Virginia’s Class Action Ban
Virginia is one of two states with a class action ban. Put more precisely, Virginia law does not provide a mechanism to bring a class action in state court. While federal courts can allow class action litigation under Virginia state laws and against Virginia entities, these avenues are not a complete substitute for state class action. State and federal courts each have their benefits and drawbacks—different jury pools, judicial selection methods, rules of procedure—which can potentially inflect or perhaps even substantially alter the outcome of a case. In forty-eight other states, litigants get to weigh the full spate of options, but not in Virginia.
State Senate Majority Leader Scott Surovell of Fairfax and House Delegate Marcus B. Simon of Fairfax and Falls Church introduced a bill addressing this very issue in 2024. The bill, passed by both houses, appeared to be modeled upon the Federal Rules of Civil Procedure, in that its requirements for certification echo the Federal Rules almost verbatim. The bill passed both houses with thin margins: 51-49 in the House and 21-18 in the Senate. Even committee and subcommittee votes were frequently close.
Governor Youngkin vetoed the bill. According to the governor’s published statement concerning his veto, “[t]he possible statutory damages resulting from these consumer class actions will coerce defendants into settlements to avoid potentially ruinous consequences.”[1] The statement also made a vague reference to the state’s recent expansion of the Court of Appeals, seemingly suggesting that the state court system could only handle so much change at once. On the whole, business interests appeared to be the driving force behind the veto, at the end of which the governor noted, “[e]xcessive tort liabilities and the threat of litigation expenses can force businesses to close their doors, imperiling economic growth.”[2]
Virginia law generally protects civil defendants more than some other states. According to a report generated by Thompson Law, a Texas personal injury firm, numerous states do not have any damages cap for medical malpractice lawsuits.[3] Some states also have no cap for punitive damages in personal injury lawsuits. Virginia, in contrast, has a $350,000 cap for punitive damages and, as of 2024, a $2.65 million cap for medical malpractice. While these caps may protect a more diverse set of defendants than the class action ban, they serve to illustrate that Virginia law has its perks for at least some civil defendants.
Taking a look more specifically at the business interest served by the class action ban, the Virginia Consumer Protection Act (VCPA) appears to be the locus for anxiety in the business community. The statute authorizes $500 in statutory damages per violation. Hunton Andrews Kurth LLP published an article articulating these concerns after the Commonwealth Senate passed the bill. The firm pointed out that businesses feared paying out enormous amounts that would far exceed actual damages and suggested that the governor amend the bill to exclude class actions from the VCPA’s statutory damages provision.[4]
Based on the text of the bill as passed by the General Assembly, it appears that including the VCPA within the scope of class actions was part of the goal. The bill explicitly invokes the VCPA, allowing VCPA class actions to forgo additional certification requirements to which all other classes ostensibly would have been subject. Perhaps the writing was on the wall with this one.
The availability of VCPA remedies in federal class actions has created an Erie doctrine circuit split. Judge Norman K. Moon of the Western District of Virginia recently summed up the split in an order denying a 12(b)(6) motion by class action defendant BMW. BMW had contended that the VCPA was incompatible with class action, necessitating dismissal.[5] Judge Moon reflected on the fact that while the majority of circuits that have decided the issue have upheld VCPA class actions, they have done so on varying grounds.[6] However, Judge Moon found a common thread among these decisions: Because Virginia’s class action ban is the result of the absence of legislation, the availability of class action under the VCPA is a procedural, rather than substantive rule.[7] In contrast, Judge Moon wrote that those circuits which have reached the opposite outcome declined to undertake Erie doctrine analysis, instead taking a more textual approach to the issue.[8]
Judge Moon acknowledged that “[t]he line between procedural and substantive law is hazy” (quoting the seminal Shady Grove case, which deals with the Erie doctrine).[9] What is the effect, if any, of Governor Youngkin’s veto of the class action bill on Shady Grove analysis? While his perspective is a political one, is it conceivable that a court would factor in his stated rationale for vetoing the ban as evidence that Virginia’s ban is more than a procedural idiosyncrasy? What if the statement came from the attorney general instead—would that make a difference? I struggle with the haziness of the procedural versus the substantive in this case because it is difficult to ignore the political, economic, and social considerations that go into maintaining the ban, even if the ban is the result of non-legislation.
[1] https://legacylis.virginia.gov/cgi-bin/legp604.exe?241+amd+HB418AG
[2] Id.
[3] https://1800lionlaw.com/damage-caps-by-state-personal-injury-med-mal/
[4] https://www.hunton.com/hunton-retail-law-resource/the-legislation-enacting-virginias-new-class-action-statute-should-be-amended-to-protect-virginia-businesses-from-in-terrorem-statutory-damages
[5] Berl et al v. BMW of North America, LLC, Docket No. 3:24-cv-00066 (W.D. Va. Aug 27, 2024), MEMORANDUM OPINION re 18 MOTION to Dismiss by BMW of North America, LLC (Doc. No. 52, p. 2)
[6] Id. at 14
[7] Id.
[8] Id.
[9] Id. at 12
