Thursday, July 29, 2010
The National Law Journal reports a decision from the Seventh Circuit holding that the insurers of sellers of baby products had no duty to defend the insured in a class action lawsuit that sought only economic damages.
Sunday, July 25, 2010
Ronen Perry (University of Haifa) has posted Economic Loss, Punitive Damages, and the Exxon Valdez Litigation to SSRN.
On March 24, 1989, an Exxon supertanker ran aground on Bligh Reef off the Alaskan coast, spilling millions of gallons of crude oil into Prince William Sound. The spill was probably the worst environmental disaster in American history, and sparked unusually extensive and complex litigation, as well as a vast academic literature. But the natural focus on concrete legal and procedural questions has left at least one abstract juridical puzzle unsolved - one that goes to the very foundation of tort liability.
The article uncovers a fundamental yet unnoticed inconsistency in American land-based and maritime tort law that surfaced following the unprecedented spill. The understandable emphasis on the award of punitive damages in recent literature has overshadowed an extremely important part of the Exxon Valdez litigation, namely the wholesale rejection of numerous claims for purely economic loss by the federal district court in the early 1990s. Thus, on the one hand, liability for economic loss was strictly limited under the renowned Robins Dry Dock v. Flint, leaving dozens of thousands of victims uncompensated. On the other hand, liability was expanded through an award of punitive damages to relatively few successful claimants. While these two components of the legal saga might not seem incompatible from a simple doctrinal perspective, they are inconsistent on a deeper - justificatory - level. This inconsistency transcends the Exxon Valdez litigation: It is a troubling trait of land-based and maritime tort law, which happened to surface when the Exxon oil submerged.
The first two parts introduce the clashing rules and their underlying rationales: Part I discusses the origins of the exclusionary (economic loss) rule, its scope of application, and most importantly - its main justifications in American case law and academic literature. Part II provides a short history of punitive damages, and discusses the common justifications for this private law anomaly. Next, Part III shows how the two rules were applied through the Exxon Valdez litigation, and explains why their in tandem application gives rise to incoherence on the justificatory level. After delineating the contours of the stark incongruity, the article proposes a conceptual framework for resolution. Generally, it holds that if courts believe liability must be expanded beyond the limits set by the exclusionary rule in order to obtain certain levels of deterrence and retribution, relaxing the exclusionary rule and allowing more victims to recover is a more defensible path than awarding punitive damages to the already compensated few. The former simply extends the application of two general principles of tort law, whereas the latter is based on problematic exceptions to these universal principles and generates severe distributive injustice.
Through this analysis, the article not only sheds new light on the particular proceedings and on the common law of torts, but also lays the foundation for a more holistic approach to legal reasoning: a transition from fragmentation to integration. “Can two walk together, except they be agreed?” the biblical prophet rhetorically inquires. The Exxon Valdez litigation shows that they can, but this article concludes that they should not.
Wednesday, July 21, 2010
Discovery Order in Toyota MDL incorporates elements of parallel state and federal administrative investigations
The National Law Journal reports that the California federal judges hearing the Toyota MDLs has approved a new joint discovery plan.
Of interest to civ pro folks is the fact that the plan takes advantage of discovery and facts already prepared for cases pending in other states and from a federal administrative investigation:
In their joint discovery plan, the parties submitted 21 topics to be covered in depositions, including the location and access to documents and people associated with the electronic throttle control systems in Toyota vehicles -- specifically, documents in two state court cases in Michigan and California.
Discovery will include information about customer complaints and internal studies of sudden unintended acceleration, the whereabouts of electronic data recorders and Toyota's advertising, sales and public relations materials. Toyota must provide nonprivileged documents that it produced earlier this year to the National Highway Traffic Safety Administration, Congress and state attorneys general.
Tuesday, June 15, 2010
The article documents the difficulties that private parties and various levels of government authorities have faced in coordinating control and cleanup efforts. From the article:
Closer to shore, the efforts to keep the oil away from land have not fared much better, despite a response effort involving thousands of boats, tens of thousands of workers and millions of feet of containment boom.
From the beginning, the effort has been bedeviled by a lack of preparation, organization, urgency and clear lines of authority among federal, state and local officials, as well as BP. As a result, officials and experts say, the damage to the coastline and wildlife has been worse than it might have been if the response had been faster and orchestrated more effectively.
“The present system is not working,” Senator Bill Nelson of Florida said Thursday at a hearing in Washington devoted to assessing the spill and the response. Oil had just entered Florida waters, Senator Nelson said, adding that no one was notified at either the state or local level, a failure of communication that echoed Mr. Bonano’s story and countless others along the Gulf Coast.
“The information is not flowing,” Senator Nelson said. “The decisions are not timely. The resources are not produced. And as a result, you have a big mess, with no command and control.” (emphasis added)
This should not be news. Similar complaints were leveled in the aftermath of Hurricane Katrina. Erin Ryan (William & Mary) gives a thorough outline of these problems and various responses in her article Federalism and the Tug of War Within: Seeking Checks and Balance in the Interjurisdictional Gray Area, 66 Md. L. Rev. 503, 518-36 (2007).
Are these problems of cooperative/shared/interactive federalism intractable? Or can we learn and improve from the Katrina and BP experiences before the next disaster, particularly before incidences that might have a lower profile but cause equal devastation to local residents and paralysis among state, local, and federal officials.
Wednesday, June 9, 2010
This week the U.S. Senate has been holding hearings to consider legislation that would lift or alter the liability cap for oil spills. Under the 1990 Oil Pollution Act (33 U.S.C. s. 2704), BP's liability is limited to $75 million in economic damages. Various proposals have suggested raising the cap to $10 billion or eliminating it completely.
Representatives of the oil industry are lobbying against the change, arguing that that any change to the law would expose the federal government to breach of contract liability with the oil industry.
Monday, June 7, 2010
Wednesday, June 2, 2010
A few months ago, the lawyers representing the first responders, recovery workers, and contractors at Ground Zero came to a draft settlement with lawyers for NYC, the captive insurer, and other defendants. After the parties presented the proposed settlement to the court, Judge Hellerstein more or less rejected the deal, prompting criticism from some lawyers and scholars as to his authority to "reject" a settlement for a case that is not a class action.
Now the lawyers for the plaintiffs have offered to reduce their attorneys fees --an earlier sticking point for Judge Hellerstein -- so that more money would go directly to the plaintiffs. The original settlement provided for 30% or more of the settlement to go to the attorneys in fees. The new proposal would cap fees at 20%.
The Associate Press reports more here.
Thursday, May 27, 2010
The National Law Journal reports that two federal judges have come to opposite rulings about whether to stay litigation until decisions about consolidation are made and more potential lawsuits are filed.
As I have written previously, I believe that courts should proceed with caution when casting too wide a consolidation net in the aftermath of a major catastrophe. The problems of whether it is fairer or more efficient for cases to move forward on their own or to be consolidated with other cases is a serious question for which I do not believe there are clear or easy answers.
Two federal courts have responded to BP's motions to stay law suits regarding the oil spill in the Gulf of Mexico pending a determination of a multidistrict litigation panel on whether to combine the 130+ cases. One granted the stay and one denied it. A federal court in Mobile, Alabama denied BP's request to delay filing an answer, while another federal court in New Orleans, Louisiana granted BP's motion to stay proceedings. Judge Martin Feldman based his decision to stay the New Orleans proceedings on the "grave potential of conflicting discovery orders," which poses "a hardship for defendants [and] mocks an efficient and orderly judicial system."
The National Law Journal has more about the conflicting decisions on BP's motions to stay proceedings here.
Monday, May 3, 2010
The New York Times has a piece today profiling Judge Hellerstein. It discusses his background, impressions of his motivations for how he has shaped the 9/11 litigation, and opinions as to the propriety of rejecting the MDL settlement on fairness grounds.
From the article:
The struggle over control of the settlement has underscored two different, but not necessarily contradictory views of the judge: the compassionate jurist driven by a sense of social responsibility and with a wealth of experience with victims’ suffering, and the aggressive judge unwilling to cede ground on cases he has shepherded for years.
Judge Hellerstein lost several former clients in the collapse of the twin towers on 9/11. But legal experts suggest that he has a bigger motivation for championing the ground zero victims: he may see his handling of the 9/11 cases as his legacy.
But lawyers who have sparred with Judge Hellerstein suggest that his moral compass and commitment to doing what he thinks is right have sometimes led him to overreach.
Thursday, April 22, 2010
The BNA reports that Judge Selna of the C.D. California has set an initial conference for May 13 for the cases currently consolidated as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation. The court also made an interim assignment of lead counsel., choosing Steve W. Berman of Hagens Berman Sobol Shapiro in Seattle; Elizabeth J. Cabraser of Lieff Cabraser Heimann & Bernstein in San Francisco; and Marc M. Seltzer of Susman Godfey in Los Angeles for the plaintiffs. Alston & Byrd of Atlanta represent Toyota.
Monday, April 12, 2010
The JPML has ordered a consolidation of more than 200 lawsuits against Toyota before Judge James Selma in the Central District of California. This order combines the personal injury lawsuits with class actions alleging economic damages.
The order is available here.
As I have argued previously in the context of the 9/11 cases and Hurricane Katrina litigation, consolidating these lawsuits around such a loosely defined event, here, the acceleration problems, might not necessarily be the most efficient or just way of handling such mass tort litigation.
Monday, March 22, 2010
The New York Law Journal reports here. Judge Hellerstein indicated that the settlement formula was too complicated for each individual plaintiff and that the attorneys' fees (33% of each award) were too high.
This will be an interesting story to watch, as he seems to essentially be conducting a class action-style fairness hearing on a group of cases consolidated as an MDL.
Wednesday, March 17, 2010
Richard Nagareda (Vanderbilt University School of Law) has posted 1938 All Over Again? Pre-Trial as Trial in Complex Litigation to SSRN.
This Essay for the Sixteenth Annual Clifford Symposium analyzes the transformation of the pre-trial process for complex civil litigation. Settlement, rather than trial, has emerged as the dominant endgame. As a result, in functional terms, the pre-trial phase effectively operates as the trial. Over the past quarter-century, doctrinal developments have shifted steadily backward within the pre-trial phase the major checkpoints for judicial scrutiny of claims. The key developments consist of the Supreme Court’s summary judgment “trilogy” (1986), the rise of Daubert scrutiny for the admissibility of expert testimony (1993), the elaboration of a distinctive law of class action certification (circa 2006) and, most recently, the invigoration of pleading standards in the Court’s Twombly and Iqbal decisions (2007 and 2009).
During the same period, an equally dramatic transformation has taken place with respect to litigation scholarship. Insights from economics, cognitive psychology, and finance – among other non-law disciplines – have broadened the vocabulary now available for analysis. Two big-picture points emerge from this literature: first, costs (especially, the ability to impose costs on one’s opponent) matter greatly to the choice whether to continue litigation or to settle; and, second, risk (or, more specifically, variance) matters in the pricing of civil claims via settlement, above and beyond calculations of expected value.
The emergence of judicial checkpoints in the pretrial phase has elicited considerable debate – most strikingly, today, over the Court’s pleading decisions. At one level, those decisions are rightly seen as pushing against the ethos of the 1938 reforms that put into place our modern notice-pleading regime. Yet, in a deeper historical sense, we actually find ourselves today in much the same position as the 1938 reformers. Today, as then, there is a lingering – but, often, undertheorized – sense that procedure itself is having an undue and even deleterious effect on the pricing of claims via settlement. It is just that the procedure now suspected to be distortive consists of the 1938 reforms. This Essay explains, in particular, how the Court’s attention to pleading standards in recent years marks a shift of emphasis from the regulation of variance in the litigation process to a concern over cost imposition.
The various pretrial checkpoints today exhibit a similar structural feature. They seek to manage variance or cost imposition by way of third-party judicial regulation – specifically, court rulings that signal “stop” or “go” on the road to trial. Evaluation of procedural doctrine as an enterprise of regulation opens up inquiry to the existence of other potential regulatory modes. This Essay concludes with examination of alternatives in the nature of first-party regulation (e.g., cost shifting) and regulation in the form of judicial action that would not be dispositive vis-à-vis trial but, rather, would seek to inform directly the pricing of claims in the settlement endgame.
Thursday, March 11, 2010
Almost as predictable as the fact that Toyota is facing a multitude of lawsuits is the fact that lawyers will begin an intense campaign to determine where and how the lawsuits will be consolidated, and which lawyers will win the prize of leading the charge.
The National Law Journal reports here that around 150 met in Chicago to discuss strategies for going forward, and to jockey for who will take the lead in the litigation. Thus far, the fault lines have developed around arguments concerning venue, with some lawyers supporting the Central District of California where Toyota has its headquarters and where a District Judge is already hearing twelve cases against Toyota, whereas others favor the Western District of Kentucky (site of a large manufacturing plant) or the Eastern District of Louisiana (MDL district extraordinaire).
Sunday, February 14, 2010
Law.com reports here about a qui tam suit concerning the quality of PVC pipes. The plaintiffs allege that J-M Manufacturing deliberately mislead regulators and consumers with products that did not meet manufacturing standards. The recently unsealed complaint illustrates the interesting path of some qui tam suits: (1) a government fails or declines to exercise authority; (2) private litigants file a qui tam suit; (3) governments seek to intervene in the lawsuit.
Monday, February 8, 2010
The National Law Journal reports on the several class actions that have been brought against Toyota in the wake of the gas pedal problems and recalls. The lawsuits are consumer class actions that seek damages for economic losses stemming from reduced value of cars subject to this problem.
It looks like the lawsuits are being filed state by state with the expectation that they will then be consolidated as an MDL. The lead plaintiffs in the lawsuits appear to be persons whose cars actually experienced the gas pedal issues. Although these plaintiffs have not alleged personal injury, there will be some serious typicality issues given the very broad class definition that the attorneys are seeking.
While the plaintiffs face some challenges in terms of class certification and causation, there is no question that multiple billion dollar lawsuits will pose a major litigation challenge to Toyota going forward.
Thursday, February 4, 2010
The New York Times reports that the lawsuits brought by the rescue and clean up workers might be near settlement, with 12 bellwether trials nearing their start in May in the Southern District of New York .
These are largely plaintiffs whose claims arose after the Victim Compensation Fund had closed, so liability and compensation has been a delicate political and judicial matter.
Monday, December 14, 2009
The New York Times article, Menopause, as Brought to You By Big Pharma features a history of regulatory and litigation issues surrounding the prescription of hormone replacement therapy drugs. The litigation centers on the Prempro cases against Wyeth (now part of Pfizer).