Monday, October 9, 2017
A new and really fascinating case study about environmental mass tort litigation against Du Pont was posted recently by the NBER. You can find the piece here. It demonstrates how a company came to ignore the injuries that its product (in this case a toxin called C8) and how it can be that this decision was value maximizing for shareholders.
The bottom line answer is that the company's ability to hide information and delay payment of any penalties, combined with the relatively low exposure in tort and regulatory penalties, made it sensible because it knew it would not have to internalize the full costs of its conduct. It demonstrates that information and secrecy is at the core of the effectiveness (or ineffectiveness) of regulation and litigation.
Wednesday, August 16, 2017
There is a persistent question in multidistrict proceedings: what duties do lead lawyers owe to individual plaintiffs who have no direct attorney-client relationship with them?
That's the question at the heart of a recent opinion by Judge David Herndon in the Yazmin/Yaz litigation, although the opinion itself is about whether remand to state court is appropriate. (Spoiler: Judge Herndon thinks it's isn't.)
After the negotiating parties in the underlying MDL reached a global settlement for the ATE (arterial thromboembolism) cases, Judge Herndon issued a series of orders designed to usher plaintiffs into the deal. One of those was a Lone Pine order that required every non settling plaintiff to produce fact sheets, over three years worth of pharmacy and medical records, and a case-specific expert on general and specific causation--all within three months. Those who didn't comply faced dismissal.
As you might guess, the plaintiffs currently suing missed that deadline and their various attorneys failed to respond to Bayer's motion to dismiss. As such, with new counsel, they are now suing lead counsel (Micheal S. Burg, Roger Denton, Michael A. London, and Mark R. Niemeyer) for legal malpractice under Illinois common law.
What question lies at the heart of the case? You guessed it: what duties do lead lawyers owe to non-client plaintiffs in a multidistrict proceeding?
Returning for a moment to the question of federal jurisdiction, given the way that the complaint is framed, jurisdiction appears to lie under CAFA, 28 USC 1332(d)(2) (it's pled on behalf of a class). But the parties take different routes. Disgruntled plaintiffs argue that it's a mass action that contains fewer than 100 people (despite it being pled as a class action), and defendants argue that it presents federal question jurisdiction under 1331. Relying on Grable and Gunn, the court agrees.
I confess, I'm not yet convinced that these state-law malpractice claims implicate a federal issue under Grable.
Either way, as Judge Herndon (and lead lawyers) framed it, even if the dissatisfied plaintiffs sued individually, federal question jurisdiction would lie over their claims, thereby allowing defendants to remove and send it to Judge Herndon. Judge Herndon, you may recall, presided over the original claims and appointed the leaders in the first place.
There hasn't been a ton written on the fiduciary question, but Professor Charlie Silver's work comes readily to mind. In his article, The Responsibilities of Lead Lawyers and Judges in Multidistrict Litigation, he writes:
Given that both lawyers who represent individual claimants and lawyers who handle class actions are fiduciaries, it would be surprising to discover that lead lawyers in MDLs were not. . . . Given the dearth of authority directly on point, judges may take guidance from other bodies of law. If they do, they will quickly conclude that lead attorneys are fiduciaries. Mass tort lawyers are fiduciaries, and so are lawyers who represent plaintiff classes. These examples are the most analogous to lead counsel.
My own view is similar. Without imposing fiduciary duties on lead lawyers, all sorts of mischief could result. Of course, whether lead lawyers in Yasmin/Yaz breached those duties in a way that amounts to malpractice is a separate question. But, given the lengths they've taken to have the malpractice claims heard before Judge Herndon, leaders clearly think they have a much better chance there than in IL state court.
Casey et. al. v. Roger Denton, et. al. is worth following. Here are a few of the relevant documents:
Monday, August 7, 2017
Bellwether trials are a mass tort phenomenon that is often reported in the media, but too often journalists put more emphasis on an individual trial or even a small set of trials than is warranted. This post tries to explain why more care and nuance is needed in reporting on these trials.
A bellwether is a kind of test trial, a vehicle for the judge and the parties to obtain information about a mass litigation in order to settle a large number of lawsuits at once. That settlement might happen through a settlement matrix, in groups as lawyers settle their "inventory" of cases, through a class action, or all three. Often cases where we see bellwether trials are MDLs -- multi-district litigation that has been transferred to a single federal judge for resolution. If you are a journalist writing about complex litigation, all this will be familiar to you.
Trial verdicts in bellwether cases seem like they should be big news. After all, if the case really is "representative" of the run of cases then the verdict should help us predict what will happen in settlement. It can help us understand what risks a company faces, for example.
The problem is, that bellwether trials will rarely tell you what the run of cases are like or how they will come out. This is true for several reasons. It is good to keep them in mind when you are reporting on bellwether trials:
1. Mass tort cases are often heterogenous. The bellwether trial is just one trial out of a larger, varied group. Even if everyone was injured by the same toxin or drug or product, they likely different injuries and different levels of injury. So picking one of them doesn't tell us much about the others. The same is true not only for the injury itself but for other elements of the legal claim, especially causation.
2. Bellwether cases are picked by the parties. The parties try to pick their best cases. For defendants this means cases they are likely to win; same for plaintiffs. So we would expect bellwether cases to be outliers. They do not necessarily reflect the run of cases. What do we (the public) know about the run of cases in the litigation? Often very little. The parties tend to know a lot, but they are not likely to share that information. We can assume that the cases are varied. See point #1.
3. The universe of cases is not always the universe of cases. This is because cases will settle. A defendant might decide that it is in its best interest to settle out the most high value cases, leaving low value cases to be tried. This might create the misleading appearance that the run of cases are very low value, and that there is little litigation exposure for the defendant. It is important to ask about what cases have been settled as well as what cases are tried.
4. The trial verdict is not the outcome. One reason is that cases will settle. For example, the parties may have reached a high-low settlement before trial, so that the defendants' payout has a ceiling above which it need not pay and the plaintiff has a floor, below which he or she will not lose. Another reason is that cases will be appealed. Or retried. Or the verdict remitted. Reports of high verdicts without nuance are shocking and exciting, but they misrepresent what really goes on in the justice system.
When you report on bellwether trials and there is an exciting verdict -- either because the defendant won or the plaintiff did -- I hope you will remember that while it is very interesting how the bellwether came out, it doesn't really tell us very much about the defendant's exposure.
Sunday, August 6, 2017
Professor James Henderson (Cornell Law) has posted to SSRN his article, The Impropriety of Punitive Damages in Mass Torts, 52 Ga. L. Rev. (forthcoming). Here is the abstract:
Punitive damages have been around for centuries in classic one-on-one tort actions and are here to stay. Mass torts, of more recent origin and not without difficulties, have matured to the point that this article is comfortable referring to most of them as traditional. Notwithstanding the legitimacy of both institutions when employed separately, loud warning signals should sound when, as with drinking and driving, they are combined. Potentially destructive mixes of punitive damages and mass torts have, unfortunately, been prevalent in traditional, fault-based mass tort actions. The difficulties are mostly administrative. Although punitive damages are conceptually compatible with fault-based mass torts, courts administer punitive awards in ways that are so capricious as to generate gross unfairness and inefficiency. And if for that reason the warning signals should be loud in connection with punitive awards in traditional mass torts, they should be downright deafening if and when courts consider awarding punitives in what this article refers to as emerging, nontraditional, enterprise-liability-based forms of mass tort.
Given that these serious difficulties cannot be eliminated by marginal reforms, this article argues that punitive damages are manifestly inappropriate in, and must be eliminated from, all forms of mass tort. Of course, a broad proscription would require courts to overrule precedent in connection with traditional mass torts, and this article explains how this could be accomplished. By contrast, such a proscription would come early enough in the development of emerging forms of mass tort to nip punitive awards in the bud without the need to overrule longstanding precedent. Thus, if courts are going to eliminate punitive awards in mass torts, now is the time for them to act.
Saturday, July 29, 2017
Friday, July 28, 2017
Bruce Kaufman, at Bloomberg BNA, has posted an update on class action and MDL legislation pending in the Senate. The bottom line is that these reforms seem to have stalled (and rightly so, I might add).
As Kaufman writes:
The bills, two of which still lack Senate sponsors, are:
The Fairness in Class Action Litigation Act and Furthering Asbestos Claims Transparency Act ( H.R. 985) affects nearly all facets of class action practice, and mandates increased reporting of payments to plaintiffs by trusts that pay out asbestos exposure claims against bankrupt companies. It passed the House March 9 by a 220-201 vote.
The Innocent Party Protection Act ( H.R. 725) targets what is known as fraudulent joinder—the improper addition of local defendants to suits in a bid to keep cases in more plaintiff-friendly state courts. It passed the House March 9 by a 224-194 margin.
The Lawsuit Abuse Reduction Act ( H.R. 720; S. 237) requires judges to impose mandatory sanctions on attorneys who file “meritless” civil cases in federal courts. It passed the House March 10 by a 230-188 margin.
Kaufman's full article is available here: https://www.bna.com/businessfriendly-litigation-overhaul-n73014462386/
Sunday, July 23, 2017
Skadden Arps has posted its Class Action Chronicle for Summer 2017, which includes updates on Third-Party Litigation Funding, Class Certification Decisions, and Class Action Fairness Act Decisions.
Saturday, July 15, 2017
Judge Jack Weinstein of the Eastern District of New York, who is noted for his opinions in many mass torts including Agent Orange, has surpassed 50 years on the bench. Shibani Gokhale, At 95, Weinstein Keeps Going After 50 Years on Bench, Law.com (July 13, 2017).
Friday, June 2, 2017
HR 985, the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017, has now passed the House and is pending in the Senate's Committee on the Judiciary. How might that bill affect plaintiffs involved in mass torts like mesh, Essure, Yaz, Mirena, NuvaRing, Ortho Evra, Power Morcellator, or the many hip implant suits?
Simply reading the bill, I'm afraid, won't help too much. It's shrouded in legalese. As such, I've marked up the bill to explain in non-legalese which provisions help and hurt mass-tort victims and consumers.
Many of the class action provisions in HR 985 don't affect mass-tort plaintiffs at all since those lawsuits rarely proceed as class actions (albeit, there are some notable exceptions, like the NFL concussion cases and the injuries incurred during the clean-up of the BP oil spill; both litigations were certified as settlement class actions).
There is, however, a possibility for judges to use class actions as a means to step in and ensure that plaintiffs are being adequately represented (and that resulting settlements are fair, reasonable, and adequate). How? Through the issue class action. Unfortunately, as HR 985 is currently written, it would completely eliminate that possibility.
I've studied MDLs for many years now and have written articles that are critical of both repeat player plaintiffs' attorneys and the manner in which judges sometimes handle these cases. Over the past four years, I've collected data on and analyzed 73 multidistrict proceedings. Although I'm still in the process of writing a book about my findings, one thing has become glaringly clear to me: the systematic lack of checks and balances in our courts seem to profit everyone but the plaintiffs.
Analyzing the deals repeat players make, the “common-benefit” attorneys’ fees that the lead plaintiffs’ attorneys receive to run the proceedings, and the judicial rulings in mass-tort cases consolidated over 22 years and settled over 12 years reveals a disturbing pattern: repeat plaintiff and defense attorneys persistently profit from the current system.
Corporate defendants end sprawling lawsuits and lead plaintiffs’ lawyers broker deals that reward them handsomely and sometimes pay litigants very little. For example, in litigation over the acid-reflux medicine, Propulsid, only 37 of 6,012 plaintiffs (0.6 percent) recovered anything through the strict settlement program. Their collective recoveries totaled no more than $6.5 million. Yet, the lead plaintiffs’ attorneys received over $27 million in common-benefit attorneys’ fees, vividly illustrating the worry that a corporate defendant might trade higher fees for less relief to plaintiffs.
So, is reform needed? Absolutely. Is HR 985 the right ticket? No, not as it's currently written.
As such, I've marked up the bill in a way that begins to instill the necessary reforms and eliminates (or changes) provisions that set up further (and unnecessary) roadblocks for plaintiffs. It also explains what the proposed provisions do in plain English: Download HR985 Burch Mark-up
If you want some version of HR 985 to pass, please consider forwarding this revised version to your Senator and do not support the bill as it reads now.
For those who care more about the legalese, I was contacted by a House subcommittee to provide nonpartisan, academic commentary on the bill, which I did. That write up is included here (note, however, that this is a commentary on the original House bill and some changes have been made to the current bill that address a few of the concerns I raised): Download Burch Final Comments on Fairness in Class Action Litigation Act
There's no need to take just my word for it, though. Every other academic that I know of opposes this bill, as has the Federal Rules Committee. This committee, formally known as the Committee on Rules of Practice and Procedure, just happens to include Neil Gorsuch, now Justice Gorsuch (of the U.S. Supreme Court), whose views are reflected in the letter below as well.
And here are links to other academic commentary -
Professor John C. Coffee, Jr. (Columbia Law School): Download Coffee - How Not to Write a Class Action “Reform” Bill _ CLS Blue Sky Blog
Professor Howard Erichson (Fordham Law School): Download Erichson-hr985-letter
Professor Myriam Gilles (Cardozo Law School): Download Gilles Letter to James Park on HR 985
Friday, May 12, 2017
An Iowa class action (subject to CAFA's local class exception) has been approved by the Iowa Supreme Court. Here is the report from Iowa radio. You can find the opinion here: Freeman v. Grain Processing Corporation.
The court considers arguments that individual defenses ought to defeat class certification, as well as arguments based in the Supreme Court's opinions in Wal-Mart and Tyson Foods and rejects them. It explained:
GPC argues that class certification will deny it the fair opportunity to contest whether individual homeowners have suffered injury or damage. We disagree. The plaintiffs have proposed a formula for damages. GPC can contest the appropriateness of that formula before the jury. If a special jury verdict is entered approving this formula and that verdict is supported by substantial evidence, then potentially this formula can be used in subsequent claims administration by the court while preserving GPC’s due process and jury trial rights. If no damage formula is approved, then there would have to be subsequent individual trials on damages. Either way, GPC’s rights would be protected. (33)
One additional aspect of the case is worth noting. The Court specifically differentiates this nuisance class action, which alleges injury in the form of property damage, from a personal injury action and distinguishes some federal precedent on that basis. As I show in a forthcoming article in NYU Law Review called Mass Tort Class Actions: Past, Present and Future, that is a common pattern for mass tort classes that have been certified for litigation. For example, the first asbestos class actions certified were property damages classes. In that article, I review all the mass tort class actions considered by the federal court from the promulgation of the class action rule through Amchem, and explain how they relate to developments in tort law during the same period. I will be posting this article to SSRN in July.
Wednesday, April 26, 2017
Yesterday the Supreme Court held oral arguments in a personal jurisdiction case involving purchasers of the drug Plavix who bought the drug in Ohio but wanted to join a suit in California where the company does almost 1 billion dollars worth of business. There is a marvelous amicus in the case by Alan Morrison who argues for a new test for personal jurisdiction. Its a "must read" for those of us who think about civil procedure or teach mass torts.
Tuesday, April 4, 2017
With everything else that's dominated the news, it's easy to place the "Fairness in Class Action Litigation Act" on the back burner. But to forget that it's still an active bill (having now passed the House and pending before the Senate) would be a mistake.
Professor Myriam Gilles (Cardozo) and I recently published an op-ed with Bloomberg Law, which appeared in yesterday's Product Safety & Liability Reporter and will be in next week's Class Action Litigation Report titled Congress's Judicial Mistrust. You can read it here: Download Bloomberg Law - Congress's Judicial Mistrust.
We explained our legal positions more fully in our respective letters to the House Judiciary's subcommittee. Download Burch Final Comments on Fairness in Class Action Litigation Act, Download Gilles Letter to James Park on HR 985.
Friday, March 17, 2017
Adam Zimmerman has posted his new article "Bellwether Settlements" to SSRN. The abstract is below:
This Article examines the use of bellwether mediation in mass litigation.
Bellwether mediations are different from “bellwether trials,” a practice
where parties choose a representative sample of cases for trial to determine
how to resolve a much larger number of similar cases. In bellwether
mediations, the parties instead rely on a representative sample of settlement
outcomes overseen by judges and court-appointed mediators.
The hope behind bellwether mediation is that different settlement
outcomes, not trials, will offer the parties crucial building blocks to forge a
comprehensive global resolution. In so doing, the process attempts to (1)
yield important information about claims, remedies, and strategies that
parties often would not share in preparation for a high-stakes trial; (2) avoid
outlier or clustering verdicts that threaten a global resolution for all the
claims; and (3) build trust among counsel in ways that do not usually occur
until much later in the litigation process.
The embrace of such “bellwether settlements” raises new questions about
the roles of the judge and jury in mass litigation. What function do courts
serve when large cases push judges outside their traditional roles as
adjudicators of adverse claims, supervisors of controlled fact-finding, and
interpreters of law? This Article argues that, as in other areas of aggregate
litigation, courts can play a vital “information-forcing” role in bellwether
settlement practice. Even in a system dominated by settlement, judges can
help parties set ground rules, open lines of communication, and, in the
process, make more reasoned trade-offs. In so doing, courts protect the
procedural, substantive, and rule-of-law values that aggregate settlements
Friday, March 3, 2017
Bruce Kaufman, the senior legal editor at Bloomberg BNA, has written a very informative series of articles examining the prospects that the House, Senate, and President will enact wide-ranging tort and civil justice "reform" legislation. This legislation includes:
- HR 985, the "Fairness in Class Action Litigation Act"
- HR 725, the "Innocent Party Protection Act"
- HR 469, the "Sunshine for Regulatory Decrees and Settlements Act"
- HR 720, the "Stop Settlement Slush Funds Act" or "Lawsuit Abuse Reduction Act"
- and HR 906, the "Furthering Asbestos Claims Transparency Act"
All three articles are worth a careful read. Links and downloads included below, courtesy of Bruce and Bloomberg BNA.
- Part 1: Trump to Weigh Litigation Changes, Download BNA - Trump to Weigh Litigation Changes Long Coveted by Business
- Part 2: Push to Enact Civil Justice Bills Follows Industry Playbook, Download BNA - Push to Enact Civil Justice Bills Follows Industry Playbook
- Part 3: Trump Seen as Supportive of Business-Backed Litigation Bills, Download BNA - Trump Seen as Supportive of Business-Backed Litigation Bills
For those of you who missed the academic roundup on HR 985, you can find it here.
Floor debate on at least four of the bills (including the now merged HR 985 and HR 906, class actions and asbestos) is scheduled to begin as soon as the week of March 6. A seventh bill on medical malpractice reform, HR 1215, may be voted on the week after March 6.
Saturday, February 25, 2017
With House Bill 985 (the "Fairness" in Class Action Litigation Act of 2017), the controversy over current class action practice has escalated. I've been an outspoken critic of the cozy relationships that plaintiffs' lawyers and defense lawyers have developed not only in class actions, but in multidistrict litigation, too. Yet, as I (along with a number of other academics) have discussed, HR 985 doesn't fix what's ailing the system. Instead, it seeks to eliminate most class actions, tramples bipartisan consensus in the appellate courts and federal rules committee, and ineptly tells judges how to do their jobs.
This past January, I attended a conference at Tel Aviv University called Fifty Years of Class Actions--A Global Perspective. As part of that conference, I wrote a paper titled Publicly Funded Objectors, which calls for data collection and suggests that if the U.S. is truly serious about fixing what ails class actions, then it needs to publicly fund those who police them best--nonprofit organizations. I posted the paper on SSRN today.
Now that we have 50 years of class action practice under our belt, we know that practice suggests the need for tune-ups: sometimes judges still approve settlements rife with red flags, and professional objectors may be more concerned with shaking down class counsel than with improving class members’ outcomes. The lack of data on the number of opt-outs, objectors, and claims rates fuels debates on both sides, for little is known about how well or poorly class members actually fare. This reveals a ubiquitous problem—information barriers confront judges, objectors, and even reformers.
Rule 23’s answer is to empower objectors. At best, objectors are a partial fix. They step in as the adversarial process breaks down in an attempt to resurrect the information-generating function that culture creates. And, as the proposed changes to Rule 23’s handling of objectors reflect, turmoil exists over how to encourage noble objectors that benefit class members while staving off those that namely seek rents from class counsel.
Our class-action scheme is not the only one that relies on private actors to perform public functions: citizens privately fund political campaigns, and private lobbyists provide research and information to lawmakers about public bills and policies. Across disciplines, the best responses to those challenges have often been to level up, not down. As such, this Essay proposes a leveling up approach to address judges’ information deficit such that they can better perform their monitoring role. By relying on public funds to subsidize data collection efforts and nonprofit objectors’ information-gathering function, we can disrupt private class counsel’s disproportionate influence.
Put simply, we keep the baby and just throw out the bathwater.
Tuesday, February 21, 2017
Academics have been busy this week providing commentary on HR 985, the "Fairness in Class Action Litigation Act of 2017." Here's a round-up of the commentary thus far (and please do let me know if I've missed someone).
John Coffee (Columbia): Download Coffee - How Not to Write a Class Action “Reform” Bill _ CLS Blue Sky Blog
Howard Erichson (Fordham): Download Erichson-hr985-letter
Myriam Gilles (Cardozo): Download Gilles Letter to James Park on HR 985
And mine, Elizabeth Chamblee Burch (Georgia): Download Burch Final Comments on Fairness in Class Action Litigation Act
For those of you who like up to the minute commentary, several academics and reporters keep very active twitter accounts that track the bill: @adam_zimmerman, @elizabethcburch, @HowardErichson, @PerryECooper
Saturday, February 18, 2017
Class actions and MDL have real problems that need fixing. I have written about these problems at length, most recently in Aggregation as Disempowerment. But the new bill that just passed the House Judiciary Committee does not fix any of the real problems. Instead, it is a crass attempt to undermine any effort by plaintiffs to seek justice in mass disputes.
The bill, H.R. 985, the "Fairness in Class Action Litigation Act of 2017," seeks to reduce defendants' exposure to liability for mass harms by tightening the standard for class certification, imposing an ascertainability requirement, delaying the payment of class counsel fees, limiting the use of issue class actions, expanding diversity jurisdiction, mandating Lone Pine orders in MDL, banning trials in MDL, and capping MDL personal injury attorneys' fees at 20%, among other things. As Beth Burch noted, the bill does not make things fairer for those who have been wronged.
I would like to see thoughtful reforms to help courts distinguish meritorious from non-meritorious claims. I would like to see thoughtful reforms to protect claimants from unfair settlements in both class actions and MDL. And I would like to see thoughtful reforms to ensure that fees reflect what lawyers actually accomplish, not inflated settlement valuations. The abuses in class actions and non-class mass litigation happen mostly in settlement, not litigation and adjudication. But that is not what this bill would address. Instead, its provisions are aimed mostly at protecting defendants from the kinds of class actions and mass litigation that actually empower consumers, employees, citizens, and others to fight corporate and government wrongdoing.
Even where the bill aims at real problems (such as its provision to expand diversity jurisdiction to reach plaintiffs suing diverse defendants but who join with a non-diverse plaintiff), it goes too far, failing to match its solution to the problem of magnet jurisdiction in nationwide mass disputes.
In my letter to Congressional leaders, I attempt to explain which of the provisions of H.R. 985 are especially problematic, and why. If you're interested, you can find the letter here:
Monday, February 13, 2017
The U.S. House of Representatives is considering a bill that would substantially curtail the usefulness of class actions and multidistrict litigation, but would not make things "fairer" for class members.
Alison Frankel has a great write-up on the proposal that includes my preliminary comments along with Professor Myriam Gilles's comments. I'm heartened that representatives are reaching out to academics, because I have a number of concerns with the bill's proposals. If you are likewise concerned, then you should weigh-in, too. The House is marking up the bill on Wednesday.
My comments are available here: Download Final Comments on Fairness in Class Action Litigation Act
Tuesday, December 27, 2016