June 12, 2008
Taylor v. Sturgell
Today the Supreme Court decided Taylor v. Sturgell, the FOIA virtual representation case. The unanimous opinion by Justice Ginsburg unequivocally rejects virtual representation as a basis for nonparty preclusion, as Alexi Lahav noted earlier. As far as I'm concerned, the Court got it exactly right.
The D.C. Circuit had held that a plaintiff was barred by claim preclusion from pursuing his FOIA claim because he was virtually represented by an earlier plaintiff who had made an identical request, litigated, and lost. Rather than accepting the D.C. Circuit's multi-factor approach, the Supreme Court carefully listed and explained each of the possible bases for nonparty preclusion -- the exceptions to the principle that only parties are bound by a judgment -- and why they do not apply based on the record in the case.
For those interested in nonparty preclusion as it relates to mass litigation, one of the most interesting passages addresses the problem of de facto class actions:
An expansive doctrine of virtual representation, however, would "recogniz[e], in effect, a common-law kind of class action." That is, virtual representation would authorize preclusion based on identity of interests and some kind of relationship between parties and nonparties, shorn of the procedural protections prescribed in Hansberry, Richards, and Rule 23. These protections, grounded in due process, could be circumvented were we to approve a virtual representation doctrine that allowed courts to "create de facto class actions at will."
Slip Op. at 19 (quoting Tice v. American Airlines, 162 F.3d 966, 972, 973 (7th Cir. 1998)). The Court also drew comparisons to bankruptcy and probate, in which nonparties may be bound pursuant to a statutory scheme with its own justifications, constraints, and protections. This was a point that several colleagues and I emphasized in our amicus brief and that I mentioned in a previous blog entry: the law offers numerous ways to bind multiple persons to a judgment, but such joinder or representation must be accomplished ex ante and with appropriate procedural protections, not ex post through the backdoor of preclusion.
The Court ultimately remanded for a determination of whether the second plaintiff was suing as an agent on behalf of the first plaintiff, in which case claim preclusion might apply (this sort of remand seemed likely based on the oral argument), but that's a different and less mischievous idea than the virtual representation theory applied by the D.C. Circuit.
New Details on the Kentucky Fen-Phen Settlement
Beth Musgrave of the Kentucky Herald-Leader has the latest report on Kentucky fen-phen attorneys William Gallion, Shirley Cunningham Jr. and Melbourne Mills Jr., who are accused of taking more than $65 million from their clients in the diet drug settlement. Here's an excerpt:
Three lawyers for American Home Products had testified earlier in the trial that the $200 million settlement was for only 440 people and was not meant to settle future claims brought by people who had taken fen-phen but were not part of the 2001 Boone Circuit Court lawsuit. The three lawyers have argued that some money from the settlement had to be set aside in case other people who took fen-phen came forward with other lawsuits.
When no one came forward, the lawyers put some of the money in a non-profit and the rest went to legal fees and expenses. The lawyers on the case received approximately $105 million, their clients received $74 million and the remaining money went into a non-profit.
But Robbins, after reviewing transcripts, depositions and court documents related to the 2001 case, said he doesn't understand how American Home Products could say the $200 million settlement was strictly for the 440 clients. Documents indicate that American Home Products said the 440 people who took the drug were entitled to $30 million to $50 million.
Instead, the pharmaceutical company paid $200 million. Why would the company pay an additional $150 million, if it was not to pay for future claims?
"They were buying peace in Kentucky," Robbins said. Robbins will continue his testimony Tuesday. Gallion, who took the stand on Friday, is expected to return to the stand later this week.
The Wall Street Journal Law Blog also has an update:
Prosecutors allege that as part of the fraud, the three failed to tell clients how much the total settlement was for, threatened many with a fine if they told their family members about the settlement and also failed to tell many that some of the settlement money was going into a non-profit. The three Lexington-area lawyers deposited millions of the settlement money into their own accounts after the settlement was reached in 2001 and then later moved some of that money back into the settlement account after the Kentucky Bar Association issued a subpoena asking about the details of the settlement, the indictment alleges.
Robbins testified that the judge decides if and when clients are notified in a class action. “It is the judge’s responsibility to decide when notice should be given and what that notice should consist of.”
Procedure in the Supreme Court
The Supreme Court issued its opinion in Republic of the Philippines v. Pimentel (06-1204), a Rule 19 case (failure to join a necessary party) arising out of a human rights mass tort action against Marcos. The opinion can be found here. Justice Kennedy writing for the majority overturned the 9th Circuit opinion and held that the case must be dismissed under Rule 19. I'm wondering whether I should add this to my civ pro syllabus this fall. Hopefully we'll hear more about the opinion soon from Howard Erichson, who blogged on the case in December (see here).
The Supreme Court also issued its opinion on Taylor v. Sturgell (07-371), with Justice Ginsburg writing the unanimous court disapproving of the doctrine of "virtual representation," reversing and remanding the case. The opinion can be found here. Erichson's take on the oral argument on this blog can be found here. Erichson got what he asked for!
All this breaking news thanks to Scotusblog.
June 10, 2008
Pet Owners Seek Class Action Over Food Additives
The Daily Business Review reports that animal owners are seeking class certification over a new type of pet food class action that resembles a false-advertising claim. They claim that certain advertisements make false claims about the contents of pet food, when in reality the food contains unsavory ingredients. Here's an excerpt:
The pet food companies claimed they are allowed to use words, such as "complete and balanced," "veterinarian recommended" and "natural" in advertising as authorized by the Association of American Feed Control Officials and approved by U.S. Food and Drug Administration. The defense claims the allegations in the lawsuit castigating the entire pet food industry are culled from the Internet.
Altonaga didn't buy it.
"Defendants do not assert that the FDA or any other regulatory body has specifically approved the advertisement or statements at issue in this action, and nothing in the AAFCO standards authorizes defendants to engage in false advertising," Altonaga wrote in her order.
The 84-page, fourth-amended complaint filed April 11 names seven pet food manufacturers: Tennessee-based Mars Petcare, Ohio-based Iams, Kansas-headquartered Hill's Pet Nutrition -- makers of Science Diet, California-based Del Monte Foods, Missouri-based Nestle Purina Petcare, California-based Nutro Products and California-based Natura Pet Products.
Also named are some large retailers: Target, Wal-Mart, Publix Supermarkets, Kroger and Albertsons, as well as pet specialty stores PetSmart, Pet Supermarket, Petco Animal Supplies and Pet Supplies "Plus/USA."
The pet owners seek damages and injunctive relief to prevent pet food companies from advertising their product is akin to human food.
One other defendant is Menu Foods, a Canadian-based packing concern, which really opened the door to litigation nationwide against pet food companies.
Last week, five pet food companies won preliminary court approval of a $24 million settlement in New Jersey of class action lawsuits for selling tainted food. The lawsuits were filed after Menu Foods said more than 180 brands of foods and treats needed to be recalled because they contained melamine-tainted wheat gluten imported from China. About 1,950 cats and 2,200 dogs died from kidney failure from eating melamine-contaminated pet food, according to the U.S. Justice Department.
The Florida lawsuit, though, takes a different path than the Menu Food class action litigation."I think this is a different case because it focuses on advertising as opposed to content of food and the damage done to pets," said attorney Marcos Jimenez, who represented retailers Safeway and Stop & Shop Supermarkets, which were dropped as defendants in the Florida case.
"It's more of a false advertising-type of case than product liability."
The lawsuit alleges defendants "humanize" pet food by, among other things, including pictures or drawings of human-grade ingredients. "Defendants' marketing makes numerous deceptive and/or false claims," the lawsuit alleges.
June 9, 2008
Supreme Court grants cert in Williams v. Philip Morris (again)
The Supreme Court today granted certiorari to hear another appeal concerning punitive damages in Williams v. Philip Morris, this time to decide whether the Oregon courts complied with the U.S. Supreme Court's earlier ruling in the case. Here's a link to the Oregon Supreme Court opinion in question, and an excerpt from the NY Times article by David Stout:
The United States Supreme Court will review a $79.5 million punitive-damages award against Philip Morris in the latest back-and-forth between the justices and the high court of Oregon. The last time the case was before the United States Supreme Court, the justices overturned the award by an Oregon jury on the ground that jurors might have improperly calculated the monetary figure to punish the cigarette maker, by weighing the harm the company caused to smokers other than Mr. Williams.
That ruling, on Feb. 20, 2007, sent the case back to the Oregon Supreme Court, which concluded in January that the award against Philip Morris could stand because the United States Supreme Court had acknowledged that harm to people not involved in the lawsuit could still play a role in the punitive-damages calculation “in the sense that it is relevant to showing the degree of reprehensibility of a defendant’s conduct.”
In announcing on Monday that it would look at the Williams case once again, the United States Supreme Court said it would not consider whether the amount of the judgment was constitutionally permissible. Rather, it would decide if the Oregon court’s January action was taken in defiance of the February 2007 ruling.
For earlier accounts of the Williams case on this blog, see here (on the Supreme Court's opinion and a related editorial), here (on a subsequent law review symposium), and for earlier accounts with links to articles, audio, and more, see here, here, here, here, here, here, and here.
Two Perspectives on Bill Lerach
Conde Nast's Portfolio.com's July issue features a story by Bill Lerach titled "I Am Gulity." New York Times writer Joe Nocera offers a less flattering perspective in his story, "Serving Time, but Lacking Remorse." Both are interesting reads.