January 19, 2008
Burbank on CAFA's Historical Context
Steve Burbank (Penn) has posted his new article, The Class Action Fairness Act of 2005 in Historical Context: A Preliminary View, on SSRN. Here’s the abstract:
This article sets CAFA in the contexts of the history of federal diversity of citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court effectively to police interstate forum shopping through constitutional control of personal jurisdiction or choice of law and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I conclude that it was not unreasonable for Congress to assert a federal interest in regulating the process by which and the forums in which nationwide and multistate class action decisions are made. To be sure, the interest in question bears little relation to the historic account of diversity jurisdiction with which we are familiar. But, as Section IV demonstrates, it is consistent with the policy that the Supreme Court in fact pursued when umpiring ordinary diversity litigation in the late nineteenth and early twentieth centuries, and consistent as well with the policy that Congress pursued in its 1958 amendments to the diversity statute.
I reach a very different conclusion with respect to the numerous class actions within CAFA's reach that are not in any meaningful sense "multistate." The 1958 Congress left in place (if it did not enhance) the instruments of countervailing power for plaintiffs that had developed in the system and that made the fictions of corporate citizenship tolerable. The 2005 Congress dismantled those instruments in order to open federal courts to multistate class actions. It conveniently forgot them when it came time to fashion exceptions. In the process, Congress neglected the critical role they played in equilibrating not just plaintiffs' and defendants', but federal and state, interests. Ultimately, a combination of special interest overreaching, abetted by the fictions of corporate citizenship, and confusion about legislative aims, abetted by the institutional federal judiciary's schizophrenia regarding overlapping class actions, led Congress to lose sight of its duty, when fashioning CAFA's exceptions, to preserve the "happy relation of States to Nation."
Vioxx Settlement Update
On Friday, Judge Fallon held a status conference on the Vioxx settlement. As reported by the Wall Street Journal this morning, the parties announced that roughly 57,100 claimants out of some 60,100 (upwards of 95%) registered their cases by January 15. You may recall that Merck needed only 85% to keep the deal alive. I mentioned in an earlier post that some plaintiffs attorneys filed an emergency motion objecting to the settlement requirement that each attorney recommend the deal to all of their clients. This motion has been withdrawn in light of a "clarification" stating that "Each Enrolling Counsel is expected to exercise his or her independent judgment in the best interest of each client individually before determining whether to recommend enrollment in the Program." Here’s a short excerpt from the Wall Street Journal’s article, "Merck’s Prospects Brighten for Vioxx Settlement:"
Lawyers who contested that provision had filed motions citing ethical obligations to give clients individual counsel that isn't predicated on potential conflicts of interest. They have withdrawn the motions or indicated their intention to do so, according to Kent Jarrell, Merck's Vioxx legal spokesman. "There are no pending motions anywhere" related to the settlement plan, he said.
The attorneys appear to have been mollified by an addition to the deal that says, "Each Enrolling Counsel is expected to exercise his or her independent judgment in the best interest of each client individually before determining whether to recommend enrollment in the Program." Lawyers for both sides said this is a point of clarification but not a substantive change.
The real test of the deal's viability will come next month, when 85% of the 57,100 claimants must enroll their cases by submitting releases and medical records. The deadline is Feb. 29. Mr. Jarrell says Merck, of Whitehouse Station, N.J., expects that threshold will be met and that 3,065 claimants already have begun to enroll.
January 18, 2008
Supreme Court Grants Cert in Two Preemption Cases
The Supreme Court today granted cert in two preemption cases that will have significance for mass tort litigation. In Wyeth v. Levine, No. 06-1249, the Court will decide whether the FDA's prescription drug labeling judgments preempt state law liability claims for failure to warn. In a case involving Wyeth's anti-nausea drug Phenergan, the Vermont Supreme Court ruled that the FDA regs only provide a floor on labeling requirements, so states are free to enforce their own. In Itria Group v. Good, No. 07-562, the Court is asked to decide whether federal law preempts state-law challenges to FTC-authorized statements in cigarette advertising about "light" or "low tar" cigarettes.
You can see brief descriptions of these cases on ScotusBlog. I'm sure more will follow from the defense perspective on the Drug and Device Law blog. Public Citizen is a good resource for the consumer's perspective on this issue.
January 16, 2008
Cert Grant in Taylor v. Sturgell and Preclusion
Last Friday the Supreme Court granted cert in Taylor v. Sturgell, Case No. 07-371. The question presented is: "Can a party be precluded from bringing a claim, under a theory of ‘virtual representation,’ and thereby denied the due process right to a day in court, when the party had no legal relationship with any party to the previous litigation and did not receive notice of that litigation?" Although this issue has been contemplated in the class context by Phillips Petroleum Co. v. Shutts and Eisen, the Court’s decision in Taylor could affect nonclass aggregation even though the issue is presented in a FOIA context.
Here are links to the Supreme Court’s grant of cert., the D.C. Circuit Court’s opinion, Petition for Writ of Certiorari, Brief in Opposition of Cert, Brief in Opposition of Cert (United States), and Petitioner’s Reply. Thanks to SCOTUSblog for the tip.
January 15, 2008
Bone on Rule 68, Settlement and the Purpose of the FRCP
Robert Bone (BU Law) recently posted a fascinating article on SSRN entitled "To Encourage Settlement: Rule 68, Offers of Judgment and the History of the Federal Rules of Civil Procedure." The piece is forthcoming in the Northwestern Law Review. While not directly about mass tort litigation, this article provides insights into the push towards settlement which is a (if not the) central feature of mass torts. Think of Richard Nagareda's new book: Mass Torts in a World of Settlement. Bone reminds us of the changes that not only the procedural system but also our perception of what procedure is for over the past forty years. Here is the abstract:
Rule 68, the offer of judgment rule, has been described as “among the most enigmatic of the Federal Rules of Civil Procedure.” This Rule allows a defendant to serve an offer of judgment on the plaintiff and makes the plaintiff who rejects the offer liable for post-offer costs if she fails to improve on the offer at trial. It is universally accepted today that Rule 68 was adopted to encourage settlements, but the Rule’s text makes it an extremely poor settlement device. The Rule operates only one-way (in favor of defendants); the penalty is too small to be meaningful; the requirement of a judgment (rather than just a settlement) discourages its use, and the Rule’s timing requirements are puzzling. The mystery is why intelligent lawyers and judges in 1938 would have drafted such a poor settlement promotion tool. This Article solves that mystery. Contrary to the conventional view, the 1938 drafters did not intend Rule 68 to encourage settlement in the way we understand that today. They adopted the offer of judgment rule that existed in state practice, the primary purpose of which was litigation fairness not settlement promotion. The state rules aimed to prevent plaintiffs from imposing costs unfairly when the defendant offered everything the plaintiff was entitled to receive from trial. The text of Rule 68 makes much more sense when it is viewed in fairness terms. The prevailing settlement promotion view became entrenched in the 1970s and 1980s, when concerns about litigation cost, case backlog, and litigation delay grew acute and interest in settling cases intensified. Because the settlement promotion view has caused problems for interpretation of the Rule and for efforts to revise it, clarifying the history of Rule 68 is important. Moreover, empirical work on Rule 68 is nearing completion and the Advisory Committee is considering another look at the Rule, so the time is ripe for a clearer understanding. With the FRCP about to celebrate their seventieth anniversary, the history of Rule 68 also sheds light on two of the most important changes in federal civil procedure over the past seventy years: the rise of settlement and the politicization of the rulemaking process.
I think this will prove to be an important article. ADL
January 14, 2008
Erichson on CAFA
I posted my new paper -- CAFA's Impact on Class Action Lawyers -- on SSRN. The article examines data on forum selection and claim selection in the wake of the Class Action Fairness Act, in an effort to understand the statute's impact on the legal profession. Post-CAFA forum selection in class actions focuses less on particular counties in state court and more on federal courts within circuits with relatively favorable law on class certification. Post-CAFA claim selection has shifted away from personal injury torts and toward contract, fraud, and federal question claims. Taken together, these adaptations by plaintiffs' lawyers appear likely to benefit the dominant class action law firms. Along the way, the article looks at CAFA in the context of other recent class action reforms, and especially as a reflection of popular and political mistrust of class action plaintiffs' lawyers. Here's the abstract:
The Class Action Fairness Act of 2005 (CAFA) reflected a profound mistrust of class action lawyers. Three years after its enactment, examination of lawyers' adaptation strategies offers an emerging picture of the statute's impact on class actions and class action lawyers. CAFA, like the Private Securities Litigation Reform Act a decade earlier, shifted class action practice in ways that appear likely to strengthen the upper tier of the plaintiff class action bar. CAFA has affected not only the division of labor between state and federal court, but also horizontal forum selection among federal courts and class action claim selection. Analysis of these effects suggests that CAFA is achieving some of its stated objectives but is unlikely to squelch class actions or to disempower leading members of the class action bar.