December 13, 2008
CAFA's Local Class Action Exception
BNA reports that a class action for medical monitoring and other state law claims concerning mold was remanded to state court under the exception set forth in 28 U.S.C. 1332(d)(3) which provides that if the primary defendant and between 1/3 and 2/3 of the plaintiff class are citizens of the forum state, the case may be remanded to state court. See Sorrentino v. ASN Roosevelt Center, E.D.N.Y., No. 08-550 (12/1/08).
One of the key questions was what a "primary defendant" is under the statute. Here's what BNA says about that issue:
While the court noted that the term “primary defendant” is not defined in CAFA, the court noted that a different district court in New York (in Brook v. United Health Group Inc., 2007 U.S. Dist. LEXIS 73640 (S.D.N.Y. 2007)) last year noted the term “has variably been defined as one: ‘(1) who has the greater liability exposure; (2) is most able to satisfy a potential judgment; (3) is sued directly, as opposed to vicariously, or for indemnification or contribution; (4) is the subject of a significant portion of the claims asserted by plaintiffs; or (5) is the only defendant named in one particular cause of action.'”
December 12, 2008
Possible Candidates to Head FDA
Article in the Wall Street Journal -- Critics Top Shortlist for FDA Head, by Alicia Mundy. Here's an excerpt:
A doctor who once denounced Pfizer Inc. for holding a marketing event in a pool hall is leading President-elect Barack Obama's team formally assessing the troubled Food and Drug Administration, boosting his chances of becoming the next FDA commissioner.
Joshua Sharfstein, now head of the Baltimore Health Department, has tangled with the pharmaceutical industry on several occasions and would likely lead the agency to get tougher on drugs. Companies might benefit from his strong support of childhood vaccinations, however.
Several other candidates remain in the running for the top FDA post, and no decision appears imminent.
December 11, 2008
Moller on CAFA and Diversity Jurisdiction
Mark Moller, of DePaul University College of Law, has posted "A New Look at the Original Meaning of the Diversity Clause" on SSRN. Here's the abstract:
The 2005 Class Action Fairness Act, which allows federal courts to exercise diversity jurisdiction if members of a proposed class and the defendant reside in different states, raises a jurisdictional puzzle.
The puzzle was first identified by Brian Wolfman, Public Citizen's litigation director, in congressional testimony on CAFA. "When a proposed class action is filed," he argued, "the class does not yet exist and a constitutional 'controversy' exists only between the named plaintiffs and the defendant. Because there is no controversy between the absent class members... and the defendant... it is difficult to imagine how diversity jurisdiction can be constitutionally maintained [based on class members' citizenship] prior to certification of the class."
CAFA, in other words, forces us to ask whom an Article III "controversy" is "between" for purposes of establishing diversity jurisdiction.
In this article, I solve this puzzle. An Article III "controversy" subsists only "between" those subject to the court's "power to bind." Diversity jurisdiction is therefore limited to suits in which persons brought within that power are citizens of different states. Put another way, the constitutional reach of diversity jurisdiction and the due process limits on federal preclusion are, contrary to received wisdom, linked. I end by exploring the implications of this discovery for the constitutionality of CAFA.
Metrolink Chief's Conduct Before and After Crash
Article in the L.A. Times -- Crash thrusts Metrolink chief into the unwelcome limelight, by Jeff Gottlieb. Here's an excerpt:
He is one of those well-paid technocrats who makes sure things run smoothly, someone few people have heard of but so many depend on. Then something happens, and that cloak of invisibility disappears.
For David R. Solow, that moment occurred Sept. 12, when a Metrolink train crashed into a freight train in Chatsworth. Twenty-five people died and 135 were injured in the worst rail accident in modern state history. Suddenly Solow, chief executive of the Southern California Regional Rail Authority, which operates Metrolink, was much closer to the spotlight than he cared to be.
No member of Metrolink's board will say publicly that Solow's $220,000-a-year job is in jeopardy, but his performance is being scrutinized as never before. The board has appointed an 11-member panel composed mainly of academics and industry experts to examine the railroad's safety and operating procedures. The board also approved a review of Metrolink's emergency preparedness and crisis communications plans.
December 9, 2008
Monestier on Canadian Class Actions
Tanya Monestier of Queen's University has posted her article, Personal Jurisdiction Over Non-Resident Plaintiffs in Multi-Jurisdictional Class Actions: Have We Gone Down the Wrong Road?, on SSRN. Here's the abstract:
Canadian courts have recently been struggling with the question of personal jurisdiction over non-resident class members in multi-jurisdictional class actions. On what basis can an Ontario court, for instance, purport to bind a class member resident in British Columbia or Quebec? The loose consensus appears to be that a court in one province has personal jurisdiction over a class member in another province where there is a "real and substantial connection" between the plaintiff class and the adjudicating forum. However, a lack of consensus in the application of the real and substantial connection test has proved problematic for parties seeking finality in litigation. In particular, defendants cannot be assured that a settlement or judgment rendered in one province will in fact be enforceable in another, since the enforcing court may conclude that the adjudicating court did not have jurisdiction over non-resident class members under its view of the real and substantial connection test. There is thus the possibility that a defendant who has proceeded on the assumption that a settlement or judgment will be res judicata, will nonetheless be required to re-litigate the claim. This ultimately undermines the "order" and "fairness" which are said to lie at the heart of the Canadian conflict of laws.
This paper suggests that it is necessary to re-think whether a real and substantial connection is needed to ground jurisdiction over a non-resident plaintiff class. The real and substantial connection test was originally developed to govern the question of when courts can assume jurisdiction over an individual out-of-province defendant. The test cannot be readily transposed outside this context. Instead of focusing on the issue of whether there is a real and substantial connection between a non-resident plaintiff class and the adjudicating forum to support the assumption of jurisdiction, courts should re-orient their analysis towards ensuring that procedural safeguards are afforded to non-resident plaintiffs. If a non-resident class member is provided with sufficient notice, an opportunity to opt out and adequate representation, an adjudicating court should be viewed as jurisdictionally competent and its judgment accorded preclusive effect. Re-conceptualizing jurisdiction in this way eliminates the possibility that an enforcing court will be able to second-guess the adjudicating court's view on whether the real and substantial connection test has been satisfied and gives defendants a measure of control over the ultimate enforceability of a class judgment or settlement.
Resnik on CAFA
Judith Resnik recently posted her article, Lessons in Federalism from the 1960s Class Action Rule and the 2005 Class Action Fairness Act: 'The Political Safeguards' of Aggregate Translocal Actions, on SSRN. It recently appeared in the Pennsylvania Law Review. Here's the abstract:
What does the Class Action Fairness Act of 2005 (CAFA) teach us about federalism? A first lesson is that, when confronted with state-based decision making of which they disapprove, national lawmakers federalize rights, as they have repeatedly done throughout United States history. In 2005, Congress turned to the federal courts because CAFA's proponents believed that state courts were too welcoming of collective adjudication. CAFA is part of a cohort of enactments and doctrinal developments of this era that preempt state decision making and push litigants toward noncollective and nonadjudicative remedies such as privately sponsored arbitration programs. CAFA's reliance on federal courts to deal with aggregate litigation parallels decisions made in the 1960s to revise the Federal Rules of Civil Procedure to facilitate the aggregation of parties and claims. The mechanism of federalization is the same, but the goals are not. In the 1960s, Rule 23 was redrafted to expand class action opportunities for claimants in the federal courts. By easing access, rulemakers wanted to maximize the enforcement of federal rights, which they perceived to be under-protected in state courts, especially when state actors were charged with discrimination. In 2005, the purpose was, once again, to offer an alternative to state courts, perceived by then to have over-protected rights for various kinds of plaintiffs. Thus, a second lesson to be drawn from the enactment of CAFA is how quickly substantive "national" goals can change aimed now at deploying federal courts to very different ends.
Turning the question around to ask what federalism teaches us about CAFA yields other insights. A review of the history of the interactions between state and federal governance results in a third lesson, that efforts to centralize authority in the federal government and to exclude the states are not likely to endure. In this federation, national rule pronouncement regularly relies on local implementation. Fourth, local decision making does not occur in isolation. Rather, state policies and laws are regularly shaped through the interaction of state officials crossing their own borders as well as those of the nation. The interactions across localities have increased as government officials work, translocally as well as transnationally, through national organizations of local officials such as the U.S. Conference of Mayors, the National Governors Association, and the National League of Cities. While CAFA may try to centralize decision making at the national level in an effort to assert the United States' sovereign interests, pressures from local and transnational levels function as "political safeguards" that limit concentrations of power through countervailing mechanisms that produce other policy judgments.
From the density and richness of such translocal initiatives comes a fifth lesson: CAFA's efforts to diminish the role of aggregate-rights claiming will not succeed. Joint endeavors by local officials and their national organizations are themselves a form of aggregation, prompted by the need for collective responses to problems that affect large numbers of persons. Like the invention of the class action rules in the 1960s, the development of translocal organizations is likewise innovative. These national networks of local actors function as "political safeguards" that check exclusive national authority, but they are not themselves intrinsically "safe." Rather, their power raises questions that are familiar in the class action and political science literatures about the adequacy of representation by spokespersons for the group, the commonality of interests among members, and the opportunities of members to participate so as to inform and to monitor their representatives. Further, some of these national networks raise new questions for social movement theory, which has been focused on networks of nongovernmental organizations (NGOs) rather than on these voluntary national, private entities gaining authority by virtue of their members holding local and state offices. Thus, I propose capturing their presence through the term "transnational organizations of government actors," or TOGAs, as I begin below to interrogate their contributions both to federalism and to aggregation.
Lorillard Tobacco Company on Liberty in America -- Including Liberty to Re-Start Litigation Against Itself?
Interesting paid-advertisement op-ed by Lorillard Tobacco Company in the Opinion section of today's Wall Street Journal. Unfortunately, I can't find the ad online, so I'll have to type from my paper copy.
The headline is "No Choice, No Freedom." Lorillard begins by issuing what is a clarion call for any product-liability libertarian like me (and for disclosure, I represented R.J. Reynolds Tobacco Company in the 1990s). From the ad:
Freedom is the right to choose -- perhaps the most powerful act in our democracy. And nowhere else was that awesome responsibility better displayed than in the recent presidential election, the ultimate act of democratic choice.
Indeed, Americans know and understand the importance of choice. Choice underlies the values of our nation. It is the essence of individual character and ultimately leads to empowerment and engagement. We are all better off with it -- and oppose those who want to limit it.
Choice, of course, demands responsibility. Where that responsibility rests is often the crux of vigorous debate. Government reform and regulation have appropriate places in our society. But that government power to regulate must be balanced against misguided zeal that has the potential to restrict our freedom of choice. Taken too far, such an effort may turn negative and could threaten the basic concept of liberty that Americans have protected for more than 230 years.
It is in that context that Americans should be ever vigilant about the government's encroachment on people's right to choose the legal products they want to enjoy. Should Congress or an Executive Branch department or agency dictate whether we should drink diet soda or regular soda? Drive only certain types of cars? Eat in only certain types of restaurants? We believe the answers to all of those questions is "no." For the government to seek to eliminate that choice is troubling. For it to succeed could be dangerous, and would stamp out the core of the American spirit.
Well said, indeed. Then Lorillard turns to the specific issue -- Menthol cigarettes -- and here's where things get interesting:
With this in mind, we should consider a proposal, that some are advocating, to ban the use of menthol in cigarettes. They claim that menthol cigarettes confer a higher risk for tobacco-related diseases, or that menthol cigarettes are more addictive than non-menthol cigarettes.
And then the key sentence (italics added):
Yet, the existing body of scientific evidence does not support those conclusions.
Is Lorillard trying to re-start tobacco litigation against itself? Smokers who in the future get cancer or other illnesses and who have smoked Menthol cigarettes may sue for fraud and allege that they relied on Lorillard's comment that Menthol is not more dangerous than regular cigarettes. Such potential plaintiffs might hope to cull enough evidence of Menthol's additional danger to survive summary-judgment and put their claims before a jury that, despite voir dire attempts to exclude overt bias, might still be inclined against Lorillard from prior tobacco litigation and settlements. Plaintiffs would still also have to prove reliance on the statements, but the failure of smokers in the last litigation to show individual reliance didn't prevent a litigation firestorm, and plaintiffs' counsel have experimented (although so far lost) with arguments that individual reliance is not needed where the background public knowledge is changed.
Lorillard certainly should press its view before Congress that Menthol is not more dangerous that non-Menthol. But as a strategic matter, do they need to take out a mass-media ad to the public? Such an ad likely does little to create additional support (most Journal readers probably supported them already), but it does open Lorillard up to possible litigation.
And then the ad continues in an appeal to balanced scientific inquiry (and due consideration that Menthol might not be more dangerous) that might be seen by some as vaguely reminiscent of the 1954 Frank Statement that figured prominently in the last litigation. From today's ad:
Before Congress attempts to ban menthol cigarettes, which are smoked by nearly one-third of all smokers, they have a responsibility to know the facts and have all the evidence needed to make such an important decision. That is why Lorillard advocates for a proper scientific review based on sound information and scientific evidence and data.
Finally, the ad returns to apply its earlier pro-choice sentiment to tobacco:
Young people should not smoke, and we support efforts to keep them from starting. But, if adults, who can and should assess the risks of smoking, choose to smoke, then shouldn't they have the freedom to choose whether to smoke regular or menthol cigarettes?
We respect every individual's position on whether or not to smoke. We trust that this respect is reciprocal and the right of Americans to choose the legal products they want is equally cherished.
Setting aside the debate on the dangers of Menthol cigarettes, my verdict is that Lorillard is right on principle, wrong on strategy.
December 7, 2008
Paul Howard & Marie Gryphon on FDA Preemption of Tort Lawsuits
Paul Howard and Marie Gryphon, both of the Manhattan Institute, wrote an editorial, Manhattan Moment: The right prescription for drug safety, in the Examiner. (H/t to Point of Law.)
Jones Day's Robert Mittelstaedt and Chevron Case Involving Nigerian Plaintiffs Under Alien Tort Claims Act
AmLaw Daily profiles the Chevron jury verdict win obtained by Robert Mittelstaedt. (H/t to Point of Law.)