Saturday, November 28, 2009
Last Monday Judge John Keenan of the Southern District of New York dismissed the second of three bellwether cases set for trial on Merck's osteoporosis drug, Fosamax. As David Bario of The American Lawyer reports, "the plaintiff in the second test case, a 74-year-old Mississippian named Bessie Flemings, had failed to present admissible evidence of specific causation tying her jaw problems to Fosamax." Judge Keenan found that one of Fleming's medical experts had no opinion and that the other did not qualify as an expert. Consequently, Fleming couldn't establish causation under Mississippi's Product Liability Act.
The first bellwether trial ended in a mistrial after a juror complained about physical threats from other jurors. That case is set for a new trial in the spring and the third test case is set for trial in April of 2010. Judge Keenan still has roughly 900 Fosamax cases consolidated before him through multi-district litigation.
Friday, November 27, 2009
Earlier this week, a Florida jury returned a $300 million verdict in Lucinda Naugle's individual lawsuit against Philip Morris. The jury awarded $56 million in compensatory damages plus $244 million in punitive damages. Here's a WSJ Health Blog post, as well as an editorial in today's NY Times urging that "There should be more lawsuits seeking not only monetary damages, but changes in how the tobacco industry markets its products."
The Naugle action is one of over 8000 post-Engle lawsuits in Florida. Engle was the massive statewide Florida class action against the tobacco industry that resulted in a 12-figure punitive damages verdict against the cigarette companies. When the Florida Supreme Court decertified the class in 2006, the classwide punitive damages verdict was lost, but the Florida Supreme Court held that the classwide factual findings would be given preclusive effect in subsequent individual trials. Thus, when Engle class members (Florida smokers) go to trial on cigarette claims, certain facts are already established without the need for new proof: that nicotine is addictive, that cigarettes cause certain diseases, that the tobacco companies knew of certain dangers but failed to disclose that information, and so on. The post-Engle individual lawsuits began to reach trial this year, and so far they have mostly resulted in big wins for plaintiffs.
As I commented on this blog nine months ago, if the post-Engle plaintiffs continue to win at this rate, it may turn out that the Florida Supreme Court's decertification of the class action -- which at the time seemed like an important victory for the tobacco industry -- was an even greater victory for tobacco plaintiffs.
Tuesday, November 24, 2009
In the hormone replacement therapy (HRT) litigation, plaintiffs won substantial verdicts in two trials in state court in Pennsylvania. In the trial that concluded yesterday, the jury imposed punitive damages of $28 million on top of the $6.3 million in compensatory damages it had already awarded to plaintiff Donna Kendall. In the other case, the court yesterday unsealed a punitive damages verdict of $75 million for plaintiff Connie Barton, who had been awarded $3.7 million in compensatory damages. When the Barton punitive verdict was reached in late October, the court took the unusual step of sealing the amount of punitives (see here and here) while the Kendall trial was pending. Here's an excerpt from today's Philadelphia Inquirer article:
Pfizer Inc. has been hit with more than $100 million in two punitive-damage awards - one decided and the other unsealed yesterday - from Philadelphia juries.
Both cases involve Prempro, a hormone-replacement drug made by Wyeth, which recently was acquired by Pfizer. Plaintiffs said the drug was linked to their breast cancer.
The total includes $28 million awarded yesterday to Donna Kendall of Decatur, Ill.
In the second case, Philadelphia Common Pleas Court Judge Sandra Moss yesterday unsealed a verdict reached earlier this year that awarded $75 million in punitive damages to another Illinois resident, Connie Barton, over her Prempro-linked breast cancer. ...
About 1,500 of 10,000 similar cases are pending in Philadelphia, a common jurisdiction for large liability cases, attorneys say.
With the momentum in plaintiffs' favor and 10,000 cases remaining, one has to wonder whether Pfizer will seek some sort of global settlement. We can't help comparing Pfizer's position to the position of Merck before it settled the Vioxx litigation. After a similar but slightly higher number of trials, Merck abandoned its try-every-case-individually strategy and negotiated a mass aggregate settlement. Merck, however, settled when it had a favorable trial record; so far the defendants have not prevailed in most of the HRT trials.
Wednesday, November 18, 2009
In my previous post pointing readers to Tim Lytton's thought provoking post on TortsProfBlog, I neglected to mention our own Byron Stier's work on the same issue. Interested readers might look to his piece, Jackpot Justice available on SSRN. Here is the abstract:
Mass tort scholars, practitioners, and judges struggle with determining the most efficient approach to adjudicate sometimes tens of thousands of cases. Favoring class actions, mass tort scholars and judges have assumed that litigating any issue once is best. But while litigating any one issue could conceivably save attorneys' fees and court resources, a single adjudication of thousands of mass tort claims is unlikely to further tort goals of corrective justice, efficiency, or compensation in a reliable way. That is because, as recent empirical research on jury behavior shows, any one jury's verdict may be an outlier on a potential bell curve of responses applying the law to the facts before it. Indeed, one aberrational, high jury claim valuation, if extrapolated to thousands of claims through a class action, may inappropriately bankrupt an entire industry. Similarly, one unusually low jury verdict might deny legions of plaintiffs the compensation that they deserve. To illustrate the problems of attempting to resolve a mass tort with a single jury, this Article discusses the Engle tobacco class action of Florida smokers, where the application of a single jury verdict to approximately 700,000 smokers appears to be an outlier verdict in light of prior juries' verdicts in Florida tobacco cases. In contrast, this Article argues that the use of multiple juries in individual cases is a superior method of resolving a mass tort. While the use of multiple juries in class actions to create statistically cobbled claim values has been rejected as violating due process and state tort law, no such problems accompany the approach espoused here: that individual-plaintiff lawsuits, each with its own jury, be tried and that the jury verdicts be used by mass tort litigants to develop claim values for broad mass tort settlement. In addition to remaining within the strictures of constitutional and tort law, this clustering of multiple juries around an accurate valuation of mass tort claims and the resulting likely settlement furthers both the procedural goal of litigant autonomy and the tort aims of efficiency, corrective justice, and compensation.
One question I ask in my work in progress is what makes a process that uses other people's jury verdicts as a predictor of your own award fair? Is this an evolving view of what fairness is in litigation?
Tuesday, November 17, 2009
Tim Lytton has a very interesting post up on Torts Prof Blog about the tort system and the accusations of a litigation lottery. Here is the link.
I am very interested in Lytton's critique. I think he is right that tort verdicts are not random like a lottery is. There are extreme cases, but they are pretty universally recognized as extreme and there are plenty of procedural mechanisms for controlling these rare, extraordinary awards through remittiturs, appeals, etc. Lytton is also right that there are no ways that I know of for controlling for the opposite -- people that don't file cases although they have meritorious cases or people who recieve compensation that is too low. (At least in most states and the federal courts because additur is the exception rather than the rule).
So overall I agree that calling the tort system a "lottery" is hyperbole that is counterproductive. But I am not sure about one thing: that cases can be "accurately" priced such that we can say that an outcome is erroneous in some objective way. Here I am not talking about liability, but rather case valuation, often the target of tort reformers.
I am currently working on an essay in which I argue that the valuation of tort cases is culturally based, contextual and therefore must be done comparitively. That is, a case is accurately valued when it is valued at an amount comparable to other cases. This should not be a one way ratchet (only bringing case values downwards rather than up). People concerned that case values are too high should look at the statistics - they are often surprisingly low compared to what media reports would indicate. See this post on state tort statistics for a flavor.
I hope to be able to post my essay on SSRN soon; interested readers can contact me directly.
Monday, November 16, 2009
Dan Levine, Pair of Plaintiffs Lawyers May Face Different Fates in 9th Circuit Disciplinary Action, The Recorder (discussing disciplinary action in Nicaraguan pesticides case).
Francis E. McGovern (Duke), The Second Generation of Dispute System Design: Reoccurring Problems and Potential Solutions, Ohio St. J. Disp. Resol. (2008) (posted on SSRN).
William H. Simon (Stanford & Columbia), Moral Freaks: Lawyers’ Ethics in Academic Perspective, Geo. J. Lgl. Ethics (forthcoming) (posted on SSRN).
Keith N. Hylton (Boston Univ.) & Haizhen Lin (Indiana), Trial Selection Theory and Evidence: A Review (posted on SSRN).
Neil Vidmar (Duke) & Mirya R. Holman (Duke), The Frequency, Predictability and Proportionality of Punitive Damages in State Courts (posted to SSRN).
Patrick M. Connors (Albany), Which Party Pays the Costs of Document Disclosure?, Pace L. Rev. (2009) (posted to SSRN).
Richard Nagareda has just posted "Embedded Aggregation in Civil Litigation" on SSRN. I saw him present this piece at NYU and it is worth reading. I always enjoy Nagareda's work and this is no exception. The Article does a good job of explaining the emergence of this idea of the "quasi" class action. As a rule of thumb, whenever one sees a doctrine with a "quasi" in front of it, legal categories are in the process of breaking down. Here is the abstract:
When one hears the term “aggregation” in civil litigation, the context that comes to mind involves the long-running debate over class actions. Viewed within its own terms, that debate tends to convey the impression that the world neatly divides itself into the mass effects somehow unique to class actions and the confined realm of one-on-one litigation. In the midst of this debate, a closely related set of issues has gone curiously underexplored. Here, the concern is not over some deviation from the one-on-one lawsuit. Rather, the basic suggestion is to circumscribe what an ostensible individual action may do in order to prevent that lawsuit from exerting some manner of binding force upon nonparties who are broadly similar to the parties involved. The idea, in other words, is to constrain what individual litigation may do, precisely because it is not a “de facto class action” empowered to act upon nonparties. Variations of this concern have emerged across what might seem an unrelated array of contexts: the Supreme Court’s 2008 decision in Taylor v. Sturgell, rejecting the procedural doctrine of “virtual representation”; the Court’s 2007 decision in Philip Morris USA v. Williams, regarding the constitutional due-process limits on punitive damages; and the multibillion-dollar deal reached in 2007 to resolve mass tort litigation over the prescription pain reliever Vioxx. This Article explains that there is something deeper going on here but that its nature and implications remain undertheorized. Each instance involves a more general phenomenon, what this Article delineates as “embedded aggregation.” In each, a doctrinal feature of what is ostensibly individual litigation – the scope of the right of action asserted, the nature of the remedy sought, or the character of the wrong alleged – gives rise to demands for the suit to bind nonparties in some fashion, beyond the ordinary stare decisis effect that any case might exert. Ironically, the features of Taylor, Williams, and the Vioxx litigation that make them situations of embedded aggregation also, in all likelihood, would defeat efforts to aggregate them overtly as class actions. The result is to leave the law today in a kind of procedural Catch-22, whereby embedded aggregation seemingly invites class-action treatment, but such treatment is unavailable due to the very features that make the situation one of embedded aggregation. This Article frames an emerging prescription for situations of embedded aggregation in a world in which the modern class action does not, and will not, realistically shoulder the entire regulatory load. The way out of the procedural Catch-22 in which the law finds itself consists of “hybridization” – the combination of individual actions with some manner of centralizing mechanism, just not always the unity of litigation generated by the class action device. Moving outside the parameters of the class action means shifting into new settings a similar need for a centralizing mechanism and, crucially, for legal regulation of the manner in which it may exercise coercive power. In so doing, this Article seeks to break down the prevalent supposition of a neat division between the perceived need for legal regulation of class actions and the supposedly benighted world of autonomous individual lawsuits. The time has come to move the conversation about aggregate procedure beyond the class action device – to broaden the menu of approaches available for our modern world of mass civil claims. Such an approach actually would remain more true to the historical emergence of the class action device over time than a prescription for either a vast expansion of that device or reflexive individualization in all situations of embedded aggregation. In addition, hybridization accords better with the emerging transnational conversation about the design of aggregate litigation procedures.
Friday, November 13, 2009
The Shady Grove case got me thinking about uniformity (or lack thereof) in class action law across the circuits and reminded me that in the MTBE Products Liability Litigation, Judge Scheindlin (SDNY) held that the interpretation of the requirements of Rule 23 of the Fourth Circuit (the transferor court) not the Second Circuit (the transferee court), would apply to that Multi-District Litigation. She wrote:
The requirements of class certification are inherently enmeshed with considerations of the trial, and under Lexecon the authority of the transferee court in multi-district proceedings ends once the pretrial proceedings are completed. “It would be neither just nor efficient to apply the law of this Circuit in considering class certification, and then force the transferor court to try a class action that it might never have certified.” FN42 Moreover, “[n]either party should be prejudiced in preparing for trial because the case was removed and transferred to another district in a different circuit.” FN43 “Thus, in considering a motion for class certification of state claims under Rule 23, the law of the transferor circuit controls because that is the law that will bind the trial court and class certification is an issue on which the Supreme Court has directed courts to ensure that the requirements of Rule 23 are satisfied for purposes of trial.”
In re MTBE Products Liability Litigation, 241 F.R.D. 185, 193 (2007).
Thursday, November 12, 2009
Samuel Issacharoff (NYU) & Robert Klonoff (Lewis & Clark) have just posted "The Public Value of Settlement" on SSRN. Here is the abstract:
This article, part of a symposium honoring the 25th anniversary of Owen Fiss’s Against Settlement, takes issue with the basic premise that settlement indicates defeat of the weak by the powerful, the poor by the rich, the injured by the wrongdoers. The argument is both empirical and normative. On the empirical side, this article challenges the basic claim advanced by Fiss and Marc Galanter that repeat players in the courts of justice are more likely to prevail because they will marshal and deploy greater resources. Over the past quarter century, the emergence of the well-heeled plaintiffs’ firm together with referral and other market organizing practices have allowed plaintiffs to fight and defeat institutional defendants across all sorts of mass harm cases. Normatively, this article challenges the assumption that the driving organizational framework of the court system should be derived from the structural injunction that characterized an episodic phase of the civil rights movement. Instead, resolution of mass harms has been and continues to be one of the great challenges of the judicial system, a process for which settlement is a critical and likely inescapable component.
Wednesday, November 11, 2009
We all know judges are hostile to mass tort class actions, but Myriam Gilles (Cardozo) argues that consumer class actions are also suffering the brunt of judicial hostility in an article with the excellent title "Class Dismissed: Contemporary Judicial Hostility to Small Claims Consumer Class Actions" now available on SSRN. Here is the abstract:
I start from the view that small-value consumer claims are a primary reason that class actions exist, and that without class actions many - if not most - of the wrongs perpetrated upon small-claims consumers would not be capable of redress. It would then seem to follow that the class action device should be readily available in small-claims consumer cases. And yet, over the past decade, federal district courts have repeatedly declined to certify class actions on grounds that are specific to small-claims consumer cases. Foremost among those grounds is the notion that the federal class action rule carries within it an implicit requirement of “ascertainability.” More specifically, courts have held that in order to certify a class, the identity of class members must be sufficiently ascertainable to ensure the efficacy of a subsequent distribution of damages. In practice, what this shadow standard of ascertainability has come to mean is that no matter how clear the evidence of wrongdoing, plaintiffs have no redress in the typical consumer case involving small retail transactions. This article examines the ascertainability doctrine as it is developing in the courts, and shows that the traditional goals of class actions - deterrence and compensation - cannot plausibly be said to animate this new certification requirement. Indeed, the ascertainability requirement readily sacrifices both deterrence and compensation in favor of an alternative value, namely, ensuring that compensation does not flow to uninjured parties. I end with a first-round effort to understand what really may be animating the ascertainability doctrine, suggesting that the explanation lies in a conception of class actions that is based on a private law model - i.e., a conception that demands unity among the injured parties, the prosecutors of civil actions, and the beneficiaries of remedies. Future work will seek to tease out the normative underpinnings of this private law model.
Tuesday, November 10, 2009
Monday, November 9, 2009
Scotusblog has a very nice recap of the Shady Grove oral argument, better than the real thing in my opinion. I was lucky to be teaching Erie last week in my civil procedure class and have been thinking a lot about this case.
Among other things, this case raises the question of whether a class action is a remedy, which would be "substantive" under Erie, or merely a method for dealing with large numbers of claims, which would be "procedural" under Erie. I think the class action is both things. It is a means to aggregate claims and permits large-scale remedial action that would otherwise be impossible because most people do not bring their small claims at all. The Court will have to choose between these competing interpretations.
The oral argument demonstrated to me that we do not have a good theory of what a class action is. If we buy entity theory (that the class action is an entity like a corporation) then to me the class looks more remedial. This would mean that in order to be consistent with Cohen v. Beneficial Loan, 337 U.S. 541 (1949) the Court would have to hold that the NY Rule trumps Rule 23. Why? In that case the Court reasoned that the state legislature wanted to limit costly derivative litigation and therefore the state rule regarding that type of litigation ought to govern regardless of Rule 23. (At that time Rule 23 governed derivative suits). Justice Ginsburg kept bringing up Cohen in the oral argument, so dealing with it is important. (Set aside for the moment what this interpretation means for the legitimacy of class actions under the Rules Enabling Act).
On the other hand, if the class action is simply a mechanism for aggregating similar individual cases, then the class looks more like a "housekeeping" rule. Under this theory, a class is nothing more than a collection of individual cases that plaintiffs are otherwise entitled to bring, and nothing about the class action changes that fact. Advocates of this version of the class action might be against cy pres distributions, for example, because the money doesn't go to individual class members which is the only place it belongs. If aggregation of individual claims is the theory of the class action, then the federal rule should govern because no change is wrought to the underlying substantive law by the aggregation - its just that all the small cases are adjudicated together. Nor does the class action create an inequity in the law because in state citizens can still bring their claims just as well. The availability of aggregation doesn't change that. In this view, Shady Grove is more like Hanna v. Plumer, 380 U.S. 460 (1965), where the Court upheld the federal rule on service of process.
In his recent book, Wholesale Justice, Martin Redish argues that the class action does distort the substantive causes of action brought by this mechanism and is therefore a violation of the Rules Enabling Act (which states that the federal rules cannot abridge enlarge or modify any substantive right). Redish is making an argument about democratic accountability, but his theory fits nicely with Ginsberg's apparent view of class actions from oral argument - that they are a remedy that alters the substantive law.
Proponents of class actions make similar arguments. Myriam Gilles has argued in an excellent article Exploding the Class Action Agency Costs Myth, that in a class action what matters is deterrence, not whether individuals actually get compensation. This theory is particularly resonant in statutory damages cases where the amount collected is small and uniform, perfectly suited to the class action mechanism. And the ability to bring statutory damages class actions are what is at stake in Shady Grove.
This brings me to what Justice Story, the author of Swift v. Tyson, would say about this. Story was the author of the first treatise of Equity in the U.S. and a big fan of distinguishing between law and equity. (The class action is a procedural mechanism with its roots in equity). He was also a staunch Federalist. His opinion in Swift requiring that federal judges apply a "general common law" in commercial cases (later expanded to all cases) was a move to consolidate power over the national economy in the federal government. We see echos of this in the Class Action Fairness Act (barely discussed at oral argument but I think quite relevant to the case), which brought class actions exceeding $5 million into federal court with some limited restrictions on local class actions. Erie recognized that the Swift rule did not bring the uniformity of law that it promised and overturned it. Its not clear to me that Erie is about uniformity at all. Ed Purcell in his wonderful book Brandeis and the Progressive Constitution, reads Erie as Brandeis' reaction against the centralization wrought by the Federal Rules, which were adopted the same year. Will Shady Grove, if it comes out in favor of the NY rule, be read as a reaction against the attempt at centralization wrought by CAFA? Or as a corporatist move by the Court? Or simply part of the larger struggle of this Court against litigation in general? (For an excellent discussion of this trend, see Andrew Siegel, The Court Against the Courts: Hostility to Litigation as a Theme in the Rehnquist Court's Jurisprudence, Siegel could write a great update to this piece based on Twombly, Iqbal and probably Shady Grove given how oral argument went).
Finally, would this case come out differently if the state law at stake favored class actions? There seemed to be an argument floating around that a rule favoring class actions would not be applied under Erie because the methods of certifying class actions is governed by Rule 23 and this would be a direct conflict, whereas the case at hand presents an indirect conflict because the state has banned class actions altogether for certain categories of cases. I don't really buy this one way ratchet idea - it seems to me that if you say that the state's interest in not having class actions is paramount, so too should the state's interest in enabling litigation be paramount.
Wednesday, November 4, 2009
My new paper, The Trouble with All-or-Nothing Settlements, is now available on SSRN. I presented it at last week's symposium in Kansas on "Aggregate Justice: Perspectives Ten Years After Amchem and Ortiz." The theme of the conference got me thinking about the shift in mass dispute resolution. The failed settlements in Amchem and Ortiz were driven by defendants' insistence on peace, and defendants today often demand similar comprehensiveness. Much of the action, however, has shifted from settlement class actions to non-class aggregate settlements. Rather than peace through Rule 23, defendants try to obtain peace by negotiating settlements with all-or-nothing clauses, mandatory withdrawal provisions, or other terms to ensure comprehensiveness. Too often, however, such all-or-nothing settlements lead to ethical problems. This paper is my attempt to unpack the various problems engendered by such deals. Here's the abstract:
When defendants settle litigation involving multiple plaintiffs, they often insist that they will settle only if they obtain releases from all or nearly all of the plaintiffs in the group. Judges, lawyers, and academics largely accept the drive for comprehensive settlements as a given, and many embrace such settlements as a positive goal. All-or-nothing settlements, however, create uncommon pressures and opportunities for abuse. Exploring a number of recent mass settlements that have led to disciplinary proceedings, civil litigation, and criminal prosecutions, this article shows the pressures and opportunities that arise out of defendants' insistence on bringing all claimants into a deal.
The article describes seven types of ethical problems created by demands for fully inclusive settlements. First, all-or-nothing settlements create client-client and lawyer-client conflicts of interest. Second, such settlements exacerbate problems concerning the allocation of settlement funds, including incentives to misallocate. Third, they create a risk of strategic hold-outs as savvy clients may attempt to extort additional money by withholding consent. Fourth, they create an incentive for lawyers to keep settlement money in reserve as a slush fund to ensure full participation, leading to problems of misallocation and client deception. Fifth, they generate loyalty problems by pressuring lawyers to withdraw from representing non-settling clients. Sixth, they create special problems concerning clients’ informed consent to aggregate settlements. And seventh, they introduce a risk of collusion as the interest of plaintiffs’ counsel aligns with the defendant’s interest in getting every plaintiff to sign on to the deal. Although all-or-nothing settlements provide peace for defendants and value for claimants, the troubles they engender suggest that the current love affair with comprehensive settlements - evident in academic writings, judicial pronouncements, and defendant demands - should be tempered by a realistic appreciation of the ethical downside.
I'd be very interested in any comments readers may have. If you have thoughts or suggestions either about the overall analysis or about any of the specific settlements discussed in the paper, please feel free to e-mail me directly or to comment on the blog.
Monday, November 2, 2009
The Supreme Court will be hearing oral arguments in Shady Grove Orthopedic v. Allstate today. This case is about the intersection between two perennial favorite topics among civil procedure enthusiasts: class actions and Erie.
Will Hanna survive Shady Grove? I'm betting on the FRCP.