May 6, 2009
9/11 Statistical Discovery
What's going on with the 9/11 "First Responder" cases these days?
I just saw the following article in NYLJ - "Plan Implemented to Resolve Complex Suits in World Trade Center Cleanup." The special masters who are creating this plan are two eminent mass tort scholars: Aaron Twerski (formerly dean of Hofstra Law and now back on the faculty at Brooklyn) and James Henderson (on the faculty at Cornell Law). The plan involves creating a database of all the plaintiffs, and then conducting in depth discovery of a selected number of them to get a sense of how the cases develop, with the ultimate view of either having trials or settling the cases. Here is a description of the special masters' plan from the NYLJ article:
The plan divides the 9,090 cases into five groups, running from the first wave of cases filed to the last. The first four groups will contain 2,000 cases each. The fifth group will contain the remainder and any after-filed cases.
The special masters and counsel for both sides prepared severity charts that grade a person's condition on a scale from zero to four. They also selected six major disease categories in which to group the illnesses.
The plan kicked off on Jan. 1 and within 40 days, plaintiffs in the first group of 2,000, Group A, completed a subset of the data fields that detailed their disease rankings, duration of exposure at Ground Zero and pre-existing disorders.
Ten days later, the special masters selected from this group the 200 cases ranked most severe, 25 additional cases for diseases that are not necessarily included in the severity chart, and an additional 400 cases at random.
The database for the 200 most severe cases and the 25 additional cases will be completed by April 1. Within five days, both sides and the judge will select the first six sample cases.
Completion of the database for the 400 cases chosen at random is due in late May, after which each party will choose two more cases and the judge picks another two. Those 400 cases will proceed along on discovery only, with no schedule set for motion or trials.
I haven't seen whether the six sample cases that were to be selected in April actually were selected, but will post then I find out. Judge Hellerstein, who is overseeing these cases, is quoted in the article as saying of the methodology: ""It allows the parties to get a good sense of the strengths and weaknesses of all the cases."
This approach shares some similarities with the bellwether trials procedure I describe in a recent article. (See Lahav, Bellwether Trials, available on SSRN). What is interesting about this form of statistical adjudication is that it addresses the discovery phase and illustrates the extent to which discovery really makes or breaks a litigation, rather than trial.
Weinstein: Some Pessimism About Aggregate Litigation
Judge Weinstein has published a short essay on the administration of complex litigations in a new on-line publication of the Cardozo Law Review called De Novo. The essay, entitled "Preliminary Reflections on the Administration of Complex Litigations" describes a few litigations in which the Judge acted as architecht of a large-scale settlement (what has been described as a quasi-administrative agency).
Judge Weinstein closes on a pessimistic note, arguing that the appellate courts have been so inhospitable to class actions and aggregations that it will now fall to regulators to prevent mass claims rather than the courts to adjudicate them. He writes: "There is a general hostility, I believe, particularly at the
appellate level, to class actions and other devices for efficient
administration of mass litigation." And he ends by writing "In the end, I must reluctantly conclude that the law—and
certainly I—have failed to rise sufficiently to meet the challenges of
modern litigation. We have not served the people as well as we should
The model for adjudication of mass torts was initially individual litigation, which gave way in the 1980's and 1990's to an administrative model. (For a great article making this argument see Richard Negareda, From Tort to Adminsitration in the Michigan Law Review - which for some reason the author has not put on SSRN, but when he does I shall link to it). Today the adminsitrative model still has some traction, but it seems that things are shifting. Zyprexia and Vioxx are far different than Agent Orange was. We're seeing a different type of judicial involvement which is geared more towards information gathering than actual adjudication, more private control over settlements, the total failure of the class action device to offer closer and the mechanism for an administrative regime. So what is next for mass torts? Can the current developments still be described as an "administrative" regime or is this something closer to an insurance model?
May 5, 2009
Supreme Court Ruling Makes Government Recovery More Difficult in Toxic Torts
In Burlington Northern & Santa Fe Railway Co. v. United States, the Supreme Court ruled 8 to 1 to limit corporate liability under Superfund. Here's an except from Adam Liptak's article in the New York Times:
The federal government had sought to hold the Shell Oil Company responsible for selling pesticides to the business, where the chemicals routinely leaked and spilled. The distribution business, Brown & Bryant, later became insolvent and ceased operations.
Shell argued that it could not be held responsible for the spills because it did not qualify under the relevant part of the Superfund law, which applies to companies that “arranged for disposal” of hazardous substances. Justice John Paul Stevens, writing for the majority in the 8-to-1 decision, said the statutory language applied only when companies took “intentional steps to dispose of a hazardous substance.”
“Shell’s mere knowledge that spills and leaks continued to occur” with each delivery, Justice Stevens continued, “is insufficient grounds for concluding that Shell ‘arranged for’ the disposal.”
In dissent, Justice Ruth Bader Ginsburg wrote that Shell was “well aware” that its deliveries “directly and routinely” resulted in spills and leaks for more than 20 years. She added that she would have placed the cleanup costs on a company “whose activities contributed to the contamination rather than on the taxpaying public.”
May 4, 2009
Cert Granted in Important Class Action Case
The Supreme Court today granted certification in Shady Grove Orthopedic Assoc., P.A. v. Allstate Insurance Co. (docket no. 08-1008). This may be a case that decides the future of the much-maligned procedural rule - the money damages class action. The case concerns allegations against Allstate arising out of payments of claims for auto accidents under New York's no fault auto insurance regime.
Here is the outline of the case: In cases where a statute creates a penalty or provides for a minimum measure of recovery, New York law prohibits the certification of a class action unless the statute specifically permits the class action device to be used. (NY Civil Practice Law and Rules Sec. 901(b)). The plaintiffs sought to bring a class action in Federal Court against Allstate for violating provisions in New York's no fault insurance regime. The lower federal courts (district court and 2nd Circuit) dismissed the suit on the theory that the New York legislature had spoken and no class action could be certified. The plaintiffs argue that the state legislature cannot dictate the procedural rules used in the federal courts. Scotusblog has linked to the petitions for and against cert.
At stake are the uniformity of the federal rules in diversity cases, as well as the right of states to regulate (or limit regulation) of business through statutory penalties. It provides the court with an opportunity to revisit the intersection between the Erie doctrine and the federal rules.
The class action is in some ways a special case because it illustrates in an obvious way the uneasy relationship between substance and procedure. For example, consider a law that creates a statutory penalty of $1000 for the selling of private information by telecom companies. A single person bringing a claim cannot justify the cost of suit. In that case, the law has no bite. But if the suit is brought as a class action on behalf of all telecom customers, one million customers means a one billion dollar statutory penalty for the company. Some opponents of the class action argue that class actions violate due process because it can lead to the distortion of individual claims. Others argue that class actions are a form of "blackmail" for this reason - even if the claims are weak, the risk of loss is too high and requires settlement. Even those that think class actions are a good idea because they permit private parties to regulate misconduct that would otherwise go unpunished must admit that the class action device changes the nature of litigation - they just think it changes it in a beneficial way for society.
But anyone who was once a first year law student will remember that all procedural rules to some extent share this quality. For example, consider a rule that requires individual service of process on the defendant in some cases, but permits service of process to any responsible adult in other cases. This rule can alter the outcome of the case and is therefore substantive in some sense, but the Supreme Court in Hanna v. Plumer held that this is fundamentally a procedural rule. In that case, the Federal Rule (which did not require service on individual defendant) trumped the state rule (which did).
The last time something like this came up was in Gasperini v. Center for the Humanities. In that case, the Supreme Court held that a New York statute dictating a more stringent standard for remittitur should be followed in the federal courts. If the Court requires the federal courts to apply the New York ban on class actions, this would result in a further fragmentation of the FRCP and perhaps eventually lead to a regime where state procedure is applied in diversity cases.
I have not even addressed the question of whether the New York statute is a good idea - that is, whether the class action should be a default rule available in all cases or be specially required by legislatures. I am sure that this will be to some extent the focus of the Supreme Court. But since the federal rules are structured to be trans-substantive (that is, to apply the same to all cases), a policy-based ruling that the New York legislature is right to carve out the class action will mean a significant change to the Court's approach to the federal rules. This change that has already been signaled in the Court's recent pleadings jurisprudence. We'll find out more when Ashcroft v. Iqbal (this link is to Scotusblog on that case) comes down later this term.