October 9, 2009
Fen-Phen Fee of $567 Million
The Third Circuit upheld a fee of $567 million yesterday in the In re Diet Drugs Products Liability Litigation case noting that the amount "through extraordinarily large, is not excessive." Here's an excerpt of the Legal Intelligencer's story:
The ruling is a victory for attorney Michael D. Fishbein of Levin Fishbein Sedran & Berman, who argued in defense of the fee award to the 72 firms that had logged more than 350,000 hours on the case.
It was a setback for two lawyers who led the challenge -- Brian S. Riepen of Dallas and Raymond Valori of Weston, Fla.
Riepen argued that the process Bartle used in calculating the fee award lacked the transparency courts require in common fund cases.
Jordan disagreed, saying: "[T]he fee proceedings were amply transparent under our precedent. Indeed, it is difficult to discern what the District Court reasonably could have done to increase the level of transparency."
Riepen argued that Bartle should have considered and made public the class counsel's individual billing records, but Jordan said, "[W]e have held that courts need not always engage in that time-consuming process."
In a separate appeal, Valori had argued that he was unfairly forced to contribute to the fee award from the fees he had earned through clients who opted out of the fen-phen settlement -- despite the fact that he never took advantage of the joint discovery conducted by the class action lawyers.
Valori also argued that Bartle failed to make the proper findings to support his ultimate conclusion that the $567 million in fees was reasonable.
Jordan disagreed, saying Bartle had made a series of findings that amply supported the fee award, including the finding that the work of class counsel yielded a $6.44 billion settlement fund that benefited more than 800,000 class members.
October 8, 2009
Toxic Tort Damages Class Action Certified Based on Aggregate Proof
In Shar v. Raytheon, ---- F.R.D. ---, 2009 WL 3193152, M.D.Fla. 2009 (Sept. 30, 2009), the Middle District of Florida District Court approved a toxic tort class action arising out of the contamination of groundwater near a Raytheon plant in St. Petersburg, Florida.
The biggest obstacle to class certification was the predominance requirement. For a money damages class action to be certified, the plaitniff class representative must show that class issues predominate over individual issues. Here the defendant argued that individual issues predominated - particularly with respect to properly devaluation due to the contamination. The District Cout heard expert testimony about the ability of the experts to create a model to do what they call a "mass appraisal." From reading the opinion, it seems to me that the fact that the local county appraiser uses a similar model was critical to the court's decision.
The court refused to hold a Daubert hearing prior to certification, raising questions that are addressed in an excellent recent article by Richard Nagareda about the relationship between class certification, the merits and aggregate proof. See Nagareda, Class Certification in the Age of Aggregate Proof, on SSRN.
(hat tip BNA Class Action Reporter)
October 7, 2009
Chinese Drywall Litigation Update
The Sarasota Herald-Tribune reported yesterday that Florida's Senate Community Affairs Committee held a hearing to discuss both legislative and state agency action to prevent builders from using tainted Chinese drywall. The article reports that Florida is considering the following legislative action:
- Providing relief on mortgage payment for homeowners trying to rehabilitate their homes;
- Developing a standard for remediating homes and certifying them as being free from the drywall problems
- Allowing homeowners to receive a tax break to offset their rehabilitation costs; and
- Providing help to homeowners trying to deal with insurance companies over the cost of the home rehabilitation.
UPDATE: New York Times story can be found here.
How Transparent Are Class Action Outcomes?
In a paper that I somehow missed, Bill Rubenstein (Harvard) and Nicholas Pace (RAND) demonstrate that class action outcomes are not transparent. The paper is called "How Transparent Are Class Action Outcomes" and is available on Rubenstein's website here and SSRN. They write:
This paper examines the extent to which claiming data are available and recommends ways to increase transparency in this area. We reviewed the official court files in a sample of 31 class action settlements and we also made direct inquiries to the judges, lawyers, and settlement administrators in another set of 57 cases. Searching through the case files and communicating with the participants, we were able to gain access to data in fewer than one of five closed cases. Despite the significant time and effort we put into the task, the final outcomes of four of five class action cases were beyond our discovery. It is not that the data are non-existent – claims administrators or parties certainly have them - it is, rather, that they are secreted away. The outcomes of publicly approved settlements lie locked in private files.
Why should the reader care? Here is there analysis:
We argue that this is a problem for three reasons: because the case outcomes might not be all that they purport to be; because the lessons that they could teach – for example, about which approaches work best – are lost to secrecy; and because the public record is unnecessarily incomplete and public access unnecessarily thwarted. We end the paper by proposing a set of solutions, including requiring parties to report back to the court on the final claiming data, publicizing this data, and creating a central repository for it.
Lack of transparency is one of the most significant problems in our system. Information can be obscure not only when it is secreted away, as in this RAND study, but also when it is presented in such a complicated way or in a way calculated to put off all but the most dogged researchers -- e.g. the "fine print" -- that it is impossible for anyone but an expert to understand.
October 6, 2009
Martin Redish et al. on Cy Pres Relief and the Pathologies of the Modern Class Action
Martin Redish, Peter Julian, and Samantha Zyontz (all of Northwestern) have a new paper, Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis. Here's Redish's description:
Food Safety - Put a Trial Lawyer out of Business
Bob Marler, noted food borne illness lawyer, is sending T-Shirts that say "Put A Trial Lawyer Out of Business" to Senators today to advocate for better regulation of foodstuffs.
See the post here. ADL