Tuesday, November 30, 2010
Kevin Clermont (Cornell) has posted a draft of his forthcoming PENNumbra piece, Class Certification's Preclusive Effects, on SSRN. Here's the abstract:
In September 2010, the Supreme Court granted certiorari in the controversial Baycol litigation. The central question will be whether, subsequent to a denial of class certification, preclusion can prevent an absentee from seeking to certify another class action on a similar claim. This Article answers that question in the affirmative, while warning that the preclusion is very limited in scope. It arrives at this answer by analogizing to the established doctrine of jurisdiction to determine no jurisdiction.
His first paragraph nicely lays out the issue he's addressing:
A federal court denies certification of a plaintiff class action, thereby declaring the absentees to be nonparties. One of those absentees then brings a class action on a similar claim in a different jurisdiction with an identical class-action rule, provoking the common defendant to invoke res judicata. Is the issue of certifiability subject to collateral estoppel? Academics might say "no," on the ground that res judicata normally does not bind nonparties. But the courts generally answer "yes," on the thought that no reasons sufficiently justify retrying the same issue as long as the class representative adequately represented the absentee in the certification attempt. Now the U.S. Supreme Court stands poised to enter the fray via the controversial Baycol case. (footnotes removed)
The case that Kevin's discussing is In re Baycol Prods. Litig., 593 F.3d 716 (8th Cir.), cert. granted sub nom., Smith v. Bayer Corp., 131 S. Ct. 61 (2010). The Eighth Circuit held that the "non-parties" were precluded from relitigating the question of class certification because their interests were adequately represented. Accordingly, it enjoined the plaintiffs from trying to relitigate class certification in West Virginia state court. Here's a link to a previous post on the case.
Wednesday, November 24, 2010
John Schwartz of the New York Times has an article in this morning's paper detailing the final settlement phase of the BP Oil Spill. The claims handling process includes a three-year program that requires anyone who agrees to a final settlement to give up the right to sue BP and other companies involved with the spill. Although the claims process is much quicker and, on the whole, has far fewer transaction costs than traditional litigation, we don't yet know what kind of long-term health effects the spill will have. As was the case in asbestos, it's hard to predict what the latent health effects might be.
Of note in the article is a link to the 12-page document laying out the claims process as well as a 48-page memo by John Goldberg (Harvard), which argues that claims from people and businesses near the beaches but not directly affected by the spill would not be entitled to recover through the traditional litigation process.
Tuesday, November 23, 2010
Last week, District Judge James Selna refused to dismiss the economic injury claims by Toyota owners who alleged that the unintended acceleration problems caused a decrease in their cars' value. The multi-district litigation includes more than 200 economic injury class actions and around 100 personal injury and wrongful death claims. Judge Selna will consider Toyota's motion to dismiss the cases alleging wrongful injury and death on December 9. Here's a link to the National Law Journal story.
Monday, November 22, 2010
Moira Herbst of Reuters has a short, but thoughtful piece analyzing the issues at play for a private claims administrator running a quasi-public claims fund. It's easy to sympathize in the abstract with Ken Feinberg's difficult situation in exploring what's appropriate in his unprecedented role; but with his firm being compensated at an average of $1,000 per hour (according to Herbst's analysis), he's not ultimately likely to get much sympathy.
The family who lost a son and granddaughter in the accident has come together with the man driving the Toyota to file a suit against Toyota for unintended acceleration. Jan Crawford of CBS has the story.
Sunday, November 21, 2010
Merck has won the second of three bellwether trials on Fosamax, Graves v. Merck & Co., 1:06-cv-05513 (S.D.N.Y.). Judith Graves, a Florida resident, sued the company and alleged that Fosamax (an osteoporosis drug) caused her jawbone to deteriorate. The jury asked the judge for the date of the first report from which Merck could have known of an association between Fosamax and jawbone problems and found that the report appeared six months after the plaintiff's problems started. Accordingly, jurors might've decided that Merck couldn't have known about the risks in time to warn the plaintiff.
Merck faces more than 1,500 claims in federal and state courts alleging various defects in Fosamax. So far it has won two of the three cases that have gone to a jury trial; the third awarded damages of $8 million to the plaintiff, which was reduced to $1.5 million.
Saturday, November 20, 2010
Reading yesterday’s New York Times article on the 9/11 Workers Settlement, I couldn’t help but think of the other-regarding preferences and psychological influences that played a role in garnering the requisite 95.1% agreement. The two claimants quoted in the article, Jennifer McNamara (whose firefighter husband died of colon cancer last year) and Kenny Specht, a retired firefighter with thyroid cancer, both framed their ultimate decision to participate in the settlement in terms of helping others within the community of plaintiffs. As described by the N.Y. Times, McNamara “explained to friends in a letter that she did not want to delay the settlement for the many plaintiffs who needed it to pay mortgages and medical bills.” Specht said, “I am not sure that holding out for a better offer will ever be something that is attainable.”
I’ve written about this internal group pressure in the past and how claimants might be able to use it to their benefit as opposed to lawyers using it for theirs. It does appear that Napoli Bern Ripka LLP held at least one town hall meeting (video footage available below), but I’m not sure whether claimants were encouraged or given opportunities to discuss the deal with one another or whether the lawyers did most of the talking. Given the claimants geographical proximity to one another in the 9/11 Workers Settlement as well as the closeness of the firefighting and police officers’ communities, it appears that altruism, reciprocity, and a concern for others' well-being within their community played a significant role in members’ decision to approve the settlement (though the settlement did not receive the 100% approval rate that would have paid out $712 million). Others simply appeared to be exhausted by the protracted litigation and wanted finality. Still others, at least 520 of them, opted out (or did not respond by the deadline). A New York Times article last August described several plaintiffs' difficult decision-making process.
Although the House of Representatives has approved a bill that would reopen the 9/11 Victim’s Compensation Fund, the Senate has yet to approve it and those who have signed on to the 9/11 Workers Settlement will be ineligible for compensation.
Here's a link to Napoli Bern's press release (with the percentage of claimants signing-on in each tier).
Friday, November 19, 2010
Each year the Civil Procedure Section of the AALS prepares a newsletter that aggregates various bits of information for the benefit of Civil Procedure teachers and scholars. One regular feature of that newsletter is “Upcoming Conferences.” If you have planned (or are otherwise aware of) a conference for calendar year 2011 and would like this newsletter to list the event, please send us the details—web links, calls for papers, etc. Even conferences with tentative plans and dates can be listed. Please send the details by December 5 to Thom Main at firstname.lastname@example.org.
The allocation neutral in the World Trade Center litigation reported today that 10,043 claimants have agreed to participate in the settlement. This number, which constitutes 95.1% of the 10,563 eligible claimants, apparently meets (just barely) the 95 percent threshold required under the terms of the settlement agreement. But the settlement agreement also required at least 90% participation and 95% participation by particular categories of claimants. The report filed today states that 87.4% eligible "Tier 1" claimants (2383 out of 2726) signed on. Does this mean that the settlement fails? Media reports suggest that the settlement is going forward, but I will be interested to find out whether all of the participation requirements were met.
In general, it comes as no surprise when a mass tort settlement meets a participation threshold, given that clients overwhelmingly follow their lawyers' advice to participate in a settlement. But the WTC litigation -- and particularly Judge Hellerstein's rejection of an earlier settlement proposal amid questions about whether a judge in a non-class action has any business "approving" or "disapproving" a settlement -- generated enough notoriety that reasonable observers might have wondered how claimants would react.
UPDATE/CLARIFICATION: The settlement agreement requires 90% participation by each category of claimants with "qualifying injuries" but does not require a specified percentage of participation by claimants with no qualifying injury. Tier 1 consists of claimants with no qualifying injury. Therefore, the participation levels do meet the requirement under the terms of the agreement.
Thursday, November 18, 2010
The results of how many plaintiffs signed on to the WTC Disaster Site Litigation Settlement, which required that 95% of the plaintiffs sign on for the settlement to go forward, will be announced at 1 PM tomorrow. Click here to see docket & documents online.
Interestingly, the allocation neutral overseeing this aspect of the settlement adminsitration is from Ohio - Matthew Garretson. His profile can be found here. Here is the description of the firm's work on allocating settlement proceedings to claimants:
Perhaps the hallmark of our settlement allocation service, GFRG helps ensure that similarly-situated claimants are treated the same under the methodology developed to allocate the settlement proceeds and to help ensure that every claimant is allocated a fair and equitable share of the settlement proceeds (taking into account the terms/conditions of the Settlement Agreement, the severity of the injury and the proof available).
The question of course is whether the terms of the settlement agreement - i.e. the matrix developed by the lawyers - fairly allocates funds and what data is used to make those determinations.
h/t Fred Mogul, WNYC.
Tuesday, November 16, 2010
Edward Brunet, an eminent civil procedure scholar and expert on arbitration, sent the following to me regarding the recent NY Times coverage of the AT&T Mobility case:
Adam Liptak’s excellent treatment of the AT&T Mobility oral argument would have been even better if he had just used this word: FEDERALISM..
The case and context of this case scream out unforgivable breaches of federalism policy. Both the Times coverage and oral argument undervalue federalism theory
The dispute is not one about state regulation of class action arbitration. Rather, the case concerns a dispute of state contract interpretation and asks simply whether the cell phone contract’s ban on class actions is unconscionable. This is a state contract law issue, traditionally left to the state because of respect for state common law regulation. There is very little federal contract law. Alternatively, the issue presented is one of consumer protection, a subject matter also left to state regulation. This litigation involves a double dose of federalism deference to the states based on questions of contract law and consumer protection
This analysis appears to have been understood by Justice Scalia who nicely asked whether the Supreme Court would “tell the State of California what it has to consider unconscionable?”
There exists a textual basis to reach the same result for the respondent. Under section 2 of the FAA the courts are to treat arbitration agreements as enforceable, except when matters of state contract law require a contrary result. The end of the prior sentence, termed the “savings clause of the FAA,” should control this case. Essentially section 2 requires that a court enforce as written agreements to arbitrate unless some rule of state contract doctrine(e.g., adhesion , covenant of good faith and fair dealing, unconscionablity, or lack of mutuality) requires the opposite result. Here the California Supreme Court offered what should have been the last word on the subject Its ability to do so advances federalism values in a collaborative manner not unlike the interactive federalism notions set forth by Professor Robert Shapiro.
This case has nothing to do with preemption despite the efforts of AT&T”S counsel to twist the case out of context. There is no difference between California’s law of unconcionability and federal law presented. Indeed, there is no relevant federal conflicting norm involving unconscionability. That should have been the end of the matter but kudos to AT&T counsel for a great job of (mis)framing the issue here to try to take advantage of a lame and disappointing group of arbitration preemption decisions. The Casarotto opinion of Justice Ginsburg used a strange preemption approach by asking whether arbitration had been “singled out” for special treatment and failed to follow a more conventional “obstacle” test used several years earlier by Chief Justice Rehnquist in the Volt decision. Under either test the respondent should prevail here The interpretation of the contract ban on class actions fails to single out arbitration and represents little threat to the FAA.
Readers who want more should consult the following: Brunet, The Minimal Role of Federalism and State Law in Arbitration, 8 Nev. L.J. 326 (2007) (arbitration symposium), Brunet, Speidel, Sternlight & Ware, Arbitration Law in America: A Critical Appraisal (Cambridge 2007); Robert Schapiro, Monophonic Preemption, 102 Nw. L. Rev.(2007).
* * * *
I am a big fan of both Brunet and Schapiro's work. ADL
Wednesday, November 10, 2010
The New York Times Sunday Magazine has a feature by Douglas McCollam about the lawyers suing BP. You can find it here: The Other Oil Cleanup. More analysis later.
The Supreme Court heard oral arguments yesterday in AT&T Mobility, LLC v. Vincent Concepcion, a case that will determine whether states can require businesses to include certain procedures (like class-wide arbitration) in their arbitration agreements. The "plain English" translation by SCOTUSblog is: "Does the Federal Arbitration Act prohibit states from mandating that class arbitration be available as part of every arbitration agreement?"
Monday, November 8, 2010
Although the following pieces are not specifically aimed at mass torts, they do bear on procedure more broadly and might be of interest:
Cathy Struve (Penn) has posted her article, "Institutional Practice, Procedural Uniformity, and As-Applied Challenges under the Rules Enabling Act," on SSRN. Here's the abstract:
Addressing the Supreme Court’s decision last Term in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., this symposium essay focuses on the debate between the plurality and Justice Stevens concerning the availability of as-applied challenges to the validity of rules promulgated under the Rules Enabling Act. Agreeing with Professor Allan Ides’ article in the same symposium, this essay argues that Justice Stevens’ proposed approach strikes a reasonable balance: State-specific as-applied invalidation of a federal rule should be permissible but rare.
A survey of debates over facial and as-applied review in other contexts shows that the choice among facial review, as-applied review, and a combination of the two depends on both the institutional setting and the nature of the constraint that forms the basis for the review. In the context of Enabling Act review of federal rules, as-applied review is not unprecedented, and it has a role to play. Though the rulemakers are attentive to the limits imposed by the Enabling Act, they may not always be able to foresee a rule’s future effects on substantive rights. Admitting the possibility of the occasional as-applied challenge to a rule’s validity permits questions of a rule’s effect on substantive rights to develop in the context of concrete cases, before judges who are likely to have some familiarity with the relevant substantive-law concerns. The information developed in such litigation can inform both a court’s evaluation of the rule’s application in the case before it and future deliberations of the rulemakers.
As-applied challenges can cause uncertainty, can be difficult to resolve, and can impair the nationally uniform application of the federal rules. But the costs of state-specific as-applied review could be controlled by requiring a strong showing before finding a rule invalid as applied. There already exist other features of federal court practice that currently produce significant inter-state procedural variation. And the federal system asks state courts to tolerate similar disuniformity in state procedure.
Adam Steinman (Seton Hall) has posted his article, "Our Class Action Federalism and the Rules Enabling Act after Shady Grove," on SSRN. Here's the abstract:
The intersection of federalism and class-action litigation has been an area of significant controversy in recent years. With the 2005 Class Action Fairness Act placing more high-stakes class actions into federal court, an especially crucial question is the extent to which the Erie doctrine and the Rules Enabling Act (REA) require federal courts to follow state class-action law. The Supreme Court’s decision in Shady Grove Orthopedic Associates v. Allstate Insurance Co. begins to confront this issue, but many unanswered questions remain. Under several lines of argument that were neither made nor considered in Shady Grove, the Erie doctrine and the REA would require federal courts to apply state class-action law, whether state law is more tolerant or less tolerant of class actions than the prevailing federal approach. In particular, Shady Grove leaves open the possibility that state class-action law may influence a federal court’s application of Rule 23’s certification requirements, as well as other matters - available remedies, statutes of limitations, and the preclusive effect of the ultimate judgment - that can arise during the course of a putative class action. This article identifies these important unresolved issues, and then suggests a more precise doctrinal framework for addressing them (and Erie/REA issues more generally).
Joseph Bauer (Notre Dame) has posted his article, "Shedding Light on Shady Grove: Furhter Reflections on the Erie Doctrine from a Conflicts Perspective," on SSRN. Here's the abstract:
This Article, a contribution to the Notre Dame Law Review symposium issue on the Supreme Court’s recent Shady Grove decision, is a follow-up to an article published in the same journal eleven years ago, in which I suggested that the Erie doctrine could be usefully informed by drawing on caselaw and jurisprudence from the horizontal choice of law setting. Shady Grove addressed the question of whether a New York state law, barring the assertion of claims for statutory damages, was binding in an action brought in the federal courts, or whether Federal Rule 23, which does not contain a similar prohibition, controlled exclusively. In a 5-4 decision, the Court applied its “familiar framework,” first articulated in Hanna v. Plumer, to find that the language of Rule 23 was “unambiguous,” that the Rule addressed the same questions as the state law, that it satisfied the standards of validity contained in the Rules Enabling Act (REA) as a “rule of ... procedure,” and that any incidental effects on the outcome of the litigation or encouragement of forum shopping were irrelevant.
In this Article, I argue that the Court got it wrong, and that application of the learning from horizontal analysis would have led to a sounder result. Choice of law jurisprudence seeks to avoid unnecessary conflicts, in part by giving the law of one or the other jurisdiction a more limited reading. Justice Ginsburg’s dissent in Shady Grove adopted that approach, quoting from the title of an article by California Supreme Court Chief Justice Roger Traynor, to ask “Is this Conflict Really Necessary?” By contrast, although the majority cited a canon of construction which would have recognized and deferred to the important goals and interests of New York, it chose to give Rule 23 an unnecessarily broad reading. After explaining why the dissent’s analysis was preferable, I then discuss in detail the majority’s conclusion that the Rule passed muster under the REA, again arguing that horizontal choice of law jurisprudence would have been instructive in defining and distinguishing “substance” and “procedure.”
Suja Thomas (Illinois) has posted her article, "Oddball Iqbal and Twombly and Employment Discrimination" on SSRN. Here's the abstract:
This brief Essay argues that Bell Atlantic Corp. v. Twombly was an oddball case, a massive antitrust action with significant costs, much different than the vast majority of cases in the federal courts. While the Supreme Court and some scholars including Professor Richard Epstein have largely justified the new plausibility standard in Twombly on the basis of these costs, they have not shown why the new standard should apply transsubstantively to cases without these same costs, including typical employment discrimination cases. This Essay further argues that Ashcroft v. Iqbal like Twombly was also an oddball case, though with different types of costs than Twombly. Finally, contrary to Professor Epstein, this Essay argues that the standard under Iqbal and Twombly is likely to be procedurally revolutionary in employment discrimination cases. Indeed, the new standard could lead to a revolution due to the convergence of the new motion to dismiss standard with summary judgment and the effective death of Swierkiewicz v. Sorema N.A.
Last week, the Seventh Circuit issued an opinion concerning the All Writs Act in Thorogood v. Sears, Roebuck and Company (No. 10-2407). Suit 1 involved plaintiff Thorogood, who sued in the state court of Illinois. Sears, the defendant, removed to federal court, and the federal district judge, Judge Leinenweber, certified the class action. Plaintiff alleged that Sears engaged in deceptive advertising because its Kenmore-brand clothes dryer was not made entirely of stainless steel; the front part of the drum is made of a ceramic-coated mild steel, which isn’t stainless steel. Sears appealed Judge Leinenweber’s decision to certify the class and, on appeal, the Seventh Circuit decertified, calling the case “a notably weak candidate for class treatment.” (Thorogood Opinion at 5.) In particular, the Seventh Circuit held that common issues didn’t predominate because it was inconceivable that class members had a shared understanding of the advertisments. After decertification, Sears made a Rule 68 offer of judgment for $20,000 (even though the maximum damages Thorogood could recover under Tennessee law were $3,000). When the plaintiff refused, Judge Leinenweber dismissed the case since the offer exceeded the amount in controversy and mooted the case. Thorogood appealed and the Seventh Circuit affirmed the district court’s denial of attorneys’ fees and the dismissal of the suit.
Thorogood’s counsel (Clinton Krislov) found another plaintiff (Murray) and filed another, similar putative class action suit against Sears in California state court, which Sears promptly removed and argued was barred by issue preclusion. In particular, Sears argued that the issue of whether the class could be certified had already been litigated and determined in the Illinois action. The district court judge in California, Judge Claudia Wilken, initially agreed. Plaintiffs’ counsel then amended the complaint and, according to Judge Wilken, sufficiently differentiated it from the complaint in Thorogood “to avoid the application of collateral estoppel.” (Murray v. Sears, Roebuck and Co., 2010 WL 3490214, at *4 (N.D. Cal. Sept. 3, 2010)).
Sears returned to the court in the Northern District of Illinois and asked Judge Leinenweber to enjoin the federal court in California from proceeding under the All Writs Act, 28 U.S.C. 1651(a). Judge Leinenweber, however, ruled that Sears could obtain adequate relief by pleading collateral estoppel in the California action. In a harshly worded opinion by Judge Posner, the Seventh Circuit reversed and enjoined class members and class counsel from further pursuing similar class action suits. Because the issue that was precluded was whether the action could be maintained as a class action, the ruling did not prevent class members from pursuing an individual suit.
The result in this case isn’t surprising given Judge Easterbrook’s statement in In re Bridgestone/Firestone:
[W]hen federal litigation is followed by many duplicative state suits, it is sensible to handle the preclusive issue once and for all in the original case, rather than put the parties and state judges through an unproductive exercise. That these suits are multiplying suggests that some lawyers have adopted a strategy of filing in as many courts as necessary until a nationwide class comes into being and persists. (333 F.3d at 766)
Easterbrook’s statements here and Posner’s statements in Thorogood suggest that collateral estoppel doesn’t always do the trick. Even though issue preclusion should be determined by looking to the law that governed the issue in the first lawsuit (here federal law since the issue in question is whether to certify a class under FRCP 23), courts can come to different conclusions as to whether the issue in question is in fact the “same issue” (as did Judge Wilken in Murray).
These tactics were used somewhat more successfully before CAFA when state court cases couldn’t be removed to federal courts and the states could apply their own versions of Rule 23, which were often more forgiving than the federal version. When federal courts are faced with enjoining state courts, they’re restricted by the Anti-Injunction statute, which prohibits injunctions against state proceedings “except as expressly authorized by an Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” Historically, these exceptions have been narrowly construed.
Smith v. Bayer Corp., which is currently pending before the U.S. Supreme Court, might affect the scope of the Thorogood injunction, though it wouldn’t change the result that Murray’s case cannot proceed. Smith v. Bayer Corp. deals with the more classic injunction scenario of whether Baycol plaintiffs can bring a class action in West Virginia state court after the federal judge in the MDL action denied class certification on similar issues. In other words, Smith v. Bayer Corp. addresses whether a federal court can enjoin a state court, not whether a federal court can enjoin another federal court (the primary question in Thorogood). As Posner indicates, Smith may change the scope of the Thorogood injunction, which currently prevents copycat suits in state and federal courts.
Tuesday, November 2, 2010
Vanderbilt Law Review En Banc is pleased to present its latest Roundtable on Dukes v. Wal-Mart Stores, Inc.. Professor Elizabeth Burch’s introductory piece lays the foundation for the debate. Professors Robert Bone, Alexandra Lahav, Greg Mitchell, and Richard Nagareda are providing their “first takes” on the case. We hope you find the Roundtable informative and engaging.
Elizabeth Chamblee Burch, Introduction: Dukes v. Wal-Mart Stores, Inc., 63 Vand. L. Rev. En Banc 77 (2010).
Robert G. Bone, Sorting Through the Certification Muddle, 63 Vand. L. Rev. En Banc 105 (2010)
Alexandra D. Lahav, The Curse of Bigness and the Optimal Size of Class Actions, 63 Vand. L. Rev. En Banc 117 (2010).
Gregory Mitchell, Good Causes and Bad Science, 63 Vand. L. Rev. En Banc 133 (2010).
Richard A. Nagareda, Common Answers for Class Certification, 63 Vand. L. Rev. En Banc 149 (2010).
We've dedicated the Roundtable to Richard Nagareda, whose essay appears in the Roundtable with only light edits from the editors. As the "table setter," I can say that this is truly a wonderful group of authors. I look forward to reading each of their essays and hope that you'll find them interesting and thought-provoking, too.
Monday, November 1, 2010
While not strictly speaking about mass torts, I've just posted my contribution to the Vanderbilt Law Review En Banc Roundtable on Dukes v. Wal-Mart Stores, Inc. The paper is entitled The Curse of Bigness and the Optimal Size of Class Actions.