September 23, 2011
Class Actions: On Death and Dying
[This post has been updated.]
There is no question that this term in the Supreme Court's decisions in AT&T v. Concepcion and Wal-Mart v. Dukes justify a gloomy prognosis for class actions. But the patient was already very sick. On the arbitration/consumer class action side, Myriam Gilles diagnsed the problem back in 2004 in her article Opting Out of Liability and this post by David Schwartz tells the rest of the story. But even if you don't have an arbitration provision, given the differences in state consumer protection laws its extremely difficult to certify a national consumer class action in federal court. And any class action worth anything (that is, over $5 million) will be in federal court because of CAFA. On the class action side, CAFA plus the predominance standard of 23(b)(3) means the diagnosis for national consumer class actions in the case where the isn't an arbitration clause is "start making plans for the next life."
Wal-Mart's cribbed reading of the commonality inquiry might have a role to play here, although I have yet to be convinced that there is a difference between a "common question" and an "answer" - the issue isn't about answers/questions but about the level of generality of the question that is being asked. Its really a deep jurisprudential issue when you think about it -- at what level of generality can you pitch a question that will tie members of a class together. The majority opinion in Wal-Mart says that the questions were at a too general level to comply with the common question of fact or law requirement of 23(a), but the analysis of what those questions were (and the glibness) indicates that something else is going on here. That something else is that the thing that could have been a common question -- whether plaintiff's theory of liability is viable -- cannot be asked because the Supreme Court has a fortiori rejected it. The most telling sentence of the opinion is this: "To the contrary, left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all." 131 S.Ct. 2541, 2554 (2011). (Note that there is no citation included for this proposition. I did not omit the citation - the Court did not provide one). The decision on commonality had little to do with commonality or class action doctrine but instead with a rejection of the substantive theory that plaintiff was propounding. Without that theory, there were too many differences to bring all these claims under the same class action umbrella. But the validity of that theory ought to have been decided not by judicial fiat but by a reasoned opinion based on a full and fair litigation of the question. Say, on a 12(b)(6) motion for failure to state a claim.
Because the common question always needed some specificity, I don't think Wal-Mart did much to the commonality inquiry. What it did do, however, was give judges license to combine the idea behind 12(b)(6) motions for failure to state a claim with the class action inquiry to determine what legal theories would be considered "questions" that could be "common" to the class. It also warns the federal courts to be more aware of the potential that individual defenses will render the class action unmanageable or create too many differences between class members to justify class treatment. [Edited to add: But these questions ought to be decided on the typicality or adequacy prong if they are part of 23(a) at all. There may be a common question as to the class as a whole, but because of available individualized defenses no plaintiff can be typical of the class or an adquate representative. While these distinctions are not determinative of the outcome, if you are going to analyze a rule let's do it correctly].
Ignored in all of the discussions I've seen so far, perhaps because it touches on interjurisdictional preclusion (a mouthful if ever there was one), is Smith v. Bayer. This case allowed what looked like a parallel class action to go forward in state court even though a similar one had been denied certification in federal court. Will a change of scenery from federal to state court help the class action heal? That is the question left open in Bayer. [Edited to add: I nearly forgot to mention that Bayer involved a class action that predates CAFA. Today, most national class actions of any substance would be in federal court. Local class actions would not be, but whether they are viable in the states with smaller economies is an open question.]
September 22, 2011
Sending Mass Torts to State Court
I just read a very interesting student note from 1987 suggesting that in mass tort cases the JPMDL should be permitted to send mass tort cases to state court. George T. Conway III,* The Consolidation of Multistate Litigation in State Courts, 96 Yale L. J. 1099, 1101 (1987). The rule of thumb could be that the state with the applicable law would be the target jurisdiction. Of course this would take new Congressional action to implement, but what an idea!
*The author is now a litigation partner at Wachtell - I wonder what he would say of his student note with many years of experience under his belt? If you're reading this, leave a comment or drop me an email.
Asbestos Victim Receives $20 Million Jury Verdict
A Miami (Broward County) jury awarded some $20 million to Charles Garrison and his wife in an asbestos case against Union Carbide, Corp. Garrision was diagnosed with mesothelioma in 2008 and explained that he never saw any warning labels on Georgia Pacific's joint compound about its asbestos-laden contents.
September 21, 2011
Monestier on Global Securities Class Actions
Tanya Monestier (of Roger Williams) has posted a draft of her article, "Is Canada the New 'Shangri-La' of Global Securities Class Actions?" on SSRN. It's forthcoming in the Northwestern Journal of International Law and Business. Here's the abstract:
There has been significant academic buzz about Silver v. Imax, an Ontario case certifying a global class of shareholders alleging statutory and common law misrepresentation in connection with a secondary market distribution of shares. Although global class actions on a more limited scale have been certified in Canada prior to Imax, it can now be said that global classes have “officially” arrived in Canada. Many predict that the Imax decision means that Ontario will become the new center for the resolution of global securities disputes. This is particularly so after the United States largely relinquished this role last year in Morrison v. National Australia Bank.
Whether Imax proves to be a meaningful precedent or simply an aberration will largely depend on whether the court dealt appropriately with the conflict of laws issues at the heart of the case. No author has yet addressed the conflict of laws complications posed by the certification of global class actions in Canada; this Article seeks to fill that void. In particular, I use the Imax case as a lens through which to canvass the conflict of laws issues raised by the certification of global classes. I look at the difficult questions of jurisdiction simpliciter, recognition of judgments, choice of law, parallel proceedings, and notice/procedural rights that need to be addressed now that global classes have come to Canada.
September 19, 2011
Oil Spill Trial To Begin
District Court Judge Carl Barbier (EDLa) has issued a case managment order for the upcoming trial arising out of the BP Horizon Deep Water Oil Spill. You can find the order here: Pretrial Order #41. According to BNA, the MDL has more than 500 lawsuits arising out of the spill.