Friday, April 20, 2012

McKenzie on the Bankruptcy Model for Mass Torts

Troy McKenzie (NYU) has posted "Toward a Bankruptcy Model for Non-Class Aggregation."  I look forward to reading it.  Here is the abstract:

In recent years, aggregate litigation has moved in the direction of multidistrict litigation followed by mass settlement without certification of a class action — a form commonly referred to as the “quasi-class action.” Driven by increased restrictions on class certification, the rise of the quasi-class action has been controversial. In particular, critics object that it overempowers lawyers and devalues the consent of individual claimants in the name of achieving “closure” in litigation. This Article presents two claims.

First, the debate about the proper scope and form of the quasi-class action too frequently relies on the class action as the touchstone for legitimacy in aggregate litigation. References to the class action, however, are more often misleading than helpful. The basic assumptions behind the class action are different in degree and in kind from the reality of the quasi-class action. Overreliance on the class action as the conceptual framework for aggregation carries the significant risk of unintentionally shackling courts in their attempts to coordinate litigation. The very reason the quasi-class action emerged as a procedural device — the ossification of the class action model of litigation — suggests that courts and commentators should look for another reference model when assessing what is proper or improper in quasi-class actions.

Second, bankruptcy serves as a better model for judging when to use, and how to order, non-class aggregation of mass tort litigation. The entirety of bankruptcy practice need not be imported to realize that bankruptcy may provide a useful lens for viewing aggregation more generally. That lens helps to clarify some of the most troubling concerns about the quasi-class action, such as the proper role of lawyers and the place of claimant consent. Bankruptcy serves as a superior reference model because it starts with an assumption that collective resolution is necessary but tempers the collective with individual and subgroup consent as well as with institutional structures to counterbalance excessive power by lawyers or particular claimants.

ADL

April 20, 2012 in Aggregate Litigation Procedures, Class Actions, Informal Aggregation, Mass Tort Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, April 16, 2012

Klonoff on Class Actions

Dean Robert Klonoff (Lewis & Clark) has posted The Decline of Class Actions to SSRN.  It provides a very useful overview to the recent developments in class actions - going far deeper than just Wal-Mart.  If you're interested in class actions, this is a must read. Here is the abstract:

This Article argues that in recent years courts have cut back sharply on the ability to bring class action lawsuits, thereby undermining the compensation, deterrence, and efficiency functions of the class action device. Starting in the mid-1990s, courts began expressing concern about the pressure on defendants to settle after a decision certifying a class. The business community also raised concerns that many multi-state class actions were brought in pro-plaintiff, state-court venues. Federal Rule of Civil Procedure 23(f), adopted in 1998, enabled defendants to obtain interlocutory review of federal district court decisions certifying class actions, and the Class Action Fairness Act (CAFA), adopted in 2005, had the effect of shifting most major class actions to federal court. There is now a large body of federal appellate court case law, and as a result of that case law, several disturbing trends have emerged.

First, many courts now require that plaintiffs prove substantial portions of their cases on the merits at class certification. Second, several of the class certification requirements (class definition, numerosity, commonality, adequacy of representation, Rule 23(b)(2), and Rule 23(b)(3), are now considerably more difficult to establish. Third, a number of courts have rejected class settlements by rigidly applying the requirements for class certification, even though the settlement eliminates the need for a trial. Fourth, a number of courts have essentially nullified so-called issues classes under Rule 23(c)(4) by requiring courts to examine whether the case as a whole satisfies the predominance requirement of Rule 23(b)(3). Finally, the Supreme Court has upheld, against unconsionability challenges, binding arbitration clauses that prohibit resolution of disputes on a classwide basis.

Although some class actions remain viable, such as securities fraud, wage and hour, and antitrust class actions, the overall impact of these case law trends has been to curtail substantially the ability of plaintiffs to obtain class treatment. This Article thus concludes by urging courts, rule makers, and Congress to return to a more balanced approach to classwide adjudication.

ADL

April 16, 2012 | Permalink | Comments (0) | TrackBack (0)