Friday, March 29, 2013
Zachary Savage (J.D. Candidate, NYU), has posted to SSRN his student note, Scaling Up: Implementing Issue Preclusion in Mass Tort Litigation Through Bellwether Trials, N.Y.U. L. Rev. (forthcoming 2013). Here's the abstract:
The civil litigation system aims to resolve disputes in an efficient, centralized, and final manner. In the context of mass tort litigation, one technique courts often use to achieve these goals is what I call “scaling up”: holding individual trials, and then applying results from these trials to similarly situated individuals. Scaling up, however, presents two difficulties. First, the technique risks compromising defendants’ Due Process rights by creating impermissible settlement pressure. Second, scaling up requires the initial court to structure the litigation so that it may serve as a template for follow-on proceedings; where this is not done, attempting to graft the results of one proceeding onto the remaining group of similarly situated individuals may simply lead to more protracted litigation.
Yet these difficulties are not inherent to the technique; in fact, courts can scale up in a way that avoids these problems. In order to mitigate the Due Process problem, courts should not apply the results of individual trials to subsequent trials involving similar claims until a substantial number of trials have been completed, and until it has become clear that any verdicts unfavorable to defendants are not flukes or outliers. And to ensure that scaling up does not simply lead to more protracted litigation, the initial trials should be structured so as to maximize the likelihood that individuals in follow-on litigation can invoke the findings under the issue preclusion doctrine of Parklane Hosiery v. Shore. The American Law Institute has made a proposal with these considerations in mind with respect to issue classes. This Note argues that a similar approach should be taken in the Multidistrict Litigation (MDL) process, where most mass tort litigation occurs today. This approach would be particularly useful if applied to one device that is being used with increasing frequency in the MDL process: the bellwether trial.
Wednesday, March 27, 2013
The Supreme Court released its decision in Comcast v. Behrend today. The Court (with Justice Scalia writing for the majority) overturned the 3rd Circuit and held that the plaintiff does need to introduce evidence in support of its damages model in an antitrust case at the certification stage.
There is a history of antitrust cases touching on procedural issues having significant impact outside the antitrust field (e.g. AT&T v. Twombly). This is likely to be another one.
Friday, March 22, 2013
At Corporate Counsel, there's an interesting piece by journalist Michael Goldhaber entitled Kindergarten Lessons from Chevron in Ecuador. Goldhaber, who has been following this massive and messy litigation for years, offers what he sees as some of the true and false lessons from the ongoing litigation concerning Texaco-Chevron's involvement in oil drilling in Ecuador.
In a nutshell, the litigation involves claims that a Texaco subsidiary caused environmental damage to the Oriente region of Ecuador. Plaintiffs originally sued in the Southern District of New York, but their suit was dismissed on grounds of forum non conveniens. Plaintiffs then filed a lawsuit in Ecuador and won an $18 billion judgment. Chevron contends that the Ecuadorian judgment was obtained by fraud and corruption, and has resisted enforcement of the judgment. Chevron sued plaintiffs' attorney Stephen Donziger and others, asserting RICO and fraud claims. An international arbitration tribunal weighed in pursuant to the Ecuador-US bilateral investment treaty. Plaintiffs are seeking to enforce the judgment in Canada, Argentina, Brazil and elsewhere. This mess of a litigation has been going on for nearly 20 years.
Goldhaber, in prior work, has articulated a strong view that the Ecuadorian judgment was the product of fraud and corruption. In the new article, Goldhaber takes as his starting point the Stanford Journal of Complex Litigation symposium that took place in February. He goes through the basic lessons offered by the participants -- plaintiffs' lawyer Graham Erion, defense lawyer Theodore Boutros, and a host of scholars including myself.
The strongest lesson (and here I am in complete agreement with Goldhaber): "Be careful what you wish for." The irony of this litigation is overwhelming. Texaco fought to have the case dismissed on grounds of forum non conveniens, arguing that Ecuador was a more appropriate forum. The plaintiffs argued that the Ecuadorian courts could not handle the case and that it should remain in the U.S. Ever since the massive judgment, however, the positions have been flipped -- with the plaintiffs insisting that the judgment deserves respect and the defendant contending that the Ecuadorian courts were corrupt. Goldhaber has referred to this as "forum shopper's remorse."
But I do not agree with Goldhaber's next step. Noting that "the abuse of transnational litigation would never have happened had the U.S. held on to the case," he suggests that the doctrine of forum non conveniens be altered to take into account the stakes and political significance of a case:
The great blunder in this dispute was to ship it to Ecuador in the name of forum non conveniens. The U.S. courts could have saved everyone a lot of grief had they recognized that a case is more prone to abuse when the issues are (a) high-stakes or (b) politicized. I learned from Russia's Yukos affair that, even if a weak judicial system has made significant progress, it does not deserve trust in a hot-button case of great magnitude. It was reckless to expect Ecuador (even if it had just adopted a new set of corruption reforms) to handle a huge case pitting gringo oil companies against indigenous rights. My modest suggestion is to incorporate these factors into the FNC analysis.
The adequate alternative forum prong of the forum non conveniens analysis is a low threshold, and deliberately so. A lawsuit alleging environmental harm to Ecuadorian land and medical harm to Ecuadorian citizens, and involving control over Ecuadorian natural resources, belongs in Ecuador. That is the very point of forum non conveniens. A U.S. court should be loath to say that it will hear the case in the U.S. because it thinks the Ecuadorian courts just cannot handle it. A judgment obtained by fraud should not be enforceable elsewhere, but this is better addressed ex post, which is exactly what the current litigation -- albeit in a rather ugly fashion -- is doing. But to have said, ex ante, that the case should be heard in the United States despite all of the public and private interest factors that pointed to Ecuador, would have been a mistake.
Thursday, March 21, 2013
Stanley M. Chesley, one of the leading mass tort lawyers of his generation, was disbarred today by the Kentucky Supreme Court (court's opinion here). Chesley played an important role in many of the biggest mass torts of the past forty years: the Beverly Hills Supper Club fire, tobacco, breast implants, fen-phen, Bendectin, Bhopal, Lockerbie, Catholic church sex abuse, MGM Grand Hotel, San Juan Dupont Plaza, and other mass torts, as well as numerous antitrust and securities class actions. He was disbarred for his involvement in an aggregate settlement of Kentucky fen-phen claims. The court found that the lawyers violated rules of professional conduct by taking fees in excess of what their fee agreement provided, by including an inappropriate cy pres remedy that advantaged the lawyers rather than the clients, and by failing to comply with the disclosure and informed consent requirements of the aggregate settlement rule.
The Kentucky diet drug settlement also led to the disbarment and imprisonment of Kentucky attorneys William Gallion and Shirley Cunningham, as well as criminal, civil, and ethics proceedings and penalties for several other lawyers. For earlier coverage of the Kentucky fen-phen settlement dispute, see here, here, here, here, and here.
Wednesday, March 20, 2013
SCOTUS Oral Argument in Mutual Pharm. Co. v. Bartlett: Generic Pharmaceutical Manufacturers' Potential Immunity from Suit
Widener University School of Law and the Widener Law Journal are presenting a day-long symposium, Perspectives on Mass Tort Litigation, on Tuesday, April 16, 2013 in Harrisburg, Pennsylvania. The Honorable Eduardo Robreno of the Eastern District of Pennsylvania will present a luncheon address, Federal Asbestos Litigation: Black Hole or New Paradigm? Other participants include Hon. Thurbert Baker (McKenna Long); Mark Behrens (Shook Hardy); John Beisner (Skadden); S. Todd Brown (SUNY Buffalo); Scott Cooper (Schmidt Kramer); Amaris Elliot-Engel (Legal Intelligencer); Michael Green (Wake Forest); Deborah Hensler (Stanford); Mary Kate Kearney (Widener); Randy Lee (Widener); Bruce Mattock (Goldberg Persky); Tobias Millrood (Pogust Braslow); Linda Mullenix (Texas); Christopher Robinette (Widener); Susan Raeker-Jordan (Widener); Sheila Scheuerman (Charleston); Victor Schwartz (Shook Hardy); William Shelley (Gordon & Rees); Aaron Twerski (Brooklyn); Nicholas Vari (K&L Gates); and Nancy Winkler (Eisenberg Rothweiler). I will also participate via Skype videoconference. Here's the brochure: Download Widener 2013 MTL Symposiu Brochure
Tuesday, March 19, 2013
In an opinion by Justice Breyer, the Court unanimously rejected a stipulation by a proposed class representative to limit recovery for the putative class to less than $5 million, in an apparent attempt by plaintiffs to avoid removal to federal court unde the Class Action Fairness Act. See also SCOTUSblog.
Friday, March 15, 2013
The Florida Supreme Court affirmed the preclusive effect of Engle - giving further support to the development of issue class actions. The opinion is here: http://www.floridasupremecourt.org/decisions/2013/sc12-617.pdf