Wednesday, May 6, 2015
Our friends at the FJC and Administrative Office of the U.S. Courts, Emery Lee, Catherine Borden, Margaret Williams, and Kevin Scott have posted their latest empirical analysis of multidistrict litigation on SSRN. Here's the abstract:
Following the judiciary's experience with aggregate litigation in the 1960s, Congress established a procedure for the transfer of related cases to a single district court for coordinated pretrial proceedings. Originally designed to achieve efficiencies associated with coordinated discovery, the multidistrict litigation (MDL) process evolved from a rather modest starting point to become a central part of aggregate litigation in the federal courts today. Despite its importance, however, there is little empirical research on the MDL process. This article seeks to fill this gap in the empirical literature by addressing a few central questions about the work of the Judicial Panel on Multidistrict Litigation (Panel). Using a unique database, we examine how that body decided motions to centralize multidistrict litigation. We find, most importantly, that the Panel became more likely to order centralization of proceedings over time, after controlling for other factors. That trend is not, however, apparent in the most recent years' data. We also find, all else equal, that the Panel is more likely to centralize a proceeding including class allegations, and more likely to centralize proceedings raising certain kinds of claims.
Thursday, April 30, 2015
In conjunction with its annual meeting each year, the American Law Institute hosts a CLE the day before the meeting begins. This year, there are two programs that may be of interest to readers on Sunday, May 17, 2015:
1) Changes for Federal Rule of Civil Procedure 23? An Open Forum with the Rule 23 Subcommittee of the Advisory Committee on Civil Rules; and
2) Ethical Issues in Class Actions and Non-Class Aggregate Litigation.
The panels run from 1:30-3:00 p.m. and 4:00-6:00 p.m., respectively and are located in the Ritz-Carlton Hotel in Washington, D.C. I understand that panel members on the second panel will include Bob Klnonoff, Elizabeth Cabraser, Judge Diane Wood, Judge Lee Rosenthal, Sam Issacharoff, John Beisner, and myself among others. Hope to see you there!
There's been a lot of chatter over the past few years about the greater use of issue classes. The Rule 23 Subcommittee in its recent report (p. 41) indicated that issue classes top its agenda for possible reform and there's been a greater willingness to rely on Rule 23(c)(4) among the circuit courts over the last few years. Much of the scholarship on issue classes thus far, however, has focused on how to use issue classes in conjunction with Rule 23(b)(3)'s predominance requirement. Professor Laura Hines (Kansas) has, for instance, written a series of articles on the topic and there have been several debates in symposium pages, such as DePaul's 2013 symposium.
Whatever side of the debate one adheres to on the to-be-or-not-to-be question, the courts are embracing issue classes. Thus, there remains much work to be done on discerning which issues should qualify for certification, how to think about Seventh Amendment Reexamination Clause questions, and how to compensate plaintiffs' attorneys who initiate issue classes.
I've recently written a paper on issue classes that takes some steps toward fleshing out these problems. The paper is long since it's meant to be a one-stop shop for judges and attorneys on the subject, but here are the critical points worth underscoring:
First, one of the main difficulties of our system is that the focus in massive lawsuits has shifted to the ways in which the plaintiffs are dissimilarly situated, even when the defendant's conduct is uniform. Take the GM ignition switch debacle or the Toyota acceleration cases, for example. Corporate actions are nonindividuated; it doesn't make sense to litigate what GM or Toyota did in 40,000 different cases. (Draft pp 5-8) But defendants have successfully shifted the procedural focus to how their behavior affected claimants, which tends to defeat class certification because common questions do not predominate over individual ones. The issue class has the potential to recapture what is common to the plaintiffs: defendant's conduct--at least so long as that conduct is nonindividuated. One can capture this notion by divvying up the legal elements in any claim or defense as "conduct components," which concern the defendant's conduct, or "eligibility components," which concern a plaintiff's eligibility for relief. (Draft pp 15-29)
Second, by embracing the standard suggested by the ALI's Principles of the Law of Aggregate Litigation, courts can ease the supposed tension (to the extent any remains) between Rule 23(c)(4) and Rule 23(b)(3). (Draft pp 31-32) Courts should certify issue classes where resolving the issue would "materially advance the resolution of multiple civil claims by addressing the core of the dispute in a manner superior to other realistic procedural alternatives, so as to generate significant judicial efficiencies." (Principles, 2.02(a)(1), 2.02 cmt. a, 2.08, 2.08 cmt. a) Predominance is embedded in the "materially advance" language and superiority is included as a condition that certifying the issue would be "superior to other realistic alternatives" such that it "generate[s] significant judicial efficiencies." Moreover, the courts themselves seem to have reached a general consensus on this matter, with even the Fifth Circuit embracing issue classes in In re Deepwater Horizon, 739 F.3d 790, 804 (5th Cir. 2014). (Draft p. 30)
Third, courts must figure out a way to compensate (and thus incentivize) plaintiffs' attorneys. This is perhaps the trickiest part because of both the lack precedent and doctrinal hurdles such as Lexecon. Lexecon presents a special challenge in multidistrict litigation cases where issue classes might prove most useful. Nevertheless, one need not invent a theory out of whole cloth. Charging liens and the common-benefit doctrine provide sound analogies for fashioning a coherent path forward. (Draft pp 42-50)
Finally, there are some hurdles to making issue classes stick, such as preclusion doctrines, adequate representation, and the Seventh Amendment Reexamination Clause. Thus, the paper concludes by suggesting solutions to these problems and arguing that preclusion can provide a way to coordinate dispersed public and private regulators.
As always, comments are welcome (eburch at uga.edu).
April 30, 2015 in Aggregate Litigation Procedures, Class Actions, Current Affairs, Lawyers, Mass Tort Scholarship, Procedure, Products Liability, Tobacco, Vioxx | Permalink | Comments (0) | TrackBack (0)
Thursday, April 9, 2015
You can find the surprising opinion here. The crux of the opinion is the last paragraph:
Cigarette smoking presents one of the most intractable public health
problems our nation has ever faced. It was not so long ago that anyone would walk
a mile for a Camel: cigarette smoke once filled movie theaters, college classrooms,
and even indoor basketball courts. For fifty years, the States and the federal
government have worked to raise awareness about the dangers of smoking and to
limit smoking’s adverse consequences to the greatest extent possible, all without
prohibiting the sale of cigarettes to adult consumers. To that end, the State of
Florida may ordinarily enforce duties on cigarette manufacturers in a bid to protect
the health, safety, and welfare of its citizens. But it may not enforce a duty, as it
has through the Engle jury findings, premised on the theory that all cigarettes are
inherently defective and that every cigarette sale is an inherently negligent act. So
our holding is narrow indeed: it is only these specific, sweeping bases for state tort liability that we conclude frustrate the full purposes and objectives of Congress.
As a result, Graham’s Engle-progeny strict-liability and negligence claims are
preempted, and we must reverse the District Court’s denial of judgment as a matter
of law. For these reasons, the judgment of the District Court is REVERSED.
Case: 13-14590 Date Filed: 04/08/2015 Page: 50 of 50
Friday, February 6, 2015
Perry Cooper, of the BNA Class Action Litigation Report, published a special report yesterday titled "Issue Classes Swell in Consumer Suits: Are Potential Rewards Worth the Risk?" A subscription is required to read the full article, but it does a nice job of portraying different points of view on the topic - John Beisner and Jessica Miller (Sadden Arps) for the defense, Gary Mason (Whitfield Bryson & Mason) for the plaintiffs, and some of my own views as an academic.
Issue classes have been on my mind for awhile now as well as the minds of many others--the Rule 23 Subcommittee has indicated that the topic tops their list for potential rule changes. As such, I've been working on an article titled "Constructing Issue Classes." I'm still tweaking it, so it's not available for public consumption yet, but for those interested in the topic, here's the gist of it:
Issue classes under Rule 23(c)(4) have the potential to adjudicate collectively what actually unites plaintiffs: defendant's uniform conduct. One can separate the elements of any cause of action into "conduct elements" that relate to the defendant's conduct--what the defendant knew, when the defendant knew it, etc.--or "eligibility elements" that relate to the plaintiff's eligibility for relief--specific causation, damages, etc. When defendant's conduct toward the plaintiffs is uniform, as it was for example in the smelly washing machine cases, then adjudicating elements relating to that conduct collectively can even out resource imbalances between plaintiffs' attorneys and defendants and reduce the possibility of inconsistent verdicts.
As you may imagine, a lot rides on that one trial. Issue classes work by generating two-way preclusion in follow-on cases. In the Ohio "smelly washer" trial against Whirlpool, the defense verdict meant that defendants could preclude class members from relitigating those same issues in subsequent cases. (Granted, the class was limited to Ohio purchasers, but did include some 100,000 consumers.) The high stakes suggest that anytime courts certify an issue for class treatment they should be prepared to allow an interlocutory appeal on the merits (not just the certification question as Rule 23(f) permits). It also means that courts shouldn't certify trivial issues for class treatment. As the ALI in its Principles of the Law of Aggregate Litigation suggest, the issue class should "materially advance the resolution of the claims," which would be the case with regard to most conduct-related questions.
Sunday, December 14, 2014
My colleague Professor Debra Lyn Bassett (Southwestern) has posted to SSRN her article, Class Action Silence, 94 Boston U. L. Rev. 1781 (forthcoming 2014). Here is the abstract:
A number of law review articles have noted the issues inherent in treating class members' failure to opt out as consent to the court's personal jurisdiction or as agreement to a proposed class settlement. Missing from the existing analyses, however, is the "big picture" -- the reality that class action silence is layered, resulting in silence that is repeatedly and inappropriately compounded. At each and every step in class action litigation, absent class members are not just expected, but effectively encouraged, to remain silent. Moreover, at every step, courts interpret class members' silence as consent. The ultimate result is a "piling on" of consents: the expected and encouraged silence is deemed to constitute consent to the filing of the class suit and consent to personal jurisdiction and consent to be bound to any resulting class judgment and consent to the proposed class settlement and approval of the proposed settlement's terms and conditions. Yet this compounded effect occurs under highly ambiguous circumstances, where arguably the most sensible interpretation of class members' silence is not consent, but confusion. The multiple and contradictory meanings of silence render it unreasonable to equate the failure to opt out with consent. The fallacy of repeatedly ascribing consent to highly ambiguous silence should be recognized as a due process danger that potentially can deprive class members of property rights and their day in court.
Monday, November 3, 2014
A recent article by Jessica Dye (Thomson Reuters) describes the procedure adopted by Judge Goodwin (U.S.D. So. Dist. W. Va).
While Goodwin originally scheduled a series of single-plaintiff bellwether, or test, trials for the federal litigation, he scrapped those plans earlier this year and instead consolidated claims from multiple women into a single trial. Doing so, he said, would help save courts' time and resources, and "may facilitate settlement" by giving Boston Scientific and plaintiffs a clearer picture of the strengths and weaknesses of their cases.
You can find the article here. I would love to know how Judge Goodwin is picking the plaintiffs and locations to go forward and what coordination is happening with state courts.
Tuesday, October 14, 2014
The papers in the Deepwater Horizon Settlement cert petition are mostly in. The case is BP Exploration & Production Inc. v. Lake Eugenie Land & Development, Inc. -- you can find the documents on SCOTUSBLOG.
BP's basic argument is that the settlement approved by Judge Barbier in the mass tort class action against it was ultra vires because it contemplated giving money to people who were, according to BP, not injured. The plaintiffs respond that BP is just trying to overturn a settlement it championed through the backdoor now that its unhappy with the deal.
One of the most interesting briefs filed in this dispute is from Kenneth Feinberg, who oversaw both the 9/11 Victims Compensation Fund and the Gulf Coast Claims Facility. The latter was the entity that settled claims arising out of the Deepwater Horizon oil spill immediately after it happened.
Feinberg is a world class mediator and one of the most prominent figures in the mass tort world. The class action settlement that BP is now disputing is the successor to the Gulf Coast Claims Facility, which he headed. What the class action did that the Gulf Coast Claims Facility could not do is give BP global peace. In other words, all civil claims against BP arising out of the oil spill are precluded by that class action settlement.
Feinberg's brief asks the Supreme Court to grant cert. The argument is basically the following: claim facilities like the ones he ran apply a causation requirement that parallels that of the tort system. But, he argues, the settlement agreed to by BP does not include as strong a causation requirement, and this threatens the possibility of future compensation funds to solve mass torts. The brief explains:
..the Fifth Circuit's decisions in this case affecting the causation standard, if permitted to stand, threaten to make these sorely needed alterantives to mass tort litigation unlikely to be replicated. Future funds would either adopt the Fifth Circuit's new standard, thereby threatening to overwhelm the claims process with spurious claims, or continue to require causation, thereby channeling claimants toward litigation where the burden of proof is lower. (Feinberg petition at 6).
This argument seems to me to be just wrong. The settlement imposed a looser causation requirement than tort law requires. But that causation requirement was agreed to in order for claimants collect under the settlement; it is not the causation requirement of the substantive law. In the future, if a defendant perferred to create a settlement fund of the Feinberg-ian variety, they could do so and rest "easy" that the causation requirement of the substantive law remains as it always was. (Whether the requirement of specific causation is the best requirement from a normative point of view in mass tort litigation I leave to another day).
There is no risk that this settlement will affect future litigation because it is a settlement - the defendant participated in crafting and agreed to the causation requirement applied in the claims facility created by the settlement. One might say it is a form of private lawmaking only applicable to these parties. If a future mass tort defendant doesn't like this type of loosened causation requirement, they don't have to agree to it. In fact, they are free to say "we'll litigate every case" as Merck did for five years in the Vioxx mass tort and then in each and every case the standard causation requirement of the tort law in the relevant jurisdiction will apply.
And what of the argument championed by BP that the settlement pays people who were not injured in fact? Welcome to the world of settlements, Dorothy. What happens in a settlement is this: each party has a sense of what the case is "worth" - that is, the likely result at trial. They discount that amount by the risk of loss. Then they substract from that discounted amount their transactions costs (the costs of litigation). If the resulting number is close for both parties, they settle. See Steven Shavell, Foundations of the Economic Analysis of Law, 401-407 (2004). If they settle, they don't litigate. When they don't litigate, there is no trial.
A settlement means that the plaintiff never has to prove causation, or any other element of her cause of action. If the BP settlment violates Article III because plaintiffs didn't prove their legal entitlements, then every settlement violates Article III. The reason is that in no settlement does plaintiff ever prove that they are entitled to compensation because the very purpose of the settlement is to avoid trial. A plaitniff's entitlement at settlement is always uncertain. If settlements in general are constitutional, then so is this one.
A class action settlement is different than an ordinary settlement because it requires judicial approval. But does that judicial approval require that plaintiff establish injury? Here is the requirement for judicial approval of class action settlements: "If the settlement would bind class members," then the court needs to determine at a fairness hearing that the settlement is "fair, reasonable and adequate." Fed. R. Civ. P. 23(e)(2). The reason that a fairness hearing is only required "if the settlement woudl bind class members" is that the purpose of the hearing and approval process is to protect absent class members who are to be bound, but are not before the court to state their objections. This requirement is not meant to protect defendants, who are certainly well able to defend their interests and state their objections before the court.
And what was the benefit to BP? Why would BP enter into such a settlement? They wanted global peace. Only a class action settlement can provide that. They were willing to pay a high price for global peace at the time. Now things are different for BP, time has passed and it is in a better position than it was when it made this agreement, but that doesn't make the agreement unconstitutional or violative of the class action rule.
I hope the Supreme Court does not grant certiorari because the Fifth Circuit correctly rejected these claims. The ideas that underly the BP cert petition don't make sense in a litigation system that permits settlement. And they don't make sense under modern jurisprudential understanding of what a right is. People can sue when they think they have a right that has been violated. If the lawsuit goes to trial, then plaintiff will have to meet their burden of proving that they in fact (1) have a right and (2) it was violated. (Actually, they will likely have to show that they have a colorable case long before then). At the beginning of the litigation these things are uncertain. Uncertainty is the space in which settlements happen.
NYU's new Center on Civil Justice is hosting a conference on November 7 titled "The Future of Class Action Litigation: A View from the Consumer Class." Here's a bit more information for those in the area who might be interested (I understand there will be up to 6 CLE hours available):
Co-hosted with the NYU Journal of Law & Business
Keynote Address by Chief Judge Alex Kozinski, US Court of Appeals for the Ninth Circuit
Friday, November 7, 2014
REGISTER HERE. Up to 6 hours of New York State CLE credit will be available to both experienced and newly admitted attorneys under the Areas of Professional Practice Category.
NYU School of Law
Vanderbilt Hall, Greenberg Lounge
40 Washington Square South
Have consumer class actions run their course? Once, they were praised for increasing access to justice by compensating "small claims held by small people." They were also seen as a form of regulation, because they allowed private enforcement of the law by overcoming the economics of small-stakes individual litigation. This view was so widely accepted that the Supreme Court described these "negative value" suits as "the very core of the class action mechanism."
Now, consumer class actions face serious criticism for failing to provide compensation for class members or to achieve effective market regulation. Courts and commentators have questioned whether class members or society benefit from these cases. Perhaps as a result, it is harder to certify a consumer class action today than at any time since the adoption of modern Rule 23 in 1966.
This conference will explore whether consumer class actions deserve the criticism—or the praise—that they have received. Participants will discuss a broad range of issues about the recent development of the law of consumer class actions. The conference will also consider what the criticism of consumer class actions means for the future of class actions more generally. If "the very core" of class actions goes away, what will be left?
8:30 - 9:00 am - Registration
(Registration will take place just outside of Greenberg Lounge)
9:00 - 9:15 am - Welcoming Remarks
Introduction – Peter L. Zimroth, Director of the Center on Civil Justice
Remarks - Dean Trevor W. Morrison, NYU School of Law
9:15 - 10:30 am: Panel 1 - The Current State of the Consumer Class Action
Moderator: Samuel Issacharoff, Bonnie and Richard Reiss Professor of Constitutional Law and Faculty Co-Director, Center on Civil Justice, NYU School of Law
When Peace is Not the Goal of a Class Action Settlement
D. Theodore Rave, Assistant Professor of Law, University of Houston Law Center
The Identifiable Consumer: The Ascertainability Doctrine and Rule 68 Offers as Impediments to the Class
Myriam Gilles, Professor of Law, Benjamin N. Cardozo School of Law
Comments: Andrew Pincus, Mayer Brown LLP
10:30 - 10:45 am - Coffee Break
10:45 am - 12:00 pm: Panel 2 - Reforming the Consumer Class Action
Moderator: Troy A. McKenzie, Professor of Law and Faculty Co-Director, Center on Civil Justice, NYU School of Law
Constructing Issue Classes
Elizabeth Chamblee Burch, Associate Professor of Law, University of Georgia School of Law
Compensation in Consumer Class Actions: Data and Reform
Brian T. Fitzpatrick, 2014-15 FedEx Research Professor of Law, Vanderbilt Law School (with Robert C. Gilbert, , Grossman Roth)
Comments: Elizabeth J. Cabraser, Lieff Cabraser Heimann & Bernstein, LLP
12:00 - 1:00 pm - Lunch
1:00 - 2:15 pm: Panel 3 - Alternatives to the Consumer Class Action
Moderator: Michael S. Barr, Professor of Law, University of Michigan Law School
Contract Procedure, Regulatory Breakdown
David L. Noll, Assistant Professor of Law, Rutgers University School of Law – Newark
Government Compensation and the Class Action
Adam Zimmerman, Associate Professor of Law, Loyola Law School
Comments: Mark P. Goodman, Debevoise & Plimpton LLP
2:15 - 2:30 PM: Break
2:30 - 3:45 PM: Panel 4 - Roundtable Discussion: Consumer Class Actions and the Future of the Class Action
Moderator: Arthur R. Miller, University Professor and Faculty Co-Director, Center on Civil Justice, NYU School of Law
- Sheila A. Birnbaum, Quinn Emanuel Urquhart & Sullivan, LLP
- Elizabeth J. Cabraser, Lieff Cabraser Heimann & Bernstein, LLP
- Charles Delbaum, National Consumer Law Center
- Andrew Pincus, Mayer Brown LLP
- Hon. Lee H. Rosenthal, US District Court for the Southern District of Texas
4:00 - 4:45 pm: Keynote Address
Chief Judge Alex Kozinski, US Court of Appeals for the Ninth Circuit
Introduction by Arthur R. Miller
4:45 - 5:00 PM: Closing Remarks by Peter Zimroth
Saturday, October 4, 2014
I've been a bit slow in posting this, but Louisiana Law Review hosted an excellent symposium last spring titled The Rest of the Story: Resolving the Cases Remanded by the MDL. As part of that symposium, I wrote a piece titled Remanding Multidistrict Litigation. Remands are something that have received scant attention in the scholarly literature, but are a constant hope for many plaintiffs' lawyers involved in multidistrict litigation (well, at least those who aren't on the steering committees).
I just got around to posting the piece on SSRN today. Here's the abstract:
Multidistrict litigation has frequently been described as a “black hole” because transfer is typically a one-way ticket. The numbers lend truth to this proposition. As of 2010, the Judicial Panel on Multidistrict Litigation remanded only 3.425% of cases to their original districts. That number dwindled to 3.1% in 2012, and to a scant 2.9% in 2013. Retaining cases in hopes of forcing a global settlement can cause a constellation of complications. These concerns range from procedural justice issues over selecting a forum and correcting error, to substantive concerns about fidelity to state laws, to undermining democratic participation ideals fulfilled through jury trials in affected communities. Yet, if transferee judges remanded cases after overseeing discovery into common issues, they could alleviate those concerns while avoiding inconsistent rulings on common questions and streamlining discovery.
Despite the potential upside, remand rarely occurs because it disfavors those with litigation control—transferee judges, lead plaintiffs’ attorneys, and defendants. Transferee judges deem settlement a hallmark of their success. Lead plaintiffs’ lawyers try to increase their fees by inserting fee provisions into settlements. Likewise, plaintiffs’ attorneys can bypass doctrinal uncertainties over weak claims by packaging plaintiffs together in a global settlement. And aggregate settlements allow defendants to resolve as many claims as possible in one stroke, take their hit, and return to business, which their shareholders view as a net positive. The remand process itself defers to these vested interests. Although the Panel could remand cases at a party’s request, in practice it appears never to have done so. Rather, it waits for the transferee judge to admit defeat and suggest remand—thereby conceding failure.
For transferee judges to begin remanding cases, the “pro-settlement” norm and “remand-as-a-failure” stigma must change. Accordingly, transferee judges should routinely entertain a suggestion for remand by a party or initiate them sua sponte as soon as discovery on common issues concludes and only case-specific issues remain. Likewise, the Panel should seriously consider parties’ remand requests even when the transferee judge does not support them. This reopens a direct line for parties to request remand when common discovery ends, but the transferee judge prefers to hold cases hostage in hopes of coercing settlement.
If you happen to be in Buffalo this Monday, you might check out SUNY's Civil Justice Symposium on Recent Developments in Tort Law and Practice. Ken Feinberg is the keynote speaker. There's also a panel at 10:20 where I, along with our co-blogger Sergio Campos, Emery Lee (FJC), and Matt Steilen will discuss disaggregating (I think the official title is Aggregation and Disaggregation in Mass Torts). Here's the rest of the agenda:
Civil Justice Symposium 2014: Recent Developments in Tort Law and Practice
Kenneth R. Feinberg as The Gerald S. Lippes Lecture Speaker
The Lippes Lecture is brought to you by SUNY Buffalo Law and UB's School of Managment
Mr. Feinberg is an attorney who has overseen the payouts of billions of dollars to the victims of the September 11 Victim Compensation Fund, the BP oil spill, and the Boston Marathon bomb victims, among other highly visible settlements.
7:30 a.m.Conference and keynote registration begins
8:00 a.m. Coffee and light food
8:45 a.m. to 10:00 a.m. Keynote Address and Q&A
The all-day CLE conference - Civil Justice Symposium 2014 - featuring renowned judges and attorneys on recent developments in tort law and practice to immediately follow the Lippes Lecture.
Earn 4.5 non-transitional NYS CLE credits in the area of professional practice. The Law School has a financial harship policy. For details contact: Lisa Mueller email@example.com.
For a full panel listing, including descriptions and speakers visit our web page.
10:20 a.m. Aggregation and Disaggregation in Mass Torts
11:30 a.m. Luncheon
12:15 p.m. Luncheon panel with judges from across NYS speak on their experience with asbestos litigation.
1:40 p.m. Past, Present and Future of NYCAL
2:50 p.m. Update on the RAND ICJ Asbestos Project
4:00 p.m. The Past, Present and Future of the New York Scaffolding Law
5:00 p.m. Wine & Beer Reception with light fare
Sponsored in part by the SUNY Buffalo Law Alumni Association
* Not a member of the LAA? Join here.
Sunday, September 21, 2014
Professors Adam Zimmerman (Loyola Los Angeles) and Dana Remus (North Carolina) have posted to SSRN their article, Aggregate Litigation Goes Private, 63 Emory L.J. 1317 (2014). Here is the abstract:
In Disaggregative Mechanisms, Professor Jaime Dodge documents how corporate defendants increasingly design their own mass resolution systems to avoid collective litigation — what she calls “disaggregative” dispute resolution. According to Dodge, such schemes promise benefits not only to putative defendants, but also to plaintiffs — resolving disputes quickly, handling large volumes of claims predictably, and sometimes, offering more compensation than would be available through aggregate litigation. She observes, however, that these systems also risk underdeterrence. Dodge concludes by endorsing disaggregative mechanisms while suggesting a need for more public oversight.
In the following response, we argue that, left unregulated, such highvolume claim systems threaten transparency, deterrence, and even the rule of law. We therefore agree with Dodge’s call for public oversight. But we observe that a number of policing and oversight mechanisms already exist. Today, lawmakers and regulators police collective arbitration and private settlement funds, in a wide variety of areas — from financial and environmental regulations to employment and consumer protection laws. After reviewing the ways that policymakers currently regulate corporate dispute resolution, we examine their effectiveness by exploring two regulated private settlement systems in more detail: (1) regulations developed by the Obama Administration that require airlines to offer “liquidated damages” using a preapproved settlement grid when they overbook customers on a flight and (2) regulations imposed by the Office of the Comptroller of the Currency following accusations that many of the nation’s largest banks executed “robo-signed” mortgages that required banks to perform a detailed “independent foreclosure review” of past loans with borrowers. These case studies demonstrate both the challenges to, and opportunities for, government bodies that attempt to encourage sound regulation of mass private settlement systems without compromising their potential contributions to increased access, equality, and efficiency.
Friday, September 12, 2014
On August 21, 2014, the Oregon Supreme Court embraced the ALI's definition of a non-class aggregate settlement and held that an attorney who represented victims of clergy abuse failed to get the clients' informed consent before distributing a lump-sum settlement. In In re Complaint as to the Conduct of Daniel J. Gatti, the court noted that Gatti failed to get clients' informed consent in writing to the formula or method he devised to divvy up the defendants' lump-sum settlement payments, which violated Rule 1.8(g). As a result, the court imposed a 90-day suspension as a sanction.
For more on the problems associated with lump-sum settlements, see Howie's article, The Trouble with All-or-Nothing Settlements.
Wednesday, September 10, 2014
Professor Neal Katyal (Georgetown) and Theodore Olson (Gibson Dunn) take part in a Federalist Society panel on class action reform and the BP Deepwater Horizon case; the panel is moderated by Stuart Taylor (Brookings Institution).
Monday, August 4, 2014
Professor Linda Mullenix has posted a new article titled "Designing Compensatory Funds: In Search of First Principles" on SSRN. It takes on several high-profile compensation funds and may have something of interest to say about how GM is designing its own compensation fund. Here's the abstract:
The World Trade Center Victims’ Compensation Fund of 2001 ushered in a new age of fund approaches to resolving claims for mass disasters in the United States. Since then, numerous funds have been created following several mass events injuring large numbers of claimants. The Gulf Coast Claims Facility, created in the immediate aftermath of the BP Deepwater Horizon oil platform explosion, represented a further expansion of fund design and operation. The funds that have been implemented since 2001, including the World Trade Center Fund, have been the object of both praise as well as criticism. Notably, all these funds have been designed and implemented after the events giving rise to a universe of mass claimants. This article suggests that the policy recommendations for future fund design largely fail to address antecedent threshold questions about the nature of the events giving rise to possible recourse to a fund for compensation of claims. Although such compensation funds have been intended to provide an alternative to the tort compensation system and to operate largely outside the purview of the judicial system, instead most fund designs have relied on tort notions of corrective justice that mimic the tort system. However, many funds have in practice entailed mixed theories of corrective and distributive justice, confusing the purpose, utility, and goals of such funds. This article asks fundamental questions about the goals of such funds and whether and to what extent disaster compensation funds comport with theories of justice. It suggests that certain types of mass disaster events ought not to be resolved through fund auspices at all, while only a limited universe of communitarian harms should give rise to such a response. Finally, a communitarian fund designed ex-ante might more fairly be based on theories of distributive justice based on an egalitarian social welfare norm.
Monday, July 14, 2014
Professor Linda Mullenix (U. Texas) has posted to SSRN her article, Ending Class Actions as We Know Them: Rethinking the American Class Action, Emory. L.J. (forthcoming 2014). Here is the abstract:
Class actions have been a feature of the American litigation landscape for over 75 years. For most of this period, American-style class litigation was either unknown or resisted around the world. Notwithstanding this chilly reception abroad, American class litigation has always been a central feature of American procedural exceptionalism, nurtured on an idealized historical narrative of the class action device. Although this romantic narrative endures, the experience of the past twenty-five years illuminates a very different chronicle about class litigation. Thus, in the twenty-first century American class action litigation has evolved in ways that are significantly removed from its golden age. The transformation of class action litigation raises legitimate questions concerning the fairness and utility of this procedural mechanism, and whether class litigation actually accomplishes its stated goals and rationales. With the embrace of aggregative non-class settlements as a primary – if not preferred – modality for large scale dispute resolution, the time has come to question whether the American class action in its twenty-first century incarnation has become a disutilitarian artifact of an earlier time. This article explores the evolving dysfunction of the American class action and proposes a return to a more limited, cabined role for class litigation. In so doing, the article eschews alternative non-class aggregate settlement mechanisms that have come to dominate the litigation landscape. The article ultimately asks readers to envision a world without the twenty-first century American damage class action, limiting class procedure to injunctive remedies. In lieu of the damage class action, the article encourages more robust public regulatory enforcement for alleged violation of the laws.
Tuesday, July 1, 2014
Joe Nocera has a short opinion piece on Ken Feinberg and his work in progress - the GM claims fund. You can find the piece here. The question for Feinberg is always - is this replicable? The answer depends on the company's tolerance for risk and desire for atonement.
The New York Times' Danielle Ivory also covered the new fund here, explaining how the fund works.
I also recommend the Valukas report on GM. My favorite part is his description of the "GM nod." Everyone at a meeting nods their head to a plan, nobody actually does anything to move it forward.
Thursday, May 29, 2014
Plaintiffs' attorneys huddled in Chicago on Wednesday to strategize about where to ask the MDL Panel to send the GM ignition switch cases. As usual, there are several things that will influence plaintffs' attorneys' pick.
According to this morning's article in the WSJ, Elizabeth Cabraser called the litigation "a perfect storm for a class action." Maybe. But that will largely depend on which circuit and which judge hears the case, how GM's bankruptcy affects the pending claims, and whether attorneys forgo personal injury claims (they will likely be excluded in the class definition) to pursue product liability and economic injuries.
Choice of procedural law, like how to apply Rule 23, can vary. Under Chan v. Korean Airlines, Ltd. (D.C. Cir. 1989), the Van Dusen doctrine, which holds that transferee courts must apply the choice of law interpretation of the transferor circuit, may not apply to 1407 transfers. Rather, when it comes to procedural and other federal law matters, Korean Airlines suggests that transferee courts are obligated to follow their own interpretation of the relevant law. Several circuits follow this rationale including the Second, Eighth, Ninth, and Eleventh. Other circuits, including most notably, the Seventh, have held that a transferee court should use transferor court's interpretation of federal law.
According to Bloomberg, several plaintiffs' attorneys are pushing for a California venue before Judge James Selna, who is currently handling the Toyota acceleration MDL. This strategy makes sense on several fronts. The Ninth Circuit, which originally upheld (in part) the certification in Dukes v. Wal-Mart Stores, Inc., has shown a willingness to resolve aggregate cases through class actions. And given that courts in the Ninth Circuit apply their own procedural law where circuit splits are concerned, this could further help plaintiffs. Finally, Judge Selna, who certified an economic loss settlement class action in the Toyota litigation, is a logical choice.
But other plaintiffs' attorneys (and of couse GM) have other ideas about where the MDL should land. Bloomberg reports:
Other plaintiffs want the cases to be heard in Chicago, Miami or Corpus Christi,Texas, where they have sued. GM wants the cases consolidated in the federal court in Manhattan, about a mile from where a prior incarnation of the company filed for bankruptcy in 2009. Company lawyers say proximity to the bankruptcy court trumps Selna’s experience.
While the Panel considers the forum requests by the parties, it is in no way limited to those venues. There are several factors that it typically cites in favor of forum selection such as the location of discovery materials, convenience of the witnesses, location of grand jury proceedings, possibility of coordination with related state-court proceedings, where the majority of cases are located, knowledge of the transferee judge, and the willingness and motivation of a particular judge to handle an MDL docket. Of these factors, the transferee judge is by far the most important. The Panel tends to look for judges who have handled MDLs successfully in the past. And, for better or worse, "successful" means quick settlement (see here, p. 11-12 for more).
The Judicial Panel on Multidistrict Litigaiton is comprised of seven judges from around the country. Judge David Proctor is the Panel's newest edition and was added just this year to replace Judge Paul Barbadoro.
For more on the process that will--and should--unfold once a transferee judge is appointed and how those judges should go about appointing lead lawyers, see here.
Wednesday, May 28, 2014
As I've slowly emerged from my grading slump, I've caught up on a number of interesting articles dealing with class actions, two of which are authored by Professor Jay Tidmarsh at Notre Dame. In case you missed them, too, I thought I'd mention them here.
The first is a new take on auctions. Auctions have been proposed and used to pick class counsel, but Tidmarsh proposes using them to increase settlement prices. Once the parties reach a settlement, the court puts the class's claims up for auction. If an entity--presumably a corporation, though perhaps a third-party financier?--outbids the settlement price, that entity purchases the class's rights to sue and can continue to litigate against the defendant. Here's the idea in Tidmarsh's own words in his SSRN abstract:
Although they promise better deterrence at a lower cost, class actions are infected with problems that can keep them from delivering on this promise. One of these problems occurs when the agents for the class (the class representative and class counsel) advance their own interests at the expense of the class. Controlling agency cost, which often manifests itself at the time of settlement, has been the impetus behind a number of class-action reform proposals.
This Article develops a proposal that, in conjunction with reforms in fee structure and opt-out rights, controls agency costs at the time of settlement. The idea is to allow the court, once a settlement has been achieved, to put the class’s claims up for auction, with the settlement acting as reserve price. An entity that outbids the settlement becomes owner of the class’s claims, and may continue to pursue the case against the defendant. A successful auction results in more compensation for the class. On the other hand, if no bids are received, the court has evidence that the settlement was fair. The prospect of a settlement auction also deters class counsel and the defendant from negotiating a sweetheart deal that sells out the class.
The Article works through a series of theoretical and practical issues of settlement auction, including the standards that a court should use to evaluate bids, the limitations on who may bid, and the ways to encourage the emergence of an auction market.
Tidmarsh's second article returns to a long-espoused notion: trial by statistics (or, as Justice Scalia used in the pejorative sense in Wal-Mart Stores, Inc. v. Dukes, "Trial by Statistics."). Here's the abstract, which explains the idea concisely:
“Trial by statistics” was a means by which a court could resolve a large number of aggregated claims: a court could try a random sample of claim, and extrapolate the average result to the remainder. In Wal-Mart, Inc. v. Dukes, the Supreme Court seemingly ended the practice at the federal level, thus removing from judges a tool that made mass aggregation more feasible.
After examining the benefits and drawbacks of trial by statistics, this Article suggests an alternative that harnesses many of the positive features of the technique while avoiding its major difficulties. The technique is the “presumptive judgment”: a court conducts trials in a random sample of cases and averages the results, as in trial by statistics. It then presumptively applies the average award to all other cases, but, unlike trial by statistics, any party can reject the presumptive award in favor of individual trial. The Article describes the circumstances in which parties have an incentive to contest the presumption, and explores a series of real-world issues raised by this approach, including problems of outlier verdicts, strategic behavior by parties, and the parties’ risk preferences. It proposes ways to minimize these issues, including a requirement that the party who reject a presumptive judgment must pay both sides’ costs and attorneys’ fees at trial.
The Article concludes by showing that this approach is consonant with important procedural values such as efficiency, the accurate enforcement of individual rights, dignity, and autonomy.
Friday, May 16, 2014
I posted a new article to SSRN this morning that's been a labor of love for well over a year now. I'm excited about this new piece for a few reasons.
First, it debuts an original data set of all lead lawyers appointed in 72 product liability and sales practices MDLs that were pending as of May 14, 2013. As such, it's the only paper (that I know of) that includes empirical evidence on plaintiffs-side repeat players appointed to leadership positions. (Yes, it includes a list of some of the most entrenched repeat lawyers and law firms as an appendix.) (If this is of interest, have a look at Margaret Williams, Emery Lee, and Catherine Borden's recently published paper in the Journal of Tort Law titled Repeat Players in Federal Multidistrict Litigation, which looks at all plaintiffs' attorneys in MDLs using social network analysis.)
I also explain why appointing a leadership group comprised of predominately repeat players can cause inadequate representation problems. For example, repeat players playing the long game have rational, economic incentives to curry favor with one another, protect their reputations, and develop reciprocal relationships to form funding coalitions and receive client referrals. As such, extra-legal, interpersonal, and business concerns may govern their interactions and trump their agency obligations to uniquely situated clients who could threaten to bust a multi-million dollar deal. Non-conforming lawyers may be ostracized and informally sanctioned, which promotes cooperation, but deters dissent and vigorous representation. Over time, expressing contrary opinions could brand the dissenting lawyer a defector, which could decrease lucrative leadership opportunities. (Other reasons abound, which I explain on pages 25-27 of the paper.)
Second, it provides some much needed guidance for transferee judges. Although the Manual for Complex Litigation remains the go-to guide for transferee judges, it hasn't been updated in 10 years. So much has changed since the fourth edition was published in 2004. Accordingly, in "Judging Multidistrict Litigation," I suggest best practices for appointing and compensating lead lawyers. Judges can compensate lead lawyers on a coherent and more predictable basis by distilling current theories down to their common denominator: quantum meruit. Quantum-meruit awards would align fees with other attorney-fee decisions and compensate leaders based on the value they actually add.
Third, as anyone familiar with the area knows, settlement review in nonclass litigation is controversial at best. After judges expressly deny class certification they then harken back to Rule 23 and their "inherent equitable authority" to comment on settlements. So, employing a quantum-meruit theory for awarding lead lawyers' attorneys' fees would give judges a legitimate private-law basis for scrutinizing settlements. Because courts must evaluate the case's success to determine how much compensation is merited, it could likewise help stymie a trend toward self-dealing where repeat players insert fee provisions into master settlements and require plaintiffs and their attorneys to "consent" to fee increases to obtain settlement awards.
The article is forthcoming in N.Y.U. Law Review in April of 2015, so I still have a bit of time to tinker with it and welcome comments in the interim (eburch at uga.edu). In the meantime, here's the formal SSRN abstract.
High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence. On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight. But on the other, without the arsenal class certification once afforded, judges are relatively powerless to police the private settlements they encourage. Of course, this power shortage is of little concern since parties consent to settle.
Or do they? Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of repeat players to leadership positions, which may complicate genuine consent through inadequate representation. Repeat players’ financial, reputational, and reciprocity concerns can govern their interactions with one another and opposing counsel, often trumping fidelity to their clients. Systemic pathologies can result: dictatorial attorney hierarchies that fail to adequately represent the spectrum of claimants’ diverse interests, repeat players trading in influence to increase their fees, collusive private deals that lack a viable monitor, and malleable procedural norms that undermine predictability.
Current judicial practices feed these pathologies. First, when judges appoint lead lawyers early in the litigation based on cooperative tendencies, experience, and financial resources, they often select repeat players. But most conflicts do not arise until discovery and repeat players have few self-interested reasons to dissent or derail the lucrative settlements they negotiate. Second, because steering committees are a relatively new phenomenon and transferee judges have no formal powers beyond those in the Federal Rules, judges have pieced together various doctrines to justify compensating lead lawyers. The erratic fee awards that result lack coherent limits. So, judges then permit lead lawyers to circumvent their rulings and the doctrinal inconsistencies by contracting with the defendant to embed fee provisions in global settlements—a well recognized form of self-dealing. Yet, when those settlements ignite concern, judges lack the formal tools to review them.
These pathologies need not persist. Appointing cognitively diverse attorneys who represent heterogeneous clients, permitting third-party financing, encouraging objections and dissent from non-lead counsel, and selecting permanent leadership after conflicts develop can expand the pool of qualified applicants and promote adequate representation. Compensating these lead lawyers on a quantum-meruit basis could then smooth doctrinal inconsistencies, align these fee awards with other attorneys’ fees, and impose dependable outer limits. Finally, because quantum meruit demands that judges assess the benefit lead lawyers’ conferred on the plaintiffs and the results they achieved, it equips judges with a private-law basis for assessing nonclass settlements and harnesses their review to a very powerful carrot: attorneys’ fees.
May 16, 2014 in Aggregate Litigation Procedures, Class Actions, Ethics, Informal Aggregation, Lawyers, Mass Tort Scholarship, Procedure, Products Liability, Settlement, Vioxx, Zyprexa | Permalink | Comments (0) | TrackBack (0)