Mass Tort Litigation Blog

Grisham's Latest

What do mass tort scholars do in their down time?  ... Well, read a mass tort novel, of course.  John Grisham's latest book, The Appeal, involves a toxic tort of groundwater pollution that injures many in a Mississippi town -- sort of Grisham thriller meets Jonathan Harr's A Civil Action.  The plot steers off into pursuing issues of judicial elections, but along the way there are plenty of mass tort themes, involving David vs. Goliath plaintiff-defendant litigation, class actions, and the implications of a trial verdict for case inventories.  I'm in the middle and having fun, as I have reading Grisham since The Firm came out back in the early 90s.

For the last few years, I've been gradually assembling a "mass tort movie library" of DVDs, which I lend out to students in my mass tort litigation class, and I use a clip of the film version of A Civil Action in class.  I've been mulling over incorporating excerpts from novels in my class, as well -- Grisham's King of Torts also sounds many mass tort themes.  Part of the appeal of studying mass tort litigation is the variety of perspectives available -- not only substantive and procedural, but also factual and fictionalized.

BGS

Class Action Watch Issue

The Federalist Society has posted the March 2008 issue of Class Action Watch.  Articles include the following:

Cy Pres Settlements by Theodore H. Frank (AEI)

The Supreme Court Rejects "Scheme Liability" in Securities Class Actions by Larry Obhof (Kirkland & Ellis)

Dukes, et al. v. Wal-Mart Stores, Inc.: Ninth Circuit Affirms Largest Employment Discrimination Class in History by John Beisner, Evelyn Becker & Karl Thompson (all of O'Melveny & Myers)

The Problem of Class Action Tolling in Mass Tort Personal Injury Litigation by Jessica Davidson Miller & Geoffrey Wyatt (both of O'Melveny & Myers)

FACTA Truncation: Applicable to the Digital World? by Shawn J. Organ (Jones Day)

Silberblatt v. Morgan Stanley: Class Action Court Protects Unnamed Class Members by Jack Park (Spec. Asst. for Inspector Gen. for Corp. for Nat'l & Community Service)

"Reverse Bifurcation" Approach to Punitive Damages Trials in West Virgina by Mark A. Behrens & Christopher E. Appel (both of Shook Hardy)

BGS

Federal Judicial Center Releases its Latest Report on CAFA

Emery Lee and Tom Willging, of the Federal Judicial Center, have released their latest report on CAFA’s Impact on the Federal Courts. Here’s a link to the report. Here is an excerpt of their most important findings (p. 1-2):

• There has been a dramatic increase in the number of diversity class actions filed as original proceedings in the federal courts in the post-CAFA period. The pre-CAFA average of such filings per month was 11.9; the post-CAFA average was 34.5 per month (see Figures 2 and 3 in Appendix B).
• Diversity class action removals increased in the immediate post-CAFA period over their 2004 levels but have been trending downward since 2005. In the last months of the study period, diversity removals were at levels similar to those in the pre-CAFA period (see Figures 2 and 3 in Appendix B).
• The increase in diversity class action original proceedings was widespread. Diversity class action original proceedings increased overall in the districts in eleven of the twelve circuits, when we compared filings for calendar years 2002 and 2003 with those for the last two years of the study period, July 1, 2005–June 30, 2007 (see Figure 4 in Appendix B). Diversity class action original proceedings also increased between the two time periods in all but one of the districts with substantial numbers of diversity class actions during the study period (see Figures 5 and 6 in Appendix B).
• The results we found for diversity class action removals were more varied. When we compared removals in calendar years 2002 and 2003 with those in the last two years of the study period, we found that they decreased in the last two years of the study period in five circuits (see Figure 4). However, when we analyzed the districts separately, we found that most of the districts with substantial numbers of diversity class actions experienced some increase in diversity removals (see Figures 5 and 6 in Appendix B).
• The increase in diversity class actions is due largely to increases in the numbers of contracts, consumer protection/fraud, and torts-property damage class actions being filed in or removed to federal court in the post-CAFA period. Torts personal injury cases have not increased in the post-CAFA period (see Figure 7 in Appendix B).

Many thanks to Tom and Emery for their continued efforts on this project. It’s been a wonderful resource for mass tort scholars and provides much needed empirical data on class litigation.

ECB

Second Circuit Dismisses Light Cigarette Class Action

The Second Circuit dismissed an $800 billion light cigarettes class action against tobacco companies today. Although Judge Weinstein approved the class in September of 2006, the Second Circuit held found that individual issues, such as why smokers chose light cigarettes, predominated over common ones. Here’s an excerpt of the New York Times story:

Plaintiffs’ lawyers had wanted to represent potentially millions of people across the country who had smoked light cigarettes, but the court found that it was impossible to tell why smokers chose light cigarettes, so the group could not be treated as a class. Instead, smokers would have to sue individually.

"Individualized proof is needed to overcome the possibility that a member of the purported class purchased lights for some other reason than the belief that lights were a healthier alternative," the ruling said.

The ruling by a three-judge panel of the United States Court of Appeals for the Second Circuit means that individuals can still pursue lawsuits against cigarette makers, but they cannot be grouped together as a class.

Although not entirely unexpected, the ruling was a setback for lawyers who thought that the ruling approving the class, issued by Federal District Judge B. Weinstein in Brooklyn in September 2006, could have opened a new avenue for litigation against the tobacco industry, exposing cigarette companies to potentially large damages.

Judge Weinstein’s ruling in the case, known as Schwab for one of its plaintiffs, Barbara Schwab, had been viewed as significant. That was partly because it was the first so-called lights case certified as a class in federal court and partly because such lawsuits on behalf of smokers of light cigarettes have generally not been successful.

Unlike most tobacco lawsuits, the Schwab case did not contend that smokers were injured but instead that they had been subjected to a fraud since 1971, when Philip Morris began selling Marlboro Lights, the first light cigarette.

On a related note, the House of Representatives approved a bill today that would give the Food and Drug Admistration the authority to regulate tobacco.

ECB

Charleston Law Review Symposium Issue on Punitive Damages After Philip Morris v. Williams

Last September, Charleston Law School hosted a symposium entitled, Punitive Damages, Due Process, and Deterrence: The Debate After Philip Morris v. Williams.  (See prior posts here and here.)  The resulting symposium issue of the Charleston Law Review has just been published.  Articles in the issue include the following:

Anthony Sebok, After Philip Morris v. Williams: What is Left of the "Single-Digit" Ratio?, 2 Chas. L. Rev. 287 (2008)

Anthony J. Franze, Clinging to Federalism: How Reluctance to Amend State Law-Based Punitive Damages Procedures Impedes Due Process, 2 Chas. L. Rev. 297 (2008).

Neil Vidmar & Matthew Wolfe, Fairness Through Guidance: Jury Instruction on Punitive Damages After Philip Morris v. Williams, 2 Chas. L. Rev. 307 (2008)

Christopher J. Robinette, Peace: A Public Purpose for Punitive Damages?, 2 Chas. L. Rev. 327 (2008).

Keith N. Hylton, Due Process and Punitive Damages: An Economic Approach, 2 Chas. L. Rev. 345 (2008)

Victor E. Schwartz & Christoper E. Appel, Putting the Cart Before the Horse: The Prejudicial Practice of A "Reverse Bifurcation" Approach to Punitive Damages, 2 Chas. L. Rev. 375 (2008)

Elizabeth J. Cabraser & Robert J. Nelson, Class Action Treatment of Punitive Damages Issues After Philip Morris v. Williams: We Can Get There From Here, 2 Chas. L. Rev. 407 (2008)

Byron G. Stier, Now It's Personal: Punishment and Mass Tort Litigation After Philip Morris v. Williams, 2 Chas. L. Rev. 433 (2008).

Michael L. Rustad, The Uncert-Worthiness of the Court's Unmaking of Punitive Damages, 2 Chas. L. Rev. 459 (2008)

Downloads of the articles via .pdf files are available at TortsProf Blog.

BGS

ABA Teleconference on Communicating with Class Members

On May 20, the ABA Class Action and Derivative Suits Committee will host a teleconference CLE program on communicating with class members. I’ll be on the panel along with Lisa Rodriguez and Chris Murphy. Here’s the pertinent information from the ABA:

Upcoming Class Actions and Derivative Suits Committee CLE Program: Are You Talking To Me? Communicating with Class Members Before, During and After Class Certification Click here to register: http://www.abanet.org/cle/programs/t08atm1.html

Date: Tuesday, May 20, 2008 Duration: 90 Minutes Time: 12:00PM-1:30pm Central Program Description: Confusion abounds among class counsel, defense counsel, courts, and putative class members as to the scope and appropriateness of communications with putative class members before, during, and after class certification. Our teleconference and audio webcast will provide guidance on who can talk to whom, when, and about what.

This program will discuss everything relating to communications with class members, including:

Pre-filing communications, seeking plaintiffs via websites, and the effect of any website advertising to obtain plaintiffs What communications are permissible between filing the complaint and class certification, i.e., are the class members considered represented or not?

Can discovery be propounded to the putative class members? What about questionnaires?

Is there a different standard where the non-named plaintiffs have called plaintiffs' counsel directly and asked to be a part of the case but are not named plaintiffs?

What if a defendant has an ongoing business or employment relationship with the putative class? What's allowed and when? Must any communications be approved by the court or plaintiffs' counsel?

If communications are made, can questionnaires obtained by class or defense counsel be used as evidence? What if they are unsigned or redacted?

What about post-certification before any opt-out period expires? What effect does the ABA’s recent Ethics Opinion (No. 07-445) have on such communications? Post-certification and opt-out period expiration: what's the scope of discovery from absent class members? Is it allowed? When? How?

Program Moderator Fred B. Burnside, Davis, Wright, Tremaine, LLP, Seattle, WA

Program Faculty Beth Burch, Assistant Professor of Law, Cumberland School of Law, Samford University, Birmingham, AL Lisa Rodriguez, Trujillo, Rodriguez & Richards, LLC, Haddonfield, NJ Chris Murphy, McDermott, Will, & Emery, Chicago, IL

ECB

Behrens, Sebok on Nagareda's Mass Torts in a World of Settlement

Mark Behrens of Shook, Hardy & Bacon has a short book review of Professor Richard Nagareda's Mass Torts in a World of Settlement in the Federalist Society's February issue of Engage.  Prior posts on Professor Nagareda's book are here (see interview below) and here.

For further views of Professor Nagareda's book, see also a September 2007 FindLaw column from Professor Anthony Sebok (Brooklyn), who will also be reviewing Professor Nagareda's book in a forthcoming issue of the Michigan Law Review.

BGS

Stanford's Global Class Action Clearinghouse Website

As a follow-up to the Globalization of Class Actions Conference in Oxford last December, Stanford has launched the Global Class Actions Clearinghouse Website. As Deborah Hensler writes, "[W]e hope [this website] will also become a repository for statutes, rules and important cases; articles and commentary; and news of developments and events related to the evolution of representative litigation, class actions and group proceedings worldwide." For those of you who would like to be consulted on class action developments within your country, send an e-mail to Deborah Hensler with your name, title, and institutional affiliation. Many thanks to Deborah, Christopher Hodges, and Stanford for spearheading this project, which will certainly improve the dissemination of knowledge about class actions worldwide.

ECB

Conference: Justice and the Role of Class Actions

Cardozo Law School in New York is hosting a conference on Friday, March 28 entitled "Justice and the Role of Class Actions." The organizers describe the conference as follows:

For too long, coverage of class action litigation has understated or ignored completely the critical role that class actions have played in protecting consumer safety, advancing civil rights, protecting the integrity of the market, and distributing justice. The goal of this conference is to present a series of panels focusing on the historic value of class actions, their contemporary application, as well as the threats and opportunities facing the class action system today and in the future.  The conference, cosponsored with the American Constitution Society for Law and Policy and Public Justice, will bring together a diverse group of scholars, practitioners, and law students to engage in a day-long, interactive set of conversations about class actions and the issues that swirl around this controversial and rapidly changing legal arena.

The speakers list includes some of the most prominent names in class action litigation and scholarship  (listed here in order of appearance): Kenneth Feinberg, Elizabeth Cabraser, Sean Coffey, Geoffrey Miller, Richard Nagareda, John Beisner, Paul Bland, Myriam Gilles, Michael Hausfeld, Samuel Issacharoff, Arthur Bryant, Deborah Hensler, Bill Lann Lee, Catherine Lhamon, Victor Schwartz.

The coverage of the conference is very general (panels are on the history of class actions, challenges facing class actions and globalization of class actions).  There is no specific mass tort angle, at least of the type we often write about on this blog, because class actions have largely been abandoned as a vehicle for resolving mass torts.  Constitutional torts, such as strip search class actions and Title VII class actions, remain viable and will likely be discussed at the conference.

ADL

Second Edition of Mullenix's Mass Tort Litigation Casebook

Professor Linda Mullenix (Texas) is publishing a second edition of her seminal casebook, Mass Tort Litigation: Cases and Materials.  The first edition was published in 1996, and a supplement followed in 2000.  That's quite a while for such a fast-moving field as mass tort litigation, and those of us who teach with the Mullenix text (myself included) will no doubt be opening the arriving casebook box with a kind of Christmas-morning glee.  Indeed, comparing the changes of the two casebooks should provide an interesting history of the development of mass torts -- more on that when it arrives in May.  Here's the release from West publishing:

Mullenix's Mass Tort Litigation: Cases and Materials, Second Edition is publishing in May and will be available for Fall 2008 class adoptions. This edition is updated with materials relating to breast implant litigation, tobacco litigation, and medical device and pharmaceutical litigation, in addition to the seminal cases relating to Agent Orange, Dalkon Shield, DES, and asbestos litigation. The materials demonstrate that the core cases and materials relating to mass tort litigation still remain viable precedents after 25 years and that courts are still struggling to find solutions to the resolution of this complex litigation. The casebook is suitable for advanced courses in tort litigation, complex procedure, class action litigation, and dispute resolution offerings.

BGS

Kentucky Mass Tort and Class Action Litigation Committee

The Kentucky Supreme Court has created a committee to explore possible improvements in the handling of mass tort litigation.  According to the press release, the committee "will determine whether current court rules for attorneys and judges provide adequate safeguards against unethical conduct and whether rule changes may provide guidance to attorneys and courts dealing with complex litigation."  The appointment comes in the wake of indictments against several Kentucky lawyers charged with stealing client funds in fen-phen settlements.  Here's the Torts Prof post about the committee, with a link to a news account.

I met with the Kentucky committee in Frankfort last month, and enjoyed the opportunity to discuss with them the challenges of mass tort litigation and some of the ways in which rules of procedure and rules of professional conduct may be modified or sensibly interpreted to accommodate the demands of mass disputes while respecting core values of justice and attorney-client relationships.  It will be interesting to see what proposals, if any, the committee generates after exploring the possibilities.  It will be equally interesting to see how many of those proposals are ultimately adopted.

HME

Widener Law School Symposium on Crimtorts

As I've previously posted, Widener Law School in Harrisburg is hosting a symposium entitled, Crimtorts, on Monday, February 25, 2008.  Here's the brochure: Download crimtorts_symposium_brochure.pdf  One change from the brochure -- Professor Mary Kate Kearney is unable to present, and instead, Professor Frank Vandall of Emory will present.  I will appear on the Applications Panel and discuss crimtorts and class actions. 

The symposium is being organized by Professor Christopher Robinette, who's also an editor of Torts Prof Blog.  The Widener Law Journal will subsequently publish papers from the symposium.

BGS   

Lerach Sentenced to Two Years Prison for Alleged Kickbacks to Class Representatives

Article in the Wall Street Journal -- Closing Argument: Mr. Lerach Mulls Life Behind Bars, by Peter Lattman.  Here's an excerpt:

Yesterday in Los Angeles, U.S. District Judge John Walter sentenced Mr. Lerach, 61 years old, to two years in federal prison for conspiring to obstruct justice in connection with alleged kickback payments made by his former law firm, Milberg Weiss LLP. Mr. Lerach is also paying an $8 million penalty. He has been suspended from the practice of law and will be disbarred.

The punishment brings to an end a controversial legal career. The costly class-action lawsuits Mr. Lerach pursued in the name of shareholders made him loathed in America's boardrooms. Executives hit with his suits said they had been "Lerached." His defenders maintained he had championed investors and helped keep companies accountable.

It's the latter view that Mr. Lerach, who has earned more than $200 million, sees as his legacy. He recently looked back at his career and the case against him in an interview at his club and at his home, an Italianate California mansion perched on a cliff overlooking the Pacific Ocean in La Jolla. And, with his Chihuahua, Tommy, on his lap, he looked ahead to being in prison and to getting out.

The Wall Street Journal also has an editorial on Lerach. 

BGS

A Meaner Class Action World Without Lerach & Bershad

Other authors at this blog have been following the prosecutions of lawyers from Milberg, Weiss.  Did those prosecutions have any effect on the world of class actions?  The answer, according to lawyers at the Professional Liability Underwriting Society’s D&O Symposium on February 6, 2008 seems to be yes, but not in the way you would expect.  There's no reduction in filings, but instead in collegiality.  According to a defense-side lawyer at WilmerHale, "overcaffeinated 35-year-olds" are taking over some of the suits that Milberg Weiss would have brought.  The article reporting on the conference, which you can find in the National Underwriter P&C, goes on to quote another defense side lawyer from Cravath:

the new lawyers are importing tactics from product liability cases, resulting in “an increasing inexorable tide of nastiness and incivility.”  In particular, he referred to tactics such as filing discovery sanction motions, noting that while good-intentioned people on the defense side are trying to find “millions of pieces of paper,” they are being accused of “all sorts of high crimes and misdemeanors” by these younger attorneys who are “hijacking” the litigation process.  [emphasis added].

These lawyers, at least, seem to be feeling the loss of repeat players.  Securities litigation was rather predictable, they assert, allowing insurers to determine risk early on.  The removal of these prominent plaintiff's attorneys from the scene is apparently changing all that.  A couple of thoughts.  First, I wonder if the Cravath lawyer concerned about good-intentioned people (and note that "good-intentioned" -- rather than well-intentioned -- are the words of the journalist and not the lawyer), had forgotten the recent flurry over the Qualcomm case when he made his comments.  For more on Qualcomm, look in Law Technology Today and at the Legal Ethics Forum.  Second, the overall tone seems to be that aggressive litigation is a bad thing (one lawyer is quoted as saying new lawyers make the case "about the process of litigation rather than about the merits").  But sometimes aggressive litigation is what addresses the merits, as compared with, say, just settling all cases in some smoky back room. I'm not saying that is what lawyers were doing before the entry of these over-caffeinated folks.  But I'm also not against a cup or two if you're a bit slow in the morning.  How do you determine the "merits" in the absence of litigation?

ADL
 

 

"Thomas" Toy Train Lead-Paint Class Action Settlement

Article on cnn.com -- 'Thomas' toymakers to pay $30M settlement.  Here's an excerpt:

The maker of "Thomas & Friends Wooden Railway" toys has agreed to pay $30 million to settle a nationwide class-action lawsuit by thousands of families who purchased lead-tainted products, a plaintiffs' attorney said Wednesday.

Under the deal, Oak Brook-based RC2 Brands will offer cash refunds or replacement toys, plus what the company calls a bonus toy; it also promises to implement new quality controls, said Jay Edelson, a plaintiffs' attorney in the case.

"We believe this really is the first step toward cleaning up the problem of lead paint in toys," the Chicago attorney said. "It will put a lot of pressure on other companies to step up and act morally. We hope this becomes a problem of the past."

BGS

Erichson on CAFA

I posted my new paper -- CAFA's Impact on Class Action Lawyers -- on SSRN.  The article examines data on forum selection and claim selection in the wake of the Class Action Fairness Act, in an effort to understand the statute's impact on the legal profession.  Post-CAFA forum selection in class actions focuses less on particular counties in state court and more on federal courts within circuits with relatively favorable law on class certification.  Post-CAFA claim selection has shifted away from personal injury torts and toward contract, fraud, and federal question claims.  Taken together, these adaptations by plaintiffs' lawyers appear likely to benefit the dominant class action law firms. Along the way, the article looks at CAFA in the context of other recent class action reforms, and especially as a reflection of popular and political mistrust of class action plaintiffs' lawyers.  Here's the abstract:

The Class Action Fairness Act of 2005 (CAFA) reflected a profound mistrust of class action lawyers. Three years after its enactment, examination of lawyers' adaptation strategies offers an emerging picture of the statute's impact on class actions and class action lawyers. CAFA, like the Private Securities Litigation Reform Act a decade earlier, shifted class action practice in ways that appear likely to strengthen the upper tier of the plaintiff class action bar. CAFA has affected not only the division of labor between state and federal court, but also horizontal forum selection among federal courts and class action claim selection. Analysis of these effects suggests that CAFA is achieving some of its stated objectives but is unlikely to squelch class actions or to disempower leading members of the class action bar.

HME

Italy's New Class Action Law

My utmost thanks to Jon Eskelsen, of the U.S. Chamber Institute for Legal Reform, for passing along the text of Italy’s new class action law that went into effect on December 21, 2007. The law amends Italy’s Consumers’ Code, article 140, and gives certain associations capacity to sue collectively for tort liability, unfair trade practice, and anti-competitive behavior (antitrust violations). The law doesn’t specify the availability of collective procedures to redress securities class action claims, but as I’ve noted elsewhere, suing for fraud in secondary open market transactions is much closer to a tort than a contract claim. This is, of course, in contrast with face-to-face transactions that are typically contractual in nature. Consequently, it seems that by opening the door to tort liability, Italy may also open the door to securities class actions. As always, I’d certainly be interested in any comments (on or off the blog) to the contrary. At any rate, it appears that 453.3 provides what we might classify as a combined certification/motion to dismiss procedure. Section 453.6 sets up a Camera di Conciliazione (conciliation committee) picked by both the plaintiff association and the defendant (each picks one lawyer) plus a lawyer appointed by the chief judge. I’m also told that the government will revisit class legislation in early 2009. The text of the bill is below and it takes effect on July 1:

452. The provisions contained in paragraphs 452 to 456 introduce and regulate the collective redress action intended to protect consumers, which is seen as a new general tool of protection in the context of the national measures aimed at regulating the consumers’ and users’ rights, in line with the principles introduced by Community law in order to increase the levels of protection.
453. The following article shall be added after Article 140 of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005):

“Article 140-bis (Collective redress action) - 1. The associations referred to in Article 139, paragraph 1 and the other parties referred to in paragraph 2 of this article do have legal capacity to sue in order to protect the collective interests of consumers and users by resorting to the court of the place where the company has its offices, in order to request the ascertainment of the right to be compensated for damage as well as in order to request that the defendant be ordered to return any due amounts to the individual consumers or users within legal relationships relating to agreements entered into pursuant to Section 1342 of the Italian Civil Code, or as a consequence of tort liability, unfair trade practice or anti-competition behaviour, providing that such unlawful acts damage the rights of a plurality of consumers and users.

2. The associations and the councils which duly represent collective interests have legal capacity to sue under paragraph 1 above. Those consumers and users who intend to benefit from the protection afforded by this article must notify the promoter in writing of their intention to join the class  action.  The promoter may be informed of this even during the appeal and up until the hearing scheduled in order for the parties to specify their conclusions. Any individual consumer or user who wishes to file claims having the same subject matter may in any case intervene in the action brought pursuant to paragraph 1. The commencement of the class action referred to in paragraph 1 or the fact of joining it afterwards shall interrupt the statute of limitations pursuant to Section 2945 of the Italian Civil Code.

3. At the first hearing the court, after having heard parties and gathered brief information  (to any necessary extent), shall declare the admissibility or inadmissibility of the claim by way of an order that may be challenged before the Court of Appeal, which shall rule in Chambers. The claim is declared inadmissible when it is clearly groundless, when there is a conflict of interest, or whenever the judge does not ascertain the existence of any collective interest deserving protection pursuant to this article. The judge is entitled to postpone the assessment of the admissibility of the claim when preliminary investigations concerning the same subject matter are underway before an independent authority.  Should the judge declare the admissibility of the claim, then the party who has promoted the class action is ordered to duly advertise the content of the claim, and actions are also taken for the continuation of the proceedings”.

4. Should the Judge accept the claim, he or she shall also sets the criteria to be used in order calculate the amount to be paid or given back to the individual consumers and users who have joined the class action or who have intervened in the proceedings. The Judge shall also establish the minimum amount to be paid to each consumer or user should this be possible on the basis of the documents at his or her disposal.  Within 60 days of the service of judgment, the company shall make its offer for payment by way of a written deed to be served upon any entitled party and to be filed with the clerk’s office.  Any form of proposal accepted by the consumer or user shall be enforceable.

5. The decision that brings the proceedings referred to in paragraph 1 to an end shall also produce legal effects on those consumers and users who have joined the class action. Those individual consumers or users who have not joined the class action or who have not intervened in the proceedings under paragraph 1 shall continue to have their right to bring individual actions.

6. Should the company fail to make its offer within the term referred to in paragraph 4, or should its offer remain unaccepted after 60 days of its service, the chief judge of the court having jurisdiction pursuant to paragraph 1 shall appoint a sole Camera di Conciliazione (conciliation committee) in order to set the amounts to be paid or given back to consumers and users who have joined the class action or who have intervened pursuant to paragraph 2, and who request so.  Camera di Conciliazione is composed by a lawyer duly indicated by the those who have brought the class action and by a lawyer indicated by the summoned company, and it is chaired by a lawyer appointed by the chief judge of the court, chosen from among those entered in the special register for higher jurisdictions.
Camera di Conciliazione shall set, by way of minutes to be signed by its chairman, the terms, methods and amounts to be paid in order to compensate the individual consumers and users for damages. Said minutes shall be enforceable.
Alternatively, should the  party who has promoted the class action and the defendant jointly request so, the chief judge of the court shall order out-of-court settlement before one of the conciliation bodies referred to in article 38 of Legislative Decree no. 5 dated 17th January 2003, as subsequently amended, operating in the same municipality as that of the court. The provisions set forth in articles 39 and 40 of Decree no. 5 dated 17th January 2003 (as subsequently amended) shall apply to any compatible extent.

454. The provisions referred to in paragraphs 452 to 456 shall become effective after one hundred and eighty days of the date of this law coming into force.

455. The following shall be added in article 50-bis, paragraph 1 of the Italian Code of Civil Procedure, after number 7):
“7-bis) in the proceedings referred to in article 140-bis of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005)”.

456. In the Consumer Code (Legislative Decree no. 206 dated 6th September 2005, as subsequently amended), the title of Part II of Chapter V shall be replaced as follows: “Access to justice”.

ECB

Registration for Southwestern Law School Asbestos Symposium

On Friday, January 18, 2008, Southwestern Law School is hosting a symposium entitled, Perspectives on Asbestos Litigation.   Here's the press release, and brochure: Download southwestern_law_school_asbestos_symposium_brochure.pdf  For further information about the conference, see my prior posts here and here.  Attendees may register in advance by contacting the Student Affairs Office of Southwestern Law School at (213) 738-6716.  We look forward  to an engaging and informative day with a remarkable slate of speakers, and hope you will be able to join us.

BGS

Italy's First Class Action Suit Targets Banks

Reuters reports that Italian consumer group Adusbef plans to bring a class suit against Italian banks for calculating compound interest on the initial loan plus interest that accumulates when the money is due.  Apparently this practice is known as "anatocism."  According to Italy's National Report (posted on Stanford's website on the Globalization of Class Actions), "Italy does not have any form of group litigation as a general procedural tool for the protection and the enforcement of rights and interests shared by a group of individuals equally affected by the same mass wrong or harm."  But the report does acknowledge that there are a few "collective actions" (suggesting that perhaps the use of "class action" by Reuters is a bit hasty) that address certain subjects and can be filed by consumer associations, such as Adusbef.  Granted, the report notes that there are roughly six bills proposing collective actions pending before Parliament.

ECB

What Happens to Class Actions Denied Certification?

In In re Bridgestone/Firestone Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003) (Bridgestone/Firestone II), the 7th Circuit denied certification of a nationwide class action and held that this decision was binding -- that is, absent class members could not refile this national class action in another court to obtain certification.

What happened next?  You might predict nothing. But that is not the case.  Instead, the litigation was settled in state court in Beaumont Texas.  You can see a short description in this article that appeared in the Texas Lawyer, reprinted in Law.com.  The unpublished opinion approving the settlement can be found on Westlaw: Shields on behalf of herself and all others similarly situated v. Bridgestone/Firestone, 2004 WL 546883 (Dist. Ct. Tx. 2004).

There are a lot of ways to read this chain of events.  Consider the following. The Class Action Fairness Act (CAFA) (which was passed after the events described above) was supposed to be responsive to concerns about certain state courts granting certification of class actions with minimal oversight.  It purported to solve this problem by giving jurisdiction to the federal courts of class actions over a certain size.  But when plaintiffs and defendants are both seeking certification, jurisdictional solutions like CAFA are unavailing because nobody is going to remove the case to federal court.  So does Bridgestone/Firestone II have more bite after CAFA?      

Addendum:  Since Beaumont is sometimes referred to as a "judicial hellhole", this article by Adam Liptak of the NY Times might be of interest (h/t TortsProf Blog).  Liptak analyzes a new report by the American Tort Reform Association claiming to "rank" judicial hellholes, albeit not empirically. 

“We have never claimed to be an empirical study,” said Darren McKinney, a spokesman for the association. “It’s not a batting average or a slugging percentage. It’s no more or less subjective than what appears in The New York Times."

If they actually did an empirical study, that would be worth reading.  The use of anecdotes in policy analysis is extremely misleading.  Not necessarily more misleading than the abuse of statistics can be, but perhaps less amenable to reasoned counter-argument and, to the extent that is true, more pernicious as a basis for policy making.  My favorite example of the moment of this problem is jury verdicts, which are so often reported as extraordinarily and perhaps offensively large.  But in fact studies consistently show that civil juries and judges agree approximately 80% of the time.  When they disagree, they split more or less evenly in favor of defendants and plaintiffs.  For more on this see Neil Vidmar and Valerie P. Hans' new book American Juries: The Verdict, a follow up to their excellent Judging the Jury, which presented the data in a very balanced and thoughtful way.

ADL

Litigation Funding in the UK

This article in the thelawyer.com tells that story of UK firms that are looking to obtain funding for litigation through hedge funds.  (H/t Drug and Device Blog).   This development is of a piece, it seems to me, with the proposal to develop class actions in the UK and Europe.  It poses interesting questions about the extent to which quasi-private ex post regulation should be encouraged in society and raises the concern of the separation of ownership from control of lawsuits that has been the focus of so many judicial opinions and class action scholarship. 

ADL

Perspectives on Asbestos Litigation Symposium

As I previously mentioned, Southwestern Law School is hosting a symposium entitled, "Perspectives on Asbestos Litigation," on Friday, January 18, 2008.  Here is a copy of the brochure Download lr_perspectiveinasbestoslitigation.pdf, which lists the exceptional speakers and panels that will occur throughout the day.  Hope you can join us.  We're overjoyed at the remarkable speakers who have agreed to participate.

BGS

Issacharoff and Nagareda on Class Action Settlements

Sam Issacharoff and Richard Nagareda have posted on SSRN their new paper, Class Action Settlements Under Attack.  They presented the paper at the symposium on CAFA held last week at the University of Pennsylvania (which, by the way, turned out to be a really interesting conference with enough good papers to prove that, as a topic for scholarship, CAFA hasn't become boring yet).  Here's the abstract:

Settlements dominate the landscape of class actions, and the value of claims so resolved corresponds directly to the finality that the settlement offers. The law of class actions remains surprisingly unsettled, however, on where judicial review of class settlements may take place, what that review encompasses, and how the parameters for review should be defined. This article offers a cohesive account of the "where," "what," and "how" questions surrounding class settlement review, with particular attention to the long-running debate over collateral attacks on such settlements.

The "where" questioned is informed by the recognition in the Class Action Fairness Act (CAFA) of the difficulties presented by what one might describe charitably as the anomalous court - for CAFA proponents, one inclined to certify a nationwide class action when the vast majority of other courts would not. Most of the class action commentary assumes the original certifying court to be suspect and the subsequent reviewing court to be virtuous. Our contention is that the problem of the anomalous court is not confined to the initial class certification. The same problem of outlier courts can arise when the parties agree to "park" a class settlement for approval and, later, where a class member might mount a collateral attack on its binding effect. In the first instance, we look to see whether the forum for the class action was congressionally mandated or subject to strategic behavior by the parties.

The "what" question calls for a distinction between structural conflicts of interest in the class representation and other defects in the nature of bad deals for some or all of the class members. Only the former kind of defect bespeaks a proceeding illegitimate from its outset in a manner akin to the sorts of "jurisdictional" deficiencies thought to warrant collateral attacks on judgments in ordinary litigation.

The "how" question is one of proper preclusion for class settlements. The term "collateral attack" has been used sloppily to encompass everything from appeal to relief from the judgment to outright circumvention by filing anew in a different jurisdiction. In this section, we disentangle the various forms of procedural challenge to class action settlements and propose that the level of preclusion be conditioned by where the original suit was filed, how the challenge is presented, and what is the basis of the asserted challenge. Greater preclusion against collateral attack should flow from use of the congressionally preferred forum, as delineated by CAFA, as compared to the potentially anomalous court selected simply by settling counsel. The scope of preclusion should correspond, moreover, to the nature of the defect alleged in the class representation. Structural conflicts of interest warrant an approach that asks whether the rendering court considered and rejected the conflict in question, though not necessarily at the behest of the class member now the proponent of a collateral attack. Bad deals, by contrast, warrant an approach that would ask simply whether there was a full and fair opportunity to challenge the fairness of the settlement in the rendering court, in keeping with the broadened approach to standing in that setting in the Supreme Court's 2002 decision in Devlin v. Scardelletti.

HME

Rethinking Class Action Litigation in Britain

After a push toward class actions in Britain, the United Kingdom’s Office of Fair Trading has issued a report cautioning against American style litigation.  You can access Legal Week’s article here.  Currently, Britain permits only certain groups to bring aggregate litigation, including Which?, an organization promising to be independent source for information on consumer products.  Among other agenda items, it campaigns for safety in the cosmetic industry. 

Britain’s backlash surfaces against an increasing worldwide propensity for aggregate litigation.  Stanford and Oxford University are hosting a joint conference on the Globalization of Class Actions in Oxford from December 12-14.  Pending legislation and reports from roughly 35 countries can be found here. 

ECB

Settlement Announced in Ford Explorer Rollover Class Actions

The Associated Press reports that Ford has agreed to settle class action suits covering plaintiffs in California, Connecticut, Illinois and Texas arising out of claims that Ford Explorer SUVs were prone to rolling over.  It is reported that plaintiffs will get transferable vouchers to buy new Explorers or other Ford or Lincoln Mercury cars.  This apparently settles all the suits against Ford arising out of the rollover accidents linked to Ford Explorers and Bridgestone/Firestone tires.  The Associated Press article can be accessed here.  Because the cases were brought in California State Court, the CAFA limitations on coupon settlements do not apply. 

ADL

Federalist Society Publication Articles on Preemption, Learned Intermediary Rule, and Class Action Attorneys' Fees

The Federalist Society has posted the October 2007 issue of Engage.  Mass-tort related articles include the following: Catherine M. Sharkey, The Roberts Court Wades into Products Liability Preemption Waters: Riegel v. Medtronic, Inc.; James M. Beck & Theodore H. Frank, West Virginia Supreme Court Strikes Down Learned Intermediary Rule; and Jack Park, Attorneys' Fees in Class Actions: The Problem Remains.

BGS

Perspectives on Asbestos Litigation Symposium at Southwestern Law School

On Friday, January 18, 2008, Southwestern Law School will present a symposium entitled, Perspectives on Asbestos Litigation.  Scheduled speakers and moderators include Judge Barbara Jacobs Rothstein (Federal Judicial Center, Director); Justice Helen Freedman (N.Y. Supreme Court); Deans Bryant Garth (Southwestern) and Gregory Keating (USC); Professors Ronald Aronovsky (Southwestern), Anita Bernstein (Brooklyn), Alan Calnan (Southwestern), Howard Erichson (Fordham (Visiting) & Seton Hall), James Fischer (Southwestern), Mark Geistfeld (NYU),  Michael Green (Wake Forest), Deborah Hensler (Stanford), Keith Hylton (Boston U.), Francis McGovern (Duke), Linda Mullenix (Texas), Richard Nagareda (Vanderbilt), David Owen (South Carolina), Joseph Sanders (Houston), Judy Sloan (Southwestern), and Neil Vidmar (Duke); and distinguished practitioners Marh Behrens (Shook, Hardy) and Steven Kazan (Kazan, McClain).

Professor Alan Calnan and I are serving as co-chairs for the conference, and I will also moderate a panel on Public and Private Law Perspectives.  The Southwestern University Law Review will subsequently publish an issue based on the symposium.  Hope you can join us for what promises to be an interesting and informative day.

BGS

Professor Kelly Strader on the Milberg Weiss Prosecutions

Professor Kelly Strader of Southwestern Law School has published his article, White Collar Crime and Punishment: Reflections on Michael, Martha, and Milberg Weiss, 15 George Mason L. Rev. 45 (2007).  The article discusses allegations that certain Milberg partners paid class representatives.  Here's the abstract from the SSRN post of the article:

We are deeply conflicted about white collar crime and punishment. This conflict is largely born of the government's use of novel, “gray-area” legal theories in many high profile white collar prosecutions. Such prosecutions, which seek to expand the scope of existing crimes, tend to undermine the integrity and expressive function of our system of white collar criminalization. These prosecutions also may violate the defendants' right to fair notice of the possible crimes with which they may be charged. We need a new approach. First, in such “gray-area” cases, we should rely upon civil and administrative remedies except in extraordinary circumstances. Second, we should assess whether extraordinary circumstances exist by examining whether the defendant's alleged acts caused substantial, identifiable harm. To test this approach, I examine three of the most significant economic fraud investigations and prosecutions of the last 20 years – those of Michael Milken, Martha Stewart, and the Milberg Weiss law firm. I conclude that none of the cases warranted criminal prosecution on “gray-area” economic fraud theories, and that assertion of those theories actually served to undermine our confidence in white collar criminalization and punishment.

BGS

MERCK VIOXX SETTLEMENT

According to an article by Aaron Smith on cnn.com, Merck has agreed to settle pending Vioxx claims for a total of $4.85 billion.  The settlement is being accomplished not as a class action, but as merely an offer of settlement to individual plaintiffs, provided they can show "1) objective medical proof of either a heart attack of ischemic stroke; (2) documented receipt of at least 30 Vioxx pills; and (3) receipt of pills in sufficient number and proximity to the event to support a presumption that the patient was still taking the pills within 14 days before the heart attack or stroke."  See Legal Pad with Roger Parloff.  If 85% of the plaintiffs in each of the strongest categories do not accept the settlement, then the offer is void.

In my opinion, this is how mass tort litigation should work. Science triggers the lawsuits. The litigants fight individual cases and in so doing establish a market for the value of claims.  That narrows litigants expectations about how much their claims are worth, and makes easier the resolution of claims by far-reaching settlement.  Along the way, tort and procedural goals are satisfied -- multiple juries provide a better assessment of claim value than any one potentially outlier jury in a class action could do; both plaintiffs and defendants are able to present all of their individualized arguments in cases (unlike a class action); litigants retain their autonomy to either press to trial (day in court) or seek settlement; and ultimately the far-reaching settlement leads to vastly reduced transaction costs for society and a lessening of the burdens for courts. 

Here, Merck's $4.85 billion settlement, large as it seems, is far less than the threat of bankruptcy that was discussed when Vioxx was taken off the market.  (Cnn.com reports that some analysts put the Vioxx damages at $30 billion.)  Indeed, Merck's shares rose today.  All of this is because Merck went to the individual cases and was successful in winning, thus driving down the value of all pending claims.  It also waited to settle until the statute of limitations had run after its withdrawal of Vioxx (there is no long latency period alleged for the injuries), thus avoiding the flood of claims that can be triggered when word gets around that a defendant is settling.

Of course, we'll have to see if 85% of plaintiffs do in fact sign up for this settlement.  But likely Merck negotiated this settlement behind the scenes with the top plaintiffs lawyers who represent the majority of claimants.  (The difficult ethics of the plaintiffs' lawyers in negotiating such mass settlements for differently situated Vioxx clients is a topic for another day.)

It appears to be a tour de force performance for Merck throughout the litigation, which Merck seemed to recognize in July when it promoted its general counsel Ken Frazier to president for global human health.

BGS

Class Action Suit Against Military Contractors Will Go to Trial

A federal district court ruled today that a class action lawsuit against CACI, a military contractor, brought by Iraqis detained at Abu Ghraib prison can go forward.  Having lost this summary judgment motion, CACI will now have to face a jury trial (unless the suit settles).   As I understand it, this is the first suit against a contractor to get this far.  Claims against the firm providing translators, formerly known as Titan, were dismissed.  The suit was brought by the Center for Constitutional Rights along with a private lawyer, Akeel Valentine PC, and more details can be found on the CCR website here.

I am very keen to see how this jury trial unfolds.  The court has many procedural options before it and CACI can still present the combatant activities/government contractor defense to the jury. 

ADL

Wall Street Journal Against Congress's Limiting Arbitration

The Wall Street Journal has an editorial today criticizing attempts by Ralph Nader, Public Citizen, and trial lawyers to take away the ability to arbitrate.  According to the Journal, Congress is considering not only limiting the future ability to enter into arbitration agreements, but also possibly undoing various prior arbitration agreements, which could trigger new class actions.  Here's an excerpt from the editorial -- Party at Ralph's:

We're old enough to remember when Naderite groups like Public Citizen were embarrassed by their ties to trial lawyers. No more. This week in Washington, the famous "consumer" group, which has long resisted efforts to identify the sources of its funding, is rolling out the red carpet for America's plaintiff attorneys. Attendees of the Consumer Rights Litigation Conference are cordially invited to Saturday night's cocktail reception at Public Citizen headquarters, which a conference brochure describes as "an elegant old Dupont Circle Victorian mansion . . . generously loaned to us for this special event."

No word yet on what the famously ascetic Ralph Nader thinks about standing up for the little guy by sipping cabernet at a Dupont Circle manse, but what's clear is that the trial lawyers will have plenty to celebrate. That's because they'll be visiting Congressional offices tomorrow and Friday to check on the progress of pro-lawsuit legislation, and they will not be disappointed. Bills gathering momentum in both houses are anything but subtle in their support for more class-action lawsuits. Tillinghast Towers Perrin estimates that litigation costs the U.S. more than $260 billion a year, and that figure is heading due north.

The Democratic strategy is to attach an anti-arbitration provision to nearly every new law in order to limit non-lawsuit dispute settlement. Thus a House lending bill this week bans pre-dispute arbitration agreements related to mortgages, another House bill bans them in cases involving whistleblowers, and the Senate farm bill bans them even in meatpacking contracts.

The mother of them all is a bill that lunges to fulfill the trial bar's long-cherished dream: prohibiting all Americans from voluntarily agreeing at the start of any business relationship to settle disputes without litigation. Arbitration, which avoids the cost and time of going to court, has proven to be a popular form of alternative dispute resolution. Even lawyers concede its virtues. In 2003, an American Bar Association survey found that 78% of lawyers "believe that arbitration is generally timelier than litigation, and 56% feel it is more cost effective."

I would argue that arbitration clauses can be an important check on the inadequacy of court processes.  If individuals freely agree that an alternate dispute regime -- i.e., arbitration -- should govern their dispute, then the courts should honor their contractual choice.  For me, the key issue is determining whether both parties actually agreed to arbitration -- whether there was a meeting of the minds on that issue.  Indicia of acceptance might include prominent reference to arbitration in any contract, as well as oral discussion of arbitration prior to the transaction.

BGS

Lerach pleads guilty

Former Milberg Weiss partner William Lerach pleaded guilty this week to charges of paying kickbacks to plaintiffs to serve as class representatives.  His plea agreement calls for forfeiture of $7.75 million, a fine of $250,000, one to two years in prison and three years of supervised release.

Today, the Los Angeles Times published an editorial -- An Isolated Case -- arguing that the scandal does not indicate a need to curtail class actions in general:

Famous -- or make that infamous -- class-action attorney William S. Lerach pleaded guilty Monday to one count of conspiracy, admitting his role in a $11.3-million kickback scandal that has upended his former law firm, the pathbreaking shareholder advocacy firm of Milberg Weiss.

As part of his plea, Lerach will pay $8 million to the federal government, and could spend up to two years in prison. Responding to news of the deal, tort reform advocates seized the easy opportunity to make sport of Lerach's downfall. But for those tempted to argue that his crimes make the case for curtailing class-action suits sharply, we'd like to offer the objection that such an argument overstates the evidence. Paying plaintiffs to sue is illegal and should be. Zealously representing injured clients is not and shouldn't be.

To the contrary, it's a necessary calling that benefits victims and society. The usual complaint against lawyers such as Lerach is that they trump up frivolous claims against innocent corporations, dragging down the economy and laughing all the way to the bank. Business interests point out, with some merit, that while individual plaintiffs can receive little in compensation, class-action lawyers reap millions of dollars in fees. Lerach's fees in suits against Enron alone may surpass $1 billion.

But here's the rub: Complaints against a company such as Enron, to cite an obvious example, aren't frivolous at all. Through deceitful accounting practices, Enron defrauded shareholders out of $40 billion and wreaked havoc in energy markets. Class-action lawsuits allow wronged investors and other parties injured by corporate malfeasance to pool resources and seek redress far more effectively and efficiently than any individual could. It's not always pretty, but it's the best solution at hand. Government, for instance, lacks the resources -- and often the incentive