Sunday, July 21, 2013
Khoury, Menard & Redko on the Role of Canadian Private Law in the Control of Risks Associated with Tobacco Smoking
Professors Lara Khoury and Marie-Eve Couture-Ménard (McGill), and Olga Redko (LL.B./B.C.L. Candidate, McGill) have posted to SSRN their article, The Role of Private Law in the Control of Risks Associated with Tobacco Smoking: The Canadian Experience, 39 Am. J. L., Med. & Ethics 442 (2013). Here's the abstract:
Can private law litigation serve as a tool for advancing public health objectives? With this contentious and oft-asked question in mind, this text tackles Canada’s recent tobacco litigation. This Article first presents critical commentary regarding various lawsuits waged against Canadian cigarette manufacturers by citizens acting as individuals or as parties to class action lawsuits. We then turn to analyze how Canada’s provincial governments rely on targeted legislation to facilitate private law recourses for recouping the healthcare costs of treating tobacco-related diseases. The authors address challenges to the constitutionality of this type of legislation, as well as attempts by manufacturers to transfer responsibility to the federal government.
Wednesday, April 17, 2013
As we as scholars and practictioners begin to explore class action alternatives, one problem continues to arise: when to preclude subsesequent litigation. Of course, this problem arose early on in the class action's history, most notably with (b)(2) civil rights cases where some class members disagreed fundamentally over the remedy requested. But the problem has persisted in multidistrict litigation and, perhaps most notably, in parens patriae actions. I explore this problem and propose a solution in my latest piece, titled Adequately Representing Groups. Here's the SSRN abstract, which gives a brief summary of the proposed solution:
Adequate representation and preclusion depend on whether the courts treat a litigant as part of a group experiencing an aggregate harm or as a distinct person suffering individual injuries. And though a vast literature about adequate representation exists in the class-action context, it thins dramatically when contemplating other forms of group litigation, such as parens patriae actions and multidistrict litigation. As class actions have gradually fallen into disfavor and attorneys and commentators seek alternative means for resolving group harms, the relative clarity of Rule 23 wanes. How should courts evaluate adequate representation in parens patriae actions and in multidistrict litigation? The answer to this question matters immensely since adequate representation is critical to precluding relitigation and achieving finality.
This Article suggests that courts should differentiate between inadequate representation claims based on the underlying right at stake. When the underlying right arises from an aggregate harm — a harm that affects a group of people equally and collectively — and demands an indivisible remedy, courts should tolerate greater conflicts among group members when evaluating a subsequent claim of inadequate representation. Because the harm is aggregate and the remedy is indivisible (typically declaratory or injunctive relief), if one group member receives the remedy, then they all receive the remedy. The litigation operates to group members’ benefit or detriment equally, so if one group member is inadequately represented, they are all inadequately represented. Consequently, a subsequent litigant can successfully avoid preclusion only where the lawyers or the named representatives acted contrary to the group’s best interests or attempted to represent an overinclusive, noncohesive group where some members required unique relief that the representative had no selfish reason to pursue.
Conversely, when plaintiffs suffer individual injuries at the same defendant’s hands and unite their claims for economic or efficiency reasons, that aggregation does not convert their individual injuries into an aggregate harm. When counsel fails to fairly represent her client in vindicating that harm, inadequate representation is an individual injury. In multidistrict litigation and Rule 23(b)(3) class actions, which typically include individuals litigating their individual harms together for systematic and litigant efficiency, courts should look for “structural conflicts” between the claimants themselves as well as between the representatives and the claimants. This means that both initially and on a collateral attack, courts should accept fewer conflicts than in cases involving aggregate rights. Accordingly, judges should assess whether there are reasons the lawyers “might skew systematically the conduct of the litigation so as to favor some claimants over others on grounds aside from reasoned evaluation of their respective claims or to disfavor claimants generally vis-à-vis the lawyers themselves.”
Tuesday, April 2, 2013
BNA Law Week reports that the Supreme Court granted cert, vacated the judgments and remanded two class actions yesterday. RBS Citizens NA v. Ross, U.S., No. 12-165, certiorari granted, judgment vacated, remanded 4/1/13; Whirlpool v. Glazer Corp., U.S., No. 12-322, certiorari granted, judgment vacated, remanded 4/1/13.
BNA describes Ross as a case in which a bank is accused of unlawfully denying overtime pay. The allegations involved the enforcement of an unofficial policy and the Seventh Circuit affirmed the grant of class certification.
The Whirlpool case comes out of the Sixth Circuit and a very similar issue class action was certified in the Seventh Circuit. This case involves allegations that Whirlpool sold faulty washing machines that got moldy. I thought the Whirlpool case was a real poster child for the correct use of the issue class action, and I'm not sure on what grounds the Court thinks that Behrend is relevant. It seems to me that it is not, Behrend was not an issue class action and the questions that concerned the majority there related to feasibility of damages determinations. Given the allegations regarding overtime pay in Ross, I understand why that case might have made sense to remand, but Whirlpool is a very different kind of case. There are no damages issues in Whirlpool because it is a liability issue class action.
At a minimum, as after Wal-Mart, I predict we will see a spate of reconsideration motions, decertification motions and more litigation post-Behrend.
ETA: And for commentary on Behrend, see Sergio's Campos' latest post on Scotusblog.
Monday, April 1, 2013
I have posted a new paper, The Problem of Settlement Class Actions, on SSRN. It makes the argument that we should abandon settlement-only class actions as a means of resolving mass disputes. The article focuses first on problems of leverage, including would-be class counsel's inability to take the class claims to trial and the monopsony or "reverse auction" problem. Because of the inherent asymmetry of settlement class action negotiations, would-be class counsel does not adequately represent the interests of the absent class members. The article incorporates these leverage concerns into an account of the illegitimacy of settlement-only class certification as a matter of judicial authority. The problems include not only due process concerns of inadequate representation, but also Rules Enabling Act concerns.
Settlement class actions have been an important form of dispute resolution in mass torts (as well as securities, antitrust, and other areas). Despite the Supreme Court's rejection of two asbestos settlement class actions in Amchem and Ortiz, and despite the problems encountered in the fen-phen nationwide settlement class action shortly thereafter, mass tort settlement class actions have never disappeared, and we need only look at the BP settlement class actions in the Gulf Oil Spill litigation for a well-known recent example.
Needless to say, the argument I am advancing faces an uphill battle. It cuts against entrenched interests of defendants, of plaintiffs' counsel, and of judges, all of whom prefer easier paths to comprehensive negotiated resolutions. The argument also cuts against the grain of most recent thinking on this topic. The ALI Principles of the Law of Aggregate Litigation, as well as a recent suggestion under consideration by the Advisory Committee on Civil Rules, would alter Rule 23 to facilitate settlement class actions even in cases that would be uncertifiable for purposes of litigation. Recent cases such as the Second Circuit's 2012 decision in In re AIG Securities Litigation and the Third Circuit's 2011 en banc decision in Sullivan v. DB Investments have taken new liberties with the Supreme Court's Amchem decision. The article explains what is problematic about the direction these cases have taken.
Here is the abstract:
This article argues that class actions should never be certified solely for purposes of settlement. Contrary to the widespread “settlement class action” practice that has emerged in recent decades, contrary to current case law permitting settlement class certification, and contrary to recent proposals that would extend and facilitate settlement class actions, this article contends that settlement class actions are ill-advised as a matter of litigation policy and illegitimate as a matter of judicial authority. This is not to say that disputes should not be resolved on a classwide basis, or that class actions should not be resolved by negotiated resolutions. Rather, this article contends that if a dispute is to be resolved on a classwide basis, then the resolution should occur after a court has found the matter suitable for classwide adjudication regardless of settlement.
For those who were unable to attend the excellent conference on class actions that was held last month at George Washington Law School, video recordings of the panels can now be found on the conference website.
Wednesday, March 27, 2013
The Supreme Court released its decision in Comcast v. Behrend today. The Court (with Justice Scalia writing for the majority) overturned the 3rd Circuit and held that the plaintiff does need to introduce evidence in support of its damages model in an antitrust case at the certification stage.
There is a history of antitrust cases touching on procedural issues having significant impact outside the antitrust field (e.g. AT&T v. Twombly). This is likely to be another one.
Tuesday, March 19, 2013
In an opinion by Justice Breyer, the Court unanimously rejected a stipulation by a proposed class representative to limit recovery for the putative class to less than $5 million, in an apparent attempt by plaintiffs to avoid removal to federal court unde the Class Action Fairness Act. See also SCOTUSblog.
Wednesday, February 27, 2013
The Supreme Court just issued its ruling in Amgen v. Connecticut Retirement Plans & Trust Funds. You can find the slip opinion here.
The Court held that a finding of materiality is not necessary at the class certification stage for a Securities Class Action. Ultimately, of course, plaintiff will have to prove that the representation was material, but the Court said that proof can wait until after class certification. This holding is consistent with the Court's holding in Erica P. John Fund v. Halliburton last year. In that case, the Court unanimously held that plaintiff need not prove loss causation. You can find the opinion in that case here.
The Court held in Amgen that since materiality is an issue that is common to the whole class (to think of it in Wal-Mart v. Dukes's language, if plaintiff cannot carry her burden a finding that the representation was not material will decide all the claims "in one stroke").
The majority was written by Justice Ginsburg. Justice Thomas, Scalia and Kennedy dissented and Justice Alito filed a concurring opinion.
Monday, January 21, 2013
Corporate Counsel has a short piece, Crafting a Defense in Food-Labeling Class Actions, by O'Melveny's Kelsey Larson and Carlos Lazatin.
Skadden has issued a useful analysis of upcoming cases to watch and potential developments for 2013 in class actions and product liability. The analysis includes contributes by Skadden's John Beisner, J. Russell Jackson, and Jessica Miller.
Friday, November 30, 2012
On November 26 the Supreme Court denied cert in RJ Reynold Tobacco Co. v. Clay, an appeal from a Florida state court decision to give the Engle court ruling preclusion effect.
Engle, recall, is the tobacco issue class action certified and upheld by the Florida Supreme Court. Does the denial of cert pave the way for issues class actions to flourish (at least for the moment) or is this just not the right vehicle?
See Scotusblog for a summary and links. ADL
Wednesday, November 28, 2012
Prof. John C. Coffee and I have posted "The New Class Action Landscape: Trends and Developments in Certification and Related Topics" on SSRN.
This is a memorandum that provides an overview of the trends and highlights in class certification rulings from 2012. Its going to be another interesting year for class actions at the Supreme Court and we provide a summary and evaluation of the upcoming cases, in addition to highlighting appellate and district court cases of interest.
Saturday, October 20, 2012
The conference will take place on October 24, 2012 in Washington, D.C., and includes panels on third-party litigation financing and global litigation (including the Chevron Ecuadoran litigation and the adoption of class actions in other countries).
Wednesday, October 17, 2012
Friday, October 12, 2012
Daniel Fisher at Forbes has an interesting article previewing three class-action cases being argued before the Supreme Court of the United States this fall: Class-Action Lawyers Face Triple Threat At Supreme Court.
Wednesday, October 10, 2012
Friday, October 5, 2012
Those interested in a quick overview of many of the recent issues in global tort litigation might be interested in the following article from the Legal Intelligencer: Is Growth of Foreign Class, Mass Actions Changing Products Law?, by Amaris Elliot-Engel (registration required). I was happy to be quoted in the article along with leading practitioners, but even happier that my current Global Tort Litigation seminar course was mentioned.
Thursday, August 16, 2012
This article argues that there is an unrecognized “anticommons” problem in aggregate litigation. An anticommons occurs when too many owners’ consent is needed to use a resource at its most efficient scale. When many plaintiffs have similar claims against a common defendant, those claims are often worth more if they can be packaged up and sold to the defendant (i.e., settled) as a single unit — that is, the defendant may be willing to pay a premium for total peace. But because the rights to control those claims are dispersed among the individual plaintiffs, transaction costs and strategic holdouts can make aggregation difficult, particularly in cases where class actions are impractical. Recently the American Law Institute has proposed to modify long-standing legal ethics rules governing non-class aggregate settlements to allow plaintiffs to agree in advance to be bound by a supermajority vote on a group settlement offer. By shifting from individual control over settlement decisions to collective decision making, the ALI proposal may offer a way out of the anticommons and allow the group to capture the peace premium. Critics, however, say that allowing plaintiffs to surrender their autonomy will leave them vulnerable to exploitation by the majority and by their lawyers. Viewed through the lens of the anticommons, these concerns are manageable. Similar anticommons problems arise in many areas of law, ranging from eminent domain to oil and gas to sovereign debt. But instead of slavishly preserving the autonomy of individual rights-holders, these areas of law have developed strategies for aggregating rights when doing so will result in joint gains. Drawing from these other contexts, this article argues that the legitimacy of compelling individuals to participate in a value-generating aggregation depends on the presence of governance procedures capable of protecting the interests of the individuals within the collective and ensuring that the gains from cooperation are fairly allocated. Governance is thus the key to legitimizing attempts to defeat the anticommons in mass litigation through aggregation, whether by regulatory means, such as the class action, or contractual precommitment, as in the ALI proposal.
Monday, June 25, 2012
For those feeling this term lacked excitement because there were not any class action cases, the Supreme Court has recently granted cert on two cases that address the question of class certification and the merits and another case considering the role of class representative.
The question presented in Comcast Corp. v. Behrend (No. 11-864) is whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the class is susceptible to awarding damages on a class-wide basis?
The question presented in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11-1085) is (1) whether in a misrepresentation case under SEC Rule 10b-5 the district court must require proof of materiality before certifying a class based on the fraud on the market theory and (2) whether in such a case the district court must allow the defendant to present evidence to rebut the applicability of the fraud on the market theory before certifying on that theory.
Followers of the class action docket will recall that in the banner 2010 term in which the court decided Wal-Mart v. Dukes, the Court also held in Erica P. John Fund Inc. v. Halliburton, 131 S.Ct. 2179 (2011) that plaintiffs in a securities class action need not prove loss causation at class cert. But hints in the Wal-Mart opinion, particularly Justice Scalia's statement in the majority opinion that Daubert hearings may be appropriate at the class certification stage, indicated that the Halliburton case should not be read broadly. The grant of certiorari in these two cases indicates that the court will consider whether the plaintiff needs to prove his or her case in tandem with the class certification motion.
The Court also granted cert on a third class action case, Genesis Healthcare Corp. v. Symczyk (No. 11-1059), in which it will consider whether a named class representative who was given a Rule 68 offer of judgment before class certification has standing to represent the class that would fully satisfy her individual claim. In other words, should defendants be allowed to pick off class representatives with offers of settlement? This case has echoes of Evans v. Jeff D., 475 U.S. 717 (1986) in which the Court upheld a offer of settlement that gave the civil rights plaintiffs everything they wanted in exchange for a waiver of attorney's fees.