Monday, September 23, 2013
Marketplace has a segment about lead paint litigation today featuring our own Elizabeth Burch. The trigger is a lead paint trial that closed in California today. See here for a news story. The question posed is how the lead paint manufacturers have escaped the kind of liability that tobacco or asbestos. What's the difference? Here are some theories. Caveat: These are just some ruminations, not a definitive work on lead paint by any stretch.
1. Who's doing the suing?
Municipalities vs. victims: Beth points out that in these lead paint suits municipalities or states are pursuing a public nuisance theory against the paint manufacturers and this makes them different than some more successful mass torts. Some courts think that this doctrine is a bad fit with the wrong at issue. But not all lead paint cases have been brought by municipalities. In the beginning, much like tobacco or asbestos, these cases were brought on behalf of victims. This is a late-stage litigation after failures at the individual or group victim level.
Poor children vs. workers: The victims of lead paint were poor children who ingested the paint chips, whereas in the tobacco and asbestos cases they were adult workers. This is not a doctrinal explanation but a socio-political one.
Scienter: In tobacco there was evidence of misrepresentation and manipulation. That seems to be a big part of the argument in the California courtroom from press reports: what did the lead manufacturers know and when?
2. What's the doctrine?
Market share liability. First, and I think most importantly, the idea of market-share liability failed to gain traction after some initial gains early on. Without being able to tie a particular manufacturer to the apartment where the paint was ingested, plaintiff can't show that this manufacturer caused the harm. In that sense lead not like asbestos (where work places kept records) or tobacco (where people know what brand they smoked).
Public nuisance doctrine is a relatively novel theory for this type of mass tort. That doesn't make it wrong, but it doesn't make it an easy sell to courts either.
3. Is there insurance? The asbestos manufacturers had more insurance coverage than you'd think due to some loose underwriting in mid-century. What is the lead paint manufacturers' coverage and how is this affecting these suits?
More theories welcome.
Wednesday, September 4, 2013
Friday, August 30, 2013
According to a news report, BP today asked the Fifth Circuit to reverse the district court's approval of the Gulf oil spill settlement. I have not seen the court filing, but according to this AP report as published by the NY Times, "BP is trying to persuade a federal appeals court that it should throw out a judge's approval of the company's multibillion-dollar settlement with Gulf Coast residents and businesses. Last year, BP PLC joined plaintiffs' attorneys in urging U.S. District Judge Carl Barbier to give the deal his final approval. On Friday, however, the company's lawyers argued in a court filing that Barbier's more recent interpretation of settlement terms have allowed businesses to receive hundreds of millions of dollars for inflated or fictitious claims." As told in the Houston Chronicle, BP would still support the settlement if the Fifth Circuit were to decide in BP's favor on its earlier appeal challenging Judge Barbier's rulings on the generosity of payouts.
BP's decision to ask for reversal of its settlement class action (a deal that BP had negotiated and agreed to, and for which BP had previously argued in favor of judicial approval), is a fascinating turn of events in light of the history of the Gulf Oil Spill litigation and settlement. Shortly after the Deepwater Horizon explosion, BP established a compensation fund to pay claims. Kenneth Feinberg was named administrator of the fund, which came to be knows as the Gulf Coast Claims Facility (GCCF), and the GCCF proceeded to settle thousands of claims. But BP later joined with a group of plaintiffs' lawyers to negotiate a settlement class action that would replace the GCCF as settlement mechanism. For BP, a settlement class action offered a greater prospect of finality because it could bind all class members who fail to opt out, whereas the GCCF settlement program could bind only those claimants who chose to accept their compensation offers. In other words, even though the claims systems strongly resembled each other, a key difference is that a settlement class action uses the adjudicative power of the court to bind class members, in contrast to the claims facility, which depended upon the consent of individual claimants to settle their claims.
I've argued elsewhere that settlement class actions should be impermissible because they use the power of the courts to disadvantage claimants. But the BP news drives home the point that the opposite problem can occur -- a defendant may feel disadvantaged by a settlement class action because it deprives the defendant of control over the settlement process.
Monday, August 19, 2013
Am Law Litigation Daily has an article on the tobacco companies' filing another certiorari petition in an Engle progeny case: Tobacco Companies Seek Supreme Court Cert in Engle Case, by Ross Todd. Here's their petition for a writ of certiorari. The appellate team includes Greg Katsas (Jones Day), Paul Clement (Bancroft), and Miguel Estrada (Gibson Dunn).
I've previously addressed issue preclusion, verdict variability, and problems with the Engle case in my article, Jackpot Justice: Verdict Variability and the Mass Tort Class Action, 80 Temp. L. Rev. 1013 (2007).
Tuesday, August 13, 2013
Adap Liptak of the NYTimes has a piece When Lawyers Cut Their Clients Out of the Deal about a cy pres settlement with Facebook. In this settlement (approved by the 9th Circuit) the lawyers got $2.3 million and the clients got a cy pres contribution, apparently $6.5 million to a foundation over which Facebook has some control according to the article. The cy pres recipient is something called the Digital Trust Foundation. A quick google search came up with a bunch of references to the Facebook settlement but no website for this foundation.
The Ninth Circuit affirmed the settlement and denied rehearing en banc, with a dissent on rehearing en banc, making this a possible Supeme Court cert grant. (A cert petition was filed on June 26, 2013).
There is a lot of scholarship on the topic of how much lawyers should be paid relative to class members as well as articles critizing cy pres settlements. Some links to this work are below. The problem is this. We regulate entities like Facebook largely by litigation. In the absence of the class action, there would be little or no enforcement of the consumer protection laws. But the class action litigation needs to be funded, and it is funded out of lawyers percentage of the total fund, usually the total fund from a settlement because class actions are almost never litigated. Its very hard to certify a class action, so class actions are often certified for settlement only. The incentive of the lawyers, fearing no class certification or realistic possibility of actually litigating, is to settle. The incentives for defendants, wanting to get the litigation off their books, is to settle cheap. The answer to this problem in my view is to allow classes to be litigated, not to tighten the certification standards further.
If the settlement will deter future misconduct, even if the money doesn't go directly to the class members, there is still a lot of societal value there. But is $8.8 million enough to deter Facebook? Does it have any relationship to the potential value of this lawsuit? That is, what is the value of the claims multiplied by the probability of success?
In my own work, I've suggested that cy pres settlements are not necessarily bad, but that certainly doesn't mean they are always good. Class members should just be polled in determining where cy pres settlements should go. The argument that class members will not appreciate the putative $1 (I think I saw it was $1.12) they would get in a settlement like this one is reasonable. But that doesn't make a settlement like this one okay. Especially in a settlement involving facebook users, who presumably are all connected via facebook, there is no reason why absent class members cannot be polled. Do they "like" this foundation? what would they prefer? Might I suggest Public Citizen as a recipient?
This case might be a fine vehicle for the Supreme Court to consider cy pres settlements. Given how few cases the Court decides, how few class actions actually are filed and litigated (less than 1% of the federal docket) its not clear to me that this is the best use of its time. That said, if the Court does grant cert, it would be wise to consider both the overall benefits and costs of cy pres to consumers and society more generally, not merely the fact that the lawyers got a lot of money here. This is a story of more money than sense.
Monday, July 22, 2013
The presentatons from the 2012 Moscow meeting of the International Association of Procedural Law have been posted to SSRN as a combined UC Irvine Law research paper entitled, Civil Procedure in Cross-Cultural Dialogue: Eurasia Context. Among the many professors whose papers are gathered are Carrie Menkel-Meadow (UC Irvine), Richard Marcus (UC Hastings), Stefaan Voet (Univ. of Ghent), and Jasminka Kalajdzic (Univ. of WIndsor). Here's the abstract:
The Idea of the book is to discuss the evolution of civil procedure in different societies, not only in the well-known civil or common law systems, but also in different countries of Eurasia, Asia, etc. Civil procedure in Europe and North America is a subject of enormous scientific and practical importance. We know a lot about these systems. But we do not know enough about civil procedure in the rest of the world. How does it work and what are the main principles? Culture is one of the main factors that makes civil procedure of these countries different. Therefore it is necessary to discuss the main links between different systems of civil procedure. The discussion was held on the basis of National reports from 24 countries.
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).