Tuesday, August 16, 2016
As our readers surely know, despite its bulky name, multidistrict litigation (“MDL”) is in the news constantly: litigation over Volkswagen's defeat device, GM’s ignition defect, Toyota’s sudden acceleration, asbestos, and medical drugs and devices (pelvic mesh, Yasmin/Yaz, NuvaRing, Vioxx) are just a few of the higher profile MDLs.
MDL now comprises over 36% of the entire federal civil caseload (that number leaps to 45.6% if you exclude social security and prisoner cases), yet courts and Congress have made it more difficult for these cases to proceed as certified class actions. This litigation doesn’t go away without class certification as many tort reformers believe, it simply persists with far less judicial oversight.
Few rules and little appellate oversight on the one hand, plus multi-million dollar “common-benefit fees” for the lead lawyers who shepherd these cases toward settlement on the other may tempt a cadre of repeat attorneys to fill in the gaps in ways that further their own self interest. (Because there are so many cases involved, judges appoint "lead lawyers" to litigate and negotiate on behalf of the entire group of plaintiffs; if their individual attorney isn’t a lead lawyer, then that attorney has little say in how the litigation is conducted.)
To shed light on some of these issues, my co-author, Margaret Williams, and I have posted a revised version of our paper, Repeat Players in Multidistrict Litigation: The Social Network (forthcoming, Cornell Law Review) on SSRN.
We collected data on who the lead attorneys are (plaintiff and defense side) in all product-liability and sales practice cases that were pending on the MDL docket as of May 2013 (those cases covered a 22-year span), built an adjacency matrix, and employed a two-mode (actors and events) projection of a bipartite network (also known as an affiliation network) to graph the ties between lawyers judicially appointed to leadership positions (the actors) in multidistrict proceedings (the events). (For the non-statistically inclined, this social network analysis is somewhat akin to the kind that Facebook has popularized.)
The point was to reveal what the naked eye cannot see: how those attorneys and MDLs connect to one another. (Detailed, searchable PDFs of the social network with the players and litigations are available here). We also collected data on the publicly available nonclass settlements that repeat players brokered, reviewed news and media accounts of those litigations, and analyzed the common-benefit fees awarded to the lead plaintiffs' lawyers.
Here’s a summary of our key findings:
- Repeat players are prevalent on both the plaintiff and the defense side.
- No matter what measure of centrality we used, a key group of 5 attorneys maintained their elite position within the network.These 5 attorneys may act as gatekeepers or toll takers, for example. This matters considerably, for lead lawyers control the proceeding and negotiate settlements. They can bargain for what may matter to them most: defendants want to end lawsuits, and plaintiffs’ lawyers want to recover for their clients and receive high fee awards along the way.
- By identifying settlement provisions that one might argue principally benefit the repeat players, we examined the publicly available nonclass settlements these elite lawyers designed. Over a 22-year span, we were unable to find any deal that didn’t feature at least one closure provision for defendants, and likewise found that nearly all settlements contained some provision that increased lead plaintiffs’ lawyers’ common-benefit fees. Bargaining for attorneys’ fees with one’s opponent is a stark departure from traditional contingent-fee principles, which are designed to tie lawyers’ fees to their clients’ outcome.
- Based on the evidence available to us, we found reason to be concerned that when repeat players influence the practices and norms that govern multidistrict proceedings—when they “play for rules,” so to speak—the rules they develop may principally benefit them at the plaintiffs’ expense.
A highly concentrated plaintiff and defense bar is nothing new, nor is the disquiet about where that concentration may lead. As scholars have long recognized, repeat play tends to regress our adversarial system from its confrontational roots toward a state of cooperation.
In the criminal context, prosecutors and public defenders routinely work together through plea bargaining, leading them toward mutual accommodation; incumbents form a primary community of interest, whereas clients present secondary challenges and contingencies. As such, adversary features are often overshadowed by regulars’ quid pro quo needs. As Professor Jerome Skolnick has explained, those working group relationships become a social control problem only once they reach a “tipping point where cooperation may shade off into collusion, thereby subverting the ethical basis of the system.” (Social Control in the Adversary System, 11 J. Conflict Resol. 52, 53 (1969)).
As I’ve argued in a separate article, Monopolies in Multidistrict Litigation, we've reached that tipping point in MDL, and these circumstances warrant regulation. Even though MDL judges are the ones who entrench and enable repeat players, they also are integral to the solution.
By tinkering with lead-lawyer selection and compensation methods and instilling automatic remands to a plaintiff’s original court after leaders negotiate master settlements, judges can capitalize on competitive forces already in play. Put simply, the antidote is to reinvigorate competition among plaintiffs’ attorneys and I’ve set forth several specific proposals for doing so in Part III of Monopolies in Multidistrict Litigation.
For interested judges, that article's appendix also contains a Pocket Guide for Leadership Appointment and Compensation, a Sample Leadership Application form, and sample orders for suggesting remand and replacing leaders who ignore adequate representation concerns.
August 16, 2016 in Aggregate Litigation Procedures, Current Affairs, Ethics, Lawyers, Mass Tort Scholarship, Pharmaceuticals - Misc., Prempro, Procedure, Products Liability, Settlement, Vioxx | Permalink | Comments (0)
Saturday, June 25, 2016
New Book on Class Actions in Context: How Culture, Economics and Politics Shape Collective Litigation
A new book, Class Actions in Context: How Culture, Economics and Politics Shape Collective Litigation, has been published by Edward Elgar Publishing (also available on Amazon). The editors of the book are Associate Dean Deborah Hensler (Stanford Law) and Professors Christopher Hodges (Oxford) and Ianika Tzankova (Tilburg Law). A global group of aggregate-litigation scholars contributed to the book, including Dean Camille Cameron (Dalhousie Law, Canada); Associate Dean Manuel Gomez (Florida International Law); Professors Agustin Barroilhet (U. Chile Law), Naomi Creutzfeldt (Research Fellow, Oxford), Axel Halfmeier (Leuphana U., Germany), Kuo-Chang Huang (Member, Taiwan national congress and formerly of National Cheng-Chi U., Taiwan), Jasminka Kalajdzic (Windsor Law, Canada), Alon Klement (Tel-Aviv U., Israel), Elizabeth Thornburg (SMU Law), and Stefaan Voet (U. Leuven & U. Hasselt, Belgium); and myself.
I authored a chapter, The promise and peril of media and culture: The Toyota unintended acceleration litigation and the Gulf Coast Claims Facility in the United States, and Professor Ianika Tzankova and I co-authored another chapter, The culture of collective litigation: A comparative analysis.
The book was a remarkable and fascinating undertaking, with many of us contributors gathering at several conferences across the globe over recent years to discuss and compare our ongoing research. Here is a brief description of the book:
In recent years collective litigation procedures have spread across the globe, accompanied by hot controversy and normative debate. Yet virtually nothing is known about how these procedures operate in practice. Based on extensive documentary and interview research, this volume presents the results of the first comparative investigation of class actions and group litigation ‘in action’.
Produced by a multinational team of legal scholars, this book spans research from ten different countries in the Americas, Europe, Asia and the Middle East, including common law and civil law jurisdictions. The contributors conclude that to understand how class actions work in practice, one needs to know the cultural factors that shape claiming, the financial arrangements that enable or impede litigation and how political actors react when mass claims erupt. Substantive law and procedural rules matter, but culture, economics and politics matter at least as much.
This book will be of interest to students and scholars of law, business and politics. It will also be of use to public policy makers looking to respond to mass claims; financial analysts looking to understand the potential impact of new legal instruments; and global lawyers who litigate transnationally.
We are honored that Professor Geoffrey Hazard (Emeritus, UC Hastings Law & Penn Law) offered the following comment on the book:
Class Actions in Context is a penetrating analysis of class and group actions worldwide. A group of international scholars brings to bear legal, economic, and political analyses of this evolving judicial remedy. It explores various substantive claims ranging from consumer protection to securities litigation. Drawing on case studies of practice as well as legal analysis, it demonstrates the importance of factors running from litigation finance to background cultural traditions. It is worth study in every legal system.
Thursday, June 16, 2016
On Bloomberg BNA Perry Cooper has an important article on MDL leadership fights entitled "MDLs Led By the Usual Suspects, and Not Everyone is Happy."
Our own Prof. Burch's work is featured. Cooper writes "Burch, a professor at the University of Georgia Law School in Athens, Ga., who specializes in complex litigation, said she's troubled by the number of “repeat players” she sees among attorneys that represent both plaintiffs and defendants in MDLs."
Elizabeth Cabraser, a frequent leader in MDLs, explains: "The problem for getting new players into the leadership is that there are economic barriers to entry,” she said. “To be part of the leadership you have to write a check. You have to put up the money and spend the time.” Cabraser also links the developments in MDLs to changes in the legal culture. As Cooper quotes her: “We all became plaintiffs’ attorneys because we didn't want to work for big firms—we wanted to do our own thing,” she said. “But in an MDL everything is by committee.”
The article also has some good tidbits on Bellwether trials. One plaintiffs lawyer explains: "Large verdicts in bellwether trials can be great from a plaintiff's perspective, Berezofsky said, but they can give clients an expectation that the resolution of their case will be in keeping with the verdict." This lawyer says that for claimants in the middle of the bell curve, an MDL saves money and time, but not for claimants who have more severe injuries because "global settlements generally don't take into account their individual, specialized injuries."
You can find the paper detailing Burch's findings, Monopolies in MDL Litigation, on SSRN.
Thursday, April 28, 2016
In my first post on Monopolies in Multidistrict Litigation, I noted that lead lawyers and defendants seem to benefit in tandem from the settlements they negotiate. This second post, Part II, explains how repeat players on both plaintiff and defense sides have perfected a fundamental shift in settlement design.
As I elaborate on pages 19-21, the demise of the mass tort class action makes it more difficult for defendants to achieve holistic closure, for MDL settlements technically bind only those litigants before the court. But defendants have been able to regain a greater degree of finality through a foundational shift in settlement construction: unlike traditional settlements between plaintiffs and defendants, all twelve deals in the dataset were agreements between lead lawyers and defendants.
As such, these deals position lead plaintiffs’ lawyers as settlement gatekeepers, for defendants will not make better offers to others without the threat of trial; doing so would work against their closure goal. These new deals then serve as a mandatory gateway for anyone wanting to settle, and typically require non-lead attorneys to become signatories alongside their clients. Accordingly, all master settlement agreements in the dataset aimed some provisions at plaintiffs’ attorneys and some at their clients. As a later post will explore, it's the provisions targeting plaintiffs' attorneys that raise the most ethical problems.
Making deals with plaintiffs’ attorneys masterfully furthers defendants’ end game in two ways.
First, the agreements impose uniform endorsement requirements on participating attorneys to discourage them from “cherry picking,” a practice in which lawyers settle most cases, but continue litigating those with the strongest claims or most sympathetic facts. By requiring a high percentage of plaintiffs to accept the settlement offer for it to take effect and insisting that individual attorneys recommend that all their clients settle (including clients who had not yet sued or who were pursuing relief elsewhere), defense attorneys essentially conditioned plaintiffs’ attorneys fees on achieving their closure aims.
A plaintiff’s attorney is either “all in” and would collect significant contingent fees from all her settling clients, or “all out” and would have to spend significant resources litigating individual cases. As such, recommendation provisions alter the typical contingent fee model where an attorney’s recovery increases alongside her clients’ recovery and instead ties plaintiffs’ attorneys’ financial self-interest to each other and to the entire claimant base.
This shift also allows defendants to reach some plaintiffs who are outside of the federal court’s jurisdiction, and others who haven’t yet filed suit (through case census provisions - see pp. 27-29). It thereby recaptures some of the finality that class actions once offered through binding absent class members.
Second, when combined with the defendant's ability to walkaway from the deal if too few claimants consent to settle, provisions aimed at plaintiffs' attorneys (attorney-recommendation provisions, attorney' withdrawal provisions - see pp. 19-26) collectively reduce the demand for legal representation. The settlement effectively becomes the only “game” in town.
Like oligopolists, leaders are able to thwart competition and reduce demand by using attorney withdrawal and recommendation provisions to restrict the legal services market (at least for those with similar allegations against the same defendant). When defendants threaten to abandon the deal if too few plaintiffs participate, and participating attorneys must recommend the deal to all of their clients and withdraw from representing those who refuse, leaders can regulate the legal service being offered and control a sufficiently large share of that market
In this sense, master settlements can recreate bottleneck problems where dominant firms raise competitors’ costs by obtaining exclusionary rights; once defendants negotiate master settlements with plaintiffs’ leadership, that agreement typically becomes the only settlement option.
Why should we be concerned? Apart from inherent economic concerns that arise under these conditions, the next post will explore why provisions targeting attorneys are ethically troubling.
Thursday, April 21, 2016
I've spent the better part of the past year and a half analyzing the publicly available nonclass aggregate settlements that have taken place in multidistrict litigation alongside leadership appointments, common-benefit fees, and, where available, recovery to the plaintiffs. This has given me an in-depth look at what's happening (or has happened) in Propulsid, Vioxx, Yasmin/Yaz, DePuy ASR Hip Implant, Fosamax (2243), American Medical Systems pelvic mesh litigation, Biomet, NuvaRing, and Actos. I've also analyzed fee practices in Baycol, Ortho Evra, Avandia, Mentor Corp. ObTape, Prempro, Chantix, Pradaxa, and Ethicon Pelvic Repair.
This endeavor has been deeply unsettling for a variety of ethical, doctrinal, and systemic reasons. Professors Erichson and Zipursky's prior work on Vioxx opened our eyes to troubling provisions in that deal, but I had no idea how widespread the problems were or how they had evolved over time from deal to deal until now.
Propulsid appears to be the primogenitor, for all subsequent deals in the data replicated some aspect of its closure provisions. But Propulsid is extraordinarily troubling: 6,012 plaintiffs abandoned their right to sue in court in favor of settling. Only 37 of them (0.6 percent) recovered any settlement money through the physician-controlled claims review process, receiving little more than $6.5 million in total. Lead lawyers, on the other hand, received over $27 million in common-benefit fees through a deal they negotiated directly with the defendant (and had the court approve). Sadly, that's just the tip of the iceberg.
I posted the fruits of my labor on SSRN today in a piece titled, Monopolies in Multidistrict Litigation. It's a 70+ page tomb, so I'll be covering specific aspects of it over the next few weeks in a series of blog posts. It's not only an indictment of current practices and procedures, but it offers myriad ways for judges to improve MDL practice. It even comes complete with handy pocket guides for judges, leadership application forms, and leadership applicant scoring sheets in the appendix.
For those of you who love data, there are several tables that may be of interest: Table 1: Provisions Benefitting Defendants Occurring within the Analyzed Settlements on p. 20; Table 2: Common-Benefit Fee Practices on p. 33; and Table 3: Common-Benefit Awards and Nonclass Claimant Recovery within the Data on p. 48.
Today's post simply introduces the paper, so here is the summary:
When transferee judges receive a multidistrict proceeding, they select a few lead plaintiffs’ lawyers to efficiently manage litigation and settlement negotiations. That decision gives those attorneys total control over all plaintiffs’ claims and rewards them richly in common-benefit fees. It’s no surprise then that these are coveted positions, yet empirical evidence confirms that the same attorneys occupy them time and again. When asked, repeat players chalk it up to their experience and skill—no one can manage and negotiate as well as they can. Off the record, however, any plaintiff’s lawyer who’s been involved in multidistrict litigation will explain repeat players’ dominance with stories of backroom deals, infighting, and payoffs. Yet, when judges focus on cooperation and consensus in selecting leaders and then defer to those leaders in awarding common-benefit fees, they dampen open rivalry and enable repeat actors to mete out social and financial sanctions on challengers.
Anytime repeat players exist and exercise both oligopolistic leadership control across multidistrict proceedings and monopolistic power within a single proceeding, there is concern that they will use their dominance to enshrine practices and norms that benefit themselves at consumers’ (or here, clients’) expense. Apprehensiveness should increase when defense lawyers are repeat players too, as they are in multidistrict litigation. And anxiety should peak when the circumstances exhibit these anti-competitive characteristics, but lack regulation as they do here. Without the safeguards built into class certification, judicial monitoring and appellate checks disappear. What remains is a system that permits lead lawyers to act, at times, like a cartel.
Basic economic principles demonstrate that noncompetitive markets can result in higher prices and lower outputs, and agency costs chronicle ways in which unmonitored agents’ self-interest can lead them astray. By analyzing the nonclass deals that repeat players design, this Article introduces new empirical evidence that multidistrict litigation is not immune to market or agency principles. It demonstrates that repeat players on both sides continually achieve their goals in tandem—defendants end massive suits and lead plaintiffs’ lawyers increase their common-benefit fees. But this exchange may result in lower payouts to plaintiffs, stricter evidentiary burdens in claims processing, or higher plaintiff-participation requirements in master settlements.
These circumstances warrant regulation, for both multidistrict litigation and class actions are critical to redressing corporate wrongdoing. Even though judges entrench and enable repeat players, they are integral to the solution. By tinkering with selection and compensation methods and instilling automatic remands after leaders negotiate master settlements, judges can capitalize on competitive forces already in play. By tapping into the vibrant rivalries within the plaintiffs’ bar, judges can use dynamic market solutions to remap the existing regulatory landscape by invigorating competition and playing to attorneys’ strengths.
As always, your comments are welcome (the draft is still just that, a draft) - please email any comments or corrections to me eburch at uga.edu. More soon...
Saturday, April 9, 2016
Professor Briana Rosenbaum (Tennessee Law) has posted to SSRN the abstract for her article, The RICO Trend in Class Action Warfare, 102 Iowa L. Rev. (forthcoming 2016). Here's the abstract:
The class action device has been under attack for decades. Recent Supreme Court cases have further enervated class actions, and the current Congress is considering both class action and tort reform. Recently, defendants in aggregate litigation have employed an additional tactic by filing civil RICO cases against plaintiffs’ counsel alleging they fraudulently concealed a few baseless lawsuits among larger sets of claims. The predicate acts in those RICO cases consist solely of litigation activities: the filing of complaints in mass actions and related litigation documents. Members of the defense bar have made no secret of the fact that these RICO cases are part of a larger strategy to prevent plaintiffs’ attorneys from bringing large-scale class actions and other aggregate litigation. Despite the rich literature on class actions, this recent aggressive use of RICO by the defense bar and corporate interest groups to punish plaintiffs’ attorneys for the alleged fraudulent filing of aggregate litigation has gone relatively unexplored.
This Article pulls together several previously unassociated areas of law-including RICO, Rule 11, class actions, SLAPP motions, and asbestos litigation-to develop a model of the RICO trend. It then argues that holding plaintiffs’ attorneys liable under civil RICO solely for litigation activities is illegal, results in the lamentable federalization of state common law, and leads to improper forum shopping. The RICO trend also avoids legitimate state protections for litigation activity and is a thinly-veiled attempt by the defense bar to further weaken class actions by targeting the plaintiffs’ attorneys themselves. Just as critically, this use of RICO punishes the aggregate litigation device itself, rather than the underlying fraudulent conduct; as a remedy for frivolous aggregate litigation conduct, it is both over- and under-inclusive. This Article concludes by proposing several alternatives, including effectively barring any civil RICO action targeting attorneys’ pure litigation activities without systemic wrongdoing.
Professors Jef P. B. De Mot (Ghent University), Michael G. Faure (University of Maastricht - Faculty of Law & Erasmus School of Law), and Louis T. Visscher (Rotterdam Institute of Law and Economics & Erasmus School of Law) have posted to SSRN their article, Third Party Financing and its Alternatives: An Economic Appraisal. Here's the abstract:
In this contribution we provide an economic approach to third party funding. We first explain why third party funding emerges. It can be considered as a remedy for the market failure that can occur in cases of so-called dispersed losses where rational apathy may occur, and also when individuals do not bring claims solely because they do not have sufficient funds. However, we argue that although TPF can help solve market failures, it can create also problems of its own. All the classic economic problems, such as the principal-agent problem, information and transaction costs may jeopardize the effectiveness of TPF. However, we argue that remedies can be designed to increase the effectiveness. We further compare TPF to other mechanisms that could equally cure the market failures, such as legal expenses insurance (LEI) and the transfer of claims. We also briefly compare TPF to contingency fee arrangements, although this is not the central focus of our contribution.
Friday, January 29, 2016
There's obviously been a lot in the news about multidistrict litigation--from Lance Cooper's allegations in GM to the recent selection of the plaintiffs' leadership slate in VW. But what do we really know about the settlements that come out of those large MDLs? On one hand, the answer is not much. Many of the deals are secret because they are private. But sometimes those private deals are nevertheless publicly available. And when they are, we read them. And analyze them.
The results can be a little disturbing. Given all of the hubbub over Cooper's allegations in GM (see Lahav's post), my co-author Margaret Williams and I decided to go ahead and release the findings of our recent study, Repeat Players in Multidistrict Litigation: The Social Network, on SSRN.
While past studies have considered repeat play on the plaintiffs’ side, this study is the first comprehensive empirical investigation of repeat play on both sides. It won't surprise most readers to learn that we found robust evidence of repeat play among both plaintiff and defense attorneys. What may be more interesting is that we used social-network analysis to demonstrate that a cohesive multidistrict-litigation leadership network exists, which connects people, law firms, and the proceedings themselves.
While repeat play may not be surprising for those in the know, the fact that repeat players exist matters considerably. Lead lawyers control the litigation, dominate negotiations, and design settlements.
To consider repeat players’ influence, we examined the publicly available nonclass settlements these attorneys negotiated, looking for provisions that one might argue principally benefit the attorneys, and not one-shot plaintiffs. By conditioning the deal on achieving a certain claimant-participation rate and shifting the deal-making entities from plaintiffs and defendants to lead lawyers and defendants, repeat players tied all plaintiffs’ attorneys’ financial interests to defendants’ ability to achieve closure.
Over a 22-year span, we were unable to find any publicly available nonclass settlement that didn’t feature at least one closure provision (which benefits the defendant), and likewise found that nearly all settlements contained some provision that increased lead lawyers’ fees. Based on the limited settlements available to us, we found reason to be concerned that when repeat players influence the practices and norms that govern multidistrict proceedings—when they “play for rules,” so to speak—the practices they develop may principally benefit them at the expense of one-shot plaintiffs.
Of course, our research doesn't speak directly to the allegations in GM, but it does make those allegations far less surprising. And if you compare our list of repeat players to the names of those appointed in Volkswagen, you'll see a lot of familiar names.
Sunday, September 27, 2015
Amanda Bronstad at the National Law Journal recently published an article titled Good Ol' Boys Clubs in MDL that includes a list of law firms that I recently identified as firms with the most lawyers appointed to leadership positions in products liability MDLs. Given the title of her piece, I thought readers might also be interested in the gender breakdown of lead lawyers in those multidistrict litigation cases. Of the top fifty lawyers who were appointed most frequently, only 11 of the 50, or approximately 22% were female. The full list of those attorneys is available in Judging Multidistrict Litigation, 90 N.Y.U. L. Rev. 71, 139-40 (2015) (gender breakdowns are mentioned in footnoted 102).
Tuesday, August 18, 2015
Daniel Fisher at Forbes has an article, Investing In Lawsuits Is Heating Up, Aided By Electronic Platform, discussing LexShares.
Thursday, April 30, 2015
There's been a lot of chatter over the past few years about the greater use of issue classes. The Rule 23 Subcommittee in its recent report (p. 41) indicated that issue classes top its agenda for possible reform and there's been a greater willingness to rely on Rule 23(c)(4) among the circuit courts over the last few years. Much of the scholarship on issue classes thus far, however, has focused on how to use issue classes in conjunction with Rule 23(b)(3)'s predominance requirement. Professor Laura Hines (Kansas) has, for instance, written a series of articles on the topic and there have been several debates in symposium pages, such as DePaul's 2013 symposium.
Whatever side of the debate one adheres to on the to-be-or-not-to-be question, the courts are embracing issue classes. Thus, there remains much work to be done on discerning which issues should qualify for certification, how to think about Seventh Amendment Reexamination Clause questions, and how to compensate plaintiffs' attorneys who initiate issue classes.
I've recently written a paper on issue classes that takes some steps toward fleshing out these problems. The paper is long since it's meant to be a one-stop shop for judges and attorneys on the subject, but here are the critical points worth underscoring:
First, one of the main difficulties of our system is that the focus in massive lawsuits has shifted to the ways in which the plaintiffs are dissimilarly situated, even when the defendant's conduct is uniform. Take the GM ignition switch debacle or the Toyota acceleration cases, for example. Corporate actions are nonindividuated; it doesn't make sense to litigate what GM or Toyota did in 40,000 different cases. (Draft pp 5-8) But defendants have successfully shifted the procedural focus to how their behavior affected claimants, which tends to defeat class certification because common questions do not predominate over individual ones. The issue class has the potential to recapture what is common to the plaintiffs: defendant's conduct--at least so long as that conduct is nonindividuated. One can capture this notion by divvying up the legal elements in any claim or defense as "conduct components," which concern the defendant's conduct, or "eligibility components," which concern a plaintiff's eligibility for relief. (Draft pp 15-29)
Second, by embracing the standard suggested by the ALI's Principles of the Law of Aggregate Litigation, courts can ease the supposed tension (to the extent any remains) between Rule 23(c)(4) and Rule 23(b)(3). (Draft pp 31-32) Courts should certify issue classes where resolving the issue would "materially advance the resolution of multiple civil claims by addressing the core of the dispute in a manner superior to other realistic procedural alternatives, so as to generate significant judicial efficiencies." (Principles, 2.02(a)(1), 2.02 cmt. a, 2.08, 2.08 cmt. a) Predominance is embedded in the "materially advance" language and superiority is included as a condition that certifying the issue would be "superior to other realistic alternatives" such that it "generate[s] significant judicial efficiencies." Moreover, the courts themselves seem to have reached a general consensus on this matter, with even the Fifth Circuit embracing issue classes in In re Deepwater Horizon, 739 F.3d 790, 804 (5th Cir. 2014). (Draft p. 30)
Third, courts must figure out a way to compensate (and thus incentivize) plaintiffs' attorneys. This is perhaps the trickiest part because of both the lack precedent and doctrinal hurdles such as Lexecon. Lexecon presents a special challenge in multidistrict litigation cases where issue classes might prove most useful. Nevertheless, one need not invent a theory out of whole cloth. Charging liens and the common-benefit doctrine provide sound analogies for fashioning a coherent path forward. (Draft pp 42-50)
Finally, there are some hurdles to making issue classes stick, such as preclusion doctrines, adequate representation, and the Seventh Amendment Reexamination Clause. Thus, the paper concludes by suggesting solutions to these problems and arguing that preclusion can provide a way to coordinate dispersed public and private regulators.
As always, comments are welcome (eburch at uga.edu).
April 30, 2015 in Aggregate Litigation Procedures, Class Actions, Current Affairs, Lawyers, Mass Tort Scholarship, Procedure, Products Liability, Tobacco, Vioxx | Permalink | Comments (0) | TrackBack (0)
Thursday, March 19, 2015
Wednesday, December 10, 2014
Saturday, October 4, 2014
I've been a bit slow in posting this, but Louisiana Law Review hosted an excellent symposium last spring titled The Rest of the Story: Resolving the Cases Remanded by the MDL. As part of that symposium, I wrote a piece titled Remanding Multidistrict Litigation. Remands are something that have received scant attention in the scholarly literature, but are a constant hope for many plaintiffs' lawyers involved in multidistrict litigation (well, at least those who aren't on the steering committees).
I just got around to posting the piece on SSRN today. Here's the abstract:
Multidistrict litigation has frequently been described as a “black hole” because transfer is typically a one-way ticket. The numbers lend truth to this proposition. As of 2010, the Judicial Panel on Multidistrict Litigation remanded only 3.425% of cases to their original districts. That number dwindled to 3.1% in 2012, and to a scant 2.9% in 2013. Retaining cases in hopes of forcing a global settlement can cause a constellation of complications. These concerns range from procedural justice issues over selecting a forum and correcting error, to substantive concerns about fidelity to state laws, to undermining democratic participation ideals fulfilled through jury trials in affected communities. Yet, if transferee judges remanded cases after overseeing discovery into common issues, they could alleviate those concerns while avoiding inconsistent rulings on common questions and streamlining discovery.
Despite the potential upside, remand rarely occurs because it disfavors those with litigation control—transferee judges, lead plaintiffs’ attorneys, and defendants. Transferee judges deem settlement a hallmark of their success. Lead plaintiffs’ lawyers try to increase their fees by inserting fee provisions into settlements. Likewise, plaintiffs’ attorneys can bypass doctrinal uncertainties over weak claims by packaging plaintiffs together in a global settlement. And aggregate settlements allow defendants to resolve as many claims as possible in one stroke, take their hit, and return to business, which their shareholders view as a net positive. The remand process itself defers to these vested interests. Although the Panel could remand cases at a party’s request, in practice it appears never to have done so. Rather, it waits for the transferee judge to admit defeat and suggest remand—thereby conceding failure.
For transferee judges to begin remanding cases, the “pro-settlement” norm and “remand-as-a-failure” stigma must change. Accordingly, transferee judges should routinely entertain a suggestion for remand by a party or initiate them sua sponte as soon as discovery on common issues concludes and only case-specific issues remain. Likewise, the Panel should seriously consider parties’ remand requests even when the transferee judge does not support them. This reopens a direct line for parties to request remand when common discovery ends, but the transferee judge prefers to hold cases hostage in hopes of coercing settlement.
Monday, August 4, 2014
Professors Charlie Silver and David Hyman have posted their latest article, "Double, Double Toil and Trouble: Justice-Talk and the Future of Medical Malpractice Litigation," on SSRN. Their article studies the people behind the cases: the lawyers. It examines the market for legal services and how recent economic changes have impacted that market. Here's the abstract:
It’s not easy being a lawyer. “Biglaw” may not be dead (yet), but major firms have dissolved, filed for bankruptcy, and shed partners and practice groups. Small and mid-sized firms and solo practitioners are facing similar challenges. Some of these developments are attributable to the financial crisis and the Great Recession. Others are the result of structural and technological changes affecting the market for legal services — and those changes have revealed new weaknesses in the business forms through which lawyers have traditionally delivered legal services. To most inhabitants of Biglaw, these changes and challenges are unprecedented, but to lawyers who do medical malpractice and personal injury litigation, market turbulence of this sort is old hat. Over the past three decades, there have been dramatic changes in the market (and demand) for such services. Some of these changes are clearly attributable to legislative action, including caps on noneconomic or total damages, and procedural hurdles such as screening panels, certification requirements, and interlocutory appeals of expert witness reports. But, even in states that have not taken such steps, there has been a long-term secular decline in the volume of medical malpractice litigation. Apart from the highly visible public brawl over the merits of damage caps, these developments have attracted little attention. However, the dynamics are clear to those who wish to pay attention to them. In this Article, we explore these trends, highlight the ways in which they have interacted with one another, and then briefly discuss why it is not helpful to analyze these developments in terms of their impact on “access to justice.”
Sunday, July 13, 2014
Representatives of the U.S. Chamber of Commerce Institute for Legal Reform, American Insurance Association, American Tort Reform Association, Lawyers for Civil Justice, and National Association of Manufacturers have submitted a letter to Administrative Office of the U.S. Courts, requesting the that Rule 26 of the Federal Rules of Civil Procedure be amended to require disclosure of third-party litigation financing. The Institute for Legal Reform also has provided a summary of their request.
Tuesday, July 1, 2014
Joe Nocera has a short opinion piece on Ken Feinberg and his work in progress - the GM claims fund. You can find the piece here. The question for Feinberg is always - is this replicable? The answer depends on the company's tolerance for risk and desire for atonement.
The New York Times' Danielle Ivory also covered the new fund here, explaining how the fund works.
I also recommend the Valukas report on GM. My favorite part is his description of the "GM nod." Everyone at a meeting nods their head to a plan, nobody actually does anything to move it forward.
Thursday, May 29, 2014
Plaintiffs' attorneys huddled in Chicago on Wednesday to strategize about where to ask the MDL Panel to send the GM ignition switch cases. As usual, there are several things that will influence plaintffs' attorneys' pick.
According to this morning's article in the WSJ, Elizabeth Cabraser called the litigation "a perfect storm for a class action." Maybe. But that will largely depend on which circuit and which judge hears the case, how GM's bankruptcy affects the pending claims, and whether attorneys forgo personal injury claims (they will likely be excluded in the class definition) to pursue product liability and economic injuries.
Choice of procedural law, like how to apply Rule 23, can vary. Under Chan v. Korean Airlines, Ltd. (D.C. Cir. 1989), the Van Dusen doctrine, which holds that transferee courts must apply the choice of law interpretation of the transferor circuit, may not apply to 1407 transfers. Rather, when it comes to procedural and other federal law matters, Korean Airlines suggests that transferee courts are obligated to follow their own interpretation of the relevant law. Several circuits follow this rationale including the Second, Eighth, Ninth, and Eleventh. Other circuits, including most notably, the Seventh, have held that a transferee court should use transferor court's interpretation of federal law.
According to Bloomberg, several plaintiffs' attorneys are pushing for a California venue before Judge James Selna, who is currently handling the Toyota acceleration MDL. This strategy makes sense on several fronts. The Ninth Circuit, which originally upheld (in part) the certification in Dukes v. Wal-Mart Stores, Inc., has shown a willingness to resolve aggregate cases through class actions. And given that courts in the Ninth Circuit apply their own procedural law where circuit splits are concerned, this could further help plaintiffs. Finally, Judge Selna, who certified an economic loss settlement class action in the Toyota litigation, is a logical choice.
But other plaintiffs' attorneys (and of couse GM) have other ideas about where the MDL should land. Bloomberg reports:
Other plaintiffs want the cases to be heard in Chicago, Miami or Corpus Christi,Texas, where they have sued. GM wants the cases consolidated in the federal court in Manhattan, about a mile from where a prior incarnation of the company filed for bankruptcy in 2009. Company lawyers say proximity to the bankruptcy court trumps Selna’s experience.
While the Panel considers the forum requests by the parties, it is in no way limited to those venues. There are several factors that it typically cites in favor of forum selection such as the location of discovery materials, convenience of the witnesses, location of grand jury proceedings, possibility of coordination with related state-court proceedings, where the majority of cases are located, knowledge of the transferee judge, and the willingness and motivation of a particular judge to handle an MDL docket. Of these factors, the transferee judge is by far the most important. The Panel tends to look for judges who have handled MDLs successfully in the past. And, for better or worse, "successful" means quick settlement (see here, p. 11-12 for more).
The Judicial Panel on Multidistrict Litigaiton is comprised of seven judges from around the country. Judge David Proctor is the Panel's newest edition and was added just this year to replace Judge Paul Barbadoro.
For more on the process that will--and should--unfold once a transferee judge is appointed and how those judges should go about appointing lead lawyers, see here.
Friday, May 16, 2014
I posted a new article to SSRN this morning that's been a labor of love for well over a year now. I'm excited about this new piece for a few reasons.
First, it debuts an original data set of all lead lawyers appointed in 72 product liability and sales practices MDLs that were pending as of May 14, 2013. As such, it's the only paper (that I know of) that includes empirical evidence on plaintiffs-side repeat players appointed to leadership positions. (Yes, it includes a list of some of the most entrenched repeat lawyers and law firms as an appendix.) (If this is of interest, have a look at Margaret Williams, Emery Lee, and Catherine Borden's recently published paper in the Journal of Tort Law titled Repeat Players in Federal Multidistrict Litigation, which looks at all plaintiffs' attorneys in MDLs using social network analysis.)
I also explain why appointing a leadership group comprised of predominately repeat players can cause inadequate representation problems. For example, repeat players playing the long game have rational, economic incentives to curry favor with one another, protect their reputations, and develop reciprocal relationships to form funding coalitions and receive client referrals. As such, extra-legal, interpersonal, and business concerns may govern their interactions and trump their agency obligations to uniquely situated clients who could threaten to bust a multi-million dollar deal. Non-conforming lawyers may be ostracized and informally sanctioned, which promotes cooperation, but deters dissent and vigorous representation. Over time, expressing contrary opinions could brand the dissenting lawyer a defector, which could decrease lucrative leadership opportunities. (Other reasons abound, which I explain on pages 25-27 of the paper.)
Second, it provides some much needed guidance for transferee judges. Although the Manual for Complex Litigation remains the go-to guide for transferee judges, it hasn't been updated in 10 years. So much has changed since the fourth edition was published in 2004. Accordingly, in "Judging Multidistrict Litigation," I suggest best practices for appointing and compensating lead lawyers. Judges can compensate lead lawyers on a coherent and more predictable basis by distilling current theories down to their common denominator: quantum meruit. Quantum-meruit awards would align fees with other attorney-fee decisions and compensate leaders based on the value they actually add.
Third, as anyone familiar with the area knows, settlement review in nonclass litigation is controversial at best. After judges expressly deny class certification they then harken back to Rule 23 and their "inherent equitable authority" to comment on settlements. So, employing a quantum-meruit theory for awarding lead lawyers' attorneys' fees would give judges a legitimate private-law basis for scrutinizing settlements. Because courts must evaluate the case's success to determine how much compensation is merited, it could likewise help stymie a trend toward self-dealing where repeat players insert fee provisions into master settlements and require plaintiffs and their attorneys to "consent" to fee increases to obtain settlement awards.
The article is forthcoming in N.Y.U. Law Review in April of 2015, so I still have a bit of time to tinker with it and welcome comments in the interim (eburch at uga.edu). In the meantime, here's the formal SSRN abstract.
High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence. On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight. But on the other, without the arsenal class certification once afforded, judges are relatively powerless to police the private settlements they encourage. Of course, this power shortage is of little concern since parties consent to settle.
Or do they? Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of repeat players to leadership positions, which may complicate genuine consent through inadequate representation. Repeat players’ financial, reputational, and reciprocity concerns can govern their interactions with one another and opposing counsel, often trumping fidelity to their clients. Systemic pathologies can result: dictatorial attorney hierarchies that fail to adequately represent the spectrum of claimants’ diverse interests, repeat players trading in influence to increase their fees, collusive private deals that lack a viable monitor, and malleable procedural norms that undermine predictability.
Current judicial practices feed these pathologies. First, when judges appoint lead lawyers early in the litigation based on cooperative tendencies, experience, and financial resources, they often select repeat players. But most conflicts do not arise until discovery and repeat players have few self-interested reasons to dissent or derail the lucrative settlements they negotiate. Second, because steering committees are a relatively new phenomenon and transferee judges have no formal powers beyond those in the Federal Rules, judges have pieced together various doctrines to justify compensating lead lawyers. The erratic fee awards that result lack coherent limits. So, judges then permit lead lawyers to circumvent their rulings and the doctrinal inconsistencies by contracting with the defendant to embed fee provisions in global settlements—a well recognized form of self-dealing. Yet, when those settlements ignite concern, judges lack the formal tools to review them.
These pathologies need not persist. Appointing cognitively diverse attorneys who represent heterogeneous clients, permitting third-party financing, encouraging objections and dissent from non-lead counsel, and selecting permanent leadership after conflicts develop can expand the pool of qualified applicants and promote adequate representation. Compensating these lead lawyers on a quantum-meruit basis could then smooth doctrinal inconsistencies, align these fee awards with other attorneys’ fees, and impose dependable outer limits. Finally, because quantum meruit demands that judges assess the benefit lead lawyers’ conferred on the plaintiffs and the results they achieved, it equips judges with a private-law basis for assessing nonclass settlements and harnesses their review to a very powerful carrot: attorneys’ fees.
May 16, 2014 in Aggregate Litigation Procedures, Class Actions, Ethics, Informal Aggregation, Lawyers, Mass Tort Scholarship, Procedure, Products Liability, Settlement, Vioxx, Zyprexa | Permalink | Comments (0) | TrackBack (0)