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.
Professor Adam Steinman (Alabama Law) has posted to SSRN his article, The Rise and Fall of Plausibility Pleading?, 69 Vanderbilt L. Rev. 333 (2016). Here's the abstract:
The Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly and its 2009 decision in Ashcroft v. Iqbal unleashed a torrent of scholarly reaction. Commentators charged these decisions with adopting a new pleading regime, "plausibility pleading," that upended the notice-pleading approach that had long prevailed in federal court. Whether a complaint could survive a motion to dismiss — it was argued — now depends on whether the court found the complaint plausible, allowing courts to second-guess a complaint's allegations without any opportunity for discovery or consideration of actual evidence. Lower courts began to cite Twombly and Iqbal at a remarkably high rate, and empirical work revealed their effect on both dismissal rates and litigant behavior.
Although Twombly and Iqbal were troubling on many levels, the rise of a newly restrictive form of plausibility pleading was not inevitable. There was — and still is — a path forward that would retain the notice-pleading approach set forth in the text of the Federal Rules themselves and confirmed by pre-Twombly case law. This Article describes this reading of Twombly and Iqbal, and explains how more recent Supreme Court pleading decisions are consistent with this understanding. It is crucial, however, that these post-Iqbal decisions and the approach to pleading they reflect receive the same attention that accompanied Twombly, Iqbal, and the rise of plausibility pleading. Otherwise the narrative that Twombly and Iqbal compel a more restrictive pleading standard may become further entrenched, compounding the adverse effects of those problematic decisions.
Friday, April 1, 2016
Thursday, March 31, 2016
This case involved a crash on an icy bridge in New Orleans during a rare ice storm in that part of the country. The plaintiffs suffered minor injuries.
The jury found the accident was caused by the ice storm, not the defect. It did, however, also find that the car was "unreasonably dangerous." With respect to that determination, Prof. Carl Tobias (Richmond) is quoted in the Bloomberg article saying: “The plaintiffs can claim a victory at least insofar as the jury made that finding, which is a critical finding. Every case will be on its own merits, but I think they can claim that as an important development.”
Thursday, March 24, 2016
The New York Times has an article today on the link between NFL and Tobacco called NFL's Concussion Research Deeply Flawed.
What does this mean for the NFL settlement? Should the issue be approached in the mode advocated long ago by Francis McGovern - that is, by allowing the mass tort to mature through multiple trials before a settlement is reached?
This article also raises the question of how the law promotes and creates disincentives for entities to conduct reliable scientific studies. For interesting takes on that question, compare Wendy Wagner, Choosing Ignorance in the Manufacture of Toxic Products with Wendy Wagner, When All Else Fails: Regulating Risky Products Through Tort Litigation.
Tuesday, March 22, 2016
The Supreme Court today issued its decision in Tyson Foods v. Bouaphakeo. The Court upheld class certification on a state claim that parallels FLSA and the FLSA collective action (which is not a class action but an opt-in procedure) and reaffirmed its precedent that representative evidence can be used in FLSA cases. The Court's decision emphasizes that there is no one size fits all in the use of statistical evidence in class actions - whether evidence is appropriate is a question of evidence law that depends on the specific legal and factual requirements of the individual case. The case also supports the relatively narrow reading appellate courts have given the Court's decision in Comcast. The evidence presented, be it statistical or any other form of evidence, must fit the claims, but that does not mean that statistical analysis cannot help the court and the jury better understand what transpired.
What does Tyson portend for future trials, which Robert Klonoff predicted are going to be more common in class actions? A couple things. First, defendants will probably seek to bifurcate trials and make greater use of specific verdict forms rather than try to assault a lump sum verdict on appeal. Second, Daubert challenges are likely to continue to be contentious, and we'll see them twice: first on certification and again at trial.
Now the case goes back to the district court to determine an allocation plan, which I doubt defendants will challenge. The point of this appeal was to try to eliminate the use of statistical evidence in class actions and to broaden Comcast - otherwise why would fighting a 2.9 million dollar verdict be worth it for a defendant like Tyson? I can't think of a reason other than setting a precedent that prohibits the use of statistics in complex litigation will protect it and other defendants from class wage and hour claims, and potentially other claims. And note that the late Justice Scalia's dissent, if he had dissented, would have played little role in the outcome of the case as Justice Roberts joined the majority. It would have been 6 to 3 instead of 6 to 2.
One more thing: is this a business unfriendly decision? I think not. It is narrowly drawn to apply the law (FLSA) to employers, but an employer such as Tyson Foods can protect itself by keeping records that would obviate the need for representative evidence.
Friday, March 11, 2016
Bloomberg BNA has an article by Steve Sellers about increased judicial scrutiny by courts in mass products liability cases. He lists several cases in the last few years in which courts denied secrecy provisions in settlements because of the public interest:
, 2016 BL 6286, 9th Cir., No. 15-55084, 1/11/16. This case in the 9th Circuit granted in intervenor public interest organization's motion to obtain documents in a lawsuit involving defective car parts.
Maybe there is a trend towards transparency. Another recent Bloomberg BNA piece by Perry Cooper highlights the question of whether class action settlement outcomes should be required to be disclosed.
Sunday, February 21, 2016
Professor Joanna Shepherd (Emory) has posted to SSRN her article, An Empirical Survey of No-Injury Class Actions. Here is the abstract:
This report empirically examines the allocation of settlements and awards in no-injury class actions among plaintiffs, attorneys, and cy pres funds. The results are based on my study of 432 no-injury class action settlements and trial awards from 2005-2015. The study finds that, on average, 60 percent of the total monetary award paid by the defendants was allocated to the plaintiffs’ class and 37.9 percent was allocated to attorneys’ fees. However, because many settlements disperse the unclaimed portion of the settlement fund to a cy pres fund, the funds available to class members at the time of settlement may significantly overstate the actual amount class members ultimately receive. Although 60 percent of the total monetary award may be available to class members, in reality, they typically receive less than 9 percent of the total. In comparison, class counsel receives an average of 37.9 percent of available funds, over 4 times the funds typically distributed to the class. A result in which plaintiffs recover less than 10 percent of the award, with the rest going to lawyers or unrelated groups, clearly does not achieve the compensatory goals of class actions. Instead, the costs of no-injury class actions are passed on to consumers in the form of higher prices, lower product quality, and reduced innovation.
Jill Fraley on the Government Contractor Defense and Superior Orders in International Human Rights Law
Professor Jill Fraley (Washington & Lee) has posted to SSRN her article, The Government Contractor Defense and Superior Orders in International Human Rights Law. Here is the abstract:
As military functions are increasingly outsourced to corporate contractors, civil courts face adjudicating issues of tort liability arising from actions occurring in war zones. Currently victims of torture and other invasive military techniques used at Abu Ghraib and Guantanamo Bay seek to prevail over issues of sovereign immunity and to hold corporations responsible for the actions of their employees. In response, corporations shield themselves with the government contractor defense, an affirmative defense developed in the context of product liability actions. Recent articles have overwhelmingly suggested that the defense will succeed and often have argued that it should succeed due to issues of sovereign immunity. This article makes a novel claim — a claim which is supported by placing the government contractor defense in the context of international law. This article examines the theoretical foundations of the government contractor defense, and comparing the elements of the defense to the international law of human rights, argues that the government contractor defense is reducible to a claim of “superior orders.” The government contractor defense is attempting to hang on the coattails of sovereign immunity — i.e., the defense is nothing more than an argument that “the government told me to do it.” Indeed, this is what one must argue to present the traditional prima facie case for the government contractor defense: specific orders and compliance with those orders. In light of the analytical similarity between the two defenses, and given the absolute ban of the superior orders defense in international law, the government contractor defense is unacceptable in the context of claims of human rights violations.
Professor Robert Rabin (Stanford) has posted to SSRN his article, Intangible Damages in American Tort Law: A Roadmap. Here is the abstract:
This paper is meant to provide a succinct roadmap to the many pathways taken in providing recovery for intangible harm in tort. The paper was initially prepared for a comparative law conference, and in that setting, I assumed a lack of close familiarity with the historical origins and surprisingly broad expanse of recovery for intangible harm in American tort law. While succinctly presented, the present revised treatment, for those conversant with the US system, is meant to be comprehensive, addressing defamation and privacy, no-fault and tort reform, as well as the more conventional common law topics of intangible damages in cases of intentional and accidental harm.
Monday, February 8, 2016
In today's New York Times, Michael Wines & John Schwartz have an article called "Regulatory Gaps Leave Unsafe Lead Levels in Water Nationwide."
What they describe in the article are not only regulatory gaps - that is places such as certain waterways or sources of water that are un- or under- regulated, but also cases where regulations are ignored, poorly followed, etc.
On prawfsblawg, Rick Hills writes about the Flint water crisis in particular and the relationship between litigation and regulation. He correctly observes: "Darnell Earley, the emergency manager appointed by Governor Snyder to run Flint, had a bureaucratic mandate to save money and no electoral incentive to protect non-fiscal goals like voters' health. By switching Flint's water supply from the expensive Detroit water system to the cheaper and more corrosive Flint River, Earley maximized the first goal and ignored the second, with the result that Flint's residents now have elevated lead levels in their blood."
Tuesday, February 2, 2016
Some more news coverage of the GM Bellwethers and the allegations made against the lead lawyer.
An interview with Robert Hilliard can be found here: Amanda Bronstad, Plaintiffs Lawyer Hilliard Saw No Red Flags in Case, National Law Journal, Feb. 1, 2016.
Amanda Bronstad, Lawyer Claims GM Bellwether Counsel Cut Sweetheart Deal with Automaker, National Law Journal, Jan. 28, 2016.
Sara Ranzaddo & Mike Spector, GM, Plaintiffs Lawyers Dispute Misconduct Allegations in Ignition Switch Cases, Wall Street Journal, Feb. 2, 2016.
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.
Thursday, January 28, 2016
Tuesday, January 26, 2016
Lance Cooper, a lawyer with ignition switch cases against GM, has made a motion to remove the MDL plaintiffs counsel in the ignition switch litigation. You can find some coverage by Sara Randazzo & Mike Spector at the Wall Street Journal. (I haven't seen the motion).
The first lawsuit to proceed to trial - of a total of six, three picked by plaintiffs, three by defendants - has ended with a dismissal with prejudice under a cloud of allegations of fraud. What does this say about bellwethers?
I think it says nothing about the underlying cases, or not very much. (It does tell you something about lawyer error, but that's a topic for another day). However, the recent events at trial do show that the way bellwether trials are structured is deeply flawed. If the cases tried are going to be meaningful, they should be randomly selected and the number of trials should be related to the variation in the underlying group of cases. If there is a high variation, you will need more trials to tell you much about the underlying run of cases. A number that is convenient (six, for example) is just that, convenient, but convenience should not be confused with meaningful. Now a lot is riding on this case because one would imagine, since plaintiffs picked it and they only get three, its a really good case for plaintiffs. So a skewed sample can tell you something - but what it ends up telling you is more about the lawyers than the underlying run of cases.
To understand this, imagine you have a jar full of marbles. If you know all the marbles are the same color, you can just pick one marble out of the jar to find out what the color of all the marbles is. But if the marbles are of various colors picking one marble is not enough. If you have a sense of the distribution of colors in the jar - say you know that there are some black and some red marbles - you can calculate how many marbles to pick out so that you will have a pretty good estimate of the proportion of red to black. The same with cases. If your cases are homogeneous, you can just try a few to get a sense of their value. The more heterogeneity, the greater the number of cases that need to be tried. This was the basis for Francis McGovern's idea of maturation of mass torts - you try lots of cases, and over time a value emerges. It was also the basis for the structure of bellwether trials in the 9/11 First Responders' Litigation.
Of course, its easy for me to say this. I am not running an MDL and I don't have to pay for all those trials, which are expensive. But that said, if you want to get a sample that could mean something, the sample size needs to be related to the variance of the underlying class and the method of selection needs to be random. That's basic statistical methods. I think that MDL judges need to partner with statisticians and have a serious conversation about what bellwether trials are trying to achieve and how best to do this. Judges have a lot of discretion and they can use it wisely to lead to fair and equitable results for everyone. There are ways to do better, we just need to find them.
Thursday, January 21, 2016
The first GM Ignition Switch Bellwether trial is going forward now. Below are some links to media coverage:
Wednesday, January 20, 2016
Monday, January 18, 2016
Professor Erin Sheley (Calgary Law) and Theodore Frank (Competitive Enterprise Institute) have posted to SSRN their article, Prospective Injunctive Relief and Class Action Settlements, Harv. J. L. & Pub. Pol'y (forthcoming). Here is the abstract:
Despite much controversy and criticism, the class action is alive and well. In particular, the injunctive remedy, requiring the defendant to change some aspect of its business practice, has become a common feature of class action settlements. This article explores a taxonomically distinct remedial category of injunction that has, as of yet, not generally been considered by courts and scholars as such: the prospective injunctive remedy. We demonstrate how the prospective injunctive remedy operates and argue that, in light of the special policy and legal problems it creates, courts should observe a presumption against approving settlements that contain provisions for prospective injunctive relief. In Part I we show how the parties to a class action have, in general, no incentive to benefit either absent class members or society at large and therefore require courts to police them to ensure justice. In Part II we describe the public law underpinnings of prospective injunctive relief and provide three case studies of consumer class actions that demonstrate how and why courts fail to accurately police this relief in the private law context. We compare the approved relief in these cases to the regulatory regimes they disrupt to argue that courts in this way allow class action litigation to produce bad public policy. In Part III we explore the ways in which these prospective remedies likewise produce bad law: namely, through the inappropriate creation of regulatory preemption and the potential violations of attorney-client fiduciary duty, the adequacy requirement of Rule 23(a)(4), and constitutional standing requirements. In Part IV we consider counterarguments and in Part V we conclude.
Tuesday, December 22, 2015
In an environmental disaster of tragic proportions, the City of Flint, Michigan has discovered that by switching water sources to save money, it inadvertently corroded the lead pipes of the city's water system, leaching lead into the water supply. The result is a generation of children who have been exposed to lead and likely will suffer permanent effects. The story is reported, among other places, in this story in the Washington Post. Residents filed a class action suit against the State and the City in mid-November - you can find the complaint here. It is interesting in that it alleges constitutional violations - a violation of the right to bodily integrity and deprivation of property under the due process clause of the 14th Amendment.
The Mayor declared a state of emergency this week.