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.
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.
Monday, December 21, 2015
Patricia Moore over at the Civil Procedure and Federal Courts Blog draws attention to a recent decision by Judge William Young (U.S.D.-MA) about attorneys fees in a case involving coupons (or "vouchers" which is the new coupon), especially footnote 29 in which the Judge explains why it is that judges might want to be more rigorous in their fee determinations in order to attract MDLs to their district, and in so doing preserve or increase their share of judicial appointments. The opinion is Tyler v. Michaels Stores, Inc., No. CV 11-10920-WGY, 2015 WL 8484421 (D. Mass. Dec. 9, 2015).
Readers interested in the phenomenon may want to check out an article by Daniel Klerman & and Greg Reilly called Forum Selling which describes the creative interpretations of the Federal Rules engaged in by judges in the Eastern District of Texas to attract patent cases.
Friday, October 23, 2015
I was just rereading Henry Friendly's Essay on the history of diversity jurisdiction.
There he quotes from remarks by George Mason:
“What!” he exclaimed, “carry me a thousand miles from home — from my family and business, where perhaps, it will be impossible for me to prove that I paid it [a bond]? ... Suppose I have your bond for £ 1000 — if I have any wish to harrass you, or if I be of a litigious disposition, I have only to assign it to a gentleman in Maryland.”
Monday, October 12, 2015
Professor Christopher Hodges (Oxford) has posted to SSRN his research paper, US Class Actions: Promise and Reality, EUI Department of Law Research Paper No. 2015/36. Here's the abstract:
The US class action is the best-known tool of civil procedure for enforcement of mass private rights. It is intended to achieve judicial and procedural economy in civil procedure, and to exert significant pressure on corporate defendants to observe the law. This piece summarises the major empirical evidence on how the mechanism works. It confirms extensive enforcement of law. It also identifies issues of selectivity of case types (especially securities cases brought by investors), high transactional costs and reductions in sums received by claimants, the risk that high economic factors distort the legal merits of settlements, the limited evidence on evaluating the legal merits of outcomes, forum shopping, and aspects of conflicts of interest that have been criticised by European politicians as abusive. The piece notes that these features are predictable consequences of the policy of encouraging widespread private enforcement of law by incentivising intermediaries and reducing risk to claimants. Various questions are noted in relation to the future of collective redress in the different context of the European legal order.
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).
Wednesday, September 23, 2015
Monday, September 14, 2015
Professor David Logan (Roger Williams) has posted to SSRN his article, Judges, Juries, and the Politics of Tort Reform, 83 U. Cin. L. Rev. 903 (2015). Here's the abstract:
The civil justice system has many repeat players with a deep interest in the civil justice system because they are often the target of personal injury lawsuits, most prominently product manufacturers and physicians, and the companies that insure them. Following a blueprint drafted by leading corporate lawyer Lewis Powell, prior to his appointment to the Supreme Court of the United States, these deep pocket interests have spent four decades and tens of millions of dollars maligning the civil jury and trying, with notable success, to influence legislators, administrators, and judges, both state and federal, under the catchy, but misleading banner of “tort reform.” These campaigns have been amplified by media coverage of the civil justice system that has been unsophisticated, and at times misleading.
This article argues that separation of powers concerns counsel that we should be cautious about constricting the role of the jury, one of our most democratic institutions. Juries provide checks and balances on government; juries are independent; juries bring community values into the judicial system; juries are fair; juries legitimatize the civil justice system; and, juries generally “get it right.”
Instead of draconian reforms like damage caps, the article argues for the primacy of judges when adjustments to the civil justice system are called for. Judges bring legal experience and knowledge not shared by most legislators and administrators; the nature of the judicial process makes judges predictable and their work transparent; judges are far less likely to be “captured” by special interests than legislators and administrators; and state judges have the best perspective of how the civil justice system works and are thus in the best position to implement reforms when necessary.
The article concludes with a survey of various tools, some time-tested and others novel, by which judges can oversee the work of juries, and the civil justice system more generally.
Saturday, August 15, 2015
The University of Haifa in Israel is hosting an international conference on the Legal Resolution of Mass Disputes on November 26-27, 2015. The conference includes a remarkable gathering of speakers from numerous countries. Participating academic speakers include the following: Dean Gad Barzilai (U. Haifa) and Professors Arthur Miller (NYU Law), Christopher Hodges (Oxford U.), Alon Klement (IDC Herzliya), Geraint Howells (City U. of Hong Kong), Stefaan Voet (U. Leuven), Willem Van Boom (U. Leiden), Astrid Stadler (Konstanz U.), Rhonda Wasserman (U. Pittsburgh), Rabeea Assy (U. Haifa), Ariel Flavian (U. Haifa), Morris Ratner (UC Hastings), Orna Rabinovich Einy (U. Haifa), Linda Mullenix (U. Texas), and Hélène van Lith (Sciences Po Law Paris).
Monday, June 8, 2015
The Supreme Court this morning granted certiorari in Tyson Foods v. Bouaphakeo. The questions presented are:
(1) Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act, where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample; and (2) whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.
You can find more information on the case at SCOTUSBLOG.
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
Friday, February 6, 2015
Perry Cooper, of the BNA Class Action Litigation Report, published a special report yesterday titled "Issue Classes Swell in Consumer Suits: Are Potential Rewards Worth the Risk?" A subscription is required to read the full article, but it does a nice job of portraying different points of view on the topic - John Beisner and Jessica Miller (Sadden Arps) for the defense, Gary Mason (Whitfield Bryson & Mason) for the plaintiffs, and some of my own views as an academic.
Issue classes have been on my mind for awhile now as well as the minds of many others--the Rule 23 Subcommittee has indicated that the topic tops their list for potential rule changes. As such, I've been working on an article titled "Constructing Issue Classes." I'm still tweaking it, so it's not available for public consumption yet, but for those interested in the topic, here's the gist of it:
Issue classes under Rule 23(c)(4) have the potential to adjudicate collectively what actually unites plaintiffs: defendant's uniform conduct. One can separate the elements of any cause of action into "conduct elements" that relate to the defendant's conduct--what the defendant knew, when the defendant knew it, etc.--or "eligibility elements" that relate to the plaintiff's eligibility for relief--specific causation, damages, etc. When defendant's conduct toward the plaintiffs is uniform, as it was for example in the smelly washing machine cases, then adjudicating elements relating to that conduct collectively can even out resource imbalances between plaintiffs' attorneys and defendants and reduce the possibility of inconsistent verdicts.
As you may imagine, a lot rides on that one trial. Issue classes work by generating two-way preclusion in follow-on cases. In the Ohio "smelly washer" trial against Whirlpool, the defense verdict meant that defendants could preclude class members from relitigating those same issues in subsequent cases. (Granted, the class was limited to Ohio purchasers, but did include some 100,000 consumers.) The high stakes suggest that anytime courts certify an issue for class treatment they should be prepared to allow an interlocutory appeal on the merits (not just the certification question as Rule 23(f) permits). It also means that courts shouldn't certify trivial issues for class treatment. As the ALI in its Principles of the Law of Aggregate Litigation suggest, the issue class should "materially advance the resolution of the claims," which would be the case with regard to most conduct-related questions.
Monday, February 2, 2015
Sunday, December 14, 2014
My colleague Professor Debra Lyn Bassett (Southwestern) has posted to SSRN her article, Class Action Silence, 94 Boston U. L. Rev. 1781 (forthcoming 2014). Here is the abstract:
A number of law review articles have noted the issues inherent in treating class members' failure to opt out as consent to the court's personal jurisdiction or as agreement to a proposed class settlement. Missing from the existing analyses, however, is the "big picture" -- the reality that class action silence is layered, resulting in silence that is repeatedly and inappropriately compounded. At each and every step in class action litigation, absent class members are not just expected, but effectively encouraged, to remain silent. Moreover, at every step, courts interpret class members' silence as consent. The ultimate result is a "piling on" of consents: the expected and encouraged silence is deemed to constitute consent to the filing of the class suit and consent to personal jurisdiction and consent to be bound to any resulting class judgment and consent to the proposed class settlement and approval of the proposed settlement's terms and conditions. Yet this compounded effect occurs under highly ambiguous circumstances, where arguably the most sensible interpretation of class members' silence is not consent, but confusion. The multiple and contradictory meanings of silence render it unreasonable to equate the failure to opt out with consent. The fallacy of repeatedly ascribing consent to highly ambiguous silence should be recognized as a due process danger that potentially can deprive class members of property rights and their day in court.
Wednesday, December 10, 2014
Friday, October 31, 2014
The Ohio jury's verdict yesterday was in favor of the defendant, Whirlpool, in the moldy washing machine issue class action. BNA has the report.
In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig. (Glazer v. Whirlpool Corp.), N.D. Ohio, No. 08-65001, verdict10/30/14
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.
Sunday, September 21, 2014
Professors Adam Zimmerman (Loyola Los Angeles) and Dana Remus (North Carolina) have posted to SSRN their article, Aggregate Litigation Goes Private, 63 Emory L.J. 1317 (2014). Here is the abstract:
In Disaggregative Mechanisms, Professor Jaime Dodge documents how corporate defendants increasingly design their own mass resolution systems to avoid collective litigation — what she calls “disaggregative” dispute resolution. According to Dodge, such schemes promise benefits not only to putative defendants, but also to plaintiffs — resolving disputes quickly, handling large volumes of claims predictably, and sometimes, offering more compensation than would be available through aggregate litigation. She observes, however, that these systems also risk underdeterrence. Dodge concludes by endorsing disaggregative mechanisms while suggesting a need for more public oversight.
In the following response, we argue that, left unregulated, such highvolume claim systems threaten transparency, deterrence, and even the rule of law. We therefore agree with Dodge’s call for public oversight. But we observe that a number of policing and oversight mechanisms already exist. Today, lawmakers and regulators police collective arbitration and private settlement funds, in a wide variety of areas — from financial and environmental regulations to employment and consumer protection laws. After reviewing the ways that policymakers currently regulate corporate dispute resolution, we examine their effectiveness by exploring two regulated private settlement systems in more detail: (1) regulations developed by the Obama Administration that require airlines to offer “liquidated damages” using a preapproved settlement grid when they overbook customers on a flight and (2) regulations imposed by the Office of the Comptroller of the Currency following accusations that many of the nation’s largest banks executed “robo-signed” mortgages that required banks to perform a detailed “independent foreclosure review” of past loans with borrowers. These case studies demonstrate both the challenges to, and opportunities for, government bodies that attempt to encourage sound regulation of mass private settlement systems without compromising their potential contributions to increased access, equality, and efficiency.
Wednesday, September 10, 2014
Professor Neal Katyal (Georgetown) and Theodore Olson (Gibson Dunn) take part in a Federalist Society panel on class action reform and the BP Deepwater Horizon case; the panel is moderated by Stuart Taylor (Brookings Institution).