Wednesday, November 13, 2013
The New York Times and Bloomberg are reporting that Johnson & Johnson has agreed to settlement terms to resolve thousands of DePuy metal hip implant claims. According to the Bloomberg article, J&J Said to Reach $4 Billion Deal to Settle Hip Lawsuits, and the New York Times article, Johnson & Johnson Said to Agree to $4 Billion Settlement Over Hip Implants, the deal would provide about $300,000 to $350,000 in compensation for each claimant who underwent surgery to replace the DePuy hip implant, which could be as many as 8000 cases. The amount for each claimant would depend on age, medical condition, and other factors. According to the articles, the settlement has not been formally announced.
The Depuy hip implant cases are pending in Multidistrict Litigation (MDL 2197) before Judge David Katz in the Northern District of Ohio, as well as in state courts in Ohio, California, and New Jersey. Two cases have gone to trial, with one plaintiff victory and one for the defense. Seven more trials are scheduled. This would be the largest settlement ever for medical device litigation, and one of the largest mass tort settlements.
Update: See here for Nov. 19 info.
Wednesday, October 2, 2013
The New York Times reports that an appellate panel has remanded the BP settlement appeal for "clarification" of the settlement in response to BP's allegations that the settlement adminstrator was paying claims to non-injured claimants and engaging in other wasteful conduct.
Update: Here's the Fifth Circuit decision in the case.
Tuesday, September 3, 2013
Professor Jennifer Robbennolt (Illinois) has posted to SSRN her article, The Effects of Negotiated and Delegated Apologies in Settlement Negotiation, 37 Law & Hum. Behav. 128 (2013). Here's the abstract:
Previous work has explored the influence that apologies have on the settlement of civil legal disputes. This study explored 2 aspects of apologies that commonly arise in the legal setting — the fact that many apologies may be negotiated with or requested from a wrongdoer in the context of settlement discussions and the possibility that an apology may be offered by a wrongdoer’s attorney rather than personally by the offender. In general, apologies given following a negligent action were found to improve perceptions of the offender and the situation. Full apologies that were given in response to a request by the injured party or at the suggestion of a mediator were viewed in ways that were similar to the same apology given spontaneously. On the other hand, full apologies that were offered by an attorney on behalf of the wrongdoer, although improving perceptions somewhat, were less effective than apologies offered directly by the wrongdoer. The motives attributed to the apologizer and general attitudes toward the civil litigation system also influenced perceptions of apologies.
Friday, August 30, 2013
According to a news report, BP today asked the Fifth Circuit to reverse the district court's approval of the Gulf oil spill settlement. I have not seen the court filing, but according to this AP report as published by the NY Times, "BP is trying to persuade a federal appeals court that it should throw out a judge's approval of the company's multibillion-dollar settlement with Gulf Coast residents and businesses. Last year, BP PLC joined plaintiffs' attorneys in urging U.S. District Judge Carl Barbier to give the deal his final approval. On Friday, however, the company's lawyers argued in a court filing that Barbier's more recent interpretation of settlement terms have allowed businesses to receive hundreds of millions of dollars for inflated or fictitious claims." As told in the Houston Chronicle, BP would still support the settlement if the Fifth Circuit were to decide in BP's favor on its earlier appeal challenging Judge Barbier's rulings on the generosity of payouts.
BP's decision to ask for reversal of its settlement class action (a deal that BP had negotiated and agreed to, and for which BP had previously argued in favor of judicial approval), is a fascinating turn of events in light of the history of the Gulf Oil Spill litigation and settlement. Shortly after the Deepwater Horizon explosion, BP established a compensation fund to pay claims. Kenneth Feinberg was named administrator of the fund, which came to be knows as the Gulf Coast Claims Facility (GCCF), and the GCCF proceeded to settle thousands of claims. But BP later joined with a group of plaintiffs' lawyers to negotiate a settlement class action that would replace the GCCF as settlement mechanism. For BP, a settlement class action offered a greater prospect of finality because it could bind all class members who fail to opt out, whereas the GCCF settlement program could bind only those claimants who chose to accept their compensation offers. In other words, even though the claims systems strongly resembled each other, a key difference is that a settlement class action uses the adjudicative power of the court to bind class members, in contrast to the claims facility, which depended upon the consent of individual claimants to settle their claims.
I've argued elsewhere that settlement class actions should be impermissible because they use the power of the courts to disadvantage claimants. But the BP news drives home the point that the opposite problem can occur -- a defendant may feel disadvantaged by a settlement class action because it deprives the defendant of control over the settlement process.
Tuesday, August 13, 2013
Adap Liptak of the NYTimes has a piece When Lawyers Cut Their Clients Out of the Deal about a cy pres settlement with Facebook. In this settlement (approved by the 9th Circuit) the lawyers got $2.3 million and the clients got a cy pres contribution, apparently $6.5 million to a foundation over which Facebook has some control according to the article. The cy pres recipient is something called the Digital Trust Foundation. A quick google search came up with a bunch of references to the Facebook settlement but no website for this foundation.
The Ninth Circuit affirmed the settlement and denied rehearing en banc, with a dissent on rehearing en banc, making this a possible Supeme Court cert grant. (A cert petition was filed on June 26, 2013).
There is a lot of scholarship on the topic of how much lawyers should be paid relative to class members as well as articles critizing cy pres settlements. Some links to this work are below. The problem is this. We regulate entities like Facebook largely by litigation. In the absence of the class action, there would be little or no enforcement of the consumer protection laws. But the class action litigation needs to be funded, and it is funded out of lawyers percentage of the total fund, usually the total fund from a settlement because class actions are almost never litigated. Its very hard to certify a class action, so class actions are often certified for settlement only. The incentive of the lawyers, fearing no class certification or realistic possibility of actually litigating, is to settle. The incentives for defendants, wanting to get the litigation off their books, is to settle cheap. The answer to this problem in my view is to allow classes to be litigated, not to tighten the certification standards further.
If the settlement will deter future misconduct, even if the money doesn't go directly to the class members, there is still a lot of societal value there. But is $8.8 million enough to deter Facebook? Does it have any relationship to the potential value of this lawsuit? That is, what is the value of the claims multiplied by the probability of success?
In my own work, I've suggested that cy pres settlements are not necessarily bad, but that certainly doesn't mean they are always good. Class members should just be polled in determining where cy pres settlements should go. The argument that class members will not appreciate the putative $1 (I think I saw it was $1.12) they would get in a settlement like this one is reasonable. But that doesn't make a settlement like this one okay. Especially in a settlement involving facebook users, who presumably are all connected via facebook, there is no reason why absent class members cannot be polled. Do they "like" this foundation? what would they prefer? Might I suggest Public Citizen as a recipient?
This case might be a fine vehicle for the Supreme Court to consider cy pres settlements. Given how few cases the Court decides, how few class actions actually are filed and litigated (less than 1% of the federal docket) its not clear to me that this is the best use of its time. That said, if the Court does grant cert, it would be wise to consider both the overall benefits and costs of cy pres to consumers and society more generally, not merely the fact that the lawyers got a lot of money here. This is a story of more money than sense.
Monday, April 1, 2013
I have posted a new paper, The Problem of Settlement Class Actions, on SSRN. It makes the argument that we should abandon settlement-only class actions as a means of resolving mass disputes. The article focuses first on problems of leverage, including would-be class counsel's inability to take the class claims to trial and the monopsony or "reverse auction" problem. Because of the inherent asymmetry of settlement class action negotiations, would-be class counsel does not adequately represent the interests of the absent class members. The article incorporates these leverage concerns into an account of the illegitimacy of settlement-only class certification as a matter of judicial authority. The problems include not only due process concerns of inadequate representation, but also Rules Enabling Act concerns.
Settlement class actions have been an important form of dispute resolution in mass torts (as well as securities, antitrust, and other areas). Despite the Supreme Court's rejection of two asbestos settlement class actions in Amchem and Ortiz, and despite the problems encountered in the fen-phen nationwide settlement class action shortly thereafter, mass tort settlement class actions have never disappeared, and we need only look at the BP settlement class actions in the Gulf Oil Spill litigation for a well-known recent example.
Needless to say, the argument I am advancing faces an uphill battle. It cuts against entrenched interests of defendants, of plaintiffs' counsel, and of judges, all of whom prefer easier paths to comprehensive negotiated resolutions. The argument also cuts against the grain of most recent thinking on this topic. The ALI Principles of the Law of Aggregate Litigation, as well as a recent suggestion under consideration by the Advisory Committee on Civil Rules, would alter Rule 23 to facilitate settlement class actions even in cases that would be uncertifiable for purposes of litigation. Recent cases such as the Second Circuit's 2012 decision in In re AIG Securities Litigation and the Third Circuit's 2011 en banc decision in Sullivan v. DB Investments have taken new liberties with the Supreme Court's Amchem decision. The article explains what is problematic about the direction these cases have taken.
Here is the abstract:
This article argues that class actions should never be certified solely for purposes of settlement. Contrary to the widespread “settlement class action” practice that has emerged in recent decades, contrary to current case law permitting settlement class certification, and contrary to recent proposals that would extend and facilitate settlement class actions, this article contends that settlement class actions are ill-advised as a matter of litigation policy and illegitimate as a matter of judicial authority. This is not to say that disputes should not be resolved on a classwide basis, or that class actions should not be resolved by negotiated resolutions. Rather, this article contends that if a dispute is to be resolved on a classwide basis, then the resolution should occur after a court has found the matter suitable for classwide adjudication regardless of settlement.
Friday, October 19, 2012
HB Litigation Conferences has put together a Judicial & Lawyers’ Forum on Cost-Driven Litigation Strategies — The New Paradigm: When is a Case Too Big to Litigate?, on November 9, 2012, at the University of Chicago. Here's the brochure.
Friday, October 12, 2012
Two Wall Street Journal articles in recent days have tracked recent settlements talks between BP and the federal government regarding civil and criminal liability in connection with the Deepwater Horizon oil spill in the Gulf. On Wednesday, the Journal reported, BP Close to Spill Settlement: Multibillion-Dollar Deal With U.S. Would Combine Civil, Criminal Liabilities. But on Thursday, the Journal noted in Slick Complicates BP Liability Talks that a new thin oil slick determined to be related to the prior Deepwater Horizon spill has appeared.
Thursday, August 16, 2012
This article argues that there is an unrecognized “anticommons” problem in aggregate litigation. An anticommons occurs when too many owners’ consent is needed to use a resource at its most efficient scale. When many plaintiffs have similar claims against a common defendant, those claims are often worth more if they can be packaged up and sold to the defendant (i.e., settled) as a single unit — that is, the defendant may be willing to pay a premium for total peace. But because the rights to control those claims are dispersed among the individual plaintiffs, transaction costs and strategic holdouts can make aggregation difficult, particularly in cases where class actions are impractical. Recently the American Law Institute has proposed to modify long-standing legal ethics rules governing non-class aggregate settlements to allow plaintiffs to agree in advance to be bound by a supermajority vote on a group settlement offer. By shifting from individual control over settlement decisions to collective decision making, the ALI proposal may offer a way out of the anticommons and allow the group to capture the peace premium. Critics, however, say that allowing plaintiffs to surrender their autonomy will leave them vulnerable to exploitation by the majority and by their lawyers. Viewed through the lens of the anticommons, these concerns are manageable. Similar anticommons problems arise in many areas of law, ranging from eminent domain to oil and gas to sovereign debt. But instead of slavishly preserving the autonomy of individual rights-holders, these areas of law have developed strategies for aggregating rights when doing so will result in joint gains. Drawing from these other contexts, this article argues that the legitimacy of compelling individuals to participate in a value-generating aggregation depends on the presence of governance procedures capable of protecting the interests of the individuals within the collective and ensuring that the gains from cooperation are fairly allocated. Governance is thus the key to legitimizing attempts to defeat the anticommons in mass litigation through aggregation, whether by regulatory means, such as the class action, or contractual precommitment, as in the ALI proposal.
Wednesday, July 18, 2012
Walter Olson has an op-ed on recent New Hampshire tort reform involving early offers of settlement and loser pays. Although New Hampshire's new approach concerns medical malpractice, one could imagine such reforms subsequently spreading to other areas of tort, including perhaps products liability.
Monday, July 9, 2012
NPR has an extended interview with famed claims administrator Ken Feinberg about his new book, Who Gets What: Fair Compensation After Tragedy and Financial Upheaval.
July 9, 2012 in 9/11, Aggregate Litigation Procedures, Current Affairs, Informal Aggregation, Lawyers, Mass Disasters, Mass Tort Scholarship, Products Liability, Settlement | Permalink | Comments (0) | TrackBack (0)
Thursday, May 3, 2012
On Tuesday, the Sixth Circuit U.S. Court of Appeals affirmed the convictions and sentences of William Gallion and Shirley Cunningham for their handling of a massive settlement of fen-phen claims. Here is the Sixth Circuit opinion, and here are news accounts from Thomson Reuters and Bloomberg. The lawyers had been sentenced to 25 years and 20 years, respectively. The opinion provides interesting and useful background on the diet drugs litigation and settlement, and it offers a picture of how badly things can go when mass tort aggregate settlements are mishandled. Because the Daubert exclusion of defendants' expert was an issue on appeal, the Sixth Circuit referred to my trial testimony as an expert on behalf of the United States -- I don't know whether I should be offended or flattered that I was accused of espousing ivory tower ideals, but I take some solace in knowing that the court thought the ivory tower had it right.
Monday, April 23, 2012
George Conk has the links to the BP settlement class action. A quote from the complaint: "The principle was two-fold: to design claims frameworks that fit a wide array of damage categories, and, within each category, to treat like claims alike, so as to proceed with both fairness and predictability."
Conk also notes that the settlement offers a "risk transfer premium" for future injuries/losses. You can find more posts here.
Interesting to think how the court will treat this high profile settlement class action, whether there will be objectors and appeals.
Saturday, March 3, 2012
John Schwartz at the New York Times reports that the litigation surrounding the BP Deepwater Horizon Oil Spill has settled for all of the litigants except the federal government. The Judge overseeing the litigation issued the order late Friday night and will review the settlement.
Here's the report from Bloomberg as well.
According to these reports, either the settlement will be paid by the $20 billion fund BP created to compensate victims or the fund will close and be replaced by a court overseen claims facility. In any event, the amount of the settlement is $7.8 billion that from these reports is not in addition to the $20 billion already set aside.
More to come. ADL
Wednesday, February 29, 2012
An intrepid reporter asked me today what a good precedent would be for a settlement in the BP litigation - something on point, not a products liability mass tort settlement but an environmental toxic tort settlement of the magnitude that this would have to be. I couldn't think of anything except the Exxon case, which of course was litigated. Any other ideas?
Tuesday, February 28, 2012
You don't need the Mass Tort Litigation Blog to tell you that the imminent BP trial has been stayed pending settlement talks. In the meantime, here are some thoughts from the ever relevant George Conk. Special shout out for his poetic references: Diving Into the Wreck: BP and Kenneth Feinberg's Gulf.
I was just at a wonderful conference at the Charleston School of Law on Mass Torts and the Federal Courts where Feinberg spoke. One of the key questions at the conference is the extent to which claims facilities (BP, 9/11, etc.) are unique and unlikely to be repeated or the wave of the future. The interesting thing about BP is that it shows the interaction between claims facilities and litigation - its not one or the other. Speakers mentioned how companies trying to get ahead of a litigation may well look to the BP model. Others questioned whether BP was really special because the company was prepared to admit liability (although not gross negligence).
I was especially interested by the remarks of Sheila Birnbaum, currently running the 9/11 Fund for first responders and who mediated settlements for the 94 families who chose not to participate in the 9/11 Victim Compensation Fund. Even the families who wanted a public trial to find out what happened ultimately settled because of the uncertainty of trial. This raises important questions about the purpose of litigation for individuals: is it ultimately to get compensation? How important is it to get to the "truth"? How important is vindication? Punishment? When people settle (or waive their right to litigate prior to filing suit), what kind of consent do we want and does money ultimately satisfy? Lynn Baker, who was at the conference, referred me to the following article that addresses some of these questions: Gillian Hadfield, Framing the Choice Between Cash and the Courthouse: Experiences with the 9/11 Victims Compensation Fund. This continues to be relevant, especially if Funds become a model rather than a one-off.
Saturday, February 18, 2012
NPR has a story with lots of interesting quotes. My favorite:
"There's only one place where a waitress or a shrimper can be on equal footing with a company the size of BP, and that's a courtroom," says Rhon Jones, with the Montgomery, Ala., law firm Beasley Allen. Jones is part of the plaintiffs' steering committee, a group of lawyers coordinating the case.
The story raises a series of important questions about the purpose of litigation and settlement. Is it best for society to funnel cases outside that system as in the BP and 9/11 cases? What is the use of a trial - to apportion liability? get to the truth? allocate damages? figure out difficult causation questions? Are different plaintiffs to be treated differently - for example the waitress and the shrimper above as opposed to the attorneys general of the affected states?
Edited to add: I just saw the blog post by George Conk about the potential ineligibility of many plaintiffs who did not file claims with the compensation fund. See here for more analysis.
Tuesday, January 31, 2012
Eyal Zamir (Hebrew Univ.), Barak Medina (Hebrew Univ.), and Uzi Segal (Boston College, Economics) have posted to SSRN their article, The Puzzling Uniformity of Lawyers’ Contingent Fee Rates: An Assortative Matching Solution. Here is the abstract:
Lawyers’ Contingent Fee (CF) rates are rather uniform, often one-third of the recovery. Arguably, this uniformity attests to collusion in the market, resulting in clients paying supra-competitive fees. This paper challenges this common argument.
Uniform CF rates are not necessarily superior to negotiable ones; yet they provide clients with an important advantage. They result in clients making a defacto “take-it-or-leave-it” offer. It precludes lawyers from exploiting their private information about the lawsuit’s expected value and the amount of work it requires. The uniformity of CF rates enables clients to hire the best available lawyer, either directly, if clients know lawyers’ ranking, or indirectly, through the referral system. This uniformity thus fosters a positive assortative matching of lawyers and clients. Finally, the fact that both direct clients and clients obtained through paid-for referrals pay the same CF rate does not attest to cross-subsidization, as the cases a lawyer gets through referrals are quite different than those she gets directly.
Tuesday, January 17, 2012
Adam Zimmerman (St. John's) has a nice post on Prawfsblawg called "The Rise of Executive (Branch) Compensation" in which he discusses the historical antecedents and politics of compensation funds for mass disasters. It reminds us that not all worthy victims have been the beneficiaries of such funds and the reasons why some are picked (and others are not) are not always clear.
Saturday, January 14, 2012
All that in the recent interesting op-ed from New York Times business columnist Joe Nocera -- BP Makes Amends.
January 14, 2012 in Aggregate Litigation Procedures, Environmental Torts, Informal Aggregation, Lawyers, Mass Disasters, Procedure, Punitive Damages, Settlement | Permalink | Comments (0) | TrackBack (0)