Mass Tort Litigation Blog

Panel on Pluralism in Tort Law and Litigation at Annual Conference of the Association for the Study of Law, Culture and the Humanities

As previously mentioned, I was part of a panel on Pluralism in Tort Law and Litigation at the annual conference of the Association for the Study of Law, Culture and the Humanities, which took place on Saturday, March 20 at Brown University.  Professor Alan Calnan (Southwestern) moderated the panel, and other participants included Professors Christopher Robinette (Widener) and Sheila Scheuerman (Charleston).  Below are the abstracts and links to audio from the presentations and Q&A.  Thanks to Alan Calnan for moderating and to all for participating.

***

I.  Prof. Alan Calnan -- Introduction (audio)

II.  Prof. Christopher Robinette -- "The Instrumentalism in Tort Reforms" (audio)

The traditional view among legal historians is that tort was largely deontic private law until the late nineteenth century.  Due to factors such as the Industrial Revolution and the advent of liability insurance, tort became (more) instrumentalist.  A survey of major tort reforms over the course of the last century provides evidence to support this view.  Each of the reforms--workers' compensation, no-fault automobile insurance, products liability, and "modern" tort reforms (such as damage caps)--is based in instrumentalism.  Furthermore, the reforms become increasingly integrated into tort law as time passed.  The earliest reform, workers' compensation, was a substitute for tort law.  By the time of the modern reforms, instrumentalism is operating within tort itself, and covers a multitude of tort cases.

III.  Prof. Byron Stier -- ""Examining Litigant Autonomy in Mass Torts: Insights from the Individualism of Ayn Rand" (audio)

Class actions and other aggregate procedural methods raise questions about the relationship of the individual to the group.  Litigant autonomy -- the litigant's interest in controlling his or her lawsuit -- has generally been considered merely one value among others in mass tort litigation, and only recently has a robust commitment to litigant autonomy been seen to call into question the entire structure of class action practice.  In looking for insight into the proper place for litigant autonomy in class actions or other management methods, we might fruitfully turn to political debates concerning the relationship of the citizen to the state, for both settings examine the rights of the individual against the perceived needs of the group or collective.  For discussion of that political question, I look to an unusual source -- outside law, to the literature of one known for her radical political individualism, Ayn Rand.  Her novel, "We The Living," which was published in 1936 and is set in the aftermath of the communist revolution in Russia, puts forth a moral argument for individualism stemming from the sanctity of one's own life, and of one's control of one's own life, for one's own ends, not the group's; she also argues that personal tragedy and systemic corruption accompany an approach that fails to respect individuals' lives and choices.  Turning back to mass tort litigation, I suggest that our notion of litigant autonomy can be informed by Rand's themes and that current class action rules show flaws similar to the collectivism that Rand critiques. Viewing litigant autonomy not merely as one value among others, but instead as an organizing principle that must be respected as a core right, I suggest that current class action rules regarding notice, opt-out, and settlement are problematic because they do not allow adequate expression of individual preference and they blunt each class member's individuality.  In addition, by avoiding individual control, the current class action rules create fertile ground for corruption and collusive settlements.

IV.  Prof. Sheila Scheuerman (audio)

In my presentation, I examine whether and when tort law should permit
"no injury" claims -- claims where the plaintiff's harm has not yet
materialized.  Examples of these suits include medical monitoring
actions, products liability claims where a known defect exists, but the
product has not yet malfunctioned, as well as consumer fraud claims
where the consumer's decision was not affected by the defendant's
alleged misrepresentation.  Recent years have seen an influx of these
suits under an array of tort and contract theories.  Traditionally,
however, tort doctrine has premised liability on an injury to an
identified party.  But is "injury" a necessary pre-requisite?  I address
whether tort values support these "no injury" causes of action.  In
other words, should "no injury" claims be actionable under the varied
rationales for the tort system and, if so, under what circumstances?

V.  Questions and Answers (audio)

***

BGS

Litigating Together: Social, Moral, and Legal Obligations

I have posted a draft of the last in a trilogy of articles on nonclass aggregation and thought I would provide a brief retrospective for the interested reader.  The first article in the trilogy is Procedural Justice in Nonclass Aggregation, which explains in-depth the problems and risks presented by nonclass aggregation.  It observes that systemic legitimacy and compliance with judicial decisions hinges on ensuring procedural justice, but that our current system for handling large-scale litigation fails to provide a number of key procedural-justice components including the preference for adversarial litigation, participation opportunities, impartiality, and error correction.  These institutional shortcomings are due in large part to the trade-offs inherent in large-scale litigation.  Those trade-offs include that "litigation is no longer adversarial despite litigants’ preferences, but effective individual litigation is too costly to pursue; aggregate settlements provide few participation opportunities and no avenues for appeal or error correction despite potential conflicts, but, without aggregate settlements, cost and delay could be staggering and the relief may come too late; mediators or special masters might afford claimants additional participation opportunities, but process is then less adversarial and may suffer from legitimacy problems."  Id. at 46. 

The second article in the trilogy is Litigating Groups. In Litigating Groups, I laid the theoretical groundwork for an alternative to our current approach by borrowing insights from other disciplines—social psychology, moral and political philosophy, and behavioral law and economics—and bringing those notions of commitment, community, and groups to bear on nonclass aggregation.  By relying on the other-regarding preferences that tend to form from group membership, I argued that groups of plaintiffs may have or could be encouraged to develop organic or indigenous origins such that they form moral obligations to one another that are reinforced by social and personal norms. (I have also summarized these contentions in a short response to Judge Weinstein - A New Way Forward: A Response to Judge Weinstein.)

The current (and latest) article is the third and final piece in the trilogy.  It's titled Litigating Together, Social, Moral, and Legal Obligations.  This Article translates the theoretical foundation laid in Litigating Groups into concrete, feasible procedures for litigating together.  Although Litigating Groups maintained that plaintiffs who form groups will likely develop other-regarding preferences toward their fellow group members, it did not fully formulate procedures for promoting cooperation and group formation; decide when, whether, or how to impose sanctions when norms and moral obligations fail; contemplate incentives to join the group; or determine when exiting the group is appropriate.  Accordingly, this Article takes up those hard questions as well as the challenge of determining whether and how substantive and procedural law should enforce moral obligations once a certain level of moral interconnectedness exists.  Here's the SSRN abstract:

In a post-Class Action Fairness Act world, the modern mass-tort class action is disappearing. Indeed, multi-district litigation and private aggregation through contracts with plaintiffs’ law firms are the new mass-tort frontier. But something’s amiss with this “nonclass aggregation.” These new procedures involve a fundamentally different dynamic than class actions: plaintiffs have names, faces, and something deeply personal at stake. Their claims are independently economically viable, which gives them autonomy expectations about being able to control the course of their litigation. Yet, they participate in a familiar, collective effort to establish the defendant’s liability. They litigate from both a personal and a collective standpoint.

Current scholarship overlooks this inter-personal dimension. It focuses instead on either touting the virtues of individual autonomy or streamlining mass litigation to maximize social welfare. Both approaches fail to solve the unique problems caused by these personal dimensions: temptations for plaintiffs to hold out and thus derail settlements demanding near unanimity, outliers who remain disengaged from the group but free-ride off of its efforts, and subgroups within the litigation whose members compete for resources and litigation dominance to the group’s detriment. Accordingly, this Article has two principal objectives: one diagnostic, one prescriptive. The diagnosis is this: current procedures for handling nonclass aggregation miss the mark. Process isn’t just an exercise in autonomy or a handy crutch for enforcing substantive laws. Procedures can serve as a means for bringing plaintiffs together, plugging their individual stories into a collective narrative, making sense of that narrative as a community, reasoning together about the right thing to do, and pursuing that end collectively. Thus, the prescription is litigating together.

Along the way, I've developed a few aspects of this overall project in greater detail for various symposia:

 In Aggregation, Community, and the Line Between, I provided a more detailed account of the moral and political theory animating this "litigating together" approach.  This article contends that encouraging plaintiffs to form groups and reach decisions through deliberation relies on a mix of individual consent and moral obligation. Allowing plaintiffs to exercise their free will when deciding whether to associate with others preserves the liberal tenet of self-determination and escapes the anti-democratic criticism leveled at class actions. Yet, a purely liberal approach fails to capture the obligatory aspect of reciprocal promises to cooperate and the communal obligations that attach. Although plaintiffs voluntarily enter into the group, once they are group members and have tied together their collective litigation fates, they should not be permitted to exit when doing so violates their commitments. Of course, the community itself determines the content of its members’ rights and obligations to one another. Thus, the article concludes by explaining the rationale for group autonomy in terms of pluralism and communitarianism. 

In Group Consensus, Individual Consent (which is still very much "in progress," as they say), I explore how this project relates to sections 3.17 and 3.18 of the American Law Institute’s Principles of the Law of Aggregate Litigation and use those principles as a lens for exploring thematic questions about the value of pluralism, group cohesion, governance, procedural justice, and legitimacy in nonclass aggregation.  Both this project and Litigating Together: Social, Moral, and Legal Obligations are still very much in progress, so, as always, I welcome your comments. 

I'm extremely grateful for all of the helpful comments and criticisms of so many scholars in the field along the way.  I'm also looking forward to tackling new and different projects that have been waiting in the wings for some time now.

ECB

9/11 First Responder's Settlement Rejected by Judge

On Friday Judge Hellerstein (SDNY) rejected the settlement that had been reached by lawyers in the 9/11 First Responders Litigation (otherwise known as In Re World Trade Center Disaster Litigation).  He said the settlement was too obscure and that the lawyers were probably being paid too much at 30%.

The New York Times coverage is here:  Judge Rejects Deal on Health Claims of Workers at Ground Zero. 

The Times reports that the Judge said he would oversee further negotiations and would take "judicial control" over the matter.  "There has to be additional negotiations to come up with a better and fair settlement. I will not preside over a settlement based on fear or ignorance."  He said.  "I want transparency. I want accountability. I want judicial control over this process.  They've got to come up with an agreement under judicial supervision that will make us all proud."

The judge also said he would hear from plaintiffs directly about the settlement when the time came, not from their lawyers.  I recommended that judges do this in an article called The Law and Large Numbers - if you're looking for other similar suggestions, read the last few pages of that piece. 

Now for some law.  The judge does not have formal veto over the settlement the way that he would had this case been certified as a class action (basically impossible now after Amchem).  And the right of a judge to reject a settlement like this has never been tested on appeal.  (Richard Nagareda is quoted in the Times saying this - and he will be posting on Torts Prof Blog Monday so you can read his views on aggregation there). 

The ALI Aggregate Litigation Project has proposed letting judges oversee aggregate settlements in the way Judge Hellerstein is doing but as a formal matter.  What the judge is doing now is not a formal requirement, but a use of discretion.  Of course, once the judge opines that the settlement isn't good whether he has a formal veto or not doesn't matter because there is no way the 95% of the plaintiffs required for the settlement to go forward will agree to accept its terms.  So as a matter of practice it looks like the ALI model is being adopted informally.

ADL 

 

ASLCH Annual Conference and Presentation on "Examining Litigant Autonomy in Mass Torts: Insights from the Individualism of Ayn Rand"

On Saturday, March 20, I'll be speaking as part of a panel on "Pluralism in Tort Law and Litigation" at the annual meeting of the Association for the Study of Law, Culture, and Humanities, at Brown University in Rhode Island.  The panel will be moderated by Professor Alan Calnan (Southwestern), and other presenting panelists are Professors Christopher Robinette (Widener) and Sheila Scheuerman (Charleston). A podcast of the panel may later be posted on this blog.  Given the conference's focus on culture and humanities, my talk draws upon literature and political theory.  Here's the abstract for my talk:

Byron Stier -- "Examining Litigant Autonomy in Mass Torts: Insights from the Individualism of Ayn Rand"

Class actions and other aggregate procedural methods raise questions about the relationship of the individual to the group.  Litigant autonomy -- the litigant's interest in controlling his or her lawsuit -- has generally been considered merely one value among others in mass tort litigation, and only recently has a robust commitment to litigant autonomy been seen to call into question the entire structure of class action practice.  In looking for insight into the proper place for litigant autonomy in class actions or other management methods, we might fruitfully turn to political debates concerning the relationship of the citizen to the state, for both settings examine the rights of the individual against the perceived needs of the group or collective.  For discussion of that political question, I look to an unusual source -- outside law, to the literature of one known for her radical political individualism, Ayn Rand.  Her novel, "We The Living," which was published in 1936 and is set in the aftermath of the communist revolution in Russia, puts forth a moral argument for individualism stemming from the sanctity of one's own life, and of one's control of one's own life, for one's own ends, not the group's; she also argues that personal tragedy and systemic corruption accompany an approach that fails to respect individuals' lives and choices.  Turning back to mass tort litigation, I suggest that our notion of litigant autonomy can be informed by Rand's themes and that current class action rules show flaws similar to the collectivism that Rand critiques. Viewing litigant autonomy not merely as one value among others, but instead as an organizing principle that must be respected as a core right, I suggest that current class action rules regarding notice, opt-out, and settlement are problematic because they do not allow adequate expression of individual preference and they blunt each class member's individuality.  In addition, by avoiding individual control, the current class action rules create fertile ground for corruption and collusive settlements.

BGS

What Should Plaintiffs In Aggregate Litigation Ask Their Lawyers?

What should plaintiffs in large-scale litigation that settles as an aggregate settlement -- like Vioxx or the WTC litigation -- ask their lawyers in trying to evaluate the settlement?  As a general matter, plaintiffs are trying to compare unknowns and this is really hard. 

If it were the case that a lawyer could tell her client "well, if you go to trial you will get X and if you settle you will get X minus 10 but will save transactions costs" this would be easy.  But nobody knows what will happen at trial, and sometimes settlements themselves can only offer ballpark predictions rather than actual numbers.  For example, the plaintiffs choosing to participate in the 9/11 victims compensation fund were taking a risk that they would get something different than what the tort system would provide and they did not know in advance what that number would be.  Most of them elected to participate in that administrative process rather than the tort system.  Those that did not eventually settled, but it took a lot longer.  Settling is not just about money and the risk of losing at trial or pretrial motions, but also time and the emotional costs of litigation.

Here are some ideas for questions - happy to add others as comments come in:

1. What are the weaknesses in my case? What are the strengths?

2. What are the chances we will lose before or at trial?

3. What are the costs to me of going to trial, in terms of money, time and emotions?

4. If we go to trial, how long will it take for me to eventually get paid? Are there likely to be appeals and how long will that take?

5. How does the amount I am being offered compare to what other, similarly situated plaintiffs are getting?

6. How does the amount I am being offered compare to what plaintiffs who have lesser harm/greater harm are getting?

ADL

WTC Litigation Settlement Link

The WTC Settlement is now available online. I wasn't able to track it down until late last night. Here is the link, from the Bern Napoli website (that is the firm spearheading the settlement):

http://www.nbrlawfirm.com/blog/read_blog/213/wtc-respiratory-illness-law

ADL

9/11 First Responders Settlement - "Fairness Hearing" April 12

Judge Hellerstein has scheduled a "fairness hearing" in the 9/11 First Responders Settlement (the case is known as In re World Trade Center Disaster Site Litigation) to take place on April 12, the New York Times Reports.  Next Friday (3/19) he will meet with the parties to give them his impressions of the settlement.  The judge also said he may reduce attorneys fees awards to as low as 15% (from the 30% that most retainer agreements require). 

Kenneth Feinberg, the special master overseeing the 9/11 Victim's Compensation Fund is reported as saying that the only reason these workers weren't compensated under that fund was that they had not fallen ill when the fund closed in 2003.  I predict the compensation will try to mirror what that fund did.  Feinberg's dissatisfaction with that process, which he handled very well, is chronicled in his book What Is Life Worth?

I have it on good authority that the federal government was considering reopening the 9/11 fund to deal with these cases, but the settlement has mooted that idea (and whether it would have actually come to pass is an open question). 

An unnamed tort management firm has already been appointed to handle the claims. The administrator in charge of evaluating cases and meting out awards will be appointed in a few weeks. 

The Times article can be found here: Hurdles Remain for Ground Zero Settlement.

ADL

First Responders Litigation Settles

The New York Times reports that In Re World Trade Center Disaster Site Litigation in the Southern District of New York has settled.  The case involved nearly 10,000 plaintiffs and at least 90 defendants.

The parties agreed that if 95% of the plaintiffs sign on to the litigation, then the settlement will go forward at $575 million.  If 100% agree, then the settlement will go forward at $654.5 million. This looks a lot like the Vioxx settlement in that sense.  It sets aside a $23.4 million "insurance fund" to cover future claims - those plaintiffs whose illnesses have yet to develop.

The amounts allocated to each plaintiff will be based on a points chart that will be administered by a neutral claims administrator on the model of the Sept. 11th Victims Compensation Fund.   The points will be based on illness severity and, according to the Times, "Other factors that will be considered include evidence of a link to ground zero and adjustments for age, pre-existing conditions, time of diagnosis and smoking history. The process could take up to a year."  The process is set up to weed out fraudulent claims.

The lawyers will get up to a third in fees, and the insurer that will fund this settlement has already paid over $200 million in fees  to defend the litigation.

How will they value the cases? They haven't held any bellwether trials (and they won't now) so it will be interesting to see what the basis of calculations will be.  A study of the Sept. 11th Victims Compensation Fund found that most people who disputed the forensic economists findings got higher compensation; and the judge has said that the amounts individuals get must be individualized and subject to his review even though the case is not certified as a class action. See Tinari et al, Did the 9/11 Victim Compensation Fund Accurately Assess Economic Losses?

I urge any readers with ideas or insights into this question to contact me via email.

ADL

Erichson & Zipursky on mass settlements

 
Benjamin Zipursky and I have completed a paper entitled "Consent versus Closure."  Ben is one of the nation's leading experts on torts and legal theory.  He and I have long shared an interest in mass tort litigation, and we share certain concerns about the direction mass tort settlements seem to be heading.  In particular, we were both troubled by the mandatory withdrawal provision of the Vioxx settlement, and we both opposed the American Law Institute's proposal to permit advance consent to aggregate settlements.  More generally, we see the Vioxx deal and the ALI proposal as part of a troubling broader trend, in both practice and scholarship, toward embracing the pursuit of absolute closure by empowering plaintiffs' lawyers to deliver their clients' claims in settlement.  Here's the abstract:

Claimants, defendants, courts, and counsel are understandably frustrated by the difficulty of resolving mass tort cases. Defendants demand closure, but class certification has proved elusive and non-class settlements require individual consent. Lawyers and scholars have been drawn to strategies that solve the problem by empowering plaintiffs’ counsel to negotiate package deals that effectively sidestep individual consent. In the massive Vioxx settlement, the parties achieved closure by including terms that made it unrealistic for any claimant to decline. The American Law Institute’s Principles of the Law of Aggregate Litigation offers another path to closure: it proposes to permit clients to consent in advance to be bound by a settlement with a supermajority vote. This article argues that, despite their appeal, both of these strategies must be rejected. Lawyer empowerment strategies render settlements illegitimate when they rely on inauthentic consent or place lawyers in the untenable position of allocating funds among bound clients. Consent, not closure, is the touchstone of legitimacy in mass tort settlements.

"Consent versus Closure" critiques mandatory withdrawal, looking at specific legal ethics rules and doctrines as well as the more basic problem of inauthentic consent.  It critiques the ALI's advance consent proposal based not only on the problem of inauthentic consent, but also the problem of nonconsentable conflicts, exploring what it means for claimants to own their claims and for lawyers to represent clients in pursuing those claims.  

This article picks up on the theme of "The Trouble with All-or-Nothing Settlements," in which I used six case studies to show various problems caused by demands for fully comprehensive settlements outside of class actions and bankruptcy.

HME

Bebchuck & Klement on Negative Value Suits

Lucian Bebchuck (Harvard) and Alon Klement (Radzyner School of Law & B.U.) have posted an encyclopedia entry on Negative Value Suits on SSRN. Here is the abstract:

We review the literature on negative-expected-value suits (NEV suits) – suits in which the plaintiff would obtain a negative expected return from pursuing the suit all the way to judgment. We discuss alternative theories as to why, and when, plaintiffs with NEV suits can extract a positive settlement amount. In particular, we explain how such a plaintiff can extract a positive settlement due (i) asymmetry of information between the parties, (ii) divisibility of the plaintiff's litigation costs, (iii) upfront costs that the defendant must incur before the plaintiff incurs any costs; (iv) expectation that the arrival of information during the course of the litigation may turn the suit into a positive-expected-value one, (5) reputation that enables the plaintiff to bind itself to going to trial if the defendant refuses to settle; or (6) the plaintiff’s having a contingency fee or retainer arrangement with its lawyer.

ADL

Sept 11th First Responder Suits in Settlement Talks

The New York Times has published an article by Mireya Navarro entitled "Effort to Settle Sept. 11th Lawsuits".  The article describes (albeit without much detail) the efforts to settle the lawsuits brought by first responders against various contractors and New York City in the aftermath of the terrorist attack of September 11th.  Twelve cases have been scheduled to go to trial in May 16, ten thousand total have been brought against approximately 200 defendants.  Apparently there is a 70 page settlement plan and the judge says that the parties have been working "very hard."  The article also mentions a bill pending in Congress to compensate the workers at the disaster site, similar to that created to compensate the victims of the tragedy.  

The judge is using a relatively sophisticated approach to sampling, first surveying the class and using a severity chart to pick cases for trial.  The special masters that came up with it are both law professors and experts in mass torts: Aaron Twersky (Brooklyn) and James Henderson (Cornell).

The article quotes two law professor mass tort experts.  Anthony Sebok (Cardozo) explains the difficulty of the causation issues: "“There’s not a lot of experience with this kind of risk, [i]t may be very difficult from a technical point of view to get testimony from experts.”

Richard Nagareda (Vanderbilt) explains “Ultimately, everybody understands there’s going to be some sort of comprehensive settlement. The question is, what is the price?”  

I am working on a paper that attempts to answer this question - what is the best way to determine the price. I think holding some sample trials is the best way, but it sounds like the players in this litigation disagree and would prefer to reach a settlement prior to trial.  The judge is prepared for this and apparently has suggested having multiple judges try the sample cases rather than trying them together.

Impending trials have a way of focusing the mind. I predict a settlement by May. 

ADL

Issacharoff & Klonoff on the Mass Tort Settlements

Samuel Issacharoff (NYU) & Robert Klonoff (Lewis & Clark) have just posted "The Public Value of Settlement" on SSRN.  Here is the abstract:

This article, part of a symposium honoring the 25th anniversary of Owen Fiss’s Against Settlement, takes issue with the basic premise that settlement indicates defeat of the weak by the powerful, the poor by the rich, the injured by the wrongdoers. The argument is both empirical and normative. On the empirical side, this article challenges the basic claim advanced by Fiss and Marc Galanter that repeat players in the courts of justice are more likely to prevail because they will marshal and deploy greater resources. Over the past quarter century, the emergence of the well-heeled plaintiffs’ firm together with referral and other market organizing practices have allowed plaintiffs to fight and defeat institutional defendants across all sorts of mass harm cases. Normatively, this article challenges the assumption that the driving organizational framework of the court system should be derived from the structural injunction that characterized an episodic phase of the civil rights movement. Instead, resolution of mass harms has been and continues to be one of the great challenges of the judicial system, a process for which settlement is a critical and likely inescapable component.

ADL

The Trouble with All-or-Nothing Settlements

My new paper, The Trouble with All-or-Nothing Settlements, is now available on SSRN.  I presented it at last week's symposium in Kansas on "Aggregate Justice: Perspectives Ten Years After Amchem and Ortiz."  The theme of the conference got me thinking about the shift in mass dispute resolution.  The failed settlements in Amchem and Ortiz were driven by defendants' insistence on peace, and defendants today often demand similar comprehensiveness.  Much of the action, however, has shifted from settlement class actions to non-class aggregate settlements.  Rather than peace through Rule 23, defendants try to obtain peace by negotiating settlements with all-or-nothing clauses, mandatory withdrawal provisions, or other terms to ensure comprehensiveness.  Too often, however, such all-or-nothing settlements lead to ethical problems.  This paper is my attempt to unpack the various problems engendered by such deals.  Here's the abstract:

When defendants settle litigation involving multiple plaintiffs, they often insist that they will settle only if they obtain releases from all or nearly all of the plaintiffs in the group. Judges, lawyers, and academics largely accept the drive for comprehensive settlements as a given, and many embrace such settlements as a positive goal. All-or-nothing settlements, however, create uncommon pressures and opportunities for abuse. Exploring a number of recent mass settlements that have led to disciplinary proceedings, civil litigation, and criminal prosecutions, this article shows the pressures and opportunities that arise out of defendants' insistence on bringing all claimants into a deal.

The article describes seven types of ethical problems created by demands for fully inclusive settlements. First, all-or-nothing settlements create client-client and lawyer-client conflicts of interest. Second, such settlements exacerbate problems concerning the allocation of settlement funds, including incentives to misallocate. Third, they create a risk of strategic hold-outs as savvy clients may attempt to extort additional money by withholding consent. Fourth, they create an incentive for lawyers to keep settlement money in reserve as a slush fund to ensure full participation, leading to problems of misallocation and client deception. Fifth, they generate loyalty problems by pressuring lawyers to withdraw from representing non-settling clients. Sixth, they create special problems concerning clients’ informed consent to aggregate settlements. And seventh, they introduce a risk of collusion as the interest of plaintiffs’ counsel aligns with the defendant’s interest in getting every plaintiff to sign on to the deal. Although all-or-nothing settlements provide peace for defendants and value for claimants, the troubles they engender suggest that the current love affair with comprehensive settlements - evident in academic writings, judicial pronouncements, and defendant demands - should be tempered by a realistic appreciation of the ethical downside.

I'd be very interested in any comments readers may have.  If you have thoughts or suggestions either about the overall analysis or about any of the specific settlements discussed in the paper, please feel free to e-mail me directly or to comment on the blog.

HME

Passing of David I. Shapiro

Litigator David I. Shapiro, founding partner of the firm Dickstein Shapiro, has died.  In a career that spanned many areas of litigation, Mr. Shapiro also was active in several prominent mass tort litigations, and came to focus on mediation as a case management method.  Here's an excerpt from the Wall Street Journal's obituary:

Mr. Shapiro branched out into class-action suits in the late 1960s. He handled the states' cases in a complex federal price-fixing lawsuit against manufacturers of the antibiotic tetracycline, winning a $100 million verdict for the states.

Later, Mr. Shapiro took on cases related to breast implants, asbestos and the Exxon Valdez oil spill. In 1984, he was assigned as a special master to handle a $180 million settlement resulting from the Agent Orange case, then among the largest class-actions suits to date.

But Mr. Shapiro came to feel that much of class-action litigation was driven by greed, and that cases could be better settled by other means. He developed an expertise in negotiations, and was chairman of the American Bar Association's National Institute on New Techniques for Resolving Complex Legislation.

"It's possible to get justice and recompense for consumers without the greed of the few that plagues the U.S. system," he told the Telegraph of London in 2007.

He taught mediation at the London School of Economics, and created a mediation practice at SJ Berwin. 

BGS

Fifth Circuit Ruling for State Farm in Hurricane Katrina Insurance Dispute

More from AmLaw Litigation Daily.  The opinion is here.  Congratulations to my former Skadden colleagues Sheila Birnbaum, Doug Dunham, and Ellen Quackenbos, who represented State Farm.

BGS

Ford Settles New Jersey Toxic Tort Case

According to this report in The Record, Ford Motor Co. yesterday reached a settlement in which Ford agreed to pay millions of dollars to settle the claims of 600 residents of Upper Ringwood, NJ.  Although the settlement amount is confidential, the article mentions $10 million as an amount stated by sources.  The claims involved allegations of asthma, cancer, and other illnesses that residents claimed were attributable to Ford's 1960s-1970s dumping of paint sludge in a former mining area of Ringwood.

HME

Jackpot Justice: Verdict Variability and the Mass Tort Class Action

I posted to SSRN my article, Jackpot Justice: Verdict Variability and the Mass Tort Class Action, 80 Temple Rev. 1013 (2007).  Notwithstanding the 2007 formal publication date, the article was published this year.  Here's the abstract:

Mass tort scholars, practitioners, and judges struggle with determining the most efficient approach to adjudicate sometimes tens of thousands of cases. Favoring class actions, mass tort scholars and judges have assumed that litigating any issue once is best. But while litigating any one issue could conceivably save attorneys' fees and court resources, a single adjudication of thousands of mass tort claims is unlikely to further tort goals of corrective justice, efficiency, or compensation in a reliable way. That is because, as recent empirical research on jury behavior shows, any one jury's verdict may be an outlier on a potential bell curve of responses applying the law to the facts before it. Indeed, one aberrational, high jury claim valuation, if extrapolated to thousands of claims through a class action, may inappropriately bankrupt an entire industry. Similarly, one unusually low jury verdict might deny legions of plaintiffs the compensation that they deserve. To illustrate the problems of attempting to resolve a mass tort with a single jury, this Article discusses the Engle tobacco class action of Florida smokers, where the application of a single jury verdict to approximately 700,000 smokers appears to be an outlier verdict in light of prior juries' verdicts in Florida tobacco cases. In contrast, this Article argues that the use of multiple juries in individual cases is a superior method of resolving a mass tort. While the use of multiple juries in class actions to create statistically cobbled claim values has been rejected as violating due process and state tort law, no such problems accompany the approach espoused here: that individual-plaintiff lawsuits, each with its own jury, be tried and that the jury verdicts be used by mass tort litigants to develop claim values for broad mass tort settlement. In addition to remaining within the strictures of constitutional and tort law, this clustering of multiple juries around an accurate valuation of mass tort claims and the resulting likely settlement furthers both the procedural goal of litigant autonomy and the tort aims of efficiency, corrective justice, and compensation.

BGS

Community, Network, Class Action

The most recent BNA Class Action Reporter describes a privacy lawsuit filed by Facebook users alleging that Facebook "a data mining company disguised as a social network, and has repeatedly violated users' privacy, engaged in illegal advertising, and misappropriated users' names and likenesses as a routine part of its business."  The suit, Melkonian v. Facebook Inc., was filed in California on August 17 (see Cal. Super. Ct., No. 30-2009 00293755, 8/17/09). 

This reminds me of the work of two of my fellow bloggers.  Byron Stier has written about mass tort litigation as network (see his paper on SSRN) and Elizabeth Burch has written on the concept of "community" in aggregate litigation (see her paper on SSRN as well).  I think Burch's work in particular speaks to a larger desire to create community in an increasingly atomized world and is in the same vein as the "third place" literature in sociology -- that is, the idea that people need a place beyond work and home to connect with one another: the bowling alley, the soccer field, the Starbucks.   We Americans are torn between a strong tradition of individualism and a desire to find our place in a community and we see the same themes and tensions repeated in the context of litigation.  Yes, there is the tradition of the day in court ideal.  But at the same time we have a very robust class action regime - probably the most robust in the world - and increasingly the use of aggregate litigation serves the same function in areas where the possibility of class treatment has been cut off.  What do we make of this desire? 

It seems to me that litigation is more about speech than connection, and that is what makes these latest class actions that are directly about speech, publicity and privacy (such as this Facebook suit or the Google settlement) so interesting.  The power of creating a collective lawsuit is really the power of voice, but its an anemic type of participation in the deep sense of the term.  That's why non-utilitarians have such a hard time with it.  (This struggle is set forth in a very good article by Lawrence Solum,  Procedural Justice, available on SSRN).  That is also what bothers ethicists about settlements like that in the Vioxx litigation, for similar reasons.  That is, the value of the individual in his own right rather than looking only to the collective good.  A closer look at our history demonstrates that participation has always been a bit more ideal than real.  For a discussion of this history in the academic literature see Robert Bone, Rethinking the Day in Court Ideal and Non Party Preclusion, 67 New York University Law Review 193 (1992) (unfortunately not available on SSRN) and Issacharoff & Witt, The Inevitability of Aggregate Settlement (available on SSRN).  

ADL

Replacement of Defense Billable Hour with Flat Fee

The Wall Street Journal has an article today discussing the trend, accelerated by the recession, of replacing billable hours with flat fees.  Amy Schulman, general counsel for Pfizer, is quoted in the article, and the Journal also provides a video of Amy Schulman discussing Pfizer's new flat-fee approach with their law firms. Prior to joining Pfizer, Schulman lead the mass tort/class action practice at DLA Piper.  (For more on Schulman, see my prior post.)  

Neither the article nor video specifically mention whether Pfizer will use flat fees to pay defense lawyers in mass torts, though it is suggested since Schulman says all of the Pfizer Legal Alliance firms (all 16 of them) will be paid by flat fees.  Are mass torts sufficiently predictable that flat-fee arrangements can be negotiated? If so, it supports the notion that the initial Wild West mass torts era has settled into a more orderly approach.  One way to make flat fees more viable for mass torts would be to peg flat fees to each procedural stage of a mass tort, with an additional exit price attached to negotiating a far-reaching settlement; of course, given the many variables of a mass tort, flat fees for any procedural stage would likely need to be separately negotiated for each mass tort -- which would also have the benefit of forcing client and lawyer to think early about their overarching mass tort strategy.

BGS 

Elizabeth Nowicki on Apologies and Good Lawyering

Elizabeth Nowicki (Tulane) has posted to SSRN her article, Apologies and Good Lawyering.  Here's the abstract:

In everyday life, apologies are common. For example, if one shopper bumps into another in a crowded grocery store, apologies abound. Or if a child on the playground accidentally crashes into another child, the crashing child will apologize. If the crashing child does not apologize, a teacher, playground monitor, or parent will instruct the child to apologize, because apologizing for hurting someone is the 'right' thing to do. This apology norm largely disappears if the crashing child grows up and becomes a lawyer, however. Despite empirical research showing that apologies have value in settlement, facilitate cost-effective dispute resolution, and are important to injured parties, it appears that lawyers do not regularly either suggest that a client ask for or suggest that a client offer an apology as part of a conflict resolution. Why does the instinct to facilitate dispute resolution with a sincere apology disappear when students enter law school or when law students become lawyers? Some suggest that lawyers – and consequently the clients they advise – disavow apologies as a matter of defense because apologies are viewed as costly admissions of liability. Others suggest that attorneys for injured parties have no obvious incentives to suggest apologies since quick dispute resolution results in smaller legal fees. Still others suggest that those who become lawyers tend to be logical and analytical, and tend to eschew conduct viewed as purely emotive, such as apologizing. This paper shows that a good lawyer must recognize the value of apologies in conflict resolution, litigation, and settlement, and this paper provides guidance for offering apologies.

BGS