Friday, November 16, 2012
Alvin Hellerstein (USDC, Southern District of New York), James Henderson (Cornell), and Aaron Twerski (Brooklyn) have posted to SSRN Managerial Judging: The 9/11 Responders' Tort Litigation. The abstract provides:
After the 9/11 attack on the World Trade Center approximately 60,000 responders came to ground zero to assist in some fashion. Over the years some 10,000 responders brought suit against the City of New York and its contractors under a variety of theories for injuries they suffered from exposure to the toxic environment at the World Trade Center site. This conglomeration of cases brought to Judge Alvin Hellerstein, sitting in the federal Southern District of New York, was the most complex mass tort case in the history of the United States. The responders alleged that they suffered over 300 different diseases arising from exposures at the site ranging from several days to ten months. The Court, with the aid of Special Masters, created a complex database that accounted for a host of variables and that categorized diseases utilizing objective criteria to determine their relative severity so that the Court and the parties could get an overview of the scope of the injuries actually suffered over time. The parties presented the Court with a settlement for all the cases slightly in excess of $600 million dollars. The federal government had set aside a fund of one billion dollars to compensate victims who had legitimate tort claims against the city. Although this case could not be certified as a class action Judge Hellerstein rejected the settlement as unfair. Ultimately the parties agreed to add $125 million in additional monies to the settlement and the Judge found the settlement to be reasonable. This article deals with the creative role of the judge in managing discovery and his authority to reject a settlement in a case that had many attributes of a class action but was not a true class action. The article argues that Judge Hellerstein’s assumption of responsibility for managing discovery and his rejection of the settlement was necessary and proper. It was the only way to bring about a settlement and assure that the plaintiffs would receive fair compensation.
Thursday, November 15, 2012
Twenty angry customers of New Jersey Power & Light have sued the company for negligence, among other things, due to the power outage in the wake of hurricane Sandy. One of the chief allegations is that the company is not keeping up with the infrastructure and outages are becoming more common and lasting longer. A similar suit was filed against the Long Island Power Authority in New York. NJ.com has the story.
Tuesday, November 13, 2012
Jay Feinman (Rutgers-Camden) has posted to SSRN The Law of Insurance Claims Practices: Beyond Bad Faith. The abstract provides:
This article provides a fresh perspective on the law of bad faith in first-party insurance cases. In these cases, the company is alleged to have failed to pay a valid claim submitted by the policyholder, delayed payment of a claim or forced litigation to obtain what the policyholder is owed. A basic premise of the article is that “bad faith” is an ill-advised term for this area. The primary focus in these cases should be whether the company has honored its obligation to observe fair claim practices. “Bad faith,” as that term is normally understood, plays a part, but it is a secondary part, prohibiting opportunism by the company. Therefore, this area should be understood simply as the law of claim practices.
The article first describes the development and present state of the law providing a cause of action for the failure to observe fair claim practices. That development rests on the obligation of good faith implied in every contract, including insurance contracts. It then explains more fully that obligation and how it relates to claim practices, and it draws the implications of that explanation to state and apply the appropriate rule for evaluating a company’s claim practices: The company may not act opportunistically, and it must promptly, fairly, and objectively process, investigate, evaluate, and resolve the claim. Finally, the article explains the damages that should be available to a policyholder for violation of this rule.
The analysis in the article provides a basis for reexamining the law of first-party claim practices generally. It has its greatest application, however, in two groups of jurisdictions which together comprise the large majority of American jurisdictions. One group does not recognize a cause of action for violation of claim practices standards, and the other permits an action only where the company not only lacked a reasonable basis for its action in delaying or denying a claim, but also knew or recklessly disregarded its lack of a reasonable basis. Both of these positions fail to apply properly the obligation of good faith in light of the relationship between an insurance company and its policyholder.
Professor Coleman has now responded that Porat’s account of misalignment is unpersuasive because negligence law is not misaligned. It is aligned but in terms of its own intrinsic logic not in terms of efficiency. The sequence of elements in a negligence claim determines whether a putative wrongdoer in fact conducted themselves with sufficient regard for the interests of the party claiming wrongful harm at their hands. The elements are coherent on their own terms and that is all the coherence they need.
This is a rich, sophisticated debate which will repay close study by anyone interested in the nature of tort liability and the future of tort theory.