Mass Tort Litigation Blog

Vladeck on Direct-to-Consumer Drug Advertising

Professor David Vladeck (Georgetown) has posted his article, The Difficult Case of Direct-to-Consumer Drug Advertising, Loyola L.A. L. Rev. (forthcoming 2008).  Here's the abstract:

This article will appear in a symposium to pay tribute to Professor Steven H. Shiffrin, one of the leading First Amendment theorists of our time. The author was asked to focus on Professor Shiffrin’s contribution to the development of the commercial speech doctrine. To reflect on the wisdom of Professor Shiffrin’s refusal to rely on general First Amendment theories, the article focuses on the difficult First Amendment problem of regulating direct-to-consumer (DTC) advertising of prescription drugs. In his famous dissent in Virginia Pharmacy Board, then-Justice Rehnquist forecast that, as a consequence of the Court’s ruling, drug companies would soon advertise directly to consumers on television and other media. Justice Rehnquist argued that “there are sufficient dangers attending” the use of drugs “that they simply may not be promoted in the same manner as hair creams, deodorants, and toothpaste.”

Today drugs are promoted in much the same way as other products. Drug companies devote forty percent of their advertising expenditures — over $4 billion per year — to DTC ads. The average American views as many as 16 hours of prescription drug ads per year, far exceeding the average time spent with a primary care physician. The question is whether proposals before Congress to limit or ban DTC advertising would pass constitutional muster. The article canvasses the arguments in some detail and concludes that legislation restricting DTC advertising to enable the FDA to assess the risks of a drug might withstand constitutional attack, but that an all-out ban on DTC advertising would not likely be sustained. The point of this discussion is to illustrate the complexity of commercial speech questions and to demonstrate that Professor Shiffrin was correct when he observed that “the commercial speech problem is in fact many problems,” and that “the small questions [it poses] will not go away.”

BGS

Kessler and Vladeck on FDA Preemption of Failure-to-Warn Claims

Former FDA commissioner David Kessler and Professor David Vladeck (Georgetown) have posted their article, A Critical Examination of the FDA’s Efforts to Preempt Failure-to-Warn Claims, Georgetown L. J. (forthcoming 2008).  Here's the abstract:

This article explores the legality and wisdom of the FDA’s effort to persuade courts to find most failure-to-warn claims preempted. The article first analyzes the FDA’s justifications for reversing its long-held views to the contrary and explains why the FDA’s position cannot be reconciled with its governing statute. The article then examines why the FDA’s position, if ultimately adopted by the courts, would undermine the incentives drug manufacturers have to change labeling to respond to newly-discovered risks. The background possibility of failure-to-warn litigation provides important incentives for drug companies to ensure that drug labels reflect accurate and up-to-date safety information. The article next explains why the agency’s view that it is capable of singlehandedly regulating the safety of drugs is unrealistic. The agency does not have the resources to perform the Herculean task of monitoring the performance of every drug on the market. Both the Institute of Medicine and the Government Accountability Office have explained the shortcomings in the FDA’s recent performance, and they express doubt that the FDA is in capable of facing an increasingly challenging future.

The article then explains how state damages litigation helps uncover and assess risks that are not apparent to the agency during a drug’s approval process, and why this “feedback loop” enables the agency to better do its job. FDA approval of drugs is based on clinical trials that involve, at most, a few thousand patients and last a year or so. These trials cannot detect risks that are relatively rare, affect vulnerable sub-populations, or have long latency periods. For this reason, most serious adverse effects do not become evident until a drug is used in larger population groups for periods in excess of one year. Time and again, failure-to-warn litigation has brought to light information that would not otherwise be available to the FDA, to doctors, to other health care providers, and to consumers. And failure-to-warn litigation often has preceded and clearly influenced FDA decisions to modify labeling, and, at times, to withdraw drugs from the market.

BGS

Reports of Lilly Reaching Settlement with Federal Prosecutors

With all of the attention Merck’s been receiving lately, it’s nice (in an abstract sense) to see some headlines about Zyprexa. The New York Times reported today that Eli Lilly is discussing the possibility of settling civil and criminal investigations by federal prosecutors, with Lilly paying more than $1 billion to federal and state governments. Here’s a bit of the New York Times piece, Lilly in Settlement Talks with U.S.:

Zyprexa has serious side effects and is approved only to treat people with schizophrenia and severe bipolar disorder. But documents from Lilly show that between 2000 and 2003, Lilly encouraged doctors to prescribe Zyprexa to people with age-related dementia, as well as people with mild bipolar disorder who had previously been diagnosed only as depressed.

Although doctors can prescribe drugs for any use once they are on the market, it is illegal for drug makers to promote their medicines any uses not formally approved by the Food and Drug Administration.

Lilly may also plead guilty to a misdemeanor criminal charge as part of the agreement, the people involved with the investigation said. But the company would be allowed to keep selling Zyprexa to Medicare and Medicaid, the government programs that are the biggest customers for the drug. Zyprexa is Lilly’s most profitable product and among the world’s best-selling medicines, with 2007 sales of $4.8 billion, about half in the United States.

Lilly would neither confirm nor deny the settlement talks.

"We have been and are continuing to cooperate in state and federal investigations related to Zyprexa, including providing a broad range of documents and information," Lilly said in a statement Wednesday afternoon. "As part of that cooperation we regularly have discussions with the government. However, we have no intention of sharing those discussions with the news media and it would be speculative and irresponsible for anyone to do so."

Lilly also said that it had always followed state and federal laws when promoting Zyprexa.

The Lilly fine would be distributed among federal and state governments, which spend about $1.5 billion on Zyprexa each year through Medicare and Medicaid.

The fine would be in addition to $1.2 billion that Lilly has already paid to settle 30,000 lawsuits from people who claim that Zyprexa caused them to suffer diabetes or other diseases. Zyprexa can cause severe weight gain in many patients and has been linked to diabetes by the American Diabetes Association.

Stay tuned.

ECB

Philip Morris to Spinoff International Operations

Article in the Wall Street Journal -- Philip Morris Readies Aggressive Global Push, by Vanessa O'Connell.  Here's an excerpt:

Sitting in his office overlooking Lake Geneva, Philip Morris International Chief Executive André Calantzopoulos takes a long drag from an unusually short cigarette. Called Marlboro Intense, the product has been shrunk down by about a half inch, and offers smokers seven potent puffs apiece, versus the average of eight or so milder draws.

The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don't always finish a full-size cigarette. Pointing to his lit Intense, the CEO says there are "possibly 50 markets that are interested in deploying it."

Marlboro Intense is likely to be part of an aggressive blitz of new smoking products PMI will roll out around the globe once the company -- now a unit of New York-based Altria Group Inc. -- becomes a standalone entity. That change will be set into motion tomorrow, when the Altria board is expected to approve a long-awaited decision to split PMI from Philip Morris USA. The move would free the tobacco giant's international operations of legal and public-relations headaches in the U.S. that have hindered its growth.

The separate entity, for example, would be exempt from U.S. tobacco regulations and out of reach of American litigators. Importantly, its practices would no longer be constrained by American public opinion, paving the way for broad product experimentation.

BGS

SEALS Mass Tort Related Panels

The Southeastern Association of Law Schools (SEALS) has released a draft of its 2008 meeting program, which is at the Ritz Carlton in West Palm Beach from July 27-August 2, 2008. (If you haven't been before, it's a wonderful conference.)  There are several panels that may be of interest to mass tort scholars on Friday, August 1. Tom Metzloff (Duke) has put together a civil procedure workshop that includes a luncheon where Francis McGovern (Duke) will speak about Handling Hurricanes and Other Mass Litigation Problems: Lessons from Katrina, and, later that evening, Bob Klonoff (Lewis & Clark), Lonny Hoffman (Houston), Scott Dodson (Arkansas) and I will speak about Frontier Issues in Civil Procedure. My talk will be on Aggregate Procedural Justice, a piece that’s currently in its nascent stages but is largely directed toward mass torts. Here’s the full tentative civil procedure line up for many of you with broader civil procedure interests. And thanks to Tom Metzloff for all of his efforts in organizing the workshop.

Workshop on Civil Procedure

10:15- 10:25 Welcome and Overview

Workshop Organizers: Professor Thomas B. Metzloff, Duke University School of Law (& SEALS President-Elect); Professor Michael P. Allen, Stetson University College of Law (& SEALS Board of Directors)

10:25- Noon Reflections on the Federal Rules at 70

This panel will address varying perspectives on the history behind and the impact of the adoption of the Federal Rules of Civil Procedure in 1938. Among other issues, the panelists will discuss whether the Rules have been a "success" as well as where they may be headed in the future.

Moderator: Professor Michael Kelly, University of San Diego School of Law.

Speakers: Professor Paul Carrington, Duke University School of Law; Professor Richard Freer, Emory University School of Law; Professor Carl Tobias, University of Richmond School of Law?

Noon- 1:30 Luncheon: Handling Hurricanes and Other Mass Litigation Problems: Lesson from Katrina (ticket required)

This program will be a moderated discussion among academics, practitioners and judges concerning the role of the legal system when facing mass litigation.

Speaker: Professor Francis McGovern, Duke University School of Law.

1:30 - 3:00 Challenges (and Solutions) Teaching Civil Procedure

This panel will discuss the challenges associated with teaching Civil Procedure. The Panelists will suggest innovative means to deal with the topic.

Moderator: Professor Carol Andrews, University of Alabama School of Law.

Speakers: Professor Mary Alegro, Loyola University, New Orleans, School of Law; Professor David Hricik, Mercer University Law School; Professor Benjamin Madison Regent University School of Law; Professor A. Benjamin Spencer, Washington & Lee University School of Law.

3:00-3:15 Break (Sponsored by Aspen Publishing Co.)

3:15-4:45 "The Devil is in the Details" -- The Rules in Operation

This panel will focus on the detailed operation of the Rules as interpreted by the federal courts in a number of contexts including pleadings, discovery and resolution.

Moderator: Professor Trina Jones (invited)

Speakers: Professor Dwight Aarons, University of Tennessee College of Law; Professor Michelle Slack, Southern Illinois University School of Law; Professor Suzette Malveaux, Catholic University of America, Columbus School of Law.

4:45-5:00 Break (Sponsored by Aspen Publishing Co.)

5:00- 6:30 Frontier Issues in Civil Procedure

This panel will address cutting-edge issues in Civil Procedure today. Among such issues are developing class action practice, issues associated with electronic discovery, potential development in notice pleading standards, and personal jurisdiction to just name a few.

Moderator: Professor Louis Virelli, Stetson University College of Law.

Speakers: Professor Beth Burch, Samford University, Cumberland School of Law; Professor Scott Dodson, University of Arkansas, Fayetteville, Leflar Law Center; Professor Lonny Hoffman, University of Houston Law Center; Dean Robert Klonoff, Lewis & Clark Law School.

ECB

FDA Difficulties in Inspecting Medical Devices

Article in the Wall Street Journal -- FDA Faulted for Scrutiny Of Medical-Device Makers, by Anna Wilde Mathews.  Here's an excerpt:

The Food and Drug Administration can't keep up with requirements to inspect domestic makers of medical devices to assure manufacturing quality, and the agency rarely examines foreign facilities, according to congressional investigators.

In testimony scheduled to be delivered today before a House Energy and Commerce subcommittee, the Government Accountability Office will tell lawmakers that it found "weaknesses" in the agency's oversight of an industry that makes products ranging from contact lenses to defibrillators. According to FDA officials' own estimates, overseas makers of the riskiest products, such as pacemakers, were examined only every six years, and moderate-risk device manufacturers on average went an estimated 27 years between FDA inspections.

The GAO testimony on medical devices will be a part of the hearing's broader effort to highlight an issue that has turned up in reports and critiques over the past few years: concerns the FDA's resources and technology aren't enough to meet its regulatory responsibilities to oversee drugs, food and other products.

BGS

Vioxx - The End of Lawyer's Ethics?

Adam Liptak of the NY Times published a piece on January 22 basically arguing that the duty of loyalty is dead and the Vioxx settlement dealt the final blow.  You can find the piece here.  He quotes Richard Nagareda arguing that “Speaking of individualized notions of lawyer loyalty is sort of like the mindset of the French military in 1940. The French generals hunkered down in a series of reinforced bunkers along the German border called the Maginot Line, meanwhile, the new world of warfare literally blitzed right past them."  The analogy is a particularly good use of the war metaphor in litigation.

Liptak's view is that any change to the duty should come from the legislature or state bar, not individual lawyers and legal developments on the ground.  (This type of thing is what the ALI is trying to do with the Project on Aggregate Litigation.)  But people that do not like what the existence of inventory cases does to the lawyer-client relationship shouldn't like it any better when the outcome is legislated.  See Howie Erichson's post on the aggregate settlement rule here, Nancy Moore's article here for some criticisms. 

What appears as a new development is old wine in new bottles.  See, for example, Judge Weinstein's classic (and excellent) article Ethical Dilemmas in Mass Tort Litigation, 88 Nw. U. L. Rev. 469 (1994) (which Howard Erichson blogged about here). Samuel Issacharoff and John Fabian Witt have shown this pretty convincingly in The Inevitability of Aggregate Settlement which was published by the Vanderbilt Law Review and can be found on SSRN.  That the problem is old doesn't mean that it isn't real, but it does show that its not a problem that can be resolved by process (it doesn't matter if the rule comes from the ALI, the bar, Congress, or the norms of the profession as they develop over time) but a structural problem of the mismatch between mass industrial harms and the tort system.

ADL 

FDA Analyzing Vytorin Study Results

Article on cnn.com -- FDA scrutinizes Vytorin.  Here's an excerpt:

Government regulators said Friday they are analyzing recent study results regarding cholesterol drug Vytorin, but that it's too early to tell whether it will take any regulatory action.

The Food and Drug Administration is focusing on study results from drugmakers Merck (MRK, Fortune 500). and Schering-Plough (SGP, Fortune 500), who unveiled their study on Jan. 14. The study failed to prove that Vytorin, a combination drug containing Schering's Zetia and Merck's generic drug Zocor, is better than Zocor alone in reducing plaque in neck arteries.

But Vytorin is still seen as effective in lowering harmful types of cholesterol, which is the drug's FDA-approved purpose.

Vytorin is a $4 billion-a-year treatment, with sales split between Schering and Merck. Vytorin is a name-brand drug, and triple the cost of generic Zocor.

BGS

Merck and Schering-Plough Defend Vytorin and Zetia

Article in the Wall Street Journal -- Merck, Schering-Plough Defend Efforts for Vytorin, Zetia, by the Associated Press.  Here's an excerpt:

Merck & Co. and Schering-Plough Corp. defended their actions Friday involving a recently released study that raised questions about the effectiveness of cholesterol drugs Vytorin and Zetia.

The Food and Drug Adminstration, meanwhile, said it will review the partially completed study once it has been finished.

The companies are being sued in several states over allegations they misled consumers into thinking the drugs were more effective than generics. In a statement Friday, the companies said they acted "with integrity and good faith."

Last week, Merck and Schering-Plough released partial data from the controversial Enhance study, which ended in April 2006. The study results revealed cholesterol drug Vytorin is no more effective than a high dose of one of its components, Zocor, which is available generically at a third of the cost. Vytorin, developed by Merck and Schering-Plough, is a combination of Schering-Plough's Zetia and Merck's Zocor, which lost patent protection in June 2006. Zocor had been Merck's top-selling drug, with annual sales of about $5 billion, roughly the amount Vytorin and Zetia now bring in together.

BGS

"Thomas" Toy Train Lead-Paint Class Action Settlement

Article on cnn.com -- 'Thomas' toymakers to pay $30M settlement.  Here's an excerpt:

The maker of "Thomas & Friends Wooden Railway" toys has agreed to pay $30 million to settle a nationwide class-action lawsuit by thousands of families who purchased lead-tainted products, a plaintiffs' attorney said Wednesday.

Under the deal, Oak Brook-based RC2 Brands will offer cash refunds or replacement toys, plus what the company calls a bonus toy; it also promises to implement new quality controls, said Jay Edelson, a plaintiffs' attorney in the case.

"We believe this really is the first step toward cleaning up the problem of lead paint in toys," the Chicago attorney said. "It will put a lot of pressure on other companies to step up and act morally. We hope this becomes a problem of the past."

BGS

Sharkey on Preemption

Given the recent cert grants on preemption, this might be a good time to revisit Catherine Sharkey (NYU)'s piece entitled "The Fraud Caveat to Preemption" which I mentioned back in October.  Sharkey has a new piece on preemption that is also of interest to those following this issue: "Products Liability: An Institutional Approach" posted on SSRN.

Her take on the cases is that "At first glance, the United States Supreme Court's preemption jurisprudence in the realm of products liability cases is a nearly incoherent muddle. But a closer view actually reveals an unmistakable pattern: in every case, the Court, with only one exception, has adopted the position of the relevant federal agency as to whether the plaintiff's state law claims should be preempted by that agency's regulations. The Court is hardly forthright about its dependence upon agencies."  She argues that this is right: "courts should look to agencies to supply the data and analysis necessary to determine if preemption is appropriate; i.e., to determine when a uniform, national regulatory policy with respect to a certain product makes the most sense or, instead, whether such regulation is better left to the states, in which case a plaintiff's common law claim should be permitted to proceed."  She includes the caveat that agencies are subject to incompetence and capture, and proposes some additional safeguards to deal with that problem.

ADL 

Burbank on CAFA's Historical Context

Steve Burbank (Penn) has posted his new article, The Class Action Fairness Act of 2005 in Historical Context: A Preliminary View, on SSRN. Here’s the abstract:

This article sets CAFA in the contexts of the history of federal diversity of citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court effectively to police interstate forum shopping through constitutional control of personal jurisdiction or choice of law and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I conclude that it was not unreasonable for Congress to assert a federal interest in regulating the process by which and the forums in which nationwide and multistate class action decisions are made. To be sure, the interest in question bears little relation to the historic account of diversity jurisdiction with which we are familiar. But, as Section IV demonstrates, it is consistent with the policy that the Supreme Court in fact pursued when umpiring ordinary diversity litigation in the late nineteenth and early twentieth centuries, and consistent as well with the policy that Congress pursued in its 1958 amendments to the diversity statute.

I reach a very different conclusion with respect to the numerous class actions within CAFA's reach that are not in any meaningful sense "multistate." The 1958 Congress left in place (if it did not enhance) the instruments of countervailing power for plaintiffs that had developed in the system and that made the fictions of corporate citizenship tolerable. The 2005 Congress dismantled those instruments in order to open federal courts to multistate class actions. It conveniently forgot them when it came time to fashion exceptions. In the process, Congress neglected the critical role they played in equilibrating not just plaintiffs' and defendants', but federal and state, interests. Ultimately, a combination of special interest overreaching, abetted by the fictions of corporate citizenship, and confusion about legislative aims, abetted by the institutional federal judiciary's schizophrenia regarding overlapping class actions, led Congress to lose sight of its duty, when fashioning CAFA's exceptions, to preserve the "happy relation of States to Nation."

ECB

Vioxx Settlement Update

On Friday, Judge Fallon held a status conference on the Vioxx settlement. As reported by the Wall Street Journal this morning, the parties announced that roughly 57,100 claimants out of some 60,100 (upwards of 95%) registered their cases by January 15. You may recall that Merck needed only 85% to keep the deal alive. I mentioned in an earlier post that some plaintiffs attorneys filed an emergency motion objecting to the settlement requirement that each attorney recommend the deal to all of their clients. This motion has been withdrawn in light of a "clarification" stating that "Each Enrolling Counsel is expected to exercise his or her independent judgment in the best interest of each client individually before determining whether to recommend enrollment in the Program." Here’s a short excerpt from the Wall Street Journal’s article, "Merck’s Prospects Brighten for Vioxx Settlement:"

Lawyers who contested that provision had filed motions citing ethical obligations to give clients individual counsel that isn't predicated on potential conflicts of interest. They have withdrawn the motions or indicated their intention to do so, according to Kent Jarrell, Merck's Vioxx legal spokesman. "There are no pending motions anywhere" related to the settlement plan, he said.

The attorneys appear to have been mollified by an addition to the deal that says, "Each Enrolling Counsel is expected to exercise his or her independent judgment in the best interest of each client individually before determining whether to recommend enrollment in the Program." Lawyers for both sides said this is a point of clarification but not a substantive change.

The real test of the deal's viability will come next month, when 85% of the 57,100 claimants must enroll their cases by submitting releases and medical records. The deadline is Feb. 29. Mr. Jarrell says Merck, of Whitehouse Station, N.J., expects that threshold will be met and that 3,065 claimants already have begun to enroll.

ECB

Supreme Court Grants Cert in Two Preemption Cases

The Supreme Court today granted cert in two preemption cases that will have significance for mass tort litigation.  In Wyeth v. Levine, No. 06-1249, the Court will decide whether the FDA's prescription drug labeling judgments preempt state law liability claims for failure to warn.  In a case involving Wyeth's anti-nausea drug Phenergan, the Vermont Supreme Court ruled that the FDA regs only provide a floor on labeling requirements, so states are free to enforce their own.  In Itria Group v. Good, No. 07-562, the Court is asked to decide whether federal law preempts state-law challenges to FTC-authorized statements in cigarette advertising about "light" or "low tar" cigarettes. 

You can see brief descriptions of these cases on ScotusBlog.  I'm sure more will follow from the defense perspective on the Drug and Device Law blog.  Public Citizen is a good resource for the consumer's perspective on this issue.

ADL

Cert Grant in Taylor v. Sturgell and Preclusion

Last Friday the Supreme Court granted cert in Taylor v. Sturgell, Case No. 07-371. The question presented is: "Can a party be precluded from bringing a claim, under a theory of ‘virtual representation,’ and thereby denied the due process right to a day in court, when the party had no legal relationship with any party to the previous litigation and did not receive notice of that litigation?" Although this issue has been contemplated in the class context by Phillips Petroleum Co. v. Shutts and Eisen, the Court’s decision in Taylor could affect nonclass aggregation even though the issue is presented in a FOIA context.

Here are links to the Supreme Court’s grant of cert., the D.C. Circuit Court’s opinion, Petition for Writ of Certiorari, Brief in Opposition of Cert, Brief in Opposition of Cert (United States), and Petitioner’s Reply.  Thanks to SCOTUSblog for the tip.

ECB

Bone on Rule 68, Settlement and the Purpose of the FRCP

Robert Bone (BU Law) recently posted a fascinating article on SSRN entitled "To Encourage Settlement: Rule 68, Offers of Judgment and the History of the Federal Rules of Civil Procedure."  The piece is forthcoming in the Northwestern Law Review.  While not directly about mass tort litigation, this article provides insights into the push towards settlement which is a (if not the) central feature of mass torts.   Think of Richard Nagareda's new book: Mass Torts in a World of Settlement.  Bone reminds us of the changes that not only the procedural system but also our perception of what procedure is for over the past forty years.   Here is the abstract:

Rule 68, the offer of judgment rule, has been described as “among the most enigmatic of the Federal Rules of Civil Procedure.” This Rule allows a defendant to serve an offer of judgment on the plaintiff and makes the plaintiff who rejects the offer liable for post-offer costs if she fails to improve on the offer at trial. It is universally accepted today that Rule 68 was adopted to encourage settlements, but the Rule’s text makes it an extremely poor settlement device. The Rule operates only one-way (in favor of defendants); the penalty is too small to be meaningful; the requirement of a judgment (rather than just a settlement) discourages its use, and the  Rule’s timing requirements are puzzling. The mystery is why intelligent lawyers and judges in 1938 would have drafted such a poor settlement promotion tool. This Article solves that mystery. Contrary to the conventional view, the 1938 drafters did not intend Rule 68 to encourage settlement in the way we understand that today.  They adopted the offer of judgment rule that existed in state practice, the primary purpose of which was litigation fairness not settlement promotion. The state rules aimed to prevent plaintiffs from imposing costs unfairly when the defendant offered everything the plaintiff was entitled to receive from trial. The text of Rule 68 makes much more sense when it is viewed in fairness terms. The prevailing settlement promotion view became entrenched in the 1970s and 1980s, when concerns about litigation cost, case backlog, and litigation delay grew acute and interest in settling cases intensified. Because the settlement promotion view has caused problems for interpretation of the Rule and for efforts to revise it, clarifying the history of Rule 68 is important. Moreover, empirical work on Rule 68 is nearing completion and the Advisory Committee is considering another look at the Rule, so the time is ripe for a clearer understanding. With the FRCP about to celebrate their seventieth anniversary, the history of Rule 68 also sheds light on two of the most important changes in federal civil procedure over the past seventy years: the rise of settlement and the politicization of the rulemaking process.

I think this will prove to be an important article.  ADL

Erichson on CAFA

I posted my new paper -- CAFA's Impact on Class Action Lawyers -- on SSRN.  The article examines data on forum selection and claim selection in the wake of the Class Action Fairness Act, in an effort to understand the statute's impact on the legal profession.  Post-CAFA forum selection in class actions focuses less on particular counties in state court and more on federal courts within circuits with relatively favorable law on class certification.  Post-CAFA claim selection has shifted away from personal injury torts and toward contract, fraud, and federal question claims.  Taken together, these adaptations by plaintiffs' lawyers appear likely to benefit the dominant class action law firms. Along the way, the article looks at CAFA in the context of other recent class action reforms, and especially as a reflection of popular and political mistrust of class action plaintiffs' lawyers.  Here's the abstract:

The Class Action Fairness Act of 2005 (CAFA) reflected a profound mistrust of class action lawyers. Three years after its enactment, examination of lawyers' adaptation strategies offers an emerging picture of the statute's impact on class actions and class action lawyers. CAFA, like the Private Securities Litigation Reform Act a decade earlier, shifted class action practice in ways that appear likely to strengthen the upper tier of the plaintiff class action bar. CAFA has affected not only the division of labor between state and federal court, but also horizontal forum selection among federal courts and class action claim selection. Analysis of these effects suggests that CAFA is achieving some of its stated objectives but is unlikely to squelch class actions or to disempower leading members of the class action bar.

HME

Italy's New Class Action Law

My utmost thanks to Jon Eskelsen, of the U.S. Chamber Institute for Legal Reform, for passing along the text of Italy’s new class action law that went into effect on December 21, 2007. The law amends Italy’s Consumers’ Code, article 140, and gives certain associations capacity to sue collectively for tort liability, unfair trade practice, and anti-competitive behavior (antitrust violations). The law doesn’t specify the availability of collective procedures to redress securities class action claims, but as I’ve noted elsewhere, suing for fraud in secondary open market transactions is much closer to a tort than a contract claim. This is, of course, in contrast with face-to-face transactions that are typically contractual in nature. Consequently, it seems that by opening the door to tort liability, Italy may also open the door to securities class actions. As always, I’d certainly be interested in any comments (on or off the blog) to the contrary. At any rate, it appears that 453.3 provides what we might classify as a combined certification/motion to dismiss procedure. Section 453.6 sets up a Camera di Conciliazione (conciliation committee) picked by both the plaintiff association and the defendant (each picks one lawyer) plus a lawyer appointed by the chief judge. I’m also told that the government will revisit class legislation in early 2009. The text of the bill is below and it takes effect on July 1:

452. The provisions contained in paragraphs 452 to 456 introduce and regulate the collective redress action intended to protect consumers, which is seen as a new general tool of protection in the context of the national measures aimed at regulating the consumers’ and users’ rights, in line with the principles introduced by Community law in order to increase the levels of protection.
453. The following article shall be added after Article 140 of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005):

“Article 140-bis (Collective redress action) - 1. The associations referred to in Article 139, paragraph 1 and the other parties referred to in paragraph 2 of this article do have legal capacity to sue in order to protect the collective interests of consumers and users by resorting to the court of the place where the company has its offices, in order to request the ascertainment of the right to be compensated for damage as well as in order to request that the defendant be ordered to return any due amounts to the individual consumers or users within legal relationships relating to agreements entered into pursuant to Section 1342 of the Italian Civil Code, or as a consequence of tort liability, unfair trade practice or anti-competition behaviour, providing that such unlawful acts damage the rights of a plurality of consumers and users.

2. The associations and the councils which duly represent collective interests have legal capacity to sue under paragraph 1 above. Those consumers and users who intend to benefit from the protection afforded by this article must notify the promoter in writing of their intention to join the class  action.  The promoter may be informed of this even during the appeal and up until the hearing scheduled in order for the parties to specify their conclusions. Any individual consumer or user who wishes to file claims having the same subject matter may in any case intervene in the action brought pursuant to paragraph 1. The commencement of the class action referred to in paragraph 1 or the fact of joining it afterwards shall interrupt the statute of limitations pursuant to Section 2945 of the Italian Civil Code.

3. At the first hearing the court, after having heard parties and gathered brief information  (to any necessary extent), shall declare the admissibility or inadmissibility of the claim by way of an order that may be challenged before the Court of Appeal, which shall rule in Chambers. The claim is declared inadmissible when it is clearly groundless, when there is a conflict of interest, or whenever the judge does not ascertain the existence of any collective interest deserving protection pursuant to this article. The judge is entitled to postpone the assessment of the admissibility of the claim when preliminary investigations concerning the same subject matter are underway before an independent authority.  Should the judge declare the admissibility of the claim, then the party who has promoted the class action is ordered to duly advertise the content of the claim, and actions are also taken for the continuation of the proceedings”.

4. Should the Judge accept the claim, he or she shall also sets the criteria to be used in order calculate the amount to be paid or given back to the individual consumers and users who have joined the class action or who have intervened in the proceedings. The Judge shall also establish the minimum amount to be paid to each consumer or user should this be possible on the basis of the documents at his or her disposal.  Within 60 days of the service of judgment, the company shall make its offer for payment by way of a written deed to be served upon any entitled party and to be filed with the clerk’s office.  Any form of proposal accepted by the consumer or user shall be enforceable.

5. The decision that brings the proceedings referred to in paragraph 1 to an end shall also produce legal effects on those consumers and users who have joined the class action. Those individual consumers or users who have not joined the class action or who have not intervened in the proceedings under paragraph 1 shall continue to have their right to bring individual actions.

6. Should the company fail to make its offer within the term referred to in paragraph 4, or should its offer remain unaccepted after 60 days of its service, the chief judge of the court having jurisdiction pursuant to paragraph 1 shall appoint a sole Camera di Conciliazione (conciliation committee) in order to set the amounts to be paid or given back to consumers and users who have joined the class action or who have intervened pursuant to paragraph 2, and who request so.  Camera di Conciliazione is composed by a lawyer duly indicated by the those who have brought the class action and by a lawyer indicated by the summoned company, and it is chaired by a lawyer appointed by the chief judge of the court, chosen from among those entered in the special register for higher jurisdictions.
Camera di Conciliazione shall set, by way of minutes to be signed by its chairman, the terms, methods and amounts to be paid in order to compensate the individual consumers and users for damages. Said minutes shall be enforceable.
Alternatively, should the  party who has promoted the class action and the defendant jointly request so, the chief judge of the court shall order out-of-court settlement before one of the conciliation bodies referred to in article 38 of Legislative Decree no. 5 dated 17th January 2003, as subsequently amended, operating in the same municipality as that of the court. The provisions set forth in articles 39 and 40 of Decree no. 5 dated 17th January 2003 (as subsequently amended) shall apply to any compatible extent.

454. The provisions referred to in paragraphs 452 to 456 shall become effective after one hundred and eighty days of the date of this law coming into force.

455. The following shall be added in article 50-bis, paragraph 1 of the Italian Code of Civil Procedure, after number 7):
“7-bis) in the proceedings referred to in article 140-bis of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005)”.

456. In the Consumer Code (Legislative Decree no. 206 dated 6th September 2005, as subsequently amended), the title of Part II of Chapter V shall be replaced as follows: “Access to justice”.

ECB

Registration for Southwestern Law School Asbestos Symposium

On Friday, January 18, 2008, Southwestern Law School is hosting a symposium entitled, Perspectives on Asbestos Litigation.   Here's the press release, and brochure: Download southwestern_law_school_asbestos_symposium_brochure.pdf  For further information about the conference, see my prior posts here and here.  Attendees may register in advance by contacting the Student Affairs Office of Southwestern Law School at (213) 738-6716.  We look forward  to an engaging and informative day with a remarkable slate of speakers, and hope you will be able to join us.

BGS

Vioxx Settlement Update

As the first January 14 deadline looms, the Wall Street Journal reports that "it looks highly likely enough plaintiffs will sign on to seal the deal." Here are a few key excerpts from the article:

More than 28,000 of the estimated 60,800 claimants have submitted registration information so far, according to Andy Birchfield, a partner with Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. in Montgomery, Ala., and one of the plaintiffs' attorneys who negotiated the settlement. He believes the rest will do so by Jan. 15.

. . .

A more crucial deadline comes Feb. 29, when the estimated 45,000 plaintiffs with heart-attack and stroke cases that qualify for the settlement must enroll. To validate the pact, at least 85% of those must enroll. Mr. Birchfield says a strong turnout next week would indicate that threshold will be met.

But law firms representing thousands of plaintiffs have filed court papers contesting the clause that would require lawyers participating in the settlement to recommend it to all clients who qualify. They say it violates professional-ethics codes that require lawyers to give every client their "independent professional judgment." One of these motions, filed by lawyers from Missouri and Illinois, is scheduled for a hearing Jan. 18 before U.S. District Judge Eldon E. Fallon of New Orleans, who is overseeing the settlement. Another motion by lawyers from Kentucky and Indiana hasn't yet been set for a hearing.

. . .

Some plaintiffs are concerned their lawyers have been co-opted into recommending the deal.

Virginia Pickett, a 55-year-old former blackjack dealer, says she suffered a heart attack in 2002 after having used Vioxx for three years. She says she lost her job after the heart attack and has paid more than $200,000 in medical bills. Ms. Pickett, of Baltimore, estimates the settlement would pay her about $530,000, but says she is entitled to three times that. "I won't be browbeaten into taking this settlement," she says.

The law firm that represents her, Levin Simes Kaiser & Gornick LLP of San Francisco, recently sent her a letter stating its "strong recommendation" that she participate, detailing the challenges she would face taking on Merck in court.

A letter very similar to the one sent by Levin Simes is posted at officialvioxxsettlement.com, a Web site sponsored by the lead plaintiffs' firms, leading Ms. Pickett to suspect her lawyers didn't take her particular situation into account. "If they tell me they won't represent me because I'm dropping out, that is malfeasance," she says.

Partner William Levin says his firm is familiar with each client's case. He says the firm recommends that clients take a "hard look" at the settlement, but that it will stick by any who object. "We're happy to continue representing anyone who doesn't go forward with the deal," he says.

It is impossible to gauge the precise number of hold-out plaintiffs, or to determine if there are enough to scotch the deal. A small band of them have formed discussion groups online to share information. The Fort Lauderdale-based Kelley/Uustal Law Firm, which doesn't have significant experience with Vioxx cases, has offered to represent plaintiffs who opt out, and has been retained by fewer than 10 so far.

The full article is available here (subscription required).  Wall Street Journal Law Blog also has a post today titled "Are Reports of Vioxx Litigation's Death Exaggerated?"  It concludes:

Even if the all-or-none clause is eventually dropped, analysts believe the settlement deal would still leave Merck better off as long as the vast majority of cases settle. Says Peter Bicks, a product liability lawyer who isn’t involved in the Vioxx litigaiton: "If you get this down to less than 1,000 cases, [Merck] can manage that."

I haven't seen any recent figures on the number of foreign plaintiffs.  Should you see any, let me know!

ECB