Mass Tort Litigation Blog

UK Changes Allow Investing in Law Firms

Article in the Economist -- Legal Advice: Should you buy shares in a law firm?, which discusses recent changes in the UK allowing for non-partnership structures for law firms, and external investing by the public via, for example, initial public offerings.  While there are real confidentiality concerns that would need to be addressed in any such proposal, investing in law firms strikes me as a proper way to harness the market to even the playing field in mass tort litigation.  In particular, plaintiffs' firms should have access to investment capital, so that claims that should be brought are in fact brought.  Then our litigation system can focus on getting the economic incentives right via the litigation system, confident that the firms will have the capital to respond.  Here's an excerpt from the article:

WERE it possible to buy shares in big British and American law firms, they would appear to be attractive investments. They boast double-digit revenue growth at a time when many companies are suffering. Baker & McKenzie, one of America’s biggest firms, has just announced a 20% increase in annual revenues, which exceeded $2 billion for the first time. Britain’s top four firms have reported revenues up by an average of 15% this year, with all four passing the £1 billion ($1.85 billion) mark.

Investing in law firms is more than just a pipe dream. A change in British law, introduced last year, enables law firms to use business structures other than private partnerships, and allows for external investment and initial public offerings (IPOs). Law firms will have to wait for a new regulator, the Legal Services Board, but everything is due to be in place by 2011.

BGS

Vytorin Study Results on Potential Cancer Link to Be Released Next Week

Article in Forbes -- Another Storm Brewing For Vytorin, by Matthew Herper.  Here's an excerpt:

When a study linking the widely used cholesterol drug Vytorin to cancer came out in July it caused a stir--for a few hours.

It should have lasted longer. A 1,873-patient study called SEAS found there were 50% more cancers among patients who took Vytorin than those who received placebo. Researchers involved in the study put together a hastily organized, company-funded press conference on July 21 to release the data.

There, Richard Peto, an Oxford University statistician, quieted the cancer scare before it really began. He pooled data from two much larger ongoing studies of Vytorin and said they showed that the cancer risk was a statistical fluke. He called the contention that Vytorin could cause cancer "bizarre." Deutsche Bank pharmaceuticals analyst Barbara Ryan says the impact of SEAS on Vytorin sales has been "negligible."

Shares of Vytorin makers Merck and Schering-Plough are still down 6% and 9%, respectively, since SEAS was released. The companies say the cancer finding is "an anomaly."

Next week, the full results of SEAS will be presented at a medical meeting in Munich, and, if some of world's top cardiologists, drug safety experts and statisticians are to be believed, the stage is set for yet another battle over Vytorin, which is already being haunted by worries over its effectiveness.

BGS

FDA Says Salmonella Outbreak Over -- Blaming Jalapenos, Not Tomatoes

Article in the Wall Street Journal -- Salmonella Outbreak Is Over, Federal Health Officials Say, by the Associated Press.  Now I can stop worrying about what to add to my Subway sandwiches.

BGS

Richard Epstein on Field Preemption of State Laws in Drug Cases

Professor Richard Epstein (Chicago) has published The Case for Field Preemption of State Laws in Drug Cases on Northwestern University Law Review's Colloquy.  Here's an excerpt:

This brief Comment renews my defense of strong field preemption for FDA regulation.  In Part I, I shall set out the emergence of modern preemption law in light of the vast expansion of federal power after the New Deal with special reference to two cases of great current concern, Riegel and Levine.  Thereafter, in Part II, I shall comment first not on Professor Sharkey’s article, but on a recent essay by David Kessler and David Vladeck that takes the strong view that the doctrine of implied preemption should not be applied in duty-to-warn drug cases.  Then, in Part III, I address Professor Sharkey’s agency model, and lastly, in Part IV, I offer a brief capitulation of my field preemption position.

BGS

Another Jackpot (In)Justice: Verdict Variability and Issue Preclusion in Mass Torts

I've posted my manuscript, Another Jackpot (In)Justice: Verdict Variability and Issue Preclusion in Mass Torts, on Bepress.  Here's the abstract:

If there are no prior inconsistent verdicts, non-mutual offensive issue preclusion generally allows a finding by a single jury to bar relitigation, in future cases, of the issue by the defendant who lost in the prior case. This approach, however, ignores the possibility that the first verdict delivered may have been an outlier if further verdicts were permitted to be delivered. In mass tort litigation, such a flawed approach may result in critical issues such as defect or negligence being resolved by only six jurors, whose potentially outlier verdict is then applied to resolve the cases of thousands, perhaps bankrupting a company or an industry when most juries would not so hold. Focusing on mass tort litigation, this article presents the growing empirical evidence of verdict variability and then critiques the use of issue preclusion, whose downside is applied only against defendants, not plaintiffs, because only defendants were parties to the prior action. As a result, the article argues that courts should exercise their discretion to deny issue preclusion in mass tort litigation. Instead, courts should join the emerging consensus of mass tort management that ultimately better serves the goals of efficiency and public respect supposedly underlying issue preclusion: allow multiple verdicts to unfold a more balanced view of liability that will frequently be used for well-informed and far-reaching settlements.

This manuscript extends the analysis begun in my prior article, Jackpot Justice: Verdict Variability in the Mass Tort Class Action, Temple L. Rev. (forthcoming 2008).

BGS

Nagareda on Class Certification in the Age of Aggregate Proof

Richard Nagareda has posted his article, Class Certification in the Age of Aggregate Proof, on SSRN.  It will appear this spring in New York University Law Review.  Here's the abstract:

Few pre-trial motions in our civil justice system elicit as much controversy as those for the certification of class actions. This Article offers the first account in the literature of the challenges faced today by courts in light of an important series of federal appellate decisions that direct the courts to resolve competing expert submissions on the class certification question in the pre-trial stage - even when the dispute overlaps with the merits of the litigation - in the course of determining the application of Rule 23.

Across broad swaths of class action litigation today, proponents of class certification invoke aggregate proof - evidence, typically of an economic or statistical nature, that presupposes the cohesiveness of the aggregate unit for litigation and, from that perspective, seeks to reveal quantitatively a common wrong attributable to the defendant. Debates over the proper role of aggregate proof unite what otherwise might seem disparate disputes over class certification today across securities, antitrust, RICO, consumer fraud, and employment discrimination litigation. Too often, however, courts have taken at face value the evidentiary form that aggregate proof assumes in class certification.

This Article urges a new conceptualization of the challenges facing courts in class certification today. The real question about aggregate proof in class certification is not one that speaks to the relationship between the court and the fact finder in the (usually, purely hypothetical) event of a class-wide trial. Rather, the institutional relationship that really matters is the one between the court and the legislature as expositors of governing law. Properly understood, aggregate proof offers not so much a contested view of the facts but, more fundamentally, a contested account of governing law - one eminently suited for judicial resolution and appellate correction de novo, without concern about possible intrusion into the role of the fact finder.

This Article exposes how renewed attention to the judicial role to say what the law is can lend coherence to the law of class certification, offering the first extended assessment of such controversial recent litigation as the civil RICO class action against the tobacco industry concerning its marketing of light cigarettes and the largest employment discrimination class action in history against Wal-Mart concerning the pay and promotion of its hourly female employees. The Article concludes by relating the analysis of class certification to larger changes in the civil justice system to grapple with the reality of settlement, rather than trial, as the endgame of litigation.

ECB

FDA May Set Rules for Food Allergy Warnings

Article on cnn.com -- FDA to consider rules for food allergy warnings, by the Associated Press.

BGS

New Scholarship on Using a Cost-Benefit Analysis in Certification

Patrick Luff, a student at Michigan, has posted his piece, "Bad Bargains: The Mistake of Allowing Cost-Benefit Analyses in Class Action Certification Decisions," on SSRN.  Here's the abstract:

The class action is a bete noir, attacked by corporate counsel, politicians, the media, and the public as unfair to businesses and individuals alike. In recognition of these complaints, proposed changes to the Federal Rules of Civil Procedure are a recurrent theme in complex litigation scholarship. One such example has been the suggestion that, in determining whether or not to certify a class action, the judge should weight the perceived costs and benefits that the certification decision would produce. However, as this Article will show, the arguments that favor a cost-benefit analysis stage in class action certifications fail because they are based on insufficient or misguided criteria. This Article emphasizes that the correct criteria by which to judge class certification decisions will be those that are conducive to public goods - such as deterrence of socially harmful conduct - and private goods - such as individual compensation for wrongdoing. In assessing proposed rules that would insert a cost-benefit analysis into class action certifications, this Article concludes that only a rule that avoids such a test can achieve the public and private goals that are the proper ends of the class action device.

ECB

Drug and Device Law on MDL

In this post on the Drug and Device Law Blog, a guest blogger Pearson Bownas discusses a defense side point of view on when the MDL grants motions to transfer.  An interesting post, and I'd be interested in hearing any contrary points of view.  You can find it here.

Iraq Injuries Spur Putative Class Action

According to the Fulton County Daily Report, a wrecker driver who was employed in Iraq with Houston-based Kellogg, Brown & Root claims that the company sent him without adequate training.  Here's a brief excerpt of the story:

On Tuesday, his lawyers filed a class action lawsuit in Fulton County Superior Court in Georgia outlining Curtis "Bubba" Coffey's own experiences with the multinational contractor and pointing to several other highly publicized reports of deaths, accidents and sexual assaults allegedly tied to the company. Similar actions have been filed in other court jurisdictions across the nation with mixed results.

The complaint, filed on the same day a Congressional Budget Office report estimated that the United States spent more than $85 billion on contractors in Iraq between 2003 and 2007, targets KBR and nine subsidiaries, describing them as a "sham" and "corporate fiction" designed to "perpetrate a fraud for the direct personal benefit of KBR."

But "our main focus is that KBR is taking American folks, telling them that everyone they'll be working with is skilled, that everyone's trained," said Atlanta attorney E. Adam Webb. "Then they get to Iraq, and there's no training, no experience, people that speak no English -- that's what caused the direct issue here."

According to Webb and details contained in the lawsuit, Coffey, 45, was an experienced tow-truck driver who had earned his "WreckMaster" certification and was hired by KBR to "recover disabled vehicles, including tanks, personnel carriers, jeeps, cars and trucks." He was told that only persons with more than three years of experience would be considered for such employment and that extensive specialized training would be provided. But upon arriving for training at Camp Anaconda in Iraq in February, Coffey was rushed through an "ineffectual" training regimen with "trainers who were often inexperienced themselves," according to the suit.

The case name and number are Coffey v. Kellogg Brown & Root, No. 2008-CV-154929 and is filed in the Fulton County Superior Court.  The article doesn't mention what the class definition is, but from the article itself, it sounds like one that might be subject to CAFA's removal provision.

ECB

Plaintiffs Rejecting Settlement Offers Fare Worse at Trial

While not exclusively related to mass torts, the ABA reports on the results of a new study of civil suits from 2000-2005, which found that 61% of plaintiffs rejecting settlement offers fared worse at trial. Here's a link to the New York Times story and an excerpt of the ABA story:

Sixty-one percent of plaintiffs who turned down settlement offers ended up faring worse at trial, according to a New York Times story on the study. The average settlement offer was $48,700 and the average award at trial was $43,000, a difference of $5,700.

Defendants were wrong in just 24 percent of the cases, but for them the cost of a bad gamble was must larger. The average plaintiff’s settlement demand in those cases was $770,900 and the average verdict was $1.9 million, a difference of more than $1.1 million.

ECB

Gearing up for Wyeth v. Levine

This morning's Wall Street Journal has a preview of the two sides and the politics involved in Wyeth v. Levine, which will be argued before the Supreme Court on November 3. Here's an excerpt of the piece by Alicia Mundy:

Corporate defense lawyers are also girding for battle. A spokesman for the Chamber of Commerce Institute for Legal Reform said, "Pre-emption will be one of the top issues in Congress next year, and we'll be focusing significant resources on it."

Trial lawyers are expected to be heavily outspent. The chamber, which has helped drive the pre-emption and tort-reform campaign, intends to raise $40 million for political candidates this year.

The Bush administration has over the past few years circumvented Capitol Hill by weakening regulatory agencies' safety rules and adding introductions, called preambles, to public-safety regulations that effectively prohibit plaintiffs from suing at the state level, where safety standards can be tougher than those at the federal level.

Pre-empting plaintiffs' right to sue will come under the microscope in the Wyeth case. The case centers on Diana Levine, a professional guitarist who lost an arm to gangrene after a receiving a shot to treat a migraine headache in 2000.

Ms. Levine won $6.8 million in her lawsuit against Wyeth, which makes the antinausea drug, phenergan, that was given to her. A Vermont jury and that state's Supreme Court found that Wyeth hadn't sufficiently warned the public and doctors about the drug's dangers if improperly injected.

ECB

International Human Rights Litigation in U.S. Courts

Beth Stephens, Judith Chomsky, Jennifer Green, Paul Hoffman, and Michael Ratner have published the second edition of International Human Rights Litigations in U.S. Courts (2008).

Jefrrey Davis has published his book, Justice Across Borders: The Struggle for Human Rights in U.S. Courts (2008).

BGS

WSJ Editorial on FASB Proposed Rule Requiring Disclosure of Estimate of Lawsuit Cost

Editorial in the Wall Street Journal -- FASB's Lawyer Bonanza.  Here's an excerpt:

Under the proposed change, a company facing a lawsuit would have to list on its financial statement its best-guess estimate of what that litigation could end up costing -- not just in attorney fees, but in any potential payout. For a company in high-stakes litigation, that means showing its hand to plaintiffs' attorneys, allowing them to gauge management's upper estimate of what the case is worth.

The effect will be to force corporate defendants to fight lawsuits with one hand tied behind their backs -- assuming the company can even figure the "fair value" of a lawsuit it has no idea if it will win or lose. Predicting the trajectory of complex, often multiyear litigation is inherently unscientific. As we saw with Merck and Vioxx, a company's stock price can jump or fall depending on jury verdicts whose results are impossible to predict.

BGS

Krueger and Serotta on Cy Pres Class Distributions

Editorial in the Wall Street Journal -- Our Class-Action System Is Unconstitutional, by George Krueger and Judd Serotta (both of Blank Rome).  The editorial criticizes the cy pres method of distribution of class proceeds.  Here's an excerpt:

In our view, this as-near-as-possible remedy in class actions is defective. The Constitution provides for the resolution of "cases" and "controversies" between aggrieved parties. Courts are empowered to resolve those specific disputes, and not to transfer a corporate defendant's assets to an outside organization that has not appeared before the court. The Constitution does not give courts the authority to satisfy notions of "deterrence" by giving institutions like legal aid societies or universities windfalls when those entities are not even parties to the lawsuit.

The best solution would be to give the remainder of the uncollected funds back to the defendant; to those class members who have already collected their initial portion; or even to the government, thereby at least allowing society to benefit in some way, while still serving as a deterrent. Another solution would be to come up with a less arbitrary -- and more objective and disinterested -- mechanism for finding an appropriate beneficiary organization that shares the plaintiffs' common interests.

We also recommend a new wave of class-action reform, following up on certain successful elements of the Class Action Fairness Act of 2005. In our view, class-action attorneys should be compensated only based on the reward actually recovered by class members, as opposed to the total claimed "value" of the settlement. The claimed value is often calculated by including monies paid to these third parties who benefit from the settlement even though they did not participate in the litigation and are thus not even aggrieved.

BGS

WSJ Editorial on Milberg

Editorial in the Wall Street Journal -- Justice and Milberg.  Here's an excerpt:

Poor Bernie Ebbers, the former WorldCom boss now serving a 25-year prison sentence. If he'd been a class-action lawyer, the former CEO might have ended up with a fat payout from his employer despite his felony rap. At least that's one way to look at the Justice Department's recent nonprosecution agreement with the notorious Milberg law firm.

We criticized the deal last month for letting the law firm pay Melvyn Weiss -- its former lead partner and now admitted felon -- a share of the firm's future lawsuit winnings. Milberg also picked up his legal fees and expenses. We've since learned that all of this was fine with prosecutors at Justice. Thom Mrozek, spokesman for the U.S. Attorney's office in the Central District of California, confirmed the contents of last week's letter to us from five Milberg partners saying Justice had given them the green light to keep Weiss in the financial style to which he had become accustomed

BGS

Bauer on Secret Settlements

Jon Bauer (Connecticut) has recently posted an important article on SSRN on the ethics of settlements that impede other parties' access to evidence entitled "Buying Witness Silence: Evidence Suppressing Settlements and Lawyers' Ethics."  This issue is relevant to the civil rights context and products liability.  Here is the abstract:

Lawyers frequently draft settlements that impede other parties' access to relevant evidence, through clauses that prohibit the plaintiff from making voluntary disclosures to anyone with a claim against the defendant, or forbid all uncompelled disclosures concerning the facts underlying the dispute. This Article argues that lawyers who negotiate these "noncooperation" agreements violate Rule 3.4(f) of the Model Rules of Professional Conduct, which prohibits requesting someone other than the lawyer's own client to withhold relevant information from another party, and Model Rule 8.4(d), which prohibits "conduct that is prejudicial to the administration of justice."

The conventional wisdom among practitioners and legal ethics scholars has been that lawyers may ethically negotiate any settlement terms that serve their clients' interests and are not criminal or fraudulent. (Some recent critics of settlement secrecy have argued that noncooperation settlements violate obstruction of justice statutes or other criminal laws, but the illegality argument is largely unconvincing.) This Article argues that the conventional view has looked at the problem through the wrong lens. In the ethos of the ethics codes, third party and societal interests generally take a back seat to client service, but certain types of conduct deemed especially harmful to the justice system have long been placed off-limits to lawyers because of their special role as "officers of the court."

This Article traces the history of one such duty, the principle that lawyers must not ask nonclients to refrain from voluntarily disclosing relevant information to other parties or their attorneys, and shows the important function that it plays in safeguarding the integrity of adversary adjudication. After providing a theoretical justification for liberally construing ethics rules that limit client advocacy for the sake of the adversary system's effective functioning, this Article explores what the rules mean for settlement practices. The Article examines how far the duty to allow disclosures of relevant information to other parties extends; the scope of the exception allowing noncooperation requests to be made to a client's employees; whether it is permissible to require that certain types of information, such as settlement amounts, discovery materials, privileged information, and trade secrets, not be disclosed; and what limits may be placed on the manner of disclosure. The conclusion addresses the critique that prohibiting lawyers from negotiating agreements that their clients could lawfully enter into on their own is either futile or paternalistic, and shows that it is neither.

ADL

Effron on Disaster Specific Mechanisms for Consolidation

Robin Effron (Brooklyn Law) recently posted an article entitled "Disaster-Specific Mechanisms for Consolidation" on SSRN (and forthcoming in the Tulane L. Rev.).  Here is the abstract:

Within the past decade, two large scale catastrophes - the terrorist attacks of September 11, 2001 and Hurricanes Katrina and Rita - have been the recent laboratories of new congressional provisions for the federalization and aggregation of mass tort claims. In the case of September 11, the litigation has been shaped by the Air Transportation Safety and System Stabilization Act (ATSSSA) an aggregation device that Congress devised specifically to address that particular catastrophe.

The Hurricane Katrina litigation has seen the use (and attempted use) of the Multiparty, Multiforum Trial Jurisdiction Act (MMTJA), an event jurisdiction device of general application that Congress established in 2002. This article explores three aspects of post-catastrophe litigation where the consolidation of cases, or the statutes that govern the consolidation of such cases, raise issues about how to think about disaster litigation as a singular category. After providing a brief summary of the paths of the September 11th and Canal Breach litigations, this article demonstrates that when the boundaries of federal jurisdiction are shaped by reference to events, this affects how cases may be consolidated, particularly with respect to Congress's degree of specificity in naming an event as the organizing principle of jurisdiction. These two federal statutes challenge courts to consider how closely, as a matter of law, federal jurisdiction based on the ATSSSA and the MMTJA and the consolidation of cases must be linked under these respective statutes. The article then turns to a discussion of the role that courts of appeals play in determining the boundaries of federal jurisdiction and consolidation for disaster litigation. The article ends with a discussion of the practical and administrative concerns of consolidated disaster litigation. I argue that the September 11th and Canal Breach litigations show that there can be a problem for judges and litigants of sorting common from uncommon issues in the context of a district-wide consolidation organized around an event.

ADL