Mass Tort Litigation Blog

The future ain't what it used to be.

Yogi Berra was right and I was wrong. Revisiting my old post, boy my prediction regarding the outcome in Shady Grove was wrong.  I should have taken the statistical approach - after all why would they grant cert if not to reverse?  Then again, it was a plurality opinion.

ADL

Rule 23 Upheld in All State Class Actions

The Supreme Court today released the decision in Shady Grove Orthopedics v. Allstate.  Justice Scalia, writing for the Court, was joined by Thomas, Roberts, Sotomayor & Stevens.  Justices Kennedy, Breyer, Alito joined Ginsburg's dissent.  (h/t Steven Burbank, Penn Law).  You can find the case here. Coverage at Civ Pro Blog here.

The case concerned a class action for statutory damages brought by Shady Grove against Allstate for failing to pay claims.  The cause of action was under New York law and the New York class action rule only permits class actions where the underlying substantive law specifically states that class actions will be available.  The question presented in the case was whether the plaintiffs could sustain a class action in Federal Court based on the state cause of action.  The class action was in Federal Court because of the Class Action Fairness Act.  The Court ruled that the Federal Court could certify a class under Rule 23 even when the underlying cause of action could not have been certified as a class in state court because of the New York procedural rule.

Part II.B. is the key part, although only a plurality agreed on it (Justice Stevens issued a separate concurrence and basically agreed only with the result).  Justice Scalia writes "The test is not whether the rule affects a litigant's substantive rights; most procedural rules do....What matters is what the rule itself regulates: If it governs only "the manner and the means" by which the litigant's rights are "enforced," it is valid; if it alters the "rules of decision by which [the] court will adjudicate [those] rights," it is not.....[W]e have rejected every statutory challenge to a Federal Rule that has come before us....Applying that criterion, we think it obvious that rules allowing multiple claims (and claims by or against multiple parties) to be litigated together are also valid....Such rules neither change plaintiffs' separate entitlements to relief nor abridge defendants' rights; they alter only how the claims are processed."  He went on to analogize joinder and consolidation to class actions. (Slip Op at 13)

What of the argument that New York intended to achieve a substantive effect -- disallowing statutory damages class actions? The Court explains: "...the substantive nature of New York's law, or its substantive purpose, makes no difference.  A Federal Rule of Procedure is not valid in some jurisdictions and invalid in others --or valid in some cases and invalid in others -- depending upon whether its effect is to frustrate a state substantive law (or a state procedural law enacted for substantive purposes."   (Slip op at 15)

The inquiry is not to the state law, but to the nature of the Federal Rule - does it regulate procedure?

More analysis of the decision to come.  ADL

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

Erichson on Judge's Involvement in WTC Disaster Site Litigation

Our own Howard Erichson is quoted at length in a recent New York Law Journal article on Judge Hellerstein's rejection of the 9/11 first responders settlement.

I can't access the article, but here is a taste.

ADL

Toyotal Lawsuits - behind the scenes at an MDL

Here is an interesting article about the JPMDL oral arguments in the Toyota lawsuits: Lawyers Play Speed-Date in Toyota Tussle.

The issue the article discusses (rather disdainfully) is who will be the lead lawyers in the Plaintiffs' Management Committee because those lawyers will lead the litigation, garner the most fees, etc.

More needs to be written about procedures to allocate power among plaintiffs attorneys as well as fees, a process that could use more process.

Note too the names raised in the article: Mark Lanier (Houston based) who tried the Vioxx cases, Mark P. Robinson Jr (who according to the article was involved in the Ford Pinto litigation in the 70's), and Mark Geragos (who is best known for representing Michael Jackson).

h/t Todd Gilbert

ADL

Reynolds' Move Into Smokeless Products

Thorough article in the Wall Street Journal -- Smokeless Products Are Tough Test for Reynolds, by David Kesmodel.

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

Georgia High Court Strikes Down Damages Caps in MedMal Cases

The NYTimes coverage is here.

ADL

New York City Settles Strip Search Class Action for $33 Million

The New York Times reports that NYC has settled yet another strip search class action, providing about $33 million for 100,000 people who were strip searched between 1999 and 2007.  The article is here.

ADL

Nagareda on "Developments in Mass Torts"

At Torts Prof Blog.  See his post here.

ADL

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 

 

Florida's Third District Court of Appeals Upholds $24 Million Tobacco Verdict

The Third District Court of Appeal in Florida unanimously upheld a $24.8 million verdict against Phillip Morris USA, Brown & Williamson, and Liggett Group.  It's the first appellate ruling upholding a verdict since the Florida Supreme Court dismantled the Engle class action.  (The appeal to the Eleventh Circuit in Engle is still pending.)

Here's an excerpt from The Daily Business Review's article on the case:

With Lukacs dying, his attorneys sued and pushed for a quick trial in 2002 instead of forcing their cancer-ridden client to wait for the Supreme Court ruling. 

"He wanted his day in court, and the only way to obtain his day in court was to try the case before the Florida Supreme Court made its decision," said Alters Boldt Brown Rash special counsel Bruce Rogow, who argued the appeal for Lukacs' family. 

The jury awarded Lukacs' widow, Yolanda, a total of $37.5 million in 2002. The award was later reduced to $24.8 million. 

Tobacco attorneys appealed, challenging trial decisions and insisting smoker trials could not proceed without a Supreme Court directive. 

The 3rd DCA decision cited the Supreme Court ruling, which allowed smokers to pursue individual lawsuits and offer the original jury's findings as fact. New juries are advised to accept that smoking causes cancer and other illnesses, cigarettes are addictive and tobacco companies defrauded consumers by misleading them. 

"It sends a clear message that Engle is the guiding light in Florida tobacco litigation," Rogow said.

ECB

Taxing Punitive Damages

Dan Markel and Greg Polsky (both of Florida State) have posted "Taxing Punitive Damages" on SSRN.  Here is the abstract:

There is a curious anomaly in the law of punitive damages. Jurors assess punitive damages in an amount that they believe will best “punish” the defendant. But, in fact, defendants are not always punished to the degree that the jury intends. Under the Internal Revenue Code, punitive damages paid by business defendants are tax deductible and, as a result, these defendants often pay (in real dollars) far less than the jury believed they deserved to pay.

To solve this problem of under-punishment, many scholars and policymakers, including President Obama, have proposed making punitive damages nondeductible in all cases. In our view, however, such a blanket nondeductibility rule would, notwithstanding its theoretical elegance, be ineffective in solving the under-punishment problem. In particular, defendants could easily circumvent the nondeductibility rule by disguising punitive damages as compensatory damages in pre-trial settlements.

Instead, the under-punishment problem is best addressed at the state level by making juries “tax aware.” Tax-aware juries would adjust the amount of punitive damages to impose the desired after-tax cost to the defendant. As we explain, the effect of tax awareness cannot be circumvented by defendants through pre-trial settlements. For this and a number of other reasons, tax awareness would best solve the under-punishment problem even though it does come at the cost of enlarging plaintiff windfalls. Given the defendant-focused features of current punitive damages doctrine, this cost is not particularly troubling. Nonetheless, a related paper of ours furnishes a strategy for overcoming this tradeoff through some basic reforms to punitive damages law.

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

Albany Law Journal Symposium Issue on Off-Label Drug Prescription

The Albany Law Journal of Science & Technology has published a symposium issue on Regulating the Cure: Topics Arising Out of the Prescription of Drugs Off-Label.  My article, Promotion of Off-Label Drug Use: In Favor of a Regulatory Retreat, 19 Alb. L.J. Sci & Tec. 609 (2009), is included.

BGS

Prempro Verdict Roundup

Date	Compensatory	Punitive
9/15/2006	1.5	0
2/1/2007	0	0
2/1/2007	2.4	0
10/1/2007	11.66	33
10/1/2007	11.66	33
10/1/2007	11.66	33
3/1/2008	2.75	27
10/1/2009	3.7	75
11/29/2009	6.3	28
2/22/2010	3.45	6
2/25/2010	0	0
average	5.007272727	21.36363636

 

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

Walter Olson Attempts to Defuse the Toyota Panic

His article, Exorcising Toyota’s Demons, was published today in the National Review online.

BGS

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