Mass Tort Litigation Blog

Your Next Investment? Jacoby & Meyers

Jacoby & Meyers has filed a lawsuit challenging restrictions on non-lawyer ownership and investment in law firms.  A post on the Legal Ethics Forum links to various sources.

This is a very interesting development indeed - and would seem to me to benefit the corporate bar more than plaintiff-side personal injury firms like J&M, or at least as much.  (Although looking at the J&M site I learned they are a "full service law firm"). 

The real action for mass torts is related, but not quite the same: the sale of claims or debt based on claims.  See Tony Sebok, The Inauthentic Claim on SSRN. Another interesting article that takes a different approach to the question is Jonathan T. Molot, Litigation Finance: A Market Solution to a Procedural Problem, 99 Geo. L.J. 65-115 (2010).  You can access it from his website here.

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Birnbaum to work as Ground Zero Special Master

The Wall Street Journal reports that the Justice Department plans to appoint Sheila Birnbaum to run the $2.8 billion fund for Ground Zero workers.  Here's an excerpt from the story:

The new fund was created late last year to provide compensation and health care for those who became ill after being exposed to the debris of World Trade Center rubble.

Ground Zero workers, as well as nearby residents and office workers who also breathed in the dust of the site, are eligible for compensation if the special master concludes their injuries are the result of such exposure.

. . .

According to people involved in the process, the Obama administration is concerned the fund could be swamped with thousands of applications for compensation from people who were many blocks away and now claim they have suffered after having watching the planes strike the buildings.

"The real challenge here is going to be figuring out what is and isn't compensable,'' said lawyer Noah Kushlefsky, who represents Ground Zero workers. "This fund is going to be harder than the last one, because the last one largely focused on the people who had died.''

Justice Department lawyers have already begun working out those rules, but they won't be finalized until the summer. In October, the government plans to start accepting claims for compensation.

ECB

What is the purpose of trials?

A paper that promises to be very interesting was posted on the NBER site recently.  Its called "Does Accuracy Improve the Information Value of Trials" by Anup Malani & Scott A. Baker.  Here is the abstract:

We develop a model where products liability trials provide information to consumers who are not parties to the litigation. Consumers use this information to take precautions against dangerous products. A critical assumption is that consumers cannot differentiate between firms that have never been sued and firms that have been sued but settled out of court. In this framework, we show that perfectly accurate courts do not maximize information to consumers and thus welfare, contrary to Kaplow and Shavell (1994). More accurate courts provide more information only if producers go to trial. Greater accuracy, however, encourages producers of dangerous products to settle and hide their type. When courts are perfectly accurate, all low quality producers settle. And given the lack of any information from trials about bad types, consumers (rationally) fail to take precautions. If consumer precautions are relatively more efficient than producer precautions, our conclusion stands even when firms can invest in improving the safety of their products.

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Campos on Mass Torts and Due Process

Sergio Campos (Miami) has just posted Mass Torts and Due Process on SSRN. I've also just learned that the paper was accepted for the Stanford/Yale Junior Faculty Forum, wonderful recognition for an important topic. Here is the abstract:

Almost all courts and scholars disfavor the use of class actions in mass tort litigation, primarily because class actions infringe on each plaintiff's control, or autonomy, over the tort claim. The Supreme Court has stressed the importance of litigant autonomy in other contexts, most recently in decisions involving the Rules Enabling Act, preclusion, and arbitration. Indeed, this term the Court will decide four cases involving class actions that will likely reaffirm the importance of protecting a plaintiff's autonomy over the claim. In all of these contexts the Court, and most scholars, have understood protecting litigant autonomy as a requirement of procedural due process.

In this article I argue that protecting litigant autonomy in the mass tort context is mistaken, and, in the process, challenge basic notions of procedural due process. Relying on recent property theory, I first show that protecting litigant autonomy in mass tort litigation causes collective action problems that undermine the deterrent effect of the litigation. Thus, protecting litigant autonomy leads to more mass torts. Counterintuitively, this tragedy can be avoided by taking away each plaintiff's autonomy over the claim, such as through a mandatory class action.

I then use the self-defeating nature of litigant autonomy in the mass tort context to reexamine the law of procedural due process. I argue that an interest in deterrence, understood as an individual interest in avoiding the tort altogether, should be included in the due process analysis. I also argue for a more impartial method to balance competing interests. I conclude that the law of procedural due process should permit mandatory collective procedures in mass tort and similar contexts. I further suggest that the law of procedural due process should focus less on procedural rights such as litigant autonomy, a "day in court," and even the opportunity to be heard, and focus more on often ignored aspects of procedural design.

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$322 Million Asbestos Verdict

Last Thursday, a jury in Smith County Mississippi awarded the largest asbestos verdict in United States history against Chevron Phillips Chemical and Union Carbide Corporation.  The award compensated Thomas "Tony" Brown, Jr. for future medical expenses, pain and suffering, and punitive damages.  Here's a link to the story from Laurel Leader-Call and the WSJ Law Blog story by Ashby Jones.

ECB

Zimmerman on Distributing Justice and The Criminal Class Action

Adam Zimmerman (St. John's) has posted two new articles on SSRN.  The first, "Distributing Justice," explores procedural concerns that arise when government agencies seek restitution on behalf of a large class of victims, and the second, "The Criminal Class Action," explores similar concerns when prosecutors distribute funds to a large group of victims (a compensatory goal), while also pursuing retribution and deterrence.  Here's the SSRN abstract for Distributing Justice:

This Article explores the procedural concerns that arise when regulatory agencies mimic class actions by collecting big monetary settlements on behalf of victims. Over the past decade, agencies have collected over $10 billion to compensate people hurt by massive frauds, false advertising, and defective drugs, using proceeds from penalties levied against regulatory violators. Today, the Securities and Exchange Commission regularly seeks awards against large public companies and distributes the money to injured investors through “Fair Funds.” The Federal Trade Commission similarly seeks restitution against parties profiting from unfair trade practices and distributes awards to consumers. Even the U.S. Postal Service distributes the ill-gotten profits of scam artists to victims of mail fraud.

However, unlike private lawsuits, agencies afford few safeguards for the victims they compensate. Agencies lack adequate procedures to hear victims’ claims, identify conflicts between different parties, or coordinate with other kinds of lawsuits. I argue that agencies should continue to play a role - albeit a limited one - in compensating victims for widespread harm. However, when agencies compensate victims, they should adopt rules similar to those that exist in private litigation to resolve differences between victims, improve judicial review, and coordinate with private lawsuits.

I propose three solutions to give victims more voice in their own redress, while preserving an agency’s flexibility to enforce the law: (1) that agencies involve representative stakeholders in settlement discussions through negotiated rulemaking; (2) that courts subject agency decisions to hard look review; and (3) that courts and agencies coordinate overlapping settlements before a single federal judge.

And here's the SSRN abstract for The Criminal Class Action (co-authored with David Jaros):

Over the past ten years, in a variety of high-profile corporate scandals, prosecutors have sought billions of dollars in restitution for crimes ranging from environmental dumping and consumer scams to financial fraud. In what we call “criminal class action” settlements, prosecutors distribute that money to groups of victims as in a civil class action while continuing to pursue the traditional criminal justice goals of retribution and deterrence. 

Unlike civil class actions, however, the emerging criminal class action lacks critical safeguards for victims entitled to compensation. While prosecutors are encouraged, and even required by statute, to seek victim restitution, they lack adequate rules requiring them to (1) coordinate with other civil lawsuits that seek the same relief for victims, (2) hear victims’ claims, (3) identify conflicts between different parties, and (4) divide the award among victims. 

We argue that prosecutors may continue to play a limited role in compensating victims for widespread harm. However, when prosecutors compensate multiple victims in a criminal class action, prosecutors should adopt rules similar to those that exist in private litigation to ensure that the victims receive fair and efficient compensation. We propose four solutions to give victims more voice in their own redress while preserving prosecutorial discretion: (1) that prosecutors and courts coordinate overlapping settlements before a single federal judge, (2) that prosecutors involve representative stakeholders in settlement discussions through a mediation-like process, (3) that courts subject prosecutors’ distribution plans to independent review to police potential conflicts of interest, and (4) that prosecutors adopt the distribution guidelines the American Law Institute developed for large-scale civil litigation to balance victims’ competing interests.

ECB

Can Liz Warren Save Class Actions?

Nathan Koppel at the WSJ blog weighs in - not in the near term is the answer. In the meantime, Congress might act.   Here is a link to the proposed legislation: the Arbitration Fairness Act.

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