Tuesday, December 27, 2011
En Banc Third Circuit Approves De Beers Class Action Settlement
The Third Circuit, sitting en banc, recently approved a nationwide class action settlement concerning antitrust claims against De Beers in its marketing of diamonds. The 171-page opinion can be found here. Samuel Issacharoff, an NYU law professor and a titan in the field of class action law, argued at oral argument in favor of the settlement. Kevin Walsh, who teaches at Richmond, has an interesting post here critiquing the opinion as well as an earlier post on the De Beers settlement and the typicality requirement. I am sure more will be said in the next couple of weeks.
December 27, 2011 | Permalink | Comments (0) | TrackBack (0)
Tuesday, December 20, 2011
Tort Reform in The Economist
The Economist this week has an article discussing various approaches to American tort reform, including loser pays and damage caps.
December 20, 2011 in Mass Tort Scholarship, Procedure | Permalink | Comments (0) | TrackBack (0)
Tuesday, December 13, 2011
Financiers as Monitors in Nonclass Aggregation
I recently posted a working draft of a new piece titled "Financiers as Monitors: Unbundling Agency, Risk, and Reward in Aggregate Litigation" on SSRN. The thurst of the piece is that courts will certify fewer and fewer class actions after Wal-Mart Stores, Inc. v. Dukes and AT&T Mobility v. Concepcion. When cases are economically viable en masse, they're likely to proceed as mass torts currently do, as nonclass aggregation (think Vioxx). This means that the ethically questionable practices in mass tort litigation (i.e., threatening to withdraw from representing clients who refuse to accept a proposed settlement offer) will invade protypical class action areas like employment discrimination, civil rights, and toxic torts.
The basic gist of the proposal is that third-party funders could perform a monitoring function in large-scale nonclass litigation and that by unbundling the attorney's role as a financier from that as an advisor, she could be a more faithful agent. Financiers would contract with plaintiffs for a portion of the litigation's proceeds on a nonrecourse basis. They'd then negotiate the fee arrangement with the plaintiffs' attorneys, preferably on a billable hour rate (plus, perhaps some small percentage of the proceeds as a successful litigation bonus). My hope is that this would both reduce the need for monitoring by alleviating the financial tension that a contingent-fee relationship injects and create a viable monitor in the financier.
Here's the SSRN abstract:
This Article offers a new way to monitor large-scale litigation that proceeds outside the bounds of Rule 23. Although class actions receive all the scholarly attention (and public scorn), after the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, the class action’s existence is limited, at best. The shadowy world of nonclass aggregation, where attorneys threaten to pull the rug out from under their own clients if they refuse to accept a settlement, will take its place. Despite the attorney overreaching and questionable ethics that have emerged as attorneys scramble to patch together the finality that class certification once afforded, there is no substitute for the judicial monitoring that Rule 23 provided. In short, the nebulous world of mass-tort litigation will become the new operating model for all types of would-be class actions — from employment-discrimination claims to civil-rights litigation to toxic torts.
The answer to this conundrum comes from an equally controversial source: alternative litigation financing. You see, litigating massive cases can take a small fortune, which is fronted by the contingent-fee attorney. And it is the prospect of complete financial ruin that drives plaintiffs’ attorneys to act unethically and coerce clients into settling. Thus, if a third party bore the financial risk, the attorney could be a faithful agent again. But alternative litigation financing, where hedge funds and venture capitals invest in and profit from litigation, raises plenty of ethical issues on its own and has its own cadre of critics. Although wedding the two is bound to spark fireworks, this Article seeks to carefully engineer their union such that it benefits society as a whole and plaintiffs in particular.
This draft is still in its very early stages, so I'd certainly welcome any thoughts or comments on it (eburch[at]uga.edu).
December 13, 2011 in Class Actions, Current Affairs, Informal Aggregation, Mass Tort Scholarship | Permalink | Comments (0) | TrackBack (0)
Yaz Litigation Likely to Heat Up After FDA Relabeling
Last week the FDA voted 21-5 to revise the labeling on Yaz, Yasmin, Beyaz, Safyral, and its generic versions to clarify the potential risk of blood clots in the legs and lungs from taking the pills. After debating the conflicting data for more than nine hours, the panelists disagreed on the evidence's quality but agreed that the risks should be clearly stated in the label. Here's an excerpt from the Huffington Post's report:
"Clearly the wording is inadequate and incomplete," said Dr. Richard Bockman of New York's Hospital for Special Surgery. "Adverse events have to be made graphic so physicians and patients are aware of the consequences."
In an earlier vote, panelists voted 15-11 that the pills remain a beneficial option for preventing pregnancy. The majority ruling amounts to a vote of confidence for keeping the drugs on the market, though well over a third of panelists voted against the drug's overall benefit, citing numerous alternatives available.
"I can see no real group of patients that this drug benefited over existing alternatives," said Mark Woods of New York University School of Medicine. "Without any clear benefit, and given the potentially catastrophic risk, I voted no."
Two large studies conducted by German drugmaker Bayer have shown no difference in blood clots between patients taking the company's drugs and patients taking older medications.
But since 2009, five large studies have suggested drospirenone-containing pills carry a slightly higher risk of blood clots than older birth control pills, though events in both groups are very rare. Even a slightly higher risk can be critical because blood clots can trigger heart attacks, strokes and blockages in lungs or blood vessels.
Here's a link to a TIME magazine report and to a recent NY Times piece.
December 13, 2011 in FDA, Pharmaceuticals - Misc. | Permalink | Comments (0) | TrackBack (0)
Monday, December 5, 2011
Fight Ensures over Attorneys' Fees in BP Oil Spill MDL
Yesterday's NY Times had an article by John Schwartz titled, "Plaintiffs' Lawyers in a Bitter Dispute Over Fees in Gulf Oil Spill Cases." The article chronicles the now typical battle over attorneys' fees in multidistrict litigation where judges compensate Plaintiffs' Steering Committee members from other attorneys' fee awards. This dispute is particularly bitter; the steering committee is asking for fees not just from those involved in the federal multidistrict litigation, but from those who negotiated their own recoveries from the privately administered Gulf Coast Claims Facility.
December 5, 2011 in Current Affairs, Environmental Torts, Ethics, Lawyers | Permalink | Comments (0) | TrackBack (0)