Monday, April 29, 2013
Earlier this month two tobacco trials with origins in the Florida Supreme Court's affirmation of classwide issue preclusion in Engle resulted in large awards.
Thursday, April 25, 2013
Over at the Conglomerate Blog, Christine Hurt has a great post on the One Fund Boston and individual victim fundraising. Her blog post is entitled One Fund Boston, Torts and Social Capital.
Wednesday, April 17, 2013
As we as scholars and practictioners begin to explore class action alternatives, one problem continues to arise: when to preclude subsesequent litigation. Of course, this problem arose early on in the class action's history, most notably with (b)(2) civil rights cases where some class members disagreed fundamentally over the remedy requested. But the problem has persisted in multidistrict litigation and, perhaps most notably, in parens patriae actions. I explore this problem and propose a solution in my latest piece, titled Adequately Representing Groups. Here's the SSRN abstract, which gives a brief summary of the proposed solution:
Adequate representation and preclusion depend on whether the courts treat a litigant as part of a group experiencing an aggregate harm or as a distinct person suffering individual injuries. And though a vast literature about adequate representation exists in the class-action context, it thins dramatically when contemplating other forms of group litigation, such as parens patriae actions and multidistrict litigation. As class actions have gradually fallen into disfavor and attorneys and commentators seek alternative means for resolving group harms, the relative clarity of Rule 23 wanes. How should courts evaluate adequate representation in parens patriae actions and in multidistrict litigation? The answer to this question matters immensely since adequate representation is critical to precluding relitigation and achieving finality.
This Article suggests that courts should differentiate between inadequate representation claims based on the underlying right at stake. When the underlying right arises from an aggregate harm — a harm that affects a group of people equally and collectively — and demands an indivisible remedy, courts should tolerate greater conflicts among group members when evaluating a subsequent claim of inadequate representation. Because the harm is aggregate and the remedy is indivisible (typically declaratory or injunctive relief), if one group member receives the remedy, then they all receive the remedy. The litigation operates to group members’ benefit or detriment equally, so if one group member is inadequately represented, they are all inadequately represented. Consequently, a subsequent litigant can successfully avoid preclusion only where the lawyers or the named representatives acted contrary to the group’s best interests or attempted to represent an overinclusive, noncohesive group where some members required unique relief that the representative had no selfish reason to pursue.
Conversely, when plaintiffs suffer individual injuries at the same defendant’s hands and unite their claims for economic or efficiency reasons, that aggregation does not convert their individual injuries into an aggregate harm. When counsel fails to fairly represent her client in vindicating that harm, inadequate representation is an individual injury. In multidistrict litigation and Rule 23(b)(3) class actions, which typically include individuals litigating their individual harms together for systematic and litigant efficiency, courts should look for “structural conflicts” between the claimants themselves as well as between the representatives and the claimants. This means that both initially and on a collateral attack, courts should accept fewer conflicts than in cases involving aggregate rights. Accordingly, judges should assess whether there are reasons the lawyers “might skew systematically the conduct of the litigation so as to favor some claimants over others on grounds aside from reasoned evaluation of their respective claims or to disfavor claimants generally vis-à-vis the lawyers themselves.”
Jaime Dodge (Georgia) has posted Disaggregative Mechanisms: The New Frontier of Mass-Claims Resolution Without Class Actions on SSRN. Here's the abstract:
Aggregation has long been viewed as the primary if not sole vehicle for mass claims resolution. For a half-century, scholars have consistently viewed the consolidated litigation of similar claims through joinder, class actions and more recently multi-district litigation as the only mechanism for efficiently resolving mass claims. In this Article, I challenge that long-standing and fundamental conception. The Article seeks to reconceptualize our understanding of mass claims resolution, arguing that we are witnessing the birth of a second, unexplored branch of mass claims resolution mechanisms — which I term “disaggregative” dispute resolution systems because they lack the traditional aggregation of common questions that has been the hallmark of traditional mass claims litigation. Disaggregation returns to a focus on the individual akin to that of the single-plaintiff system, but uses either procedural or substantive streamlining, or a shift of costs to the defendant, to correct the asymmetries that prompted the creation of class actions. Many of our most innovative claims structures — from the BP GCCF and the fund created in the wake of the Costa Concordia disaster, to the common single-plaintiff arbitration clauses in consumer and employment agreements — use this new, bottom-up model of disaggregative mass claims resolution instead of the familiar top-down aggregative model.
These next-generation systems have been heralded as a significant advancement in mass claims resolution, capable of awarding more compensation to claimants more quickly and at lower cost than aggregate litigation. But like the single-plaintiff and aggregate litigation systems that preceded it, disaggregation has its flaws. Because the defendant typically designs these systems, they often give rise to questions about legitimacy and the accuracy of compensation. More shockingly, situating disaggregation within the existing doctrinal trends reveals that the rise of disaggregation allows corporations to avoid class actions in a far broader swath of cases than has previously been identified — such that class actions will, as a practical matter, proceed only at the defendant’s election, raising substantial questions about the viability of private actions as a mechanism for the enforcement of law. Yet, because these systems are the product of contract, attempts to restrict these systems have largely failed. The answer to these problems lies in an unlikely and potentially controversial approach: expanding rather than restricting the availability of disaggregation, by creating a public mechanism for disaggregation — comparable to the existing public aggregation mechanisms.
Looks really interesting and definitely worth a read!
Friday, April 12, 2013
I want to point out that Richard Epstein just posted a nice column on Comcast v. Behrend, which can be found here. In the column Epstein puts nicely one of the points I tried to make in my last post on Comcast:
The ultimate question in these cases is whether the price increase was attributable to the added concentration, and for that question the regressions have to be admitted because they apply to the class as a whole. The information on the four possible sources of the increase should not be looked at in the alternative; if examined at all, the theories should be treated at most as cumulative descriptive evidence that is weaker in kind than the quantitative evidence in the regression itself. It is therefore a plus that the regression is not tied to the overbuilding theory. If this analysis is correct, it is mistaken to insist that the harms suffered by the plaintiff class do not derive from the distinctive overbuilding theory put forward by the plaintiff. Instead, the numbers tell the key story, as each of the four theories mentioned could offer a partial explanation as to the subsidiary question of how the antitrust injury came to pass.
The whole thing is worth a read!
Monday, April 8, 2013
Hi everyone. It has been a while since I rapped at ya. I recently did an opinion analysis of Comcast v. Behrend for SCOTUSBlog (see here). I have been puzzling over the opinion ever since, and I was wondering what you guys think about the opinion.
Here is what confuses me. A majority concluded that the plaintiffs-respondents failed to satisfy the "predominance" standard of Rule 23(b)(3). Specifically, the majority found that an expert model used to determine damages was insufficient because the model did not set out to isolate the one antitrust theory (out of four) certified by the district court. From what I can tell, the model was basically a simple comparison between the actual prices in the Philadelphia area and what the prices would have been "but for" the antitrust violation. The "but for" market was constructed to reflect a competitive market.
As I understand it, this is a standard method of determining an overcharge in an antitrust case. Moreover, I am not sure it makes sense to isolate one antitrust violation to determine the "but for" price. As put by the dissent, the majority ignores the fact that if an antitrust violator is successful, then it would deter not only existing competitors from entering the market, but potential ones as well, making the competitive market the logical "but for" comparator.
So here is my first question: If this method of determining antitrust damages is generally accepted, then isn't predominance always satisfied? Doesn't this method show that damages in antitrust cases are always capable of proof on a common basis? I recognize that there may be exceptions, such as the individual contracting found in Hydrogen Peroxide, but in Comcast and in many other consumer antitrust cases the prices are not usually subject to a great deal of negotiation. People usually pay according to the same price schedule, which lends itself to an overcharge analysis like the one proposed by the plaintiffs in Comcast.
Another weird thing about the case is that the plaintiffs conceded that they had to show they could determine damages on a common basis. That has not been the case for antitrust class actions, where bifurcation has been an accepted method of distributing damages.
So here is my second question: If bifurcation is always an available method of distributing damages, then does it matter that the plaintiffs conceded that they could prove damages on a common basis? In other words, if the plaintiffs fail, then the court simply could bifurcate away the damages issue. Accordingly, the issue of whether damages can be assessed on a common basis seems to me to be a red herring.
Why do I wonder about these two questions? I am worried that the majority may be interpreted to have held that (1) plaintiffs are now required to prove damages on a common basis to show "predominance" and, (2) plaintiffs cannot fall back on bifurcation if they cannot. These two propositions seem like a logical extension of Wal-Mart, but is in some conflict with Amgen. What do you guys think? Am I overreading Comcast?
Saturday, April 6, 2013
For those who were unable to attend the "Lessons from Chevron" symposium at Stanford Law School in February, the conference website now has links to videotapes of the panels. Some of the panels focused directly on the Chevron-Ecuador environmental litigation itself, while others used that litigation as a springboard to consider such issues as litigation financing, transnational legal ethics, forum non conveniens, judgment enforcement, international discovery, and international arbitration. The participants included a mix of players in the litigation, journalists who have followed the litigation, and scholars interested in various aspects of transnational litigation: Deborah Hensler, Graham Erion, Theodore Boutros, Judith Kimerling, Burt Neuborne, Martin Redish, Maya Steinitz, Nora Freeman Engstrom, Morris Ratner, Catherine Rogers, Patrick Keefe, Jenny Martinez, Howard Erichson, Manuel Gomez, Christopher Whytock, Janet Martinez, Michael Goldhaber, Richard Marcus, and S.I. Strong.
Friday, April 5, 2013
I have posted a new paper on SSRN entitled The Chevron-Ecuador Dispute, Forum Non Conveniens, and the Problem of Ex Ante Inadequacy. Here is the abstract:
This essay, written for the 2013 Stanford Journal of Complex Litigation symposium on lessons from the Chevron-Ecuador environmental litigation, urges that we not take the wrong lesson concerning the doctrine of forum non conveniens. The paper highlights the irony of the forum battles in the litigation. The plaintiffs sued in the United States, the defendants won dismissal on grounds of forum non conveniens (arguing that the dispute should be adjudicated by the courts of Ecuador), the plaintiffs obtained a massive judgment in Ecuador, and the defendants challenged the judgment on grounds of fraud and corruption in the Ecuadorian proceedings. Despite the temptation to see the Chevron-Ecuador litigation as a cautionary tale about forum non conveniens, this essay argues that the “adequate alternative forum” standard for forum non conveniens should remain exceedingly low. Ex ante, deference to foreign legal systems should prevail, even as we permit ex post challenges to recognition of judgments on grounds of fraud and corruption.
The essay was prepared for the Stanford Lessons from Chevron symposium, which took place in February. On this blog, the long-running environmental dispute has come up a number of times, including a recent reference to Michael Goldhaber's work and earlier reports here, here and here.
Tuesday, April 2, 2013
BNA Law Week reports that the Supreme Court granted cert, vacated the judgments and remanded two class actions yesterday. RBS Citizens NA v. Ross, U.S., No. 12-165, certiorari granted, judgment vacated, remanded 4/1/13; Whirlpool v. Glazer Corp., U.S., No. 12-322, certiorari granted, judgment vacated, remanded 4/1/13.
BNA describes Ross as a case in which a bank is accused of unlawfully denying overtime pay. The allegations involved the enforcement of an unofficial policy and the Seventh Circuit affirmed the grant of class certification.
The Whirlpool case comes out of the Sixth Circuit and a very similar issue class action was certified in the Seventh Circuit. This case involves allegations that Whirlpool sold faulty washing machines that got moldy. I thought the Whirlpool case was a real poster child for the correct use of the issue class action, and I'm not sure on what grounds the Court thinks that Behrend is relevant. It seems to me that it is not, Behrend was not an issue class action and the questions that concerned the majority there related to feasibility of damages determinations. Given the allegations regarding overtime pay in Ross, I understand why that case might have made sense to remand, but Whirlpool is a very different kind of case. There are no damages issues in Whirlpool because it is a liability issue class action.
At a minimum, as after Wal-Mart, I predict we will see a spate of reconsideration motions, decertification motions and more litigation post-Behrend.
ETA: And for commentary on Behrend, see Sergio's Campos' latest post on Scotusblog.
Monday, April 1, 2013
I have posted a new paper, The Problem of Settlement Class Actions, on SSRN. It makes the argument that we should abandon settlement-only class actions as a means of resolving mass disputes. The article focuses first on problems of leverage, including would-be class counsel's inability to take the class claims to trial and the monopsony or "reverse auction" problem. Because of the inherent asymmetry of settlement class action negotiations, would-be class counsel does not adequately represent the interests of the absent class members. The article incorporates these leverage concerns into an account of the illegitimacy of settlement-only class certification as a matter of judicial authority. The problems include not only due process concerns of inadequate representation, but also Rules Enabling Act concerns.
Settlement class actions have been an important form of dispute resolution in mass torts (as well as securities, antitrust, and other areas). Despite the Supreme Court's rejection of two asbestos settlement class actions in Amchem and Ortiz, and despite the problems encountered in the fen-phen nationwide settlement class action shortly thereafter, mass tort settlement class actions have never disappeared, and we need only look at the BP settlement class actions in the Gulf Oil Spill litigation for a well-known recent example.
Needless to say, the argument I am advancing faces an uphill battle. It cuts against entrenched interests of defendants, of plaintiffs' counsel, and of judges, all of whom prefer easier paths to comprehensive negotiated resolutions. The argument also cuts against the grain of most recent thinking on this topic. The ALI Principles of the Law of Aggregate Litigation, as well as a recent suggestion under consideration by the Advisory Committee on Civil Rules, would alter Rule 23 to facilitate settlement class actions even in cases that would be uncertifiable for purposes of litigation. Recent cases such as the Second Circuit's 2012 decision in In re AIG Securities Litigation and the Third Circuit's 2011 en banc decision in Sullivan v. DB Investments have taken new liberties with the Supreme Court's Amchem decision. The article explains what is problematic about the direction these cases have taken.
Here is the abstract:
This article argues that class actions should never be certified solely for purposes of settlement. Contrary to the widespread “settlement class action” practice that has emerged in recent decades, contrary to current case law permitting settlement class certification, and contrary to recent proposals that would extend and facilitate settlement class actions, this article contends that settlement class actions are ill-advised as a matter of litigation policy and illegitimate as a matter of judicial authority. This is not to say that disputes should not be resolved on a classwide basis, or that class actions should not be resolved by negotiated resolutions. Rather, this article contends that if a dispute is to be resolved on a classwide basis, then the resolution should occur after a court has found the matter suitable for classwide adjudication regardless of settlement.
For those who were unable to attend the excellent conference on class actions that was held last month at George Washington Law School, video recordings of the panels can now be found on the conference website.