Mass Tort Litigation Blog

Adam Zimmerman and Dana Remus on Aggregate Litigation Going Private

Professors Adam Zimmerman (Loyola Los Angeles) and Dana Remus (North Carolina) have posted to SSRN their article, Aggregate Litigation Goes Private, 63 Emory L.J. 1317 (2014).  Here is the abstract:

In Disaggregative Mechanisms, Professor Jaime Dodge documents how corporate defendants increasingly design their own mass resolution systems to avoid collective litigation — what she calls “disaggregative” dispute resolution. According to Dodge, such schemes promise benefits not only to putative defendants, but also to plaintiffs — resolving disputes quickly, handling large volumes of claims predictably, and sometimes, offering more compensation than would be available through aggregate litigation. She observes, however, that these systems also risk underdeterrence. Dodge concludes by endorsing disaggregative mechanisms while suggesting a need for more public oversight.

In the following response, we argue that, left unregulated, such highvolume claim systems threaten transparency, deterrence, and even the rule of law. We therefore agree with Dodge’s call for public oversight. But we observe that a number of policing and oversight mechanisms already exist. Today, lawmakers and regulators police collective arbitration and private settlement funds, in a wide variety of areas — from financial and environmental regulations to employment and consumer protection laws. After reviewing the ways that policymakers currently regulate corporate dispute resolution, we examine their effectiveness by exploring two regulated private settlement systems in more detail: (1) regulations developed by the Obama Administration that require airlines to offer “liquidated damages” using a preapproved settlement grid when they overbook customers on a flight and (2) regulations imposed by the Office of the Comptroller of the Currency following accusations that many of the nation’s largest banks executed “robo-signed” mortgages that required banks to perform a detailed “independent foreclosure review” of past loans with borrowers. These case studies demonstrate both the challenges to, and opportunities for, government bodies that attempt to encourage sound regulation of mass private settlement systems without compromising their potential contributions to increased access, equality, and efficiency.

 

 

Oregon Supreme Court Applies Aggregate Settlement Rule to Clergy Abuse

On August 21, 2014, the Oregon Supreme Court embraced the ALI's definition of a non-class aggregate settlement and held that an attorney who represented victims of clergy abuse failed to get the clients' informed consent before distributing a lump-sum settlement.  In In re Complaint as to the Conduct of Daniel J. Gatti, the court noted that Gatti failed to get clients' informed consent in writing to the formula or method he devised to divvy up the defendants' lump-sum settlement payments, which violated Rule 1.8(g).  As a result, the court imposed a 90-day suspension as a sanction.

For more on the problems associated with lump-sum settlements, see Howie's article, The Trouble with All-or-Nothing Settlements.

Panel on Class Action Reform and the BP Deepwater Horizon Case

Professor Neal Katyal (Georgetown) and Theodore Olson (Gibson Dunn) take part in a Federalist Society panel on class action reform and the BP Deepwater Horizon case; the panel is moderated by Stuart Taylor (Brookings Institution).