Mass Tort Litigation Blog

Mass Tort Bankruptcies before SCOTUS on Monday - Harrington v. Purdue Pharma L.P.

Those of you who have been following the opioid lawsuits know that on Monday, December 4, 2023, the Supreme Court will hear oral arguments over whether to allow the billionaire Sackler family behind Purdue Pharma to glom on to Purdue's bankruptcy without declaring bankruptcy itself. 

But do you know what's at stake for mass torts? Professors Abbe Gluck (Yale), Adam Zimmerman (USC Gould), and I explore that question in a new paper forthcoming in Yale Law Journal Forum. As we explain, the case provides a critical opportunity to reflect on what is lost when parties in mass torts find the “behemoth” litigation system unable to bring mass disputes to a close, when they charge multidistrict litigation as a “failure,” and when defendants contend that sprawling lawsuits across national courts have thrown them into unresolvable crisis that only bankruptcy can solve. Harrington v. Purdue Pharma L.P. is just one of many recent examples of extraordinarily unorthodox and creative civil procedure maneuvers—in both the bankruptcy and district courts—that push cases further away from the federal rules and the trial paradigm in the name of settlement.  

Unlike ordinary state and federal trial courts, bankruptcy courts don’t generally lay blame for millions of deaths; they efficiently distribute resources. Petitioners in bankruptcy aren’t called “victims” or “plaintiffs”; they are “creditors” with limited voting rights over the distribution of an estate. Bankruptcy courts don’t develop state tort doctrines. They don’t engage in broad discovery designed to reveal accountability and spur policy reform. They rarely utilize juries or hear testimony from tort victims anxious to have their day in court; instead, testimony tends to focus on the debtor’s financial health. 

Yet diverse defendants—many of whom, notably, are not even in financial distress—from Catholic Diocese and Boy Scout abuse cases, to Johnson & Johnson talc, 3M’s earplugs, Revlon hair straighteners, and many more, have now looked to the bankruptcy court to use its inherent authority to invent new forms of procedure to find a path to global peace. Bankruptcy courts are attractive in part because they possess some powers that, ironically, state and Article III federal courts do not—they are the only American courts that can overcome federalism’s jurisdictional boundaries; they are only courts with the power to commandeer both state and federal litigants into a single forum and halt all other civil litigation no matter what court it is in. They also have stretched their own equitable powers to allow innovative corporate maneuvers, as in Purdue, that cabin liability and preclude future litigation even for entities not in financial trouble. But bankruptcy court is not supposed to be a superpower of a court that trumps all others in public litigation; it is instead, an Article I court designed for efficient, private resolution of claims, centered on capturing private value for private actors–not the elaboration and development of law and public norms.

You can read more here if you're interested.

And if you're wanting to catch up on the issues before SCOTUS next week, check out Charlotte Bismuth & Jonathan Lipson's podcast, Bankruptcy for Billionaires, where the three of us talk about MDL, opioids, and bankruptcy.

 

MDLs & Class Actions: A Discussion with Elizabeth Burch & Chris Seeger

For the mass tort and MDL enthusiasts of the world, I hope you'll be able to join me, Chris Seeger, and Judge John Koeltl on Tuesday, October 20, at 2pm EST via zoom for a discussion hosted by NYU's Civil Justice Center.

We'll be talking about MDLs and how to improve them, with topics ranging from so-called claims census, the need for remands, leadership's ethical obligations to nonclient plaintiffs, the role of the MDL judge in non class MDLs (and during settlements), and ways to reinvigorate the jury trial in the midst of the covid19 pandemic.  I'll also be highlighting some of the critiques that I have of the system as well as ways that we might address them.

We plan to take audience questions after each of our topics and I'd love to hear from you.

Registration is free (I think) and has been approved for 2 hours of CLE credits in the areas of professional practice.  

The Short Guide To Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation

Over at our sister blog, Business Law Prof Blog, Professor Ben Edwards has been making his way through my recent book, Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation.  He does an excellent job of both summarizing and commentating on each chapter. So, if you just don't have the time to do a deep dive into a new book right now but want the quick and dirty takeaway alongside thoughtful, insightful commentary, here are the links to his posts so far:

Chapter 1 - Mass Tort Deal Making - on the nuts and bolts of class actions vs. multidistrict proceedings

Chapter 2 - Mass Tort Deals - on whether quid-pro-quo arrangements exist between lead plaintiffs' attorneys & defense lawyers 

Chapter 3 - Mass Tort Deals - on repeat player dynamics in aggregate litigation (leadership appointments, etc.)

Chapter 4 - Mass Tort Deals - on judges coercing facilitating mass tort settlements 

Chapter 5 - Mass Tort Deals - on the likeness between MDL deals and arbitration

Chapter 6, on reform proposals, will be coming next week.

If you're interested in all of the data and documents in the book, they are all available for free online. That site also has some data visuals that aren't in the book, like this one (clicking the image will bring up an interactive version):

 

Five Thoughts on Today's Opioid Hearing on a "Negotiation Class"

Judge Dan Polster entertained a motion to certify a Rule 23(b)(3) negotiation class today in the federal Opiate MDL. Here are a few of my thoughts after listening in.

1. I find myself reluctantly agreeing with the distributor defendants (who objected based on predominance) on the following point: you can’t look to the fact that this might be fair to satisfy predominance under Amchem. This is Richard Nagareda’s point about bootstrapping. And Sonya Winner, who argued on behalf of objecting defendants, raises fair questions about conflicts of interest and notice (e.g., that it may be misleading as to what counties and cities will receive under the allocation formula).

• Judge Polster’s repeated question of what alternative do we have is not an answer to the Amchem question.
• Whether the kind of proposal that Francis McGovern and Bill Rubenstein put forward in their article would improve Rule 23 as a general matter (or a rules amendment) is a separate question. I have qualms about it being implemented on an ad hoc basis in the context of judicial common law, but this is a question that merits more thought.

2. The interplay between the state attorneys general and their local governments is a critical component to all of this. Would local government settlements count as an offset in state AG suits? For an interesting take on this general issue, see Roderick Hills, Jr.’s 1998 article.

3. Judge Polster said that defendants have a “justifiable insistence” on global peace. Why? Is that a fair assumption? When we think we know something, we stop paying attention to it and stop questioning it. But moving from what “is” to what “ought to be” can be a fruitful inquiry. We need an argument as to why and whether global resolution is the correct starting point and for that we need far more evidence.

4. Prediction: Judge Polster will certify the negotiation class, perhaps after tweaking it to help alleviate some of the state AGs concerns. He was its most ardent advocate.

5. If (or when) Judge Polster certifies a negotiation class, he shouldn’t appoint Chris Seeger as co-lead class counsel. One need only follow what is happening now in the NFL Concussion case or read about the Propulsid deal to understand my fears – See Mass Tort Deals Chapters 2 and 5.

• As an aside, Seeger’s review of my book (which incidentally, I didn’t see until going to pull up a link for this post) is hilarious. But hey, thanks for buying it!

Come for the Opioids, Stay for the Civil Procedure

Last week, I sat down with Nicolas Terry, who hosts the podcast, The Week in Health Law. We discussed the role of repeat players in multidistrict litigation leadership (on both sides), the functions and control of MDL judges, the ongoing opioid litigation, and my new book--Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation.

If you like podcasts and civil procedure, it might be just the thing for a morning commute. Just click on the icon below.

If you're interested in the opioid suits and online reading is more your style, then you might prefer the conversation that Jenn Olivia and I had, which is written up on Harvard Law's Bill of Health (click on the icon below).  While you're on the blog, you'll find lots of useful information if you search by category: Opioid Crisis.

Does Multidistrict Litigation Deny Plaintiffs Due Process?

As part of Law 360's focus on access to justice, I published this perspectives piece on MDL: Does Multidistrict Litigation Deny Plaintiffs Due Process?  It's freely accessible through the link without requiring any log-in information. 

I thought it might be of interest to readers of our blog because of its topic and its focus on the Opiate proceeding before Judge Polster.

Sarah Swan on Preempting Plaintiff Cities

Professor Sarah L. Swan (Florida State Law) has posted to SSRN her manuscript, Preempting Plaintiff Cities, Fordham Urb. L. J. (forthcoming).  Here is the abstract:

Within the city-state relationship, states hold an enormous amount of power. Recently, states have been using that power to pass extremely aggressive preemption laws that prohibit cities’ regulatory efforts on many fronts. These new preemption laws most commonly occur in the context of red states limiting the regulatory scope of blue cities, inflaming those already tense city-state relationships and cutting into what many view as the appropriate scope of local autonomy.

But despite this intense clash in the regulatory sphere, when we move away from the world of city regulation and toward the world of city litigation, things look surprisingly different. Although cities have been bringing forward hundreds of quite controversial claims against corporate wrongdoers for harms ranging from the subprime mortgage crisis to the opioid epidemic, such plaintiff city litigation has provoked relatively little state hostility. States have not ratcheted up their response to this exercise of city power in at all the same way as they have for regulation. Rather, states have shown a remarkably limited appetite for preempting plaintiff city litigation.

What accounts for these differing responses? Three main factors are likely in play. First, while regulatory preemption is largely the result of intense political polarization, states have historically viewed litigation against corporate wrongdoers in less partisan terms. Both blue and red states have themselves engaged in this type of litigation, and there is thus an institutional tradition of flexibility in this context. Second, and relatedly, the issues at the heart of plaintiff city litigation are often not as politically divisive as those at the heart of the preempted regulations. Harms like lead paint poisoning and the opioid epidemic have attracted widespread condemnation, while many of the regulation preemption subjects remain hotly contested. Finally, unlike regulation, litigation is not an obvious instrument of governance. It has unpredictable outcomes, it is not an exclusively governmental power, and it relies on existing law.

Since plaintiff city litigation operates mostly outside of state crosshairs, it can provide a space for cities looking to pursue progressive goals. Plaintiff city litigation may not achieve the same immediate governance goals as regulation, but it does have significant political benefits for cities and their residents. Thus, even in an era of rampant regulatory preemption and deep political animosity between cities and states, plaintiff city litigation presents a viable parallel track for cities to continue their pursuit of urban social justice. Although such litigation does not directly address the contentious issues forming the basis of regulatory battles, it does offer a means of protecting vulnerable communities and advancing goals of democratic equality in other ways.

Are you a plaintiff involved in a women's health mass tort? Or do you know people who are?

Today's post is really a plea for help with a new project that I've just started.  I've created a new survey that allows plaintiffs to tell me about their interaction with the court system and their attorneys.

I’m hoping to hear directly from plaintiffs who are involved in women’s health mass torts like pelvic mesh, breast implants, NuvaRing, Mirena, and Yasmin/Yaz. 

If you're a plaintiff involved in one of those cases, please consider taking this short survey.  It will ask you questions about whether you had opportunities to tell your side of the story and present evidence, how you felt your lawyer handled your case, how you felt about the process and your outcome, and whether you used third-party funding.

If you're a lawyer or reporter, I'd love your help publicizing the project. Participants' answers will be kept completely confidential, and I am not asking for details that would be covered by a confidentiality provision in a settlement.  

I am not affiliated with the courts or with the lawyers on either side in any way and I do not have any clients of my own.  I don’t consult for any of the lawyers in these cases, and all of my funding comes from the University of Georgia—not from a private company or interest.  In other words, I have no financial ties that affect the way I conduct my research.

Here's more information about me and the research I am doing: https://www.elizabethchambleeburch.com/womens-mdls

If you have questions, please feel free to contact me--if confidentiality is important, please use [email protected] rather than my University of Georgia email.  

Fourth Annual Civil Procedure Workshop - Call for Papers

The Fourth Annual Civil Procedure Workshop will be held on November 9-10, 2018 at Stanford Law School.  Here's the blurb from its tireless organizers:

We are excited to announce the fourth annual Civil Procedure Workshop, to be held Stanford Law School in Palo Alto, California on November 9-10, 2018.

The CPW gives both emerging and established civil procedure scholars an opportunity to gather with colleagues and present their work to an expert audience. Scholars will present their papers in small panel sessions. A senior scholar will moderate each panel and lead the commentary. In addition to paper presentations, we intend to engage members of the judiciary and federal civil rulemaking bodies in discussions about current developments in procedure. Our ongoing goal is for the CPW to strengthen the study of procedure as an academic discipline, and to deepen ties among the academy, rulemakers, and the judiciary.

Confirmed participants for 2018 include the Hon. Diane Wood, Janet Alexander, Elizabeth Burch, Margaret Lemos, David Engstrom, Myriam Gilles, and Deborah Hensler. We welcome all civil procedure scholars to attend. Those wishing to present a paper for discussion should submit a two-page abstract by March 23, 2018.

While we welcome papers from both emerging and senior scholars, preference may be given to those who have been teaching for less than ten years. We will select papers to be presented by May 4, 2018. Please send all submissions or related questions to Norman Spaulding.

The CPW will provide meals for registrants. Participants must cover travel and lodging costs. We will provide information about reasonably priced hotels as the date approaches. Feel free to contact us with questions.

Norman Spaulding (Stanford), [email protected]

Dave Marcus (Arizona), [email protected]

Liz Porter (UW), [email protected]

Brooke Coleman (Seattle U), [email protected]

Fifty Years of Class Actions - A Global Perspective

Theoretical Inquiries in Law has just published a symposium volume on FiftyYears of Class Actions - A Global Perspective. 

It's chock full of interesting ideas and features a keynote from Professor Arthur Miller (NYU).  Here's the table of contents (if the PDF links below don't work, the full volume is available at the link above):

Introduction	PDF
Yael Braudo, TIL Editorial Board

Keynote Address - The American Class Action: From Birth to Maturity	PDF
Arthur R. Miller

Publicly Funded Objectors	PDF
Elizabeth Chamblee Burch

Tiered Certification	PDF
Shay Lavie

Can and Should the New Third-Party Litigation Financing Come to Class Actions?	PDF
Brian T. Fitzpatrick

The Global Class Action and Its Alternatives	PDF
Zachary D. Clopton

Class Actions in the United States and Israel: A Comparative Approach	PDF
Alon Klement, Robert Klonoff

Regulation Through Litigation — Collective Redress in Need of a New Balance Between Individual Rights and Regulatory Objectives in Europe	PDF
Brigitte Haar

Towards Collaborative Governance of European Remedial and Procedural Law?	PDF
Fabrizio Cafaggi

Class Action Value	PDF
Catherine Piché

When Pragmatism Leads to Unintended Consequences: A Critique of Australia’s Unique Closed Class Regime	PDF
Vicki Waye, Vince Morabito

Rethinking the Relationship Between Public Regulation and Private Litigation: Evidence from Securities Class Action in China	PDF
Robin Hui Huang

The Regime Politics Origins of Class Action Regulation	PDF
Agustín Barroilhet

What duties do lead counsel owe plaintiffs in multidistrict litigation?

There is a persistent question in multidistrict proceedings: what duties do lead lawyers owe to individual plaintiffs who have no direct attorney-client relationship with them?

That's the question at the heart of a recent opinion by Judge David Herndon in the Yazmin/Yaz litigation, although the opinion itself is about whether remand to state court is appropriate. (Spoiler: Judge Herndon thinks it's isn't.)

After the negotiating parties in the underlying MDL reached a global settlement for the ATE (arterial thromboembolism) cases, Judge Herndon issued a series of orders designed to usher plaintiffs into the deal.  One of those was a Lone Pine order that required every non settling plaintiff to produce fact sheets, over three years worth of pharmacy and medical records, and a case-specific expert on general and specific causation--all within three months.  Those who didn't comply faced dismissal.

As you might guess, the plaintiffs currently suing missed that deadline and their various attorneys failed to respond to Bayer's motion to dismiss.  As such, with new counsel, they are now suing lead counsel (Micheal S. Burg, Roger Denton, Michael A. London, and Mark R. Niemeyer) for legal malpractice under Illinois common law.

What question lies at the heart of the case?  You guessed it: what duties do lead lawyers owe to non-client plaintiffs in a multidistrict proceeding?

Returning for a moment to the question of federal jurisdiction, given the way that the complaint is framed, jurisdiction appears to lie under CAFA, 28 USC 1332(d)(2) (it's pled on behalf of a class).  But the parties take different routes.  Disgruntled plaintiffs argue that it's a mass action that contains fewer than 100 people (despite it being pled as a class action), and defendants argue that it presents federal question jurisdiction under 1331.  Relying on Grable and Gunn, the court agrees.

I confess, I'm not yet convinced that these state-law malpractice claims implicate a federal issue under Grable.

Either way, as Judge Herndon (and lead lawyers) framed it, even if the dissatisfied plaintiffs sued individually, federal question jurisdiction would lie over their claims, thereby allowing defendants to remove and send it to Judge Herndon. Judge Herndon, you may recall, presided over the original claims and appointed the leaders in the first place.

There hasn't been a ton written on the fiduciary question, but Professor Charlie Silver's work comes readily to mind.  In his article, The Responsibilities of Lead Lawyers and Judges in Multidistrict Litigation, he writes:

Given that both lawyers who represent individual claimants and lawyers who handle class actions are fiduciaries, it would be surprising to discover that lead lawyers in MDLs were not. . . . Given the dearth of authority directly on point, judges may take guidance from other bodies of law.  If they do, they will quickly conclude that lead attorneys are fiduciaries.  Mass tort lawyers are fiduciaries, and so are lawyers who represent plaintiff classes.  These examples are the most analogous to lead counsel. 

My own view is similar.  Without imposing fiduciary duties on lead lawyers, all sorts of mischief could result.  Of course, whether lead lawyers in Yasmin/Yaz breached those duties in a way that amounts to malpractice is a separate question.  But, given the lengths they've taken to have the malpractice claims heard before Judge Herndon, leaders clearly think they have a much better chance there than in IL state court.

Casey et. al. v. Roger Denton, et. al. is worth following.  Here are a few of the relevant documents:

Download Casey v. Denton - 53 - 08.11.17 - Order on Motion to Remand

Download Casey v. Denton - 1 - 05.16.17 - Ex. 2 Casey Complaint

Download Casey v. Denton - 1 - 05.16.17 - Notice of Removal

Legislative Update on HR 985, 725, and 720

Bruce Kaufman, at Bloomberg BNA, has posted an update on class action and MDL legislation pending in the Senate.  The bottom line is that these reforms seem to have stalled (and rightly so, I might add).

As Kaufman writes:

The bills, two of which still lack Senate sponsors, are:

•  The Fairness in Class Action Litigation Act and Furthering Asbestos Claims Transparency Act ( H.R. 985) affects nearly all facets of class action practice, and mandates increased reporting of payments to plaintiffs by trusts that pay out asbestos exposure claims against bankrupt companies. It passed the House March 9 by a 220-201 vote.

•  The Innocent Party Protection Act ( H.R. 725) targets what is known as fraudulent joinder—the improper addition of local defendants to suits in a bid to keep cases in more plaintiff-friendly state courts. It passed the House March 9 by a 224-194 margin.

•  The Lawsuit Abuse Reduction Act ( H.R. 720; S. 237) requires judges to impose mandatory sanctions on attorneys who file “meritless” civil cases in federal courts. It passed the House March 10 by a 230-188 margin.

Kaufman's full article is available here: https://www.bna.com/businessfriendly-litigation-overhaul-n73014462386/ 

A Note to Mass Tort Plaintiffs on HR 985

HR 985, the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017, has now passed the House and is pending in the Senate's Committee on the Judiciary.  How might that bill affect plaintiffs involved in mass torts like mesh, Essure, Yaz, Mirena, NuvaRing, Ortho Evra, Power Morcellator, or the many hip implant suits?

Simply reading the bill, I'm afraid, won't help too much.  It's shrouded in legalese.  As such, I've marked up the bill to explain in non-legalese which provisions help and hurt mass-tort victims and consumers.

Many of the class action provisions in HR 985 don't affect mass-tort plaintiffs at all since those lawsuits rarely proceed as class actions (albeit, there are some notable exceptions, like the NFL concussion cases and the injuries incurred during the clean-up of the BP oil spill; both litigations were certified as settlement class actions).  

There is, however, a possibility for judges to use class actions as a means to step in and ensure that plaintiffs are being adequately represented (and that resulting settlements are fair, reasonable, and adequate).  How?  Through the issue class action.  Unfortunately, as HR 985 is currently written, it would completely eliminate that possibility.  

I've studied MDLs for many years now and have written articles that are critical of both repeat player plaintiffs' attorneys and the manner in which judges sometimes handle these cases. Over the past four years, I've collected data on and analyzed 73 multidistrict proceedings.  Although I'm still in the process of writing a book about my findings, one thing has become glaringly clear to me: the systematic lack of checks and balances in our courts seem to profit everyone but the plaintiffs.

Analyzing the deals repeat players make, the “common-benefit” attorneys’ fees that the lead plaintiffs’ attorneys receive to run the proceedings, and the judicial rulings in mass-tort cases consolidated over 22 years and settled over 12 years reveals a disturbing pattern: repeat plaintiff and defense attorneys persistently profit from the current system.

Corporate defendants end sprawling lawsuits and lead plaintiffs’ lawyers broker deals that reward them handsomely and sometimes pay litigants very little. For example, in litigation over the acid-reflux medicine, Propulsid, only 37 of 6,012 plaintiffs (0.6 percent) recovered anything through the strict settlement program. Their collective recoveries totaled no more than $6.5 million. Yet, the lead plaintiffs’ attorneys received over $27 million in common-benefit attorneys’ fees, vividly illustrating the worry that a corporate defendant might trade higher fees for less relief to plaintiffs.

So, is reform needed?  Absolutely.  Is HR 985 the right ticket?  No, not as it's currently written.

As such, I've marked up the bill in a way that begins to instill the necessary reforms and eliminates (or changes) provisions that set up further (and unnecessary) roadblocks for plaintiffs.  It also explains what the proposed provisions do in plain English:  Download HR985 Burch Mark-up

If you want some version of HR 985 to pass, please consider forwarding this revised version to your Senator and do not support the bill as it reads now.

For those who care more about the legalese, I was contacted by a House subcommittee to provide nonpartisan, academic commentary on the bill, which I did.  That write up is included here (note, however, that this is a commentary on the original House bill and some changes have been made to the current bill that address a few of the concerns I raised):  Download Burch Final Comments on Fairness in Class Action Litigation Act

There's no need to take just my word for it, though.  Every other academic that I know of opposes this bill, as has the Federal Rules Committee.  This committee, formally known as the Committee on Rules of Practice and Procedure, just happens to include Neil Gorsuch, now Justice Gorsuch (of the U.S. Supreme Court), whose views are reflected in the letter below as well.

Here's a link to that letter:  Download Federal Rules Committee Letter
As well as to the American Bar Association's letter opposing HR 985:  Download ABA's Letter on HR 985

And here are links to other academic commentary - 

Professor John C. Coffee, Jr. (Columbia Law School):  Download Coffee - How Not to Write a Class Action “Reform” Bill _ CLS Blue Sky Blog
Professor Howard Erichson (Fordham Law School):  Download Erichson-hr985-letter
Professor Myriam Gilles (Cardozo Law School):  Download Gilles Letter to James Park on HR 985

HR 985 and Congress's Judicial Mistrust

With everything else that's dominated the news, it's easy to place the "Fairness in Class Action Litigation Act" on the back  burner. But to forget that it's still an active bill (having now passed the House and pending before the Senate) would be a mistake.

Professor Myriam Gilles (Cardozo) and I recently published an op-ed with Bloomberg Law, which appeared in yesterday's Product Safety & Liability Reporter and will be in next week's Class Action Litigation Report titled Congress's Judicial Mistrust.  You can read it here:  Download Bloomberg Law - Congress's Judicial Mistrust.

We explained our legal positions more fully in our respective letters to the House Judiciary's subcommittee.  Download Burch Final Comments on Fairness in Class Action Litigation Act,  Download Gilles Letter to James Park on HR 985.

 

Litigation Reform's Legislative Prospects

Bruce Kaufman, the senior legal editor at Bloomberg BNA, has written a very informative series of articles examining the prospects that the House, Senate, and President will enact wide-ranging tort and civil justice "reform" legislation.  This legislation includes:

• HR 985, the "Fairness in Class Action Litigation Act"
• HR 725, the "Innocent Party Protection Act"
• HR 469, the "Sunshine for Regulatory Decrees and Settlements Act"
• HR 720, the "Stop Settlement Slush Funds Act" or "Lawsuit Abuse Reduction Act"
• and HR 906, the "Furthering Asbestos Claims Transparency Act"

All three articles are worth a careful read.  Links and downloads included below, courtesy of Bruce and Bloomberg BNA.

• Part 1: Trump to Weigh Litigation Changes,  Download BNA - Trump to Weigh Litigation Changes Long Coveted by Business
• Part 2: Push to Enact Civil Justice Bills Follows Industry Playbook,  Download BNA - Push to Enact Civil Justice Bills Follows Industry Playbook
• Part 3: Trump Seen as Supportive of Business-Backed Litigation Bills,  Download BNA - Trump Seen as Supportive of Business-Backed Litigation Bills

For those of you who missed the academic roundup on HR 985, you can find it here.

Floor debate on at least four of the bills (including the now merged HR 985 and HR 906, class actions and asbestos) is scheduled to begin as soon as the week of March 6.  A seventh bill on medical malpractice reform, HR 1215, may be voted on the week after March 6.

Publicly Funded Objectors

With House Bill 985 (the "Fairness" in Class Action Litigation Act of 2017), the controversy over current class action practice has escalated.  I've been an outspoken critic of the cozy relationships that plaintiffs' lawyers and defense lawyers have developed not only in class actions, but in multidistrict litigation, too.  Yet, as I (along with a number of other academics) have discussed, HR 985 doesn't fix what's ailing the system.  Instead, it seeks to eliminate most class actions, tramples bipartisan consensus in the appellate courts and federal rules committee, and ineptly tells judges how to do their jobs.

This past January, I attended a conference at Tel Aviv University called Fifty Years of Class Actions--A Global Perspective.  As part of that conference, I wrote a paper titled Publicly Funded Objectors, which calls for data collection and suggests that if the U.S. is truly serious about fixing what ails class actions, then it needs to publicly fund those who police them best--nonprofit organizations.  I posted the paper on SSRN today. 

Now that we have 50 years of class action practice under our belt, we know that practice suggests the need for tune-ups: sometimes judges still approve settlements rife with red flags, and professional objectors may be more concerned with shaking down class counsel than with improving class members’ outcomes.  The lack of data on the number of opt-outs, objectors, and claims rates fuels debates on both sides, for little is known about how well or poorly class members actually fare. This reveals a ubiquitous problem—information barriers confront judges, objectors, and even reformers.

Rule 23’s answer is to empower objectors.  At best, objectors are a partial fix.  They step in as the adversarial process breaks down in an attempt to resurrect the information-generating function that culture creates.  And, as the proposed changes to Rule 23’s handling of objectors reflect, turmoil exists over how to encourage noble objectors that benefit class members while staving off those that namely seek rents from class counsel. 

Our class-action scheme is not the only one that relies on private actors to perform public functions: citizens privately fund political campaigns, and private lobbyists provide research and information to lawmakers about public bills and policies.  Across disciplines, the best responses to those challenges have often been to level up, not down.  As such, this Essay proposes a leveling up approach to address judges’ information deficit such that they can better perform their monitoring role.  By relying on public funds to subsidize data collection efforts and nonprofit objectors’ information-gathering function, we can disrupt private class counsel’s disproportionate influence.  

Put simply, we keep the baby and just throw out the bathwater.

Academic Roundup on HR 985

Academics have been busy this week providing commentary on HR 985, the "Fairness in Class Action Litigation Act of 2017."  Here's a round-up of the commentary thus far (and please do let me know if I've missed someone).

John Coffee (Columbia):   Download Coffee - How Not to Write a Class Action “Reform” Bill _ CLS Blue Sky Blog

Howard Erichson (Fordham): Download Erichson-hr985-letter

Myriam Gilles (Cardozo):  Download Gilles Letter to James Park on HR 985

And mine, Elizabeth Chamblee Burch (Georgia):  Download Burch Final Comments on Fairness in Class Action Litigation Act

For those of you who like up to the minute commentary, several academics and reporters keep very active twitter accounts that track the bill: @adam_zimmerman, @elizabethcburch, @HowardErichson, @PerryECooper

 

"Fairness" in Class Action Litigation Act

The U.S. House of Representatives is considering a bill that would substantially curtail the usefulness of class actions and multidistrict litigation, but would not make things "fairer" for class members.  

Alison Frankel has a great write-up on the proposal that includes my preliminary comments along with Professor Myriam Gilles's comments.  I'm heartened that representatives are reaching out to academics, because I have a number of concerns with the bill's proposals.  If you are likewise concerned, then you should weigh-in, too.  The House is marking up the bill on Wednesday.

My comments are available here: Download Final Comments on Fairness in Class Action Litigation Act

Repeat Players in Multidistrict Litigation

As our readers surely know, despite its bulky name, multidistrict litigation (“MDL”) is in the news constantly: litigation over Volkswagen's defeat device, GM’s ignition defect, Toyota’s sudden acceleration, asbestos, and medical drugs and devices (pelvic mesh, Yasmin/Yaz, NuvaRing, Vioxx) are just a few of the higher profile MDLs.

MDL now comprises over 36% of the entire federal civil caseload (that number leaps to 45.6% if you exclude social security and prisoner cases), yet courts and Congress have made it more difficult for these cases to proceed as certified class actions. This litigation doesn’t go away without class certification as many tort reformers believe, it simply persists with far less judicial oversight.

Few rules and little appellate oversight on the one hand, plus multi-million dollar “common-benefit fees” for the lead lawyers who shepherd these cases toward settlement on the other may tempt a cadre of repeat attorneys to fill in the gaps in ways that further their own self interest. (Because there are so many cases involved, judges appoint "lead lawyers" to litigate and negotiate on behalf of the entire group of plaintiffs; if their individual attorney isn’t a lead lawyer, then that attorney has little say in how the litigation is conducted.)

To shed light on some of these issues, my co-author, Margaret Williams, and I have posted a revised version of our paper, Repeat Players in Multidistrict Litigation: The Social Network (forthcoming, Cornell Law Review) on SSRN.  

We collected data on who the lead attorneys are (plaintiff and defense side) in all product-liability and sales practice cases that were pending on the MDL docket as of May 2013 (those cases covered a 22-year span), built an adjacency matrix, and employed a two-mode (actors and events) projection of a bipartite network (also known as an affiliation network) to graph the ties between lawyers judicially appointed to leadership positions (the actors) in multidistrict proceedings (the events).  (For the non-statistically inclined, this social network analysis is somewhat akin to the kind that Facebook has popularized.)

The point was to reveal what the naked eye cannot see: how those attorneys and MDLs connect to one another. (Detailed, searchable PDFs of the social network with the players and litigations are available here). We also collected data on the publicly available nonclass settlements that repeat players brokered, reviewed news and media accounts of those litigations, and analyzed the common-benefit fees awarded to the lead plaintiffs' lawyers.

Here’s a summary of our key findings:

• Repeat players are prevalent on both the plaintiff and the defense side.

• No matter what measure of centrality we used, a key group of 5 attorneys maintained their elite position within the network.These 5 attorneys may act as gatekeepers or toll takers, for example. This matters considerably, for lead lawyers control the proceeding and negotiate settlements. They can bargain for what may matter to them most: defendants want to end lawsuits, and plaintiffs’ lawyers want to recover for their clients and receive high fee awards along the way.  

• By identifying settlement provisions that one might argue principally benefit the repeat players, we examined the publicly available nonclass settlements these elite lawyers designed. Over a 22-year span, we were unable to find any deal that didn’t feature at least one closure provision for defendants, and likewise found that nearly all settlements contained some provision that increased lead plaintiffs’ lawyers’ common-benefit fees. Bargaining for attorneys’ fees with one’s opponent is a stark departure from traditional contingent-fee principles, which are designed to tie lawyers’ fees to their clients’ outcome.

• Based on the evidence available to us, we found reason to be concerned that when repeat players influence the practices and norms that govern multidistrict proceedings—when they “play for rules,” so to speak—the rules they develop may principally benefit them at the plaintiffs’ expense.

A highly concentrated plaintiff and defense bar is nothing new, nor is the disquiet about where that concentration may lead. As scholars have long recognized, repeat play tends to regress our adversarial system from its confrontational roots toward a state of cooperation.

In the criminal context, prosecutors and public defenders routinely work together through plea bargaining, leading them toward mutual accommodation; incumbents form a primary community of interest, whereas clients present secondary challenges and contingencies. As such, adversary features are often overshadowed by regulars’ quid pro quo needs. As Professor Jerome Skolnick has explained, those working group relationships become a social control problem only once they reach a “tipping point where cooperation may shade off into collusion, thereby subverting the ethical basis of the system.” (Social Control in the Adversary System, 11 J. Conflict Resol. 52, 53 (1969)).

As I’ve argued in a separate article, Monopolies in Multidistrict Litigation, we've reached that tipping point in MDL, and these circumstances warrant regulation. Even though MDL judges are the ones who entrench and enable repeat players, they also are integral to the solution.

By tinkering with lead-lawyer selection and compensation methods and instilling automatic remands to a plaintiff’s original court after leaders negotiate master settlements, judges can capitalize on competitive forces already in play. Put simply, the antidote is to reinvigorate competition among plaintiffs’ attorneys and I’ve set forth several specific proposals for doing so in Part III of Monopolies in Multidistrict Litigation.  

For interested judges, that article's appendix also contains a Pocket Guide for Leadership Appointment and Compensation, a Sample Leadership Application form, and sample orders for suggesting remand and replacing leaders who ignore adequate representation concerns.

Volkswagen Proposed Class Settlement for $14.7 Billion

The parties litigating over Volkswagen's emissions defeat device have submitted a proposed class action settlement to Judge Breyer for his approval.  After the parties confer with him on June 30, he'll hear arguments over whether to approve that settlement on July 26.

The proposed settlement is available here: Download 1. The settlement money available to class members is a fund of $10,033,000,000, which is based on an assumed 100% buyback of all eligible vehicles and leased eligible vehicles.

If approved, parties who wish to object or opt out must do so before September 16, 2016 (p. 27 describes the opt-out process, which will have to be approved in conjunction with the notice to class members, and p. 28 describes the objection process).  Class members must likewise complete and submit a valid claim form before September 1, 2018, and decide on their chosen remedy by December 30, 2018. Put differently, class members will need to take affirmative action to receive relief.  Failing to submit a claim or to opt out means that their claims will be extinguished under the settlement (and through general res judicata principles). 

The proposal provides VW owners with several options.  They can:

• sell their car back to VW for the "vehicle value" (a term of art defined in the settlement on p. 16);
• receive restitution payments calculated based on a percentage of the vehicle value (some owners are eligible for loan forgiveness up to 30% of the vehicle value and owner restitution payment) - an estimate of those settlement payments is available here -  Download 7
• terminate their car leases with no early termination penalty;
• modify their vehicle, which should help fix the emissions problems based on the different vehicles; 
• or may receive both a restitution payment and a vehicle modification.

An overview of the options available to class members and proposed allocation plan is available here:  Download 2

And the proposed short form notice, which is refreshingly straightforward is available for download here:  Download 3.  The longer notice is here:  Download 4. And detailed information on the proposed 5-step claims program and administration is available here:  Download 5.