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.

 

MDL Data, Free & Searchable MDL Docs, MDL Rules, and a New Book on Mass Torts

For judges, lawyers, and even academics toiling away in the world of mass torts, getting a handle on the big picture can be tough.  I've seen many empirical claims made when it comes to the push for or against creating federal rules specific to mega-MDLs, all of which are mass torts.  Yet, most lack real, empirical data.

For the past six years, I've been collecting data on all of the products-liability proceedings that were pending on the MDL docket as of May 2013. (Yes, yes, I live a thrilling life.) Like a hoarder, I've squirreled away data on Lone Pine orders, Daubert motions, class-certification motions, plaintiff fact sheets, summary judgment motions, census orders, class action settlements, private aggregate settlements, and on and on and on. Those data-collection efforts have culminated in a book that is out today, Mass Tort Deals.  There is ton of information in the book's appendix on all of the information I just mentioned.  Here's a way to Download Index to Data.

One thing I noticed along the way was that neither Pacer nor Bloomberg Law allow you to search inside the text of MDL dockets, which can be long and unwieldy in and of themselves, as many of you know.  So, with the help of the wonderful UGA Law School IT department, I've created a free website that allows you to search the text of the thousands of MDL documents that I've been stockpiling for the past six years.  It includes all of the documents that I relied on for the book and I will continue to update it periodically.

The Book, Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation:

As for the book, Mass Tort Deals marshals this wide array of empirical data to suggest that the systematic lack of checks and balances in our courts may benefit everyone but the plaintiffs. Multidistrict proceedings, which place a single judge in charge of similar lawsuits filed across the country, consume a substantial portion of the federal courts’ civil caseload.  As the figure below shows, many MDLs are product liability proceedings (for an interactive version, click here):

And if you consider not just the number of proceedings, but the number of actions pending in those proceedings, products-liability suits dominate (for an interactive version, click here): 

Of course, most of these product-liability proceedings are not run-of-the-mill disputes. Litigation over products like pelvic and hernia mesh, opioids, Johnson & Johnson’s baby powder, Roundup, and hip implants are headline-grabbing media magnets.

Federal judges certify a small handful of these proceedings (principally those without personal injuries)  as class actions, which affords them judicial safeguards. But as tort reform has made its way into civil procedure, it has effectively clamped down on class actions.  As you can see from the graphic below, most product-liability proceedings within my dataset ended in private, aggregate settlement (click here for an interactive version):

As readers of my work know, I've voiced some concerns with adequate representation and repeat players in MDLs. Judges and academics have long raised questions about arms-length bargaining and adequate representation in the class-action context, even though Rule 23 builds in some safeguards. In class actions, for example, judges have the authority to appoint class counsel; consider whether counsel adequately represents class members; ensure that any class settlement is fair, reasonable, and adequate; and award class counsel’s attorney’s fee.

But worries about collusion, self-interest, and overreaching don’t disappear just because mass litigation can’t be certified as a class action. Instead, we might worry more because the judge lacks any clear-cut authority to police the proceedings in the same way.

 

Those concerns can be exacerbated if repeat players exist leadership positions, which they do. The graph below shows who those players are and you can click here for an interactive version:

 

Some judges appoint more lead lawyers than others, as the graphic below illustrates (click here for an interactive version):

 

 

That repeat players exist isn’t surprising in and of itself. Attorneys specialize all the time. It might be that they use their expertise to generate better outcomes for their clients. But playing the long game may also mean that repeat players develop working relationships with their opponents such that each side can use private settlement to bargain for what matters to them most from a self-interested standpoint.

 

For corporate defendants and their lawyers, this means ending the litigation with the least cost. For lead plaintiffs’ lawyers, this typically means attorneys’ fees—specifically common-benefit fees (the fees they receive for the work they do on behalf of the group as a whole).  As Chapter 3 of Mass Tort Deals details, repeat-player attorneys are prevalent in leadership positions on both the plaintiff and defense side in products-liability multidistrict proceedings.  Here's a look at the major law firms involved in these proceedings on both sides (interactive version):

 

To the extent possible given that most of the mass-tort settlements were private, Chapter 2 examines the deals that these repeat players negotiated with one another. After confirming that one of the top five most connected repeat players participated directly in each settled proceeding’s leadership, I identify the provisions within those settlements that are arguably more beneficial to plaintiffs’ lead lawyers or to the defendants than to the actual plaintiffs.

 

How do these provisions work? To stymie the lawsuits against them, for example, defense corporations include settlement provisions designed to push as many plaintiffs as possible into the settlement program. These "closure" clauses might require plaintiffs’ lawyers to recommend that all their clients accept the settlement offer and, if the client refuses, take steps to withdraw from representing that client.

 

To enter a settlement program, plaintiffs must typically dismiss their lawsuit. But, as I explain in Chapter 5, those plaintiffs often don’t know what, if anything, they will receive under that program. So, plaintiffs may be giving up their lawsuit in exchange for no compensation whatsoever.

 

For example, in litigation over the acid-reflux medicine Propulsid, out of the 6,012 claimants who entered into the settlement program, only 37 received any money. The rest received nothing, but had already dismissed their lawsuit as a condition of entering into the program. Those 37 plaintiffs collectively received little more than $6.5 million.

 

The lead plaintiffs’ lawyers in Propulsid, however, negotiated their common-benefit fees directly with the defendant, Johnson & Johnson, and received $27 million. Much of the remaining funds then reverted back to Johnson & Johnson.

 

Lead plaintiffs’ lawyers in Propulsid announced that they were creating a template for all future deals. Chapter 2 of Mass Tort Deals shows that they did exactly that.

 

Considering settlements that occurred over a 14-year span, Chapter 2 shows that every deal contained at least one closure provision for defendants. Nearly all settlements also contained some provision that increased lead plaintiffs’ lawyers common-benefit fees. Bargaining for attorneys’ fees with one’s opponent is a troubling departure from traditional contingent-fee principles, which are designed to tie lawyers’ fees to their clients’ outcomes.

 

In short, Mass Tort Deals raises the concern that as repeat players influence practices and norms in mass torts, they may undermine plaintiffs’ ability to freely consent to the settlement. That may or may not affect the substantive outcome. Unfortunately, most of the data on how plaintiffs fared under settlement programs was not publicly available.

 

Rules for MDLs?

Given my qualms about what lawyers are doing (Chapter 2 and 3) and what judges are doing (Chapter 4), should we implement rules for MDL proceedings? Not necessarily. Our system needs a makeover, yes.  But Chapter 6 uses basic economic and social principles as the bedrock of reform.

I suggest ways in which we can build opportunities for dissent and competition into the fabric of multidistrict proceedings and incentivize lawyers to use them.

But doing so relies on judges. Educating judges and encouraging them to select leaders via a competitive process, tie leaders’ fees to the benefits they confer on plaintiffs, open the courthouse doors to hear about those benefits (or not) directly from the plaintiffs, and remand those litigants who don’t want to settle can allow the vibrant rivalries within the plaintiffs’ bar to see to it that dissent and competition flourish.

As attorneys object and compete, they are likely to divulge new information, thereby equipping judges with pieces of the puzzle that they currently lack. In short, Chapter 6 explains how arming judges with procedures that better align plaintiffs’ attorneys’ self-interest with their clients’ best interest equips courts to hold parties accountable even without legislation or rulemaking.

From diagnosis to reforms, my goal in Mass Tort Deals isn’t to eliminate these lawsuits; it’s to save them.

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.

MDL Leadership

On Bloomberg BNA Perry Cooper has an important article on MDL leadership fights entitled "MDLs Led By the Usual Suspects, and Not Everyone is Happy."

Our own Prof. Burch's work is featured.  Cooper writes "Burch, a professor at the University of Georgia Law School in Athens, Ga., who specializes in complex litigation, said she's troubled by the number of “repeat players” she sees among attorneys that represent both plaintiffs and defendants in MDLs."  

Elizabeth Cabraser, a frequent leader in MDLs, explains: "The problem for getting new players into the leadership is that there are economic barriers to entry,” she said. “To be part of the leadership you have to write a check. You have to put up the money and spend the time.”  Cabraser also links the developments in MDLs to changes in the legal culture.  As Cooper quotes her: “We all became plaintiffs’ attorneys because we didn't want to work for big firms—we wanted to do our own thing,” she said. “But in an MDL everything is by committee.”  

The article also has some good tidbits on Bellwether trials.  One plaintiffs lawyer explains: "Large verdicts in bellwether trials can be great from a plaintiff's perspective, Berezofsky said, but they can give clients an expectation that the resolution of their case will be in keeping with the verdict."  This lawyer says that for claimants in the middle of the bell curve, an MDL saves money and time, but not for claimants who have more severe injuries because "global settlements generally don't take into account their individual, specialized injuries."

You can find the paper detailing Burch's findings, Monopolies in MDL Litigation, on SSRN. 

 

 

 

Remanding Multidistrict Litigation

I've been a bit slow in posting this, but Louisiana Law Review hosted an excellent symposium last spring titled The Rest of the Story: Resolving the Cases Remanded by the MDL.  As part of that symposium, I wrote a piece titled Remanding Multidistrict Litigation.  Remands are something that have received scant attention in the scholarly literature, but are a constant hope for many plaintiffs' lawyers involved in multidistrict litigation (well, at least those who aren't on the steering committees). 

I just got around to posting the piece on SSRN today.  Here's the abstract:

Multidistrict litigation has frequently been described as a “black hole” because transfer is typically a one-way ticket. The numbers lend truth to this proposition. As of 2010, the Judicial Panel on Multidistrict Litigation remanded only 3.425% of cases to their original districts. That number dwindled to 3.1% in 2012, and to a scant 2.9% in 2013. Retaining cases in hopes of forcing a global settlement can cause a constellation of complications. These concerns range from procedural justice issues over selecting a forum and correcting error, to substantive concerns about fidelity to state laws, to undermining democratic participation ideals fulfilled through jury trials in affected communities. Yet, if transferee judges remanded cases after overseeing discovery into common issues, they could alleviate those concerns while avoiding inconsistent rulings on common questions and streamlining discovery.

Despite the potential upside, remand rarely occurs because it disfavors those with litigation control—transferee judges, lead plaintiffs’ attorneys, and defendants. Transferee judges deem settlement a hallmark of their success. Lead plaintiffs’ lawyers try to increase their fees by inserting fee provisions into settlements. Likewise, plaintiffs’ attorneys can bypass doctrinal uncertainties over weak claims by packaging plaintiffs together in a global settlement. And aggregate settlements allow defendants to resolve as many claims as possible in one stroke, take their hit, and return to business, which their shareholders view as a net positive.  The remand process itself defers to these vested interests. Although the Panel could remand cases at a party’s request, in practice it appears never to have done so. Rather, it waits for the transferee judge to admit defeat and suggest remand—thereby conceding failure.

For transferee judges to begin remanding cases, the “pro-settlement” norm and “remand-as-a-failure” stigma must change.  Accordingly, transferee judges should routinely entertain a suggestion for remand by a party or initiate them sua sponte as soon as discovery on common issues concludes and only case-specific issues remain.  Likewise, the Panel should seriously consider parties’ remand requests even when the transferee judge does not support them.  This reopens a direct line for parties to request remand when common discovery ends, but the transferee judge prefers to hold cases hostage in hopes of coercing settlement.

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.

Coverage of GM's New Fund

Joe Nocera has a short opinion piece on Ken Feinberg and his work in progress - the GM claims fund. You can find the piece here.  The question for Feinberg is always - is this replicable?  The answer depends on the company's tolerance for risk and desire for atonement.  

The New York Times' Danielle Ivory also covered the new fund here, explaining how the fund works.

I also recommend the Valukas report on GM. My favorite part is his description of the "GM nod."  Everyone at a meeting nods their head to a plan, nobody actually does anything to move it forward.   

Judging Multidistrict Litigation

I posted a new article to SSRN this morning that's been a labor of love for well over a year now.  I'm excited about this new piece for a few reasons.  

First, it debuts an original data set of all lead lawyers appointed in 72 product liability and sales practices MDLs that were pending as of May 14, 2013.  As such, it's the only paper (that I know of) that includes empirical evidence on plaintiffs-side repeat players appointed to leadership positions.  (Yes, it includes a list of some of the most entrenched repeat lawyers and law firms as an appendix.)  (If this is of interest, have a look at Margaret Williams, Emery Lee, and Catherine Borden's recently published paper in the Journal of Tort Law titled Repeat Players in Federal Multidistrict Litigation, which looks at all plaintiffs' attorneys in MDLs using social network analysis.) 

I also explain why appointing a leadership group comprised of predominately repeat players can cause inadequate representation problems.  For example, repeat players playing the long game have rational, economic incentives to curry favor with one another, protect their reputations, and develop reciprocal relationships to form funding coalitions and receive client referrals.  As such, extra-legal, interpersonal, and business concerns may govern their interactions and trump their agency obligations to uniquely situated clients who could threaten to bust a multi-million dollar deal.  Non-conforming lawyers may be ostracized and informally sanctioned, which promotes cooperation, but deters dissent and vigorous representation.  Over time, expressing contrary opinions could brand the dissenting lawyer a defector, which could decrease lucrative leadership opportunities.  (Other reasons abound, which I explain on pages 25-27 of the paper.) 

Second, it provides some much needed guidance for transferee judges.  Although the Manual for Complex Litigation remains the go-to guide for transferee judges, it hasn't been updated in 10 years.  So much has changed since the fourth edition was published in 2004.  Accordingly, in "Judging Multidistrict Litigation," I suggest best practices for appointing and compensating lead lawyers.  Judges can compensate lead lawyers on a coherent and more predictable basis by distilling current theories down to their common denominator: quantum meruit.  Quantum-meruit awards would align fees with other attorney-fee decisions and compensate leaders based on the value they actually add.  

Third, as anyone familiar with the area knows, settlement review in nonclass litigation is controversial at best.  After judges expressly deny class certification they then harken back to Rule 23 and their "inherent equitable authority" to comment on settlements.  So, employing a quantum-meruit theory for awarding lead lawyers' attorneys' fees would give judges a legitimate private-law basis for scrutinizing settlements.  Because courts must evaluate the case's success to determine how much compensation is merited, it could likewise help stymie a trend toward self-dealing where repeat players insert fee provisions into master settlements and require plaintiffs and their attorneys to "consent" to fee increases to obtain settlement awards.

The article is forthcoming in N.Y.U. Law Review in April of 2015, so I still have a bit of time to tinker with it and welcome comments in the interim (eburch at uga.edu).  In the meantime, here's the formal SSRN abstract.

High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence. On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight. But on the other, without the arsenal class certification once afforded, judges are relatively powerless to police the private settlements they encourage. Of course, this power shortage is of little concern since parties consent to settle. 

Or do they? Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of repeat players to leadership positions, which may complicate genuine consent through inadequate representation. Repeat players’ financial, reputational, and reciprocity concerns can govern their interactions with one another and opposing counsel, often trumping fidelity to their clients. Systemic pathologies can result: dictatorial attorney hierarchies that fail to adequately represent the spectrum of claimants’ diverse interests, repeat players trading in influence to increase their fees, collusive private deals that lack a viable monitor, and malleable procedural norms that undermine predictability.

Current judicial practices feed these pathologies. First, when judges appoint lead lawyers early in the litigation based on cooperative tendencies, experience, and financial resources, they often select repeat players. But most conflicts do not arise until discovery and repeat players have few self-interested reasons to dissent or derail the lucrative settlements they negotiate. Second, because steering committees are a relatively new phenomenon and transferee judges have no formal powers beyond those in the Federal Rules, judges have pieced together various doctrines to justify compensating lead lawyers. The erratic fee awards that result lack coherent limits. So, judges then permit lead lawyers to circumvent their rulings and the doctrinal inconsistencies by contracting with the defendant to embed fee provisions in global settlements—a well recognized form of self-dealing. Yet, when those settlements ignite concern, judges lack the formal tools to review them. 

These pathologies need not persist. Appointing cognitively diverse attorneys who represent heterogeneous clients, permitting third-party financing, encouraging objections and dissent from non-lead counsel, and selecting permanent leadership after conflicts develop can expand the pool of qualified applicants and promote adequate representation. Compensating these lead lawyers on a quantum-meruit basis could then smooth doctrinal inconsistencies, align these fee awards with other attorneys’ fees, and impose dependable outer limits. Finally, because quantum meruit demands that judges assess the benefit lead lawyers’ conferred on the plaintiffs and the results they achieved, it equips judges with a private-law basis for assessing nonclass settlements and harnesses their review to a very powerful carrot: attorneys’ fees.

Distributive Justice in Action

There is a very nice, lauditory article on Kenneth Feinberg in the New York Times today: "One Man Disperses Charity After Tragedy in Boston."

The interesting thing about the compensation funds Feinberg is often asked to run are the way they bring distributive justice issues that are always imbedded in tort litigation to the surface.  How should people with similar injuries be compensated when they have different life circumstances?  Should weathier people receive less (or more) compensation than poorer people with similar injuries?  Should emotional harm be compensated?  What about fraud, the flip side of desert?  These questions arise in ordinary tort litigation and in mass tort litigation as well.  What any fund, whether created by an insurance company, a mass tort litigation, a charitable foundation or the government can do that ordinary decentralized tort litigation cannot is treat similarly situated people equally, which is the promise of the common law maxim that like cases ought to be treated alike and the foundation of the rule of law.  But that raises difficult questions about what it means to treat people alike who are different from one another but suffered similar injuries. 

Perhaps because these funds aren't governed by legal prinicples but instead by charitable ones, the issues of distributive justice, luck and social inequality are easier to discuss.  There is no legally imposed baseline of how compensation is to be awarded, so this opens up our thinking about how things ought to be.  These are the fundamental philosophical issues of tort law in the United States, and decision-maker's philosophy affects how the law and non-legal funds (like the One Fund Boston) operate in real life.  Should these funds track the tort system?  The 9/11 fund kind of did (not completely), and in his book "What is Life Worth?" Feinberg notes that he would have preferred to pay everyone a flat amount rather than distinguish based on earning capacity and other factors that end up reflecting societal inequalities.  The tort system presently often reinforces existing social inequalities in compensation, should it?  Similarly, as PTSD on the military side has become more recognized as disabling, will we reach a point where emotional trauma receives more recognition on the civil justice side as well? 

Also notable, the article points out that the number of funds has accelerated in the 21st century.  According to the article, between 1984 and 2010 Feinberg worked on five such funds, since then he's worked on five more.  

ADL

Distributive Justice in Action

There is a very nice, lauditory article on Kenneth Feinberg in the New York Times today: "One Man Disperses Charity After Tragedy in Boston."

The interesting thing about the compensation funds Feinberg is often asked to run are the way they bring distributive justice issues that are always imbedded in tort litigation to the surface.  How should people with similar injuries be compensated when they have different life circumstances?  Should weathier people receive less (or more) compensation than poorer people with similar injuries?  Should emotional harm be compensated?  What about fraud, the flip side of desert?  These questions arise in ordinary tort litigation and in mass tort litigation as well.  What any fund, whether created by an insurance company, a mass tort litigation, a charitable foundation or the government can do that ordinary decentralized tort litigation cannot is treat similarly situated people equally, which is the promise of the common law maxim that like cases ought to be treated alike and the foundation of the rule of law.  But that raises difficult questions about what it means to treat people alike who are different from one another but suffered similar injuries. 

Perhaps because these funds aren't governed by legal prinicples but instead by charitable ones, the issues of distributive justice, luck and social inequality are easier to discuss.  There is no legally imposed baseline of how compensation is to be awarded, so this opens up our thinking about how things ought to be.  These are the fundamental philosophical issues of tort law in the United States, and decision-maker's philosophy affects how the law and non-legal funds (like the One Fund Boston) operate in real life.  Should these funds track the tort system?  The 9/11 fund kind of did (not completely), and in his book "What is Life Worth?" Feinberg notes that he would have preferred to pay everyone a flat amount rather than distinguish based on earning capacity and other factors that end up reflecting societal inequalities.  The tort system presently often reinforces existing social inequalities in compensation, should it?  Similarly, as PTSD on the military side has become more recognized as disabling, will we reach a point where emotional trauma receives more recognition on the civil justice side as well? 

Also notable, the article points out that the number of funds has accelerated in the 21st century.  According to the article, between 1984 and 2010 Feinberg worked on five such funds, since then he's worked on five more.  

ADL

One Fund Boston

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.

ADL

 

Disaggregating

I posted a new and likely controversial piece titled "Disaggregating" on SSRN today.  As the abstract explains, the basic idea is that if courts can no longer resolve mass torts cases through judicial means, like approving a class action settlement, and must resort to encouraging private settlement, then perhaps we should rethink what we hope to accomplish by centralizing these cases. 

Rethinking centralization really requires that we consider two questions: First, what level of commonality justifies aggregating mass torts, shorn of Rule 23’s procedural protections? And, second, should the federal judicial system continue to centralize claims with nominal commonality when judges typically cannot resolve those claims collectively absent a private settlement?

This Article’s title suggests one answer: if minimal commonality continues to justify collective litigation, then the system should aggregate claims to resolve common concerns and then, as state laws or individual differences come to the forefront, disaggregate into smaller, cohesive groups whose members’ claims could be resolved collectively through public, judicial means, such as trials or dispositive motions. Disaggregating into smaller, more cohesive units could revive the use of issues classes, particularly when the class definition is correspondingly narrow.

To be clear, I do not claim that this is the only way to legitimately resolve mass torts.  But my previous work has prompted me to think more directly about the use of exit.  Exit can perform a number of functions.  It can signal dissatisfaction with substantive or procedural fairness.  It allows plaintiffs with fundamental differences over which litigation ends to pursue and how to pursue them to leave the group when significant conflicts arise.  It thus preserves plaintiffs' choice of forum and may also safeguard defendants' right to assert individual affirmative defenses.

Exit performs other functions, too, such as preserving substantive law and furthering democratic ideals.  For example, while private ordering through settlement might follow a handful of bellwether trials, jurors are geographically concentrated in the transferee forum.  That allows no public participation from other affected communities nationwide, whereas holding trials in plaintiffs’ original fora would further democratic participation ideals.  Jury trials are, after all, meant to be a communal enterprise and, as the American Tort Reform Association likes to point out, each community may approach the adjudicative and deliberative process differently.  In that way, disaggregating might also help maintain fidelity to state substantive law.

As always, I'd be interested in your comments - eburch at uga.edu

 

ECB

 

D. Theodore Rave on Governing the Anticommons in Aggregate Litigation

D. Theodore Rave (Furman Fellow, NYU) has posted his article, Governing the Anticommons in Aggregate Litigation, to SSRN.  Here is the abstract:

This article argues that there is an unrecognized “anticommons” problem in aggregate litigation. An anticommons occurs when too many owners’ consent is needed to use a resource at its most efficient scale. When many plaintiffs have similar claims against a common defendant, those claims are often worth more if they can be packaged up and sold to the defendant (i.e., settled) as a single unit — that is, the defendant may be willing to pay a premium for total peace. But because the rights to control those claims are dispersed among the individual plaintiffs, transaction costs and strategic holdouts can make aggregation difficult, particularly in cases where class actions are impractical. Recently the American Law Institute has proposed to modify long-standing legal ethics rules governing non-class aggregate settlements to allow plaintiffs to agree in advance to be bound by a supermajority vote on a group settlement offer. By shifting from individual control over settlement decisions to collective decision making, the ALI proposal may offer a way out of the anticommons and allow the group to capture the peace premium. Critics, however, say that allowing plaintiffs to surrender their autonomy will leave them vulnerable to exploitation by the majority and by their lawyers. Viewed through the lens of the anticommons, these concerns are manageable. Similar anticommons problems arise in many areas of law, ranging from eminent domain to oil and gas to sovereign debt. But instead of slavishly preserving the autonomy of individual rights-holders, these areas of law have developed strategies for aggregating rights when doing so will result in joint gains. Drawing from these other contexts, this article argues that the legitimacy of compelling individuals to participate in a value-generating aggregation depends on the presence of governance procedures capable of protecting the interests of the individuals within the collective and ensuring that the gains from cooperation are fairly allocated. Governance is thus the key to legitimizing attempts to defeat the anticommons in mass litigation through aggregation, whether by regulatory means, such as the class action, or contractual precommitment, as in the ALI proposal.

BGS

NPR Interview with Ken Feinberg About His New Book

NPR has an extended interview with famed claims administrator Ken Feinberg about his new book, Who Gets What: Fair Compensation After Tragedy and Financial Upheaval.

BGS 

McKenzie on the Bankruptcy Model for Mass Torts

Troy McKenzie (NYU) has posted "Toward a Bankruptcy Model for Non-Class Aggregation."  I look forward to reading it.  Here is the abstract:

In recent years, aggregate litigation has moved in the direction of multidistrict litigation followed by mass settlement without certification of a class action — a form commonly referred to as the “quasi-class action.” Driven by increased restrictions on class certification, the rise of the quasi-class action has been controversial. In particular, critics object that it overempowers lawyers and devalues the consent of individual claimants in the name of achieving “closure” in litigation. This Article presents two claims.

First, the debate about the proper scope and form of the quasi-class action too frequently relies on the class action as the touchstone for legitimacy in aggregate litigation. References to the class action, however, are more often misleading than helpful. The basic assumptions behind the class action are different in degree and in kind from the reality of the quasi-class action. Overreliance on the class action as the conceptual framework for aggregation carries the significant risk of unintentionally shackling courts in their attempts to coordinate litigation. The very reason the quasi-class action emerged as a procedural device — the ossification of the class action model of litigation — suggests that courts and commentators should look for another reference model when assessing what is proper or improper in quasi-class actions.

Second, bankruptcy serves as a better model for judging when to use, and how to order, non-class aggregation of mass tort litigation. The entirety of bankruptcy practice need not be imported to realize that bankruptcy may provide a useful lens for viewing aggregation more generally. That lens helps to clarify some of the most troubling concerns about the quasi-class action, such as the proper role of lawyers and the place of claimant consent. Bankruptcy serves as a superior reference model because it starts with an assumption that collective resolution is necessary but tempers the collective with individual and subgroup consent as well as with institutional structures to counterbalance excessive power by lawyers or particular claimants.

ADL

BP, the Gulf Coast Claims Fund, and MDL Plaintiffs' Lawyers

All that in the recent interesting op-ed from New York Times business columnist Joe Nocera -- BP Makes Amends.

BGS

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).

ECB

Fifth Annual Conference on the Globalization of Class Actions and Mass Litigation at The Hague

The Fifth Annual Conference on the Globalization of Class Actions and Mass Litigation is being hosted by Tilburg University and will be held on December 8-9, 2011 in The Hague, Netherlands.  The conference is being organized by Professors Deborah Hensler (Stanford Law School), Christopher Hodges (Oxford Centre for Socio-Legal Studies and Erasmus University), and Ianika Tzankova (Tilburg University).  Master claim administrator Kenneth Feinberg is delivering the keynote speech.

BGS  

Levaquin Bellwether Trials Update

BNA reports that a set of cases (one trial, two plaintiffs) reached a defense verdict in the Levaquin pharma litigation.  Beare v. Johnson & Johnson, N.J. Super. Ct. Law Div., No. ATL-L-196-10, verdict 10/14/11; Gaffney v. Johnson & Johnson, N.J. Super. Ct. Law Div., No. ATL-L-4551-09, verdict 10/14/11).  The cases are consolidated before Judge Carol Higbee of New Jersey, who also oversaw the New Jersey Vioxx litigation.

The allegations are the the manufacturer of the antibiotic did not provide adequate warnings of its potential to cause tendon injuries. There are six more bellwether cases to go. According to BNA there are approximately 1,900 Levaquin cases before Judge Higbee.

I don't have information about how the bellwether cases were picked or why eight is the number.  For an analysis of how judges can do a more rigorous job of using bellwether trials to promote case resolution and equality among litigants, see my latest paper: The Case for "Trial by Formula." 

ADL

Grabill on Judicial Review of Private Mass Tort Settlements

Jeremy Grabill (Weill, Gotshall) has posted to SSRN his article, Judicial Review of Private Mass Tort Settlements, which is forthcoming in the Seton Hall Law Review.  Here's the abstract:

In the mass tort context, class action settlements have largely given way to a unique form of non-class aggregate settlements that this Article refers to as “private mass tort settlements.” Although it has been argued that aggregation in tort law is “inevitable,” the legal profession has struggled for many years to find an effective aggregate settlement mechanism for mass tort litigation that does not run afoul of the “historic tradition” that everyone should have their own day in court, assuming they want it. Over the last decade, however, as a result of the evolution of non-class aggregate settlements, a new opt-in paradigm for mass tort settlements has emerged that is true to that historic tradition. This Article discusses the new opt-in paradigm and the appropriate contours of judicial authority vis-à-vis private mass tort settlements.

Private mass tort settlements present a difficult conundrum for presiding judges. On one hand, mass tort litigation requires active judicial involvement and oversight due to the sheer size and complexity of such matters. Thus, having been intimately involved in the litigation from its inception, it understandably seems natural for courts to want to exercise some degree of control over private mass tort settlements. But, on the other hand, like traditional one-on-one settlements and unlike class action settlements and other specific settlements, private mass tort settlements do not impact the rights of absent or unrepresented parties. Perhaps not surprisingly then, courts have struggled in applying established principles concerning the scope of judicial authority to evaluate and oversee the implementation of traditional settlements in the unfamiliar context of private mass tort settlements. 

This Article seeks to provide a clear path forward by first examining the limited contexts in which courts have the authority to evaluate and oversee the implementation of traditional settlements, highlighting the nature of the absent or unrepresented interests that judicial review is designed to protect in those traditional contexts. The Article then discusses the emerging opt-in paradigm for mass tort settlements and traces the paradigm’s lineage to three recent cases: In re Baycol Products Liability Litigation, In re Vioxx Products Liability Litigation, and In re World Trade Center Disaster Site Litigation. The Article argues that the well-established maxim that courts lack authority over private one-on-one settlements should apply with equal force to private mass tort settlements because these non-class aggregate settlements allow each individual plaintiff to decide whether or not to settle on the terms offered and do not impact the rights of absent or unrepresented parties. In short, courts do not have - and do not need - the authority to review private mass tort settlements. The Article concludes by addressing the arguments that have been advanced to support judicial review of non-class aggregate settlements, debunking the “quasi-class action” theory that some courts have relied upon to regulate attorneys’ fees in connection with mass tort settlements, and discussing the various ways in which courts may nevertheless be able to influence private mass tort settlements.

BGS