Tuesday, October 2, 2018
I'm at a conference on litigation funding and realized it might be useful, especially for journalists, to think through what we mean when we talk about litigation funding or litigation finance.
Journalists and others tend to describe all forms of investment that support litigation under one umbrella: “litigation funding.” But in fact the litigation funding market is highly specialized. Types of litigation funding should be considered separately because they are very different financial products with different costs and benefits. This is my stab at setting out the parameters of this space:
- Commercial litigation funding. This type of litigation funding is offered by investors and can be used by either plaintiffs or defendants. The funding agreements involve sophisticated parties on both sides, either firms or clients. It well recognized in international arbitration and is increasingly used in other types of commercial cases. Funding may be for an individual litigation or for a portfolio of suits.
- Appeals funding. This type of funding is given to lawyers against fees (often contingency) and to clients against expected recoveries.
- Patent litigation funding. These involve three types of entities. First, some entities purchase patents and prosecute patent infringers but have no relationship to the inventors. Second, a company may sue the infringers and give a small percentage of the recovery to the inventors. Third, universities or companies may monetize their patent portfolios using a funder.
- Law firm financing. Law firms may obtain financing usually structured as a loan with their receivables as collateral.
- Consumer litigation funding. These funders provide small retail level non-recourse loans to individual tort or contract plaintiffs, typically under $5,000. This type of funding is the most like “payday” loans.
- Mass tort monetizations. These types of funders may advance money to lawyers against future earned fees and to clients against expected recoveries in aggregate tort litigation such as multidistrict litigation after a settlement matrix is in place. Depending on how it is used, this may be more like law firm financing for a portfolio of cases of a particular type (cases filed against a particular defendant for example) or consumer litigation funding, directly offered to the client. These funders specialize in mass torts, but loans to lawyers should be differentiated from advances to clients because lawyers are sophisticated market actors who can protect themselves, whereas tort clients tend to be more vulnerable.
(This was edited to correct the amount that individuals usually obtain from consumer funding).
Monday, October 9, 2017
A new and really fascinating case study about environmental mass tort litigation against Du Pont was posted recently by the NBER. You can find the piece here. It demonstrates how a company came to ignore the injuries that its product (in this case a toxin called C8) and how it can be that this decision was value maximizing for shareholders.
The bottom line answer is that the company's ability to hide information and delay payment of any penalties, combined with the relatively low exposure in tort and regulatory penalties, made it sensible because it knew it would not have to internalize the full costs of its conduct. It demonstrates that information and secrecy is at the core of the effectiveness (or ineffectiveness) of regulation and litigation.
Wednesday, August 16, 2017
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:
Sunday, August 6, 2017
Professor James Henderson (Cornell Law) has posted to SSRN his article, The Impropriety of Punitive Damages in Mass Torts, 52 Ga. L. Rev. (forthcoming). Here is the abstract:
Punitive damages have been around for centuries in classic one-on-one tort actions and are here to stay. Mass torts, of more recent origin and not without difficulties, have matured to the point that this article is comfortable referring to most of them as traditional. Notwithstanding the legitimacy of both institutions when employed separately, loud warning signals should sound when, as with drinking and driving, they are combined. Potentially destructive mixes of punitive damages and mass torts have, unfortunately, been prevalent in traditional, fault-based mass tort actions. The difficulties are mostly administrative. Although punitive damages are conceptually compatible with fault-based mass torts, courts administer punitive awards in ways that are so capricious as to generate gross unfairness and inefficiency. And if for that reason the warning signals should be loud in connection with punitive awards in traditional mass torts, they should be downright deafening if and when courts consider awarding punitives in what this article refers to as emerging, nontraditional, enterprise-liability-based forms of mass tort.
Given that these serious difficulties cannot be eliminated by marginal reforms, this article argues that punitive damages are manifestly inappropriate in, and must be eliminated from, all forms of mass tort. Of course, a broad proscription would require courts to overrule precedent in connection with traditional mass torts, and this article explains how this could be accomplished. By contrast, such a proscription would come early enough in the development of emerging forms of mass tort to nip punitive awards in the bud without the need to overrule longstanding precedent. Thus, if courts are going to eliminate punitive awards in mass torts, now is the time for them to act.
Friday, June 2, 2017
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.
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
Friday, May 12, 2017
An Iowa class action (subject to CAFA's local class exception) has been approved by the Iowa Supreme Court. Here is the report from Iowa radio. You can find the opinion here: Freeman v. Grain Processing Corporation.
The court considers arguments that individual defenses ought to defeat class certification, as well as arguments based in the Supreme Court's opinions in Wal-Mart and Tyson Foods and rejects them. It explained:
GPC argues that class certification will deny it the fair opportunity to contest whether individual homeowners have suffered injury or damage. We disagree. The plaintiffs have proposed a formula for damages. GPC can contest the appropriateness of that formula before the jury. If a special jury verdict is entered approving this formula and that verdict is supported by substantial evidence, then potentially this formula can be used in subsequent claims administration by the court while preserving GPC’s due process and jury trial rights. If no damage formula is approved, then there would have to be subsequent individual trials on damages. Either way, GPC’s rights would be protected. (33)
One additional aspect of the case is worth noting. The Court specifically differentiates this nuisance class action, which alleges injury in the form of property damage, from a personal injury action and distinguishes some federal precedent on that basis. As I show in a forthcoming article in NYU Law Review called Mass Tort Class Actions: Past, Present and Future, that is a common pattern for mass tort classes that have been certified for litigation. For example, the first asbestos class actions certified were property damages classes. In that article, I review all the mass tort class actions considered by the federal court from the promulgation of the class action rule through Amchem, and explain how they relate to developments in tort law during the same period. I will be posting this article to SSRN in July.
Tuesday, April 4, 2017
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.
Saturday, February 25, 2017
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.
Tuesday, February 21, 2017
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
Monday, February 13, 2017
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
Sunday, September 18, 2016
Professors Andrew Bradt (UC Berkeley Law) and D. Theodore Rave (U. Houston Law) have posted to SSRN their article, The Information-Forcing Role of the Judge in Multidistrict Litigation, Cal. L. Rev. (forthcoming). Here is the abstract:
In this article, we address one of the most controversial and current questions in federal civil procedure: What is the proper role of the judge in the settlement of mass-tort multidistrict litigation, or MDL? Due to the Supreme Court’s hostility to class actions, MDL proceedings have begun to dominate the federal civil docket. To wit, nearly half of the federal civil caseload is MDL. Although MDL is structurally different from a class action, the procedure replicates — and in many ways complicates — the principal-agent problems that plagued the class action. Like a class action, nearly all MDL cases are resolved by a comprehensive global settlement agreement, but, unlike a class action, in MDL the judge has no authority to reject a settlement agreement as unfair to the potentially thousands of parties ensnared in the litigation. Here, we argue that, given this limitation, the judge should act as an “information-forcing intermediary,” who reserves the right to offer a non-binding opinion about the fairness of the settlement to send an easy-to-understand signal directly to the parties about their lawyers’ performance. Such a signal will mitigate many of the agency problems inherent to MDL and allow parties to exercise informed consent when choosing whether to accept a settlement. More generally, this article is a call for judges to embrace an information-forcing role at the head of consolidated MDL proceedings.
Tuesday, August 16, 2016
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.
August 16, 2016 in Aggregate Litigation Procedures, Current Affairs, Ethics, Lawyers, Mass Tort Scholarship, Pharmaceuticals - Misc., Prempro, Procedure, Products Liability, Settlement, Vioxx | Permalink | Comments (0)
Monday, July 25, 2016
Sergio Campos has a great new review on JOTWELL of an important report from Adam Zimmerman and Michael Sant'Ambrogio. The report concerns the use of aggregation techniques in administrative agencies and is both conceptually and practically interesting. Both the review and the report are worth reading!
Saturday, July 2, 2016
Hillel Bavli on the Logic of Comparable-Case Guidance in the Determination of Awards for Pain and Suffering and Punitive Damages
Hillel Bavli (Ph.D. Candidate in Statistics in Law & Governance, Harvard; Counsel, Boies, Schiller & Flexner LLP) has posted to SSRN his article, The Logic of Comparable-Case Guidance in the Determination of Awards for Pain and Suffering and Punitive Damages, U. Cin. L. Rev. (forthcoming 2016). Here is the abstract:
Little guidance is provided to fact-finders in arriving at awards for pain and suffering and punitive damages. Such awards are therefore highly variable. This article explains why methods involving comparable-case guidance — information regarding awards in comparable cases as guidance for determining damage awards — are generally effective in reducing unpredictability and improving the reliability of awards for pain and suffering and punitive damages. The article addresses major objections to such methods, and provides relevant legal context and direction for implementation.
Professor Alexander Lemann (Research Fellow & Adjunct Professor, Georgetown Law) has posted to SSRN his article, Coercive Insurance and the Soul of Tort Law, 105 Geo. L.J. (forthcoming 2016). Here is the abstract:
Scholars have long accepted the idea that there are alternatives to the tort system, particularly insurance, that are better at compensating victims than tort law. Tort law remains necessary, it has been assumed, because insurance lacks the ability to deter conduct that causes harm, and indeed it sometimes creates a moral hazard that increases incentives to engage in risky conduct. Scholars of insurance law, however, have observed that insurance has at its disposal a variety of tools that can help deter risky conduct. Recent technological developments lend dramatic support to this account. New telematics devices being used in automobiles can track acceleration, braking, and even whether a car is exceeding the speed limit on a particular road, allowing insurance companies to identify and penalize individual acts of negligent driving in real time. Insurance can now, in many cases, deter risky conduct more effectively than tort law. And yet tort law incorporates values that insurance cannot.
While much attention has been paid to the implications of these developments for insurance law, the implications for tort theory have been largely ignored. This Article fills that gap. Where insurance coverage is mandatory and premiums are adjusted based on individual acts by individual customers, “coercive insurance” can be understood as a liability rule just like tort law. Comparing the mechanisms by which these systems deter risky conduct, I argue that coercive insurance’s abandonment of certain features central to tort law makes it inherently more efficient in dealing with certain risks. Coercive insurance thus helps resolve the ongoing debate between efficiency and rights-based theories of tort law, undermining the claim that tort law is best understood as a system for achieving efficient deterrence and lending support to the idea that concepts like corrective justice and civil recourse theory are necessary to explain tort law’s purpose and structure.
Saturday, June 25, 2016
New Book on Class Actions in Context: How Culture, Economics and Politics Shape Collective Litigation
A new book, Class Actions in Context: How Culture, Economics and Politics Shape Collective Litigation, has been published by Edward Elgar Publishing (also available on Amazon). The editors of the book are Associate Dean Deborah Hensler (Stanford Law) and Professors Christopher Hodges (Oxford) and Ianika Tzankova (Tilburg Law). A global group of aggregate-litigation scholars contributed to the book, including Dean Camille Cameron (Dalhousie Law, Canada); Associate Dean Manuel Gomez (Florida International Law); Professors Agustin Barroilhet (U. Chile Law), Naomi Creutzfeldt (Research Fellow, Oxford), Axel Halfmeier (Leuphana U., Germany), Kuo-Chang Huang (Member, Taiwan national congress and formerly of National Cheng-Chi U., Taiwan), Jasminka Kalajdzic (Windsor Law, Canada), Alon Klement (Tel-Aviv U., Israel), Elizabeth Thornburg (SMU Law), and Stefaan Voet (U. Leuven & U. Hasselt, Belgium); and myself.
I authored a chapter, The promise and peril of media and culture: The Toyota unintended acceleration litigation and the Gulf Coast Claims Facility in the United States, and Professor Ianika Tzankova and I co-authored another chapter, The culture of collective litigation: A comparative analysis.
The book was a remarkable and fascinating undertaking, with many of us contributors gathering at several conferences across the globe over recent years to discuss and compare our ongoing research. Here is a brief description of the book:
In recent years collective litigation procedures have spread across the globe, accompanied by hot controversy and normative debate. Yet virtually nothing is known about how these procedures operate in practice. Based on extensive documentary and interview research, this volume presents the results of the first comparative investigation of class actions and group litigation ‘in action’.
Produced by a multinational team of legal scholars, this book spans research from ten different countries in the Americas, Europe, Asia and the Middle East, including common law and civil law jurisdictions. The contributors conclude that to understand how class actions work in practice, one needs to know the cultural factors that shape claiming, the financial arrangements that enable or impede litigation and how political actors react when mass claims erupt. Substantive law and procedural rules matter, but culture, economics and politics matter at least as much.
This book will be of interest to students and scholars of law, business and politics. It will also be of use to public policy makers looking to respond to mass claims; financial analysts looking to understand the potential impact of new legal instruments; and global lawyers who litigate transnationally.
We are honored that Professor Geoffrey Hazard (Emeritus, UC Hastings Law & Penn Law) offered the following comment on the book:
Class Actions in Context is a penetrating analysis of class and group actions worldwide. A group of international scholars brings to bear legal, economic, and political analyses of this evolving judicial remedy. It explores various substantive claims ranging from consumer protection to securities litigation. Drawing on case studies of practice as well as legal analysis, it demonstrates the importance of factors running from litigation finance to background cultural traditions. It is worth study in every legal system.
Professor Wendy Parmet (Northeastern Law) has posted to SSRN her article, Paternalism, Self-Governance, and Public Health: The Case of E-Cigarettes, 70 U. Miami L. Rev. 879 (2016). Here is the abstract:
This article develops a normative framework for assessing public health laws, using the regulation of e-cigarettes as a case study. Although e-cigarettes are likely far less dangerous to individual users than traditional cigarettes, it remains uncertain whether their proliferation will lead to a reduction of smoking-related disease and deaths or to increased morbidity and mortality. This scientific uncertainty presents regulators with difficult challenges in determining whether and how to regulate e-cigarettes. This article presents a normative framework for analyzing such questions by offering three justifications for public health laws: impaired agency, harm to others, and self-governance. Each justification responds to the common charge that public health laws are impermissibly paternalistic. The self-governance rationale, which is the most robust, and most reflective of public health’s own population perspective, has been the least theorized. This article develops that theory, examining the basis for the justification as well as its limitations. The article then applies its normative framework to the regulation of e-cigarettes, focusing on the FDA’s so-called deeming regulations, which at the time the article was written were pending but have since been promulgated in a substantially similar form. The article supports the FDA’s ultimate decision to ban the sales of e-cigarettes to minors and to require the disclosure of warning labels based upon the impaired agency rationale. However, the scientific uncertainty renders the harm rationale inadequate. As a result, the regulations’ pre-market review requirement must rely on the self-governance rationale for its normative justification. Given the lack of clear legislative guidance and political engagement, the article concludes that the pre-market review provisions are normatively problematic: if public health advocates want to claim the mantle of self-governance, they must take it seriously.
Thursday, June 16, 2016
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.
Brooke Coleman (Seattle) has posted "One Percent Procedure" on SSRN. Here is the abstract:
In this election year, political rhetoric about the one percent is already pervasive, as those with the greatest concentrated wealth prosper and the remaining population stagnates. Because of their affluence, the one percent exercise disproportionate control over political and economic systems. This Article argues that federal civil procedure is similarly a one percent regime. The crème de la crème of the bench and bar, along with equally exclusive litigants, often engage in high-stakes, complex civil litigation. It is this type of litigation that dominates both the elite experience and the public perception of what civil litigation is. This litigation is not particularly common, however; while expensive and well known, it is in the minority. Yet this litigation and the individuals engaged in it have an incongruent influence on how the Federal Rules of Civil Procedure and procedural doctrine develop. They create one percent procedure.
This Article interrogates and connects disparate phenomena related to civil litigation, including the recent discovery amendments and the rise of multidistrict litigation. It demonstrates that the elite — those who are deeply steeped in complex, high-stakes litigation — are setting the agenda and determining the rules for how the entire civil litigation game is played. It further argues that the benefits of a one percent procedure system — notably expertise of the participants — are not worth the costs; indeed, that expertise can be detrimental to the design of a civil litigation system.
As in politics and economics, a system that gives too much control to the one percent risks undervaluing and underserving the remaining ninety-nine. Using social and political science, the Article argues that the homogenous policymaking of one percent procedure creates suboptimal results. The Article concludes that the structures giving rise to one percent procedure must be modified and proposes a set of reforms intended to allow the ninety-nine percent representation in, and access to, the process of constructing our shared civil litigation system.
Sunday, May 29, 2016
Professors John C.P. Goldberg (Harvard Law) and Benjamin Zipursky (Fordham Law) have posted to SSRN their forthcoming article, The Myths of MacPherson, 9 J. Tort L. (forthcoming 2016). Here is the abstract:
For a symposium marking the centenary of MacPherson v. Buick, we identify three common characterizations of Cardozo’s famous opinion that purport to explain its importance. Unfortunately, each of these characterizations turns out to be a myth. MacPherson is worthy of celebration, but not because it recognizes that negligence law’s duty of care is owed to the world, nor because it displays the promise of an instrumental, policy-oriented approach to adjudication, nor because it embraces a nascent form of strict products liability. These myths of MacPherson reflect deep misunderstandings of tort law, and of Cardozo’s distinctively pragmatic approach to adjudication. Ironically, although they have been largely fostered by progressives, the myths lend support to the cause of modern tort reform. By contrast, an accurate appreciation of MacPherson’s virtues permits an understanding of negligence, tort law, and common law adjudication that provides grounds for resisting regressive reforms.