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
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.
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)
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.
Sunday, May 29, 2016
Professor Christopher Mueller (Colorado Law) has posted to SSRN his forthcoming article, Taking a Second Look at MDL Product Liability Settlements: Somebody Needs to Do It, 65 U. Kan. L. Rev. (forthcoming 2017). Here is the abstract:
This Article examines the forces that lead to the settlement of product liability cases gathered under the MDL statute for pretrial. The MDL procedure is ill-suited to this use, and does not envision the gathering of the underlying cases as a means of finally resolving them. Motivational factors affecting judges and lawyers have produced these settlements, and the conditions out of which they arise do not give confidence that they are fair or adequate. This Article concedes that MDL settlements are likely here to stay, and argues that we need a mechanism to check such settlements for fairness and adequacy. The best way to do so is to allow collateral review of such settlements in suits brought by dissatisfied claimants.
Friday, April 29, 2016
Our own Howie Erichson has posted his latest piece, Aggregation in Disempowerment: Red Flags in Class Action Settlements, on SSRN. It's a great read for judges and attorneys alike and points out--as the title suggests--provisions in class action settlements that should give judges pause before approving a class settlement.
Here's the abstract:
Class action critics and proponents cling to the conventional wisdom that class actions empower claimants. Critics complain that class actions over-empower claimants and put defendants at a disadvantage, while proponents defend class actions as essential to consumer protection and rights enforcement. This article explores how class action settlements sometimes do the opposite. Aggregation empowers claimants’ lawyers by consolidating power in the lawyers’ hands. Consolidation of power allows defendants to strike deals that benefit themselves and claimants’ lawyers while disadvantaging claimants. This article considers the phenomenon of aggregation as disempowerment by looking at specific settlement features that benefit plaintiffs’ counsel and defendants without benefiting class members. Recognizing that protection of disempowered class members lies with judges who review settlement agreements, the article identifies red flags to alert judges to problematic settlements and fee requests. By showing how certain settlement features reflect defendants’ cooption of the power of aggregation, the article offers a framework for thinking about class action power dynamics in the age of settlement.
Thursday, April 28, 2016
In my first post on Monopolies in Multidistrict Litigation, I noted that lead lawyers and defendants seem to benefit in tandem from the settlements they negotiate. This second post, Part II, explains how repeat players on both plaintiff and defense sides have perfected a fundamental shift in settlement design.
As I elaborate on pages 19-21, the demise of the mass tort class action makes it more difficult for defendants to achieve holistic closure, for MDL settlements technically bind only those litigants before the court. But defendants have been able to regain a greater degree of finality through a foundational shift in settlement construction: unlike traditional settlements between plaintiffs and defendants, all twelve deals in the dataset were agreements between lead lawyers and defendants.
As such, these deals position lead plaintiffs’ lawyers as settlement gatekeepers, for defendants will not make better offers to others without the threat of trial; doing so would work against their closure goal. These new deals then serve as a mandatory gateway for anyone wanting to settle, and typically require non-lead attorneys to become signatories alongside their clients. Accordingly, all master settlement agreements in the dataset aimed some provisions at plaintiffs’ attorneys and some at their clients. As a later post will explore, it's the provisions targeting plaintiffs' attorneys that raise the most ethical problems.
Making deals with plaintiffs’ attorneys masterfully furthers defendants’ end game in two ways.
First, the agreements impose uniform endorsement requirements on participating attorneys to discourage them from “cherry picking,” a practice in which lawyers settle most cases, but continue litigating those with the strongest claims or most sympathetic facts. By requiring a high percentage of plaintiffs to accept the settlement offer for it to take effect and insisting that individual attorneys recommend that all their clients settle (including clients who had not yet sued or who were pursuing relief elsewhere), defense attorneys essentially conditioned plaintiffs’ attorneys fees on achieving their closure aims.
A plaintiff’s attorney is either “all in” and would collect significant contingent fees from all her settling clients, or “all out” and would have to spend significant resources litigating individual cases. As such, recommendation provisions alter the typical contingent fee model where an attorney’s recovery increases alongside her clients’ recovery and instead ties plaintiffs’ attorneys’ financial self-interest to each other and to the entire claimant base.
This shift also allows defendants to reach some plaintiffs who are outside of the federal court’s jurisdiction, and others who haven’t yet filed suit (through case census provisions - see pp. 27-29). It thereby recaptures some of the finality that class actions once offered through binding absent class members.
Second, when combined with the defendant's ability to walkaway from the deal if too few claimants consent to settle, provisions aimed at plaintiffs' attorneys (attorney-recommendation provisions, attorney' withdrawal provisions - see pp. 19-26) collectively reduce the demand for legal representation. The settlement effectively becomes the only “game” in town.
Like oligopolists, leaders are able to thwart competition and reduce demand by using attorney withdrawal and recommendation provisions to restrict the legal services market (at least for those with similar allegations against the same defendant). When defendants threaten to abandon the deal if too few plaintiffs participate, and participating attorneys must recommend the deal to all of their clients and withdraw from representing those who refuse, leaders can regulate the legal service being offered and control a sufficiently large share of that market
In this sense, master settlements can recreate bottleneck problems where dominant firms raise competitors’ costs by obtaining exclusionary rights; once defendants negotiate master settlements with plaintiffs’ leadership, that agreement typically becomes the only settlement option.
Why should we be concerned? Apart from inherent economic concerns that arise under these conditions, the next post will explore why provisions targeting attorneys are ethically troubling.
Thursday, March 24, 2016
The New York Times has an article today on the link between NFL and Tobacco called NFL's Concussion Research Deeply Flawed.
What does this mean for the NFL settlement? Should the issue be approached in the mode advocated long ago by Francis McGovern - that is, by allowing the mass tort to mature through multiple trials before a settlement is reached?
This article also raises the question of how the law promotes and creates disincentives for entities to conduct reliable scientific studies. For interesting takes on that question, compare Wendy Wagner, Choosing Ignorance in the Manufacture of Toxic Products with Wendy Wagner, When All Else Fails: Regulating Risky Products Through Tort Litigation.
Friday, March 11, 2016
Bloomberg BNA has an article by Steve Sellers about increased judicial scrutiny by courts in mass products liability cases. He lists several cases in the last few years in which courts denied secrecy provisions in settlements because of the public interest:
, 2016 BL 6286, 9th Cir., No. 15-55084, 1/11/16. This case in the 9th Circuit granted in intervenor public interest organization's motion to obtain documents in a lawsuit involving defective car parts.
Maybe there is a trend towards transparency. Another recent Bloomberg BNA piece by Perry Cooper highlights the question of whether class action settlement outcomes should be required to be disclosed.
Friday, January 29, 2016
There's obviously been a lot in the news about multidistrict litigation--from Lance Cooper's allegations in GM to the recent selection of the plaintiffs' leadership slate in VW. But what do we really know about the settlements that come out of those large MDLs? On one hand, the answer is not much. Many of the deals are secret because they are private. But sometimes those private deals are nevertheless publicly available. And when they are, we read them. And analyze them.
The results can be a little disturbing. Given all of the hubbub over Cooper's allegations in GM (see Lahav's post), my co-author Margaret Williams and I decided to go ahead and release the findings of our recent study, Repeat Players in Multidistrict Litigation: The Social Network, on SSRN.
While past studies have considered repeat play on the plaintiffs’ side, this study is the first comprehensive empirical investigation of repeat play on both sides. It won't surprise most readers to learn that we found robust evidence of repeat play among both plaintiff and defense attorneys. What may be more interesting is that we used social-network analysis to demonstrate that a cohesive multidistrict-litigation leadership network exists, which connects people, law firms, and the proceedings themselves.
While repeat play may not be surprising for those in the know, the fact that repeat players exist matters considerably. Lead lawyers control the litigation, dominate negotiations, and design settlements.
To consider repeat players’ influence, we examined the publicly available nonclass settlements these attorneys negotiated, looking for provisions that one might argue principally benefit the attorneys, and not one-shot plaintiffs. By conditioning the deal on achieving a certain claimant-participation rate and shifting the deal-making entities from plaintiffs and defendants to lead lawyers and defendants, repeat players tied all plaintiffs’ attorneys’ financial interests to defendants’ ability to achieve closure.
Over a 22-year span, we were unable to find any publicly available nonclass settlement that didn’t feature at least one closure provision (which benefits the defendant), and likewise found that nearly all settlements contained some provision that increased lead lawyers’ fees. Based on the limited settlements 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 practices they develop may principally benefit them at the expense of one-shot plaintiffs.
Of course, our research doesn't speak directly to the allegations in GM, but it does make those allegations far less surprising. And if you compare our list of repeat players to the names of those appointed in Volkswagen, you'll see a lot of familiar names.
Tuesday, November 18, 2014
By Howard Erichson
Tomorrow in Philadelphia, lawyers for the NFL and lawyers for former football players will try to persuade Judge Anita Brody to approve their settlement of claims that the League concealed chronic risks of concussions and failed to protect players. The judge, the players, and the public should view the settlement with suspicion.
We have grown so accustomed to "settlement class actions" that we have lost sight of what is strange and troubling about them. Class actions serve an essential function in our legal system by empowering claimants in mass disputes, and I reject the knee-jerk criticisms of class actions that I hear too often. But when the class action tool is exploited by defendants to buy peace on the cheap, and when class members are harmed by the alignment of interests between defendants and class counsel, I feel the need to speak up.
Who reached this agreement with the NFL? Not the thousands of former football players. The deal was struck by lawyers who purported to represent the players but who had not actually gotten the go-ahead to litigate for the class. To litigate a class action, lawyers must get the class certified. But in this case, the lawyers negotiated their settlement before the court certified the class.
It makes sense that the NFL would want to do it this way. By negotiating before class certification, the NFL knew that the plaintiffs’ lawyers lacked the leverage that comes with being able to say, “See you at trial.” And it makes sense that the players’ lawyers would go along. They stand to make $112 million plus up to five percent of each award going forward. If these lawyers failed to reach agreement with the NFL, they risked being cut out if the League struck a deal with someone else.
In a “settlement class action” like the NFL deal, lawyers ask the court to certify the class for settlement only, as opposed to a standard class action that can be litigated or settled. This ought to be the first question people ask when they hear about a class action settlement: Was the class certified for litigation? If not, then class members are especially vulnerable to exploitation.
It is not an obscure problem. As I explain in The Problem of Settlement Class Actions, settlement class actions have become more common than standard class actions. And while good settlements exist, we see mischief too often. Three weeks ago, the Seventh Circuit heard arguments in Pearson v. NBTY, a settlement class action about false labeling for glucosamine supplements. Among numerous other problems, the lawyers’ fees were more than double the amount actually paid to the class. The district court's opinion approving the settlement is disturbing, and Ted Frank's argument for the objectors is powerful. And in Lane v. Facebook, a settlement class action involving claims that Facebook illegally shared information about members’ Internet activity, Facebook paid over $2 million to the plaintiffs’ lawyers, $6.5 million to a foundation that Facebook would partly control, and zero to the class members. Facebook discontinued the challenged program but could reinstate it under a different name. Facebook wiped away its liability while the class members got nothing of value. Chief Justice Roberts was horrified.
Compared to these settlements, the NFL deal looks pretty good. For some players, it offers immediate compensation, and for others it offers long-term insurance. Judge Brody initially rejected the settlement but then gave it preliminary approval after the NFL removed a cap on the fund. But the dynamic of settlement class actions should make us ask questions. The settlement rewards certain diagnoses (Alzheimer’s, Parkinson’s, ALS) over others (CTE). It pays for cognitive impairment but not mood disorders. The objectors make a strong argument that these items are crucial. The settlement imposes a registration requirement and other hurdles that objectors say are intended only to reduce claims. I can see why the deal has drawn so much fire and why Public Citizen sought to intervene.
The truth is, it is always hard to judge whether a class settlement is fair. A settlement, after all, is a compromise. There is no magic formula by which a football fan or a federal judge can evaluate whether the settlement is good enough. What we can ask, however, is whether the settlement resulted from a fair process, a negotiation on a level playing field. The answer is no.
The concern in every settlement class action is that lawyers may have struck the deal not because it was the best the class members could have gotten, but because it was the best the lawyers could get for themselves. If the settlement proves inadequate, then the lawyers get rich, the League gets off easy, and the football players – damaged forever – are left without the money they need to take care of themselves and their families for the rest of their lives.
There is, of course, something the judge can do about it. Reject this settlement, and on a proper motion, certify the class for litigation as well as settlement. Rest assured, there will be a better offer on the table. Although the judge would still face the difficult task of evaluating a class settlement and would still have to be on the lookout for abuse, at least she would know that the players weren’t disempowered from the start.
Friday, September 12, 2014
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.
Wednesday, September 10, 2014
Professor Neal Katyal (Georgetown) and Theodore Olson (Gibson Dunn) take part in a Federalist Society panel on class action reform and the BP Deepwater Horizon case; the panel is moderated by Stuart Taylor (Brookings Institution).
Monday, August 4, 2014
Professor Linda Mullenix has posted a new article titled "Designing Compensatory Funds: In Search of First Principles" on SSRN. It takes on several high-profile compensation funds and may have something of interest to say about how GM is designing its own compensation fund. Here's the abstract:
The World Trade Center Victims’ Compensation Fund of 2001 ushered in a new age of fund approaches to resolving claims for mass disasters in the United States. Since then, numerous funds have been created following several mass events injuring large numbers of claimants. The Gulf Coast Claims Facility, created in the immediate aftermath of the BP Deepwater Horizon oil platform explosion, represented a further expansion of fund design and operation. The funds that have been implemented since 2001, including the World Trade Center Fund, have been the object of both praise as well as criticism. Notably, all these funds have been designed and implemented after the events giving rise to a universe of mass claimants. This article suggests that the policy recommendations for future fund design largely fail to address antecedent threshold questions about the nature of the events giving rise to possible recourse to a fund for compensation of claims. Although such compensation funds have been intended to provide an alternative to the tort compensation system and to operate largely outside the purview of the judicial system, instead most fund designs have relied on tort notions of corrective justice that mimic the tort system. However, many funds have in practice entailed mixed theories of corrective and distributive justice, confusing the purpose, utility, and goals of such funds. This article asks fundamental questions about the goals of such funds and whether and to what extent disaster compensation funds comport with theories of justice. It suggests that certain types of mass disaster events ought not to be resolved through fund auspices at all, while only a limited universe of communitarian harms should give rise to such a response. Finally, a communitarian fund designed ex-ante might more fairly be based on theories of distributive justice based on an egalitarian social welfare norm.
Friday, May 16, 2014
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.
May 16, 2014 in Aggregate Litigation Procedures, Class Actions, Ethics, Informal Aggregation, Lawyers, Mass Tort Scholarship, Procedure, Products Liability, Settlement, Vioxx, Zyprexa | Permalink | Comments (0) | TrackBack (0)
Tuesday, March 4, 2014
Louisiana Law Review is hosting a symposium on Multidistrict Litigation this Friday, March 7, 2014, that focuses on remand and may be of interest to our readers. The title of the symposium is "The Rest of the Story: Resolving Cases Remanded by MDL Here's the link for registration and additional information.
Here's the list of Panels and Panelists:
8:25-8:30: Welcome Address & Opening Remarks
- Chancellor Jack Weiss; LSU Law School
8:30-9:30: Panel 1: Collaboration of Judges and Attorneys in MDL Case Management
The panel will discuss how attorneys and judges can successfully collaborate to use disaggregation as a tool of effective case management.
Moderator: Francis McGovern; Professor of Law, Duke Law School
- Judge Eldon Fallon; U.S. District Court for the Eastern District of Louisiana
- Richard Arsenault; Neblett, Beard, & Arsenault
- James Irwin; Irwin Fritchie Urquhart & Moore, LLC
9:40-10:40: Panel 2: Effectively Planning for Disaggregated Discovery
The panel will discuss when discovery issues should be disaggregated for separate resolution, and the costs, benefits, and challenges of reserving issues for separate discovery.
Moderator: Judge Lee Rosenthal; U.S. District Court for the Southern District of Texas
- Mark Lanier; The Lanier Law Firm
- James Irwin; Irwin Fritchie Urquhart & Moore, LLC
- Dean Edward F. Sherman; Tulane University Law School
10:50-11:50: Panel 3: Integrating Aggregated and Disaggregated Discovery Issues
The panel will discuss various kinds of discovery (e.g., E-Discovery, expert discovery, and specific discovery), and the strategic and case management challenges each method presents in the context of MDLs, including both aggregated and disaggregated discovery issues.
Moderator: Mark Lanier, The Lanier Law Firm
- Judge Lee Rosenthal; U.S. District Court for the Southern District of Texas
- Francis McGovern; Professor of Law, Duke Law School
- Richard Arsenault; Neblett, Beard, & Arsenault
- David Jones; Beck Redden, LLP
11:50-12:10: Lunch Break
12:10-1:10: Panel 4: (Lunch Presentation) The Real Story: FJC Data on What the Empirical Data on MDL Remands Shows
Federal Judicial Center researchers will present findings from their research on multidistrict litigation. The analysis will focus on two sets of cases: (1) cases that are considered for transfer but not transferred, and (2) cases that are transferred and that are subsequently remanded back to the transferor court. Understanding these cases, and the cases that are resolved in the transferee court, may provide some insight into the effects of aggregation on various kinds of cases
Moderator: Judge Lee Rosenthal; U.S. District Court for the Southern District of Texas
- Emery G. Lee, III, Federal Judicial Center
- Margaret Williams, Federal Judicial Center
- Catherine Borden, Federal Judicial Center
1:20-2:20: Panel 5: When Remand is Appropriate
The panel will discuss at what stages plaintiffs, defendants, and judges perceive optimal windows to disaggregate various kinds of issues, and the factors that influence the decision and timing.
Moderator: Dean Edward F. Sherman, Tulane University Law School
- Judge Fallon; U.S. District Court for the Eastern District of Louisiana
- Professor Elizabeth Burch, University of Georgia School of Law
- David Jones, Beck Redden, LLP
2:30-3:30: Panel 6: How Remand Should be Effectuated
The panel will discuss how judges and attorneys work together to effectuate remand of MDL cases, including methods for ensuring smooth transitioning of work product, case management, and expertise to state and federal judges upon remand.
Moderator: Francis McGovern; Professor of Law, Duke Law School
- Judge Fallon; U.S. District Court for the Eastern District of Louisiana
- Professor Teddy Rave, University of Houston
- Professor Elizabeth Burch, University of Georgia School of Law
3:30-3:45: Closing Remarks
Tuesday, January 21, 2014
You can find the Room for Debate segment here, with input from a number of law professors including Michele Landis Dauber (Stanford), Betsy Grey (Arizona State), and Stephen Shugerman (UC Berkeley)