Mass Tort Litigation Blog

Judicial Adjuncts in Multidistrict Litigation: from Special Masters to Claims Administrators

As our readers tend to know, MDLs prioritize efficiency.  That is, after all, what the statute was designed to do--promote efficient resolution. 

But what's often unknown is the best way to promote efficiency and whether efficiency might have unintended consequences.

Back in 2019, the American Bar Association (ABA) called for courts to appoint special masters regularly in MDLs. Its report claimed that multidistrict proceedings in particular could “benefit from specialized expertise,” and that “[e]ffective special masters reduce costs by dealing with issues before they evolve into disputes and by swiftly and efficiently disposing of disputes that do arise.”

The ABA’s resolution thus urged judges to appoint special masters in complex cases at “the outset of litigation” and permit them to do everything from oversee discovery and pretrial litigation to conduct trials based on parties’ consent, allocate settlements, and administer claims. Failing to do so, it cautioned, “[r]egardless of the reason,” “may disserve the goal of securing ‘a just, speedy, and inexpensive determination.’”  Neither this reproach nor the ABA’s empirical claims included empirical support, however.

My co-author, Margie Williams, and I set out to investigate. But we didn't just look into special masters, we considered everyone that judges allocate power or authority to in MDLs: magistrate judges, claims administrators, lien resolution administrators, and even banks. We posted our article, Judicial Adjuncts in Multidistrict Litigation, on SSRN today and the paper will appear in Columbia Law Review this December. But for those of you who'd prefer the quick version, here's a summary of our findings:

Proceedings with special masters lasted 66% longer than those without them.

Using a duration model allowed us to investigate this statistic further by controlling for a proceeding's outcome (settlements uniformly took longer), personal-injury claims (which likewise took longer), and the number of actions in a proceeding (the more actions, the longer the proceeding lasted).

Nevertheless, appointing a judicial adjunct of any kind made the proceedings continue longer than they otherwise would, all else being equal. 

Designating a judicial adjunct meant that the proceeding was 47% less likely to end. And for every additional adjunct appointed, there was an 11% decrease in the probability of a proceeding ending.

Of course, magistrate judges are salaried court employees. Appointing them does not add to parties' cost. But parties must pay for special masters, claims administrators, etc., which raises questions about costs. After all, Rule 1 isn't just concerned with efficiency; it's concerned with securing "the just, speeding, and inexpensive determination of every action and proceeding." Here, however, we ran into a roadblock:

Compensation information was either undisclosed or affirmatively sealed for 62% of private adjunct appointments.

Some of the payments that we could unearth ran into the millions. In the Actos proceeding, for instance, Special Master Gary Russo charged over $4.7 million and Deputy Special Master Kenneth DeJean charged over $1.3 million. And special settlement masters Ken Feinberg, Michael Rozen, John Trotter, and Cathy Yanni collectively charged over $9.4 million to administer the Zyprexa settlement. 

Even though we couldn't always identify the amounts charged, we were able to discern that plaintiffs alone bore the costs for 54% of private adjuncts, meaning that in over half the the appointments, defendants did not contribute.

To try and figure out why judges appoint judicial adjuncts if proceedings with adjuncts cost more and last longer, we conducted confidential interviews with plaintiff and defense attorneys, special masters, claims administrators, magistrate judges, and district court judges with a wealth of MDL experience.

Interviews revealed two competing narratives. In one version, courts outsourced to effectively manage complex cases behind the scenes and closely monitored those appointed. In the other, repeat players in both the bar and the private-adjunct sector came to mutually beneficial arrangements that exposed real-life problems over capture, self-dealing, bias, transparency, and ad hoc procedures.

You'll just have to read the paper for those juicy tidbits (and there are plenty). They can be found in Part IV.  

We did create some pretty fascinating data visualizations that were just too detailed to work in the article, so I thought I might share those with you here instead. I'd just ask that before you quibble with our categorizations that you read the caveats and explanations that we provide in the paper itself. But of course we'd welcome feedback.  The following visualization provides what I think of as a snapshot of the lifecycle of an MDL, with critical events like centralization, settlement, and dispositive decisions included alongside judicial adjunct appointments, which are also color coded.  A different version of the graphic that's less "busy" appears in the paper. Clicking on the graphic will bring up an interactive version that allows you to see more details.

As our readers surely know, it's difficult to pinpoint all of the factors that make a proceeding complex. Nevertheless, we tried!  Of course, we can't measure things like the difficulty of proving causation, but we did code for the way the proceedings were resolved (as judged by the majority of the actions--some individual settlements may have occurred, for instance, even in proceedings we marked as "defense wins"); whether the proceeding included personal-injury allegations, whether the defendants were related to one another (e.g., parent-subsidiary), and the number of actions in the proceeding.  

The following visualization includes some of those factors, pairing them alongside the days to a proceeding's closure, the number of actions in the proceeding, and the number of judicial adjuncts in the proceeding.  Again, we provide some important qualifiers in the paper itself.  

Here are two: First, we use the official closed date rather than the settlement date because many of our adjuncts were appointed post-settlement to help administer the settlement program. Thus, the date the the court formally closes the proceeding remains an important milestone. (You can still see settlement dates in the above graphic.)

Second, in some proceedings, the number of actions filed on the court docket may well undercount the actions affected by the MDL.  This is because global settlements often include state-court plaintiffs and unfiled claims, judges have begun to create shadow dockets, and parties institute tolling agreements so that claims do not actually appear on the docket. Unfortunately, systematic data is not publicly available to remedy these deficiencies. 

Even with those caveats in place, you might find this interesting--I certainly did:

Again, clicking on the graphic above will open an interactive version. 

I hope this post is enough to interest you in the paper itself. We offer a number of theoretical contributions and suggestions to help chart a path forward that may interest MDL judges and attorneys. 

As always, we welcome your comments.

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

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

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

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

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

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

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

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

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

 

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.

Repeat Players in Multidistrict Litigation

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

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

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

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

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

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

Here’s a summary of our key findings:

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

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

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

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

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

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

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

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

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

Monopolies in Multidistrict Litigation

I've spent the better part of the past year and a half analyzing the publicly available nonclass aggregate settlements that have taken place in multidistrict litigation alongside leadership appointments, common-benefit fees, and, where available, recovery to the plaintiffs.  This has given me an in-depth look at what's happening (or has happened) in Propulsid, Vioxx, Yasmin/Yaz, DePuy ASR Hip Implant, Fosamax (2243), American Medical Systems pelvic mesh litigation, Biomet, NuvaRing, and Actos.  I've also analyzed fee practices in Baycol, Ortho Evra, Avandia, Mentor Corp. ObTape, Prempro, Chantix, Pradaxa, and Ethicon Pelvic Repair.

This endeavor has been deeply unsettling for a variety of ethical, doctrinal, and systemic reasons. Professors Erichson and Zipursky's prior work on Vioxx opened our eyes to troubling provisions in that deal, but I had no idea how widespread the problems were or how they had evolved over time from deal to deal until now.  

Propulsid appears to be the primogenitor, for all subsequent deals in the data replicated some aspect of its closure provisions.  But Propulsid is extraordinarily troubling: 6,012 plaintiffs abandoned their right to sue in court in favor of settling.  Only 37 of them (0.6 percent) recovered any settlement money through the physician-controlled claims review process, receiving little more than $6.5 million in total. Lead lawyers, on the other hand, received over $27 million in common-benefit fees through a deal they negotiated directly with the defendant (and had the court approve).  Sadly, that's just the tip of the iceberg.

I posted the fruits of my labor on SSRN today in a piece titled, Monopolies in Multidistrict Litigation.  It's a 70+ page tomb, so I'll be covering specific aspects of it over the next few weeks in a series of blog posts.  It's not only an indictment of current practices and procedures, but it offers myriad ways for judges to improve MDL practice.  It even comes complete with handy pocket guides for judges, leadership application forms, and leadership applicant scoring sheets in the appendix.

For those of you who love data, there are several tables that may be of interest: Table 1: Provisions Benefitting Defendants Occurring within the Analyzed Settlements on p. 20; Table 2: Common-Benefit Fee Practices on p. 33; and Table 3: Common-Benefit Awards and Nonclass Claimant Recovery within the Data on p. 48.

Today's post simply introduces the paper, so here is the summary:

When transferee judges receive a multidistrict proceeding, they select a few lead plaintiffs’ lawyers to efficiently manage litigation and settlement negotiations. That decision gives those attorneys total control over all plaintiffs’ claims and rewards them richly in common-benefit fees. It’s no surprise then that these are coveted positions, yet empirical evidence confirms that the same attorneys occupy them time and again. When asked, repeat players chalk it up to their experience and skill—no one can manage and negotiate as well as they can. Off the record, however, any plaintiff’s lawyer who’s been involved in multidistrict litigation will explain repeat players’ dominance with stories of backroom deals, infighting, and payoffs. Yet, when judges focus on cooperation and consensus in selecting leaders and then defer to those leaders in awarding common-benefit fees, they dampen open rivalry and enable repeat actors to mete out social and financial sanctions on challengers. 

Anytime repeat players exist and exercise both oligopolistic leadership control across multidistrict proceedings and monopolistic power within a single proceeding, there is concern that they will use their dominance to enshrine practices and norms that benefit themselves at consumers’ (or here, clients’) expense. Apprehensiveness should increase when defense lawyers are repeat players too, as they are in multidistrict litigation. And anxiety should peak when the circumstances exhibit these anti-competitive characteristics, but lack regulation as they do here. Without the safeguards built into class certification, judicial monitoring and appellate checks disappear. What remains is a system that permits lead lawyers to act, at times, like a cartel.

Basic economic principles demonstrate that noncompetitive markets can result in higher prices and lower outputs, and agency costs chronicle ways in which unmonitored agents’ self-interest can lead them astray. By analyzing the nonclass deals that repeat players design, this Article introduces new empirical evidence that multidistrict litigation is not immune to market or agency principles. It demonstrates that repeat players on both sides continually achieve their goals in tandem—defendants end massive suits and lead plaintiffs’ lawyers increase their common-benefit fees. But this exchange may result in lower payouts to plaintiffs, stricter evidentiary burdens in claims processing, or higher plaintiff-participation requirements in master settlements.

These circumstances warrant regulation, for both multidistrict litigation and class actions are critical to redressing corporate wrongdoing. Even though judges entrench and enable repeat players, they are integral to the solution. By tinkering with selection and compensation methods and instilling automatic remands after leaders negotiate master settlements, judges can capitalize on competitive forces already in play. By tapping into the vibrant rivalries within the plaintiffs’ bar, judges can use dynamic market solutions to remap the existing regulatory landscape by invigorating competition and playing to attorneys’ strengths.

 

As always, your comments are welcome (the draft is still just that, a draft) - please email any comments or corrections to me eburch at uga.edu.  More soon...

Constructing Issue Class Actions

There's been a lot of chatter over the past few years about the greater use of issue classes.  The Rule 23 Subcommittee in its recent report (p. 41) indicated that issue classes top its agenda for possible reform and there's been a greater willingness to rely on Rule 23(c)(4) among the circuit courts over the last few years.  Much of the scholarship on issue classes thus far, however, has focused on how to use issue classes in conjunction with Rule 23(b)(3)'s predominance requirement.  Professor Laura Hines (Kansas) has, for instance, written a series of articles on the topic and there have been several debates in symposium pages, such as DePaul's 2013 symposium.  

Whatever side of the debate one adheres to on the to-be-or-not-to-be question, the courts are embracing issue classes.  Thus, there remains much work to be done on discerning which issues should qualify for certification, how to think about Seventh Amendment Reexamination Clause questions, and how to compensate plaintiffs' attorneys who initiate issue classes.

I've recently written a paper on issue classes that takes some steps toward fleshing out these problems.  The paper is long since it's meant to be a one-stop shop for judges and attorneys on the subject, but here are the critical points worth underscoring:

First, one of the main difficulties of our system is that the focus in massive lawsuits has shifted to the ways in which the plaintiffs are dissimilarly situated, even when the defendant's conduct is uniform.  Take the GM ignition switch debacle or the Toyota acceleration cases, for example.  Corporate actions are nonindividuated; it doesn't make sense to litigate what GM or Toyota did in 40,000 different cases.  (Draft pp 5-8) But defendants have successfully shifted the procedural focus to how their behavior affected claimants, which tends to defeat class certification because common questions do not predominate over individual ones.  The issue class has the potential to recapture what is common to the plaintiffs: defendant's conduct--at least so long as that conduct is nonindividuated.  One can capture this notion by divvying up the legal elements in any claim or defense as "conduct components," which concern the defendant's conduct, or "eligibility components," which concern a plaintiff's eligibility for relief.  (Draft pp 15-29)

Second, by embracing the standard suggested by the ALI's Principles of the Law of Aggregate Litigation, courts can ease the supposed tension (to the extent any remains) between Rule 23(c)(4) and Rule 23(b)(3).  (Draft pp 31-32)  Courts should certify issue classes where resolving the issue would "materially advance the resolution of multiple civil claims by addressing the core of the dispute in a manner superior to other realistic procedural alternatives, so as to generate significant judicial efficiencies." (Principles, 2.02(a)(1), 2.02 cmt. a, 2.08, 2.08 cmt. a)  Predominance is embedded in the "materially advance" language and superiority is included as a condition that certifying the issue would be "superior to other realistic alternatives" such that it "generate[s] significant judicial efficiencies."  Moreover, the courts themselves seem to have reached a general consensus on this matter, with even the Fifth Circuit embracing issue classes in In re Deepwater Horizon, 739 F.3d 790, 804 (5th Cir. 2014).  (Draft p. 30)

Third, courts must figure out a way to compensate (and thus incentivize) plaintiffs' attorneys.  This is perhaps the trickiest part because of both the lack precedent and doctrinal hurdles such as Lexecon.  Lexecon presents a special challenge in multidistrict litigation cases where issue classes might prove most useful.  Nevertheless, one need not invent a theory out of whole cloth.  Charging liens and the common-benefit doctrine provide sound analogies for fashioning a coherent path forward.  (Draft pp 42-50)

Finally, there are some hurdles to making issue classes stick, such as preclusion doctrines, adequate representation, and the Seventh Amendment Reexamination Clause.  Thus, the paper concludes by suggesting solutions to these problems and arguing that preclusion can provide a way to coordinate dispersed public and private regulators.

As always, comments are welcome (eburch at uga.edu).

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.

Citron Reviewing "All the Justice Money Can Buy"

Rodger Citron (Touro) has published a short, readable online review of Snigda Prakash's book on the Vioxx litigation, "All the Justice Money Can Buy."  To access it, click this link.

ADL

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." 

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Book on Vioxx by Snigdha Prakash

Snigdha Prakash has written an interesting book on the Vioxx litigation, "All the Justice Money Can Buy: Corporate Greed on Trial."  The book follows the early course of the Vioxx litigation and then turns its attention to the Humeston/Hermans trial, during which Prakash was embedded with Mark Lanier and his trial team.  Dramatic and well-written, and not shy about taking sides, the book is a great read and offers a rare inside look at the functioning of a trial team and the tensions that can arise among plaintiffs' lawyers in mass tort litigation.

HME

GMO Rice Lawsuits Settle for $750M

BNA Class Action Litigation Reporter reports that the lawsuits against Bayer Cropscience for the contamination of rice crops with genetically modified rice have settled. The case was In Re: Genetically Modified Rice Litigation, E.D. Mo., No. 4:06-md-1811. 

The plaintiffs were denied class certification for predictable reasons. The settlement is equally predictably organized on the Vioxx model: it goes into effect if 85% of the farmers sign on.

For more information on the MDL GMO Rice Litigation see the E.D.Mo. website: http://www.moed.uscourts.gov/node/115. (As for this writing, not updated to reflect the BNA report of settlement).   As the website notes, the GMO rice has since been de regulated by the FDA.

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Image by scottchan.

Toyota MDL Plaintiffs' Mgmt Committee Appointed

BNA Class Action Litigation Report has the latest.  The personal injury piece will be led by Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein of San Francisco and Mark P. Robinson Jr. of Robinson, Calcagnie & Robinson in Newport Beach, Calif.  The economic loss piece will be led by Frank M. Pitre of Cotchett Pitre & McCarthy in Beverly Hills and Marc M. Seltzer of Susman Godfrey in Los Angeles. 

See In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation, C.D. Cal., No. 8:10ML151, 5/14/10.  For those interested in following the litigation, the Central District of California has posted opinions in the case here. 

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Profile of WTC Litigation Judge in the NYTimes

Mireya Navarro of the New York Times wrote an article published on Sunday about Judge Alvin Hellerstein who is overseeing the 9/11 World Trade Center Disaster Site litigation, and who now famously came out against the proposed settlement in that case.  The article is called "Empathetic Judge in 9/11 Suits Seen By Some As Interfering." 

The theme of the article is Judge Hellerstein's empathy for these special victims.  Some legal experts, Navarro  writes, say that he was acting outside of his judicial capacity -- "such intervention is not the norm outside the class action."

While Judge Hellerstein's actions in this case are very public and the subject of a great deal of interest, its not clear to me that there is a difference between what he did and what judges usually do.  As I see it, the litigants here (or the lawyers more precisely) are trying to put together the kind of settlement that Merck and the plaintiffs lawyers were able to put together in Vioxx.  In that case, the litigants sought Judge Fallon's approval for the settlement, which was controversial.  Judge Fallon's approval - especially because he is a thoughtful, intelligent and well-respected federal judge - was critical to the success of that settlement.  I asked him once why, if it wasn't a class action, his approval was needed.  He replied in sum and substance that the parties wouldn't proceed without his approval.

The WTC lawyers wanted Judge Hellerstein's approval for the same reasons the Vioxx lawyers did - he is a thoughtful, intelligent and well respected federal judge.  His approval of the settlement would give it gravitas; it would make plaintiffs whose lawyers weren't involved in drafting it want to sign on; it would make plaintiffs who had no way of knowing what they would get at the end of the day agree to buy a pig in a poke because they could trust the process.  The lawyers didn't get the Judge's sign-on.  It seems that with their appeal to the Second Circuit they are saying he acted beyond the scope of judicial power now that they got a response from the judge that they didn't like.   

But how is this different than a settlement conference in an ordinary case when the judge opines that a settlement is not giving the plaintiff enough?  After all, the parties came to Judge Hellerstein.  They could settle the cases individually and dismiss them one after the other as settlement is reached.  If they chose to dismiss their individual cases, its not clear to me that there is anything Judge Hellerstein could do other than to tell the client he thought that was a bad idea.  But if the lawyers want an aggregate settlement and they want a Judge to give them legitimacy, then they have to face the reality that he will only legitimate a settlement he thinks is appropriate under the circumstances. 

EDITED TO ADD:  You can find the documents regarding the appeal on the Napoli Bern website.

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Litigating Together: Social, Moral, and Legal Obligations

I have posted a draft of the last in a trilogy of articles on nonclass aggregation and thought I would provide a brief retrospective for the interested reader.  The first article in the trilogy is Procedural Justice in Nonclass Aggregation, which explains in-depth the problems and risks presented by nonclass aggregation.  It observes that systemic legitimacy and compliance with judicial decisions hinges on ensuring procedural justice, but that our current system for handling large-scale litigation fails to provide a number of key procedural-justice components including the preference for adversarial litigation, participation opportunities, impartiality, and error correction.  These institutional shortcomings are due in large part to the trade-offs inherent in large-scale litigation.  Those trade-offs include that "litigation is no longer adversarial despite litigants’ preferences, but effective individual litigation is too costly to pursue; aggregate settlements provide few participation opportunities and no avenues for appeal or error correction despite potential conflicts, but, without aggregate settlements, cost and delay could be staggering and the relief may come too late; mediators or special masters might afford claimants additional participation opportunities, but process is then less adversarial and may suffer from legitimacy problems."  Id. at 46. 

The second article in the trilogy is Litigating Groups. In Litigating Groups, I laid the theoretical groundwork for an alternative to our current approach by borrowing insights from other disciplines—social psychology, moral and political philosophy, and behavioral law and economics—and bringing those notions of commitment, community, and groups to bear on nonclass aggregation.  By relying on the other-regarding preferences that tend to form from group membership, I argued that groups of plaintiffs may have or could be encouraged to develop organic or indigenous origins such that they form moral obligations to one another that are reinforced by social and personal norms. (I have also summarized these contentions in a short response to Judge Weinstein - A New Way Forward: A Response to Judge Weinstein.)

The current (and latest) article is the third and final piece in the trilogy.  It's titled Litigating Together, Social, Moral, and Legal Obligations.  This Article translates the theoretical foundation laid in Litigating Groups into concrete, feasible procedures for litigating together.  Although Litigating Groups maintained that plaintiffs who form groups will likely develop other-regarding preferences toward their fellow group members, it did not fully formulate procedures for promoting cooperation and group formation; decide when, whether, or how to impose sanctions when norms and moral obligations fail; contemplate incentives to join the group; or determine when exiting the group is appropriate.  Accordingly, this Article takes up those hard questions as well as the challenge of determining whether and how substantive and procedural law should enforce moral obligations once a certain level of moral interconnectedness exists.  Here's the SSRN abstract:

In a post-Class Action Fairness Act world, the modern mass-tort class action is disappearing. Indeed, multi-district litigation and private aggregation through contracts with plaintiffs’ law firms are the new mass-tort frontier. But something’s amiss with this “nonclass aggregation.” These new procedures involve a fundamentally different dynamic than class actions: plaintiffs have names, faces, and something deeply personal at stake. Their claims are independently economically viable, which gives them autonomy expectations about being able to control the course of their litigation. Yet, they participate in a familiar, collective effort to establish the defendant’s liability. They litigate from both a personal and a collective standpoint.

Current scholarship overlooks this inter-personal dimension. It focuses instead on either touting the virtues of individual autonomy or streamlining mass litigation to maximize social welfare. Both approaches fail to solve the unique problems caused by these personal dimensions: temptations for plaintiffs to hold out and thus derail settlements demanding near unanimity, outliers who remain disengaged from the group but free-ride off of its efforts, and subgroups within the litigation whose members compete for resources and litigation dominance to the group’s detriment. Accordingly, this Article has two principal objectives: one diagnostic, one prescriptive. The diagnosis is this: current procedures for handling nonclass aggregation miss the mark. Process isn’t just an exercise in autonomy or a handy crutch for enforcing substantive laws. Procedures can serve as a means for bringing plaintiffs together, plugging their individual stories into a collective narrative, making sense of that narrative as a community, reasoning together about the right thing to do, and pursuing that end collectively. Thus, the prescription is litigating together.

Along the way, I've developed a few aspects of this overall project in greater detail for various symposia:

 In Aggregation, Community, and the Line Between, I provided a more detailed account of the moral and political theory animating this "litigating together" approach.  This article contends that encouraging plaintiffs to form groups and reach decisions through deliberation relies on a mix of individual consent and moral obligation. Allowing plaintiffs to exercise their free will when deciding whether to associate with others preserves the liberal tenet of self-determination and escapes the anti-democratic criticism leveled at class actions. Yet, a purely liberal approach fails to capture the obligatory aspect of reciprocal promises to cooperate and the communal obligations that attach. Although plaintiffs voluntarily enter into the group, once they are group members and have tied together their collective litigation fates, they should not be permitted to exit when doing so violates their commitments. Of course, the community itself determines the content of its members’ rights and obligations to one another. Thus, the article concludes by explaining the rationale for group autonomy in terms of pluralism and communitarianism. 

In Group Consensus, Individual Consent (which is still very much "in progress," as they say), I explore how this project relates to sections 3.17 and 3.18 of the American Law Institute’s Principles of the Law of Aggregate Litigation and use those principles as a lens for exploring thematic questions about the value of pluralism, group cohesion, governance, procedural justice, and legitimacy in nonclass aggregation.  Both this project and Litigating Together: Social, Moral, and Legal Obligations are still very much in progress, so, as always, I welcome your comments. 

I'm extremely grateful for all of the helpful comments and criticisms of so many scholars in the field along the way.  I'm also looking forward to tackling new and different projects that have been waiting in the wings for some time now.

ECB

Rough Justice and the Problem of Value in Tort Law

Following on Prof. Erichson's footsteps, I have just posted a draft  article entitled "Rough Justice and the Problem of Value in Tort Law."  You can find it on SSRN and bepress.

This article can be read in dialogue with Erichson and Zipursky's argument against lawyer empowerment in the mass tort context (see their article "Consent versus Closure" described in the post below).  Their baseline is the individual case which ostensibly is run by the litigant as compared to the mass tort context in which lawyers are empowered to determine outcomes.  I demonstrate that in the individual case lawyers are setting the price of settlement with reference to other cases without rigorous methodology, leading to inequity.  In the mass tort context, we have the possibility to adopt transparent, rigorous methods that ensure horizontal equity, a central principle of procedural justice.

This article is also a response to concerns about variability in jury verdicts. I have blogged about these issues here and here and refer readers to Tim Lytton's post on Tort Profs Blog and Byron Stier's work on "Jackpot Justice." We have very different views on what variability in tort verdicts really means!

Below is the abstract of my piece.  If you read the draft and have comments, please send them along.

This Essay argues the counterintuitive position that in our tort system, individual justice is rougher than justice on a mass scale. The reason for this is that mass tort cases can be resolved collectively using rigorous transparent social science methods that can ensure equal treatment of similarly situated litigants. Individual justice, by contrast, allows cases to be resolved in a largely hidden system of comparative valuation using loose methods that are unlikely to result in like cases being treated alike. To do justice courts must use rigorous, transparent methods of case valuation.

In addition to this key insight, this Essay makes two contributions. First, it demonstrates a pragmatic way of thinking about procedural justice by measuring existing procedures against widely recognized principles. In this case, I compare sampling procedures with principles of equality, fairness and distributive justice. Second, it uncovers a pernicious assumption that has been heretofore ignored by scholars: contrary to popular belief, there is no objective way to monetize injuries. All justice in tort cases is rough justice. This is the problem of value in tort law. The solution to this problem is properly administered sampling procedures.

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Erichson & Zipursky on mass settlements

 
Benjamin Zipursky and I have completed a paper entitled "Consent versus Closure."  Ben is one of the nation's leading experts on torts and legal theory.  He and I have long shared an interest in mass tort litigation, and we share certain concerns about the direction mass tort settlements seem to be heading.  In particular, we were both troubled by the mandatory withdrawal provision of the Vioxx settlement, and we both opposed the American Law Institute's proposal to permit advance consent to aggregate settlements.  More generally, we see the Vioxx deal and the ALI proposal as part of a troubling broader trend, in both practice and scholarship, toward embracing the pursuit of absolute closure by empowering plaintiffs' lawyers to deliver their clients' claims in settlement.  Here's the abstract:

Claimants, defendants, courts, and counsel are understandably frustrated by the difficulty of resolving mass tort cases. Defendants demand closure, but class certification has proved elusive and non-class settlements require individual consent. Lawyers and scholars have been drawn to strategies that solve the problem by empowering plaintiffs’ counsel to negotiate package deals that effectively sidestep individual consent. In the massive Vioxx settlement, the parties achieved closure by including terms that made it unrealistic for any claimant to decline. The American Law Institute’s Principles of the Law of Aggregate Litigation offers another path to closure: it proposes to permit clients to consent in advance to be bound by a settlement with a supermajority vote. This article argues that, despite their appeal, both of these strategies must be rejected. Lawyer empowerment strategies render settlements illegitimate when they rely on inauthentic consent or place lawyers in the untenable position of allocating funds among bound clients. Consent, not closure, is the touchstone of legitimacy in mass tort settlements.

"Consent versus Closure" critiques mandatory withdrawal, looking at specific legal ethics rules and doctrines as well as the more basic problem of inauthentic consent.  It critiques the ALI's advance consent proposal based not only on the problem of inauthentic consent, but also the problem of nonconsentable conflicts, exploring what it means for claimants to own their claims and for lawyers to represent clients in pursuing those claims.  

This article picks up on the theme of "The Trouble with All-or-Nothing Settlements," in which I used six case studies to show various problems caused by demands for fully comprehensive settlements outside of class actions and bankruptcy.

HME

Embedded Aggregation in Civil Litigation

Richard Nagareda has just posted "Embedded Aggregation in Civil Litigation" on SSRN. I saw him present this piece at NYU and it is worth reading.  I always enjoy Nagareda's work and this is no exception.  The Article does a good job of explaining the emergence of this idea of the "quasi" class action.  As a rule of thumb, whenever one sees a doctrine with a "quasi" in front of it, legal categories are in the process of breaking down. Here is the abstract:

When one hears the term “aggregation” in civil litigation, the context that comes to mind involves the long-running debate over class actions. Viewed within its own terms, that debate tends to convey the impression that the world neatly divides itself into the mass effects somehow unique to class actions and the confined realm of one-on-one litigation. In the midst of this debate, a closely related set of issues has gone curiously underexplored. Here, the concern is not over some deviation from the one-on-one lawsuit. Rather, the basic suggestion is to circumscribe what an ostensible individual action may do in order to prevent that lawsuit from exerting some manner of binding force upon nonparties who are broadly similar to the parties involved. The idea, in other words, is to constrain what individual litigation may do, precisely because it is not a “de facto class action” empowered to act upon nonparties. Variations of this concern have emerged across what might seem an unrelated array of contexts: the Supreme Court’s 2008 decision in Taylor v. Sturgell, rejecting the procedural doctrine of “virtual representation”; the Court’s 2007 decision in Philip Morris USA v. Williams, regarding the constitutional due-process limits on punitive damages; and the multibillion-dollar deal reached in 2007 to resolve mass tort litigation over the prescription pain reliever Vioxx. This Article explains that there is something deeper going on here but that its nature and implications remain undertheorized. Each instance involves a more general phenomenon, what this Article delineates as “embedded aggregation.” In each, a doctrinal feature of what is ostensibly individual litigation – the scope of the right of action asserted, the nature of the remedy sought, or the character of the wrong alleged – gives rise to demands for the suit to bind nonparties in some fashion, beyond the ordinary stare decisis effect that any case might exert. Ironically, the features of Taylor, Williams, and the Vioxx litigation that make them situations of embedded aggregation also, in all likelihood, would defeat efforts to aggregate them overtly as class actions. The result is to leave the law today in a kind of procedural Catch-22, whereby embedded aggregation seemingly invites class-action treatment, but such treatment is unavailable due to the very features that make the situation one of embedded aggregation. This Article frames an emerging prescription for situations of embedded aggregation in a world in which the modern class action does not, and will not, realistically shoulder the entire regulatory load. The way out of the procedural Catch-22 in which the law finds itself consists of “hybridization” – the combination of individual actions with some manner of centralizing mechanism, just not always the unity of litigation generated by the class action device. Moving outside the parameters of the class action means shifting into new settings a similar need for a centralizing mechanism and, crucially, for legal regulation of the manner in which it may exercise coercive power. In so doing, this Article seeks to break down the prevalent supposition of a neat division between the perceived need for legal regulation of class actions and the supposedly benighted world of autonomous individual lawsuits. The time has come to move the conversation about aggregate procedure beyond the class action device – to broaden the menu of approaches available for our modern world of mass civil claims. Such an approach actually would remain more true to the historical emergence of the class action device over time than a prescription for either a vast expansion of that device or reflexive individualization in all situations of embedded aggregation. In addition, hybridization accords better with the emerging transnational conversation about the design of aggregate litigation procedures.

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The Trouble with All-or-Nothing Settlements

My new paper, The Trouble with All-or-Nothing Settlements, is now available on SSRN.  I presented it at last week's symposium in Kansas on "Aggregate Justice: Perspectives Ten Years After Amchem and Ortiz."  The theme of the conference got me thinking about the shift in mass dispute resolution.  The failed settlements in Amchem and Ortiz were driven by defendants' insistence on peace, and defendants today often demand similar comprehensiveness.  Much of the action, however, has shifted from settlement class actions to non-class aggregate settlements.  Rather than peace through Rule 23, defendants try to obtain peace by negotiating settlements with all-or-nothing clauses, mandatory withdrawal provisions, or other terms to ensure comprehensiveness.  Too often, however, such all-or-nothing settlements lead to ethical problems.  This paper is my attempt to unpack the various problems engendered by such deals.  Here's the abstract:

When defendants settle litigation involving multiple plaintiffs, they often insist that they will settle only if they obtain releases from all or nearly all of the plaintiffs in the group. Judges, lawyers, and academics largely accept the drive for comprehensive settlements as a given, and many embrace such settlements as a positive goal. All-or-nothing settlements, however, create uncommon pressures and opportunities for abuse. Exploring a number of recent mass settlements that have led to disciplinary proceedings, civil litigation, and criminal prosecutions, this article shows the pressures and opportunities that arise out of defendants' insistence on bringing all claimants into a deal.

The article describes seven types of ethical problems created by demands for fully inclusive settlements. First, all-or-nothing settlements create client-client and lawyer-client conflicts of interest. Second, such settlements exacerbate problems concerning the allocation of settlement funds, including incentives to misallocate. Third, they create a risk of strategic hold-outs as savvy clients may attempt to extort additional money by withholding consent. Fourth, they create an incentive for lawyers to keep settlement money in reserve as a slush fund to ensure full participation, leading to problems of misallocation and client deception. Fifth, they generate loyalty problems by pressuring lawyers to withdraw from representing non-settling clients. Sixth, they create special problems concerning clients’ informed consent to aggregate settlements. And seventh, they introduce a risk of collusion as the interest of plaintiffs’ counsel aligns with the defendant’s interest in getting every plaintiff to sign on to the deal. Although all-or-nothing settlements provide peace for defendants and value for claimants, the troubles they engender suggest that the current love affair with comprehensive settlements - evident in academic writings, judicial pronouncements, and defendant demands - should be tempered by a realistic appreciation of the ethical downside.

I'd be very interested in any comments readers may have.  If you have thoughts or suggestions either about the overall analysis or about any of the specific settlements discussed in the paper, please feel free to e-mail me directly or to comment on the blog.

HME

Vioxx Verdicts

I am collecting all the Vioxx verdicts - here is what I have so far. I welcome reader corrections and information about the current status of all of these cases - have they been appealed to higher courts? settled and if so for how much? or is this the final disposition? 

1. Ernst -- TX -- $26,100,000 on 8/19/2005 -- Reversed on appeal 
2. Humeston -- NJ -- Defense verdict in Nov. 2005 -- New trial ordered -- $47,000,000 verdict 
3. Plunkett -- EDLA -- Defense verdict on 2/17/2006 -- New trial ordered
4. Cona -- NJ -- 2,270,000 verdict on consumer fraud and defense verdict on tort in Apr. 2006 -- appealed and $135 award upheld
5. McDarby -- NJ -- 1,570,000 verdict in Apr. 2006 -- appealed, 3,500,000 award upheld
6. Garza -- TX -- 32, 500,000 verdict on 4//21/2006 -- remitted to 8,700,000
7. Doherty -- NJ -- defense verdict on 7/13/2006 
8. Grossberg -- CA -- defense verdict on 8/2/2006
9. Barnett -- EDLA -- 51,000,000 verdict on 8/17/2006 -- new trial ordered -- settled?
10. Smith -- EDLA -- defense verdict on 9/17/2006
11. Mason -- EDLA -- defense verdict on 11/15/2006
12. Dedrick -- EDLA -- defense verdict on 12/13/2006
13. Albright -- AL -- defense verdict on 12/15/2006
14. Appell -- CA -- hung jury on 1/18/2007
15. Arrigale -- CA -- defense verdict on 1/18/2007
16. Kozic -- FL -- defense verdict on 10/8/2007
17. Hermans -- NJ -- defense verdict on 4/3/2007
18. Schwaller -- IL -- defense verdict on 3/27/2007

For readers wanting to cite to these, I have collected them in my article titled The Social Value of Jurisdictional Redundancy, 82 Tul. L. Rev. 2369 (2008) at footnotes 106 and 107. It is available on SSRN.

Thanks to George Conk (whose blog is called Otherwise) and Ben Zipursky, both of Fordham Law, for supplementing my research.

ADL

Community, Network, Class Action

The most recent BNA Class Action Reporter describes a privacy lawsuit filed by Facebook users alleging that Facebook "a data mining company disguised as a social network, and has repeatedly violated users' privacy, engaged in illegal advertising, and misappropriated users' names and likenesses as a routine part of its business."  The suit, Melkonian v. Facebook Inc., was filed in California on August 17 (see Cal. Super. Ct., No. 30-2009 00293755, 8/17/09). 

This reminds me of the work of two of my fellow bloggers.  Byron Stier has written about mass tort litigation as network (see his paper on SSRN) and Elizabeth Burch has written on the concept of "community" in aggregate litigation (see her paper on SSRN as well).  I think Burch's work in particular speaks to a larger desire to create community in an increasingly atomized world and is in the same vein as the "third place" literature in sociology -- that is, the idea that people need a place beyond work and home to connect with one another: the bowling alley, the soccer field, the Starbucks.   We Americans are torn between a strong tradition of individualism and a desire to find our place in a community and we see the same themes and tensions repeated in the context of litigation.  Yes, there is the tradition of the day in court ideal.  But at the same time we have a very robust class action regime - probably the most robust in the world - and increasingly the use of aggregate litigation serves the same function in areas where the possibility of class treatment has been cut off.  What do we make of this desire? 

It seems to me that litigation is more about speech than connection, and that is what makes these latest class actions that are directly about speech, publicity and privacy (such as this Facebook suit or the Google settlement) so interesting.  The power of creating a collective lawsuit is really the power of voice, but its an anemic type of participation in the deep sense of the term.  That's why non-utilitarians have such a hard time with it.  (This struggle is set forth in a very good article by Lawrence Solum,  Procedural Justice, available on SSRN).  That is also what bothers ethicists about settlements like that in the Vioxx litigation, for similar reasons.  That is, the value of the individual in his own right rather than looking only to the collective good.  A closer look at our history demonstrates that participation has always been a bit more ideal than real.  For a discussion of this history in the academic literature see Robert Bone, Rethinking the Day in Court Ideal and Non Party Preclusion, 67 New York University Law Review 193 (1992) (unfortunately not available on SSRN) and Issacharoff & Witt, The Inevitability of Aggregate Settlement (available on SSRN).  

ADL