Mass Tort Litigation Blog

9/11 Statistical Discovery

What's going on with the 9/11 "First Responder" cases these days?

I just saw the following article in NYLJ - "Plan Implemented to Resolve Complex Suits in World Trade Center Cleanup."  The special masters who are creating this plan are two eminent mass tort scholars: Aaron Twerski (formerly dean of Hofstra Law and now back on the faculty at Brooklyn) and James Henderson (on the faculty at Cornell Law).   The plan involves creating a database of all the plaintiffs, and then conducting in depth discovery of a selected number of them to get a sense of how the cases develop, with the ultimate view of either having trials or settling the cases.  Here is a description of the special masters' plan from the NYLJ article:

The plan divides the 9,090 cases into five groups, running from the first wave of cases filed to the last. The first four groups will contain 2,000 cases each. The fifth group will contain the remainder and any after-filed cases.

The special masters and counsel for both sides prepared severity charts that grade a person's condition on a scale from zero to four. They also selected six major disease categories in which to group the illnesses.

The plan kicked off on Jan. 1 and within 40 days, plaintiffs in the first group of 2,000, Group A, completed a subset of the data fields that detailed their disease rankings, duration of exposure at Ground Zero and pre-existing disorders.

Ten days later, the special masters selected from this group the 200 cases ranked most severe, 25 additional cases for diseases that are not necessarily included in the severity chart, and an additional 400 cases at random.

The database for the 200 most severe cases and the 25 additional cases will be completed by April 1. Within five days, both sides and the judge will select the first six sample cases.

Completion of the database for the 400 cases chosen at random is due in late May, after which each party will choose two more cases and the judge picks another two. Those 400 cases will proceed along on discovery only, with no schedule set for motion or trials.

I haven't seen whether the six sample cases that were to be selected in April actually were selected, but will post then I find out.  Judge Hellerstein, who is overseeing these cases, is quoted in the article as saying of the methodology: ""It allows the parties to get a good sense of the strengths and weaknesses of all the cases."

This approach shares some similarities with the bellwether trials procedure I describe in a recent article.  (See Lahav, Bellwether Trials, available on SSRN).  What is interesting about this form of statistical adjudication is that it addresses the discovery phase and illustrates the extent to which discovery really makes or breaks a litigation, rather than trial. 

ADL

Weinstein: Some Pessimism About Aggregate Litigation

Judge Weinstein has published a short essay on the administration of complex litigations in a new on-line publication of the Cardozo Law Review called De Novo.  The essay, entitled "Preliminary Reflections on the Administration of Complex Litigations" describes a few litigations in which the Judge acted as architecht of a large-scale settlement (what has been described as a quasi-administrative agency).

Judge Weinstein closes on a pessimistic note, arguing that the appellate courts have been so inhospitable to class actions and aggregations that it will now fall to regulators to prevent mass claims rather than the courts to adjudicate them.  He writes: "There is a general hostility, I believe, particularly at the appellate level, to class actions and other devices for efficient administration of mass litigation."  And he ends by writing "In the end, I must reluctantly conclude that the law—and certainly I—have failed to rise sufficiently to meet the challenges of modern litigation.  We have not served the people as well as we should have."

The model for adjudication of mass torts was initially individual litigation, which gave way in the 1980's and 1990's to an administrative model.  (For a great article making this argument see Richard Negareda, From Tort to Adminsitration in the Michigan Law Review - which for some reason the author has not put on SSRN, but when he does I shall link to it).   Today the adminsitrative model still has some traction, but it seems that things are shifting.  Zyprexia and Vioxx are far different than Agent Orange was.  We're seeing a different type of judicial involvement which is geared more towards information gathering than actual adjudication, more private control over settlements, the total failure of the class action device to offer closer and the mechanism for an administrative regime.  So what is next for mass torts?  Can the current developments still be described as an "administrative" regime or is this something closer to an insurance model?

ADL

Supreme Court Ruling Makes Government Recovery More Difficult in Toxic Torts

In Burlington Northern & Santa Fe Railway Co. v. United States, the Supreme Court ruled 8 to 1 to limit corporate liability under Superfund.  Here's an except from Adam Liptak's article in the New York Times:

 The federal government had sought to hold the Shell Oil Company responsible for selling pesticides to the business, where the chemicals routinely leaked and spilled. The distribution business, Brown & Bryant, later became insolvent and ceased operations.
Shell argued that it could not be held responsible for the spills because it did not qualify under the relevant part of the Superfund law, which applies to companies that “arranged for disposal” of hazardous substances. Justice John Paul Stevens, writing for the majority in the 8-to-1 decision, said the statutory language applied only when companies took “intentional steps to dispose of a hazardous substance.”
“Shell’s mere knowledge that spills and leaks continued to occur” with each delivery, Justice Stevens continued, “is insufficient grounds for concluding that Shell ‘arranged for’ the disposal.”
In dissent, Justice Ruth Bader Ginsburg wrote that Shell was “well aware” that its deliveries “directly and routinely” resulted in spills and leaks for more than 20 years. She added that she would have placed the cleanup costs on a company “whose activities contributed to the contamination rather than on the taxpaying public.”

ECB

Cert Granted in Important Class Action Case

The Supreme Court today granted certification in Shady Grove Orthopedic Assoc., P.A. v. Allstate Insurance Co. (docket no. 08-1008). This may be a case that decides the future of the much-maligned procedural rule - the money damages class action. The case concerns allegations against Allstate arising out of payments of claims for auto accidents under New York's no fault auto insurance regime. 

Here is the outline of the case: In cases where a statute creates a penalty or provides for a minimum measure of recovery, New York law prohibits the certification of a class action unless the statute specifically permits the class action device to be used. (NY Civil Practice Law and Rules Sec. 901(b)).  The plaintiffs sought to bring a class action in Federal Court against Allstate for violating provisions in New York's no fault insurance regime. The lower federal courts (district court and 2nd Circuit) dismissed the suit on the theory that the New York legislature had spoken and no class action could be certified.  The plaintiffs argue that the state legislature cannot dictate the procedural rules used in the federal courts. Scotusblog has linked to the petitions for and against cert.

At stake are the uniformity of the federal rules in diversity cases, as well as the right of states to regulate (or limit regulation) of business through statutory penalties.   It provides the court with an opportunity to revisit the intersection between the Erie doctrine and the federal rules.

The class action is in some ways a special case because it illustrates in an obvious way the uneasy relationship between substance and procedure.  For example, consider a law that creates a statutory penalty of $1000 for the selling of private information by telecom companies. A single person bringing a claim cannot justify the cost of suit.  In that case, the law has no bite.  But if the suit is brought as a class action on behalf of all telecom customers, one million customers means a one billion dollar statutory penalty for the company.  Some opponents of the class action argue that class actions violate due process because it can lead to the distortion of individual claims.  Others argue that class actions are a form of "blackmail" for this reason - even if the claims are weak, the risk of loss is too high and requires settlement.  Even those that think class actions are a good idea because they permit private parties to regulate misconduct that would otherwise go unpunished must admit that the class action device changes the nature of litigation - they just think it changes it in a beneficial way for society.

But anyone who was once a first year law student will remember that all procedural rules to some extent share this quality.  For example, consider a rule that requires individual service of process on the defendant in some cases, but permits service of process to any responsible adult in other cases.  This rule can alter the outcome of the case and is therefore substantive in some sense, but the Supreme Court in Hanna v. Plumer held that this is fundamentally a procedural rule.  In that case, the Federal Rule (which did not require service on individual defendant) trumped the state rule (which did).

The last time something like this came up was in Gasperini v. Center for the Humanities.  In that case, the Supreme Court held that a New York statute dictating a more stringent standard for remittitur should be followed in the federal courts.  If the Court requires the federal courts to apply the New York ban on class actions, this would result in a further fragmentation of the FRCP and perhaps eventually lead to a regime where state procedure is applied in diversity cases. 

I have not even addressed the question of whether the New York statute is a good idea - that is, whether the class action should be a default rule available in all cases or be specially required by legislatures.  I am sure that this will be to some extent the focus of the Supreme Court.  But since the federal rules are structured to be trans-substantive (that is, to apply the same to all cases), a policy-based ruling that the New York legislature is right to carve out the class action will mean a significant change to the Court's approach to the federal rules.  This  change that has already been signaled in the Court's recent pleadings jurisprudence. We'll find out more when Ashcroft v. Iqbal (this link is to Scotusblog on that case) comes down later this term.

ADL

Plaintiffs' Attorneys Feuding Over Fees

Judge Faith Hochberg of the District of New Jersey urged plaintiffs' lawyers to cooperate and coordinate discovery rather than devolve into a feeding frenzy for attorneys' fees.  The case isn't a mass tort; rather, it is a putative health insurance class action involving Aetna, Cigna, Oxford, WellPoint and Horizon Blue Cross of New Jersey for underpaid out-of-network claims.  Still, it demonstrates that judges continue to exercise significant oversight over multi-district litigation even before certification.  To the extent that issue reaches attorneys' fees, Charlie Silver and Geoffrey Miller have an interesting paper on the court's authority to control the fee issue absent certification.  It is titled, "The Quasi-Class Action Method of Managing Multidistrict Litigations: Problems and a Proposal."

As for the putative health insurance class action, here's a brief excerpt from the New Jersey Law Journal:

"I wasn't born yesterday," the judge said at an April 7 status conference in Newark attended by almost two dozen plaintiffs lawyers. "I understand everybody's interest in this room, and I'm not going to tolerate this becoming an attorney feeding frenzy for fees. My overriding principle will be to get this settled reasonably early, fairly, with the vast bulk of the proceeds going to the policyholders, not the attorneys."

ECB

Justice Souter Retiring

Justice David Souter plans to retire from the Supreme Court when the term ends in June, according to new accounts.  In the field of mass torts, Justice Souter authored the majority opinion in Ortiz v. Fibreboard Corp., the 1999 decision rejecting a Rule 23(b)(1)(B) limited fund settlement class action in asbestos litigation.  After Ortiz, non-opt-out settlement class actions -- which in the 1990s had some appeal as a potential mechanism for resolving future claims in high liability mass torts -- are both difficult and unappealing to use as a mass tort settlement mechanism.  For the tenth anniversary of Ortiz, the University of Kansas is planning a symposium in October, organized by mass torts prof Laura Hines.

HME

The Law of the Banana

Los Angeles Superior Court Judge Victoria Chaney dismissed two tort cases against Dow Chemical and Dole as fraudulent.  The suits alleged that chemicals manufactured by the defendants and used on banana plantations caused sterility.  Law.com reports of the lawyers' misconduct (see the full article here) - the Edelman referenced below is the defendants' attorney:

They offered a $20,000 bounty in Nicaragua for information about witnesses, Edelman said, and saw to it that Dole investigators were subject to intimidation by police and other officials. The court testimony that led to Chaney's ruling detailed how a group of Nicaraguan lawyers, in apparent collusion with local officials, judges and lab technicians, rounded up 10,000 men whom they coached to claim sterility -- and to blame that sterility on Dole's chemicals. In fact, many of the men had never worked for Dole, and many weren't sterile. Some even had multiple children. "There [are] massive amounts of evidence demonstrating the recruiting and training of fraudulent plaintiffs to bring cases in both the Nicaraguan and U.S. courts," Chaney wrote.

The transcript of the hearing in which the judg excoriated the plaintiffs' lawyers can be found at this link.  She will hold a contempt hearing and potentially refer the lawyers to the bar disciplinary committee.

(H/T Legal Ethics Forum - Roy Simon gives this the cute title "Banana Lawyer Slips, Tort Cases Fall")

ADL

Katrina Litigation Moves Forward

The New York Times reports that a lawsuit by property owners against the US Army Corps of Engineers regarding the breaking of the levees during Hurricane Katrina begins today.  Click this link to get to the article.  The article notes that the plaintiffs overcame the immunity issue, but still need to prove that government negligence, not the sheer force of the hurricane, caused their damage.  In terms of significance of this litigation, here's what the article says:

The plaintiffs say they hope a victory in the case could open the door for a broader class action in which more than 400,000 claims have been filed against the government. An Army financial projection has concluded that there is a reasonable possibility that potential government losses could ultimately range from $10 billion to $100 billion.

ADL

Wall Street Journal on Provenge & the FDA

Editorial in today's Wall Street Journal on the delay in approving prostate-cancer drug Provenge by the FDA -- Prostate Cancer and FDA Politics: Their first priority should be to save patients.  Here's an excerpt:

The larger question is why Provenge wasn't made available sooner to the 30,000 American men who die each year from prostate cancer. The FDA regularly -- and pointlessly -- slow-walks potentially revolutionary therapies, relying on overly simplistic and unscientific statistical models that don't take into account the fact that some drugs may work better in certain subgroups than in others. Its regulatory blockade is especially cruel to terminally ill patients for whom drugs like Provenge may mean extra months or years of life.

Id.  One wonders if rather than an FDA-centric regulatory approach, a flexible negligence standard incorporating evolving industry custom for testing would better serve public policy by expeditiously moving safe and effective drugs to market.

BGS

U.S. Homeowner Health Problems from Chinese Drywall

Article in the Wall Street Journal -- Homeowner Problems With Chinese-Made Drywall Spread, by Michael Corkery.  Here's an excerpt:

Complaints about foul-smelling Chinese-made drywall that first emerged in a few dozen homes in Florida in January have spread to hundreds of homes in several states, fueling controversy over the Chinese import.

Fearing that the construction material is making them sick, homeowners are moving out of their houses, filing lawsuits and demanding help from lawmakers. Two U.S. senators have proposed a temporary ban on certain Chinese drywall imports. A Chinese government agency is also investigating, according to a Chinese news report.

The actual health effects of the drywall, which is commonly used to construct interior walls, are still unknown. While homeowners attribute bloody noses, sinus problems and headaches to the drywall, the Florida health department said there is no evidence that gases being emitted from the construction material pose a serious health risk.

BGS

Second Wall Street Journal Editorial on Plaintiffs' Lawyers Hired for Contingency Fee by State of Pennsylvania

Following last week's editorial, the Wall Street Journal expanded its discussion in today's editorial.  Here's an excerpt:

Our editorial last week on the state lawsuit racket has created a stir in Pennsylvania, where Governor Ed Rendell has finally had to defend his "pay-to-play" relationship with Houston plaintiffs lawyer F. Kenneth Bailey. That's the good news. The rest of this underreported story is that Mr. Bailey has been running a nationwide "pay-to-sue" operation with Democratic state Attorneys General.

As we reported, Mr. Bailey made repeated donations to Mr. Rendell's 2006 re-election campaign in the months before his law firm was given a no-bid, contingency-fee contract to sue Janssen Pharmaceuticals on the state's behalf. Mr. Rendell told the Philadelphia Inquirer -- whose reporters have roused from their slumbers -- that "there wasn't the slightest bit of pay-to-play here." But the Governor was obliged to acknowledge that Mr. Bailey had approached the state about suing Janssen. Normally, the state Attorney General would handle such legal matters, but the AG rebuffed Mr. Bailey. Mr. Rendell's office then decided to hire the law firm that was also his major campaign donor. Smile if you think the two were related.

The episode speaks volumes about Mr. Rendell's political ethics, but more important is what it reveals about the plaintiffs bar's latest "business" model. Mr. Bailey's Janssen suit is part of a national pay-to-sue operation, as he and his Bailey, Perrin & Bailey law firm have taken their pre-packaged lawsuit to many states. Janssen's complaint asking the Pennsylvania Supreme Court to dismiss Bailey Perrin from the suit notes that the firm has "taken on numerous engagements similar to this action, including representation in the states of Louisiana, South Carolina, Arkansas, Mississippi and New Mexico."

BGS

Scholarship on Damage Caps

Catherine Sharkey (NYU) and Jonathan Klick (Penn) have posted an article entitled "What Drives the Passage of Damage Caps?" on SSRN.  The article is available here.  Here is the abstract:

A number of states have passed caps on non-economic and punitive damage awards in civil cases. The conventional wisdom is that the passage of these caps is driven by "out-of-control" jury awards that need to be reigned in. However, it could be the case that voters harboring anti-litigation, pro-tort reform sentiments are more likely to support the passage of caps even in the absence of an upsurge in awards. To examine the effect of jury awards on the passage of caps, we estimate semi-parametric hazard models of cap passage using data from the Jury Verdict Research Reporter.

ADL

Damage Compensation for Low Probability/High Damage Events

Richard Lempert (Michigan) has posted an article entitled Low Probability/High Consequence Events: Dilemmas for Damage Compensation on bepress.  Here is the abstract:

This article was prepared for a Clifford Symposium which challenged paper writers to imagine how our system of tort compensation might look in the year 2020. This paper responds to an aspect of the general challenge: to imagine a tort recovery system which would deal adequately with rare and catastrophic events. To get a handle on this problem, the paper looks closely at how the legal system compensated damages attendant on four recent events that might be considered “rare and catastrophic” – Three Mile Island, 9/11, Hurricane Katrina and the Exxon Valdez oil spill. In no case did the system of compensation meet all the desiderata of a well-functioning tort compensation scheme, but the two no-fault schemes which provided the bulk of the compensation to those injured in the Three Mile Island and 9/11 disasters seem to have done better than the “ordinary” tort system which provided the bulk of the individual compensation for the damages caused by Hurricane Katrina and the Exxon Valdez oil spill. The 9/11 compensation scheme may, however, have been sui generis since it appears to have reflected both a national coming together after an attack on the homeland and Congressional efforts to protect the airline industry, and the Price-Anderson compensation scheme, which worked well in Three Mile Island, might have failed utterly had the disaster been on the scale of Chernobyl. Ultimately, the article concludes, no imaginable compensation scheme is likely to adequately handle a large, unique and unexpected catastrophe, but some improvements in current law and practice are possible and ad hoc political solutions, as with 9/11, may help in some cases.

This raises the following question in my mind: Are large "unique" catastrophes really unique? That is, should as a matter of procedure or institutional design treat tort claims arising out of Katrina or 9/11 differently than the tort claims arising out of use of Zyprexia or Vioxx?  If so, why?  One explanation might be that we think of disasters as being blameless, while we do assign blame in the tort context, but arguably that isn't true with respect to 9/11 (terrorists) or Katrina (government ineptitude).  Although it is the case that those wrongdoers cannot be successfully hauled into court.

ADL

Does Litigation = Regulation?

A very intriguing analysis just posted on bepress calls into question whether litigation is a substitute for regulation.  See Eric Helland and Jonathan Klick, The Relation Between Regulation and Class Actions: Evidence from the Insurance Industry, available here. 

Here is the abstract:

Standard law and economics models imply that regulation and litigation serve as substitutes. We test this by looking at the incidence of insurance class actions as a function of measures of regulatory enforcement. We also look specifically at whether states with clear regulatory standards regarding the use of OEM parts experience less litigation over this issue. We find no evidence of substitution between regulation and litigation. We also examine the possibility that litigation is more frequent in states where regulators are more likely to be captured by industry interests, finding no support for this hypothesis either. Instead, litigation is more likely in states where similar litigation has been successful in the past, calling into question standard law and economics models in this area.

ADL

The "Hair Club for Men" Theory for Regulating Food Safety

Ian Ayers (Yale law) and Peter Siegelman (UConn Law) have posted a suggestion for regulating food safety: establish that the company CEO uses the product.  In other words, "I'm not only the president, I'm also a client."   See the idea developed more fully here at Freakonomics blog or here on Balkinization. 

Now for some civil procedure free association.  At the oral argument in the Iqbal v. Ashcroft case in the Supreme Court this term, Justice Breyer asked if a plaintiff finds a mouse in a can of cola, can he depose the CEO of a cola company?  If government regulations required the CEO to drink the cola, is the answer yes?  The answer it seems to me should be no, unless there is some demonstrable reason to depose the CEO (that is, deposing him or her will lead to the discovery of admissible evidence).  Just tasting the Cola is not such a reason, although "plausibly" alleging that the CEO had learned of the mice in cola and let the cola be distributed nevertheless or conspired to place mice in cola might be sufficient (at least, until Iqbal comes down). The majority of the members of the Court seemed to think that letting a CEO be deposed is pretty much the end of the world.  (Quite a turnaround from the Court's position that a civil suit against the President can proceed, including depositions.)  I wonder what they would make of forcing CEOs to eat the peanut butter their companies produce.

ADL