The ALI is best known as the folks who bring you the Restatements of the law, but that isn’t all this august group does. Over the last decade or so, when ALI (or some subset of it) has wanted to go beyond the constraints of what the law actually is, it commissions projects to examine what it calls “Principles” of the law. That’s what it’s doing now with a project called “Principles of the Law of Aggregate Litigation.” We’ve both signed up for what’s called the Members’ Consultative Group for this project. Being a member of a MCG is sort of like being a plaintiff’s lawyer – we get to come in and second-guess what’s been done by people who’ve specialized and thus usually know far more about a particular field than we do. Bexis says it’s like buying a ticket to a baseball game – but what would you expect from a Philly boobird.
Well, we just got the notice for the next ALI annual meeting, and the aggregate litigation “principles” are on the agenda again. They were on it last year, and their reception at the 2006 meeting was decidedly frosty. It wasn’t hard to see why. At that point, it appeared that there was only one guiding principle to these principles – to change the law in numerous ways to facilitate the creation of ever more class actions and other forms of mass litigation. In its wisdom, the ALI membership said “back to the drawing board” after a full debate that provided a forum for criticism from our (and other) points of view. ALI wasn’t close to adopting the prior draft of the “Principles,” and it probably isn’t much closer to adopting the current draft.
Why do we say that? Because we’ve studied the latest draft of the Principles of Aggregate Litigation that came out (September 21, 2006) after the roasting the prior draft received at the 2006 meeting. This is “Preliminary Draft No. 4,” and from our defense-oriented perspective it seems to add little more than window dressing to the controversial sections of the prior draft that drew so much fire.
We’d like to invite you to read this draft as well (and the transcribed debate from the 2006 ALI meeting if you’re really interested), but we can’t post a public link to it. One of the ways the ALI supports all of the fine work it does is through the revenue it receives from the sale of its publications. Anyone can purchase a copy of the draft, though, and as legal publications go they’re not all that expensive. If you’d like your own, go here: http://www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=80
By our count, there are at least 31 instances in which Preliminary Draft 4 proposes to change or add to existing law – and as with the prior draft, each and every one of those 31 changes encourages and expands the availability of class actions and other forms of aggregate litigation. If you like class actions, mass torts, and other aggregated litigation, then the current draft Principles are for you. If like us, you don’t, then you might want to consider what you can do about this. Take a look, and make up your own mind:
- 1. §1.01, Comment a: Right at the beginning, the Principles are “consciously breaking” with the terminology found in almost all applicable class action rules – dispensing with “predominance,” “superiority,” and the rest of the familiar analytical framework in favor of terms used in a 2005 law review article. However, those terms do not track any Rule enacted by any jurisdiction, state or federal. By jettisoning the legal requirements of the applicable rules, and the mature and well-developed body of case law that has grown up around those rules, the principles are profoundly destructive of existing law.
- 2. §1.05 – This section lists the “objects” of aggregate proceedings. These “objects” are those of the plaintiffs – “maximizing the net value” of the claims and “stopping challenged conduct” by defendants. This section is entirely one-sided, with no consideration given the “objects” of aggregated proceedings from the defense point of view.
- 3. §2.03, Comment a – The comment creates a circular test for issue aggregation by defining “material advancement” as the “resolution of common issues in the aggregate proceeding” – so that “material advancement,” by virtue of the definition, would always exist. This definition puts rabbit in hat, since any issue decided commonly obviously need not be revisited. Under this test, issue aggregation would become the norm rather than the rare exception. Individualized issues that remain – no matter how extensive – are essentially ignored. The draft looks to isolate common issues by “carving at the joint” (Reporters notes to §2.03, comment c), but we think there should be at least as much consideration given to the partially dismembered causes of action that would be left behind.
- 4. §2.03, Comment b – The draft takes the position (contrary to most courts, most recently, Blain v. Smithkline Beecham Corp., 2007 WL 178564, at *9 (E.D. Pa. Jan. 25, 2007)) that single-issue class certification should be available even though the action as a whole is not certifiable due to the predominance of individualized issues. In an earlier draft, the “Principles” had advocated abolishing the predominance test altogether. After intensive criticism of that position, the current draft has adopted a version of issue certification that effectively abolishes predominance sub silentio.
- 5. §2.03, Comment e – This comment endorses “creative” procedural arrangements and hypothetical “trial plans” over actually trying cases to see whether and to what extent a trial would involve individualized issues. We’d much rather see actual trials, since practice makes perfect.
- 6. §2.04 – The circular “material advancement” test discussed in item 3 is applied in this section to a new form of single-issue dividing line – between “liability” and “remedy.” The result is, again, that issue certification would become the norm. Of nine illustrations in §2.04, eight of them allow issue aggregation.
- 7. §2.04, Illustration 1 – All single-point pollution cases would be certifiable as class actions under this illustration, even though this type of case is a classic situation where proof as to one (lead) claimant is not proof as to all. To prove that any one person’s property is contaminated does not require any proof concerning the contamination of any other property – particularly non-adjacent property. This example is at cross-purposes with what the draft elsewhere calls the “ideal form” of aggregation: “that the determination of a common issue as to one claimant should resolve the same issue as to all other claimants.” §2.03, comment a.
- 8. §2.04, Illustration 6 – At least part of every product-related mass tort litigation would be certifiable as a single-issue class action under this illustration, which uses a product’s “merchantability” for purposes of implied warranty as an example of an independently certifiable “common issue.”
- 9. §2.04, Reporter’s Notes to Comment b – This note exemplifies the pro-aggregation slant of the draft’s Reporter's Notes. For the proposition that “in mass tort litigation, courts have certified issue classes on particular liability elements,” the notes cite only pre-Ortiz/Amchem cases, while omitting the much larger body of post-Ortiz/Amchem law (not to mention prior law to the same effect) that almost uniformly rejects class certification in mass tort litigation. A subset of that law – concerning prescription medical products – is cited in our post of January 26, 2007.
- 10. §2.05 – This section treats medical monitoring as an “indivisible” remedy. Under the draft’s jargon that means that – not only would any medical monitoring claim be automatically certifiable as a class action – but monitoring claims would be subject to no-opt-out, mandatory class certification. That’s just not the substantive law. Even in the minority of jurisdictions where such claims are recognized, medical monitoring includes several individualized elements, such as that monitoring must be “different” from that otherwise recommended, that there must be a “significant” increased risk, and that monitoring must be likely to actually help cure disease. E.g., Barnes v. American Tobacco Co., 161 F.3d 127 (3d Cir. 1998). It could get even worse. ALI has before it a separate draft of the Third Restatement of Torts that would recognize a medical monitoring cause of action generally. See Sean Wajert’s guest post of Jan. 19, 2007.
- 11. §2.05, Illustration 1 – The draft states that the reason medical monitoring is an “indivisible” remedy is because it involves “other than the distribution of money to individual claimants.” Medical monitoring, however, involves “the quantifiable costs of periodic medical examinations.” Redland Soccer Club, Inc. v. Department of the Army, 696 A.2d 137, 144 (Pa. 1997). That’s a form of monetary loss if we’ve ever seen it. Medical monitoring is all about money; the limit is that the money is to be spent only for a specific purpose. The draft abandons Rule 23’s current legal/equitable distinction in favor of declaring all monitoring classes to be the equivalent of “equitable” under existing definitions. That’s another controversial issue resolved in favor of promoting aggregation.
- 12. §2.05, Reporter’s Notes to Comment b – Here, one finds the statement that payment of money becomes “indivisible” if “claimants do not simply receive money that they might use in whatever way they choose.” Think of the implications of that. This language invites an explosion of mandatory, non-opt-out class action claims demanding payments of money for any number of limited purposes (such as research funds).
- 13. §2.06, Comments a & f – Contrary to current law, which requires the proponent to prove that the aggregation being sought is warranted, the draft would shift the burden of proof to defendants as to choice of law variations. A law review article, but no precedent, is cited as support for this change in the Reporter’s Note to comment f.
- 14. §2.06, Comment c – This comment gives textual treatment to the novel choice of law argument (almost never seen outside of class action litigation) that the governing law for every claim should be the law of a defendant’s principal place of business. The draft never grapples with the constitutional (extraterritoriality) and practical (corporate migration – think Delaware and corporate law) implications of this largely rejected approach to choice of law.
- 15. §2.06, Reporter’s Notes to Comment b –Several pre-Ortiz/Amchem cases are cited as examples of a permissible “patterns in substantive law” approach to choice of law. One of the few post-Ortiz/Amchem product liability class certifications was reversed precisely on choice of law grounds. In re St. Jude Medical, Inc., 425 F.3d 1116 (8th Cir. 2005). The Notes cite a prior district court opinion in St. Jude, but not the many courts that have found insuperable obstacles to class certification in mass tort actions. See Cases cited in our post of January 26, 2007 (limited to prescription medical product cases).
- 16. §2.08, Comment j and Accompanying Reporter’s Notes –The draft advocates overturning Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), and allowing aggregate trials in the MDL context. There is some merit to this suggestion, but it’s another pro-aggregation change.
- 17. §2.08, and Reporter’s Notes to Comment i – Contrary to almost all recent precedent, the draft advocates deciding punitive damages on an aggregate, classwide basis. Recent (post-State Farm) cases rejecting this approach include: In re Simon II, 407 F.3d 125, 139 (2d Cir. 2005); Engle v. Liggett Group, Inc., 2006 WL 3742610, at *9 (Fla. Dec. 21, 2006); Johnson v. Ford Motor Co., 113 P.3d 82, 94-95 (Cal. 2005); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006); O’Neal, v. Wackenhut Services, Inc., 2006 WL 1469348, at *22 (E.D. Tenn. May 25, 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005) (unpublished).
- 18. §2.08, Comment k – The due process rights of defendants are reduced to a mere “admonition” or “reminder,” while the due process protections afforded claimants remain unchanged (compare: §1.06, comment b, §3.03, mandatory language of black letter law about plaintiffs’ rights to notice and approval).
- 19. §2.09(b) – The draft elevates to black letter law the controversial proposition that courts in MDL consolidations not involving binding forms of aggregation can nevertheless order non-consenting plaintiffs to pay “common costs” to lawyers they have not retained. This kind of arrangement has never received appellate approval, and the In re Diet Drugs, 401 F.3d 143, 149 (3d Cir. 2005), citation is only to description in the statement of facts.
- 20. §2.10, Comment a – Here the draft breaks from existing law to authorize creation of opt-in class actions. Whether or not this is a good idea, it would require the sort of statutory or rules change that the draft states it is avoiding. See §2.03, reporter’s notes to comment b.
- 21. §2.11, Comments a and c – The draft rejects Seventh Amendment precedent that precludes aggregate trials involving more than one jury. Once again the circular “material advancement” test raises its head, this time to support “pragmatic” limits on the Seventh Amendment’s prohibition against reconsideration. The intent is to reduce this prohibition to a “historical artifact.” §2.11, comment c.
- 22. §2.12, and Comment a – The draft rejects existing precedent and allows class action plaintiffs repeated bites at the certification apple. Class action plaintiffs who have sought certification, failed, appealed, and failed on appeal would be able to repeat the process for identical classes in other jurisdictions. The draft rejects the collateral estoppel effect of an appealed denial of class certification under In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003), and would limit estoppel to the extremely rare instance of constitutional grounds for denial of class certification. The rationale – that other jurisdictions might construe even identical certification rules differently – is in sharp contrast to the “patterns of state law” approach the draft takes (§2.06) to state-law differences that would limit aggregation.
- 23. §2.13 – The draft would give great weight to “trial plans” in determining the manageability/feasibility of classwide trials. Trial plans are whatever the advocate wants them to be. As mentioned in Point 5, above, a less manipulable method would be actual trials of enough individual cases to determine whether proof is in fact common and whether all juries are likely to reach the same result.
- 24. §3.05 – The draft abandons, as too expensive, current constitutional principles that require individual notice to all claimants who can be identified through reasonable effort.
- 25. §3.07 – The draft would alter current law and allow settlement class actions even where individual issues predominate.
- 26. §3.08 – The draft departs from current law, and encourages uneconomic litigation, by allowing “cy pres” settlements – where claimants receive money without proof of injury. The draft would allow courts to give a defendant’s money to charities selected by plaintiffs’ counsel.
- 27. §3.09(c) – Although not addressing the massive filing of frivolous or worthless claims in solicitation-driven mass torts, the draft would change existing law to assess counsel fees against settlement objectors. Frivolous is frivolous. The same standards should be applied to anyone filing claims, whether plaintiffs or objectors.
- 28. §3.10, Comment b – The draft takes the position that guardians ad litem are enough to allow aggregated disposition of future claims, but nowhere addresses the implications of Ortiz/Amchem that tort claims involving only prospective injury might not even be cognizable under the Article III case-or-controversy requirement.
- 29. §3.11 – The draft endorses a previously rejected amendment to Rule 23 that would allow a second right to opt out in class settlement situations.
- 30. §3.12 – The draft would change appellate procedure to permit interlocutory appeals as of right where courts reject aggregate settlements.
- 31. §3.18(f) – The draft would hold settling defendants liable for the ethical lapses of opposing counsel. If a settlement were later found to be improper, the settling defendant (not the unethical plaintiff’s attorney) would be required to pay the counsel fees of the successful objector. No precedent is given for a defendant being responsible for its adversary’s ethical violations.
That’s 31 changes in the law – and 31 changes aimed at increasing the frequency of class actions and other forms of aggregated litigation. We haven’t left out (intentionally, anyway) any countervailing changes that would restrict aggregation. There just aren’t any. Why is this happening? It certainly doesn’t reflect any seismic shift in the law. If anything, the opposite is true. Since Ortiz in 1999 and Amchem in 1997, the federal court system has essentially shut the door on class actions in personal injury and product liability actions (what we know most about). In the decade since these Supreme Court decisions, only a smattering of such classes have even been certified, and none – not one – has yet survived a contested appeal. After the 2003 State Farm decision, as discussed in Point 17, aggregated treatment of punitive damages has been widely rejected. Not only that, but the old Eisen rule that once precluded courts from considering the merits of claims on class certification is on its last legs. See In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006).
Congress has concurred in this federal trend away from class actions. In 2005 it passed the Class Action Fairness Act, designed to force a wide range of putative class actions into the federal system, with the expectation that these class actions would be governed by increasingly restrictive federal precedents.
States are also joining this trend. State class actions have been pruned significantly in Texas (Southwest Refining), and Illinois (Avery). The notorious Mississippi joinder rule that used to allow mass aggregations in lieu of class actions (which Mississippi does not recognize) has been abolished.
In trying to make sense of why the ALI’s Aggregation Project takes so many positions that are so manifestly at odds with current legal trends, we have to consider the project’s guiding light, the primary ALI reporter, Prof. Samuel Issacharoff. Professor Issacharoff’s a smart guy (we’ve said so here before), and he comes with a proud civil rights pedigree. We’ve seen him in action at the MCG meetings; we’ve made some of these same points to him; and we respect the huge commitment of time and effort that he’s putting into this project – along with the three associate reporters. On the other hand, unlike most ALI reporters, Prof. Issacharoff has rather more irons in the fire than the average law professor. He’s very well respected, evidently quite in demand, and has quite often represented litigants in court.
We can only go on what the computerized searches tell us – but what they tell us is that, for the last five years or so, Prof. Issacharoff seems to have limited his practice to representing plaintiffs in class actions (at least those are the cases that show up). These representations include product liability class actions. In re Diet Drugs Products Liability Litigation, 431 F.3d 141 (3d Cir. 2005); In re Simon II Litigation, 407 F.3d 125 (2d Cir.2005) (which the draft Principles would overturn); In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003) (which the draft Principles would overturn). They extend to various class actions of other sorts. In re Flat Glass Antitrust Litigation, 385 F.3d 350 (3d Cir. 2004); Parker v. Time Warner Entertainment Co., 331 F.3d 13 (2d Cir. 2003); ABC Arbitrage Plaintiffs Group v. Tchuruk, 291 F.3d 336 (5th Cir. 2002); Wyble v. Gulf South Pipeline Co., 308 F. Supp.2d 733 (E.D. Tex. 2004); Montgomery v. New Piper Aircraft, Inc., 209 F.R.D. 221 (S.D. Fla. 2002).
Where one stands depends upon where one sits (at counsel table). We know that. We accept it. That’s what we do in this blog. This blog, however, is just the views of a couple of gadflies who can’t shut up. It isn’t a formal undertaking of what’s probably the most prestigious legal organization in the country. Everyone who defends against aggregate litigation of any sort has good reason to be concerned about the current form of the ALI’s “Principles of the Law of Aggregate Litigation” – because it does not reflect legal principles that the defense community shares. Those who work the “D” side of the “versus” need to pay attention to this development, and get (or stay) involved. Otherwise we and our clients could one day be in for a most unpleasant (and for our clients, expensive) surprise.
We’ve even heard that plaintiffs’ lawyers are unhappy with the current draft Principles. We have trouble understanding why, so perhaps we’re missing something. If anyone cares to defend the other point of view, feel free to comment below. We like comments – they make us feel that we’re doing something more than preaching to the choir. Freewheeling debate is, after all, part of what makes blogging fun.