Wednesday, January 28, 2009

A Grace Note To Beisner And Miller

We enjoyed John Beisner and Jessica Miller's paper, "Litigate the Torts, Not the Mass: A Modest Proposal for Reforming How Mass Torts are Adjudicated," just published by the Washington Legal Foundation. (We liked Richard Nagareda's foreword to the monograph, too. And we're pleased to see that the authors are giving a talk based on their paper on this Friday morning, which will be available on-line here. We're just in a happy mood today.)

Beisner and Miller's thesis, in a nutshell, is that the judicial system could better litigate mass torts if (1) diversity jurisdiction were expanded to allow more claims to proceed in federal court, (2) courts adopted more aggressive winnowing procedures to separate the wheat from the chaff at the outset of mass torts, (3) class action tolling of statutes of limitations were eliminated in mass torts to provide clearer guidance as to when all claims must be filed, and (4) ethical rules were revised to account for the unique problems posed by mass tort settlements.

We're chiming in with an extra thought on the third point -- the need to eliminate class action tolling in the mass tort context.

Here's the background: American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), held that "the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action." Id. at 554. The Supreme Court announced that tolling rule for three reasons: (1) to avoid prompting absent class members to intervene or file separate complaints to preserve their claims, (2) to protect absent class members who reasonably chose not to intervene or file a separate case in reliance on the pendency of the class action, and (3) because the Court saw no harm to the statute of limitations, since the filing of the class acion put the defendant on notice of all claims against it.

Beisner and Miller object to American Pipe tolling in the mass tort context for three reasons. First, Beisner and Miller explain that "the vast majority of [mass tort] plaintiffs file individual complaints notwithstanding the hypothetical availability of class action tolling." Beisner & Miller, at 37. Second, the parties in mass torts often reach tolling agreements, which render class action tolling redundant. Id. Third, American Pipe tolling makes it impossible for the parties or the courts to "get a grasp of the size or scope of the litigation until years after the deadlines contemplated by the applicable statutes of limitations," which renders settlement more difficult. Id. at 37-38.

Beisner and Miller also note that courts almost never certify mass tort personal injury classes, which distinguishes mass torts from other fields of law in which classes are more likely to be certified and tolling is thus arguably justified. Id. at 38-39.

We'd like to add two more thoughts to the mix:

First, the Supreme Court decided American Pipe in 1974, when the MDL statute was just six years old. MDL procedure was in its infancy, and the phrase "mass torts" had not yet entered the lexicon. In 1974, courts arguably had a reason to worry about absent class members filing an avalanche of individual lawsuits if the pendency of a class action didn't toll the statute of limitations: How would courts manage the vast number of cases?

Times have changed. Courts now routinely manage thousands, or tens of thousands, of individual lawsuits that are filed as part of MDL proceedings. If the MDL transferee judge thinks it likely that he or she will certify a class, then the court can stay the individual cases pending a class certification decision and, if appropriate, notice of the right to opt out of the class. If, on the other hand, the MDL transferee judge recognizes that the court is unlikely to certify a personal injury class, then the court can begin to process the deluge of individual cases, as appropriate. (So too in state courts, where many states have enacted "mini-MDL" procedures. See Mark Herrmann & Geoffrey Ritts, "Statewide Proceedings," The National Law Journal (Oct. 13, 2003).)

It is now routine for courts to manage a slew of individual lawsuits filed as part of a mass tort proceedings. Time and experience have undercut American Pipe's concern about the judicial system's inability to process individual lawsuits that would be filed absent class action tolling.

Second, the Supreme Court's assertion that absent class members reasonably rely on the pendency of a class action to postpone filing individual complaints is simply not true in the context of mass tort class actions.

In some class action contexts -- allegations of discrimination at one manufacturing plant, or allegations that the properties surrounding one lake have been affected by groundwater pollution, for example -- it's possible that many people in the small community affected by the local dispute may in fact be aware of the pendency of the class action and may rely on the putative class action to protect their rights.

But, in the context of mass torts, this is simply not true. When tens of thousands of patients have received a medical implant, or hundreds of thousands of patients have ingested a drug, those patients are exceedingly unlikely to be aware that a class action has been filed on their behalf. In this context, the legal fiction of reliance is a fantasy indeed. See Mark Herrmann, "Class Actions: Are you a class member?," The National Law Journal (Sept. 19, 2005).

Moreover, in other contexts, class action procedure basically acknowledges that absent class members are often unaware of the pendency of the class action lawsuit. The rules require courts and parties to notfiy absent class members (including giving individual notice "to all members who can be identified through reasonable effort") when a Rule 23(b)(3) class is certified. And the rules again require notice to be given when certified class actions are settled. Fed. R. Civ. P. 23(e).

Why would the rules require giving notice if the absent class members were already aware of the pendency of the class action and able to monitor its progress? Because, we submit, outside of the context of class action tolling, the rules more honestly recognize that most absent class members are unaware that the class action is pending. That truth undercuts one of the main rationales for American Pipe's tolling doctrine.

So: "Hear, hear!" to Beisner and Miller. Fight the noble fight!

But don't miss a trick. There are even more reasons than you offered in your paper to justify altering the class action tolling rules in the context of mass torts.

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