We just got back – well, one of us, anyway – from the latest ALI Members’ Consultative Group (“MCG”) meeting concerning the Principles of the Law of Aggregate Litigation (which we’ll call “PLAL” for short). We’ve always had concerns about the direction of this project, which we haven’t hesitated to inflict on our readers.
We’re doing it again.
The latest version of PLAL, we have to admit, is improved in a number of ways: (1) class action treatment of personal injury claims is “broadly” rejected, (2) there’s more recognition (although we still don’t think enough) of a defendant’s right to defend common issues with individualized proof, (3) the circular “material advancement” test we complained about before is gone (but, for how long, we’re not sure), (4) the draft endorses searching review (including discovery) of the plaintiffs’ contentions in advance of a certification decision, (5) the reporters agreed that the principal place of business choice-of-law position should be characterized as a minority view; and (6) the latest draft retreats to a more neutral treatment of punitive damages in the context of class actions.
Unfortunately, PLAL still suffers from the same two fundamental problems that have been there all along: (1) it would do away with predominance as a practical restriction on the types of claims that can be certified as class actions, and (2) it would allow routine certification of what it calls “common issues” – pieces of litigation or of a cause of action – without regard to the litigation or cause of action as a whole. PLAL calls that “carving at the joint,” but even in the examples it uses, some of this carving would do considerable damage to the sinews of the law.
Both of these features would change the existing legal landscape dramatically – leading to a significant increase in the types of matters subject to class action certification. Currently, predominance is the single greatest impediment to certification of class actions in just about any action for damages.
Single issue certification (so-called “(c)(4)” certification after Fed. R. Civ. P. 23(c)(4)) has always been the exception rather than the rule – again because of predominance. If single issues could be certified as class actions without regard to the rest of the litigation, the concept of predominance would lose its meaning, because the plaintiffs could always ask the court to slice the salami thinner until the only the “common issue” was left.
And that’s pretty much what the latest ALI draft still does – only it uses a different metaphor.
The reporters have worked hard putting this together, and they’ve listened to our criticism (for the most part) patiently. Some things (like personal injury) they’ve actually changed in a way that makes the whole thing better. At this point, however, on these core issues, we have to assume that the draft does what it does because that’s how the reporters want the law to be.
That means it’s getting close to a take it or leave it proposition for ALI members like us.
But don’t just take our word for it about how expansive individual issue class certification would still become under the latest draft. Take a look at the illustrations in the draft itself for what it’s intended to do….
Actually, you can’t – unless you buy the thing from the ALI publications unit. ALI has to fund itself, after all.
So you’re stuck with out word for it after all – unless you want to shell out the thirty bucks.
“Illustrations” are used in ALI publications to provide models that explain how things work, not only on the precise facts, but under similar facts. The PLAL illustrations thus indicate not only what precise facts support class certification (“aggregation”) under its view of the law, but also mean that analogous facts should support certification, too.
Section 2.01, illustration 1 – reliance can be certified as a common issue in a fraud case when there’s a “common body of evidence, if believed by the factfinder.” Under current law, reliance is usually the paradigm of an individual issue. The same thing’s repeated almost verbatim in Section 2.03, illustration 7, so the draft really wants to make this point. Certify!
Section 2.03, illustration 4 – The “geographic scope of seepage” in a point source pollution case can be certified as a separate common issue. That happens only rarely these days, because “proof as to one” isn’t “proof as to all.” An individual property owner doesn’t care about the whole “geographic scope” of the pollution. S/he doesn’t have to. All the individual need prove is that the defendant polluted his/her property. But under this draft (as it currently stands – we raised a ruckus about this at the meeting) if “geographic scope” of pollution is at issue: Certify!
Section 2.03, illustration 6 – another fraud/reliance example. Reliance is a common, certifiable issue whenever there is a “standardized sales pitch.” It doesn’t seem to matter whether any given customer actually believed the pitch or not. Certify!
Section 2.03, illustration 8 – here PLAL punches yet two more holes in the currently individualized reliance issue, this time for both an “objective, reasonable-person standard for reliance,” and/or when the law “presumes reliance upon proof of a material misrepresentation.” But in an example of what we would call excessive joint-cutting, it seems strange that a “presumption” of reliance could be a certifiable common issue, separate and apart from whatever evidence the defendant might offer to rebut the very same presumption. But who cares whether the presumption is rebuttable? Certify!
Section 2.03, illustrations 9 and 12 – aggregate treatment of the “breach” issue in litigation raising the implied warranty of merchantability is “permissible.” Wow! We look around and see that lots and lots of economic loss actions that include breach of warranty allegations. In PLAL’s brave new world, they’d all be suitable for aggregated (that is class certification) treatment. The breadth of these illustrations was so remarkable that we asked the reporters specifically about it at the MCG meeting. Do you guys really mean to say that, everything else being equal, economic loss claims involving UCC warranty claims would be routinely certified under PLAL? They confirmed it – yes. Wow! Certify! Certify! Certify!
Not only that, the illustration we like the least is still there – Section 2.04, illustration 1, about medical monitoring. PLAL essentially lays out a road map. As long as plaintiffs’ counsel are smart enough to plead what PLAL tells them to, they’re home free. Do that, and they’ve characterized medical monitoring in a way that PLAL not only says is certifiable as a common issue, but one that supports a mandatory, non-opt out class action.
As long there’s a monitoring “fund” involved, medical monitoring becomes an “indivisible” remedy because, from the plaintiffs’ perspective, if one person is entitled to monitoring, then so would everyone else who’s similarly affected. But we represent defendants. So we naturally look at medical monitoring from the defense perspective. All we see in medical monitoring cases is a demand that the defendant pony up the $$$ to pay for the fund. From our perspective, medical monitoring’s a run-of-the-mill damages claim, except for the fact nobody’s been hurt. But then PLAL rarely looks at things from a defense perspective. So … Certify!
While we’re on the subject, we have a second beef with the draft’s treatment of medical monitoring, so we’ll get that out of the way, too. As a matter of substantive law, medical monitoring is really controversial. As we’ve pointed out, repeatedly, here, here, here, and here, most recent precedent has either rejected altogether the idea that uninjured people can recover prospective medical expenses, or else has limited such recoveries to environmental torts. But PLAL practically gives medical monitoring the ALI seal of approval – six different illustrations and two pages (small print) of Reporters’ Notes, all without a any acknowledgement anywhere that the existence, vel non (fancy legal Latin for “or not”), of the cause of action itself is quite questionable.
So, after all has been said and done, our basic beef with PLAL remains pretty much the same as it’s always been. On aggregation, we’re essentially traditionalists. We think that the rules, and indeed the whole American legal system, contemplate that ordinarily individual plaintiffs (even if a lot of them) sue individual defendants. Lawyers should represent, and owe their professional duties to, real clients, not legal fictions like “classes” or “consolidations.” If a cause of action can’t practically be pursued except in an aggregated fashion, then that cause of action has no business existing (unless provided by statute). Litigation isn’t the answer to all society’s woes, and some problems are best left to the democratic branches of government to solve.
Now, in fairness, we have to add that the PLAL doesn’t profess to change things all that much. The Reporters’ Notes say that several times in §2.02, and they reiterated that sentiment in person the other day.
Yeah … and in 1965, §402A (“strict liability”) was supposed to be a restatement of “existing” law.
We just can’t see it. And the other side, if the law gets muddied up again with the elimination of established concepts such as “predominance, will try for every advantage then can from that resultant ambiguity. That’s what they do. That’s what they’re supposed to do under our adversarial system of justice.
PLAL takes away predominance, a bulwark against widespread class certification that’s supported by both massive accrued precedent and the language of the rules themselves. In its black-letter rules, PLAL doesn’t replace predominance with anything much that’s concrete. We know how plaintiffs operate. If it’s not in the black letter, they’re going to tell courts to ignore it. That’s what they do now, all the time, with … for example, the administrative history of the CBE regulation (even if we haven’t posted it, we’ve read the other side’s brief in Levine).
Under PLAL, the guiding principle would no longer be whether common issues “predominate” but rather whether the arguably “common” issue sought to be certified would “drive the resolution” of the litigation.
We don’t even like the sound of that. Whether the reporters mean it or not, when we hear that, it sure sounds like our clients are getting the cannon of the in terrorem (legal Latin for “something scary enough to make people surrender their legal rights”) effects of class certification pointed straight at them. The “driving” that PLAL seeks to do – from where we stand – looks like driving defendants to settle no matter what the merits of the case, because after certification all of a sudden millions (or billions) of dollars are at stake.
If it gets down to take it or leave it, we’ll have to leave it, because we can’t support something that, in practical operation if not necessarily the reporters’ intent, promises to produce a massive expansion of the number of cases and subjects amenable to class action certification.
Beyond that, in our prior post we listed a bunch of particular points of concern that we had with PLAL. Just to be consistent, we’ll let you know how we think those complaints were affected, if at all, in the current draft:
- §2.02 [formerly 2.03], Comment a – The discussion of “marketability” of plaintiffs’ claims still remains, and thus still suggests that it’s appropriate to use aggregation to create value in what are otherwise worthless (“unmarketable”) claims. As we discussed before, we think that’s an improper use of a procedural device to change the substance of the claims. Objections were raised to this discussion at the MCG meeting and it might be changed, but for now, PLAL takes the position that a valid justification for an aggregation procedure is that it makes otherwise valueless claims have value.
- §2.02 [formerly 2.03], Comment f – PLAL still contains language that would prevent defendants from conceding common issues in order to avoid the bother of aggregation. We disagree and think an outright concession is the highest form of litigation “efficiency” conceivable. We think concessions should therefore be encouraged, not discouraged. We raised it at the MCG, and the reporters referenced a civil rights case where the defendant tried to use a concession to avoid all liability by keeping the would-be class ignorant of their rights. So they wouldn’t change what was in the draft. Well, we’re not interested in promoting sharp litigation practices either, but we hardly think that’s a reason for PLAL to be hostile to all concessions. We tend to use them in environmental cases with events that were notorious to everyone potentially affected. We weren’t going to win on liability anyway, and the clients would rather pay claimants than enrich class action lawyers. We’d be fine with dismissal of common claims by way of concession being predicated upon the conceding defendant (who, after all, was the one that screwed up) paying for notice of the concession to the erstwhile class.
- §2.02 [formerly 2.03], Comment g – This comment continues to endorses “creative” procedural arrangements that we view with suspicion, but other changes have removed most objectionable substance. What’s left is little more than platitude, and thus probably not worth the trouble of further mention.
- §2.02 [formerly 2.03], Reporters’ notes to comment a – We didn’t like the “material advancement” test as the standard for when aggregation/class certification is appropriate. PLAL has largely gotten rid of it, except for a trivial mention in the reporters’ notes. That would be a good thing, except that, as already discussed, the replacement phrase – “drives the resolution of multiple claims” – is probably even worse, since it sounds like “let’s see if we can force the defendants to settle.” This inability to come up with a workable test suggests to us the obvious alternative: go back to the language that’s actually in the governing rules. But undoubtedly that’s too easy.
- §2.03 [formerly 2.04], Illustration 4 – The illustration that “geographic scope” of contamination in a single-point pollution case presents a certifiable common issue is still there. It might end up being dropped, or at least modified, though. Discussion at the MCG meeting revealed that the case on which the illustration was based wasn’t in fact about “scope” but only a simple “yes/no” contamination question that, to us, would be much less problematic. But then again, that case apparently was so peculiar (since most alleged class actions in this field do genuinely involve scope), that it raises the question, what’s the point of the illustration in the first place?
- §2.03 [formerly 2.04], Illustrations 9 and 12 – Our biggest beef from before is now fixed in toto. Express language has been added disclaiming personal injury. But as we’ve already discussed, making breach of warranty/merchantability the model of a certifiable issue is pretty conclusive proof that PLAL will greatly expand the availability of class certification.
- §2.03 [formerly 2.04], Reporter’s notes to comment b – This was largely fixed before, and from the MCG discussion we expect it will be entirely fixed. The reporters agreed to remove the last of the pre-Ortiz/Amchem personal injury cases they had cited.
- §2.04 [formerly 2.05], and Illustrations 1-6 – these are the medical monitoring illustrations that, as we’ve already discussed, make that claim amenable to mandatory class actions and confer implicit ALI blessing on that controversial cause of action. We aren’t going into those problems any further. As for the illustrations themselves, the examples aren’t all that bad, especially Illustration 6, which if moved to the front and made the general rule (since in practice it embraces the most cases), could fix most of more specific problems. Illustration 6, at least as the reporters explained it at the MCG, provides that medical monitoring isn’t certifiable if “individualized inquiry into the circumstances of th[e] exposure” is necessary. Essentially, it’s Rhodes v. E.I. Du Pont De Nemours & Co., ___ F. Supp.2d ___, 2008 WL 4414720, at *9-14 (S.D.W. Va. Sept. 30, 2008), and a hundred other similar cases. Every medical monitoring claim we’ve encountered has individual exposure issues: how much, how long, at what concentration, were putative class members even present? Thus, a general rule of non-certifiability based on Illustration 6, with an exception for what is now Illustration 1, would go quite a long way to fixing the discussion of “indivisibility.”
- §2.04 [formerly 2.05], Illustrations 2 and 4 – This hasn’t been fixed, but probably will be. They read as determinations of whether a medical monitoring claim has substantive merit, but could easily be changed by adding “individual issues exist” before the operative language.
- §2.04 [formerly 2.05], Reporter’s notes to comment b – It’s still here, but we already discussed this. From a defense perspective, medical monitoring claims look purely “legal” in that our clients are simply being told to pay money.
- §2.05, Comment a [new] – This isn’t an area of disagreement at all. We just couldn’t resist pointing out that the reporters actually agree with us (that doesn’t happen often) about General Motors Corp. v. Bryant, ___ S.W.3d ___, 2008 WL 2447477 (Ark. June 19, 2008). PLAL labels that case an “outlier.” We called it an “atrocity.”
- §2.05 [formerly 2.06], Comments a & f and reporters’ notes – PLAL still shifts the burden in choice of law to opponents of certification in some situations, to which we object, because that’s properly (and traditionally) the class proponent’s burden. But during the MCG meeting it became clear that what the reporters had in mind was more in the nature of a burden of production than burden of proof. That probably would not be a problem, so while it’s not fixed, it’s fixable.
- §2.05 [formerly 2.06], Comment c – We were told at the MCG meeting that this will be fixed and that the reference to a defendant’s principal place of business as a choice of law principle will either be dropped or explicitly recognized as a distinct minority rule. That’s still the case, as last week’s decision in Knipe v. SmithKline Beecham, 2008 WL 4442635, at *8-10 (E.D. Pa. Sept. 30, 2008) (otherwise really bad) yet again demonstrates.
- §2.05 [formerly 2.06], Comment b and reporters’ notes – The supposed “patterns in substantive law” approach to choice of law isn’t supported by a single case less than ten years old. The only new case isn’t a “patterns” case at all, since it separately dealt with each state. All this should tell the reporters (four really smart law professors) that this approach, if technically “existing,” is moribund. We think it should be consigned to the dustbin of history.
- §2.06, Comment a and reporters’ notes – This is unchanged. PLAL still seeks to overrule two seminal cases in the elimination of personal injury class actions, In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995), and Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996), and deprive defendants in aggregated litigation of Seventh Amendment protection. We think defendants have constitutional rights, too (and we don’t want to see a personal injury comeback), so we don’t like this.
- §2.07 [formerly 2.08], and Reporters’ notes to comment i – PLAL’s tilt to the plaintiffs’ side on aggregated treatment of punitive damages has been fixed. Now, the notes simply identify the problem in a straight-forward way. The discussion still needs updating on substantive grounds, since Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007), made the question as much one of procedural due process as of excessiveness. We discussed that aspect of Williams here.
- §2.07 [formerly 2.08], Comment j and accompanying reporters’ notes – PLAL still wants to overturn Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). We still don’t have strong feelings as a matter of legal policy (what ALI’s about), but since in practical effect Lexecon makes it harder to bludgeon our clients into settling with trial threats, we guess we like Lexecon the way it is.
- §2.07 [formerly 2.08], Comment k – Still unchanged. The black letter about defendants’ constitutional rights isn’t that bad (it uses “shall”), but the comment insists on describing that as merely an “admonition,” an unfortunate choice of words. If they’d just call it a “requirement” we’d call it fixed.
- §2.09(A)(3) – This is still there and worse than ever. One quid pro quo for issue certification is an interlocutory appeal as of right from “any determination of common issues on the merits.” After the MCG discussion, it seems even less adequate than we thought before. The nature of such an appeal simply hasn’t been thought through very much. (1) Is it essential in that failure to authorize such appeals would mean abandonment of broad “common issue” certification? (2) How would this appeal relate to Rule 23(f) interlocutory review? (3) What’s the scope of review? (4) The standard of review? (5) How would it effect the ability of a court to revisit certification down the road? (6) How do multiple interlocutory appeals affect waiver of issues not raised? The reporters admitted that they hadn’t thought through these questions. All the more reason, we think, to stick with the current, restricted version of Rule 23(c)(4).
- §2.09(b), Comment c – Unchanged, although we don’t care all that much. The basis of supposed judicial authority to order non-consenting plaintiffs in “other proceedings” (that is, people not before the court) to pay “common costs” to lawyers they have not retained isn’t obvious. Sure, courts have done it – but they tried MDL cases before Lexecon. Simply citing cases that do it doesn’t address where the power to do it comes from. There’s only one case, In re Showa Denko K.K. L-Tryptophan Products Liability Litigation-II, 953 F.2d 162, 166 (4th Cir. 1992), in which an appellate court has examined the propriety of such an order, and the court rejected it outright. The reporters’ notes don’t even acknowledge the case. It looks entirely result-oriented to us.
- §2.10, Comment a – Whoa! This would create an opt-in class mechanism for anybody, anywhere in the world, to sue American defendants in American courts over events that happened overseas. There’s not even a nod in the direction of forum non conveniens, and the discovery/evidentiary problems that such litigation would cause defendants. Also, it’s based on personal injury precedent, which elsewhere has been removed. Our balance of payments is bad enough. We don’t think our legal system should import litigation and export “damages.”
- §2.11 [formerly 2.12], and Comment a – This got worse. In In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003), the court used collateral estoppel principles to put a stop to plaintiffs seeking to certify the same nationwide classes time and time again in different state courts. The as-published draft would cabin Bridgestone/Firestone into nothingness by limiting it to due-process based certification denials (has there ever been one?), but at the MCG, it became clear that now the reporters want to overrule Bridgestone/Firestone altogether. Since there’s no vested interest in a procedural device, and because the class in Bridgestone/Firestone did not have adequacy of representation problems, we think the case is correctly decided. PLAL would depend on “comity” instead, except that plaintiffs control forum selection and don’t choose courts inclined towards comity. We’d have to call this a giant step backwards towards class action abuses, except that the jurisdictional changes made by Class Action Fairness Act probably solve the problem independently.
- §2.13 – The “trial plan” fig leaf for “common issue” certification is still here, and is as insubstantial as ever. There isn’t even a requirement that the trial plan actually be used at trial. We still consider PLAL altogether too trusting of mere lawyer-drafted pieces of paper. There was a “trial plan” in Engle, and the reporters freely acknowledged at the MCG meeting the huge mess that that case has produced We still think actual trials would be a more reliable way of separating real manageability/feasibility problems from phony ones.
Anyway, we’ll wait and see what happens between now and the next ALI meeting next May, when it appears that chapter 2 of PLAL will be presented for a final vote. The choice looks like it’s going to be pretty clear. If you want lots more class actions, PLAL gets a thumbs up. If not, it shouldn’t.