There’s a new draft of the ALI’s Principles of Aggregate Litigation in circulation. And, like all the others, you’ll have to buy it from the ALI. Make sure you ask for Council Draft #2, or you’ll be wasting your money on a superseded version.
We’ve provided you with our views – and gripes – on the prior drafts of this ALI project, here, here, and here.
It’s time for another go.
But this time, at least, we’ve got some help. As the latest draft states, “[w]e are now in the final stages of this project.” Reporters’ Memorandum (11/12/08), at 1. And at long last there’s now more than the voices of a couple of bloggers crying in the cyber-wilderness.
Yesterday we received an email from John Beisner, a class-action guru over at O’Melveny, and (we’re delighted to learn) a regular reader of this blog. We’ve worked with John in a number of mass tort “virtual law firm” set ups, so when he told us he’d weighed in with comments of his own about the Principles of Aggregate Litigation, we know what that means.
For once we don’t have to do the all the work of drafting one of these posts ourselves. That’s something we can appreciate.
This Letter provides the most sustained critique that the ALI’s principles project has received (other than from us) since the Product Liability Advisory Council, Inc. (“PLAC”) submitted its comments on Discussion Draft #2 back in May, 2007. PLAC never even got an acknowledgement of receipt. We sure hope that the Beisner letter has more influence than the PLAC submission.
So instead of preparing another of our screeds, this time we can just say, “What he said ….”
Not surprisingly, John’s concerns largely parallel ours. His problems with the current draft are:
- Overall encouragement of more class action litigation, particularly in mass torts.
- The consequences of expanded use of single issue class certification – especially erosion of the predominance requirement.
- Endorsement of class actions in the context of medical monitoring.
- The undue prominence of corporate principal place of business as a choice of law alternative.
- Rejection of constitutional “reexamination clause” (Seventh Amendment) precedent protecting defendants in aggregated litigation.
- Creating “opt in” classes for foreign litigants seeking to sue American companies over things that happened in other countries.
And not only that, the Beisner comments come complete with solid legal research to back them up – the kind of research we never really had time to do. We fed the blog instead.
Let’s take a look at the reasoning.
ENCOURAGE MORE CLASS ACTIONS
Section 2.03, as a whole “paints an overly optimistic view of the viability and usefulness of the issues class device in aggregate proceedings.” Class actions have theoretical attractiveness, but in practice often accomplish little more than to “tilt the playing field” in favor of plaintiffs through (presumably) the intense pressure they generate for defendants to settle and for plaintiffs to churn the litigation to increase their fees:
In theory, issues classes sound attractive – a way to simplify complex cases. But that attractiveness normally wanes when one tries to assess employing the device in the context of a specific case. Such an exercise usually reveals that an issues class would serve primarily to tilt the playing field to one side or the other – not to create the kinds of efficiencies that supposedly recommend the device.
Letter at 2.
Thus §2.03 “should note that because of the unfairness risks, the issues class device should be used only where there is a very compelling showing that the device will serve to create real efficiencies in resolving the proceeding.” Letter at 3.
Another thing that could be done to reduce §2.03’s bias in favor of class certification is to highlight the most widely used alternative to class actions in aggregate litigation – bellwether trials. Such trials, as they remain individual cases, have numerous advantages over class action proceedings:
- Bellwether trials “tell a court and the parties about the strengths and weaknesses” not only of “various categories of cases” but also “the strengths and weaknesses of various elements of the claims within those cases.”
- Although “not binding,” bellwether trials “tend to have a strong precedential effect and loom large as the parties seek to resolve those proceedings.”
- Bellwether trials are more realistic. They “are not artificially confined to only certain facts,” but rather “consider and resolve the entirety of a specific claim” and thus do not leave any bits and pieces that have to be resolved in some other manner.
- Bellwether juries may be “asked to answer interrogatories that may provide insight into the value of other cases in the aggregate litigation pool.”
- And, if properly selected, the bellwether process has the “added benefit” of “discouraging the filing of meritless claims because every case in an aggregate proceeding is at risk of being tried.”
- Bellwether trials do not bet the whole of the litigation on one throw of the dice. Rather “juries reach different views about [liability issues] depending on a plaintiff’s specific experiences.”
Letter at 3-4. Cross-reference: PLAC 2007 submission chapters 1 and 2.
THE PREDOMINANCE REQUIREMENT
Issue classes, in particular, are overemphasized in §2.03, by using the “concept of ‘carving at the joint’ in framing” such classes. Issue classes are often suggested as a possible means of “streamlining litigation,” but consideration usually amounts to no more than a “brief flirtation” because of serious problems with certifying bits and pieces of litigation:
(1) potential issues classes are rarely as neatly packaged as hypotheticals may suggest; (2) issues classes are rarely efficient; and/or (3) issues classes are, as a general rule, inherently unfair because they present the first jury with no real facts and the second jury with a preconceived finding of liability.
Letter at 1-2 (citations omitted).
Thus, as written §2.03 creates an “inaccurate impression” – that courts across the country have “ignored” single issue certification, “when in reality, courts have carefully examined the option in a wide array of contexts and found it only very rarely to be the complex litigation panacea that it is advertised to be.” Letter at 2.
It is almost impossible to try a single “common” issue coherently because facts, unlike legal theories, are usually a seamless web without “joints” subject to “carving.” “[O]ur jury system works best when a jury is allowed to hear the whole story, not just pieces.” The “bottom line” is that chopping litigation into “bitesized” bits “is bound to substantially favor one side or the other,” Letter at 3, and, not surprisingly, the side that anticipates being so favored will be the one advocating single issue certification.
A prime example of the mischief that can be caused by single issue class actions is the environmental or other toxic exposure case in which “general causation” is asserted as a single common issue:
[I]n a mass tort ease, plaintiffs frequently propose an issues trial on a general causation question: could the product at issue cause the alleged adverse health effect? Typically, the burden of proof on that question (versus the specific causation question) is much lighter for plaintiffs. After all, the jury is, for all practical purposes, presented with a series of abstract questions about whether the defendants are bad actors. Since no tangible consequences would follow from a verdict against the defendants, a jury may be more inclined to find there is sufficient evidence to warrant subsequent individual trials. In that sense, the first jury acts as a de facto grand jury rather than a true factfinder.
Letter at 2.
Section 2.03 likewise fails to consider what’s left after a “common issue” has been adjudicated in aggregate fashion. Single issue adjudications confer “substantial advantages” upon the prevailing party on the remaining issues “that [are] not always legitimate.” Again, looking at “general causation”:
[I]f an issues trial jury makes a general causation finding regarding a product (that is, the jury finds that the product could cause a particularly adverse health effect), that development will create an enormous advantage for plaintiffs in subsequent individual claims trials. When the jury in the latter trial is told of the general causation verdict, it is likely to be interpreted as a binding finding that the product is dangerous, likely creating among jurors a greater receptivity to arguments that the drug had an adverse effect in the individual plaintiff’s case and that a specific causation finding is therefore warranted.
Letter at 2-3.
For these reasons, §2.03, as it relates to single issue certification, “should be revised to endorse (and not reject, as it presently does) the widely held judicial view that issues trials are appropriate only where a class action as a whole satisfies the predominance requirement.” Letter at 3 (citations omitted).
The section should also “stress that even if certain ‘common’ questions could be answered in a vacuum,” a single issue class “would be inappropriate if subsequent juries would be required to reconsider these ‘common’ liability issues.” Letter at 4. These reconsideration concerns are addressed in more depth below.
Cross-reference: PLAC 2007 submission chapter 3.
TO CLASS CERTIFICATION
Addressing §2.04 of the draft Principles, the Letter addresses the same concerns we have expressed over the extraordinary emphasis given to medical monitoring claims. The lead hypothetical in draft §2.04 supports (mandatory) class certification of medical monitoring, while the most common situation – that differences in the facts surrounding different people’s exposures and susceptibilities to a toxic substance preclude class treatment of medical monitoring claims – is relatively speaking buried in a later illustration that is virtually lost in a chain of various hypotheticals:
[C]ourt after court has rejected medical monitoring classes because, in reality, there are no situations in which hundreds or thousands of people with the same medical histories and predispositions are exposed to an allegedly toxic substance in the same amount, putting them at the same risk of the same condition. The draft fails to convey sufficiently – as court after court has found – that medical monitoring cases are inherently individualized because assessing someone’s risk of personal injury is usually no different from the specific causation analysis that makes personal injury cases so individualized.
Letter at 4-5 (over a page of single-spaced citations omitted) (emphasis added). As the current draft “recognizes that personal injury actions are normally not suitable for aggregate resolution,” it should do the same for medical monitoring, since “the same characteristics” are present in medical monitoring litigation “that make personal injury cases unattractive candidates for class treatment.”
That’s point one about §2.04. Point two is a more scholarly exposition of the beef we’ve had with mentioning medical monitoring at all – that the very existence of this supposed cause of action is controversial:
[T]he draft downplays the growing chorus of state courts that have rejected medical monitoring claims absent present injury as a threshold matter, making the class certification discussion irrelevant. . . . By giving so much attention to medical monitoring class actions, the draft seems to be implicitly endorsing the availability of the medical monitoring remedy, a point not appropriate for an ALI principles document addressing procedural matters.
Letter at 6 (more citations than in our own medical monitoring compendium omitted).
Cross-reference: PLAC 2007 submission chapter 10.
ACCEPTED CHOICE-OF-LAW THEORY
This is another point we’ve kvetched about since the first draft of the Principles we ever saw. Why does §2.05, comment c even discuss the outlier theory that corporate principal place of business determines choice of law in anything other than corporate law-based litigation? “[T]he comment, as currently drafted, could be read to legitimize an approach . . . that has been soundly rejected by court after court.” Letter at 6 (citations to 18 cases omitted). Thus:
While the current language indicates that such an approach is “rare” and may be subject to constitutional constraints, this discussion should more clearly indicate that federal and state courts across the country have flatly rejected the use of defendant’s principal place of business to steer choice-of-law determinations in class actions.
But here the Letter’s comments go beyond our admittedly limited backgrounds in constitutional law and address the “constitutional constraints” that the draft’s comment only wave at:
[T]hat statement. . .fails to capture the current state of the law. In reality, the constitutional constraints of due process will almost always render the application of one state’s laws – including those of the defendant’s principal place of business inappropriate . . . . [I]t is a “basic principle of federalism” that “each State may make its own reasoned judgment about what conduct is permitted or proscribed within its borders.”
Letter at 7 (quoting State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 422 (2003)). The letter goes on to cite a number of cases specifically applying this principle in the choice of law context. Id.
Thus, if the draft is to mention principal place of business at all in the context of choice of law, it should state “that courts nationwide – including the U.S. Supreme Court – have almost unanimously rejected such an approach.” Letter at 8.
Cross-reference: PLAC 2007 submission chapter 7.
CHANGES IN CONSTITUTIONAL LAW
We’ve mentioned the assault on the Seventh Amendment mounted by what is now §2.06 of the draft Principles in every one of our posts (although the section numbers have varied) on this subject. The letter calls this position what it is – an “overreach”:
[The draft] unduly downplays the significant practical and constitutional problems posed by reconsideration of evidence insofar as it ignores the fact that parties often attempt to use bifurcation to secure a lopsided trial of an abstraction for example, of a company’s allegedly bad acts. It also seems to overreach in essentially declaring the Reexamination Clause rulings in In re Rhone-Pou1enc Rorer Inc., 51 F.3d 1293, 1303 (7th Cir. 1995), and Castano v. American Tobacco, 84 F.3d 734, 751 (5th Cir. 1996), to be wrongly decided.
Letter at 8.
It’s simply not the business of a procedural principles project to advocate changes in fundamental constitutional law. Thus, there is “concern” over the draft’s “seeming hostility toward widely recognized constitutional restraints on reexamination of facts by a second jury.” Letter at 9. The draft takes “a cramped reading” of the Seventh Amendment that “fr[eezes it] in time” rather than allowing it to “to adapt to the evolving practices of federal courts.” Id. (explaining that the comment “is contrary to unanimous Supreme Court and federal appellate precedent. . since 1931”) (another half-page of citations omitted).
Beyond that (and beyond what we’ve ever said), the Letter identifies §2.06 as another point where the detrimental practical effects of single issue class certification are ignored. “[T]he same concerns that animate the federal rule against advisory opinions counsel further skepticism about the accuracy of a judgment based on abstract facts” (citations omitted). And §2.06 –
omits an important “functional” consideration – whether bifurcation prejudicially distorts the jury’s factfinding function. As discussed above, there is a significant risk that bifurcation could be used in such a way that, upon reexamination of first-phase issues in their greater context, a jury would be inclined to reach a different result regarding the same issues in later phases.
Letter at 8.
Cross-reference: PLAC 2007 submission chapter 5.
OF WRETCHED FOREIGN CLASS ACTION PLAINTIFFS
YEARNING TO BANKRUPT AMERICAN COMPANIES
The Letter also addresses the new provision that we spotted the last time around – the revamping of §2.10 to call for “opt-in” class actions for foreign plaintiffs, anywhere, to join together to sue American corporations over grievances that arose anywhere – in the world that is.
Like us, the letter finds little in this new proposal to recommend it. It is a:
struggle to understand why changing current law to create the option of certifying “opt-in” classes (as urged by the current draft) is either necessary or desirable. Although the Reporters’ Notes say that “opt-in” classes should be permitted “in exceptional circumstances,” neither the Notes nor Comment (a) identify what those “exceptional circumstances” might be other than to imply (perhaps unintentionally) that such circumstances might arise in connection with class actions primarily involving putative class members located in foreign countries.
Letter at 9.
But why throw the gates wide open to accommodate foreign plaintiffs? Good question. “[T]he current text does not explain why it would be desirable for U.S. courts generally to expend resources adjudicating class actions comprised of foreign claimants alleging claims based on conduct that occurred in foreign countries.” Letter at 9.
Finding that the entire thrust of §2.10 is to overrule a single case (Kern v. Siemens Corp., 393 F.3d 120 (2d Cir. 2004)), that the Reporters don’t like, and finding no particular justification for encouraging “international class action[s],” the Letter wisely “recommend striking this Section.” Letter at 10. Failing that, the section should be revised to reaffirm that “that nothing in this Section is intended to alter traditional forum non conveniens principles.” Id. Otherwise, §2.10 gives the “impression that the real purpose of the commentary in this Section is to lower hurdles for bringing foreign class actions in U.S. courts.” Id.
Cross reference – none.
In sum, John’s written a great set of comments – and not just because they saved us a whole lot of work coming up with our own evaluation of the latest draft Principles of the Law of Aggregate Litigation.
No, the real reason the Letter is important is because it shows that the potentially imminent (next May) prospect of this draft being adopted by the ALI is starting to draw the attention of others in the defense community to the serious problems that still surround this principles project.
Thus we invite other readers of this blog who share our concerns (especially ALI members) to prepare and send their own comments to the project’s Reporters at the addresses given in the Letter. While the ALI council is meeting tomorrow, that is not a firm deadline for sending comments to the Reporters.
And send us a copy, too. We’ll collect them and post the really good ones.