Fairness in Class Action Litigation Bill Moving Forward

Earlier this year we posted about the Fairness in Class Action Litigation Act when it was approved by the House Judiciary Committee.

Our readers know that this type of bill generally is aimed at the so-called no injury class actions in which not all of the class members are injured, sometimes even most of the class is not injured -- for example purchasers of a consumer product with an alleged design defect that has not manifested itself in most of the units. Such classes create issues for defendants, plaintiffs, and the courts. The bill's sponsors argue that when classes are certified that include members who do not have the same type and scope of injury as the class representatives, those members siphon off limited compensatory resources. Classes including uninjured parties can also artificially inflate the size of the class to command a larger settlement value.

Now comes word the bill is tentatively scheduled for consideration by the full House of Representatives early in 2016.

If enacted, the law would require the moving party to affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative or representatives. And any certification decision in a class action regarding personal injury or economic loss must include a determination, based on a rigorous analysis of the evidence presented, that the requirement was satisfied.

Wisconsin Passes Asbestos Trust Reform

We posted before about the legislative effort in Wisconsin to level the asbestos playing field with regard to claims against asbestos trusts and remaining solvent defendants.  Earlier this month the state Senate passed a version of the bill that would require plaintiffs in asbestos personal injury actions to disclose whether they have filed a claim against any personal injury trust.

This week, the Wisconsin Assembly passed the bill (A.B.19), a version that will also create a setoff for defendants of the amount recovered from the trust.  The bill now goes to Gov. Scott Walker (R) for approval.  Published reports suggest the governor will sign the measure.

A.B. 19 imposes a series of new requirements in asbestos-related claims, including:

(a) the plaintiff shall provide to all parties a sworn statement identifying each personal injury claim he or she has filed or reasonably anticipates filing against an asbestos trust, including the amount claimed by the plaintiff, the date that the plaintiff filed the claim, the disposition of the claim and whether there has been a request to defer, delay, suspend, or toll the claim against the asbestos trust.
(b) For each personal injury claim he or she has filed against an asbestos trust, plaintiff shall provide a copy of the final executed proof of claim, all trust documents, including trust claims materials, trust governance documents, any documents reflecting the current status of the claim and, if the claim is settled, all documents relating to the settlement of the claim.
(c)  Trust claims materials and trust governance documents are admissible in evidence. No claims of privilege apply to trust claims materials or trust governance documents.
(d) Trust claim materials that are sufficient to entitle a claim to consideration for payment under the applicable trust governance documents may be sufficient to support a jury finding that the plaintiff may have been exposed to products for which the trust was established to provide compensation and that such exposure may be a substantial factor in causing the plaintiff's injury that is at issue in the action.
(e) If a verdict is entered in favor of the plaintiff in an action subject to this section and the defendant is found to be 51 percent or more causally negligent or responsible for the plaintiff's entire damages, the plaintiff may not collect any amount of damages until after the plaintiff assigns to the defendant all pending, current, and future rights or claims he or she has or may have for a personal injury claim against an asbestos trust.

 

UPDATE- The governor signed the bill. (reminder check our disclaimer page, we don't always update posts!)

 

Report Issued on "New Lawsuit Ecosystem"

The U.S. Chamber of Commerce Institute for Legal Reform has released a report examining the developing lawsuit “ecosystem” and areas of litigation of most concern to the business community. The report examines the trends and players in six key litigation areas, offers insights into new emerging liability threats, and explores the growing alliance between state attorneys general and the plaintiffs’ bar.  One key feature notes how alleged deceptive marketing claims against food and beverage makers are on the rise.  Readers will recall our many posts about the trend for plaintiffs to parse labels and bring putative class actions even when they were not injured by the product. The report is entitled "The New Lawsuit Ecosystem.”

The report delves into the areas of law where entrepreneurial plaintiffs’ lawyers have been prospecting for new liability: Class actions against food makers alleging misleading advertising;
Data privacy suits against businesses over allegations that they inadvertently violated released or misused customer information; Claims against brand-name drug manufacturers for injuries allegedly stemming solely from generic products they did not make or sell; Speculative theories of liability seeking to recover for risks of harm or “economic loss,” not actual injuries.

The report also looks at the increasingly troubling trend of state attorneys general turning over the keys to their offices and litigation powers to private plaintiffs’ lawyers. Plaintiffs’ lawyers often develop the legal theories, decide whom to target, and then “recruit” state attorneys general
to retain them on a contingency fee basis to bring the lawsuits. This process provides significant advantages to plaintiffs’ lawyers: it eliminates the need to represent individuals who were actually injured by a defendants’ product or conduct; avoids any contribution those individuals may have
made to their own injuries; reduces traditional defenses; heightens the plaintiffs’ lawyers’ subpoena power; and gives them the ability to seek fines, not just damages. State attorneys general have these powers because they are to be used sparingly, and only to advance appropriate public policies. They are not to be used to maximize personal profit, which is the goal
of private contingency fee lawyers who are often personal or political allies of the state attorneys general.

Very interesting read.


Among those contributing to the report were my colleagues Mark Behrens, Phil Goldberg, Victor E. Schwartz and Cary Silverman.

Prop 65 Reforms Proposed

Our readers know how Prop 65 has created numerous issues for product sellers and created much litigation mischief in the hands of overzealous plaintiffs. Interesting that earlier this week, California Gov. Jerry Brown (D) said he now advocates reforms to California's law to frivolous lawsuits that do nothing to protect consumers.

The administration, through the California Environmental Protection Agency, wants to work closely with the state Legislature to revamp Proposition 65 by ending frivolous “shake-down” lawsuits. 

Voters approved Proposition 65 in 1986. The measure requires the Governor to annually publish a list of chemicals allegedly "known to the state to cause cancer or reproductive toxicity." If a business in California sells a product containing such chemicals listed by the state in excess of certain levels, the business must provide warnings to users or in the workplace.

The Governor wants reforms to:
• Cap or limit attorney’s fees in Proposition 65 cases.
• Require stronger demonstration by plaintiffs that they have information to support claims before litigation begins.
• Require greater disclosure of plaintiff’s information.
• Set limits on the amount of money in an enforcement case that can go into settlement funds in lieu of penalties.

The administration is worried about "lawyers who bring nuisance lawsuits to extract settlements from businesses with little or no benefit to the public or the environment." Since 2008, nearly 2,000 complaints have been filed by so-called “citizen enforcers.” Goofy suits include litigation against banks for failing to prevent second-hand smoke near their ATM machines.

The devil is always in the details, so it will be important to keep an eye on this.

 

ATRA Releases "Judicial Hellholes" Report

The American Tort Reform Association has released its latest edition of the Judicial Hellholes report.  Of particular interest, ATRA ultimately chose to move formerly #1-ranked Philadelphia (home base of your humble blogger) off the list of Judicial Hellholes and into the top slot on the marginally less critical "Watch List."   ATRA wanted to acknowledge various efforts taken by the local court recently to step back from prior administrative steps that seemed designed to attract out of state mass tort plaintiffs.

ATRA now ranks California -- the entire state – as the new #1 Judicial Hellhole (it was #2 last year).  "Lingering troubles with an unbalanced playing field" earn West Virginia the second-place ranking; Madison County, Illinois earned the #3 ranking with filings of new asbestos lawsuits in the small, rural jurisdiction poised to set another record. And New York City’s mounting tort liability, and Baltimore because of its asbestos litigation, led to fourth- and fifth-place rankings for those jurisdictions.


This latest report also debuts a new feature scrutinizing some of the worst (and best) federal appellate decisions of the year, and they also added a special focus on the explosion of consumer protection litigation, particularly that which targets “Big Food.”

 

 

Tort Reform Continues in Arizona

As always at MassTortDefense we are happy to note tort reform victories.

Earlier this month Arizona Governor Brewer signed legislation limiting punitive damage awards in product liability defect suits in the state.

The bill, H.B. 2503, was passed by wide margins in both chambers of the state legislature earlier in the Spring.  It states that punitive damages generally cannot be awarded in a civil suit in Arizona when a product is designed, manufactured, packaged, labeled, sold, or represented in relevant and material respects in accordance with a federal agency's approval, clearance, or determination.

The legislation does not exempt punitive damages if the company that sells a product does so after a final order is given from a government agency to withdraw or recall the item from the market.

Supporters had indicated that the measure was important to discourage the practice of seeking punitive damages simply as a lever to force a defendant to settle, as insurance typically does not cover punitives. Businesses that manufacture products in compliance with all relevant health and safety standards should not be held liable for punitive damages in product liability cases. Laws like this one give clients the security to be innovative. When creating new products, businesses can be assured that by complying with mandated guidelines they will not be subject to unjust punitive sanctions. 

 

Competing Model of Plaintiff Class Action Bar Forthcoming

Readers of MassTortDefense are mostly from the defense bar, and are always thinking about what the other side is thinking about.

Visiting Professor Ratner of Harvard Law School is trying to give us a new view of plaintiff class action attorneys.  Since he practiced with Lieff Cabraser Heimann & Bernstein, readers can soon decide for themselves whether his view is descriptive or wishful thinking. See Ratner, Morris, A New Model of Plaintiffs' Class Action Attorneys (2011). Review of Litigation, Forthcoming.

According to the author, this article offers a new model for conceptualizing plaintiffs’ class action attorneys, and thus for understanding principal-agent problems in class action litigation. It responds to the work of Professor John C. Coffee, Jr., who, in a series of influential articles, demonstrated that principal-agent problems may be acute in class action litigation because class members lack the information or financial incentive to monitor class counsel; class counsel is thus free to pursue his own interests at the expense of the class members. But what are those interests, and how do they diverge from the class members’ interests? Professor Coffee provided one answer to this sub-set of questions, presenting an account of class counsel and the precise parameters of his disloyalty corresponding with three descriptive assertions: that class counsel is either a solo practitioner or in a small firm; that he is predominantly interested in maximizing his law firm profit; and he capably pursues his fee-maximizing goal by investing his time in cases based on confident predictions about expected fees.

In this article, the author offers a competing conception of the dominant class action attorneys and firms; he argues that the leading firms today are relatively large and internally complex; law firm structural complexity creates diverse incentives other than maximization of law firm profit; and class counsel invest time in cases for complex reasons other than the effect on expected fees, particularly because fees are notoriously difficult to predict. Modeling class counsel to recognize this complexity has three virtues, he claims: it better reflects the actual characteristics of the most significant class action attorneys, and hence is a more accurate descriptive tool; as such, it enables a more precise understanding of the extent and nature of agency or loyalty problems; and thus, finally, it provides a more solid basis for needed reforms. In particular, this new model, the author asserts, sheds insight on the importance of direct versus incentive-based regulation to manage agency costs in class actions. In light of the diverse incentives this new model reveals, direct regulation of outcomes by trial courts using enhanced final approval standards should be a central part of any package of reforms to manage agency costs in class litigation, argues the author.

We are looking forward to seeing the arguments.