The class action counterreformation.
INTRODUCTION: REFORM VERSUS COUNTERREFORMATION I. THE AMERICAN COURTS' CONTRASTING ATTITUDES TOWARD "CLASSIC" CLASS ACTIONS II. MASS WITHOUT CLASS: EXISTING JOINDER ALTERNATIVES UNDER THE FEDERAL RULES A. Rule 20: Permissive Joinder 1. General standards for Rule 20 favor joinder 2. Courts have reached divergent conclusions on application of Rule 20's "transaction" requirement B. Rule 22: Interpleader C. Rule 42: Consolidation/Severance for Common Questions Trials III. CLASS NOUVEAU: EMERGING VARIATIONS ON THE CLASS ACTIONS THEME A. Rule 23(c)(4)(A): "Issues Classes " B. Classwide Punitive Damages Determinations C. The New and Implied Preference for Class Actions over "Representative Actions" in Consumer Cases D. The Class Action Fairness Act (CAFA) E. The "Opt-In" Class CONCLUSION
INTRODUCTION: REFORM VERSUS COUNTERREFORMATION
Class actions have been reformed to death. In Amchem Products Inc. v. Windsor (1) and Ortiz v. Fibreboard Corp., (2) the Supreme Court transformed Federal Rule of Civil Procedure 23(b)(3)'s "superiority" requirement into a mandate of perfection, and reformalized the "limited fund" doctrine beyond practical utility. In the case of Amchem, the perfect was the enemy of the good: the multibillion-dollar settlement, rejected by the Supreme Court, was lost forever, and thousands of claimants who would gladly have traded their pristine due process rights for substantial monetary compensation have been consigned to the endless waiting that characterizes asbestos bankruptcies. The $1 billion in contested insurance coverage that Ortiz attempted to capture for the benefit of asbestos victims has similarly evaporated. Sometimes, reform hurts most those whom it is invoked to assist.
On the legislative front, perennial congressional efforts to "reform" class actions by expanding federal diversity jurisdiction and removing the class action procedure from our state court systems were again revived in light of the outcome of the most recent election. (3) The admitted goal of congressional class action "reform" is to save class actions by destroying them as viable state court proceedings and transferring them (at the whim of any single class member or defendant) to the federal system, where, the lobbyists in favor of "reform," at least, have promised the suits will languish and die. (4)
There have been a few nonpartisan, functional additions and refinements to Rule 23: in the past six years the federal class action rule (5) has gained a discretionary appeals feature, (6) and the 2003 amendments include detailed provisions for governing the content and dissemination of class notice, (7) the appointment and compensation of class counsel, (8) and the specifics of the judicial review and approval process for class action settlements. (9) The states have engaged in their own class action innovations. For example, effective January 1, 2002, California enacted a uniform system of class action-specific Rules of Court that govern procedures in all class actions from the filing of the complaint through discovery, case management, class certification, class notice, trial, settlement, and dismissal. (10)
Unfortunately, the extreme wing of the movement for class action reform has also successfully waged war with fact. A recurring motif, for example, in mass media attacks on class actions is that class action attorneys' fees are too high, despite a massive body of empirical evidence that court-awarded fees in class actions are substantially lower than private contingent fee agreements. (11) Class action fees are substantially lower in real terms (as a percentage of dollars recovered) than private contingent fee contracts (which can range from 30% to 40% of recovery--and higher, in especially risky cases) because judicial recognition of the economies of scale inherent in class actions and judicial sensitivity to class members' interests and public sentiment have caused percentage fees to trend downward as class lawyers' efforts achieve ever larger settlements. (12)
As these "reforms" demonstrate, it is far easier to curb class actions than to avoid or reduce the mass frauds and disasters that create mass misery and the need for workable aggregate litigation mechanisms. Making asbestos victims wait longer for compensation or for their much-vaunted "day in court" does not correspondingly lengthen their life spans, nor increase their tolerance for delay. A new social covenant, fondly desired by corporate interests, would dismantle effective civil litigation enforcement in return for an unenforceable corporate promise to tell only the truth and sell only safe products for fair prices. In effect, it is an offer to replace justice with "just trust us." This "bargain" appears too close at hand for comfort.
Yet recently, there has been a judicial awakening, a dawning recognition that class actions were not the sole remaining barrier to utopia and that class action reform may have been "carried to an excess, that itself will need reforming." (13) The counterreformation has begun. It is taking several forms. First is the path of least resistance, utilizing alternatives to traditional, formal class certification to accomplish at least some of its aggregative and preclusive advantages. (14) This is done through adopting, and adapting, the joinder and aggregation alternatives that exist, most notably, in Rules 19 through 24 of the Federal Rules of Civil Procedure. (15) The second, more straightforward, path is the reclamation and revitalization of "partial" or "issues" class certification under Federal Rule of Civil Procedure 23(c)(4)(A).
Intersecting with this approach is a neoclassical analysis that recognizes practicality as a touchstone and rejects the insistence on perfection as the functional equivalent of superiority under Federal Rule of Civil Procedure 23(b)(3). The most recent judicial example of this trend, the decision affirming class certification in Klay v. Humana, Inc., (16) is discussed in this Article. The neoclassical approach adheres to the textual requirements of class certification under Rule 23 and draws upon decades of jurisprudence to restore rational, comparative analysis to the inherently relativistic (but too often absolutist) determination of Rule 23(b)(3)'s "predominance" and "manageability" requirements. (17)
The last, and newest, approach focuses not on the development of judicial choices through "issues class" analysis under Rule 23(c)(4)(A), or on Rule 23(b)(3) superiority criteria, but on the mechanics of class member choice, harnessing the inherent authority and equity jurisdiction of federal courts to engraft alternative procedures, such as the "opt-in" class, that are neither expressly provided for, nor precluded by, the text of Rule 23 itself.
I. THE AMERICAN COURTS' CONTRASTING ATTITUDES TOWARD "CLASSIC" CLASS ACTIONS
The most recent major opinion on nationwide class action certification authored by a federal appellate court is the Eleventh Circuit's comprehensive decision in Klay v. Humana, Inc., which issued on September 1, 2004. (18) In Klay, a unanimous panel of the Eleventh Circuit affirmed the district (trial) court's certification of a nationwide class of over 600,000 physicians alleging violations of the federal civil RICO (antiracketeering) statute, in connection with major U.S. health care insurers' alleged refusal to make full payment for the physicians' professional services. (19) The Klay class is one of the very largest classes ever certified in U.S. commercial, nonsecurities litigation. Klay signifies the continuing willingness of at least some American appellate courts to recognize the utility and vitality of the representative suit to fairly, efficiently, and cost-effectively provide consistent and binding adjudication of common, recurring questions of fact or law. In recent years, by contrast, some American courts have withdrawn from affirmative embrace of the class action mechanism, in no small part because the mechanism is effective: risk-averse litigants and passive courts seem reluctant to decide important issues in one fell swoop, preferring instead to nibble away at the issues in protracted litigation, hoping that a comprehensive solution will emerge through "market forces." (20)
What is most striking about the Eleventh Circuit's Klay decision is the policy declaration that concludes it. In Klay, the defendants claimed that a class action was inferior to a host of individual suits in resolving the recurring issues of the litigation, invoking the conventional "free market" multitrial approach to mass litigation to argue that "a single jury, in a single trial, should not decide the fate of the managed care industry." (21) An influential 1995 decision, In re Rhone-Poulenc Rorer, Inc., by the Seventh Circuit, had advanced just such a premise in reversing certification of a mass tort class action, because, with a class action,
[o]ne jury, consisting of six persons ... will hold the fate of an industry in the palm of its hand. This jury ... [may] hurl the industry into bankruptcy.... [This] need not be tolerated when the alternative exists of submitting an issue to multiple juries constituting in the aggregate a much larger and more diverse sample of decision-makers. (22) To this, the Klay court responded: We find such reasoning unpersuasive and contrary to the ends of justice. This trial is not about the managed care industry; it is about whether several large HMOs conspired to systemically underpay doctors. The issue is not whether managed care is wrong, but whether particular managed care companies failed to live up to their agreements. The plaintiffs are seeking nothing more than the compensatory damages to which they are contractually entitled, and the treble damages to which they are statutorily entitled. We have nothing but the defendants' conclusory, self-serving speculations to support their claim that this trial could devastate the managed care industry. "Because considering the financial impact of a judgment presupposes success on the merits and requires the trial court to express an opinion on the harshness Vel non [sic] of a particular remedy prior to trial itself, it ought to be allowed only in extreme cases." ... More importantly, however, if their fears are truly justified, the defendants can blame no one but themselves. It would be unjust to allow corporations to engage in rampant and systematic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous. We are courts of justice, and can give the defendants only that which they deserve; if they wish special favors such as protection from high--though deserved--verdicts, they must turn to Congress. ... Given the number of parties involved in this case, it threatens to degenerate into a Hobbesian war of all against all. Nevertheless, we feel that the district court--a veritable Leviathan--will be able to prevent the parties from regressing to a state of nature. One can only hope that, on remand, the proceedings will be short, though preferably not nasty and brutish. (23)
Klay merits both fulsome quotation and close study, because it signals an abrupt about-face from the previous recessive trend in class action jurisprudence and declares a renewed commitment to centralized case management that does not skew or ignore procedural rules because their application may have profound consequences. As such, Klay is the polar opposite of the judicial attitudes embodied in the Rhone-Poulenc decision with which it took direct issue.
The Rhone-Poulenc decision has been vastly influential in all aspects of class action jurisprudence. Its "free market" attitude toward the maturation of mass torts through repetitive trials in multiple jurisdictions has held sway across the country, (24) in part, it may be suspected, because it absolves reluctant courts of the serious responsibilities and daunting demands of organizing and managing complex litigation to determine common questions in unitary proceedings. In Rhone-Poulenc, the Seventh Circuit's justification in reversing the class action status of a major mass tort was avowedly procorporate. Rhone-Poulenc voiced the concern, found nowhere in the Federal Rules, that a classwide trial on liability that the defendant lost would place it into bankruptcy, or force it to settle, short of trial, because the risk of loss, rather than or in addition to the risk presented by the merits, would force a corporate decision to surrender. Since such pressure would not be present had the company faced only a series of scattered individual trials--with lower consequences of defeat, and repeated opportunities for victory--class actions therefore comprise, in the Rhone-Poulenc analysis, a form of "blackmail." (25)
Utterly absent from Rhone-Poulenc's diatribe against class certification was any recognition that the victims had corresponding rights. Indeed, Rhone-Poulenc and its progeny exhibited no consciousness that consigning common issues to individual adjudication denies due process to the victims of mass wrongs.
The notion of Rhone-Poulenc is that a sample of trial outcomes, garnered from complete trials conducted before many juries in multiple jurisdictions, will eventually yield a market consensus on the viability or settlement value of an average case. (26) The Rhone-Poulenc model posits unfairness to defendants resulting from the classwide trial of an "immature" tort: a case that has not been seasoned through repetitive trials and in which the outcome is unpredictable. This "immature tort" theory has been applied by a number of courts in denying or reversing class certification in mass tort litigation, most notably in tobacco litigation in which the Fifth Circuit, in 1996, declared smokers' claims to constitute an "immature tort" requiring multiple trials rather than class treatment. (27) The Fifth Circuit's decision in Castano v. American Tobacco Co. restates the value judgments inherent in the multiple trial/immature tort model:
In the context of mass tort class actions, certification dramatically affects the stakes for defendants. Class certification magnifies and strengthens the number of unmeritorious claims. Aggregation of claims also makes it more likely that a defendant will be found liable and results in significantly higher damage awards. In addition to skewing trial outcomes, class certification creates insurmountable pressure on defendants to settle, whereas individual trials would not. The risk of facing an all-or-nothing verdict presents too high a risk, even when the probability of an adverse judgment is low. These settlements have been referred to as judicial blackmail. (28)
The Klay court rejected the immature tort theory as a proper consideration in the class certification decision, disapproving recent case law from within the Eleventh Circuit itself. (29) As Klay instead declared, "None of our cases has ever held the 'maturity' of a tort to be a proper consideration in the certification decision.... [W]e reject this as a legitimate consideration in making a 'superiority' determination." (30) The Klay court affirmatively declared that "there is no basis in Rule 23 for arbitrarily foreclosing plaintiffs from pursuing innovative theories through the vehicle of a class action lawsuit.... [A] class action may be the only way that most people can have their rights--even 'innovative' or 'immature' rights--enforced." (31) As the Klay court further observed, if an immature tort truly raised a variety of new or complicated legal questions, then those questions themselves would constitute significant common issues of law, whose "resolution in a single class-action forum would greatly foster judicial efficiency and avoid unnecessary, repetitious litigation." (32) Accordingly, the Klay court saw superior desirability in centralizing the litigation and adjudication of such claims in a single forum, rather than farming them out to a multiplicity of courts for a period of market maturation under the Seventh Circuit model.
With respect to Rhone-Poulenc's articulation of a "hydraulic" pressure on defendants to settle class actions far in excess of the aggregate values of their constituent individual claims, (33) the Klay court sided with the Second Circuit's view on these matters, noting that "[m]ere pressure to settle is not a sufficient reason for a court to avoid certifying an otherwise meritorious class action suit." (34) In the Klay view, settlement pressures had already been taken into account in the structure of Rule 23, through the enactment of the Rule 23(f) appellate provision, "which allowed the defendants to pursue this appeal in the first place." (35) As Klay tartly noted, "Having already used settlement pressure as a basis for getting into this court on interlocutory appeal, the defendants cannot continue to rely upon it as the basis for overturning the underlying certification ruling." (36)
Finally, the Klay court observed that the hydraulic pressure to settle supposedly created by class certification operates in two directions. Overturning an otherwise proper class certification decision for fear of imposing hydraulic pressures on a defendant does not equalize the stakes in a litigation; rather, it turns the hose full force on the plaintiff: "while affirming certification may induce some defendants to settle, overturning certification may create similar 'hydraulic' pressures on the plaintiffs, causing them to either settle or--more likely--abandon their claims altogether." (37) In short, the Klay court recognized that class certification decisions are not supposed to be about the merits, and courts considering class certification in the first instance, or reviewing a class certification decision on appeal, must not choose sides or allow their sympathies to guide their hand in placing a thumb on one of the scales of justice.
The mass production and nationwide marketing of standard products and services creates the potential for massive liability in cases of intentional wrongdoing, negligence, or sometimes mere error. This massive risk goes with the territory in our mass market economy. (38) Voluntary entrants into the market should not expect the courts to protect them from that entrance's consequences. (39) The overarching import of Klay is that, in rejecting the Rhone-Poulenc approach, it recognized the inherent artificiality and unreality of a supposed free market of litigation or a tort maturation process. The civil justice system is one realm in which the vagaries of the market are not intended to hold sway, because the purpose of civil litigation is to correct, not exacerbate or ignore, the harms and errors that sometimes result from market activities.
It is worthwhile to ponder whether the diametrically opposed approaches of Rhone-Poulenc and Klay could be reconciled with some form of a low-stakes, diffuse-market model used to inform the parties of juries' perceptions of the value and merits of the claims before all-or-nothing decisions must be made. A literal Rhone-Poulenc approach is not practicable: the conduct of many trials in many courts throughout the country takes too long, costs too much, and is too disrespectful of the rights of litigants for reasonably cost-effective and expeditious determinations of their claims to be truly feasible, especially in an era in which each side may spend in excess of $1 million in out-of-pocket costs alone, discovery and trial preparation consumes several years, and the trial itself may take weeks or months in each individual case. The asbestos litigation that was the subject of Amchem and Ortiz itself constitutes a horrible example of mass litigation consigned, for much of its life span, to a decentralized litigation marketplace. (40)
Yet, if procedures could be harnessed to mimic the marketplace in a more cost-effective and efficient fashion--if litigation could reach maturity before killing off or bankrupting the litigants--plaintiffs and defendants alike would certainly be interested in the opportunity. There are, fortunately, a number of procedures, many of them developed as alternative dispute resolution mechanisms, that may be employed. A dramatic example of the effectiveness of the "summary jury trial" device, for example, is the recent utilization of a one week mini-trial in the Teleetronics certified class action that was not binding on defendants or the class, but provided both sides with sufficient information to enable them to negotiate a fair and reasonable classwide settlement. (41)
II. MASS WITHOUT CLASS: EXISTING JOINDER ALTERNATIVES UNDER THE FEDERAL RULES
A. Rule 20: Permissive Joinder
Unlike Rule 23(b)(3), the "joinder" rules (42) contain no requirement that common issues predominate. (43) For plaintiffs to be joined, Rule 20 requires simply that their claims arise out of the same transaction or occurrence, or series of transactions or occurrences. While Rule 20 is often presumed to be the functional equivalent of Rule 23(a)(2), which requires that there be one or more "questions of law or fact common to the class," courts have tended to interpret the Rule 20 "transaction" requirement to allow only those claims that share a number of common characteristics to proceed together. The fact that all injuries stem from the use of the same defective product, for example, or the fact that all damages arise from the same discriminatory policy may often, surprisingly, be viewed as insufficient to support joinder. Some cases require no more than exposure to the same injurious product, or, in an employment discrimination case, an injury resulting from a company-wide discriminatory policy. But there is insufficient jurisprudence on Rule 20 joinder in the modern mass tort or complex commercial litigation contexts to declare as established a flexible, open interpretation of the transaction requirement for joinder.
1. General standards for Rule 20 favor joinder
The general standards for the applicability of Rule 20 favor the broad and flexible use of joinder. Rule 20(a) provides, in pertinent part:
All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action. (44)
As the rule suggests, there are two requirements for plaintiff joinder: "First, there must be a right to relief arising out of the same transaction or occurrence, or series of transaction [sic] or occurrences. Second, there must be a question of law or fact common to all the plaintiffs." (45)
The commentators advise us that "modern joinder policy is to encourage resolving controversies in one lawsuit rather than many," (46) and that two requirements for joinder--transaction and common-question requirements--"are flexible concepts used by the courts to implement the purpose of Rule 20 and therefore are to be read as broadly as possible whenever doing so is likely to promote judicial economy." (47) We are informed that "federal policy favors joinder," as the purpose of Rule 20 is "'to promote trial convenience and expedite the final determination of disputes, thereby preventing multiple lawsuits.'" (48) Yet the jurisprudence, to date, does not fully exemplify this policy or realize this promise.
2. Courts have reached divergent conclusions on application of Rule 20's "transaction" requirement
The transaction requirement. "'Transaction' is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship." (49) Commentators have stressed that the transaction test should be construed to allow joinder "when the likelihood of overlapping proof and duplication in testimony indicates that separate trials would result in delay, inconvenience, and added expense to the parties and to the court." (50)
However, although the policies underlying Rule 20 favor joinder whenever possible to serve goals of expediency, efficiency, and convenience, the courts themselves have taken mixed and, in some cases, contradictory approaches to Rule 20, particularly in products liability and antidiscrimination cases. Although some courts have held that the marketing and sale of a defective product, for example, constitutes a common series of transactions, others have required that plaintiffs seeking joinder be injured at the same time, in the same place, and under identical circumstances to satisfy the "transaction" requirement.
Applying the transaction requirement in products/mass tort cases. The case law concerning joinder in products/mass torts cases is both sparse and inconsistent; joinder doctrine does not appear to be sufficiently "mature" to cope predictably with diffuse product-defect mass torts.
Several courts have held that the issuance of a defective product alone constitutes a common transaction and therefore provides the necessary predicate for joinder. Perhaps the case that employed the most flexible interpretation of "transaction" is In re Norplant Contraceptive Products Liability Litigation. (51) The defendants moved to limit the number of plaintiffs in the case, specifically asking the court to "require that 'plaintiffs in each case satisfy the requirements of Rule 20(a) by joining only those plaintiffs who had the Norplant System inserted by the same medical provider or at the same medical facility.'" (52) The court denied this request and allowed the plaintiffs to remain joined. It noted that "the impulse" under the Federal Rules "is toward entertaining the broadest possible scope of action consistent with fairness to the parties," and that the "'joinder of claims, parties and remedies is strongly encouraged.'" (53) The Norplant court accepted the plaintiffs' argument that the defendants' marketing and sale of a dangerous product met the transaction requirement for Rule 20:
The Plaintiffs point out, however, that in this Norplant litigation, "the same transaction, occurrence or series of transactions or occurrences" requirement of Rule 20(a) is met by their allegation that Defendants, in the same series of acts and omissions specified in sealed Exhibit A, failed in their nationwide promotional materials to adequately warn Plaintiffs of the risks and severity of side effects associated with the use of Norplant. The Plaintiffs contend that the Defendants' liability under theories of negligence, misrepresentation, and fraud arises out of the same series of occurrences wherein Defendants failed to adequately warn Plaintiffs, thus satisfying Rule 20(a). (54)
Several courts have endorsed the Norplant stance; the Mississippi Supreme Court, for example, in the absence of any existing state class action rule or procedure, allowed approximately one hundred plaintiffs alleging injuries from asbestos inhalation to join their claims under Mississippi's exact analogue of Rule 20. (55) Another court allowed plaintiffs alleging claims sounding in products liability to proceed in joined fashion, even though their injuries were suffered at different times and under different factual circumstances. (56)
But Norplant stands in stark contrast to the holding in In re Orthopedic Bone Screw Products Liability Litigation, (57) a products liability action involving thousands of plaintiffs alleging injuries caused by orthopedic bone screws. The Bone Screw court refused to allow joinder. After acknowledging the goals of efficiency and economy served by the liberal application of Rule 20, the court nonetheless reasoned that the transaction requirement "requires at a minimum that the central facts of each plaintiff's claim arise on a somewhat individualized basis out of the same set of circumstances," and described the set of plaintiffs as too diverse to qualify for joinder:
In this case, plaintiffs from many states went to different doctors or teams of doctors and medical facilities and providers ... for different reasons, and underwent surgery at different times in what could likely be over one thousand different medical providers [sic] locations staffed by different personnel. To simply group the plaintiffs ... primarily for filing convenience ... would not satisfy the terms required in Rule 20 nor the purpose for which Rule 20 seeks to ease the burden of litigation in groups of similarly situated persons. (58)
The Bone Screw court did allow a very limited subset of closely related plaintiffs to join their claims--namely, those who underwent surgery at the same medical provider and had the same manufacturer's device implanted. (59)
The Bone Screw court likewise did not categorically close the door on possible joinder of a larger number of more diverse plaintiffs in some future ease, concluding its discussion of Rule 20 with the following valedictory:
The court agrees that the lack of clear guideposts in some aspects of this work warrants responsible experimentation and innovation by counsel with the rules and statutes that are available, including Rule 20.... Indeed, there may very well be another ease at another time where the suggestions concerning the application of Rule 20 to a large number of consolidated cases would fit the model that the plaintiffs believe is appropriate here, but which the court declines to adopt here. (60)
Other mass tort/products cases have followed the Bone Screw approach. A similarly narrow view of the appropriate scope of the transaction requirement was expressed in a decision issued, ironically, by the same court whose previous order finding a predominance of common issues, and certifying the litigation as a class action (with a class definition that included the plaintiffs in the second case), was reversed by the Seventh Circuit in Rhone-Poulenc. (61)
In Alvarez v. Armour Pharmaceutical, (62) the court refused to allow several hundred plaintiffs to join their claims pursuant to Rule 20, despite having previously found a sufficiency of common issues to support class certification. In the wake of the reversal of class treatment by the Seventh Circuit in Rhone-Poulenc, the district court reasoned that Rule 20 was not designed for the joinder of hundreds of claims, and that individual issues would predominate over common ones if it allowed the plaintiffs to litigate their cases together.
Applying the transaction requirement in employment discrimination cases. Decisions in employment discrimination cases, a significant subset of the Rule 20 jurisprudence, often consider whether plaintiffs whose only connection is a shared experience of discrimination by the same defendant can proceed with joined claims. It is instructive to look at a single circuit's jurisprudence in a single substantive area--here, Seventh Circuit employment cases--to see if an efficiently coherent jurisprudence of joinder has emerged to substitute for class actions.
The issue of permissive joinder arises when two or more plaintiffs alleging discrimination by the same employer for the same reason (race, gender, national origin, etc.) seek to proceed in consolidated fashion. In determining whether the transaction requirement is met,
courts look to whether the discrimination took place at roughly the same time, if it involved the same people, whether there is a relationship between the discriminatory actions, whether the discriminatory actions involved the same supervisor or occurred within the same department, and whether there is geographical proximity between the discriminatory actions. (63)
In Byers v. Illinois State Police, three plaintiffs, female officers in the Illinois State Police, alleged that they had been denied promotions due to a pattern and practice of discrimination against females. (64) They argued that their denied promotions constituted a series of transactions, since they all sought promotion within overlapping time periods, the promotion system in place was the same for each of them, and the same top statewide officials decided applications for promotions. (65) However, their promotions were refused at quite different times, they had applied for different jobs, and they lived in different districts within Illinois. (66) Noting that "allegations of a common discriminatory policy or practice, or a company-wide policy of discrimination, could tilt the balance in favor of joinder," (67) the Byers court nonetheless denied the plaintiffs' motion, holding that the plaintiffs' claims "stretch the limits of what could be considered to be a single logical transaction or occurrence, in that the claims involve plaintiffs who live in different geographical regions, and who are asserting discrimination for different time periods which will implicate different individual decision-makers." (68) Other courts have likewise held that a generalized policy of discrimination does not by itself constitute a single transaction or series of transactions. (69)
Other courts have taken a more expansive view of the transaction requirement, although even these decisions suggest that more than the allegation of a common general policy is necessary to join claims of different plaintiffs. For example, the court in Smith v. Northeastern Illinois University (70) granted joinder, applying the same set of factors set forth in Byers, but in a more flexible manner. Three plaintiffs alleging claims of race discrimination joined their claims. The court observed that the time periods alleged were similar for each plaintiff, the claims were identical, the same supervisors were named as defendants, and the same geographical location was implicated. (71) Notably, the Smith court found that "[t]he allegations of a hostile work environment are tantamount to allegations that there was a widely held policy of discrimination" at the workplace, and that "[t]his constitutes a single transaction." (72) Similarly, in Hawkins v. Groot Industries Inc., (73) the court allowed African American and Hispanic plaintiffs to join their claims, noting that the proposed complaint "alleges a pattern and practice of both harassment and direct discrimination against African Americans and Hispanics," and that "[s]uch allegations of a 'system of decision-making', or widely-held policy of discrimination, constitute a single transaction for Rule 20(a) purposes." (74) However, the court further observed that "the allegations refer to discrimination during the same general time period, allege the same type of adverse employment actions, allege the same type of discrimination (race), and appear generally to accuse the same set of supervisors at the same work location, all factors favoring joinder." (75)
For some broader perspectives, it should be noted that several courts in other circuits have adopted a more permissive approach to the transaction requirement for joinder. The Eighth Circuit allowed ten plaintiffs alleging race discrimination to join their claims even though they were victimized at different times, in different locations, and by different supervisors. (76) More recently, a district court in the Eastern District of Pennsylvania permitted plaintiffs in a race discrimination case to proceed in joined fashion, using language compatible with and deemed to be derived directly from Rule 20 itself, because their specific incidences of discrimination "flow from this general policy, or pattern and practice [of a discriminatory policy], and therefore are logically related and arise out of the same series of transactions or occurrences." (77)
The problem that appears to plague many courts grappling with the appropriate application of the joinder mechanism in a multiplaintiff context is a failure to completely appreciate or explore the relationship between joinder, which brings multiple parties into an action, and Rule 42's consolidation/severance provisions, which enable common questions of law or fact to be severed from their underlying actions and joined for a unitary hearing or trial. Under the Federal Rules, even if a court determines that plaintiffs who wish to be joined in a single action do not share "enough" common issues for class certification under Rule 23 or joinder under Rules 20 or 21, a unitary determination of such common issues as do exist--even a single (albeit threshold or overarching) common issue--may nonetheless be effectuated by "issue joinder" under Rule 42 as an alternative to "party joinder" under Rule 20. The ultimate and preclusive result will be the same: parties who share a common issue of law or fact are bound by the unitary determination.
B. Rule 22: Interpleader
While Rule 20, or statutory interpleader, (78) is historically and most typically used to protect a defendant-stakeholder, (79) interpleader "can be used to protect the claimants [plaintiffs] by bringing them together in one action and reaching an equitable division of a limited fund." (80)
In 1999, a major asbestos class action settlement came to grief--after many years of negotiation and a substantial investment in the class notice, settlement approval, and appellate process--with the Supreme Court's decision in Ortiz v. Fibreboard Corp. (81) The Supreme Court rejected the utilization of the "limited fund" doctrine to justify settlement on a Rule 23(b)(1) "mandatory" ("non-opt-out") class basis. At issue was an asbestos class action settlement of over $1 billion, funded primarily from disputed insurance coverage, which was the subject of separate litigation. Could interpleader have been used instead? Rather than suspend pending appellate proceedings in favor of packaging a stipulated fraction of the disputed coverage amount as a Rule 23(b)(1) "limited fund," could the insurer have filed a federal interpleader action under 28 U.S.C. [section] 1937 or Fed. R. Civ. P. 22, naming as defendants-in-interpleader the insureds and the asbestos victim class? After all, interpleader may be utilized by any party facing competing claims to any identifiable property or monetary fund, "limited" or not, such as an insurance policy or other asset. Under modern interpleader practice, the insurance company, as "stakeholder," need not admit or concede that either all, or any, of the claimants have a legitimate claim to the interpleader asset, and may reserve all of its defenses (including "no coverage") resisting any payout of the fund. Interpleader provides a convenient mechanism to join, as defendants, all those who lay claim to the policies. A combination of interpleader and class action techniques would enable stakeholders to name, as defendant classes, groups of claimants without individually identifying them, serving them, or joining them as parties. In the wake of the Ortiz decision's self-consciously restrictive approach to mandatory classes, the interpleader mechanism may offer a literally traditional, and neatly effective, alternative, free of the jurisprudential limitations on Rule 23(b)(1). (82)
C. Rule 42: Consolidation/Severance for Common Questions Trials
While consolidation is frequently discussed (usually in a perfunctory manner) in the superiority/manageability sections of class certification decisions, the interrelationship of Rules 23 and 42 remains largely unexamined, and the potential for full deployment of severance and consolidation techniques under Rule 42 (83) as an alternative to class treatment remains unrealized. One of the few direct and thoughtful comparisons of these two techniques was conducted some years ago by Charles Silver. (84) At the time Silver wrote, the freshest example of the utilization of Rule 23 to create what he termed a "docket clearing" class action (a representative suit comprised, in turn, of actions already on file in a single district) was the technique employed by Judge Robert Parker at the district court level, and affirmed on appeal by the Fifth Circuit, in Jenkins v. Raymark Industries, Inc. (85) Jenkins was an early, and largely unrepeated, example of a class action arising out of a consolidation of pending asbestos injury suits, with the class's membership comprised entirely of parties that were plaintiffs in existing actions.
In Jenkins, the Fifth Circuit affirmed Judge Parker's decision certifying for class treatment the following fact issues in an asbestos personal injury class action:
(a) which products, if any, were asbestos-containing insulation products capable of producing dust that contained asbestos fibers sufficient to cause harm in its application, use, or removal;
(b) which of the Defendants' products, if any, were defective as marketed and unreasonably dangerous;
(c) what date each Defendant knew or should have known that insulators and their household members were at risk of contracting an asbestos-related injury or disease from the application, use, or removal of asbestos-containing insulation products; and
(d) what amount of punitive damages, if any, should be awarded to the class as punishment for the Defendants' conduct. (86)
Questions relating to causation and ultimate liability were left for individualized adjudication. Similarly, in In re Copley Pharmaceutical, Inc. "Albuterol" Products Liability Litigation, (87) a product liability class action arising out of defectively manufactured respiratory medication, the district court certified for class treatment, and a common-issues trial, the following "factual issues":
(1) To what extent was Copley's Albuterol contaminated?
(a) What batches were contaminated?
(b) What were the contaminants present?
(2) Using the class representatives as models, are those contaminants capable of causing damage to the human body?
(3) Was Copley's Albuterol defective?
(a) Was Copley's Albuterol defective in its design or manufacture?
(b) Did the contamination in Copley's Albuterol make it an "unreasonably dangerous" product?
(4) Was the defendant negligent in allowing the contaminants into its product?
(5) Did the defendant violate the Food, Drug & Cosmetic Act or the regulations promulgated thereunder?
(6) Did Copley breach express or implied warranties by its sale of contaminated Albuterol? (88)
The common-issues trial in the Bendectin litigation, a multidistrict litigation on behalf of children with birth defects allegedly caused by their mothers' ingestion of an antinausea drug, is particularly instructive. (89) After a mandatory class action settlement of the litigation failed, (90) the trial court separated for a Phase I common-issues trial (by which hundreds of plaintiffs agreed to be bound) two questions of fact relating to generic causation. The first, ultimately answered in the negative by the common-issues jury, was "Have the plaintiffs established by a preponderance of the evidence that ingestion of Bendectin at therapeutic doses during the period of fetal organogenesis is a proximate cause of human birth defects?" (91) Had the jury returned an affirmative answer, "it then would have answered a second question concerning the particular categories of birth defects that Bendectin caused when administered at therapeutic doses: musculoskceletal [sic] defects, central nervous system defects, heart and circulatory defects, head defects, respiratory defects, gastrointestinal defects, genitourinary defects, and death." (92)
Since Silver wrote in 1991, and since the cases comprising Jenkins and Albuterol were certified for common liability-issues trials, the multiple-filing scenario has repeated itself many times over in mass torts, while the utility of the "docket clearing" class action has remained largely unrecognized.
To Silver, consolidations and class actions were not equivalents: consolidations organized existing suits, in which the parties had selected their own counsel, while class actions were inherently representative, with court-appointed class representatives and class counsel directing the proceedings for the benefit of largely passive "absent" class members. But since 1991, the adaptation of highly individualized claims techniques in major class action settlements, such as the settlements of the diet drugs litigation, (93) has made this neat distinction between consolidations and class actions obsolete.
The presumed interest of individual litigants in controlling their cases has been frequently invoked by courts as a justification for denying class certification in personal injury mass tort cases, in obeisance to Federal Rule of Civil Procedure 23(b)(3)(A), which includes "the interest of members of the class in individually controlling the prosecution or defense of separate actions" as a matter "pertinent" to findings on the predominance/superiority requirements. Judicial experience with large mass torts, however, taught an early lesson that such "individual control" is largely mythical. (94) The utilization of multidistrict coordination and transfer (now candidly termed "centralization" by the Judicial Panel on Multidistrict Litigation); the practical need to consolidate, de jure or de facto, multiple filings within each court; and the move to coordinate across state lines, and between federal and state courts, (95) means that there is no longer (if indeed there ever was) true autonomy or self-determination with respect to the prosecution of claims arising from either a mass disaster or a diffuse mass tort.
In the past few years, the Judicial Panel on Multidistrict Litigation has acted, many times, to "centralize" multiple actions asserting a variety of tort claims and an array of injuries allegedly resulting from a common product, frequently a prescription drug or medical device. Typical of these transfer orders, which may be viewed as constituting statutory consolidations under the multidistrict litigation provision, 28 U.S.C. [section] 1407, is In re Zyprexa Products Liability Litigation. (96) In Zyprexa, the Panel ordered the "centralization" and transfer of at least fourteen actions, pending in at least eleven states, to the Eastern District of New York (in which, it appears, none of the constituent actions had actually been filed) over the objections of some plaintiffs. As the Panel articulated its rationale:
On the basis of the papers filed and hearing session held, the Panel finds that these ... involve common questions of fact, and that centralization under Section 1407 in the Eastern District of New York will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. All actions share allegations concerning the safety of Zyprexa, a prescription drug used in the treatment of schizophrenia. Centralization under Section 1407 is thus necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel and the judiciary. (97)
In addressing the objections of plaintiffs to centralization, the Panel noted, indirectly, the distinctions between the "predominance of common issues" standard for Rule 23(b)(3) class joinder and the "common questions of fact" standard for [section] 1407 coordination/consolidation:
Plaintiff in the Western District of Louisiana action argues against transfer of her action that her claims arise from the interaction between Zyprexa and another prescription medicine, and thus are different from the claims in other actions relating only to Zyprexa. This plaintiff also emphasizes that her decedent suffered respiratory failure, not the diabetes or related injuries complained of in other actions. We find these contentions unpersuasive. We observe that transfer under Section 1407 does not require a complete identity or even majority of common factual issues as a prerequisite to transfer. Nor is the presence of an additional defendant or product significant when the underlying action still contains, as here, products liability claims and factual allegations focusing on the safety of Zyprexa. (98)
While it might seem that the interests of the various Zyprexa plaintiffs in controlling their own destinies received short shrift from the Panel, the seeming paradox is that the practical ability of individual litigants, and their counsel, to individually control the prosecution of their claims has increased within both multidistrict consolidation and class action mechanisms. Counsel for individual plaintiffs have played an ever-increasing role in decisionmaking, discovery, prosecution, and settlement of mass tort litigation, whether such litigation is organized as a formal class action or as a consolidation of separate cases, and a strong argument can be made that aggregation has been enhancing this role. This is so because individual control may frequently be exercised to block or veto a settlement, by deployment of the objection rights and opportunities now written into Federal Rule of Civil Procedure 23(e). (99) Thus pragmatism and politics, if nothing else, dictate that individual counsel be included as active and equal voices before settlements or other dispositive procedures are reached. The Supreme Court's insistence in Amchem Products, Inc. v. Windsor (100) that settlement as well as litigation classes incorporate structural protections of the rights and interests of divergent groups within the class guaranteed the right to a greater role for counsel representing such interests.
The current distinction between consolidations and class actions appears to be one of scope: consolidation, by definition, operates upon parties to existing actions and upon the claims asserted in filed actions. Class actions operate upon a defined population, whose members may or may not have (yet) filed their own cases. Class actions thus have a broader preclusive effect, by adjudication or settlement. However, this wider scope, once presumed to constitute a major class action advantage, is now viewed, at least by some defendants in some cases, as a problem (sometimes called the "woodwork" effect), in which the act of certifying a class, even a settlement class, activates litigants and claims that may otherwise have remained dormant. Thus, while operating to cabin exposure and define its outer limits, a class action may, in the process, enlarge that exposure beyond which it would otherwise have self-limited.
It is impossible to know whether, in fact, this fear must inevitably be realized. It is challenging to design a mechanism in which litigants have it both ways: achieving global resolution or globally binding adjudication without including, categorically, the entire universe of potential claims. As this struggle continues, however, class actions and consolidations will increasingly come to resemble each other, as class certification decisions are qualified and limited through deployment of Rule 23(c)(4)(A) (discussed below), and as the traditional "opt-out" mechanism is replaced, in some cases, by an affirmative "opt-in" procedure (also discussed below).
At least one multidistrict litigation went through both class certification and consolidated phases. As noted above, In re Bendectin Litigation was characterized, first, by a failed mandatory "limited fund" class action settlement, followed by the consolidation of approximately eight hundred of the existing cases for a Phase I general causation jury trial, which ended in a defense verdict. (101) The consolidated Bendectin cases were, as the Sixth Circuit recognized, by no means all of the cases or claims which were pending in many different courts. Nonetheless, the experience of the failed Bendectin class action settlement and the subsequent defense verdict in the Bendectin consolidated trial spelled the near cessation of the litigation for many years. As a matter of practical impact, the Bendectin general causation trial was the functional equivalent of a preclusive class action.
One side effect of the Bendectin experience was a long-abiding resistance, on the part of many plaintiffs' counsel, to class certification, bifurcated or common-issues trials, or formal consolidations for trial purposes. At the same time, other pharmaceutical and medical device defendants, perhaps not confident of repeating the Bendectin outcome for themselves, failed to promote class certification, consolidation, or phased trials as defense proposals to organize and systematize the management and adjudication of mass torts.
III. CLASS NOUVEAU: EMERGING VARIATIONS ON THE CLASS ACTIONS THEME
A. Rule 23(c)(4)(A): "Issues Classes"
The "issues class" provision of Rule 23(c)(4)(A) (102) has been infrequently invoked, perhaps due to uncertainty as to how it is to be "construed and applied" in conjunction with, or as a substitute for, the predominance analysis of Rule 23(b)(3). Nothing in Rule 23(c)(4)(A) requires a common-issues trial to resolve an entire cause of action, or even an element of a cause of action. Its standard is more flexible, enabling courts to examine the circumstances of a particular case to fashion the most efficient path toward resolution. The rule simply requires that the issue proposed for class treatment be of "central" importance to the disposition of the case. (103) Some courts, however, have insisted that the entirety of a cause of action or claim for relief must be granted or denied certification, in order to avoid "claims splitting." (104) Nevertheless, more courts are beginning to explore the application of Rule 23(c)(4)(A) to obtain unitary adjudications of common issues of law or fact, without the necessity of granting--or denying--class certification to all claims and issues in a particular action or litigation. (105)
The Manual for Complex Litigation (Fourth) presents a functional standard for determination of the propriety of "issues class" certification, opining that such certification "is appropriate only if it permits fair presentation of the claims and defenses and materially advances the disposition of the litigation as a whole." (106) The jurisprudential source of this standard is a recent Second Circuit decision. (107)
The possibility of utilizing issues-only classes has created a split of authority as to whether questions relating to product defects, for example, can or should be certified in an issues class, with the First, Second, Third, Fourth, Fifth, and Ninth Circuits coming down in favor of such certification, and the Seventh Circuit, to date, both in favor and opposed, depending upon the context. (108) The Fifth Circuit has been both skeptical and encouraging with respect to permitting hybrid certification of issues, first rejecting the procedure in Castano v. American Tobacco Co., (109) but then, in a more recent decision, Bolin v. Sears, Roebuck, & Co., reversing course to reject the notion that class certification must be an all-or-nothing or "holistic" procedure. (110) The Bolin court noted the advantages of claim-by-claim certification, and remanded the case before it for a determination of whether certification of a modified class, with respect to specific claims under either Rule 23(b)(2) or (b)(3), would be appropriate. The Bolin pronouncement holds that
Certification on a claim-by-claim, rather than holistic, basis is necessary to preserve the efficiencies of the class action device without sacrificing the procedural protections it affords unnamed class members. In a case such as this one, where claims for injunctive relief intermingle with claims for damages, certification of a (b)(2) class without individual treatment of the claims may deny unnamed class members the notice and opt-out protections of Rule 23(b)(3). On the other hand, denying certification or certifying under (b)(3) when (b)(2) certification is appropriate for part of the class eliminates the efficiencies in adjudication that Rule 23, and specifically (b)(2), create. Rule 23(c)(4) explicitly recognizes the flexibility that courts need in class certification by allowing certification "with respect to particular issues" and division of the class into subclasses. (111)
Bolin thus represents an intersection of the concept of "hybrid" classes--in which some claims or issues are certified under Rule 23(b)(3), while other claims or issues are certified under Rule 23(b)(1) or (b)(2)--with that of the pure "issues" class certified under Rule 23(c)(4)(A).
In a classic issues-class decision, the court analyzes the claims and evidence in the case, and any affirmative defenses that the defendants have specifically articulated and demonstrated to be relevant, in determining whether and how to separate common issues from individual issues. The court certifies the common issues for class trial and reserves the individual issues for adjudication in follow-on proceedings in the same or separate courts. This severance of issues frequently reserves issues necessary, in a given case, to complete the liability determination (such as individual causation) while certifying issues that depend, instead, on common evidence, such as defendants' knowledge or state of mind, defendants' conduct or inaction, and, perhaps, whether the defendants had a legal duty to take action or make disclosures under the circumstances. (112)
In the most recent appellate decision to address the characteristics of a Rule 23(c)(4)(A) analysis, Judge Edward Becker, writing for the Third Circuit in Chiang v. Veneman, (113) clarified the relationship (and eliminated any tension or purported contradiction) between the permission granted by Rule 23(c)(4)(A) to maintain a class action with respect to particular issues and Rule 23(b)(3)'s requirement that common issues of law or fact predominate over those issues affecting only individual class members in order for a class action to be maintained. Chiang affirmed in part, and vacated in part, a Rule 23(b)(3) certification order arising from claims of loan discrimination made by Virgin Islanders against the U.S. Department of Agriculture (USDA).
Chiang differentiated between common fact issues relating to the USDA's alleged course of conduct (e.g., placing the names of minorities who requested loan applications on a "phony" waiting list rather than providing them with actual applications), which could be determined based upon conduct common to the USDA, without any investigation or analysis of the individual class members' loan qualifications, from those individualized issues that related to loan eligibility and damages. The Third Circuit focused on the existence of important common issues that did not present predominance, superiority, or manageability problems. These issues were certified under Rule 23(c)(4)(A). In so doing, Becker observed that
Federal Rule of Civil Procedure 23(c)(4) provides that "when appropriate (A) an action may be brought or maintained as a class action with respect to particular issues...." Rule 23(c)(4) both imposes a duty on the court to insure that only those questions which are appropriate for class adjudication be certified, and gives it ample power to "treat common things in common and to distinguish the distinguishable." Jenkins v. United Gas Corp., 400 F.2d 28, 35 (5th Cir. 1968). Because we believe that the two questions--the existence of the phony waiting list and associated techniques on the one hand, and the feasibility of class-wide determinations of loan eligibility on the other--are easily distinguishable, we will affirm certification on the former and leave it to the district court to determine whether class certification might be appropriate on the latter. We note in this regard the courts commonly use Rule 23(e)(4) to certify some elements of liability for class determination, while leaving other elements to individual adjudication--or, perhaps more realistically, settlement. See, e.g., Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004) (Posner, J.) ("It may be that if and when the defendants are determined to have violated the law separate proceedings of some character will be required to determine the entitlements of the individual class members to relief."); Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 623 (5th Cir. 1999). (114)
The lesson of Chiang is that the predominance and superiority requirements of Rule 23(b)(3) are to be applied on an issue-by-issue basis. Those issues which meet these requirements may be certified under Rule 23(c)(4)(A). In other words, consistent with the Fifth Circuit's analysis in Bolin, the class certification analysis may properly be conducted from the bottom up, rather than the top down: The court may commence its analysis with a particular issue to determine whether, as to that issue, predominance and superiority are met. If so, that issue may be certified for Rule 23(c)(4)(A) treatment, notwithstanding the treatment of a large number of other issues in the case, which may or may not qualify for class action treatment. It is thus possible for a single important issue, such as the threshold government conduct issues certified in Chiang, to qualify for class treatment, even though these are not completely dispositive of either the defendants' liability or the class members' entitlement to damages. In this respect, Rule 23(c)(4)(A) issues certification is analogous to, and compatible with, the severance and consolidation of common issues for unitary trial under Federal Rule of Civil Procedure 42.
The Second Circuit's approval of Judge Weinstein's decision to certify common fact questions in In re "Agent Orange" Product Liability Litigation (115) illustrates an early acknowledgment of common fact-issues certification. The plaintiffs, a class of Vietnam veterans, alleged injuries from exposure to the Agent Orange herbicide manufactured by the defendants pursuant to a series of government contracts. Judge Weinstein certified under Rule 23(b)(3) fact issues concerning general causation. (116) Denying the defendants' writ petition seeking to decertify the class, the Second Circuit observed that "[c]ommon issues of fact of considerable significance ... arguably exist." (117) These issues of fact concerned what the defendants knew about the dangers of their products, when they knew this information, and what they did to make this information known:
Potentially [the common issues of fact] include what each manufacturer knew and when it knew it, what each told the government and when it did so, what the government learned on its own and when it did so, what hazards of Agent Orange were known then and are known now, what influence the government exercised over the composition of the herbicide, and what various manufacturers communicated to each other. (118)
Not only could these common issues of fact "be disposed of in a single trial," but their resolution, which would "involve extensive documentary and testimonial evidence," would "lead to substantial economies in the use of judicial and private resources." (119) Accordingly, class certification was upheld, even though "the residual individual trials [would] be a considerable task." (120)
A recent products liability case in an Alabama state court underscores the modern-day viability of the issues-class approach and provides helpful guidance for this litigation. In Naef v. Masonite Corp., (121) a case on behalf of a nationwide class of homeowners with defective Masonite hardboard siding, the trial court elected to try before a common-issues jury the single threshold factual issue of whether the siding was defective. (122) Rather than perform a choice of law analysis, the court asked the jury to determine whether the product was defective under the five operative definitions of defect adopted by the various states. After a finding of defect under four of the five definitions of defect, the case settled before proceeding to any determination of the defendant's liability, thereby demonstrating the efficacy of a Rule 23(c)(4)(A)-like process to the resolution of a complex dispute. (123)
Judge Weinstein utilized a more refined, but similar, Rule 23(c)(4)(A) analysis in Simon v. Philip Morris, later referred to as the Simon II Litigation, (124) certifying the issue of the tobacco companies' "general compensatory liability" (125) to smokers diagnosed with a specific list of smoking-related diseases as a step in structuring a classwide trial to determine classwide liability, classwide impact, and an appropriate aggregate sum, or formula ratio, of punitive damages. The Simon H class trial structure has reserved issues of specific causation and compensatory damages for individualized treatment, on a smoker-by-smoker basis, for those who wish to pursue such claims. (126)
The Ninth Circuit has also explained the interrelationship of Rules 23(b)(3) and 23(c)(4)(A) as follows:
The first requirement of Rule 23(b)(3) is predominance of common questions over individual ones. Implicit in the satisfaction of the predominance test is the notion that the adjudication of common issues will help achieve judicial economy.... Even if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)(A) and proceed with class treatment of these particular issues. (127)
In Valentino v. Carter-Wallace, Inc., (128) the district court had applied Rule 23(c)(4)(A) to limit class certification to the issues of strict liability, negligence, failure to warn, breach of implied and express warranty, causation-in-fact, and liability for punitive damages in litigation alleging injuries from the use of the defendant's epilepsy drug. The Ninth Circuit's ruling vacated the class certification order and remanded for further proceedings: specifically, for the findings on predominance and superiority with respect to the issues certified by the district court under Rule 23(c)(4)(A). Valentino has since been mischaracterized as critical of class certification of mass torts: a misapprehension that the Ninth Circuit itself very recently corrected in a decision affirming class treatment of a product defect case. (129) The Valentino action was thereafter settled on an aggregate basis, without the revisitation of litigation-purposes class certification. However, the Valentino court's analysis of the proper application of Rule 23(c)(4)(A) retains its utility in demonstrating that Rule 23(b)(3)'s predominance and superiority requirements are to be applied on an issue-by-issue basis, to facilitate the unitary adjudication of specific issues within the case. (130)
Years after the Jenkins v. Raymark Industries "docket clearing" class, the Fifth Circuit reenlisted and reaffirmed the Jenkins technique. In Mullen v. Treasure Chest Casino, LLC, it upheld the certification of common issues that were significant in relation to, but by no means dispositive of, issues of liability, causation, damages, and contributory negligence in claims that a defendant casino's defective and/or improperly maintained ventilating system caused the class members' respiratory illnesses. (131)
An analysis similar to Treasure Chest appears in Central Wesleyan College v. W.R. Grace & Co., (132) a Fourth Circuit decision affirming class treatment of colleges' and universities' asbestos-related property damage claims. The court in Central Wesleyan affirmed the Rule 23(c)(4)(A) certification of a class on eight common issues relating to the characteristics of the asbestos products at issue, the defendants' knowledge of asbestos health hazards (the "state of the art" defense), and whether the defendants' conduct justified the imposition of punitive damages. (133) Central Wesleyan, unlike Treasure Chest and Chiang, involved a nationwide class, and thus potentially implicated choice of law issues and complications. However, the Central Wesleyan court characterized the questions it certified under Rule 23(c)(4)(A) as "primarily factual," also noting that "if separate state laws needed to be applied to these questions, subclasses of plaintiffs could be formed." (134)
Interestingly, while the Seventh Circuit's influential 1995 Rhone-Poulenc decision appeared to sound a death knell for issues classes in personal injury cases in that circuit, the more recent Carnegie decision, also issued by the Seventh Circuit, (135) affirmed the certification of a consumer class, on civil RICO and other claims, observing:
Often, and possibly in this case as well, there is a big difference from the standpoint of manageability between the liability and remedy phases of a class action. The number of class members need have no bearing on the burdensomeness of litigating a violation of RICO. Whether particular members of the class were defrauded and if so what their damages were are another matter, and it may be that if and when the defendants are determined to have violated the law separate proceedings of some character will be required to determine the entitlements of the individual class members to relief. (136)
In the Seventh Circuit's view, this observation supported not denial or reversal of class certification but rather the certification under Rule 23(c)(4)(A) of those issues arising out of defendants' course of conduct. Quoting from the influential Second Circuit Visa Check/MasterMoney decision, (137) the Seventh Circuit's Carnegie decision recited the case management techniques and options that courts may deploy to "treat common things in common and to distinguish the distinguishable." (138) Those solutions include:
(1) bifurcating liability and damage trials with the same or different juries; (2) appointing a magistrate judge or special master to preside over individual damages proceedings; (3) decertifying the class after the liability trial and providing notice to class members concerning how they may proceed to prove damages; (4) creating subclasses; or (5) altering or amending the class. (139)
The potential revitalization of the classic class action has assistance from an unexpected quarter: the U.S. Supreme Court.
B. Classwide Punitive Damages Determinations
In Amchem and Ortiz, the Supreme Court's thoughtful and conscientious insistence on due process and class member protection in the class action settlement context unintentionally resulted in a setback for class certification--for litigation as well as settlement purposes--in a broad array of class action litigation far removed from the massive asbestos litigation for which the Amchem and Ortiz settlements were failed solutions. Ironically, in another arena of Supreme Court jurisprudence--the review of punitive damages verdicts in individual cases--the Court's rising concern with due process for defendants faced with recurring punitive damages exposure may have indirectly (and perhaps unintentionally) strengthened the prospects for class certification of issues relating to punitive damages.
In its most recent punitive damages trilogy, (140) the Supreme Court articulated guideposts for the determination of punitive damages that focus primarily on defendants' conduct and self-consciously strive to systematize the determination of punitive damages in all courts and cases. First in BMW of North America, Inc. v. Gore, and most recently in State Farm Mutual Automobile Insurance Co. v. Campbell, the Supreme Court established three mandatory guideposts for punitive damages determinations, (141) and five factors under which the determination of the "most important" guidepost, the degree of reprehensibility of the defendant's conduct, (142) are to be assessed. To determine reprehensibility, the Supreme Court has directed consideration of whether
the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. (143)
In the middle case of this modern trilogy, Cooper Industries, Inc. v. Leatherman Tool Group, Inc., the Supreme Court decoupled the calculation of punitive damages from Seventh Amendment implications when it announced the mandatory de novo judicial review of all punitive damages awards. (144) As Leatherman Tool Group explains:
"Unlike the measure of actual damages suffered, which presents a question of historical or predictive fact ... the level of punitive damages is not really a 'fact' 'tried' by the jury."... Because the jury's award of punitive damages does not constitute a finding of "fact," appellate review of the District Court's determination that an award is consistent with due process does not implicate the Seventh Amendment concerns raised by respondent.... (145)
Thus, the Seventh Amendment-based argument against class certification in complex cases that would require phased trials--the constitutional stricture against reexamination of decided questions of fact by subsequent factfinders--has been weakened, at least in the context of the all-important determination of punitive damages liability. The Leatherman Tool Group decision has set in motion the wholesale and repetitive de novo judicial review of punitive damages awards in individual cases that nonetheless have a "mass" or "class" aspect. Mandatory de novo judicial review adds to the workload of the judicial system, because it guarantees exhaustive appeals in every punitive damages case. Moreover, while the Supreme Court believed that appellate courts were institutionally more competent than jurors and trial courts to make punitive damages decisions under its stated guideposts, (146) the fact is that appellate courts are no more able than lay jurors or trial courts to know about similar cases involving the same or similar conduct, or to moderate or increase their punitive damages accordingly, so as to achieve the optimal degree of deterrence and punishment. The argument may be made that the problem Leatherman Tool Group attempted to solve has been made worse with multiple appellate courts, as well as multiple juries, assessing punitive damages and awarding them to individual litigants in a piecemeal fashion in many cases that involve a common course of conduct on the part of defendants, or at least conduct that overlaps among cases.
The State Farm decision contains the seed of a solution to the problem created by a convergence of the holdings in Gore, Leatherman Tool Group, and State Farm itself: the "inclusion," in a single proceeding, of all victims of a specific defendant's common course of conduct. (147) Such a procedure, not explored in detail by State Farm itself, would prevent the multiple de novo judicial reviews of punitive damages awards arising from the same course of conduct, and thus prevent the twin evils of inadequate and excessive deterrence that are the most likely outcomes of multiple proceedings seeking to punish and deter the same conduct in whole or partial ignorance of the status and progress of their counterparts. Furthermore, the procedure is fair to both plaintiffs and defendants because it reduces the threat of excessive damages, and ensures proportionality between the general quantum of real or potential harm caused by the defendant's conduct and the quantum of punitive damages assessed to punish and deter it. Moreover, aggregation of punitive damage claims by joinder or class certification enables any punitive damages award that survives the de novo judicial review process to be distributed equitably by the court among all victims.
These are the goals of In re Simon II Litigation, a Rule 23(b)(1) mandatory class certification decision certifying the issue of punitive damages for unitary trial for a certified class of long-term smokers with incontrovertibly smoking-related diseases, a decision that is currently before the Second Circuit on defendants' Rule 23(f) appeal. (148) The Simon H class certification decision was issued after Gore and Leatherman Tool Group, but before State Farm. Nonetheless, it appears to anticipate the State Farm problems and solution and provide a superior procedural framework within which to perform the Supreme Court's mandated reprehensibility exercise.
While none of the cases in which the Supreme Court has made its landmark punitive damages decisions was a class action, at least one certified class action serves as a palpable demonstration that class treatment best enables Supreme Court punitive damages principles and mandates to be fulfilled in a situation involving a common course of conduct, a mass disaster, or similar damage to multiple victims: the litigation arising from the March 1989 wreck and oil spill of the Exxon Valdez. (149) The resulting federal Exxon Valdez litigation was certified, on defendant Exxon Corporation's motion, as a Rule 23(b)(1) mandatory class for unitary determination of punitive damages liability arising from the incident. The case was tried in three phases by a single jury in 1994. The resulting punitive damages verdict was $5 billion. This verdict has been on appeal ever since, with several remands by the Ninth Circuit to the district court, corresponding to the issuance of the Supreme Court's Leatherman Tool Group and State Farm decisions.
The most recent district court decision in the Exxon Valdez litigation, issued in January 2004, (150) features a State Farm-mandated reconsideration and recalculation of the jury's punitive damages verdict, resulting in an adjustment to $4.5 billion. In the course of conducting this de novo exercise, in fidelity to Leatherman Tool Group, the court, which had presided over the Exxon Valdez litigation from its 1989 inception, had occasion to observe that the certification of the mandatory punitive damages class and the resulting conduct of a classwide trial of liability, compensatory damages, and punitive damages had itself presented many of the potential evils with which the Supreme Court punitive damages trilogy was concerned:
[T]his court was concerned before trial about the risk of multiple punitive damages awards based upon the same incident. Even when punitive damages awards are limited to matters in which there is a proper Alaska interest, they could be arbitrarily cumulative and in sum grossly excessive. Here, Exxon was exposed to a multiplicity of claims, most but not all of which were pending in this court. But for the creation of a mandatory punitive damages class, Exxon was exposed to the risk of multiple punitive damages awards flowing from the same incident. Where multiple suits for punitive damages have been brought in a single jurisdiction, it strikes this court that there is a very real risk that two punitive damages awards in different courts, but based upon the same incident, could result in a doubling up on deterrence and punishment. How this concern should be managed under BMW and State Farm is not clear. What is clear is that the risk does not exist in this case. Because of the mandatory punitive damages class, the court can say with confidence that Exxon has been exposed to grossly excessive deterrence or punishment because of multiple suits for punitive damages based upon the same harm or course of conduct. It follows that the whole of what is constitutionally foreseeable for purposes of due process is fairly put to the BMW test of whether $5 billion in punitive damages was or was not grossly excessive. (151)
The Supreme Court has made it abundantly clear that no litigant has the right to receive punitive damages. This is because the purpose of punitive damages, as opposed to compensatory damages, is to advance societal interests (152) in punishment and deterrence. The due process rights in punitive damages litigation, in the Supreme Court's view, thus belong primarily to defendants. These include the right to be protected from excessive punitive damages, defined as punitive damages that are disproportionate to the scope of the real or potential harm flowing from highly reprehensible conduct. At the same time, society's punishment and deterrence interests can be pursued only by private litigants, and the system of punitive damages determination and appeals that renders punitive damages prosecution cost-ineffective, or results only in underdeterrent awards, is similarly deleterious to the real and perceived integrity of the civil justice system. To prevent punitive damages litigation from becoming dysfunctional, while protecting the due process rights of defendants that the Supreme Court's trilogy articulates, courts would be well advised to follow the Exxon Valdez court's cue and organize some or all aspects of the punitive damages determination through the class certification mechanism. As post-State Farm jurisprudence observes, the overriding purpose of punitive damages is to ensure that the punishment "fits the crime." (153) Where the crime injures many who either cannot afford individual prosecution, or whose individual cases threaten the courts with repetitive litigation and inconsistent adjudication concerning the same conduct and similar harm, the class action presents the best assurance that the crime will not go wholly or partially unpunished, and that the civil justice system will not exhaust itself in the prosecution process. (154)
C. The New and Implied Preference for Class Actions over "Representative Actions" in Consumer Cases
The people have spoken: class actions are better. Such is at least one of the lessons that can be derived from the 2004 election cycle, in which Californians passed Proposition 64, an initiative that revised California's Unfair Competition Law (UCL), (155) to strip it of its long established, and possibly unique, public prosecution feature. Under California law, prior to Proposition 64, actions to enforce the unfair competition law could be brought by private citizens, on behalf of the general public, without utilizing formal class action procedures. These "representative actions" could pursue injunctive and equitable remedies, but not damages. Several problems emerged: the first related to the preclusive, or binding, effect of judgments and settlements of nonclass UCL representative actions. (156) The second arose from the absence of a mandatory court approval process for the settlement of representative actions. The "evils" of the UCL, as perceived by some in the business community, had more to do with the ease with which representative actions could be brought to attack unfair business practices than with the case management and justice administration conundrums that faced courts in UCL representative actions. (157) The "reform" accomplished by Proposition 64 engrafts class action requirements onto UCL cases, transforming them from representative actions into formal class actions. (158) They must now meet the requirements of California's venerable class action statute, California Code of Civil Procedure section 382; the upshot is that UCL cases require judicial approval of settlements, and are subject to California's Rules of Court that govern all California state court class actions.
A series of recent California appellate decisions prior to the passage of Proposition 64 had wrestled with the distinctions between the remedies that could be afforded in UCL cases brought as representative actions, and whether the formal class action mechanism was required, for example, to accomplish complete relief via restitution and disgorgement. (159) The jurisprudence was trending in the direction of requiring formal class action mechanisms in virtually every UCL case that sought widespread equitable relief. (160) The passage of Proposition 64 completed this trend and gave it the force of statute. Consumer lawyers and public interest advocates opposed Proposition 64, in part because in some cases formal class action procedures restricted or delayed the ability of advocacy groups--such as environmental protection organizations--to file actions for injunctive relief without waiting for potentially irreversible injury to occur. The current jurisprudential battle is over whether Proposition 64 has retroactive effect: California's courts of appeal have split on this issue. (161) What passage of Proposition 64 demonstrates, however, from a proceduralist's standpoint, is that experiments in less formalistic alternatives to traditional or "classic" class actions may dissatisfy the very interests that criticized class actions in the first place and lead to a preference for class action procedures as a welcome return to tradition.
D. The Class Action Fairness Act (CAFA)
The enactment of the federal Class Action Fairness Act of 2005 (CAFA) on February 18, 2005, portends dramatic changes in the landscape of class action litigation by dramatically expanding federal diversity jurisdiction to encompass most class actions, including those comprised largely of the citizens of one state asserting claims against defendants headquartered in the same state. (162) By its terms, CAFA does not apply to class actions in which "the number of members of all proposed plaintiff classes in the aggregate is less than 100," (163) or to class actions commenced before its effective date. (164)
The preamblic "Findings and Purposes" section of CAFA (165) articulates the motivations for moving vast numbers of class actions, and millions of class members' claims, from the thousands of available and experienced state courthouses to fewer than seven hundred active federal district judges. Congress appears to have been motivated by state courts' purported inability or unwillingness to control class action settlements or curtail attorneys' fees. (166) Congress claims to have found "abuses of the class action device" that have adversely affected interstate commerce and have left class members with little or no benefit from class actions (e.g., through the phenomenon of the "coupon settlement," a little-used settlement device in which class members receive discount certificates, scrip, or rebates for defendants' products (167)). The class action legislation, supported by extensive lobbying expenditures of the U.S. Chamber of Commerce and other organizations, (168) was seen as a way to place and keep "cases of national importance" in the federal courts. (169)
Indeed, as CAFA's language itself reveals, the push for CAFA seems animated by mixed messages, or at least confused signals, emanating from those with either legitimate or strategic concerns about the appropriate respective roles of the federal and state courts in managing multistate class action litigation. On the one hand, the notion that the federal courts are well suited to adjudicate consumer disputes that, because of nationwide distribution and marketing, are truly interstate in character has logical appeal. The fact that there is little or no federal substantive law to govern such disputes does not appear to have been well appreciated by the legislature. CAFA thus thrusts federal courts into the thick of state substantive law and obliges them to face up to the choice of law decisions that the Supreme Court has authorized them to make where state laws collide (170) but in which the federal courts have often been reluctant to engage. (171)
The ultimate passage of CAFA was justified, in part, on purported data that state courts were rife with class action abuses such as low class benefits, high attorneys' fees, and judicial rubber-stamping of proposed settlements, and that removal of consumer class actions to the federal court system would effect a geographic cure. The class action abuse/reform debate has engendered numerous editorials and news stories on all sides of the issue, with the victory for CAFA being viewed, generally, in probusiness terms. (172) But there is doubt that the data supports such a wholesale jurisdictional shift. As a recent National Law Journal editorial opined:
The bill is based more on misperception than truth. Tort reformers claim that state courts are more favorable toward class actions than are federal courts, especially in plaintiff-friendly jurisdictions such as Madison County, Ill., which are often called "judicial hellholes" by reform advocates. But according to a study by the Federal Judicial Center, the research and education arm of the U.S. courts, class actions removed to federal courts and then remanded back to states are no more likely to be certified as a class than those removed and retained in the federal system. Based on responses from attorneys in 621 cases between 1994 and 2001, the survey reported that 20% of cases remanded to state court for trial or settlement were certified, as opposed to 22% of class actions kept in federal court. The survey, available at www.fjc.gov, also said that the typical (median) recovery per class member in cases retained in federal court is $517, almost 50% higher than the $350 typical recovery in cases remanded to state court. And it said that state courts aren't statistically more generous in granting awards of fees to plaintiffs' lawyers. (173)
Those concerned with the fate of class action litigation as a political casualty may be heartened by Congress's initial CAFA finding:
Congress finds the following: (1) class action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm. (174)
This finding, at least, resonates fully with Federal Rule of Civil Procedure 23, its state court counterparts, and with the U.S. Supreme Court's policy pronouncements in Amchem and Roper. (175) In applying this fundamental finding to the new challenges presented by an influx of state-law-based class actions, the federal courts may catalyze a true class action reformation by reclaiming the full breadth of their equity jurisdiction, as a necessary adjunct to their rule-based powers, to avoid a failure of justice and provide due process for redress of mass harms.
E. The "Opt-In" Class
While the Federal Rules Advisory Committee has, at various times, considered the addition of an "opt-in" or other affirmative joinder option or requirement for Rule 23, the text of the Rule itself remains silent as to the opt-in procedure. Only Rule 23(b)(3) provides an express right of exclusion, or "opt-out," although some federal courts have given class members the right to exclude themselves from classes certified under the traditionally "mandatory" provisions of Rule 23(b)(1) or (b)(2). Whether or not the "opt-in" procedure could be utilized in a Rule 23(b)(3) "damages" class context remained an essentially unanswered question until relatively recently, when Judge Shira Scheindlin provided a "yes" answer in In re Ski Train Fire in Kaprun. (176)
The Ski Train litigation arose out of the November 11, 2000, fatal fire aboard a ski train near Kaprun, Austria. Relatives of 8 of the 155 passengers and crew members who died sought class certification, limited to liability issues only, on their claims against a number of American and foreign defendants. The moving plaintiffs were Americans, but the class included families and estates in other countries. Judge Seheindlin's survey of trends and developments in the class certification of mass disaster and other mass tort cases led her to conclude that "class action treatment is appropriate in situations where: (1) the class action is limited to the issue of liability; (2) the class members support the action; and (3) the choice of law problems are minimized." (177)
The Ski Train court first noted that almost two-thirds of the victim families had expressed interest in participating in the class action, and that the cost savings of proceeding to a liability determination in an American court rendered class inclusion desirable from an objective and institutional standpoint. The court saw choice of law problems as minimized, because the American court's finding of liability, while not necessarily preclusive in other jurisdictions, would be of assistance in advancing the claims of all victim families to compensation, in either American or foreign damages proceedings. (178)
The moving plaintiffs sought not traditional opt-out class certification under Rule 23(b)(3) but an innovative opt-in procedure. The court determined that an opt-in class was appropriate, and, in its terms, "necessary," "because it would be unfair to presumptively include members in the class for which membership depends upon the waiver of a right." (179) The court analogized opt-in procedures in this context to a Fair Labor Standards Act action, which binds only those who affirmatively "opt in" by filing written consents-to-join with the court. (180)
The Ski Train court further held that the opt-in requirement pertained not only to the foreign plaintiffs, but to the American plaintiffs as well, "because they too must waive their rights to sue ... defendants in any foreign jurisdictions." (181) Judge Scheindlin acknowledged the defendants' opposition to the procedure, and its novelty. Nonetheless, she found nothing in Rule 23 or its jurisprudence that expressly prohibited or precluded the opt-in procedure, observing "[t]he fact that Rule 23 does not explicitly authorize courts to certify 'opt-in' classes under Rule 23(b)(3) is immaterial. This Court's authority to certify an opt-in class, where necessary, derives from its equitable powers. After all, the 'class suit was an invention of equity.'" (182) The court concluded:
Because I find that a class action is the superior method of adjudicating plaintiffs' liability claims, and class membership requires consent to be bound by the judgment, this action should proceed as an "opt-in" class action. Notice should be given to all potential class members of their right to "opt-in." (183)
Given the relatively small size of the Ski Train class (families of 155 victims), the "opt-in" procedure selected by the court, and the limitation of class treatment to issues of liability only, it is difficult to perceive any functional difference between this form of class certification and the consolidation of common issues under Rule 42. Arguably, the same result could have been achieved in Ski Train without recourse to Rule 23; however, it may be that the Ski Train court was using the case, with its highly sympathetic scenario, as a test case for experimentation with opt-in class procedures. Many mass disaster cases (such as major air disasters) and many diffuse mass torts (such as the Vioxx litigation now gaining steam) involve far more victims, and render less formalistic alternatives to class certification more and more difficult to fashion and administer, given the relatively undeveloped state of joinder jurisprudence. Many or most of such victims may be expected to opt into a common-issues class action in such circumstances, because of (rather than in spite of) the relatively high individual values of their cases, which courts have often reflexively presumed to connote a corresponding interest in individual control of the litigation. Today, product liability litigation is expert-intensive, and experts are expensive. Indeed, complex tort litigation is so expensive to prosecute, even for plaintiffs with "high value" serious injury or death claims, that the cost-sharing opportunity of collective presentation, and the reduction in trial delay, remain attractive. An opt-in procedure may provide a laboratory in which test trials can be conducted which bind many, but not all, of the litigants, the "maturity" of the tort may be accelerated in less than all-or-nothing fashion, and a tolerable balance between the efficiencies of centralization and the values of individual autonomy may be struck.
The Ski Train decision's application of Rule 23 concepts to effectuate what looks as much like joinder or consolidation as class certification illustrates the precept that litigants should not necessarily abandon Rule 23 in favor of the joinder alternatives presented by Rules 19 through 22 and 42 (or vice versa). Rather, it behooves litigants and courts to develop a more integrated approach to the selection and adjudication of common issues of fact or law that recur in the claims of numerous parties, whether they arise from a common disaster, a common product, or a common course of allegedly violative conduct. The Federal Rules were designed to be utilized in such a fashion, and it is unfortunate that their synthesis has been delayed first by a near-exclusive fascination--almost a fixation--on Rule 23 alone, and more recently by reform, avoidance, or abandonment of Rule 23 itself.
The class action counterreformation, which may spark a renaissance of federal civil procedural innovation, is a creature of necessity. The need for judges to be able to effectively manage the complex and large-scale litigation increasingly placed before them did not disappear, but was exacerbated, as a result of restrictions on class action certification. And for judges who hoped that if class actions were not certified, they would just go away, or who relied on the state court system as a safety valve, Congress has a new message: "They're baaaack!"
CAFA's startling transfer of the majority of class action litigation from the relatively decentralized process of state court adjudication to a highly centralized federal system solves a few problems (e.g., competing class actions in different states, overlapping federal and state class actions), but places a new burden and responsibility of unprecedented magnitude on the federal court system.
And so the process of exploration and experimentation has begun anew, spurred by necessity. This is procedural reform in the service not of partisan ideology or political power, but of the quest to fulfill the mandate and raison d'etre of the Federal Rules of Civil Procedure themselves: "to secure the just, speedy, and inexpensive determination of every action" (184) in an era in which restricting access to the courts, raising financial barriers to individual cases, and effecting judicial immobilization in the face of mass harms are being touted as savvy corporate litigation strategies. (185)
(1.) 521 U.S. 591 (1997).
(2.) 527 U.S. 815 (1999).
(3.) These bills are typically styled the "Class Action Fairness Act of [Year]." The most recent iteration is the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). It obtained Senate and House approval in February 2005 and was signed into law by President Bush on February 18, 2005. The text for this legislation, referred to throughout this Article as "CAFA," is available at http://www.theorator.com/bills109/s5.html (last visited Mar. 28, 2005).
(4.) As a CitiGroup/Smith Barney tobacco analyst gloated on February 10, 2005:
the senate just passed a bill 72-26 which is designed to funnel class-action suits with plaintiffs in different states out of state courts and into the federal court system, which is typically much less sympathetic to such litigation. The practical effect of the change could be that many cases will never be heard given how overburdened federal judges are, which might help limit the number of cases.
CitiGroup's Global Markets Industry Note, FLASH--Senate Just Passed Class Action Bill--Positive for Tobacco (Feb. 10, 2005) (analysis report). This analyst's note reflects a widespread corporate view that federal courts will disfavor federal class actions on the merits, and, better yet, will be unwilling or simply unable to deal with most of them. Those counting on recent instances of judicial resistance to class actions, and the legislative ability to jam the federal courts into inaction through forced overload, would do well to consider the federal courts' institutional heritage of insistence upon doing justice in times of crisis and under difficult circumstances.
(5.) FED. R. CIV. P. 23(b).
(6.) See FED. R. CIV. P. 23(f); id. advisory committee notes to 1998 amendments.
(7.) See FED. R. CIV. P. 23(c)(2); id. advisory committee notes to 2003 amendments.
(8.) See FED. R. CIV. P. 23(b), (g).
(9.) See FED. R. CIV. P. 23(e)(1)(A)-(4)(B).
(10.) CAL. R. CT. 1850-1861.
(11.) See, e.g., LAURAL L. HOOPER & MARIE LEARY, AUCTIONING THE ROLE OF CLASS COUNSEL IN CLASS ACTION CASES: A DESCRIPTIVE STUDY (2001), reprinted in 209 F.R.D. 519, 595-97 (2001) (finding in nine terminated cases, in which the attorneys' fee awards were set by judicially supervised "bidding" or auction processes, that the fee awards ranged from 5% to 23%, with 8% being the median award); THOMAS E. WILLGING ET AL., EMPIRICAL STUDY OF CLASS ACTIONS IN FOUR FEDERAL DISTRICT COURTS: FINAL REPORT TO THE ADVISORY COMMITTEE ON CIVIL RULES (1996); Third Circuit Task Force Report on Selection of Class Counsel, 74 TEMP. L. REV. 689 (2001).
(12.) See Welch & Forbes, Inc. v. Cendant Corp. (In re Cendant Corp. PRIDES Litig.), 243 F.3d 722, 736-37 (3d Cir. 2001) (stating that the size of the settlement may be considered as a factor in reducing a fee award from the historical average percentage range). The Third Circuit has recently clarified the Cendant point:
Our jurisprudence confirms that it may be appropriate for percentage fees awarded in large recovery cases to be smaller in percentage terms than those with smaller recoveries.... But there is no rule that a district court must apply a declining percentage reduction in every settlement involving a sizeable fund.... We have generally cautioned against overly formulaic approaches in assessing and determining the amounts and reasonableness of attorneys' fees. See Cendant PRIDES, 243 F.3d at 736 ("[A] district court may not rely on a formulaic application of the appropriate range in awarding fees but must consider the relevant circumstances of the particular case.").
In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 303 (3d Cir. 2005).
(13.) SAMUEL TAYLOR COLERIDGE, 1 BIOGRAPHIA LITERARIA 17 (John Shawcross ed., Oxford Univ. Press 1968) (1817).
(14.) Given the recent resistance to expanding the application of Rule 23 itself, and the negative baggage that the term "class action" has accumulated, utilitarian reform efforts focused on providing courts and litigants with clear, fair, and useful procedural mechanisms for deciding common questions in ways that preclude the necessity of endless relitigation have adopted alternative terminology, for both real and symbolic reasons. For example, the American Law Institute has commenced a project dedicated to developing "Principles of the Law of Aggregate Litigation," recognizing that the formal class action is not the only means by which to effectively organize complex litigation, and that previously underutilized mechanisms and principles, including collateral estoppel, voluntary joinder, and interjurisdictional coordination hold promise. See Am. Law Inst., American Law Institute--Projects and Participants: Principles of the Law of Aggregate Litigation, at http://www.ali.org/ali/PP5.asp (last visited Mar. 25, 2005).
(15.) In the United States, the post-1966 modern era of aggregate litigation has been marked by Rule 23's near monopoly on the attention of courts, litigants, and commentators. The joinder alternatives in the "Parties" section (Rules 17 through 25 of the Federal Rules of Civil Procedure), such as mandatory or permissive joinder, intervention, and interpleader have been given equal status, while the consolidation and severance provisions of Federal Rule of Civil Procedure 42 have been slighted by comparison.
(16.) 382 F.3d 1241 (11th Cir. 2004).
(17.) Rule 23(b)(3) is the reef upon which most class certification efforts flounder. It applies to claims for money damages, and requires the court to find
that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
FED. R. CIV. P. 23(b)(3).
(18.) 382 F.3d 1241.
(19.) Id. at 1260-61.
(20.) See, e.g., In re Bridgestone/Firestone, Inc., 333 F.3d 763 (7th Cir. 2003).
(21.) Appellants' Opening Brief at 45, Klay, 382 F.3d 1241 (No. 02-16333), quoted in Klay, 382 F.3d at 1274.
(22.) In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1300 (7th Cir. 1995).
(23.) 382 F.3d at 1274-76.
(24.) See, e.g., Newton v. Merrill Lynch, 259 F.3d 154, 167 (3d Cir. 2001); Andrews v. AT&T, 95 F.3d 1014, 1025 (11th Cir. 1996); Castano v. Am. Tobacco Co., 84 F.3d 734, 749-50 (5th Cir. 1996).
(25.) For a skeptical view of this theory, see Charles Silver, "We're Scared to Death": Class Certification and Blackmail, 78 N.Y.U. L. REV. 1357 (2003).
(26.) See 51 F.3d at 1298-1301.
(27.) See Castano, 84 F.3d at 749 ("In the context of an immature tort, any savings in judicial resources is speculative, and any imagined savings would be overwhelmed by the procedural problems that certification of a sui generis cause of action brings with it."). At the time Castano issued, no smoker had won at trial. Since then, the tobacco tort has "matured," with a number of smokers' suits surviving through trial and appeal. See, e.g., Henley v. Philip Morris, Inc., 113 Cal. Rptr. 2d 494 (Ct. App. 2001), vacated and remanded by 57 P.3d 362 (Cal. 2002); Aspinall v. Philip Morris Cos., 813 N.E.2d 476 (Mass. 2004); Williams v. Philip Morris, Inc., 92 P.3d 126 (Or. Ct. App. 2004).
(28.) 84 F.3d at 746 (citations omitted).
(29.) 382 F.3d at 1272 (criticizing Jacobs v. Osmose, Inc., 213 F.R.D. 607, 618 (S.D. Fla. 2003) (("Class action treatment is not the superior method for handling this matter. A mass tort such as this cannot properly be certified without a prior track record from which this Court would be able to draw the information necessary to make the predominance analysis required under Rule 23. Certification of an 'immature' tort results in a higher than normal risk that the class action may not be superior to individual adjudication. Any savings in judicial resources in this case is speculative....") (internal citations omitted))).
(33.) See id. at 1275.
(34.) Id. (citing Wal-Mart Stores, Inc. v. Visa U.S.A., Inc. (In re Visa Check/Mastermoney Antitrust Litig.), 280 F.3d 124, 145 (2d Cir. 2001) ("The effect of certification on parties' leverage in settlement negotiations is a fact of life for class action litigants. While the sheer size of the class in this case may enhance this effect, this alone cannot defeat an otherwise proper certification.")).
(38.) See Samuel Issacharoff, The Vexing Problem of Reliance in Consumer Class Actions, 74 TUL. L. REV. 1633 (2000).
(39.) The Supreme Court has spoken formally on this issue:
The aggregation of individual claims in the context of a classwide suit is an evolutionary response to the existence of injuries unremedied by the regulatory action of government. Where it is not economically feasible to obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the class-action device.
Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339 (1980). Thus:
The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor.
Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997), quoted in Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997).
(40.) The Amchem decision itself took judicial notice of "an asbestos-litigation crisis":
The most objectionable aspects of asbestos litigation can be briefly summarized: dockets in both federal and state courts continue to grow; long delays are routine; trials are too long; the same issues are litigated over and over; transaction costs exceed the victims' recovery by nearly two to one; exhaustion of assets threatens and distorts the process; and future claimants may lose altogether.
AD HOC COMM. ON ASBESTOS LITIG., JUDICIAL CONFERENCE, REPORT OF THE JUDICIAL CONFERENCE AD HOC COMMITTEE ON ASBESTOS LITIGATION 2-3 (1991), quoted in Amchem, 521 U.S. at 598.
(41.) See In re Telectronics Pacing Sys., Inc., 137 F. Supp. 2d 985 (S.D. Ohio 2001) (approving class action settlement); In re Telectronics Pacing Sys., Inc., 186 F.R.D. 459, 464-65 (S.D. Ohio 1999) (discussing summary jury trial). As the Telectronics court observed:
While we realize that the summary jury trial is merely advisory, of no binding effect on anyone, we note that it is a settlement device used to assist the Parties in assessing the results of a trial on the merits. From the experience of this Court in other cases, including class actions where there have been a summary jury trials [sic], the results have been very instructive in helping the parties negotiate settlements. Furthermore, utilization of the summary jury trial technique in this ease assisted the Court and these Parties in determining whether a trial on the merits was manageable.
Telectronics, 137 F. Supp. 2d at 993 n.8.
(42.) Federal Rule of Civil Procedure 20, on "Permissive Joinder of Parties," provides:
(a) Permissive Joinder. All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action. All persons (and any vessel, cargo or other property subject to admiralty process in rein) may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action. A plaintiff or defendant need not be interested in obtaining or defending against all the relief demanded. Judgment may be given for one or more of the plaintiffs according to their respective rights to relief, and against one or more defendants according to their respective liabilities.
(b) Separate Trials. The court may make such orders as will prevent a party from being embarrassed, delayed, or put to expense by the inclusion of a party against whom the party asserts no claim and who asserts no claim against the party, and may order separate trials or make other orders to prevent delay or prejudice.
FED. R. CIV. P. 20.
Federal Rule of Civil Procedure 21, on "Misjoinder and Non-Joinder of Parties," provides:
Misjoinder of parties is not ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just. Any claim against a party may be severed and proceeded with separately.
FED. R. CIV. P. 21.
(43.) See 2660 Woodley Rd. Joint Venture v. ITT Sheraton Corp., No. 97-450, 1999 U.S. Dist. LEXIS 21547, at * 12 (D. Del. Apr. 6, 1999).
(44.) FED. R. CIV. P. 20(a).
(45.) Smith v. Northeastern Ill. Univ., No. 98 C 3555, 2002 U.S. Dist. LEXIS 3883, at * 3 (N.D. Ill. Feb. 28, 2002).
(46.) Mary Kay Kane, Original Sin and the Transaction in Federal Civil Procedure, 76 TEX. L. REV. 1723, 1728 (1998).
(47.) CHARLES ALAN WRIGHT ET AL., 7 FEDERAL PRACTICE &; PROCEDURE [section] 1653, at 415 (3d ed. 2001); see also United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966) ("Under the Rules, the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly encouraged.").
(48.) Bailey v. N. Trust Co., 196 F.R.D. 513, 515 (N.D. Ill. 2000) (quoting Gorence v. Eagle Food Ctrs., Inc., No. 93 C 4862, 1996 U.S. Dist. LEXIS 18806, at * 3 (N.D. Ill. Dec. 19, 1996)).
(49.) Mosley v. Gen. Motors Corp., 497 F.2d 1330, 1333 (8th Cir. 1974).
(50.) 7 WRIGHT ET AL., supra note 47, [section] 1653, at 412; see also Puricelli v. CNA Ins. Co., 185 F.R.D. 139, 142 (N.D.N.Y. 1999) ("The presence of material dissimilarities between the substantive allegations of the joined plaintiffs does not automatically bring such claims outside the 'same transaction or occurrence' language."); Kane, supra note 46, at 1730 ("[W]hen the courts consider whether the claims presented are logically related and thus meet the transaction requirement, the underlying philosophy guiding their decisions is to allow or require joinder if doing so will expedite the resolution of the entire controversy between the parties.").
(51.) 168 F.R.D. 579 (E.D. Tex. 1996).
(52.) Id. at 580.
(53.) Id. (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966)).
(54.) Id. at 581.
(55.) See Ill. Cent. R.R. v. Travis, 808 So. 2d 928, 936 (Miss. 2002).
(56.) See Poleon v. Gen. Motors Corp., Civ. No. 1999-127, 2000 U.S. Dist. LEXIS 221, at * 4 (D.V.I. Jan. 5, 2000) (determining that accidents caused by the same model of vehicle arose from the same series of transactions and thus satisfied Rule 20); see also Abraham v. Volkswagen of Am., Inc., 795 F.2d 238, 241,251 (2d Cir. 1986) (allowing joinder of claims for injuries caused by the same defective part in vehicles manufactured over a four-year span).
(57.) MDL No. 1014, 1995 U.S. Dist. LEXIS 10138 (E.D. Pa. July 17, 1995).
(58.) Id. at * 5.
(59.) Id. at * 6.
(60.) Id. at * 13-14.
(61.) Alvarez v. Armour Pharm., No. 94 C 3587, 1997 U.S. Dist. LEXIS 13668, at * 7 (N.D. Ill. Sept. 4, 1997); see also In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995).
(62.) 1997 U.S. Dist. LEXIS 13668.
(63.) Byers v. Ill. State Police, No. 99 C 8105, 2000 U.S. Dist. LEXIS 17929, at * 11 (N.D. Ill. Dec. 4, 2000).
(64.) Id. at * 4.
(65.) Id. at * 6.
(66.) Id. at * 7.
(67.) Id. at * 12.
(68.) Id. at *14.
(69.) E.g., Sanders v. City of Chi., No. 95 C 1400, 1995 U.S. Dist. LEXIS 19186, at *3 (N.D. Ill. Dec. 21, 1995) (denying joinder of claims of plaintiffs in a race discrimination case because despite allegations of a generalized policy of discrimination, the plaintiffs held different jobs and their claims arose at different times).
(70.) No. 98 C 3555, 2002 U.S. Dist. LEXIS 3883 (N.D. Ill. Feb. 28, 2002).
(71.) Id. at *5-6.
(72.) Id. at *8.
(73.) 210 F.R.D. 226 (N.D. Ill. 2002).
(74.) Id. at 230 (citation omitted).
(76.) Mosley v. Gen. Motors Corp., 497 F.2d 1330, 1333 (8th Cir. 1974) (stating that because each plaintiff "alleged that he had been injured by the same general policy of discrimination on the part of' the defendant, their claims arose out of the same series of transactions).
(77.) Miller v. Hygrade Food Prods. Corp., 202 F.R.D. 142, 144 (E.D. Pa. 2001).
(78.) 28 U.S.C. [subsection] 1397, 2361 (2000); FED. R. CIV. P. 22.
(79.) "Interpleader originally was designed to protect the stakeholder"--a defendant. 7 WRIGHT ET AL., supra note 47, [section] 1702, at 533. Interpleader "prevents the stakeholder from being obliged to determine at his peril which claimant has the better claim," and "forces the claimants to contest what essentially is a controversy between them without embroiling the stakeholder in the litigation over the merits of the respective claims." Id.
(80.) Id.; see also Henry Paul Monaghan, Antisuit Injunctions and Preclusion Against Absent Nonresident Class Members, 98 COLUM. L. REV. 1148, 1164 n.71 (1998) (describing the (b)(1) class as the plaintiffs' interpleader).
(81.) 527 U.S. 815 (1999).
(82.) Modern interpleader actions are brought by banks, insurance companies, and even auctioneers concerned with multiple claims over assets or benefits. See, e.g., Fid. Brokerage Servs., LLC v. Bank of China, 192 F. Supp. 2d 173 (S.D.N.Y. 2002) (concerning bank fraud with conflicting claims from interactive clients); John v. Sotheby's, Inc., 141 F.R.D. 29 (S.D.N.Y. 1992) (concerning competing claims to ownership of property consigned for auction).
(83.) Federal Rule of Civil Procedure 42, on "Consolidation; Separate Trials," provides:
(a) Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a joint bearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.
(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues, always preserving inviolate the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States.
FED. R. CIV. P. 42.
(84.) Charles Silver, Comparing Class Actions and Consolidations, l0 REV. LITIG. 495 (1991).
(85.) 782 F.2d 468 (5th Cir. 1986).
(86.) Id. at 471 n.3. Subsequent Fifth Circuit decisions reversed other aspects of the trial plan ultimately adopted by the Jenkins court, such as the classwide trial of specific causation and personal injury damages issues. See Cimino v. Raymark Indus., Inc., 151 F.3d 297 (5th Cir. 1998). However, the "Phase I" trial of the common fact questions listed above survived appellate scrutiny. In dissecting the multiphase trial, Cimino noted, with approval, the utilization of class certification to determine classwide issues relating to defendants' knowledge, conduct, or duty, as well as issues relating to "generic causation," that is, the propensity or ability of a product to cause harm. Id. at 316-17.
(87.) 161 F.R.D. 456 (D. Wyo. 1995).
(88.) Id. at 468-69.
(89.) The Bendectin litigation was conducted on behalf of what amounted to an 1180-member "opt-in" class. See Ryan Patrick Phair, Note, Resolving the "Choice-of-Law Problem" in Rule 23(b)(3) Nationwide Class Actions, 67 U. CHI. L. REV. 835, 843 (2000) (describing the Bendectin litigation).
(90.) See In re Bendectin Prods. Liab. Litig., 749 F.2d 300 (6th Cir. 1984).
(91.) Hoffman v. Merrell Dow Pharm., Inc. (In re Bendectin Litig.), 857 F.2d 290, 294 (6th Cir. 1988) (upholding the constitutionality and binding effect of the consolidated common-issues trial).
(93.) Brown v. Am. Home Prods. Corp. (In re Diet Drugs Prods. Liab. Litig.), MDL Docket No. 1203, 2000 U.S. Dist. LEXIS 12304 (E.D. Pa. 2000).
(94.) See Judge Spencer Williams's reflections on his frustrated efforts to organize the Dalkon Shield litigation as a class action in Spencer Williams, Mass Tort Class Actions: Going, Going, Gone?, 98 F.R.D. 323 (1983).
(95.) See MANUAL FOR COMPLEX LITIGATION (FOURTH) [section] 20.14 (2004).
(96.) 314 F. Supp. 2d 1380 (J.P.M.L. 2004).
(97.) Id. at 1381.
(98.) Id. at 1381-82.
(99.) See Edward Brunet, Class Action Objectors: Extortionist Free Riders or Fairness Guarantors, 2003 U. CHI. LEGAL F. 403.
(100.) 521 U.S. 591 (1997).
(101.) See Hoffman v. Merrell Dow Pharm., Inc. (In re Bendectin Litig.), 857 F.2d 290 (6th Cir. 1988) (affirming the constitutionally binding effect of a "trifurcated" consolidated trial); In re Bendectin Prods. Liab. Litig., 749 F.2d 300 (6th Cir. 1984) (reversing a Rule 23(b)(1) settlement approval). As noted above, the sole question at the Phase I trial, clearly sufficient to satisfy the requirements of Rule 20 joinder and Rule 42 consolidation, and at least arguably sufficient to justify class certification, was whether ingestion of Bendectin at therapeutic doses was a generic proximate cause of human birth defects. In re Richardson-Merrell, Inc. "Bendectin" Prods. Liab. Litig., 624 F. Supp. 1212, 1244 (S.D. Ohio 1985). Had the jury answered this question "yes," it would then, under the court-approved trifurcated trial procedure, have answered a second question regarding particular categories of birth defects caused by Bendectin when administered at therapeutic doses. This second question was never reached. More recently, appellate courts have endorsed the premise that a single issue of generic or general causation could support class certification in toxic exposure mass tort litigation. See, e.g., Jaros v. E.I. DuPont (In re Hanford Nuclear Reservation Litig.), 292 F.3d 1124, 1139 (9th Cir. 2002); Sterling v. Velsicol Chem. Corp., 855 F.2d 1188 (6th Cir. 1988).
(102.) FED. R. CIV. P. 23(c)(4) provides, "When appropriate (A) an action may be brought or maintained as a class action with respect to particular issues, or (B) a class may be divided into subclasses and each subclass treated as a class, and the provisions of this rule shall then be construed and applied accordingly."
(103.) Campion v. Credit Bureau Servs., Inc., 206 F.R.D. 663, 676 (E.D. Wash. 2001) (noting that certification of a common issue is appropriate if it "is of central importance to the case").
(104.) Compare Bentley v. Honeywell Int'l, Inc., 223 F.R.D. 471, 483 (S.D. Ohio 2004) (granting class certification in groundwater contamination case, holding certification of property-based claims did not bar future individual personal injury claims, and rejecting claim-splitting argument), with Weizeorick v. ABN AMRO Mortgage Group, Inc., 2004 U.S. Dist. LEXIS 4078, at *7-*8 (N.D. Ill. 2004) (denying class certification, reasoning that decisions of federal and state claims between two courts is "claim splitting," which is disfavored because it "multiplies the costs of litigation on an opponent's adversaries and the judicial system").
(105.) The Manual for Complex Litigation (Fourth) now states, "Rule 23(c)(4)(A) permits a class to be certified for specific issues or elements of claims raised in the litigation." MANUAL FOR COMPLEX LITIGATION, supra note 95, [section] 21.24. As the Manual goes on to explain, "[s]electively used, this provision may enable a court to achieve the economies of class action treatment for a portion of the case, the rest of which may either not qualify under Rule 23(a) or may be unmanageable as a class action." Id. A variation on this theme is the certification of "hybrid" classes, in which the court certifies some claims under Rule 23(b)(3) "while creating a non-opt-out Rule 23(b)(1) or (b)(2) class for other claims." Id.
(107.) Robinson v. Metro-North Commuter R.R., 267 F.3d 147 (2d Cir. 2001).
(108.) See Smilow v. Southwestern Bell Mobile Sys., 323 F.3d 32 (1st Cir. 2003); Robinson, 267 F.3d 147; In re Chiang, 385 F.3d 256 (3d Cir. 2004); Gunnells v. Healthplan Servs., 348 F.3d 417 (4th Cir. 2003); Central Wesleyan College v. W.R. Grace & Co., 6 F.3d 177 (4th Cir. 1993); Jenkins v. Raymark Indus., 782 F.2d 468 (5th Cir. 1986). Compare Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996) ("[I]f the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)(A) and proceed with class treatment of these particular issues."), with In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1302-03 (7th Cir. 1995) (rejecting the use of an issues class in a specific product liability case because of an inability to "carve at the joint" between common liability issues and individual causation and damages issues). But see Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004) (writing that Rule 23(c)(4)(A) enables liability issues to be decided in "separate proceedings" from those over causation and damages, with class treatment appropriate for liability, and individual treatment appropriate for individual causation and damages).
(109.) 84 F.3d 734, 745 n.21 (5th Cir. 1996).
(110.) 231 F.3d 970, 976 (5th Cir. 2000).
(112.) Thus, in In re Tri-State Crematory Litigation, 215 F.R.D. 660 (N.D. Ga. 2003), the multidistrict litigation transferee court certified a Rule 23(b)(3) class under Rule 23(c)(4)(A)'s principles in litigation claiming intentional or negligent mass desecration of decedents' remains at a rural crematorium. The court certified "those issues related to Defendants' duty to Plaintiffs and whether Defendants breached that duty," while reserving questions of whether such conduct caused plaintiffs' emotional distress as well as the ultimate determination of damages. Id. at 697. The litigation settled midway through the jury trial of the liability phase.
(113.) 385 F.3d 256 (3d Cir. 2004).
(114.) Id. at 267.
(115.) 818 F.2d 145, 166-67 (2d Cir. 1987).
(116.) See In re Diamond Shamrock Chems. Co., 725 F.2d 858, 860 (2d Cir. 1984) (describing Judge Weinstein's class certification order).
(119.) Id. at 860-61.
(120.) Id. at 860.
(121.) No. CV-94-4033 (Ala. Cir. Ct. Jan. 15, 1998); see Carrell v. Masonite Corp., 775 So. 2d 121 (Ala. 2000) (describing various aspects of the Naef litigation); Ex parte Masonite Corp., 681 So. 2d 1068 (Ala. 1996) (same). Alabama's class action rule is identical to Rule 23, and federal jurisprudence is considered authoritative when Alabama courts interpret and apply the state class action rule. Compass Bank v. Snow, 823 So. 2d 667, 672 (Ala. 2001).
(122.) See Int'l Paper Co. v. Agric. Excess & Surplus Ins. Co., No. A089102, 2001 WL 641781, at *2 (Cal. Ct. App. Apr. 12, 2001) (describing the Naef litigation). Naef is the exemplification of the type of multistate, state-law-based class action that the Class Action Fairness Act of 2005's drastic expansion of 28 U.S.C. [section] 1332 diversity jurisdiction makes removable to federal court. Class Action Fairness Act of 2005, Pub. L. No. 109-2, [section] 4, 119 Stat. 4, 9-12.
(123.) Int'l Paper Co., 2001 WL 641781, at *2 (describing the Naef litigation).
(124.) Simon v. Philip Morris Inc., 200 F.R.D. 21, 29 (E.D.N.Y. 2001) ("By bifurcating issues like general liability or general causation and damages, a court can await the outcome of a prior liability trial before deciding how to provide relief to the individual class members."), quoted in Olden v. LaFarge Corp., 383 F.3d 495 (6th Cir. 2004) (affirming Rule 23(b)(3)/23(c)(4)(A) certification of liability issues in a toxic pollutants exposure case).
(125.) Simon, 200 F.R.D. at 49-50.
(126.) Judge Weinstein's Rule 23(c)(4)(A) certification of a "non-opt-out" Rule 23(b)(1) smokers' punitive damages class is currently on Federal Rule of Civil Procedure 23(f) appeal to the Second Circuit.
(127.) Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996).
(129.) In Chamberlan v. Ford Motor Co., 2005 U.S. App. LEXIS 5151 (9th Cir. Mar. 23, 2005), the Ninth Circuit rejected Ford's argument that Valentino genetically militated against class treatment, noting that what was worthy in Valentino was simply sufficient detail in the district court's order: "Superficial recitation of the factors has was not enough; thus, in Valentino, the case was remanded so the district court could provide the details necessary to evaluate the certification decision." Id. at *20.
(130.) Other decisions that have similarly analyzed the function and application of Rule 23(c)(4)(A) in the mass torts context include Abed v. A.H. Robins Co. (In re Northern District of California Dalkon Shield IUD Products Liability Litigation), 693 F.2d 847, 856 (9th Cir. 1982), and In re Copley Pharmaceutical Inc., "Albuterol" Products Liability Litigation, 158 F.R.D. 485, 491 (D. Wyo. 1994).
(131.) 186 F.3d 620 (5th Cir. 1999).
(132.) 6 F.3d 177 (4th Cir. 1993).
(133.) Id. at 184.
(134.) Id. Central Wesleyan followed an extensive analysis set forth by the Third Circuit in Manheim Township School District v. Lake Asbestos of Quebec, Ltd. (In re School Asbestos Litigation), 789 F.2d 996 (3d Cir. 1986), and followed the Fourth Circuit's own earlier admonition, expressed in In re A.H. Robins Co., 880 F.2d 709, 740 (4th Cir. 1989), that district courts take "full advantage" of Rule 23(c)(4)(A) "in order to promote the use of the class device and to reduce the range of disputed issues" in complex litigation.
(135.) Carnegie v. Household Int'l, Inc., 376 F.3d 656 (7th Cir. 2004).
(136.) Id. at 661.
(137.) Wal-Mart Stores, Inc. v. Visa U.S.A., Inc. (In re Visa Check/Mastermoney Antitrust Litig.), 280 F.3d 124 (2d Cir. 2001).
(138.) Jenkins v. United Gas Corp., 400 F.2d 28, 35 (5th Cir. 1968).
(139.) Carnegie, 376 F.3d at 661.
(140.) State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003); Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001); BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996).
(141.) These guideposts are: "(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases." State Farm, 538 U.S. at 418; see also Gore, 517 U.S. at 575.
(142.) "[T]he most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct." Gore, 517 U.S. at 575; see also State Farm, 538 U.S. at 419.
(143.) State Farm, 538 U.S. at 419; see also Gore, 517 U.S. at 576-77.
(144.) In Leatherman Tool Group, the Supreme Court explicitly mandated the de novo review of every punitive damages award, specifying that such awards shall be reexamined to ensure they are not unconstitutionally excessive. In so doing, the Court rejected the argument that de novo review of punitive damages awards, which literally involves the reexamination and potential recalculation of a punitive damages award (not to mention the reversal of the decision whether or not to award punitive damages in the first place) constituted a prohibited reexamination of any "fact tried by a jury." 532 U.S. at 437 n. 10 (citing Honda Motor Co. v. Oberg, 512 U.S. 415, 427 (1994)).
(145.) Id. at 437 (quoting Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 459 (1996)).
(146.) The Court suggests this claim in the following passage:
Differences in the institutional competence of trial judges and appellate judges are consistent with our conclusion. In Gore, we instructed courts evaluating a punitive damages award's consistency with due process to consider three criteria: (1) the degree or reprehensibility of the defendant's misconduct; (2) the disparity between the harm (or potential harm) suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. 517 U.S. at 574-575. Only with respect to the first Gore inquiry do the district courts have a somewhat superior vantage over courts of appeals, and even then the advantage exists primarily with respect to issues turning on witness credibility and demeanor. Trial courts and appellate courts seem equally capable of analyzing the second factor. And the third Gore criterion, which calls for a broad legal comparison, seems more suited to the expertise of appellate courts. Considerations of institutional competence therefore fail to tip the balance in favor of deferential appellate review.
Id. at 440 (footnote omitted).
(147.) State Farm, 538 U.S. at 421.
(148.) 211 F.R.D. 86 (E.D.N.Y. 2002).
(149.) The history of this litigation is recounted in In re the Exxon Valdez, 296 F. Supp. 2d 1071 (D. Alaska 2004).
(151.) Id. at 1091-92.
(152.) See Catherine M. Sharkey, Punitive Damages as Societal Damages, 113 YALE L.J. 347 (2003).
(153.) As Judge Posner remarked in Mathias v. Accor Econ. Lodgings, Inc., 347 F.3d 672, 676 (7th Cir. 2003),
The term "punitive damages" implies punishment, and a standard principle of penal theory is that "the punishment should fit the crime" in the sense of being proportional to the wrongfulness of the defendant's action, though the principle is modified when the probability of detection is very low (a familiar example is the heavy fines for littering) or the crime is potentially lucrative (as in the case of trafficking in illegal drugs).
Because in Mathias, the small economic value of the harm caused by the defendant's outrageous conduct in renting bedbug-infested hotel rooms to guests assured that only a few of the victims would persist with litigation, the court affirmed a punitive damages award 37.2 times higher than the compensatory award, a ratio far in excess of the State Farm 9-to-1 prescription for most cases. Id. at 676-77. An alternative approach would have been to join all victims of the bedbug plague as class members, and award both compensatory and punitive damages to the entire class. The total amount of punitive damages would likely have been the same, but would have constituted a much lower multiplier of the compensatory damages, and would have been apportioned equitably among the victims, rather than being awarded to Mr. and Mrs. Mathias alone as bounty hunters.
(154.) See Sermu Mesulam, Note, Collective Rewards and Limited Punishment: Solving the Punitive Damages Dilemma with Class, 104 COLUM. L. REV. 1114 (2004).
(155.) CAL. BUS. & PROF. CODE [subsection] 17203-17204, 17206, 17235-17236 (West 1997) (amened 2004).
(156.) As one defense counsel observed,
the inability of a claimant to offer a binding settlement means, quite simply, that he or she has nothing of real value to sell. Meanwhile, another interloper can file suit, "poaching" on the first lawyer's turf and settling first. Those things have happened. A claimant with a real claim, however, suing on behalf of a class, can offer finality.
William L. Stern, Tort-Reform Initiative Will Be Good for Everyone, Even Plaintiffs' Bar, S.F. DAILY J., Nov. 5, 2004, at 4.
(157.) The defense counsel perspective on pre-Proposition 64 UCL abuses went as follows:
Sometimes called a "general public" or "private attorney general" action [in UCL cases], this public prosecution feature means that a defendant who settles or goes to judgment in a "nonclass class" cannot bar other claimants. There is no finality, only the prospect of serial litigation, and no obligation on the part of the lawyer or the plaintiff (who are often one and the same) to pay the spoils to the victims. Together, these features had become a de facto litigation tax on companies who do business in the state. ....That it is bad for the court system is also pretty clear because it fosters cynicism and public disrespect for the courts.
Id. Thus, the "real class action" is perceived, at least in comparison, as avoiding such purported abuses, comporting with notions of public policy, and offering the ultimate Holy Grail of all modern complex litigation: finality or preclusive effect.
(158.) See CAL. BUS. & PROF. CODE [subsection] 17203-17204, 17206, 17235-17236 (West Supp. 2005).
(159.) See Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937 (Cal. 2003); Krause v. Trinity Mgmt. Servs., Inc., 999 P.2d 718 (Cal. 2000); Prata v. Superior Court, 111 Cal. Rptr. 2d 296 (Ct. App. 2001).
(160.) See Korea Supply Co., 63 P.3d 937; Krause, 999 P.2d 718; Prata, 111 Cal. Rptr. 2d 296.
(161.) See Branick v. Downey Sav. & Loan Ass'n, No. B172981, 2005 Cal. App. LEXIS 201 (Ct. App. Feb. 9, 2005) (holding that Proposition 64 is retroactive); Californians for Disability Rights v. Mervyn's, No. A106199, 2005 Cal. App. LEXIS 160 (Cal. Ct. App. Feb. 1, 2005) (holding that Proposition 64 is not retroactive).
(162.) Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). The primary mechanism by which CAFA operates to "federalize" most class actions is through amendment of 28 U.S.C. [section] 1332, the federal diversity jurisdiction provision, to base federal jurisdiction on the citizenship of unnamed or "absent" class members. Section 4 of CAFA puts the following language into [section] 1332:
(2) The district courts shall have the original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which--
(A) any member of a class of plaintiffs is a citizen of a State different from any defendant;
(B) any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or
(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.
(3) A district may, in the interests of justice and looking at the totality of the circumstances, decline to exercise jurisdiction under paragraph (2) over a class action in which greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed based on consideration of--
(A) whether the claims asserted involve matters of national or interstate interest;
(B) whether the claims asserted will be governed by laws of the State in which the action was originally filed or by the laws of other States;
(C) whether the class action has been pleaded in a manner that seeks to avoid Federal jurisdiction;
(D) whether the action was brought in a forum with a distinct nexus with the class members, the alleged harm, or the defendants;
(E) whether the number of citizens of the State in which the action was filed in all proposed plaintiff classes in the aggregate is substantially larger than the number of citizens from any other State, and the citizenship of the other members of the proposed class is dispersed among a substantial number of States; and
(F) whether, during the 3-year period preceding the filing of that class action, 1 or more other class actions asserting the same or similar claims on behalf of the same or other persons have been filed.
(4) A district court shall decline to exercise jurisdiction under paragraph (2)--
(A) (i) over a class action in which--
(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;
(II) at least 1 defendant is a defendant--
(aa) from whom significant relief is sought by members of the plaintiff class; whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiffclass; and
(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and
(cc) who is a citizen of the State in which the action was originally filed; and
(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and
(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons; or
(B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.
(163.) Class Action Fairness Act of 2005, [section] 4, 119 Stat. at 10 (amending 28 U.S.C.A. [section] 1332(d)(5)(B) (West Supp. 2005)).
(164.) Id. [section] 9, 119 Stat. at 14.
(165.) Id. [section] 2, 119 Stat. at 4-5.
(166.) See id. [section] 3(a), 119 Stat. at 6 (creating 28 U.S.C. [section] 1712, which allows for judicial review of coupon settlements and associated attorneys' fees).
(167.) See, e.g., In re Domestic Air Transp. Antitrust Litig., 148 F.R.D. 297 (N.D. Ga. 1993) (granting final approval to a federal class action settlement valued at $458 million (as record amount) and comprised primarily of discount travel certificates good toward domestic travel on major airlines).
(168.) On February 14, 2005, the nonpartisan Political Moneyline tracking service reported that the U.S. Chamber of Commerce and its Institute for Legal Reform together spent just over $53 million lobbying the federal government in 2004 on issues including a push for limits on lawsuits. See Washington in Brief, WASH. POST, Feb. 15, 2005, at A4. Prominent in the CAFA proponents' campaign against state courts is the notion that certain state courts constitute "judicial hellholes" that are plaintiff-oriented, and which "personal injury lawyers seek out ... because they know that they will produce a positive outcome--an excessive verdict or settlement, a favorable precedent, or both." AM. TORT REFORM ASS'N, JUDICIAL HELLHOLES 2004 (2004), available at http://www.atra.org/reports/hellholes/ report.pdf. The American Tort Reform Association's list of 2004 judicial hellholes was topped by the much-maligned Madison County, Illinois, but also included respected jurisdictions such as Philadelphia, Pennsylvania, and Los Angeles, California. West Virginia residents will also be disconcerted to know that ATRA has dubbed their "entire state" a judicial hellhole. Id. at 7.
(169.) CAFA states:
(b) Purposes.--The purposes of this Act are to--
(1) assure fair and prompt recoveries for class members with legitimate claims;
(2) restore the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction; and
(3) benefit society by encouraging innovation and lowering consumer prices.
[section] 2(b), 119 Stat. at 5.
(170.) See Franchise Tax Bd. of Cal. v. Hyatt, 538 U.S. 488, 495-96 (2003); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 818-19 (1985).
(171.) See In re Ford Motor Co. Bronco II Prods. Liab. Litig., 177 F.R.D. 360 (E.D. La. 1997).
(172.) See, e.g., David Rogers, Class-Action Bill Sails in Senate, and Heads Quickly to the House, WALL ST. J., Feb. 11, 2005, at A2; U.S. Business Groups Laud Senate Passage of Class-Action Bill, WALL ST. J. ONLINE, Feb. 10, 2005, at http://online.wsj.com/article/ 0,,BT_CO_20050210_010535,00.html.
(173.) Marcia Coyle, A Reform's Fate Rests in Federal Courts; Delays, Larger Classes to Come in Class Action Reform, NAT'L L.J., Feb. 14, 2005, at 1, 1 (discussing THOMAS E. WILLGING & SHANNON R. WHEATMAN, EMPIRICAL EXAMINATION OF ATTORNEYS' CHOICE OF FORUM IN CLASS ACTION LITIGATION (2005)).
(174.) [section] 2, 119 Stat, at 4-5.
(175.) See supra note 39.
(176.) 220 F.R.D. 195, 209-10 (S.D.N.Y. 2003).
(177.) Id. at 207.
(178.) See id. at 207-09.
(179.) Id. at 210.
(180.) See 29 U.S.C. [subsection] 216(b), 256 (2000).
(181.) 220 F.R.D. at 210 n.28.
(182.) Id. at 210 (citing Ortiz v. Fibreboard Corp., 527 U.S. 815, 832 (1999)); see also Hansberry v. Lee, 311 U.S. 32, 41 (1940).
(183.) Id. at 211.
(184.) FED. R. CIV. P. 1.
(185.) As the National Law Journal recently opined regarding CAFA:
We think the legislation is a bad idea. The federal courts are already underfunded and overcrowded, and to add thousands of cases to their caseload will only cause a delay of justice. Most state courts are perfectly competent to handle these cases; getting more of them removed to federal court will solve nothing, and may preclude some multistate claims from being heard at all.
Editorial, Class Action Reform, NAT'L L.J., Feb. 14, 2005, at 27, 27.
Elizabeth J. Cabraser, Partner at Lieff, Cabraser, Heimann & Bernstein, LLP (San Francisco, California). The office represents plaintiffs in class actions and other aggregate proceedings in the federal and state courts. I have represented clients in tort, consumer, and investment litigation, and I lecture frequently on these and other complex litigation topics, whether anyone is listening or not. I serve as one of the counsel of record for plaintiffs in the Exxon Valdez, Simon II, and Diet Drugs litigation referred to in this Article. Many thanks to David W. Marcus for his substantial contributions on the joinder alternatives discussion in Part II.
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|Title Annotation:||The Civil Trial: Adaptation and Alternatives|
|Author:||Cabraser, Elizabeth J.|
|Publication:||Stanford Law Review|
|Date:||Apr 1, 2005|
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