The public value of settlement

Fordham Law Review

Volumn 78, Issue 3, 2009, Pages 1177-1202

  Issacharoff, Samuel ^a   Klonoff, Robert H ^b  

^a NEW YORK UNIVERSITY   (United States)

^b LEWIS AND CLARK LAW SCHOOL   (United States)

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[No Author keywords available]

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EID: 75649144455     PISSN: 0015704X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (221)

1. Owen M. Fiss, Against Settlement, 93 YALE L. J. 1073, 1075 (1984).
2. Id.
3. Id.
4. See Marc Galanter, Why the "Haves" Come Out Ahead: Speculations on the Limits of Legal Change, 9 LAW & SOC'Y REV. 95, 123-24 (1974).
5. Fiss, supra note 1, at 1078.
6. Id. at 1076-78.
7. Id. at 1078-82.
8. Id. at 1082-85.
9. Id. at 1085-87.
10. See, e.g., In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008) ("[T]here is a strong judicial policy that favors settlements, particularly where complex class action litigation is concerned." (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)));
11. Hensley v. Alcon Labs., Inc., 277 F.3d 535, 540 (4th Cir. 2002) (recognizing the value settlements generally bring by "providing an orderly and peaceful resolution of controversies");
12. Little Rock Sch. Dist. v. Pulaski County Special Sch. Dist. No. 1, 921 F.2d 1371, 1388 (8th Cir. 1990) ("A strong public policy favors agreements, and courts should approach them with a presumption in their favor.");
13. Birbalas v. Cuneo Printing Indus., Inc., 140 F.2d 826, 828 (7th Cir. 1944) ("[I]t has long been public policy to favor settlement of controversies, as conducive to termination of litigation". (citing Chi., Milwaukee & St. Paul Ry. Co. v. Clark, 178 U. S. 353 (1900);
14. Bofinger v. Tuyes, 120 U. S. 198 (1887);
15. Jackson v. Horton, 21 N. E. 490 (Ill. 1888))).
16. The most famous argument against "settlement blackmail" comes from Judge Richard Posner in In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1299 (7th Cir. 1995) (arguing that class certification creates insurmountable pressure on defendants to settle by forcing them "to stake their companies on the outcome of a single jury trial, or be forced by fear of the risk of bankruptcy to settle even if they have no legal liability").
17. For a rejoinder, see Charles Silver, "We're Scared to Death": Class Certification and Blackmail, 78 N. Y. U. L. REV. 1357 (2003).
18. Fiss, supra note 1, at 1076.
19. Id.
20. Id.
21. Id. at 1077.
22. See, e.g., Howard M. Erichson, The End of the Defendant Advantage in Tobacco Litigation, 26 WM. & MARY ENVTL. L. & POL'Y REV. 123, 123 (2001) (arguing that defendants no longer enjoy an advantage over plaintiffs in mass tort litigation because, among other reasons, "the financial resources of the elite plaintiffs' bar have reached a point where plaintiffs' lawyers can fund large-scale litigation at the highest level");
23. Deborah R. Hensler, Has the Fat Lady Sung?: The Future of Mass Toxic Torts, 26 REV. LITIG. 883, 923-24 (2007) (noting a large increase in the number of plaintiffs' law firms involved in mass tort cases between the early 1990s and 2007);
24. Herbert M. Kritzer, From Litigators of Ordinary Cases to Litigators of Extraordinary Cases: Stratification of the Plaintiffs' Bar in the Twenty-First Century, 51 DEPAUL L. REV. 219, 232 (2001) (discussing plaintiffs' firms that "are in the game for the long term and have the resources to sustain cases that, until recently, would have bankrupted virtually any lawyer or plaintiffs' law firm").
25. See, e.g., Stephen C. Yeazell, Re-financing Civil Litigation, 51 DEPAUL L. REV. 183, 199 (2001).
26. Among many examples, Lieff, Cabraser, Heimann & Bernstein has more than fifty attorneys in three offices. Its website states that its attorneys have served as lead or cocounsel in forty-two separate cases involving verdicts or settlements of more than $100 million, including eleven cases in excess of $1 billion. Lieff, Cabraser, Heimann & Bernstein, http://www.lieffcabraser.com/(last visited Nov. 6, 2009). The Cochran Firm has 139 attorneys in twenty-seven offices. According to the firm's website, its partners have won ten verdicts of more than $100 million each and obtained over $45 billion in verdicts, settlements, and judgments. Cochran Firm, http://www.cochranfinn.com/(last visited Nov. 6, 2009). Bernstein Litowitz, which has over fifty lawyers in three offices, has recovered almost $13 billion for securities plaintiffs. Bernstein Litowitz, http://www.blbglaw.com/index (last visited Nov. 6, 2009). Baron & Budd, with over fifty attorneys in four offices, has recovered billions of dollars in toxic tort cases. Baron & Bud, http://baronandbudd.com/(last visited Nov. 6, 2009). Cotchett, Pitre & McCarthy, with twenty-four lawyers in four offices, has recovered hundreds of millions of dollars for plaintiffs, primarily in antitrust and other complex business cases. Cotchett, Pitre & McCarthy, http://www.cpmlegal.com/(last visited Nov. 6, 2009). Coughlin Stoia, with 190 lawyers in eight offices, has recovered billions of dollars for plaintiffs in securities lawsuits, including $7.2 billion in the Enron controversy. Coughlin Stoia, http://www.csgrr.com/(last visited Nov. 6, 2009). Grant & Eisenhofer has forty-two attorneys in three offices. It specializes in securities litigation and recently brokered a $2.975 billion settlement in a suit against Tyco International. Grant & Eisenhofer, http://www.gelaw.com/(last visited Nov. 6, 2009). Grant & Eisenhofer represented "the largest cash payment ever made by a corporate defendant in the history of securities litigation" and "the third largest securities class action recovery in history, behind only Enron and WorldCom." In re Tyco Int'l Ltd. Multidistrict Litig., 535 F. Supp 2d 249, 256-57 (D. N. H. 2007). The New York law firm of Seeger Weiss has thirty-six lawyers. Seeger Weiss, http://www.seegerweiss.com/(last visited Nov. 6, 2009). It played a major role in the $4.85 billion settlement in the Vioxx litigation.
27. See Peter Page, Persistence Pays in Vioxx Litigation, NAT'L L. J., Oct. 6, 2008, at 3. Cohen, Milstein, Sellers & Toll has more than fifty lawyers in four offices. It has been involved in some of the nation's largest class actions, including antitrust, securities fraud, employment discrimination, and human rights cases. Cohen, Milstein, Sellers & Toll, http://www.cmht.com/home.php (last visited Nov. 6, 2009).
28. See Kritzer, supra note 16, at 232 (citing firms that do both plaintiff contingent-fee litigation and traditional commercial litigation on an hourly basis, including Boies, Schiller, and Flexner and Susman Godfrey).
29. See, e.g., Erichson, supra note 16, at 131.
30. Id;
31. accord, e.g., Ingrid L. Dietsch Field, Comment, No Ifs, Ands, or Butts: Big Tobacco Is Fighting for Its Life Against a New Breed of Plaintiffs Armed with Mounting Evidence, 27 U. BALT. L. REV. 99, 115 (1997).
32. Kritzer, supra note 16, at 232.
33. Id;
34. accord, e.g., Erichson, supra note 16, at 129. One example of this shift of advantage to the plaintiffs, as noted above
35. see supra note 11 and accompanying text, was widely noted in the mid 1990s, when some courts and commentators began expressing concern that defendants were being coerced to settle major class action cases because of the possibility, after class certification, of a crippling or even bankrupting judgment.
36. See, e.g., In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995). Federal Rule of Civil Procedure 23 (f), which became effective on December 1, 1998, authorizes federal appellate courts, in their discretion, to grant review of "an order of a district court granting or denying class action certification". FED. R. CIV. P. 23 (f). One of the principal reasons for the rule's adoption was that "a grant of class status can put considerable pressure on the defendant to settle, even when the plaintiff's probability of success on the merits is slight." Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 834 (7th Cir. 1999). In particular, "[m]any corporate executives are unwilling to bet their company that they are in the right in bigstakes litigation, and a grant of class status can propel the stakes of a case into the stratosphere."
37. Id. For additional authority discussing Rule 23 (f) 's attempt to protect defendants against coerced settlements see, for example, Regents of the Univ. of Cal. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372, 379 (5th Cir. 2007);
38. Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 164 (3d Cir. 2001);
39. Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 293 (1st Cir. 2000).
40. For an overview of the powerful regulatory role played by the reorganized plaintiffs' bar, see John Fabian Witt, Bureaucratic Legalism, American Style: Private Bureaucratic Legalism and the Governance of the Tort System, 56 DEPAUL L. REV. 261 (2007).
41. For discussions of the tobacco industry's settlements and its prior record of paying out no judgments see, for example, PETER PRINGLE, CORNERED: BIG TOBACCO AT THE BAR OF JUSTICE (1998);
42. Michael V. Ciresi, Roberta B. Walburn & Tara D. Sutton, Decades of Deceit: Document Discovery in the Minnesota Tobacco Litigation, 25 WM. MITCHELL L. REV. 477 (1999);
43. Erichson, supra note 16, at 127. The authors admit to having played a role in some of the cases discussed here. Indeed, we first met when we were on opposite sides in tobacco litigation.
44. See, e.g., In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., 553 F. Supp. 2d 442, 449-56 (E. D. Pa. 2008) (summarizing allegations and proceedings leading up to settlement).
45. Associated Press, Vioxx Settlement on Track as 44, 000 Sign Up, N. Y. TIMES, Mar. 4, 2008, at C11;
46. Page, supra note 18.
47. In re Sulzer Hip Prosthesis and Knee Prosthesis Liab. Litig., 268 F. Supp. 2d 907, 910-13, 918-19 (N. D. Ohio 2003).
48. Wal-Mart Stores, Inc. v. Visa U. S. A. Inc., 396 F.3d 96, 103 (2d Cir. 2005).
49. In re Enron Corp. Sec., Derivative & "ERISA" Litig., 586 F. Supp. 2d 732, 796 (S. D. Tex. 2008).
50. In re WorldCom, Inc. Sec. Litig., 388 F. Supp. 2d 319, 322 (S. D. N. Y. 2005).
51. Fiss, supra note 1, at 1079.
52. See, e.g., Hayes v. Eagle-Picher Indus., Inc., 513 F.2d 892, 894 (10th Cir. 1975);
53. Tax Auth., Inc. v. Jackson Hewitt, Inc., 898 A.2d 512, 519-20 (N. J. 2006);
54. PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION §§ 3.16, 3.17 (Proposed Official Draft 2009);
55. ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 06-438 (2006) [hereinafter ABA Formal Op.];
56. MODEL RULES OF PROF'L CONDUCT R. 1.8 (g) (2002);
57. MODEL CODE OF PROF'L RESPONSIBILITY DR 5-106 (1980);
58. Nancy J. Moore, The Case Against Changing the Aggregate Settlement Rule in Mass Tort Lawsuits, 41 S. TEX. L. REV. 149, 151 (1999).
59. See PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 3.17 cmt. a (Proposed Official Draft 2009).
60. MODEL RULES OF PROF'L CONDUCT R. 1.8 (g) (2002).
61. Id.;
62. see also ABA Formal Op., supra note 33 (interpreting aggregate settlement role).
63. Charles Silver & Lynn A. Baker, Mass Lawsuits and the Aggregate Settlement Rule, 32 WAKE FOREST L. REV. 733, 767 (1997).
64. Professor Charles Silver is also one of the Reporters on the American Law Institute (ALI) Project, Principles of the Law of Aggregate Litigation.
65. PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 3.17 cmt. a (Proposed Official Draft 2009).
66. Id. § 3.17. Under the ALI Draft, a claimant who gives an ex ante waiver to permit a supermajority to settle his or her claim may challenge the settlement if (i) the claimant did not receive the proper disclosures prior to waiver, or (ii) the claimant believes that his or her share of the settlement is unfair.
67. See id. § 3.18 (a).
68. George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1, 3-6 (1984) (explaining that cases that go to trial are likely the product of uncertainty about controlling law and offering empirical support for the proposition that well-developed law promotes settlement).
69. Robert H. Mnookin & Lewis Kornhauser, Bargaining in the Shadow of the Law: The Case of Divorce, 88 YALE L. J. 950, 950 (1979).
70. Fiss, supra note 1, at 1078.
71. See FED. R. CIV. P. 23 (b) (3), (c) (2) (B).
72. FED. R. CIV. P. 23 (e) (4).
73. FED. R. CIV. P. 23 (a) (4) (providing that "the representative parties [must] fairly and adequately protect the interests of the class").
74. See, e.g., Ortiz v. Fibreboard Corp., 527 U. S. 815 (1999) (striking down the class settlement because, among other reasons, class representatives with an existing injury could not adequately represent class members whose injuries had not yet manifested themselves);
75. Amchem Prods., Inc. v. Windsor, 521 U. S. 591 (1997) (same).
76. *4-7 (S. D. N. Y. July 14, 1995) (finding the class representative inadequate because of chronic failure to communicate with class counsel and lack of knowledge about basic elements of the case);
77. Greenspan v. Brassier, 78 F. R. D. 130, 134 (S. D. N. Y. 1978) (finding that "Plaintiffs' limited personal knowledge of the facts underlying this suit, as well as their apparently superfluous role in this litigation to date, indicate their inadequacy as class representatives" (footnote omitted));
78. In re Goldchip Funding Co, 61 F. R. D. 592, 594-95 (M. D. Pa. 1974) (holding that proposed class representatives had not shown themselves to be adequate, and noting that "[t]he class is entitled to more than blind reliance upon even competent counsel by uninterested and inexperienced representatives").
79. FED. R. CIV. P. 23 (a) (3).
80. See, e.g., Wiener v. Dannon Co, 255 F. R. D. 658, 666-67 (CD. Cal. 2009) (finding proposed class representative failed typicality requirement because she had purchased only one of the products at issue in the litigation);
81. *6-7 (N. D. Ill. Dec. 21, 2004) (finding class representative failed typicality requirement because of argument by defendant that representative's claim was time barred);
82. Landry v. Price Waterhouse Chartered Accountants, 123 F. R. D. 474, 475-77 (S. D. N. Y. 1989) (finding representative in securities fraud suit atypical because of claim that representative did not rely on defendant or on integrity of market).
83. See FED. R. CIV. P. 23 (e).
84. Although class members may not have an absolute right to testify orally at a given fairness hearing, there is no doubt that they have the right to present the grounds for their objection to the court. See FED. R. CIV. P. 23 (e) (4) (A) (providing that "[a]ny class member may object" to a proposed class settlement);
85. Devlin v. Scardelletti, 536 U. S. 1, 8 (2002) (observing that "nonnamed parties have been consistently allowed" to object to settlements at fairness hearings under the Federal Rules of Civil Procedure).
86. See, e.g., Synfuel Techs., Inc. v. DHL Express (USA), Inc., 463 F.3d 646, 654 (7th Cir. 2006) (overturning a settlement approved by the district court because the proposed recovery by class members was akin to coupons and provided inadequate compensation);
87. Staton v. Boeing Co., 327 F.3d 938, 972 (9th Cir. 2003) (reversing the approval of a settlement because of concern about attorneys' fees);
88. Molski v. Gleich, 318 F.3d 937 (9th Cir. 2003) (reversing the approval of a class settlement because of insufficient notice, lack of opportunity for opt out, and unfairness of settlement terms);
89. Reynolds v. Beneficial Nat'l Bank, 288 F.3d 277, 279 (7th Cir. 2002) (Posner, J.) (reversing the district court's approval of a class settlement because of concern that class counsel, "in derogation of their professional and fiduciary obligations, place[d] their pecuniary self-interest ahead of that of the class");
90. Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292, 1301-04, 1311, 1317, 1328 (S. D. Fla. 2007) (rejecting proposed coupon settlement based on an "onslaught of opposition" from objectors, academics, and Attorneys General of thirty-five states);
91. Grosso v. Fid. Nat'l Title Ins. Co., 983 So. 2d 1165, 1174 (Fla. Dist. Ct. App. 2008) (reversing the approval of a settlement under Florida's version of Rule 23 in part because of meager proposed payments to unnamed class members in the face of materially higher payments to the lead plaintiff and very large attorneys' fees).
92. See, e.g., In re Holocaust Victim Assets Litig., 424 F.3d 132 (2d Cir. 2005) (affirming the distribution of settlement proceeds through the use of a special master);
93. In re Asbestos Litig., 90 F.3d 963, 972 (5th Cir. 1996) (noting that a law professor was appointed as guardian ad litem to review the fairness of settlement to the class), vacated and remanded on other grounds sub nom.
94. Flanagan v. Ahearn, 521 U. S. 1114 (1997), aff'd on remand sub nom. In re Abestos Litig. 134 F.3d 668 (5th Cir. 1998), rev'd on other grounds sub nom. Ortiz v. Fibreboard Corp., 527 U. S. 815 (1999);
95. Officers for Justice v. Civil Serv. Comm'n, 473 F. Supp. 801, 818 (N. D. Cal. 1979) (appointing a special master to oversee distribution of damages);
96. Miller v. Mackey Int'l, Inc., 70 F. R. D. 533, 535 (S. D. Fla. 1976) (upholding the prior decision to appoint a guardian ad litem to protect class members after parties negotiated a class settlement);
97. MANUAL FOR COMPLEX LITIGATION (FOURTH) § 21.644 (2004);
98. Edward Brunet, Class Action Objectors: Extortionist Free Riders or Fairness Guarantors, 2003 U. CHI. LEGAL F. 403 (2003);
99. Alon Klement, Who Should Guard the Guardians? A New Approach for Monitoring Class Action Lawyers, 21 REV. LITIG. 25 (2002);
100. Joseph F. Rice & Nancy Worth Davis, The Future of Mass Tort Claims: Comparison of Settlement Class Action to Bankruptcy Treatment of Mass Tort Claims, 50 S. C L. REV. 405, 422 (1999);
101. William B. Rubenstein, The Fairness Hearing: Adversarial and Regulatory Approaches, 53 UCLA L. REV. 1435, 1448-52 (2006).
102. See PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 3.11 cmt. a (Proposed Official Draft 2009). There are several representative cases denying a second opt out.
103. See, e.g., Hainey v. Parrott, 617 F. Supp. 2d 668, 679 (S. D. Ohio 2007) (rejecting a second opt out because "class members had enough information at [the earlier time] to make a reasoned decision whether or not to opt out of the settlement" and because a second opt-out period "would result in additional administrative costs, which in turn reduces the amount available for distribution");
104. *6 (S. D. N. Y. 2005) (denying a second opt out because not enough was at stake for individual action);
105. Denney v. Jenkens & Gilchrist, 230 F. R. D. 317, 345 (S. D. N. Y. 2005) (noting that a second opt out must "be applied sparingly"), aff'd in relevant part sub nom. Denney v. Deutsche Bank AG, 443 F.3d 253, 271 (2d Cir. 2006) ("Requiring a second opt-out period as a blanket rule would disrupt settlement proceedings because no certification would be final until after the final settlement terms had been reached.");
106. In re Visa Check/Mastermoney Antitrust Litig., 297 F. Supp. 2d 503, 518 n. 18 (E. D. N. Y. 2003) (denying a second opt out because of an "infinitesimal number of objections")
107. aff'd sub nom. Wal-Mart Stores, Inc. v. Visa U. S. A. Inc., 396 F.3d 96 (2d Cir. 2005).
108. For examples of the wide variety of approaches to settlement, see Visa U. S. A. Inc., 396 F.3d at 117 (addressing the nine "Grinnell factors", articulated in City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974));
109. In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 534-35 (3d Cir. 2004) (addressing the nine factors);
110. Ngwanyia v. Gonzales, 376 F. Supp. 2d 923, 928 (D. Minn. 2005) (addressing the four factors described in Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir. 1988));
111. In re Am. Bank Note Holographics, Inc., 127 F. Supp. 2d 418, 426-28 (S. D. N. Y. 2001) (examining, inter alia, the difficulty of proving claims and damages, "litigation risks", the possible bankruptcy of one of the defendants, the threat of protracted litigation, the "arm's length" nature of negotiations between "skilled attorneys", the extent of discovery completed, and giving "great weight" to the views of counsel);
112. In re Austrian & German Bank Holocaust Litig., 80 F. Supp. 2d 164, 174-78 (S. D. N. Y. 2000) (examining, among other things, plaintiffs' "difficulty in establishing damages at a trial", the "arm's length" nature of negotiations, whether defendants could withstand a greater judgment, and the small number of objections);
113. see also Jonathan R. Macey & Geoffrey P. Miller, Judicial Review of Class Action Settlements, 1 J. LEGAL ANALYSIS 167 (2009) (discussing various approaches of the federal appellate courts to class settlements and proposing simplified standards for review).
114. See PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 3.08, cmt. a (Proposed Official Draft 2009);
115. Brunet, supra note 54, at 409 (discussing the possibility that "[ojbjectors and their attorneys may be engaged in a form of extortion, seeking to hold up court approval of a settlement in exchange for a piece of a limited settlement pot");
116. Richard A. Nagareda, Administering Adequacy in Class Representation, 82 TEX. L. REV. 287, 375 (2003) (describing "professional objectors" as "a term used colloquially to describe plaintiffs' law firms that threaten objections largely as a means to obtain side payments for themselves in exchange for their agreement either to drop the objections or not to raise them in the first place").
117. See, e.g., Robert H. Klonoff & Mark Herrmann, The Class Action Fairness Act: An Ill-Conceived Approach to Class Settlements, 80 TUL. L. REV. 1695, 1698-1705 (2006) (discussing the regulation of coupon settlements under § 1712 of the Class Action Fairness Act, 28 U. S. C. § 1712);
118. Christopher R. Leslie, A Market-Based Approach to Coupon Settlements in Antitrust and Consumer Class Action Litigation, 49 UCLA L. REV. 991, 994 (2002) (arguing that "[c]oupon-based settlements illustrate how defendants have structured class action settlements to maximize the gains for the corporate defendant while minimizing any compensation to the class").
119. See PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 3.08 (Proposed Official Draft 2009).
120. See id.
121. Derrick A. Bell, Jr., Serving Two Masters: Integration Ideals and Client Interests in School Desegregation Litigation, 85 YALE L. J. 470, 482-93, 505-15 (1976) (discussing the conflict of institutional civil rights lawyers committed to school integration in dealing with the aspirations of the local communities they represented in obtaining better local schools).
122. See, e.g., Marc Galanter, The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts, 1 J. EMPIRICAL LEGAL STUD. 459, 524 (2004);
123. William G. Young, Vanishing Trials, Vanishing Juries, Vanishing Constitution, 40 SUFFOLK U. L. REV. 67, 73-75 (2006).
124. Judith Resnik, Many Doors? Closing Doors? Alternative Dispute Resolution and Adjudication, 10 OHIO ST. J. ON DISP. RESOL. 211, 261 (1995).
125. Fiss, supra note 1, at 1080.
126. Id.
127. For a critical account of the lack of client involvement in class litigation, see Lisa L. Casey, Class Action Criminality, 34 J. CORP. L. 153, 211 (2008) (chronicling passivity of named class representatives, even in securities cases);
128. Elliott J. Weiss & John S. Beckerman, Let the Money Do the Monitoring: How Institutional Investors Can Reduce Agency Costs in Securities Class Actions, 104 YALE L. J. 2053, 2064 (1995).
129. For example, in one of the largest class action cases to go to trial, involving an estimated 700, 000 class members, the unnamed class members played little, if any, role in the case. The case was tried in phases: (1) an initial trial on liability and entitlement to punitive damages and (2) a trial of compensatory damages for three class representatives and a lump sum determination of punitive damages to the class. Liggett Group Inc. v. Engle, 853 So. 2d 434, 441-42 (Fla. Dist. Ct. App. 2003). The history of this case is ongoing and complex, dating back to a class action first filed in 1994.
130. See generally R. J. Reynolds Tobacco Co. v. Engle, 672 So. 2d 39 (Fla. Dist. Ct. App. 1996). After a lengthy trial, the Florida intermediate court decertified the class and reversed the compensatory and punitive damages awards.
131. Id. at 42. The Florida Supreme Court affirmed the decertification of the class, but found that certain findings from the first phase could be retained.
132. See Engle v. Liggett Group, Inc., 945 So. 2d 1246, 1269 (Fla. 2006), cert. denied, 128 S. Ct. 96 (2007). Subsequently, thousands of former class members brought individual suits in state and federal court, and the defendants removed the cases to federal district court in Florida. The district court held that the jury findings from the decertified class action were neither claim preclusive nor issue preclusive in the individual cases.
133. See generally Brown v. R. J. Reynolds Tobacco Co., 576 F. Supp. 2d 1328 (M. D. Fla. 2008). That matter is currently on appeal, and Professor Issacharoff represents the appellants. In the meantime, individual trials are going forward against the backdrop of the former class adjudication.
134. FED. R. CIV. P. 23 (a) (1).
135. Fiss, supra note 1, at 1080.
136. 347 U. S. 483 (1954).
137. Fiss, supra note 1, at 1082.
138. Id. at 1085.
139. See, e.g., J. ANTHONY LUKAS, COMMON GROUND: A TURBULENT DECADE IN THE LIVES OF THREE AMERICAN FAMILIES 222-23, 244-45 (1985).
140. See Samuel Issacharoff & Pamela S. Karlan, Groups, Politics, and the Equal Protection Clause, 58 U. MIAMI L. REV. 35, 44-45 (2003). The increased judicial skepticism regarding structural injunctions is evident in Horne v. Flores, 129 S. Ct. 2579 (2009), where the Court found error in the lower courts' refusal to modify or vacate a court decree. The Court emphasized that judges "must take a flexible approach" to considering postjudgment challenges to institutional reform decrees, so as "to ensure that responsibility for discharging the State's obligations is returned promptly to the State and its officials when the circumstances warrant."
141. Id. at 2594-95 (citation and internal quotation marks omitted);
142. see also Rahman v. Chertoff, 530 F.3d 622, 626 (7th Cir. 2008) (Easterbrook, C. J.) (describing a 1977 U. S. Court of Appeals for the Seventh Circuit case as "a relic of a time when the federal judiciary thought that structural injunctions taking control of executive functions were sensible" and declaring "[t]hat time is past");
143. cf. Nw. Austin Mun. Util. Dist. No. One v. Holder, 129 S. Ct. 2504, 2510, 2516 (2009) (stating that, while "exceptional conditions" during the civil rights movement of the 1960s justified Congress's passage of the Voting Rights Act, "we are now a very different Nation") (quoting South Carolina v. Katzenbach, 383 U. S. 301, 334 (1966) (internal quotation marks omitted));
144. ROSS SANDLER & DAVID SCHOENBROD, DEMOCRACY BY DECREE: WHAT HAPPENS WHEN COURTS RUN GOVERNMENT (2003).
145. Stephenson v. Dow Chem. Co., 273 F.3d 249 (2d Cir. 2001).
146. Id. at 251-54 (discussing settlement terms).
147. In re "Agent Orange" Prod. Liab. Litig., 689 F. Supp. 1250, 1266-67 (E. D. N. Y. 1988).
148. Id. at 1259-60.
149. Stephenson, 273 F.3d at 255. For a comprehensive report on the Agent Orange litigation, see PETER H. SCHUCK, AGENT ORANGE ON TRIAL: MASS TOXIC DISASTERS IN THE COURTS (1986).
150. See Nancy Levit, Megacases, Diversity, and the Elusive Goal of Workplace Reform, 49 B. C. L. REV. 367 (2008) (discussing employment discrimination class action suits).
151. Id. at 401 (citing Tammy Joyner & Janita Poe, Coke Settlement Sets New Standard for Corporations, ATLANTA J.-CONST., Nov. 19, 2000, at 1);
152. see also Ingram v. Coca-Cola Co., 200 F. R. D. 685 (N. D. Ga. 2001) (approving settlement).
153. Ingram, 200 F. R. D. at 688 (observing that "[t]he Task Force's recommendations are binding on Coca-Cola unless the Company seeks and obtains judicial relief in a proceeding where it bears the burden of proof").
154. 424 F.3d 158 (2d Cir. 2005).
155. Id. at 160-62.
156. Id. at 169.
157. In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., 553 F. Supp. 2d 442 (E. D. Pa. 2008).
158. Id. at 469.
159. Id. at 454-56;
160. see also supra note 26 and accompanying text.
161. Liggett Group, Inc. v. Engle, 853 So. 2d 434, 468 (Fla. Dist. Ct. App. 2003).
162. Id. at 469 n. 49.
163. Id. (describing Master Settlement Agreement); Master Settlement Agreement 39-42 (1998), available at http://www.naag.org/backpages/naag/ tobacco/msa/msa-pdf/1109185724-1032468605-cigmsa.pdf/file-view (describing terms of jurisdiction and enforcement);
164. id. at 14-28 (describing relief, including, inter alia, prohibitions on tobacco companies' sponsorship of concerts and athletic events, use of cartoons in advertising, and outdoor advertising). For a relatively critical account of the tobacco settlement's terms and enforcement
165. see RICHARD A. NAGAREDA, MASS TORTS IN A WORLD OF SETTLEMENT 184 (2007) (explaining that the settlement's terms effectively have put courts in an ongoing role of construing and enforcing the various limitations on competitive entry on a going-forward basis, and suggesting that "one might very well question whether state-protected cartelization of the tobacco industry represents a credible public health strategy").
166. See, e.g., Levit, supra note 80;
167. Benjamin C. Fishman, Note, Binding Corporations to Human Rights Norms Through Public Law Settlement, 81 N. Y. U. L. REV. 1433, 1433 (2006). Although finding shortcomings with prior human rights class action settlements, the latter author notes that "future settlements of human rights cases against corporations can-perhaps more effectively than fully litigated cases-better reflect the promise of public law litigation by setting up legally binding systems to monitor corporate conduct"
168. Id. (emphasis added).
169. Fiss, supra note 1, at 1085.
170. Id.
171. Id.
172. Id. at 1076, 1087.
173. Id. at 1087.
174. See, e.g., DEBORAH R. HENSLER ET AL., CLASS ACTION DILEMMAS: PURSUING PUBLIC GOALS FOR PRIVATE GAIN 52 (2000) (noting that "the world of class actions in 1995-1996 was primarily a world of Rule 23 (b) (3) damages actions");
175. THOMAS E. WILLGING, LAURAL L. HOOPER & ROBERT J. NIEMIC, FED. JUDICIAL CTR., EMPIRICAL STUDY OF CLASS ACTIONS IN FOUR FEDERAL DISTRICT COURTS: FINAL REPORT TO THE ADVISORY COMMITTEE ON CIVIL RULES 8 (1996), available at http://www.fjc.gov/ public/pdf.nsf/lookup/rule23.pdf/$file/rule23.pdf ("The most frequently certified class was the Rule 23 (b) (3) or 'opt-out class,' which occurred in roughly 50% to 85% of the certified classes in the four districts [that were studied].").
176. EMERY G. LEE III & THOMAS E. WILLGING, FED. JUDICIAL CTR., THE IMPACT OF THE CLASS ACTION FAIRNESS ACT OF 2005 ON THE FEDERAL COURTS: FOURTH INTERIM REPORT TO THE JUDICIAL CONFERENCE ADVISORY COMMITTEE ON CIVIL RULES 5 (2008), available at http://www.fjc.gov/public/pdf.nsf/lookup/cafa0408.pdf/ $file/cafa0408.pdf (finding 195 civil rights class actions in the period July-December 2001, compared to 162 in January-June 2007, a 17% decrease; also finding, on a percentage basis, that civil rights class actions went from 14.2% of total class action filings and removals in July-December 2001 to only 6.9% in January-June 2007).
177. See McHann v. Firestone Tire & Rubber Co., 713 F.2d 161, 167 (5th Cir. 1983) (excluding evidence of settlement because "[i]t is reasonable to infer that jurors would view the settlement as an admission of guilt");
178. Paster v. Pa. R. R., 43 F.2d 908, 911 (2d Cir. 1930) (Hand, J.) (stating that if evidence of a defendant's settlement were admitted, "damage will have been done" to the integrity of the proceedings, "since such a concession of liability is almost sure to be taken as an admission of fault" (emphasis added));
179. see also FED. R. EVID. 408 (prohibiting the use of settlement offers and discussions to prove liability).
180. The extensive literature on this point is summarized in Samuel Issacharoff, Regulating After the Fact, 56 DEPAUL L. REV. 375 (2007).
181. 521 U. S. 591 (1997).
182. Elizabeth J. Cabraser, The Class Action Counterreformation, 57 STAN. L. REV. 1475, 1476 (2005).
183. Settlement Agreement at 2, In re Vioxx Prods. Liab. Litig., MDL No. 1657 (E. D. La. Nov. 9, 2007), available at http://www.merck.com/ newsroom/vioxx/pdf/Settlement-Agreement.pdf;
184. see also Edward F. Sherman, The MDL Model for Resolving Complex Litigation If a Class Action Is Not Possible, 82 TUL. L. REV. 2205, 2213-16 (2008) (discussing the Vioxx settlement);
185. Alex Berenson, Analysts See Merck Victory in Vioxx Deal, N. Y. TIMES, NOV. 10, 2007, at A1.
186. See Eldon E. Fallon, Jeremy T. Grabill & Robert Pitard Wynne, Bellwether Trials in Multidistrict Litigation, 82 TUL. L. REV. 2323, 2334-37 (2008) (article by Judge Eldon E. Fallon, who oversaw the consolidated MDL proceedings leading up to the Vioxx settlement, and two of his former law clerks, discussing six of the Vioxx trials, including one verdict for the plaintiff, four for the defendant, and one mistrial);
187. Molly Selvin, Merck's Vioxx Tactic Pays Off, L. A. TIMES, Nov. 10, 2007, at C1 (reporting that, "[a]lthough the company has been hit
188. Settlement Agreement, supra note 104, at 8-22.
189. See Wailin Wong, Settlement Frees Merck of Vioxx Suits: Deal's 'Reasonable' Cost Means Company's Risky Strategy May Pay Off, CHI. TRIB., Nov. 10, 2007, § 2, at 1-2 (quoting Texas lawyer Mark Lanier).
190. See supra notes 80-81 and accompanying text.
191. Levit, supra note 80, at 401.
192. Id. at 402 (concluding that "[t]he Coke settlement was 'the real thing'" (footnote omitted)).
193. But see Michael Selmi, The Price of Discrimination: The Nature of Class Action Employment Discrimination Litigation and Its Effects, 81 TEX. L. REV. 1249, 1332 (2003) (conducting statistical and case studies of class action employment discrimination litigation and concluding, inter alia, that "we should not rely on the litigation to eliminate or deter discrimination, but instead should see it in a more limited light as a process of wealth transfers with a substantial public relations dimension that can occasionally lead to significant change, but only to the extent a firm finds that it is in its interests to reform its employment practices").
194. Levit, supra note 80, at 400-05.
195. Id. at 402;
196. see also UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA, INGRAM V. COCA-COLA CO., CASE NO. 1-98-CV-3679 (RWS), FIFTH ANNUAL REPORT OF THE TASK FORCE (2006) [hereinafter FIFTH ANNUAL TASK FORCE REPORT], available at http://www.thecoca-colacompany.com/ourcompany/task-force-report-2006.pdf.
197. Levit, supra note 80, at 404 (citing FIFTH ANNUAL TASK FORCE REPORT, supra note 112, at 21-23).
198. Id. at 403 (citing FIFTH ANNUAL TASK FORCE REPORT, supra note 112, at 6).
199. Id. at 405 (citing DiversityInc, Top 50 for Diversity Profiles, No. 4: The Coca-Cola Company (May 26, 2007), http://www.diversityinc.com/public/ 1801.cfm).
200. Ingram v. Coca-Cola Co., 200 F. R. D. 685, 688 (N. D. Ga. 2001). The same point could be made with respect to the Attorney General's settlement in the tobacco litigation. In a relatively short amount of time, the parties reached agreement on a historic payout of more than $200 billion, along with various changes in the tobacco industry's conduct that probably could not have been ordered in a trial. For example, the prohibitions on tobacco companies' sponsorship of concerts and athletic events, use of cartoons in advertising, and outdoor advertising would have raised serious First Amendment concerns if imposed by a court. As the terms of a voluntary agreement, however, they are enforceable just as any other settlement contract.
201. See Master Settlement Agreement, supra note 91, at 14-28;
202. see also Lorillard Tobacco Co. v. Reilly, 533 U. S. 525, 571 (2001) ("The First Amendment... constrains state efforts to limit advertising of tobacco products, because so long as the sale and use of tobacco is lawful for adults, the tobacco industry has a protected interest in communicating information about its products and adult customers have an interest in receiving that information. ").
203. Carrie Menkel-Meadow, Whose Dispute Is It Anyway?: A Philosophical and Democratic Defense of Settlement (In Some Cases), 83 GEO. L. J. 2663, 2673-74 (1995).
204. Fiss, supra note 1, at 1075.
205. Id. at 1087 (noting that the cases subject to his critique "probably dominate the docket of a modem court system").
206. See, e.g., George L. Priest, Regulating the Content and Volume of Litigation: An Economic Analysis, 1 SUP. CT. ECON. REV. 163, 163 (1982) (discussing the growing volume of litigation and the institution of ADR procedures in many courts).
207. ADMIN. OFFICE OF THE U. S. COURTS, 2007 JUDICIAL FACTS & FIGURES tbl.4.10, available at http://www.uscourts.gov/judicialfactsfigures/2007/Table410.pdf.
208. In re Relafen Antitrust Litig., 231 F. R. D. 52, 91 (D. Mass. 2005). Moreover, the In re Relafen court noted that the figures counted as a "trial" any "contested proceeding before a court or jury in which evidence [was] introduced."
209. Id. (emphasis omitted) (citation omitted). Thus, these figures include not only jury trials, but bench trials, motions to suppress evidence, Daubert hearings, etc. The number of full jury trials was clearly much smaller than the numbers suggest.
210. Richard A. Nagareda, Aggregation and Its Discontents: Class Settlement Pressure, Class-Wide Arbitration, and CAFA, 106 COLUM. L. REV. 1872, 1875 (2006) (citing Thomas E. Willging et al., An Empirical Analysis of Rule 23 To Address the Rulemaking Challenges, 71 N. Y. U. L. REV. 74, 143 (1996)).
211. ADMIN. OFFICE OF THE U. S. COURTS, 2008 ANNUAL REPORT OF THE DIRECTOR: JUDICIAL BUSINESS OF THE UNITED STATES COURTS 48, 206 (2009), available at http://www.uscourts.gov/judbus2008/ JudicialBusinespdfversion.pdf. Moreover, there were 70, 896 new criminal cases filed during the same time period, for a combined total of 338, 153 cases filed, representing a four percent increase over the combined total for the previous twelve-month period.
212. Id. at 11.
213. Id. at 16 (noting an increase from 380 civil filings per authorized judgeship during the previous twelve-month period).
214. Id. at 19.
215. Id. at 22.
216. Id. at 183.
217. Id. at 58. This figure represents a significant increase over the 17, 003 civil cases that had been pending for three years or more on September 30, 2007.
218. Id.
219. FED. R. CIV. P. 1.
220. The historic emergence of private responses to the need for efficient aggregation of mass claims is discussed in Samuel Issacharoff & John Fabian Witt, The Inevitability of Aggregate Settlement: An Institutional Account of American Tort Law, 57 VAND. L. REV. 1571 (2004).
221. Richard Nagareda provides the most comprehensive account of the development of new institutional and legal responses in NAGAREDA, MASS TORTS, supra note 91.