Class Action Countermeasures : Class Action Lawyers & Attorneys : McGuireWoods Law Firm : Complex Litigation, Mass Torts

 I've written before about priming, the tendency of us humans to adopt emotional states if we are exposed to words with emotional content. But there are other psychogical effects that can influence negotiating in unseen, and unwelcome, ways. One of the most common of these is the problem of anchoring.

What is anchoring? As Dan Orr and Chris Guthrie write in their 2006 article Anchoring, Information, Expertise, and Negotiation: New Insights from Meta-Analysis, it's the tendency of any negotiation of numbers (like the price of a home) to cluster around the first number thrown out. Experiments have shown that this actually happens. And it can happen in odd ways. For example, social scientists have been able to influence a person's estimate of the value of a home in Des Moines, Iowa by showing them the median home price in the far more expensive Honolulu; or, better yet, they have influenced people's estimates of the African membership in the UN by spinning a wheel of fortune and reporting the number the arrow pointed at.

In essence, anchoring is a subset of priming, just one that focuses on numbers. Much as we can be primed by words to act in certain ways, we can also be "primed" by numbers that we see.

Like all heuristics, anchoring is often adaptive. For example, when estimating how much we will have to pay to purchase a house, it is usually reasonable for us to rely on the initial list price because it often conveys meaningful information about the actual market value of the home. Problems can arise, however, in two circumstances. First, we can get into trouble when we over-rely on an anchor. In the home purchase example, for instance, we are at risk of over-paying for the house if we are unable to adjust sufficiently away from its list price. Second, we can get into trouble if we rely on an irrelevant or uninformative anchor. If, for example, a newspaper article recounting the median home price in Honolulu influences the amount we are willing to pay for a small house in Des Moines, we are also at risk of over-paying for that home. (Likewise, if our estimate of African membership in the United Nations is influenced by the spin of a wheel of fortune, anchoring is obviously influencing our judgment in untoward ways.)

To test whether anchoring really wound up influencing actual negotiations, Guthrie and Orr performed a statistical meta-analysis on previous studies. (A meta-analysis is a method of statistical analysis that aggregates studies in the same field; performed properly, it can offer results that are more statistically sound than any individual study.) Their conclusion:

Our meta-analysis demonstrates that anchoring has a powerful influence on negotiation outcomes.

From this, they drew a few tactical recommendations. First, they leapt to the same conclusion as most do when they first hear of anchoring: bid high (or low) to start out, in order to sway your counterparty into moving their price closer to yours. Of course, most negotiators already do this, and there is only so far one can move out of a general range before it becomes obvious what one is doing, which may actually cause certain agreements to fall through.

Guthrie and Orr do identify another tactic, however, which is to use anchoring on oneself to counteract any external anchors. In other words, to the extent that one can set high explicit goals before sitting down at the table, one can counteract the anchoring effect of any opening offers at the table. (One might consider this the "I'm not going to pay a lot for this muffler" strategy.)

Guthrie and Orr also talk about the importance of using a good "outside" strategy as a way of defending against anchoring effects. What is an "outside" strategy? Basically, it's any strategy that gets the negotiator out of her own head, since that is where the anchoring effect is happening.

This outside, 'policy' approach improves decision-making by changing the dimensions of the choice-set. A good example of an outside strategy is the prevention of 'independent' auditors from working with a bank or brokerage firm for more than, say, five consecutive years. Rather than simply advising auditors to be impartial, or expecting them to be professional and direct in delivering bad news to the company responsible for their employer's financial growth, the outside strategy removes the threat to integrity by eliminating its source.

(Emphasis added.)  Simple bans are an outside strategy, as are bright-line rules. (The controversial Federal Sentencing Guidelines were an effort by Congress to either keep judges from anchoring too low, or an attempt to impose an alternative anchor.) But so is consulting an impartial third party, such as a consultant or a local expert. And it's possible that having a client back at home with high expectations also constitutes a good defense against anchoring; it's certainly something that works for a number of defense counsel.

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Today's case is interesting in no small part because it shows just how far class-action arguments have come in the last 18 months. In the latter half of 2010, most defendants faced with a class action would look primarily at adequacy (are the named plaintiffs good representatives?), typicality (do the named plaintiffs have the same injury and proof as the class?), and predominance (are there more individual issues than common issues?). Now, however, given recent trends in case law--particularly the increased focus on a "rigorous analysis"--more defendants are looking at numerosity [] (can the plaintiffs show that there are enough class members?) and commonality (will the class action yield common answers?) as well.

Take, for example, the recent case of Khalif L. v. City of Union City, 2012 U.S. Dist. LEXIS 64567 (N.D. Cal. 2012). In this case, the named plaintiff sued the Union City Police Department, alleging that it had unlawfully discriminated against its African-American population by denying young blacks who had been victimized by Latino gangs any police assistance.

Under the best of circumstances, this would be a difficult case to prove on a classwide basis. (How, for example, does one really prove non-responsiveness on a common basis? Unless the police systematically never responded to calls from African-Americans, there would always be individualized issues.) When the plaintiffs moved for class certification, the defendants opposed them on both numerosity and commonality grounds, and did so successfully.

For numerosity, the plaintiffs had alleged that, based on 2000 census data, coupled with several affidavits alleging non-responsiveness by the police department, the court could conclude that there were enough African-American high school students in the area to constitute a class.

Defendant, however, asserts that plaintiffs' reliance on the 2000 census data is unduly speculative, and furthermore, that plaintiffs' supporting declarations are insufficient to satisfy numerosity requirements, since the testimony therein exposes a paucity of contact between certain putative class members and the UCPD (and thus, lack of membership in the class).

Defendant's objections are well taken. Plaintiffs have failed to connect the census information they primarily rely upon -- and that establishes the presence of 301 Black or African-American students enrolled in grades 9 through 12 in Union City in 2000 -- to their own class definition or claims.

(Emphasis added.)  Similarly, to establish commonality, the plaintiffs asserted that the common issue was whether the Union City Police Department had violated the civil rights of the class members. The defendants responded with an argument that is becoming more common after Dukes: anyone can pose a "common" question, but will it yield common answers?

What plaintiffs here must posit are not questions that within them presuppose a finite legal conclusion that will apply to all class members (e.g., whether the UCPD acts to violate plaintiffs equal protection rights), but instead questions of law or fact that will generate a common answer among members of the class that will aid in determining questions of liability (e.g, allegations that all plaintiffs were subjected to the same particularized UCPD response, or conduct by the same UCPD officer, as a result of similar underlying incidents/reports). This plaintiffs fail to do.

The takeaway from this case is pretty simple. In the wake of cases like Dukes, courts are beginning to recognize that certifying a class means certifying it for a classwide trial. Under those circumstances, even issues like numerosity and commonality are not foregone conclusions for the plaintiff. This is the new normal in class action defense.

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There is a common perception in complex litigation (not to mention litigation generally) that time favors the defendant. Defendants often counsel clients not to react too quickly: situations that may provoke a fight-or-flight response in the moment often present more strategic opportunities as they unfold. And plaintiffs tend to agree; they often complain that defendants' primary strategy is just to delay litigation for as long as possible.

But is there any basis for this assumption? After all, there are definite cases--like the motion to strike class allegations, or when plaintiffs try to change their theory late in the litigation--where defendants prefer to move faster than plaintiffs to resolve outstanding issues. So why is it that we all assume that plaintiffs want to rush while defendants want to wait?

One of the largest reasons that we assume that plaintiffs want to proceed faster than defendants is because of what economists call the time discount factor. All other things being equal, people value a gain now more than an equal gain in the future. This works in reverse, too. Most people would prefer a loss in the future more than the same loss today. (So you can see why, from the beginning, plaintiffs push for quick trials--they want their payments now, while defendants don't mind putting off losses from litigation.)

In 2007, Rutgers political science professor Jack S. Levy and PhD candidate Phillip Streich looked over the economic literature on time discounting. And what they found was that the classic account of time discounting actually understates how people treat decisions over time. As they wrote in their article Time Horizons, Discounting, and Intertemporal Choice:

The accumulation of experimental research on intertemporal choice has made it increasingly clear that the exponential discounting model that Samuelson (1937) pioneered nearly seventy years ago, which has subsequently dominated economics and economic applications in political science, does not provide a descriptively accurate model of how most people actually behave in making choices over time. Instead of discounting by a constant rate from one period to the next, people tend to discount relatively more heavily the near-term future and to discount relatively less heavily the more distant future, compared to constant-rate exponential discounting. In addition, discounting is not independent of the value of future out- comes. People have greater discount rates for less valuable outcomes than they do more valuable outcomes, and they have greater discount rates for gains than for losses. This asymmetry of losses and gains, so familiar to students of prospect theory, carries over into other manifestations of reference dependence and framing: the anticipated loss of utility of having to wait longer than expected for a future reward is greater than the anticipated gain in utility from receiving a future reward sooner than expected.

(Emphases aded.) All of these phenomena together contribute to what economists call hyperbolic discounting.  These two phenomena (sometimes called the gain-loss asymmetry and the delay-speedup asymmetry) add to the explanation of why defendants appear to prefer delay: plaintiffs value the gains they might receive less the further away they appear, and the mere fact of delay feels like a loss to them. By contrast, the defendant still anticipates that any anticipated loss will close to the amount it hurts today, and it experiences comparatively less gain from the day.

So what does this mean in complex litigation? It means that plaintiffs are in fact likelier to push hard to resolve matters quickly, even when there are sound reasons for proceeding deliberately. And that means that any attempts to slow the litigation to a manageable pace will lead to vigorous protest and strong rhetoric about "delay tactics." This may not be mere rhetoric on the part of cynical counsel; it may represent genuine frustration.

It also means that defendants have some leverage in negotiating how the litigation will proceed. Remember, all else being equal, delays are more immediately painful to plaintiffs than they are immediately helpful to defendants. So, when defendants need important concessions in other areas of the litigation (perhaps in the scope of discovery), they may be able to trade less-valuable (to them) scheduling concessions.

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We've been talking about negotiations on Wednesdays here for several months now. And while most of that discussion has focused on how to reach principled agreements, even with parties you may not like, there is no denying the fact that sometimes, people lie when negotiating. Or, at the very least, they shade the truth.

This tendency makes sense. To the extent that negotiations are an exchange of information about what agreements will provide the most value to both sides, and to the extent that we all leak information without knowing it, it is just sound strategy to try to keep some information private. There are several ways one can do this. One is to outright lie; another is simply to use accurate information to mislead.

And there are other tactics that can, under certain circumstances, succeed at reaching an agreement even if they're not commonly accepted or liked. One can use the ruse of an agreement to gain valuable information from the other side. Similarly, one can use threats or intimidation to force an agreement where one might not otherwise exist. (For example, corporate defendants--and courts--often worry that plaintiffs' lawyers use class actions to leverage small, easily resolved individual complaints into large cases that will justify large attorneys' fees by threatening bet-the-company litigation.)

So what is to keep lawyers from doing all of this? Is there any law that regulates negotiations? Well, sort of.

First of all, lawyers are not above the law itself. So laws that prohibit outright fraud or other forms of deceptive conduct that might arise in negotiation will apply equally to lawyers. But, in addition, the law governing lawyers' professional duties has evolved to regulate some of this conduct as well. The best-known of these rules is probably the ABA Guidelines on Settlement Negotiations.  And while these are not the last word on lawyers in negotiations, they do provide a good starting point.

First and foremost, the ABA Guidelines say that a lawyer cannot outright lie about a material fact.

"In the course of representing a client a lawyer shall not knowingly:
(a) make a false statement of material fact or law to a third person; or
(b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6."

(ABA Guideline 4.1.) Unlike fraud, these prohibitions against misstatements do not require the other side to actually rely on the misstatement. (In other words, it is the misrepresentation itself that is a problem, not the harm it does to the other side. This makes sense; lawyers have enough PR problems without being known to condone lying.) That said, the ABA is quick to clarify that by misstatements, it does not mean all misstatements. Just the ones about provable facts.

The prohibition against making false statements of material fact or law is intended to cover only representations of fact, and not statements of opinion or those that merely reflect the speaker’s state of mind.

The Guidelines point out that this allows a certain amount of "puffing," or strategic misinformation. (As one colleague once pointed out, they allow him to react to settlement offers by talking about how angry he is, even if the offer is well within what his client has told him is acceptable.)

Moreover, a lawyer sometimes has a duty to disclose certain information, at least to correct misrepresentations by his client.

The duty to disclose may arise in at least three situations: (1) a lawyer has previously made a false statement of material fact or a partially true statement that is misleading by reason of omission; (2) a lawyer learns of a client’s prior misrepresentation of a material fact; and (3) a lawyer learns that his or her services have been used in the commission of a criminal or fraudulent act by the client, “unless such disclosure is prohibited by the ethical duty of confidentiality.”

Nor may lawyers use the settlement process "in bad faith." (ABA Guideline 4.3.1.) What does that mean?

It is not bad faith for a party to refuse to engage in settlement discussions or to refuse to settle. Settlement is not an obligation, but an alternative to litigation. The choice to pursue it to fruition should be that of the client. However, it may be impermissibly deceptive, and thus an act of bad faith, for a lawyer to obtain participation in settlement discussions or mediation or other alternative dispute resolution processes by representing that the client is genuinely interested in pursuing a settlement, when the client actually has no interest in settling the case and is interested in employing settlement discussions or alternative dispute resolution processes solely as a means of delaying proceedings or securing discovery.

Finally,

A lawyer may not attempt to obtain a settlement by extortionate means, such as by making extortionate or otherwise unlawful threats.

(ABA Guideline 4.3.2.) The ABA is quick to add that, of course, that threatening a party with a valid civil claim is permissible, as is "reminding" the party of the costs of fighting a civil claim in court. So there is some leeway for lawyers to use the threat of a lawsuit to

Now, as with any subject matter involving lawyers--who have, as a profession, never met a rule they couldn't argue around--these ethics rules are not the last word on what lawyers may (or may not) do in the service of negotiating for their clients. Like the Pirate Code, they turn out to be more of a guideline. That is one reason why the ABA Guidelines alone are 71 pages of rules and commentary, instead of a quick, bullet-point list of commandments. And, of course, the barriers to making a complaint to the appropriate licensing body can create some more space for underhanded tactics. But the ABA Guidelines do mark an important starting point. And I will be revisiting exactly what kinds of tactics have been upheld as legitimate and what have not.

Meanwhile, however, it is worth remembering that while underhanded tactics may occasionally work, they carry a heavy cost. A party that believes that it has been treated unfairly will not trust the trickster a second time. And reputations spread. Negotiators known to be dishonest or to employ underhanded tactics will find it harder to reach agreements with other parties as well; also, no one likes to be branded as untrustworthy. And it is these threats, as much as any worry about ethical sanctions, that keep many lawyers in line.

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 Last week, the District of Montana ruled on the defendants' motion to dismiss in Pfau v. Mortenson (the infamous "Three Cups of Tea" class action). The lawsuit alleged that author Greg Mortenson had made up aspects of his biography in writing and marketing his bestselling memoir Three Cups of Tea.  The plaintiffs--a pair of Montana lawmakers--specifically claimed that Mortenson and his publisher had engaged in a criminal enterprise (a term of art for RICO claims) to market his book as nonfiction despite the falsehoods it allegedly contained.

When the complaint was filed, I wrote about how the lawsuit had a slim chance of getting certified as a class action. That chance has now gone from "slim" to "none": the trial court dismissed the complaint without leave to amend. And its opinion is instructive reading for class-action defense lawyers.

I'm going to presume that most of my readers are familiar with motions to dismiss, and so will not dwell on the court's discussion of Iqbal (which discusses the "plausibility" requirement in federal pleading) or Rule 9(b) (which requires a heightened pleading standard for fraud-based claims). Instead, I'll just note that the opinion largely turns on the fact that the plaintiffs did not meet their pleading burden in either case. As the court put it when dismissing plaintiffs' RICO claims:

The RICO claims are fraught with shortcomings, including failure to satisfy causal elements, failure to specify the roles of the Defendants, not adequately pleading enterprise theories, and failure to specify an actionable, identifiable racketeering activity. Failure to adequately address the causal elements is the ultimate and fatal flaw. The Complaint does not state, nor is it possible to ascertain, whether Plaintiffs would have purchased the Books if: (1) the Books were labeled or marketed as fiction; or (2) the readers knew portions of the Books, as claimed, were fabricated. Plaintiffs' overly broad statements that they paid approximately $15 for the Books because they were represented as true does not suffice. Additionally, Plaintiffs fail to allege when they purchased the Books, which is crucial in analyzing this case. In fact, Plaintiffs never allege they visited CAI's website or saw or heard any statements made by it before purchasing the Books.

(Emphases added; internal footnote omitted.)  The opinion also points out that the plaintiffs did not differentiate among the defendants in making their allegations. (Courts generally frown on "group pleading" of fraud or RICO claims.)

Nor was the court impressed by plaintiffs' fraud-related claims.  In particular, it pointed out that the plaintiffs could not point to any specific misrepresentation on which they relied.  (The plaintiffs had alleged that they were misled by the book's characterization as "nonfiction."  They did not specify who made that representation, or how they relied on it.)

The fraud pleadings in point of fact are weakened by incorporation of the flawed RICO allegations. Moreover, the Complaint fails to specify what representation the Plaintiffs relied upon or the materiality of that representation. Plaintiffs are not entitled to rely on general allegations of purported lies within the Books' content. At a minimum, Plaintiffs must show that they relied on some particular statement by the Defendants made outside the text of the Books.

(Internal footnote omitted.) The plaintiffs had also asserted breach-of-contract and unjust enrichment claims. The court denied these for lack of privity. (Since the plaintiffs bought the book from retailers, there was no privity of contract between them and the publisher, or them and the author.)

What's the takeaway here? Don't forget about the merits arguments. While I talk a lot about how plaintiffs often don't consider whether classes are actually certifiable, they often stretch legal theories far beyond what they're intended as well. In particular, plaintiffs asserting class actions based on public outrage often find themselves in a precarious position: if they are too specific in their allegations, it becomes clear that they do not have a certifiable class. If they rely on vague allegations to mask the obvious certification problems, then they can not prevail on the merits. Plaintiffs (and scholars sympathetic to them) will likely say this is evidence that Rule 23 is not working properly. I'd say the opposite. The class action is not a one-size-fits all device, and its primary purpose is not to leverage quick settlements. The class action is designed to allow a trial of aggregated claims; it works for some kinds of cases, and not others. Recognizing where it will not does not diminish its usefulness.

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In Wal-Mart Stores, Inc. v. Dukes, Justice Scalia registered his disapproval of using statistics to litigate liability in a class action, writing

The Court of Appeals believed that it was possible to replace such proceedings with Trial by Formula. A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master. The percentage of claims determined to be valid would then be applied to the entire remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery -- without further individualized proceedings. We disapprove that novel project.

(Emphases added, internal citation omitted.) Several months later, Connecticut Law Professor Alexndra Lahav wrote a spirited defense of the practice of "Trial by Formula," in the Texas Law Review, titled, aptly enough, "The Case for Trial by Formula."

I would love to say that Professor Lahav's argument is sound as far as it goes, but it goes a little too far. What do I mean by that?

For the most part, Professor Lahav argues that "Trial by Formula" (which she takes to mean statistical sampling in litigation) is an excellent way of ensuring equality of outcome in mass tort litigation. As she writes:

The problem with this understanding of injury valuation is that the tort system does not approximate the actual damages suffered by the plaintiff. The tort system is an institution that is supposed to monetize injuries, yet injuries are not readily monetizable. What the tort system does is assign a value to the damages suffered by the plaintiff. The amount of money damages the system assigns to injuries is contextual and cultural. This means that tort values are comparative; the value assigned to a given injury is dependent on values assigned to other injuries. The cultural contingency of tort damages is the reason that the amounts awarded in tort cases are sometimes controversial. This is also the reason that critics of the tort system are able to say that the system is unpredictable. The problem of valuing injury is not limited to the trial context. In settlement, even if one is able to accurately discount the amount of damages by the probability of the defendant being found liable, the damages assigned to a plaintiff (the amount that is to be discounted) will still be contested.

(Emphasis in original.) To ensure an accurate valuation of damages, Professor Lahav argues that courts should be more rigorous in their statistical methods, an argument that I (and most lawyers) would have no problem with.

To the extent that Professor Lahav argues that statistical sampling may help to smooth out the variations in damages awards, I think she has a strong case. And while I can certainly see where there are sound strategic arguments on the other side (who chooses the sample? for example), she has at least helped to frame an issue that both plaintiffs and defendants might agree on. (And, in many cases, they do. This is why matrix settlements have become popular in mass torts.)

The problem with her argument is that--at least implicitly--she does not confine herself to using statistical sampling to measure damages. Instead, she appears to also want to use it to determine liability. She tips her hand in two places. The first is in her discussion of several class actions that used statistical techniques, not just to determine the amount of damages, but also to determine the fact of injury for different plaintiffs:

In the late 1990’s, a few trial courts experimented with binding statistical adjudication procedures. In Hilao v. Marcos, a federal court used statistical methods to adjudicate a class action brought on behalf of persons who suffered human rights abuses under the regime of Ferdinand Marcos in the Philippines. A special master conducted on-site depositions in the Philippines, and based on these he recommended a recovery schedule to a jury, which then adopted his recommendations (for the most part). The Ninth Circuit upheld this procedure. Around the same time, a U.S. District Court judge in Texas tried 160 asbestos cases and was prepared to use these verdicts to extrapolate to the remainder of asbestos cases consolidated before him. The Fifth Circuit quashed his efforts, holding that the extrapolation of the results of the sample verdicts violated the defendant’s due process right and the Seventh Amendment. No trial court has followed in the footsteps of these innovators and the appellate courts continue to express hostility to mandatory statistical adjudication of this type.

(Emphasis added, footnotes omitted.) The second place is more explicit, when she discusses how one might use statistical sampling to root out fraudulent claims:

Trial by Formula has the potential to resolve many other problems that plague modern litigation. For example, commentators have repeatedly lamented patterns of baseless claiming in mass tort litigation. Sampling offers a way of addressing the phenomenon of fraudulent claims and creating incentives to curb them.

(Emphasis added, footnotes omitted.) In both of these cases, the problem that the courts (and the plaintiffs) have worried about is not the statistical determination of damages once liability has been established, it is the statistical determination of liability itself. This is the same issue that Justice Scalia had in the Dukes case. To repeat his specific issue (as opposed to the summation):

A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master. The percentage of claims determined to be valid would then be applied to the entire remaining class ...

It isn't the use of statistical sampling to determine damages that defendants (or the Court) worries about. It's the use of sampling to determine liability that causes problems, because statistical sampling cannot tell which plaintiffs are actually entitled to relief and which are not. Professor Lahav argues that "Trial by Formula" works because we want equality of outcome--treating like cases alike. But no defendant--or anyone else concerned with due process--wants unlike cases treated alike, particularly when the difference between the cases is that in one the defendant is actually liable and in the other it is not. That's the bridge too far, and that is the one that Professor Lahav and others either don't notice--or won't admit--they are crossing.

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Harvard Law Professor Robert Mnookin has written a lot about negotiation. Seriously, a lot. His most recent book, Bargaining with the Devil, is about how to negotiate long-standing conflicts with lots of bad blood. Or, as he puts it:

By "bargain" I mean attempt to make a deal--try to resolve the conflict through negotiation--rather than fighting it out. By "Devil," I mean an enemy who has intentionally harmed you in the past or appears willing to harm you in the future. Someone you don't trust. An adversary whose behavior you may even see as evil.

(Emphasis added.)  Mnookin's primary concern with "bargaining with the Devil" is that negotiating with an enemy carries with it a number of "negative traps," patterns of thought and behavior that leave the parties mired in conflict instead of actually resolving issues. He examines this issue through the lens of three primary examples: (1) Nelson Mandela's discussions with the Afrikaner government; (2) the resolution of a long-standing legal dispute between IBM and Fujitsu; and (3) a bitter labor dispute at the San Francisco Symphony Orchestra.

Among the most useful lessons Mnookin offers:

Beware of preconditions. As Mnookin points out, preconditions are often designed to deprive the other side of any leverage (by, for example, taking the only issues one side cares about off the table). As a result, they send an unequivocal signal that one side is not actually interested in negotiating through the issues. So the next time plaintiffs' counsel tells you that they're happy to talk settlement, but only on a classwide basis, save yourself the time. She's just told you she's not ready to talk yet.

Personal connections can be important. Often the mere act of dealing with a rival feels like too much of a compromise. I have certainly, in my time, dealt with clients who believed that even dignifying a class action complaint with negotiation was doing nothing more than encouraging bottom-feeding behavior. (In some cases, they were right. But in some cases, the refusal to negotiate more knee-jerk than considered.) How does one make it past this initial reluctance to negotiate? Mnookin offers the example of Nelson Mandela, who was able to secure compromises from the all-white South African government by making (and then maintaining) personal connections with individual Afrikaner leaders. Once they had a personal connection to Mandela (as well as a sense of mutual respect), they could "make concessions and yet maintain one's self-respect."

Reinforce the value of cooperation to your own side. Mnookin draws on Robert Putnam's work on two level games. He points out that in resolving a dispute, both parties usually must deal with disgruntled (and possibly polarized) constituents back home. And, as Mnookin points out, no matter how skilled the negotiator is, if her constituents do not understand the importance of compromise, then there will not be an agreement. His suggestion? Continually reinforce the benefits of any compromise with your constituents.

I have a much deeper understanding of how difficult it is to change the negotiation culture of an organization. It requires not simply initial "buy-in" but constant reinforcement. … Without this reinforcement, their natural fears--the negative traps--may reappear.

Mnookin's work is useful for class-action defendants on two levels. First, since there does tend to be some polarization and demonization between plaintiffs and defense counsel, it is useful to see what he recommends for negotiating with parties one might find deeply distasteful. Second, and every bit as important, Mnookin provides a detailed look at three extremely difficult negotiations. That alone is worth the price of the book.

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Much has been written in the last few years about cy pres relief (relief that goes, not to class members, but to ) in class action settlements. While plaintiffs and defendants still find cy pres to be a valuable for increasing settlement amounts, the practice has come under increasing fire from some scholars and courts who view it more as a way of inflating settlement amounts to justify attorneys fees.

Last week, the First Circuit weighed in on the debate in Rohn v. TAP Pharmaceutical Products, Inc. Its take: while cy pres relief is a valid tool for providing relief to absent class members, courts should not have the discretion to decide where the funds actually go.

The procedural posture of the case is a little complicated. Rohn is one of the constituent cases of the In re Lupron Marketing & Sales Practice Litigation. The appellants are one subclass of plaintiffs, who challenged a cy pres distribution of $11.4 million to the Dana Farber/Harvard Cancer Center and the Prostate Cancer Foundation. (They argued that the money should have gone to them, as consumers.)

The First Circuit took the opportunity to state some of the principles it follows when reviewing cy pres relief. It elected not to follow Judge Jones's suggestion in her concurrence to Klier v. Elf Atochem (5th Cir. 2011) that courts prefer reversion settlements to cy pres. Instead, it adopted the "reasonable approximation" standard.

Both case law and the ALI Principles support our adoption of the "reasonable approximation" test. As to whether distributions reasonably approximate the interests of the class members, we consider a number of factors, which are not exclusive. These include the purposes of the underlying statutes claimed to have been violated, the nature of the injury to the class members, the characteristics and interests of the class members, the geographical scope of the class, the reasons why the settlement funds have gone unclaimed, and the closeness of the fit between the class and the cy pres recipient.

The First Circuit was also not sympathetic to the plaintiffs' claim that they deserved the money, since they had already received full relief, and

It is well accepted that protesting class members are not entitled to windfalls in preference to cy pres distributions

However, the First Circuit also expressed one concern about cy pres relief, namely that the court itself should not be the entity deciding where cy pres funds should go.

Distribution of funds at the discretion of the court is not a traditional Article III function, as many courts have recognized …

What's the takeaway for defense lawyers? Cy pres is still OK, but make sure that the third party receiving the relief is closely related to the gravamen of the lawsuit.

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 Back in December, I bemoaned the fact that there wasn't more good class action scholarship, and I offered a number of topics that I thought class-action scholars could look into.  In January, I offered some more suggestions about ways to improve class action scholarship.  It appears I wasn't the only one thinking along the lines of improving academic coverage of issues in complex litigation, because I just received the following email:

Re: Announcing the Stanford Journal of Complex Litigation!

Dear Authors:

We are proud to announce the founding of the Stanford Journal of Complex Litigation (SJCL). Beginning in the 2012-2013 academic year, SJCL will publish articles and essays that are timely and make a significant, original contribution to the field of complex litigation. We are currently seeking article and essay manuscripts on a range of topics including the rules of civil procedure, aggregate litigation, mass torts, jurisdictional disputes, complex litigation reform, actions by private attorneys general, and transnational litigation.
We hope you will consider publishing with SJCL for a few reasons:
· Specialization: SJCL is the first student-edited journal devoted exclusively to topics relating to complex litigation. Publishing with SJCL will ensure your important contribution will be read within the broader field it is engaging. SJCL will serve as a forum for dialogue on complex litigation issues. We also expect that because SJCL is devoted exclusively to complex litigation, it will quickly become a source of guidance for courts and practitioners.
· Expedited publishing: Because we are currently accepting submissions for the first volume of SJCL, we will be able to publish many of the submissions we accept in our fall issue. That means you can expect your article with SJCL to be in print faster than almost any other journal. There will be no need to update through a lengthy editing process.
· Modified peer review: SJCL will follow a modified peer-review system. Meaning, after a first-level review by SJCL’s editorial staff, any submission that is a candidate for publication will be submitted to at least one scholar in the field of complex litigation or civil procedure who will review the piece. We will take any unanimous decision from our peer reviewers as a binding decision on publication. This will ensure that SJCL is publishing significant contributions to this field.
· “Light edit”: Our editorial policy is to afford substantial deference to authors, in both tone and substance. As a result, all articles must be well written, well cited, and completely argued at the time of submissions. SJCL will only edit to ensure readability and Bluebook compliance, which means that the editing process will be faster but also requires that authors vouch for the accuracy of their citations.
· Outreach: We are committed to generating interest in the articles published with SJCL. That is why we will actively promote all scholarship we publish at symposia and on the blogosphere. We are also committing to distributing hundreds of copies of our first issue to grow our readership base.
· Volume 1: There is something to be said for publishing in the very first volume of a journal. We hope you appreciate this significance and decide to submit your manuscript to SJCL.

We review and accept articles year-round on a rolling basis. SJCL strongly prefers electronic submissions through the ExpressO submission system, which can be found online at http://www.law.bepress.com/expresso. You may also e-mail your manuscript tosjcl_submissions@lists.stanford.edu. We do not accept submissions in hard copy.
SJCL is also seeking faculty with expertise in areas such as civil procedure or complex litigation to serve as reviewers. If you are interested, please contact sjcl_editors@lists.stanford.edu.

A website with more information is forthcoming. For the time being please refer to our Stanford Law School site:http://www.law.stanford.edu/publications/journals/sjcl/.

Please contact us with any questions. We look forward to working with you.

Regards,

Nick Landsman-Roos & Matt Woleske
Editors-in-Chief, Stanford Journal of Complex Litigation
sjcl_editors@lists.stanford.edu

I'd say that there are enough good research topics in complex litigation to support a devoted journal. Now we have one. So if you've been mulling over some issue specific to complex litigation, this is the ideal time to write it up and submit it.

And I'd like to wish Nick and Matt the best of luck in launching their new journal.

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