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

So, it's the end of September. Let's talk baseball. And, since my beloved Red Sox have reverted to their old habits, we're not going to focus on this season. Instead, we're going to go back nine years and sixty-four years. And we're going to talk about two general managers. Billy Beane (the Brad Pitt of baseball management) and Branch Rickey (the Edward Herrman of baseball management). Between the two of them, these baseball managers came up with at least three innovations that changed the way the game was played. What were they?

Moneyball. What do you do when you want to be an American League pennant contender, but you don't have the same payroll as the big boys in New York and Boston? Hire a statistician instead. Have the statistician figure out which players are contributing the most to scoring or preventing runs, and which do so for the least amount of salary. Hire those guys. Sounds simple enough, but in 2002, the Oakland A's rode that strategy to first place in the AL West, including an AL record 20 wins in 22 days. How? At the time, no one else was doing it.

Jackie Robinson. Major League Baseball had a gentleman's agreement not to hire any blacks to play. (The only silver lining to this was a vibrant alternative set of teams, the Negro Leagues, that featured such great players--Hall of Famers, finally--as pitcher Satchel Paige, slugger Josh Gibson, and base-stealer James "Cool Papa" Bell.) Rickey was the man who decided to break the color barrier in the National League. A simple enough decision, probably, but hardly an easy one. He recruited former UCLA star and then-Kansas City Monarch Jackie Robinson, who spent one year with the minor-league Montreal Royals before braving racist fans and opponents in a blistering rookie year with the Brooklyn Dodgers.

Farm teams. Branch Rickey was the pioneer of the farm team, a method of developing home-grown talent for a ball club. Before that, scouts would try to recruit new talent from various semi-professional clubs; a risky proposition at best.

There's a common theme to these innovations. Baseball is a talent-oriented industry. To build a winning team, you need winning players. Rickey and Beane each recognized untapped (and therefore less-expensive) sources of winning players. Beane found players who could contribute to a team even if they weren't pretty enough to grab a scout's attention. Rickey began by taking players who needed seasoning and adding it, while in the process adding another source of revenue to his ball club's organization. Then he went straight for the talented, seasoned players that--because of virulent prejudice--no team would touch. There's no question that breaking the color barrier was costly in the short term, but it was far less expensive in the long term than maintaining it.

So what Rickey and Beane did was to find undervalued players. Finding (and employing) those players cost a little more in the short term, but it more than paid off in competitive advantage. How do we know? Today baseball is integrated, and scouts are continually looking for new sources of players. Every team has a farm team. And most teams have statisticians.

So what does this all have to do with class action practice?

Well, let's look at the lead counsel for each side of the 2010-11 Supreme Court term class action cases (I'm using this as a VERY loose proxy for "wicked smart class action lawyers") and where they each went to school.

• David Boies (Erica P. John Fund v. Halliburton) - Yale Law School
• Andrew Pincus (AT&T Mobility v. Concepcion) - Columbia University Law School
• Deepak Gupta (AT&T Mobility v. Concepcion) - Georgetown University Law Center
• Jonathan Hacker (Matrixx) - University of Michigan

• Richard A. Monahan (Smith v. Bayer Corp.) - University of Pittsburgh School of Law
• Philip S. Beck - (Smith v. Bayer Corp.) Boston University School of Law
• Theodore J. Boutros, Jr. (Wal-Mart Stores, Inc. v. Dukes) University of San Diego
• Joseph M. Sellers (Wal-Mart Stores, Inc. v. Dukes) Case Western Reserve School of Law
• David Sterling (Erica P. John Fund v. Halliburton) - The University of Texas School of Law

Pittsburgh, BU, San Diego, Case Western, UT. Hardly slouch schools. And yet there is a consensus that students from these schools can't get jobs in this market, because we have a glut of unemployed lawyers, and employed lawyers are often concerned with status and prestige.

It's no secret that the legal market is in turmoil right now. Firms are desperately looking to stay relevant, particularly given the competition they are receiving from technology and lawyers in other countries.

So here's what I'd do if I were in charge of a high-earning plaintiffs' firm. I would take $5 million out of my next contingency fee, and build a "farm firm" for recent law school grads. Offer a low base salary that would cover rent and a moderate student-loan payment, and then let them eat what they kill. If they're good enough, let them buy into the big leagues. Alternatively, I'd endow a clinic at a local law school. Students would have to interview for slots. Should we eventually no longer have a glut of just-graduated lawyers, I'd try to turn this into a law-school firm.

If I were rebuilding a a defense firm from the ground up, I'd do two things. First, I'd offer to take each of the complex litigation and civil procedure professors out to lunch. I'd want to pump them about their most promising students. Not just the ones that did best on the exams, but the ones that actually participated in class, and the ones that seemed most creative when asked offbeat questions. And I'd ask them specifically who seemed to underperform on their last exam. Those are the students I'd want to interview for jobs; and I'd want to start some of them right away as clerks. Yes, the search costs are slightly higher than just taking the appellate clerks and law-review editors, but I'm looking for students who exhibit skills other than just test-taking. Then I'd go to my best client, and make the following pitch: give us your lowest-tier class actions, the crazy, frivolous ones that are unlikely to turn into anything. Most companies have a few of these lying around. I'd offer to litigate these for a significant discount, provided I can use my new stable of clerks and first-years to do most of the work. The cases would still get partner attention, but they'd also get a significant discount to reflect the fact that they were essentially training cases.

While I doubt many current AmLaw firms would go for these ideas, my bigger worry is that they may not be crazy enough. Law firms (including class action firms) have the opportunity right now to grab and train great future lawyers on the cheap. And currently, most firms can't or won't do so. So it's only good strategy for someone else to.

[Image of Branch Rickey public domain, image of Billy Beane taken by Brett Farmiloe]

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I've written before about the inventiveness of plaintiffs counsel when it comes to tobacco and class actions. And Xavier v. Philip Morris USA, 2011 U.S. Dist. LEXIS 42335 (N.D. Cal. Apr. 18, 2011), represents a new chapter in the ongoing tobacco wars.

Xavier was a class acton brought by smokers who were not suffering from any adverse health effects--yet. The named plaintiffs sought to certify a class of

asymptomatic Marlboro smokers and recent quitters who are more than fifty years old and have at least a twenty-pack-year smoking history.

What does twenty-pack-year mean? It represents the number of packs per day multiplied by the number of years the habit persisted, so a twenty-pack-year history could be a pack a day for 20 years, 2 packs a day for 10 years, or some other combination that added up to roughly 146,000 cigarettes. The plaintiffs sought medical monitoring.

Judge Alsup (of Class Settlement Checklist fame) immediately tied the ascertainability problem to the issue of preclusion.

If a class definition includes a requirement that cannot be proven directly, and that depends instead upon each putative class member's feelings and beliefs, then there is no reliable way to ascertain class membership. Without an objective, reliable way to ascertain class membership, the class quickly would become unmanageable, and the preclusive effect of final judgment would be easy to evade.

(Emphasis added.)  In this case, the class was not ascertainable, because determining class membership would require delving into class members' memories of their own conduct:

Thus, while the arithmetic total of an individual's Marlboro-smoking history is an "objective" question, it remains a question, and its answer depends on each individual's subjective estimate of his or her long-term smoking habit. Unlike in many cases, there are no defendant records on point to identify class members. There is no reliable way in which smokers themselves could document their long-term smoking histories.

(Emphasis in original.) Nor would the problems with class members' memories be the only issue in determining class membership. As Judge Alsup explained:

The memory problem is compounded by incentives individuals would have to associate with a successful class or dissociate from an unsuccessful one. Plaintiffs argue that individuals "have little reason to lie given the lack of pecuniary gain" but this order finds to the contrary. For example, long-term smokers of other cigarette brands and long-term smokers who have smoked fewer than 146,000 cigarettes may desire medical monitoring and be tempted to free-ride on relief granted in this action.

Since the class was not ascertainable using objective measures, Judge Alsup denied certification. His opinion is a useful one. In addition to explaining the importance of ascertainability to absent class members, he also expands the analysis a little by pointing out that an "objective" definition needs to rest on reliable data. If class membership relies solely on memory, and there is incentive to fudge, then the membership criteria is not really objective.

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 This is a tough year to be entering law school. Tuition is more expensive than ever. The job market for entering lawyers is worse than ever. And the combination of technology and cost pressures is changing the legal profession in ways that even longtime veterans have trouble getting their heads around. It's tough enough that the hot new legal blog is Professor Paul Campos's Inside the Law School Scam.

When young pre-laws (or 0Ls, as some call them) have asked my advice over the last decade, I've usually cautioned them to think long and hard about law school. Sure there's the now-crushing debt and the sometimes-brutal competition. But even in the days of lush lunches and the Brobeck bump, law was still a profession that ate its young. Even the most promising entry positions involve tedium, long hours, and intellectual drudgery. And many describe the process of making partner as a pie-eating contest in which first prize is more pie. But if you're a proud member of Law School Class of 2014, then you've probably already heard these warnings and decided they apply to the other guy.

So, so long as you're already in law school (or out in the larger, harsher legal world), my next piece of advice would be to buy yourself a copy of A Civil Action, and read it carefully.

A Civil Action has been a classic account of a mass tort case for years. When I was a wee baby attorney (not even, I was a first-year summer associate), reading it was my first assignment. I was the sole summer associate in the office of a small Boston firm, and much of the setting was the federal court in Boston. The book was not yet the perennial bestseller it is today. It was so new it was still in hardcover, and I could only locate one copy on the shelves of the local Borders. But I devoured it. Not just because it promised an inside look at complex litigation in Boston, but because Jonathan Harr did such a great job getting inside the head of the various lawyers.

For those who haven't read it (or seen the movie), it tells the story of litigation over cancer clusters in Woburn, Massachusetts. The plaintiffs, represented by tort lawyer Jan Schlichtmann, accused WR Grace & Company, which had a tanning plant nearby, of dumping various carcinogens into the local groundwater. The litigation spanned years, and resulted in a number of published opinions. In fact, it's since become a valuable teaching tool for civil procedure professors.

Jonathan Harr does an excellent job of providing a layperson's understanding of various motions practice and tactics. In particular, he provides a good early discussion of the defense's strategy behind filing a motion for Rule 11 sanctions against Schlictmann, a warning shot that hit a little too close to home, and set an often-hostile tone for the remainder of the case.

But what the book is really about--and this is the real reason to read it--is the personal toll complex litigation takes on the people involved: the plaintiffs, the defendants, and the lawyers.

"Rich and famous and doing good," mused Schlictmann. "Rich isn't so difficult. Famous isn't so difficult. Rich and famous together aren't so difficult. Rich, famous, and doing good--now, that's very difficult."

Harr, who spent most of his time shadowing the plaintiffs' team, gets in under the skin of the lawyers on each side, and his observations are useful for young lawyers. (Heck, they're useful for more experienced lawyers as well.) Among them:

Lawyers can take personal offense at various tactics. When the defense filed its Rule 11 motion against the plaintiffs, Schlictmann got personally offended at the tactic, a response that colored his strategy going into a crucial hearing.

Schlichtmann slammed the phone down. He was breathing hard, his face flushed, so angry that his hands shook. "This guy is an [expletive deleted]," Schlichtmann shouted.

When Schlichtmann got offended by the Rule 11 motion, he went out of his way to make the judge feel that same outrage. In fact, according to Harr, he spent more time on the emotional appeal of his argument than he did on the substance of his response. This is a rhetorical technique known as the "pathetic appeal," and many lawyers live by it. But, as Harr details, it is hard to make constant pathetic appeals without feeling the emotions you're trying to evoke. And if you can't evoke that emotion in others, the appeal may backfire (as it did on Schlichtmann).

Lawyers can get carried away with good news, too. In the course of their research, the plaintiffs retained Charles Nesson, who advised them they had a case that might be worth as much as a billion dollars. (Hence his nickname in the book, "Billion Dollar Charlie.") Despite their best efforts to remain calm, they're unable to dismiss the optimism that comes with the prediction. (They probably should have tried harder; Nesson has developed an idiosyncratic reputation in the years since.)

Litigation is full of highs and lows. Early in the book, Harr describes how Schlichtmann's car gets repossessed in the middle of a case. Later, he describes an opulent settlement conference at the Ritz-Carlton, one so excessive it actually backfires, convincing the defendants it would be better to fight than to settle. Towards the end of the litigation, Schlictmann moves into his office:

Although not without shelter, he had finally become homeless. He put his Dmitri suits in the reception-room closet, his silk ties and Bally shoes in the closet bathroom. He slept on a foldout couch in Crowley's office. He made herbal tea every night in the kitchen and watched television in the conference room. "It doesn't bother me living here," he said. "I'm a man of extremes. It's the middle ground I can't stand."

Not every lawyer experiences the specific financial highs and lows that Schlichtmann does, but complex litigation--with its demanding clients, aggressive adversaries, and insane workloads--does involve this kind of roller-coaster, feast-or-famine experience.

Intense litigation can be all-consuming.

Being in trial, Schlichtmann once said, is like being submerged in deep water for weeks at a time. The world above becomes a faint echo. War, scandal, and natural disaster may occur, but none of it seems to matter. The details of the case occupy every waking hour and usually intrude into dreams as well. Existence becomes spartan. When you finally come to the surface again, the world seems altered in fundamental ways. Win or lose, you set about rediscovering pleasures only dimly remembered. Colors seem brighter, food tastes better, the weather is of compelling interest.

This experience can be intoxicating for some, but it can also be profoundly disorienting. You'll notice Schlichtmann (through Harr) describes the experience in almost addictive terms. And for many lawyers, that experience can be addictive. If you want work to be your primary focus, that can be great. If not, it's somewhat less so.

So what can law students take from this book? Law school advertises itself as teaching students to "think like a lawyer." But it's just as important to know what it's like to feel like a lawyer. Lawyers are prone to bouts of excessive optimism and deep pessimism. They get angry, sometimes really angry. Human emotion is inescapable, and some lawyers deal with its effects better than others.

A number of studies have shown that you don't have to be rich to be happy. In fact, you may need as little as $40,000 per year in income. Instead, happiness with a job depends on some intangibles like being appreciated, and some tangible factors, like the length of one's commute.  So if, after reading A Civil Action, you still believe you'd enjoy the life--the whole life--that Harr describes, congratulations! You may have what it takes enjoy a fulfilling career as a lawyer. If not, it may be time to rethink litigation, because you may never find it that satisfying. (Don't worry that this says something bad about you. It doesn't. You're in very good company, including roughly half your law school class. And that includes many people who will make outwardly successful lawyers.)

[A brief personal note here, given the content: I am far from dissatisfied with my job. I've been extremely fortunate; I currently practice with a number of excellent class-action lawyers I admire a great deal. I have several clients I am outright proud to represent. And my colleagues are very tolerant of my writing compulsion. But I'm realistic. The legal life is not for everyone. I have known a number of talented lawyers who have moved on to other things where they are happier. And even the most satisfied practicing lawyers can identify with the characters in Harr's book.]

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 Phillips Petroleum v. Shutts involved a lawsuit by a class of gas royalty owners (folks who own the rights to income from gas produced on land) against an oil company. The royalty owners brought their class action in Kansas state court, alleging that Phillips Petroleum had not paid them on time, and so they were owed interest on their royalty payments.

The Kansas state court certified a class of 33,000 royalty owners. The debate over certification bore some similarity to modern debates, but also some startling differences. Phillips basically made two arguments against certifying a class. First, it argued that a Kansas court could not exercise jurisdiction over out-of-state class members. Second, it argued that a Kansas court could not apply Kansas law to those members' claims, and applying the laws of fifty states would be unmanageable.

The Court, in an opinion by Justice Rehnquist, held rejected Phillips's first argument. After an extensive discussion of personal jurisdiction (invoking every 1L's favorite Civ Pro opinion, International Shoe Co. v. Washington, the Court concluded that

the protection afforded the plaintiff class members by the Kansas statute [governing class actions] satisfies the Due Process Clause. The interests of the absent plaintiffs are sufficiently protected by the forum State when those plaintiffs are provided with a request for exclusion that can be returned within a reasonable time to the court.

In other words, under the right circumstances, a state court could certify a nationwide class. (Before CAFA, this holding had a huge effect on litigation, resulting in a flood of state-court nationwide class actions.)

But while the Court rejected Phillips's first challenge to certification, it gave more credence to the second. The plaintiffs made a number of arguments to try to keep all of the claims under Kansas law, among them that, essentially, Phillips had created a "common fund" in Kansas when it had delayed payments, and that the royalty owners all expected Kansas law to apply to their claims. The Court rejected each of these justifications, and held that:

Given Kansas' lack of "interest" in claims unrelated to that State, and the substantive conflict with jurisdictions such as Texas, we conclude that application of Kansas law to every claim in this case is sufficiently arbitrary and unfair as to exceed constitutional limits.

As a result, when courts today look at certifying nationwide classes based on state-law claims, they first engage in a choice-of-law inquiry to determine which laws should apply to each class members' claims. But even leaving aside this legacy of class-action choice-of-law rules (which, in itself would qualify Shutts as a "classic case"), there are a few other parts of the opinion that are still useful for modern class-action defense lawyers.

First, the Shutts Court's reasoning about the "expectation" of which law to apply is one that still has relevance, in particular, every time a plaintiff argues for imposing a single state's law to certify a nationwide class, particularly when arguing for applying the law of the defendant's home state.

Second, the Court helped to explain why it is that defendants often seem to be the only ones that care about the interests of absent class members; it's because of the way Rule 23 is structured:

The court and named plaintiffs protect [the absent class member's] interests. Indeed, the class-action defendant itself has a great interest in ensuring that the absent plaintiff's claims are properly before the forum. In this case, for example, the defendant sought to avoid class certification by alleging that the absent plaintiffs would not be adequately represented and were not amenable to jurisdiction.

(Emphasis added.) That's some handy language for the next time the plaintiff responds to a valid argument with rhetoric involving foxes and chicken coops.

In the end, Shutts is one of the more thoughtful opinions on how class actions can (and should be) tried. While it's often used solely as a quick citation supporting the need for a choice-of-law inquiry, Justice Rehnquist's opinion offers quite a bit more to the attentive defense attorney.

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This is a brief announcement that you can find a PDF copy of my article for the Cato Supreme Court Review at the following SSRN link.  

Thanks very much to the Cato folks for hosting a great CLE last week, and for publishing this.  

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 It's no secret that plaintiffs often choose cases, not so much because of the merits of the rulings, but because of the outrage they can generate. (Indeed, some plaintiffs' counsel openly discuss how they picture either how a particular cross-examination or closing argument will sound.)

As it turns out, a nine-year old lecture by Cass Sunstein sheds some light on ways in which defendants may be able to minimize the effects of outrage in class actions filed against them. (Full disclosure: Professor Sunstein taught several of my classes in law school.)

Sunstein's lecture discusses the ways in which outrage affects legal rulings. He focuses primarily on how juries decide punitive damages. And his conclusion explains much about how why defendants gets nervous about class-action verdicts:

The simplest lessons are that punitive awards are rooted in outrage; that levels of outrage command a degree of agreement among diverse Americans, at least in some domains; but that people have a great deal of difficulty in "mapping" their outrage onto a bounded scale. Among other things, we find that the process of group discussion dramatically changes individual views by making people move toward higher dollar awards. In other words, groups often go to extremes. The point has large implications for the role of outrage in deliberation and the effect of deliberation in altering outrage. We also find that people's judgments about cases, viewed one at a time, are very different from their judgments about cases seen together.

(Emphasis added.)  Professor Sunstein was focusing primarily on punitive damage awards. Nonetheless, his analysis has several implications for those defending class actions (which often rely on the same arguments as punitive damages):

Deterrence arguments are likely to be bunk. Plaintiffs' lawyers (and the academics who advocate greater class-action use) tend to stress the deterrent effect that class actions have on corporate defendants. But Professor Sunstein and his colleagues found that juries tend not to consider deterrence when awarding damages.

The first experiment found that varying the probability of detection had no effect on punitive awards. Even when people's attention was explicitly directed to the probability of detection, people were indifferent to it. People's decisions about appropriate punishment were unaffected by seeing a high or low probability of detection. Outrage is what matters, not the probability of detection. The second experiment found that strong majorities of respondents rejected judicial decisions to reduce penalties because of high probability of detection - and also rejected executive decisions to increase penalties because of low probability of detection. In other words, people did not approve of an approach to punishment that would make the level of punishment vary with the probability of detection. What apparently concerned them was the extent of the wrongdoing, and the right degree of moral outrage - not optimal deterrence.

(Emphasis added.)  In other words, while lawyers and scholars rely on deterrence as a justification for "punishing" corporate wrongdoing, no one's told the actual juries about this. (Nor are they likely to; punishment, through either punitive damages or class action verdicts, results in very large contingency fees.) To the extent that plaintiffs' counsel rely on deterrence-related arguments in justifying a class certification or summary-judgment ruling, defendants may be able to point to this research to steer the judge back to the merits of the arguments.

Defendants are likely to be better off with bench trials. I've written about this before. To the extent that juries tend to amplify--as opposed to dampening--the outrage of the most offended members, a defendant in a class action may be better off trying any eventual case in front of a judge instead. This option won't always be available to the defendant. But when it is, a defendant should think very hard about taking it.

Rhetorical advantage. Finally, in a comparatively minor part of his discussion, Professor Sunstein throws out the idea of "rhetorical advantage," a great concept that explains much about how plaintiffs' lawyers select cases.

What produces a rhetorical advantage? The simplest answer points to existing social norms, which of course vary across time and place. Among most Americans, existing norms make it easier to argue, other things equal, for higher penalties against corporations for egregious misconduct; but it is possible to imagine subcommunities (corporate headquarters?) in which the rhetorical advantage runs the other way. In extreme cases, those with a rhetorical advantage are on the correct side of a social taboo, whether mild or strong. In any case it is easy to imagine many other contexts in which one or another side has an automatic rhetorical advantage.

For all of the law review articles with "rhetoric " in the title, precious few actually develop this idea. (Somewhere along the line, legal academics decided that "rhetoric" was a theoretical tool to be used for critique, as opposed to an intensely practical discipline focusing on persuasion.) But it makes sense that plaintiffs' counsel would look for cases that can employ, not just the David versus Goliath trope, but other rhetorical advantages as well. To the extent defendants can focus on these areas, they can find their own means of combatting these advantages.

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Readers of this blog know that I've been an early (and ardent) advocate of challenging poorly-conceived class actions as early as possible. And, during the last three to four years, the motion to strike class allegations has (with good reason) become a popular tactic among defense counsel. And, several months ago, we got one of the best examples of how well a good motion to strike can succeed, in Plaisance v. Bayer Corp., 2011 U.S. Dist. LEXIS 47795 (S.D. Ill. 2011).

In Plaisance, the plaintiff sued Bayer Corp., alleging that various people who had used the birth control Yaz or Yasmin had suffered from various "adverse cardiovascular events" (heart or blood problems). In the complaint, the plaintiff asserted claims for fraud, breach of warranty, and negligence, and sought certification of a nationwide "personal injury" class--a difficult proposal at the best of times, since personal injuries tend to vary widely from person to person, not to mention the fact that teasing out the cause of various personal injuries can also require a series of very detailed individualized inquiries.

Rather than wait until after lengthy (and expensive) discovery and motions practice to raise these points, Bayer moved to strike the class allegations. The plaintiff argued that Bayer's motion was premature, but she also responded substantively to its arguments.

The court, in a particularly thoughtful opinion, held that the motion to strike in this case was not premature:

In the instant case, defendants have identified numerous facial deficiencies in the class allegations; no amount of time or discovery can cure these deficiencies. Plaintiff's argument with regard to the filing of additional class actions in other states is unavailing for the same reason. After reviewing the parties' briefs and the allegations in the first amended complaint, it is obvious from the pleadings that no class action can be maintained. Accordingly, the Court properly proceeds with its ruling on defendants' motion to strike or dismiss plaintiff's class allegations. See Rule 23(c)(1)(A) (providing that the court, "[a]t an early practicable time ..., must determine by order whether to certify the action as a class action"); Rule 23(d)(1)(D) ("In conducting an action under this rule, the court may issue orders that ... require that the pleadings be amended to eliminate allegations about representation of absent persons and that the action proceed accordingly.").

(Emphases added.)  The court found two different facial problems with plaintiffs' proposed class action. First, the plaintiff's proposed class would require applying the disparate legal rules of fifty different jurisdictions.

In the instant case, under applicable choice of law rules, the merits of the putative class members' claims would be governed by the substantive law of each class member's home state. Accordingly, the laws of all fifty states plus the District of Columbia would be applicable to the putative nationwide class members' claims. Amongst the states, there are differences in the law of product liability as well as in the applicable theories of recovery and their subsidiary concepts. These differences, even if slight, are not insignificant. Indeed, "such differences have led [the Seventh Circuit] to hold that other warranty, fraud, or products-liability suits may not proceed as nationwide classes").

(Internal citations omitted.) As a result, the court held that the plaintiff could not maintain a nationwide class action based on her claims, because there was no way to reconcile the conflicting state laws. (The plaintiff did try to sidestep the problem by subclassing, but faced the additional obstacle that she did not have 49 other class representatives waiting in the wings.) This particular ruling makes a great deal of sense. There is no reason a court has to go beyond the pleadings to determine which states' laws will apply to plaintiffs' claims, or whether variations in state laws would preclude a nationwide class. There's no question a state-law variations analysis takes work, but there's no reason why that work had to wait until after discovery.

The court also that the complaint indicated a number of individualized factual inquiries would be necessary:

In the instant case, almost every element of the asserted claims will require highly individualized factual inquiries unique not only to each class member but also to each class member's prescribing physician. For example, as defendants' brief highlights, establishing causation will require (1) an examination of each class member's medical history, including pre-existing conditions and use of other medications; (2) an evaluation of potential alternate causes for the alleged injury; and (3) an assessment of individualized issues pertaining to each class member's prescriber, including how the doctor balances the risks and benefits of the medicine for that particular patient, the particular doctor's prescribing practices, the doctor's knowledge about the subject drug, and the doctor's sources of information with regard to the subject drug.

As the court pointed out, this didn't even begin to address the individualized reliance issues that come up in many fraud claims. But, given the elements of the plaintiff's causes of action, there was no way around these particular individualized inquiries.

Given these various problems with plaintiff's proposed class, the court granted Bayer's motion to strike. What can defense counsel learn from this? Challenge bad class complaints early. Bayer had some great natural advantages; among other things, there is a long paper trail establishing how difficult it is to bring classwide personal injury claims. But so long as the defects that a motion to strike challenges are purely legal (such as the variations in different states' laws), there is no reason why a defendant should have to wait until after a lengthy, expensive, and possibly unnecessary discovery period to challenge them.  

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It's no secret that most class action plaintiffs and defendants usually view each other with great suspicion from across a great divide. (I can't say all; I have a few good friends among the plaintiffs' bar, and I think quite highly of several plaintiffs' lawyers regardless of any substantive disagreements.) What may be surprising, though, is research that shows that this mutual distrust not just a paycheck-induced mental state, but a smart choice for both clients and the lawyers themselves.

At least, that's what a recent set of experiments conducted by several business professors suggests. Authored by Professors Sandy Jap, Diana Robertson, and Ryan Hamilton (this one, not this one), The Dark Side of Rapport describes two possible pitfalls for lawyers who develop rapport with the opposing side.

First, lawyers who develop rapport may be more likely to compromise their clients' interests. This is not necessarily all that surprising. Depending on the client, the lawyers may have longer-term relationships with each other. And a lawyer may justify compromising his client's interest in all kinds of ways, such as telling himself that the long-term relationship with opposing counsel will benefit future clients, or that the compromise is the only way to get the client at least some of what she wants.

Second, lawyers who develop rapport with each other may be more likely to deceive each other. At first glance, this may seem counterintuitive. If you have a rapport with someone, aren't you more likely to try to keep their trust?  Aren't we more inclined to deceive the jerk than the guy with whom we can see eye-to-eye? As it turns out, negotiators will often hide or downplay bad news in order to maintain the rapport that they have.

How did he researchers discover these issues? The experiments were built around a negotiation exercise known as the Bullard Houses case. Bullard Houses is designed for negotiation training. It pits a property seller (who absolutely does not want the property used for commercial purposes) against a hotel developer (who is trying to keep a low profile about its preferred locations). So Bullard Houses is designed to create an impasse; unless, of course, someone either lies or compromises her client's interests. The authors tweaked the conditions of the exercise in various ways to encourage rapport. (Specifically, they encouraged one group to negotiate face to face instead of by instant-messaging; they had another group engage in team-building exercises; and they "primed" a third group by having them think happy thoughts.) They then looked at how many members of each group resolved the impasse in some way. In general, conditions that encouraged rapport encouraged resolution. (The researchers also tried to prime one group with reminders about duty, ethics, and reputation. It didn't help.)

So what does this suggest for class action lawyers? The primary lesson may be to maintain a cordial distance from the other side. There's no reason to unnecessarily provoke opposing counsel, but a conscientious lawyer may remember not to get too chummy, either.

Another implication--peculiar to class actions--is that courts (and defense counsel) may need to be careful of rapport between plaintiffs' attorneys and clients. After all, rapport works both ways. And there is already some evidence that, where possible, class-action attorneys select plaintiffs that are easier to manipulate.  In a legal sense, the client's job is to represent the interests of the proposed class. But if the client is more interested in maintaining a rapport with her attorney (either because of the emotional satisfaction, or because that may be the best way to get the attorney to fight for an incentive payment), then the plaintiff may have a strong incentive to compromise the interests of class members she has never met for the interests of the attorney with whom she works.

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 Sometimes, the most interesting cases, from both a strategic and an equities standpoint, are hidden in the weeds of a statute. For example, take the lengthily named case Graphic Communications Local 1B Health & Welfare Fund "A" v. CVS Caremark Corp., 636 F.3d 971 (2011).

In Graphic Communications, the plaintiffs originally sued the defendants in Minnesota state court, alleging a number of claims related to the pricing of generic drugs. (Exciting already, no?) The defendants removed the case under CAFA, and moved to dismiss. The court granted the motion without prejudice. So the plaintiffs filed an amended complaint that eliminated some of the grounds the defendants had used to invoke CAFA jurisdiction, and later moved to remand under CAFA's "local controversy" exception. (The local controversy exception applies to cases where more than two-thirds of the plaintiff class comes from the same state as one defendant, the principal conduct occurred in the state, and no related class actions have been filed in the previous three years.) At that point, reasoning that it did not have jurisdiction over the case anymore, the district court granted the remand, and the defendants appealed to the Eighth Circuit.

The defendants made several arguments on appeal, among them that the plaintiffs had not moved to remand in a timely fashion. (For reasons even the Eighth Circuit did not know, the plaintiffs waited more than 100 days before moving to remand, instead of the 30 required under the statute.)

The Eighth Circuit began by heading straight to the meat of the question. Looking at the text of CAFA, it noted that

The local controversy provision, which is set apart from the above jurisdictional requirements in the statute, inherently recognizes the district court has subject matter jurisdiction by directing the court to "decline to exercise" such jurisdiction when certain requirements are met. Thus, the local controversy provision operates as an abstention doctrine, which does not divest the district court of subject matter jurisdiction.

(Emphasis added, internal citation omitted.)

At that point, the court had to determine whether a "local controversy" was somehow a jurisdictional defect that did not involve subject matter jurisdiction. (If so, then the plaintiffs might not be bound by the 30-day time limit for filing remand motions.) After a lengthy discussion of the meaning of the term "defect" (which was not defined in the statute, and was susceptible to several meanings from context), the court determined that a "local controversy" is not a jurisdictional defect under CAFA.

But the court ruled that that did not necessarily mean that the plaintiffs' motion was timely. Noting that a remand motion is not necessarily authorized at any time, the court pointed out that it was entirely possible the appropriate time for moving to remand may even be shorter than the 30-day "defect" limit. (This conclusion makes sense; ruling the other way means that a plaintiff could amend a complaint to invoke a local controversy, but only move to remand after some adverse ruling from the federal trial court. It's unlikely the drafters of CAFA meant to give plaintiffs a "get out of federal court free" card like that.) So instead, the court held that

We recognize there may be similar considerations to take into account in this case, but, along with the central question of whether the more than 100 days it took for Plaintiffs to move to remand constitutes a "reasonable" time frame, we remand to the district court to make these determinations in the first instance.

So what can defendants learn from this case? Don't be afraid to argue the equities of a motion, even if (perhaps especially if) it appears to be highly technical. Like most humans, judges are sensitive to when people are trying to game a rule to reach an unintended result, and, like most humans, judges don't like it when that happens.

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... that my entry in the SCOTUSblog symposium on class actions is up: "The Class Action is Alive and Kicking." 

The entire symposium is well worth a read so far; some very interesting ideas from various lawyers and academics.

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Mass torts have long been a problem for the American judicial system. Today, it's Vioxx, the BP oil spill, and Chinese drywall. Fifteen years ago, it was asbestos, Agent Orange, and silicone gel breast implants. Back in the 1980s and 1990s, when mass torts first threatened to overwhelm crowded dockets in various jurisdictions, the courts carefully considered whether to use class actions as a means of resolving thousands of similar tort claims.

And, at that time, Columbia University law professor (and recent Daily Show guest) John Coffee wrote an in-depth examination of the various problems and conflicts of interest that arose when courts tried to use Rule 23 to solve the mass tort problem: Class Wars: The Dilemma of the Mass Tort Class Action.

Professor Coffee began by providing an excellent working definition of a mass tort:

Mass tort litigation is characterized by several unique features: (1) a predictable evolutionary cycle during which the value and volume of individual claims starts low and then spirals upward; (2) high case interdependency so that litigated outcomes in any mass tort area quickly impact on the settlement value of other pending cases in that same field; (3) a highly concentrated plaintiffs' bar, in which individual practitioners control exceptionally large inventories of cases, sometimes totaling in the tens of thousands; and (4) a capacity to place logistical pressure on individual courts that is simply unequalled by any other form of civil litigation.

Over time, courts have progressively held that mass torts are not well-suited for class-action treatment, particularly not in the form of "settlement classes" (that is, class actions filed specifically to enforce a pre-existing settlement agreement between plaintiffs and defendants). And Professor Coffee spends much of the article discussing the difficulties that arise from doing so. The portions of his discussion that remain most relevant have to do with the conflicts of interest that arise from aggregated settlements.

On an ethical level, probably the most disquieting phenomenon about recent mass tort settlements has been the acceptance of a single attorney acting as the representative of multiple subclasses of plaintiffs. Not only have the interests of these subclasses clearly conflicted, but the class counsel has explicitly traded off the interests of subclasses against each other, obtaining substantial compensation for one subclass in return for a waiver of cash compensation by anoth- er. In such multiparty negotiations between the defendants and different subclasses of plaintiffs, even the well-meaning plaintiffs' attorney shifts inevitably from the role of an advocate and adviser for clients to the role of a philosopher king, dispensing largess among his client subjects.

While the specific cases may have changed, the fundamental dilemma remains the same, however, whether it is a class action or just a series of consolidated tort cases. Any resolution of mass torts has to accommodate (1) the plaintiffs' desire for redress of some kind, (2) the defendant's desire for global peace, and (3) the plaintiffs' attorneys' desire for fees.

And Professor Coffee discusses a number of issues that still resonate. While the explicit development of "settlement classes" has waned, defendants will still take advantage of filed class actions to try to achieve releases of larger issues through a classwide settlement. And Coffee's descriptions of inventory settlements and settling future claims are both still relevant today.

So what can modern defendants take from this article? The most useful portions have to do with objection-proofing possible settlements:

• Negotiate down attorneys' fees. It makes sense to negotiate on fees more closely than defendants have done in the past. While it doesn't matter as much to the defendant who gets paid (from a fiscal, not emotional, standpoint), courts care. And courts are beginning to eye "clear-sailing" and quick-pay provisions with greater suspicion.
• Try to give the class some cash benefit. Courts have long been suspicious of non-monetary benefits. And they're expressing their concerns more openly.
• Make sure subgroups are separately represented. In a discussion that seems especially prescient today, Professor Coffee notes that "On an ethical level, probably the most disquieting phenomenon about recent mass tort settlements has been the acceptance of a single attorney acting as the representative of multiple subclasses of plaintiffs." A defendant interested in a global settlement of certain complaints could do worse than to insist that subclasses receive separate counsel. (Among other advantages, counsel who are both zealous and ethical can help the defendant reduce payments for true nuisance claims.)

Be advised, the advice to be gleaned from Professor Coffee's article, particularly in light of current settlement case law, doesn't make for easy or cheap class settlements. But as I've said for some time now, for defendants, settling on the cheap can get really expensive.

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