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Class-action settlements, once thought to be the solution to the mass tort epidemic, came under fire this year, with courts following the U.S. Supreme Court's precedent when it rejected a landmark asbestos pact.
But the courts weren't the only ones displeased with the mass tort settlement process: Disgruntled plaintiffs in a Texas case tried to force their lawyers to forfeit legal fees because they thought a settlement the lawyers negotiated was inadequate.
Despite the setbacks, defendants' and plaintiffs' lawyers still are trying to streamline mass tort litigation. For example, the American Arbitration Assn. has created a new national panel to help resolve complex, protracted mass claims and mass torts.
In September, plaintiffs' lawyers litigating over the popular diet drugs Fen-Phen and Redux filed an application with the Judicial Panel on Multidistrict Litigation in Washington seeking to consolidate the suits rather than seek class-action certification.
The high court's 6-2 rejection in August of a $1.3 billion asbestos class-action settlement in Amchem Products Inc. et al. vs. Windsor et al. is already chilling other settlement efforts.
Amchem turned on the question of whether Rule 23 of the Federal Rules of Civil Procedure, which govern civil cases, allowed certification of a class for purposes of a global settlement of future asbestos-related claims.
Under the proposal, 20 former asbestos manufacturers that had formed the Asbestos Claims Facility offered to compensate future victims according to the diseases they manifested as well as some claims not in the categories of compensable diseases. Everyone exposed to asbestos but who had not filed a claim against any CCR member could opt out or remain in the class and agree to use the settlement to resolve any future claim.
A federal judge approved the settlement in 1994, but a panel of the 3rd U.S. Circuit Court of Appeals overturned it. The appeals court held that the $1.3 billion settlement violated Rule 23 because disparity among the claimants' illnesses was greater than their commonality. The judges also said classes formed for settlement purposes had to meet the same standard as classes formed for litigation.
The CCR members appealed to the Supreme Court, but a 6-2 majority agreed with the appeals court.
Writing for the majority, Justice Ruth Bader Ginsburg said the "sprawling class" did not meet the requirements of Rule 23. The named parties in the class "with diverse medical conditions sought to act on behalf of a single giant class rather than on behalf of discrete subclasses."
While at first some experts thought the Amchem decision wouldn't hamper the proposed tobacco settlement, Liggett Group Inc. became the first mass tort defendant to feel the fallout.
Citing the Supreme Court decision, West Virginia Chief Judge Charles H. Haden II vacated preliminary approval of a class-action settlement that would have shielded Liggett from future smokers' claims.
Shortly after the Amchem decision, the high court also declined to review a proposed mass tort settlement between Fibreboard Corp. and thousands of people who could file asbestos-related injury claims.
Earlier this month, a Louisiana judge decertified the class in the nation's first silicone breast implant class action to go to trial against Dow Corning Corp. Plaintiffs now will have to pursue suits individually.
Besides the courts, some plaintiffs also took part in the backlash.
A group of 46 plaintiffs in a class-action settlement with Phillips Petroleum Co. in 1991 over a Texas chemical plant explosion sued their lawyers, charging they negotiated the settlement without their knowledge or consent. The group sued after learning plaintiffs represented by other lawyers received larger amounts.
Legal experts predict more personal-injury cases will jam already overcrowded courts as a result of the Supreme Court's Amchem decision, putting extra pressure on Congress to step in to clarify how such "future-looking" settlements can be structured.