Conflicts in Massive Proportion

By Grady, Maureen | Dispute Resolution Journal, May-July 2002 | Go to article overview
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Conflicts in Massive Proportion


Grady, Maureen, Dispute Resolution Journal


It is bad enough when two parties in dispute go all the way to court. It is worse when a conflict pits hundreds of thousands of people on one side against a manufacturer or company on the other side. The pain and suffering--not to mention the costs-of such a conflict can be staggering. Such is the nature of class actions and mass tort claims. Maureen Grady writes that in many cases, both plaintiffs and defendants have turned to ADR models to facilitate conflict resolution. At times, according to Grady, it is the only way for a company to compensate victims without having to go belly-up.

As the number of class actions and mass tort claims continues to grow nationally, the need for effective alternative dispute resolution at both the private and public levels has become a necessary part of the administration and settlement of these claims. Asbestos litigation1 and the bankruptcy cases2 that have ensued from them are but two familiar examples of the types of mass claims that both federal and state courts are grappling with at an increasing rate. The most recent RAND Study on asbestos litigation has noted that with 500,000 plaintiffs and almost $21 billion in damages at stake "the current trend of cases shows no sign of letting up."3

Faced with this floodtide of cases inundating the courts, counsel for plaintiff classes and defendants, as well as the courts, are more frequently recognizing the need for effective and fair alternative dispute resolution processes for these cases.

While asbestos and breast implant cases4 are the more frequently cited examples of large volume tort litigation, several other areas are becoming the targets of mass claim filers. The new "mega-torts," including mold damage claims, drug liability and medical device cases, and environmental tort litigation, are fast becoming the new wave of mass claims litigation.

The lure of large damage recoveries for single plaintiff claims has made environmental personal injury litigation6 and property damage claims another area for class action lawyers. With the number of plaintiff classes averaging in the thousands in some cases, even the most efficient of federal and state courts can only devote limited resources to the administration of these claims.7

Therefore, the need for effective methods of case resolution through organized ADR processes at the court and private level, which preserve individual due process rights, must be included as part of the cost-efficient resolution of mass claims litigation.

In addition to the traditional models of mediation and arbitration programs, parties and the courts are now looking to more streamlined methods of case resolution. Settlement distribution matrices8 and other pre-packaged financial models9 are now becoming part of the ADR settlement landscape.

The American Home Products Fen-Phen settlement includes as part of its model a financial settlement distribution matrix based upon type of injury and proposed medical monitoring.10 Similarly, the Sulzer hip implant litigation settlement11 includes a formulaic settlement distribution scheme.

While these settlement calculation methodologies do not account for individual settlement factors, they may save a company defendant from financial disaster. In putting up a reported $1 billion for settlement, hip implant manufacturer Sulzer capped its current and future liabilities and may have ultimately saved itself from bankruptcy.12

Similarly, other limited fund settlements and bankruptcy settlements are now part of the mass tort and mass claim landscape. Settlement matrices and predetermined financial payment schemes may provide uniformity and certainty of result, but do not necessarily provide for individual deviations from otherwise rote settlements. The Federal Victim Compensation Fund, in particular, has been the subject of some criticism with respect to the method by which predetermined settlement amounts were calculated.

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