The Mass Tort Defendants Strike Back: Are Settlement Class Actions a Collusive Threat or Just a Phantom Menace?
Franklin, Darren M., Stanford Law Review
The class action endures as one of the most debated procedures in mass tort litigation. Considered by some to be an invitation for meritless claims and attorney abuse, and regarded by others as a uniquely efficient device to provide fair compensation, the class action has garnered significant attention as judges and academics struggle to confront the current explosion of mass tort lawsuits. As personal injury claims for exposure to asbestos, tobacco, silicone gel, and other professed toxins threaten to swamp the torts system, many commentators have begun promoting the class action as a solution to the heavy court burdens, high transaction costs, and delayed benefits endemic to traditional mass tort litigation.
At one time, mass tort defendants fervently resisted class certification. The certification order was often the trial court's most important ruling. The potential for a jury to levy crippling liability upon a class action defendant created overwhelming incentives for the defendant to settle, often without regard to the merits of the claims.(1) As judges were asked to certify an increasing number of mass tort class actions, some courts began to see "a concern with forcing these defendants to stake their companies on the outcome of a single jury trial, or be forced by fear of the risk of bankruptcy to settle even if they have no legal liability."(2)
Recently, however, some mass tort defendants have begun to welcome the class action.(3) In cases such as Georgine v. Amchem Products, Inc.,(4) Lindsey v. Dow Corning Corp.,(5) and Ahearn v. Fibreboard Corp.,(6) the defendants endorsed the class action certification and some even joined the certification motion. Some defendants have not only adopted the class action as their preferred means of resolving their mass tort liabilities, but have also actually begun to solicit plaintiffs' attorneys to bring such suits.(7) Why is the class action, "once a sword for plaintiffs," increasingly "becoming a shield for defendants"?(8)
The answer, of course, is that the class actions that modern mass tort defendants seek are not the traditional actions in which the defendant runs the risk of a jury trial. Instead, they are carefully circumscribed procedures certified for settlement purposes only. Known as a "settlement class action," the device ranks as one of the most controversial developments in the already contentious field of mass tort class actions. Briefly, a settlement class action occurs when the class certification motion is presented simultaneously with a proposed settlement and is conditioned upon the court's acceptance of the settlement. The procedure differs substantially from certification for purposes of trial, where the defendant normally provides a vigorous opposition to the certification and the court can consider well-briefed arguments in making its ruling. With settlement classes, in contrast, the court certifies the class at the parties' behest, essentially acting for their benefit in binding absent parties to the settlement and sometimes neglecting the superiority requirements of Rule 23(b)(3) of the Federal Rules of Civil Procedure since litigation is not contemplated.(9)
Mass tort defendants welcome settlement classes for two main reasons. First, the absence of significant court involvement during settlement negotiations gives defendants, to a limited extent, more control over the parties and conditions that they must deal with in order to obtain favorable terms. Second, and perhaps more importantly, a settlement class offers the possibility of a final, global solution to all liability claims without the defendant having to risk a jury trial. This liability cap is possible because settlement classes especially, and often exclusively,(10) bind "futures" plaintiffs--people who have been exposed to or injured by the defendant's product--in addition to the already-filed "inventory" claimants. By negotiating a futures settlement class, a defendant can immediately dispose of thousands of future claims that otherwise could take decades to litigate and cost uncertain sums of money. …