The book has many strengths.  It is comprehensive, generally accessible, eloquently written, and well-researched.  Perhaps its greatest accomplishment is the breadth of its usefulness to a wide range of readers with varying levels of sophistication.  The book starts at the beginning, with a discussion of the history of mass tort litigation and a summary of the relevant FDA regulations.  Following a discussion of each of the typical causes of action in drug and device cases, the book goes on to cover every conceivable procedural phase, from MDL assignment, to motions practice, to discovery, and finally through the rarest of events in mass tort litigation: trial.  The step-by-step approach makes the book a perfect starting point for a new associate, client, or colleague who is just becoming familiar with medical products litigation.  But packed in to the logically organized chapters are a wealth of practice tips and research summaries that make the book a handy practice aid to even the most seasoned practitioner. 

The book’s authors admit (and make no apologies for the fact) that it has a defense-oriented slant, and it’s main audience would certainly be defense-oriented practitioners and corporate legal departments, but that does not mean that it would not be a useful guide to plaintiffs in pharmaceutical or other mass tort litigation. 

In short, this book is a welcome addition to my personal law library.  Now, my problem is figuring out how to protect it from being permanently “borrowed” from one of my colleagues.

My gripe is this: Redish may be right, and he may be wrong; I’m not taking sides here. I haven’t read the cases, and I don’t exactly have any firmly-held beliefs about the nuances of the Presentment Clause (whatever the heck that is). But Redish is a smart guy. His ideas are surely plausible, and no law firm would be sanctioned for making these arguments in a brief. So where are the law firms? Why isn’t every class action defense firm in America mentioning to clients that these arguments exist?

This post is not intended to be a response to or criticism of Herrman’s commentary, as I don’t disagree with a word of it.  Think of it instead as a supplement, intended to address the related topic of how clients can select outside counsel who will keep them abreast of arguments like the ones discussed in Professor Redish’s book.  I have two simple suggestions, each of which I will expand upon below: 1) Hire bloggers, and 2) Ask for competing litigation strategy proposals before selecting outside counsel.

Hire Bloggers as Outside Counsel

Reacting to Herrmann’s post gives me an opportunity to engage in the blatant self-promotion that this blog was created for, if a bit less subtly than usual.  

There is no better way to ensure that your outside counsel is up to speed on possible arguments than to hire blogger.  Bloggers are constantly doing their own research and tracking in current issues, theories, and litigation trends from many different sources, including law reviews, trade journals, other blogs, news feeds, and court decisions.  Those arguments that they don’t become aware of through their own study are often brought to their attention by their readers.

Blogging also reflects several other traits that are favorable in any outside lawyer.  It shows a strong work ethic (after all, most of us do this in our spare time), and demonstrates intellectual curiosity.  A blog also serves as a permanent public resource that any potential client can consult to get insights into a lawyer’s writing style, creativity, and analytical abilities. 

Of course, none of this would be news to Herrmann, who was one of the premier Biglaw bloggers before moving in-house a few years ago.  If I were looking for outside counsel in a class action, among the first lawyers I would consider would be my fellow Biglaw bloggers Andrew Trask and Russell Jackson, as well as Herrmann’s former blogging partner, Jim Beck.

For obviously selfish reasons, I’m highlighting bloggers here, but these same arguments apply to any lawyer who writes, lectures, or teaches in any medium.  A frequent contributor to law reviews or trade journals an adjunct professor at a law school, a frequent CLE panelist, or even a lawyer who takes the time to actually read law reviews and trade journals (rather than simply let them pile up on the corner of a desk) can also have many of these same desirable traits.  And, there are plenty of lawyers who can walk and chew gum at the same time (in other words, lawyers who are both able to keep up with academic trends and who know their way around a courtroom).

Seek Competitive Litigation Proposals

Especially in the current market, class action defendants have their pick of whom to select as outside counsel.  Discounts and alternative fee arrangements are understandably a focus of outside counsel selection in today’s market, but the is no reason that cost considerations have to be considered at the expense of counsel’s ideas, arguments, and litigation approaches.  If you are dissatisfied with the initiative or creativity of your current lawyer, why not ask multiple firms to submit competitive proposals for their litigation strategies before you hire them? 

This approach has many advantages: it allows you to synthesize the ideas of attorneys with different perspectives and take advantage of all of their ideas regardless of whom you ultimately choose to represent you; it ensures that the attorneys that you ultimately select will have thought through potential arguments, and their litigation strategy more generally; it encourages creativity and discourages complacency.  Attorneys should have the self-confidence in their abilities and ideas necessary to show a willingness to pit them against those of the competition before you start paying them.  And,  the willingness to put together a litigation proposal also demonstrates a capacity to give your matter the attention that it deserves.  If you give them a fair shot, attorneys should always be happy to share their ideas on any given case even if they aren’t ultimately selected in every case.  The benefits of a competitive selection of outside counsel in class action litigation seem obvious, and certainly the trend is in this direction, but too often I still see these decisions being made based on longstanding relationships or on who is the lowest bidder.

Asking for prospective counsel to share their ideas doesn’t just let you collect good ideas for the eventual defense in the litigation.  It also gives you a chance to evaluate the thoughtfulness and completeness of a particular firm’s approach to the litigation.  Take Redish’s book as an example.  Herrmann’s thesis is certainly not necessarily that constitutional arguments can or should be raised haphazardly in every case, costs be damned. It is merely that clients should expect their counsel to be up to speed on all the possible arguments, however esoteric.  So, knowing that Professor Redish’s book exists and then mastering his arguments are good first steps, but then there are a host of nuances to consider.  For example, For every academic argument there is an equally compelling (at least to some) argument on the other side.  What arguments could the plaintiff make in response to the constitutional arguments, and which set of arguments is more likely to be persuasive to the judge assigned to the case?  What about the appellate courts?  Also, what if the case strategy includes retention of a class action expert, a role that Professor Redish has had in past cases?  Certainly, Redish’s arguments about the constitutionality of Rule 23 are a factor that any client would want to consider before retaining him as an expert witness.

In summary, while I agree wholeheartedly with Herrmann’s point that clients should be able to expect their outside counsel to keep abreast of academic trends, I would add there are some simple things that clients can do to better ensure that they have outside counsel who will do so.

Paths to (Mass) Justice

To wrap up the conference, Dr. Sam Muller, Director, Hague Institute for the Internationalization of Law, led an all-star panel of academics, lawyers, and industry executives in a discussion about where we are heading over the next five years in global class, collective, and mass litigation.  The panel included program co-organizer Professor Deborah Hensler, international plaintiffs’ lawyer extraordinaire Michael Hausfeld (who more than ably filled in for Professor Hodges), Mr. Robert W. Hammesfahr, Managing Director Claims & Liabilities, Swiss Reinsurance Company Ltd., Mr. Richard Murray, The Geneva Association, Special Advisor on Liability and Legal Affairs and Liability Dynamics Consulting LLC, Mr. Daniel Girard, Partner Girard Gibbs LLP, and Mr. Martijn van Maanen, Partner BarentsKrans.

This is the only presentation not framed by a particular case study.  However, the panel did focus on a common question, what are we likely to be discussing at the 10^th annual conference on the globalization of class actions?

Dr. Muller began the discussion with some general themes and questions that both summed up the conference generally and framed the last panel’s discussion.  They included:

• Whether the internationalization of class action law will continue;
• Whether we will see an increasing divide between public and private mechanisms for the enforcement of collective interests;
• What will be the impact of social media and changes in mass communication?
• Is globalization and the development of systems of collective redress driving changes to the legal profession or the legal profession driving changes to mechanisms for collective redress?

Pointing to the example of the development of competition law in the EU, Hausfeld remarked that changes in policy are happening on their own but that they are not happening quickly.  He argued that it is up to the legal profession to change policy through practice; in other words, through litigation brought by counsel and through court decisions.  Hausfeld also made a key observation based on a recurring theme throughout the conference: the engine of change in the development of private enforcement mechanisms is, at least in the near future, likely to come from large corporations and institutional investors, rather than from consumers or popular political pressure.

Hensler predicted that the future will be more of the same.  The development of collective enforcement mechanisms will not go away because the scale of commerce drives the scale of mass harms, and globalization is increasing the scale of commerce.  Moreover, citizens are more likely than ever to want redress for injuries.  In modern societies, people are no longer willing to blame God for their misfortunes.  Hensler predicted that the transformation into a truly international system of collective redress will take 25 years, not 5 years.

 Hammesfahr was optimistic about change.  He noted that “where there’s a vacuum, the law will fill it,” and that therefore, the growing need for systems of collective redress will require reforms in even those countries that are most politically resistant to change.  There has to be a remedy for harms, and the younger generation will not accept delays in avenues to redress in the same way as previous generations.  However, he also predicted that Europe will find its own solutions for the problem of mass harm without copying the U.S. model of class actions. 

Murray observed that what was discussed in the 2011 conference as being a practical reality was foreseen during the first global class actions conference in 2007, but was still being debated.  For example, 5 years ago in Europe, people were saying that “we don’t do that here,” but now, Europe has begun to recognize the need for private enforcement mechanisms for collective harms.  Murray made a variety of other observations and predictions, including

• There has been a significant growth in the scale and economic consequences in things that require aggregation.
• There has been a change in the nature of litigation globally.  It used to be unique, to be avoided.  In the past few years, we have become compensation driven rather than fault driven. 
• In the future, litigation will be investment driven rather than party driven, and there will be a transformation of litigation funding to litigation ownership.  Litigation will become an investment of choice.
• There will be more climate change and catastrophe-related litigation in the coming years.  There will be a convergence of liability and reparations processes, a socialization of the humanitarian loss compensation system.  This will be driven by huge need for redress, combined with someone to blame for mass harm.

Girard was more pessimistic about significant developments in global collective redress, based in large part on events in the United States over the past several years.  

He divided aggregated litigation into 2 types of cases:

1. “Train wrecks” – cases with a very high public profile, and a clear sense of public injustice.  This, he said, “is good work if you can get it.” 
2. Private regulatory actions – i.e., mass lawsuits based on a private right of action that challenge conduct not widely recognized as being wrong.  This category would include many current class actions in the United States, such as those involving alleged deceptive trade practices and dangerous products.

While policymakers will almost certainly agree on the need for collective redress in the first category of cases, the second category is quite a bit more challenging, and there is a greater potential for abuse.  The resolution of cases in category 2 is quite a bit different than the deal brokering that goes on in category 1.

Girard pointed out how the recent trend in the United States has been to restrict class actions.  But, he went on, plaintiffs’ lawyers are nothing if not creative and persistent.  In the end, he predicted that we will see things swing back into an equilibrium, since “the law will tend toward justice.”  However, he admitted that we may have seen the end of the fully empowered private attorney general in the United States.

Girard concluded with a word of wisdom for policymakers in Europe.  As you are being urged toward a system like the American system, he said, keep in mind that lighter regulatory framework was intended to come with it a strong right of private enforcement.

Van Maanen was much more positive about change.  Using competition law as an example, he said that in the past, the it was economical for defendants to form cartels.  Now, however, corporations are taking on the role of ally with plaintiffs.  This will drive a push toward private enforcement in Europe.  He noted that there is some level of competition between European countries in the development of systems of collective redress.  For example, he observed that with its resistance to collective action legislation, the UK has fallen behind the Netherlands in recent years.  He concluded with the observation that a challenge for policymakers will be in developing a system that will make it more profitable for corporations to comply with the law.

In the Q&A session, the panelists were asked whether we are moving toward coordination or competition between jurisdictions, and if so, are we going to a race to the bottom or a race to the top?  In Hensler’s opinion, we are in a period of competition.  In the short term, there is an incentive to maintain a system of multiple forum choices.  Murray agreed, and commented that “we will do the right thing after we try everything else.” Girard returned to the theme that the United States is a microcosm of the world.  He pointed to example of the so-called reverse auction process discussed by Judge Vaughan Walker earlier in the conference and pointed out how competition helped to reduce attorney’s fee abuse.

Other topics addressed in the Q&A included the role of social justice.  Hensler commented that social media will have an effect on litigation, as it did during the recent Arab Spring movement.  Hammesfahr discussed the potential impact of social justice movements with respect to catastrophic events claims.  He observed that if the civil justice lawyers are going to have a role, they will have to look at transaction costs and efficiencies.

A final, and perhaps fitting, point (unfortunately, I did not note which panelist made it) had to do with the different way that European law is developing in comparison to the system of class actions in the United States.  In Europe, the prevailing view has been to consider anything but the “American horror story.”  In developing systems of collective redress, European systems haven’t built on the U.S. system, they’ve rejected it, but they are working toward a completely different system intended to solve some of the same problems.

In closing out this series of posts, I want to reiterate how impressed I was with both the content and organization of the conference.  The organizers say that they are uncertain whether this will continue to be an annual event going forward, but I hope that the demand will convince them otherwise.

Class action settlements can be jeopardized or delayed by objections by nonclass counsel, government officials and public interest groups. Particularly vexing are objections from “professional objectors” who may appear to be motivated only to extract part of the fee or take over as class counsel.

Government official objections are usually aimed at coupon settlements and settlement release language intended to bind state officials. Public interest groups that file objections have varied purposes and political agendas. Coupon settlements and cy pres provisions are natural targets.

There are several key preventative measures and tactics that both sides to a class action settlement can take to ward off and protect proposed settlements from nonclass counsel objectors as well as government and public interest objections.

Listen as our authoritative panel of class action attorneys discusses trends in settlement objections and best practices that both plaintiff and defense counsel can take to protect proposed settlements.

Who Has Jurisdiction in a Global Market?

This presentation was chaired by Professor Deborah Hensler, Stanford Law School/Tilburg University and co-founder of the annual conference on the globalization of class actions and the Stanford Global Class Actions Exchange.  The panelists were Mrs. Femke van ‘t Groenewout, Senior Advisor, Responsible Investment PGGM Investments, Mr. Daan Lunsingh Scheurleer, Mass Litigation Partner at NautaDutilh, and Professor Peter Cashman, University of Sydney Law School.

Professor Manual Gomez, Florida International University College of Law, presented the case study, which focused on the Lago Agrio (“sour lake”) litigation in Ecuador against oil company Texaco.  The toxic tort litigation arose out of allegations that Texaco’s dumping activities from the mid 1960s to the early 1990s caused severe degradation of a lake in the Amazon rain forest.  Ten separate proceedings were filed in Ecuador against the two companies.  A separate case was filed in the United States, but the United States District Court for the Southern District of New York, but that court dismissed the case on forum non conveniens grounds in 2002, a decision that was upheld by the Second Circuit Court of Appeals.  A court in Ecuador ultimately rendered an $18 billion judgment in favor of the plaintiffs.  This has led to additional litigation in the United States about whether the judgment was procured by fraud, whether the U.S. courts have the power to enjoin its enforcement globally, and whether agreements made by Texaco, before it was acquired by Chevron in 2001, bind the current corporate parent.  Most recently, the Second Circuit Court of Appeals vacated a lower court’s preliminary injunction against the enforcement of the judgment.  (For a recent update on the status of the Lago Agrio litigation in the United States, see this September 20, 2011 American Lawyer article by Michael Goldhaber).

The first panelist to comment was Femke van ‘t Groenewout, who provided an institutional investor’s perspective on the issue of global forum selection.  She started by making clear that institutional investors rarely look to litigation as a means to protect investments because it usually is not cost-effective.  Other strategies, such as regulatory engagement and excluding bad actors from the investor’s portfolio, are much more common.  In the few instances where litigation is necessary, institutional investors will look to joining existing class actions and will file opt out actions if necessary.  When asked during the Q&A portion of the presentation what factors dictate whether to take an active role in pursuing litigation, she pointed to multiple factors, including the amount of loss, the degree of misconduct, and the time an effort required to pursue reimbursement. 

To date, nearly all of the litigation that van ‘t Groenewout has been involved in has been brought in the United States.  However, she pointed to what she considers a negative trend in the U.S. courts to exclude foreign investors from the forum, a trend culminating in the Supreme Court’s decision in Morrison v. National Australia Bank, which barred so-called foreign-cubed securities class actions.  This, she observed, may lead other jurisdictions to open their courthouse doors to foreign investors.  As an example, she pointed to the Royal Dutch Shell settlement in the Netherlands.  In light of the decreased legal protection in the U.S. for foreign investors, she raised the question whether investors will consider whether they can continue to invest in the United States.  In addition to lobbying Congress, she discussed the alternative of pursuing litigation in other parts of the world.  However, there are two problems with this approach 1) there are signficant differences in the substantive securities law in other parts of the world, which makes litigation less efficient and therefore less appealing; and 2) institutional investors are unlikely to want to pay for counsel up front, as opposed to simply paying a percentage of recovery as is customary in the United States.  Van ‘t Groenewout summed up by stating that institutional investors have an obligation to protect their own investors in the case of severe fraud, and they cannot always count on regulators to remedy acts of investor fraud.  Therefore, in her view, institutional investors need more mechanisms for collective redress outside the United States.

Daan Lunsingh Scheurleer opened his remarks by challenging the notion that the Morrison case leaves foreign investors unprotected in the U.S. Courts, pointing out that foreign investors can still seek relief in the U.S. for securities purchased on U.S. exchanges, among other situations.  He then focused on barriers to the development of procedures for transnational litigation in Europe.  There is a prevailing reluctance to create procedures that would impose uncertainty about where a defendant may be sued.  For example, a general rule within European court systems is that a defendant should only be sued in the jurisdiction where it is situated.  There are some exclusions to this general rule, including where there are multiple defendants.  If so, there is a choice.  All of them may be sued in the country where one of them is situated provided that there is enough connectivity between the rest of the defendants and the forum.  In the case of tort law, a defendant may be sued where the tortious act occurred or where the damage is felt.  In a securities case, this means that you can only sue on behalf of investors that reside in a particular jurisdiction.  The challenge for Europeans, Lunsingh Scheurleer concluded, is to convince their lawmakers that they need a remedy in their home jurisdiction, but prevailing cultural norms will make it difficult to implement a system that allows all plaintiffs from multiple European jurisdictions to pursue relief in a single forum.

In his remarks, Professor Cashman pointed out some additional barriers to the development of transnational litigation procedures within any given country, including: 1) the problem of exercising personal jurisdiction over class members in other countries (he noted that this issue is still murky in both the United States and Canada); 2) uncertainty about whether the courts of another jurisdiction give preclusive effect to the judgment (as an example, he pointed to the Canadian courts, where even the judgment of a court in one Province is not enforceable in the courts of another Province); 3) forum non conveniens issues, such as those highlighted by the case study; and 4) other issues of comity, such as what one court does while the same issue is pending in a court within another jurisdiction.

Professor Hensler observed that there is a tension between finding a single forum versus taking into account the fact that there are differences in the substantive laws from one jurisdiction to another.  Cashman has a somewhat modest proposal to solve this quandary: create an international MDL process for the adjudication of transnational mass claims.  He suggested several existing mechanisms that could be used to establish an MDL process, including conventions, treaties, or simply a memorandum of understanding between courts.  He also pointed to protocols that are already being developed by the courts of the United States and Canada to assist with the cooperative management of cross-border litigation. 

When asked what he thought about the possibility of an international MDL process as a solution to the problem of transnational disputes, Lunsingh Scheurleer responded that it was hard to envision a framework that would apply to all sorts of claims in all situations.  He thought it might be possible to come up with different procedures for different claims that bore a “family resemblance” to one another, but that it would be hard to find a “one-size fits all” approach.  It might, however, be possible to come up with a set of simple rules that could help guide courts in some situations.  For example, a rule requiring that tort claims be moved to the corporate law umbrella might provide more predictability because it could permit a defendant to be sued in its home jurisdiction by all alleged victims, regardless of their country of residence.

Van ‘t Groenewout said that she favored the idea of an MDL process in principle, but noted that there are some cases where it is clearly more appropriate to litigate in a single jurisdiction. 

Hensler noted that one problem with the MDL concept is that discovery procedures differ so widely from jurisdiction to jurisdiction.

The panelists were asked whether international arbitration might be a solution.  Van ‘t Groenewout pointed out that fraud claims aren’t contract claims, so class actions often better fit than arbitration.  Lunsingh Scheurleer pointed out another practical problem to the idea, at least with respect to consumer claims: arbitration agreements with consumers are generally not enforceable in Europe.

There are a few interesting side notes in this presentation.  The first is that the Lago Agrio litigation has many interesting facets that overlap with all of the earlier presentations at the conference.  As Professor Gomez pointed out in presenting the case study, the litigation in Ecuador was the subject of mass public relations campaigns, a topic discussed in Session 1.  There were also significant case management concerns raised in the litigation both in Ecuador and the United States, a topic discussed in Session 3.  Finally, as discussed by Alison Frankel in this December 12, 2011 article, the litigation has been supported through investments from private litigation funders, a topic discussed in Session 2. 

Finally, someone (I believe it was Professor Tzankova) noted during this presentation that the conference had been the subject of a story that day in the local Amsterdam media in which the assertion was made that the conference was  contributing to a “claims” consciousness in the Netherlands.  I assumed that this was another way of saying that there was a fear that hosting a conference on the globalization of class actions was going to turn the Dutch sue-happy.  We shall see…

Giving Away Money: Calculating Damages & Allocating Damages

Professor Francis McGovern, Duke University Law School chaired this panel of authorities on the management of compensation funds.  A pioneer in the development of mass compensation programs, Professor McGovern has assisted with the administration of similar mass tort settlements in the United States, as well as reparations involving international disputes, such as the United Nations Compensation Commission, through which he is currently assisting in developing a framework for handling approximately 2.6 million reparations claims against Iraq.

Professor Jasminka Kalajdzic, University of Windsor, Canada, presented the case study and offered her insights into practical aspects of the case study.   The case study focused on a $1.9 billion fund for victims of abuse within the notorious Canadian Indian Residential Schools (IRS) program, in which aboriginal children were forced to attend Christian schools in an effort to force assimilation into white culture.  The purposes of the program had been described as “killing the Indian in the child” and turning native populations into English-speaking farmers and Christians.  The children were forced to attend the schools were subjected to harsh corporal punishment, psychological, physical, and sexual abuse.  By the early 2000s more than 50,000 individual claims and a number of class actions had been filed by victims of the IRS programs.  In 2005, following an alternative dispute resolution process, the Canadian government set up a $1.9 billion fund to compensate victims.  Compensation schedules established monetary award amounts based on a variety of factors, such as the amount of time spent in the schools, and the number of specific instances and types of abuse that a claimant had been subjected to.

Each of the panelists had been responsible for administering compensation funds, but the funds themselves had a variety of sources and purposes.

Dr. Norbert Wühler, Director of Reparations Programmes, International Organization for Migration, directs international claims facilities that provide reparations or other compensation arising out of international conflicts.  They include the Iranian Claims Tribunal, which provides compensation to U.S. citizens and companies who were harmed or displaced from Iran following the revolution of the late 1970s, and a program to compensate victims of Iraq’s invasion of Kuwait in the early 1990s.

Mr. Pieter van Regteren Altena, Partner, Van Doorne NV, administered the DES fund in the Netherlands, a fund established as a result of a mass tort settlement of claims against the pharmaceutical companies who manufactured DES, a synthetic hormone given to pregnant women prior to the late 1970s.  A collective settlement of DES claims was approved in 2006, resulting in the establishment of a 38 million Euro fund for the benefit of people who suffered adverse consequences from the use of DES, such as infertility, cancer, and birth defects.

The final panelist, and also the Keynote Speaker at the dinner held later that evening, was Kenneth Feinberg, who has been charged with administering some of the most high-profile compensation funds in history.  They include the September 11 Victim Compensation Fund established by Congress in 2001, the Gulf Coast Claims Facility established by BP following the 2010 Gulf of Mexico oil spill, and a settlement fund arising out of claims by victims of the use of the compound Agent Orange during the Vietnam war.

Professor McGovern opened the discussion with the observation that what all of the panelists had attempted to do in administering monetary funds was “rough justice.”  He then led a discussion on the similarities and differences between different compensation programs and the various issues and themes that can arise in the process of administering compensation funds.

Several of the obvious ways that compensation programs can differ are the source of the assets to be distributed and the sources of authority for the distribution and management of the compensation fund.  In a mass tort case, such as the DES case in the Netherlands or the Agent Orange case in the United States, the source of funding is a corporate defendant, but the source of authority for the settlement is a court.  In many international disputes, the source of authority can be an international tribunal, the United Nations, or a treaty among nations, and the source of funding can differ significantly from case to case.  For example, in the Iranian Claims Tribunal, the source of funding was frozen Iranian assets from outside Iran.  In the case of the fund established for victims of the Iraqi invasion of Kuwait, the funds came out of a percentage of oil sales that were permitted as an exception to a trade embargo.  Other funds have had sources of authority and funding that are unlikely to be repeated again in the future, including the 9/11 fund, which was established and funded by Congress only weeks after the terrorist attacks occurred, and the Gulf Coast Claims Facility, which was established and funded voluntarily by BP following what was essentially a handshake agreement with President Obama.

The structure of a compensation program is dependent on a number of factors.  Feinberg and Wühler both made the point that the volume of claims has a large impact on the structure of the compensation scheme.  In the Iranian Claims Tribunal, there were only 2700 claims, so individual claims could be handled more like a commercial arbitration, whereas with the reparations from the Iraqi invasion of Kuwait, there were many more claims, so the structure had to have a very different composition.  In the case of the 9/11 Victims’ Compensation Fund, the task of determining individual recoveries was handled mainly by accountants, whereas in the case of BP, distribution of benefits also required the work of claims adjusters.

Organizational systems for compensation funds are also influenced by other factors.  The need to prove causation is a factor.  For example, in the DES case, one of the main issues in determining who should receive compensation was the causal link between the drug and adverse health consequences suffered by the individual.  There, van Regteren Altena explained, the fund administrators fell back to the law of evidence, and an individual assessment procedure was implemented.  By contrast, Feinberg explained that in the Gulf Coast Claims fund, the level of evidence needed to prove an adverse impact resulting from the oil spill differed depending on how far removed the claimant was located geographically from the site of the spill.

The issue of causation highlights a common difficulty in administering settlement programs.  That is, the problem of efficiently distributing the funds while maintaining a sense of fairness and proportionality among individual claimants.  As Feinberg pointed out, although the goal of the program may be “rough justice,” there is a big tension between rough justice and individual compensation in any settlement program.  Success in a compensation program requires the administrator to walk a fine line between the efficient and speedy distribution of limited resources and paying enough attention to individual claims so that the claimants as a whole perceive the settlement as fair.  To achieve this goal, allowing claimants an opportunity to be heard makes an enormous difference.  Many of the structures described by the panelists had multiple levels of individual assessment.  For example, in the IRS settlement, claimants were paid according to a schedule but also had the opportunity to request an individual hearing.  Many mass tort settlements, such as the DES settlement, allow individual members to opt out and pursue their own claims individually.  Where individual hearings are impractical due to the number of claims, providing claimants with different options can help resolve the tension.

As a final thought, I would add a personal note that although many of the programs discussed during the presentation involved unique situations that most of us as practitioners are never likely to encounter, the themes and concepts discussed by the panelists are likely to be applicable in fashioning a wide variety of class action and mass tort settlements.  I have been involved with several not-so-high profile class action settlements that involve many of the issues and tensions discussed during the program.  So, as a practitioner, a key question from the Q&A portion of the program that piqued my interested was whether there are any resources or guides available to assist with the development or implementation of compensation funds.  Several of the panelists pointed to a comprehensive guide published by the Center for Public Resources, the Master Guide to Mass Claims Resolution Facilities.

Session 3: Managing the Mass: Judicial Case Management

As the title suggests, this presentation focused on strategies for judges in managing class and mass actions in different jurisdictions.  Professor Axel Halfmeier, Frankfurt School of Finance and Management presented the case study.  Professor Ianika Tzankova moderated the panel, which consisted of three highly esteemed judges from three very different jurisdictions: The Honorable Lee Rosenthal, U.S. District Court, S.D. Texas, Sir David Steel, High Court of Justice, England & Wales (ret.), The Honorable Ivan Verougstraete, Former President of the Belgian Court of Cassation and Visiting Professor of Law Georgetown University.

Professor Halfmeier’s case study focused on ongoing mass litigation in Germany involving Deutsche Telekom arising out of alleged acts of securities fraud in the late 1990s and in 2000.    The thousands of individual shareholder claims brought by investors in Germany led to the enactment of a new law, roughly translated as the Capital Investors Model Proceedings Act, that provides for the creation of a test case that will be binding on all other similar claims.  Proceedings even under the new law have been slow, due in large part to bureaucratic court procedures in Germany, such as the requirement that the documents in each of the thousands of individual cases have to be hand marked by court clerks.  The last hearing in Telekom case was held in 2010, and the next hearing is not scheduled to occur until 2012. Meanwhile, securities class action litigation involving the same alleged acts had been brought on behalf of U.S. investors in the early 2000s and was resolved in a global settlement in 2005.

Sir David Steel did not pull any punches with his blunt criticism of the German system, commenting in summary that the “German courts need to join the modern world.”  He pointed out that the prospectus fraud claims in the Telekom case are not very complicated and that it should be possible for the courts to deal with them in a much shorter period of time.  He pointed to a number of simple procedural reforms that might have sped up the Telekom litigation, including reform of cumbersome clerical requirements, the imposition of a time bar for claims (he pointed out that the German proceedings had not even been commenced until 2005, roughly 5 years after the event), and rules relating to case assignments (by the time the case was ready for a ruling, the initial judge assigned to the case had reached retirement age), and discretion to impose reasonable pleading deadlines (the plaintiffs were allowed to introduce new claims as recently as 2010). He concluded by likening the Telekom case to the fictitious decades-long Jarndyce v. Jarndyce will contest in the Dickens novel Bleak House, which had spurred judicial reforms in the UK in the Nineteenth Century.  It should be noted (although not discussed specifically during his remarks) that Justice Steel himself has a proven track record of efficient management of mass litigation in a jurisdiction that does not permit class actions.  As an example, he presided over the Buncefield case, a mass tort action arising out of gas pipeline explosions in December 2005.  The case reached a judgment in March 2009, only three years and three months after the explosions giving rise to the claims. 

Judge Verougstraete offered a counterpoint to Justice Steel’s criticisms by pointing out the significant cultural differences between the common law system in the UK and the civil law jurisdictions in Continental Europe.  He went on to point out various constitutional, cultural, and practical barriers to significant judicial case management reforms in European civil law jurisdictions, including: 1) the individual’s right to his day in court is of paramount importance in European jurisdictions and cannot be discarded in the interest of judicial efficiency; 2) discovery reforms are not a solution in Europe because most European jurisdictions do not allow parties to engage in discovery anyway (he noted, however, that judges do have some level of control over the speed with which court-appointed experts and masters complete their investigations and findings); 3) while settlement and alternative dispute resolution procedures are theoretically possible, they haven’t worked yet in speeding the resolution of many mass actions.  Judge Verougstraete also pointed to two possible alternatives to collective litigation in civil law countries: 1) use of the criminal law complaint, which places the financial cost of redress on the State but also cedes control over the litigation; and 2) bundled litigation, although even in bundled litigation, the requirement to provide individual notice to litigants often minimizes the judicial efficiencies created by joining claims together, as was seen in the Telekom matter.  In closing, although he agreed with Justice Steel that civil law jurisdictions in Europe could benefit from legislative reforms streamlining judicial procedure in mass litigation, he warned that there was still the problem of legal tradition and culture, which cannot be changed overnight.

United States District Court Judge Lee Rosenthal focused her remarks on what jurisdictions with developing complex litigation procedures can learn from the experience of the United States.  While the United States has a well-developed body of rules governing case management of complex litigation, U.S. Courts still have problems in managing complex litigation, and we “haven’t gotten there” in terms of perfecting efficient management of complex litigation.   Judge Rosenthal agreed that there is a divide between civil and common law jurisdictions but argued that there are a lot of things that a judge can do in either type of jurisdiction manage cases.  She provided examples of key areas where courts and policymakers need to focus in evaluating effective case management techniques: 1) early and effective court supervision; 2) cooperation by counsel; 3) development of a case management plan cooperatively between the court and counsel; 4) communication between counsel, the court, and both representative and absent parties; 5) effective management of electronic discovery issues (notably, Judge Rosenthal is one of the foremost thought leaders on e-discovery issues in the United States); 6) management of attorney’s fees awards (this is a topic addressed by Judge Vaughn Miller in Session 2); 7) effective trial planning; 8) if there is a settlement, an effective plan for assessing and administering the settlement.  She went on to point out that although many judges are much more comfortable in a passive role (decision maker) rather than active role (manager), effective case management requires a judge to carry out both of these roles at appropriate times.  In other words, a judge must be both a neutral decider and an effective case manager.  An effective case manager also has to be both flexible and pragmatic.  Despite having the tools for effective case management, Judge Rosenthal admitted that many judges in the United States are still viewed as being ineffective case managers.  In summarizing the experience of the U.S. judiciary, Judge Rosenthal opined that the United States has the tools in place for effective case management, but U.S. courts are still far from institutionalizing effective case management techniques.

As one member of the audience observed during the question and answer portion of the presentation, the three panelists represent the cream of the crop in their respective judicial systems, both as case managers and as jurists.  Judges from around the world have a lot to learn from their pearls of wisdom.