Class Action and Mass Tort Litigation in a Global Context Professor Linda S. Mullenix

1. Class Action and Mass Tort Litigation in a Global ContextProfessor Linda S. Mullenix International Mass Tort Litigation, Part 2

2. International Mass Tort Litigation Case Study: In re Factor VIII or IX Concentrate Blood Products Litigation

3. International Mass Tort Litigation • Questions: • The Austrian Ski Fire litigation involved a mass accident case. The federal courts rejected class certification: • Should American courts certify class actions involving international or transnational personal injury mass torts? • Are these cases or claims different than human rights class actions? • How? Why?

4. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation, 2005 WL 497782 (N.D. Ill. March 1, 2005): • Factual background: • “Second generation” HIV tainted blood products litigation • First generation HIV tainted blood products litigation 1994-95, involving American clamants • Second generation claimants: • Residents of foreign countries (Europe, South America) • Contracted HIV or Hepatitis C virus from use of Defendants’ factor concentrates in Plaintiffs’ home countries

5. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • Factual background of first generation litigation: • Trial court certified negligence class (Wadleigh v. Rhone-Poulenc Rorer, Inc., 157 F.R.D. 410 (N.D. Ill. 1994) • Class certification overturned in In reRhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir. 1995) • Ultimately claims settled in 1998

6. International Mass Tort Litigation • In re Rhone Poulenc Rorer (7th Cir. 1995): • Appellate reasons for reversing class certification in Rhone Poulenc-Rorer (3 reasons): • Fear of blackmail settlements • Applicable choice-of-law problems (differences in definition of ordinary negligence standards among 50 states) • Seventh Amendment re-examination problem • Class trial on liability • Remand to state courts for individual damage trials

7. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation (second generation litigation) • Plaintiffs seek certification of class pursuant to Rule 23(c)(4)(a) • Concept of “limited issues” trial • Attempt to craft narrower class certification in light of 7th Cir. Rhone Poulenc decision • Defendants challenge legitimacy of certifying Rule 23(c)(4)(a) class • Standard: would resolution of the limited issues materially advance the litigation?

8. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • Issue for the court: • Can the court, consistent with the holdings in Rhone Poulenc, certify a limited issues class in the second generation tainted blood products litigation involving foreign plaintiffs? • Court requests Plaintiffs to draft list of ten questions, strictly factual, that “would not involve any legal component and would, if decided by a jury, materially advance the litigation.” • Question: Are the Plaintiffs successful?

9. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • Defendants: • Contest every class certification requirement except numerosity • Contest certification under Rule 23(c)(4)(a) • Contest Plaintiffs’ statements of “factual” questions as requested by judge

10. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • The court (Judge Grady): • Reviews submissions of ten jury questions • Jury questions found unsatisfactory, not useful for certification as Rule 23(c)(4)(a) class: • Fact questions require reference to some legal standard in some jurisdiction • Problems of “legal overlay” embedded in fact questions • Definitions of “reasonable evidence,” “adequate,” “association,” “agreement” all vary in meaning by jurisdiction • Vague references (“statements”/”important information”)

11. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • The court (Judge Grady): • Concedes possibility of drafting a “knowledge” question that would create useful issues for class jury • Might result in special verdict with potential classwide significance • Such issues might be given collateral estoppel effect in subsequent cases • However, this potential leads the court (Judge Grady) to reject class certification: • Class certification of a limited issues class would exert undue pressure on the Defendants to settle, in violation of the Seventh Circuit holding in Rhone-Poulenc Rorer

12. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • The court (Judge Grady): On the settlement blackmail tendency of a “limited issue class”: • “ . . . The Court is saying that the Rule 23(c)(4)(A) certification itself would force the settlement even before the class trial were held. The mere prospect of a plaintiffs’ verdict in the Rule 23(c)(4)(A) trial would exert the influence.” • “The final question, then, is whether there could be a Rule 23(c)(4)(A) certification in this case that would not violate the ‘undue pressure’ holding of Rhone Poulenc Rorer. We think the answer is probably no.”

13. International Mass Tort Litigation • In re Factor VIII or IX Concentrate Blood Products Litigation • “The result is that we must deny the certification motion on the ground that, under Rhone Poulenc Rorer, certification would place undue settlement pressure on the defendants.”

14. International Mass Tort Litigation • Questions: • Is Judge Grady’s decision to deny class certification to the international HIV claimants a sound decision under American class action jurisprudence? • Would a limited issue class have helped to materially advance resolution of the litigation? • Would it be possible to craft a series of issues that did not fail for the reasons articulated by Judge Grady? • Are all “limited issues” classes doomed under Judge Grady’s rationale that such classes impose undue settlement blackmail on the Defendant? • Could Judge Grady have reached that conclusion without requiring the Plaintiffs to go through the exercise of drafting ten factual questions for the jury?

15. Academic Commentary on the Possibility for International Class Actions: Some Dissenting Views

16. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Themes: • “Troubling and dangerous phenomenon” emerged on international litigation landscape • Entrepreneurial lawyers permitted to aggregate claims into massive controversies that cannot be tried • Single intimidating characteristic: imposition of enormous and intolerable risks defendants cannot accept • Mere threat of international class actions (especially human rights violations) produces gigantic settlements in U.S.: • Slave labor and Holocaust victims class actions against German and Swiss companies

17. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Themes: • U.S. courts permitting such class actions for activities occurring entirely outside U.S. • Settlements occur before classes are certfied – demonstrates coercive effects of class allegations: • “With few exceptions, the public record conclusively demonstrates that once a controversy is aggregated to the point where the “blackmail” threat arises, settlement is inevitable unless the threat is eliminated by interlocutory appellate review or bankruptcy.”

18. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Themes: • Cases are involuntarily decided outside of the judicial process • Settlement classes bypass procedural safeguards, protections, guarantees of litigation process • Unfairness impacts individual plaintiffs as well as defendants • Potential for collusive settlements • High compensation for counsel • Under-compensation individual plaintiffs

19. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Themes: • Collective actions or American class actions represents “a major intrusion into the internal social policies and cultures of other states” • Represents intrusion into other states’ jurisprudence • “To the extent that such (class action) proposals are considered, they should not focus solely upon enhancing claimants’ access to justice. They must also guarantee that defendants are not oppressively denied their opportunities to be heard.”

20. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Themes: • Other considerations for countries contemplating class action litigation: • Threatens a barrage of forum shopping by litigants and counsel who will seek to create transnational class actions • Questions whether there is a need to create class actions in the first place • Attempts to introduce class actions “should be approached with utmost caution, with full awareness of the cultural limitations on the forum system’s jurisprudence, the serious potential for abuse inherent in the process, and the consequences of enabling extra-territorial class actions within the forum nation’s national courts.”

21. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Question: Are Class Actions Necessary to Motivate Responsible Behavior? • Yes, in U.S.: • Strong tradition of utility of class actions to impact social policy and modify behavior • Concept of “private attorney general” to represent public interests • Example: civil rights litigation

22. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Question: Are Class Actions Necessary to Motivate Responsible Behavior? • No, other countries: • Rely on governmental regulation • Rely on public enforcement proceedings • Pervasive social welfare systems in place • Compensation levels relatively high • Little incentive to use class actions seeking tort damages as tools of social engineering • Most democracies have determined tort litigation not effective or efficient method to achieve social or personal justice

23. Commentary on International Class Actions “There is no empirical evidence that threats of litigation are necessary to coerce responsible behavior and regulatory compliance, nor is there any evidence that current regulations and compensation programs are indequate to protect personal and public interests.”

24. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Other problems: • Incompatibility of contigent fee principles • Entrepreneurship of contingent fee system in U.S. • Fee-shifting in civil law systems discourages litigants and counsel from taking risks • International community distrusts litigation as means for social reform

25. Commentary on International Class Actions • Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution (2001) • Other problems: • Civil law systems generally eschew judicial discretion -- relatively inflexible judiciary • Rely on syllogistic reasoning, determined outcomes • Lack administrative authority to supervise a certified class action effectively • Lack discretion to implement protections to avoid class action abuse • Lack institutional safeguard of stare decisis of like cases • Common law systems do not insist on “right” answer, only “reasonable” approach, equitable flexibility • Rule 23 based in equity and equity principles • Focus on judicial efficiency and economy rationales

26. Commentary on International Class Actions “Once ‘judicial economy’ became the overriding consideration, Rule 23’s lack of specificity exacerbated the problem by permitting trial courts to exercise broad discretion to certify cases merely on the allegation of a mass tort crisis, instead of requiring proof that such a controversy actually existed or that the claims had any demonstrable merit.” “This pattern of abuse not only promoted the creation of artifical controversies, but also motivated the resolution of those controversies on economic grounds, rather than on the merits.”

27. Catherine A. MacKinnon, Collective Harms Under the Alien Tort Statute: A Cautionary Note on Class Actions (2000)

28. Commentary on International Class Actions • Questions: • Richard Faulk argues for a cautionary approach for civil law systems in adopting class actions, which he thinks are an imperfect fit into civil law tradition. • What is Professor MacKinnon’s concern about international human rights class litigation? Does she favor this approach, or not? • Prof. MacKinnon represented the Kadic plaintiffs in the Serbian litigation. Does her position as counsel for these plaintiffs shape her views? In what ways? • What is the jurisprudential philosophy embedded in Prof. MacKinnon’s argument? Where have we seen this argument before?

29. Commentary on International Class Actions • Catherine A. MacKinnon, Collective Harms Under the Alien Tort Statute: A Cautionary Note on Class Actions (2000) • Themes: • Human rights violations are not mass accidents • Concerned about the fit of American class action “limited fund” approach for resolving mass human rights cases • 1960s-70s civil rights class actions presumed in interests of whole class • 1980s-1990s: class actions favored by defendants to resolve group liabilities

30. Commentary on International Class Actions • Catherine A. MacKinnon, Collective Harms Under the Alien Tort Statute: A Cautionary Note on Class Actions (2000) • Themes: • “When the interests of hurt people are not entirely driving the litigation, class actions can become more in the interest of perpetrators, and vehicles for the advancement of others, than engines of vindication and reparations for the survivors.”

31. Commentary on International Class Actions • Catherine A. MacKinnon, Collective Harms Under the Alien Tort Statute: A Cautionary Note on Class Actions (2000) • Themes: • Major issue is ensuring adequate representation • Class members have no real contact with their purported representatives • Survivors far away, speak foreign languages • May number in hundreds of thousands • Structure of limited fund discourages contact

32. Commentary on International Class Actions • “Unsought and unwanted representation in a class raises the possibility that some of the intangible and expressive gains from human rights litigation, especailly for group-based injuries like rape and genocide, may be undermined. Human rights litigation offers people their humanity back. What is stolen from them when they are violated can be partially or potentially returned to them through a process that does not reduce them to ciphers of group membership the way their perpetrators did.

33. Commentary on International Class Actions • “It treats them more than the sum of the injuries done to them. It gives them back a voice in their fate, and the dignity of a place at the table. For this to work, the process must be accountable, personal, and responsible. Being forcibly lumped into a group-based class, thereby deprived of direct or actual representation, being represented in name (or no name) only, survivors of group-based atrocities can experience the process as furthering the deprivation of humanity that human rights law promises to restore.”

34. Fine