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What Happened To Class

You could hear the rumbling and thefaint hiss of steam even before Sept. 30, 2004?? 1/2 the day Merck announced it was pulling its painkiller Vioxx off the market for potential side effects. Now the sound of meshing gears and stoking furnaces is inescapable: The litigation locomotive is fueling up, taking

on passengers and preparing to set those steel rails humming.

The Vioxx Express is pretty sure to have not a single empty seat. Estimates are that as many as 50,000 of the 20 million former Vioxx users may have suffered serious cardiovascular problems.

What's much less certain is where in the U.S. court system the train is headed. Ten years ago plaintiffs' lawyers would have sought class certification for Vioxx clients almost reflexively, on the premise that corporations would settle a class action suit relatively quickly.

But class actions are no longer the straight-ahead threat they once were--at least not in the personal injury and product-liability fields. Many state courts are now more reluctant than before to certify classes in personal injury cases. Faced with a rising tide of class-based lawsuits--some of them with merit, but others obvious ploys for settlement--state judges are setting the bar higher for class membership and ruling more narrowly about the type of injuries class action can relieve. And some state legislatures have enacted tort reform within their borders to discourage the kind of big jury awards that grab headlines and move their state higher on the forum-shopping lists of plaintiffs' attorneys.

When a door closes, a window opens. With class actions getting tougher in many jurisdictions, some plaintiffs' lawyers instead are bundling a large number of individual lawsuits, including many from out-of-state plaintiffs, and aiming them at a single defendant. Forget class action, this school of thought holds; instead think mass action. It presents fewer preliminary obstacles and a slew of tactical advantages for plaintiffs' attorneys during the litigation process, and offers the best hope in personal injury cases of a winning outcome--or a winning settlement.

"Courts in many states have been reluctant to let personal injury cases go forward wearing a class action hat," says Joseph Cohen, a partner at Beirne, Maynard & Parsons. "So plaintiffs' attorneys will bundle groups of plaintiffs in the mass tort arena--in pharmaceuticals, in the ongoing battles involving asbestos and the tort of the day silicosis, in welding rods and in many types of consumer product liability--and try to get corporate America's attention."

A Class Action End Run

The rise of mass action is a textbook demonstration of the law of unintended consequences. For instance, the West Virginia judiciary found itself buried under a mudslide of asbestos-related lawsuits in 1996. To dig itself out, the state Supreme Court upheld the consolidation of about 1,000 cases filed against 17 defendants that operated facilities in West Virginia. Bad idea: Thousands more cases came pouring in, and the mudslide became an avalanche.

In response, the court established a mass litigation panel in 1999 "to develop and implement case-management methodologies for mass litigation." But it offered no criteria for referral and no guidance on how the panel should "fairly and expeditiously" dispose of the cases referred to the court.

Ad hoc judicial solutions flooded into that vacuum. In 2002, the court aggregated the asbestos-exposure claims of 8,000 plaintiffs against more than 250 defendants. The courts deemed those cases were aggregated for all purposes, through trial to judgment. The plaintiffs were widely dispersed; about 5,000 of them didn't live or work in the state. And the 250 defendants were denied such pretrial rights as discovery on any of the 8,000 plaintiffs.

Problems like this aren't exclusive to West Virginia. Federal rules have long allowed for joinder of actions if the alleged injury arises out of the same transaction and for consolidation where cases share a common question of law or fact. Most states have adopted rules similar to the federal ones. But those state rules are subject to judicial interpretation, and in counties that have a reputation for being plaintiff-friendly, they can sometimes stretch to cover actions involving thousands of plaintiffs and multiple defendants, as they were in West Virginia.

Roberta Hegland, a partner at Bracewell & Patterson, says she often sees such bundles of tort cases in Texas. She believes one reason for the prevalence of such mass actions is that both the Texas courts and the legislature have taken a dim view of class actions involving personal injury.

"It used to be pretty fast and loose to file a class action in south Texas," she says. "Now courts are making local judges hold plaintiffs' feet to the fire to demonstrate that something is an appropriate matter for a class suit. That's why I'm seeing a lot of big, 500-plaintiff, multi-party suits rather than class actions."

To defense counsel, the approach constitutes an end run by plaintiffs' attorneys around the class certification hurdle. Specifically, joining cases that assert personal injury from a single product into a mass action blurs the issue of causation.

Standards of causation are generally looser in consolidated cases than in those trying for class action status. The courts turn down many bids for class status because plaintiffs' attorneys cannot draw a clear enough connection between use of a product and a resulting injury.

"[State] courts are all over the lot on granting class action certification for cases involving toxic torts and personal injury, and commonality of cause is one big obstacle," says Arvin Maskin, a partner at Weil, Gotschal & Manges in New York. He points to a recently attempted class action in Florida by a plaintiff who claimed that more than 300 homes in a development were susceptible to toxic mold. The court denied certification on the grounds that differing home designs and situations prevented the plaintiffs from representing a clear common cause for the mold.

"So much in the certification phase turns on expert testimony to determine if there's enough commonality among the plaintiffs," Maskin says. He is currently involved in defending a manufacturer of a "super-fiber" material used in bulletproof vests. He has fought class action status in some of those cases by introducing expert testimony to show a wide variation in how police officers wear their vests, take care of them and under what conditions they use them--all factors that can affect the product's efficacy.

Showing enough common causation to justify a class action can be even more difficult when the product in question is a pharmaceutical. For one thing, it's likely that many people have taken a given drug and not been harmed by it or have derived benefits from it. For another, it's very difficult to draw a causal link between a drug and an adverse effect on very sick users, whose health may be threatened by other health issues. This problem will affect many Vioxx plaintiffs: Many users who suffered heart attacks were in poor enough health that they might have suffered the same attacks without ever using the drug.

In the face of these difficulties, plaintiffs' lawyers may decide to forego class actions and simply aim for the looser commonality standards applied to consolidated individual lawsuits. The barriers are lower, and the amount of leverage to compel a settlement can be almost as great.

"The underlying point from the plaintiff's perspective is, how can they exert the most pressure on the corporate defendant," says Daniel Blouin, partner and national chair of the complex litigation group for Seyfarth Shaw. "Maybe they've been snake-bitten in the past with regard to getting classes certified, or maybe they know a particular corporate defendant is going to fight class cert. At any rate, the plaintiffs' lawyer re-evaluates and decides that filing multiple individual actions will give him or her the most leverage against the corporation."

Of course, there's also the matter of compensation. In bundled actions, lawyers can sign retainer agreements with the individual plaintiffs and get a contingency fee. In class actions plaintiffs' lawyers are forced to present a fee request to the court and have that approved as reasonable. The difference in payout can be considerable.

"Personal injury cases have a much higher dollar value than your typical consumer case, where each plaintiff may have only a buck or two in the pot," says Michael Hartley, counsel with the firm of Weston Benshoof Rochefort Rubalcava MacCuish. "And those contingency fees are usually about one third of the actual recovery."

The Numbers Game

Whatever reasons plaintiffs' attorneys have for choosing mass action over class action, the effect on defense lawyers is that they must prepare for multiple cases in a short span of time. In fact, many defense attorneys claim that's the main reason plaintiffs opt for such strategies.

Defense lawyers sometimes call the tactic "trial by ambush," says Martin Beirne, a partner at Beirne, Maynard & Parsons. "The reality is that when they bundle these cases, you can end up with a hundred or more plaintiffs. The judge can say, 'We're going to try the case of Smith et al. v. XYZ Corp. in 30 days. And we're going to try them in groups of two, or six, or eight.' They don't tell you who's in that first group. That puts tremendous pressure on the defense to get fully prepared for all 100 cases."

These cases also may come to trial in a fashion that doesn't permit interlocutory appellate review, a procedure most states allow defendants to use in class-action settings. Without the recourse to question the basis of the lawsuit at some point before the end of the case, defendants in these mass action suits usually are obliged to see the entire litigation through to term before getting a chance to have an appellate court review the "threshold" decision that permitted the action.

Another problem for defendants is that these mass actions sometimes combine cases that involve serious personal injury with others where the injury is merely a fear of future harm--from a drug, for example, or an automotive product. Anecdotal evidence suggests that in many of these mass actions, plaintiffs' lawyers are unwilling to come to a settlement with defendants on the most serious injury cases unless defendants also settle the cases with lesser merit--cases that they would likely lose if brought individually.

Many defense lawyers argue that combining plaintiffs who have different injuries and different levels of exposure to a product also tends to confuse and perhaps prejudice a jury.

"[For plaintiffs' lawyers,] 'Asbestos 101' is to bundle the vast majority of claims from nonimpaired folks with the relatively few very serious mesothelioma cases," says Maskin. "Mesothelioma is only caused by asbestos. So you've got relatively few 'bell-ringer' cases versus the majority of nonimpaired folks with barely any symptoms you could diagnose." Juries may tend to assume that the worst case is unfairly representative of all the cases, he adds.

That allows plaintiffs' lawyers to coerce defendants into settlement.

"If it's all a settlement game, which is how some plaintiffs' lawyers see it, then they're taking their one, or five, good cases and using them as leverage to settle 1,000 other cases," says Amy Schulman, a partner at Piper Rudnick in New York. "In those circumstances, a plaintiffs' lawyer wouldn't be advantaged by bringing 1,005 actions. He'd be better off presenting the defense with the strongest individual cases."

At least one plaintiffs' lawyer disputes the notion his colleagues bundle meritorious and nonmeritorious cases together to either gain an advantage over the defense or to increase the pressure to settle.

"I don't think [defense lawyers] are statistically correct that that happens a lot," says Mitchell Breit, special counsel at Milberg Weiss Bershad & Schulman in New York. "I don't buy that argument. The plaintiffs' bar is mindful of the amount of 'tort reform' bad press out there now. The lawyers I know are being very careful about the kinds of cases they pick."

As for use of the mass action tactic, Breit says it's a function of widespread judicial distaste for class actions involving personal injury.

"It is very, very difficult to get a personal-injury class certified, with courts around the country denying class certification," he says. "I've often heard the complaint that we're 'ganging up' on the defendants, but I think that's a taint that they like to apply to the plaintiff end of the industry."

One indisputable fact, however, is that plantiffs' lawyers are filing these joined actions in rural, out-of-the-way venues: Mississippi, Alabama, Louisiana, West Virginia and parts of Texas.

"They often are in areas where you have a blue-collar population, and frequently some law firms that cut their teeth doing asbestos claims or railroad injury claims under the Federal Employers Liability Act," says Matt Neumeier, a partner with Jenner & Block in Chicago. "They've made a fair amount of money, and then realized they can get into this bundled side of things and really get into some much bigger numbers." Put some of those firms together with a judge who looks favorably on the plaintiffs' bar--particularly an elected judge, Neumeier adds--and you've got the beginnings of a mass-tort "hellhole."

Mississippi, one of two states that don't permit class actions (Virginia is the other), developed a reputation as a plaintiff-bundling paradise in the late 1990s.

According to a study by the conservative Manhattan Institute for Policy Research, the number of mass actions in Jefferson County, Miss., grew from 17 in 1999 to 73 in 2000. Of 108 mass actions filed in the country court from 1999 through 2001, only 539 of the 3,011 plaintiffs identified with addresses were from Jefferson County.

Keep It Local

For plaintiffs' attorneys, one key strategy is ensuring mass actions remain in state court. The thinking among the plaintiffs' bar is that, as with class actions, mass actions will receive a more favorable hearing in state courts, proceedings will tend to move more swiftly and state judges will be less inclined to favor corporate defendants than their federal counterparts.

One might think that actions involving widely dispersed plaintiffs would be good candidates for removal to federal courts. After all, the U.S. Constitution specifically permits defendants to remove state court actions involving "citizens of different states" to federal court. But Congress has limited that diversity jurisdiction to cases where the plaintiffs assert claims that exceed $75,000, and where the parties are completely diverse--that is, no plaintiffs are from the same home state in which any defendant is considered a citizen.

For that reason, mass actions never claim more than the triggering figure of $75,000 per individual plaintiff. In addition, the lawyers are usually careful to sprinkle a handful of local citizens into the plaintiff mix.

And very often, they include a local distributor of a product or service among the list of defendants in their actions: usually someone small, such as a local supermarket in tobacco cases, a car dealership for auto-product liability matters, or a hometown bank or insurance agency in the case of financial services actions. Obviously there's no hope of winning the awards from a local convenience store that one expects from a tobacco giant. In fact, plaintiffs' lawyers often drop these "throwaway" defendants once the opportunity for removing the action to federal court has passed. Some lawyers have gone even further and offered to strike these defendants immediately in exchange for a defendant's stipulation to forego actions to remove the case to federal court.

Often the presence of a local defendant is enough to keep a judge from sending the case to the federal level. As long as there's an outside chance that plaintiffs can prove that the corner supermarket knew of an alleged defect in the cigarettes they were selling, the case should remain in state jurisdiction.

A Shift In The Wind

Whether this increase in bundled lawsuits is a full-fledged trend or a brief blip on the litigation radar is difficult to say. Some jurisdictions that once favored the tactic are beginning to tighten the tap on mass action suits. Last year the Mississippi Supreme Court rejected joinder in two mass actions: one because counsel for 137 plaintiffs in an asbestos case didn't provide core data about their workplace exposure; and another because 56 plaintiffs who alleged injury from the reflux medication Propulsid weren't connected by a single transaction. Even in Jefferson County, Miss., the only civil judge announced from the bench in July 2001 that he would take a much stricter view of joinder to cut back on the number of out-of-state plaintiffs in such suits.

"I think judges are starting to express their frustration at seeing their venue named as the venue of choice for plaintiffs' lawyers," Maskin says. For a while, courts were proud of these grand experiments in case management, he says, and of their ability to clear dockets that would have taken much more time to handle separately. But Maskin sees a looming backlash against bizarre legal consolidations.

"More creative use of class action, working off the various statutes that lessen the requirement for strict causation, reliance and such--that's the trend, not these attempts to just cram cases in all at once," he says. "Coerced consolidation is ultimately not the way to go."

Staff Writer

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