Mass Tort Claims Research Articles

The Anatomy of Mass Tort and Post-Settlement Litigant Finance in the U.S.

Litigant Third-Party Funding (LTPF), where financial companies advance money on a non-recourse basis to individual plaintiffs, is a growing and increasingly controversial industry in the U.S. This funding made headlines during the NFL concussion litigation with more than 1,000 players reported to have received such advances and with class counsel raising concerns of “predatory lending” with the Court. Policymakers and scholars echo these concerns as they call for regulation of the industry to protect vulnerable consumers. Any regulations, however, should be based on systematic data rather than good intentions or isolated anecdotes. But to date there has been almost no empirical research on the actual practices of the industry. This Article begins to fill that void. Using a unique data set from one of the largest consumer litigation financing firms in the U.S. (“Funder”), we are the first to explore the anatomy of pre-settlement litigant finance in mass tort cases, such as the NFL class action. We are also the first to examine general post-settlement litigant finance in the U.S., which is the type of funding many NFL players were reported to have obtained. Our comprehensive data set includes approximately 225,593 requests for funding from 2001 throughout 2016. With respect to pre-settlement funding, we find that the Funder makes an annual median gross profit of 55% from Mass Tort claims (compared with 60% from Motor Vehicle claims, our control group). We also find that the Funder includes complicated terms in their contracts that make it extremely difficult for clients to understand the actual interest rate they will be eventually be charged. We believe lawmakers should regulate these contracts, banning any unnecessarily complicated provisions and requiring that the effective annual interest rate and total amount due be straightforwardly disclosed. With respect to post-settlement funding, we find that the effective annual interest rate charged and the profit to the Funder are even greater than for post-settlement fundings – 68% compared to 60% for Motor Vehicle claims. This is striking given that post-settlement fundings present virtually no risk to the Funder. Indeed we find that the rate of default in post-settlement cases is close to zero, which means that this category of advance is “non-recourse” on paper but not on the ground. We therefore recommend that funding in post-settlement cases should be subject to consumer protections similar to those usury laws provide for ordinary loans.

The Law and Economics of Concealing Health and Safety Information

A conspiracy to conceal information is a central allegation in prominent mass tort claims totaling billions of dollars. Analysis of such claims can be informed by evaluating firms' economic incentives to conceal substantive information. We show that these incentives — and thus the potential merit of such allegations — relies on the dynamic nature of the markets for information and innovation, which determine current and future expected public information dissemination and determine the likelihood of successful concealment of information.

Lessons Learned by the Reporter: Is Disaggregation the Answer to the Asbestos Mess?

Described as an “elephantine mass” that “defies customary judicial administration,” asbestos litigation remains the longest-running mass tort in U.S. history. Ultimately, the efforts made to resolve the ever-expanding asbestos litigation failed. In 1997, in Amchem Products, Inc. v. Windsor, the United States Supreme Court struck down the use of a class action settlement to achieve a global resolution of all asbestos claims — those pending at the time and those of future claimants. In the wake of Amchem, dozens of asbestos defendants sought bankruptcy protection while plaintiffs continued to file claims in state and federal courts. Between 1988 and 2010, a United States Government Accountability Office (GAO) analysis of the approximately 100 bankruptcy trusts’ payment data showed that the asbestos trusts had paid about $17.5 billion to 3.3 million claimants. Since then, much has happened but basic problems remain. The patchwork system of plaintiffs claiming in federal and state courts, as well as the separate administrative claiming before bankruptcy trusts, raises complicated issues about how injured persons can be properly compensated while assuring that defendants are not assessed damages that are not warranted, and how to protect the trusts from fraud and preserve trust funds for future meritorious claimants.The American Bar Association Torts and Insurance Section appointed a Task Force to look into issues currently confronting asbestos stakeholders. I was appointed its Reporter. This Article focuses on how the Task Force went about its work and developed a record. It then presents some thoughts on how my service brought together my long-standing academic interest in how mass torts ought to be resolved and the realities of the current asbestos litigation. What I have learned thus far has led me to question my once zealous advocacy of aggregated mass tort claims resolution.When I served as Chairperson of the Dalkon Shield Claimant’s Trust, I wrote articles that focused on how the Trust resolved hundreds of thousands of claims. It is fair to say that I was a fan of aggregate resolution of mass torts. In my view, the use of multidistrict litigation, class actions, other aggregation tools, and even Chapter 11 reorganization provided fair and efficient vehicles for the resolution of mass torts. Indeed, the Dalkon Shield Board of Trustees expressly adopted motivating principles as they began to put meat on the bones of the CRF. First, and foremost, among these principles, was to “[t]reat all claimants fairly and equally, always focusing on the best interests of claimants collectively instead of on the interests of a particular claimant or group of claimants.” Another principle harkened back to the first: “Prefer settlement and prompt payment of claims over arbitration and litigation.” Rereading these principles in light of the compelling testimony of two of the Task Force witnesses challenged my weltanschauung about mass tort dispute resolution. Judge Robreno’s and Judge Davidson’s testimony about disaggregating cases into their core components, “letting lawyers be lawyers,” and getting cases ready for trial instead of obsessing about global or individual settlements is what led to the successful resolution of the cases before them.Moreover, Judge Robreno’s testimony suggests that attempts at aggregated resolution of the “elephantine mass” were all failures, except for the MDL itself, which has largely wrapped up its work. Rather, as Judges Robreno and Davidson testified, the disaggregation of asbestos claims allowed asbestos cases to be prepared for trial (or settlement discussions) more expeditiously. Now, dying plaintiffs can get a shot at a prompt trial date rather than having to wait out a global settlement. Perhaps tending to the needs of particular plaintiffs is the best way to protect the interests of the whole in mass tort litigation after all.

Recent Decisions on the FRCP Rule 26 Amendments Pertaining to Experts in Products Liability Cases

RECENT AMENDMENTS Federal Rule of Civil Procedure 26 have led a proliferation of Motions Strike/Exclude Expert Testimony under Court's responsibility as a gatekeeper of information is be considered by a jury. Keeping apprised of recent rulings on these issues is key effectively using experts in defending mass tort claims. This article explores changes Rule 26 as they pertain experts in products cases, including how courts have handled discovery disputes involving experts following these amendments. I. Amendments Federal Rule of Civil Procedure 26 Pertaining Experts Effective December 1, 2010, Federal Rule of Civil Procedure 26 was amended protect draft expert materials and some attorney-expert communications from discovery. (1) New Rule 26(b)(4) works in conjunction with recently amended Rule 26(a) (2) govern discovery and disclosure from experts, respectively. With respect Rule 26(b)(4), amendments inserted two new sections, (B) and (C): (4) Trial Preparation: Experts. (B) Trial-Preparation Protection for Draft Reports or Disclosures. Rules 26(b)(3)(A) and (B) protect drafts of any report or disclosure required under Rule 26(a)(2), regardless of form in which draft is recorded. (C) Trial-Preparation Protection for Communications Between a Party's Attorney and Expert Witnesses. Rules 26(b)(3)(A) and (B) protect communications between party's attorney and any witness required provide a report under Rule 26(a)(2)(B), regardless of form of communications, except extent communications: (I) relate compensation for expert's study or testimony; (II) identify or data party's attorney provided and expert considered in forming opinions be expressed; or (III) identify assumptions party's attorney provided and expert relied on in forming opinions be expressed. Rule 26(a)(2)(B) now provides an expert report must contain facts or data considered by witness in forming [the opinion be expressed], while old Rule was more expansive and required report contain the data or other information considered by witness in forming [the opinions be expressed]. (2) Section 26(b)(4)(C) applies work-product protections communications between party's attorney and a expert. (3) The court in Sara Lee v. Kraft Foods highlighted an exception under Rule 26 (b)(3)(A)(ii), which allows discovery if the party seeking discovery 'has substantial need for materials prepare and cannot, without undue hardship, obtain their substantial equivalent by other means.' (4) II. Purposes of Rule 26 Amendments Under old Rule 26, interpretation by courts was inconsistent. (5) The majority applied a bright-line rule under which matters considered by an expert in formulating an opinion, including attorney work product, were automatically discoverable. (6) On other hand, a minority found disclosure of core work product a testifying expert did not affect protection accorded such information. (7) The majority interpretation created undesirable under old Rule. (8) Such effects included increased discovery costs and impeded effective communication between attorneys and their experts, apparently inducing some parties retain two separate sets of experts--one for consultation and another testify. (9) As Court in Sara Lee explained, advisory committee intended its change to 'limit disclosure material of a factual nature by excluding theories or mental impressions of counsel.' (10) According a Magistrate Judge in District Court of Colorado, Advisory Committee made clear that amendments are meant alleviate perceived uncertainty and rising costs associated with attorneys' limited interactions with their retained experts as a result of court opinions allowing discovery of an expert's draft reports and of all communications with counsel. …

The Mass Tort Bankruptcy: A Pre-History

The history of insolvency schemes as mass tort resolution devices is generally said to begin with the asbestos bankruptcies of the 1980s. This Article brings to light a much earlier example of the resolution of mass tort claims through another insolvency scheme—the equity receivership—that was a precursor to Chapter 11 of the Bankruptcy Code. The Article recounts the creation of a receivership after a fire at the Ringling Brothers circus killed and injured hundreds of spectators. It also describes the maneuvers of the key actors in the case and the legal landscape that explained their resort to a receivership instead of traditional civil litigation. The Article presents the Ringling Brothers case as more than a piece of historical trivia. The case raises a number of puzzles, most notably its success. While modern mass tort bankruptcies are criticized for a variety of perceived flaws, the Ringling Brothers receivership was widely praised. The Article considers a model of mass tort insolvency schemes as public law litigation in order to explain the different fates of the Ringling Brothers receivership and the modern mass tort bankruptcy.

An Administrative Approach to the Resolution of Mass Torts?

This article contains a review of Professor Richard Nagareda's recent book, Mass Torts in a World of Settlement. Nagareda's premise is that parties have moved away from litigation and toward procedures that are more administrative in nature to resolve mass tort claims and that this move should be facilitated by putting in place a more formal structure to provide an administrative or regulatory solution. However, it is not clear that Nagareda's approach will be feasible in practice. Nor is it clear that it will provide a comprehensive solution to the problems plaguing mass tort litigation. More fundamentally, there are particular aspects of traditional litigation-based resolution of mass tort claims that are important and should not be abandoned. Much of the dysfunction with respect to mass tort claims resolution may be traced to a failure to implement litigation-based procedures, as opposed to being a result of such procedures. Accordingly, a strong case can be made that the traditional litigation-based paradigm should not be abandoned, but rather fortified.

Federalism and Mass Tort Litigation

There is no justification for displacing state tort law by adopting a new federal law of torts in order to facilitate mass tort class actions in federal court. Tort law law has traditionally and properly been the province of state law. The principal problem of mass tort litigation for the federal government is the congestion in the federal district courts caused by the avalanche of state tort claims that have found their way there. This has occurred for reasons not attributable to the federal government. Specifically, state legislatures and state supreme court justices have expanded available claims and remedies under state tort law to include, for example, medical monitoring claims, fear of cancer claims, and emotional distress claims. While some of these new state tort claims may be controversial and add to the burden on the docket of federal courts, this is not a sufficient reason for federal tort law to be enacted to displace these state claims. Any change in the federal rules of procedure by itself will not assure the fair and orderly adjudication of mass tort claims, given the reality that the federal courts are not the only forum where mass tort claims are litigated. A more viable proposal would be to expand the role of federal courts in coordinating pretrial activities in mass tort cases while remanding cases to their original state or federal court for trial. In short, the proper response is to facilitate the consolidation of factually related claims for pretrial discovery in an appropriate venue, but then try those tort claims in state and federal court in the traditional manner.

Penn Law School Mass Torts Symposium: A Response to Professor Cooper

Our hats are off to Professor Cooper for his production of a brilliant paper on the legal concerns presented by complex mass torts litigation.' His paper discusses the entire array of complex legal problems and issues raised by the adjudication of mass tort claims. The scope of this Response does not permit us to delve into the specifics of each of the topics that he has addressed; we shall therefore focus on what we believe are the larger issues. To begin, Professor Cooper's proposed Mass Tort Statute, Mass Tort Civil Rule, and Settlement Class Rule each offer the current best conception of a total solution to the real problems encountered in mass tort litigation. Unfortunately, the quarrels about the various provisions of both proposals demonstrate that all of the constituencies represented here today simply cannot and, as a practical matter, will not, reach a full agreement about a solution. Much of the conflict inherent in these proposals rests in the evaluation of value-determined choices that perforce form the foundations for each attempt to create a workable, guiding statute or rule. Just a partial list of the competing values underlying this debate necessarily includes the differing attitudes on matters such as aggregation versus individualization of claims; the importance of process; tolerance for uncertainty; tolerance for the subjugation of individual claims which present a unique element of plaintiff fault, causation, and damage issues to the great aggregate; beliefs in the efficacy of opt-in versus opt-out provisions; perspectives on the fictional nature of legal representation in the mass

Procedural Versus Substantive Controls of Mass Tort Class Actions

Abstract Class certification in a mass tort case confers extraordinary negotiating power even where the underlying claim is meritless. This power stems from the prospect that claims of a large‐numbered class might reach a jury that might render a large aggregate judgment under our vastly looser tort law standards. The power is so extreme that all mass tort claims certified as classes appear to settle, rather than litigate to judgment. Recommendations for class action reform have been solely procedural since Rule 23 has been implemented without substantive review of the underlying claim. This article shows that recent reform efforts in fact attempt to impose substantive controls on mass tort class actions through procedural means, efforts that necessarily will remain inadequate. The various problems attending mass tort class actions can only be effectively addressed if courts are given power to substantively review the underlying merits of a claim prior to class certification.

A Psychological Perspective on the Settlement of Mass Tort Claims

A Psychological Perspective on the Settlement of Mass Tort Claims

Aggregative Valuation of Mass Tort Claims

Aggregative Valuation of Mass Tort Claims

Optimal Pooling in Claims Resolution Facilities

The various claims resolution facilities discussed in this symposium exhibit a number of distinctive qualities and governing principles. A common characteristic of many of these facilities, however, is an attempt to avoid the litigation costs of individualized proof of damages by channeling mass tort claims into rough categories for compensation. All claimants within a particular category receive similar compensation, even though they might be able to prove disparate damages through litigation. This article seeks to analyze the efficiency of pooling disparate claims through the categorical compensation of claims facilities.