Mapping Mass Claims Facilities

Vol. 18 No. 1

Review by

In 1997, convened a conference around the question, “What will we do when adjudication ends?”  In response to that provocative query, I advised, “We’ll settle in bunches.”[1] I was wrong, but I was also right. Notwithstanding the Supreme Court’s then recent decision in Amchem Products, Inc. v. Windsor,[2] I argued for and foresaw expanded use of class action settlements to provide greater access, fairness and justice to mass tort claimants and expanded use of Rule 23 to resolve mass torts.  The Supreme Court did not embrace my view.  The Court’s swift follow-up to Amchem in Ortiz v. Fibreboard Corp.[3] severely curtailed the burgeoning use of Rule 23 class actions to resolve mass torts caused by widespread exposure to toxic products.  Since then, while class actions have remained a potential vehicle for settlement of some mass cases, the current judicial attitude to this procedural mechanism has not noticeably warmed.[4] 

However, despite the stunted use of class action settlements, creative mediators, courts and counsel have nonetheless managed in some cases to fill the need for mechanisms to resolve mass claims quickly, fairly and efficiently by inventing a wide variety of additional vehicles for resolution outside of traditional litigation.  These devices, from bankruptcy reorganization trusts to governmental and private claims facilities, have been called on to collect, quantify and resolve a multitude of claims through a form of alternative dispute resolution specifically constructed for mass claims situations. They have been used in many different contexts:  massive oil spills, natural disasters such as hurricanes and earthquakes, environmental contamination, pharmaceutical products litigation, residential mortgage backed securities claims, and terrorist attacks.  The complexity of the problems to which the various resolution mechanisms have been applied has been matched only by the creativity of their inventors.

The CPR Institute’s Commission on Facilities for the Resolution of Mass Claims has performed a great service by publishing Mass Claims Resolution Facilities, a state-of-the-art handbook on recent developments and emerging issues in this important area of dispute resolution. The handbook is part of the CPR Master Guides series on Conflict Prevention and Resolution.   In 12 intelligently structured chapters spanning 150 well-written pages, the MCRF guide catalogues, discusses and critiques the spectrum of mass resolution facilities, including asbestos bankruptcy trusts, the September 11 Victim Compensation Fund, Dalkon Shield Trust, Holocaust Victim Assets Litigation and Swiss Banks settlement funds, and others.  The guide not only delves into the nitty-gritty of initial due diligence and estimation, claims forms, intake and tracking, claimant communications, claims resolution, allocation, distribution, payment, and oversight and audit, it also addresses deeper conceptual issues such as the sources of authority for claims programs, the extent of appropriate delegation to the claims facility, and considerations of due process and basic fairness.  Each chapter is liberally sprinkled with illustrations from actual mass claims resolutions facilities (some of which are colorfully labeled as “Cautionary Tales”), and most conclude with a concise set of “Best Practices” gleaned from the experience to date.  Collecting all of this information between two covers would be an achievement in itself; organizing, presenting and reflecting on it as thoughtfully as this handbook consistently manages to do is a real tribute to the CPR commission that put it together, especially its chairs, Ken Feinberg and Deborah Greenspan, and its reporter and deputy reporter, Jordana Feldman and Mark Boyko.

As this volume illustrates, the possible variety of mass claims resolutions facilities is as broad as the spectrum of mass disputes and disasters they address.  The judicial system – originally designed to resolve spats between neighboring landowners, divorces, horse-drawn-cart-runs-over-child, and merchants’ contract disputes – struggles to deal with cases involving thousands of claims arising out of a defective drug marketed to millions of people throughout the world by a multi-national pharmaceutical company, or the massive collapse in the value of billions of dollars in residential mortgage-backed securities issued by hundreds of Wall Street manufactured  trusts,[5] or a man-made environmental disaster affecting the businesses and homes of tens of thousands of people over a wide swath of the country.  By necessity, lawyers and decision-makers faced with these sprawling, complex cases have sought out new ways to organize and resolve them better than the traditional litigation mechanism allows. 

Consider how the changes in the last 25 years in the ways in which we manage, store, access and communicate information have revolutionized business, the arts, telecommunications, marketing, health systems, sports, even our love lives.  Compare the extent of change in these fields with the incremental, glacial, grudgingly expanded development of legal procedures. While the rest of the world changes at sometimes startling speed, legal mechanisms sometimes seem frozen in time.  But as this CPR volume reveals, the creative leaders of the profession have been busy inventing, experimenting, testing and improving novel devices for new mass problems, sometimes entirely outside the traditional legal structures but oftentimes cleverly and daringly within existing forms or bolted on to them in imaginative ways. A useful addition would be an appendix or supplement cataloguing the many other examples of innovative mass claims facilities not highlighted in the text, such as more common securities and anti-trust class action settlement plans of allocation.[6] Perhaps the CPR commission will continue its fine work in this direction by creating such a resource and providing further guidance on best practices and cautionary tales.

CPR’s Mass Claims Resolution Facilities is a timely and indispensable guide, both for its valuable practical knowledge and also for its thoughtful treatment of the more fundamental questions of due process and fairness that always attend to the resolution of claims of justice and right.


Endnotes
    
[1] Green, What Will We Do When Adjudication Ends? We’ll Settle in Bunches: Bringing Rule 23 into the Twenty-First Century, 44 U.C.L.A. L. Rev. 1773 (1997).
    [2] 521 591, 117 2231 (1997).
    [3] 527 815, 117 2503 (1999).
    [4] See, in the context of Title VII discrimination claims, Wal-Mart Stores, Inv. v. Dukes,  564 ______ (June 20, 2011).
    [5] See In re The Bank of Mellon (as Trustee) and BlackRock Financial Management, Inc., et al. v. The People of the State of , N.Y. Sup. Index No. 651786/2011) ( seeking approval under CPLR Article 77 for approval of a proposed $8.5b settlement with Countrywide Home Loans, et al.)
    [6] See, e,.g.,  In re Countrywide Financial Corporations Securities Litigation (C.D. Cal.), In re TFT/LCD (Flat Panel) Antitrust Litigation (MDL Docket No. 1827), In re Vitamins Anti-trust Class Actions (D.C. Cir.), or the pharmaceutical Average Wholesale Price cases (In re Pharmaceutical Industry Average Wholesale Price Litigation (D. Mass.) plan of allocation between consumers and third party payors, and other mass (as opposed  to class) torts, such as the ephedra cases, see e.g. In re Ephedra Products Liability Litigation, 329 B.R. 1 (Bank. Court, SDNY, 2005) and 393 F. Supp. 2d 181 (2005).

 

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Eric D. Green is the Principal of Resolutions, LLC and a retired Professor of Law at Boston University School of Law.

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