No. 96-270
IN THE
OCTOBER TERM, 1996
_______________
AMCHEM PRODUCTS, INC., et al.,
Petitioners,
v.
GEORGE WINDSOR, et al.,
Respondents.
_______________
On Writ of Certiorari to the
United States Court of Appeals for the Third Circuit
BRIEF OF AMICUS CURIAE TRIAL LAWYERS FOR
PUBLIC JUSTICE, P.C., IN SUPPORT OF RESPONDENTS
Leslie A. Brueckner, Esq.
(Counsel of Record)
Arthur H. Bryant, Esq.
Trial Lawyers for Public Justice, P.C.
1717 Massachusetts Ave., N.W.
Suite 800
Washington, D.C. 20036
(202) 797-8600
Counsel for Amicus Curiae
January 15, 1997
TABLE OF CONTENTS
TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
INTEREST OF AMICUS CURIAE. . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INTRODUCTION AND SUMMARY
OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
ARGUMENT: THE INCLUSION OF FUTURE
PERSONAL INJURY CLAIMS IN THE CLASS
RENDERS THE SETTLEMENT
UNCONSTITUTIONAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
I. The Class Settlement Violates the Future Victims'
Constitutionally-Mandated Notice and Opt-Out
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
II. The Class Settlement Violates the Future Victims'
Constitutionally-Mandated Rights to Adequate
Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
TABLE OF AUTHORITIES
Cases: Page:
Adams v. Robertson, 676 So.2d 1265 (Ala. 1995),
cert. granted, 117 S. Ct. 37 (1996). . . . . . . . . . . . . . . . . . . . 8
In re "Agent Orange" Prod. Liab. Litig., 100 F.R.D.
718 (E.D.N.Y. 1983). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
In re "Agent Orange" Prod. Liab. Litig., 818 F.2d 145
(2d Cir. 1987). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
In re "Agent Orange" Prod. Liab. Litig., 996 F.2d
1425 (2d Cir. 1993), cert. denied, 114 S. Ct.
1125 (1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
In re Asbestos Litig., 90 F.3d 963 (5th Cir. 1996). . . . . . .8, 28
In re Bendectin Prod. Liab. Litig., 749 F.2d 300
(6th Cir. 1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Bowling v. Pfizer, 143 F.R.D. 141 (S.D. Ohio
1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 17, 19
Brady v. United States, 397 U.S. 742 (1970). . . . . . . . . . . . . .19
Brown v. Ticor Title Ins. Co., 982 F.2d 383 (9th
Cir. 1992), cert. dism'd as improv. granted sub
nom., Ticor Title Ins. Co. v. Brown, 114 S. Ct.
1292 (1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
General Telephone Co. of Southwest v. Falcon, 457
U.S. 147 (1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20, 23
Georgine v. Amchem Products, Inc., 878 F. Supp. 716
(E.D. Pa. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Georgine v. Amchem Products, Inc., 157 F.R.D.
246 (E.D. Pa. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 3, 4
Georgine v. Amchem Products, Inc., 83 F.3d 610
(3d Cir. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Hansberry v. Lee, 311 U.S. 32 (1940). . . . . . . . . . . . . . . .13, 29
Hobbs v. Northeast Airlines, Inc., 50 F.R.D. 76
(E.D. Pa. 1970). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
International Union of Electronic, Electrical,
Salaried, Mach., and Furniture Workers, AFL-CIO
v. Unisys, 155 F.R.D. 41 (E.D.N.Y. 1994). . . . . . . . . . . . .24
Martin v. Wilks, 490 U.S. 755 (1989). . . . . . . . . . . . . . . . . . . .16
Matsushita Elec. Indus. Co., Ltd. v. Epstein,
116 S. Ct. 873 (1996). . . . . . . . . . . . . . . . . . . . .20, 21, 24, 25
National Super Spuds v. New York Mercantile
Exchange, 660 F.2d 9 (2d Cir. 1981). . . . . . . . . . . . . . .23, 24
Pettway v. American Cast Iron Pipe Co., 576 F.2d
1157 (5th Cir), cert. denied, 439 U.S. 1115 (1978). . . . . . 27
Phillips Petroleum Co. v. Shutts, 472 U.S. 797
(1985). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Plummer v. Chemical Bank, 668 F.2d 654 (2d Cir.
1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
In re Silicone Gel Breast Implant Prods. Liab.
Litig., 1994 U.S. Dist. LEXIS 12521 (N.D. Ala.
Sept. 1, 1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8, 17
Weinberger v. Kendrick, 698 F.2d 61 (2d Cir. 1982),
cert. denied, 464 U.S. 818 (1983). . . . . . . . . . . . . . . . . . . . .27
Rules:
Fed. R. Civ. P. 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Fed. R. Civ. P. 23(a)(1) (1938). . . . . . . . . . . . . . . . . . . . . . . . .13
Fed. R. Civ. P. 23(a)(2) (1938). . . . . . . . . . . . . . . . . . . . . . . . .13
Fed. R. Civ. P. 23(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Fed. R. Civ. P. 23(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . .6, 23
Fed. R. Civ. P. 23(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Fed. R. Civ. P. 23(b)(1) and (2). . . . . . . . . . . . . . . . . . . . . . . . . 7
Fed. R. Civ. P. 23(b)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fed. R. Civ. P. 23(b)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Fed. R. Civ. P. 23(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 13
Fed. R. Civ. P. 23, Advisory Committee Notes (1966
Amendment). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Miscellaneous:
Coffee, Class Wars: The Dilemma of the Mass Tort
Class Action, 95 Columbia L. Rev. 1343 (1995). . . . . . . . .24
Downs, Federal Class Actions: Diminished
Protection for the Class and the Case for
Reform, 73 Neb. L. Rev. 646 (1994). . . . . . . . . . . . . . . . . . 22
Frankel, Amended Rule 23 From a Judge's Point
of View, 32 Antitrust L.J. 295 (1966). . . . . . . . . . . . . . . . . . .15
Frankel, Some Preliminary Observations Concerning
Civil Rule 23, 43 F.R.D. 39 (1967). . . . . . . . . . . . . . . . . . . .15
Homburger, State Class Actions and the Federal
Rule, 71 Columbia L. Rev. 609 (1971). . . . . . . . . . . . . . . . .22
Koniak, Feasting While the Widow Weeps: Georgine v.
Amchem Products, Inc., 80 Cornell L. Rev.
1045 (1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 27
Moore & Kennedy, 3B Moore's Federal Practice
¶ 23.02-1 (2d ed. 1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Newberg & Conte, 1 Newberg on Class Actions
("Newberg") § 1.13 (3d ed. 1992). . . . . . . . . . . . . .20, 22, 23
Newberg, 3 Newberg § 3.01. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Newberg, 3 Newberg § 3.13. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Notes of Rules Advisory Committee to 1966
Amendments to Rule 23, 39 F.R.D. 69 (1966) . . . . . . . . . . 14
Wright, et al., 7A Federal Practice and
Procedure ("Federal Practice") § 1765 (1986 &
Supp. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Wright, 7B Federal Practice § 1789. . . . . . . . . . . . . . . . . . . . .12
Wright, 7B Federal Practice § 1797. . . . . . . . . . . . . . . . . .24, 27
Wright, Proposed Changes in Federal Civil, Criminal
and Appellate Procedure, 35 F.R.D. 317, 338
(1964). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
INTEREST OF AMICUS CURIAE
Trial Lawyers for Public Justice ("TLPJ") is a national
public interest law firm that specializes in precedent-setting and
socially significant civil litigation and is dedicated to pursuing
justice for the victims of corporate and governmental abuses.
Litigating throughout the federal and state courts, TLPJ
prosecutes cases designed to advance consumers' and victims'
rights, environmental protection and safety, civil rights and civil
liberties, occupational health and employees' rights, the
preservation and improvement of the civil justice system, and the
protection of the poor and the powerless.
As part of its efforts to ensure the proper working of the
civil justice system, TLPJ has established a Class Action Abuse
Prevention Project dedicated to monitoring, exposing, and
preventing abuses of the class action device nationwide.
Through this work, TLPJ has become especially concerned about
efforts by corporate defendants to use the class action device as
a tool for capping their liability in mass tort cases and depriving
injured victims of their rights. One means to this end is to create
"settlement-only" class actions that include all individuals who
have been exposed to a hazardous product -- whether or not they
have yet manifested any disease. TLPJ submits this brief to urge
the Court to reject this approach and make clear that, at least
under the circumstances of this case, due process prohibits the
adjudication or release of absent class members' unaccrued future
personal injury claims.
STATEMENT
This class action seeks to settle the personal injury claims
of millions of individuals who have been exposed to asbestos
products manufactured by a consortium of companies known as
the Center for Claims Resolution ("CCR"). If approved, the
settlement will extinguish the personal injury claims of every
individual who has been exposed to asbestos made or supplied by
CCR, even though most of those individuals have not yet gotten
sick and could not currently seek damages for their future
injuries in individual lawsuits. In the Third Circuit's words,
"[t]hese `futures claims' of `exposure-only' plaintiffs would be
extinguished even though they have not yet accrued." Georgine
v. Amchem Products, Inc., 83 F.3d 610, 617 (3d Cir. 1996).
The inclusion of future claims in the class settlement was
the culmination of CCR's efforts to limit its members' liability
in asbestos cases. The saga began in 1991, when the Judicial
Panel on Multidistrict Litigation transferred all existing federal
asbestos personal-injury litigation to the Eastern District of
Pennsylvania. Thereafter, CCR approached two members of the
plaintiffs' asbestos bar in an attempt to negotiate a settlement of
all future (rather than pending) asbestos claims against the CCR
defendants. See Georgine v. Amchem Products, Inc., 157
F.R.D. 246, 305 (E.D. Pa. 1994).
CCR achieved its goal on January 15, 1993, when the two
attorneys and CCR filed a class action complaint, an answer, and
a stipulation of settlement. The class was defined to include "all
persons exposed occupationally . . . to asbestos supplied by any
CCR defendant, and . . . the spouses and family members of
such persons, who had not filed an asbestos related lawsuit
against a CCR defendant as of the date the class action was
commenced." 83 F.3d at 619 (footnote omitted). By defining
the class to include "all persons exposed occupationally" to
asbestos supplied by the CCR defendants, CCR was able to
achieve a settlement that not only included individuals who had
already gotten sick as a result of asbestos exposure, but also
encompassed the future claims of "exposure-only" plaintiffs who
had not yet manifested any asbestos-related disease. Moreover,
by defining the class to include the "spouses and family
members" of future personal injury victims, CCR was also able
to settle the claims of individuals who cannot possibly be known
and, in some cases, do not yet even exist -- i.e., spouses yet to
be married and children yet to be conceived.
Because the exposure-only class members lacked standing
to assert claims based on future personal injuries, the class
complaint merely alleged that these individuals were entitled to
receive medical monitoring and recover damages for their
emotional distress and increased risk of cancer. See J.A. 4-21
(Class Complaint).
These claims were abandoned, however, in
exchange for a settlement that purports to settle all present and
future claims of class members for asbestos-related personal
injury or wrongful death against the CCR members that were not
filed before January 15, 1993. In essence, the settlement
establishes a complex administrative procedure that would, over
a period of years, provide various levels of compensation for
class members meeting certain exposure and medical criteria.
See 83 F.3d at 620-21; 157 F.R.D. at 267-85.
Notably, the
claims asserted by the exposure-only plaintiffs -- claims for
increased risk of cancer, fear of future injury, and medical
monitoring -- do not receive any compensation under the
settlement. Instead, these individuals are only eligible for relief
when and if they contract certain asbestos-related diseases. See
83 F.3d at 620.
Shortly after the proposed settlement was filed, the district
court conditionally certified the class under Fed. R. Civ. P.
23(b)(3), which requires that class members be given notice and
the right to exclude themselves from the class. Subsequently, the
court approved a plan to give notice to the class through a
combination of TV and print ads, an "800 number," and union-sponsored publicity. See 157 F.R.D. at 314-36. The notice also
explained that class members who did not want the relief
proposed in the settlement had the right to exclude themselves
from the litigation by filing an opt-out form by a certain
deadline. All class members who did not opt out by that
deadline are bound -- even if they had no current injury and no
idea they were ever exposed to asbestos.
The district court ultimately approved the settlement as
fair, adequate, and reasonable within the meaning of Fed. Rule
Civ. P. 23. See id. at 325. The court subsequently enjoined
class members from pursuing any claims against CCR outside of
the settlement. See Georgine v. Amchem Products, Inc., 878 F.
Supp. 716, 723 (E.D. Pa. 1994). Numerous objectors appealed
the district court's injunction, arguing, among other things, that
the inclusion of future victims' personal injury claims in the class
settlement violated the absentee class members' constitutional
rights to due process. In particular, the objectors argued that, in
a futures class action with virtually no delayed opt-out rights,
notice to absent class members cannot meet the requirements of
the U.S. Constitution. See 83 F.3d at 622.
On appeal, the Third Circuit ultimately did not decide
whether the inclusion of future personal injury claims in the class
settlement violated due process. See id. at 634. Instead, the
lower court vacated the settlement on the ground that the class
could not meet the various certification requirements of Rule 23.
Id. at 626. In so holding, however, the court emphasized that
the inclusion of future personal injury claims in the class
settlement contributed to the class' inability to meet the
certification requirements of Rule 23. Thus, for example,
regarding the "commonality" and "predominance" requirements
of Rules 23(a) and (b)(3), the court noted that the exposure-only
plaintiffs "share little in common, either with each other or with
the presently injured class members." Id. at 626. Similarly,
regarding the "adequacy-of-representation" requirement of Rule
23(a)(4), the court held that the "serious intra-class conflicts"
between the present claimants and future victims rendered the
class representatives incapable of adequately representing the
class. See id. at 630.
The Third Circuit also emphasized its "serious concerns
about the constitutional adequacy of class notice" with respect to
the exposure-only class members. Id. at 623. Those concerns
were rooted in the fact that these class members "may not know
that they have been exposed to asbestos within the terms of this
class action." Id. at 633. The court added that even those class
members who manage to hear about the class settlement and
realize they fall within the class definition "may lack adequate
information to properly evaluate whether to opt out of the
settlement." Id. at 633 (footnote omitted). Although the court
did not decide whether these concerns rendered the class notice
constitutionally infirm, it stressed that "this situation raises
serious fairness concerns." Id. at 634.
INTRODUCTION AND
SUMMARY OF ARGUMENT
Petitioners would have this Court believe that this case is
in some way similar to the type of garden-variety class action
settlements that numerous courts have approved, time and again,
since Rule 23 was first restructured to permit opt-out class
actions for damages. Thus, they argue that the Third Circuit's
decision constitutes a "radical change in long-settled class action
practice" that would, among other evils, "make numerous
beneficial class action settlements impossible." Brief for
Petitioners at 2.
In reality, however, this is an unprecedented action. It
began with the pre-packaged filing on a single day of a class
action complaint, answer, and stipulation of settlement of a case
that both parties admit they never intended to litigate -- and that,
in truth, no parties ever could litigate. Unlike any other case
before or since, it seeks to constrain future asbestos victims to a
pre-determined, administrative remedy -- or, in some cases, no
remedy at all -- without any averments by the defendants of
limited funds and without any recourse to bankruptcy
proceedings. It attempts class-wide adjudication of a mass tort --
an area where courts have been traditionally wary of certifying
classes because the claims are deeply personal and "vitally affect
a significant aspect of the lives of the claimants." Hobbs v.
Northeast Airlines, Inc., 50 F.R.D. 76, 79 (E.D. Pa. 1970). See
also Fed. R. Civ. P. 23, Advisory Committee Notes (1966
Amendment) ("[a] `mass accident' resulting in injuries to
numerous persons is ordinarily not appropriate for a class
action"). And it is a settlement class, "the subject of
considerable controversy" because of the dangers of abuse and
collusion in reaching an agreement before the procedural
protections of Rule 23 are in place. See Plummer v. Chemical
Bank, 668 F.2d 654, 657-58 (2d Cir. 1982).
But the most notorious -- and constitutionally suspect --
aspect of this case is its attempt to extinguish, in one fell swoop,
the unaccrued future claims of literally millions of individuals
who have been occupationally exposed to asbestos -- and may not
even know it. In this sense, this case represents the pinnacle of
attempts by defendants to use class actions as vehicles for
capping their liability in damages cases. On occasion,
defendants have tried to attain this goal by seeking to create
mandatory, "no-opt-out" classes that strip victims of their right
to exclude themselves from class litigation. This approach,
however, has met with uneven success, because defendants often
have difficulty shoehorning their cases into one of the mandatory
certification "prongs" of Rule 23.
Another, more insidious
approach is to create "opt-out" damages classes under Rule
23(b)(3) that include both present and future victims of a
defendant's mass tort. While such actions theoretically grant
class members a right to pursue their own individualized
litigation, they in fact leave many class members with no
meaningful opportunity to exercise this right, trapping them in
the class action for perpetuity. In this way, defendants achieve
their goal of limiting their future liability for mass torts without
having to persuade a court that circumstances warrant
certification of a mandatory class under one of the other prongs
of Rule 23.
This case represents this trend at its worse. Although other
opt-out class action settlements have sought to encompass the
"future" personal injury claims of mass tort victims, see, e.g.,
Bowling v. Pfizer, 143 F.R.D. 141 (S.D. Ohio 1992) (heart
valves); In re Silicone Gel Breast Implant Prods. Liab. Litig.,
1994 U.S. Dist. LEXIS 12521 (N.D. Ala. Sept. 1, 1995) (breast
implants), the classes in those cases have included only persons
who could plainly determine -- at the time of certification --
whether they are or are not class members, i.e., whether they do
or do not have heart valves or breast implants. This class goes
light years farther by attempting to simultaneously extinguish the
unaccrued future claims of millions of individuals who are
entirely unaware that they have even been exposed to a
hazardous product, let alone that their rights are being
extinguished in a class action settlement. If this unique and
extraordinary class action is permitted to stand, it will serve as
a green light for manufacturers and suppliers of insidiously
dangerous products to use Rule 23 as a device for limiting the
rights of their "future victims" before those individuals' claims
ever accrue. That practice cannot be -- and is not --
constitutional.
We recognize, of course, that the Third Circuit did not
ultimately decide whether the Constitution prohibits binding
future plaintiffs through a 23(b)(3) opt-out class action. See 83
F.3d at 634. Rather, it held that the presence of future claimants
contributed to the class' inability to meet the various certification
requirements of Rule 23. However, we submit that --
particularly since the Rule 23 safeguards were deliberately drawn
in light of due process requirements -- the more natural way to
approach the case is to hold that the settlement's attempt to
extinguish the rights of "future victims" whose personal injury
claims had not yet accrued fails to pass muster under the U.S.
Constitution.
This settlement violates the due process rights of future
victims in two distinct ways. First, the settlement cannot be
reconciled with the class members' constitutionally mandated
rights to receive meaningful notice of a class settlement and a full
and fair opportunity to exclude themselves from the class. These
rights are embodied in Rule 23(c)(2), which requires that absent
class members be given notice and the right to opt out of
damages classes certified under Rule 23(b)(3). This provision
was created in 1966, when Rule 23 was amended to permit, for
the first time, absent class members to be bound to a judgment
in a common-question damages class action without their
affirmative consent. The history of this provision reveals that it
was expressly designed to protect the constitutional rights of
absent class members to control their own individual litigation.
This Court has since affirmed that the mandatory notice and opt-out rights embodied in Rule 23(c)(2) are minimal safeguards
mandated by due process.
These minimal safeguards are rendered impotent in this
case due to the settlement's attempt to extinguish the unaccrued
personal injury claims of exposure-only class members. First,
many of the future victims in the class had no way of knowing
they were included in the settlement, either because they were
unaware of their asbestos exposure or had no idea that their
ability to sue in the future could be limited now, when they have
no personal injury. Future spouses and children, of course,
could not possible receive proper notice, since the former cannot
identify themselves and the latter do not exist. Even those class
members who were aware of their inclusion in the class,
moreover, lacked any meaningful way to evaluate the
settlement's terms, since they had no way of knowing what
asbestos-related disease they might ultimately contract and how
much that disease would be "worth" under the terms of the
settlement (which is not adjusted for inflation). As a result, the
notice and opt-out rights provided in this case were essentially
meaningless -- a result that cannot be reconciled with due
process.
Second, the proposed settlement violates the future victims'
constitutional right to adequacy of representation, which is set
forth in Rule 23(a)(4). Like the notice and opt-out rights
applicable to Rule 23(b)(3) damages classes, the adequacy-of-representation requirement was carefully drawn to satisfy
minimal requirements of due process in class actions. Since Rule
23 was amended to its present form in 1966, this Court has
repeatedly reaffirmed that adequacy of representation is a core
element of due process that must be satisfied in every class
action.
This requirement was violated in this case because the class
representatives lacked authority to release the future personal
injury claims of exposure-only class members. It is axiomatic
that class representatives' authority is limited to the claims they
possess in common with other members of the class. This
limitation is designed to ensure that the class representatives,
through the driving imperative of self interest, will achieve the
best possible result for the class. No such imperative exists in a
case where -- as here -- the settlement seeks to extinguish future
personal injury claims that, by their very nature, are unrelated in
critical respects to those claims held by the class representatives.
As the Third Circuit recognized, the unaccrued future personal
injury claims encompassed in the settlement will vary radically
from class member to class member, especially with respect to
the nature of their damages. Given these disparities, the class
was incapable of "generat[ing] a typical representative" (83 F.3d
at 632), let alone one able to adequately represent the full range
of interests encompassed in the class -- either for litigation or
settlement purposes. Thus, the inclusion of future personal
injury claims in the settlement renders this class action
unconstitutional, regardless of how one interprets the various
protections of Rule 23.
ARGUMENT
THE INCLUSION OF FUTURE
PERSONAL INJURY CLAIMS IN THE
CLASS RENDERS THE SETTLEMENT
UNCONSTITUTIONAL.
As petitioners have framed this case, the key question is
whether the Third Circuit erred in holding that "each of [Rule
23's] requirements must be satisfied without taking into account
the settlement, and as if the action were going to be litigated."
83 F.3d at 626. Resolution of this question, however, is
ultimately unnecessary, since the inclusion of future personal
injury claims in this class means that the case could not
constitutionally be certified for settlement or litigation purposes.
As is explained in further detail below, both the mandatory
notice and opt-out provisions of Rule 23(c)(2) and the right to
adequacy of representation embodied in Rule 23(a)(4) were
"carefully drawn" to protect the minimal due process rights of
absent class members in damages classes certified under Rule
23(b)(3). See Charles A. Wright, et al., 7B Federal Practice
and Procedure ("Federal Practice") § 1789, at 251 (1986 &
Supp. 1996). Neither of these constitutionally mandated
safeguards serves its purpose in a case where -- as here -- a class
settlement attempts to extinguish simultaneously a vast array of
present and future personal injury claims on behalf of a widely
disparate class of individuals, many of whom have no idea they
were ever exposed to the defendant's product and have no way
of determining what related disease -- if any -- they will
ultimately contract. Because these core procedural safeguards
are rendered largely meaningless in the context of this "future
victims" settlement, this class violates the due process rights of
the absent class members -- and a fortiori violates the various
certification criteria of Rule 23.
I. The Class Settlement Violates the Future Victims'
Constitutionally-Mandated Notice and Opt-Out
Rights.
The constitutional underpinnings of the rights to notice and
opt-out embodied in Rule 23(b)(3) are best revealed by the
history of the modern class action rule. Prior to 1966, when
Rule 23 was amended to its present form, the federal rules did
not permit any class actions seeking damages at law to bind
absent class members without their express consent. At the time,
Rule 23 limited the binding effect of "common question"
damages classes to the parties and class members who
affirmatively chose to intervene in the action -- in other words,
a type of "opt-in" procedure. See 3B James W. Moore & John
E. Kennedy, Moore's Federal Practice ("Moore's") ¶ 23.02-1,
at 23-73 (2d ed. 1993). This restriction reflected the "principle
of general application in Anglo-American jurisprudence that one
is not bound by a judgment in personam in litigation in which he
is not designated as a party or to which he has not been made a
party by service of process." Hansberry v. Lee, 311 U.S. 32, 40
(1940).
The 1966 amendments to Rule 23 expanded the reach of
class actions. Most notably, new Rule 23(b)(3) permitted, for
the first time, absent class members to be bound to a judgment
in a common-question damages class action without their
affirmative consent. Recognizing the dangers this posed, the
Rules Advisory Committee included a number of procedural
protections in the new Rule to safeguard the due process interests
of absent class members. Foremost among these protections
were the mandatory notice and opt-out provisions of new Rule
23(c)(2), which requires that absent class members be given
notice and the opportunity to exclude themselves from classes
certified under Rule 23(b)(3). At the time, the Committee noted
that, in damages cases:
the interests of individuals in pursuing their own
litigations may be so strong here as to warrant denial
of a class action altogether. Even when a class action
is maintained under subdivision (b)(3), this individual
interest is respected. Thus the court is required to
direct notice to the members of the class of the right
of each member to be excluded from the class upon
his request.
Notes of Rules Advisory Committee to 1966 Amendments to Rule
23, 39 F.R.D. 69, 104-05 (1966) (emphasis added). The
Committee Notes further reflect that the mandatory notice and
opt-out provisions were necessary "to fulfill requirements of due
process to which the class action procedure is of course subject."
Id. at 107 (citing, inter alia, Hansberry v. Lee, 311 U.S. 32
(1940); Mullane v. Central Hanover Bank & Trust Co., 339 U.S.
306 (1950)).
Even with the protection of the new notice and opt-out
provisions, many commentators expressed strong reservations
about the constitutionality of the new Rule 23(b)(3) damages
class. For example, Professor Wright wrote:
In the situation which (b)(3) covers, there is a strong
feeling that the person who wants to go it alone, and
to bring his individual action with his own lawyer,
should be permitted to do so. . . . Even with this
protection [of the right to opt-out], (b)(3) is a novel
and controversial proposition . . .
Charles A. Wright, Proposed Changes in Federal Civil,
Criminal and Appellate Procedure, 35 F.R.D. 317, 338 (1964).
Similarly, Judge Frankel called the sweep of the (b)(3)
class "among the more debatable" provisions of Rule 23, and
compared the opt-out procedure to the Book-of-the-Month Club.
See Marvin E. Frankel, Some Preliminary Observations
Concerning Civil Rule 23, 43 F.R.D. 39, 44 (1967). He
indicated his preference for an affirmative opt-in procedure, so
that silence would not constitute consent to inclusion. See
Marvin E. Frankel, Amended Rule 23 From a Judge's Point of
View, 32 Antitrust L.J. 295, 299 (1966). In the end, he urged
that Rule 23 not "be pressed to the limits of its logic or to the
literal dimensions that its language might possibly suggest." Id.
at 297.
Notwithstanding these reservations, the constitutionality of
Rule 23(b)(3) classes was affirmed by this Court in Phillips
Petroleum Co. v. Shutts, 472 U.S. 797, 810-13 & n.3 (1985).
Shutts made clear, however, that the notice and opt-out
requirements embodied in the Rule are not merely procedural
niceties, but rather are indispensable requirements of due
process. Thus, this Court stated that a court wishing "to bind an
absent plaintiff concerning a claim for money damages or similar
relief at law . . . must provide minimal procedural due process
protection." 472 U.S. at 810. Such minimal protection must
include "notice plus an opportunity to be heard and participate in
the litigation, whether in person or through counsel . . . [and] an
opportunity [for the absent plaintiff] to remove himself from the
class by executing and returning an `opt out' or `request for
exclusion' form to the court." Id.
By requiring that courts provide absent class members the
right to exclude themselves from actions involving claims for
money damages, Shutts recognized the constitutionally-protected
interest of absent plaintiffs to control their own inherently
particularized damages claims. Thus, while the procedural
device of the class action has made some inroads on "our deep-rooted historic tradition that everyone should have his own day
in court," Martin v. Wilks, 490 U.S. 755, 762 (1989), there can
be no question that the notice and opt-out rights embodied in
Rule 23(c)(2) are indispensable requirements of due process in
class actions seeking damages at law. Shutts, 472 U.S. at 810.
Against this backdrop, it is readily apparent that the class
action at issue in this case fails to withstand constitutional
muster. First and foremost, many -- if not most -- of the future
victims in the class had no way of knowing they were included
in the settlement. As the Third Circuit recognized, exposure-only class members may be entirely in the dark about whether
they were ever occupationally exposed to asbestos and, if so, to
what extent. See 83 F.3d at 633-34. Yet even individuals who
have had only "slight and incidental exposure" to asbestos can
develop crippling diseases such as mesothelioma, which is
always fatal, "generally within two years of diagnosis." Id. at
633.
These problems are magnified with respect to exposure-only class members' future spouses and other family members,
who may have had no relationship with the class members -- and
may not even have existed -- during the notice and opt-out
period. Even currently-existing family members might have had
no way of knowing during the notice period that their spouse or
parent was ever occupationally exposed to asbestos. For these
class members, the notice and opt-out rights afforded by the
settlement are essentially meaningless.
In these respects, this case is far more troubling than other
class action settlements that have sought to affect claims for
future personal injuries. For example, class members in cases
involving medical devices implanted through surgery presumably
have little difficulty identifying themselves as falling within the
class definition. See, e.g., Bowling v. Pfizer, 143 F.R.D. 141
(S.D. Ohio 1992) (heart valves); In re Silicone Gel Breast
Implant Prods. Liab. Litig., 1994 U.S. Dist. LEXIS 12521
(N.D. Ala. Sept. 1, 1995) (breast implants). Although these
cases may present other problems, the future victims included in
those settlements at least had a fair chance of knowing that their
rights were at risk. What makes the present case so uniquely
unfair is that it includes thousands, if not millions, of individuals
who had no conceivable way of identifying themselves as
members of the class. See generally Koniak, Feasting While the
Widow Weeps: Georgine v. Amchem Products, Inc. ("Feasting"),
80 Cornell L. Rev. 1045, 1086 (1995) ("Georgine . . . is
atypical because it involves a class composed largely of persons
who could not be identified by the parties, who had not yet
manifested injury at the time the action was brought, and who
might not have known then or now that they had been exposed
to the hazardous product.")
Equally important, even those individuals who were able to
identify themselves as class members had no meaningful way to
determine whether to object to the settlement's terms or to opt
out of the class. As the Third Circuit found, the exposure-only
class members' futures are "completely uncertain" insofar as they
have no way of knowing whether they will eventually get sick
and, if they do, which of the wide variety of asbestos-related
diseases they will contract. See 83 F.3d at 632. These
individuals also had no way of knowing whether their
unknowable, future disease would be compensable under the
settlement, and, if it was, how much that disease would be
"worth," particularly in light of the fact that the settlement does
not compensate for inflation. In short, because they cannot
predict their own future, even class members who could identify
themselves as such had no way to make an intelligent decision
whether to opt out of the class or accept the settlement and waive
their constitutional rights, including the right to a jury trial. Cf.
Brady v. United States, 397 U.S. 742, 748 (1970) (waiver of
constitutional rights "must be knowing, intelligent [and] done
with sufficient awareness of the relevant circumstances and likely
consequences.")
In this respect, too, this case is far more extreme than other
class action settlements involving future personal injuries. In the
heart-valve settlement, for example, class members will at least
be afforded a second, unlimited "back-end" right to opt out of
the class settlement and pursue their own relief when and if their
heart valves fracture in the future. See Bowling, 143 F.R.D. at
157. In this case, in contrast, only a tiny percentage of the class
will be permitted to opt-out of this case at the "back-end," and
they will still be bound in constitutionally impermissible ways.
See n.4, supra. The vast majority of the exposure-only class
members will have no further opportunities to exclude
themselves from the class no matter what injuries they incur in
the future and regardless of the effect of inflation on the real
value of their recovery under the settlement.
For these reasons, this case cannot be reconciled with the
constitutionally-mandated notice and opt-out rights embodied in
Rule 23. These rights were designed to give absent class
members the ability to protect their own interests by objecting to
a proposed settlement or by opting out of the case to pursue
individual litigation. This role, however, cannot be fulfilled in
a case where -- as here -- most class members were not given any
meaningful notice of their inclusion in the settlement or any
means of evaluating its terms as applied to them. Thus, this core
procedural safeguard -- firmly rooted in the U.S. Constitution --
is simply lacking in this case.
II. The Class Settlement Violates the Future Victims'
Constitutionally-Mandated Rights to Adequate
Representation.
The second constitutional infirmity in the proposed
settlement is that it deprives the future victims of their due
process right to adequate representation. To begin with, there is
no question that Rule 23(a)(4)'s adequacy-of-representation
requirement is a minimal requirement of due process. As Justice
Ginsberg recently wrote in her concurrence in Matsushita Elec.
Indus. Co., Ltd. v. Epstein, 116 S. Ct. 873, 875 (1996),
"adequate representation is among the due process ingredients
that must be supplied if the judgment is to bind absent class
members." See also Shutts, 472 U.S. at 812; Herbert Newberg
& Alba Conte, 1 Newberg on Class Actions ("Newberg") § 1.13
(3d ed. 1992). With regard to the class representatives, this
safeguard requires, at a minimum, that "the interests of the
named plaintiffs must be sufficiently aligned with those of the
absentees." 83 F.3d at 630 (citing In re General Motors Corp.
Pick-Up Trucks Fuel Tank Prods. Liab. Litigation, 55 F.3d 768,
800 (3d Cir.), cert. denied sub nom., General Motors Corp. v.
French, 116 S. Ct. 88 (1995)).
As with the mandatory notice and opt-out provisions of
Rule 23(c)(2), the drafters of the modern class action rule
regarded the adequacy-of-representation requirement as an
essential safeguard of the due process rights of absent class
members. See 7A Federal Practice § 1765, at 263. This Court
has since repeatedly affirmed that adequacy of representation is
a basic element of due process in opt-out damages class actions
brought under Rule 23(b)(3). E.g., Shutts, 472 U.S. at 812
("the Due Process Clause of course requires that the named
plaintiff at all times adequately represent the interests of the
absent class members.") (citing Hansberry v. Lee, 311 U.S. 32
(1940)). See also Matsushita, 116 S. Ct. at 875 (Ginsburg, J.,
concurring).
Rule 23 incorporates this constitutional standard by
requiring a showing of adequacy of representation in every class
action. See Fed. R. Civ. P. 23(a)(4). In this case, the Third
Circuit held that the class failed this requirement due to the
inherent, irreconcilable "intra-class" conflicts between the
presently injured and future plaintiffs -- in particular, the fact
that "the former have an interest in preserving as large a fund as
possible while the latter seek to maximize front-end benefits."
83 F.3d at 618; see also id. at 630-31. These conflicts, in the
court's view, rendered the class representatives incapable of
adequately representing the class, since "the named plaintiffs'
interests cannot align with those of absent class members if the
interests of different class members are not themselves in
alignment." Id. at 630.
We agree that, in this case, the intra-class conflicts between
present claimants and future victims prevented the adequacy-of-representation requirement from being met. However, there is
another, equally compelling reason why the class representatives
failed to adequately represent the class: the release of the absent
class members' future claims violates the "most fundamental
principles underlying class actions, [which] limit the powers of
the class representatives to the claims they possess in common
with other members of the class." Downs, Federal Class
Actions: Diminished Protection for the Class and the Case for
Reform, 73 Neb. L. Rev. 646, 694 (1994). This restriction is
rooted in the basic rationale underlying the adequacy-of-representation requirement: "the court must be satisfied that the
class representative, by litigating his or her personal claim, will
also necessarily be litigating common claims that are shared by
the class." 1 Newberg § 1.13, at 1-36. As one commentator put
it,
The basic philosophy of class actions has remained
unchanged through the centuries. Self-interest, the
motivating force that sparks the adversary system,
also sustains the doctrine of class actions. We may
trust man to help his fellow man if by doing so [he]
helps himself. Building on that simple premise, the
[class action] device provides for the use of man's
natural instinct to act in his own best interest in order
to achieve justice and procedural efficiency in mass
litigation.
Homburger, State Class Actions and the Federal Rule, 71
Columbia L. Rev. 609, 610 (1971).
By restricting class representatives' authority to claims that
they hold in common with the entire class, the adequacy-of-
representation requirement ensures that the class representatives
-- through the "motivating force" of self-interest -- will achieve
the best result possible for the class. Thus, "[w]hen the class
representative's claims are the same as or similar to those of the
class members, the court may rely in part on the representative's
self-interest in prosecuting those claims to protect the interests of
the class members." 3 Newberg § 3.01, at 3-5.
Conversely,
"[t]o the extent the plaintiff or class members also have unique
individual claims, the plaintiff cannot adequately represent the
class on uncommon claims, nor will the adjudication of common
issues affect or be binding on the individual uncommon claims
possessed by the plaintiff or class members." Id. § 1.13, at 1-37
(footnotes omitted).
The Second Circuit followed these principles in National
Super Spuds v. New York Mercantile Exchange, 660 F.2d 9 (2d
Cir. 1981), which reversed a district court's approval of a class
action settlement releasing claims that did not arise out of the
facts pled in the complaint. There, the district court had certified
a class of purchasers of potato futures contracts who liquidated
the contracts between April 13, 1976, and May 7, 1976. The
class members alleged that the wrongful conduct of the
defendants had depressed the price of those contracts. Class
counsel and the defendant agreed to a settlement that released
both the claims alleged in the complaint and any claims
regarding futures contracts that were liquidated after May 7,
1976. Over objections, the district court approved the fairness
of the settlement. See id. at 15.
The Second Circuit, per Judge Friendly, reversed, holding
that the representative plaintiffs were empowered to represent the
class "solely with respect to the contracts in which all members
of the class had a common interest: contracts liquidated between
April 13 and May 7." Judge Friendly added that, "if a judgment
after trial cannot extinguish claims not asserted in the class action
complaint, a judgment approving a settlement in such an action
ordinarily should not be able to do so either." Id. at 17-18.
Thus, the Second Circuit held that the authority of the
representative plaintiffs under Rule 23 to release claims on behalf
of the class is limited by the scope of the class complaint, which
describes the claims all class members have in common. Id. at
18-19. See also International Union of Electronic, Electrical,
Salaried, Mach., and Furniture Workers, AFL-CIO v. Unisys,
155 F.R.D. 41, 48 (E.D.N.Y. 1994) ("National Super Spuds
thus stands for the proposition that a federal district court may
not approve a class-action settlement that seeks to release claims
that are inadequately represented by the named plaintiffs"); 7B
Federal Practice § 1797.1, at 41-42 (quoting National Super
Spuds with approval and noting that, "[i]n evaluating the fairness
and reasonableness of any proposed settlement, the court should
make certain . . . that the agreement does not impermissibly
waive future claims"); J. Coffee, Class Wars: The Dilemma of
the Mass Tort Class Action, 95 Columbia L. Rev. 1343, 1435
(1995) ("Judge Friendly's view in National Super Spuds that an
atypical plaintiff cannot meet the `adequacy of representation'
standard in Rule 23(a) rests on a sound perception of the
conflicts of interest that arise under any contrary rule.")
The proposed settlement in this case violates these basic
principles by releasing claims that the class representatives do
not hold in common with the rest of the class. Although the
unaccrued future personal injury claims of the exposure-only
class representatives and the unnamed class members they
purport to represent share some common "liability facts" with
respect to the CCR defendants -- e.g., the defendants' production
of, and failure to warn about, asbestos products -- the vast
majority of the facts relating to class members' damages vary
radically and depend on proof of events that have not yet
occurred. As the Third Circuit found in connection with its
holding that the class did not meet the "typicality" requirement
of Rule 23(a)(3),
the course of each plaintiff's future is completely
uncertain. . . [S]ome plaintiffs may ultimately
contract mesothelioma, some may get asbestosis,
some will suffer less serious diseases, and some will
incur little or no physical impairments. Given these
uncertainties, which will ultimately turn into vastly
different outcomes, the futures plaintiffs share too
little in common to generate a typical representative.
It is simply impossible to say that the legal theories
of named plaintiffs are not in conflict with those of
the absentees, . . or that the named plaintiffs have
incentives that align with those of absent class
members.
83 F.3d at 632 (citations omitted).
Given this radical disparity
among the future personal injury claims held by the exposure-only class members, the class representatives in this case cannot
adequately represent the broad and varying interests of the future
victims encompassed by the class settlement with respect to those
claims -- either for litigation or settlement purposes.
Petitioners attempt to sidestep this irremediable defect in
the class by arguing that, in the settlement-class context, it is
unnecessary to establish that the interests of the named plaintiffs
are sufficiently aligned with those of the class to satisfy the
adequacy-of-representation requirement. Rather, they claim that
"a court's determination that the terms of the settlement are fair
presumptively establishes that the class received adequate
representation." Brief for Petitioners at 46. Thus, in petitioners'
view, it is irrelevant that the class itself is riddled with conflicts,
and that the class representatives are not qualified to represent
the interests of future victims whose claims necessarily differ
from their own. Rather, in their view, the sole question is
whether the settlement itself is fair. See id.
This argument hinges on an unrealistic belief that courts are
able to adequately police the fairness of all class action
settlements. To be sure, under Rule 23(e), no class settlement
may be finalized without court approval. As with the other
safeguards of Rule 23, this provision was designed to protect the
rights of absentee class members from unfair compromise of
their rights. See generally 7B Federal Practice § 1797, at 341-43. See also Weinberger v. Kendrick, 698 F.2d 61 (2d Cir.
1982) (under Rule 23(e), the court "sit[s] as a guardian for class
members who have not received notice or who lack intellectual
or financial resources to press objections"), cert. denied, 464
U.S. 818 (1983).
It is well understood, however, that courts face serious
constraints in their ability to curb abuse by reviewing class action
settlements. As the Fifth Circuit cautioned in Pettway v.
American Cast Iron Pipe Co., 576 F.2d 1157, 1169 (5th Cir),
cert. denied, 439 U.S. 1115 (1978), "[l]acking a fully developed
evidentiary record, both the trial court and the appellate court
[are] incapable of making the independent assessment of the facts
and law required in the adjudicatory context." Id. at 1169. This
absence of a full evidentiary record is due to the lack of any true
adversarialness in the context of a class action settlement: "when
a class settlement is presented to a court for approval, there may
be no `opposing party.' The settling parties are aligned, and
there may be no objector represented at the fairness hearing."
Feasting, 80 Cornell L. Rev. at 1126. Even when an objector
does appear to oppose a settlement,
this does not transform a fairness proceeding into an
ordinary adversary proceeding. Fairness hearings are
not supposed to resemble full blown trials, and they
do not. Objectors are rarely allowed to conduct
extensive discovery on the compromises made by the
settling parties in their negotiations. Even when the
court is persuaded to allow discovery into the
negotiation process to expose collusion or other
evidence of unfairness, it is highly unlikely to order
the depositions of class counsel or defendants'
lawyers. Thus, objectors are routinely denied the
best evidence by which to establish their position.
Id. at 1126-27 (footnotes omitted). Even in this case, where
numerous objectors were represented by counsel throughout the
fairness hearing and were granted some discovery, they were
denied permission to depose class counsel to obtain information
regarding negotiation of the class settlement.
The information problems inherent in evaluating class
action settlements, moreover, are massively exacerbated in the
context of a "future victims" settlement, where there is often no
one available to advocate the rights of the absentees. Even if
someone does appear to speak for the future victims, it is
impossible to fully evaluate the fairness of the settlement with
respect to their claims, since they rest on facts that do not yet
exist and legal theories that may have yet to be developed.
Finally, even the most diligent court, applying the most rigorous
scrutiny possible to a proposed class action settlement, would
have no way of knowing how much "fairer" the settlement would
have been if the class had been represented by plaintiffs who
actually held claims in common with the absentees. See In re
Asbestos Litig., 90 F.3d at 1009 n.42 ("No one can tell whether
a compromise found to be `fair' might not have been `fairer' had
the negotiating [attorney] . . . been animated by undivided
loyalty to the cause of the class.") (Smith, J., dissenting)
(internal quotation omitted).
For all these reasons, petitioners' attempt to avoid the
adequacy-of-representation inquiry in this case should be
rejected. No matter how "fair" this settlement may have
appeared to the district court in this case, the fact remains that
the class representatives lacked any authority to release the
unaccrued personal injury claims of the exposure-only class
members. Any other result would fly in the face of due process,
which forbids absent class members from being bound by a class
judgment in which they were represented by individuals "whose
substantial interests are not necessarily or even probably the
same as those whom they are deemed to represent." Hansberry
v. Lee, 311 U.S. 32, 45 (1940). Thus, the settlement in this case
violates the constitutional rights of the absent class members and
should not be permitted to stand.
CONCLUSION
For these reasons, we urge this Court to affirm the decision
of the Third Circuit Court of Appeals.
Respectfully submitted,
Leslie A. Brueckner
(Counsel of Record)
Arthur H. Bryant
Trial Lawyers for Public Justice, P.C.
1717 Massachusetts Ave., N.W.
Suite 800
Washington, D.C. 20036
(202) 797-8600
Counsel for Amicus Curiae
Trial Lawyers for Public Justice, P.C.
January 15, 1997
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