Complex Litigation

I. Introduction ...................................................................................................................................................... 4
A. Framing the Problem ......................................................................................................................................... 4
B. Preclusion ............................................................................................................................................................. 4
1. Preclusion Charts ................................................................................................................................................ 4
2. Claim Preclusion (Res Judicata) ...................................................................................................................... 4
3. Issue Preclusion (Collateral Estoppel) .......................................................................................................... 5
4. Offensive Non-Mutual Issue Preclusion ........................................................................................................ 6
5. Virtual Representation/Preclusion of Non-Parties ................................................................................... 6
C. Overview of Aggregation Techniques ............................................................................................................ 7
II. Class Actions v. Mass Actions ................................................................................................................. 8
A. Mass Actions v. Class Actions....................................................................................................................... 8
B. The Multidistrict Litigation Act (MDL) (28 U.S.C. Section 1407) ....................................................... 9
III. Class Actions: Creating a Class ....................................................................................................... 12
A. The Stakes ........................................................................................................................................................... 12
1. Significance to Plaintiffs: Binding Absent Class Members ....................................................................................12
2. Significance to Defendants: Settlement Pressure ..................................................................................................... 13
3. Interlocutory Appeal .............................................................................................................................................................14
B. The Mechanics: Class Certification ............................................................................................................... 15
1. Overview ....................................................................................................................................................................................15
2. Numerosity ...............................................................................................................................................................................15
3. Commonality & Typicality ..................................................................................................................................................15
4. Adequate Representation ...................................................................................................................................................18
5. Class Counsel............................................................................................................................................................................19
IV. The Types of Classes .......................................................................................................................... 20
A. 23(b) Classes ...................................................................................................................................................... 20
B. The Opt-Out Class .............................................................................................................................................. 21
1. Due Process Requirements for 23(b)(3) ......................................................................................................................21
2. Predominance & Superiority .............................................................................................................................................25
3. Future Claimants and Intra Class Conflict ....................................................................................................................29
4. Choice of Law and Intersection w/Predominance ................................................................................................... 30
5. Manageability ..........................................................................................................................................................................33
6. Challenging Class Certification .........................................................................................................................................34
C. The Mandatory Class ........................................................................................................................................ 35
1. Overview ....................................................................................................................................................................................35
2. Indivisible Claims ................................................................................................................................................................... 36
3. Claims Against a Limited Fund .........................................................................................................................................38
D. The Issue Class ................................................................................................................................................... 40
1. Overview ....................................................................................................................................................................................40
2. The Seventh Amendment....................................................................................................................................................40
3. Predominance of Rule 23 ....................................................................................................................................................41
4. Mandatory Classes ................................................................................................................................................................. 42
E. Class Certification and the Merits ................................................................................................................. 42
F. The Opt-In Class ................................................................................................................................................. 47
V. Class Counsel ................................................................................................................................................ 49
A. Selecting Class Counsel .................................................................................................................................... 49

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 1. Rule 23(g) ..................................................................................................................................................................................49
2. Auction-based techniques ..................................................................................................................................................49
B. Fee Awards .......................................................................................................................................................... 50
C. Strategic Considerations ................................................................................................................................. 52
1. Staton v. Boeing ......................................................................................................................................................................52
VI. Private Securities Litigation Reform Act of 1995 (PSLRA) ......................................................... 54
A. Overview ......................................................................................................................................................... 54
VII. Defendant Classes .................................................................................................................................... 55
A. Opt-Out Classes ............................................................................................................................................. 55
B. Mandatory Classes ............................................................................................................................................ 55
VIII. Forum Selection and Rival Proceedings ......................................................................................... 56
A. CAFA ...................................................................................................................................................................... 56
B. The Multidistrict Litigation Act ..................................................................................................................... 57
1. Generally ....................................................................................................................................................................................57
2. Special Challenges Presented by Mass Actions ..........................................................................................................57
3. Selecting the Transferee Court .........................................................................................................................................58
4. The Role of the Transferee Court: Choice of Law and Adjudicatory Authority ............................................58
C. Inter-System Coordination .............................................................................................................................58
1. Full Faith and Credit..............................................................................................................................................................59
2. Other Sources of Law ............................................................................................................................................................60
IX. Class Settlements ....................................................................................................................................... 62
A. Class Settlement Review and Design ........................................................................................................... 62
1. Direct Review: Rule 23(e) ...................................................................................................................................................62
2. Objecting Classmembers (Who May Seek Appellate Review of Class Settlement Approval) .................63
B. Collateral Attacks on Class Settlements ...................................................................................................... 63
1. Epstein v. MCA .........................................................................................................................................................................63
C. Administration of Class Settlements ............................................................................................................ 65
1. In re Orthopedic Bone Screw Prods. Liab. Litig. (3d Cir. 2001) ..........................................................................65
2. Pigford v. Johanns (D.C. Cir. 2005) .................................................................................................................................. 65
D. Settlement Design and Opt-Out Rights........................................................................................................ 65
E. Cy Pres Distributions ........................................................................................................................................ 66
F. Attorney-Client Conflicts ................................................................................................................................. 67
X. Private Aggregations/Aggregate Settlements .................................................................................. 67
A. Background......................................................................................................................................................... 67
1. The Private Aggregator ........................................................................................................................................................67
2. The Role of the Attorney in Aggregate Settlements ................................................................................................. 69
3. The Role of the Court in Aggregate Settlements .......................................................................................................71
B. Aggregate Settlements ..................................................................................................................................... 72
1. Quasi-Class Actions ...............................................................................................................................................................72
2. Problems Arising from Aggregate Settlement in Mass Actions that Aren’t Class Actions .......................73
3. Bellwether Trials .................................................................................................................................................................... 76
XI. MDL Issues in Practice: ............................................................................................................................ 79
A. Flint Water Crisis............................................................................................................................................... 79
XII. Aggregation and Alternative Dispute Resolution ......................................................................... 81
A. Class Arbitration ............................................................................................................................................... 81
XIII. Discovery and Statute of Limitations Issues in Class Actions ................................................. 88
A. Discovery .............................................................................................................................................................88
1. General........................................................................................................................................................................................88

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 2. Proportionality ........................................................................................................................................................................90
3. Written Discovery .................................................................................................................................................................. 90
4. The Meet and Confer Dance ...............................................................................................................................................90
5. Document Requests and Production..............................................................................................................................90
6. Depositions ...............................................................................................................................................................................91
B. Statute of Limitations and Tolling ................................................................................................................ 91
1. Commencement of Class Action Suspends Statute of Limitations During Pendancy of Action .............91
XIV. Parens Patriae Suits ............................................................................................................................... 94
A. Background......................................................................................................................................................... 94
1. Parens Patriae Authority.....................................................................................................................................................94
B. Application to Opioid Litigation......................................................................................................................................97
1. Public Right Element ............................................................................................................................................................97
XV. Spread of Class Actions Abroad ........................................................................................................... 97
XVI. Pending Legislation (Fairness in Class Action Litigation Act (FICALA)) ............................. 98
XVII. Themes ...................................................................................................................................................... 99

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I. Introduction
A. Framing the Problem
 Why Cases Are Aggregated
o Airlines agreement not to undercut competitors in hub cities.
 Reasons: attorney incentive, optimal efficiency, individuals wouldn’t bring individual claims
because Sherman Act doesn’t
o Butterfly Ballot fee for voting
 Injunctive relief and can force government to fund through alternative means; easy to find
lawyer to do this than individual
o Stroke/Products liability
 Goal is to get drugs off the market one person not enough for prima facie; you need
aggregate class; you have more likely to settle if there is a group of people but there are a ton
of people being helped
 Types of Aggregate Proceedings
o Aggregate Lawsuits: single case involving multiple claims and defenses (class actions)
o Administrative Aggregation: formally separate, but brought together for judicial management
(MDLs)
o Private/Informal Aggregation: multiple claims, held by multiple parties, resolved through non-
judicial supervision
 Statutory Provisions that permit aggregation
o Interpleader
o Bankruptcy
 2 views of complex litigation:
o Litigation that requires intense judicial management
o A problem of governance: exit, voice and loyalty
 Exit: when are the stakeholders allowed to leave?
 Voice: when do they have a voice in the running of the organization?
 Loyalty: how do we ensure leaders are loyal to the organization.
B. Preclusion
1. Preclusion Charts
Issue Preclusion Claim Preclusion (Res Judicata)

1. Issue same in litigation 1 & litigation 2 1. Same party in L1 and L2, against whom
 Beware of sub issues preclusion is sought. (or represented)

2. Issue was actually litigated 2. Same claim in L1 and L2

 Full and fair opp standard  Event, transaction and occurrence

3. Issue was actually decided 3. “Final” judgement

4. Issue was necessary to judgement 4. Judgement on Merits

2. Claim Preclusion (Res Judicata)

o Elements
- Final Judgement
- Judgement on the “merits”
- What counts trials followed by verdicts and judgements, summary judgement, etc.
- What doesn’t countdismissals for improper venue, lack of pj
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 - What isn’t clear if it countsDismissal for failure to state a claim
- Same claims in first and later suits
- Cause of action=same transaction or occurrence
- Claims that couldn’t have been joined in the first action aren’t barred
- Usually, all damages must be collected at once
- Same transaction, but different type of damage claims are barred (Rush v. City of Maple
Heights)
- Either same parties, or parties were represented in a prior action

3. Issue Preclusion (Collateral Estoppel)

o General
- An issue is precluded if it’s an issue of fact or law, regardless of whether it’s the same or a
different claim
o Requirements
- (1) Identity of issues
- (2) Actual litigation and decision of the issue
 If a default or consent judgment is entered generally NO collateral estoppel as to the fact
issues that would have been tried had the case gone forward.
 Actual Litigation
o When a party fails to raise an issue in a previous action, it has not been actually
litigated
o An issue that was raised in a prior action may not have been “actually litigated” even
though it was raised in a prior action
- Example:
A sues B for BOK and B admits in answer that B made contract but defends action on
another ground.
A then sues B for a later breach of same K and B can defend on ground that B never
made the contract, since that issue was never actually litigated in original suit
 Actual Decision
o Will not bar re-litigation unless the issue was actually decided in that action
- Example:
A publishes book that B claims to hold all rights to publish, and B sues A on copyright
infringement and BOK theories.
If court finds for B on the ground that A breached the contract, and does not decide the
copyright issue, re-litigation of the copyright infringement issue in another context will
not be barred.
o Sometimes in conflict with essential/necessary to judgement
- (3) Necessity of the issue to the disposition of the first action
- Will not apply unless the decision on the issue in the prior action was necessary to the court’s
judgement
- In the course of a suit, the judge may decide a number of issues that do not ultimately determine
the outcome of the case
 If something doesn’t determine a decision, it is not precluded from rel-itigation
- All elements must be met to apply issue preclusion.
o Primarily Determined by…
- Not by whether evidence is the same as in the first action, but by whether evidence was fairly
accessible to the party in the first action.
o Reasoning for Determination…

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 - Idea is that you want the earlier party to have the same ability and motivation to prove the stuff
(comes into play with offensive)
 One consideration. First D may not have litigated to the same level of rigor as the next.
 First P may not have had same access to evidence as the second.

4. Offensive Non-Mutual Issue Preclusion

Parklane Hosiery v. Shore
o Facts: At T1, SEC filed suit against Parklane based on misleading proxy statement. SEC wins,
declaratory judgment entered, no jury trial. At T2, stockholders bring class action alleging the proxy
was misleading in the same way as the SEC alleges. Stockholders move for partial summary
judgment, asserting that Parklane is collaterally estopped from re-litigating the issues it already lost
in SEC suit.
o Rule: A litigant who was not a party to a prior judgment may nonetheless use that judgment
offensively to prevent a defendant from re-litigating issues resolved in the earlier proceeding,
provided that (1) the plaintiff could not easily have joined in the earlier action and (2) use of the
judgment will not result in unfairness to the defendant.
- Unfairness includes:
 D had little incentive to defend vigorously; inconsistent with one or more previous
judgments; section action affords D procedural opportunities unavailable in first action
o Use of Offensive NMIP does not violate Seventh Amendment
 Beacon Theaters says that equitable determinations can have preclusive effect in subsequent
legal action;
 Parklane argues that scope of 7A is determined with reference to common law in 1791, and
mutuality of parties was required then
- But there is no reason to think the Seventh Amendment depends on whether mutuality of parties
is present
o Dissent (Rehnquist)
- This violates the 7A; developments in collateral estoppel cannot contract the right for a jury trial
that D would have enjoyed in 1791
- Also, no NMIP here b/c (1) runs counter to federal policy favoring jury trials; (2) jury trial could
lead to a different result; (3) there aren’t big efficiency gains anyway; a jury must be still
impaneled
 The result is just that defendants will settle or agree to consent orders with agencies like the
SEC to preserve jury trial right in private action
o TM: Parklane is the stopping point for preclusion because the cautionary language becomes very
important. And it’s often hard to figure out what was actually litigated at T1.

5. Virtual Representation/Preclusion of Non-Parties

Taylor v. Sturgell
o Facts: T1, Herrick fails in FOIA request/subsequent lawsuit to get records from the FAA about a
plane he was trying to build b/c they were protected by trade-secret status. At T2, his friend Taylor
files suit, makes a FOIA request seeking the same documents. He litigates 2 issues concerning
whether trade secret status could be “restored” that Herrick didn’t litigate. FAA argues that Taylor is
claim precluded, based on virtual representation theory.
o Rule: A claim cannot be precluded if the previous litigant is a different party and there is no legal
relationship between the current and past litigants.
o Holding: This doctrine is an inappropriate application of claim preclusion for three reasons.

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 - First, litigants are generally not bound by the actions of another. There are discrete exceptions to
this broad rule, but it is one that exists in order to ensure that parties are held responsible only for
their own actions. The “virtual representation” doctrine contravenes that idea.
- Second, the “virtual representation” doctrine would hold a litigant responsible for a suit for which
they were not noticed. While this is acceptable in certain types of suits, such as class actions, those
exceptions are creatures of statute, not common law.
- Third, litigating these kinds of claims would take up a significant amount of the court’s time.
Claim preclusion is a process designed to relieve the court of needless litigation, not create it.
o Not even in “public law” litigation, like a FOIA request, can we have virtual representation
- Threat of repetitive litigation is diminished by stare decisis and self-interest
o Two-part, five factor test:
- Two necessary but not sufficient factors: (1) Identity of interests and (2) Adequacy of
representation.
- One of three aditional factors is also required: (a) Close relationship, (b) Substantial participation
in the first action, or (c) Tactical maneuvering to avoid preclusive effect.
- A broadening of the classic notions of privity—but when is representation “adequate”? Merely
when interests and incentives are aligned?
 TM: This is a formalist opinion; cabining the use of nonparty preclusion to the 6 categories. If you
don’t fall into the categories, you’re out. Even though it doesn’t make sense in the context of FOIA.
o This foreshadows the formalism the court takes in Amchem.

C. Overview of Aggregation Techniques

 The need for aggregate litigation procedures arises from the mass nature of wrongs in modern
society and the limited capacity of conventional preclusion principles, developed in one-on-one
litigation, to yield closure on a commensurately mass basis. The term “aggregate litigation” has
come to encompass the various procedural techniques used to litigate civil claims on a mass or
collective basis in such a way as to yield preclusion.
 Along the continuum from “Private” to “Public” procedures for resolving aggregate claims run: (1)
Individual Settlements; (2) Aggregate Settlements; (3) Class Settlements; (4) Reorganizations in
Bankruptcy; and (5) Public Law.
 Contractual Aggregation
o Perhaps the most straightforward technique of aggregation consists of the join representation of
similar claimants by a single lawyer or law firm. See ABA 1.8(g) and ALI 3.17.
 Non-Contractual Aggregation:
o Consolidation (FRCP 42) or MDL in Federal Courts (see below section on MDL)
o “If actions before the court involve a common question of law or fact, the court may:
o (1) Join for hearing or trial any or all matters at issue in the actions; (2) Consolidate the actions;
or (3) Issue any other orders to avoid unnecessary cost or delay.”
o ALI §1.20 Notes: “As a practical matter, consolidation occurs mainly when separate lawsuits
have strong overlaps, typically because all plaintiffs claim to have been injured by the same
product, the same accident, or the same course of conduct.”
 Class Actions: Class actions seek to achieve efficiency through economies of scale, but raise
concerns of agency cost. This insight is captured by the ALI, §1.04 Comment:
o “A foundational insight of the economic literature on corporate governance is that ownership of
assets and control of their disposition must often be separated to achieve economies of scale, to
take advantage of the division and specialization of labor, to bear risks efficiently, and to realize
other advantages.... Aggregate lawsuits resemble other economic undertakings in which
ownership and control of assets rest in different hands. Claimants own the returns aggregate
lawsuits generate, and respondents are subject to the liabilities, but agents, mainly attorneys,
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 control or strongly influence the conduct of litigation. Consequently, aggregate lawsuits generate
the same potential for agency costs as other economic undertakings in which ownership is
separated from control.”
 Class actions vs. consolidations:
o First, consolidation reaches cases that already exist. It does not bring into court anyone who
was not already there. Consolidation is not a technique for creating representational lawsuits
that bind nonparties.
o Second, a consolidation order does not entitle one party to represent another party. After
consolidation, πs and ∆s stand in judgment only for themselves.
o Third, although a class action is a single lawsuit, consolidated cases start out separate and
remain so. In other words, consolidation does not merge separate cases into one. Thus,
consolidated lawsuits can settle piecemeal, while class actions cannot.
 Aggregation Neither Contractual Nor Wholly Non-Contractual
o Bellwether Trials (Vioxx model)
o The resulting aggregate settlement will likely take a contractual form: the release executed by the
individual settling claimant in exchange for payment from the defendant. But, the contract might
alternatively be with the plaintiffs’ law firms who represent such claimants in substantial
numbers.
o The usual move here is for the firms to agree to “recommend” to their individual clients that they
settle their claims against the defendant according to the terms of the grid. The defendant then
promises to pay claims presented to it by the signatory firms according to the terms agreed upon
for the grid.
o In this way, the contract between the defendant and the plaintiffs’ law firms effectively
anticipates the terms of later, conventional settlement contracts that will resolve the claims of the
clients those firms represent.

II. Class Actions v. Mass Actions

A. Mass Actions v. Class Actions
 Differences
o In a class action, the court authorizes representation of broad class
o In a mass action, there are contractual relationships
o Plaintiff’s counsel might prefer a class action because:
 Don’t have to seek retention agreements for thousands of individuals.
 Ethical obligations (e.g. conflicts requirements) for thousands of individuals
 Document preservation and discovery obligations
o A mass action is not “representative litigation”—each plaintiff selects their own counsel
o A mass action has no “absentee plaintiffs”
o In a mass action, in theory, cases are only consolidated for pre-trial proceedings
o In a mass action, clients decide whether to settle (opt-in)
 Similarities
o A case that is MDL’d has all pre-trial proceedings handled by a court-appointed lead counsel
 Many/most clients don’t select these lawyers and have limited ability to control them
o The volume of cases limit individual input or control in a MDL (think shareholder in publicly-
traded corporation)
o Individual plaintiffs may have very limited information
o For MDL’s, vast majority of cases are resolved in consolidated MDL proceedings.
o Interests of plaintiff lawyers may align with defendants

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 o “MDL functions as an exceptionally strong aggregation device, and very few cases are ever
actually remanded for trial because most mass-tort MDL’s are resolved just as class actions
were: by global settlement agreement.”

B. The Multidistrict Litigation Act (MDL) (28 U.S.C. Section 1407)

 Initiation of MDL Transfer
o Sua sponte by panel
OR
o Motion of “a party in any action in which transfer … may be appropriate.”
 Standards for Transfer
o One or more common factual questions exist
 Panel doesn’t need to find that common issues will predominate over individual issues, only
that common issues exist and the transfer will facilitate judicial efficiency
o Transfer will promote “the convenience of the parties and witnesses and will promote the just
and efficient conduct of actions.”
 Selection of Transferee Court
o MDL Panel considers variety of factors:
 Location of various cases
 Locations of parties, witnesses, and pertinent evidence
 Experience of the various judges being considered
 Number of cases pending in the districts being considered
 Whether discovery is at a later stage in one of the districts
 Convenience of the parties
o Supposed to be for pre-trial proceedings only
 Supreme Court ruled that transferee court cannot self-transfer a trial to itself and at the
conclusion of pretrial proceedings, the transferee court must remand to the transferor court
for trial
 However, a party may request the transferor court transfer the case to the transferee court for
trial under 28 U.S.C. S 1404(a). This is not guaranteed to happen.
 Court selection of lead plaintiffs’ lawyers
o Judges focus on experience, cooperative tendencies, and an ability to finance the litigation—
factors that favor repeat players.
 In the abstract, repeat players’ experience and cooperation seem like positive attributes. And
experience in building the relevant infrastructure to litigate claims is critical.
 But emphasizing cooperation can lead to three negative effects that may dampen the
advantage that experience confers.
 First, it may foster a need for attorneys to curry favor with one another to secure lucrative positions in
future leadership hierarchies. Second, it deters dissent by implicitly labeling it as something that
should not be rewarded. Dissent can be particularly important during settlement when plaintiffs’
interests may differ. Third, the lack of dissent raises concerns about inadequate representation.
Because multidistrict litigation’s authorizing statute requires that cases share only a single common
question of fact, plaintiffs’ best interests are not likely to be uniform, making adequate representation
through dissent crucial.
 Unlike class actions, where the defendant might raise conflicting interests when battling class certification,
the controlling stakeholders in non-class multidistrict litigation—plaintiffs’ lead lawyers, defendants, and
their attorneys—have little economic motive to identify conflicts. Lead plaintiffs’ lawyers have two income
sources: contingent fees from their own clients and court-ordered common- benefit fees from plaintiffs (and
their individual counsel) who benefit from leaders’ efforts. Attorneys profit from representing as many
people as possible—not from recognizing divisive interests. And defendants’ closure hinges not on the
preclusive effect of a class-wide settlement that demands adequate representation, but on convincing

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 plaintiffs enter into a settlement program. Consequently, judicial pressure toward cooperation and
consensus may erode dissent and the adequate representation that follows from it.
 Defendant’s Decision to MDL or not MDL? (Mark Herrmann, To Mdl or Not to Mdl? A
Defense Perspective, Litigation, SUMMER 1998)
o Factors to consider:
 Timing
 Time-consuming process
 No automatic stay for federal cases while MDL Panel decides to create a coordinated
proceeding. However, most fed. Judges agree to motions to stay cases pending transfer to
another judge.
 If weight of litigation threatens client’s destruction in very short term, filing a motion
with the MDL Panel for coordinated proceedings might buy time necessary to organize a
defense, negotiate a global settlement, or file a bankruptcy proceeding.
 Additional delay once sent to transferee (MDL) court when discovery begins varies. It
could be discovery begins quickly, or it takes months or years.
 Delay in federal case doesn’t delay state cases, so state cases might go to trial first
because of inherent delay of MDL desirability depends, but should be considered…
 Choice of Forum
 Panel will consider:
o (1) where the pending litigation has progressed furthest, (2) where the greatest number
of cases are pending, (3) where the documents, parties, and witnesses are located, and
(4) where the greatest opportunity for state/federal coordination may exist.
 Disaggregation Advantage
 Coordination may advantage or disadvantage
 Procedural Considerations
o When cases are scattered throughout the federal system, counsel may be able to speed
the disposition of select cases and postpone the disposition of other cases. This can be
a strategic advantage.
 If, for example, a mass tort involves diversity cases, one state's law may be very
strong on a key issue, while other state's laws may be undeveloped or unfavorable.
Counsel can try to accelerate the cases in the preferred jurisdiction to obtain
favorable, on-point precedent. Case law in hand, counsel can then press this
argument in a jurisdiction with undeveloped law and have a better chance for
success.
o Other opportunities … When cases are spread among many courts, defense counsel
can choose to accelerate cases pending before preferred judges, or cases being
prosecuted by weak opposing counsel. Opportunities such as these to create favorable
precedents vanish when an MDL proceeding is created.
 Substantive Concerns
o MDL might have substantive effect on coordinated litigation
o Once an MDL is in place, plaintiffs will inevitably file many new complaints. In an
MDL, as in the Field of Dreams: “If you build it, they will come.”
o Because an MDL proceeding may place hundreds, or thousands, of cases before a
single judge, plaintiffs' counsel can file less meritorious cases in federal court, hoping
that these cases will stay forever submerged beneath the avalanche of pending cases.
Counsel assume that their weak cases will never see the light of day.
 Alternatively, counsel can choose to file strong cases in state court. By filing a
single strong case, by itself, in state court, counsel assures that the case will receive
individualized attention by a particular state court judge. The case will move at the
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 usual speed to trial and judgment, and the defendant will be forced to defend in the
usual manner. It has become almost axiomatic among plaintiffs' counsel to put
good cases in state court and put “dogs” in the MDL.
 Where there’s a mass, there is a tort
 Cost of MDL is perception that can influence reality and cost a client years of litigation
and millions of dollars
 MDL and Discovery
 There are significant benefits to consolidating a single discovery
 However, there also may be costs resulting from a broadened discovery
 State/Federal Coordination
 A single federal decision as opposed to multiple federal decisions means it’s easier to
convince a state court judge to follow the lead of a particular judge
 Settlement
 Can increase opportunities for settlement
 The Effect on the Law
 Parties may be forced to take extreme positions

 Plaintiff’s Decision to MDL (Is it Time to Rethink MDL for Mass Tort Cases?)
o Drawbacks and problems with an all-MDL strategy, so state courts should also be
considered
 MDL far too routinized and formulaic for defendants.
 They’ve figured out how to survive and mastered the drill: delay as long as possible;
produce a massive document dump; file “silver bullet” motions to try to kill the whole
case; chisel down on bellwether trials as much as possible; fold up the tent when it’s time
to settle. Having everything neatly in one courtroom with a time-honored roadmap to be
followed makes the corporate defense lawyer feel mellow and safe.
 Plaintiffs are losing control of the pace of the trial docket.
 When all of the cases are filed in front of the same judge, those cases proceed in lockstep.
The ability to jump an excellent case to the front of the line, ring the bell, and get the
company’s attention is lost when all cases are filed in the same trial pool.
 Having fewer trials, or even no trials, can be bad for plaintiffs.
 Shocking abuses by corporations don’t come to light when there no trials. And the trial
skills we honed in our own backyards begin to atrophy when we don’t have a trial,
empanel a jury, and put on the evidence. Cases should be filed in state courts again.
Going a state court route, in parallel with an MDL, offers a revitalized approach
toward mass torts. It would significantly shake corporate defendants out of their
comfort zones.
o More on actual article
 Reasons for Plaintiffs to want MDL (on slides)
o Leadership position;
o Reluctance to challenge leads;
o Ability to “piggy-back” – limited work;
o Large inventory with weak cases.
 Reasons for Plaintiffs to not want MDL (on slides)
o Favorable judge in individual proceeding;
o Strong case;
o Collateral estoppel threat;
o Avoid mdl delay;

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 o Maintain control over their case;
o Avoid common fund “tax” on settlement.
 Why do most MDL’d Mass Actions Involve Mass Torts? (on slides)
o These are positive value claims;
o Punitive damages possible;
o There are economies of scale to aggregating;
o There are established mechanisms for aggregating: advertising; referral networks; labor unions;
long history of this at state level.
 Antitrust Cases as Mass Actions (on slides)
o No history of antitrust mass actions.
o Is aggregating direct purchasers possible?
 direct solicitation required (advertising will not work);
 reluctance to sue suppliers;
 no relationship with plaintiff counsel;
 discovery burdens.
o “Opt in” nature of mass action limits defendants’ exposure.
 Consumer Cases as Mass Actions (on slides)
o Negative value claims.
o “Opt in” nature limits defendants’ exposure.
o Again, limited historical evidence.
 Plaintiffs’ instead pursue class actions in large states.
 May settle on a national basis.
 Securities Cases as Mass Actions (on slides)
o securities cases have historically been treated as class cases (“fraud-on-the-market” rule)?
o could present similar problems to antitrust cases
 can you aggregate enough large investors?
 Factors that Make Mass Actions/MDL Viable? (on slides)
o Significant individual recovery possible?
o Ability to aggregate large number of plaintiffs?
o Significant “opt in” percentage?
o Defendant incentivized to resolve on mass action basis?

C. Bellwether Trials in MDLs

 Trial of a limited number of plaintiffs’ cases in a large MDL, with the results providing useful
information but not being binding on cases not subject to trial (soft-edged)

III. Class Actions: Creating a Class

A. The Stakes
1. Significance to Plaintiffs: Binding Absent Class Members
 General
o The judgment in a class action is capable of binding absent class members, even though they are
not conventional members to the lawsuit. Thus, there must be alignment of interests among
the class members. This is a constitutional overlay. The clear outer limit is that before
preclusion can be triggered, there must be adequate representation, understood as some
minimal alignment of interests with respect to the conduct and outcome of the litigation said to
be preclusive.

12
 Hansberry v. Lee, 42 (U.S. 1940)
o Under the Due Process Clause of the Fourteenth Amendment, res judicata may only be
applied to bind absent parties by prior litigation if they were present or adequately
represented in the prior action.
 The key point is the notion that adequate representation is a requirement of federal
constitutional due process in the class action context that overrides the design of state rules of
procedure and practice. This requirement of adequate representation is conceptualized in
terms of a lack of conflicting interest within the class.
 Hansberry seems to provide that, while a collateral attack cannot overturn the previous
judgment because the facts were wrong, we will now give people the opportunity to come in
and say there wasn’t adequacy of representation and thus remove the prospective preclusive
effect of the prior judgment.
 Thus, there must be procedures at T1 to ensure adequacy of representation that will not
be successfully attacked at T2. Then, at T2, a more specific a limited question can be
asked: were those procedures at T1 followed?
o Inevitably leads to:
 (1) a more formal certification (2) during the pendency of class or representative action (3)
after procedural assurances that interests of absent class members are represented and
protected, including absence of conflicts.
o Sets the stage for FRCP 23.
 From ALI §1.02 Notes:
o “In a class action, no relationship external to the litigation need exist between a named party
and a represented person. The class action therefore comes closest to the paradigm of virtual
representation, in which the preclusive effect of a lawsuit depends mainly on an overlap of
interests. Reflecting this, and because of concerns about inadequate representations that are
critical to all representative actions, the class action is heavily regulated. Absent members are
bound only when a number of requirements are met, and typically only after they have
received at least one chance to preserve the right to sue individually by excluding
themselves.”
 Requiring no conflicts among the class implicates no conflicts among counsel
o ABA Model Rule 1.7
 cannot represent a client if “there is a significant risk that the representation of one or more
clients will be materially limited by the lawyer's responsibilities to another client, a former
client or a third person or by a personal interest of the lawyer.”
o FRCP 23(g)(3)
 Class counsel must fairly and adequately represent the interests of the class.” When? Is it
significant that the immediately preceding provision discusses appointment of “interim
counsel” to act on behalf of putative class before certification?
o Advisory Committee Notes Fed. R. Civ. P. 23(g)(1)(B)
 “Appointment as class counsel means that the primary obligation of counsel is to the class
rather than to any individual members of it.”

2. Significance to Defendants: Settlement Pressure

 As a descriptive matter, certification increases the likelihood of settlement:
o (1) Empirically, the rate of opt-out in class actions is low. By certifying, the court ropes into the
proceeding claims that might otherwise not be brought.
o (2) Certification increases variance of outcomes. The whole idea is to have a single determination.
 Depending on the source of variance, such settlement pressure might be normatively
undesirable. If the probability of success is influenced by those factors that have nothing to

13
 do with the merits then variance might be a serious problem. However, if the sources of
variance are dealt with by other procedural mechanisms then settlement pressure might not
be objectively bad.
 In re Rhone-Poulenc Rorer, Inc., 52 (7th Cir. 1995)
o Rule of Law:
 Class action certification may be unacceptable in situations where a defendant is likely
to win, and wherein a plaintiff will be awarded a large sum if they prevail, and
irreparable harm would come to the defendant if the plaintiffs won the class action suit.
o Facts:
 Plaintiffs were hemophiliacs or the heirs to now-deceased hemophiliacs who contracted
AIDS from blood transfusions. Defendants are drug companies that make the blood solids
that were allegedly contaminated with the HIV virus. By the time of this suit, it has been over
ten years that the medical community has been using heat-treated blood solids. There have
also been 13 cases between similar plaintiffs and Defendants, and Defendants have won 12
times. Because the damages would be great for each Plaintiff that was successful, Defendant
is now petitioning for mandamus relief for the class certification granted by the district court
judge. Although Defendants have been successful 12 of 13 times, the threat that a class
certification consolidating 300 lawsuits and 400 Plaintiffs could set Defendants up for
such a large amount of losses and potential bankruptcy led Defendants to the current
petition.
 The proposed class under review was an issue class encompassing the issue of breach. This
element was particularly important because the element of duty was already established and
causation and damages would have been straightforward.
 “Particular issues. When appropriate, an action may be brought or maintained as a
class action with respect to particular issues.” FRCP 23(c)(4)
o Holding: Issue class reversed.
 Posner writes that there is a concern with “forcing these defendants to stake their companies
on the outcome of a single jury trial, or be forced by fear of the risk of bankruptcy to settle
even if they have no legal liability.”
 Especially troubling when “the preliminary indications are that defendants are not liable for
the grievous harm that has befallen the members of the class”; the defendants won twelve of
the first thirteen individual trials.
 The defendants may not want to “roll the dice” on their liability in one trial and thus “will be
under intense pressure to settle.” Theory is that most ∆s will be risk averse.
 Result will be more “robust if [individual] trials are permitted to go forward, because the
pattern that results will reflect a consensus, or at least a pooling of judgment, of many
different tribunals.”
o TM: This case comes before Rule 23(f) interlocutory review, so in order to reverse certification
immediately you need issue a writ of mandamus—a writ only granted in extraordinary
circumstances. So perhaps Posner was exaggerating by saying that this was truly the end of
litigation.
 Could also criticize this as too much of a look into the merits of the claim at the certification
stage, although the Eisen rule has since been limited, so this seems like a weak criticism.

3. Interlocutory Appeal
 The recognition that certification creates pressure to settle is part of the rationale for interlocutory
appeal. Rule 23(f) provides that:
o “A court of appeals may permit an appeal from an order granting or denying class-certification
under this rule if a petition for permission to appeal is filed with the circuit clerk within 14 days

14
 after the order is entered. An appeal does not stay the proceedings in the district court unless
the district judge or the court of appeals so orders.”
 The district court must allow the parties to move for interlocutory appeal upon any decision to
certify or not certify the class, although the appellate court has discretion over whether or not to
take the appeal.
 This has strategic implications, because ∆s can use this as an additional delay in litigation, even if
the appellate court declines to take review. And if the appellate court does take it, who knows what
tangential issues within the case it will rule on?
o Technically, the level of review under 23(f) is “abusive”, but since there is so much vagueness
in class action law, courts nonetheless can easily find some error law in order to reverse.
 In a way, 23(f) drops the pretense that there will be a trail on the merits at all, because there is
an implicit recognition that with so few trials actually happening in the federal courts. Thus, there is
appeal from the most significant decision of a class trial.
 Implications for parties
o For Defendantsopportunity to avoid high-risk trial.
o For Plaintiffsif class certification is denied, case may be doomed without ability to appeal class
certification decision.
 Success Rate of 23(f) appeals
o Only 23% of Rule 23(f) appeals are accepted for review.
o 69% of these are appeals by the Defendant (31% are appeals by Plaintiff).
o Where Defendant obtains review, Defendant prevails 70% of the time.
o Where Plaintiffs obtains review, Plaintiff prevails 30% of the time.

B. The Mechanics: Class Certification

1. Overview
 The general requirements overlap. Approach class actions from the broadest level of generality first
and then break the problems of dissimilarity into the blackletter requirements. The real question: Is
there sufficient cohesiveness to enable a single class?
 Rigorous Analysis: General Telephone v. Falcon (U.S. 1982) states that a class action “may only be
certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a)
have been satisfied.”

2. Numerosity
 Rule 23(a)(1): the class must be “so numerous that joinder of all members is impracticable.”
o Impracticable doesn’t mean impossible
 The more geographically dispersed the claimants are, the fewer are needed to satisfy the size
requirement.
 In general, 20-40 proposed class members is in “the grey area.”

3. Commonality & Typicality

 Commonality
o Asks whether “there are questions of law or fact common to the class.”
o Focus is on relationship of class members to one another.
o The representative must show not just personal discrimination, but that there is an entire
group of people harmed in the same way by the same practices. (General Telephone v. Falcon)
o There must not just be a common question, but a “common answer” that would drive the
resolution of litigation. (Wal-Mart Stores v. Dukes)
o Choice of law issues can hurt commonality
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 Typicality
o Focuses on relationship of the class representative to the absent members of the proposed class,
asking whether the claims of the former are “typical” of those of the latter.
o The representative must show not just personal discrimination, but that there is an entire
group of people harmed in the same way by the same practices. (General Telephone v. Falcon)

General Telephone v. Falcon (U.S. 1982) is the leading case on commonality and typicality, although
the court notes in footnote 18 that the two requirements “tend to merge.”
o “Both serve as guideposts for determining whether under the particular circumstances maintenance
of a class action is economical and whether the named plaintiff’s claim and the class claims are so
interrelated that the interests of the class members will be fairly and adequately protected in their
absence.” In this way, thus, the two also merge with the adequacy of representation requirement.
o Facts
 π alleges he was discriminated against based on national origin. Π’s concern was WRT
promotion, not hiring decisions, but he sued on behalf of all Mexican-Americans, both currently
employed by the company and wrongfully not hired by the company. He alleged a general
policy or practice theory of discrimination. The case reached the Fifth Circuit, which had an
“across-the-board” rule—if an individual sued with respect to an employment practice, he/she
could serve as a class representative encompassing other alleged adverse employment practices
affecting the same group (i.e., promotion, hiring, and termination)
 This employment discrimination class action was brought under (b)(2) – seeking declaratory
and injunctive relief, but also back-pay.
 Back-pay had historically been treated as an “equitable” remedy and generally did not make
23(b)(2) unavailable (this view is later changed by Wal-Mart).
o Holding
 The Supreme Court reversed certification and overturned the across-the-board rule. The practices
that the defendant would have had to change WRT promotion and hiring were different:
 “Respondent’s complaint provided an insufficient basis for concluding that the adjudication
of his claim of discrimination in promotion would require the decision of any common
questions concerning the failure of petitioner to hire more Mexican-Americans.”
 The representative must show not just personal discrimination, but that there is an entire
group of people harmed in the same way by the same practices.
 Not harmed in same way because there is a difference between no job by hiring process and
no promotion by promotion process
 Alleging promotion discrimination against Plaintiff does not (a) show widespread practice;
or (b) show discrimination in hiring.
 In this case, the fact that Falcon was discriminated against for a promotion is not proof of (1)
widespread discrimination in promoting employees, (2) a company policy of discrimination,
or (3) discriminatory hiring practices.
 Falcon did not allege sufficient facts in the complaint to raise common questions of law or
fact between employees and applicants who were not hired.
 A single instance of discrimination does not warrant a class action suit in every case, and
Congress could not have intended such a result.

o Additional Notes/Considerations
 This is a blend of formalism and functionalism. The formalism comes from the fact that just
because he is bringing a slightly different claim, he can’t be said to be typical. The plaintiff
actually won for the class on the hiring claim. The functionalism is the recognition that in 23(a),
16
 typicality, commonality, and adequacy all blend together. The ultimate question is whether the
collective is properly being brought for the purposes of litigation.
 This has serious implications for “pattern or practice” cases
 Alleged disparate treatment of Mexican-Americans in employment. Under Title VII, this
requires proof of discriminatory motive. Focus on facially neutral laws that fall more harshly
on a Title VII protected group
 For cases more difficult to detect, becomes more difficult when they claim a “pattern-or-
practice” of disparate treatment.
o Initial burden on plaintiff in a pattern-or-practice case “is to demonstrate unlawful
discrimination has been a regular procedure or policy followed by an employer
(International Brotherhood of Teamsters v. US)
o Initial liability stage, plaintiff not required to offer evidence that each person for whom
the plaintiff will ultimately seek relief was a victim of the discriminatory policy. Burden
is to establish a prima facie case that policy existed.
Wal-Mart Stores, Inc. v. Dukes, (U.S. 2011)
o Facts:
 Dukes (plaintiff) and two other current or former employees of Wal-Mart Stores, Inc. (Wal-Mart)
(defendant) were three named plaintiffs in a proposed class action against the company that
included approximately 1,500,000 current and former female Wal-Mart employees (plaintiffs).
 Plaintiffs brought suit against Wal-Mart alleging that the company engaged in a corporate culture
of discrimination against female employees in violation of Title VII of the Civil Rights Act of
1964.
 Plaintiffs did not allege any violation of an express corporate policy. Rather, they claimed that the
local Wal-Mart managers’ subjective discretion over pay and promotions was exercised
disproportionately in favor of men. Plaintiffs sought injunctive and declaratory relief as well as
back pay. The district court approved certification of the class, and Wal-Mart appealed. The court
of appeals affirmed the district court's certification order. The United States Supreme Court
granted certiorari.
 En-banc decision by 9thCircuit – (a) certifies (B)(2) class for individuals employed when
complaint filed; (b) lower court should consider whether punitive damage claim can be certified
under (B)(3).
o Holding: Class decertified.
 Commonality requires the plaintiffs to demonstrate that all class members have suffered the
same injury.
 It is not sufficient simply to allege that the class has suffered a violation under the same
statute.
 Instead, the claims must depend upon a common contention that may be resolved across the
entire class.
 In this case, plaintiffs allege that the discrimination handed down by Wal-Mart was suffered by
all female employees. Proof of commonality overlaps with plaintiffs’ contention that Wal-Mart
engaged in widespread sex discrimination. Plaintiffs are suing for millions of employment
decisions at once.
 However, there is no significant proof that Wal-Mart operated under a policy of
discrimination.
o Conversely, Wal-Mart has an express policy in place that forbids workplace
discrimination.
 Accordingly, the lower court improperly certified the class under FRCP 23(a).

17
 “Because respondents provide no convincing proof of a companywide discriminatory pay and
promotion policy, we have concluded that they have not established the existence of any
common question”
 Plaintiffs’ showing in Wal-Mart
o Highly subjective (“tap on shoulder”) policy;
o “[S]ystems for ... promoting in-store employees” were “sufficiently similar across
regions and stores” (vacancies not posted; managers moved across stores, etc.).
o Social framework analysis – culture and discretion made Wal-Mart susceptible to gender
bias;
o 70% of hourly jobs filled by women; only 33% of management positions.
o Regression analysis found statistically significant gender disparities in 41 regions;
o Bendick study: Wal-Mart promotes lower percentage than its 20 leading competitors.
o 120 declarations.
o There must not just be a common question, but a “common answer” that would drive the resolution
of litigation.

o Ginsburg:
 Scalia is importing the 23(b)(3) requirements to certification into 23(a). Commonality isn’t the
same as superiority.
 see below under types of class actions for more on this
 The majority is correct in holding that the class’ claims for back pay were improperly certified
under FRCP 23(b)(2). However, the Court improperly holds that plaintiffs cannot cross the
“commonality” threshold set by FRCP 23(a)(2).
 See below under types of class actions for more on this
o Additional Notes/Considerations:
 Supreme Court majority analyzes this as a (B)(2) case (even though Court unanimously
concluded that backpay claims can only proceed under (B)(3)).
 Before
 Commonality requirement had historically been very liberal: identify one or more common
questions (of some significance).
 Aftermath
 Provides a stronger basis for challenging “commonality” in (B)(2) cases.
 Focus in many (B)(3) cases continues to be on whether common questions
 predominate
 TM: Perhaps this is about employment.

 ALI § 2.02
o “The court should exercise discretion to authorize aggregate treatment of a common issue by way
of a class action if the court determines that resolution of the common issue would (1) materially
advance the resolution of multiple civil claims by addressing the core of the dispute in a manner
superior to other realistic procedural alternatives, so as to generate significant judicial
efficiencies”
o The reason we put together the collective is for the purposes of resolution; if we don't have
confidence that the question being asked will drive resolution, then maybe we shouldn't put
together the collective in the first place.

4. Adequate Representation
 Rule 23(a)(4): representative parties must “fairly and adequately protect the interest of the class”

18
 In general, a class representative “must be part of the class and possess the same interest and
suffer the same injury as the class members.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591,
625-26 (1997).
o Amchem dealt with appropriate parameters in opt-out class actions
o Ortiz v. Fibreboard Corp dealt with appropriate parameters of mandatory class actions predicated
upon existence of a limited fund.
 Representatives must not have any conflict of interest with absent class members, and they must
furnish competent legal counsel to fight the suit.
o This requirement—which applies to both the class representatives and class counsel—is based on
fundamental principles of due process from Hansberry: A ruling cannot bind absent class
members if the representatives were inadequate.
o This requirement is hugely important, but most cases that deal with it come from (b)(3)
certification requirements. There are two dimensions of representation: between the named
plaintiff and the absent parties and between the class and counsel.
 Combining presently injured and potential future claimants is problematic
o Does this mean solution is creating sub-classes?
o Problems w/sub-classes
 Principle: The most effective/efficient way to litigate a case is to use the fewest number of
attorneys consistent with getting the work done.
 Corrolary: Litigation expense is highly correlated with number of attorneys involved.
 Requisite knowledge and independence (Newberg on Class Actions, 5 th ed.)
o Only needs “minimal degree of knowledge” to be adequate
o Adequacy is satisfied, though, if the plaintiff has some rudimentary knowledge of her role as a
class representative and is committed to serving in that role in the litigation.”

5. Class Counsel
 Rule 23(g): (from advisory committee notes)
o Paragraph (1)
 Basic requirement that class counsel be appointed if a class is certified and articulates the
obligation of class counsel to represent the interests of the class, as opposed to the potentially
conflicting interests of individual class members. It also sets out the factors the court should
consider in assessing proposed class counsel.
o Paragraph (2)
 Sets out the procedure that should be followed in appointing class counsel.
 Advisory Committee Notes Fed. R. Civ. P. 23(g)(1)(B)
o “Appointment as class counsel means that the primary obligation of counsel is to the class
rather than to any individual members of it.”
 Should There Be Restrictions on Direct Solicitations of Class Plaintiffs?
o Rule 7.3: Direct Contact with Prospective Clients.
 (a) A lawyer shall not by in-person, live telephone or real-time electronic contact solicit
professional employment from a prospective client when a significant motive for the lawyer’s
doing so is the lawyer’s pecuniary gain, unless the person contacted:
 (1) is a lawyer; or
 (2) has a family, close personal, or prior professional relationship with the lawyer.
o Rule does not foreclose the following solicitations:
 Contacts with in-house lawyers;
 Contacts with potential client’s existing or prior lawyers;
 Contacts with a prior client;
 Contacts with a friend, relative, etc.
19
  Contacts through advertising materials.
o Should there be any limits (other than fraud or the like) on direct solicitations of class plaintiffs?
 Do we want lawyers trumpeting up litigation, or should we allow people to decide
themselves?

IV. The Types of Classes

A. 23(b) Classes

23(b)(1)
 See FRCP 23 in a Nutshell for exact language
 E.g.: “Limited fund” cases; joint interest in property.
 Can also include cases seeking injunctive or declaratory relief (overlaps with 23(b)(2)).
 Ordinarily no right to “opt out” – it is a mandatory class.
 Must meet the four requirements of Rule 23(a) for a class to be certified.
 Do NOT need to satisfy the additional requirements in Rule 23(b)(3) – e.g., predominance;
superiority; manageability.

23(b)(2)
 See FRCP 23 in a Nutshell for exact language
 General
o Primary focus of action is injunctive and/or declaratory relief;
o Can include monetary claim, but money damages must not be predominant relief sought.
 Rules Advisory Committee: “The subdivision does not extend to cases in which the appropriate final
relief relates exclusively or predominantly to money damages.
o No right to opt out – mandatory class (but court has discretion).
o Must meet four requirements of Rule 23(a) for certification.
o Do NOT have to meet additional requirement of Rule 23(b)(3).
Wal-Mart Stores v. Dukes
o With respect to certification under FRCP 23(b)(2), claims for monetary relief may not be
certified under this provision if the monetary relief is not incidental to injunctive or
declaratory relief.
o FRCP 23(b)(2) applies only when a single injunction or declaratory judgment would provide
relief to each member of the class.
 The provision does not authorize class certification when each individual class member
would be entitled to a different injunction or declaratory judgment against the defendant.
 FRCP 23(b)(2) also does not authorize class certification if each class member would be
entitled to an individualized award of monetary damages.
o The individualized claims belong instead in FRCP 23(b)(3), with the procedural protections of
predominance, superiority, mandatory notice, and the right to opt out.
o Ginsburg Dissent
 The Court improperly holds that plaintiffs cannot cross the “commonality” threshold set by
FRCP 23(a)(2).
 One issue common to the class is sufficient for certification under FRCP 23(a)(2).
 In this case, an issue common to the class is whether Wal-Mart's discretionary pay and
promotion policies are discriminatory. The Court overlooks this common dispute and instead
focuses on the differences between class members. This "dissimilarities" line of inquiry is
better suited to FRCP 23(b)(3) and has no place in a FRCP 23(a) analysis.

20
23(b)(3)
 See FRCP 23 in a Nutshell for exact language
 Encompasses most cases seeking significant monetary relief (but see discussion of employment
discrimination cases).
 Class members must be given notice and an opportunity to opt out. See Rule 23(c)(2).
o If a class members opts out, she/he is not bound by the result.
 Rule 23(b)(3) classes face significant additional requirements for class certification:
o Common issues must predominate;
o Class action must be superior to alternatives

B. The Opt-Out Class

1. Due Process Requirements for 23(b)(3)

Phillips Petroleum Co. v. Shutts Absent Class Member Rights

- Limited to money damages class actions (fn 3)
- Rule of Law
 (1) A state may exercise jurisdiction over the claim of an absent class-action plaintiff, even if
the plaintiff lacks minimum contacts with the state, so long as the plaintiff is provided with
minimal procedural-due-process protection.
- This means:
 Plaintiffs must receive notice and an opportunity to participate in the litigation, either in
person or through counsel.
 An absent plaintiff must have the opportunity to remove himself from the class.
 Absent class members also must be represented adequately at all times by the named
plaintiff.
 (2) In a class action, the forum state must have a significant contact or aggregation of contacts
creating a state interest in the claims asserted by each plaintiff class member to ensure that the
choice of the forum state's law is not arbitrary or unfair.
 Application of a state’s law to every claim in a lawsuit might be unfair and arbitrary in
violation of constitutional principles if:
o there is no “common fund” for payment in the state and the state has no interest in claims
unrelated to the state
o there appear to be conflicts between the state law and the laws of other states
w/connections to the lawsuit that have significant impact on a finding of liability
- Facts:
 Phillips Petroleum Co. (defendant), a producer and seller of natural gas, extracted some of its gas
from leased real property in 11 states. Shutts (plaintiff), a royalty owner with rights to the leases
from which Phillips produced the gas, brought a class-action suit in a Kansas state court, alleging
that the plaintiff class members were owed interest on royalty payments that Phillips had delayed.
The trial court certified a class consisting of royalty owners from all 50 states, Washington, D.C.,
and foreign countries.
 Shutts sent a letter via first-class mail to each class member. The letter advised each class member
that he could appear in person or by counsel, or otherwise, each class member would be
represented by Shutts and the other named plaintiffs. The letter also advised each class member
that he could opt out of the class if he returned a document included with the notice entitled
"request for exclusion.”

21
 - Proposed class was 33,000 – 3,400 opted out and 1,500 didn’t receive notice.
 The final class as certified contained 28,100 members. Approximately 97 percent of the class
members and over 99 percent of the leases had no connection to Kansas beyond the lawsuit.
- One named plaintiff from Kansas
- Less than 1K class members lived in Kansas
 After trial, the Kansas court found Phillips liable under Kansas law for interest on the delayed
royalty payments. Phillips appealed to the Supreme Court of Kansas.
- On appeal, Phillips argued that the Kansas court did not have personal jurisdiction over the
absent class members and that the opt-out notice was not sufficient to bind class members
who were not Kansas residents or did not have minimum contacts with Kansas.
- Phillips also asserted that the trial court erred in applying Kansas law to all of the claims and
that the court instead should have looked to the law of each state where a lease was located
to determine whether interest could be recovered and at what rate. The Supreme Court of
Kansas affirmed the decision of the trial court. The United States Supreme Court granted
Phillips's petition for certiorari.
- Issue 1 and arguments:
 May a state exercise jurisdiction over the claim of an absent class-action plaintiff, even if the
plaintiff lacks minimum contacts with the state, so long as the plaintiff is provided with minimal
procedural-due-process protection?
 PHILLIPS:
- International Shoe should apply to plaintiffs. Normally it applies to defendants to protect
defendants’ liberty. But it applies to plaintiffs in the class because an adverse judgment would
extinguish their chose in action.
- Opt-out is not enough; there needs to be an opt-in procedure
 KANSAS S CT: International Shoe doesn’t apply because absent class members are plaintiffs.
- SCOTUS Holding and Reasoning for Issue 1:
 The minimum-contacts requirement established in International Shoe Co. v. Washington, 326 U.S.
310 (1945), Shaffer v. Heitner, 433 U.S. 186 (1977), and World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286 (1980), involved the exercise of personal jurisdiction over out-of-state
defendants.
- The burden placed by a state on an out-of-state defendant is greater than on an out-of-
state plaintiff.
 An out-of-state defendant must hire counsel and travel to the forum to defend itself.
o Further, the defendant may need to participate in discovery, pay damages, or comply with
some form of remedy imposed by the court against it.
 In contrast, the out-of-state plaintiffs in this case were not forced to travel anywhere to
defend themselves.
o Moreover, unlike a defendant in a civil suit, the class-action plaintiffs here had the named
plaintiffs to protect their interests. They did not need to hire counsel or appear in court.
Nor were they subject to liabilities for fees or costs.
 Because out-of-state plaintiffs are faced with less of a burden, states may exercise personal
jurisdiction over the claim of an out-of-state plaintiff, even though that plaintiff lacks the
minimum contacts with the state that would support personal jurisdiction over a defendant.
 However, a forum state seeking to bind an out-of-state plaintiff must still provide minimum
procedural-due-process protection.
- For instance, plaintiffs must receive notice and an opportunity to participate in the
litigation, either in person or through counsel.
- Additionally, an absent plaintiff must be given the opportunity to remove himself from the
class.
22
 - Absent class members also must be represented adequately at all times by the named plaintiff.
- Because the class members in this case received appropriate due-process protection, the Kansas
court appropriately exercised jurisdiction over the class, and the decision of the Supreme Court
of Kansas is affirmed as to the jurisdictional issue.
- Stevens Concurrence on Issue 1:
 The Court correctly concluded that the Kansas court properly exercised jurisdiction over the class
action.
- Issue 2 and arguments:
 In a class action, must the forum state have a significant contact or aggregation of contacts
creating a state interest in the claims asserted by each plaintiff class member to ensure that
the choice of the forum state's law is not arbitrary or unfair?
 Kansas S CT:
- Kansas law can be applied because normally, law of the forum controls without “compelling
reasons” otherwise.
 Phillips owns property in KS; there are some plaintiffs in KS; lawsuit is like a “common
fund” in KS And plaintiffs wanted to have it determined in Kansas.
- SCOTUS Holding and Reasoning for Issue 2:
 To meet the requirements of the Due Process Clause and the Full Faith and Credit Clause, a forum
state's substantive law may be applied in an action only if the state has a significant contact or
aggregation of contacts, creating a state interest, such that the choice of the forum state's law is
not arbitrary or fundamentally unfair.
- There is no greater leeway given to a court presiding over a nationwide class action.
- Although a court may constitutionally exercise jurisdiction over the claims of plaintiffs
whose main contacts are with other states, this is an entirely separate inquiry from a
choice-of-law analysis.
 Accordingly, in a class action, the forum state must have … not arbitrary or unfair.
- In this case, Kansas has an interest in protecting the interests of the Kansas class members
and in regulating Phillips's conduct, given Phillips's substantial presence in the state and the
importance of the oil-and-gas industry.
 However, there is no "common fund" for payment located in Kansas, and Kansas does not
have any interest in claims that are unrelated to the state.
- Moreover, there appear to be conflicts between Kansas law and the laws of other states with
connections to the lawsuit, specifically Texas and Oklahoma.
 For example, both Texas and Oklahoma have statutory interest rates much lower than the
rate applied under Kansas law, and it is questionable whether Phillips would be liable to the
same extent under these states' laws.
 Therefore, application of Kansas law to every claim in the lawsuit was arbitrary and unfair in
violation of constitutional principles. The judgment of the Supreme Court of Kansas is reversed
with respect to this issue and remanded for further proceedings.
- Dissent (Stevens) for Issue 2:
 Regarding the choice-of-law issue, there is no constitutional violation from applying Kansas
law if Kansas law does not conflict with the law of any other jurisdiction connected to the
action.
 In this case, there is no direct, substantive conflict between Kansas law and other states' laws.
The only purported conflicts cited by the Court are merely potential or likely; they do not rise to
the level of actual, unambiguous conflicts. Indeed, the Supreme Court of Kansas has conducted
in-depth analysis of the Texas and Oklahoma laws relevant to this action and found those laws to
support the results reached by the Kansas courts. Accordingly, application of Kansas law to the
class-action claims in this action was appropriate.
23
In re Nexium Antitrust Litigation (1st Cir. 2015) Def’s 7th Am. and Due Process Rights
 Rule of Law
o At class certification stage, “the court must be satisfied that, prior to judgment, it will be possible
to establish a mechanism for distinguishing the injured from the uninjured class members. The
court may proceed with certification so long as this mechanism will be ‘administratively
feasible,’ and protective of defendants' Seventh Amendment and due process rights”
 Base Issue:
o Is class certification permissible even if class includes de-minimis number of uninjured parties?
 1st Cir. Holding and Reasoning for Base Issue:
o Class certification permissible even if class includes de-minimis number of uninjured parties.
- “Relevant to the question of whether a class can include uninjured members, three principles
are established”
 “First, a class action is improper unless the theory of liability is limited to the injury caused
by the defendants. In other words, the defendants cannot be held liable for damages beyond
the injury they caused.”
 Satisfied in this case because model of damages only requires payment of injuries actually
caused.
 “Second, the definition of the class must be ‘definite,’ that is, the standards must allow the
class members to be ascertainable.”
 Satisfied in this case because limited to customers during a certain time period.
 “Third, where an individual claims process is conducted at the liability and damages stage of
the litigation, the payout of the amount for which the defendants were held liable must be
limited to injured parties.”
 Required additional analysis
 Sub Issue:
At class certification stage, “the court must be satisfied that, prior to judgment, it will be
possible to establish a mechanism for distinguishing the injured from the uninjured class
members.”
“The court may proceed with certification so long as this mechanism will be
‘administratively feasible,’ and protective of defendants' Seventh Amendment and due
process rights”
o “What counts as a ‘de minimis’ deviation ‘from a prescribed standard must, of course, be determined
with reference to the purpose of the standard.’ We thus define ‘de minimis’ in functional terms.
- Here, if common issues ‘truly predominate over individualized issues in a lawsuit, then the
addition or subtraction of any of the plaintiffs to or from the class [should not] have a substantial
effect on the substance or quantity of evidence offered.’ Upon examination of the record, we see
no basis for overturning the district court's ultimate conclusion that the number of uninjured
members here is not so large as to render the class impractical or improper, or to cause non-
common issues to predominate. Nor do we see a basis for concluding the number of uninjured
class members here is so large as to violate defendants' 7th Amendment or due process rights, in
light of the fact that uninjured members can be excluded and the district court expressly
‘preserve[d] the Defendants' rights to challenge individual damage claims at trial.’”
 Sub Issue Argument 1:
o Defendants:
- “The defendants here dispute the plaintiffs' compliance with the third set of requirements primarily
because the class includes some number of brand-loyal consumers who would continue to
purchase branded Nexium even when a generic becomes available. Defendants argue that ‘the
[brand-loyalist issue] presents problems that plaintiffs cannot overcome, for plaintiffs have no
24
 methodology to identify [at a later stage of litigation] those consumers who would have switched
to a generic version.’ Defendants assert … plaintiffs' expert admitted … damages model did not
limit recovery to injured parties.”
 1st Circuit Holding and Reasoning for Sub-Issue 1:
o 1st Circuit confident a proper mechanism could be developed, and noted “plaintiffs' expert made no
concession that such a mechanism could not be developed, nor did defendants' expert say that it
could not be developed.”
- Two options to determine whether a mechanism could be developed
 “[P]resumption that consumers would purchase the generic if it were available, i.e., a
presumption that economically rational consumers faced with two identical products would
purchase the less expensive alternative.”
 “[E]stablish injury through testimony by the consumer that, given the choice, he or she
would have purchased the generic.” If testimony is unrebutted, this “would be sufficient to
establish injury in an individual action. And if such consumer testimony would be sufficient
to establish injury in an individual suit, it follows that similar testimony in the form of an
affidavit or declaration would be sufficient in a class action.”
- Defendant’s mere speculation a mechanism cannot be developed later is insufficient.
 Sub Issue Defendants Argument 2:
o “[A]ny mechanism of exclusion” requiring “determination of the individual circumstances of class
members is improper.”
 1st Circuit Holding and Reasoning for Sub-Issue 2:
o The “need for some individualized determinations at the liability and damages stage does not defeat
class certification.”
- “Rather, the question is whether there is ‘reason to think that [individualized] questions will
overwhelm common ones and render class certification inappropriate....’”
 Dissent (Kayatta):
o Affidavits are insufficient,
o 2.4 percent is not de minimus from a Constitutional perspective;
o Plaintiffs should bear burden of explaining how they’ll weed out uninjured class members before
certification.

In re Asacol Antitrust Litigation (1st Cir. 2018) Def’s 7th Am. and Due Process Rights
 Background
o Very similar facts in front of same Court just a few years later (product hopping instead of reverse
payment).
o Plaintiffs proposed a method of culling out uninjured class members via claims administrator
 Holding and Reasoning (Kayatta)
o Proposed method of culling is unsatisfactory
o Judge Kayatta says some plaintiffs will have no records of purchases, some persons will have a
preference for DBP-free medication and some have no co-pay so will have stuck with the branded
drug.
- What if the declarations encompass each of those elements?
- Could they be challenged effectively under a preponderance of the evidence standard or is this
delusional?
Takeaways from 1st Cir. Cases
 This is a fundamental shot across the bow of Rule 23. Intra and Inter-circuit split on this issue.

2. Predominance & Superiority

General
25
 The language of the Rule asks if common questions predominate, but case law shows that common
questions are not enough. Courts care about whether a class can yield common “answers.”
 The predominance test asks whether there are any individualized questions that would disable class
resolution, suggesting that it is really searching for “a lack of dissimilarity.”
o Amchem: “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are
sufficiently cohesive to warrant adjudication by representation.”
 Per the Rule, common questions need only “predominate” and a class action need only be “superior”
to other available methods for fair and efficient adjudication.
 “The predominance inquiry ‘asks whether the common, aggregation-enabling issues in the case are
more prevalent or important than the non-common, aggregation-defeating individual issues.”
(Tyson Foods)

Erica P. John Fund v. Haliburton (U.S. 2011) Loss Causation v. Reliance

 Rule of Law
o Securities fraud plaintiffs are not required to prove loss causation to obtain class certification.
 Facts
o Erica P. John Fund, Inc. (EPJ Fund) (plaintiff) is an investor in Halliburton Co. (Halliburton)
(defendant). EPJ Fund brought this suit on behalf of all purchasers of Halliburton common stock
between June 3, 1999, and December 7, 2001, alleging that Halliburton made misrepresentations in
order to inflate its stock price in violation of § 10(b) of the Securities and Exchange Act of 1934.
EPJ Fund sought class certification under Federal Rule of Civil Procedure 23. The District Court
found that the plaintiffs could not obtain class certification because they were unable to prove loss
causation. The Court of Appeals affirmed. This Court granted certiorari
 Holding and Reasoning
o Securities fraud plaintiffs are not required to prove loss causation to obtain class certification
o When determining whether a class should be certified, Rule 23(b)(3) of the Federal Rules of Civil
Procedure requires that common questions of law or fact predominate.
- This inquiry requires a court to consider the elements of the cause of action at issue.
 One of the elements of a § 10(b) cause of action is reliance on a misrepresentation, which
is usually shown by demonstrating that the plaintiffs were aware of the defendant’s
misrepresentation.
- However, in Basic Inc. v. Levinson, 485 U.S. 224 (1988), this Court recognized that showing
each plaintiff in a class knew of the misrepresentation would be difficult and unrealistic.
- Therefore, Basic established the fraud-on-the-market theory, which presumes an investor’s
reliance on a defendant’s misrepresentation on grounds that the market price of the shares
reflects the effect of any public misrepresentations.
o Here, the Court of Appeals improperly required EPJ Fund to establish loss causation in order to
benefit from the fraud-on-the-market presumption of reliance, and thereby show that reliance was
capable of resolution on a classwide basis. This is because a loss causation inquiry is distinct from
a reliance inquiry.
- Reliance concerns an investor’s decision to buy or sell a stock based upon a misrepresentation.
- Loss causation is concerned with whether that misrepresentation caused an economic loss.
- Even if a misrepresentation does not cause an economic loss, this does not necessarily mean an
investor did not rely on the misrepresentation. Thus, the plaintiffs should not have been required
to establish loss causation in order to obtain class certification.

Amchem Prods. Inc. v. Windsor (U.S. 1997) Management as Consideration

o Rule of Law:

26
 - A court considering certification of a class for the sole purpose of settlement does not need to
determine whether certification would create significant management problems at the trial
stage, but must still ensure that all the formal certification requirements of Federal Rule of Civil
Procedure 23 are met
o Facts:
- 23(b)(3) class action; hundreds of thousands of asbestos exposed individuals.
- MDL panel transferred all asbestos cases then filed to a single district. Plaintiffs steering committee
negotiate with defendants’ committee (CCR). They reach an agreement to settle inventory claims
(then-pending claims).
- Settling parties file a settlement class (all done within 1 day). The class is all persons who hadn’t
filed, but who had been exposed or whose spouse or family member had been exposed. Defendants
want global peace/finality
- The settlement: Comes up with a grid of payments depending on disease categories
 No adjustment for inflation, only a few claimants can opt out at the back end, no loss of
consortium claims.
o Procedural history
- District court certified for settlement only, found settlement was fair and representation and notice
had been adequate.
 Commonality/preponderance satisfied – they looked to their common exposure to the asbestos,
and the interest in a fair and reasonable settlement.
 Representation was adequate b/c all plaintiffs had a strong interest in recovery for all categories;
subclasses were unnecessary and costly/confusing
- Third Circuit vacated district court’s judgment.
 You look to 23(a) as if it’s to be litigated even though just a settlement class
- No commonality: different products, periods, different diseases
- No adequacy: intra-class conflicts; while they all wanted to maximize recovery, settlement
makes “important judgments on how recovery is to be allocated”
 Conflict between exposure-only and already-injured
o Holding:
 A court considering a class for settlement need not consider whether certification would
present intractable management problems at the trial stage
 But, remaining formal requirements necessary.
- Predominance in 23(b)(3) classes
 First, despite the overarching issue of asbestos-related health problems for all
plaintiffs, common issues do not actually predominate, given the very different
injuries suffered by the plaintiffs, which was complicated by the fact that some class
members had not yet manifested physical disease. This fact means the certification
does not comply with the requirements of FRCP 23(b)(3).
- 23(a) requirements
 Second, the named parties do not adequately represent the class, because those
currently injured had interests distinct from those who had been exposed to
asbestos but not yet exhibited any physical symptoms. This fact means the
certification does not comply with the requirements of FRCP 23(a)(4).
o The class members had sharply varying incentives. For instance, the currently-
injured πs wanted generous immediate payments, whereas the exposure-only πs
most cared about a large, inflation-protected fund for the future. “The settling
parties ... achieved a global compromise with no structural assurance of fair and
adequate representation for the diverse groups and individuals affected.”

27
 - Back-end opt-out rights might resolve some of these sub-classing problems.
However, settlements that involve back-end opt outs are susceptible to collapse
because the strongest claims opt out, leaving the defendants settling with opt-out
claimants for more than they are settling with class claimants, as was the case in
Fen-Phen.
o The Court in Ortiz v. Fibreboard (U.S. 1999), in fact, noted that the single,
undifferentiated class in that case should have been subdivided: “it is obvious after
Amchem that a class divided between holders of present and future claims (some of
the latter involving no physical injury and attributable claimants not yet born)
requires division into homogenous subclasses under Rule 23(c)(5), with separate
representation to eliminate conflicting interests of counsel.
- Notice Requirements
 The Court also noted there was a notice problem (namely inability for potential future
πs who had not yet contracted diseases but had been exposed). “Many persons in the
exposure-only category ... may not even know of their exposure, or realize the extent
of the harm they may incur. Even if they fully appreciate the significance of class
notice, those without current afflictions may not have the information or foresight
needed to decide intelligently, whether to stay in or opt out.” The Court did not,
however, resolve this issue, stating the other two problems sufficed to decide the case.
o Breyer Dissent
- The majority’s basic holding is that a class being certified solely for settlement is partially relevant
to determining whether certification is appropriate.
- However, the majority’s approach would ultimately lead to a different conclusion on the five
following grounds.
 First, the need for settlement in this mass tort case, with hundreds of thousands of lawsuits, is
greater than the majority’s opinion suggests.
- Settlement is really important; otherwise we have irrational/no compensation
 Second, more weight should be given to settlement-related issues for purposes of
determining whether common issues predominate.
 Third, on the issue of adequacy of representation, it is inappropriate to second-guess the
district court on that matter.
- District court is in a better position to judge
 Fourth, the majority’s opinion would seem to suggest that the settlement was unfair.
- We’ll evaluate the fairness of the settlement under 23(e)
 Finally, in the absence of further review by the court of appeals, the majority is wrong to
suggest that the requirement of giving notice to the class members, when taken by itself as
the only formal requirement present, is inadequate for purposes of FRCP 23.
 Additional Notes
- Conflict between presents and futures is always a problem
 There are serious benefits for the futures in the settlement
o Class Notes
- Dissent says “trust the district court” to do substantial justice and apply 23(b)(3) fairly.
- Majority raises explicit and implicit concerns about conflicts, inadequate notice, a dizzying array of
individualized issues incapable of common resolution, and an incentive to maximize attorneys fees
at expense of care & attention to individual circumstances.
 Court discusses disparity between currently injured and exposure-only categories of plaintiffs.
- Is there a conflict here? Can representatives ever be adequate? Can notice?

28
  Court notes that “predominance is a test readily met in certain cases alleging consumer or
securities fraud or violations of the antitrust laws” but “mass accident” cases are “ordinarily not
appropriate” for class treatment. (citing Advisory Committee Notes).
- What if I were to tell you that in the intervening years since Amchem, all those companies went
bankrupt, insurance coverage of over $1B earmarked for plaintiffs was mostly expended in
attorneys fees and litigation costs and average recoveries were lower than under the proposed
settlement and take longer?
 Does that factor into whether the dissent was correct? Why or why not?

 Effect of Settlement-Class on Predominance and Superiority Inquiry

o In Amchem Ginsburg is clear in stating that a settlement-only class certification question does not
present management problems—a court “need not inquire whether the case, if tried, would
present intractable management problems—but that “other specifications of the Rule—those
designed to protect absentees by blocking unwarranted or overbroad class definitions—demand
undiluted, even heightened, attention in the settlement context.”
o But, “every class—whether for settlement or litigation—must satisfy the basic core requirements
for certifying any class action, namely, commonality, adequacy of class representation,
numerosity.”

3. Future Claimants and Intra Class Conflict

General
 Amchem left a large unsettled question in its wake – if “exposure only” or other plaintiffs who have
not yet manifested injuries cannot be fairly represented by representatives who have, what do we do
about previous settlements that purported to resolve such claims? Are those claimants now unbound
by the settlement and free to pursue their claims anew?
Stephenson v. Dow Chemical Co. (2d Cir. 2001) Remaining Questions Regarding Amchem
 Rule of Law
o Class action judgments can only bind absent class members where the interests of the absent class
members are the same as the joined class members and the interests are adequately represented in the
litigation.
 Facts
o Settlement fund created to resolve Agent Orange litigation (Vietnam vets exposed to chemical).
Agreement includes future claimants, and fund will pay out for 10 years (1/1/85 – 12/31/94), after
which no more payouts will happen. Settlement approved by Judge Weinstein; under Rule 23;
affirmed by 2d Cir.
o Stephenson sues after the window has closed, argues that he’s not bound by the settlement because
they were not afforded due process and were not adequately represented in the prior litigation
under 23(a) under Amchem.
- Points to a lack of futures representative, lack of subclasses, intra-class conflicts.
 Holding and Reasoning
o Class action judgments do not always preclude all members of the class from bringing a claim on
the issue in the future.
- Class action judgments can only bind absent class members where the interests of the absent
class members are the same as the joined class members and the interests are adequately
represented in the litigation.
 In the prior 1984 Agent Orange litigation, the courts never determined the adequacy of the
representation of those individuals whose injuries manifested after the expiration of the
settlement fund. As an initial matter, therefore, a collateral attack on the district court’s
application of res judicata to this case is appropriate.

29
o In terms of the merits of that attack, the court determines that the plaintiffs were not adequately
represented in the prior litigation.
- Although the plaintiffs were within the class in the prior litigation, there is a clear conflict
between their interests and the rest of the class.
 The prior litigation allegedly settled all future Agent Orange claims. However, it only
provided funds for those injuries manifesting prior to the end of 1994.
 The settlement did not provide for those claims after 1994 and as a result it cannot be said
that those class members whose injuries manifested after 1994 were adequately
represented.
o The absence of adequate representation as part of the class is a violation of the plaintiffs’ due
process rights.
- Consequently, the plaintiffs may not be bound by the 1984 litigation and their claims may
proceed. The district court’s dismissal of the plaintiffs’ claims is vacated and the case is remanded
for a trial on the merits.
Uhl v. Thoroughbred Tech. & Telecomms., Inc. (7th Cir. 2002) Remaining Questions Post-
Amchem
 Facts
o Proposed settlement class between owners of property on whose land will be installed fiber optic
cables on 1 side of train track by D. D doesn’t know which side of track cables are on, so class
divided into Cable Side and Non-Cable side. 2 groups will receive different forms of compensation.
One class representative.
o Class member challenges settlement based on inadequacy of representation.
o There were conflicting subgroups (Non-Cable Side’s goal is to prepare for future infringement by
telecommunications groups through the formation of Class Corridor, while Cable Side’s goal is to
get compensation for the cable on their land) but they were only assigned one class representative.
Note: this is about the named representative, not the lawyer.
 Holding and Reasoning
o No inadequacy of representation; settlement APPROVED
- Need to view the adequacy of representation from an ex ante perspective, at the time of
certification
- At the time of settlement, objecting class member is in the same position as everyone else: doesn’t
know which side of the tracks the cable will be on. Named representative had equal incentive to
represent the two sides.

Takeaways:
 (1) Stephenson and Uhl are reconcilable; look at the adequacy of representation at the time of class
certification
 (2) Court acknowledges responsibility to act as a “fiduciary” during class settlement approval

4. Choice of Law and Intersection w/Predominance

When do choice of law issues defeat class certification?

 Possibly raises commonality, predominance, and manageability issues
 Not problem for federal law cases— most antitrust, securities and employment discrimination class
actions
 Can be fatal for national (or multi-state) class actions based on state law—product liability and other
cases based on tort law, consumer and fraud claims, breach of contract claims, and other cases
predicated on state law.
How can a plaintiff overcome choice of law issues?
30
 Rely on federal law
 Argue there’s a false conflict
 Rely on a “choice of law” provision in terms of sale.
 Pursue claim where Defendant has principle place of business.
 Bring class action based on violation of single state’s law (or multiple class actions)
General
 Shutts tells us that due process requires a court in a multijurisdictional 23(b)(3) class action has to do
choice of law analysis. This applies to federal courts sitting in diversity as well.
 Choice of law analysis:
o (1) Identification of a conflict: Is there actually a conflict among the bodies of law with
potential application?
 Sun Oil: A due process violation arises here when the court “raises its judicial middle
finger to the clearly established law of some other state”
o (2) Identification of applicable choice-of-law principle
 If certifying court is a state court  state law is the source of choice-of-law principle
 Schutts tells us state can apply its own law to all claims only if it had a “significant
contact or aggregation of contacts to the claims asserted by each member of the
plaintiff class, contacts ‘creating state interests’ in order to ensrue that the choice of”
state “law is not arbitrary or unfair.”
 If certifying court is a federal court sitting in diversity or w/ supplemental jx  Klaxon
 Court must apply the choice of law rule of the state in which it sits (like Erie)
o (3) Application of choice-of-law principle (this is where you actually determine which state’s
law governs)
 (A) Vested Rights Test: the law in place where the right vested is the law that governs
 (B) Significant Relationship Test: the law of the jurisdiction which has the greatest concern
with the specific issue raised, because of its relationship or contact with the occurrence or
the parties
 (C) Interest Analysis Test: Balance the interests of each of the states that are related to the
litigation
 Sun Oil: there’s no constitutional problem for failing to do a serious choice-of-law analysis
 2 ways in which choice of law analysis affects certification:
o (1) Creates manageability concerns
o (2) Substantive law may require investigation of individual questions, defeating
commonality/predominance.
Cole v. General Motors Corp. (5th Cir. 2007) Choice of Law and Predominance
 Facts
o Plaintiffs move for (b)(3) certification of a nationwide class of people who bought cars from GM
equipped with faulty air bag systems (excluding those who had been harmed by them).
- Claims are brought on the grounds of breach of express and implied warranty.
o District court certifies saying that all the states’ laws were compatible, just looks at the text of the
rule, GM appeals under 23(f) arguing that there was no predominance.
- Louisiana choice of law rule: The laws of all 51 jurisdictions would apply because the choice-of-
law rule is: “the laws governing plaintiffs’ claims are the laws of the state where the vehicle is
used by its owner or lessee and in where the contract of repair is to be performed”
 Holding and Reasoning
o Class DECERTIFIED.
- Plaintiffs failed to analyze how variations in state law impact predominance. Also concerns
about manageability.

31
o (A) Predominance: certain jurisdictions have law that risks turning this into individual inquiries.
- Some jurisdictions require individuals to show reliance on a statement/representation; individuals
would have to bring forth individualized evidence of this, risks turning the trial into multiple
individual hearings
- Some jurisdictions might require a showing that class members had notice of the alleged defect.
- Some jurisdictions require individuals to show privity of contract between manufacturer and
individual; this would require individualized proof.
- Some jurisdictions do not permit recovery for unmanifested product defect
o (B) No manageability Differences in state laws would require separate jury instructions for each one
 Additional Notes and Considerations
o The court might not have been so aggressive about COL question if this had been a legitimate CA –
the named representatives are the lawyers’ relatives.

In re St. Jude Medical, Inc. (D. Minn. 2006)

 Facts
o Eighth Circuit remanded to district court to determine whether:
- “Minnesota has sufficient contacts with each plaintiff’s claims so that application of Minnesota
law satisfies the constitutional requirements of the Due Process Clause and Full Faith and Credit
Clause.”
- “[I]f Minnesota has sufficient contacts to satisfy the constitutional requirements, the Court must
apply Minnesota’s conflicts of law rules to determine whether application of Minnesota law is
preferable over the law of other states with sufficient contacts…”
 Rule of Law
o Determination of sufficient contacts:
- The first step for sufficient contacts “is to determine whether the law of the forum ‘conflicts in any
material way with any other law which could apply.’”
 Court concluded 18 states had substantive conflicts w/consumer protection laws in
Minnesota
- The second step for sufficient contacts is whether applying law of the forum would be fair. This
entails consideration of whether “forum has significant contacts to the litigation that support the
forum state’s interest in applying its law.” It also includes consideration of “expectation of the
parties” (citing Schutts)
 Satisfied because:
- of domicile and claims-related activities of defendant
 Defendant’s PPOB is in Minnesota, which supports Minnesota’s interest in applying its law
 Defendant’s corporate acts implicated by each claim occurred in Minnesota
 Defendant’s products were created and manufactured in Minnesota
 In advertisements worldwide, Defendant included a Minnesota telephone number
o Minnesota law is constitutionally permissible, but need to determine if application of Minnesota law
is preferable to where implants were implanted. Application of Minnesota’s Conflicts of Laws rules:
- First, determine whether any conflicts of law
 If yes, are they substantive or procedural?
- If procedural, continue with application of Minnesota law
 To determine whether substantive, can use “outcome determinative” standard to see if a
COA based on facts alleged would be precluded under laws of other states.
- Here, 32 jurisdictions had no outcome determinative conflicts w/Minnesota law and therefore
application of Minnesota law to plaintiffs w/significant contacts in these jux’s is warranted without
further analysis

32
 - The remaining 18 jurisdictions with substantive conflicts of law required application of the five
factor test…
In re Bridgestone/Firestone Inc. Tires Prods. Liab. Litig. (7th Cir. 2002)
 Facts
o Nationwide class certified in Indiana district court for owners of cars with defective tires. District
court determines that the Indiana choice-of-law rule was to apply the law of the place where
defendant’s headquarters was (Michigan) to all of the claims, and certifies the class.
o Defendants challenge the choice-of-law analysis, argue that one state’s law can’t apply to all
consumers’ claims. They think that laws of all 50 states should apply, which would defeat the
commonality, superiority, and manageability requirements.
 Holding and Reasoning
o Class DECERTIFIED.
- The district court chose the wrong choice-of-law rule: Indiana never actually applies the law of a
state where a product was designed to a suit arising out of an Indiana injury. They always apply
the law of the state where the consumer is located.
 Note the searching nature of the inquiry into how legal rules are actually applied. Don’t just take the
district court’s decision at face value.
 So, the laws of all 50 states have to apply; which creates a number of problems: predominance,
superiority, manageability.
 Double-recovery problem for cases where there are both economic harms and personal injuries.

5. Manageability
 Background
 Rule 23(b)(3): “…The matters pertinent to the findings [of predominance and superiority] include:
(A) the class members’ interests in individually controlling the prosecution or defense of separate
actions (B) the extent and nature of any litigation concerning the controversy already commenced by
or against class members; (C) the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and (D) the likely difficulties in managing a class action
 Issues of manageability often come up when predominant issues concern questions of liability, but
remaining individual issues center on calculation of damages for class members.
 In re Domestic Air Transportation Antitrust Litigation, 155 (N.D. Ga. 1991)
 Setup: District court considering whether to certify a 23(b)(3) class of domestic airline ticket
purchasers nationwide who allege that major airline carriers conspired not to compete, raising prices
of tickets. Common issues easily predominated (existence of conspiracy and market effects upon
consumers).
 Defendants challenge superiority on the grounds that the class would be unmanageable for 2
reasons: (1) it will be impossible to calculate damages for the 400 million transactions; (2) it will be
impossible to give notice to everyone in the class.
 Holding: Class CERTIFIED.
 Damages: Not a problem: Plaintiffs submit a plan that involves a formula to calculate damages and
they have computers.
 Notice: Plaintiffs do publication notice; newspapers, magazines, seat pockets on airplanes
 You don’t need to do individual notice; all that Mullane requires is notice is “reasonably calculated
to reach interested parties and apprise them of the pendency of the action.”
 McKenzie takeaway: Court looks to the economics of the litigation and what alternatives are
possible (link to Amex III); demonstrates a willingness to sacrifice manageability problems if this
enables autonomy interests of class

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 Court assumes that the notice standard should be the same as in Mullane, even though Mullane was a
mandatory class
 Notice serves a different function for mandatory vs. opt-out class: for an opt-in, it’s just ensuring that
the adversarial process works. For opt-out, it has to also enable the ability of class members to
actually opt out.
 Rule 23(c)(2): Notice “For any class certified under Rule 23(b)(3), the court must direct to class
members the best notice that is practicable under the circumstances, including individual notice to all
members who can be identified through reasonable effort.”
 Plaintiffs lawyers generally want to do b2 classes instead of b3 b/c less expensive for notice. Here,
they get away with cheap notice.
Hilao v. Estate of Marcos, 158 (9th Cir. 1996) (NEVER WOULD HAPPEN POST-WALMART)
 Rule of Law:
o In human rights class action against estate of former president of Philippines, use of statistical
sample of class claims in determining compensatory damages did not violate due process clause;
although statistical method presented somewhat greater risk of error in comparison to adversarial
adjudication of each claim, interest of the class in use of statistical method was enormous, since
adversarial resolution of each class member's claim would pose insurmountable practical hurdles,
and “ancillary” interest of judiciary in procedure was substantial, since 9,541 individual
adversarial determinations of claim validity would clog docket of district court for years. Hilao v.
Estate of Marcos, 103 F.3d 767 (9th Cir. 1996)
 Facts:
o Class certified of citizens from the Philippines who were tortured, summarily executed, or
disappeared by Philippine military groups. Sue based on Alien Tort Statute. Comes up with
creative, trifurcated trial plan.
o Phase 1: Liability - Verdict in favor of the class. Phase 2: Punitive Damages - Punitives of $1.2
billion. Phase 3 (the controversial part): Compensatory Damages
o (1) Random sample of 137/10,000 claims selected. (2) Special master takes depositions of
sample, and makes a recommendation on sample’s damages. Extrapolated to the whole class,
comes out to $767M (3) Jury trial decides: (a) whether to accept/reject/modify special master’s
recommendation; (b) actual damages of random sample claimants; (c) aggregate damages
suffered by the class.
o It finds a lower invalidity rate than the special master, but awards basically the same amount
decided by the special master.
o Estate challenges method used by district court in awarding compensatory damages to class
members on manageability due process grounds.
 Holding: Trial plan upheld.
o Manageability This does look like a superior method of adjudicating this controversy than any
other; it’d be hard to get redress for a lot of these people without the class action in the U.S.
Today, a court would probably not come to the same conclusion about manageability.
o Due Process: Mathews balancing favors using the procedure. (1) Interest of D: They don’t care
how the damages are determined; they just care about the total amount of damages. And the risk
of paying damages for invalid claims is reduced by (1) accurate statistical method; (2) proof-of-
claim form required, under penalty of perjury. (2) The class has a huge interest in using the
statistical method b/c adversarial resolution of each claim would be impossible. (3) And the court
has an interest in having this resolved quickly, get these cases off the docket.

6. Challenging Class Certification

 Klay v. Humana, 167 (11th Cir. 2004)

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 Setup: Class of doctors sue a group of HMOs for conspiring with each other to underpay physicians
for their services. Plaintiffs bring claims under RICO and breach of contract.
 District court certifies. Defendants challenge because common issues of fact and law do not
predominate over individual issues.
 Holding: (1) Affirms certification of federal RICO claims; (2) Decertifies state claims.
 Predominance
 Federal RICO claims
 RICO is a good way to get around problems of class certification for claims of fraud because matters
is the pattern of fraudulent conduct by defendants. Don’t need to look at P’s knowledge. Still need
to prove reliance, but individualized issues of reliance don’t predominate b/c plaintiffs may prove
reliance through common evidence (can just look at defendant’s representations) Commented [ZS1]: How is this reliance more
 Individualized damages calculations are not impossible because they can be done through reference presumptive than in General Motors?

to computerized records.
 Breach of K state law claims
 No choice of law problem: the only legal issue pertinent to their breach of K claims is whether there
has been a breach, and this doesn’t differ from state-to-state
 But the individualized issues of fact doom certification of state law claims: each defendant used
different form contracts, and you need to know the K that the defendant used to determine whether
there has been breach.
 The facts about the conspiracy go to material elements of the RICO claim, but not to the breach of
contract claim.
 Superiority
 It is desirable to hold this litigation in a single forum b/c it’s efficient; individual actions would be
costly
 Amount in controversy is so small to make individual litigation unlikely
 The court has already handled various pretrial motions, so it knows the case well
 Maturity
 D argues that it’s not appropriate to certify because this is an immature tort. You risk certifying
before you know whether individual questions will predominate. So it’s better to let it play out in
individual litigation first. This is why the court decertified in Castano (tobacco litigation).
 Holding: Where individual claims can never be brought, the tort will never mature. Unlike Castano,
these are negative value claims, so individual actions will never happen. So certification is
appropriate.
 Manageability
 The question is whether we are creating more significant manageability problems than the
alternatives – and the alternative is 600,000 separate lawsuits by the individual physicians
 Rhone-Poulenc Concerns
 We’re not deciding the fate of an entire industry; we’re deciding whether several companies did
something wrong. If they want special protections, they should go to Congress.
 And pressure to settle isn’t a sufficient reason to avoid certifying a class action. Settlement pressure
has been taken into account with the enactment of 23(f) for interlocutory appeals.

C. The Mandatory Class

1. Overview
 Classes for Indivisible Relief: 23(b)(1)(A) or (b)(2)
o Rule 23(b)(2) provides for the certification of a mandatory class—i.e. there is no right to opt
out—when “the party opposing the class acted or refused to act on grounds that apply generally
35
 to the class, so that final injunctive relief or corresponding declaratory relief is appropriate
respecting the class as a whole”
 Rules Advisory Committee: “The subdivision does not extend to cases in which the
appropriate final relief relates exclusively or predominantly to money damages.”
 Historically, so long as equitable relief predominated over backpay, courts could avoid
triggering due process rights, including right to opt out.
 Predominance was a big debate See below on indivisible claims
 Prototypical examples are civil rights class actions (though at the time there was no back-
pay available for civil rights violations – just injunctive or declaratory relief).
o Rule 23(b)(1)(A) provides for the certification of a mandatory class when “prosecuting separate
actions by or against individual class members would create a risk of inconsistent or varying
adjudications with respect to individual class members that would establish incompatible
standards of conduct for the party opposing the class”
 This has converged with (b)(2) mandatory class treatment
 Limited Fund Classes: 23(b)(1)(B)
o Rule 23(b)(1)(B) provides for certification of a mandatory class when “prosecuting separate
actions by or against individual class members would create a risk of adjudications with respect
to individual class members that, as a practical matter, would be dispositive of the interests of
the other members not parties to the individual adjudications or would substantially impair or
impede their ability to protect their interests”

2. Indivisible Claims
 Rule 23(b)(2) provides for the certification of a mandatory class—i.e. there is no right to opt out—
when “the party opposing the class acted or refused to act on grounds that apply generally to the
class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the
class as a whole”
 Rules Advisory Committee: “The subdivision does not extend to cases in which the appropriate
final relief relates exclusively or predominantly to money damages.”
o This also comes from Shutts FN 3.
o Allison preserves right to litigate monetary claims individually and interest in judicial economy.
 The general problem: figuring out when certain types of damages are considered “incidental” to
the relief sought, so as to permit mandatory class treatment
o Sometimes the cases rest on the equitable (mandatory class appropriate) vs. legal (not
appropriate) distinction – but making this distinction is hard
 ALI Solution: Mandatory class treatment appropriate when remedies are indivisible.
 §2.04: Indivisible Remedies Versus Divisible Remedies
o (a) Divisible remedies are those that entail the distribution of relief to one or more claimants
individually, without determining in practical effect the application or availability of the same
remedy to any other claimant.
o (b) Indivisible remedies are those such that the distribution of relief to any claimant as a
practical matter determines the application or availability of the same remedy to other
claimants.
o (c) The court may authorize aggregate treatment of common issues concerning an indivisible
remedy by way of a class action, with no requirement under § 2.07 that claimants must be
afforded an opportunity to exclude themselves from such treatment. Aggregate treatment as to
an indivisible remedy may be appropriate even though additional divisible remedies are also
available that warrant individual treatment or aggregate treatment with the opportunity of
claimants to exclude themselves as to divisible remedies, as specified in § 2.07.
 §2.07: Individual Rights In Aggregation Of Related Claims
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 o (c) If the court finds that the aggregate proceeding should be mandatory in order to manage
indivisible relief fairly and efficiently as to the related claims, then aggregate treatment by way
of a class action need not afford claimants an opportunity to avoid the preclusive effect of any
determination of those claims.
Brown v. Ticor Title Ins. Co, 197 (9th Cir. 1992)
 Setup: Class action suits against Ticor for violating antitrust laws consolidated via MDL in PA.
Mandatory class settlement certified and approved under (b)(1) and (b)(2). The settlement gave up
monetary claims against Ticor; just got injunctive relief. Brown files a new suit against Ticor, sues
for damages. He argues he isn’t barred by res judicata because he was denied due process (Shutts):
he did not have the opportunity to opt out, and the settlement precluded him from bringing claims
for recovery of damages
 Collateral attack on class settlement
 Holding: Brown is precluded from seeking further injunctive relief, but he is not precluded for
bringing claims for monetary damages.
o Shutts says that the right to opt out is necessary “to bind known plaintiffs concerning claims
wholly or predominately for monetary damages”
o Draws on the law vs. equity distinction. Equitable claims are OK for mandatory treatment,
claims at law are not.
o Supreme Court writes a per curiam opinion, suggests that Brown might have a right to opt out
under Rule 23(b)(1) or (b)(2), but it is not allowed to undo the decision under FRCP because the
certification is res judicata.
o It doesn’t want to reach the constitutional question, since there might be a rule-based reason for
this.
Barnes v. American Tobacco Co., 201 (3d Cir. 1998)
 Setup: Medical monitoring class of cigarette smokers decertified by district court.
 Plaintiffs appeal.
 Holding: Decertification affirmed. The class is not sufficiently cohesive; too many individual
issues.
 (1) For causation/addiction, plaintiffs will have to show that D’s nicotine manipulation caused
each individual plaintiff to have an increased risk of latent disease. Or if they go with strict liability,
they’ll have to show that each individual is actually addicted to cigarettes.
 (2) For need for medical monitoring, P will have to show what monitoring program is required for
him, which requires individualized evidence about smoking history.
 (3) To respond to defenses, P must demonstrate that they did not consent or assume the risk. (4) To
determine when the SOL started to run, we have to know when the plaintiff began smoking and
how much he smoked.
 McKenzie takeaways: Although Barnes is a mandatory class, the whole discussion is about
cohesiveness, sounds like (b)(3) discussion.Technically, the rule is just that the class has to be
“cohesive,” but this sounds like a discussion of whether common issues predominate, whether a
class action is superior, and whether a class action will be manageable
Allison v. Citgo Petroleum Co. (5th Cir. 1998) Cir. Split on “Predominance” in Indivisible Claims
 Setup: District court refuses to certify a (b)(2) class action for employment discrimination on
behalf of black employees under Title VII and CRA. Employees wanted injunctive, declaratory, and
monetary relief. Plaintiffs bring an interlocutory appeal under 23(f).
 Holding: Affirms district court decision in denying class certification.
 The Rule: Plaintiffs claims for money damages predominated over their claims for
nonmonetary relief. It’s not incidental.

37
 o “Monetary relief predominates unless it is incidental to requested injunctive or declaratory
relief.
 To be incidental, damages must “flow directly from liability to the class as a whole on the
claims forming the basis of the injunctive or declaratory relief. Ideally, incidental damages
should be only those to which class members automatically would be entitled once
liability…is established.”
o This is consistent with other cases permitting back pay under Title VII (b)(2) class actions b/c
there the monetary relief was equitable.
o Application: Compensatory damages are not incidental; you have to take into account individual
facts to estimate them.
o Punitive damages are not incidental either because they must be reasonably related to
compensatory damages. You have to determine individual liability before you can determine
punitive damages.

Wal-Mart Stores, Inc. v. Dukes, Supp. 20 (U.S. 2011) Predominance no longer matters
 Holding: Claims for back pay improperly certified under (b)(2).
o Court adopts the indivisible vs. divisible distinction from ALI: (b)(2) applies only when a
single injunction or declaratory judgment would provide relief to all members of the class.
o Both backpay and reinstatement claims are divisible; the remedy is divisible, and they
require individualized inquiries (such as whether there was a good reason to fire the person).
 The district court tried to get around this problem and say the relief was just “incidental”
with “trial by formula”
 A sample of class members would be selected, liability and backpay would be determined,
and the percentage of valid claims * average award would be applied to the remaining class.
 But Scalia doesn’t like that because the REA says Rule 23 can’t change anybody’s
substantive rights. Wal-Mart has the right to litigate its statutory defenses.
o This affirms what the Court suggested in Ticor Title: claims for monetary relief can never be
certified under (b)(2) unless they are incidental to the injunctive or declaratory relief.

3. Claims Against a Limited Fund

 23(b) “A class action may be maintained if Rule 23(a) is satisfied and if:
o (1) prosecuting separate actions by or against individual class members would create a risk of:
(B) adjudications with respect to individual class members that, as a practical matter, would be
dispositive of the interests of the other members not parties to the individual adjudications or
would substantially impair or impede their ability to protect their interests
Ortiz v. Fibreboard Corp., 224 (U.S. 1999)
 Facts:
o After decades of litigation, Fibreboard Corporation and a group of plaintiffs' lawyers reached
a "Global Settlement Agreement" of its asbestos personal-injury liability. Subsequently, a group
of named plaintiffs filed the present action in Federal District Court, seeking certification for
settlement purposes of a mandatory class that comprised three certain groups.
 (1) those who hadn’t brought suit; (2) dismissed claims but retained right to bring future
action against Fibreboard; (3) relatives of class members who were exposed.
 Class doesn’t include those with pending claims (inventory claims). Inventory claims settle;
settlement amounts will be paid out contingent on global settlement or resolution of insurance
coverage litigation.
o Intervening objectors argued that the absence of a "limited fund" precluded Rule
23(b)(1)(B) certification. Rule 23(b)(1)(B) provides that "an action may be maintained as a class
action if the prerequisites of subdivision (a) are satisfied, and in addition: (1) the prosecution of

38
 separate actions by or against individual members of the class would create a risk of... (B)
adjudications with respect to individual members of the class which would as a practical matter
be dispositive of the interests of the other members not parties to the adjudications or
substantially impair or impede their ability to protect their interests."
o The court ruled that both the disputed insurance asset liquidated by the global settlement,
and, alternatively, the sum of the value of Fibreboard plus the value of its insurance
coverage, as measured by the insurance funds' settlement value, were relevant "limited
funds." The Court of Appeals affirmed both the class certification and the adequacy of the
settlement. The appellate court approved the class certification, under Rule 23(b)(1)(B), on a
limited fund rationale based on the threat to other class members' ability to receive full
payment from the manufacturer's limited assets.
o A fund is created for the class that is comprised of Fibreboard’s entire equity (or is it $500k of
equity? – seems like 500k) and $2 billion in insurance assets.
o District court certifies the class under 23(b)(1)(B) and approved the settlement under 23(e).
 Question: Is a mandatory settlement class in asbestos personal injury litigation certifiable on
limited fund theory under Rule 23(b)(1)(B) of Federal Rules of Civil Procedure?
 Conclusion: In a 7-2 opinion delivered by Justice David H. Souter, the Court held that "applicants
for contested certification [of a mandatory settlement class on a limited fund theory under Rule
23(b)(1)(B)] must show that the fund is limited by more than the agreement of the parties, and
has been allocated to claimants belonging within the class by a process addressing any
conflicting interests of class members." "The record on which the District Court rested its
certification of the class for the purpose of the global settlement did not support the essential
premises of mandatory limited fund actions. It failed to demonstrate that the fund was limited
except by the agreement of the parties, and it showed exclusions from the class and allocations of
assets at odds with the concept of limited fund treatment and the structural protections of Rule 23(a)
explained in [Amchem Products, Inc. v. Windsor]," concluded Justice Souter.
o (1) The fund isn’t truly limited
 The fund must be limited on its own accord; it cannot be limited by agreement.
 (A) The insurance assets aren’t limited b/c there hasn’t been a showing that either (a) they
were limited by agreement; or (b) total claims would render the insurers insolvent. Need
better evidence on this point.
 (B) We are skeptical that this represents the limits of the amount available b/c class’s
lawyers’ incentives were misaligned. (internal governance concern) The lawyers who
negotiated the settlement also had 45,000 inventory claims, payment of which was contingent
on successful settlement or resolution of insurance coverage dispute.
 This point is doing more of the work than the first.
o (2) Inequitable treatment of class members (internal governance concern)
 (A) Class is insufficiently inclusive: doesn’t include (1) those who settled with Fibreboard but
retained the right to sue again upon developing a disease; (2) those with pending claims; (3)
inventory claims.
 (B) Class treats members inequitably: inventory plaintiffs do much better than non-inventory
plaintiffs; no sub-class to protect pre- and post-1959 claims (pre-1959 claims are more
valuable because Fibreboard had a better insurance policy back then)
o (3) Impermissible reordering of priority scheme, favoring equity over creditors
 Fibreboard gets to retain virtually all of its net worth, but this is the opposite of what would
happen in bankruptcy (tort victims = creditors)
 This is an external governance concern: use of a class action in place of a legislative
response; like circumvention of the priority scheme in bankruptcy
 Breyer Dissent (functional, like in Amchem):
39
 o The fund is limited; 23(b)(1)(B) only requires a significant risk that total assets available to
satisfy claims would fall below value of claims. There is a significant risk that the assets won’t
be available b/c there is a risk that a judge would have determined the insurance policy to be
limited.

D. The Issue Class

1. Overview
 Rule 23(c)(4): “[w]hen appropriate, an action may be brought…as a class action with respect to
particular issues”
 Ways to separate out issues for class treatment from individual issues not suited for class treatment:
(1) separate questions of liability from allocation of the appropriate remedy; (2) separate elements of
liability that focus on D’s conduct from elements that examine plaintiffs’ conduct; (3) separate
claims for indivisible relief (injunction) from divisible relief (damages)

2. The Seventh Amendment

 Issue classes may conflict with 7th Amendment’s Reexamination Clause:
o “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of
trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any
Court of the United States, than according to the rules of the common law.”
 Remember: (1) no reexamination clause issue when the same jury tries successive phases; the
problem is when it’s different juries; (2) it needs to be a finding of FACT in order to present a 7A
problem
In re Rhone-Poulenc Rorer, Inc., 252 (7th Cir. 1995)
 Setup: Trial plan is to have the jury determine whether D is negligent, under 1 of 2 theories
 Holding and Reasoning:
o Under the plan, there would be inconsistencies between juries and trial plan will violate
Reexamination Clause
o the subsequent juries will have to determine comparative negligence and proximate
causation, which overlap with the issue of D’s negligence. Judge didn’t “carve at the joint.”
 Comparative negligence requires looking at D’s negligence
 Proximate cause requires juries to determine whether it was foreseeable that D’s failure to
take precautions against would cause HIV; this overlaps with question of negligence
 Additional Thoughts and Takeaways:
o 7th Cir. says “prohibition is not against having two juries review the same evidence, but rather
against having two juries decide the same essential issues.” (Houseman v. U.S. Aviation
Underwriters).
o (1) It’s not clear that the second jury really would have reexamined the first jury’s findings of fact
 It’s also odd to focus on proximate cause foreseeability and comparative fault as the facts to
be reexamined; they are only “facts” because we give them to juries to decide. Sometimes
foreseeability goes to the judge.
 For comparative fault; why can’t the 2nd jury just be told that the first jury found the D
negligent and weigh that against P’s negligence?
 Perhaps b/c you can’t weigh two things without reconsidering the first one.
o (2) It might have been possible to avoid the reexamination issues by using a special jury form in
the issue class
o (3) Seems to be motivated by hostility to class treatment in this case; issue class treatment makes
class treatment more likely

40
 o Sometimes plaintiffs want to do issue classes, but sometimes defendants want them too, as a way
of heading off broader certification
 Other Circuits in Agreement
o Blyden (2d Cir.)
 Damages phase of the proceedings entailed prohibited reexamination of a fact tried by the
liability-phase jury.
o Castano (5th Cir.)
 Overlap may not be an issue according to some, Rhone-Poulenc was one circuit
o Woolley, Mass Tort Litigation & the 7th Amendment Reexamination Clause, 83 Iowa L. Rev.

3. Predominance of Rule 23
 Generally:
o What is the relationship between (b)(3) and (c)(4)?
o Do you need to need to find common questions to predominate over individual questions for
certification of an issue class?
 Circuit Split: Nassau County (2d Cir), Valentino (9th Cir) vs. Castano (5th Cir)
In re Nassau County Strip Search Cases, 259, (2d Cir. 2006)
 Facts:
o Litigation over Nassau County jail’s strip search policy. Plaintiffs request district issue class
certification on the issue of liability; D admits liability.
o District court denies issue class certification b/c (1) plaintiffs claims, on the whole, didn’t satisfy
predominance and superiority; (2) defendants removed issues of common liability by conceding
liability.
 Holding:
o (1) You can use an issue class even if the claim as a whole fails the predominance/superiority
analysis and (2) Concession of liability doesn’t eliminate liability issues from predominance
analysis.
 The benefits of a class action still exist when D concedes a central point
 Reasoning for Concession part of holding:
 “because predominance analysis tests whether the class is a ‘sufficiently cohesive’ unit, all
factual or legal issues that are common the class inform the analysis.”
o “[A]n issue is common to the class when it is susceptible to generalized, class-wide proof.”
o It doesn’t matter if the class-wide proof comes from concession or something more costly
 Efficiency and uniformity gains
o Efficiency gains: otherwise, plaintiffs will have to file individual actions.
o Uniformity of decision as to similarly situated parties (though unclear why plaintiffs
wouldn’t just be able to invoke issue preclusion)
 Providing notice to individuals who otherwise wouldn’t know they had rights; greater rights
enforcement.
 McKenzie takeaways: 2d Circuit certifies this because individuals will have little interest in
maintaining separate actions without the class action; they won’t even know. And the litigation will
probably settle once the liability is settled.
 Notes: Different circuits take different approaches to this issue
o 5th Circuit takes the opposite approach in Castano; need to certify the whole claim
o 9th Circuit does the same thing as the 2d Circuit (Valentino)
ALI § 2.08
 Issue classes are permissible, but only so long as (a) aggregation would otherwise be permissible;
and (b) interlocutory appeals are possible, both on the certification question, as well as on the
merits of the common issue determination itself.
41
 o Example: if there is a finding of liability in an issue class, before it is broken up into individual
determinations, a defendant should be able to appeal the finding of liability.
Is the Issues Class Fools Gold?
 Will plaintiff still need (or want) to present liability evidence?
 Does issue class solve the “negative value” claim problem?
 Subsequent proceedings involve individualized burdens
o Individual document retention, discovery, etc.
o Burdens of representing large numbers of individuals.
 Subsequent proceedings are now opt-in cases.
 Subsequent proceedings may be brought, if at all, by new attorneys.
 Subsequent decisions on damages are unlikely to have collateral estoppel effects.

4. Mandatory Classes
 Generally: What is the relationship between issue classes and mandatory classes? Do issue class
members need the opportunity to opt out of the class?
 Allen v. Int’l Truck & Engine Corp., 266 (7th Cir. 2004)
 Setup: Group of 27 black plaintiffs sue employer for telling them to quit when their white coworkers
exhibited hostility towards them. This is a pattern-or-practice claim; plaintiffs seek class certification
under 23(b)(2).
 District court does not certify because: (1) Monetary damages are not incidental to equitable relief;
(2) In issue class for equitable relief only would run into 7th Amendment reexamination issues.
 Holding: Overturns district court decision; remands to certify under 23(b)(2) for equitable matters,
and reconsider whether damages could also benefit from class treatment.
 No matter what, the injunctive relief is going to affect all 350 employees.
 And there are practical benefits of mandatory aggregation here: class certification obligates counsel
to act as a fiduciary for all 350 employees, not just the 27 that filed individual claims; increases
incentives for attorneys to litigate vigorously because they can recover attorneys fees.
 The court is unconcerned with the 7th amendment issues – you could either (1) offer plaintiffs the
opportunity to opt-out; or (2) deny them in later damages proceeds the benefits and detriments of
preclusion.
 McKenzie: There is a tension between this case and Rhone Poulenc, where Easterbrook is less
sympathetic to the 7th Amendment concerns. Though different type of relief is being sought in the
two cases.Preclusion.
 McReynolds v. Merrill Lynch, (7th Cir. 2012)
 Posner opinion, post Walmart, reversing denial of (b)(2) class seeking injunctive relief.
 Distinct from Walmart because the plaintiffs are challenging 2 distinct policies of Merrill Lynch:
their “teaming” policy and their “account distribution” policy, which allegedly cause racial
discrimination. It’s a disparate impact case, which doesn’t require intent of the corporation to
discriminate. And this is not just about discretion, but specific supervisors making a choice.
 Consistent with Allen

E. Class Certification and the Merits

Background
 The Eisen rule: there is nothing in Rule 23 that authorizes a court “to conduct a preliminary inquiry
into the merits of a suit in order to determine whether it may be maintained as a class action”
o In Eisen, Supreme Court overruled district court that decided to impose 90% of cost of notice on
the defendant based on conclusion plaintiff was “more than likely” to prevail at trial.

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 The Eisen rule runs up against Falcon: Eisen says that sometimes it may be necessary to “probe
behind the pleadings” to resolve the certification question.
 Eisen Rule Ended in Wal-Mart Stores, Inc. v. Dukes: preliminary inquiry is okay if it’s to
determine the propriety of class certification under 23(a) and (b).
o It’s not okay in Eisen because in Eisen it was in order to shift the cost of notice from plaintiffs to
defendants.
 Wal-Mart v. Dukes Creates Question: When a substantive issue is relevant to a certification
requirement, how convinced must the judge be that the plaintiff’s position on that issue is correct
before granting certification?
o In other words, what is the standard of proof for certification?

In re Hydrogen Peroxide Antitrust Litig., (3d Cir. 2008)Before Wal-Mart, but Useful
 District court, in certifying class of direct purchasers for antitrust action against hydrogen peroxide
manufacturers, abused its discretion by applying improperly lenient proof standard in
determining that putative class met predominance requirement under federal rules; Rather than
making only “threshold” showing that element of impact would predominantly involve
generalized issues of proof, court was required to address questions particular to each member
of putative class.
 “First, the decision to certify a class calls for findings by the court, not merely a “threshold
showing” by a party, that each requirement of Rule 23 is met.”
o “Factual determinations supporting Rule 23 findings must be made by a preponderance of
the evidence.”
 “Second, the court must resolve all factual or legal disputes relevant to class certification, even
if they overlap with the merits-including disputes touching on elements of the cause of action.”
o Because nature of evidence that will suffice to resolve predominance question determines
whether question is common or individual, district court must formulate some prediction as to
how specific issues will play out in order to determine whether common or individual issues
predominate in given case.
o If proof of essential elements of cause of action requires individual treatment, then class
certification is unsuitable.
o When district court properly considers issue overlapping merits in course of determining whether
class certification requirement is met under federal rules, it does not do so in order to predict
which party will prevail on merits; rather, court determines whether alleged claims can be
properly resolved as class action
 “Third, the court's obligation to consider all relevant evidence and arguments extends to expert
testimony, whether offered by a party seeking class certification or by a party opposing it.”
o Weighing conflicting evidence may be required
o District Court can also make credibility findings

Questions Left Open By and Implications of Hydrogen Peroxide

 Questions
o Plaintiff must show that antitrust impact is “susceptible to common proof” or “capable of
common proof”
o Must expert satisfy Daubert Requirements?
o What does predominance of common issues mean?  The District Court must evaluate “the
likely shape of a trial on these issues”

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 o District Court has “‘considerable discretion to limit both discovery and the extent of the hearing.
But… the district court must receive enough evidence, by affidavits, documents or testimony, to
be satisfied that each Rule 23 requirement has been met.”
 Implications for Plaintiffs
o Work and expense now front-loaded
o When do you move for class certification?
o Risk is significantly increased—there’s a higher cost and great risk of losing.
o For example: Drywall Antitrust Litigation
 Millions of pages of discovery (>50 depositions)
 Summary judgement motions and hearings
 Expert report and class proceedings > one year (there was an additional court-appointed
expert)
 Implications for Defendants
o If def. loses motion to dismiss, the case is more likely to be protracted
o Early or inexpensive settlement may be more difficult
o Significantly better chance of defeating class certification
o Strategic decision: what kind of hearing does defendant want?
 Implications for Judiciary
o Required to hold evidentiary hearing of some kind
o Must resolve complex and often confusing issues
o Less ability to defer to jury

Fraud on the Market Theory and Reliance in Predominance Findings

 Recognizing a presumption of reliance when investors trade in an efficient market, assuming
information is material and sufficiently public to affect share prices.
 To use the presumption, plaintiff must prove the market is efficient. Therefore, critical issue is what
burden the plaintiff must meet to prove the market is sufficient.

In re IPO Sec. Litig., 276 (2d Cir. 2006) Application of Fraud on the Market Theory
 Facts:
o Investors who purchased IPO shares file class actions against underwriters, issuers, and corporate
officers for coordinating to violate securities laws and inflate IPO prices.
o There’s overlap between the certification question and the merits question because, in order to
show predominance of common questions, plaintiffs must show an efficient market. Otherwise
they will have to show individual reliance, and the class will not be certified. But the question of
efficient market also goes to the merits.
o District Court certifies class, says that where the requirements of Rule 23 are enmeshed with the
merits, plaintiffs must simply make “some showing” that the requirements have been met. Little
engagement into the evidence because of the Eisen rule. And for expert testimony they said that
it had to be “not fatally flawed” (Visa Check).
 Holding:
o The court should inquire into the merits only insofar as they are related to the application of a
class certification requirement.
o “(1) district judge can certify only after each Rule 23 requirement has been met; (2) if factual
determinations are relevant to any of the Rule 23 requirements, then they must be made; (3) the
obligation to make such factual determinations isn’t lessened by overlap between Rule 23
requirement and a merits issue”
o Must be shown by a “preponderance of the evidence” Note: the determination isn’t binding on
the trier of facts.
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 o Textual analysis: Rule 23: Concern that certification may be manufactured when it’s not
appropriate.
 Implications: Plaintiffs can’t establish that there was an efficient market; market for IPO shares not
efficient, not any reports by securities analysts, market was slow to correct alleged price inflation
 Takeaways:
o Under this approach, while it makes certification harder, it also makes certification a sort of
mini-assessment of the merits. So if plaintiffs are able to surmount the hurdle of certification, the
value of their case goes way up.
o This creates an incentive for defendants to try to get the court to rule on certification as early as
possible, before plaintiffs can develop their case and demonstrate the appropriateness of
certification.
Synthesis Burden of Proof in Certification
 Walmart approves of the In re IPO approach; the expert testimony overlapped between the merits
issues and the certification questions. The Court engaged these issues at the certification stage
because it was necessary to do so to resolve the Rule 23 requirements.
 Walmart was interesting because common question (existence of company-wide discrimination) is
also plaintiff’s entire prima facie case, which differs from Hyrdogen Peroxide of IPO Securities. In
those two, the antirtrust impact or reliance was just one liability issue of many.
o In Walmart, it meant that if plaintiff must prove existence of company-wide discriminatory
policy to obtain class certification, court would be deciding prima facie case under auspices of a
preliminary, pre-trial ruling.
 For commonality, plaintiffs must actually demonstrate that all class members’ claims depend upon
the common question.

Comcast v. Behrend  Judicial Inquiry at Class Certification for Damages

 Background
o The SC grappling w/use of statistical standards post-Hydrogen Peroxide cases
 Rule of Law
o On a motion for class certification, a court must perform a rigorous analysis to determine
whether damages can be proven by evidence common to the class, thereby satisfying the
predominance criterion required by Federal Rule of Civil Procedure 23(b)(3).
 Facts
o Caroline Behrend and 2 million others who were similarly situated (plaintiffs) filed a class-action
suit in federal district court against cable-television provider Comcast Corporation (Comcast)
and its subsidiaries (defendants), seeking damages for violations of federal antitrust laws. The
plaintiffs claimed that Comcast had attempted to monopolize the cable market in Philadelphia,
Pennsylvania, through a series of swap transactions with cable providers in other markets that
resulted in the elimination of competition and increased prices. The plaintiffs filed a motion for
class certification under Federal Rule of Civil Procedure (FRCP) 23(b)(3) and proposed four
different theories of antitrust impact. An expert for the plaintiffs, Dr. James McClave, compared
actual cable prices in the Philadelphia market with hypothetical prices that would have prevailed
but for Comcast’s conduct, and fashioned damages of over $875 million for the class. In granting
the motion for class certification, the district court accepted only one of the plaintiffs’ theories,
namely that Comcast’s conduct reduced the level of competition from companies that built
competing cable networks in areas where an existing cable company operated. This was known
as the overbuilder theory. Although the model did not indicate how the overbuilder theory
affected the price of cable-television services in the area, the district court concluded that
damages from decreased competition could be calculated on a classwide basis. The
defendants appealed. The court of appeals affirmed, concluding that Dr. McClave was not
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 required to correlate damages to likely antitrust impact based on Comcast’s conduct at the class-
certification stage, because this would involve an analysis of the merits of the case. The United
States Supreme Court granted certiorari to review.
 Holding and Reasoning (Scalia)
o On a motion for class certification, a court must perform a rigorous analysis to determine
whether damages can be proven by evidence common to the class, thereby satisfying the
predominance criterion required by FRCP 23(b)(3).
 This analysis may overlap with the merits of the underlying claim and is often more
demanding than a court’s analysis of FRCP 23(a). See Wal-Mart Stores, Inc. v. Dukes, 131
S.Ct. 2541 (2011).
o Here, Dr. McClave’s model falls far short of establishing that damages based on the overbuilder
theory are capable of being measured on a classwide basis. The district court failed to require
the plaintiffs to tie each theory of liability to a specific calculation of damages. The rationale
behind the district court’s decision was that the district court could not delve too deeply into the
merits of the case. However, this conclusion directly contradicts this Court’s holding in Wal-
Mart that a district court must ensure the predominance requirements of FRCP 23(b)(3) are
satisfied, even if an analysis reaches the merits of the case. Because Dr. McClave’s model did
not isolate damages flowing from the overbuilder theory of liability and the district court did not
conduct a more rigorous analysis of the predominance criterion, the judgment of the court of
appeals is reversed, and the matter is remanded for further proceedings consistent with this
opinion.
 Dissent
o Individual damages calculations do not preclude class certification. Rather, this Court has held
that a class may obtain certification under FRCP 23(b)(3) when liability questions common to
the class predominate over damages unique to class members. Here, the plaintiffs’ damages
methodology was sufficient to support class certification.
 Interpretations of Comcast v. Behrend
o Narrow
 Limited to its facts—mismatch between liability theories and damage model
o Broad
 To satisfy predominance, plaintiffs must show damages are susceptible to proof by a common
model (not individualized damage determinations)
o Alternative Approach
 Certify liability class only under 23(c)(4)
Tyson Foods, Inc. v. Bouaphakeo  Use of Statistical/Represenative Evidence
 Relevant Rule of Law
o “Whether a representative sample may be used to establish classwide liability will depend on
the purpose for which the sample is being introduced and on the underlying cause of action.”
 Facts
o Peg Bouaphakeo and the rest of the plaintiff class are current and former employees of Tyson
Foods, Inc. (Tyson) at the company’s meat-processing facility in Storm Lake, Iowa. The
employees worked on a “gang-time” system, which means they were paid only for time they
were at their working stations and the production line was moving. The employees sued Tyson
and argued that the company violated the Fair Labor Standards Act of 1938 and the Iowa Wage
Payment Collection Law by not paying appropriate compensation for the time spent putting on
and taking off protective clothing at the beginning and end of the work day and lunch break.
o Tysons didn’t maintain time records. So they used average time from a sample of workers to
calculate back-pay owed in aggregate damages claim
 6-2 Majority (Kennedy)
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 o There was PREDOMINANCE because the class members were joined under one common
question, and that satisfies the requirements for a class action suit despite differences among
the members. The case was remanded for the lower court to consider of the proper disbursement
of the award.
 “An individual question is one where ‘members of a proposed class will need to present
evidence that varies from member to member,’ while a common question is one where ‘the
same evidence will suffice for each member to make a prima-facie showing [or] the issue is
susceptible to generalized class-wide proof.”
 “The predominance inquiry ‘asks whether the common, aggregation-enabling issues in the
case are more prevalent or important than the non-common, aggregation-defeating individual
issues.”
o The majority rejects petitoner’s request that court “announce a broad rule against the use in
class actions of what the parties call representative evidence.”
o “WHETHER A REPRESENTATIVE SAMPLE MAY BE USED to establish classwide
liability will depend on the purpose for which the sample is being introduced and on the
underlying cause of action.”
 “The fairness and utility of statistical methods in contexts other than those presented here will
depend on the facts and circumstances particular to those cases.”
 An individual plaintiff could use statistical evidence to support a “just and reasonable”
inference that they worked more than forty hours
o Distinguished from Wal-Mart:
 “While the experience of the employees in Walmart bore little relationship to one another, in
this case, employees each worked in the same facility, did similar work, and was paid under
the same policy.”
o Rules Enabling Act Double Edged Sword
 The federal “rules shall not abridge, enlarge or modify any substantive right.”
 As a shield: R 23 cannot foreclose a defendant’s ability to raise individual defenses.
 As a sword: if plaintiff could rely on the statistical evidence in individual action, they can rely
on it in class case if plaintiffs are similary situated
 Concurrence (Roberts)
o In his concurring opinion, Chief Justice John G. Roberts, Jr. wrote that the district court
would be unable to appropriately distribute the $2.9 million award among the class
members. The jury did not allocate the direct calculation of damages to unpaid overtime
compensation and each plaintiff spent different amounts of time doffing and donning the
protective clothing, so it would be extremely difficult to determine which plaintiffs are
excluded from the award for lack of damages and the amount of the damages the other
plaintiffs should receive. Justice Samuel A. Alito joined in the part of the concurrence that
addressed the problems of allocating damages.
 “[I]f there is no way to ensure that the jury’s damages award goes only to uninjured members,
that award cannot stand.”
 Dissent (Thomas)
o Justice Clarence Thomas wrote a dissent in which he argued that the district court erred in
certifying the class action because the amount of time individual plaintiffs spent dealing
with the protective clothing varied significantly. Some plaintiffs may not have been pushed
over 40 hours a week and would not be owed damages. The awarded $2.9 million will be
difficult to distribute among the 3344-members of the class action suit, and the district court
should not have certified the class action suit. Justice Alito joined in the dissent.

F. The Opt-In Class

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 Kern v. Siemens Corp., (2d Cir. 2004)
 Setup: Judge Schendlin certifies a 23(b)(3) opt-in class of individuals and heirs who died in a
funicular accident. Only 8 Americans, but they make the class for all of theirs because they want to
meet numerosity. Participation in the class requires individuals to consent to be bound. Otherwise
they’re not in.
 Defendants challenge b/c Rule 23 doesn’t permit certification of opt-in classes.
 Holding: Certification of the opt-in was improper
 Textual analysis: not included in Rule 23; Shutts did not require opt-ins for due process purposes
 Historical analysis: The modern Rule 23 got rid of the spurious class action, which was basically an
opt-in class. Opt-ins were criticized because it would freeze out small claims by small people.
 McKenzie: This is weird; normally we are worried about opt-ins because they’re bad for plaintiffs,
don’t get enough rights enforcement by plaintiffs. Normally Ds like opt-ins and P’s don’t. But here,
the P’s actually want an opt-in.
 ALI § 2.10: Aggregation by Consent
 “When justice so requires, a court may authorize aggregate treatment of related claims or of a
common issue by affirmative consent of each affected claimant.”
 Comment: “This Section breaks from existing law regarding class actions by recognizing the
desirability, in exceptional instances, of judicial orders that effectively create an opt-in class… This
Section rejects the result in Kern that an opt-in class is per se impermissible under the current
Rule 23 and, instead, would provide courts with authority to create opt-in mechanisms for voluntary
aggregation of claimants by their affirmative consent. On the assumption that the Kern court
properly read the current Rule 23, rule amendment would suffice for this purpose.
 Hoffmann-La Roche Inc. v. Sperling, (U.S. 1989)
 Setup: FLSA collective action on behalf of employees allegedly discriminated against under the
ADEA. District court orders D to produce the names and addresses of potential members of the
collective action so that they may opt in.
 Strategy: Plaintiffs lawyers need to contact as many potential class members as possible because
under ADEA § 216(d) the statute of limitations still runs. Unlike class actions, where it tolls.
 The issue: “whether, in an ADEA action, district courts may play any role in prescribing the terms
and conditions of communication from the named plaintiffs to the potential members of the class on
whose behalf the collective action has been brought.”
 Holding (Kennedy): Yes. District courts may “facilitate notice” to potential plaintiffs
 The discovery was OK; it was “relevant to the subject matter of the action”
 “the court has a managerial responsibility to oversee the joinder of additional parties to assure that
the task is accomplished in an efficient and proper way”
 Dissent (Scalia): This is inappropriate because the court is drumming up plaintiffs who wouldn’t
otherwise come before the court.
 This is not a class action, where we are intending to give notice and promote aggregation; this is
§ 216(d); and the statute was made an opt-in for precisely this reason.
 This isn’t “case management” because the individual who were notified were not parties to the
litigation at the time of the notice.
 Governance concerns: fear that unwilling persons are being dragged into the litigation.
 Theme: majority takes the older view of complex litigation (strong judicial management is needed to
deal with the big case) whereas dissent takes the modern view, looks at it as a problem of
governance (exit, voice, loyalty)

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V. Class Counsel
A. Selecting Class Counsel
1. Rule 23(g)
 Rule 23(g) (2003 amendment):
 (1) Appointing Class Counsel. Unless a statute provides otherwise, a court that certifies a class
must appoint class counsel. In appointing class counsel, the court:
o (A) must consider: (i) the work counsel has done in identifying or investigating potential claims
in the action; (ii) counsel's experience in handling class actions, other complex litigation, and
the types of claims asserted in the action; (iii) counsel's knowledge of the applicable law; and
(iv) the resources that counsel will commit to representing the class
o (B) may consider any other matter pertinent to counsel's ability to fairly and adequately
represent the interests of the class;
 This subsection underscores the move from the earlier practice whereby class counsel would be
whichever lawyers happened to file the class action
 The reason that it says 23(g) doesn’t apply if a statute “provides otherwise” is because it didn’t want
to disturb the method for class counsel set forth in the PSLRA
 23(g) doesn’t address the major innovation on selection of counsel: auctions

2. Auction-based techniques
 The problem that auctions are intended to solve:
 We have a classic principal-agency problem between the class and class counsel. Class has
ownership, but class counsel has control. We are concerned about loyalty and internal governance
concerns.
 2 concerns: (1) underinvestment/cheap settlement; (2) “run the meter”
 Auctions might get around this; create a structure for evaluating counsel’s fee awards that might help
to align counsel’s interests with the class’s.
 But auctions create problems of their own:
 (1) Auctions can create external governance concerns: they might undermine lawyers’ incentives to
go out into the world and find wrongdoing, because the finder doesn’t necessarily get to be class
counsel (and get fees).
o Normally, plaintiffs’ firms have to do a lot of work to research the underlying conduct of the D.
If the plaintiffs who find the wrongdoing might not get paid, they will be less incentivized to do
this work in the first place.
o You could try to get around this problem by granting the filing attorney the opportunity to match
the winning bid.
 (2) Also, auctions might not always work correctly; there might not be enough information about the
underlying claims to enable meaningful or well-informed bids.
 (3) It might not be a good idea to necessarily choose the cheapest lawyer to represent the class.
Though judges can also look at qualifications of counsel in determining who to choose.
 So there are some limited situations where auctions might be appropriate
 (1) Little attorney-initiative involved
o Like in Auction Houses, DOJ had already investigated the D. This justifies auctions because: (a)
the “attorney who filed the first complaint in this case therefore is not necessarily any more
deserving of the lead counsel position than is any other attorney involved”; (b) selection as lead
counsel of someone other than the first-to-file did not deprive an investigating attorney of his or
her just reward or dissuade attorneys in other cases from searching out a wrong.
 (2) There will be an efficient market for lawyers

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 o High profile case  lots of P lawyers
o Easy to evaluate bids b/c form of relief is monetary
o DOJ investigation/media coverage make it easier for bidders to evaluate prospects of claims
 In re Auction Houses Antitrust Litig., 296 (S.D.N.Y. 2000)
 Setup: Two attempts to use auction structure. First attempt is dropped because it may create a new
conflict between the class & class counsel. Goes with a new structure instead.
 Structure #1: “Stacked” system. Class counsel submits 2 figures, X and Y. Any recovery up to X
goes to the class. Recovery between X and Y goes to the lead counsel. And recovery above Y  ¼
goes to lead counsel; ¾ to class.
o Pro: Competition drives X up. The area between X and Y motivates counsel to work hard. The
area above Y motivates counsel to continue to prosecute case, but guards against risk of
overprosecuting.
o Con (Coffee): Implicitly encourages counsel to take a case to trial if the settlement value is
exactly X, even if the chances of winning at trial are really low. And it’s also hard for courts to
compare bids with multiple variables.
 Structure #2: Counsel submits a single figure, X. 100% of recovery up to X goes to the class, 25% of
recovery above X goes to counsel, 75% to class.
 Holding: Go with structure #2.
 There is an external governance problem, which is that lawyers’ won’t be adequately incentivized to
prosecute. But that isn’t a risk here for a few reasons: (1) the wrongdoing only came to light after a
DOJ investigation; (2) lots of media attention  attracted lots of good attorneys; (3) the form of
relief is monetary, rather than equitable, so the bids are easier to compare; (4) Christie’s had already
taken advantage of government’s amnesty program, suggesting that there are good prospects for
success.
 Notes: Other auction structure proposals
 Coffee: increasing percentage-of-recovery
 This would mean that as plaintiffs recovered more, counsel would get a marginally greater
percentage of plaintiffs’ recovery
 This would guard against the quick settlement problem
 Miller: class settlement auctions: Once a class settlement has been proposed, if dissenting counsel
believes that D could have paid more, dissenting counsel could post a bond for the proposed
recovery, tries to negotiate for a higher award, which would be subject to the court’s approval.
B. Fee Awards
 Generally
 Boeing grounds the fee award in restitutionary principles: absent such an award, class members
would be unjustly enriched by the efforts of class counsel to create a common fund for their benefit
by way of the class litigation
 This is the common fund doctrine: “a litigant or a lawyer who recovers a common fund for the
benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the
fund as a whole…The doctrine rests on the perception that persons who obtain the benefit of a
lawsuit without contributing to its cost are unjustly enriched at the successful litigant’s expense.”
 Rule 23(h): “in a certified class action, the court may award reasonable attorney fees”
 Such an award must be preceded by a motion, 23(h)(1), to which a class member or a party from
whom payment is sought, may object
 Court may hold a hearing on the fee award motion and may draw on the assistance of a special
master.
 Percentage-of-Recovery
 Counsel is awarded a variable percentage of the amount recovered for the class.
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 Generally used in cases involving a common fund; designed to allow courts to award fees from the
fund in a manner that rewards counsel for success and penalizes for failure
 How are fees calculated under POR?
 Factors to consider when using POR method: (1) size of fund created and number of persons
benefitted; (2) presence or absence of substantial objections by members of the class to the
settlement terms and/or fees requested by counsel; (3) skill and efficiency of the attorneys involved;
(4) complexity and duration of the litigation; (5) risk of nonpayment; (6) amount of time devoted; (7)
awards in similar cases
 On the entire fund? Just the claimed amount of the fund?
 Boeing v. Van Gemert, 320 (U.S. 1980)
 Setup: Boeing’s debt holders file a class action claiming that Boeing had violated securities statutes
by failing to give them notice of a debt redemption. Goes to trial, damages of $3.3M established,
Boeing puts the money into escrow, has a special master administer the settlement.
 Boeing appeals the judgment, claims that class counsel’s fees should not be awarded from the
unclaimed portion of the fund because (1) the money in the judgment fund would not benefit class
members who failed to claim it; (2) Boeing had a colorable claim for the return of unclaimed money.
 Holding: Fees are awarded from the entire fund. Not just the amount claimed, even though there
are a bunch of absent class members.
 “[Absent class members’] right to share the harvest of the lawsuit…whether or not they exercise it,
is a benefit in the fund created by the efforts of the class representatives and their counsel. Unless
absentees contribute to the payment of attorney’s fees incurred on their behalves, they will pay
nothing for the creation of the fund and their representatives may bear additional costs.”
 ALI § 3.13
 “Requires that fee awards be based on the actual value of the judgment or settlement to the class
members. For cash judgments or settlements, the actual value is the value actually paid to class
members or to third parties under an appropriate cy pres settlement.”
 Illustration #1: “A settlement fund of $100 million is put aside to pay claims of consumers who
purchased allegedly defective computers. After the period for making claims expires, $95 million of
the fund remains, and under the settlement agreement this remaining sum reverts to Defendant.
Fees should be based on a percentage of $5 million, not on a percentage of $100 million.”
o This is consistent with Boeing
 Illustration #2:
 Lodestar:
 Lodestar = Hours Reasonably Worked * Reasonable Hourly Billing Rate, Adjusted by Multiplier
 Reasonable Rate based on geographical area, nature of services provided, experience of the lawyer
 Note: even if lodestar isn’t used as the main method for fee calculation, it is often used as a “cross-
check” against percentage-of-fund recovery. See what the multiplier is. Suggestion in In re Cendant
PRIDES that a multiplier of 3 is the upper limit.
 In re Cendant Corp. PRIDES Litig., 325 (3d Cir. 2001)
 Setup: Securities class action settlement between Cendant and investors. Cendant issues Rights to
investors. Court approves a fee award of the equivalent of 5.7% of the Rights received by the class
(equivalent of $19.3M).
 Holding:
 Issue #1: Does the trust have standing to challenge the fee award?
o It seems like they may not, because any reduction in the amount of attorneys’ fees to the
class counsel will not be distributed among the members; the Rights would just be returned
to and canceled by D.

51
 o But there is standing. The “aggrieved” requirement for standing must be construed broadly
in class action cases, and the judiciary has independent authority over the appointment of
class counsel, grant of attorneys’ fees, and review of fee awards.
o Note: the settlement is structured like this to prevent objectors from blowing the settlement.
In particular, the D is worried about professional objectors.
o Types of objectors: (1) honest objectors; (2) professional objector (that’s what we have here
– trying to get paid off based on holdout value); (3) ideological objector – opposed to CAs in
general.
 Issue #2: Was the fee award appropriate?
o 2a: The district court did not provide sufficient explanation because it didn’t even say
whether it was using percentage-of-recovery method or lodestar.
o 2b: The award was so unreasonably high that the district court abused its discretion.
o Percentage of fund factors:
o Complexity/Duration: D conceded liability; case settled early; minimal motion practice; no
discovery; small amount of time spend, compared to other large class actions
o Range of awards: this is in the range of awards, but there is an expectation that the
percentage will decrease as the size of the fund increases
o Other awards: this percentage is really low, but the other cases were way more complex,
involved more time by attorneys, and smaller total settlements
o Lodestar Cross-Check: The multiplier is 7 at a minimum, or maybe as high as 10. In all of
the other cases, the multiplier was much lower.
 Notes: Using the lodestar cross-check punishes the P’s counsel for not recording their hours. They
say they only billed 5,600 hours. They probably billed more than that, but just didn’t keep good
records.
 Empirical evidence suggests that the choice between lodestar and percentage methods doesn’t
matter; the fee award is driven by class recovery.
 ALI Approach: § 3.13
 The percentage approach should be the preferred approach for common fund cases, and the
court can use the lodestar as a cross-check. Like in Cendant PRIDES.
 A percentage-of-the-fund approach should be the method utilized in most common-fund cases, with
the percentage being based on both the monetary and the nonmonetary value of the judgment or
settlement. The court may consider using the “lodestar” approach as a cross-check, particularly
when the value of the judgment or settlement is uncertain.
 Lodestar should only be used for (1) injunctive/declaratory relief; (2) fee-shifting statute requires
lodestar; (3) court finds that percentage would be unfair or inapplicable on the facts
 Fee Shifting
 Fee shifting statutes exist under federal law, and authorize the court to award attorneys’ fees and
costs to the prevailing party. When these statutes apply, the statute governs the making of a fee
award.“prevailing party” = “prevailing plaintiff,” not prevailing defendant
 Buckhannon Board: to be a prevailing plaintiff, there has to be a judicially sanctioned change in
the legal relationship between parties. When the West Virginia legislature gives plaintiffs via statute
what they had been seeking through litigation, the plaintiffs were not considered “prevailing
plaintiffs,” and so did not get fees.
C. Strategic Considerations
1. Staton v. Boeing
 Staton v. Boeing Co., 338 (9th Cir. 2003)

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 Setup: Consent decree negotiated in employment discrimination class action (Title VII – fee shifting
available). Consent decree requires Boeing to pay $7.3M in monetary relief, releases Boeing from
race discrimination-related and other claims, provides for certain injunctive relief, awards $4.05
million in attorneys’ fees. Settlement is questionable – very broad equitable relief.
 Class members object to the settlement and the attorney’s fees under 23(e) (settlement must be
fundamentally fair, adequate, and reasonable).
 Holding: The court overturns the fee award.
 Court is skeptical of the fairness of the settlement based on the extent of Boeing’s release from
liability, but it’s not overturning the approval on those grounds alone b/c plaintiffs claims weren’t
great. The attorneys fees are the bigger problem.
 How the parties justify the fee award:
 Normally, under statutory fee shifting provisions, the parties negotiate an award of fees under the
lodestar method. So Boeing and class counsel COULD have negotiated a fee award under lodestar
provisions, but they didn’t, and they did not submit billing records to the court.
 If you do that, then all the reviewing court does is review the reasonableness of the fee request under
the lodestar calculation method.
 Instead, they justified it based on common fund doctrine: they constructed a hypothetical fund =
money damages + amount of fees provided to various counsel + cost of class action notices + value
of the injunctive relief. In theory, common fund justification is permissible where a fee-shifting
statute applies. This is based on the court’s equitable power.
 The problem: mixing the devices. The negotiated settlement borrowed some features from the fee-
shifting (lodestar) approach, and some from the common fund approach. Improper procedure.
 They negotiate the settlement based on common fund principles, but then condition the merits
settlement on the fee award. If you negotiate settlement based on common fund principles, you can
determine the value of the fund, but then the COURT determines the reasonable amount of
attorneys’ fees.
 If you negotiate the settlement under a fee shifting statute, then the court doesn’t scrutinize the fees,
but you have to use lodestar.
 Also, the percentage was too high because the common fund value included the value of
injunctive relief. “Only in the unusual instance where the value to individual class members of
benefits deriving from injunctive relief can be accurately ascertained may courts include such
relief as part of the value of a common fund.”Otherwise, it shouldn’t be included in the value of the
fund, but rather just considered as a “relevant circumstance.”
 Deeper problem: Underlying concern that defendant bought off class counsel
 Court thinks D agreed to higher fees than it would have had to under fee shifting lodestar method: “if
fees are unreasonably high, the likelihood is that the defendant obtained an economically beneficial
concession with regard to the merits provisions, in the form of lower monetary payments to class
members or less injunctive relief for the class than could otherwise have obtained.”
 McKenzie Takeaways: Suspicion about the quality of the settlement plays into the scrutiny of the
fee award. The court doesn’t want to disturb the certification inquiry, so it goes after attorney’s fees
instead.
 Ex ante / Upfront fee determination
 Easterbrook in In re Synthroid Marketing:
 Courts should play a greater role in setting fees at the beginning of litigation, rather than at the end.
It’s hard to set fees ex post, because you have hindsight bias & sunk costs make it impossible for
lawyers to walk away. Individual clients and lawyers always make their bargains at the beginning,
not the end.

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 Better for judges to set fee schedules at the beginning of litigation (using auction techniques or
others).
 ALI §3.13 agrees: In appropriate cases, the court should consider defining the expected fee recovery
as a percentage set early in the litigation rather than after the fact. When courts do so, they may,
where appropriate, adjust the fees in exceptional cases where settlement is reached very early in the
litigation or the level of recovery is extraordinary.

VI. Private Securities Litigation Reform Act of 1995 (PSLRA)

A. Overview
 See Nutshell p 422-7
 In response to the concern that lead plaintiff in class action is determined by a race to the
courthouse, Congress passes PSLRA, which specifies the method of selecting a lead plaintiff in
class actions brought under federal securities laws:
 PSLRA directs the court to “appoint as lead plaintiff the member or members of the purported
plaintiff class that the court determines to be the most capable of adequately representing the
interests of the class”
 Creates a rebuttable presumption that the most adequate plaintiff is a person or group of persons
that (1) has filed the complaint or made a motion in response to a notice, (2) has the largest
financial interest in the relief sought by the class, AND (3) otherwise satisfies the requirements
of Rule 23.
B. Implications
 The most adequate plaintiff selects and retains counsel.
 In re Cavanaugh says that PSLRA does not permit the court to select class counsel by way of an
auction; the plaintiff gets to choose counsel.
C. Goals and Problems
 The goal of PSLRA: a return to the idea that the class representative (here, large institutional
investors in securities actions) should exercise meaningful supervision over class counsel. Contrast
with Lazy Oil – which says that the class counsel is just a representative of the entity, not individual
members of the class.
 Same goal as with auctions; align ownership and control to get rid of loyalty problems.
 Problems with PSLRA: Institutional investors (banks, mutual funds, insurance companies,
pension funds, endowments) are reluctant to serve as lead plaintiffs. A number of reasons:
 (1) Fear of discovery into the institutional investor’s business practices; (2) There may be greater
recoveries for institutions that pursue their own actions. Institutional investors fear that their strong
claims will be combined with weaker ones in class actions, diluting their share of settlement. (3)
There are significant costs that the institutional investors will have to incur by serving as lead
plaintiff. Investigating claims, selecting counsel, reading complaints/pleadings, spending
time/resources to monitor prosecution of the action, potential free rider problems. (4) Lack of
information about the case at the time when they have to decide whether to become lead plaintiffs:
PSLRA gives only 60 days to make the choice. (5) Institutions have relationships with defendants
that may be jeopardized if they become lead plaintiffs. The customers of the largest classes of
financial institutions (banks, mutual funds, insurance companies) are often corporations and
accounting firms being sued in securities class actions.
 Some of these investors choose not to pursue these claims at all!
D. PSLRA Today

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 Pension funds and union funds become the big hitters as lead plaintiffs; they are the ones that have
good relationships with the plaintiffs’ bar
 Many proponents thought it would dramatically reduce the number of security fraud suits, but that
has not happened
 In response, plaintiffs’ attorneys have looked more closely at state court options

VII. Defendant Classes

A. Opt-Out Classes
 Rule 23(a) says “one or more members of a class may sue or be sued as representative parties on
behalf of all members,” so perhaps we can certify defendant classes. Defendant classes still must fall
into one of the 23(b) subdivisions.
 Thillens, Inc. v. Cmty. Currency Exch. Ass’n, 352 (N.D. Ill. 1983)
 Setup: a defendant class action under Rule 23(b)(3) was brought against the Community Currency
Exchange Association of Illinois and each of its member currency exchanges on allegations of
antitrust and conspiracy against the plaintiff Thillens, a different exchange not within the
association. Thillens nominated the Association as the defendant class representative.
 Holding: Motion for certification of the defendant class approved.
 Due Process Concerns:
o (1) Defendant classes raise Rule 23(a)/due process adequacy of representation issues.
 Because (1) the plaintiff is selecting the class representative for the defendant class, so the
defendant might not do a good job serving as the representative; (2) there may be a conflict of
interest if different defendants want to assert different defenses; (3) the defendant may have a
low amount at stake.
- Court in Thillens doesn’t think that’s a problem here; the Association has lots of
experience, already the self-selected representative of the class, and there are no real
conflicts of interest.
o (2) Personal jurisdiction; the consequences are worse for absent D’s than absent P’s.
 But this isn’t an issue here b/c all defendants are from Illinois
 Limiting rule for 23(b)(3) defendant classes:
o (1) Each plaintiff must have a colorable claim against each defendant class member
 (1a) This requirement may be waived where defendant members are related by a conspiracy
or juridical link
- Juridical link: “some legal relationship which relates all defendants in a way such that
single resolution of the dispute is preferred to a multiplicity of similar actions”
o (2) Need a clear showing that common issues predominate over individual issues, as well as
superiority
 Predominance is satisfied in Thillens because the common issue is to prove the existence of
a conspiracy; class action is superior both for plaintiffs (unmarketable claims), defendants
(share costs of litigation), and judicial system (efficiency)
- Notes: in opt-out defendant class actions, there is a risk in certifying a class the defendants
will “jump ship,” but here the risk is minimized because those who opt out might lose the
effect of a favorable decision, and will have to pay for individual litigation.
B. Mandatory Classes
 The language of 23(b)(2) does not explicitly refer to defendant class actions. Courts are divided
as to whether defendant classes should be allowed under (b)(2).
 Henson v. East Lincoln Township, 361 (7th Cir. 1987)

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 - Setup: the plaintiff tried to bring a (b)(2) defendant class on behalf of residents in 65
counties against almost every local welfare department in the state, claiming that the
departments were violating constitutional due process and seeking only injunctive relief.
- Holding: Defendant class not certified under (b)(2).
 External Governance Amchem Concern: The class action is being used here to force a change in
the structure of government. It would be better to just do this through normal litigation.
o “The double class action is a legislative or regulatory device for bringing about general
compliance with law, rather than an adjudicative device for resolving a dispute.”
o Response: they are just trying to enforce a clear command.
 Internal Governance Concern: Double class action is unwieldy, or worse.
o “The law firm retained by one Illinois township of modest size is being asked to shoulder
responsibility for defending the interest of hundreds o others, which by the same token are being
asked to place the responsibility for a litigation vital to the discharge of their essential and
financially burdensome public functions in lawyers they may never heard of.”
o Not every plaintiff will have a claim against every defendant.
 Also some textual argument based the language of (b)(2).

VIII. Forum Selection and Rival Proceedings

A. CAFA
Background/Purpose
 Ultimate goal: to take nationwide class actions out of state court and bring them to federal court.
 The passage of CAFA is motivated by a concern that with “hotbed” jurisdictions. Judges in certain
jurisdictions are certifying tons in mass tort and products liability suits, and are not adequately
supervising class settlements. Courts were interpreting the COL principles in plaintiffs’ favor.
 Plaintiffs were keeping class actions in state courts by just naming one non-diverse named plaintiff.
 This has led to several forms of abuse of the class action: (1) lawyers, rather than plaintiffs, benefit;
(2) corporate defendants forced to settle frivolous claims; (3) due process rights being ignored; (4)
expensive and predatory copy-cat cases force defendants to litigate the same case in multiple
jurisdictions, driving up consumer costs.
Law Itself and Requirements
 See in a nutshell!!!!! P 284-300
o Expanded Federal Jux over Class Actions p. 284-6
o Establishing Minimal Diversity p. 286
o Aggregating Claims p. 287
o Also applies to Mass Actions!!!! p. 290!
Anderson v. Bayer Corp. (7th Cir. 2010)
 Separate state-court suits against drug manufacturer, each involving fewer than 100 plaintiffs,
could not be treated as single “mass action” eligible for removal to federal court under Class
Action Fairness Act (CAFA); mass action provision explicitly excluded cases in which claims
were consolidated on defendant's motion from term “mass action,” and thus gave plaintiffs
choice to file separate actions that did not qualify for CAFA jurisdiction.
 “Bayer asks us to grant its petitions for review in the four cases remanded to state court and
hold that (1) plaintiffs cannot avoid federal diversity jurisdiction by carving their filings into
five separate pleadings, and (2) there is diversity jurisdiction over most plaintiff's claims
because the claims of the small number of non-diverse plaintiffs were fraudulently
misjoined and should be severed. Because we agree with the district court on the first

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 question, we conclude that we are without jurisdiction to reach the second.” Anderson v. Bayer
Corp., 610 F.3d 390, 392 (7th Cir. 2010)
o Expanded Removal to Federal Court p. 292
o Exceptions to CAFA’s Jurisdictional Rules p. 293
o Appellate Review p. 298
Mechanics & Consequences
 (1) Removal is allowed if any plaintiff (not just class representative) is a citizen of a state different
from any defendant.
 (2) Amount in controversy only has to be an aggregate of $5 million
 (3) Gets rid of the old requirement that a D sued in his home state could not remove to federal court;
now, they can.
 Carve-Outs: Plaintiffs can get out of CAFA if they can prove that it falls within one of the two
carve-outs:
o (1) Mandatory Carve-Out: If 2/3 of the class and at least one primary defendant are from the state
in which the action was filed, no removal.
o (2) Discretionary Carve-Out: If more than 1/3 but less than 2/3 of the class and the “primary
defendants” are citizens of the state in which the action is filed, then court can decide no diversity
jurisdiction.
 CAFA doesn’t apply to corporate governance & securities litigation.
Consequences
 Issacharoff/Sharkey: CAFA is at odds with Erie.
 CAFA is leading to a federalization of state common law. By bringing ordinary state court litigation
into federal courts, CAFA (1) licenses federal courts to create federal common law governing those
claims; (2) implicitly justifies a federal choice of law rule (even though normally federal courts just
piggyback the choice of law rule from the state they sit in).
 Critics charged that the legislation would deprive Americans of legal recourse when they were
wronged by powerful corporations.
 Critics charge that this bill makes it far more difficult to bring class action suits, and may prolong
such litigation, clogging the federal courts' dockets. The act also gives the federal government some
ability to control, through judicial appointments, outcomes that were previously under state control

B. The Multidistrict Litigation Act

1. Generally
 § 28 U.S.C. 1407: “When civil actions involving one or more common questions of fact are pending
in different districts, such actions may be transferred to any district for coordinated or consolidated
pretrial proceedings.”
o The MDL panel decides whether or not to make these transfers
o Much looser standard of commonality than in CA. Coordination: cases kept separate;
consolidation: closer connection between the cases (i.e. summary judgment)
 More than 97% of MDL cases are resolved in the transferee district

2. Special Challenges Presented by Mass Actions

 Mass actions lack the procedural safeguards of Rule 23 and subsequent cases
 Rules of mass actions are undeveloped so MDL cases are “one of the least studied type of federal
litigation.” Thomas, Morphing Case Boundaries in Multidistrict Litigation Settlements, 63 EMORY
L.J. 1339, 1350 (2014)

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3. Selecting the Transferee Court
 In re Silicone Gel Breast Implants, 388 (J.P.M.L. 1992)
 MDL can transfer wherever they want.
 Setup: One category of plaintiffs wanted the case in San Francisco. The defendants wanted the case
in Ohio.
 Holding: The MDL decides to transfer to a completely different place: Alabama.
 “[W]e have determined to look beyond the preferences of the parties in our search for a transferee
judge.”
 In selecting the transferee court, the Panel is not bound by the recommendations of the parties and
need not limit its choice to a judge who currently has one or more of the cases at issue. Essentially, it
can send litigations anywhere. Silicone Gel Breast Implants.
 TM: The D pairs up with one set of P’s here because they were close to settlement. The reason the
P’s disagree on the location is that they want to be made lead counsel and get fees.

4. The Role of the Transferee Court: Choice of Law and Adjudicatory Authority
Purpose of Transfers
 Cases are transferred for the purposes of pre-trial proceedings
Whose Law Applies Post Transfer?
 Van Dusen: transfer under § 1404 does not change the state law that governs. Transferee court must
apply the same state law as would have applied in the transferor court.
 In re Korean Air Lines: if transferred cases involve matters of federal law, D.C. Circuit says that
the transferee court should apply its own law, not that of the transferor court.
Lexecon v. Milberg Weiss, (U.S. 1998)
 MDL panel cannot engage in the practice of self-transfer (transfer of consolidated cases to
themselves for the purposes of trial).
 Each action transferred to a particular district court by the MDL Panel “shall be remanded…at or
before the conclusion of such pretrial proceedings to the district from which it was transferred.”
Courts had been doing this all the time. But that doesn’t make it okay.
 Notes: Transferee courts want to hold onto the cases for trial because self-perception of the role of
judging to manage cases aggressively and avoid trial; need to retain the possibility of trial to manage
the cases.
 This makes a difference in Lexecon; as a result of this, Lexecon gets to have the trial in its
hometown.
 Now judges just follow the cases. Or ask the transferor court to transfer it back under 1404(a).
- Criticism of MDL Consolidation
 Judge Young in Delaventura: MDL consolidation unfairly advantages defendants in settlement
negotiations. The combination of 3 features favors defendants:
o (1) The MDL Panel itself rarely denies a request for transfer
o (2) Cases rarely make their way back to the transferor court for trial, despite Lexecon
 Thus plaintiffs can’t credibly threaten defendants to force settlement.
o (3) There is tons of delay
 This is especially problematic b/c individual P’s are creditors and D is debtor. Delay always
favors the debtor.
 Though, from a system-wide perspective, the delay in one MDL proceeding is better than
having tons of parallel proceedings all across the country.
 The effect of this is to force settlement, and on terms favorable to the defendant.

C. Inter-System Coordination
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1. Full Faith and Credit
 There are provisions of federal law that concern the obligation of a court in one judicial system
to respect the proceedings of courts in other judicial systems with the U.S.
 Full Faith and Credit Clause (Article IV, section 1 of the Constitution)
o State courts must follow decisions from other state courts (“Full faith and credit shall be given
in each state to the public acts, records, and judicial proceedings of every other state”)
 Full Faith and Credit Act (28 U.S.C. § 1738)
o When a state court issues a judgment, courts in the federal system must afford that judgment
the same preclusive effect it would have in the rendering state.
 Matsushita v. Epstein, 398, (U.S. 1996)
 A federal court must accord full faith and credit to a settlement incorporated into a state court
judgment, even if the settlement releases claims that are within the exclusive jurisdiction of the
federal courts.
 Setup: 2 class actions going on against the same D, one in state court and one in federal court.
They reach a settlement in DE state court, releases D from all state and federal claims. The D’s
in the federal action then argued that the state court settlement was entitled to “full faith and
credit” and precluded P’s federal claims.
 Holding: Federal claims can be precluded by the state law settlement.
 2-step analysis when state court judgment relating to exclusively federal claim (Marrese):
 Step 1: What preclusive effect would a court in the rendering jurisdiction give to the settlement?
o DE state law would give preclusive effect to the settlement: “When a state court settlement of
a class action releases all claims which arise out of the challenged transaction and is
determined to be fair and to have met all due process requirements, the class members are
bound by the release or the doctrine of issue preclusion.” In re MCA
 Step 2: Does the federal securities statute partially repeal the FFCA? Nothing suggests that it
does.
 Ginsburg concurrence: a state court judgment is not entitled to FFC if it doesn’t satisfy the
requirements of the Due Process Clause, particularly adequacy of representation (Shutts)
 She is concerned that the Delaware lawyers released the federal securities claims for a “meager
return” to the class members, but a “solid fee” to the Delaware class attorneys.
 Final judgments are still vulnerable to collateral attack if they don’t adhere to due process
 The Chancellor never made the adequacy of representation due process inquiry required by
Shutts
 Inquiry into the merits of the settlement isn’t enough, because an inadequate representative
“taints” the entire settlement process.
 TM: Like in Amchem, Ginsburg worries that the lawyers settling these claims don’t have
sufficient leverage
o In Amchem, the lawyers couldn’t litigate the claims of futures. In Matsushita, the lawyers
couldn’t litigate the federal claims.
o But maybe DE counsel did have some meaningful leverage b/c they could refile their lawsuit
in federal district court, avail themselves of the grant of exclusive subject matter jurisdiction
to adjudicate the federal securities claims.
o However, Nagareda suggests that this wasn’t a credible threat because it would have been
sucked into the MDL process.
o Ginsburg says that “a court conducting an action cannot predetermine the res judicata effect of
the judgment” rendered therein. She says that the res judicata effect can only be tested in a
subsequent action.

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 o But FFC says that the claim preclusive effect is determined by the preclusion principles of the
rendering forum.
 Generally, the Court is expressing a disfavorable view of collateral attacks. The ALI takes a
similar view.
 Delaware is acting to protect its parochial interests here; they are concerned that if they don’t
allow the parties to settle all of their claims in state court, then parties will go to federal court and
bring the state claims in via supplemental jurisdiction. Delaware counteracts this by using what
McKenzie calls “reverse supplemental jurisdiction,” and the Supreme Court says that’s fine.

2. Other Sources of Law

 Anti-Injunction Act: “A court of the United States may not grant an injunction to stay proceedings
in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its
jurisdiction, or to protect or effectuate its judgments.”
 A federal court cannot enjoin a state court proceeding except to (1) protect/effectuate its judgment or
(2) when doing so is necessary to aid its jurisdiction.
 Note: This is another example where a court (this time a federal court) is allowed to determine the
preclusive effect of its own judgments.
 Exception to AIA #1: Protect/Effectuate Judgments (remember, this is about final
JUDGMENTs)
 Generally: You need an entry of an appealable judgment (but see Corrugated Container); and this
will be evaluated under normal issue preclusion doctrine (same issue, no binding of nonparties).
 Smith v. Bayer, Supp. 44 (U.S. 2011)
 A federal court that has denied class certification cannot enjoin a state court from hearing a motion
to certify a class, even if the claims are exactly the same.
 Setup: 2 parallel suits against Bayer; one is in West Virginia state court, the other is in the District
of Minnesota. District of Minnesota court denies certification and dismisses the claim on the merits.
Then, Bayer then asks the District of Minnesota to enjoin the WV state court from hearing motion to
certify the class.
 Holding: The district court cannot enjoin the state court from hearing the motion to certify the class.
 Bayer argues that this falls under the “relitigation exception,” which is part of the “protect/effectuate
judgments” exception to the AIA.
 This argument fails for 2 reasons, part of issue preclusion analysis:
o (1) The issue being considered by the WV court (certification under WV Rule 23) is different
than the issue that was already decided by the district of Minnesota. WV has a more relaxed
predominance inquiry than D. Minn. D. Minn. says that a single individualized issue would
defeat predominance, but D. Minn. says that a single common issue could outweigh numerous
individual questions.
o (2) Bayer is trying to bind a nonparty (Taylor). Smith is an unnamed party of class, and class
certification was denied
 Corrugated Container: generally, the entry of an appealable order is necessary for the invocation of
the relitigation/protection of judgment exception. (see below)
 Exception to AIA #2: Necessary in aid of jurisdiction
 Generally: This is hard to prove. You need to demonstrate something like a settlement being
imminent, or that the federal court is close to finalizing the litigation, and there’s some real risk of
interference. Enjoining state proceedings is the exception, rather than the rule.
 In re Corrugated Container Antitrust Litig., 421 (5th Cir. 1981)

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 Setup: The federal court approved an antitrust settlement. Absent class members did not opt out but
brought subsequent litigation in state court under state anti-competition law. The federal court
invoked the “protect/effectuate” exception to enjoin the proceeding.
o The state court enjoined defendants in the federal proceeding; this blocks the federal proceeding
 Holding: 5th Circuit affirms: the injunction is appropriate.
 The court justifies this under the protect/effectuate judgment exception, though it might make
more sense to do it under the in aid of jurisdiction exception
 There is a timing problem with the protect/effectuate judgment exception here: the federal court
issued the injunction before it approved the settlement and issued an appealable order.
 It would have been cleaner just to say that stopping the harassing state court proceedings was
necessary to aid its jurisdiction.
 The real problem was that the plaintiffs lawyers were trying to disrupt the MDL proceedings by
running to state court. The court is kind of sloppy about which exception this fell under.
 In re Eagle-Picher Indus., Inc., 424 (E.D.N.Y. 1990)
 Strong argument for an injunction for limited fund class action, though doctrinal support is unclear.
 Setup: Federal court is considering whether to certify a 23(b)(1)(B) limited fund class action against
an asbestos manufacturer and enjoin all pending state claims. The concern is that competing actions
will eat away at the limited fund and prevent equitable distribution.
 Holding: This is permitted under a few doctrines; (1) “in aid of jurisdiction” exception to the AIA;
(2) the All Writs Act; and (3) analogy to in rem action; (4) analogy to interpleader action.
 The AIA argument isn’t great on its own because the problem isn’t really about not about
jurisdiction.
 All Writs Act: federal courts can issue injunction before a judgment is reached, allowing the court to
protect its settlement efforts.
 In rem action: “The in aid of jurisdiction exception would also authorize a stay of state court
proceedings when the ‘federal court’s jurisdiction is in rem and the state court action may effectively
deprive the federal court of the opportunity to adjudicate the res.”
 Analogy to interpleader: “Federal courts have also relied on the ‘in aid of jurisdiction’ exception to
the AIA to justify a stay of existing state proceedings in interpleader actions…Limited fund class
actions closely resemble an interpleader action.”
 Carlough v. Amchem Prods., Inc., 429 (3d Cir. 1993)
 This is probably one of the few cases where you can get an injunction for a (b)(3) class action.
 Setup: Early stages of Amchem. In the federal proceeding a settlement was imminent, but it did not
provide money to unimpaired but exposed class members. State-class counsel was working with
asbestos-exposed workers without diagnosed conditions and sought a declaration from a West
Virginia state court that the proposed settlement was not binding and that opted out all West Virginia
class members.
o The West Virginia state class seeks a declaration that the settlement is unenforceable, not entitled
to full faith and credit , not binding on West Virginia class members, that Gore plaintiffs are
adequate representatives, and are authorized to “opt out” of the federal class action on behalf of
the entire WV class.
 District court issues an injunction the state court proceedings.
 Holding: Injunction is proper, under the “necessary in aid of jurisdiction”.
 The reason that the district court gives: the settlement was imminent.
 McKenzie: the real reasons for the significant interference.
 (1) The timing of this is messed up. Even though class members could opt out, this timing would
result in giving competing notice to class members; they would get very confused.

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 (2) The class-wide opt-out seems to be done in order to have a state court declare the rights of the
entire group. That’s not permissible.

IX. Class Settlements

A. Class Settlement Review and Design
1. Direct Review: Rule 23(e)
Rule 23(e):
 “A class action shall not be dismissed or compromised without the approval of the court, and
notice of the proposed dismissal or compromise shall be given to all members of the class in such
manner as the court directs.”
o (e)(2): “If the proposal will bind class members, the court may approve it only after a hearing
and on finding that it is fair, reasonable, and adequate”
o (e)(4) allows the court to provide a second opt-out opportunity before approving a settlement;
this is discretionary
o (e)(5) requires judicial approval for the withdrawal of an objection to a class settlement
Reynolds v. Beneficial Bank, 440 (7th Cir. 2002) Standard of Review
 Setup: Taxpayers bring class actions against Beneficial Bank & H&R Block for engaging in
undisclosed self-dealing by not informing the taxpayers that Beneficial paid Block to make refund
anticipation loans or that Block owned an interest in the loans.
o District court approves a settlement where defendants pay into a $25 million fund, and class
members can get up to $15. Several plaintiffs who had objected to the settlement appeal.
 Holding: Overturns district court’s approval of the settlement.
o Discussion of the role of the district court judge: the judge must “exercise the highest degree of
vigilance in scrutinizing proposed settlements of class actions”; the district judge is a “fiduciary
of the class.”
o Problems with the settlement: (1) The district court didn’t set out a record by which to assess
whether the settlement was fair and adequate under 23(e) (2) This looks like a sweetheart deal for
the defendants.
 There was a Texas class action against H&R block on similar claims that was going well, yet
the settlement released H&R block from all of these claims in exchange for no consideration.
 The district judge had the lawyers submit their fee applications in camera, so that objectors
wouldn’t see how little time they spent on the case.
o The district court should have done some sort of valuation analysis where it tried to figure out
how much the expected value of the continued litigation was to the class: estimate values and
probabilities for “high, medium, low, and zero.”
William B. Rubenstein, The Fairness Hearing: Adversarial and Regulatory Approaches
 Mechanisms to “assist the judge at the fairness hearing”:
o (1) Devil’s Advocate (public adversarial): “The court could appoint a ‘devil’s advocate’ to
argue against the reasonableness of the settlement or fee, thereby using public funds to ensure
an adversarial fairness hearing.”
o (2) Bonds (private adversarial): “When a class settlement is proposed, the settling parties could
be required to post a bond with the court. The bond could be utilized as security so that if the
settlement failed to win approval, the bond would be forfeited; more modestly, the bond could be
used to pay the attorney’s fees of objectors who brought reasonable concerns to the court’s
attention. Both versions utilize market incentives to monitor class counsel.”
o (3) Labels (public regulatory): “A public agency could passively require that class action
settlements be labeled with a simple chart identifying their key characteristics. Alternatively,
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 a public agency could actively investigate, assess, and label class action settlements with a
grade. Or a public agent could simply review and report on the nature of the settlement. Any of
these approaches would help make more transparent to courts and class members the elements
and quality of the settlement.”
o (4) Trademarks (private regulatory): “A private independent agency could register a
certification mark, and provide that mark to class action settlements meeting its guidelines. Such
a mark would, like its public counterpart, signal to class members and judges the quality of the
settlement terms.”

2. Objecting Classmembers (Who May Seek Appellate Review of Class Settlement Approval)
Generally
 Any class member may lodge objections to a proposed settlement. Rule 23(e)(4)(A). (e)(5) requires
judicial approval for the withdrawal of an objection to a class settlement
Devlin v. Scardelletti, 449 (U.S. 2002)
 Facts: Unnamed class member, Devlin, sought to intervene but his motion was denied. Later, Devlin
objected to the settlement at the fairness hearing, but the settlement was approved despite his
objections. The Fourth Circuit held that since Devlin was not a named representative and had
correctly been denied intervention, he lacked standing to challenge the settlement on appeal.
 Holding:
o The Supreme Court reversed, reasoning that the right to appeal settlement was not restricted to
named parties to the litigation.
o In a 6-3 opinion delivered by Justice Sandra Day O'Connor, the Court held that non-named class
members like Devlin, who have objected in a timely manner to approval of the settlement at
the fairness hearing, have the power to bring an appeal without first intervening.
 The Court reasoned that the District Court's approval of the settlement, which bound the non-
named class member as a member of the class, amounted to a final decision of the
nonnamed class member's right or claim sufficient to trigger his right to appeal. Moreover,
the Court concluded, appealing the approval of the settlement was the non-named class
member's only means of protecting himself from being bound by a disposition of his rights he
found unacceptable, given that the non-named class member had no ability to opt out of the
settlement.
 Scalia Dissent:
o The objector isn’t truly a party; and we want objectors to have to intervene before they appeal b/c
it allows the district court to screen out objectors who shouldn’t be there.

B. Collateral Attacks on Class Settlements

1. Epstein v. MCA
 Collateral attack: Ability to attack the binding effect of a judgment approving a class settlement
outside the channels for direct review.
 Epstein v. MCA 460 (9th Cir. 1999), p. 460
 Setup: In Matsushita, Supreme Court held that FFCA required California district court to give
preclusive effect to settlement in Delaware state court that resolved federal securities claims that
could only be litigated in federal court.
o Now plaintiffs collaterally attack the settlement on a different ground: they say that the state
court judgment wasn’t entitled to full faith and credit because it violated due process—
members of the class were not adequately represented in the proceeding.
 Holding: Collateral attack is barred. Class members are not allowed to collaterally attack adequacy
of representation.
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 2 reasons: (1) The Supreme Court already implicitly decided that the class met adequate
representation in Matsushita. (2) The Supreme Court has expressed skepticism toward collateral
attacks on class settlements.
 But in Stephenson, where 2d Circuit allowed futures to attack class action judgment, SCOTUS split
4-4.
 Thomas dissent: Need to assess whether adequacy of representation has been met via issue
preclusion, and it’s not clear that the adequacy of representation issue was actually litigated in the
Delaware court. Delaware court offers no “supporting reasoning” or findings to indicate that
representation was adequate.
 The reason that we’re worried about adequacy of representation here is that there was a time bar for
some of the Delaware claimants that wouldn’t have applied to the federal securities plaintiffs;
concern that these claims might have been thrown in for nothing by the plaintiffs’ lawyers. Thomas
want subclassing.
 McKenzie: This is all about 9th Circuit’s concern with objectors, and particularly professional
objectors. The fear is that if courts are open to collateral attacks, objectors will forgo showing up at
the initial forum (because they would probably lose in that initial forum) and instead just collaterally
attack from a different forum. This forces objectors to show up at F1, which increases the chances
for adversarial testing when it matters most.
 ALI § 3.14 on Class Settlements: strong preference for direct appeal rather than collateral attack.
Based on the need for finality: “A principal purpose of a class-action settlement is to achieve
finality. When class members are permitted to bring collateral challenges to a settlement on grounds
that were, or could have been, raised during the settlement process, the very integrity of the
settlement process is undermined.”
 The only instances where collateral attacks are permissible are laid out in § 3.14(a)(2).
 §3.14 (a) The normal vehicle for challenging a settlement is a direct appeal from the order or
judgment approving the settlement.
o Apart from appeal, a judgment embodying a class-action settlement may not be challenged,
except: (1) before the court in which the settlement occurred on grounds generally applicable
under the governing rules of civil procedure for obtaining relief from judgment; or (2) before the
same or a different court on the ground that the settlement court lacked personal or subject-
matter jurisdiction, failed to make the necessary findings of adequate representation, or failed to
afford class members reasonable notice and an opportunity to be heard as required by applicable
law.(b) In restricting collateral challenges to a class settlement, this Section leaves unchanged
existing law governing class members' ability to pursue claims of malpractice or breach of
fiduciary duty against class counsel as permitted by applicable law.
 The Epstein view is in tension with the 2d Circuit in Stephenson, but in Wolfert v. Transamerica
(2006), the 2d Circuit seemed to take Epstein as the law.
 The ALI view (and Epstein) still permit collateral attacks when the first court didn’t think about
adequacy of representation. This opens the door for arguments that a particular court didn’t think
about the particular objection to adequacy of representation—the particular subclassing at issue—
that’s at stake in the second case.
 Hansberry could be read as being in tension with this view, though. In Hansberry, the court allowed
collateral litigation based on a structural conflict. Strong indication from SCOTUS that collateral
attacks are permitted.
o Though you could also just say that the problem in Hansberry is that it was decided prior to Rule
23, prior to there being any kind of procedure that ensured adequacy of representation. Maybe
you just need to check the boxes.

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 When litigation is removed under CAFA or MDL, this is an even stronger argument against
collateral attacks. If parties don’t get to choose the forum, we are less worried about them
strategically choosing a forum where settlement will be approved.
 Generally, there are 3 approaches to collateral attacks based on adequacy of representation: claim
preclusion (O’Scannlain in Epstein); issue preclusion (Thomas in Epstein); jurisdictional defect
(Ginsburg concurrence in Matsushita).
C. Administration of Class Settlements
1. In re Orthopedic Bone Screw Prods. Liab. Litig. (3d Cir. 2001)
 Setup: District court sets up 2-step process for administration of settlement: (1) class members come
forward and register; (2) class members file proof of claim. Sambolin fails to register on time, but
files a proof of claim. District court denies him participation in settlement.
 Holding: Reverses district court order denying Sambolin participation.
 Late claims evaluated by whether claimant has shown excusable neglect
o Factors: (1) the danger of prejudice to the nonmovant; (2) the length of the delay and its potential
effect on judicial proceedings; (3) the reason for the delay, including whether it was within the
reasonable control of the movant; and (4) whether the movant acted in good faith.
o Not prejudicial to D because it’s a mandatory class action, fixed sum; not prejudicial to other
class members b/c it’s just denying them a windfall.
 TM: It’s not true that there is no prejudice to the D. There is a reason that they have a registration
deadline for the settlement—to help D estimate the size of the class and prepare for administration.
When late plaintiffs show up, it can be prejudicial.
 The 3rd Circuit is saying that the district court needs to act as a fiduciary for the purposes of
administering the settlement.

2. Pigford v. Johanns (D.C. Cir. 2005)

 Setup: Class settlement approved by district court for class action of black farmers discriminated
against by the government. 2-track system for administration. Class counsel are overwhelmed by the
number of claimants filing for administrative appeals, and miss the deadlines for filing. Claimants
come into the process late; district court denies them participation.
 Holding: Claimants cannot participate; no excusable neglect (for pro se litigants) and no “changed
circumstances” warranting re-opening of judgment under 60(b)(5) (for those represented by CC).
 Application of balancing test from Bone Screw comes out differently:
 (1) Prejudice to defendant is lesser here, as there is not a fixed amount of $$.
o TM: This allows the defendant to enjoy a windfall. Perhaps the fact that we are dealing with the
public fisc makes this less relevant.
 (2) It was the movants’ fault that they missed the deadline.
o TM: It wasn’t the claimants’ fault, it was their lawyers’ fault.
 Rodgers dissent: it makes no sense to deny re-opening of the judgment based on class counsel’s
inadequacy, and then bind them to the results.
 McKenzie: Perhaps the D.C. Circuit is deferring to the lower court because it weighed these factors,
but it seems more like it is saying that the district court has no obligation to act as a fiduciary.
 The adequacy of representation inquiry should take account of counsel’s capacity to deal with
contingencies in administering the settlement. The court should do something like Posner did in
Reynolds, require an estimation of probabilities of complications and contingencies to deal with
them.
D. Settlement Design and Opt-Out Rights
 In re Inter-op Hip Prosthesis Liab. Litig. (N.D. Ohio 2001), p. 487

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 Setup: Rule 23(b)(3) class settlement containing a “most-favored nation”/settlement top-up clause
(if D settles with opt-outs for more than class claimants received, all claimants get paid the
increment of the difference); clause setting up a trust with cash, insurance proceeds, stock, and a
pledge of 50% of D’s annual income; preferential liens on D’s assets in favor of the trust (forcing an
opt-out plaintiff to “stand in line” behind participating class members). Objectors object to the
settlement, arguing that it looks like a mandatory class.
 Holding: The court approves the settlement, says that the objection is just that it’s “too good a deal.”
 On a rules formalism approach, this would have failed the Ortiz test for mandatory classes because
there were substantial resources withheld from the settlement.
o In re General Motors Interchange Litigation 494, (7th Cir. 1979): 23(b)(3) settlement presents
an unacceptable “accept-or-else” situation because if they don’t accept the settlement they will
lose their federal claims.
 It’s not about being too good a deal; the settlement is designed to stop opting out. The MFN/top-up
is a huge disincentive. If D settles with for more than it’s paying the class, then this means it gives a
ton more to the class, bringing it closer to insolvency. Opt-outs know that D will litigate vigorously
and thus remain in the collective.
 Without opt-out rights, this puts more pressure on voice and loyalty. Voice isn’t great because it
requires the court taking objectors seriously, and they might not if they just want to get the deal
done.
 Opting out (exit) is arguably more effective than voice or loyalty; it serves as both an internal check
on the class action and external check on the court. When members are opting out, this suggests that
either the court isn’t doing its job, or the deal is bad, or both.
o This implicitly says that exit is so important that it can’t be bargained away.
o Aligns with Shutts, which tells us that exit is part of due process.
 Note: The Sixth Circuit subsequently expressed “serious doubts as to the legitimacy of the proposed
class settlement,” and the final settlement eliminated the lien and the trust fund.
 General Motors Exchange: Seventh Circuit overturns district court’s decision to dismiss the federal
claims of class members who refuse to accept a settlement. Suggests that you can’t have an “accept
or else” settlement; this effectively deprives them of their right to opt out of the initial settlement.
E. Cy Pres Distributions
 Courts often use cy pres distributions (“as near as possible”) when distribution of funds in class
settlements not feasible. Derived from trusts and estates law; the idea is to come as close to the
hypothetical wishes of the “grantor” as possible.
 Six (6) Mexican Workers v. Arizona Citrus Growers, 499 (9th Cir. 1990)
 Setup: Class actions against agricultural co-op for violating statutes relating to migrant workers.
Remedy is statutory damages. Plaintiffs are undocumented workers; so there’s a reason to think that
they might not come forward. District court directs unclaimed funds to a non-profit doing work in
native countries of immigrant workers.
 Holding: Court remands: “no reasonable certainty that any member will be benefited”
 Three options with what to do with the money: (1) cy pres award; (2) escheat to the government; (3)
reversion to defendant. The court is open to #1 and #2, not to #3.
 Cy pres might be okay, but the plan of distribution here didn’t adequately target the plaintiff class;
and the court hadn’t planned for adequate supervision of the distribution.
 Escheat to government might be a good option here, too—this gives plaintiffs 5 years to come
forward and claim their money before the money goes to gov’t for good.
 Fernandez (concurring): Better to give money back to D; not great, but better than anything other
than giving it to plaintiffs. “Exercise in social engineering.”
 TM: This is really about external and internal governance concerns.
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 External: It looks like the court is engaging in legislative behavior, redistributing $$.
 Internal: Fear that the court will be disloyal; give the $$ to its own favorite charities when nobody
else is watching. Court must behave as a fiduciary up until the very end of the litigation; like in Bone
Screw.
 ALI § 3.07: Cy Pres Settlements
 Open to cy pres, but skeptical. Prefers excess $$ to be distributed to known class members rather
than being used as cy pres: “If the settlement involves individual distributions to class members and
funds remain after distributions…the settlement should presumptively provide for further
distributions to participating class members.”
F. Attorney-Client Conflicts
 Ordinary conflict-of-interest principles don’t suit the class action device. Named plaintiff does not
have the same authority with respect to counsel as in traditional litigation, mainly because of the risk
of holdout problems. This comes up with the decision to fire.
 Lazy Oil v. Witco Corp., 509 (3d Cir. 1999)
 Setup: Antitrust class action settlement worked out. Majority of named plaintiffs did not like the
proposed settlement, object to the settlement, and seek removal of class counsel. Named plaintiffs
think there should have been subclassing b/c some plaintiffs (investors) didn’t have the same
interests as others (producers).
 Holding: The court rejects plaintiffs’ attempts to remove class counsel.
 Rule: In class actions, “once some class representatives object to a settlement negotiated on their
behalf, class counsel may continue to represent the class, as long as the interest of the class in
continued representation by experienced counsel is not outweighed by the actual prejudice to the
objectors of being opposed by their former counsel.”
 Prejudice might exist if there had been a relationship between named plaintiff and the lawyer,
sharing of strategy/documents.
 3rd Circuit recognizes the problem if treat class counsel with normal conflict-of-interest principles:
named plaintiff could threaten to disrupt the entire settlement by firing class counsel. This is a
holdout problem.
 TM: This case suggests that we don’t take voice that seriously. Although named plaintiffs get to
voice their concerns, they don’t really have much control. Class counsel has control of the class
action. This places a lot of emphasis on exit and court’s settlement approval; we assume that because
the class members haven’t exited and b/c the court has approved the settlement, the class members
side with the attorney. Seems at odds with Amchem by making judicial approval of fairness the
exclusive test.

X. Private Aggregations/Aggregate Settlements

A. Background
1. The Private Aggregator
 Sprint Commc’ns Co. v. APCC Servs., Inc. (U.S. 2008)
 Setup: payphone operators had assigned their dial-around claims to billing and collection firms
called “aggregators” so that, in effect, these aggregators could bring suit on their behalf. These
aggregators collect claims from different payphone operators; the aggregator promises to remit to the
relevant payphone operator (i.e., the assignor of the claim) any dial-around compensation that is
recovered; the aggregator then pursues the claims in court or through settlement negotiations; and
the aggregator is paid a fee for this service.

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 o Issue: do these aggregators (the assignees of the claims) have standing to pursue that claim in
federal court, even when the assignee has promised to remit the proceeds of the litigation to the
assignor.
 Holding (Breyer) Aggregators have standing.
o Courts have long permitted asignees of claims to bring suit.
o 3-pronged test for standing: (1) Injury-in-fact; (2) Causation; (3) Redressability.
 Injury-in-fact not a problem because APCC comes into court with legal title to the claims.
Doesn’t matter that the injury isn’t personal.
 Redressability not a problem because it doesn’t turn on what the plaintiff ultimately does
with the money they recover. The injury will be addressed through the litigation.
o And otherwise, it’s saying that the result would change if the aggregator owned $1 of recovery.
 Roberts dissent: APCC doesn’t have a personal injury. Recovering a fee isn’t enough because this
is more like general good-will, and there is no way to distinguish this from lawyers’ fees.
o The outcome would change if APCC were just paid a dollar; formalism.
 Notes: Private aggregators are another mechanism to deal with the problem of “protracted
litigation.”
o Sprint argued that class actions should be the sole form of settling mass claims; but the Court
sees them as merely a supplement to private aggregations.
o Sprint wants to avoid private aggregators because it makes it hard to make counterclaims and
force the opponents to respond to discovery requests. Relevant information more likely to be in
the hands of the payphone operators.
 TM: This problem would exist the aggregator had just bought the claims outright; wouldn’t
change with $1 of consideration; and you could just join the real party.
o This case only applies to federal courts b/c it’s about standing.
o The reasons the pay phone operators chose not to pursue these claims through a class action: (1)
don’t have to worry about a judge appointing a different attorney; (2) fees aren’t under court
supervision; (3) don’t need settlement to be approved by the judge; (4) avoid historical doctrines
that preclude lending money to someone for the purposes of litigating a claim (maintenance,
champerty, etc.). Generally to avoid the formality of a class action but get the efficiency benefits.
 Historical Doctrines on 3rd party financing:
o Maintenance: helping another prosecute a suit
o Champerty: maintaining a suit in return for a financial interest in the outcome
 Exemption for contingency-fee arrangements or buying the claim outright.
o Barratry: is a continuing practice of maintenance or champerty
o These are all prohibited at common law.
 Saladini v. Righellis, (Supreme Judicial Court of Mass., 1997)
 Setup: Saladini (S) and Righellis (R) entered into an agreement under which S advanced funds to R
to pursue potential legal claims he had arising out of an interest in real estate. R agreed that if pursuit
of his claims was successful, he would repay S and also give her half of any net recovery. R used S's
funds to retain an attorney but, at some point, became unhappy with the attorney and hired another
one. S agreed to pay half of the fees of the new attorney. Overall, S advanced over $19,000 to R,
who won a settlement for $130,000, but did not pay S, who sued to enforce the agreement.
 Holding: Enforces the agreement; common law doctrines of champerty, barratry, and maintenance
no longer shall be recognized in Massachusetts.
o The rule against champerty disadvantages people who can’t bring litigation in the first place; it
allows these people to get financing to bring claims they otherwise couldn’t pay for. Litigation is
rights enforcement.

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  TM: it’s not just about rights enforcement; it’s also about the eventual award. Without 3 rd
party investment, the plaintiff might settle for a lower value on a claim than the 3rd party
would settle for because the 3rd party has a higher risk tolerance.
o Even though champerty permitted contingency-fee arrangements, 3rd party financing is better
because it allows you to get cheaper financing. Contingency fees are expensive b/c banks are
reluctant to fund plaintiff-side firms depending on contingency fee arrangements unless they pay
high rates.
o Court says that the decision is not authorizing syndication of lawsuits (companies acquire rights
to suits, and then sell shares in the suits to raise money to finance the litigation).
 TM: This doesn’t fit with the rest of the opinion; if the idea is to spread risk so as to allow
those with higher risk-tolerance to participate, why not do it more than 1 investor at a time.
 Notes: Distinction between champerty is the distinction between debt and equity. If you finance with
debt  not champerty. If you finance with equity  champerty.
o Hypo #1: TMAC gets sued by Apple for $$, takes out a loan to pay for a lawyer. This is not
champerty because the profits aren’t coming out of the litigation. Even though the likelihood of
repayment might depend on the success of the lawsuit. This is debt financing.
o Hypo #2: TMAC gets sued by Apple for $$, TMAC countersues Apple, hedge fund takes an
interest in the litigation itself. This is champerty b/c it is equity financing.
 Champerty allows debt but not equity financing b/c (1) debt financing less likely to encourage
litigation; (2) equity more likely to take on risky litigation.
 Even in states like Massachusetts that have gotten rid of champerty, there is still a requirement that
the lawyers control the decision-making in the litigation. Concern that the lawyer will listen to the
investor, rather than the client.

2. The Role of the Attorney in Aggregate Settlements

Lawyer Proposing to Make or Accept an Aggregate Settlement or Aggregated Agreement, American
Bar Association Formal Ethics Opinion 06-438, 516 (2006)
 Definition of aggregate settlement: “An aggregate settlement or aggregated agreement occurs
when two or more clients who are represented by the same lawyer together resolve their claims or
defenses…The rule applies when any two or more clients consent to have their matters resolved
together.”
Rule 1.8(g): Consent & Disclosure (“The Aggregate Settlement Rule”)
 Consent: Clients must consent to the settlement in writing
 Disclosure: Lawyer must disclose the following information:
o (1) The total amount of the aggregate settlement
o (2) The existence and nature of all of the claims or defenses involved in the aggregate settlement
o (3) The details of every other client’s participation in the aggregate settlement
o (4) The total fees and costs to be paid to the lawyer as a result of the settlement
o (5) The method by which costs are to be apportioned
 Premised on client hegemony.
 The rule was made in response to a TX plaintiffs’ lawyer who represented multiple clients in
separate tort cases that involved the same insurance carrier, who would go to the insurer and offer to
settle these unrelated claims as a group, without disclosing the grouping to the clients.
 The underlying purposes of the rule: (1) deter favoritism/ensure loyalty: 1.8(g) “deters lawyers from
favoring one client over another in settlement negotiations.” 2 sources of potential favoritism:
o Concern that lawyers will favor their own clients over those referred to him b/c he won’t have to
pay a referral fee.

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 o Or maybe lawyer favors claimants without present-day impairments over those with serious injuries
in order to enhance credibility for recruitment of future claimants; there are more unimpaired
claimants out there in the world than those with serious injuries.
o 1.8(g) tries to prevent this by empowering each individual client to withhold consent.
 The other purpose of the rule: create some form of judicial review outside class action.
 The effect of the aggregate settlement rule is to make aggregate settlements impossible. This
empowers holdout objectors, allows clients to threaten attorney’s fees by alleging spurious
violations.
Vioxx Settlement (absent for Class 12)
 Facts
o Defendant Merck – one of the largest pharmaceutical companies in the United
o States.
o Vioxx was a painkiller prescribed to 20 million Americans during the five years it was on the
market.
o Withdrawn from the market in September 2004 after clinical study showed increased risk of heart
attacks and strokes
o 26,000 lawsuits filed in federal and state courts – individual actions as well as 264 class actions
o Some analysts estimated Merck’s expected liability at $25 billion
o Federal cases were MDL’d and transferred to Judge Fallon (E.D. La.). Judge Fallon appointed a
12-lawyer Plaintiff steering committee (which then appointed subcommittees). State cases also
proceeded.
o Plaintiffs’ sought class certification but it was denied by Judge Fallon – issues in mass tort case
were too individualized.
o Judge Fallon held six bellwether trials. 13 other jury trials in state court. Plaintiffs won five; Merck
won 12. But one of cases awarded Plaintiff more than $250 million in one case (reduced to $26
million).
 Vioxx Settlement Terms
o Fixed amount of $4.85 billion to be allocated among “qualifying claimants.”
o Claimants limited to individuals who had filed (or entered tolling agreement) on or before
November 8, 2007
o To receive funds, a claimant would have to “pass three gates” – an injury gate; a duration gate; and
a proximity gate – as determined by settlement administrators.
o For an attorney’s clients to participate in settlement, attorney had to agree to recommend
participation in settlement for 100% of her/his clients.
o If an Eligible Claimant declines to participate, counsel will withdraw from representation (and
forego any fee interest) to the extent permitted by Model Rules 1.16 and 5.6.
o Merck can withdraw from settlement unless 85% participation threshold is met by March 1, 2008.
o Settlement proposal was presented to Judge Fallon and two state court judges. Also proposed a
role for court in administering settlement.
ALI § 3.17: Circumstances Required For Aggregate Settlements To Be Binding
 This is a proposal to alter 1.8(g). 1.8(g) is bad because individual clients can hold out and prevent
the entire deal. This holdout problem is especially bad because it prevents claimants from receiving
the peace premium: the more claims that can be involved in a settlement, the more each individual
claim will be worth; defendants pay a premium for peace.
 § 3.17 creates a choice, whereby the client can either wait to see what the deal is (§ 3.17(a)), or
“before the receipt of a proposed settlement offer, enter into an agreement in writing through shared
counsel allowing each participating claimant to be bound by a substantial-majority vote of all
claimants concerning an aggregate-settlement proposal (or, if the settlement significantly

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 distinguishes among different categories of claimants, a separate substantial-majority vote of each
category of claimants).” (§ 3.17(b)).
o Protections built in:
o “A waiver of individual approval may be valid and binding provided that it is knowingly and
voluntarily made, is in writing, is signed by the claimants after full disclosure, and vests
decisionmaking power in the claimants either collectively or through some preestablished voting
structure.”
o 4 requirements that must be satisfied in order for § 3.17(b) agreement to be valid: (1) power to
settle must remain with claimants; (2) claimant must give informed consent; (3) agreement must
specify procedures for approval of any settlement offer; (4) lawyer must inform client that they
have the option of insisting on compliance with the regular aggregate settlement rule.
 ALI justification: “Subsection (b) rejects the view that individual decisionmaking over the settlement
of a claim is so critical that it cannot be subject to a contractual waiver in favor of decisionmaking
governed by substantial-majority vote.”
 ALI expects that lawyers will push clients to sign onto the voting procedure. And it permits lawyers
to not represent clients who refuse to take the advance consent option: “Subsection (b) does not
prevent counsel from refusing to represent claimants who choose representation under subsection
(a).”

3. The Role of the Court in Aggregate Settlements

Judicial Approval of Settlement Is Not Required Under Rule 41
 “Unlike a class action, there is no rule granting [a court authority to review settlement agreements or
fees in a mass action] or mandating its exercise.”
 “Indeed, rule 41 provides that under most circumstances the parties may voluntarily dismiss a case
`without a court order ...’” (Bradt & Rave)
In re Zyprexa Prods. Liab. Litig., 534 (E.D.N.Y. 2006)
 Setup: MDL consolidation of a product liability dispute. During the proceedings, the parties came
together and reached a settlement. The settlement was a grid, placing plaintiffs on different tracks for
compensation. The court also appointed special masters to facilitate negotiation and processing.
Judge Weinstein had lots of pending cases in front of him.
 Holding: The court can “exercise its power to control legal fees in a coordinated litigation of many
individual related cases—in effect, a quasi-class action.”
o “A district court has the explicit power to require reasonable fees in class actions.”
 Although not class action, it’s quasi-class action, so it’s subject to court’s equitable powers
o Weinstein tries to justify this setting aside of private contractual agreements on several grounds.
o (1) General Ethical Supervision
 Courts have the power to review contingency fee contracts for fairness, even when a party
hasn’t challenged the validity of the contract.
 Weinstein says that the lawyers are overcompensated because the fee arrangements were
premised on an assumption of ordinary bilateral litigation. This changed, so the transaction
costs become shared.
o (2) Analogy to Class Actions
 This looks like a class action; like in class actions, the court needs to ensure that claimants
aren’t exploited by counsel because the D has no incentive to watch out for individual
claimants either.
o TM: If the agreements are truly unfair, and the award truly violates some ethical responsibility,
then this discussion of the class action is unnecessary. This suggests that it’s not all about
exercising ethical supervision.
WORLD TRADE CENTER LITIGATION, No. 21 MC 100 (S.D.N.Y. 2010)
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 General
o Mass action involving 10,000 first responder claims consolidated in the SDNY.
o District court asserted authority to “reject” settlement, indicated that fees were excessive, and
instructed that additional negotiations would be required “to come up with what is a better and fair
settlement.”
o Parties did not appeal to second circuit – instead, renegotiated settlement.
 Is this an appropriate role of the court?
o “The deployment of MDL jurisdiction, with the quasi-class action fiction engrafted onto MDL
procedure, has stripped away protections afforded by class action requirements. Mass litigation
actors may now settle complex cases largely unconstrained by law.” Mullenix, Dubious Doctrines:
The Quasi Class Action, 80 U. Cinn. L. Rev. 389 (2012)
o “The notion of the quasi-class action is not justified by statute, rule, precedent or any other
authority.... [it is] the antithesis of the rule of law, providing instead a mantle of legality to
unbounded, free-wheelming aggregate claims resolution.” Mullenix, Dubious Doctrines: The
Quasi Class Action, 80 U. Cinn. L. Rev. 389 (2012)
 Different Perspective
o “The fact is that class action judges do not always police class action litigation vigorously. There
are structural obstacles to their doing so, such as informational constraints, and also incentives that
favor settlement approval when it avoids lots of future litigation.”

B. Aggregate Settlements
1. Quasi-Class Actions
 Judges import class-action management procedures into multidistrict litigations, including
procedures related to appointment of counsel and regulation of fees. So class-action style procedures
are employed in mass tort lawsuits where class actions couldn’t otherwise be certified.
 See In re Zyprexa Prods. Liab. Litig. above
 The “features” of a quasi-class:
o (1) Critical mass of claimants—nominally independent—submit to 1 settlement scheme.
o (2) Special master
o (3) Common fund created by defendant.
o (4) Substantial role played by the court in forming the litigation
 TM: This is true of all forms of civil litigation. Hearkening back to the “protracted case” view
of aggregate litigation.
o (5) Plaintiffs represented by a handful of firms
 TM: This is true, but there could also be ordinary bilateral litigation where a firm holds a
massive inventory of cases.
o (6) Economies of scale reduce the costs of litigation
 TM: This is troubling, at odds with Taylor, which says no free-form class actions.
o Though perhaps it’s less troubling if you think of the K agreement between lawyer and client as
just a default, that goes away if the suit is not litigated as ordinary bilateral litigation.
o And there’s also a concern that adjusting fees overcompensates the lawyers on the plaintiffs’
steering committee, as they are often not the ones who have the largest inventory.
 Notes: Weinstein’s assertion of judicial authority to override fee arrangements is influential; other
judges have done a similar thing (e.g. Vioxx). The typical path now is for MDL consolidation 
pretrial proceedings  aggregate settlement  court oversees settlement/adjusts compensation.
o In Vioxx, Judge Fallon points to similarities to the Zyprexa settlement: (1) large number of
plaintiffs subject to the same settlement matrix; (2) utilization of special masters; (3) settlement
fund held in escrow
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2. Problems Arising from Aggregate Settlement in Mass Actions that Aren’t Class Actions
Class Action Settlement Safeguards Non-Existent for MDL Settlements
 Can only be approved if 23(a) requirements are met (and 23(b)(3) requirements if relevant)
 If there are conflicts, a court can require subclassing and separate counsel
 Any settlement is subject to preliminary approval
 Class must then be given court-approved notice of settlement terms.
 Class members (usually) have an opportunity to opt out or submit objections to court.
 Court must hold a fairness hearing and determine if settlement is fair, reasonable and adequate
 Any class member objecting to settlement can appeal terms if contrary to rule 23 (or due process)
requirements –e.g., amchem.
Vioxx
 Pre-Settlement Litigation: Merck takes an aggressive, no-settlement, individual-trial strategy.
o Merck wanted to do individual trials because it was hard for plaintiffs to show individual
causation. And because they outlasted the plaintiffs financially.
o After they held bellwether trials, parties agreed to settle, using the bellwethers as parameters to
create the grid points and factors that were important in the trials.
 The Settlement Agreement: An agreement between Merck and plaintiffs’ law firms.
o 85% of claimants had to come into the grid.
o Overall price cap on what the defendant would have to pay.
o Defendant was entering into a contract with the plaintiffs’ lawyers, who had to recommend the
agreement to every plaintiff in the inventory.
o If a client chose not to accept the recommended deal, then their lawyer had to attempt to sever the
relationship with the client.
 This provision is subsequently softened due to criticism, but the settlement still holds b/c there
aren’t a lot of other lawyers to represent the clients.
 TM: This provision is designed to prevent cherry-picking; don’t want lawyers to hold back their
strong claims and only submit their weak ones.
 Role of the Court: The settlement couldn’t have occurred without the participation of the court.
o Judge Fallon facilitated bellwethers, enforced the settlement, made sure that firms weren’t
violating the agreement, taxes compensation for all attorneys to boost compensation of common
benefit attorneys. He also issued Lone Pine orders, which require plaintiffs to produce some basic
evidence supporting their claims – usually evidence of exposure to defendant’s product, injury, and
proof that the exposure caused the injury – or face dismissal.
o Judge Fallon employs the reasoning from Zyprexa that the individual contingency fee agreements
don’t reflect the realities of aggregation.
o But like in Zyprexa, the appropriate role of a judge in adjusting a private agreement is unclear. Is
he a fiduciary, like in Pigford/Bone Screw? Must a judge step back because it hasn’t been certified
as a class action?
 Ethical Concerns:
o Features of the settlement are controversial:
 the requirement that the lawyer recommend the settlement to 100% of his clients;
 the requirement that a participating lawyer withdraw from representing any client who
declines the settlement.
 Plaintiff’s counsel would also forfeit an attorney fee if a client didn’t accept a settlement
o The argument: Lawyer’s duty of loyalty to a client can’t be bargained away to an adverse party.
Just b/c a settlement is good, doesn’t mean that acceptance is right for every single client.
o And the settlement makes it nearly impossible for a client to say no, because the lawyer has to
withdraw.

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 Commentary:
o “Commentators generally agree that it was improper for defense attorneys to require (and for
plaintiffs’ attorneys to agree) that the plaintiffs’ attorneys would recommend the settlement to all
their clients and would withdraw from the representation of any client who rejected the
settlement.” (N. Moore)
o CONNECTICUT BAR ASSOCIATION (INFORMAL OPINION 08-01) (2008):
 Agreement “restricts the advice [counsel] can give” and violates requirements that (a)
lawyers give independent professional advice to each client; (b) abide by client’s decision
whether to settle; and (c) represent client without violating conflict of interest rules. Ethics
rules 1.2, 2.1 & 1.7.
 Agreement violates rules 1.16 and 5.6 because “a lawyer may not threaten to withdraw or
withdraw from a case because the client rejects a settlement offer.”
 Agreement creates conflict of interest because lawyer forfeits fee if client does not accept
the offer.
 Some people say that this violated 1.8(g) because no individual plaintiff knew how much they were
going to get. But there was a letter sent to plaintiffs that described the settlement and the deal
document was public; so in that sense it satisfied informed consent. No advance consent provision
like in Jackson Hewitt.
Kentucky Phen-Phen Litigation (2002)
 Background
o Defendant agreed to pay $200 million for aggregate+).
o Plaintiffs’ counsel agreed to get releases from “each and every” client.
o Clients not informed of aggregate settlement – just individual settlement terms.
o Clients not informed that plaintiff’s counsel (not defendant) determined allocation.
o Clients instructed to sign confidentiality agreement – told could go to jail if disclosed her/his
settlement terms.
o Withheld $70 million and placed in attorneys’ personal accounts.
o Court order subsequently entered providing that 50% of withheld funds would go to plaintiffs and
50% would go to attorneys.for outstanding expenses and payment to a charity.
o Plaintiffs’ counsel pocketed $104 million from the settlement
o Plaintiffs’ counsel criminally prosecuted for fraud – 20/25 years in jail.
o Ordered to pay $127 million in restitution.
o Plaintiffs’ counsel were permanently disbarred.
o Plaintiffs’ counsel also found liable in civil case for $42 million.
o Plaintiff’s counsel blinded by “pot of gold”
o Defense counsel wanted all or nothing aggregate payment—no involvement in allocation
 Ethical Problems for Plaintiff’s Counsel
o False and misleading representations about settlement.
o “slush fund” and “hold out” problem.
o self-dealing by plaintiffs’ counsel – directing much of aggregate settlement to themselves.

Some Ethical Rules Implicated by Mass Actions

 Need to provide full disclosure to clients at the outset and seek consent to aggregate representation.
 Any aggregate settlement is subject to “aggregate settlement rule”:
o No client is bound by aggregate settlement unless she/he provides informed consent.
o This requires full disclosure of the terms of the settlement.
 Coercive terms to compel participation are problematic:
o Requiring uniform recommendation to all clients.
o Threatening to withdraw if client does not accept.
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 “All or nothing” settlements are potentially problematic:
o potentially create client-client conflicts.
o potentially create lawyer-client conflicts.
o associated risks of pressuring clients or favoring clients.
o may mitigate by lower than 100% threshold (85-90% not unusual).
 Allocations should be individualized, reasonable and afford reasonable process.
o must be sound basis for distinctions between clients (and avoiding favoring some clients based
on referral fee interests – one of the alleged problems in Burrow).
 Complete and accurate disclosure is essential.
 An attorney has a fiduciary duty to their clients. (Huber v. Taylor)
o A breach of fiduciary duty includes a breach by both an individual attorney and their co-
counsel—an attorney is responsible for a breach even if their co-counsel was the one who
actually committed the breach. (Huber v. Taylor)
 ‘no showing of actual harm is required to maintain an action for disgorgement for breach of
fiduciary duty…” (Huber v. Taylor)
 An attorney who breaches his fiduciary duty to his client may be required to forfeit his fees,
even if the client suffered no actual harm as a result of the breach. (Burrow v. Ace)
o Attorneys owe fiduciary duties to their clients. If an attorney commits a serious breach of his
fiduciary duty, one penalty that may be imposed is the forfeiture of some or all of the fees
that the attorney collected from the client. The potential forfeiture of fees acts as a disincentive
to commit breaches of fiduciary duty.
o The primary purpose of forfeiture, therefore, is not to compensate the injured client but to
protect the relationship of trust between attorney and client.
 Regardless of whether the client suffers actual harm, forfeiture of some or all of an
attorney’s compensation is a reasonable consequence for serious breaches of fiduciary
duty.
The Tax Authority v. Jackson Hewitt, Inc., 527 (N.J. 2006)
 Setup: Clients signed contract agreeing to enter any settlement should a “weighted majority” of
other clients accept the settlement. After the settlement was reached, some πs did not like the
settlement and tried to refuse it.
 Holding: 1.8(g) forbids obtaining advance consent to abide by majority’s decision re:
settlement. Before a client may be bound by a settlement, he or she must have knowledge of the
terms fo the settlement and agree to them.
o 1.8(g) doesn’t actually say anything about advance consent, but predecessor version said there can’t
be advance consent. The court goes with this reading of the rule.
o Motivating concern for the rule against advance consent is that we don’t have procedural safeguards
to protect inventory members; once you enter into an advance consent agreement, nobody is
overseeing what the lawyer does, so he might take advantage of clients. Particularly concerning if
the client is unsophisticated.
 TM: There’s no reason to think that the client would be any better at evaluating the settlement terms
ex post rather than ex ante. If we think that the client is unsophisticated, then there’s no reason to
think he’d be good at processing the terms of the agreement.
o Real concern is small-time operators are only signing onto these agreements bc they have no
choice; either they don’t sign on and have to hire their own lawyer (and pay high transaction costs),
or they sign on but have to do what the group wants. 1.8(g) allows them to hold out.
o Group settlements are especially important because certification has become more difficult; we
need alternates to the class action for group resolution through joinder, consolidation
ALI 3.17(b) on Revision of ASR to Permit Waiver of Individual Approval

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  For waiver to be effective, counsel must in good faith inform claimaint of specific information that
should be set out in any implementing legislation or ethical rule and this information should
include:
o Claimant agreement that they retained lawyer for the lawyer’s expertise and reputation in the
particular area of law
o Claimant is receiving benefits of lawyer’s more effective representation because of multiple clients
with similar claims
o Defendant and counsel for claimants find it mutually beneficial for everyone if settle all similar
claims being represented by the lawyer at the time
o Claimant agrees to be bound to collective decisionmaking of substantial majority represented by
one or more lawyers covered by proposed settlement under certain conditions:
 Claimant is informed of settlement amount offer… etc.
 Claimant is informed of how settlement will be divided….
 Claimant is informed of what category they fall into for settlement division purposes
 Claimant is informed of existence of other related or unrelated claims of other claimants
represented by same lawyer or group of lawyers against same defendant not covered by
proposed settlement terms
 If proposed settlement distinguishes significantly among categories of claimants, each similarly
situated claimants category must approve proposed settlement by a substantial majority of
claimants in that category
 Claimant is informed that waivers are permissible only in cases exceeding a specified size and
dollar amount as set out in the applicable legislation or rule.
 NOTE: Walk away provision might be included for defendant to have right to walk away from a
settlement if less than a certain percent of claimants agree to settlement terms.

3. Bellwether Trials
In order to reach a settlement, settling lawyers need some information to draw on.
 In asbestos cases, they had years of experience with asbestos litigation.
 Another approach is to rely on special masters to consider the various claims so as to inform
settlement negotiations.
 A 3rd method: bellwether trials.
Two functions for bellwethers: hard-edged and soft-edged.
 Hard-edged: Give the judgments of bellwether trials preclusive effect with respect to the untried
cases.
o This approach is not the norm today
 Soft-edged: Results of trials inform design of settlement terms for remaining untried cases, without
formal preclusive effect.
o This approach isn’t necessary for elastic torts, like asbestos, because we already have an idea of
what the value of the tort is. But for inelastic torts (like Vioxx), this might be more useful. In Vioxx,
there’s rapid maturation, favorable verdicts for defendants.
o TM: Ideally you’d want information not on the best and worst cases, but on the median. Statistically
representative sample would be best.
o In re Chevron: plaintiffs pick 15, defendants pick 15. Vioxx: agreement of parties.
Benefits of the Modern Vioxx Approach to Bellwethers in MDL Setting (Eldon E. Fallon et. al., Bellwether Trials
in Multidistrict Litigation)
 General
o “can be effectively employed for nonbinding informational purposes and for testing various theories
and defenses in a trial setting.”

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 “Although the results of such “nonbinding” bellwether trials are obviously binding upon the
parties to the specific cases that are tried, the results need not be binding on consolidated
claimants in order to be beneficial to the MDL process.”
o “provide a vehicle for putting litigation theories into practice.”
o “Bellwether trials thus assist in the maturation of any given dispute by providing an opportunity for
coordinating counsel to organize the products of pretrial common discovery, evaluate the strengths
and weaknesses of their arguments and evidence, and understand the risks and costs associated with
the litigation.”
 “Trial Packages” (also highlighted in slides)
o Essentially scripts for trials, development of informed grid-based global settlements.
How a Bellwether Process Achieves its purpose (Loren H. Brown, Matthew A. Holian, Arindam Ghosh, Bellwether Trial
Selection in Multi-District Litigation: Empirical Evidence in Favor of Random Selection
 “For a bellwether selection process to achieve its purpose - providing the parties with information
that helps them extrapolate the results to the remainder of the docket for purposes of resolving
claims that cannot all be tried - the sample the court and litigants select must fairly represent the rest
of the plaintiffs in the litigation. If the parties believe that the cases that are selected are outliers, then
the information-gathering purpose of a bellwether process is impaired significantly. Any verdicts are
not likely to be accepted as generalizable to the remainder of the docket and may have little or no
value in the resolution process.”

In re Chevron U.S.A., Inc., 542 (5th Cir. 1997)

 Rule of Law
o Before trial court may utilize results from bellwether trial for purpose that extends beyond
individual cases tried, it must, prior to any extrapolation, find that cases tried are representative of
larger group of cases or claims from which they are selected; typically, such finding must be based
on competent, scientific, statistical evidence that identifies variables involved and that
provides sample of sufficient size so as to permit finding that there is sufficient level of confidence
that results obtained reflect results that would be obtained from trials of whole. In re Chevron
U.S.A., Inc., 109 F.3d 1016 (5th Cir. 1997)
o When unitary trial is conducted where common issues, issues of general liability, or issues of
causation are coupled with sample of individual claims or cases, sample must be one that is
randomly selected, statistically significant sample, in order to comply with due process. In re
Chevron U.S.A., Inc., 109 F.3d 1016 (5th Cir. 1997)
 Facts:
o Personal injury/environmental damage mass tort in Texas. Trial judge selects 30 cases for trial; 15
selected by plaintiffs and 15 by defendants, and the court wanted to give the cases preclusive
effect.
o Plan was to extrapolate liability (but not damages) findings to render verdict and judgment for all
plaintiffs – Chevron objected and sought mandamus prior to trials
o Defendants challenge trial plan.
 Holding (Judge Parker):
o Allowed bellwethers to proceed, but not to extrapolation for liability findings only because sample
was not representative
o The plan is overturned for 2 reasons:
 (1) Lack of plan by the district court. Not clear what the effect of the bellwethers will be.
 Unclear as to (1) whether they will be used to identify/resolve common issues, (2) what these
issues will be, (3) how the common issues will interact with individual trials.
 (2) Inadequate selection method for the bellwethers. Not selected on a representative basis.

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  He relies on Hilao for authority that a representative bellwether trial might be okay; but the
district court required opt-in there. Doesn’t get rid of the due process concerns raised by Jones
in her concurrence.
 Concurrence (Jones): Bellwether trials should not have preclusive even if they are selected on a
representative basis.
o 2 due process problems: (1) plaintiffs are losing their chose in action (Shutts); (2) high stakes for
defendants (Rhone-Poulenc-type concerns)
 Notes:
o Common issues or even general liability may also be resolved in a bellwether context in appropriate
cases.
o Bellwether trials can certainly have preclusive effect if defendants and plaintiffs agree in advance to
be bound.
o Bellwethers unlikely to be useful in cases where the stakes aren’t high enough that plaintiffs will
pursue their individual claims.
o CB suggests that the prospect of bellwethers makes the finding of (b)(3) superiority less likely, at
least in areas where economics of bellwethers makes sense.
See Hilao v. Estate of Marcos in other section
 (note never would happen post-Walmart)
Vioxx Settlement (Contractual Agreement Settlement)
 Go to for how Bellwether is used today
 Used for settlement purposes
Ideker, et. al v. Usace
 Background
o Claim: The U.S. Corps of Engineers’ changed management of the Missouri River led to increased
flooding of plaintiffs’ properties, resulting in a 5th Amendment taking. Damages over between ‘07
and ‘14 years (some had 1 year, some 2 years...some 6 years). Dakotas, Iowa, Nebraska, Kansas
and Missouri.
o Mass Action; Bi-furcated trial (only liability tried thus far)
 Bellwether Selection
o Court divided claimants into 4 subregions and asked for recommendations for number of
bellwethers per region. Plaintiffs recommended 3 (12 total), DOJ recommended 11 (44 total).
Court agreed with DOJ.
o Plaintiffs and Defendants negotiated selections – parcels, not plaintiffs.
o Defendants wanted parcels riverward of levees, less involved parties, individuals rather than
entities, complicated past histories of flooding.
o Plaintiffs wanted inland parcels, community leaders, entities, clean histories of flooding.
 Trial Details
o Decision to try 44 bellwethers lead to 4 month trial. Could have been 2 month trial.
o In the end, 12 would have left questions unanswered. 44 was a waste of time. Would have been
better to compromise in the middle.
o In the end, the critical questions were whether there truly was additional flooding and, if so,
whether it was caused by USACE actions or other factors, including climate change, stochastic
weather events leading to additional water in the Missouri River, or growth of cityscapes or levee
improvements leading to additional runoff or retention in the river.
o Findings of Court – 2011 was unavoidable flooding. Other years, USACE actions caused flooding.
All 2011 claims disallowed, certain others disallowed. Most proceed to damages.
 Lessons from Ideker

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 o 1) Never defer to experts without understanding the issues. Visit, get tutorials, schedule phone
calls, establish early on with expert that you will need to understand everything.
o 2) Scheduling – the benefits of aggressive scheduling
o 3) Avoid Extremely Long Trials If Possible – Impossible to Remember Months-Old Testimony.
o 4) Timeline is Critical (“Are they asking you to lie, too?”)
o 5) Read the actual documents, not summaries.
o 6) Search broadly for deposition materials. No substitute for using depositions at trial to teach you
how to take depositions (close out topics, repackage testimony).
o 7) Know the rules of evidence. Understand how to introduce evidence and impeach. Make eye
contact with finder of fact during critical moments.
o 8) Begin and end examinations with a bang.

XI. MDL Issues in Practice:

A. Flint Water Crisis
 Facts
o Flint was looking for a way to save money. Flint historically bought water from Detroit, but
switched to the Flint river to distribute water to homes. Flint began dumping chlorine in water to
kill e-coli.
o The MI department of environmental duality said Flint’s water met state and federal regulations.
o Investigations by Michigan, EPA, Congressional Hearings, Private Attorneys
o Many cases were filed
 Cases on behalf of individuals
 Little groupings of mass torts based on attorney
 “Next friend”
 Wrongful death claims and personal property suits
 Criminal prosecution in state court of MI.
o Cases were filed in MI state court, federal court (eastern and western district of MI), MI Court of
Claims against the state of MI, higher execs in the government, several individual employees, and
agencies.
 Many cases didn’t progress because the bar for qualified immunity for gross negligence is you
have to prove that what you are claiming is the proximate cause of that specific injury, not just a
proximate cause.
 The exception to qualified immunity of state actors Need to plausibly plead the government
actors knew and their conduct schocked the conscience.
o Types of Claims
 Common Law Torts
 Private engineering defendants
 State statutes
 Substantive Due Process Claims
 Government can’t force contraception or sterilization, and in this case poison in citizens.
 Equal Protection Claims
 History of MI environmental quality and non-enforcement of environmental regulations in
predominately black community
 Procedural Status/Strategy
o Overview
 In span of three years, there hasn’t been a single civil trial or settlement, things are still tied up in
litigation

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  Hundreds of suits in state courts
 11+ putative class actions in federal courts
 2ish class actions in state court
o How to Efficiently Handle so that it’s all in one court?  Can we get the cases in one place?
 MDL ONLY applies to cases in federal courts, and not state courts.
 “(a)When civil actions involving one or more common questions of fact are pending in
different districts, such actions may be transferred to any district for coordinated or
consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on
multidistrict litigation authorized by this section upon its determination that transfers for such
proceedings will be for the convenience of parties and witnesses and will promote the just and
efficient conduct of such actions. Each action so transferred shall be remanded by the panel at
or before the conclusion of such pretrial proceedings to the district from which it was
transferred unless it shall have been previously terminated: Provided, however, That the panel
may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of
such claims before the remainder of the action is remanded.
 Strategically, can dismiss federal actions to move to state court.
 However, federal questions cases can be brought in federal court.
 There was a weird CAFA loophole
 Only need minimal diversity for class action cases so they can be in federal court (lessened
diversity requirements)
 First filed class action in state court and subsequent actions go to federal court under CAFA.
All class cases were consolidated into one federal court under one judge.
 State court cases cannot be forced into federal court and stuck trying to coordinate best possible
way.
 You want complex actions like these in federal court because federal judges have law clerks and
state court judges don’t
 How Courts Manage Federal Cases Like Flint w/Many Different Claims
o Consolidate under 42(a)
 “[i]f actions before the court involve a common question of law or fact, the court may: (1) join
for hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3)
issue any other orders to avoid unnecessary cost or delay.”
o Judges appoint leadership counsel under 23(g) for plaintiffs
o Appointment of mediators to see if the parties can work something out and special master to keep
eye on lodestar and sharing of cost and a consensus of who represents who
o Tax dollars don’t pay for this, defendant side charges their clients, but on plaintiffs side attorneys
front the bill.
o You want a judge that is diligent enough to handle such a case.
 Obstacles to coordinate of multidistrict litigation
o Defense side has big egos and trying to impress clients
o Plaintiff attorneys some go- getter rolling the dice and getting people to settle
o Different plaintiff groups with different interests (glory, money, clients).
o Interlocutory appeals due to qualified immunity
o 5th amendment immunity in ongoing criminal investigations
 What we can do as lawyers
o Organization: all the cases and where they are procedurally
o Interpersonal skills: to be able to work with the adversarial side
o Strategy: how do you structure the claims you will bring and put your strongest clients in front.

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XII. Aggregation and Alternative Dispute Resolution
A. Class Arbitration
Original Purpose of Arbitration (class slides)
 Intended to permit private parties to contract for terms and processes to resolve disputes arising
from contracts quickly & privately.
 Congressional reaction to judicially-created doctrine of “ouster.” Recognition that business
contracts ought to be enforceable & parties bound to terms of their bargains.
 Not understood or intended to replace civil justice system or effectively confer immunity from
statutes.
Arbitration v. Judicial Process (class slides)
 Private not public; Informality
 Very limited or no discovery; entire process is stripped down and expedited
 Single (or panel) trier of fact and law, no jury, paid by parties; arbitrators v. judges
 No right to written opinion or right to appeal
Expansion of Arbitration
 For many years whether FAA was only held to apply to federal courts not sitting in diversity.
 Originally not applied to statutory claims, only contract claims.
 Overall, very narrow scope.
 Thirty Year Line of Supreme Court Cases
o Southland Corp. v. Keating (1984) – FAA is preemptive federal substantive law – States
cannot legislate around FAA
o Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. (1985) – Arbitration provision is
enforceable “so long as the prospective litigant effectively may vindicate its statutory cause of
action in the arbitral forum ...”
o Allied-Bruce Terminix v. Dobson (1995) – FAA applies to all contracts as long as area of
economic activity affects interstate commerce even if particular contract does not
o Shearson/American Express v. McMahon (1987) and Rodriguez v. Shearson/AmEx (1989) –
(all) statutory claims arbitratable
o Gilmer v. Interstate/Johnson Lane Corp (1991) – Title VII claims arbitratable
o Remarkable and lightning fast revolution – all civil claims, regardless of whether they are
classic business disputes, civil rights, fraud, etc. arbitratable regardless of whether contract
involved interstate commerce.
o Commercial use of arbitration clauses begins to expand in the 90’s.
Jean R. Sternlight, Creeping Mandatory Arbitration, 57 Stan. L. Rev. 1631 (2005)
 Until recently, arbitration agreements were only used in business-to-business or management/union
contexts. Now they are being used to require consumers, employees, franchisees, or other weaker
parties to use private arbitration.
 Shift in attitude toward commercial arbitration in the 1970s and 1980s; Supreme Court begins to
enforce arbitration clauses imposed by securities brokerage houses on their investors, and then in
Gilmer v. Interstate/Johnson Lane Corp., it holds that a securities broker could be compelled to
arbitrate an employment suit.
 Companies then follow the securities industry, use form agreements to require customers to agree
all future disputes through arbitration rather than litigation
 New consumer and employment arbitration agreements are different from old ones ina few ways:
they don’t require an actual signature; impose arbitration after the relationship has already
commenced; less educated cadre of persons is now covered; arbitration clauses are being used to
limit substantive and procedural rights.
McKenzie, History/Background/Theory
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 The model for the Federal Arbitration Act (FAA) comes from a NY statute from the early part of
the 20th century. In NY there was a lot foreign investment. In 1916, a district court voids an
arbitration clause in a dispute between a foreign investor and a New York merchant. People get
worried that investors are going to pull out of the US market, so NY enacts a statute to overcome
judicial skepticism of arbitration clauses.
 The NY statute becomes the model for the FAA:
o “A written provision in any maritime transaction or a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such contract or
transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law
or in equity for the revocation of any contract.” § 2
 The theory behind arbitration clauses is like a choice of forum clause. By contract, parties agree to
resolve their dispute in a certain way.
 The FAA envisions a limited role for normal courts—they just decide whether or not the parties, by
the terms of their agreement, agreed to arbitrate. Once there is an arbitral award, the parties can
proceed to a court to have the award enforced.
 As Sternlight discusses, there is a great expansion of the reach of arbitration agreements in the
1980s. Starts in the securities industry, but then get applied to ordinary employment, consumer
claims. Businesses begin to include arbitration provisions in adhesion contracts.
 Arbitration is another response to the litigation crisis. The other examples: softening of mutuality,
MDL statute, other judicial case management devices, expansion of CA.
Green Tree v. Bazzle, (U.S. 2003)
 Implicit approval of class arbitration
 Plurality holds that whether arbitration can proceed as class arbitration is for the arbitrators and not
the court to decide, unless the parties specify otherwise
Stolt-Nielsen v. AnimalFeeds Int’l Corp., (US 2010)
 Facts
o Stolt-Nielsen and 3 other companies controlled virtually 100% of parcel tanker shipping.
o DOJ discovered price-fixing and fined companies. Did not seek to compensate shippers for
overcharges due to long-standing (and still current) policy to let private parties litigate these
issues.
o Class action filed by Animalfeeds and other companies. Cohen Milstein named co-lead. Standard
form contract in the industry required arbitration of any disputes relating to the contract.
o Arbitration demand filed by Stolt Nielsen (and other defendants) in response to class action. Case
was then brought as “class arbitration.”
o Arbitrator decides to proceed on a class-wide basis when an arbitration agreement is silent as to
whether class arbitration is permitted.
o Arbitration agreement called for panel of arbitrators. Tripartate format for panel selection. Chair
selected by party selected arbitrators.
o First issue was whether arbitration could proceed as a “class arbitration.”
o Panel said yes. Appeal taken. Went up to U.S. Supreme Court.
 Supreme Court Ruling
o Supreme Court remands, holding that you need an explicit statement in the arbitration clause
in favor of class arbitration.
 FAA prohibits compelling a party to submit to class arbitration unless there is contractual
evidence that the party agreed to do so.
 Takeaways
o 5-3 decision that lack of affirmative agreement to “class arbitration” did not afford arbitration
panel authority to pursue class arbitration.

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  Post-script – effectively no restitution paid by conspirators.

AT&T Mobility v. Concepcion, Supp. 59 (U.S. 2011)

 Facts:
o The Concepcions sue AT&T over their cell phone contract, claiming false advertising. The suit is
consolidated with a class action. Included in the service agreement was an arbitration provision
that required all disputes between the parties to be resolved by an arbitrator and prohibited
arbitration in the form of a class action. The agreement additionally allowed AT&T to make
unilateral amendments to the contract at any time, which it did. The agreement says that when
parties go to arbitration, AT&T pays costs for all nonfrivolous claims, and if customer receives
more in arbitration than AT&T’s last settlement offer, AT&T pays a minimum $7,500 recovery
and 2x claimant’s attorneys fees.
o The Concepcions brought suit against AT&T in federal district court as part of a putative class
action and the class collectively alleged that AT&T had engaged in false advertising and fraud by
charging sales tax on phones it advertised as free. AT&T filed a motion to compel arbitration
under the terms of the agreement with the Concepcions. The district court denied AT&T’s motion
based on a California Supreme Court case, Discover Bank v. Superior Court, 36 Cal. 4th 148
(2005), and found that the arbitration provision was unconscionable because AT&T had not
shown that bilateral arbitration adequately substituted for the deterrent effects of class actions.
The Ninth Circuit Court of Appeals affirmed and the U.S. Supreme Court granted certiorari to
review.
 Issue
o Plaintiffs argued that because this provision explicitly made class actions impossible and would
severely limit discovery, the arbitration provision makes prosecuting small dollar claims
impossible – and therefore is essentially unconscionable.
 Holding (Scalia):
o Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate “valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. The second portion of § 2 is a savings clause that permits arbitration
agreements to be declared unenforceable utilizing common contract defenses such as fraud,
duress, or unconscionability.
o In Discover Bank v. Superior Court, 36 Cal. 4th 148 (2005), the California Supreme Court held
that a contract of adhesion between a consumer and a company with superior bargaining power,
that included an arbitration provision requiring a waiver of class actions, was unenforceable
because such waivers were unconscionable.
 But perhaps there is some room to argue that the FAA carves out “generally applicable contract
defenses”:
 “This saving clause permits agreements to arbitrate to be invalidated by “generally
applicable contract defenses, such as fraud, duress, or unconscionability,” but not by
defenses that apply only to arbitration or that derive their meaning from the fact that an
agreement to arbitrate is at issue.”
o When a state law prohibits the arbitration of a particular type of claim, the conflicting rule
is preempted by the FAA.
 The analysis becomes more complex, however, when there is an allegation of
unconscionability, such as in the case at bar. The principal purpose of the FAA is to
“ensur[e] that private arbitration agreements are enforced according to their terms.”
 State laws that interfere with that purpose succumb to preemption by the FAA.

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  California’s Discover Bank rule interferes with arbitration because it allows any party to a
consumer adhesion contract to demand class-wide arbitration when damages are
predictably small.
 Additionally, the switch from bilateral to class arbitration sacrifices the principal
advantage of arbitration, namely the informality of the process.
 Class arbitration makes the process slower, more costly, and more likely to generate
inconsistent results.
o “Class arbitration requires procedural formality.” If you don’t have the required
formality, then you run into a Shutts due process problem. But if you do have it, then
you disrupt the underlying nature of arbitration.
 Moreover, class arbitration greatly increases risks to defendants. When damages owed to
tens of thousands of potential claimants are aggregated and decided at once, the risk of an
error will often become unacceptable.
o Because it stands as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress, the Discover Bank rule is preempted by the FAA. The judgment of the
court of appeals is reversed and the matter is remanded for further proceedings consistent with the
opinion.
 Breyer dissent:
o The majority agrees that the Discover Bank rule falls directly within the scope of the FAA’s
exception permitting courts to refuse to enforce arbitration agreements on grounds that exist “for
the revocation of any contract.” 9 U.S.C. § 2. However, the majority errs in holding that the
Discover Bank rule increases the complexity of arbitration procedures and is thus
preempted by the FAA. The majority does not explain why class arbitration is so
burdensome. Because California applies the same legal principles to address the
unconscionability of class arbitration waivers as it does to address the unconscionability of any
other contractual provision, the merits of class proceedings should not be a factor in the
Court’s decision. Nevertheless, the majority unnecessarily focuses on that aspect and reaches a
decision that is contrary to precedent.
 Takeaways according to profs
o Majority
 Essentially says, “True, but it does not matter.” Federal policy in passing the FAA trumps
these concerns articulated by states and lower courts. Public policy rationales may be raised
for or against class actions, but Congress has declared in passing the FAA that federal policy
favoring arbitration must prevail. Majority noted that, in many ways plaintiffs were better off
under arbitration than with traditional process.
 Allowing an unconscionability defense based on the inherent limitations of arbitration
would defeat the purpose of the act.
o Dissent
 Points out that FAA itself declares that arbitration clauses are revocable and unenforceable
where law or equity so require. Thus, it anticipated that equitable and legal grounds would
occasionally require that such clauses be voided.
 California law holds unenforceable all contracts “which have for their object, directly or
indirectly, to exempt anyone from responsibility for his own ... violation of law.”
 Dissent argues that state is justified in refusing to enforce contracts of adhesion with class
action waivers since the law does not distinguish from such waivers in contracts with
arbitration provisions and those without arbitration provisions.
 Legislative history of FAA shows that its purpose was to restrict judicial hostility to arbitration
in commercial disputes between roughly equivalent parties.

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 TM: The deeper problem with class-wide arbitration is the absence of meaningful review.
o Rhone-Poulenc tells us that multi-layered review of the certification decision is essential. Without
some form of review, certification decisions can become incredibly risky, and have very high
outcome variance. Thus, defendants will be pressured to settle for reasons other than the merits.
o This view is consistent with the ALI, and Rule 23(f) (interlocutory appeal of certification
decisions).
 Parties are not allowed to agree by contract for judicial review of the arbitrator’s decision.
(Hall Street Associates)
o And it is also impossible to have settlement as a part of class arbitration because there is no party
who can serve as the “fiduciary” like in Reynolds v. Beneficial Bank – the arbitrator is just chosen
by the defendant.

American Express v. Italian Colors Restaurant, (U.S. 2013)

 Facts
o An agreement between petitioners, American Express and a subsidiary, and respondents,
merchants who accept American Express cards, requires all of their disputes to be resolved by
arbitration and provides that there “shall be no right or authority for any Claims to be arbitrated
on a class action basis.” Respondents nonetheless filed a class action, claiming that petitioners
violated § 1 of the Sherman Act and seeking treble damages for the class under § 4 of the Clayton
Act. Petitioners moved to compel individual arbitration under the Federal Arbitration Act (FAA),
but respondents countered that the cost of expert analysis necessary to prove the antitrust claims
would greatly exceed the maximum recovery for an individual plaintiff. The District Court
granted the motion and dismissed the lawsuits. The Second Circuit reversed and remanded,
holding that because of the prohibitive costs respondents would face if they had to arbitrate, the
class- action waiver was unenforceable and arbitration could not proceed. The Circuit stood by its
reversal when this Court remanded in light of Stolt–Nielsen S.A. v. AnimalFeeds International
Corp., which held that a party may not be compelled to submit to class arbitration absent an
agreement to do so.
o Argument was that, unlike Concepcion, it was truly impossible to prove this case without
class action mechanism.
 Issue
o Whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration
Act when the plaintiff's cost of individually arbitrating a federal statutory claim exceeds the
potential recovery
 Holding and Reasoning
o The FAA does not permit courts to invalidate a contractual waiver of class arbitration on the
ground that the plaintiff's cost of individually arbitrating a federal statutory claim exceeds
the potential recovery.
 (a) The FAA reflects the overarching principle that arbitration is a matter of contract. (co).
Courts must “rigorously enforce” arbitration agreements according to their terms, (co),
even for claims alleging a violation of a federal statute, unless the FAA's mandate has been
“‘overridden by a contrary congressional command.’”
 (b) No contrary congressional command requires rejection of the class-arbitration waiver
here.
 The antitrust laws do not guarantee an affordable procedural path to the vindication
of every claim, (co), or “evince an intention to preclude a waiver” of class-action
procedure, (co).
 Nor does congressional approval of establish an entitlement to class proceedings for the
vindication of statutory rights. The Rule imposes stringent requirements for certification
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 that exclude most claims, and this Court has rejected the assertion that the class- notice
requirement must be dispensed with because the “prohibitively high cost” of
compliance would “frustrate [plaintiff's] attempt to vindicate the policies underlying the
antitrust” laws.
 (c) The “effective vindication” exception that originated as dictum in Mitsubishi Motors
Corp. v. Soler Chrysler– Plymouth, Inc., (co), also does not invalidate the instant arbitration
agreement. The exception comes from a desire to prevent “prospective waiver of a party's right
to pursue statutory remedies,” (co); but the fact that it is not worth the expense involved in
proving a statutory remedy does not constitute the elimination of the right to pursue that
remedy. (co). AT&T Mobility LLC v. Concepcion, 563 U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d
742, all but resolves this case. There, in finding that a law that conditioned enforcement of
arbitration on the availability of class procedure interfered with fundamental arbitration
attributes, (co), the Court specifically rejected the argument that class arbitration was
necessary to prosecute claims “that might otherwise slip through the legal system,”
 NOTE: Exception “would perhaps cover filing and administrative fees attached to
arbitration that are so high as to make access to the forum impracticable.”
 Dissent (Kagan)
o “Applied as our precedents direct, the effective vindication rule furthers the purposes not just
of laws like the Sherman Act, but of the FAA itself. That statute reflects a federal policy favoring
actual arbitration—that is, arbitration as a streamlined “method of resolving disputes,” not as a
foolproof way of killing off valid claims. [Citation omitted.] Put otherwise: What the FAA
prefers to litigation is arbitration, not de facto immunity.”
 The “effective vindication” rule “reconciles the federal arbitration act (faa) with all the rest of
federal law ... an arbitration clause may not thwart federal law, irrespective of exactly how
it does so.”
 Mitsubishi case instructs that arbitration clause should be set aside if “proceedings in the
contractual forum will be so gravely difficult” that the claimant “will for all practical
purposes be deprived of his day in court.”
 The effective vindication rule “requires courts to determine in the here and now...whether an
agreement’s provisions foreclose even meritorious antitrust claims.”
o “The Court today mistakes what this case is about. To a hammer, everything looks like a nail.
And to a Court bent on diminishing the usefulness of Rule 23, everything looks like a class action,
ready to be dismantled....As a result, Amex’s contract will succeed in depriving Italian Colors of
any effective opportunity to challenge monopolistic conduct allegedly in violation of the Sherman
Act. The FAA, the majority says, so requires. Do not be fooled. Only the Court so requires; the
FAA was never meant to produce this outcome. The FAA conceived of arbitration as a
“method of resolving disputes”—a way of using tailored and streamlined procedures to facilitate
redress of injuries. [Citation omitted.][Emphasis added by Kagan.] . . . In the hands of today’s
majority, arbitration threatens to become more nearly the opposite—a mechanism easily made to
block the vindication of meritorious federal claims and insulate wrongdoers from liability.
The Court thus undermines the FAA no less than it does the Sherman Act and other federal
statutes providing rights of action.”
 Takeaways
o Effective vindication doctrine rejected
o Book says “The upshot is that the consumer must arbitrate future disputes rather than sue in court,
and she is forced to do so without giving informed and truly voluntary consent. Or so the critics
of mandatory arbitration claim. Professor Sternlight is one of the most vocal of these critics and
the excerpt included here paints a rather gloomy picture.”

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 o Arbitration agreements with express class waivers are now in everything. Employment contracts,
consumer contracts, financial contracts, every online transaction, every “terms and conditions”
that you are now bound to without even reading.
o Class action firms are shrinking, changing focus and going out of business.
o Consumer protection, employment protections, antitrust enforcement, etc. is shifting back to
states and largely going unpoliced. Is there a new “wild west” era dawning?
Aftermath of Supreme Court’s Arbitration Jurisprudence
 In the past three decades, court has enforced arbitration requirements in:
o Cases brought by defrauded consumers; when employees allege age discrimination;
o When employees file sex discrimination suits under state consumer protection laws; when
merchants allege violations of the antitrust laws;
o Claims by family members that negligent management of nursing homes resulted in the wrongful
deaths of their relatives.
 NLRA Case: Epic Systems Corp. v. Lewis, 138 S.CT. 1612 (2018) (5-4)
o Facts
 Employee Collective action (FLSA) and class action based on denial of overtime pay.
 ARB clause prohibited employees from litigating collectively in any manner.
o Issue: Does arb clause violation section 7 of the NLRA?
 Section 7 protects right to organize and employees’ rights “to engage in other concerted
activities for the purpose of ...mutual aid or protection.”
o Majority Opinion
 Party claiming two statutes cannot be harmonized and one displaces the other “bears the
heavy burden of showing `a clearly expressed congressional intention’ that such a result
should follow.
 There is a strong presumption against this intention to displace must be “clear and manifest.”
 FAA was passed in 1925 and establishes a liberal policy favoring arbitration.
 NLRA does not hint at displacement of arbitration act, “let alone accomplish that much
clearly and manifestly.”
 It is also “well known” that class actions can unfairly place pressure on the defendant to settle
even unmeritorious claims.
o Dissent
 “The legislative history and debate leading up to the faa’s passage evidence congress’ aim to
enable merchants of roughly equal bargaining power to arbitrate commercial disputes.”
 58-year after FAA was enacted, “the court declared, for the first time .. that the FAA evinces a
`liberal federal policy favoring arbitration.”
 “The inevitable result of today’s decision will be the under-enforcement of ... statutes
designed to advance the well-being of vulnerable workers.”
In Re: Automotive Parts Antitrust Litigation (E.D. Mich. 2017)Important and Unresolved Issues
 Basic Takeaways
o In general, a non-signatory to an agreement cannot enforce its terms.
o There are exceptions as dictated by state law: equitable estoppel.
 Equitable estoppel may apply if a signatory to the contract makes allegations of “substantially
interdependent and concerted” misconduct by a non-signatory defendant and one or more
signatories.
o E.D. MI: the allegations of collusive conduct must bear some relation to the agreement at issue.
 Facts
o Three Defendants, and plaintiff has arbitration agreements with the first two and not the third
defendant.
o Plaintiffs file class action antitrust claims of conspiracy
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 Who can Plaintiffs sue and for what?
o Can Plaintiffs sue D2 for purchases from D1?
 No: Dispute is intertwined with terms of D1’s contract (price).
o Can Plaintiffs sue D2 for purchases from D3 (no arb clause)
 Yes. But stayed until arbitration completed.
o Can plaintiffs sue D3 for purchases from D1 & D2?
 No – D3 can rely on D1 and D2 arbitration clauses.
o can plaintiffs sue D2 for purchases from D3.
 Yes – But stayed.
 General Takeaways
o Implications of stay until completion of arbitration
o Some courts reject this reasoning–unless claim arises out of contract, non-signatory can’t enforce.
o Which is the right result? Should a non-signatory benefit from another company’s arb agreement
simply because they were co-conspirators?
Impact on Anti-Trust Class Actions
 Can large direct purchasers viably proceed with arbitration?
 Indirect purchasers usually are not subject to arbitration clauses.
 Does Illinois Brick standing for direct purchasers make sense in a world with arbitration clauses?
Impact in Securities Litigation
 Corporate interest in including arb clauses/class action waivers in by-laws or registration statements
with SEC.
 SEC’S historical policy and view of the securities laws.
 In new administration, there has been some equivocaton.
 Johnson & Johnson issue: can corporation decline to include this amendment to its by-laws in
meeting with shareholders?
Impact on Securities Class Actions
 SEC issues “no action letter” (based on position of New Jersey AG).
o Reserved opinion on federal law.
o “The parties could seek a more definitive determination from a court of competent jurisdiction.”
 Shareholders filed suit in district of NJ.
o The Doris Behr 2012 Irrevocable Trust v. Johnson & Johnson (D.N.J.)
o On April 8, 2019, district court denied request for preliminary injunction.
Arbitration Agreements and “Mass Actions”
 Arbitration clauses often go beyond class action waivers – also prohibit joinder or other collective
actions.
 Many mass actions will not involve a contractual relationship – so injured party is not subject to an
arbitration clause.
 But these tort cases generally will continue as mass actions, not class actions under Rule 23.

XIII. Discovery and Statute of Limitations Issues in Class Actions

A. Discovery
1. General
 Facts are complicated and reside with defendants. How can plaintiffs tell their story to a jury?
 Discovery may or may not open during pendency of motions to dismiss, but usually is put on hold in
complex discovery until motions are resolved.

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 Discovery period is defined by a schedule – usually negotiated in part or in full by the parties.
Typical complex litigation discovery periods might be one or two years.
 Three basic types of discovery – written, documentary, testimonial (deposition).
 Generally, discovery proceeds according to a well understood sequence. Written discovery is served
early and fought over for much of the period. Document requests are served early and intensively
fought over for the initial month or two and then documents are rolled out over a period of a few
months. Depositions start near the end of document discovery and run until the end of fact
discovery.
In Re Rezulin Products Liability Litigation, 309 F. Supp. 2d 531 (S.D.N.Y. 2004)
 Facts
o Plaintiffs sought to tell their narrative about an allegedly dangerous and deadly drug through a
series of expert witnesses, who would testify about the key documents in the case.
o Among other experts, plaintiffs sought to bring expert to testify about the history of regulatory
actions involving the drug and the suppression of research in dealings with FDA. Defendants
moved to exclude expert testimony.
 Holding and Reasoning
o Court analogized the Plaintiffs’ trial plan to “wager of law” and granted the motion.
 Court says this practice has “become fashionable among some well-financed litigants – the
engagement of ‘expert’ witnesses whose intended role is more to argue the client's cause
from the witness stand than to bring to the fact-finder specialized knowledge or expertise
that would be helpful in resolving the issues of fact presented by the lawsuit.”
 “To the extent that the challenged testimony relates, as plaintiffs contend, to the factual
accuracy of Warner-Lambert's clinical data submissions to the FDA, it constitutes lay
matter that the fact-finder can understand without the assistance of experts, regardless of
much experience these witnesses have with clinical trials.”
 “Dr. Avorn's testimony... is a simple inference drawn from his review of two documents--
the primary Rezulin NDA and its Appendix, which, if admissible, plaintiffs' counsel may
present directly to the fact-finder while arguing his or her view as to their significance.
Expert testimony interpreting Warner-Lambert's conduct in disclosing information to the
FDA therefore will not assist the fact-finder in these cases.”
 “Dr. Gale's ‘history of Rezulin’ is merely a ‘narrative of the case which a juror is equally
capable of constructing.’ In Dr. Gale's own words, the purpose of this testimony is simply
to ‘provid[e] an historical commentary of what happened’ which, in his view, is ‘important
to try and define the staging process’ a term evidently meaning ‘background.’ Such
material, to the extent it is admissible, is properly presented through percipient witnesses
and documentary evidence.”
 Implications in this case
o Without experts, plaintiffs only have defendant employees to introduce their documents. Will that
work?
o On one hand, having “facts” provided in summary fashion through experts is prejudicial – it is
curated, one-sided and delivered with intent to persuade. On the other hand, if the alternative is to
introduce those exhibits only through defense witnesses, doesn’t that also complicate that
presentation? What if that’s on video? Even if it were possible to eliminate the spin on the
evidence, is it realistic to expect lay jurors to meaningfully interpret, construct, contextualize and
draw reasonable inferences from a large volume of technical documents? Which is better - both
sides get facts in through experts or neither side gets this? Who benefits, relatively-speaking, from
each approach?

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2. Proportionality
 Under amended Rule 26(b)(1), information is discoverable if it is relevant to any party’s claim or
defense and proportional to the needs of the case, with several proportionality factors now stated in
the rule. [Id. at 12.]
Klonoff, “Application of the New “Proportionality” Discovery Rule in Class Actions: Much Ado
About Nothing” 71 Vand. L. Rev.1949 (2018)
 2015 – Proportionality scare was real. Defendants had gotten most mileage in limiting discovery in
arguments on burden and asymmetry. Footnote 66 of the article.
 In hindsight, scare was irrational. All proportionality factors were already in the rules with the
exception of “the parties relative access to relevant information” which addresses asymmetry of
information in situations like complex litigation. Notes 161-163 of the article. The Advisory
Committee notes explicitly disclaim that there is any new standard.

3. Written Discovery
 “Written Rules:”
o You can ask questions which must be answered, you can ask RFAs, which must be answered.
o Limits apply.
o Timeframes are defined.
o Sounds great.
 “Unwritten Rules:”
o Unlike documents and depositions, all written discovery responses are drafted by lawyers.
o Lawyers will admit nothing that will help the other side unless it is unavoidable – every fact will
be spun and answers will be delayed until the close of discovery whenever possible.
o Substantive interrogatories are effectively useless with the exception of contention interrogatories.
o Written discovery is best used in conjunction with other methods of discovery such as
identification of witnesses (for depositions), admissibility issues (for documents).

4. The Meet and Confer Dance

 All discovery requests are served with overbroad instructions and definitions and substance and are
met with overbroad objections.
 Parties must then “meet & confer” to attempt to resolve their disputes & avoid burdening the Court.
 Parties meet & confer & attempt to both appear reasonable, force their opposition to take
unreasonable positions, give up nothing of value & get what they need.
 After each meet & confer, there is an exchange of documentation of the M&C.
 Scheduling is up to the parties by agreement. Goal is to ultimately “win” the magistrate

5. Document Requests and Production

 Documents are the most critical discovery for modern complex litigation.
 Document discovery is in the midst of the 2nd great revolution of the past 30 years.
 The first was the revolution from paper to electronic documents. Understanding the ancient world
can be beneficial.
 The second revolution, currently underway, is from human reviews to electronic reviews.
 This revolution itself has been staged – text searchable documents v. non-OCR’d pdfs, text
searchable prioritization of human search, algorithmic prioritization of human search, algorithmic
search augmented by human search, algorithmic search. Progression is neither constant nor
consistent. There are significant interests in gaming this system.
 Current state of progression, search terms and custodians identified for production set. Over-
inclusive set of potentially privileged and non-responsive documents withheld. Remainder is
produced, where it is generally a computer-aided and prioritized human search. Depositions typically
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 start before document review is completed. Documents are never identified as being responsive to
requests by number.
 Privilege and claw-back fights ensue. Supplementary document requests are made. Problems in the
production are identified. Meeting and conferring on document requests continues throughout the
discovery process. Authentication and chain of custody issues are generally fading in importance as
Defendants have come to realize it is a losing hand.

6. Depositions
 Setting the stage –
o In the complex litigation world where very few cases go to trial, depositions are where witnesses
are confronted with documents and testify under oath.
o Objections merely preserved. Testimony is transcribed and recorded. Word on who must appear at
trial.
 Depositions are quoted in briefing and cut for playing at trial.
 Conservative rules of taking and defending depositions usually prevail. No asking of the ultimate
questions. No extensive re-direct. No argument on the record.
 Thus, the Perry Mason moments are rare at deposition.
 Note about perjury.
 Tips on depositions:
o 1. Leading questions are an art.
o 2. Telling a story in logical order is better than the surprise hopscotch approach.
o 3. Getting a tight series of questions is an art. Summaries are important but boundaries can only
be pushed so far.
o 4. Closing out witnesses is critical.
o 5. 6.5 hours of waste is irrelevant if you get 30 minutes of useful material.

B. Statute of Limitations and Tolling

1. Commencement of Class Action Suspends Statute of Limitations During Pendancy of Action

American Pipe Const. Co. v. Utah (U.S. 1974)

 Facts
o Eleven days short of a year after a final consent judgment had been entered against petitioners in
civil actions by the Government to restrain federal antitrust violations (which actions had been
filed almost four years before entry of that judgment), the State of Utah commenced a Sherman
Act treble-damages class action against petitioners, in which the State purported to represent
various state and local agencies and certain other Western States.
o The action was found to be timely under the federal four-year statute of limitations governing
antitrust suits (s 4B of the Clayton Act) because of s 5(b) of that Act providing that whenever the
United States institutes any proceeding to restrain antitrust violations, the running of the statute of
limitations in respect of every private right of action arising under such laws and based on any
matter complained of in such proceeding shall be suspended during the pendency thereof and for
one year thereafter. The District Court thereafter granted petitioners' motion for an order pursuant
to Fed.Rule Civ.Proc. 23(c)(1) that the suit could not be maintained as a class action, the court
finding that, although the prerequisites to a class action contained in Rule 23(a)(2) through (4) had
been met, the requirement of Rule 23(a)(1) that ‘the class (be) so numerous that joinder of all
members is impracticable’ was not satisfied.
o Eight days after entry of this order, respondent towns, municipalities, and water districts, all of
which had been claimed as members of the original class, moved to intervene as plaintiffs in
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 Utah's action, either as of right under Fed.Rules Civ.Proc. 24(a)(2) or by permission under Rule
24(b)(2), but the District Court denied this motion, concluding that the limitation period had run as
to all those respondents and had not been tolled by institution of the class action. The Court of
Appeals reversed as to denial of permission to intervene under Rule 24(b)(2), finding that as to the
members of the class Utah purported *539 to represent, suit was actually commenced by Utah's
filing of the class action
 Holding and Reasoning
o 1. The commencement of a class action suspends the applicable statute of limitations as to all
asserted members of the class who would have been parties had the requirement of Rule
23(a)(1) been met, and here where respondents, who were purported members of the class, made
timely motions to intervene after the District Court had found the suit inappropriate for class action
status, the institution of the original class suit tolled the limitations statute for respondents. Pp.
765—767.
 “Whatever the merit in the conclusion that one seeking to join a class after the running of the
statutory period asserts a 'separate cause of action' which must individually meet the timeliness
requirements, such a concept is simply inconsistent with Rule 23 as presently drafted. A
federal class action is no longer 'an invitation to joinder' but a truly representative suit
designed to avoid, rather than encourage, unnecessary filing of repetitious papers and motions.”
It would have been bizarre policy to rule otherwise. (764-5)
 “This rule is in no way inconsistent with the functional operation of a statute of limitations.
As the Court stated in Order of Railroad Telegraphers v Railway Express Agency, 321 U.S.
342, 64 S.Ct. 582, 88 L.Ed. 788, statutory limitation periods are ‘designed to promote justice
by preventing surprises through the revival of claims that have been allowed to slumber
until evidence has been lost, memories have faded, and witnesses have disappeared. The
theory is that even if one has a just claim it is unjust not to put the adversary on notice to defend
within the period of limitation and that the right to be free of stale claims in time comes to
prevail over the right to prosecute them.’” (767)
o 2. A judicial tolling of the statute of limitations does not abridge or modify a substantive right
afforded by the antitrust acts; the mere fact that a federal statute providing for substantive liability
also sets a time limitation upon the institution of suit does not restrict the power of the federal
courts to hold that the statute of limitations is tolled under certain circumstances not inconsistent
with the legislative purpose. Pp. 767—769.
o 3. The District Court's determination in denying permission to intervene that respondents were
absolutely barred by the statute of limitations, was not an unreviewable exercise of discretion but
rather a conclusion of law which the Court of Appeals correctly found to be erroneous. P. 769.
o 4. The commencement of the class action suspended the running of the limitations period only
during the pendency of the motion to strip the suit of its class action character. Since the class
action was filed with 11 days yet to run in the period as tolled by s 5(b), the intervenors had 11
days after entry of the order denying them participation in the class suit in which to move to
file their intervention motion. Their filing only 8 days after the entry of such order was thus
timely. Pp. 769—770.

China Agritech, Inc. v. Resh (U.S. 2018)

 Facts
o This suit was the third class action brought on behalf of purchasers of petitioner China Agritech's
common stock, alleging materially identical violations of the Securities Exchange Act of 1934.
 The Act has both a two-year statute of limitations and a five-year statute of repose, 28 U.S.C. §
1658(b). Here, the accrual date for purposes of the Act's limitation period is February 3, 2011,
and for the repose period, November 12, 2009.

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 o Theodore Dean, a China Agritech shareholder, filed the first class-action complaint on February
11, 2011. As required by the Private Securities Litigation Reform Act of 1995 (PSLRA), his
counsel posted notice of the action and invited any member of the purported class to move to serve
as lead plaintiff. Six shareholders sought lead-plaintiff status.
 On May 3, 2012, the District Court denied class certification; the action settled in September
2012, and the suit was dismissed.
o On October 4, Dean's counsel filed a new complaint (Smyth), still timely, with a new set of
plaintiffs. Eight shareholders sought lead-plaintiff appointment in response to the PSLRA notice,
but the District Court again denied class certification. Thereafter, the Smyth plaintiffs settled their
individual claims and dismissed their suit.
o Respondent Michael Resh, who did not seek lead-plaintiff status in the earlier actions, filed the
present class action in 2014, a year and a half after the statute of limitations expired. The other
respondents moved to intervene in the suit commenced by Resh, seeking lead-plaintiff status. The
District Court dismissed the class complaint as untimely, holding that
the Dean and Smyth actions did not toll the time to initiate class claims. The Ninth Circuit
reversed, holding that the reasoning of American Pipe extends to successive class claims.
 Issue
o Whether American Pipe tolling applies not only to individual claims, but to successive class
actions as well.
 Holding and Reasoning
o Upon denial of class certification, a putative class member may not, in lieu of promptly joining an
existing suit or promptly filing an individual action, commence a class action anew beyond the
time allowed by the applicable statute of limitations. Pp. 1805 - 1811.
 (a) American Pipe and Crown, Cork addressed only putative class members who wish to sue
individually after a class-certification denial. The “efficiency and economy of litigation”
that support tolling of individual claims, American Pipe, 414 U.S., at 553, 94 S.Ct. 756 do not
support maintenance of untimely successive class actions such as the one brought by Resh.
 Economy of litigation favors delaying individual claims until after a class-certification
denial. With class claims, on the other hand, efficiency favors early assertion of
competing class representative claims. If class treatment is appropriate, and all would-be
representatives have come forward, the district court can select the best plaintiff with
knowledge of the full array of potential class representatives and class counsel. And if
the class mechanism is not a viable option, the decision denying certification will be made
at the outset of the case, litigated once for all would-be class representatives.
 Federal Rule of Procedure 23 evinces a preference for preclusion of untimely successive
class actions by instructing that class certification should be resolved early on. The PSLRA,
which governs this litigation, evinces a similar preference, this time embodied in legislation
providing for early notice and lead-plaintiff procedures. There is little reason to allow
plaintiffs who passed up opportunities to participate in the first (and second) round of
class litigation to enter the fray several years after class proceedings first commenced.
 Class representatives who commence suit after expiration of the limitation period are
unlikely to qualify as diligent in asserting claims and pursuing relief. See, e.g., McQuiggin
v. Perkins, 569 U.S. 383, 391, 133 S.Ct. 1924, 185 L.Ed.2d 1019. *1803 And respondents'
proposed reading would allow extension of the statute of limitations time and again; as
each class is denied certification, a new named plaintiff could file a class complaint
that resuscitates the litigation.
 Endless tolling of a statute of limitations is not a result envisioned by American Pipe.
Pp. 1805 - 1809.

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  (b) If Resh's suit meets the requirements of Rule 23(a) and (b), respondents assert, the suit
should be permitted to proceed as a class action in keeping with Shady Grove Orthopedic
Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393, 130 S.Ct. 1431, 176 L.Ed.2d 311. Shady
Grove, however, addressed a case in which a Rule 23 class action could have been maintained
absent a state law proscribing class actions, while Resh's class action would be untimely unless
saved by American Pipe 's tolling exception. Rule 23 itself does not address timeliness of claims
or tolling and nothing in the Rule calls for the revival of class claims if individual claims
are tolled.
 The clarification of American Pipe 's reach does not run afoul of the Rules Enabling Act by
abridging or modifying a substantive right. Plaintiffs have no substantive right to bring
claims outside the statute of limitations. Nor is the clarification likely to cause a
substantial increase in the number of protective class-action filings. Several Courts of
Appeals have already declined to read American Pipe to permit a successive class action
filed outside the limitations period, and there is no showing that these Circuits have
experienced a disproportionate number of duplicative, protective class-action filings.
Multiple filings, moreover, could aid a district court in determining, early on, whether class
treatment is warranted, and if so, who would be the best representative. The Federal Rules
provide a range of mechanisms to aid district courts in overseeing complex litigation, but
they offer no reason to permit plaintiffs to exhume failed class actions by filing new,
untimely class claims. Pp. 1809 - 1811.

XIV. Parens Patriae Suits

A. Background

 Initially, when FRCP 23 was passed and we had an age of government regulation and enforcement,
the need for state AGs to bring suits wasn’t there
 For many people R23 was positive, but others it wasn’t
o Some felt it reflected how democracy should look
o Enter Chamber of Commerce→ Powell saw a threat to American Enterprise system and so
despite businesses actually being down, Powell created a blueprint to combat the changes
 Companies knew AG’s weren’t equipped, but AGs started collaborating with each other

1. Parens Patriae Authority

 Means parent of the country
 Practically it means state attorney general can bring actions sitting in a quasi-sovereign manner for
things that affect health and welfare of citizens of state
2. Policy Reasons
 Because CAFA was used when defendants tried to say the AG is not a party in interest. However,
that was solved
 Arc of what has happened to mandatory arbitration clauses
3. AG Toolbox
 State UDAP statutes
 False Claims statutes
 Common Law

State UDAP Statutes

 What’s included:

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 o Civil Penalties
 Lower standard of proof for deceptive v. unfair or unconscionable (not clear this falls under
civil penalties…)
 AG’s don’t need to show harm or reliance only need to show harm or deception
occurred→ in some states you need to show it was intentional
 This burden is easier than private actor plaintiff burden
 You have to show conduct is wrong
 You need to make sure the people aren’t harmed and the AG needs the power to act
quickly and act first, then you help the market better
 Mississippi Consumer Protection Act:
o Private right of action a person who purchases good and uses them for personal use and
then suffers ascertainable loss as a result of deceptive acts and practices can bring a
lawsuit
o AG right of action if the AG has reason to believe that someone is going to use practice
prohibited then AG can bring action in name of the state against such person to restrain.
o AG may recover on behalf of the state a civil penalty in a sum not to exceed 10K.
o Statutory Disgorgement
 Oft underused and extremely powerful
 Differs from regular disgorgement under common law, which is ill docked gains which you
have to show that you’re trying to make victim whole after being harmed.
 Here, it’s wrong-doer; you only have to show there were gains that were wrongful
o Restitution
o Other injunctive relief
 Example: Mississippi Consumer Protection Act
o Private right of action a person who purchases good and uses them for personal use and then
suffers ascertainable loss as a result of deceptive acts and practices can bring a lawsuit
o AG right of action if the AG has reason to believe that someone is going to use practice
prohibited then AG can bring action in name of the state against such person to restrain.
o AG may recover on behalf of the state a civil penalty in a sum not to exceed 10K.

False Claims Statutes

Common Law

 Background
o Modern roots in industrial revolution and in 20th century issues relating to morality
 Definition
o Conduct that reasonably interferes with public rights

State (Rhode Island) v. Lead Industries Association, Inc. (R.I. 2008)

 Rule of Law
o To support an action for public nuisance, a plaintiff must show that there has been an
unreasonable interference with a right common to the general public by someone with
control over the instrumentality creating the nuisance at the time the damage occurred.
 Facts
o Lead, a toxic chemical that can cause developmental disabilities, coma and even death in
children, was widely used in household paints until the 1970s. It is undisputed that lead
poisoning continues to be a public nuisance in the U.S., and particularly in Rhode Island, where a
disproportionately large number of children have elevated levels of lead in their blood. The
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 Rhode Island Attorney General filed suit on behalf of the State of Rhode Island (plaintiff) against
several lead paint manufacturers (Lead Industries) (defendants), alleging that they either knew or
should have known that the lead contained in their paint was a health hazard, and that as a result
of their conduct the state incurred substantial damages. The trial court denied Lead Industries’
motion to dismiss. The jury found that the presence of lead paint is a public nuisance caused by
Lead Industries’ conduct, and ordered the paint manufacturers to abate the public nuisance. Lead
Industries appealed.
 Issue
o May a plaintiff support an action for public nuisance, where the plaintiff fails to allege that the
defendant interfered with a public right, or that the defendant had control over the
instrumentality creating the nuisance at the time the damage occurred?
 Holding and Reasoning (Williams, C.J.)
o No.
o This court has defined the elements of a public nuisance as (1) an unreasonable interference
(2) with a right common to the general public (3) by someone with control over the
instrumentality creating the nuisance at the time the damage occurs.
o The Restatement (Second) of Torts recognizes that an unreasonable interference may include a
significant interference with public health, safety, peace, comfort, or convenience. Here, the
state’s complaint fails to allege that Lead Industries interfered with a public right, or that they
had control over lead content in paint at the time it caused harm to children.
o An interference with a public right is an interference with an indivisible resource shared by the
public, such as air, water, or a public right of way. In contrast, the right of a child not to be
poisoned by lead paint is a private, individual right.
o Control over the instrumentality that causes the nuisance at the time the damage occurs is also a
necessary element because the principal remedy for nuisance is abatement, which is not possible
where the defendant lacks control. There is no allegation in the complaint that Lead Industries
both manufactured the lead paint and controlled the paint at the time it injured children in Rhode
Island. Because the state’s complaint is insufficient, it is not necessary to determine whether
Lead Industries’ conduct was unreasonable, or whether it caused the injuries to children in
Rhode Island. Plaintiffs may still bring a products liability action against a lead paint
manufacturer, rather than a public nuisance action. However, permitting a product-based public
nuisance claim such as this one would open the floodgates to litigation properly brought in a
more limited products liability action. A plaintiff may also seek an injunction under the laws
adopted by the state legislature governing lead paint. These laws also do not permit an action for
public nuisance against lead paint manufacturers. For these reasons, this court finds that the trial
court erred in denying Lead Industries’ motion to dismiss.

County of Santa Clara v. Superior Court/Atlantic Richfield Company, 50 Cal.4th 35 (Cal 2010)
 Background
o Public entities brought representative public nuisance action against lead paint manufacturers,
seeking abatement as sole remedy. Manufacturers filed motion to bar public entities from
compensating private counsel by means of contingent fees. The Superior Court, Santa Clara
County, No. CV788657, Jack Komar, J., granted the motion, and public entities filed petition for
writ of mandate. The Court of Appeal granted the petition. Manufacturers petitioned for review.
The Supreme Court granted review, superseding the opinion of the Court of Appeal.
 Issue
o Whether “all contingent-fee agreements between public entities and private counsel in any
public-nuisance action prosecuted on behalf of the public” is prohibited.
 Holding and Reasoning

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 o (1) Public entities were not categorically barred from engaging private counsel under
contingent fee arrangements; but (2) retainer agreements were required to specify matters
that contingent-fee counsel must present to government attorneys for decision.
 This differs from situations where interests implicated are “akin to those inherent in a
criminal prosecution,” which bars contingent fee arrangements.
 “The broad spectrum of public-nuisance law may implicate both civil and criminal
liability.”
 “To ensure that the heightened standard of neutrality is maintained for attorneys prosecuting
public nuisance cases on behalf of the government, contingent-fee agreements between
public entities and private counsel must contain specific provisions delineating the proper
division of responsibility between the public and private attorneys, and specifically providing
explicitly that all critical discretionary decisions will be made by public attorneys—most
notably, any decision regarding the ultimate disposition of the case.”

Requirements of Outside Counsel in these Cases

 Confidentiality
 Oversight
 Transparency
 Accountability

B. Application to Opioid Litigation

1. Public Right Element
 Standard and duty of care is something people should be able to rely on
 To have medical consensus disrupted by a massive deceptive marketing campaign.
 Opioid crisis has been indiscriminate

XV. Spread of Class Actions Abroad

A. Background
 Class actions predominant in the US
 Traditionally, Europe had regulations they could depend on
 US perceived as too lawyer and plaintiff friendly
B. Variations in Design
 Substantive scope,
 Rules on standing of class representatives,
 Whether class members need to proactively join or proactively exclude themselves from the
collective litigation (“opt-in” v. “opt-out”)
 Availability of monetary remedies
o US is more favorable to class litigation because:
 Lawyers can bring class actions on speculative basis, such that they can invest their own
resources and if they are successful they can earn a premium on investment
 American fee rule each side bears own litigation costs and neither class nor class counsel
is threatened by adverse costs.

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 Under equitable fee doctrine, which is where if the class prevails, all class members pay a
share of attorney fees and expenses proportionate to damages they obtain, which
eliminates potential free-riding
 In other countries (some examples):
 Canada: class members pay contingent fees and face adverse costs
 Australia: lawyers can represent class representative on “no win, no pay” basis, but
cannot charge fees based on amount obtained for the class and class representative faces
adverse costs if defendant prevails.
o Lower potential damages
 Procedures for class certification, if any
C. European Union
 See class slides from Class 24 (slides titled Class 23 Collective Redress in Europe)
 European Commission Recommendations

XVI. Pending Legislation (Fairness in Class Action Litigation Act (FICALA))

A. Background
 Proposed legislation that Chamber of Commerce is pushing.
o Repeatedly introduced in Judiciary Committee
 Section 105(i) “Allegations Verification”
o Drafted by lawyers representing Johnson and Johnson in MDLS
o Factual support for all allegations within 45 days (without discovery) and 90 days for review, at
which point Judge must decide whether case may proceed.
o Need to pass a burden of proof on causation (not to mention other elements) pre-discovery.
o What other problems might 105(i) cause plaintiffs (or courts)?
 Section 105(k) – Required appeals from nonfinal orders
o MDL judges must permit appeals from any order that “may materially advance the ultimate
termination of one or more civil actions in the proceedings.”
o How long does a typical federal appeal last? Which types of orders “may” materially “advance”
the ultimate termination of “one or more” civil actions in the proceedings? Any guesses as to
how long this would delay a typical MDL litigation? How much would this serve to discount
value of ultimate liability?
 Section 105(l) “Ensuring Proper Recovery for Plaintiffs”
o Plaintiffs must receive a minimum of 80 percent of the proceeds from any recovery obtained via
settlement or judgment. This leaves 20 percent for attorneys and costs. (Costs in many cases will
be 5% of eventual settlements. In smaller settlements, even more.) Thus, attorneys fees will
often be 15%
o A word about law firm economics.
o We have discussed the downside of this rule – what is the upside, i.e., what problem is this
provision attempting to solve?
 (§1716)
o “In a class action seeking monetary relief for personal injury or economic loss, each proposed
class member suffered the same type and scope of injury as the named class representatives.”
 How does this differ, if at all, from current requirements under FRCP 23(b)(3)?
 (§1720)
o “A court’s order that certifies a class with respect to particular issues must include a
determination that the entirety of the cause of action from which the particular issues arise
satisfies all the class certification prerequisites.”

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  What does this do to FRCP 23(c)(4)?
 (§1723)
o “Appeals courts must permit appeals from an order granting or denying class certification.”
 How does this differ from current 23(f)?
 Is this really “anti-litigation” legislation more than “fairness” legislation?

B. “ENCROACHMENTS AND OPPRESSIONS – THE CORPORATIZATION OF

PROCEDURE”
 What is at stake in these battles over civil procedure governing complex litigation is nothing less
than the integrity of the rule of law.
 What is the “Rule of Law”? (taken from World Justice Project)
o 1. Accountability – private actors, no matter their size, are accountable under the law.
o 2. Just laws – laws are applied evenly, meaningfully protect fundamental rights, including
contract and property rights, security and civil rights.
o 3. Open Government – Process by which laws are enacted, administered and enforced are
accessible, fair and efficient.
o 4. Accessible and Impartial Dispute Resolution – Justice is delivered by competent and
independent representatives and neutrals who are accessible, resourced, and reflect the makeup of
the communities they serve.
 “[T]he entities—be they plaintiffs, corporations, judges, or members of Congress—that have control
over judicial procedure also have great control over the preservation, or non-preservation, of the rule
of law.”
 Power struggles between legislative & judicial branch over procedure. “The big winner in this
power struggle has been neither the judicial nor the legislative branch but, instead, corporate entities
seeking (often successfully) to limit exposure to liability by restricting access to justice, particularly
for low-income individuals, those w/low-value claims, or citizens w/little political power.”
 “It is also true that there are many reasons beyond mere power struggles that explain the
corporatization of procedure: the increased politicization of judicial appointments; the anti-litigation
stance of the Court filled with many of those more ‘politicized’ appointees; the long-standing
perception of a litigation explosion in the United States; an increasingly far-right and deregulatory
Congress and executive; and a lack of campaign-finance reform, among others. All of these
considerations should give us pause in believing that there is, in fact, a nonpoliticized branch with
which we can entrust matters of ‘procedure.’”

XVII. Themes
 Challenges of the “complex case”
o Inadequacies of ordinary civil litigation procedures illustrated by post-WWII patent and antitrust
cases that threaten to overwhelm the federal judiciary; particularly the electrical equipment
antitrust case
 The threat is not only delay and cost, but also inconsistent and seemingly unfair results
o Need for new procedures to deal with this: Rule 23 and MDL statute enable coordination,
consolidation, representative litigation. But these give rise to new problems of governance and
legitimacy.
 Goals of Complex Litigation
o Internal
 Efficiency: We want a mechanism to get closure with some quickness and relative moderation
of cost, and some economies of scale relative to the scale of the dispute.

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  Fairness: Treating similarly situated in similar fashions. There should be non-arbitrary treatment
of individuals.
 Equitable treatment to defendant: Want culpable party to be treated equitably. Do not want
multiple punitive awards in mass tort context to put a good company out of business as a result
of wild jury verdicts and repeat punitive damages.
o External
 Role of attorneys
 Formalism vs. functionalism
o Formalism: Falcon on typicality, Combustion Engineering, Taylor, Hansberry, Kern,
Amchem/Ortiz, Bayer
 Roberts’s dissent in APCC
o Functional: Falcon on other things, Walmart, Barnes, Amchem/Ortiz dissents, Zyprexa, Johns-
Manville
 Different views of complex litigation: intense judicial management vs. a problem of governance
o Judicial Management
 Breyer in Ortiz, Amchem
 Weinstein in Zyprexa
 Kennedy in Hoffman-Laroche
o Internal and external governance
 Court’s role
o Delaventura – court’s interests conflict with class members
o Vioxx
o Formalism of Amchem
 Fiduciaries
o The certifying court
 Reviewing settlement (Beneficial Bank)
 Pigford – the traffic cop
 Overseeing attorney’s fees (Cendant Prides, Staton)
 Administration of settlements (Bone Screw, but see Pigford)
 Cy pres ALI 3.07 – court a fidicuary until the last dollar is spent
o Class counsel
 Easterbrook in Allen
o Arbitration
 Lack of fidicuary means no class arbitration (Concepcion)
o Quasi-class actions
 Zyprexa, Vioxx
 Internal vs. external governance
o Internal Governance
 Exit: Shutts, Ticor, Rule 23c notice, Inter-Op, General Motors
 Not MDLs
 Exit isn’t all that important; we see this in Shutts because we allow mandatory classes.
 Voice: Lazy Oil, Devlin, Aggregate Settlement Rule (holdout), appointment of future claims
(gives voice in the proceedings), bankruptcy (sort of)
 Souter in Ortiz: disloyal counsel
 Posner in Henson:
 Loyalty:
 Intraclass conflicts: Falcon

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  Conflicts among members of the class: Amchem, Ortiz, Stephenson, Falcon, Combustion,
Thillens, bellwethers, Hilao, Epstein
o Not Uhl
 Conflicts between lawyers and class: Ortiz, aggregate settlement rule, Zyprexa, Reynolds,
Staton, Cendant Prides, Combustion Engineering, Pigford, Bone Screw
 Conflicts between lawyers: Vioxx, Zyprexa, Auction House
 Conflicts between courts and parties: Delaventura, Beneficial Bank, Cy pres
o ALI proposal on cy pres.
 Fairness to defendant: Rhone-Poulenc, Wal-Mart, Henson, not Klay
 No exit, voice, loyalty, but a good deal: Vioxx, aggregation
o External
 Institutional competency of judiciary vs. legislature: Taylor (no free-form CA), Amchem/Ortiz,
Kern (opt-in not legit), Inter Op (changing Rule 23), Henson, cy pres, Jones in In re Chevron
(your right is to your own damages), Combustion Engineering, but see (Klay), Johns-Manville,
Hilao, Rubenstein article
 Souter in Ortiz: CA being used to circumvent priority scheme in bankruptcy
 Courts taking over other courts’ power: Shutts concern with choice of law; allowing one
jurisdiction’s power to be magnified improperly by procedure; ALI – use principles of comity to
resolve certification vs. Bayer
 Altering of substantive rights: Wal-Mart (no trial by formula), In re Chevron (need to preserve
individual defenses), Simon II (no punitives w/o individual damages/proof), but see Hilao
 Deterring wrongdoing, rights enforcement
 Economics of trying to bring small claims/comparison of aggregation devices
o Costs: Amex III; In re Domestic Air Transportation Antitrust Litigation; Ephedra; Stolt-Nielsen (if
silent and parties don’t agree, no class arbitration)
o Fees: Auction House, Zyprexa, Cendant Prides,
 Class actions as rights enforcement vs. convenience/efficiency
o Rights enforcement: Auction House, Allen, Van Gemert, Saladini, Shutts (we don’t want opt-outs),
Kern
 Settlement structure
 Methods of aggregation
o Aggregate Settlement
 3.17
o MDL
o Quasi-class actions
 Bellwethers
 Agreements with counsel
o Class actions
o Arbitration
o Bankruptcy
o Preclusion
o Private aggregator
o 3rd party funding

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