Understanding Mass Personal
Two features distinguish mass torts from other product liability cases: (1) The high degree of commonality of issues and actors among the claims within a litigation, and (2) the extraordinary interdependence of case values. In many mass torts, a large number of claims arise in one or a few jurisdictions over a relatively short time. Claims are brought by a relatively small number of law firms, against one or a few defendants, and--increasingly--managed by one or a few judges, often assisted by a small cadre of special masters and experts. Because of these commonalities in issues and actors, the aggregate value of all claims in the same mass tort rises and falls on the outcomes of single cases or with other critical developments.
The civil justice system has not responded well to the challenge of handling mass torts, and many innovations have been proposed to improve processing of these cases. In Understanding Mass Personal Injury Litigation: A Socio-Legal Analysis, Deborah Hensler and Mark Peterson examine the broader context in which these innovations must function. The analysis suggests that proposals for improving mass tort processing will not be successful unless they deal directly with uncertainties flowing from the factual and legal complexity of the cases; address the pervasive, inherent conflicts of interest among parties and attorneys; recognize how the litigation is propelled by the asymmetric risks facing plaintiffs' attorneys and defendants; and offer clear solutions to issues associated with future claimants.
WHY DID MASS INJURY LITIGATION EMERGE IN THE 1980s?
Mass personal injury litigation emerged in the 1980s from the interaction of diverse social and legal trends.
Mass marketing of products increased the population's exposure to potentially injurious products and substances. Weaknesses in the FDA's regulatory process also contributed to the incidence of mass injuries. For example, medical devices, which until 1976 were not subject to FDA review, are well represented in mass tort litigation.
Other social influences such as mass media and the evolution of plaintiff law firms facilitated the filing of mass tort claims. Americans are now more likely to be exposed to information through the mass media that suggests or establishes causal links between injuries and product use or exposure, attributes blame for such hazards to business or industry, and provides information about the potential for litigation. Plaintiffs' attorneys advertise their availabil-ity to represent specific classes of claimants and, at times, aggressively seek out claimants.
Changes in legal doctrine have also played a role. Perhaps most important, product liability law gave victims in mass injury incidents the opportunity to sue common defendants--product manufacturers. Key civil procedures evolved in parallel with these doctrinal developments. By the end of the 1980s, formal aggregative procedures such as class actions, multidistricting, and consolidation were being used to resolve massive numbers of claims that would otherwise sit in increasing backlogs. As a result, plaintiffs' attorneys and defendants came to understand that thousands of cases might be resolved as a result of a single negotiated agreement or trial outcome.
WHY ARE MASS TORTS SO DIFFICULT TO RESOLVE?
Mass personal injury litigation is difficult to resolve because of (1) the factual and legal issues raised by latent injuries, (2) the litigation's peculiar risk profile, (3) the problems that future injuries and future plaintiffs pose for settlement efforts, (4) the conflicts of interest inherent in collective litigation, and (5) the dilemma that courts confront when attempting to aggregate cases.
Factual and Legal Issues. For mass litigation to occur, plaintiffs' attorneys and defendants must believe that the expected value of the litigation is great enough to warrant a significant investment of time and capital. At the inception of the litigation, estimates of expected value are highly uncertain, stakes and risks are high, but settlement may be hard to achieve because the sides have such disparate views of likely outcomes.
Establishing causation for latent injuries is difficult. The scientific evidence of a causal link between product use or exposure and the harm claimed may be uncertain. In addition, there are uncertainties about how judges and juries will respond to and evaluate whatever scientific evidence is available.
Plaintiffs' attorneys must also establish that the defendants are legally responsible for the plaintiffs' injuries, but this may be less difficult than proving causation. Indeed, plaintiffs' past successes have convinced many defendants that if plaintiffs' attorneys can get their liability cases before juries, the plaintiffs will win.
Finally, plaintiffs must demonstrate that their claims have substantial monetary value. This may require repeated jury trials. The potential for punitive damages has a significant influence on the value of mass tort litigation.
The Special Risk Profile of Mass Litigation. At the beginning of mass personal injury litigation, plaintiffs' attorneys and defendants face asymmetric risks. This asymmetry drives the litigation in special ways.
For plaintiffs' attorneys, the cost of losing is determined by how much the firm invests in the litigation. Balanced against these costs may be huge potential recoveries if the firm successfully represents scores, hundreds, or even thousands of claims.
For defendants, the cost of losing early in the litigation is determined not just by the legal costs and the compensation paid, but also by the increase in value of many other pending claims and by the fact that each plaintiff verdict will encourage new case filings. Thus, even from the beginning, defendants may view the litigation as a "bet the company" proposition and shy away from trials.
If defendants become willing to settle questionable claims in order to reduce their litigation costs, they may motivate plaintiffs' attorneys to dip even deeper into the potential claimant pool and take on more questionable litigation. Thus, huge scale and asymmetric risks can drive mass tort litigation forward, broadening its scope, until it reaches the limits of the available defendant assets or the limits of exposed persons willing to sue.
Future Injuries and Future Plaintiffs. Asbestos worker injury litigation offers the most vivid example of the future injury problem. Statutes of limitation typically require that individuals make legal claims within a few years of when they know, or should have known, that they were injured as a result of product use or exposure. Since clinical evidence of asbestos-related injury--for example, pleural conditions--may appear well before an individual suffers serious impairment, many of those filing claims will have little or no current impairment. Such claims have less value because damages are based substantially on estimates of future medical expenses and work loss or on present non-monetary damages related to the risk of serious future illness. Thus asbestos plaintiffs with pleural conditions are faced with a dilemma. Statutes of limitations require them to file before they are seriously injured. But if they file early, their settlements will be small, quite inadequate to cover their losses should they develop asbestos-related cancer, as some will.
Asbestos litigation presents a second "futures" problem: From a large pool of people who have been exposed to the toxic product, many who have not yet asserted legal claims will, in the future, have injuries and file claims. This creates the risk that compensation will be available to those who come forward early--even those with little or no current impairment--while those with serious impairments who come forward later may find no funds left to compensate for their injuries.
This "futures" problem is addressed in bankruptcies and global settlement class actions that provide a fund to pay not only all currently pending claims but all future claims as well. However, there is always great uncertainty about how many individuals will ultimately suffer disease and make claims, the timing of those claims, and the costs of litigating them. Courts must decide if projections of these future claims and costs are sufficiently certain to define the size of a fund that can fairly pay all claims and to restrict present and future claimants to having recourse against the fund rather than pursuing their claims through individual litigation.
Conflicts of Interest. In the paradigmatic personal injury suit, there are two parties with opposing interests, each with an attorney whose interests are aligned with theirs, and a disinterested, relatively passive judge. Mass personal injury litigation breaks this paradigmatic mold in all respects.
Initially, plaintiffs have strong common interests--one's victory enhances the value of all their interdependent claims. But as defendants' assets or courts' trial time become limited, plaintiffs' interests may conflict. Plaintiffs have varying degrees of injury, claims of varying strength, and different needs for short-term or long-term compensation. Some are best served by immediate compensation that can deplete limited defendant assets; others, whose injuries might become more serious or who will suffer future injuries, are best served by delaying settlement and preserving defendant assets.
Defendants' interests may also conflict. Defendants with a modest market share and files that hold little incriminating evidence may best be served by striking agreements with plaintiffs that offer modest, certain payments with little scrutiny of claims and minimal attorney investment. Defendants who face greater liability exposure may believe they face financial ruin if they adopt such a conciliatory stance early in the litigation process. And the modest payments by marginal defendants may worsen the plight of central defendants by financing plaintiffs' litigation against them.
Even the judges in mass tort litigation may eschew their paradigmatic role: The pressures of mass torts cause some to avoid the litigation while others become caught up in the challenge of settling "mega-cases." And the courts themselves have a stake in resolving these burdensome claims.
The Aggregation Dilemma. Court efforts to use aggregation for resolving mass torts have foundered on the factual realities of the cases, the peculiar incentives created by the special risk profile of mass litigation, the problems posed by future claimants, and the conflicts of interest among parties and attorneys.
For defendants, aggregating cases and arriving at a global resolution of mass litigation offers a means of capping their exposure. However, when mass torts involve multiple defendants with different degrees of exposure, defendants may not be able to agree on a favorable global solution.
Plaintiffs' attorneys may also have mixed interests in aggregation and global resolution. Some attorneys believe that it is in their and their clients' interests to pursue individual cases to trial to demonstrate the value of their caseload, then negotiate settlements for their remaining cases. Aggregation will be more appealing to attorneys with larger numbers of less valuable cases, who can use aggregation to resolve claims cheaply without having their worth tested. Aggregation is also attractive to other plaintiffs' lawyers, who maximize settlements by greatly increasing defendants' stakes in large, aggregated trials.
Global resolution requires courts and parties to estimate the value of claims that are pending but have not been tried or even completed discovery. However, there may be little agreement about what particular types of cases are "worth" or about the number and value of future claims.
Because global resolutions are so hard to achieve, courts and parties often attempt to devise partial resolutions of mass tort litigation--for example, securing payments for cases brought against some defendants or filed in a particular jurisdiction. Such partial resolutions may lead to inequities, diverting all available money to well-placed plaintiffs, concentrating liabilities on one or a few defendants, and consuming limited assets that will be needed for other present and future claimants.
PROPOSALS FOR CHANGE
Practitioners who conclude that the civil justice system is not well suited for mass personal injury litigation have made many innovative suggestions for improving the process. Proposals include adaptations of current rules (e.g., consolidation), revisions in current rules (multidistricting, class actions), and new fora and compensation mechanisms (special courts, claims resolutions facilities). Most of these proposals focus on procedure rather than on substantive doctrine, and most are aimed at increasing judges' ability to achieve global resolutions of mass tort litigation. None deals directly with the factual and legal complexity of the cases and addresses the conflicts of interest inherent in the litigation or the problems related to future plaintiffs. Perhaps most important, the proposals ignore the peculiar risk profile that drives mass tort litigation. In an effort to reduce transaction costs and expedite settlement, they aim to rationalize what courts are already doing while failing to confront the difficult ethical and equity issues now inextricably intertwined with mass personal injury litigation.
If a mass tort litigation is resolved by aggregation and creation of a compensation fund, that fund can be paid out and the remaining litigation resolved through a claims facility. Examples include the Manville Personal Injury Settlement Trust and the Dalkon Shield Claimants' Trust Facility, both established as a result of Chapter 11 bankruptcy proceedings. The advantages and shortcom-ings of such facilities illustrate how the special character of mass tort litigation interacts with reform proposals.
Claims facilities typically offer a combination of administrative compensation schedules, alternative dispute resolution and, in some instances, jury trials, with procedures tailored to meet the requirements of plaintiffs' attorneys and defendants in particular cases. Claims facilities have clear advantages. Because they are sui generis, they necessitate negotiating agreements only within the narrow confines of a specific litigation. But claims facilities are no panacea.
- Typically, they emerge late in a litigation, often after the defendants have
entered bankruptcy proceedings, when funds to compensate plaintiffs may be
- Often they offer less compensation to individuals with pending claims than
the compensation received by claimants who were successful in prior litigation.
- They may pay compensation without regard to the validity of the underlying
- They eliminate punitive damages, which some argue is inappropriate.
- Their reliance on administrative procedures denies many, if not all, injured
individuals an opportunity to have their cases heard and to bring culpable
defendants to account in a public forum.
- Over time, their administrators and directors may become more concerned with
preserving the claims facilities' assets than with providing compensation.
RAND research briefs summarize research that has been more fully documented elsewhere. This research brief describes work done in the Institute for Civil Justice and published in the Brooklyn Law Review, Vol. 59, No. 3, Fall 1993; also available as RAND RP-311. RAND is a nonprofit institution that helps improve public policy through research and analysis. RAND's publications do not necessarily reflect the opinions or policies of its research sponsors.
The mission of the Institute for Civil Justice is to help make the civil justice system more efficient and more equitable by supplying policymakers and the public with the results of objective, empirically based, analytic research. ICJ research is supported by pooled grants from corporations, trade and professional associations, and individuals; by government grants and contracts; and by private foundations. The Institute disseminates its work widely to the legal, business, and research communities, and to the general public.
For additional information about the Institute for Civil Justice, call Deborah Hensler at (310) 393-0411, x7803, or write to: 1700 Main St., P.O. Box 2138, Santa Monica, CA 90407-2138. Internet: Deborah_Hensler@rand.org.
A profile of the ICJ, abstracts of its publications, and ordering information can also be found on RAND's home page on the World Wide Web at / and on RAND's gopher server at info.rand.org.
RAND's Home Page