ALI-ABA Course of Study Civil Practice and Litigation Techniques in Federal and State Courts. February 18-20, 2004 Scottsdale, Arizona

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1 ALI-ABA Course of Study Civil Practice and Litigation Techniques in Federal and State Courts February 18-20, 2004 Scottsdale, Arizona New Developments in Mass Torts and Class Actions: Issues Certification; Mass Torts Top Ten of 2003; Rule 23 s New Provision and Action Trial Plans; and the FJC New Plain Language Class Notice By Elizabeth Cabraser Lieff, Cabraser, Heimann & Bernstein, LLP San Francisco, California

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3 NEW DEVELOPMENTS IN MASS TORTS AND CLASS ACTIONS: ISSUES CERTIFICATION THE MASS TORTS TOP TEN OF 2003; RULE 23 s NEW PROVISION AND ACTION TRIAL PLANS; AND THE FJC NEW PLAIN LANGUAGE CLASS NOTICE by Elizabeth Cabraser 1 I. ISSUES CERTIFICATION AND CLASS ACTION TRIAL PLANS The confluence of Rules 42(b) and 23(c)(4)(A) of the Federal Rules of Civil Procedure has catalyzed the development of innovative multi-phase trial structures in class actions, particularly in those characterized as "mass tort" actions. Rule 42(b) provides for the "separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims... or issues" in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy... ". Rule 23(c)(4)(A) provides that "an action may be brought or maintained as a class action with respect to particular issues... ". Rule 23(c)(4)(B) enables a class to "be divided into subclasses and each subclass treated as a class... ". This has become known as the issues class. The new amendment to Rule 23(c)(1) acknowledges the increasing attention to Rule 23(c)(4) "issues" classes by newly providing that "an order certifying a class action must define the class and the class claims, issues, or defenses..." (Proposed) Rule 23(1)(B) 1 Elizabeth Cabraser is a partner in Lieff, Cabraser, Heimann & Bernstein, LLP, of San Francisco California. She served as one of plaintiffs' class counsel in the Exxon Valdez, Naef v. Masonite, Copley, Avery, Telectronics and Spitzfaden actions mentioned in this article. This article updates and expands upon an earlier piece, "Beyond Bifurcation", that appeared in the Spring 1997 ABA Section of Litigation Class Actions & Derivative Suits Newsletter. Copies of the unpublished orders and decisions described in the article may be obtained by request to the author at ecabraser@lchb.com

4 As used in this article, the term "mass tort" refers to an action brought to assert primarily state law claims (e.g. fraud, negligence, strict product liability, breach of warranty) arising from a single incident, disaster, long-term toxic exposure, continuous course of allegedly tortious conduct, or the design, marketing and sale of an allegedly defective product. Such claims have, in recent years, found their way into the federal courts, and thereafter into a single coordinating court, via removal, venue transfer, and multi-district transfer and coordination pursuant to 28 U.S.C Many of the cases described in this article are federal multi-district ("MDL") proceedings. Even more recently, as the Supreme Court's Lexecon decision 2 curtailed the MDL transferee courts' ability to conduct trials of transferred cases, and as class certification has been denied or reversed in federal mass tort litigation, the state courts also have been confronted with the need or opportunity to aggregate, certify, and adjudicate mass tort claims on a statewide, regional, or nationwide class basis. The broad and flexible language of Rule 42(b) contains the caveat that orders for the separate trial of claims or issues must always preserve "inviolate the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States." While several recent federal appellate decisions have reversed district courts' Rule 23(c)(4)(A) certification of common claims or issues on grounds, inter alia, that the trials potentially contemplated thereunder could violate the Seventh Amendment, other decisions, including the two most recent decisions on the issue, have rejected the argument that multi-phase trials necessarily violate the Seventh Amendment. Compare In re Rhone-Poulenc, 51 F.3d 1293 (7th Cir.), cert. denied, 516 U.S. 867 (1995) and Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996) (decertifying nationwide tort classes) with Valentino v. Carter-Wallace, Inc., 97 2 Milberg Weiss Bershad v. Lexecon, Inc., 523 U.S. 26 (1998)

5 F.3d 1227, 1232 ("we... do not accept [defendant's] invitation in this case to adopt the principles of Rhone-Poulenc as the law of this circuit); and Hilao v. Estate of Marcos, 103 F.3d 767 (9th Cir. 1996) (district court's trifurcated trial structure culminating in statistically extrapolated damages award to class members affirmed as constitutional). As of this writing, trial courts in most federal circuits, and in most states, are free to devise multi-phase trial structures to prioritize the adjudication of common questions of law and fact in mass tort class actions. This article discusses early examples of multi-phase trial plans, and the ways in which the 1980's decisions, primarily in the asbestos litigation context, have inspired and shaped contemporary class action trial structures. To date, most class actions have been settled rather than tried to completion. Thus, examples of multi-phase trial structures that have been fully implemented, via jury trial, are few. While scarce, these cases, notably the Exxon Valdez litigation, the Copley "Albuterol" litigation, and the Marcos litigation in the federal courts; and the Masonite (nationwide), Avery (nationwide) and Spitzfaden (statewide) cases in the state courts, are contemporary examples of the state of the art in multi-phase class action proceedings. A. The Forerunners: Jenkins and School Asbestos Two appellate decisions endorsing the classwide trial of common issues in mass tort litigation have had a profound and continuing influence on the trial planning activities and class certification decisions of federal and state courts. Both of these, Jenkins v. Raymark Industries, Inc., 109 F.R.D. 269 (Ed. Text 1985), affirmed, 782 F.2d 468, rehearing denied, 785 F.2d 1034 (5th Cir. 1986) and In re School Asbestos Litigation, 789 F.2d 996 (3d Cir. 1986) cert. denied, 479 US 852 (1986) arose from asbestos litigation. The Jenkins court certified a district-wide class of several thousand individual asbestos personal injury and wrongful death claims. The School Asbestos litigation involved a nationwide class of schools and educational - 3 -