The Law Firm of Piacentile, Stefanowski & Malherbe LLP

Combining Multidistrict Litigation and Class Action Procedures

Although class actions have been around longer than the Multidistrict Litigation procedures (“MDL”) 28 U.S.C. § 1407 created, MDL procedures currently are much more prevalent than class actions. Many of the tools developed within class actions, however, can and are being used to help resolve MDL cases. Most importantly, the settlement class, in which the class is certified solely to approve a group settlement, has undergone a revival despite the apparent repudiation of such classes a few decades ago.

When mass tort cases first began to appear, the most obvious way to handle these large-scale cases in a large-scale manner was with class actions. In particular, the most significant group of mass tort cases in the last several decades undoubtedly were the hundreds of thousands of asbestos cases which began to be filed in the 1980. In the late 1990s, the United States Supreme Court’s decisions in Amchem Products, Inc. v. Windsor and Ortiz v. Fibreboard Corp. rejected attempts to certify these classes of large groups of victims of asbestos-related injuries and diseases. The Amchem decision held that a proposed class of present and future asbestos claimants could not be certified, because the claims were too disparate and "sprawling" to be joined in a single representative class action. Two years later, the Ortiz decision reaffirmed that reasoning.

Quite a few mass tort class actions were then filed in the state courts using their more lenient class procedures. It was impossible for defendants to remove these cases to federal court, as they did not rely on federal law but state tort law, and there was no basis for diverse jurisdiction. As long as one plaintiff in a putative class and one defendant are citizens of the same state, the case could not be removed to federal court. This changed, however, with the enactment of the Class Action Fairness Act of 2005 (“CAFA”), which grants federal jurisdiction in any class action where at least one defendant and one member of the plaintiff class are from different states, as long as the potential total damages for all the class members are at least $5 million. Significantly, the class need not be certified before the federal court takes jurisdiction over the action. That means a state complaint that is filed claiming to be a class action can be removed to federal court and then the federal court decides, under federal class action procedure, whether the class should be certified. Moreover, even if the state court certified the class, the federal court, applying federal procedural law, can decertify that class. The overall initial effect of the Act on mass torts was to make it harder to use class actions to resolve them, and to increase the importance of MDLs. As it turned out, though, various class action procedures are becoming increasingly important within those MDLs.

MDLs can contain within the overall aggregated set of proceedings several constituent class actions, taking advantage of the provision in the class action rules for a limited class action where “. . . an action may be brought or maintained as a class action with respect to particular issues.” Court has begun to use this provision of the class action rule to allow classes to be formed to resolve some issues common to all the MDL claimants.

One recent and closely watched decision allowing limited classes in a mass tort case was the decision in Martin v. Behr Dayton Thermal Products, LLC. a mass tort of the sort that arises from a localized but widespread catastrophe. The case originally was filed as an Ohio state class action but removed to federal court under CAFA.. The plaintiffs alleged that 540 properties were contaminated with carcinogenic compounds that the defendants had released into the groundwater. There were highly individualized issues in the dispute about exposure to the compounds. However, the trial court identified seven issues about the defendants’ knowledge and actions in creating the contamination, and the locations of the contaminated groundwater that could be certified as class issues, and the Court of Appeals later agreed. Once each of these issues is resolved in the class actions, that result would be binding on all members of the class. That, however, would still leave individual issues to be resolved on a case-by-case basis,

Within the umbrella of an MDL plaintiffs’ counsel often seek to certify much smaller classes. Rather than one large nationwide class, for example, counsel can seek to certify different classes for plaintiffs from particular states, and thus avoid the problem that a nationwide class might be faced with different state legal standards to evaluate the alleged tortious actions of the defendants. Also, when a mass tort allegedly causes different sorts of harm, the plaintiffs can seek to certify classes for each of the different alleged harms. In effect, rather than attempting one big class for all victims of the mass tort, these victims are all grouped together in an MDL and then subdivided into particular classes.

Now that mass torts are primarily encompassed within MDLs, the single most important use of class actions in handling mass torts is one very specific sort of limited issue class, “a class . . . certified for purposes of settlement.”. Such a class only can be proposed only after the mass tort litigation has proceeded to a point where enough information is available to settle the case. At that point, it often has become clear that the defendants only have a certain amount of money available to pay plaintiffs, and that an uncoordinated first-come, first-served resolution of the cases will deprive some of the less fortunate plaintiffs of compensation. In part because of the coordinated proceedings of the MDL, there is an identifiable set of lead counsel for plaintiffs and defendants who can begin to negotiate a global settlement, one that will compensate all the plaintiffs and which will end the matter for defendants as well. At that point, the plaintiff's lead counsel, the defense counsel, or both, often will move to certify a class of all plaintiffs in the MDL, or all the plaintiffs in some identifiable segment of the MDL, in order to impose that global settlement on all of them. If the class is approved, the settlement already negotiated by the lead counsel would then bind every member of the class.