Complex Litigation Master Outline – Prof. Robert Bone, Complex Lit, Fall 2015
Principles for aggregation: Why do we aggregate?
Scenario 1: small individual damages claims
23(b)(3) actions
Scenario 2: civil rights injunctive claims
23(b)(2) & (b)(1) actions
Scenario 3: large individual damages claims
23(b)(3) actions; sometimes (b)(1)
Reasons?
1. Private enforcement of substantive law
a. Deterrence
b. Compensation
This is usually accompanied by some form of public enforcement (e.g. Deceptive Trade Practices Act in Texas)
1. Remedial efficacy (i.e. optimal injunction targeting harmful conduct)
2. Preclusion
3. Sometimes judicial economy
1. Judicial economy
2. Helps equalize litigating power
a. Reduces asymmetry of information
Potential problems?
1. Agency problems (i.e. adequacy of representation; class counsel)
2. Judicial management problems
3. Over-enforcement? (i.e. allows otherwise small, insignificant claims w/o much value to be litigated)
4. Day in court/DP concerns (i.e. small claims won’t be brought unless in class form—agency probs also implicated here)
5. Frivolous suits
1. Agency problems
2. Day in court/DP concerns
1. Agency problems
2. Intra-class conflicts
3. Judicial management problems
4. Day in court/DP concerns
5. Frivolous suits
NOTE: large claims COULD be brought on their own, but there are policy reasons to aggregate. Therefore, something different must be animating aggregation than what’s seen in Scenario 1
1. Since, for each scenario, there are individual claims, must ask yourself…
a. Why should we aggregate?
b. What are the costs/benefits of aggregation?
c. How do we aggregate?
d. How do we then manage the aggregation?
e. Once certified, is the Due Process Clause (5th or 14th) satisfied?
THREE BRIEF ILLUSTRATIONS:
SCENARIO 1: price fixing conspiracy btwn airlines (airlines agree not to compete on the price of service out of one another’s hubs)
· What’s the harm? à a higher than competitive price with a price-fixing arrangement
· Why aggregate?
o All small claims are likely Negative Expected Value (Negative EV) claims—they won’t be brought because the cost of litigation far outweighs the potential award
o If individual suits are too costly to bring, then there’s no way to privately enforce antitrust laws without some form of aggregation
§ We want to enforceà enforcement = deterrence
· How does it help?
o Turns suits into Positive EV suits à lawyers will want to take the case
· Why do we want a private remedy in addition to a public one (i.e. if Feds or States can punish, then why do private citizens need to)?
o Incentives btwn DOJ and private parties may be different (RB doubts this)
o Level of enforcement may change depending on politics of admin
o Budget constraints—may be cheaper to privately enforce
· What downsides?
o Too much enforcement may cause risk-averse investments and dealings, potentially raising the cost of doing business—may raise prices at register
SCENARIO 2: Bush v. Gore fallout & poll tax claim ($30 processing fee to vote to pay for new voting machines in FL)
· Likely a civil rights claim (poll tax is the harm)
· Why aggregate?
o Relief won’t be ltd to the party to the suit (eventually this would happen w/o aggregation, but aggregation speeds up the process)
o Multiple ∆s: ensure that ALL counties abolish the $30 fee
o Since status (“voter”) is at issue—a civil rights claim—aggregation ensures that it’s the STATUS that gets the remedy, not the individual
· Why wouldn’t other πs be precluded if an individual lost suit against FL?
o Taylor: everyone gets their day in court (i.e. can’t use preclusion offensively in the absence of “virtual representation” for π2)
SCENARIO 3: Beta Corporation and cerebral hemorrhages stemming from Beta’s mass-mkt drug
· What’s the harm? à injury stemming from the use of the drug
· Why aggregate?
o Equalize power in litigation—large, multinational corporate ∆ would seriously outweigh individual π
§ Reduces asymmetry of information (discovery)
o Judicial economy—if 100s of suits are being brought, aggregation can dispose of all claims at once
· How does it help?
o Mostly in equalizing litigation power—claims might be large enough to bring by themselves, but this ensures that when they are brought, the ∆’s negotiation leverage is proportionally reduced
· What downsides?
o Agency problems (as with any aggregate litigation)
o Potential increased cost to manufacture and market the drug—higher sticker prices?
o Day in court problems (again, as with any aggregate litigation)
GENERAL PRINCIPLES TO KEEP IN MIND
· POLICY: Read R23 against backdrop of policy
o Judicial economy (litigation cost savings)
o Global efficiency (different from judicial economy)
o Private enforcement
o Agency/Day-in-court concerns
§ Due Process Clause animates this
o Incentivizing participation (both πs and counsel)
§ E.g. aggregation incentivizes attys to take claims they otherwise wouldn’t à can aggregate a bunch of small claims to overcome negative expected value of individual claim
· RULE(S): Before reaching R23 inquiry, court must determin
. if judgment in favor of ∆, the claim is extinguished and judgment bars subsequent action on that claim
7. Issue preclusion (collateral estoppel) – “Been there done that.”: about preventing relitigating issues decided in suit #1; almost always involves factual issues or mixed issues of law and fact, but not purely legal issues
a. Only if…
i. (1) the identical issue has been actually litigated and actually determined; and
ii. (2) the issue must be essential to the judgment
1. NOTE: it’s often difficult to determine whether jury actually determined a particular issue à general verdict especially
a. E.g. in pharm litigation where π is paralyzed, verdict that says “We find for ∆” presents no way to determine whether jury decided case based on duty of care owed or causation (i.e. drug did cause paralysis) à no way to apply issue preclusion
i. Special verdicts can be easier (e.g. jury says “on causation issue, we find that the drug did cause paralysis)
b. POLICY: much more about judicial economy than anything else
i. Don’t want to litigate the same issue over and over; saves transaction costs, time, etc.
c. Issues MUST have been disposed of in suit #1 (i.e. can’t have 2nd bite at the apple)
d. Need final judgment on the merits USUALLY (not always necessary)
i. If final judgment, issue that arises in suit #2 is not purely legal issue, and easy to tell identically the same was actually litigated and decided, and actually determined in suit #1
8. “Mutuality of estoppel” à issue preclusion long required this
a. notion that A could use IP against B only if B could have used IP against A had the issue come out the other way (“Anything you can do I can do.”)
i. essentially, required a symmetry of preclusion risk
ii. some states still require it; not required at federal level, however
b. POLICY: helps to equalize litigation investment incentives across the party line, which in turn helps to avoid systematically biased outcomes
i. π1 sues ∆ alleging negligence and nonmutual IP applies—if π1 proves neg, then π2-100 can bind ∆ to negligence determination
1. Thus, ∆ has high incentive to invest a lot of resources in first case; π1 only has incentive to invest as much as required to win his case
2. And it follows that nonmutual issue preclusion can favor ∆s more heavily
c. Practical result was to limit IP mostly to ppl who were parties to the 1st suit
i. Enter Parklane Hosiery: issue was “whether a litigant who was not a party to a prior judgment may nevertheless use that judgment “offensively” to prevent a ∆ from relitigating issues resolved in the earlier proceeding.”
