Civil Justice Report
No. 7 April 2003
One Small Step for a County Court . . . One Giant Calamity for the National Legal System
John H. Beisner, Jessica Davidson Miller, and Matthew M. Shors
For centuries, our national litigation system has embraced a bedrock principle: that claims should be pursued and resolved individually, plaintiff-by-plaintiff. In recent years, efforts to aggregate claims have become more frequent. One familiar form of aggregation has provoked a storm of controversy: the class action. Criticisms focus on the many ways class actions may compromise defendants’ and plaintiffs’ due process rights (e.g., by binding a large group of parties to the same result simultaneously, a risky proposition if the facts surrounding each claim are not highly similar). But class actions are not the only aggregation vehicle through which harms may occur. “Mass actions” are proliferating in some states. In that form of litigation, the claims of large numbers of plaintiffs are joined indiscriminately for simultaneous trial under unusually lenient aggregation standards, depriving the defendants (and sometimes the claimants, as well) of basic due process and trial fairness rights.
Mass actions most frequently involve fraud or personal injury claims involving tobacco, asbestos, pharmaceutical products, or insurance company practices. They join hundreds (or even thousands) of plaintiffs (and often multiple defendants) into a single massive proceeding, even though the individual plaintiffs have no obvious connection to each other. In essence, mass actions are clearly an end-run—an effort by the plaintiffs’ lawyers to litigate highly individualized claims in an aggregated, class action style, even though they would not satisfy the prerequisites for class treatment if they were asserted as a class action.
In mass actions, plaintiffs’ counsel often find a local plaintiff, well known to the jury pool, who has suffered a serious injury, and then tack on tens or even hundreds of less compelling cases by plaintiffs who live outside the county or outside the state, who essentially free-ride on the main claim. For example, one plaintiff who suffered cancer might be combined with many others who merely fear they may get cancer. In this way plaintiffs’ counsel can sway a jury to award huge damages to numerous plaintiffs whose claims would seem far less compelling if they were tried individually.
Mass actions also enable plaintiffs’ counsel to overwhelm a jury with evidence in a manner that makes it impossible to reach a fair verdict. For example, when a mass action involves hundreds (or even thousands) of plaintiffs, their counsel are unfairly permitted to piece together evidence from among the various claimants to construct a “perfect plaintiff”—one who, of course, does not exist in the real world — for presentation to the jury. Counsel may pick and choose among the facts presented by the many plaintiffs in attempting to establish all the various elements of the claim and the jury is often left with the indelible impression that the collective evidence counsel offers satisfies each individual plaintiff’s particular burden of proof. For example, if one plaintiff had an allegedly misleading conversation with a defendant’s representative about the potential side-effects of a drug, that conversation will be repeatedly referenced to the jury, even though none of the other 1,000 plaintiffs in the action had such a conversation. As a result, the jury may come away with the patently false impression that all plaintiffs had such conversations and relied on them in electing to use the drug at issue.
These harms are magnified exponentially when a mass action includes claims against several or many defendants. In such cases, it is difficult for any particular defendant to have a fair opportunity to put on its unique defenses at trial: evidence admitted as to one defendant’s knowledge of a defect many years ago will inevitably tar other defendants as well. The jury will also be hopelessly lost in attempting to determine the precise lawfulness of any one particular defendant’s conduct. Mass actions thus often become a “thumbs-up, thumbs-down” vote on corporate America, with the lowest common denominator of conduct often being extrapolated to plaintiffs’ verdicts against all defendants. And, to make matters worse, the host of state laws that need to be applied in the typical consolidated proceeding, should the state court engage in a proper choice-of-law analysis, inevitably confuse and prejudice the jury.
Unlike class actions, mass actions often seek, and sometimes obtain at trial, millions of dollars for each plaintiff. Since these cases are typically brought in counties where seven-figure jury awards are routine, the risk of going to trial can be even greater than in a class action, and the settlement pressure even stronger.
To examine some mass action activity in detail, this study reports on mass action activity in Jefferson County, Mississippi from 1999 through 2001 as compiled by Stateside Associates, a Virginia-based research organization, under the direction of the Center for Legal Policy of the Manhattan Institute. The data reveal several disturbing patterns:
- First, the frequency of filing of mass joinder actions in Jefferson County, Mississippi was vastly disproportionate to the county’s population and the overall volume of the court’s civil docket. (The total number of plaintiffs outnumbered the total number of residents of Jefferson County.)
- Second, the vast majority of these cases had little (if any) relationship to Jefferson County.
- Third, plaintiffs’ counsel consistently included one local defendant to insulate their cases from federal jurisdiction.
- Fourth, the complaints were brought by counsel from all over the country.
- Fifth, plaintiffs’ counsel made little, if any, effort to explain in their complaints exactly what the plaintiffs were alleging or why their claims should be litigated jointly; to the contrary, many of these complaints simply included long lists of plaintiffs with no facts regarding their allegations (and often, no addresses), and thus were clearly intended to intimidate defendants into settlement negotiations.
Mid-year in 2001, Jefferson County’s only civil judge reversed his position of being quite hospitable to nationwide mass actions and announced that he was only going to allow mass actions to proceed in his court with in-county plaintiffs. Since then, the party has reportedly moved elsewhere—to other Mississippi counties such as Holmes, Jones, and Jasper. Other states—particularly West Virginia—are now welcoming mass actions as well.
The Mississippi experience makes clear that if an isolated state court signals a willingness to cut due process and fundamental fairness corners in order to accommodate aggregated claims litigation, enterprising plaintiffs’ counsel will promptly herd claims to that court in droves from distant locations. In the end, however, the results are catastrophic. Defendants are victimized. The courts and their constituencies suffer, because the courts are largely diverted from fulfilling their primary responsibility for resolving local disputes. Often, claimants are not treated fairly, with some being undercompensated to benefit others who are overcompensated. Only the plaintiffs’ lawyers are assured of a happy result.
About the Authors
John H. Beisner, head of O’Melveny & Myers LLP’s 120-attorney Class Action Practice Group, specializes in the defense of purported class actions, mass tort matters, and other complex litigation in both federal and state courts. Over the past 20 years, he has been involved in defending numerous major U.S. and foreign corporations in upward of 450 purported class actions filed in the federal and state courts of 37 states at both the trial court and appellate level. Those class actions have concerned a wide variety of subjects, including antitrust/unfair competition, consumer fraud, RICO, ERISA, employment/discrimination, environmental, product-related, and securities class actions. He has handled numerous matters before the Judicial Panel on Multidistrict Litigation and has also been responsible for proceedings before various federal and state administrative agencies, particularly the National Highway Traffic Administration and the Consumer Product Safety Commission.
John is a frequent writer and lecturer on class action and complex litigation issues and has been an active participant in litigation reform initiatives before Congress, state legislatures, and judicial committees. In recent years, he has frequently testified on class action and claims aggregation issues before the U.S. Senate and House Judiciary Committees and before state legislative committees. His professional activities include membership in the American Law Institute, the District of Columbia Bar, the State Bar of California, and the American Bar Association.
Jessica Davidson Miller joined O’Melveny & Myers in 1996 and is involved in the firm's litigation and regulatory practices, with a focus on strategic counseling and government relations. Prior to joining O’Melveny, Jessica worked for U.S. Senators Bob Graham and Frank Lautenberg. From 1999 to 2000, she worked at the Federal Trade Commission as a staff attorney in the Office of General Counsel, focusing on appellate litigation.
Matthew M. Shors is a member of the Class Action and Strategic Counseling Practice Groups at O’Melveny & Myers. At the appellate level, Matt has drafted numerous briefs before the Supreme Court, including amicus briefs and petitions for certiorari filed on behalf of leading business corporations, several Members of Congress, and national nonprofit organizations. At the trial level, Matt has successfully second-chaired a jury trial in federal court, and he has successfully argued numerous dispositive and other motions in various courts.
This Study was commissioned by the Center for Legal Policy of the Manhattan Institute under the leadership of Judyth Pendell. The data collection was conducted by Stateside Associates, Arlington, Virginia, under the leadership of Samuel B. Witt III, Senior Vice President and General Counsel. J. Christian Adams of the Adams law firm, Fairfax, Virginia, provided project management. The authors wish to thank Terrell P. McSweeny, Georgetown University Law Center, ‘05, for her invaluable research assistance.
In two previously published articles, we documented how some county courts elected by (and accountable only to) several thousand residents of their home communities have decided to ignore basic, long-standing principles regarding the class action device to achieve massive aggregations of claims arising nationwide, all with profound—and profoundly negative—effects on our national legal system. Based in part on fresh field research, we conclude in this article that another claims aggregation device—the “mass action”—is being used by some local courts to declare themselves the nationwide arbiters of critical legal issues, all pointedly to the exclusion of federal and other state courts with closer, more legitimate interests in those issues.
For centuries, our national litigation system has embraced a bedrock principle: that claims should usually be adjudicated separately, on a claimant-by-claimant basis. In recent years, however, efforts to aggregate claims—to assert collections of claims on behalf of multiple individuals and seek to place those claims before a tribunal for simultaneous resolution—have become more frequent. One form of aggregated claims litigation—the class action device—has received considerable attention from legal researchers and commentators. Through that device, a named plaintiff may, in a representative capacity, seek to litigate his/her own claims plus the claims of hundreds or thousands of other similarly situated unnamed plaintiffs. Normally, those unnamed plaintiffs have not given their express consent to being included in the action; unless they have taken affirmative steps to “opt out” of the litigation, their claims are included.
Much of the recent writing on class actions reflects concern that, when used incautiously, class actions threaten the due process rights of both claimants and defendants because they require courts to attempt to bind a large group of parties to the same result simultaneously, a risky proposition if the facts surrounding each claim are not highly similar. Other observers have criticized the fact that certain state courts have become class action “magnets,” attracting to their dockets numerous cases that do not warrant class treatment, including multi-state class actions with little or no connection to the forum. It must be stressed that this magnet effect does not occur because the class action rules of those courts are outside the mainstream; indeed, the class action rules of our federal and state courts are relatively uniform. Rather, the magnet effect apparently occurs because attorneys specializing in class actions quickly discern that a particular venue—often a particular judge—has developed a reputation for less than rigorous application of the due process and fairness protections that are the foundation of all class action rules.
Further, recent writings express concerns that, in aggregating claims through the class action device, plaintiffs can create exposure risks for defendants that are so substantial that they necessitate settlements, even where the claimants have relatively weak underlying substantive legal theories. These risks are magnified when a single case seeks to adjudicate the claims of class members throughout the nation. Moreover, in approving nationwide class actions, these magnet courts sometimes, in an effort to make mass actions seem more manageable, uncritically apply forum law to dozens, hundreds, or even thousands of claims with no connection to the state. In the process, they effectively set nationwide policy, often undermining the reasoned policy choices made by other states.
These harms are quite real. But class actions are not the only vehicle today through which such harms occur. Another device—the “mass action”—resembles a class action in that it is a lawsuit in which counsel seeks to adjudicate substantial numbers of claims simultaneously. Mass actions, however, effectively are “opt in” class actions—they typically include only those claimants who have affirmatively consented to the inclusion of their claims and who are named as plaintiffs in the action. They often involve claims that courts have previously held are not susceptible to class treatment, such as personal injury product liability claims or fraud claims. Mass actions typically involve one of three devices: joinder, consolidation, or special state court mass litigation rules.
Comparatively less attention has been devoted to mass actions, primarily because the concept is relatively new. But as federal and state courts have, in recent years, become more attentive to the requirements for pursuing class actions, plaintiffs’ counsel have increasingly sought to structure their cases as mass actions (almost invariably in state courts) in order to avoid the procedural prerequisites of the class action rules. Plaintiffs’ counsel invoke the comparatively less rigorous procedural requirements of joinder, consolidation, and special litigation rules to bring hundreds or even thousands of claims together that plainly would not qualify for class treatment. To some extent, counsels’ efforts have been successful because of the willingness of some state courts to apply extremely lenient aggregation standards—despite the fact that, as a case proceeds through these vehicles, it sometimes becomes very difficult (if not impossible) to distinguish it in operation from a traditional class action lawsuit. As these mass actions increasingly resemble the classic class action, it is important to consider the ways in which they threaten the due process rights of both defendants and effectively-absent claimants, as well as how they threaten critical principles of interstate sovereignty and comity by allowing certain magnet courts—and particular local judges—to invent nationwide legislative “solutions” that no legislature, state or federal, has enacted.
Unregulated mass actions pose a unique threat to our legal system, and the “solutions” imposed by magnet courts are difficult to override. If a small number of judges are not reliably enforcing state civil procedure rules, or are making novel and dubious interpretations thereof, it is difficult for state policy-makers to respond without upsetting the balanced operation of the state’s civil procedural regime. And by the time that a particular magnet court has become sufficiently notorious that corrective action is taken by appropriate state officials (e.g., state appellate courts or state legislatures), that court often will have already exacted an enormous toll on interstate commerce, most often by forcing settlements that benefit primarily the plaintiffs’ counsel and ignore the legitimate interests of both the claimants and the defendants. Further, the corrective actions are frequently incomplete. And even if state reforms are ultimately successful, plaintiffs’ counsel are likely to respond by moving their cases to other nascent magnet courts (either elsewhere in the state or outside the state). In short, because state solutions are delayed reactions to a problem that has every incentive to migrate, mass actions (as well as other similar efforts by plaintiffs’ counsel to dodge commonsense, due process-based procedural rules) pose significant challenges for conscientious policymakers.
The evolution of the magnet court phenomenon is evident in several state courts around the nation. This article, in part, examines field data summarizing the experience of Jefferson County, Mississippi, as an illustration of the challenges posed by mass actions.
I. THE CONTOURS AND DANGERS OF THE MASS ACTION PHENOMENON
As we use the term, “mass actions” are cases brought on behalf of large numbers of unrelated plaintiffs against one or more defendants. These cases typically involve personal injury or fraud claims against tobacco, asbestos, pharmaceutical or insurance companies, and they frequently seek to combine hundreds (or even thousands) of plaintiffs and defendants into a single massive proceeding, even though the individual plaintiffs have no obvious connection to each other. In essence, mass actions are an effort by plaintiffs’ lawyers to achieve the tactical benefits of class actions without having to satisfy the prerequisites for litigating a class action. Available data suggest that in recent years, mass actions have been brought most frequently in Mississippi, but their incidence is growing in other states (e.g., West Virginia), where certain courts have demonstrated a willingness to apply loose joinder, consolidation, and special litigation rule standards to such cases.
A. Available Mass Action Devices
The first vehicle through which plaintiffs seek to litigate mass actions is the joinder rule. At common law, joinder was subject to rigorous limitations in order to protect against the potential that combined claims would result in arbitrary or inaccurate adjudication. Early in the Twentieth Century, joinder was allowed only where common issues relating to the same transaction (or series of transactions) existed. The federal joinder rule, which has been adopted by most states, now provides:
All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action. All persons . . . may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action.
Fed. R. Civ. P. 20(a) (emphasis added). Rule 20(a) thus imposes “two specific requirements to joinder of parties.” The first requirement is that a “right to relief must be asserted by, or against, each plaintiff or defendant relating to or arising out of [the] same transaction or occurrence.” The second requirement is that “some question of law or fact common to all parties must arise in the action.” The overall goal of these twin requirements is to provide “fundamental fairness to all parties.”
The typical mass action meets neither of these established requirements. First, these cases do not arise out of the same transaction or occurrence. To the contrary, they often involve hundreds of people who each purchased products or services (such as cigarettes, pharmaceuticals, or insurance policies) or were exposed to allegedly defective products (such as those containing asbestos) in separate transactions, often involving different defendants, and who each used those products or were affected by the alleged exposure in separate occurrences.
Second, these cases do not involve questions of fact or law common to all parties, because the plaintiffs’ claims are often highly individualized. This is true for two reasons: (a) personal injury and fraud claims, which account for the vast majority of mass actions, almost always require inquiries into each plaintiff’s circumstances (e.g., how long a plaintiff took the drug, smoked the cigarettes, or was exposed to the product at issue; what symptoms he or she allegedly manifested; whether those symptoms were indeed caused by the drugs or asbestos at issue and, if so, whose product caused those symptoms; whether a plaintiff relied on the allegedly fraudulent misrepresentations in a case); and (b) these cases almost always involve plaintiffs from a variety of states (so that different plaintiffs’ claims must be decided under different state laws).
Indeed, it is for these reasons that most courts would refuse to hear these cases if they were asserted as class actions, since class action rules generally require that common issues predominate over individualized issues. As the U.S. Supreme Court explained in an asbestos case, the claimants had been “exposed to different asbestos-containing products, for different amounts of time, in different ways, and over different periods. Some suffer no physical injury or have only asymptomatic pleural changes, while others suffer from lung cancer, disabling asbestosis or from mesothelioma.” Similarly, it is also for this reason that, until recently, mass actions were not filed under the joinder rule at all: that rule was not designed for these kinds of cases. The federal class action rule itself requires that claims be so numerous that “joinder is impracticable,” thus suggesting that the drafters of the federal rules contemplated that class actions—not mass actions pursued through the joinder rule—would be used aggregate such myriad claims.
The second vehicle through which plaintiffs seek to litigate mass actions is state consolidation rules, many of which are patterned after (or identical to) the federal consolidation rule: Fed. R. Civ. P. 42. The rule provides that:
(a) Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all of the matters in issue in the actions; it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.
(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues.
Thus, under Rule 42(a), consolidated actions must, at a minimum, possess a common question of law or fact. The fact that this requirement is fairly easy to meet itself has historically posed no due process concerns, for two reasons.
First, consolidation has traditionally been invoked simply as a device of convenience, and the Supreme Court has held that it does not “merge the suits into a single cause, or change the rights of the parties.” As we explain below, only the more recently emerging mass actions seek to actually merge the various constituent claims, a tactic that is in conflict with traditional practice.
Second, the key procedural protection in the rule is in Rule 42(b), which prohibits a court from consolidating cases for trial when such consolidation would unduly prejudice a party’s right to present its case or defense. Hence, when consolidation is ordered merely to streamline discovery, such as under the federal Multidistrict Litigation statute for cases pending in federal court, it poses no concern over the due process rights of the litigations. When consolidation is ordered for all purposes, however, including for trial, it may indeed pose that very concern. Consolidations for all purposes may not “deny a party his due process right to prosecute his own separate and distant claims or defenses without having them so merged into the claims or defenses of others that irreparable injury will result.”
As a result of these concerns, federal courts have applied stricter, more consistent standards to joinder and consolidation and have tended to reject their application to all but a handful of personal injury actions. For example, the U.S. Courts of Appeals for the Second and Fifth Circuits have required a judicial determination that a proposed aggregation does not combine cases so factually dissimilar that a joint trial would improperly interfere with a party’s right to litigate its own claims or defenses. Moreover, these courts have recognized that imposing limits on aggregation is not simply a matter of civil procedure, but also an issue of due process and fundamental fairness. Indeed, in invalidating a proposed, consolidated asbestos trial involving 48 cases, the Second Circuit held that “the benefits of efficiency can never be purchased at the cost of fairness.” In another case, the same court invalidated a consolidation order, finding that it would “deny a party his due process right to prosecute his own separate and distinct claims or defenses without having them so merged into the claims or defenses of others that irreparable injury will result.” The Fifth Circuit has applied similar rules, precluding consolidation where it would deprive litigants of their due process right to a “fair opportunity to have [their cases] determined from the evidence in reasonable proceedings.” All of these decisions follow the Supreme Court’s dictate that “consolidation is permitted as a matter of convenience and economy in administration, but does not . . . change the rights of the parties.”
The third vehicle through which plaintiffs seek mass action treatment is special state court mass litigation rules. This vehicle is different than other mass action vehicles in one fundamental respect. Joinder and consolidation have existed for centuries, and it is only their recent unprecedented application that poses due process concerns. In contrast, special mass litigation rules have been adopted only recently, sometimes in response to a perception that the old aggregation devices are insufficient to facilitate the resolution of large numbers of cases clogging a particular jurisdiction’s docket.
The most prominent example of this vehicle can be found in West Virginia, where as applied, a special mass litigation rule permits the mass aggregation of particular categories of cases. That rule—Trial Court Rule 26.01—was adopted on July 1, 1999 by that state’s highest court in large part because past mass actions (particularly asbestos cases) pursued in West Virginia under its traditional consolidation rule had virtually overrun the state’s judiciary. Put another way, the rule was created because the state’s willingness to approve mass actions had made West Virginia a magnet court, thus requiring even more draconian efforts to resolve a flood of new cases.
For over a decade, West Virginia courts have utilized the state’s consolidation rule (which is identical to Fed. R. Civ. P. 42) to permit mass consolidation of asbestos cases for all purposes, including trial. In 1996, the state’s highest court upheld the consolidation for all purposes of approximately 1,000 cases filed against 17 defendants who owned facilities located in West Virginia. The West Virginia high court held that, as of 1996, it had become necessary to “adopt diverse, innovative, and often non-traditional judicial management techniques to reduce the burden of asbestos litigation.”
Following West Virginia’s approval of that mass asbestos action, thousands of additional claimants flooded West Virginia’s courts with personal injury claims. As one judge familiar with the process lamented,
[W]e thought that [an early mass trial] was probably going to put an end to asbestos, or at least knock a big hole in it. What [we] didn’t consider was that that was a form of advertising. That when we could whack that batch of cases down as well, it drew more cases.
In response to this wave of filings, the West Virginia high court invoked its constitutional supervisory powers to adopt Trial Court Rule 26.01. Rule 26.01 establishes a Mass Litigation Panel with the power to “develop and implement case management and trial methodologies for mass litigation and to fairly and expeditiously dispose of civil litigation which [is] referred to it.” The Rule does not establish criteria for determining when a case should be referred to the Mass Litigation Panel. Nor does it indicate what transfer entails: whether, for instance, suits transferred have been joined (and thereby merged into one suit) or consolidated (for some purposes or for trial). And apart from its reference to “fairly and expeditiously” disposing of cases, the Rule offers no guidance to the Mass Litigation Panel itself concerning how to resolve cases referred to it.
In a series of ad hoc decisions, Rule 26.01 has been interpreted to approve the aggregation of the claims of as many as 8,000 plaintiffs alleging exposure to asbestos against over 250 defendants—for resolution in a single mass trial. It has been interpreted to allow the aggregation of these cases for all purposes, and also to allow the denial to 250 defendants of the right to conduct any discovery of the 8,000 plaintiffs—the very discovery needed to file standard pretrial motions (such as those challenging venue and those seeking summary judgment) in order to weed out non-meritorious claims. In addition, although “as many as five thousand” plaintiffs had “no connection whatsoever with West Virginia,” the rule has been interpreted to allow the application of West Virginia law to all the thousands of claims.
B. Unregulated Mass Action Vehicles Pose Serious Due Process Concerns
Regardless of what label a state affixes to a mass action device (i.e., joinder, consolidation, or special mass litigation rule), traditional practice, as well as the due process principles that underpin and inform that practice, should ordinarily preclude mass numbers of individual tort claims from being pursued as mass actions. Such combinations of disparate tort claims may prevent a defendant from adequately defending itself against each of the distinct claims alleged by the various plaintiffs. For this very reason, there is a growing consensus that the class action device should not be used to adjudicate disparate personal injury product liability claims. Unfortunately, some state court judges are allowing these cases to proceed in the new mass action garb, even though they plainly fail to meet the requirements set forth in civil procedure rules and raise serious concerns regarding due process and fundamental fairness.
1. Tainted Jury Pools, Loose Venue Rules, And Unimpaired Plaintiffs
Plaintiffs’ counsel often find a local plaintiff, well known to the jury pool, who has suffered a serious injury, and then tack on tens or even hundreds of less compelling cases by plaintiffs who live outside the county or outside the state, who essentially free-ride on the main claim. This practice is particularly prevalent in Mississippi, because of its liberal good-for-one, good-for-all venue rule (i.e., a rule that permits filing on behalf of an unlimited number of claimants if just one has the contact with the forum required by the applicable venue rule). Indeed, the combination of that liberal venue rule with a liberal joinder rule creates enormous opportunities for plaintiffs’ counsel to bring into the jurisdiction tens or hundreds of “rider” plaintiffs with no connection to the state. The same is true in West Virginia, where venue and choice of law rules are scarcely enforced in mass action proceedings pursued under Rule 26.01. In this way, plaintiffs’ counsel can sway a jury to award huge damages to numerous plaintiffs whose claims would seem far less compelling if they were tried individually. For example, even setting aside the problem of a plaintiff well-known to the jury pool, by combining the claims of one plaintiff who suffered cancer or was involved in a serious automobile accident, with the claims of other plaintiffs who merely allege fear of cancer or fear of an alleged automobile defect, plaintiffs’ counsel can often achieve six- and seven-figure verdicts for plaintiffs who essentially allege no injuries. Liberal joinder rules thus permit unfair manipulation of both the jury pool and the jury’s tendency to sympathize with seriously ill plaintiffs.
Mass actions also enable plaintiffs’ counsel to overwhelm a jury with evidence in a manner that makes it impossible to reach a fair verdict, even if there is no lead “sympathy” plaintiff. For example, when a mass action involves hundreds (or ever thousands) of plaintiffs, their counsel are unfairly permitted to piece together evidence to show a “perfect plaintiff”—one who, of course, does not exist in the real world—for presentation to the jury. That is, counsel may pick and choose among the facts presented by the many plaintiffs in attempting to establish all the various elements of the claim, and the jury is often left with the indelible impression that the collective evidence counsel offers satisfies each individual plaintiff’s particular burden of proof. For example, if one plaintiff had an allegedly misleading conversation with a defendant’s representative about the potential side-effects of a drug, that conversation will be repeatedly referenced to the jury, even though none of the other 1,000 plaintiffs in the action had such a conversation. As a result, the jury may come away with the patently false impression that all plaintiffs had such conversations and relied on them in electing to use the drug at issue.
These harms are magnified exponentially when a mass action includes claims against several or many defendants. In such cases, it is difficult for any particular defendant to have a fair opportunity to put on its unique defenses at trial: evidence admitted as to one defendant to show, for example, evidence of that defendant’s knowledge of a defect many years ago, will inevitably tar other defendants, as well. The jury will also be hopelessly lost in attempting to determine the precise lawfulness of any one particular defendant’s conduct. Mass actions thus often become a “thumbs-up, thumbs-down” vote on corporate America, with the lowest common denominator of conduct often being extrapolated to plaintiffs’ verdicts against all defendants. And to make matters worse, the host of state laws that need to be applied in the typical consolidated proceeding (assuming, of course, that the state court engages in a proper choice-of-law analysis), which seeks to join the claims of plaintiffs from numerous states, inevitably further confuse the jury, resulting in further prejudice.
4. Mass Actions As De Facto Class Actions—But Without The Procedural Protections Of The Class Action Rule
As noted above, one reason for the increase in mass actions in state courts is that counsel often have more success in convincing judges to allow these cases to proceed than in obtaining certification of proposed classes, because the rules governing joinder and consolidation (at least as they relate to mass actions) are not as well developed as those governing class actions. Indeed, as noted above, it is the recent greater judicial attention to the properly rigorous application of class action requirements in many jurisdictions that has led plaintiffs’ lawyers to begin utilizing aggregation vehicles like joinder and consolidation rules more aggressively. Similarly, the reason for mass action popularity in Mississippi is the fact that Mississippi never adopted a class action rule; thus, mass actions are one way for plaintiffs’ counsel to generate the level of fees available to them in large cases. However, for several reasons, the recent tendency to utilize joinder, consolidation, and special litigation rules to achieve de facto class action status arguably raises even more serious due process and civil justice concerns than do actual class actions.
Unlike class actions, plaintiffs in these cases often seek—and sometimes obtain at trial—millions of dollars each. And because these cases are typically brought in counties where seven-figure jury awards are routine, the risk of going to trial can be even greater than in a class action, and the settlement pressure even stronger. This is especially true when a few very serious personal injury cases are coupled with many less serious cases (e.g., a wrongful death claim joined with numerous non-injury warranty claims). Such a collection of claims clearly would not qualify for class treatment, because the named plaintiff’s claims would not be “typical” of the other plaintiffs. But some courts have allowed such claims to proceed as joinder claims. In that circumstance, plaintiffs can combine numerous dissimilar cases and exert tremendous pressure on defendants to settle all the claims simultaneously, thereby avoiding a jury verdict for all the plaintiffs that is unfairly inflated by the few very serious claims. In mass actions, it is not at all uncommon to hear of plaintiffs’ counsel with a large volume of cases refusing to settle serious claims unless the defendant is also willing to “buy out” the claims with lesser merit. Mass actions, which allow these cases involving both serious and unimpaired plaintiffs to be tried together, allow these practices to continue and, indeed, to thrive.
As noted above, these cases are being pursued through rules not generally intended to address mass actions, which means defendants have very little precedent to rely upon in seeking to defend themselves. When plaintiffs utilize joinder, consolidation, and special litigation rules in this setting, litigation is often pursued through a series of ad hoc decisions detached from any traditional practice, making it easier for courts to apply inconsistent standards to such cases. By contrast, the due process underpinnings of class actions are fairly well established, and create significant procedural protections for defendants.
Interlocutory appellate review is typically more difficult to obtain in mass actions than in class actions. For example, some states have adopted the recent amendment to the federal class action rule, which permits discretionary interlocutory appeals of class certification orders, or had previously adopted a similar rule. Joinder, consolidation, and special litigation rules, on the other hand, do not generally provide for interlocutory appeals.
As a result, a defendant subject to a mass action must run the litigation gauntlet to a final judgment on the merits in order to obtain appellate review of the threshold decision permitting mass aggregation (through joinder, consolidation, or a special litigation rule). As noted above, however, the risks posed by seven-digit verdicts in cases where plaintiffs allege minor injuries are simply too great for most defendants to withstand. Rather, with little prospect of being able to defend themselves against cases that are unfairly combined (for the reasons expressed above), defendants face extreme pressure from the financial markets and other sources to settle these cases en masse, regardless of their merit. These pressures are made worse when mass actions include not only many plaintiffs, but many defendants as well. Those pressures are worse still when mass actions are, as typically occurs, structured in “phases,” so that a defendant’s “fault,” for example, is determined before any plaintiff has demonstrated causation and damages.
This intense settlement pressure is far from speculation, and has been recognized by courts and scholars alike. As Professor William Eskridge of Yale Law School has explained: “Especially in state courts, defendants in the typical jumbo consolidation now face an Armageddon scenario if they do not settle on terms favorable to plaintiffs.” Confronted with the possibility of “losing the company on his or her watch,” a company decision-maker will settle even if convinced of the merits of the company’s defenses. The unfortunate result is that the very coerciveness of mass actions often insulates them from appellate review.
Several examples are worth noting. First, on August 16, 2002, the share value of MeadWestvaco Corporation, a paper and packaging company, declined more than 20% in a single day when the company simply announced that it had been named as a defendant in 500 asbestos cases involving 6,000 plaintiffs—the majority of whose suits had been filed as part of mass actions in West Virginia, Illinois, and Mississippi. Second, in a mass consolidation of asbestos cases approved by the West Virginia Supreme Court of Appeals in 1996, there were 1,000 plaintiffs asserting claims against 17 defendants—but not a single claim proceeded to a final judgment; all were settled. And in the most recent mass aggregation approved by the courts of West Virginia—this time involving 8,000 plaintiffs and 250 defendants—all but two of the defendants settled before trial. Of the two that remained, one settled during the trial. The other defendant, Dow Chemical Company, that survived the first “phase” of a trial was found liable and assessed with a “punitive damages multiplier” of as-yet undetermined compensatory damages. Dow’s stock price fell a full 9.3% the day of the verdict, and Dow is now litigating the issues of causation and damages in a Phase Two trial against over 2,000 plaintiffs. To this date, no asbestos case consolidated for mass trial in West Virginia has ever proceeded to final judgment.
One potential justification for allowing mass actions even in cases in which class certification could not be obtained is that, unlike a class action, a mass action requires every plaintiff to “opt in” to the lawsuit. For that reason, joinder and consolidation, at least as traditionally understood, pose less of a concern that absent claimants will be bound to the outcomes of lawsuits they never heard about, were inadequately represented in, or otherwise had no wish to participate in. Indeed, several of the Supreme Court’s decisions concerning the due process underpinnings of the class action device focus heavily on the question of whether a particular class action regime affords adequate protections to such absent claimants.
While this justification does explain why joinder, consolidation, and special state court litigation rules contain less robust procedural protections than class action rules, it does not mean that defendants lack any due process interests in the administration of aggregation rules. To the contrary, defendants have well-recognized due process interests in ensuring that they are afforded a fair opportunity to defend themselves, whether the case involves a single claim or hundreds of aggregated claims. That interest is particularly acute in an aggregated proceeding involving not only multiple plaintiffs, but also multiple defendants. Without a careful inquiry into procedural fairness, such a proceeding may easily become so large and confusing that it is impossible for a defendant to present a meaningful defense.
Nor does the fact that mass actions require a plaintiff to “opt in” explain why mass actions that raise the same or similar issues concerning effectively absent plaintiffs should be treated differently than class actions merely because the chosen vehicle is a different one. As explained above, it is not at all uncommon in mass proceedings for plaintiffs’ counsel to refuse to settle serious cases (such as those involving cancer or death) unless a defendant also settles counsels’ other claims, including “unimpaired” claims. In that situation, the settlement value of the serious case is reduced to effectuate an increase in the settlement value of the unimpaired claims, yet no provision of the joinder or consolidation rule even requires a court to examine the fairness of those settlements. In the class context, such clear conflicts of interest would clearly prohibit class certification, as the Supreme Court has made clear. And in cases, such as West Virginia’s mass asbestos aggregation, in which a court proposes to resolve the claims of 8,000 plaintiffs in a single proceeding, it is fantastical to suggest that each of those plaintiffs is represented in any way other than an absent class member. No caption in that proceeding ever identified the exact parties to the proceeding. As the U.S. Court of Appeals for the Fifth Circuit has expressed, plaintiffs in mass actions are often “actually before the court” in nothing “more than a fictional sense.” Indeed, “consolidation can leave claimants with as little control over those cases as unnamed class members in a class action.” For this reason, the absent claimant protections that underlie class actions must be read into mass actions as the latter converge upon the former. And defendants themselves have an obvious interest in ensuring that any judgment in an aggregated proceeding binds all the plaintiffs in the future. In this sense, the requirements of notice and adequate representation, well established in the class action arena, protect defendants by affording them some measure of finality at the close of a mass proceeding.
Unlike consolidation and joinder, which have existed for centuries but which have historically not been invoked to support mass actions, West Virginia’s mass litigation rule is new. But its newness carries significant dangers. So far, it has been applied in an ad hoc fashion without any meaningful notice to the parties in particular cases. That standardless application itself raises serious constitutional questions. Even more fundamentally, Rule 26.01 is applied without regard to the fact that, as the Supreme Court has made clear, traditional practice provides a touchstone for constitutional analysis. By permitting the mass aggregation of cases in ways not envisioned by the class action, joinder, and consolidation rules—particularly the effective merging of thousands of disparate personal injury claims accompanied by the wholesale denial of pretrial discovery and the application of forum law to thousands of claims with no connection to the forum—the West Virginia courts have failed to consider that these traditional ways of proceeding may well set the constitutional baseline, at least in the absence of an alternative procedure that contains equally robust due process protections.
Indeed, the elimination of discovery, and the resulting effective elimination of pretrial motions, such as motions for summary judgment, combine to raise serious constitutional questions. If state law places “causation” as an element of the cause of action, it is open to serious question whether a state court may permit a jury first to make a vacuous finding of “liability” without permitting defendants to litigate embedded issues like causation. And if the effect of the elimination of pretrial discovery is that defendants lose the right to raise established pretrial defenses, that too raises serious due process concerns. In short, as the Fifth Circuit has held, “[w]e are . . . uncomfortable with the suggestion that a move from one-to-one ‘traditional’ modes is little more than a move to modernity. Such traditional ways of proceeding reflect far more than habit. They reflect the very culture of the jury trial and the case and controversy requirement of Article III.”
A significant irony of the mass action problem is that it is largely a self-fulfilling one. In West Virginia, for example, new mass actions flooded that state’s courts precisely because the courts there were so amenable to mass actions that effectively deprived defendants of their rights to defend themselves. As one eminent scholar has observed,
[j]udges who move large numbers of highly elastic torts through their litigation process at low transaction costs create the opportunity for new filings. They increase demand for new cases by their resolution rates and low transaction costs. If you build a superhighway, there will be a traffic jam.
Similarly, another irony is that Mississippi made the policy decision to reject the class action rule in order to avoid some of the very problems that are plaguing joinder practice in that state today. As we explain below, Mississippi appears to have more mass actions than any other jurisdiction, as creative plaintiffs’ counsel attempt to invoke joinder to effectuate class action treatment. Of course, Mississippi’s decision not to adopt a class action rule does not mean that its courts can simply ignore the due process underpinnings of established class action practice by effectively permitting class treatment for disparate claims. Nor does it mean that Mississippi can abandon traditional due process safeguards that all (or nearly all) other states observe in aggregating cases. This is especially true because the Mississippi joinder rule is identical to the federal joinder rule, the latter of which specifically contemplates aggregated treatment much less aggressive than class action treatment. Indeed, one Mississippi judge whose county became a mass actions magnet in the late 1990s recently appeared to recognize this problem when he stated (in announcing a new policy toward mass actions): “[W]e have some very, very fine legal talent, legal minds in Mississippi that have crafted a class action rule into our joinder rule and that’s not what it was intended for.”
C. Why Most Mass Actions Cannot Be Heard In Federal Court
One key reason for the growing mass action problem is that the laws governing federal jurisdiction were unwittingly drafted in a way that keeps most of these cases out of federal courts, where, as explained above, judges have applied far more consistent standards to joinder and consolidation proposals.
As envisioned by the Framers of the Constitution, the concept of diversity jurisdiction (as provided in Article III) was intended to permit defendants to remove a state court action to federal court if it involves “Citizens of different States.” In so providing, the Framers wished to ensure that local biases would not taint the outcome of disputes between in-state plaintiffs and out-of-state defendants, thereby hurting the nation’s burgeoning economy. Since one of the concerns regarding mass joinder actions is the apparent bias against out-of-state defendants in certain state courts, one would expect that mass actions of the type discussed above would be subject to federal jurisdiction. In enacting the diversity jurisdiction statute, however, Congress did not exercise the full authority granted under Article III for diversity jurisdiction. Instead, Congress sought to limit diversity jurisdiction to cases that are large and that have real interstate implications. Thus, under 28 U.S.C. § 1332, an action is subject to federal diversity jurisdiction only where the parties are “completely” diverse (that is, where no plaintiff is a citizen of the same state where any defendant is deemed to be a citizen) and where each plaintiff asserts claims that exceed a threshold amount in controversy—currently set at $75,000.
Although mass joinder actions would usually appear to meet these criteria because they place substantial amounts into controversy and involve parties from multiple jurisdictions, section 1332 tends to exclude these cases from federal courts, because the diversity statute has been interpreted to require “complete” diversity, such that diversity jurisdiction is lacking whenever any single plaintiff is a citizen of the same state as any single defendant. That means plaintiffs’ counsel can avoid federal jurisdiction in a mass action simply by including one plaintiff and one defendant from the same state, even if the case involves tens or hundreds of other parties who come from different states. Plaintiffs’ counsel, eager to avoid the more rigorous analysis of Rules 20 and 42 typically afforded by federal courts, are extremely adept at this tactic. For example, in product liability cases, plaintiffs will sometimes join as a defendant one local retailer (e.g., a supermarket, a prescribing doctor, a car dealership) that sold the product at issue to just one or a few of the many plaintiffs in the case. More often than not, this is enough to keep their case out of federal court.
Recently, the U.S. Senate’s Judiciary Committee heard testimony from Hilda Bankston, a former pharmacy owner from Mississippi who has been joined as a defendant in numerous mass actions in Jefferson County, Mississippi against major out-of-state pharmaceutical companies for just this purpose. According to Mrs. Bankston:
[I]n 1999, we were named in the national class action lawsuit brought against the manufacturer of Fen-Phen. Let me stop here to explain why we were brought into this suit. While I understand that class actions are not allowed under Mississippi state law, what is permitted is the consolidation of lawsuits. These consolidations involve Mississippi plaintiffs or defendants who are included in cases along with plaintiffs from across the country. . . . By naming us, the only drugstore in Jefferson County, the lawyers could keep the case in a place known for its lawsuit-friendly environment. I’m not a lawyer, but that sure seems like a form of class action to me. . . .
Since then, Bankston Drugstore has been named as a defendant in hundreds of lawsuits brought by individual plaintiffs against a variety of pharmaceutical manufacturers. Fen-Phen. Propulsid. Rezulin. Baycol. At times, the bookwork became so extensive that I lost track of the specific cases. And today, even though I no longer own the drugstore, I still get named as a defendant time and again. . . .
Notably, although Bankston Drugstore has been sued in numerous mass joinder actions, the store has never been found liable in any of these cases, further evidencing that plaintiffs include it as a defendant solely to avoid federal court jurisdiction.
Frequently, defense counsel seek to remove mass joinder cases to federal court, despite the presence of one non-diverse, tangential defendant (such as a minor retailer), arguing “fraudulent joinder”—i.e., that the inclusion of one insignificant in-state defendant should not be allowed to defeat diversity jurisdiction because plaintiffs do not seriously intend to recover from such defendants and they have only been joined to keep the case out of federal court. As defendants put it in one typical notice of removal involving the Bankston Drugstore:
Plaintiffs joined as the only non-diverse defendants pharmacies which did nothing more than dispense medications to one or more plaintiffs in accordance with a physician’s prescription. Plaintiffs do not allege that the defendant pharmacies incorrectly filled their prescriptions. Rather, plaintiffs assert only product liability theories, including strict liability for defective design, failure to warn and breach of implied warranties—precisely the same theories asserted against the manufacturing defendants. Under Mississippi law, no cause of action exists against a pharmacy for correctly filling a physician’s prescription for a lawful drug; thus there is no possibility of recovery against the pharmacies.
Defendants have also sought removal on other grounds, such as the existence of a federal court class action settlement, or on the grounds that the plaintiffs’ claims were misjoined and the court should simply sever the claims of the plaintiffs with relationships to the non-diverse defendants.
However, while some federal courts have been sympathetic to these arguments, the vast majority of cases are remanded. As a typical remand order to Jefferson County, Mississippi put it:
In order to establish that a defendant has been fraudulently joined, the removing party must show either that no possibility exists that the plaintiff would be able to establish a cause of action against the non-diverse defendant under state law or an outright fraud in the plaintiffs’ pleading of the facts. All ambiguities in the controlling law of a state must be resolved in favor of the plaintiff. . . . There is some possibility that the supermarkets could be shown to have had knowledge of an alleged defective condition of the cigarettes at the time they sold them to the plaintiff.
Thus, the hypothetical possibility of recovery by just one of 100 plaintiffs against a small local defendant is enough to relegate the overwhelming majority of interstate mass actions to state courts, where they are currently subject to inconsistent standards and where certain judges have agreed to mass trials that are inherently unfair and deny the parties basic due process protections.