Current Decisions.

CIVIL JUSTICE REFORM

Tort Reform Falls Victim to Plaintiffs' Bar

In a sharp 4-3 disagreement and with a combative and caustically worded majority opinion, the Ohio Supreme Court has struck down the state's comprehensive 1995 civil reform legislation, primarily on the ground that it violated two principles of the Ohio Constitution--separation of powers and the one-subject rule.

In State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 715 N.E.2d 1062 (Ohio 1999), the Ohio plaintiffs' bar and organized labor choose to challenge the legislation by the unusual route of invoking the state supreme court's original jurisdiction to issue writs of prohibition and mandamus ordering Ohio trial court judges not to apply the legislation, as well as declaring the legislation unconstitutional and enjoining its implementation.

To Justice Alice Robie Resnick, who wrote the majority opinion, the case presented a bad guys-good guys picture--"a power struggle between those who seek to limit their liability and financial exposure for civil wrongs and those who seek compensation for their injuries." While she conceded the procedure used in this case was unusual and rejected the plaintiffs' bar argument that they had standing because they were losing members and the legislation caused them to lose clients and fees, Justice Resnick concluded for the majority that the "issues sought to be litigated in this case are of such a high order of public concern as to justify allowing this action as a public action." Therefore, neither the plaintiffs' lawyers nor labor had to show "any legal or special individual interest in the result."

On the separation of powers issue, Justice Resnick held for the majority that the legislation at issue usurped the judicial power and charged that the Ohio legislature had "boldly seized the power of constitutional adjudication" and appropriated the authority of the judicial branch to establish rules of court. What particularly irked the majority was that the legislation enacted several measures, albeit some in different forms, that previously had been struck down as unconstitutional.

On the one-subject issue, the majority relied on an Ohio constitutional provision, "No bill shall contain more than one subject, which shall be clearly expressed in its title." Although the title to the legislation stated that it dealt with "changes in the laws pertaining to tort and other civil actions," Justice Resnick said the legislation included "blatantly unrelated" topics. And, she added, it was not possible to sever the bad from the good; to do so would "constitute a legislative exercise wholly beyond the province of this court."

Dissenting, Chief Justice Moyer, joined by Justices Cook and Lundberg Stratton, took the position that the court should not have proceeded to a substantive judgment on constitutionality in a mandamus and prohibition action. Such action, he said, should be taken in the ordinary course of law in a justiciable controversy coming up through the state's court system. Moreover, he added, the legislature acted within its legitimate sphere and did not affront the separation of powers doctrine. In his book, the majority, by referring to the state legislature in "inflammatory and accusatory language" appeared to be "throwing down the gauntlet to that coequal branch of government.... It is time to end this war of words."

In a separate dissenting opinion, Justice Lundberg considered the single-subject issue, which she stated was to be judged by disunity, not multiplicity, of topics. While the legislation covered a plurality of topics, she wrote, there was no disunity of subject matter because all the topics "address the single subject of tort reform." In any event, she added, if some provisions offended he single-subject rule, they could be severed.

CLASS ACTIONS

No OK for Asbestos Settlement the Second Time Around

While declining to go as far as to say that a limited fund mandatory class action is never possible in mass tort litigation under Rule 23 of the Federal Rules of Civil Procedure as now written, the U.S. Supreme Court in Ortiz v. Fibreboard Corp., 119 S.Ct. 2295 (1999), held that in the case before it, the attempt to do so was faulty.

Beset by an avalanche of damage suits by persons claiming injuries from asbestos and locked in litigation over insurance coverage for the claims, Fibreboard Corp., which manufactures products containing asbestos, joined with a group of leading asbestos plaintiffs' lawyers in 1993 to reach what became known as a "global settlement agreement" providing $1.535 billion for unsettled present claims and future claims. At the same time, Fibreboard, its insurers and the claimants settled the coverage dispute by a "trilateral settlement agreement" guaranteeing Fibreboard a defense and indemnity for winning claimants up to $2 billion.

The plaintiffs then packaged their complaint together with the agreements and sought a mandatory class action in the U.S. District Court for the Eastern District of Texas, which was granted. 162 F.R.D. 505 (1995). The court certified the class under Rule 23(b)(1)(B) as a limited fund class action, established a sort of trust fund and laid down procedures for present and future claimants to seek compensation. Intervenors objected on the ground that there really wasn't a "limited fund," but the district court found that the value of Fibreboard plus the insurance funds amounted to a "limited fund" as contemplated by Rule 23(b)(1)(B).

The Fifth Circuit affirmed both as to the class certification and the adequacy of the settlement, 90 F.3d 963 (1996), aff'd en banc, 101 F.3d 368 (1996), approving the limited fund thesis because of the threat that some members of the class might not receive full payments for their injuries from Fibreboard's "limited assets." But the Supreme Court in 1997 remanded for further consideration in view of its decision in Amchem Products Inc. v. Windsor, 521 U.S. 591 (1997), in which the Court held that class members' shared exposure to asbestos was insufficient to meet the predominance requirements of Rule 23(b)(3).

On remand, the Fifth Circuit reaffirmed its approval of the class certification, distinguishing Amchem on the ground that it proceeded under 23(b)(3), whereas the case before it was under 23(b)(1)(B). 134 F.3d 668 (1998).

With the case before it a second time, the Supreme Court, in a 7-2 decision written by Justice Souter, held that there was no true "limited fund" in the sense contemplated by Rule 23(b)(1)(B), and that even if there was, inadequate consideration had been given to the equities of the certification. The court declared that it could not extend the sweep of 23(b)(1)(B) by judicial fiat. "The [Judicial Conference] Advisory Committee [on Civil Rules] did not envision mandatory class actions in cases like this one," Justice Souter stated, "and both the Rules Enabling Act and the policy of avoiding serious constitutional issues counsel against leniency in recognizing mandatory limited fund actions in circumstances markedly different from the traditional paradigm." If the limited fund rationale could be applied to mass tort settlement classes, the Court added, it would be essential that the fund be shown to be limited independently of the agreement of the parties and that the "class include persons with claims unsatisfied at the time of the settlement negotiations, with intraclass conflicts addressed by recognizing independently represented subclasses."

Justice Breyer, joined by Justice Stevens, dissented on the ground that the certification was proper under the limited fund theory of 23(b)(1)(B) because there was a significant "risk," a word used in the rule, that the total assets available to settle the claims would fall short, thus creating an unfairness to some claimants.

Chief Justice Rehnquist concurred separately, stating that if he were writing on a clean slate to devise a system for handling asbestos claims via class actions, he would agree with Justice Breyer. "But," he added, "we are not free to devise an ideal system for adjudicating these claims. Unless and until the Federal Rules of Civil Procedure are revised, the Court's opinion correctly states the existing law." Asbestos cases cry out for legislative solution, he wrote, with Justices Kennedy and Scalia joining.

COPYRIGHTS

Sweat All You Want To, but It Won't Get You a Copyright

A panel of the Second Circuit, with one judge dissenting, has dealt the legal publishing firm West Publishing Co. double blows, holding that rival publishers Matthew Bender & Co. and Hyperlaw...

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