The role of the judge in non-class settlements.

• Author: Erichson, Howard M.

What is the role of the judge in aggregate litigation? That was the question posed to Judge Alvin Hellerstein and several panelists, including myself, at the 2012 Symposium of the Institute of Law and Economic Policy. Judge Hellerstein, who has overseen the litigation arising out of both the September 11 terrorist attacks and the subsequent rescue efforts and clean-up, framed the question more provocatively and purposively: "How do you bring justice to ten thousand cases?" (1)

The justice that Judge Hellerstein brought to ten thousand cases in the September 11 clean-up litigation took the form of a massive settlement. (2) Responders who participated in recovery and debris-removal efforts and who suffered respiratory diseases and other ailments had sued New York City and other defendants, claiming that the city had failed to provide adequate protective gear and supervision. Rather than a class action, this was a mass non-class aggregate settlement. Plaintiffs' liaison counsel negotiated the deal with New York City after several individual cases had been scheduled for trial but before any case had been tried. The resolution was accomplished on a non-class basis because the court had earlier denied class certification on the grounds that the claims were too individualized for class action treatment. (3) In the denial of class certification and the subsequent accomplishment of a mass non-class settlement, the outcome was typical of the past decade's major mass tort resolutions. (4)

But the signal moment of the September 11 clean-up litigation was not typical at all. In March 2010, Judge Hellerstein "rejected" a settlement that the attorneys had negotiated. (5) He sent the parties back to the bargaining table to make the settlement richer. Sure enough, several months later the lawyers returned with a settlement proposal that increased plaintiffs' compensation, and this time the judge "approved" it. (6) To many observers, there may be something quite appealing about the court's intervention.

The judge helped World Trade Center responders and clean-up workers obtain greater compensation, and the defendant was willing to pay the higher amount rather than go to trial.

What I wonder is where the judge got the power to "approve" or "reject" the settlement. I understand, of course, why a judge might wish he had that power. Overseeing a case gives a judge a strong investment in the outcome as well as a sense of what outcome might be just. But settlement is not adjudication. (7) A settlement is a contract in which a claimant agrees to release a claim in exchange for something offered by the defendant. (8) There are special circumstances that require judicial approval of negotiated resolutions; these circumstances turn settlements into something akin to adjudication. (9) But the September 11 clean-up litigation deal was not a class action settlement. It was not a consent judgment in which the parties sought the court's ongoing supervision. It was not a settlement by minors or others legally incompetent to make their own decisions. Nor was it a shareholder derivative action or an action in which a receiver had been appointed. Rather, it was a settlement of individual claims, albeit in the context of a complex mass dispute.

Judge Hellerstein and his special masters--Professors James Henderson and Aaron Twerski--have described in a detailed law review article the challenges they faced in bringing ten thousand claims to resolution. (10) Their reflections provide an apt occasion for considering the role of the judge in bringing a mass dispute to a negotiated resolution.

1. JUDICIAL MANAGEMENT TO FACILITATE SETTLEMENT

   The judge and special masters took several important steps that set the stage for settlement, and these steps nicely illustrate the ways in which effective judicial management of complex litigation can pave the way to a negotiated resolution. (11) Relatively early in the proceedings, the judge and special masters instituted a phased discovery process with a "core discovery order" requiring plaintiffs and defendants to provide certain essential information. (12) The order required each plaintiff to answer questions regarding, among other things, "where and when the plaintiff worked ... [on] debris removal," "the availability of ... protective equipment," and the plaintiff's injuries, and it required each plaintiff to provide medical records (13) Information from these responses, as well as information from the defendants, was entered into a database that the court ordered the parties to establish (14) The core discovery and resulting database, by providing essential information about each claimant, by allowing an overview of the litigation, and by making it possible to sort cases by severity, undoubtedly facilitated the settlement process.

   Not only did the court require the parties to provide information that would be useful for either adjudication or settlement, the court also proceeded to schedule a number of individual bellwether trials. Bellwether trials are a well-established and sound approach to encouraging settlement in mass tort litigation. The idea is not that the verdicts in the early trials will bind other litigants through extrapolation or issue preclusion, (15) but rather that those verdicts will provide data points that can assist parties in determining settlement values for purposes of negotiating a comprehensive deal. (16)

   In their article, the judge and special masters explain in detail the process they employed for selecting cases for trial. (17) Their goal apparently was to select a sample of relatively severe cases, combining some desire for representativeness with a worst-should-go-first prioritization approach. (18) To the extent they were striving for representativeness, their detailed process of case selection may have been more involved than necessary. Unlike extrapolation plans, where an enormous amount rides on the selection of sample plaintiffs, (19) informal bellwethers provide useful information even if the cases are not perfectly representative or neatly selected. Lawyers evaluate bellwether verdicts in light of the particular features of the case--the judge, the jury, the lawyers, the strength of the plaintiff's causation case, the severity of the harm, and so on. Judges have used a wide variety of techniques to select cases for early trials, including literally picking cases from a hat. (20) In mass tort litigation, cases may arrive at trial without an overarching design simply because cases proceed in multiple jurisdictions. In the Vioxx pharmaceutical litigation, for example, the federal judge overseeing the multidistrict litigation could control only part of the early trial schedule because many of the cases were in state courts. Despite this confounding aspect to the selection of cases for trial, the early Vioxx trials generated information that the parties needed in order to negotiate a comprehensive settlement. (21) The September 11 litigation was confined to a single court because Congress legislated that cases must be brought in the...