The Center for Claims Resolution (CCR), a consortium of 20 asbestos defendants, approached two prominent plaintiffs' lawyers and literally asked to be sued by a class of all persons (and their household members and relatives) who had been exposed to CCR asbestos products in their workplaces. The class, defined to include persons who were exposed but not yet injured, involved as many as 20 million people. The complaint, answer, and settlement were filed on the same day in early 1993. The settlement provided a worker's compensation-type system of payment ranges for future victims of certain asbestos-related diseases. Although statutes of limitations were waived, certain diseases compensable in the tort system were not compensable under the settlement and other diseases (e.g., lung cancer) were much more difficult to prove. There was no inflation adjustment, even though the settlement bound class members in perpetuity. Loss of consortium claims were "settled" for zero. The settlement amounts were considerably lower than their historical averages, especially for claimants in certain jurisdictions, and, in a first for any settlement of which we are aware, the decisionmakers on most individual claims were the defendant companies!
The settlement raised serious questions of collusion and conflict of interest, most of which centered around the fact that class counsel settled, for $215 million, 14,000 of their pending cases against CCR as, in our view, a quid pro quo for doing the "futures" class action. The 14,000 cases included many claimants whose injuries would not entitle them to cash under the class action settlement. Moreover, we argued that the $215 million represented a premium over what would be paid for like cases compensated under the class settlement. Thirty-seven prominent law teachers in the legal ethics and civil procedure fields filed an amicus brief arguing that the deal was rife with conflicts. The district court rejected the brief, although it had accepted more than a dozen other amici briefs.
Thanks largely to lawyers at Baron & Budd, a firm representing some of the objectors, there were more than 30 depositions, other discovery, and an 18-day fairness hearing, plus lots of other hearings on other issues. The district court approved the settlement, and issued a preliminary injunction barring the class members from suing any CCR defendant for asbestos-related injuries in state or federal court. (The court could not issue a final decision or permanent injunction because a massive third party complaint by the CCR against its insurers was still pending). About 260,000 class members opted out, but the district court invalidated them all on the ground that many opt outs had been misled or coerced into opting out by unscrupulous lawyers (a ruling with which we largely disagreed). A new opt-out period was ordered under court supervision in which about 80,000 people opted out.
After the district court approved the settlement, the objectors appealed the preliminary injunction, raising purely threshold issues that implicated the district court's power to issue its injunction (case or controversy, amount in controversy, due process rights of "futures" and the like). After the initial briefs were filed, the Third Circuit's issued its decision in General Motors (discussed in #16 below). That case held that a settlement class action must meet the same standards for Rule 23 certification as does a case certified for litigation. General Motors enhanced our position because it was difficult to imagine that Georgine — which was never intended to be litigated at all — could be litigated as a class action.
C. Public Citizen Involvement: We represented a number of absent class members, labor organizations, and asbestos advocacy groups in opposition to the settlement. We decided early on to represent actual parties, not amici, and to take a major role in the case. Over a period of three years, we briefed all of the major legal issues (e.g., whether this trumped-up suit presents a "case" or "controversy" under the constitution, whether it comported with due process to bind people who are currently uninjured, the ethical issues, etc.), participated in discovery, and questioned witnesses at the fairness hearing, etc. We were also responsible for helping to organize the ethics professors' amicus brief, written by John Leubsdorf, a Rutgers law professor. We worked in tandem with Baron & Budd, but also raised a few issues that they did not (and we chose not to join in a few of theirs). We filed opening, reply, and supplemental briefs in the Third Circuit appeal from the district court's preliminary injunction. A six-hour oral argument was held on November 21, 1995, in which we participated.
On May 10, 1996, the Third Circuit handed down a smashing victory, holding that the class should not have been certified under Rule 23 because the claims of the class were too disparate to meet either the Rule's subsection (a) or subsection (b)(3) criteria. The Court noted that it was impossible for the class representatives to adequately represent those who had not yet suffered injuries and therefore could not know their injury-related circumstances. The unanimous panel acknowledged the strength of our due process and justiciability concerns, but did not reach those issues. Judge Wellford (a visiting judge from the Sixth Circuit) concurred in the main opinion, and also held that the complaint, as buttressed by the named plaintiffs' testimony, did not state an Article III case or controversy.
The Supreme Court granted review of CCR's petition for a writ of certiorari on the Rule 23 question that formed the basis for the Third Circuit's decision. We briefed the case before the Supreme Court on that issue, but also raised the justiciability arguments. Two other groups of objectors also participated actively in the Supreme Court, including the Baron & Budd group, represented by Laurence Tribe, who argued the case for the objectors.
The Supreme Court affirmed by a 6-2 vote. The majority opinion, authored by Justice Ginsburg, held that the class did not meet Rule 23(a)'s typicality and adequacy of representation requirements, or Rule 23(b)(3)'s requirement that common questions "predominate" over individual questions. The Court declined to address the justiciability issues. The Court suggested, but did not hold, that the class notice did not comport with due process.
Shockingly, after the Supreme Court rejected the settlement, the district court awarded class counsel more than $2 million in litigation expenses to be paid by CCR. Apparently, before the case was even filed, CCR agreed to pay class counsel's expenses, although that fact was never disclosed to the class members (nor, to our knowledge, to the court). Standing alone, we appealed the district court's decision, arguing that the agreement to pay a parties' expenses was patently collusive and at odds with the settlement agreement. After full briefing on the merits and the setting of an argument date, the Third Circuit dismissed our appeal before argument was held on the ground that class members lacked Article III standing to challenge the payment. The court of appeals then denied our request for en banc review.