Complex Litigation

Alexandra Bursak
Preclusion law is notoriously convoluted. Courts have made no secret of their distaste for the doctrine, describing it variously as “conflicting,” “inconsistent,” “breeding confusion,” and ultimately “not very well liked.” Though the Supreme Court has consolidated issue and claim preclusion into a single coherent whole, this Note argues that the merger of res judicata and collateral estoppel in our modern preclusion law is incomplete. These different preclusions are motivated by different rationales: Res judicata protects private closure of parties, while estoppel began as a defense of judicial interests and expanded to forward systemic ones. Though private and systemic interests may often align, this alignment is not inevitable. In the case of public rights, failure to keep these doctrines distinct has undermined judicial ability to offer closure. Attention to the differences in historic preclusion doctrines ultimately provides a direction for modernization in the form of intervention.
 
Jack L. Millman

Jurisdictions have been liberalizing rules surrounding third-party litigation funding or the buying and selling of legal claims since the early twentieth century. Scholars have generally supported liberalization, seeing it as a way to expand access to courts and allow for the more efficient allocation of risk. Opponents have warned about a surge in frivolous litigation and strategic behavior by funders. But both sides have ignored how interrelated the rules governing third-party investment in litigation and the alienability of legal claims are, and how they interact to affect a legal claims market. The focus on reform should be to adjust these rules to create the optimal legal claims market. Instead, reform has increasingly focused on liberalizing third-party investment while keeping rules around alienability the same, or even barring investors from exercising control over the suit. This risks creating new problems without effectively solving many of the issues reform is meant to solve. This incremental approach comes with real costs, and may actually prevent a well-developed legal claims market from developing.

Steven D. Marcus

A discriminatory school district is sued, placed under court supervision, remedies the discrimination, and is released from court supervision. What next? There is a growing, and worrisome, trend towards the resegregation of schools following their release from supervision. While the problems of resegregation have recently drawn attention among social scientists and journalists, the procedural hurdles to litigating a claim of resegregation remain largely unexamined. Indeed, certain procedural hurdles could greatly impede litigation to challenge resegregation. This Note examines the defense of preclusion in the resegregation context, and concludes that in two categories of cases—pre-1966 class actions, and post-1966 “implied” class actions—school districts cannot rely on preclusion to defeat an action challenging resegregation. The first category, pre-1966 class actions, were filed before the 1966 Amendments to Rule 23, which provide greater procedural protections to ensure adequate representation. The second category, implied class actions, were filed after the 1966 amendments, never formally certified as class actions, but informally treated as such by courts. Because many pre-1966 class actions and post-1966 implied class actions do not provide the procedural protections to satisfy the constitutional requirement for adequate representation, judgments releasing school districts from court supervision cannot properly bind future plaintiffs challenging resegregation.

Elizabeth Chamblee Burch

High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence. On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight. But on the other, without the arsenal that class certification once afforded, judges are relatively powerless to police the private settlements they encourage. Of course, this power shortage is of little concern since parties consent to settle.

But do they? Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of repeat players to leadership positions, which may complicate genuine consent through inadequate representation. Repeat players’ financial, reputational, and reciprocity concerns can govern their interactions with one another and opposing counsel, often trumping fidelity to their clients. Systemic pathologies can result: dictatorial attorney hierarchies that fail to adequately represent the spectrum of claimants’ diverse interests, repeat players that trade in influence to increase their fees, collusive private deals that lack a viable monitor, and malleable procedural norms that undermine predictability.

Current judicial practices feed these pathologies. First, when judges appoint lead lawyers early in the litigation based on cooperative tendencies, experience, and financial resources, they often select repeat players. But most conflicts do not arise until discovery, and repeat players have few self-interested reasons to dissent or derail the lucrative settlements they negotiate. Second, because steering committees are a relatively new phenomenon and transferee judges have no formal powers beyond those in the Federal Rules, judges have pieced together various doctrines to justify compensating lead lawyers. The erratic fee awards that result lack coherent limits. So, judges then permit lead lawyers to circumvent their rulings and the doctrinal inconsistencies by contracting with defendants to embed fee provisions in global settlements—a well-recognized form of self-dealing. Yet, when those settlements ignite concern, judges lack the formal tools to review them.

These pathologies need not persist. Appointing cognitively diverse attorneys who represent heterogeneous clients, permitting third-party financing, encouraging objections and dissent from non-lead counsel, and selecting permanent leadership after conflicts develop can expand the pool of qualified applicants and promote adequate representation. Compensating these lead lawyers on a quantum-meruit basis could then smooth doctrinal inconsistencies, align these fee awards with other attorneys’ fees, and impose dependable outer limits. Finally, because quantum meruit demands that judges assess the benefit lead lawyers conferred on the plaintiffs and the results they achieved, it equips judges with a private-law basis for assessing nonclass settlements and harnesses their review to a very powerful incentive: attorneys’ fees.

Jonathan J. Ossip

The federal courts are currently divided on how to determine the diversity citizenship of trusts. Several circuits hold that trusts take the citizenship of their trustees. Another circuit holds that trusts take the citizenship of the trust’s beneficiaries, and yet another considers the citizenships of both the trustees and the beneficiaries. But beyond this circuit split, a more significant problem plagues the law in this area: The courts of appeals have failed to recognize the distinction between traditional and business trusts. The former—what is most commonly thought of as a trust—is a gift and estate planning tool. The latter is an alternative to incorporation, and is designed to run a business and generate profit for investors.

In this Note, I examine the differences between traditional and business trusts in the context of federal diversity jurisdiction. After discussing the history of diversity jurisdiction and the nature of these two forms of trusts, I explore the current circuit split over the citizenship rules for trusts. I then propose a new rule that fits within the current Supreme Court case law in the field: Traditional trusts take the citizenship of their trustees, while business trusts take the citizenship of their members—the beneficiaries. Having proposed a rule that depends upon the type of trust at issue, I conclude by explaining that a trust can be classified by determining the primary purpose for which it was organized.

Hiro N. Aragaki

Recent Supreme Court decisions such as American Express v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), and AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), represent dramatic developments with implications that extend far beyond the arbitration context. These decisions are a product of what the author refers to as the “contract model” of the Federal Arbitration Act (FAA). Heretofore largely unquestioned, the contract model posits the FAA’s original and dominant purpose as the promotion of private ordering in dispute resolution, as free as possible from state regulation. The model has, in turn, helped courts and commentators claim that the FAA requires arbitration agreements to be enforced strictly “according to their terms”—without regard to the way those agreements might compromise procedural values, such as when they preclude classwide relief.

 
This Article questions both the descriptive accuracy and normative persuasiveness of the contract model. It argues that when placed in their proper historical context, the FAA’s text and legislative history appear equally consistent (if not more so) with a purpose to improve upon the widely discussed procedural failings of the courts circa 1925. From this standpoint, the FAA can be understood as an offshoot of ongoing efforts at the time to reform procedure in the federal courts—efforts spearheaded by figures such as Roscoe Pound and Charles E. Clark, and that eventually culminated in the Federal Rules of Civil Procedure in 1938. The FAA, in short, was arguably a type of procedural reform.

 
These insights lead the author to propose a “procedural reform” model of the FAA, one that he contends is both more faithful to the statute’s history (legislative and otherwise) and more adept at answering the difficult questions that confront arbitration law in the age of “contract procedure.” The author considers two recent examples to illustrate.

Jacob J. Taber

Plaintiffs seeking to institute a civil action in federal court must plead the grounds for the court’s subject-matter jurisdiction over their claim; if they cannot adequately do so, their claim will be dismissed. Recently, courts have started to apply the plausibility rule announced in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal—which requires plaintiffs to plead facts plausibly showing their entitlement to relief—to the pleading of subject-matter jurisdiction. This Note argues that such a novel shift in how jurisdiction is pleaded is neither supported nor necessitated by Twombly and Iqbal and is fundamentally incompatible with long-settled jurisdictional doctrine. It therefore recommends that district court judges redouble their attention to the articulation of procedural rules of decision (eschewing reliance upon boilerplate) and desist from imposing heightened pleading of subject-matter jurisdiction without considering the question as a matter of first impression.

Matthew J. Ahn

Foreign law has become an increasingly important element of many cases brought before federal courts. Rule 44.1, which controls determinations of foreign law, is intended to make the process for determining foreign law as painless as possible, but like the regime that preceded it, it has become a procedural minefield for those wishing to rely on foreign law, as courts have declined to apply Rule 44.1 when it should be used, either deliberately or due to uncertainty as to its application. This is in large part due to the lack of concrete standards outlined in the rule. This Note examines the standards associated with the rule and their application in the years immediately after its promulgation and concludes that the reliant party’s burden of production with respect to foreign law should vary based on whether statutory text is provided. If a statute is available, the courts should be required to undertake a Rule 44.1 analysis, while if a statute is unavailable, the reliant party should bear the burden of producing substantial evidence of foreign law. This standard, elaborated in the text of Rule 44.1, should ensure that as many foreign law determinations as possible can be resolved on the merits.

Ankur Mandhania
This Note attempts to answer the question of which choice-of-law regime ought to apply to bankruptcy cases. Taking the facts of a recent Second Circuit case as my example, I argue that Congress should amend the Bankruptcy Code to include a blackletter second-order choice-of-law section for use in all bankruptcy cases. First, Part I examines the state of Second Circuit jurisprudence on the question before this case, probing the reasoning and basic justifications for the resulting rule. Second, Part II establishes a normative framework, drawing on both bankruptcy and choice-of-law theory, for evaluating any proposed answer to this dilemma. I show here that the Second Circuit solution does not meet this framework and thus must be discarded. Third, Part III articulates my proposed solution, showing that it is most consistent with this framework.
Zachary B. Savage

The civil litigation system aims to resolve disputes in an efficient, centralized, and final manner. In the context of mass tort litigation, one technique courts often use to achieve these goals is what I call “scaling up”: holding individual trials, and then applying results from these trials to similarly situated individuals. Scaling up, however, presents two difficulties. First, the technique risks compromising defendants’ Due Process rights by creating impermissible settlement pressure. Second, scaling up requires the initial court to structure the litigation so that it may serve as a template for follow-on proceedings; where this is not done, attempting to graft the results of one proceeding onto the remaining group of similarly situated individuals may simply lead to more protracted litigation.

Yet these difficulties are not inherent to the technique; in fact, courts can scale up in a way that avoids these problems. In order to mitigate the Due Process problem, courts should not apply the results of individual trials to subsequent trials involving similar claims until a substantial number of trials have been completed, and until it has become clear that any verdicts unfavorable to defendants are not flukes or outliers. And to ensure that scaling up does not simply lead to more protracted litigation, the initial trials should be structured so as to maximize the likelihood that individuals in follow-on litigation can invoke the findings under the issue preclusion doctrine of Parklane Hosiery v. Shore. The American Law Institute has made a proposal with these considerations in mind with respect to issue classes. This Note argues that a similar approach should be taken in the Multidistrict Litigation (MDL) process, where most mass tort litigation occurs today. This approach would be particularly useful if applied to one device that is being used with increasing frequency in the MDL process: the bellwether trial.

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