Manual for Complex Litigation,

Fourth

Federal Judicial Center 2004
Cite as

Manual for Complex Litigation,

Fourth, § ____

or

MCL 4th § ____
Manual for Complex Litigation,

Fourth

Board of Editors

Judge Stanley Marcus (Ct. of App., 11th Cir.), chair

Judge John G. Koeltl (S.D.N.Y.) Judge Barefoot Sanders (N.D. Tex.)

Judge J. Frederick Motz (D. Md.) Sheila Birnbaum, Esq. (N.Y., N.Y.)

Judge Lee H. Rosenthal (S.D. Tex.) Frank A. Ray, Esq. (Columbus, Ohio)

Judge Fern M. Smith (N.D. Cal.),

director, Federal Judicial Center 1999–2003

Federal Judicial Center 2004

The Manual for Complex Litigation, Fourth has been produced under the auspices of the Federal Judicial Center. The analyses and recommendations are

those of the Manual’s Board of Editors.
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v

Contents

Preface xvii

Acknowledgments xix

Introduction 1

Part I: Overview 5

 10. General Principles 7

.1 Judicial Supervision 8

.11 Early Identification and Control 9

.12 Assignment Plan 9

.121 Recusal/Disqualification 10

.122 Other Judges 11

.123 Related Litigation 11

.13 Effective Management 12

.14 Supervisory Referrals to Magistrate Judges and Special Masters 13

.15 Sanctions 15

.151 General Principles 15

.152 Sources of Authority 16

.153 Considerations in Imposing 17

.154 Types 18

.155 Procedure 21

.2 Role of Counsel 22

.21 Responsibilities in Complex Litigation 22

.22 Coordination in Multiparty Litigation—Lead/Liaison Counsel and Committees 24

.221 Organizational Structures 24

.222 Powers and Responsibilities 26

.223 Compensation 26

.224 Court’s Responsibilities 26

.225 Related Litigation 28

.23 Withdrawal and Disqualification 28

 11. Pretrial Procedures 31

.1 Preliminary Matters 32

.11 Scheduling the Initial Conference 32

.12 Interim Measures 33

.13 Prediscovery Disclosure 34

.2 Conferences 36

.21 Initial Conference and Orders 36

.211 Case-Management Plan 36

.212 Scheduling Order 39

.213 Class Actions 40

.214 Settlement 40

.22 Subsequent Conferences 40

.23 Attendance 41

.3 Management of Issues 42

.31 Relationship to Discovery 42

.32 Pleading and Motion Practice 43

.33 Identifying, Defining, and Resolving Issues 44

.34 Summary Judgment 46
Manual for Complex Litigation, Fourth

vi

.4 Discovery 49

.41 Relationship to Issues 50

.42 Planning and Control 51

.421 Discovery Plan/Scheduling Conference 51

.422 Limitations 53

.423 Other Practices to Save Time and Expense 56

.424 Resolution of Discovery Disputes 59

.43 Privilege Claims and Protective Orders 62

.431 Claims of Privilege/Full Protection 63

.432 Limited Disclosure/Protective Orders 64

.433 Allocation of Costs 69

.44 Documents 71

.441 Identification System 71

.442 Preservation 72

.443 Rule 34 Requests/Procedures for Responding 74

.444 Document Depositories 75

.445 Evidentiary Foundation for Documents 77

.446 Discovery of Computerized Data 77

.447 Discovery from Nonparties 82

.45 Depositions 83

.451 Limitations and Controls 83

.452 Cost-Saving Measures 85

.453 Deferred Supplemental Depositions 87

.454 Scheduling 88

.455 Coordination with Related Litigation 89

.456 Control of Abusive Conduct 89

.46 Interrogatories 90

.461 Purposes 90

.462 Limitations 91

.463 Responses 92

.464 Other Practices to Save Time and Expense 92

.47 Stipulations of Fact/Requests for Admission 94

.471 Stipulations of Fact 94

.472 Requests for Admission 95

.473 Statements of Contentions and Proof 96

.474 Requests for Judicial Notice 97

.48 Disclosure and Discovery of Expert Opinions 97

.481 Trial Experts 97

.482 Consulting Experts 99

.483 Court-Appointed Experts 100

.49 Special Problems 100

.491 Government Investigations/Grand Jury Materials 100

.492 Summaries 101

.493 Sampling/Opinion Surveys 102

.494 Extraterritorial Discovery 104

.5 Special Referrals 111

.51 Court-Appointed Experts and Technical Advisors 111

.52 Special Masters 114

.53 Magistrate Judges Under 28 U.S.C. § 636(b)(1) 117

.54 Other Referrals 118

.6 Final Pretrial Conference/Preparation for Trial 118

.61 Date and Place of Trial 119

.62 Reevaluation of Jury Demands 120

.63 Structure of Trial 121

.631 Consolidation 121
Contents

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.632 Separate Trials 122

.633 Special Verdicts and Interrogatories 123

.64 Procedures to Expedite Presentation of Evidence 124

.641 Statements of Facts and Evidence 124

.642 Pretrial Rulings on Objections 124

.643 Disclosure of and Objections to Digital Evidence and Illustrative Aids 126

.644 Limits on Evidence 127

.645 Use of Courtroom Technology to Facilitate Evidence Presentation 127

.65 Proposed Jury Instructions 128

.66 Briefs and Final Pretrial Motions 129

.67 Final Pretrial Order 129

 12. Trial 131

.1 Administration 132

.11 Trial Schedule 132

.12 Courthouse Facilities 133

.13 Managing Exhibits 134

.14 Transcripts 135

.15 Conferences During Trial 135

.2 Conduct of Trial 136

.21 Opening Statements 136

.22 Special Procedures for Multiparty Cases 137

.23 Advance Notice of Evidence and Order of Proof/Preclusion Orders 138

.24 The Judge’s Role 139

.3 Presentation of Evidence 139

.31 Glossaries/Indexes/Demonstrative Aids 140

.32 Use of Exhibits 141

.33 Depositions 143

.331 Summaries 143

.332 Editing, Designations, and Extracts 143

.333 Presentation/Videotaped Depositions 144

.334 Alternative Means of Presenting Testimony 145

.34 Sequencing of Evidence and Arguments 146

.35 Judicial Control/Time Limits 147

.4 Jury Trials 150

.41 Impaneling the Jury 150

.411 Size of the Venire and Panel 150

.412 Voir Dire 151

.413 Peremptory Challenges 152

.42 Juror Note Taking/Notebooks/Questions 152

.421 Note Taking 152

.422 Juror Notebooks 153

.423 Juror Questions 153

.43 Jury Instructions 154

.431 General Principles 154

.432 Preliminary Instructions 154

.433 Interim and Limiting Instructions 156

.434 Final Instructions 156

.435 Jurors’ Use of Exhibits During Deliberations 158

.436 Supplemental Instructions and Readbacks 158

.44 Avoiding Mistrial 159

.45 Verdicts 160

.451 Special Verdicts and General Verdicts with Interrogatories 160

.452 Judgment as a Matter of Law 162

.453 Return of Verdict 163
Manual for Complex Litigation, Fourth

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.5 Nonjury Trials 164

.51 Adopted Prepared Statements of Direct Testimony 164

.52 Findings of Fact and Conclusions of Law 165

.53 Procedures When Combined with Jury Trial 166

.6 Inability of Judge to Proceed 166

 13. Settlement 167

.1 Trial Judge’s Role 167

.11 General Principles 167

.12 Timing/Relationship to Discovery 169

.13 Specific Techniques to Promote Settlement 169

.14 Review and Approval 172

.15 Alternative Processes to Encourage Settlement 174

.2 Special Problems 174

.21 Partial Settlements 174

.22 Agreements Affecting Discovery 176

.23 Side Agreements 176

.24 Ethical Considerations 180

 14. Attorney Fees 183

.1 Eligibility for Court-Awarded Fees 184

.11 Types of Cases—Overview 184

.12 Common-Fund Cases 186

.121 Percentage-Fee Awards 186

.122 Lodestar-Fee Awards 193

.13 Statutory-Fee Cases 196

.2 Proceedings to Award Fees 199

.21 Setting Guidelines and Ground Rules 199

.211 Selecting Counsel and Establishing Fee Guidelines 200

.212 Staffing 201

.213 Maintaining Adequate and Comprehensible Records 202

.214 Submission of Periodic Reports 202

.215 Compensation for Designated Counsel 202

.216 Reimbursement of Expenses 203

.22 Motion for Attorney Fees 203

.221 Contents of the Fee Motion 203

.222 Timing 204

.223 Supporting Documentation and Evidence 204

.224 Discovery 205

.23 Judicial Review/Hearing and Order 205

.231 Judicial Review 205

.232 Hearing and Order 207

 15. Judgments and Appeals 208

.1 Interlocutory Appeals 208

.11 When Permitted 208

.12 Proceedings While Appeal Pending 212

.2 Entry of Final Judgment 212

.3 Disposition of Materials 213

Part II: Special Problems 215

 20. Multiple Jurisdiction Litigation 217

.1 Related Federal Civil Cases 218

.11 Cases in Same Court 218
Contents

ix

.12 Cases in Different Federal Courts 219

.13 Multidistrict Transfers Under Section 1407 219

.131 Requests for Transfer 219

.132 During Period of Transfer 221

.133 Remand 225

.14 Coordination Between Courts 227

.2 Related Criminal and Civil Cases 228

.3 Related State and Federal Cases 229

.31 Coordination 229

.311 Identifying the Need and Opportunity 231

.312 Threshold Steps 232

.313 Specific Forms of Coordination 235

.32 Jurisdictional Conflicts 238

 21. Class Actions 242

.1 Precertification Case Management 245

.11 Initial Case-Management Orders 245

.12 Precertification Communications with the Proposed Class 247

.13 Standards for Class Certification and Precertification Discovery 250

.131 Certifying a Litigation Class 250

.132 Certifying a Settlement Class 250

.133 Timing of the Certification Decision 252

.14 Precertification Discovery 255

.141 Precertification Discovery into the Rule 23(a) Requirements 257

.142 Precertification Discovery into the Rule 23(b) Requirements 260

.15 Relationship with Other Cases Pending During the Precertification Period 263

.2 Deciding the Certification Motion 266

.21 Certification Hearings and Orders 266

.22 Type and Definition of Class 268

.221 Type of Class 268

.222 Definition of Class 270

.23 Role of Subclasses 272

.24 Role of Issues Classes 272

.25 Multiple Cases and Classes: The Effect on Certification 274

.26 Appointment of the Class Representatives 276

.27 Appointment of Class Counsel 278

.271 Criteria for Appointment 278

.272 Approaches to Selecting Counsel 279

.273 Procedures for Appointment 282

.28 Interlocutory Appeals of Certification Decisions 282

.3 Postcertification Communications with Class Members 284

.31 Notices from the Court to the Class 285

.311 Certification Notice 287

.312 Settlement Notice 293

.313 Other Court Notices 296

.32 Communications from Class Members 298

.321 Class Members’ Right to Elect Exclusion 298

.322 Communications Relating to Damage or Benefit Claims 299

.323 Other Communications from Class Members 299

.33 Communications Among Parties, Counsel, and Class Members 300

.4 Postcertification Case Management 302

.41 Discovery from Class Members 302

.42 Relationship with Other Cases 303

.5 Trials 306
Manual for Complex Litigation, Fourth

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.6 Settlements 308

.61 Judicial Role in Reviewing a Proposed Class Action Settlement 308

.611 Issues Relating to Cases Certified for Trial and Later Settled 312

.612 Issues Relating to Cases Certified and Settled at the Same Time 313

.62 Criteria for Evaluating a Proposed Settlement 315

.63 Procedures for Reviewing a Proposed Settlement 318

.631 Obtaining Information 318

.632 Preliminary Fairness Review 320

.633 Notice of Fairness Hearing 321

.634 Fairness Hearing 322

.635 Findings and Conclusions 322

.64 Role of Other Participants in Settlement Review 323

.641 Role of Class Counsel in Settlement 323

.642 Role of Class Representatives in Settlement 325

.643 Role of Objectors in Settlement 326

.644 Role of Magistrate Judges, Special Masters, and Other Judicial Adjuncts in

 Settlement 329

.65 Issues Raised by Partial or Conditional Settlements 329

.651 Partial Settlements 329

.652 Conditional Settlements 330

.66 Settlement Administration 331

.661 Claims Administrator or Special Master 332

.662 Undistributed Funds 333

.7 Attorney Fee Awards 334

.71 Criteria for Approval 336

.72 Procedure for Reviewing Fee Requests 338

.721 Motions 338

.722 Notice 338

.723 Objections 338

.724 Information Supporting Request and Discovery for Fee Requests 338

.725 Required Disclosures 339

.726 Hearing and Findings 339

.727 Use of Special Masters or Magistrate Judges 340

 22. Mass Torts 341

.1 Introduction 342

.2 Initial Issues in Mass Tort Suits 348

.3 Multiple Filingsin Federal District Courts 355

.31 Aggregating Claims 355

.311 Criteria 357

.312 Advantages and Disadvantages of Aggregation 357

.313 Timing of Aggregation Decisions 358

.314 Obtaining Information About Common Issues and Case Values 358

.315 Test Cases 360

.316 Case Characteristics 360

.317 Role of Different State Laws 361

.318 Trial Plans 362

.32 Intradistrict Assignment to a Single Judge 362

.33 Interdistrict Transfer (Including MDL) 366

.34 Denial of Transfer 368

.341 Insufficient Common Facts 368

.342 Procedural Alternatives 369

.343 Geographical Diversity and Economy 369

.344 Maturity of Litigation 370

.35 Authority of a Judge Pending Decision by the MDL Panel 371
Contents

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.36 The Tasks of an MDL Transferee Judge 372

.37 The Task of the Transferor Judge Following Remand After MDL Proceedings 376

.4 Multiple Filings in State and Federal Courts 376

.5 Multiple Filings in District and Bankruptcy Courts 378

.51 Venue, Transfer, and Consolidation 380

.511 Venue and Transfer 380

.512 Consolidation and Reassignment 380

.52 Withdrawing the Reference 381

.53 Dividing the Labor Among Judges 383

.531 MDL Transferee Judge 383

.532 Other Judges 384

.533 Bankruptcy Appeals 384

.54 Coordinating and Consolidating Tort Claims and Related Cases 385

.541 Claims Against the Debtor 386

.542 Claims Against Other Defendants 388

.543 Consolidation of Cases 388

.544 Transfer of Related Cases of Nondebtor Defendants 389

.545 Expanding the Automatic Stay or Enjoining Related Cases 391

.55 Providing Representation for Future Mass Tort Claimants 393

.56 Estimating the Value of Mass Tort Claims 397

.57 Negotiating a Reorganization Plan 398

.58 Discharging Future Claims 399

.59 Confirming a Reorganization Plan 401

.6 Case-Management Orders 403

.61 Initial Orders 403

.62 Organization of Counsel 405

.63 Subsequent Case-Management Orders 408

.631 Adding Parties 408

.632 Pleadings and Motions 409

.633 Deferred Docketing 410

.634 Issue Identification and Development 410

.635 Electronic Communications 413

.7 Class Actions in Mass Tort Cases 413

.71 Background 414

.72 Post-Amchem Class Certification 416

.73 Post-Ortiz Mandatory Limited Fund Class Settlements 421

.74 Medical Monitoring Class Actions 424

.75 Issues Classes 429

.751 Identify the Issues 430

.752 Determine Applicable Law 431

.753 Identify a Limited Set of Laws 432

.754 Subclasses to Reflect Differences in State Law 432

.755 Determine Separability of Common Issue 433

.756 Establish a Trial Plan 434

.757 Assess the Overall Impact 435

.8 Discovery 435

.81 Sampling 436

.82 Initial Disclosures 437

.83 Interrogatories 438

.84 Depositions: New Parties 438

.85 Documents 439

.86 Physical Evidence 439

.87 Experts and Scientific Evidence 440

.9 Settlement and Trial 446

.91 Judicial Role and Settlement 446
Manual for Complex Litigation, Fourth

xii

.92 Review of Settlement in Mass Tort Class Actions 449

.921 Class Certification in a Settlement Context 450

.922 Fairness, Adequacy, and Reasonableness of the Settlement 453

.923 Criteria for Evaluating the Merits of a Proposed Settlement 454

.924 Gathering Information and Conducting a Fairness Hearing 456

.925 Evaluating Nonmonetary Benefits 460

.926 Presenting the Decision 460

.927 Awarding and Allocating Attorney Fees 461

.93 Trial 463

 23. Expert Scientific Evidence 469

.1 Introduction 469

.2 The Use of Scientific Evidence in Complex Litigation 472

.21 The Federal Rules of Evidence 472

.22 The Daubert Trilogy 474

.23 The Daubert Criteria 476

.24 Opinions and Conclusions Under Daubert 478

.25 The Daubert “Fit” Test 480

.26 The Scope of Appellate Review 482

.27 Emerging Issues in the Use of Scientific Evidence 484

.271 The Validity of Toxicological Evidence Versus Epidemiological Evidence 485

.272 Aggregation of Scientific Evidence 485

.273 Clinical Medical Judgment 487

.274 Research as a Result of Litigation 489

.3 Case Management 491

.31 Preliminary Considerations in Assessing Expert Testimony 491

.32 The Initial Conference 494

.33 Disclosures 499

.34 Discovery Control and Management 503

.341 Discovery of Testifying Experts 503

.342 Discovery of Nontestifying Experts 504

.343 Discovery of Nonretained Experts 504

.344 Discovery of Court-Appointed Experts 505

.345 Use of Videotaped Depositions 505

.35 Motion Practice 506

.351 Initiating a Daubert Inquiry 507

.352 Timing of Challenges to Expert Testimony 508

.353 Handling a Challenge to Expert Testimony 509

.354 Summary Judgment 512

.36 Final Pretrial Conference 513

.37 Trial 514

Part III: Particular Types of Litigation 517

 30. Antitrust 519

.1 Managing the Issues 519

.2 Transactional and Economic Data, and Expert Opinions 522

.3 Conflicts of Interest 524

.4 Related Proceedings 524

 31. Securities 527

.1 Introduction 527

.2 Statutory Framework 528

.3 The Private Securities Litigation Reform Act 529

.31 Class Representatives and Lead Plaintiffs 531
Contents

xiii

.32 Pleading Requirements 540

.33 Safe Harbor 543

.34 Discovery Stays 544

.4 Initial Pretrial Conference 545

.5 Class Actions and Derivative Actions 550

.6 Discovery 553

.7 Takeover Litigation 554

.71 Initial Conference 554

.72 Injunctive Relief 556

.73 Discovery 558

.8 Trial and Settlement 558

 32. Employment Discrimination 561

.1 Introduction 561

.2 The Statutory Framework 562

.21 Title VII: Discrimination in Employee Hiring and Advancement 564

.22 The Civil Rights Act of 1964: Discrimination in Contracting 567

.23 Age Discrimination in Employment Act 568

.24 Americans with Disabilities Act 570

.25 Family and Medical Leave Act 571

.3 Developments in the Law of Employment Discrimination 572

.4 Case Management 576

.41 Initial Pretrial Conference 576

.42 Class Actions 579

.43 Discovery 586

.431 Identification of Source Materials 586

.432 Computerized Records 587

.433 Confidential Information 588

.434 Preservation of Records 589

.435 Statistical Evidence and Expert Testimony 589

.436 Discovery from Class Members 590

.44 Summary Judgment 591

.45 Trial 592

.46 Settlement 596

.461 Timing 596

.462 Affirmative Relief 596

.463 Attorney Fees 597

.464 Settlement Hearing 597

.465 Implementation 597

 33. Intellectual Property 599

.1 Introduction 599

.2 Patent Law 600

.21 The Statutory Framework 600

.22 Claim Construction Under Markman v. Westview Instruments 602

.221 Holding a Markman Hearing 604

.222 Structuring the Markman Hearing 606

.223 Timing the Markman Hearing 607

.224 Requesting a Markman Hearing 610

.225 Appeal 611

.23 Defining the Issues in Patent Litigation 611

.24 Injunctive Relief 619

.25 Discovery 622

.26 Experts 625

.27 Trial 627
Manual for Complex Litigation, Fourth

xiv

.3 Copyright and Trademark Law 628

.31 Copyright 628

.311 Discovery 637

.312 Motions 639

.313 Experts 640

.32 Trademarks 640

 34. CERCLA (Superfund) 643 .1 Introduction 643

.11 Statutory Framework 646

.12 The Three Phases of CERCLA Litigation 650

.2 Case Management 654

.21 Setting Up the Case 662

.22 Special Masters and Magistrate Judges 664

.23 Related Litigation 665

.24 Organizing Counsel 667

.25 Centralized Document Management 669

.26 Narrowing the Issues 670

.27 Joinder 672

.28 Managing Discovery 674

.29 Scientific and Technical Expert Testimony 676

.3 Settlement and Trial 677

.31 Allocation 677

.32 Settlement 682

.33 Approval of Consent Decrees 686

.34 Structuring the Trial 687

 35. Civil RICO 689

.1 Introduction 689

.2 Statutory Framework 692

.3 Case Management 702

.31 Pleadings 702

.32 Initial Conference 708

.33 Discovery 720

.34 Motion Practice 721

.35 Trial 722

Part IV: Sample Orders 725

 40. Sample Orders 727

.1 Order Setting Initial Conference 730

.2 Sample Case-Management Orders 734

.21 General 734

.22 Responsibilities of Designated Counsel 741

.23 Attorneys’ Time and Expense Records 743

.24 Scheduling Order 744

.25 Preservation of Documents, Data, and Tangible Things 746

.26 Document Depositories 749

.261 Order to Meet and Confer to Establish Joint Document Depository 749

.262 Order to Establish Separate Document Depositories 751

.27 Confidentiality Order 752

.28 Referral of Privilege Claims to Special Master 754

.29 Deposition Guidelines 756

.3 Order Creating a Web Site 762
Contents

xv

.4 Class Actions Orders 763

.41 Order Certifying Class 763

.42 Order Setting Hearing on Proposed Class Settlement 765

.43 Combined Certification and Proposed Settlement Order 766

.44 Order Approving Settlement/Claims Procedure 768

.5 Orders in Special Cases 770

.51 Coordinating Proceedings in Different Courts 770

.52 Mass Tort Case-Management Order 773

.53 CERCLA Case-Management Order 779

.54 Civil RICO Case-Statement Order 783

.6 Sample Final Pretrial Orders 786

.7 Jury Questionnaire 786

Index 787
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xvii

Preface

This fourth edition of the Manual for Complex Litigation stands on the

shoulders of the three previous editions and in the debt of the following: Judge

William W Schwarzer, director of the Federal Judicial Center from 1990 to

1995, and primarily responsible for the third edition (1995); Judge Sam C.

Pointer, who chaired the Board of Editors for the second edition (1985); Judge

Alfred P. Murrah, the Center director who was the driving force behind the

inaugural edition; Judge Thomas J. Clary, the chair of the initial Board of Editors; and the members of that Board.

The fourth edition of the Manual is adapted to new conditions and demands of federal litigation and reflects the work, experience, and insight of its

Board of Editors. The Chief Justice, as chairman of the Board of the Federal

Judicial Center, appointed the Board of Editors in 1999. He asked Judge Stanley Marcus, then a member of the Center’s Board, to chair the Board of Editors. Judge Marcus has continued to oversee the Manual’s completion even

though his term as a Center Board member ended in 2002. His insight and experience as a federal district judge and now as a member of the court of appeals

are reflected on every page of the Manual. So, too, does this edition reflect the

many hours dedicated to the project by individual members of the Board of

Editors. A complete list of individuals who worked on the Manual can be

found at Acknowledgments, page xix.

This Manual is one of the flagship services of the Federal Judicial Center. It

has been my pleasure, as director of the Center, to have worked with Judge

Marcus and the Board of Editors, and with the staff of the Center and others,

to bring this fourth edition into being.

Fern M. Smith

Director, Federal Judicial Center 1999–2003
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xix

Acknowledgments

As with all Federal Judicial Center publications, this work is a tribute to the

teamwork of its staff. In particular, thanks go to Meghan A. Dunn, Jill E.

Evans, Elizabeth C. Wiggins, Thomas E. Willging, and Kenneth J. Withers for

substantial assistance in drafting portions of the Manual. In addition, thanks

go to the following: Linda Beavers, Joe Cecil, James Eaglin, Geoffrey Erwin,

Richard Gibson, Jason Gilbert, Kristina Gill, Linda B. Gill, David Guth, Andrea

Henson-Armstrong, Laural Hooper, Gil Hopenstand, Ilisa Horowitz, Martha

Kendall, Gregory Langadinos, Marie Leary, Angelia N. Levy, Preston Manning,

David Marshall, Dean Miletich, and Russell Wheeler.

We greatly appreciate the work of the many judges, professors, practitioners, and law clerks who offered their enthusiastic review and helpful comments: John Aldock, Esq., Hon. William Alsup, David Aman, John E. Ballow,

Esq., David Barkan, Hon. Louis C. Bechtle, Hon. Edward R. Becker, John Beisner, Esq., Professor Margaret Berger, Kenneth J. Brown, Hon. Robert J. Bryan,

Arthur Bryant, Esq., Professor Stephen B. Burbank, Elisabeth Cabraser, Esq.,

Professor Dan Capra, Stanley Chesley, Esq., Edward Cloutman, Esq., Professor

Edward H. Cooper, Professor Jill Fisch, Hon. James C. Francis IV, Theodore L.

Garrett, Esq., Professor S. Elizabeth Gibson, Hon. John F. Grady, Hon. Wm.

Terrell Hodges (Judicial Panel on Multidistrict Litigation), Gregory P. Joseph,

Esq., Terrence M. Kalahurka, Esq., Bruce Keller, Esq., Professor Kenneth

Kreiling, Michael C. LeVine, Professor Richard L. Marcus, Hon. Jed S. Rakoff,

Deborah Reyher, Paul Rheingold, Esq., Anthony Z. Roisman, Esq., Hon. Barbara Jacobs Rothstein, Hon. Patti B. Saris, Hon. Shira Scheindlin, Hon. William W Schwarzer, Hon. Milton Shadur, Hon. Walter K. Stapleton, Hon. Ben

F. Tennile, North Carolina Business Court, Rebecca Tushnet, Esq., Melvyn I.

Weiss, Esq., and Brian Wolfman, Esq.
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1

Introduction

The impetus for this fourth edition of the Manual for Complex Litigation

was, as with the previous editions, significant change in the landscape of federal litigation and the increasing responsibilities of federal trial judges. A recommendation of the Mass Tort Working Group, appointed by the Chief Justice, served as a catalyst for this project.1

 Major changes include, but are hardly

limited to, the growth in class action and mass tort litigation, and the trial

judge’s heightened role imposed by Daubert v. Merrell Dow Pharmaceuticals2

and cases following it, and by Markman v. Westview Instruments, Inc.

3

 The

Manual’s orientation, however, differs little from the first incarnation. It

“contains neither a simplified outline for the easy disposition of complex litigation nor an inflexible formula or mold into which all trial or pretrial procedure must be cast.”4

Users should keep in mind several things about this edition. First, it is not,

and should not be cited as, authoritative legal or administrative policy. As

noted at page iii, it contains analyses and recommendations of the Board of

Editors, but each member of the Board does not necessarily subscribe to all

parts of the Manual. It was produced under the auspices of the Federal Judicial

Center, but the Center has no authority to prescribe practices for federal

judges. The Manual’s recommendations and suggestions are merely that. As

always, the management of any matter is within the discretion of the trial

judge.

Second, although federal trial judges are the Manual’s primary audience,

the techniques and procedures discussed may be useful in state courts as well,

particularly in view of the convergence that is occurring in related litigation

pending in both state and federal court systems. Reference to the Manual may

assist in the coordination of such litigation. The Manual will also assist lawyers,

who share with judges the responsibility for managing complex litigation in

which they are involved.

Third, as with the previous editions, this edition’s “organization . . . belies

the fact that its subject matter is not neatly divisible into distinct topics.”5

 Nor

is the term “complex litigation” susceptible to any bright-line definition. Part I

1. Mass Tort Working Group, Report on Mass Tort Litigation, 187 F.R.D. 293, 324 (1999).

2. 509 U.S. 579 (1993).

3. 517 U.S. 370 (1996).

4. Handbook of Recommended Procedures for the Trial of Protracted Cases, 25 F.R.D. 351,

355 (1960) (quoted in Manual for Complex Litigation, Second, § 10 (1985)).

5. Manual for Complex Litigation, Third, § 10.2 (1995).
Manual for Complex Litigation, Fourth

2

treats generic topics in complex (and other) litigation, such as pretrial and trial

procedures and attorney fees. Part II analyzes special problems in complex litigation, such as class actions and expert scientific evidence. Part III has separate

sections on complex litigation in various subject areas, such as antitrust and

intellectual property. Part IV includes sample orders and forms. As the Manual

for Complex Litigation, Third said, however, “[a] topic, such as settlement or

class actions, will be relevant to the discussion at different points.”6

 Thus, this

edition too contains extensive cross-references. This fourth edition contains

much new and revised material and has a somewhat different format and

numbering system than that of the MCL 3d. However, because civil and criminal case management differ significantly, and in order to keep this volume to a

manageable size, this edition deals only with civil litigation.

Finally, it could go without saying that changes in statutes, case law, regulations, and technology will quickly date some specific references in the Manual, and users need to exercise standard research practices when using the

Manual. For example, prospective legislative changes in class action rules remained pending as the Manual went to press, and the precise changes could

not be forecast. Before this edition went to press, significant changes in Federal

Rules of Civil Procedure 23 and 53 were approved by the Supreme Court7

 and

were before Congress pursuant to the Rules Enabling Act.8

 Because congressional acceptance of the amendments seemed likely, and the amended rules

differed significantly from those in effect prior to December 1, 2003, the Manual, when treating class actions, uses the amended rules and the committee

notes about those amendments.

In offering an array of litigation management techniques and procedures,

the Manual does not recommend that every complex litigation necessarily employ any such procedures or follow a standard pattern. Choices will depend on

the needs of the litigation and many other considerations. What the Manual

does urge is that choices be made, and that they be made starting early in the

litigation. While those decisions are largely the responsibility of the court, the

judge should not take the case from the lawyers, but rather provide guidance

and direction, setting limits and applying controls as needed. Additional Center publications on litigation management can be found at http://www.fjc.gov.

Complex litigation should not be viewed as monolithic. In some areas of

law, such as antitrust and securities litigation, substantive and procedural rules

6. Id.

7. See letters of the Chief Justice to the Speaker of the House and the President of the Senate, March 27, 2003, and amendments adopted by the Supreme Court, in “2002 Term Court

Orders,” at http://www.supremecourtus.gov (last visited Nov. 10, 2003).

8. 28 U.S.C. § 2074 (2000).
Introduction

3

are relatively well settled, as are management techniques. In others, such as

environmental, civil rights, and mass tort litigation, rules are still emerging or

undergoing change. While all complex litigation challenges courts, the unsettled areas present the greatest challenges.

Much complex litigation, therefore, will take the judge and counsel into

sparsely charted terrain with little guidance on how to respond to pressing

needs for effective management. Practices and principles that served in the past

may not be adequate, their adaptation may be difficult and controversial, and

novel and innovative ways may have to be found. While this Manual for Complex Litigation, Fourth should be helpful within the limits of its mission, it

should be viewed as open-ended, and judges are encouraged to be innovative

and creative to meet the needs of their cases while remaining mindful of the

bounds of existing law and any variations within their own circuits.
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when printing double-sided copies.
Part I

Overview

_______________

10. General Principles 7

11. Pretrial Procedures 31

12. Trial 131

13. Settlement 167

14. Attorney Fees 183

15. Judgments and Appeals 208
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when printing double-sided copies.
7

10. General Principles

.1 Judicial Supervision 8

.11 Early Identification and Control 9

.12 Assignment Plan 9

.121 Recusal/Disqualification 10

.122 Other Judges 11

.123 Related Litigation 11

.13 Effective Management 12

.14 Supervisory Referrals to Magistrate Judges and Special Masters 13

.15 Sanctions 15

.151 General Principles 15

.152 Sources of Authority 16

.153 Considerations in Imposing 17

.154 Types 18

.155 Procedure 21

.2 Role of Counsel 22

.21 Responsibilities in Complex Litigation 22

.22 Coordination in Multiparty Litigation—Lead/Liaison Counsel and Committees 24

.221 Organizational Structures 24

.222 Powers and Responsibilities 26

.223 Compensation 26

.224 Court’s Responsibilities 26

.225 Related Litigation 28

.23 Withdrawal and Disqualification 28

Fair and efficient resolution of complex litigation requires at least that

(1) the court exercise early and effective supervision (and, where necessary,

control); (2) counsel act cooperatively and professionally; and (3) the judge

and counsel collaborate to develop and carry out a comprehensive plan for the

conduct of pretrial and trial proceedings. The generic principles of pretrial and

trial management are covered in sections 11 and 12 and are applied to specific

types of litigation in Part III. Section 10 discusses matters that cut across all

phases of complex litigation.
§ 10.1 Manual for Complex Litigation, Fourth

8

10.1 Judicial Supervision

.11 Early Identification and Control 9

.12 Assignment Plan 9

.121 Recusal/Disqualification 10

.122 Other Judges 11

.123 Related Litigation 11

.13 Effective Management 12

.14 Supervisory Referrals to Magistrate Judges and Special Masters 13

.15 Sanctions 15

.151 General Principles 15

.152 Sources of Authority 16

.153 Considerations in Imposing 17

.154 Types 18

.155 Procedure 21

Although not without limits, the court’s express and inherent powers enable the judge to exercise extensive supervision and control of litigation. The

Federal Rules of Civil Procedure, particularly Rules 16, 26, 37, 42, and 83,

contain numerous grants of authority that supplement the court’s inherent

power9 to manage litigation. Federal Rule of Civil Procedure 16(c)(12) specifically addresses complex litigation, authorizing the judge to adopt “special

procedures for managing potentially difficult or protracted actions that may

involve complex issues, multiple parties, difficult legal questions, or unusual

proof problems.”

In planning and implementing case management, the court should keep in

mind the goal of bringing about a just resolution as speedily, inexpensively,

and fairly as possible. Judges should tailor case-management procedures to the

needs of the particular litigation and to the resources available from the parties

and the judicial system. Judicial time is the scarcest resource of all: Judges

should use their time wisely and efficiently and make use of all available help.

Time pressures may lead some judges to believe that they should not devote

time to civil case management. Investing time in the early stages of the litigation, however, will lead to earlier dispositions, less wasteful activity, shorter

trials, and, in the long run, economies of judicial time and fewer judicial burdens.

9. See, e.g., Chambers v. NASCO, Inc., 501 U.S. 32, 42–51 (1991); Pedroza v. Cintas Corp.,

No. 6-013247-CV, 2003 WL 828237, at *1 (W.D. Mo. Jan. 9, 2003). References to “Rule(s)” refer

to the Federal Rules of Civil Procedure.
General Principles § 10.12

9

10.11 Early Identification and Control

Judicial supervision is most needed and productive early in the litigation.

To this end, courts should have a method of advising the assigned judge immediately that a case is likely to be complex; courts should also instruct lawyers

to alert the judge in such a case. A case that needs increased supervision may

not be apparent from the docket sheet.

The judge should hold an initial pretrial conference under Rule 1610 as

soon as practical (many judges hold the conference within thirty to sixty days

of filing), even if some parties have not yet appeared or even been served. Special procedures sometimes are needed even before the initial conference (for

example, it may be necessary to take immediate action to preserve evidence).

Rule 16(b) requires the judge, usually after holding a scheduling conference, to issue a scheduling order11 “as soon as practicable but in any event

within 90 days after the appearance of a defendant and within 120 days after

the complaint has been served on a defendant” (local rules may establish different deadlines). The initial pretrial conference may be used for this purpose

unless a separate scheduling conference is needed. Many judges use standing

case orders—sometimes tailored to specific types of litigation—to elicit specific

information before the conference and to inform counsel of the matters they

must be prepared to discuss.12

10.12 Assignment Plan

.121 Recusal/Disqualification 10

.122 Other Judges 11

.123 Related Litigation 11

Each multijudge court should determine for itself how assignment of complex litigation should be made: according to the court’s regular caseassignment plan, under a special rotation for complex cases, or to judges particularly qualified by reason of prior experience. Courts that do not assign actions automatically to a specific judge upon filing should nevertheless make an

individual assignment as soon as a case is identified as complex or a part of

10. For discussion of the matters that should or may be covered in this and subsequent

conferences, see infra section 11.2 (pretrial conferences). Special procedures may be needed even

before the initial conference; for example, it may be necessary to take immediate action to preserve evidence. See infra section 11.442 (documents preservation).

11. For a sample scheduling order, see infra section 40.24.

12. For a sample order, see infra section 40.54 (civil RICO case-statement order); see also

Civil Litigation Management Manual app. A, at 213–15 (Federal Judicial Center 2001) [hereinafter Litigation Manual] (Sample Form 12).
§ 10.121 Manual for Complex Litigation, Fourth

10

complex litigation. In unusual situations, the demands of complex litigation

may be great enough to justify relieving the assigned judge from some or all

other case assignments for a period of time or giving the judge assistance on

aspects of the litigation from other judges.

10.121 Recusal/Disqualification

Title 28, section 455(c) of the U.S. Code directs judges to inform themselves about their personal and fiduciary financial interests and to make a

“reasonable effort” to inform themselves about the personal financial interests

of their spouse and any minor children residing in their household. Sections

455(b) and (f) designate when the judge must recuse and when parties may

waive recusal. Upon assignment or reassignment of a complex case, the court

should promptly review the pleadings and other papers in the case, the identities of parties and attorneys, and the nature of interests affected by the litigation for possible conflicts that may require recusal or disqualification. Counsel

should submit a list, for review by the judge, of all entities affiliated with the

parties and all attorneys and firms associated in the litigation. This review must

be conducted at the outset, but the judge needs to consider both present and

potential conflicts that may arise as a result of the joinder of additional parties,

the identification of class members, or the assignment of related cases with the

resultant involvement of additional litigants and counsel.13 As the case progresses, conflicts may continue to arise as additional persons and interests enter the litigation or as the judge’s staff changes.14 It is important that law clerks

avoid having a relationship (including a pending offer) with any party or

counsel.

Reassignment, when warranted, should be effected as promptly as possible,

and the judge to whom the litigation is to be reassigned should make a similar

inquiry into potential grounds for recusal before accepting the reassignment

and notifying the parties.

13. See, e.g., Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 859–62 (1988)

(holding that “scienter is not an element of a violation of § 455(a); advancement of the purpose

of the provision—to promote public confidence in the integrity of the judicial process—does not

depend upon whether or not the judge actually knew” of the conflict, but rather what the public

might reasonably expect the judge to know); In re Cement Antitrust Litig., 688 F.2d 1297 (9th

Cir. 1982), aff’d under 28 U.S.C. § 2109 sub nom. Ariz. v. United States Dist. Court, 459 U.S. 1191

(1983) (disqualification of judge, five years after suit instituted, upon discovery that spouse

owned stock in a few of the more than 200,000 class members).

14. See, e.g., Linda S. Mullenix, Beyond Consolidation, 32 Wm. & Mary L. Rev. 475, 539–40

(1991) (discussing complex case in which magistrate judge recused when law clerk was offered

employment with firm of counsel representing party).
General Principles § 10.123

11

10.122 Other Judges

Although one judge should supervise the litigation, he or she may request

other judges to perform special duties, such as conducting settlement discussions (see section 13.11). Moreover, in the course of consolidated or coordinated pretrial proceedings, severable claims or cases may appear that could be

assigned to other judges.

10.123 Related Litigation

Complex litigation frequently involves two or more separate but related

cases. All pending related cases or cases that may later be filed in the same

court, whether or not in the same division, should be assigned at least initially

to the same judge. Pretrial proceedings in these cases should be coordinated or

consolidated under Federal Rule of Civil Procedure 42(a), even if the cases are

filed in more than one division of the court.15 It may be necessary to transfer to

the district judge related adversary proceedings in bankruptcy court, including

proceedings to determine the dischargeability of debts.16 Counsel should be

directed to inform the assigned judge of any pending related cases (as many

local rules require). Sometimes related cases are identified on the face of the

complaint. The judge to whom the complex litigation has been assigned should

also ask whether related cases are pending in that district.

Assignment of related criminal and civil cases to a single judge will improve efficiency and coordination, especially when the cases are pending at the

same time. Other factors, however, may suggest that the cases be handled by

different judges—for example, extensive judicial supervision of pretrial proceedings in the civil litigation may be needed while the criminal trial is being

conducted. See generally section 20.2.

Consolidation may be possible even when related cases are filed in different courts. Other courts can transfer cases under 28 U.S.C. § 1404(a) or § 1406

to the consolidation court, but only if personal jurisdiction and venue lie in the

transferee forum.17 Pretrial proceedings in related cases may also be consolidated in a single district by the Judicial Panel on Multidistrict Litigation under

28 U.S.C. § 1407. See section 20.13. State court cases may be removed to fed15. Under 28 U.S.C. § 1404(b) the court may, upon motion, transfer cases, motions, or

hearings pending in the same district to a single division.

16. See, e.g., In re Flight Trans. Corp. Sec. Litig., 730 F.2d 1128 (8th Cir. 1984).

17. See, e.g., Nat’l Union Fire Ins. Co. v. Turtur, 743 F. Supp. 260, 263 (S.D.N.Y. 1990);

Shutte v. Armco Steel Corp., 431 F.2d 22, 24 (3d Cir. 1970) (citing 28 U.S.C. § 1404(a)); Cote v.

Wadel, 796 F.2d 981, 984 (7th Cir. 1986); Dubin v. United States, 380 F.2d 813 (5th Cir. 1967)

(citing 28 U.S.C. § 1406). If personal jurisdiction and venue do not lie in the transferee forum,

transfer is improper even if plaintiffs consent. Hoffman v. Blaski, 363 U.S. 335 (1960).
§ 10.13 Manual for Complex Litigation, Fourth

12

eral court.18 They may also be transferred to or refiled in the consolidating district court following voluntary dismissal or dismissal based on forum non conveniens.

When transfer of all cases to a single court for centralized management is

not possible the affected courts can still use informal means to coordinate proceedings to the extent practicable. Coordination methods include arrangements made by counsel, communications between judges, joint pretrial conferences and hearings at which all involved judges preside, and parallel orders.

Another coordination method is to designate a “lead” case in the litigation;

rulings in the lead case would presumptively apply to the other coordinated

cases, and the judges in those cases may stay pretrial proceedings in those cases

pending resolution of the lead case. Section 20.14 (cases in different federal

courts) and section 20.31 (cases in federal and state courts) discuss coordination of related litigation more fully.

18. See 28 U.S.C. §§ 1441–1452 (2000).

10.13 Effective Management

Effective judicial management generally has the following characteristics:

• It is active. The judge anticipates problems before they arise rather than

waiting passively for counsel to present them. Because the attorneys

may become immersed in the details of the case, innovation and creativity in formulating a litigation plan frequently will depend on the

judge.

• It is substantive. The judge becomes familiar at an early stage with the

substantive issues in order to make informed rulings on issue definition and narrowing, and on related matters, such as scheduling, bifurcation and consolidation, and discovery control.

• It is timely. The judge decides disputes promptly, particularly those

that may substantially affect the course or scope of further proceedings. Delayed rulings may be costly and burdensome for litigants and

will often delay other litigation events. The parties may prefer that a

ruling be timely rather than perfect.

• It is continuing. The judge periodically monitors the progress of the

litigation to see that schedules are being followed and to consider necessary modifications of the litigation plan. Interim reports may be ordered between scheduled conferences.

• It is firm, but fair. Time limits and other controls and requirements are

not imposed arbitrarily or without considering the views of counsel,
General Principles § 10.14

13

and they are revised when warranted. Once established, however,

schedules are met, and, when necessary, appropriate sanctions are imposed (see section 10.15) for derelictions and dilatory tactics.

• It is careful. An early display of careful preparation sets the proper tone

and enhances the court’s credibility and effectiveness with counsel.

The judge’s role is crucial in developing and monitoring an effective plan

for the orderly conduct of pretrial and trial proceedings. Although elements

and details of the plan will vary with the circumstances of the particular case,

each plan must include an appropriate schedule for bringing the case to resolution. Case-management plans ordinarily prescribe a series of procedural

steps with firm dates to give direction and order to the case as it progresses

through pretrial proceedings to summary disposition or trial. In some cases,

the court can establish an overall plan for the conduct of the litigation at the

outset; in others, the plan must be developed and refined in successive stages. It

is better to err on the side of overinclusiveness initially and subsequently modify plan components that prove impractical than to omit critical elements.

Nevertheless, in litigation involving experienced attorneys working cooperatively, a firm but realistic trial date may suffice if coupled with immediate access to the court for disputes that counsel cannot resolve.

The attorneys—who will be more familiar than the judge with the facts

and issues in the case—should play a significant part in developing the litigation plan and should have primary responsibility for its execution. Court supervision and control should recognize the burdens placed on counsel by

complex litigation and should foster mutual respect and cooperation between

the court and the attorneys and among the attorneys.

10.14 Supervisory Referrals to Magistrate Judges and Special

Masters

The judge should decide early in the litigation whether to refer all or any

part of pretrial supervision and control to a magistrate judge. The judge should

consider a number of factors:

• the law of the circuit (see section 11.53);

• the experience and qualifications of the available magistrate judges;

• the relationship among and attitude of the attorneys;

• the extent to which a district judge’s authority may be required;

• the time the judge has to devote to the litigation;

• the novelty of the issues and the need for innovation; and

• the judge’s personal preferences.
§ 10.14 Manual for Complex Litigation, Fourth

14

Some judges prefer to supervise complex litigation personally, even in courts

that routinely refer discovery or other pretrial procedures to magistrate judges.

Referrals in complex cases may cause additional costs and delays when the

parties seek judicial review, diminish supervisory consistency and coherence as

the case proceeds to trial, create greater reluctance to try innovative procedures

that might aid in resolution of the case, and cause the judge to be unfamiliar

with the case at the time of trial. Other judges believe that such referrals provide effective case management during the pretrial stage, enabling the judge to

devote time to more urgent matters.

Even without general referral to a magistrate judge, referral of particular

matters may be helpful. Such matters include supervision of all discovery matters or supervision of particular discovery issues or disputes, particularly those

that may be time-consuming or require an immediate ruling (including resolving deposition disputes by telephone; ruling on claims of privilege and

motions for protective orders; and conducting hearings on procedural matters,

such as personal jurisdiction). Magistrate judges may also help counsel formulate stipulations and statements of contentions, and may facilitate settlement

discussions. See generally section 11.53.

Referral of pretrial management to a special master (not a magistrate

judge) is not advisable for several reasons. Rule 53(a)(1) permits referrals for

trial proceedings only in nonjury cases involving “some exceptional conditions” or in an accounting or difficult computation of damages. Because pretrial management calls for the exercise of judicial authority, its exercise by

someone other than a district or magistrate judge is particularly inappropriate.19 The additional expense imposed on parties also militates strongly against

such appointment.20 Appointment of a special master (or of an expert under

Federal Rule of Evidence 706) for limited purposes requiring special expertise

may sometimes be appropriate (e.g., when a complex program for settlement

needs to be devised).21 See sections 11.51–11.52.

Orders of referral should follow the guidance offered in Rule 53(b) and

specifically describe what is being referred, the authority being delegated to the

19. See LaBuy v. Howes Leather Co., 352 U.S. 249 (1957) (the length and complexity of a

case and the congestion of the court’s docket do not alone justify a comprehensive reference to a

special master). See also Maldonado v. Administracion de Correccion del Estado Libre Asociado,

No. 90-2186, 1992 U.S. Dist. LEXIS 16393 (D.P.R. Sept. 30, 1992); infra section 11.52. Cf. McLee

v. Chrysler Corp., 38 F.3d 67 (2d Cir. 1994).

20. Prudential Ins. Co. of Am. v. United States Gypsum Co., 991 F.2d 1080 (3d Cir. 1993)

(writ of mandamus issued overturning appointment of master to hear merits of a claim for cost

of testing, monitoring, and removing asbestos-containing products at thirty-nine sites).

21. See Litigation Manual, supra note 12, at 123–24. See generally Wayne D. Brazil et al.,

Managing Complex Litigation: A Practical Guide to the Use of Special Masters (1983).
General Principles § 10.151

15

magistrate judge or special master, and the procedure for review by the judge.

Regular progress reports from the magistrate judge or special master are advisable.

10.15 Sanctions

.151 General Principles 15

.152 Sources of Authority 16

.153 Considerations in Imposing 17

.154 Types 18

.155 Procedure 21

10.151 General Principles

The rules and principles governing the imposition of sanctions in complex

litigation require special care because misconduct may have more severe consequences. Sanctions proceedings can be disruptive, costly, and may create

personal antagonism inimical to an atmosphere of cooperation. Moreover, a

resort to sanctions may reflect a breakdown of case management. Close judicial

oversight and a clear, specific, and reasonable management program, developed with the participation of counsel, will reduce the potential for sanctionable conduct because the parties will know what the judge expects of them. On

the other hand, the stakes involved in and the pressures generated by complex

litigation may lead some parties to violate the rules. Although sanctions should

not generally be a management tool, a willingness to resort to sanctions, sua

sponte if necessary, may ensure compliance with the management program.22

In designing the case-management program, the judge should anticipate

compliance problems and include prophylactic procedures, such as requiring

parties to meet and confer promptly in the event of disputes and providing

ready access to the judge if the parties cannot resolve their differences. In addition, it helps if the court informs counsel at the outset of the court’s expectations about cooperation and professionalism. Perceptions of the limits of legitimate advocacy differ, and advance guidance can reduce the need for sanctions later.

Although sanctions should be a last resort, they are sometimes unavoidable

and may be imposed for general or specific deterrence, to punish, or to remedy

the consequences of misconduct. If sanctions are imposed, the court should

explain on the record or in an order the basis and purpose of its action.

22. See Fed. R. Civ. P. 11(c)(1)(B); Chambers v. NASCO, Inc., 501 U.S. 32, 42 n.8 (1991).
§ 10.152 Manual for Complex Litigation, Fourth

16

10.152 Sources of Authority

A number of federal statutes allow the court, in its discretion, to award

costs, including attorneys’ and sometimes experts’ fees to prevailing parties.23

The primary codified sources of authority to impose sanctions in civil litigation

are 28 U.S.C. § 1927 and Federal Rules of Civil Procedure 11, 16, 41, and 56(g).

Sanctions relating to discovery are authorized by Rules 26, 30, 32(d),

33(b)(3)–(4), 34(b), 35(b)(1), 36(a), and, most prominently, 37. Note that

Rule 11 is expressly made inapplicable to discovery.24 Under limited circumstances sanctions may also be imposed under local rules.25

Sanctions may also be imposed under the court’s inherent power,26 even

where the conduct at issue could be sanctioned under a statute or rule. Use of

inherent power, however, should be avoided if the statute or rule is directly

applicable and adequate to support the intended sanction.27 The court may

assess attorneys’ fees pursuant to its inherent power, but when sitting in diversity should not do so in contravention of applicable state law embodying a

substantive policy, such as a statute permitting prevailing parties to recover

fees in certain classes of litigation.28

Choice of authority for sanctions should be clear in the order, because the

applicable standards and procedures and the available sanctions will vary depending on the authority under which the court proceeds. For example, 28

U.S.C. § 1927 authorizes the assessment of costs and fees against an attorney

only—it provides no authority to sanction a party.

23. See, e.g., 42 U.S.C.A. §§ 1988(b), 1988(c), 2000e-5(k) (West 1994 & Supp. 2002); 15

U.S.C. §§ 78i(e), 78r(a) (2000). Such statutes may expressly predicate such an award on a finding

that the action (or defense) was meritless, see, e.g., 15 U.S.C. § 77k(e), and common law may

impose the same requirement when awards under such statutes are sought by defendants. See

Christansburg Garment Co. v. EEOC, 434 U.S. 412, 416 (1978) (prevailing plaintiff qualifies for

fee award absent “special circumstances,” but prevailing defendant qualifies for fee award only if

plaintiff’s suit is “frivolous, unreasonable, or without foundation”). But see Fogerty v. Fantasy

Inc., 510 U.S. 517, 525 n.12 (1994) (same standard applies to plaintiffs and defendants seeking

fees in copyright, patent, and trademark cases). Such awards may therefore be considered a

sanction for meritless litigation.

24. Fed. R. Civ. P. 11(d).

25. See, e.g., E.D. Mich. Civ. R. 11.1; Miranda v. S. Pac. Transp. Co., 710 F.2d 516 (9th Cir.

1983).

26. See Chambers, 501 U.S. at 43–45, and cases cited therein; Pedroza v. Cinatas Corp. No.

6-01-3247-CV, 2003 WL 828237, at *1 (W.D. Mo. Jan. 9, 2003).

27. Id. at 49–50 & n.14 (distinguishing Societe Internationale v. Rogers, 357 U.S. 197 (1958)

(Rule 37)); United States v. One 1987 BMW 325, 985 F.2d 655, 661 (1st Cir. 1993) (where civil

rule limits sanction that may be imposed, court may not circumvent by resorting to inherent

power).

28. Chambers, 501 U.S. at 50–53.
General Principles § 10.153

17

10.153 Considerations in Imposing

Factors to consider as to imposing sanctions include the following:

• the nature and consequences of the dereliction or misconduct;

• the person(s) responsible;

• the court’s discretion under the applicable source of authority to impose sanctions and to choose which sanctions to impose;

• the purposes to be served by imposing sanctions, and the least severe

sanction that will achieve those purposes; and

• the appropriate time for conducting sanctions proceedings.

Factors to consider as to the nature and consequences of the dereliction or

misconduct include the following:

• whether the act or omission was willful or negligent;

• whether it directly violated a court order or a federal or local rule;

• its effect on the litigation and the trial participants;

• whether it was isolated or part of a course of misconduct or dereliction;29 and

• any extenuating circumstances.

Rule 11 substantially limits the authority to impose monetary sanctions,

but they may still be available in unusual cases or under other rules or powers.

Generally, they are imposed only on the person(s) responsible for the misconduct; if assessed against counsel, they should be accompanied by a direction

not to pass the cost on to the client. It may sometimes be appropriate for the

court to sanction the client or the client and attorney jointly. Pitting attorney

against client, however, can create a conflict of interest30 and may require inquiry into potentially privileged communications. Though it may be ethically

permissible for an attorney to reveal client confidences to the extent necessary

in this context,31 this does not resolve the privilege issue. The least disruptive

alternative may be for the court to impose joint and several liability on both

29. See Fed. R. Civ. P. 11(b) & (c) committee note (listing these and other considerations).

30. See Healey v. Chelsea Res., Ltd., 947 F.2d 611, 623 (2d Cir. 1991); White v. Gen. Motors

Corp., 908 F.2d 675, 685 (10th Cir.), cert. denied, 498 U.S. 1069 (1991).

31. See Model Rules of Prof’l Conduct R. 1.6(b)(2) (2002); Model Code of Prof’l Responsibility DR 4-101(c) (1981).
§ 10.154 Manual for Complex Litigation, Fourth

18

counsel and client32 or to defer the matter of sanctions until the end of the litigation.33

Some types of nonmonetary sanctions may affect the litigation’s outcome.

A judge should impose dismissal, default, or preclusion of a claim or evidence

only in egregious circumstances and only after consideration of the following

factors:

• the policy favoring trial on the merits;

• whether the sanction will further the just, speedy, and inexpensive determination of the action;

• the degree to which the sanctioned party acted deliberately and knew

or should have known of the possible consequences;

• the degree of responsibility of the affected client;

• the merits and importance of the claim(s) affected;

• the impact on other parties or the public interest; and

• the availability of less severe sanctions.

10.154 Types

In imposing the least severe sanction adequate to accomplish the intended

purpose, the court can select from a broad range of options:34

• Reprimand. An oral reprimand will suffice for most minor violations,

particularly a first infraction. A written reprimand may be appropriate

in more serious cases.

• Cost shifting. The purpose of Federal Rule of Civil Procedure 11 sanctions is deterrence rather than compensation; the rule therefore permits cost shifting only in “unusual circumstances.”35 In contrast, many

of the discovery rules (primarily Rules 26(g) and 37) and Rule 16(f)

(dealing with pretrial conferences) require or permit cost shifting in

specified situations. See generally section 11.433. Under 28 U.S.C.

§ 1927, and Federal Rule of Civil Procedure 56(g) and its inherent

32. See Martin v. Am. Kennel Club, Inc., No. 87C2151, 1989 U.S. Dist. LEXIS 201, at

*22–23 (N.D. Ill. Jan. 6, 1989) (“[a]bsent a clear indication of sole responsibility,” liability

should be joint and several).

33. See, e.g., O’Neil v. Ret. Plan for Salaried Employees of RKO Gen. Inc., No. 88 Civ. 8498,

1992 U.S. Dist. LEXIS 237, at *12–13 (S.D.N.Y. Jan. 10, 1992); Fed. R. Civ. P. 11 committee note.

34. See Chambers v. NASCO, Inc., 501 U.S. 32, 44–45 (1991) (“A primary aspect” of the

court’s discretion to invoke its inherent sanction power “is the ability to fashion an appropriate

sanction” for abuse of judicial process.).

35. See Fed. R. Civ. P. 11 committee note (monetary sanctions ordinarily paid into court,

but may be directed to those injured if deterrence would otherwise be ineffective).
General Principles § 10.154

19

power, the court may order cost-shifting sanctions for actions taken in

bad faith.

• Denial of fees or expenses. When attorneys’ fees and expenses are incurred through dilatory or otherwise improper conduct or in proceedings brought on by such conduct, the court may decline to award

such fees and expenses or may order counsel not to charge them to

their clients.

• Remedial action. Counsel and parties may be required to remedy a

negligent or wrongful act at their own expense, as by reconstructing

materials improperly destroyed or erased.

• Grant/denial of time. Improper delay may justify awarding opposing

parties additional time for discovery or other matters,36 or denying

otherwise proper requests for extension of time.

More serious sanctions, reserved for egregious circumstances, include the

following:

• Demotion/removal of counsel. An attorney may be removed from a position as lead, liaison, or class counsel, or (in an extreme case) from

further participation in the case entirely. Such a sanction, however,

may disrupt the litigation, may cause significant harm to the client’s

case and the reputation of the attorney or law firm, and can conflict

with a party’s right to counsel of its choosing.

• Removal of party as class representative. Before imposing this sanction,

the court should consider ordering that notice be given to the class

under Rule 23(d)(2) to enable class members to express their views

concerning their representation or to intervene in the action.37

• Enjoining party from commencing other litigation. While there is a

strong policy against denying access to the courts, a party may be enjoined from commencing other actions until it has complied with all

orders in the current action, or from bringing, without court approval,

other actions involving the same or similar facts or claims.

• Preclusion/waiver/striking. Failure to timely make required disclosures

or production, raise objections, or file motions may constitute sufficient grounds for the court to preclude the introduction of related evidence, deem certain facts admitted and objections waived, strike

36. See, e.g., Fed. R. Civ. P. 30(d)(2).

37. See Fed. R. Civ. P. 23(d)(2) & committee note.
§ 10.154 Manual for Complex Litigation, Fourth

20

claims or defenses, or deny the motions, including those seeking to

amend pleadings or join parties.38

• Dismissal. This severe sanction should generally not be imposed until

the affected party has been warned and given a chance to take remedial

action, and then only when lesser sanctions, such as dismissal without

prejudice and assessment of costs, would be ineffective.

• Vacation of judgment. The court may vacate a judgment it has rendered

if procured by fraud.39

• Suspension/disbarment. The court has inherent power to suspend or

disbar attorneys, but should follow applicable local rules.40

• Fine. Even without a finding of contempt, the court may assess monetary sanctions apart from or in addition to cost shifting. The amount

should be the minimum necessary to achieve the deterrent or punitive

goal, considering the resources of the person or entity fined.41

• Contempt. The court may issue a contempt order under its inherent

authority,42 statute,43 or rule,44 and should indicate clearly whether the

contempt is civil or criminal. The procedure and possible penalties will

depend on that determination and the nature and timing of the contemptuous act.45

• Referral for possible criminal prosecution. Where the misconduct rises to

the level of a criminal offense,46 the matter may be referred to the U.S.

Attorney’s Office.

38. See, e.g., Fed. R. Civ. P. 37(b)(2), (c)(1).

39. Chambers, 501 U.S. at 44 (inherent power); Fed. R. Civ. P. 60(b).

40. See In re Snyder, 472 U.S. 634, 643 & n.4 (1985). For discussion of the standard for taking such action, see id. at 643–47 (refusal to supplement fee petition or accept Civil Justice Act

assignment coupled with single instance of discourtesy insufficient to support suspension).

41. See, e.g., Fed. R. Civ. P. 11(c)(2).

42. See Chambers, 501 U.S. at 44; Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980).

43. See, e.g., 18 U.S.C. §§ 401–403 (2000); 28 U.S.C. § 1784 (West 2002); Fed. R. Crim. P.

42 committee note (statutes cited therein).

44. See, e.g., Fed. R. Civ. P. 37(b)(2)(D), 45(e); Fed. R. Crim. P. 17(g).

45. See Benchbook for U.S. District Court Judges §§ 7.01–7.02 (Federal Judicial Center, 4th

ed. 2000) (criminal and civil contempt) [hereinafter Benchbook]; 18 U.S.C. § 3691 (2000) (jury

trial of criminal contempts), § 3692 (jury trial for contempt in labor dispute cases), § 3693

(summary disposition or jury trial; notice); Fed. R. Crim. P. 42 (criminal contempt). Since there

is no federal rule establishing a procedure for civil contempt, the court should follow the procedures of Fed. R. Crim. P. 42 to the extent applicable.

46. See 18 U.S.C. §§ 1501–1518 (2000) (obstruction of justice).
General Principles § 10.155

21

10.155 Procedure

The appropriate timing for imposing sanctions depends on the basis for

the sanctions; the timing can be more problematic in complex litigation. Sanctions are often most effective when imposed promptly after the improper conduct has occurred47 because this may maximize their deterrent effect in the litigation.

Sometimes, the frivolous nature of a paper may not be immediately apparent. Moreover, some misconduct or the extent of its consequences may not

become apparent until the litigation has developed further. Some sanctions

are, therefore, expressly conditioned on later developments.48 Certain facts may

have to be established before the court can decide the sanctions issue, which

could delay the litigation unless sanctions are deferred until its conclusion.

Similarly, sanctions should be deferred where the decision may require inquiry

into potentially privileged communications and create a conflict of interest

between counsel and client. Delaying rulings on sanctions also may allow the

court more dispassionate consideration; however, applying the wisdom of

hindsight should be avoided.

The assessment of sanctions should be preceded by notice and an opportunity to be heard.49 The extent of the process afforded depends on the circumstances, primarily the type and severity of sanction under consideration.50

An oral or evidentiary hearing may not be necessary for relatively minor sanctions.51 To provide notice when acting sua sponte, the court should issue an

order for counsel or parties to show cause why sanctions should not be imposed, specifying the alleged misconduct.52 To avoid disrupting a settlement,

47. See Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 881 (5th Cir. 1988). Cf. Chambers

v. NASCO, Inc., 501 U.S. 32, 55 (1991) (explaining exception to imposing prompt sanctions).

48. See, e.g., Fed. R. Civ. P. 37(c)(2) (recovery of expenses for failure to admit depends on

later proof of matter not admitted); Fed. R. Civ. P. 68 (assessment of costs incurred after settlement offer refused depends on failure to obtain more favorable judgment).

49. United States v. 4003–4005 5th Ave., 55 F.3d 85 (2d Cir. 1995); Roadway Express, Inc. v.

Piper, 447 U.S. 752, 767 (1980). Some rules expressly require this. See, e.g., Fed. R. Civ. P. 11(c).

50. See, e.g., United States v. Kouri-Perez, 187 F.3d 1, 10 & n.4 (1st Cir. 1999); Media Duplication Servs. v. HDG Software, Inc., 928 F.2d 1228, 1238 (1st Cir. 1991) (citing Roadway, 447

U.S. at 767 n.14 (due process concerns raised by dismissal are greater than those presented by

assessment of attorneys’ fees)); G.J.B. & Assocs., Inc. v. Singleton, 913 F.2d 824, 830 (10th Cir.

1990) (same); Fed. R. Civ. P. 11 committee note.

51. See, e.g., In re Edmond, 934 F.2d 1304, 1313 (4th Cir. 1991); Hudson v. Moore Bus.

Forms, Inc., 898 F.2d 684, 686 (9th Cir. 1990); Fed. R. Civ. P. 11 committee note.

52. El Paso v. Socorro, 917 F.2d. 7 (5th Cir. 1990); Maisonville v. F2 Am., Inc., 902 F.2d 746

(9th Cir. 1990); Fed. R. Civ. P. 11(c)(1)(B) & committee note.
§ 10.21 Manual for Complex Litigation, Fourth

22

avoid assessing monetary sanctions sua sponte once the parties have reached

agreement.53

Unless the sanction is minor and the misconduct obvious, it is advisable to

put findings and reasons on the record or issue a written order.54 The findings

should clearly identify the objectionable conduct, state the factual and legal

reasons for the action (including the need for the particular sanction imposed

and the inadequacy of less severe measures), and cite the authority relied on. If

the sanctions are appealed, such a record will facilitate appellate review and

help the appellate court understand the basis for the court’s exercise of its discretion.55 There is normally no need to explain a denial of sanctions.56

10.2 Role of Counsel

.21 Responsibilities in Complex Litigation 22

.22 Coordination in Multiparty Litigation—Lead/Liaison Counsel and Committees 24

.221 Organizational Structures 24

.222 Powers and Responsibilities 26

.223 Compensation 26

.224 Court’s Responsibilities 26

.225 Related Litigation 28

.23 Withdrawal and Disqualification 28

53. See Fed. R. Civ. P. 11(c)(2)(B) & committee note.

54. See Fed. R. Civ. P. 11(c)(3).

55. The standard of review is abuse of discretion. Buford v. United States, 532 U.S. 59, 64

(2001); Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991) (inherent power); Cooter & Gel v.

Hartmax Corp., 496 U.S. 384, 405 (1990) (Rule 11); Blue v. United States Dep’t of the Army, 914

F.2d 525, 539 (4th Cir. 1990) (28 U.S.C. § 1927).

56. Fed. R. Civ. P. 11 committee note. Only the First Circuit has held to the contrary. See

Metrocorps, Inc. v. E. Mass. Junior Drum & Bugle Corps Ass’n, 912 F.2d 1, 3 (1st Cir. 1990);

Morgan v. Mass. Gen. Hosp., 901 F.2d 186, 195 (1st Cir. 1990).

10.21 Responsibilities in Complex Litigation

Judicial involvement in managing complex litigation does not lessen the

duties and responsibilities of the attorneys. To the contrary, complex litigation

places greater demands on counsel in their dual roles as advocates and officers

of the court. The complexity of legal and factual issues makes judges especially

dependent on the assistance of counsel.

Greater demands on counsel also arise from the following:

• the amounts of money or importance of the interests at stake;

• the length and complexity of the proceedings;
General Principles § 10.21

23

• the difficulties of having to communicate and establish effective

working relationships with numerous attorneys (many of whom may

be strangers to each other);

• the need to accommodate professional and personal schedules;

• the problems of having to appear in courts with which counsel are

unfamiliar;

• the burdens of extensive travel often required; and

• the complexities of having to act as designated representative of parties

who are not their clients (see section 10.22).

The added demands and burdens of complex litigation place a premium

on attorney professionalism, and the judge should encourage counsel to act

responsibly. The certification requirements of Federal Rules of Civil Procedure

11 and 26(g) reflect some of the attorneys’ obligations as officers of the court.

By presenting a paper to the court, an attorney certifies in essence that he or

she, based on reasonable inquiry, has not filed the paper to delay, harass, or

increase costs.57 A signature on a discovery request, response, or objection certifies that the filing is not “unreasonable or unduly burdensome or expensive”

under the circumstances of the case.58 These provisions encourage attorneys to

“stop and think” before taking action.

Counsel need to fulfill their obligations as advocates in a manner that will

foster and sustain good working relations among fellow counsel and with the

court. They need to communicate constructively and civilly with one another

and attempt to resolve disputes informally as often as possible. Even where the

stakes are high, counsel should avoid unnecessary contentiousness and limit

the controversy to material issues genuinely in dispute. Model Rule of Professional Conduct 3.2 requires lawyers to make “reasonable efforts to expedite

litigation consistent with the interests of the client.”59

57. Fed. R. Civ. P. 11(b)(1). Fed. R. Civ. P. 26(g) contains substantially similar language.

Case law in the circuit interpreting these provisions should be considered.

58. Fed. R. Civ. P. 26(g)(C).

59. See also Model Rules of Prof’l Conduct R. 3.1 (2002) (meritorious claims and contentions); Model Code of Prof’l Responsibility DR 7-102(A)(1) (1981) (action taken merely to harass).
§ 10.221 Manual for Complex Litigation, Fourth

24

10.22 Coordination in Multiparty Litigation—Lead/Liaison

Counsel and Committees

.221 Organizational Structures 24

.222 Powers and Responsibilities 26

.223 Compensation 26

.224 Court’s Responsibilities 26

.225 Related Litigation 28

Complex litigation often involves numerous parties with common or

similar interests but separate counsel. Traditional procedures in which all papers and documents are served on all attorneys, and each attorney files motions, presents arguments, and examines witnesses, may waste time and

money, confuse and misdirect the litigation, and burden the court unnecessarily. Instituting special procedures for coordination of counsel early in the litigation will help to avoid these problems.

In some cases the attorneys coordinate their activities without the court’s

assistance, and such efforts should be encouraged. More often, however, the

court will need to institute procedures under which one or more attorneys are

selected and authorized to act on behalf of other counsel and their clients with

respect to specified aspects of the litigation. To do so, invite submissions and

suggestions from all counsel and conduct an independent review (usually a

hearing is advisable) to ensure that counsel appointed to leading roles are

qualified and responsible, that they will fairly and adequately represent all of

the parties on their side, and that their charges will be reasonable. Counsel

designated by the court also assume a responsibility to the court and an obligation to act fairly, efficiently, and economically in the interests of all parties

and parties’ counsel.

10.221 Organizational Structures

Attorneys designated by the court to act on behalf of other counsel and

parties in addition to their own clients (referred to collectively as “designated

counsel”) generally fall into one of the following categories:

• Liaison counsel. Charged with essentially administrative matters, such

as communications between the court and other counsel (including

receiving and distributing notices, orders, motions, and briefs on behalf of the group), convening meetings of counsel, advising parties of

developments, and otherwise assisting in the coordination of activities

and positions. Such counsel may act for the group in managing document depositories and in resolving scheduling conflicts. Liaison

counsel will usually have offices in the same locality as the court. The

court may appoint (or the parties may select) a liaison for each side,
General Principles § 10.221

25

and if their functions are strictly limited to administrative matters,

they need not be attorneys.60

• Lead counsel. Charged with formulating (in consultation with other

counsel) and presenting positions on substantive and procedural issues during the litigation. Typically they act for the group—either

personally or by coordinating the efforts of others—in presenting

written and oral arguments and suggestions to the court, working with

opposing counsel in developing and implementing a litigation plan,

initiating and organizing discovery requests and responses, conducting

the principal examination of deponents, employing experts, arranging

for support services, and seeing that schedules are met.

• Trial counsel. Serve as principal attorneys at trial for the group and organize and coordinate the work of the other attorneys on the trial

team.

• Committees of counsel. Often called steering committees, coordinating

committees, management committees, executive committees, discovery committees, or trial teams. Committees are most commonly

needed when group members’ interests and positions are sufficiently

dissimilar to justify giving them representation in decision making.

The court or lead counsel may task committees with preparing briefs

or conducting portions of the discovery program if one lawyer cannot

do so adequately. Committees of counsel can sometimes lead to substantially increased costs, and they should try to avoid unnecessary

duplication of efforts and control fees and expenses. See section 14.21

on controlling attorneys’ fees.

The types of appointments and assignments of responsibilities will depend

on many factors. The most important is achieving efficiency and economy

without jeopardizing fairness to the parties. Depending on the number and

complexity of different interests represented, both lead and liaison counsel may

be appointed for one side, with only liaison counsel appointed for the other.

One attorney or several may serve as liaison, lead, and trial counsel. The functions of lead counsel may be divided among several attorneys, but the number

should not be so large as to defeat the purpose of making such appointments.

60. See In re San Juan Dupont Plaza Hotel Fire Litig., MDL No. 721, 1989 WL 168401, at

*19–20 (D.P.R. Dec. 2, 1988) (defining duties of “liaison persons” for plaintiffs and defendants).
§ 10.224 Manual for Complex Litigation, Fourth

26

10.222 Powers and Responsibilities

The functions of lead, liaison, and trial counsel, and of each committee,

should be stated in either a court order or a separate document drafted by

counsel for judicial review and approval.61 This document will inform other

counsel and parties of the scope of designated counsel’s authority and define

responsibilities within the group. However, it is usually impractical and unwise

for the court to spell out in detail the functions assigned or to specify the particular decisions that designated counsel may make unilaterally and those that

require an affected party’s concurrence. To avoid controversy over the interpretation of the terms of the court’s appointment order, designated counsel

should seek consensus among the attorneys (and any unrepresented parties)

when making decisions that may have a critical impact on the litigation.

Counsel in leadership positions should keep the other attorneys in the

group advised of the progress of the litigation and consult them about decisions significantly affecting their clients. Counsel must use their judgment

about limits on this communication; too much communication may defeat the

objectives of efficiency and economy, while too little may prejudice the interests of the parties. Communication among the various allied counsel and their

respective clients should not be treated as waiving work-product protection or

the attorney–client privilege, and a specific court order on this point may be

helpful.62

61. See Sample Order infra section 40.22.

62. See id. ¶ 5.

10.223 Compensation

See section 14.215 for guidance on determining compensation and establishing terms and procedures for it early in the litigation.

10.224 Court’s Responsibilities

Few decisions by the court in complex litigation are as difficult and sensitive as the appointment of designated counsel. There is often intense competition for appointment by the court as designated counsel, an appointment that

may implicitly promise large fees and a prominent role in the litigation. Side

agreements among attorneys also may have a significant effect on positions

taken in the proceedings. At the same time, because appointment of designated

counsel will alter the usual dynamics of client representation in important

ways, attorneys will have legitimate concerns that their clients’ interests be

adequately represented.
General Principles § 10.224

27

For these reasons, the judge is advised to take an active part in the decision

on the appointment of counsel. Deferring to proposals by counsel without independent examination, even those that seem to have the concurrence of a

majority of those affected, invites problems down the road if designated counsel turn out to be unwilling or unable to discharge their responsibilities satisfactorily or if they incur excessive costs. It is important to assess the following

factors:

• qualifications, functions, organization, and compensation of designated counsel;

• whether there has been full disclosure of all agreements and understandings among counsel;

• would-be designated attorneys’ competence for assignments;

• whether there are clear and satisfactory guidelines for compensation

and reimbursement, and whether the arrangements for coordination

among counsel are fair, reasonable, and efficient;

• whether designated counsel fairly represent the various interests in the

litigation—where diverse interests exist among the parties, the court

may designate a committee of counsel representing different interests;

• the attorneys’ resources, commitment, and qualifications to accomplish the assigned tasks; and

• the attorneys’ ability to command the respect of their colleagues and

work cooperatively with opposing counsel and the court—experience

in similar roles in other litigation may be useful, but an attorney may

have generated personal antagonisms during prior proceedings that

will undermine his or her effectiveness in the present case.

Although the court should move expeditiously and avoid unnecessary delay, an

evidentiary hearing may be needed to bring all relevant facts to light or to allow

counsel to state their case for appointment and answer questions from the

court about their qualifications (the court may call for the submission of

résumés and other relevant information). Such a hearing is particularly appropriate when the court is unfamiliar with the attorneys seeking appointment.

The court should inquire as to normal or anticipated billing rates, define record-keeping requirements, and establish guidelines, methods, or limitations to

govern the award of fees.63 While it may be appropriate and possibly even

beneficial for several firms to divide work among themselves,64 such an ar63. See infra section 14.21.

64. See In re Auction Houses Antitrust Litig., 197 F.R.D. 71, 77 (S.D.N.Y. 2000); In re Fine

Paper Antitrust Litig., 751 F.2d 562, 584 (3d Cir. 1984).
§ 10.23 Manual for Complex Litigation, Fourth

28

rangement should be necessary, not simply the result of a bargain among the

attorneys.65

The court’s responsibilities are heightened in class action litigation, where

the judge must approve counsel for the class (see section 21.27). In litigation

involving both class and individual claims, class and individual counsel will

need to coordinate.

10.225 Related Litigation

If related litigation is pending in other federal or state courts, consider the

feasibility of coordination among counsel in the various cases. See sections

20.14, 20.31. Consultation with other judges may bring about the designation

of common committees or of counsel and joint or parallel orders governing

their function and compensation.66 Where that is not feasible, the judge may

direct counsel to coordinate with the attorneys in the other cases to reduce duplication and potential conflicts and to coordinate and share resources. In any

event, the judges involved should exchange information and copies of orders

that might affect proceedings in their courts. See generally section 20, multiple

jurisdiction litigation.

In approaching these matters, consider also the status of the respective actions (some may be close to trial while others are in their early stages). Counsel

seeking a more prominent and lucrative role may have filed actions in other

courts.

10.23 Withdrawal and Disqualification

In view of the number and dispersion of parties and interests in complex

litigation, the court should remind counsel to be alert to present or potential

conflicts of interest.67

It is advisable to deny motions for disqualification that claim the attorney

may be called as a witness if such testimony probably will not be necessary and

prejudice to the client will probably be minor. Disqualification on the ground

that an attorney is also a witness may sometimes be denied where it would

cause “substantial hardship” to the client. This exception is generally invoked

65. See, e.g., In re Auction Houses Antitrust Litig., 197 F.R.D. 71 (S.D.N.Y. 2000); Smiley v.

Sincoff, 958 F.2d 498 (2d Cir. 1992); In re Fine Paper Antitrust Litig., 98 F.R.D. 48 (E.D. Pa.

1983), aff’d in part and rev’d in part, 751 F.2d 562 (3d Cir. 1984).

66. See infra section 40.51.

67. See Model Rules of Prof’l Conduct R. 1.7–1.9 (2002); Model Code of Prof’l Responsibility DR 5-101(A), 5-104(A), 5-105(A) (1981); see also Model Rules of Prof’l Conduct R. 3.7

(2002); Model Code of Prof’l Responsibility DR 5-102 (1981) (lawyer as witness).
General Principles § 10.23

29

when disqualification is sought late in the litigation, and it requires the court to

balance the interests of the client and the opposing party. The motion may also

be denied when the likelihood that the attorney would have to testify should

have been anticipated earlier in the case.68 Motions for disqualification should

be reviewed carefully to ensure that they are not being used merely to harass,69

and disqualification should be ordered only when the motion demonstrates a

reasonable likelihood of a prohibited conflict.70

The court should promptly resolve ancillary legal issues requiring research

into applicable circuit law, because uncertainty as to the status of counsel

hampers the progress of the litigation. Additional delays may result if counsel

seeks appellate review71 or if replacement counsel are precluded from using the

work product of the disqualified firm. While disqualified counsel usually must

turn over their work product to new counsel upon request, it is possible that

counsel will deny the request when there is a danger that confidential information will be disclosed.72 Issues raised by disqualification motions include

whether disqualification of counsel extends to the entire firm,73 whether co68. Model Rules of Prof’l Conduct R. 3.7(a)(3) (2002); Model Code of Prof’l Responsibility

DR 5-10(B)(4) (1981). See General Mill Supply Co. v. SCA Servs., Inc., 697 F.2d 704 (6th Cir.

1982).

69. Harker v. Comm’r, 82 F.3d 806, 808 (8th Cir. 1996); Richardson-Merrell, Inc. v. Koller,

472 U.S. 424, 433–36 (1985); Optyl Eyewear Fashion Int’l Corp. v. Style Cos., 760 F.2d 1045,

1050–51 (9th Cir. 1985); Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1577–80

(Fed. Cir. 1984).

70. Though often premised on violations of state disciplinary rules, disqualification in federal court is a question of federal law. In re Am. Airlines, Inc., 972 F.2d 605, 615 (5th Cir. 1992);

In re Dresser Indus., Inc., 972 F.2d 540, 543 (5th Cir. 1992).

71. The denial of a motion to disqualify counsel in a civil case is not immediately appealable

as a matter of right. Cunningham v. Hamilton County, 527 U.S. 198, 207 (1999); Firestone Tire

& Rubber Co. v. Risjord, 449 U.S. 368 (1981). Nor is an order granting such a motion in a

criminal case, Flanagan v. United States, 465 U.S. 259 (1984), or in a civil case,

Richardson–Merrell, Inc. v. Koller, 472 U.S. 424 (1985). A petition for a writ of mandamus may

be filed even if there is no right of appeal, see Fed. R. App. P. 21, but the standard of review may

be more stringent. See In re Dresser, 972 F.2d at 542–43.

72. See First Wis. Mortgage Trust v. First Wis. Corp., 584 F.2d 201, 207–11 (7th Cir. 1978)

(en banc), and Int’l Bus. Machs. Corp. v. Levin, 579 F.2d 271, 283 (3d Cir. 1978) (the request to

turn over work product may be denied when there is a danger that confidential information will

be disclosed (EZ Paintr Corp. v. Padco, Inc., 746 F.2d 1459, 1463–64 (Fed. Cir. 1984))).

73. See Model Rules of Prof’l Conduct R. 1.10 (2002) (imputation of conflicts of interest);

Model Code of Prof’l Responsibility DR 5-105(D) (1981). Compare Panduit, 744 F.2d at

1577–80, with United States v. Moscony, 927 F.2d 742, 747–48 (3d Cir. 1991), and Atasi Corp. v.

Seagate Tech., 847 F.2d 826, 830–32 (Fed. Cir. 1988). Timely erection of a “Chinese wall” to

screen other firm members from the attorney(s) possessing confidential information may avoid

imputed disqualification. See, e.g., Blair v. Armontrout, 916 F.2d 1310, 1333 (8th Cir. 1990);
§ 10.23 Manual for Complex Litigation, Fourth

30

counsel will also be disqualified,74 and whether counsel may avoid disqualification based on consent,75 substantial hardship,76 or express or implied waiver.77

If a disqualification motion is filed in order to harass, delay, or deprive a party

of chosen counsel, sanctions may be appropriate under 28 U.S.C. § 1927 or

Federal Rule of Civil Procedure 11 (see section 10.15).

Kennecott Corp. v. Kyocera Int’l, Inc., 899 F.2d 1228 (Fed. Cir. 1990) (per curiam) (unpublished

table decision); United States v. Goot, 894 F.2d 231, 235 (7th Cir. 1990); Manning v. Waring,

James, Sklar & Allen, 849 F.2d 222 (6th Cir. 1988); Atasi, 847 F.2d at 831 & n.5; Panduit, 744

F.2d at 1580–82; LaSalle Nat’l Bank v. County of Lake, 703 F.2d 252, 257–59 (7th Cir. 1983)

(screening not timely). Disqualification of an attorney on the ground that he or she will be called

as a witness generally does not require disqualification of the attorney’s firm. See Optyl Eyewear,

760 F.2d at 1048–50; Bottaro v. Hatton Assocs., 680 F.2d 895, 898 (2d Cir. 1982).

74. Disqualification of counsel generally does not extend to cocounsel. See, e.g., Brennan’s,

Inc. v. Brennan’s Rests., Inc., 590 F.2d 168, 174 (5th Cir. 1979); Fred Weber, Inc. v. Shell Oil Co.,

566 F.2d 602, 607–10 (8th Cir. 1977); Akerly v. Red Barn Sys., Inc., 551 F.2d 539, 543–44 (3d

Cir. 1977); Am. Can Co. v. Citrus Feed Co., 436 F.2d 1125, 1129 (5th Cir. 1971). But disqualification is proper when information has been disclosed to cocounsel with an expectation of

confidentiality. See Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225, 235 (2d Cir.

1977); cf. Arkansas v. Dean Food Prods. Co., 605 F.2d 380, 387–88 (8th Cir. 1979); Brennan’s,

590 F.2d at 174.

75. See, e.g., Unified Sewerage Agency v. Jelco, Inc., 646 F.2d 1339, 1345–46 (9th Cir. 1981);

Interstate Props. v. Pyramid Co., 547 F. Supp. 178 (S.D.N.Y. 1982); cf. Westinghouse Elec. Corp.

v. Gulf Oil Corp., 588 F.2d 221 (7th Cir. 1978).

76. Disqualification on the ground that an attorney is also a witness may be denied where it

would cause “substantial hardship” to the client. Model Rules of Prof’l Conduct R. 3.7(a)(3)

(2002); Model Code of Prof’l Responsibility DR 5-101(B)(4) (1981). This exception is generally

invoked when disqualification is sought late in the litigation, and it requires the court to balance

the interests of the client and those of the opposing party. Model Rules of Prof’l Conduct R. 3.7

cmt. ¶ 4 (2002). It may be rejected when the likelihood that the attorney would have to testify

should have been anticipated earlier in the case. See Gen. Mill Supply Co. v. SCA Servs., Inc., 697

F.2d 704 (6th Cir. 1982).

77. See, e.g., United States v. Wheat, 486 U.S. 153, 162–64 (1988) (court in criminal case

may decline waiver of conflict); Melamed v. ITT Cont’l Baking Co., 592 F.2d 290, 292–94 (6th

Cir. 1979) (waiver found); City of Cleveland v. Cleveland Elec. Illuminating Co., 440 F. Supp.

193, 205 (N.D. Ohio), aff’d, 573 F.2d 1310 (6th Cir. 1977) (same); cf. In re Yarn Processing Patent Validity Litig., 530 F.2d 83, 88–90 (5th Cir. 1976) (waiver and consent).
31

11. Pretrial Procedures

.1 Preliminary Matters 32

.11 Scheduling the Initial Conference 32

.12 Interim Measures 33

.13 Prediscovery Disclosure 34

.2 Conferences 36

.21 Initial Conference and Orders 36

.211 Case-Management Plan 36

.212 Scheduling Order 39

.213 Class Actions 40

.214 Settlement 40

.22 Subsequent Conferences 40

.23 Attendance 41

.3 Management of Issues 42

.31 Relationship to Discovery 42

.32 Pleading and Motion Practice 43

.33 Identifying, Defining, and Resolving Issues 44

.34 Summary Judgment 46

.4 Discovery 49

.41 Relationship to Issues 50

.42 Planning and Control 51

.421 Discovery Plan/Scheduling Conference 51

.422 Limitations 53

.423 Other Practices to Save Time and Expense 56

.424 Resolution of Discovery Disputes 59

.43 Privilege Claims and Protective Orders 62

.431 Claims of Privilege/Full Protection 63

.432 Limited Disclosure/Protective Orders 64

.433 Allocation of Costs 69

.44 Documents 71

.441 Identification System 71

.442 Preservation 72

.443 Rule 34 Requests/Procedures for Responding 74

.444 Document Depositories 75

.445 Evidentiary Foundation for Documents 77

.446 Discovery of Computerized Data 77

.447 Discovery from Nonparties 82

.45 Depositions 83

.451 Limitations and Controls 83

.452 Cost-Saving Measures 85

.453 Deferred Supplemental Depositions 87

.454 Scheduling 88

.455 Coordination with Related Litigation 89

.456 Control of Abusive Conduct 89

.46 Interrogatories 90

.461 Purposes 90

.462 Limitations 91

.463 Responses 92

.464 Other Practices to Save Time and Expense 92

.47 Stipulations of Fact/Requests for Admission 94

.471 Stipulations of Fact 94

.472 Requests for Admission 95
§ 11.11 Manual for Complex Litigation, Fourth

32

.473 Statements of Contentions and Proof 96

.474 Requests for Judicial Notice 97

.48 Disclosure and Discovery of Expert Opinions 97

.481 Trial Experts 97

.482 Consulting Experts 99

.483 Court-Appointed Experts 100

.49 Special Problems 100

.491 Government Investigations/Grand Jury Materials 100

.492 Summaries 101

.493 Sampling/Opinion Surveys 102

.494 Extraterritorial Discovery 104

.5 Special Referrals 111

.51 Court-Appointed Experts and Technical Advisors 111

.52 Special Masters 114

.53 Magistrate Judges Under 28 U.S.C. § 636(b)(1) 117

.54 Other Referrals 118

.6 Final Pretrial Conference/Preparation for Trial 118

.61 Date and Place of Trial 119

.62 Reevaluation of Jury Demands 120

.63 Structure of Trial 121

.631 Consolidation 121

.632 Separate Trials 122

.633 Special Verdicts and Interrogatories 123

.64 Procedures to Expedite Presentation of Evidence 124

.641 Statements of Facts and Evidence 124

.642 Pretrial Rulings on Objections 124

.643 Disclosure of and Objections to Digital Evidence and Illustrative Aids 126

.644 Limits on Evidence 127

.645 Use of Courtroom Technology to Facilitate Evidence Presentation 127

.65 Proposed Jury Instructions 128

.66 Briefs and Final Pretrial Motions 129

.67 Final Pretrial Order 129

11.1 Preliminary Matters

.11 Scheduling the Initial Conference 32

.12 Interim Measures 33

.13 Prediscovery Disclosure 34

11.11 Scheduling the Initial Conference

The court’s first step in establishing control of the litigation is promptly

scheduling the initial conference with counsel, generally within 30 to 60 days of

filing, but with sufficient time for counsel to become familiar with the litigation and prepare for the conference. The judge should hold the conference

before any adversary activity begins, such as filing of motions or discovery requests, and the order setting the conference may require that all such activity

be deferred. Although Federal Rule of Civil Procedure 4(m) allows 120 days

from filing to effect service, earlier service or appearance should be encouraged

in order to give notice of the conference and of any interim administrative
Pretrial Procedures § 11.12

33

measures even before responsive pleadings are filed. The court need not wait

for service to be made on every party, once the primary parties have been notified.

The order scheduling the conference78 generally refers to Federal Rule of

Civil Procedure 16(c), which lists subjects for consideration at such a conference. Also worth considering are the following:

• requiring counsel in advance to discuss claims and defenses, a plan for

disclosure and discovery, and possible settlement;79

• listing specific topics that the court intends to address at the conference;

• inviting suggestions from counsel for additional topics;

• directing counsel to submit a tentative statement, joint if possible,

identifying disputed issues as specifically as possible;

• directing counsel to submit a proposed schedule for the conduct of the

litigation, including a discovery plan (see section 11.421);

• calling on counsel to submit brief factual statements to assist the court

in understanding the background, setting, and likely dimensions of the

litigation;

• suspending all discovery and motion activity pending further order;

• specifying that responses to the order will not be treated as admissions

or otherwise bind the parties; and

• directing counsel to provide information about all related litigation

pending in other courts.

See also section 22.6 (mass torts, case-management orders).

11.12 Interim Measures

At the outset of the case, pending the initial conference, the judge can sua

sponte initiate special procedures, including the following:80

• ordering joint briefs and limits on briefs’ length and appendices;

• suspending some local rules, such as those requiring the appearance or

association of local counsel or limiting the time for joining new parties;81

78. See sample order infra section 40.1.

79. Such a conference of counsel prior to discovery and the Rule 16 conference is required

by Federal Rule of Civil Procedure 26(f).

80. See infra sections 22.6 (case-management orders in mass tort litigation) and 40.2 (sample orders).
§ 11.13 Manual for Complex Litigation, Fourth

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• creating a single master file for the litigation, eliminating the need for

multiple filings of similar documents when related cases have common

parties;

• extending time for filing responses to the complaint until after the initial conference, making unnecessary individual requests for extensions;

• reducing under Federal Rule of Civil Procedure 5 the number of parties upon whom service of documents must be made—liaison counsel

may be appointed to receive service of all papers and distribute copies

to cocounsel (see section 10.221);

• modifying the timing of the initial disclosures required by Federal Rule

of Civil Procedure 26(a)(1) (see section 11.13);

• permitting limited discovery, prior to Rule 26(a)(1) initial disclosure,

of information helpful or necessary in formulating a discovery plan,

such as Rule 30(b)(6) depositions of records keepers and computer

personnel knowledgeable of the parties’ data holdings and systems;

• ordering that paper and electronic records, files, and documents, and

other potential evidence, not be destroyed without leave of

court—preservation orders may impose undue burdens on parties and

be difficult to implement; therefore, holding an early conference or

hearing to work out appropriate terms for such orders should be encouraged (see section 11.442); and

• appointing interim liaison counsel or committees of plaintiffs’ or defense counsel.

11.13 Prediscovery Disclosure

Federal Rule of Civil Procedure 26(a)(1) requires parties to exchange certain core information within fourteen days after their initial discovery planning conference82 without awaiting a discovery request.

Prediscovery disclosure avoids the cost of unnecessary formal discovery

and accelerates the exchange of basic information to plan and conduct discovery and settlement negotiations. The judge should administer Rule 26(a)(1) to

81. Rule 1.4 of the Rules of Procedure of the Judicial Panel on Multidistrict Litigation provides that parties in actions transferred under 28 U.S.C. § 1407 may continue to be represented

in the transferee district by existing counsel, without being required to obtain local counsel.

82. For discussion of the discovery planning conference see infra section 11.421. See Fed. R.

Civ. P. 26(f) (discovery planning conference). Rule 26(g)(3) and Rule 37 provide for the imposition of sanctions for violation of Rule 26(a)(1).
Pretrial Procedures § 11.13

35

serve those purposes; disclosure should not place unreasonable or unnecessary

burdens on the parties (and should not require disclosure of any information

that would not have to be disclosed in response to formal discovery requests).

In complex litigation, this rule may need modification or suspension.

The scope of disputed issues and relevant facts in a complex case may not

be sufficiently clear from the pleadings to enable parties to make the requisite

disclosure. One purpose of Rule 26(f)’s requirement that counsel confer is to

identify issues and reach agreement on the content and timing of the initial

disclosures. To the extent the parties cannot agree during their conference, it

sometimes helps to defer disclosure and fashion an order at the Rule 16 conference, defining and narrowing the factual and legal issues in dispute and establishing the scope of disclosure. This will require suspending, by stipulation

or order, Rule 26(f)’s presumptive ten-day deadline for making disclosure.

Although Rule 26(a)(1) defines certain information that must be disclosed,

it does not limit the scope of prediscovery disclosure and exchange of information. The parties have a duty to conduct a reasonable investigation pursuant

to disclosure, particularly when a party possesses extensive computerized data,

which may be subject to disclosure or later discovery.83 The rule does not require actual production (except for damage computations and insurance

agreements), but only identification of relevant information and materials. The

judge may nevertheless direct the parties to produce and exchange materials in

advance of discovery, subject to appropriate objections. Effective use of this

device without excessive and unnecessary burdens on the parties can streamline the litigation.

Rule 26(e)(1) requires parties to correct or supplement disclosures at appropriate intervals if they learn that the information (even if correct when

supplied) is materially incomplete or incorrect, unless they have already informed the other party of the corrective or additional information during discovery or in writing. The court should set a schedule for such supplementation

and qualify or clarify the scope of the obligation to supplement in order to fit

the particular litigation.

83. See, e.g., Danis v. USN Communications, Inc., No. 98 C 7482, 2000 WL 1694325, at *25

(N.D. Ill. Oct. 23, 2000) (noting that litigation of the discovery issues could have been avoided if

the defendants had not “failed to conduct a sufficiently thorough search” pursuant to courtordered mandatory disclosure under Federal Rule of Civil Procedure 26(a)(1)).
§ 11.211 Manual for Complex Litigation, Fourth

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11.2 Conferences

.21 Initial Conference and Orders 36

.211 Case-Management Plan 36

.212 Scheduling Order 39

.213 Class Actions 40

.214 Settlement 40

.22 Subsequent Conferences 40

.23 Attendance 41

Federal Rule of Civil Procedure 16 authorizes the court to hold pretrial

conferences in civil cases. These conferences are the principal means of implementing judicial management of litigation. Rules 16(a) and (c) suggest appropriate purposes for these conferences and subjects to discuss, but they are not

exhaustive.

11.21 Initial Conference and Orders

.211 Case-Management Plan 36

.212 Scheduling Order 39

.213 Class Actions 40

.214 Settlement 40

The initial conference launches the process of managing the litigation. It

generally provides the first opportunity to meet counsel, hear their views of the

factual and legal issues, and begin to structure the litigation and establish a

management plan. It is therefore crucial that the judge be prepared to address

the range of topics that the conference should cover. The principal topics include

• the nature and potential dimensions of the litigation;

• the major procedural and substantive problems likely to be encountered; and

• the procedures for efficient management.

The conference is not a perfunctory exercise, and its success depends on

establishing effective communication and coordination among counsel and

between counsel and the court (see section 11.22).

11.211 Case-Management Plan

The primary objective of the conference is to develop an initial plan for the

“just, speedy, and inexpensive determination” of the litigation. This plan

should include procedures for identifying and resolving disputed issues of law,

identifying and narrowing disputed issues of fact, carrying out disclosure and
Pretrial Procedures § 11.211

37

conducting discovery efficiently and economically, and preparing for trial in

the absence of settlement or summary disposition. The agenda should be

shaped by the needs of the particular litigation. The following checklist of procedures could help in the development of case-management plans (see also

section 22.6):

• identifying and narrowing issues of fact and law (see section 11.33);

• establishing deadlines and limits on joinder of parties and amended or

additional pleadings (see section 11.32);

• coordinating with related litigation in federal and state courts, including later filings, removals, or transfers (see section 20);

• effecting early resolution of jurisdictional issues;

• severing issues for trial (see section 11.632);

• consolidating trials (see section 11.631);

• referring, if possible, some matters to magistrate judges, special masters, or other judges (see sections 10.122, 10.14, and 11.5);

• appointing liaison, lead, and trial counsel and special committees, and

maintaining time and expense records by counsel (see sections 10.22

and 14.21);

• reducing filing and service requirements through a master file and orders under Federal Rule of Civil Procedure 5 (see sections 11.12 and

20);

• exempting parties from or modifying local rules or standing orders

(see section 11.12);

• applying and enforcing arbitration clauses;84

• planning for prompt determination of class action questions, including a schedule for discovery and briefing on class issues (see sections 11.213, 21.11);

• managing disclosure and discovery, including establishing

– a process for preserving evidence (see section 11.442);

– document depositories and computerized storage (see section

11.444);

– a uniform numbering system for documents (see section 11.441);

84. See, e.g., EEOC v. Waffle House, Inc., 534 U.S. 279 (2002); Circuit City Stores, Inc. v.

Adams, 532 U.S. 105 (2001); Volt Info. Scis., Inc. v. Bd. of Trs., 489 U.S. 468 (1989); Perry v.

Thomas, 482 U.S. 483 (1987); Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473

U.S. 614 (1985); Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985); Moses H. Cone Mem’l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).
§ 11.211 Manual for Complex Litigation, Fourth

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– procedures for the exchange of documents, photographs, videos,

and other materials in digital format;85

– procedures for the exchange of digital-format materials, such as

databases, fax server files, PDA (personal digital assistant) files, Email, and digital voicemail;86

– informal discovery and other cost-reduction measures (see sections

11.13 (prediscovery disclosure) and 11.423);

– procedures for resolving discovery disputes (see sections 11.424,

11.456);

– protective orders and procedures for handling claims of confidentiality and privilege (see section 11.43); and

– sequencing and limitations, including specific scheduling and

deadlines (see sections 11.212, 11.421–11.422, 11.451, 11.462);

• planning for the presentation of electronic or computer-based evidence at trial, including the use of any audiovisual or digital technology in the courtroom;

• setting guidelines and schedules for the disclosure and exchange of

digital evidentiary exhibits and illustrative aids (see section 11.643);

• establishing procedures for managing expert testimony (see sections 11.48, 11.51 (court-appointed experts and technical advisors),

and 23.34 (expert scientific evidence, discovery control and management);

• creating schedules and deadlines for various pretrial phases of the case

and setting a tentative or firm trial date (see section 11.212);

• discussing any unresolved issues of recusal or disqualification (see section 10.121);

• evaluating prospects for settlement (see section 13.1) or possible referral to mediation or other procedures (see section 13.15); and

• instituting any other special procedures to facilitate management of

the litigation.

Federal Rule of Civil Procedure 16(e) directs the court to enter an order

reciting any action taken at the conference. The order should address the various matters on the agenda and other matters conducive to the effective management of the litigation (section 22.6 has an illustrative list of items). The order should memorialize all rulings, agreements, or other actions taken, and set

85. See Effective Use of Courtroom Technology: A Judge’s Guide to Pretrial and Trial 61–97

(Federal Judicial Center 2d prtg. 2002) [hereinafter Effective Use of Courtroom Technology].

86. Id. at 93–97.
Pretrial Procedures § 11.212

39

a date for the next conference or other event in the litigation. Counsel should

promptly submit a proposed order.

11.212 Scheduling Order

Scheduling orders are a critical element of case management. They help

ensure that counsel will timely complete the work called for by the management plan. Rule 16(b) requires that a scheduling order issue early in every case,

setting deadlines for joinder of parties, amendment of pleadings, filing of motions, and completion of discovery. Scheduling orders in complex cases should

also cover other important steps in the litigation, in particular discovery activities and motion practice. Scheduling orders should be informed by the parties’ discovery plan submitted pursuant to Rule 26(f) (see section 11.421).87

The order may also

• modify the time set by Rule 26(a)(1) for initial disclosure and set dates

for its supplementation under Rule 26(e)(1) (see section 11.13);88

• establish a schedule for amending discovery responses as required by

Rule 26(e)(2), which requires parties to amend most discovery responses “seasonably” if they learn that the response is materially “incomplete or incorrect and if the additional or corrective information

has not otherwise been made known to the other parties during the

discovery process or in writing”; to maintain order and clarify counsel’s responsibilities, the scheduling order may specify a series of dates

on which the parties must provide any amendment required;

• set dates for future conferences (see section 11.22), the final pretrial

conference (see section 11.6), and trial; and

• provide for any other matters appropriate in the circumstances of the

case.89

To allow additional information to be gathered, some judges defer the

scheduling conference until after the initial conference. The scheduling conference is best held soon after the initial conference, however, both to maintain

momentum and to comply with the rule requiring the scheduling order to issue “as soon as practicable” and within 90 days of a defendant’s appearance

and within 120 days of service. In any event, the judge should base the scheduling order on information and recommendations from the parties, rather

87. Fed. R. Civ. P. 16(d).

88. Fed. R. Civ. P. 16(b)(4).

89. Fed. R. Civ. P. 16(b)(6).
§ 11.22 Manual for Complex Litigation, Fourth

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than on a standard form. Developments in the litigation may call for subsequent modification of a scheduling order entered early in the litigation.

11.213 Class Actions

Claims by or against a class require a procedure for dealing with the certification issues. A schedule for an early ruling on class certification typically

should be set at the initial conference. Class certification or its denial will have

a substantial impact on further proceedings, including the scope of discovery,

the definition of issues, the length and complexity of trial, and the opportunities for settlement. Denial of class certification may effectively end the litigation. The court should ascertain what discovery on class questions is needed

for a certification ruling and how to conduct it efficiently and economically.

Consider also staying other discovery if resolution of the certification issue

may obviate some or all further proceedings. Discovery may proceed concurrently if bifurcating class discovery from merits discovery would result in significant duplication of effort and expense to the parties.

See section 21 regarding principles and procedures involved in the management of class actions. For discussion of discovery in class actions, see section 21.14.

11.214 Settlement

At each conference, the judge should explore the settlement posture of the

parties and the techniques, methods, and mechanisms that may help resolve

the litigation short of trial. While settlement is most advantageous early in the

litigation, meaningful negotiations may require specific critical discovery so

that the parties have a fuller understanding of the strengths and weaknesses of

their respective cases. Discovery may be targeted for this purpose, but settlement discussions should not delay or sidetrack the pretrial process. See section

13.11 for a general discussion of the judge’s role in settlement. Judges should

remind counsel to advise the court promptly when an agreement is imminent

or has been reached.

11.22 Subsequent Conferences

Conferences following the initial conference help the judge to monitor the

progress of the case and to address problems as they arise. Scheduling the conferences well in advance helps ensure maximum attendance. Some judges

schedule conferences only as the need arises, and others schedule them at

regular and frequent intervals, with agendas composed of items suggested by

the parties or designated by the court. Directing parties to confer and submit
Pretrial Procedures § 11.23

41

written reports before each conference helps avoid unnecessary conferences.

Conferences may also be held in conjunction with motion hearings.

It is best not to adjourn a conference without setting the date for the next

conference or the next report from counsel. Written status reports or conference calls can keep the court advised of the progress of the case between conferences. When a conference is scheduled, the court should distribute to

counsel an agenda of items to be addressed, perhaps after calling for suggestions from counsel.

On-the-record conferences will minimize later disagreements, particularly

if the judge anticipates issuing oral directions or rulings. Many judges hold all

conferences on the record, particularly where numerous attorneys are in the

courtroom. Nevertheless, an informal off-the-record conference held in chambers or by telephone can sometimes be more productive; a reporter can later be

brought in to record the results of the conference. (28 U.S.C. § 753(b) sets

forth the requirements for recording various proceedings.) Rule 16 requires

(and sound practice dictates) that all matters decided at pretrial conferences be

memorialized on the record or in a written order. Counsel may be directed to

submit proposed orders incorporating the court’s oral rulings.

The Federal Rules of Civil Procedure require a final pretrial conference

when discovery and other pretrial matters are substantially complete90 and a

firm trial date has been set, usually about thirty to sixty days before the trial.

More than one such conference may be needed, particularly if there will be

more than one trial. See section 11.6.

90. See Fed. R. Civ. P. 16(d).

11.23 Attendance

All attorneys and unrepresented parties should attend the initial pretrial

conference. Requirements for attendance at subsequent conferences depend on

the purposes of each conference. Costs can be reduced by relieving counsel

from attending if their clients have no substantial interest in the matters to be

discussed or if their interests will be fully represented by designated counsel, or

by allowing them to attend by video or telephone conference, particularly if

they have only a peripheral interest in the matters to be discussed. The judge

should generally not bar any attorney’s attendance, but might consider excluding attorneys who appear unnecessarily in order to claim court-awarded

fees for that time. Authorizing compensation for one attorney per party only at

routine conferences will also minimize attorneys’ fees. Rule 16(c) requires that

each party participating in a conference be represented by an attorney with
§ 11.31 Manual for Complex Litigation, Fourth

42

authority to enter into stipulations and make admissions as to all matters the

participants may reasonably anticipate will be discussed at that conference.

Lead trial counsel should always attend the final pretrial conference. Rule 16(f)

allows the court to impose sanctions for unexcused nonattendance at any

conference. See section 40.1, ¶ 2.

Rule 16 also authorizes the court to require attendance or telephone availability of persons with authority to settle, including insurance carriers or their

representatives when their interests are implicated and their presence will facilitate settlement. It may also be beneficial to invite counsel involved in related

litigation and the magistrate judge or special master to whom matters to be

discussed at the conference have been or may be referred. Judges should always

consider the cost versus the benefits of such invitations.

11.3 Management of Issues

.31 Relationship to Discovery 42

.32 Pleading and Motion Practice 43

.33 Identifying, Defining, and Resolving Issues 44

.34 Summary Judgment 46

11.31 Relationship to Discovery

The sine qua non of managing complex litigation is defining the issues in

the litigation. The materiality of facts and the scope of discovery (and the trial)

cannot be determined without identification and definition of the controverted issues. The pleadings, however, will often fail to define the issues clearly,

and the parties may lack sufficient information at the outset of the case to arrive at definitions with certainty. Probably the judge’s most important function

in the early stages of litigation management is to press the parties to identify,

define, and narrow the issues. The initial conference should start this process.

Plaintiffs may assert that substantial discovery must precede issue definition, and defendants may contend that plaintiffs must first refine their claims.

Nonetheless, the judge must start the process of defining and structuring the

issues, albeit tentatively, to establish the appropriate sequence and limits for

discovery.

The controlling factual and legal issues can almost always be identified by a

thorough and candid discussion with counsel at the initial conference, prior to

discovery. The judge should construct the discovery plan after identifying the

primary issues, at least preliminarily, based on the pleadings and the parties’

positions at the initial conference. Discovery may then provide information for

further defining and narrowing issues, which may in turn lead to revision and

refinement of the discovery plan.
Pretrial Procedures § 11.32

43

11.32 Pleading and Motion Practice

Finalizing pleadings and resolving emergency legal issues will help to define and narrow issues.

The judge should consider establishing a schedule for filing all pleadings,

including counterclaims, cross-claims, third-party complaints, and amendments to pleadings that add parties, claims, or defenses. This avoids later enlargement of issues and expansion or duplication of discovery. The judge

should also consider suspending filing of certain pleadings if statutes of limitations present no problems and should consider ordering that specified pleadings, motions, and other court orders (unless specifically disavowed by a party)

are “deemed” filed in cases later brought, transferred, or removed, without

actually filing the documents (see Sample Order, section 40.42).

The pleadings may disclose issues of law that can be resolved by a motion

to dismiss, to strike, or for judgment on the pleadings. Challenges to the

court’s personal or subject-matter jurisdiction should take priority. The legal

insufficiency of a claim or defense may be raised by motion for failure to state a

claim or for partial judgment on the pleadings. If the court considers evidence

in connection with such a motion, the motion must be treated as one for

summary judgment.91 Insufficient defenses and irrelevant or duplicative matter

can be stricken under Federal Rule of Civil Procedure 12(f). If a motion concerns a pivotal issue that may materially advance the termination of the litigation, the ruling may be certified for interlocutory appeal under 28 U.S.C.

§ 1292(b) if there is “substantial ground for difference of opinion.” The judge

may also provide for appellate review by entering final judgment as to a particular claim or party under Rule 54(b). See section 15.1.

Motion practice can be a source of substantial cost and delay. Following

are some points the judge might consider:

• A Rule 12 motion can cause unnecessary expense if the asserted defect

can be cured by amendment; therefore, instruct counsel to notify the

opposing party and the court before filing such a motion in order to

ascertain whether it will serve to narrow the issues in the case.

• Some motions can be decided based on oral presentations and reference to controlling authority, without briefs.

• Limiting the length of briefs and of appendices, affidavits, declarations,

and other supporting materials, and requiring joint briefs whenever

feasible, will expedite the litigation.

91. Fed. R. Civ. P. 12(b), (c). For discussion of summary judgment, see infra section 11.34.
§ 11.33 Manual for Complex Litigation, Fourth

44

• Prefiling conferences and requiring leave of court for filing of reply or

supplemental briefs, or motions for reconsideration, will help avoid

useless or unnecessary briefing.

• Prompt rulings from the bench will often help avoid unnecessary litigation activity.

• Some judges issue tentative rulings on motions in advance of the motion hearing. If the parties reject the rulings, they can direct their arguments at the hearing to specific issues.

 • Multiparty litigation requires particular attention to scheduling.

Counsel should inform the court as soon as possible of any motion to

be filed, with sufficient time for opposing counsel to respond and the

court to review submissions in advance. Discourage expedited motions unless they concern matters that will delay further proceedings if

not resolved. It is sometimes best to specially set multiparty motions

rather than schedule them as part of a regular motion docket or calendar call of the court; such motions also may be combined with other

status conferences in the litigation.

11.33 Identifying, Defining, and Resolving Issues

The process of identifying, defining, and resolving issues begins at the initial conference. The attorneys should confer and submit a tentative statement

of disputed issues in advance, agreed on to the extent possible (see section

11.11). The conference is an opportunity for the judge to learn about the material facts and legal issues and for counsel to learn about the opponent’s case

and gain a better perspective on their own. The judge should be willing to admit ignorance and ask even basic questions. Questions should probe into the

parties’ claims and defenses and seek specific information. Rather than accept a

statement that defendant “was negligent” or “breached the contract,” the judge

should require the attorneys to describe the material facts they intend to prove

and how they intend to prove them.

The judge should also inquire into the amount of damages claimed and the

proposed proof and manner of computation, including the evidence of causation and the specific nature of any other relief sought (data that may also be

subject to mandatory prediscovery disclosure, see section 11.13). The defense

should identify the specific allegations and claims it disputes, the specific defenses it will raise, and the proof it will offer. This process helps identify the

genuine disputes and may facilitate admissions and stipulations between the

parties. The parties may, for example, be able to stipulate to the authenticity of

documents or the accuracy of underlying statistical or technical data while reserving the right to dispute assumptions, interpretations, or inferences drawn
Pretrial Procedures § 11.33

45

from the evidence. The judge may take judicial notice of facts after the opposing party has had an opportunity to proffer contradictory evidence.92

A variety of actions can help to identify, define, and resolve issues in complex litigation, including the following:

• requiring nonbinding statements of counsel, such as those that may be

required at the initial conference (see section 11.11)—such statements

can be updated periodically by written reports or oral statements at

later conferences;

• encouraging voluntary abandonment of tenuous claims or defenses by

the parties, often after the court’s probing into the likelihood of success and the potential disadvantages of pursuing them;

• requiring counsel to list the essential elements of the cause of action—this exercise, designed to clarify the claims, may help identify

elements in dispute and result in abandonment of essentially duplicative theories of recovery;

• incorporating formal amendments to the pleadings, including those

resulting from an order under Federal Rule of Civil Procedure 12

striking allegations or requiring a more definite statement;

• using the authority in Rule 16(c)(1) to eliminate insubstantial claims

or defenses;93

• allowing contention interrogatories (see section 11.461) and requests

for admission (see section 11.472), especially when served after adequate opportunity for relevant discovery;

92. See Fed. R. Evid. 201; Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 332 (1949);

William J. Flittie, Judicial Notice in the Trial of Complex Cases, 31 Sw. L.J. 819, 829–39 (1978).

93. See, e.g., Fed. R. Civ. P. 16(c) committee note; McLean Contracting Co. v. Waterman

S.S. Corp., 277 F.3d 477 (4th Cir. 2002) (citing the interest of efficient judicial administration as

a basis for 16(c)(1)); Huey v. United Parcel Serv., Inc., 165 F.3d 1084, 1085 (7th Cir. 1999)

(holding that a local rule requiring the party to identify disputed issues of material fact or waive

arguments related to those issues “contributes to the efficient management of judicial business”); Morro v. City of Birmingham, 117 F.3d 508, 515 (11th Cir. 1997) (noting the importance

of narrowing and defining the issues before trial); Lexington Ins. Co. v. Cooke’s Seafood, 835

F.2d 1364, 1368 (11th Cir. 1988) (“Given the vast number of details competing for the attention

of a federal district judge, reducing all issues to writing before the pretrial conference substantially assists the trial court in its ability to understand the issues and to prepare for trial.”); Diaz

v. Schwerman Trucking Co., 709 F.2d 1371, 1375 n.6 (11th Cir. 1983) (noting trial court’s power

under Rule 16 to summarily decide matters where no issue of fact exists); Holcomb v. Aetna Life

Ins. Co., 255 F.2d 577, 580–81 (10th Cir. 1958) (trial court may enter judgment at Rule 16 pretrial conference if no issue of fact); cf. Fox v. Taylor Diving & Salvage Co., 694 F.2d 1349,

1356–57 (5th Cir. 1983) (judge may summarily dispose of unsupportable claim after Rule 16

conference held during recess in trial).
§ 11.34 Manual for Complex Litigation, Fourth

46

• ruling promptly on motions for full or partial summary judgment (see

section 11.34);

• issuing sanctions for violations of Rules 16, 26, and 37 in the form of

orders precluding certain contentions or proof (see section 10.15);

• requiring, with respect to one or more issues, that the parties present a

detailed statement of their contentions, with supporting facts and evidence (see section 11.641)—the statements may be exchanged, with

each party marking those parts it disputes; the order directing this

procedure should provide that other issues or contentions are then

precluded and no additional evidence may be offered absent good

cause;

• requiring the parties to present, in advance of trial, proposed instructions in jury cases (see sections 11.65, 12.43) or proposed findings of

fact and conclusions of law in nonjury cases (see section 12.52);

• conducting preliminary hearings under Federal Rule of Evidence 104

on objections to evidence (see section 11.642); and

• conducting a separate trial under Federal Rule of Civil Procedure

42(b) of issues that may render unnecessary or substantially alter the

scope of further discovery or trial (see section 11.632)—special verdicts and interrogatories (see section 11.633) may be helpful, and on

some issues the parties may waive jury trial (see section 11.62).

11.34 Summary Judgment

Summary judgment motions can help identify, define, and resolve issues.

As the Supreme Court has stated, summary judgment is “not . . . a disfavored

procedural shortcut, but rather . . . an integral part of the Federal Rules.”94

Summary judgment may eliminate the need for further proceedings or at least

reduce the scope of discovery or trial. Even if denied, the parties’ formulations

of their positions may help clarify and define issues and the scope of further

discovery. In addition, under Federal Rule of Civil Procedure 56(d), the court

may issue an order specifying those facts that “appear without substantial

controversy” and shall be “deemed established” for trial purposes.

Despite their benefits, summary-judgment proceedings can be costly and

time-consuming. To avoid the filing of unproductive motions, the court may

require a prefiling conference to ascertain whether issues are appropriate for

summary judgment, whether there are disputed issues of fact, and whether the

motion, even if granted, would expedite the termination of the litigation. A

94. Celotex v. Catrett, 477 U.S. 317, 329 (1986).
Pretrial Procedures § 11.34

47

separate trial of an issue bifurcated under Rule 42(b) may sometimes be a preferable alternative.

Summary judgment is as appropriate in complex litigation as in routine

cases95—and, as a general proposition, the standard for deciding a summary

judgment motion is the same in all cases.96 Complex litigation, however, may

present complicated issues not as susceptible to resolution as issues in more

familiar settings. More extensive discovery may be necessary to create an adequate record for decision.97 However, the party opposing summary judgment

should make the necessary showing under Rule 56(f) in support of its request.98

To avoid pretrial activities that may be unnecessary if the summaryjudgment motion is granted, the schedule should call for filing the motion as

early in the litigation as possible. This will maximize the potential benefits

from its disposition while affording the parties an adequate opportunity to

conduct discovery relevant to the issues raised, obtain needed evidence, and

develop a sufficient record for decision.99 Allowing adequate time for preparation before the motion is filed should reduce the opposing party’s need for

granting a continuance under Rule 56(f) to obtain affidavits or conduct further

discovery to oppose the motion. Under Rule 56(f), the party requesting a continuance must specify (1) the discovery it proposes to take, (2) the evidence

95. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (approving

grant of summary judgment in complex antitrust case).

96. See William W Schwarzer et al., The Analysis and Decision of Summary Judgment Motions (Federal Judicial Center 1991), reprinted in 139 F.R.D. 441 (1992) [hereinafter Summary

Judgment]. For U.S. Supreme Court cases discussing the standard and the parties’ respective

burdens, see Eastman Kodak Co. v. Image Technical Servs. Inc., 504 U.S. 451 (1992); Celotex, 477

U.S. at 317; Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); Matsushita, 475 U.S. at 574.

97. See William W Schwarzer & Alan Hirsch, Summary Judgment After Eastman Kodak, 45

Hastings L.J. 1 (1993).

98. See, e.g., Harrods Ltd. v. Sixty Internet Domain Names, No. 00-2414, 2002 U.S. App.

LEXIS 17530, at *77 (4th Cir. Aug. 23, 2002); Fennell v. First Step Designs, Ltd., 83 F.3d 526 (1st

Cir. 1996); Keebler Co. v. Murray Bakery Prods., 866 F.2d 1386, 1388–90 (Fed. Cir. 1989);

Dowling v. City of Philadelphia, 855 F.2d 136, 139–40 (3d Cir. 1988); VISA Int’l Serv. Ass’n v.

Bankcard Holders of Am., 784 F.2d 1472, 1475 (9th Cir. 1986); Madrid v. Chronicle Books, 209

F. Supp. 2d 1227, 1232–33 (D. Wyo. 2002); Nicholson v. Doe, 185 F.R.D. 134, 136–37 (N.D.N.Y.

1999).

99. See Celotex, 477 U.S. at 327 (court must allow “adequate time” for discovery); Anderson, 477 U.S. at 250 n.5 (nonmoving party must have opportunity to discover information “essential to [its] opposition”). The court must use its discretion to determine what constitutes

“adequate time” and what information is “essential” in opposition; requiring all discovery to be

completed before entertaining the motion defeats the purpose of summary judgment.
§ 11.34 Manual for Complex Litigation, Fourth

48

likely to be uncovered, and (3) the material fact issues that evidence will support.

Rule 56(c) directs the court to rule on a summary-judgment motion on

the basis of “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits.”100 The affidavits “shall be made on

personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to

the matters stated therein.”101 Because of the volume of discovery materials in

complex litigation and the potential for disputes over admissibility, these provisions can be a particular source of problems. The court may either direct the

moving party to specify the material facts claimed to be undisputed or direct

the opposing party to specify the evidence upon which a claimed factual dispute is based.102 Objections to evidence may be resolved by a hearing under

Federal Rule of Evidence 104.103 Each party should also submit a clear and unambiguous statement of the theories of its case. Such statements in the motion

and the opposition will minimize the risk of error, as will a tentative ruling

before hearing the motion.

The ruling on the motion should be in writing or read into the record, and

it should lay out the court’s reasoning. It is important to decide such motions

promptly; deferring rulings on summary judgment motions until the final

pretrial conference defeats their purpose of expediting the disposition of issues.

100. Fed. R. Civ. P. 56(c). The court may also hold an evidentiary hearing under Rule

43(e), but when the motion cannot be decided because the parties’ submissions are unclear, the

court may instead simply require additional, clarifying submissions.

101. Fed. R. Civ. P. 56(e). The requirements of personal knowledge and admissibility in

evidence presumably apply also to the use of depositions and interrogatory answers. See 10A

Charles A. Wright et al., Federal Practice and Procedure: Civil 3d § 2722 (3d ed. 1998).

102. For example, the parties should identify relevant deposition evidence by deponent,

date, place of deposition, and page numbers; similarly detailed information should be provided

for all other evidence submitted. Copies of relevant materials should be included with the moving and opposing papers. See Summary Judgment, supra note 96, at 480–81 & n.221; Schneider

v. TRW, Inc., 938 F.2d 986, 990 n.2 (9th Cir. 1991).

103. See In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 260 (3d Cir. 1983), rev’d

on other grounds sub. nom. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574

(1986).
Pretrial Procedures § 11.4

49

11.4 Discovery

.41 Relationship to Issues 50

.42 Planning and Control 51

.421 Discovery Plan/Scheduling Conference 51

.422 Limitations 53

.423 Other Practices to Save Time and Expense 56

.424 Resolution of Discovery Disputes 59

.43 Privilege Claims and Protective Orders 62

.431 Claims of Privilege/Full Protection 63

.432 Limited Disclosure/Protective Orders 64

.433 Allocation of Costs 69

.44 Documents 71

.441 Identification System 71

.442 Preservation 72

.443 Rule 34 Requests/Procedures for Responding 74

.444 Document Depositories 75

.445 Evidentiary Foundation for Documents 77

.446 Discovery of Computerized Data 77

.447 Discovery from Nonparties 82

.45 Depositions 83

.451 Limitations and Controls 83

.452 Cost-Saving Measures 85

.453 Deferred Supplemental Depositions 87

.454 Scheduling 88

.455 Coordination with Related Litigation 89

.456 Control of Abusive Conduct 89

.46 Interrogatories 90

.461 Purposes 90

.462 Limitations 91

.463 Responses 92

.464 Other Practices to Save Time and Expense 92

.47 Stipulations of Fact/Requests for Admission 94

.471 Stipulations of Fact 94

.472 Requests for Admission 95

.473 Statements of Contentions and Proof 96

.474 Requests for Judicial Notice 97

.48 Disclosure and Discovery of Expert Opinions 97

.481 Trial Experts 97

.482 Consulting Experts 99

.483 Court-Appointed Experts 100

.49 Special Problems 100

.491 Government Investigations/Grand Jury Materials 100

.492 Summaries 101

.493 Sampling/Opinion Surveys 102

.494 Extraterritorial Discovery 104
§ 11.41 Manual for Complex Litigation, Fourth

50

The Federal Rules of Civil Procedure, along with the court’s inherent

power, provide ample authority104 for early and ongoing control of discovery in

complex litigation.

11.41 Relationship to Issues

Fundamental to controlling discovery is directing it at the material issues

in controversy. The general principle governing the scope of discovery stated in

Rule 26(b)(1) permits discovery of matters, not privileged, “relevant to the

claim or defense of any party.” The court has discretion to expand that to “any

matter relevant to the subject matter involved in the action.”105 But Rule

26(b)(2) directs the court to limit the frequency and extent of use of the discovery methods permitted by the rules in order to prevent “unreasonably cumulative or duplicative” discovery and discovery for which “the burden or expense . . . outweighs its likely benefit, taking into account the needs of the case

. . . the importance of the issues at stake . . . and the importance of the proposed discovery in resolving the issues.” This underlying principle of proportionality means that even in complex litigation, discovery does not require

leaving no stone unturned.

Early identification and clarification of issues (see section 11.3) is essential

to discovery control. It enables the court to assess the materiality and relevance

of proposed discovery and provides the basis for a fair and effective discovery

plan. A plan established early in the litigation needs to take into account the

possibility of revisions based on information gained through discovery. Alternative approaches to the sequencing of discovery have different costs and

benefits. For example, deferring discovery on damages until liability has been

decided may result in savings, but may also lead to duplicative discovery if resumed. Conversely, conducting discovery on damages before discovery on liability will sometimes facilitate early settlement by informing the parties of

their potential exposure, but may be rendered unnecessary if the defendant is

found not liable.

104. See Herbert v. Lando, 441 U.S. 153, 177 (1979); Oppenheimer Fund, Inc. v. Sanders,

437 U.S. 340, 350–54 (1978).

105. Fed. R. Civ. P. 26(b)(1).
Pretrial Procedures § 11.421

51

11.42 Planning and Control

.421 Discovery Plan/Scheduling Conference 51

.422 Limitations 53

.423 Other Practices to Save Time and Expense 56

.424 Resolution of Discovery Disputes 59

A discovery plan should facilitate the orderly and cost-effective acquisition

of relevant information and materials and the prompt resolution of discovery

disputes. The plan should reflect the circumstances of the litigation, and its

development and implementation must be a collaborative effort with counsel.

The judge should ask the lawyers initially to propose a plan, but should not

accept joint recommendations uncritically. Limits may be necessary even regarding discovery on which counsel agree. The judge’s role is to oversee the

plan and provide guidance and control. In performing that role, even with

limited familiarity with the case, the judge must retain responsibility for control of discovery. The judge should not hesitate to ask why particular discovery

is needed and whether information can be obtained more efficiently and economically by other means. Regular contact with counsel through periodic

conferences will enable the judge to monitor the progress of the plan, ensure

that it is operating fairly and effectively, and adjust it as needed.

11.421 Discovery Plan/Scheduling Conference

Adoption of a discovery plan is a principal purpose of the initial conference.106 The initial conference should be preceded by a conference of counsel

to develop a discovery plan for submission to the court.107 Rule 26(f) requires

such conferring and places joint responsibility on the attorneys of record and

all unrepresented parties to arrange, attend (or be represented at), and participate in good faith in the conference. Rule 26(d) bars discovery, absent stipulation or court order, before that conference. An exception is found in Rule

30(a)(2)(C), which allows a deposition to be taken before the discovery conference if the notice contains a certification, with supporting facts, that the deponent is expected to leave the United States and be unavailable for examination in this country unless deposed before that time. Such a deposition may

106. See Fed. R. Civ. P. 16(c)(6). See also supra sections 11.11, 11.33.

107. For a discussion of the factors to be considered in formulating a discovery plan, see

William W Schwarzer et al., Civil Discovery and Mandatory Disclosure: A Guide to Efficient

Practice (2d ed. 1994).
§ 11.421 Manual for Complex Litigation, Fourth

52

not be used against a party who demonstrates that it was unable through diligence to obtain counsel to represent it at the deposition.108

Within fourteen days after conferring the parties must submit to the court

a written report outlining their discovery plan.109 The plan should address

• the form and timing of disclosure;

• the subjects of and completion date for discovery; and

• the possibility of phasing, limiting, or focusing discovery in light of the

issues.

The parties’ submission will be the starting point for developing the plan. If

necessary, the court should direct the parties to resume discussion to prepare a

more useful and reasonable plan. Rule 37(g) allows the court, after opportunity for hearing, to assess reasonable costs, including attorneys’ fees, against a

party or attorney failing to participate in good faith in the development and

submission of a proposed discovery plan as required by Rule 26(f). It is ordinarily best to defer commencement of discovery until after a plan has been

adopted.

Actions taken at the conference bearing on the discovery plan may include

the following:

• examining the specifics of proposed discovery in light of Rule

26(b)(2), which calls for

– limiting discovery that is cumulative or duplicative, or that is more

convenient, less burdensome, or less expensive to obtain from another source, or that seeks information the party has had ample opportunity to obtain; and

– balancing the burden and expense of any discovery sought against

its benefit, after considering the need for the discovery, the importance of the amount or issues at stake, and the parties’ resources;

• directing disclosure of core information where appropriate to avoid

the cost and delay of formal discovery (see section 11.13);

• discussing issues related to the format, compression, resolution, and

alteration of documents, photographs, videotapes, and other materials

to be exchanged in digital form;110

• reminding counsel of their professional obligations in conducting discovery and the implications of the certification under Rule 26(g) that

108. Fed. R. Civ. P. 32(a)(3).

109. For a sample report, see Federal Rule of Civil Procedure appendix of forms (form 35).

110. See Effective Use of Courtroom Technology, supra note 85, at 61–97. Also see the

material regarding form of production in infra section 11.446.
Pretrial Procedures § 11.422

53

all disclosures and discovery responses are complete and correct when

made, and that requests, objections, and responses conform to the requirements of the Federal Rules;

• providing for compliance with the supplementation requirements of

Rules 26(e)(1) and (2)111 by setting periodic dates for additional reports;

• requiring periodic status reports to monitor the progress of discovery

(which can be informal, by letter or telephone); and

• issuing an order, which may be a part of the scheduling order required

by Rule 16(b) (see section 11.212), which incorporates the discovery

plan (for a sample order, see section 40.24).

11.422 Limitations

Discovery control in complex litigation may take a variety of forms, including time limits, restrictions on scope and quantity, and sequencing. The

Federal Rules and the court’s inherent power provide the court with broad

authority. Among other provisions, Federal Rule of Civil Procedure 16(b) directs the court to limit the time for discovery, and Rule 26(b) empowers the

court to limit the “frequency or extent of use of the discovery methods” under

the rules, including the length of depositions. Rule 30(a) imposes a presumptive limit of ten depositions per side. Rule 30(d) has a presumptive durational

limit of one 7-hour day for any deposition. Rule 33 establishes a presumptive

limit of twenty-five interrogatories per party (see sections 11.451, 11.462). Rule

26(f)(3) requires the parties to address discovery limits in their proposed discovery plan.

Presumptive limits should be set early in the litigation, before discovery

has begun. Information about the litigation will be limited at that time, so limits may need to be revised in the light of later developments. But they should

be imposed on the basis of the best information available at the time, after full

consultation with counsel, and with the understanding that they will remain

binding until further order. In determining appropriate limits, the court will

need to balance efficiency and economy against the parties’ need to develop an

adequate record for summary judgment or trial. This task further underlines

the importance of clarifying and understanding the issues in the case before

111. Rule 26(e)(2) does not apply to deposition testimony, but when the deposition of an

expert from whom a report was required under Rule 26(a)(2)(B) reveals changes in the expert’s

opinion, it triggers the duty of supplementation imposed by Rule 26(e)(1). See Fed. R. Civ. P. 26

committee note; Fed. R. Civ. P. 26(a)(2)(C).
§ 11.422 Manual for Complex Litigation, Fourth

54

imposing limits.112 The following are examples of discovery limits that a judge

might consider:

• Time limits and schedules. The discovery plan should include a schedule for the completion of specified discovery, affording a basis for judicial monitoring of progress. Setting a discovery cutoff date113 is an

important objective, but may not be feasible at the initial conference

in complex litigation. The discovery cutoff should not be so far in advance of the anticipated trial date that the product of discovery becomes stale and the parties’ preparation outdated. Time limits impose

valuable discipline on attorneys, forcing them to be selective and

helping to move the case expeditiously, but standing alone they may

be insufficient to control discovery costs. Unless time limits are complemented by other limitations, attorneys may simply conduct multitrack discovery, thereby increasing expense and prejudicing parties

with limited resources. To prevent time limits from being frustrated,

the judge should rule promptly on disputes so that further discovery is

not delayed or hampered while a ruling is pending. Although attorneys

will sometimes argue over “priorities,” the rules provide for no such

presumptive standing.

• Limits on quantity. Time limits may be complemented by limits on the

number and length of depositions, on the number of interrogatories,

and on the volume of requests for production. Imposing such limitations only after hearing from the attorneys makes possible a reasonably informed judgment about the needs of the case. Limitations are

best applied sequentially to particular phases of the litigation, rather

than as aggregate limitations. When limits are placed on discovery of

voluminous transactions or other events, consider using statistical

sampling techniques to measure whether the results of the discovery

fairly represent what unrestricted discovery would have been expected

to produce (section 11.493 discusses statistical sampling).

• Phased, sequenced, or targeted discovery. Counsel and the judge will

rarely be able to determine conclusively early in the litigation what

discovery will be necessary; some discovery of potential relevance at

the outset may be rendered irrelevant as the litigation proceeds, and

the need for other discovery may become known only through later

developments. For effective discovery control, initial discovery should

focus on matters—witnesses, documents, information—that appear

112. See Schwarzer & Hirsch, supra note 97.

113. See In re Fine Paper Antitrust Litig., 685 F.2d 810 (3d Cir. 1982).
Pretrial Procedures § 11.422

55

pivotal. As the litigation proceeds, this initial discovery may render

other discovery unnecessary or provide leads for further necessary discovery. Initial discovery may also be targeted at information that

might facilitate settlement negotiations or provide the foundation for

a dispositive motion; a discovery plan may call for limited discovery to

lay the foundation for early settlement discussions. Targeted discovery

may be nonexhaustive, conducted to produce critical information

rapidly on one or more specific issues. In permitting this kind of discovery, it is important to balance the potential savings against the risk

of later duplicative discovery should it be necessary to resume the

deposition of a witness or the production of documents. Targeted discovery may in some cases be appropriate in connection with a motion

for class certification; however, matters relevant to such a motion may

be so intertwined with the merits that targeting discovery would be inefficient. See sections 11.41 and 21.2.

• Subject-matter priorities. Where the scope of the litigation is in doubt

at the outset—as, for example, in antitrust litigation—the court

should consider limiting discovery to particular time periods or geographical areas, until the relevance of expanded discovery has been

established. See section 11.41.

• Sequencing by parties. Although discovery by all parties ordinarily proceeds concurrently, sometimes one or more parties should be allowed

to proceed first. For example, if a party needs discovery to respond to

an early summary judgment motion, that party may be given priority.

Some judges establish periods in which particular parties have exclusive or preferential rights to take depositions, and in multiple litigation, those judges direct that discovery be conducted in some cases

before others. Sometimes judges order “common” discovery to proceed in a specified sequence, without similarly limiting “individual”

discovery in the various cases.

• Forms of discovery. Some judges prescribe a sequence for particular

types of discovery—for example, interrogatories may be used to identify needed discovery and documents, followed by requests for production of documents, depositions, and finally requests for admission.

If the court directs that discovery be conducted in a specified sequence, it

should grant leave to vary the order for good cause, as when emergency depositions are needed for witnesses in ill health or about to leave the country.
§ 11.423 Manual for Complex Litigation, Fourth

56

11.423 Other Practices to Save Time and Expense

Various other practices can help minimize the cost, delay, and burden associated with discovery. Consider reminding counsel of the following:

• Stipulations under Federal Rule of Civil Procedure 29. The rule gives

parties authority to alter procedures, limitations, and time limits on

discovery so long as they do not interfere with times set by court order. Thus, the parties can facilitate discovery by stipulating with respect to notice and manner of taking depositions and adopting various

informal procedures. The court may, however, require that it be kept

advised of such agreements to ensure compliance with the discovery

plan and may by order preclude stipulations on particular matters.

• Informal discovery. The court should encourage counsel to exchange

information, particularly relevant documents, without resort to formal

discovery (see section 11.13). Early exchanges can make later depositions more efficient. Informal interviews with potential witnesses can

help determine whether a deposition is needed, inform later discovery,

and provide the basis for requests for admissions through which the

results of informal discovery are made admissible at trial.

• Automatic disclosure. Rule 26(a)(1) and many local rules and standing

orders require the parties to identify relevant witnesses and categories

of documents early in the litigation, without waiting for discovery requests. By stipulation or court order, the timing and content of this

disclosure may be tailored to the needs of the particular case. See section 11.13.

• Reduction of deposition costs. Depositions taken by telephone, videoconference, electronic recording devices, or having deponents come to

central locations sometimes save money. Likewise, parties may forgo

attending a deposition in which they have only a minor interest if a

procedure is established for supplemental questions—by telephone,

videoconference, written questions, or resumption of examination in

person—in the event that, after a review of the transcript, they find

further inquiry necessary. Section 11.45 has additional discussion of

deposition practices.

• Information from other litigation and sources. When information is

available from public records (such as government studies or reports),
Pretrial Procedures § 11.423

57

from other litigation,114 or from discovery conducted by others in the

same litigation, consider requiring the parties to review those materials

before undertaking additional discovery. The court may limit the parties to supplemental discovery if those materials will be usable as evidence in the present litigation. Interrogatory answers, depositions, and

testimony given in another action ordinarily are admissible if made by

and offered against a party in the current action. Similarly, they may

be admissible for certain purposes if made by a witness in the current

action.115 Coordination of “common” discovery in related litigation

may also save costs, even if the litigation is pending in other courts. If

related cases are pending in more than one court, coordinated common discovery can prevent duplication and conflicts. A joint discovery

plan can be formulated for all cases, with agreement among parties

that one of the cases will be treated as the lead case (with its discovery

plan serving as the starting point for development of supplemental

plans in the other courts), or with the use of joint deposition notices.

See section 20. Counsel may also agree that discovery taken in one

proceeding can be used in related proceedings as though taken there.

• Joint discovery requests and responses. In multiparty cases with no designated lead counsel, judges sometimes require parties with similar

positions to submit a combined set of interrogatories, requests for

production, or requests for admission. If voluminous materials are to

be produced in response, the responding party may be relieved of the

requirement of furnishing copies to each discovering party. Section 11.44 has further discussion of document discovery, including use

of document depositories.

• Modified discovery responses. When a response to a discovery request

can be provided in a form somewhat different from that requested,

but with substantially the same information and with less time and

expense, the responding party should make that fact known and seek

agreement from the requesting party. For example, information

sought on a calendar year basis may be readily and inexpensively available on a fiscal year basis. Similarly, if some requested information can

be produced promptly but additional time will be needed for other

items, the responding party should produce the information presently

114. Access to materials and testimony given in other cases may be impeded because of

confidentiality orders, restrictions on release of grand jury materials, and other limitations. See

infra sections 11.43 and 20.

115. See Fed. R. Evid. 801(d). The parties may stipulate to the admissibility of other information.
§ 11.423 Manual for Complex Litigation, Fourth

58

available and indicate when the remainder will be produced. Preferably, formal discovery requests should be prepared only after counsel

have informally discussed what information is needed and how it can

be produced most efficiently.

• Phased or sequenced discovery of computerized data. Sections 11.41 and

11.422 have discussed phasing discovery by issue. Computerized data,

however, are often not accessible by date, author, addressee, or subject

matter without costly review and indexing. Therefore, it may be appropriate for the court to phase or sequence discovery of computerized data by accessibility. At the outset, allowing discovery of relevant,

nonprivileged data available to the respondent in the routine course of

business is appropriate and should be treated as a conventional document request. If the requesting party requests more computerized

data, consider additional sources in ascending order of cost and burden to the responding party, e.g., metadata or system data, archived

data, backup data, and legacy data.116 The judge should encourage the

parties to agree to phased discovery of computerized data as part of

the discovery plan. But with or without a prior agreement, the judge

may engage in benefit-and-burden analysis under Rule 26(b)(2)(iii) at

each stage and enter an appropriate order under Rule 26(c), which

may include cost sharing between the parties or cost shifting to the requesting party.117 See section 11.433.

• Computerized data produced in agreed-on formats. Information subject

to discovery increasingly exists in digital or computer-readable form.

The judge should encourage counsel to produce requested data in

formats and on media that reduce transport and conversion costs,

maximize the ability of all parties to organize and analyze the data

during pretrial preparation, and ensure usability at trial. Wholesale

conversion of computerized data to paper form for production, only

to be reconverted into computerized data by the receiving party, is

costly and wasteful. Particularly in multiparty cases, data production

on CD-ROM or by Internet-based data transfer can increase efficiency. Section 11.444 discusses “virtual” document depositories.

116. For explanations of these terms, see Kenneth J. Withers, Computer-Based Discovery in

Federal Civil Litigation, 2000 Fed. Cts. L. Rev. 2, at http://www.fclr.org/2000fedctslrev2.htm (last

visited Nov. 3, 2003); see also infra section 11.446.

117. See Zubulake v. UBS Warburg LLC, 2003 U.S. Dist. LEXIS 7939 (S.D.N.Y.) (defining

five common categories of data accessibility, proposing sampling of backup data, and applying a

seven-factor test in considering cost sharing or cost shifting).
Pretrial Procedures § 11.424

59

• Sampling of computer data. Parties may have vast collections of computerized data, such as stored E-mail messages or backup files containing routine business information kept for disaster recovery purposes. Unlike collections of paper documents, these data are not normally organized for retrieval by date, author, addressee, or subject

matter, and may be very costly and time-consuming to investigate

thoroughly. Under such circumstances, judges have ordered that random samples of data storage media be restored and analyzed to determine if further discovery is warranted under the benefit versus burden considerations of Rule 26(b)(2)(iii).118

• Combined discovery requests. Several forms of discovery can be combined into a single request. Ordinarily, more time should be allowed

for parties responding to a combined discovery request, even though

such responses sometimes consume less overall time than do responses to traditional separate discovery requests. Because the rules

impose no limits on requests for admission as they do on interrogatories, an order enlarging the number of permissible interrogatories may

be necessary.

• Conference depositions. If knowledge of a subject is divided among several people and credibility is not an issue, a “conference deposition”

may be feasible (see, e.g., Rule 26(b)(6)). Each witness is sworn, and

the questions are then directed to the group or those having the information sought. Persons in other locations who may also be needed

to provide information may be scheduled to be “on call” during the

conference deposition. This procedure may be useful in obtaining

background information, identifying and explaining documents, and

examining reports compiled by several persons.

• Subpoenas. Under Rule 45, an attorney may subpoena documents or

other tangibles from nonparties, avoiding unnecessary depositions.

The rule also provides for subpoenas to permit inspection of premises

possessed by nonparties, rendering unnecessary the commencement of

an independent proceeding. See section 11.447.

118. Id.

11.424 Resolution of Discovery Disputes

Discovery disputes, with their potential for breeding satellite litigation, are

a major source of cost and delay. Few aspects of litigation management are

more important than the prompt and inexpensive resolution of such controversies. Procedures such as those described here take little judicial time but
§ 11.424 Manual for Complex Litigation, Fourth

60

result in substantial improvements in the conduct of discovery by deterring

counsel from obstructive conduct. Such procedures are equally effective when

a magistrate judge manages discovery.

A discovery plan should include specific provisions, such as the following,

for the fair and efficient resolution of discovery disputes.

Presubmission conference of counsel. Submission of a dispute or a request

for relief should be disallowed until the parties have met and attempted to resolve it. Rules 37(a) and 26(c) condition the right to make a motion to compel

or for a protective order upon certification that the movant has in good faith

conferred or attempted to confer with the opponent to resolve the matter

without court action. Most local rules require such a conference before counsel

may bring a discovery dispute to the court (some judges require the participation of local counsel in this conference).119 The discovery plan or scheduling

order, however, should specify the ground rules for such conferences, such as

requiring that the party requesting the conference send the opponent a clear

and concise statement of the asserted deficiencies or objections and the requested action. Having to narrow and define the dispute and the requested

relief should cause counsel to prepare for the conference, consult with clients,

and seek a resolution that will avoid the need for judicial intervention. Any

resulting resolution should be put in writing.

Submission to the court. Many judges believe that making themselves available to resolve discovery disputes informally discourages disputes and encourages quick resolution of those that are submitted. Some judges direct counsel

to present disputes by conference call. Others direct submission by letter. A

brief excerpt of the transcript containing relevant proceedings, either in writing or read by the reporter over the phone, will help the decision maker. The

availability of a speedy resolution process, particularly during the course of a

deposition, tends to deter unreasonable and obstructive conduct. The incentive

for unreasonable behavior is reduced when the judge (or magistrate judge) is

readily available by telephone and the opponent can obtain prompt relief (see

section 11.456).

Avoiding formal motions in discovery disputes also forces attorneys to

narrow and simplify the dispute rather than to elaborate on it as they would in

a brief. Questions from the judge will further narrow and clarify the dispute.

Often, the appropriate resolution becomes self-evident during the course of

the conference. Even if informal presentation does not resolve a dispute, it can

help to define and narrow it for further proceedings.

119. See, e.g., William W Schwarzer, Guidelines for Discovery, Motion Practice and Trial, 117

F.R.D. 273 (1987).
Pretrial Procedures § 11.424

61

If informal procedures fail or are rejected, it helps to adopt procedures that

minimize the activity needed to resolve the dispute. These procedures include

restricting the length of motions, memoranda, and supporting materials, barring replies generally, and setting time limits for submission. Discovery disputes involving issues having a significant impact on the litigation—such as

rulings on privilege—may require substantial proceedings. The judge should

avoid discovery with respect to the discovery dispute itself except in extraordinary circumstances.

Special masters can successfully oversee discovery, particularly where there

are numerous issues—such as claims of privilege—to resolve or where the

parties are extraordinarily contentious. Appointing special masters, however,

can increase substantially the cost of litigation, although the resulting efficiencies could result in offsetting savings. In any event, the court should avoid such

appointments where the parties object with good cause or cannot afford the

cost.120

Counsel sometimes may submit certain discovery disputes to a judge outside of the district. Lawyers sometimes submit a motion, for example, to compel or terminate a deposition held outside the district where the action is

pending, or a motion for a protective order, either to the judge before whom it

is pending or to a judge in the district where the deposition is being held.121 In

complex litigation, however, particularly if procedures have already been established for expedited consideration, consider requiring all such matters to be

presented to the assigned judge. Federal Rule of Civil Procedure 37(a)(1) requires counsel to present a motion to compel to the court in which the action

is pending if directed at a party; only if directed at a nonparty must it be presented to a court in the district where the discovery is taken. When a dispute is

presented to a deposition-district court, however, the assigned judge may have

or be able to obtain authority to act also as deposition judge in that district,

and may be able to exercise those powers by telephone.122 In multidistrict litigation under 28 U.S.C. § 1407(b), “the judge or judges to whom such actions

are assigned, the members of the judicial panel on multidistrict litigation, and

other circuit and district judges designated when needed by the panel may exercise the powers of a district judge in any district for the purpose of conduct120. See infra section 11.52; Brazil et al., supra note 21 (based on experience in United

States v. Am. Tel. & Tel. Co., 461 F. Supp. 1314 (D.D.C. 1978), 552 F. Supp. 131 (D.D.C. 1982),

aff’d mem. sub nom. Md. v. United States, 460 U.S. 1001 (1983)).

121. Fed. R. Civ. P. 26(c), 30(d).

122. See In re Corrugated Container Antitrust Litig., 662 F.2d 875, 877, 879 (D.C. Cir.

1981); In re Corrugated Container Antitrust Litig., 644 F.2d 70 (2d Cir. 1981) (tacitly assuming

power); In re Corrugated Container Antitrust Litig., 620 F.2d 1086, 1089 (5th Cir. 1980).
§ 11.43 Manual for Complex Litigation, Fourth

62

ing pretrial depositions.” In other cases, an interdistrict or intercircuit assignment may enable the judge to whom the case is assigned to act as deposition

judge in another district. In such cases, the deposition-district judge can always

confer with the forum-district judge by telephone and thereby expedite a ruling.

Rulings. The judge should try to expedite the resolution of discovery disputes by whatever procedure is adopted. Pending disputes disrupt the discovery program and result in additional cost and delay. It is generally more important to the parties that the dispute be decided promptly than that it be decided perfectly, and it is best to memorialize the resolution on the record or by

written order. Thus, consider directing prevailing counsel to prepare a proposed order and submit it to the opponent for review and then to the court. If

the order is made at a conference during a deposition, the conference and order can be transcribed as part of the deposition transcript.

11.43 Privilege Claims and Protective Orders

.431 Claims of Privilege/Full Protection 63

.432 Limited Disclosure/Protective Orders 64

.433 Allocation of Costs 69

Attention should be given at an early conference, preferably before discovery begins, to any need for procedures to accommodate claims of privilege or

for protection of materials from discovery as trial preparation materials,123 as

trade secrets, or on privacy grounds.124 If not addressed early, these matters

may later disrupt the discovery schedule. The court should consider not only

the rights and needs of the parties but also the existing or potential interests of

those not involved in the litigation.125

123. “Trial preparation materials” include, but are not limited to, traditional “work product.” See Fed. R. Civ. P. 26(b)(3) & committee note.

124. Although there is no privacy privilege, maintenance of privacy can be the ground for a

protective order. See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 30, 35 n.21 (1984).

125. For a thorough discussion of the issues raised by protective orders, see Zenith Radio

Corp. v. Matsushita Elec. Indus. Co., 529 F. Supp. 866 (E.D. Pa. 1981). See also Seattle Times, 467

U.S. 20; Richard L. Marcus, The Discovery Confidentiality Controversy, 1991 U. Ill. L. Rev. 457

(1991).
Pretrial Procedures § 11.431

63

11.431 Claims of Privilege/Full Protection

Certain materials may qualify for full protection against disclosure or discovery as privileged,126 as trial preparation material,127 or as incriminating under the Fifth Amendment.128 It helps to minimize their potentially disruptive

effects on discovery, by addressing the possibility of such claims at an early

conference and establishing a procedure for their resolution or for avoidance

through appropriate sequencing of discovery. Parties sometimes try to facilitate discovery by agreeing that the disclosure of a privileged document will not

be deemed a waiver with respect to that document or other documents involving the same subject matter. Some courts, however, have refused to enforce such agreements.129

A claim for protection against disclosure based on privilege or protection

of trial preparation materials must be made “expressly” and describe the nature of the allegedly protected information sufficiently to enable opposing parties to assess the merits of the claim.130 This is usually accomplished by counsel

submitting a log (frequently called a “Vaughn Index”131) identifying documents

or other communications by date and by the names of the author(s) and recipient(s), and describing their general subject matter (without revealing the

privileged or protected material).132 Unresolved claims of privilege should be

presented directly to the judge for a ruling; if necessary, the judge can review

the disputed information in camera.

Parties seeking protection, however, sometimes request that the trial judge

not see the document, especially in a nonjury case. In such circumstances, the

judge should consider referring the matter to another judge, a magistrate

126. Rulings on claims of privilege in diversity cases are governed by Federal Rule of Evidence 501, which provides that privilege is determined by state law where state law supplies the

rule of decision.

127. See Fed. R. Civ. P. 26(b)(3), which extends qualified protection to such materials.

128. Potential Fifth Amendment claims are one reason why discovery in civil litigation may

be stayed, in whole or in part, until termination of related criminal proceedings. See infra section

20.2. Conclusion of the criminal case, however, will not necessarily avoid further assertions of

the privilege against self-incrimination.

129. See In re Chrysler Motors Corp. Overnight Evaluation Program Litig., 860 F.2d 844,

846–47 (8th Cir. 1988); Khandji v. Keystone Resorts Mgmt., Inc., 140 F.R.D. 697, 700 (D. Colo.

1992); Chubb Integrated Sys. v. Nat’l Bank, 103 F.R.D. 52, 67–68 (D.D.C. 1984).

130. Fed. R. Civ. P. 26(b)(5), 45(d)(2). Withholding materials otherwise subject to disclosure without such notice may subject a party to Rule 37 sanctions and waive the privilege or

protection. See Fed. R. Civ. P. 26 committee note.

131. See Vaughn v. Rosen, 484 F.2d 820, 827 (D.C. Cir. 1973).

132. Rule 26(b)(5) does not specify the information that must be provided, which may

depend on the nature and amount of material withheld. See Fed. R. Civ. P. 26 committee note.
§ 11.432 Manual for Complex Litigation, Fourth

64

judge, or a special master. Judges, however, are accustomed to reviewing matters that may not be admissible; therefore, counsel should restrict such requests

to the most sensitive, potentially prejudicial materials and be prepared to indicate, at least in general terms, the basis for the request.

In complex litigation involving voluminous documents, privileged materials are occasionally produced inadvertently. The parties may stipulate, or an

order may provide, that such production shall not be considered a waiver of

privilege and that the party receiving such a document shall return it promptly

without making a copy.133

11.432 Limited Disclosure/Protective Orders

Complex litigation will frequently involve information or documents that

a party considers sensitive. There are two approaches to seeking protection for

such material: (1) one or more parties may seek “umbrella” protective orders,

usually by stipulation, or (2) the claim to protection may be litigated document by document.

Umbrella orders. When the volume of potentially protected materials is

large, an umbrella order will expedite production, reduce costs, and avoid the

burden on the court of document-by-document adjudication. Umbrella orders

provide that all assertedly confidential material disclosed (and appropriately

identified, usually by stamp) is presumptively protected unless challenged.

Such orders typically are made without a particularized showing to support the

claim for protection, but such a showing must be made whenever a claim under an order is challenged. Some courts have therefore found that umbrella

orders simply postpone, rather than eliminate, the need for close scrutiny of

discovery material to determine whether protection is justified, thereby delaying rather than expediting the litigation.134

133. See In re Bridgestone/Firestone, Inc., 129 F. Supp. 2d 1207, 1219 (S.D. Ind. 2001)

(Case Management Order dated Jan. 30, 2001).

134. See John Does I–VI v. Yogi, 110 F.R.D. 629, 632 (D.D.C. 1986). The problems of preserving protection for documents produced under umbrella orders are aggravated by the understandable tendency of counsel to err on the side of caution by designating any possibly sensitive documents as confidential under the order. The time saved by excessive designations, however, may be more than offset by the difficulties of later opposing some request for access or

disclosure. Although the judge, in the interest of reducing the time and expense of the discovery

process, should be somewhat tolerant of this practice, counsel should not mark documents as

protected under the order without a good-faith belief that they are entitled to protection.

Counsel should also be cautioned against objecting to document requests without first ascertaining that the requested documents exist. The designation of a document as confidential

should be viewed as equivalent to a motion for a protective order and subject to the sanctions of

Federal Rule of Civil Procedure 37(a)(4), as provided by Rule 26(c).
Pretrial Procedures § 11.432

65

Applications for umbrella orders, usually presented to the court by stipulation of the parties, should specify the following matters:135

• the categories of information subject to the order;

• the procedure for determining which particular documents are within

protected categories;136

• the procedure for designating and identifying material subject to the

confidentiality order;137

• the persons who may have access to protected materials;

• the litigation support providers’ access to protected materials (support

providers include consulting experts, document indexers, and technicians who prepare courtroom exhibits and demonstrative aids);

• the extent to which protected materials may be used in related litigation;138

• the procedures for maintaining security; for example, information may

be sealed or exempted from filing with the court under Federal Rule of

Civil Procedure 5(d) or 26(a)(4), and copying or computerization of

particularly sensitive documents may be prohibited or tightly controlled;139

• the procedures for challenging particular claims of confidentiality—a

common procedure is for the producing party to mark all assertedly

protected material “confidential”; the opposing party then has a specified period, usually about two weeks, within which to contest the

designation;140

135. See sample orders infra section 40.27.

136. Umbrella orders do not eliminate the burden on the person seeking protection of

justifying the relief sought as to every item, but simply facilitate rulings on disputed claims of

confidentiality. See Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1122 (3d Cir. 1986).

137. Items produced under a claim of confidentiality should be identified with some special marking at the time of production to ensure that all persons know exactly what materials

have been designated as confidential throughout the litigation. Specific portions of deposition

transcripts may be marked as confidential through a written designation procedure; see sample

order infra section 40.27, ¶ (g). If numerous documents are involved, a log may be maintained

describing the documents and identifying the persons having access to them.

138. Restrictions on use in other litigation may not provide complete protection. See, e.g.,

In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693 (9th Cir. 1993) (reversing

contempt order where party used confidential information but did not reveal trade secrets).

139. See sample order infra section 40.27.

140. See Poliquin v. Garden Way, Inc., 989 F.2d 527, 529 (1st Cir. 1993). The burden remains on the party seeking protection; the opposing party need not offer affidavits to support a

challenge. See id. at 531.
§ 11.432 Manual for Complex Litigation, Fourth

66

• the exceptions, if any, to the general prohibitions on disclosure; for example, the order may allow otherwise protected information to be

shown to a witness at or in preparation for a deposition; the order

usually provides that if a party desires to make a disclosure not clearly

permitted, advance notice will be given to the other parties and the

dispute, if not resolved by agreement, may be presented to the court

for a ruling before disclosure;

• the termination of the order after the litigation or at another time;

• the return or destruction of materials received; and

• the court’s authority to modify the order, both during and after conclusion of the litigation.

Particularized protective orders. A person from whom discovery is sought

may move under Rule 26(c) for a protective order limiting disclosure or providing for the confidentiality of information produced. As with other discovery

motions, the movant must first make a good-faith attempt to resolve the dispute without court action;141 the parties should address the subject of protective orders in their proposed discovery plan.142 Rule 26(c) allows the court to

“make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” The court

should enter a protective order only when the movant makes a particularized

showing of “good cause,” by affidavit or testimony of a witness with personal

knowledge, of the specific harm that would result from disclosure or loss of

confidentiality—generalities and unsupported contentions do not suffice.143

When directed solely at discovery materials, protective orders are not subject

to the high level of scrutiny required by the Constitution to justify prior restraints; rather, courts have broad discretion at the discovery stage to decide

when a protective order is appropriate and what degree of protection is required.144

In fashioning the order, it is important to balance the movants’ legitimate

concerns about confidentiality against the legitimate needs of the litigation,

individual privacy, or the commercial value of information.145 Protecting only

material for which a clear and significant need for confidentiality has been

141. Fed. R. Civ. P. 26(c).

142. Fed. R. Civ. P. 26(f)(4).

143. See Cipollone v. Liggett Group Inc., 785 F.2d 1108, 1121 (3d Cir. 1986), and cases

cited therein; see also Smith v. BIC Corp., 869 F.2d 194 (3d Cir. 1989).

144. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36–37 (1984).

145. See Arthur R. Miller, Confidentiality, Protective Orders, and Public Access to the Courts,

105 Harv. L. Rev. 428, 476 (1991).
Pretrial Procedures § 11.432

67

shown146 will reduce the burdensomeness of the order and render it less vulnerable to later challenge.

Modification and release. A protective order is always subject to modification or termination for good cause.147 Even where the parties have consented to

entry of a protective order, they may later seek its modification to allow dissemination of information received. Nonparties, including the media, government investigators, public interest groups, and parties in other litigation,

may seek modification to allow access to protected information. In assessing

such requests, courts balance the potential harm to the party seeking protection against the requesting party’s need for the information and the public interest served by its release. Also relevant may be the disclosing party’s degree of

reliance on the protective order when disclosure was made. If a party freely

disclosed information without contest based on the premise that it would remain confidential, subsequent dissemination may be unfair and may, in the

long run, reduce other litigants’ confidence in protective orders, rendering

them less useful as a tool for preventing discovery abuse and encouraging more

strenuous objections to discovery requests.148 Courts of appeals apply different

standards in balancing the continuing need for protection against the gains in

efficiency and judicial economy that may result from release.149 If the latter

factors support release of otherwise confidential material, the court might

consider redacting the material, allowing access only to that information necessary to serve the purpose for which release was granted. In addition, it is

helpful to define the terms of the release, including precisely who may have

access to the information and for what purpose.

A common basis for nonparty requests for release is the need for the information in related litigation. Conversely, the parties may seek discovery of

information subject to a protective order in other litigation. Generally, the

146. See Poliquin v. Garden Way, Inc., 989 F.2d 527, 532 (1st Cir. 1993) (citing Francis H.

Hare Jr. et al., Confidentiality Orders § 4.10 (1988)).

147. See Public Citizen v. Liggett Group, Inc., 858 F.2d 775, 782–83 (1st Cir. 1988), and

cases cited therein; see also In re “Agent Orange” Prod. Liab. Litig., 821 F.2d 139, 145 (2d Cir.

1987). Even without modification, a protective order may fail to prevent disclosure of information as required by law. See, e.g., 15 U.S.C. § 1312(c)(2) (2000) (requiring access to discovery

materials pursuant to a civil investigative demand despite protective order).

148. See Miller, supra note 145, at 499–500; cf. Pansy v. Borough of Stroudsberg, 23 F.3d

772, 778 (3d Cir. 1994); Meyer Goldberg, Inc. v. Fisher Foods, Inc., 823 F.2d 159, 163 (6th Cir.

1987); Palmieri v. New York, 779 F.2d 861, 863 (2d Cir. 1985).

149. See SEC v. TheStreet.com, 273 F.3d 222, 231 (2d Cir. 2001); United Nuclear Corp. v.

Cranford Ins. Co., 905 F.2d 1424, 1428 (10th Cir. 1990) (citing cases). If the party seeking information would be entitled to obtain it in the other litigation, there is little need to require redundant discovery proceedings. See id. (citing Wilk v. Am. Med. Ass’n, 635 F.2d 1295, 1299 (7th

Cir. 1980)).
§ 11.432 Manual for Complex Litigation, Fourth

68

party seeking discovery should first establish its right to discovery in the court

in which it will be used. If that court permits discovery, it should normally determine the effect this will have given the earlier protective order issued by the

other court. Section 11.423 discusses the use of documents from other litigation. Even where the protective order contains a provision prohibiting such

use, the court that entered the order is permitted to require such disclosure,

subject to appropriate restrictions on further use and disclosure.150 In making

this determination, the court should balance the continuing need for protection against the efficiency and judicial economy that may result from release.

The court should consider the following questions:

• Was the disclosing party under an unqualified obligation to produce

the material sought?

• Will the material be discoverable in subsequent litigation involving

other parties?

• Does the other litigation appear to have merit?

• Would granting release save significant time and expense?

• Can the material be released in redacted form so as to aid legitimate

discovery while minimizing the loss of confidentiality?

• Will modification of the protective order disrupt settlement of the case

in which it was entered?

• Did the person providing discovery do so in reliance on the protective

order?

• Would informal communication between the two judges be productive in arriving at an accommodation that gives appropriate consideration to the interests of all involved?

Even if designated as confidential under a protective order, discovery materials will lose confidential status (absent a showing of “most compelling”

reasons) if introduced at trial or filed in connection with a motion for summary judgment.151 Confidential materials filed solely in connection with pre150. See United Nuclear Corp., 905 F.2d at 1427–28; Wilk, 635 F.2d at 1299–1301 (protective orders should ordinarily be modified on request from other litigants, subject to appropriate

conditions as to further use and cost); Am. Tel. & Tel. Co. v. Grady, 594 F.2d 594, 597 (7th Cir.

1978) (confidentiality order modified to permit nonparty U.S. government to obtain discovery);

but see Palmieri, 779 F.2d at 865–66 (denying modification to allow state to gain access to settlement agreement).

151. See, e.g., Poliquin v. Garden Way, Inc., 989 F.2d 527, 532–33 (1st Cir. 1993); Littlejohn

v. BIC Corp., 851 F.2d 673, 677–78, 684 (3d Cir. 1988); FTC v. Standard Fin. Mgmt. Corp., 830

F.2d 404, 410 (1st Cir. 1987); Meyer Goldberg, Inc. v. Fisher Foods, Inc., 823 F.2d 159, 163 (6th

Cir. 1987); In re Knoxville News-Sentinel Co., 723 F.2d 470, 476 (6th Cir. 1983); Joy v. North,
Pretrial Procedures § 11.433

69

trial discovery, however, remain protected as long as the “good cause” requirement of Rule 26(c) is satisfied.152 The general rule announced by the Supreme Court is that a public right of access to material produced in connection

with a particular pretrial or trial proceeding arises when (1) the proceeding has

historically been open and (2) public access plays a significant role in the

proper functioning of the process.153 To ensure continued protection, counsel

sometimes stipulate to material nonconfidential facts to avoid the need to introduce confidential material into evidence. Counsel may also move to have

confidential material excluded from evidence as prejudicial and of low probative value under Federal Rule of Evidence 403.154

The administration of protective orders does not necessarily end with the

disposition of the case. While it is common for protective orders to include

provisions for posttrial protection, an order remains subject to modification

after judgment or settlement, even if it was entered by consent of the parties.155

692 F.2d 880, 893 (2d Cir. 1982). See also Leucadia, Inc. v. Applied Extrusion Techs., Inc., 998

F.2d 157, 161–65 (3d Cir. 1993) (protection lost if material filed with any nondiscovery motion).

152. See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 37 (1984); Leucadia, 998 F.2d at

161–65; Anderson v. Cryovac, Inc., 805 F.2d 1, 5–7, 10–13 (1st Cir. 1986).

153. Press-Enter. Co. v. Superior Court, 478 U.S. 1, 8 (1986); Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 605–06 (1982).

154. See Poliquin, 989 F.2d at 535.

155. See id.; United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir.

1990); Public Citizen v. Liggett Group, Inc., 858 F.2d 775, 781–82 (1st Cir. 1988); Meyer Goldberg, 823 F.2d at 161–62.

11.433 Allocation of Costs

The cost of seeking and responding to discovery is a part of the cost of litigation that each party normally must bear, subject only to specific provisions

for cost-shifting contained in statutes or rules. But Federal Rule of Civil Procedure 26(b)(2) directs the judge to take into account the cost of particular discovery in exercising the authority to control discovery. Among other things to

consider are whether the information sought “is obtainable from some other

source that is more convenient, less burdensome, or less expensive,” and

whether to limit discovery if, in the circumstances of the case, the discovery’s

“expense . . . outweighs its likely benefits.” Protective orders are a means of

implementing the proportionality principle underlying the discovery rules.

Rule 26(c) permits the court to issue orders “to protect a party or person from

. . . undue burden or expense,” including an order “that the discovery . . . may

be had only on specified terms or conditions . . . [or] only by a method of discovery other than that selected by the party seeking discovery.”
§ 11.433 Manual for Complex Litigation, Fourth

70

Taken together, these provisions confer broad authority to control the cost

of discovery by imposing limits and conditions. The judge can implement the

cost–benefit rationale of the rule by conditioning particular discovery on payment of its costs by the party seeking it. Short of barring a party from conducting certain costly or marginally necessary discovery, the judge can require

the party to pay all or part of the cost as a condition to permitting it to proceed. Similarly, where a party insists on certain discovery to elicit information

that may be available through less expensive methods, that discovery may be

conditioned on the payment of the costs incurred by other parties. Such a costshifting order may require payment at the time or may simply designate certain costs as taxable costs to be awarded after final judgment.156

Reference to the court’s authority to shift costs will give the parties an incentive to use cost-effective means of obtaining information and a disincentive

to engage in wasteful and costly discovery activity. For example, where production is to be made of data maintained on computers, and the producing

party is able to search for and produce the data more efficiently and economically than the discovering party, they may agree to use the former’s capabilities

subject to appropriate reimbursement for costs. Where it is less expensive for a

witness to travel to a deposition site than for several attorneys to travel to the

witness’s residence, the party seeking discovery may agree to pay the witness’s

travel expenses.

Cost allocation may also be an appropriate means to limit unduly burdensome or expensive discovery. Rule 26’s purpose is not to equalize the burdens on the parties, but Rule 26(b)(2)(iii) expressly requires the court to take

the parties’ resources into account in balancing the burden or expense of particular discovery against its benefit. Thus, where the parties’ resources are

grossly disproportionate, the judge can condition discovery that would be unduly burdensome on one of them upon a fair allocation of costs.

Considerations of cost allocation are not based on relative resources alone.

Rule 26(b)(2)(iii) allows the court to allocate costs based on considerations of

benefits, burdens, and overall case efficiency. Courts have articulated as many

as eight factors relevant to cost allocation:

• the specificity of the discovery requests;

• the likelihood of discovering critical information;

• the availability of such information from other sources;

• the purposes for which the responding party maintains the requested

data;

• the relative benefit to the parties of obtaining the information;

156. See 28 U.S.C. § 1920 (West 2002); Fed. R. Civ. P. 54(d).
Pretrial Procedures § 11.441

71

• the total cost associated with the production;

• the relative ability of each party to control costs and its incentive to do

so; and

• the resources available to each party.157

11.44 Documents

.441 Identification System 71

.442 Preservation 72

.443 Rule 34 Requests/Procedures for Responding 74

.444 Document Depositories 75

.445 Evidentiary Foundation for Documents 77

.446 Discovery of Computerized Data 77

.447 Discovery from Nonparties 82

Complex litigation usually involves the production and handling of voluminous documents. Efficient management during discovery and trial requires

planning and attention to the documentary phase of the litigation by the attorneys and the judge from the outset.

11.441 Identification System

Document production under the rules may occur in a variety of ways.

Production may be voluntary and informal. It may occur under Federal Rule

of Civil Procedure 34 (see section 11.443) or under Rule 33(d) by making

documents available for inspection.158 Alternatively, deponents may be required to produce documents by a subpoena duces tecum,

159 and nonparties

may be commanded to produce documents by a subpoena issued under Rule

45.160 Before any documents are produced or used in depositions, the judge

should direct counsel to establish a single system for identifying all documents

157. Rowe Entm’t, Inc. v. William Morris Agencies, Inc., 205 F.R.D. 421, 429 (S.D.N.Y.

2002) (discussing factors to consider in shifting discovery costs), appeal denied, No. 98 CIV.

8272, 2002 WL 975713 (S.D.N.Y. May 9, 2002); see also Murphy Oil U.S.A., Inc. v. Fluor Daniel,

Inc., 52 Fed. R. Serv. 3d (Callaghan) 168 (E.D. La. 2002). Cf. Zubulake v. UBS Warburg LLC,

2003 U.S. Dist. LEXIS 7939 (S.D.N.Y. May 13, 2002) (questioning the eight factors considered in

Rowe and proposing seven weighted factors).

158. Under Rule 33(d) the party may “specify the records from which the answer may be

derived or ascertained . . . in sufficient detail to permit the interrogating party to locate and

identify, as readily as can the party served, the records from which the answer may be ascertained.” If the information sought exists in the form of compilations, abstracts, or summaries,

these should be made available to the interrogating party. Fed. R. Civ. P. 33 committee note.

159. See Fed. R. Civ. P. 30(b)(1).

160. Fed. R. Civ. P. 34(c).
§ 11.442 Manual for Complex Litigation, Fourth

72

produced (by any procedure) or used in the litigation. To reduce the risk of

confusion, each document should be assigned a single identifying designation

for use by all parties for all purposes throughout the case, including depositions and trial.

Counsel should be informed that consecutive numbering is usually the

most practicable; blocks of numbers are assigned to each party in advance to

make the source of each document immediately apparent. Every page of every

document is Bates-stamped consecutively. The document’s number may be

later used to designate it; if the document is identified differently in the course

of a deposition or on an exhibit list, the stamped number should be included

as a cross-reference. If other means of designation are used, no designation

should be assigned to more than one document, and the same document

should not receive more than one designation unless counsel have reason to

refer to different copies of the same document. In multitrack depositions, a

block of numbers should be assigned to each deposition in advance. To avoid

later disputes, a log should record each document produced and should indicate by, to whom, and on what date production was made. A record of the

documents produced by a party and copied by an opposing party may also be

useful.

The court can also order an identification system for computerized data

that complements or integrates into the system adopted for paper documents.

At a minimum, computer tapes, disks, or files containing numerous E-mail

messages or word-processed documents should be broken down into their

component documents for identification. However, databases containing millions of data elements, none of which are meaningful alone, can be difficult or

impossible to break down and organize in a way directly analogous to conventional document collections. Special consideration should be given to their

identification and handling.

Courts have traditionally given new designations to documents marked as

exhibits for trial, often by assigning sequential numbers to one side and sequential letters to the other. Duplicate designations of documents, however,

can be confusing; exhibits can readily be marked for trial by their discovery

designations. If desired, a supplemental designation can be used to identify the

offering party.

11.442 Preservation

Before discovery starts, and perhaps before the initial conference, the court

should consider whether to enter an order requiring the parties to preserve and

retain documents, files, data, and records that may be relevant to the litiga-
Pretrial Procedures § 11.442

73

tion.161 Because such an order may interfere with the normal operations of the

parties and impose unforeseen burdens, it is advisable to discuss with counsel

at the first opportunity the need for a preservation order and, if one is needed,

the scope, duration, method of data preservation, and other terms that will

best preserve relevant matter without imposing undue burdens.

A blanket preservation order may be prohibitively expensive and unduly

burdensome for parties dependent on computer systems for their day-to-day

operations. In addition, a preservation order will likely be ineffective if it is

formulated without reliable information from the responding party regarding

what data-management systems are already in place, the volume of data affected, and the costs and technical feasibility of implementation. The following

are among the points to consider in formulating an effective data-preservation

order:

• Continued operation of computers and computer networks in the

routine course of business may alter or destroy existing data, but a

data preservation order prohibiting operation of the computers absolutely would effectively shut down the responding party’s business operations. Such an order requires the parties to define the scope of

contemplated discovery as narrowly as possible, identify the particular

computers or network servers affected, and agree on a method for data

preservation, such as creating an image of the hard drive or duplicating particular data on removable media, thereby minimizing cost and

intrusiveness and the downtime of the computers involved.

• Routine system backups for disaster recovery purposes may incidentally preserve data subject to discovery, but recovery of relevant data

from nonarchival backups is costly and inefficient, and a datapreservation order that requires the accumulation of such backups beyond their usual short retention period may needlessly increase the

scope and cost of discovery. An order for the preservation of backup

data obliges the parties to define the scope of contemplated discovery

narrowly to minimize the number of backups that need to be retained

and eventually restored for discovery purposes.

161. See infra section 40.25 (order for preservation of records). For examples from recent

complex multidistrict litigation, see In re Propulsid Prods. Liab. Litig., MDL No. 1355 (E.D. La.

Apr. 19, 2001) (Pretrial Order No. 10: Production and Preservation of Defendants’ Electronic

Data), at http://propulsid.laed.uscourts.gov/Orders/order10.pdf (last visited Nov. 10, 2003). See

also In re Bridgestone/Firestone, Inc. ATX, ATX II & Wilderness Tires Prods. Liab. Litig., MDL

No. 1373 (S.D. Ind. Mar. 15, 2001) (Order Regarding Ford’s Preservation of Electronic Data), at

http://www.insd.uscourts.gov/Firestone/bf_docs/93730738.pdf (last visited Nov. 10, 2003).
§ 11.443 Manual for Complex Litigation, Fourth

74

• A preservation order may be difficult to implement perfectly and may

cause hardship when the records are stored in data-processing systems

that automatically control the period of retention. Revision of existing

computer programs to provide for longer retention, even if possible,

may be prohibitively expensive. Consider alternatives, such as having

parties duplicate relevant data on removable media or retaining periodic backups.

Any preservation order should ordinarily permit destruction after reasonable notice to opposing counsel; if opposing counsel objects, the party seeking

destruction should be required to show good cause before destruction is permitted. The order may also exclude specified categories of documents or data

whose cost of preservation outweighs substantially their relevance in the litigation, particularly if copies of the documents or data are filed in a document

depository (see section 11.444) or if there are alternative sources for the information. The court can defer destruction if relevance cannot be fairly evaluated

until the litigation progresses. As issues in the case are narrowed, the court may

reduce the scope of the order. The same considerations apply to the alteration

or destruction of physical evidence.

11.443 Rule 34 Requests/Procedures for Responding

In litigation with voluminous documents, requests for production and the

required responses can become mired in confusion. The discovery plan should

anticipate the possibility of overlooked requests, costly responses, obscured

failures to respond, and uncertainty about the specifics of requests and production.

The discovery plan should call for strict observance of Rule 34’s requirements that requests to produce documents for inspection and copying specify

the items sought individually or by category and describe each with “reasonable particularity.”162 Each request must specify a reasonable time, place, and

manner for inspection and copying.163 A party served with a request must respond in writing within thirty days, stating for each item or category either that

inspection and copying will be permitted as requested or that the party objects

to the request; in the latter case, the reasons for the objection must be stated. If

the responding party objects to only part of an item or category, it must permit

inspection of the remaining parts. Documents must be produced for inspection “as they are kept in the usual course of business” or organized and labeled

“to correspond with the categories in the request.” In many cases, the volume

162. Fed. R. Civ. P. 34(b).

163. Id.
Pretrial Procedures § 11.444

75

of computer data produced will far exceed the volume of paper documentation, and conventional procedures for “inspection and copying” are not applicable. Section 11.446 describes practices for the production of computer data

in complex litigation.

The discovery plan should establish a schedule for submitting requests and

responses and for subsequent supplementation of responses under Rule 26(e).

In developing the plan, the court should consider counsel’s proposals for

document discovery and imposing limits based on Rule 26(b)(2). The court

may initially limit production to the most relevant files or may require a preliminary exchange of lists identifying files and documents from which the requesting party may then make selections. The court may also require, even if

lead counsel or committees of counsel have not been appointed, that similarly

situated parties confer and present joint Rule 34 requests and conduct their

examinations at the same time and place. Parties can also be required to share

extensive copies to save money.

In overseeing document production, the court should

• ensure that the burdens are fairly allocated between the parties;

• prevent indiscriminate, overly broad, or unduly burdensome demands—in general, forbid sweeping requests, such as those for “all

documents relating or referring to” an issue, party, or claim, and direct counsel to frame requests for production of the fewest documents

possible (this may be facilitated by prediscovery conferences or discovery devices to identify relevant files before the request is made);

• prevent the parties from filing overwhelming or confusing responses;

and

• guard against the parties tampering with files and other abusive practices.

11.444 Document Depositories

Central document depositories can promote efficient and economical

management of voluminous documents in multiparty litigation.164 Requiring

the production of all discovery materials in common, computer-readable formats and insisting that these materials be made available on centrally generated

computer-readable media (such as CD-ROM or DVD) or through a secure

Internet Web site or a dial-in computer network may reduce substantially the

expense and burden of document production and inspection. A depository

164. See In re Bridgestone/Firestone, Inc., 129 F. Supp. 2d 1207, 1213 (S.D. Ind. 2001)

(Case Management Order dated Jan. 30, 2001).
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76

also facilitates determination of which documents have been produced and

what information is in them, minimizing the risk of later disputes.

On the other hand, the cost of establishing and maintaining either a paper

or computerized central document depository may be substantial; before ordering or approving one, the court must be sure that the cost is justified by the

anticipated savings and other benefits. In consultation with counsel, the court

should allocate costs fairly among the parties, considering their resources, the

extent of their use of the depository, and the benefit derived from it. The cost

of establishing and maintaining a central document depository is not a “taxable cost” under 28 U.S.C. § 1920 and Federal Rule of Civil Procedure 54(d).165

One way of allocating costs is to charge parties for each use of the depository.

The charge should be set no higher than what is necessary to cover costs; a depository should not be a profit-making enterprise. The judge may consider

special arrangements for less affluent or less technologically sophisticated parties to ensure fair access.

It may be necessary to appoint an administrator to operate the depository,

with the cost allocated among the parties.166 If document depositories have

been established in related cases in other courts, counsel may be able to arrange for the depositories’ joint use, sharing the expense; likewise, the judge

should consider the requests of litigants in other cases, wherever pending, to

use a depository established in the case before the court. Where significant

costs are involved, periodic assessments to fund operations might be necessary,

usually beginning with the order establishing the depository.

To create and operate a depository, counsel and the judge should collaborate in establishing procedures for acquiring, formatting, numbering, indexing,

and maintaining discovery materials, and they should establish rules governing

when and by whom documents may be accessed for examination or copying. If

a party objects to placing documents in a central depository or to making them

available on-line, the judge can issue an order under Rule 26(c)(2) directing

production at the depository (or the place designated by the requesting parties)

or permit the producing party at its expense to furnish copies to all parties.

165. In re Two Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litig., 994 F.2d

956, 964 (1st Cir. 1993). Counsel should also be aware that expenses incurred during discovery,

which would ordinarily be taxable costs, may not be recoverable if the party could have avoided

them by using the depository. See In re San Juan Dupont Plaza Hotel Fire Litig., 142 F.R.D. 41,

46–47 (D.P.R. 1992).

166. For a list of possible duties for the administrator, see the amended case-management

order in In re San Juan Dupont Plaza Hotel Fire Litig., MDL No. 721, 1989 WL 168401, at *21

(D.P.R. Dec. 2, 1988).
Pretrial Procedures § 11.446

77

Counsel and the judge must agree on a computer service provider to administer the depository, although technologies such as CD-ROM and the Internet reduce the need for physical storage facilities, inspection, and copying.

Most discovery material can be produced by the parties to the depository in

computer-readable form. For the remaining paper documents, the court may

direct that some or all be “imaged” or scanned and made available either on

disks or on-line (special provision for the retention of originals, if they carry

independent legal significance, may be necessary).167

11.445 Evidentiary Foundation for Documents

The production of documents, either in the traditional manner or in a

document depository, will not necessarily provide the foundation for admission of those documents into evidence at trial or for use in a motion for summary judgment. In managing documents, the court should therefore also take

into account the need for effective and efficient procedures to establish the

foundation for admission, which can be accomplished by stipulation, requests

for admission, interrogatories, or depositions (particularly Rule 31 depositions

on written questions).168 While admissions are only binding on the party

making them, authenticity (as opposed to admissibility) may be established by

the testimony of any person having personal knowledge that the proffered item

is what the proponent claims it to be.169 This is particularly true when discovery involves computerized data (see section 11.446) that must be retrieved

from computer systems or storage media, imaged, converted to a common

format, or handled by a third-party expert or court-appointed neutral in the

process of production. The judge should advise parties to agree on handling

because admissibility will depend on the efficacy of these procedures.

167. For more on this technology, see Effective Use of Courtroom Technology, supra note 85

at 97–98.

168. See Fed. R. Civ. P. 36.

169. See In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 285 (3d Cir. 1983), rev’d

on other grounds sub. nom. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574

(1986).

11.446 Discovery of Computerized Data

Computerized data have become commonplace in litigation. The sheer

volume of such data, when compared with conventional paper documentation,

can be staggering. A floppy disk, with 1.44 megabytes, is the equivalent of 720

typewritten pages of plain text. A CD-ROM, with 650 megabytes, can hold up

to 325,000 typewritten pages. One gigabyte is the equivalent of 500,000 typewritten pages. Large corporate computer networks create backup data meas-
§ 11.446 Manual for Complex Litigation, Fourth

78

ured in terabytes, or 1,000,000 megabytes; each terabyte represents the equivalent of 500 billion typewritten pages of plain text.

Digital or electronic information can be stored in any of the following:

mainframe computers, network servers, personal computers, hand-held devices, automobiles, or household appliances; or it can be accessible via the Internet, from private networks, or from third parties. Any discovery plan must

address issues relating to such information, including the search for it and its

location, retrieval, form of production, inspection, preservation, and use at

trial.

For the most part, such data will reflect information generated and maintained in the ordinary course of business. As such, discovery of relevant and

nonprivileged data is routine and within the commonly understood scope of

Rules 26 and 34. Other data are generated and stored as a byproduct of the

various information technologies commonly employed by parties in the ordinary course of business, but not routinely retrieved and used for business purposes. Such data include the following:

• Metadata, or “information about information.” This includes the information embedded in a routine computer file reflecting the file

creation date, when it was last accessed or edited, by whom, and

sometimes previous versions or editorial changes. This information is

not apparent on a screen or in a normal printout of the file, and it is

often generated and maintained without the knowledge of the file

user.

• System data, or information generated and maintained by the computer

itself. The computer records a variety of routine transactions and

functions, including password access requests, the creation or deletion

of files and directories, maintenance functions, and access to and from

other computers, printers, or communication devices.

• Backup data, generally stored off-line on tapes or disks. Backup data are

created and maintained for short-term disaster recovery, not for retrieving particular files, databases, or programs. These tapes or disks

must be restored to the system from which they were recorded, or to a

similar hardware and software environment, before any data can be

accessed.

• Files purposely deleted by a computer user. Deleted files are seldom actually deleted from the computer hard drive. The operating system renames and marks them for eventual overwriting, should that particular space on the computer hard drive be needed. The files are recoverable only with expert intervention.

• Residual data that exist in bits and pieces throughout a computer hard

drive. Analogous to the data on crumpled newspapers used to pack
Pretrial Procedures § 11.446

79

shipping boxes, these data are also recoverable with expert intervention.

Each of these categories of computer data may contain information within the

scope of discovery. The above categories are listed by order of potential relevance and in ascending order of cost and burden to recover and produce. The

judge should encourage the parties to discuss the scope of proposed computerbased discovery early in the case, particularly any discovery of data beyond that

available to the responding parties in the ordinary course of business. The requesting parties should identify the information they require as narrowly and

precisely as possible, and the responding parties should be forthcoming and

explicit in identifying what data are available from what sources, to allow formulation of a realistic computer-based discovery plan. Rule 26(b)(2)(iii) allows the court to limit or modify the extent of otherwise allowable discovery if

the burdens outweigh the likely benefit—the rule should be used to discourage

costly, speculative, duplicative, or unduly burdensome discovery of computer

data and systems. Additionally, some computerized data may have been compiled in anticipation of or for use in the litigation and may therefore be entitled

to protection as trial preparation materials.

There are several reasons to encourage parties to produce and exchange

data in electronic form:

• discovery requests may themselves be transmitted in computeraccessible form—interrogatories served on computer disks, for example, could then be answered using the same disk, avoiding the need to

retype them;

• production of computer data on disks, CD-ROMs, or by file transfers

significantly reduces the costs of copying, transport, storage, and management—protocols may be established by the parties to facilitate the

handling of documents from initial production to use in depositions

and pretrial procedures to presentation at trial;

• computerized data are far more easily searched, located, and organized

than paper data; and

• computerized data may form the contents for a common document

depository (see section 11.444).

The goal is to maximize these potential advantages while minimizing the potential problems of incompatibility among various computer systems, programs, and data, and minimizing problems with intrusiveness, data integrity,

and information overload.

Below are some of the relevant issues to be considered in reaching an optimal balance.

Form of production. Rule 34 provides for the production, inspection, and

copying of computerized data, i.e., “data compilations from which informa-
§ 11.446 Manual for Complex Litigation, Fourth

80

tion can be obtained, translated, if necessary, by the respondent through detection devices into reasonably usable form.” Rule 33(d) permits parties to

answer interrogatories by making business records available for inspection and

copying, including “compilations,” where “the burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as for the party served.”

Conventional “warehouse” productions of paper documents often were

costly and time-consuming, but the burdens and expense were kept in check

by the time and resources available to the requesting parties to review and

photocopy the documents. In a computerized environment, the relative burdens and expense shift dramatically to the responding party. The cost of

searching and copying electronic data is insignificant. Meanwhile, the tremendously increased volume of computer data and a lack of fully developed electronic records-management procedures have driven up the cost of locating,

organizing, and screening data for relevance and privilege prior to production.

Allowing requesting parties access to the responding parties’ computer systems

to conduct their own searches, which is in one sense analogous to the conventional warehouse paper production, would compromise legally recognized

privileges, trade secrets, and often the personal privacy of employees and customers.

Evolving procedures use document-management technologies to minimize

cost and exposure and, with time, parties and technology will likely continue

to become more and more sophisticated. The judge should encourage the parties to discuss the issues of production forms early in litigation, preferably

prior to any production, to avoid the waste and duplication of producing the

same data in different formats. The relatively inexpensive production of computer-readable images may suffice for the vast majority of requested data. Dynamic data may need to be produced in native format, or in a modified format

in which the integrity of the data can be maintained while the data can be manipulated for analysis. If raw data are produced, appropriate applications, file

structures, manuals, and other tools necessary for the proper translation and

use of the data must be provided. Files (such as E-mail) for which metadata is

essential to the understanding of the primary data should be identified and

produced in an appropriate format. There may even be rare instances in which

paper printouts (hard copy) are appropriate. No one form of production will

be appropriate for all types of data in all cases.170

The court should consider how to minimize and allocate the costs of production. Narrowing the overall scope of electronic discovery is the most effec170. See Effective Use of Courtroom Technology, supra note 85, at 61–97; see also supra

section 11.421.
Pretrial Procedures § 11.446

81

tive method of reducing costs. Early agreement between the parties regarding

the forms of production will help eliminate waste and duplication. More expensive forms of production, such as production of word-processing files with

all associated metadata or production of data in a specified nonstandard format, should be conditioned upon a showing of need or sharing of expenses.171

Search and retrieval. Computer-stored data and other information responsive to a production request will not necessarily be in an appropriately labeled

file. Broad database searches may be necessary, requiring safeguards against

exposing confidential or irrelevant data to the opponent’s scrutiny. A responding party’s screening of vast quantities of unorganized computer data for

privilege prior to production can be particularly onerous in those jurisdictions

in which inadvertent production of privileged data may constitute a waiver of

privilege as to a particular item of information, items related to the relevant

issue, or the entire data collection. Fear of the consequences of inadvertent

waiver may add cost and delay to the discovery process for all parties. Thus,

judges often encourage counsel to stipulate at the outset of discovery to a

“nonwaiver” agreement, which they can adopt as a case-management order.

Such agreements protect responding parties from the most dire consequences

of inadvertent waiver by allowing them to “take back” inadvertently produced

privileged materials if discovered within a reasonable period, perhaps thirty

days from production.

Some data may be maintained in compilations that are themselves entitled

to trade-secret protection or that reflect attorney work product (e.g., data

compiled for studies and tabulations) for use at trial or as a basis for expert

opinions. Generally, claims of trade-secret or work-product privilege for computer data should be treated the same as similar claims for conventional data.

The difference is that discovery respondents may be able to produce computerdata compilations containing confidential or privileged data, structures, or

relationships in such a fashion as to suppress or eliminate the confidential or

privileged data. For example, a computerized litigation support database containing the thoughts and impressions of counsel may be modified to reveal

only “ordinary” attorney work product. Production of such ordinary work

product would still be subject to the showings of substantial need and undue

hardship under Rule 26(b)(3), as well as possible sharing of costs. If both parties plan to use litigation support databases to prepare their cases, encourage

them to share the expense of preparing “ordinary” work product, such as

document indexes, to which each party can add privileged data for their own

171. See Sattar v. Motorola, Inc., 138 F.3d 1164, 1171 (7th Cir. 1998) (affirming a trial

court order that the parties bear half the cost of copying 210,000 pages of E-mails as a “reasonable resolution of [the] problem” and “far from an abuse of discretion”).
§ 11.447 Manual for Complex Litigation, Fourth

82

trial preparation use. Such arrangements often facilitate the production of

large databases of imaged documents and are necessary for the establishment

of a document depository.

Use at trial. In general, the Federal Rules of Evidence apply to computerized data as they do to other types of evidence.172 Computerized data, however,

raise unique issues concerning accuracy and authenticity. Accuracy may be

impaired by incomplete data entry, mistakes in output instructions, programming errors, damage and contamination of storage media, power outages, and

equipment malfunctions. The integrity of data may also be compromised in

the course of discovery by improper search and retrieval techniques, data conversion, or mishandling. The proponent of computerized evidence has the

burden of laying a proper foundation by establishing its accuracy.

The judge should therefore consider the accuracy and reliability of computerized evidence, including any necessary discovery during pretrial proceedings, so that challenges to the evidence are not made for the first time at

trial. When the data are voluminous, verification and correction of all items

may not be feasible. In such cases, verification may be made of a sample of the

data. Instead of correcting the errors detected in the sample—which might

lead to the erroneous representation that the compilation is free from error—evidence may be offered (or stipulations made), by way of extrapolation

from the sample, of the effect of the observed errors on the entire compilation.

Alternatively, it may be feasible to use statistical methods to determine the

probability and range of error.

Computer experts. The complexity and rapidly changing character of technology for the management of computerized materials may make it appropriate for the judge to seek the assistance of a special master or neutral expert, or

call on the parties to provide the judge with expert assistance, in the form of

briefings on the relevant technological issues.

11.447 Discovery from Nonparties

Under Federal Rule of Civil Procedure 34(c), a nonparty may be compelled to produce and allow copying of documents and other tangibles or

submit to an inspection by service of a subpoena under Rule 45; the producing

person need not be deposed or even appear personally.173 A party seeking such

production has a duty to take reasonable steps to avoid imposing undue bur172. See Gregory P. Joseph, A Simplified Approach to Computer-Generated Evidence and

Animations, 43 N.Y.L. Sch. L. Rev. 875 (1999–2000).

173. Fed. R. Civ. P. 45(c)(2)(A). Despite the absence of a deposition, notice must be given

to other parties. Fed. R. Civ. P. 45(b)(1).
Pretrial Procedures § 11.451

83

den or expense on the person subpoenaed.174 Objections to production must

be made in writing by the subpoenaed person; the requesting party must then

move for an order to compel production.175 If granted, the order must protect

the nonparty from significant expense resulting from the inspection or copying176—the order may also protect against disclosure of privileged, confidential,

or otherwise protected material and undue burden.177

11.45 Depositions

.451 Limitations and Controls 83

.452 Cost-Saving Measures 85

.453 Deferred Supplemental Depositions 87

.454 Scheduling 88

.455 Coordination with Related Litigation 89

.456 Control of Abusive Conduct 89

Depositions are often overused and conducted inefficiently, and thus tend

to be the most costly and time-consuming activity in complex litigation. The

judge should manage the litigation so as to avoid unnecessary depositions,

limit the number and length of those that are taken, and ensure that the process of taking depositions is as fair and efficient as possible.

11.451 Limitations and Controls

The court has broad authority to limit depositions. Federal Rules of Civil

Procedure 30(a)(2)(A) and 31(a)(2)(A) impose a presumptive limit of ten

depositions each for plaintiffs, defendants, and third-party defendants (local

rules may also restrict the number of depositions). Rule 30(d)(2) presumptively limits a deposition to one 7-hour day. While the parties may stipulate

around the presumptive limit (unless prohibited to do so by the court), the

court always has final authority under Rule 26(b)(2) to limit the number and

length of depositions. Limits on depositions may also be imposed indirectly by

the setting of the trial date or a discovery cutoff date. In large-stake cases, such

limits can be evaded by multitrack discovery (concurrent depositions) in the

absence of a further order by the court. Despite their cost and the potential for

unfairness, such multitrack depositions may be a practical necessity to expedite

cases in which time is of the essence. See section 11.454.

174. Fed. R. Civ. P. 45(c)(1).

175. Fed. R. Civ. P. 45(c)(2)(B).

176. Id.

177. Fed. R. Civ. P. 45(c)(3).
§ 11.451 Manual for Complex Litigation, Fourth

84

In exercising its authority to limit depositions, the court should use the

information provided by the parties about the need for the proposed depositions, the subject matter to be covered, and the available alternatives. The extent to which the judge considers each particular deposition, categories of

depositions, or only the deposition program as a whole will depend on the circumstances of the litigation. The judge may, for example, condition the taking

of certain depositions, such as those of putative class members, on prior court

approval. The judge’s involvement in the development of this phase of the discovery plan should be sufficient to establish meaningful control over the time

and resources to be expended. Aside from setting appropriate limits, the judge

should also be concerned with the time and place of the depositions, including

proposed travel and the recording methods.178

To ensure that abusive practices do not frustrate the limits placed on

depositions in the discovery plan, the judge should insist on observance of

rules for the fair and efficient conduct of depositions. Rule 30(d)(1) requires

that objections be stated “concisely and in a non-argumentative and nonsuggestive manner”; local rules or standing orders may also establish guidelines

for objections.179 Under Rule 30(d)(1), counsel may instruct a deponent to not

answer only for the purpose of enforcing a court-imposed limitation on evidence, or if preparing a motion under Rule 30(d)(3) to limit or terminate the

examination for bad faith or harassment or to preserve a privilege (to the extent possible, disputed claims of privilege should be resolved in advance of the

deposition). More stringent limitations may be imposed by local rule or by

court order when necessary.180 In addition, some judges issue guidelines covering the following matters:

• who may attend depositions;

• where the depositions are to be taken;

• who may question the witness;

178. Authority for judicial management of deposition discovery can be found in the federal

rules. E.g., Fed. R. Civ. P. 30(d) committee note (2000 amendment); Fed. R. Civ. P. 30(b), 30(d)

committee notes (1993 amendment). For an example of comprehensive guidelines for deposition discovery not having the force of local rules or orders, but strongly encouraged by the court,

see Civil Practice Fed. Court Comm., Introduction to Civil Discovery Practice in the Southern District of Alabama 11–16 (S.D. Ala. 1998), at http://www.als.uscourts.gov/district-court/forms/

discprat.pdf (last visited Jan. 7, 2004).

179. See, e.g., D.S.C. Civ. R. 30.04; N.D. Ohio Civ. R. 30.1. For a discussion of attorney

conduct in depositions and citations to a number of cases construing local rules and standing

orders, see Hall v. Clifton Precision, 150 F.R.D. 525, 527 (E.D. Pa. 1993). But see In re Stratosphere Corp. Sec. Litig., 182 F.R.D. 614, 621 (D. Nev. 1998) (noting that deposition conduct

orders should be narrowly drawn to avoid interfering with the deponent’s right to counsel).

180. See Hall v. Clifton Precision, 150 F.R.D. 525 (E.D. Pa. 1993).
Pretrial Procedures § 11.452

85

• how the parties are to allocate the costs; and

• how the attorneys are to conduct themselves.181

Rule 30(d)(3) expressly authorizes sanctions for “impediment, delay or other

conduct that has frustrated the fair examination of the deponent.”

Inefficient management of documents at a deposition can interfere with

the deposition’s proper conduct. The discovery plan should establish procedures for marking deposition exhibits, handling copies and originals, and exchanging in advance all papers about which the examining party intends to

question the witness (except those to be used for genuine impeachment).182

11.452 Cost-Saving Measures

In addition to the general discovery practices discussed in section 11.42,

there are numerous techniques used to streamline deposition discovery:

• Informal interviews. Informal interviews of potential witnesses may be

arranged with the agreement of counsel. However, an attorney may

not communicate with a represented party without the consent of that

party’s counsel. If the represented party is an organization, the prohibition extends to persons with managerial responsibility and any other

person whose act or omission may be imputed to the organization or

whose statement may constitute an admission on the part of the organization.183 The prohibition does not extend to former corporate employees.184 Informal interviews may be useful for persons who have

only limited knowledge or involvement and who are unlikely to be

called as witnesses at trial. The witness may be sworn and the interview

recorded electronically for possible use later in the case; by agreement

or court order, the interview may also be converted into a nonstenographic deposition.

• Nonstenographic depositions. The party taking a deposition may record

it on audio or videotape instead of stenographically without having it

transcribed. With prior notice to the deponent and other parties, any

other party may make its own recording of the deposition.

185 Videotaped depositions offer a number of advantages: They help deter mis181. See sample order infra section 40.22.

182. See, e.g., In re San Juan Dupont Plaza Hotel Fire Litig., MDL No. 721, 1989 WL

168401, at *43–44 (D.P.R. Dec. 2, 1988) (five days’ advance notice).

183. Model Rules of Prof’l Conduct R. 4.2 & cmt. (2002).

184. ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 91-359 (1991). The law

of the circuit should be consulted for recent developments in this area of the law.

185. Fed. R. Civ. P. 30(b)(3).
§ 11.452 Manual for Complex Litigation, Fourth

86

conduct by counsel at the deposition; they can preserve the testimony

of witnesses who may be unavailable to testify at trial (such as experts

with scheduling conflicts or persons suffering from an infirmity) and

in dispersed litigation can avoid multiple live appearances by the same

witness; they tend to hold a jury’s attention better than reading a

deposition transcript; they help the jury assess the witness’s demeanor

and credibility; and they are more effective in helping clients considering settlement to evaluate the quality of the opposition’s case.

Moreover, if the video recording is digital, it can be edited easily and

exactly to eliminate objectionable and irrelevant material.

Measures to safeguard the accuracy of the recording may be necessary, such as having (1) the videotape operator, after being sworn, certify the correctness and completeness of the recording; (2) the deponent sworn on tape; (3) the recording device run continuously

throughout the deposition; and (4) counsel agree to (or having the

court order) standard technical procedures to avoid distortion. These

procedures might cover such matters as the use of a zoom lens, lighting, background, and camera angle.186 Both sides may record a deposition, each bearing its own expense.

• Telephonic and videoconference depositions. Telephonic or videoconferenced depositions can reduce travel costs. Federal Rule of Civil Procedure 30(b)(7) allows the court to order or the parties to stipulate to

taking a deposition “by telephone or other remote electronic means.”

Supplemental examination by parties not present when a person was

first deposed may be conducted effectively by telephone or videoconference. Through use of speaker phones, conference calls, or videoconference, distant witnesses may be examined by counsel from

counsel’s offices, with the court reporter located with the witness or,

by stipulation, at one of the attorneys’ offices (see section 11.494, extraterritorial discovery). A remote deposition may also be recorded

nonstenographically. Remote depositions are most often used for

relatively brief examinations that do not involve numerous documents, but may also be used to reduce travel costs or to avoid lastminute continuances or trial interruptions when deposition testimony

becomes unexpectedly necessary. To ensure that deponents are not

186. See Michael J. Henke, The Taking and Use of Videotaped Depositions, 16 Am. J. Trial

Advoc., 151, 158 (1992). Rule 30(b)(4) requires that “[t]he appearance or demeanor of deponents or attorneys shall not be distorted through camera or sound-recording techniques.”
Pretrial Procedures § 11.453

87

coached, ground rules should specify who may be present with the deponent during the examination.

• Conference depositions. In special situations, such as a Rule 30(b)(6)

deposition of an organization, several persons may be deposed simultaneously (in person, by telephone, or by videoconference) in a conference setting.187

• Representative depositions. Where there are many potential nonparty

witnesses, typically in the case of eyewitnesses, counsel may agree on a

few representative depositions and stipulate that the testimony of

other named witnesses would be the same.

• Written questions. In some circumstances, the rarely used procedures

of Federal Rule of Civil Procedure 31 for depositions on written questions may be a cost-effective means of obtaining trial evidence. For example, Rule 31 deposition questions—unlike interrogatories—may be

directed to nonparties and the answers used at trial to provide evidentiary foundation for documents. Rule 31 questions may also be useful

in follow-up examinations by absent or later-added parties of persons

whose depositions have been taken earlier.

• Reduction in copies. Costs can be controlled by (1) limiting the number

of copies of deposition transcripts ordered, particularly if a document

depository is established; (2) waiving filing of the original with the

court; and (3) not having transcripts prepared of depositions that turn

out to be of no value.

• Limited attendance. Limits may be set on the number of attorneys for

each party or each side who may attend depositions, particularly in

cases in which fees may be awarded or approved by the court.

11.453 Deferred Supplemental Depositions

In multiparty cases, the court should consider issuing an order relieving

parties of the risks in not attending a deposition in which they have only a peripheral interest.188 Such an order may direct that a copy of the deposition

transcript be made available promptly to nonattending parties, who within a

specified period thereafter may conduct supplemental examination of the deponent, either by appearing in person at a designated time and place for resumption of the deposition or by presenting questions in written form under

Rule 31 or in a telephonic deposition under Rule 30(b)(7). A stipulation or

187. See supra section 11.423.

188. See infra section 40.29.
§ 11.454 Manual for Complex Litigation, Fourth

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court order will be required to depose a person who already has been deposed

in the case.189 The order should specify whether the absent party has the right

to require resumption of the adjourned deposition or—as is usually preferable—whether it must show cause why resumption is necessary. The order

should also state whether the initial examination is admissible at trial if the

deponent later becomes unavailable for supplemental examination.

These procedures can relieve parties, particularly those with limited financial resources, from the expense of attending depositions in which their interest is minimal or will likely be adequately protected by others in attendance.

Such procedures should not be used as a tactical device to harass witnesses or

to inconvenience other parties. Counsel for litigants with a substantial interest

in a deposition should attend or be represented by other counsel.

The judge should provide for the use of depositions against persons who

may become parties to the litigation by later amendment of the pleadings or

the filing, removal, or transfer of related cases. The pretrial order may state

that all previously taken depositions will be deemed binding on new parties

unless, within a specified period after their appearance in the litigation, the

new parties show cause to the contrary. Even in the absence of such an order, it

is best for the court to limit the resumption of earlier depositions to questioning relevant to the new parties. Like other parties who have not attended a

deposition, the new parties should have a specified period of time to conduct

supplemental examination of the deponents, although the court may require a

showing of some need for additional questioning. Permitting repetition of earlier examinations is rarely advisable.

11.454 Scheduling

Scheduling depositions involves sequencing them in relation to other discovery, fixing the order in which witnesses are to be deposed, and setting times

and places that are feasible for all of the attorneys and witnesses. Absent stipulation or court order, depositions may not be taken before the Rule 26(f) discovery conference unless the notice is accompanied by “a certification, with

supporting facts, that the person to be examined is expected to leave the country and be unavailable for examination in this country unless deposed before

that time.”190

Ordinarily, discovery by all parties proceeds concurrently. The rules do not

give priority to any party or side. One purpose of a discovery plan is to establish an orderly procedure and to avoid indiscriminate noticing of depositions,

189. Fed. R. Civ. P. 30(a)(2)(B).

190. Fed. R. Civ. P. 30(a)(2)(C), 26(d).
Pretrial Procedures § 11.456

89

which may result in inconvenience, harassment, and inefficiency. Depositions

should be scheduled to accomplish the objectives of the discovery plan while

minimizing travel and other expense, and reasonably accommodating parties,

counsel, and witnesses. A plan might set specific dates for specific witnesses or

set aside specified time periods during which designated parties are given either exclusive or preferential rights to schedule depositions, subject to exceptions for emergencies.

When depositions cannot be scheduled at times or places convenient to all

counsel, attorneys should try to arrange for participation by others from their

offices or counsel representing litigants with similar interests. Moreover, to

meet discovery deadlines it may be necessary to conduct depositions on a multitrack basis, with depositions of several different witnesses being taken at the

same time in one or more locations. Parties should be expected to work out

these arrangements with little involvement by the court.

11.455 Coordination with Related Litigation

In related cases pending before the same judge, it is best to coordinate discovery plans to avoid conflicts and duplication. If the cases are pending before

different judges, the judges should attempt to coordinate the depositions of

common witnesses and other common discovery. Examination regarding subjects of interest only to a particular case may be deferred until the conclusion

of direct and cross-examination on matters of common interest. Parties in related cases may also stipulate to the use of depositions taken in one particular

case.

It may also be economical for the judges to afford parties in the present

litigation access to depositions previously taken in other litigation (see section

11.423)—the judges can deem depositions of opposing parties and their employees admissible against parties involved in related litigation under Federal

Rule of Evidence 801(d)(2). Depositions of other witnesses may be usable for

impeachment under Federal Rule of Evidence 801(d)(1)(A). In other situations, such as those involving nonparties or a party’s own witnesses, a new

deposition may be necessary, but (with advance notice) the answers given at

the earlier deposition may be adopted as the current testimony of the witness,

subject to supplementation; telephonic nonstenographic depositions may be

used for this purpose at little cost to either side.

See section 20 on coordination with related litigation.

11.456 Control of Abusive Conduct

To prevent frustration of the discovery plan, counsel must observe the

rules for the fair and efficient conduct of depositions. See section 11.451. Those

rules include Federal Rules of Civil Procedure 30(d)(1) and (4), local rules, and
§ 11.461 Manual for Complex Litigation, Fourth

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the judge’s standing orders. The court can inform counsel at the outset of the

litigation, preferably by written guidelines, of the court’s expectations with respect to the conduct of depositions, thereby reducing the likelihood of problematic conduct such as speaking and argumentative objections, instructions

not to answer, coaching of witnesses (including restrictions during recesses in

the deposition),191 and evasive or obstructive conduct by witnesses (see sections

11.451, 40.29). A speedy and efficient procedure to resolve discovery disputes

also helps (see section 11.424).

Where abuses are rampant, the court might require that depositions be

videotaped for judicial review or require counsel expeditiously to deliver a

copy of the transcript of each deposition for judicial review. Alternatively, the

court could direct that one or more depositions be supervised in person by a

judicial officer or special master. The judge or special master may need to be

present only briefly, setting the tone and making a few early rulings, and then

remain on call. Even where a special master exercises continuous oversight,

avoiding disputes and satellite litigation may justify the cost. Some judges have

required that depositions be taken in court to allow periodic monitoring.

In rare cases, sanctions may be needed. Although sanctions may have a

prophylactic effect for later depositions, they will do little to cure the damage

that has already occurred and may further poison relations between counsel

and should therefore be a last resort. See section 10.15.

191. See Hall v. Clifton Precision, 150 F.R.D. 525 (E.D. Pa. 1993).

11.46 Interrogatories

.461 Purposes 90

.462 Limitations 91

.463 Responses 92

.464 Other Practices to Save Time and Expense 92

Because interrogatories are often poorly drafted, misused, or employed to

burden and harass an opponent, courts generally restrict the number permitted, forcing counsel to make the best use of the limited number of interrogatories through skillful and thoughtful drafting designed to accomplish a legitimate purpose.

11.461 Purposes

Primarily, interrogatories help determine the existence, identity, and location of witnesses, documents, and other tangible evidence as a prerequisite to

planning further discovery. Much of this information is subject to prediscovery
Pretrial Procedures § 11.462

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disclosure under the national or local rules. If not, the court’s discovery order

can require it. See sections 11.13, 11.423. Interrogatories may help fill gaps,

ensure full compliance with informal requests, and obtain information dispersed among a number of persons under the opponent’s control. They may

also help to gather technical information when the requesting party may need

an expert’s assistance in formulating precise questions and the answering party

may need time and special assistance to respond (e.g., when discovery is sought

concerning systems and programs for the storage and retrieval of computerized data).

Contention interrogatories may sometimes help define issues, though the

procedures discussed in section 11.33 are usually more productive in clarifying

and narrowing issues and the contentions of the parties. Rule 33(c) permits

interrogatories that call for “an opinion or contention that relates to fact or the

application of law to fact,” but permits the court to defer an answer “until after

designated discovery has been completed or until a pretrial conference or other

later time.” Before allowing contention interrogatories, consider whether they

are likely to be useful at that stage of the proceeding and ensure that they will

not be argumentative.

Interrogatories may also be used, either alone or in conjunction with requests for admission under Federal Rule of Civil Procedure 36 (see section

11.47), to provide the foundation for a summary judgment motion. Whether

certain facts are genuinely in dispute may be difficult to ascertain from depositions and affidavits, and even in response to Rule 36 requests, the opposing

party may state that although reasonable inquiry has been made, it can neither

admit nor deny the truth of particular matters that depend on the credibility of

third persons. Interrogatories are a means of requiring a party to disclose any

facts that it believes raise a triable issue with respect to particular elements of a

claim or defense.

11.462 Limitations

Rule 33(a) imposes a presumptive limit of twenty-five interrogatories (including subparts) per party, and many local rules also restrict the number of

interrogatories that may be propounded without stipulation or a court order.

In complex litigation, with a great number of potentially relevant facts, a large

amount of noncontroversial background information may be counterproductive. Nevertheless, it is best to retain some control over the use of interrogatories and, in considering requests to file additional interrogatories, to be guided
§ 11.464 Manual for Complex Litigation, Fourth

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by the principles of Rule 26(b)(2). A basic question is whether the resulting

benefits will outweigh the burdens.192

11.463 Responses

Federal Rule of Civil Procedure 33(b)(3) requires that answers and objections be served within thirty days of the interrogatory unless the parties stipulate otherwise. The court may establish a different period by order and should

consider doing so after determining, in consultation with counsel, how much

time is truly needed to respond to specific interrogatories. Fed. R. Civ. P.

33(b)(1), (4). Any ground not stated in a timely objection will be deemed

waived in the absence of good cause. Fed. R. Civ. P. 33(b)(4). Rule 26(e)(2)

requires parties to reasonably amend interrogatory responses if, as new information comes to light, the responding party learns that a response—even if

complete and correct when made—has become incomplete or incorrect (unless this information has otherwise been made known to opposing parties

during discovery or in writing). The discovery plan should schedule periodic

dates for review and amendment of interrogatory responses (see section

11.421). If an answer is withheld on privilege grounds, the claim must be accompanied by a description of the information withheld sufficient to enable

other parties to assess the applicability of the privilege.193 Answers must be

signed by the person making them, and objections must be signed by counsel,

subject to the certification required by Rule 26(g) when propounding and responding to interrogatories.194 Some judges require that responses to contention interrogatories be signed by counsel; others permit a party to sign, stating

in substance, “I have been advised by my attorneys that . . . .” Such a statement,

however, may waive attorney–client privilege.

11.464 Other Practices to Save Time and Expense

Use of the following techniques may increase the effectiveness and efficiency of interrogatories:

• Master interrogatories; precluding duplicate requests. The court should

consider requiring similarly situated parties to confer and develop a

single or master set of interrogatories to be served on an opposing

party. If interrogatories have already been served by one party, other

parties should be prohibited from asking the same questions, because

192. See Fed. R. Civ. P. 33(a).

193. Fed. R. Civ. P. 26(b)(5). See supra section 11.431.

194. The requirements of Rule 26(g) are described in supra section 11.421.
Pretrial Procedures § 11.464

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any party may use the answers to interrogatories served by another regardless of who propounded the interrogatory.195

• Use of interrogatories from other litigation. Parties may also be barred

from propounding interrogatories that an adversary has already answered in other litigation, when such answers are available or may be

made available by the adversary.196

• Successive responses. If some questions will require substantially more

investigation than others, counsel may stipulate that the responding

party will provide answers in stages as the information is obtained,

rather than seek additional time for the first response. Federal Rule of

Civil Procedure 29(2) requires court approval of stipulations extending the time to respond to interrogatories only if such stipulations

would interfere with court-ordered time limits (see section 11.423).

• Modified responses. When interrogatories seek information that the

responding party lacks or can obtain only with significant expenditure

of time and money, and the information can be provided in a different

form, that party should not object but rather advise the opponent and

attempt to reach agreement on an acceptable form of response. For

example, information requested on a calendar-year basis may be readily available on a fiscal-year basis, or information on overtime hours

may be derived from records of compensation rates and overtime

paid.

• Early resolution of disputes. The judge may require parties to object to

interrogatories before expiration of the time for filing answers, particularly in cases where more than the standard thirty-day period is

allowed for filing answers. If the parties cannot resolve the objections

by modifying or clarifying the troublesome interrogatories, they

should present their dispute to the court in a clear and concise manner, avoiding lengthy motions and briefs, and the court should rule

promptly to avoid disruption of the progress of the litigation (see section 11.424).

• Rule 30(b)(6) depositions. When a party seeks discovery from an organization but does not know the identity of the individuals with relevant knowledge, the party may name the organization as the deponent, requiring it to designate persons to testify in response. This

avoids the need for the two-step process of using an interrogatory to

195. See Fed. R. Evid. 801(d)(2).

196. See id.
§ 11.471 Manual for Complex Litigation, Fourth

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discover the identity of knowledgeable individuals and then deposing

them individually.

11.47 Stipulations of Fact/Requests for Admission

.471 Stipulations of Fact 94

.472 Requests for Admission 95

.473 Statements of Contentions and Proof 96

.474 Requests for Judicial Notice 97

11.471 Stipulations of Fact

Federal Rule of Civil Procedure 16(c)(1) provides that at any pretrial conference, the court “may take appropriate action, with respect to . . . the possibility of obtaining admissions of fact . . . which will avoid unnecessary

proof . . . . ” Although premature efforts to obtain stipulations may be counterproductive, judges might consider the early use of the combined discovery

request described in section 11.423, in which a party may admit that particular

facts are true in lieu of proceeding with other discovery regarding those matters. The judge can also encourage stipulations of facts that, after an appropriate opportunity for discovery has been afforded, should no longer be genuinely

in doubt. Admission should be expected not only of facts of which each party

has personal knowledge, but also of those that can be established by evidence

from other sources. If the parties insist, facts of the latter type may be shown as

“uncontested,” “uncontroverted,” or “conceded” rather than shown as “admitted,” but the legal effect is identical. Stipulations may be sought with respect both to the facts of the case and to matters that affect the admissibility of

other evidence, such as the authenticity of records and the foundation requirements for exceptions to the hearsay rule under Federal Rule of Evidence

803(6) and similar provisions. Parties may be more willing to enter into stipulations for specified limited purposes, such as an injunction proceeding, motion for summary judgment, or bifurcated trial of an issue. They may be willing to enter early stipulations if there is provision analogous to that in Federal

Rule of Civil Procedure 36(b) for timely withdrawal from an incorrect stipulation on the basis of newly discovered evidence when no substantial prejudice

to other parties would result.

The court can assist the stipulation process by stressing the distinction

between conceding the truth of some fact or agreeing not to contest it, and

conceding its admissibility or weight. Counsel’s admission of the truth of an

uncontroverted fact does not affect the right to object to its admissibility or to

contest its probative value. Indeed, if a party contends that some fact is irrelevant or otherwise inadmissible, there is more reason to admit to its truth without the exhaustive investigation and discovery that might be warranted for an

obviously critical fact. A party may stipulate to the accuracy of tabulations and
Pretrial Procedures § 11.472

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compilations, the significance of which it intends to dispute. The court should

be cautious, however, of requiring a party to admit the accuracy of voluminous

data or summaries of the same. As discussed in section 11.446, a response

based on some limited study may be more appropriate even though this results

in a summary with known errors.

The court should also remind parties of the tactical disadvantages of contesting at trial some matter on which their opponents will certainly prevail, or

of being confronted at trial with an earlier denial of some matter that could not

have been fairly disputed. Since an angry client, rather than the attorney, is

often the person responsible for an “admit nothing” posture in the litigation,

consider directing the clients themselves to attend a conference at which the

desirability of early stipulations is discussed. Special masters can sometimes

assist the parties in arriving at stipulations.

11.472 Requests for Admission

When voluntary means of narrowing factual disputes have been exhausted,

admissions may be obtained under Federal Rule of Civil Procedure 36. This

rule has its limitations, however. As discussed in section 11.463, complementary or supplementary interrogatories may be needed if a party in apparent

good faith declines to admit the truth of some fact that depends on the credibility of other witnesses. In addition, like interrogatories, Rule 36 admissions

are usable only against the party who made them and only in the action in

which they were made. In multiparty litigation, therefore, requests may have to

be directed to each party in each related action. Rule 36 requests answered by a

party in prior or related litigation should be renewed; a straightforward new

request that asks the party to admit each matter previously admitted should

suffice.

 Because parties often deny a requested admission on the basis of a trivial

disagreement with a statement or without indicating the portions of the stated

fact that are true, the court can urge the parties to observe their obligation under the rule to respond in good faith and point out the availability of sanctions

for failure to do so.197

197. “[W]hen good faith requires that a party qualify his answer or deny only a part of the

matter of which an admission is requested, he shall specify so much of it as is true and qualify or

deny the remainder.” Fed. R. Civ. P. 36(a). Sanctions are available under Rule 37(c)(2). Marchand v. Mercy Med. Ctr., 22 F.3d 933 (9th Cir. 1994) (affirming award of attorney fees incurred

at trial based on failure to admit).
§ 11.473 Manual for Complex Litigation, Fourth

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11.473 Statements of Contentions and Proof

The limitations of Rule 36 and the difficulties often encountered when attorneys attempt, even in good faith, to negotiate stipulations of fact have led to

a third method for arriving at stipulations and admissions: the court orders

counsel for one side, typically the plaintiff’s, to draft a series of numbered, narrative statements of objective facts that they believe can be established, avoiding argumentative language, labels, and legal conclusions.198 Opposing counsel

must then indicate which of the proposed facts are admitted (or will not be

contested) and which are disputed, specifying the nature of the disagreement

by appropriate interlineation or deletion, as well as drafting narrative statements of additional facts that they believe can be established. The newly added

statements are then returned to the first party for admission (or nondenial) or

for specific disagreement. The parties then file a consolidated statement

reflecting what is agreed and what remains in dispute as a stipulation of the

parties. Judges sometimes incorporate the stipulation in a pretrial order, specifically providing that all (or only specified) objections to admissibility at trial

are reserved.

This procedure for narrowing factual issues can be one of the final steps

before trial, coupled with a provision precluding a party from offering at trial

evidence of any fact not included in the narrative listing, except for good cause

shown. It could also be used earlier in the litigation (after adequate opportunity for discovery) with respect to specified proceedings, such as a class certification hearing or a Rule 56 motion. The circumstances of the case will dictate whether all facts that the party proposes to prove must be listed—or only

those that may possibly be admitted and, if admitted, would reduce the scope

of evidence presented. The more extensive the required listing, the greater the

opportunity to narrow the facts that remain for proof at trial; the judge should,

however, weigh the potential for reduction in the length and cost of trial

against the time and expense expended in identifying facts that will probably

remain in dispute.

The degree to which stipulations can be obtained may depend not so much

on the procedures used as on the attitude of the parties. Attorneys are sometimes reluctant to make any concessions on behalf of their clients. In such

cases, the judge may be able to persuade counsel that, in addition to fulfilling

their responsibilities as officers of the court, they will serve their clients’ interests by streamlining the litigation through appropriate concessions and admissions. The refusal by counsel to stipulate to provable facts almost never results

198. See Manual for Complex Litigation, Third, 515 (Federal Judicial Center 1995).
Pretrial Procedures § 11.481

97

in an advantage through a failure of proof and usually imposes additional costs

on both sides in discovery, at trial, or both.

11.474 Requests for Judicial Notice

The judicial notice procedure provided by Federal Rule of Evidence 201

may also be used to eliminate the need for some fact-finding at trial. With respect to matters “capable of accurate and ready determination by resort to

sources whose accuracy cannot reasonably be questioned,” an appropriate request may be filed under Rule 201 requiring opposing counsel to justify their

refusal to stipulate.

11.48 Disclosure and Discovery of Expert Opinions199

.481 Trial Experts 97

.482 Consulting Experts 99

.483 Court-Appointed Experts 100

Effective litigation management requires reasonable judicial control over

the use of expert witnesses.200 Some judges confer with counsel before testifying

experts are retained, to determine whether the proposed testimony will be necessary and appropriate, and to establish limits on the number of expert witnesses and the subjects they will cover.

Management of the disclosure and discovery of expert opinions is also essential to ensure adequate preparation by the parties, avoid surprise at trial,

and facilitate rulings on the admissibility of expert evidence.

11.481 Trial Experts

Federal Rule of Civil Procedure 26(a)(2) requires the prediscovery disclosure, by the parties, of the identity of expert witnesses to be called at trial and

of extensive additional information, including the following:

• a signed written report stating all opinions to which the expert will

testify;

• the bases for those opinions;

• the data or information considered in forming the opinions—according to the 1993 committee note on Rule 26, this requirement substan199. For more detailed discussion of the management of expert testimony, see generally

William W Schwarzer & Joe S. Cecil, Management of Expert Evidence, in Reference Manual on

Scientific Evidence 39 (Federal Judicial Center 2d ed. 2000). See also infra section 23 (expert

scientific evidence).

200. See infra sections 22.87, 23.22, 23.27, 23.35, 23.37.
§ 11.481 Manual for Complex Litigation, Fourth

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tially eliminates work product protection from communications between counsel and the expert; the court may conduct an in camera

inspection if necessary to redact irrelevant material;201

• exhibits to be introduced as a summary or in support of the opinions;

• the expert’s qualifications (including a list of all publications authored

in the last ten years);

• the compensation the expert is to receive; and

• a list of other cases in which the expert has testified within the last four

years.202

Local rules or standing orders may contain similar requirements, and the judge

may enter an order adapting these requirements to meet the needs of the litigation. Rule 26(a)(2) applies only to experts “retained or specially employed”

to give expert testimony or “whose duties as an employee of the party regularly

involve giving expert testimony,” but the judge may extend the rule to other

experts (e.g., treating physicians) or, conversely, waive it as to certain experts.203

At the initial conference, establish a timetable for expert disclosure and

procedures to implement it. Absent stipulation or a court order, these disclosures must be made at least ninety days before trial or, if the evidence is intended solely for rebuttal, thirty days from the opposing party’s disclosure.

Supplementation under Rule 26(e) is also required.204

Scheduling should take into account that the parties may lack sufficient

information to select expert witnesses until the issues have been further

defined and certain discovery is completed; a party’s decision may also await

the disclosure of the opinions of experts selected by other parties. Rule 26’s

committee note states that the party with the burden of proof on an issue

should normally be required to disclose its expert testimony on that issue before the other parties.

Disclosure must be made sufficiently in advance of trial for the parties to

take depositions if necessary and for the court to conduct appropriate pretrial

proceedings, such as hearing motions under Federal Rule of Evidence 104(a)

directed at expert evidence and motions for summary judgment.205 Expert

depositions are authorized by Rule 26(b)(4)(A); Rule 26(b)(4)(C) normally

201. See Bogosian v. Gulf Oil Corp., 738 F.2d 587, 595–96 (3d Cir. 1984).

202. Fed. R. Civ. P. 26(a)(2)(A), (B).

203. Fed. R. Civ. P. 26 committee note.

204. See Fed. R. Civ. P. 26(a)(2)(C).

205. The court at that time may also want to consider appointment of an expert under Fed.

R. Evid. 706. See infra section 11.51.
Pretrial Procedures § 11.482

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requires the discovering party to pay the expert’s reasonable fees for responding. (The Rule 26 committee note advises that disclosure may reduce the need

for expert discovery, however, and warrant substantial limitations on it.)

Experts may wish to modify or refine their disclosed opinions in the light

of further studies, opinions expressed by other experts, or other developments

in the litigation. Although Rule 26(e)(1) requires that opposing counsel be advised of these changes, the judge should set a final cutoff date by which all additions and revisions must be disclosed in order to be admissible at trial.206

Early and full disclosure of expert evidence can help define and narrow

issues. Although experts often seem hopelessly at odds, revealing the assumptions and underlying data on which they have relied in reaching their opinions

often makes the bases for their differences clearer and enables substantial simplification of the issues. In addition, disclosure can facilitate rulings well in advance of trial on objections to the qualifications of an expert, the relevance and

reliability of opinions to be offered, and the reasonableness of reliance on particular data.207 Judges use various procedures to identify and narrow the

grounds for disagreement between opposing experts, such as asking them to

explain the reasons for their disagreement.

11.482 Consulting Experts

Discovery with respect to nontestifying experts is much more limited. Such

experts are not covered by Rule 26(a)(2) and may be deposed only upon a

showing of “exceptional circumstances under which it is impractical . . . to

obtain facts or opinions on the same subject by other means.”208 If such a

deposition is allowed, consider imposing time limits and requiring the party

seeking discovery to pay an appropriate share of the cost reasonably incurred

in obtaining the expert’s testimony (cost shifting under Rule 26(b)(4)(C) is

mandatory “unless manifest injustice would result”).

The stringent disclosure requirements applicable to testifying experts may

lead parties to rely on consulting experts, deferring a decision whether to designate them as trial experts. The judge should address this matter at the initial

conference and establish a cutoff date for designation of trial experts and compliance with disclosure requirements.

206. See Fed. R. Civ. P. 37(c)(1) (failure to make Rule 26(a) disclosures “without substantial justification” precludes introduction of nondisclosed witnesses or information at trial).

207. See generally Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592 (1993) (rejecting “general acceptance” test of Frye v. United States, 293 F. 1013 (D.C. Cir. 1923)).

208. Fed. R. Civ. P. 26(b)(4)(B). When a physical or mental examination is made under

Fed. R. Civ. P. 35, a party may obtain the examiner’s report even if the examiner is not testifying.
§ 11.491 Manual for Complex Litigation, Fourth

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11.483 Court-Appointed Experts209

Although Federal Rule of Evidence 706 provides that an expert appointed

by the court may be deposed, judges should establish the terms on which an

expert serves and the nature of the functions the expert is to perform. When

such an appointment is made, the extent of discovery permitted should be determined at the outset. This may depend on whether the expert is to testify and

on the issues the expert is to address.210

11.49 Special Problems

.491 Government Investigations/Grand Jury Materials 100

.492 Summaries 101

.493 Sampling/Opinion Surveys 102

.494 Extraterritorial Discovery 104

11.491 Government Investigations/Grand Jury Materials

Early in the litigation, the court should inquire about relevant government

reports and other materials. Access to such materials can reduce the need for

discovery and assist in defining and narrowing issues. If not a matter of public

record, these materials can sometimes be obtained by agreement with the

agency, by subpoena, or by requests under the Freedom of Information Act.211

Factual findings of a government agency may be admissible under Federal

Rule of Evidence 803(8)(C), but some discovery may be needed to determine

whether the information meets the rule’s “trustworthiness” standard. The rule

provides a hearsay exception, in civil cases and against the government in

criminal cases, for “[r]ecords, reports, statements, or data compilations . . . of

public offices and agencies, setting forth . . . factual findings resulting from an

investigation conducted pursuant to authority granted by law, unless the

sources of information or other circumstances indicate lack of trustworthiness.” Objections to the admissibility of the findings may be addressed in a

pretrial hearing under Federal Rule of Evidence 104, if necessary.212

Grand jury materials can sometimes be used to reduce discovery in related

civil litigation. Federal Rules of Criminal Procedure 6(e)(3)(D) and (E) set out

the procedures for seeking disclosure of grand jury materials. Grand jury pro209. See infra section 11.51.

210. See generally Reference Manual on Scientific Evidence, supra note 199.

211. 5 U.S.C. § 552 (2000).

212. See In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 260 (3d Cir. 1983), rev’d

on other grounds sub nom. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574

(1986).
Pretrial Procedures § 11.492

101

ceedings are presumptively secret, but the court may order disclosure upon a

showing of a particularized need.213 Although disclosure may be ordered of

testimony given before the grand jury and of documents subpoenaed or otherwise obtained for its use,214 a person may invoke the Fifth Amendment

privilege against self-incrimination and refuse to answer questions about such

testimony even if it was given under a grant of immunity.215 The production to

a grand jury of otherwise discoverable material does not, however, entitle it to

Federal Rule of Civil Procedure 6 protection.216 Copies of material produced to

a grand jury are subject to discovery.

Requests for disclosure of grand jury materials are generally addressed to

the judge who supervised the grand jury proceedings.217 Nevertheless, because

that court may not be able to assess the “particularized need” for the materials

in the litigation for which the materials are sought, the court should consult

with the trial judge assigned to the litigation.218 If disclosure is ordered, the

court may include in the order protective limitations on the materials’ use.219

11.492 Summaries

Whenever possible, voluminous or complicated data at trial should be

presented by counsel through summaries, including compilations, tabulations,

charts, graphs, and extracts. Federal Rule of Evidence 1006 creates an exception to the “best evidence” rule, allowing writings, recordings, or photographs

that cannot conveniently be examined in court to be presented in the form of

“charts, summaries or calculations.” The rule does not affect the requirement

that the originals be admissible. While counsel in jury cases usually recognize

the need for summaries, they may overlook their utility in nonjury cases; the

213. See Fed. R. Crim. P. 6(e)(2), (3)(C)(i). The “particularized need” requirement derives

from case law and is described in detail in Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211,

222–23 (1979). See also United States v. Sells Eng’g, Inc., 463 U.S. 418, 443 (1983); Ill. v. Abbott

& Assocs., Inc., 460 U.S. 557, 567 & n.14 (1983).

214. Some courts give greater protection to transcripts of testimony than to documentary

evidence. See, e.g., In re Grand Jury Proceedings (Miller Brewing Co.), 717 F.2d 1136 (7th Cir.

1983). Production under Fed. R. Civ. P. 33(d) or 34 of documents previously subpoenaed by a

grand jury may be facilitated if the producing party has retained copies.

215. United States v. Balsys, 524 U.S. 666, 683 (1998); Pillsbury Co. v. Conboy, 459 U.S.

248 (1983).

216. See Finn v. Schiller, 72 F.3d 1182, 1187 (4th Cir. 1996); Blalock v. United States, 844

F.2d 1546, 1551 (11th Cir. 1988).

217. Douglas Oil, 441 U.S. at 226.

218. Id. at 226–31.

219. Id. at 223.
§ 11.493 Manual for Complex Litigation, Fourth

102

trial judge should not be expected to “wad[e] through a sea of uninterpreted

raw evidence.”220

Summaries may be offered under Federal Rule of Evidence 611(a) solely as

an aid to understanding, with the underlying evidence separately admitted into

the record. Whenever possible, however, summaries should be received as

substantive evidence under Rule 1006, in lieu of the underlying data. When

summaries are so used, opposing parties must be given an adequate opportunity to examine the underlying data in advance of trial and raise objections in

time to enable the proponent of the summary to make necessary corrections.

As noted in section 11.446, the use of sampling techniques to verify summaries

and quantify possible errors may be adequate and preferable to an item-byitem examination of the underlying data. When the summary is received as

substantive evidence of the data it contains, the underlying data will not become part of the record, although receipt of a few examples of the source materials may be helpful in illustrating the nature of the underlying data summarized.

11.493 Sampling/Opinion Surveys

Statistical methods can often estimate, to specified levels of accuracy, the

characteristics of a “population” or “universe” of events, transactions, attitudes, or opinions by observing those characteristics in a relatively small segment, or sample, of the population. Acceptable sampling techniques, in lieu of

discovery and presentation of voluminous data from the entire population, can

save substantial time and expense, and in some cases provide the only practicable means to collect and present relevant data. In one case, for example, a

statistical expert profiled the compensatory damage claims of the class members to assist the jury in fixing the amount of punitive damages.221

The choice of appropriate sampling methods will depend on the objective.

There is a difference between sampling to generate data about a population so

the data will be verified or declared true and sampling, like polling, to measure

opinions, attitudes, and actions by a population. In the case of the former, the

reliability and validity of estimates about the population derived from sampling are critical.

220. Crawford v. W. Elec. Co., 614 F.2d 1300, 1319 (5th Cir. 1980).

221. In re Shell Oil Refinery, 136 F.R.D. 588 (E.D. La. 1991), affirmed sub nom. Watson v.

Shell Oil Co., 979 F.2d 1014 (5th Cir. 1992), reh’g granted, 990 F.2d 805 (5th Cir. 1993), other

reh’g, 53 F.3d 663 (5th Cir. 1994) (case settled before rehearing).
Pretrial Procedures § 11.493

103

The sampling methods used must conform to generally recognized statistical standards. Relevant factors include whether

• the population was properly chosen and defined;

• the sample chosen was representative of that population;

• the data gathered were accurately reported; and

• the data were analyzed in accordance with accepted statistical principles.

Laying the foundation for such evidence will ordinarily involve expert testimony and, along with disclosure of the underlying data and documentation,

should be taken up by the court well in advance of trial. Even if the court finds

deficiencies in the proponent’s showing, the court may receive the evidence

subject to argument going to its weight and probative value.222

By contrast, questioning a sample of individuals by opinion polls or surveys about such matters as their observations, actions, attitudes, beliefs, or

motivations provides evidence of public perceptions. The four factors listed

above are relevant to assessing the admissibility of a survey, but need to be applied in light of the particular purpose for which the survey is offered. In addition, in assessing the validity of a survey, the judge should take into account

the following factors:

• whether the questions asked were clear and not leading;

• whether the survey was conducted by qualified persons following

proper interview procedures; and

• whether the process was conducted so as to ensure objectivity (e.g.,

determine if the survey was conducted in anticipation of litigation and

by persons connected with the parties or counsel or by persons aware

of its purpose in the litigation).

Parties who propose to offer sampling or survey evidence may want to

consider whether to disclose details of the proposed sampling or survey methods to the opposing parties before the work is done (including the specific

questions that will be asked, the introductory statements or instructions that

will be given, and other controls to be used in the interrogation process). Objections can then be raised promptly and corrective measures taken before the

survey is completed. A meeting of the parties’ experts can expedite the resolution of problems affecting admissibility.

Parties sometimes object that an opinion survey, although conducted according to generally accepted statistical methods, involves impermissible

222. See E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1292 (9th Cir. 1992);

McNeilab, Inc. v. Am. Home Prods. Corp., 848 F.2d 34, 38 (2d Cir. 1988).
§ 11.494 Manual for Complex Litigation, Fourth

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hearsay. When the purpose of a survey is to show what people believe—but

not the truth of what they believe—the results are not hearsay.223 In the rare

situation where an opinion survey involves inadmissible hearsay, Federal Rule

of Evidence 703 nevertheless allows experts to express opinions based on the

results of the survey.224

11.494 Extraterritorial Discovery

Discovery directed at witnesses, documents, or other evidence located

outside the United States will often create problems, since many countries view

American pretrial discovery as inconsistent with or contrary to their laws,

customs, and national interests. For example, in civil-law jurisdictions where

courts control the gathering and presentation of evidence, taking a deposition

may be viewed as a judicial act performed by another sovereign. In addition,

many common-law jurisdictions disfavor discovery requests directed at obtaining material other than evidence to be presented at trial.225 The need for

evidence located outside the United States should be explored early in the proceedings to allow for the extra time that may be required to obtain it. Consider

ways to minimize cost and delay, or to develop alternate methods of proof

when the evidence cannot be obtained. For example, the parties may achieve

substantial savings by paying a willing deponent to come to the United States

or, if permitted by the laws of the host country, conducting short depositions

telephonically.

The following factors may affect foreign discovery:

• Laws of the United States. The procedures for obtaining evidence from

other countries are prescribed by

– the Federal Rules of Civil Procedure, particularly Rule 28(b)

(depositions in a foreign country);226

– statutes, particularly 28 U.S.C. § 1781 (transmittal of letter rogatory

or request), § 1783 (subpoena of person in a foreign country), and

§ 1784 (contempt); and

223. See Fed. R. Evid. 801(c), 803(3).

224. See Fed. R. Evid. 703.

225. See, e.g., Soc’y of Lloyd’s v. Ashenden, 233 F.3d 473, 480 (7th Cir. 2000); Rio Tinto

Zinc Corp. v. Westinghouse Elec. Corp., [1978] A.C. 547 (H.L.); S. Seidel, Extraterritorial Discovery in International Litigation 24 (PLI 1984).

226. See also Fed. R. Civ. P. 44(a)(2) (authentication of foreign official record). Rule 28(b)

must be read in conjunction with the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, done Oct. 5, 1961, T.I.A.S. No. 10072, 527 U.N.T.S. 189

(entered into force for the United States on Oct. 15, 1981), reprinted in Fed. R. Civ. P. 44; see also

28 U.S.C. §§ 1740, 1741, 1745 (West 2002).
Pretrial Procedures § 11.494

105

– international agreements, particularly the Hague Convention on

the Taking of Evidence Abroad in Civil or Commercial Matters (the

“Hague Convention”);227 attention must also be given to applicable

decisional law228 and the Federal Rules of Evidence.229

• Laws and attitude of the foreign country. The extent and form of pretrial

discovery that other sovereigns will compel or even permit vary

widely. Even within a particular country, the rules may differ depending on the nature and identity of the person or body from which the

discovery is sought and on the type of information (e.g., the breadth of

discovery may depend on whether the evidence is testimonial or

documentary).230 Some countries not only refuse to compel a witness

to provide evidence, but also prohibit even the voluntary production

of some items of evidence. The attitude of the other country may also

be affected by its current diplomatic relations with the United States

and by the nature of the litigation. This latter factor is particularly important if the American litigation involves claims (such as antitrust)

that conflict with the law or policies of the foreign country.

• Position of the person or body from which discovery is sought. Foreign

discovery rules may vary depending on whether discovery is sought

from

– a national of the United States, of the country in which the discovery is to be conducted, or of another country;

– a person or entity party to the American litigation or otherwise

subject to the jurisdiction of the American courts—where the entity

or person from whom discovery is sought is subject to the court’s

jurisdiction, it will often be faster and less costly to use the Federal

Rules’ standard discovery methods;231 and

227. Opened for signature Mar. 18, 1970, 23 U.S.T. 2555 (entered into force for the United

States on Oct. 7, 1972), reprinted in 28 U.S.C. § 1781 (West 2002) [hereinafter Hague Convention]. As its title implies, the convention does not apply to criminal cases. See Obtaining Discovery Abroad 9 (ABA 1990).

228. See, e.g., Breard v. Greene, 523 U.S. 371, 375 (1998); Societe Nationale Industrielle

Aerospatiale v. United States Dist. Court, 482 U.S. 522 (1987); Ins. Corp. of Ir. v. Compagnie des

Bauxites de Guinee, 456 U.S. 694 (1982); Societe Internationale v. Rogers, 357 U.S. 197 (1958);

In re Westinghouse Elec. Corp. Uranium Contracts Litig., 563 F.2d 992 (10th Cir. 1977).

229. See, e.g., Fed. R. Evid. 902(3) (self-authentication of foreign public documents).

230. For example, most countries party to the Hague Convention will not execute letters of

request for the purpose of obtaining pretrial disclosure of documents. See Hague Convention,

supra note 227, art. 23.

231. See Obtaining Discovery Abroad, supra note 227, at 2; Societe Nationale, 482 U.S. at

549.
§ 11.494 Manual for Complex Litigation, Fourth

106

– an instrumentality or arm of a foreign country, or a person or entity willing to provide the information.

• Posture of the litigant. Extraterritorial discovery will be expedited if the

parties to the litigation cooperate by entering into stipulations under

Federal Rule of Civil Procedure 29 as to the manner and location of

discovery. Stipulations for nonstenographic and telephonic depositions under Rule 30(b)(2), (7) also may be valuable (the court may

also order the use of these procedures; see section 11.452), but such

procedures may violate foreign law. Stipulations as to admissibility are

particularly important because the discovery may not be in the question-and-answer form traditional in American litigation. The refusal

of a party with foreign connections or interests to enter into stipulations may not necessarily reflect an uncooperative attitude but may be

compelled by the laws or customs of the foreign country. In this regard, the court should note that under Rule 28(b), “[e]vidence obtained in response to a letter of request need not be excluded merely

because it is not a verbatim transcript, because the testimony was not

taken under oath, or because of any similar departure from the requirements for depositions taken within the United States under these

rules.”

Because procedures for obtaining foreign discovery vary from country to

country and are often complex, it is generally advisable for the attorneys to

associate with local counsel. The Department of State and the appropriate

United States embassy or consulate can also provide assistance in planning discovery in foreign countries.232 The Department of State’s Office of Citizens

Consular Services can provide lists of local counsel and current information

regarding such matters as reservations and declarations under the Hague Convention, practices in nonsignatory countries, the procedures to be followed in

particular countries, and actual results of discovery efforts in specific countries.233

Depositions. Federal Rule of Civil Procedure 28(b) establishes four alternative procedures for taking depositions in other countries.234 Under Rule

28(b)(1), when the country where discovery is sought is a signatory to the

232. For the U.S. State Department’s regulations on foreign discovery, see 22 C.F.R. § 92

(1993).

233. Inquiries should be directed to the Office of Citizens Consular Services, Dept. of State,

2201 C Street, N.W., Washington, DC 20520.

234. See also Restatement (Third) of the Foreign Relations Law of the United States

§ 474(2) (1987).
Pretrial Procedures § 11.494

107

Hague Convention,235 depositions may be taken in accordance with the convention, as described below, though resort to the Convention is not mandatory.236 When the country is not a signatory, counsel may use one of the procedures in Rule 28(b)(2)–(4). Under Rule 28(b)(2), the American court may issue a “letter of request” (formerly called a “letter rogatory”) seeking the voluntary assistance of the court or other agency of the foreign country to compel

the deponent to provide evidence.237 There may be a long delay, perhaps as

much as two years, between the issuance of a letter of request and receipt of the

evidence. The Department of State’s Office of Citizens Consular Services often

can provide information about recent experiences in particular countries.

The foreign country ultimately decides whether to honor and execute the

letter of request. Many countries not party to the Convention, such as Canada,

routinely execute letters of request from United States courts.238 When the deponent is willing to give evidence, the parties may use the “notice” or “commission” methods of Rule 28(b)(3) and (4), respectively, if not prohibited by

foreign law. For example, in Japan and Turkey a deposition on notice is permissible only of an American citizen, while Swiss law makes it a crime to take

any deposition in that country without governmental authorization. The “notice” method is essentially the same used for a typical domestic deposition.

Under the “commission” method, the American court appoints a per235. The rule refers to “any applicable treaty or convention,” but the intended reference is

to the Hague Convention. See Fed. R. Civ. P. 28 committee note.

236. See Societe Nationale Industrielle Aerospatiale v. United States Dist. Court, 482 U.S.

522, 529–40 (1987); see also Restatement (Third) of the Foreign Relations Law of the United

States, supra note 234, § 473.

237. For a thorough discussion of the issues and procedures involved in obtaining judicial

assistance from a foreign country, see Bruno Ristau, International Judicial Assistance Part IV

(1990). For the form and substance of a letter of request, see Hague Convention, supra note 227,

arts. 1–14.

238. Currently, the U.S. State Department’s Web site lists more than thirty nations in

which the Hague Convention is in force. See Hague Convention on the Taking of Evidence

Abroad in Civil or Commercial Matters, at http://travel.state.gov/hague_evidence.html (last

visited Nov. 10, 2003). The Hague Convention’s official Web site lists additional states in which

the Hague Convention is in force by “accession,” but not all of these necessarily have reciprocal

arrangements with the United States. See Hague Convention of 18 March 1970 on the Taking of

Evidence Abroad in Civil or Commercial Matters, http://www.hcch.net/e/status/evidshte.html

(last visited Nov. 10, 2003). The situation is fluid, as former territories become independent

nations and other nations experience fundamental political changes. For current information

about a specific nation, consult the Department of Justice, Civil Division, Office of International

Judicial Assistance, 1100 L Street, N.W., Room 11006, Washington, DC 20530; tel: (202) 307-

0983; fax: (202) 514-6584.
§ 11.494 Manual for Complex Litigation, Fourth

108

son—typically an American consular officer239—to administer the oath and

preside over the deposition.

Much foreign discovery will occur in the numerous countries that are

contracting states to the Hague Convention.240 The Convention generally allows evidence to be taken compulsorily pursuant to a letter of request or voluntarily before a diplomatic officer or consular agent or any person “commissioned” for the purpose.241 (Issuance of both a commission and a letter of request, as authorized by Rule 28(b), may be a useful measure to guard against

the risk that a deponent may not remain willing to testify voluntarily.) Although the judicial authority executing the request will apply its own procedures, Article 9 of the Convention states that special requests—for example,

for a verbatim transcript or for answers in writing and under oath—are to be

honored unless incompatible with the law of the executing state or otherwise

impossible or impracticable. In practice, though, such requests are commonly

not complied with. Under the Convention, letters of request must be sent to a

“central authority” designated by the receiving country; the identities of the

authorities designated are given in notifications appended to the treaty.242 The

Convention must, however, be read in light of the numerous reservations and

declarations made by the contracting states, through which they have modified

or declined to adopt various provisions. Many countries, for example, require

that a judicial officer conduct depositions, and a majority will not execute letters of request issued for the purpose of obtaining documents related solely to

pretrial discovery. Each country’s declarations and reservations are listed in the

notifications at the end of the convention.243 These create variances among the

discovery rules applicable in the contracting countries and may be complex.

When “necessary in the interest of justice,” a United States national or

resident in a foreign country may be subpoenaed to testify or produce documents.244 Failure to comply may subject the person to punishment for contempt.245

Blocking laws. Efforts to obtain or compel production of documents located outside the United States may be impeded by one of the increasing num239. See 22 C.F.R. § 92.4(a) (2001).

240. For a list of contracting states, see Hague Convention, supra note 227.

241. Hague Convention, supra note 227, arts. 16–17.

242. See 28 U.S.C.A. § 1781 at 125–41 (West Supp. 1993). For discussion of the procedures

and problems associated with letters of request, see Spencer W. Waller, International Trade and

U.S. Antitrust Law § 7.08 (1992).

243. See 28 U.S.C.A. § 1781 at 125–41 (West Supp. 1993).

244. 28 U.S.C. § 1783 (West 2002).

245. Id. § 1784.
Pretrial Procedures § 11.494

109

ber of foreign nondisclosure (or “blocking”) laws.246 These laws take the form

of general commercial and bank secrecy laws, as well as more specific and discretionary blocking statutes aimed at combating perceived excesses in American discovery.247 The fact that certain discovery is prohibited under foreign

law, however, does not prevent the court from requiring a party to comply

with a demand for it,248 though the prohibition may be relevant in determining

the sanctions to be imposed for noncompliance.249 Where a party fails to comply with a discovery order because of a blocking statute, the court may impose

any of the sanctions set forth in Federal Rule of Civil Procedure 37(b), though

it may also consider factors such as the party’s good faith efforts to comply in

declining to impose them.250

Judicial control. The Supreme Court has cautioned federal courts to exercise special vigilance to protect foreign litigants from unnecessary or unduly

burdensome discovery and to supervise pretrial proceedings particularly

closely to prevent discovery abuses.251 The additional cost of foreign discovery

may increase the danger that it will be used for an improper purpose, such as

to burden or harass; objections to abusive discovery advanced by foreign litigants should therefore receive the court’s “most careful consideration.”252 In

deciding whether to order production of information abroad, and in framing

such an order, the following are worth considering:

• the importance to the litigation of the discovery requested;

• the degree of specificity of the request;

• whether the information sought originated in the United States;

• the availability of alternative means to secure the information;

• the extent to which noncompliance with the request would undermine

important U.S. interests; and

• the extent to which compliance would undermine important interests

of the country in which the information is located.253

246. See Obtaining Discovery Abroad, supra note 227, passim.

247. See Waller, supra note 242, § 7.09.

248. Societe Nationale Industrielle Aerospatiale v. United States Dist. Court, 482 U.S. 522,

544 n.29 (1987).

249. Societe Nationale v. Rogers, 357 U.S. 197, 204–06 (1958).

250. See Obtaining Discovery Abroad, supra note 227, at 18–22.

251. Societe Nationale, 482 U.S. at 546.

252. Id.

253. Restatement (Third) of the Foreign Relations Law of the United States, supra note

234, § 442(1)(c); see also Societe Nationale, 482 U.S. at 544 n.28 (citing earlier draft of the restatement).
§ 11.494 Manual for Complex Litigation, Fourth

110

Comity also dictates that American courts take into account special problems

confronted by the foreign litigant because of its nationality or location and any

sovereign interests expressed by a foreign state.254 An order requiring that all

extraterritorial discovery be conducted using the procedures in the Hague

Convention when available may serve this purpose.

Careful drafting can reduce the risk that a foreign country will refuse to

execute a letter of request. In most cases, the request should be directed at evidence for use at trial and should be as specific as possible. Hague Convention

countries that have executed a reservation under Article 23255 will ordinarily

not execute general requests for broad categories of documents for use in discovery.256 The letter should include no unnecessary information, and the language should be simple and nontechnical.257 The court should incorporate

findings as to the extent of discovery to be permitted and the need therefore in

a separate order that can be presented to foreign authorities, even if letters of

request are not being issued.

Federal judges are not authorized to travel abroad to control the conduct

of depositions, at least in the absence of specific approval by the Judicial Conference of the United States.258 For this reason, it is best to adopt in advance

appropriate guidelines to govern such depositions consistent with the laws of

the other country.259 Moreover, if permissible under the laws and customs of

that country, the judge may be available by telephone to resolve disputes or

may appoint a special master to supervise the deposition personally.260 Before

employing either of these procedures, the judge should seek advice from the

Department of State’s Office of Citizens Consular Services.

254. Societe Nationale, 482 U.S. at 546.

255. See supra note 227.

256. See Waller, supra note 242, § 7.08[3].

257. U.S. Dept. of State Circular, Preparation of Letters Rogatory (Mar. 1992).

258. Report of the Proceedings of the Judicial Conference of the United States 4–5 (March

1978).

259. For suggested deposition guidelines, see supra section 11.45.

260. See supra sections 11.424, 11.456.
Pretrial Procedures § 11.51

111

11.5 Special Referrals

.51 Court-Appointed Experts and Technical Advisors 111

.52 Special Masters 114

.53 Magistrate Judges Under 28 U.S.C. § 636(b)(1) 117

.54 Other Referrals 118

Complex litigation often involves extensive fact-finding in preparation for

trial, or in aid of settlement. Referrals to a neutral arbiter or special master may

at times be helpful, either by relieving the judge of time-consuming proceedings or by bringing to bear special expertise. The authority to make such referrals is circumscribed and conditioned, and the costs and benefits must be balanced.

11.51 Court-Appointed Experts and Technical Advisors

Court-appointed experts serve a number of purposes: to advise the judge

on technical issues, to provide the jury with background information to aid

comprehension, or to offer a neutral opinion on disputed technical issues.261

The court has broad discretion to appoint such an expert, sua sponte or on request of the parties, but should consider whether there are adequate alternatives to such an appointment, such as directing the parties to clarify, simplify,

and narrow the differences between them.262 Below are some of the problems

and implications of appointing an expert:

• Cost. Court appointment of an expert increases the already high cost of

complex litigation. Except in the rare cases where such funding is provided by statute, Federal Rule of Evidence 706(b) requires the parties

to pay the expert’s compensation. The judge allocates this expense

among the parties and determines the time of payment (usually periodic deposits in court during the litigation, subject to reapportionment at the outcome). Courts often decline to appoint an expert when

one party is indigent to avoid the unfairness of requiring the other side

to pay all of the expert’s compensation. The court has the authority,

however, to order the nonindigent party to pay this expense in compelling circumstances (e.g., when the indigent party’s claim has merit

that cannot viably be presented absent such expert assistance). The

261. For an extensive discussion of the various aspects of using court-appointed experts,

see Joe S. Cecil & Thomas E. Willging, Court-Appointed Experts: Defining the Role of Experts

Appointed Under Federal Rule of Evidence 706 (Federal Judicial Center 1993); see also

Schwarzer & Cecil supra note 199, at 59–63.

262. See supra section 11.48; Cecil & Willging, supra note 261, at 67–78.
§ 11.51 Manual for Complex Litigation, Fourth

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judge should provide for payment at the time of appointment to ensure that the expert will be compensated.

263

• Neutrality of the expert. Truly neutral experts are difficult to find.

Though they will have no commitment to any party, most experts do

not come to the case free of experience and opinions that will predispose—or may be perceived to predispose—them in some fashion on

disputed issues relevant to the case.

• Undue influence. Experts are typically appointed in cases that are extraordinarily difficult, and their independence relative to the parties’

experts may cause the jury to give their opinions undue weight. For

this reason, the testimony of the expert must be limited to those issues

specified by the court. Disclosure to the jury of the expert’s courtappointed status is discretionary.264

• Delay. The testimony of a court-appointed expert may lengthen the

trial, although there may be offsetting savings by narrowing the issues,

reducing the scope of the controversy, and perhaps promoting settlement.

• Timing of the appointment. The need for an appointment will not always be clear early in the litigation. By the time it becomes clear, the

case may be at or about to go to trial, when introduction of a courtappointed expert would cause delay.

Nevertheless, in appropriate cases, appointment of a neutral expert, even at an

advanced stage of the proceedings, can be beneficial:

• court-appointed experts can have “a great tranquilizing effect”265 on

the parties’ experts, reducing adversariness and potentially clarifying

and narrowing disputed issues;

• they can help the court and jury comprehend the issues and the evidence;

• they can suggest acceptable procedures and ground rules for preserving and exchanging digital-format materials relevant to the case, and

assist in settling disputes regarding electronic evidence; and

• they may facilitate settlement or at least stipulations.

263. See McKinney v. Anderson, 924 F.2d 1500, 1510–11 (9th Cir. 1991); United States

Marshals Serv. v. Means, 741 F.2d 1053, 1057–59 (8th Cir. 1984) (en banc); Cecil & Willging,

supra note 261, at 62–65.

264. Fed. R. Evid. 706(c).

265. E. Barrett Prettyman, Proceedings of the Seminar on Protracted Cases for United States

Circuit and District Judges, 21 F.R.D. 395, 469 (1957).
Pretrial Procedures § 11.51 

113

The order of appointment should clearly specify whether the expert is appointed under authority of Rule 706 or as a technical advisor under the inherent authority of the court, along with the assigned duties, functions, and compensation.266 A court-appointed expert, when forming opinions, is not limited

to information presented by the parties at a hearing. Furthermore, testifying

experts are subject to discovery with respect to their opinions; therefore, the

order should specify the ground rules for depositions and other discovery directed at the expert, including the extent to which materials used or considered

by the expert will be subject to discovery. The order should also specify

whether the expert is to provide a written report to the parties before trial, and

whether ex parte communications with the judge will be permitted. The order

may also state how the jury should be instructed. Generally the jury would be

told that the opinions of a court-appointed expert should be treated the same

as those of other expert witnesses—the opinions are entitled to only such

weight as is warranted by the witness’s knowledge, expertise, and preparation.

Judges sometimes appoint an expert to render assistance other than testifying at trial, such as analyzing and evaluating reports prepared by the parties’

experts or attorneys.

267 In such situations, ex parte communications regarding

matters of substance may be necessary but should be subjected to procedural

safeguards. Such safeguards might include (1) giving the parties notice of the

expert’s identity and precise function; (2) providing written instructions detailing the expert’s duties; and (3) requiring the expert to submit a written report or otherwise advising the parties of the substance of the advice given.268 Ex

parte communications are always suspect and should be allowed only in exceptional circumstances.

When the court is selecting an expert witness for appointment, the best

candidate is one whose fairness and expertise in the field cannot reasonably be

questioned and who can communicate effectively as a witness. The court

should make every effort to select a person acceptable to the litigants. First, the

parties should be asked to submit a list of proposed experts; they may be able,

with the assistance of their own experts, to agree on one or more candidates.

The court may also call on professional organizations and academic groups to

provide lists of qualified and available persons (though not delegating the selection to any such organization), giving the parties an opportunity to com266. See Cecil & Willging, supra note 261, at 59, 63.

267. See, e.g., Webster v. Sowders, 846 F.2d 1032, 1035, 1039 (6th Cir. 1988) (asbestos).

268. See Reilly v. United States, 863 F.2d 149, 158–59 (1st Cir. 1988); Schwarzer & Cecil,

supra note 199, at 62; Cecil & Willging, supra note 261, at 41 & nn.83–84.
§ 11.52 Manual for Complex Litigation, Fourth

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ment. In making appointments, judges must avoid even the appearance of patronage or favoritism.269

11.52 Special Masters

Federal Rule of Civil Procedure 53 authorizes judges to appoint special

masters to aid in handling pretrial and posttrial matters tried without a jury

“that cannot be addressed effectively and timely by an available district court

judge or magistrate judge of the district.”270 Reference to a special master must

be the exception and not the rule. The Supreme Court held in La Buy v. Howes

Leather Co., Inc.

271 that the general complexity of the litigation, the projected

length of trial, and the congestion of the court’s calendar do not constitute the

exceptional circumstances that would justify appointment of a trial-level special master. These considerations, however, do not preclude more limited references, such as those regarding resolution of pretrial or nondispositive matters,272 mediation of settlement negotiations (see section 13.13), or posttrial

implementation of a decree.273

Whether to appoint a special master involves largely the same considerations discussed in section 11.51 with respect to court-appointed experts and

technical advisors. Appointment of a magistrate judge makes it unnecessary to

worry about imposing extra expense274 on parties or about the question of

neutrality. It may be particularly difficult to appoint a completely disinterested

269. See 28 U.S.C. § 458 (West 2002).

270. Rule 53(a)(1)(C). For an examination of the changes in practices that documented a

basis for the rule change, see Thomas E. Willging, Laural L. Hooper, Marie Leary, Dean Miletich,

Robert Timothy Reagan, & John Shapard, Special Masters’ Incidence and Activity: Report to the

Judicial Conference’s Advisory Committee on Civil Rules and Its Subcommittee on Special

Masters (Federal Judicial Center 2000).

271. 352 U.S. 249, 259 (1957).

272. See In re Bituminous Coal Operators Ass’n, Inc., 949 F.2d 1165, 1168–69 (D.C. Cir.

1991) (improper to refer dispositive matters, but proper to refer pretrial preparation or calculation of damages); In re United States, 816 F.2d 1083, 1091 (6th Cir. 1987) (improper to refer

dispositive matters, proper to refer nondispositive matters); In re Armco, 770 F.2d 103 (8th Cir.

1985) (per curiam) (improper to refer trial on merits, though proper to refer all pretrial matters,

including dispositive motions). The court in Stauble, while making a similar distinction, noted

that the reference would not have violated Article III if the judge had afforded de novo review of

the special master’s determination. Stauble v. Warrob, Inc., 977 F.2d 690, 698 n.13 (1st Cir.

1992).

273. See Fed. R. Civ. P. 53(a)(1)(C) & (b)(2)(A).

274. See Fed. R. Civ. P. 53(a); Prudential Ins. Co. of Am. v. United States Gypsum Co., 991

F.2d 1080, 1085, 1087 (3d Cir. 1993) (disqualifying special master, in part because of availability

of magistrate judges).
Pretrial Procedures § 11.52

115

special master with no prior relationship to any of the parties, since special

masters are often practicing attorneys and tend to have substantial experience

with similar disputes. Rule 53(a)(2) requires that a master “not have a relationship to the parties, counsel, action, or court that would require disqualification of a judge under 28 U.S.C. § 445 unless the parties consent with the

court’s approval to appointment of a particular person after disclosure of any

potential grounds for disqualification.”

Also, appointment of a magistrate judge pursuant to statute may be appropriate where the purpose is to collect, assemble, and distill voluminous data

presented by the parties and where the primary qualifications are objectivity

and familiarity with evidentiary hearings rather than expertise in some technical field. Appointment of a special master to supervise discovery may be appropriate where the financial stakes justify imposing the expense on the parties

and where the amount of activity required would impose undue burdens on a

judge. It is generally preferable to appoint special masters with the parties’

consent, and either to permit the parties to agree on the selection or to make

the appointment from a list submitted by the parties. The clerk and deputy

clerks of court may not be appointed as special masters “unless there are special reasons requiring such appointment which are recited in the order of appointment.”275

Special masters have increasingly been appointed for their expertise in

particular fields, such as accounting, finance, science, and technology.276 Accordingly, the distinction between special masters under Federal Rule of Civil

Procedure 53 and court-appointed experts under Federal Rule of Evidence 706

has become blurred in the context of appointments to serve in nonjury trial

settings. The court may make an appointment under the latter rule without

Rule 53’s restrictions. Although Rule 706 speaks of a “witness,” it also specifically permits the appointed expert to make “findings.” Thus, when the

court is calling on a neutral for that person’s “scientific, technical, or other

specialized knowledge,” as contemplated by Federal Rule of Evidence 702, it

may consider making the appointment under Rule 706 even though the master

will not testify. Presumptively, however, a person appointed under Rule 706

would be subject to discovery and cross-examination; Rule 53 makes no provision for discovery or cross-examination of special masters, but the parties

have access to the special master’s report. Rule 53(g)(1), however, requires the

court to allow the parties “an opportunity to be heard” and allows the court to

275. 28 U.S.C. § 957 (West 2002).

276. For discussion of the roles played by special masters and magistrate judges, see e.g.,

FJC Study, Special Masters, supra note 270; Linda Silberman, Judicial Adjuncts Revisited: The

Proliferation of Ad Hoc Procedure, 137 U. Pa. L. Rev. 2131 (1989).
§ 11.52 Manual for Complex Litigation, Fourth

116

“receive evidence” before deciding whether to adopt, modify, reject, or resubmit a special master’s report.

In jury matters, amended Rule 53 eliminates any blurring of functions.

Appointment of a Rule 706 expert becomes the only option for bringing in an

independent expert to assist the jury. Any expert appointed under Rule 706 is,

of course, subject to discovery and cross-examination.

An order of reference to a special master should specify the scope of the

reference, the issues to be investigated, the circumstances under which ex parte

communication with the court or a party will be appropriate, the time and

format for delivering the master’s record of activities, the compensation, and

the delegated powers.277 Subject to the terms of that order, a special master may

take all appropriate measures to perform the special master’s duties,278 including requiring production of tangible evidence and examining witnesses under

oath. The special master may call parties to testify (see Rule 53(d)), and other

witnesses may be subpoenaed by the parties.279 Under Rule 53(b), the order of

reference may direct a special master to make findings of fact, but due process

requires that the findings be based on evidence presented at an adversarial

hearing. Unless otherwise directed by the order of reference, the special master

may evaluate and rule on the admissibility of evidence. Unlike a courtappointed expert, however, a special master is not authorized to conduct a private investigation into the matter referred. The order should also provide arrangements to ensure that the special master’s fees will be paid.

Ordinarily, the special master must produce a report on the matters submitted by the order of reference, including any findings of fact or conclusions

of law.280 The parties may stipulate that the special master’s findings of fact are

to be accepted as final, leaving only questions of law for review, which is on a

de novo basis.281 Otherwise, the court must decide de novo all objections to a

special master’s findings of fact.282 The judge should keep in mind that the special master’s findings may carry undue weight with the jury.

277. See Fed. R. Civ. P. 53(b).

278. Fed. R. Civ. P. 53(c).

279. Fed. R. Civ. P. 53(c) & (d).

280. Fed. R. Civ. P. 53(f).

281. Fed. R. Civ. P. 53(g)(4).

282. Fed. R. Civ. P. 53(g)(3).
Pretrial Procedures § 11.53

117

11.53 Magistrate Judges Under 28 U.S.C. § 636(b)(1)

Referrals may also be made to magistrate judges, pursuant to 28 U.S.C.

§ 636(b)(1), Federal Rules of Civil Procedure 53(f) and 72, and local rules283

(apart from referrals of supervision of pretrial proceedings as discussed in section 10.14). Like a special master, a magistrate judge acting under these provisions makes factual determinations based on evidence presented at an adversarial hearing and submits a disposition or recommended disposition, along

with proposed findings of fact when appropriate, by written report filed with

the court and served on the parties.284 The parties have no right to engage in

discovery from, or to cross-examine, the magistrate judge. Under Federal Rule

of Civil Procedure 72, the magistrate judge’s rulings on nondispositive matters

may, if objected to within ten days of service, be modified or set aside only if

“clearly erroneous or contrary to law.”285

On matters dispositive of a claim or defense, the magistrate judge’s recommended disposition is, on timely, specific, written objection by a party,286

subject to de novo determination by the district judge, who may, but need not,

take further evidence.287 This distinction is clarified by 28 U.S.C. § 636(b)(1),

which allows the designation of a magistrate judge only to provide proposed

findings of fact and recommendations for disposition of motions for injunctive

relief, judgment on the pleadings, summary judgment, dismissal of indictment,

suppression of evidence in a criminal case, class certification, dismissal for failure to state a claim, or involuntary dismissal.288 Section 636(b)(1)(A) allows

determination of any other pretrial matter subject to reconsideration only if

“clearly erroneous or contrary to law.” There is no explicit authority (as there

is in Rule 53(e)(4)) for the parties stipulating to be bound by the magistrate

judge’s findings. This situation must be distinguished from that in which a

magistrate judge acts as a district judge under 28 U.S.C. § 636(c).

In considering whether to make a referral to a magistrate judge, the court

must balance the advantages of obtaining the magistrate judge’s assistance

against the risk of delay from requests for review of the magistrate judge’s order, proposed findings, or recommendations.

283. See also Mag. Judges Div., Admin. Office of the U.S. Courts, A Constitutional Analysis

of Magistrate Judge Authority, 150 F.R.D. 247 (1993).

284. 28 U.S.C. § 636(b)(1)(C) (West 2002).

285. Fed. R. Civ. P. 72(a).

286. Even in the absence of an objection, the judge should review the report for “clear error.” Fed. R. Civ. P. 72 committee note.

287. Fed. R. Civ. P. 72(b) and committee note.

288. 28 U.S.C. § 636(b)(1)(B) (West 2002).
§ 11.6 Manual for Complex Litigation, Fourth

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11.54 Other Referrals

Other possible resources in complex litigation include referral to a private

or public technical agency, use of an advisory jury of experts in a nonjury case,

and consultation with a confidential advisor to the court.289 Caution is recommended in experimenting with such procedures—absent statutory authorization or a party’s stipulation—in cases in which, if the court of appeals finds

reversible error, a lengthy and costly retrial might be required. Referrals to

court-appointed experts, special masters, and magistrate judges authorized by

statute or rule are adequate in most cases to provide the needed assistance. The

judge should consider innovative uses of recognized procedures to make the

process more fair and efficient when complicated issues are involved, such as

appointing a team of experts to serve under Rule 706, but not to the extent of

displacing the parties’ right to a resolution of disputes through the adversary

process.290

11.6 Final Pretrial Conference/Preparation for Trial

.61 Date and Place of Trial 119

.62 Reevaluation of Jury Demands 120

.63 Structure of Trial 121

.631 Consolidation 121

.632 Separate Trials 122

.633 Special Verdicts and Interrogatories 123

.64 Procedures to Expedite Presentation of Evidence 124

.641 Statements of Facts and Evidence 124

.642 Pretrial Rulings on Objections 124

.643 Disclosure of and Objections to Digital Evidence and Illustrative Aids 126

.644 Limits on Evidence 127

.645 Use of Courtroom Technology to Facilitate Evidence Presentation 127

.65 Proposed Jury Instructions 128

.66 Briefs and Final Pretrial Motions 129

.67 Final Pretrial Order 129

The purposes of the final pretrial conference, explicated in Federal Rule of

Civil Procedure 16(a), are to “improv[e] the quality of the trial through more

thorough preparation” and to “facilitat[e] the settlement of the case.” These

ends take on special importance in complex litigation and are embodied in

Rule 16(d), which requires that

289. See Cecil & Willging, supra note 261, at 40–41.

290. For a discussion of the use of outside neutral persons in facilitating settlement, see

infra section 13.13.
Pretrial Procedures § 11.61

119

• the final pretrial conference be held as close to the time of trial as is

reasonable under the circumstances;

• the parties formulate a plan for trial, including a program for facilitating the admission of evidence; and

• the attorneys who will conduct the trial attend the conference.

The order setting the conference should specify the items to be taken up. It

should also maximize the utility of the conference by deciding summary judgment motions and (to the extent feasible) motions in limine well in advance

(see section 11.34, summary judgment). The judge should tailor preparation

for the final pretrial conference to accomplish the purposes of Rule 16. Essential agenda items include exchange and discussion of the following:291

• a final list identifying the witnesses to be called and the subject of their

testimony, including a designation of deposition excerpts to be read;

• copies of all proposed exhibits and visual aids, including illustrative

exhibits and computer-generated evidence;

• a list of all equipment and software to be used at trial, and suggestions

as to possible shared use of equipment and operators;

• proposed questions for voir dire;

• concise memoranda on important unresolved legal issues;

• nonargumentative statements of facts believed to be undisputed;

• proposed jury instructions, including any special instructions needed

regarding computerized evidence or equipment (see section 11.65);

• proposed verdict forms, including special verdicts or interrogatories;292

and

• in nonjury cases, proposed findings of fact and conclusions of law.293

11.61 Date and Place of Trial

Although civil trial dates are problematic in many courts because of criminal dockets, a trial date for complex litigation should be firm, given the number of people involved and the expense incurred in preparation. The trial date

needs to take into account the commitments of the court and counsel and

should permit an uninterrupted trial. The judge should advise counsel in advance that once the date is set, there will be no continuances. Some judges set a

291. For a comprehensive list of potential agenda items, see Litigation Manual, supra note

12, at 79–85.

292. See Fed. R. Civ. P. 49. See also infra sections 11.633, 12.451.

293. See Litigation Manual, supra note 12, app. A, at 188, 206–07 (Sample Form 9).
§ 11.62 Manual for Complex Litigation, Fourth

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deadline after which they will not permit partial settlements that might necessitate a continuance of the trial (see section 13.21).

Where litigation includes cases filed in other districts and transferred to

the court for coordinated or consolidated pretrial proceedings under 28 U.S.C.

§ 1407, those cases must be remanded at or before the conclusion of the pretrial proceedings to the districts from which they were transferred.294 Consider

whether to pursue alternatives that would allow a transferee judge to obtain

authority (e.g., by action of the parties, the transferor court, or the committee

on intercircuit assignments) to retain a role that is consistent with Lexecon. See

section 20.132. Venue motions that may have been deferred should be decided.

In referring cases back to the MDL Panel, it is helpful to indicate the nature

and expected duration of remaining discovery, the estimated time before the

case will be ready for trial, and the major rulings that, if not revised, will affect

further proceedings. The court can also make appropriate recommendations

for further proceedings. In most cases transferred under 28 U.S.C. § 1407,

substantially all discovery will be completed before remand. In some cases,

however, such as mass tort litigation, discovery regarding individual damages

may have been deferred and must be conducted in the transferor district after

remand. Section 20.133 has a fuller discussion of remand.

11.62 Reevaluation of Jury Demands

Although a general demand for a jury trial may have been made early in

the litigation,295 the final pretrial conference is an appropriate time to consider

whether the parties are entitled to a jury trial on particular issues and, if not,

whether those issues should be decided in a separate trial (which may be concurrent with the jury trial), decided by motion,296 or submitted to an advisory

jury.297 If both jury and nonjury issues are to be tried, the judge should determine whether Beacon Theatres, Inc. v. Westover298 requires that the jury issues

be decided first. Even if so, it is possible to hear evidence during the jury trial

on related nonjury issues, provided that the parties are later afforded opportunity to supplement the record with evidence relevant only to the nonjury issues

and that a decision on the nonjury issues is deferred until after the verdict has

been returned. In mass tort cases, some judges ask the parties to consider

whether to try liability and lump sum damage issues to the jury, leaving the

294. See Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998).

295. See Fed. R. Civ. P. 38.

296. See Fed. R. Civ. P. 39(a).

297. See Fed. R. Civ. P. 39(c).

298. 359 U.S. 500 (1959).
Pretrial Procedures § 11.631

121

resolution of individual damage claims to special agreed procedures (see section 22.93, mass tort litigation, trial).

11.63 Structure of Trial

.631 Consolidation 121

.632 Separate Trials 122

.633 Special Verdicts and Interrogatories 123

The judge should seek suggestions from counsel for approaches to structuring the trial that will improve the trial process. In addition to the devices

discussed below, consider trying one or more test cases, with appropriate provision concerning the estoppel effect of a judgment. The interplay of these

various devices can have a significant effect on the fair and efficient resolution

of complex litigation.299 In considering any of these devices, keep in mind the

devices’ potentially disparate impact on the parties (given the parties’ respective trial burdens and possibly unequal resources), their effect on the right to

trial by jury, the possibilities of settlement, and the interests of the court and

the public.

11.631 Consolidation300

Federal Rule of Civil Procedure 42(a) authorizes the judge to consolidate,

for trial or pretrial, actions pending in the same court involving common

questions of law or fact if it will avoid unnecessary cost or delay. Consolidation

may be for trial of the entire case or only for separable common issues. Moreover, it may be appropriate even if some issues or cases are to be tried before a

jury and others before the court; the same evidence must be presented only

once even though the judge may consider it in some of the cases and the jury

may consider it in others. Class actions may be consolidated with cases

brought by opt-outs or other individual plaintiffs. When this occurs, the judge

must ensure that counsel for parties in the non–class actions have a fair opportunity to participate in the presentation of evidence and arguments at trial,

particularly when their clients are primarily affected.

Whether consolidation is permissible or desirable depends largely on the

amount of common evidence among the cases. Unless common evidence predominates, consolidated trials may confuse the jury rather than promote efficiency. To avoid this problem, the judge may consider severing for a joint trial

those issues on which common evidence predominates, reserving noncommon

299. For an illustration, see In re Plywood Antitrust Litig., 655 F.2d 627 (5th Cir. 1981).

300. See also supra section 10.123 and infra section 22.54.
§ 11.632 Manual for Complex Litigation, Fourth

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issues for subsequent individual trials. For example, in mass tort litigation, liability issues could be consolidated for joint trial and damage issues reserved

for later individual trials. If most of the proof will be common but some evidence admissible in one case should not be heard in others, consider a multiple-jury format. However, cases with major conflicts between the basic trial

positions of parties should not be consolidated, at least not without ensuring

that no prejudice results. Consolidation is also inappropriate where its principal effect will be to magnify unnecessarily the dimensions of the litigation.301

11.632 Separate Trials

Whether the litigation involves a single case or many cases, severance of

certain issues for separate trial under Federal Rule of Civil Procedure 42(b) can

reduce the length of trial, particularly if the severed issue is dispositive of the

case, and can also improve comprehension of the issues and evidence. Severance may permit trial of an issue early in the litigation, which can affect settlement negotiations as well as the scope of discovery. The court should balance

the advantages of separate trials, however, against the potential for increased

cost, delay (including delay in reaching settlement), and inconvenience, particularly if the same witnesses may be needed to testify at both trials. There is

also the potential for unfairness if the result is to prevent a litigant from presenting a coherent picture to the trier of fact.302

The court should take care when deciding which issues may and should be

severed for separate trial and the order in which to try them. Under Beacon

Theatres, the right to trial by jury on legal claims may not (except under “the

most imperative circumstances”) be lost by a prior determination of equitable

claims; this may require trial of legal claims before deciding related claims in

equity, or trying them concurrently.303 In addition, issues for trial should not

be severed if they are so intertwined that they cannot fairly be adjudicated in

isolation304 or when severance would create a risk of inconsistent adjudication.

Generally, when issues are severed for separate trials, they should be tried

before the same jury unless they are entirely unrelated. Severance may take the

form of having evidence on discrete issues presented sequentially, with the jury

returning a verdict on an issue before the trial moves on to the next issue (see

section 12.34).

301. See In re Repetitive Stress Injury Litig., 11 F.3d 368 (2d Cir. 1993).

302. See In re Bendectin Litig., 857 F.2d 290 (6th Cir. 1988) (severed trial creates risk of

“sterile or laboratory atmosphere”).

303. See Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510–11 (1959).

304. See Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494, 500 (1931) (antitrust).
Pretrial Procedures § 11.633

123

11.633 Special Verdicts and Interrogatories

Special verdict forms or interrogatories accompanying a general verdict

form may help the jury focus on the issues, reduce the length and complexity

of the instructions, and minimize the need for, or scope of, retrial in the event

of reversible error.305 They can provide posttrial guidance in conducting additional discovery, ruling on nonjury issues (possibly with some issues presented

to the jury while others are reserved for decision by the court) or motions for

summary judgment,306 trying remaining issues, or negotiating settlement.

Having counsel submit proposed verdict forms along with jury instructions at

the pretrial conference will help focus counsel’s attention on the specific issues

in dispute and will help inform the court.

Special verdict forms and interrogatories can help the jury understand and

decide the issues while minimizing the risk of inconsistent verdicts. It is best

for the court to arrange the questions on the form in a logical and comprehensible manner; for example, asking questions common to several causes of action or defenses only once and grouping related questions together. Where the

legal standards applicable to similar claims or defenses differ (for example,

where different laws may apply to different parties), careful drafting of questions on a special verdict form can ease problems that consolidation could otherwise cause. Issues not in dispute should be excluded.

Special verdict forms may also be used in connection with a procedure by

which issues are submitted to the jury sequentially. The jury may be asked to

consider a threshold or dispositive issue and return its verdict before submission of other issues, which may be rendered moot by the verdict.

Some judges and attorneys are reluctant to use these devices out of fear of

inconsistent verdicts and jury confusion, but these problems can be avoided by

good drafting. Parties’ views on the desirability of special verdict forms or interrogatories will differ, however, if these devices are seen as advantageous to

one side; the court will have to evaluate the arguments for and against them in

the particular case.

The court may also suggest that the parties stipulate to accept a majority

verdict if the jury is not unanimous307 or to waive a verdict and accept a decision by the judge based on the trial evidence. Although such stipulations may

be obtained after the case has gone to trial, the parties may be more amenable

before trial begins.

305. Fed. R. Civ. P. 49. See infra section 12.451.

306. See In re Plywood Antitrust Litig., 655 F.2d 627 (5th Cir. 1981) (special verdicts following a joint trial of all cases (including “opt-out” cases) on all issues except individual

amounts of damages provided foundation for summary judgment motions regarding damages).

307. See Fed. R. Civ. P. 48.
§ 11.642 Manual for Complex Litigation, Fourth

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11.64 Procedures to Expedite Presentation of Evidence

.641 Statements of Facts and Evidence 124

.642 Pretrial Rulings on Objections 124

.643 Disclosure of and Objections to Digital Evidence and Illustrative Aids 126

.644 Limits on Evidence 127

.645 Use of Courtroom Technology to Facilitate Evidence Presentation 127

The principal purpose of the final pretrial conference is the “formulat[ion

of] a plan for trial, including a program for facilitating the admission of evidence.”308 The plan should eliminate, to the extent possible, irrelevant, immaterial, cumulative, and redundant evidence, and should further the clear and

efficient presentation of evidence. Essential to accomplishing this purpose is a

final definition of the issues to be tried. The process of defining and narrowing

issues begun at the initial conference and discussed in section 11.3 should

reach completion at the final pretrial conference, which can then turn to the

proof the parties expect to offer at trial. Fair, effective, and innovative ways of

presenting that proof may include presenting voluminous data through summaries or sampling (see sections 11.492–11.493); presenting summaries of

deposition testimony; and presenting expert testimony by reports on videotape

or by videoconferencing.309 Other techniques to expedite the presentation of

evidence are discussed below and in section 12.3.

308. Fed. R. Civ. P. 16(d).

309. Effective Use of Courtroom Technology, supra note 85, at 168–74, discusses videoconferencing witness testimony.

11.641 Statements of Facts and Evidence

One method used by judges to ensure adequate preparation, streamline the

evidence, and prevent unfair surprise is to have each party prepare and submit

a statement listing the facts it intends to establish at trial and the supporting

evidence. The statement should be informative and complete, but free of argument and conclusions. If adopted, evidence not included in the statement

should not be permitted at trial. Exchanging such statements may help narrow

factual disputes and expedite the trial (also see generally section 11.47). Such

statements should not be required routinely, however, because the substantial

amount of work required for their preparation may outweigh the benefits.

11.642 Pretrial Rulings on Objections

Judges should strive to resolve objections to evidence and cure technical

defects (such as lack of foundation) before trial. Where the admissibility of

evidence turns on other facts, the facts should be established where possible
Pretrial Procedures § 11.642

125

before trial—by stipulation if there is no basis for serious dispute (see section

11.445). Parties should be required, to the extent feasible, to raise their objections to admissibility in advance of trial (usually by motions in limine), with all

other objections (except those based on relevance or prejudice) deemed

waived. Under Federal Rule of Civil Procedure 26(a)(3), objections (other than

under Federal Rule of Evidence 402 or 403) to the admissibility of proposed

exhibits disclosed as required by Rule 26(a)(3)(C) or to the use of depositions

designated as required by Rule 26(a)(3)(B) are waived unless made within

fourteen days of disclosure or excused by the court. Pretrial rulings on admissibility save time at trial and may enable parties to overcome technical objections by eliminating inadmissible material, obtaining alternative sources of

proof, or presenting necessary foundation evidence. In addition, such rulings

may narrow the issues and enable counsel to plan more effectively for trial.

Receiving exhibits into the record during the final pretrial conference can also

save time by avoiding the need for formal offers at trial.

Opposing counsel may indicate their objections to documentary evidence

in a response to the pretrial listing of such evidence by opposing counsel. Objections to deposition testimony can be noted in the margin of the deposition

where the objectionable matter appears, and the court’s ruling can be indicated

in the same place. Objections to other types of evidence can be made by means

of a separate motion or other written requests describing the nature of the

proposed evidence and the grounds of the objection.

The court should weigh the benefits of advance rulings on objections

against the potential for wasteful pretrial efforts by the court and counsel. For

example, ruling on objections in a deposition may require the judge to read it

before trial, despite the fact that the deposition or the objections to it may be

partially or entirely mooted or withdrawn because of developments during

trial. Some judges prefer to make pretrial rulings only on those objections that

counsel consider sufficiently important, either because of their significance to

the outcome of the case or because of their effect on the scope or form of other

evidence.

Pretrial rulings are also advisable with respect to proffered expert testimony that may be pivotal. The judge may rule on the basis of written submissions, but an evidentiary hearing under Federal Rule of Evidence 104(a) may

be necessary to determine whether the evidence is admissible under Rules 702

and 703.310

310. The subject is discussed at length in Schwarzer & Cecil, supra note 199, at 53–54. See

also infra sections 23.2, 23.35.
§ 11.643 Manual for Complex Litigation, Fourth

126

11.643 Disclosure of and Objections to Digital Evidence and Illustrative

Aids

The court should consider requiring disclosure of all digital materials that

will be shown to the jury. The timing of the disclosure may differ for evidentiary exhibits, illustrative aids, and expert materials. The timing may also vary

according to the type of digital materials (e.g., digital photos versus animations) and whether they will be used in opening statements, direct examination, cross-examination, or closing arguments.311 Such disclosure will help expedite the pretrial and trial processes, assist the court in making pretrial and

otherwise timely rulings on admissibility, and minimize surprising the court

and parties.

Disclosure should ordinarily be in the same format to be used at trial. For

example, paper copies may not adequately represent documents and photos to

be presented with a computer because the paper copies cannot reveal any

sound, motion, or alteration that may be involved. Computer animations and

simulations should be disclosed in the format to be used at trial, which is typically digital or analog videotape; in addition, however, the opposing party

needs the computer files that constitute the actual animation or simulation in

order to expose underlying assumptions and construct an effective crossexamination.312 The disclosure of digital materials raises a number of issues

that must be resolved during pretrial, or at least before the materials are shown

to the jury.313 For example, the phrase “digital alteration” means different

things to different people, so some ground rules are needed about the alteration of photographs, documents, videotapes, and other materials at a fairly

early point in the pretrial proceedings.314 The planned use of an animation or

simulation also raises issues for pretrial consideration, including the treatment

of any narration (possibly including hearsay statements), the need for limiting

instructions (such as to clarify the specific purpose for which the evidence is

being offered), the authenticity and reliability of the underlying data, and the

assumptions on which the exhibit is based.315 It may be advisable for a party to

obtain at least a preliminary ruling or guidance concerning the admissibility of

an animation or simulation (or any other expensive and elaborate exhibit) be311. See Effective Use of Courtroom Technology, supra note 85, at 105–06, and the additional pages referenced therein.

312. Id. at 113–14.

313. For a discussion of possible objections to digital evidentiary exhibits and illustrative

aids, see id. at 180–209.

314. See id. at 106–13.

315. See Joseph, supra note 172, at 890–93; Effective Use of Courtroom Technology, supra

note 85, at 205–09.
Pretrial Procedures § 11.645

127

fore substantial expense is incurred in its preparation (e.g., at the storyboard

stage of a computer animation).

11.644 Limits on Evidence

Some attorneys understand the advantages of selectively presenting evidence, but others leave no stone unturned, resulting in trials of excessive length

unless limited by the judge. Where the parties’ pretrial estimates suggest that

trial will be excessively long, the judge should discuss the possibility of voluntary, self-imposed limits with the lawyers, perhaps suggesting exhibits or testimony that could be eliminated and inviting further suggestions.

If this approach is not productive, consider imposing limits in some form,

using the authority under Federal Rule of Civil Procedure 16(c)(4) and Federal

Rules of Evidence 403 and 611. Announcing an intention to impose such limits

may suffice to motivate counsel to exercise the discipline necessary to expedite

the case. Before imposing limits, the judge should be sufficiently familiar with

the litigation to form a reasonable judgment about the time necessary for trial

and the scope of the necessary evidence.

Limits may be imposed in a variety of ways:

• by limiting the number of witnesses or exhibits to be offered on a particular issue or in the aggregate;

• by controlling the length of examination and cross-examination of

particular witnesses;

• by limiting the total time allowed to each side for all direct and crossexamination; and

• by narrowing issues, by order or stipulation.

Limits need not hamper counsel’s ability to present their case; indeed,

counsel often welcome them. At the same time, limits should not jeopardize

the fairness of the trial. In designing limits, consider the respective evidentiary

burdens of the parties. Generally, limits are best imposed before trial begins so

that the parties can plan accordingly, but the need for limits may not become

apparent until trial is underway. Limits must be firm so that one side cannot

take advantage of the other, but it is sometimes necessary to extend the limits.

If a party requests, the judge may advise the jury of any limits imposed in order

to prevent unwarranted inferences from a party’s failure to call all possible

witnesses.

11.645 Use of Courtroom Technology to Facilitate Evidence

Presentation

Trials in a technologically advanced courtroom usually move faster and

take less time than a traditional trial. This faster pace puts a premium on law-
§ 11.65 Manual for Complex Litigation, Fourth

128

yers’ preparation and a clear and well-defined case theory. All exhibits must be

identified and organized before trial so that digital files can be assembled and

stored on a laptop computer to be taken to court. Most of the illustrative aids

to be used with the opening statement and the direct examination of witnesses

need to be prepared before trial so that they are consistent with and support

the case theory. Judges may more confidently impose time limits on lawyers

because technology assists in making presentations move along more quickly

and predictably.

Each piece of equipment should contribute to efficiency. For example,

presenting an exhibit with the help of an evidence camera or laptop computer

eliminates the sometimes-lengthy pauses for approaching the bench, handing

copies of exhibits to opposing counsel, and passing the exhibit hand-to-hand

among the jurors. Documents on a CD or a laptop can be accessed and displayed almost instantly, resulting in time savings that can be quite significant

in trials involving a significant number of documents. Computer presentations

can also be accessed very quickly, as well as altered on the spot, if necessary, in

case of an objection. Real-time transcription frees judges from detailed note

taking and enables them to focus on what is taking place with the witnesses,

lawyers, and jurors. In the event of a contested objection, it also allows the

judge to look at the pending question or just-uttered answer to see exactly

what was said. Videoconferencing gives judges the flexibility to conduct pretrial hearings from remote locations or to schedule the testimony of witnesses

at remote locations to fit the trial schedule.

11.65 Proposed Jury Instructions

The final pretrial conference should complete the pretrial process of identifying and narrowing issues. To that end, the parties should submit and exchange proposed substantive jury instructions (both preliminary and final)

before the conference; some judges require counsel to confer and submit a single set of those instructions on which there is no disagreement.316 This process

compels counsel to analyze the elements of their claims and defenses and the

supporting and opposing evidence. Many judges then use the parties’ submissions as a starting point for preparing their own substantive instructions and

find that they are generally accepted by counsel with little argument. Proposed

instructions can be submitted electronically to enable the judge to make revisions on chambers computers. This also helps those judges who want to pre316. For more on jury instructions, see infra section 12.43.
Pretrial Procedures § 11.67

129

sent preliminary and final jury instructions on monitors or a projection screen.

Many judges provide their own standard instructions to counsel for comment.

11.66 Briefs and Final Pretrial Motions

If legal issues remain to be resolved, counsel should submit briefs before

the final pretrial conference. Early submission will assist the court and counsel

in preparing for the conference and make the conference more productive.

With discovery complete and critical evidentiary rulings made, some additional issues may be ready for summary judgment. Motions for summary

judgment should be presented and decided no later than the final conference,

absent special circumstances. Deferring such motions and their resolution to

the eve of trial may cause unnecessary expense and inconvenience to counsel,

witnesses, jurors, and the court, and may interfere with trial preparation.

11.67 Final Pretrial Order317

At the conclusion of the final pretrial conference, the judge should enter an

order reciting all actions taken and rulings made, whether at the conference or

earlier. The order should provide that it will govern the conduct of the trial

and will not be modified except “to prevent manifest injustice.”318

Below are some of the things that should be stated in the order:

• the starting date of the trial and the schedule to be followed;

• the issues to be tried;

• if separate trials are to be held, the issues to be tried at the initial trial;

• the witnesses to be called and the exhibits to be offered by each side

(other than for impeachment);

• whether additional undisclosed or other specified evidence is precluded;319

• which objections are to be deemed waived;320

• procedures for consolidation or severance or transfer of cases;

• procedures for the presentation of testimony and exhibits;

• procedures regarding the use of technology at trial; and

• other housekeeping matters to expedite the trial.

317. See infra section 40.6.

318. Fed. R. Civ. P. 16(e).

319. Fed. R. Civ. P. 26(a)(3).

320. Id.
§ 11.67 Manual for Complex Litigation, Fourth

130

No single format can be prescribed for a final pretrial order that will be

suitable for all complex litigation. The judge and attorneys must tailor the trial

according to the circumstances of the specific litigation.
131

12. Trial

.1 Administration 132

.11 Trial Schedule 132

.12 Courthouse Facilities 133

.13 Managing Exhibits 134

.14 Transcripts 135

.15 Conferences During Trial 135

.2 Conduct of Trial 136

.21 Opening Statements 136

.22 Special Procedures for Multiparty Cases 137

.23 Advance Notice of Evidence and Order of Proof/Preclusion Orders 138

.24 The Judge’s Role 139

.3 Presentation of Evidence 139

.31 Glossaries/Indexes/Demonstrative Aids 140

.32 Use of Exhibits 141

.33 Depositions 143

.331 Summaries 143

.332 Editing, Designations, and Extracts 143

.333 Presentation/Videotaped Depositions 144

.334 Alternative Means of Presenting Testimony 145

.34 Sequencing of Evidence and Arguments 146

.35 Judicial Control/Time Limits 147

.4 Jury Trials 150

.41 Impaneling the Jury 150

.411 Size of the Venire and Panel 150

.412 Voir Dire 151

.413 Peremptory Challenges 152

.42 Juror Note Taking/Notebooks/Questions 152

.421 Note Taking 152

.422 Juror Notebooks 153

.423 Juror Questions 153

.43 Jury Instructions 154

.431 General Principles 154

.432 Preliminary Instructions 154

.433 Interim and Limiting Instructions 156

.434 Final Instructions 156

.435 Jurors’ Use of Exhibits During Deliberations 158

.436 Supplemental Instructions and Readbacks 158

.44 Avoiding Mistrial 159

.45 Verdicts 160

.451 Special Verdicts and General Verdicts with Interrogatories 160

.452 Judgment as a Matter of Law 162

.453 Return of Verdict 163

.5 Nonjury Trials 164

.51 Adopted Prepared Statements of Direct Testimony 164

.52 Findings of Fact and Conclusions of Law 165

.53 Procedures When Combined with Jury Trial 166

.6 Inability of Judge to Proceed 166

Judicial management can reduce complexity, cost, and trial time, and can

improve the quality of the trial. Its effectiveness depends on the design and
§ 12.11 Manual for Complex Litigation, Fourth

132

implementation of flexible and creative plans that take into account the specific needs of particular litigation and permit the attorneys to try their case in

an orderly fashion.

Although judicial management is equally important in civil and criminal

litigation, the two frequently pose different problems and considerations. This

section deals with civil trials.

12.1 Administration

.11 Trial Schedule 132

.12 Courthouse Facilities 133

.13 Managing Exhibits 134

.14 Transcripts 135

.15 Conferences During Trial 135

12.11 Trial Schedule

A trial schedule is essential to the orderly conduct of a trial. The schedule

may, but need not, limit the length of the trial itself or the time allotted to each

side for examination and cross-examination (see section 12.35). Whether or

not it imposes time limits, the schedule should specify the days of the week and

the hours each day that the trial will be held, as well as holidays and other recess days (such as for a weekly motions day). It is appropriate to set the trial

schedule only after consultation with counsel and after making appropriate

accommodations for other time demands of the participants. The schedule

ordinarily should be modified only in urgent situations. Very lengthy trials

may require periodic review and adjustment of the schedule.

Adherence to the schedule requires all trial participants to make appropriate arrangements for their other activities. Jurors should be informed of the

schedule at the time of voir dire; any who are unable to commit to it should be

excused, if possible. The judge should inform them of any changes in the trial

schedule and advise them of the trial’s progress so that they can alter their own

arrangements. If unforeseen events arise during a trial affecting a juror’s availability, accepting minor delays is generally preferable to losing a juror who may

later be needed for a verdict.

All trial participants should be punctual and prepared to proceed on

schedule. To minimize interruptions, attorneys may be permitted to enter and

leave the courtroom discretely during the proceedings. Informing the jury will

avoid any perception of discourtesy.

To expedite the trial and avoid keeping the jury waiting, it is advisable to

devote the trial day to the uninterrupted presentation of evidence. Objections,

motions, and other matters that may interrupt generally should be raised at a

time set aside for the purpose, before the jury arrives or after it leaves for the
Trial § 12.12

133

day. Any matter that must be raised during the presentation of evidence should

be stated briefly without argument and ruled on promptly. If an objection is

too complex for an immediate ruling, consider deferring the matter until it can

be resolved without taking the jury’s time, and proceeding with the presentation of evidence, possibly directing counsel to pursue a different line of questioning for the moment. In managing the trial, the judge should not hesitate to

use the authority of Federal Rule of Evidence 611(a) to “exercise reasonable

control over the mode and order of interrogating witnesses and presenting

evidence.”

Judges employ different approaches to the scheduling of trial:

• Six-day week. An extended trial week can expedite a lengthy trial, but

may take too great a toll on trial participants and leave insufficient

time for other activities.

• Four-and-a-half-day week. With this commonly used schedule, one

half day each week is reserved for administrative matters, hearings

outside the presence of the jury, and other nontrial matters.

• Short-day schedule. Holding trial from 9 a.m. to noon for a short day

or from 8 a.m. to 2 p.m. for a longer day permits jurors time for their

personal commitments during the trial (which can reduce requests to

be excused) and allows the court and counsel substantial time to keep

up with other work.

12.12 Courthouse Facilities

A trial with a large number of attorneys, parties, witnesses, exhibits, and

documents requires advance planning for appropriate accommodations. Such

a trial may require the following:

• a larger courtroom, in the courthouse or elsewhere;

• a courtroom that is technologically equipped;

• installation of case-specific technology in the courtroom for the case at

hand;

• physical modifications to the courtroom, such as additional space for

counsel, parties, files, exhibits, or persons whose presence may be

needed, such as experts or consultants;

• jury accommodations, particularly in a lengthy trial;

• witness and attorney conference rooms; and

• courtroom security and access during nontrial hours.

The judge should alert those responsible for courthouse facilities of the

trial needs as far in advance as possible. Allowing the parties access before trial

to the courtroom and other areas as necessary helps them to prepare and to
§ 12.13 Manual for Complex Litigation, Fourth

134

advise the court of potential problems. Preparation is particularly important

(and may require more time and effort than usual) if attorneys plan to bring

evidence presentation equipment into a courtroom that is not technologically

advanced or to supplement the court-provided equipment.321 Most courts

designate court personnel with whom the parties may coordinate these activities.

12.13 Managing Exhibits

Trial efficiency increases if each document or other item to be offered in

evidence or used at trial (other than for impeachment) is

• premarked with an identification number, preferably in advance of

trial but at least one day before it is to be offered or referred to at trial

(preferably a single identification designation should be used for pretrial discovery and trial) (see section 11.441)—the numbering system

should accommodate and differentiate between evidentiary exhibits

and illustrative aids;322

• listed on the form used by the court to record such evidence—

counsel should obtain in advance of trial copies of the court’s form or,

subject to the judge’s approval, create a form for use in the particular

case;

• made available to opposing counsel and the court before trial begins;

• copied, enlarged, or imaged323 as necessary for use at trial; and

• redacted, if lengthy, to eliminate irrelevant matter.

As discussed in section 11.64, the judge should consider requiring pretrial

disclosure of proposed exhibits and objections thereto, and ruling at that time

on admissibility to the extent feasible. The following procedures expedite the

trial and help avoid interruptions:

• admitting into evidence exhibits not objected to, or to which pretrial

objections were overruled, without formal offer and ruling;

• issuing pretrial rulings on objections to evidence—this should preclude the parties from renewing the offer or objection at trial, absent a

substantial basis for reconsideration;324

321. The use of technology at trial is discussed in infra section 12.3; see also Effective Use of

Courtroom Technology, supra note 85, at 1–59, 137–216.

322. Id. at 123–28.

323. Imaging of documents for computerized storage and retrieval is discussed in supra

section 11.444.
Trial § 12.15

135

• ruling on objections made at trial from the bench without argument,

deferring any necessary argument to the next scheduled recess, and

having counsel proceed with other matters (see section 12.15); and

• alternatively, permitting attorneys not needed in the courtroom to

present objections and arguments to a magistrate judge while the trial

is proceeding, and receiving unresolved objections, along with the

magistrate judge’s summary of the arguments, for resolution after the

jury has been excused.325

12.14 Transcripts

The benefits of expedited, daily, or hourly transcripts should be balanced

against the costs they add to the litigation. Ultimately, the decision whether to

incur the extra costs of such transcripts is for counsel. Under 28 U.S.C.

§ 1920(2), the court may tax as costs “fees of the court reporter for all or any

part of the stenographic transcript necessarily obtained for use in the case.”

Courts do not ordinarily include in taxable costs the additional fees for expedited or daily transcripts.326

Having a transcript available can speed readbacks requested by the jury

during deliberations, but the transcript, if given to the jury, may overshadow

the jurors’ mental impression of witness demeanor and credibility. Many

judges advise jurors at the outset of the trial to be prepared to rely on their recollection rather than a transcript.

Real-time court reporting permits transcription on a monitor as the verbal

exchange takes place. The more common practice is to provide a monitor only

for the judge, but monitors may be provided in other locations in the courtroom327 (e.g., counsel tables).

324. Counsel should, however, consult local law to determine whether renewal of the objection is required to prevent waiver. See United States v. Rutkowski, 814 F.2d 594, 598 (11th

Cir. 1987).

325. See Harry M. Reasoner & Betty R. Owens, Innovative Judicial Techniques in Managing

Complex Litigation, 19 Fed. Litig. Guide 603, 605–06 (1989) (discussing ETSI Pipeline Project v.

Burlington N., Inc., No. B-84-979-CA (E.D. Tex.)).

326. See 10 Wright et al., supra note 101, § 2677 and cases cited therein.

327. For further discussion of this technology, see Effective Use of Courtroom Technology,

supra note 85, at 29–32 and 164–68.

12.15 Conferences During Trial

The court should consider scheduling a conference with counsel at the end

of each trial day, after the jury has been excused. The conference may be brief,
§ 12.21 Manual for Complex Litigation, Fourth

136

but should generally be on the record to avoid later misunderstandings. Such a

conference helps avoid bench conferences and other trial interruptions. It can

be used to plan the next day’s proceedings and to fix the order of witnesses and

exhibits, avoiding surprises and ensuring that the parties will not run out of

witnesses. Counsel can raise anticipated problems, and the judge may hear offers of proof and arguments. The judge may, in light of other evidence previously presented, determine that further evidence on a point would be cumulative. In large litigation, attorneys working on the case but not directly engaged

in the courtroom can prepare motions for consideration at the conference. The

judge can provide guidance to attorneys without the stigma of courtroom admonitions, remind them, when necessary, of appropriate standards of conduct,

and cool antagonism generated in the heat of trial. A short conference before

the jury arrives in the morning can address last-minute changes in the order of

witnesses or exhibits or follow up on matters raised at the previous day’s conference.

12.2 Conduct of Trial

.21 Opening Statements 136

.22 Special Procedures for Multiparty Cases 137

.23 Advance Notice of Evidence and Order of Proof/Preclusion Orders 138

.24 The Judge’s Role 139

12.21 Opening Statements

Opening statements are of particular importance in complex litigation. To

maximize their utility, consider some of the following points:

• the effectiveness of opening statements is often enhanced if preceded

by preliminary instructions from the judge outlining the principal issues in the case;

• opening statements should be brief—perhaps subject to a time limit;

• it may be beneficial to set ground rules in advance for dealing with

sensitive issues, such as punitive damages and evidence that may yet be

ruled inadmissible;

• in long trials, it may be useful to allow each side time to make supplementary opening statements during trial to help the jury understand

evidence as it is presented;

• it is helpful to set rules for the use of charts and other demonstrative

aids not then in evidence—the court should encourage the use of such

aids at this stage to aid jury comprehension, but should give opposing

counsel an opportunity to review and object to them in advance of

trial;
Trial § 12.22

137

• it is best to review all computer-driven graphics (particularly those

with motion or sound) to be used in opening statements;328

• in multiparty cases, a decision should be made whether to permit each

party to present an opening statement to establish its separate identity

with the jury and, if this is the case, how to minimize repetition and

limit time; and

• opening statements in nonjury cases are still useful in informing the

court of each party’s contentions and proposed order of proof, but

they may be brief.

328. See id. at 153–64.

12.22 Special Procedures for Multiparty Cases

Appropriate procedures to minimize delay and confusion from the proliferation of counsel in multiparty cases can include the following:

• assigning primary responsibility for the conduct of trial to a limited

number of attorneys, either by formal designation of trial counsel (see

section 10.22) or by encouraging informal arrangement among the

attorneys, taking into account legitimate needs for individual representation of parties;

• in cases in which the court will award or apportion attorneys’ fees,

overseeing the arrangements for trial preparation, clarifying the extent

to which attorneys in subsidiary roles will be entitled to compensation,

and ensuring that attorneys will not claim compensation for time unnecessarily spent at trial (see section 14.213);

• providing that objections made by one party will be deemed made by

all similarly situated parties unless expressly disclaimed;

• permitting other counsel to add further grounds of objection, again on

behalf of all similarly situated parties unless disclaimed;

• minimizing repeated objections by ordering that objections to a particular line of examination will be deemed “continuing” until its completion, without the need for further objection unless new grounds

arise as the examination proceeds; and

• in cases alleging collusion or conspiracy, allowing counsel reasonable

leeway to demonstrate their independence from one another and, if

requested, giving cautionary instructions.
§ 12.23 Manual for Complex Litigation, Fourth

138

12.23 Advance Notice of Evidence and Order of

Proof/Preclusion Orders

Counsel should exchange lists (with copies if not previously supplied) for

each trial day indicating the order in which expected witnesses and exhibits

will be called or offered. The lists should identify those portions of depositions

to be read. The court should specify the amount of advance notice required,

balancing opposing counsel’s need for time to prepare against the possibility

that intervening developments will require changes. Some judges require a

tentative listing of the order of witnesses and exhibits a week or more in advance, with instructions to communicate changes as soon as known, and give a

final list at a conference at the close of the preceding day.

Absent unusual circumstances, counsel should also indicate in advance

when adverse parties or their employees will be called to testify. Counsel

should try to accommodate personal and business conflicts and, to avoid surprise and possible embarrassment, not call on the opponent to produce a person without warning. If numerous employees are called, the judge should require counsel to order them so as to avoid disrupting the adversary’s affairs

unnecessarily. When plaintiffs call significant defense witnesses, consider permitting defendants to offer their case on redirect examination. The court can

encourage counsel for the adverse party, upon sufficient advance notice, to

arrange for the presence of witnesses under the party’s control at the agreed-on

time without the need for a subpoena (and even if not subject to subpoena).

Ordinarily, it is best when witnesses, whether or not subpoenaed, are allowed

to report on timely request rather than remain in continuous attendance.

If a party will not make available an employee who is beyond the court’s

subpoena power, any party may offer that witness’s deposition for any purpose

“unless it appears that the absence of the witness was procured by the party

offering the deposition.”329 Though the court probably lacks authority to compel the appearance, it may encourage cooperation by precluding the uncooperative party from later calling such a witness. The court may similarly preclude witnesses who have earlier successfully resisted testifying for the opposing side on privilege or other grounds; an effective procedure is to enter an

order requiring witnesses to elect between testifying or asserting a privilege at

least forty-five days prior to trial.

329. Fed. R. Civ. P. 32(a)(3)(B).
Trial § 12.3

139

12.24 The Judge’s Role

This section sets out general principles relating to the judge’s role at trial;

for specific actions the judge may take to control the presentation of evidence

at trial, see section 12.35.

Judges can control the courtroom and proceedings without frustrating the

adversary process, and still remain humane and considerate. Such control provides the parties, counsel, and jurors with prompt, firm, and fair rulings. It

keeps the trial moving in an orderly and expeditious fashion, bars cumulative

and unnecessary evidence, and holds all participants to high professional standards (see section 12.35 for discussion of judicial control of time and proof). It

also helps reduce the stress and tension of a long trial.

Counsel appreciate a judge’s sensitivity to counsel’s rights in the adversarial process to employ accepted strategies and tactics that serve their clients’ interests. Counsel should understand courtroom procedures, such as the location from which to examine witnesses and the mechanics for submitting exhibits to witnesses, the clerk, or the jury. Written guidelines may be helpful,

particularly to attorneys unfamiliar with local customs.

In jury trials, judicial restraint in questioning witnesses minimizes both the

appearance of partiality and the disruption of counsel’s presentation. The

court should generally refrain from asking questions until counsel have

finished their examination and even then limit questions to matters requiring

clarification. See section 12.35.

12.3 Presentation of Evidence

.31 Glossaries/Indexes/Demonstrative Aids 140

.32 Use of Exhibits 141

.33 Depositions 143

.331 Summaries 143

.332 Editing, Designations, and Extracts 143

.333 Presentation/Videotaped Depositions 144

.334 Alternative Means of Presenting Testimony 145

.34 Sequencing of Evidence and Arguments 146

.35 Judicial Control/Time Limits 147

Although presentation of evidence is normally controlled by counsel’s

strategies and tactics, complex litigation presents other concerns, primarily

jury comprehension and the length of the trial. These are not unrelated: A

shorter trial promotes jury comprehension, and effective presentation of evidence saves time. Moreover, many jurors expect information to be presented

succinctly, even where it deals with complex matters.
§ 12.31 Manual for Complex Litigation, Fourth

140

The judge should encourage or even direct the use of techniques to facilitate comprehension and expedition—primarily simplification of facts and evidence, use of plain language, and use of visual and other aids. Some techniques

are time-tested; others are more innovative, but can improve the trial process

without risking error.

12.31 Glossaries/Indexes/Demonstrative Aids

Aids that organize massive quantities of evidence and familiarize jurors

with the relevant vocabulary can significantly enhance jury comprehension.

Such aids include glossaries of important terms, names, dates, and events; informative indexes of exhibits to assist in identification and retrieval; and time

lines of important events in the case. To the extent feasible, the judge should

encourage or direct the parties to develop glossaries, indexes, and time lines as

joint exhibits. They may be prepared using the procedure suggested for developing statements of agreed and disputed facts (see section 11.471); if necessary,

the court can refer disputes to a magistrate judge. Stipulated facts should be

presented in the form of a logically organized statement.

Jurors understand better and remember more when information is presented both visually and verbally. Graphics, such as charts and diagrams, are

common demonstrative aids.330 Demonstrative evidence may be admitted,

whatever its source, if it will help the trier of fact understand other evidence;331

however, the court should prohibit misleading representations, such as physical representation of data (e.g., the area occupied on a chart) that is disproportionate to the ratio of the numbers represented, distorted representation of

data (e.g., representing one-dimensional data by three-dimensional bars),

showing amounts of money in nonconstant dollars, or graphs taking figures

out of context or using different scales that may distort large or small differences in data.332 The judge should try to rectify such problems pretrial.

330. See supra section 12.21 on the use of demonstrative aids during opening statements

and Effective Use of Courtroom Technology, supra note 85, at 137, on computer-generated graphics.

331. See 2 McCormick on Evidence § 212, at 9–10 (John William Strong et al. eds., 4th ed.

1992).

332. See Edward R. Tufte, Visual Explanations: Images and Quantities, Evidence and Narrative (1997); Envisioning Information (1990); and The Visual Display of Quantitative Information (1983).
Trial § 12.32

141

12.32 Use of Exhibits

Counsel should present exhibits in a manner that will communicate some

significant fact (except when an exhibit is simply a link in a chain of proof).

Thus, documentary proof should be redacted to eliminate irrelevant matter,

and its contents offered, whenever possible, by way of summary or other

streamlined procedure that will focus the jury’s attention on the material portions. See section 11.492.

It is time-consuming when counsel circulate exhibits among the jurors,

and it disrupts the examination of witnesses, except where the physical qualities of an object are themselves relevant. It is helpful, however, to display exhibits so that the jurors, the judge, and counsel can view them while hearing

related testimony. Below are some options to consider:

• Enlargements. They may be posted, or projected on a screen easily visible to the witness, judge, and jurors; counsel can direct attention to

particular portions of an exhibit during examination.

• Evidence presentation systems. Such systems display evidence electronically and simultaneously to everyone in the courtroom and may significantly assist jury involvement and comprehension and expedite

trial. The most basic use is for the retrieval and display of documentary exhibits. Evidence presentation systems can also be used to create

and display illustrative aids by combining an exhibit with enhancements that make the content of the exhibit easier to understand—for

example, by highlighting and enlarging relevant portions of documents and photos, juxtaposing text from two or more pages, adding

explanatory labels and text, displaying digitized videotaped transcripts

of depositions, playing digitized audio files, and presenting complex

animations and simulations. The following should be considered with

respect to evidence presentation systems:

– providing counsel with an orientation to the courtroom evidence

presentation system;333

– having counsel practice using the technology, overcoming the

problem that some lawyers may have had little or no experience

with these valuable resources;334

– permitting attorneys to bring their own evidence presentation

equipment into a courtroom that is not technologically advanced

333. See Effective Use of Courtroom Technology, supra note 85, at 49–50.

334. Id. at 51.
§ 12.32 Manual for Complex Litigation, Fourth

142

and allowing them to practice on the equipment in the courtroom

before trial (an increasing number of courts have evidence presentation systems installed in at least one courtroom, although attorneys typically must provide their own laptop computer, if one is to

be used);335

– determining whether counsel, the court, or a combination of the

two will control the equipment at trial;336

– determining whether the use of the system will be optional or mandatory for attorneys;337 and

– requiring attorneys to state for the record the backup plan in case of

equipment failures.338

• Copies and exhibit books. In some cases it may be cost-effective for

counsel simply to provide jurors with individual binders containing

indexed copies of selected exhibits central to the presentation at trial,

updated as needed, with separate pages summarizing counsel’s contentions concerning their significance. If juror note taking is allowed

(see the discussion of juror notebooks in sections 12.421–12.422),

there should be space for their notes about each exhibit. Other less

important exhibits may be distributed and collected by the courtroom

clerk on a daily basis, with jurors instructed not to make notes on their

copies.

To avoid cumbersome and time-consuming handling of exhibits, exhibits

should be premarked and received into evidence pretrial. Copies of exhibits to

be used should be available to a witness on the stand and in the hands of

counsel before an examination begins. If voluminous, relevant exhibits can be

kept in tabbed notebooks stacked on a cart located within easy reach of the

witness, counsel can direct the witness to the volume and tab number of exhibits as needed.

335. Id. at 44.

336. Id. at 45–46.

337. Id. at 44–45.

338. Id. at 141–42.
Trial § 12.332

143

12.33 Depositions

.331 Summaries 143

.332 Editing, Designations, and Extracts 143

.333 Presentation/Videotaped Depositions 144

.334 Alternative Means of Presenting Testimony 145

The court should encourage counsel to avoid reading depositions at trial

and to consider the techniques detailed in the following subsections.

12.331 Summaries

If the contents of a deposition are a necessary element of a party’s proof,

the preferred mode of presentation is a succinct stipulated statement or summary of the material facts that can be read to the jury. Most of the contents of

pretrial depositions are irrelevant or at least unnecessary at trial; the material

portions rarely exceed a few lines or pages. The judge should encourage the

parties to agree on a fair statement of the substance of the testimony, possibly

with the assistance of a magistrate judge. Video presentation may increase the

effectiveness of summaries, as discussed below.

12.332 Editing, Designations, and Extracts

A fair presentation of the contents of a deposition may, however, also require presenting a colloquy with the witness. The portions read should be limited to the essential testimony of the witness, but may include not only the deponent’s “final” answer but also testimony that reflects demeanor, attitude,

recollection, and other matters affecting credibility. Rather than going through

a deposition to eliminate unnecessary portions, the judge can direct counsel to

select for designation only the genuinely material parts that cannot be presented by way of summary. Background information, such as that bearing on

the qualifications of an expert, may be covered by a brief stipulation read to the

jury in advance.

Before trial, each party should designate those portions of depositions it

intends to read at trial. Using this information, other counsel can designate

additional portions, if any, to be read. Under Federal Rule of Civil Procedure

32(a)(4), if only a part of a deposition is offered, “an adverse party may require

the offeror to introduce any other part which ought in fairness to be considered with the part introduced, and any party may introduce any other part.”339

The parties should repeat this series of exchanges until they have designated

339. See also Fed. R. Evid. 106.
§ 12.333 Manual for Complex Litigation, Fourth

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the portions to be offered. Those portions usually will be introduced at trial in

the same sequence in which they appear in the deposition, although another

sequence can be adopted to improve comprehension.

A common and convenient method for making designations is for the

parties to bracket the portions to be offered on the pages of the deposition,

each using a different color. Other parties may indicate objections in abbreviated language opposite the brackets (e.g., “D obj. hearsay, not best evidence”).

The court’s rulings may be indicated in a similar fashion, enabling counsel to

read only the admitted portions from the original deposition.

Developments during trial may change the parts of depositions that the

parties want to offer. Ordinarily, the court should permit parties to change

their designations as long as other parties are advised promptly of such changes

and have sufficient notice to revise their counterdesignations.

12.333 Presentation/Videotaped Depositions

In nonjury cases, relevant excerpts of depositions or summaries can be

prepared and offered as exhibits, usually without being read at trial and transcribed by the court reporter. The judge can later read these excerpts along

with other exhibits in the record. The judge, however, should hear the testimony if a ruling from the bench is expected. The same procedure can be used

in jury trials; it reduces the volume of deposition evidence but increases the

number of exhibits.

In jury cases, attorneys or paralegals usually read deposition testimony.

The court should discourage or prohibit using actors and ensure that the

reader’s pauses, inflection, and tone do not unfairly distort the witness’s deposition testimony. If a tape recording (e.g., made by court reporters during

depositions as a backup) is available, it may be played for the jury when necessary. Under Federal Rule of Civil Procedure 32(c), deposition testimony may

be offered at trial in nonstenographic form if the offering party provides a

transcript of the pertinent portions to the court and, under Rule 26(a)(3)(B),

to other parties (indeed, in a jury trial, on a party’s request it must be so presented if available unless the court for good cause orders otherwise). Recordings may, however, be difficult to hear and understand.

Videotape is generally more effective for the presentation of deposition

testimony, for impeachment and rebuttal, and for reference during argument.340 Videotaped depositions may be used routinely or for key witnesses

340. For discussion of the use of videotaped depositions during argument, see Henke, supra note 186, at 165 (citing Gregory P. Joseph, Modern Visual Evidence § 3.03[2][f] (1984)). See

also Effective Use of Courtroom Technology, supra note 85, at 187, 191–92 (discussing possible

objections to the use of videotapes at trial).
Trial § 12.334

145

only; any party may videotape a deposition without court order.341 To avoid an

unfair difference in emphasis, however, testimony should not be presented by

different means on direct and cross-examination.342 As with all depositions,

videotaped depositions should be purged of irrelevant and inadmissible matter.

Digitized video (made with a digital video camera) is easier to edit and use

in the courtroom than analog video because specific portions can be identified

more readily. When appropriate, consider requiring counsel to exchange analog video for a digitized version to minimize expense and to ensure that all

copies of the recording to be used at trial are of the same quality.

As with written depositions, when edited versions of videotaped depositions are offered, other parties may request introduction of deleted portions.343

Counsel should provide other parties access to recordings in their entirety before trial, allowing them to designate the portions they contend should be

shown and to present unresolved disputes promptly to the court.

The process for determining the admissibility of videotape testimony

should be addressed early in the litigation before the parties have made extensive investments. The persuasive power of visual presentation carries with it

the potential for prejudice, a risk heightened by the opportunities for manipulation. Rulings on objections are critical. Unless the parties can reach substantial agreement on the form and content of the videotape to be shown to the

jury, the process of passing on objections can be so burdensome and timeconsuming as to be impractical for the court.

12.334 Alternative Means of Presenting Testimony

Videoconferencing344 makes it possible to present the testimony of absent

witnesses, including witnesses recalled for only brief testimony, without the

341. Fed. R. Civ. P. 30(b)(2), (3).

342. See Traylor v. Husqvarna Motor, 988 F.2d 729, 734 (7th Cir. 1993) (disapproving

presentation of live direct testimony and videotaped cross).

343. See Fed. R. Civ. P. 32(a)(4); Fed. R. Evid. 106.

344. This technique was used in San Juan Dupont Plaza Hotel Fire Litigation, MDL 721, and

in In re Washington Public Power Supply System Securities Litigation, MDL 551. In both cases, the

court held that witnesses (at least if under a party’s control) may be compelled to testify by such

means despite being beyond the court’s subpoena power, reasoning that the limits on that power

are intended only to protect witnesses from undue inconvenience. See San Juan, 129 F.R.D. at

426 (approving Judge Browning’s reasoning in Washington Public). For considerations related to

the videoconferencing of witness testimony, see Effective Use of Courtroom Technology, supra

note 85, at 168–74.
§ 12.34 Manual for Complex Litigation, Fourth

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cost and other disadvantages of depositions.345 In some instances, the cost and

burden of obtaining the physical presence of a witness will be disproportionate

to the importance of the expected testimony. For videoconferencing, the procedure for examination is similar to that in the courtroom—the witness is

sworn and examined on direct and cross—though additional safeguards may

be needed.346 The cost should generally be borne by the party calling the witness, though a portion may be allocated to other parties who prolong examination by extensive cross-examination or objections.347

Federal Rule of Civil Procedure 43(a) permits presentation of witness testimony by videoconference “for good cause shown in compelling circumstances and upon appropriate safeguards.” The Rule 43(a) committee notes

point out that the appearance of a witness by videoconference “cannot be justified by a showing that it is inconvenient for the witness to attend the trial.”

More is required, unless both parties consent. Courts have found good cause

shown in instances where it was necessary to obtain the testimony of witnesses

who are incarcerated, medically incapacitated, or otherwise unable to travel to

the courtroom, or who are located at a distance and are only peripherally involved in the trial. A peripheral fact witness or a witness who supplies a part of

the foundation for an exhibit might be inconvenienced considerably by traveling a significant distance to participate in a trial for only a brief interval.

Judges also have allowed child witnesses to appear by videoconference to avoid

emotional distress the child might experience from a courtroom appearance.

345. See In re San Juan Dupont Plaza Hotel Fire Litig., 129 F.R.D. 424, 425–26 (D.P.R.

1989).

346. For a sample protocol, see id., 129 F.R.D. at 427–30 (adapted from protocol used in

Washington Public). For example, it is necessary to control the presence of other persons in the

room in which the witness is being interrogated by remote means.

347. See id. at 428.

12.34 Sequencing of Evidence and Arguments

Jury recollection and comprehension in lengthy and complex trials may be

enhanced by altering the traditional order of trial. Sequencing techniques include the following:

• Evidence presented by issues. Organizing the trial in logical order, issue

by issue, with both sides presenting their opening statements and evidence on a particular issue before moving to the next, can help the

jury deal with complex issues and voluminous evidence, but may result in inefficiencies if witnesses must be recalled and evidence re-
Trial § 12.35

147

peated. See section 12.21. This procedure is roughly equivalent to severance of issues for trials under Federal Rule of Civil Procedure 42(b).

• Arguments presented by issues/sequential verdicts. If it is impractical to

arrange the entire trial in an issue-by-issue format, it may still be

helpful to arrange closing arguments by issue, with both sides making

their closings on an issue before moving to the next. The entire case

may be submitted to the jury at the conclusion of all argument, or the

issues may be submitted sequentially (see section 12.451 (special verdicts and general verdicts with interrogatories) and section 35.35 (civil

RICO trials)). The latter procedure may be advantageous if a decision

on one issue will render others moot or if the early resolution of pivotal issues will facilitate settlement; on the other hand, it can lengthen

the total time for deliberations and requires recurrent recesses while

the jury deliberates.

• Interim statements and arguments. In a lengthy trial, it can be helpful if

counsel can intermittently summarize the evidence that has been presented or can outline forthcoming evidence. Such statements may be

scheduled periodically (for example, at the start of each trial week) or

as the judge and counsel think appropriate, with each side allotted a

fixed amount of time. Some judges, in patent and other scientifically

complex cases, have permitted counsel to explain to the jury how the

testimony of an expert will assist them in deciding an issue. Although

such procedures are often described as “interim arguments,” it may be

more accurate to consider them “supplementary opening statements,”

since the purpose is to aid the trier of fact in understanding and remembering the evidence and not to argue the case.348 (Interim jury

instructions, discussed in section 12.433, and reminders to the jury of

the difference between evidence and counsel’s statements349 may also

be helpful.)

12.35 Judicial Control/Time Limits

Limits on time and evidence are ordinarily set at the pretrial conference so

that counsel can plan accordingly before the trial begins. See section 11.644.

Judicial intervention may become necessary, however, if evidence exceeds

reasonable bounds and does not contribute to resolving the issues presented.

348. See, e.g., In re Visa Check/Mastermoney Antitrust Litig., 96-CV-5238, 2003 WL

1712567 (E.D.N.Y. Apr. 1, 2003) (order addressing jury selection and conduct of upcoming

trial).

349. See Robert M. Parker, Streamlining Complex Cases, 10 Rev. Litig. 547, 553–54 (1991).
§ 12.35 Manual for Complex Litigation, Fourth

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One judicial alternative is to limit or bar the examination of witnesses whose

testimony is unnecessary or cumulative and to call for stipulations where a

number of witnesses would testify to the same facts. Judges can review the order in which witnesses are to be called to determine if it would interfere with

an orderly trial. For example, counsel may try to call an adversary’s expert witness before critical evidence has been presented and before the party’s own

expert has testified. When particular, clearly defined subject matter requiring

the testimony of two or more persons is involved, it may be efficient to examine the witnesses simultaneously, allowing the more knowledgeable witness to

answer. This may require consent of counsel, in view of the parties’ right under

Federal Rule of Evidence 615 to have witnesses excluded. Expert witnesses

needed to advise counsel are not subject to exclusion.350 Opposing expert witnesses may be examined seriatim in order to clearly frame their agreements

and disagreements for the trier of fact.

The judge should ordinarily refrain from interfering with counsel’s mode

of questioning, except when ruling on objections. However, the judge should

consider limiting the examination when the questioning is confusing, repetitive, or irrelevant and threatens to delay the trial. Federal Rules of Evidence

611(a) and 403 permit exclusion even of relevant testimony “if its probative

value is substantially outweighed by . . . considerations of undue delay, waste

of time, or needless presentation of cumulative evidence.”

The judge may intervene, even without objection, in order to

• bar testimony on undisputed or clearly cumulative facts—testimony

may be disallowed as cumulative if it relates to evidence to be covered

in later testimony, or matters beyond the scope of the examination;

• clarify confusing questions or answers;

• prohibit repeated paraphrasing of answers into new, duplicative questions (e.g., “Do I understand you to mean that . . .”; “Is it your testimony then that . . .”; “Is it fair to say that . . .”; and the like); and

• encourage stipulations by opposing counsel to avoid routine testimony, such as the date of a document.

It is helpful for the court to issue guidelines providing, among other things,

that it will

• not instruct witnesses to answer “yes or no” to questions that (1) are

compound, (2) require a witness to make or accept a characterization

rather than testify to a fact, or (3) are argumentative in form or substance;

350. Fed. R. Evid. 615(3) committee note.
Trial § 12.35

149

• bar questions framed as arguments rather than requests for testimony

that the witness is competent to give;

• prohibit questions asking one witness to comment on the credibility of

another, unless prior request is made outside of the jury’s presence;

and

• sustain objections that an answer is nonresponsive only when made by

interrogating counsel.

As noted in section 11.644, time limits generally should be established before trial. The burdens of an unduly long trial on jurors and on the public’s

access to the court may, however, require setting limits during trial. Such limits

should not prejudice either side, but the mere threat of such limits may cause

counsel to expedite the trial. Limits may grant each party a specified number of

hours for all direct and cross-examination, restrict the time for specific arguments, or limit the time for examination of particular witnesses. Once limits

have been imposed, the court should grant extensions only for good cause,

taking into account the requesting party’s good-faith efforts to stay within the

limits and the degree of prejudice that would result from the denial of an extension.

It occasionally may be appropriate for the judge to use Federal Rule of

Evidence 614’s authority to question parties’ witnesses. However, such questions should avoid the appearance of partiality or interference with counsel’s

trial strategy and should be limited to clarifying matters on which the jury may

be confused. Rule 614’s committee note states that “the authority [to question

witnesses] is . . . abused when the judge abandons his proper role and assumes

that of advocate.” Such abuse may be grounds for reversal.

Rule 614 also allows the court to call its own witnesses (subject to crossexamination by the parties); however, that authority is rarely used, other than

with respect to an expert under Rule 706 (see section 11.51). An alternative

approach is for the judge to suggest questions to counsel outside the hearing of

the jury, or inquire whether the matter will be clarified or addressed by another

witness.
§ 12.411 Manual for Complex Litigation, Fourth

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12.4 Jury Trials

.41 Impaneling the Jury 150

.411 Size of the Venire and Panel 150

.412 Voir Dire 151

.413 Peremptory Challenges 152

.42 Juror Note Taking/Notebooks/Questions 152

.421 Note Taking 152

.422 Juror Notebooks 153

.423 Juror Questions 153

.43 Jury Instructions 154

.431 General Principles 154

.432 Preliminary Instructions 154

.433 Interim and Limiting Instructions 156

.434 Final Instructions 156

.435 Jurors’ Use of Exhibits During Deliberations 158

.436 Supplemental Instructions and Readbacks 158

.44 Avoiding Mistrial 159

.45 Verdicts 160

.451 Special Verdicts and General Verdicts with Interrogatories 160

.452 Judgment as a Matter of Law 162

.453 Return of Verdict 163

Jury trials in complex cases place a heavy responsibility on the judge, who

must ensure not only that the parties receive a fair trial but also that the jurors

are treated with courtesy and consideration by counsel, staff, and the court

itself. Although the jurors are the decision makers, they too often are in the

dark about much of what is happening in court and are left to wait while the

judge and counsel discuss matters outside their presence.

12.41 Impaneling the Jury351

.411 Size of the Venire and Panel 150

.412 Voir Dire 151

.413 Peremptory Challenges 152

12.411 Size of the Venire and Panel

Federal Rule of Civil Procedure 48 requires between six and twelve jurors

for a civil trial. Local rules may also address jury size. Rule 47(c) allows the

judge to excuse jurors during trial for good cause, but federal courts no longer

seat alternates in civil trials—all jurors not excused participate in deliberations.

A verdict from a jury of less than six requires a stipulation. The committee

note to Rule 48, however, suggests avoiding verdicts of fewer than six, even

351. See generally Benchbook, supra note 45, §§ 2.05–6.03.
Trial § 12.412

151

with a stipulation, because smaller juries may be less reliable. For similar reasons, many judges prefer seating twelve jurors, especially in complex cases.

The court should seat enough jurors to minimize the risk of a mistrial,

considering the probability of incapacity, disqualification, or other developments requiring the excuse of jurors during trial. This is especially important

in complex cases. The primary factor is the expected length of trial. One rule of

thumb is to select eight jurors for a trial expected to last up to two months, ten

jurors for a trial expected to last four months, and twelve jurors for a longer

trial. In determining appropriate jury size, consider asking the parties if they

will stipulate, in the event of a hung jury, to accept a verdict from a less-thanunanimous jury352 or to allow the case to be decided on the record by the

court.353 The parties may be more amenable to entering such agreements before voir dire than after the jury has been selected.

12.412 Voir Dire

The court may examine prospective jurors itself or allow the parties to do

so.354 The judge who conducts the examination must “permit the parties or

their attorneys to supplement the examination by such further inquiry as it

[the court] deems proper or . . . submit to the prospective jurors such additional questions of the parties or their attorneys as ‘it [the court] deems

proper.’”355 The judge should invite the attorneys to submit proposed questions in advance of trial and to conduct reasonable follow-up questioning of

the jurors after the judge has finished.

In cases involving potentially large jury venires, judges often mail pre–voir

dire jury questionnaires to prospective jurors for basic information and to

identify prospective jurors unable to serve. This avoids unnecessary trips to

court, but may lead to many requests by potential jurors to be excused and to

inappropriate inquiries about the case. An alternative is to have prospective

jurors complete a questionnaire in court before voir dire begins.356

During voir dire, the court should inform prospective jurors of the expected length of trial, the trial schedule, and other facts that may bear on a juror’s ability and qualifications to serve. The prospect of a long trial may produce many requests to be excused, and may generate the risk of a jury consisting solely of persons who are retired or otherwise not employed outside their

352. See Fed. R. Civ. P. 48.

353. See Fed. R. Civ. P. 39(a)(1).

354. Fed. R. Civ. P. 47(a); Fed. R. Crim. P. 24(a).

355. Fed. R. Civ. P. 47(a). Federal Rule of Criminal Procedure 24(a) is similar, but applies

to the defendant, defense counsel, and the government’s attorney.

356. See infra section 40.7.
§ 12.421 Manual for Complex Litigation, Fourth

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home. Introductory comments can reduce requests for excuses—these comments should emphasize the responsibilities of citizenship and the importance

of representative juries, and describe the challenge of litigation and the opportunity to learn more about the judicial process.

Some judges permit counsel to deliver opening statements to the entire

venire so that prospective jurors can respond to voir dire questions more intelligently.

12.413 Peremptory Challenges

In civil cases, each party is allowed three peremptory challenges.357 Several

plaintiffs or several defendants may be considered a single party for that purpose, but the court may allow additional challenges, depending on whether

parties’ interests conflict or diverge significantly. The court should grant additional challenges sparingly because they will increase the size of the venire and

lengthen voir dire and the jury-selection process. Presumptively, each side

should have the same number of challenges. Some judges have used unconventional methods of jury selection in complex cases to increase the participation of relatively more experienced and educated jurors. Such techniques are

best used with the consent and cooperation of counsel.358

12.42 Juror Note Taking/Notebooks/Questions

.421 Note Taking 152

.422 Juror Notebooks 153

.423 Juror Questions 153

12.421 Note Taking

Arguments for juror note taking are particularly compelling in long and

complicated trials.359 Many jurors will not take notes, but denial of permission

to do so may be inconsistent with the large measure of responsibility the system places on jurors, and it may hamper their performance. If note taking is

permitted, the court should provide jurors with paper (or notebooks with

space for notes, see section 12.422) and pens. Jurors should be told that notes

are only for their individual use and not to be shown or read to others, that

357. 28 U.S.C. § 1870 (West 2002); Fed. R. Civ. P. 47(b). In felony cases, defendants are

allowed ten challenges jointly and the government six (with additional challenges for alternates,

if selected); the court may allow additional defense challenges if there are multiple defendants.

Fed. R. Crim. P. 24(b).

358. See William W Schwarzer, Reforming Jury Trials, 132 F.R.D. 575, 580–81 (1991).

359. See id. at 590–91.
Trial § 12.423

153

note taking should not distract them from observing the witnesses, and to

leave their notes in the jury room during recesses.

12.422 Juror Notebooks

Individual notebooks can hold exhibits (see section 12.32) and provide

assistance to help jurors organize and retain information (witness and exhibit

lists, pictures of witnesses, chronologies and timelines, glossaries (see section

12.31), and excerpts from instructions).360 The amount of material in the notebooks should be controlled to ensure that the notebooks remain clear and

useful.

12.423 Juror Questions

Some judges allow jurors to ask questions in open court in civil cases. Others require them to submit questions in writing for consideration by the judge

and counsel. Still others disallow juror questions. Some judges say nothing on

this subject; others inform jurors that questions are permitted at the conclusion of a witness’s examination to help them understand the evidence. Jurors,

however, should be cautioned that it is for the lawyers to try the case and that

matters occurring to them during one witness’s examination may later be covered by another’s361 or may be inadmissible under the Federal Rules of Evidence.

360. See Parker, supra note 349, at 550. Preliminary and interim instructions are discussed

in infra sections 12.432–12.433.

361. The pros and cons of juror questioning, and the procedures to follow if it is allowed,

are discussed in United States v. Cassiere, 4 F.3d 1006, 1016–18 (1st Cir. 1993); United States v.

Johnson, 914 F.2d 136, 137–39 (8th Cir. 1990) (criminal); DeBenedetto v. Goodyear Tire & Rubber Co., 754 F.2d 512, 513–17 (4th Cir. 1985); Schwarzer, supra note 358, at 591–93 (also providing sample instruction).
§ 12.432 Manual for Complex Litigation, Fourth

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12.43 Jury Instructions362

.431 General Principles 154

.432 Preliminary Instructions 154

.433 Interim and Limiting Instructions 156

.434 Final Instructions 156

.435 Jurors’ Use of Exhibits During Deliberations 158

.436 Supplemental Instructions and Readbacks 158

12.431 General Principles

A complex and protracted trial makes understandable jury instructions

particularly important. Instructions should use language that laypersons can

understand—instructions should be concise, concrete, and simple, be in the

active voice, avoid negatives and double-negatives, and be organized in logical

sequence. Counsel should submit proposed instructions at the final pretrial

conference to focus the judge’s and lawyers’ attention on the issues to be tried

(see section 11.65).

Substantive instructions should be tailored to the particular case, and the

judge should avoid a generalized pattern of instructions. The judge should explain propositions of law with reference to the facts and parties in the case; illustrations familiar to jurors may also help. Instructions using the language of

appellate opinions are rarely meaningful to jurors. Most judges reword—or at

least edit—counsel’s proposed instructions, which are often argumentative and

one-sided. Combining the proposals submitted by counsel for each side rarely

produces sound and intelligible instructions. Instructions should be read to the

jury in a manner that enhances comprehension and retention; rarely should

the reading take more than thirty minutes. Some judges use the court’s evidence presentation system to put the jury instructions on a screen or monitors

in the courtroom so that jurors can read along as the instructions are given

orally.363 Jurors usually like to have one or more copies of the instructions in

the jury room (see section 12.434). In complex cases with long verdict forms, it

is helpful for each juror to have an individual copy of the verdict form.

362. See generally Benchbook, supra note 45, §§ 2.07–2.08, 6.05–6.06 (jury instructions in

criminal and civil cases, respectively).

363. See Effective Use of Courtroom Technology, supra note 85, at 149–53, for related discussion and suggestions.

12.432 Preliminary Instructions

Jurors can deal more effectively with the evidence in a lengthy trial if they

are provided with a factual and legal framework to give structure to what they

see and hear. Moreover, jurors should understand the trial process in which
Trial § 12.432

155

they are about to participate and what they can expect. Preliminary instructions provide context and basic guidance for the jurors’ conduct. These instructions typically contain or delineate the following:

• Preliminary statement of legal principles and factual issues. The instructions should summarize the key factual issues, including the undisputed facts and the parties’ major contentions (which may be drafted

jointly by the parties), and explain briefly the basic legal issues and

principles, such as the elements of claims and defenses to be proved.

The court should emphasize that these instructions are preliminary—they don’t cover all the issues or principles—and that instructions given at the conclusion of the case will govern deliberations.

Since one purpose of these instructions is to prepare jurors for opening statements, they are usually given first, permitting counsel to refer

to them in opening statements. The judge may, however, defer instructions until after opening statements or give supplemental preliminary instructions at that time.

• The conduct of the trial. The judge should inform jurors of the anticipated course of the trial from opening statements to verdict, the

methods for presenting evidence, and the procedure for raising and

resolving objections. It is also useful to introduce court personnel—the clerks, bailiffs, and reporters—and to provide a short orientation to the equipment in the courtroom.364

• Schedule. Jurors should be informed of the hourly and daily trial

schedule and any holidays or other recesses.

• Precautions to prevent mistrial.365 The judge should direct jurors not to

discuss the case or communicate with trial participants. It is also important that they be warned against exposure to publicity and attempts

at independent fact-finding, such as viewing the scene of some occurrence or undertaking experiments or research.

• Pretrial procedures. The instructions should briefly describe the various

discovery devices used during the pretrial stage of the litigation, such

as depositions, document production, and interrogatories. This information will be helpful when the evidence is introduced, and it explains how the parties learned the facts of the case.

• The functions and duties of the jury. The judge should describe the

jury’s role as fact-finder; the burden of proof; assessing the credibility

of witnesses; the nature of evidence, including circumstantial evidence

364. See id. at 146–49 (suggesting language for explaining courtroom technology to jurors).

365. See also infra section 12.44 (avoiding mistrial).
§ 12.434 Manual for Complex Litigation, Fourth

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and the purpose of rules of evidence; and the jurors’ need to rely on

their recollection of testimony (including any special instructions

about the use of juror notebooks, note taking, or questions). Most of

these instructions should be repeated in the final jury charge, supplemented by any special explanations (such as use of convictions to impeach credibility) warranted by developments at trial, or the use of

special verdicts or interrogatories.366

12.433 Interim and Limiting Instructions

Developments in the course of trial may require additional instructions.

Under Federal Rule of Evidence 105, when evidence is admitted that is admissible as to some but not all parties or for a limited purpose only, the court

must, upon request, instruct the jury accordingly. At counsel’s request, the

judge may repeat such limiting instructions at the close of trial. Counsel should

be advised that when they contemplate offering such evidence, they should

raise the issue promptly (if possible, before trial) and submit proposed instructions.

The judge may also give instructions at any point in the trial where they

might be helpful to the jury. An explanation of applicable legal principles may

be more helpful when the issue arises than if deferred until the close of trial,

but counsel should be permitted to comment or object before an instruction is

given. As with preliminary instructions, the judge should caution the jury that

these are only interim explanations, and that the final, complete instructions

on which they will base their verdict will come at the close of trial. If the parties

are presenting their evidence according to a prescribed sequence of issues (see

section 12.34), the instructions should be structured accordingly.

12.434 Final Instructions

Although proposed instructions should generally be submitted to the court

in connection with the final pretrial conference, developments during the trial

may require their revision or supplementation. Counsel are entitled to file

written requests for instructions “at the close of the evidence or at such earlier

time as the court reasonably directs,” and are entitled to notice of the judge’s

proposed action before closing arguments.367 Most judges, rather than responding to particular requests, provide counsel with the entire charge they

propose to give and then hold a charge conference to consider counsel’s objections and requests; generally there will be little controversy if the judge has

366. See infra sections 12.436, 12.45 (supplemental instructions and verdicts, respectively).

367. Fed. R. Civ. P. 51; Fed. R. Crim. P. 30.
Trial § 12.434

157

prepared instructions.

368 Having proposed instructions submitted electronically can expedite the editing process.

Final instructions may be given before or after closing arguments, or

both.369 Though traditionally instructions have been given after counsel’s

closings, there are advantages to giving the bulk of the instructions before argument.370 Instructions on the law may make closing arguments easier to understand, and counsel can refer to instructions already given in arguing their

application to the facts. At a minimum, counsel should know before closing

arguments what final instructions will be given. This may help them structure

their arguments. The judge should reserve the final closing instructions, however, until after arguments, reminding the jury of the instructions previously

given and instructing them about the procedures to follow in deliberations.371

Most judges give jurors copies of the instructions to use during deliberations. Because jurors are unlikely to remember lengthy and complex legal

terms, define these terms in advance so that they can listen to the charge for a

general understanding rather than try to memorize it. Some judges keep the

written charge from jurors while they deliver the instructions, to focus attention on the delivery. Others permit the jurors to follow the text in hard copy or

on a monitor, or at least give them a brief topical outline to follow as the instructions are given. Jurors should have any special verdict forms or interrogatories for use during deliberations.

The oral charge, which the court reporter transcribes, should be complete

within itself (i.e., not merely refer to writings that the jury may be given). The

judge should instruct jurors that, in the event of any variations between the

oral and written charges, the oral charge controls and governs their deliberations. Some judges have experimented with providing jurors with a tape recording of the charge for use during deliberations. Access to specific passages

may be facilitated by recording designated portions on separate tapes, or

maintaining a record of the counter number where different portions begin.372

The charge should focus on helping the jurors understand the law and their

responsibilities.

368. For a general discussion of procedures and options, see Benchbook, supra note 45,

§§ 2.08, 6.06.

369. Fed. R. Civ. P. 51; Fed. R. Crim. P. 30.

370. See Fed. R. Civ. P. 51 committee note.

371. See Stonehocker v. Gen. Motors Corp., 587 F.2d 151, 157 (4th Cir. 1978); Babson v.

United States, 320 F.2d 662, 666 (9th Cir. 1964).

372. See Leonard B. Sand & Steven A. Reiss, A Report on Seven Experiments Conducted by

District Judges in the Second Circuit, 60 N.Y.U. L. Rev. 423, 456–69 (1985).
§ 12.436 Manual for Complex Litigation, Fourth

158

In complex litigation, some judges comment on evidence in order to explain subject matter foreign to jurors and to keep them from being confused or

misled by adversarial presentations. Such comments should be impartial and

assist comprehension only. Before commenting on the evidence, however,

consider submitting the proposed language to counsel for comment and objections. The judge’s comments may be included with the written instructions

given to the jury, but it may be preferable not to do so to avoid giving the

comments undue weight. A judge’s expression of a personal opinion on disputed facts can be problematic.373

After the judge has given all instructions, and before the jury retires,

counsel are entitled to record any objections to the charge outside the presence

of the jury.374 It is helpful to remind counsel that objections and the grounds

must be stated distinctly or be deemed waived.375 The judge can then give corrective or supplemental instructions (see section 12.436) before deliberations

begin.

12.435 Jurors’ Use of Exhibits During Deliberation

Some judges send all exhibits received in evidence (except items such as

currency, narcotics, weapons, and explosive devices) directly to the jury room

for reference during deliberations. Other judges await requests from the jury,

or withhold some items—such as those received for impeachment or another

limited purpose—until and unless requested by the jury, when they repeat the

limiting instructions. If the exhibits are voluminous, jurors should be given an

index or other aids to assist their examination (see section 12.31).

12.436 Supplemental Instructions and Readbacks

Requests by the jury for supplemental instructions during deliberations are

handled in much the same manner as final instructions, i.e., the appropriate

response is determined after consulting with counsel and allowing them to

object to the proposed response on the record. The instructions should be

given orally in open court, with a reminder to the jury to consider the instructions as a part of those previously given, which remain binding.

The final instructions should advise the jurors that in deliberating on their

verdict, they will not have a transcript available but will have to rely on the ex373. See Quercia v. United States, 289 U.S. 466, 469 (1933). Quercia, in which Chief Justice

Hughes discusses judicial comments on evidence in detail, is still cited as the leading case on the

issue. See, e.g., United States v. Beard, 960 F.2d 965, 970 (11th Cir. 1992).

374. Fed. R. Civ. P. 51; Fed. R. Crim. P. 30.

375. Fed. R. Civ. P. 51; Fed. R. Crim. P. 30.
Trial § 12.44

159

hibits and their recollection of the testimony. Nevertheless, after long and

complex trials, most juries will request readbacks of testimony. The court

should instruct the jury to make requests as specific and narrow as possible to

avoid excessively long readbacks, then should confer with the attorneys to seek

agreement on the portions of the testimony to be read. Counsel should state

any objections on the record.

Readbacks should not unduly emphasize any part of the evidence.376 Some

judges decline readback requests altogether, to save time and to avoid potentially unfair distortions of the record. This approach can sometimes make the

jury’s task more difficult. Some readbacks can be avoided, however, by an

agreed-on statement of the parties’ positions on the matter at issue. Readbacks

should never be authorized absent counsel’s consent or, at least, absent an opportunity to be heard.

12.44 Avoiding Mistrial

Complex trials increase the potential and consequences of mistrials. Accordingly, the judge might consider the following precautions to minimize the

most obvious risk, the jury’s failure to reach a verdict:

• Evidence and instructions. Trials and charges should present the facts

and the law so as to maximize jury comprehension.

• Stipulations on verdict. In advance of trial, the judge should encourage

the parties to stipulate under Federal Rule of Civil Procedure 48377 to

accept a nonunanimous verdict, or under Rule 39(a)(1) to accept a

nonjury decision on the same evidence if a jury verdict cannot be obtained (see section 11.62). Such stipulations may be made during trial

or deliberations—indeed, the parties may not seriously consider them

until actually faced with the possibility of mistrial caused by the need

to remove a juror—but are generally easier to obtain in advance.

• Partial verdicts. Permit juries to return a partial verdict on issues on

which they can agree.

• Cautionary instructions. As discussed in section 12.432, the jurors, at

the outset and periodically during the trial, should be given appropriate instructions regarding improper conduct. The final instructions

may also include a brief explanation of the consequences of a mistrial.

• Special verdicts and interrogatories. These are discussed in section

12.451.

376. See United States v. Hernandez, 27 F.3d 1403, 1408–10 (9th Cir. 1994).

377. See section 12.411.
§ 12.451 Manual for Complex Litigation, Fourth

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• The jury room. The jury deliberation room should be “sanitized” before the jury retires, and all counsel should review all material before it

is sent into the room, to ensure that it includes nothing extraneous.

• Sequestration. The judge should consider sequestration only in extraordinary cases where public interest and media coverage are so intense as to jeopardize the fairness of the trial.

• Seating a sufficient number of jurors. If a juror is excused or disqualified

during deliberations, it need have no effect as long as six jurors remain. If the loss of one or more jurors would reduce the jury to fewer

than six members, however, the court cannot accept the resulting verdict (absent the stipulation described above). Seating a sufficient

number of jurors helps to avoid this situation (see section 12.411).

12.45 Verdicts

.451 Special Verdicts and General Verdicts with Interrogatories 160

.452 Judgment as a Matter of Law 162

.453 Return of Verdict 163

12.451 Special Verdicts and General Verdicts with Interrogatories

Special verdicts and interrogatories are common in complex trials. As discussed in section 11.633, they simplify instructions, help jurors organize their

deliberations, facilitate partial verdicts, isolate issues for possible appellate review, and reduce the costs and burdens of a retrial. A general verdict form

should at least require separate verdicts on each claim and on damages, but be

drafted so as to prevent duplicate damage awards. Counsel and the court

should consider the form of verdict during pretrial.

Special verdicts may require the jury to return findings on each issue of

fact, leaving the court to apply the law to the jury’s findings. Some courts have

held that the court may also amend special verdict responses to conform to the

jury’s obvious intention or to correct a manifest error.378 The preparation of

special verdict forms can be complicated. Federal Rule of Civil Procedure 49(a)

suggests the court submit “written questions susceptible of categorical or other

brief answer,” or “written forms of the several special findings which might

properly be made under the pleadings and evidence.” Alternatively, the rule

378. See Aquachem Co. v. Olin Corp., 699 F.2d 516, 520 (11th Cir. 1983); Shaffer v. Great

Am. Indem. Co., 147 F.2d 981 (5th Cir. 1945), but cf. Austin-Westshore Constr. Co. v. Federated

Dep’t Stores, Inc., 934 F.2d 1217, 1224 (11th Cir. 1991) (Aquachem does not apply to general

verdicts with interrogatories).
Trial § 12.451

161

permits any “method of submitting the issues and requiring the written

findings thereon as [the judge] deems most appropriate.”

The verdict form should be concise, clear, and comprehensive. If any issue

of fact raised by the pleadings is omitted, the parties must demand its submission before the jury retires or they will waive their right to a jury trial on that

issue. The court may make its own findings on issues omitted without such

demand.379

Inconsistent verdicts are a concern even with standard verdict forms, but

careful structuring and instructions should minimize the risk of inconsistency.

Rule 49 requires the court to instruct the jury on how to complete the verdict

form properly, including both the procedure for rendering special verdicts and

the specific substantive issues to be decided. Consider having the jury return

partial verdicts seriatim, instructing on each issue individually before the jury

deliberates on it.

Alternatively, the court could submit a general verdict form with interrogatories. The jury both determines the facts and applies the law; it also makes

findings on “issues of fact the decision of which is necessary to a verdict.”380

Some consider this procedure an attractive compromise between a simple general verdict and special verdicts. It maintains the traditional role of the jury

while diminishing the need to relitigate factual issues if an error of law taints

the general verdict. On the other hand, interrogatories increase the length and

complexity of deliberations and are more likely to produce inconsistencies.

When the interrogatory answers are consistent with each other but inconsistent with the general verdict, the court may simply enter judgment according

to the answers, or may return the jury for further deliberation or order a new

trial.381 The court may not accept the verdict if the answers are inconsistent

with each other and at least one is also inconsistent with the general verdict; it

must first try to reconcile the answers, ordering further deliberations or a new

trial if it cannot.382 After the return of special verdicts or a general verdict with

interrogatories, it is important to allow counsel to be heard before discharging

the jury. That will allow further deliberations to cure inconsistencies following

supplemental instructions, and, perhaps, amendment of the verdict form.

383

379. Fed. R. Civ. P. 49(a).

380. Fed. R. Civ. P. 49(b).

381. Id.

382. See id.; Atl. & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364 (1962).

383. Case law on the court’s authority to amend or supplement verdict forms after the jury

has returned a verdict is scarce; for a case holding it permissible to amend interrogatories, see

United States v. 0.78 Acres of Land, 81 F.R.D. 618, 622 (E.D. Pa.) (mem.), aff’d, 609 F.2d 504 (3d

Cir. 1979).
§ 12.452 Manual for Complex Litigation, Fourth

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12.452 Judgment as a Matter of Law

The court may grant judgment as a matter of law (formerly directed verdict) on a claim or defense during the trial. Federal Rule of Civil Procedure

50(a)(1) lets the judge, once a party has been fully heard on an issue, determine the issue against that party if “there is no legally sufficient evidentiary

basis for a reasonable jury to find for that party on that issue.” The court may

grant a motion for judgment as a matter of law on any “claim or defense that

cannot . . . be maintained or defeated without a favorable finding on that issue.” The motion must “specify the judgment sought and the law and the facts

on which the moving party is entitled to the judgment,” in order to allow the

opposing party an opportunity to correct any deficiencies in its proof. If meritorious, it will reduce costs to grant such motions as soon as a party has completed presentation on a fact essential to one or more of its claims or defenses.

Such motions should not be granted, however, before the party has been apprised of the materiality of the fact and afforded an opportunity to supplement

its evidence on that fact.384

Counsel must move for judgment as a matter of law before submission of

the case to the jury. Judges sometimes deny or defer such motions initially,

even those with merit, until the jury renders a verdict. In this way, if the jury

“gets it right” the judge need not disturb the verdict; any question of invading

the province of the jury is avoided, and the verdict will be more difficult to

overturn on appeal than would a judgment rendered on motion. If the jury

instead renders a verdict lacking sufficient evidentiary support, the judge may

then grant the motion upon its renewal. Rule 50(b) permits the judge to order

a new trial or enter judgment as a matter of law. If the latter, Rule 50(c)(1) still

requires the judge to rule on the motion (if any) for a new trial, to assist the

appellate court in determining the type of relief to grant if the judgment is reversed. Thus, there will be a jury verdict for the appellate court to reinstate if it

chooses.

Motions for judgment as a matter of law may effectively be combined with

the procedure discussed in section 12.34 for sequencing issues for trial. If issues

likely to be dispositive are scheduled first, a ruling may reduce or obviate further proceedings. Thus, the judge may choose to deny a pivotal summary

judgment motion during pretrial if its correct resolution is doubtful, while

scheduling the trial to begin with presentation of the facts in issue (or scheduling a separate trial).385 Even if not dispositive, early judicial resolution of issues unsubstantiated by facts or law may significantly reduce the scope of evi384. Fed. R. Civ. P. 50 committee note.

385. Id.
Trial § 12.453

163

dence, argument, and instructions. An order granting a motion for judgment

as a matter of law should be in writing or read into the record, with stated

reasons.

12.453 Return of Verdict386

When the jury has returned a special verdict or a general verdict with interrogatories, the judge and counsel should promptly review it for inconsistencies so as to permit appropriate steps before the jury is discharged. After consultation with counsel, the judge should promptly approve a form of judgment

for entry by the clerk.387 If the judgment does not resolve all aspects of the litigation, entering final judgments as to some claims or parties allows an appeal

to be taken.388

Where issues have been bifurcated or submitted to the jury for seriatim

verdicts, the jury may need to resume hearing evidence and receive further instructions or begin deliberations on other issues.389 If a recess is called, the

judge should instruct the jurors that they remain under the restrictions originally imposed; if the recess extends more than a few days, a supplementary examination of jurors may be necessary on their return to determine whether

grounds for disqualification have arisen in the interim.

If the jury is deadlocked, the judge will need to consider appropriate inquiries and instructions. Although the large investment in a long trial makes a

mistrial costly, there should not be undue pressure on jurors to reach agreement. The incorrect use of an Allen charge may trigger a reversal.390

386. For general procedures for receipt of civil verdicts, see Benchbook, supra note 45,

§ 6.07.

387. See Fed. R. Civ. P. 58.

388. See Fed. R. Civ. P. 54(b); see also 28 U.S.C. § 1291 (West 2002); infra section 15.1.

389. See supra sections 11.632 (separate trials), 12.34 (sequencing of evidence and arguments).

390. Darks v. Mullin, No. 01-6308, 2003 U.S. App. LEXIS 6977, at *288 (10th Cir. Apr. 11,

2003) (prohibiting use of Allen charge if found to impermissibly coerce the jury); United States

v. Brennan, No. 01-3148, 2003 U.S. App. LEXIS 6546, at *37 (3d Cir. Apr. 7, 2003) (noting that

the circuit has “developed a prophylactic rule prohibiting the use of such an Allen charge because of its power to coerce,” but allowing a modified Allen charge with noncoercive language);

but cf. Mason v. Mitchell, 320 F.3d 604, 642 (6th Cir. 2003) (holding that Allen charge was not so

coercive as to deny due process rights); United States v. Walrath, No. 02-2824, 2003 U.S. App.

LEXIS 6359, at *7–*10 (8th Cir. Apr. 3, 2003) (reviewing challenged jury instruction for abuse of

discretion); United States v. Crispo, 306 F.3d 71, 76–78 (2d Cir. 2002) (reviewing Allen charge

under an abuse of discretion standard); United States v. Weymouth, 45 Fed. Appx. 311, 312 (4th

Cir. 2002) (per curiam) (same).
§ 12.51 Manual for Complex Litigation, Fourth

164

12.5 Nonjury Trials

.51 Adopted Prepared Statements of Direct Testimony 164

.52 Findings of Fact and Conclusions of Law 165

.53 Procedures When Combined with Jury Trial 166

Nonjury trials may take less trial time than jury trials do, but, unless well

managed, may take longer to decide. Although nonjury trials require less formality, procedures to promote clarity and expedition are still important. In

fact, the judge has greater freedom to control the conduct and shape of a bench

trial than he or she does a jury trial. For example, rather than receive vast volumes of documents to be sorted out during the decision-making process following trial, the court can use redaction, summaries, sampling, and other

helpful techniques.

12.51 Adopted Prepared Statements of Direct Testimony

Where credibility or recollection is not at issue, and particularly when the

evidence is complicated or technical, a court may consider ordering witnesses

under the parties’ control to present their direct testimony in substantial part

through written statements prepared and submitted in advance of trial.391 At

trial, the witness is sworn, adopts the statement, may supplement the written

statement orally, and is then cross-examined by opposing counsel and perhaps

questioned by the judge. The statement is received as an exhibit and is not read

into the record. As with all exhibits, objections should be resolved before trial.

Because the witness adopts the statement orally in open court, Rule 43 is not

violated.392

This procedure—which may be particularly appropriate for expert witnesses, witnesses called to supply factual background, or those needing an interpreter—has several advantages. The proponent can ensure that it has made

a clear and complete record; the judge and opposing counsel, having read the

statement, are better able to understand and evaluate the witness’s testimony;

opposing counsel can prepare for more effective cross-examination; and the

reduction in live testimony saves time.

391. See Charles. R. Richey, Requiring Direct Testimony to be Submitted in Written Form

Before Trial, 72 Geo. L.J. 73 (1983). Circuit law should be consulted on whether the consent of

parties is required.

392. See In re Adair, 965 F.2d 777 (9th Cir. 1992).
Trial § 12.52

165

12.52 Findings of Fact and Conclusions of Law393

The court might consider directing each party to submit proposed findings

of fact and counterfindings responding to opposing counsel’s submissions,

unless the pretrial briefs and statements of agreed on and disputed facts serve

this purpose. Some judges require counsel to exchange proposed findings and

conclusions before submitting them to the court, marking for the court the

portions disputed. Counsel should draft findings in neutral language, avoiding

argument and conclusions, and identify the evidence expected to establish each

finding. Proposed findings allow the judge to follow the evidence during trial,

and to adopt, modify, or reject findings as trial proceeds. This process simplifies the court’s final preparation of findings of fact, which along with its

conclusions of law are required by Federal Rule of Civil Procedure 52 (also see

section 12.452 and Rule 52(c), judgment on partial findings). Some judges require parties to submit proposed findings electronically for ease of adoption,

but appellate courts frown on verbatim use of the parties’ submissions.394

Under Rule 52(a), the court’s findings of fact and conclusions may be filed

as an opinion or memorandum of decision or read into the record in open

court. The latter procedure produces a quick decision while enabling the court

to refine its opinion later as needed. The court may defer the decision until

after receiving posttrial briefs. However, adequate pretrial memoranda may

make posttrial briefs unnecessary. Some judges call for closing arguments immediately after the close of evidence, as in jury trials, and render their decisions

promptly following the arguments.

Whatever time savings may be realized by a bench trial can easily be lost if

the case is not decided promptly. Decisions become more difficult as the record grows cold, and a long-delayed decision undermines public confidence in

the justice system and must be included in the public reports required by 28

U.S.C. § 476. Many judges avoid this problem by ruling from the bench whenever possible (preparing their ruling as the trial progresses) or by setting a

deadline for their decision (forcing themselves to arrange their calendar to allow sufficient time).

393. For general guidance, see Benchbook, supra note 45, §§ 2.04, 6.02.

394. See Falcon Constr. Co. v. Econ. Forms Corp., 805 F.2d 1229, 1232 (5th Cir. 1986) (a

court that adopts findings verbatim leaves doubt whether it has discharged its duty to review the

evidence itself and reached its decision on the basis of its own evaluation of evidence). Verbatim

adoption of proposed findings may lead to more searching review at the appellate level. See, e.g.,

Andre v. Bendix Corp., 774 F.2d 786, 800 (7th Cir. 1985); In re Las Colinas, Inc., 426 F.2d 1005,

1010 (1st Cir. 1970). Compare the Seventh Circuit’s opinion in Andre with that in Scandia Down

Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1429 (7th Cir. 1985) (despite verbatim adoption, no special scrutiny required where judge paid careful attention to evidence and wrote own opinion).
§ 12.6 Manual for Complex Litigation, Fourth

166

12.53 Procedures When Combined with Jury Trial

As discussed in section 11.63, some judges try jury and nonjury issues concurrently (occasionally with an advisory jury, whose verdict is not binding).

Evidence admissible only on a nonjury issue may have to be presented without

the jury present. The proper sequencing of the jury and nonjury decisions

must comply with Beacon Theatres, Inc. v. Westover, under which the right to a

jury trial on legal claims may not be lost by a prior determination of equitable

claims, except under “the most imperative circumstances.”395

12.6 Inability of Judge to Proceed

Should the judge become unable to proceed after trial has begun, Rule 63

permits any other judge to proceed with the trial upon certifying familiarity

with the record and determining that the parties will not be prejudiced. Of

course, this will require the prompt availability of a transcript or other record

of the prior trial proceedings and any associated video recordings; otherwise, it

may be impossible to avoid prejudicing one or more parties.396

The rule requires the successor judge in a civil nonjury trial, upon request,

to recall any witness whose testimony is material and disputed, and who is

available to testify again without “undue burden.” The rule also permits the

recall of any other witness.397 It is unlikely that a successor judge will wish to

decide a complex case without having heard all the direct and crossexamination of witnesses, unless the parties stipulate to a decision on the record.

Whether a judge unable to proceed in a complex jury trial should be replaced to avoid mistrial is a difficult question, and the answer depends in part

on how close the trial is to completion. If the disability occurs near the start of

the trial, declaring a mistrial may be the preferable course. On the other hand,

if a large investment of resources (not only the parties’ but also the jurors’

time) has been made in the trial, a mistrial should be avoided if the replacement judge has confidence that the trial can go forward without sacrificing

fairness. Note that one of the reasons for the 1991 amendment liberalizing

Rule 63 was “the increasing length of federal trials.”398

395. 359 U.S. 500, 510–11 (1959).

396. Fed. R. Civ. P. 63 committee note.

397. Fed. R. Civ. P. 63 & committee note.

398. Fed. R. Civ. P. 63 committee note.
167

13. Settlement

.1 Trial Judge’s Role 167

.11 General Principles 167

.12 Timing/Relationship to Discovery 169

.13 Specific Techniques to Promote Settlement 169

.14 Review and Approval 172

.15 Alternative Processes to Encourage Settlement 174

.2 Special Problems 174

.21 Partial Settlements 174

.22 Agreements Affecting Discovery 176

.23 Side Agreements 176

.24 Ethical Considerations 180

The high stakes in complex cases increase the incentive to avoid the risk of

trial, and the burgeoning cost of pretrial activity places a premium on settling

early in the litigation. At the same time, however, the large sums involved, the

high number of parties and counsel, and the complexity of the issues magnify

the difficulty of achieving settlement. This section discusses the role of the trial

judge, general principles and techniques to promote settlement, and special

problems that may arise. Settlement of specific types of litigation is covered in

section 21.6 (class actions), section 22.9 (mass tort litigation), section 31.8 (securities litigation), and section 32.46 (employment discrimination).

13.1 Trial Judge’s Role

.11 General Principles 167

.12 Timing/Relationship to Discovery 169

.13 Specific Techniques to Promote Settlement 169

.14 Review and Approval 172

.15 Alternative Processes to Encourage Settlement 174

13.11 General Principles

Some cases involve important questions of law or public policy that are

best resolved by public, official adjudication. Other times, however, resistance

to settlement arises from unreasonable or unrealistic attitudes of parties and

counsel, in which case the judge can help them reexamine their premises and

assess their cases realistically. The judge can encourage the settlement process

by asking at the first pretrial conference whether settlement discussions have

occurred or might be scheduled. As the case progresses, the judge occasionally

can suggest that the parties reexamine their positions in light of current or anticipated developments.

The judge can then facilitate negotiations by removing obstacles to compromise and can help overcome the intransigence or militance of clients.
§ 13.11 Manual for Complex Litigation, Fourth

168

Without touching on the merits, the judge can focus the parties’ attention on

the likely cost of litigating the case to conclusion, in fees, expenses, time, and

other resources. Other helpful measures include scheduling settlement conferences, directing or encouraging reluctant parties, insurers, and other potential

contributors to participate, suggesting and arranging for a neutral person to

assist negotiations, targeting discovery at information needed for settlement,

and promptly deciding motions whose resolution will lay the groundwork for

settlement.399

Judges may be particularly helpful in identifying and encouraging consideration of nonmonetary solutions. Where, for example, the parties contemplate a continuing relationship, the court can stimulate thought about innovative and mutually beneficial arrangements for the future that may pave the way

for agreement on monetary terms. Drawing on experience and common sense,

a judge may see opportunities for compromise not apparent to the parties and

guide their negotiations toward solutions they might not otherwise discover.

Settlement efforts, however, should not delay or divert the pretrial process;

both can and should operate effectively on parallel tracks. Nor should settlement efforts be permitted to impair the parties’ perception of judicial fairness

and impartiality. Some judges participate actively in settlement discussions of a

case, as well as handling pretrial activity and trial if the case does not settle.

Others are uncomfortable in what they view as a dual role. Occasionally, the

parties request that the assigned judge participate in settlement discussions,

waiving the right to seek recusal.400 Such involvement, however, might affect

the parties’ confidence in the judge’s ability to try the case impartially. Thus,

many judges rarely engage in substantive settlement negotiations in cases they

are expected to try, particularly by bench trial.401 Instead, they bring in another

judge or other neutral person for settlement purposes. In some large litigation,

the parties are willing to pay for the services of a skilled mediator. See section

13.15.

Judicial participation in settlement negotiations demands patience and a

willingness to listen. One obstacle may be removed only to reveal another. The

judge should not become, or allow counsel and the parties to become, discouraged, but should seek openings and opportunities not readily apparent. Parties

may signal their expectations and limits in subtle ways. Often their true objectives remain hidden from all but the most attentive listener. An observant

judge can open channels for effective communication.

399. See Litigation Manual, supra note 12, at 58–64.

400. See id. at 58.

401. See D. Marie Provine, Settlement Strategies for Federal District Judges 28 (Federal

Judicial Center 1986).
Settlement § 13.13

169

13.12 Timing/Relationship to Discovery

Many judges broach settlement at the initial scheduling conference.402

Counsel should prepare by discussing the possibility of settlement during the

Federal Rule of Civil Procedure 26(f) conference, as the rule requires, and becoming familiar with their clients’ positions. Though the parties may lack sufficient information for serious discussions, the court can use the conference to

explore the prospects for settlement, as well as the possibility of reference to

extrajudicial procedures (see section 13.15). Consider scheduling negotiations

and periodic progress reports and assisting counsel in developing a format for

them.403 Counsel should attend settlement conferences with full settlement

authority or with immediate access to their client.404 Any impending or finalized settlement should be disclosed to the court promptly (see also section 13.23).

Although settlement should be explored early in the case, the parties may

be unwilling or unable to settle until they have conducted some discovery. The

benefits of settlement are diminished, however, if it is postponed until discovery is completed. A better approach may be to target early discovery at information needed for settlement negotiations.405 Most judges do not stay discovery or other pretrial proceedings based on the pendency of settlement discussions, because the momentum of the litigation and trial preparation can create

a powerful impetus for settlement. A short, judicially monitored extension may

be appropriate, however, if the parties are close to agreement, and if a particular activity or deadline could affect their positions. Avoiding the expense of

imminent discovery can be an inducement to settle, but a possible settlement

should not preclude or limit further discovery needed by other parties (see

section 13.22).

13.13 Specific Techniques to Promote Settlement

A number of techniques have proven successful in promoting settlement.

The list below is not exhaustive, and creativity in this aspect of the litigation

has few risks. The following techniques may be productive:

• Firm trial date. Setting a firm trial date is generally the most effective

means to motivate parties to settle. To keep the date credible, ensure

402. See Fed. R. Civ. P. 16(a)(5), (c)(9) (pretrial conferences may be used to consider settlement).

403. See Litigation Manual, supra note 12, at 21.

404. See Fed. R. Civ. P. 16(c).

405. Targeted discovery is discussed in supra section 11.422.
§ 13.13 Manual for Complex Litigation, Fourth

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that the case proceeds on schedule through pretrial; early settlement

discussions generally should not be allowed to delay pretrial proceedings.

• Reference to another judge or magistrate judge. One way to avoid the

appearance of partiality is to refer the parties to another judge or

magistrate judge for settlement negotiations. Many courts have reciprocal arrangements by which judges assist in settlement negotiations in

cases assigned to other judges.

• Participation by parties. Requesting or requiring that the parties or representatives attend settlement conferences406 may expedite negotiations

and help avoid the delays involved in seeking authority. In any event,

the attending parties will become better informed of the strengths and

weaknesses of each side’s case and the costs and risks of pursuing the

litigation. The parties’ presence can, however, inhibit frank discussion

by counsel, who may feel obliged to keep up appearances for the

benefit of their clients.

• Confidential discussions with judge. A judicial meeting with each party

(or side) separately for confidential discussions, with their mutual

consent, may help the parties find common ground. The parties may

be more willing to speak candidly outside of the adversarial setting,

and the judge can point out weaknesses without fear of compromising

a party’s position in the eyes of opposing counsel. The judge may also

ask counsel to submit confidential memoranda outlining their settlement posture. After such discussions, the judge may be able to suggest

areas of possible agreement, without revealing confidences.

• Settlement counsel, special masters, or experts. The litigating attorneys

may not be suited to conduct settlement discussions and may be hampered by personal antagonisms developed in the course of the litigation. In such cases, consider suggesting that one or more of the parties

engage or designate special settlement counsel separate from lead and

liaison counsel (see section 10.222). Judges have also used special

masters to assist in settlement of complex litigation and in postsettlement claims-resolution proceedings. The judge can arrange for

the special master’s compensation with the agreement of the parties

and select an individual from a list provided by the parties (see section

11.52).

406. See Fed. R. Civ. P. 16(c) (court may require party or its representative to be present or

available by telephone).
Settlement § 13.13

171

• Contribution bar orders. To facilitate partial settlements in multiparty

cases, the court may (unless prohibited by the underlying statute) approve as a term of the settlement an order barring claims for contribution or indemnification by nonsettling defendants. To ensure binding

effect, the affected parties or their representatives should be before the

court, and their rights should be protected.407 Such orders typically

contain a formula for calculating a setoff for nonsettling defendants

based on the settlement amount or the settlors’ adjudged proportion

of fault.408

• Offer of judgment. Federal Rule of Civil Procedure 68 allows a party

defending against a claim to serve an offer of judgment on the adverse

party at any time up to ten days before trial (or proceedings to determine damages if liability has already been adjudged). The party served

has ten days to accept or be liable for all costs incurred after the offer is

made, unless it obtains a more favorable judgment.409 The court’s invoking this procedure can create an added incentive to accept a reasonable offer in litigation (such as antitrust) where taxable costs may

be high, particularly where the underlying statute defines costs to include attorneys’ fees.410 Local or state rules may include similar, possibly harsher provisions than Rule 68. In deciding whether such state

rules or statutes apply in diversity cases, consider Burlington Northern

Railroad Co. v. Woods,

411 which held inapplicable an Alabama statute

imposing a mandatory penalty against appellants obtaining a stay

pending an unsuccessful appeal, on the ground that it conflicted with

Federal Rule of Appellate Procedure 39.

• Representative case(s). The results of a trial of one or a few representative lead cases can provide information and motivation helpful to settlement of related cases.

• Severance. The early resolution of one or more issues by separate trial

may provide a basis for settlement of others. The resolution of liability,

407. See, e.g., In re Masters Mates & Pilots Pension Plan & IRAP Litig., 957 F.2d 1020, 1031

(2d Cir. 1992); In re Jiffy Lube Sec. Litig., 927 F.2d 155, 160 (4th Cir. 1991); Franklin v. Kaypro

Corp., 884 F.2d 1222, 1229 (9th Cir. 1989); McDonald v. Union Carbide Corp., 734 F.2d 182,

184 (5th Cir. 1984) (per curiam).

408. See McDermott, Inc. v. AmClyde, 511 U.S. 202 (1994) (admiralty).

409. See Yohannon v. Keene Corp., 924 F.2d 1255, 1263–69 (3d Cir. 1991) (upholding

application of Pennsylvania Rule of Civil Procedure 238, which predicates penalty, inter alia, on

failure to obtain judgment of more than 125% of offer).

410. See Marek v. Chesny, 473 U.S. 1, 7–12 (1985).

411. 480 U.S. 1 (1987).
§ 13.14 Manual for Complex Litigation, Fourth

172

damages, or other pivotal issues can provide the parties with the information or incentive needed for a comprehensive settlement. A federal court, however, cannot enforce agreements settling claims lacking

an independent basis for federal subject-matter jurisdiction unless the

court embodies the settlement in the dismissal order at the request of

the parties.412

13.14 Review and Approval

Ordinarily, settlement does not require judicial review and approval.413

Many of the exceptions to this rule, however, are of particular relevance to

complex litigation. The Federal Rules require court approval of settlements in

class actions (including actions brought by or against an unincorporated association as a class),414 shareholder derivative actions,415 and actions in which a

receiver has been appointed.416 The antitrust laws require court approval of

consent judgments proposed by the United States in actions it has instituted.417

Common law may call for review and approval in a variety of contexts where

the settlement requires court action, particularly if it affects the rights of nonparties or nonsettling parties,418 or where the settlement is executed by a party

acting in a representative capacity.419

Although the standards and procedures for review and approval of settlements vary, in general the judge is required to scrutinize the proposed settlement to ensure that it is fair to the persons whose interests the court is to protect. Those affected may be entitled to notice420 and an opportunity to be

412. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994).

413. In re Masters, 957 F.2d at 1025–26; see Fed. R. Civ. P. 41(a)(1)(ii) (voluntary dismissal

by stipulation signed by all parties).

414. Fed. R. Civ. P. 23, 23.2. Settlement in class actions is discussed in infra section 21.6.

415. Fed. R. Civ. P. 23.1.

416. Fed. R. Civ. P. 66.

417. 15 U.S.C. § 16(e) (2000) (review of proposed antitrust consent judgment to determine

if in the public interest).

418. See, e.g., In re Masters, 957 F.2d at 1025–26 (parties unwilling to settle unless the court

enforced the terms); TBG Inc. v. Bendis, 811 F. Supp. 596, 600 (D. Kan. 1992) (settlement required bar order affecting rights of nonsettling parties).

419. See, e.g., Gaxiola v. Schmidt, 508 F. Supp. 401 (E.D. Tenn. 1980) (action brought on

behalf of minors). State law, when applicable in a diversity case, may require approval in similar

contexts. See, e.g., Owen v. United States, 713 F.2d 1461, 1464–68 (9th Cir. 1983) (applying

California law requiring approval of certain settlements in cases involving joint tortfeasors);

Soares v. McCloskey, 466 F. Supp. 703 (E.D. Pa. 1979) (applying Pennsylvania estate statute).

420. See, e.g., Fed. R. Civ. P. 23(c)(2).
Settlement § 13.14

173

heard.421 This usually involves a two-stage procedure. First, the judge reviews

the proposal preliminarily to determine whether it is sufficient to warrant public notice and a hearing. If so, the final decision on approval is made after the

hearing.

The judge must have information sufficient to consider the proposed settlement fully and fairly. All terms must be disclosed, so that the judge can understand the agreement’s effect on those not party to the settlement and help

prevent collusion and favoritism.422 Because the parties or attorneys often have

conflicts of interest, the proponents should explain why the proposed settlement is preferable, for those not a party to it, to continuation of the litigation.

The proponents should respond to any objections raised. When settlement is

proposed early in the litigation, the judge may need additional information

necessary for a full review.

The judge must guard against the temptation to become an advocate—either in favor of the settlement because of a desire to conclude the litigation, or against the settlement because of the responsibility to protect the

rights of those not party to it. Judges should be open to the views of those who

may be affected by the settlement, whether or not they have legal standing to

be heard. This may include providing notice to absent parties even if not required by governing law, and appointing an expert under Federal Rule of Evidence 706 to provide a neutral assessment, or special counsel to represent the

interests of persons who are absent or under a legal disability.

The trial court may not rewrite a settlement agreement; if it is unacceptable

the court must disapprove it,423 but it may suggest changes.424 An order rejecting a proposed settlement or consent decree is generally not immediately appealable, but may be appealed if the proposal includes injunctive relief.425 The

proponents may revise their agreement to overcome the court’s objections and

resubmit it; if the changes are substantial, it may be necessary for the court to

begin the notice and review process anew. An order approving a settlement

should be supported by a statement of the court’s reasoning so as to create a

record for appellate review.426

421. See, e.g., Michaud v. Michaud, 932 F.2d 77, 81 (1st Cir. 1991); Garabedian v. Allstates

Eng’g Co., 811 F.2d 802 (3d Cir. 1987).

422. See In re Warner Communications. Sec. Litig., 798 F.2d 35, 37 (2d Cir. 1986).

423. See Evans v. Jeff D., 475 U.S. 717, 727 (1986); Jeff D. v. Andrus, 899 F.2d 753, 758 (9th

Cir. 1989); In re Warner, 798 F.2d at 37.

424. See Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977) (discussing process of reviewing proposed settlement).

425. See Carson v. Am. Brands, Inc., 450 U.S. 79 (1981); see also 28 U.S.C. § 1292(a)(1)

(West 2002).

426. See Cotton, 559 F.2d at 1331.
§ 13.21 Manual for Complex Litigation, Fourth

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13.15 Alternative Processes to Encourage Settlement

A number of processes outside of the traditional litigation process have

proved effective in helping parties reach settlement. The Federal Judicial Center’s Guide to Judicial Management of Cases in ADR (2001) discusses such processes and how to use them.

13.2 Special Problems

.21 Partial Settlements 174

.22 Agreements Affecting Discovery 176

.23 Side Agreements 176

.24 Ethical Considerations 180

13.21 Partial Settlements

In litigation involving numerous claims and parties, litigants sometimes

seek settlement limited to particular claims, defenses, or issues, or a settlement

with less than all of the parties. Such partial settlements may provide funds

needed to pursue the litigation, limit the extent of exposure, reduce the scope

of discovery or trial, aid the parties in obtaining evidence, and facilitate later

settlements on other issues and with other parties. On the other hand, the

timing or terms of partial settlements can interfere with the ultimate resolution

of the litigation. A partial settlement on terms that prove too generous, for example, may create resistance to later, more reasonable settlement offers. To

avoid such problems, settling parties may adopt a general formula for all settlements; if adhered to, this may discourage adverse parties from prolonging

litigation to get better terms.

Late partial settlements in multiparty cases present a number of potential

problems.427 Attorneys with assigned responsibilities at trial may drop out

when their client’s case has been settled, requiring reorganization of counsel

and disrupting trial planning. Although it is a common and legitimate litigation strategy to settle with one adverse party to weaken another’s position, doing so on the eve of trial may seriously disrupt the progress of the case. The

power to shift costs for such conduct, and the desirability of doing so, are both

unclear, but the judge can discourage belated and potentially disruptive settlements. If necessary to reduce the prejudice to nonsettling parties, the judge can

grant a continuance. The judge can also remind lead counsel, members of a

trial team, and other attorneys who have accepted responsibilities on behalf of

427. Partial settlements in class actions are discussed in infra section 21.651.
Settlement § 13.21

175

other parties and attorneys that their fiduciary obligations may survive the

dismissal of their own clients.

Partial settlements can affect the issues and parties not covered. A partial

settlement may (by law) release certain nonsettling parties or entitle them to a

setoff for amounts received in settlement from coparties; in some areas of law,

this may depend on the settling parties’ intention.428 The agreement must

therefore indicate clearly which parties and claims it covers, making plain the

relationship between the damage items covered and those that may later be

awarded by judgment. The court needs to consider whether and in what manner payments made under the settlement agreement will be treated as offsets

against future awards,429 and how the settlement will be treated at trial.

The parties may attempt to apportion the settlement among different

claims, sometimes for tax purposes430 and sometimes to enhance their position

against nonsettling parties. When partial settlements are submitted for judicial

approval, apportionment clauses should be reviewed for their effect on further

proceedings and other parties. Agreements that do not permit appropriate

modification of such clauses if justified by later developments should not be

approved.

Evidence of the settlement of a claim is inadmissible at trial “to prove liability for or invalidity of the claim or its amount,” though not for other purposes. Though federal law disfavors admission, in diversity cases the court may

be obliged to apply state law to the contrary.431 There is disagreement over

whether Federal Rule of Evidence 408 prohibits the introduction of evidence of

a partial settlement for the purpose of allowing the jury, in determining damages, to consider the amount already recovered from other sources.432 An alternative approach is for the court to make an appropriate reduction in any

428. See Zenith Radio Corp. v. Hazeltine Research, 401 U.S. 321, 343–47 (1971) (discussing

subject generally and adopting “intention of parties” rule for release of antitrust coconspirators).

429. See McDermott, Inc. v. AmClyde, 511 U.S. 202 (1994) (admiralty).

430. Several U.S. Tax Court decisions hold that agreements apportioning liability solely to

create a tax deduction should not be approved. See, e.g., Fed. Paper Bd. Co. v. Comm’r, 90 T.C.

1011, 1024 n.33 (1988); Metzger v. Comm’r, 88 T.C. 834, 849–50 (1987); Fisher Cos. v. Comm’r,

84 T.C. 1319, 1340 (1985).

431. Fed. R. Evid. 408.

432. See, e.g., Carota v. Johns Manville Corp., 893 F.2d 448 (1st Cir. 1990); see also

McHann v. Firestone Tire & Rubber Co., 713 F.2d 161, 166 n.10 (5th Cir. 1983). If such evidence

is received, the court should give appropriate limiting instructions.
§ 13.23 Manual for Complex Litigation, Fourth

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judgment recovered against nonsettling parties,433 informing the jury of the fact

(not the amount) of settlement where necessary to explain a party’s absence.434

13.22 Agreements Affecting Discovery

One of the major incentives to settle is to avoid the cost and burden of

further discovery. Settlement provisions that relieve a settling party from further discovery (at least in part) may be problematic if other parties need discovery from a settling party, particularly in light of the limits on nonparty discovery. Such provisions should therefore be drafted to take into account other

parties’ continuing need for discovery. Though nonsettling defendants usually

lack standing to appeal orders approving partial settlements, they may appeal if

they suffer formal legal prejudice. 435

A settlement agreement may also purport to require a party not to disclose

its terms, or to return, destroy, or keep confidential discovery materials previously obtained. The effect, if not the purpose, of such an agreement may be to

forestall or frustrate other litigation, pending or anticipated. For this and other

public policy reasons, including the protection of First Amendment interests

(not to mention problems under state law), such agreements may be invalid,

unenforceable, or simply not entitled to approval. Where such an agreement

may be appropriate (e.g., to protect trade secrets), consider requiring that the

materials be preserved for a reasonable period of time. The relevant analysis is

similar to that employed when considering issuance of a protective order (see

section 11.43).

13.23 Side Agreements

Agreements allocating financial responsibility among persons or entities

are common—contracts of insurance and indemnification are prime examples.

Occasionally, however, litigants try to apportion damages through side agreements that supplement their formal settlement agreements but are not intended to be disclosed to others. These agreements may not of themselves be

unlawful or unethical, and on occasion there may be legitimate reasons for not

433. See, e.g., Jackson v. Johns-Manville Sales Corp., 727 F.2d 506, 531–32 (5th Cir. 1984),

modified on other grounds, 757 F.2d 614 (1985) (en banc); McHann, 713 F.2d at 166.

434. Jackson, 727 F.2d at 531.

435. See, e.g., Zupnik v. Fogel, 989 F.2d 93, 98 (2d Cir. 1993); Mayfield v. Barr, 985 F.2d

1090, 1092–93 (D.C. Cir. 1993); Agretti v. ANR Freight Sys. Inc., 982 F.2d 242, 247 (7th Cir.

1992) (defining “formal legal prejudice”); Alumax Mill Prods., Inc. v. Cong. Fin. Corp., 912 F.2d

996, 1002 (8th Cir. 1990), and cases cited therein.
Settlement § 13.23

177

disclosing them to other parties. In presenting settlement agreements for judicial approval, however, the parties are obliged to make full disclosure of all

terms and understandings, including any side agreements. The settling parties

may request that certain terms not be disclosed to other parties, but must justify this to the court.436

Common types of side agreements include the following:

• “Mary Carter” agreements.437 In return for a settlement payment, the

plaintiff may agree to release a particular defendant from liability, even

though the defendant remains party to the suit, with the further provision that the defendant will be reimbursed in some specified manner

out of any recovery against other defendants.438 Many varieties of such

agreements have developed, including loan-receipt agreements and

agreements to dismiss during the case or not to execute a judgment if

the defendant does not take an aggressive posture against the plaintiff’s

claims.439 These agreements have been criticized as unfair to nonsettling defendants,440 because they align the interests of the “settling”

defendant, who remains in the litigation, with those of the plaintiff

(usually covertly), eliminating their normal adversarial relationship.441

Nevertheless, courts have rarely rejected a settlement on this basis,442

although it is advisable for the court to give such agreements particular

scrutiny.443

The primary problem raised by Mary Carter agreements is disclosure. Typically, parties enter them secretly or request that the court not

disclose the terms of the agreement. Nondisclosure, however, mag436. See, e.g., In re Braniff, Inc., No. 91-03325-BKC-6Cl, 1992 WL 261641, at *5 (Bankr.

M.D. Fla. Oct. 2, 1992) (parties must disclose to court and, unless good cause shown, other parties all agreements settling or limiting liability, whether “formal or informal, absolute or conditional”).

437. Booth v. Mary Carter Paint Co., 202 So.2d 8 (Fla. Dist. Ct. App. 1967).

438. See Robertson v. White, 81 F.3d 752, 754 n.1 (8th Cir. 1996); Marathon Oil Co. v.

Mid-Continent Underwriters, 786 F.2d 1301, 1303 n.1 (5th Cir. 1986); Wilkins v. P.M.B. Sys.

Eng’g, Inc., 741 F.2d 795, 798 n.2 (5th Cir. 1984); Quad/Graphics, Inc. v. Fass, 724 F.2d 1230,

1236 (7th Cir. 1983). For other definitions, see materials cited in Hoops v. Watermelon City

Trucking, Inc., 846 F.2d 637, 640 n.3 (10th Cir. 1988).

439. See Frank D. Wagner, Annotation, Validity and Effect of Agreement with One Cotortfeasor Setting His Maximum Liability and Providing for Reduction or Extinguishment Thereof

Relative to Recovery Against Nonagreeing Cotortfeasor, 65 A.L.R.3d 602 (1975).

440. See Bass v. Phoenix Seadrill/78, Ltd., 562 F. Supp. 790, 796 (E.D. Tex. 1983).

441. See Hoops, 846 F.2d at 640.

442. Bass, 562 F. Supp. at 796.

443. See Wilkins v. P.M.B. Sys. Eng’g, Inc., 741 F.2d 795, 798 n.2 (5th Cir. 1984).
§ 13.23 Manual for Complex Litigation, Fourth

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nifies the prejudice to other parties, since neither the jury nor the defense can take the agreement into account when considering the testimony of the settling defendant; the agreement may therefore be

ground for a new trial.444 For this reason, case law favors requiring disclosure of such agreements to the court, parties, and jury.445 Thus, at

the outset of the litigation, the court should impose a continuing duty

on counsel to promptly disclose all such agreements without need for

a motion or discovery request.

• Sharing agreements. Defendants sometimes agree in advance to allocate

responsibility for damages among themselves according to an agreed

formula (often based on market share). These agreements serve the legitimate purposes of controlling parties’ exposure and preventing

plaintiffs from forcing an unfair settlement by threats to show favoritism in the collection of any judgment that may be recovered. They

may, however, expressly prohibit or indirectly discourage individual

settlements. They also create a disincentive for defendants to make

available evidence indicating liability on the part of codefendants.

Therefore, although they are generally appropriate, the court may refuse to approve or enforce agreements that violate public policy or

unfairly prejudice other parties.446

Sharing agreements should be discoverable. Once the agreement is

made known, it may be possible to structure partial settlements to take

its terms into account. It is less clear when and whether such agreements should be admissible in evidence. Since Federal Rule of Evidence 408 does not require exclusion of settlement agreements when

offered for purposes such as proving bias, they may be admitted to attack a witness’s credibility or demonstrate that formally opposing parties are not in fact adverse, accompanied by a limiting instruction that

the agreement is not to be considered proof or disproof of liability or

damages.447 Settlement agreements should not be admitted, however,

when they are of little relevance and may be prejudicial448 (e.g., by suggesting a conspiracy to the jury).

444. See Leger v. Drilling Well Control, Inc., 69 F.R.D. 358, 361 (W.D. La. 1976), aff’d, 592

F.2d 1246 (5th Cir. 1979); cf. Reichenbach v. Smith, 528 F.2d 1072 (5th Cir. 1976) (error found

harmless).

445. See, e.g., Hoops, 846 F.2d at 640; Reichenbach, 528 F.2d at 1076 (dictum).

446. See In re San Juan Dupont Plaza Hotel Fire Litig., MDL No. 721, 1993 U.S. Dist.

LEXIS 14191 (D.P.R. Sept. 14, 1993).

447. See Brocklesby v. United States, 767 F.2d 1288, 1292–93 (9th Cir. 1985).

448. See Fed. R. Evid. 403.
Settlement § 13.23

179

• “Most-favored nation” clauses. Settlement agreements proposed early in

the litigation often contain a “most-favored nation” clause to encourage early settlement by protecting all parties against being prejudiced

by later, more favorable settlements with others. Such clauses typically

obligate a signatory plaintiff to give signatory defendants a proportionate refund if the former settles with other defendants for less, or a

signatory defendant to make additional payments to signatory plaintiffs if the former settles with other plaintiffs for more.

Such clauses have several drawbacks: (1) the potential liability under

them is indeterminate, making them risky; (2) the additional recovery

they may produce for some plaintiffs without any effort by their attorneys makes it difficult to fix fees; and (3) the factors that induce parties

to settle with different parties for different amounts, such as the time

of settlement and the relative strength of claims, are nullified. Such

clauses can provide an incentive for early settlement as well as an obstacle to later settlements. To limit their prejudicial impact, such

clauses should terminate after a specified length of time (to prevent

one or more holdouts from delaying final implementation), impose

ceilings on payments, and allow flexibility to deal with changed circumstances or with parties financially unable to contribute proportionately.449 The judge may have to consider voiding or limiting them

if enforcement becomes inequitable. If this determination involves

disputed questions of fact, an evidentiary hearing and possibly additional discovery may be necessary.450

• Tolling agreements. Parties may enter into agreements under which one

side promises not to assert a statute-of-limitations defense in return

for some consideration. Parties should disclose these agreements to the

court and other parties to avoid disruption of the case-management

plan and frustration of the goals of court-imposed deadlines.

449. See In re Corrugated Container Antitrust Litig., 752 F.2d 137, 139 n.3 (5th Cir. 1985);

Fisher Bros. v. Phelps Dodge Indus., Inc., 614 F. Supp. 377, 381–82 (E.D. Pa. 1985), aff’d mem.

791 F.2d 917 (3d Cir. 1986).

450. See In re Corrugated Container, 752 F.2d at 142–43; Fisher Bros., 614 F. Supp. at 381 &

n.8.
§ 13.24 Manual for Complex Litigation, Fourth

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13.24 Ethical Considerations

A number of ethical issues can confound settlement agreements even if not

kept secret:

• Communications with represented parties. State rules of professional

responsibility bar attorneys from communicating directly with a party

represented by counsel (absent that counsel’s presence or consent).451

These rules prohibit attorneys from directly negotiating settlement

with adverse parties.452 The parties themselves are free to engage in direct settlement discussions without their attorneys. It may be an ethical violation, however, for an attorney to use a client or a third party to

violate the prohibition on direct communication with represented

parties.453

• Agreements foreclosing other representation. Defendants have attempted

to condition settlement on an agreement that plaintiff’s counsel will

not represent other persons with similar claims, but it is an ethical

violation for an attorney to enter into or propose such an agreement.454 “Futures deals” are an ethically dubious variation, in which

the settling attorney agrees to process similar claims of future clients

according to the settlement terms or to advise clients to accept those

terms.

• Negotiations regarding attorney fees. In routine nonclass litigation, in

which each party is responsible for its own attorneys’ fees, settling defendants customarily pay a negotiated sum, leaving counsel and their

clients to settle their fees. Problems may arise, however, in cases where

the court must approve settlements containing provisions for attorneys’ fees, as in class actions (see section 21.7) or in cases, such as civil

451. Model Rules of Prof’l Conduct R. 4.2 (2002); Model Code of Prof’l Responsibility DR

7-104(A)(1) (1981). For the purposes of this rule, class members are considered parties represented by class counsel. For further discussion and citations, see infra section 21.33.

452. See Walker v. Kotzen, 567 F. Supp. 424, 426–27 (E.D. Pa. 1983), appeal dismissed, 734

F.2d 9 (3d Cir. 1984). For settlement and related communications in class actions, see infra sections 21.3, 21.6.

453. Model Rules of Prof’l Conduct R. 8.4(a) & cmt. (2002) (it is professional misconduct

for a lawyer to attempt to violate rule through another person).

454. Model Rules of Prof’l Conduct R. 5.6(b) & cmt. (2002); Model Code of Prof’l Responsibility DR 2-108(B) (1981); ABA Comm. on Ethics and Prof’l Responsibility, Informal Op.

1039 (1968).
Settlement § 13.24

181

rights actions, in which the losing side is liable for the adversary’s attorneys’ fees.

It is problematic when settlement negotiations involving attorney

fees are conducted simultaneously with negotiations on the merits.

When a defendant offers to settle for a lump sum covering both damages and fees, negotiating the allocation may create a conflict of interest for the plaintiff’s attorney.455 The problem is acute when the plaintiffs are represented by legal aid or another nonprofit group that has

agreed with the clients to seek fees only from the opposing parties.456

The Supreme Court, while recognizing that “such situations may raise

difficult ethical issues for a plaintiff’s attorney,” has declined to prohibit this practice, reasoning that “a defendant may have good reason

to demand to know his total liability.”457 Indeed, the Court has stated

that settlement of civil rights cases would be impeded by rules prohibiting simultaneous negotiations of fees.458

Proposed settlements arising out of such negotiations need not be

rejected out of hand, but should be reviewed for fairness of the allocation between damages and attorneys’ fees.459 The ethical problem will

be eased if the parties agree to have the court make the allocation.

A further problem is presented if a defendant conditions a settlement favorable to plaintiffs on an agreement to waive attorney fees,

particularly if the relief sought is primarily or entirely nonmonetary.

Plaintiffs’ attorney has an ethical obligation to obtain the most favorable relief for the client without regard to the attorney’s interest in a

fee, and may thereby be coerced into giving up all fees.460 This practice

may discourage other attorneys from representing civil rights claimants.461 Some bar associations have ruled it unethical for defendants to

request fee waivers in exchange for relief on the merits.462 The Supreme Court, however, has approved the practice, reasoning that a

prohibition on fee waivers would discourage settlement. Because of the

“potentially large and typically uncertain magnitude” of fee awards,

455. See White v. N.H. Dep’t of Employment Sec., 455 U.S. 445, 453 n.15 (1982).

456. See Evans v. Jeff D., 475 U.S. 717, 721 (1986).

457. White, 455 U.S. at 453 n.15; see Evans, 475 U.S. at 732–34; Marek v. Chesny, 473 U.S.

1, 6–7 (1985).

458. Evans, 475 U.S. at 736–37 & nn.28–29.

459. See id. at 754, 765 (Brennan, J., dissenting); but see id. at 738 n.30.

460. See id. at 727–30 & nn.14, 16.

461. Id. at 754–59 (Brennan, J., dissenting).

462. Id. at 728 n.15.
§ 13.24 Manual for Complex Litigation, Fourth

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defendants are unlikely to settle until the issue of fees has been resolved.463 The judge is therefore free—but not required—to approve

such settlements. The Supreme Court suggested that disapproval

might be appropriate if the defendant had no realistic defense on the

merits or if the waiver was a “vindictive” act designed to discourage

counsel from bringing such cases.464 Counsel, though, may be prohibited by state rules from proposing such settlements.

• Failure to submit offers to client. Attorneys have an obligation promptly

to submit nonfrivolous offers of settlement to the client, unless prior

discussions have made clear that the proposal will be unacceptable.465

Breach of this duty is egregious if counsel will be compensated in

whole or in part on the basis of the number of hours expended in the

litigation, as in the case of defense counsel or when fees are awarded or

approved by the court on a lodestar basis.

463. See id. at 732–38.

464. Id. at 739–40 & n.32.

465. See Model Rules of Prof’l Conduct R. 1.2(a) & cmt., 1.4 & cmt. (2002); ABA Comm.

on Ethics and Prof’l Responsibility, Formal Op. 326 (1970); Deadwyler v. Volkswagen of Am.

Inc., 134 F.R.D. 128, 140 (W.D.N.C. 1991), aff’d, 966 F.2d 1443 (4th Cir. 1992).
183

14. Attorney Fees466

.1 Eligibility for Court-Awarded Fees 184

.11 Types of Cases—Overview 184

.12 Common-Fund Cases 186

.121 Percentage-Fee Awards 186

.122 Lodestar-Fee Awards 193

.13 Statutory-Fee Cases 196

.2 Proceedings to Award Fees 199

.21 Setting Guidelines and Ground Rules 199

.211 Selecting Counsel and Establishing Fee Guidelines 200

.212 Staffing 201

.213 Maintaining Adequate and Comprehensible Records 202

.214 Submission of Periodic Reports 202

.215 Compensation for Designated Counsel 202

.216 Reimbursement of Expenses 203

.22 Motion for Attorney Fees 203

.221 Contents of the Fee Motion 203

.222 Timing 204

.223 Supporting Documentation and Evidence 204

.224 Discovery 205

.23 Judicial Review/Hearing and Order 205

.231 Judicial Review 205

.232 Hearing and Order 207

Regulating and awarding attorneys’ fees presents the court with an opportunity and a mechanism for managing class actions and other forms of

complex litigation. Under the “American Rule,” parties generally bear their

own costs of litigation,467 and the attorneys and client ordinarily negotiate the

rate at which attorneys are to be paid and the scope of their work. In complex

litigation, however, there is often no traditional client with the authority to

negotiate the terms of the representation or the rate for compensating counsel.

In class actions involving monetary stakes, the natural conflict that arises between lawyers and class members necessarily draws the judge into the role of

regulating and awarding attorney fees.468 Unless the judge protects the interests

of absentee class members, those interests may go unrepresented.

466. The subject is treated at length in Alan Hirsch & Diane Sheehey, Awarding Attorneys’

Fees and Managing Fee Litigation (Federal Judicial Center 1994). See also supra section 13.24

(negotiation of fees and settlement); infra section 21.27 (appointment of class counsel); infra

section 21.7 (fee awards in class actions).

467. See, e.g., Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 247 (1975).

468. See, e.g., Rawlings v. Prudential-Bache Props, Inc., 9 F.3d 513, 516 (6th Cir. 1993)

(“The interest of class counsel in obtaining fees is adverse to the interest of the class in obtaining

recovery because the fees come out of the common fund set up for the benefit of the class.”).
§ 14.11 Manual for Complex Litigation, Fourth

184

Judicial involvement can have a major impact on the reasonableness of fee

requests and on the management of the litigation. The court has considerable

discretion to use fees as a tool in a class action or a multidistrict consolidation.

Calibrating the amount of attorney fees to a reasonable share of the benefits of

a class settlement or award is an appropriate and effective means of managing

class action litigation and preventing abuses of the class action device.469 For

example, a fee award that is limited to a reasonable percentage of the coupons

actually redeemed in a “coupon settlement” may eliminate the worst coupon

settlement abuses.470 An announcement at the outset by the judge of the intention to apply such a rule will motivate attorneys to ensure that class benefits

have a real value to the class.

Because of the sums involved, the calculation of fee awards often is complex, burdensome, bitterly contested, and a precursor to satellite litigation. Establishing guidelines and ground rules—even establishing budgets or rates for

payment—early in the litigation helps ease the judge’s burden and helps prevent later disputes. To facilitate the hearing and resolution of fee petitions,

Rule 54(d)(2)(D) explicitly authorizes district courts to adopt local rules by

which fees issues “may be resolved without extensive evidentiary hearings” and

authorizes judges to refer fee matters to special masters or magistrate judges.

469. Deborah R. Hensler et al., Class Action Dilemmas: Pursuing Public Goals for Private

Gain 490 (2000) (“The single most important action that judges can take to support the public

goals of class action litigation is to reward class action attorneys only for lawsuits that actually

accomplish something of value to class members and society.”) (emphasis omitted); see also

Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 524 (1st Cir. 1991).

470. See Duhaime v. John Hancock Mut. Life Ins. Co., 989 F. Supp. 375, 377–80 (D. Mass.

1997); see also In re Gen. Motors Corp. Pick-up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768,

801–02, 819–20 (3d Cir. 1995).

14.1 Eligibility for Court-Awarded Fees

.11 Types of Cases—Overview 184

.12 Common-Fund Cases 186

.121 Percentage-Fee Awards 186

.122 Lodestar-Fee Awards 193

.13 Statutory-Fee Cases 196

14.11 Types of Cases—Overview

An initial determination should be made by the court early in the case as to

whether the prevailing party is entitled to court-awarded fees. The nature of an
Attorney Fees § 14.11

185

award depends on the type of case and fund as well as applicable local rules and

circuit law.

Below are the principal types of cases and situations in which courts may

award attorney fees:

• Common-fund cases. If attorneys’ efforts create or preserve a fund or

benefit for others in addition to their own clients, the court is empowered to award fees from the fund.471 The award may be made from recoveries obtained by settlement or by trial. Common-fund cases are

predominantly, but not exclusively, class actions; some class actions

may also be brought under fee-shifting statutes. Federal Rule of Civil

Procedure 23 limits attorney fees in class actions to those that are

“reasonable.”472

A variant on the traditional common-fund case occurs frequently in

mass tort litigation—in both class actions and large consolidations—where a separate fund to pay attorney fees is created as a part of

a settlement. The court must distribute the fund among the various

plaintiffs’ attorneys, which may include class counsel, court-designated

lead and liaison counsel, and individual plaintiff’s counsel.473

• Statutory-fees cases. Over 150 statutes, covering actions ranging from

antitrust and civil rights to little known types of claims, authorize

courts to depart from the American Rule and award attorney fees to a

prevailing party.474 Whether the award is mandatory or permissive depends on the particular statute and applicable case law and may depend on whether the prevailing party is the plaintiff or the defendant.475

471. See, e.g., Boeing Co. v. Van Gemert, 444 U.S. 472 (1980); Mills v. Elec. Auto-Lite Co.,

396 U.S. 375 (1970); Sprague v. Ticonic Nat’l Bank, 307 U.S. 161 (1939); Cent. R.R. & Banking

Co. v. Pettus, 113 U.S. 116 (1885); Trs. of the Internal Improvement Fund v. Greenough, 105

U.S. 527 (1882).

472. Rule 23(h) restates the existing law in its provision that “the court may award reasonable attorney fees.”

473. See In re Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig.,

982 F.2d 603 (1st Cir. 1992).

474. See Ruckelshaus v. Sierra Club, 463 U.S. 680, 684 (1983); see also Hirsch & Sheehey,

supra note 466, at 1–3.

475. Hensley v. Eckerhart, 461 U.S. 424, 429 n.2 (1983) (“A prevailing defendant may recover an attorney’s fee only where the suit was vexatious, frivolous, or brought to harass or embarrass the defendant.”). See also Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421

(1978); but cf. Fogerty v. Fantasy, Inc., 510 U.S. 517, 522 (1994).
§ 14.121 Manual for Complex Litigation, Fourth

186

• Designated counsel. The court may award fees to lead counsel, liaison

counsel, and other attorneys designated to perform tasks on behalf of a

group of litigants (see section 10.22).476

• Objectors. The court may award fees to objectors who provided services

that contributed to an increase in the common fund available to a

class, that aided the court’s review of a class-action settlement, or that

otherwise advanced the interests of the class or assisted the court.477

• Special parties. Under the common law and many state statutes, court

approval is required for the payment of fees charged by counsel for

minors, incompetents, and trusts.

• Sanctions. The court has inherent power to award fees against a litigant

who conducts litigation in bad faith or vexatiously.478 A statutory

counterpart, 28 U.S.C. § 1927, provides for awards against an offending attorney. Various provisions of the Federal Rules of Civil Procedure authorize the award of fees against parties who have failed to

comply with rules or orders with respect to discovery and other pretrial proceedings. Section 10.15 has a detailed discussion of sanctions.

14.12 Common-Fund Cases

.121 Percentage-Fee Awards 186

.122 Lodestar-Fee Awards 193

14.121 Percentage-Fee Awards

The common-fund exception to the American Rule is grounded in the equitable powers of the courts under the doctrines of quantum meruit and unjust

enrichment.479 The exception applies where a common fund has been created

by the efforts of a plaintiff’s attorney480 and rests on the principle that “persons

476. In re Air Crash Disaster, 549 F.2d 1006, 1016 (5th Cir. 1977) (relying on “commonfund” principles and inherent management powers of court in complex litigation); see also infra

section 20.312 and text accompanying notes 700–05 (discussing the relationship between fee

allocations in multidistrict litigation and state–federal cooperation).

477. See Fed. R. Civ. P. 23(e)(4), 23(h) & committee notes; infra sections 21.723 (role of

objectors), 21.71 (criteria for approval of fee requests).

478. Chambers v. NASCO, Inc., 501 U.S. 32 (1991); see also Alyeska Pipeline Serv. Co. v.

Wilderness Soc’y, 421 U.S. 240, 258–59 (1975); Ellingson v. Burlington N., Inc., 653 F.2d 1327,

1332 (9th Cir. 1981).

479. Trs. of the Internal Improvement Fund v. Greenough, 105 U.S. 527, 536 (1882).

480. Compare Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984), and Camden I Condo. Ass’n

v. Dunkle, 946 F.2d 768 (11th Cir. 1991), and Court Awarded Attorney Fees: Report of the Third

Circuit Task Force, 108 F.R.D. 237 (1985) [hereinafter Third Circuit 1985 Task Force Report], with
Attorney Fees § 14.121

187

who obtain the benefit of a lawsuit without contributing to its cost are unjustly

enriched at the successful litigant’s expense.”481 Historically, attorney fees were

awarded from a common fund based on a percentage of that fund.482 After a

period of experimentation with the lodestar method (based on the number of

hours reasonably expended multiplied by the applicable market rate for the

lawyer’s services), the vast majority of courts of appeals now permit483 or direct484 district courts to use the percentage-fee method in common-fund cases.

The only court of appeals that has not explicitly adopted the percentage

method seems to allow considerable flexibility in approving combined percentage and lodestar approaches.485

Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d

Cir. 1973), appeal following remand, 540 F.2d 102 (3d Cir. 1976).

481. Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). See also Mills v. Elec. Auto-Lite

Co., 396 U.S. 375, 392 (1970).

482. See, e.g., Sprague v. Ticonic Nat’l Bank, 307 U.S. 161 (1939); Cent. R.R. & Banking Co.

v. Pettus, 113 U.S. 116 (1885). The rationale differs significantly from that on which statutoryfee awards rest. See Brown v. Phillips Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988)

(“[S]tatutory fees are intended to further a legislative purpose by punishing the nonprevailing

party and encouraging private parties to enforce substantive statutory rights.”). See also In re

SmithKline Beckman Corp. Sec. Litig., 751 F. Supp. 525, 532 (E.D. Pa. 1990).

483. For a circuit-by-circuit review, see Alba Conte, Newburg on Class Actions app. 14-1

(Supp. June 2002). The following seven courts of appeals permit awarding fees by either the

percentage-fee or lodestar method or both (generally using the lodestar as a cross-check): Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000); Johnston v. Comerica Mortgage

Corp., 83 F.3d 241, 246 (8th Cir. 1996); In re Thirteen Appeals Arising out of San Juan Dupont

Plaza Hotel Fire Litig., 56 F.3d 295, 307 (1st Cir. 1995); In re Wash. Pub. Power Supply Sys. Sec.

Litig., 19 F.3d 1291, 1295 (9th Cir. 1994); Rawlings v. Prudential-Bache Props., Inc., 9 F.3d 513,

516 (6th Cir. 1993); In re Cont’l Ill. Sec. Litig., 962 F.2d 566, 572 (7th Cir. 1992) (fee award

simulating “what the market in fact pays not for the individual hours but for the ensemble of

services rendered in a case of this character” would be appropriate); Brown, 838 F.2d at 454

(Tenth Circuit case).

484. The following three courts of appeals direct district courts to use the percentage-fee

method, sometimes supplemented with a lodestar “check”: In re Gen. Motors Corp. Pick-up

Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821–22 (3d Cir. 1995); Swedish Hosp. Corp. v.

Shalala, 1 F.3d 1261, 1271 (D.C. Cir. 1993); Camden I, 946 F.2d at 774. See also In re Cendant

Corp. Prides Litig., 243 F.3d 722, 742 (3d Cir. 2001) (directing the district court to apply a lodestar cross-check and to award fees with a multiplier no greater than three); cf. In re Cendant

Corp. Litig., 264 F.3d 201, 285 (3d Cir. 2001) (stating that the “lodestar cross-check . . . is very

time consuming” but the district court may use it “if necessary”).

485. Longden v. Sunderman, 979 F.2d 1095, 1099–1100 (5th Cir. 1992) (indicating that the

circuit “has yet to adopt this [percentage of common-fund] method” and affirming a district

judge’s use of a combined lodestar and percentage-of-fund approach). See also Strong v. BellSouth Telecomms., Inc. 137 F.3d 844, 852–53 (5th Cir. 1998) (approving application of lodestar

and stating that application of a percentage-of-fund approach could be restricted to a percentage

of claims actually made by class members and not the total amount that might be claimed). The
§ 14.121 Manual for Complex Litigation, Fourth

188

In practice, the lodestar method is difficult to apply, time-consuming to

administer, inconsistent in result, and capable of manipulation. In addition,

the lodestar creates inherent incentive to prolong the litigation until sufficient

hours have been expended.486 The percentage method also has been criticized

as arbitrary, especially “when applied by courts in an automatic fashion.”487

Attorney fees awarded under the percentage method are often between 25%

and 30% of the fund.488 Several courts have established benchmarks, either a

specific figure or a range, subject to upward or downward adjustment depending on the circumstances of the case. Awarding attorneys 25% of a common fund represents a typical benchmark.489 Any single rate, however, is arbitrary and cannot capture variations in class actions’ characteristics. A fixed

benchmark will often yield fee awards that are excessive for certified class actions in which the risk of non-recovery is relatively small.490

Accordingly, in “mega-cases” in which large settlements or awards serve as

the basis for calculating a percentage, courts have often found considerably

lower percentages of recovery to be appropriate.491 One court’s survey of fee

practice of many district judges in the Fifth Circuit appears to be to use either the percentage

approach or both methods. See, e.g., In re Catfish Antitrust Litig., 939 F. Supp. 493, 500 (N.D.

Miss. 1996), and cases cited therein (applying a percentage-of-fund method and discussing the

Johnson factors that courts in the Fifth Circuit typically apply in lodestar analyses). For further

discussion of the Johnson factors, see infra note 509.

486. Third Circuit 1985 Task Force Report, supra note 480, at 248 (finding that “there appears to be a conscious, or perhaps unconscious, desire to keep the litigation alive despite a reasonable prospect of settlement, to maximize the number of hours to be included in computing

the lodestar”).

487. Third Circuit 2001 Task Force Report on Selection of Class Counsel, 74 Temp. L. Rev.

689, 707 (2001) [hereinafter Third Circuit 2001 Task Force Report].

488. Thomas E. Willging, Laural L. Hooper & Robert J. Niemic, Empirical Study of Class

Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules

69, 146–47 figs.67 & 68 (Federal Judicial Center 1996) [hereinafter FJC Empirical Study of Class

Actions]; see also, e.g., In re Pac. Enters. Sec. Litig., 47 F.3d 373, 379 (9th Cir. 1995) (25% with

adjustments up to 33% for complexity, risk, and nonmonetary results).

489. See Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989)

(adopting 25% benchmark). Several other courts of appeals have endorsed variations of the 25%

benchmark. See, e.g., Swedish Hosp., 1 F.3d at 1272 (affirming that a 20% award is within the

range of reasonable fees in common-fund cases, since the majority fall between 20% and 30%);

see also cases cited infra note 498.

490. FJC Empirical Study of Class Actions, supra note 488, at 60 (finding settlement rates

for certified class actions ranging from 62% to 100% in four federal district courts).

491. See, e.g., In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 339–40

(3d Cir. 1998), and cases cited therein (award constituting 6.7% of common fund remanded “for

a more thorough examination and explication of the proper percentage to be awarded to class

counsel . . . in light of the magnitude of the recovery”).
Attorney Fees § 14.121

189

awards in class actions with recoveries exceeding $100 million found fee percentages ranging from 4.1% to 17.92%.492 Likewise, judges who have used

competitive bidding to select counsel and establish the terms for attorney fee

awards have produced percentage-of-recovery awards considerably lower than

the 20%–30% average award reported above.493

Two courts of appeals have rejected benchmark percentages, preferring

more qualitative standards.494 Benchmarks are subject to considerable fluctuation and should be applied, if at all, with the caveat that “[t]he benchmark percentage should be adjusted, or replaced by a lodestar calculation, when special

circumstances indicate that the percentage recovery would be either too small

or too large in light of the hours devoted to the case or other relevant factors.”495 The Third Circuit 2001 Task Force on Selection of Class Counsel recommended that courts “avoid rigid adherence to a ‘benchmark’” and concluded that “a percentage fee, tailored to the realities of the particular case, remains superior to any other means of determining a reasonable fee for class

counsel.”496

The application of a benchmark percentage for unusually large funds may

result in a windfall.497 In that circumstance, some courts have used a sliding

scale, with the percentage decreasing as the magnitude of the fund increases,498

492. Id. at 339.

493. See Laural L. Hooper & Marie Leary, Auctioning the Role of Class Counsel in Class

Action Cases: A Descriptive Study pt. VII (Federal Judicial Center Aug. 29, 2001), reprinted in

209 F.R.D. 519, 595–97 tbl.4, 598 (2001) (finding in nine terminated bidding cases that the fee

awards ranged from 5% to 22%, with 8% being the median award).

494. In re Cendant Corp. Prides Litig., 243 F.3d 722, 736–37 (3d Cir. 2001) (district court

may not rely on a formulaic application of the appropriate range in awarding attorney fees under

the percentage-of-fund method in a class action, but must consider the relevant circumstances of

the particular case, including the size of the settlement); Goldberger v. Integrated Res., Inc., 209

F.3d 43, 51–52 (2d Cir. 2000) (“We are nonetheless disturbed by the essential notion of a

benchmark. . . . [M]arket rates, where available, are the ideal proxy for [attorney] compensation.”).

495. Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990).

496. Third Circuit 2001 Task Force Report, supra note 487, at 705.

497. See In re Washington Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1297–98 (9th

Cir. 1994); see also In re Domestic Air Transp. Antitrust Litig., 148 F.R.D. 297, 350–51 & nn.75, 76

(N.D. Ga. 1993), and cases cited therein (listing declining percentages based on case law).

498. See In re First Fid. Bancorporation Sec. Litig., 750 F. Supp. 160 (D.N.J. 1990) (30% of

first $10 million, 20% of next $10 million, 10% of any recovery greater than $20 million); Sala v.

Nat’l R.R. Passenger Corp., 128 F.R.D. 210 (E.D. Pa. 1989) (33% of first $1 million, 30% of

amount between $1 million and $2 million); Third Circuit 1985 Task Force Report, supra note

480, at 256. But see In re Auction Houses Antitrust Litig., 197 F.R.D. 71, 79–81, 84 (S.D.N.Y.

2000) (discussing decreasing and increasing fee scales and choosing a fee scale with a single increment, from 0% below a certain recovery—the “X factor”—to 25% for all amounts above that
§ 14.121 Manual for Complex Litigation, Fourth

190

or they have used the lodestar method.499 Where the fund is unusually small or

where actual common benefits are difficult to determine and possibly illusory,

a benchmark (or any award based on a percentage of recovery) may likewise be

inapplicable. Particularly where the common benefits are in the form of discounts, coupons, options, or declaratory or injunctive relief, estimates of the

value or even the existence of a common fund may be unreliable, rendering

application of any percentage-of-recovery approach inappropriate.500 Where

there is no secondary market for coupon redemption, the judge can conclude

that the stated value of the coupons is misleading and does not provide a sufficiently firm foundation to support a fee award. Awarding fees in the form of a

percentage of the coupons themselves may give attorneys an incentive to ensure that a secondary market becomes available to convert the benefits into

cash.501 Alternatively, courts can award fees as a percentage of coupons actually

redeemed by class members.502 Where payment of a common benefit is scheduled to take place in the future, consider linking the attorney-fee award to that

future payment.503

level); In re Am. Cont’l Corp. Lincoln Sav. & Loan Sec. Litig., MDL No. 834 (D. Ariz. July 24,

1990) (25% of first $150 million, 29% of any recovery greater than $150 million plus additional

incentives for prompt resolution of case); Milton I. Shadur, Response: Task Force Report: “Against

the Manifest Weight of the Evidence,” 74 Temp. L. Rev. 799, 803 (2001) (discussing use of an absolute cap on fees). The Third Circuit 2001 Task Force identified adherents of both decreasing

and increasing percentages and concluded that either approach might reasonably be used. Third

Circuit 2001 Task Force Report, supra note 487, at 719.

499. In re Wash. Pub. Power, 19 F.3d 1291 (9th Cir. 1994).

500. See, e.g., Strong v. BellSouth Telecomms., Inc., 137 F.3d 844, 851–52 (5th Cir. 1998)

(upholding district court’s use of lodestar based on finding “insignificant benefit” to class member in “phantom” common fund asserted to be worth $64 million); In re Gen. Motors Corp.

Pick-up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995) (stating that “the

lodestar rationale has appeal where as here, the nature of the [coupon] settlement evades the

precise evaluation needed for the percentage of recovery method”); Weinberger v. Great N. Nekoosa Corp. 925 F.2d 518, 526 n.10 (1st Cir. 1991) (upholding the “district court’s implied

premise that the lodestar is the soundest available alternative”).

501. See, e.g., In re Auction Houses Antitrust Litig., No. 00 Civ. 0648, 2001 WL 170792, at

*3–*5, *15–*17 (S.D.N.Y. Feb. 22, 2001) (discussing initial agreement on coupons and changes

made after court-appointed experts reported on value of coupons; counsel fees paid in same

proportion of cash and coupons as class benefits paid).

502. Third Circuit 2001 Task Force Report, supra note 487, at 693 n.12 (quoting Brian

Wolfman’s testimony that “‘[b]y tying counsel’s fate to that of their clients, the typical coupon

settlement would become a thing of the past’”).

503. See, e.g., Bowling v. Pfizer, 132 F.3d 1147, 1152 (6th Cir. 1998) (portion of fees related

to future funding to be determined and paid after the fund is created, over a ten-year period,

using lodestar method).
Attorney Fees § 14.121

191

A number of courts favor the lodestar as a backup or cross-check on the

percentage method when fees might be excessive.504 To use the lodestar

method, the court should give the attorneys early notice that they should keep

track of their time. (At least one court has discontinued using the lodestar as a

check on the reasonableness of percentage awards because of the lodestar

method’s perceived faults.505)

In securities fraud and other types of cases in which a large fund is likely,

some district judges have used competitive bidding to aid in selecting class

counsel and determining a proposed percentage fee.506 See section 21.27. Others, however, have concluded that competitive bidding is incompatible with

the Private Securities Litigation Reform Act of 1995. See section 31.31. In addition, one court of appeals has minimized one advantage of competitive bidding by ruling that a fee percentage established at the outset of the case must be

reviewed at the conclusion of the case, using traditional factors governing such

awards. Section 14.211 further discusses bidding.

The decision of an award of attorney fees in a common-fund case is committed to the sound discretion of the trial court, which must consider the

unique contours of the case.507 Reasons for the selection of a given percentage

must be sufficiently articulated for appellate review. The court should identify

relevant factors and how these factors helped determine the percentage

awarded.508 The factors used in making the award will vary,509 but may include

one or more of the following:

504. Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000) (“encourag[ing] the

practice of requiring documentation of hours as a ‘cross check’ on the reasonableness of the

requested percentage”); United States v. 8.0 Acres of Land, 197 F.3d 24, 33 (1st Cir. 1999)

(holding that a lodestar-calculated fee amounted to a reasonable percentage of the common

fund); Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996) (upholding a district court fee

award based on a percentage of the common fund and then cross-checked against the class

counsel’s lodestar); In re Gen. Motors Corp., 55 F.3d at 820 (finding it “sensible for a court to use

a second method of fee approval to cross check its conclusion under the first method”).

505. Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1266–67 & n.3 (D.C. Cir 1993) (citing

Third Circuit 1985 Task Force Report, supra note 480, at 246–49).

506. For a description of the characteristics of the cases in which competitive bidding has

been used to date, see Hooper & Leary, supra note 493, pt. III, reprinted in 209 F.R.D. at 529–38

& tbl.1.

507. Camden I Condo. Ass’n v. Dunkle, 946 F.2d 768, 774 (11th Cir. 1991); Brown v. Phillips Petroleum Co., 838 F.2d 451, 453 (10th Cir. 1988). For an overview of factors to consider in

determining the amount of attorney fees to award in class-action litigation, see Fed. R. Civ. P.

23(h) committee note; see also infra section 21.7.

508. Camden I, 946 F.2d at 775. See also Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d

268, 272–73 (9th Cir. 1989).
§ 14.121 Manual for Complex Litigation, Fourth

192

• the size of the fund and the number of persons who actually receive

monetary benefits;510

• any understandings reached with counsel at the time of appointment

concerning the amount or rate for calculating fees; any budget set for

the litigation; or other terms proposed by counsel or ordered by the

court;

• any agreements or understandings, including side agreements, between

attorneys and their clients or other counsel involved in the litigation;511

• any substantial objections to the settlement terms or fees requested by

counsel for the class by class members (it is, however, a court’s duty to

scrutinize applications for fees, independently of any objection”)512—in the appropriate case, a court has authority to award fees

to an objector that assists the court in scrutinizing the settlement, the

fee requests, or both;513

• the skill and efficiency of the attorneys;

• the complexity and duration of the litigation;

• the risks of nonrecovery and nonpayment;

509. In Brown, the Tenth Circuit endorsed the use of the Johnson factors in determining a

reasonable percentage fee. 838 F.2d at 454–55 (citing Johnson v. Ga. Highway Express, Inc., 488

F.2d 714, 717–19 (5th Cir. 1974)). Similarly, the Eleventh Circuit instructed the district courts

within that circuit to apply the Johnson factors plus other pertinent factors. Camden I, 946 F.2d

at 775. In contrast, the Ninth Circuit established a 25% benchmark for such awards, subject to

upward or downward adjustment “to account for any unusual circumstances involved in [the]

case.” Graulty, 886 F.2d at 272. See also In re RJR Nabisco, Inc. Sec. Litig., MDL No. 818, 1992

WL 210138, at *7 (S.D.N.Y. Aug. 24, 1992) (“What should govern such awards is . . . what the

market pays in similar cases.”).

510. See cases cited supra notes 500, 503 (Strong, General Motors, Weinberger, and Bowling).

In Strong, the district court examined the actual value of telephone usage credits requested under

the settlement and found them to be $1.7 million, far below the parties’ valuation of $64 million.

Strong, 137 F.3d at 851. For approaches to reviewing and determining the value of in-kind settlements, see generally Note, In-Kind Class Action Settlements, 109 Harv. L. Rev. 810, 823–26

(1996). See also the Private Securities Litigation Reform Act, 15 U.S.C. §§ 77z-1(a)(6), 78u4(a)(6) (2000) (fee award should not exceed a “reasonable percentage of the amount of any

damages and prejudgment interest actually paid to the class”).

511. Rule 23(e)(2); see infra section 21.631; Fed. R. Civ. P. 54(d)(2)(B).

512. Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1328–29 (9th Cir. 1999). See In

re Cendant Corp. Prides Litig., 243 F.3d 722, 743–44 (3d Cir. 2001) (directing district court to

evaluate the objector’s contribution to the ultimate fee and to award compensation to that extent); Bowling v. Pfizer, Inc., 922 F. Supp. 1261, 1285 (S.D. Ohio 1996) (awarding $105,037.46 to

a public interest group that objected to the settlement and provided “extensive” and “invaluable”

objections to the fee applications).

513. In re Cendant Corp., 243 F.3d at 743–44.
Attorney Fees § 14.122

193

• the amount of time reasonably devoted to the case by counsel; even

where fees are to be awarded on a percentage-of-fund basis, some

judges cross-check the percentage by conducting a modified lodestar

analysis;514 and

• the awards in similar cases.

Unlike a statutory-fee analysis, where the lodestar is generally determinative,515 a percentage-fee award sometimes gives little weight to the amount of

time expended. Attorneys’ hours may be one of many factors to consider.516

Indeed, one purpose of the percentage method is to encourage early settlements by not penalizing efficient counsel, thus ensuring that competent counsel continue to be willing to undertake risky, complex, and novel litigation.517

Generally, the factor given the greatest emphasis is the size of the fund created,

because “a common fund is itself the measure of success . . . [and] represents

the benchmark from which a reasonable fee will be awarded.”518

14.122 Lodestar-Fee Awards

Judges award attorney fees in some common-fund cases based on the

lodestar or a combination of the percentage-of-fund and other methods. The

lodestar is at least useful as a cross-check on the percentage method by estimating the number of hours spent on the litigation and the hourly rate, using

affidavits and other information provided by the fee applicant. The total lodestar estimate is then divided into the proposed fee calculated under the percentage method. The resulting figure represents the lodestar multiplier to

compare to multipliers in other cases.519

514. See id. at 735.

515. See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983); see also infra section 14.122.

516. Brown v. Phillips Petroleum Co., 838 F.2d 451, 456 (10th Cir. 1988).

517. See Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 338–39 (1980) (recognizing the

importance of a financial incentive to entice qualified attorneys to devote their time to complex,

time-consuming cases in which they risk nonpayment); Third Circuit 1985 Task Force Report,

supra note 480, at 248.

518. 4 Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 14:6, at 547, 550

(4th ed. 2002). See also Camden I Condo. Ass’n v. Dunkle, 946 F.2d 768, 774 (11th Cir. 1991);

Brown, 838 F.2d at 456.

519. See, e.g., In re Cendant Corp., 243 F.3d at 724, 742 (finding multipliers ranging from

1.35 to 2.99 in past years compared with a multiplier of 7–10 in a common-fund case in which

counsel was selected by bidding); cf. In re Comdisco Sec. Litig., 150 F. Supp. 2d 943, 947 (N.D.

Ill. 2001) (criticizing the use of lodestar for cross-checking to reduce the fee of counsel selected

by bidding).
§ 14.122 Manual for Complex Litigation, Fourth

194

When the fund is unusually large, the lodestar may be more appropriate

than the percentage method.520 In these unique mega-cases, selection of percentage figures, even on a sliding scale, may be arbitrary because of the absence

of comparable cases.521 As with percentage fees, an award of attorney fees under

the lodestar method should fairly compensate the attorney for the reasonable

value of services rendered, given the circumstances of the particular case.522

The lodestar method may also be appropriate for distributing fees out of a

common fund created to compensate attorneys, e.g., payment of lead counsel

in a multidistrict consolidation or a nationwide settlement of mass tort litigation. Some cases may call for allocation of fees among different sets of plaintiffs’ lawyers, such as those designated to serve on a steering committee (and

entitled to compensation for that service) and those who represent individual

plaintiffs. Because compensation directed to any group of attorneys will reduce

the amount available to satisfy other contingent fee arrangements, the court

should attempt to resolve conflicts between these groups in determining a fair

allocation.523

The lodestar calculation begins with multiplying the number of hours

reasonably expended by a reasonable hourly rate.524 The number of hours reasonably expended and the reasonable hourly rate must be supported by adequate records and other appropriate evidence; therefore, counsel intending to

seek a fee award should maintain specific and adequate time records.525 Failure

to keep contemporaneous time records may justify an appropriate reduction in

520. See In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1297 (9th Cir. 1994).

521. See, e.g., In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 340 (3d

Cir. 1998) (indicating that hypothetical percentage-fee arrangements do not “provide much

guidance in cases involving the aggregation of over 8 million plaintiffs and a potential recovery

exceeding $1 billion”).

522. See Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487

F.2d 161 (3d Cir. 1973).

523. See In re Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig.,

982 F.2d 603 (1st Cir. 1992).

524. Blum v. Stenson, 465 U.S. 886, 897 (1984); Hensley v. Eckerhart, 461 U.S. 424, 430

(1983). A number of the additional factors set forth in Johnson will usually be subsumed in the

determination of the reasonableness of the time spent and the hourly rate.

525. See, e.g., In re Cont’l Ill. Sec. Litig., 572 F. Supp. 931, 934 (N.D. Ill. 1983) (requiring in

a pretrial order that attorneys organize and report their time by activity, not by attorney), rev’d

on other grounds, 962 F.2d 566 (7th Cir. 1992); see also Hirsch & Sheehey, supra note 466, at

103–04; Thomas E. Willging, Judicial Regulation of Attorneys’ Fees: Beginning the Process at

Pretrial 30–32 (Federal Judicial Center 1984) [hereinafter Judicial Regulation] (reporting outside

attorneys’ enthusiastic support for this aspect of the district judge’s order).
Attorney Fees § 14.122

195

the award.526 In especially large cases, consider seeking additional staff to review fee petitions and uncover duplicative, excessive, or unproductive efforts,527 or appointing a special master under Rule 54(d)(2)(D).

What constitutes a reasonable hourly rate varies according to geographic

area and the attorney’s experience, reputation, practice, qualifications, and

customary charge. The rate should reflect what the attorney would normally

command in the relevant marketplace.528 In exceptionally complex national

litigation, the court should consider establishing a national rate for all the attorneys.529 Federal Rule of Civil Procedure 54(d)(2)(D) allows establishment of

“special procedures to resolve fee issues without extensive evidentiary hearings.” Such procedures might include “a schedule reflecting customary fees or

factors affecting fees within the community.”530

The lodestar figure may be adjusted, either upward or downward,531 to account for several factors including, inter alia, the quality of the representation,

the benefit obtained for the class, the complexity and novelty of the issues pre526. Hensley, 461 U.S. at 433. Some circuits require contemporaneous time records as a

condition to an award of fees. See 5th Cir. R. 47.8.1 (absent contemporaneous records, fee based

on minimum time necessary); N.Y. State Ass’n for Retarded Children, Inc. v. Carey, 711 F.2d

1136 (2d Cir. 1983); Nat’l Ass’n of Concerned Veterans v. Sec’y of Def., 675 F.2d 1319 (D.C. Cir.

1982).

527. See, e.g., In re “Agent Orange” Prod. Liab. Litig., 611 F. Supp. 1296, 1319 (E.D.N.Y.

1985) (describing work of three temporary law clerks); Hirsch & Sheehey, supra note 466, at

114–15. For a study of the use of professional staff to review attorney fee vouchers and occasionally to negotiate budgets with attorneys, see Tim Reagan et al., The CJA Supervising Attorney: A

Possible Tool in Criminal Justice Act Administration (Federal Judicial Center Apr. 2001) (unpublished report, on file with the Federal Judicial Center). See also Alan J. Tomkins & Thomas E.

Willging, Taxation of Attorneys’ Fees: Practices in English, Alaskan, and Federal Courts (Federal

Judicial Center 1986).

528. Blum, 465 U.S. at 895 (“‘[R]easonable fees’ . . . are to be calculated according to the

prevailing market rates in the relevant community . . . .”); Lindy Bros. Builders, Inc. of Phila. v.

Am. Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973).

529. In re “Agent Orange” Prod. Liab. Litig., 818 F.2d 226, 232 (2d Cir. 1987) (holding that

“in an exceptional multiparty case . . . public policy and administrative concerns call for the

district court to be given the necessary flexibility to impose a national hourly rate when an adequate factual basis for calculating the rate exists”); cf. In re Fine Paper Antitrust Litig., 751 F.2d

562, 591 (3d Cir. 1984) (rejecting national rates as incompatible with a lodestar approach to

fees). See also Third Circuit 1985 Task Force Report, supra note 480, at 261 (recommending use of

national rates in exceptional cases).

530. Fed. R. Civ. P. 54(d)(2)(D) committee note (1993 amendments); see also Third Circuit

1985 Task Force Report, supra note 480, at 260–62 (advocating steps to create uniform districtwide fee schedules).

531. See Conte & Newberg, supra note 518, § 14:5, at 541–42.
§ 14.13 Manual for Complex Litigation, Fourth

196

sented, the risk of nonpayment,532 and any delay in payment.533 Accurate computation requires an adjustment for the loss of the use of the money up to the

time of the award,534 and perhaps an award of interest.535 Historic interest rates

generally are a more accurate starting point than current rates,536 but it is permissible to use current rates as a rough approximation of the adjustment

needed to compensate for delay in payment.537 Whether enhancements for the

risks assumed by plaintiffs’ attorneys are permissible in common-fund cases

was unresolved as of publication of this manual.538

14.13 Statutory-Fee Cases

The analysis of attorney fees in a statutory-fee (or fee-shifting) case differs

from that in a common-fund case.539 Shifting fees in a statutory-fee case serves

the public policy of encouraging private enforcement of statutory or constitutional rights. Under most fee-shifting statutes, fees are available to a “prevailing

party.” In Buckhannon, the Supreme Court said a prevailing party is a party

that has altered its legal relationship with its adversary through a judgment or

consent decree entered by the court.540 (A litigant’s status as the beneficiary of

an out-of-court settlement, or as the beneficiary of an adversary’s voluntary

action mooting a case, does not by itself entitle that litigant to an award of at532. See In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291 (9th Cir. 1994).

533. See generally Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary

Corp., 487 F.2d 161 (3d Cir. 1973), appeal following remand, 540 F.2d 102 (3d Cir. 1976). But see

Burlington v. Dague, 505 U.S. 557 (1992) (barring use of multiplier in statutory-fee case). Some

courts have held this bar to be inapplicable in common-fund cases. In re Wash. Pub. Power, 19

F.3d at 1299–1300.

534. Missouri v. Jenkins, 491 U.S. 274, 283–84 (1989). For a comprehensive study of the

Jenkins case and a case-based formula for achieving an integrated approach to the issues of prejudgment and postjudgment interest, see Russell E. Lovell II, Court-Awarded Attorneys’ Fees:

Examining Issues of Delay, Payment, and Risk (1999).

535. In re Cont’l Ill. Sec. Litig., 962 F.2d 566, 571 (7th Cir. 1992).

536. Lovell, supra note 534, at 88–92.

537. Jenkins, 491 U.S. at 283–84.

538. See Burlington, 505 U.S. at 561, 567 (no enhancement in statutory-fee cases).

539. See Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984).

540. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dept. of Health & Human Res., 532

U.S. 598, 604 (2001) (“enforceable judgments on the merits and court-ordered consent decrees

create the ‘material alteration of the legal relationship of the parties’ necessary to permit an

award of attorney’s fees” (quoting Tex. State Teachers Ass’n v. Garland Indep. Sch. Dist., 489

U.S. 782, 792–93 (1989))).
Attorney Fees § 14.13

197

torney fees as a prevailing party.541) If the Buckhannon test has been met, the

lodestar is the appropriate method to use in calculating a fee award.542

The lodestar calculation—reasonable hours multiplied by a reasonable

rate—usually provides an appropriate estimate of the value of a lawyer’s services.543 Enhancements available in common-fund cases, such as for results obtained,544 novelty and complexity of the issues presented,545 and the contingent

nature of the litigation, are not appropriate enhancements in a statutory-fee

award case.546 Only in the rare statutory-fee award case may exceptional results

or quality of representation warrant an upward adjustment.547 A delay in payment may be taken into account by applying current rates or factoring in an

interest adjustment.548

A downward adjustment of the lodestar figure may be appropriate when

the prevailing party achieves only “limited success.”549 Where the plaintiff recovers only nominal damages and no other indicia of success, for example, the

court can award “low fees or no fees.”550 It is a good idea to examine not only

the amount of recovery but also “the significance of the legal issue on which

the plaintiff prevailed and the public purpose the litigation served.”551 Courts

541. Id. at 605 (rejecting the claim that a plaintiff could be a prevailing party if its actions

served as a catalyst for defendant to voluntarily change its allegedly illegal conduct).

542. Blanchard v. Bergeron, 489 U.S. 87, 94 (1989) (lodestar approach is the centerpiece of

attorney fee awards).

543. Pa. v. Del. Valley Citizens’ Council for Clean Air, 478 U.S. 546, 565 (1986); Blum, 465

U.S. at 897.

544. Blum, 465 U.S. at 900 (“Because acknowledgment of the results obtained generally will

be subsumed within other factors used to calculate a reasonable fee, it normally should not provide an independent basis for increasing the fee award.”).

545. Id. at 898–99 (novelty and complexity will be reflected either in an increase in the

number of hours or, for especially experienced attorneys who would thus expend fewer hours, in

an increased hourly rate).

546. Burlington v. Dague, 505 U.S. 557, 561, 567 (1992).

547. Blum, 465 U.S. at 898 (the quality of representation is usually reflected in an attorney’s

hourly rate).

548. Mo. v. Jenkins, 491 U.S. 274, 283–84 (1989). See also Pa. v. Del. Valley Citizens’ Council for Clean Air, 483 U.S. 711 (1987); see also supra notes 533–37 and accompanying text.

549. Hensley v. Eckerhart, 461 U.S. 424, 436 (1983).

550. Farrar v. Hobby, 506 U.S. 103, 115 (1992). “[T]he relevant indicia of success [are] the

extent of relief, the significance of the legal issue on which the plaintiff prevailed, and the public

purpose served . . . .” Id. at 122 (O’Connor, J., concurring). See also Phelps v. Hamilton, 120 F.3d

1126, 1131–32 (10th Cir. 1997) (applying Justice O’Connor’s Farrar factors), and cases cited

therein.

551. Morales v. City of San Rafael, 96 F.3d 359, 364–65 (9th Cir. 1996) (awarding fees because plaintiff’s nonmonetary success significantly advanced public purpose of deterring un-
§ 14.13 Manual for Complex Litigation, Fourth

198

have found public purposes in the deterrence arising from jury findings of liability,552 in the broad applicability of nonmonetary relief,553 and in the public

significance of the issues on which plaintiffs prevailed.554

Awards should not be more than an amount “reasonable in relation to the

results obtained.”555 In public interest cases, however, the fact that the lodestar

amount exceeded the damages awarded does not by itself justify adjusting the

lodestar downward.556 In applying the lodestar, therefore, the court must consider counsel’s level of effort given the issues at stake, its degree of success in

the litigation, including the public ramifications of any success, and the efficiency and economy with which it handled the litigation.

lawful arrests), amended on other grounds on denial of hearing and reh’g en banc 108 F.3d 981 (9th

Cir. 1997).

552. Brandau v. Kan., 168 F.3d 1179, 1183 (10th Cir.) (concluding that “while Plaintiff’s

litigation did not achieve significant monetary benefits, it served a larger public purpose” of

deterring future sexual harassment and putting defendant on notice about the need to educate

its employees about sexual harassment), cert. denied, 526 U.S. 1133 (1999).

553. LeBlanc-Sternberg v. Fletcher, 143 F.3d 748 (2d Cir. 1998) (upholding fee award based

on significance of injunction entered and jury finding of statutory civil rights violation).

554. Phelps, 120 F.3d at 1132 (examining “whether the judgment vindicates important

rights and deters future lawless conduct”); O’Connor v. Huard, 117 F.3d 12, 18 (1st Cir. 1997)

(basing fee award on vindicating rights of pretrial detainees despite $1 damage award).

555. Hensley v. Eckerhart, 461 U.S. 424, 440 (1983). However, fees should not be reduced

simply because the plaintiff was not successful on every contention in the litigation. Id. at 435.

The “most critical factor is the degree of success obtained.” Id. at 436. See also Tex. State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 790–91 (1989) (rejecting test that would

focus on the “central issue” in the litigation); Hirsch & Sheehey, supra note 466, at 27–33.

556. City of Riverside v. Rivera, 477 U.S. 561 (1986) (affirming award of $245,456.25 in

attorney’s fees in civil rights litigation in which plaintiff received $13,300 in damages after prevailing against the city and police officers); Morales, 96 F.3d at 363–65 (ordering lodestar application where attorneys submitted bills totaling $139,783.25 and jury had awarded damages of

$17,500); see also Hirsch & Sheehey, supra note 466, at 33–35.
Attorney Fees § 14.21

199

14.2 Proceedings to Award Fees

.21 Setting Guidelines and Ground Rules 199

.211 Selecting Counsel and Establishing Fee Guidelines 200

.212 Staffing 201

.213 Maintaining Adequate and Comprehensible Records 202

.214 Submission of Periodic Reports 202

.215 Compensation for Designated Counsel 202

.216 Reimbursement of Expenses 203

.22 Motion for Attorney Fees 203

.221 Contents of the Fee Motion 203

.222 Timing 204

.223 Supporting Documentation and Evidence 204

.224 Discovery 205

.23 Judicial Review/Hearing and Order 205

.231 Judicial Review 205

.232 Hearing and Order 207

14.21 Setting Guidelines and Ground Rules

.211 Selecting Counsel and Establishing Fee Guidelines 200

.212 Staffing 201

.213 Maintaining Adequate and Comprehensible Records 202

.214 Submission of Periodic Reports 202

.215 Compensation for Designated Counsel 202

.216 Reimbursement of Expenses 203

The judge should encourage agreement by the parties on the fee,557 but also

should keep in mind the potential conflict of interest for the attorney seeking

damages for the client and fees for itself.558 Also, an agreement will not be

binding in a class-action settlement or other common-fund litigation.559 In

many instances, there will be no agreement and the judge must determine the

fees.

557. Blum v. Stenson, 465 U.S. 886, 902 n.19 (1984); Hensley, 461 U.S. at 437. See, e.g.,

White v. N.H. Dep’t of Employment Sec., 455 U.S. 445, 453–54 n.15 (1982); In re Gen. Motors

Corp. Pick-up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 801–04 (3d Cir. 1995); Cheng v.

GAF Corp., 713 F.2d 886, 889–90 (2d Cir. 1983); Mendoza v. United States, 623 F.2d 1338,

1352–53 & n.19 (9th Cir. 1980); Prandini v. Nat’l Tea Co., 557 F.2d 1015, 1017 (3d Cir. 1977).

See also supra section 13.24.

558. See, e.g., Evans v. Jeff D., 475 U.S. 717, 725, 728 n.14 (1986) (describing the attorney’s

duty to evaluate a settlement offer based on the client’s interest without regard to the attorney’s

interest in obtaining a fee).

559. See In re Gen. Motors Corp., 55 F.3d at 801–04 (examining adequacy of attorneys to

represent settlement class); Cent. R.R. & Banking Co. v. Pettus, 113 U.S. 116, 126–27 (1885); see

also infra sections 21.6–21.7.
§ 14.211 Manual for Complex Litigation, Fourth

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14.211 Selecting Counsel and Establishing Fee Guidelines

In class-action litigation—and generally in multidistrict consolidated litigation—the judge has the opportunity and the obligation to appoint counsel

who will represent the beneficiaries of any common fund. See Rule 23(g). As

discussed more fully in sections 21.27 (class actions) and 31.5 (securities class

actions), judges have used four distinct approaches to the selection of counsel:

(1) reviewing the recommendations of lawyers who have filed related actions

and appointing the recommended lawyers if they are adequate to represent the

interests of the class (“private ordering”); (2) selecting among counsel who

have filed related actions but are unable to reach an agreement and who compete for the appointment; (3) inviting bids from counsel who may or may not

have filed a related action (“competitive bidding”); and (4) allowing the most

adequate plaintiff to select counsel, subject to review by the court (“empowered-plaintiff” approach)—this technique is mandated by the Private Securities

Litigation Reform Act for securities class actions. See section 31.31.560 There

will frequently be a number of law firms interested in serving as lead counsel,

so judicial involvement is often necessary in selecting counsel and setting

guidelines for future fee applications in the case.561 Procedures for selection or

designation of counsel in class-action settings pursuant to Rule 23(g) are discussed in section 21.27, which also presents criteria and procedures that courts

have used in considering selection of counsel by competitive bidding.562

There are alternatives to bidding. A discussion about fees at an early stage

of the litigation can simulate the type of uncertainty a client faces in negotiating a fee.563 Judges should consider advising the parties at the outset of the litigation about the method to be used for calculating fees and, if using the percentage method, about the likely range of percentages.564 At an early conference

or in an early pretrial order after consultation with counsel, it is helpful to es560. Pub. L. No. 104-67, § 27(a)(3)(B)(v), 109 Stat. 737, 740 (codified as amended at 15

U.S.C. §§ 77z-1(a)(3)(B)(v), 78u-4(a)(3)(B)(v) (2000)).

561. See, e.g., In re Synthroid Mktg. Litig., 264 F.3d 712, 720–21 (7th Cir. 2001) (calling for

district courts to use competitive bidding or other ex ante procedures to approximate a market

rate for legal services in a class action).

562. For a discussion of the bidding process, see Third Circuit 2001 Task Force Report, supra

note 487; Symposium, Third Circuit Task Force Report on Selection of Class Counsel, 74 Temp. L.

Rev. 685 (2001); Hooper & Leary, supra note 493.

563. See In re Synthroid, 264 F.3d at 718 (remanding a case in which the district court had

used a percentage method and indicating that “[t]he best time to determine [a market] rate is

the beginning of the case”).

564. Some judges have reported success using this approach. See Hirsch & Sheehey, supra

note 466, at 100–01 & n.444.
Attorney Fees § 14.212

201

tablish guidelines and procedures that will lighten the burdens on the participants, clarify expectations, and reduce the opportunities for disputes.565 Matters such as those discussed in the following paragraphs should be covered.

Although most of these factors are relevant primarily to the lodestar method,

they may aid in regulating percentage awards as well. Judges have an independent duty to review fees and specifically determine if they are reasonable, applying traditional legal tests.566

14.212 Staffing

A major issue in determining fees is the appropriate level of staffing for the

particular litigation. Consider setting at least presumptive guidelines at the

outset of the litigation, after discussion with counsel. Some judges find that

appointing a single law firm, not a committee, to represent the class helps to

keep fees reasonable. Setting guidelines at the outset, subject to revision, can

reduce the potential for later conflict and facilitate judicial review of fee applications. Guidelines can cover the number of attorneys who may charge for

time spent attending depositions, court hearings, office and court conferences,

and trial.567 Guidelines may also caution against using senior attorneys on projects suitable for less senior (and less costly) attorneys.568 Finally, guidelines may

set forth the range of hourly charges for particular attorneys on the case and

permissible charges for travel time.569 In setting such guidelines, there is a need

for some symmetry between the staffing levels of plaintiffs and defendants.

565. See In re Cont’l Ill. Sec. Litig., 572 F. Supp. 931 (N.D. Ill. 1983) (pretrial order establishing fee guidelines and record-keeping responsibilities), rev’d on other grounds, 962 F.2d 566

(7th Cir. 1992); Hirsch & Sheehey, supra note 466, at 97–98, 109–11; Judicial Regulation, supra

note 525, at 11–34 (presenting attorneys’ reactions to the pretrial order concerning fees in the

Continental Illinois litigation); Administrative Order re Guidelines for Fees and Disbursements

for Professionals in Southern District of New York Bankruptcy Cases (Bankr. S.D.N.Y. June 24,

1991), reprinted in 3 Bankr. Local Ct. R. Serv. (CBC) N.Y., 98.14–98.19 (1996). See also Bennett

Feigenbaum, How to Examine Legal Bills, 177 J. Acct. 84 (May 1994) (listing criteria for testing

reasonableness).

566. See generally Cendant Corp. Prides Litig., 243 F.3d 722 (3d Cir. 2001), and cases cited

therein.

567. See, e.g., In re Cont’l Ill., 572 F. Supp. at 933–34 (emphasizing individual responsibility

and establishing staffing guidelines for depositions and legal research and criteria for compensating document review); see also Judicial Regulation, supra note 525, at 15–26.

568. In re Cont’l Ill., 572 F. Supp. at 933 (directing that “[s]enior partner rates will be paid

only for work that warrants the attention of a senior partner”).

569. Id. at 934 (travel limited; airfare to be reimbursed at tourist rates).
§ 14.215 Manual for Complex Litigation, Fourth

202

14.213 Maintaining Adequate and Comprehensible Records

Complete time records are critical when fees are based on a lodestar and

are advisable in any large litigation. Such records may be used as a cross-check

on the percentage-of-fund method. Sometimes, however, these records may be

too voluminous for effective judicial analysis. The judge should address this

issue early in the case by directing counsel to develop record-keeping procedures to facilitate review.570 Counsel should maintain contemporaneous records that show the name of the attorney, the time spent on each discrete activity, and the nature of the work performed. Consider recommending that attorneys use computer programs to facilitate analysis of billings and of fee requests.

Agreed-on forms of summaries may be used to achieve similar results.

14.214 Submission of Periodic Reports

Some judges require periodic reports in anticipation of an award at the end

of the litigation (it may be necessary to submit some of the information under

seal or in camera).571 This practice encourages lawyers to maintain records adequate for the court’s purposes and enables the court to spot developing problems. Periodic review of time charges sometimes leads the judge to establish a

tentative budget for the case, acceptable billing ranges for attorneys, or at least

limits on recoverable fees for particular activities.

14.215 Compensation for Designated Counsel

Lead and liaison counsel may have been appointed by the court to perform

functions necessary for the management of the case but not appropriately

charged to their clients. Early in the litigation, the court should define designated counsel’s functions, determine the method of compensation, specify the

records to be kept, and establish the arrangements for their compensation, including setting up a fund to which designated parties should contribute in

specified proportions. Guidelines should cover staffing, hourly rates, and estimated charges for services and expenses.

570. For a discussion of various approaches that judges use to accomplish this goal, see

Hirsch & Sheehey, supra note 466, at 103–05. See also Judicial Regulation, supra note 525, at

30–32.

571. See Hirsch & Sheehey, supra note 466, at 104–05.
Attorney Fees § 14.221

203

14.216 Reimbursement of Expenses

Rules and practices vary widely with respect to reimbursement of lawyers’

expenses out of the fee award.572 Charges for paralegals and law clerks at market rates573 and the fees of necessary experts are generally reimbursable while

secretarial assistance is not. Courts have differed over whether overtime is reimbursable, as well as such items as computer-assisted legal research, copy and

printing costs, certain meals and travel, and fax, telephone, and delivery

charges. The court should establish ground rules at the outset for determination of such claims.

In some litigation, parties may incur substantial costs for various litigation

support or services, such as special computer installations, costly expert services, or elaborate trial exhibits or demonstrations. Counsel who expect to treat

such items as reimbursable expenses or taxable costs should advise the court

and opposing counsel and obtain clearance before incurring the expenses. This

should also be done when there are questions relating to taxation of costs.

14.22 Motion for Attorney Fees

.221 Contents of the Fee Motion 203

.222 Timing 204

.223 Supporting Documentation and Evidence 204

.224 Discovery 205

14.221 Contents of the Fee Motion

Federal Rule of Civil Procedure 23(h) establishes procedures in class actions for ruling on motions for attorney fees, notifying the class, holding hearings, making findings, and using special masters or magistrate judges to assist

in the process. See generally section 21.72. In non–class-action cases, Rule

54(d)(2) and any rules specifying the requirements of motions for fees in other

cases should be the primary source of procedures governing fee motions. If

counsel is advised early in the case of the possibility of departure, they can prepare and maintain records that will facilitate the later preparation of the motion. The judge should give timely notice to counsel of a decision to bifurcate

the determination of liability for fees from that of the amount under Rule

54(d)(2)(C).

Where multiple counsel in the case expect to submit separate fee motions,

consider requiring them to coordinate their submissions, avoid duplication,

572. See generally 1 Alba Conte, Attorney Fee Awards §§ 2.19, 4.41–4.43 (2d ed. 1993 &

Supp. Nov. 2002) (discussing cost reimbursement in common-fund and statutory-fee cases).

573. Mo. v. Jenkins, 491 U.S. 274, 288 (1989).
§ 14.223 Manual for Complex Litigation, Fourth

204

and perhaps attempt to resolve disputes among themselves before submission.

Lead counsel can be made responsible for overseeing this process.574

14.222 Timing

For nonclass litigation, Rule 54(d)(2)(B) requires that motions for attorney fees be filed and served no later than fourteen days after entry of judgment

unless otherwise provided by statute or order of the court. Prompt filing of the

motion gives the opponent and other interested parties notice of the claim before the time for appeal has expired, affords the court an opportunity to rule

on the application while the services are still fresh in mind, and allows an appeal to be taken at the same time as an appeal on the merits.

Although such motions are ordinarily made at the end of the case, an interim award of fees and expenses will sometimes be appropriate.575 For discussion of the Rule 23(h)(1) requirement that notice of a motion for attorney fees

in a class action be given to class members, see section 21.722.

14.223 Supporting Documentation and Evidence

In advance of any fee-award hearing, counsel should submit time and expense records, to the extent not previously submitted with the motion and in

manageable and comprehensible form, to encourage parties to reach agreements where possible and to streamline the hearing. Where different claims

were litigated, the records should identify the claims to which particular services relate.576 Counsel should also submit the evidence on which they will rely

in urging particular rates for certain lawyers, or a particular percentage when

that method is to be used. The direct testimony of witnesses in support of the

application can be in the form of declarations, with the witnesses available at

the hearing for cross-examination if requested.577

574. For a description of one district judge’s approach to using lead counsel to coordinate

interim and final submissions of multiple requests for fees, see Hirsch & Sheehey, supra note

466, at 117.

575. See Tex. State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 790–92

(1989).

576. Hensley v. Eckerhart, 461 U.S. 424, 437 & n.12 (1983).

577. See generally Charles Richey, A Modern Management Technique for Trial Courts to

Improve the Quality of Justice: Requiring Direct Testimony To Be Submitted in Written Form Prior

to Trial, 72 Geo. L.J. 73 (1983). For a discussion about applying this technique to fee hearings,

see Hirsch & Sheehey, supra note 466, at 107–08.
Attorney Fees § 14.231

205

In class actions, all agreements or understandings made in connection with

a settlement must be described in writing and may have to be disclosed.578 See

section 21.725. In any type of case, the judge may wish to direct the movant to

disclose any agreement with a client in which the terms deal with “fees to be

paid for the services for which the claim is made.”579

14.224 Discovery

For discussion of discovery regarding fee requests in class actions, see section 21.724. Discovery in connection with fee motions should rarely be permitted, but may be advisable where attorneys make competing claims to a settlement fund designated for the payment of fees.580 With appropriate guidelines and ground rules, the materials submitted should normally meet the

needs of the court and other parties. If a party or an objector to a settlement

requests clarification of material submitted in support of the fee motion, or

requests additional material, the court should determine what information is

genuinely needed and arrange for its informal production.

14.23 Judicial Review/Hearing and Order

.231 Judicial Review 205

.232 Hearing and Order 207

14.231 Judicial Review

Exacting judicial review of fee applications, burdensome though it may be,

is necessary to discharge the obligation to award fees that are reasonable and

consistent with governing law. In common-fund litigation, class counsel may

be competing with class members for a share of the fund, thus placing a special

fiduciary obligation on the judge because class members are unrepresented as

578. Fed. R. Civ. P. 23(e)(2) & committee note; see also Smiley v. Sincoff, 958 F.2d 498, 501

(2d Cir. 1992) (discussing the district court’s power to review and invalidate private fee agreements); In re “Agent Orange” Prod. Liab. Litig., 818 F.2d 216, 218, 222–24 (2d Cir. 1987); 7B

Charles Alan Wright et al., Federal Practice & Procedure Civil 2d § 1803 (Supp. 2002) (discussing Agent Orange). But see Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311

(9th Cir. 1990) (counsel free to divide lump sum award as they see fit without disclosure). See

generally supra section 13.23 (full disclosure of all side agreements must be made to the court in

presenting a related settlement agreement for judicial approval).

579. Fed. R. Civ. P. 54(d)(2)(B).

580. See In re Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig.,

982 F.2d 603, 614 n.20 (1st Cir. 1992) (discovery not required, but is one way to afford competing claimants due process). See also Fed. R. Civ. P. 23(h)(2) committee note (“If the motion

provides thorough information, the burden should be on the objector to justify discovery . . . .”).
§ 14.231 Manual for Complex Litigation, Fourth

206

to this issue.581 If there are no objectors to the fee request, consider whether to

appoint counsel to represent the class on this issue, balancing the additional

cost an appointment will likely entail against the possible benefit to the class.582

Standards for reviewing common-fund attorney fee requests are discussed

in section 14.12, and standards for reviewing statutory attorney fee requests are

discussed in section 14.13. The following is a summary of several techniques

judges have developed to expedite the review process, primarily relevant to application of the lodestar approach:

• Establishing at the outset of the case the method of compensation and, if

possible, any percentage formula that will be used. Innovative methods

used in this connection have included competitive bidding procedures

for the selection of class counsel583 and appointment of an outside attorney to negotiate a fee arrangement for the class.584

• Sampling. The judge can select certain blocks of time, at random, examining them closely to determine the reasonableness of the hours

charged and apply the results to the entire fee application by extrapolation.585

• Evaluating the request in light of a budget submitted by counsel at the beginning of the case.586 Counsel must justify substantial departures from

the budget.

• Using computer programs to facilitate analysis of fee requests.587 See section 14.213.

• Having defendants submit billing records. Records showing defendants’

attorney fees may provide a reference for determining the reasonableness of fees where defendants oppose plaintiff’s counsel’s fee request.588

581. In re Cendant Corp. Prides Litig., 243 F.3d 722, 730–31 (3d Cir. 2001); In re Wash.

Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1302 (9th Cir. 1994).

582. In re Wash. Pub. Power, 19 F.3d at 1302.

583. See supra section 14.211.

584. See Third Circuit 1985 Task Force Report, supra note 480, at 256; see also Hirsch &

Sheehey, supra note 466, at 101 n.444.

585. Evans v. City of Evanston, 941 F.2d 473, 477 (7th Cir. 1991) (approving the sampling

technique employed as reasonable); see also Hirsch & Sheehey, supra note 466, at 96–97 (reporting interviews with judges who have used sampling).

586. Hirsch & Sheehey, supra note 466, at 97–98.

587. Id. at 101–02. A bankruptcy judge reported creating and maintaining a database of

local attorney billing rates, which she shares with other judges. Id. at 102.

588. Id. at 105–06.
Attorney Fees § 14.232

207

• Delegating discrete tasks to law clerks and secretaries. Law clerks can

compare the billing request with the product of the billing as shown in

the case file.589

• Using magistrate judges, special masters, or experts.590 Before calling on

outside assistance, the judge should take all reasonable steps to simplify and streamline the process. The trial judge has a familiarity with

the case that cannot be matched by any judicial adjunct.

14.232 Hearing and Order

Rule 54(d)(2)(C) requires the court, on request of a party or class member,

to “afford an opportunity for adversary submissions with respect to [a] motion” for attorney fees. An evidentiary hearing may be required in some cases,

but Rule 54(d)(2)(D) permits the court to “establish special procedures by

which issues relating to such fees may be resolved without extensive evidentiary hearings.” Due process may require affording claimants a meaningful opportunity to be heard concerning competing applications for fees payable from

a common fund.591 A hearing must be held in a class action in which a settlement would bind the class,592 and that hearing should ordinarily encompass

attorney fee petitions. If a hearing is anticipated, the judge should hold a preliminary conference to narrow the issues and resolve as many disputes as possible. Techniques to expedite bench trials should be used, such as exchange and

submission of direct testimony subject to cross-examination of the witness at

the hearing when requested (see section 12.51).593

Rule 54(c)(2)(C) requires the court to “find the facts and state its conclusions of law as provided in Rule 52(a)” and to issue its judgment in a separate

document under Rule 58. The order, which should be made public, must “provide a concise but clear explanation of its reasons for the fee award.”

589. Id. at 114–15.

590. Fed. R. Civ. P. 54(d)(2)(D). But see Estate of Conners v. O’Connor, 6 F.3d 656, 658–59

(9th Cir. 1993) (magistrate judge cannot enter final, appealable order). See also Hirsch & Sheehey, supra note 466, at 107 (discussing threat to appoint auditor to resolve fee dispute at the

loser’s expense), 115–17 (discussing use of magistrate judges, special masters, experts, and settlement judges in managing fee applications).

591. In re Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig., 982

F.2d 603, 616 (1st Cir. 1992). For discussion of the hearing procedures for class-action settlements, see infra section 21.634.

592. Fed. R. Civ. P. 23(e)(1)(C) (requiring a hearing before approving a settlement, voluntary dismissal, or a compromise that would bind class members).

593. See In re Fine Paper Antitrust Litig., 751 F.2d 562, 572 (3d Cir. 1984).
208

15. Judgments and Appeals

.1 Interlocutory Appeals 208

.11 When Permitted 208

.12 Proceedings While Appeal Pending 212

.2 Entry of Final Judgment 212

.3 Disposition of Materials 213

15.1 Interlocutory Appeals

.11 When Permitted 208

.12 Proceedings While Appeal Pending 212

15.11 When Permitted

The principal occasions on which an appellate court may permit interlocutory appeal are these:

• Orders granting, continuing, modifying, dissolving, or refusing to dissolve

or modify injunctions. Appeals as of right from such orders are authorized by 28 U.S.C. § 1292(a)(1),594 and an appellate court may treat an

order as an injunction even if the district court has labeled it otherwise.595 Interlocutory appeals are also authorized from certain orders

relating to receiverships and decrees in admiralty. An interlocutory order that merely has the practical effect of denying an injunction is appealable as of right under 28 U.S.C. § 1292(a)(1) upon a showing that

the order would have “serious, perhaps irreparable” consequences and

can be effectively challenged only by appeal.596 Section 1292(a)(1) generally does not, however, permit interlocutory appeals from orders

granting or refusing to grant stays.597 Failure to take an interlocutory

594. 28 U.S.C. § 1291 (West 2002).

595. Sierra Club v. Marsh, 907 F.2d 210, 214 (1st Cir. 1990); Cohen v. Bd. of Trs., 867 F.2d

1455, 1466 (3d Cir. 1989) (en banc). See also Hershey Foods Corp. v. Hershey Creamery Co., 945

F.2d 1272, 1277 (3d Cir. 1991) (to be deemed an injunction, order must be directed to party,

enforceable by contempt, and designed to protect some or all of the substantive relief sought).

596. Carson v. Am. Brands, Inc., 450 U.S. 79, 84 (1981). See also Gulfstream Aerospace

Corp. v. Maycamas Corp., 485 U.S. 271, 287–88 (1988); Sierra Rutile, Ltd. v. Katz, 937 F.2d 743,

749 (2d Cir. 1991). Under Title 9, an order refusing a stay to permit arbitration pursuant to a

written arbitration agreement is immediately appealable, but one granting such a stay is not. 9

U.S.C. §§ 16(a)(1)(A), 16(b)(1) (2000).

597. Gulfstream, 485 U.S. at 279–88 (overruling the Enelow-Ettleson doctrine).
Judgments and Appeals § 15.11

209

appeal does not waive the right to appeal an order after final judgment.598

• Orders not otherwise appealable that “involve a controlling question of

law as to which there is substantial ground for difference of opinion . . .

[if] an immediate appeal from the order may materially advance the ultimate termination of the litigation.”599 Some judges give a party an opportunity to seek interlocutory review of an order by issuing a written

order finding that this standard is met. Such an order should clearly

articulate the reasons and factors underlying the court’s decision.600

The court of appeals has discretion to hear or decline the appeal.601

Adopted with complex litigation in mind,602 28 U.S.C. § 1292(b) provides a mechanism for obtaining early review of crucial orders where

an appellate ruling may simplify or shorten the litigation.603 Examples

include orders certifying or refusing to certify a class or allocating the

cost of notice, granting or denying motions disposing of pivotal claims

or defenses, finding a lack of subject-matter jurisdiction,604 or determining the applicable substantive law. The appellant has ten days from

entry of the district court’s order to petition the court of appeals for

permission to appeal.605

• Orders constituting a clear abuse of discretion in circumstances where the

court’s legal duty is plainly established. Review may be available by way

of extraordinary writ.606 Appellate courts grant these writs rarely, limiting them to situations where the trial court has clearly committed le598. See, e.g., Clark v. Merrill Lynch, Pierce, Fenner & Smith Inc., 924 F.2d 550, 553 (4th

Cir. 1991). The issue may, of course, become moot after final judgment.

599. 28 U.S.C. § 1292(b) (West 2002).

600. Metro Transp. Co. v. N. Star Reinsurance Co., 912 F.2d 672, 677 (3d Cir. 1990).

601. Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978) (appeal may be denied for any

reason, including docket congestion).

602. See 16 Wright et al., supra note 578, § 3929.

603. See, e.g., Watson v. Shell Oil Co., 979 F.2d 1014, 1016 (5th Cir. 1992) (orders defining

class and class issues, designating class representatives, and setting a class trial plan), reh’g

granted, 990 F.2d 805 (5th Cir. 1993), other reh’g, 53 F.3d 663 (5th Cir. 1994) (case settled before

rehearing).

604. See In re TMI Litig. Cases Consol. II, 940 F.2d 832 (3d Cir. 1991) (order remanding

cases to state court upon finding that the federal statute providing federal jurisdictional predicate

was unconstitutional).

605. 28 U.S.C. § 1292(b) (West 2002); Fed. R. App. P. 5(a). Failure to meet this deadline is

a jurisdictional defect and is strictly enforced. See, e.g., Tranello v. Frey, 962 F.2d 244, 247–48 (2d

Cir. 1992).

606. See 28 U.S.C. § 1651 (West 2002); Fed. R. App. P. 21.
§ 15.11 Manual for Complex Litigation, Fourth

210

gal error, and a party is entitled to relief but cannot obtain it through

other means.607 Writs have been granted to require that a demand for

trial by jury be honored,608 to vacate orders restricting communications with class members,609 to uphold claims of sovereign immunity,610 to vacate orders appointing special masters,611 and to enforce

claims of privilege612 or work-product protection.613 A writ may be

sought as an alternative ground for interlocutory review where review

is denied under section 1292(b).614

• Collateral orders that finally determine claims separable from rights asserted in the action and that would be effectively unreviewable on appeal

from final judgment. Under the “collateral order” doctrine, certain

nonfinal orders may be considered final decisions for purposes of 28

U.S.C. § 1291.615 Examples are orders denying immunity,616 preventing

intervention,617 or modifying a protective order.618 Courts have construed this doctrine narrowly.619 As an alternative, a writ may be

607. Kerr v. United States Dist. Court, 426 U.S. 394, 402–03 (1976).

608. See, e.g., Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962); Beacon Theatres, Inc. v.

Westover, 359 U.S. 500 (1959).

609. See, e.g., Coles v. Marsh, 560 F.2d 186 (3d Cir. 1977).

610. See, e.g., Spacil v. Crowe, 489 F.2d 614 (5th Cir. 1974).

611. See, e.g., La Buy v. Howes Leather Co., 352 U.S. 249 (1957).

612. Jenkins v. Weinshienk, 670 F.2d 915 (10th Cir. 1982); Rowley v. Macmillan, 502 F.2d

1326 (4th Cir. 1974); Harper & Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir. 1970),

aff’d per curiam, 400 U.S. 348 (1971).

613. See, e.g., Bogosian v. Gulf Oil Corp., 738 F.2d 587 (3d Cir. 1984).

614. See, e.g., In re Cement Antitrust Litig., 673 F.2d 1020 (9th Cir. 1982) (judge’s recusal

reviewable by mandamus, but not under section 1292(b)), aff’d under 28 U.S.C. § 2109 sub nom.

Ariz. v. Ash Grove Cement Co., 459 U.S. 1190 (1983).

615. See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). See also Eisen v.

Carlisle & Jacquelin, 417 U.S. 156 (1974) (order directing defendants to bear part of cost of class

notice held immediately appealable).

616. See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 143 (1993);

Mitchell v. Forsyth, 472 U.S. 511, 524–30 (1985).

617. See Stringfellow v. Concerned Neighbors in Action, 480 U.S. 370, 377 (1987).

618. See Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 472 (9th Cir. 1992) (cases

cited therein).

619. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978) (order denying class certification held not immediately appealable). Mindful of the constraints of Coopers, appellate

courts have declined to review interlocutory orders restricting communications with class members, Lewis v. Bloomsburg Mills, Inc., 608 F.2d 971 (4th Cir. 1979), awarding interim attorneys’

fees, Hillery v. Rushen, 702 F.2d 848 (9th Cir. 1983), directing class counsel to create a list of class

members at their own expense, Judd v. First Federal Savings & Loan Ass’n, 599 F.2d 820 (7th Cir.

1979), and transferring the action to another district court because of a forum selection clause,
Judgments and Appeals § 15.11

211

sought.620 It is unclear whether the right to appeal a collateral order is

lost if the appeal is not taken immediately.621

• Orders granting or denying class action certification. See section 21.28.

• Where a claim has been resolved while others remain pending, or the

rights or liabilities of one party have been determined while others remain

in the litigation. Review may be available under Federal Rule of Civil

Procedure 54(b) if the district court, in its discretion, makes “an express determination that there is no just cause for delay” and has given

“an express direction for the entry of judgment.” The order should

state the court’s reasons. The district court has discretion to direct entry of judgment only for those decisions that are “final” within the

meaning of 28 U.S.C. § 1291.622 Unlike 28 U.S.C. § 1292(b), Rule 54(b)

does not provide for certification of issues.623 Once judgment has been

entered and the certification made, the party affected must perfect its

appeal or it is waived.624 A Rule 54(b) appeal with respect to a particular party or a discrete claim may be appropriate to speed the final

resolution of the litigation. On the other hand, such appeals sometimes result in duplication of work for the court of appeals by having

to hear separate appeals on the same or similar issues.625

• Reference of controlling questions of state law to a state appellate court. A

number of state appellate courts entertain references from federal

courts of unsettled questions of state law.

Nascone v. Spudnuts, 735 F.2d 763 (3d Cir. 1984). But cf. Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983) (order refusing to enforce contractual forum selection

clause held immediately appealable). For cases on interlocutory appeals of orders on motions to

disqualify counsel, see supra note 71.

620. Some appellate courts will treat appeals outside the scope of the collateral order doctrine as petitions for special writs. See, e.g., Cheyney State Coll. Faculty v. Hufstedler, 703 F.2d

732, 736 (3d Cir. 1983) (discretionary with court of appeals).

621. See Exc. Nat’l Bank v. Daniels, 763 F.2d 286, 290–92 (7th Cir. 1985).

622. Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 742–44 (1976); Sears, Roebuck & Co. v.

Mackey, 351 U.S. 427, 437–38 (1956).

623. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 443 (3d Cir. 1977).

624. See, e.g., Local P-171, Amalgamated Meat Cutters & Butchers Workmen v. Thompson

Farms Co., 642 F.2d 1065, 1071 n.7 (7th Cir. 1981).

625. See Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980); Sears, Roebuck & Co.,

351 U.S. at 441–44 (Frankfurter, J., dissenting).
§ 15.2 Manual for Complex Litigation, Fourth

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15.12 Proceedings While Appeal Pending

An interlocutory appeal, whether by right or by permission, does not ordinarily deprive the trial court of jurisdiction except with respect to the matter

that is the subject of the appeal.626 Notwithstanding the pendency of an interlocutory appeal, the litigation usually proceeds as scheduled through discovery

and other pretrial steps toward trial. However, depending on the nature of the

issue before the appellate court, it may be appropriate for the trial judge to

suspend some portion of the proceedings or alter the sequence in which further activities in the litigation are conducted.

15.2 Entry of Final Judgment

Federal Rule of Civil Procedure 58 directs the district judge to set forth the

final judgment on a separate document identified as such, separate from any

order, memorandum, or opinion. If the final judgment will run to several

pages, consider preparing for signature a single cover sheet that refers to and

adopts the provisions set forth in an attached appendix. The judgment is effective only when entered by the clerk in accordance with Rule 79(a).627 The time

for appeal does not begin to run until the conditions set by Rules 58 and 79(a)

have been met.628 Though notice of the entry is not required to start the time

for appeal running,629 failure to receive notice may support such a motion for

reopening the time to appeal.630 Prevailing parties should therefore send their

own notice as a supplement to that expected from the clerk.631 A notice filed

before disposition of such motion becomes effective upon the motion’s disposition.632 The pendency of a motion for costs or attorneys’ fees tolls the time to

appeal if the court on timely application delays entry of the underlying judgment.633

If a party timely files a motion under Rule 50(b) for judgment as a matter

of law, under Rule 52(b) to amend or make additional findings of fact, or under Rule 59 for a new trial or to amend the judgment, the time to appeal runs

626. See Taylor v. Sterrett, 640 F.2d 663, 667–68 (5th Cir. 1981); 19 James Wm. Moore et

al., Moore’s Federal Practice § 203.11 (3d ed. 1997).

627. Bankers Trust Co. v. Mallis, 435 U.S. 381, 384 (1978).

628. Fed. R. App. P. 4(a)(7); United States v. Indrelunas, 411 U.S. 216 (1973).

629. See Fed. R. App. P. 4(a)(1).

630. See Fed. R. App. P. 4(a)(6).

631. See Fed. R. App. P. 4(a)(6) committee note.

632. See Fed. R. App. P. 4 committee note on the 1993 amendments.

633. See Fed. R. Civ. P. 58 committee note.
Judgments and Appeals § 15.3

213

instead from entry of the order denying a new trial or granting or denying any

of the other motions.634 These postjudgment motions should, therefore, be

acted on promptly. Postjudgment motions may affect the appealability of other

cases consolidated for trial.

The final judgment in a class action must describe the class with sufficient

specificity to identify those bound by the decision.635 In actions maintained

under Rule 23(b)(3), the court should compile—and refer in the judgment

to—a list that identifies the persons who were sent individual notice and did

not timely elect to be excluded from the class.

634. Fed. R. App. P. 4(a)(4).

635. Fed. R. Civ. P. 23(c)(3).

15.3 Disposition of Materials

Most courts by local rule or order direct or permit the parties, after the

time for appeal has expired, to remove many of the documents and other exhibits.

The parties, however, may need those materials—often gathered or compiled at great expense—in other litigation, pending or not. Therefore, the court

should be reluctant to authorize immediate destruction of documents and

other exhibits. Items permitted to be withdrawn from the court should usually

be retained by the parties for a reasonable period of time so that, if shown to be

needed in other litigation, they can be produced without undue expense or

delay.
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Part II

Special Problems

_______________

20. Multiple Jurisdiction Litigation 217

21. Class Actions 242

22. Mass Torts 341

23. Expert Scientific Evidence 469
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217

20. Multiple Jurisdiction Litigation

.1 Related Federal Civil Cases 218

.11 Cases in Same Court 218

.12 Cases in Different Federal Courts 219

.13 Multidistrict Transfers Under Section 1407 219

.131 Requests for Transfer 219

.132 During Period of Transfer 221

.133 Remand 225

.14 Coordination Between Courts 227

.2 Related Criminal and Civil Cases 228

.3 Related State and Federal Cases 229

.31 Coordination 229

.311 Identifying the Need and Opportunity 231

.312 Threshold Steps 232

.313 Specific Forms of Coordination 235

.32 Jurisdictional Conflicts 238

Multiplication of cases within the federal system or across the federal and

state systems is a common characteristic of complex litigation. Multiple claims

may be aggregated in a single class action if the prerequisites of Federal Rule of

Civil Procedure 23 are met. Frequently, though, separate lawsuits asserting

similar claims are initiated; multiple, overlapping class actions are filed in

federal and state courts; or class members opt out to file their own cases.

Occasionally, peripheral claims in complex litigation will lead to multiple

cases, as in the case of insurance coverage litigation or reactive litigation

motivated by forum preferences. Control over the proliferation of cases and

coordination of multiple claims is crucial to effective management of complex

litigation. When the limitations of federal jurisdiction preclude such control,

voluntary means may be available to achieve coordination and thereby reduce

duplicative activity, minimize the risks of conflict, and avoid unnecessary

expense.

The most powerful device for aggregating multiple litigation pending in

federal and state courts—the bankruptcy law636—is, except for the mass tort

context, beyond the scope of this manual. Where related adversary proceedings

are pending in bankruptcy court, however, the bankruptcy judge should

consider having them reassigned, at least tentatively, to the district judge

handling related litigation.637 When related bankruptcy reorganization pro636. See A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir. 1986). See generally section 22.5.

637. See generally section 22.54.
§ 20.11 Manual for Complex Litigation, Fourth

218

ceedings are pending in different districts, judges should consider methods of

consolidating those proceedings before a single judge.638

20.1 Related Federal Civil Cases

.11 Cases in Same Court 218

.12 Cases in Different Federal Courts 219

.13 Multidistrict Transfers Under Section 1407 219

.131 Requests for Transfer 219

.132 During Period of Transfer 221

.133 Remand 225

.14 Coordination Between Courts 227

20.11 Cases in Same Court

All related civil cases pending in the same court should initially be assigned

to a single judge to determine whether consolidation, or at least coordination

of pretrial proceedings, is feasible and is likely to reduce conflicts and duplication (see section 10.12). If the cases appear to involve common questions of

law or fact, and consolidation may tend to reduce cost and delay, the cases may

be consolidated under Federal Rule of Civil Procedure 42(a) (see section

11.631). Cases pending in different divisions of the court may be transferred

upon request under 28 U.S.C. § 1404(b). Cases should not be consolidated if it

would result in increased delay and other unnecessary burdens on parties, such

as having to participate in discovery irrelevant to their cases.639

At the initial conference, consider whether cases should be coordinated or

consolidated for pretrial proceedings or for all purposes even if the final

decision must be deferred pending the development of additional information.

When cases are coordinated or consolidated, the court should enter an order

establishing a master file for the litigation in the clerk’s office, relieving the

parties from multiple filings of the same pleadings, motions, notices, orders,

and discovery materials, and providing that documents need not be filed

separately in an individual case file unless uniquely applicable to that particular case.

638. See Order of Chief Judge Edward H. Becker, Designation of a District Judge for Service

in Another District Within the Circuit (3d Cir. Nov. 27, 2001). The order was based on authority

granted the chief judge in 28 U.S.C. § 292(b), which permits such reassignments “in the public

interest.”

639. In re Repetitive Stress Injury Litig., 11 F.3d 368 (2d Cir. 1993).
Multiple Jurisdiction Litigation § 20.131

219

20.12 Cases in Different Federal Courts

Related cases pending in different federal courts may be consolidated in a

single district by a transfer of venue. Under 28 U.S.C. § 1404(a), the court may,

“[f]or the convenience of parties and witnesses, in the interest of justice . . .

transfer any civil action to any other district or division where it might have

been brought.”640 Plaintiffs’ choice of forum is, however, entitled to substantial

deference.641

20.13 Multidistrict Transfers Under Section 1407

.131 Requests for Transfer 219

.132 During Period of Transfer 221

.133 Remand 225

The Judicial Panel on Multidistrict Litigation (“the Panel”) is authorized

to transfer civil actions pending in more than one district involving one or

more common questions of fact to any district for coordinated or consolidated

pretrial proceedings upon the Panel’s determination that transfer “will be for

the convenience of the parties and witnesses and will promote the just and

efficient conduct of such actions.”642 The Panel’s authority is not subject to

venue restrictions643—it extends to most civil actions644 and, with one statutory

exception, only to transfer for pretrial proceedings (as of December 2003).645

20.131 Requests for Transfer

Transfer proceedings may be initiated by one of the parties or by the Panel

itself, although the latter procedure is ordinarily used only for “tag-along”

cases (transfer on the request of a person not a party in one or more of the

640. For the implications of the phrase “where it might have been brought,” see infra note

649.

641. See Gulf Oil Co. v. Gilbert, 330 U.S. 501, 508 (1947).

642. 28 U.S.C. § 1407 (West 2003).

643. In re N.Y. City Mun. Sec. Litig., 572 F.2d 49 (2d Cir. 1978).

644. Antitrust actions brought by the United States are exempt from the Panel’s power, 28

U.S.C. § 1407(g) (West 2002), as are injunctive actions instituted by the Securities and Exchange

Commission unless the SEC consents to consolidation, 15 U.S.C. § 78u(g) (2000).

645. See infra section 20.132 and text accompanying notes 666–71. Parens patriae antitrust

actions brought by states under 15 U.S.C. § 15c(a)(1) may be transferred by the Panel for both

pretrial and trial. 28 U.S.C. § 1407(h) (West 2002). The Panel can also designate the circuit court

to hear appeals of federal agency rulings in certain instances in which petitions for review have

been filed in multiple circuits. Id. § 2112(a)(3).
§ 20.131 Manual for Complex Litigation, Fourth

220

cases).646 The Panel evaluates each group of cases proposed for multidistrict

treatment on the cases’ own facts in light of the statutory criteria. The objective

of transfer is to eliminate duplication in discovery, avoid conflicting rulings

and schedules, reduce litigation cost, and save the time and effort of the

parties, the attorneys, the witnesses, and the courts.647 As few as two cases may

warrant multidistrict treatment,648 although those advocating transfer bear a

heavy burden of persuasion when there are only a few actions, particularly

those involving the same parties and counsel.649

Occasionally, only certain claims in an action are related to multidistrict

proceedings, or an action contains claims relating to more than one multidistrict docket (e.g., a plaintiff suing its broker over purchases of stock in two

different companies, each of which is the subject of a separate multidistrict

docket). Section 1407(a) authorizes the Panel to transfer only “civil actions,”

not claims; however, section 1407(a) also empowers the Panel to accomplish

“partial” transfer by (1) transferring an action in its entirety to the transferee

district, and (2) simultaneously remanding to the transferor district any claims

for which transfer was not deemed appropriate, such as cross-claims, counterclaims, or third-party claims. If the “new” action containing the remanded

claim in the transferor district is also appropriate for inclusion in a second

transferee docket, the process can proceed one step further with simultaneous

retransfer to the second docket’s transferee district.

A transfer under section 1407 becomes effective when the order granting

the transfer is filed in the office of the clerk of the transferee court. At that

point, the jurisdiction of the transferor court ceases and the transferee court

has exclusive jurisdiction.650 During the pendency of a motion (or show cause

order) for transfer, however, the court in which the action was filed retains

jurisdiction over the case.651

The transferor court should not automatically stay discovery; it needs to

consider provisions in local rules that may mandate early commencement of

discovery, and an order modifying such provisions’ impact on the litigation

may be necessary. Nor should the court automatically postpone rulings on

pending motions, or generally suspend further proceedings. When notified of

646. The Panel may order transfer on the request of a person not a party in one or more of

the cases. See, e.g., In re Equity Funding Corp. Sec. Litig., 375 F. Supp. 1379, 1390 n.4 (J.P.M.L.

1974).

647. See In re Plumbing Fixture Cases, 298 F. Supp. 484 (J.P.M.L. 1968).

648. See, e.g., In re Clark Oil & Ref. Corp. Antitrust Litig., 364 F. Supp. 458 (J.P.M.L. 1973).

649. See, e.g., In re Scotch Whiskey, 299 F. Supp. 543 (J.P.M.L. 1969).

650. In re Plumbing Fixture, 298 F. Supp. 484. Unless altered by the transferee court, orders

entered by the transferor court remain in effect.

651. J.P.M.L. R.P. 1.5; In re Four Seasons Sec. Laws Litig., 362 F. Supp. 574 (J.P.M.L. 1973).
Multiple Jurisdiction Litigation § 20.132

221

the filing of a motion for transfer,652 therefore, matters such as motions to

dismiss or to remand, raising issues unique to the particular case, may be

particularly appropriate for resolution before the Panel acts on the motion to

transfer. The Panel has sometimes delayed ruling on transfer to permit the

court in which the case is pending to decide critical, fully briefed and argued

motions. At the same time, it may be advisable to defer certain matters until

the Panel has the opportunity to rule on transfer. For example, there would be

little purpose in entering a scheduling order while a conditional order of

transfer is pending. The court should, however, modify any previously scheduled dates for pretrial proceedings or trial as may be necessary to avoid giving

the Panel a misleading picture of the status of the case.

More often, however, the Panel has held that the pendency of potentially

dispositive motions is not an impediment to transfer of actions, because such

motions can be addressed to the transferee judge for resolution after transfer.

Furthermore, the pendency of motions raising questions common to related

actions can itself be an additional justification for transfer.653

The Panel uses no single factor to select the transferee district,654 but the

Panel does consider where the largest number of cases is pending, where

discovery has occurred, where cases have progressed furthest, the site of the

occurrence of the common facts, where the cost and inconvenience will be

minimized, and the experience, skill, and caseloads of available judges. Based

on these factors, the Panel will designate a judge (on rare occasions, two

judges) to whom the cases are then transferred for pretrial proceedings. The

judge is usually a member of the transferee court, but occasionally the Panel

selects a judge designated to sit specially in the transferee district on an

intracircuit or intercircuit assignment.

20.132 During Period of Transfer

After the transfer, the transferee judge655 exercises not only the judicial

powers in the transferee district but also “the powers of a district judge in any

district for the purpose of conducting pretrial depositions in such coordinated

or consolidated proceedings.”656 The Panel has no authority to direct transferee

judges in the exercise of their powers and discretion in supervising multidis652. A copy of the motion is to be filed with the court where the action is pending. See

J.P.M.L. R.P. 5.12(c).

653. See, e.g., In re Ivy, 901 F.2d 7, 9 (2d Cir. 1990).

654. See Robert A. Cahn, A Look at the Judicial Panel on Multidistrict Litigation, 72 F.R.D.

211, 214–215 (1977).

655. In re Plumbing Fixture, 298 F. Supp. at 489.

656. 28 U.S.C. § 1407(b) (West 2003).
§ 20.132 Manual for Complex Litigation, Fourth

222

trict proceedings.657 This supervisory power over depositions in other districts

may be exercised in person or by telephone.658 The transferee judge may vacate

or modify any order of a transferor court, including protective orders;659 unless

altered, however, the transferor court’s orders remain in effect.660

Although the transferee judge has no jurisdiction to conduct a trial in cases

transferred solely for pretrial proceedings, the judge may terminate actions by

ruling on motions to dismiss, for summary judgment, or pursuant to settlement, and may enter consent decrees.661 Complexities may arise where the

rulings turn on questions of substantive law. In diversity cases, the law of the

transferor district follows the case to the transferee district.662 Where the claim

or defense arises under federal law, however, the transferee judge should

consider whether to apply the law of the transferee circuit or that of the

transferor court’s circuit,663 keeping in mind that statutes of limitations may

present unique problems.664 An action is closed by appropriate orders entered

in the transferee court, without further involvement by the Panel or the

original transferor court.

The transferee judge’s management plan for the litigation should include

provisions for handling tag-along actions transferred by the Panel after the

initial transfer. Panel Rules 7.2(I) and 7.5(e) impose an affirmative obligation

on parties in cases in which a motion to transfer is pending, or that previously

have been transferred by the Panel, to promptly notify the Panel of any

potential tag-along action in which the party is also named. This obligation

also is imposed on counsel with respect to any action in which the counsel

appears. Ordinarily, it is advisable to order that (1) tag-along actions shall be

automatically made part of the centralized proceedings upon transfer to, or

filing in, the transferee court; (2) rulings on common issues—for example, on

the statute of limitations—shall be deemed to have been made in the tag-along

657. Id.

658. See In re Corrugated Container Antitrust Litig., 662 F.2d 875 (D.C. Cir. 1981); In re

Corrugated Container Antitrust Litig., 644 F.2d 70 (2d Cir. 1981); In re Corrugated Container

Antitrust Litig., 620 F.2d 1086 (5th Cir. 1980).

659. See, e.g., In re Upjohn Co. Antibiotic Cleocin Prods. Liab. Litig., 664 F.2d 114 (6th Cir.

1981).

660. See In re Master Key Antitrust Litig., 320 F. Supp. 1404 (J.P.M.L. 1971).

661. See, e.g., In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357, 367–68 (3d Cir. 1993).

662. Van Dusen v. Barrack, 376 U.S. 612 (1964); In re Dow Co. “Sarabond” Prods. Liab.

Litig., 666 F. Supp. 1466, 1468 (D. Colo. 1987).

663. Compare In re Korean Air Lines Disaster, 829 F.2d 1171 (D.C. Cir. 1987), aff’d on other

grounds sub nom. Chan v. Korean Air Lines Ltd., 490 U.S. 122 (1989), with Dow “Sarabond,” 666

F. Supp. 1466 (D. Colo. 1987), and cases cited therein.

664. See, e.g., Berry Petroleum Co. v. Adams & Peck, 518 F.2d 402, 406 (2d Cir. 1975).
Multiple Jurisdiction Litigation § 20.132

223

action without the need for separate motions and orders; and (3) discovery

already taken shall be available and usable in the tag-along cases.665 Consider

other means of reducing duplicative discovery activity and expediting later

trials by measures such as videotaping key depositions or testimony given in

bellwether trials, particularly of expert witnesses, for use at subsequent trials in

the transferor courts after remand.

One of the values of multidistrict proceedings is that they bring before a

single judge all of the federal cases, parties, and counsel comprising the

litigation. They therefore afford a unique opportunity for the negotiation of a

global settlement. Few cases are remanded for trial; most multidistrict litigation is settled in the transferee court. As a transferee judge, it is advisable to

make the most of this opportunity and facilitate the settlement of the federal

and any related state cases. See section 20.31.

Until 1998, actions based on section 1407 proceedings and not settled or

otherwise dismissed in the transferee districts during their pretrial stages often

remained in the transferee districts for trial. Transferee judges entered orders

effecting transfer for trial, pursuant to 28 U.S.C. § 1404 or 1406, of cases

previously transferred to them for pretrial under section 1407.

In 1998, the U.S. Supreme Court held that a district court has no authority

to invoke section 1404(a) to assign a transferred case to itself for trial, because

section 1407(a) “uncondition[ally]” commands the Panel to remand, at the

end of pretrial proceedings, each action transferred by the Panel that has not

been terminated in the transferee district.666 However, the policy reasons for

the pre-1998 practice remain: (1) during the often protracted time of the

section 1407 assignment, the transferee judge gains a solid understanding of

the case, and it makes sense for trial to be conducted by the judge with the

greatest understanding of the litigation; (2) the transferee judge may already be

trying the constituent centralized action(s), and there may be efficiencies in

adjudicating related actions or portions thereof in one trial; and (3) the

transferee judge, if empowered to try the centralized actions, may have a

greater ability to facilitate a global settlement.

665. For a discussion of the use of supplemental depositions, see supra section 11.453. See

also infra sample order at section 40.29.

666. In re Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). The

Court infers that MDL transferee judges may not use section 1404(a) to transfer to any district at

all, neither to a third district or back to the section 1407 transferor district. Id. at 41 n.4. By

analogy and further inference, an MDL transferee judge likewise now may not transfer under

section 1406. See id.
§ 20.132 Manual for Complex Litigation, Fourth

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Accordingly, evolving alternatives, such as those below, permit the

transferee court to resolve multidistrict litigation through trial while remaining

faithful to the Lexecon limitations:

• Prior to recommending remand, the transferee court could conduct a

bellwether trial of a centralized action or actions originally filed in the

transferee district, the results of which (1) may, upon the consent of

parties to constituent actions not filed in the transferee district, be

binding on those parties and actions,667 or (2) may otherwise promote

settlement in the remaining actions.

• Soon after transfer, the plaintiffs in an action transferred for pretrial

from another district may seek or be encouraged (1) to dismiss their

action and refile the action in the transferee district, provided venue

lies there, and the defendant(s) agree, if the ruling can only be accomplished in conjunction with a tolling of the statute of limitations or a

waiver of venue objections, or (2) to file an amended complaint asserting venue in the transferee district,668 or (3) to otherwise consent

to remain in the transferee district for trial.669

667. See, e.g., In re Air Crash Near Cali, Colombia on Dec. 20, 1995, MDL No. 1125, Order

No. 1522 (S.D. Fla. Jan. 12, 2000) (noting that parties in some of the actions transferred under

section 1407 had agreed to be bound by the results of a consolidated liability trial and had been

instructed to file appropriate motions after the completion of the trial, seeking a ruling that

effectuated such agreements).

668. Often in multidistrict litigation the transferee court will consider establishing a master

file with standard pleadings, motions, and orders. This file may include a single amended

consolidated complaint, alleging that venue is proper in the transferee district. If such a

document is used, the court and parties should take care to ensure a common understanding of

the document’s intent and significance—that is, whether it is being used as a device simply to

facilitate ease of the docket’s administration, or whether the filing in the transferee district

constitutes the inception of a new “case or controversy” in that district, thereby superseding and

rendering moot the pending separate actions that had been transferred to that district for

pretrial proceedings by the Panel under section 1407.

669. See, e.g., State v. Liquid Air Corp. (In re Carbon Dioxide Indus. Antitrust Litig.), 229

F.3d 1321 (11th Cir. 2000) (ruling that Lexecon does not prohibit parties from waiving venue

objections in centralized actions where transferee court otherwise had subject-matter jurisdiction); In re Dippin’ Dots Patent Litig., MDL No. 1377, Docket No. 1:00-CV-907 (N.D. Ga. July

23, 2001) (transferee court ordered all parties to file a pleading stating whether they consented to

trial in the transferee district); In re Research Corp. Techs., Inc. Patent Litig., Docket No. 97-

2836 (D.N.J. Dec. 3, 1999) (order entering final judgment and staying further pretrial proceedings; transferee court found it reasonable to conclude that final judgment may be entered

following trial proceedings consented to by the parties that resulted in termination of the

actions).
Multiple Jurisdiction Litigation § 20.133

225

• After an action has been remanded to the originating transferor court

at the end of section 1407 pretrial proceedings, the transferor court

could transfer the action,670 pursuant to 28 U.S.C. § 1404 or 1406, back

to the transferee court for trial by the transferee judge.671

• The transferee judge could seek an intercircuit or intracircuit assignment pursuant to 28 U.S.C. § 292 or 294 and follow a remanded action, presiding over the trial of that action in that originating district.

20.133 Remand

Section 1407 directs the Panel to remand, after appropriate pretrial

proceedings, actions not filed or terminated in the transferee court to the

respective transferor courts for further proceedings and trial. When this should

be done will depend on the circumstances of the litigation. In some cases,

remands have been ordered relatively early, while substantial discovery

remained to be done; in others, virtually all discovery had been completed and

the cases were ready for trial at the time of remand to the transferor districts.

Some of the constituent cases may be remanded, while others are retained for

further centralized pretrial proceedings.

The Panel looks to the transferee court to suggest when it should order

remand, but that court has no independent authority to order section 1407

remand.672 The transferee court should consider when remand will best serve

the expeditious disposition of the litigation. The Panel may also order remand

on its own initiative or on the motion of a party.673 Although authorized to

“separate any claim, cross claim, counter-claim, or third-party claim and

remand any of such claims before the remainder of the action is remanded,”

the Panel has rejected most requests to exclude portions of a case from transfer

670. Lexecon, 523 U.S. at 19.

671. See, e.g., Kenwin Shops, Inc. v. Bank of La., 97 Civ. 907, 1999 WL 294800, at *11

(S.D.N.Y. May 11, 1999). The transferee court might also facilitate such a transfer by expressly

recommending it either in its suggestion of remand to the Panel or in its final pretrial order. See,

e.g., In re Air Crash at Dubrovnik, Croatia on Apr. 3, 1996, MDL No. 1180 (Letter from Alfred

V. Covello, Chief Judge, U.S. District Court, D. Conn., to Michael J. Beck, Clerk of the Panel,

Judicial Panel on Multidistrict Litigation, suggesting that four remanded cases be transferred

back to the court and consolidated for trial (Jan. 4, 2002) (on file with the Judicial Panel on

Multidistrict Litigation)).

672. See In re Roberts, 178 F.3d 181 (3d Cir. 1999).

673. J.P.M.L. R.P. 7.6(c). Great deference is given to the views of the transferee judge. See,

e.g., In re IBM Peripheral EDP Devices Antitrust Litig., 407 F. Supp. 254, 256 (J.P.M.L. 1976).

Efforts by parties to use the Panel as a substitute for appellate review, by seeking premature

remand, have been uniformly rejected.
§ 20.133 Manual for Complex Litigation, Fourth

226

under section 1407.674 The transferee court may give such matters individualized treatment if warranted, and the transferee judge (who will develop a

greater familiarity with the nuances of the litigation) can suggest remand of

claims in any constituent action whenever the judge deems it appropriate.675

The Panel has further concluded that it has no power to transfer (or sever and

remand) particular “issues,” as distinguished from particular “claims.”676

After remand, the transferor court has exclusive jurisdiction, and further

proceedings in the transferee court with respect to a remanded case are not

authorized absent a new transfer order by the Panel.677 The transferor court

conducts further pretrial proceedings, as needed, and thus all cases remanded

to the same court for additional proceedings and trial should be assigned at

least initially to a single judge for coordination or consolidation. Although the

transferor judge has the power to vacate or modify rulings made by the

transferee judge, subject to comity and “law of the case” considerations, doing

so in the absence of a significant change of circumstances would frustrate the

purposes of centralized pretrial proceedings.678

The complete pretrial record is sent to the transferor court upon remand

of the case. One of the final actions of the transferee court should be a pretrial

order that fully chronicles the proceedings, summarizes the rulings that will

affect further proceedings, outlines the issues remaining for discovery and trial,

and indicates the nature and expected duration of further pretrial proceedings.679 Transferee courts typically do not provide transferor courts with status

reports during the pretrial proceedings, so this order will help the transferor

674. But see In re Hotel Tel. Charge Antitrust Litig., 341 F. Supp. 771 (J.P.M.L. 1972); cf. In re

Midwest Milk Monopolization Litig., 386 F. Supp. 1401 (J.P.M.L. 1975).

675. See, e.g., In re Collins, 233 F.3d 809 (3d Cir. 2000), cert. denied sub nom. Collins v. MacMillan Bloedel, Inc., 532 U.S. 1066 (2001) (upholding severance of punitive damage claims by

the transferee court in actions where the rest of the claims were suggested for remand); In re

Patenaude, 210 F.3d 135, 143 (3d Cir. 2000) (ruling that the phrase “coordinated or consolidated pretrial proceedings” in section 1407(a) is to be interpreted broadly, here in the context of

the transferee judge’s wide leeway regarding when to suggest remand).

676. In re Plumbing Fixture Case, 298 F. Supp. 484, 489–90 (J.P.M.L. 1968).

677. See, e.g., In re The Upjohn Co. Antibiotic Cleocin Prods. Liab. Litig., 508 F. Supp. 1020

(E.D. Mich. 1981). In unusual circumstances, the Panel has by a new order again transferred a

remanded case to the transferee district or transferred it to a new district as part of another

multidistrict proceeding.

678. See Stanley A. Weigel, The Judicial Panel on Multidistrict Litigation, Transferor Courts

and Transferee Courts, 78 F.R.D. 575, 577 (1978).

679. See In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 1962, 2001 WL

497313 (E.D. Pa. May 9, 2001), available at http://www.fenphen.verilaw.com/search_

common.icl (last visited Nov. 10, 2003) (final pretrial order establishing a process for the

remand of transferred cases that have completed the pretrial process).
Multiple Jurisdiction Litigation § 20.14

227

courts plan further proceedings and trial. Transferee judges have occasionally

received intracircuit or intercircuit assignments under 28 U.S.C. §§ 292(b) and

292(d) to preside at trials of cases remanded to the transferor courts.

20.14 Coordination Between Courts

Even when related cases pending in different districts cannot be transferred to a single district, judges can coordinate proceedings in their respective

courts to avoid or minimize duplicative activity and conflicts. Coordination

requires effective communication between judges and among judges and

counsel.

Steps that may be taken include the following:

• Special assignment of judge. All cases may be assigned to a single judge

designated by the chief justice or the chief circuit judge under

28 U.S.C. §§ 292–294 to sit temporarily in the district where the cases

are pending (either within or outside of the assigned judge’s own circuit).

• Lead case. Counsel in the various cases may agree with the judge to

treat one case as the “lead case.” The agreement may provide for staying proceedings in the other cases pending resolution of the lead case,

or rulings in the lead case may be given presumptive, though not conclusive, effect in the other courts.

• Joint conferences and orders. All judges may attend joint hearings or

conferences, in person or by telephone. Federal Rule of Civil Procedure 77(b) requires consent of the parties for trials or hearings to be

conducted outside the district; consent is not required for other proceedings, such as conferences. The joint proceedings may be followed

by joint or parallel orders by the several courts in which the cases are

pending.

• Joint appointments. The several courts may coordinate the appointment of joint experts under Federal Rule of Evidence 706, or special

masters under Federal Rule of Civil Procedure 53, to avoid duplicate

activity and inconsistencies. The appointments may help resolve

claims of privilege made in a number of cases on similar facts, or

where global settlement negotiations are undertaken. The courts may

also coordinate in appointing lead or liaison counsel.

• Avoiding duplicative discovery. Judges should encourage techniques

that coordinate discovery and avoid duplication, such as those discussed in sections 11.423, 11.443, 11.452, and 11.464. Filing or crossfiling deposition notices, interrogatories, and requests for production

in related cases will make the product of discovery usable in all cases
§ 20.2 Manual for Complex Litigation, Fourth

228

and avoid duplicative activity. Relevant discovery already completed

should ordinarily be made available to litigants in the other cases.680 If

the material is subject to a protective order, the court usually may accommodate legitimate privacy interests by amending the order to include the new litigants within the order’s restrictions,681 and the party

seeking the discovery may be required to bear a portion of the cost incurred in initially obtaining the information. Document production

should be coordinated and joint depositories established.682 The resolution of discovery disputes can also be coordinated to some degree

(e.g., by referring them to a single magistrate judge or special master).

• Clarifying class definitions. Conflicts between class actions, or between

a class action and individual actions, can be avoided by coordinating

the drafting of class definitions when actions are certified. See section 20.32.

• Stays. In appropriate cases, a judge may order an action stayed pending resolution of a related case in a federal court.

20.2 Related Criminal and Civil Cases

Major management problems arise in concurrent criminal and civil cases

involving the same persons. Witnesses may claim a Fifth Amendment privilege

in the civil actions, especially if examined prior to final resolution of the

criminal proceedings.683 Serious questions may arise as to requiring an accused,

during the pendency of criminal charges, to produce in civil proceedings either

adverse (although nonprivileged) evidence or exculpatory evidence to which

680. See Wilk v. Am. Med. Ass’n, 635 F.2d 1295, 1299 (7th Cir. 1980) (“Where an appropriate modification of a protective order can place private litigants in a position they would

otherwise reach only after repetition of another’s discovery, such modification can be denied

only where it would tangibly prejudice substantial rights of the party opposing modification. . . .

Once such prejudice is demonstrated, however, the district court has broad discretion in judging

whether that injury outweighs the benefits of any possible modification of the protective

order.”).

681. Id. at 1301.

682. See Fed. R. Civ. P. 26(b)(2) (“The frequency or extent of use of [discovery] . . . shall be

limited by the court if it determines that: (i) the discovery is unreasonably . . . duplicative, or is

obtainable from some other source that is more convenient, less burdensome, or less expensive

. . . .”).

683. Termination of the criminal case will not necessarily result in testimony becoming

available. See Pillsbury Co. v. Conboy, 459 U.S. 248 (1983) (witness compelled by grant of “use

immunity” to give testimony to grand jury does not waive right to claim Fifth Amendment in

subsequent civil litigation).
Multiple Jurisdiction Litigation § 20.31

229

the prosecution would not be entitled under Federal Rule of Criminal Procedure 16. The criminal proceeding ordinarily has first priority because of the

short pretrial period allowed under the Speedy Trial Act684 and because of the

potential impact of a conviction. Even if conviction will not preclude relitigation of issues in a subsequent civil proceeding, it may be admissible in the civil

case as substantive evidence of the essential elements of the offense under

Federal Rule of Evidence 803(22) or as impeachment evidence under Federal

Rule of Evidence 609. Suspending all pretrial activities in civil litigation until

the end of the criminal proceeding, however, may be inadvisable, since it may

be possible to conduct major portions of the civil case’s discovery program

without prejudice before completion of the criminal proceedings.685

To facilitate coordination, related criminal and civil cases should be

assigned, if possible, to the same judge (though, as noted in section 10.12,

circumstances may make assignment to the same judge inadvisable). Although

the MDL Panel has no authority to transfer criminal cases, it has frequently

ordered transfer of civil actions to the location of related criminal proceedings.

If the cases are assigned to different judges, the judges should at least communicate and coordinate informally. If grand jury materials from another court

are sought, the two-step procedure described in Douglas Oil Co. of California v.

Petrol Stops Northwest686 must be followed.

20.3 Related State and Federal Cases

.31 Coordination 229

.311 Identifying the Need and Opportunity 231

.312 Threshold Steps 232

.313 Specific Forms of Coordination 235

.32 Jurisdictional Conflicts 238

20.31 Coordination

.311 Identifying the Need and Opportunity 231

.312 Threshold Steps 232

.313 Specific Forms of Coordination 235

Increasingly, complex litigation involves related cases brought in both

federal and state courts. Such litigation often involves mass torts (see section

684. The complexity of the case may be a ground for extending the statutory time limits. 18

U.S.C. § 3161(h)(8)(B) (2000). See infra section 30.4.

685. See Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936); Texaco, Inc. v. Borda, 383 F.2d

607 (3d Cir. 1967).

686. 441 U.S. 211 (1979).
§ 20.31 Manual for Complex Litigation, Fourth

230

22.2). Some sets of cases may involve numerous claims arising from a single

event, confined to a single locale (such as a plane crash or a hotel fire). Other

more-complicated litigations may arise from widespread exposure to harmful

products or substances dispersed over time and place.

No single forum has jurisdiction over these groups of cases. Unless the

defendant files for bankruptcy, no legal basis exists for exercising exclusive

federal control over state litigation. Interdistrict, intradistrict, and multidistrict

transfer statutes and rules apply only to cases filed in, or removable to, federal

court (see sections 22.32 and 22.33).

State and federal judges, faced with the lack of a comprehensive statutory

scheme, have undertaken innovative efforts to coordinate parallel or related

litigation687 so as to reduce the costs, delays, and duplication of effort that often

stem from such dispersed litigation. State judges, for example, can bring

additional resources that might enable an MDL transferee court to implement

a nationwide discovery plan or a coordinated national calendar.688 There are,

however, potential disadvantages of cooperative activity. Coordination can

delay or otherwise affect pending litigation, conferring an advantage to one

side in contentious, high-stakes cases.689 Such litigation activates strategic

maneuvering by plaintiffs and defendants. For example, plaintiffs may seek

early trial dates in jurisdictions with favorable discovery rules.690

687. See generally William W Schwarzer et al., Judicial Federalism in Action: Coordination of

Litigation in State and Federal Courts, 78 Va. L. Rev. 1689 (1992) (reporting on a study of eleven

notable instances of state–federal coordination in litigation arising from (1) 1972 Federal

Everglades air crash, (2) 1977 Beverly Hills Supper Club fire, (3) 1979 Chicago air crash,

(4) 1980 MGM Grand Hotel fire, (5) 1981 Hyatt skywalk cases, (6) 1986 technical equities fraud,

(7) 1987 L’Ambience Plaza collapse, (8) 1989 Exxon Valdez oil spill, (9) 1989 Sioux City air

crash, (10) Ohio asbestos litigation, and (11) Brooklyn Navy Yard asbestos litigation). See infra

section 33.23.

688. See Sam C. Pointer, Jr., Reflections by a Federal Judge: A Comment on Judicial Federalism:

A Proposal to Amend the Multidistrict Litigation Statute, 73 Tex. L. Rev. 1569, 1571 (1995)

(discussing state judges taking primary responsibility for portions of common discovery and

other aspects of the silicone gel breast implant MDL process). See also E. Norman Veasey, A

Response to Professor Francis E. McGovern’s Paper Entitled Toward a Cooperative Strategy for

Federal and State Judges in Mass Tort Litigation, 148 U. Pa. L. Rev. 1897, 1898 (2000) (“Over 95%

of all litigation and roughly the same percentage of resources are in the state courts.”).

689. See generally Mark Herrmann, To MDL or Not to MDL: A Defense Perspective, 24 Litig.

43 (1998).

690. Paul D. Rheingold, Symposium: National Mass Torts Conference: Comment on Judicial

Federalism: A Proposal to Amend the Multidistrict Litigation Statute, 73 Tex. L. Rev. 1581,

1582–83 (1995). Defendants may have concerns about state cases being resolved before federal

cases consolidated under the MDL procedure. See Francis E. McGovern, Rethinking Cooperation

Among Judges in Mass Tort Litigation, 44 UCLA L. Rev. 1851, 1858 (1997) [hereinafter McGovern, Rethinking Cooperation] (“[P]laintiffs’ attorneys rush to their favorite judges and demand
Multiple Jurisdiction Litigation § 20.311

231

State and federal judges also have initiated state–federal cooperation

between jurisdictions to minimize conflicts that distract from the primary goal

of resolving the parties’ disputes.

20.311 Identifying the Need and Opportunity

Coordination approaches differ depending on the nature of the litigation.

Coordination is relatively easy if all of the cases are pending in a single state.

States increasingly have adopted procedures for assigning complex multiparty

litigation to a single judge or judicial panel or have created courts to deal with

complex business cases,691 facilitating coordination between state and federal

courts. Federal judges should learn about their own state or local courts’

practices and procedures for consolidating cases.

The Judicial Panel on Multidistrict Litigation has no power over cases

pending in state courts, but has facilitated coordination by transferring federal

cases to a district where related cases are pending in the state courts.692

Coordination is easier when counsel for some or all of the parties in the

related actions have the same counsel. In appointing lead or liaison counsel or

otherwise organizing counsel (see section 10.22 (general) and section 22.62

(mass torts) and 21.27 (class actions)), consider including attorneys from

jurisdictions with cases that may need to be coordinated with either class

action or multidistrict litigation.

The need to coordinate is especially acute where overlapping or multiple

identical class actions are filed in more than one court (see section 21.15). It is

best to communicate with state and federal judicial counterparts at an early

stage to begin coordinating such cases. Unilateral action by any judge to certify

a class or assert nationwide jurisdiction can fatally undermine future coordination efforts.

Coordination becomes much more complex when cases are dispersed

across a number of states, even where the federal cases are all centered in a

draconian procedures to pressure defendants to make block settlements . . . Defendants seek the

opposite—delay is their nirvana.”).

691. Alexander B. Aikman, Managing Mass Tort Cases: A Resource Book for State Trial

Court Judges § 3.11 (December 1995). For examples of such rules, see id. at app. C. See also

Helen E. Freedman, Product Liability Issues In Mass Torts—View From the Bench, 15 Touro L.

Rev. 685, 687, n.8 (1999), and cases cited therein; Paul D. Rheingold, Mass Tort Litigation

§§ 6:3, 6:7 (1996) (discussing statewide systems in California, New York, and elsewhere). See

also, e.g., N.C. Rules of Prac. for Sup. & Dist. Cts. R. 2.1 (West 2003). See

www.ncbusinesscourt.net for a history and overview of the workings of the North Carolina

Business Court.

692. Cahn, A Look at the Judicial Panel on Multidistrict Litigation, supra note 654, at 215.
§ 20.312 Manual for Complex Litigation, Fourth

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single MDL transferee court. Electronic media—e.g., Internet Web sites and

list-servs—can improve communication in such circumstances.

Reciprocity and cooperation create trust and mutual respect so that

attempts to coordinate are not perceived as attempts to dominate. The special

master who facilitated state–federal coordination in the silicone gel breast

implant litigation observed that the more transparent, formal, even-handed,

and administrative the proposed cooperative venture is, the more acceptable it

will be to other judges.693

20.312 Threshold Steps

The nature and extent of multiple filings related to the same subject matter

in different courts should be clarified, so as to minimize conflicts. The court

should direct counsel to identify the names of all similar cases in other courts,

their stage of pretrial preparation, and the assigned judges. Such a direction

should be part of the initial case-management order in any case with related

litigation pending in other courts,694 and many courts have local rules requiring disclosure of similar information.695

Dispersed litigation makes essential an information network, perhaps

formalized as a judicial advisory committee,696 which can serve as a catalyst for

some degree of state–federal coordination. If the litigation warrants it, a

meeting of a judicial advisory committee can help to develop relationships

693. McGovern, Rethinking Cooperation, supra note 690, at 1870.

694. See, e.g., In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL No. 926, Order No. 1

(N.D. Ala. June 26, 1992), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited

Nov. 10, 2003).

695. See, e.g., Alaska U.S. Dist. Ct. L.R. 40.2 (“Whenever counsel has reason to believe that

an action or proceeding on file or about to be filed in this court is related to another action or

proceeding in this or any other federal or state court, whether pending, dismissed or otherwise

terminated, counsel shall promptly file and serve a Notice of Related Case.”); Ohio N.D., Civ.

L.R. 16.3 (“An attorney who represents a party in Complex Litigation, as defined above, shall,

with the filing of the complaint, answer, motion, or other pleading, serve and file a Case

Information Statement which briefly describes the nature of the case, identifies by title and case

number all other related case(s) filed in this and any other jurisdiction (federal or state) . . . .”).

696. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 1014 (E.D. Pa.

Dec. 7, 1999), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10,

2003). Judge Bechtle, the MDL judge, had earlier communicated with and established an

informal network of state judges to coordinate the litigation. The settlement agreement with

American Home Products expressly provided for the creation of a State Court Judicial Advisory

Committee to assist in administering the settlement agreement. In re Diet Drugs, MDL No. 1203,

Nationwide Class Action Settlement Agreement with Am. Home Prods., at § VIII(B)(3)–(6)

(E.D. Pa. Nov. 18, 1999), at http://www.fenphen.verilaw.com/mdl_settle/settleagree.pdf (last

visited Nov. 10, 2003).
Multiple Jurisdiction Litigation § 20.312

233

among the judges and ease coordination efforts.697 An Internet list-serv is

another economical way to foster communications among geographically

dispersed attorneys and judges. In some mass torts litigation, the National

Conference of State Chief Justices, the National Center for State Courts, and

the State Justice Institute have helped create and fund coordinating committees of state court judges with significant mass tort assignments. Federal judges

with mass tort responsibilities have sometimes participated in person or by

presenting written or telephonic reports and updates of federal activities. Such

committees help identify specific types of coordination that can be recommended to other state and federal judges assigned to the same type of litigation. It may also be helpful to organize attorneys from states with significant

numbers of cases into an advisory committee, to be a channel of communication between the judges and other attorneys.698

Federal judges should communicate personally with state court judges

who have a significant number of cases in order to discuss mutual concerns

and suggestions, such as designating a liaison attorney and judge to communicate with federal counterparts. These communications provide an opportunity

to exchange pretrial orders and proposed schedules that help avoid potential

conflicts. One special master has concluded that “[t]he earlier and more

comprehensive the cooperative intervention occurs in the litigation cycle, the

greater the benefits and the less the resistance.”699

Class counsel generally have the benefit of the common fund doctrine to

support payment for their efforts on behalf of the class or consolidated

litigants.700 MDL judges generally issue orders directing that defendants who

settle MDL-related cases contribute a fixed percentage of the settlement to a

general fund to pay national counsel.701 Without special provisions to com697. See, e.g., In re Baycol Prods. Liab. Litig., 180 F. Supp. 2d 1378 (J.P.M.L. 2001). The

transferee judge convened a conference from June 6–8, 2002, that included twenty-three state

judges. Notably, the meeting was held in New Orleans, La., not in the transferee district. The

agenda of the conference is available online at http://www.mnd.uscourts.gov/Baycol_Mdl (last

visited Nov. 10, 2003).

698. See, e.g., In re Diet Drugs, MDL No. 1203, Order No. 39 (E.D. Pa. Apr. 21, 1998),

available at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003)

(appointing twenty lawyers from fourteen states to serve as members of the plaintiffs’ state

liaison committee).

699. McGovern, Rethinking Cooperation, supra note 690, at 1870.

700. See supra section 14.12. See also Paul D. Rheingold, Mass Tort Litigation § 7:33 (1996 &

Supp. 2000).

701. See, e.g., In re Diet Drugs, MDL No. 1203, Order No. 467 (E.D. Pa. Feb. 10, 1999), at

http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003) (ordering

defendants to withhold a fixed portion of settlements and pay into a common fund). See also In

re Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926, unnumbered order (N.D. Ala.
§ 20.312 Manual for Complex Litigation, Fourth

234

pensate state attorneys who cooperate with federal MDL-funded attorneys, the

MDL fee structure presents an obstacle to cooperation. State attorneys and

judges may realistically perceive that state attorneys’ legal work might not be

rewarded appropriately even though it advances the national litigation.

There are various ways to handle these fee issues.702 It is important to allay

the coordinating state lawyers’ concerns about being fairly compensated. In the

diet drug litigation, discovery proceedings were coordinated between the MDL

court and the judge presiding over California’s statewide consolidated diet

drug litigation. The federal and state judges entered orders establishing rates of

contribution for lawyers who settled cases using coordinated state–federal

discovery.703 The state judge controlled the fund, eliminating concerns about

federal dominance and providing a direct financial link between the state and

federal common-benefit activities. In other mass tort litigation, judges have

permitted state attorneys who were not part of the MDL plaintiffs’ attorneys’

steering committee to make claims for MDL-managed funds. In the silicone

gel breast implant litigation, the MDL transferee judge appointed a former

state judge to rule on attorneys’ disputed claims for common fund fees.704

Lawyers should be encouraged to resolve fee disputes among themselves and to

seek judicial intervention only if necessary. It may be helpful to appoint a

Oct. 7, 1998), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003)

(denying attorneys’ motions for relief from Order No. 13, which required payment of 6% of

settlements into a “common benefit” fund). Judge Pointer carefully tailored Order No. 13,

entered on July 23, 1993, to comply with the Fourth Circuit ruling that fee orders in MDL cases

cannot be applied to cases that were not within the jurisdiction of the MDL transferee court. See

In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig. II, 953 F.2d 162 (4th Cir. 1992). To

comply with this jurisdictional limit, Judge Pointer applied the assessment to cases that were in

MDL No. 926 at any time, except those that were remanded because they were improperly

removed from state court. He also extended the obligation to counsel who agreed to it and to

“cases in a state court to the extent so ordered by the presiding judge of that court.” Silicone Gel,

MDL No. 926, Order No. 13, § 2(c), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm

(last visited Nov. 10, 2003).

702. For an extensive discussion of mechanisms for allocating fees in mass tort litigation,

including case summaries discussing the orders in the silicone gel breast implant and diet drug

litigations, see Rheingold, supra note 691, §§ 7:33, 7:36, 7:40.

703. In re Diet Drugs, MDL No. 1203, Order No. 467 (establishing a deduction of 9% from

all settlements of MDL cases transferred from California federal district courts and 6% from all

settlements in California state court actions, and creating a coordinated discovery plan). See also

Rheingold, supra note 691, § 7:40 (discussing PTO 467).

704. Thomas E. Willging, Laural L. Hooper, Marie Leary, Dean Miletich, Robert Timothy

Reagan, & John Shapard, Special Masters’ Incidence and Activity: Report to the Judicial

Conference’s Advisory Committee on Civil Rules and Its Subcommittee on Special Masters

26–27 (Federal Judicial Center 2000) [hereinafter FJC Study, Special Masters].
Multiple Jurisdiction Litigation § 20.313

235

special master to coordinate proceedings among the state and federal courts,705

reducing to manageable proportions the challenge of communicating and

coordinating with dozens of judges.

In the silicone gel breast implant and diet drug litigations, state and federal

judges created working relationships that came close to achieving a comprehensive approach to state–federal cooperation.706 Extending that approach to

other mass torts “could build upon generally accepted models for resolving

local mass torts, such as the use of test plaintiffs for discovery, with settlement

discussions based upon the results of the test cases.”707 In the diet drug and

silicone gel breast implant litigations, the federal MDL transferee judge took

the lead in implementing a comprehensive state–federal discovery plan while

state judges presided over individual trials and settlements. The parties

achieved the economies of consolidated discovery and developed information

about the value of individual cases, providing a basis for aggregated settlements

and judgments.

20.313 Specific Forms of Coordination

Aggregation and consolidation decisions. Discussions between state and

federal judges about the timing of class certification hearings and decisions

have a beneficial effect on other aspects of cooperation. The prospect that one

judge might unilaterally certify a nationwide class and enter a binding national

judgment has a chilling effect on cooperative relationships. Joint deferral of

decisions on certification and perhaps joint hearings on motions to certify a

class enhance the chances that both sets of courts will find appropriate roles in

managing the litigation. Judges might agree that the court with most of the

cases or the strongest interest should take the lead in certain proceedings, such

as class certification.708

The court should also consider staying cases until actions in the other

tribunal have been tried. Important factors in making that decision include the

705. In In re Silicone Gel Breast Implants Product Liability Litigation, the MDL transferee

judge appointed a special master to serve as liaison between the federal and state judges and to

facilitate coordination. See Francis E. McGovern, Toward a Cooperative Strategy for Federal and

State Judges in Mass Tort Litigation, 148 U. Pa. L. Rev. 1867, 1886–87 (2000) [hereinafter

McGovern, Cooperative Strategy]. See also Francis E. McGovern, An Analysis of Mass Torts for

Judges, 73 Tex. L. Rev. 1821, 1839 (1995) [hereinafter McGovern, Mass Torts for Judges].

706. For a discussion of mechanisms for coordinating cases that are dispersed nationwide

among state and federal courts, including a brief history of the Mass Tort Litigation Committee

(MTLC), which was funded by the State Justice Institute, see supra section 20.31.

707. McGovern, Cooperative Strategy, supra note 705, at 1886.

708. See, e.g., Union Light, Heat, & Power Co. v. United States Dist. Court, 588 F.2d 543 (6th

Cir. 1978) (discussing Beverly Hill Supper Club fire class action proceedings on common issues).
§ 20.313 Manual for Complex Litigation, Fourth

236

extent of pretrial discovery and motions activities in the various jurisdictions,

the typicality of the claims, the likelihood that verdicts will provide useful

information about the values of other pending cases, and the impact that delay

may have on the parties.

Pretrial motions and hearings. State and federal judges have often worked

together during the pretrial process.709 They have jointly presided over hearings

on pretrial motions, based on a joint motions schedule, sometimes alternating

between state and federal courthouses. Joint hearings have used coordinated

briefs so that one set of briefs can be used in both state and federal courts, with

supplements for variations in the applicable laws and choice-of-law questions.

Cooperative approaches might also include jointly appointing a special

master, court-appointed expert, or other adjunct to assist the courts with some

aspect of the litigation. Some state courts are not authorized to appoint such

adjuncts and may wish to share the benefits of the federal authority.

At a minimum, judges should exchange case-management orders, master

pleadings, questionnaires, and discovery protocols. This simple step can

encourage judges to adopt the same or similar approaches to discovery and

pretrial management.

Also, consider joint appointments of lead counsel, committees of counsel,

or liaison counsel to coordinate activities between the courts. Having some

overlapping membership among counsel in state and federal cases facilitates

cooperation by establishing channels of communication.

Pretrial discovery. State and federal judges have considerable experience

coordinating and managing nationwide discovery.710 For example, courts may

issue joint orders for the preservation of tangible, documentary, and electronic

evidence and for coordinating the examination of evidence by experts in both

state and federal proceedings. Early attention to questions concerning expert

evidence may be necessary to take advantage of various options for managing

such evidence, including the possibility of appointing common experts.711

Coordination could involve inviting state judges to participate in a

coordinated national discovery program while retaining control of local

discovery. Depending on the progress of the state litigation, some aspects of

discovery in state cases may in some instances serve as the basis for national

709. See generally, Schwarzer et al., Judicial Federalism in Action, supra note 687, at 1690.

710. See, e.g., In re Diet Drugs, MDL No. 1203, Order No. 467, 1999 WL 124414, at *4–*6

(order granting, in part, plaintiff’s petition for management committee).

711. Joe S. Cecil & Thomas E. Willging, Accepting Daubert’s Invitation: Defining a Role for

Court-Appointed Experts in Assessing Scientific Validity, 43 Emory L.J. 995, 1058–62 (1994)

(describing a pretrial procedure designed to identify issues regarding expert evidence and any

need for special assistance).
Multiple Jurisdiction Litigation § 20.313

237

discovery. For example, in the silicone gel breast implant litigation, state judges

in Texas had progressed further in discovery than had federal courts at the

time the MDL cases were assigned to Judge Pointer. Recognizing the state

court’s advantage, Judge Pointer “agreed to designate certain Texas depositions

as official ones for the entire multidistrict litigation (MDL).”712 Procedures to

minimize duplicative discovery activity include consolidating depositions of

experts who will testify in numerous cases and maintaining document depositories. It is important to remember that the rulings of a single court can

become preemptive; for example, the first court to reject a particular privilege

claim likely will cause the material sought to be protected to become discoverable for the entire litigation.713

Specific elements of discovery coordination have included

• creating joint federal–state, plaintiff–defendant document depositories, accessible to attorneys in all states;714

• ordering coordinated document production and arrangements for

electronic discovery;

• ordering discovery materials from prior state and federal cases to be

included in the document depository;

• scheduling and cross-noticing joint federal–state depositions;715

• designating state-conducted depositions as official MDL depositions;716

• enjoining attorneys conducting federal discovery from objecting to use

of that discovery in state courts on the grounds that it originated in

federal court;

• adopting standard interrogatories developed by state judges for litigation in their cases; and

712. Sandra Mazer Moss, Response to Judicial Federalism: A Proposal to Amend the Multidistrict Litigation Statute from a State Judge’s Perspective, 73 Tex. L. Rev. 1573, 1574 (1995).

713. Supra section 22.6 discusses relevant provisions of case-management orders in the

silicone breast implant and diet drugs litigations implementing state–federal coordination of

multiple actions in many states. See also supra section 22.4 for suggestions about eliciting

information that may be useful in planning for state–federal coordination.

714. See, e.g., In re Diet Drugs, MDL No. 1203, Order No. 22, ¶ 6 (E.D. Pa. Mar. 23, 1998), at

http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003) (establishing

plaintiffs’ document depository).

715. In re Diet Drugs, MDL No. 1203, Order No. 467, 1999 WL 124414, at *4–*6.

716. Id. (separating the portion of the deposition to be used in the MDL proceedings from

portions designed to be admissible in state proceedings).
§ 20.32 Manual for Complex Litigation, Fourth

238

• coordinating rulings on discovery disputes, such as the assertion of

privilege, and using parallel orders to promote uniformity to the extent possible.717

Settlement. State and federal judges should consider conducting joint

comprehensive settlement negotiations, hearings, and alternative dispute

resolution procedures to establish case values.718 Insurance coverage disputes

may require special attention and coordination because resolution of the

primary litigation may depend on resolution of the coverage dispute.

Trial. State and federal judges have developed coordinated management

plans for an entire litigation.719 Joint trials, where separate state and federal

juries sit in the same courtroom and hear common evidence, present substantial procedural and practical difficulties,720 but differences in state and federal

procedures have not been insurmountable barriers to useful coordination. Any

coordination must be flexible because cases in some state courts will reach trial

sooner than those in others. State and federal courts should establish a mechanism to coordinate trial dates so that they do not unduly burden parties or

their attorneys with multiple conflicting trial settings. Judges may also set the

order and location of trials cooperatively to provide better information as to

the diverse range of value of the cases included in the mass tort.

20.32 Jurisdictional Conflicts

The pendency of related state and federal actions can cause jurisdictional

complexities and conflicts, leading to requests that the federal court either stay

or dismiss its proceeding or enjoin state court proceedings. Such injunctions

should be a last resort, invoked only after voluntary coordination efforts have

failed. An injunction against pending state proceedings, even if authorized by

federal statutes and case law (see below, this section, and see also section

21.15), can have a detrimental effect on future efforts to work cooperatively

and should be used only as a last resort, if at all.

Federal courts have a duty to exercise their jurisdiction, notwithstanding

the mere pendency of parallel or related litigation in state court. Discretion to

stay or dismiss the federal proceedings exists, however, in the following

circumstances: (1) where a pending state proceeding may decide a pivotal

question of state law, the decision of which may remove the need for the

717. See Coordinating Proceedings in Different Courts, infra section 40.41.

718. Schwarzer et al., Judicial Federalism in Action, supra note 687, at 1714–21.

719. See, e.g., id. at 1702–03 (describing the Ohio asbestos litigation).

720. See id. at 1727–32.
Multiple Jurisdiction Litigation § 20.32

239

federal court to decide a constitutional issue before it;721 (2) where state law

claims are alleged and federal court litigation would impair a comprehensive

state regulatory scheme;722 and (3) in order to avoid piecemeal litigation where

the state court has previously acquired jurisdiction of the res and is the more

convenient forum.723

Where the action alleges both federal claims and related state law claims

joined on the basis of supplemental jurisdiction, 28 U.S.C. § 1367(c) permits

the district court to decline to exercise jurisdiction over a state law claim if the

claim raises a novel or complex issue of state law, if it substantially predominates over the federal claims, if the district court has dismissed all federal

claims, or, in exceptional circumstances, if there are compelling reasons for

declining jurisdiction. In some circuits, the court’s discretion to dismiss claims

entertained under its supplemental jurisdiction has been held to be considerably narrower than under the former doctrine of pendent jurisdiction.724 In

deciding whether to entertain the state law claims, the court should consider

whether dismissal or remand will result in substantially duplicative litigation

and unnecessary burdens on parties, witnesses, or the courts.

The federal court’s power to interfere with parallel or related proceedings

in state court is limited by the Anti-Injunction Act, which prohibits federal

721. R.R. Comm’n v. Pullman, 312 U.S. 496 (1941).

722. Burford v. Sun Oil Co., 319 U.S. 315 (1942).

723. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (1976); see also

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).

724. Some courts have emphasized that discretionary dismissals are limited to exceptional

circumstances that are as compelling as the circumstances specified in 28 U.S.C.

§ 1367(c)(1)–(3) (West 2003) and have held that the statute does not authorize a court to

decline jurisdiction based on the amount of judicial time required to adjudicate the state claim.

See Itar–Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 446–48 (2d Cir. 1998)

and cases cited therein; Executive Software N. Am., Inc. v. United States Dist. Court, 24 F.3d

1545, 1555–62 (9th Cir. 1994). But other circuits have taken a different view of what constitutes

“exceptional circumstances” under section 1367(c). See Rodriguez v. Doral Mortgage Corp., 57

F.3d 1168, 1177 (1st Cir. 1995) (“[T]he district court, in reaching its discretionary determination

on the jurisdictional question, will have to assess the totality of the attendant circumstances.”);

Borough of W. Mifflin v. Lancaster, 45 F.3d 780, 788 (3d Cir. 1995) (“Section 1367(c) . . . was

intended simply to codify the preexisting pendent jurisdiction law, enunciated in Gibbs and its

progeny . . . .”). Where a case has been removed under 28 U.S.C. § 1441(c) (West 2003),

discretion to remand the separate and independent state law claim may be broader. See Moralez

v. Meat Cutters Local 539, 778 F. Supp. 368 (D. Mich. 1991) (remanding federal and state claims

removed under 28 U.S.C. § 1441(c) on the grounds that the separate and independent state law

claims predominate). See also Hinson v. Norwest Fin. S.C., Inc., 239 F.3d 611 (4th Cir. 2001)

(finding inherent authority to remand state law statutory claims after federal claims involving

some plaintiffs settled, based on finding that state law claims predominated).
§ 20.32 Manual for Complex Litigation, Fourth

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courts from enjoining or staying state court proceedings725 except as expressly

authorized by an act of Congress,726 or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments. The exceptions under the Act

are narrowly construed.

The pendency of a parallel state court action does not by itself warrant an

injunction, even though an impending judgment in that action would be res

judicata in the federal action.727 Similarly, the fact that persons who fall within

the scope of a class certified in a federal court action have filed parallel actions

in state court does not afford a basis for interfering with the state court actions

during the pendency of the federal action. Accordingly, when defining a

proposed class, a federal court should consider whether a class can be defined

so as to avoid unnecessary conflict with state court actions.728 However, where

a class has been certified under Federal Rule of Civil Procedure 23(b)(3), and

where class members have failed to avail themselves of their right to opt out

and litigate their claims independently in state or federal court, a district judge

may enjoin those members from initiating or proceeding with civil actions in

other state or federal courts.729

In limited circumstances, federal courts have used the All Writs Act730 and

the necessary-in-aid-of-jurisdiction exception to the Anti-Injunction Act731 to

protect their exercise of jurisdiction. The Anti-Injunction Act enables a judge

to issue orders directed to nonparties in the pending litigation.732 Generally,

those statutes have been used to effectuate global settlements in large scale

litigation by enjoining or removing to federal court parallel state court litigation that would otherwise frustrate the adoption or implementation of

comprehensive class settlements approved by the federal court as binding on

725. 28 U.S.C. § 2283 (West 2002). See also Younger v. Harris, 401 U.S. 37 (1971). Note,

however, that Younger abstentions have been applied to civil cases only in limited circumstances

involving significant state interests. See, e.g., Pennzoil v. Texaco, 481 U.S. 1 (1987).

726. The prime example of such authorizing legislation is 42 U.S.C. § 1983 (2000). See

Mitchum v. Foster, 407 U.S. 225 (1972).

727. Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 642 (1977).

728. Where the class is certified under Fed. R. Civ. P. 23(b)(3), class members have the right

to opt out and litigate their claims independently in state or federal court.

729. See infra section 21.42 at notes 934–42.

730. 28 U.S.C. § 1651(a) (West 2002) authorizes federal courts to “issue all writs necessary or

appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of

law.”

731. The Anti-Injunction Act bars federal courts from granting “an injunction to stay

proceedings in a State court except as expressly authorized by Act of Congress, or where

necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283

(West 2003).

732. See United States v. N.Y. Tel. Co., 434 U.S. 159 (1977).
Multiple Jurisdiction Litigation § 20.32

241

the parties to the state court litigation,733 or that would require relitigation in

state court of a matter finally decided in federal court.734 Courts have also

enjoined state court stay orders that would otherwise prevent a federal court

from proceeding with pretrial aspects of the litigation.735

733. In re “Agent Orange” Prod. Liab. Litig., 996 F.2d 1425 (2d Cir. 1993), cert. denied sub

nom. Ivy v. Diamond Shamrock Chems. Co., 510 U.S. 1140 (1994); In re Baldwin-United Corp.,

770 F.2d 328 (2d Cir. 1985). But cf. Brown v. Ticor Title Ins. Co., 982 F.2d 386 (9th Cir. 1992),

cert. dismissed as improvidently granted, 511 U.S. 117 (1994) (due process requires that plaintiffs

with monetary claims be given right to opt out of class action settlement); In re Real Estate Title

& Settlement Servs. Antitrust Litig., 869 F.2d 760 (3d Cir. 1989).

734. See Kelly v. Merrill Lynch, Pierce, Fenner & Smith, 985 F.2d 1067 (11th Cir. 1993).

735. See, e.g., Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1202–03 (7th Cir. 1996) (holding that

an MDL transferee judge had authority to issue an injunction to protect the integrity of an order

barring discovery of a particular matter); In re Columbia/HCA Healthcare Corp., Billing

Practices Litig., 93 F. Supp. 2d 876 (M.D. Tenn. 2000) (issuing injunction under All Writs Act

against competing motion to compel discovery filed in state court).
242

21. Class Actions

.1 Precertification Case Management 245

.11 Initial Case-Management Orders 245

.12 Precertification Communications with the Proposed Class 247

.13 Standards for Class Certification and Precertification Discovery 250

.131 Certifying a Litigation Class 250

.132 Certifying a Settlement Class 250

.133 Timing of the Certification Decision 252

.14 Precertification Discovery 255

.141 Precertification Discovery into the Rule 23(a) Requirements 257

.142 Precertification Discovery into the Rule 23(b) Requirements 260

.15 Relationship with Other Cases Pending During the Precertification Period 263

.2 Deciding the Certification Motion 266

.21 Certification Hearings and Orders 266

.22 Type and Definition of Class 268

.221 Type of Class 268

.222 Definition of Class 270

.23 Role of Subclasses 272

.24 Role of Issues Classes 272

.25 Multiple Cases and Classes: The Effect on Certification 274

.26 Appointment of the Class Representatives 276

.27 Appointment of Class Counsel 278

.271 Criteria for Appointment 278

.272 Approaches to Selecting Counsel 279

.273 Procedures for Appointment 282

.28 Interlocutory Appeals of Certification Decisions 282

.3 Postcertification Communications with Class Members 284

.31 Notices from the Court to the Class 285

.311 Certification Notice 287

.312 Settlement Notice 293

.313 Other Court Notices 296

.32 Communications from Class Members 298

.321 Class Members’ Right to Elect Exclusion 298

.322 Communications Relating to Damage or Benefit Claims 299

.323 Other Communications from Class Members 299

.33 Communications Among Parties, Counsel, and Class Members 300

.4 Postcertification Case Management 302

.41 Discovery from Class Members 302

.42 Relationship with Other Cases 303

.5 Trials 306

.6 Settlements 308

.61 Judicial Role in Reviewing a Proposed Class Action Settlement 308

.611 Issues Relating to Cases Certified for Trial and Later Settled 312

.612 Issues Relating to Cases Certified and Settled at the Same Time 313

.62 Criteria for Evaluating a Proposed Settlement 315

.63 Procedures for Reviewing a Proposed Settlement 318

.631 Obtaining Information 318

.632 Preliminary Fairness Review 320

.633 Notice of Fairness Hearing 321

.634 Fairness Hearing 322

.635 Findings and Conclusions 322

.64 Role of Other Participants in Settlement Review 323
Class Actions § 21

243

.641 Role of Class Counsel in Settlement 323

.642 Role of Class Representatives in Settlement 325

.643 Role of Objectors in Settlement 326

.644 Role of Magistrate Judges, Special Masters, and Other Judicial Adjuncts in

 Settlement 329

.65 Issues Raised by Partial or Conditional Settlements 329

.651 Partial Settlements 329

.652 Conditional Settlements 330

.66 Settlement Administration 331

.661 Claims Administrator or Special Master 332

.662 Undistributed Funds 333

.7 Attorney Fee Awards 334

.71 Criteria for Approval 336

.72 Procedure for Reviewing Fee Requests 338

.721 Motions 338

.722 Notice 338

.723 Objections 338

.724 Information Supporting Request and Discovery for Fee Requests 338

.725 Required Disclosures 339

.726 Hearing and Findings 339

.727 Use of Special Masters or Magistrate Judges 340

Equity courts created class action procedures to manage group litigation

fairly and efficiently. Since 1966, when Federal Rule of Civil Procedure 23736

was amended to add the damages class action under Rule 23(b)(3), class action

litigation has greatly expanded. Class actions range from claims involving very

small individual recoveries (such as consumer claims) that would otherwise

likely not be litigated because no individual has a stake sufficient to justify

individual litigation, to claims in which individual damages are high but the

volume of claims creates advantages in group resolution. Because the stakes

and scope of class action litigation can be great, class actions often require

closer judicial oversight and more active judicial management than other types

of litigation. Class action suits present many of the same problems and issues

inherent in other types of complex litigation. The aggregation of a large

number of claims and the ability to bind people who are not individual

litigants tend to magnify those problems and issues, increase the stakes for the

named parties, and create potential risks of prejudice or unfairness for absent

class members.737 This imposes unique responsibilities on the court and

736. Rule 23’s predecessor was Federal Equity Rule 38, which provided that one or more may

sue or defend for the whole when the question is “one of common or general interest to many

persons constituting a class so numerous as to make it impracticable to bring them all before the

court.” Fed. R. Civ. P. 23(a) committee note (1937 adoption).

737. See generally Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999); Amchem Prods., Inc. v.

Windsor, 521 U.S. 591 (1997). For a discussion of problems in class action litigation, see

Deborah R. Hensler et al., Class Action Dilemmas: Pursuing Public Goals for Private Gain
§ 21 Manual for Complex Litigation, Fourth

244

counsel. Once class allegations are made, decisions such as whether to settle

and on what terms are no longer wholly within the litigants’ control. Rather,

the attorneys and named plaintiffs assume responsibilities to represent the

class. The court must protect the interests of absent class members, and Rule

23(d) gives the judge broad administrative powers to do so, reflecting the

equity origins of class actions.738

This section applies to a broad spectrum of subject areas, including

statutory and common-law causes of action involving personal injury, property damage, consumer, civil rights, antitrust, environmental, and employment-related claims. This section also covers various types of relief, including

injunctions, declaratory judgments, common resolution of particular issues in

a case, and damages.739 The various aspects of managing class action litigation

discussed in this section are closely intertwined with other MCL, 4th sections,

including those on mass tort litigation, attorney fees, and multiple jurisdiction

litigation. Other sections of the MCL, 4th describe three types of class actions

that have unusual features and procedural requirements: mass torts (see

section 22.7); private securities litigation, including shareholder derivative

actions under Rule 23.1 (see section 31.5); and employment discrimination

(see section 32.42).

Occasionally, a plaintiff or other party seeks to have a defendant class

certified. Such requests are unusual. The rules discussed in this section, which

focus on plaintiffs’ classes, must be specifically tailored to the issues defendant

classes raise.740 Additionally, conflicts of interest between an unwilling class

(2000); John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum. L.

Rev. 1343, 1367–82 (1995) (discussing incentives for collusion in settlement class actions); Note,

In-Kind Class Action Settlements, 109 Harv. L. Rev. 810 (1996).

738. See Ortiz, 527 U.S. at 832–33; Blanchard v. Edgemark Fin. Corp., 175 F.R.D. 293,

298–300 (N.D. Ill. 1997) (holding that any individual settlement with a certified class representative must be submitted to the court for approval because the representative has voluntarily

undertaken a fiduciary responsibility toward the class as a whole and the court has a commensurate duty to protect absent class members); 7A Charles Alan Wright et al., Federal Practice and

Procedure: Civil 2d § 1751 (1986 & Supp. 2002).

739. For reference to the law of class actions, see generally Alba Conte & Herbert B.

Newberg, Newberg on Class Actions (4th ed. 2002); 5 James Wm. Moore et al., Moore’s Federal

Practice (3d ed. 1997 & Supp. 2002); 7A & 7B Wright et al., supra note 738. The casemanagement requirements imposed by the Private Securities Litigation Reform Act of 1995 are

discussed in infra section 31.33.

740. See 2 Conte & Newberg, supra note 739, § 4:46, at 339 (indicating that “[d]efendant

class actions must meet all the Rule 23 criteria” and that “[d]efendant classes pose unique

problems in the application of Rule 23 criteria” and raise distinct due process concerns). For

examples of Rule 23 analysis in the defendant class certification context, see CBS, Inc. v. Smith,

681 F. Supp. 794 (S.D. Fla. 1988); In re LILCO Sec. Litig., 111 F.R.D. 663 (E.D.N.Y. 1986). See
Class Actions § 21.11

245

representative and the class warrant special attention when a defendant class

certification motion is made.741 Plans for compensating counsel for a defendant class representative need to be addressed at the certification stage. A class

settlement that provides for a defendant class representative’s attorney fees also

may demand special scrutiny.

21.1 Precertification Case Management

.11 Initial Case-Management Orders 245

.12 Precertification Communications with the Proposed Class 247

.13 Standards for Class Certification and Precertification Discovery 250

.131 Certifying a Litigation Class 250

.132 Certifying a Settlement Class 250

.133 Timing of the Certification Decision 252

.14 Precertification Discovery 255

.141 Precertification Discovery into the Rule 23(a) Requirements 257

.142 Precertification Discovery into the Rule 23(b) Requirements 260

.15 Relationship with Other Cases Pending During the Precertification Period 263

21.11 Initial Case-Management Orders

Initial case-management orders in a class action guide the parties in

presenting the judge with the information necessary to make the certification

decision and permit the orderly and efficient development of the case.

also Scott D. Miller, Note, Certification of Defendant Classes Under Rule 23(b)(2), 84 Colum. L.

Rev. 1371, 1387–89 (1984) (discussing potential burdens defendant classes may impose on

courts). Defendant classes may also raise questions about ascertaining the identity of class

members that differ from plaintiff classes. S. Ute Indian Tribe v. Amoco Prod. Co., 2 F.3d 1023,

1029–30 (10th Cir. 1993). There is a split among courts of appeals concerning whether Rule

23(b)(2) applies to defendant cases. See Henson v. E. Lincoln Township, 814 F.2d 410 (7th Cir.

1987) (affirming district court’s order denying certification of a defendant class); cf. Marcera v.

Chinlund, 595 F.2d 1231, 1238 (2d Cir.), vacated on other grounds sub nom. Lombard v. Marcera,

442 U.S. 915 (1979); Luyando v. Bowen, 124 F.R.D. 52, 59 (S.D.N.Y. 1989) (certifying a

defendant class). Protecting absent members of a defendant class may require special effort on

the part of court and counsel. In re Integra Realty Res., Inc., 262 F.3d 1089, 1105 (10th Cir.

2001) (stating that “defendant class actions create a special need to be attentive to the due

process rights of absent parties”).

741. Courts should give greater scrutiny to the adequacy of representation in defendant class

actions “because of the risk that plaintiff[s] will seek out weak adversaries to represent the class.”

7A Wright et al., supra note 738, § 1770. See, e.g., In re Integra Realty, 262 F.3d at 1111–13

(finding representation by unwilling mutual fund with largest losses to be adequate and noting

that a settlement providing compensation for attorney fees was potentially troubling). For

further commentary on Integra, see 15A Charles Alan Wright et al., Federal Practice and

Procedure: Jurisdiction 2d § 3902.1, at 53–54 (Supp. 2002).
§ 21.11 Manual for Complex Litigation, Fourth

246

Whether a class is certified and how its membership is defined affects case

management as well as outcome. Certification and class membership determine not only the stakes involved, but also the scope and timing of discovery

and motion practice, the structure of trial and methods of proof, and the

length and cost of the litigation. Certification decisions are critical and should

be made only after consideration of all relevant information and arguments

presented by the parties.742

Before ruling on class certification, a judge should address the following

matters at an early stage in the case, typically in initial case-management

conferences under Rule 16:

• Whether to hear and determine threshold dispositive motions, particularly motions that do not require extensive discovery, before hearing and

determining class certification motions. Motions such as challenges to

jurisdiction and venue, motions to dismiss for failure to state a claim,

and motions for summary judgment may be decided before a motion

to certify the class, although such precertification rulings bind only the

named parties. If the judge decides to hear such threshold motions

before ruling on class certification, the initial scheduling order should

set a timetable for the submission of motions for briefs and for any

necessary discovery.

• Whether to appoint interim class counsel during the period before class

certification is decided.743 If the lawyer who filed the suit is likely to be

the only lawyer seeking appointment as class counsel, appointing interim class counsel may be unnecessary. If, however, there are a number of overlapping, duplicative, or competing suits pending in other

courts, and some or all of those suits may be consolidated, a number

of lawyers may compete for class counsel appointment. In such cases,

designation of interim counsel clarifies responsibility for protecting

the interests of the class during precertification activities, such as

making and responding to motions, conducting any necessary discovery, moving for class certification, and negotiating settlement. In cases

742. A court may act on its own initiative in deciding whether to certify a class. McGowan v.

Faulkner Concrete Pipe Co., 659 F.2d 554, 559 (5th Cir. 1981) (“The trial court has an independent obligation to decide whether an action was properly brought as a class action, even

where neither party moves for a ruling on class certification.”). A court may not, however, act on

its own initiative to expand an individual complaint into a class action. Newsom v. Norris, 888

F.2d 371, 380–82 (6th Cir. 1989) (vacating district court order converting an individual action

into a class action and certifying the class).

743. See Fed. R. Civ. P. 23(g)(2)(A) committee note (permitting the designation of interim

counsel before determining whether to certify a class).
Class Actions § 21.12

247

involving overlapping, duplicative, or competing suits in other federal

courts or in state courts, the lawyers may stipulate to the appointment

of a lead interim counsel and a steering committee to act for the proposed class. Such a stipulation leaves the court with the tasks of determining that the chosen counsel is adequate to serve as interim class

counsel and making a formal order of appointment. Absent a stipulation, the court may need to select interim class counsel from lawyers

competing for the role and formally designate the lawyer selected.

• Whether and how to obtain information from parties and their counsel

about the status of all related cases pending in state or federal courts, including pretrial preparation, schedules and orders, and the need for any

coordinated activity. Section 20.31 discusses coordination and other

approaches to pending parallel litigation with state judges.

• Whether any discovery is needed to decide whether to certify the proposed

class. See section 21.13. Precertification discovery permits the parties

to “gather information necessary to make the certification decision,”

which “often includes information required to identify the nature of

the issues that actually will be presented at trial.”744 To define the need

for and appropriate limits on precertification discovery, it is useful to

direct the parties to discuss these and related problems at the Rule

26(f) conference and to present a plan to the court at an early Rule 16

hearing. The judge can then put into place a schedule for determining

the scope of discovery necessary to decide certification, as opposed to

merits discovery. At such hearings, the judge should also inquire

whether the parties contemplate precertification discovery from the

potential class members, determine whether such proposed discovery

fills a legitimate need, and make appropriate plans for the most costeffective means of conducting it.

21.12 Precertification Communications with the Proposed

Class

Rule 23(d) authorizes the court to regulate communications with potential

class members, even before certification.745 Such regulations, however, could

744. See Fed. R. Civ. P. 23(c)(1) committee note (setting a flexible time standard by

providing that certification decisions should be made “at an early practicable time”).

745. In re Sch. Asbestos Litig., 842 F.2d 671, 680 (3d Cir. 1988) (“Rule 23 specifically

empowers district courts to issue orders to prevent abuse of the class action process.”).
§ 21.12 Manual for Complex Litigation, Fourth

248

implicate the First Amendment.746 Moreover, restrictions of this type may be

difficult to implement given the ease and speed of communicating with

dispersed groups. For example, many class actions attorneys establish Internet

Web sites for specific class actions, in addition to using conventional means of

communication, such as newspapers. Most judges are reluctant to restrict

communications between the parties or their counsel and potential class

members, except when necessary to prevent serious misconduct.747

Direct communications with class members, however, whether by plaintiffs or defendants, can lead to abuse.748 For example, defendants might

attempt to obtain releases from class members without informing them that a

proposed class action complaint has been filed. If defendants are in an ongoing

business relationship with members of a putative class, the court might

consider requiring production of communications relating to the case. In

appropriate cases, courts have informed counsel that communications during

an ongoing business relationship, including individual releases or waivers,

must be accompanied by notification to the members of the proposed class

that the litigation is pending.749

Judicial intervention is generally justified only on a clear record and with

specific findings that reflect a weighing of the need for a limitation and the

potential interference with the rights of the parties. Such intervention “should

result in a carefully drawn order that limits speech as little as possible, consistent with the rights of the parties under the circumstances.”750 Even if the court

finds that there has been an abuse, less burdensome remedies may suffice, such

as requiring parties to initiate communication with potential class members

746. See Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985).

747. Gulf Oil Co. v. Bernard, 452 U.S. 89, 101–02 (1981).

748. See id. at 99–100 & n.12; Kleiner v. First Nat’l Bank, 751 F.2d 1193 (11th Cir. 1985);

Keystone Tobacco Co. v. U.S. Tobacco Co., 238 F. Supp. 2d 151 (D.D.C. 2002), reconsideration

denied, 2003 U.S. District LEXIS 14653 (2003); Hampton Hardware Inc. v. Cotter & Co., 156

F.R.D. 630 (N.D. Tex. 1994).

749. Ralph Oldsmobile, Inc. v. Gen. Motors Corp., No. 99 Civ. 4567, 2001 WL 1035132, at

*7 (S.D.N.Y. Sept. 7, 2001); see also 2 Geoffrey C. Hazard & W. William Hodes, The Law of

Lawyering § 38.4, at 38-6 (3d ed. 2002) (copies of communications sent by defendants who have

ongoing business relationships with potential class members relating to pending litigation

should be given to opposing counsel).

750. Gulf Oil, 452 U.S. at 101–02. For an example of a limited ban on communications

between a defendant and class members, see Rankin v. Board of Education of Wichita Public

Schools, 174 F.R.D. 695, 697 (D. Kan. 1997) (ordering that “defendants and their counsel shall

not make any contact or communication with [prospective class members] which expressly

refers to this litigation”). Generally, more than just the potential for abuse is required to support

issuance of a protective order. Basco v. Wal-Mart Stores, Inc., No. CIV.A.00-3184, 2002 WL

272384, at 3–4 (E.D. La. Feb. 25, 2002).
Class Actions § 21.12

249

only in writing or to file copies of all nonprivileged communications with class

members.751 If class members have received inaccurate precertification communications, the judge can take action to cure the miscommunication and to

prevent similar problems in the future.752 Rule 23 and the case law make clear

that, even before certification or a formal attorney–client relationship, an

attorney acting on behalf of a putative class must act in the best interests of the

class as a whole.753

Misrepresentations or other misconduct in communicating with the class

may impair the fairness and adequacy of representation under Rule 23(a)(4),

may affect the decision whether to appoint counsel under proposed Rule

23(g), and may be prohibited and penalized under the court’s Rule 23(d)(2)

plenary protective authority. Defendants and their counsel generally may

communicate with potential class members in the ordinary course of business,

including discussing settlement before certification,754 but may not give false,

misleading, or intimidating information, conceal material information, or

attempt to influence the decision about whether to request exclusion from a

class certified under Rule 23(b)(3). Ethics rules restricting communications

with individuals represented by counsel may apply to restrict a defendant’s

communications contract with the named plaintiffs.755

751. See Gulf Oil, 452 U.S. at 104 n.20.

752. E.E.O.C. v. Mitsubishi Motor Mfg. of Am., Inc., 102 F.3d 869, 870–71 (7th Cir. 1996)

(reciting district court action to cure precertification miscommunication regarding communications between employees and employer and to require prior notice to prevent future

miscommunications); Ralph Oldsmobile, 2001 WL 1035132, at *7 (curative notice sent to

members of the proposed class at the expense of defendant).

753. See Fed. R. Civ. P. 23(g)(2)(A) committee note; cf. 2 Hazard & Hodes, supra note 749,

§ 38.4, at 38-7 (indicating that the lawyer for the proposed class has a fiduciary obligation and

owes class members “duties of loyalty and care”).

754. See Gulf Oil, 452 U.S. 95 (after a class action had been commenced but before certification, defendant continued to deal directly with potential class members concerning an offer of

settlement that had been earlier negotiated with the Equal Employment Opportunity Commission (EEOC)).

755. See Ralph Oldsmobile, 2001 WL 1035132, at *4, *7 (finding that defendant’s failure to

inform independent dealers about pending class actions was misleading and ordering defendant

to send corrective notice to potential members of the proposed class); Hampton Hardware v.

Cotter & Co., 156 F.R.D. 630, 634–35 (N.D. Tex. 1994) (court found abuse and issued protective

order limiting communications after defendant contacted potential class members and

encouraged them not to participate in the class action by stating that such participation would

negatively impact the parties’ ongoing business relationship); see also infra section 21.323 (other

communications from class members). See generally Kleiner v. First Nat’l Bank of Atlanta, 751

F.2d 1193, 1202 (11th Cir. 1985) (“If the class and the class opponent are involved in an ongoing

business relationship, communications from the class opponent may be coercive.”) (quoting

Note, Developments in the Law—Class Actions, 89 Harv. L. Rev. 1318, 1600 (1976)).
§ 21.132 Manual for Complex Litigation, Fourth

250

21.13 Standards for Class Certification and Precertification

Discovery

.131 Certifying a Litigation Class 250

.132 Certifying a Settlement Class 250

.133 Timing of the Certification Decision 252

21.131 Certifying a Litigation Class

To obtain an order to prevail in their efforts to certify a class, proponents

must satisfy two sets of requirements: those set forth in Rule 23(a) and those

contained in Rule 23(b). Rule 23(a) requires that (1) the proposed class be

sufficiently numerous; (2) there is at least one common question of fact or law;

(3) the named plaintiff’s claims are typical of the class as a whole; and (4) the

named plaintiff will adequately represent the class.756

Rule 23(b) permits maintenance as a class action if the action satisfies Rule

23(a)’s prerequisites and meets one of three alternative criteria for maintainability. First, Rule 23(b)(1)(A) permits certification to prevent inconsistent

rulings regarding defendants’ required conduct. Standards for certifying a class

under Rule 23(b)(1)(B) relate primarily to limited fund settlements and are

discussed below in section 21.132. Second, Rule 23(b)(2) permits a class action

if “the party opposing the class has acted or refused to act on grounds generally

applicable to the class, thereby making appropriate final injunctive relief or

corresponding declaratory relief with respect to the class as a whole.” Third,

Rule 23(b)(3) permits a class action if “the court finds that questions of law or

fact common to the members of the class predominate over any questions

affecting only individual members, and that a class action is superior to other

available methods for the fair and efficient adjudication of the controversy.”

Section 21.141 elaborates on the requirements for certifying a litigation class.

21.132 Certifying a Settlement Class

Parties frequently settle before the judge has decided whether to certify a

class.757 Some settle before a motion to certify or even a class action complaint

has been filed. Such settlements typically stipulate that the court may certify a

class as defined in the agreement, but only for the purpose of settlement. When

a case settles as a class action before certification, the parties must present the

756. Fed. R. Civ. P. 23(a).

757. See, e.g., In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283

(3d Cir. 1998); Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998); In re Inter-Op Hip

Prosthesis Liab. Litig., 204 F.R.D. 330 (N.D. Ohio 2001); In re Diet Drugs Prods. Liab. Litig.,

MDL No. 1203, 2000 WL 1222042 (E.D. Pa. Aug. 28, 2000); In re Lease Oil Antitrust Litig., 186

F.R.D. 403 (S.D. Tex. 1999).
Class Actions § 21.132

251

court a plan for notifying the class and, if Rule 23(b)(3) applies, providing an

opportunity to opt out, along with the motions for certification and preliminary approval of the settlement. If the case settles after it has been certified as a

litigation class, different notice requirements apply (see section 21.312).

Rule 23(a) and (b) standards apply equally to certifying a class action for

settlement or for trial, with one exception. In Amchem Products, Inc. v. Windsor, the Supreme Court held that because a settlement class action obviates a

trial, a district judge faced with a request to certify a settlement class action

“need not inquire whether the case, if tried, would present intractable management problems”758 under Rule 23(b)(3)(D). The Court added, however,

“that the settlement context demands undiluted, even heightened attention to

unwarranted or overbroad class definitions.”759

Post-Amchem courts have emphasized that a settlement class must be

cohesive. This means, according to one court of appeals, that there should be a

common nucleus of facts and potential legal remedies among all class members,760 and that the class and any necessary subclasses must be definable and

defined for the judge. In a nationwide or multistate settlement class, counsel

should be ready at the class certification hearing to explain the common

elements of the substantive law that are applicable to all class members so that

choice of law issues will not defeat predominance and the manageability

component of superiority.761 As in a litigation class, counsel seeking certification of a settlement class must address variations in applicable state law. The

court must determine whether the variations or conflicts defeat commonality,

predominance, and superiority and the extent to which the creation of subclasses removes such conflicts so as to permit certification. As in a litigation

class, counsel seeking certification of a settlement class must show that there

are no actual conflicts among the anticipated claims of class members762 or

must show that conflicts can be avoided or ameliorated by proposing subclasses or by providing a plan for distributing benefits based on objective

758. 521 U.S. 591, 620 (1997).

759. Id.

760. Hanlon, 150 F.3d at 1022 (affirming certification of a settlement class).

761. Id.

762. Id. at 1021 (finding “no structural conflict of interest based on variations in state law [in

part, because] . . . the differences in state remedies are not sufficiently substantial so as to

warrant the creation of subclasses”); see also In re Mex. Money Transfer Litig., 267 F.3d 743, 747

(7th Cir. 2001) (affirming a nationwide class action settlement against objections that class

members from certain states had superior remedies not reflected in the settlement terms and

noting that class representatives avoided the “pitfall” of state law variations by confining their

theories to “federal law plus aspects of state law that are uniform” and by asking for “certification of a class for settlement only”); In re Prudential, 148 F.3d at 314–15.
§ 21.133 Manual for Complex Litigation, Fourth

252

criteria. The court must determine whether the process for presenting claims

and awarding relief to individual class members is manageable and takes

account of differences among class members without creating conflicting

interests.763 Counsel seeking class certification must also present a plan for

communicating adequate notice of a settlement to individual class members,

an important factor in the court’s determination that the proposed settlement

class is manageable.764

A proposed settlement of a mandatory “limited fund” class765 under Rule

23(b)(1)(B) must meet the exacting standards articulated by the Supreme

Court in Ortiz v. Fibreboard Corp.

766 Because limited-fund classes do not

permit opt-outs, certification for settlement imposes particularly stringent

standards.

In any certification for settlement, the court must examine adequacy of

representation and predominance of common issues to be sure that the

settlement does not mask either conflicts within classes or the overwhelming

presence of individual issues. Section 21.61 discusses determining whether to

approve the terms of proposed settlements in class actions, which involves a

separate set of issues from deciding whether to certify a proposed settlement

action. The particular problems raised by proposed class and other settlements

in mass torts cases are discussed in section 22.9.

21.133 Timing of the Certification Decision

Federal Rule of Civil Procedure 23(c)(1) directs the court to determine “at

an early practicable time”767 whether to certify an action as a class action. The

“early practicable time” is when the court has sufficient information to decide

763. In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2000 WL 1222042, at *43, *51–*52

(E.D. Pa. Aug. 28, 2000) (certifying a settlement class based on objective national standards for

claims); cf. Walker v. Liggett Group, Inc., 175 F.R.D. 226, 232–33 (S.D. W. Va. 1997) (denying

certification of a settlement class and citing need to ascertain variations in state law, to decide

how millions of class members could offer input during the comment period, to create

subclasses, and to appoint representatives to an already difficult to define class).

764. Thomas v. NCO Fin. Sys., Inc., No. CIV.A.00-5118, 2002 WL 1773035, at *5–*7 (E.D.

Pa. July 31, 2002) (denying certification of a settlement class where parties proposed notice in

two newspapers and failed to introduce evidence that the individual names of class members

were available).

765. Class actions certified under Rule 23(b)(1) or (b)(2) are often referred to as “mandatory” class actions because Rule 23 does not expressly require that members be permitted to opt

out; some courts, however, have granted limited opt-out rights in so-called “mandatory” class

actions, recognizing this act as being within the court’s discretion and equity jurisdiction. See,

e.g., County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1302–03 (2d Cir. 1990).

766. 527 U.S. 815, 838–53 (1999).

767. Fed. R. Civ. P. 23(c)(1)(A).
Class Actions § 21.133

253

whether the action meets the certification criteria of Rules 23(a) and (b). The

timing of the certification decision deserves discussion early in the case, often

at the initial scheduling conference where the judge and counsel can address

the issues bearing on certification and can establish a schedule for the work

necessary to permit an informed ruling on the class certification motion.

Appropriate timing will vary with the circumstances of the case, although an

early resolution is generally desirable.

Precertification discovery may be necessary. The court may rule on

motions pursuant to Rule 12, Rule 56, or other threshold issues before deciding on certification; however, such rulings bind only the named parties.768

Most courts agree, and Rule 23(c)(1)(A) reflects, that such precertification

rulings on threshold dispositive motions are proper, and one study found a

substantial rate of precertification rulings on motions to dismiss or for

summary judgment.769 Precertification rulings frequently dispose of all or part

of the litigation.770

Efficiency and economy are strong reasons for a court to resolve challenges

to personal or subject-matter jurisdiction before ruling on certification. The

judge should direct counsel to raise such challenges before filing motions to

certify. Similarly, courts should rule early on motions to dismiss, challenging

whether the plaintiffs have stated a cause of action. Early resolution of these

questions may avoid expense for the parties and burdens for the court and may

minimize use of the class action process for cases that are weak on the merits.771 In unusual cases, involuntary precertification dismissal may unfairly

768. Dismissal before certification is res judicata only as to the class representatives, not class

members. Wright v. Schock, 742 F.2d 541, 544 (9th Cir. 1984); see also Schwarzchild v. Tse, 69

F.3d 293, 297 (9th Cir. 1995) (moving for and obtaining summary judgment after class

certification but before notice to the class implicitly waives defendant’s interest in notifying the

class). A grant of summary judgment dismissing the claims of class representatives often has the

effect of mooting the class certification issue. Cowen v. Bank United of Tex., 70 F.3d 937, 941

(7th Cir. 1995).

769. Thomas E. Willging, Laural L. Hooper & Robert J. Niemic, Empirical Study of Class

Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules

29–32 (Federal Judicial Center 1996) [hereinafter FJC Empirical Study of Class Actions] (finding

that the rate of precertification rulings on motions to dismiss was about 80% in three of four

districts studied and about 60% in the other district).

770. Id. at 33 (finding that “[a]pproximately three out of ten cases in each district were

terminated as a direct result of a ruling on a motion to dismiss or for summary judgment”).

771. See, e.g., Curtin v. United Airlines, Inc., 275 F.3d 88, 93 (D.C. Cir. 2001) (holding that

“where . . . the plaintiffs’ claims can be readily resolved on summary judgment, where the

defendant seeks an early disposition of those claims, and where the plaintiffs are not prejudiced

thereby, a district court does not abuse its discretion by resolving the merits before considering

the question of class certification”); Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474–76
§ 21.133 Manual for Complex Litigation, Fourth

254

affect the interests of members of the proposed class. For example, in a case in

which the filing was accompanied by extensive publicity, but where the

dismissal had little publicity, individual members of the proposed class may

rely on the pendency of the class action to toll limitations. If the risk of unfair

prejudice is present, some form of notice under Rule 23(d)(2) may be appropriate.

Some local rules specify a short period within which the plaintiff must file

a motion to certify a class action. Such rules, however, may be inconsistent

with Rule 23(c)(1)(A)’s emphasis on the parties’ obligation to present the

court with sufficient information to support an informed decision on certification. Parties need sufficient time to develop an adequate record.

Rule 23(c)(1)(C) makes clear that an action should be certified only if it

meets Rule 23’s requirements. However, Rule 23(c)(1)(C) permits later

alteration or amendment of an order granting or denying class certification.

Nevertheless, decertifying or redefining an expansive class, certified on

insufficient information, may unnecessarily cost the parties substantial time

and expense and add to the court’s load. In a federal question case, the

pendency of class action allegations tolls the statute of limitations.772 Individuals removed from a narrowed class after receiving notice that they were

included may be entitled to notice that the statute of limitations has now

begun to run against them.773 If the judge expands a class definition in a Rule

23(b)(3) case, those added members must receive notice and an opportunity to

opt out, adding expense and effort.

(7th Cir. 1997) (asserting that deciding summary judgment before ruling on class certification

was an appropriate way to deal with meritless litigation).

772. Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 553 (1974).

773. For those excluded from the class, the statute of limitations, which was tolled by the

filing of the class complaint, begins to run again when the opt-out form is filed. See, e.g.,

Chardon v. Fumero Soto, 462 U.S. 650 (1983); Crown, Cork & Seal Co. v. Parker, 462 U.S. 345

(1983); Am. Pipe, 414 U.S. at 561. In diversity cases, state rules on equitable and crossjurisdictional tolling may or may not toll the statute of limitations for individual claims filed

subsequent to the denial of certification of a class action. See, e.g., Wade v. Danek Med., Inc., 182

F.3d 281, 290 (4th Cir. 1999) (affirming that statute of limitations for state law claims was not

tolled during the pendency of a diversity-based class action in federal court); Vaught v. Showa

Denko K.K., 107 F.3d 1137, 1147 (5th Cir. 1997) (same).
Class Actions § 21.14

255

21.14 Precertification Discovery

.141 Precertification Discovery into the Rule 23(a) Requirements 257

.142 Precertification Discovery into the Rule 23(b) Requirements 260

A judge faced with a motion for class certification must decide whether the

record is sufficient to determine if the prerequisites of Rule 23 have been met

and, if so, how to define the class.

A threshold question is whether precertification discovery is needed.

Discovery may not be necessary when claims for relief rest on readily available

and undisputed facts or raise only issues of law (such as a challenge to the

legality of a statute or regulation). Some discovery may be necessary, however,

when the facts relevant to any of the certification requirements are disputed

(see sections 21.141 and 21.142), or when the opposing party contends that

proof of the claims or defenses unavoidably raises individual issues. Generally,

application of the Rule 23 criteria requires the judge to examine the elements

of the parties’ substantive claims and defenses774 in order to analyze commonality, typicality, and adequacy of representation under Rule 23(a), as well as the

satisfaction of Rule 23(b)’s maintainability requirements.775

At this stage, the court should not decide or even attempt to predict the

weight or outcome of the underlying claims and defenses,776 but it need not

rely only on the bare allegations of the pleadings. A preliminary inquiry into

the merits may be required to decide whether the claims and defenses can be

presented and resolved on a class-wide basis.777 Some precertification discovery

774. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 & n.12 (1978) (reasoning that “the

class determination generally involves considerations that are ‘enmeshed in the factual and legal

issues comprising the plaintiff’s cause of action’” and that “‘[e]valuation of many of the

questions entering into determination of class action questions is intimately involved with the

merits of the claims’” (quoting Mercantile Nat’l Bank v. Langdeau, 371 U.S. 555, 558 (1963) and

15 Charles Wright et al., Federal Practice and Procedure § 3911, at 485 n.45 (1976))); see also

Castano v. Am. Tobacco Co., 84 F.3d 734, 744 (5th Cir. 1996) (ruling that “[g]oing beyond the

pleadings is necessary, as a court must understand the claims, defenses, relevant facts, and

applicable substantive law in order to make a meaningful determination of the certification

issues” (citing Manual for Complex Litigation, Third, § 30.11 (1995))). For consideration of

how examination of the merits has evolved in the context of mass tort class actions and other

forms of aggregation, see infra sections 22.2 and 22.31.

775. Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th Cir.) (“Before deciding

whether to allow a case to proceed as a class action, therefore, a judge should make whatever

factual and legal inquiries are necessary under Rule 23.”), cert. denied, 534 U.S. 951 (2001).

776. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177–79 (1974) (reversing order requiring

defendant to pay for class notice based on preliminary assessment of probabilities of plaintiff’s

success).

777. Szabo, 249 F.3d at 676.
§ 21.14 Manual for Complex Litigation, Fourth

256

may be necessary if the allegations in the pleadings—with affidavits, declarations, and arguments or representations of counsel—do not provide sufficient,

reliable information.778 To make this decision, the court should encourage

counsel to confer and stipulate as to relevant facts that are not genuinely

disputed, to reduce the extent of precertification discovery, and to refine the

pertinent issues for deciding class certification.

Discovery relevant only to the merits delays the certification decision and

may ultimately be unnecessary. Courts often bifurcate discovery between

certification issues and those related to the merits of the allegations. Generally,

discovery into certification issues pertains to the requirements of Rule 23 and

tests whether the claims and defenses are susceptible to class-wide proof;

discovery into the merits pertains to the strength or weaknesses of the claims

or defenses and tests whether they are likely to succeed. There is not always a

bright line between the two. Courts have recognized that information about

the nature of the claims on the merits and the proof that they require is

important to deciding certification. Arbitrary insistence on the merits/class

discovery distinction sometimes thwarts the informed judicial assessment that

current class certification practice emphasizes.

Allowing some merits discovery during the precertification period is

generally more appropriate for cases that are large and likely to continue even

if not certified. On the other hand, in cases that are unlikely to continue if not

certified, discovery into aspects of the merits unrelated to certification delays

the certification decision and can create extraordinary and unnecessary

expense and burden. If merits discovery is stayed during the precertification

period, the judge should provide for lifting the stay after deciding the certification motion.

It is often useful under Rule 26(f) to require a specific and detailed

precertification discovery plan from the parties. The plan should identify the

depositions and other discovery contemplated, as well as the subject matter to

be covered and the reason it is material to determining the certification inquiry

under Rule 23. Discovery relevant to certification should generally be directed

to the named parties. Discovery of unnamed members of a proposed class

requires a demonstration of need.779 If precertification discovery of unnamed

class members is appropriate, the court should consider imposing limits

beyond those contemplated by the Federal Rules of Civil Procedure. Such

limits might include the scope, subject matter, number, and time allowed for

depositions, interrogatories, or other discovery directed to class representatives

778. Id. (referring to use of affidavits and inquiries from judges); Sirota v. Solitron Devices,

Inc., 673 F.2d 566, 571–72 (2d Cir. 1982).

779. See Baldwin & Flynn v. Nat’l Safety Assocs., 149 F.R.D. 598 (N.D. Cal. 1993).
Class Actions § 21.141

257

or unnamed class members, and might limit the period for completing

certification-related discovery. Section 21.41 discusses postcertification

discovery from unnamed class members. If some merits discovery is permitted

during the precertification period, consider limits that minimize the time and

effort involved, such as requiring the use of questionnaires or interrogatories

rather than depositions, and consider limiting discovery to a certain number

or a sample of proposed class members.780

21.141 Precertification Discovery into the Rule 23(a) Requirements

Numerosity. Determining whether the proposed class is sufficiently

numerous for certification is usually straightforward. Affidavits, declarations,

or even reasonable estimates in briefs are often sufficient to establish the

approximate size of the class and whether joinder might be a practical and

manageable alternative to class action litigation.

Commonality. Identifying common questions typically requires examining

the parties’ claims and defenses, identifying the type of proof the parties expect

to present, and deciding the extent to which there is a need for individual, as

opposed to common, proof. Courts have come to varying results in applying

such tests, particularly in the mass tort context. See section 22.7.

A trial plan often assists in identifying the relationship between individual

and common elements of proof, but Rule 23 does not operate in a vacuum.

Bifurcation and severance under Rule 42 are available as tools that might make

a case more manageable by separating out discrete issues for a phased or

sequenced decision by the judge or at trial. In making such decisions, the judge

must decide whether certification of issues classes, bifurcation, or severance are

fair and workable ways to achieve class certification, or whether they would

merely mask the predominance of individual issues and result in prejudice

780. Transamerican Ref. Corp. v. Dravo Corp., 139 F.R.D. 619, 621–22 (S.D. Tex. 1991)

(approving interrogatories relevant to common issues and limiting their service to 50 of 6,000

absent class members); cf. Schwartz v. Celestial Seasonings, Inc., 185 F.R.D. 313 (D. Colo. 1999)

(allowing after class certification, brief, nonmandatory questionnaire relating to common

issues); McCarthy v. Paine Webber Group, Inc., 164 F.R.D. 309 (D. Conn. 1995). On the other

hand, courts have declined to limit discovery conducted on behalf of a class to a sample selected

by the defendant. See Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338, 343 (N.D. Ill.

1995) (noting that “[t]he Federal Rules and this [c]ourt do not countenance self-selecting

discovery by either party”). Accordingly, the court should assure that any use of sampling in the

context of class-related discovery provides a meaningful random, or at least objective, sample of

data.
§ 21.141 Manual for Complex Litigation, Fourth

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from presenting claims or defenses out of context.781 Issues classes are discussed further at section 21.24.

Typicality. Deciding typicality requires determining whether the named

plaintiff’s claim arises from the same course of events and involves legal

arguments similar to those of each class member.782 The court must also

establish that the proposed class representative’s claims are not subject to

defenses that do not apply to other members of the class.783 Discovery may be

necessary to determine if the plaintiff’s claim is atypical, although discovery

may not be necessary if the pleadings or readily available information reveals

that a named plaintiff’s claim is idiosyncratic.

Adequacy of representation. The named plaintiffs must show that the

proposed action will fairly and adequately protect the interests of the class.

They must first demonstrate that class counsel is qualified, experienced, and

able to conduct the litigation in the interests of the class. That also is part of

the showing required for appointment of class counsel under Rule 23(g). See

section 21.27.

Plaintiffs also must show that the named representatives have no substantial interests antagonistic to those of proposed class members and that the

representatives share the desire to prosecute the action vigorously. A trial plan

can help to identify distinct claims that may demand separate representation

or a denial of certification. If the motion to certify is for a litigation class or for

a settlement class that is opposed, as contrasted with a jointly submitted

motion to certify a class for settlement, the adversaries may help to identify the

range and divergence of claims. In a jointly submitted motion to certify a

settlement class, the judge may need to press the parties to identify differences

in the positions or interests of class members. Proposed class members’

interests may differ from those of the named representatives for a variety of

781. See, e.g., In re Hanford Nuclear Reservation Litig., 292 F.3d 1124, 1139 (9th Cir. 2002)

(remanding with recommendation that the trial court consider “[class] certification only for

questions of generic causation common to plaintiffs who suffer from the same or a materially

similar disease”); In re Bendectin Litig., 857 F.2d 290 (6th Cir. 1988) (upholding constitutionality of aggregate phase I trial on common issues of generic causation); Jenkins v. Raymark Indus.,

Inc., 782 F.2d 468 (5th Cir. 1986) (dividing trial into phases dealing with common and

individual issues separately); see also Simon v. Philip Morris, Inc., 200 F.R.D. 21 (E.D.N.Y. 2001)

(discussing severance and consolidation of issues for phased trials in class action); but cf. In re

Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1303 (7th Cir. 1995) (discussing difficulty of having

multiple juries decide comparative negligence and proximate causation).

782. See generally Gen. Tel. Co. v. Falcon, 457 U.S. 147 (1982) (rejecting claim of employee

denied promotion as not typical of claims of applicants for work).

783. See Chateau de Ville Prods., Inc. v. Tams-Witmark Music Library, Inc., 586 F.2d 962,

966 (2d Cir. 1978); Douglas M. Towns, Note, Merit-Based Class Action Certification: Old Wine in

a New Bottle, 78 Va. L. Rev. 1001, 1032–33 (1992).
Class Actions § 21.141

259

reasons. Different state law may apply to different class members.784 In a mass

tort case, those with present injuries have different interests than those who

have been exposed to the injurious substance but have not yet manifested

injury.785 Those with severe injuries may have different interests than those

with slight injuries.

The proponents of certification sometimes attempt to meet Rule 23’s

adequacy-of-representation requirements by suing for only one type of relief,

such as an injunction, on behalf of the class. In that case, the named plaintiffs

may be inadequate representatives for class members who also have existing

damage claims.786 Discovery may be needed to identify any appropriate

remedies not included in the proposed class claims.

Under the Private Securities Litigation Reform Act (PSLRA), courts must

select as “lead plaintiff” the most knowledgeable and sophisticated investor

who is willing to serve.787 Note that the court may or may not select the lead

plaintiff to serve as a Rule 23(a) “class representative” if the court decides to

certify a class. Even without such a statutory requirement, the proposed class

representative should be willing to participate in discovery788 and demonstrate

familiarity with the claims asserted and the role of the class representative.789

784. See generally In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 288 F.3d 1012

(7th Cir. 2002); Spence v. Glock, 227 F.3d 308 (5th Cir. 2000).

785. Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997).

786. In re Methyl Tertiary Butyl Ether (“MTBE”) Prods. Liab. Litig., 209 F.R.D. 323, 338–40

(S.D.N.Y. 2002) (actual conflicts between proposed class representatives who seek injunctive

relief and members of the proposed class who have already experienced personal injuries render

the representatives inadequate under Rule 23(a)); see also Thompson v. Am. Tobacco Co., 189

F.R.D. 544, 550–51 (D. Minn. 1999) (same).

787. 15 U.S.C. § 78u-4(a)(2)(A) (2000); Berger v. Compaq Computer Corp., 257 F.3d 475,

483 (5th Cir. 2001) (noting that the PSLRA raises the adequacy of representation standard by

requiring that “securities class actions be managed by active, able class representatives who are

informed and can demonstrate they are directing the litigation”), reh’g denied, 279 F.3d 313

(2002) (noting that the Rule 23 standard remains the same).

788. In re Storage Tech. Corp. Sec. Litig., 113 F.R.D. 113, 118 (D. Colo. 1986) (holding that

“failure to comply with proper discovery is a sufficient basis . . . to conclude that these plaintiffs

would not adequately represent the class”).

789. Morris v. Transouth Fin. Corp., 175 F.R.D. 694, 698 (M.D. Ala. 1997) (finding that

adequate class representatives need only “have a basic understanding about the nature of [the]

lawsuit” and “need not be intimately familiar with every factual and legal aspect” of the

litigation). A named plaintiff who shows no understanding of the complaint and proceedings is

inadequate. Kelley v. Mid-America Racing Stables, Inc., 139 F.R.D. 405, 409 (W.D. Okla. 1990)

(finding named plaintiffs inadequate because of “their almost total lack of familiarity with the

facts of their case”); In re Storage Tech., 113 F.R.D. at 118 (disqualifying one plaintiff who was

“unaware of even the most material aspects of this action” and another who was “too passive to

assure vigorous prosecution”).
§ 21.142 Manual for Complex Litigation, Fourth

260

Precertification inquiries into the named parties’ finances or the financial

arrangements between the class representatives and their counsel are rarely

appropriate, except to obtain information necessary to determine whether the

parties and their counsel have the resources to represent the class adequately.

Ethics rules permit attorneys to advance court costs and expenses of litigation,

the repayment of which may be contingent on the outcome of the matter.790

Such arrangements may later become relevant when awarding fees. See section

14.12.

21.142 Precertification Discovery into the Rule 23(b) Requirements

Rule 23(b)(1)(B). In addition to satisfying the Rule 23(a) criteria, a Rule

23(b)(1)(B) non-opt-out “limited fund” class must overcome a high threshold

set by the Supreme Court.791 Indeed, the Court has questioned whether a mass

tort class action could ever be certified as a limited-fund class action.792 First,

the judge must find that there is a limited fund. The evidence must prove that

the value of class claims exceeds the proven value of the fund.793 Next, the

judge must find that there would be equitable treatment of all claimants,794

which may require the creation of subclasses for differing interests or, if the

interests are too numerous and too conflicting, may defeat certification.795

Finally, the judge must find that payment of the claims would exhaust the

limited fund or that failure to exhaust the fund would be justified.796 Efforts to

certify limited-fund class actions after Ortiz have not been successful.797

790. Model Rules of Prof’l Conduct R. 1.8(e)(1) (2002). See Rand v. Monsanto Co., 926 F.2d

596, 599 (7th Cir. 1991) (indicating that class representatives are not responsible to underwrite

class-wide costs and that class counsel who are compensated based on class benefits are more

appropriate underwriters); Paul E. Iacono Structural Eng’r, Inc. v. Humphrey, 722 F.2d 435 (9th

Cir. 1983); In re Workers’ Comp., 130 F.R.D. 99, 108 (D. Minn. 1990).

791. Ortiz v. Fibreboard Corp., 527 U.S. 815, 838–53 (1999).

792. Id. at 842, 844, 864. See also S. Elizabeth Gibson, Case Studies of Mass Tort Limited

Fund Class Action Settlements & Bankruptcy Reorganizations 37 (Federal Judicial Center 2000)

(indicating that the Supreme Court reserved “[t]he larger question . . . whether a mass tort case

could ever qualify for mandatory class treatment under Rule 23(b)(1)(B)”).

793. Ortiz, 527 U.S. at 849.

794. Id. at 841.

795. Id. at 856–57.

796. Id. at 841, 858–60.

797. See, e.g., In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig.,

221 F.3d 870, 873 (6th Cir. 2000) (decertifying a limited fund settlement class because parties

did not have a “limited fund”); In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads

Prods. Liab. Litig., 137 F. Supp. 2d 985, 1029 (S.D. Ohio 2001) (a renegotiated Rule 23(b)(3)

opt-out settlement was granted final approval). See also In re River City Towing Servs., Inc., 204

F.R.D. 94, 96 (E.D. La. 2001) (finding that the “kind of limited fund necessary to certify a (b)(1)
Class Actions § 21.142

261

Certifying a Rule 23(b)(1)(B) class ordinarily will call for extensive factual

findings showing that the standards have been met,798 which may require

extensive discovery.

Rule 23(b)(2). The Rule 23(b)(2) class action applies when class-wide

injunctive or declaratory relief is necessary to redress group injuries, such as

infringements on civil rights, and is commonly relied on by litigants seeking

institutional reform through injunctive relief.799 Because a Rule 23(b)(2) class

action does not permit opting out, it presumes that the class is homogenous

and therefore cohesive. That presumption can be destroyed by showing

individualized issues as to liability or remedy.

The grant of Rule 23(b)(2) certification in the tort context depends on

factors such as whether state law recognizes medical monitoring claims, and, if

so, treats them as calling for injunctive relief rather than money damages.

Discovery may be necessary to show the existence of underlying state law

preconditions for such claims as medical monitoring. Section 22.74 further

class action” was not determined); Doe v. Karadzic, 192 F.R.D. 133, 144 (S.D.N.Y. 2000)

(decertifying after reconsideration because plaintiffs could not provide evidence of a limited

fund); In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 1999 WL 782560, at *10 (E.D. Pa.

Sept. 27, 1999) (vacating a conditionally certified settlement because the parties could not

provide evidence of a true limited fund). Cf. In re Inter-Op Hip Prosthesis Liab. Litig., 204

F.R.D. 359, 378, 383 (N.D. Ohio) (preliminarily approving a Rule 23(b)(3) class in which

participants in settlement would be given prior liens on defendant’s assets over opt outs), later

proceeding at 174 F. Supp. 2d 648, 653–55 (N.D. Ohio) (granting injunctive relief by enjoining

the initiation of claims against defendants), and injunction stayed, No. 01-4039, 2001 WL

1774017, at *1 (6th Cir. Oct. 29, 2001) (ruling that “financial disincentives on the right to opt

out of the settlement class . . . raise the due process concerns addressed in Ortiz”).

798. See In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 208 F.R.D. 625, 634 (W.D.

Wash. 2002) (stating that “to certify such a class in the context of a limited fund claim, the court

must have before it, at a minimum, evidence as to the assets and potential insolvency of the

defendants involved in these cases”).

799. Baby Neal ex rel. Kanter v. Casey, 43 F.3d 48, 58 (3d Cir. 1994). See also Daniels v. City

of New York, 198 F.R.D. 409, 422 (S.D.N.Y. 2001) (certifying class of African-American and

Latino men who were allegedly stopped and frisked by police street crimes unit without

reasonable suspicion); Arnold v. United Artists Theatre Circuit, Inc., 158 F.R.D. 439, 451–52

(N.D. Cal. 1994) (certifying class of disabled theatergoers who sought movie theaters’ compliance with the Americans with Disabilities Act). In addition to its frequent application to civil

rights cases, some courts have extended this provision to, inter alia, classes alleging systemic

failure of child welfare services, see, e.g., Baby Neal, 43 F.3d at 58–59 and LaShawn A. v. Dixon,

762 F. Supp. 959, 960 (D.D.C. 1991), as well as suits alleging miscalculation of Social Security

benefits. See Forbush v. J.C. Penney Co., 994 F.2d 1101, 1106 (5th Cir. 1993); Gilchrist v.

Human Res. Admin., No. 87 CV 7820, 1989 U.S. Dist. LEXIS 7850, at *10 (S.D.N.Y. July 13,

1989). Indeed, its drafters stated expressly that “[s]ubdivision (b)(2) is not limited to civil-rights

cases.” Fed. R. Civ. P. 23(b)(2) committee note (1966 amendment).
§ 21.142 Manual for Complex Litigation, Fourth

262

discusses medical monitoring claims and the factors affecting whether they

may be certified as class actions under either Rule 23(b)(2) or Rule 23(b)(3).

When a proposed class seeks both injunctive relief and damages, the judge

may have to make findings as to the relative importance of the damage claims

and decide whether to provide class members notice and an opportunity to opt

out. Rule 23(c)(4)(A) permits certification under the appropriate subsection of

the rule to be made on a claim-by-claim basis. Some claims justify Rule

23(b)(3) certification, others will justify Rule 23(b)(2) treatment, and other

claims should not be certified at all.

Rule 23(b)(3). Rule 23(b)(3) maintainability requires the judge to determine that common questions predominate over individualized ones and that

class action treatment is superior to other available methods for the fair and

efficient adjudication of the controversy.

To analyze predominance, the judge must determine whether there are

individualized issues of fact and how they relate to the common issues, and

then examine how the class action process compares to available alternatives

(either alone or in combination): individual suits or joinder; consolidation,

intervention, or other nonrepresentational forms of aggregate litigation; test

cases; more narrowly defined class actions, perhaps filed in different courts;

and agency enforcement. The Supreme Court has emphasized that judges

should consider, in cases involving small claims, the access to court that the

class mechanism provides.800

Precertification discovery may be needed to assist the judge in distinguishing the individual from the common elements of the claims, issues, and

defenses, and in deciding the extent to which the need for individual proof

outweighs the economy of receiving common proof. A trial plan addressing

each element of the claims can help to identify the nature and extent of the

individualized proof required.

To analyze superiority, the judge will need information from the parties

about alternative approaches to the claims of the proposed class and the

defenses they will face. Discovery may be needed to determine the extent to

which individual potential class members have an interest in separate actions,

inconsistent with class treatment. For example, discovery may be necessary to

determine whether some class members are likely to assert individual claims

for damages that could support individual suits, while other class members

have claims for small amounts that would not justify individual litigation.

800. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) (stating that “‘[t]he policy at

the very core of the class action mechanism is to overcome the problem that small recoveries do

not provide the incentive for any individual to bring a solo action prosecuting his or her rights’”

(quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997))).
Class Actions § 21.15

263

The judge must decide whether the proposed Rule 23(b)(3) class will be

manageable. For the most part, courts determine manageability by reviewing

affidavits, declarations, trial plans, and choice-of-law analyses that counsel

present.801 Discovery may be needed to determine whether a need for individual proof will hinder the fair presentation of common questions to the finder

of fact802 and whether class members can be identified without making numerous fact-intensive inquiries. In unusual circumstances, judges have used test

cases or alternative dispute resolution (ADR) approaches to test the manageability of a class trial. See section 21.5.

An important aspect of precertification discovery is coordination with any

discovery underway or anticipated in cases involving parallel suits simultaneously pending in other federal or state courts. The following section discusses

the precertification relationship with other cases.

21.15 Relationship with Other Cases Pending During the

Precertification Period

There may be other class actions, consolidated cases, or individual lawsuits

in other courts or before other judges in the same division or district that arise

out of the same legal and factual basis as the class action proposed for certification. These cases may purport to bind overlapping or duplicative groups. A

federal district judge asked to certify a class action that overlaps with, duplicates, or competes with cases pending in other federal or state courts may face

conflicts involving rulings on discovery or substantive motions, timetables for

discovery, selection of class counsel, certification rulings, trial, and settlement,

and may also face duplicative work and expense. The judge should obtain

complete information from the parties about other pending or terminated

actions in federal or state courts relating to the claims, defenses, and issues

presented.

If multiple cases are pending in federal courts, the Judicial Panel on

Multidistrict Litigation has the authority to transfer related federal cases to one

district court for consolidated and coordinated pretrial proceedings803 in order

to prevent inconsistent rulings and to minimize duplicative discovery. See

801. See, e.g., Zinser v. Accufix Research Inst., 253 F.3d 1180, 1187–90 (9th Cir. 2001)

(discussing plaintiff’s proposals for managing variations in state laws); cf. Szabo v. Bridgeport

Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001) (stating that a judge should “receive evidence (if

only by affidavit) and resolve the disputes before deciding whether to certify the class”).

802. See Szabo, 253 F.3d at 676 (indicating that determining manageability required making

a choice-of-law decision that in turn required resolving a factual issue on the merits).

803. 28 U.S.C. § 1407(a) (West 2002).
§ 21.15 Manual for Complex Litigation, Fourth

264

section 20.1. Prior to overlapping federal cases being transferred, or if the

federal cases are not transferred at all, coordination among the judges handling

the cases may be critical. Such coordination can be informal, consisting of

telephone calls or other communication to minimize conflicts in scheduling

and to arrange for the results of discovery to be used in all or most of the

related cases. Some judges prefer more formal procedures, such as orders

entered in the related cases that establish a coordinated schedule and arrangements for discovery and motions practice.

If the overlapping or duplicative cases are pending in both state and

federal courts, there is no formal mechanism for global consolidation. If the

federal cases have been transferred to one judge, the transferee court can then

contact the other courts to discuss cooperation and coordination. Section

20.31 discusses in more detail approaches to coordination with state courts,

particularly after a class action has been certified in the federal court.

Courts rely on a variety of techniques to coordinate overlapping or

duplicative cases, such as establishing coordinated schedules for discovery and

the filing and briefing of motions. Federal and state judges sometimes jointly

hold hearings or arguments on the motions and establish coordinated discovery schedules.

The pendency of overlapping or duplicative cases in other courts may

affect the timing of the certification decision. If transfer to a multidistrict

litigation (MDL) proceeding is likely, it is usually best to defer certification

until the MDL Panel acts (see generally section 20.31). A delay in deciding

certification might also be appropriate if other cases in state or federal court

are at a more advanced stage in the litigation.

A court may want to defer to other courts that have developed the record

necessary to decide certification or are about to decide threshold dispositive

motions to dismiss or for summary judgment.804 Judges sometimes defer

certification decisions pending the results of individual actions that are in or

nearing trial or summary judgment. For example, in a mass tort case the trial

of individual claims might inform a judge considering class certification about

the nature of the claims and defenses and whether class certification is

proper.805 On the other hand, if the federal case is more advanced, the judge

804. See, e.g., Nolan v. Cooper Tire & Rubber Co., No. CIV.A.01-83, 2001 WL 253865 (E.D.

Pa. Mar. 14, 2001) (remanding nationwide class action to state court based in part on conduct

originating in New Jersey).

805. See In re Norplant Contraceptive Prods. Liab. Litig., 955 F. Supp. 700 (E.D. Tex. 1997)

(ruling on first set of bellwether plaintiffs’ complaints); infra section 22.31 (criteria for aggregating mass tort claims); see also Thomas E. Willging, Beyond Maturity: Mass Tort Case

Management in the Manual for Complex Litigation, 148 U. Pa. L. Rev. 2225, 2253–61 (2000)
Class Actions § 21.15

265

may want to accelerate action on certification to protect against inconsistent

rulings on class certification, appointment of class counsel, discovery motions,

choice of law, and dispositive motions.

Competing class actions may produce a race to certification in different

courts for the perceived advantages of a given forum. Such efforts should not

influence the timing of the certification decision, and, through coordination

with other courts, the judge should avoid facilitating such adversarial contests.

When informal efforts at cooperation and coordination prove unsuccessful, federal courts have on occasion felt it necessary to resort to efforts to stay

parallel suits pending in other fora. The Anti-Injunction Act806 and the All

Writs Act807 define federal court authority to stay or enjoin state court proceedings. Under these statutes, a federal court may enjoin actions in state

courts, but only when necessary to aid its jurisdiction.808 For example, a federal

court may enjoin parallel state court actions to protect a class action settlement

preliminarily or finally approved in the federal court.809 Less clear is federal

court authority to issue such orders outside the context of a pending settlement and before a class is certified.810 A federal court considering an injunction

(discussing a multidimensional approach to mass tort case management that includes, among

other factors, the concept of maturity). See generally McGovern, Mass Torts for Judges, supra note

705, at 1841–45 (presenting the concept of maturity, i.e., the idea that individual cases should be

adjudicated and evaluated before courts consider certifying a class or otherwise aggregating

claims).

806. 28 U.S.C. § 2283 (West 2002).

807. Id. § 1651.

808. At least four federal courts of appeals have approved such an injunction in “consolidated multidistrict litigation, where a parallel state court action threatens to frustrate proceedings and disrupt the orderly resolution of the federal litigation.” Winkler v. Eli Lilly & Co., 101

F.3d 1196, 1202 (7th Cir. 1996) (citing Carlough v. Amchem Prods., Inc., 10 F.3d 189, 197 (3d

Cir. 1993); In re Baldwin-United Corp., 770 F.2d 328, 336 (2d Cir. 1985); In re Corrugated

Container Antitrust Litig., 659 F.2d 1332, 1334–35 (5th Cir. 1981)); see also, e.g., Hanlon v.

Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998) (affirming the district court’s injunction of

state court proceedings where it had preliminarily approved a nationwide class settlement);

White v. Nat’l Football League, 41 F.3d 402, 409 (8th Cir. 1994) (affirming injunction of related

proceedings where district court had given final approval to a nationwide class settlement);

Carlough v. Amchem Prods., Inc., 10 F.3d 189, 197 (3d Cir. 1993) (same).

809. Hanlon, 150 F.3d at 1025; White, 41 F.3d at 409; Carlough, 10 F.3d at 197; In re

Baldwin-United Corp., 770 F.2d 328, 336 (2d Cir. 1985); In re Corrugated Container Antitrust

Litig., 659 F.2d 1332, 1334–35 (5th Cir. 1981).

810. See In re Bridgestone/Firestone Tires Prods. Liab. Litig., Nos. 03-1-1399 & 03-1564 (7th

Cir. June 20, 2003) (once federal appellate court held nationwide class action improper, federal

district courts required to enjoin members of the putative national classes and their lawyers to

have nationwide classes certified over defendants opposition with respect to same claims). See

also Newby v. Enron Corp., 302 F.3d 295, 300 (5th Cir. 2002) (indicating in dicta that a district
§ 21.21 Manual for Complex Litigation, Fourth

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or similar action directed toward parallel state court actions, before the federal

court has certified a class or preliminarily approved a settlement, should be

cautious in doing so; it is critical that the court be clear and precise in identifying the legal and factual basis for the injunction and the parties against

whom the injunction operates.

21.2 Deciding the Certification Motion

.21 Certification Hearings and Orders 266

.22 Type and Definition of Class 268

.221 Type of Class 268

.222 Definition of Class 270

.23 Role of Subclasses 272

.24 Role of Issues Classes 272

.25 Multiple Cases and Classes: The Effect on Certification 274

.26 Appointment of the Class Representatives 276

.27 Appointment of Class Counsel 278

.271 Criteria for Appointment 278

.272 Approaches to Selecting Counsel 279

.273 Procedures for Appointment 282

.28 Interlocutory Appeals of Certification Decisions 282

21.21 Certification Hearings and Orders

A hearing under Federal Rule of Civil Procedure 23(c) is a routine part of

the certification decision. The nature and scope of the disputed issues relating

to class certification bear on the kind of hearing811 the judge should conduct.

An evidentiary hearing may be necessary in a challenge to the factual basis for a

judge could not issue an injunction restraining a lawyer from filing related state court proceedings absent a pattern of abuse); In re Inter-Op Hip Prosthesis Prod. Liab. Litig., No. 01-4039,

2001 WL 1774017, at *2 (6th Cir. Oct. 29, 2001) (staying injunction against members of the

proposed class in conditionally certified class “[b]ecause the validity of the proposed settlement

is questionable”). See also infra section 31.32.

811. Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001) (“Before deciding

whether to allow a case to proceed as a class action, therefore, a judge should make whatever

factual and legal inquiries are necessary under Rule 23.”); Marisol A. ex rel. Forbes v. Giuliani,

126 F.3d 372, 379 (2d Cir. 1997) (affirming certification but ordering the district court to create

subclasses and “[i]f necessary, . . . allow additional discovery and hold evidentiary hearings in

order to determine which classifications may be appropriate”); Morrison v. Booth, 730 F.2d 642,

644 (11th Cir. 1984) (remanding and holding that an evidentiary hearing on class certification is

required unless clear grounds for denying certification exist); cf. In re Domestic Air Transp.

Antitrust Litig., 137 F.R.D. 677, 682 n.4 (N.D. Ga. 1991) (holding that discretionary evidentiary

hearing need not afford defendants unlimited opportunity to examine or cross-examine

witnesses opposing class certification and addressing the merits).
Class Actions § 21.21

267

class action.812 Disputed facts material to deciding certification may be narrowed or eliminated by stipulations, requests for admission, affidavits, or

declarations. The parties should submit a statement of stipulated facts and

identify disputed facts relevant to Rule 23 issues using the general procedure

described in section 11.47. When there is disagreement over the legal standards

but not over the facts material to the certification decision, the court may rely

on the parties’ stipulations of fact, affidavits, declarations, and relevant

documents to establish the factual record. In such a case, a hearing may be

limited to argument over whether the certification requirements are met. A

hearing is appropriate, even if the parties jointly move for certification of a

class for settlement and for approval of the settlement class. A hearing ensures

a full record, particularly if it is unclear that the certification standards are met

or if there are likely to be objections to the settlement.

An evidentiary hearing to resolve disputed facts relevant to the certification decision should not be a minitrial on the merits of the class or individual

claims.813 Instead, the parties should present facts and arguments to let the

judge determine the nature of the claims and defenses and how they will be

presented at trial, whether there are common issues that can be tried on a

class-wide basis, and whether those common issues predominate and class

treatment is a superior method of resolving them. The judge may limit the

number of witnesses, require depositions to be summarized, call for written

statements of the direct evidence, and use other techniques described in

section 12.5 for nonjury proceedings.814

If the parties have submitted a trial plan to aid the judge in determining

whether certification standards are met, the certification hearing provides an

opportunity to examine the plan and its feasibility.

Expert witnesses play a limited role in class certification hearings; some

courts admit testimony on whether Rule 23 standards, such as predominance

and superiority, have been met.815 The judge need not decide at the certification stage whether such expert testimony satisfies standards for admissibility at

812. See Gen. Tel. Co. v. Falcon, 457 U.S. 147, 157–60 (1982).

813. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177–78 (1974).

814. In re Domestic Air, 137 F.R.D. at 682 (allowing each side to use written statements of

expert witnesses).

815. See, e.g., In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 134–35 (2d Cir.

2001) (affirming district court’s reliance on plaintiff’s expert testimony to support its decision to

certify a class), cert. denied, 536 U.S. 917 (2002); In re Linerboard Antitrust Litig., 203 F.R.D.

197, 214–18 (E.D. Pa. 2001) (relying on an econometrics expert to show that issues relating to

common impact and common damages predominate and are susceptible to class-wide proof); In

re Cardizem CD Antitrust Litig., 200 F.R.D. 297, 321–26 (E.D. Mich. 2001) (using expert

testimony to show a plausible method of proving class-wide damages).
§ 21.221 Manual for Complex Litigation, Fourth

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trial. Courts have applied a high threshold for assessing the need for expert

testimony at the certification stage.816 A judge should not be drawn prematurely into a battle of competing experts.817

After the hearing, the court should enter findings of fact and conclusions

of law addressing each of the applicable criteria of Rule 23. Failure to make

such findings may result in reversal or remand for further proceedings after

interlocutory appeal under Rule 23(f).818

Rule 23(c)(1)(B) specifies that an order certifying a class must define the

class membership and identify the class claims, issues, or defenses. It also

requires that the order appoint class counsel under Rule 23(g). An order

certifying a Rule 23(b)(3) class must inform the members of the proposed class

when and how they may elect to opt out.819

21.22 Type and Definition of Class

.221 Type of Class 268

.222 Definition of Class 270

21.221 Type of Class

The certification order must specify whether Rule 23(b)(1), (b)(2), or

(b)(3) forms the basis for certification. Members of a Rule 23(b)(3) class are

entitled to individual notice and an opportunity to opt out.820 Rules 23(b)(1)

816. See, e.g., In re Visa, 280 F.3d at 135 (“A district court must ensure that the basis of the

expert opinion is not so flawed that it would be inadmissible as a matter of law.” (citing Cruz v.

Coach Stores, Inc., 96 Civ. 8099, 1998 U.S. Dist. LEXIS 18051, at *13 n.3 (S.D.N.Y. Nov. 18,

1998))); Vickers v. Gen. Motors Corp., 204 F.R.D. 476, 479 (D. Kan. 2001) (same).

817. See, e.g., In re Visa, 280 F.3d at 135 (“[A] district court may not weigh conflicting expert

evidence or engage in ‘statistical dueling’ of experts.” (citing Caridad v. Metro-North Commuter

R.R., 191 F.3d 283, 292 (2d Cir. 1999))); In re Linerboard, 203 F.R.D. at 217 n.13 (same); see also

In re Polypropylene Carpet Antitrust Litig., 996 F. Supp. 18, 30 (N.D. Ga. 1997) (noting that

“the evidence relied upon . . . has not been subjected to the adjudicative process” and that class

certification “‘should not be viewed as a prediction that Plaintiffs will ultimately prevail on the

merits’” (quoting Diaz v. Hillsborough County Hosp. Auth., 165 F.R.D. 689, 692 (M.D. Fla.

1996))).

818. See Consol. Edison Co. of N.Y. v. Richardson, 233 F.3d 1376, 1384 (Fed. Cir. 2000)

(remanding issue of certification because district court provided no reasons for its denial),

amended by No. 99-1436, 2000 U.S. App. LEXIS 35446, at *22–*23 (Fed. Cir. Feb. 27, 2001); see

also Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 149–50 (4th Cir. 2001) (vacating and remanding

for determination of factual issue); Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1276

(11th Cir. 2000) (noting “a limited or insufficient record may adversely affect the appellate

court’s ability to evaluate fully and fairly the class certification decision”).

819. Fed. R. Civ. P. 23(c)(2)(B).

820. Id.
Class Actions § 21.221

269

and (b)(2) do not mandate notice or an opt-out opportunity, but amended

Rule 23(c)(2)(A) recognizes a court’s discretion to require notice of class

certification in such cases. See section 21.311.821

A class action seeking injunctive and declaratory relief may also include a

claim for monetary relief, and the judge must decide whether a class should be

certified under Rule 23(b)(2) or (b)(3).822 Courts have held that where money

damages constitute the primary relief requested, even though injunctive relief

is also sought, the class must be certified under Rule 23(b)(3) and must meet

due process requirements.823 In such cases, the notice and opt-out requirements of that subsection apply, even if the class also qualifies for certification

under Rule 23(b)(1) or (b)(2).824 On the other hand, where the damages flow

directly from the equitable remedy, without the need for individual calculation, some courts have held that Rule 23(b)(2) is the only standard that must

be met.825 The circuits have divided on the resolution of this issue, which arises

most often in employment discrimination class actions.

821. A court has discretion under Rules 23(d)(2) and (d)(5) to permit a class member to

exclude itself from a Rule 23(b)(1)(B) class. County of Suffolk v. Long Island Lighting Co., 907

F.2d 1295, 1304–05 (2d Cir. 1990). A court is not precluded from defining a class under Rule

23(b)(1) or (b)(2) to include only those potential class members who do not opt out of the

litigation. Such a definition may be appropriate in some Rule 23(b)(2) cases or in a Rule

23(b)(1)(B) case in which the class was formed merely because separate actions by class

members might impede their ability to protect their interests. See, e.g., Penson v. Terminal

Transp. Co., 634 F.2d 989, 993 (5th Cir. 1981).

822. Eubanks v. Billington, 110 F.3d 87, 91–92 (D.C. Cir. 1997). The above cases deal with

employment discrimination actions. Courts have similarly divided over whom to certify in

proposed mass tort medical monitoring class actions, and whether under Rule 23(b)(2) or

(b)(3). See infra section 22.74 (medical monitoring class actions).

823. Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998); see also Molski v.

Gleich, 318 F.3d 937, 947–48 (9th Cir. 2003) (holding in a case primarily seeking injunctive relief

that release in settlement of claims for individual damages triggers applicability of Rule 23(b)(3)

requirements of individual notice and the right to opt out); Jefferson v. Ingersoll Int’l Inc., 195

F.3d 894 (7th Cir. 1999).

824. In re Ikon Office Solutions, Inc. Sec. Litig., 209 F.R.D. 94, 101–02 (E.D. Pa. 2002)

(certifying Rule 23(b)(1) and (b)(3) settlement classes with first-class mail notice supplemented

by publication and Internet posting); Wilson v. United Int’l Investigative Servs. 401(k) Sav. Plan,

No. CIV.A.01-CV-6126, 2002 WL 734339, at *6–*7 (E.D. Pa. Apr. 23, 2002) (certifying Rule

23(b)(2) and (b)(3) class with individual notice pursuant to Rule 23(c)(2)).

825. See Allison, 151 F.3d at 414–15, and cases cited therein. Damages would be incidental to

an injunction when a statute serving as the basis for an injunction also establishes a fixed sum as

damages. Robinson v. Metro-North Commuter R.R., 267 F.3d 147, 164 (2d Cir. 2001) (holding

that Rule 23(b)(2) certification is permissible if the district court finds that “‘the positive weight

or value [to the plaintiffs] of the injunctive or declaratory relief sought is predominant even

though compensatory or punitive damages are also claimed’” and that “class treatment would be
§ 21.222 Manual for Complex Litigation, Fourth

270

21.222 Definition of Class

Defining the class is of critical importance because it identifies the persons

(1) entitled to relief, (2) bound by a final judgment, and (3) entitled under

Rule 23(c)(2) to the “best notice practicable” in a Rule 23(b)(3) action. The

definition must be precise, objective, and presently ascertainable. For example,

the class may consist of those persons and companies that purchased specified

products or securities from the defendants during a specified period, or it may

consist of all persons who sought employment or who were employed by the

defendant during a fixed period.

Although the identity of individual class members need not be ascertained

before class certification, the membership of the class must be ascertainable.

Because individual class members must receive the best notice practicable and

have an opportunity to opt out, and because individual damage claims are

likely, Rule 23(b)(3) actions require a class definition that will permit identification of individual class members, while Rule 23(b)(1) or (b)(2) actions may

not.826 An identifiable class exists if its members can be ascertained by reference to objective criteria. The order defining the class should avoid subjective

standards (e.g., a plaintiff’s state of mind) or terms that depend on resolution

of the merits (e.g., persons who were discriminated against).827 The order

should use objective terms in defining persons to be excluded from the class,

such as affiliates of the defendants, residents of particular states, persons who

have filed their own actions, or members of another class.

A class may be defined to include individuals who may not become part of

the class until later. Such “future claimants” are primarily a feature of those

mass tort actions involving latent injury. Section 22.1 defines the three types of

mass tort future claimants. Apart from mass tort cases, membership in a Rule

23(b)(3) class ordinarily should be ascertainable when the court enters

judgment. There is no need to identify every individual member at the time of

certification of a Rule 23(b)(2) class action for injunctive relief as long as the

court can determine at any given time whether a particular individual is a

efficient and manageable” (quoting Allison, 151 F.3d at 430 (Dennis, J., dissenting))), cert.

denied, 535 U.S. 951 (2002).

826. Garrish v. United Auto., Aerospace, & Agric. Implement Workers, 149 F. Supp. 2d 326,

331 (E.D. Mich. 2001) (finding that the plaintiff’s definition of the Rule 23(b)(3) class is “readily

ascertainable by reference to objective criteria”); see generally 5 Moore et al., supra note 626,

§§ 23.21[1] & 23.21[3] (discussing how a precise class definition allows courts to determine

whether a particular individual is a member of the proposed class and who is entitled to notice).

827. See, e.g., Forman v. Data Transfer, Inc., 164 F.R.D. 400, 403 (E.D. Pa. 1995) (“defining

the purported class as ‘all residents and businesses who have received unsolicited facsimile

advertisements’ requires addressing the central issue of liability” and “[d]etermining a membership in the class would essentially require a mini-hearing on the merits of each case”).
Class Actions § 21.222

271

member of the class.828 See section 21.24 for a discussion of issues classes

certified under Rule 23(c)(4).

The court should also consider whether the class definition captures all

members necessary for efficient and fair resolution of common questions of

fact and law in a single proceeding. If the definition fails to include a substantial number of persons with claims similar to those of the class members, the

definition of the class may be questionable. A broader class action definition or

separate class might be more appropriate. If the class definition includes

people with similar claims but divergent interests or positions, subclasses with

separate class representatives and counsel might suffice.

The applicable substantive law and choice-of-law considerations may also

affect the appropriate scope of the class.829 The difficulties posed by these

considerations are likely to be compounded in nationwide or multistate class

action litigation raising state law claims or defenses. Differences in applicable

law and the number of divergent interests may lead a court to decline to certify

a class.830

The class definition should describe the operative claims, issues, or

defenses, such as injury resulting from securities fraud or denial of employment on account of race.831 The relevant time should be included in the class

definition. The relevant time, often referred to as the “class period,” is, for

example, the period during which members of the proposed class incurred the

claimed injury. The order should delineate how the class representatives meet

the commonality and typicality requirements of Rule 23(a).832 In a Rule

23(b)(3) case, defining the class and the class claims in the order helps confirm

828. Robertson v. Nat’l Basketball Ass’n, 389 F. Supp. 867, 897 (S.D.N.Y. 1975).

829. A court to which cases have been transferred, through multidistrict proceedings or

otherwise, is obliged to apply the choice-of-law rules of the transferor court. Van Dusen v.

Barrack, 376 U.S. 612 (1964). Courts have applied Van Dusen to proceedings under the

multidistrict litigation statute. See Larry Kramer, Choice of Law in Complex Litigation, 71 N.Y.U.

L. Rev. 547, 552 n.14 (1996) (citing case law).

830. In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 288 F.3d 1012 (7th Cir. 2002);

Spence v. Glock, 227 F.3d 308, 313 (5th Cir. 2000); Castano v. Am. Tobacco Co., 84 F.3d 734,

741 (5th Cir. 1996).

831. Fed. R. Civ. P. 23(c)(2)(B). A description of the claims made on behalf of or against the

class will be useful if questions relating to preclusive effects arise in later litigation. See Collins v.

E.I. Dupont de Nemours & Co., 34 F.3d 172, 179–80 (3d Cir. 1994); cf. Cooper v. Fed. Reserve

Bank, 467 U.S. 867, 880–81 (1984) (judgment against class in Title VII action bars only “class

claims” and individual claims actually tried).

832. Gen. Tel. Co. v. Falcon, 457 U.S. 147 (1982) (meritorious individual claim of employment discrimination in promotion could not serve as a basis for certifying a class claim relating

to “across the board” hiring practices).
§ 21.24 Manual for Complex Litigation, Fourth

272

that class treatment is superior to other available methods for the fair and

efficient adjudication of the controversy.833

21.23 Role of Subclasses

Subclasses must be created when differences in the positions of class

members require separate representatives and separate counsel. Those differences may arise from a variety of sources. Subclassing sometimes represents a

workable solution to differences in substantive law and for choice-of-law

difficulties. For example, in tort cases class members may have different levels

of exposure to the same allegedly toxic substance, allege different types and

degrees of injury, or seek different relief. Class members who have been

exposed to a toxic substance but have no present injury (so-called future

claimants) have an interest in ensuring that they will receive adequate compensation if an injury manifests itself in the future; those whose exposure has

already resulted in injury have a conflicting interest in maximizing the present

recovery for the damage they have already sustained. In securities fraud cases,

class members may have received different information or communications at

different times, requiring the creation of subclasses.

Each class or subclass must independently satisfy all the prerequisites of

Rules 23(a) and (b).834 The necessity of a large number of subclasses may

indicate that common questions do not predominate. The creation of a

number of subclasses may result in some that are too small to satisfy the

numerosity requirement, may make the case unmanageable, or, in a Rule

23(b)(3) suit, may defeat the superiority requirement. Denial of class status in

such circumstances is appropriate; if conflicts and differences among class

members are so sharp that a number of small subclasses result, class treatment

may not be justified in the first place.

21.24 Role of Issues Classes

Rule 23(c)(4)(A) permits a class to be certified for specific issues or

elements of claims raised in the litigation.835 Selectively used, this provision

833. Fed. R. Civ. P. 23(b)(3); see also In re Fibreboard Corp., 893 F.2d 706 (5th Cir. 1990);

Cimino v. Raymark Indus., Inc., 751 F. Supp. 649 (E.D. Tex. 1990), vacated in part, 151 F.3d 297

(5th Cir. 1998). See infra section 22.

834. Fed. R. Civ. P. 23(c)(4)(B); see, e.g., In re Methyl Tertiary Butyl Ether (“MTBE”) Prods.

Liab. Litig., 209 F.R.D. 323, 351 (S.D.N.Y. 2002).

835. See, e.g., Cent. Wesleyan Coll. v. W.R. Grace & Co., 6 F.3d 177, 184 (4th Cir. 1993)

(class certified for eight common issues); Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 472–73
Class Actions § 21.24

273

may enable a court to achieve the economies of class action treatment for a

portion of a case, the rest of which may either not qualify under Rule 23(a) or

may be unmanageable as a class action.836 A court may certify a Rule 23(b)(3)

class for certain claims, allowing class members to opt out, while creating a

non-opt-out Rule 23(b)(1) or (b)(2) class for other claims.837 Certification of

an issues class is appropriate only if it permits fair presentation of the claims

and defenses and materially advances the disposition of the litigation as a

whole.838 If the resolution of an issues class leaves a large number of issues

requiring individual decisions, the certification may not meet this test. In

product-liability cases, there is a split of authority as to whether questions

relating to product defects should be certified in an issues class.839

(5th Cir. 1986) (class action to adjudicate “state of the art” defense); Weathers v. Peters Realty

Corp., 499 F.2d 1197 (6th Cir. 1974) (class for injunctive relief).

836. See, e.g., Halderman v. Pennhurst State Sch. & Hosp., 612 F.2d 84 (3d Cir. 1979)

(dictum), rev’d on other grounds, 451 U.S. 1 (1981). This appears to have been the intention of

the drafters of the clause. See Fed. R. Civ. P. 23(c)(4) committee note (1966 amendment).

Courts have, for example, considered the propriety of post-verdict proceedings in class actions

under the securities acts in which, after the jury has determined liability, individual plaintiffs

could seek recovery for qualifying shares. See Biben v. Card, 789 F. Supp. 1001, 1003 (W.D. Mo.

1992) (bifurcating trial proceeding into liability determination phase and individual claims for

damages phase); Jaroslawicz v. Engelhard Corp., 724 F. Supp. 294, 302–03 (D.N.J. 1989) (“[I]t is

well settled that the issue of liability may be tried separately from the damage claims of

individual class members.”). If filing a claim is the only way for class members to recover

individual damages, this process amounts to a “claims class,” that is, one in which liability has

been determined on a class-wide basis, and individual damages are based on reviewing

individual claims from class members.

837. In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 147 (2d Cir. 2001); see

also Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147 (2d Cir. 2001), cert. denied, 535

U.S. 951 (2002).

838. Robinson, 267 F.3d at 167 n.12 (“‘the issues covered by the request be such that their

resolution (as a class matter) will materially advance a disposition of the litigation as a whole’”

(quoting In re Tetracycline Cases, 107 F.R.D. 719, 727 (W.D. Mo. 1985))). See also MTBE, 209

F.R.D. at 352–53.

839. See infra section 22.75. Compare In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293,

1302–03 (7th Cir. 1995) (rejecting the use of an issues class in product liability case because of

individual liability issues), and Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir.

1996) (same), with Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996)

(indicating that even “if the common questions do not predominate over the individual

questions so that class certification of the entire action is warranted, Rule 23 authorizes the

district court in appropriate cases to isolate the common issues under Rule 23(c)(4)(A) and

proceed with class treatment of these particular issues”). See also Bolin v. Sears, Roebuck & Co.,

231 F.3d 970, 976 (5th Cir. 2000) (reciting the advantages of claim-by-claim certification and

remanding case for determination of whether certification of a modified class with respect to

some of the claims under Rule 23(b)(2) or (b)(3) would be proper).
§ 21.25 Manual for Complex Litigation, Fourth

274

An issues-class approach contemplates a bifurcated trial where the common issues are tried first, followed by individual trials on questions such as

proximate causation and damages. A bifurcated trial must adequately present

to the jury applicable defenses and be solely a class trial on liability.840 There is

a split of authority on whether the Seventh Amendment is violated by asking

different juries to decide separate elements of a single claim.841

Before certifying an issues class under Rule 23(d), the judge should be

satisfied that common questions are sufficiently separate from other issues and

that a severed trial will not infringe any party’s constitutional right to a jury

trial and will permit all the parties fairly to present the claims and defenses.842

840. In re Rhone-Poulenc, 51 F.3d at 1299.

841. Compare In re Rhone-Poulenc, 51 F.3d at 1303 (holding that the Seventh Amendment

includes “a right to have juriable issues determined by the first jury impaneled to hear them”),

with Robinson, 267 F.3d at 169 (“Trying a bifurcated claim before separate juries does not run

afoul of the Seventh Amendment” as long as a single factual issue is not “tried by different,

successive juries.”). See also Steven S. Gensler, Bifurcation Unbound, 75 Wash. L. Rev. 705,

736–37 (2000); Patrick Woolley, Mass Tort Litigation and the Seventh Amendment Reexamination

Clause, 83 Iowa L. Rev. 499 (1998).

842. See Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494, 500 (1931); Alabama v.

Blue Bird Body Co., 573 F.2d 309, 318 (5th Cir. 1978). See also supra section 21.132.

21.25 Multiple Cases and Classes: The Effect on Certification

The broad range of venues available in class actions means that competing,

conflicting, or overlapping suits are often simultaneously pending in state and

federal courts. Any of the following circumstances or combinations of circumstances may exist:

• multiple cases with similar class allegations, each of which might be

appropriately certified under Rule 23 but which may overlap or conflict if more than one is certified;

• cases alleging a nationwide class and cases seeking multistate or singlestate class certification pending in different courts at the same time;

• cases filed as class actions in federal and state courts relating to the

same type of transactions and involving some or all of the same parties;

• cases filed by the same lawyers seeking to represent an overlapping or

duplicative class of plaintiffs in order to obtain the most favorable forum;

• cases filed by different lawyers competing for the fastest and most favorable rulings on class certification and appointment as class counsel;
Class Actions § 21.25

275

• multiple individual actions or other forms of aggregate litigation

pending in state and federal courts, raising the same issues and involving some or all of the same parties; or

• prior unsuccessful class certification efforts in state or federal courts.

A judge should be mindful of the various possibilities in deciding the best

approach to precertification case management, in deciding whether and for

what purpose to certify a class action, and in determining how to define the

class. The first step is to obtain complete information from the parties about

other pending or terminated actions in federal or state courts relating to the

claims presented.

If all the cases are pending in federal court and have been centralized by an

MDL proceeding, the transferee court can order consolidated pleadings and

motions to decide how to resolve competing claims for certification, appointment of class counsel, and appointment of lead class counsel. See section

21.27. Counsel sometimes request certification of multiple classes and subclasses primarily to gain appointment to positions of leadership in the litigation. The court should attempt to distinguish such requests from competing

certification motions that reflect more significant differences.

If multiple class actions or individual actions are pending at the same time

in one or more federal and state courts, the certification decision requires the

judge to consider the relationship among the cases. Federal class actions may

encompass plaintiffs who are parties to individual cases or members of

proposed class actions pending in other federal courts. If the MDL Panel has

not been asked to centralize those cases, a court that has gathered information

about the cases’ status might discuss with counsel whether MDL status should

be sought. In order to enable and facilitate essential intercourt communication

and as an ongoing duty of candor to the tribunal, the court should, at an early

date, call on counsel to disclose all related actions in other courts (state or

federal) that may involve multiple, overlapping, or competing class allegations.

Whether the related cases are pending in other federal or state courts, the

federal judge asked to certify a class action that will overlap with or duplicate

parallel cases should communicate with the judges handling the other proceedings and coordinate approaches to the class certification issues, including

precertification discovery, motions, arguments, and proposed class definitions.

See sections 20.14 and 20.31.

If each case meets the Rule 23 requirements, the judge has broad discretion

in deciding which of several related cases to certify as a class action. A number

of factors are relevant to this decision:
§ 21.26 Manual for Complex Litigation, Fourth

276

• the extent and nature of other litigation;843

• choice-of-law consequences (see section 21.23);

• whether persons who are class members under the allegations of one

complaint are also included as members of other classes pleaded in

other courts; and

• the existence of parallel state court actions.

If a state court class action has proceeded to certification before the federal

action, there may be no need for the federal action. If the federal court finds

that a certifiable class exists, it might define that class so as to exclude the

members of a certified state class,844 thus preventing needless conflicts between

state and federal proceedings.

To the extent that these problems relate to differences in pleadings in

different cases, they may be solved by ordering or allowing the filing of a

consolidated complaint that amends existing complaints to add the necessary

or appropriate claims and parties. A single pleading, in a single action, can

then serve as the vehicle for defining the proposed class and deciding class

certification.

A federal class action may include plaintiffs who are members of state

classes. Because a prior resolution of the federal action may have a preclusive

effect on claims pending in state courts, it is important to give adequate notice

to enable individual state plaintiffs845 to decide whether to opt out. Note,

however, that a judgment in a federal non-opt-out Rule 23(b)(1) or (b)(2)

class case has the practical effect of an injunction against the state court

proceeding.846 See section 21.3.

21.26 Appointment of the Class Representatives

The judge must appoint one or more representatives of the class and any

subclass. The Private Securities Litigation Reform Act (PSLRA) requires that a

class representative act independently of counsel, be familiar with the subject

843. See Califano v. Yamasaki, 442 U.S. 682, 703 (1979) (need to consider whether proposed

nationwide class would improperly interfere with similar pending litigation in other courts).

844. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 1999 U.S. Dist. LEXIS

13228, at *49–*50 (E.D. Pa. Aug. 26, 1999) (conditionally certifying nationwide medical

monitoring class that excludes members of certified state medical monitoring classes).

845. Due process for individual class members requires that the decision whether or not to

opt out rests with the individual and not be made by a class representative or class counsel.

Hanlon v. Chrysler Corp., 150 F.3d 1011, 1024–25 (9th Cir. 1998); see also Conte & Newberg

supra note 739, § 16.16 at 210.

846. See In re Fed. Skywalk Cases, 680 F.2d 1175 (8th Cir. 1982).
Class Actions § 21.26

277

matter of the complaint, and authorize initiation of the action.847 In other

kinds of class actions as well, courts have required that representatives be

knowledgeable about the issues in the case. This does not necessarily require

legal experience or expertise on the part of the representative, who is usually a

layperson. No particular level of education or sophistication is required.848 In

all cases, the representatives must be free of conflicts and must represent the

class adequately throughout the litigation. The judge must ensure that the

representatives understand their responsibility to remain free of conflicts and

to vigorously pursue the litigation in the interests of the class,849 including

subjecting themselves to discovery.

Later replacement of a class representative may become necessary if, for

example, the representative’s individual claim has been mooted or otherwise

significantly altered. Replacement also may be appropriate if a representative

has engaged in conduct inconsistent with the interests of the class or is no

longer pursuing the litigation.850 In such circumstances, courts generally allow

class counsel time to make reasonable efforts to recruit and identify a new

representative who meets the Rule 23(a) requirements. The court may permit

intervention by a new representative or may simply designate that person as a

representative in the order granting class certification.851

847. 15 U.S.C. § 78u-4(a)(2)(A) (2000). See generally Berger v. Compaq Computer Corp.,

257 F.3d 475 (5th Cir. 2001), reh’g denied, 279 F.3d 313 (2002); see also In re Cell Pathways, Inc.,

Sec. Litig. II, 203 F.R.D. 189, 193–94 (E.D. Pa. 2001) (granting a post-PSLRA motion of a group

of four businessmen to serve as lead plaintiffs indicating that they were all “sophisticated

businessmen who share a substantial and compelling interest in vigorously prosecuting the

claims on behalf of the class”). In a nonsecurities context, courts have commented that

demanding a high degree of sophistication from class representatives is inconsistent with

allegations in consumer cases that defendants’ conduct targets those who are not sophisticated.

See Dienese v. McKenzie Check Advance of Wis., L.L.C., No. 99-C-50, 2000 U.S. Dist. LEXIS

20389, at *20 (E.D. Wis. Dec. 11, 2000); see also Morris v. Transouth Fin. Corp., 175 F.R.D. 694,

698 (M.D. Ala. 1997) (holding that an unsophisticated consumer’s reliance on counsel to

investigate and litigate the case does not make this plaintiff an inadequate class representative).

848. See cases cited supra note 789.

849. See In re Storage Tech. Corp. Sec. Litig., 113 F.R.D. 113, 118 (D. Colo. 1986) (disqualifying named plaintiffs who failed to appear at depositions and another who appeared too passive

to prosecute the case vigorously); 1 Conte & Newberg, supra note 739, § 3:22, at 409–14.

850. See Greenfield v. U.S. Healthcare, Inc., 146 F.R.D. 118 (E.D. Pa. 1993).

851. See In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 172

F.R.D. 271, 283 (S.D. Ohio 1997) (court named substitute new class representative without

formal intervention joinder); see also Shankroff v. Advest, Inc., 112 F.R.D. 190, 194 (S.D.N.Y.

1986) (sole proposed representative found inadequate, although other class certification criteria

were met; plaintiff’s counsel were given thirty days to propose at least one substitute representative).
§ 21.271 Manual for Complex Litigation, Fourth

278

Aside from the need to replace a class representative, formal intervention

by class members is infrequent. Intervention is not necessary for a class

member to pursue an appeal after objecting to a class settlement.852 Class

members in Rule 23(b)(3) actions may, however, appear by their own attorneys, subject to the court’s power to adopt appropriate controls regarding the

organization of counsel.

21.27 Appointment of Class Counsel

.271 Criteria for Appointment 278

.272 Approaches to Selecting Counsel 279

.273 Procedures for Appointment 282

Rules 23(c)(1)(B) and 23(g) recognize that the certification decision and

order require judicial appointment of counsel for the class and any subclasses.

This section deals with that process. Sections 21.7 and 14 discuss the procedures for reviewing and awarding attorney fees for class counsel.

Unlike other civil litigation, many class action suits do not involve a client

who chooses a lawyer, negotiates the terms of the engagement, and monitors

the lawyer’s performance. Those tasks, by default, fall to the judge, who creates

the class by certifying it and must supervise those who conduct the litigation

on behalf of the class. The judge must ensure that the lawyer seeking appointment as class counsel will fairly and adequately represent the interests of the

class.853 If the certification decision includes the creation of subclasses reflecting divergent interests among class members, each subclass must have separate

counsel to represent its interests.854

21.271 Criteria for Appointment

Rule 23(g) sets out the criteria and procedures for appointment of class

counsel. In every case, the judge must inquire into the work counsel has done

in investigating and identifying the particular case; counsel’s experience in

handling class actions, other complex litigation, and claims of the type asserted

in the action; counsel’s knowledge of the applicable law; the resources counsel

will commit to representing the class; and any other factors that bear on the

attorney’s ability to represent the class fairly and adequately. This last category

may include the ability to coordinate the litigation with other state and federal

852. Devlin v. Scardelletti, 536 U.S. 1, 14 (2002) (holding that “nonnamed class members . . .

who have objected in a timely manner to approval of the settlement at the fairness hearing have

the power to bring an appeal without first intervening”).

853. Fed. R. Civ. P. 23(g)(1)(B).

854. Fed. R. Civ. P. 23(g)(1)(A) committee note.
Class Actions § 21.272

279

class and individual actions involving the same subject matter. Those seeking

appointment as class counsel must identify related litigation in which they are

participating. It is important for the judge to ensure that counsel does not have

a conflict with class interests.855

In many cases, the lawyers who filed the suit will be the obvious or only

choice to be appointed counsel for the class. In such cases, the judge’s task is to

determine whether the applicant is able to provide adequate representation for

the class in light of the Rule 23(g)(1)(C) factors.

The judge must choose the class counsel when more than one class action

has been filed and consolidated or centralized, or more than one lawyer seeks

the appointment. The term “appoint” here means to “select” as well as to

“designate” the lawyer as class counsel. If there are multiple applicants, the

court’s task is to select the applicant best able to represent the interests of the

class. No single factor is dispositive in evaluating prospective class counsel. In

addition to those listed above, relevant considerations might include

• involvement in parallel cases in other courts;

• any existing attorney–client relationship with a named party; and

• fee and expense arrangements that may accompany the proposed appointment.

21.272 Approaches to Selecting Counsel

There are several methods for selecting among competing applicants. By

far the most common is the so-called “private ordering” approach: The lawyers

agree who should be lead class counsel and the court approves the selection

after a review to ensure that the counsel selected is adequate to represent the

class interests.856 Counsel may agree to designate a particular lead class counsel

in exchange for commitments to share the legal work and fees. To guard

against overstaffing and unnecessary fees,857 the court should order the

attorneys to produce for court examination any agreements they have made

relating to fees or costs.858 See section 21.631.

855. For an overview of possible conflicts of interest and other abuses (such as the “reverse

auction” settlement in which defendant seeks to settle with counsel willing to accept the lowest

offer), see sources cited supra note 737 and see infra sections 21.611–21.612.

856. See Third Circuit Task Force Report on Selection of Class Counsel, 74 Temp. L. Rev.

689, 693–94 (2001) [hereinafter Third Circuit 2001 Task Force Report]; see generally supra

section 14.

857. See, e.g., In re Fine Paper Antitrust Litig., 98 F.R.D. 48 (E.D. Pa. 1983), modified, 751

F.2d 562 (3d Cir. 1984).

858. See Fed. R. Civ. P. 23(h) committee note; see also Fed. R. Civ. P. 23(e)(2) (settlement

approval); Fed. R. Civ. P. 54(d)(2)(B) (attorney fees motions).
§ 21.272 Manual for Complex Litigation, Fourth

280

In the “selection from competing counsel” approach, the judge selects

from counsel who have filed actions, are unable to agree on a lead class

counsel, and are competing for appointment. The lawyer best able to represent

the class’s interests may emerge from an examination of the factors listed in

Rule 23(g)(1)(C), as well as other factors, such as those delineated above.

A third and relatively novel approach, competitive bidding, entails inviting

applicants for appointment as class counsel to submit competing bids. The fees

to be awarded are one of the many factors in the selection.859 Rules

23(g)(1)(iii) and 23(g)(2)(C) expressly permit the court to consider fee

arrangements in appointing counsel. Some judges propose a fee structure as a

framework for comparing bids for different percentages at different levels of

recovery.860

Judges in antitrust and securities class actions have used competitive

bidding to select counsel and to establish in advance a rate or formula for

calculating attorney fees. Studies suggest that bidding may be more appropriate when

• prospective damages are relatively high;

• the chances of success are relatively predictable;

• prefiling investigative work was conducted by governmental agencies

or others, so that the lawyers’ foundational work is minimal; and

• the bidding process does not directly conflict with statutory or policy

goals.

Bidding remains an experimental approach to selecting counsel and establishing presumptive fee levels.861

859. See Third Circuit 2001 Task Force Report, supra note 856, at 715–22; Laural L. Hooper

& Marie Leary, Auctioning the Role of Class Counsel in Class Action Cases: A Descriptive Study

(Federal Judicial Center Aug. 29, 2001), reprinted in 209 F.R.D. 519 (2002); see also In re Auction

Houses Antitrust Litig., 197 F.R.D. 71 (S.D.N.Y. 2000); In re Amino Acid Lysine Antitrust Litig.,

918 F. Supp. 1190 (N.D. Ill. 1996); In re Wells Fargo Sec. Litig., 156 F.R.D. 223 (N.D. Cal.), later

proceedings at 157 F.R.D. 467 (N.D. Cal. 1994); In re Oracle Sec. Litig., 131 F.R.D. 688 (N.D.

Cal.), later proceedings at 132 F.R.D. 538 (N.D. Cal. 1990), and 136 F.R.D. 639 (N.D. Cal. 1991);

supra section 10.224. See generally Alan Hirsch & Diane Sheehey, Awarding Attorneys’ Fees and

Managing Fee Litigation 99–101 (Federal Judicial Center 1994); Steven A. Burns, Note, Setting

Class Action Attorneys’ Fees: Reform Efforts Raise Ethical Concerns, 6 Geo. J. Legal Ethics 1161

(1993).

860. For examples of fee structures that were used in the bidding cases, see Hooper & Leary,

supra note 859, at 34–45, reprinted in 209 F.R.D. at 561–73 (documenting key features of the

various bidding approaches used in all twelve bidding cases identified in this descriptive study).

861. See generally Hooper & Leary, supra note 859; Third Circuit 2001 Task Force Report,

supra note 856.
Class Actions § 21.272

281

Cases in which liability is relatively clear and the amount of damages

relatively predictable may be particularly good candidates for ex ante fee

setting. Even if there is no court-ordered competition, a court may consider

asking counsel to submit fee proposals to help analyze which application is

best able to represent the class. In any case in which the judge does not appoint

as class counsel the attorneys who investigated and filed the case, those

attorneys may be entitled to compensation based on work performed. See

section 14.12.

The Private Securities Litigation Reform Act of 1995 mandates an “empowered-plaintiff” approach to appointment of counsel in securities class

actions.862 This statute-based model provides that “[t]he most adequate

plaintiff shall, subject to the approval of the court, select and retain counsel to

represent the class.”863 Section 31.3 provides a useful analogy for similar class

actions brought by sophisticated plaintiffs with large losses or sizeable claims.

The order that appoints counsel might specify some of the criteria the

judge expects to use in determining a fee award. The order can include

provisions that will affect the fees ex ante864 as part of the appointment process,

even in jurisdictions that require a searching and detailed ex post review of the

fee award at the end of the case. For example, the court can clarify whether it

will use the percentage or lodestar method or a combination of the two in

calculating fees. The judge can also specify terms that may reduce duplicative

work, unnecessary hours, and unnecessary costs, such as agreements on the

numbers of lawyers who may appear at depositions or agreements on the types

of permissible expenses. See section 14.211. With the percentage-of-fund

method for calculating attorney fee awards, such detailed limitations are less

important since the maximum fee award is fixed at a reasonable percentage of

the class recovery, no matter how many lawyers work to produce it. Even

under a percentage-of-fund approach, however, consider controlling litigation

862. Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737

(codified as amended at 15 U.S.C. §§ 77z-1, 78u-4 to 78u-5 (2000)). For a discussion of the

underpinnings of the empowered plaintiff model, see generally Elliott J. Weiss & John S.

Beckerman, Let the Money Do the Monitoring: How Institutional Investors Can Reduce Agency

Costs in Securities Class Actions, 104 Yale L.J. 2053 (1995).

863. 15 U.S.C. §§ 77z-1(a)(3)(B)(v), 78u-4(a)(3)(B)(v) (2000).

864. At least one court of appeals has expressed a preference for establishing the terms of

appointment ex ante. See In re Synthroid Mktg. Litig., 264 F.3d 712, 718–19 (7th Cir. 2001)

(“The best time to determine [a market] rate is the beginning of the case, not the end . . . .”).

Another court of appeals has ruled that ex ante consideration of the terms of appointing counsel

is not a substitute for ex post review of fees that were calculated using a formula established at

the outset of the litigation. In re Cendant Corp. Prides Litig., 243 F.3d 722, 736–37 (3d Cir.

2001).
§ 21.28 Manual for Complex Litigation, Fourth

282

expenses that would ordinarily be deducted from the award to the class before

fees are calculated. Many courts use the lodestar method as a cross-check on

the reasonableness of the fee awarded under a percentage-of-fund approach.

See section 14.122.

If no applicant would provide adequate representation, the judge may

refuse to certify the class. If the class appears otherwise certifiable, however,

refusal to certify solely on a finding of inadequate representation is very

problematic. One alternative is to allow a reasonable time period for other

attorneys to seek appointment.

21.273 Procedures for Appointment

If only one lawyer seeks appointment as class counsel, or if the parties

agree who should be class counsel or lead class counsel, the application is

generally submitted as part of the certification motion. If competing applications are likely, a reasonable period after commencement of the action should

be allowed for attorneys to file class counsel applications. Competing applications are likely where more than one class action has been filed or other

attorneys have filed individual actions on behalf of members of the proposed

class. To facilitate comparison among applications, consider ordering applicants to follow a common format designed to elicit information about the

court’s appointment criterion. Any order of appointment should include a

statement of the reasons for the appointment. Section 10.2 considers appointment of liaison counsel and committees of counsel in complex class action

cases or cases resulting from the consolidation of different classes or subclasses.

21.28 Interlocutory Appeals of Certification Decisions

Rule 23(f) provides that a court of appeals may permit parties to appeal a

district court order granting or denying class certification if application to the

court of appeals is made within ten days after entry of the order. An appeal

does not stay proceedings in the district court unless the district judge or court

of appeals so orders. Whether to grant an interlocutory appeal lies within the

discretion of the court of appeals. The reported opinions produce a rough

consensus865 that interlocutory review should not be granted unless one or

865. See Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266 (11th Cir. 2000); Waste Mgmt.

Holdings, Inc. v. Mowbray, 208 F.3d 288 (1st Cir. 2000); Blair v. Equifax Check Servs., Inc., 181

F.3d 832 (7th Cir. 1999); but cf. Isaacs v. Sprint Corp., 261 F.3d 679 (7th Cir. 2001). Other

courts, however, have indicated a more expansive standard for granting interlocutory appeals.

See, e.g., Isaacs, 261 F.3d at 681 (expressing doubt that creating an exhaustive list of factors to
Class Actions § 21.28

283

more of the following factors are evident: (1) the certification order represents

the death knell of the litigation for either the plaintiffs (who may not be able to

proceed without certification) or defendant (who may be compelled to settle

after certification); (2) the certification decision shows a substantial weakness,

amounting to an abuse of discretion; or (3) an interlocutory appeal will resolve

an unsettled legal issue that is central to the case and intrinsically important to

other cases but is otherwise likely to escape review.866

Rule 23(f) differs from other interlocutory review provisions in that it does

not call for the district judge to recommend whether the appellate court accept

the interlocutory appeal. Rule 23(f) also does not automatically impose a stay,

either during the pendency of the petition or during any appeal that the court

of appeals permits.867 A party seeking a stay should file an application in the

trial court in the first instance.868 Interlocutory appeals can disrupt and delay

the litigation without necessarily changing the outcome of what are often

familiar and almost routine issues.869 Granting a stay depends, in the language

of one early decision applying the amended rule, on “a demonstration that the

probability of error in the class certification decision is high enough that the

costs of pressing ahead in the district court exceed the cost of waiting.”870 In

deciding whether to enter a stay, the effect of the certification decision on the

statute of limitations is a consideration.871 A stay of an order denying certificaconsider in deciding whether to allow an interlocutory appeal would be desirable); Newton v.

Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 165 (3d Cir. 2001) (an “erroneous

ruling” by the trial court or “‘any consideration that the court of appeals finds persuasive’”

justifies granting an interlocutory appeal (quoting Fed. R. Civ. P. 23(f) committee note (1998

amendment))).

866. Prado-Steiman, 221 F.3d at 1274–75. The court also indicated that the pretrial posture

of the case, the state of the record, and future events, such as an impending settlement or

bankruptcy, could have a substantial impact on the decision of whether to allow an interlocutory

appeal. Id. at 1276.

867. Fed. R. Civ. P. 23(f) committee note (“Permission to appeal does not stay trial court

proceedings.”).

868. Newton, 259 F.3d at 165.

869. Fed. R. Civ. P. 23(f) committee note (referring to FJC Empirical Study of Class Actions,

supra note 769); see also In re Sumitomo Copper Litig., 262 F.3d 134, 140 (2d Cir. 2001) (noting

that “parties should not view Rule 23(f) as a vehicle to delay proceedings in the district court”);

Newton, 259 F.3d at 165; Prado-Steiman, 221 F.3d at 1272 (citing Fed. R. Civ. P. 23(f) committee

note).

870. Blair, 181 F.3d at 835 (noting that “Rule 23(f) is drafted to avoid delay”); see also In re

Sumitomo, 262 F.3d at 140 (holding that “a stay will not issue unless the likelihood of error on

the part of the district court tips the balance of hardships in favor of the party seeking the stay”).

871. See Nat’l Asbestos Workers Med. Fund v. Philip Morris, Inc., No. 98 CV 1492, 2000

U.S. Dist. LEXIS 13910 (E.D.N.Y. Sept. 26, 2000); see also In re Silicone Gel Breast Implant

Prods. Liab. Litig., MDL No. 926, 1994 WL 114580, at *4, *7 (N.D. Ala. Apr. 1, 1994) (extending
§ 21.3 Manual for Complex Litigation, Fourth

284

tion may continue to toll the statute of limitations and thereby discourage the

filing of individual cases that might otherwise follow denial of class certification, particularly where the stakes for an individual are large enough to

support litigation.872 In general, a court considering whether to grant a stay

pending interlocutory appeal should consider possible prejudice to the parties

that may arise from delaying the proceedings. If the appeal is from a grant of

certification, the district court should ordinarily stay the dissemination of class

notice to avoid the confusion and the substantial expense of renotification that

may result from appellate reversal or modification after notice dissemination.873 The ten-day rule for filing appeals is applied strictly.874

21.3 Postcertification Communications with Class

Members

.31 Notices from the Court to the Class 285

.311 Certification Notice 287

.312 Settlement Notice 293

.313 Other Court Notices 296

.32 Communications from Class Members 298

.321 Class Members’ Right to Elect Exclusion 298

.322 Communications Relating to Damage or Benefit Claims 299

.323 Other Communications from Class Members 299

.33 Communications Among Parties, Counsel, and Class Members 300

Communication by the court and counsel with the class is a major concern

in the management of class actions. It is important to develop appropriate

means for providing information to, and obtaining information from, class

indefinitely the time for opting out of a provisionally certified class action and stating that the

pendency of that action would toll the statute of limitations for members of that class).

Ordinarily, the tolling effect of a proposed class action ceases when a court denies class

certification. Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1378 (11th Cir. 1998).

872. Nat’l Asbestos Workers, 2000 U.S. Dist. LEXIS 13910, at *8. See also Armstrong, 138 F.3d

at 1380, 1389–90 (a pre-Rule 23(f) decision in which appellants did not seek to certify an

interlocutory appeal under 28 U.S.C. § 1292(b); stating test for tolling as whether it is reasonable

for members of the proposed class to rely on the possibility of reconsideration, or reversal

through an interlocutory appeal, and holding that it was not reasonable in that case).

873. See Ramirez v. DeCoster, 203 F.R.D. 30, 40 (D. Me. 2001) (ordering a fairness hearing if

no Rule 23(f) appeal filed, staying proceedings if appeal filed).

874. See, e.g., Richardson Elecs., Ltd. v. Panache Broad. of Pa., Inc., 202 F.3d 957, 958–59

(7th Cir. 2000) (denying inexcusably late Rule 23(f) petition to appeal and rebuffing attempt to

treat such a petition as an interlocutory appeal under 28 U.S.C. § 1292(b)); Gary v. Sheahan, 188

F.3d 891, 893 (7th Cir. 1999) (ruling that to extend the ten-day rule, a motion for reconsideration must be filed within ten days of the certification decision).
Class Actions § 21.31

285

members, and for handling inquiries from potential or actual class members. It

is equally necessary to avoid communications that might interfere with or

burden the litigation. Rule 23(c)(2) provides significant guidance on the form

and content of notices to the class. A committee note to that rule urges courts

to “work unremittingly at the difficult task of communicating with class

members” in plain language.875

21.31 Notices from the Court to the Class

.311 Certification Notice 287

.312 Settlement Notice 293

.313 Other Court Notices 296

Notice to class members is required in three circumstances: (1) when a

Rule 23(b)(3) class is certified; (2) when the parties propose a settlement or

voluntary dismissal that would be binding on the class; and (3) when an

attorney or party makes a claim for an attorney fee award. Rule 23(c)(2)(A)

expressly grants the court discretion to require certification notice in Rule

23(b)(1) and (b)(2) classes in appropriate circumstances. Notice of settlement

is required in all class actions. Rule 23(h)(1) requires that the court direct

notice to the class members “in a reasonable manner” when an attorney or

party files a motion for an award of attorney fees.876 A judge who simultaneously certifies a class action and preliminarily approves a class-wide settlement

(see section 21.612) typically combines notice of certification with notice of

settlement and ordinarily includes notice of an application for an award of

attorney fees. A case that is certified as a class action and has notice issue at

that point, then settles at a later date (see section 21.611) requires a separate

notice of the settlement.

Notice is a critical part of class action practice. It provides the structural

assurance of fairness that permits representative parties to bind absent class

members.877 In a Rule 23(b)(3) class, notice conveys the information absent

class members need to decide whether to opt out and the opportunity to do so.

In all class actions, notice provides an opportunity for class members to

participate in the litigation, to monitor the performance of class representatives and class counsel, and to ensure that the predictions of adequate representation made at the time of certification are fulfilled. Proper notice also

875. Fed. R. Civ. P. 23(c)(2)(B) committee note.

876. Fed. R. Civ. P. 23(h)(1).

877. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 627 (1997).
§ 21.31 Manual for Complex Litigation, Fourth

286

lessens the vulnerability of the final judgment to collateral attack by class

members.878

Rule 23(c)(2)(B) specifies information that must be included in a notice,

such as the nature of the action, the definition of the class, and the claims,

issues, and defenses to be litigated. The rule requires that notices state essential

terms “concisely and clearly . . . in plain, easily understood language.” In

addition, the court can require notice to be given when needed for the protection of class members or for the fair conduct of the action.879 Notice generally

is given in the name of the court, although one of the parties typically prepares

and distributes it.

The Federal Judicial Center has produced illustrative forms of notice that

combine notice of class certification and settlement in two types of class

actions: a securities case and a products liability case in which both monetary

damages and medical monitoring are provided. These forms can be adapted to

specific cases. The Center has also drafted a form illustrating certification

notice in an employment discrimination case. The form notices can be

downloaded from the Center’s Web site.880

Published notice should be designed to catch the attention of the class

members to whom it applies. In many cases, a one-page summary of the

salient points is useful, leaving fuller explanation for a separate document.

Headlines and formatting should draw the reader’s attention to key features of

the notice. A short, informative blurb (“If you were exposed to ___, you may

have a claim in a proposed class action settlement”) on the outside of a mailing

envelope serves a similar purpose.

Question-and-answer formats help to make information accessible and

can guide the reader through each step of a complicated certification or

settlement explanation. Counsel should logically order the information that

will assist the class member in making important decisions, such as whether to

opt out of the class, object to a settlement, or file a claim. Counsel should

discuss with the court whether class members are likely to require notice in a

language other than English or delivery by a means other than mail. Lists of

class members usually provide the best source of information for deciding how

to deliver notice. In some cases, the cohesiveness of a class (for example,

employees of a single plant) or the existence of a common gathering place (for

878. See 7B Wright et al., supra note 738, §§ 1789, 1793.

879. Fed. R. Civ. P. 23(d).

880. The FJC has tested the form notices for comprehension and identified some principles

that will be of value to those drafting such notices. Forms and discussion of plain language

drafting principles are on the Center’s Web page at http://www.fjc.gov (last visited Nov. 10,

2003).
Class Actions § 21.311

287

example, shelters or food kitchens for a case involving the homeless) may

suggest reliable and efficient ways to communicate notice.881

21.311 Certification Notice

Rule 23(c)(2)(A) and Rule 23(d) authorize the court to direct notice that a

case has been certified as a Rule 23(b)(1) or (b)(2) class action. The court must

provide notice for Rule 23(b)(3) classes. Notice in Rule 23(b)(1) and (b)(2)

actions is within the district judge’s discretion. Rule 23(c)(2)(A) recognizes the

court’s authority to direct “appropriate” notice in Rule 23(b)(1) and (b)(2)

class actions, but contemplates different and more flexible standards for those

cases than for Rule 23(b)(3) actions. Notice to members of classes certified

under Rule 23(b)(1) or (b)(2) serves limited but important interests, such as

monitoring the conduct of the action. This more flexible role of notice

recognizes that in some cases, such as public interest organizations’ civil rights

class action suits, the costs of a wide-reaching notice might prove crippling and

the benefits may be relatively small.

A court must decide whether and how to provide notice in Rule 23(b)(1)

and (b)(2) actions. It may be preferable in some cases to forego ordering

notice if there is a risk that notice costs could outweigh the benefits of notice,

deterring the pursuit of class relief. If notice is appropriate, it need not be

individual notice because, unlike a Rule 23(b)(3) class, there is no right to

request exclusion from Rule 23(b)(1) and (b)(2) classes.

Who is to receive notice and how is notice to be delivered? Individual members in a Rule 23(b)(3) action have a right to opt out of the class proceedings.

Rule 23(c)(2)(B) requires that individual notice in 23(b)(3) actions be given to

class members who can be identified through reasonable effort. Those who

cannot be readily identified must be given “the best notice practicable under

the circumstances.”882 When the names and addresses of most class members

are known, notice by mail883 usually is preferred.

881. For a description of a case involving communication of notice on a worldwide basis to

disparate groups, see In re Holocaust Victims Assets Litigation, 105 F. Supp. 2d 139, 144 (E.D.N.Y.

2000) (“Swiss Banks” litigation). Under the notice plan approved by the court, notice went to

forty-eight countries under a “multi-faceted notice plan, involving, in addition to direct mail

utilizing existing lists covering segments of the settlement classes, worldwide publication, public

relations (i.e., ‘earned media’), Internet and grass roots community outreach.” Id.

882. Fed. R. Civ. P. 23(c)(2)(B); In re Holocaust Victims, 105 F. Supp. 2d at 144. Historically,

due process has not required actual notice to parties who cannot reasonably be identified. See

Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313–19 (1950); Silber v. Mabon, 18

F.3d 1449 (9th Cir. 1994); but see Amchem, 521 U.S. at 595. See also In re Orthopedic Bone Screw

Prods. Liab. Litig., 246 F.3d 315, 327 n.11 (3d Cir. 2001) (listing recommended practices for

expanding the pool of names of class members for actual notice); In re Holocaust Victims, 105 F.
§ 21.311 Manual for Complex Litigation, Fourth

288

Posting notices on dedicated Internet sites, likely to be visited by class

members and linked to more detailed certification information, is a useful

supplement to individual notice, might be provided at a relatively low cost,

and will become increasingly useful as the percentage of the population that

regularly relies on the Internet for information increases. An advantage of

Internet notice is that follow-up information can easily be added, and lists can

be created to notify class members of changes that may occur during the

litigation. Similarly, referring class members to an Internet site for further

information can provide complete access to a wide range of information about

a class settlement.884 Many courts include the Internet as a component of class

certification and class settlement notice programs.

Publication in magazines, newspapers, or trade journals may be necessary

if individual class members are not identifiable after reasonable effort or as a

supplement to other notice efforts. For example, if no records were kept of

sales of an allegedly defective product from retailers to consumers, publication

notice may be necessary. Financial and legal journals or financial sections of

broad circulation newspapers, while useful to a degree, might not be read by

many members of the general public. Such publications may, however, be

useful in certain kinds of cases, such as securities fraud suits. Determination of

whether a given notification is reasonable under the circumstances of the case

is discretionary. The sufficiency of the effort made might become an issue if

the preclusive effect of the class action judgment is later challenged. Section

21.22–21.23 discusses class certification under Rule 23(b)(3) in conjunction

with Rule 23(b)(2).

When should notice be given? Ordinarily, notice to class members should be

given promptly after the certification order is issued. When the parties are

nearing settlement, however, a reasonable delay in notice might increase

incentives to settle and avoid the need for separate class notices of certification

and settlement. Delaying notice of certification until after settlement apparently is a common practice in such cases.885

Notice to the added class members is required if the certification order is

amended to expand the class definition. If the certification order is amended to

Supp. 2d at 144–45; In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2000 WL 1222042 (E.D.

Pa. Aug. 28, 2000).

883. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 356 n.22 (1978), speaks favorably of

the use of mail, without specifying the class of mail.

884. See, for example, the notice and forms published on a Web site created for the diet

drugs class action settlement in In re Diet Drugs Products Liability Litigation. The site can be

visited at http://www.settlementdietdrugs.com/dhome.php3#forms (last visited Nov. 10, 2003).

885. FJC Empirical Study of Class Actions, supra note 769, at 62.
Class Actions § 21.311

289

eliminate previously included class members, consider whether notice is

necessary to inform affected individuals who might have relied on the class

action to protect their rights. If repetitive notice and frequent orders affect

class interests, ordering the parties to use the Internet—especially a specific

Web site dedicated to the litigation—may be a particularly cost-effective

means to provide current information in a rapidly evolving situation.

What must the notice include? If a class is certified and settled simultaneously, a single notice is generally used. Rule 23(c)(2)(B) requires that a class

certification notice advise class members of the following:

• the nature of the action;

• the definition of the class and any subclasses;

• the claims, issues, and defenses for which the class has been certified;

• the right of a potential class member to be excluded or to opt out from

the class;

• the right of a class member to enter an appearance by counsel; and

• the binding effect of a class judgment.

In Rule 23(b)(3) actions, the notice also must describe when and how a class

member may opt out of the class.

Sufficient information about the case should be provided to enable class

members to make an informed decision about their participation. The notice

should

• describe succinctly the positions of the parties;

• identify the opposing parties, class representatives, and counsel;

• describe the relief sought; and

• explain any risks and benefits of retaining class membership and opting out, while emphasizing that the court has not ruled on the merits

of any claims or defenses.

A simple and clear form for opting out is often included with the notice. If the

certification notice is combined with a settlement notice, it should identify

specific benefits for class or subclass members (or a formula for calculating

such benefits), the choices available to class members, and any other information a class member reasonably would need to make an informed judgment

about whether to remain in the class.886 In a combined notice of certification

and settlement, the opt-out form should be distinguished from a claims form

886. Ravens v. Iftikar, 174 F.R.D. 651, 655 (N.D. Cal. 1997) (citing In re Nissan Motor Corp.

Antitrust Litig., 552 F.2d 1088, 1104–05 (5th Cir. 1977)).
§ 21.311 Manual for Complex Litigation, Fourth

290

or a notice of appearance. Color coding or similar approaches may be appropriate.

Notice may be published in more than one language if appropriate to the

demographics of the class.887 The Federal Judicial Center’s illustrative notices

offer guidance in meeting the plain language requirement.888

Who pays for the notice? In a Rule 23(b)(3) class, the parties seeking class

certification must initially bear the cost of preparing and distributing the

certification notice,889 including the expense of identifying the class members.890 Individual class representatives, however, are responsible only for their

pro rata share of notice costs (and other class action costs).891 Class counsel

may properly advance such costs with repayment contingent on recovery.892

Class counsel should keep accurate and complete records of the steps taken to

provide notice. Those records will be useful for assessing costs and for responding to any post-judgment attacks on the adequacy of notice.

There is no clear rule regarding who should pay the initial cost of preparing and distributing certification notice when it is ordered in Rule 23(b)(1)

and (b)(2) actions. Some judges have required class representatives to pay this

cost.893 Others have required the defendant to bear these costs, particularly

887. See, e.g., Montelongo v. Meese, 803 F.2d 1341, 1352 (5th Cir. 1986) (finding notice with

English and Spanish language mailings, announcements on Spanish radio, and notice in Spanish

newspapers to be sufficient); S.F. NAACP v. S.F. Unified Sch. Dist., No. C-78-1445, 2001 WL

1922333, at *4 (N.D. Cal. Oct. 24, 2001) (finding notice requirements met because of publication and postings in English, Chinese, and Spanish); In re Mex. Money Transfer Litig., 164 F.

Supp. 2d 1002, 1020 (N.D. Ill. 2000) (reporting “notice was provided via television, radio, and

newspaper advertising in the Untied States and Mexico”).

888. See the Center’s Web page at http://www.fjc.gov (last visited Nov. 10, 2003).

889. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177–79 (1974) (interpreting Rule 23).

890. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 356 (1978).

891. Rand v. Monsanto Co., 926 F.2d 596, 601 (7th Cir. 1991) (holding that “a district court

may not establish a per se rule that the representative plaintiff must be willing to bear all (as

opposed to a pro rata share) of the costs of the action”).

892. Model Rules of Prof’l Conduct R. 1.8(e)(1) (2002).

893. Coalition for Econ. Equity v. Wilson, No. C 96-4024, 1996 WL 788376, at *4 (N.D. Cal.

Dec. 16, 1996); Lynch Corp. v. MII Liquidating Co., 82 F.R.D. 478, 483 (D.S.D. 1979).
Class Actions § 21.311

291

when the defendant requested the notice894 or where notice follows a finding of

liability and the granting of injunctive relief.895

In Rule 23(b)(3) class actions, determining how and to whom notice

should be delivered can be controversial. The mode and extent of notice

implicates issues of cost and fairness to the parties and class members, and

raises the potential for prejudice to one side or the other. In securities cases, for

example, brokers or financial institutions might hold the shares of many class

members, but giving notice to these agents for class members alone may not

always suffice to give notice to the class members.896 In that case, however, the

class representatives usually are able to make arrangements with the nominees

to forward the notices to class members, or at least to provide a list of the

names and addresses of the beneficial owners. If the nominees are not willing

to do so and are not parties to the litigation, the court can issue a subpoena

duces tecum directing them to produce the records from which the class

representatives can compile a mailing list. If the litigation eventually is terminated favorably to the class, the representatives might be entitled to reimbursement for these expenses, either from the entire fund recovered for the

class, from that part of the fund recovered on behalf of security holders whose

shares were held by brokers, or perhaps from the defendants.897

Similar problems may arise in consumer class actions on behalf of individual purchasers of goods or services. Sales records might be lost, incomplete, or

unreliable, making identification and notification of individual class members

difficult. A program to publish notice is especially useful in such cases. The

894. See generally 7B Wright et al., supra note 738, § 1788; see also S. Ute Indian Tribe v.

Amoco Prod. Co., 2 F.3d 1023, 1030 (10th Cir. 1993) (observing that one of two issues certified

would only benefit a class of defendants and reversing an order that plaintiffs pay a portion of

the costs that representative defendant had previously incurred in compiling a list of defendants).

895. See Barahona-Gomez v. Reno, 167 F.3d 1228, 1236–37 (9th Cir. 1999) (upholding

notice of preliminary injunction based in part on finding that notice would not impose a burden

on defendant).

896. Compare Silber v. Mabon, 18 F.3d 1449, 1454, n.3 (9th Cir. 1994) (approving method of

notice where brokerage house forwards notice to shareholders and affirming that class member’s

notice was sufficient even though not actually received until after the opt-out period expired),

and In re Victor Tech. Sec. Litig., 792 F.2d 862, 866 (9th Cir. 1986) (affirming order requiring

plaintiffs to pay, in advance, record owners for costs related to forwarding notice to shareholders), with Blum v. BankAtlantic Fin. Corp., 925 F.2d 1357, 1362, n.10 (11th Cir. 1991) (noting

that evidence of industry practice of record owners not forwarding notice may “sustain a Rule

23(c)(2) challenge” but appellants presented no current evidence of this practice).

897. See Zuckerman v. Smart Choice Auto. Group, Inc., No. 6:99-CV-237, 2001 WL 686879,

at *2 (M.D. Fla. May 3, 2001).
§ 21.311 Manual for Complex Litigation, Fourth

292

published notice should give class members access to more detailed and

ongoing information by providing telephone numbers and Internet addresses.

Individual notice generally is preferable. If individual names or addresses

cannot be obtained through reasonable efforts, the court must, with counsel’s

assistance, determine how to provide the best notice practicable under the

circumstances. Alternative techniques for providing notice include

• publication notice;898

• Internet notice;899 and

• posting notice in public places likely to be frequented by class members.900

Plaintiffs may propose distributing notice with a defendant company’s routine

mailings when, for example, the class members consist of, or overlap with,

shareholders, credit card holders, customers, or employees.901 Defendant may

object that requiring it to use its own mailings to announce the certification of

898. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 327 (3d

Cir. 1998) (notice published in newspapers in all fifty states and the District of Columbia); Fry v.

Hayt, Hayt & Landau, 198 F.R.D. 461, 475 (E.D. Pa. 2000) (notice published one time in

national newspaper); In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2000 WL 1222042, at

*35 (E.D. Pa. Aug. 28, 2000) (notice published in largest newspapers across the country

including those that targeted the Hispanic market).

899. Fry, 198 F.R.D. at 475 (Internet notice published on news Web site); In re Diet Drugs,

2000 WL 1222042, at *35 (Web site provided detailed notice package to class members who

registered); In re Holocaust Victim Assets Litig., 105 F. Supp. 2d 139, 144 (E.D.N.Y. 2000)

(extensive notice package was “successfully implemented,” which included world-wide

publication, press coverage, extensive community outreach, direct mail to 1.4 million people in

forty-eight countries, and Internet notice).

900. In re Domestic Air Transp. Antitrust Litig., 141 F.R.D. 534, 549 (N.D. Ga. 1992) (notice

posters sent to “approximately 36,000 travel agencies in the United States”); cf. In re Ariz. Dairy

Prods. Litig., No. Civ. 74-569A, 1975 WL 966, at *1 (D. Ariz. Oct. 7, 1975) (notice printed on

milk cartons).

901. See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 356 n.22 (1978) (noting that “a

number of courts have required defendants in Rule 23(b)(3) class actions to enclose class notices

in their own periodic mailings to class members in order to reduce the expense of sending the

notice”); In re Nasdaq Market-Makers Antitrust Litig., 169 F.R.D. 493, 515 n.19 (S.D.N.Y. 1996)

(requiring notice sent to subclass be inserted in defendants’ mailings); Kan. Hosp. Ass’n v.

Whiteman, 167 F.R.D. 144, 145–46 (D. Kan. 1996) (requiring defendants to insert notice of the

“proposed disposition” of case into monthly mailings); Sollenbarger v. Mountain States Tel. &

Tel. Co., 121 F.R.D. 417, 437 (D.N.M. 1988) (allowing plaintiffs to provide individual notice to

class members by enclosing an insert in defendant’s monthly billing statements to current

customers).
Class Actions § 21.312

293

a class against it may be prejudicial902 and may even deprive it of First

Amendment rights.903 It is important to balance any efficiencies that might be

gained by this approach against the burden such mailings can impose. Before

requiring a defendant to use its own mailings to provide certification notice,

the court should require class counsel to show the absence of feasible alternatives.

21.312 Settlement Notice

Rule 23(e)(1)(B) requires the court to “direct notice in a reasonable

manner to all class members who would be bound by a proposed settlement,

voluntary dismissal, or compromise” regardless of whether the class was

certified under Rule 23(b)(1), (b)(2), or (b)(3). Certification and settlement

notices are subject to many of the same considerations.904

When is a settlement notice required? Rule 23(e) requires notice of a

settlement only if it would bind the class. If individual members settle individual claims before class certification, notice to the class is not required even if

the class claims have been dismissed without prejudice or withdrawn. When a

proposed class has not been certified, however, special circumstances might

lead a court to impose terms to prevent abuse of the class action procedure.

Section 21.61 discusses potential abuses, especially the filing and voluntary

dismissal of class allegations for strategic purposes; section 21.62 discusses

criteria for reviewing proposed settlements, especially when named plaintiffs

receive relief that is disproportionately large. The judge might also require

notice directed to the absent members of the proposed class under Rule

23(d)(2).905 However, requiring such notice is unusual. The court should

902. Katz v. Carte Blanche Corp., 496 F.2d 747, 757 (3d Cir. 1974) (en banc) (noting that

credit card customers might refuse to pay their regular bills as a result of a notice including

information about statutory damages).

903. See Pac. Gas & Elec. Co. v. Public Util. Comm’n, 475 U.S. 1 (1986) (plurality opinion in

nonclass action context).

904. See supra note 880. See, e.g., In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088,

1105 (5th Cir. 1977).

905. The cases cited in this note were all decided under the pre-2003 version of Rule 23(e).

See, e.g., Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1409 (9th Cir. 1989) (notice of a

precertification voluntary dismissal of a complaint with class action allegations should be given

to protect members of the proposed class from “prejudice [they] would otherwise suffer if class

members have refrained from filing suit because of knowledge of the pending class action”;

notice not required in Diaz case); see also Glidden v. Chromalloy Am. Corp., 808 F.2d 621, 627

(7th Cir. 1986) (dicta that notice of a settlement or summary judgment dismissal of a case before

deciding on certification should be given because the settlement or dismissal “creates obvious

dangers; the representative may have been a poor negotiator or may even be in cahoots with the

defendant”); In re Nazi Era Cases Against German Defendants Litig., 198 F.R.D. 429, 439 (D.N.J.
§ 21.312 Manual for Complex Litigation, Fourth

294

weigh the costs and consequences of such notices against the need for the

protection it may provide in a given case.906

Who is to receive settlement notice and how is notice to be delivered? Rule

23(e)(1)(B) requires notice in a reasonable manner to “all class members who

would be bound by a proposed settlement, voluntary dismissal, or compromise.” Even if a class member has opted out after receiving a certification

notice, the parties might direct notice to such opt outs to give them an opportunity to opt back into the class and participate in the proposed settlement.

In general, settlement notices should be delivered or communicated to

class members in the same manner as certification notices (see section 21.311).

As with certification notices, individual notice is required, where practicable,

in Rule 23(b)(3) actions. Posting notices and other information on the

Internet, publishing short, attention-getting notices in newspapers and

magazines, and issuing public service announcements may be viable substitutes for, or more often supplements to, individual notice if that is not reasonably practicable.

When should the notice be given? In an order preliminarily approving the

settlement under Rule 23(e), the judge sets the date for providing notice of the

proposed settlement. This order, as well as the notice, should establish the time

and place of a public hearing on the proposed settlement and specify the

procedure and timetable for opting out, filing objections, and appearing at the

settlement hearing. If problems or questions concerning the terms of the

settlement are identified at the preliminary approval stage, notice to the class

ordinarily is deferred until there has been an opportunity to resolve those

issues.

What must the notice include? The notice should announce the terms of a

proposed settlement and state that, if approved, it will bind all class members.

If the class has been certified only for settlement purposes, that fact should be

disclosed. Even though a settlement is proposed, the notice should outline the

original claims, relief sought, and defenses so class members can make an

informed decision about whether to opt out.907

2000) (stating that “a district court should make a ‘proper inquiry’ to determine whether a

proposed settlement and dismissal are tainted by collusion or will prejudice absent members of

the putative class”); Gassie v. SMH, Ltd., Civ. A. No. 97-1786, 1997 U.S. Dist. LEXIS 13687, at

*4–*5 (E.D. La. Sept. 9, 1997) (same).

906. Diaz, 876 F.2d at 1411.

907. If the class had been certified previously under Rule 23(b)(3), and if the parties propose

a class settlement after expiration of the opportunity for class members to opt out, Rule 23(e)(3)

authorizes the court, in its discretion, to refuse to approve a settlement unless the parties provide

a second opportunity to opt out. See infra section 21.611.
Class Actions § 21.312

295

The notice should

• define the class and any subclasses;

• describe clearly the options open to the class members and the deadlines for taking action;

• describe the essential terms of the proposed settlement;

• disclose any special benefits provided to the class representatives;

• provide information regarding attorney fees (see section 14);

• indicate the time and place of the hearing to consider approval of the

settlement;

• describe the method for objecting to (or, if permitted, for opting out

of) the settlement;

• explain the procedures for allocating and distributing settlement

funds, and, if the settlement provides different kinds of relief for different categories of class members, clearly set forth those variations;

• explain the basis for valuation of nonmonetary benefits if the settlement includes them;

• provide information that will enable class members to calculate or at

least estimate their individual recoveries, including estimates of the

size of the class and any subclasses;908 and

• prominently display the address and phone number of class counsel

and how to make inquiries.

In a Rule 23(b)(3) class, the notice and any Internet Web site should

include opt-out forms. The notice must clearly explain the options available to

a class member and the difference between opting out and claiming benefits.909

If the details of a claims procedure have been determined, and there is little

908. See, e.g., Grunin v. Int’l House of Pancakes, 513 F.2d 114, 122 (8th Cir. 1975) (stating

“the notice may consist of a very general description of the proposed settlement, including a

summary of the monetary and other benefits that the class would receive and an estimation of

attorneys’ fees and other expenses”); Boggess v. Hogan, 410 F. Supp. 433, 442 (N.D. Ill. 1975)

(stating “the notice should . . . include . . . an estimated range of unitary recovery”). Cf. 3 Alba

Conte & Herbert B. Newberg, Newberg on Class Actions § 8:32, at 265 (4th ed. 2002) (indicating

that “[i]t is unnecessary for the settlement distribution formula to specify precisely the amount

that each individual class member may expect to recover”).

909. But see In re Domestic Air Transp. Antitrust Litig., 141 F.R.D. 534, 554 (N.D. Ga. 1992)

(refusing to include opt-out form with notice to class because of “possible confusion resulting

from inclusion of such a form” (citing Roberts v. Heim, 130 F.R.D. 416, 423 (N.D. Cal. 1988)

(disallowing opt-out form with class notice on the basis that “on balance, such a separate form

will engender confusion and encourage investors to unwittingly opt out of the class”))); see also

3 Conte & Newberg, supra note 908, § 8:31, at 257–59 (describing use of forms for class

members to notify court of desire to be excluded).
§ 21.313 Manual for Complex Litigation, Fourth

296

indication of any serious challenge to or problems with the settlement, claims

forms might be included with the settlement notice. Often, however, the

outcome of objections to or concerns over the settlement terms and the details

of allocation and distribution are not established until after the settlement is

approved. In that situation, claims forms are distributed after the approval.910

The court can direct class counsel or their agents (such as settlement claims

administrators) to communicate with class members whose intentions are

unclear in order to help ensure that they make an informed election or

exclusion of class membership and that the outcome (claimant status or optout status) is what they intended. Rule 23(d)(2) permits the court to revoke

inadvertent opt outs to protect class members’ interests and advance “the fair

conduct of the action.”

In most instances, the notice does not include the full text of the proposed

settlement. If the agreement itself is not distributed, however, the notice must

contain a clear, accurate description of the key terms of the settlement and

inform class members where they can examine or obtain a copy, such as from

the Internet, the clerk’s office, class counsel, or another readily accessible

source. For example, in an employment discrimination case, the agreement

may be obtained from a defendant’s employer’s office.

Who pays for the notice? The parties generally use the settlement agreement

to allocate the cost of settlement notices. The costs are often assessed against a

fund created by the defendants or to the defendant, in addition to any funds

paid to the class.

21.313 Other Court Notices

Rule 23(d)(2) authorizes the court to require that notice be given

for the protection of the members of the class . . . of any step in the action, or of the proposed extent of the judgment, or of the opportunity of

members to signify whether they consider the representation fair and

adequate, to intervene and present claims or defenses, or otherwise to

come into the action.

910. For example, in In re Holocaust Victim Assets Litigation (“Swiss Banks”), the pre-fairness

hearing on worldwide notice did not include a detailed plan of allocation; instead, the notice

program was actively used to solicit allocation proposals and preferences from the class

members themselves. These were submitted to a court-appointed special master, who in turn

considered the suggestions and prepared a detailed plan of allocation, after final settlement

approval, that the court ultimately approved and implemented. See In re Holocaust Victim

Assets Litig., No. CV 96-4849, 2000 U.S. Dist. LEXIS 20817, at *13 (E.D.N.Y. Nov. 22, 2000).
Class Actions § 21.313

297

There are a number of circumstances under which notice is appropriate to

protect the class or proposed class or for the fair conduct of the action. For

example, if a decision is made to decertify a previously certified class or to

exclude previously included members of the class after certification notice has

been issued and after the time for opting out has expired, the judge should

consider whether to inform the affected class members of the change in their

status and any effect on the statute of limitations.911

The type and contents of any notice and who should bear the cost depend

on the circumstances surrounding the notice, including what prompted the

notice, who should be notified, whose duties are discharged, and when the

notice is given. The court may consider using means less costly than personal

notice. For example, if there was little or no publicity about the filing of a

proposed class action, posting or publishing a notice of the court’s denial of

certification may suffice.

In Rule 23(b)(3) actions in which liability issues are adjudicated on a classwide basis and individual damages claims are left for separate resolution, the

class members must be provided notice of the results of the liability adjudication and an opportunity to file claims for individual relief in a later phase of

the proceedings. See, e.g., section 21.322.

The judge also can require notice to correct misinformation or misrepresentations made by one of the parties or by parties’ attorneys.912 See section

21.33. Those who made the misstatements should bear the cost of a notice to

correct misstatements. Curative notices generally should be disseminated in

the same form as was the misinformation to be corrected.

If the notice of settlement does not establish a claims procedure, subsequent notice will be necessary to advise the class about when, where, and how

to file claims, and the notice should also provide claims forms. This notice

should be sent to all known members of the class and is generally part of the

cost of administering the settlement, paid out of a settlement fund.

911. See Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 354 (1983); Am. Pipe & Constr.

Co. v. Utah, 414 U.S. 538, 561 (1974); see also Culver v. City of Milwaukee, 277 F.3d 908, 915

(7th Cir. 2002) (notice of decertification of class required unless “it is plain that there is no

prejudice”); Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 764–65 (8th Cir. 2001) (when

class has not been certified, notice of voluntary dismissal is not required unless there is

prejudice).

912. Georgine v. Amchem Prods., Inc., 160 F.R.D. 498, 518 (E.D. Pa. 1995) (finding

objectors’ communications about settlement misleading and inaccurate and ordering curative

action).
§ 21.321 Manual for Complex Litigation, Fourth

298

21.32 Communications from Class Members

.321 Class Members’ Right to Elect Exclusion 298

.322 Communications Relating to Damage or Benefit Claims 299

.323 Other Communications from Class Members 299

Important types of communications from class members include solicited

responses (such as returns of opt-out forms or claim benefit forms) and

unsolicited communications initiated by class members.

21.321 Class Members’ Right to Elect Exclusion

In Rule 23(b)(3) actions, class members must have the opportunity to

exclude themselves from the litigation; this opportunity is discretionary in

other types of class actions. See section 21.311. The opt-out procedure should

be simple and should afford class members a reasonable time in which to

exercise their option. Courts usually establish a period of thirty to sixty days

(or longer if appropriate) following mailing or publication of the notice for

class members to opt out. If the case involves a complex settlement or significant individual claims, a class member might need more time to consult with

attorneys or financial advisors before making an informed opt-out decision. A

form for members of the proposed class who wish to opt out might be included with the notice; it should clearly and concisely explain the available

alternatives and their consequences. Typically, opt-out forms are filed with the

clerk, although in large class actions the court can arrange for a special mailing

address and designate an administrator retained by counsel and accountable to

the court to assume responsibility for receiving, time-stamping, tabulating,

and entering into a database the information from responses (such as name,

address, and social security number).

The judge may treat as effective a tardy election to opt out. Factors

affecting this decision include the reasons for the delay, whether there was

excusable neglect, and whether prejudice resulted.913 Relief from deadlines,

however, should be granted only if the delinquency is not substantial or if

there is good cause shown. The state of the class at the end of the opt-out

period should be fixed enough to allow parties to conduct their affairs. A

general extension of time for making the election may be appropriate if

logistical or other problems require further mailings or publications.

Counsel should maintain careful records of who has opted out and when,

both to comply with Rule 23(c)(3) and for use in allocating and distributing

913. Silber v. Mabon, 18 F.3d 1449, 1455 (9th Cir. 1994).
Class Actions § 21.323

299

funds obtained in the litigation for the class. Computer databases are routinely

used and are critical if the class is large. For a discussion of settlement opt-out

opportunities, see section 21.611.

21.322 Communications Relating to Damage or Benefit Claims

Class members are sometimes asked for information regarding their

individual claims. This may be appropriate in connection with preparation for

the second stage of a bifurcated trial (with adequate time allowed for discovery) or the determination of entitlement to individual relief under a judgment

or settlement. See section 21.66.

21.323 Other Communications from Class Members

The court can expect to receive inquiries about the litigation from class

members and the public and should establish procedures for responding to

such inquiries. Notices and other communications to the class should instruct

class members to communicate directly with counsel through mechanisms

developed for the case, including communications addressed to the court at a

post office box number maintained by counsel. A Web site, a voicemail system

providing scripted answers to frequently asked questions, or a toll-free telephone number with an automated menu or support staff can provide information efficiently without placing demands on court personnel. The court can

establish a routine procedure, using the clerk’s office, to refer inquiries to class

counsel or another appropriate source of information. If the clerk’s office has

procedures to handle such matters efficiently and fairly, there should rarely be

cause for judicial involvement.

If communications from the class—such as assertions that counsel have

refused to respond to their inquiries—indicate the possibility of inadequate

representation, the judge should take appropriate steps, including holding a

hearing, ordering additional information directed to the class, or, in unusual

cases, substituting new class counsel. See section 21.27. If misleading communications have contaminated the notice period, the judge should consider

necessary action to correct the misinformation.914

914. See, e.g., Kleiner v. First Nat’l Bank, 751 F.2d 1193, 1209–11 (11th Cir. 1985) (trial court

found that defendants violated court order limiting communication with class members by

initiating a surreptitious telephone campaign to solicit potential class members to opt out; trial

court ordered defendant’s lead trial counsel disqualified and issued a $50,000 fine against

defendants; on appeal, order and fine upheld, but disqualification order remanded for notice

and hearing); Georgine, 160 F.R.D. at 518–19 (objectors to settlement sent misleading communications and advertisements to absent class members encouraging them to opt out of settlement

agreement; court ordered second notice and opt-out period); Impervious Paint Indus., Inc. v.
§ 21.33 Manual for Complex Litigation, Fourth

300

21.33 Communications Among Parties, Counsel, and Class

Members

Once a class has been certified, the rules governing communications apply

as though each class member is a client of the class counsel.915 (Section 21.12

discusses precertification communication between interim class counsel and

potential class members.) Defendants’ attorneys, and defendants acting in

collaboration with their attorneys, may only communicate through class

counsel with class members on matters regarding the litigation.916 Communications with class members in the ordinary course of business, unrelated to the

litigation, remain permitted.

Where appropriate, the court should authorize defendants’ counsel to

answer inquiries from class members about a proposed class settlement. Such

inquiries are expected in cases in which the class members have an ongoing

relationship with the defendant, such as policyholders in a class action against

an insurance company, account holders in a class action against a bank,

customers in a class action against a telephone company, or employees in a

class action against an employer. To avoid problems over such communication, the courts often channel class members’ requests for information to a

“hotline.” Such a telephone line can be staffed by individuals who use agreedon scripts to respond to questions. Another technique is to include a list of

“frequently asked questions” on a Web site or in a notice (or both), with

answers prepared jointly by the parties and approved by the court. An interactive Web site can also be used.

The judge has ultimate control over communications among the parties,

third parties, or their agents and class members on the subject matter of the

litigation to ensure the integrity of the proceedings and the protection of the

class.917 Objectors to a class settlement or their attorneys may not communiAshland Oil, 508 F. Supp. 720, 723–24 (W.D. Ky. 1981) (finding that defendant contacted class

members during opt-out period with the intent of sabotaging the class and ordering corrective

notice).

915. See In re Sch. Asbestos Litig., 842 F.2d 671, 679–83 (3d Cir. 1988) (indicating that court

had authority under Rule 23(d) to require defendants’ affiliate prominently to display a

proscribed court-approved notice whenever it communicated directly with the members of the

class); Erhardt v. Prudential Group, Inc., 629 F.2d 843, 845 (2d Cir. 1980) (detailing defendants’

compliance with district court’s contempt order enjoining them from further communicating

with class members without prior court approval).

916. Kleiner, 751 F.2d at 1207 n.28; Blanchard v. Edgemark Fin. Corp., 175 F.R.D. 293,

300–02 (N.D. Ill. 1997); Resnick v. Am. Dental Ass’n, 95 F.R.D. 372, 376–77 (N.D. Ill. 1982); see

also Gulf Oil Co. v. Bernard, 452 U.S. 89, 104 n.21 (1981).

917. Corrective or prophylactic notice to potential class members may be ordered under

Rule 23(d)(2)at any stage of the proceedings, including the precertification stage. Ralph
Class Actions § 21.33

301

cate misleading or inaccurate statements to class members about the terms of a

settlement to induce them to file objections or to opt out.918

If improper communications occur, curative action might be necessary,

such as extending deadlines for opting out, intervening, or responding to a

proposed settlement, or voiding improperly solicited opt outs and providing a

new opportunity to opt out.919 Other sanctions may be justified, such as

exclusion of information gained in violation of the attorney–client relationship,920 contempt and fines,921 assessment of fees, or, in the most egregious

situations, the replacement of counsel or a class representative.922

Restrictions on communications with the class can create problems. For

example, in employment discrimination class actions, key individuals in

supervisory positions might be members of the class. Barring direct communications would seriously handicap the employer’s defense because the employer

must rely on those individuals for evidence and for assisting its attorneys. In

such circumstances, the court can consider certification under Rule 23(b)(3)

(enabling class members to opt out), exclusion of such persons from the class

Oldsmobile, Inc. v. Gen. Motors Corp., No. 99 Civ. 4567, 2001 WL 1035132, at *7 (S.D.N.Y.

Sept. 7, 2001) (ordering curative notice for improper precertification communications). The

issuance of corrective or protective notice under Rule 23(d)(2) is considered an exercise of the

court’s case-management authority. The “district court has both the duty and the broad

authority to exercise control over a class action and to enter appropriate orders governing the

conduct of counsel and parties.” Gulf Oil, 452 U.S. at 100. Courts need not issue a formal

injunction requiring the party to meet the procedural requirements of Federal Rule of Civil

Procedure 65. See Kleiner, 751 F.2d at 1201; cf. In re Domestic Air Transp. Antitrust Litig., MDL

No. 861, 1992 WL 357433, at *1 (N.D. Ga. Nov. 2, 1992) (finding “injunctive relief requested by

plaintiffs” is appropriate under Rule 23(d)(2), which “gives to the certifying court specific

authority to devise and issue appropriate orders necessary for the protection of class members”).

918. Georgine, 160 F.R.D. at 518.

919. Id. at 502–08 (invalidating previous opt outs, mandating curative notice limited to opt

outs, and creating a new four week opt-out period for them); cf. In re Potash Antitrust Litig., 896

F. Supp. 916, 919–21 (D. Minn. 1995) (rejecting request for gag order and ordering defendants

to gather communications and submit for in camera review).

920. Hammond v. City of Junction City, 167 F. Supp. 2d 1271, 1293 (D. Kan. 2001)

(excluding evidence gained from improper communications).

921. Ralph Oldsmobile, 2001 WL 1035132, at *7 (ordering corrective notice be sent at the

expense of the party at fault); Hammond, 167 F. Supp. 2d at 1293–94 (ordering party at fault to

pay attorneys’ fees and costs incurred by opposing party to file protective orders); In re

McKesson HBOC, Inc. Sec. Litig., 126 F. Supp. 2d 1239, 1247 (N.D. Cal. 2000) (ordering

printing and mailing costs of curative notice to be paid by party at fault).

922. See Hammond, 167 F. Supp. 2d at 1289 (disqualifying plaintiff’s counsel and their firm

because of improper communications); see also Kleiner, 751 F.2d at 1210–11 (holding that due

process requires notice and a hearing before any disqualification of counsel).
§ 21.41 Manual for Complex Litigation, Fourth

302

if they have no genuine claims, or certification of a subclass for which the court

could permit limited communication with the defendant.

21.4 Postcertification Case Management

.41 Discovery from Class Members 302

.42 Relationship with Other Cases 303

21.41 Discovery from Class Members

Postcertification discovery directed at individual class members (other

than named plaintiffs) should be conditioned on a showing that it serves a

legitimate purpose. See section 21.14. One of the principal advantages of class

actions over massive joinder or consolidation would be lost if all class members were routinely subjected to discovery. Most courts limit discovery against

unnamed class members, but do not forbid it altogether.923 In setting appropriate limits, a judge should inquire whether the information sought from

absent class members is available from other sources924 and whether the

proposed discovery will require class members to obtain personal legal counsel

or technical advice from an expert.925 Some courts have held that class members are not parties for the purpose of discovery by interrogatories,926 but may

be required to respond to a questionnaire approved by the court. Others have

923. 8A Charles Alan Wright et al., Federal Practice and Procedure: Civil 2d § 2171, at 277

(1994).

924. See Redmond v. Moody’s Investor Serv., No. 92 CIV. 9161, 1995 WL 276150, at *2

(S.D.N.Y. May 10, 1995) (granting plaintiff’s motion for protective order under Rule 26(c) to

restrict interrogatories and document requests); see also Dellums v. Powell, 566 F.2d 167, 187

(D.C. Cir. 1977).

925. See, e.g., Collins v. Int’l Dairy Queen, 190 F.R.D. 629, 632–33 (M.D. Ga. 1999) (denying

discovery motion allowing defendant opportunity to ask absent class members questions that

would “require the assistance of an accountant or an attorney”); Kline v. First W. Gov’t Sec.,

Inc., No. CIV.A.83-1076, 1996 WL 122717, at *5 (E.D. Pa. Mar. 11, 1996) (denying defendant’s

motion for discovery of absent class members and noting discovery would be impractical as class

members would need to consult an attorney or accountant).

926. See, e.g., Schwartz v. Celestial Seasonings, Inc., 185 F.R.D. 313, 319 (D. Colo. 1999)

(holding that while “class members are not considered parties for purposes of traditional

discovery measures,” limited discovery of class members will be allowed “in the form of

questionnaires”); McCarthy v. Paine Webber Group, Inc., 164 F.R.D. 309, 313 (D. Conn. 1995)

(holding that questionnaire directed at absent class members was essentially a “proof of claim”

form and would not be allowed); cf. Krueger v. N.Y. Tel. Co., 163 F.R.D. 446, 451 (S.D.N.Y.

1995) (allowing defendant to send to all members of a small class a questionnaire limited to

individual damage questions).
Class Actions § 21.42

303

permitted limited numbers of interrogatories upon a showing of need,927

limited the number of class members to whom interrogatories may be directed,928 limited the scope of the discovery to a brief, nonmandatory questionnaire relating to common issues,929 or have imposed on defendants the

added cost of mailing otherwise permissible interrogatories to absent members

of a plaintiff class.930 Deposing absent class members requires greater justification than written discovery.931

21.42 Relationship with Other Cases

Claims identical or similar to those in a federal class action might be the

subject of other litigation in the same court, in other federal district or bankruptcy courts, or in state courts. Once the federal class action has been certified, the issues involving cases pending in other courts are somewhat different

than those arising before certification (discussed in section 21.15).

When the claims asserted in a certified Rule 23(b)(3) class action overlap

with claims in individual cases pending in other federal courts, in bankruptcy

court,932 or in state courts, the claimants ordinarily will have opted out of the

federal class action or will be pursuing related individual actions. Persons who

are members of a certified federal court class might pursue their own separate

927. See Long v. Trans World Airlines Inc., 761 F. Supp. 1320, 1329 (N.D. Ill. 1991) (finding

discovery of absent class members by sampling necessary and appropriate in determining

damage claims).

928. Transamerican Ref. Corp. v. Dravo Corp., 139 F.R.D. 619, 622 (S.D. Tex. 1991)

(permitting discovery from 50 of 6,000 absent class members); Long, 761 F. Supp. at 1333

(allowing discovery of absent class members “only on a random sample basis”); cf. BuycksRoberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338, 341–42 (N.D. Ill. 1995) (declining to limit

discovery conducted on behalf of a class to a sample selected by the defendant). See also supra

note 780 and accompanying text.

929. Schwartz, 185 F.R.D. at 316–17, 319; see also Wayne D. Brazil, Special Masters in

Complex Cases: Extending the Judiciary or Reshaping Adjudication?, 53 U. Chi. L. Rev. 394,

403–04 (1986) (describing the use of a survey interview protocol by specially trained college

students to elicit information from 9,000 claimants).

930. Alexander v. Burrus, Cootes & Burrus, 24 Fed. R. Serv. 2d (Callaghan) 1313, 1314 (4th

Cir. 1978) (per curiam) (unpublished opinion) (allowing defendant accounting firm to use

contact information furnished by plaintiffs to mail its interrogatories to class members at its own

expense); cf. Schwartz, 185 F.R.D. at 320 (requiring plaintiffs and defendants to share the costs of

mailing to absent class members a questionnaire that aids both sides); In re Airline Ticket

Comm’n Antitrust Litig., 918 F. Supp. 283, 288 (D. Minn. 1996) (ordering defendants to pay

75% of costs relating to survey of absent class members).

931. See Redmond v. Moody’s Investor Serv., No. 92 CIV. 9161, 1995 WL 276150, at *2

(S.D.N.Y. May 10, 1995).

932. See, e.g., In re Flight Trans. Corp. Sec. Litig., 730 F.2d 1128 (8th Cir. 1984).
§ 21.42 Manual for Complex Litigation, Fourth

304

actions in the same court or in other courts even if they have not elected to be

excluded from the class. A member of a certified Rule 23(b)(2) class in a civil

rights action might, for example, wish to pursue a damage claim not encompassed in the 23(b)(2) action.933 Much of the discovery in those parallel cases

might be related to the class action and many of the witnesses will overlap. The

judges involved should coordinate to avoid undue burden, expense, and

conflict. If a federal court has certified a class action that overlaps with individual lawsuits or class actions pending in other federal courts, coordinated

action or consolidation can be accomplished through reassignment of cases

pending in the same division (see section 20.11); through informal coordination between the judges (see section 2014); by invoking 28 U.S.C. § 1404, the

statutory provision for change of venue (see section 20.12); or through

multidistrict transfers under 28 U.S.C. § 1407 (see section 20.13).

If the federal court has certified a class action that duplicates or overlaps

with individual suits or class actions pending in state courts, the federal court

should consider coordinating the litigation with state courts. Appropriate

techniques may include coordinating motions, briefing schedules, and trial

schedules setting simultaneous arguments before the different judges, and

coordinating the timetable for, and use of, discovery in the different proceedings. See section 20.3.

If informal coordination is unsuccessful, the court may entertain a motion

to enjoin the related state cases on the ground that the state cases conflict with,

or threaten the integrity of, the federal class action.934 Some of the constraints

933. See, e.g., Hiser v. Franklin, 94 F.3d 1287, 1290–92 (9th Cir. 1996) (issue not resolved in

injunctive action and plaintiff’s claim had not arisen before the injunction); Fortner v. Thomas,

983 F.2d 1024, 1031 (11th Cir. 1993) (stating “[i]t is clear that a prisoner’s claim for monetary

damages or other particularized relief is not barred if the class representative sought only

declaratory and injunctive relief, even if the prisoner is a member of a pending class action”); but

see In re Methyl Tertiary Butyl Ether (“MTBE”) Prods. Liab. Litig., 209 F.R.D. 323, 339–40

(S.D.N.Y. 2002) (holding that claims for equitable relief and damages for personal injuries

related to groundwater contamination could not be split and distinguishing Hiser and Fortner

that allow claims splitting).

934. See In re Diet Drugs Prods. Liab. Litig., 282 F.3d 220, 235 (3d Cir. 2002) (holding that

“a federal court entertaining complex litigation, especially when it involves a substantial class of

persons from multiple states, or represents a consolidation of cases from multiple districts, may

appropriately enjoin state court proceedings in order to protect its jurisdiction” (citing Carlough

v. Amchem Prods., Inc., 10 F.3d 189, 202–04 (3d Cir. 1993))); Winkler v. Eli Lilly & Co., 101

F.3d 1196, 1202 (7th Cir. 1996) (injunction may be issued where “the state court action

threatens to frustrate proceedings and disrupt the orderly resolution of the federal litigation”);

see also Newby v. Enron Corp., 302 F.3d 295, 301 (5th Cir. 2002) (affirming injunction

restraining a lawyer from filing related state court proceedings without the federal district

judge’s approval and seeking ex parte relief dealing with matters previously adjudicated in
Class Actions § 21.42

305

that limit the federal court’s authority to issue such injunctions before certification are not present once the class certification order has issued.935 For

example, the federal court might not have jurisdiction to enjoin state actions

before certification936 because the Anti-Injunction Act, 28 U.S.C. § 2283, limits

the power of federal courts to enjoin state proceedings, with certain narrow

exceptions. After certification, the federal court is authorized to issue an

injunction “when necessary in aid of its jurisdiction,”937 which may make it

possible to enjoin pending state litigation if settlement in the certified federal

class action is completed or imminent and the need to protect the class

settlement is shown.938 Another exception allows for an injunction “when

federal court); In re Prudential Ins. Co. of Am. Sales Practice Litig., 261 F.3d 355, 364–65 (3d

Cir. 2001) (injunction appropriate to prevent relitigation of claims settled in federal class

action). But see In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 134 F.3d

133, 145 (3d Cir. 1998) (declining to invoke the All Writs Act to interfere with the state court

settlement of a revised version of a proposed settlement a federal court had previously rejected).

See generally Southeastern Pa. Transp. Auth. v. Pa. Pub. Util. Comm’n, 210 F. Supp. 2d 689

(E.D. Pa. 2002); In re Briarpatch Film Corp., 281 B.R. 820 (Bankr. S.D.N.Y. 2002).

935. See generally In re Diet Drugs, 282 F.3d at 236–36; Carlough v. Amchem Prods., Inc., 10

F.3d 189, 203 (3d Cir. 1993).

936. In re Diet Drugs, 282 F.3d at 236 (noting that the “threat to the federal court’s jurisdiction posed by parallel state actions is particularly significant where there are conditional class

certifications and impending settlements in federal actions”); cf. In re Inter-Op Hip Prosthesis

Prod. Liab. Litig., No. 01-4039, 2001 WL 1774017, at *2 (6th Cir. Oct. 29, 2001) (staying

injunction against members of the proposed class in a conditionally certified class from opting

out or pursuing litigation in state court pending review of a class settlement). See also sources

cited supra notes 806–810.

937. 28 U.S.C. § 2283 (West 2002). The exception overlaps with the provision in the All

Writs Act allowing federal courts to “issue all writs necessary or appropriate in aid of their

respective jurisdictions.” Id. § 1651(a). The All Writs Act’s use of the term “appropriate”

suggests a broader authority than the reference to “necessary” in both the All Writs Act and the

Anti-Injunction Act. In re Diet Drugs, 282 F.3d at 239.

938. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998); Carlough, 10 F.3d at

201–04; In re Baldwin-United Corp., 770 F.2d 328, 336–38 (2d Cir. 1985); In re Corrugated

Container Antitrust Litig., 659 F.2d 1332 (5th Cir. 1981); supra notes 808–09 and accompanying

text. See also infra section 20.32. An extraordinary writ staying or otherwise limiting other

litigation involving the same claims or parties may also be warranted. In re Lease Oil Litig., 200

F.3d 317 (5th Cir. 2000). In In re Lease Oil, the district judge framed an injunction to bar the

parties from settling federal claims in other related cases without its approval, and the court of

appeals affirmed the injunction. Id. at 319; see also In re Diet Drugs, 282 F.3d at 242 (affirming

order enjoining a mass opt out of the consolidated federal litigation by a statewide subclass);

Carlough, 10 F.3d at 202–04 (affirming injunction enjoining state court proceedings pursuant to

the “necessary in aid of jurisdiction” exception under the Anti-Injunction Act and All Writs

Act).
§ 21.5 Manual for Complex Litigation, Fourth

306

expressly authorized by Act of Congress.”939 An injunction or extraordinary

writ might also be available to protect the settlement during the period

between conditional approval of the class action settlement and the Rule 23(e)

fairness hearing.940

The binding effect of a judgment in an individual or class action on other

related actions depends on principles of claim and issue preclusion. A judgment in the class action adverse to the class will, however, bar only class claims

or individual claims actually litigated and resolved in the class action.941

Questions concerning the court’s ability to bind class members outside of its

jurisdiction and the adequacy of the notice given might raise complex due

process issues that affect the binding effect of a class action judgment.942

21.5 Trials

Trial techniques applicable to other forms of complex litigation will also be

useful for class actions. Section 12.4 discusses jury notebooks, preliminary

instructions, and special verdicts, all of which might help jurors organize the

volume of complex information that is likely to be involved in a class action

trial. Sections 21.141 and 21.21 discuss trial plans submitted as part of the

certification process. In nonjury class action trials, the judge can limit the

number of witnesses, require depositions to be summarized, call for the

presentation of the direct evidence of witnesses by written statements, and use

other techniques (described in section 12.5).

In jury cases, the court may consider trying common issues first, preserving individual issues for later determination. Such orders must be carefully

drawn to protect the parties’ right to a fair and balanced presentation of their

claims and defenses and their right to have the same jury determine separate

claims.943 Approaches that have been tried in mass tort litigation might apply

939. 28 U.S.C. § 2283 (West 2002); see also, e.g., In re BankAmerica Corp. Sec. Litig., 263

F.3d 795, 801 (8th Cir. 2001) (injunction authorized where a federal statute, the Private

Securities Litigation Reform Act of 1995, “create[d] a federal right or remedy that can only be

given its intended scope by such an injunction”).

940. See cases cited supra note 934.

941. See Cooper v. Fed. Res. Bank, 467 U.S. 867, 880–81 (1984).

942. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985).

943. See In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001) (describing multiphase class-wide

trial of claims arising from the Exxon Valdez oil spill; affirming class-wide compensatory

damages award, and vacating and remanding for district court recalculation the punitive

damages verdict); Hilao v. Estate of Marcos, 103 F.3d 767 (9th Cir. 1996) (describing and

affirming three-phase class-wide trial of punitive damages, liability, and compensatory damages

of 10,000 member class of victims of alleged atrocities by the Marcos regime); In re Bendectin
Class Actions § 21.5

307

(see section 22.93). Judges can encourage parties to stipulate to a test case

approach, in which a sufficient number of individual or consolidated cases are

tried in order to test the merits of the litigation. Such an approach is particularly useful if the claim is novel or otherwise “immature.” See section 22.315.

Some courts have used summary jury trials, an alternative dispute resolution

(ADR) technique,944 to determine the manageability of a class-wide trial of

common issues. For example, in the Telectronics litigation, summary jury trial

demonstrated the manageability of a common-issues trial and, as a result,

facilitated informed settlement discussions.945

Although not accepted as mainstream, the following approaches have

occasionally been suggested as ways to facilitate class action trials: using courtappointed experts to examine cases and report their findings to a jury, subject

to cross-examination by the parties;946 or adopting administrative models to

administer damage awards, to the extent that such administrative models meet

Seventh Amendment standards.947 There is no consensus on the use of such

procedures, however, and appellate review is scant.

Litig., 857 F.2d 290 (6th Cir. 1988) (describing and upholding constitutionality of trial to verdict

of generic causation issue in aggregate proceedings); see also In re Visa Check/MasterMoney

Antitrust Litig., 280 F.3d 124, 141 (2d Cir. 2001) (suggesting “bifurcating liability and damage

trials with the same or different juries” as one alternative for trial of antitrust action).

944. See Robert J. Niemic, Donna Stienstra & Randall E. Ravitz, Guide to Judicial Management of Cases in ADR 8–9, 44–45 (Federal Judicial Center 2001).

945. See In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 137

F. Supp. 2d 985 (S.D. Ohio 2001).

946. Hilao, 103 F.3d at 782–84 (describing district court’s use of a special master as a courtappointed expert); see also Sol Schreiber & Laura D. Weissbach, In re Estate of Ferdinand E.

Marcos Human Rights Litigation: A Personal Account of the Role of the Special Master, 31 Loy. L.A.

L. Rev. 475 (1998).

947. See Samuel Issacharoff, Administering Damage Awards in Mass-Tort Litigation, 10 Rev.

Litig. 463, 471–80 (1991) (discussing administrative models for determining damage awards in

mass contract, Title VII, and tort cases); see also In re Visa, 280 F.3d at 141 (listing five alternatives for district court to consider in approaching any need for individualized damages

determinations).
§ 21.61 Manual for Complex Litigation, Fourth

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21.6 Settlements

.61 Judicial Role in Reviewing a Proposed Class Action Settlement 308

.611 Issues Relating to Cases Certified for Trial and Later Settled 312

.612 Issues Relating to Cases Certified and Settled at the Same Time 313

.62 Criteria for Evaluating a Proposed Settlement 315

.63 Procedures for Reviewing a Proposed Settlement 318

.631 Obtaining Information 318

.632 Preliminary Fairness Review 320

.633 Notice of Fairness Hearing 321

.634 Fairness Hearing 322

.635 Findings and Conclusions 322

.64 Role of Other Participants in Settlement Review 323

.641 Role of Class Counsel in Settlement 323

.642 Role of Class Representatives in Settlement 325

.643 Role of Objectors in Settlement 326

.644 Role of Magistrate Judges, Special Masters, and Other Judicial Adjuncts in

 Settlement 329

.65 Issues Raised by Partial or Conditional Settlements 329

.651 Partial Settlements 329

.652 Conditional Settlements 330

.66 Settlement Administration 331

.661 Claims Administrator or Special Master 332

.662 Undistributed Funds 333

21.61 Judicial Role in Reviewing a Proposed Class Action

Settlement

.611 Issues Relating to Cases Certified for Trial and Later Settled 312

.612 Issues Relating to Cases Certified and Settled at the Same Time 313

This section deals with judicial review of the fairness, reasonableness, and

adequacy of proposed settlements in class actions. (Section 13 discusses

settlement in complex litigation generally; section 22.9 discusses settlement in

the context of mass tort litigation; and section 31.8 discusses settlement in the

context of securities class action litigation. Section 21.132 discusses issues

relating to certification standards for settlement classes.)

Whether a class action is certified for settlement or certified for trial and

later settled, the judge must determine that the settlement terms are fair,

adequate, and reasonable. Rule 23(e)(1)(A) mandates judicial review of any

“settlement, voluntary dismissal, or compromise of the claims, issues, or
Class Actions § 21.61

309

defenses of a certified class.”948 Rule 23.1 contains a similar directive for

shareholder derivative actions.

The judicial role in reviewing a proposed settlement is critical, but limited

to approving the proposed settlement, disapproving it, or imposing conditions

on it. The judge cannot rewrite the agreement.949 A judge’s statement of

conditions for approval, reasons for disapproval, or discussion of reservations

about proposed settlement terms, however, might lead the parties to revise the

agreement. See section 13.14. The parties might be willing to make changes

before the notice of the settlement agreement is sent to the class members if

the judge makes such suggestions at the preliminary approval stage.950 Even

after notice of a proposed settlement is sent, a judge’s statement of concerns

about the settlement during the fairness hearing might stimulate the parties to

renegotiate in order to avoid possible rejection by the judge.951 If the fairness

hearing leads to substantial changes adversely affecting some members of the

class, additional notice, followed by an opportunity to be heard, might be

necessary.

To determine whether a proposed settlement is fair, reasonable, and

adequate, the court must examine whether the interests of the class are better

served by the settlement than by further litigation. Judicial review must be

exacting and thorough. The task is demanding because the adversariness of

litigation is often lost after the agreement to settle. The settling parties frequently make a joint presentation of the benefits of the settlement without

significant information about any drawbacks. If objectors do not emerge, there

may be no lawyers or litigants criticizing the settlement or seeking to expose

flaws or abuses. Even if objectors are present, they might simply seek to be

treated differently than the class as a whole, rather than advocating for class948. Rule 23(e) does not require court approval when the parties voluntarily dismiss class

allegations before certification. However, in certain situations in which a voluntary dismissal

might represent an abuse of the class action process, the court should inquire into the circumstances behind the dismissal. See discussion supra section 21.312 and text accompanying notes

905–06.

949. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998) (“The settlement must

stand or fall in its entirety.”); but cf. In re Auction Houses Antitrust Litig., No. 00 Civ. 0648, 2001

WL 170792, at *18 (S.D.N.Y. Feb. 22, 2001) (conditioning approval of a settlement on parties’

adopting changes specified by the district court).

950. Romstadt v. Apple Computer, Inc., 948 F. Supp. 701, 707 (N.D. Ohio 1996) (noting

that a “proposed agreement is more readily alterable” and that “[t]he choice facing the court and

parties is not limited to the binary alternatives of approval or rejection”).

951. See, e.g., Bowling v. Pfizer, Inc. 143 F.R.D. 138 (S.D. Ohio 1992) (raising questions

about proposed settlement and continuing fairness hearing); Bowling v. Pfizer, Inc., 143 F.R.D.

141, 146 (S.D. Ohio 1992) (approving revised settlement); see also Jay Tidmarsh, Mass Tort

Settlement Class Actions: Five Case Studies 35, 38 (Federal Judicial Center 1998).
§ 21.61 Manual for Complex Litigation, Fourth

310

wide interests. The lack of significant opposition may mean that the settlement

meets the requirements of fairness, reasonableness, and adequacy. On the

other hand, it might signify no more than inertia by class members or it may

indicate success on counsel’s part in obtaining, from likely opponents and

critics, agreements not to object. Whether or not there are objectors or

opponents to the proposed settlement, the court must make an independent

analysis of the settlement terms.

Factors that moved the parties to settle can impede the judge’s efforts to

evaluate the terms of the proposed settlement, to appraise the strength of the

class’s position, and to understand the nature of the negotiations. Because

there is typically no client with the motivation, knowledge, and resources to

protect its own interests, the judge must adopt the role of a skeptical client and

critically examine the class certification elements, the proposed settlement

terms, and procedures for implementation.

There are a number of recurring potential abuses in class action litigation

that judges should be wary of as they review proposed settlements:

• conducting a “reverse auction,” in which a defendant selects among

attorneys for competing classes and negotiates an agreement with the

attorneys who are willing to accept the lowest class recovery (typically

in exchange for generous attorney fees);952

• granting class members illusory nonmonetary benefits, such as discount coupons for more of defendants’ product, while granting substantial monetary attorney fee awards;953

• filing or voluntarily dismissing class allegations for strategic purposes

(for example, to facilitate shopping for a favorable forum or to obtain

a settlement for the named plaintiffs and their attorneys that is disproportionate to the merits of their respective claims);954

952. Coffee, supra note 737, at 1354, 1370–73; see, e.g., Blair v. Equifax Check Servs., Inc.,

181 F.3d 832, 839 (7th Cir. 1999) (suggesting that “[p]erhaps [defendant] found a plaintiff (or

lawyer) willing to sell out the class”); see also Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 283

(7th Cir. 2002) (finding that “[a]lthough there is no proof that the settlement was actually

collusive in the reverse-auction sense, the circumstances demanded closer scrutiny than the

district judge gave it”); Crawford v. Equifax Payment Servs., Inc., 201 F.3d 877, 882 (7th Cir.

2000) (rejecting class settlement because “Crawford and his attorney were paid handsomely to

go away; the other class members received nothing”).

953. See, e.g., In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d

768, 818–19 (3d Cir. 1995) (rejecting as unfair a settlement based on $1,000 nontransferable

coupon redeemable only upon purchase of new GM truck); see generally FJC Empirical Study of

Class Actions, supra note 769, at 77–78, 183–85; Note, supra note 737, at 816–17.

954. Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989); Shelton v.

Pargo, Inc., 582 F.2d 1298, 1303, 1314 (4th Cir. 1978) (holding that the Rule 23(e) notice
Class Actions § 21.61

311

• imposing such strict eligibility conditions or cumbersome claims procedures that many members will be unlikely to claim benefits, particularly if the settlement provides that the unclaimed portions of the

fund will revert to the defendants;955

• treating similarly situated class members differently (for example, by

settling objectors’ claims at significantly higher rates than class members’ claims);956

• releasing claims against parties who did not contribute to the class settlement;957

• releasing claims of parties who received no compensation in the settlement;958

• setting attorney fees based on a very high value ascribed to nonmonetary relief awarded to the class, such as medical monitoring injunctions or coupons, or calculating the fee based on the allocated settlerequirement does not apply to a precertification dismissal that does not bind the class, but that

“the court must, after a careful hearing, determine what ‘claims are being compromised’

between the plaintiff and defendant and whether the settling plaintiff has used the class action

claim for unfair personal aggrandizement in the settlement, with prejudice to absent putative

class members”); 3 Conte & Newberg, supra note 908, § 8:19. In many instances, notice and

court approval of a voluntary dismissal will not be given or obtainable because the members of

the proposed class will not yet have been determined. Shelton, 582 F.2d at 1303.

955. See, e.g., Reynolds, 288 F.3d at 282–83; see also Deborah R. Hensler et al., Class Action

Dilemmas: Pursuing Public Goals for Private Gain 427–30 (2000) [hereinafter RAND Class

Action Report] (reporting actual distribution of benefits in ten case studies, in three of which

class members claimed less than half the funds).

956. Gibson, supra note 792, at 154–55 (payment for dismissal of objectors’ appeal regarding

Rule 23(b)(1)(B) mandatory class); Tidmarsh, supra note 951, at 40–41 (objectors entered into

private fee-sharing arrangements; opt-out cases settled for much higher sums than class

members received).

957. See, e.g., In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig.,

221 F.3d 870, 873 (6th Cir. 2000) (decertifying a limited fund settlement class because some of

the released parties did not qualify for “limited fund” certification); see also In re Telectronics

Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 137 F. Supp. 2d 985 (S.D. Ohio

2001) (approving a Rule 23(b)(3) opt-out settlement).

958. Molski v. Gleich, 318 F.3d 937 (9th Cir. 2003) (finding that settlement released

individual damage claims without compensating class members other than class representative);

Crawford v. Equifax Payment Servs., Inc., 201 F.3d 877, 882 (7th Cir. 2000) (finding that only

the class representative received compensation); Bowling v. Pfizer, Inc., 143 F.R.D. 141, 169–70

(S.D. Ohio 1992) (concluding that objection concerning lack of compensation for release of

claims for loss of consortium became moot by addition of $10 million fund for spouses of class

members).
§ 21.611 Manual for Complex Litigation, Fourth

312

ment funds, rather than the funds actually claimed by and distributed

to class members;959 and

• assessing class members for attorney fees in excess of the amount of

damages awarded to each individual.960

In addition, although Rule 23(e) no longer requires court approval of a

settlement or voluntary dismissal of individual claims as long as the settlement

does not bind the class, the settlement of individual claims can represent an

abuse of the class action process. For example, a party might plead class

allegations to promote forum-shopping or to extract an unreasonably high

settlement for the sole benefit of potential class representatives and their

attorneys. Use of the court’s supervisory authority to police the conduct of

proposed class actions under Rule 23(d) may be appropriate in such circumstances.961

21.611 Issues Relating to Cases Certified for Trial and Later Settled

When a Rule 23(b)(3) class is certified for trial, the decision whether to opt

out might have to be made well before the nature and scope of liability and

damages are understood. Settlement may be reached only after the opportunity to request exclusion has expired and after changes in class members’

circumstances and other aspects of the litigation have occurred. Rule 23(e)(3)

permits the court to refuse to approve a settlement unless it affords a new

opportunity to request exclusion at a time when class members can make an

informed decision based on the proposed settlement terms.962

This second opt-out opportunity helps to provide the supervising court

the “structural assurance of fairness,” called for in Amchem Products Inc. This

part of Rule 23(e)(3) affects only cases in which the class is certified and the

959. See supra section 14.121.

960. The only reported example of this egregious practice is Kamilewicz v. Bank of Boston

Corp., 100 F.3d 1348, 1349 (7th Cir. 1996) (Easterbrook, J., dissenting from denial of rehearing

en banc) (class member received an award of $2.19, but $91.33 was deducted from class

member’s bank account for attorney fees).

961. See supra notes 904–10 and accompanying text. Prior to the change on this issue in

Rule 23(e), some courts subjected precertification requests for dismissal to rigorous review. For

an example of the Rule 23(e) analysis of the district court in the dismissal (pursuant to

diplomatic settlement) of major German Holocaust-related litigation, see In re Nazi Era Cases

Against German Defendants Litigation, 198 F.R.D. 429 (D.N.J. 2000).

962. Providing a second opportunity to opt out may be appropriate “if the earlier opportunity . . . provided with the certification notice has expired by the time of the settlement notice”

and if there have been “changes in the information available to class members since expiration of

the first opportunity to elect exclusion.” Rule 23(e)(3) committee note. See also text at note 238

for a description of an organized opt-out campaign.
Class Actions § 21.612

313

initial opt-out period expires before a settlement agreement is reached. The

rule provides a court with broad discretion to determine whether, in the

particular circumstances, a second opt-out opportunity is warranted before

approving a settlement.

21.612 Issues Relating to Cases Certified and Settled at the Same Time

Parties quite frequently enter into settlement agreements before a decision

has been reached whether to certify a class.963 Section 21.132 discusses the

standards for certifying such a class. This section is about reviewing a proposed

settlement in such a context.

Settlement classes—cases certified as class actions solely for settlement—can provide significant benefits to class members and enable the

defendants to achieve final resolution of multiple suits. See section 22.921.

Settlement classes also permit defendants to settle while preserving the right to

contest the propriety and scope of the class allegations if the settlement is not

approved and, in Rule 23(b)(3) actions, to withdraw from the settlement if too

many class members opt out. An early settlement produces certainty for the

plaintiffs and defendants and greatly reduces litigation expenses.964

Class actions certified solely for settlement, particularly early in the case,

sometimes make meaningful judicial review more difficult and more important. Courts have held that approval of settlement class actions under Rule

23(e) requires closer judicial scrutiny than approval of settlements reached

only after class certification has been litigated through the adversary process.965

See section 22.9. Extended litigation between or among adversaries might

963. FJC Empirical Study of Class Actions, supra note 769, at 35.

964. See supra section 14.12 (noting the desirability of fee arrangements that reward counsel

for efficiency, such as percentage of recovery fees). See also Hirsch & Sheehey, supra note 859, at

65–66.

965. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998) (calling for “a higher

standard of fairness” in reviewing a settlement negotiated before class certification), and cases

cited therein. Cf. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997) (calling for

“undiluted, even heightened, attention” to class certification requirements in a settlement class

context). Cf. also In re PaineWebber Ltd. P’ships Litig., 171 F.R.D. 104, 122 (S.D.N.Y.) (holding

that close scrutiny need not be given when class was certified for settlement purposes long before

an agreement was reached), aff’d, 117 F.3d 721 (2d Cir. 1997). See generally Roger C. Cramton,

Individualized Justice, Mass Torts, and “Settlement Class Actions”: An Introduction, 80 Cornell L.

Rev. 811, 826–35 (1995) (discussing problems relating to adequacy of representation in

settlement class involving claims relating to future injuries and setting forth principles for

reviewing settlement class actions); Coffee, supra note 737, at 1367–82, 1461–65 (discussing

incentives for collusion in settlement class actions and possible antidotes). See also John C.

Coffee, Jr., Class Action Accountability: Reconciling Exit, Voice, and Loyalty in Representative

Litigation, 100 Colum. L. Rev. 370 (2000).
§ 21.612 Manual for Complex Litigation, Fourth

314

bolster confidence that the settlement negotiations were at arm’s length. If, by

contrast, the case is filed as a settlement class action or certified for settlement

with little or no discovery, it may be more difficult to assess the strengths and

weaknesses of the parties’ claims and defenses, to determine the appropriate

definition of the class, and to consider how class members will actually benefit

from the proposed settlement. The court should ask questions about the

settlement and provide an adequate opportunity for settlement opponents to

be fully heard.

Recurring issues raised by settlement classes include the following:

• Conflicts between class counsel and counsel for individual plaintiffs. Approval of the class settlement will, for the most part, take responsibility

for providing relief to individual claimants from their individual attorneys and shift it to class counsel. Settlement will also effectively

terminate other pending individual and class actions subsumed in the

certified settlement class. Divergent interests must be taken into account and fairly accommodated before the parties negotiate a final

settlement. Consider whether the counsel who have negotiated the

settlement have fairly represented the interests of all class members.

(This concern appears to be one of the major reasons the Court rejected the proposed settlement in Amchem.

966) If the parties have not

anticipated the need for subclasses, the court may decide to certify

subclasses, appoint attorneys to represent the subclasses, and send the

parties back to the negotiating table.

• Future claimants. In some mass tort cases, the court should consider

whether a settlement purports to bind persons who might know that

they were exposed to an allegedly harmful substance but are not yet

injured, and persons who might not even be aware that they were exposed. The opt-out rights of those in the first category can be illusory

in a Rule 23(b)(3)967 action unless they are protected by “back-end

opt-out” rights that permit individuals to decide whether to remain in

the class after they become aware that they are injured, may have a

claim, and understand the severity of their injury. (Rule 23(e)(3) gives

a trial judge discretion to provide class members an opportunity to opt

out of a Rule 23(b)(3) class settlement even though they had an earlier

opportunity to opt out of the class after it was certified.) Because those

in the second category, those who might not even know that they have

been exposed or injured, cannot be given meaningful notice, an effort

966. 521 U.S. at 620.

967. See generally id.
Class Actions § 21.62

315

to include them in the class can raise constitutional and due process

issues.968 See section 22.72. In some settlements, parties have negotiated terms that allow certain class members to defer choosing between

accepting the benefits of a class settlement or litigating the class member’s claim until after the claim arises.969

• Administration of claims procedure. The court should determine

whether the persons chosen to administer the procedure are disinterested and free from conflicts arising from representing individual

claimants.

• Review of attorney fee applications. See section 21.7.

968. See id. at 628 (questioning whether proper notice could ever be given to “legions so

unselfconscious and amorphous”).

969. See, e.g., In re Diet Drugs, MDL No. 1203, 2000 WL 1222042, at *21 (E.D. Pa. Aug. 28,

2000) (approving second opt-out opportunity to pursue individual claim for compensatory (but

not punitive) damages if injury worsens); Bowling v. Pfizer, Inc., 143 F.R.D. 141, 170 (S.D. Ohio

1992) (approving settlement in which class members retain rights to sue, pursue arbitration, or

accept a guaranteed settlement amount for a future heart valve fracture).

21.62 Criteria for Evaluating a Proposed Settlement

Rule 23(e)(1)(C) establishes that the settlement must be fair, reasonable,

and adequate. Fairness calls for a comparative analysis of the treatment of class

members vis-à-vis each other and vis-à-vis similar individuals with similar

claims who are not in the class. Reasonableness depends on an analysis of the

class allegations and claims and the responsiveness of the settlement to those

claims. Adequacy of the settlement involves a comparison of the relief granted

relative to what class members might have obtained without using the class

action process.

A number of factors are used to apply those criteria and evaluate a proposed settlement. Deciding which factors apply and what weight to give them

depends on a number of variables: (1) the merits of the substantive class

claims, issues, or defenses; (2) whether the class is mandatory or opt-out; and

(3) the mix of claims that can support individual litigation, such as personal

injury claims, and claims that are only viable within a class action, such as

small economic loss claims. A class involving small claims may provide the

only opportunity for relief and pose little risk that the settlement terms will

sacrifice the interests of individual class members. A class involving many

claims that can support individual suits—ranging from claims of severe injury

or death to relatively slight harms, as for example a mass torts personal-injury

class—might require more scrutiny by the court to fairness.
§ 21.62 Manual for Complex Litigation, Fourth

316

Some factors that may bear on review of a settlement are set out below:970

1. the advantages of the proposed settlement versus the probable outcome of a trial on the merits of liability and damages as to the

claims, issues, or defenses of the class and individual class members;

2. the probable time, duration, and cost of trial;

3. the probability that the class claims, issues, or defenses could be

maintained through trial on a class basis;

4. the maturity of the underlying substantive issues, as measured by the

information and experience gained through adjudicating individual

actions, the development of scientific knowledge, and other factors

that bear on the probable outcome of a trial on the merits;

5. the extent of participation in the settlement negotiations by class

members or class representatives, and by a judge, a magistrate judge,

or a special master;

6. the number and force of objections by class members;

7. the probable resources and ability of the parties to pay, collect, or

enforce the settlement compared with enforcement of the probable

judgment predicted under above paragraph 1 or 4;

8. the effect of the settlement on other pending actions;

9. similar claims by other classes and subclasses and their probable

outcome;

10. the comparison of the results achieved for individual class or subclass members by the settlement or compromise and the results

achieved or likely to be achieved for other claimants pressing similar

claims;

11. whether class or subclass members have the right to request exclusion from the settlement, and, if so, the number exercising that right;

12. the reasonableness of any provisions for attorney fees, including

agreements on the division of fees among attorneys and the terms of

any agreements affecting the fees to be charged for representing individual claimants or objectors;

13. the fairness and reasonableness of the procedure for processing individual claims under the settlement;

970. The list is not exclusive and is subject to change depending on common-law development, including evolving interpretation of the 2003 amendments to Rule 23(e) and any

legislation affecting class action or other mass tort suits. A helpful review of many factors that

may deserve consideration is provided by In re Prudential Insurance Co. America Sales Practice

Litigation Agent Actions, 148 F.3d 283, 316–24 (3d Cir. 1998).
Class Actions § 21.62

317

14. whether another court has rejected a substantially similar settlement

for a similar class; and

15. the apparent intrinsic fairness of the settlement terms.

In determining the weight accorded these and other factors, courts have

examined whether

• other courts have rejected similar settlements for competing or overlapping classes;

• the named plaintiffs are the only class members to receive monetary

relief or are to receive relief that is disproportionately large (differentials are not necessarily improper, but may call for judicial scrutiny);971

• the settlement amount is much less than the estimated damages incurred by members of the class as indicated by preliminary discovery

or other objective measures, including settlements or verdicts in individual cases;

• the settlement was completed at an early stage of the litigation without

substantial discovery and with significant uncertainties remaining;

• nonmonetary relief, such as coupons or discounts, is unlikely to have

much, if any, market or other value to the class;972

• significant components of the settlement provide illusory benefits because of strict eligibility conditions;

• some defendants have incentives to restrict payment of claims because

they may reclaim residual funds;

• major claims or types of relief sought in the complaint have been

omitted from the settlement;

• particular segments of the class are treated significantly differently

from others;

• claimants who are not members of the class (e.g., opt outs) or objectors receive better settlements than the class to resolve similar claims

against the same defendants;

• attorney fees are so high in relation to the actual or probable class recovery that they suggest a strong possibility of collusion;

971. Compensation for class representatives may sometimes be merited for time spent

meeting with class members, monitoring cases, or responding to discovery. In re Dun &

Bradstreet Credit Servs. Customer Litig., 130 F.R.D. 366, 374 (S.D. Ohio 1990).

972. See, e.g., In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d

768, 818–19 (3d Cir. 1995) (rejecting as unfair a settlement based on $1,000 nontransferable

coupon redeemable only upon purchase of new GM vehicles); see generally Note, supra note 737.
§ 21.631 Manual for Complex Litigation, Fourth

318

• defendants appear to have selected, without court involvement, a negotiator from among a number of plaintiffs’ counsel; and

• a significant number of class members raise apparently cogent objections to the settlement. (The court should interpret the number of

objectors in light of the individual monetary stakes involved in the litigation. When the recovery for each class member is small, the paucity

of objections may reflect apathy rather than satisfaction. When the recovery for each class member is high enough to support individual

litigation, the percentage of class members who object may be an accurate measure of the class’ sentiments toward the settlement. However,

an apparently high number of objections may reflect an organized

campaign, rather than the sentiments of the class at large. A similar

phenomenon is the organized opt-out campaign.)973

A settlement will occasionally cover a class different from that certified.

Review of the terms of the settlement or objections might reveal a need to

redefine the class or to create subclasses based on the revelation of conflicts

among class members. Frequently, the parties propose to enlarge the class or

the claims of the class to give the settling defendants greater protection against

future litigation. The court faced with a request for an expanded class definition should require the parties to explain in detail what new facts, changed

circumstances, or earlier errors support the alteration of the original definition. If a Rule 23(b)(3) class is enlarged, notice must be given to the newly

added members of their right to opt out; if a class is reduced, those being

excluded should receive notice under Rule 23(d) if they previously received

notice that they were included in the class and did not opt out.

21.63 Procedures for Reviewing a Proposed Settlement

.631 Obtaining Information 318

.632 Preliminary Fairness Review 320

.633 Notice of Fairness Hearing 321

.634 Fairness Hearing 322

.635 Findings and Conclusions 322

21.631 Obtaining Information

Required disclosures. Counsel for the class and the other settling parties

bear the burden of persuasion that the proposed settlement is fair, reasonable,

and adequate. In discharging that burden, counsel must submit to the court

certain required disclosures, such as the terms of the settlement. Rule 23(e)(2)

973. See Carlough v. Amchem Prods., Inc., 10 F.3d 189 (3d Cir. 1993).
Class Actions § 21.631

319

also requires a statement identifying any agreement made in connection with

the settlement, including all agreements and undertakings “that, although

seemingly separate, may have influenced the terms of the settlement by trading

away possible advantages for the class in return for advantages for others.

Doubts should be resolved in favor of identification.”974

Separate side agreements or understandings may encompass such matters

as resolution of claims outside the class settlement, positions to be taken on

later fee applications, division of fees among counsel, or restrictions on

counsel’s ability to bring related actions in the future. The reference to agreements or undertakings related to the proposed settlement is necessarily openended. It is intended to reach agreements that accompany settlement but are

not reflected in formal settlement documents and, perhaps, not even reduced

to writing. The spirit of Rule 23(e)(2) is to compel identification of any

agreement or understanding that might have affected the interests of class

members by altering what they may be receiving or foregoing. Side agreements

might indicate, for example, that the settlement is not reasonable because they

may reveal additional funds that might have been paid to the class that are

instead paid to selected claimants or their attorneys.

The court should, after reviewing the statement identifying related agreements and undertakings, decide whether to require specified agreements to be

revealed and whether to require filing complete copies or only summaries of

the agreements. Requiring the parties to file the complete agreement might

elicit comments from class members and facilitate judicial review. A judge

might consider acting in steps, calling first for a summary of any agreement

that might have affected the settlement and then for a complete version if the

summary does not provide an adequate basis for review.

A direction to disclose a summary or copy of an agreement might raise

confidentiality concerns, as with agreements that include information that

merits protection against general disclosure. The parties should be given an

opportunity to claim work-product or other protections. Opt-out agreements,

in which a defendant conditions its agreement on a limit on the number or

value of opt outs, may warrant confidential treatment. Knowledge of the

specific number of opt outs that will vitiate a settlement might encourage third

parties to solicit class members to opt out. A common practice is to receive

information about such agreements in camera.

Agreements between a liability insurer and a defendant may require

balancing the need to know the terms of the agreement with the potential

impact of making such terms public. The amount of insurance coverage

974. Fed. R. Civ. P. 23(e)(2) committee note.
§ 21.632 Manual for Complex Litigation, Fourth

320

available to compensate class members can bear on the reasonableness of the

settlement, and identification of such agreements sometimes provides insufficient information. Unrestricted access to the details of such agreements, on the

other hand, might impede resolution of important coverage disputes.

Rule 23(e)(2) does not specify sanctions for failure to identify an agreement or an understanding connected with the settlement. One possible

sanction is reopening the settlement if the agreements or understandings not

identified bear significantly on the settlement’s reasonableness.

Requests for additional information. The judge may direct counsel to

provide additional information necessary to evaluate the proposed settlement.

Where settlement is proposed early in the litigation, for example, consider

asking counsel to provide complete and detailed information about the factors

that indicate the value of the settlement. Such factors include975

• likelihood of success at trial;

• likelihood of class certification;

• status of competing or overlapping actions;

• claimant’s damages and value of claims;

• total present value of monetary and nonmonetary terms;

• attorney fees;

• cost of litigation; and

• defendant’s ability to pay.

Discovery in parallel litigation may supply additional information. The

outcomes of parallel litigation may also inform the court and objecting class

members about the fairness, reasonableness, and adequacy of the proposed

settlement.

21.632 Preliminary Fairness Review

Review of a proposed class action settlement generally involves two

hearings.976 First, counsel submit the proposed terms of settlement and the

judge makes a preliminary fairness evaluation. In some cases, this initial

evaluation can be made on the basis of information already known, supple975. The enumeration of issues and factors affecting the evaluation of settlements in this

section draws on the opinion in In re Prudential Insurance Co. America Sales Practice Litigation

Agent Actions, 148 F.3d 283 (3d Cir. 1998), and William W Schwarzer, Settlement of Mass Tort

Class Actions: Order Out of Chaos, 80 Cornell L. Rev. 837, 843–44 (1995). See also RAND Class

Action Report, supra note 955, at 486–90.

976. See, e.g., In re Amino Acid Lysine Antitrust Litig., MDL No. 1083, 1996 U.S. Dist. LEXIS

5308, at *11 (N.D. Ill. Apr. 22, 1996) (conducting a preliminary review of whether a proposed

settlement is within the range of reasonableness and raising questions for the fairness hearing).
Class Actions § 21.633

321

mented as necessary by briefs, motions, or informal presentations by parties. If

the case is presented for both class certification and settlement approval, the

certification hearing and preliminary fairness evaluation can usually be

combined. The judge should make a preliminary determination that the

proposed class satisfies the criteria set out in Rule 23(a) and at least one of the

subsections of Rule 23(b). See section 21.22. If there is a need for subclasses,

the judge must define them and appoint counsel to represent them. The judge

must make a preliminary determination on the fairness, reasonableness, and

adequacy of the settlement terms and must direct the preparation of notice of

the certification, proposed settlement, and date of the final fairness hearing. In

settlement classes, however, it is often prudent to hear not only from counsel

but also from the named plaintiffs, from other parties, and from attorneys who

represent individual class members but did not participate in the settlement

negotiations.

Whether the case has been certified as a class at an earlier stage or presented for certification and settlement approval at the same time, the judge can

have a court-appointed expert or special master review the proposed settlement terms, gather information necessary to understand how those terms

affect the absent class members, and assist the judge in determining whether

the fairness, reasonableness, and adequacy requirements for approval are met.

Individuals sometimes provide expert testimony regarding the valuation of the

settlement or even of its legal validity. Given the nonadversarial posture of

these experts, it is important to evaluate such testimony under Federal Rules of

Evidence 701, 702, and 703 and question whether the proffered expert testimony will “assist the trier of fact to understand the evidence or determine a

fact in issue.”977 The judge should raise questions at the preliminary hearing

and perhaps seek an independent review if there are reservations about the

settlement, such as unduly preferential treatment of class representatives or

segments of the class, inadequate compensation or harms to the classes, the

need for subclasses, or excessive compensation for attorneys. The parties then

have an opportunity to resume negotiations in an effort to remove potential

obstacles to court approval.

977. Fed. R. Evid. 702.

21.633 Notice of Fairness Hearing

Once the judge is satisfied as to the certifiability of the class and the results

of the initial inquiry into the fairness, reasonableness, and adequacy of the

settlement, notice of a formal Rule 23(e) fairness hearing is given to the class

members. For economy, the notice under Rule 23(c)(2) and the Rule 23(e)
§ 21.635 Manual for Complex Litigation, Fourth

322

notice are sometimes combined. The fairness hearing notice should alert the

class that the hearing will provide class members an opportunity to present

their views on the proposed settlement and to hear arguments and evidence for

and against the terms.

The notice of the fairness hearing should tell objectors to file written

statements of their objections with the clerk of court by a specified date in

advance of the hearing and to give notice if they intend to appear at the

fairness hearing. Despite such ground rules, people who have not filed a

written statement may be allowed to present objections at the hearing.978

21.634 Fairness Hearing

At the fairness hearing, the proponents of the settlement must show that

the proposed settlement is “‘fair, reasonable, and adequate.’”979 The parties

may present witnesses, experts, and affidavits or declarations. Objectors and

class members may also appear and testify. Time limits on the arguments of

objectors are appropriate, as is refusal to hear the same objections more than

once. An extended hearing may be necessary.980

21.635 Findings and Conclusions

Even if there are no or few objections or adverse appearances before or at

the fairness hearing, the judge must ensure that there is a sufficient record as to

the basis and justification for the settlement. Rule 23 and good practice both

require specific findings as to how the settlement meets or fails to meet the

statutory requirements. The record and findings must demonstrate to a

reviewing court that the judge has made the requisite inquiry and has consid978. See, e.g., In re Ford Motor Co. Bronco II Prods. Liab. Litig., MDL No. 991, 1994 U.S.

Dist. LEXIS 15790 (E.D. La. Nov. 1, 1994) (permitting testimony by objectors who had not filed

written statements, subject to inclusion of such objectors on witness lists and to limitation by the

judge based on weight and significance of arguments); In re Prudential-Bache Energy Income

P’ships Sec. Litig., 815 F. Supp. 177, 179 (E.D. La. 1993) (allowing objectors to submit evidence

and testimony and to cross examine plaintiffs’ experts). See also Tidmarsh, supra note 951, at 56,

68 (observing that two mass tort settlement class actions used trial-like procedure at the fairness

hearing).

979. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 316 (3d

Cir. 1998) (quoting In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55

F.3d 768, 785 (3d Cir. 1995)); see also Fed. R. Civ. P. 23(e)(1)(C).

980. In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL No. 926, 1994 WL 578353

(N.D. Ala. Sept. 1, 1994) (reporting hearing from breast implant recipients during three days of

hearings); In re “Agent Orange” Prod. Liab. Litig., 597 F. Supp. 740, 746–47 (E.D.N.Y. 1984)

(reporting on national hearings involving numerous veterans and their families), aff’d, 818 F.2d

226 (2d Cir. 1987).
Class Actions § 21.641

323

ered the diverse interests and the requisite factors in determining the settlement’s fairness, reasonableness, and adequacy.

21.64 Role of Other Participants in Settlement Review

.641 Role of Class Counsel in Settlement 323

.642 Role of Class Representatives in Settlement 325

.643 Role of Objectors in Settlement 326

.644 Role of Magistrate Judges, Special Masters, and Other Judicial Adjuncts in

Settlement 329

21.641 Role of Class Counsel in Settlement

Attorneys representing a class are responsible for communicating a

settlement offer to the class representatives and ultimately to the members of

the class. But the attorneys are also responsible for protecting the interests of

the class as a whole, even in circumstances where the class representatives take

a position that counsel consider contrary to the interests of absent class

members.981 Class counsel must discuss with the class representatives the terms

of any settlement offered to the class.982 Approval or rejection of the offer by

the representatives, however, does not end the attorneys’ obligations, because

they must act in the best interests of the class as a whole.983 Similarly, class

counsel should bring to the court’s attention any settlement offer that the class

representatives approve, even if, as attorneys for the entire class, they believe it

should not receive court approval.

Class counsel must be available to answer questions from class members in

the interval between notice of the settlement and the settlement hearing.

Counsel for the parties can create a Web site to convey factual information

981. See, e.g., Flinn v. FMC Corp., 528 F.2d 1169, 1174–76 (4th Cir. 1975); cf. Parker v.

Anderson, 667 F.2d 1204, 1211 (5th Cir. 1982); Saylor v. Lindsley, 456 F.2d 896, 899–900 (2d

Cir. 1972). In the Diet Drugs litigation, several of the subclass representatives opposed approval

of a settlement that had been negotiated on their behalf; the trial court discussed adequacy of

representation requirements under these circumstances, and the fulfillment of Amchem criteria.

In re Diet Drugs Prods. Liab. Litig., 2000 WL 1222042, at *50–*53 (E.D. Pa. Aug. 28, 2000).

982. Byes v. Telecheck Recovery Servs., Inc., 173 F.R.D. 421, 428–29 (E.D. La. 1997) (finding

inadequacy of representation, based in part on counsel’s failure to communicate with named

plaintiff about settlement offers); Deadwyler v. Volkswagen of Am., Inc., 134 F.R.D. 128, 140–41

(W.D.N.C. 1991) (ordering sanctions because class counsel failed to communicate settlement

offers to class representatives).

983. See, e.g., Kincade v. Gen. Tire & Rubber Co., 635 F.2d 501, 508 (5th Cir. 1981)

(indicating that “the ‘client’ in a class action consists of numerous unnamed class members as

well as the class representative”); see also Heit v. Van Ochten, 126 F. Supp. 2d 487, 494–95 (W.D.

Mich. 2001) (approving proposed settlement and approving class counsel’s motion to withdraw

from representing named representative who filed objection to the settlement).
§ 21.641 Manual for Complex Litigation, Fourth

324

about the settlement, including a complete copy of the agreement, and to give

jointly prepared and court-approved answers to frequently asked questions.984

Counsel for the parties may also arrange for a toll-free telephone number that

provides information and an opportunity for class members to speak with

personnel who have been trained to follow prearranged scripts in responding

to various types of questions. In addition to or in lieu of an automated system,

the notice may tell members to direct questions to class counsel and give a

mailing address, a fax number, an E-mail address, or a telephone number.

When most of the class members reside in the same locale (for example, in

employment discrimination cases involving a single plant or facility), class

attorneys and class representatives can meet with members to explain the

terms and consequences of the proposed settlement.

Counsel for the parties are the main court’s source of information about

the settlement. The judge should ensure that counsel meet their obligations to

disclose fully all agreements and understandings, including side agreements

with attorneys or class members (see section 21.631) and be prepared to

explain how the settlement was reached and why it is fair and reasonable.

Counsel must also disclose any facet of the settlement that may adversely affect

any member of the class or may result in unequal treatment of class members.

Ordinarily, counsel should confer with the judge to develop an appropriate

review process. See section 21.61. Counsel should submit the settlement

documents and a draft order setting a hearing date, prescribing the notice to be

given to class members, and fixing the procedure for objections. Counsel may

also be asked for statements about the status of discovery, the identity of those

involved in the settlement discussions, the arrangements and understandings

about attorney fees, and the reasons the settlement is in the best interests of the

class. Counsel should be required to disclose and explain any incentive awards

or other benefits to be received only by the class representatives.

At the hearing to consider final approval of the proposed settlement,

counsel for the settling parties must make an appropriate showing on the

record as to why the settlement should be approved. The nature and extent of

that showing depends on the circumstances of the case—e.g., the importance

of individual class members’ stakes, the extent of disapproval within the class

with regard to the settlement, whether relief to the class is in-kind only,

984. See, e.g., In re Sulzer Hip Prosthesis & Knee Prosthesis Liab. Litig., No. 1:01-CV-9000,

2001 WL 1842315, at *16 (N.D. Ohio Oct. 20, 2001) (notice of class action and proposed

settlement can be found at http://www.sulzerimplantsettlement.com (last visited Nov. 10,

2003)); In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2000 WL 1222042, at *35 (E.D. Pa.

Aug. 28, 2000) (additional information available at http://www.settlementdietdrugs.com (last

visited Nov. 10, 2003)).
Class Actions § 21.642

325

whether individual cases are being settled concurrently, and any varying

allocations among groups of claimants and attorneys.

Counsel owe a duty of candor to the court to disclose all information

relevant to the fairness of the settlement. If the class was certified in adversary

proceedings, counsel must take into account their ongoing obligation to their

clients and the need to protect their clients’ positions should the settlement

fail. In evaluating the settlement, the court should take into account not only

the presentations of counsel but also information from other sources, such as

comments from class representatives and class members, presentations by

objections, the court’s own knowledge of the case obtained during pretrial

proceedings, and information provided by special masters or experts appointed by the court to assess the settlement.

21.642 Role of Class Representatives in Settlement

The court should examine closely any opposition by class representatives

to a proposed settlement; those objections might be symptomatic of strained

attorney–client relations. Notice of the settlement hearing might indicate any

terms about which class counsel and class representatives differ.

Although rejection of a proposed settlement by a class representative may

influence class counsel not to present the settlement to the court, a class

representative cannot alone veto a settlement, especially one that has been

presented to and approved by the court.985 If the judge concludes that class

representatives have placed individual interests ahead of the class’s and

impeded a settlement that is advantageous to the class as a whole, the judge

should take appropriate action, such as notifying the class of the proposed

settlement or removing the class representatives, or both.

When class representatives favor acceptance of a settlement offer that class

counsel believe is inadequate or unfair, the representatives should be permitted

to submit it to the court for preliminary approval and, if the court so orders, a

fairness hearing. Although the court will ordinarily not approve a settlement

that counsel do not recommend, class counsel, like class representatives, have

no veto power over settlement of class actions.

985. See, e.g., Lazy Oil Co. v. Witco Corp., 166 F.3d 581, 591 (3d Cir. 1999) (affirming order

approving settlement of class action and denying lead plaintiff’s objections and motions for

certification of subclass and disqualification of class counsel); see also Maywalt v. Parker &

Parsley Petroleum Co., 864 F. Supp. 1422, 1429–30 (S.D.N.Y. 1994) (holding that settlement was

fair, adequate, and reasonable despite objections from class representatives and some class

members).
§ 21.643 Manual for Complex Litigation, Fourth

326

21.643 Role of Objectors in Settlement

Objectors can play a useful role in the court’s evaluation of the proposed

settlement terms. They might, however, have interests and motivations vastly

different from other attorneys and parties.

Objectors can provide important information regarding the fairness,

adequacy, and reasonableness of settlements. Objectors can also play a beneficial role in opening a proposed settlement to scrutiny and identifying areas

that need improvement. For example, an organization’s objection in one case

transformed a settlement from one in which the lawyers received a majority of

the funds to one that primarily benefited class members.986

Some objections, however, are made for improper purposes, and benefit

only the objectors and their attorneys (e.g., by seeking additional compensation to withdraw even ill-founded objections). An objection, even of little

merit, can be costly and significantly delay implementation of a class settlement. Even a weak objection may have more influence than its merits justify in

light of the inherent difficulties that surround review and approval of a class

settlement. Objections may be motivated by self-interest rather than a desire to

win significant improvements in the class settlement. A challenge for the judge

is to distinguish between meritorious objections and those advanced for

improper purposes.987 An objector who wins changes in the settlement that

benefit the class may be entitled to attorney fees, either under a fee-shifting

statute or under the “common-fund” theory. Fee awards made on the basis of

insignificant or cosmetic changes in the settlement serve to condone and

encourage improper use of the objection process. Federal Rule of Civil Procedure 11 applies to objectors and their attorneys and should be invoked in

appropriate cases.

Who may object? Any class member who does not opt out may object to a

settlement, voluntary dismissal, or compromise that would bind the class. Any

party to the settlement may also object (for example, a shareholder of a

corporation involved in the settlement).988

986. RAND Class Action Report, supra note 955, at 461–62. For a detailed discussion of the

objections and the settlement discussions in that case, see id. at 201–05. See also id. at 355–60

(discussing objections, the fairness hearing, and a renegotiated settlement in the Oriented Strand

Board Home Siding Litigation).

987. See In re Domestic Air Transp. Antitrust Litig., 148 F.R.D. 297 (N.D. Ga. 1993).

988. See 4 Conte & Newberg, supra note 908, § 11:55, at 168 (“Any party to the settlement

proceeding has standing to object to the proposed settlement.”). See also id. at 176–77 (“[A]n

objection may be registered by . . . any settling defendant, or any shareholder whose corporation

is involved in settlement” (footnote call number omitted)).
Class Actions § 21.643

327

Individually based objections. Objectors sometimes act individually, arguing

that the objector should not be included in the class definition or is entitled to

terms different than the terms afforded other class members. Unless a number

of class members raise similar objections, individual objectors rarely provide

much information about the overall reasonableness of the settlement. Individual terms more favorable than those applicable to other class members should

be approved only on a showing of a reasonable relationship to facts or law that

distinguish the objector’s position from other class members.

If a complaint about differential treatment reflects genuine distinctions

between the objector’s position and the positions of other class members, the

court should consider whether that distinction requires a subclass or otherwise

uncovers an imperfection in the class definition or the settlement terms. Any

modification to the settlement agreement generally should benefit other

members of the class or subclass in addition to the objector. In the context of a

certified class, different treatment of an individual objector must be based on a

finding that the objector shares the common characteristics of the class yet

possesses distinct attributes that are so unique as not to call for a subclass.

Class-based objections. Objections also may be made in terms common to

class members or that seem to invoke both individual and class interests. So

long as an objector is acting at least in part on behalf of the class, it is appropriate to impose on the objector a duty to the class similar to the duty assumed by

a named class representative. In order to guard against an objector who is

using the strategic power of objecting for private advantage, the court should

examine and consider disapproving the proposed withdrawal of an objection if

the objector is receiving payment or other benefits more favorable than those

available to other similarly situated class members.989

Discovery and other procedural support. The important role some objectors

play might justify additional discovery, access to information obtained by class

counsel and class representatives, and the right to participate in the fairness

hearing.990 Parties to the settlement agreement should generally provide access

989. See, e.g., Duhaime v. John Hancock Mut. Life Ins. Co., 183 F.3d 1 (1st Cir. 1999).

990. See Scardelletti v. Debarr, 265 F.3d 195, 204 n.10 (4th Cir. 2001) (affirming denial of

motion to intervene and stating “‘while [the court] should extend to any objector to the

settlement leave to be heard, to examine witnesses and to submit evidence on the fairness of the

settlement, it is entirely in order for the trial court to limit its proceedings to whatever is

necessary to aid it in reaching an informed, just and reasoned decision’” (quoting Flinn v. FMC

Corp., 528 F.2d 1169, 1173 (4th Cir. 1975) (internal quotation marks in original omitted))),

rev’d on other grounds sub nom. Devlin v. Scardelletti, 536 U.S. 1 (2002); In re Lorazepam &

Clorazepate Antitrust Litig., 205 F.R.D. 24, 26 (D.D.C. 2001) (holding that “[c]lass members

who object to a class action settlement do not have an absolute right to discovery; the Court may
§ 21.643 Manual for Complex Litigation, Fourth

328

to discovery produced during the litigation phases of the class action (if any) as

a means of facilitating appraisal of the strengths of the class positions on the

merits.

Objectors might seek intervention and discovery to demonstrate the

inadequacy of the settlement. Discovery should be minimal and conditioned

on a showing of need, because it will delay settlement, introduce uncertainty,

and might be undertaken primarily to justify an award of attorney fees to the

objector’s counsel. A court should monitor postsettlement discovery by

objectors and limit it to providing objectors with information central to the

fairness of the proposed settlement. A court should not allow discovery into

the settlement-negotiation process unless the objector makes a preliminary

showing of collusion or other improper behavior.991

An opportunity to opt out after the settlement terms are known, either at

the initial opportunity or a second opportunity, might reduce the need to

provide procedural support to objectors or to rely on objectors to reveal

deficiencies in a proposed settlement. Class members who find the settlement

unattractive can protect their own interests by opting out of the class.

Withdrawal of objections. Court approval is necessary for withdrawal of

objections to settlements binding on the class.992 If objections are withdrawn

but result in modifications to the class settlement terms, the withdrawal is

reviewed as part of the class settlement. If the objector simply abandons

pursuit of the objection, the judge should inquire into the circumstances,

asking the parties and the objector to identify any benefit conveyed or promised to the objector or objector’s counsel in connection with the withdrawal.

Although an objector cannot ordinarily be required to pursue objections,

judicial inquiry into—and potential disapproval of—so-called side agreements

or tacit understandings can discourage improper uses of objections.

Intervention and appeal. A class member may appear at the settlement

hearing and object without seeking intervention. Objectors need not formally

intervene to appeal matters to which they objected during the fairness hearing.993 Once an objector appeals, control of the proceeding lies in the court of

appeals.

in its discretion allow discovery if it will help the Court determine whether the settlement is fair,

reasonable, and adequate” and allowing limited discovery).

991. Bowling v. Pfizer, 143 F.R.D. 141, 153 & n.10 (S.D. Ohio 1992).

992. Fed. R. Civ. P. 23(e)(4)(B).

993. Devlin v. Scardelletti, 536 U.S. 1 (2002).
Class Actions § 21.651

329

21.644 Role of Magistrate Judges, Special Masters, and Other Judicial

Adjuncts in Settlement

Reviewing a proposed class settlement for fairness, reasonableness, and

adequacy is a time-consuming and demanding task, but it is essential and must

be done by the judge. Typically, the parties and their attorneys will be primarily interested in upholding the settlement and may present information in a

way that supports their position. In cases with a sparse record, the judge may

appoint an adjunct: a magistrate judge, guardian ad litem, special master,

court-appointed expert, or technical advisor, to help obtain or analyze information relevant to the proposed settlement.994 For example, a judge might

retain a special master or a magistrate judge to examine issues regarding the

value of nonmonetary benefits to the class and their fairness, reasonableness,

and adequacy.995 Even in that context, however, the judge generally has to

identify the issues and the procedures needed to address and resolve them.

21.65 Issues Raised by Partial or Conditional Settlements

.651 Partial Settlements 329

.652 Conditional Settlements 330

21.651 Partial Settlements

Settlement classes present special problems when they involve partial

settlements, such as a settlement with one of several defendants. The settling

defendant might be liable to the class as a whole or only to certain members of

the class, and members of the settlement class might have difficulty understanding their position in the litigation. Because they may not know whether

they will be members of a class with respect to claims against nonsettling

defendants, they might be unable to make an informed decision regarding the

adequacy of the settlement.

Given that the litigation might continue against other defendants, the

parties may be reluctant to disclose fully and candidly their assessment of the

proposed settlement’s strengths and weaknesses that led them to settle separately. The adequacy of the settlement depends in part on the relative exposure

and resources of other parties. An informed evaluation is extremely difficult if

994. For examples of such appointments in a mass tort context, see infra notes 1344–46 and

accompanying text. Expert testimony may assist the court in making its evaluation. See In re

Corrugated Container Antitrust Litig., 643 F.2d 195, 215 n.30 (5th Cir.), on second appeal, 659

F.2d 1322 (5th Cir. 1981).

995. See, e.g., Gibson, supra note 792, at 22–23.
§ 21.652 Manual for Complex Litigation, Fourth

330

discovery is incomplete or has been conducted against only a few of the

defendants.

Partial settlements are nevertheless not unusual. If several such settlements

are being negotiated, it is ordinarily wise to defer consideration until all are

submitted, thereby saving the time and expense of successive notices and

hearings and allowing the judge and class members to assess the adequacy of

the settlements as a whole. In the interest of fairness, a partial settlement

should be brought to the attention of all parties. The judge may wish to defer

ruling on temporary approval if a nonsettling party so requests and shows

substantial progress in negotiating a settlement of its own. Funds from the

settlements typically are placed in income-producing trusts established by class

counsel for the benefit of the class and held until the case is fully resolved.

Partial settlements shortly before trial can disrupt the trial, resulting, for

example, in the departure of a lead counsel. The court should set a deadline for

the presentation of partial settlements sufficiently in advance of trial so that

fairness hearings may be completed while still allowing the parties sufficient

time to prepare for trial. See section 13.21.

Partial settlements containing provisions that might interfere with further

proceedings, such as those attempting to limit further discovery, should rarely

be approved. See section 13.22. A provision under which the class agrees to a

refund if it later settles on terms more favorable to other defendants is particularly inappropriate, because the adequacy of such a proposed settlement

cannot be fairly determined. Similarly, a defendant’s agreement to increase the

settlement fund if individual plaintiffs later settle for a greater amount does not

diminish the court’s responsibility to evaluate the adequacy of the amount

offered to the class. See section 13.23. Although the court can give some

deference to provisions purporting to allocate a settlement fund according to

particular theories of recovery, claims, or time periods, it should reserve the

power to make modifications when warranted. See section 13.21.

21.652 Conditional Settlements

The parties sometimes propose a precertification settlement that permits

the settling parties to withdraw from the settlement if a specified number of

persons opt out of the class or settlement. Although doing so might promote

settlement by giving a defendant greater assurance of ending the controversy

and avoiding the expense of litigating numerous individual claims, it might

delay a final settlement. A reasonable cut-off date for the defendant’s election,

such as thirty days after the opt-out period, should keep any delays to a

minimum. An alternative approach is to provide that the benefits paid to the

class will be reduced in proportion to the number of opt outs or the total

amount of their claims. If the reduction in benefits is substantial, fairness

might require providing class members another opportunity to opt out.
Class Actions § 21.66

331

Some settlements, particularly in securities and consumer litigation, are

conditioned on class members waiving claims for additional periods not

covered by the pleadings or are conditioned on waiving additional potential

claims against the settling defendants. Often such waivers take the form of

changing the definition of the class (e.g., by adding spouses or children).

Review of such waivers will ensure that notice of them is clear, conspicuous,

and not abusive.

21.66 Settlement Administration

.661 Claims Administrator or Special Master 332

.662 Undistributed Funds 333

Class settlements are rarely self-executing and various problems may arise

in their administration. Sometimes a settlement fund is to be divided equally

among all class members who meet specified criteria (for example, employees

who sought promotion during a certain time period) or allocated in proportion to some measure of damage or injury (for example, the price paid for

particular securities). In such cases, the class members are in potentially

conflicting roles, because increasing one claimant’s benefits will reduce

another’s recovery. Where the settlement provides that each qualifying class

member receive a specified payment, either a flat sum or an amount determined according to a formula, settling defendants may have an interest in

maximizing the extent to which class members are disqualified or have their

claims reduced.

Class members must usually file claims forms providing details about their

claims and other information needed to administer the settlement.996 In larger

class actions, forms and instructions might be provided on the Internet, and an

E-mail address or a toll-free telephone number may be established for handling questions. In any event, class members should receive some means of

personal communication. Verification of claims forms by oath or affirmation

under 28 U.S.C. § 1746 may be required, and it may be appropriate to require

substantiation of the claims (e.g., through invoices, confirmations, or brokers’

records).

Completion and documentation of the claims forms should be no more

burdensome than necessary. Nor, for purposes of administering a settlement,

should the court require the same amount and specificity of evidence needed

996. For examples of claims forms, see In re Diet Drugs Products Liability Litigation, AHP

Diet Drug Settlement Forms, available at http://www.settlementdietdrugs.com/d.home.php3

#forms (last visited Nov. 10, 2003).
§ 21.661 Manual for Complex Litigation, Fourth

332

to establish damages at a trial; secondary forms of proof and estimates are

generally acceptable. A default award may be appropriate for those who can

establish membership in the class but cannot, or prefer not to, submit detailed

claims. Typically, such an award would be at the low end of the range of

expected claims. The parties will usually have negotiated the amount and

nature of proof necessary for a class member to recover under the settlement.

To achieve the intended distribution to beneficiaries, additional mailings,

telephone calls, and investigative searches might be needed if notices to class

members are returned or if class members fail to submit claim forms. There

may be no need to require action by class members, as where the defendants’

records provide a satisfactory, inexpensive, and accurate method for determining the distribution of a settlement fund.

Class counsel should establish a procedure for recording receipt of the

claims forms and tabulating their contents, with arrangements subject to court

approval. If the class is large, forms are customarily sent to a separate mailing

address and the essential information is recorded on computers. Judges

sometimes require class counsel to use follow-up procedures to contact class

members where only a few have filed claims.997 Form letters can answer

common inquiries from class members and deal with recurring errors in

completing the claims forms. These procedures should be made part of the

record to minimize subsequent disputes.

Audit and review procedures will depend on the nature of the case. Claims

for modest amounts are frequently accepted solely on the basis of the verified

claim forms.998 Medium-sized claims or a portion of such claims selected by

random sampling may be subjected to telephone audit inquiries or crosschecks against other records. Large claims might warrant a field audit to check

for inaccuracies or fraud.999

21.661 Claims Administrator or Special Master

Judges often appoint a claims administrator or special master and describe

the duties assigned in the order approving the settlement agreement. Duties

may include taking custody of settlement funds, administering the distribution

procedures, and overseeing implementation of an injunction. The adminis997. See Fed. R. Civ. P. 23(d)(2); In re Orthopedic Bone Screw Prods. Liab. Litig., 246 F.3d

315, 327–28, n.11 (3d Cir. 2001) (listing recommended practices for identifying class members

entitled to actual notice).

998. See infra section 40.44.

999. See, e.g., In re Diet Drugs Prods. Liab. Litig., 236 F. Supp. 2d 445, 462, 464 (E.D. Pa.

2002) (order increasing field audits for doctors and law firms that had submitted medically

unreasonable claims).
Class Actions § 21.662

333

trator or special master may be charged with reviewing the claims and deciding

whether to allow claims that are late, deficient in documentation, or questionable for other reasons.1000 The specific procedure for reviewing claims may be

limited to the materials submitted or may include a hearing at which the

claimant and other interested parties may present information bearing on the

claim. The claims procedure may allow appeal of a decision to disallow a claim.

That appeal may involve review by a disinterested individual or panel or, in

some instances, by the court.

The administrator should make periodic reports to the court. These

reports should include information about distributions made, interest earned,

allowance and disallowance of claims, the progress of the distribution process,

administrative claims for fees and expenses, and other matters involving the

status of administration. Section 32.39 discusses the use of special masters and

magistrate judges in implementing class settlements in employment discrimination cases.

21.662 Undistributed Funds

The settlement might provide for disposition of undistributed or unclaimed funds.1001 Judicial approval is required for such disposition, and the

parties may want the funds to be returned to the settling defendant, paid to

other class members, or distributed to a charitable or nonprofit institution.

The court should allow adequate time for late claims before any refund or

other disposition of settlement funds occurs,1002 and might consider ordering a

reserve for late claims.

1000. See, e.g., In re Crazy Eddie Sec. Litig., 906 F. Supp. 840, 844–47 (E.D.N.Y. 1995)

(reviewing criteria for deciding whether to allow late claims).

1001. Although disfavored in a fully tried class action, “fluid recovery,” in which damages

are paid in the aggregate without individual proof, may be permissible in a settlement. See In re

“Agent Orange” Prod. Liab. Litig., 818 F.2d 179, 185–86 (2d Cir. 1987) (finding “some ‘fluidity’

is permissible in the distribution of settlement proceeds” and holding that the district court

must supervise the programs that will consume such proceeds). Compare Six (6) Mexican

Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1305 (9th Cir. 1990) (noting “[f]ederal courts

have frequently approved this remedy [fluid recovery for distribution of unclaimed funds] in the

settlement of class actions where the proof of individual claims would be burdensome or

distribution of damages costly”), with Daly v. Harris, 209 F.R.D. 180, 197 n.5 (D. Haw. 2002)

(noting “fluid recovery system, as a method of aggregating damages as opposed to a distribution

method, would not be appropriate here since Section 1983 requires proof of actual damages”).

1002. In re Crazy Eddie, 906 F. Supp. at 845 (noting “there is an implicit recognition that late

claims should ordinarily be considered in the administration of a settlement” (citing Manual for

Complex Litigation, Third, § 30.47 (Federal Judicial Center 1995)).
§ 21.7 Manual for Complex Litigation, Fourth

334

The court’s equitable powers may be necessary to deal with other problems

that commonly arise during administration of settlement but might not be

covered by the terms of the agreement. Such problems include

• the impact of divorce, death, incompetence, claims by minors, and

dissolution of business entities or other organizations;

• investment of settlement funds (security of settlement funds is critical—the court should permit these funds to be held in only the most

secure investments unless prudent investment of long-term holdings

(e.g., to administer a trust for a mass tort settlement involving latent

claims) calls for a balance between maintaining security and gaining

returns on the investment);

• interim distributions and partial payments of fees and expenses; and

• procedures for handling lost or returned checks (although checks

should ordinarily be stamped with a legend requiring deposit or negotiation within ninety days, counsel should be authorized to grant additional time).

The court and counsel should be alert to the possibility of persons soliciting

class members after the settlement and offering to provide “collection services”

for a percentage of the claims. Such activities might fraudulently deprive class

members of benefits provided by the settlement and impinge on the court’s

responsibility to control fees in class actions.1003

21.7 Attorney Fee Awards

.71 Criteria for Approval 336

.72 Procedure for Reviewing Fee Requests 338

.721 Motions 338

.722 Notice 338

.723 Objections 338

.724 Information Supporting Request and Discovery for Fee Requests 338

.725 Required Disclosures 339

.726 Hearing and Findings 339

.727 Use of Special Masters or Magistrate Judges 340

Attorney fee applications may arise as part of the settlement of a class

award or after litigation of the class proceedings. The request may be based on

a percentage of a common fund that the class action has produced or may be

based on a statutory fee award. Statutory awards are generally calculated using

the lodestar method (number of hours reasonably spent on the litigation

1003. Jack Faucett Assocs., Inc. v. Am. Tel. & Tel. Co., 1985-2 Trade Cas. (CCH) ¶ 66,830

(D.D.C. 1985).
Class Actions § 21.7

335

multiplied by the hourly rate, enhanced in some circumstances by a multiplier), subject to any applicable statutory ceiling on the hourly rate. Some

courts use a lodestar method as a crosscheck to ensure that the percentage

method does not result in an excessive award. See section 14.122.

The court’s settlement review should include provisions for the payment

of class counsel. In class actions whose primary objective is to recover money

damages, settlements may be negotiated on the basis of a lump sum that covers

both class claims and attorney fees. Although there is no bar to such arrangements,1004 the simultaneous negotiation of class relief and attorney fees creates

a potential conflict.1005 Separate negotiation of the class settlement before an

agreement on fees is generally preferable. See generally sections 14.22, 14.23

(court-awarded attorney fees), and 32.463 (employment discrimination,

attorney fees). This procedure does not entirely eliminate the risk of conflict,

and, if negotiations are to be conducted in stages, counsel must scrupulously

avoid making concessions affecting the class for personal advantage. If an

agreement is reached on the amount of a settlement fund and a separate

amount for attorney fees and expenses, both amounts must be disclosed to the

class. Moreover, the sum of the two amounts ordinarily should be treated as a

settlement fund for the benefit of the class, with the agreed-on fee amount

constituting the upper limit on the fees that can be awarded to counsel. The

total fund could be used to measure whether the portion allocated to the class

and to attorney fees is reasonable. Although the court may not rewrite the

parties’ agreement, it can find the proposed funds for the class inadequate and

the proposed attorney fees excessive, and can allow the parties to renegotiate

their agreement. The judge can condition approval of the settlement on a

separate review of the proposed attorneys’ compensation.

1004. See Evans v. Jeff D., 475 U.S. 717, 733–34 (1986); Marek v. Chesny, 473 U.S. 1, 5–7

(1985).

1005. See, e.g., In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283,

334–35 (3d Cir. 1998) (approving a settlement in which parties sought permission of the court

to negotiate fees after the merits had been resolved); Malchman v. Davis, 761 F.2d 893, 904–05

(2d Cir. 1985) (rejecting, for lack of factual support, appellant’s argument that simultaneous

negotiation of the merits and fees had tainted the settlement); Manchaca v. Chater, 927 F. Supp.

962, 966 (E.D. Tex. 1996) (“The decision by plaintiffs to pursue attorneys’ fees and costs

subsequent to judicial approval of a settlement agreement demonstrates their commitment to

arms-length negotiations.”). See also Court Awarded Attorney Fees: Report of the Third Circuit

Task Force, 108 F.R.D. 237, 269 (1985) (calling for, among other things, allowing parties to enter

into a conditional settlement pending resolution of fees and for parties to seek the court’s

permission before discussing fees).
§ 21.71 Manual for Complex Litigation, Fourth

336

21.71 Criteria for Approval

Compensating counsel for the actual benefits conferred on the class

members is the basis for awarding attorney fees. The “fundamental focus is the

result actually achieved for class members.”1006 That approach is premised on

finding a tangible benefit actually obtained by the class members. See section

14.11. In comparing the fees sought by the lawyers to the benefits conferred on

the class, the court’s task is easiest when class members are all provided cash

benefits that are distributed. It is more complicated when class members

receive nonmonetary or delayed benefits. In such cases, the judge must

determine the value of those benefits.

Nonmonetary benefits can take a number of forms. In a Rule 23(b)(3)

case, nonmonetary benefits can include coupons, discounts, or securities, or

other forms. In a Rule 23(b)(2) case, the benefits may include different forms

of injunctive relief, or relief that may mix injunctive and damages elements. A

court may need to determine the dollar value of medical monitoring programs

or warranty programs. A civil rights case may require evaluating an injunction

redressing employment or other forms of discrimination. The court’s evaluation and review of such benefits as part of the settlement review process (see

section 21.62) is important for its review of fee applications. If a settlement

provides only speculative, uncertain, or amorphous benefits to the class, that

resists valuation in dollar terms.

The court should carefully scrutinize any agreement providing that

attorneys for the class receive a noncontingent cash award.1007 The court should

refuse to allow attorneys to receive fees based on an inflated or arbitrary

evaluation of the benefits to be delivered to class members. It might be appropriate to require attorneys to share in the risk of fluctuations in the value of an

in-kind settlement, either by taking all or part of its counsel fees in in-kind

benefits or by deferring collection of fees and making them contingent on the

value of in-kind benefits that are actually delivered to the class members.1008

1006. Fed. R. Civ. P. 23(h) committee note. See also 15 U.S.C. § 77z-1(a)(6) (2000) (limiting

fee award to a “reasonable percentage of the amount of any damages and prejudgment interest

actually paid to the class”); RAND Class Action Report, supra note 955, at 490 (concluding that

the “single most important action that judges can take to support the public goals of class action

litigation is to reward class action attorneys only for lawsuits that actually accomplish something

of value to class members and society”) (emphasis omitted).

1007. See RAND Class Action Report, supra note 955, at 429 (“In at least three instances

[among 10 cases studied in depth], class members claimed less than half of the funds set aside

for compensation.”).

1008. See supra section 24.121; see also, e.g., Bowling v. Pfizer, Inc., 132 F.3d 1147 (6th Cir.

1998) (reserving decisions on fees related to future funding until the class receives its benefits

over a ten-year period); In re Auction Houses Antitrust Litig., No. 00 Civ. 0648, 2001 WL
Class Actions § 21.71

337

In some instances, the court might find the benefit to the class so speculative that it will use the lodestar method rather than the common-fund method

to determine the amount of fees to which the attorneys are entitled.1009 In other

instances, the court may greatly reduce the parties’ estimates of the dollar value

of the benefits delivered to the class members and base the attorney fee award

on the reduced amount. In cases involving a claims procedure or a distribution

of benefits over time, the court should not base the attorney fee award on the

amount of money set aside to satisfy potential claims. Rather, the fee awards

should be based only on the benefits actually delivered. It is common to delay a

final assessment of the fee award and to withhold all or a substantial part of the

fee until the distribution process is complete.

If a case is primarily concerned with injunctive or declaratory relief,

exclusive concern with monetary benefits may not be appropriate.1010 If the

value of such relief cannot be reliably determined or estimated, consider using

the lodestar method, including any appropriate multiplier, to calculate fee

awards.

The common-fund theory may call for awarding attorney fees to counsel

other than class counsel. If the court has appointed as class counsel attorneys

who did not file one of the original complaints (see section 21.27), attorneys

who investigated and filed the case might be entitled to a fee award. Attorneys

for objectors to the settlement or to class counsel’s fee application might also

have provided sufficient benefits to a class to justify an award.1011

Rule 23(h) also authorizes the award of nontaxable costs in class action

litigation and settlements.

170792, at *3–*5, *15–*17 (S.D.N.Y. Feb. 22, 2001) (counsel fees for cash and coupon components of settlement to be paid in same proportion of cash and coupons as class benefits paid).

1009. Strong v. BellSouth Telecomms., Inc., 137 F.3d 844, 851–52 (5th Cir. 1998) (upholding use of lodestar method of calculating fees in relation to a “phantom” common fund); In re

Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995)

(calling for lodestar calculation where common benefit “evades the precise evaluation needed for

the percentage of recovery method”).

1010. Fed. R. Civ. P. 23(h) committee note (citing an individual civil rights action for the

proposition that placing an “‘undesirable emphasis’ on ‘the importance of the recovery of

damages in civil rights litigation’ . . . might ‘shortchange efforts to seek effective injunctive or

declaratory relief’” (quoting Blanchard v. Bergeron, 489 U.S. 87, 95 (1989))).

1011. Id.
§ 21.724 Manual for Complex Litigation, Fourth

338

21.72 Procedure for Reviewing Fee Requests

.721 Motions 338

.722 Notice 338

.723 Objections 338

.724 Information Supporting Request and Discovery for Fee Requests 338

.725 Required Disclosures 339

.726 Hearing and Findings 339

.727 Use of Special Masters or Magistrate Judges 340

21.721 Motions

Rule 23(h)(1) calls for the court to fix a time for submission of motions for

attorney fees in class actions. For a discussion of procedures applicable in other

types of cases, see section 14.22. Rule 23(h) does not contemplate application

of the fourteen-day rule specified in Rule 54(d)(2)(B) unless the court chooses

to set that time. In general, parties should be prepared to submit such motions

as soon as possible after announcing a settlement so that the required Rule

23(h)(1) notice of the fee request can be combined with the required Rule

23(e) notice of settlement and sent to the class at the same time.

21.722 Notice

Rule 23(h)(1) requires that notice of fee requests be “directed to class

members in a reasonable manner.” The rule contemplates that, in cases

involving settlement review under Rule 23(e), “notice of class counsel’s fees

motion should be combined with notice of the proposed settlement” and

afforded the same notice as Rule 23(e) requires.1012 In adjudicated class actions,

“the court can calibrate the notice to avoid undue expense.”1013

21.723 Objections

Rule 23(h)(2) limits the right to object to class members or parties from

whom payment is sought. Specifically, nonsettling defendants who will not be

contributing to the fee payment sought may not object to the motion for a fee

award.1014

21.724 Information Supporting Request and Discovery for Fee Requests

The party seeking fees has the burden of submitting sufficient information

to justify the requested fees and taxable costs. Even in common fund cases,

judges frequently call for an estimate of the number of hours spent on the

1012. Fed. R. Civ. P. 23(h)(1) committee note.

1013. Id.

1014. Fed. R. Civ. P. 23(h)(2) committee note.
Class Actions § 21.726

339

litigation and a statement of the hourly rates for all attorneys and paralegals

who worked on the litigation. Such information can serve as a “cross-check”

on the determination of the percentage of the common fund that should be

awarded to counsel. See section 14.122. In lodestar or statutory fee award cases,

applicants must provide full documentation of hours and rates. To facilitate

meaningful review of fee petitions, the court may specify the categories that

attorneys should use to group their fee requests (e.g., by motion, brief, or other

product) and establish other guidelines for any requests.1015

If there is a request for discovery to support an objection to a motion for

attorney fees, the court should consider “the completeness of the material

submitted in support of the fee motion, which depends in part on the fee

measurement standard.”1016 If “the motion provides thorough information, the

burden should be on the objector to justify discovery to obtain further information.”1017 As provided in Rule 23(e)(2), objectors should usually have access

to the parties’ statement about “any agreement made in connection with the

proposed settlement.” Whether the actual agreement will be discoverable

depends on the extent to which the parties demonstrate a legitimate interest in

confidentiality. See section 21.631.

21.725 Required Disclosures

Side agreements provide information relevant to the allocation of fees

among counsel for various parties and interests. Any concurrent settlements of

individual plaintiffs’ cases by class counsel may be of particular interest. The

court should examine the fee arrangements and the terms of individual

settlements to avoid some plaintiffs’ being favored over similarly situated class

members.1018

1015. See Hirsch & Sheehey, supra note 859, at 103–05; see also supra section 14.21.

1016. Fed. R. Civ. P. 23(h)(2) committee note.

1017. Id.

1018. Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 258, 260, 307–09 (E.D. Pa. 1994),

vacated on other grounds, 83 F.3d 610 (3d Cir. 1996), and aff’d sub nom. Amchem Prods., Inc. v.

Windsor, 521 U.S. 591 (1997).

21.726 Hearing and Findings

Rule 23(h)(3) permits the court to hold a hearing on a fee motion and

directs the court to find the facts and state its conclusions of law. The circumstances and needs of the case will dictate the form of any hearing. For example,

where the fee request depends on an evaluation of the relief earned for the

class, a hearing may be necessary to provide evidence of such an appraisal.

Usually, evidence of the value of the settlement will have been presented at the
§ 21.727 Manual for Complex Litigation, Fourth

340

hearing on settlement review. In many instances, hearings on settlement review

and fees can be conducted at the same time.

21.727 Use of Special Masters or Magistrate Judges

Rule 23(h)(4) provides broad authority to refer issues related to the

amount of a request for fees to a special master or magistrate judge. In this

context, as in other posttrial contexts, Rule 53(a)(1)(C) does not require a

finding of exceptional circumstances before making such a referral. Considerations of timing and cost, however, might affect a decision to refer the

matter.
341

22. Mass Torts

.1 Introduction 342

.2 Initial Issues in Mass Tort Suits 348

.3 Multiple Filingsin Federal District Courts 355

.31 Aggregating Claims 355

.311 Criteria 357

.312 Advantages and Disadvantages of Aggregation 357

.313 Timing of Aggregation Decisions 358

.314 Obtaining Information About Common Issues and Case Values 358

.315 Test Cases 360

.316 Case Characteristics 360

.317 Role of Different State Laws 361

.318 Trial Plans 362

.32 Intradistrict Assignment to a Single Judge 362

.33 Interdistrict Transfer (Including MDL) 366

.34 Denial of Transfer 368

.341 Insufficient Common Facts 368

.342 Procedural Alternatives 369

.343 Geographical Diversity and Economy 369

.344 Maturity of Litigation 370

.35 Authority of a Judge Pending Decision by the MDL Panel 371

.36 The Tasks of an MDL Transferee Judge 372

.37 The Task of the Transferor Judge Following Remand After MDL Proceedings 376

.4 Multiple Filings in State and Federal Courts 376

.5 Multiple Filings in District and Bankruptcy Courts 378

.51 Venue, Transfer, and Consolidation 380

.511 Venue and Transfer 380

.512 Consolidation and Reassignment 380

.52 Withdrawing the Reference 381

.53 Dividing the Labor Among Judges 383

.531 MDL Transferee Judge 383

.532 Other Judges 384

.533 Bankruptcy Appeals 384

.54 Coordinating and Consolidating Tort Claims and Related Cases 385

.541 Claims Against the Debtor 386

.542 Claims Against Other Defendants 388

.543 Consolidation of Cases 388

.544 Transfer of Related Cases of Nondebtor Defendants 389

.545 Expanding the Automatic Stay or Enjoining Related Cases 391

.55 Providing Representation for Future Mass Tort Claimants 393

.56 Estimating the Value of Mass Tort Claims 397

.57 Negotiating a Reorganization Plan 398

.58 Discharging Future Claims 399

.59 Confirming a Reorganization Plan 401

.6 Case-Management Orders 403

.61 Initial Orders 403

.62 Organization of Counsel 405

.63 Subsequent Case-Management Orders 408

.631 Adding Parties 408

.632 Pleadings and Motions 409

.633 Deferred Docketing 410
§ 22.1 Manual for Complex Litigation, Fourth

342

.634 Issue Identification and Development 410

.635 Electronic Communications 413

.7 Class Actions in Mass Tort Cases 413

.71 Background 414

.72 Post-Amchem Class Certification 416

.73 Post-Ortiz Mandatory Limited Fund Class Settlements 421

.74 Medical Monitoring Class Actions 424

.75 Issues Classes 429

.751 Identify the Issues 430

.752 Determine Applicable Law 431

.753 Identify a Limited Set of Laws 432

.754 Subclasses to Reflect Differences in State Law 432

.755 Determine Separability of Common Issue 433

.756 Establish a Trial Plan 434

.757 Assess the Overall Impact 435

.8 Discovery 435

.81 Sampling 436

.82 Initial Disclosures 437

.83 Interrogatories 438

.84 Depositions: New Parties 438

.85 Documents 439

.86 Physical Evidence 439

.87 Experts and Scientific Evidence 440

.9 Settlement and Trial 446

.91 Judicial Role and Settlement 446

.92 Review of Settlement in Mass Tort Class Actions 449

.921 Class Certification in a Settlement Context 450

.922 Fairness, Adequacy, and Reasonableness of the Settlement 453

.923 Criteria for Evaluating the Merits of a Proposed Settlement 454

.924 Gathering Information and Conducting a Fairness Hearing 456

.925 Evaluating Nonmonetary Benefits 460

.926 Presenting the Decision 460

.927 Awarding and Allocating Attorney Fees 461

.93 Trial 463

22.1 Introduction

This section provides a general definition of mass torts and distinguishes

between multiple tort claims arising out of a single incident and dispersed

mass tort claims. Section 22.2 identifies categories of information helpful to a

judge managing mass tort suits. Section 22.3 analyzes a threshold issue in mass

tort litigation––whether and when to aggregate related cases filed in different

federal district courts, in federal and state courts, and in federal district courts,

bankruptcy courts, and state courts. Throughout this section, “aggregated

treatment” refers to various devices that bring claims and cases together for

pretrial management, settlement, or trial. These devices include intradistrict

consolidation under Federal Rule of Civil Procedure 42, class certification

under Rule 23, multidistrict transfer under 28 U.S.C. § 1407, and the assembling of tort claims that automatically accompanies a bankruptcy filing.

Section 22.31 focuses on aggregated treatment of related cases for pretrial case
Mass Torts § 22.1

343

management, criteria for deciding whether consolidation for trial is appropriate, and coordination techniques for nonaggregated cases. Subsequent sections

focus on the particulars of mass tort case management and problems that can

arise when class certification is sought in mass tort cases.

Mass torts litigation “emerges when an event or series of related events

injure a large number of people or damage their property.”1019 A mass tort is

defined by both the nature and number of claims; the claims must arise out of

an identifiable event or product, affecting a very large number of people and

causing a large number of lawsuits asserting personal injury or property

damage to be filed. Some argue that 10,000 claims represent a threshold for

mass torts that require special management;1020 others argue that 100 suits will

suffice. A 1999 report by the Working Group on Mass Torts considered fifty

distinct groups of mass tort cases, representing a spectrum ranging from

hundreds to hundreds of thousands of claims.1021 The central question is

whether the group of claims, whatever its size, calls for special management.

The need for special judicial management of mass torts arises from the

sheer volume of the litigation generated. Judges must efficiently and fairly

manage hundreds, even thousands, of related cases without unduly disrupting

the court’s other work. Mass tort cases are often characterized by a combination of issues, some that may lend themselves to group litigation (such as the

history of a product’s design) and others that require individualized presentation (such as the circumstances of individual exposure, causation, and damages). Because these factors vary from tort to tort, and case to case, generalized

rules about handling mass tort cases are difficult to formulate.

State substantive law usually governs mass tort cases, making multistate

aggregations of cases even more complex. Some products, like asbestos and

diethylstilbestrol (DES), were produced by a substantial number of companies,

and allocating responsibility among defendants and their insurers introduces

additional complications. The trial judge ordinarily should distinguish between issues appropriate for aggregate determination and issues that require

individualized determinations before making any decision about whether or

how to aggregate claims for pretrial management or final resolution.

Courts have long recognized the need for special case-management

practices in single incident mass torts, such as a hotel fire, the collapse of a

structure, the crash of a commercial airliner, a major chemical discharge or

1019. Advisory Comm. on Civil Rules and Working Group on Mass Torts, Report on Mass

Tort Litigation 10 (Feb. 15, 1999), reprinted without appendices in 187 F.R.D. 293, 300 [hereinafter, Working Group Report].

1020. Id. at 300 n.1 and sources cited therein.

1021. Working Group Report, supra note 1019, app. D, at 1.
§ 22.1 Manual for Complex Litigation, Fourth

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explosion, or an oil spill. Since the early 1980s, however, there has been a rapid

increase in litigation involving dispersed mass torts, which typically arise from

widespread use of, or exposures to, widely distributed products or substances,

often over an extended time.1022 Prominent examples include litigation

involving asbestos, Dalkon Shield intrauterine devices, silicone gel breast

implants, and diet drugs. Key elements of such claims are a high volume of

repetitive litigation involving the same or similar product or substance, and an

evolving and uncertain group of potential claimants and potential defendants.

In a dispersed mass tort, “the universe of potential plaintiffs is unknown and

many times is seemingly unlimited, and the number of potential tortfeasors is

equally obtuse . . . .”1023 By contrast, with single incident mass torts, “the

universe of potential claimants is either known or . . . capable of ascertainment

and the event or course of conduct . . . occurred over a known time period and

is traceable to an identified entity or entities.”1024

Some dispersed mass tort cases involve only claims by individuals who

know that they consumed a certain product or were exposed to a certain

substance and who sustained a present injury of predictable severity within a

relatively short period. Examples of such cases include a pharmaceutical drug

or a medical device that is withdrawn from the market within a year or two

after introduction, such as the Baycol (antistatin drug)1025 and Sulzer Inter-Op

Hip Prosthesis1026 litigations. In other cases, the product or substance exposure

can occur over years and produce latent injury that may take decades or more

to appear and even longer for the extent or severity of injury to become clear.

Such cases are often termed latent dispersed mass torts. Examples of latent

injury claims include those related to asbestos,1027 intrauterine devices,1028

1022. See generally American Law Institute, Complex Litigation: Statutory Recommendations and Analysis § 6.01, at 340–41 (1994) [hereinafter ALI, Complex Litigation] (a succinct

history of some major events in the history of mass torts); see also Francis E. McGovern,

Resolving Mature Mass Tort Litigation, 69 B.U. L. Rev. 659 (1989) [hereinafter McGovern,

Mature Mass Tort].

1023. In re Chevron U.S.A., Inc., 109 F.3d 1016, 1018 (5th Cir. 1997) (claims of personal

injury and property damage related to alleged contamination of property and groundwater by

dumping hazardous wastes).

1024. Id. See also McGovern, Mass Torts for Judges, supra note 705, at 1827–38 (analyzing

various factors related to the volume or elasticity of some mass torts).

1025. See In re Baycol Prods. Liab. Litig., 180 F. Supp. 2d 1378 (J.P.M.L. 2001).

1026. In re Inter-Op Hip Prosthesis Prods. Liab. Litig., 149 F. Supp. 2d 931 (J.P.M.L. 2001).

1027. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 598 (1997) (“[L]atency period that

may last as long as 40 years for some asbestos related diseases . . . .”).

1028. See Richard B. Sobol, Bending the Law: The Story of the Dalkon Shield Bankruptcy

107 (1991) (“The discovery of infertility related to the use of the Dalkon Shield frequently

occurred long after the removal of the device.”).
Mass Torts § 22.1

345

silicone gel breast implants,1029 radiation exposure,1030 and pharmaceutical

products, such as morning sickness remedies.1031 Some potential claimants will

know that they have been exposed to a harmful product or substance, even

absent present injury. Other individuals, however, may not be aware that they

have been exposed to a potentially injurious product or substance (e.g., the

female children of women who took DES during pregnancy1032 or individuals

who have unknowingly been exposed to asbestos1033). Some individuals may

not yet have been exposed to products such as asbestos, lead, or other harmful

substances, but may be exposed later. Justice Ginsburg described such categories of potential claimants as “unselfconscious and amorphous,”1034 a characterization that underscores the difficulty of providing notice to them in a class

action.

Those who have been exposed to a potentially harmful product or substance but have no discovered injury are sometimes referred to as future

claimants or present future claimants. People who have not yet been exposed

to the product or substance but who are in the future are sometimes referred

to as future future claimants. Some question exists whether future claimants,

of whatever type, can receive class action notice that is sufficient under the

Constitution and Rule 23.1035 Some cases present allegations of both present

injury and latent injury, adding to the variability among the claims. Breast

implant and asbestos claims exemplify this latter category.1036

1029. In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL No. 926, No. CV92-P10000-S, Civ. A. No. CV 94-P-11558-S, 1994 WL 578353, at *8 (N.D. Ala. Sept. 1, 1994)

(approving ongoing disease compensation program for thirty years that provides for potentially

adding illnesses of children of women with implants).

1030. In re TMI Litig., 193 F.3d 613, 643 (3d Cir. 1999) (finding that latency period for

exposure to radiation may vary, depending on disease, from eight to ten years).

1031. In re DES Cases, 789 F. Supp. 552, 558 (E.D.N.Y. 1992) (noting that babies exposed to

DES in womb may have latent diseases in adult years); cf. In re Diet Drugs (Phentermine,

Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., MDL No. 1203, No. 99-20593, 2000 WL

1222042, at *46 (E.D. Pa. Aug. 28, 2000) (finding no real latency period from time of discontinued use of diet drug).

1032. DES Cases, 789 F. Supp. at 558 (“Women exposed to DES in utero may develop

adenosis, a pre-cancerous cell change . . . .”).

1033. Amchem, 521 U.S. at 628 (noting that many persons may not know they were exposed,

including children and spouses of claimants).

1034. DES Cases, 789 F. Supp. at 558. See generally, Amchem, 521 U.S. at 628.

1035. Jay Tidmarsh, Mass Tort Settlement Class Actions 29 n.72 (Federal Judicial Center

1998) (dividing “future plaintiffs” into “present futures” and “future futures”); Working Group

Report, supra note 1019, at 302 (referring to “future claimants”).

1036. See, e.g., Amchem, 521 U.S. at 626–27 (discussing “currently injured” and future

claimants); In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL No. 926, 1994 WL 578353,

at *8 (N.D. Ala. Sept. 1, 1994) (alleging wide range of injuries).
§ 22.1 Manual for Complex Litigation, Fourth

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These different categories of potential claimants may create conflicts of

interest. Those with present injuries want to maximize present recoveries;

those who may reveal no injury for years want to ensure that sufficient assets

are available in the future to provide compensation if and as needed.1037 Those

who have not yet been exposed or are unaware of exposure may not be

identifiable. Including such individuals in a binding resolution, as in a global

settlement, raises issues of notice and fairness.

Identifying the differences between single incident and dispersed mass

torts does not necessarily indicate how specific cases should be managed. Some

single incidents, such as accidental discharges of pollutants, can also lead to

claims that are widely dispersed over time and place.1038 Even single event torts

with a strong local nexus, such as a plant emission or a spill of toxic materials,

may include latent exposure effects or be affected by individual variables, such

as smoking. The “common distinction between ‘single event’ and ‘dispersed’

mass torts identifies prototypes,” but does not neatly divide mass torts “into

two tidy categories that can be managed by separate or distinctive means.”1039

The “crucial point is not whether the underlying tort itself is a single event, but

whether its consequences are dispersed.”1040

Toxic tort and defective product cases are often filed throughout the state

and federal court systems, including the bankruptcy courts. The sheer number

of cases can create enormous pressure to aggregate or combine them in order

to reduce delay and docket congestion and to avoid the costs of repetitive

litigation that can drain potential compensation funds. That pressure has led to

creative and experimental procedures by attorneys and judges. A “process of

common law evolution” and “a growing corps of experienced litigators” have

helped “state and federal courts continue to experiment with existing procedures and allocations of jurisdiction.”1041 District judges have exercised their

broad discretion to create some of the innovations described in this section.

The purpose of these innovations, often stimulated by necessity, was to

implement the goals of Rule 42 or 28 U.S.C. § 1407. Although appellate courts

have not reviewed many of the innovative techniques, several of these techniques are clearly within the district court’s discretionary power to manage the

1037. Amchem, 521 U.S. at 626–27.

1038. See, e.g., In re TMI Litig., 193 F.3d 613, 624, 625 n.8 (3d Cir. 1999) (personal injury

claims were filed from the early eighties to mid-nineties); Allen v. United States, 588 F. Supp.

247, 257–58 (D. Utah 1984) (discussing personal injury claims related to radioactive fallout from

nuclear test site where pollutants were dispersed over parts of Nevada, Utah, and Arizona).

1039. Working Group Report, supra note 1019, at 301.

1040. Id. at 302.

1041. Id. at 316.
Mass Torts § 22.1

347

litigation. However, some approaches, especially those that aggregate large

numbers of claims with significant variations, may not comply with the

underlying substantive law or may be unfair to some litigants.1042 Nevertheless,

courts recognize that the complexity, diversity, and volume of mass tort claims

require adapting traditional procedures to new contexts, to achieve both

fairness and efficiency. Effective management of mass tort cases typically

requires early and regular meetings with the lawyers, identifying the nature of

the claims, making decisions on pretrial or trial aggregation or coordination,

and entering detailed orders necessary to the orderly development of the

case.1043 This management role should begin early in the litigation.

Procedures to aggregate claims sometimes encourage the filing of questionable claims, accelerate the rate at which claims are presented,1044 or even

create a mass tort out of what otherwise might simply have been a flurry of

similar cases that would have quickly faded away. For example, in the repetitive stress injury litigation, the Judicial Panel on Multidistrict Litigation (MDL

Panel) (see section 20.13) rejected plaintiffs’ request for consolidation because

the Panel was “not persuaded . . . that the degree of common questions of fact

among these actions rises to the level” required under 28 U.S.C. § 1407.1045

Subsequently, plaintiffs failed to succeed on the merits in trials in seven

different jurisdictions and such claims disappeared from the mass tort landscape.1046

1042. For a case study discussing the appropriate use of mass tort innovations discussed in

this manual, see Thomas E. Willging, Beyond Maturity: Mass Tort Case Management in the

Manual for Complex Litigation, 148 U. Pa. L. Rev. 2225 (2000) (focusing on use of MCL, 3d’s

treatment of the maturity concept in nationwide tobacco class action) [hereinafter Willging,

Beyond Maturity]; see also ALI, Complex Litigation, supra note 1022, § 3.01, at 41–51 (discussing efficiency and fairness in deciding whether to aggregate claims).

1043. See generally Jack B. Weinstein, Ethical Dilemmas in Mass Torts Litigation, 88 Nw. U. L.

Rev. 469 (1994); Geoffrey C. Hazard, Jr., Reflections on Judge Weinstein’s Ethical Dilemmas in

Mass Torts Litigation, 88 Nw. U. L. Rev. 569 (1994).

1044. See McGovern, Mass Torts for Judges, supra note 705, at 1822 (“The more successful

judges become at dealing ‘fairly and efficiently’ with mass torts, the more and larger the mass

tort filings become.”); see also id. at 1841–45 (discussing different case-management approaches

for different levels of maturity of mass tort litigation).

1045. In re Repetitive Stress Injury Prods. Liab. Litig., No. 955, 1992 WL 403023, at *1

(J.P.M.L. Nov. 27, 1992). See also In re Repetitive Stress Injury Litig., 11 F.3d 368, 374 (2d Cir.

1993) (vacating a pretrial consolidation order under Rule 42; approving assignment of cases to a

single judge).

1046. See George M. Newcombe, RSI Defendants Fight for Due Process: “Mass Torts” Needn’t

Always Be Massive, 63 Def. Couns. J. 36, 39–40 (1996). A prominent plaintiffs’ attorney had

described RSI cases as “the mass tort of the nineties” (see Stanley J. Levy, Repetitive Trauma: The

Mass Tort of the Nineties, in Proving or Defending Repetitive Stress Injury, Medical Device, Lead,
§ 22.2 Manual for Complex Litigation, Fourth

348

Although the “just, speedy, and inexpensive determination of every

action”1047 requirement applies to all cases, the difficult and sometimes contradictory demands posed by mass torts make case management both challenging

and critical. The absence of precedent or of legislative or rule-making solutions

should not foreclose innovation and creativity. Such creativity must be

carefully applied, accompanied by an examination of the specific issues raised

in each case, the legal authority for and against the procedures devised, and

other factors that might affect fairness and efficiency.

22.2 Initial Issues in Mass Tort Suits

The goals of mass tort case management parallel the goals of Federal Rule

of Civil Procedure 1 and include the following:

• providing a forum for all parties to have a fair test of the merits of their

claims and defenses;

• avoiding inefficient and duplicative litigation of similar issues of law or

fact;

• effecting the statutory and common-law goals of compensating those

injured by tortious conduct and deterring such conduct; and

• affording similar treatment to similar cases in order to promote public

confidence in the courts through consistent, predictable, and costeffective outcomes.

These goals sometimes require the court to marshal limited assets for the

protection of present and future claimants not yet before the court.

Mass tort case management must keep the litigation moving efficiently,

without truncating necessary pretrial preparation or distorting the presentation of issues. Cases involving a large volume and variety of claims and parties,

and the presence of individualized issues, often create conflicting demands for

speedy adjudication and fairness to all parties. The challenge for the judge is to

avoid excessive delay while preserving the right to a fair trial. For example, the

court may need to establish priorities by considering claims involving serious

impairment before claims that appear to involve little or no impairment. (This

section later discusses types and varieties of claims; section 22.633 discusses

deferred docketing.)

The paradox of mass torts is that all of the claims share some common

attributes, and all present similar challenges, but each particular case has some

Pharmaceutical and Closed Head Trauma Cases 167 (PLI Comm. Law & Practice Course,

Handbook Series No. 723, 1995)).

1047. Fed. R. Civ. P. 1.
Mass Torts § 22.2

349

unique features. A judge must gather information that affects the threshold

decisions for organizing the litigation and for setting a timetable for pretrial

discovery, preliminary or dispositive motions, and trial. A critical question

often is whether to aggregate cases for pretrial and trial management or to

proceed on a case-by-case basis. Important factors to consider include the

following:

• What is the number of potential claims? Mass production and widespread distribution of potentially harmful products or broad exposure

to harmful substances is at the core of most mass torts. The volume of

sales or the extent of public exposure to the products or substances at

issue can help the court approximate the potential size of a mass tort.

Information about the number of cases already filed in state and federal courts and the number of people exposed may provide a basis for

predicting the number of cases likely to be filed in the future and the

likely rate of filings. The number of actual and potential claimants affects decisions about whether to aggregate a group of cases, when aggregation is appropriate, and what form aggregation should take. A

court should be cautious before aggregating claims or cases, particularly for trial, learning first about the nature of the litigation and

whether the issues are appropriate even for pretrial aggregation or

consolidation. Premature aggregation might be unworkable, unfair, or

even accelerate the number and rate of filings and increase the size of

the mass tort.

• What are the types and varieties of claims involved? Considering the

following will help inform case-management decisions:

– whether there is mixed severity among injury claims and whether

any alleged diseases are latent (if a latent disease, the length of the

latency period—that is, the period between exposure and manifestation of injury);

– whether there are claims for personal injury, property damage, economic damage, or combinations of these elements;

– whether claims for personal injuries involve imminent death, disability, chronic illness, or fear of future injury;

– if an increased risk of future injuries is at issue, whether medical

monitoring is an available cause of action or remedy under applicable law; and

– whether the mix of injuries suggests a need to establish priorities

for the most serious claims and a correlative need to defer consid-
§ 22.2 Manual for Complex Litigation, Fourth

350

eration of claims with little or no present impairment.1048 Section

40.52 has a sample order. Section 22.633 discusses deferred docketing. Judges have also devised ways to screen claims that appear to

have no factual basis.1049

A latency period raises the issue of future claimants and their relationship

to those already manifestly injured. A long latency period complicates the

identification and resolution of future claims, particularly claims by those who

are still unaware that they have been exposed to a dangerous product or

substance, or who may not yet have been exposed. The likelihood of future

claims, and the number of those claims, may be difficult or impossible to

determine.

• What is the strength and reliability of the scientific evidence? Is statistically significant and reliable information to support general causation

available or likely to become available? Epidemiological evidence may

not be available when the exposed population is relatively small, the

disease or injury at issue is relatively rare, or both.1050 Is other reliable

evidence available or likely to become available from which a causal

relationship might be proven—for example, findings from toxicology

or medicine?1051 These issues are often raised in challenges to the sufficiency and reliability of expert evidence.

1048. See, e.g., In re Asbestos Prods. Liab. Litig. (No. VI), No. 875, 2002 U.S. Dist. LEXIS

16590, at *1 (E.D. Pa. Jan. 16, 2002) (order ruling that “priority will be given to the malignancy

and other serious health cases over the asymptomatic claims,” administratively dismissing cases

based on mass screenings, and tolling the statute of limitations for such cases). See generally 28

U.S.C. § 1657 (West 2003) and Fed. R. Civ. P. 40 for statutory and rule-based authority of courts

to set priorities for civil cases; see also In re Joint Eastern & Southern Districts Asbestos Litigation,

237 F. Supp. 2d 297, 319–24, 336 (E.D.N.Y. & Bankr. S.D.N.Y. 2002) (approving amended trust

terms that modify disease categories, criteria, and values to increase compensation to claimants

with severe impairments).

1049. See, e.g., In re Diet Drugs Prods. Liab. Litig., 236 F. Supp. 2d 445, 462–64 (E.D. Pa.

2002) (finding echocardiograms and claims forms submitted by two cardiologists and two law

firms to have been medically unreasonable and authorizing the settlement trust to audit all

claims submitted by those law firms and all reports by those cardiologists).

1050. See generally Michael D. Green et al., Reference Guide on Epidemiology, in Reference

Manual on Scientific Evidence 333, 343 (Federal Judicial Center 2d ed. 2000) (indicating that for

a rare disease, a cohort study may not be possible because “an extremely large group would have

to be studied in order to observe the development of a sufficient number of cases for analysis);

see also id. at 356 (“Common sense leads one to believe that a large enough sample of individuals

must be studied if the study is to identify a relationship between exposure to an agent and

disease that truly exists.”).

1051. See Bernard D. Goldstein & Mary Sue Henifin, Reference Guide on Toxicology, in

Reference Manual on Scientific Evidence 401–37 (Federal Judicial Center 2d ed. 2000), and
Mass Torts § 22.2

351

• Do the basic elements of the mass tort present issues common to all claimants? Is the proof of those basic issues common to enough claimants to

warrant common treatment? Common factual issues may arise from

the development, manufacturing, or marketing of an allegedly defective product. The evidence as to whether a product was defective,

whether there is general causation, and the presence and extent of

damages must all be analyzed to determine whether it is common to

all claimants or primarily dependent on individual circumstances.

Causation must be analyzed to determine whether it can be established on a group-wide basis. Proof of causation requires evidence of

exposure to the allegedly defective product or substance, the amount

and duration of exposure, the alleged causal mechanism, and the role

of alternative causal agents. In some cases, judges have treated general

causation as suitable for aggregation through consolidation or certification of an issues class;1052 in other cases, judges have found the issue

too intertwined with individual questions to permit such an approach.1053 Some products leave a signature injury, such as mesothelioma from asbestos. Even in those cases, however, proof of individual

exposure to the causal agent is essential. An identifiable agent that

consistently causes a particular injury may make it easier to prove

causation on a group-wide basis. Without a signature injury or a readily identifiable agent, evidence as to the amount of exposure and the

role of alternative causal agents is more individualized and may make

aggregation of the claims questionable.

Alleged product defects must also be analyzed to determine whether

they can be established by proof common to the group. Such proof

may relate to a single version of a product or to variations among

similar products. The number and extent of the variations will affect

Mary Sue Henifin et al., Reference Guide on Medical Testimony, in Reference Manual on

Scientific Evidence 439–84 (Federal Judicial Center 2d ed. 2002).

1052. See In re Hanford Nuclear Reservation Litig., 292 F.3d 1124, 1139 (9th Cir. 2002)

(distinguishing between nature of expert testimony and proof required for individual as opposed

to generic causation, and remanding with recommendation that the trial court consider “[class]

certification only for questions of generic causation common to plaintiffs who suffer from the

same or materially similar disease”); In re Bendectin Litig., 857 F.2d 290, 308–09 (6th Cir. 1988)

(constitutionality of separate common issues trial of generic causation upheld); Sterling v.

Velsicol Chem. Corp., 855 F.2d 1188 (6th Cir. 1988) (severing, and granting class certification

on, issues of generic causation).

1053. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1302–03 (7th Cir. 1995) (rejecting the

use of an issues class in product liability case because of individual liability issues); Castano v.

Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996) (same).
§ 22.2 Manual for Complex Litigation, Fourth

352

the extent to which proof of deficiencies applies across a substantial

group of claimants. Similarly, claims for punitive damages may be affected by the number of products involved and variations in their production and marketing.

Proof of individual, compensatory damages will typically be specific

to each claimant. Accordingly, individual decisions on actual damages

are usually required.

• How many defendants are there and what is the relationship among

them? The number of defendants that designed, manufactured, or

marketed the suspect product is an important consideration. The

claims among codefendants or third-party defendants may affect not

only the type and extent of discovery, but also whether all necessary

parties are before the court for comprehensive adjudication or settlement. In appropriate cases, the court should encourage defendants to

present joint defenses or to coordinate motions and eliminate repetitive arguments. Early in the litigation, the court should determine

whether other parties, such as insurers, are appropriately and usefully

included in the litigation. If there are related insurance coverage actions pending, the court should consider whether those actions should

be coordinated or consolidated with the litigation. Treatment of coverage issues in conjunction with personal injury litigation has generally occurred in limited fund class action or bankruptcy contexts.1054

Whether any of the defendants are judgment-proof or seeking protection under the Bankruptcy Code are also important considerations. If

the funds available appear inadequate to satisfy likely claims, the court

should assess whether some identifiable plaintiffs are so disabled or

critically ill as to warrant priority consideration, such as expedited trial

dates.1055 For example, the MDL asbestos court severed punitive damages claims and delayed their consideration until compensatory damages had been paid.1056

• Have numerous cases presenting the same issues been filed in other

courts? Courts routinely order counsel to disclose, on an ongoing basis

past, and pending related cases in state and federal courts and to report on their status and results. This information is necessary to casemanagement decisions, including the appropriate level of communi1054. See generally, e.g., Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) (asbestos-related

limited fund class action); In re Dow Corning Corp., 113 F.3d 565 (6th Cir. 1997) (bankruptcy).

1055. See discussion of Tidmarsh and Working Group Report, supra note 1035.

1056. See In re Asbestos Prod. Liab. Cases (No. VI), MDL No. 875, Suggestion of Remand

Order (E.D. Pa. Feb. 26, 2003) (ordering punitive damages severed).
Mass Torts § 22.2

353

cation, cooperation, or coordination with other courts. If similar cases

are dispersed among federal courts, the Judicial Panel on Multidistrict

Litigation may order the cases transferred to a single court for coordinated or consolidated pretrial purposes. See section 22.33. If similar

cases are pending in state courts as well as federal courts, the judge

should inquire whether any of the state cases have been considered,

and, if so, in what courts. Formal and informal techniques to coordinate discovery, pretrial motions, rulings on class certification, trial

schedules, and other matters should be considered. See section 22.4.

• What is the impact of different state laws that may apply? State law usually governs tort claims, even when filed in federal court. The judge,

early in the litigation, should consider the applicable conflicts and

choice-of-law rules. Consider which state laws and defenses apply and

how they affect whether issues of defect, causation, or damages are

subject to common proof. The judge should examine whether any

claims or defenses create individual issues or make aggregate treatment appropriate only for certain parts of the case, or for limited purposes, such as pretrial discovery. And consider whether there are conflicts among the applicable state laws that might present significant

obstacles to any aggregate treatment.

• What are the experiences of other courts with similar claims? The court

might inquire whether similar cases have been tried or settled, and, if

so, with what results; whether other courts have ruled on dispositive

motions or on the limits of appropriate discovery; and what information is available as to the value of a particular set of cases, based on

prior trials or prior settlements.1057 Consider whether there is a need

for more trials of individual cases to determine whether claims should

be aggregated and on what terms. Also, determine if trials of test cases,

common issues trials, or summary jury trials should be used.1058

1057. For an example of an order for counsel to submit preliminary reports summarizing

the status of litigation pending in state courts, see In re Silicone Gel Breast Implant Prods. Liab.

Litig., MDL No. 926, Order No. 1 (N.D. Ala. June 26, 1992), at http://www.fjc.gov/BREIMLIT/

ORDERS/orders.htm (last visited Nov. 10, 2003).

1058. For discussion of summary jury trials as an ADR technique, see Robert J. Niemic,

Donna Stienstra & Randall E. Ravitz, Guide to Judicial Management of Cases in ADR 44

(Federal Judicial Center 2001); see also In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads

Prods. Liab. Litig., 137 F. Supp. 2d 985, 993 (S.D. Ohio 2001).
§ 22.2 Manual for Complex Litigation, Fourth

354

• Would a court-appointed expert, panel of experts, technical advisor, or

special master be of assistance to the trier of fact?1059 Determine whether

there are less costly methods or alternative ways for the court to manage the expert testimony, such as joint meetings of the parties’ experts

to identify the sources of differences in their approaches to the same

questions.

The information discussed above will help in devising a plan for managing the

litigation. A threshold question is whether to aggregate cases for pretrial

management or to proceed on a case-by-case basis.

1059. See generally Laural L. Hooper, Joe S. Cecil & Thomas E. Willging, Neutral Science

Panels: Two Examples of Panels of Court-Appointed Experts in the Breast Implants Product

Liability Litigation (Federal Judicial Center 2001) [hereinafter FJC Study, Neutral Science

Panels] (comparison of methods two judges used to appoint scientific experts to assist in

resolving mass tort litigation); FJC Study, Special Masters, supra note 704 (reporting empirical

findings about the incidence of using special master in various types of cases and describing the

appointment and use of such masters); Ellen E. Deason, Court-Appointed Expert Witnesses:

Scientific Positivism Meets Bias and Deference, 77 Or. L. Rev. 59 (1998) (examining the uses and

pitfalls of appointing experts, especially difficulties in assuring neutrality and counteracting the

tendency to defer to an appointed expert); Joe S. Cecil & Thomas E. Willging, Accepting

Daubert’s Invitation: Defining a Role for Court-Appointed Experts in Assessing Scientific Validity,

43 Emory L.J. 995 (1994) (reporting results of an empirical study of judicial use of courtappointed experts, identifying purposes and problems relating to the appointments, and

describing a pretrial procedure to identify expert issues early in the litigation).
Mass Torts § 22.31

355

22.3 Multiple Filingsin Federal District Courts

.31 Aggregating Claims 355

.311 Criteria 357

.312 Advantages and Disadvantages of Aggregation 357

.313 Timing of Aggregation Decisions 358

.314 Obtaining Information About Common Issues and Case Values 358

.315 Test Cases 360

.316 Case Characteristics 360

.317 Role of Different State Laws 361

.318 Trial Plans 362

.32 Intradistrict Assignment to a Single Judge 362

.33 Interdistrict Transfer (Including MDL) 366

.34 Denial of Transfer 368

.341 Insufficient Common Facts 368

.342 Procedural Alternatives 369

.343 Geographical Diversity and Economy 369

.344 Maturity of Litigation 370

.35 Authority of a Judge Pending Decision by the MDL Panel 371

.36 The Tasks of an MDL Transferee Judge 372

.37 The Task of the Transferor Judge Following Remand After MDL Proceedings 376

22.31 Aggregating Claims

.311 Criteria 357

.312 Advantages and Disadvantages of Aggregation 357

.313 Timing of Aggregation Decisions 358

.314 Obtaining Information About Common Issues and Case Values 358

.315 Test Cases 360

.316 Case Characteristics 360

.317 Role of Different State Laws 361

.318 Trial Plans 362

Aggregation—bringing together hundreds or even thousands of similar

claims into a single unit—is among the most important decisions a judge faces

in mass tort litigation.1060 The decision whether to aggregate related mass tort

cases is very different when made for the purpose of pretrial case management

only, as opposed to trial. This section discusses the criteria and factors applicable to both of these decisions.

Aggregation of mass tort cases can take different forms: assigning cases

filed within a district to a single judge in that district and entering consolida1060. For an overview of the range of informed opinions on whether and when aggregation

should be used in mass tort litigation, see Thomas E. Willging, Appendix C, Mass Torts Problems

and Proposals: A Report to the Mass Torts Working Group (1999), in Working Group Report,

supra note 1019, at app. C.
§ 22.31 Manual for Complex Litigation, Fourth

356

tion orders under Federal Rule of Civil Procedure 421061 for pretrial or trial

management; transferring cases filed in different districts for coordinated or

consolidated treatment by a single judge under the multidistrict litigation

(MDL) statute;1062 and certifying similar cases as a class action for litigation or

settlement purposes. Sections 22.3 and 20.13 discuss MDL transfers and

section 22.7 discusses class actions. The recent trend in federal courts, with a

few notable exceptions,1063 has been to reject certification of nationwide mass

tort personal injury class actions,1064 particularly outside the settlement

context. This trend makes the search for other tools of aggregation and

coordination even more important.

1061. For a discussion of the structural differences between class actions and consolidations,

see Charles Silver, Comparing Class Actions and Consolidations, 10 Rev. Litig. 495 (1991).

Occasionally, cases are consolidated among districts within the same state, but such consolidations do not warrant separate discussion beyond noting the possibility that judges can be

designated to handle cases filed in another district. See In re Joint E. & S. Dists. Asbestos Litig.,

769 F. Supp. 85 (E.D.N.Y. & Bankr. S.D.N.Y. 1991); In re Johns-Manville Corp., 1990 Bankr.

LEXIS 1940 (Bankr. S.D.N.Y. Aug. 21, 1990) (consolidated cases 82 B 11656 (BRL) through 82 B

11676); In re Joint E. & S. Dists. Asbestos Litig., 120 B.R. 648, 652–53 (E.D.N.Y. & Bankr.

S.D.N.Y. 1990) (discussing Order of James L. Oakes, Chief Judge, Second Circuit, dated January

23, 1990, and July 20, 1990; Order of Charles L. Brieant, Chief Judge, United States District

Court S.D.N.Y., dated July 20, 1990, assigning responsibility for pending asbestos cases).

1062. 28 U.S.C. § 1407 (West 2003). If a motion to transfer pursuant to the MDL is not filed,

there may be motions to transfer the venue of related cases to permit assignment before a single

judge. Id. § 1404(a).

1063. Federal trial courts certified nationwide classes for specified common liability-related

issues in the following cases: In re Telectronics Pacing System, Inc., Products Liability Litigation,

172 F.R.D. 271 (S.D. Ohio 1997); In re Copley Pharmaceutical, Inc., “Albuterol” Products Liability

Litigation, 161 F.R.D. 456 (D. Wyo. 1995), In re Copley Pharmaceutical, Inc., “Albuterol” Products

Liability Litigation, 158 F.R.D. 485 (D. Wyo. 1994) (manufacturing defect in batch of pharmaceutical product); see also Lewis Tree Service Inc. v. Lucent Technologies, Inc., 211 F.R.D. 228

(S.D.N.Y. 2002). In Valentino v. Carter-Wallace, Inc., the Ninth Circuit vacated the district

court’s class certification order and remanded for adequate findings, holding that “the law of

this circuit . . . does not create any absolute bar to the certification of a multi-state plaintiff class

action in the medical products liability context.” 97 F.3d 1227, 1230 (9th Cir. 1996). In In re

Estate of Marcos Human Rights Litigation, 910 F. Supp. 1460 (D. Haw. 1995), the Court discusses

a litigation class of personal injury, wrongful death, and torture claimants that was certified for

purposes of a three-phase class-wide trial on liability, punitive damages, and compensatory

damages, under the Alien Tort Claims Act, 28 U.S.C. § 1350 (West 2003).

1064. See, e.g., In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 288 F.3d 1012, 1018

(7th Cir. 2002) (holding that because the claims would have to “be adjudicated under the law of

so many jurisdictions, a single nationwide class is not manageable”); Castano v. Am. Tobacco

Co., 84 F.3d 734, 743–44, 749–52 (5th Cir. 1996).
Mass Torts § 22.312

357

22.311 Criteria

The criteria for aggregation of mass tort cases for trial are more stringent

than for more limited purposes, such as pretrial discovery, motions, or

settlement. Aggregation of related cases for pretrial preparation often promotes

efficiency in discovery, even when the cases cannot be aggregated for all phases

of pretrial preparation or for trial.

The key factor in deciding to aggregate cases for pretrial is the presence of

common issues that can be discovered and litigated efficiently and fairly,

through motions or otherwise, in coordinated or consolidated proceedings. A

common issue is one that is susceptible to common proof. Decisions about

whether to aggregate cases, and for what purposes, should be based on the

presence of common issues critical to liability determinations. In general,

product-based mass torts in which the evidence of exposure and general

causation is clear may be candidates for some form of aggregation.1065 When

the circumstances of exposure vary widely, or where causation is uncertain or

varying, aggregation for trial is inappropriate. In such cases, aggregation for

pretrial discovery and motions may provide some efficiencies but will require

careful management to protect some parties from unfair burden.1066

22.312 Advantages and Disadvantages of Aggregation

Aggregation of similar claims can maximize fair and efficient case management, minimize duplication, reduce cost and delay, enhance the prospect of

settlement, promote consistent outcomes, and increase procedural fairness.1067

Without aggregation, some types of tort or tort-like claims, such as consumer

claims asserting economic loss or property damage but not personal injury,

may simply be foreclosed or delayed for reasons unrelated to the merits.1068 On

the other hand, aggregation can increase the complexity of cases and introduce

1065. In a report to the Mass Tort Working Group, Federal Judicial Center staff identified

the following mass torts areas as having clear causation and identifiable exposure: asbestos,

Dalkon Shield, heart valves, HIV blood factors, tobacco, TMJ implants, J-pacemaker leads, and

Thalidomide. Working Group Report, supra note 1019, app. D, at 10 tbl. 3.

1066. See, e.g., In re Repetitive Stress Injury Litig., 11 F.3d 368, 374 (2d Cir. 1993) (vacating

consolidation order and noting party pursuing aggregation should not do so to increase costs for

adversary).

1067. See Helen E. Freedman, Product Liability Issues in Mass Torts—View from the Bench, 15

Touro L. Rev. 685, 686–88 (1999).

1068. In Amchem Products, Inc. v. Windsor, the Court noted the intent of Rule 23’s drafters

to vindicate the rights of those who might not be able to use the courts at all without a class

action device. 521 U.S. at 617.
§ 22.314 Manual for Complex Litigation, Fourth

358

additional cost and delay associated with individualized issue resolution. In

such instances, aggregation can be unfair to plaintiffs and defendants.1069

22.313 Timing of Aggregation Decisions

Judges have broad discretion as to the timing of aggregation decisions.

Federal Rule of Civil Procedure 42 permits consolidation whenever “actions

involving a common question of law or fact are pending before the court.”

Rule 23(c)(1) directs the court to decide class certification “at an early practicable time.” The statute governing multidistrict litigation, 28 U.S.C. § 1407,

simply refers to “pretrial” proceedings. The MDL Panel sometimes decides to

defer or reject consolidation because one or more of the component cases is

approaching trial.1070 On the other hand, MDL consolidation can occur long

after a substantial number of similar cases have been resolved by trials or

settlements.1071 In most cases, timing depends on the availability of reliable and

sufficient information about whether there are common issues that can be

determined fairly and efficiently across a large number of claims and whether

the nature and value of the claims makes aggregation useful.

22.314 Obtaining Information About Common Issues and Case Values

A “mature” mass tort is one that rests on clearly established law and tested

and accepted evidence. In a mature mass tort, the cases have a predictable

range of values produced through a number of trials and settlements in a

variety of tribunals. Maturity exists on a continuum and resists clear definition.

Determining whether a particular mass tort is mature requires scrutinizing the

merits of the litigation—merits which may become evident in pretrial rulings

1069. See, e.g., In re Repetitive Stress Injury Litig., 11 F.3d 368, 373 (2d Cir. 1993) (“‘The

systematic urge to aggregate litigation must not be allowed to trump our dedication to individual justice, and we must take care that each individual plaintiff’s—and defendant’s—cause not

be lost in the shadow of a towering mass litigation.’” (quoting In re Brooklyn Navy Yard

Asbestos Litig., 971 F.2d 831, 853 (2d Cir. 1992))); Malcolm v. Nat’l Gypsum Co., 995 F.2d 346,

354 (2d Cir. 1993) (disapproving a consolidated trial and cautioning “that it is possible to go too

far in the interests of expediency and to sacrifice basic fairness in the process”); see also Irwin A.

Horowitz & Kenneth S. Bordens, The Consolidation of Plaintiffs: the Effects of Number of Plaintiffs

on Jurors’ Liability Decisions, Damage Awards, and Cognitive Processing of Evidence, 85 J. Applied

Psychol. 909 (2001) (experimental research on jury decision making found that aggregations of

up to ten cases—when compared with single trials or smaller aggregations—increased the

likelihood that defendant would be found liable, but reduced the average damage award per

plaintiff).

1070. See In re Asbestos & Asbestos Insulation Materials Prods. Liab. Litig., 431 F. Supp. 906,

909–10 (J.P.M.L. 1977).

1071. See In re Asbestos Prods. Liab. Litig. (No. VI), 771 F. Supp. 415 (J.P.M.L. 1991).
Mass Torts § 22.314

359

on discovery and motions in the first case filed—to decide whether core issues

of liability remain unsettled.1072 Litigation is generally considered mature if

through previous cases (1) discovery has been thorough, producing a consensus that the available important information has been provided, (2) a number

of verdicts have been received indicating the value of claims, and (3) plaintiffs’

contentions have been shown to have merit.1073 In a typical mature mass tort,

little or no new evidence is likely, appellate review of novel legal issues has been

completed, and a full cycle of trial strategies has been explored.1074

Cases with extensive history or development in other litigation generally

allow a judge to decide whether to aggregate claims, and for what purposes,

with little additional information. Perhaps the best example of a mature mass

tort is the asbestos litigation where discovery has been exhaustively conducted

into many of the issues common to asbestos claims, including factors affecting

causation; the many asbestos verdicts and settlements provide information as

to the value of a particular claim; and repeated litigation in a variety of tribunals has proven specific causation for certain types of injury. The issues in

newly filed asbestos claims focus on whether a particular plaintiff has the

injury claimed and, if so, whether it was caused by asbestos exposure or by

alternative causes, such as using tobacco.

In less mature mass tort cases, aggregation decisions may be more difficult

and may require the judge to obtain additional information. If the injuries

allegedly arise from new products or substances, or liability is predicated on

novel legal claims, causation may be disputed or scientific evidence may be

conflicting. If there are few prior verdicts, judgments, or settlements, additional information may be needed to determine whether aggregation is

appropriate. The need for such information may lead a judge to require a

number of single-plaintiff, single-defendant trials, or other small trials. These

trials would test the claims of causation and damages and whether the evidence

applies across groups, in order to provide the necessary information as to

whether aggregation is appropriate, the form and extent of aggregation, and

the likely range of values of the various claims.

A variety of case-management techniques are available when there is

insufficient information as to the nature, strength, or value of the claims.

1072. See generally infra section 22.2 and Thomas E. Willging, Beyond Maturity: Mass Tort

Case Management in the Manual for Complex Litigation, 148 U. Pa. L. Rev. 2225, 2254–55 and

sources cited therein (2000); see also George L. Priest, Procedural Versus Substantive Controls of

Mass Tort Class Actions, 26 J. Legal Stud. 521 (1997) (presenting the view that substantive review

of the merits of a claim is essential to effective management of mass tort class actions).

1073. See McGovern, Mature Mass Tort, supra note 1022, at 659.

1074. Id.
§ 22.316 Manual for Complex Litigation, Fourth

360

Before making aggregation decisions, the judge should order the parties to

identify other, pending, related cases and their status. The judge also might

consider setting several individual cases on a schedule for pretrial motions,

discovery, and trial as test cases, while holding other cases or claims in abeyance. As another technique, a court may stay or defer decisions in the cases

before it until more advanced cases or dispositive motions pending in other

courts are concluded. Identifying and implementing such approaches

promptly will avoid unnecessary delay.

22.315 Test Cases

If individual trials, sometimes referred to as bellwether trials or test cases,

are to produce reliable information about other mass tort cases, the specific

plaintiffs and their claims should be representative of the range of cases. Some

judges permit the plaintiffs and defendants to choose which cases to try

initially, but this technique may skew the information that is produced.1075 To

obtain the most representative cases from the available pool, a judge should

direct the parties to select test cases randomly or limit the selection to cases

that the parties agree are typical of the mix of cases.1076

Test cases should produce a sufficient number of representative verdicts

and settlements to enable the parties and the court to determine the nature and

strength of the claims, whether they can be fairly developed and litigated on a

group basis’ and what range of values the cases may have if resolution is

attempted on a group basis. The more representative the test cases, the more

reliable the information about similar cases will be.

22.316 Case Characteristics

In litigation with numerous plaintiffs, the judge may direct the parties or a

special master to identify relevant characteristics of the parties affecting pretrial

organization,1077 discovery, settlement, or trial. For example, in litigation

1075. In re Chevron U.S.A., Inc., 109 F.3d 1016, 1019 (5th Cir. 1997) (noting that trial of

cases selected by each side separately “is not a bellwether trial. It is simply a trial of fifteen (15) of

the ‘best’ and fifteen (15) of the ‘worst’ cases contained in the universe of claims involved in this

litigation.”).

1076. Id. (“A bellwether trial designed to achieve its value ascertainment function for

settlement purposes or to answer troubling causation or liability issues common to a universe of

claimants has as a core element representativeness—that is, the sample must be a randomly

selected one of sufficient size so as to achieve statistical significance to the desired level of

confidence . . . .”).

1077. See Johnson v. Celotex Corp., 899 F.2d 1281, 1285 (2d Cir. 1990) (affirming consolidation of two cases with similar characteristics and specifying criteria for identifying common
Mass Torts § 22.317

361

involving allegedly harmful products or substances, the parties might be

directed to organize information such as (1) the circumstances of exposure to

the toxic product (e.g., the place, time span, and amount of exposure), (2) the

types of diseases or injuries attributable to the exposure (e.g., in the diet drug

litigation, heart-valve disease and primary pulmonary hypertension),

(3) relevant and distinguishing characteristics of multiple products, including

manufacturing and distribution information (e.g., prescription from a doctor

or over-the-counter distribution through specific retailers), and (4) the types

of occupations or other roles of the plaintiffs (e.g., asbestos factory worker,

installer, consumer, bystander, exposed spouse). Emerging patterns may assist

the court in organizing and managing the litigation, whether by aggregated

treatment or otherwise.

Also relevant is whether the cases have the same counsel on one or both

sides and whether the cases are at similar stages of pretrial development. Cases

having substantially similar evidence from the same expert or percipient

witnesses sometimes benefit from some form of aggregation.

22.317 Role of Different State Laws

When different state laws apply, a judge might ask the parties to research

the feasibility of organizing cases based on the similarity of the applicable

laws.1078 If the cases are consolidated for pretrial purposes, lead counsel can file

“core” briefs on dispositive motions based on the most widely applicable or

otherwise most significant state substantive law. Variations in state laws can be

addressed separately through supplemental briefs, which can be prepared by

lawyers whose clients assert that a different law applies to some or all of their

cases.

Differences in the applicable substantive law do not necessarily preclude

aggregation for pretrial proceedings, but may create substantial obstacles to

consolidation for trial, even if the underlying facts on liability are the same.1079

issues); see also Hendrix v. Raybestos-Manhattan, Inc., 776 F.2d 1492, 1495–97 (11th Cir. 1985)

(discussing bases for consolidation); cf. In re Repetitive Stress Injury Litig., 11 F.3d 368 (2d Cir.

1993) (vacating a pretrial consolidation order under Rule 42 while approving assignment of

cases to a single judge), and Malcolm v. Nat’l Gypsum Co., 995 F.2d 346 (2d Cir. 1993)

(reversing a jury verdict after trial of forty-eight consolidated cases involving asbestos workers

whose various occupations, worksites, time of exposure, disease types, and injuries were not

sufficiently common to support a consolidated trial); see also Jay Tidmarsh & Roger H.

Trangsrud, Complex Litigation and the Adversary System 473–87 (1998); Thomas E. Willging,

Trends in Asbestos Litigation 104–07 (Federal Judicial Center 1987) [hereinafter Trends].

1078. See In re School Asbestos Litig., 789 F.2d 996, 1010–11 (3d Cir. 1986).

1079. See, e.g., In re Bendectin Litig., 857 F.2d 290, 293–94 (6th Cir. 1988) (noting differences in the complaints and finding “most are virtually identical, requesting relief on grounds of
§ 22.32 Manual for Complex Litigation, Fourth

362

Differences in affirmative defenses, such as statute of limitations defenses,

sometimes create a need for separate discovery and motions practice.

22.318 Trial Plans

Trial plans can assist in determining whether common issues justify

aggregating related cases for trial and the extent and nature of the appropriate

aggregation. Plans should address whether to try cases on a traditional case-bycase basis, on a test case basis, in a bifurcated or multifurcated organization of

issues, in a consolidated or class format, or on some other basis. See section

22.32. The parties should point to evidence that will prove the elements of the

claims and defenses in issue. Such information enables the judge to test

whether common issues support some form of aggregation and whether to

limit aggregation to particular issues. One court tested the manageability of a

class action trial in a multidistrict medical-device proceeding by designing a

plan for a summary jury trial conducted over approximately a one-week

period.1080 Other courts have rejected class certification after the trial plans

exposed an inability to try proof of causation or other elements of liability on a

class-wide basis.1081

22.32 Intradistrict Assignment to a Single Judge

A single judge’s supervision of related mass tort cases filed in a single

district provides centralized management of the cases pending in that district

and also can facilitate coordination of related cases in other districts. Efficiency

is increased if all related cases pending in the same division or district—including actions regarding insurance coverage, suits for indemnification, and adversary proceedings in bankruptcy—are assigned to the same

judge, at least for pretrial management (see sections 20.11 and 10.12).

negligence, breach of warranty, strict liability, fraud, and gross negligence”); In re Copley

Pharm., Inc., “Albuterol” Prods. Liab. Litig., 161 F.R.D. 456, 468–69 (D. Wyo. 1995) (presenting

trial plan to deal with differences in state laws).

1080. In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 137 F.

Supp. 985, 993 n.8 (S.D. Ohio 2001) (noting that “utilization of the summary jury trial

technique in these cases assisted the Court and these Parties in determining whether a trial on

the merits was manageable”).

1081. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1299 (7th Cir. 1995) (finding the use of

multiple juries deciding comparative negligence and proximate causation would violate the

Seventh Amendment’s reexamination clause); In re Methyl Tertiary Butyl Ether (MTBE) Prods.

Liab. Litig., 209 F.R.D. 323, 334, 351–53 (S.D.N.Y. 2002) (denying plaintiffs’ motion for class

certification because trial plan could not resolve individual issues of causation).
Mass Torts § 22.32

363

The district court may withdraw the references to bankruptcy judges of

proceedings to determine the dischargeability of tort claims and assign those

proceedings to the judge presiding over the underlying claims. 28 U.S.C.

§ 157(d). See section 22.52. The judges of a district court in which the bankruptcy proceeding is pending may also decide to defer transfer of multiple

claims for personal injury or wrongful death under 28 U.S.C. § 157(b)(5),

which provides for trial of such claims in the district court in which the

bankruptcy case is pending or in the district in which the claim arose, until

after a period of centralized pretrial management. In some mass tort cases,

district judges and bankruptcy judges have presided jointly and issued joint

opinions and orders.1082 Bankruptcy courts sometimes grant relief from the

automatic stay to save time and conserve resources by enabling distinct claims,

such as insurance coverage or ERISA claims, to proceed simultaneously in

other districts.1083 See section 22.54.

If several cases are remanded to transferor courts in a single district for

trial after a period of multidistrict supervision under 28 U.S.C. § 1407,1084

judges in that district should consider whether the remanded cases are most

efficiently handled by assignment to one judge, at least initially. If so, that

judge may coordinate further discovery as needed and determine the most

appropriate trial structure and schedule.

Local rules sometimes authorize transfer to a single judge of related mass

tort cases filed before different judges in the same division of a district, or in

multiple divisions of the same district. For example, one local rule defines

related cases as those in which “a substantial saving of judicial resources is

likely to result” by assigning them to the same judge “because of the similarity

of facts and legal issues or because the cases arise from the same transactions or

events.”1085 Such local rules generally provide a random or objective basis for

selecting the transferee judge—for example, assignment to the judge who

initially received the lowest-numbered case.1086 Another court’s local rule

directs the clerk to seek the guidance of the judges in the division in the event

1082. See, e.g., In re A.H. Robins Co., 158 B.R. 640 (Bankr. E.D. Va. 1993); In re Joint E. & S.

Dist. Asbestos Litig., No. CV90-3973, 1993 WL 207565 (E.D.N.Y. & Bankr. S.D.N.Y. June 10,

1993).

1083. In re Enron Corp., No. 01-16034, 2002 WL 1008240, at *1 (Bankr. S.D.N.Y. May 17,

2002) (order lifting automatic stay to permit payments under insurance policies).

1084. See infra section 22.33 and supra section 20.13.

1085. U.S. Dist. Ct. R. 50.3(a) (E.D.N.Y Westlaw, current as of Oct. 15, 2003); cf. U.S. Dist.

Ct. R. 40.1 (E.D. Pa. Westlaw, current as of Oct. 15, 2003) (defining a related case as one that

“relates to property included in another suit, or involves the same issue of fact or grows out of

the same transaction as another suit”).

1086. U.S. Dist. Ct. R. 50.3(e) (E.D.N.Y. 2002).
§ 22.32 Manual for Complex Litigation, Fourth

364

of multiple related filings, defined as five or more related cases.1087 Courts have

applied intradistrict assignments to a variety of mass tort cases. In one instance, two courts combined and consolidated their asbestos caseloads before a

single judge designated by the chief judge of the court of appeals.1088

Once cases have been assigned to a single judge, that judge can determine

the nature, extent, and purpose of the coordination or consolidation. Federal

Rule of Civil Procedure 42(a) permits consolidation when the cases involve “a

common question of law or fact.” Such consolidation may be of “any or all of

the matters in issue in the actions.” In single incident mass tort litigation, early

aggregation and pretrial consolidation of all or most of the individual cases

generally has proved to be feasible and efficient.1089 In such cases, consolidation

under Rule 42 for trial purposes as well is often fair and efficient. If there are

some variations among cases within a single district, subdividing them into

groups or clusters of cases that raise similar issues or present similar casemanagement needs can also be an efficient approach.

In dispersed mass tort litigation, by contrast, coordinated discovery and

pretrial motions may be feasible, but differences in facts relevant to exposure,

causation, and damages, as well as in the applicable law, often make consolidation for trial purposes both inefficient and unfair.1090 A court should avoid

ordering even pretrial aggregation until it is sufficiently clear that there are

common questions of fact and law.

Judges in a single division or district sometimes defer any transfer and

intradistrict assignment until some of the cases have been discovered or tried

on an individual basis. If the cases are assigned to a single judge in the district,

that judge often defers the decision on whether to aggregate some or all of the

cases for trial until after discovery and motions practice in cases coordinated

for pretrial purposes have narrowed the claims, issues, and defenses and

illuminated the extent to which they can fairly and efficiently be tried on an

aggregated basis.1091

1087. In re Div. of Cases Among Dist. Judges (Standing Order) (W.D. Va. Jan. 30, 2001), at

http://www.vawd.uscourts.gov/storders/contents.asp (last visited Nov. 10, 2003).

1088. In re Joint E. & S. Dists. Asbestos Litig., 769 F. Supp. 85 (E.D.N.Y. & Bankr. S.D.N.Y.

1991).

1089. See generally Working Group Report, 187 F.R.D. 293, 301–02, supra note 1019, at

11–14 (exploring similarities and differences between single incident and dispersed mass torts);

see also In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001) (describing consolidation of oil spillrelated claims and multiphase class action trial in single federal court; affirming class-wide

compensatory damages verdict, and vacating and remanding class-wide punitive damages

verdict to district court for recalculation).

1090. See In re Repetitive Stress Injury Litig., 11 F.3d 368, 373–74 (2d Cir. 1993).

1091. Fed. R. Civ. P. 42(a). See also cases cited at supra note 1079.
Mass Torts § 22.32

365

The extent and duration of supervision by one judge, and whether to

consolidate some or all of the cases for trial, will depend on the facts. A court

should, for example, examine whether any common issues are central to the

litigation,1092 whether the common issues are separable from individual

issues,1093 and whether there is a feasible plan for dealing with any individual

issues that remain after a verdict on the common issues.1094 A key factor is

whether the claims originated from a single incident. Section 22.32 has further

discussion of trial structures. In dispersed mass tort cases, judges often require

separate trials of individual actions, or of groups of individual actions, and

arrange for assignments or remand to a number of judges after completion of

common discovery.1095

Intradistrict aggregation sometimes leads to adverse consequences.

Assignment to a single judge might delay disposition if that judge has other

major cases to handle.1096 Requiring each party to participate in tangentially

related cases brought by or against other parties may increase costs unnecessarily.1097 Case-management orders should tailor specific discovery to the

parties affected, relieving other parties of that expense and burden. Even in a

single district, aggregation ordered before it is clear that the cases actually

1092. See, e.g., In re Bendectin Litig., 857 F.2d 290, 295–96 (6th Cir. 1988) (reciting district

court finding of common issues relating to causation and liability); see also In re Copley Pharm.,

Inc., “Albuterol” Prods. Liab. Litig., 158 F.R.D. 485, 488–89 (D. Wyo. 1994) (finding common

issues based on contamination of product sold across the country).

1093. See infra text accompanying notes 1395–99, discussing Gasoline Products Co. v.

Champlin Refining Co., 283 U.S. 494, 499 (1931) (holding that “where the requirement of a jury

trial has been satisfied by a verdict according to law upon one issue of fact, that requirement

does not compel a new trial of that issue even though another and separable issue must be tried

again”) and In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995).

1094. See infra text at notes 1400–02 (discussing trial plans for issues classes).

1095. See, e.g., In re Orthopedic Bone Screw Prods. Liab. Litig., MDL No. 1014, 1998 WL

118060, at *1 (E.D. Pa. Jan. 12, 1998) (remanding case after managing all aspects of civil

procedure and discovery); In re Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926,

Order 30 (N.D. Ala. Mar. 25, 1996, with app. B (Apr. 2, 1996)), at http://www.fjc.gov/

BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003) (remanding cases back to

transferor courts with summary of significant rulings, an “outline of issues remaining for

discovery and trial,” and indicating “the nature and expected duration of further pretrial

proceedings that are likely to be needed after remand or transfer”).

1096. Sam C. Pointer, Jr., Reflections by a Federal Judge: A Comment on Judicial Federalism: A

Proposal to Amend the Multidistrict Litigation Statute, 73 Tex. L. Rev. 1569, 1571 (1995) (“formal

assignment of all cases to one court may result in the loss of valuable judicial resources”).

1097. See, e.g., In re Repetitive Stress Injury Litig., 11 F.3d 368, 374 (2d Cir. 1993) (“A party

may not use aggregation as a method of increasing the costs of its adversaries—whether

plaintiffs or defendants—by forcing them to participate in discovery or other proceedings that

are irrelevant to their case.”).
§ 22.33 Manual for Complex Litigation, Fourth

366

represent a mass tort litigation, as opposed to a short-lived filing of similar

claims, might “encourage additional filings and provide an overly hospitable

atmosphere for weak cases,” thereby “render[ing] the label ‘mass tort’ into a

self-fulfilling prophecy.”1098

22.33 Interdistrict Transfer (Including MDL)

Aggregating cases from multiple federal districts can be addressed on a

case-by-case basis through motions to transfer1099 or on a national basis

through the MDL Panel. The Panel has transferred a significant number of

dispersed products liability and other mass torts cases “for coordinated or

consolidated pretrial proceedings” (sometimes referred to as “centralized

proceedings”) in a single district.1100 In one instance, the Panel transferred a

single district’s asbestos cases to an adjoining district for centralized management.1101 Later, the Panel transferred all federal asbestos cases, which were by

then mature mass tort cases, to a single district for nationwide centralized

management.1102

The Panel applies a threshold set of criteria for transfer to a single district.

The first issue is whether the underlying actions present common questions of

fact.1103 The common questions of fact must be complex, numerous, and

incapable of resolution through other available procedures such as informal

coordination.1104 Next, the Panel looks to prudential and procedural factors

1098. Freedman, supra note 1067, at 688.

1099. “For the convenience of the parties and witnesses, in the interest of justice, a district

judge may transfer any civil action to any other district or division where it might have been

brought.” 28 U.S.C. § 1404(a) (West 2003). See also id. § 1406.

1100. 28 U.S.C. § 1407(a) (West 2003). See, e.g., In re Meridia Prods. Liab. Litig., 217 F.

Supp. 2d 1377 (J.P.M.L. 2002); In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 173 F.

Supp. 2d 1377 (J.P.M.L. 2001); In re Propulsid Prods. Liab. Litig., No. 1355, 2000 U.S. Dist.

LEXIS 11651 (J.P.M.L. Aug. 7, 2000); In re Diet Drugs Prods. Liab. Litig., 990 F. Supp. 834

(J.P.M.L. 1998); In re Silicone Gel Breast Implants Prods. Liab. Litig., 793 F. Supp. 1098

(J.P.M.L. 1992).

1101. In re Joint E. & S. Dists. Asbestos Litig., 769 F. Supp. 85 (E.D.N.Y. & Bankr. S.D.N.Y.

1991).

1102. In re Asbestos Prods. Liab. Litig. (No. VI), 771 F. Supp. 415 (J.P.M.L. 1991).

1103. In re Serzone Prods. Liab. Litig., 217 F. Supp. 2d 1372 (J.P.M.L. 2002); In re Baycol

Prods. Liab. Litig., 180 F. Supp. 2d 1378 (J.P.M.L. 2001); Silicone Gel Breast Implants, 793 F.

Supp. at 1098.

1104. See, e.g., In re DaimlerChrysler Corp. Seat Belt Buckle Prods. Liab. Litig., 217 F. Supp.

2d 1376 (J.P.M.L. 2002); In re Unitrin, Inc., Ins. Sales Practices Litig., 217 F. Supp. 2d 1371

(J.P.M.L. 2002); In re Chromated Copper Arsenate (CCA) Treated Wood Prods. Liab. Litig., 188

F. Supp. 2d 1380 (J.P.M.L. 2002); In re Amino Acid Lysine Antitrust Litig., 910 F. Supp. 696
Mass Torts § 22.33

367

supporting the necessity of centralization under section 1407. Centralization

serves judicial economy by avoiding duplication of discovery, preventing

inconsistent or repetitive rulings, and conserving the financial resources of the

parties, their counsel, and the judiciary.1105 The Panel will not grant such a

motion unless transfer ultimately will serve the convenience of the parties and

the courts. Finally, the Panel looks for an available and convenient transfer

forum, usually one that (1) is not overtaxed with other MDL cases,1106 (2) has a

related action pending on its docket,1107 (3) has a judge with some degree of

expertise in handling the issues presented,1108 and (4) is convenient to the

parties.1109

Typically, MDL orders do not provide elaborate explanations or justifications for granting transfer in product liability cases; the Panel merely provides

a short description of the criteria and concludes that the pending litigation

satisfies them. For example:

Common factual questions arise because all actions focus on alleged side

effects of Meridia, a widely-prescribed weight loss drug, and whether

defendants knew of these side effects and either concealed, misrepresented or failed to warn of them. Centralization under Section 1407 is

thus necessary in order to avoid duplication of discovery, prevent inconsistent or repetitive pretrial rulings (such as those regarding class certification), and conserve the resources of the parties, their counsel and the

judiciary.1110

(J.P.M.L. 1995); In re Repetitive Stress Injury Prods. Liab. Litig., No. 955, 1992 WL 403023, at *1

(J.P.M.L Nov. 27, 1992).

1105. For a representative example of the standard language used in nearly all of these

grants, see Baycol, 180 F. Supp. 2d at 1380 (arguing that “Centralization under Section 1407 is

thus necessary in order to eliminate duplicative discovery; prevent inconsistent pretrial rulings,

including with respect to class certification; and conserve the resources of the parties, their

counsel and the judiciary”).

1106. In re Inter-Op Hip Prosthesis Prods. Liab. Litig., 149 F. Supp. 2d 931, 933–34 (J.P.M.L.

2001).

1107. In re Lupron Mktg. & Sales Practices Litig., 180 F. Supp. 2d 1376, 1378 (J.P.M.L.

2001). Though frequently a condition, this factor appears not to be essential. See In re Silicone

Gel Breast Implants Prods. Liab. Litig., 793 F. Supp. 1098, 1100–01 (J.P.M.L. 1992) (appointing

transferee judge from the “universe of federal district judges,” based on comprehensive complex

litigation experience).

1108. In re Wireless Tel. Radio Frequency Emissions Prods. Liab. Litig., 170 F. Supp. 2d

1356, 1358 (J.P.M.L. 2001).

1109. In re Diet Drugs Prods. Liab. Litig., 990 F. Supp. 834, 835–36 (J.P.M.L. 1998).

1110. In re Meridia Prods. Liab. Litig., 217 F. Supp. 2d 1377, 1378 (J.P.M.L. 2002).
§ 22.341 Manual for Complex Litigation, Fourth

368

22.34 Denial of Transfer

.341 Insufficient Common Facts 368

.342 Procedural Alternatives 369

.343 Geographical Diversity and Economy 369

.344 Maturity of Litigation 370

The Panel tends to offer more detailed justifications when denying

transfer. It has generally declined to order transfer if one or more of the

following are present.

22.341 Insufficient Common Facts

The most common reason for denial is that the cases or the common

questions of fact are not sufficiently complex or numerous.1111 For example, in

the DaimlerChrysler seat belt buckle litigation, the Panel held that the number

of actions on the docket was insufficient to justify the inconvenience that

would be caused by the transfer.1112 Even if the number of cases is substantial,

the Panel may find that the cases involve significantly different claims that do

not raise common questions of fact.1113 Section 1407, however, does not

require a complete identity of factual and legal issues as a prerequisite to

centralization.”1114 The Panel has centralized cases where the presence of core

common questions of fact outweighed the existence of individual factual

questions or varying legal arguments.1115 In such cases, the transferee court

generally allows concurrent discovery of noncommon and common issues.1116

Where it has found common issues, the Panel typically has rejected

arguments against transfer that are based solely on the special interests of the

parties. For example, in the Starlink corn products liability litigation, a class of

farmers argued against section 1407 centralization based on significant

1111. In re DaimlerChrysler Corp. Seat Belt Buckle Prods. Liab. Litig., 217 F. Supp. 2d 1376

(J.P.M.L. 2002). See also, e.g., In re First Union Mortgage Corp. Yield Spread Premium Litig., 215

F. Supp. 2d 1360 (J.P.M.L. 2002); In re Chromated Copper Arsenate (CCA) Treated Wood

Prods. Liab. Litig., 188 F. Supp. 2d 1380 (J.P.M.L. 2002); In re Amino Acid Lysine Antitrust

Litig., 910 F. Supp. 696 (J.P.M.L. 1995); In re Repetitive Stress Injury Prods. Liab. Litig., No. 955,

1992 WL 403023, at *1 (J.P.M.L. Nov. 27, 1992).

1112. DaimlerChrysler, 217 F. Supp. 2d at 1377.

1113. Amino Acid, 910 F. Supp. at 701.

1114. In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 173 F. Supp. 2d 1377, 1379

(J.P.M.L. 2001).

1115. In re Immunex Corp. Average Wholesale Price Litig., 201 F. Supp. 2d 1378, 1380–81

(J.P.M.L. 2002); In re Inter-Op Hip Prosthesis Prods. Liab. Litig., 149 F. Supp. 2d 931, 933

(J.P.M.L. 2001); In re Bridgestone/Firestone Tires Prods. Liab. Litig., No. 1373, 2000 WL

33416573, at *2 (J.P.M.L. Oct. 24, 2000).

1116. PPA, 173 F. Supp. 2d at 1379.
Mass Torts § 22.343

369

differences between their interests and the interests of a class of consumers.1117

In granting the defendants’ motion for transfer, the Panel concluded that the

farmer actions and the consumer actions were not different enough to warrant

separate pretrial proceedings.1118 The Panel cited the availability of concurrent

discovery of common and divergent issues as its primary justification for

granting transfer.1119

22.342 Procedural Alternatives

Another reason for denying MDL centralization is the existence of other

procedural alternatives, such as consolidation or cooperative management.1120

In the CCA treated wood products liability case, the Panel observed that

numerous alternatives to transfer exist for less complex actions.1121 The Panel

also has refused to grant centralization where the resolution of an interlocutory

appeal may obviate the need for transfer.1122

22.343 Geographical Diversity and Economy

The Panel also has cited lack of geographic diversity between parties as a

reason for denying transfer. Where all actions are pending in adjacent federal

districts, the Panel has found that the similarity of actions and the ready

availability of cooperative management minimize the necessity for section 1407

centralization.1123

Conversely, where similar cases are widely dispersed, economic burden or

inconvenience arguments are usually rejected as a reason for delaying or

1117. In re Starlink Corn Prods. Liab. Litig., 152 F. Supp. 2d 1378, 1380 (J.P.M.L. 2001).

1118. Id.

1119. Id.

1120. In re Unitrin, Inc. Ins. Sales Practices Litig., 217 F. Supp. 2d 1371, 1372 (J.P.M.L.

2002); In re Chromated Copper Arsenate (CCA) Treated Wood Prods. Liab. Litig., 188 F. Supp.

2d 1380, 1381 (J.P.M.L. 2002).

1121. CCA, 188 F. Supp. 2d at 1381 (finding that “alternatives to transfer exist that can

minimize whatever possibilities there might be of duplicative discovery and/or inconsistent

pretrial rulings” (citing In re Eli Lilly & Co. (Cephalexin Monohydrate) Patent Litig., 446 F.

Supp. 242 (J.P.M.L. 1978) and Manual for Complex Litigation, Third, § 31.14 (1995))). In In re

Eli Lilly, the Panel identified a number of alternatives for dealing with three cases that involved

the validity of the same patent: One or more courts could order that discovery in each case

would apply in the others; the parties could stipulate to coordinated discovery and pretrial

approaches; the courts could coordinate pretrial rulings to avoid duplicative activity; a court

could stay the litigation pending action in the other courts; or collateral estoppel could dispose

of the issues. In re Eli Lilly, 446 F. Supp. at 244.

1122. In re First Union Mortgage Corp. Yield Spread Premium Litig., 215 F. Supp. 2d 1360,

1361 (J.P.M.L. 2002).

1123. Unitrin, 217 F. Supp. 2d at 1372.
§ 22.344 Manual for Complex Litigation, Fourth

370

denying transfer.1124 The Panel has noted that after section 1407 centralization,

the appointment of lead counsel may reduce the need for large numbers of

lawyers to travel to the transferee district.1125

22.344 Maturity of Litigation

The Panel sometimes rejects a motion for MDL transfer filed late in the

litigation when centralization may delay the progress of cases approaching trial

and it is too late to avoid duplicative judicial efforts.1126 In the Propulsid case,

the Panel rejected the idea that it should wait until the litigation matured

before ordering transfer:

If the Panel were to adopt the defendants’ concept of maturity, many of

the judges assigned to the various actions would be required to needlessly replicate other judges’ work on such matters as class action certifications, medical monitoring claims, the structuring of confidentiality

and other discovery orders, the scheduling of depositions and other discovery, rulings on motions to dismiss, and so forth. Only when such

common pretrial matters had been repetitiously resolved in an undetermined number of federal actions would defendants concede that Section

1407 centralization might then become appropriate. We conclude that

such an approach would defeat the very purposes leading to the enactment of Section 1407.1127

In a later opinion, the Panel again rejected the maturity argument by refusing

to delay centralization where several actions were subject to pending motions

to remand to state court.1128 Finally, an early transfer affords the Panel flexibility in choosing the best forum for the common questions of fact.

1124. In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 173 F. Supp. 2d 1377, 1379

(J.P.M.L. 2001).

1125. Id. at 1379. See also In re Nissan Motor Corp. Antitrust Litig., 385 F. Supp. 1253, 1255

(J.P.M.L. 1974).

1126. In re Asbestos Sch. Prods. Liab. Litig., 606 F. Supp. 713, 714 (J.P.M.L. 1985) (denying

motion to transfer based on several factors including the fact that several “actions [were]

scheduled for trial within the next six months”). See generally In re Grand Funk Railroad

Trademark Litig., 371 F. Supp. 1084, 1086 (J.P.M.L. 1974) (denying motion to transfer because

the case was close to trial and “transfer of these actions at this time will neither serve the

convenience of the majority of the parties and witness nor promote the just and efficient

conduct of the litigation”).

1127. In re Propulsid Prods. Liab. Litig., No. 1355, 2000 U.S. Dist. LEXIS 11651, at *3–*4

(J.P.M.L. Aug. 7, 2000).

1128. In re Bridgestone/Firestone, Inc., ATX, ATX II, & Wilderness Tires Prods. Liab. Litig.,

No. 1373, 2000 WL 33416573, at *2 (J.P.M.L. Oct. 24, 2000).
Mass Torts § 22.35

371

22.35 Authority of a Judge Pending Decision by the MDL

Panel

In many cases, a court with one or more cases that are part of a mass tort

may anticipate transfer by the MDL Panel. That court may, however, have

motions to remand, motions to dismiss, or motions relating to discovery filed

before the MDL Panel rules. A court in that position has the authority to grant

or deny a motion or to stay the cases before it, pending the Panel’s decision on

transfer. If the case is transferred, the transferee court then decides unresolved

motions after transfer.1129

A stay pending the Panel’s decision can increase efficiency and consistency,

particularly when the transferor court believes that a transfer order is likely and

when the pending motions raise issues likely to be raised in other cases as

well.1130 The reasons for a stay diminish, however, if the pending motions raise

issues relating to the law of a single state that are unlikely to arise in other

related cases, if MDL transfer appears unlikely, or if the absence of federal

jurisdiction is clear.1131 Judicial economy may then be served by resolving

specific issues and declining to stay the proceedings.1132 Similarly, if the case is

far along in discovery or motions practice, and there is an urgent need to have

that case resolved, the court may decide not to stay the proceedings.1133 For

example, if the case involves a critically ill plaintiff who cannot wait an ex1129. The rules of the Judicial Panel on Multidistrict Litigation expressly provide that the

pendency of a proceeding before the Panel to transfer a case “does not affect or suspend orders

or pretrial proceedings in the district court in which the action is pending.” J.P.M.L. R. P. 1.5

(West 2003); see also In re Asbestos Prods. Liab. Litig., 170 F. Supp. 2d 1348, 1349 n.1 (J.P.M.L.

2001) (citing Rule 1.5 and noting that proceedings for transferring tag-along actions experience

“a lag time of at least three or four months from the filing of an action . . . and the issuance of

the Panel’s subsequent order”).

1130. Moore v. Wyeth-Ayerst Labs., 236 F. Supp. 2d 509, 510–11 (D. Md. 2002) (observing

that the MDL transferee judge had faced multiple motions to remand cases removed from state

courts).

1131. See, e.g., Caldwell v. Am. Home Prods. Corp., 210 F. Supp. 2d 809, 811 (S.D. Miss.

2002) (stating “the law in this circuit is clear that the All Writs Act does not provide an independent basis for federal jurisdiction”).

1132. McGrew v. Schering-Plough Corp., No. CIV.A.01-2311, 2001 WL 950790, at *3 (D.

Kan. Aug. 6, 2001) (“For purposes of judicial economy, the jurisdictional issue should be

resolved immediately,” before action by the MDL panel.).

1133. See, e.g., Carden v. Bridgestone/Firestone, Inc., No. CIV.00-3017, 2000 WL 33520302,

at *4 (S.D. Fla. Oct. 18, 2000) (denying stay and remanding case seeking injunctive relief to state

court); see also Naquin v. Nokia Mobile Phones, Inc., No. CIV.A.00-2023, 2001 WL 1242253, at

*1 (E.D. La. June 20, 2001) (denying motions to stay because “the prior substantial rulings in

this case and continuing efforts by counsel may in fact aid the multidistrict litigation”).
§ 22.36 Manual for Complex Litigation, Fourth

372

tended period for trial, the court may decide to proceed rather than wait for

MDL action.

22.36 The Tasks of an MDL Transferee Judge

Aside from deciding any threshold motion to remand, the initial tasks of

the MDL transferee judge include coordinating or consolidating the cases

previously pending in a number of different districts; identifying differences in

applicable law; and seeking information from the parties as to the status of the

cases in order to determine how to proceed with pretrial discovery and

motions. See sections 22.2 and 22.61. As to remand motions, the Panel’s policy

is not to delay a transfer decision because a remand motion is pending. The

transferor court may rule on such a motion—or any other motion—while the

Panel considers transfer. If the transferor courts have not decided remand

motions before the MDL Panel order is issued, the transferee court should try

to resolve the remand motions promptly because they invariably affect federal

subject-matter jurisdiction, and the failure to rule on them until a case is

returned to the transferor court may result in unnecessary and prejudicial

delay.

An MDL transferee judge has authority to dispose of cases on the merits—for example, by ruling on motions for summary judgment1134 or trying

test cases that had been originally filed in the transferee district or refiled in or

transferred to that district. If summary judgment motions are pending, the

transferee judge must consider whether to decide the motions or to transfer

the cases back to the transferor districts. If the summary judgment motion

pertains to one or few cases, or rests on application of the transferor court’s

conflicts-of-law and substantive law rules, the transferor judge may be able to

decide the motions most efficiently.1135 If the summary judgment motions

involve issues common to all the cases centralized before the MDL court,

however, the transferee judge may be in the best position to rule.1136

1134. See, e.g., In re Temporomandibular Joint (TMJ) Implants Prods. Liab. Litig., 113 F.3d

1484, 1488 (8th Cir. 1997) (affirming grant of summary judgment for defendant Dow Chemical

in relation to liability for the use of silicone gel in TMJ implants).

1135. See In re Orthopedic Bone Screw Prods. Liab. Litig., MDL No. 1014, 1997 WL 109595,

at *2 (E.D. Pa. Mar. 7, 1997) (ruling on motions for partial summary judgment would not

advance the litigation and would serve no useful purpose (citing Manual for Complex Litigation,

Third, § 21.34 (1995))); see also Francis E. McGovern, Judicial Centralization and Devolution in

Mass Torts, 95 Mich. L. Rev. 2077 (1997) (citing In re Silicone Gel Breast Implants Prods. Liab.

Litig., 887 F. Supp. 1455 (N.D. Ala. 1995)) [hereinafter McGovern, Judicial Centralization].

1136. See, e.g., In re Norplant Contraceptive Prods. Liab. Litig., 215 F. Supp. 2d 795, 810, 835

(E.D. Tex. 2002) (granting summary judgment terminating “nearly all remaining non-settling
Mass Torts § 22.36

373

MDL transferee judges cannot try cases that were not filed in their districts

or refiled or transferred to their districts by the court of origin, absent consent

of the parties.1137 Some courts and parties, however, have attempted to adopt

techniques to facilitate trials in MDL transferee courts—for example, by the

filing of a consolidated amended class action complaint, or master complaint,

as an original action in the transferee forum. That complaint then may serve as

the vehicle for determination of common issues, including trial.1138 Section

20.132 describes other circumstances in which the transferee court may have

authority to retain cases for trial.

Even if the transferee court has authority, by consent or otherwise, to try

transferred cases, the court may decide to use a decentralized approach in

which authority to decide individual cases remains with or returns to the nonMDL judges.1139 If, however, there are summary judgment motions that might

resolve all of the issues for all of the parties, or if there are common issues that

might be tried, either on a test-case basis or otherwise, the transferee judge

may find it more efficient to address the merits in a centralized manner.1140

Plaintiffs and their claims in the Norplant multidistrict litigation proceedings” based in part on

the common-law application of the learned intermediary doctrine); see also In re Norplant

Contraceptive Prods. Liab. Litig., 165 F.3d 374, 378 (5th Cir. 1999) (affirming district court’s

summary judgment ruling applying learned intermediary doctrine); cf. In re Norplant Contraceptive Prods. Liab. Litig., 961 F. Supp. 163, 169 (E.D. Tex. 1997) (denying defendants’ motion

for partial summary judgment based on statute-of-limitations grounds).

1137. Lexecon, Inc. v. Milberg, Weiss, Bershad, Hynes & Lerach, 523 U.S. 26 (1998)

(interpreting 28 U.S.C. § 1407 as limiting authority of transferee judge to transfer action to itself

for trial). Legislation has been proposed to amend section 1407 and remove the limitation on

transfers for trial.

1138. For example, in In re Bridgestone/Firestone Inc., ATX, ATX II, & Wilderness Tires Prods.

Liab. Litig., 155 F. Supp. 2d 1069 (S.D. Ind. 2001), the parties filed a master complaint as an

original proceeding in the MDL transferee court and the court used this complaint to support

applying Indiana’s choice-of-law rules to determine defendants’ motions to dismiss. The district

court subsequently certified a nationwide class, which order was reversed sub nom in In re

Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 288 F.3d 1012 (7th Cir. 2002), on grounds,

inter alia, that the district court had misapplied Indiana’s choice-of-law doctrine.

1139. See McGovern, Judicial Centralization, supra note 1135, at 2079–81 (describing the

approach used in the silicone gel litigation); In re Silicone Gel Breast Implant Prods. Liab. Litig.,

MDL No. 926, Order No. 60A (N.D. Ala. May 30, 2000), at http://www.fjc.gov/BREIMLIT/

ORDERS/orders.htm (last visited Nov. 10, 2003) (remanding thirteen cases).

1140. See, e.g., Norplant, 215 F. Supp. 2d at 835 (granting partial summary judgment

terminating “nearly all remaining non-settling plaintiffs and their claims” in the MDL); In re

Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2001 WL 497313, at *3 (E.D. Pa. May 9, 2001)

(noting special master’s dismissal of defendants “for lack of product identification”); In re

MasterCard Int’l, Inc. Internet Gambling Litig., 132 F. Supp. 2d 468, 497 (E.D. La. 2001)

(dismissing two test cases); In re Honda Am. Motor Co. Dealership Relations Litig., 979 F. Supp.

365, 368–69 (D. Md. 1997) (rejecting test case approach in favor of limited issues class ap-
§ 22.36 Manual for Complex Litigation, Fourth

374

In a number of recent MDL centralizations, transferee judges have exercised their discretion to select test cases for discovery, motions, and trial, and

to coordinate their dockets with state courts handling similar cases.1141 Courts

have also carved out issues classes to resolve common issues.1142 Section 22.315

discusses the selection of test cases and implementation of a test-case strategy

beginning at the pretrial stage, while section 22.93 discusses the use of a testcase strategy at the trial stage. Section 22.75 discusses issues classes, and section

22.4 discusses state–federal coordination.

Two RICO cases illustrate some advantages and disadvantages of using a

test-case approach as compared with using a class action approach. In one

case—alleging that credit card companies had facilitated use of the Internet to

support illegal gambling—the court determined that a test case was the best

approach to resolve the RICO issues that the plaintiffs’ claims raised.1143 In the

other case—involving allegations of fraud and bribery in dealings between an

automobile franchisor and its franchisee dealerships—the court expressly

rejected a test-case approach and elected to deal with RICO and non-RICO

issues by managing the case through a bifurcated limited issues class trial.1144 In

both contexts, the case-management approaches focused on whether the RICO

claims could establish liability. In context, each approach appears to have

adjudicated the validity of plaintiffs’ claims in an efficient, fair, and balanced

manner.

An advantage of using the test-case approach in the Internet gambling

MDL proceeding was that it allowed the court to isolate and resolve a disputed

and dispositive threshold issue: whether plaintiffs’ best cases could survive a

motion to dismiss for failure to state a claim for relief.1145 Other advantages of

using test cases might include litigating and trying all of the claims in the test

cases, which would allow the litigation to mature through trials. If the MDL

proach); In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL. No. 926, Order No. 31 (N.D.

Ala. May 31, 1996), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10,

2003) (appointing national science panel).

1141. McGovern, Cooperative Strategy, supra note 705, at 1886–92 (2000) (describing the “de

facto” strategy implemented in the diet drug, Norplant, and California silicone gel breast

implant litigations).

1142. See, e.g., In re Honda Am. Motor Co. Dealership Relations Litig., 979 F. Supp. 365 (D.

Md. 1997).

1143. In re MasterCard Int’l Inc., Internet Gambling Litig., 132 F. Supp. 2d 468 (E.D. La.

2001).

1144. Honda, 979 F. Supp. at 366.

1145. MasterCard, 132 F. Supp. 2d at 497 (holding that plaintiffs failed to plead several

elements of a RICO case, dismissing Rule 19 motions as moot, and statistically closing the

remaining MDL cases for administrative purposes).
Mass Torts § 22.36

375

cases include class allegations, the test-case approach resolves the claims as to

the named parties, ends the tolling of the statute of limitations, and requires

potential litigants to file lawsuits if they wish to pursue claims.1146

Potential disadvantages of using test cases include the lack of any clear

preclusive effect of a judgment for defendants, possible limits on the preclusive

effects of judgments for the plaintiffs, and the possibility of creating “chaos

among plaintiffs’ counsel”—that is, lead counsel appointed to represent

plaintiffs in the MDL proceedings.1147 On the other hand, the Honda American

MDL transferee court decided that an issues class action approach would yield

a mutual preclusive effect and would “serve to keep the leadership structure

among plaintiffs’ counsel in place.”1148

The transferee judge usually supervises discovery, decides motions, and, if

called for, decides whether to certify a class action.1149 Under the decentralized

approach, the transferee judge would then remand the cases to their original

districts for trial, as in the breast implant and orthopedic bone screw litigations.1150 In other cases, grants of summary judgment or approvals of settlement have obviated remand to the transferee courts.1151

1146. Honda, 979 F. Supp. at 368.

1147. Id.

1148. Id. at 368–69. The disadvantage of continued tolling of the statute the limitations

could be ameliorated by ending the tolling for damage claims, which were not included among

the issues to be adjudicated on a class-wide basis. Id. at 370–71.

1149. See, e.g., Bridgestone/Firestone, 288 F.3d at 1018 (holding that the certified class was not

manageable). The court noted that the transferee court had certified a nationwide class that

“would make all other suits [MDL transferred cases] redundant.” Id. at 1015. The court did not

decide, however, whether certification of a class action meeting Rule 23 requirements would

authorize the transferee court to retain the class action (and all the underlying cases) for trial,

effectively bypassing the Lexecon restriction on trial of transferred cases by the transferee court.

As of mid-2003, that question has not been the subject of an appellate ruling.

1150. See, e.g., In re Orthopedic Bone Screw Prods. Liab. Litig., MDL No. 1014, Order No.

1507, 1998 WL 411380, at *1 (E.D. Pa. June 30, 1998); In re Silicone Gel Breast Implants Prods.

Liab. Litig., MDL No. 926, Revised Order No. 30 (N.D. Ala. Mar. 25, 1996), at

http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003).

1151. In re Norplant Contraceptive Prods. Liab. Litig., 165 F.3d 374 (5th Cir. 1999)

(affirming summary judgment of test cases); In re Inter-Op Hip Prosthesis Liab. Litig., 204

F.R.D. 330 (N.D. Ohio 2001) (certifying settlement class); In re Diet Drugs Prods. Liab. Litig.,

2000 WL 1222042 (E.D. Pa. Aug. 28, 2000) (same).
§ 22.4 Manual for Complex Litigation, Fourth

376

22.37 The Task of the Transferor Judge Following Remand

After MDL Proceedings

When the MDL pretrial proceedings are concluded and individual cases

are remanded to the transferor courts, the transferor judge must decide

whether additional discovery and other pretrial work require completion,

including deciding dispositive motions.1152 In some remanded cases, the cases

are assigned to a single judge in a district for coordinated final pretrial proceedings and trial. If the remanded cases raise individual questions of exposure, causation, injury, or damages, such aggregated proceedings may not be

useful.

22.4 Multiple Filings in State and Federal Courts

Mass tort litigation frequently involves filings in both federal and state

courts. As discussed in section 22.33, multidistrict treatment of the federal

cases under 28 U.S.C. § 1407 may be possible,1153 but some state court cases

may not have been removed—or may not be removable—and will not be

subject to section 1407 transfer. Although it is likely that the Panel will transfer

federal cases alleging the same mass tort to a single federal district judge for

pretrial proceedings, there will likely be numerous state court cases raising

similar allegations. Absent certification of a national class (which is unlikely in

a mass tort case alleging personal injuries or property damages based on state

1152. In re Silicone Gel Breast Implants Prods. Liab. Litig, MDL No. 926, Pretrial Order No.

30, at ¶ 1 (summarizing the MDL proceedings and significant rulings), ¶ 4(c) (detailing

remaining discovery), and ¶ 7(c) (specifying further pretrial proceedings likely to be needed in

the remand courts) (N.D. Ala. Mar. 25, 1996), and id., app. B (Apr. 2, 1996), at

http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003). See also Recent

Developments in the Silicone Gel Breast Implant Products Liability Litigation: A Briefing for

Federal and State Court Judges (Federal Judicial Center 1996) (FJC Media Catalog No. 3095-

V/96) (videotape supplementing Judge Pointer’s order in the silicone gel breast implant

litigation instructing judges on the background of the litigation and other pretrial issues).

1153. See supra section 20.13. The Judicial Panel on Multidistrict Litigation has centralized a

number of mass tort cases for pretrial management. See supra section 22.33. After initially

rejecting applications to centralize asbestos personal injury actions, see, e.g., In re Asbestos &

Asbestos Insulation Material Prods. Liab. Litig., 431 F. Supp. 906 (J.P.M.L. 1977), the panel later

transferred all pending federal asbestos personal-injury claims in the Eastern District of

Pennsylvania. In re Asbestos Prods. Liab. Litig., 771 F. Supp. 415 (J.P.M.L. 1991). For other

examples of centralization of mass tort litigation, see In re Diet Drugs Products Liability

Litigation, 990 F. Supp. 834 (J.P.M.L. 1998), In re Temporomandibular Joint (TMJ) Implants

Products Liability Litigation, 844 F. Supp. 1553 (J.P.M.L. 1994), and In re Silicone Gel Breast

Implant Products Liability Litigation, 793 F. Supp. 1098 (J.P.M.L. 1992).
Mass Torts § 22.4

377

law causes of action), there is no procedural mechanism analogous to the

Multidistrict Litigation Panel’s transfer under section 1407 for formal coordination or consolidation of state and federal cases.

Federal and state court judges frequently cooperate informally and

effectively to coordinate discovery and pretrial proceedings in mass tort cases.

For example, in the PPA litigation, the MDL transferee judge coordinated the

discovery and Daubert hearing schedules with state judges.1154 In the diet drug

litigation, a state judge, the MDL transferee judge, and counsel worked out a

formula for compensating the lawyers handling the state court cases who had

conducted discovery that was useful in the MDL cases.1155 These and other

approaches to state–federal coordination are discussed extensively in section

20.3, which emphasizes cooperative efforts that have taken place in the mass

tort context.

In the absence of a class certification and a pending settlement, the

authority of federal courts to enjoin state court proceedings is limited. Read

together, the Anti-Injunction Act1156 and the All Writs Act1157 allow injunctions

against state proceedings only when necessary to aid a federal court’s jurisdiction. For example, in a case in which the MDL transferee judge issued a pretrial

order that barred discovery of certain matters and applied to discovery

conducted in state court cases involving the same subject matter, the court of

appeals held that “the Anti-Injunction Act does not bar courts with jurisdiction over complex multidistrict litigation from issuing injunctions to protect

the integrity of their rulings, including pretrial rulings like discovery orders.”1158 Such an order must be “narrowly crafted to prevent specific abuses

which threaten the court’s ability to manage the litigation effectively and

responsibly.”1159 Section 21.15 discusses the authority of a federal court to

1154. See In re Phenylpropanolamine (PPA) Prods. Liab. Litig., MDL No. 1407, Order

Granting in part and Denying in part Manufacturing Defendants Motion to Accelerate Daubert

Hearing (W.D. Wash. Sept. 19, 2002), at http://www.wawd.uscourts.gov/wawd/mdl.nsf/

main/page (last visited Nov. 10, 2003) (adjusting calendar for Daubert proceedings to coordinate

with similar proceedings in state courts); id., MDL No. 1407, Order No. 1 (W.D. Wash. Jan. 29,

2002), at http://www.wawd.uscourts.gov/wawd/mdl.nsf/main/page (last visited Nov. 10, 2003)

(“This Court has taken into consideration the present status and progress of discovery against

various groups of defendants in fashioning a discovery schedule that will aid in fostering state

and federal court coordination of PPA cases, and completing the tasks undertaken in this MDL

1407 with reasonable dispatch in keeping with the needs and expectations of litigants.”).

1155. See supra section 20.31 and text accompanying notes 702–04.

1156. 28 U.S.C. § 2283 (West 2003).

1157. Id. § 1651.

1158. Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1203 (7th Cir. 1996).

1159. Id. See also In re Inter-Op Hip Prosthesis Prod. Liab. Litig., 2001 WL 1774017, at *1

(6th Cir. Oct. 29, 2001) (rejecting order enjoining all litigation pending settlement review).
§ 22.5 Manual for Complex Litigation, Fourth

378

enjoin state court proceedings before class certification. Section 21.42 discusses

such authority in relation to certified class actions. Section 20.32 discusses

state–federal jurisdictional conflicts in general and the variety of means of

addressing them, including injunctive relief. The limits on a federal court’s

authority to enjoin overlapping and duplicative proceedings in state courts

makes cooperative efforts at coordination critical to minimize conflicts and

duplication unrelated to the strengths or weaknesses of the merits.

22.5 Multiple Filings in District and Bankruptcy

Courts1160

.51 Venue, Transfer, and Consolidation 380

.511 Venue and Transfer 380

.512 Consolidation and Reassignment 380

.52 Withdrawing the Reference 381

.53 Dividing the Labor Among Judges 383

.531 MDL Transferee Judge 383

.532 Other Judges 384

.533 Bankruptcy Appeals 384

.54 Coordinating and Consolidating Tort Claims and Related Cases 385

.541 Claims Against the Debtor 386

.542 Claims Against Other Defendants 388

.543 Consolidation of Cases 388

.544 Transfer of Related Cases of Nondebtor Defendants 389

.545 Expanding the Automatic Stay or Enjoining Related Cases 391

.55 Providing Representation for Future Mass Tort Claimants 393

.56 Estimating the Value of Mass Tort Claims 397

.57 Negotiating a Reorganization Plan 398

.58 Discharging Future Claims 399

.59 Confirming a Reorganization Plan 401

Corporate defendants in mass tort litigation sometimes file for relief under

the Bankruptcy Code in order to attempt a global resolution of pending and

threatened mass tort claims. The constraints on certification of some settlement classes imposed by the Supreme Court’s decisions in Amchem and Ortiz

appear to have increased the use of the bankruptcy courts for this purpose,

1160. This subsection draws heavily on a preliminary draft of Professor S. Elizabeth Gibson’s

work on a Federal Judicial Center manual on case management of bankruptcy proceedings in

cases involving mass torts. S. Elizabeth Gibson, Judicial Management of Mass Tort Bankruptcy

Cases (Federal Judicial Center forthcoming; title is tentative) [hereinafter Gibson, Judicial

Management]. See also S. Elizabeth Gibson, Case Studies of Mass Tort Limited Fund Class

Action Settlements & Bankruptcy Reorganizations (Federal Judicial Center 2000) [hereinafter

Gibson, Case Studies].
Mass Torts § 22.5

379

particularly in asbestos cases.1161 Generally, such defendant-debtors seek

confirmation of a reorganization plan under Chapter 11 that will provide

adjusted payments to creditors, including tort claimants. Such a plan allows

the reorganized business to emerge from bankruptcy free of the obligations to

creditors, including tort claimants, that led to the reorganization. On rare

occasions debtors liquidate their businesses under Chapter 7. Bankruptcy

filings can dramatically alter the scope and direction of a pending mass tort

litigation and can alter the claims and cases directly or indirectly related to the

bankrupt debtor’s activities.

When a defendant in mass tort litigation files for bankruptcy, all the

pending litigation in all state and federal courts against that party is automatically stayed as of the petition date.1162 The automatic stay, combined with the

bankruptcy court’s exclusive control of the debtor’s assets, effectively centralizes that defendant’s state and federal mass tort cases into a single federal

court. The bankruptcy filing and resulting centralization raise questions

relating to the venue of the cases, the division of labor among various judges

(including considerations relating to withdrawing the reference to the bankruptcy judge), the coordination and consolidation of the tort claims with other

related cases (including cases involving codefendants that are not in bankruptcy), the representation of future mass tort claimants, the process for

estimating the value of mass tort claims, and, finally, the process for negotiating a reorganization plan that includes provisions for payment of present and

future claims. This section addresses those questions in summary fashion,

focusing on issues that involve district as well as bankruptcy judges.1163

1161. Stephen Carroll et al., Asbestos Litigation Costs and Compensation: An Interim

Report (2002), available at http://www.rand.org/publications/DB/DB397 (last visited Dec. 2,

2003). See generally ALI-ABA, Asbestos Litigation in the 21st Century (Sept. 19–20, 2002). See

infra section 22.71 for discussion of the Amchem and Ortiz decisions.

1162. 11 U.S.C. § 362(a)(1) (2003). The Bankruptcy Code also bars the bringing of new suits

on claims that arose before the petition was filed. Id.

1163. See generally Gibson, Judicial Management, supra note 1160. That manual will also

cover topics primarily relevant to the operation of the bankruptcy system, such as the appointment of committees, the compensation of professionals, and procedures for voting on and

confirming reorganization plans.
§ 22.512 Manual for Complex Litigation, Fourth

380

22.51 Venue, Transfer, and Consolidation

.511 Venue and Transfer 380

.512 Consolidation and Reassignment 380

22.511 Venue and Transfer

The defendant-debtor makes the initial decision about where to file the

bankruptcy petition.1164 Where the MDL Panel has centralized the tort claims

in a given district, the bankruptcy petition can be filed in that district if other

venue requirements are met.1165 If the debtor files the bankruptcy case in a

district other than the transferee district, the bankruptcy court may, under

certain conditions, “transfer a case or proceeding . . . to a district court for

another district, in the interest of justice or for the convenience of the parties.”1166 Although this procedure has not been invoked in any mass tort

bankruptcy case to date, a retrospective analysis of the proceedings in the Dow

Corning reorganization indicated that “prospects for [bankruptcy/MDL]

coordination can be enhanced if the [MDL] transferee judge sits in the district

where the bankruptcy proceedings are pending.”1167 Accordingly, the debtor,

other parties, and judges in the district in which the bankruptcy is filed should

consider this and other options to centralize MDL and bankruptcy case

management in a single district.

22.512 Consolidation and Reassignment

In an innovative approach to coordinate asbestos-related bankruptcies, the

Third Circuit Court of Appeals found that five asbestos-related Chapter 11

cases that had been filed in the District of Delaware needed “to be consolidated

before a single judge so that a coordinated plan for management [could] be

developed and implemented.”1168 Courts may also want to consider consoli1164. See generally Gordon Bermant, Arlene Jorgensen Hillestad & Aaron Kerry, Chapter 11

Venue Choice by Large Public Companies: Report to the Judicial Conference Committee on the

Administration of the Bankruptcy System (Federal Judicial Center 1997).

1165. See 28 U.S.C. § 1408(1) (West 2003) (specifying as key factors the entity’s domicile,

residence, principal place of business, or principal location of assets).

1166. 28 U.S.C. § 1412 (West 2003). For a discussion of the considerations involved in such

a transfer, see John F. Nangle, Bankruptcy’s Impact on Multidistrict Litigation: Legislative Reform

as an Alternative to Existing Mechanisms, 31 Ga. L. Rev. 1093, 1103–04 (1997) (Nangle is the

former chair of the JPML).

1167. Nangle, supra note 1166, at 1102. See generally Judge Nangle’s article for consideration

of the advantages and disadvantages of various options for achieving coordination of bankruptcy

and MDL proceedings.

1168. Order of Chief Judge Edward H. Becker, cited in In re Federal-Mogul Global, Inc., 300

F.3d 368 (3d Cir. 2002) (designation of a district judge for service in another district within the
Mass Torts § 22.52

381

dating bankruptcy cases dealing with the same or similar products to achieve

any efficiencies that might be associated with consolidated case management

and with the linkage of claims-resolution facilities. Such consolidated procedures are novel. It remains unclear that they will achieve such efficiencies and

at what cost.

22.52 Withdrawing the Reference

A mass tort bankruptcy brings new judges into a mass tort litigation,

including the bankruptcy judge to whom the case is assigned and district

judges who will hear appeals from the bankruptcy judge. The district court of

the district where the case is filed has the authority to withdraw the reference

of jurisdiction to the bankruptcy court in whole or in part.1169 Throughout the

bankruptcy case, the district and bankruptcy judges involved should consider

whether some aspects of that case should or must be resolved by judges other

than the assigned bankruptcy judge and whether and how knowledge and

expertise already accumulated by other judges can be used in the bankruptcy

proceedings.

A district judge might partially withdraw the reference in a mass tort

bankruptcy case for a number of reasons, including prior familiarity with the

tort claims involved, greater expertise as to the legal issues raised, desire to

avoid duplication of effort, jurisdictional limitations on the bankruptcy court’s

authority, and statutory command.1170 Once the withdrawal occurs, it will be

especially important for the bankruptcy and district judges handling the

various aspects of the bankruptcy case to have frequent communications so

that the matters can proceed in a coordinated fashion.

In several mass tort cases, district judges have withdrawn the reference

with respect to various proceedings relating to the personal-injury and

circuit). The order was based on authority granted the chief judge in 28 U.S.C. § 292(b) (West

2003), which permits such reassignments “in the public interest.”

1169. District courts are authorized by 28 U.S.C. § 157(d) to, “for cause,” withdraw the

reference of any bankruptcy case or proceeding from the bankruptcy court and to exercise

original jurisdiction over the withdrawn matter. The district court may take this action on its

own motion or on a party’s motion. 28 U.S.C. § 157(d) (West 2003).

1170. See 28 U.S.C. § 157(d) (West 2003) (requiring a district court, upon timely motion of

a party, to withdraw the reference of jurisdiction to a bankruptcy judge with respect to a

proceeding if resolution of that proceeding “requires consideration of both title 11 and other

laws of the United States regulating organizations or activities affecting interstate commerce”).

Because mass tort personal-injury claims are typically governed by state law, they will rarely

trigger the mandatory withdrawal provision. Their liquidation or estimation for purposes of

distribution, however, will have to take place in the district court. Id. § 157(b)(2)(B)(5).
§ 22.52 Manual for Complex Litigation, Fourth

382

wrongful-death tort claims against the debtor. Perhaps the broadest example

occurred in the A.H. Robins case where the district judge, who had been

presiding over a large group of Dalkon Shield cases against Robins, partially

withdrew the reference of jurisdiction from the bankruptcy court at the

debtor’s request on the day the debtor filed its petition. The district court

specified seventeen categories of proceedings and motions that it would

resolve, including all “[p]roceedings involving the estimation or liquidation of

any personal injury tort or wrongful death claims against the estate.”1171

Included within this category of withdrawn matters were the following:

motions to establish procedures for filing and resolving the tort claims,

including the establishment of bar dates; motions concerning procedures for

and discovery in proceedings relating to the estimation or liquidation of the

tort claims; requests for declaratory relief concerning the debtor’s liability for

the tort claims; the estimation or liquidation of the tort claims for purposes of

allowance, confirmation, or distribution; motions concerning the automatic

stay’s application to tort claims; and requests for relief under 11 U.S.C. § 105

with respect to a tort claim. Other matters withdrawn for the district court’s

determination included motions for conversion or dismissal, appointment of

committees, extensions of exclusivity, approval of disclosure statements,

confirmation, appointment of a trustee, compensation for services, and

enforcement of the automatic stay.1172

In other mass tort bankruptcies, district judges have withdrawn the

reference with respect to a narrower set of proceedings. In In re Dow Corning

Corp.,

1173 for example, the district judge withdrew from the bankruptcy court

jurisdiction to decide the debtor’s “omnibus objection to disease claims” that

sought a determination that the tort plaintiffs lacked proof that the debtor’s

product caused their alleged diseases.1174 Another district judge acting in a mass

tort case withdrew the reference with regard to the validity of the personal

injury claims against the debtor, specifically including, within the withdrawn

proceedings, motions for the following: setting a bar date for filing claims,

1171. In re A.H. Robins Co., 59 B.R. 99, 105 (Bankr. E.D. Va. 1986).

1172. Id. at 105–07.

1173. In re Dow Corning Corp., 215 B.R. 526 (Bankr. E.D. Mich. 1997).

1174. The bankruptcy judge recommended withdrawal of the reference because a similar

issue was likely to be raised in cases against the debtor’s shareholders already pending in the

district court, id. at 527–29, and because a ruling on the debtor’s objection depended largely on

application of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), on which the

bankruptcy court believed the district court possessed greater expertise. In re Dow Corning, 215

B.R. at 530.
Mass Torts § 22.531

383

concerning notice to claimants, relating to the form to be used for proofs of

claim, and for summary judgment based on threshold liability issues.1175

22.53 Dividing the Labor Among Judges

.531 MDL Transferee Judge 383

.532 Other Judges 384

.533 Bankruptcy Appeals 384

Withdrawals often retain in the district court matters relating to the

estimation and resolution of mass tort liability. Conversely, matters that relate

exclusively to the administration of the bankruptcy estate and the supervision

of the ongoing business of the debtor have been generally retained in the

bankruptcy court. In some bankruptcy cases, following a partial withdrawal of

the reference, the bankruptcy and district judges have held hearings at which

they presided jointly and after which they issued joint rulings.1176 In such

situations, the judges and the parties should have a clear understanding of their

respective roles and responsibilities.

22.531 MDL Transferee Judge

In addition to matters relating to withdrawal of the reference, district and

bankruptcy judges should consider drawing on the knowledge and experience

of other judges who have presided over all or part of the mass tort litigation.

The transferee judge assigned to coordinate the multidistrict litigation represents a primary, and in many cases an indispensable, source of such expertise.1177 When the bankruptcy has been filed in a district other than the MDL

transferee district and not transferred to that district, the MDL transferee judge

can be assigned to handle portions of a bankruptcy case, but only with the

cooperation of the bankruptcy and district judges presiding over the case.1178

1175. In re Babcock & Wilcox Co., No. CIV.A.00-0558, 2000 WL 422372, at *3–*4 (E.D. La.

Apr. 17, 2000). The court based its decision on the fact that the law was unresolved within its

circuit as to whether a bankruptcy judge has authority to decide dispositive pretrial motions

concerning personal injury and wrongful death claims against a bankruptcy estate. Id. at *4.

1176. See, e.g., In re A.H. Robins Co., 88 B.R. 742, 743 (E.D. Va. 1988) (memorandum in re

confirmation order jointly issued by district judge Merhige and bankruptcy judge Shelley, noting

that “[b]y agreement, the undersigned, with few exceptions, conducted all proceedings jointly”).

1177. See generally Nangle, supra note 1166.

1178. Id. at 1111 (“It must be remembered, of course, that mere assignment of the multidistrict judge or judges to the district in which the bankruptcy is pending will be of limited utility in

the absence of cooperation from that district’s bankruptcy and district judges.”).
§ 22.533 Manual for Complex Litigation, Fourth

384

Such an assignment should be initiated by judges of the bankruptcy district

rather than one of the parties.

The mere existence of an MDL proceeding does not mean that the MDL

transferee judge should be assigned automatically to the bankruptcy district.

Such an assignment should be sought only when the MDL transferee judge can

play a specific and useful role. If causation is not seriously in issue and the

bankruptcy court believes the parties will successfully attempt to negotiate a

resolution of the tort claims, there may be no need for the MDL transferee

judge’s involvement. In some bankruptcy cases, however, there may be a need

for a ruling on causation or other global liability issues, or for judicial estimation of the tort claims; the MDL transferee judge is often well suited to preside

over such matters. There also may be cases in which the participation of the

MDL transferee judge facilitates the settlement of claims involving multiple

defendants or the establishment of joint claims resolution facilities.

22.532 Other Judges

Litigation pending in other courts may be important to the bankruptcy

proceedings, even if the pending litigation does not involve tort claims. For

example, the debtor may have previously filed suit against one or more of its

insurers seeking a declaration of coverage. A declaratory judgment action

against an insurer is not an action against the debtor and would not ordinarily

be stayed automatically by the debtor’s bankruptcy filing. Unless the parties

obtain a transfer of the litigation to the bankruptcy court, or the debtor

dismisses the suit and refiles it in the bankruptcy court, the insurance litigation

can proceed where originally filed. The bankruptcy judge should stay informed

of the progress of that litigation by requiring counsel to submit periodic status

reports or through informal consultation with the judge handling the case.1179

Should it appear that the resolution of the litigation in the nonbankruptcy

court will frustrate or delay progress in the bankruptcy case, the bankruptcy

judge should encourage the parties to seek a change of venue to the bankruptcy

court or initiate a new adversary proceeding there.

22.533 Bankruptcy Appeals

A mass tort bankruptcy case will always involve judges who will hear

appeals from the bankruptcy judge. Such appeals may be to district judges,

1179. See McGovern, Rethinking Cooperation, supra note 690, at 1868 (noting that cooperation among judges in the form of “[s]uccessful coordination of pretrial activities by reconciling

overlapping schedules and eliminating redundancies in case development” and “the reduction of

duplication” rarely presents problems).
Mass Torts § 22.54

385

bankruptcy appellate panel judges,1180 or circuit judges.1181 The assignment of a

single district judge to hear all appeals in a mass tort bankruptcy case will

enable that judge to learn about the case, thereby expediting decision making

and facilitating consistent rulings. For similar reasons, some courts of appeals

have assigned all appeals from a single mass tort bankruptcy case to the same

appellate panel.1182 This approach should also be considered in courts with

bankruptcy appellate panels.

22.54 Coordinating and Consolidating Tort Claims and

Related Cases

.541 Claims Against the Debtor 386

.542 Claims Against Other Defendants 388

.543 Consolidation of Cases 388

.544 Transfer of Related Cases of Nondebtor Defendants 389

.545 Expanding the Automatic Stay or Enjoining Related Cases 391

A principal advantage of using a bankruptcy court to resolve mass tort

litigation is that it consolidates all pending mass tort litigation in the district in

which the bankruptcy case is filed.1183 The bankruptcy filing itself largely

accomplishes this consolidation. Parties may also ask the bankruptcy court to

transfer the tort suits pending against the debtor to the district in which the

bankruptcy is pending and to expand the scope of this consolidation to include

claims against nondebtor parties. Despite possible advantages, a number of

legal and practical questions will present themselves to the bankruptcy or

district judges who are asked to approve such a consolidation. An important

question is what steps, if any, should be taken to resolve the multitude of

personal injury tort cases pending against the debtor and others in state and

federal courts around the country at the time the bankruptcy petition is filed.

1180. See 28 U.S.C. §§ 158(a), (b)(1) (West 2003).

1181. See id. § 158(d).

1182. See, e.g., Official Comm. of Tort Claimants v. Dow Corning Corp. (In re Dow Corning

Corp.), 142 F.3d 433 (6th Cir. 1998); Lindsey v. Dow Chem. Co. (In re Dow Corning Corp.), 113

F.3d 565 (6th Cir. 1997); Tort Claimants’ Comm. v. Dow Corning Corp. (In re Dow Corning

Corp.), 103 F.3d 129 (6th Cir. 1996); Lindsey v. O’Brien, Tanski, Tanzer & Young Health Care

Providers (In re Dow Corning Corp.), 86 F.3d 482 (6th Cir. 1996) (appeals all decided by a panel

of the same three judges).

1183. See, e.g., Alan N. Resnick, Bankruptcy as a Vehicle for Resolving Enterprise-Threatening

Mass Tort Liability, 148 U. Pa. L. Rev. 2045, 2050–54 (2000); Barbara J. Houser, Chapter 11 as a

Mass Tort Solution, 31 Loy. L.A. L. Rev. 451, 457 (1998).
§ 22.541 Manual for Complex Litigation, Fourth

386

22.541 Claims Against the Debtor

Consolidation of the mass tort litigation is achieved by virtue of the

automatic stay and the bankruptcy court’s exclusive jurisdiction over the

property of the debtor and of the estate.1184 The bankruptcy court itself,

however, does not have jurisdiction to hear and determine personal injury and

wrongful death claims.1185 Those claims must be adjudicated by the district

court, either in the district of the bankruptcy case or the district where the tort

claim arose.1186 Any jury trial rights that exist outside of bankruptcy are

statutorily preserved in bankruptcy.1187 This does not mean, however, that all

of the thousands of personal injury and wrongful death claims against the

debtor will have to be tried to a jury in district court. A right to jury trial may

be waived by a tort claimant who accepts a reorganization plan’s provisions for

settlement or for alternative dispute resolution methods.1188 Moreover, most

courts have concluded that the bankruptcy court has authority to estimate the

value of the mass tort claims for purposes of voting and confirmation and for

determining the feasibility of the reorganization plan.1189

A practical question is whether there is good reason to transfer the mass

tort case files from the federal and state courts around the country to the

district in which the bankruptcy case is filed. The district court has authority to

do so.1190 In both the Dow Corning and the A.H. Robins bankruptcies, courts

1184. See 28 U.S.C. § 1334(e) (West 2003).

1185. Id. § 157(b)(5) (excluding the determination of personal injury tort and wrongful

death claims for purposes of distribution through bankruptcy from the definition of core

bankruptcy proceedings).

1186. Id.

1187. Id. § 1411(a); see also id. § 157(b)(5).

1188. See, e.g., A.H. Robins Co. v. Piccinin, 788 F.2d 994, 1013 n.17 (4th Cir. 1986); In re

Dow Corning Corp., 187 B.R. 919, 929–30 (Bankr. E.D. Mich. 1995), rev’d in part on other

grounds, 86 F.3d 482 (6th Cir. 1996); In re UNR Indus., Inc., 45 B.R. 322, 326 (Bankr. N.D. Ill.

1984); Resnick, supra note 1183, at 2053.

1189. See, e.g., A.H. Robins Co., 788 F.2d at 1012 (citing Roberts v. Johns-Manville Corp., 45

B.R. 823, 825–26 (S.D.N.Y. 1984)); UNR Indus., 45 B.R. at 326–27; Resnick, supra note 1183, at

2052–53. Courts are divided, however, over whether a bankruptcy judge is authorized to rule on

dispositive motions seeking to disallow personal injury and wrongful death claims against the

debtor. Compare In re U.S. Lines, Inc. v. U.S. Lines Reorganization Trust, 262 B.R. 223 (S.D.N.Y.

2001), and In re Dow Corning Corp., 215 B.R. 346 (Bankr. E.D. Mich. 1997), with Pettibone

Corp. v. Easley, 935 F.2d 120 (7th Cir. 1991), and In re UNR Indus., Inc., 74 B.R. 146 (N.D. Ill.

1987).

1190. Courts have consistently read 28 U.S.C. § 157(b)(5) as authorizing the district court in

the district of the bankruptcy case to transfer personal injury tort and wrongful death claims to

its district. See, e.g., In re Dow Corning Corp., 86 F.3d 482, 496 (7th Cir. 1996); In re Pan Am.

Corp., 16 F.3d 513, 516 (2d Cir. 1994); A.H. Robins Co., 788 F.2d at 1010–11.
Mass Torts § 22.541

387

concluded that transfers were warranted1191 but stopped short of requiring the

physical shipment of case files to the district in which the bankruptcy case was

filed.1192 In fact, in the Dow Corning case, the court ordered that the files for all

removed cases continue to be transferred to the MDL judge for pretrial

purposes.1193 In asbestos-related mass tort bankruptcies, actions pending

against the debtors have generally not been transferred to the bankruptcy

district. In at least one of those cases, the bankruptcy court was able to estimate

the value of the tort claims without having the pending cases transferred to its

district,1194 and in other cases the parties were able to negotiate a value of the

relevant tort claims without having all of the underlying actions against the

debtor consolidated in the district in which the bankruptcy case was pending.1195

After the reorganization plans have been confirmed, individual tort claims

generally will be resolved according to the terms of the plans. Those terms

typically include the establishment of trusts from which all present and future

asbestos claims for payment are paid, under so-called channeling injunctions.1196

1191. See Dow Corning, 187 B.R. at 929 (discussing the advantage of transferring because

“one or more causation trials held during the estimation process for the purpose of assuring a

more accurate estimation” might “best be accomplished if all cases pending against the Debtor

are before one court”); A.H. Robins Co., 788 F.2d at 1014 (concluding that “[n]o progress along

estimating these contingent claims . . . can be made until all Dalkon Shield claims and suits are

centralized before a single forum where all interests can be heard and in which the interests of all

claimants with one another may be harmonized”).

1192. In the Dow Corning case, the district court found that “no physical transfer of case files

or case records to the Eastern District of Michigan is necessary at this time.” Dow Corning Corp.,

187 B.R. at 932. In the A.H. Robins case, physical transfer of the case files to the Eastern District

of Virginia was contemplated, but the Fourth Circuit held that no actual transfer of the case files

should take place until the individual plaintiff in each case was given notice and an opportunity

to object. A.H. Robins Co., 788 F.2d at 1016.

1193. Id. But see Maritime Asbestosis Legal Clinic v. U.S. Lines, Inc. (In re U.S. Lines, Inc.),

216 F.3d 228, 236 (2d Cir. 2000) (holding that the district court lacked authority under section

157(b)(5) to transfer personal injury or wrongful death claims against the debtor to the MDL

district unless the claims arose there).

1194. See, e.g., In re Eagle-Picher Indus., 189 B.R. 681 (Bankr. S.D. Ohio 1995).

1195. See, e.g., In re UNR Indus., No. 82B9841–45, 1996 Bankr. LEXIS 1455, at *11 (Bankr.

N.D. Ill. Aug. 13, 1996) (quoting disclosure statement explanation of how the value of asbestos

claims was negotiated).

1196. See, e.g., In re Eagle-Picher Indus., 203 B.R. 256, 279, 282 (S.D. Ohio 1996); In re UNR

Indus., 143 B.R. 506, 514–15 (Bankr. N.D. Ill. 1992).
§ 22.543 Manual for Complex Litigation, Fourth

388

22.542 Claims Against Other Defendants

The provisions of the Bankruptcy Code that allow consolidation and

coordination of the mass tort litigation against the debtor are not explicitly

applicable to the debtor’s nonbankrupt codefendants.1197 Parties may, however,

seek rulings to permit the litigation against these nondebtor parties to be

consolidated in the district in which the debtor’s bankruptcy case is pending.

Nondebtor defendants may also ask the district court to extend the automatic

stay to include related claims against them. The motivations for such requests

may be any of the following: to achieve the efficiencies of a unified resolution;

to prevent the potential unfairness resulting from the continued prosecution of

actions against derivative defendants, while the actions against the major

defendant, the debtor, are stayed; to prevent the dissipation of a jointly held

asset; or to achieve delay. Whatever the reason, a motion to transfer the actions

against these nondebtor parties to the district in which the debtor’s bankruptcy

case is located raises a number of difficult and uncertain legal issues.

22.543 Consolidation of Cases

Although the structure of the bankruptcy laws might theoretically permit a

nationwide consolidation and resolution of all related claims against all

defendants, no mass tort case to date has attempted globally to resolve claims

against unaffiliated nondebtor manufacturers as part of a debtor’s bankruptcy

case. Mass tort litigation against nondebtor parties falls within bankruptcy

jurisdiction, if at all, only if it is related to a bankruptcy case. The district court

(and by reference the bankruptcy court) is granted subject-matter jurisdiction

over cases and all civil proceedings arising under or related to cases arising

under title 11. 28 U.S.C. §§ 1334(a) & (b).1198 The most far-reaching decision

regarding mass tort litigation against nondebtor codefendants held that claims

against breast implant manufacturers other than the debtor fell within “related

1197. The automatic stay prohibits the “commencement or continuation . . . of a judicial . . .

proceeding[] against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the

commencement of the case under this title.” 11 U.S.C. § 362(a)(1) (West 2003) (emphasis

added). Bankruptcy courts are granted exclusive jurisdiction over “all of the property, wherever

located, of the debtor as of the commencement of such case, and of property of the estate.” 28

U.S.C. § 1334(e) (West 2003) (emphasis added).

1198. In Pacor, Inc. v. Higgins, a proceeding is related to a bankruptcy case, and thus falls

within federal subject-matter jurisdiction under section 1334(b), if “the outcome of that

proceeding could conceivably have any effect on the estate being administered in bankruptcy.”

743 F.2d 984, 994 (3d Cir. 1984) (emphasis omitted). See also In re Federal-Mogul Global, Inc.,

300 F.3d 368, 381 (3d Cir. 2002) (noting “the widespread acceptance of Pacor”).
Mass Torts § 22.544

389

to” jurisdiction because the prosecution of such claims could lead to claims for

contribution or indemnity against the debtor.1199 The district court abstained

from exercising that jurisdiction,1200 and the Sixth Circuit denied the petitions

for mandamus.1201 Other courts have not read the jurisdictional statute this

broadly.

1202 The bankruptcy of one defendant has not yet achieved a global

resolution of a mass tort litigation against an entire industry.1203 However,

courts have allowed some claims against some nondebtor parties to be resolved

in the bankruptcy proceedings. Some of the debtor’s codefendants with such

close relationships to the debtor as officers, directors, shareholders, and related

entities with joint insurance coverage, are more likely to be found within

“related to” jurisdiction than other nondebtor parties.1204

22.544 Transfer of Related Cases of Nondebtor Defendants

A judge who determines that mass tort claims against some or all of the

debtor’s codefendants come within bankruptcy jurisdiction must then determine whether the district court in the district of the bankruptcy case has

authority to transfer all of those claims from state and federal courts to the

bankruptcy district. Section 157(b)(5) authorizes the district court where the

bankruptcy case is pending to determine the place of trial of “personal injury

tort and wrongful death claims.” Other parts of that same statute refer more

specifically to “personal injury tort or wrongful death claims against the estate”

(emphasis added). Two courts of appeals have concluded that section

157(b)(5) allows the district court in the district where the bankruptcy is filed

1199. Lindsey v. O’Brien, Tanski, Tanzer & Young Health Care Providers (In re Dow

Corning Corp.), 86 F.3d 482, 494 (6th Cir. 1996).

1200. In re Dow Corning Corp., No. 95-CV-72397, 1996 WL 511646, at *4 (E.D. Mich. July

30, 1996).

1201. In re Dow Corning Corp., 113 F.3d 565, 572 (6th Cir. 1997).

1202. See, e.g., In re Federal-Mogul Global, Inc. 300 F.3d 368 (3d Cir. 2002); Pacor, Inc. v.

Higgins, 743 F.2d 984 (3d Cir. 1984); cf. GAF Corp. v. Johns-Manville Corp. (In re JohnsManville Corp.), 26 B.R. 405 (Bankr. S.D.N.Y. 1983) (declining to extend scope of automatic

stay to cover suits against nondebtor codefendants).

1203. Federal-Mogul Global, 300 F.3d at 379–84 (rejecting codefendants’ argument that

claims are related to the debtor’s claims because of the possibility that debtor may have to

indemnify codefendants); cf. In re Johns-Manville Corp., 26 B.R. 405, 409 (Bankr. S.D.N.Y 1983)

(rejecting codefendant manufacturer’s proposal for “an industry-wide solution of the entire

asbestos health-related problem,” despite finding it “tempting”).

1204. See, e.g., Lindsey, 86 F.3d at 490–95; cf. A.H. Robins v. Piccinin, 788 F.2d 994, 1007

(4th Cir. 1986) (affirming district court’s exercise of bankruptcy jurisdiction to stay mass tort

actions against officers, directors, and employees of the debtor). Direct claims against a debtor’s

insurers have also been found to come within “related to” jurisdiction. See, e.g., Coar v. Nat’l

Union Fire Ins. Co., 19 F.3d 247 (5th Cir. 1994).
§ 22.544 Manual for Complex Litigation, Fourth

390

to fix venue for cases pending against nondebtor defendants that are related to

a debtor’s bankruptcy proceedings, pursuant to section 1334(b).1205 In both of

those cases, however, only claims against certain closely affiliated nondebtor

defendants were part of the overall resolution of the tort claims in the debtor’s

plan of reorganization.1206 Because those nondebtor parties were released from

further liability after confirmation of the debtor’s plan, the claims against them

were never litigated.

The fact that a district court determines that it has authority under section

157(b)(5) to transfer personal injury tort litigation pending against a debtor’s

codefendants does not necessarily mean that the court will choose to exercise

that authority, especially at the outset of the bankruptcy case. If the goal of the

transfer is to coordinate and consolidate all the mass tort cases pending against

the debtor and related parties, a favorable ruling by the court on a motion to

expand the stay to cover the nondebtor parties (see section 22.545) may make

transfer of the litigation to the bankruptcy district unnecessary.1207

Claims against nondebtor defendants do not necessarily have to be tried in

the bankruptcy district. Courts have held that in addition to the venue options

expressly included in section 157(b)(5)—the district where the bankruptcy

case is pending and the district where the personal injury claim arose—the

district court has the option of abstaining and allowing the personal injury tort

cases to remain in the courts in which they are pending.1208 Other courts,

however, may find that the factors governing abstention lend themselves to a

categorical analysis when applied to a large number of similar cases against

nondebtor defendants. Before making a final decision to transfer personal

injury cases to the bankruptcy district, the district court must give an opportunity for the individual plaintiffs in each case to object.1209

1205. Lindsey, 86 F.3d at 497; A.H. Robins, 788 F.2d at 1014.

1206. See, e.g., In re Dow Corning Corp., 255 B.R. 445, 475 (E.D. Mich. 2000); Georgene M.

Vairo, The Dalkon Shield Claimants Trust: Paradigm Lost (or Found)?, 61 Fordham L. Rev. 617,

629–30 (1982) (describing provisions of A.H. Robins reorganization plan that released nondebtor parties from liability).

1207. See In re Johns-Manville Corp., 45 B.R. 823, 825 (S.D.N.Y. 1984) (Section 157(b)(5)

“does not mandate that all personal injury and wrongful death claims be tried. It merely sets

forth the procedure by which the forum for trial shall be designated for those . . . claimants who

do not agree to another procedure for settling their claims.”).

1208. In re Dow Corning Corp., 86 F.3d 482, 497 (6th Cir. 1996); In re Pan Am. Corp., 950

F.2d 839, 844 (2d Cir. 1991); In re White Motor Credit, 761 F.2d 270, 271, 273 (6th Cir. 1985).

The Sixth Circuit has held that the abstention decision must be made on a case-by-case basis,

rather than globally. In re Dow Corning, Corp., 113 F.3d 565, 569–70 (6th Cir. 1997).

1209. A.H. Robins, 788 F.2d at 1014 (“[D]ue process requires some form of notice and an

opportunity for a hearing before there can be a change of venue and before trial of a personal
Mass Torts § 22.545

391

22.545 Expanding the Automatic Stay or Enjoining Related Cases

Just as nondebtor parties may seek the transfer of mass tort litigation

against them to the bankruptcy district, they may also attempt to use the

debtor’s bankruptcy to gain a stay of the litigation against them by virtue of 11

U.S.C. § 362. Alternatively, nondebtor parties may seek an order under to 11

U.S.C. § 105 temporarily enjoining the prosecution of the litigation against

them. A court asked to stay litigation pending before it may also be asked to

declare that the automatic stay applies to nondebtors or to stay litigation

pending in other courts against nondebtors. Courts presented with such

requests have concluded that they have authority to enter the requested relief,

but only with respect to the cases before them.1210 A bankruptcy court, however, has authority to enjoin litigation against nondebtors pending in other

courts so long as that litigation is at least related to the bankruptcy case.1211

Expanding the automatic stay. Although only the debtor itself is generally

entitled to the benefit of the automatic stay in Chapter 11 cases,1212 several

courts have found circumstances in mass tort bankruptcies that justify expanding the scope of that protection.1213 The primary considerations in

deciding whether to stay related litigation are whether it is tantamount to

litigation against the debtor and whether it constitutes an effort to obtain

possession of, or exercise control over, property of the estate. The focus must

be on the litigation’s impact on the debtor and its bankruptcy estate, rather

than on the possible impact on the nondebtor parties.1214

injury tort cause of action against a debtor may be transferred finally from the court in which the

cause was initially filed to the district where the bankruptcy proceedings are pending.”).

1210. See, e.g., Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (5th Cir. 1983); In re Related

Asbestos Cases, 23 B.R. 523 (N.D. Cal. 1982); see also G. Hisae Ishii-Chang, Litigation and

Bankruptcy: The Dilemma of the Codefendant Stay, 63 Am. Bankr. L.J. 257, 277–79 (1989).

1211. Celotex Corp. v. Edwards, 514 U.S. 300, 307–10 (1995).

1212. See, e.g., Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194, 1197 (6th Cir. 1983);

Wedgeworth, 706 F.2d at 544; In re Sunbeam Sec. Litig., 261 B.R. 534, 536 (Bankr. S.D. Fla.

2001). In limiting the benefit of the automatic stay to debtors in Chapter 11 cases, courts have

sometimes contrasted the expanded scope of the automatic stay in Chapter 13 cases, where it is

expressly made applicable to persons liable with the debtor on a debt. See, e.g., Wedgeworth, 706

F.2d at 544 (citing 11 U.S.C. § 1301(a) (West 2003)).

1213. See, e.g., In re Eagle-Picher Indus., 963 F.2d 855 (6th Cir. 1992); A.H. Robins v.

Piccinin, 788 F.2d 994 (6th Cir. 1986); In re Johns-Manville Corp., 40 B.R. 219 (Bankr. S.D.N.Y.

1984).

1214. See, e.g., Eagle-Picher Indus., 963 F.2d at 862 (“[I]t is for the protection of EaglePicher’s numerous creditors, not for [nondebtor defendants] Hall and Ralston, that AISI is

properly prohibited from proceeding with its action against Hall and Ralston . . . .”) (emphasis

in original); In re Johns-Manville Corp., 26 B.R. 420, 430 (Bankr. S.D.N.Y. 1983) (enjoining

under sections 362 and 105 suit against nondebtors because it “threatens adversely to impact on
§ 22.545 Manual for Complex Litigation, Fourth

392

In A.H. Robins Co. v. Piccinin,

1215 the Fourth Circuit affirmed the district

court’s stay under sections 362(a)(1) and (3) of personal injury suits against

various individual defendants who were closely associated with the debtor—its

chairman of the board, president, chief medical officer, and the inventor of the

Dalkon Shield, whom the debtor had agreed to indemnify—and litigation

against the debtor’s insurer.1216 The Fourth Circuit concluded that the interests

of the individual defendants were “so intimately intertwined with those of the

debtor that the latter may be said to be the real party in interest.”1217 The court

emphasized that the individual defendants had an absolute right to be indemnified by the debtor for any judgments rendered against them.1218

Courts have not, however, been willing to read the automatic stay provision as extending to unrelated nondebtor codefendants who have merely a

joint tortfeasor relationship with the debtor. In several asbestos bankruptcies,

for example, courts have rejected codefendant manufacturers’ attempts to

bring themselves within the scope of the debtor’s automatic stay.1219

Enjoining proceedings under section 105. Most courts that have extended the

automatic stay to nondebtor parties have done so under section 105 rather

than by an expansive application of section 362. These courts have entered

preliminary injunctions temporarily staying litigation against the protected

parties, rather than holding that the debtor’s filing of its Chapter 11 petition

automatically accomplished this result.1220 Similar to the Fourth Circuit’s

property of the debtor’s estate as well as disrupt the reorganization proceedings and frustrate

Manville’s efforts to achieve financial rehabilitation”), aff’d, 40 B.R. 219 (Bankr. S.D.N.Y. 1984);

Charles Jordan Tabb, The Law of Bankruptcy 170–71 (1997) (discussing the “very limited

circumstances” under which actions against nondebtors may be stayed under section 362 in

Chapter 11 cases).

1215. 788 F.2d 994 (4th Cir. 1986).

1216. Id. at 1007; see also id. at 999 (application of the automatic stay to nondebtors was

appropriate only in “unusual circumstances”—such unusual circumstances exist “when there is

such identity between the debtor and the third-party defendant that the debtor may be said to be

the real party defendant and that a judgment against the third-party defendant will in effect be a

judgment or finding against the debtor”).

1217. Id. at 1001.

1218. Id. at 1007.

1219. See, e.g., Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194 (6th Cir. 1983);

Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (5th Cir. 1983); In re Johns-Manville Corp., 26

B.R. 405 (Bankr. S.D.N.Y. 1983).

1220. See, e.g., In re Eagle-Picher Indus., 963 F.2d 855 (6th Cir. 1992) (affirming grant of

preliminary injunction pursuant to section 105 enjoining prosecution of civil action against

debtor’s officers); A.H. Robins v. Piccinin, 788 F.2d 994 (4th Cir. 1986) (affirming grant of

preliminary injunction pursuant to section 105 enjoining litigation against debtor’s insurers,

corporate officers, and other indemnified persons, in addition to relying on section 362 as basis

for the stay); In re Johns-Manville Corp., 33 B.R. 254, 263 (Bankr. S.D.N.Y. 1983) (granting
Mass Torts § 22.55

393

interpretation of section 362(a), however, courts have read section 105 as

providing authority to extend the stay to nondebtor parties only if the acts to

be enjoined “would frustrate the statutory scheme or impact adversely on a

debtor’s ability to formulate a plan or on the debtor’s property.”1221 Accordingly, courts ruling on requests for extension of the stay to protect nondebtor

parties in mass tort cases have generally restricted such relief to key officers and

employees of the debtor, persons covered by the debtor’s insurance policy, and

in some instances the debtor’s liability insurers.1222 Courts generally have

declined to grant this relief under section 105 to alleged joint tortfeasors who

are merely codefendants of the debtor.1223

22.55 Providing Representation for Future Mass Tort

Claimants

As discussed below in section 22.7 and in sections 21.1 and 21.2 of the class

actions section, a challenging aspect of managing mass or class litigation is the

need to give fair and consistent treatment to claimants who present widely

disparate claims. A lesson of the Amchem and Ortiz (see section 22.71) decisions is that before resolving claims in an aggregated fashion, courts must find

a fair mechanism for representing the different interests of present and future

claimants. Because the decisions invoked due process principles as well as the

limits of Federal Rule of Civil Procedure 23, the concerns that they raise affect

bankruptcy proceedings. See section 22.58.

The need for fair treatment of future claimants is heightened in the

bankruptcy context because the very act of filing for bankruptcy usually signals

that the defendant does not have sufficient assets fully to compensate all

claimants. Because most mass tort bankruptcies are precipitated by the

debtor’s desire to achieve a global resolution of all the tort claims that have

preliminary injunction enjoining litigation against officers, directors, and employees of debtor

“[b]ased upon the broad grant of power contained in Section 105(a)”).

1221. In re Johns-Manville Corp., 26 B.R. 420, 427 (Bankr. S.D.N.Y. 1983); see also JohnsManville Corp. v. Asbestos Litig. Group (In re Johns-Manville Corp.), 40 B.R. 219, 225 (Bankr.

S.D.N.Y. 1984) (holding that “to issue a stay under § 105, the court must determine that such

relief is at least appropriate to achieve the goals of a Chapter 11 reorganization, and is necessary

to protect the debtor”).

1222. See In re Forty-Eight Insulations, Inc., 54 B.R. 905, 909 (Bankr. N.D. Ill. 1985); David

G. Epstein et al., Bankruptcy 126 (1993) (listing factors increasing chances of obtaining a stay of

litigation against a nondebtor).

1223. See, e.g., Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194 (6th Cir. 1983);

Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (5th Cir. 1983); Johns-Manville Corp., 26 B.R.

405 (Bankr. S.D.N.Y. 1983).
§ 22.55 Manual for Complex Litigation, Fourth

394

been or will be asserted against it, the debtor will seek to discharge not only the

claims of persons who are presently sick or injured but also the claims of

persons who have been exposed to the offending product but have not yet

manifested any injury (i.e., present-future claimants). A debtor may also

attempt to discharge the claims of persons who have not yet been exposed to

the debtor’s product but who will be exposed in the future and will suffer

injury as a result (i.e., future-future claimants).

Judges presiding over the early mass tort bankruptcy cases struggled over

the question whether persons who had not yet manifested any injury from

exposure to the debtor’s product could be dealt with in the bankruptcy

proceedings.1224 These doubts arose from an uncertainty whether such persons

had a “right to payment” as required by the statutory definition of “claim.”1225

Doubts also arose from the due process concerns raised by adjudicating such

persons’ rights in the bankruptcy without the persons’ notice of and opportunity to participate in the proceedings.1226 Most courts eventually concluded

that future mass tort claims could not be ignored.1227 At the very least, these

future claimants were “parties in interest” who had a right to be heard in the

proceedings and were entitled to representation.1228 As a result, courts began

1224. See, e.g., In re Amatex Corp., 755 F.2d 1034 (3d Cir. 1985) (reversing denial by

bankruptcy court, affirmed by district court, of request for appointment of representative for

future asbestos claimants); In re Johns-Manville Corp., 36 B.R. 743 (Bankr. S.D.N.Y. 1984)

(granting motion for appointment of future claims representative); In re UNR Indus., Inc., 29

B.R. 741 (N.D. Ill. 1983) (denying application for appointment of a future claims representative), appeal dismissed, 725 F.2d 1111 (7th Cir. 1984). The specific legal issue presented in the

above cases was whether such future claimants were “creditors” who held “claims,” within the

meaning of the Bankruptcy Code, that could be discharged at the end of the case.

1225. 11 U.S.C. § 101(10)(A) (2000).

1226. See, e.g., UNR Indus., 29 B.R. at 745 (“[T]he putative claimants—who have been

exposed to asbestos some time in their lives but do not now have or do not know that they have

an asbestos-related disease—have no claims under state law, and therefore do not have claims

cognizable under the Code.”); id. at 747 (“It would be impossible for one legal representative to

represent adequately the claims of tens of thousands of future claimants. . . . The practical and

legal problems of notifying those who the legal representative would be able to bind . . . are

insurmountable.”).

1227. See, e.g., In re UNR Indus., 725 F.2d 1111, 1119 (7th Cir. 1984) (“If future claims

cannot be discharged before they ripen, UNR may not be able to emerge from bankruptcy with

reasonable prospects for continued existence as a going concern.”); Johns-Manville Corp., 36

B.R. at 749 (“Any plan not dealing with their interests precludes a meaningful and effective

reorganization and thus inures to the detriment of the reorganization body politic.”).

1228. See, e.g., UNR Indus., 725 F.2d at 1120; In re Forty-Eight Insulations, Inc., 58 B.R. 476,

478 (Bankr. N.D. Ill. 1986); Johns-Manville Corp., 36 B.R. at 749. See, e.g., In re Forty-Eight

Insulations, Inc., 58 B.R. 476, 478 (Bankr. N.D. Ill. 1986); In re Johns-Manville Corp., 36 B.R.

743, 749 (Bankr. S.D.N.Y. 1984).
Mass Torts § 22.55

395

appointing future claims representatives to represent, in the bankruptcy

proceedings, the interests of those persons who would be injured by the

debtor’s product sometime in the future. Congress ratified this judicial practice

in the context of asbestos bankruptcies by amending the Bankruptcy Code to

make appointment of a future claims representative a condition for a court’s

statutory authority to issue a channeling injunction directing that claimants

may seek payment only from a trust created under a reorganization plan.1229

Section 22.58 further discusses statutory provisions for discharging future

asbestos claims.

Neither the Bankruptcy Code nor the bankruptcy rules set forth procedures for the appointment of a future claims representative. The courts have

had to devise such procedures. Typically the debtor files a motion to have the

court appoint a future claims representative.1230 Occasionally other participants

in the bankruptcy have requested the appointment.

1231 In Chapter 11 reorganization cases in which the debtor likely faces significant long-term tort liability,

the appointment of a future claims representative has become standard. On

the other hand, the request for such an appointment in a mass tort liquidation1232 or where the existence of future tort liability is disputed1233 is likely to

provoke opposition from some of the existing parties. Courts routinely grant a

hearing in such circumstances. The decision whether to appoint a future

claims representative should be based on an assessment of the likelihood of

future claimants, the number, nature, and variety of their claims, and the

impact that the bankruptcy will have on these claims.

The court necessarily selects and appoints the future claims representative

without the consent of the class of persons represented; the representative is

1229. 11 U.S.C. § 524(g)(4)(B)(i) (West 2003).

1230. See, e.g., In re Amatex Corp., 755 F.2d 1034, 1036 (3d Cir. 1985) (referring to debtor’s

application for the appointment of a guardian ad litem to represent future asbestos claimants on

all issues before the court); In re UNR Indus., 46 B.R. 671, 673 (Bankr. N.D. Ill. 1985) (referring

to debtors’ application for a legal representative for unknown putative asbestos-related

claimants).

1231. See, e.g., Locks v. U.S. Trustee, 157 B.R. 89, 90 (Bankr. W.D. Pa. 1993) (referring to

motion for the appointment of a future claims representative filed by a plaintiff’s attorney who

was a member of the unsecured creditors’ committee); Johns-Manville Corp., 36 B.R. at 744

(referring to motion filed by Keene Corp., a codefendant of the debtor, to appoint a legal

representative for asbestos-exposed future claimants).

1232. See Locks, 157 B.R. at 91; In re H.K. Porter Co., 156 B.R. 16, 17–18 (Bankr. W.D. Pa.

1993).

1233. See In re Dow Corning Corp., 211 B.R. 545, 598 n.55 (Bankr. E.D. Mich. 1997)

(discussing the denial of a motion to appoint a representative for future breast implant

claimants on the ground that all such claimants were aware of their implants and thus were

present, not future, claimants).
§ 22.55 Manual for Complex Litigation, Fourth

396

not a true agent of those represented.1234 Unlike the named plaintiffs in a class

action, the representative is not a member of the class being represented.

Instead, the future claims representative is invariably a lawyer and does not

claim the same potential injury that the future claimants face. Because there is

no shared or common interest to ensure “‘that the interests of the class

members will be fairly and adequately protected in their absence, courts look

to other bases for such assurance.’”1235

Future claims representatives are appointees of the court, and are thus

viewed by some as neutral brokers seeking consensual reorganizations rather

than as zealous advocates for the interests of future claimants.1236 A judge

appointing a future claims representative can diminish concerns about

adequacy of representation in the following ways:1237

• Weight should be given to qualifications and experience as an effective

advocate when appointing the representative. When a potential future

claims representative has previously served in that capacity, the court

should consider the results achieved.

• The class of persons represented must be defined as clearly as possible.

For example, determine whether the future claims representative is

expected to act on behalf of persons injured only by a certain type of

product (e.g., those containing asbestos) manufactured by the debtor

or on behalf of those injured by multiple products (e.g., lead-based

products); on behalf of only persons exposed to the product(s) prior

to confirmation or on behalf of those exposed post-bankruptcy as

well; or on behalf of those who will suffer only slight or questionable

injury as well as those who will be able to demonstrate serious injury.

• The representative needs supporting resources with the same degree of

expertise as the creditors’ committees possess. The future claims representative should be authorized to hire counsel and financial experts

when shown to be necessary.

1234. See Frederick Tung, The Future Claims Representative in Mass Tort Bankruptcy: A

Preliminary Inquiry, 3 Chap. L. Rev. 43, 59 (2000).

1235. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 626 n.20 (1997) (quoting Gen. Tel.

Co. of S.W. v. Falcon, 457 U.S. 147, 157–58 n.13 (1982)).

1236. See Tung, supra note 1234, at 70–71 (“A judge—and certainly parties in interest—might be less interested in finding a person to provide zealous representation for future

claimants than one who understands the paramount goal of reorganization.”).

1237. See Gibson, Case Studies, supra note 792, at 91–93. For the UNR reorganization, see id.

at 161–67, 180–81; for the Dalkon Shield reorganization, see id. at 207–09.
Mass Torts § 22.56

397

22.56 Estimating the Value of Mass Tort Claims

Most courts have found that the bankruptcy court has the authority to

estimate the value of mass tort claims for purposes of determining the feasibility of a reorganization plan, confirming a plan, or establishing a framework for

voting on a proposed plan.1238 However, district judges with experience in

handling mass tort claims involving the debtor, particularly an MDL transferee

judge, may be able to bring a special knowledge and expertise to the estimation

process and should ordinarily be invited into the process. See section 22.53.

Although courts have generally allowed the parties to negotiate a plan

without judicial estimation proceedings, such proceedings can clarify the

extent and value of potential tort claims against the debtor. Knowing the

extent of the potential liability in relation to the debtor’s assets may determine

whether there is any value in the company for equity shareholders.1239 That

information might propel the negotiations and produce a basis for agreement

about a reorganization plan.1240

If the parties are unable to reach agreement on the value of the claims,

evidentiary hearings can assist the judge in resolving this difficult issue.1241

Along with any unsecured creditors’ committee, tort claimants committee,

equity committee, and the debtor, future claims representatives have participated in claims estimation hearings by presenting their own experts on the

value of the future claims.1242 In such cases, the judge should consider whether

appointment of an expert under Federal Rule of Evidence 706 or appointment

of a special master might be appropriate.

1238. The court’s authority to estimate the value of tort claims does not, however, include

the authority to use those estimates to determine the final value of any individual claim, see 28

U.S.C. § 157(b)(5) (West 2003), or a consensual reorganization plan. See infra section 22.57.

1239. See, e.g., the discussion of the effect of the estimation order in Eagle-Picher, in Gibson,

Case Studies, supra note 1160, at 80 (“Given the court’s estimation order, the writing was on the

wall.”).

1240. See, e.g., the discussion of the A.H. Robins reorganization in Gibson, Case Studies,

supra note 1160, at 196 (“Within a week of Judge Mehige’s estimation ruling, American Home

Products (AHP) made an offer to merge with Robins. . . . This offer became the heart of the

reorganization plan soon agreed to by Robins.”); see also id. at 91 (discussing the effect of the

estimation order on Eagle-Picher negotiations).

1241. See Gibson, Case Studies, supra note 1160, at 78–79 (describing the testimony in the

Eagle-Picher estimation hearing), and id. at 195–96 (describing the testimony in the A.H. Robins

estimation hearing).

1242. See, e.g., In re A.H. Robins Co., 88 B.R. 742, 747 (E.D. Va. 1988) (describing the

evidence presented at the claims estimation hearing by the expert for the future claims representative), aff’d, 880 F.2d 694 (4th Cir. 1989); In re Eagle-Picher Indus., 189 B.R. 681, 687–88

(Bankr. S.D. Ohio 1995) (same).
§ 22.57 Manual for Complex Litigation, Fourth

398

A district judge with experience in the mass tort litigation can help lay the

groundwork for estimating the tort claims by using different techniques,

including the following:

• conducting trials of representative bellwether cases as discussed in section 22.93;

• conducting trials of specific issues to resolve a disputed common issue

(e.g., general causation), as discussed in sections 21.24 and 22.75; and

• mediating or otherwise assisting in negotiation of a consensual reorganization plan once any estimation process has been completed.

22.57 Negotiating a Reorganization Plan

The traditional practice in mass tort bankruptcies involving future claimants has been for the court to appoint a representative for those interests (see

section 22.55). The representative then participates in plan negotiations with

the debtor and representatives of other committees, appears in court, and

raises objections on behalf of the future claimants.

The primary role of the future claims representative has been that of a

negotiator. Typically negotiations take place among the debtor, the tort

claimants’ committee, the future claims representative, and the unsecured

creditors’ committee, in varying combinations. These entities try to arrive at an

agreement on the ratio of tort debt to other unsecured debt, the division of tort

debt between present and future claims, the terms for liquidation and payment

of the tort claims, the percentage of payment for unsecured claims, and the

amount, if any, to be provided to equity.1243 Although there is authority for the

court to appoint a mediator to facilitate the negotiations of a reorganization

plan,1244 the expense should be considered.

The future claims representative does not have a formal veto over a

proposed reorganization plan, but gaining the representative’s assent has

proven essential for arriving at a consensual plan of reorganization. A representative’s influence is based on the concerns of other parties about the

feasibility and legitimacy of confirming a plan to which the future claims

representative objects, as well as the persuasive abilities of the representative

(both in court and in negotiations). The cases provide examples of how the

1243. See, e.g., In re UNR Indus., 212 B.R. 295, 298 (Bankr. N.D. Ill. 1997) (describing the

negotiation history of the UNR asbestos bankruptcy); Gibson, Case Studies, supra note 1160, at

90–91 (describing the negotiation history of the Eagle-Picher asbestos bankruptcy).

1244. See, e.g., Gibson, Case Studies, supra note 1160, at 75–76 (describing the use of

mediation in the Eagle-Picher reorganization).
Mass Torts § 22.58

399

future claims representative’s implicit veto power and advocacy in court results

in the improved treatment of future claimants in the reorganization plans.1245

Judges should monitor and evaluate the quality of the future claimants’

representation and whether it furthers future claimants’ ability to receive a fair

and adequate recovery. One way to do so compares the recoveries provided in

the reorganization plan for future claimants with recoveries provided to

present claimants both in the reorganization plan and in settlements immediately before the reorganization. Another measure of the future claims representative’s efficacy is the strength and fairness of any mechanisms established

to deal with a possible shortfall of funds for the trust. Consider whether

procedures are in place to distribute the burden of such shortfalls across the

spectrum of claims, and whether monies have been reserved to deal with

anticipated future claims.

22.58 Discharging Future Claims

At the end of the bankruptcy, the parties generally negotiate a plan

requiring future claimants to proceed against a trust established to pay both

present and future tort claims, rather than against the reorganized debtor and

related entities. Judicial decisions about future claims have recognized, but not

clearly resolved, issues concerning the means of discharging such claims.1246

Congress to some extent validated the trust concept in 1984 when it added

subsections (g) and (h) to section 524 of the Bankruptcy Code.1247 This

amendment, limited to Chapter 11 asbestos cases, authorizes courts in connection with an order confirming a reorganization plan to issue a channeling

injunction requiring claimants—present and future—to proceed only against

the tort claimant trust established by the plan.1248 Section 524(g) requires,

1245. See, e.g., In re Nat’l Gypsum Co., 219 F.3d 478, 481 (5th Cir. 2000) (referring to the

future claims representative’s successful objection to a permanent injunction that would have

prevented future claimants from seeking recovery from the debtor’s successor); Gibson, Case

Studies, supra note 1160, at 208–09 (describing the successful efforts of the future claims

representative in the A.H. Robins bankruptcy to amend the proposed plan to allow payment for

future claimants who did not file a claim in the bankruptcy proceedings by the bar date).

1246. See, e.g., In re Amatex Corp., 755 F.2d 1034, 1043 (1985) (“At this juncture . . . we do

not know whether future claimants can or should be considered ‘creditors’ under the Code . . .

and how best to solve a whole host of other problems which have not been briefed.”); In re

Johns-Manville Corp., 36 B.R. 743, 754 (Bankr. S.D.N.Y. 1984) (“[I]t is unnecessary for this

Court to face the dischargeability issue at this time in order to decide whether these claimants

are parties in interest.”).

1247. See Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 111, 108 Stat. 4106,

4113–17 (codified as amended at 11 U.S.C. §§ 524(g), (h) (West 2003)).

1248. 11 U.S.C. § 524(g)(1)(A) (West 2003).
§ 22.58 Manual for Complex Litigation, Fourth

400

among other things, that the court appoint during the bankruptcy proceedings

“a legal representative for the purpose of protecting the rights of persons that

might subsequently assert demands of such kind.”1249 The statute, however,

does not address future claims in the following: mass tort bankruptcies

involving a product other than asbestos; Chapter 7 liquidations; or cases

creating a payment mechanism other than a trust having the characteristics

described in that provision. Nor does the statute address whether future

claimants may participate in the bankruptcy proceedings, either directly or

through a court-appointed representative; whether the rights of such persons

may be dealt with by a reorganization plan; whether such persons are entitled

to payment in a liquidation distribution; or whether the rights of such persons

to proceed against the reorganized debtor and related entities may be terminated by the plan or court-issued injunction.1250 Even in Chapter 11 asbestos

cases, it is unclear whether section 524(g) provides the exclusive method for

dealing with future claims or whether other methods may be used. The act

amending section 524 included a provision stating that the amendment “shall

not be construed to modify, impair, or supersede any other authority the court

has to issue injunctions in connection with an order confirming a plan of

reorganization.”1251 Uncertainties remain concerning the existence of any other

authority to enjoin future claimants.

Despite the courts’ reliance on future claims representatives and the

analogy to the conditions that Congress found essential to a fair resolution of

asbestos mass tort claims under section 524(g), uncertainty as to the constitutionality of binding future claimants remains. One unresolved issue is whether

constitutionally adequate notice can be provided to future claimants. The

Supreme Court has given conflicting signals. In 1950, the Court held that

notice by publication in a single newspaper was sufficient with respect to

“beneficiaries whose interests or addresses are unknown to the trustee,”1252

because “notice reasonably certain to reach most of those interested in objecting is likely to safeguard the interests of all, since any objection sustained

would inure to the benefit of all.”1253 Often, though, no form of notice will be

1249. Id. § 524(g)(4)(B)(i).

1250. See Nat’l Bankr. Rev. Comm’n, Bankruptcy: The Next Twenty Years: National

Bankruptcy Review Commission Final Report 320–22 (1997) [hereinafter NBRC Report].

1251. Pub. L. No. 103-394, § 111(b), 108 Stat. 4106, 4117 (codified as amended at 11 U.S.C.

§ 524 (West 2003), committee note).

1252. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 318 (1950).

1253. Id. at 319. Most authorities that have supported the treatment of future claims in mass

tort bankruptcies have relied on the appointment of a future claims representative, not merely

notice, as the key to satisfying due process. See, e.g., NBRC Report, supra note 1250, at 329–34;
Mass Torts § 22.59

401

“reasonably certain to reach most” future mass tort claimants. As the Court

stated in Amchem Products, Inc. v. Windsor, “[m]any persons in the exposureonly category . . . may not even know of their exposure, or realize the extent of

the harm they may incur.”1254

The Court “recognize[d] the gravity of the question whether class action

notice sufficient under the Constitution and Rule 23 could ever be given to

legions so unselfconscious and amorphous.”1255 Whether it is possible to

provide constitutionally adequate notice to future claimants in the bankruptcy

context similarly remains open to question.

Due process concerns also attend possible conflicts of interest within the

class of future claimants. In other representational situations, the Supreme

Court has insisted on a careful alignment of interests between the representative and those represented and has prohibited grouping of class members with

divergent interests.1256 A similar insistence in the bankruptcy context might

require appointment of more than one future claims representative. For

example, separate representatives might be necessary for seriously injured

future claimants and for those future claimants who will suffer only minor

injury.1257 Given the lack of clear precedent on the resolution of future claims

in the bankruptcy context, courts should proceed with caution, recognizing the

constitutional, statutory, and practical questions that remain unresolved.

Courts should draw on the practices that have been developed to provide

procedural protections for future claimants.

22.59 Confirming a Reorganization Plan

The Bankruptcy Code provides that “[a]fter notice, the court shall hold a

hearing on confirmation of a plan”1258 and that “[a] party in interest may

object to confirmation of a plan.”1259 Judicial review of the plan must take place

Kathryn R. Heidt, Future Claims in Bankruptcy: The NBC Amendments Do Not Go Far Enough,

69 Am. Bankr. L.J. 515 (1995); Resnick, supra note 1183, at 2076.

1254. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 628 (1997).

1255. Id.

1256. See Ortiz v. Fibreboard Corp., 527 U.S. 815, 856–57 (1999); Amchem, 521 U.S. at

625–28.

1257. See S. Elizabeth Gibson, A Response to Professor Resnick: Will This Vehicle Pass

Inspection?, 148 U. Pa. L. Rev. 2095, 2114–15 (2000).

1258. 11 U.S.C. § 1128(a) (2000).

1259. Id. § 1128(b).
§ 22.59 Manual for Complex Litigation, Fourth

402

even if every impaired class of claims or interests has affirmatively accepted the

plan.1260

Before confirming a plan, the Bankruptcy Code requires the court to

determine whether the plan satisfies thirteen statutory requirements. For

example, the Code explicitly requires that a Chapter 11 reorganization plan

identify and designate separate classes of creditors’ claims and equity holders’

interests, specify the treatment to be afforded each class of claims or interests

affected by the plan, provide equal treatment for each claim or interest within a

particular class, and avoid benefiting directors, officers, and trustees at the

expense of creditors and interest holders.1261

It is generally efficient to have the bankruptcy judge and a district judge sit

jointly to decide whether a proposed plan should be confirmed. In an asbestos

bankruptcy (or one following the asbestos statutory model), this approach

streamlines the process because, under the statute, the district judge has to

either issue or affirm the confirmation order for a channeling injunction to

become valid and enforceable.1262 In circuits without a bankruptcy appeals

panel, a joint sitting may also bypass what would otherwise be an appeal of

right from a bankruptcy judge’s ruling to a judge of the district court.1263

Instead, an appeal of the joint decision would proceed directly to the court of

appeals.1264

1260. See Gerald F. Munitz & Karen M. Gebbia, The Chapter 11 Plan, Confirmation and

Cramdown, in Basics of Bankruptcy and Reorganization 339, 355 (1992).

1261. See 11 U.S.C. § 1129(a)(1)–(13) (West 2003). For additional requirements, see id.

§ 1129(b)–(d); for requirements relating to the contents of a reorganization plan, see id. § 1123.

For an example of a confirmation ruling and order, see In re Eagle-Picher Industries, 203 B.R. 256

(Bankr. S.D. Ohio 1996).

1262. 11 U.S.C. § 524(g)(3)(A) (West 2003).

1263. 28 U.S.C. § 158(a) (West 2003). See, e.g., In re Eagle-Picher Indus., 203 B.R. 256

(Bankr. S.D. Ohio 1996). In the A.H. Robins reorganization, the district judge and bankruptcy

judge sat jointly throughout the bankruptcy proceedings. Gibson, Case Studies, supra note 1160,

at 190. Because a bankruptcy appellate panel serves as a substitute for appeal to a district court,

see 28 U.S.C. § 158 (b)(1) (West 2003), a joint hearing with a bankruptcy judge and a district

judge would not save a step in the process. Appeal from that joint decision would lie with a

three-judge bankruptcy appellate panel and then with the court of appeals. 28 U.S.C. §§ 158(c)

& (d) (West 2003).

1264. Id. § 158(d).
Mass Torts § 22.61

403

22.6 Case-Management Orders

.61 Initial Orders 403

.62 Organization of Counsel 405

.63 Subsequent Case-Management Orders 408

.631 Adding Parties 408

.632 Pleadings and Motions 409

.633 Deferred Docketing 410

.634 Issue Identification and Development 410

.635 Electronic Communications 413

When responsibility for numerous related cases pending in the federal

courts is centralized early with a single judge, active case management is

imperative. The judge must promptly develop case-management plans and

orders, updating and modifying them as the litigation unfolds. An initial casemanagement order will set the stage for the ongoing management process.

That order should start to organize the cases and counsel; address discovery

issues, including preservation of documents, electronic data, and other

evidence; set priorities for pretrial pleadings and defer unnecessary pleadings;

identify preliminarily the critical threshold legal and factual issues; outline

preliminary discovery and motions and, if possible, set a timetable; and direct

counsel to coordinate the implementation of the order. The order should

coordinate discovery and threshold pretrial motions with discovery and

motions in related cases pending in state and other federal courts. The order

should also take into account the proposals of counsel and encourage continuing collaboration among counsel and the parties in the cases pending in

different courts.1265

22.61 Initial Orders

Items that might be covered in initial and follow-up case-management

orders in mass tort litigation are illustrated by the orders issued in the MDLcentralized silicone gel product liability litigation, the fen-phen diet drug

litigation, the phenypropanolamine (PPA) litigation, and other mass tort

litigations. Section 40.52 contains a composite of those orders, which typically

are used to accomplish the following tasks:1266

1265. See generally supra sections 21.2 & 21.3.

1266. See In re Silicone Gel Breast Implant Prods. Liab. Litig., No. CV 92-P-1000-S, Order

No. 1 (N.D. Ala. June 26, 1992), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last

visited Nov. 10, 2003); see also In re Diet Drugs Prods. Liab. Litig., MDL No. 1421 (E.D. Pa.), at

http://www.fenphen.verilaw.com/ (last visited Nov. 10, 2003); In re Phenylpropanolamine (PPA)
§ 22.61 Manual for Complex Litigation, Fourth

404

• set the agenda and ground rules for the initial conference and notify

parties that attendance by each party or attorney is not necessary and

that parties with similar interests are expected to agree to be represented at the conference by a single attorney;

• establish an initial service list of counsel, which can later be modified

to include a statement that defendants authorized listed counsel to accept service of process or service of other papers and motions by certified mail or by electronic means;

• urge counsel to familiarize themselves with the Manual for Complex

Litigation and “be prepared at the conference to suggest procedures to

facilitate the expeditious, economical, and just resolution of this litigation”;

• direct counsel for each side to meet, confer, and seek consensus on all

agenda items and, specifically, to propose a discovery plan, including

methods to obtain expert discovery and a timetable for considering

motions, including any class certification motions;

• call for (1) preliminary reports on the critical factual and legal issues,

(2) lists of all affiliated companies and counsel (to assist the court in

addressing recusal or disqualification questions), (3) lists of pending

motions, and (4) summaries of the nature and status of similar litigation pending in state courts;

• direct attorneys interested in serving as lead, liaison, or coordinating

counsel to “submit information showing how and at what rates they

will be expected to be compensated” and to disclose any “agreements

or commitments they have made respecting the role and responsibility

of other attorneys in conducting pretrial proceedings, discovery, and

trial”;1267

• consolidate cases for pretrial proceedings, create a master docket and

file, and establish a case-caption format;

• bar motions under Rule 11 or 56 without leave of court and order that

counsel meet and attempt to resolve other motions (except Rule 12

motions to dismiss), an approach that should be reaffirmed and applied throughout the litigation;

Prods. Liab. Litig., MDL No. 1407 (W.D. Wash.), at http://www.wawd.uscourts.gov/wawd/

mdl.nsf/main/page (last visited Nov. 10, 2003).

1267. Id. See also In re Diet Drug Prods. Liab. Litig., MDL No. 1203, Order No. 16 (E.D. Pa.

Mar. 13, 1998), at http://www.fenphen.verilaw.com/all_court.icl (last visited Nov. 10, 2003)

(establishing guidelines for attorneys’ common benefit fund time and expense reports, including

time categories and limitations on expenses).
Mass Torts § 22.62

405

• order the parties to preserve all documents and records containing

relevant information, establish ground rules for any routine purges of

computer records, and address other issues relating to electronic data

likely to be the subject of discovery (see sections 11.432 and 40.26);

• stay formal discovery and grant extensions of time for responding to

complaints and motions, pending establishment of a schedule; and

• announce whether the judge intends to handle all matters personally

and, if applicable, designate a magistrate judge to handle matters requiring immediate judicial attention when the district judge is unavailable.

Similar orders have been used by judges handling a variety of dispersed mass

tort personal injury and property damage cases1268 and single incident mass

tort litigation.1269

22.62 Organization of Counsel1270

Early organization of the counsel who have filed the various cases transferred or consolidated for pretrial purposes is a critical case-management task.

The judge will often need to appoint lead counsel or a committee of counsel to

1268. See, e.g., In re Baycol Prods. Litig., MDL No. 1431, Order No. 4 (D. Minn. Mar. 4,

2002), at http://www.mnd.uscourts.gov/Baycol_Mdl/pretrial.htm (last visited Nov. 10, 2003)

(pretrial order, issued after initial conference, dealing with docketing, service, conferences,

refinement of pleadings, discovery, and attorneys’ time records); In re Phenylpropanolamine

(PPA) Prods. Liab. Litig., MDL No. 1407, Order No. 1 (W.D. Wash. Jan. 29, 2002), a t

http://www.wawd.uscourts.gov/wawd/mdl.nsf/main/page (last visited Nov. 10, 2003) (order,

issued after initial case-management conference, dealing with discovery, experts, use of

technology, class actions, and state–federal coordination); In re Inter-Op Prosthesis Prod. Liab.

Litig., MDL No. 01-CV-9000, Case Management Order (N.D. Ohio Sept. 13, 2001), at

http://www.ohnd.uscourts.gov/Clerk_s_Office/Notable_Cases/index.html (last visited Nov. 10,

2003) (pretrial order including statements of responsibilities of counsel and participation of

state court counsel; extensive treatment of discovery); In re Propulsid Prods. Liab. Litig., MDL

No. 1355, Order No. 2 (E.D. La. Oct. 2, 2000), at http://propulsid.laed.uscourts.gov/orders.htm

(last visited Nov. 10, 2003) (pretrial case-management plan including detailed organization of

counsel).

1269. See, e.g., In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001); In re San Juan Dupont

Plaza Hotel Fire Litig., MDL No. 721, 1989 WL 168401 (D.P.R. Dec. 2, 1988) (case-management

order).

1270. For a general outline of factors for the court to consider in selecting, providing

compensation for, and monitoring the performance of lead counsel in coordinated or consolidated litigation, see supra section 10.22. For more specific discussion of the factors relevant to

selecting counsel and establishing an initial understanding about attorney fees, see infra section

14.211.
§ 22.62 Manual for Complex Litigation, Fourth

406

coordinate discovery and other pretrial preparation. Lead counsel and committees of counsel for the plaintiffs in mass tort litigation perform a host of

functions. They develop proof of liability and anticipate defenses; gather the

expertise necessary to prove causation and other elements of plaintiffs’ cases;

trace patterns of exposure; manage discovery; coordinate the various filings;

and communicate with counsel for plaintiffs, counsel for defendants, and the

court.1271 In cases involving numerous defendants, liaison counsel for defendants generally play an important coordinating role in the mass tort litigation.

As the appointing authority, the judge has the opportunity and obligation to

monitor the activities of counsel and to implement the litigation management

plan. Many judges monitor the activities of the parties and counsel through

regularly scheduled status conferences and hearings on pretrial motions and

discovery. Section 21.27 discusses the rule provision that applies to appointing

counsel in class actions.

Where several counsel are competing to be lead counsel or to serve on a

key liaison committee, the court should establish a procedure for attorneys to

present their qualifications, including their experience in managing complex

litigation and knowledge of the subject matter, their efforts in researching and

investigating the claims before the court, and the resources that they can

contribute to the litigation.1272 Often counsel will agree among themselves as to

who should serve as lead counsel or assume responsible positions on counsel

committees; but the judge must be satisfied that counsel can perform the

assigned roles and that they have not entered into improper arrangements to

secure such positions.1273 Including plaintiffs’ attorneys with different perspectives and experience in lead or liaison counsel or as committee members can be

helpful. Consider also including counsel handling significant numbers of state

cases to facilitate coordination among state and federal cases. Section 20.31

discusses steps that judges can take in organizing counsel to help coordinate

cases among state and federal courts, emphasizing the need to include attorneys involved in cases needing coordinated efforts.1274

1271. See Paul D. Rheingold, Mass Tort Litigation §§ 7:20 to 7:28 (1996 & Supp. 2002).

1272. See infra section 14.211; see also Fed. R. Civ. P. 23(h)(2) & committee notes.

1273. See, e.g., In re Fine Paper Antitrust Litig., 98 F.R.D. 48, 70–75 (E.D. Pa. 1983)

(describing agreements among attorneys to influence the organizational structure of the

Plaintiffs Steering Committee and the Executive Committee), aff’d in part, rev’d in part, 751 F.2d

562 (3d Cir. 1984).

1274. See also, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 39 (E.D.

Pa. Apr. 21, 1998), at http://www.fenphen.verilaw.com/pto.icl (last visited Nov. 10, 2003)

(creating Plaintiff’s State Liaison Committee with twenty lawyers from fourteen states).
Mass Torts § 22.62

407

During the selection process, judges should explicitly articulate their

expectations about attorney compensation.1275 For example, the judge can

establish guidelines on the number of attorneys who can be present for or

involved in specific tasks, the use of paralegals and associates, record keeping

and reporting of time and expenses, ranges of allowable expenses, and similar

requirements. See section 14.21.

The cost of the legal services may be apportioned among all parties who

benefit from the services.1276 Fees, however, may not be imposed by an MDL

transferee judge on attorneys in cases that are not within the jurisdiction of the

MDL courts.1277 In general, those attorneys who provide a common benefit to a

group of litigants may also receive compensation from a common fund—even

if the attorneys who provide the benefit are not part of an official committee.1278

At a minimum, the judge should consider designating one or more

attorneys for the plaintiffs and defendants to conduct common discovery and

to present motions and arguments during coordinated pretrial proceedings. To

minimize repetitious or marginal presentations, lawyers should be encouraged

to consult with such designated or liaison counsel before presenting motions

or arguments to the court.

Disagreements among the parties and counsel should not prevent designation of an attorney to act as liaison counsel in distributing documents, developing joint discovery requests, and otherwise assisting in the coordination of

the litigation.

1275. See Fed. R. Civ. P. 23(g)(2)(B) & committee notes.

1276. See Smiley v. Sincoff, 958 F.2d 498 (2d Cir. 1992); In re Air Crash Disaster at Fla.

Everglades on Dec. 29, 1992, 549 F.2d 1006 (5th Cir. 1977); In re Silicone Gel Breast Implant

Prods. Liab. Litig., MDL No. 926, Order No. 13 (N.D. Ala. July 23, 1992), at

http://ww.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003).

1277. In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig., 953 F.2d 162 (4th Cir.

1992).

1278. See supra section 20.31; see also Diet Drugs, Order No. 467 (E.D. Pa. Feb. 10, 1999)

(establishing fund for MDL lawyers and corresponding fund for cooperating state lawyers

working on common discovery).
§ 22.631 Manual for Complex Litigation, Fourth

408

22.63 Subsequent Case-Management Orders

.631 Adding Parties 408

.632 Pleadings and Motions 409

.633 Deferred Docketing 410

.634 Issue Identification and Development 410

.635 Electronic Communications 413

22.631 Adding Parties

New actions will likely be commenced throughout the course of the

litigation, particularly in cases involving latent toxic torts. As discovery

progresses, additional defendants can be joined by amendments to plaintiffs’

complaints or by a succession of third-party complaints. Under Federal Rule of

Civil Procedure 16(b)(1), the judge should establish at the initial pretrial

conference a schedule for joinder of additional parties and for amendment of

pleadings. The schedule should provide the parties a reasonable opportunity

for discovery before the deadline for adding parties or amending pleadings and

should not be modified without a showing of good cause. A presumptive

period for later-added parties to join—usually sixty days from service—should

be included, subject to the right to seek additional time.1279

It is helpful to develop a system for adding new plaintiffs into the structure

of the litigation1280—for example, a system for assigning new cases to existing

groups, or for creating new groups if prior cases have been categorized by

worksite, disease, or some other feature. Such a system may entail collecting

information about the characteristics of each new case. Necessary data about

each new case can be collected at filing and used to create a current database of

the information needed to manage the litigation.

Consider directing the defendants to compile information, such as the

dates on which and areas in which each defendant marketed a particular

product, so that plaintiffs can identify the proper defendants.1281 Such records

might forestall claims being filed against improperly named defendants.

Ordinarily, discovery should not be postponed until all parties have been

joined; indeed, some discovery is necessary to identify the proper parties.

1279. See, e.g., Diet Drugs, Pretrial Order No. 807 (E.D. Pa. July 20, 1999) (establishing a bar

date for cross-claims and third-party claims).

1280. See, e.g., Silicone Gel (Revised Case Management Order), Pretrial Order No. 5 at ¶ 4(c)

(N.D. Ala. Sept. 15, 1992) (granting leave for plaintiffs’ counsel to add, without further motion

or order, additional plaintiffs from the same state as parties with pending claims against

defendants).

1281. See, e.g., Diet Drugs, Pretrial Order No. 418 (E.D. Pa. Jan. 6, 1999) (requiring

defendants to prepare lists of products and for plaintiffs to provide notice regarding product

identification).
Mass Torts § 22.632

409

Interrogatories may be served on the existing parties, and the judge can order

their answers available to, and usable by, parties later added to the litigation.

Similarly, new parties may use documents produced in response to requests by

others and be given access to document depositories.1282 Newly added parties

may use depositions taken earlier, supplemented as necessary by later, limited

depositions. See section 11.453 (deferred supplemental depositions).

22.632 Pleadings and Motions

Establishing a master file with standard pleadings, motions, and orders can

be particularly helpful if the litigation will involve a number of actions filed,

removed, or transferred over an extended period.1283 Answers, third-party

complaints, and motions contained in the master file may be deemed automatically filed in each new case to the extent applicable.1284 A pretrial order

establishing a standard plan and schedule for discovery can also be deemed to

apply automatically. Rulings on motions under Federal Rules of Civil Procedure 12 and 56 may be deemed to apply in the newly filed cases unless an

objecting party can show good cause.1285 If the parties have already filed

separate motions, consider consolidating related motions that affect the

structure of the litigation, such as motions for consolidation for class certification1286 or to establish a trial plan.

These procedures will expedite proceedings in the later-filed cases while

preserving the parties’ rights to claim error from adverse rulings. The parties

should not, however, be automatically precluded from presenting special issues

or requests in individual cases by supplemental pleadings, motions, and

arguments.

1282. See supra section 11.444.

1283. See infra section 40.52.

1284. See supra section 11.32 (pleading and motion practice).

1285. See, e.g., In re Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926, Order

No. 1 (N.D. Ala. June 26, 1992), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last

visited Nov. 10, 2003) (deeming that any motion, brief, response, and corresponding order

applies to each similarly situated party unless that party expressly disavows it).

1286. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 419 (E.D. Pa.

Jan. 6, 1999), at http://www.fenphen.verilaw.com/pto.icl (last visited Nov. 10, 2003) (scheduling

a hearing on motions to certify classes, requiring each side to specify facts they intend to prove,

and calling for stipulations of uncontested facts and briefs); id., Order No. 252 (E.D. Pa. Aug. 13,

1998) (establishing deadlines for class certification motions and requiring parties to confer with

the Plaintiffs’ Management Committee and seek to consolidate such motions); id., Order No. 4

(E.D. Pa. Jan. 16, 1998) (suspending filing and consideration of motions for class certification).
§ 22.634 Manual for Complex Litigation, Fourth

410

22.633 Deferred Docketing

In latent toxic tort cases, exposure to the product may precede manifestation of injuries by a number of years. The presence, nature, and extent of

injury or harm may not be known for years or even decades after exposure.

Nevertheless, parties may file cases to prevent statutes of limitation or statutes

of repose from extinguishing their claims. Some judges, generally with the

consent of the parties affected, have established deferred dockets, sometimes

referred to as dormant or inactive dockets, to register such claims with the

court and toll the running of statutes of limitation or repose while deferring

their consideration until any injuries become manifest.1287

Other means are available to defer decisions on mass tort claims that are

not ready to be adjudicated. For example, judges severed and deferred cases

involving claims of systemic injuries resulting from exposure to the silicone gel

in breast implants until a national panel of scientific experts appointed under

Federal Rule of Evidence 706 issued its report in the multidistrict litigation on

the causation issues. Cases involving allegations of localized injuries were not

deferred because those causation issues did not raise the same scientific

questions or require the same scientific evidence.1288 Another judge entered an

interim order granting in limine motions to exclude plaintiffs’ experts, subject

to reexamination when the Rule 706 panel issued its report.1289 Yet another

judge deferred claims by tolling the statute of limitations and maintaining a

class action relating to those claims on the court’s docket.1290

22.634 Issue Identification and Development

Identifying the issues—and the governing statutory or decisional law—is

critical to developing a plan for efficiently resolving complex tort litigation.

Multiple tort cases frequently involve claims and defenses asserted under

1287. See, e.g., In re Asbestos II Consolidated Pretrial, 142 F.R.D. 152 (N.D. Ill. 1991);

Freedman, supra note 1067, at 688–89. See generally, Peter H. Schuck, The Worst Should Go First:

Deferral Registries in Asbestos Litigation, 75 Judicature 318 (1992); see also In re Asbestos Prods.

Liab. Litig. (No. VI), MDL No. 875, 2002 U.S. Dist. LEXIS 16590 (E.D. Pa. Jan. 14, 2002) and the

discussion of priorities, supra note 1048; see also infra section 40.52, ¶ 9.

1288. In re Breast Implant Cases, 942 F. Supp. 958 (E.D.N.Y. & S.D.N.Y. 1996). For a

discussion of the process of appointing and receiving the report of the national panel see FJC

Study, Neutral Science Panels, supra note 1059.

1289. Hall v. Baxter Healthcare Corp., 947 F. Supp. 1387, 1394–95 (D. Or. 1998).

1290. See, e.g., In re Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926, Order

No. 5 (N.D. Ala. Sept. 15, 1992), at http://www.fjc.gov/BREIMLIT/ORDERS.htm (last visited

Nov. 10, 2003) (extending indefinitely the time for opting out of a provisionally certified class

action and stating that the pendency of that action would toll the statute of limitations for

members of that class).
Mass Torts § 22.634

411

various federal and state laws. In early Federal Rule of Civil Procedure 16

conferences and status conferences, the judge and counsel should work to

narrow the issues, claims, and defenses. Such conferences should explore, for

example, whether stipulations are feasible to determine what law applies to

certain groups of claims or claimants, or to determine what products were

distributed during certain periods or in certain geographic areas.

Issues to be taken up early in the litigation may include the following:

• whether the facts and expert evidence support a finding that the products or acts in question have the capacity to cause the type of injuries

alleged;

• whether plaintiffs’ claims of causation are generally applicable and susceptible to proof across large groups of individuals and over time;

• what law applies and whether there are material differences among the

applicable laws;

• whether plaintiffs’ claims are barred by statutes of limitations or other

legal bars;

• whether plaintiffs can pursue punitive damages;1291

• whether one or more classes should be certified and, if so, how to define the class and whether it should be limited to particular claims or

issues;1292 and

• whether to consolidate groups of cases under Federal Rule of Civil

Procedure 42(a) for pretrial management.

Some legal issues may be susceptible to resolution and review on interlocutory appeal relatively early in the litigation.1293 Examples include whether

claims are cognizable under federal common law,1294 barred by the statute of

limitations,1295 subject to issue or claim preclusion,1296 or covered by insurance.

1291. See generally In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001) (reviewing punitive

damages award); In re TMI, 67 F.3d 1119, 1127–28 (3d Cir. 1995) (affirming order allowing

punitive damage award based on state law); In re Simon II Litig., 211 F.R.D. 86, 158–63

(E.D.N.Y. 2002) (discussing punitive damages). See also State Farm Mut. Auto. Ins. Co., 123 S.

Ct. 1513 (2003).

1292. See supra section 21.1; see also Fed. R. Civ. P. 23(c)(4)(A). Recent decisions have called

into question the applicability of Rule 23(c)(4)(A) in the mass tort context. See infra section

22.75.

1293. See supra sections 15.11–15.12.

1294. See In re Agent Orange Prod. Liab. Litig., 635 F.2d 987 (2d Cir. 1980).

1295. See Neubauer v. Owens-Corning Fiberglas Corp., 686 F.2d 570 (7th Cir. 1982).

1296. See In re Air Crash at Dallas/Ft. Worth Airport, 861 F.2d 814 (5th Cir. 1988); In re

Asbestos Litig., 829 F.2d 1233, 1242 (3d Cir. 1987); Hardy v. Johns-Manville Sales Corp., 681

F.2d 334 (5th Cir. 1982); Ezagui v. Dow Chem. Corp., 598 F.2d 727 (2d Cir. 1979); see also
§ 22.634 Manual for Complex Litigation, Fourth

412

Interlocutory certification of controlling but unresolved questions of state law

to state courts may also be feasible.1297

Differences in the substantive law governing liability and damages may

substantially affect discovery, trial, and settlement. In all mass tort litigation,

the judge must analyze applicable choice-of-law rules and determine what state

law will govern particular issues.1298 In single incident mass tort cases, the

applicable choice-of-law rules may indicate that only one state’s law applies.1299

In dispersed, multistate toxic tort and defective products litigation, choice-oflaw issues may be more problematic because there may be a wide range of

applicable state laws, and the state in which the action is pending may not have

a significant relationship with many of the class members, with the defendants,

or with the activities that are subject to the litigation.1300 If the choice-of-law

and subsequent analysis show little relevant difference in the governing law, or

that the law of only a few jurisdictions applies, the court might address these

differences by creating subclasses or by other appropriate grouping of

claims.1301 See sections 22.72 and 22.75.

Michael D. Green, The Inability of Offensive Collateral Estoppel to Fulfill Its Promise: An

Examination of Estoppel in Asbestos Litigation, 70 Iowa L. Rev. 141 (1984).

1297. See supra section 15.1.

1298. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941). In a case transferred under

28 U.S.C. § 1404(a), the transferee court must apply the choice-of-law rules that would have

governed in the transferor court. Ferens v. John Deere Co., 494 U.S. 516 (1990); Van Dusen v.

Barrack, 376 U.S. 612 (1964).

1299. As a threshold matter, there “can be no injury in applying [the forum state’s law] if it

is not in conflict with that of any other jurisdiction” connected with the litigation. Phillips

Petroleum Co. v. Shutts, 472 U.S. 797, 816 (1985). See also, e.g., In re Air Crash Disaster near

Chicago, Ill. on May 25, 1979, 644 F.2d 594 (7th Cir. 1981) (punitive damages); In re Air Crash

Disaster near Chicago, Ill. on May 25, 1979, 644 F.2d 633 (7th Cir. 1981) (prejudgment interest).

1300. Phillips Petroleum, 472 U.S. at 821–22 (where a state does not have significant contacts

with the claims asserted by each member of the plaintiff class, the application of that state’s law

to all members of the class is arbitrary, unfair, and hence unconstitutional). See also In re Real

Estate Title & Settlement Servs. Antitrust Litig., 869 F.2d 760, 769 (3d Cir. 1989) (“[I]f the

[proposed class] member has not been given the opportunity to opt out in a class action

involving both important injunctive relief and damage claims, the member must have either

minimum contacts with the forum or consent to jurisdiction” to be precluded from litigating its

claims in its own forum.).

1301. In re Sch. Asbestos Litig., 977 F.2d 764, 796–98 (3d Cir. 1992) (division of state laws

into four categories that encompass the variations in the product liability laws of the states may

prove successful; plaintiff’s proposal to pursue the strictest state standards of liability would raise

constitutional issues about whether class members from a state with a less strict law could be

precluded from challenging an adverse decision based on another state’s stricter standard). See

also In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001); In re Telectronics Pacing Sys., Inc.

Accufix Atrial “J” Leads Prods. Liab. Litig., 221 F.3d 870, 880 (6th Cir. 2000); Watson v. Shell Oil
Mass Torts § 22.7

413

22.635 Electronic Communications1302

Effective management requires constant attention to developments in the

litigation. The judge must promptly identify and resolve problems, such as

difficulties in implementing current orders. Soliciting frequent feedback on the

operation of the case-management plan usually yields the information necessary to adjust procedures. Establishing an electronic mechanism for ongoing

communication among the lawyers and the court during the course of complex mass tort litigation has become essential.1303

22.7 Class Actions in Mass Tort Cases

.71 Background 414

.72 Post-Amchem Class Certification 416

.73 Post-Ortiz Mandatory Limited Fund Class Settlements 421

.74 Medical Monitoring Class Actions 424

.75 Issues Classes 429

.751 Identify the Issues 430

.752 Determine Applicable Law 431

.753 Identify a Limited Set of Laws 432

.754 Subclasses to Reflect Differences in State Law 432

.755 Determine Separability of Common Issue 433

.756 Establish a Trial Plan 434

.757 Assess the Overall Impact 435

Federal courts have “ordinarily” disfavored—but not ruled out entirely—using class actions in dispersed mass tort cases.1304 After experimentaCo., 979 F.2d 1014 (5th Cir. 1992), reh’g granted, 990 F.2d 805 (5th Cir. 1993), other reh’g, 53

F.3d 663 (5th Cir. 1994) (case settled before rehearing).

1302. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 173 (E.D. Pa.

July 13, 1998), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10,

2003) (setting up Web site); see also In re Baycol Prods. Litig., MDL No. 1431, Order No. 18 (D.

Minn. May 9, 2002), at http://www.mnd.uscourts.gov/Baycol_Mdl/pretrial.htm (last visited

Dec. 2, 2003) (setting up electronic filing, service, storage, and delivery of documents via Web

site); id., Order No. 19 (D. Minn. May 9, 2002) (setting up protocol for production of documents from electronic storage); In re Propulsid Prods. Liab. Litig., MDL No. 1355, Order No. 4

(E.D. La. Nov. 21, 2000), at http://propulsid.laed.uscourts.gov/orders.htm (last visited Nov. 10,

2003) (setting up electronic records protocols).

1303. In re Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926, Order No. 7 (N.D.

Ala. Oct. 6, 1992), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10,

2003) (establishing an electronic bulletin board). The court also established a Web site located

on the Federal Judicial Center’s homepage at http://www.fjc.gov/BREIMLIT/mdl926.htm (last

visited Nov. 10, 2003).

1304. “A ‘mass accident’ resulting in injuries to numerous persons is ordinarily not

appropriate for a class action because of the likelihood that significant questions, not only of
§ 22.71 Manual for Complex Litigation, Fourth

414

tion with class treatment of some mass torts during the 1980s and 1990s,1305 the

courts have greatly restricted its use in mass torts litigation.1306 Mass tort

personal injury cases are rarely appropriate for class certification for trial. In a

settlement context, the proposed class must meet Rule 23 requirements, with

the exception of trial manageability, and the court must carefully review the

proposed settlement terms to ensure that they are fair, reasonable, and adequate.1307 The trend appears to be that cases involving significant personal

injuries should not be certified for trial, particularly on a nationwide or

multistate basis, because individual issues of causation and individual damages

often predominate and state law often varies. Property damage claims may be

different—if the amounts at issue in each individual claim are too small,

individual litigation may not be a superior, or even feasible, alternative for

resolution, especially when the proposed mass tort rests on a novel or untested

scientific or legal claim. Some courts have addressed these difficulties by

certifying some, but not all, issues for class treatment, and by structuring

subclasses under Federal Rule of Civil Procedure 23(c)(4) to reflect state law

differences.1308 This section examines the case-management challenges presented by mass tort litigation and settlement class actions.

22.71 Background1309

In the 1980s and 1990s, some district courts certified mass tort class

actions on an opt-out basis under Rule 23(b)(3) for litigation arising both

damages but also of liability and defenses of liability, would be present, affecting the individuals

in different ways. In these circumstances an action conducted nominally as a class action would

degenerate in practice into multiple lawsuits separately tried.” Fed. R. Civ. P. 23 committee note,

reprinted in 39 F.R.D. 69, 103 (1966). For a detailed discussion of a relatively brief trend away

from this view, see In re A.H. Robins Co., 880 F.2d 709, 729–38 (4th Cir. 1989).

1305. See Manual for Complex Litigation, Third, § 33.262 (1995).

1306. See, e.g., Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996); In re Am. Med.

Sys., Inc., 75 F.3d 1069 (6th Cir. 1996); In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir.

1995). But see Valentino v. Carter-Wallace, 97 F.3d 1227 (9th Cir. 1996) (declining to adopt

across-the-board rejection of class treatment in pharmaceutical injury mass tort claim).

1307. Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999); Amchem Prods., Inc. v. Windsor, 521

U.S. 591 (1997).

1308. See Simon v. Philip Morris, 200 F.R.D. 21 (E.D.N.Y. 2001) (appeal pending); In re

Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 172 F.R.D. 271 (S.D.

Ohio 1997); In re Copley Pharm., Inc., “Albuterol” Prods. Liab. Litig., 161 F.R.D. 456 (D. Wyo.

1995); In re Copley Pharm., Inc., “Albuterol” Prods. Liab. Litig., 158 F.R.D. 485 (D. Wyo. 1994).

1309. For a comprehensive review of class action activity in mass tort litigation, see

Rheingold, supra note 1271, §§ 3:13 to 3:43.
Mass Torts § 22.71

415

from single incident mass disasters1310 and dispersed mass torts.1311 Opinions in

those earlier cases should be read with caution in light of subsequent rulings of

the Supreme Court and courts of appeals. For an instructive approach, see that

taken by the district and appellate courts that have determined or reviewed

class certification requests in the mass tort context after the Amchem and Ortiz

decisions.1312

As mass tort litigation expanded and became more prevalent, the phenomenon of a settlement class action emerged—that is, a class certified for

settlement purposes only, that may not meet all the requirements for class

certification for trial. Sections 22.72 and 22.73 discuss the various types of

settlement classes and the important differences among them.

In some mass tort cases, judges focus on common issues of fact or law and

carve out issues classes for certification under Rule 23(c)(4)(A),

1313 expressly

1310. Watson v. Shell Oil Co., 979 F.2d 1014, 1020–21 (5th Cir. 1992) (personal injury and

property damage claims arising from oil refinery explosion), reh’g granted, 990 F.2d 805 (5th Cir.

1993), other reh’g, 53 F.3d 663 (5th Cir. 1994) (case settled before rehearing); Sterling v. Velsicol

Chem. Corp., 855 F.2d 1188 (6th Cir. 1988) (opt-out class of water-contamination victims in

vicinity of a landfill); In re Fed. Skywalk Cases, 95 F.R.D. 483 (W.D. Mo. 1982) (certifying optout class of business invitees injured in collapse of hotel skywalk after mandatory class was

vacated); Coburn v. 4-R Corp., 77 F.R.D. 43 (E.D. Ky. 1977) (Beverly Hills Supper Club fire),

mandamus denied sub nom. Union Light, Heat & Power Co. v. U.S. Dist. Ct., 588 F.2d 543 (6th

Cir. 1978).

1311. In re Sch. Asbestos Litig., 789 F.2d 996 (3d Cir. 1986) (nationwide Rule 23(b)(3) class

of schools presenting property damage claims associated with asbestos-containing building

materials used in the schools); Jenkins v. Raymark Indus., 782 F.2d 468, 473 (5th Cir. 1986)

(districtwide class of asbestos personal injury claimants to resolve specific issues, including the

“state-of-the-art” defense); Albuterol, 158 F.R.D. at 485 (wrongful death and personal injury

claims relating to a contaminated batch of drugs); In re Agent Orange Prods. Liab. Litig., 100

F.R.D. 718 (E.D.N.Y. 1983) (nationwide class of Vietnam veterans exposed to dioxins certified

under Rule 23(b)(3) for compensatory relief and under Rule 23(b)(1)(B) for punitive damages),

aff’d, 818 F.2d 145, 163–67 (2d Cir. 1987).

1312. See, e.g., In re The Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001) (affirming class-wide

compensatory damages verdict, vacating class-wide punitive damages verdict on review of

judgment from multiphase class-wide trial in single incident mass tort certified under “limited

punishment” theory as mandatory litigation class action); see also In re Telectronics Pacing Sys.,

Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 221 F.3d 870 (6th Cir. 2000) (reversing

mandatory settlement-purposes class certification pursuant to Ortiz). The Sixth Circuit

Telectronics decision left undisturbed the earlier decision granting a Rule 23(b)(3) litigation

class, and the case was later settled on a Rule 23(b)(3) basis. See In re Telectronics Pacing Sys.,

Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 137 F. Supp. 2d 985 (S.D. Ohio 2001).

1313. See infra section 22.75 for a discussion of issues classes in light of the decision in In re

Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995) (issues class to determine negligence

liability for infected blood decertified on mandamus); cf. Jenkins, 782 F.2d at 473 (certifying

asbestos personal injury claimant class to resolve common issues, including the “state of the art”
§ 22.72 Manual for Complex Litigation, Fourth

416

providing for the resolution of individual issues through nonclass procedures,

such as individual hearings or alternative dispute resolution. Recently, questions have been raised about the constitutionality, fairness, and usefulness of

issues classes in the mass tort context.1314 Section 22.75 discusses issues classes.

The Supreme Court in Amchem and Ortiz examined class certification

standards in the dispersed mass tort context. The Court focused on settlement

classes, but identified principles that apply generally to class certification

issues. After Amchem, cases can still be certified for settlement purposes only,

but they must meet all of Rule 23(a)’s certification standards and all of those in

Rule 23(b)(3) except manageability for trial. Ortiz has greatly restricted the use

of Rule 23(b)(1) to certify mass tort settlement classes on a limited fund

theory. Section 22.74 discusses the specific issues in using Rule 23(b)(2) to

certify medical monitoring settlement class actions.

22.72 Post-Amchem Class Certification

After the 1997 Amchem decision, a court reviewing a proposed mass tort

settlement class action faces two questions: Can the case be certified for

settlement? And can the settlement be approved as fair, reasonable, and

adequate to the absent class members? This section considers the first question;

section 22.92 considers the second, and quite separate, question. The Amchem

Court unequivocally held that a finding that a proposed settlement is fair does

not resolve whether a settlement class can be certified under Rules 23(a) and

23(b).1315

In Amchem, the Supreme Court ruled that, in order to be certified, a

settlement class must meet the requirements in Federal Rules of Civil Procedure 23(a) and (b), even though the parties do not intend to try the case. A

court may take the settlement into account in deciding whether Rules 23(a)

and (b) are met in that the court need not find that trial manageability is

satisfied.1316 The Court noted, however, that those portions of Rule 23 that are

defense where law of only one state applied); Albuterol, 158 F.R.D. at 491–92 (certifying issues

class for negligence and breach of warranty claims related to contamination of bronchodilator).

1314. See, e.g., Castano v. Am. Tobacco Co., 84 F.3d 734, 748–51 (5th Cir. 1996) (decertifying issues class, citing Seventh Amendment and fairness grounds); Rhone-Poulenc, 51 F.3d at

1298–1304 (same).

1315. Amchem, 521 U.S. at 622 (“Federal courts, in any case, lack authority to substitute for

Rule 23’s certification criteria a standard never adopted—that if a settlement is ‘fair’ then

certification is proper.”).

1316. Id. at 620 (“Confronted with a request for settlement-only class certification, a district

court need not inquire whether the case, if tried, would present intractable management

problems, see Fed. R. Civ. P. 23(b)(3)(D), for the proposal is that there be no trial.”).
Mass Torts § 22.72

417

“designed to protect absentees by blocking unwarranted or overbroad class

definitions . . . demand undiluted, even heightened, attention in the settlement

context.”1317

The Court rejected the parties’ proposed nationwide settlement in Amchem involving hundreds of thousands of class members and twenty asbestos

manufacturers because the proposed class was “sprawling” and because

common issues failed to predominate over individual issues, as required for an

opt-out class action under Rule 23(b)(3).1318 The class’s sprawl or lack of

cohesiveness also implicated Rule 23(a)(4)’s adequacy-of-representation

requirement because the interests of some class members and representatives

conflicted with those of other members and representatives. In particular, the

interest of present claimants asserting asbestos-related injuries conflicted with

the interests of future claimants, both those who knew they had been exposed

but had not manifested any injury, and those who had no manifest injury and

did not even know that they had been exposed.1319 The Court also noted with

concern—but did not rule on—the difficulties of providing adequate notice to

future claimants, particularly those who might not know that they had been

exposed to asbestos dust or injured by it. The court pointed out “the gravity of

the question whether class action notice sufficient under the Constitution and

Rule 23 could ever be given to legions so unselfconscious and amorphous.”1320

After Amchem, judges asked to certify mass tort class actions for settlement

purposes only must scrutinize the cohesiveness, adequacy of representation,

and predominance of common issues presented in the proposed class. In

Amchem itself, indications of the lack of cohesiveness included the nationwide

dispersal of cases and the wide range of differences in the asbestos products,

claimants’ exposures to varied asbestos products, medical histories, severity of

injuries, and the presence of alternative causal agents, particularly smoking

history.1321 Judges have also applied Amchem’s teachings to mass tort litigation

outside of the asbestos context, finding deficiencies under Rule 23 that preclude certification.1322

1317. Id.

1318. Id. at 622–25.

1319. Id. at 625–28.

1320. Id. at 628.

1321. See John D. Aldock & Richard M. Wyner, The Use of Settlement Class Actions to Resolve

Mass Tort Claims After Amchem Products, Inc. v. Windsor, 33 Tort & Ins. L.J. 905, 913 (1998)

(“[O]ther, unnamed Rule 23 criteria warranted undiluted or even heightened scrutiny—presumably, the criteria that relate to the ‘cohesiveness’ of the class.”).

1322. See text accompanying infra notes 1328–29.
§ 22.72 Manual for Complex Litigation, Fourth

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Courts have created subclasses to respond to concerns about adequacy of

representation, providing separate representation for each.1323 Each subclass,

however, must also meet all the applicable certification criteria of Rule 23.1324

The individual nature of many exposure, causation, and damages issues may

predominate even within a proposed subclass. Such differences can extend far

beyond conflicts between present and future claimants and can defeat certification even if there are no future claimants involved.

Two post-Amchem mass tort exposure cases illustrate the importance of

subclassing. Both involve claims related to defective pacemaker leads. In the

first case, a district judge certified subclasses for medical monitoring, negligence, and strict liability claims, but rejected a subclass for punitive damages.

Where the laws of various states differed, the judge created subclasses for each

of the major groups of state laws, and later approved a settlement of an opt-out

class based on the subclasses previously created.1325 The other case involved a

similar product manufactured by the same defendant. The district judge

denied plaintiffs’ motion to certify a class to litigate claims for negligence,

1323. Aldock & Wyner, supra note 1321, at 914 (“[A] prudent reading of Amchem would

suggest that subclasses, with separate representatives and counsel, should be established where a

strong case can be made that groups of class members have conflicting settlement goals.”);

Stephen A. Saltzburg (moderator), The Future of Class Actions in Mass Tort Cases: A Roundtable

Discussion, 66 Fordham L. Rev. 1657, 1681–82 (1998) (Judge Weinstein recounts his experience

in the Manville litigation in which the first settlement was “properly reversed” for lack of

subclasses and then resettled “on a different basis”); Roger C. Cramton, Individualized Justice,

Mass Torts, and “Settlement Class Actions”: An Introduction, 80 Cornell L. Rev. 811, 828 (1995)

(“Adequate representation of a huge class of future tort claimants is possible, if at all, only if the

lawyers negotiating for the class are representative of all the major divisions and groups within

the class.”).

1324. Walker v. Liggett Group, Inc., 175 F.R.D. 226, 233 (S.D. W. Va. 1997) (holding that a

proposed class of past and present cigarette smokers, their families and estates, those exposed to

secondhand smoke, and those who paid medical claims was “of such diversity and enormity that

adequacy of representation cannot be achieved even with separate representatives and subclasses”).

1325. In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 172

F.R.D. 271 (S.D. Ohio 1997) (certifying a mandatory class pursuant to Rule 23(b)(1)(B) and

approving a settlement creating a “limited fund” and releasing the parent corporations as well as

the subsidiary from further liability). The court of appeals rejected the settlement and the

certification of a Rule 23(b)(1)(B) class and held that “bootstrapping of a Rule 23(b)(3) class

into a Rule 23(b)(1)(B) class is impermissible and highlights the problem with defining and

certifying class actions by reference to a proposed settlement.” In re Telectronics Pacing Sys.,

Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 221 F.3d 870, 880 (6th Cir. 2000). After remand,

the district court approved a revised settlement providing opt-out rights. In re Telectronics

Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 137 F. Supp. 2d 985 (S.D. Ohio

2001).
Mass Torts § 22.72

419

products liability, and medical monitoring. The court of appeals affirmed,1326

holding that the common issues did not predominate, in part because plaintiffs

had not submitted a plan for designating subclasses that would satisfy Rule

23.1327

Amchem does not categorically preclude certification of a mass tort

personal injury or property damage settlement class action. Since Amchem,

however, a number of district courts have refused to certify dispersed personal

injury or property damage mass tort class actions for the purpose of trial, or

have decertified them,1328 finding that varying state laws and individual issues

of exposure, causation, and damages defeat the predominance requirement of

Rule 23(b)(3), making trial unmanageable. Another basis for rejecting certification is that such variations make class representatives inadequate or atypical

of the interests of the absent class members.1329

Since Amchem, a number of district courts have also refused to certify, or

have decertified, mass tort class actions proposed for settlements, or have

refused to approve the settlement terms. For example, in a case dealing with a

proposed settlement arising out of alleged intentional exposure of workers to

radioactive isotopes, the judge rejected a proposed settlement in part because it

favored the interests of current employees over the interests of past employees

and retirees.1330 In a case dealing with the alleged exposure of cancer patients to

high doses of radiation without their consent, the judge declined to review a

proposed settlement because the proposed class did not satisfy the requirements of either Rule 23(a) or (b).1331 In the former case, the judge reviewed and

rejected the entire settlement before ruling on the certification motion. In the

1326. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1198 (9th Cir. 2001) (Fletcher, B.,

dissenting). The dissent concluded that common issues predominate and that “representative

subclasses based on state law commonalities” would satisfy Rule 23’s superiority requirement.

Id. at 1199.

1327. Id. at 1190.

1328. See, e.g., In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 288 F.3d 1012 (7th

Cir. 2002); Spence v. Glock, 227 F.3d 308 (5th Cir. 2000); Barnes v. Am. Tobacco Co., 161 F.3d

127 (3d Cir. 1998); In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 209 F.R.D. 323

(S.D.N.Y. 2002); Walker v. Liggett Group, 175 F.R.D. 226 (S.D. W. Va. 1997).

1329. See, e.g., MTBE, 209 F.R.D. at 338–41.

1330. Levell v. Monsanto Research Corp., 191 F.R.D. 543, 548–49 (S.D. Ohio 2000) (noting

that, after Amchem, “if class certification is not appropriate under Rule 23(a) and (b), then the

Court cannot approve the proposed Agreement”). The court also noted that the parties had up

until the proposed settlement disputed the issue whether a class could be certified. Id.

1331. In re Cincinnati Radiation Litig., No. C-1-94-126, 1997 WL 1433832 (S.D. Ohio Aug.

4, 1997). Two years later, the same judge reviewed and approved a revised settlement and

certified a hybrid opt-out class under Rules 23(b)(2) and (d)(2). In re Cincinnati Radiation

Litig., 187 F.R.D. 549 (S.D. Ohio 1999).
§ 22.72 Manual for Complex Litigation, Fourth

420

latter case, the judge denied certification at the preliminary approval stage and

thereby avoided the need to conduct a full review of the settlement. See section

21.63. The better practice is to determine class certification at the preliminary

approval stage, thus resolving the central issue of class certification before

investing the significant resources required in reviewing what is often a

complex settlement agreement and the considerable costs of providing notice

to the class.1332

In a number of cases, however, judges have continued to certify settlement

class actions in the mass tort context, particularly when there are no unknown

future claimants and the absent class members are readily identifiable and can

be given notice and an opportunity to opt out.1333 Those judges have emphasized that because the case will be settled rather than tried, differing state laws

that might make a class-wide trial unmanageable do not defeat certification for

settlement purposes only. The judges address the differences among state laws

by certifying subclasses and appointing separate class representatives and

counsel for each subclass.1334 In evaluating the proposed settlements, judges

have taken differing state laws into account to ensure that similarly situated

claimants do not receive disparate treatment.1335 In other settlements dealing

with the laws of more than one state, parties and judges have avoided choiceof-law and adequacy-of-representation problems by framing settlement

1332. For an example of a case in which the court combined a ruling on certification of a

proposed settlement class with a ruling preliminarily approving a proposed settlement, see In re

Inter-Op Hip Prosthesis Liability Litigation, 204 F.R.D. 330 (N.D. Ohio 2001).

1333. See, e.g., In re Sulzer Hip Prosthesis & Knee Prosthesis Liab. Litig., No. 1:01-CV-9000,

2001 WL 1842315, at *7 n.9, *14 (N.D. Ohio Oct. 20, 2001) (conditionally certifying settlement

class and noting that a “‘single set of operative facts establishes liability’” and a “single proximate

cause applies to each potential class member”); In re Diet Drugs Prods. Liab. Litig., MDL No.

1203, 2000 WL 1222042, at *41, *69 (E.D. Pa. Aug. 28, 2000) (certifying settlement class and

finding claimants shared single product and common injury).

1334. See, e.g., Diet Drugs, 2000 WL 1222042, at *50–*53 (discussing the differences in

benefits for different groups of claimants and the role of counsel for subclasses in the negotiations).

1335. In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 137 F.

Supp. 2d 985, 1022–24 (S.D. Ohio 2001). See also Petrovic v. Amoco Oil Co., 200 F.3d 1140,

1146–47 (8th Cir. 1999) (analyzing differences in settlement amounts for property damage

claims in different zones and finding sufficient “‘structural assurance’ of adequate representation” required by Amchem); Diet Drugs, 2000 WL 1222042, at *47–*49 (discussing the reasons

for the different treatment of neurotoxic injuries, which received no benefits but were released in

the settlement); id. at *50–*53 (discussing the differences in benefits for different groups of

claimants and the role of counsel for subclasses in the negotiations); Levell, 191 F.R.D. at 551

(rejecting settlement because “it disparately benefits current employees, who are represented by

nearly all of the named class members, at the expense of former employees and retirees”).
Mass Torts § 22.73

421

allocations in terms of matrices of benefits based on differences in the severity

and impact of various injuries.1336

22.73 Post-Ortiz Mandatory Limited Fund Class Settlements

In Ortiz v. Fibreboard Corp., the Court summarized the traditional and

“presumptively necessary” characteristics of a limited-fund class action under

Rule 23(b)(1)(B) as “[1] a ‘fund’ with a definitely ascertained limit, [2] all of

which would be distributed to satisfy all those with liquidated claims based on

a common theory of liability, [3] by an equitable, pro rata distribution.”1337

The Court refused to recognize an amount of insurance proceeds that the

parties had agreed to make available as a limited fund, despite recognition that

without the settlement the insurance would be subject to competing claims,

and in any event fell below the amounts of projected claims.

Before Ortiz, judges had occasionally certified mandatory (i.e., non-optout) settlement classes under Rule 23(b)(1) in mass tort cases.1338 Parties

invoked such limited-fund class actions typically as settlement class actions in

situations in which “a defendant’s potential tort liability . . . threatens to

overwhelm the company’s assets.”1339 The limited-fund class action usually

represented an effort to resolve mass tort liability without forcing a company

to file for reorganization under the bankruptcy laws.1340 Ortiz put in doubt the

viability of limited-fund class actions in mass tort cases. The requirements are

so difficult to meet that a number of companies have turned to Chapter 11

reorganization as a means of limiting mass tort suits and attempting a global

resolution of the claims rather than asserting that their assets can be consid1336. See, e.g., Sulzer, 2001 WL 1842315, at *11 n.15, *14 (N.D. Ohio Oct. 20, 2001)

(conditionally certifying settlement class and finding “parties’ tentative identification of

appropriate factors to include in the matrix” supports a preliminary finding of fairness); Diet

Drugs, 2000 WL 1222042, at *19–*29, *68 (certifying settlement class and approving matrix

compensation benefits).

1337. Ortiz v. Fibreboard Corp., 527 U.S. 815, 841–42 (1999).

1338. See In re A.H. Robins Co., 880 F.2d 709, 738–40 (4th Cir. 1989) (discussing trend of

certifying mass torts for settlement). But see In re Joint E. & S. Dists. Asbestos Litig. Corp., 982

F.2d 721, 735–45 (2d Cir. 1992) (vacating district court approval of a settlement class in which

competing interests of subgroups of personal injury claimants and codefendants were combined

and represented collectively); see also infra section 22.9 (settlement). For a post-Amchem, preOrtiz limited fund certification, see In re Orthopedic Bone Screw Products Liability Litigation, 176

F.R.D. 158 (E.D. Pa. 1997). For a detailed discussion of the orthopedic bone screw litigation, see

Gibson, Case Studies, supra note 1160, at 127–58.

1339. Gibson, Case Studies, supra note 1160, at 7.

1340. For an in-depth comparison of limited fund procedures under Rule 23 with comparable procedures under the Bankruptcy Code, see Gibson, Case Studies, supra note 1160.
§ 22.73 Manual for Complex Litigation, Fourth

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ered a limited fund.1341 Section 22.5 discusses the management of bankruptcies

involving mass tort claims. This section discusses the conditions the Court

imposed in Ortiz. Note that satisfaction of those conditions for a limited fund

does not necessarily require the court to approve a mandatory limited fund

action under Rule 23(b)(1)(B), either for settlement or for litigation. The

Supreme Court in Ortiz announced that it could not, in the context of that

case, “decide the ultimate question whether settlements of multitudes of

related tort actions are amenable to mandatory class treatment.”1342 The court

said that “the applicability of Rule 23(b)(1)(B) to a fund and plan purporting

to liquidate actual and potential tort claims is subject to question . . . .”1343

Ortiz provides guidance for district judges to follow in reviewing proposed

limited fund class settlements under Rule 23(b)(1)(B). A court must

• undertake an independent investigation as to whether the valuation of

the assets comprising the proposed fund has been set at the upper

limit;1344

• determine on the record the value of present and future tort claims

against the limited fund and whether the fund is adequate to meet

those claims;1345

• analyze any side agreements, such as the contingent settlement of present claims, that might affect the incentives of attorneys for the

class;1346

1341. According to the Rand Institute for Civil Justice, twenty-two companies filed asbestosrelated bankruptcies between January 2000 and July 2002. Carroll, supra note 1161.

1342. Ortiz v. Fibreboard Corp., 527 U.S. 815, 842 (1999). The court specifically raised

questions about limitations that might inhere in the Rules Enabling Act, 28 U.S.C. § 2072(b)

(requiring that federal rules of procedure “not abridge, enlarge or modify any substantive

right”), and the Seventh Amendment rights of absent class members, including future claimants,

to trial by jury and due process. Ortiz, 527 U.S. at 845–47.

1343. Id. at 864.

1344. Id. at 852 (referring to the general assets of the company plus any insurance coverage

and calling for an independent valuation repeatedly in this section of the opinion). A trial court

has numerous options, such as directing the parties to present evidence and argument on

specific issues, including those in the text following this note, or appointing a magistrate judge,

special master, Federal Rule of Evidence 706 expert, or a technical advisor. See generally supra

section 20.14.

1345. Ortiz, 527 U.S. at 849 (“Thus, in an action such as this the settling parties must present

not only their agreement, but evidence on which the district court may ascertain the limit and

the insufficiency of the fund, with support in findings of fact following a proceeding in which

the evidence is subject to challenge.”).

1346. Id. at 852–53.
Mass Torts § 22.73

423

• compare the interests of different claimants who are included in the

class, such as present versus future claimants, and consider whether

those differing interests were adequately represented in the negotiations;1347

• compare the interests of those in the class with those not in the class,

such as present claimants who settled before the class was certified or

claimants who opt out of the settlement;1348 and

• consider who should get the savings of “transaction costs” in settlement agreements, plaintiffs or defendants (which the Supreme Court

found to be “at least a legitimate question, which we leave for another

day”).1349

Based on Ortiz, several judges have invalidated limited fund settlements

approved before the Court’s decision.1350 Some commentators have expressed

doubts as to whether a limited-fund class action is ever appropriate in a mass

tort1351 and whether a class action provides structural fairness equivalent to the

1347. Id. at 856 (“[I]t is obvious after Amchem that a class divided between holders of

present and future claims (some of the latter involving no physical injury and to claimants not

yet born) requires division into homogeneous subclasses under Rule 23(c)(4)(B), with separate

representation to eliminate conflicting interests of counsel. See Amchem, 521 U.S. at 627.”).

1348. Id. at 854–55. Cf. In re Inter-Op Hip Prosthesis Prod. Liab. Litig., No. 01-4039, 2001

WL 1774017, at *1 (6th Cir. Oct. 29, 2001) (staying an injunction against pursuing claims in

other forums that “imposes significant financial disincentives on the right to opt out of a

proposed class action settlement”).

1349. Id. at 861. For further discussion of the allocation of savings in a “going concern”

settlement, see Matthew C. Stiegler, Note, The Uncertain Future of Limited Fund Settlement Class

Actions in Mass Tort Litigation After Ortiz v. Fibreboard Corporation, 78 N.C. L. Rev. 856,

895–99 (2000).

1350. In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig., 221

F.3d 870, 877 (6th Cir. 2000) (mandatory limited fund class settlement approved by district

court before Ortiz held invalid for failure to satisfy the Ortiz criteria, noting that “the applicability of Rule 23(b)(1)(B) to a fund purporting to liquidate actual and potential tort claims is

‘subject to question’”); In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 1999 WL 782560, at

*6–*12, *14 (E.D. Pa. Sept. 27, 1999) (district court disapproved a mandatory limited fund

proposed for a Rule 23(b)(1)(B) settlement class that the court had conditionally certified before

Ortiz, holding that the proposed settlement did not satisfy any of the three criteria in Ortiz’s

historical model). But cf. Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1143–48 (8th Cir. 1999)

(affirming mandatory settlement for pollution damages and injunctive relief, distinguishing

Ortiz, and ruling that differences in damages among class members do not necessarily create

conflicts of interest that require subclasses).

1351. See Gibson, Case Studies, supra note 1160, at 37–38 (“[t]he larger question, repeatedly

raised but not answered by [the Ortiz opinion] was whether a mass tort could ever qualify for

mandatory class treatment under Rule 23(b)(1)(B)”); Stiegler, supra note 1349, at 900 (“[O]rtiz
§ 22.74 Manual for Complex Litigation, Fourth

424

Bankruptcy Code.1352 Others have declared that bankruptcy is the only recourse

for companies facing tort claims exposure that may last for years and ultimately prove overwhelming.1353 The Ortiz decision itself did not go this far,1354

and the Court expressly recognized that an undetermined portion of a company’s limited funds may go back into the business.1355

22.74 Medical Monitoring Class Actions

In cases involving exposure to allegedly toxic substances in which resulting

injury might be latent, plaintiffs may seek certification of a class to provide

medical monitoring for the members. Such claims typically seek relief in the

form of either a court-administered fund to establish and pay for specific

diagnostic testing and research or to prepay for testing or reimburse the class

members for costs incurred if and when they obtain such testing on their own.

Medical monitoring has evolved predominantly under state common

law1356 but can also arise under federal1357 or state statutes.1358 The elements of

has made limited fund class certification substantially, perhaps prohibitively, more difficult and

uncertain.”).

1352. Gibson, Case Studies, supra note 1160, at 5–6 (concluding that “bankruptcy comes out

ahead of limited fund class action settlements with respect to the fairness of the resolution

process and the effectiveness of judicial review” while limited fund class action settlements come

out ahead . . . with regard to the efficiency of the resolution process and the likelihood that

defendant will invoke that resolution method”).

1353. See, e.g., Telectronics, 221 F.3d at 880 (ruling that imminent threat of bankruptcy does

not provide a good reason to approve a limited-fund class action settlement).

1354. Ortiz, 527 U.S. at 860 (no inherent conflict between a limited-fund class action under

Rule 23(b)(1)(B) and the Bankruptcy Code).

1355. Id. at 860 n.34 (“We need not decide here how close to insolvency a limited fund

defendant must be brought as a condition of class certification.”).

1356. See, e.g., In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 787–88 (3d Cir. 1994) (discussing elements of medical monitoring claim and remedy that Pennsylvania would recognize)

[hereinafter Paoli II]; Friends For All Children, Inc. v. Lockheed Aircraft Corp., 746 F.2d 816,

824–25 (D.C. Cir. 1984) (examining “general principles of tort law, the Restatement (Second) of

Torts, and the law of other jurisdictions,” the court found that the District of Columbia Court of

Appeals would recognize a medical monitoring claim and remedy in a case brought on behalf of

children who were at risk of future neurological disorders because they were exposed to severe

decompression and loss of oxygen during an airplane flight); Bower v. Westinghouse Elec.

Corp., 522 S.E.2d 424, 431–32 (W. Va. 1999) (on certification from federal district court, state

court finds a common-law cause of action for medical monitoring in the context of plaintiffs’

exposure to allegedly toxic substances in a pile of debris from the manufacture of light bulbs);

Hansen v. Mountain Fuel Supply Co., 858 P.2d 970, 979–80 (Utah 1993) (workers exposed to

asbestos in the course of renovating an office have a state common-law cause of action to the

extent that monitoring is “medically advisable”); Ayers v. Jackson, 525 A.2d 287, 291 (N.J. 1987)
Mass Torts § 22.74

425

state law claims for medical monitoring typically include exposure to a

harmful substance or product that the defendant marketed or wrongfully

released into the environment and that has significantly increased the plaintiffs’ risk of developing a serious latent disease. Plaintiffs must show that the

defendant caused the exposure to the substance and the consequent increase in

risk. Courts generally require plaintiffs to show that diagnostic tests exist, that

the increased risk has made testing reasonably necessary, and that early

detection can significantly improve medical treatment of the disease.1359

However, courts have not, to date, required plaintiffs to show that the increase

in risk constitutes the proximate cause of any injury that might follow, leaving

that issue for any personal injury damage actions that might ensue. Some

courts have adopted a lesser standard for evaluating how much of an increase

in risk plaintiffs must show to trigger the medical monitoring remedy.1360

(residents of an area near a landfill that allegedly leaked contaminants into nearby well sought

medical monitoring based on their increased risk of developing cancer).

1357. In Metro-North Commuter Railroad Co. v. Buckley, 521 U.S. 424 (1997), the Court

refused to recognize an individual claim under the Federal Employers’ Liability Act (FELA) for

lump-sum economic damages for future medical testing required as a result of plaintiffs’

exposure to asbestos. The Court, however, avoided ruling out “medical cost recovery rules more

finely tailored than the rule we have considered [lump sum damages],” id. at 444, and noted that

courts recognizing a medical monitoring remedy often imposed limitations on that remedy,

such as channeling payments through a court-supervised fund. Id. at 440–41. See also In re

Marine Asbestos Cases, 265 F.3d 861, 866–67 (9th Cir. 2001) (discussing Jones Act claim and

concluding that Metro-North left the medical monitoring question unresolved as to a similar

FELA claim).

1358. See, e.g., Redland Soccer Club, Inc. v. Dept. of the Army, 696 A.2d 137, 142 (Pa. 1997)

(holding that plaintiffs’ claims for medical monitoring based on alleged exposure to toxic

chemicals in a park built over a landfill state a cause of action arising under Pennsylvania

Hazardous Sites Cleanup Act because medical testing qualifies as a statutory “cost of response”

to the release of a hazardous substance), dismissed on jurisdictional grounds after remand aff’d sub

nom. O’Neil v. Dept. of the Army, 742 A.2d 1095 (Pa. Super. Ct. 1999).

1359. The elements of a medical monitoring claim, as described above in the text, are set out

in In re Paoli Railroad Yard PCB Litigation, 916 F.2d 829, 852 (3d Cir. 1990) [hereinafter Paoli I].

See also Marine Asbestos Cases, 265 F.3d at 866; Arch v. Am. Tobacco Co., 175 F.R.D. 469, 481

(E.D. Pa. 1997); Redland Soccer Club, 696 A.2d at 143–45.

1360. See, e.g., Paoli I, 916 F.2d at 851 (“[T]he appropriate inquiry is not whether it is

reasonably probable that plaintiffs will suffer harm in the future but rather whether medical

monitoring is, to a degree of medical certainty, necessary in order to diagnose properly the

warning signs of disease.”); Ayers v. Twp. of Jackson, 525 A.2d 287, 312 (N.J. 1987) (“Even if the

likelihood that these plaintiffs would contract cancer were only slightly higher than the national

average, medical intervention may be completely appropriate in view of the attendant circumstances.”); cf. Donald L. DeVries & Ian Gallacher, Medical Monitoring in Drug and Medical

Device Cases: Taking the Temperature of a New Theory, 68 Def. Couns. J. 163, 173 (2001)
§ 22.74 Manual for Complex Litigation, Fourth

426

Some courts have found that the applicable state law precludes medical

monitoring claims if the claimants have no present injury.1361 Still others have

held that medical monitoring is “a separate and distinct cause of action.”1362

Many state courts have not addressed whether there is a cause of action or

remedy for medical monitoring. A federal district judge managing mass tort

diversity litigation might thus consider certifying to the relevant state courts

the question whether there is a cause of action for medical monitoring or a

medical monitoring remedy.1363

Certifying a class action for medical monitoring raises the same threshold

issues that apply to all mass torts, see section 22.72, and that apply to class

actions generally, see section 21.2. If state law recognizes medical monitoring,

either as a cause of action or as a remedy, a judge must still decide whether the

proposed class action satisfies the criteria set out in Federal Rule of Civil

Procedure 23(a) and the criteria of at least one of the Rule 23(b) types of

classes.1364 The typicality of the class representatives’ claims and possible

conflicts of interest among class representatives and class members remain

critical.1365 See sections 21.141 (adequacy of representation) and 22.72.

(arguing that plaintiffs should have to show a probability of future harm and citing cases

requiring such a showing as well as cases not requiring that level of proof).

1361. See, e.g., Potter v. Firestone Tire & Rubber Co., 863 P.2d 795 (Cal. 1993) (indicating

that medical monitoring is a remedy available to a plaintiff who proves defendant's liability); see

also Crooks v. Metro. Life Ins. Co., 785 So. 2d 810, 811 (La. 2001) (applying statute requiring

actual physical harm as a prerequisite to medical monitoring damages).

1362. Arch, 175 F.R.D. at 481, and cases cited therein.

1363. See, e.g., Bower v. Westinghouse Elec. Corp., 522 S.E.2d 424, 428 (W. Va. 1999)

(district judge certified question to state supreme court); but cf. Paoli II, 35 F.3d 717, 785 (3d

Cir. 1994) (summarizing the judges’ role in Paoli I as “predict[ing] the holding of Pennsylvania

courts on a claim for medical monitoring”); Friends For All Children, Inc. v. Lockheed Aircraft

Corp., 746 F.2d 816, 824–25 (D.C. Cir. 1984) (looking to local tort law and general principles of

tort law in the Restatement, Second).

1364. See In re Diet Drugs Products Liability Litigation, No. CIV.A.98-20626, 1999 WL

673066, at *14–*19 (E.D. Pa. Aug. 26, 1999), for a thorough discussion of procedure and of cases

applicable to a court’s analysis of Rule 23(a) factors in the context of a proposed medical

monitoring class. Note that “‘a single common question is sufficient to satisfy Rule 23(a)(2).’” In

re Diet Drugs, 1999 WL 673066, at *8 (quoting Lake v. First Nationwide Bank, 156 F.R.D. 615,

624 (E.D. Pa. 1994)).

1365. See generally Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997); see also Barnes v.

Am. Tobacco Co., 161 F.3d 127, 141 (3d Cir. 1998) (“The typicality requirement is designed to

align the interests of the class and the class representatives so that the latter will work to benefit

the entire class through the pursuit of their own goals.”).
Mass Torts § 22.74

427

Courts are divided over whether Rule 23(b)(2) or Rule 23(b)(3) is the

appropriate vehicle for certifying a mass tort class for medical monitoring.1366

A key question is whether the primary type of relief plaintiffs seek is for money

damages. Rule 23(b)(2) generally applies when the relief sought is a courtsupervised program for periodic medical examination and research to detect

diseases attributable to the product in question.1367 If money damages are the

primary relief sought in a medical monitoring class, as in programs that pay

class members but leave it to the members to arrange for and obtain tests,

certification generally must meet the Rule 23(b)(3) standards.1368 Judges who

applied Rule 23(b)(3) have generally found that common issues did not

predominate and that differing state laws controlled the claims for medical

monitoring. These judges concluded that nationwide or multistate class

certification was not a superior method of resolving such claims.1369

The choice between application of Federal Rules of Civil Procedure

23(b)(2) and (b)(3) revolves around whether the complaint is seeking predominantly money damages or equitable relief.1370 That determination requires

1366. Barnes, 161 F.3d at 142–44 (affirming decertification); Diet Drugs, 1999 WL 673066, at

*19 (class certified); Day v. NLO, 851 F. Supp. 869, 885–87 (S.D. Ohio 1999) (certification

granted). But cf. Cook v. Rockwell Int’l Corp., 181 F.R.D. 473, 478–80 (D. Colo. 1998) (decertifying a Rule 23(b)(2) medical monitoring class because the underlying claims are for damages

for personal injuries).

1367. Barnes, 161 F.3d at 132 (stating that a court-supervised program to detect diseases

caused by smoking is a “paradigmatic request for injunctive relief”; certification denied on other

grounds); Diet Drugs, 1999 WL 673066, at *6 (finding the “request for relief in this action is

equitable in nature”); Katz v. Warner-Lambert Co., 9 F. Supp. 2d 363, 364 (S.D.N.Y. 1998)

(stating that “[a] claim for a medical monitoring and research fund is injunctive in nature”);

Day v. NLO, Inc., 144 F.R.D. 330, 335–36 (S.D. Ohio 1992) (certifying a Rule 23(b)(2) class for

medical monitoring in the form of a court’s program, managed by court-appointed, courtsupervised trustees, and using monitoring data for group studies and distinguishing programs

seeking monetary relief).

1368. See Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180 (9th Cir. 2001) (holding that

establishment of reserve fund for past and future damages and compensation for future medical

treatment was primarily a claim for money damages; claim for research into alternative

methodologies to uncover remedies for class members’ conditions amounted to incidental

injunctive relief); Arch v. Am. Tobacco Co., 175 F.R.D. 469 (E.D. Pa. 1997) (claims for relief are

primarily for treatment, hence primarily for damages, not injunctive relief).

1369. See In re Rezulin Prods. Liab. Litig., 210 F.R.D. 61, 70–71 (S.D.N.Y. 2002) (denying

certification because choice-of-law issues defeat superiority); In re Methyl Tertiary Butyl Ether

(MTBE) Prods. Liab. Litig., 209 F.R.D. 323, 350 (S.D.N.Y. 2002) (concluding that “the class

action device in this case is not superior to a combination of individual suits and state agency

relief”).

1370. Zinser, 253 F.3d at 1195 (rejecting plaintiffs’ argument that their complaint called for

equitable relief and stating “[a] request for medical monitoring cannot be characterized as

primarily equitable or injunctive per se”); Arch, 175 F.R.D. at 483 (“The court . . . may properly
§ 22.74 Manual for Complex Litigation, Fourth

428

an informed understanding of the essential nature of the medical monitoring

relief that plaintiffs prove to be necessary in the particular case.

If medical monitoring is available under the applicable state law and the

nature of the relief sought is equitable, the court must then decide whether the

proposed class meets Rule 23(b)(2)’s requirement that “the party opposing the

class has acted or refused to act on grounds generally applicable to the class,

thereby making appropriate final injunctive relief or corresponding declaratory

relief with respect to the class as a whole.” In general, Rule 23(b)(2) requires

that the class be “cohesive”1371 in that “the defendant is alleged to have acted in

some uniform way toward the class . . . and that the injunctive relief requested

is applicable to the entire class.”1372 In cases seeking multistate class certification, the court must determine whether applicable state laws are uniform or

whether significant differences can be addressed by certification of subclasses.1373

Also important is whether the diagnostic procedures requested are

reasonably necessary and likely to provide benefits to the class.1374 One court

has framed the test as whether “informed physicians . . . would recommend

routine monitoring on the basis of” former use of the product in question.1375

Another court examined whether plaintiffs can prove “the existence of accepted medical monitoring regimes that make early detection of [the diseases

in question] possible and beneficial.”1376 State and federal medical monitoring

case law development remains dynamic and variable.1377

certify a medical monitoring claim under Rule 23(b)(2) when the plaintiffs seek such specific

relief which can be properly characterized as invoking the court’s equitable powers.”).

1371. Barnes, 161 F.3d at 143.

1372. Diet Drugs, 1999 WL 673066, at *6 (holding that request for medical monitoring relief

“in this action is equitable in nature”). Applicability to the entire class does not mean that the

class definition or the use of subclasses cannot further define or limit the scope of the class to

achieve cohesiveness. Id. at *11–*12 (establishing subclasses and defining the class to exclude, for

example, those who used diet drugs for fewer than thirty days).

1373. See, e.g., id.

1374. See text accompanying supra notes 1357–60.

1375. In re Rezulin Prods. Liab. Litig., 210 F.R.D. 61, 73–74 (S.D.N.Y. 2002).

1376. Carey v. Kerr-McGee Chem. Corp., 60 F. Supp. 2d 800, 811 (N.D. Ill. 1999).

1377. See, e.g., Rezulin, 210 F.R.D. at 75 (denying certification of medical monitoring Rule

23(b)(2) class, finding the proposed class lacked cohesion and individual issues, making it

unmanageable); In re Propulsid Prods. Liab. Litig., 208 F.R.D. 133, 143–47 (E.D. La. 2002)

(denying certification of the proposed class and noting variations in state recognition of medical

monitoring as a claim or remedy).
Mass Torts § 22.75

429

22.75 Issues Classes

.751 Identify the Issues 430

.752 Determine Applicable Law 431

.753 Identify a Limited Set of Laws 432

.754 Subclasses to Reflect Differences in State Law 432

.755 Determine Separability of Common Issue 433

.756 Establish a Trial Plan 434

.757 Assess the Overall Impact 435

Rule 23 provides that “an action may be brought and maintained as a class

action with respect to particular issues” under Rule 23(c)(4)(A),1378 but courts

have held that the proponent must show that issue certification “will materially

advance a disposition of the litigation as a whole.”1379 Section 21.24 discusses

the role of issues classes in class actions generally.

In deciding whether an issues class will materially advance the disposition

of a set of mass tort cases, courts often consider the following factors:

• the issue(s) to be resolved on a class-wide basis;

• the applicable law, based in part on whether the cases arise from a single incident or a series of dispersed activities;1380

1378. Fed. R. Civ. P. 23(c)(4)(A). The rule was intended to recognize that “an action may be

maintained as to particular issues only,” for example, by separating class adjudication of liability

from individual adjudication of damages. Id., committee note to 1966 Amendment, subdivision

(c)(4). See also Simon v. Philip Morris, Inc., 200 F.R.D. 21 (E.D.N.Y. 2001) (analyzing

Rule 23(c)(4)(A) in the historical context of the Seventh Amendment) (appeal pending).

1379. Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 167 n.12 (2d Cir. 2001).

See also In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 209 F.R.D. 323, 351–53

(S.D.N.Y. 2002); Sprague v. Gen. Motors Corp. 133 F.3d 388, 397 (6th Cir. 1998) (stating that

the court is looking for a common issue that will advance and resolve the litigation); Harding v.

Tambrands, Inc., 165 F.R.D. 623, 630 (D. Kan. 1996) (“[c]ertification [of ‘general causation’]

would not materially advance the disposition of the litigation as a whole” where individual issues

of causation and damages under the laws of fifty states would remain); cf. In re Ford Motor Co.

Ignition Switch Prods. Liab. Litig., 174 F.R.D. 332, 352 (D.N.J. 1997) (“If there were certain

basic issues (such as defect) to which only one state’s laws applied and concerning which classwide issues predominated, the court could consider certifying a class with respect to those issues

only.”) (citing Fed. R. Civ. P. 23(c)(4)).

1380. See, e.g., MTBE, 209 F.R.D. at 330 (alleging widespread dispersed groundwater

contamination by petroleum companies as a result of a gasoline additive); cf. Mullen v. Treasure

Chest Casino, LLC, 186 F.3d 620, 623 (5th Cir. 1999) (casino employees claiming they developed

respiratory illness caused by the casino’s “defective and/or improperly maintained airconditioning”); Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1229 (9th Cir. 1996) (claiming

side effects arising from taking a single drug by a single manufacturer for a relatively short

period); In re Copley Pharm., Inc., “Albuterol” Prods. Liab. Litig., 161 F.R.D. 456, 457 (D. Wyo.

1995) (claims arising from a nationwide recall of a bronchodilator prescription pharmaceutical

following alleged incident of contamination).
§ 22.751 Manual for Complex Litigation, Fourth

430

• in dispersed mass tort cases, whether a limited and manageable set of

state or federal substantive laws would apply in a trial of specific issues;

• if there are differences in applicable state laws, whether subclasses can

be used to organize the applicable laws into manageable categories;

• whether each common issue is sufficiently separable from the individual issues so that it need not be “reexamined” in individual trials that

may follow;

• whether the remaining issues of liability or damages will be resolved,

an analysis often aided by trial plans that the parties submit; and

• the impact that determining the common issues will have on advancing the litigation as a whole.

22.751 Identify the Issues

The threshold question is whether there is a separate common issue that

can be certified under Rule 23(c)(4)(A). In mass tort litigation, issues classes

have been used to establish liability elements, such as general causation,

negligence, or breach of warranty.1381 Judges have also certified issues classes to

establish class-wide affirmative defenses, such as the state of the art,1382 the

defendant’s status as a government contractor,1383 and medical monitoring

claims (see section 22.74). Issues of specific causation and resulting damages to

exposed individuals, however, cannot fairly or realistically be decided on a

class-wide basis. As discussed in section 22.756, the judge and parties need to

design other appropriate structures for resolving individual issues if adjudication of common issues establishes entitlement to damages upon proof of

injury. The fact that such procedures will eventually be required does not

1381. See, e.g., Mejdrech v. Met-Coil Sys. Corp., 319 F.3d 910, 912 (7th Cir. 2003) (identifying as common issues leakage of contaminant by defendant and the geographical limits of the

leakage); In re Hanford Nuclear Reservation Litig., 292 F.3d 1124 (9th Cir. 2002) (identifying

general causation as potential issue for class treatment, approving certification of PriceAnderson Act common liability issues as issues class, and approving bifurcated trial with

common issues trial followed by individual trials of causation and damages issues); Jenkins v.

Raymark Indus., 782 F.2d 468, 473 (5th Cir. 1986) (affirming certification of asbestos personal

injury claimant class to resolve common liability issues and the “state of the art” defense);

Albuterol, 161 F.R.D. at 467 (certifying issues classes for negligence and breach of warranty

claims relating to contamination of bronchodilator).

1382. Jenkins, 782 F.2d at 473.

1383. In re Agent Orange Prod. Liab. Litig., 818 F.2d 145, 166–67 (2d Cir. 1987).
Mass Torts § 22.752

431

necessarily defeat the predominance or superiority requirements of

Rule 23(b)(3).1384

22.752 Determine Applicable Law

The choice of applicable law is critical. It often turns on whether the mass

tort in question derives from a single incident in a confined locale or from a

series of events dispersed by geography or time, or both. For example, a court

addressing a Jones Act case dealing with occupational respiratory illnesses

allegedly caused by a defective ventilation system on board a ship found that

certification of an issues class was appropriate.1385 The discrete issue presented

in that case was very different from the “‘Frankenstein Monster’” later described by the same court in rejecting an issues class for a nationwide group of

millions claiming damages for tobacco addiction.1386

The dichotomy between a single incident and a dispersed mass tort is not

always so clear. In a case involving a contaminated product that was distributed nationally before its recall, a judge certified an issues class as to liability.

The judge found that defendant’s admission of liability for some of the

contamination, the widespread use of strict liability concepts by the states

involved, and the improbability that comparative negligence would apply to

use of a contaminated product, made the applicable law and proof consistent

across the class.1387 At the other end of the spectrum, in the Methyl Tertiary

Butyl Ether (MTBE) multidistrict litigation, a group of plaintiff ground well

owners complained of contamination from MTBE, a product used as a

gasoline additive that had allegedly leaked into groundwater sources. The

district court rejected an effort to certify “the appropriateness of injunctive

relief” or “general liability” as issues classes under Rule 23(c)(4). The court also

held that the proposed injunctive issues class failed to meet Rule 23(b)(2)

criteria: The well owners were not a cohesive class because of the differences in

the levels of any contamination, in the sources of any contamination, in the

effects on each plaintiff, and in the extent and nature of relief required.1388 The

1384. See Jenkins, 782 F.2d at 472–73.

1385. Mullen, 186 F.3d at 620 (approving certification of Jones Act common liability issues

as issues class and approving bifurcated trial with common issues trial of negligence and

seaworthiness followed by individual trials of causation and damages issues); see also Mejdrech,

319 F.3d at 911 (all class members in groundwater pollution case proceeding under same state

and federal laws).

1386. Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.19 (5th Cir. 1996).

1387. In re Copley Pharm., Inc., “Albuterol” Prods. Liab. Litig., 161 F.R.D. 456, 464–65 (D.

Wyo. 1995).

1388. In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 209 F.R.D. 323, 341–44

(S.D.N.Y. 2002).
§ 22.754 Manual for Complex Litigation, Fourth

432

court also held that the general liability issues class would not materially

advance the litigation and would be subject to the individual differences

among plaintiffs, requiring countless individual trials.1389

22.753 Identify a Limited Set of Laws1390

Where the cases are derived from activities with dispersed origins, an

issues class will advance the litigation only if it can proceed to jury trial with

clear instructions relating to a common legal standard or a small group of

standards. Drafting sample jury instructions may help to clarify whether an

issues class will work. Where liability relates to an allegedly defective product,

Restatement of Law principles may be applicable and an issues class may be

viable.1391 With regard to negligence claims that are strongly disputed, courts

could face the ungainly prospect of a “single trial before a single jury instructed

in accordance with no actual law of any jurisdiction—a jury that will receive a

kind of Esperanto instruction, merging the negligence standards of the fifty

states and the District of Columbia.”1392 An issues class is rarely viable in such

circumstances.

22.754 Subclasses to Reflect Differences in State Law

Determining whether the applicable laws can be grouped into a few sets

that are very similar may help determine whether common issues are sufficiently present.1393 If subclasses are proposed based on different categories of

1389. Id. at 344–46.

1390. See supra section 22.317. The process of classifying and grouping the pertinent states’

laws is a task that has been described as “not . . . fun, but . . . far from impossible.” Larry Kramer,

Choice-of-Law in Complex Litigation, 71 N.Y.U. L. Rev. 547, 582 (1996). As Professor Kramer

observed, “surveying state laws is not the problem that could make mass consolidation

unmanageable. Determining the law in many states is not easy, to be sure. But every practicing

lawyer has done a fifty-state search at some time in his or her career and this is certainly

manageable. Moreover, the time and expense required to ascertain the content of the laws, even

in a fifty-state search, are a drop in the bucket compared to the other costs of litigating a mass

tort.” Id.

1391. See Albuterol, 161 F.R.D. at 465 (citing In re Asbestos Sch. Litig., 104 F.R.D. 422, 434

(E.D. Pa. 1984), modified, 789 F.2d 996 (3d Cir. 1986)) (observing that “51 jurisdictions are in

virtual agreement in that they apply the Restatement (Second) of Torts § 388” and “forty seven

jurisdictions have adopted strict liability and all of them start with the concept of a defective

product,” and holding that “substantial duplication” of negligence and strict liability laws in

fifty-one jurisdictions make a nationwide class manageable).

1392. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1300 (7th Cir. 1995).

1393. See In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig.,

172 F.R.D. 271, 293–94 (S.D. Ohio 1997) (finding that four subclasses “sufficiently take into

account state law variations in the law of strict liability”); Albuterol, 161 F.R.D. at 465 (directing
Mass Torts § 22.755

433

applicable state law, each subclass must independently meet all the requirements of Rule 23(a) and at least one of the categories specified in Rule 23(b).

See sections 22.72, 21.22, and 21.23.

22.755 Determine Separability of Common Issue

The Reexamination Clause of the Seventh Amendment of the U.S. Constitution provides: “[N]o fact tried by a jury, shall be otherwise reexamined in

any Court of the United States, than according to the rules of the common

law.” The courts have divided over the application of this clause to issues

classes when two or more trials, with separate juries, will be required.1394 See

section 21.24. In the Gasoline Products case, the Supreme Court held that it is

consistent with the Seventh Amendment to allow separate juries to hear

different issues in the same case, as long as the issues tried to separate juries are

so “distinct and separable” that the second jury will not revisit issues determined by the first, and separate trials may be “had without injustice.”1395 See

section 21.24. In Rhone-Poulenc, the Seventh Circuit concluded that a trial plan

under which one jury would first determine the common issue of negligence

and subsequent juries would determine comparative negligence and proximate

causation violated the Reexamination Clause.1396 Other courts have concluded

that the Seventh Amendment is not offended by a bifurcation of the proceedings into class-wide claims and individual claims, on the ground that the

second phase would not involve the “same issues” as the first phase.1397 See

section 22.751. Unless the decision of the first jury will “provide sufficient

guidance to allow later juries to implement the first jury’s formal findings

that “if an individual state’s law is at variance with the general law on a relevant point of law, its

residents may be removed from the class”). Cf. Zinser v. Accufix Research Inst., Inc., 253 F.3d

1180 (9th Cir. 2001) (rejecting the use of subclasses).

1394. Compare In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1303 (7th Cir. 1995), with

Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 169 (2d Cir. 2001). See supra

section 21.24; see also Castano v. Am. Tobacco Co., 84 F.3d 734, 750–51 (5th Cir. 1996) (ruling

that “if separate juries are allowed to pass on issues involving overlapping legal and factual

questions the verdicts rendered by each jury could be inconsistent”); cf. Mullen v. Treasure

Chest Casino, LLC, 186 F.3d 620, 628–29 (5th Cir. 1999) (distinguishing Castano and RhonePoulenc).

1395. Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494, 500 (1931). See also Ala. v.

Blue Bird Body Co., 573 F.2d 309 (5th Cir. 1978) (approving a bifurcated statewide class trial of

an antitrust action and disapproving a nationwide class action trial plan).

1396. Rhone-Poulenc, 51 F.3d at 1303–04.

1397. See In re Asbestos Sch. Litig., 789 F.2d 996 (3d Cir. 1986); see also Albuterol, 161 F.R.D.

at 456.
§ 22.756 Manual for Complex Litigation, Fourth

434

without confusion or uncertainty, issues cannot be certified.”1398 Use of special

verdict forms can provide the specificity necessary for instructing a second jury

as to the aspects of the litigation previously resolved. The forms should clearly

distinguish among the possible interpretations of the first jury’s findings, to

allow later juries to understand and apply those findings.1399

22.756 Establish a Trial Plan

A trial plan for the proposed common issues class will help determine

whether a trial will be manageable and meet all the Rule 23 certification

standards. Section 22.93 discusses mass tort trial plans. Any plan should also

address individual issues, such as specific causation and damages, and defenses

such as comparative negligence or limitations.1400 Some judges have used trial

plans that rely on representative plaintiffs to present test cases, followed by a

procedure for determining remaining issues.1401

A trial on general liability can impose unfair burdens on parties forced to

litigate issues out of context—for example, by trying liability on a class-wide

basis without reference to statute of limitations defenses. One concern is that a

“composite” issues class is often much stronger than any plaintiff’s individual

action would be.1402 A trial plan should identify such risks and propose ways to

avoid or minimize them.

1398. Patrick Woolley, Mass Tort Litigation and the Seventh Amendment Reexamination

Clause, 83 Iowa L. Rev. 499, 531 (1998). See also Steven S. Gensler, Bifurcation Unbound, 75

Wash. L. Rev. 705, 736–37 (2000).

1399. See, e.g., Henley v. FMC Corp, 20 Fed. Appx. 108, 118–20 (4th Cir. 2001) (finding an

inability to distinguish whether jury finding applied to representative parties or the class as a

whole, reversing, and remanding).

1400. Jenkins v. Raymark Indus., 782 F.2d 468, 471 (5th Cir. 1986) (affirming district court’s

determination that a bifurcated trial plan would best address specific causation and damage

issues); In re Copley Pharm., Inc., “Albuterol” Prods. Liab. Litig., 158 F.R.D. 485, 492 (D. Wyo.

1994) (outlining a bifurcated trial plan to determine class-wide liability and individual causation/damages).

1401. See, e.g., In re Shell Oil Refinery, 136 F.R.D. 588, 593–97 (E.D. La. 1991), affirmed sub

nom. Watson v. Shell Oil Co., 979 F.2d 1014, 1017–20 (5th Cir. 1992), reh’g granted, 990 F.2d

805 (5th Cir. 1993), other reh’g, 53 F.3d 663 (5th Cir. 1994) (case settled before rehearing); see

also Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 623 (5th Cir. 1999) (providing for

hearing individual issues in groups of approximately five class members at a time).

1402. In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1299–1301 (7th Cir. 1995); In re Methyl

Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 209 F.R.D. 323, 352–53 (S.D.N.Y. 2002).
Mass Torts § 22.8

435

22.757 Assess the Overall Impact1403

When one or more issues classes are proposed, a judge should do the

following: weigh whether the issues are sufficiently distinct and separate to

comply with the Seventh Amendment under the Gasoline Products test;1404

consider the delays that might be occasioned by separate trials; balance the

need for individualized determinations, even apart from damages, on issues

such as the type or duration of exposure, proximate causation, comparative

causation, or the applicability of different defenses; and, ultimately, determine

whether certification of an issues class or case-by-case adjudication represents

the fairest response to the demands of the Seventh Amendment and due

process of law. One court of appeals identified three primary considerations in

deciding whether issues could be separately tried in consolidated mass tort

litigation: “(1) whether the issue was indeed a separate issue; (2) whether it

could be tried separately without injustice or prejudice; and (3) whether the

separate trial would be conducive to judicial economy, especially if a decision

regarding that question would be dispositive of the case and would obviate the

necessity to trying any other issues.”

1405

22.8 Discovery

.81 Sampling 436

.82 Initial Disclosures 437

.83 Interrogatories 438

.84 Depositions: New Parties 438

.85 Documents 439

.86 Physical Evidence 439

.87 Experts and Scientific Evidence 440

Discovery in mass tort cases generally has two distinct dimensions: one

involving the conduct of the defendants, and another relating to the individual

plaintiffs’ conduct, causation, and injuries. Sometimes—particularly in

multidistrict litigation—judges direct initial discovery toward matters bearing

on the defendants’ liability to all plaintiffs.1406 This approach may be appropriate when liability is seriously disputed. In other cases, however, particularly

1403. For an exploration of the difficulties of applying prior findings in later trials in a mass

tort context, see Green, supra note 1296.

1404. Gasoline Prods. Co. v. Champlin Refining Co., 283 U.S. 494, 500 (1931).

1405. In re Bendectin Litig., 857 F.2d 290, 320 (6th Cir. 1988) (affirming constitutionality of

bifurcated trial plan).

1406. Videotaped depositions are particularly useful in multidistrict litigation where the

testimony of key witnesses may have to be presented at trial in numerous, geographically

dispersed transferor (or state) courts after remand. See generally supra section 11.452.
§ 22.81 Manual for Complex Litigation, Fourth

436

those involving “mature” mass torts, the judge and parties prefer at the outset

to discover plaintiff-specific information or to conduct discovery from

plaintiffs concurrently with discovery from the defendants. Interrogatories

inquiring into the extent of the plaintiffs’ damages may be useful early in the

litigation even if depositions of the plaintiffs are to be delayed. Answers to such

interrogatories may be prepared without disrupting the schedule for discovery

from the defendants and may be a valuable starting point for settlement

discussions. For example, in the Ohio asbestos litigation, special masters

worked with the parties to develop standard forms disclosing information that

would be relevant to both settlement and trial. 1407

The volume and complexity of discovery in dispersed mass tort litigation

might warrant appointing a special master to assist the court. In the breast

implant litigation, the MDL transferee judge resolved discovery disputes

without such assistance, but did appoint a special master to coordinate

discovery and case management with state court judges handling large numbers of related cases. In the diet drug litigation, the MDL transferee judge

appointed a special master to resolve discovery disputes and to help coordinate

state and federal litigation.1408 Other steps to organize discovery and divide

work into manageable categories include organizing discovery in waves, as in

the diet drug litigation,1409 or dividing discovery into national, regional, and

case-specific categories, as in the breast implant litigation.1410

22.81 Sampling

In some cases that involve a massive number of claims for damages for

similar injuries and in which causation is not in doubt, sampling techniques

can streamline discovery relating to individual plaintiffs’ conduct and injuries.1411 Sampling and surveying by questionnaires can provide information for

1407. See Francis E. McGovern, Toward a Functional Approach for Managing Complex

Litigation, 53 U. Chi. L. Rev. 440, 478–91 (1986); Wayne D. Brazil, Special Masters in Complex

Case: Expanding the Judiciary or Reshaping Adjudication?, 53 U. Chi. L. Rev. 394, 399–402 (1986);

Trends, supra note 1077, at 60–69.

1408. In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 26 (E.D. Pa. Mar. 30,

1998), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003).

1409. Id., Order No. 22 (E.D. Pa. Mar. 23, 1998).

1410. In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL No. 926, Order No. 5 (N.D.

Ala. Sept. 15, 1992), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov.

10, 2003).

1411. See supra section 11.493; see also Hilao v. Estate of Marcos, 103 F.3d 767, 782–87 (9th

Cir. 1996) (describing sampling for discovery and aggregated trial of damages issues).
Mass Torts § 22.82

437

settlement discussions and for test case selection for individual trials.1412 For

example, in a case involving thousands of claimants seeking damages for

injuries allegedly caused by eating fish contaminated with DDT, the parties

agreed to limit formal discovery to a sample of the claimants randomly selected

by a special master.1413 Responses to questionnaires provided information

about the remaining claimants and served as the basis for screening out a

substantial number of claims.1414 In the absence of consent or a settlement,

however, litigants are entitled to full discovery and to adjudication consistent

with the U.S. Constitution.1415 Whether the aim is discovery, settlement, or a

test-case trial, any sample should be representative of the claims and claimants,

taking into account relevant factors such as the severity of the injuries, the

circumstances of exposure to the product or accident, the mechanisms of

causation, the products and defendants alleged to be responsible, any affirmative defenses, and the applicable state law.1416 If sampling does not lead to a

global settlement, individual discovery of all plaintiffs will likely be needed.

22.82 Initial Disclosures

Federal Rule of Civil Procedure 26(a) specifies information that must be

disclosed in advance of discovery. Such disclosures are often inappropriate to

mass tort cases because they require repetitive disclosures of the same information to the same attorneys.1417 The rule permits the judge to order or the

parties to stipulate that these requirements do not apply to the particular

litigation.1418 See also section 22.61.

1412. See supra sections 11.422, 11.423, 11.464, and infra section 22.9. See also Brazil, supra

note 1407, at 402–06 (discussing sampling and surveying techniques used by special master as

settlement aid in Alabama DDT case); In re Chevron U.S.A., Inc., 109 F.3d 1016 (5th Cir. 1997)

(ruling that cases selected for a bellwether trial need to be representative of all cases).

1413. Willhoite v. Olin Corp., No. CV-83-C-5021-NE (N.D. Ala. 1983) (discussed in Brazil,

supra note 1407, at 402 n.32, 403–06). Use of random sampling apparently quelled defendants’

fears that plaintiffs’ counsel would otherwise select “a disproportionately small or unrepresentative sample.” Brazil, supra note 1407, at 403. The size of the sample was twenty. Id.

1414. Id. at 403.

1415. See Cimino v. Raymark Indus., 151 F.3d 297, 320 (5th Cir. 1998) (holding that

nonconsensual statistical extrapolation violated the defendant’s “Seventh Amendment right to

have the amount of legally recoverable damages fixed and determined by a jury”).

1416. See, e.g., Chevron U.S.A., 109 F.3d at 1020.

1417. See Fed. R. Civ. P. 26(a)(1) committee note (“Case-specific orders remain proper” and

“are expressly required if a party objects that initial disclosure is not appropriate to the

circumstances of the action.”); see also supra section 11.13 (prediscovery disclosure).

1418. Fed. R. Civ. P. 26(a)(1).
§ 22.84 Manual for Complex Litigation, Fourth

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22.83 Interrogatories

Encouraging or requiring parties with similar interests to confer and

fashion joint interrogatories supplemented as necessary can help prevent

multiple requests for the same information.1419 In lieu of interrogatories,

questionnaires directed to individual plaintiffs in standard, agreed-on forms

were used successfully in the breast implant and diet drug litigations.1420

Answers to interrogatories should generally be made available to other litigants, who in turn might then be permitted to ask only supplemental questions.

22.84 Depositions: New Parties

Standard discovery requests can be deemed filed automatically as new

parties are joined or new actions filed. Consider instituting procedures to

facilitate the use of depositions against similarly situated parties later added to

the litigation1421 and to provide counsel in related cases in other courts with

access to relevant confidential materials covered by protective orders.1422

Courts routinely establish preliminary guidelines for conducting depositions

and create a system for resolving disputes that arise during depositions.1423

Limiting repetitive depositions of some witnesses promotes efficiency, as

does using videotaped depositions for witnesses likely to testify more than

once.1424 Parties with different interests must be allowed fair discovery, but

discovery that has already been competently conducted need not be reopened

for later-added parties, absent a showing of a specific need. Judges may wish to

1419. Trends, supra note 1077, at 47–50. Alternative sets of interrogatories might be drafted

to deal with variations, such as differences in the use of a toxic product or in the measure of

damages for various plaintiffs.

1420. In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 22 (E.D. Pa. Mar. 23,

1998), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003)

(including “Plaintiff Fact Sheet” and medical authorizations in “First Wave Discovery”); In re

Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926, Order No. 30 (N.D. Ala. Mar. 25,

1996), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (approving the use of MDL

questionnaire “which is treated as the plaintiff’s answer to interrogatories and requests for

production”) (last visited Nov. 10, 2003).

1421. See supra sections 11.453, 11.445.

1422. See supra section 11.43.

1423. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 21 (E.D. Pa.

Mar. 16, 1998), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10,

2003) (deposition guidelines). In Diet Drugs, the court appointed a special master to supervise

discovery and rule initially on any disputes. Id., Order No. 26, filed Mar. 30, 1998. See also, e.g.,

Silicone Gel, Order No. 11 (N.D. Ala. June 30, 1993) (deposition guidelines).

1424. See, e.g., Silicone Gel, Order No. 5, at ¶¶ 7(f)(1)(A)–(d) (N.D. Ala. Sept. 15, 1992).
Mass Torts § 22.86

439

consider vacating any protective orders issued in individual cases before their

consolidation and taking other actions to promote access to materials from

other litigation.1425 See section 11.452 for discussion of technology to enable

broad remote participation in depositions conducted by a few lawyers physically present and other lawyers participating by electronic access, perhaps with

a magistrate judge or other discovery “master” available to handle objections.

In mass tort litigation, such approaches may avoid the need for repetitive

depositions of significant decision makers, defendants, or experts.

22.85 Documents

The volume of discovery in a mass tort often warrants creation of a

document depository, a Web site or sites, and other physical and electronic

means of making discovery materials available to all parties. The goal is to have

as much discovery material as possible readily accessible to litigants in federal

and state courts. Generally, documents relating to scientific studies, public

records, and public reports would be included at such a site, as well as responses to written discovery requests, copies of deposition transcripts, and

documents discovered by the parties. Requests for documents can be coordinated and handled by using an electronic or physical depository for the

collection and storage of the requested documents. The parties and court

reporters should provide depositions and other discoverable documents in an

electronic format so that the court and the parties can use electronic search

tools to locate relevant information. Procedures should permit a party easily

and quickly to request the return of inadvertently disclosed privileged or

confidential information or documents without waiving attorney–client or

work-product privilege or protection against discovery.1426

22.86 Physical Evidence

In a single-event mass tort case, such as an airplane crash or other accident

simultaneously affecting a number of persons, it may be advisable to order the

1425. See, e.g., id., at ¶ 7(e)(5). In that order the court indicated that it expected parties to

the litigation to waive rights under protective orders issued in cases that were not centralized

under the MDL order. The court also required applications for protective orders to specify the

materials to be protected and the terms and conditions of any proposed limits to the protection.

1426. See, e.g., Diet Drugs, Order No. 41 (E.D. Pa. Apr. 23, 1998) (providing that inadvertent

disclosure of privileged documents does not constitute a waiver of the privilege generally or in

relation to the specific document in question); id., Order No. 27 (E.D. Pa. Mar. 31, 1998) (last

visited Nov. 10, 2003) (establishing ground rules for making and preserving claims of confidentiality during the discovery process).
§ 22.87 Manual for Complex Litigation, Fourth

440

preservation of physical evidence, to set conditions on its handling, testing,

and custody, and to establish ground rules for access to and examination of the

accident site. This type of discovery may require participation by experts from

both sides—and perhaps a court-appointed expert or special master—to sift

through evidence at the site, preserve and document samples for common

testing and use at trial, and videotape and photograph the scene.1427 A judge

might appoint a joint committee of experts to coordinate collecting, recording,

and testing evidence,1428 thereby reducing disputes over testing procedures. As

soon as practicable, the court should establish a central location, accessible to

all parties, for storage and preservation of evidence. In mass accidents occurring on a defendant’s property or involving a mechanical product, it may be

necessary for the defendant to produce blueprints or other technical drawings

to enable plaintiffs to investigate the site or product adequately.

Dispersed mass tort cases may also require steps to ensure the retention

and preservation of physical evidence. In cases alleging product design or

manufacturing defects in models, makes, or lots that may have changed over

time, such orders should be entered early in the case. For example, in the

Bridgestone/Firestone MDL proceedings, the judge ordered a detailed system

for the parties to identify, inspect, retain, and store—and, in the case of new

salable models, share the cost of obtaining—the extensive range of recalled and

new tires that were in issue.1429 If the case involves a number of product makes,

models, or lots, the parties should work toward a joint proposed order setting

procedures to collect, store, and inspect or test a sampling of such products.

Although the need for joint testing might be less critical than in single-incident

torts where there may be only a single product or remnant to be tested, joint

testing may still be advisable to minimize unnecessary disputes.

22.87 Experts and Scientific Evidence

Section 23.2 discusses management of expert evidence in complex litigation generally. Because expert opinions play a vital role in many mass tort

cases, both during the discovery process and at trial, judges often establish at

an early pretrial conference a schedule for disclosing expert opinions in a

1427. See In re Shell Oil Refinery, 132 F.R.D. 437, 439–40 (E.D. La. 1990).

1428. See infra section 34.25 (discussing use of databases in Superfund litigation); see also

infra section 40.52, at ¶¶ 3, 4 (mass tort case-management order).

1429. See In re Bridgestone/Firestone, Inc., ATX, ATXII, & Wilderness Tires Prods. Liab.

Litig., No. IP00-9373, 2001 WL 219858, at *1 (S.D. Ind. Mar. 6, 2001) (Tire Preservation Order);

see also In re Bridgestone/Firestone, Inc., ATX, ATXII, & Wilderness Tires Prods. Liab. Litig., 129

F. Supp. 2d 1207, 1213 (S.D. Ind. 2001) (ordering parties to jointly prepare a preservation

order).
Mass Torts § 22.87

441

written report, for deposing the experts, and for resolving Daubert motions.1430

In deciding the timing of expert disclosures, depositions, and Daubert hearings, courts should consider whether and to what extent

• scientific or technical issues are novel, developing, or settled;

• scientific or technical issues are central to the claims and defenses and

whether resolution of the admissibility of such evidence will as a practical matter be dispositive of the litigation;

• parties and their experts disagree about crucial scientific evidence;

• underlying scientific issues are complex and require extensive time for

discovery and for experts to prepare the reports required by Rule

26(a)(2)(B); and

• scientific issues need to be sequenced or staged in a particular order to

promote economy and efficiency in the litigation.

Generally, the more novel, complex, and central the scientific or technical

issues, the more time the parties will need to conduct discovery, prepare expert

reports, and brief the issues for a Daubert hearing. Although an evidentiary

hearing is not always required to resolve Daubert issues, having the witnesses

testify may allow the judge to test the underlying assumptions and reasoning

employed by the experts and to compare various approaches to the same

subject.1431

Where causation issues dominate litigation, it may be appropriate for the

transferee court in an MDL proceeding to conduct a Daubert hearing on

general causation issues, leaving specific causation issues for the transferor

courts on remand.1432 Such a division in the appropriate case efficiently

separates the role of the MDL court from that of the trial courts after re1430. See infra section 23.32 (outlining expert evidence questions for the initial conference)

& supra section 11.48 (disclosure and discovery of expert opinions); see also, e.g., In re Phenylpropanolamine (PPA) Prod. Liab. Litig., MDL No. 1407, Order No. 6 (W.D. Wash. Mar. 22,

2002), at http://www.wawd.uscourts.gov/wawd/mdl.nsf/main/page (last visited Nov. 10, 2003)

(Expert Discovery Schedule).

1431. See In re Hanford Nuclear Reservation Litig., 292 F.3d 1124, 1138 (9th Cir. 2002)

(“[W]e encourage the court to hold a hearing on remand to provide plaintiffs with an opportunity to respond to the defendants’ challenges . . . .”); see also infra section 23.33 (discussion of

using a post-disclosure Rule 16 conference to identify the bases for disagreements among the

experts).

1432. Hanford Nuclear, 292 F.3d at 1129; see also Sterling v. Velsicol Chem. Corp., 855 F.2d

1188, 1200 (6th Cir. 1988).
§ 22.87 Manual for Complex Litigation, Fourth

442

mand.1433 In scheduling Daubert proceedings in a dispersed mass tort case, an

MDL judge should explore opportunities to coordinate scheduling with state

courts handling parallel cases.1434 Federal and state judges have successfully

conducted joint Daubert hearings creating a record that other judges might

use.

Early consideration of expert disclosure and discovery also assists a court

in deciding whether to appoint an independent expert or panel of experts

under Federal Rule of Evidence 706.1435 Court-appointed experts or panels of

experts under Rule 706 occasionally have been used in mass tort litigation to

help resolve disputed causation issues.1436 Such experts have also been used to

screen cases to determine whether individual plaintiffs or groups of plaintiffs

can establish a threshold level of injury.1437 The experience with Rule 706

experts in the silicone gel breast implant litigation indicates that the benefits

must be weighed against the cost1438 and delay1439 involved. Before appointing a

Rule 706 expert or a panel of experts in mass tort litigation, a judge should

determine at an early stage of the litigation whether the cases sufficiently

demonstrate the following features:

• a highly disputed subject in which strong evidence appears to support

the contentions of both sides of the litigation;

• a technical complexity that taxes the capacity of the adversary system;1440

1433. See PPA, Order Clarifying Expert Discovery Order (filed Aug. 13, 2002) (finding that

issues relating to substantial subsets of the general population “constitute issues of general

applicability” suitable for resolution by an MDL transferee court).

1434. See PPA, Order Granting in Part and Denying in Part Defendants’ Motion to

Accelerate Daubert Hearing (filed Sept. 19, 2002) (altering Daubert discovery schedule to

coordinate with state court schedule). See also id., Order Granting in Part and Denying in Part

Defendants’ Motion to Preclude Plaintiffs’ Expert Witnesses as to General Causation (June 18,

2003).

1435. See generally supra section 11.51. For a discussion of a pretrial procedure to assist in

determining the need for a court-appointed expert, see Joe S. Cecil & Thomas E. Willging,

Court-Appointed Experts: Defining the Role of Experts Appointed Under Federal Rule of

Evidence 706, at 83–95 (Federal Judicial Center 1993).

1436. FJC Study, Neutral Science Panels, supra note 1059 (comparison of methods two

judges used to appoint scientific experts to assist in resolving mass tort litigation).

1437. Carl B. Rubin & Laura Ringenbach, The Use of Court Experts in Asbestos Litigation, 137

F.R.D. 35 (1991) (appointment of experts from a roster compiled by a district court to perform

pulmonary function analyses in asbestos litigation in a single district).

1438. FJC Study, Neutral Science Panels, supra note 1059, at 3.

1439. Id.

1440. See FJC Study, Court-Appointed Experts, supra note 1435, at 12–14.
Mass Torts § 22.87

443

• a likelihood that scientific evidence will determine the course of the

litigation;1441

• sufficient homogeneity among the parties that the findings of courtappointed experts will have a significant impact on other claims;

• a need to develop criteria to decide the admissibility of evidence, as in

cases involving novel claims;1442

• a sufficiently large number of cases to support the costs of an expert or

panel of experts; and

• the availability of neutral experts to serve under Rule 706.1443

Appointing an expert without unduly delaying the litigation requires establishing procedures for previewing proposed expert testimony at an early

stage.1444

In cases involving disputed scientific evidence on causation, there will

often be ongoing scientific studies addressing the disputed issue. The court

may need to establish procedures for discovery of information regarding such

studies. Generally, courts have afforded protection to researchers from

disclosure of data or opinions relating to an ongoing unpublished study.1445 By

1441. See FJC Study, Neutral Science Panels, supra note 1059, at 87–92 (finding mixed but

generally positive early assessments of the impact of the expert panel appointed in the silicone

gel breast implant litigation).

1442. See Hall v. Baxter Healthcare Corp., 947 F. Supp. 1387, 1391–93 (D. Or. 1996) (acting

“in its role as ‘gatekeeper’” in about seventy statewide consolidated silicone gel breast implant

cases, the court appointed a technical advisor).

1443. There are programs available that help judges identify and obtain expert assistance. See

American Association for the Advancement of Science (AAAS), Court Appointed Scientific

Experts: A Demonstration Project of the AAAS, a t http://www.aaas.org/spp/case/case.htm (last

visited Nov. 10, 2003).

1444. For the series of orders addressing matters related to the work of the science panel in

the breast implant litigation, see In re Silicone Gel Breast Implant Products Liability Litigation,

MDL No. 926, Order No. 31 (N.D. Ala. May 30, 1996) and subsequent orders using the number

31 and a letter, at http://www.fjc.gov/BREIMLIT/mdl926.htm (last visited Nov. 10, 2003).

1445. See, e.g., In re Am. Tobacco Co., 880 F.2d 1520, 1529 (2d Cir. 1989) (stating, in dicta,

that the “principal legitimate chilling effect on scientific research . . . is the possibility that

research results discovered prior to their publication would be vulnerable to preemptive or

predatory publication by others”); Deitchman v. E.R. Squibb & Sons, Inc., 740 F.2d 556, 565

(7th Cir. 1984) (indicating that “[n]o discovery should be allowed of any material reflecting

development of [the researcher’s] ideas or stating his or others’ conclusions not yet published”);

Dow Chem. Co. v. Allen, 672 F.2d 1262, 1276 (7th Cir. 1982), aff’g sub nom. United States v.

Allen, 494 F. Supp. 107, 113 (W.D. Wis. 1980) (referring to a possible “chilling effect” on

academic research by subjecting it to premature criticism); see also Elizabeth C. Wiggins &

Judith A. McKenna, Researchers’ Reactions to Compelled Disclosure of Scientific Information, 59

Law & Contemp. Probs. 67, 86–88 (1996).
§ 22.87 Manual for Complex Litigation, Fourth

444

contrast, courts generally allow some discovery into party-sponsored studies.1446 For completed party-sponsored studies, courts generally require

production of all data; for pending studies, courts often require disclosure of

the written protocol, the statistical plan, sample data entry forms, and a

specific description of the progress of the study until it is completed.1447

In some cases, one or both of the parties will attempt to subpoena raw data

and other information regarding scientific studies that were not sponsored by a

party from researchers who were not retained by a party. Subpoenas issued to

discover ongoing or completed research conducted by scientists independent

of the parties raise a number of considerations. A paradigmatic case would

involve a subpoena directed at an academic researcher whose studies examine

whether a causal link exists between a product and plaintiffs’ alleged injuries.1448 A court faced with a challenge to such a subpoena must balance the

researcher’s claim for protection of confidentiality, intellectual property rights,

research privilege, and the integrity of the research with opposing claims that

the information is necessary and cannot be obtained from any alternative

source.1449 The burden of compliance with repetitive subpoenas in mass tort

litigation may need to be considered.1450

Federal Rule of Civil Procedure 45(c)(3)(B)(ii) permits enforcement of

subpoenas on a showing of “substantial need for the testimony that cannot be

otherwise met without undue hardship,” and on assurance that third parties

1446. In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 420 (E.D. Pa. Jan. 6,

1999), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003)

(defining an ongoing study as one in which data-collection activity occurred within the last 150

days). See also id., Order No. 580, filed Apr. 23, 1999 (modifying Order 420 in context of a

request for international judicial assistance regarding studies by a foreign defendant); Silicone

Gel, Order No. 36 (E.D. Pa. Nov. 27, 1996) & Order No. 36A (E.D. Pa. May 9, 1997) (ordering

reciprocal exchange of information regarding ongoing studies funded by a party), at

http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003).

1447. Diet Drugs, Order No. 420, at ¶ 4 (E.D. Pa. Jan. 6, 1999).

1448. See, e.g., Deitchman, 740 F.2d at 562 (involving research showing a statistical relationship between diethylstilbestrol (DES) and certain cancers); see also Am. Tobacco, 880 F.2d at

1522–23 (seeking raw data from studies examining the effects of asbestos and smoking). See

generally Barbara B. Crabb, Judicially Compelled Disclosure of Researchers’ Data: A Judge’s View,

59 Law & Contemp. Probs. 9, 10–16 (1996) (discussing Deitchman).

1449. See generally Crabb, supra note 1448.

1450. See Am. Tobacco, 880 F.2d at 1530 (discussing a report that forty subpoenas had been

served seeking the same data and suggesting district court consider establishing a central

repository or consider seeking a centralized MDL response); see also Anker v. G.D. Searle & Co.,

126 F.R.D. 515, 521 (M.D.N.C. 1989) (discussing a requirement that the party who discovers the

records make them available to other litigants); Wiggins & McKenna, supra note 1445, at 90–91

(reporting that one tobacco company “agreed to serve as a central depository for the information” involved in American Tobacco).
Mass Torts § 22.87

445

subject to the subpoena “will be reasonably compensated.” Judges have

recognized litigants’ need to examine data underlying research studies used to

support claims or defenses asserted against them.1451 The court has discretion

to impose additional conditions on enforcement of a subpoena.1452 Judges have

generally crafted orders that enforce the subpoena while imposing restrictions

to protect the researchers’ interests. For example, the judge may redact

information that would divulge the identity of research subjects who have been

promised confidentiality;1453 the judge may also consider other ways of protecting the identity of subjects.1454 Claims of excessive burden on researchers

have been accommodated by financial reimbursement, use of temporary

workers to prepare data for production, or extending the response time to

allow a researcher to continue working with minimal disruption.1455

1451. Deitchman, 740 F.2d at 563 (concluding that for defendant “to prepare properly a

defense on the causation issue, access to the Registry data to analyze its accuracy and methodology is absolutely essential”). Consider also Judge Crabb’s summary of the balancing test courts

apply. Crabb, supra note 1448, at 28.

1452. For a thorough discussion of the issues involved in enforcing such subpoenas, see

generally Joe S. Cecil & Gerald T. Wetherington, Court-Ordered Disclosure of Academic Research:

A Clash of Values of Science and Law, 59 Law & Contemp. Probs. 1 (1996).

1453. Crabb, supra note 1448, at 28–29. See also Am. Tobacco, 880 F.2d at 1530 (affirming a

protective order allowing redaction of research participants’ names, addresses, social security

numbers, employers, and union registration numbers).

1454. Crabb, supra note 1448, at 28–29. See also Am. Tobacco, 880 F.2d at 1530 (affirming a

protective order binding party and subsequent users not to determine the identity of research

participants, under penalty of contempt); Deitchman, 740 F.2d at 564 (suggesting review by an

independent third party).

1455. See Crabb, supra note 1448, at 28.
§ 22.91 Manual for Complex Litigation, Fourth

446

22.9 Settlement and Trial

.91 Judicial Role and Settlement 446

.92 Review of Settlement in Mass Tort Class Actions 449

.921 Class Certification in a Settlement Context 450

.922 Fairness, Adequacy, and Reasonableness of the Settlement 453

.923 Criteria for Evaluating the Merits of a Proposed Settlement 454

.924 Gathering Information and Conducting a Fairness Hearing 456

.925 Evaluating Nonmonetary Benefits 460

.926 Presenting the Decision 460

.927 Awarding and Allocating Attorney Fees 461

.93 Trial 463

22.91 Judicial Role and Settlement1456

In mass torts, as in other types of complex litigation, questions regarding

the appropriate extent of judicial involvement in settlement negotiations are

important because the costs associated with recusing a judge familiar with the

litigation are high.1457 Although some judges participate actively in settlement

negotiations,1458 others insulate themselves from the negotiations, leaving this

activity to a magistrate judge, a special master, or a settlement judge.1459 Judges

who have been involved in unsuccessful settlement negotiations sometimes

turn over to another judge the responsibility for trying the case because they

have been privy to information on the merits of the case or on issues that

1456. See generally supra sections 13 (settlement), 13.14 (judicial review and approval of

settlements), 21.61 (judicial review of class action settlements), & 21.66 (administration of class

action settlements). See also D. Marie Provine, Settlement Strategies for Federal District Judges

(Federal Judicial Center 1986).

1457. See supra section 13.11. See, e.g., In re Sch. Asbestos Litig. Pfizer, Inc., 977 F.2d 764,

784–85 (3d Cir. 1992) (ordering the judge to disqualify himself and noting that the “newly

assigned district judge will face a gargantuan task in becoming familiar with the case” and

additional delay that may “disadvantage the plaintiffs”).

1458. See, e.g., In re Agent Orange Prod. Liab. Litig., 597 F. Supp. 740 (2d Cir. 1984), aff’d,

818 F.2d 145 (2d Cir. 1987). For an assessment of the risks of such judicial involvement in

settlement, see Peter H. Schuck, The Role of Judges in Settling Complex Cases: The Agent Orange

Example, 53 U. Chi. L. Rev. 337, 359–65 (1986).

1459. See, e.g., In re Silicone Gel Breast Implants Prods. Liab. Litig., MDL No. 926, Order:

Opinion & Final Judgment Approving Global Settlement (N.D. Ala. Sept. 1, 1994), at

http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited Nov. 10, 2003) (in which the

transferee judge appointed three judges to act as mediators to assist in discussing a global

settlement); In re MGM Grand Hotel Fire Litig., 570 F. Supp. 913, 918 (D. Nev. 1983) (special

master appointed as “settlement coordinator”); id. at 924–26. In In re San Juan Dupont Plaza

Hotel Fire Litigation, MDL No. 721, 1988 U.S. Dist. LEXIS 17332, at *201 (D.P.R. Dec. 2, 1988),

the transferee judge appointed the former transferee judge from the MGM Grand litigation to

serve as settlement coordinator while the transferee judge managed the litigation.
Mass Torts § 22.91

447

would otherwise not have been revealed. Judges who have been involved in

successful settlement negotiations may transfer to another judge judicial

review of the settlement to avoid having to rule on the fairness, reasonableness,

and adequacy of a settlement they helped to craft.1460

In some cases, a judge can facilitate settlement negotiations by establishing

a system to collect information about past, pending, and likely future

claims.1461 In some MDL mass tort centralizations, courts have ordered

claimants to complete questionnaires eliciting a wide range of information,

such as the circumstances of their exposures and the severity of their injuries,

to facilitate settlement negotiations or improve claim administration following

settlement.1462 In many cases, the parties themselves provide the data for entry

into a centralized electronic database. Judges have occasionally appointed

special masters to assemble databases documenting essential information

concerning the thousands of personal injury claims that may be pending.

Special masters have sometimes used electronic data to compare individual

pending cases against closed cases having similar characteristics to produce a

range of settlement values.1463

The judge may assist the parties to achieve a “global” settlement resolving

not only the defendants’ potential liability to the plaintiffs, but also their

1460. Carlough v. Amchem Prods., Inc., 834 F. Supp. 1437, 1445 (E.D. Pa. 1993) (order

appointing second district judge to conduct hearings on fairness of class settlement), settlement

approved sub nom. Georgine v. Amchem Prods., 157 F.R.D. 246 (E.D. Pa. 1994), vacated and

remanded, 83 F.3d 610 (3d Cir. 1996), aff’d sub nom. Amchem Prods., Inc. v. Windsor, 521 U.S.

591 (1997). See also Flanagan v. Ahearn, 90 F.3d 963, 994 (5th Cir. 1996) (Smith, J., dissenting)

(noting, in dissent, that “the district judge presided at the fairness hearing on the very settlement

he had helped to craft”), reversed sub nom. Ortiz v. Fibreboard, 527 U.S. 815 (1999); and Hon. S.

Arthur Spiegel, Settling Class Actions, 62 U. Cin. L. Rev. 1565 (1994) (discussing the advantages

and disadvantages of having a judge participate in and review the same settlement).

1461. In Jenkins v. Raymark, the special master used the same database to support settlement

discussions and to demonstrate to a jury the array of claims in the class action. McGovern,

Mature Mass Tort, supra note 1022, at 669–70, 674. See also id. at 682–88 (describing the $5

million data-collection process established to estimate the value of Dalkon Shield personal injury

claims under section 502(c) of the Bankruptcy Code).

1462. In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 22 (E.D. Pa. Mar. 23,

1998), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10, 2003); In re

Orthopedic Bone Screw Prods. Liab. Litig., MDL No. 1014, 1995 WL 925678 (E.D. Pa. Feb. 1,

1995); see also Brazil, supra note 1407, at 402–06 (describing the use of questionnaires to obtain

claims-related information from thousands of claimants alleging damages from DDT contamination).

1463. See Brazil, supra note 1407, at 399–402 (describing the computer-based data-collection

procedures used by special masters Francis McGovern and Eric Green in the Ohio asbestos

litigation); see also Trends, supra note 1077, at 60–69 (discussing and evaluating the use of

computer data in the Ohio asbestos litigation).
§ 22.91 Manual for Complex Litigation, Fourth

448

liability to one another for indemnification or contribution. Efforts to achieve

global settlements through class certification, however, may not pass muster

under Rule 23 or the due process clause. See discussion at sections 22.72, 22.73,

22.922. The parties may be able to resolve discrete sets of claims that significantly reduce or limit the scope of the litigation through a series of case-bycase, party-by-party settlements.1464

District judges have approved settlements affecting the rights of “future

claimants” who have no present injury, even after Amchem and Ortiz. However, they have done so only in cases involving claimants who could be

identified and given notice, and after scrutiny to ensure that Rule 23 was

satisfied, including the requirement of adequate representation both to those

presently injured and to those exposed but not presently injured. Courts have

approved settlements that included protections for those who knew that they

had been exposed to a potentially injurious substance but did not know if

injury would result or whether it would be disabling or much less severe. Such

protections have included the opportunity to opt out if and when injury is

manifested or its extent is apparent. See discussion of back-end opt outs in

section 22.922 and the discussion of future claimants in section 21.612.

Parties that are unable to agree on a global settlement may still be able to

agree on a process for resolving the litigation. For example, in cases involving

immature torts, the parties may agree to use test-case trials to establish a range

of values for resolving similar claims. Alternatively, they may agree to draw a

representative sample of claims and resolve the sample through mediation,

arbitration, or another form of alternative dispute resolution.1465 Information

generated through trials or ADR processes might enable the parties to arrive at

a reasonable estimate of the value of the aggregate claims from which they

drew the sample. Alternative dispute resolution techniques (e.g., summary jury

trials) may assist the parties in valuing cases for settlement purposes and give

the court and parties information about the viability of various trial options.1466

Yet another approach is to appoint a special master to facilitate settlement by

reviewing information on liability and damages and placing an estimated value

1464. See, e.g., Ortiz, 527 U.S. at 822–28 (reciting the history of asbestos litigation and

Fibreboard’s settlements). The hazards of partial settlements are discussed in supra sections 13.21

and 21.651.

1465. See Brazil, supra note 1407, at 403, nn.37–38.

1466. See, e.g., In re Telectronics Pacing Sys., Inc., Accufix Atrial “J” Leads Prods. Liab. Litig.,

137 F. Supp. 2d 985, 993–94 (S.D. Ohio 2001) (illustrating the advantage of a summary jury

trial).
Mass Torts § 22.92

449

on each claim. Judges have used this approach with considerable success in

both single-incident and dispersed mass tort litigation.1467

Approaches to resolving presently identifiable future claims on a classwide basis must meet the Supreme Court’s standards for opt-out or limited

fund settlement class actions. See sections 22.72 and 22.73.1468 In some cases,

litigants have invoked the bankruptcy process as a settlement vehicle for mass

tort litigation. See section 22.5. The issues presented by the need for court

approval of settlement classes in mass tort cases are fully discussed in the

following section.

22.92 Review of Settlement in Mass Tort Class Actions

.921 Class Certification in a Settlement Context 450

.922 Fairness, Adequacy, and Reasonableness of the Settlement 453

.923 Criteria for Evaluating the Merits of a Proposed Settlement 454

.924 Gathering Information and Conducting a Fairness Hearing 456

.925 Evaluating Nonmonetary Benefits 460

.926 Presenting the Decision 460

.927 Awarding and Allocating Attorney Fees 461

Federal Rule of Civil Procedure 23(e) calls for the court to review “any

settlement, voluntary dismissal, or compromise of the claims, issues, or

defenses of a certified class” and to “direct notice in a reasonable manner to all

class members who would be bound by a proposed settlement, voluntary

dismissal, or compromise.” Judicial review requires two separate determinations: first, whether the proposed settlement class satisfies the criteria for

1467. See William W Schwarzer, Nancy E. Weiss, & Alan Hirsch, Judicial Federalism in

Action: Coordination of Litigation in State and Federal Courts, 78 Va. L. Rev. 1689, 1715–20

(1992) (discussing settlement techniques used in the L’Ambience Plaza building collapse

litigation and in the MGM Grand Hotel fire litigation).

1468. Cases involving future claimants in narrow contexts, such as single-incident torts

involving a small number of claims, do not appear to raise the problems of adequacy of

representation or due process of law that were present in Amchem. For example, the court in one

case set aside a portion of settlement funds to purchase an annuity, to fund a trust to pay future

benefits, or to provide diagnostic services to cover future injuries to known plaintiffs. The fund

allowed the parties to accommodate such contingencies as medical developments, expenses, and

economic losses after the date of the settlement. Friends for All Children, Inc. v. Lockheed

Aircraft Corp., 746 F.2d 816 (D.C. Cir. 1984) (affirming preliminary injunction requiring a

corporate defendant that had conceded liability and settled some cases to provide funds for

diagnostic, treatment, and educational services for plaintiffs awaiting trial). Similarly, to deal

with concerns about the possibility of actions being instituted after the settlement—for example,

by minors with respect to whom the statute of limitations may have tolled—a court reserved

settlement funds to pay such claims when asserted later. See, e.g., In re MGM Grand Fire Hotel

Litig., 570 F. Supp. 913, 929 (D. Nev. 1983).
§ 22.921 Manual for Complex Litigation, Fourth

450

certification under Rules 23(a) and (b);1469 and second, whether the proposed

settlement terms are fair, reasonable, and adequate. Rule 23(e)(1)(C) requires

the court to make such determinations “only after a hearing and on finding

that the settlement, voluntary dismissal, or compromise is fair, reasonable, and

adequate.” This subsection analyzes the Rule 23(a) and (b) criteria for certifying a settlement class, the process of gathering information and conducting a

Rule 23(e) hearing on the fairness of a proposed settlement, and the criteria for

evaluating the merits of a proposed settlement.1470

22.921 Class Certification in a Settlement Context

Even if the parties have agreed to settle a case on a class-wide basis, the

court must determine whether the proposed class satisfies all the requirements

of Rule 23(a) (numerosity, typicality, commonality, and adequacy of representation) and either Rule 23(b)(1), (2), or (3).1471 As discussed in sections 21.6

and 22.71, a settlement in a class action can arise in several ways: (1) a class

action may have previously been certified as a litigation class and a settlement

reached after certification; (2) a proposed class action may be presented for

certification as a settlement class after pretrial discovery has taken place and

certain motions have been decided; or (3) a proposed class action may be filed

simultaneously with motions to certify the class for settlement and to approve

the settlement terms. In the third category, there may or may not have been

litigation before the settlement and certification motions were presented.

Each of the three categories raises different issues. If the case has been filed

as a settlement class, with little or no prior litigation, there may be insufficient

information to determine whether the class can properly be certified under

Rules 23(a) and (b) and whether the settlement terms can properly be approved as fair, adequate, and reasonable. Judicial review should be proactive.

The parties who support the settlement may have previously reached agreements with potential objectors, calling for them to refrain from objecting or to

withdraw objections previously filed. If individual damages are small, there

may be insufficient incentive for objectors to participate. The judge may have

little or no adversarial presentation to assist in exploring the settlement terms

and determining whether the terms are fair to the absent class members.

1469. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 621 (1997) (finding that “the ‘class

action’ to which Rule 23(e) refers is one qualified for certification under Rule 23(a) and (b)”).

1470. For an example of a trial court’s post-Amchem evaluation of a personal injury class

settlement, see In re Diet Drugs Products Liability Litigation, MDL No. 1203, 2000 U.S. Dist.

LEXIS 12275 (E.D. Pa. Aug. 28, 2000).

1471. Amchem, 521 U.S. at 613–14.
Mass Torts § 22.921

451

If the case has been litigated extensively, the judge may have sufficient

reliable information to determine whether the class should be certified and

whether the settlement terms are the fair, reasonable, and adequate result of

arms-length negotiations. Mass torts rarely come before a court for class

settlement without extensive pre-settlement litigation; lack of information

about the issues and the litigants is usually not a problem for the court.

Nonetheless, it is important to have an informed understanding of the dynamics of the settlement discussions and negotiations, the participants, and the

steps taken by those negotiating on the plaintiffs’ behalf to protect the procedural and substantive rights and interests of those whose claims they propose

to settle. A judge should consider conducting such an inquiry in chambers if

necessary to preserve confidential aspects of the negotiations.

If, however, the parties have reached settlement simultaneously with or

shortly after filing the case and there is little prior related litigation, the parties

must provide sufficient information to support their contentions regarding

each applicable element of Rules 23(a) and (b) and the settlement’s fairness,

adequacy, and reasonableness. The judge must make specific findings on

certification and settlement approval and must ensure that there is a record to

support those findings.

In considering the Rule 23(a) factors, the Court in Amchem and Ortiz gave

paramount importance to the district court’s assessment of the adequacy of

class representation.1472 Accordingly, the judge should examine the interests of

all groups, including any future claimants, and make affirmative findings that

each group is adequately represented by claimants and counsel who have no

conflicting interests.1473 Sometimes it is necessary to create subclasses to

accommodate divergent interests.1474 For a discussion of numerosity, typicality,

and commonality under Rule 23(a), see section 21.141.

Even if the proposed settlement class action meets all four Rule 23(a)

requirements, it must also meet the requirements of at least one of the subsections of Rule 23(b), with the exception of trial manageability. Section 22.73

discusses whether a proposed mass tort class action meets the post-Ortiz

standards for certification under Rule 23(b)(2) as a “limited fund” class.

Section 22.74 discusses whether a proposed mass tort class action meets the

standards for certification as a medical monitoring class under Rule 23(b)(2).

1472. See supra section 21.26; Ortiz v. Fibreboard Corp., 527 U.S. 815, 831–32 (1999)

(noting that the lower court fell short of its duty to apply Amchem when it failed “to ensure that

the potentially conflicting interests of easily identifiable categories of claimants be protected by

provisional certification of subclasses under Rule 23(c)(4)”).

1473. See Amchem, 521 U.S. at 625–27.

1474. Id. at 627.
§ 22.921 Manual for Complex Litigation, Fourth

452

In evaluating whether common questions of law or fact predominate over

individual issues, the court should

• determine whether the alleged injuries arose from a single incident and

therefore might be more likely to have common issues predominate

than in a dispersed mass tort;1475

• focus “on the legal or factual questions that qualify each class member’s case as a genuine controversy”;1476

• look for variations in individual factual issues that may arise out of

different levels and timing of exposure, different types of injuries and

levels of damages, and different issues of causation; and

• consider whether “[d]ifferences in state law . . . compound [any] disparities.”1477

In evaluating whether a proposed settlement class action is “superior to

other available means for the fair and efficient adjudication of the controversy,”1478 the judge must consider the following factors:

• whether the proposed settlement1479 is manageable;1480

• whether, given the individual stakes for members of the proposed

class, potential class members have an interest in “individually controlling the prosecution . . . of separate actions,” recognizing that as

the amount of damages at stake increases, a class member’s interest in

individual control typically increases;1481 and

1475. Id. at 625 (referring to the 1966 advisory committee note to Rule 23(b)(3) where the

Court stated a “mass accident” resulting in injuries to numerous persons is “ordinarily not

appropriate for a class treatment”).

1476. Id. at 623. The court explicitly held that a common interest in a fair settlement cannot

be used to satisfy the predominance test. Id.

1477. Id. at 624. Because the case is to be settled and not tried, variations in state laws that

might make a class-wide trial unmanageable might not defeat certification for settlement

purposes. Id. at 620, 636. See also In re Diet Drugs Products Liability Litigation, MDL No. 1203,

2000 WL 1222042 (E.D. Pa. Aug. 28, 2000), describing the litigation and ultimate settlement of

claims for medical monitoring, economic loss, and present and future personal injuries arising

from ingesting diet drugs.

1478. Fed. R. Civ. P. 23(b)(3). The rule lists four factors that might affect superiority. Id.

1479. Amchem, 521 U.S. at 620 (“a district court need not inquire whether the case, if tried,

would present intractable management problems . . . for the proposal is that there be no trial”).

1480. See, e.g., Diet Drugs, 2000 WL 1222042, at *43, *49 (settlement approval opinion

discussing the fact that the settlement contemplates a national matrix based on the type of injury

and does not require variable treatment based on state law).

1481. Amchem, 521 U.S. at 616–17 (quoting the advisory committee’s reporter, Benjamin

Kaplan, to the effect that the “interest [in individual control] can be high where the stake of each

member bulks large and his will and ability to take care of himself are strong; the interest may be
Mass Torts § 22.922

453

• whether other settlements have been presented to other courts, and, if

so, the status of those actions and whether any determinations in other

courts might preclude certification of the class proposed.

22.922 Fairness, Adequacy, and Reasonableness of the Settlement

Claimants in many personal injury dispersed mass torts may range from

those with severe present injuries to those with minor present injury to those

with no present injury whatsoever. A variety of techniques acknowledge these

differences and still achieve broad settlements that courts have found to be fair,

reasonable, and adequate. Some of these techniques are listed below:

• Back-end opt-outs. This is a deferred opportunity for an absent class

member to request exclusion from the class until a certain point in the

future. A class member who does not have a present injury may postpone the decision on whether to remain in the class and accept the

settlement or opt out to pursue separate litigation.

This decision may be deferred until the class member discovers that

the past exposure has resulted in an injury.1482 This differs from a

front-end decision to opt out because the back-end opt-out class

member may be bound by an agreement to give up certain rights, such

as any right to punitive damages.1483 This type of opt-out depends on

identifying the class members and giving them adequate notice of their

right to accept a present settlement, opt out, or, if they have no present

injury, defer the decision. Individuals who ingested an identified prescription drug can, for example, be readily identified and provided

such notice. A back-end opt-out provision may not be appropriate if

the absent class members cannot be identified or provided notice of

the deferred right to request exclusion.

no more than theoretic where the individual stake is so small as to make a separate action

impracticable” and that “the Advisory Committee had dominantly in mind vindication of ‘the

rights of groups of people who individually would be without effective strength to bring their

opponents into court at all’” (citation omitted)).

1482. See, e.g., Diet Drugs, 2000 WL 1222042, at *20–*21, *26, *39 (E.D. Pa. Aug. 28, 2000)

(describing back-end opt-out provisions and concluding that they contribute to resolving

potential notice problems).

1483. Id. at *20. In a settlement involving an allegedly defective heart valve, class members

who did not opt out of a settlement retained their right to sue the manufacturer, subject to all

defenses, in the event that a heart valve fractured at any time. Bowling v. Pfizer, Inc., 143 F.R.D.

141, 170 (S.D. Ohio 1992). In those cases, class members also had the option of accepting an

amount specified in the settlement or proceeding to arbitration against the defendant who

waived all defenses to proceeding in arbitration. Id.
§ 22.923 Manual for Complex Litigation, Fourth

454

• Limits on opt-outs. Defendants often condition a settlement in a Rule

23(b)(3) class on having the number of opt-outs remain at or below a

certain percentage or number of absent class members, commonly

known as a “blow-out” clause. This is particularly significant in cases

with a large number of claims that might support individual litigation.

In the event the number of opt-outs exceeds the parties’ expectations,

the parties may attempt to renegotiate the settlement terms. In that

event, there may be a need for additional notice to the class members.1484

• Using claims facilities. Where the value of the personal injury claims

varies, courts have approved settlements that establish fixed amounts

for injuries that meet defined criteria and create claims facilities to

administer the claims process.1485 The parties may establish an administrative appeal process, an auditing process, or both, to review the

claims of those dissatisfied with the application of the criteria. At least

one court has found that such review processes help satisfy the fairness

prong of Rule 23(e).1486

22.923 Criteria for Evaluating the Merits of a Proposed Settlement

For the most part, the judge’s role in evaluating the merits of a proposed

mass tort class settlement parallels the review of any other class action settlement. A judge examines the proposed settlement terms and determines

“whether the compensation for loss and damage provided by the settlement is

within the range of reason, taking into account the balance of costs to defendant and benefits to class members,”1487 and “whether the claims process under

the settlement is likely to be fair and equitable in its operation.”1488 Section

21.61 to 21.66 discusses standards and issues relating to review and administration of class action settlements generally. The following guidelines may

1484. In re Silicone Gel Breast Implant Prods. Liab. Litig., MDL No. 926, Order No. 27

(N.D. Ala. Dec. 22, 1995), at http://www.fjc.gov/BREIMLIT/ORDERS/orders.htm (last visited

Nov. 10, 2003).

1485. Diet Drugs, 2000 WL 1222042, at *23–*24.

1486. Id. at *63.

1487. In re Prudential Ins. Co. Am. Sales Practices Litig., 148 F.3d 283, 324 n.73 (3d Cir.

1998) (citing William W Schwarzer, Settlement of Mass Tort Class Actions: Order Out of Chaos, 80

Cornell L. Rev. 837, 843–44 (1995)). See also Tidmarsh, supra note 951, at 6 (observing that

courts generally examined mass tort settlement class actions for “the strength of the plaintiff’s

case in relation to the settlement, the maturity of the litigation, the complexity of the case, and

the objections to the settlement”).

1488. Prudential Ins., 148 F.3d at 324 n.73 (citing Schwarzer, Mass Tort Class Actions, supra

note 1487, at 843–44).
Mass Torts § 22.923

455

help the judge to bring to light any serious defect in the settlement terms and

ensure that a mass torts class settlement is fair, reasonable, and adequate.

A meaningful review of a proposed class settlement in a mass tort case

requires an accurate understanding of what benefits the class members will

actually receive and on what terms. Rule 23(e)(2) requires disclosure of any

side agreements. See section 21.631. In a mass tort context, the parties must

identify to the overseeing court any agreements that relate to the proposed

settlement, such as agreements to settle “inventories” of individual cases in

addition to the class settlement;1489 agreements by lawyers not to bring certain

types of cases in the future; collateral agreements that affect attorney fees;1490 or

other agreements relating to the factors discussed below.1491 Active judicial

oversight of the settlement process helps “prevent collusion between counsel

for the class and defendant” and minimize the potential for unfair settlements.1492

Courts have identified certain features of settlement terms that, if uncorrected, should bar approval. Section 21.62 discusses factors that may affect

class action settlements generally. Sections 21.631 discusses things to avoid in

mass tort settlement, including the following:

• providing dissimilar treatment to persons with similar claims;1493

1489. Unless the court makes a special effort, the clients in these “inventory settlements”

have none of the formal procedural rights enjoyed by absent class members in litigation or

settlement classes. Georgine v. Amchem Prods., Inc., 157 F.R.D. 246 (E.D. Pa. 1994) (appointing

special master and comparing inventory settlements with class settlement), vacated on other

grounds, 83 F.3d 610 (3d Cir. 1996), aff’d sub nom. Amchem Prods., Inc. v. Windsor, 521 U.S.

591 (1997). See, e.g., Tidmarsh, supra note 951, at 40–41 (discussing the “cloud of secrecy [that]

hung over the negotiation process” in the Bjork–Shiley heart valve litigation and the settlement

of large inventories of cases for greater sums than class members received).

1490. See, e.g., In re Fine Paper Antitrust Litig., 98 F.R.D. 48, 70–75 (E.D. Pa. 1983)

(describing agreements among attorneys regarding the structure and composition of committees

to represent a class of plaintiffs), aff’d in part, rev’d in part, 751 F.2d 562 (3d Cir. 1984).

1491. John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum.

L. Rev. 1343, 1367–79 (1995). For a post-Amchem analysis of the structural and procedural

alternatives for the protection of class members’ interests in the mass tort settlement context, see

John C. Coffee, Jr., Class Action Accountability: Reconciling Exit, Voice, and Loyalty in Representative Litigation, 100 Colum. L. Rev. 370 (2000).

1492. Manuel L. Real, What Evil Have We Wrought: Class Action, Mass Torts, and Settlement,

31 Loy. L.A. L. Rev. 437, 449 (1998); see also Tidmarsh, supra note 951, at 6 (“[c]ollusion was

also frequently mentioned” by judges in reviewing mass tort settlement class actions).

1493. See, e.g., Georgine v. Amchem Prods., Inc., 83 F.3d 610, 630–31 (3d Cir. 1996)

(comparing class settlement’s treatment of various types of present and future claimants), aff’d

sub nom. Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997).
§ 22.924 Manual for Complex Litigation, Fourth

456

• splitting claims of class members for injuries or losses arising out of

the same or related occurrences and excluding some claims from the

settlement (e.g., potentially precluding personal injury claims when

settling medical monitoring claims or economic claims for breach of

warranty);1494

• settling an inventory of pending cases at a premium level and future

cases at lesser amounts;1495

• allowing duplicative or overlapping attorney fees both for serving as

class counsel and for representing individual plaintiffs;

• using strict eligibility criteria for receipt of settlement proceeds to

mask the fact that the settlement benefits that will be distributed are

far less than the stated value of the settlement fund made available;

• permitting defendants to select certain plaintiffs’ counsel with whom

to negotiate a precertification and perhaps prefiling a settlement class

action, resulting in a settlement with the lowest bid (a so-called reverse

auction);

• restricting the ability of individuals to opt out of a settlement;

• providing illusory benefits, such as coupons, to class members while

providing attorneys with fees calculated by valuing illusory class benefits at an unrealistically high level (see section 22.925); and

• calculating attorney fees on the basis of the maximum value of benefits

set aside for the class members, rather than on the amounts actually

distributed, particularly when an elaborate claims procedure reduces

or minimizes the amounts distributed and the settlement provides that

unclaimed benefits revert to the defendants.

22.924 Gathering Information and Conducting a Fairness Hearing

Reviewing a settlement consists of (1) a hearing and preliminary findings

on the fairness, reasonableness, and adequacy of the proposed settlement;

(2) review of any notice to the class; and (3) a final fairness hearing to make a

final determination. Section 21.63 discusses the process.

1494. See generally, Schwarzer, Mass Tort Class Actions, supra note 975, at 843–44. For an

example and discussion of the possible effects of this type of claim-splitting, see In re Methyl

Tertiary Butyl Ether (MTBE) Products Liability Litigation, 209 F.R.D. 323, 339–41 (S.D.N.Y.

2002).

1495. See, e.g., Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 295–304 (E.D. Pa. 1994)

(discussing relation of inventory settlement and class settlement), vacated on other grounds, 83

F.3d 610 (3d Cir. 1996), aff’d sub nom. Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997).
Mass Torts § 22.924

457

Reviewing a proposed settlement requires objective information about

factors related to class certification and to the fairness and reasonableness of

the proposed settlement.1496 The parties will be advocates for the settlement

they have crafted; without direction from the court, they may not volunteer all

the information the court needs to understand fully the settlement terms and

their effect. Settlement class actions pose special challenges because they may

not include an underlying record of discovery or other adversarial activity

bearing on the merits of the dispute.

In some cases, objectors may provide an adversarial scrutiny of the

proposed certification and settlement terms. Section 21.643 discusses the role

of objectors in class actions generally and the differences between class-based

objections and individually based objections. At their best, objectors may speak

out on behalf of class interests that have not been fully represented or accounted for in the proposed settlement. On the other hand, some objectors

may represent narrow self-interests and seek to impede or delay a settlement

until those interests are accommodated.

To fulfill their role under Rule 23(e),1497 judges may find it helpful to

undertake the following steps:

• Identify and require the parties to provide information useful for

evaluating the proposed settlement, particularly information relating

to the merits of the claims and defenses and the historic values of cases

involving the same or similar claims and defenses. See section

21.631.1498

• Require disclosure of side agreements among the parties or lawyers

relating to the terms or implementation of the settlement, including

eligibility for, or amounts and allocation of, attorney fees.1499

• Permit focused discovery by objectors on a showing of need. In considering such discovery requests, consider whether the objectors represent a large and potentially discrete group whose interests were not

1496. See Jonathan R. Macey & Geoffrey P. Miller, The Plaintiffs’ Attorney’s Role in Class

Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 U. Chi.

L. Rev. 1, 46 (1991) (asserting that “trial courts may simply lack information to make an

informed evaluation of the fairness of the settlement”).

1497. See supra section 21.61. For a descriptive case study discussing ways that judges

evaluated settlements and attorney fees in a select group of substantial cases, see Deborah

Hensler et al., Class Actions Dilemmas: Pursuing Public Goals for Private Gain 460–66 (2000).

1498. See also Bowling v. Pfizer, Inc., 143 F.R.D. 138, 140 (S.D. Ohio 1992) (requesting

information, including in camera disclosure of all prior settlements involving the Bjork-Shiley

heart valve).

1499. See, e.g., In re Chambers Dev. Sec. Litig., 912 F. Supp. 852, 867 (W.D. Pa. 1995)

(ordering counsel to disclose side agreements pertaining to attorney fees).
§ 22.924 Manual for Complex Litigation, Fourth

458

accommodated in the settlement. It is important to distinguish between objectors’ discovery into the merits of the claims and defenses

in relationship to the fairness, reasonableness, and adequacy of the

proposed settlement,1500 and discovery into the settlement negotiations, which courts have refused to permit absent evidence of collusion.1501

• Consider establishing a special settlement discovery court to be convened on a regular basis during the period leading up to the final fairness hearing.1502

• List specific issues and concerns that bring into question the fairness,

reasonableness, and adequacy of the proposed settlement, and give the

parties an opportunity to explain or renegotiate the settlement before

the court rules.1503

• Appoint one or more adjuncts, such as a magistrate judge, guardian ad

litem,

1504 special master,1505 or court-appointed expert1506 to assist in

gathering information and in evaluating the proposed settlement.

1500. See, e.g., Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 260 n.9 (“Objectors were

given the opportunity to probe into facts surrounding the proposed settlement through

depositions of relevant persons. . . . In all, thousands of pages of documents were produced and

over thirty depositions took place during the discovery period.”); see also Tidmarsh, supra note

951, at 5, 12 (finding that “[t]wo of the [five] cases (Georgine and Ahearn) permitted broad

rights of discovery to objecting parties”).

1501. See Bowling v. Pfizer, Inc., 143 F.R.D. 141, 153 n.10 (S.D. Ohio 1992); see also Charles

Alan Wright et al., Federal Practice and Procedure § 1797.1, at 413 (2d ed. 1986).

1502. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 1071 (E.D. Pa.

Jan. 28, 2000), at http://www.fenphen.verilaw.com/search_common.icl (last visited Nov. 10,

2003) (establishing a special discovery court to meet weekly prior to the fairness hearing).

1503. See Bowling v. Pfizer, Inc., 143 F.R.D. 138, 140–41 (S.D. Ohio 1992) (listing six

concerns, continuing the fairness hearing after three days, and directing the parties to report on

any changes in the proposed settlement when the hearings resume).

1504. See, e.g., Ortiz v. Fibreboard Corp., 527 U.S. 815, 827, 854 (1999) (noting the

appointment by the district court of a law professor as guardian ad litem and citing the

guardian’s report on a factual matter). The district judge requested the guardian ad litem in Ortiz

“to review the settlement from the point of view of members of the class and thereby to afford

the class additional assurance that their interest will be adequately protected.” In re Asbestos

Litig., 90 F.3d 963, 972 (5th Cir. 1996), rev’d sub nom Ortiz v. Fibreboard, 527 U.S. 815 (1999).

See also Miller v. Mackey Int’l, Inc., 70 F.R.D. 533, 535–36 (S.D. Fla. 1976) (using its residual

authority under Rule 23(d)(5), the district court appointed a guardian ad litem to represent the

interests of the class in responding to plaintiffs’ attorneys’ requests for fees). See generally Macey

& Miller, supra note 1496, at 47–48 (suggesting that judicial review of class action settlements

could be improved by the use of guardians ad litem to represent the interest of the class).

1505. See, e.g., Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 257–58 (E.D. Pa. 1994)

(indicating that the parties “filed a joint motion for appointment of a special master to assist the
Mass Torts § 22.924

459

• In a limited fund settlement, permit additional discovery by objectors

or an independent evaluator to examine whether a limited fund exists

and meets the standards set forth in Rule 23(b)(1) and Ortiz.

1507

• Allow some trial-type procedures for the fairness hearing, such as the

receipt of sworn testimony subject to cross-examination.1508 Whether

an evidentiary hearing is necessary will depend on the facts and circumstances of the case, including the extent to which there are objections to the settlement or reasons for the court to be skeptical of its

fairness.1509

A court should also consider whether class members who did not opt out

initially should receive a second opportunity to opt out after a settlement is

reached. Rule 23(e)(3) grants the court authority to refuse to approve a

settlement that does not afford an opportunity for members of the proposed

class to opt out after the parties announce the settlement terms. See section

court during the discovery process, and to review sensitive and confidential information relevant

to these proceedings”), vacated on other grounds, 83 F.3d 610 (3d Cir. 1996), aff’d sub nom

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). See generally FJC Study, Special Masters,

supra note 704 (reporting empirical findings about the use of special masters at pretrial and

posttrial stages of civil litigation).

1506. See, e.g., Williams v. City of New Orleans, 543 F. Supp. 662 (E.D. La. 1982) (evaluation

of a consent decree in the face of objections from intervenors); Ohio Pub. Interest Campaign v.

Fisher Foods, Inc., 546 F. Supp. 1, 4, 11 (N.D. Ohio 1982) (court-appointed expert who played

“key role in the lengthy, protracted, and heated negotiations” testified that the resulting

settlement was “fair, reasonable, and adequate”); but cf. In re Armored Car Antitrust Litig., 472

F. Supp. 1357, 1375 (N.D. Ga. 1979) (court-appointed expert on damages was unnecessary

because “educated estimate[s]” of the parties were sufficient to support evaluation of proposed

settlement). See also Real, supra note 1492, at 448–49 (advocating that judges “know the details

of how a settlement has been reached,” which “may require consultation with independent

experts—available under Rule 706 of the Federal Rules of Evidence—who have knowledge of the

business or industry that gave rise to the injury or damages”).

1507. Ortiz, 527 U.S. at 853–54; see also id. at 864 (“[I]t would be essential that the fund be

shown to be limited independently of the agreement of the parties to the action . . . .”). See also

section 22.73.

1508. See, e.g., In re The Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 325

(3d Cir. 1998) (“Objectors are ‘entitled to an opportunity to develop a record in support of

[their] contentions by means of cross-examination and argument to the court.’” (quoting

Greenfield v. Villager Indus., Inc., 483 F.2d 824, 833 (3d Cir. 1973))); see also Tidmarsh, supra

note 951, at 5, 12 (finding that “[t]wo of the [five] cases (Georgine and Ahearn) . . . used trial-like

procedures at the fairness hearing.”).

1509. See Wright, supra note 1501, § 1797, at 354, and cases cited therein (stating “whether

an evidentiary hearing is necessary before the approval of a proposed settlement and the extent

of the testimony that may be allowed at any hearing that is held depends on the circumstances of

each case”).
§ 22.926 Manual for Complex Litigation, Fourth

460

21.611 for a discussion conditioning settlement approval on the extension of a

second opt-out opportunity.

22.925 Evaluating Nonmonetary Benefits

Determining the fairness, adequacy, and reasonableness of a settlement,

and determining the reasonableness of attorney fees, presupposes that the

court can place a value on the parties’ settlement terms. Establishing a value for

nonmonetary benefits, such as coupons, stock, or other contingent promises to

pay a benefit of uncertain value, represents a special challenge. Experts sometimes can assist in determining a market value for coupons or other nonmonetary settlement proceeds.1510

Establishing a value of medical monitoring remedies for individual class

members may present a particularly difficult challenge. If the law of the state

supports medical monitoring in the form of payments for monitoring examinations, the value will depend on the number of people who actually use the

monitoring made available, which may require the court to defer valuation.1511

If the judge assigned to the case has actively assisted the parties in crafting

a proposed settlement, transferring the case to another district judge to review

the settlement may be appropriate.1512 Some judges who have participated in

settlement negotiations, however, believe that they are better equipped to

review the settlement because they know its provisions and the compromises

that went into its creation.1513 One judge, for example, suggests that judicial

oversight of the settlement process allows the judge to “[a]ssess fairness and

reasonableness of the settlement to all class members, and make findings as to

the value to each individual plaintiff.”1514

22.926 Presenting the Decision

The fairness hearing should create a record sufficient to determine whether

the proposed settlement is fair, reasonable, and adequate to the class and to

1510. See, e.g., In re Auction Houses Antitrust Litig., No. 00-0648, 2001 WL 170792, at *10

(S.D.N.Y. Feb. 22, 2001).

1511. In re Diet Drugs Prods. Liab. Litig., No. CIV.A. 98-20626, 1999 WL 673066, at *18–*19

(E.D. Pa. Aug. 26, 1999) (“Absent class treatment, the class members will be unable to obtain the

benefit of collection and research of medical data and thereby better understand issues such as

latency periods and techniques of diagnosis of the diseases . . . .”).

1512. See, e.g., Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 258 (E.D. Pa. 1994).

1513. See Hon. S. Arthur Spiegel, Settling Class Actions, 62 U. Cin. L. Rev. 1565, 1569 (1994)

(indicating that “the judge who was involved in the settlement negotiations will be in a better

position to consider objections at the fairness hearing, particularly in a complex case”).

1514. Real, supra note 1492, at 450.
Mass Torts § 22.927

461

support findings of fact and conclusions of law. See section 21.635. Section

21.66 discusses issues that may arise during the administration of a class action

settlement.

Occasionally, a proposed settlement will directly affect cases that are

pending in other courts. The parties may, for example, agree to dismiss related

cases pending in a state court or another federal court.1515 It is important to

communicate clearly and directly with the other courts to prevent any misunderstandings. Section 20.31 discusses state–federal coordination. If counsel are

charged with communicating with the other courts, it is helpful to specify that

responsibility and to follow up, if necessary, to enforce counsel’s duty.1516 If

proceedings in other courts threaten the integrity of the certified class settlement and the ability of the court to enforce the approved class action settlement terms, the court presiding over the class action should consider whether

to enjoin the parties from proceeding further in derogation of the certified

class action, as discussed in section 21.42.

22.927 Awarding and Allocating Attorney Fees

Section 14.12 discusses standards for reviewing attorney fee petitions in

common fund class actions. Section 14.21 discusses techniques for simplifying

and expediting the review of attorney fee applications.

Linking attorney fees to the value of the settlement benefits actually

received by class members is especially important in mass tort litigation.

Settlements that call for nonmonetary or deferred payments—such as medical

monitoring, the contingent payment of future claims, or coupons for repair or

replacement of allegedly defective products—should either be assigned an

accurate present value or the payment of attorney fees should be delayed until

benefits are in fact distributed to class members and the court knows how

much they actually received.1517

A major difference between mass torts and other class actions is that class

members in mass tort litigation are often represented by individually retained

1515. See, e.g., Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 30–31 (2002)

(describing setting in which parties agreed to dismiss stayed state case and plaintiff informed

court that agreement was limited to some claims). The Court held that the All Writs Act did not

provide an independent source of federal jurisdiction and could not be used to remove a

diversity case to federal court. Id. at 33–35.

1516. Id. at 31–32 (imposing sanctions that were upheld on appeal).

1517. See generally, Bowling v. Pfizer, Inc., 132 F.3d 1147 (6th Cir. 1998) (overarching

principle is to compensate counsel for benefits actually conferred on the class).
§ 22.927 Manual for Complex Litigation, Fourth

462

plaintiffs’ attorneys.1518 In a class action or in federal litigation that has been

centralized by the Judicial Panel on Multidistrict Litigation, the transferee

judge generally appoints class counsel to litigate common issues and prepare

the case for trial or settlement.1519 Individually retained attorneys may conduct

discovery, motions practice, and settlement negotiations on behalf of individual clients. If an MDL case proceeds to trial in federal court, individual

attorneys may handle aspects of the trial, such as individual exposure and

damages.1520 If a related case proceeds to trial in state court, individual attorneys represent their clients, with or without the use of discovery conducted in

the MDL proceedings. Individually retained counsel have contingent fee

arrangements, and counsel for the class or the MDL counsel steering committee may represent individual class members under such agreements.

Absent agreement among the attorneys, the court will have to allocate fees

among the attorneys, a task that involves placing a value on the services

provided by different attorneys.1521 The judge can protect members of the class

from excessive fees by limiting the amount of contingent fees awarded for

pursuing individual claims in a common-fund settlement.1522 If there is a

combination of individual settlements and a class-wide settlement, the judge

sometimes orders individual plaintiffs’ lawyers to pay a certain percentage of

1518. In re Thirteen Appeals Arising out of the San Juan Dupont Plaza Hotel Fire Litig., 56

F.3d 295 (1st Cir. 1995). See generally Judith Resnik et al., Individuals Within the Aggregate:

Relationships, Representation, and Fees, 71 N.Y.U. L. Rev. 296, 300 (1996). See also Dennis E.

Curtis & Judith Resnik, Contingency Fees in Mass Torts: Access, Risk, and the Provision of Legal

Services When Layers of Lawyers Work for Individuals and Collectives of Clients, 47 DePaul L. Rev.

425 (1998).

1519. See, e.g., Thirteen Appeals, 56 F.3d at 300 (“The PSC [Plaintiffs’ Steering Committee]

members looked after the big picture: mapping the overarching discovery, trial, and settlement

strategies and coordinating the implementation of those strategies.”).

1520. See, e.g., id. (“The IRPAs [Individually-Retained Plaintiffs’ Attorneys] handled

individual client communication and other case-specific tasks such as answering interrogatories

addressed to particular plaintiffs, preparing and attending the depositions of their clients, and

taking depositions which bore on damages.”). IRPAs also worked with a settlement judge to

negotiate appropriate settlement values for individual claims and collaborated with PSC

members in the trial of twelve representative claims.

1521. See generally, Thirteen Appeals, 56 F.3d at 309–11.

1522. See, e.g., In re Rio Hair Naturalizer Prods. Liab. Litig., MDL No. 1055, 1996 WL

780512, at *20–*21 (E.D. Mich. Dec. 20, 1996) (limiting contingency fee contracts with

individual class members to 5% of limited fund class settlement); In re A.H. Robins Co., 86 F.3d

364, 377–78 (4th Cir. 1996) (upholding district court’s limit of 10% on contingent fees for

supplemental payments from settlement trust); In re Joint E. & S. Dists. Asbestos Litig., 878 F.

Supp. 473, 561–62 (E.D.N.Y. & S.D.N.Y. 1995) (contingency fee contracts reduced from 33.3%

to 25%); In re Beverly Hills Fire Litig., 639 F. Supp. 915, 924–25 (E.D. Ky. 1986) (class members’

individual attorneys’ contingency fees limited to 6.3% of the individual client’s award).
Mass Torts § 22.93

463

the fees they received into a common fund to contribute to the fees of the class

counsel, whose work in discovery and trial preparation contributed to the

settlement of the individual cases as well.1523 Section 20.31 discusses some

state–federal considerations in setting such fees. Typically courts have also

limited the percentage of a mass settlement allocated to attorneys representing

the class or the MDL aggregate. See section 14.121.1524

22.93 Trial1525

For cases transferred to a court by the MDL Panel, the initial question is

whether the transferee court has authority to conduct trials of the cases at all.

The Supreme Court ruled in Lexecon that a transferee court did not have the

authority to transfer cases from another district to itself by ruling on a pretrial

motion for change of venue.1526 Nothing in that decision, however, precludes

the transferee judge from presiding over cases that litigants filed in the transferee district originally, that transferor courts transferred by ruling on motions

change venue, or that the parties consented to have tried in the transferee

district. Section 20.132 discusses these and other practices relating to the trial

of cases in transferee courts.

The structure of the trial should be addressed as early in the pretrial

process as is feasible. Judges often require the parties to submit detailed trial

plans early in the case and to modify the plans as the case develops. Such plans

assist the court and the parties in determining what issues, claims, and defenses

1523. See, e.g., In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Order No. 467 (E.D. Pa.

Feb. 10, 1999), at http://www.fenphen.verialw.com/search_common.icl (last visited Nov. 10,

2003) (ordering defendants to withhold a fixed percentage from settlements and pay those

amounts into a common fund); see also In re Silicone Gel Breast Implants Prods. Liab. Litig.,

MDL No. 926, unnumbered order (N.D. Ala. Oct. 7, 1998), at http://www.fjc.gov/BREIMLIT/

ORDERS/orders.htm (last visited Nov. 10, 2003) (denying attorneys’ motions for relief from

Order No. 13, requiring payment of 6% of settlements into a “common benefit” fund); see also

In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig. II, 953 F.2d 162, 166 (4th Cir. 1992)

(holding that fee-withholding orders in MDL cases can only be applied to cases that were within

the jurisdiction of the MDL transferee court).

1524. See also Tidmarsh, supra note 951, at 14 (documenting class counsel fees in mass tort

settlement class actions ranging from 3% (Georgine/Amchem and Ahearn) to 6% (silicone gel

breast implants) to 10% (Bjork–Shiley heart valve litigation) and stating limits on fees to

attorneys for individual class members). See also Rheingold, supra note 1271, §§ 7:40 to 7:47

(detailing fee arrangements in L-Tryptophan, swine flu vaccine, breast implant, Neptune

Society, Shell Oil (Watson), MGM Grand, and Bjork–Shiley cases, a mixture of class action and

MDL litigations).

1525. For discussion of complex trials generally, see supra section 12.

1526. Lexecon, Inc. v. Milberg, Weiss, Bershad, Hynes & Lerach, 523 U.S. 26 (1998).
§ 22.93 Manual for Complex Litigation, Fourth

464

may apply across groups and how to present the proof to a jury. If a mass tort

litigation is to proceed by first adjudicating individual test cases, identification

of those plaintiffs and discovery into their exposure and injury should occur at

the earliest opportunity. If the trial is to be of consolidated groups of claimants

with comparable exposure or injuries, the composition of those groups should

be defined during discovery and pretrial motions stages.

In general, a consolidated or aggregated trial must take into account

defenses and the measure of damages. A joint trial of common issues may be

feasible, followed by separate trials of remaining issues.1527 To avoid inconsistent adjudications and duplicative presentation of evidence, punitive damage

claims should ordinarily be tried to the same jury that determined liability and

overall compensatory damages, although in most cases the issue of punitive

damages is bifurcated.1528

Test case trials of mass torts can draw on many of the standard practices

for managing complex trials. See section 12. Similarities among the cases tried

and cases pending trial may allow use of a standard pretrial order and application of rulings on evidentiary and trial issues. Videotaped expert testimony and

use of a standard set of exhibits can streamline presentation of evidence. See

sections 12.13 and 23.345.

1527. See, e.g., Sterling v. Velsicol Chem. Corp., 855 F.2d 1188, 1194–97 (6th Cir. 1988)

(describing class trial of common liability issues, compensatory damages for representative

plaintiffs, and punitive damages for class as a whole); Jenkins v. Raymark Indus., 782 F.2d 468,

470–71 (5th Cir. 1986) (describing asbestos intradistrict class trial plan for resolving liability

issues, for punitive-damages liability and amount, and for state-of-the-art defense to be followed

by consolidated minitrials of seven to ten plaintiffs); cf. In re Copley Pharm., Inc., “Albuterol”

Prod. Liab. Litig., 161 F.R.D. 456, 468–70 (D. Wyo. 1995) (discussing class trial of common

liability issues followed by individual trials in transferor courts to establish individual causation,

damages, and punitive damages). See also In re Hanford Nuclear Reservation Litig., 292 F.3d

1124, 1139 (9th Cir. 2002) (recommending that court “resolve the pending motions for class

certification as soon as possible, and . . . consider such certification only for questions of generic

causation common to plaintiffs who suffer from the same or a materially similar disease”). See

also supra section 22.75.

1528. See, e.g., In re The Exxon Valdez, 270 F.3d 1215, 1225 (9th Cir. 2001) (describing trial

structure starting with a stipulation of negligence and providing separate phases for jury findings

regarding liability for punitive damages, class compensatory damages, and class punitive

damages, followed by individual compensatory damages); Jenkins, 782 F.2d at 470–71; In re

Simon II Litig., 211 F.R.D. 86, 193 (E.D.N.Y. Oct. 22, 2002) (ordering three-stage trial:

(1) determination of fraud and conspiracy claims and “estimated total compensatory claims”

followed by (2) punitive liability issues followed by (3) “evidence of amount of harm suffered by

the class [as result of conduct warranting punitive damages]”) (appeal pending); but cf.

Albuterol, 161 F.R.D. at 467–68 (rejecting inclusion of punitive damages in common issues trial

because “punitive damages and punitive conduct should be determined on an individual basis”).
Mass Torts § 22.93

465

In pursuing traditional or test case trials, the judge may conduct a unitary

trial, bifurcate liability and damages,1529 or create other helpful trial structures.

A court must identify and minimize any risk of unfairness in requiring litigants

to present claims or defenses in a piecemeal fashion. For example, the judge in

the Bendectin litigation found the use of a trifurcated trial plan (causation,

liability, damages) to be troubling yet concluded that, on balance, the procedure served overriding purposes of efficiency and fairness.1530 Courts have

recognized “a danger that bifurcation may deprive plaintiffs of their legitimate

right to place before the jury the circumstances and atmosphere of the entire

cause of action.”1531 In litigation concerning HIV contamination of the blood

supply, one court held that a bifurcated trial plan calling for more than one

jury interfered with the right of a defendant to present comparative negligence

defenses against individual plaintiffs.1532 In general, the Seventh Amendment

entitles parties to have facts decided by one jury and prohibits a second jury

from reexamining those facts.1533 The test is whether the issues can be presented separately to different juries without generating “confusion” and

“uncertainty.”1534

Another approach is reverse bifurcation or reverse trifurcation, starting

with individual damages. This is generally appropriate only when the degree of

injury and the amount of damages are the primary issues in dispute.1535

Courts have found some approaches inappropriate. For example, one

court rejected nonconsensual sampling and extrapolation of causation and

damages in personal injury cases because these procedures contravened

1529. See, e.g., cases discussed in supra notes 1394–1405.

1530. In re Bendectin Litig., 857 F.2d 290, 306–09, 315 (6th Cir. 1988).

1531. In re Beverly Hills Fire Litig., 695 F.2d 207, 217 (6th Cir. 1982). See also Bendectin, 857

F.2d at 314–16.

1532. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1303 (7th Cir. 1995) (holding that a

trial plan to determine defendant’s negligence first while leaving determination of comparative

negligence and proximate causation for a later jury would violate the Reexamination Clause of

the Constitution); see also In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 209

F.R.D. 323, 334–35 (S.D.N.Y. 2002).

1533. Castano v. Am. Tobacco Co., 84 F.3d 734, 750 (5th Cir. 1996).

1534. See Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494, 500 (1931) (a new trial on

the single issue of damages could not be conducted “unless it clearly appears that the issue to be

retried is so distinct and separable from the others that a trial of it alone may be had without

injustice”). See discussion at supra section 22.75 and text accompanying notes 1394–99.

1535. See, e.g., Angelo v. Armstrong World Indus., 11 F.3d 957 (10th Cir. 1993) (finding no

abuse of discretion in trying issue of whether plaintiff had incurred an asbestos-related disease

before liability issues); see also Trends, supra note 1077, at 102–04 (discussing use of various

forms of bifurcation and trifurcation in asbestos litigation).
§ 22.93 Manual for Complex Litigation, Fourth

466

litigants’ right to a jury trial under the Seventh Amendment and violated due

process.1536

Courts and litigants have experimented with various trial structures to

achieve greater efficiency and expedition in resolving mass tort cases. Some

approaches are described below:

• A series of individual trials against one or more defendants on all issues.

The verdicts in representative cases inform the parties as to a likely

range of verdicts in other similar cases. For the most part, the silicone

gel breast implant litigation and the diet drug litigation have followed

this model, with most of the individual trials conducted at the state

level.

• A series of consolidated trials on all issues, if they are sufficiently common.1537 Each trial involves defined groups of similarly situated plaintiffs (e.g., a manageable number of coworkers from the same job site

or homeowners who had the same type of siding installed by the same

contractor) against one or more defendants,1538 with special procedures, if necessary, to assist the jury in comprehending multiple claims

against multiple parties. See section 12.42.

1536. See Cimino v. Raymark Indus., 151 F.3d 297, 319–22 (5th Cir. 1998) (holding that

individual jury determinations of liability, injury, and damages are required by the Seventh

Amendment in an asbestos mass tort personal injury context); see also In re Fibreboard, 893 F.2d

706, 711–12 (5th Cir. 1990) (holding that, as a matter of Texas product liability law, plaintiffs

must show specific causation and individual injuries to establish a claim); cf. Hilao v. Estate of

Marcos, 103 F.3d 767, 786–87 (9th Cir. 1996) (holding that, on balance, in an “extraordinarily

unusual” case involving 10,000 injury claims, the use of statistical sampling and extrapolation to

determine individual personal injury recoveries did not violate due process); In re Simon II

Litig., 211 F.R.D. 86, 146–59 (E.D.N.Y. 2002) (discussing use of statistical extrapolation to

establish class-wide liability and damages and concluding that statistical extrapolation comports

with due process and the Seventh Amendment) (appeal pending).

1537. See Malcolm v. Nat’l Gypsum Co., 995 F.2d 346 (2d Cir. 1993) (reversing joint trial of

forty-eight asbestos cases on ground that lack of commonality resulted in jury confusion).

Consolidation of fewer than ten cases has been called “extremely effective.” See McGovern,

Mature Mass Tort, supra note 1022, at 688.

1538. See, e.g., Michael J. Saks & Peter David Blanck, Justice Improved: The Unrecognized

Benefits of Aggregation and Sampling in the Trial of Mass Torts, 44 Stan. L. Rev. 815 (1992).

Statistical sampling, however, can be expected to yield accurate results only when the set of cases

being tried is homogenous (i.e., similar injuries to similar plaintiffs under similar circumstances)

and the sample is representative of the whole. Kenneth S. Bordens & Irwin A. Horowitz, The

Limits of Sampling and Consolidation in Mass Tort Trials: Justice Improved or Justice Altered?, 22

Law & Psychol. Rev. 43, 47 (1998). In addition, where there is a serious question as to liability, a

jury’s knowledge that more than one plaintiff was injured can be expected to affect a jury’s

decision on liability. Id. at 59–60.
Mass Torts § 22.93

467

• A consolidated common issues trial with some plaintiffs presenting their

claims against defendants on all issues, yielding findings on common issues. This works in a single-incident mass tort case,1539 a property

damage case,1540 or a narrowly defined aspect of a dispersed mass tort

(e.g., a case involving a single product and injuries allegedly incurred

in a single work site or in a single state, within a limited time period).1541 The remaining plaintiffs would have to prove specific causation and damages in later proceedings in which the findings on common issues from the first trial would apply. The individual issues may

also be resolved through the procedures discussed immediately below

involving trials of representative cases. Certain issues relating to liability may be severed under Federal Rule of Civil Procedure 42(b) from

issues relating to causation or damages, and then consolidated as to

multiple parties under Rule 42(a) for a joint trial.1542 Federal courts

have frequently concluded that dispersed mass tort personal injury

1539. See, e.g., In re The Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001).

1540. See, e.g., Mejdrech v. Met-Coil Sys. Corp., 319 F.3d 910 (7th Cir. 2003) (groundwater

pollution claims); In re Sch. Asbestos Litig., 789 F.2d 996 (3d Cir. 1986); but cf. In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 288 F.3d 1012 (7th Cir. 2002).

1541. See, e.g., Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620 (5th Cir. 1999)

(approving certification of Jones Act common-liability issues as issues class and approving

bifurcated trial with common issues trial followed by individual trials of causation and damages

issues); Jenkins v. Raymark Indus., 782 F.2d 468 (5th Cir. 1986) (single class action trial of

punitive damages and state-of-the-art defense followed by joint trials on individual issues with

seven to ten plaintiffs); see also Watson v. Shell Oil Co., 979 F.2d 1014, 1017–20 (5th Cir. 1992),

reh’g granted, 990 F.2d 805 (5th Cir. 1993), other reh’g, 53 F.3d 663 (5th Cir. 1994) (case settled

before rehearing; panel affirmed a trial plan for determination of liability and punitive damages

in conjunction with compensatory damages in twenty fully tried sample cases to be followed by

full trials of other individual claims by a different jury). In that case, the first stage of the trial

plan included the apportionment of liability between the two primary defendants. See supra

section 11.632 and discussion at notes 1529–34. State laws precluding bifurcation may not be

binding on the federal courts. See Rosales v. Honda Motor Co., Ltd., 726 F.2d 259 (5th Cir.

1984).

1542. See, e.g., In re Copley Pharm., Inc., “Albuterol” Prods. Liab. Litig., 161 F.R.D. 456,

468–70 (D. Wyo. 1995) (discussing trial plan in which class representatives’ individual strict

liability, negligence, and breach of warranty claims would be tried along with common issues

relating to general causation, followed by individual trials in transferor courts on issues of

individual causation, damages, and punitive damages); see also Foster v. Detroit, 254 F. Supp.

655 (E.D. Mich. 1966) (treating the post-liability condemnation claims of class members as not

involving new issues of law or fact and delegating their resolution to a special master presiding

over claims of class members), aff’d, 405 F.2d 138 (6th Cir. 1968); Samuel Issacharoff, Administering Damage Awards in Mass Tort Litigation, 10 Rev. Litig. 463, 471–80 (1991) (discussing

administrative models for apportioning damage awards in mass contract, Title VII, and tort

cases).
§ 22.93 Manual for Complex Litigation, Fourth

468

claims, particularly those involving the law of different states, cannot

generally be tried on a consolidated or aggregated basis.1543

• A consolidated trial on common issues followed by a stipulated binding

procedure (such as arbitration or mediation) agreed to by the parties to

resolve individual issues.1544 This type of approach to the individual issues encompasses possible test-case trials or special master adjudications. Such an approach is more feasible in a single incident mass tort

than in a dispersed mass tort.

• A stipulated resolution of all elements of individual claims according to a

formula or by a hearing before an arbitrator, special master, or magistrate judge. The court should ensure that the parties’ waiver of the

right to a jury trial is knowing and intelligent.

1543. See generally Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996) (nationwide

class action decertified); In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995) (also class

action decertified); In re Repetitive Stress Injury Litig., 11 F.3d 368 (2d Cir. 1993) (consolidation

of cases reversed). Cf. In re Bendectin Litig., 857 F.2d 290 (6th Cir. 1988) (consolidation for

bifurcated trial upheld); Jenkins v. Raymark Indus., 782 F.2d 468 (5th Cir. 1986) (district-wide

class action trial of common issues approved).

1544. After the settlement of the class claims in Jenkins (discussed above), the court created a

voluntary alternative dispute resolution procedure to handle future claims. The program had

some initial success, but the court later judged it to be ineffective. Cimino v. Raymark Indus.,

751 F. Supp. 649, 651 (E.D. Tex. 1990), rev’d on other grounds, 151 F.3d 297 (5th Cir. 1998).
469

23. Expert Scientific Evidence

.1 Introduction 469

.2 The Use of Scientific Evidence in Complex Litigation 472

.21 The Federal Rules of Evidence 472

.22 The Daubert Trilogy 474

.23 The Daubert Criteria 476

.24 Opinions and Conclusions Under Daubert 478

.25 The Daubert “Fit” Test 480

.26 The Scope of Appellate Review 482

.27 Emerging Issues in the Use of Scientific Evidence 484

.271 The Validity of Toxicological Evidence Versus Epidemiological Evidence 485

.272 Aggregation of Scientific Evidence 485

.273 Clinical Medical Judgment 487

.274 Research as a Result of Litigation 489

.3 Case Management 491

.31 Preliminary Considerations in Assessing Expert Testimony 491

.32 The Initial Conference 494

.33 Disclosures 499

.34 Discovery Control and Management 503

.341 Discovery of Testifying Experts 503

.342 Discovery of Nontestifying Experts 504

.343 Discovery of Nonretained Experts 504

.344 Discovery of Court-Appointed Experts 505

.345 Use of Videotaped Depositions 505

.35 Motion Practice 506

.351 Initiating a Daubert Inquiry 507

.352 Timing of Challenges to Expert Testimony 508

.353 Handling a Challenge to Expert Testimony 509

.354 Summary Judgment 512

.36 Final Pretrial Conference 513

.37 Trial 514

23.1 Introduction

A significant issue in many complex cases—particularly in areas of law

such as mass tort, antitrust, environmental, and intellectual property, but

increasingly appearing in other areas as well—is the admission and use of

expert scientific or technical testimony. “Scientific evidence encompasses socalled hard sciences (such as physics, chemistry, mathematics, and biology) as

well as soft sciences (such as economics, psychology, and sociology), and it

may be offered by persons with scientific, technical, or other specialized

knowledge whose skill, experience, training, or education may assist the trier of
§ 23.1 Manual for Complex Litigation, Fourth

470

fact in understanding the evidence or determining a fact in issue.”1545 Expert

scientific testimony can add additional layers of complexity to already complex

cases, and scientific and technical evidence often plays a pivotal role in litigation. In toxic tort cases, for example, excluding scientific evidence can prevent

the plaintiff from establishing the prima facie elements of his or her case,

thereby entitling the defendant to summary disposition.1546 Judicial findings on

the relevance of toxicological studies and their weight in relation to epidemiological studies may also significantly affect the ability of mass or toxic tort

plaintiffs to prevail.1547 Superfund cases, usually brought many years after the

release of hazardous contaminants, rely heavily on scientific and toxicological

evidence to establish the liability of potentially responsible parties and to

evaluate remedial actions and the imminent threat presented to human health

and the environment.1548 Statistical evidence is routinely introduced and

1545. William W Schwarzer & Joe S. Cecil, Management of Expert Evidence [hereinafter

Expert Evidence], in Reference Manual on Scientific Evidence 39, 42 (Federal Judicial Center, 2d

ed. 2000). In a survey of federal judges conducted by the Federal Judicial Center examining

recent trials involving expert witnesses, tort cases represented the greatest percentage (45%) of

cases reported. Carol Krafka, Meghan A. Dunn, Molly Treadway Johnson, Joe S. Cecil & Dean

Miletich, Judge and Attorney Experiences, Practices, and Concerns Regarding Expert Testimony in

Federal Civil Trials, 8 Psychol. Pub. Pol’y & L. 309, 318 (2002) [hereinafter FJC Survey on Expert

Testimony]. This survey also provides, among other things, a breakdown of experts appearing in

federal courts. Id. at 319–20 & tbl.2. For a breakdown of experts appearing in state courts, see

Anthony Champagne et al., Expert Witnesses in the Courts: An Empirical Examination, 76

Judicature 5 (1992); Samuel R. Gross, Expert Evidence, 1991 Wis. L. Rev. 1113.

1546. See, e.g., Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1314, 1321–22 (9th Cir.

1995) (affirming grant of summary judgment where plaintiff’s expert testimony found

inadmissible); Wheat v. Sofamor, S.N.C., 46 F. Supp. 2d 1351, 1360–61 (N.D. Ga. 1999) (with

the exclusion of plaintiff’s expert, insufficient evidence of defect existed to preclude entry of

summary judgment for defendant).

1547. See, e.g., Gen. Elec. Co. v. Joiner, 522 U.S. 136, 144–45 (1997) (animal studies relied on

by expert “were so dissimilar to the facts presented in this litigation” that district court did not

abuse its discretion in excluding them). The introduction of scientific evidence in toxic tort

cases, however, encompasses more than testimony by medical experts. Expert witnesses can

range from experts on sampling, Trail v. Civil Engineer Corps, 849 F. Supp. 766 (W.D. Wash.

1994), to atmospheric dispersion, In re Hanford Nuclear Reservation Litig. (Hanford II), No.

CY-91-3015, 1998 WL 775340 (E.D. Wash. Aug. 21, 1998), to fisheries, In re Hanford Nuclear

Reservation Litig. (Hanford I), 894 F. Supp. 1436 (E.D. Wash. 1995).

1548. See generally supra section 34. See also Freeport-McMoran Res. Partners Ltd. P’ship v.

B-B Paint Corp., 56 F. Supp. 2d 823, 833–34 (E.D. Mich. 1999) (rejecting plaintiff’s argument

that Daubert requirements should be inapplicable to CERCLA cases and excluding expert

testimony where none of the Daubert indicia of reliability are met). See, e.g., Burns Philp Food,

Inc. v. Cavalea Cont’l Freight, Inc., 135 F.3d 526, 530–31 (7th Cir. 1998) (affirming exclusion of

testimony of environmental consultant as failing to reliably link petroleum distillates on

property with defendants’ actions); Keum J. Park, Note, Judicial Utilization of Scientific Evidence
Expert Scientific Evidence § 23.1

471

explained by experts in antitrust litigation, employment litigation, and other

areas,1549 and proof of damages suffered by plaintiffs in these cases also may

rest heavily on expert testimony.1550 The decision to admit or exclude scientific

evidence and testimony thus strongly affects the ability of a party to prevail.

This section can assist judges in effectively managing expert evidence that

involves scientific or technical subject matter. Part I discusses the current

standards under which expert testimony is to be judged in light of Daubert v.

Merrill Dow Pharmaceuticals1551 and its progeny and the Federal Rules of

Evidence. It examines some issues that can arise in the application of these

standards and then addresses case-management issues specific to expert

testimony. The discussion focuses principally on expert testimony that is

scientific or technical in nature, but is equally applicable to expert testimony in

Federal Rule of Evidence 702’s “other specialized knowledge” category. The

discussion does not address some of the issues that have frequently arisen in

criminal cases, such as those surrounding DNA and fingerprint evidence.

in Complex Environmental Torts: Redefining Litigation Driven Research, 7 Fordham Envtl. L.J.

483, 492–93 (1996) (noting that the Oil Pollution Liability and Compensation Act of 1990

established “procedures for natural resource trustees to determine resource injuries”).

1549. See, e.g., Munoz v. Orr, 200 F.3d 291, 300–02 (5th Cir. 2000) (affirming exclusion of

statistical testimony of plaintiff’s expert in Title VII disparate impact claim as unreliable); City of

Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 564–67 (11th Cir. 1998) (expert testimony of

statistician admissible in antitrust case); Bean v. S.W. Waste Mgmt. Corp., 482 F. Supp. 673,

677–80 (S.D. Tex. 1979) (statistical evidence showing disparate impact insufficient to prove

intentional discrimination under Equal Protection Clause in environmental justice case), aff’d

without opinion, 782 F.2d 1038 (5th Cir. 1986).

1550. For example, in employment cases, forensic psychiatrists may be called to testify on

the relationship between a plaintiff’s emotional harm and his or her work environment, and

psychological testimony has been found probative on the question of damages and causation.

See, e.g., Blakey v. Cont’l Airlines, Inc., 992 F. Supp. 731, 735–39 (D.N.J. 1998). See EFCO Corp.

v. Symons Corp., 219 F.3d 734, 739 (8th Cir. 2000) (expert testimony admissible on damages);

Hurley v. Atl. City Police Dept., 933 F. Supp. 396, 408–09, 424 (D.N.J. 1996) (expert testimony

on mental harm to employee resulting from sexual harassment); Bottomly v. Leucadia Nat’l

Corp., 163 F.R.D. 617, 619–20 (D. Utah 1995) (expert testimony admissible on issue of damages

and causation). Expert testimony relating to the amount of damages occurred in almost half of

the reported trials examined in a recent Federal Judicial Center survey. See FJC Survey on Expert

Testimony, supra note 1545, at 321.

1551. 509 U.S. 579 (1993).
§ 23.21 Manual for Complex Litigation, Fourth

472

23.2 The Use of Scientific Evidence in Complex

Litigation

.21 The Federal Rules of Evidence 472

.22 The Daubert Trilogy 474

.23 The Daubert Criteria 476

.24 Opinions and Conclusions Under Daubert 478

.25 The Daubert “Fit” Test 480

.26 The Scope of Appellate Review 482

.27 Emerging Issues in the Use of Scientific Evidence 484

.271 The Validity of Toxicological Evidence Versus Epidemiological Evidence 485

.272 Aggregation of Scientific Evidence 485

.273 Clinical Medical Judgment 487

.274 Research as a Result of Litigation 489

23.21 The Federal Rules of Evidence

Daubert v. Merrell Dow Pharmaceuticals, Inc., General Electric Co. v.

Joiner,

1552 and Kumho Tire Co. v. Carmichael,1553 the “Daubert trilogy,” have

made management of expert evidence an integral part of proper case management.1554 Those decisions make the district judge the gatekeeper who must pass

on the reliability and relevance of proffered evidence pursuant to Federal Rule

of Evidence 702.

Rule 702, amended in 2000 with the italicized language, takes account of

the trilogy:

If scientific, technical, or other specialized knowledge will assist the trier

of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experiences, training, or

education, may testify thereto in the form of an opinion or otherwise if

(1) the testimony is based upon sufficient facts or data, (2) the testimony is

1552. 522 U.S. 136 (1997).

1553. 526 U.S. 137 (1999).

1554. The judge’s performance of the gatekeeper function will be intertwined with his or her

implementation of Federal Rule of Civil Procedure 16. See Joiner, 522 U.S. at 149 (Breyer, J.,

concurring):

[J]udges have increasingly found in the Rules of Evidence and Civil Procedure ways to help

them overcome the inherent difficulty of making determinations about complicated scientific

or otherwise technical evidence. Among these techniques are an increased use of Rule 16’s

pretrial conference authority to narrow the scientific issues in dispute, pretrial hearings where

potential experts are subject to examination by the court, and the appointment of special

masters and specially trained law clerks.
Expert Scientific Evidence § 23.21

473

the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

1555

An extensive committee note provides guidance to courts in assessing the

admissibility of expert evidence. It emphasizes the breadth of the standards set

forth in the rule and reiterates that its purpose is to ensure the reliability of the

proffered testimony. For example, “The amendment specifically provides that

the trial court must scrutinize not only the principles and methods used by the

expert, but also whether those principles and methods have been properly

applied to the facts of the case.”1556 Federal Rules of Evidence 701 and 703 also

were amended in conjunction with the amendments to Rule 702. Rule 701

seeks to ensure that the gatekeeping requirements of Rule 702 not be circumvented through “proffering an expert in lay witness clothing,”1557 stating that

opinions and inferences of lay witnesses may not be based on “scientific,

technical or other specialized knowledge within the scope of Rule 702.”1558 Rule

703 clarifies the circumstances under which inadmissible evidence relied on by

an expert witness in forming his or her opinion can be disclosed to a jury.1559

1555. Fed. R. Evid. 702 (emphasis added). See also Hon. Lee H. Rosenthal, Strategies for

Handling Expert Challenges in Federal Court, App. Law., at 1, 8 (Houston Bar Ass’n Spring 1999)

(“Counsel should . . . familiarize themselves with the recent proposed amendments to Rule 702

[which] largely codify the two major holdings of the Supreme Court’s Kumho Tire decision.”).

1556. Fed. R. Evid. 702 committee note. See Zic v. Italian Gov’t Travel Office, 130 F. Supp.

2d 991, 999 (N.D. Ill. 2001) (amendments to Rule 702 added “three new ‘reliability’ requirements: reliable data, reliable methodology, and reliable application of the methodology”).

1557. Fed. R. Evid. 701 committee note. Rule 701 provides the following:

If the witness is not testifying as an expert, the witness’ testimony in the form of opinions or

inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness’ testimony or

the determination of a fact in issue . . . .

1558. Fed. R. Evid. 701 committee note.

1559. Rule 703 directs the court to apply a balancing test when deciding whether to let the

jury hear otherwise inadmissible information to assist the jury in evaluating the expert’s opinion

by weighing the probative value of the evidence against its prejudicial effect. Unless the probative

value substantially outweighs its prejudicial effect, the evidence should not be disclosed to the

jury. Unlike the balancing test in Rule 403, the test established in Rule 703 places the presumption against admission, and the committee note to Rule 703 further emphasizes that, to the

extent the information is disclosed, it is not admissible for substantive purposes, and a limiting

instruction should be given to the jury to that effect.
§ 23.22 Manual for Complex Litigation, Fourth

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23.22 The Daubert Trilogy1560

Expert scientific evidence in the courtroom has grown in tandem with the

increasing reliance on technological and scientific advances in virtually every

facet of American life.1561 This convergence of science and law has inevitably

placed judges in the position of assessing the admissibility of such evidence

using standards that many charged were too ill-defined to realistically separate

valid scientific endeavors from science lacking any real empirical support.1562

Prior to Daubert,1563 scientific evidence was often judged according to the

standard set forth in Frye v. United States.

1564 Frye set forth a test for the

admission of expert testimony as one of “general acceptance,” with admissibility premised on whether the scientific principle or discovery from which the

testimony derived was generally accepted in the pertinent scientific community.1565 Despite criticisms of the Frye test, the general acceptance criterion

1560. For an excellent discussion of the Daubert trilogy, see Margaret A. Berger, The Supreme

Court’s Trilogy on the Admissibility of Expert Testimony [hereinafter Supreme Court’s Trilogy], in

Reference Manual on Scientific Evidence 9 (Federal Judicial Center, 2d ed. 2000).

1561. See David L. Faigman et al., Check Your Crystal Ball at the Courthouse Door, Please:

Exploring the Past, Understanding the Present, and Worrying About the Future of Scientific

Evidence, 15 Cardozo L. Rev. 1799, 1802 n.6 (1994) (citing William L. Foster, Expert Testimony,—Prevalent Complaints and Proposed Remedies, 11 Harv. L. Rev. 169, 176 (1897–98)

(quoting unattributed comments that “the scientific expert is a product of an advanced and

rapidly advancing civilization . . . [and has acquired] a far greater frequency of employment by

the recent marvelous advances in the applications of science,—applications which have

increased the sphere of things to be litigated about”)); Joseph Sanders, Scientifically Complex

Cases, Trial by Jury, and the Erosion of Adversarial Processes, 48 DePaul L. Rev. 355, 357–58

(1998) (citing statistics from several studies reflecting growth in number of cases in which

experts testify as well as the number of testifying experts).

1562. See, e.g., 1 David L. Faigman et al., Modern Scientific Evidence: The Law and Science

of Expert Testimony § 1-2.4, at 9–10 (2d ed. 2002).

1563. 509 U.S. 579 (1993). See also Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311,

1314 & n.2 (9th Cir. 1995) (noting that prior standard for admissibility in Ninth Circuit was

Frye test of general acceptance); Christopherson v. Allied-Signal Corp., 939 F.2d 1106 (5th Cir.

1991) (overruled by Daubert).

1564. 293 F. 1013 (D.C. Cir. 1923). The Frye test initially was applied almost exclusively in

criminal cases and was not relied on in federal civil litigation until 1984. Paul C. Giannelli,

Daubert: Interpreting the Federal Rules of Evidence, 15 Cardozo L. Rev. 1999, 2008 (1994).

1565. 293 F. at 1014. Frye has been described as simply a relocation of the marketplace test,

where expertise is judged by the success of the expert in his or her profession. “In effect, the

marketplace determined whether valid knowledge existed by endowing it with commercial

value.” 1 Faigman et al., supra note 1562, § 1-2.1, at 4. However, Frye is also argued to have

recognized a distinction between the expert and the expertise, and to have placed the assessment

of the value of the expertise offered in the hands of “the people who produced the knowledge

and offered it, and themselves, to the courts.” Id. § 1-2.2, at 7.
Expert Scientific Evidence § 23.22

475

became the most common standard for assessing the admissibility of expert

testimony,1566 even after the advent of the Federal Rules of Evidence in 1975,

and in particular Rule 702.

Daubert, Joiner, and Kumho Tire, however, changed the way in which

courts assess the admissibility of scientific evidence.1567 Daubert explicitly

rejected the Frye test, holding that the admissibility of expert testimony was

governed by Rule 702, and that nothing in the language of the rule reflected an

intent to incorporate “general acceptance” as a precondition to admission.1568

“The drafting history makes no mention of Frye, and a rigid ‘general acceptance’ requirement would be at odds with the ‘liberal thrust’ of the Federal

Rules and their ‘general approach of relaxing the traditional barriers to

“opinion” testimony.’”1569 Rather, Daubert established that Rule 702 mandates

federal courts to serve as gatekeepers, ensuring (1) that the subject of the

expert testimony is scientific “knowledge” grounded “in the methods and

procedures of science”1570 and (2) that the testimony is relevant, i.e., it will

assist the trier of fact in understanding the evidence or determining an issue in

the case.1571 According to Daubert, “[t]his entails a preliminary assessment of

whether the reasoning or methodology underlying the testimony is scientifically valid and whether that reasoning or methodology properly can be applied

to the facts in issue.”1572

1566. 1 Faigman et al., supra note 1562, § 1-2.4, at 10. Among these criticisms were that the

general acceptance standard precluded the admission of reliable evidence, it left to the scientific

community the determination of validity, and it rested on the invalid assumption that jurors

were unable to handle scientific evidence. 1 Paul C. Giannelli & Edward J. Imwinkelried,

Scientific Evidence § 1-5(G), at 28–29 (3d ed. 1999). Other criticisms included that the general

acceptance standard was vague and easily manipulated, was overly conservative, provided no

clear demarcation or other guideline as to the point at which a proposition became “generally

acceptable,” lacked standards for defining the “particular field,” and, more importantly, left “the

law at the mercy of the practitioners of the respective fields” who may differ in degree of

rigorousness. 1 Faigman et al., supra note 1562, § 1-2.4, at 8–9, 10.

1567. But see United States v. Downing, 753 F.2d 1224, 1232 (3d Cir. 1985) (foreshadowing

Daubert by concluding that “the status of the Frye test under Rule 702 is somewhat uncertain”).

1568. Daubert, 509 U.S. at 588–89. The Court noted that the rules occupied the field, and

that the inability to find any reference to the common-law doctrine in Rule 702 or its drafting

history clearly indicated that Rule 702 superceded Frye. “Given the Rules’ permissive backdrop

and their inclusion of a specific rule on expert testimony that does not mention ‘general

acceptance,’ the assertion that the Rules somehow assimilated Frye is unconvincing.” Id. at 589.

1569. Id. at 588 (quoting Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 169 (1988)).

1570. Id. at 589–90.

1571. Id. at 591.

1572. Id. at 592–93. See Brasher v. Sandoz Pharms. Corp., 160 F. Supp. 2d 1291, 1295 (N.D.

Ala. 2001) (“The point of the gatekeeping role is to separate opinion evidence based on ‘good

grounds’ from simple subjective speculation masquerading as scientific knowledge.”).
§ 23.23 Manual for Complex Litigation, Fourth

476

23.23 The Daubert Criteria

Central to any determination of admissibility is the finding, as a threshold

matter, that the witness is qualified to testify as an expert under Rule 702. The

courts generally have interpreted this requirement liberally.1573 In many fields

of expertise, for example, neither formal education nor training may be

necessary. It is the inquiry into the scientific validity of the underlying reasoning or methodology that presents the greatest challenge to judges. Rule 702

establishes the general standards against which expert testimony is to be

judged, relying on criteria delineated in Daubert, as well as others that might be

appropriate. It is for the trial judge to then determine whether those standards

have been met.

Daubert identifies several considerations that might bear on the trial

court’s determination whether given testimony is scientifically valid and

therefore “trustworthy”: (1) whether the theory or technique had been tested;

(2) whether the theory or technique can be or has been peer reviewed or

published; (3) the known or potential error rate; (4) the “existence and

maintenance of standards controlling the technique’s operation”; and (5) the

general acceptance by the relevant scientific community and the testimony’s

degree of acceptance therein.1574 These considerations, however, are neither a

checklist nor exhaustive, and the trial court’s inquiry should be a “flexible

1573. See, e.g., Alvarado v. Weinberger, 511 F.2d 1046, 1048–49 (1st Cir. 1975). Some cases

decided since the Daubert trilogy seem to reflect a tightening of the standard against which

expert qualifications are judged, a trend that may become more prominent in light of the

amendments to Rule 702. See, e.g., Kumho Tire Co. v. Carmichael, 526 U.S. 137, 156 (1999)

(“The trial court had to decide whether this particular expert had sufficient specialized

knowledge to assist the jurors ‘in deciding the particular issues in the case.’” (quoting 4 Joseph

McLaughlin, Weinstein’s Federal Evidence ¶ 702.05[1] (2d ed. 1998))); Smelser v. Norfolk S.

Ry., 105 F.3d 299, 303 (6th Cir. 1997) (court to examine “‘not the qualifications of a witness in

the abstract, but whether those qualifications provide a foundation for a witness to answer a

specific question’” (quoting Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir. 1994))).

Professor Edward Imwinkelried has suggested that the former liberality of the courts in

qualifying experts as only needing to have knowledge or skill beyond the average layperson is

disappearing in favor of a standard that requires a showing “that the witness has expertise highly

relevant to the precise issue before the court.” Edward J. Imwinkelried, An Unheralded Change,

Nat’l L.J., Feb. 5, 2001, at A10. Professor Imwinkelried argues that recent decisions reflect a

trend away from qualifying experts who are not specialists in the area relevant to the subject

matter of the testimony. Id. See, e.g., Berry v. Crown Equip. Corp., 108 F. Supp. 2d 743, 752–53

(E.D. Mich. 2000) (excluding testimony of plaintiff’s expert witness because he was not qualified

to render an opinion on defective forklift design).

1574. Daubert, 509 U.S. at 593–94 (1993).
Expert Scientific Evidence § 23.23

477

one,” consistent with the “permissive backdrop” of the Federal Rules.1575 The

committee note similarly states that there may be circumstances in which the

Daubert factors are inapplicable and other criteria more probative; however, in

each case the court is to use criteria to achieve the standards set forth in the

rule.1576 Once the judge determines that proposed scientific testimony is valid

(i.e., trustworthy or reliable), the inquiry turns to whether the evidence is

relevant to the facts of the case, or its “fit.”1577

Daubert dealt specifically with scientific expert testimony. In response to

the conflict among the lower courts as to Daubert’s reach, Kumho Tire clarified

that the gatekeeping obligation of Rule 702 applied not just to expert scientific

testimony but to all expert testimony: “This language makes no relevant

distinction between ‘scientific’ knowledge and ‘technical’ or ‘other specialized’

knowledge . . . Hence, as a matter of language, the Rule applies its reliability

standard to all ‘scientific,’ ‘technical,’ or ‘other specialized’ matters within its

scope.”1578 The Court further held that it was proper, where appropriate, to

apply the Daubert factors to nonscientific evidence, recognizing, however, that

other factors might be of greater assistance in light of the “many different

kinds of experts, and many different kinds of expertise.”1579 The Court expressly declined to establish a definitive list of factors that would apply to all

cases.1580 Instead, it remains for the district court to apply those factors it

deems appropriate in order to ensure that the expert “employs in the court1575. Id. at 593. “[Rule 702’s] overarching subject is the scientific validity—and thus the

evidentiary relevance and reliability—of principles that underlie a proposed submission.” Id. at

594–95. See also Heller v. Shaw Indus., Inc., 167 F.3d 146, 155 (3d Cir. 1999) (“[N]ot only must

each stage of the expert’s testimony be reliable, but each stage must be evaluated practically and

flexibly without bright-line exclusionary (or inclusionary) rules.”).

1576. Fed. R. Evid. 702 committee note.

1577. See, e.g., Clark v. Takata Corp., 192 F.3d 750, 757 (7th Cir. 1999) (noting that “an

expert does not assist the trier of fact in determining whether a product failed if he starts his

analysis based upon the assumption that the product failed (the very question he was called

upon to resolve)”).

1578. Kumho Tire, 526 U.S. at 147.

1579. Id. at 150. The Court cited to the amicus brief filed by the United States referencing a

wide variety of cases in which nonscientific expert testimony had been offered, from handwriting analysis, to agricultural practice, to attorney fee valuation. See also Elcock v. Kmart Corp.,

233 F.3d 734, 747 (3d Cir. 2000) (analogizing two of the Daubert factors in reviewing testimony

of vocational rehabilitation expert, noting “[v]ocational rehabilitation is a social science that

does not exactly mirror the fundamental precepts of the so-called harder sciences”); Ohio ex rel.

Montgomery v. Louis Trauth Dairy, Inc., 925 F. Supp. 1247, 1252 (S.D. Ohio 1996) (noting

reasoning and general framework of Daubert applied to economic and statistical evidence).

1580. Kumho Tire, 526 U.S. at 150–51.
§ 23.24 Manual for Complex Litigation, Fourth

478

room the same level of intellectual rigor that characterizes the practice of an

expert in the relevant field.”1581

23.24 Opinions and Conclusions Under Daubert

One issue that has caused debate is the appropriate degree of inquiry into

the conclusions of an expert. In making the Daubert inquiry, some courts have

examined not only the appropriateness and reliability of the methodology used

by the expert,1582 but whether the expert’s conclusions are supported by the

methodology used.1583 The Daubert Court cautioned that the focus of the

inquiry under Rule 702 is not on the conclusions reached by the expert but on

the principles adduced and methodologies used.1584 Joiner, decided several

years later, blurred Daubert’s distinction between methodology and conclusion, stating that “conclusions and methodology are not entirely distinct from

one another.”1585 Indeed, Joiner implies that to find an expert’s proffered

testimony reliable, the district court must not only conclude the expert

followed proper methodology for the science, but also that the conclusion

reached was supported by the methodology used. The Joiner Court noted that

“nothing in either Daubert or the Federal Rules of Evidence requires a district

1581. Id. at 151–53.

1582. Allen v. Pa. Eng’g Corp., 102 F.3d 194 (5th Cir. 1996).

1583. Jahn v. Equine Servs., PSC, 233 F.3d 382, 393 (6th Cir. 2000) (expert methodology can

be reliable even where matter might be in debate because of other testimony); Smith v. Ford

Motor Co., 215 F.3d 713, 720–21 (7th Cir. 2000) (district court abused discretion in relying on

single, potentially irrelevant criterion in finding expert conclusions were based on unreliable

methodologies, did not consider other factors, and failed to explain connection between factor

selected by court and reliability under the circumstances); McCullock v. H.B. Fuller Co., 61 F.3d

1038, 1043–44 (2d Cir. 1995); United States v. Martinez, 3 F.3d 1191, 1197–98 (8th Cir. 1993);

Spearman Indus., Inc. v. St. Paul Fire & Marine Ins. Co., 128 F. Supp. 2d 1148, 1150 (N.D. Ill.

2001) (court’s gatekeeping function focuses on methodology, leaving the correctness of expert’s

conclusion or soundness of facts on which conclusion is based to fact-finder).

1584. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 595 (1993). See NutraSweet Co. v.

X-L Eng’g Co., 227 F.3d 776, 788–89 (7th Cir. 2000) (“The district court did not abuse its

discretion in concluding that the common and official acceptance of photographic analysis made

it sufficiently reliable.”); Clark v. Takata Corp., 192 F.3d 750, 758–59 (7th Cir. 1999) (expert

opinion properly excluded where based only on experience or training with no scientific data or

supporting research material or other rigorous methodology).

1585. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). Justice Stevens, concurring in part

and dissenting in part in Joiner, questioned “When qualified experts have reached relevant

conclusions on the basis of an acceptable methodology, why are their opinions inadmissible?” Id.

at 154.
Expert Scientific Evidence § 23.24

479

court to admit opinion evidence which is connected to existing data only by

the ipse dixit of the expert.”1586

The amendment to Rule 702, which became effective after Daubert, Joiner,

and Kumho Tire, provides some guidance. The rule contemplates, among other

things, that in making a reliability determination, the court will “scrutinize not

only the principles and methods used by the expert, but also whether those

principles and methods have been properly applied to the facts of the case.”1587

In light of Joiner and Rule 702, Daubert’s caution against inquiring into the

expert’s conclusion appears to have lost some of its authority, although the

degree to which the conclusion must be supported by the methodology and

supporting reasoning remains unclear.1588 Where the expert’s conclusion is

drawn from a reliable methodology, however, the correctness of that conclusion is still an issue for the finder of fact. The original intent of Rule 702 in

1975 was to liberalize, not restrict, the admission of expert evidence.1589

Accordingly, a judge must be cognizant of the constraints imposed by the

Seventh Amendment and not preclude the jury from hearing an opinion that,

although in the minority, is nonetheless responsibly grounded in the science

and reliable even if the judge does not believe the conclusion to be “correct.”1590 Presumably, cross-examination and presentation of contrary evidence

by the opposing party, as suggested in Daubert, would identify for the jury the

shakiness of the foundation on which the conclusion is based.

1586. Id. at 146.

1587. Fed. R. Evid. 702 committee note. See, e.g., Pride v. BIC Corp., 218 F.3d 566, 578 (6th

Cir. 2000) (excluding testimony where, among other things, experts failed to timely conduct

replicable experiments); Moore v. Ashland Chem., Inc., 151 F.3d 269, 279 (5th Cir. 1998) (where

wide analytical gap existed between expert opinion and scientific knowledge, opinion would be

excluded as unreliable).

1588. Ruiz-Troche v. Pepsi Cola of P.R., 161 F.3d 77, 81 (1st Cir. 1998) (“[W]hile methodology remains the central focus of a Daubert inquiry, this focus need not completely pretermit

judicial consideration of an expert’s conclusions.”).

1589. See Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir. 1999) (courts

should be mindful of the intent to liberalize the introduction of expert testimony while also

recognizing the potential of expert witnesses to “‘be both powerful and quite misleading’”

(quoting Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 595 (1993))).

1590. See, e.g., Bonner v. ISP Techs., Inc., 259 F.3d 924, 929 (8th Cir. 2001) (evidence should

be admitted where there are good grounds for the expert’s conclusions, even though the judge

may believe there are better grounds for alternative conclusions); Jahn v. Equine Servs., PSC, 233

F.3d 382, 391 (6th Cir. 2000) (district court improperly weighed testimony of expert against

pathologist testimony in finding expert’s opinion suspect).
§ 23.25 Manual for Complex Litigation, Fourth

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23.25 The Daubert “Fit” Test

Rule 702 has always required that expert testimony “assist the trier of fact”

to understand evidence or resolve issues in the case, and the second prong of

the Daubert test reiterates the necessity of such a determination. The Daubert

Court discussed this inquiry as one of relevance, noting that if “it is not always

obvious, and scientific validity for one purpose is not necessarily scientific

validity for other, unrelated purposes.”1591 Since Daubert, however, courts have

differed on their interpretation of “fit” in assessing expert scientific evidence.

This disagreement has turned in part on whether the inquiry under Rule 702

looks only at the admissibility of the expert evidence (whether it is reliable and

relevant) separate from any inquiry into its sufficiency.1592 In some cases the

courts have excluded expert testimony as lacking relevance where it was

insufficient to prove the matter for which the party sought its introduction.1593

Other courts have held that the evidence need only meet a low threshold of

“relevance” to be admissible.1594 These decisions limit the trial court, once the

methodology underlying expert testimony is found to be appropriate or

reliable, to determining whether the testimony is pertinent to an issue in the

case in order to be admissible.1595 Courts adhering to this latter view have

1591. Daubert, 509 U.S. at 591. See also Amorgianos v. Nat’l R.R. Passenger Corp., 137 F.

Supp. 2d 147 (E.D.N.Y. 2001).

1592. See, e.g., In re Joint E. & S. Dists. Asbestos Litig., 52 F.3d 1124, 1132 (2d Cir. 1995)

(stating that admissibility is a threshold inquiry as to whether a certain piece of evidence ought

to be admitted at trial, whereas a “sufficiency inquiry, which asks whether the collective weight

of a litigant’s evidence is adequate to present a jury question, lies further down the litigational

road”).

1593. See, e.g., Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319–20 (7th Cir. 1996) (expert

opinion excluded where it failed to establish how nicotine overdose can precipitate a heart attack

in person with heart disease). See also Blevins v. New Holland N. Am., Inc., 128 F. Supp. 2d 952,

957–59 (W.D. Va. 2001) (seemingly conflating both admissibility and sufficiency inquiries). For

example, in some toxic tort cases, if the expert’s evidence, considered by itself, did not meet the

legal standard of causation, it would be inadmissible as lacking relevance. See, e.g., Wheat v.

Sofamor S.N.C., 46 F. Supp. 2d 1351, 1357–58 (N.D. Ga. 1999) (where expert could not state to

reasonable degree of medical certainty as to either a general or specific causal relationship

between product and harm, testimony “is unhelpful and irrelevant”).

1594. See, e.g., Adams v. Ameritech Servs., Inc., 231 F.3d 414, 425 (7th Cir. 2000) (“First, the

question before us is not whether the reports proffered by the plaintiffs prove the entire case; it is

whether they were prepared in a reliable and statistically sound way, such that they contained

relevant evidence that a trier of fact would have been entitled to consider.”); Md. Cas. Co. v.

Therm-O-Disc, Inc., 137 F.3d 780, 783 (4th Cir. 1998) (“prescribing fluid and general standards

for the admission of scientific testimony”); Ambrosini v. Labarraque, 101 F.3d 129, 135–36

(D.C. Cir. 1996).

1595. Smith v. Ford Motor Co., 215 F.3d 713, 719 (7th Cir. 2000).
Expert Scientific Evidence § 23.25

481

maintained that litigants need only “demonstrate by a preponderance of the

evidence that their opinions are reliable,”1596 and they are not required to

“prove their case twice . . . .”1597 Under this view of the fit test, an expert’s

testimony, even though insufficient to prove causation when viewed alone,

would be admissible for consideration by the jury collectively with all the other

evidence in the case.1598

In addition to the conflict in the circuits on the proper interpretation of

Daubert’s second prong, the fit test has also been used to exclude evidence

based on the nature of the science at issue or the degree to which the science

sought to be introduced differs from the facts at issue in the case.1599 In some

instances, the very unreliability of the expert testimony has supported the

conclusion that the evidence therefore did not fit the case.1600 Daubert articulated the relevant inquiry as whether the testimony offered is “sufficiently tied

to the facts of the case that it will aid the jury in resolving a factual dispute,”1601

1596. See City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 562–63 (11th Cir. 1998).

1597. In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 744 (3d Cir. 1994); see, e.g., In re TMI

Litig., 193 F.3d 613, 665 (3d Cir. 1999) (quoting In re Paoli, 35 F.3d at 744). The TMI court

noted that there was a distinction between the evidentiary requirement of reliability and the

higher standard of whether the expert’s conclusions were correct on the merits, commenting,

“The distinction is indeed significant as it preserves the fact finding role of the jury.” In re TMI

Litig., at 665 n.90.

1598. See, e.g., Bonner v. ISP Techs., Inc., 259 F.3d 924, 929 (8th Cir. 2001) (“[N]either Rule

702 nor Daubert requires that an expert opinion resolve an ultimate issue of fact to a scientific

absolute in order to be admissible.”); City of Tuscaloosa, 158 F.3d at 565 (“As circumstantial

evidence, McClave’s data and testimony need not prove the plaintiffs’ case by themselves; they

must merely constitute one piece of the puzzle that the plaintiffs endeavor to assemble before the

jury.”).

1599. See, e.g., Savage v. Union Pac. R.R. Co., 67 F. Supp. 2d 1021, 1035–39 (E.D. Ark. 1999)

(excluding expert testimony where no scientific evidence was introduced as to whether the

chemicals to which plaintiff was exposed were implicated in the type of cancer suffered by

plaintiff). One issue of significance is the threshold necessary to maintain a science-based claim.

This conflict is probably most prominent in mass and toxic tort cases, where the ability to prove

causation typically relies on inferences and hypotheses about an unknown causal mechanism,

but arises in other areas as well. See Michael D. Green et al., Reference Guide on Epidemiology

[hereinafter Epidemiology], in Reference Manual on Scientific Evidence 333–400 (Federal

Judicial Center, 2d ed. 2000).

1600. See, e.g., Bourne v. E.I. DuPont De Nemours & Co., 189 F. Supp. 2d 482, 499 (S.D. W.

Va. 2002) (finding methodologies used by experts in extrapolating from animal studies to

humans was unsound and therefore “a poor ‘fit’ for the facts of the case”).

1601. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 591 (1993) (quoting United

States v. Downing, 753 F.2d 1224, 1242 (3d Cir. 1985)). But see Mattis v. Carlon Elec. Prods., 114

F. Supp. 2d 888, 895 (D.S.D. 2000) (examining whether testimony demonstrates level of

exposure hazardous to humans and plaintiff’s actual level of exposure in terms of “fit” under

Daubert).
§ 23.26 Manual for Complex Litigation, Fourth

482

with the determination as to what constitutes a “sufficient” relationship clearly

left to judicial discretion.1602

23.26 The Scope of Appellate Review

Joiner addressed the scope of the district court’s discretion in applying

Rule 702. The Court held that the standard of review of evidentiary rulings by

the district court, including rulings pursuant to Rule 702, is abuse of discretion.1603 Kumho Tire clarified the extent of the trial court’s discretion, holding

that the abuse-of-discretion standard applied not just to the ultimate conclusion on admissibility, but to all of the findings on admissibility. Thus the

district court has “considerable leeway in deciding in a particular case how to

go about determining whether particular expert testimony is reliable.”1604 This

includes determinations on the best way to proceed as well as what factors are

reasonable measures of reliability of the particular expert testimony proffered.1605 Kumho Tire rejected any suggestion that specific criteria must be

1602. See, e.g., Textron, Inc. ex rel. Homelite Div. v. Barber-Colman Co. (Textron I), 903 F.

Supp. 1546, 1558 (W.D.N.C. 1995) (The court rejected expert testimony that relied on studies of

household solid waste, concluding that such substances were hazardous where the expert was

unable to demonstrate that the “studies relied upon [were] sufficiently similar to the households

connected to Burlington’s wastewater system to merit comparison.”). See also Mitchell v.

Gencorp., Inc., 165 F.3d 778, 782 (10th Cir. 1999) (affirming exclusion of expert testimony as

unreliable: “[W]ithout scientific data supporting their conclusions that chemicals similar to

benzene caused the same problems as benzene, the analytical gap in the expert’s testimony is

simply too wide . . . .”); Bradley v. Armstrong Rubber Co., 130 F.3d 168, 176–78 (5th Cir. 1997)

(court considering admissibility under Rule 703 found expert opinion could be properly

excluded as irrelevant where facts on which opinion was based were wrong); Textron, Inc. ex rel.

Homelite Div. Co. v. Barber-Colman Co. (Textron II), 903 F. Supp. 1558, 1568–69 (W.D.N.C.

1995).

1603. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 142 (1997). A de novo standard of review

applies, however, to the initial inquiry into whether the district court properly followed

Daubert’s framework. See Walker v. Soo Line R.R. Co., 208 F.3d 581, 590 (7th Cir. 2000) (“We

review de novo ‘whether the district court properly followed the framework set forth in

Daubert.’” (quoting United States v. Hall, 165 F.3d 1095, 1101 (7th Cir. 1999))); United States v.

Call, 129 F.3d 1402, 1405 (10th Cir. 1997).

1604. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999).

1605. Id. at 152–53. See also Quiet Technology DC-8, Inc. v. Hurel-Dubois UK Ltd., 326

F.3d 1333 (11th Cir. 2003) (holding that (1) witness qualified as an expert by virtue of extensive

education, training, and experience; (2) expert’s methods and results were discernible and

rooted in real science, and therefore were empirically testable; and (3) expert’s testimony was

relevant and would assist the jury); Bourelle v. Crown Equip. Corp., 220 F.3d 532, 537–38 (7th

Cir. 2000) (district court did not abuse its discretion in excluding testimony of expert who failed

to test or observe vehicle, conduct computer analysis, or otherwise satisfy Daubert); Clay v. Ford

Motor Co., 215 F.3d 663, 668 (6th Cir. 2000) (“The District Court, in its discretion, could have
Expert Scientific Evidence § 23.26

483

applied to certain types of expert testimony;1606 however, Justice Scalia emphasized in a concurring opinion that although the Daubert factors “are not holy

writ, in a particular case the failure to apply one or another of them may be

unreasonable, and hence an abuse of discretion.”1607

In addition, the Supreme Court in Weisgram v. Marley Co.

1608 resolved any

uncertainty surrounding the scope of appellate courts’ authority to enter

judgment as a matter of law under Federal Rule of Civil Procedure 50 where

expert testimony has been improperly admitted. The Court held that an

appellate court, upon concluding that the district court abused its discretion in

admitting expert testimony at trial, has the authority to overturn a jury verdict

and enter judgment as a matter of law where the exclusion of the evidence

renders the proof legally insufficient.1609 The Court commented that “[s]ince

Daubert, parties relying on expert evidence have had notice of the exacting

standards of reliability such evidence must meet. It is implausible to suggest,

post-Daubert, that parties will initially present less than their best expert

evidence in the expectation of a second chance should their first try fail.”1610

decided that [the expert’s] failure to test his theories went to the weight of his testimony

regarding defects in the Bronco II, not to its admissibility.”).

1606. “[W]e can neither rule out, nor rule in, for all cases and for all time the applicability of

the factors mentioned in Daubert, nor can we now do so for subsets of cases categorized by

category of expert or by kind of evidence. Too much depends upon the particular circumstances

of the particular case at issue.” 526 U.S. at 150. The Court also rejected any interpretation of

Rule 702 that would “[map] certain kinds of questions to certain kinds of experts.” Id. at 151.

1607. Id. at 159 (Scalia, J., concurring). See Black v. Food Lion, Inc., 171 F.3d 308, 311–12

(5th Cir. 1999) (stating “[I]n the vast majority of cases, the district court first should decide

whether the [Daubert factors] are appropriate . . . . [It] then can consider whether other factors

. . . are relevant to the case at hand,” and suggesting failure to apply Daubert factors may be an

abuse of discretion). The danger of establishing criteria that must be applied is that the validity

of the science turns on being shoehorned into the correlative criteria, regardless of whether the

science involved was amenable to such a qualification, rather than being measured against

scientific work outside the courtroom.

1608. 528 U.S. 440 (2000).

1609. Id.

1610. Id. at 455 (citations and footnote omitted). Although the Court’s decision in Weisgram

and its earlier decision in Neely v. Martin K. Elby Construction Co. recognized that the authority

to enter judgment on appeal was afforded by Rule 50, the Court did caution that in exercising its

discretion, the court of appeals should take into consideration the rights of the verdict winner as

well as the trial judge’s firsthand knowledge of the case. “‘Part of the Court’s concern has been to

protect the rights of the party whose jury verdict has been set aside on appeal and who may have

valid grounds for a new trial, some or all of which should be passed upon by the district court,

rather than the court of appeals, because of the trial judge’s first-hand knowledge of witnesses,

testimony, and issues—because of his ‘feel’ for the overall case.’” Weisgram, 528 U.S. at 451

(quoting Neely v. Martin K. Elby Construction Co., 386 U.S. 317, 325 (1967)).
§ 23.27 Manual for Complex Litigation, Fourth

484

Subsequent circuit court decisions, following the rationale in Weisgram,

have entered judgment under Rule 50 where expert testimony was admitted in

error.1611 Accordingly, the Daubert trilogy, together with Weisgram, clearly

indicates not only the significance of the gatekeeping inquiry, but the potential

prejudice to a party should that inquiry be superficial or inadequate and expert

testimony subsequently deemed unreliable and therefore inadmissible on

appeal. At the same time, parties are placed on notice that borderline expert

testimony may be excised on appeal to their detriment. One possible effect of

Weisgram is that parties might attempt to identify extra experts to minimize

the negative impact on their case should an appellate court find the testimony

of one expert was erroneously admitted—with extra experts, the subsequent

excision of one would not be fatal to the verdict. Such an approach would

result in increased time and costs, both to the parties as well as the trial court,

and the court should discourage multiple expert identification.

23.27 Emerging Issues in the Use of Scientific Evidence

.271 The Validity of Toxicological Evidence Versus Epidemiological Evidence 485

.272 Aggregation of Scientific Evidence 485

.273 Clinical Medical Judgment 487

.274 Research as a Result of Litigation 489

As amended, Federal Rule of Evidence 702 establishes general standards

for the judge to use in determining the reliability of expert testimony. Rule 702

not only requires that the testimony be relevant, but also that it be based on

sufficient facts or data, that it be the product of reliable principles and methods, and that the witness applied those principles and methods reliably to the

facts of the case. The rule contemplates judicial analysis of various factors,

including but not limited to those set forth in Daubert, to assess whether the

proposed testimony meets these standards. However, the court should avoid

interpreting these factors (and others deemed appropriate) so rigidly that valid

science is excluded because it does not neatly fit within the confines of the

criteria selected by the court as indicia of reliability.

There are several issues that have emerged as the district courts have

wrestled with their role as gatekeeper, including the issues discussed below.

1611. See, e.g., Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1057 (8th Cir. 2000)

(“It cannot be said that the verdict would have been the same without the expert testimony, and

its admission affected Brunswick’s substantial rights.”).
Expert Scientific Evidence § 23.272

485

23.271 The Validity of Toxicological Evidence Versus Epidemiological

Evidence

The courts have had little difficulty admitting expert testimony based on

epidemiological studies.1612 In order for toxicological studies to be admissible

to prove causation in humans, however, a number of courts have required that

sufficient grounds exist to support the extrapolation from animals to humans,

“just as the methodology of the studies must constitute good grounds to reach

conclusions about the animals themselves.”1613 As a result, and particularly in

cases where either no epidemiological evidence is offered by the proposing

party or epidemiological evidence is unavailable, some courts have been

inclined to exclude toxicological evidence based on lack of “fit.”1614

23.272 Aggregation of Scientific Evidence

Another concern is whether the aggregation of scientific evidence undermines the reliability of expert testimony based on such evidence. For example,

epidemiological studies are often small and lack sufficient independent

1612. Christophersen v. Allied-Signal Corp., 939 F.2d 1106, 1115 (5th Cir. 1991) (“[O]nly

when . . . critically inaccurate or incomplete, as determined by what other experts would or

would not be willing to base opinions upon, would the facts and data lack the necessary

requisites of Rule 703.”); DeLuca ex rel. Deluca v. Merrell Dow Pharms., Inc., 911 F.2d 941, 953

(3d Cir. 1990), aff’d, 8 F.3d 778 (3d Cir. 1993); In re Agent Orange Prod. Liab. Litig., 611 F.

Supp. 1223, 1240 (E.D.N.Y. 1985), aff’d, 818 F.2d 187 (2d Cir. 1987); Cook v. United States, 545

F. Supp. 306, 307–16 (N.D. Cal. 1982) (whether swine flue vaccine led to Guillain-Barre disease).

See also Magistrini v. One Hour Martinizing Dry Cleaning, 180 F. Supp. 2d 584, 593 (D.N.J.

2002) (“[A]nimal bioassays are of limited use in determining whether a particular chemical

causes a particular disease, or type of cancer, in humans.”); Bourne v. E.I. DuPont De Nemours,

189 F. Supp. 2d 482, 496 (S.D. W. Va. 2002) (noting jurisdictions where extrapolating human

teratogenicity from in vivo animal studies and in vivo test found unreliable). But see Villari v.

Terminix Int’l, Inc., 692 F. Supp. 568, 570–71 (E.D. Pa. 1988) (finding substantial portion of

scientific community relied on animal studies of the type offered by plaintiff to assess human

health risks). See also Brock v. Merrell Dow Pharms., Inc., 874 F.2d 307, 313 (5th Cir.) (“This

circuit has previously realized the very limited usefulness of animal studies when confronted

with questions of toxicity.”), modified, 884 F.2d 166, 167 (5th Cir. 1989) (court changing its

holding that the plaintiffs’ case was undermined by “the lack of conclusive epidemiological

proof” to a “failure to present statistically significant epidemiological proof”).

1613. In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 743 (3d Cir. 1994).

1614. See, e.g., Allen v. Pa. Eng’g Corp., 102 F.3d 194, 197 (5th Cir. 1996) (“In the absence of

scientifically valid reasoning, methodology and evidence supporting these experts’ opinions, the

district court properly excluded them.”); Turpin v. Merrell Dow Pharms., Inc., 959 F.2d 1349,

1360–61 (6th Cir. 1992).
§ 23.272 Manual for Complex Litigation, Fourth

486

statistical significance to support definitive conclusions.1615 Furthermore,

several studies may differ or disagree in whether or not an association is found

or in the magnitude of the association.1616 As a result, a formal technique

(“meta-analysis”) was developed to aggregate these studies, which would

derive a single figure to represent the totality of the studies reviewed.1617 At

issue is whether this technique renders the conclusion “unreliable” for purposes of Daubert if the individual studies alone would not satisfy a Daubert

inquiry. There are valid concerns with the aggregation of empirical studies

under these circumstances.1618 At the same time, the mere fact that the studies

have been aggregated to make an assessment should not automatically disqualify the conclusion or serve as the basis for excluding epidemiological

evidence.1619

Questions regarding the reliability of aggregated evidence can arise in more

informal contexts as well, such as where the expert considers several studies,

none of which would support the expert’s conclusions by itself, but when taken

together form the basis for the proffered opinion.1620 This “weight of the

evidence” methodology was rejected as unreliable by the district court in

Joiner, at least as presented by the proffered experts, but the court of appeals

1615. See, e.g., Moore v. Ashland Chem., 151 F.3d 269, 281 (5th Cir. 1998) (en banc)

(Dennis J., dissenting) (noting that “[t]he quantity of persons who sustain this type of exposure

was simply too small for a plaintiff to be able to provide epidemiological, animal testing or other

hard scientific evidence linking the particular chemical compound to reactive airways disease”).

1616. Epidemiology, supra note 1599, at 380. The criteria used to determine whether an

observed association is causal are known as the Hill criteria, after their author Sir Austin

Bradford Hill. For a list of these criteria, see, e.g., Magistrini, 180 F. Supp. 2d at 592–93 (D.N.J.

2002).

1617. “In meta-analysis, studies are given different weights in proportion to the sizes of their

study populations and other characteristics.” Epidemiology, supra note 1599, at 380.

1618. Id. In many instances, the “differences among the individual studies included in the

meta-analysis and the reasons for the differences are important in themselves and need to be

understood.” Id. at 381. And, as meta-analysis generates a single estimate of risk, it could “lead

to a false sense of security regarding the certainty of the estimate.” Id. at 381 (citing John C.

Bailar III, Assessing Assessments, 277 Science 528, 529 (1997)).

1619. See id. at 381 (discussing criteria that may be more appropriate in assessing the

reliability of meta-analysis).

1620. See Brasher v. Sandoz Pharms. Corp., 160 F. Supp. 2d 1291, 1296 (N.D. Ala. 2001)

(noting that although evidence of animal studies, medical texts, and a limited number of case

reports do not “establish conclusively that Parlodel can cause [injury], taken together they

present a compelling picture, one which can support a scientific inference”). A variation of this

approach would occur where information from different kinds of studies across different fields

is considered in reaching the expert’s conclusion. Supreme Court’s Trilogy, supra note 1560, at

33.
Expert Scientific Evidence § 23.273

487

found the approach scientifically acceptable.1621 Justice Stevens, in a concurring

and dissenting opinion in Joiner, commented that “[i]t is not intrinsically

‘unscientific’ for experienced professionals to arrive at a conclusion by weighing all available scientific evidence—this is not the sort of ‘junk science’ with

which Daubert was concerned.”1622 Some courts, however, have required

experts to use a “weight of the evidence” methodology to demonstrate how

each study or piece of evidence was valued by the expert and the methodological basis upon which the expert may have discounted some pieces of evidence

while relying more heavily on others in reaching his or her conclusion.1623 The

uncertainty surrounding the reliability of aggregated studies or evidence is

inextricably tied to the debate on the distinction between methodology and

conclusion,1624 as well as the disagreement among the courts on the admissibility versus the sufficiency of expert evidence under the second prong of

Daubert.

1625

23.273 Clinical Medical Judgment

Many tort cases involve the introduction of expert evidence through the

use of clinical treating physicians, relying on a methodology referred to as

1621. Joiner v. Gen. Elec. Co., 864 F. Supp. 1310, 1320–26 (N.D. Ga. 1994), rev’d, 78 F.3d

524, 532 (11th Cir. 1996) (according to the Eleventh Circuit, “opinions of any kind are derived

from individual pieces of evidence, each of which by itself might not be conclusive, but when

viewed in their entirety are the building blocks of a perfectly reasonable conclusion, one reliable

enough to be submitted to a jury along with the tests and criticisms cross-examination and

contrary evidence would supply”). See also Gen. Elec. Co. v. Joiner, 522 U.S. 136, 153–54 (1997)

(Stevens, J., concurring in part and dissenting in part) (noting approvingly the court of appeal’s

acceptance of the “‘weight of the evidence’ methodology”). Where the data permit a reasonable

scientist to make a probabilistic statement with regard to effect, even though lacking statistical

significance, these judgments should not be automatically discarded as legally insufficient simply

because of epistemological or proof problems as long as they can be expressed with a level of

confidence that meets or exceeds the demands of Federal Rule of Evidence 104(a). The court

should allow consideration of all methodically sound studies with the focus on whether the

studies reliably permit the inference sought to be drawn.

1622. 522 U.S. at 153. In Joiner, the district court had examined various animal studies

offered by the plaintiff and found that none of them supported the experts’ conclusions that the

plaintiff’s cancer was caused by PCB exposure. The majority opinion did not specifically address

whether the experts properly could have aggregated these studies to reach their conclusion that

there was a causal relationship between the plaintiff’s cancer and PCB exposure. Rather, the

Court pointed to Joiner’s failure to explain “how and why the experts could have extrapolated

their opinions from these seemingly far-removed animal studies . . . .” Id. at 144.

1623. See, e.g., Magistrini v. One Hour Martinizing Dry Cleaning, 180 F. Supp. 2d 584, 602

(D.N.J. 2002).

1624. See supra section 23.24.

1625. See id.
§ 23.273 Manual for Complex Litigation, Fourth

488

“differential diagnosis” to establish a causal relationship between the plaintiff’s

harm and an allegedly injurious substance.1626 Differential diagnosis seeks to

establish specific causation by ruling out other causative factors, leaving the

exposure to the harmful agent as the likely explanation for plaintiff’s harm.

Although a number of judges have permitted expert testimony based on

differential diagnosis, others have held such testimony to be inadmissible

where the expert was unable to show general causation or otherwise rule out

alternative causes that might also explain all of the plaintiff’s symptoms.1627

This has hampered the ability of plaintiffs to prove causation through clinical

physicians in cases where, for example, the relevant science has not clearly

established a known etiology for the disease in question.1628 The apparent split

in approach is based in part on a disagreement regarding the degree to which

the expert must rely on more than the traditional methodology of clinical

medical reasoning to support his or her opinion, and the extent of the court’s

inquiry into the evidence forming the basis for the clinical medical judg1626. For a discussion of medical testimony and differential diagnosis, see Mary Sue Henifin

et al., Reference Guide on Medical Testimony [hereinafter Medical Testimony], in Reference

Manual on Scientific Evidence 441–84 (Federal Judicial Center, 2d ed. 2000).

1627. Compare Glastetter v. Novartis Pharms. Corp., 252 F.3d 986 (8th Cir. 2001) (finding

differential diagnosis presumptively admissible and only those diagnoses that are scientifically

invalid should be excluded), and Heller v. Shaw Indus., Inc., 167 F.3d 146, 154–57 (3d Cir. 1999)

(discussing the different components to differential analysis and stating, where properly done,

that it will support expert medical opinion on causation), and McCullock v. H.B. Fuller Co., 61

F.3d 1038, 1044 (2d Cir. 1995) (differential analysis requires “listing possible causes, then

eliminating all causes but one”), with Raynor v. Merrell Pharms., Inc., 104 F.3d 1371, 1374–76

(D.C. Cir. 1997) (where contradictory epidemiological evidence was “overwhelming” relating to

Bendectin, and expert opinion on causation based in part on differential diagnosis was

inadmissible). See also Mattis v. Carlon Elec. Prods., 114 F. Supp. 2d 888, 893 (D.S.D. 2000)

(noting that a number of cases have accepted differential diagnosis as reliable, but that

“[d]ifferential diagnosis of RADS . . . have not fared so well in the federal courts”); Gary

Sloboda, Differential Diagnosis or Distortion?, 35 U.S.F. L. Rev. 301 (2001) (discussing differential

diagnosis and issues of causation).

1628. See, e.g., Mitchell v. Gencorp, Inc., 165 F.3d 778, 781 (10th Cir. 1999); Black v. Food

Lion, Inc., 171 F.3d 308, 314 (5th Cir. 1999); Allen v. Pa. Eng’g Corp., 102 F.3d 194, 199 (5th

Cir. 1996); Wright v. Willamette Indus., Inc., 91 F.3d 1105, 1106 (8th Cir. 1996) (plaintiffs have

burden of proving “the levels of exposure that are hazardous to human beings generally as well

as plaintiff’s actual level of exposure”); Siharth v. Sandoz Pharm. Corp., 131 F. Supp. 2d 1347

(N.D. Ga. 2001). But see Meister v. Med. Eng’g Corp., 267 F.3d 1123 (D.C. Cir. 2001) (overwhelming epidemiological evidence finding no causal relationship between breast implants and

scleroderma overcame plaintiff’s evidence to the contrary based on asserted differential

diagnosis). See also Supreme Court’s Trilogy, supra note 1560, at 26; Joseph Sanders & Julie

Machal-Fulks, The Admissibility of Differential Diagnosis Testimony to Prove Causation in Toxic

Tort Cases: The Interplay of Adjective and Substantive Law, 64 Law & Contemp. Probs. 107

(2001); Sloboda, supra note 1627.
Expert Scientific Evidence § 23.274

489

ment.1629 A lack of epidemiological or other studies demonstrating an objective,

scientifically established association between the disease and the causative

agent has led some circuits to reject some clinical medical testimony as

unreliable.1630 However, all methodologically sound studies should be considered, with the focus on whether the studies reasonably permit the inference or

conclusion sought to be drawn. “While an epidemiological study may be the

best or ideal evidence, Daubert requires only that reliable evidence be presented . . . .”1631 It is unclear whether Kumho Tire’s admonition that no specified set of factors will apply to every case, and that each case must be considered in light of the circumstances, will affect how the circuits consider clinical

medical evidence.1632

23.274 Research as a Result of Litigation

Another area of concern is whether an inordinate focus on independent

research and peer review as indicia of reliability may lead to the exclusion of

research conducted as a result of litigation, even though the science is valid.

The committee note to Rule 702 offers as a possible relevant factor whether the

1629. Westberry v. Gislaved Gummi AB, 178 F.3d 257, 264 (4th Cir. 1999) (evidence of

exposure and temporal proximity to plaintiff’s injury was sufficient to “rule in” talc as a causal

agent, even though physician had no scientific literature upon which to rely); Ruiz-Troche v.

Pepsi Cola of P.R., 161 F.3d 77, 86 (1st Cir. 1998) (finding district court had improperly

imposed requirement that expert be able to “declare that a precise quantity of cocaine in the

bloodstream produces an equally precise degree of impairment”); Brasher v. Sandoz Pharms.

Corp., 160 F. Supp. 2d 1291 (N.D. Ala. 2001) (finding that “animal studies, the medical

literature reviews, the ADRs reported to the FDA, and the ‘general acceptance’ of the association

between stroke and Parlodel, reflected in several neurology and toxicology textbooks and

treatises” constituted reliable evidence on which a conclusion could be drawn); Hollander v.

Sandoz Pharms. Corp., 95 F. Supp. 2d 1230 (W.D. Okla. 2000) (lack of controlled epidemiological studies reflecting association between stroke and Parlodel, reliance on anecdotal case reports,

and the dissimilarity of the animal studies and the experts’ methodologies failed to establish

reliability of methods used by plaintiffs’ experts); Savage v. Union Pac. R.R. Co., 67 F. Supp. 2d

1021, 1033–34 (E.D. Ark. 1999) (expert testimony excluded where plaintiff introduced no

evidence of the nature of creosote exposure necessary to lead to basal cell carcinoma, the level of

exposure needed, or the level of his own exposure with any degree of scientific certainty).

Compare Heller v. Shaw Indus., Inc., 167 F.3d 146 (3d Cir. 1999), with Black v. Food Lion, Inc.,

171 F.3d 308 (5th Cir. 1999), and Moore v. Ashland Chems., Inc., 151 F.3d 269 (5th Cir. 1998).

1630. See, e.g., Hollander v. Sandoz Pharms. Corp., 95 F. Supp. 2d 1230 (W.D. Okla. 2000);

Black, 171 F.3d at 313–14. But see Nat’l Bank of Commerce v. Associated Milk Producers, Inc.,

191 F.3d 858, 864 (8th Cir. 1999) (affirming exclusion of expert testimony based on differential

diagnosis in absence of scientific studies correlating aflatoxin M-1 with laryngeal cancer).

1631. Brasher, 160 F. Supp. 2d at 1298.

1632. For an example of an opinion issued after Kumho Tire, see Black v. Food Lion, Inc., 171

F.3d 308 (5th Cir. 1999).
§ 23.274 Manual for Complex Litigation, Fourth

490

expert is proposing to testify about matters growing naturally and directly out

of research independent of litigation, and the Ninth Circuit on remand in

Daubert stated “If the proffered expert testimony is not based on independent

research, the party proffering it must come forward with other objective,

verifiable evidence that the testimony is based on ‘scientifically valid principles.’”1633 The Supreme Court in Daubert said that a corollary indicator of

reliability could be whether the research had been subject to peer review or

published.1634 Although in some instances a failure to satisfy these two criteria

may justifiably call into question the reliability of the science, in other cases

there may be a dearth of scientific evidence as to the existence of a causal

relationship between exposure to a chemical, product, or contaminant and

adverse health effects, because the relationship has not been sufficiently tested

or because the substance is new.1635 The Court noted in Kumho Tire that the

“particular application at issue may never previously have interested any

scientist,”1636 or the issue may not have been one to generate any interest

among editors of scientific publications. In such cases there are no established

studies on which experts can rely, and often it is the harm which gave rise to

the litigation that spurred whatever research exists.1637 Such research may be

both credible and reliable, even though it has neither grown “naturally and

directly out of research independent of litigation,”1638 nor yet been published.

Rigid application of these criteria might preclude a party’s ability to prove

causation simply because the question as to whether there was a causal relationship had never arisen before.

1633. Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1317–18 (9th Cir. 1995).

1634. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 593–94 (1993); Ruiz-Troche, 161

F.3d at 84 (“The publication of these pieces and their exposure to peer review serve as independent indicia of the reliability of the . . . technique . . . [and] also demonstrate a measure of

acceptance of the methodology within the scientific community.”).

1635. See Wendy E. Wagner, The Science Charade in Toxic Risk Regulation, 95 Colum. L. Rev.

1613 (1995).

1636. 526 U.S. at 151. See, e.g., Lauzon v. Senco Prods. Inc., 270 F.3d 681, 691 (8th Cir.

2001) (lack of peer reviewed information on dangers associated with pneumatic nailers a result

of the fact that only recently had there been an increase in popularity of pneumatic-fire nailers

and concomitant increase in injuries).

1637. The Bendectin litigation seems to provide an example of research spurred by litigation.

See Joseph Sanders, The Bendectin Litigation: A Case Study in the Life Cycle of Mass Torts, 43

Hastings L.J. 301 (1992). See also Bourne v. E.I. DuPont De Nemours, 189 F. Supp. 2d 482, 484

n.2 (S.D. W. Va. 2002) (parties engaged in studies of benomyl and its relationship to plaintiff’s

birth defects during pendency of case).

1638. Daubert, 43 F.3d at 1317.
Expert Scientific Evidence § 23.31

491

23.3 Case Management1639

.31 Preliminary Considerations in Assessing Expert Testimony 491

.32 The Initial Conference 494

.33 Disclosures 499

.34 Discovery Control and Management 503

.341 Discovery of Testifying Experts 503

.342 Discovery of Nontestifying Experts 504

.343 Discovery of Nonretained Experts 504

.344 Discovery of Court-Appointed Experts 505

.345 Use of Videotaped Depositions 505

.35 Motion Practice 506

.351 Initiating a Daubert Inquiry 507

.352 Timing of Challenges to Expert Testimony 508

.353 Handling a Challenge to Expert Testimony 509

.354 Summary Judgment 512

.36 Final Pretrial Conference 513

.37 Trial 514

23.31 Preliminary Considerations in Assessing Expert

Testimony

Although Kumho Tire clarified that the gatekeeping requirement extends

to “technical or other specialized knowledge” and reemphasized that the test

for determining reliability is a flexible one, nuances of Daubert and its proper

interpretation remain a subject of debate.1640 In ruling on the admissibility of

scientific evidence under the Daubert standard, and in light of the amendments

to Rule 702, the court must still consider the following questions:

What factors should apply to ensure the reliability of expert testimony? The

Daubert Court set out several factors as indicia of scientific reliability, but also

recognized that these factors might not be pertinent in every case. Rather,

different types of expert scientific evidence might require application of

different indicia of reliability.1641 Moreover, Kumho Tire did not set forth any

factors that would be more appropriate than others in assessing expert evi1639. Portions of the following subsections were adapted from and substantially incorporate

the text of Management of Expert Evidence, supra note 1545, at 39.

1640. 526 U.S. at 147 (quoting Fed. R. Evid. 702). See, e.g., Ned Miltenberg, Step Out of the

Fryeing Pan and into the Fire, and Out Back Again—or “Back to the Future,” 2 Ann. 2000 ATLACLE 2645, § I (2000) (“Although nearly a decade has passed since Daubert was decided, its

meaning is still sufficiently unclear that each year it inspires scores of precedent-setting

interpretations and new law review articles . . . . Thus, Daubert and its progeny have been the

subject of nearly 2,800 published opinions and 3,300 law review articles.”).

1641. See, e.g., City of Tuscaloosa v. Harcros Chem., Inc., 158 F.3d 548, 566 n.25 (11th Cir.

1998) (factors other than “testability” may have more bearing on methodologies employed by

economic and statistical experts).
§ 23.31 Manual for Complex Litigation, Fourth

492

dence that fell under the rubric of “technological or other specialized knowledge.”1642 The possible fields of such nonscientific evidence were simply

considered too diverse. As a practical matter, as it relates to testimony to which

the Daubert factors do not easily apply, the selection of criteria appropriate to

judge the reliability of a particular type of expert testimony will be a coordinated effort between the judge and the parties. Even nonscientific testimony,

however, must be measured against the standards reflected in the amendments

to Rule 702. Thus, underlying any Daubert inquiry is the manner or method by

which the court determines first the appropriate criteria necessary to fulfill its

gatekeeping role, and then how the testimony is judged against those criteria.

Commentators have expressed varying views on when, and how, Daubert’s

gatekeeping obligation is triggered.1643

The Reference Manual on Scientific Evidence provides a good starting place

for determining how to structure an inquiry into the process and methods

used by an expert in order to establish whether the testimony or evidence is

sufficiently reliable to be admitted.1644 In addition, the committee note to

amended Rule 702 details additional factors beyond the Daubert criteria that

may be relevant in making reliability determinations in various types of cases.

Below are some examples:

• whether the expert is proposing to testify about matters growing naturally and directly out of research independent of litigation (a matter

discussed immediately above);

1642. See Robert J. Goodwin, Roadblocks to Achieving “Reliability” for Non-Scientific Expert

Testimony: A Response to Professor Edward J. Imwinkelried, 30 Cumb. L. Rev. 215 (1999–2000)

(asserting that cases involving hard sciences are more likely to include testability as factor, and

that soft science or nonscientific evidence might not be subject to similar constraints); see also

McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1043 (2d Cir. 1995) (concluding that the consulting

engineer’s “background and practical experience qualif[ied] as ‘specialized knowledge’” and that

expert had practical experience and necessary academic training to reach conclusion).

1643. See, e.g., Andrew I. Gavil, Defining Reliable Forensic Economics in the PostDaubert/Kumho Tire Era: Case Studies from Antitrust, 57 Wash. & Lee L. Rev. 831, 849 (2000)

(The party seeking exclusion bears the initial burden of demonstrating the unreliability of the

evidence, presumably utilizing Daubert, which would then shift the burden to the proponent to

provide a “defense” of the testimony by proffering alternative factors as the “right” criteria and

that his or her expert’s testimony is reliable when judged by that criteria.). See also Blevins v.

New Holland N.A., Inc., 128 F. Supp. 2d 952, 956–57 (W.D. Va. 2001) (noting that all of the

Daubert factors will not apply in every case and finding expert’s testimony admissible based on

all the circumstances).

1644. Expert Evidence, supra note 1545, at 39–66.
Expert Scientific Evidence § 23.31

493

• whether the expert has engaged in improper extrapolation (i.e., drawing an unsupported conclusion from an accepted premise);1645

• whether the expert took into account possible alternative explanations

(for example, an important element of differential diagnosis is that the

expert take into account other potential causes);1646

• whether the expert is being as careful as he or she would be in regular

professional work, outside of paid litigation consulting; and

• whether the field of expertise claimed by the expert is known to reach

reliable results for the type of opinion the expert would give.

Courts also have considered

• whether the expert relied on anecdotal evidence, basing an opinion

solely on personal experience with patients or a few case studies—this

issue can arise when considering expert testimony based on clinical

medical judgment or differential diagnosis;1647

• whether there is a temporal relationship between the exposure to the

event and the subsequent injury—this factor is premised on requiring

a conclusion as to causation to be based on more than just temporal

proximity;1648

1645. See, e.g., Black v. Food Lion, Inc., 171 F.3d 308, 313–14 (5th Cir. 1999) (expert opinion

based in “fallacy of post-hoc propter-hoc reasoning” was unsupported by specific reliable

methodology and contradicted by general level of medical knowledge); Moore v. Ashland

Chem., Inc., 151 F.3d 269, 279 (5th Cir. 1998) (expert testimony would be excluded where

expert drew unsupported extrapolations).

1646. Westberry v. Gislaved Gummi AB, 178 F.3d 257, 265 (4th Cir. 1999) (alternative

causes affect weight, not admissibility of the testimony unless the expert cannot explain why she

concluded that a proffered alternative was not the sole cause). See also Fed. R. Evid. 702

committee note; Claar v. Burlington N. R.R. Co., 29 F.3d 499, 502 (9th Cir. 1994) (expert

opinion excluded for failing to “rule out other possible causes for” plaintiffs’ injuries); In re Paoli

R.R. Yard PCB Litig., 35 F.3d 717, 764–65 (3d Cir. 1994) (expert opinion based on differential

diagnosis not inadmissible where it failed to account for all possible causes, as long as the expert

considered alternative causes and can explain the soundness of the opinion in the face of

alternative causes proposed by the opposing party).

1647. See, e.g., Antoine-Tubbs v. Local 513, 50 F. Supp. 2d 601, 609–11 (N.D. Tex. 1998)

(testimony of physician practicing less than two years, who had seen only one case of

preeclampsia and had not seen medical literature or studies on whether work-related stress can

cause illness, was unreliable and not grounded in traditional clinical medical knowledge).

1648. See, e.g., Mattis v. Carlon Elec. Prods., 114 F. Supp. 2d 888, 894 (D.S.D. 2000)

(“[O]pinion based solely on the temporal relationship between exposure and the onset of

symptoms is not generally enough to qualify as scientifically valid under Daubert.”). Although

temporal proximity can be considered, there also must be some established connection between

the injury-producing substance and illness. Temporal proximity can then be used to confirm the

causal connection but, although there are some exceptions, it is generally considered unreliable
§ 23.32 Manual for Complex Litigation, Fourth

494

• the relationship of the technique used by the expert to established

methodologies;1649

• the qualifications of the expert witness to use the methodology;1650 and

• the nonlitigation uses to which the method has been put.1651

Is there consistency within the circuit, as well as the district, on the factors

used to assess similar types of expert evidence? One of the questions surrounding

Daubert inquiries is whether there is a need to ensure consistency and predictability in the factors applied to different types of expert evidence, both in the

district and within the circuit. Kumho Tire’s admonition regarding the deference afforded trial court’s determination as to the appropriate factors to apply

in a given case could result in one court within a district applying different

factors than another court applies to similar expert testimony.1652 Variation

across the circuit is also likely.

23.32 The Initial Conference

The probability that expert testimony will play a prominent role in a case

often is apparent from the face of the complaint. Where the expert evidence

promises to be protracted or controversial, or to address novel subjects that

will challenge the comprehension of the judge and the jury, management of

expert testimony should be part of a coordinated case-management strategy.

The initial conference presents a good opportunity to explore preliminarily the

nature and extent of the need for judicial management of expert evidence in

to explain the result in a particular case. Moore, 151 F.3d at 278 (“In the absence of an established scientific connection . . . or compelling circumstances . . . the temporal connection

between exposure to chemicals and an onset of symptoms, standing alone, it is entitled to little

weight in determining causation.”). But see Westberry, 178 F.3d at 265 (“[D]epending on the

circumstances, a temporal relationship between exposure to a substance and the onset of a

disease or a worsening of symptoms can provide compelling evidence of causation.”).

1649. Oddi v. Ford Motor Co., 234 F.3d 136, 145 (3d Cir. 2000) and In re TMI Litig., 193

F.3d 613, 665 (3d Cir. 1999) (both cases citing In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742

(3d Cir. 1994)). See Braun v. Lorillard, Inc., 84 F.3d 230, 234–35 (7th Cir. 1996) (excluding

testimony of expert with no previous experience testing human or animal tissue for asbestos

fibers before being hired by plaintiff and who, to test such tissues, used test method that was

designed for use on building materials).

1650. In re TMI Litig., 193 F.3d at 665. “However, ‘the level of expertise may affect the

reliability of the expert’s opinion.’” Id. at 664 (quoting In re Paoli, 35 F.3d at 741).

1651. In re TMI Litig., 193 F.3d at 665.

1652. Justice Breyer emphasized that “[t]oo much depends on the particular circumstances

of the particular case at issue” and declined to identify factors that would be applicable to all

cases or “subsets of cases categorized by category of expert or by kind of evidence.” 526 U.S. 137,

150 (1999).
Expert Scientific Evidence § 23.32

495

the case.1653 Areas that can be explored, either at the initial conference or,

depending on the complexity of the litigation, in subsequent case-management

conferences once the issues have been more refined, include the kinds of

evidence likely to be offered, the technical and scientific subject matter, and

anticipated areas of controversy. The court should inquire into whether the

science involved is novel and still in development, or whether the scientific

issues for which expert testimony will be offered are well settled.1654 To the

extent the conference discloses that a particular scientific issue is relevant but

not in dispute, such as whether exposure to asbestos is capable of causing lung

cancer and mesothelioma (i.e., general causation), the court should encourage

the parties to stipulate to its admission. (Judges take different positions on use

of collateral estoppel to preclude relitigation of facts based on scientific

evidence.1655)

One approach to handling the issue of expert evidence at the initial pretrial

conference is to advise counsel in advance to be prepared to respond to

inquiries into the nature of the claims and defenses together with any underlying assumptions, into the nature of expert evidence expected to be offered,

and, if known, into the areas of disagreement among experts.1656 Additional

areas that may be appropriate for discussion during the initial conference,

depending on the complexity of the case, include the following:

1653. The committee note states that the rule is intended to “clarify that in advance of trial

the court may address the need for, and possible limitations on, the use of expert testimony

. . . .” Fed. R. Civ. P. 16(c)(4) committee note. See also Med. Consultants Network, Inc. v. Cantor

& Johnson, P.C., No. CIV.A. 99-0528, 2001 WL 10788 *3 (E.D. Pa. Dec. 27, 2000) (expert

accounting testimony unnecessary where all accountant did was multiply each employee’s hours

by his or her hourly rate, which does not require accounting expertise).

1654. The court may also want to determine whether the scientific issues in the case before it

are also pending in other litigation.

1655. Compare Ezagui v. Dow Chem. Corp., 598 F.2d 727, 732–33 (2d Cir. 1979) (estopping

litigation on the issue that vaccination package inserts inadequately apprised doctors of known

hazards), with Hardy v. Johns-Manville Sales Corp., 681 F.2d 334, 341–48 (5th Cir. 1982)

(disallowing collateral estoppel to preclude relitigation of the fact that asbestos products are

unreasonably dangerous and that asbestos dust causes mesothelioma). For an interesting

discussion of the application of collateral estoppel, see Bertrand v. Johns-Manville Sales Corp.,

529 F. Supp. 539, 544–45 (D. Minn. 1982) (holding it is “clear” that the court should collaterally

estop litigation on the specific fact that “asbestos dust can cause diseases such as asbestosis and

mesothelioma . . . .” because “[t]his proposition is so firmly entrenched in the medical and legal

literature that it is not subject to serious dispute,” but declining to apply collateral estoppel to

the more disputable use of the “state of the art” defense and the claim that asbestos is “unreasonably dangerous”).

1656. The object of this exercise should be education, not argument; all participants should

be given an opportunity to learn about the case. By infusing the conference with a spirit of

inquiry, the court can set the tone for the litigation, encouraging clarity, candor, and civility.
§ 23.32 Manual for Complex Litigation, Fourth

496

• Do the parties anticipate retaining testifying experts? In cases where settlement is likely, the parties may wish to defer retaining experts and

thereby avoid unnecessary expense.1657 Where the case can make progress toward settlement without early identification of experts (for example, if nonexpert discovery could provide a basis for settlement),

consider deferring expert evidence issues for some period.1658 In more

complex cases, the resolution of a conflict over expert testimony may

be dispositive and deferral of expert discovery might impede, rather

than facilitate, resolution of the case. In cases where discovery is proceeding in phases, consider discussing with the parties the feasibility of

identifying experts in a similarly staged fashion, or whether the case

would best be served by delaying all expert discovery until all other

discovery has been completed.

• Should there be a limit on the number of expert witnesses? Some judges

limit parties to one expert per scientific discipline. Ordinarily this is

sufficient; however, as a science increases in sophistication, subspecialties develop. In addition, experts in a single specialty may bring to

bear a variety of experiences or perspectives relevant to the case. If a

party anticipates offering testimony from more than one expert in

what appears to be a distinct discipline, it is advisable for the court to

inquire whether multiple experts are warranted. Discourage efforts by

attorneys to try to bolster the weight of their case by cumulative expert

testimony, even where multiple parties are represented on one or both

sides.1659 Consider whether to impose a set limit on the number of expert witnesses that may be offered by a party, subject to modification

as the case develops should it appear that multiple experts are necessary.

• When should the parties exchange experts’ reports? Federal Rule of Civil

Procedure 26(a)(2) provides that the timing and sequencing of expert

disclosures is at the discretion of the trial court. The rule generally requires that expert disclosures be made not less than ninety days before

1657. Deferral may be inappropriate, however, in class-action contexts.

1658. On the other hand, deferring identification of experts until the eve of trial can be

costly. In a medical malpractice case, for example, expert evidence is essential to resolve the

threshold issue whether the defendant conformed to the applicable standard of practice; without

such evidence, the plaintiff has no case.

1659. In re Factor VIII or IX Concentrate Blood Prods. Litig., 169 F.R.D. 632, 637 (N.D. Ill.

1996) (transferee court in multidistrict litigation has authority to limit the number of expert

witnesses who may be called at trial). See supra section 23.26 for a discussion of Weisgram v.

Marley Co., 528 U.S. 440 (2000).
Expert Scientific Evidence § 23.32

497

trial or at such other time as the judge may order.1660 The parties are to

make detailed written disclosures with respect to each expert retained

to testify at trial, including a complete statement of all opinions to be

expressed, the basis and reasons supporting the opinions, and the data

or other information considered by the witness in forming the opinions.1661 Although experts’ reports obviously will be helpful in identifying issues, financial considerations generally mandate that they not

be required until issues have been narrowed to the greatest extent

possible. In some cases, however, consider scheduling disclosures in

accordance with the sequence in which issues are addressed. For example, in patent cases, expert disclosures relating to claims construction1662 may be called for early in the case, whereas disclosures relating

to infringement and damages may be deferred. In toxic tort cases,

submission of expert reports may not be appropriate until factual discovery has been completed. It is best to discuss at the conference when

and in what sequence these disclosures should be made.

• Is the case appropriate for referral to a magistrate judge? Many district

judges routinely refer the pretrial management of civil cases to magistrate judges.1663 Others believe that there are advantages in having the

judge who will try the case manage its pretrial stages to promote familiarity with the issues and avoid delay caused by appeals of the

magistrate judge’s rulings.1664

• Should the court appoint a special master or an outside expert?1665 In

many cases it may be helpful for the court to be educated at the outset

about the science or technology involved, particularly where the expert

evidence will involve science and technology that use language foreign

to the uninitiated. Arrangements for initial education can be made

pursuant to court order or by stipulation between the parties. In addition, the court should establish whether any tutorials should be

1660. Fed. R. Civ. P. 26(a)(2)(B).

1661. Id. Usually the party bearing the burden at trial should make the first disclosure, and

the other party should respond.

1662. See infra section 33.22; Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

1663. Rule 16(c)(8) makes the referral of matters to a magistrate judge or a special master a

subject for consideration at the initial pretrial conference.

1664. See supra section 11.53.

1665. The American Association for the Advancement of Science’s “Scientific Freedom,

Responsibility and Law” program launched a demonstration program, “Court-Appointed

Scientific Experts,” to help federal judges locate qualified individuals to serve as court-appointed

experts. More information is available at http://www.aaas.org/spp/case/case.htm (last visited

Nov. 10, 2003).
§ 23.32 Manual for Complex Litigation, Fourth

498

videotaped or transcribed for review by the judge as the litigation proceeds. If there is a need for judicial education, consider raising the

matter at the initial conference and discussing the available options

with the parties (e.g., the use of tutorials or neutral court-appointed

advisors).1666 The techniques discussed by Justice Breyer in his concurring opinion in Joiner may be appropriate in some cases to help the

court meet its gatekeeping obligations: using court-appointed experts,

special masters, and specially trained law clerks.1667 These appointed

experts could be asked to assess the methodology used by the testifying

experts and whether the conclusion reached is supported by that

methodology, short of any inquiry into the validity or “correctness” of

that conclusion. The primary focus is on determining what mechanisms would assist the court in its gatekeeping function under Rule

702.1668 The utility of outside advisors or experts depends on their

ability to maintain objectivity and neutrality in their presentation.

Among other things, the elements of the advisor’s relationship to the

judge should be defined, such as prohibitions on ex parte communications, if any, and limits on discovery. Always consider the costs and

additional time associated with these procedures.1669 In addition to this

discussion, more information can be found at sections 11.51–11.54

and in several Federal Judicial Center publications on the use of special masters and court-appointed experts.1670

1666. For a discussion of considerations involved in the appointment of special masters and

neutral expert witnesses, see supra section 11.5.

1667. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 148–50 (1997). For excellent discussions of the

issue, see also Ellen E. Deason, Court-Appointed Expert Witnesses: Scientific Positivism Meets Bias

and Deference, 77 Or. L. Rev. 59 (1998); Karen Butler Reisinger, Note, Court-Appointed Expert

Panels: A Comparison of Two Models, 32 Ind. L. Rev. 225 (1998); Joe S. Cecil & Thomas E.

Willging, Accepting Daubert’s Invitation: Defining a Role for Court-Appointed Experts in Assessing

Scientific Validity, 43 Emory L.J. 995 (1994).

1668. See, e.g., Smith v. Ingersoll-Rand Co., 214 F.3d 1235, 1243 (10th Cir. 2000) (“The

purpose of Daubert gatekeeping function is not to measure every expert by an inflexible set of

criteria . . . .”); Hall v. Baxter Healthcare, 947 F. Supp. 1387, 1392–93 (D. Or. 1996) (In view of

the complicated scientific and medical issues involved, the court appointed independent

advisors in “epidemiology, immunology/toxicology, rheumatology, and chemistry” to assist in

“evaluating the reliability and relevance of the scientific evidence.”).

1669. Expert compensation should also be discussed and appropriate fee-sharing arrangements made.

1670. FJC Study, Neutral Science Panels, supra note 1059; FJC Study, Special Masters, supra

note 704; Cecil & Willging, supra note 1435.
Expert Scientific Evidence § 23.33

499

23.33 Disclosures

Federal Rule of Civil Procedure 26(a)(2) sets out required disclosures for

parties presenting expert testimony and requires disclosure not only of the data

and materials on which the expert relied but also those that the expert “considered . . . in forming the opinions.”1671 Parties need adequate time for experts to

be retained and to prepare their reports before the required disclosures are

due. The court should impress on counsel the critical importance of Rule

26(a)(2)(B) requirements to the judge’s gatekeeping obligations, and the

seriousness of the disclosure requirement and any accompanying deadlines.1672

Counsel should be informed that opinions and supporting facts not included

in the disclosure may be excluded at trial, even if they were testified to on

deposition.1673 The judge should remind the parties that destruction of materials furnished to or produced by an expert in the course of the litigation (such

as test results, correspondence, or draft memoranda) may lead to sanctions1674

and that an expert’s disclosure must be supplemented if it turns out that any

information disclosed was, or has become, incomplete or incorrect.1675 Failure

of a party to comply with the disclosure requirements of Rule 26(a)(2) may

1671. Fed. R. Civ. P. 26(a)(2)(B). Litigants may therefore no longer assume that materials

furnished to an expert by counsel or the party will be protected from discovery. Fed. R. Civ. P.

26(a)(2)(B) committee note. Courts are divided on the extent to which they require disclosure

of attorney work product provided to a testifying expert. Compare Karn v. Ingersoll-Rand Co.,

168 F.R.D. 633, 639 (N.D. Ind. 1996) (holding that work-product protection does not apply to

documents related to the subject matter of litigation provided by counsel to testifying experts),

with Magee v. Paul Revere Life Ins. Co., 172 F.R.D. 627, 642 (E.D.N.Y. 1997) (holding that “data

or other information” considered by the expert, which is subject to disclosure, includes only

factual materials and not core attorney work product considered by the expert).

1672. See, e.g., Dura Automotive Sys. v. CTS Corp., 285 F.3d 609 (7th Cir. 2002) (affirming

trial court’s exclusion of untimely filed disclosure of additional expert witnesses); Nutrasweet

Co. v. X-L Eng’g Co., 227 F.3d 776, 786 (7th Cir. 2000) (district court did not abuse its

discretion in excluding expert testimony on supplemental report where party failed to timely file

the report under Rule 26); In re Hanford Nuclear Reservation Litig., No. CY-91-3015, 1998 WL

775340, *172–*73 (E.D. Wash. Aug. 21, 1998) (expert who discovered flaw in model should not

change model to conform to estimate after deadline for submission of expert reports).

1673. Santiago v. Furniture Chauffeurs, Piano Movers, Packers & Handlers Local 705, No.

99C 2886G, 2001 WL 11058, *5 (N.D. Ill. 2001) (damage expert barred from testifying on lost

goodwill where report was limited to lost profits).

1674. Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 81 (3d Cir. 1994) (sanctions for

spoilation of evidence arising from inspection by an expert must be commensurate with the fault

and prejudice arising in the case).

1675. Fed. R. Civ. P. 26(e)(1).
§ 23.33 Manual for Complex Litigation, Fourth

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lead to exclusion of the expert’s testimony at trial, unless such failure is

harmless.1676

Once the disclosures are in hand, a follow-up Rule 16 conference may help

further identify and narrow disputed issues. The court should attempt to

identify the bases for any disagreements that disclosure reveals between experts

on critical points. Frequently, differences between experts rest on tacit assumptions, such as choices among policies, selection of statistical data or

databases, judgments about the level of reasonable risk, or the existence of

particular facts. In addition to narrowing the substantive issues, consider the

need to address the process by which the expert reached his or her conclusions

or the purpose for which the testimony is being offered. The conclusions of a

witness offering scientific testimony generally will be the product of multistep

reasoning. By breaking down the process, the judge may be able to narrow

disputes relating to the testimony to a particular step in the process, and

thereby facilitate a resolution.1677

1676. Rule 37(c)(1) provides: “A party that without substantial justification fails to disclose

information required by Rule 26(a) or 26(e)(1) or to amend a prior response to discovery as

required by Rule 26(e)(2) is not, unless such failure is harmless, permitted to use as evidence at a

trial, at a hearing, or on a motion any witness or information not so disclosed.” See, e.g., S.W.

Whey, Inc. v. Nutrition 101, Inc., 126 F. Supp. 2d 1143, 1148–49 (C.D. Ill. 2001) (declining to

impose sanction of exclusion under Rule 37 for failure to timely disclose expert report where

exclusion would result in large monetary loss that was disproportionate to circumstances

surrounding violation and where failure to comply was harmless); In re Brand Name Prescription Drugs Antitrust Litig., MDL No. 997, Docket No. 94C897, 2001 WL 30454 (N.D. Ill. Jan.

11, 2001) (precluding plaintiffs from introducing expert evidence of any kind under Rule 37 in

light of failure to comply with Rule 26); Bastys v. Rothschild, No. 97 Civ. 5154, 2000 WL

1810107, *26–*27 (S.D.N.Y. 2000) (finding plaintiff’s failure to identify and disclose expert

warranted sanction under Rule 37 striking affidavits of plaintiff’s experts submitted in response

to defendant’s motion). See also Pride v. BIC Corp., 218 F.3d 566, 578 (6th Cir. 2000) (“District

courts have broad discretion to exclude untimely disclosed expert-witness testimony.”);

Kostantopoulos v. Westvaco Corp., 112 F.3d 710, 719 (3d Cir. 1997) (expert testimony would be

excluded where there was a violation of pretrial discovery order); Coastal Fuels, Inc. v. Caribbean Petroleum Corp., 79 F.3d 182, 202–03 (1st Cir. 1996) (finding no abuse of discretion in

district court’s exclusion of expert testimony in price discrimination and monopolization case

where party failed to produce expert report in accordance with the court’s scheduling order).

Appellate courts seem cautious about precluding expert testimony where such testimony is an

essential element of the case. See Freeland v. Amigo, 103 F.3d 1271, 1276 (6th Cir. 1997) (district

court abused its discretion by precluding expert testimony in a medical malpractice case as a

sanction for failing to comply with a pretrial order setting the deadline for discovery where such

preclusion would amount to a dismissal of the case).

1677. For example, proffered survey research may be subject to a hearsay objection. See Shari

Seidman Diamond, Reference Guide on Survey Research [hereinafter Survey Research], i n

Reference Manual on Scientific Evidence 233 n.12 (Federal Judicial Center, 2d ed. 2000). Thus, it
Expert Scientific Evidence § 23.33

501

The Federal Judicial Center’s Reference Manual on Scientific Evidence

includes subject-specific reference guides to assist the court in narrowing issues

and understanding the applicable scientific criteria within the context of

scientific, as opposed to legal, conclusions.1678 The Reference Guide on Survey

Research, for example, facilitates narrowing a dispute over proffered evidence

by breaking the inquiry into a series of questions about the following topics:

the purpose of the survey; identification of the appropriate population and

sample frame; the structure of the questions; the recording of data; and

reporting.1679 The Reference Guide on DNA Evidence summarizes scientific

principles that underlie DNA testing; basic methods used in such testing;

characteristics of DNA samples necessary for adequate testing; laboratory

standards necessary for reliable analysis; interpretation of results, including the

likelihood of a coincidental match; and emerging applications of DNA testing in

forensic settings.1680 Other reference guides in the Reference Manual on Scientific Evidence deal with statistics,1681 multiple regression,1682 estimation of

is critical to determine whether the purpose of the particular survey is to prove the truth of the

matter asserted or only the fact of its assertion.

1678. The reference guides are not primers on substantive issues of scientific proof or

normative statements on the merits of scientific proof. See Preface, in Reference Manual on

Scientific Evidence v–vii (Federal Judicial Center, 2d ed. 2000).

1679. Each of these issues is then broken into a series of suggested questions that will enable

the judge to explore the methodology and reasoning underlying the expert’s opinion. For

example, the questions concerning identification of the appropriate population and sample

frame are as follows: “Was an appropriate universe or population identified?”; “Did the

sampling frame approximate the population?”; “How was the sample selected to approximate

the relevant characteristics of the population?”; “Was the level of nonresponse sufficient to raise

questions about the representativeness of the sample?”; “What procedures were used to reduce

the likelihood of a biased sample?”; and “What precautions were taken to ensure that only

qualified respondents were included in the survey?” Survey Research, supra note 1677, at 239–48.

1680. David H. Kaye & George F. Sensabaugh, Jr., Reference Guide on DNA Testing, in

Reference Manual on Scientific Evidence 485–576 (Federal Judicial Center, 2d ed. 2000).

1681. The guide identifies three major issues in the field of statistics: the design of the datacollection process; the extraction and presentation of relevant data; and the drawing of

appropriate inferences. David H. Kaye & David A. Freedman, Reference Guide on Statistics, in

Reference Manual on Scientific Evidence 85 (Federal Judicial Center, 2d ed. 2000).

1682. This section deals with issues concerning the analysis of data bearing on the relationship of two or more variables, the presentation of such evidence, the research design, and the

interpretation of the regression results. Daniel L. Rubinfeld, Reference Guide on Multiple

Regression, in Reference Manual on Scientific Evidence 179–227 (Federal Judicial Center, 2d ed.

2000).
§ 23.33 Manual for Complex Litigation, Fourth

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economic losses in damages awards,1683 epidemiology,1684 medical testimony,1685

and engineering practice and methods.1686

These reference guides, although limited in scope, suggest analytical

approaches and opportunities that judges can use in identifying issues. For

example, following the general outline of the reference guides, a judge could

ask counsel for both sides to exchange and provide to the court a step-by-step

outline of the experts’ reasoning processes for use at the Rule 16 conference at

which issue definition and narrowing is discussed. In addition, after the

exchange of written statements of expert opinions (required by Federal Rule of

Civil Procedure 26(a)(2)), the judge could direct each side to identify each part

of the opposing expert’s opinion that is disputed and to state the specific basis

for the dispute. To facilitate later Daubert inquiries, consider having the parties

submit a written critique of the reasoning and methodology utilized by

opposing experts prior to beginning expert depositions. Any supplemental

submissions necessary to respond to the critique offered by the opposing party

could then be disclosed, reducing the need for a second round of depositions

that normally would be sought when supplemental reports are disclosed after

depositions have occurred.

1683. This guide identifies issues concerning expert qualification, characterization of the

harmful event, measurement of loss of earnings before trial and future loss, prejudgment

interest, and related issues generally and as they arise in particular kinds of litigation. Robert E.

Hall & Victoria E. Lazear, Reference Guide on Estimation of Economic Losses in Damages Awards,

in Reference Manual on Scientific Evidence 277–332 (Federal Judicial Center, 2d ed. 2000).

1684. This guide identifies issues concerning the appropriateness of the research design, the

definition and selection of the research population, the measurement of exposure to the putative

agent, the measurement of the association between exposure and the disease, and the assessment

of the causal association between exposure and the disease. Epidemiology, supra note 1050, at

333–400.

1685. This section describes the various roles of physicians, the kinds of information that

physicians consider, and how this information is used in reaching a diagnosis and attributing

causation. Medical Testimony, supra note 1051, at 439–84.

1686. This section describes the nature of engineering, including the issues that must be

considered in developing a design, the evolution of subsequent design modifications, and the

manner in which failure influences subsequent design. Henry Petroski, Reference Guide on

Engineering Practice and Methods, in Reference Manual on Scientific Evidence 577–624 (Federal

Judicial Center, 2d ed. 2000).
Expert Scientific Evidence § 23.341

503

23.34 Discovery Control and Management

.341 Discovery of Testifying Experts 503

.342 Discovery of Nontestifying Experts 504

.343 Discovery of Nonretained Experts 504

.344 Discovery of Court-Appointed Experts 505

.345 Use of Videotaped Depositions 505

23.341 Discovery of Testifying Experts

Parties may depose experts who have been identified as trial witnesses

under Federal Rule of Civil Procedure 26(b)(4)(A), but only after those experts

make their disclosure required under Rule 26(a)(2)(B).1687 Although the judge

may relieve the parties of the obligation to exchange these disclosures, it will

rarely be advisable to do so; it is also inadvisable to permit the parties to

stipulate around the obligation, for a number of reasons:

• Preparation and exchange of the expert disclosures compels parties to

focus on the issues and the evidence supporting or refuting their positions. Moreover, the cost and burden of preparing disclosures forces

parties to consider whether to designate a particular person as an expert witness and may discourage or limit the use of excessive numbers

of experts.

• Exchange of the disclosures may lead the parties to dispense with the

opposing experts’ depositions. Some attorneys believe that depositions

tend to educate the expert more than the attorney when disclosures

have been made as required by the rule.

• The disclosures will inform the consideration of any limitations and

restrictions on expert evidence.

• The disclosures will compel an expert’s proponent to be prepared for

trial. Because the proponent must disclose all opinions to be expressed

and their bases, surprise at trial will be eliminated, the opponent’s trial

1687. Fed. R. Civ. P. 26(b)(4)(A). The report under Rule 26(a)(2)(B) is presumptively

required of any “witness who is retained or specially employed to provide expert testimony in

the case or whose duties as an employee of the party regularly involve giving expert testimony.”

Fed. R. Civ. P. 26(a)(2)(B). This would normally exclude a treating physician, but the rule

extends to other areas of expertise. Riddick v. Wash. Hosp. Ctr., 183 F.R.D. 327, 330 (D.D.C.

1998). Courts have looked to the nature of the testimony rather than to the employment status

of the witness to determine if such a report is required. Sullivan v. Glock, Inc., 175 F.R.D. 497,

500 (D. Md. 1997). The court may by order, or the parties may by stipulation, exempt a case

from this requirement. Rule 26(a)(2)(B) also gives the parties the right to modify, without court

order, the procedures or limitations governing discovery, except for stipulations that would

interfere with any time set for completion of discovery, hearing of a motion, or trial.
§ 23.343 Manual for Complex Litigation, Fourth

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preparation will be improved, and cross-examination will be more effective and efficient.

• The disclosures will aid in identifying evidentiary issues early so that

they can be resolved in advance of trial.

• The disclosures may encourage early settlement.

23.342 Discovery of Nontestifying Experts

Under Federal Rule of Civil Procedure 26(b)(4)(B), the court may permit

discovery by interrogatory or deposition of consulting nontestifying experts

“upon a showing of exceptional circumstances under which it is impracticable

for the party seeking discovery to obtain facts or opinions on the same subject

by other means.”1688 Exceptional circumstances may exist where a party has

conducted destructive testing,1689 the results of which may be material, or

where the opponent has retained all available qualified experts.1690 In the

absence of such circumstances, a party should not be penalized for having

sought expert assistance early in the litigation, and its opponent should not

benefit from the party’s diligence.1691

23.343 Discovery of Nonretained Experts

Parties may seek the opinions and expertise of persons not retained in the

litigation. However, Federal Rule of Civil Procedure 45(c)(3)(B)(ii) authorizes

the court to quash a subpoena requiring “disclosure of an unretained expert’s

1688. See generally Spearman Indus., Inc. v. St. Paul Fire & Marine Ins. Co., 128 F. Supp. 2d

1148, 1151–52 (N.D. Ill 2001) (“[C]ourts have consistently held that a party may not discover

the identity of, facts know by, or opinions held by an informally consulted expert.”).

1689. Deterioration in the evidence may occur through other means than destructive testing.

See Delacastor, Inc. v. Vail Assoc., 108 F.R.D. 405 (D. Colo. 1985) (expert who observed site the

day after a mudslide was subject to discovery).

1690. See Spearman Indus., 128 F. Supp. 2d at 1152 (restating and applying the “destructive

testing” and “available experts” tests); Disidore v. Mail Contractors, Inc., 196 F.R.D. 410, 417

(D. Kan. 2000) (“Plaintiff has failed to show exceptional circumstances justifying discovery of

Defendant’s non-testifying expert.”); Bank Brussels Lambert v. Chase Manhattan Bank, N.A.,

175 F.R.D. 34, 44 (S.D.N.Y. 1997) (“Courts and commentators have commonly identified two

situations where the exceptional circumstances standard has been met.”); Queen’s Univ. at

Kingston v. Kinedyne Corp., 161 F.R.D. 443, 447 (D. Kan. 1995) (parties have to meet heavy

burden to demonstrate existence of exceptional circumstances (quoting Ager v. Jane Stormont

Hosp. & Training Sch. for Nurses, 622 F.2d 496, 502 (10th Cir. 1980))); exceptional circumstances have also been found to exist when the costs of replacing the testimony are “judicially

prohibitive.” Bank Brussels Lambert, 175 F.R.D. at 44.

1691. See Spearman Indus., 128 F. Supp. 2d at 1152 (rule regarding nontestifying experts

designed to protect party from having its experts’ testimony used by the opponent).
Expert Scientific Evidence § 23.345

505

opinion or information not describing specific events or occurrences in

dispute and resulting from the expert’s study made not at the request of any

party.”1692 In ruling on such a motion to quash, consider whether the party

seeking discovery has shown a substantial need that cannot be otherwise met

without undue hardship, whether party will reasonably compensate the

subpoenaed person, and whether to impose appropriate conditions on

discovery.1693

23.344 Discovery of Court-Appointed Experts

Federal Rule of Evidence 706 contemplates that the deposition of a courtappointed expert witness may be taken by any party. Technical advisors or

other nontestifying experts appointed under the inherent authority of the

courts are not necessarily subject to the discovery requirements of Rule 706,

permitting the court greater discretion in structuring the terms and conditions

for access to such experts for discovery.1694 The order appointing the expert

should discuss the extent to which the parties may seek such discovery from

the expert.

23.345 Use of Videotaped Depositions

Videotaping expert depositions is particularly appropriate for several

reasons: It preserves the testimony of an expert who may be unavailable for

trial or whose testimony may be used in more than one trial or in different

1692. Fed. R. Civ. P. 45(c)(3)(B)(ii). See also Spearman Indus., 128 F. Supp. 2d at 1152

(exceptional-circumstances standard similarly applies to discovery of notes, reports, and records

of nontestifying expert developed in anticipation of litigation).

1693. The committee notes on Rule 45(c)(3)(B)(ii) point out that this provision was

intended to protect the intellectual property of nonretained experts:

The rule establishes the right of such persons to withhold their expertise, at least unless the

party seeking it makes the kind of showing required for a conditional denial of a motion to

quash...; that requirement is the same as that necessary to secure work product under Rule

26(b)(3) and gives assurance of reasonable compensation.

For a discussion of issues arising with a subpoena for research data from unretained scholars,

see In re American Tobacco Co., 880 F.2d 1520, 1527–30 (2d Cir. 1989); see also Paul D.

Carrington & Traci L. Jones, Reluctant Experts, 59 Law & Contemp. Probs. 51 (1996); Richard L.

Marcus, Discovery Along the Litigation/Science Interface, 57 Brook. L. Rev. 381 (1991); Mark

Labaton, Note, Discovery and Testimony of Unretained Experts: Creating a Clear and Equitable

Standard to Govern Compliance with Subpoenas, 1987 Duke L.J. 140.

1694. Hall v. Baxter Healthcare Corp., 947 F. Supp. 1387, 1393 n.8 (D. Or. 1996) (“To keep

the advisors independent of any ongoing proceedings, I appointed them under FRE 104, not

FRE 706, which requires court-appointed experts, in effect, to act as additional witnesses subject

to depositions and testifying at trial.”).
§ 23.35 Manual for Complex Litigation, Fourth

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phases of a single trial; it also permits demonstrations (for example, of tests or

of large machinery not feasible in the courtroom); and it provides a more lively

and interesting presentation than reading a transcript at trial. Federal Rule of

Civil Procedure 30(b)(2) permits a party to videotape a deposition unless

otherwise ordered by the court. The judge should establish in advance the

ground rules for videotaping, such as the placement and operation of the

camera, off-camera breaks, lighting, procedures for objections, and review in

advance of use at trial.1695

23.35 Motion Practice

.351 Initiating a Daubert Inquiry 507

.352 Timing of Challenges to Expert Testimony 508

.353 Handling a Challenge to Expert Testimony 509

.354 Summary Judgment 512

Challenges to expert testimony are likely.1696 The court can take several

approaches to them. Rule 26 requires the disclosure of not only the full

opinions to be offered by certain experts, but also the bases for the opinions.1697

The right to depose experts further allows for the exploration by the parties of

the bases for opinion, thereby allowing the parties to identify weaknesses in the

methodologies employed in order to raise objections to the admissibility of the

testimony or evidence. Consider making some preliminary determinations

during the initial pretrial conference, not just on the timing of expert discovery

and disclosures, but also on appropriate deadlines for any challenges to the

reliability and credibility of proposed testimony once disclosures are made. It

is helpful to decide objections to expert evidence relating to admissibility,

qualifications of a witness, or existence of a privilege in advance of trial

whenever possible.1698 Exclusion of evidence may in some cases remove an

essential element of a party’s proof, providing the basis for summary judg1695. See William W Schwarzer et al., Civil Discovery and Mandatory Disclosure: A Guide to

Efficient Practice 3-15 to 3-17, app. 79 (2d ed. 1994).

1696. A Federal Judicial Center survey determined that the admissibility of expert testimony

was not disputed in 46% of the reported cases. FJC Survey on Expert Testimony, supra note 1545,

at 4.

1697. See Fed. R. Civ. P. 26(a)(2).

1698. See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592–93 (1993) (Before

admitting expert testimony, the trial court must make a “preliminary assessment of whether the

reasoning or methodology underlying the testimony is scientifically valid.”).
Expert Scientific Evidence § 23.351

507

ment.1699 In other cases, the ruling on an objection may permit the proponent

to cure a technical deficiency before trial, such as clarifying an expert’s qualifications.

23.351 Initiating a Daubert Inquiry

Rule 702 directs a court faced with a proffer of expert testimony to

determine preliminarily whether the testimony is reliable and scientifically

valid. Most courts agree that these gatekeeping obligations do not require a

formal Federal Rule of Evidence 104(a) hearing.1700 Rule 702 requires only that

the determination as to the reliability of expert testimony be made prior to its

admission into evidence. Some courts have required expert challenges to be

made early in the litigation. Failure to raise an objection could be considered a

waiver, although Daubert suggests the court may still have an obligation to

ensure the reliability of the testimony prior to its admission, even in the

absence of a formal challenge. At least one court permitted a party whose

expert witness was stricken following an early Daubert hearing to hire a new

expert, although other judges disagree with that approach.1701 Kumho Tire

noted that a trial court could “avoid unnecessary ‘reliability’ proceedings in

ordinary cases where the reliability of an expert’s methods is properly taken for

granted,”1702 which suggests that the trial court is to engage in at least a cursory

assessment, however minimal, to ensure reliability.1703 At the same time,

however, Kumho Tire also stated that “where such testimony’s factual basis,

data, principles, methods, or their application are called sufficiently into

question,”1704 the trial judge should determine whether that testimony is

reliable. Kumho Tire does not specify whether that challenge must come from a

party or may be raised sua sponte. Thus, despite the “broad latitude” it provided judges in determining how to test reliability, Kumho Tire provided no

real guidance as to when the court’s gatekeeping obligations attach. As a result,

1699. See, e.g., Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319–20 (7th Cir. 1996); Wheat v.

Sofamor, S.N.C., 46 F. Supp. 2d 1351, 1357–58 (N.D. Ga. 1999) (expert testimony excluded

because it was not relevant).

1700. See Goebel v. Denver & Rio Grande W. R.R. Co., 215 F.3d 1083, 1087 (10th Cir. 2000);

United States v. Nichols, 169 F.3d 1255, 1263 (10th Cir. 1999); Kirstein v. Parks Corp., 159 F.3d

1065, 1067 (7th Cir. 1998).

1701. See Summers v. Mo. Pac. R.R. Sys., 132 F.3d 599, 605 (10th Cir. 1997) (permitting

plaintiff to locate new experts after first expert stricken).

1702. 526 U.S. 137, 152 (1999).

1703. “Indeed, the Rules seek to avoid ‘unjustifiable expense and delay’ as part of their

search for ‘truth’ and the ‘jus[t] determin[ation]’ of proceedings.” Id. at 152–53 (citing Fed. R.

Evid. 102).

1704. Id. at 152 (emphasis added).
§ 23.352 Manual for Complex Litigation, Fourth

508

there is disagreement as to whether such a preliminary assessment is triggered

by the proffer of expert testimony, or only on an objection from the opposing

party that calls the testimony sufficiently into question. Considering Daubert’s

mandate for trial judges to exercise their obligation as gatekeeper, the better

view is that judges have an independent duty to challenge expert testimony

whenever questions of validity and reliability exist.

23.352 Timing of Challenges to Expert Testimony

The judge can require the parties to present objections to expert testimony

at any point during the case. One option is to require challenges to be made

shortly after the close of expert discovery. At that time, the parties will have

had an opportunity to depose opposing experts and determine whether there

are any weaknesses in the experts’ qualifications or methodologies. This

approach facilitates the disposition of summary-judgment motions, to the

extent those motions rely in whole or in part on expert evidence. A second

option is to require that motions seeking to strike or limit expert testimony be

made shortly before trial. Many cases settle before trial, thereby obviating the

need to hold a hearing at all. A third option is to require any challenges to

expert testimony to be presented during trial.1705 Holding a Daubert hearing

during trial, following formal objection, helps minimize the expense of

bringing the expert to court twice, and the judge is likely to better understand

the testimony in the context of the case. Reserving consideration of the

reliability of expert testimony until trial, however, probably carries more

disadvantages than advantages. Cases that could have been resolved at the

summary-judgment stage instead proceed to trial, with its attendant time and

expense. In addition, because of the demands of trial, the judge may not have

as full an opportunity to consider the merits of the motion.1706 On balance, the

best approach is to require that challenges to expert testimony be made during

pretrial proceedings, either at the close of expert discovery or through in

1705. See United States v. Alatorre, 222 F.3d 1098, 1103–04 (9th Cir. 2000) (district court

did not abuse discretion in reserving ruling on admissibility of expert testimony until voir dire at

trial); United States v. Nichols, 169 F.3d 1255, 1262–64 (10th Cir. 1999) (affirming district court

decision to reserve ruling on expert evidence until trial). But see Alfred v. Caterpillar, Inc., 262

F.3d 1083, 1087 (10th Cir. 2001) (characterizing Daubert objections made at the close of

evidence as litigation by “ambush,” but finding it unnecessary to reach the issue of the timing of

the objection).

1706. Other disadvantages include keeping the jury waiting while the Daubert issues are

resolved and, should the expert be stricken, “judicial resources, taxpayer money, and juror time

may be wasted because the striking of an expert will in some cases be tantamount to a directed

verdict.” Judge Harvey Brown, Procedural Issues Under Daubert, 36 Hous. L. Rev. 1133, 1144

(1999). See Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 133 (11th Cir. 2003).
Expert Scientific Evidence § 23.353

509

limine or other motion immediately prior to trial. In cases involving multistage

discovery, motions challenging expert witnesses can be presented in a similarly

staged manner, if necessary.

23.353 Handling a Challenge to Expert Testimony

As discussed previously, Kumho Tire affords trial judges wide discretion in

deciding “whether or when [a] special briefing or other proceedings are needed

to investigate reliability.”1707 The challenge may take the form of a motion to

strike or exclude evidence during any pretrial phases or a motion in limine

immediately before or during trial, although the failure to correctly characterize a motion should not necessarily preclude its consideration or otherwise

impact its disposition.1708 Such motions often will be accompanied by a motion

for summary judgment. Regardless of the form, the movant should set forth

specific deficiencies in the expert’s report or proposed evidence so that the

motion may be handled in an economic and expeditious fashion.1709 Consider

requiring that any expert affidavits or declarations supporting dispositive

motions include specific facts that would help to determine the reliability and

validity of the data relied on in reaching the opinions and conclusions contained in the declaration. The court can either rule on the motions on the basis

of the papers submitted1710 and the argument by counsel or hold a Daubert

hearing under Federal Rule of Evidence 104(a) where those issues can be more

1707. Kumho Tire, 526 U.S. at 152. See supra section 23.351. See also Expert Evidence, supra

note 1545, at 53.54.

1708. See, e.g., Kumho Tire, 526 U.S. at 145 (motion to exclude expert testimony accompanied by summary-judgment motion); Ruiz-Troche v. Pepsi Cola of P.R., 161 F.3d 77, 82 (1st Cir.

1998) (motions in limine to exclude expert testimony filed immediately before trial). Typically

these motions are presented as in limine motions. The type of motion presented may, however,

effect whether objections are preserved for appeal or must be reasserted during trial. Blevins v.

New Holland N. Am., Inc., 128 F. Supp. 2d 952, 954 (W.D. Va. 2001) (motion in limine); Zic v.

Italian Gov’t Travel Office, 130 F. Supp. 2d 991, 994 (N.D. Ill. 2001) (motion to strike damages

expert); Hall v. Baxter Healthcare Corp., 947 F. Supp. 1387, 1392 (D. Or. 1996) (defendants filed

motions in limine to exclude testimony on silicone gel breast implants after initial trial dates

set). See Brown, Procedural Issues, supra note 1706, at 1145–48 (discussing cases where parties

failed to preserve objection for appeal).

1709. See generally Supreme Court’s Trilogy, supra note 1560, at 9–38; Margaret A. Berger,

Procedural Paradigms for Applying the Daubert Test, 78 Minn. L. Rev. 1345 (1994) [hereinafter

Procedural Paradigms]; Goodwin, supra note 1642; see also Kumho Tire, 526 U.S. at 152–53 (the

Federal Rules of Evidence “seek to avoid ‘unjustifiable expense and delay’ as part of their search

for truth and the ‘just determination’ of proceedings” (quoting Fed. R. Evid. 102)).

1710. See Procedural Paradigms, supra note 1709, at 1373–75.
§ 23.353 Manual for Complex Litigation, Fourth

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fully explored.1711 Where the case-management order requires the parties to

provide written critiques of the reasoning and methodology of opposing

experts that would form a basis for a Daubert challenge prior to the beginning

of expert depositions, the parties have the opportunity to explore—and the

challenged expert to defend—whether Daubert requirements have been met,

perhaps facilitating resolution of any subsequent Daubert motions on written

materials and eliminating the need for an evidentiary hearing.

The Daubert Court noted that a Rule 104(a) hearing is necessary only

where the opposing party, in response to a prima facie showing of admissibility, can point to a material dispute as to the expert’s methodology. The Third

Circuit, for example, has held that “when the ruling on admissibility turns on

factual issues, . . . at least in the summary judgment context, failure to hold [an

in limine] hearing may be an abuse of discretion.”1712 Although a number of

judges have provided for extensive Daubert hearings in some cases, the general

consensus seems to be that neither the party proffering the testimony nor the

party opposing it is entitled to a Rule 104(a) hearing.1713 One alternative is to

hold an evidentiary hearing only where, despite the affidavits and evidence

submitted by the parties, there are still questions that have not been addressed.1714

There is some disagreement as to whether a full-blown evidentiary hearing

is ever appropriate. Some courts have afforded an expanded Daubert hearing

that has taken the form of a minitrial, focused solely on the question of expert

admissibility. The Third Circuit has stated that the decision to grant a hearing

does not entitle the party to “an open-ended and never-ending opportunity to

meet a Daubert challenge until [the party] ‘gets it right.’”1715 If an evidentiary

1711. See, e.g., Oddi v. Ford Motor Co., 234 F.3d 143, 154 (3d Cir. 2000) (the most efficient

procedure is an in limine hearing, but where evidentiary record is well developed it is within

court’s discretion to conclude hearing may not be necessary). “The facts of the case and the

consequences of losing the in limine motion will determine the extent of the opportunity the

proponent of the expert must be given to present its case. When a hearing is held, it is important

that its limits be well defined and its progress carefully controlled.” Supreme Court’s Trilogy,

supra note 1560, at 29.

1712. Padillas v. Stork-Gamco, Inc., 186 F.3d 412, 418 (3d Cir. 1999); see also In re TMI

Litig., 199 F.3d 158, 159 (3d Cir. 2000) (in limine hearing is important where evidentiary

challenge is in context of summary judgment or where exclusion will eventually result in

summary judgment being granted). For a more thorough discussion of the interplay between a

Rule 104(a) hearing and a motion for summary judgment, see William W Schwarzer & Joe S.

Cecil, Management of Expert Evidence, in Reference Manual on Scientific Evidence 39, 54–56

(Federal Judicial Center 2d ed. 2000).

1713. See Oddi, 234 F.3d at 154–55.

1714. See, e.g., Padillas, 186 F.3d at 418.

1715. In re TMI Litig., 199 F.3d at 159.
Expert Scientific Evidence § 23.353

511

hearing is necessary, the extensiveness of the hearing will be determined by the

nature of the case and the type of expert testimony being offered. Obviously,

expanded proceedings can consider a broader range of issues and delve more

deeply into the underpinnings of expert testimony. However, the court should

take care to avoid assessing the credibility of expert testimony and should

ensure that it is not encroaching into the province of the jury in deciding

factual disputes among the parties.1716 In all cases, consider whether extensive

Daubert hearings are an effective use of both judicial and party resources.

When a hearing is appropriate, the court should precisely define the

hearing’s scope and control its progress; otherwise, hearings may take on a life

of their own, resulting in a lengthy, expensive, and unnecessary preview of the

trial. It is best to rule on motions by written order or on the record, stating

specifically the effect of the ruling and the grounds for it.1717 It is also advisable

to indicate whether the ruling is final or might be revisited at trial. Parties are

entitled to know whether they have preserved the issue for appeal or whether

an offer or objection at trial is necessary. It is helpful if the judge indicates

whether the ruling might be affected by evidence received at trial.1718

1716. “This gatekeeping role is simply to guard the jury from considering as proof pure

speculation presented in the guise of legitimate scientifically-based expert opinion. It is not

intended to turn judges into jurors or surrogate scientists.” Joiner v. Gen. Elec. Co., 78 F.3d 524,

530 (11th Cir. 1996), rev’d, 522 U.S. 136 (1997). See Jahn v. Equine Servs., PSC, 233 F.3d 382,

393 (6th Cir. 2000) (“[T]he district court erred by mischaracterizing the methodology employed

by Jahn’s experts and by weighing their testimony against that of pathologists . . . .”); see also

Anthony Z. Roisman, The Courts, Daubert, and Environmental Torts: Gatekeepers or Auditors, 14

Pace Envtl. L. Rev. 545 (1997).

1717. Jahn, 233 F.3d at 393 (“A district court should not make a Daubert ruling prematurely,

but should only do so where the record is complete enough to measure the proffered testimony

against the proper standards of reliability and relevance.”); United States v. Call, 129 F.3d 1402,

1405 (10th Cir. 1997) (although Daubert does not require a hearing, the district court should

ensure the record is sufficiently developed to allow appellate “determination of whether the

district court properly applied the relevant law”).

1718. See In re Paoli R.R. Yard PCB Litig., 916 F.2d 829, 854–55 (3d Cir. 1990) (proponent

of expert witness entitled to notice of grounds for exclusion and opportunity to remedy

deficiency); see also Padillas, 186 F.3d at 418 (court abused its discretion in entering summary

judgment after excluding expert evidence without holding an in limine hearing to consider

shortcomings of the expert’s report); Hall v. Baxter Healthcare Corp., 947 F. Supp. 1387,

1392–95 (D. Or. 1996) (convening Rule 104(a) hearing to determine admissibility of evidence of

harmful effects of silicone gel breast implants); Procedural Paradigms, supra note 1709, at

1380–81 (calling for fully developed record in challenges to scientific evidence to permit a basis

for trial court ruling on summary-judgment motion and for appellate court review). Federal

Rule of Evidence 103(a) was recently amended to preserve a claim of error for appeal once the

court makes a definitive ruling on the record admitting or excluding evidence either at or before

trial without the party’s renewing the objection. Fed. R. Evid. 103(a) committee note.
§ 23.354 Manual for Complex Litigation, Fourth

512

23.354 Summary Judgment

When a ruling excludes expert evidence offered to meet an essential

element of a party’s case,1719 or where the court rules that expert evidence is too

conclusory to raise a genuine issue of fact,1720 the ruling may provide a basis for

summary judgment. Summary-judgment motions frequently will be submitted

in conjunction with motions under Federal Rule of Evidence 104(a). Issues

determinative of admissibility under Rule 104(a), however, will not necessarily

be dispositive of the issues under Federal Rule of Civil Procedure 56 (i.e., the

absence of a genuine issue of material fact), although they may lay the foundation for summary judgment. The judge is advised to discuss with counsel their

intentions with respect to such motions at an early Rule 16 conference and to

consider whether there are likely to be grounds for a meritorious motion.1721

However, it is best to discourage the filing of proposed motions where triable

issues clearly appear to be present; voluminous and complex motions unlikely

to succeed simply delay the litigation and impose unjustified burdens on the

court and parties.1722

Declarations filed in opposition to summary-judgment motions must

present specific facts that would be admissible in evidence and that show a

genuine issue for trial.1723 At trial an expert is permitted to state an opinion

1719. See Celotex Corp. v. Catrett, 477 U.S. 317, 320 (1986) (district court excluded

plaintiff’s submitted evidence in defense of summary judgment regarding her deceased

husband’s exposure to defendant corporation’s asbestos products).

1720. In his dissenting opinion in American International Adjustment Co. v. Galvin, Judge

Posner stated the following:

[A] party cannot assure himself of a trial merely by trotting out in response to a motion for

summary judgment his expert’s naked conclusion about the ultimate issue . . . The fact that a

party opposing summary judgment has some admissible evidence does not preclude summary judgment. We and other courts have so held with specific reference to an expert’s conclusional statements . . . The Federal Rules of Evidence permit ‘experts to present naked

opinions,’ but ‘admissibility does not imply utility . . . An expert who supplies nothing but a

bottom line supplies nothing of value to the judicial process,’ and his ‘naked opinion’ does

not preclude summary judgment.

86 F.3d 1455, 1464 (7th Cir. 1996) (Posner, C.J., dissenting).

Parties must be given an adequate opportunity for discovery to develop the evidence

necessary to oppose a summary-judgment motion. See Celotex, 477 U.S. at 322 (the opponent of

the motion is entitled to “adequate time for discovery” needed to oppose the motion); William

W Schwarzer & Alan Hirsch, Summary Judgment After Eastman Kodak, 45 Hastings L.J. 1, 17

(1993). The disclosures required under Rule 26(a)(2) should help in developing an adequate

record.

1721. See Fed. R. Civ. P. 16(c)(5).

1722. See generally Procedural Paradigms, supra note 1709, at 1376–81; Edward Brunet, The

Use and Misuse of Expert Testimony in Summary Judgment, 22 U.C. Davis L. Rev. 93 (1988).

1723. See Fed. R. Civ. P. 56(e).
Expert Scientific Evidence § 23.36

513

without first testifying to the underlying data. (Federal Rule of Evidence 705, as

amended in 1993, permits an expert “to testify in terms of opinion or inference

and give reasons therefore without first testifying to the underlying facts or

data, unless the court requires otherwise.” This eliminated the much criticized

practice of asking experts hypothetical questions, leaving it to crossexamination at trial to bring out relevant facts.1724) A declaration containing

conclusory statements of opinion by an expert, however, unsupported by facts,

is insufficient to raise a triable issue.1725 The sufficiency of an expert’s declaration is logically intertwined with the admissibility of the expert’s testimony at

trial. Thus, it makes sense, as noted above, to combine the Rule 104(a) and

Rule 56 proceedings. The reliability and validity of the expert evidence should

be assessed prior to resolving the issues presented on summary judgment.

23.36 Final Pretrial Conference

The goal of the final pretrial conference is to formulate the plan for trial,

including a program for facilitating the admission of evidence.1726 Issues should

at this point be defined with precision and finality to the extent they can be

resolved prior to trial. This includes ruling on pending objections to expert

testimony by motions in limine or otherwise, and trying to arrive at stipulations of facts and other matters to streamline the trial. The following techniques can aid this process:

• direct the parties to submit statements identifying the disputed portions of the opposing experts’ reports;

• require the submission of a joint statement specifying the matters on

which the experts disagree and the bases for each disagreement;

• rule on the admissibility of all exhibits and demonstrations to be offered by experts at trial, such as films, videos, simulations, or mod1724. Fed. R. Evid. 705 committee note; see also id. 703 (requiring court to balance the

probative value of inadmissible evidence relied on by an expert in forming his or her opinion,

with its prejudicial effect if it were to be disclosed to the jury).

1725. See First United Fin. Corp. v. United States Fid. & Guar. Co., 96 F.3d 135, 140–41 (5th

Cir. 1996) (according to circuit precedent, expert affidavits should include some indication of

the reasoning process underlying the expert’s opinion); Mendes-Silva v. United States, 980 F.2d

1482, 1488 (D.C. Cir. 1993). But see Bulthuis v. Rexall Corp., 789 F.2d 1315, 1318 (9th Cir. 1985)

(per curiam) (holding that expert opinion is admissible and may defeat a summary-judgment

motion if it appears that the affiant is competent to give expert opinion and the factual basis for

the opinion is stated in the affidavit, even though the underlying factual details and reasoning on

which the opinion is based are not).

1726. Fed. R. Civ. P. 16(d).
§ 23.37 Manual for Complex Litigation, Fourth

514

els—the judge should give opposing parties a full opportunity to review them in advance of trial and to raise any objections;

• encourage cooperation in presenting scientific or technical evidence,

such as joint use of courtroom electronics, stipulated models, charts or

displays, tutorials, and a glossary of technical terms for the court and

jury; and

• encourage stipulations on relevant background facts and other noncontroversial matters.

23.37 Trial

Attorneys and witnesses in scientific and technological cases tend to use

the jargon of the discipline, which is a language foreign to others. From the

outset, it is advisable to require the attorneys and the witnesses to use plain

English to describe the subject matter and present evidence so that it can be

understood by laypersons. Consider reminding experts from time to time that

they are not talking to each other, but are there to communicate with the jury

and the judge.1727 The court also may explore at the pretrial conference the use

of techniques to facilitate presentation of evidence so that the trier of fact can

understand the subject matter and make informed decisions. Practices that,

singly or in combination, are worthy of consideration include the following:1728

• Structuring the trial. One of the main obstacles to comprehension is an

excessively lengthy trial. The court may limit the trial’s length by limiting the scope of the issues, the number of witnesses and documents,

and the time for each side to conduct direct examination and crossexamination. Some cases can be bifurcated, and some can be segmented by issues so that the jury retires at the conclusion of the evidence on each issue to deliberate on a special verdict.1729 Such sequential approaches to the presentation of a case to the jury may be useful

for the trial of severable issues, such as punitive damages, general

causation, exposure to a product, and certain affirmative defenses. On

the other hand, such approaches make it more difficult to predict for

the jurors how long the trial will last.

• Jury management. Consider giving preliminary instructions that explain what the case is about and what issues the jury will have to de1727. See generally supra sections 11.6, 12.2–12.4; William W Schwarzer, Reforming Jury

Trials, 1990 U. Chi. Legal F. 119.

1728. See also 1998 ABA Civ. Trial Prac. Stand. 26.

1729. See Fed. R. Civ. P. 42(b).
Expert Scientific Evidence § 23.37

515

cide. Jurors may be permitted to take notes, and they may be given

notebooks with key exhibits, glossaries of complex terms, stipulations,

lists of witnesses, and timelines or chronologies. Permitting jurors to

ask questions, usually submitted through the court, can also aid their

comprehension. Some judges have found interim summations (or interim opening statements) helpful to juror comprehension; the attorneys are allotted a certain amount of time to introduce witnesses and

point out the expected significance of their testimony (e.g., “The next

witness will be Dr. X, who will explain how the fracture should have

been set. He will give you his opinion about the proper use of

screws.”).

• Tutorials. A neutral expert can be retained to present a tutorial for the

judge and jury before the presentation of expert evidence at trial begins, outlining the fundamentals of the relevant science or technology

without touching on disputed issues. Consider having the parties’ experts testify back-to-back at trial so that jurors can get the complete

picture of a particular issue at one time rather than getting bits and

pieces at various times during the trial.

• Presentation of evidence. Various technologies can facilitate the presentation of exhibits. Some technologies are computer based and some

simply facilitate projection of documents on a screen, which allows all

jurors to follow testimony about a document. Counsel should be advised to use summaries of voluminous data; stipulated summaries of

depositions in lieu of a reading of the transcript are helpful. Charts,

models, pictures, videos, and demonstrations can all assist juror comprehension.
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Part III

Particular Types of Litigation

_______________

30. Antitrust 519

31. Securities 527

32. Employment Discrimination 561

33. Intellectual Property 599

34. CERCLA (Superfund) 643

35. Civil RICO 689
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519

30. Antitrust

.1 Managing the Issues 519

.2 Transactional and Economic Data, and Expert Opinions 522

.3 Conflicts of Interest 524

.4 Related Proceedings 524

Claims or defenses arising under the antitrust laws do not invariably require treatment as complex litigation. Antitrust litigation can, however, involve voluminous documentary and testimonial evidence, extensive discovery,

complicated legal, factual, and technical (particularly economic) questions,

numerous parties and attorneys, and substantial sums of money, calling for the

application of techniques and procedures for the management of complex litigation.1730 Antitrust claims are not limited to complaints: They are also frequently raised in counterclaims, particularly in patent litigation. Antitrust

claims are often brought as class actions and may be filed in several federal and

state courts concurrently with or following criminal or administrative proceedings. Antitrust trials usually are long, and there often are controversies

over settlements and attorney fees. The earlier sections of this manual will

therefore be relevant to many of the issues that arise in the management of

complex antitrust litigation, both civil and criminal. In particular, some of the

procedures used to manage mass tort and securities cases (see sections 22, 31)

may also be of value in multiparty antitrust cases.

1730. Many of the principles and practices of judicial management and of the procedures

discussed in this manual were initially developed in antitrust litigation. See William W

Schwarzer, Managing Antitrust and Other Complex Litigation (1982); ABA Antitrust Section,

Monograph No. 3, Expediting Pretrial and Trial of Antitrust Cases (1979); National Commission for the Review of Antitrust Laws and Procedures, Antitrust Commission Report, 80 F.R.D.

509 (1979). See also ABA Section of Antitrust Law, Antitrust Law Developments (5th ed. 2002).

30.1 Managing the Issues

Effective management of antitrust litigation requires identifying, clarifying,

and narrowing pivotal factual and legal issues as soon as practicable (see generally section 11.3). Unless the judge and the attorneys give early attention to

these issues, substantial time may be wasted on claims subject to summary

dismissal, on class action disputes not critical to the class-certification ruling,

and on discovery not relevant to the later-refined issues regarding liability or

damages. Defining the issues at an early stage may enable the court to structure
§ 30.1 Manual for Complex Litigation, Fourth

520

the litigation so as to limit the scope and volume of discovery, reduce cost and

delay, facilitate the prospects of settlement, and improve the trial.

The procedures for pretrial management of complex litigation discussed in

section 11 apply generally to antitrust litigation. General principles relevant to

structuring trials apply to antitrust litigation, although the judge should take

particular care when considering severance of damage issues from other elements of the claim (see sections 11.631–11.632).1731

Issues that may arise in antitrust litigation and may be appropriate for

pretrial resolution include the following:

• Subject-matter jurisdiction. Jurisdictional issues that may be capable of

summary resolution under Federal Rule of Civil Procedure 56 or by a

separate Rule 42 evidentiary hearing are (1) whether the requisite effect on interstate commerce can be established1732 and (2) whether the

claim is within the reach of the antitrust laws.1733

• Standing. A motion under Rule 12 or 56 or by a separate trial under

Rule 42 can sometimes resolve the legal issues of whether the claimant

enjoys standing to maintain a claim for damages1734 and whether injury to competition can be demonstrated.

• Exemptions, immunities. The application of antitrust laws may be

barred or limited by statutory exemptions or immunities, such as

1731. Compare Ala. v. Blue Bird Body Co., 573 F.2d 309, 318–19, 328 (5th Cir. 1978) (disapproving of bifurcation of liability and damages), and Windham v. Am. Brands, Inc., 565 F.2d

59, 70–72 (4th Cir. 1977) (upholding denial of bifurcation), with In re Plywood Antitrust Litig.,

655 F.2d 627, 631–36 (5th Cir. 1981) (permissible to try issue of statutory violation, including

existence of injury and method of calculating damages, separately from amount of individual

damages), and Franklin Music Co. v. Am. Broad. Cos., 616 F.2d 528, 538 (3d Cir. 1979) (upholding bifurcation of liability and damages phases of trial). Bifurcation of liability and damages

issues “must be approached with trepidation.” Response of Carolina, Inc. v. Leasco Response,

Inc., 537 F.2d 1307, 1324 (5th Cir. 1976).

1732. See, e.g., McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232 (1980).

1733. Compare Hunt v. Mobil Oil Corp., 550 F.2d 68, 73, 79 (2d Cir. 1977) (pretrial dismissal based on “act of state” doctrine), with Int’l Ass’n of Machinists & Aerospace Workers v.

Org. of the Petroleum Exporting Countries, 649 F.2d 1354, 1361–62 (9th Cir. 1981) (“act of

state” doctrine applied after trial).

1734. See, e.g., Kansas v. Utilicorp. United, Inc., 497 U.S. 199 (1990) (actions by states and

utilities consolidated after summary judgment as to standing); Associated Gen. Contractors v.

Cal. State Council of Carpenters, 459 U.S. 519 (1983) (standing requires analysis of relationship

between defendants’ conduct and plaintiff’s injury); Ill. Brick Co. v. Ill., 431 U.S. 720 (1977) (no

federal antitrust damages for “indirect” purchases); Brunswick v. Pueblo Bowl-O-Mat, Inc., 429

U.S. 477 (1977) (“antitrust injury” requirement); Zenith Radio Corp. v. Hazeltine Research,

Inc., 395 U.S. 100 (1969) (“direct injury” requirement).
Antitrust § 30.1

521

those applicable to the insurance industry1735 or organized labor,1736

where restraints are imposed or authorized by state action,1737 or where

collective solicitation of governmental action has occurred.1738 The application of the antitrust laws may also be circumscribed by the primary or exclusive jurisdiction of a regulatory agency.

• Statute of limitations. Whether an action or claim is time-barred may

be appropriate for early resolution by summary judgment.1739

• Market definition. The definition of the relevant geographic and product market may be critical, and it may determine the existence of market power requisite to prove liability and may also determine the scope

of relevant evidence. The parties may be willing to stipulate to, or narrow, the range of dispute over the facts, and at least some facts may be

subject to judicial notice. The dispute over the market may be susceptible to resolution under Rule 56 in the absence of disputed evidentiary facts (see section 11.34), or through a separate bench or jury trial

under Rule 42. Where extensive fact finding is required, the issue may

be referred to a special master, magistrate judge, or court-appointed

expert for a report and recommendation (see section 11.5).

• Theory and proof of damages. Attention to liability issues in antitrust

cases may lead to neglect of injury and damage issues. Early consideration of the proposed theory of damages and proof of cognizable

injury may significantly affect the conduct of the litigation. The alleged

injury may not qualify as antitrust injury, or the damages claimed

may, in whole or in part, not be recoverable under the antitrust laws; if

so, claims may be subject to dismissal, the scope of discovery may be

reduced, or the method for proving damages may be altered. The extent to which injury and damages will require individualized proof can

be critical in determining whether to certify a class of antitrust claim1735. See 15 U.S.C. §§ 1011–1015 (2000); Group Life and Health Ins. Co. v. Royal Drug

Co., 440 U.S. 205 (1979) (narrow construction of insurance exception).

1736. 29 U.S.C. §§ 101–110, 113–115 (2000); United States v. Hutcheson, 312 U.S. 219

(1941).

1737. See FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992); Patrick v. Burget, 486 U.S. 94

(1988); S. Motor Carriers Rate Conf., Inc. v. United States, 471 U.S. 48 (1985); Cal. Retail Liquor

Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); Parker v. Brown, 317 U.S. 341

(1943).

1738. United Mine Workers v. Pennington, 381 U.S. 657 (1965); E. R.R. Presidents’ Conf.

v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961).

1739. See, e.g., Norton-Children’s Hosps. v. James E. Smith & Sons, 658 F.2d 440 (6th Cir.

1981); Dayco Corp. v. Goodyear Tire & Rubber Co., 523 F.2d 389 (6th Cir. 1975).
§ 30.2 Manual for Complex Litigation, Fourth

522

ants or whether a consolidated trial of separate but related claims is

feasible.

Early scrutiny of the claimed damages can facilitate settlement, either because of the magnitude of the potential exposure or because

provable damages are too small to justify the cost of pursuing the litigation. Indeed, in some cases the court may conclude that the initial

discovery should focus on the existence and amount of damages. Such

discovery may lead to a separate trial on damages issues prior to conducting extensive discovery and a trial on liability issues, such as the

existence of a conspiracy (see discussion of sequencing discovery in

section 11.422). If relatively little time would be needed for discovery

and trial of the issues of impact and damages caused by a particular

practice, substantial savings may be effected by postponing significant

discovery on liability issues, since any damage verdict could pave the

way to an early settlement. If the practice in question is well defined in

scope and time, such “reverse bifurcation” may be feasible, subject to

the substantive rules of antitrust law. In any event, the pretrial exchange of expert reports, computations, and exhibits regarding injury

and damages should be required (see section 11.48), whether a separate trial is held or not.

Consider establishing a schedule for early completion of motionrelated discovery and the submission and decision of motions. Merits

discovery should be stayed only to the extent that the outcome of a

motion will significantly affect the scope of that discovery.

30.2 Transactional and Economic Data, and Expert

Opinions

Antitrust cases often involve the collection, assimilation, and evaluation of

vast amounts of evidence regarding numerous transactions and other economic data. Some of this material may be entitled to protection as trade secrets

or confidential commercial information. Effective management of such cases

depends on pretrial procedures that facilitate the production and utilization of

this material and its efficient presentation at trial as well as the early resolution

of privilege claims. The following are among the measures that may be useful:

• Limiting scope of discovery. Early attention to the issues may make feasible reasonable limits on the scope of discovery. Limits may be fixed

with reference to the transactions alleged to be the subject matter of

the case, to the relevant products or services, or to geographical areas

and time periods. Limits should be subject to modification if a need

for broader discovery later arises. See generally section 11.423.
Antitrust § 30.2

523

• Confidentiality orders. Protective orders may facilitate the expeditious

discovery of materials entitled to protection as trade secrets or other

confidential commercial information (see section 11.432). Especially if

the parties are competitors, provisions may preclude or restrict disclosure by the attorneys to their clients. Particularly sensitive information, such as customer names and pricing instructions, may be masked

by excision, codes, or summaries without impairing the utility of the

information in the litigation.

• Summaries and computerized data. The court should encourage the

parties to work out arrangements for the efficient and economical exchange of voluminous data. Where feasible, data in computerized

form should be produced in computer-readable format. Identification

of computerized data may lead to agreement on a single database on

which all expert and other witnesses will rely in their testimony. Other

voluminous data can be produced by way of summaries or tabulations—subject to appropriate verification procedures to minimize and

quickly resolve disputes about accuracy—obviating extensive discovery of source documents. Counsel should produce such exhibits well

in advance of trial. See generally sections 11.446 (discovery of computerized data) and 11.492 (summaries).

• Other sources. Relevant economic data may be available from government or industry sources more quickly and cheaply than through discovery from the litigants. Accordingly, consider making an early determination regarding the admissibility of such evidence under Federal

Rules of Evidence 803(8), (17), and (18).

• Expert opinions. Parties may plan to retain economists to study such

topics as relevant markets, the concentration of economic power,

pricing structures, elasticity of demand, barriers to entry, marginal

costs, and the effect of the challenged practices on competition and the

claimants. Early in the litigation, it is advisable to call for an identification of the subjects on which expert testimony will likely be offered, determine whether such testimony is necessary, rule at least

preliminarily on the appropriate scope of expert testimony, and establish a schedule for disclosure of experts’ reports, recognizing that some

studies may require considerable time to prepare and review. Agreement on a common database for all experts to use is desirable, and the

court can require the parties to agree on methodology and form before
§ 30.4 Manual for Complex Litigation, Fourth

524

conducting surveys or polls (see section 11.493).1740 Under Federal

Rule of Evidence 104(a),1741 the judge must hear and decide, before

trial, objections to the admissibility of experts’ opinions. If significant

conflicts exist between the parties’ experts on matters of theory, an expert may be appointed by the court under Federal Rule of Evidence

706 (see section 11.51). See generally section 11.48.

30.3 Conflicts of Interest

The judge should identify, early in the litigation, possible conflicts of interest that may lead to disqualification of attorneys1742 (see section 10.23) or

recusal of the judge (see section 10.121). These problems may be acute in antitrust actions brought on behalf of large classes of purchasers, because the identification of class members—which can result in disqualification of the judge

under 28 U.S.C. § 4551743—usually may not occur until after substantial proceedings have taken place. Accordingly, it is wise to consider the feasibility of

asking the parties to provide a list of known class members.

30.4 Related Proceedings

Antitrust litigation sometimes involves a number of individual and class

actions for damages filed in several federal and state courts, and may involve

criminal or administrative proceedings as well. Such parallel or related proceedings should be taken into account when developing and implementing a

management plan for the litigation.

Recognizing the desirability of centralized management, the Judicial Panel

on Multidistrict Litigation commonly transfers civil antitrust cases for pretrial

purposes under 28 U.S.C. § 1407, usually to a district in which related civil

cases, and sometimes also criminal or civil proceedings brought by the United

1740. See also Reference Manual on Scientific Evidence (Federal Judicial Center, 2d ed.

2000).

1741. See, e.g., Daubert v. Merrell-Dow Pharm., Inc., 509 U.S. 579 (1993).

1742. See, e.g., Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221 (7th Cir. 1978);

Westinghouse Elec. Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir. 1978).

1743. See In re Cement Antitrust Litig., 688 F.2d 1297 (9th Cir. 1982), aff’d sub nom. Ariz.

v. United States Dist. Court, 459 U.S. 1191 (1983) (affirming under 28 U.S.C. § 2109). Note that

28 U.S.C. § 455(f) (added following this decision) allows a judicial officer who discovers a financial interest after devoting “substantial judicial time” to a case to avoid recusal by divestment,

unless the interest “could be substantially affected by the outcome.” 28 U.S.C. § 455(f) (West

2002).
Antitrust § 30.4

525

States, are pending (section 1407 does not apply to criminal cases or civil antitrust actions brought by the United States1744). If centralized management of

the entire litigation is impossible or impractical, the affected courts should

nevertheless attempt to coordinate proceedings through procedures such as

those described in sections 10.123 and 20.14. Injunctions against or stays of

parallel actions generally are not available (see section 20.32).

Special problems are presented when conduct that is the basis for civil antitrust claims is also the subject of criminal or administrative proceedings. Indeed, disclosure of a criminal or administrative investigation frequently triggers the filing of civil actions (see section 20.2). Ordinarily, the criminal

charges should be tried first, not only because of the requirements of the

Speedy Trial Act but also because Fifth Amendment claims tend to disrupt civil

discovery. (Completion of a witness’s testimony in the criminal case will not

necessarily preclude that witness from invoking the Fifth Amendment in subsequent civil proceedings.1745) However, a general stay of all activities in the

civil litigation pending completion of the criminal case will rarely be appropriate.1746 Similarly, although a decision by the Federal Trade Commission or

some other agency may narrow the issues or reduce the scope of discovery, the

judge should weigh the rights and interests of all parties before deciding

whether to defer any of the proceedings in the civil actions. For example, enforcement proceedings may result in collateral estoppel.1747

Special problems are also presented where parallel litigation is brought in

federal and state courts (see section 20.3) alleging violations of federal and state

antitrust laws arising out of substantially the same conduct. Although state and

federal claims may substantially overlap, federal antitrust law does not preempt

state law.1748 Removal is not permissible except in the unusual case where the

court finds that the claim asserted is simply a disguised federal claim,1749 and an

1744. 28 U.S.C. § 1407(g) (West 2002).

1745. See Pillsbury Co. v. Conboy, 459 U.S. 248 (1983).

1746. See Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936); Texaco, Inc. v. Borda, 383

F.2d 607 (3d Cir. 1967).

1747. See, e.g., Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979). Moreover, the findings

of an agency may be admissible under Federal Rule of Evidence 803(8)(C), perhaps eliminating

the need for certain discovery. See, e.g., In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238

(3d Cir. 1983), rev’d on other grounds sub nom. Matsushita Elec. Indus. Co. v. Zenith Radio

Corp., 475 U.S. 574 (1986); In re Plywood Antitrust Litig., 655 F.2d 527 (5th Cir. 1981).

1748. See Cal. v. ARC Am. Corp., 490 U.S. 93 (1989).

1749. See Federated Dep’t Stores v. Moitie, 452 U.S. 394, 397 n.2 (1981) (reaching merits of

defense in antitrust action removed from state court).
§ 30.4 Manual for Complex Litigation, Fourth

526

injunction is rarely available.1750 The judges involved, however, may coordinate

the proceedings informally. See section 20.31.

The availability to different classes of purchasers of separate and distinct

remedies in state and federal court, along with the general unavailability of injunctions against state proceedings, can create serious problems in achieving

global settlements. Antitrust claims are frequently brought under state antitrust laws that permit indirect purchasers to recover or provide a more favorable measure of damages.1751 Thus, a settlement with the federal plaintiffs (direct purchasers) will not bar later state law claims by indirect purchasers.1752 In

some circumstances, however, a court may enjoin state proceedings under the

All Writs Act1753 to effectuate a global settlement in a complex litigation.1754

1750. See 28 U.S.C. § 2283 (West 2002) (Anti-Injunction Act); Younger v. Harris, 401 U.S.

37 (1971) (federal courts should ordinarily not enjoin pending state criminal proceedings).

1751. See Alton Box Bd. Co. v. Esprit De Corp., 682 F.2d 1267 (9th Cir. 1982); In re Corrugated Container Antitrust Litig., 659 F.2d 1332, 1336 (5th Cir. 1981). See Antitrust Law Developments, supra note 1730, at 811–12 (“nineteen states and the District of Columbia have statutes

that specifically permit indirect purchasers (who could not recover damages under federal law)

to recover damages for state antitrust violations”); 14 Herbert Hovenkamp, Antitrust Law

¶ 2412d (1999) (indirect purchasers under federal and state law); 2 Phillip E. Areeda et al., Antitrust Law ¶ 317f (2d ed. 2000) (res judicata and state law).

1752. Cal. v. ARC Am. Corp., 490 U.S. 93 (1989).

1753. 28 U.S.C. § 1651 (West 2002). See supra sections 21.15 & 21.42. See also FTC v. Dean

Foods Co., 384 U.S. 597, 603–04 (1966) (citing cases interpreting the Act).

1754. See, e.g., Battle v. Liberty Nat’l Life Ins. Co., 877 F.2d 877 (11th Cir. 1989), aff’g 660 F.

Supp. 1449 (N.D. Ala. 1987); In re Corrugated Container, 659 F.2d 1332 (5th Cir. 1981). Cf. In

re Real Estate Title & Settlement Services Antitrust Litig., 869 F.2d 760 (3d Cir. 1989) (directing

lower court to vacate injunction for lack of personal jurisdiction); Alton Box, 682 F.2d at

1270–73 (upholding denial of injunction sought against nonparty to federal action in different

court). See supra section 20.32 (jurisdictional conflicts in related state and federal cases).
527

31. Securities

.1 Introduction 527

.2 Statutory Framework 528

.3 The Private Securities Litigation Reform Act 529

.31 Class Representatives and Lead Plaintiffs 531

.32 Pleading Requirements 540

.33 Safe Harbor 543

.34 Discovery Stays 544

.4 Initial Pretrial Conference 545

.5 Class Actions and Derivative Actions 550

.6 Discovery 553

.7 Takeover Litigation 554

.71 Initial Conference 554

.72 Injunctive Relief 556

.73 Discovery 558

.8 Trial and Settlement 558

31.1 Introduction

The goal of the Securities Act of 19331755 (1933 Act) and the Securities Exchange Act of 19341756 (1934 Exchange Act) is to ensure that issuers of public

securities provide all necessary and accurate information to investors. The

statutes prohibit the sale or purchase of securities through false or misleading

statements. Most litigation in the securities area centers on these two statutes

and is based on allegations of fraud or misstatements in the purchase, sale, or

offering of securities and other alleged market or management abuses. Causes

of action also exist under sections 77k, 77l(a), and 77o of the 1933 Act and

section 78t(a) of the 1934 Exchange Act. Private rights of action, both express

and implied, are available under the statutes,1757 although the Supreme Court

in recent years has narrowed the availability of implied remedies through cases

1755. 15 U.S.C. §§ 77a–77aa (2000).

1756. Id. §§ 78a–78mm.

1757. Most notably, there is the implied remedy under Securities and Exchange Commission (SEC) Rule 10b-5 for fraud in connection with the purchase or sale of securities and the

remedy for fraud in connection with the solicitation of shareholder votes. These two remedies

have been so firmly entrenched in the federal jurisprudence that they have survived the general

cutback in the recognition of private remedies. Thomas Lee Hazen, The Law of Securities Regulation § 1.7, at 65 (3d ed. 1996). See also Herman & MacLean v. Huddleston, 459 U.S. 375

(1983).
§ 31.2 Manual for Complex Litigation, Fourth

528

such as Central Bank of Denver v. First Interstate Bank of Denver,

1758 which

eliminated an implied private right of action against aiders and abettors.1759

Cases alleging securities fraud can present problems similar to those that

arise in mass tort litigation. Many cases are brought as class actions, triggering

the requirements of Federal Rule of Civil Procedure 23 as well as limitations

imposed by the Private Securities Litigation Reform Act (PSLRA).1760 This section discusses some of the issues and problems peculiar to securities litigation,

and particularly securities fraud class actions.

31.2 Statutory Framework

The 1933 Act prohibits offering securities to the public for sale or purchase

unless they have been registered with the Securities and Exchange Commission

(SEC).1761 Companies are required to file registration statements that fully disclose all of the information required by the statute and by SEC rules prior to

such sale. These registration and disclosure provisions apply to the issuance or

distribution of securities, and the statute’s protection extends only to the purchaser.1762 Civil liability can be imposed for misrepresentations and omissions

in registration statements or where securities are sold in violation of the registration requirements, as well as under the general antifraud provisions of section 77q(a).1763 The 1934 Exchange Act regulates the public trading of securities. The statute requires that any securities traded on a national exchange

must be registered with the SEC, with full disclosure of relevant information

about the company. Unlike the 1933 Act, the 1934 Exchange Act protects both

sellers and purchasers.

1758. 511 U.S. 164 (1994).

1759. The Supreme Court had previously noted the absence of “aiding and abetting” language in section 10(b) of the Exchange Act and in 17 C.F.R. § 240.10b-5 (1995), but it was not

until the decision in Central Bank of Denver that the Court held aiding and abetting liability in

private actions could not be imposed. As a consequence, civil actions based on theories of aiding

and abetting may only be brought by the SEC and then, only where the defendant acts knowingly. See Melissa Harrison, The Assault on the Liability of Outside Professionals: Are Lawyers and

Accountants Off the Hook?, 65 U. Cin. L. Rev. 473, 505 (1997); see also Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737 (codified as amended at 15 U.S.C.

§§ 77z-1, 78u-4 to -5 (2000)) (citations to the PSLRA hereafter will refer to the amendments to

the 1934 Exchange Act, although parallel provisions were added to the 1933 Act except where

noted).

1760. 15 U.S.C. § 78u-4 (2000).

1761. Id. § 77e.

1762. Express remedies are provided for in 15 U.S.C. §§ 77k, 77l(a), 77o (2000).

1763. See Hazen, supra note 1757, at 7.
Securities § 31.3

529

Most securities actions under the 1934 Exchange Act allege either violations of section 10(b),1764 which prohibits using any manipulative or deceptive

device in connection with the purchase or sale of securities, or violations of

SEC Rule 10b-5,1765 which extends liability to include misstatements and omissions, or both. These actions typically take the form of securities fraud class

actions. The 1934 Exchange Act also created the SEC to administer and enforce

the securities statutes.1766 Both the 1933 Act and the 1934 Exchange Act rely

heavily on self-regulation by affected companies, with the SEC providing the

necessary oversight. The SEC has the authority to promulgate rules and regulations, investigate potential violations, impose fines, and seek equitable or

other relief.1767 In addition to instituting enforcement actions and levying administrative sanctions,1768 however, the SEC can refer conduct to the Department of Justice for criminal prosecution.

31.3 The Private Securities Litigation Reform Act

.31 Class Representatives and Lead Plaintiffs 531

.32 Pleading Requirements 540

.33 Safe Harbor 543

.34 Discovery Stays 544

The Private Securities Litigation Reform Act of 1995 (PSLRA) sought to

prevent frivolous and unmeritorious securities class actions through broadbased legislation reaching both substantive and procedural law, as well as by

instituting other reforms in securities actions. The legislation was targeted towards certain perceived abuses of securities class actions arising out of lawsuits

brought on behalf of “professional plaintiffs” or plaintiffs with at best a nominal interest in the securities at issue.1769 The PSLRA directs the court to appoint

1764. 15 U.S.C. § 78j(b) (2000).

1765. 17 C.F.R. § 240.10b-5 (1995).

1766. The SEC is composed of five members, appointed by the President with the approval

of the Senate, who function as a bipartisan, quasi-judicial agency. 15 U.S.C. § 78d(a) (2000); see

also 1 Hazen, supra note 1757, §§ 1.3–1.3[3].

1767. The SEC also functions as an original and appellate tribunal in connection with licensing and disciplinary charges.

1768. The SEC can, among other things, issue civil fines in administrative proceedings,

freeze assets, and seek forfeiture. See, e.g., SEC v. Gonzales de Castilla, 170 F. Supp. 2d 427

(S.D.N.Y. 2001) (SEC issued freeze order on defendant’s assets in insider trading case).

1769. “In place of that practice—a practice wherein the class lawyer selected the class

plaintiff—Congress sought to substitute a new model . . . . Under the new model, the court

would appoint the lead plaintiff who, in turn, would select and direct class counsel.” In re Network Assocs., Inc. Sec. Litig., 76 F. Supp. 2d 1017, 1020 (N.D. Cal. 1999). See also Greebel v. FTP
§ 31.3 Manual for Complex Litigation, Fourth

530

as lead plaintiffs the “person or group of persons” with the greatest financial

interest in order to encourage institutional investors, who are more likely to

have significant financial holdings at stake as well as greater sophistication and

experience in securities matters, to exercise control over the litigation and over

counsel.1770 The PSLRA changed the selection criteria for lead plaintiffs from

the first to file to the adequacy of the proposed class representative. The PSLRA

has had the greatest impact on class actions alleging corporate fraud under 15

U.S.C. § 78j(b) and SEC Rule 10b-5, and its provisions are found in 15 U.S.C.

§§ 77z-1 and 77z-2 of the 1933 Act and 15 U.S.C. §§ 78u-4 and 78u-5 of the

1934 Exchange Act.

Efforts by plaintiffs to circumvent the statutory reforms of the PSLRA by

filing securities fraud class actions in state court were rebuffed with the passage

of the Securities Litigation Uniform Standards Act in 1998 (Uniform Standards

Act).1771 The Uniform Standards Act preempted state law securities fraud class

Software, Inc., 939 F. Supp. 57, 58 (D. Mass. 1996) (The PSLRA arose from a belief “that the

plaintiff’s bar had seized control of class action suits, bringing frivolous suits on behalf of only

nominally interested plaintiffs in the hope of obtaining a quick settlement.” (citing S. Rep. No.

104-98, at 8–11 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 687–90)); In re Party City Sec. Litig.,

189 F.R.D. 91, 103 (D.N.J. 1999) (“Prior to the enactment of the PSLRA, plaintiffs in securities

fraud cases tended to profit irrespective of the culpability of the defendants, most of whom chose

settlement over prolonged and expensive litigation.” (citing H.R. Conf. Rep. No. 104-369, at

31–35 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 730–34)).

1770. In re USEC Sec. Litig., 168 F. Supp. 2d 560, 560–64 (D. Md. 2001); see In re

Donnkenny Inc. Sec. Litig., 171 F.R.D. 156, 157 (S.D.N.Y. 1997) (The PSLRA serves to “ensure

that institutional plaintiffs with expertise in the securities market and real financial interests in

the integrity of the market would control the litigation, not lawyers.” (citing H.R. Conf. Rep. No.

104-369, at 31–35 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 730–34)); Gluck v. CellStar Corp.,

976 F. Supp. 542, 548 (N.D. Tex. 1997) (institutional investors likely to have largest financial

interest, and Congress intended institutional investors to play greater role in directing securities

fraud litigation); Greebel, 939 F. Supp. at 63 (PSLRA creates presumption in favor of institutional investors). See also In re Horizon/CMS Healthcare Corp. Sec. Litig., 3 F. Supp. 2d 1208,

1212 (D.N.M. 1998) (The PSLRA “appears to reflect a congressional intent to transfer power

from counsel who win the race to the courthouse to those shareholders who possess a sufficient

financial interest in the outcome to maintain some supervisory responsibility over both the litigation and their counsel.” (citing Michael Y. Scudder, Comment, The Implications of MarketBased Damages Caps in Securities Class Actions, 92 Nw. U. L. Rev. 435, 437 (1997))).

1771. 15 U.S.C. §§ 77p, 78bb (2000). The statute exempts four categories of actions:

(1) exclusively derivative actions; (2) actions pursuant to contractual agreements between issuers

and indenture trustees; (3) actions by states or political subdivisions or pension plans; and

(4) certain other actions brought under the corporate laws of the state of incorporation. Id.

§§ 77p(f), 78bb(f). See, e.g., Derdiger v. Tallman, 75 F. Supp. 2d 322, 324 (D. Del. 1999) (case

involving claims under Delaware law by issuer to shareholders not subject to Uniform Standards

Act provisions).
Securities § 31.31

531

actions,1772 granted federal courts the authority to stay discovery in private

state-court actions1773 and mandated removal to federal court of state-court

securities class actions that fell within the purview of the statute, followed by

their automatic dismissal.1774 The enactment of the Uniform Standards Act

effectively placed exclusive jurisdiction over fraud-based securities class actions

in federal court.

The PSLRA has had a significant impact on case management of securities

litigation, including procedures for the appointment of class representatives

and counsel, heightened pleading requirements on claims alleging fraud, provisions for discovery stays, and a “safe harbor” for forward-looking statements.

Other changes include the adoption of a “90-Day Look-Back Period” in calculating damages under 17 Code of Federal Regulations (C.F.R.) § 10b-5, limiting attorney fees in class actions to a reasonable percentage of the class recovery, and limiting defendants’ liability in section 10(b) cases to their proportionate share (with certain exceptions where joint and several liability may still

apply). Much of the case law interpreting the PSLRA obligations has focused

on the lead plaintiff and pleading provisions.

31.31 Class Representatives and Lead Plaintiffs

The PSLRA does not establish specific procedures for courts in implementing the lead plaintiff provisions, nor does it identify selection criteria

other than financial interest and the traditional adequacy and typicality requirements of Federal Rule of Civil Procedure 23. As a result, the courts have

wrestled with the interpretation of the lead plaintiff provisions in light of the

legislative goal to remedy lawyer-driven lawsuits. The statute imposes certain

preliminary procedural requirements on plaintiffs at the time the complaint is

filed. It requires a plaintiff seeking to represent a securities class to file, along

with the complaint,1775 a certification that (1) confirms the plaintiff did not

purchase the securities at issue at the direction of counsel; (2) shows the plain1772. 15 U.S.C. §§ 77p(b), 78bb(f)(1) (2000).

1773. Id. § 77z-1(4).

1774. Id. § 78bb(f)(2). See, e.g., Green v. Ameritrade, Inc., 279 F.3d 590 (8th Cir. 2002)

(district court properly remanded case following removal under Uniform Standards Act where

plaintiff filed amended complaint eliminating any securities causes of action, leaving only statelaw claims). State-court jurisdiction was preserved over certain covered class actions, such as

actions based on the statutory or common law of the state in which the issuer is incorporated

and that involve purchases or sales by issuers to equity holders, 15 U.S.C. § 78bb(f)(3)(A)

(2000), or actions by a state, political subdivision, or pension plan. Id. § 78bb(f)(3)(B).

1775. However, a movant need not file a complaint to seek lead plaintiff status. See Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1155 (N.D. Cal. 1999).
§ 31.31 Manual for Complex Litigation, Fourth

532

tiff is willing to serve as a representative party on behalf of the class; (3) identifies all transactions by the plaintiff in the security at issue during the relevant

time period; (4) identifies all other actions filed during the preceding three

years in which the plaintiff served or sought to serve as a representative party;

and (5) certifies that the plaintiff’s recovery will be limited to his or her pro

rata share, except as ordered by the court.1776 The PSLRA (or “the statute”) creates a presumption precluding any plaintiff seeking to serve as lead plaintiff

who has been a lead plaintiff in more than five securities class actions during

any three-year period.1777 There is a split of authority over whether and when

the presumption should be rebutted if an institutional investor is seeking lead

plaintiff status.1778

The PSLRA also directs the plaintiff, shortly after filing, to comply with

detailed notice provisions informing potential class members of the existence

of the securities class action.1779 The PSLRA specifically provides, however, that

notices required under the statute “shall be in addition to any notice required

pursuant to the Federal Rules of Civil Procedure.”1780 The plaintiff must pub1776. 15 U.S.C. § 78u-4(a)(2)(A) (2000). The Northern District of California held in Aronson that the certification requirement only applied to plaintiffs filing the complaint, and its

provisions did not attach to non-initiating movants for lead plaintiff status. Aronson, 79 F. Supp.

2d at 1155–56. But see Chill v. Green Tree Fin. Corp., 181 F.R.D. 398 (D. Minn. 1998) (imposing

certification requirements on plaintiffs seeking lead plaintiff status, even though they did not file

the complaint). The Aronson court noted, however, that the local rules for the Northern District

of California provide that although not required to file a certification, a plaintiff seeking lead

plaintiff status must at the time of its initial appearance state it has reviewed the complaint and

adopted the complaint’s allegations or identify additional allegations it intends to assert. Aronson, 79 F. Supp. 2d at 1155–56 (citing N.D. Cal. Civ. L.R. 3-7(c)).

1777. 15 U.S.C. § 78u-4(a)(3)(B)(vi) (2000).

1778. Compare In re Enron Corp. Sec. Litig., 206 F.R.D. 427 (S.D. Tex. 2002) (discussing

whether it would be proper to appoint Florida State Board of Administration (FSBA) as lead

plaintiff where it was serving as or seeking lead plaintiff status in nine cases), and In re Telxon

Corp. Sec. Litig., 67 F. Supp. 2d 803 (N.D. Ohio 1999) (FSBA would be barred from serving as

lead plaintiff where it had served or was serving as lead plaintiff in five other securities class actions in three years), and Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146 (N.D. Cal.

1999) (FSBA disqualified as lead plaintiff where it was serving as lead plaintiff in six other securities class actions), with Piven v. Sykes Enters., Inc., 137 F. Supp. 2d 1295 (M.D. Fla. 2000)

(finding presumptive bar against serving as lead plaintiff created by lead plaintiff status in five

other cases could be overcome); In re Critical Path, Inc. Sec. Litig., 156 F. Supp. 2d 1102 (N.D.

Cal. 2001); In re Network Assocs., Inc. Sec. Litig., 76 F. Supp. 2d 1017 (N.D. Cal. 1999). See

Melanie M. Piech, Was the Selection of Lead Plaintiff and Lead Counsel in Enron Correct?, 13 Sec.

Reform Act Litig. Rep. 6 (Apr. 2002).

1779. See Greebel v. FTP Software, Inc., 939 F. Supp. 57, 60 (D. Mass. 1996) (suggesting

that failure to comply with the PSLRA notice provisions would be fatal to maintaining the action

as a proposed class action).

1780. 15 U.S.C. §§ 77z-1(a)(3)(A)(iii), 78u-4(a)(3)(A)(iii) (2000).
Securities § 31.31

533

lish notice of the action in “a widely circulated national business-oriented

publication or wire service” within twenty days of the filing of the complaint,

advising of the action, the claims asserted therein, and the class period.1781 The

notice must also state that any purported class member may move to serve as

lead plaintiff within sixty days of the date of the notice.1782 Several courts have

held that the sixty-day notice requirement is mandatory and precludes consideration of untimely filed motions for lead plaintiff appointment.1783

Where multiple actions alleging substantially the same claims have been

filed by more than one plaintiff, the statute imposes the obligation to provide

early notification on the plaintiff who was the first to file. One of the effects of

the notice provisions, however, has been to help some attorneys to continue to

exert control over securities class actions, a result contrary to the goals of the

PSLRA. One court observed that notices have been filed by attorneys on multiple occasions in related cases “over and again, all in an effort to compile the

largest portfolio [of clients]” who are then presented by the firm as a “group”

for purposes of appointment under the lead plaintiff provisions.1784 The SEC

has also cautioned that the notice provisions afford an opportunity to continue

the very abuses the PSLRA sought to redress.1785 Scrutiny of the early notices

the plaintiff proposes to disseminate, with a critical eye towards any language

that “extols” the virtue of the firm or otherwise solicits support for the lawyerproposed lead plaintiff, may assist in reducing the incidence of these tactics. In

1781. Id. §§ 77z-1(a)(3)(A)(i), 78u-4(a)(3)(A)(i). See Yousefi v. Lockheed Martin Corp., 70

F. Supp. 2d 1061, 1067 (C.D. Cal. 1999) (finding that plaintiffs met notice requirements of

PSLRA by announcing class action suit in national wire service); Greebel, 939 F. Supp. at 63

(Business Wire met requirements for widely circulated national business wire service).

1782. But see Chill v. Green Tree Fin. Corp., 181 F.R.D. 398, 404 (D. Minn. 1998) (where

several notices were published, court would extend the sixty-day notice period beyond original

publication date where to do otherwise “would deprive injured investors of any opportunity to

seek to be selected as [l]ead [p]laintiff”).

1783. See Skwortz v. Crayfish Co., No. 00 Civ. 6766, 2001 WL 1160745, at *5 (S.D.N.Y.

Sept. 28, 2001) (finding motion for appointment as lead plaintiff filed beyond the sixty-day period was untimely, thereby eliminating movant as a candidate for lead plaintiff); In re MicroStrategy Inc. Sec. Litig., 110 F. Supp. 2d 427, 439–40 (E.D. Va. 2000) (rejecting party’s application for lead plaintiff for procedural failure to file timely motion for appointment). But see

Chill, 181 F.R.D. at 404.

1784. See In re Network Assocs., Inc. Sec. Litig., 76 F. Supp. 2d 1017, 1021 (N.D. Cal. 1999)

(detailing method used by law firms to accumulate clients for the purpose of aggregating claims

and claiming overwhelming support for the lawyer-created “group” as lead plaintiff and the firm

as lead counsel). The court in Network Associates rejected a motion by 1,725 members collected

by attorneys to appoint a subgroup of 10, also chosen by the attorneys, noting there was “no

organized decisionmaking apparatus, no coherency, no common ground other than the lawyer.

They [the subgroup] too are simply disparate, unlinked, and unrelated investors.” Id. at 1023.

1785. In re Baan Co. Sec. Litig., 186 F.R.D. 214 (D.D.C. 1999).
§ 31.31 Manual for Complex Litigation, Fourth

534

addition, the judge should try to ensure that these early communications to

class members encourage them to serve as lead plaintiffs and do not mislead

them into believing that they are filling out claims forms. In many cases, however, plaintiffs will publish notice of the action concurrently with the filing of

the complaint in order to comply with the twenty-day deadline for publication

imposed by the PSLRA. To the extent the court requires judicial approval of

the proposed notices prior to publication, perhaps through a standing order,

the court will need to complete its review prior to the expiration of the twentyday period.

The PSLRA contemplates that the court will appoint a lead plaintiff within

ninety days of the date on which notice is published. In certain circumstances,

such as when a defendant is facing possible bankruptcy, the court should make

the lead plaintiff determination as quickly as possible. These time constraints

are modified, however, where a motion to consolidate multiple actions has

been filed. In such cases, the statute directs the court to appoint the lead plaintiff “as soon as practicable” after resolving the motion to consolidate. Indeed,

15 U.S.C. § 78u-4(a)(3)(B)(ii) directs the court to address and resolve the motion to consolidate prior to rendering a decision on the appointment of lead

plaintiffs.1786 The statute further creates a rebuttable presumption that the

plaintiff most capable of adequately representing the class is the person or

group of persons with the largest financial interest in the relief sought, who

also satisfies the requirements of Federal Rule of Civil Procedure 23.1787 The

showing under Rule 23 is considered a preliminary inquiry into whether the

plaintiff has made a prima facie showing that the adequacy and typicality requirements have been met.1788 This presumption can be rebutted upon proof

that the plaintiff either “will not fairly and adequately protect the interests of

the class” or is subject to unique defenses that impair the plaintiff’s ability to

do so.1789 In most cases, the plaintiff filing the action will also seek appointment

1786. See Vincelli v. Nat’l Home Health Care Corp., 112 F. Supp. 2d 1309 (M.D. Fla. 2000);

Chill, 181 F.R.D. at 405–08 (considering motion to consolidate, followed by motion to appoint

lead plaintiff).

1787. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I) (2000).

1788. In re Advanced Tissue Scis. Sec. Litig., 184 F.R.D. 346 (S.D. Cal. 1998).

1789. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II) (2000). The PSLRA only permits purported class

members to challenge the adequacy of the presumptive lead plaintiff. Id. § 78u-4(a)(3(B)(i);

Gluck v. CellStar Corp., 976 F. Supp. 542 (N.D. Tex. 1997). See In re Cendant Corp. Litig., 264

F.3d 201, 262 (3d Cir. 2001) (“The Reform Act establishes a two-step process for appointing a

lead plaintiff: the court first identifies the presumptive lead plaintiff and then determines

whether any member of the putative class has rebutted the presumption.”). However, defendants may challenge whether the lead plaintiff meets Rule 23 requirements at the class certification stage. See In re Lucent Techs., Inc. Sec. Litig., 194 F.R.D. 137, 150 n.17 (D.N.J. 2000) (“The
Securities § 31.31

535

as lead plaintiff, although once the statutory early notification is published,

other investors may file competing motions.

The PSLRA does not require courts to hold a hearing on lead plaintiff motions. Courts have approached the decision-making process in various ways,

ranging from requiring movants to respond to a written questionnaire prepared by the court, to conducting interviews of the candidates and their counsel at hearings on motions for appointment,1790 to simply considering the parties’ submissions and oral argument.1791 Although some decisions have allowed

discovery as part of the appointment process,1792 the PSLRA severely restricts

discovery into the adequacy of the representation by the proposed lead plaintiff.1793 A member of the proposed plaintiff class can challenge the adequacy of

lead plaintiff’s representation only by demonstrating “a reasonable basis for a

finding that the presumptively most adequate plaintiff is incapable of adequately representing the class.”1794 Absent such a showing, a class member objecting to the presumptive lead plaintiff will not be entitled to discovery.

Where the movant is a single investor or institution, the court’s task is

fairly straightforward. In identifying the plaintiff with the largest financial interest, courts have considered factors such as the number of shares purchased

or sold during the class period,1795 the net number of shares purchased, the net

funds spent, and approximate losses suffered by the plaintiff.1796 These factors

courts have found helpful “because they look to relatively objective indicators

. . . rather than to the ultimate question of damages.”1797 One option in assessing the merits of competing lead plaintiff petitions is to have those parties

seeking lead plaintiff status file a joint submission setting forth their claimed

financial interests and comparing their financial stakes in the litigation, preferably through an agreed on method. Such an approach allows the court to

assess the merits of competing parties’ positions without expending significant

determination, however, that . . . [l]ead [p]laintiffs meet the requirements of Rule 23 does not

preclude revisiting the issue at the class certification stage.”).

1790. See In re Network Assocs., Inc. Sec. Litig., 76 F. Supp. 2d 1017, 1027 (N.D. Cal. 1999).

1791. In re Cell Pathways, Inc. Sec. Litig. II, 203 F.R.D. 189 (E.D. Pa. 2001).

1792. In re Network Assocs., 76 F. Supp. 2d at 1027 (permitting four-hour depositions of

each of the main candidate representatives).

1793. 15 U.S.C. § 78u-4(a)(3)(B)(iv) (2000).

1794. Gluck, 976 F. Supp. at 547.

1795. In re Network Assocs., 76 F. Supp. 2d at 1027 (“At least as a first approximation, the

candidate with the most net shares purchased will normally have the largest potential damage

recovery.”).

1796. See In re Cendant Corp. Litig., 264 F.3d 201, 263 (3d Cir. 2001); In re Critical Path,

Inc. Sec. Litig., 156 F. Supp. 2d 1102, 1107 (N.D. Cal. 2001).

1797. Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1158 (N.D. Cal. 1999).
§ 31.31 Manual for Complex Litigation, Fourth

536

judicial resources wading through or reconstructing underlying figures on

which the calculations are based. In addition, the court may find it difficult to

reconcile damage calculations based on differing methodologies.

Complications arise where a group seeks appointment as lead plaintiff.

Although the PSLRA contemplates that more than one class member may be

appointed as lead plaintiff, courts disagree as to whether and when a group will

qualify as the presumptively most adequate plaintiff. One issue the courts have

struggled with is whether the claims of unrelated investors can be aggregated to

meet the financial interest requirement of the PSLRA.1798 Several courts have

held that aggregation of claims was proper,1799 although some decisions have

allowed groups to serve as lead plaintiff simply because there was no opposition by individual class members, or the only opposition presented was by a

competing group.1800 Other courts have concluded that aggregation of numerous unrelated plaintiffs defeats the purpose of the PSLRA’s lead plaintiff provisions.1801 Those courts permitting groups to be appointed have looked to

whether the proposed group demonstrates the ability to control the litigation

and the lawyers.1802 The size of the group also has been a determinative fac1798. See, e.g., In re Cendant Corp., 264 F.3d at 266 (“The [PSLRA] contains no requirement mandating that the members of a proper group be ‘related’ in some manner.”); Aronson,

79 F. Supp. 2d at 1159.

1799. See, e.g., In re Rent-Way Sec. Litig., 209 F. Supp. 2d 493, 518 (W.D. Pa. 2002) (“We

see no reason to find that group pled allegations per se cannot meet the heightened pleading

standards of Rule 9(b) or the PSLRA, and rather will consider the allegations individually.”);

Weltz v. Lee, 199 F.R.D. 129, 132–33 (S.D.N.Y. 2001) (permitting aggregation); In re Advanced

Tissue Scis. Sec. Litig., 184 F.R.D. 346, 352–53 (S.D. Cal. 1998) (rejecting proposal to appoint

entire 250-member group as lead plaintiff and approving alternative proposal to appoint six

designated group members).

1800. See, e.g., Yousefi v. Lockheed Martin Corp., 70 F. Supp. 2d 1061, 1067–68 (C.D. Cal.

1999); In re Advanced Tissue, 184 F.R.D. at 352–53; In re Milestone Scientific Sec. Litig., 183

F.R.D. 404 (D.N.J. 1998); In re Oxford Health Plans, Inc. Sec. Litig., 182 F.R.D. 42 (S.D.N.Y.

1998); In re Horizon/CMS Healthcare Corp. Sec. Litig, 3 F. Supp. 2d 1208 (D.N.M. 1998); Greebel v. FTP Software, Inc., 939 F. Supp. 57, 64 (D. Mass. 1996) (no opposition to motion for

group to serve as lead plaintiff).

1801. See, e.g., Donnkenny Inc. Sec. Litig., 171 F.R.D. 156, 157–58 (S.D.N.Y. 1997) (“To

allow lawyers to designate unrelated plaintiffs as a ‘group’ and aggregate their financial stakes

would allow and encourage lawyers to direct the litigation.”); see also In re Bank One S’holders

Class Actions, 96 F. Supp. 2d 780, 783 (N.D. Ill. 2000); In re Network Assocs., Inc. Sec. Litig, 76

F. Supp. 2d 1017, 1023–24 (N.D. Cal. 1999) (cannot aggregate unrelated investors to satisfy lead

plaintiff); Aronson, 79 F. Supp. 2d at 1153–54; In re Advanced Tissue, 184 F.R.D. at 352 (rejecting

appointment of 250 unrelated individual investors).

1802. See In re Network Assocs., 76 F. Supp. 2d at 1025–26 (citing SEC memoranda discussing meaning of “group of persons” under PSLRA and that the agency’s interpretation was

entitled to great deference).
Securities § 31.31

537

tor.1803 The SEC has suggested that groups of three to five plaintiffs are permissible.1804 Additional relevant factors have included (1) the prior experience of

group members; (2) the structure of the group; (3) communication mechanisms both within the group and with counsel; (4) how the group was

formed;1805 (5) the ability of the group to oversee the litigation; (6) the ability of

the group to work together; and (7) the existence of a prelitigation relationship

among group members.1806 Courts also have been presented with motions for

appointment of co-lead plaintiffs. These requests have raised similar, but less

troublesome, issues regarding the number of proposed co-leads and whether

appointment of a large group of co-lead plaintiffs would impede their ability to

control the litigation and supervise counsel.1807

1803. The district court in In re Baan Co. Securities Litigation, for example, shared the SEC’s

view that a group should consist of “no more than three to five persons, a number that will facilitate joint decisionmaking and also help to assure that each group member has a sufficiently

large stake in the litigation.” In re Baan Co. Sec. Litig., 186 F.R.D. 214, 217 (D.D.C. 1999) (citing

Memorandum of the Securities and Exchange Commission, Amicus Curiae, at 16–17). See In re

Gemstar-TV Guide Int’l, Inc. Sec. Litig., 209 F.R.D. 447, 450 (C.D. Cal. 2002) (holding that a

group of three institutional investors and four individual investors was too large and diverse to

represent the class); In re Network Assocs., 76 F. Supp. 2d at 1023, 1026–27 (refusing to consider

group of 1,725 members and rejecting 10-member subgroup); Chill v. Green Tree Fin. Corp.,

181 F.R.D. 398, 408 (D. Minn. 1998) (approval of proposed group comprised of 300 plaintiffs

“would threaten the interests of the class, would subvert the intent of Congress, and would be

too unwieldy to allow for the just, speedy and inexpensive determination of this action”); Gluck

v. CellStar Corp., 976 F. Supp. 542 (N.D. Tex. 1997); see also In re Tyco Int’l, Ltd. Sec. Litig.,

MDL No. 1335, 2000 WL 1513772, at *4 (D.N.H. Aug. 17, 2000) (mem.) (“[A] group that consists of a small number of large shareholders should be capable of managing [the] litigation and

providing direction to class counsel.”); Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146,

1152–54 (N.D. Cal. 1999) (defining group as “a small number of members that share such an

identity of characteristics, distinct from those of almost all other class members, that they can

almost be seen as being the same person”).

1804. In re Baan Co., 186 F.R.D. at 216–17. See also In re Cendant Corp. Litig., 264 F.3d

201, 267 (3d Cir. 2001) (noting that groups of “more than five members are too large to work

effectively”).

1805. The Cendant court included an additional factor where the presumptive lead plaintiff

was a group: an inquiry into whether the way in which the group was formed “preclude[d] it

from fulfilling the tasks assigned to a lead plaintiff.” In re Cendant Corp., 264 F.3d at 266.

1806. In re Waste Mgmt., Inc. Sec. Litig., 128 F. Supp. 2d 401, 413, 432 (S.D. Tex. 2000)

(requiring, among other things, a prelitigation relationship other than the loss); In re Network

Assocs., 76 F. Supp. 2d at 1026.

1807. See, e.g., D’Hondt v. Digi Int’l Inc., Civ. No. 97-5, 1997 WL 405668, at *5 (D. Minn.

Apr. 3, 1997) (mem.) (appointing twenty-one plaintiffs as “co-lead” plaintiffs); In re Cephalon

Sec. Litig., No. 96-CV-0633, 1996 WL 515203, at *1 (E.D. Pa. Aug. 27, 1996) (mem.) (finding

that PSLRA “does not preclude appointing more than one lead plaintiff”); but see In re
§ 31.31 Manual for Complex Litigation, Fourth

538

The presumptive lead plaintiff must also make a prima facie showing that it

satisfies the adequacy and typicality requirements of Rule 23.1808 Drawing on

the PSLRA, the Third Circuit in In re Cendant Corp. Securities Litigation1809 expanded the traditional Rule 23 inquiry into “adequacy” and “typicality” to include whether the presumptive lead plaintiff “has demonstrated a willingness

and ability to select competent class counsel and to negotiate a reasonable retainer agreement with that counsel.”1810 Information about the firm selected

and its ability to conduct the litigation, as well as the manner in which the fee

structure was derived, were found to be indicia of whether the lead plaintiff

was capable of representing the class.

Thus, a court might conclude that the movant with the largest losses could

not surmount the threshold adequacy inquiry if it lacked legal experience or

sophistication, intended to select as lead counsel a firm that was plainly incapable of undertaking the representation, or had negotiated a clearly unreasonable fee agreement with its chosen counsel.1811 

The PSLRA places the selection of lead counsel in the hands of the lead

plaintiff, subject to the approval of the court,1812 although some courts have

held that lead counsel be selected through a competitive bidding process,

sometimes referred to as an auction.1813 When determining whether to approve

lead counsel proffered by the lead plaintiff, courts focus on the selection process used by the lead plaintiff to choose counsel, the proposed fee structure,

whether the firm has adequate resources, and the extent of the firm’s (and lead

attorney’s) experience in class action securities cases. On some occasions, the

appointment of more than one firm as lead counsel may be appropriate in order to protect the interests of the class.1814 Courts that have approved the apDonnkenny Inc. Sec. Litig., 171 F.R.D. 156, 157–58 (S.D.N.Y. 1997) (co-lead plaintiffs not permitted by PSLRA).

1808. See In re Cendant Corp., 264 F.3d at 263.

1809. 264 F.3d 201 (3d Cir. 2001).

1810. Id. at 265.

1811. Id. at 265–66.

1812. 15 U.S.C. § 78u-4(a)(3)(B)(v) (2000). See Vincelli v. Nat’l Home Health Care Corp.,

112 F. Supp. 2d 1309, 1315 (M.D. Fla. 2000) (“The decision to approve counsel selected by the

lead plaintiff is a matter within the discretion of the district court.”).

1813. See, e.g., In re Quintus Sec. Litig., 148 F. Supp. 2d 967, 969 (N.D. Cal. 2001); In re

Bank One S’holders Class Actions, 96 F. Supp. 2d 780, 784 (N.D. Ill. 2000); In re Lucent Techs.,

Inc. Sec. Litig., 194 F.R.D. 137, 156–57 (D.N.J. 2000); Wenderhold v. Cylink Corp., 188 F.R.D.

577, 587 (N.D. Cal. 1999); In re Cendant Corp. Litig., 182 F.R.D. 144, 150–51 (D.N.J. 1998).

1814. In re Lernout & Hauspie Sec. Litig., 138 F. Supp. 2d 39, 46–47 (D. Mass. 2001) (appointing three law firms as co-lead counsel and noting factors warranting appointment of more

than one firm including the large amount of monies at stake and pending bankruptcy proceeding of defendant corporation). But see In re Wells Fargo Sec. Litig., 156 F.R.D. 223, 226 (N.D.
Securities § 31.31

539

pointment of co-lead plaintiffs often have been willing to approve the appointment of more than one counsel to serve as co-lead counsel.1815 The sharing of resources and expertise in costly cases may favor the appointment of

multiple counsel.1816

Factors disfavoring more than one firm include the potential for duplicative services, absence of coordination, the risk of increased litigation time and

expense, and the potential for the attorneys to take over or control the litigation—a particular concern of the PSLRA.1817 The court in In re Milestone Scientific Securities Litigation1818 required that before multiple counsel would be

appointed, there must be a showing that “the lead plaintiff will be able to

withstand any limitation on, or usurpation of, control, and effectively supervise the several law firms acting as lead counsel.”1819 Review of the proposed

organizational structure of lead counsel may reveal potential conflicts among

firms, as well as whether the independence and ability of the lead plaintiff to

manage the litigation will be impaired.1820 In cases where the court has determined that the appointment of multiple law firms as lead counsel is ill-advised,

the court can still encourage lead counsel to seek the assistance of other firms

where appropriate.1821

Cal. 1994) (finding joint appointment of co-class counsel unwarranted and posing a “‘dangerous

probability’ of lessened competition” where the firms seeking joint appointment were large and

dominant players).

1815. Sakhrani v. Brightpoint, Inc., 78 F. Supp. 2d 845, 854 (S.D. Ind. 1999) (approving

selection of two law firms as co-lead counsel and a third firm as local counsel); In re Oxford

Health Plans, Inc. Sec. Litig., 182 F.R.D. 42, 50 (S.D.N.Y. 1998) (appointing three law firms as

co-lead counsel); In re Advanced Tissue Scis. Sec. Litig., 184 F.R.D. 346, 353 (S.D. Cal. 1998)

(granting plaintiff’s motion to approve selection of two firms as co-lead counsel).

1816. See, e.g., Vincelli, 112 F. Supp. 2d at 1315; In re Milestone Scientific Sec. Litig., 187

F.R.D. 165, 176 (D.N.J. 1999); In re Oxford Health Plans, 182 F.R.D. at 49–50.

1817. See Vincelli, 112 F. Supp. 2d at 1315–16; In re Advanced Tissue, 184 F.R.D. at 351.

1818. 187 F.R.D. 165 (D.N.J. 1999).

1819. Id. at 177. See also In re Sprint Corp. Sec. Litig., 164 F. Supp. 2d 1240, 1246 (D. Kan.

2001) (approving co-lead counsel but warning that “the court will not approve any possible

award of fees and expenses that reflects duplication, inefficiency, or the costs of coordinating the

efforts of the two firms . . . [and] will not tolerate co-lead counsel speaking with a divided

voice”).

1820. See In re Milestone Scientific, 187 F.R.D. at 179.

1821. See, e.g., id. at 181 & n.10; In re Horizons/CMS Healthcare Corp. Sec. Litig., 3 F.

Supp. 2d 1208, 1211 (D.N.M. 1998) (appointing firm as lead counsel and two local attorneys as

liaison counsel).
§ 31.32 Manual for Complex Litigation, Fourth

540

31.32 Pleading Requirements

Fraud claims, including allegations of securities fraud, must meet the requirements of Federal Rule of Civil Procedure 9(b), which requires that fraud

be pleaded with particularity.1822 The PSLRA reinforced the pleading requirements for securities fraud claims1823 by specifically mandating that where these

pleading requirements are not met, the district court “shall, on the motion of

any defendant, dismiss the complaint.”1824 Under the PSLRA, the complaint

now must include each allegedly misleading statement together with reasons

why it is misleading. Any allegations regarding statements or omissions that

are made on information and belief must be supported by a particularized

statement of facts supporting such belief.1825 The courts have disagreed as to

whether the group pleading doctrine survives the PSLRA. Some have interpreted the PSLRA to preclude plaintiffs from grouping all defendants together

in order to survive a motion to dismiss, requiring instead identification of the

specific misrepresentations made by each.1826 Others have adhered to a narrow

interpretation of the doctrine, holding that in appropriate circumstances it

may still apply.1827 Some courts have required the plaintiff to plead with par1822. Fed. R. Civ. P. 9(b) provides: “In all averments of fraud or mistake, the circumstances

constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge and

other condition of mind of a person may be averred generally.”

1823. The enhanced pleading requirements were not included in the PSLRA provisions of

the 1933 Act.

1824. 15 U.S.C. § 78u-4(b)(3)(A) (2000). See San Leandro Emergency Med. Group Profit

Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 812–13, 815 (2d Cir. 1996) (affirming lower

court’s ruling that plaintiffs did not allege fraud with sufficient particularity). But cf. Novak v.

Kasaks, 216 F.3d 300, 315 (2d Cir. 2000) (vacating and remanding lower court’s dismissal of the

case for failure to allege fraud with particularity).

1825. 15 U.S.C. § 78u-4(b)(1) (2000). See Liberty Ridge LLC v. Realtech Sys. Corp., 173 F.

Supp. 2d 129 (S.D.N.Y. 2001).

1826. See, e.g., In re U.S. Interactive, Inc., No. 01-CV-522, 2002 WL 1971252, at *4 (E.D.

Pa. Aug. 23, 2002) (finding group pleading doctrine could be applied to corporate officers where

it was clear, given their high level positions and the nature of writing at issue, that the officer

would have been involved directly with its writing, approval of its contents, or privy to information concerning its accuracy); Allison v. Brooktree Corp., 999 F. Supp. 1342, 1350 (S.D. Cal.

1998) (“[T]he continued vitality of the judicially created group-published doctrine is suspect

since the PSLRA specifically requires that the untrue statements or omissions be set forth with

particularity as to ‘the defendant’ . . . .”).

1827. See e.g., In re Raytheon Securities Litig., 157 F. Supp. 2d 131, 152–53 (D. Mass. 2001)

(“this Court agrees with the majority of courts that have held that the rationale behind the group

pleading doctrine remains sound in the wake of the passage of the PSLRA”); In re Stratosphere

Corp. Sec. Litig., 1 F. Supp. 2d 1096, 1108 (D. Nev. 1998) (declining to adopt defendant’s

proposition that “group pleading has been sub silentio abolished by the PSLRA”).
Securities § 31.32

541

ticularity each defendant’s specific statements supporting the plaintiff’s claim

against that defendant.1828

The degree of specificity required has varied.1829 Courts have required the

plaintiff to identify how the plaintiff learned of the conduct for the basis for its

allegations, including confidential sources underlying allegations on information and belief.1830 To the extent such sources are documentary, courts also

have required plaintiffs to identify the document, its author, its date, and its

recipient, and to describe the document’s contents.1831 Other courts have held

the PSLRA’s heightened pleading standard does not “require that plaintiffs

plead with particularity every single fact upon which their beliefs concerning

false or misleading statements are based.”1832 One option is to require plaintiffs

(in all cases subject to the provisions of the PSLRA) to file, along with a complaint alleging securities fraud, a “case statement” modeled after those often

utilized in Racketeer Influenced and Corrupt Organizations Act (RICO) litigation.1833 For example, a judge ordered plaintiffs filing an amended complaint to

include, with respect to each false or misleading statement, the following information:1834

• whether the statements were written or oral;

• the title, author, date of preparation, and persons reviewing any written statements;

• when, where, and the circumstances under which oral statements were

made;

1828. See, e.g., Coates v. Heartland Wireless Communications, Inc., 26 F. Supp. 2d 910,

915–16 (N.D. Tex. 1998) (holding group pleading banned by PSLRA); Allison, 999 F. Supp. at

1350 (questioning continued vitality of group pleading doctrine); Zuckerman v. Foxmeyer

Health Corp., 4 F. Supp. 2d 618, 626–27 & n.4 (N.D. Tex. 1998).

1829. See, e.g., In re Silicon Graphics, Inc. Sec. Litig., 183 F.3d 970 (9th Cir. 1999); In re

McKesson HBOC, Inc. Sec. Litig., 126 F. Supp. 2d 1248 (N.D. Cal. 2000); In re Eng’g Animation

Sec. Litig., 110 F. Supp. 2d 1183 (S.D. Iowa 2000).

1830. In re Green Tree Fin. Corp. Stock. Litig., 61 F. Supp. 2d 860 (D. Minn. 1999); In re

Silicon Graphics, Inc. Sec. Litig., 970 F. Supp. 746 (N.D. Cal. 1997), aff’d, 183 F.3d 970 (9th Cir.

1999).

1831. In re Guess?, Inc. Sec. Litig., 174 F. Supp. 2d 1067 (C.D. Cal. 2001). Compare In re

Silicon Graphics, Inc. Sec. Litig., 970 F. Supp. 746 (N.D. Cal. 1997), aff’d, 183 F.3d 970 (9th Cir.

1999), and In re Green Tree Fin. Corp. Stock Litig., 61 F. Supp. 2d 860 (D. Minn. 1999), with

Novak v. Kasaks, 216 F.3d 300 (2d Cir. 2000); see also In re Digi Int’l Inc. Sec. Litig., 6 F. Supp.

2d 1089 (D. Minn. 1998).

1832. Novak, 216 F.3d at 313.

1833. See infra § 35.

1834. In re Guess?, 174 F. Supp. 2d at 1079–80.
§ 31.32 Manual for Complex Litigation, Fourth

542

• all facts supporting the claim that the statement was false or misleading when made;

• details regarding any reports or other sources that plaintiffs allege support or demonstrate the falsity of the statements; and

• all facts giving rise to a strong inference of recklessness, and detailed

information regarding any documents or other sources supporting

such an inference.

Such statements can be designed to detail both the factual and legal basis for

the plaintiff’s claim. These statements may prove helpful in assisting a plaintiff

with a meritorious case to comply with the PSLRA pleading requirements as

interpreted within the jurisdiction, and they may assist the court when ruling

on motions brought pursuant to Federal Rule of Civil Procedure 12. The

PSLRA requires a plaintiff to have a detailed factual basis for the allegations at

the time suit is filed. This suggests that the normal liberality of amendment

provided by the Federal Rules may be inappropriate in shareholder class actions. Where it is apparent that repeated amendment of the complaint cannot

correct the deficiencies, dismissal with prejudice may be appropriate.

The PSLRA also imposes a uniform standard for pleading scienter in order

to survive a motion to dismiss.1835 Prior to the PSLRA, the Second Circuit, for

example, had held that a plaintiff must plead a strong inference of scienter either by (1) alleging facts establishing a motive and opportunity to commit

fraud, or (2) presenting circumstantial evidence of recklessness or conscious

misbehavior.1836 Other circuits held that compliance with Federal Rule of Civil

Procedure 9(b), permitting general averments of scienter, was sufficient.1837

Although the PSLRA incorporated language from Second Circuit jurisprudence requiring the plaintiff to allege with particularity all “facts giving rise to a

strong inference that the defendant acted with the required state of mind,”1838

Congress declined to expressly codify the Second Circuit standard.1839 Nor did

1835. “[T]he PSLRA did not change the scienter that a plaintiff must prove to prevail in a

securities fraud case but instead changed what a plaintiff must plead in his complaint in order to

survive a motion to dismiss.” In re Comshare, Inc. Sec. Litig., 183 F.3d 542, 548–49 (6th Cir.

1999).

1836. In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 268–69 (2d Cir. 1993).

1837. See In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1545 (9th Cir. 1994) (en banc).

1838. S. Rep. No. 104-98, at 26 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 705; see also id.

at 15, reprinted in 1995 U.S.C.C.A.N at 694 (choosing “a uniform standard modeled upon the

pleading standard of the Second Circuit”); H.R. Conf. Rep. No. 104-369, at 41 (1995), reprinted

in 1995 U.S.C.C.A.N. 730, 740 (“The Conference Committee language is based in part on the

pleading standard of the Second Circuit.”).

1839. See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1282 (11th Cir. 1999) (questioning

whether Congress “merely borrow[ed] the Second Circuit’s ‘strong inference’ language without
Securities § 31.33

543

Congress define the “required state of mind” or change the scienter plaintiffs

must prove.1840 The courts construing the PSLRA, however, have split on

whether a “strong inference” of scienter can be shown by motive and opportunity alone or whether the statute heightens the Second Circuit standard and

more is required.1841

31.33 Safe Harbor

The PSLRA’s statutory “safe-harbor” provision protects statements defined

as “forward looking” in section 78u-5(i)(1). However, the Act specifically excludes certain statements from the definition of forward-looking and also

withdraws the safe-harbor protections from any person convicted of securities

violations within the previous three years.1842 Under this provision, liability will

not attach to forward-looking statements that are accompanied by appropriate

adopting its motive and opportunity test”); In re Boeing Sec. Litig., 40 F. Supp. 2d 1160, 1173

(W.D. Wash. 1998) (Although modeled after the Second Circuit standard, “‘[t]he Committee

does not intend to codify the Second Circuit’s caselaw interpreting this pleading standard, although courts may find this body of law instructive.’” (emphasis omitted) (quoting S. Rep. No.

104-98, at 15 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 694 (citations omitted))).

1840. In re SmarTalk Teleservices, Inc. Sec. Litig., 124 F. Supp. 2d 505, 512 (S.D. Ohio

2000); In re Glenayre Techs., Inc. Sec. Litig., 982 F. Supp. 294, 298 (S.D.N.Y. 1997).

1841. 15 U.S.C. § 78u-4(b)(2) (2000). See, e.g., Novak v. Kasaks, 216 F.3d 300 (2d Cir.

2000) (adhering to traditional test of motive and opportunity and strong inference); Bryant, 187

F.3d at 1283, 1285 (holding that “[PSLRA] does not codify the ‘motive and opportunity’ test

formulated by the Second Circuit” and that allegations of motive and opportunity alone are

insufficient); In re Comshare, Inc. Sec. Litig., 183 F.3d 542, 551 (6th Cir. 1999) (rejecting motive

and opportunity alone as sufficient evidence of scienter); In re Silicon Graphics Inc. Sec. Litig.,

183 F.3d 970, 974 (9th Cir. 1999) (“In order to show a strong inference of deliberate recklessness, plaintiffs must state facts that come closer to demonstrating intent, as opposed to mere

motive and opportunity.”); In re Advanta Corp. Sec. Litig., 180 F.3d 525, 535 (3d Cir. 1999)

(following Second Circuit test but barring “catch-all” allegations and adhering to heightened

pleading); Williams v. WMX Techs., Inc., 112 F.3d 175, 177–78 (5th Cir. 1997) (Second Circuit

test still viable after PSLRA); In re Boeing, 40 F. Supp. 2d at 1174 (finding motive and opportunity alone, while usually insufficient, may be sufficient to plead scienter “if the totality of the

circumstances creates a strong inference of fraud”); In re Stratosphere Corp. Sec. Litig., 1 F.

Supp. 2d 1096, 1107–08 (D. Nev. 1998) (finding motive and opportunity alone not presumed to

be sufficient); In re Glenayre, 982 F. Supp. at 297–98 (motive and opportunity relevant, but insufficient on own); In re Health Mgmt., Inc. Sec. Litig., 970 F. Supp. 192, 201 (E.D.N.Y. 1997)

(Second Circuit test still viable); Friedberg v. Discreet Logic Inc., 959 F. Supp. 42, 48 (D. Mass.

1997) (Reform Act heightened Second Circuit pleading standard); Marksman Partners L.P. v.

Chantal Pharm. Corp., 927 F. Supp. 1297, 1308–11 (C.D. Cal. 1996) (Second Circuit test still

viable). See also Greebel v. FTP Software, Inc., 194 F.3d 185 (1st Cir. 1999).

1842. 15 U.S.C. § 78u-5(b) (2000).
§ 31.34 Manual for Complex Litigation, Fourth

544

cautionary statements1843 tailored to the particular risks.1844 The provision,

however, does not apply to statements included in financial or registration

statements.1845 Also, it will not protect statements that are knowingly false when

made, even if such statements otherwise would fall within the scope of section

78u-5(i)(1).1846 Early review of the complaint may disclose that the statements

complained of fall within the safe-harbor provisions and that the claims consequently are subject to dismissal under Federal Rule of Civil Procedure 12 or 56.

31.34 Discovery Stays

The PSLRA provides that all discovery and other proceedings “shall be

stayed during the pendency of any motion to dismiss” absent a showing of

“undue prejudice”1847 or a showing that “particularized discovery is necessary

to preserve evidence.”1848 The safe harbor provisions exempting forwardlooking statements from liability also permit a stay of discovery pending resolution of summary judgment motions,1849 although limited discovery targeted

towards the applicability of the safe-harbor provisions may be permitted. The

discovery stay provisions were designed to protect defendants from fishing expeditions and unnecessary costs of discovery where the legal sufficiency of the

1843. The statute protects individuals making forward-looking statements if accompanied

by “meaningful cautionary statements identifying important factors that could cause actual results to differ materially . . . .” Id. § 78u-5(c)(1)(A)(i).

1844. See EP Medsystems, Inc. v. Echocath, Inc., 30 F. Supp. 2d 726 (D.N.J. 1998) (representations effectively “bespeak caution”).

1845. 15 U.S.C. § 78u-5(b)(2)(A)–(B) (2000).

1846. Fugman v. Aprogenex, Inc., 961 F. Supp. 1190, 1196–97 (N.D. Ill. 1997).

1847. See SG Cowen Sec. Corp. v. United States Dist. Court, 189 F.3d 909, 913 (9th Cir.

1999) (“[F]ailure to muster facts sufficient to meet the Act’s pleading requirements cannot constitute the requisite ‘under prejudice’ to the plaintiff . . . .”); Anderson v. First Sec. Corp., 157 F.

Supp. 2d 1230, 1242 (D. Utah 2001) (existence of confidentiality agreement between defendant

and third-party merger candidate precluded plaintiffs from obtaining specific information and

therefore plaintiffs would be unduly prejudiced unless afforded limited discovery); In re Carnegie Int’l Corp. Sec. Litig., 107 F. Supp. 2d 676, 684 (D. Md. 2000) (defendants failed to show

undue prejudice); Med. Imaging Ctrs. of Am., Inc. v. Lichtenstein, 917 F. Supp. 717, 720–22

(S.D. Cal. 1996) (failing to show undue prejudice standard).

1848. 15 U.S.C. § 78u-4(b)(3)(B) (2000). See also Berckeley Inv. Group, Ltd. v. Colkitt, 984

F. Supp. 827, 828 (M.D. Pa. 1997) (stay applies where motion to dismiss is directed towards

counterclaim asserting claims under the securities laws). “Congress clearly intended that complaints in these securities actions should stand or fall based on the actual knowledge of the

plaintiffs rather than information produced by the defendants after the action has been filed.”

Medhekar v. United States Dist. Court, 99 F.3d 325, 328 (9th Cir. 1996) (per curiam).

1849. 15 U.S.C. §§ 77z-2(f), 78u-5(f) (2000).
Securities § 31.4

545

complaint had not been determined.1850 The provisions apply to both party and

nonparty discovery1851 and preempt the mandatory disclosure provisions of

Rule 26.1852

The courts have disagreed on whether the discovery stay provisions apply

even though a motion to dismiss has not yet been filed. Several courts have

held that the stay provisions are triggered once the defendant indicates an intent to file a motion to dismiss.1853 The court, in In re Carnegie International

Corp. Securities Litigation, commented that the defendant had to be given an

opportunity to challenge the complaint and “[a]ny other interpretation would

encourage unseemly gamesmanship, i.e., a race to serve subpoenas for discovery before a defendant had the opportunity to test the sufficiency of the complaint.”1854 Other courts have required an actual motion to be filed before imposing a stay.1855 Application of the discovery stay provisions does not, however, automatically apply to all claims asserted in the complaint. Where the

complaint contains separate state law claims that are distinct from the securities claims, some courts have allowed discovery to proceed on those claims;

staying the entire case, however, generally is more efficient.1856

31.4 Initial Pretrial Conference

Securities claims can arise under both federal and state statutes, as well as

the common law, and can involve numerous parties. Complaints typically assert numerous claims against various defendants, ranging from companies and

securities professionals to accountants and lawyers, with the latter defendants

1850. See, e.g., Angell Invs., L.L.C. v. Purizer Corp., No. 01-C-6359, 2001 WL 1345996, at

*2 (N.D. Ill. Oct. 30, 2001).

1851. In re Carnegie, 107 F. Supp. 2d at 679–81 (quashing subpoena duces tecum issued to

third parties).

1852. Medhekar, 99 F.3d at 327–28 (holding that “initial disclosures are a subset of discovery, and that, as such, they are included in the Act’s stay provision”).

1853. See, e.g., In re Carnegie, 107 F. Supp. 2d at 683.

1854. Id. See also In re Trump Hotel S’holder Derivative Litig., No. 96-CIV-7820, 1997 WL

442135, at *2 (S.D.N.Y. Aug. 5, 1997) (staying discovery even though motion to dismiss had not

been filed where lack of dismissal motion was result of agreed on schedule).

1855. See, e.g., Novak v. Kasaks, No. 96-CIV-3073, 1996 WL 467534, at *1 (S.D.N.Y. Aug.

16, 1996).

1856. See Tobias Holdings, Inc. v. Bank United Corp., 177 F. Supp. 2d 162, 167 (S.D.N.Y.

2001) (allowing discovery to proceed on plaintiff’s state law claims, where “separate and distinct” from federal securities claims “would not represent an impermissible ‘end run’ around the

PSLRA’s automatic stay provisions”); Angell Invs., L.L.C. v. Purizer Corp., No. 01-C-6359, 2001

WL 1345996, at *2 (N.D. Ill. Oct. 30, 2001). But see In re Trump Hotel, 1997 WL 442135, at *2

(staying discovery).
§ 31.4 Manual for Complex Litigation, Fourth

546

implicating issues of privilege and confidentiality.1857Complaints also may be

lengthy, in part as a result of the requirements of Federal Rule of Civil Procedure 9(b) and the PSLRA that fraud be pleaded with particularity.1858 Failure to

comply with Rule 9(b) and the more stringent pleading standards of the

PSLRA provide a basis for dismissal of securities actions.1859 Defendants frequently seek substantial time to respond to the complaint and to decide

whether to file counterclaims, cross-claims, and third-party complaints. Immediately after assignment of the litigation, the judge should consider entering

an order suspending the time for all defendants to respond to the complaint in

cases where a motion to consolidate is pending or a lead plaintiff has not been

selected, as the initial complaint is likely to be amended. The initial conference

offers an opportunity to learn about the potential size and complexity of the

litigation; set a schedule for amendments, motions, and responsive pleadings;

and schedule discovery accordingly.

Early institution of an initial case-management order will help to organize

the case and preliminarily identify key legal and factual issues. Of particular

significance in assessing securities litigation is early determination of the following issues:

• The likely size and scope of the case. Complaints will often name as defendants the company whose securities are involved, its officers, directors, independent accountants, attorneys, and brokerage firms.

Standards for both pleading and liability may differ depending on the

type of defendant. In addition, many securities cases are brought as

class actions, raising issues under Federal Rule of Civil Procedure 23

and the PSLRA.

• Pending or expected related litigation. In addition to private actions, the

SEC or other administrative agencies may institute proceedings. In

some instances, related criminal proceedings may also be pending,

which may lead the government to request staying the litigation.1860 A

1857. In addition to claims under the 1933 Act and the 1934 Exchange Act, plaintiffs may

include claims under the RICO Act, 18 U.S.C. §§ 1961–1968 (2000), as well as claims for common-law fraud, negligent misrepresentation, and breach of fiduciary duty, among others.

1858. See, e.g., Greenstone v. Cambex Corp., 975 F.2d 22, 25 (1st Cir. 1992); Whalen v.

Carter, 954 F.2d 1087, 1097–98 (5th Cir. 1992).

1859. See, e.g., Parnes v. Gateway 2000, Inc., 122 F.3d 539, 549–50 (8th Cir. 1997) (holding

that lower court properly dismissed claims for failing to meet particularity requirements); Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1021 (5th Cir. 1996) (holding lower court properly

dismissed claims based on failing to adequately plead scienter under Rule 9(b)).

1860. See, e.g., In re Aid Auto Stores, Inc. Sec. Litig., No. CV-98-7395, 2001 WL 1478803, at

*1 (E.D.N.Y. July 13, 2001) (order granting government’s motion to intervene and staying discovery pending resolution of criminal proceeding).
Securities § 31.4

547

party may also be a debtor in bankruptcy, which may result in automatic stays with respect to that party, removal of cases, related adversary proceedings, and objections to the discharge of debts. In addition,

separate actions may have been filed regarding fidelity bonds and

other insurance coverage issues, or to prevent foreclosure of security

interests. All related litigation in the same court, including pertinent

aspects of bankruptcy proceedings, ordinarily should be assigned or

transferred to one judge for initial supervision and planning.1861 The

extent to which these cases should be formally consolidated for further

pretrial proceedings and trial will depend on the circumstances1862 and,

after a period of centralized management, some cases may be appropriately reassigned to other judges. In class actions, the PSLRA provides that the court should consolidate multiple actions where appropriate.1863 Related cases may also have been filed in different jurisdictions, as the conduct alleged in securities fraud litigation often affects

persons in many states. Centralized pretrial management of the federal

litigation may be possible through motions to transfer, or through

transfer by the Judicial Panel on Multidistrict Litigation under 28

U.S.C. § 1407.1864 In general, the optimal venue for a shareholder class

action is the district in which the defendant company is headquartered. To the extent that cases remain in different courts, each court

should consider whether formal or informal coordination is possible

to minimize the risk of conflict.1865

• Takeover litigation. Takeover litigation—actions brought in connection with the attempted acquisition or transfer of control of a corporation by obtaining securities, assets, or stockholder support—often

will involve several actions filed almost simultaneously in different

1861. See, e.g., Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1150 (N.D. Cal.

1999) (fifty-four related class actions assigned to the court by the District Reassignment Committee).

1862. See Fed. R. Civ. P. 42(a).

1863. See Aronson, 79 F. Supp. 2d at 1152 (consolidating all cases except shareholder derivative suit, which was deferred for full briefing); Chill v. Green Tree Fin. Corp., 181 F.R.D. 398,

405–07 (D. Minn. 1998) (granting motion to consolidate and consolidating actions into two

class actions).

1864. See, e.g., In re Enron Corp. Sec., Derivative & “ERISA” Litig., 196 F. Supp. 2d 1375,

1376 (J.P.M.L. 2002) (transferring all related cases outside the Southern District of Texas to that

forum “for centralized pretrial proceedings” pursuant to 28 U.S.C. § 1407); In re Wash. Pub.

Power Supply Sys. Sec. Litig., 568 F. Supp. 1250 (J.P.M.L. 1983) (section 1407 transfer order).

1865. For example, coordination may be possible on decisions regarding lead plaintiffs or

class notification.
§ 31.4 Manual for Complex Litigation, Fourth

548

courts seeking a preliminary injunction against violation of the federal

antitrust and securities laws. Takeover litigation can be extremely time

sensitive, requiring the court’s attention to the need for quick resolution of many issues and the impact on the market of even the timing

of rulings and hearings. See section 31.7 regarding special problems in

takeover litigation.

• Parties seeking protective orders. Discovery in securities actions can result in the disclosure of sensitive information, the dissemination of

which is potentially detrimental, particularly to corporate defendants.1866 Securities claims can also implicate attorney–client privileges.

• Referral to a special master. Securities cases can present complex factual

disputes over matters of accounting, corporate finance, market analyses, or the negotiation or implementation of complex settlements.

• Potential for settlement. The parties may be amenable to settlement

before substantial time and expense is wasted in litigation, and the

court may want to explore the possibilities of early settlement.1867

Several foundational issues may preclude the action altogether, and

thereby render it subject to early resolution under Federal Rule of Civil Procedure 12(b) or 56. Examples of such issues include

• whether an instrument constitutes a security subject to registration for

purposes of liability under the securities laws;1868

• whether the alleged misstatements are material;1869

• whether the conduct falls within the PSLRA’s statutory safe-harbor

provisions, or the “bespeaks caution” doctrine;1870

• whether a claim is barred by the statute of limitations;1871

1866. See, e.g., SEC v. TheStreet.com, 273 F.3d 222, 230–31 (2d Cir. 2001) (discussing circumstances under which modification of protective order was appropriate); In re Cephalon Sec.

Litig., No. 96-0633, 1998 WL 744067 (E.D. Pa. Oct. 22, 1998) (mem.).

1867. See, e.g., In re Horizon/CMS Healthcare Corp. Sec. Litig., 3 F. Supp. 2d 1208, 1211

(D.N.M. 1998) (settlement reached where litigation stood in the way of acquisition of the defendant by major healthcare provider).

1868. See, e.g., Assocs. in Adolescent Psychiatry v. Home Life Ins. Co., 941 F.2d 561, 564–66

(7th Cir. 1991).

1869. See Parnes v. Gateway 2000, Inc., 122 F.3d 539, 546 (8th Cir. 1997).

1870. See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1276 n.7 (11th Cir. 1999) (describing the safe-harbor provision and the bespeaks caution doctrine). The bespeaks caution doctrine

appears to remain viable after the PSLRA. See In re Boeing Sec. Litig., 40 F. Supp. 2d 1160, 1170

(W.D. Wash. 1998) (“The PSLRA’s safe harbor provisions do not supplant the ‘bespeaks caution’ doctrine.”).
Securities § 31.4

549

• whether a demand must be made on a corporation’s directors;1872

• whether the “business judgment” rule allows the directors, or a committee they have established, to dismiss or settle the action;1873

• whether the defendant is a “controlling person” on whom liability may

be imposed;1874

• whether and when a “sale” or “purchase” occurred;1875

• whether public availability of material information excuses nondisclosure in an action relying on the “fraud-on-the-market” theory;1876

• whether loss causation can be established—the PSLRA places the burden of proving loss causation on the plaintiff;1877

• whether scienter has been properly alleged and can be established;1878

and

1871. Litigation pursuant to section 10(b) and Rule 10b-5 must be commenced within one

year from the discovery of a violation and no more than three years from the date the violation

occurred. 15 U.S.C. §§ 77m, 78i(e) (2000); Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350, 364 (1991). The one-year period begins to run when plaintiffs are on

inquiry or constructive notice of the facts giving rise to the claims. Berry v. Valence Tech., Inc.,

175 F.3d 699, 703–04 (9th Cir. 1999); Liberty Ridge LLC v. Realtech Sys. Corp., 173 F. Supp. 2d

129, 135 (S.D.N.Y. 2001); Reisman v. KPMG Peat Marwick LLP, 965 F. Supp. 165, 170 (D. Mass.

1997). The Supreme Court in Lampf established a uniform federal statute of limitations for such

claims and further held the doctrine of equitable tolling would not apply. 501 U.S. at 361–62,

363. In some cases, plaintiffs must affirmatively plead compliance with the statute of limitations,

with supporting facts. See, e.g., In re Chaus Sec. Litig., 801 F. Supp. 1257, 1265 (S.D.N.Y. 1992).

1872. See, e.g., Daily Income Fund, Inc. v. Fox, 464 U.S. 523 (1984).

1873. See Burks v. Lasker, 441 U.S. 471, 486 (1979) (state law controls issue of board’s

power to discontinue derivative action on federal claim); see also RCM Sec. Fund, Inc. v.

Stanton, 928 F.2d 1318 (2d Cir. 1991); Joy v. North, 692 F.2d 880 (2d Cir. 1982); Clark v. Lomas

& Nettleton Fin. Corp., 625 F.2d 49 (5th Cir. 1980).

1874. See, e.g., Martin v. Shearson Lehman Hutton, Inc., 986 F.2d 242, 244 (8th Cir. 1993);

Hollinger v. Tital Capital Corp., 914 F.2d 1564, 1572–76 (9th Cir. 1990) (en banc); In re Indep.

Energy Holdings PLC Sec. Litig., 154 F. Supp. 2d 741, 772 (S.D.N.Y. 2001); In re Xerox Corp.

Sec. Litig., 165 F. Supp. 2d 208, 220 (D. Conn. 2001); In re Sirrom Capital Corp. Sec. Litig., 84 F.

Supp. 2d 933, 940 (M.D. Tenn. 1999) (denying motion to dismiss).

1875. See, e.g., Frankel v. Slotkin, 984 F.2d 1328, 1333 & n.3, 1337–38 (2d Cir. 1993); Colan

v. Mesa Petroleum Co., 951 F.2d 1512, 1522–25 (9th Cir. 1991); Freeman v. Decio, 584 F.2d 186,

200 (7th Cir. 1978).

1876. See In re Apple Computer Sec. Litig., 886 F.2d 1109, 1115 (9th Cir. 1989).

1877. 15 U.S.C. § 78u-4(b)(4) (2000). See EP MedSystems, Inc. v. EchoCath, Inc., 235 F.3d

865, 883–85 (3d Cir. 2000); McGonigle v. Combs, 968 F.2d 810, 819–20 (9th Cir. 1991); Norwood Venture Corp. v. Converse Inc., 959 F. Supp. 205, 209–10 (S.D.N.Y. 1997). Loss causation

requires plaintiffs to do more than allege that “they would not have bought . . . stock had they

known the truth; they must allege that they would not have suffered the loss” but for defendant’s

actions. Miller v. New Am. High Income Fund, 755 F. Supp. 1099, 1108 (D. Mass. 1991).
§ 31.5 Manual for Complex Litigation, Fourth

550

• whether the defendant may be held liable as a “seller.”1879

In addition, the resolution of various issues—for example, whether the

plaintiffs may proceed on a fraud-on-the-market theory1880—will be relevant to

whether individual cases may be consolidated for joint trial or should proceed

as a class action.1881

31.5 Class Actions and Derivative Actions

Where appropriate, the court can use the initial pretrial conference to set a

schedule for determining whether one or more of the cases should proceed as a

class action under Federal Rule of Civil Procedure 23, or a derivative action

under Rule 23.1. In addition to ensuring that the notice and pleading requirements of the PSLRA have been met, the following can be assessed as an initial

matter:

• whether there has been more than one class action filed, and the parties’ intent to seek consolidation or transfer;

• if the action has been removed pursuant to the Uniform Standards

Act, whether removal was appropriate;1882

• whether there have been or will be challenges to lead plaintiff certification;

• whether there has been a demonstrable need for limited discovery regarding lead plaintiff certification—in addition to showing a significant financial interest in the relief sought by the class, the plaintiff

must also satisfy the typicality and adequacy requirements of Rule

23(a);

• whether appropriate discovery stays pending resolution of any motions to dismiss have been instituted;

• whether lead plaintiff has been selected;

• whether lead counsel has been identified and approved by the court;

and

1878. See Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976). See also Hollinger, 914 F.2d at

1568–72.

1879. See Pinter v. Dahl, 486 U.S. 622, 641–47 (1988).

1880. See Basic Inc. v. Levinson, 485 U.S. 224, 241–49 (1988).

1881. See, e.g., In re LTV Sec. Litig., 88 F.R.D. 134 (N.D. Tex. 1980); Mirkin v. Wasserman,

858 P.2d 568 (Cal. 1993).

1882. Derdiger v. Tallman, 75 F. Supp. 2d 322, 325 (D. Del. 1999) (finding remand required where claims fell within savings clause of 15 U.S.C. § 78bb(f)(3)(A)(ii)).
Securities § 31.5

551

• whether the complaint alleges claims that are not susceptible to class

treatment.

Other matters must be resolved before a class can be defined. The initial

complaint occasionally will include some claims (e.g., reliance on oral misrepresentations or the breach of a “suitability” standard) that rarely would be susceptible to class action treatment, along with other claims (e.g., an omission of

a material fact from a proxy statement) that may well be presented on behalf of

a class. The dates when plaintiffs bought or sold the securities, and what information they possessed on those dates, may not be clear from the complaint,

yet may be critical to a decision regarding the class of persons they might properly represent. Whether the plaintiffs may proceed on a fraud-on-the-market

theory may depend both on matters developed during discovery and on what

claims will be pursued in the case. The court may need to determine whether a

particular claim is made derivatively or individually1883 and whether the same

plaintiff may assert both derivative and class claims.1884 In deciding whether a

class should be certified, consider what class the plaintiffs may represent, and

whether multiple classes or subclasses should be formed. It is advisable to consider sources of potential conflict and their effect, such as

• whether the class members are holders of different types of securities;1885

• whether some class members took certain key actions while others did

not;1886

• whether some class members bought or sold before the alleged misconduct and others did so afterwards (or continued to hold the security);1887

• whether some class members had inside information;1888

1883. See Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 527–34 (1984).

1884. Compare Hawk Indus., Inc. v. Bausch & Lomb, Inc., 59 F.R.D. 619, 623–24 (S.D.N.Y.

1973), and Ruggiero v. Am. Bioculture, Inc., 56 F.R.D. 93, 95 (S.D.N.Y. 1972), with Keyser v.

Commonwealth Nat’l Fin. Corp., 120 F.R.D. 489, 492–93 (M.D. Pa. 1988), and In re Dayco

Corp. Derivative Sec. Litig., 102 F.R.D. 624, 629–31 (S.D. Ohio 1984). The court may choose to

address any actual conflict arising between the claims at the remedy stage. Keyser, 120 F.R.D. at

492 n.8 (citing Bertozzi v. King Louie Int’l, Inc., 420 F. Supp. 1166 (D.R.I. 1976)).

1885. See, e.g., Margolis v. Caterpillar, Inc., 815 F. Supp. 1150, 1157 (C.D. Ill. 1991) (buyers

of call options and sellers of put options); Deutschman v. Beneficial Corp., 761 F. Supp. 1080,

1082–83 (D. Del. 1991) (common stock and call options).

1886. See, e.g., In re Bally Mfg. Sec. Corp. Litig., 141 F.R.D. 262, 270 (N.D. Ill. 1992) (those

who sold during the class period and those who did not).

1887. See, e.g., Kovaleff v. Piano, 142 F.R.D. 406, 408 (S.D.N.Y. 1992); Deutschman v.

Beneficial Corp., 132 F.R.D. 359, 382–83 (D. Del. 1990); In re LTV Sec. Litig., 88 F.R.D. 134, 149

(N.D. Tex. 1980).
§ 31.5 Manual for Complex Litigation, Fourth

552

• whether class members purchased or sold securities at different times

based on different information;1889 and

• whether class members are seeking damages or rescission.1890

These differences in the various groups of plaintiffs and proposed class

members require the court’s early attention. Defendants may raise these differences when opposing class treatment, and in some cases opposing positions

may justify denial of class certification. In many instances, however, differences

may be resolved by limiting the definition of the class or classes that the plaintiffs may represent, by creating additional classes or subclasses, or by tailoring

the relief afforded to different plaintiffs. For example, the court may define a

class to exclude (or treat as a subclass) those who, as often occurs in complex

securities litigation, are also defendants in the class action or in related litigation. If a subclass should be formed and no representative of that subclass is a

party, the court may direct notice to the unrepresented class members, to afford them time to have a representative intervene.1891 Although, as discussed in

section 21.23, unnecessary classes generally should be avoided, in some securities cases multiple classes or subclasses may be needed to ensure that the interests of all class members are fairly and adequately protected, particularly during settlement negotiations. Occasionally a mandatory class under Federal Rule

of Civil Procedure 23(b)(1) or (b)(2) may be proper, but generally classes in

securities litigation will be certified under Rule 23(b)(3), with members enjoying the right to notice and an opportunity to opt out. Class members’ opting out of a 23(b)(3) class, if adequately disclosed, may cure some conflicts.

Although the PSLRA provides for early notice to class members by the

plaintiff who first files a securities class action, class representatives must also

comply with Rule 23(c)(2)’s notice provisions. Absent special circumstances,

the class representatives must bear not only the cost of providing Rule 23(c)(2)

notice, but also the expense of obtaining class members’ names and addresses,

which frequently are in the possession of the defendants or a transfer agent.1892

When securities are registered in “street” names with brokerage houses or fi1888. See, e.g., Dubin v. Miller, 132 F.R.D. 269, 274–75 (D. Colo. 1990).

1889. See, e.g., Hoexter v. Simmons, 140 F.R.D. 416, 421–22 (D. Ariz. 1991); Alfus v. Pyramid Tech. Corp., 764 F. Supp. 598, 605–06 (N.D. Cal. 1991).

1890. See, e.g., Larson v. Dumke, 900 F.2d 1363, 1366–68 (9th Cir. 1990); Davis v. Comed,

Inc., 619 F.2d 588, 592–98 (6th Cir. 1980).

1891. See Fed. R. Civ. P. 23(d)(2).

1892. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (1978).
Securities § 31.6

553

nancial institutions, these nominees’ assistance will be needed.1893 Class representatives should make arrangements with nominees to provide the necessary

names and addresses or to forward notices where appropriate, or, where necessary, issue a subpoena duces tecum.

1894 Sometimes—for example, in a class

action on behalf of holders of bearer bonds—the identity of class members

may not be ascertainable. In such a case, the plaintiffs’ attorneys should give

notice by publication in media likely to be seen by the class members.

1893. See Silber v. Mabon, 18 F.3d 1449, 1453–55 (9th Cir. 1994) (no due process violation

where notice mailed to broker holding stock in street name was not sent to class member until

after opt-out period, but court should have considered allowing late opt out).

1894. See, e.g., In re Penn Cent. Sec. Litig., 560 F.2d 1138 (3d Cir. 1977).

31.6 Discovery

The principles and procedures discussed in section 11.4 for controlling

discovery are generally applicable to securities litigation, subject to the discovery stay provisions of the PSLRA where class action litigation is involved. As an

initial matter, the judge should consider what information will be needed from

the parties to determine whether the litigation should proceed as a derivative

action or class action. In cases that do not raise class issues, the parties are

subject to Rule 26 disclosures and the court should further ascertain at the initial pretrial conference the scope of discovery likely to be sought by the parties

and tailor a discovery schedule accordingly. Additional reciprocal prediscovery

disclosures may expedite and reduce the amount of discovery needed. Similarly, deferral of depositions until the completion of document discovery may

help facilitate and expedite the depositions, reducing the burden and cost on

the parties. In class actions, the discovery process can begin once the court has

resolved any outstanding motions to dismiss; therefore, it is helpful to set a

discovery schedule that includes dates for Rule 26 disclosures (which would

have been preempted by any stay of discovery) prior to permitting the parties

to begin the formal discovery process. Staged discovery may be appropriate,

such as where there are certain factual issues that may be key to summary

judgment or settlement. Discovery into these areas first may facilitate early

resolution or, at minimum, identify areas that remain in dispute.

To avoid duplicative discovery in multiple litigation, it is best to require

plaintiffs in related cases to prepare a single set of interrogatories to be propounded to each defendant, and require the parties to coordinate discovery

plans. Consider also establishing a common document depository, perhaps online, cross-noticing depositions of common witnesses for use in all cases.

Whether claims of attorney–client privilege or other requests for protective
§ 31.71 Manual for Complex Litigation, Fourth

554

orders are likely to arise during the course of discovery can be ascertained at

the initial conference, and efforts can be made to resolve such issues before

they can disrupt the discovery schedule. The court can also establish a schedule

for exchanging expert reports and taking depositions early in the litigation and

can adopt procedures to facilitate discovery and use at trial of summaries and

computerized data. As in other cases, counsel should be expected to stipulate

to facts not genuinely in controversy and directed to develop a joint statement

of agreed-on (or uncontroverted) facts.

31.7 Takeover Litigation

.71 Initial Conference 554

.72 Injunctive Relief 556

.73 Discovery 558

Takeover litigation presents special problems. Several actions and counteractions may be filed almost simultaneously in different courts to enjoin or

remedy alleged violations of federal antitrust laws, federal securities laws, and

state statutes. Major decisions must often be made rapidly about complex factual, legal, and economic issues that involve large amounts of money and

would ordinarily take months or even years to resolve. Fortunately, such litigation typically involves only a few parties, represented by experienced attorneys accustomed to working under severe time constraints and other pressures. The existence of state statutes and corporate defenses, such as shareholders’ rights plans (“poison pills”), may render time constraints less severe than

suggested by the Williams Act.1895

1895. Pub. L. No. 90-439, 82 Stat. 454 (1968) (codified as amended at 15 U.S.C.

§§ 78m(d)–(e), 78n(d)–(f) (2000)).

31.71 Initial Conference

It is wise to hold a preliminary conference with counsel as soon as possible

after the commencement of takeover litigation—preferably within a day or two

after the complaint is filed. Plaintiff’s counsel usually will know or be able to

ascertain the identity of counsel for the defendants. The judge should consider

whether attorneys for other companies with an interest in the litigation, either

as potential intervenors or parties in related cases, should participate. Consider

also inviting counsel for government enforcement agencies, such as the Securities and Exchange Commission or the Antitrust Division of the Department
Securities § 31.71

555

of Justice. Telephone conferences can accommodate attorneys who are not

available on short notice for a conference in chambers.

Procedures can be established—such as telephone conference calls or setting aside a period before or after normal office hours for an in-person conference—for emergency or other matters that may arise and require an immediate ruling. The parties should be cautioned, however, that unnecessary “emergency” motions, whose primary purpose may be to influence the market, may

subject offending counsel or their clients to appropriate sanctions. All orders in

takeover litigation involving entities with publicly traded securities should, to

the extent feasible, be announced after the stock market closes. These rulings

may have a substantial impact on the stock market for both plaintiffs’ and defendants’ stock and are sometimes monitored by securities professionals in an

attempt to take immediate action in response to the court’s actions, often to

the disadvantage of less sophisticated market participants. In unusual situations involving important confidential information, consider holding certain

proceedings in camera or receiving some evidence under seal. Although the

court may order counsel to defer disclosing the results of a court conference,

the court will need to examine whether such an order could conflict with the

disclosure requirements of the federal securities laws. Because of the limited

time within which rulings must be made, the need for the judge to be personally involved in management and supervision is greater here than in other

complex litigation. For this reason, some judges avoid referral to a magistrate

judge or special master, which may result in critical delays while rulings are

reviewed.

A schedule should be established at the initial conference for filing responsive pleadings and motions, defining and narrowing issues, conducting

necessary discovery, and holding the next conference. The schedule usually will

be substantially compressed compared with those typical of other litigation.

For example, the court may require that the answer be combined with any

motions and filed well before the twenty-day period prescribed by Federal Rule

of Civil Procedure 12(a), and parties may also be required to serve papers by

personal delivery rather than through the mail. In setting the schedule, the

suggestions and requests of counsel should be considered. Although the schedule should be regarded as firm, unforeseen events may dictate revisions. The

attorneys should confer in advance of each conference, seeking through discussion and compromise to narrow, if not eliminate, disagreements as to matters to be considered by the court. If counsel has not done so, the court might

consider adjourning the conference for a day or two to permit counsel to develop more detailed proposals for management of the case.

Additional agenda items that may be appropriate for consideration at this

initial conference, whether the conference is held in person or by telephone,

include whether the parties anticipate filing threshold motions and the exis-
§ 31.72 Manual for Complex Litigation, Fourth

556

tence and status of any related cases. The parties may contemplate challenging

standing, personal jurisdiction, venue, or other threshold matters that, if resolved promptly, might reduce or eliminate the need for discovery. If so, the

judge should establish a schedule for expedited resolution of these issues. This

is also an appropriate time to ascertain, or direct counsel to ascertain, the

status of other related cases, including times set for hearings, and make plans

to coordinate the proceedings to the extent possible. If jurisdiction and venue

will not be contested, consider requiring the parties to include any related

claims that may arise and enjoining them from instituting new litigation in

other courts. Because of time constraints, multidistrict transfer under 28

U.S.C. § 1407 is rarely feasible. Transfer of cases to a single district under 28

U.S.C. § 1404 or 1406 may, however, be appropriate; if so, such transfers

should be ordered as expeditiously as possible. If the cases remain in separate

courts, the judges should confer and attempt to avoid conflicts in schedules.

31.72 Injunctive Relief

The most significant hearing in takeover litigation usually is that on the

preliminary injunction. The court’s ruling may moot or resolve other issues.

Although the complaint typically will include a request for a temporary restraining order (TRO) and an application for a preliminary injunction, a

TRO—or any order in takeover litigation—should almost never be granted ex

parte, particularly given the opportunity for a telephone conference. Ordinarily, any pending request for a TRO should be resolved at the initial conference,

and a date should be set for hearing the motion for injunctive relief. Depending on the date of the hearing, the court may, under Federal Rule of Civil Procedure 65(a)(2), order the trial on the merits to be advanced and consolidated

with the hearing. In some cases, it is advisable to refuse hearing a motion for

preliminary injunction if a hearing on a permanent injunction can be held expeditiously. Before deciding when or whether to hear the application for a preliminary injunction, the court should determine whether a ruling on the application must be rendered by an identifiable date. It is also wise to ascertain from

counsel all dates important to the litigation, including those on which any

statutory waiting periods expire or significant events (such as a stockholders

meeting, or the commencement of acquisition of shares by a competing offeror) are scheduled to occur. The federal statutory waiting period may not be

controlling, because of the prevalence of state statutes, such as control share

acquisition acts and business combination statutes, as well as shareholders’

rights plans (poison pills). Counsel should be questioned about the interplay of

such laws and corporate defenses and the effect they will have on the date to be

set for the hearing. If the deadline for a ruling cannot be met because of requirements of the litigation, such as criminal proceedings subject to the Speedy
Securities § 31.72

557

Trial Act, consider reassigning the case to another judge. Counsel’s views about

the minimum time needed to conduct essential discovery and to conduct the

hearing itself should be considered. The court may make a tentative determination on the form of the hearing—for example, whether the motion will be

decided on affidavits, depositions, and documents alone, or whether witnesses

will be heard in person and, if so, whether their direct testimony will be presented by prepared statements and reports.

One or two additional case-management conferences usually will be

needed before the hearing. A meeting (or conference call) among counsel

should precede each conference. The primary purposes of these casemanagement conferences are to ensure that schedules are being met, to narrow

or revise the issues based on intervening circumstances (such as an offer being

made by another company for the target company’s stock, or other defensive

measures adopted or proposed to be adopted by the “target” company), and to

make final preparations for any scheduled hearing.

Complaints in takeover litigation frequently include a number of claims

that the plaintiffs may be willing to eliminate, after further exploration, at least

for purposes of the preliminary injunction. Similarly, defenses and counterclaims may be abandoned as the hearing date approaches. The judge can encourage the parties to narrow the scope of the case to the most important issues, setting a date by which they are to specify those allegations the parties will

press at the hearing.

Various steps may be taken to expedite and streamline the hearing, including the following:

• holding the hearing on only the affidavits, where no substantial factual

disputes exist;

• directing the parties to submit statements of undisputed facts or requests for admission to narrow the scope of the hearing;

• directing counsel to identify any witnesses in advance along with the

substance of their testimony and the exhibits they will sponsor;

• requiring that direct testimony be offered in the form of adopted narrative statements, exchanged in advance and subject to motions to

strike, to cross-examination, and to redirect at the hearing if issues of

credibility are presented;

• directing counsel to exchange proposed exhibits in advance of the

hearing, and giving notice that objections may be treated as waived if

not made in writing in advance of the hearing;

• resolving objections to foundation before the hearing;

• directing counsel to present stipulated summaries or extracts of any

deposition testimony to be used in lieu of lengthy readings of transcripts;
§ 31.8 Manual for Complex Litigation, Fourth

558

• directing counsel to submit briefs in advance of the hearing, along

with proposed findings of fact and conclusions of law; and

• where time is of the essence, ruling from the bench at the conclusion

of the hearing, dictating findings and conclusions into the record, and

requiring counsel to state immediately, at the hearing, any motions for

modified or additional findings and conclusions based on the record.

31.73 Discovery

The court should encourage counsel to submit a jointly agreed on discovery plan for approval. The potential scope of disputed issues in takeover litigation can lead to excessive discovery demands, both for documents and depositions, creating unreasonable burdens on the parties in view of the brief time

usually available for compliance. The need to identify and narrow the disputed

issues and tailor the discovery plan narrowly in light of those issues should be

stressed.

Discovery should begin with an expedited procedure for the production of

relevant files, records, and documents necessary for the resolution of the issues.

Where the initial conference is held within days of the filing of the complaint,

the parties will have been unable to comply with early disclosure mandates of

Federal Rule of Civil Procedure 26. The judge should discuss with the parties

how to effectuate the goals of Rule 26 within the time pressures imposed by

takeover litigation and take steps to avoid excessively voluminous production

that will burden rather than assist the parties. The following may be helpful:

• limiting the relevant periods of time for discovery requests;

• requiring the parties to minimize objections and to redact documents

and files to eliminate extraneous matter;

• encouraging counsel and the parties to consider alternative means of

obtaining testimony in the limited time available, such as through

statements from interviews of witnesses or discovery in related litigation; and

• encouraging and approving stipulated protective orders.

31.8 Trial and Settlement

The court should always be prepared for the possibility of trial, even

though complex securities cases seldom proceed that far. Procedures similar to
Securities § 31.8

559

those used for trial and settlement of mass tort litigation1896 may be appropriate

for securities litigation. For example, consider consolidating related cases for a

joint trial on specified issues, such as the defendants’ respective liabilities for

alleged misrepresentations and omissions, while leaving for subsequent separate trials other issues, such as damages and individual defenses. In cases subject to the PSLRA, the defendant is entitled, upon request, to have a written

interrogatory submitted to the jury on the “defendant’s state of mind at the

time the alleged violation occurred.”1897 The PSLRA further requires that special interrogatories be submitted in jury cases (or findings of fact in bench trials) as to each covered person or each person alleged to have caused or contributed to the plaintiff’s loss, regarding (1) whether such person violated the

securities laws; (2) the person’s percentage of responsibility; and (3) whether

the securities violation was committed knowingly.1898 In selected cases, the

court may direct the parties to confer with the court about the precise text of

appropriate special questions to a jury.

Securities cases typically involve experienced and sophisticated lawyers, as

well as large sums of money. It is best to refer settlements to another judge, a

special master, or a court-appointed expert with comparable experience and

skills. Counsel need court approval to settle class or derivative actions, and

when such approval is sought, the court should apply the principles and procedures governing settlements of class actions in general. The PSLRA contains

specific provisions relating to settlement of covered class actions, including

statements that must be included in proposed or final settlement agreements

disseminated to the class1899 and restrictions on settlements under seal.1900 The

PSLRA also provides for the discharge of all contribution claims against a covered person who settles before final judgment.1901 In derivative actions, nonmonetary benefits—such as a change in corporate management or policies—may play a significant role.1902

The PSLRA provides for the court’s mandatory review of the parties’ conduct and that of their counsel during the course of the action, and upon final

adjudication it requires the court to “include in the record specific findings

regarding compliance by each party and each attorney representing any party

1896. See supra section 22.9.

1897. 15 U.S.C. § 78u-4(d) (2000).

1898. Id. § 78u-4(f)(3)(A). The statute sets out factors to be considered by the trier of fact

in determining the percentage of responsibility. Id. § 78u-4(f)(3)(C).

1899. Id. § 78u-4(a)(7).

1900. Id. § 78u-4(a)(5).

1901. Id. § 78u-4(f)(7).

1902. See Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 1310–12 (3d Cir. 1993), and cases cited

therein.
§ 31.8 Manual for Complex Litigation, Fourth

560

with each requirement of Rule 11(b) . . . as to any complaint, responsive

pleading, or dispositive motion.”1903 The parties should be afforded an opportunity to be heard on the issue before any such finding is made. Sanctions are

mandatory, however, once a finding of noncompliance has been made.

1903. 15 U.S.C. § 78u-4(c)(1) (2000).
561

32. Employment Discrimination

.1 Introduction 561

.2 The Statutory Framework 562

.21 Title VII: Discrimination in Employee Hiring and Advancement 564

.22 The Civil Rights Act of 1964: Discrimination in Contracting 567

.23 Age Discrimination in Employment Act 568

.24 Americans with Disabilities Act 570

.25 Family and Medical Leave Act 571

.3 Developments in the Law of Employment Discrimination 572

.4 Case Management 576

.41 Initial Pretrial Conference 576

.42 Class Actions 579

.43 Discovery 586

.431 Identification of Source Materials 586

.432 Computerized Records 587

.433 Confidential Information 588

.434 Preservation of Records 589

.435 Statistical Evidence and Expert Testimony 589

.436 Discovery from Class Members 590

.44 Summary Judgment 591

.45 Trial 592

.46 Settlement 596

.461 Timing 596

.462 Affirmative Relief 596

.463 Attorney Fees 597

.464 Settlement Hearing 597

.465 Implementation 597

32.1 Introduction

Employment discrimination litigation1904 can arise in a number of contexts

and include both statutory and common-law claims. Individual actions alleging employment discrimination are generally not factually complex. Nonetheless, complexity can be introduced into employment discrimination suits by

class action allegations, questions regarding the scope of discovery, the technical nature of expert testimony, and issues relating to the granting of relief,

whether by way of judgment or consent decree.

1904. This section is designed to highlight some of the areas in which case-management

issues may arise under the most commonly litigated statutes and does not purport to afford

comprehensive coverage of all of the issues that may arise in employment discrimination law.
§ 32.2 Manual for Complex Litigation, Fourth

562

32.2 The Statutory Framework

.21 Title VII: Discrimination in Employee Hiring and Advancement 564

.22 The Civil Rights Act of 1964: Discrimination in Contracting 567

.23 Age Discrimination in Employment Act 568

.24 Americans with Disabilities Act 570

.25 Family and Medical Leave Act 571

The main federal statutes governing employment discrimination litigation

are Title VII of the Civil Rights Act of 1964,1905 the Civil Rights Acts of 1866

and 1871 (sections 1981 and 1985(c)),1906 the Age Discrimination in Employment Act of 1967 (ADEA),1907 and the Americans with Disabilities Act of 1990

(ADA).1908 Other federal statutes also afford a basis for employment discrimination claims. These include, but are not limited to, the Equal Pay Act of

1963,1909 the Uniformed Services Employment and Reemployment Rights Act

(USERRA),1910 the Fair Labor Standards Act,1911 Title IX of the Educational

Amendments of 1972,1912 the Family and Medical Leave Act (FMLA),1913 and 42

U.S.C. § 1983.1914 These statutes afford a panoply of remedies covering a wide

variety of conduct.

1905. 42 U.S.C. § 2000e (2000).

1906. Id. § 1981(a) (section 1981 prohibits, among other things, discrimination in employment contracting); Id. § 1985 (prohibits conspiracy to interfere with civil rights).

1907. 29 U.S.C. § 623(a) (2000) (the ADEA prohibits discrimination based on age).

1908. 42 U.S.C. § 12112(a) (2000) (the ADA affords protection against employment discrimination based on disability).

1909. 29 U.S.C.A. § 206(d) (2000). The Equal Pay Act prohibits only discrimination based

on sex and requires equal pay “for equal work on jobs the performance of which requires equal

skill, effort and responsibility, and which are performed under similar working conditions . . . .”

Id. § 206(d)(1). The statute authorizes both public and private actions against employers, but

limits a private individual’s right to sue only if there has been no public action filed on the individual’s behalf or the individual has accepted no prior remedies. Id. § 216(b).

1910. 38 U.S.C. § 4301 (2000).

1911. 29 U.S.C. § 201 (2000).

1912. 20 U.S.C. § 1681 (2000) (Title IX prohibits discrimination on the basis of sex in federally funded programs or activities).

1913. 29 U.S.C. § 2615 (2000).

1914. See Evans v. Avery, 100 F.3d 1033, 1036 (1st Cir. 1996) (“Section 1983 supplies a

private right of action against a person who, under color of state law, deprives another of rights

secured by the Constitution or by federal law.”); see also Morris v. Oldham County Fiscal Court,

201 F.3d 784, 794 (6th Cir. 2000) (“The showing a plaintiff must make to recover on an employment discrimination claim under Title VII mirrors that which must be made to recover on

an equal protection claim under section 1983.”). Section 1983 is the vehicle for suits against

federal officials under other sources of federal statutory law prohibiting discrimination.
Employment Discrimination § 32.2

563

A plaintiff can establish a prima facie case of employment discrimination

through “direct” evidence of a defendant’s discriminatory intent.1915 When the

plaintiff relies only on inferential or circumstantial evidence of discriminatory

intent, however, it is common to apply some variation of the four-factor test

set out in McDonnell Douglas Corp. v. Green.1916 In McDonnell Douglas, the Supreme Court, in addressing a claim under Title VII, held that to establish a

prima facie case of employment discrimination in cases where the plaintiff

lacks direct evidence of discriminatory intent, a plaintiff must prove (1) that

the plaintiff is a member of a protected class, (2) who applied and was qualified

for a job for which the employer was seeking applicants, (3) that, despite

plaintiff’s qualifications, he or she was rejected, and (4) that, after the plaintiff

was rejected, the position remained open and the employer continued to seek

applications from persons of plaintiff’s qualifications.1917

McDonnell Douglas also “‘established an allocation of the burden of production and an order for the presentation of proof in . . . discriminatorytreatment cases.’”1918 Once the plaintiff has established a prima facie case under

the McDonnell Douglas standard, the plaintiff creates a rebuttable presumption

that the employer engaged in unlawful discrimination.1919 The burden of production then shifts to the defendant to produce evidence that its challenged

employment decision was based on factors other than the protected status of

the plaintiff and based on a legitimate, nondiscriminatory reason.1920 The pre1915. See, e.g., Hopson v. DaimlerChrysler Corp., 306 F.3d 427, 433 (6th Cir. 2002); see also

Costa v. Desert Palace, Inc., 299 F.3d 838, 852–53 (9th Cir. 2002) (discussing approaches among

the circuits to “direct evidence”), aff’d, 123 S. Ct. 2148 (2003); Harold S. Lewis, Jr. & Elizabeth J.

Norman, Employment Discrimination Law and Practice 115–123 (2001) (discussing modes of

proof for Title VII claim).

1916. 411 U.S. 792 (1973). In addition to claims brought under Title VII, the McDonnell

Douglas test applies to claims for employment discrimination brought under §§ 1981 and 1983

of the Civil Rights Act, and under the ADEA. See, e.g., Reeves v. Sanderson Plumbing Prods.,

Inc., 530 U.S. 133, 142 (2000) (noting that the issue had not squarely come before the Court but

assumed arguendo that the McDonnell Douglas burden-shifting standard applied where the parties did not dispute its application), and cases cited therein; see also Fairchild v. Forma Scientific,

Inc., 147 F.3d 567, 571 (7th Cir. 1998) (variant of McDonnell Douglas test applies to ADEA case).

1917. 411 U.S. at 802.

1918. Reeves, 530 U.S. at 142 (quoting St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 506

(1993)).

1919. Reeves, 530 U.S. at 142; Tex. Dept. of Cmty. Affairs v. Burdine, 450 U.S. 248, 253–54

(1981). The court in Jones v. Union Pac. R.R. Co., 302 F.3d 735, 742 (7th Cir. 2002) noted that

“[t]he need to establish a prima facie case does not always arise; frequently employers concede

the prima facie case and simply offer a non-discriminatory justification.” See also Hopson v.

DaimlerChrysler Corp., 306 F.3d 427, 428 (6th Cir. 2002) (employer conceded prima facie case).

1920. Reeves, 530 U.S. at 142 (citing Burdine, 450 U.S. at 254); Hicks, 509 U.S. at 506–07.
§ 32.21 Manual for Complex Litigation, Fourth

564

sumptions created by the McDonnell Douglas framework then disappear, and

the plaintiff must prove that the employer’s proffered reasons were simply a

pretext for discrimination.1921 The defendant’s burden is one of production

only, however, and “‘[t]he ultimate burden of persuading the trier of fact that

the defendant intentionally discriminated against the plaintiff remains at all

times with the plaintiff.’”1922 The Supreme Court, in Reeves v. Sanderson, held

that a plaintiff can satisfy this burden through proof of “a prima facie case,

combined with sufficient evidence to find the employer’s asserted justification

is false.”1923 The plaintiff is not required to present independent proof of discrimination.1924

32.21 Title VII: Discrimination in Employee Hiring and

Advancement

Title VII has been referred to as the “centerpiece of employment discrimination law,”1925 prohibiting discrimination based on sex (including sexual harassment),1926 race,1927 religion, and national origin.1928 Title VII further prohibits retaliation against employees who exercise their rights under the statute.

Title VII applies to employers (of fifteen or more employees),1929 employment

agencies,1930 and labor organizations,1931 as well as state and federal entities.

1921. See, e.g., Waterhouse v. District of Columbia, 298 F.3d 989, 994 (D.C. Cir. 2002)

(plaintiff failed to establish employer’s proffered explanation lacked credence where plaintiff

admitted deficiencies cited by employer concerning her performance).

1922. Hicks, 509 U.S. at 507 (quoting Burdine, 450 U.S. at 253).

1923. 530 U.S. at 148 (emphasis added).

1924. Id. at 149; see also Hopson, 306 F.3d at 434–35 (“It strains credulity to conclude that,

not once, but five times, the other employees who applied for the open positions were so significantly more qualified than Hopson that he was not even worthy of an interview.”).

1925. Mack A. Player, Federal Law of Employment Discrimination in a Nutshell 12 (3d ed.

1992).

1926. See Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843, 853 (2001) (holding that

front pay was not an element of compensatory damages to a claim of sexual harassment under

Title VII); Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 531 (1999) (gender); Faragher v. City of

Boca Raton, 524 U.S. 775, 777 (1998) (holding that employers may be vicariously liable for sexual harassment by their employees); Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 79

(1998) (recognizing discrimination under Title VII applies to sexual harassment by those of the

same sex); Harris v. Forklift Sys., Inc., 510 U.S. 17, 19–20 (1993) (alleging abusive work environment from sexual harassment).

1927. See Loum v. Houston’s Rests., Inc., 985 F. Supp. 1315, 1317 (D. Kan. 1997).

1928. 42 U.S.C. § 2000e-2(a) (2000) (plaintiff may bring Title VII claims based on national

origin discrimination). See Swierkiewicz v. Sorema, 534 U.S. 506 (2002).

1929. 42 U.S.C. § 2000e-2(a) (2000).

1930. Id. § 2000e-2(b).
Employment Discrimination § 32.21

565

When the plaintiff has direct evidence of discrimination, plaintiff’s prima facie

case is met through proof that the employer took an adverse employment action against him or her because of race, age, sex, or religion. The McDonnell

Douglas standard typically will govern the pretrial evidentiary burdens if direct

evidence of discrimination is unavailable. Remedies include both compensatory and punitive damages,1932 injunctive relief, reinstatement, back pay, attorney fees, and lost profits.1933

Title VII established the Equal Employment Opportunity Commission

(EEOC),1934 which also enforces provisions of the ADA and ADEA.1935 The

EEOC functions as an “institution of first-resort” for claims under Title VII.

The statute also authorizes the EEOC itself to bring suit against the employer.1936 Prior to seeking judicial relief, a plaintiff must timely file his or her

claim with a regional EEOC office.1937 The EEOC may grant the plaintiff

1931. Id. § 2000e-2(c).

1932. 42 U.S.C. § 1981a(a)(1) (2000). However, both compensatory and punitive damages

are subject to the statutory limitations provided in 42 U.S.C. § 1981a(b)(3), limitations that are

based on the number of employees of the defendant. See Pollard v. E.I. du Pont de Nemours &

Co., 532 U.S. 843, 848 (2001) (holding that front pay is not subject to the statutory limitations

provided in § 1981a). Punitive damages are not available against a public employer. 42 U.S.C. §

1981a(b)(1) (2000).

1933. Pollard, 532 U.S. at 847. Other recoverable damages may include “consequential

losses, such as humiliation, economic dislocations, and loss of credit.” Player, supra note 1925, at

222.

1934. 42 U.S.C. § 2000e-5(a), (e) (2000).

1935. Id. The EEOC is comprised of five members appointed by the President, with regional offices throughout the country. Player, supra note 1925, at 40.

1936. See EEOC v. Waffle House, Inc., 534 U.S. 279, 291 (2002) (where the EEOC files suit,

“the employee has no independent cause of action, although the employee may intervene in the

EEOC’s suit” (discussing 42 U.S.C. § 2000e-5(f)(1))).

1937. 42 U.S.C. § 2000e-5(a), (e) (2000). When the charge must be filed with the EEOC

depends on whether the state affords administrative remedies for unlawful employment practices. Where no such legislation exists, the charge must be filed with the EEOC within 180 days

of the unlawful practice. Where the state has enacted equal employment legislation and maintains agencies to enforce such laws, however, the charge must first be filed with the state agency.

The state agency has 60 days to review the charge and seek to resolve the plaintiff’s complaint.

The plaintiff then has 30 days from receipt of a notice of dismissal or notice of a right-to-sue

letter from the state agency, or 300 days from the unlawful practice complained of, whichever is

sooner, to file a charge with the EEOC. See Lewis & Norman, supra note 1915, § 4.2, at 199–204,

for a discussion of the notice provisions and work-sharing arrangements between the state and

federal agencies, noting “although Sec 706 appears to require that the state or local filing precede

the filing of a charge with EEOC, it is apparent from the Court’s approval of deferral and worksharing agreements that in practice EEOC is often the first, and sometimes the only agency to

investigate and conciliate charges, even in deferral states.” See also Tewksbury v. Ottoway Newspapers, 192 F.3d 322, 324–26 (2d Cir. 1999) (discussing relationship between EEOC and defer-
§ 32.21 Manual for Complex Litigation, Fourth

566

“statutory notice of the right to sue,”1938 following an investigation. Alternatively, regardless of whether the EEOC has found the charge to be supported by

reasonable cause, the plaintiff may request a right-to-sue letter after 180 days

and abandon further EEOC proceedings. Title VII does not restrict a complainant’s right to sue on charges that the commission has found unsupported

by reasonable cause.1939

Congress enacted The Civil Rights Act of 1991 (CRA) in response to Supreme Court decisions that, in Congress’s view, diminished Title VII and section 1981 protections.1940 The CRA gives plaintiffs a right to a jury trial and the

right to seek compensatory and punitive damages for claims of intentional discrimination under Title VII.1941 “The 1991 Act’s enhanced damages provisions

were designed to compensate victims of discrimination for humiliation,

trauma, physical distress, medical expenses, and other economic and noneconomic harms caused by workplace discrimination.”1942 The 1991 Act also

expressly designates claims for disparate impact as within the scope of Title VII

relief.1943 Other changes include requiring employers to demonstrate that a

challenged employment practice is “job related for the position in question and

consistent with business necessity,”1944 and allowing the award of attorney fees

and costs where the plaintiff successfully shows that an employment decision

was motivated by an impermissible factor (even though other factors may have

been involved). The 1991 Act allows for the recovery of expert fees in all cases

where attorney fees are recoverable. In addition, the Act limits the remedies

available against an employer who is able to show that it would have taken the

ral-state agency and whether claim is timely filed where EEOC forwards charges to state agency

under work-sharing agreement).

1938. See 42 U.S.C. § 2000e-5(f)(1) (2000); see also Smith v. HealthSouth Rehab. Ctr., 234

F. Supp. 2d 812, 814 (W.D. Tenn. 2002) (quoting Marquis v. Tecumseh Prods. Co., 206 F.R.D.

132, 151 (E.D. Mich. 2002)).

1939. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 798 (1973).

1940. Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071 (1992).

1941. Title VII initially provided only for declaratory or equitable relief, typically either

injunctive or an award of front or back pay. Damages are also now available for discrimination

based on sex, religion, or disability. Damages are limited to $50,000–$300,000 for claims brought

under Title VII; however, states cannot be liable for punitive damages. See, e.g., Waffle House,

534 U.S. at 287 (CRA added compensatory and punitive damages to remedies available under

ADA).

1942. Daniel F. Piar, The Uncertain Future of Title VII Class Actions After the Civil Rights Act

of 1991, 2001 BYU L. Rev. 301, 307 (2001).

1943. Civil Rights Act of 1991, Pub. L. No. 102-166, § 105, 105 Stat. 1071 (1992) (codified

as amended at 42 U.S.C. § 2000e-2(k)(1)(A) to (3)).

1944. Id.
Employment Discrimination § 32.22

567

same action even in the absence of the impermissible motivating factor.1945 The

employer may still have liability for the unlawful employment practice, but it

has a defense against the award of certain types of relief.1946 Remedies include

injunctive or declaratory relief, but not reinstatement, hiring, or promotion.

Attorney fees and costs directly attributable to pursuit of the plaintiff’s Title

VII claim may be awarded, but damages may not.

32.22 The Civil Rights Act of 1964: Discrimination in

Contracting

Section 1981 of Title 42 of the U.S. Code prohibits, among other things,

racial discrimination in employment contracting.1947 The Supreme Court has

interpreted the statute to reach discrimination based on ethnicity,1948 and

courts have interpreted the Act to prohibit discrimination on the basis of alienage.1949 There is no minimum employer size requirement as there is under

other antidiscrimination statutes.1950 In order to maintain a claim under section 1981, the record must show that plaintiff (1) is a member of a protected

class; (2) was qualified for the position; (3) was terminated; and (4) was replaced by someone outside the protected class.1951 Plaintiffs suing under section

1981 are not required to exhaust administrative avenues.1952 Damages under

section 1981 are unlimited and include both compensatory and punitive damages.1953

The scope of 42 U.S.C. § 1981 was also clarified in the CRA. Prior decisions by the Supreme Court had limited application of the statute to discrimination in the actual formation of contracts.1954 The CRA amended section 1981

1945. 42 U.S.C. § 2000e-5(g)(2)(b) (2000).

1946. Id.

1947. 42 U.S.C. § 1981 (2000).

1948. St. Francis Coll. v. Al-Khazraji, 481 U.S. 604, 613 (1987) (section 1981 applies to

discrimination based on ancestry or ethnic characteristics).

1949. Duane v. GEICO, 37 F.3d 1036, 1040 (4th Cir. 1994) (discrimination against aliens is

prohibited by both public and private persons).

1950. See, e.g., 42 U.S.C. § 2000e(b) (2000) (“fifteen or more employees”).

1951. LaPierre v. Benson Nissan, Inc., 86 F.3d 444, 448 (5th Cir. 1996). “Claims of racial

discrimination brought under § 1981 are governed by the same evidentiary framework applicable to claims of employment discrimination brought under Title VII.” Id. at 448 n.2.

1952. See, e.g., Walker v. Thompson, 214 F.3d 615, 624–25 (5th Cir. 2000) (discussing dissimilarity in administrative filing requirements between Title VII and section 1981 claims).

1953. 42 U.S.C. § 1981a(a)(1), (b)(1) (2000). Compensatory damages under section

1981(b)(1) do not include back pay or interest on back pay. Id. § 1981(b)(2).

1954. Patterson v. Mclean Credit Union, 491 U.S. 164, 176 (1989) (“Section 1981 cannot be

construed as a general proscription of racial discrimination in all aspects of contract relations,
§ 32.23 Manual for Complex Litigation, Fourth

568

to extend to all aspects of the contractual relationship, including the performance and termination of contracts, as well as “benefits, privileges, terms and

conditions of contractual relationship.”1955 Whether the Supreme Court’s decision in Jett v. Dallas Independent School District1956 (which held that a municipality may not be held liable for its employees’ violations of the plaintiff’s

“right to make contracts” as protected by section 1981 under respondeat superior) was overruled by the CRA is unresolved.1957

32.23 Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA) prohibits discrimination on the basis of age against anyone who is at least forty years old1958 and

covers employers and employment agencies with at least twenty employees,

labor organizations, and the federal government.1959 The EEOC is charged with

enforcement of the ADEA. As with Title VII, the plaintiff must file a charge

with the EEOC and, if applicable, the state-deferral agency. The Supreme

for it expressly prohibits discrimination only in the making and enforcement of contracts.”); see

also Ford v. City of Rockford, No. 88 C 20323, 1992 WL 309603, at *2 (N.D. Ill. Oct. 15, 1992)

(citing Patterson and stating that section 1981 does not provide relief unless the plaintiff was

discriminated against in the making and formation of contracts).

1955. 42 U.S.C. § 1981(b) (2000); see also Keller v. City of Portland, No. CV-98-263, 1998

WL 1060222, at *13–14 (D. Or. Nov. 13, 1998) (section 1981 not limited to contractual matters

and includes discrimination that deprives individuals of “equal benefits”).

1956. 491 U.S. 701 (1989).

1957. See George Rutherglen, Major Issues in the Federal Law of Employment Discrimination 102 (Federal Judicial Center 3d ed. 1996). See, e.g., Ford, 1992 WL 309603, at *2 (stating

Congress overruled Jett in enactment of CRA by extending section 1981 to state actors but further holding section 1981 only applies to making and formation of contracts); Keller, 1998 WL

1060222, at *14 (1991 amendments to CRA overrule Jett and allow suits against municipality

directly under section 1981); Villanueva v. City of Fort Pierce, 24 F. Supp. 2d 1364, 1368 (S.D.

Fla. 1998) (noting that CRA amendments to section 1981 “have created some confusion among

the circuits as to whether the CRA overruled the Jett rule against simultaneous § 1981 and

§ 1983 claims” and holding CRA did not overrule Jett). Compare Fed. of African Am. Contractors v. Oakland, 96 F.3d 1204 (9th Cir. 1996), and Jackson v. City of Chi., No. 96 C 3636, 1996

WL 734701, at *8 (N.D. Ill. Dec. 18, 1996), with Dennis v. Cmty. of Fairfax, 55 F.3d 151, 156 n.1

(1995).

1958. 29 U.S.C. §§ 623(a), (a)(1) (2000). See O’Connor v. Consol. Coin Caterers Corp., 517

U.S. 308, 312 (1996) (holding that 56-year-old plaintiff who was replaced by 40-year-old could

still maintain an action under ADEA, which simply limits the protected class to plaintiffs over

40).

1959. 29 U.S.C. §§ 623(a)–(c) (2000) (sections 623(b) and (c) provide that it shall be unlawful for employment agencies and labor organizations to discriminate based on age); see also

id. § 630(b) (confining “employer” to “a person . . . who has twenty or more employees”).
Employment Discrimination § 32.23

569

Court in Kimel v. Florida Board of Regents1960 held that ADEA claims are unavailable against state employers.1961

A prima facie case of age discrimination under McDonnell Douglas is

shown if the plaintiff (1) is 40 years or older, (2) had satisfactory job performance, and (3) has suffered an adverse employment action because of age.1962

Some courts have held that the plaintiff must show that he or she was replaced

by or treated differently than a younger employee.1963 Others, however, have

interpreted the Act as requiring only that the plaintiff demonstrate that he or

she is a member of the protected class (employees over 40 years old) and was

discriminated against on the basis of age, even if the beneficiary of the discriminatory acts was older than the plaintiff.1964 As with Title VII and section

1981, if an employer presents nondiscriminatory reasons for the adverse actions, the presumption created by the prima facie case drops out and the

plaintiff must bear the ultimate burden of proving that age was a mitigating

factor in the adverse employment decision.1965 Specifically, employers can defend themselves by showing that the challenged employment decision was

based on “reasonable factors other than age,” that the employee was disciplined or discharged for good cause,1966 or that the employment decision related to a bona fide occupational qualification.1967 Although ADEA plaintiffs

cannot recover compensatory or punitive damages, the Act incorporates the

remedies available under the Fair Labor Standards Act, as well as other relief,

1960. 528 U.S. 62 (2000).

1961. Id. at 66 (“The ADEA does not validly abrogate the state’s sovereign immunity.”).

1962. Fairchild v. Forma Scientific, Inc., 147 F.3d 567, 571 (7th Cir. 1998).

1963. Franzoni v. Hartmarx Corp., 300 F.3d 767, 772 (7th Cir. 2002); see also O’Connor,

517 U.S. at 308 (56-year-old plaintiff replaced by a 40-year-old).

1964. See, e.g., Cline v. Gen. Dynamics Land Sys., Inc., 296 F.3d 466, 469–70 (6th Cir.

2002).

1965. Fairchild, 147 F.3d at 572 (employer defendant presented evidence that employee

plaintiff was terminated based on legitimate financial reasons, overcoming the presumption of

discrimination, and plaintiff failed to show employer’s reason was pretextual).

1966. 29 U.S.C. § 623(f)(1) (2000). In addition, defenses exist where seniority systems are

involved. See Rutherglen, supra note 1957, at 110 (“The ADEA also contains an exception for

certain executives over age sixty-five; and it authorizes the EEOC to create further exceptions in

the public interest . . . .”) (footnote omitted); EEOC v. Francis W. Parker Sch., 41 F.3d 1073,

1078 (7th Cir. 1994) (noting ADEA contains safe-harbor provision permitting use of seniority

system); see also Hazen Paper Co. v. Biggins, 507 U.S. 604, 609 (1993) (“[T]here is no disparate

treatment under the ADEA when the factor motivating the employer is some feature other than

the employee’s age.”), and id. at 618 (Kennedy, J., concurring) (“[N]othing in the Court’s opinion should be read as incorporating in the ADEA context the so-called ‘disparate impact’ theory

of Title VII . . . and there are substantial arguments that it is improper to carry over disparate

impact analysis from Title VII to the ADEA.” (citation omitted)).

1967. See Rutherglen, supra note 1957, at 111.
§ 32.24 Manual for Complex Litigation, Fourth

570

such as injunctive relief, promotion, reinstatement, back and front pay, and

attorney fees.1968 Defendants also can be liable for liquidated damages where

the plaintiff proves “willful violation” of the Act.1969

It is unclear whether disparate impact claims are available under the

ADEA, and the Supreme Court in Hazen Paper Co. v. Biggins1970 questioned the

use of a disparate impact theory. The CRA amendments expressly codified disparate impact claims only for Title VII.1971

32.24 Americans with Disabilities Act

The Americans with Disabilities Act (ADA) prohibits, among other things,

employment discrimination against “qualified persons with a disability.”1972

Liability under the ADA is limited to employers with fifteen or more employees.1973 Although employers are permitted to establish physical criteria necessary for a position, or to prefer some physical attributes over others, the employer “runs afoul of the ADA when its makes an employment decision based

on a physical or mental impairment, real or imagined, that is regarded as sub1968. 29 U.S.C. § 626(b) (2000). See Kimel v. Fla. Bd. of Regents, 528 U.S. 62, 74–75

(2000).

1969. See Meachem v. Knolls Atomic Power Lab., 185 F. Supp. 2d 193, 218 (N.D.N.Y.

2002) (awards of damages for back pay and front pay and punitive damages for willful conduct

are authorized under ADEA, but damages for emotional distress are unavailable).

1970. 507 U.S. 604, 610 (1993) (stating “[d]isparate treatment, thus defined, captured the

essence of what Congress sought to prohibit in the ADEA” and noting that court had not addressed question of whether a plaintiff could proceed on a disparate impact theory under the

ADEA). But see Smith v. City of Des Moines, 99 F.3d 1466, 1470 (8th Cir. 1996) (disparate impact claims cognizable under ADEA); Mangold v. Cal. Pub. Utilities Comm’n, 67 F.3d 1470,

1474 (9th Cir. 1995) (plaintiff may pursue disparate impact theory under ADEA); Francis W.

Parker, 41 F.3d 1073, 1077 (7th Cir. 1994) (“[D]ecisions based on criteria which merely tend to

affect workers over the age of forty more adversely than workers under forty are not prohibited.”).

1971. See Francis W. Parker, 41 F.3d at 1073, 1076–77 (rejecting disparate impact theory).

1972. 42 U.S.C. § 12112(a) (2000) (section 12112(a) provides that no employer may “discriminate against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees,

employee compensation, job training, and other terms, conditions, and privileges of employment”). “Disability” is defined as a “physical or mental impairment that substantially limits one

or more . . . major life activities . . . .” 29 C.F.R. § 1630.2(g)(1) (1999). Thus, the ADA is violated

where the employee is able to perform the essential functions of the job “with or without reasonable accommodation which does not impose an undue hardship on the employer.” Id.

1973. 42 U.S.C. § 12111(5)(a) (2000).
Employment Discrimination § 32.25

571

stantially limiting a major life activity.”1974 Employers are required to make

reasonable accommodations for employees or applicants with disabilities. As

with other employment discrimination claims, the employer may rebut a claim

of ADA discrimination by providing “evidence of a ‘legitimate, nondiscriminatory reason’ for its action.”1975

The provisions of the ADA are enforced by the EEOC in the same manner

as Title VII claims.1976 Thus, under the ADA, the EEOC “may bring suit to enjoin an employer from engaging in unlawful employment practices, and to

pursue reinstatement, back pay, and compensatory or punitive damages.”1977

32.25 Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) entitles an eligible employee1978

to up to twelve weeks of leave for absences resulting from a disabling health

problem, serious illness of a family member or the employee, or the birth or

adoption of a child.1979 Actions brought under the FMLA are generally brought

in the context of retaliation claims arising out of the employee’s exercise of his

or her leave rights.1980 In addition to showing the exercise of leave rights, the

plaintiff must have suffered an adverse employment action, and further demonstrate a causal relationship between the exercise of leave rights and the chal1974. Sutton v. United Airlines, Inc., 527 U.S. 471, 490 (1999). Major life activity is defined

as “functions such as caring for oneself, performing manual tasks, walking, seeing, hearing,

speaking, breathing, learning, and working.” 29 C.F.R. § 1630.2(i) (1999). The term “substantially limits” means “(i) [u]nable to perform a major life activity that the average person in the

general population can perform; or (ii) [s]ignificantly restricted as to the condition, manner, or

duration under which the average person in the general population can perform that same major life activity.” Id. § 1630.2(j). See Sutton, 527 U.S. at 492–93 (holding that the petitioners

“failed to allege adequately that their poor eyesight is regarded as an impairment that substantially limits them in the major life activity of working”). But see Toyota Motor Mfg., Ky., Inc. v.

Williams, 534 U.S. 184, 197–98 (2002).

1975. Adreani v. First Colonial Bankshares Corp., 154 F.3d 389, 394 (7th Cir. 1998).

1976. EEOC v. Waffle House, 534 U.S. 279, 285 (2002) (“Congress has directed the EEOC

to exercise the same enforcement powers, remedies, and procedures that are set forth in Title VII

of the Civil Rights Act of 1964 when it is enforcing the ADA’s prohibitions against employment

discrimination on the basis of disability.”).

1977. Id.

1978. As defined by the FMLA, an eligible employee is someone who has worked at least

1,250 hours a year at a company employing fifty or more employees at least twenty weeks of the

year. 29 U.S.C. §§ 2611(2)(a) (2000).

1979. 29 U.S.C. § 2612(a)(1) (2000).

1980. But see Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81 (2002) (holding regulation requiring employer to designate leave as FMLA leave in order for it to count against an

employee’s FMLA entitlement was contrary to FMLA).
§ 32.3 Manual for Complex Litigation, Fourth

572

lenged employment action. Courts have applied the McDonnell Douglas burden-shifting standard to FMLA claims.1981

32.3 Developments in the Law of Employment

Discrimination

Supreme Court decisions have addressed such diverse issues as when punitive damages may be awarded,1982 the intersection of the employment discrimination statutes and the First Amendment,1983 and the sovereign immunity

of the states under the Eleventh Amendment.1984 Several decisions have resolved splits among the circuits. In Burlington Industries Inc. v. Ellerth1985 and

Faragher v. City of Boca Raton,

1986 the Supreme Court held that employers who

meet a two-factor affirmative defense can avoid liability for acts of supervisors

that create a hostile work environment. If an employer can show that it exercised reasonable care to prevent and promptly correct harassing behavior, and

the employee unreasonably failed to take advantage of preventive or corrective

opportunities provided by the employer, no liability will exist.1987 Same-sex

harassment was held actionable under Title VII in Oncale v. Sundowner Offshore Services Inc.,

1988 which overruled prior precedent in the Fifth Circuit rejecting such claims. “If our precedents leave any doubt on the question, we

hold that nothing in Title VII necessarily bars the claim of discrimination because of sex merely because the plaintiff and the defendant (or the person

charged with acting on behalf of the defendant) are of the same sex.”1989 In order to prevail, plaintiffs in same-sex harassment cases must show, as must

plaintiffs in opposite-sex harassment cases, that the harassment they suffered

was due to sex, and that it was sufficiently severe and persistent to create a

hostile or abusive work environment.

1981. See, e.g., Smith v. Allen Health Sys., Inc., 2002 WL 31015648 (8th Cir. 2002); Bylsma

v. Bailey, 127 F. Supp. 2d 1211 (M.D. Ala. 2001); Miranda v. BBII Acquisition Corp., 120 F.

Supp. 2d 157 (D.P.R. 2000).

1982. Kolstad v. Am. Dental Ass’n, 527 U.S. 526 (1999).

1983. Boy Scouts of Am. v. Dale, 530 U.S. 640 (2000).

1984. Bd. of Trustees of University of Ala. v. Garrett, 531 U.S. 356 (2001) (holding ADA

did not abrogate state’s immunity under the Eleventh Amendment); Kimel v. Fla. Bd. of Regents, 528 U.S. 62 (2000) (same with respect to ADEA).

1985. 524 U.S. 742 (1998).

1986. 524 U.S. 775 (1998).

1987. Although the defendant may avoid liability under the federal statutes, liability may

still exist under state law in ancillary claims.

1988. 523 U.S. 75 (1998).

1989. Id. at 79.
Employment Discrimination § 32.3

573

In Desert Palace, Inc. v. Costa,

1990 the Court resolved a split among the circuits as to whether a plaintiff seeking relief pursuant to Title VII was required

to prove by direct evidence that an impermissible motive was a motivating

factor in an adverse employment decision in order to establish liability under

section 2000e-2(m).1991 Noting that the language of Title VII did not impose

special evidentiary burdens, the Court held that a plaintiff in a mixed-motive

case was required to prove that the employment action was motivated by an

impermissible factor only by a preponderance of the evidence, which could be

met through either direct or circumstantial evidence. “Section 2000e-2(m) unambiguously states that a plaintiff need only ‘demonstrat[e]’ that an employer

used a forbidden consideration with respect to ‘any employment practice.’ On

its face, the statute does not mention, much less require, that a plaintiff make a

heightened showing through direct evidence.”1992

Addressing cases arising under other employment statutes, the Court in

Gebser v. Lago Vista Independent School District1993 held that, under Title IX, a

school district’s liability for the sexual harassment of a student by a teacher

required a showing that a school district official with authority to take corrective action had actual notice of the harassment or was deliberately indifferent

to it.

The Court declined to hold a school district liable based on a theory of

constructive notice, stating “[w]hen Congress attaches conditions to the award

of federal funds under its spending power, U.S. Const., Art. I, § 8, cl. 1, as it

has in Title IX and Title VI, we examine closely the propriety of private actions

holding the recipient liable in monetary damages for noncompliance with the

condition . . . Our central concern in that regard is with ensuring that ‘the receiving entity of federal funds [has] notice that it will be liable for a monetary

award.’”1994 Imposition of liability based on constructive notice or respondeat

superior was inconsistent with the enforcement mechanism of Title IX, which

assumed actual notice of the violation by the recipient and an opportunity to

remedy noncompliance. In Nevada Department of Human Resources v.

Hibbs,

1995 the Court held that state employees could recover damages where the

state violated the family-care provisions of the FMLA. Addressing whether

Congress had acted within its authority in abrogating state immunity under

the Eleventh Amendment, the Court noted that “the States’ record of uncon1990. 123 S. Ct. 2148 (2003).

1991. See 42 U.S.C. § 2000e-2(m).

1992. Desert Palace, 123 S. Ct. at 2149–50.

1993. 524 U.S. 274 (1998).

1994. Id. at 287 (quoting Franklin v. Guinnett County Pub. Sch., 503 U.S. 60, 74 (1992)).

1995. 123 S. Ct. 1972 (2003).
§ 32.3 Manual for Complex Litigation, Fourth

574

stitutional participation in, and fostering of, gender-based discrimination in

the administration of leave benefits is weighty enough to justify the enactment

of prophylactic § 5 legislation.”1996

The Court also has addressed the standard for determining when an individual is substantially limited in performing manual tasks within the meaning

of the Americans with Disabilities Act (ADA) (see Toyota Mfg., Kentucky, Inc.

v. Williams1997), holding that the terms “major life activity” and “substantial

impairment” should be strictly interpreted.1998 Accordingly, in order for a

plaintiff to prove that he or she suffers from a substantial limitation of a major

life activity in performing manual tasks, the plaintiff must show that he or she

suffers from an impairment “that prevents or severely restricts the individual

from doing activities that are of central importance to most people’s daily

lives.”1999 This determination must be made on a case-by-case basis.2000 In examining whether the plaintiff had shown a substantial limitation in performing

manual tasks, the Court rejected a focus limited only to whether the plaintiff

was able to perform her specific job as proof of a substantial limitation.2001

“When addressing the major life activity of performing manual tasks, the central inquiry must be whether the claimant is unable to perform the variety of

tasks central to most people’s daily lives, not whether the claimant is unable to

perform the tasks associated with her specific job.”2002 Thus, a plaintiff seeking

to establish such an impairment must show substantial impairment in both

job-related and non–job-related manual tasks.

Several Supreme Court decisions have addressed procedural issues relevant

to employment discrimination claims. For example, the Court resolved a split

among the circuits as to the proper pleading standard in such cases. Several

circuits had imposed a heightened pleading standard on plaintiffs, requiring

them to plead facts in support of each element of the prima facie McDonnell

1996. Id. at 1981.

1997. 534 U.S. 184 (2002).

1998. Id. at 691 (“If Congress intended everyone with a physical impairment that precluded

the performance of some isolated, unimportant, or particularly difficult manual task to qualify

as disabled, the number of disabled Americans would surely have been much higher.”).

1999. Id. at 185.

2000. Id. at 198. The Court found that it was not sufficient for the plaintiff to show that her

manual disability implicated a class of manual activities, as held by the Sixth Circuit. Id. at

199–200.

2001. Id. at 200.

2002. Id. at 200–01.
Employment Discrimination § 32.3

575

Douglas case in order to survive a motion to dismiss.2003 The Court rejected this

heightened pleading standard in Swierkiewicz v. Sorema,

2004 however, stating

“[t]his court has never indicated that the requirements for establishing a prima

facie case . . . also apply to the pleading standard that plaintiffs must satisfy in

order to survive a motion to dismiss.”2005 Rather, the complaint is governed by

the general notice pleading requirements of Federal Rule of Civil Procedure

8(a).2006

Acts falling outside of the statutory time period for filing charges,2007 although no longer actionable themselves as discrete acts of discrimination or

unlawful practice, may be used to support a claim based on allegations of a

hostile work environment. The Court stated in National Railroad Passenger

Corp. v. Morgan2008 “[i]t does not matter, for purposes of the statute, that some

of the component acts of the hostile work environment fall outside the statutory time period. Provided that an act contributing to the claim occurs within

the filing period, the entire time period of the hostile environment may be

considered . . . .”2009

Finally, the scope and effect of arbitration agreements in employment

contracts was discussed in Circuit City Stores Inc. v. Adams2010 and EEOC v.

Waffle House, Inc.

2011 The Court in Circuit City rejected a Ninth Circuit decision excluding employment contracts from the scope of the Federal Arbitration Act (FAA). The Court held that section 1 of the FAA contained a limited

exclusion applicable only to transportation workers, agreeing with the majority

of circuits that employment discrimination claims brought by nontransportation workers could be subject to arbitration.2012 The scope of the FAA was also

addressed in Waffle House, resolving a split among the circuits as to whether

2003. 411 U.S. 792 (1973). See, e.g., Tarshis v. Riese Org., 211 F.3d 30 (2d Cir. 2000); Jackson v. Columbus, 194 F.3d 737 (6th Cir. 1999); cf. Sparrow v. United Air Lines, Inc., 216 F.3d

1111 (D.C. Cir. 2000); Bennett v. Schmidt, 153 F.3d 516 (7th Cir. 1998).

2004. 534 U.S. 506 (2002).

2005. Id. at 511. The Court further cautioned that while the McDonnell Douglas standard

applies in many cases, it does not always control an employment discrimination claim. “For

instance, if a plaintiff is able to produce direct evidence of discrimination, he may prevail without proving all the elements of a prima facie case.” Id.

2006. Id. at 512–13.

2007. See 42 U.S.C. § 2000e-5(e) (2000) (providing that claims must be filed within 180 or

300 days).

2008. 536 U.S. 101 (2002).

2009. Id. at 103.

2010. 532 U.S. 105 (2001); see also Carter v. Countrywide Credit Indus., Inc., 189 F. Supp.

2d 606 (N.D. Tex. 2002).

2011. 534 U.S. 279 (2002).

2012. Circuit City, 532 U.S. at 113–15.
§ 32.41 Manual for Complex Litigation, Fourth

576

the Equal Employment Opportunity Commission (EEOC) could seek victimspecific relief in addition to injunctive relief for discrimination claims brought

under Title VII and the ADA. The Court held that the EEOC was not a party to

any agreements to arbitrate between the employer and employee and that an

employee’s agreement to arbitrate did not limit the remedies available to the

EEOC.2013

32.4 Case Management

.41 Initial Pretrial Conference 576

.42 Class Actions 579

.43 Discovery 586

.431 Identification of Source Materials 586

.432 Computerized Records 587

.433 Confidential Information 588

.434 Preservation of Records 589

.435 Statistical Evidence and Expert Testimony 589

.436 Discovery from Class Members 590

.44 Summary Judgment 591

.45 Trial 592

.46 Settlement 596

.461 Timing 596

.462 Affirmative Relief 596

.463 Attorney Fees 597

.464 Settlement Hearing 597

.465 Implementation 597

32.41 Initial Pretrial Conference

Efficient management of employment discrimination litigation requires

that the disputed legal and factual issues be identified and, if possible, narrowed early in the case. The pleadings often will reveal jurisdictional issues that

must be addressed at the outset. In some cases, discovery may be necessary on

factual issues underpinning a motion to dismiss for lack of subject-matter jurisdiction.2014 The complaint can be dismissed after notice and hearing, where it

is apparent that jurisdiction is improper.2015 At the initial pretrial conference,

2013. Waffle House, 534 U.S. at 297–98.

2014. See, e.g., Sizova v. Nat’l Inst. of Standards & Tech., 282 F.3d 1320, 1326 (10th Cir.

2002) (“Although a district court has discretion in the manner by which it resolves an issue of

subject matter jurisdiction . . . a refusal to grant discovery constitutes an abuse of discretion if

the denial results in prejudice to a litigant.” (citations omitted)).

2015. See, e.g., Tang v. State of R.I., Dep’t of Elderly Affairs, 904 F. Supp. 55, 58–59 (D.R.I.

1995) (courts have held that the receipt of a right-to-sue letter is a statutory prerequisite, not a

jurisdictional prerequisite).
Employment Discrimination § 32.41

577

the court should attempt to identify the specific acts of discrimination that

each plaintiff claims to have suffered, as well as the particular relief sought.

Many employment discrimination claims are brought as class actions, and

early identification of the specific claims being pursued in such cases is necessary for determining whether they qualify for class certification,2016 as well as

for developing an appropriate plan for discovery and trial. The court also

should ascertain whether plaintiffs have timely satisfied any administrative

prerequisites to the filing of the action.2017 Inquiry into the following areas, either before or in conjunction with the initial Rule 16 conference, will help

identify possible jurisdictional problems:

• Is the case barred by the statute of limitations?2018

• Has the plaintiff exhausted administrative remedies?2019

• Do any pending parallel state or agency actions involving the same

parties and issues warrant consolidation or a stay of proceedings?2020

2016. See Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147 (1982).

2017. Harriss v. Pan Am. World Airways, Inc., 74 F.R.D. 24 (N.D. Cal. 1977). Although

claims under Title VII require the prior filing by the individual claimant of a charge with the

EEOC, claims under 42 U.S.C. § 1981 (racial discrimination) and 42 U.S.C. § 1983 (discrimination by government employers) do not require filing of an administrative charge, but are subject

to state statutes of limitations. See also Sizova, 282 F.3d at 1325 (noting that although failure to

file a charge with the EEOC is a jurisdictional bar to suit, failure to timely file an administrative

charge is not jurisdictional).

2018. See, e.g., Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 108–10 (2002). Courts

generally treat discrete employment decisions that occur over a period of time as individual violations for limitations purposes, although a series of adverse actions can constitute a single continuing violation if the plaintiff was unaware he or she was a victim of discrimination until a

pattern emerged. See, e.g., Jones v. Merchs. Nat’l Bank & Trust Co., 42 F.3d 1054, 1058 (7th Cir.

1994) (discussing three scenarios under which continuing violation can be shown).

2019. A plaintiff must file a timely charge of discrimination with the EEOC as a prerequisite to maintaining a Title VII, Age Discrimination in Employment Act (ADEA), or Americans

with Disabilities Act (ADA) claim. See 42 U.S.C. § 2000e-5(e)(1), (f)(1) (2000) (Title VII); 42

U.S.C. § 12117(a) (2000) (ADA); 29 U.S.C. § 626(d) (2000) (ADEA); see also Jackson v. City of

Chi., No. 96 C 3636, 1996 WL 734701, at *2 (N.D. Ill. Dec. 18, 1996). A plaintiff’s failure to file a

charge with the EEOC in a Title VII claim can result in a dismissal of the complaint. See, e.g.,

Sizova, 282 F.3d at 1325 (stating that “exhaustion of administrative remedies is a jurisdictional

prerequisite to suit under Title VII”); Tang, 904 F. Supp. at 58–59.

2020. See, e.g., Currie v. Group Ins. Comm’n, 290 F.3d 1, 12 (1st Cir. 2002) (holding “there

is no danger that the plaintiff will be prejudiced by ineffective prosecution of the state law claim.

Nor will the defendant be prejudiced by our staying the action . . . .”); Murphy v. Uncle Ben’s,

Inc., 168 F.3d 734, 740 (5th Cir. 1999) (ADEA “does not constitute express Congressional

authorization for federal courts to enter injunctions staying state judicial proceedings involving

parallel state law age discrimination claims”).
§ 32.41 Manual for Complex Litigation, Fourth

578

• Is the claim subject to arbitration?2021

• Is the plaintiff seeking to pursue claims against unnamed parties?2022

Issues usually can be narrowed initially without discovery, and disputed jurisdictional facts—such as when a plaintiff received a “right to sue” letter—can be

resolved through an expedited hearing if necessary.

Plaintiffs often seek relief that might adversely affect other employees or

proposed employees of the defendant. Where potentially affected employees

are represented by a labor organization, even if only the employer was named

in the administrative charges or is alleged to have engaged in discrimination,

consider joining the organization as a necessary party or having it intervene in

order to make any decree binding should the plaintiffs prevail.2023 Similarly, in

some cases joinder or intervention of other employees who would be adversely

affected by the plaintiffs’ success may be warranted to ensure that all competing interests are adequately represented and to protect against subsequent

claims of reverse discrimination.2024

2021. See, e.g., EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (“The FAA provides

for stays of proceedings in federal district courts when an issue in the proceeding is referable to

arbitration, and for orders compelling arbitration when one party has failed or refused to comply with an arbitration agreement.”); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20,

26–27 (1991) (ADEA claims arbitrable under FAA); Carter v. Countrywide Credit Indus., Inc.,

189 F. Supp. 2d 606, 612–14 (N.D. Tex. 2002) (Fair Labor Standards Act claims arbitrable under

FAA).

2022. In some instances, plaintiffs may seek to bring claims against defendants who were

not named in the EEOC charge. The courts have liberally construed the requirement, focusing

on whether the party had adequate notice of the charge and an opportunity to participate in the

conciliation process. See Fernandez Molinary v. Industrias La Famosa, Inc., 203 F. Supp. 2d 111,

116–17 (D.P.R. 2002) (plaintiff failed to exhaust administrative remedies where plaintiff failed to

name respondents in EEOC complaint); Frazier v. Smith, 12 F. Supp. 2d 1362, 1369 (S.D. Ga.

1998) (sheriff should have had notice of claim from plaintiff’s naming of Camden County sheriff’s department and allegations of particular events naming sheriff specifically); Afande v. Nat’l

Lutheran Home for the Aged, 868 F. Supp. 795, 800 (D. Md. 1994) (plaintiff properly named

defendant in EEOC charge where plaintiff identified defendant as plaintiff’s supervisor in attached affidavit and defendant availed self of opportunity to participate in EEOC’s resolution

and conciliation).

2023. See Fed. R. Civ. P. 19, 24 (West 2003).

2024. See, e.g., Martin v. Wilks, 490 U.S. 755, 762–65 (1989) (white firefighters challenge to

actions taken pursuant to consent decree as reverse discrimination not impermissible collateral

attack (superseded in part by statute 42 U.S.C. § 2000e-2(n)(1) (2000))); Rafferty v. City of

Youngstown, 54 F.3d 278, 282 (6th Cir. 1995) (denying leave to intervene to attack 1996 consent

decree where court found union was represented in negotiations that led to consent decree);

EEOC v. United Ass’n of Journeymen, 235 F.3d 244, 254–55 (6th Cir. 2000) (joinder).
Employment Discrimination § 32.42

579

32.42 Class Actions

Many employment discrimination cases, particularly Title VII cases, are

brought on behalf of a proposed class. For such actions to proceed, a named

representative must have filed a timely charge with the EEOC. Plaintiffs must

have exhausted administrative remedies on behalf of the class “and with respect to any claim that was the subject of or could reasonably have been expected to grow out of the EEOC’s investigation.”2025 The statutory basis for the

claim can also affect how a class action proceeds. The provisions of Rule 23 will

apply to most employment discrimination class actions, but not all. For example, Rule 23’s opt-out provisions do not apply where proposed class claims are

brought pursuant to the ADEA or the Fair Labor Standards Act (FLSA).2026

Collective actions under the ADEA are authorized by 29 U.S.C. § 626(b),

which adopts the opt-in class mechanism of section 216 of the FLSA. Section

216 of the FLSA, in turn, provides that plaintiffs must affirmatively opt into a

collective action in order to be considered a class member.2027 “Rule 23 and

§ 216(b) class actions are ‘mutually exclusive and irreconcilable’ and those who

choose not to opt-in to a class action under § 216(b) are not bound by and

may not benefit from the judgment.”2028 There is discretion to authorize notice

of the class to similarly situated employees in order to afford them an opportunity to opt in.2029

2025. Rutherglen, supra note 1957, at 81–82. But see Winbush v. State of Iowa, 66 F.3d

1471, 1478 (8th Cir. 1995) (district court properly allowed intervention without requiring a

separate EEOC filing by each intervenor where there was a “similar and sufficient factual basis”

between the intervenors and the original plaintiffs).

2026. See 29 U.S.C. § 216(b) (West 2003) (providing that “[n]o employee shall be a party

plaintiff . . . unless he gives his consent in writing to become such”); see also Lewis & Norman,

supra note 1915, § 4.9, at 246.

2027. See, e.g., Grayson v. Kmart Corp., 79 F.3d 1086, 1106 (11th Cir. 1996); Anson v.

Univ. of Tex. Health Sci. Ctr., 962 F.2d 539 (5th Cir. 1992). While all included plaintiffs need to

be similarly situated in order to maintain an opt-in class action under section 216(b), the possibility of varying defenses does not vitiate a collective action. See Lockhart v. Westinghouse

Credit Corp., 879 F.2d 43, 52 (3d Cir. 1989) (“While the potential for problems with respect to

class management may arise from the assertion of individualized defenses, a district court has

the discretion to determine whether such problems would make manageability of the class impossible.”), overruled on other grounds, Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089 (3d

Cir. 1995).

2028. Hall v. Burk, No. 301CV2487H, 2002 WL 413901, at *2 (N.D. Tex. Mar. 11, 2002)

(citation omitted). See Ownes v. Bethlehem Mines Corp., 108 F.R.D. 207, 209–10 (S.D. W. Va.

1985) (Rule 23 is not applicable to collective actions under ADEA).

2029. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989); Hall, 2002 WL

413901, at *2. In order to serve as the basis for an ADEA class action, the underlying EEOC
§ 32.42 Manual for Complex Litigation, Fourth

580

In class actions subject to Rule 23, deciding whether the action should be

maintained under Rule 23(b)(2) or (b)(3) will make a significant difference

with respect to various aspects of the class litigation, in particular the definition of the class, entitlement to damages, class notice, and opt-out rights. Employment discrimination cases that meet the prerequisites of Rule 23(a) may

qualify as class actions under Rule 23(b)(2) where the defendant “has acted . . .

on grounds generally applicable to the class, thereby making appropriate final

injunctive relief with respect to the class as a whole.”2030 They may also qualify

under Rule 23(b)(3) on the ground that a common question of fact or law

predominates; indeed, where monetary relief is sought, a (b)(3) class is generally the appropriate vehicle.

Class action certification of disparate treatment claims under Rule 23(b)

has become more complicated since the 1991 amendments to Title VII.2031

Members of a Rule 23(b)(2) class generally are not entitled to recover anything

other than incidental damages (i.e., damages to which the plaintiffs would be

automatically entitled once liability is established). The 1991 amendments,

however, permit plaintiffs alleging intentional discrimination to seek monetary

relief in the form of compensatory or punitive damages. These damages would

otherwise not be considered “incidental” to the relief sought,2032 making certification under Rule 23(b)(2) inappropriate. At the same time, certification may

still be improper under Rule 23(b)(3) because individual concerns may outweigh legal questions common to the class.2033 In Allison v. Citgo Petroleum

Corp.,2034 the Fifth Circuit rejected certification under both Rules 23(b)(2) and

(b)(3), noting that “the predominance of individual-specific issues relating to

the plaintiffs’ claims for compensatory and punitive damages in turn detracts

from the superiority of the class action device in resolving these claims.”2035

The court viewed the issue as one of manageability, particularly in light of the

charge must give adequate notice of the scope of the class. See, e.g., Hipp v. Liberty Nat’l Life Ins.

Co., 252 F.3d 1208, 1224–25 (11th Cir. 2001).

2030. Fed. R. Civ. P. 23(b)(2) (West 2003).

2031. See Robinson v. Metro-North Commuter R.R. Co, 267 F.3d 147, 157 (2d Cir. 2001)

(“Prior to the passage of the 1991 Act, a plaintiff seeking a monetary award for disparate treatment . . . and disparate impact claims under Title VII could recover only back pay and front pay.

Because back pay and front pay have historically been recognized as equitable relief under Title

VII, neither party was entitled to a jury trial; both disparate treatment and disparate impact

claims were tried to the bench.” (footnote omitted)).

2032. Allison v. Citgo Petroleum Corp., 151 F.3d 402, 410 (5th Cir. 1998).

2033. See, e.g., id. at 417–18.

2034. 151 F.3d 402 (5th Cir. 1998).

2035. Id. at 419 (holding damage claims were not incidental to the class claims for injunctive relief).
Employment Discrimination § 32.42

581

number of potential plaintiffs, the length of time over which the discrimination was alleged to have occurred, and the number of departments involved in

the alleged discrimination.2036

Other courts have declined to follow the reasoning in Allison, or have

found that the decision did not establish a bright-line rule that a class seeking

compensatory and punitive damages in a jury trial can never be certified.2037 In

Robinson v. Metro-North Commuter Railroad Co.,2038 for example, the Second

Circuit declined to follow Allison, holding that the district court should “assess

whether Rule 23(b)(2) certification is appropriate in light of ‘the relative importance of the remedies sought, given all of the facts and circumstances of the

case.’”2039 In particular, the Second Circuit instructed the district court to ensure that the value to the plaintiffs of the equitable relief sought was predominant (i.e., plaintiffs would still bring the action for injunctive relief even if

monetary damages were unavailable) and that class treatment would be “efficient and manageable.”2040

Rule 23(c)(4) permits maintaining an action as a class action with respect

to particular issues. Several courts have suggested a “hybrid” approach in discrimination cases to deal with the problems created by the enhanced-damages

provision of the Civil Rights Act. Hybrid options include a Rule 23(b)(2) class

with an opt-out provision2041 or certifying a Rule 23(b)(2) class with respect to

the injunctive aspects of the suit and a Rule 23(b)(3) class to consider the

claims for monetary relief.2042 Other alternatives include certification of a Rule

23(b)(2) class for class-wide damages and severing the issue of individual dam2036. Id. at 419–20; see also Jefferson v. Ingersoll Int’l, 195 F.3d 894 (7th Cir. 1999); Faulk

v. Home Oil Co., 184 F.R.D. 645 (M.D. Ala. 1999).

2037. See, e.g., Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147 (2d Cir. 2001);

Smith v. Texaco, Inc., 88 F. Supp. 2d 663, 678 (E.D. Tex. 2000); Hoffman v. Honda of Am. Mfg.

Inc., 191 F.R.D. 530, 536 (S.D. Ohio 1999); Stewart v. Rubin, 948 F. Supp. 1077, 1090 (D.D.C.

1996).

2038. 267 F.3d 147 (2d Cir. 2001).

2039. Id. at 164 (quoting Hoffman, 191 F.R.D. at 536).

2040. Id. at 164.

2041. Lemon v. Int’l Union of Operating Eng’r, Local No. 139, 216 F.3d 577, 580–81 (7th

Cir. 2000); Jefferson v. Ingersoll Int’l, Inc., 195 F.3d 894, 898–99 (7th Cir. 1999); Eubanks v.

Billington, 110 F.3d 87, 96 (D.C. Cir. 1997); Smith, 88 F. Supp. 2d at 679–80.

2042. See Beck v. Boeing Co., 203 F.R.D. 459, 465–68 (W.D. Wash. 2001); Eubanks, 110

F.3d at 96; see also Lemon, 216 F.3d at 581–82 (“Since the Civil Rights Act of 1991 entitles the

parties to a jury trial on claims of intentional discrimination . . . a district court that proceeds

with divided certification must adjudicate the damages claims first before a jury to preserve the

Seventh Amendment right to a jury trial, even if adjudication of these claims decides the equitable claims as well.” (citation omitted)).
§ 32.42 Manual for Complex Litigation, Fourth

582

ages to be considered later in the suit.2043 Consider whether one of these approaches would be useful and, specifically, whether a Rule 23(b)(3) or (b)(2)

class should be certified for bifurcated adjudication of a common issue (Phase

I), to be followed by separate trials (coordinated or consolidated as may be appropriate) to adjudicate individual damage claims (Phase II). Once there has

been a finding in Phase I of a class-wide violation, “the court should decide the

issue of class-wide relief, typically in the form of an injunction prospectively

prohibiting the discriminatory practice.”2044 There are cases, however, where

injunctive relief would not remedy the challenged employment practice, such

as where the practice has been discontinued or the plaintiff is no longer employed by the defendant.2045 The court can then determine what individual relief is appropriate for class members.

In a motion for class certification, consider whether the complaint challenges an employment practice affecting a class of employees as opposed to

challenging the individual treatment of employees. In general, disparate impact

cases are more suitable to class treatment, because they arise out of a neutral

policy or practice that plaintiffs say has a disproportionate impact on a protected class.2046 As a result, plaintiffs can more easily satisfy the typicality and

commonality requirements of Rule 23 in such cases.2047 Class certification of

actions based on disparate treatment claims, however, is more complicated.2048

2043. Kernan Holiday Universal, Inc., No. JH90-971, 1990 WL 289505, at *5–7 (D. Md.

Aug. 14, 1990); Morgan v. United Parcel Serv. of Am., Inc., 169 F.R.D. 349, 358 (E.D. Mo. 1996).

See also Beck, 203 F.R.D. at 465–68 (W.D. Wash. 2001) (certifying the liability phase under Rule

23(b)(2) and the damages phase under Rule 23(b)(3), but excluding from the class certification

individual claims for back pay).

2044. Rutherglen, supra note 1957, at 90. Injunctive relief will almost invariably be appropriate where Title VII has been violated. See, e.g., Int’l Bd. of Teamsters v. United States, 431 U.S.

324, 361 (1977).

2045. See, e.g., Cardenas v. Massey, 269 F.3d 251, 265 (3d Cir. 2001) (holding injunctive

relief would not remedy plaintiff’s wrongful treatment where defendant no longer employed

plaintiff); Webb v. Mo. Pac. R.R. Co., 98 F.3d 1067, 1068 (8th Cir. 1996) (injunctive relief not

appropriate where no discrimination complaints filed and affidavit exhibited effective implementation of antidiscrimination and affirmative action programs since the close of the liability

phase of the trial); see, e.g., Amirmokri v. Baltimore Gas & Elec. Co., 60 F.3d 1126 (4th Cir.

1995) (since plaintiff was no longer employed by defendant, equitable relief would be unavailable on harassment claim unless plaintiff prevailed on his constructive discharge claim).

2046. See, e.g., Griggs v. Duke Power Co., 401 U.S. 424 (1971) (discussing whether Title VII

prohibits hiring prerequisites and aptitude tests as conditions of employment).

2047. See Gen. Tel. Co. v. Falcon, 457 U.S. 147, 159 n.15 (1982); see, e.g., McKenzie v. Sawyer, 684 F.2d 62 (D.C. Cir. 1982).

2048. Swanson v. Perry, No. 4:01-CV-0258-A, 2002 WL 324283, at *3 (N.D. Tex. Feb. 27,

2002) (noting that disparate treatment claims are necessarily individual, but can still support

class action treatment where appropriate).
Employment Discrimination § 32.42

583

Where disparate treatment forms the basis of the action, individual issues are

more likely to predominate and class certification may not be warranted.2049

Plaintiffs seeking class-wide relief on the basis of the impact of a policy on their

individual employment conditions must show that their claims are sufficiently

similar to those of the proposed class members that they meet the requirements of commonality and typicality for the class.2050 The commonality requirement is rarely satisfied by broad allegations of discrimination.2051 Courts

have refused to certify classes where, for example, the named plaintiffs worked

in different groups and job types;2052 the proposed class included current, past,

and present employees in both supervisory and non-supervisory positions in

addition to job applicants;2053 or the employees worked in different facilities or

2049. See, e.g., Donaldson v. Microsoft Corp., 205 F.R.D. 558, 565 (W.D. Wash. 2001)

(“The mere allegation of individualized discrimination on the basis of race, coupled with proof

that other people of color work in the same environment, is insufficient to establish commonality.”); Zachery v. Texaco Exploration & Prod., Inc., 185 F.R.D. 230, 239 (W.D. Tex. 1999) (proposed class was spread across fifteen states in seventeen separate business units, each with varying degrees of autonomy over evaluation and promotion decisions involving 523 autonomous

supervisors); Reyes v. Walt Disney World Co., 176 F.R.D. 654, 658 (M.D. Fla. 1998) (disparate

treatment claims by their nature “are highly individualized” and plaintiffs were employed by

three separate divisions, presumably with a different hierarchy of decision makers, and therefore

each plaintiff was subject to “own set of unique circumstances surrounding the adverse employment action about which they now attempt to collectively complain”).

2050. Gen. Tel. Co., 457 U.S. at 156–57 (emphasizing the need for careful attention to the

requirements of Rule 23 in the light of the legal and factual issues underlying plaintiff’s cause of

action and rejecting proposition that plaintiff’s injury from ethnic discrimination automatically

qualifies plaintiff to represent all members of that ethnic class allegedly adversely affected by

some manifestation of discrimination). See also Donaldson, 205 F.R.D. at 567 (“Courts have

recognized that it is not possible to make a finding of commonality where putative class involves

extensive diversity in terms of geography, job requirements, and/or managerial responsibilities.”); Swanson, 2002 WL 324283, at *3 (“[T]he central problem with the proposed class action

[is that it] is composed of individuals with widely varying job classifications, pay scales, supervisory responsibility, and histories of discrimination.”).

2051. See Zachery, 185 F.R.D. at 238–39 (geographic dispersion of facilities and localized

employment decisions precluded finding of commonality); Appleton v. Deloitte & Touche

L.L.P., 168 F.R.D. 221, 231–32 (M.D. Tenn. 1996) (noting class encompassed varying job levels

with different criteria used for decision making for each job level); Swanson, 2002 WL 324283, at

*2–3.

2052. Kresefky v. Panasonic Communications & Sys. Co., 169 F.R.D. 54, 60 & 62–63

(D.N.J. 1996).

2053. Troupe v. Randall’s Food & Drug, Inc., No. CIV.A. 3:98-CV-2462, 1999 WL 552727,

at *5 (N.D. Tex. July 28, 1999) (noting proposed class also covered at least “fifty separate stores

spread over two large cities and their outlying suburbs” with “management practices vary[ing]

widely according to stores across the division”).
§ 32.42 Manual for Complex Litigation, Fourth

584

geographical locations.2054 In General Telephone v. Falcon,

2055 however, the Supreme Court noted that commonality may be satisfied where the plaintiffs can

demonstrate that “an employer operated under a general policy of discrimination . . . [that] manifested itself . . . in the same general fashion, such as

through entirely subjective decisionmaking processes.”2056 Inquiry into whether

the practice or conduct complained of involves the entire operation of the employer, or only a specific facility, department, or individual supervisor, will

assist in determining whether the requirements of Rule 23 are met.

To ascertain the precise nature of the class claim and determine whether it

meets the prerequisites of Rule 23(a), the court should probe beneath the

pleadings at an early stage to identify the particular practice or procedure

complained of and the extent to which the evidence to be offered in support of

the named plaintiffs’ claims will also support the claims of other class members. Some discovery may be needed, although precertification discovery

should be held to a minimum.2057 Occasionally, the class claims will be consolidated with individual claims, and there may be reasons for proceeding with

merits discovery on the latter. If so, the attorneys should be instructed to organize discovery so as to avoid duplication. A ruling that the class representatives’ individual claims have merit will not determine whether class certification is appropriate. The court will still need to determine if common issues

predominate. A named plaintiff with a claim that lacks merit, however, will not

be an adequate class representative.

Less precision is required in the definition of a Rule 23(b)(2) class. Members of a Rule 23(b)(2) class generally are limited to equitable relief (and appropriate incidental damages), and res judicata considerations with respect to

individual claims are not significant. On the other hand, in a Rule 23(b)(3)

action, plaintiffs’ primary claim is for damages. Thus, the class must be defined

with more specificity, and the court must satisfy itself that the determination of

individual claims does not preclude the existence of a predominant common

question. The ruling on certification should describe the class (and any subclasses) as precisely as possible, both to facilitate planning for discovery, trial,

2054. Zachery, 185 F.R.D. at 239 (proposed class spread across fifteen states and involved

seventeen business units).

2055. 457 U.S. 147 (1982).

2056. Id. at 159 n.15. But see Appleton, 168 F.R.D. at 221 (“In applying Footnote 15 [of

General Telephone], the courts have required plaintiffs to show that a defendant’s decisionmaking process is entirely subjective before permitting an across the board attack.”).

2057. But see Zapata v. IBP, Inc., No. CIV.A. 93-2366, 1994 WL 649322, at *1 (D. Kan.

Nov. 10, 1994) (staying discovery on merits until after plaintiff moved for certification but permitting discovery relevant to certification and noting that discovery relevant to certification may

also be relevant to the merits).
Employment Discrimination § 32.42

585

and settlement and to define the persons (and claims) that will be entitled to

relief under, or barred by, a final judgment in the action.2058 To the extent feasible, this definition should be stated in objective terms: e.g., all female applicants during a specified time who, like the plaintiffs, failed to meet the employer’s height and weight requirements. If unclear from the description of the

class itself, the ruling should indicate the nature of the claimed class discrimination: e.g., all persons of color employed by the defendant during a specified

period who allege that they were denied promotion during that period on account of their race. Criteria that are subjective or depend on the merits of the

claim should be excluded. Although Rule 23(c)(1) authorizes a conditional

order of certification and modification of that order prior to final judgment,

such modification can be prejudicial to class members and interfere with the

effective management of the action.2059 In cases brought pursuant to the FLSA

or ADEA, however, a determination whether similarly situated employees exist

will help to determine whether notice of a right to opt in should be given and

whether to conditionally certify the class. Once notice has been given and the

time for opting in has expired, the judge can reexamine whether the class

should be decertified.

Rule 23(c)(2) entitles each class member in a class certified under Rule

23(b)(3) to personal notice and an opportunity to opt out of the class.2060 Rule

23 does not provide for opt-out by members of a (b)(2) class. If certain members of the class should be excluded, perhaps because their interests are aligned

with management or to avoid conflicts within a class, the class definition

should be tailored to reflect their exclusion or to create one or more subclasses.2061

Notice to class members must be given when a Rule 23(b)(3) class is certified.2062 Although not required for a (b)(2) class, notice may still be advisable

for a number of reasons, such as to bring to light possible conflicts and to ensure the res judicata effect of a judgment. The form of notice—individual

mailing, posting on bulletin boards, or inclusion in pay envelopes—will depend on the circumstances of the case. While the cost of notice generally is

2058. See Cooper v. Fed. Res. Bank of Richmond, 467 U.S. 867, 876–78 (1984) (related

individual claims of discrimination not precluded by a finding of no class discrimination); Kernan v. Holiday Universal, Inc., No. JH90-971, 1990 WL 289505, at *2, 6 (D. Md. Aug. 14, 1990).

2059. Hall v. Burk, No. CIV.A. 301CV2487, 2002 WL 413901, at *2–3 (N.D. Tex. Mar. 11,

2002).

2060. Fed. R. Civ. P. 23(c)(2) (West 2003); see also Ortiz v. Fibreboard Corp., 527 U.S. 815,

844 (1999). Rule 23 does not provide for opt-out by members of a (b)(2) class. See supra section

21.311 [certification notice].

2061. See Penson v. Terminal Transp. Co., 634 F.2d 989, 993–94 (5th Cir. 1981).

2062. Fed. R. Civ. P. 23(c)(2) (West 2003).
§ 32.431 Manual for Complex Litigation, Fourth

586

borne by the plaintiffs,2063 relatively cost-free methods of reaching at least current employees usually are available. Moreover, where notice is being given in

a (b)(2) action at the employer’s request, the employer may be required to bear

the cost.

32.43 Discovery

.431 Identification of Source Materials 586

.432 Computerized Records 587

.433 Confidential Information 588

.434 Preservation of Records 589

.435 Statistical Evidence and Expert Testimony 589

.436 Discovery from Class Members 590

Five considerations are important in planning the discovery program for

employment discrimination litigation:

1. Many aspects of the company’s employment practices and its

workforce may be potentially relevant as circumstantial evidence.

2. Most of the information will be within the control of the employer,

often in computerized form.

3. Except for the government, plaintiffs usually have limited resources.

4. Expert testimony and complex statistical evidence will play an important role at trial.

5. Trial often will be conducted in stages.

32.431 Identification of Source Materials

The judge can simplify and expedite discovery by directing the parties to

exchange core information before discovery begins. Core information includes

information required under Rule 26 or local rules. It also includes potentially

relevant documentary materials, such as statements of employment policies,

policy manuals and guides, and an identification and general explanation

(perhaps with samples) of the types of records that contain data that may be

relevant to the issues in the case. After obtaining this information, plaintiffs

may need to depose the personnel director or other individuals responsible for

maintaining such records in order to clarify the nature of the information

contained in the records, how the information is coded or compiled, and how

data may be extracted from the various sources.

Employers frequently maintain the same or similar information in different forms. For example, earnings information may be in a personnel file, in tax

2063. See Eisen v. Carlisle & Jaquelin, 417 U.S. 156, 177 (1974).
Employment Discrimination § 32.432

587

records, and in payroll records. Job histories of employees may be determined

from periodic transfer and promotion records, from individual work record

cards, or from personnel files. The company may also have compiled relevant

data regarding its workforce and employment practices for reporting to governmental agencies or for use in other litigation. Many aspects of the company’s employment practices may have some potential relevance as circumstantial evidence, and various records may contain information about these

practices. The parties can determine the most efficient and economical method

for the employer to produce, and for plaintiffs to obtain, the most relevant information. Federal Rule of Civil Procedure 26(g) directs counsel to weigh the

potential value of particular discovery against the time and expense of production, and Rule 26(b)(2) expects the judge to limit discovery to avoid duplication and unjustified expense.2064

32.432 Computerized Records

The time and expense of discovery may sometimes be substantially reduced if pertinent information can be retrieved from existing computerized

records. Moreover, production in computer-readable form of relevant files and

fields (or even of an entire database) can reduce disputes over the accuracy of

compilations made from such data and enable experts for both sides to conduct studies using a common set of data.2065 On the other hand, accessing and

2064. See Aramburu v. Boeing Co., 885 F. Supp. 1434, 1444–45 (D. Kan. 1995) (holding

that production of 1,700 personnel files would unduly burdensome in light of information already produced by defendant and relevance appeared negligible in light of burden, but giving

plaintiff leave to seek reconsideration should additional discovery prove necessary); Zapata v.

IBP, Inc., No. CIV.A. 93-2366, 1994 WL 649322, at *3 (D. Kan. Nov. 10, 1994) (requiring defendant to produce computerized records and noting that all discovery is burdensome and burden

is on party resisting discovery to demonstrate it would be unduly burdened by the discovery

request); Couglin v. Lee, 946 F.2d 1152, 1160 (5th Cir. 1991) (district court abused discretion in

limiting plaintiff’s access to personnel files, and although some limitations can be imposed on

ground of burdensomeness, the “more important the information sought in discovery is to the

case, the greater the burden the opposing party can be legitimately required to shoulder”). In

Sattar v. Motorola, for example, the district court denied plaintiff’s discovery request for hard

copies of over 200,000 pages of E-mail messages. The court instead ordered the defendant to

accommodate the plaintiff in one of several alternative ways, such as downloading the data onto

diskettes (as opposed to submitting the tapes on which the information was maintained), permitting the plaintiff to use the software needed to read the tapes, or giving the plaintiff access to

the defendant’s computer system, elsewise the parties would be required to split the costs of hard

copies. 138 F.3d 1164, 1171 (7th Cir. 1998).

2065. See Hines v. Widnall, 183 F.R.D. 596, 601 (N.D. Fla. 1998) (requiring defendant to

produce computer images to plaintiffs even though defendant computerized records after litigation began).
§ 32.433 Manual for Complex Litigation, Fourth

588

using computer-generated evidence is subject to numerous pitfalls. For a more

complete discussion see section 11.446. The parties’ computer experts should

informally discuss, in person or by telephone, procedures to facilitate retrieval

and production of computerized information; the attorneys can then confirm

these arrangements in writing.

32.433 Confidential Information

Employees’ privacy interests may be protected by excluding from production records or portions of records irrelevant to the litigation (employees’

medical histories, for example, are rarely of significance in a discrimination

case) or by masking the names of individuals in particular compilations.2066 If

the company fears exposure to privacy claims were it to disclose personal information voluntarily, consider issuing a protective order barring unnecessary

disclosure of sensitive items to facilitate the production of sensitive information. The protective order may identify information regarding the employee,

such as names or social security numbers, and may limit the persons to whom

plaintiffs’ counsel will be permitted to disclose confidential materials. For example, counsel might be allowed to disclose some sensitive information to the

plaintiffs or even to class members, but permitted to disclose information

about tests only to an expert.

Discovery sought by the defendant employer often targets private information regarding the plaintiffs or nonparty witnesses. In sexual harassment

cases, defendants may seek discovery as to the plaintiff’s emotional well-being,

including medical and psychological records, or the plaintiff’s sexual history.2067 As always, the plaintiff’s (and nonparty witness’s) privacy interests

2066. Some jurisdictions have held that employees’ tax returns were subject to a quasiprivilege and not generally discoverable in civil actions. See, e.g., Gattegno v. PriceWaterhouseCoopers, LLP, 205 F.R.D. 70, 71–72 (D. Conn. 2001) (discussing discoverability of tax

returns and approaches taken by different jurisdictions and holding tax returns subject to a

quasi-privilege).

2067. See, e.g., Gatewood v. Stone Container Corp., 170 F.R.D. 455, 460 (S.D. Iowa 1996)

(“[A] defendant is entitled to discover whether there have been other stressors relating to plaintiff’s mental and physical health during the relevant time period which may have contributed to

the claimed emotional distress.”); Fox v. Gates Corp., 179 F.R.D. 303, 305–06 (D. Colo. 1998)

(plaintiff claiming emotional distress as element of claim waived psychotherapist–patient privilege for communications within applicable time period); Butler v. Burroughs Wellcome, Inc.,

920 F. Supp. 90, 92 (E.D.N.C. 1996) (plaintiff’s entire medical history is relevant in ADA action

and defendant also entitled to inquire into history of sexual abuse and sexual dysfunction, since

claim predicated upon mental state arising out of these issues). But see Burger v. Litton Indus.

Inc., No. 91 CIV. 0918, 1995 WL 476712, at *2–3 (S.D.N.Y. Aug. 10, 1995) (defendants failed to

show that the need for information relating to sex life of nonparty witness outweighed witness’s

privacy interests and noting that although Federal Rule of Evidence 412 did not apply to civil
Employment Discrimination § 32.435

589

should be balanced against the probative value of the information sought.2068

Determinations as to whether the plaintiff may have waived any physician–

patient privilege also may be required.2069

32.434 Preservation of Records

When a charge of discrimination or a civil action has been filed, EEOC

regulations require that employers “shall preserve all personnel records relevant to the charge or action until final disposition of the charge or action.”2070

The parties may disagree on which records are covered by this mandate, particularly with respect to computerized data that may be periodically erased as

new information is electronically stored. A separate order may be needed to

clarify what records must be preserved and to provide relief from unduly burdensome retention requirements.

32.435 Statistical Evidence and Expert Testimony

Employment discrimination litigation frequently involves the collection

and presentation of voluminous data regarding characteristics of the company’s workforce and its employment practices. In addition to using data already computerized by the company, the parties often prepare new databases,

electronically storing information manually extracted from other records. Disagreements may arise about the accuracy of these new databases, and preparing

and verifying separate databases involves time and expense. Consider encouraging the parties to agree on joint development of a common database on

which their respective experts will conduct their studies. If they cannot agree

on a common database, the court should direct them to use pretrial verification procedures to eliminate (or quantify) errors in the different databases.

Whenever possible, complex data should be presented at trial through summaries, charts, and other tabulations.2071

actions, “[i]n order not to undermine the rationale of Rule 412 . . . courts should enter appropriate orders pursuant to Fed. R. Civ. P. 26(c) to protect the victim against unwarranted inquiries and to ensure confidentiality”).

2068. Gatewood, 170 F.R.D. at 460 (noting defendant did not have “carte blanche” to “peruse plaintiff’s medical history”).

2069. See, e.g., Fox, 179 F.R.D. at 305–06; Vann v. Lone Star Steakhouse & Saloon, 967 F.

Supp. 346, 349–50 (C.D. Ill. 1997).

2070. 29 C.F.R. § 1602.14 (1999).

2071. In discrimination cases, the parties sometimes attempt to introduce in bulk numerous personnel files, work history cards, and other similar documents. See, e.g., Crawford v. W.

Elec. Co., 614 F.2d 1300, 1319 (5th Cir. 1980) (the court may insist on compilations and is not

required to “[wade] through a sea of uninterpreted raw evidence”).
§ 32.436 Manual for Complex Litigation, Fourth

590

Adopting pretrial procedures to facilitate this presentation will reduce disputes over the accuracy of the underlying data and the compilations derived

from such data. Indeed, to the extent practicable, disputes at trial regarding

statistical evidence should be limited to its interpretation, relevance, and

weight, not its accuracy. Experts submitting statistical studies in the form of

written reports should include, among other things, the data and information

considered in arriving at their conclusions. Such information includes the applicable labor or employment pool, historical data, and other characteristics.2072

After reviewing these reports and considering the comments of counsel, it may

be appropriate to appoint an independent statistical expert under Federal Rule

of Evidence 706. The court should be wary of making such an appointment,

however, if the plaintiffs will be able to pay their share of any assessed fees only

if they prevail.2073

32.436 Discovery from Class Members

The extent of permissible discovery from class members, as well as its

timing and form, will depend on the circumstances of the case. The judge

should require the parties to obtain court approval before taking any discovery

from class members and should limit that discovery to what is genuinely

needed. Depositions of a limited number of proposed class members are

sometimes needed prior to a ruling on class certification. In some cases, limited discovery from class members may be conducted in a bifurcated case in

the liability phase of the pretrial proceedings, with any remaining discovery

deferred.2074 Each party ordinarily should be permitted to depose any class

member whom the other party plans to call as a witness. Discovery of a class

member whose employment history will be used as evidence to show the existence (or nonexistence) of the alleged discrimination may also be appropriate.

Whether anecdotal experiences of individual class members are relevant at a

Phase I trial will depend on the circumstances of the case. Consider deferring

discovery from those class members if such evidence will become relevant at

subsequent proceedings only if liability to the class is established. Similarly,

class members on whose behalf claims for individual relief are presented after a

finding of class-wide liability may be treated as subject to discovery.

2072. Fed. R. Civ. P. 26(a)(2) (2000).

2073. See generally, Joe S. Cecil & Thomas E. Willging, Court-Appointed Experts: Defining

the Role of Experts Appointed Under Federal Rule of Evidence 706 (Federal Judicial Center

1993).

2074. See, e.g., W. Elec. Co. v. Stern, 544 F.2d 1196, 1198–99 (3d Cir. 1976).
Employment Discrimination § 32.44

591

32.44 Summary Judgment

Summary judgment can be an effective tool in employment discrimination

cases. Although typically brought by one of the parties, some courts have approved the use of summary judgment sua sponte in appropriate cases.2075 The

courts have consistently held that the McDonnell Douglas burden-shifting

framework, applicable where the plaintiff’s case rests on circumstantial evidence of discrimination, governs summary judgment but should not be introduced to the jury.2076 The Ninth Circuit noted in Costa v. Desert Palace Inc.

2077

that the presumption of discrimination may be relevant at trial where the employer does not rebut the prima facie case, but factual disputes remain. In most

cases, however, “[r]egardless of the method chosen to arrive at trial, it is not

normally appropriate to introduce the McDonnell Douglas burden-shifting

framework to the jury.”2078 Accordingly, once the employer proffers a nondiscriminatory reason for the employment practice at issue, the plaintiff must

offer evidence to show that the defendant’s asserted reason is pretextual in order to defeat summary judgment in favor of the employer.2079 It may be enough

for the plaintiff to establish a prima facie case, together with sufficient evidence

to challenge the credibility of the employer’s proffered explanation, in order to

create a triable issue of fact.2080 The plaintiff is not required to introduce independent evidence of discrimination in order to avoid summary judgment.

Rather, once the plaintiff adequately challenges the credibility of the explana2075. See, e.g., Jones v. Union Pac. R.R. Co, 302 F.3d 735, 740 (7th Cir. 2002).

2076. See, e.g., Costa v. Desert Palace, Inc., 299 F.3d 838, 854–55 (9th Cir. 2002), aff’d, 123

S. Ct. 2148 (2003); Garrett v. Hewlett-Packard Co., 305 F.3d 1210, 1216 (10th Cir. 2002); see also

Crone v. United Parcel Serv., 301 F.3d 942, 944 (8th Cir. 2002) (stating summary judgment

would be analyzed under McDonnell Douglas burden-shifting standard).

2077. 299 F.3d 838 (9th Cir. 2002), aff’d, 123 S. Ct. 2148 (2003).

2078. Id. at 855.

2079. Heap v. County of Schenectady, 214 F. Supp. 2d 263, 269 (N.D.N.Y. 2002); Crone,

301 F.3d at 942, 944–45 (affirming grant of summary judgment for employer where plaintiff

failed to demonstrate reason for nonpromotion was pretext).

2080. Reeves v. Sanderson Plumbing Prods. Inc., 530 U.S. 133, 148 (2000) (“This is not to

say that such a showing by the plaintiff will always be adequate to sustain a jury’s finding of liability. Certainly there will be instances where, although the plaintiff has established a prima

facie case and set forth sufficient evidence to reject the defendant’s explanation, no rational factfinder could conclude that the action was discriminatory.”). The Seventh Circuit in Jones v. Union Pacific Railroad Co., noted that with respect to the issue of pretext, the “question is not

whether the employer’s reasons for a decision are ‘right but whether the employer’s description

of its reasons is honest.’” 302 F.3d 735, 744 (7th Cir. 2002) (quoting Kariotis v. Navistar Int’l

Transp. Co., 131 F.3d 672, 677 (7th Cir. 1997)). However, the court also seemed to require the

plaintiff to provide admissible evidence that the employer’s reason was pretextual “and that the

actual reason was discriminatory.” Id. at 743.
§ 32.45 Manual for Complex Litigation, Fourth

592

tion, it is within the province of the fact-finder at trial to look at the totality of

the evidence and then determine whether such evidence creates an inference of

discrimination.

32.45 Trial

Employment discrimination class actions have commonly been tried in

separate stages under Rule 42(b).2081 In some cases the class issues may themselves be severed, with the Phase I trials of different class issues conducted

separately. The Phase I trial determines whether the defendants have discriminated against the class. Whether the merits of the individual claims of the class

representatives should be tried in Phase I depends on whether proof of those

claims is essential to establishing liability on the class claim. If class-wide discrimination is found, issues of relief are tried in Phase II. The 1991 CRA entitles parties in disparate treatment cases to request a jury trial. If a jury is requested, the bifurcation of class actions will be substantially more complicated.

Although the class-wide issue of discrimination is readily tried to a jury in

Phase I, the trial of individual damage claims to a jury in Phase II will result in

potentially lengthy trials. In some cases, Title VII permits recovery of front and

back pay as well as compensatory damages, including future loss, and pain and

suffering. Consider whether fairness to the parties requires that both liability

and relief be tried to a single jury.2082

Where the case is tried to the court, the judge should determine, in Phase I,

the appropriateness of class-wide injunctive relief. Injunctive relief commonly

ordered in employment discrimination cases includes the following: establishing goals to diversify the workforce; implementing mandatory hiring or promotion of specified individuals or groups of individuals; abolishing or restricting testing procedures; instituting training programs; establishing or

modifying recruitment policies; or imposing an affirmative action plan in one

form or another.2083 Reinstatement may also be a viable remedy depending on

the circumstances of the case.2084 An immediate appeal of the ruling on injunc2081. See Gen. Bldg. Contractors Ass’n v. Pa., 458 U.S. 375, 380 (1982); Kernan Holiday

Universal, Inc., No. JH90-971, 1990 WL 289505, at *4–5 (D. Md. Aug. 14, 1990); United States

v. United States Steel Corp., 520 F.2d 1043 (5th Cir. 1975).

2082. See, e.g., Allison v. Citgo Petroleum Corp., 151 F.3d 402, 423–24 (5th Cir. 1998) (expressing concern that consideration of overlapping issues by different juries would violate the

Seventh Amendment).

2083. John F. Buckley, IV & Michael R. Lindsay, Defense of Equal Employment Claims

§ 14.18, at 14–17 (2d ed. 1995 & Supp. 2000).

2084. Hostility between the parties may militate against consideration of reinstatement.

Simpson v. Ernst & Young, 100 F.3d 436, 445 (6th Cir. 1996) (amount of award of front pay
Employment Discrimination § 32.45

593

tive relief is permissible under 28 U.S.C. § 1292(a). Because resolution of

claims for injunctive relief can be an expensive and time-consuming process,

such an appeal may be desirable as a means for obtaining early appellate review

of a finding of liability. If an appeal under 28 U.S.C. § 1292(a) is unavailable,

consider certifying the ruling on class liability for appeal under section

1292(b). The award of attorneys’ fees may be deferred until completion of proceedings for individual relief; an interim award, however, frequently is made

after a grant of injunctive relief.2085

The individual damage claims of the class members should be resolved in

Phase II. In some instances, a period of additional discovery may be necessary.

In this second stage, the claimants—who, by proof of their membership in the

class, are presumed to have been subjected to the discrimination practiced

against the class2086—are permitted to present their individual claims of injury,2087 subject to the right of the employer to raise defenses to those claims

that were not resolved during the Phase I proceedings. Further severance may

be useful at the individual remedy stage. For example, consider identifying

those entitled to relief before the parties proceed with discovery and possible

trial regarding the amount of damages. One approach is to require class members to complete information forms disclosing the critical facts on which their

claims of individual injury is based (e.g., the job bids that they assert were discriminatorily rejected by the company). It may also be feasible to establish a

claims resolution procedure administered by a magistrate judge or special

master under Rule 53.2088 In some cases, class-wide monetary relief may be ap-

“supplemented by evidence that disclosed the underlying hostility that existed between defendant and Simpson, making reinstatement highly impractical and improbable”); Avitia v. Metro.

Club of Chi., Inc., 49 F.3d 1219, 1231 (7th Cir. 1995) (noting that courts should not compel

reinstatement “where such debilitating frictions between employer and employee can be anticipated that the court might have to exercise continuing supervision over the employment relationship for many years”). In addition, where reinstatement would require the removal of another employee from the desired position, reinstatement may not be feasible. See Avitia, 49 F.3d

at 1231–32.

2085. See Fed. R. Civ. P. 54(d) (2000).

2086. Cox v. Am. Case Iron Pipe Co., 784 F.2d 1546 (11th Cir. 1986); King v. Trans World

Airlines, Inc., 738 F.2d 255 (8th Cir. 1984); McKenzie v. Sawyer, 684 F.2d 62 (D.C. Cir. 1982);

Pettway v. Am. Cast Iron Pipe, 494 F.2d 211 (5th Cir. 1974).

2087. As to whether the amount of damages each class member has sustained must be individually determined or whether damages may be assessed on a class-wide basis, compare

Mitchell v. Mid-Continent Spring Co., 583 F.2d 175, 283–84 (6th Cir. 1978), with Pettway, 494

F.2d at 259–63 (class-wide formula permissible).

2088. See, e.g., Bridgeport Guardians, Inc. v. Delmonte, 248 F.3d 66, 70–72 (2d Cir. 2001);

Ass’n of Mexican-Am. Educators v. State of Cal., 231 F.3d 572, 590–91 (9th Cir. 2000); Reynolds

v. Roberts, 207 F.3d 1288, 1295 n.9 (11th Cir. 2000); Berger v. Iron Workers Reinforced Rod-
§ 32.45 Manual for Complex Litigation, Fourth

594

propriate.2089 Where calculation of the pecuniary effects of the discrimination

would be nothing more than guesswork based on hypothetical analyses, an

individualized determination of the amount a particular class member should

recover may not be possible.2090 Other factors that may weigh on the appropriateness of class-wide relief include the size of the class, whether the promotion

or hiring practices are ambiguous, and the length of time the challenged practices continued.2091

When the trial of the action is bifurcated, the court should define precisely

the issues to be resolved at each stage of the trial. This delineation will not

eliminate all duplicative evidence. For example, anecdotal testimony may be

admissible as circumstantial evidence at the first trial and, if liability is established, be offered as direct evidence on individual claims in later proceedings.

The delineation, however, will enable counsel to prepare more effectively for

both stages of the litigation. Issues generally are separated according to the extent they depend on the particular circumstances of individual employers; for

example, defenses such as “business necessity”2092 and “bonafide occupation

qualification”2093 usually are resolved in the first phase, while the issue of

whether employees may be excused from applying for a position is typically

reserved for decision in later proceedings.

Statistical evidence and expert testimony typically play a significant role in

the liability phase of the trial,2094 especially where the plaintiff is alleging dispamen, Local 201, 170 F.3d 1111, 1117–18 (D.C. Cir. 1999); Jensen v. Eveleth Taconite Co., 130

F.3d 1287, 1289–91 (8th Cir. 1997).

2089. See, e.g., EEOC v. O & G Spring & Wire Forms Specialty Co., 38 F.3d 872 (7th Cir.

1994); Catlett v. Mo. Highway & Transp. Comm’n, 828 F.2d 1260, 1267–68 (8th Cir. 1987)

(noting class-wide relief in form of award of back pay appropriate but remanding district court’s

grant of a class-wide hiring preference for further review). But see Shipes v. Trinity Indus., 987

F.2d 311, 317 (5th Cir. 1993) (stating that “fashioning a class-wide back pay award is exceedingly

complex and difficult, and the process is fraught with uncertainty”).

2090. See Stewart v. Gen. Motors Corp., 542 F.2d 445, 452 (7th Cir. 1976) (“subjectivity of

defendant’s method of filling job vacancies renders impossible anything like a precise calculation

of the pecuniary effects of discrimination”).

2091. See Shipes, 987 F.2d at 318.

2092. 42 U.S.C. § 2000e-2(k)(1)(A)(I) (2000).

2093. 29 U.S.C. § 623(f)(1) (2000).

2094. See, e.g., Hemmings v. Tidyman’s Inc., 285 F.3d 1174 (9th Cir. 2002); Coleman v.

Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000); Bell v. EPA, 232 F.3d 546, 553 (7th Cir. 2000)

(“In a pattern and practice disparate treatment case, statistical evidence constitutes the core of a

plaintiff’s prima facie case.”); Meacham v. Knolls Atomic Power Lab., 185 F. Supp. 2d 193, 208

(N.D.N.Y. 2002) (plaintiff in ADEA case must “demonstrate, generally through statistical data,

that the employment practice caused a significant disparity in outcome between older employees

and younger employees”); O & G Spring & Wire, 38 F.3d at 876 (statistical proof alone can establish discrimination case).
Employment Discrimination § 32.45

595

rate impact as opposed to intentional discrimination. The probative value of

statistical evidence offered by the parties will depend on, among other things,

the relevant labor pool,2095 the geographic area, and other comparison pools.2096

The court must ensure that such evidence meets the requirements of Daubert

v. Merrel Dow Pharmaceuticals.

2097 The “Reference Guide on Statistics” in the

Reference Manual on Scientific Evidence2098 may be helpful in assessing statistical

evidence in employment discrimination cases.

Judges routinely admit expert testimony regarding statistical evidence, but

disagree about the need or value of expert testimony on other issues.2099 It is

helpful to consider in the pretrial planning stage the extent to which “anecdotal” evidence regarding the individual experiences of various employees, union

stewards, supervisors, and managers will be admitted. Plaintiffs or defendants

may offer to provide illustrative support for their respective positions and for

the studies conducted by their experts.2100 Some limits on the number of witnesses may be appropriate. To avoid unnecessary duplication, the court should

require pretrial disclosure of witnesses’ names and the general subject matter

of their expected testimony.2101

2095. See, e.g., EEOC v. Turtle Creek Mansion Corp., No. 3:93-CV-1649, 1995 WL 478833,

at *7–9 (N.D. Tex. May 18, 1995); see also McKenzie v. Sawyer, 684 F.2d 62, 71 (D.C. Cir. 1982)

(“A showing that few if any blacks were hired for a given kind of job is not probative of discrimination without a showing of the numbers of blacks available in the appropriate labor

pool.”).

2096. See, e.g., Aiken v. Memphis, 37 F.3d 1155 (6th Cir. 1994).

2097. 509 U.S. 579 (1993). See Wyche v. Marine Midland Bank, No. 94 CIV. 4022, 1997

WL 109564, at *1 (S.D.N.Y. Mar. 11, 1997).

2098. David H. Kaye & David A. Freedman, Reference Guide on Statistics, in Reference

Manual on Scientific Evidence (Federal Judicial Center, 2d ed. 2000) at 83–178.

2099. Sherbert v. Alcan Aluminum Corp., 66 F.3d 965, 967 (8th Cir. 1995) (operation of

forklift within the common knowledge of the jury); Karibian v. Columbia Univ., 930 F. Supp.

143, 144 (S.D.N.Y. 1996) (expert testimony as to plaintiff’s emotional state unnecessary); Skidmore v. Precision Printing & Packaging, Inc., 188 F.3d 606, 618 (5th Cir. 1999) (testimony of

psychologist on plaintiff’s emotional distress admissible); Harper v. S.E. Ala. Med. Ctr., 998 F.

Supp. 1289, 1297 (M.D. Ala. 1998) (permitting expert testimony on inadequacy of discrimination policy).

2100. See, e.g., Turtle Creek Mansion, 1995 WL 478833, at *2–6.

2101. Fed. R. Civ. P. 26(a)(3) (West 2003).
§ 32.462 Manual for Complex Litigation, Fourth

596

32.46 Settlement

.461 Timing 596

.462 Affirmative Relief 596

.463 Attorney Fees 597

.464 Settlement Hearing 597

.465 Implementation 597

32.461 Timing

Precertification settlements of discrimination cases brought as class actions

present special problems. If the parties propose settlement of only the individual claims of the named plaintiffs and abandonment of the class claim, the

judge should ensure that members of the proposed class are not prejudiced. It

is appropriate to consider whether the proposed class should be notified of the

proposed settlement and given an opportunity to intervene to pursue the class

claims. Although the parties should be encouraged to engage in settlement negotiations early in the litigation, formal settlement negotiations in class actions

ordinarily should be deferred until there is a certification ruling. In employment discrimination litigation, the parties should explore settlement possibilities as the case proceeds toward trial after the certification ruling and, if those

initial efforts are unsuccessful, they should renew their discussions after the

liability phase of the trial.

32.462 Affirmative Relief

Many employment discrimination cases terminate in consent decrees or in

litigated judgments that order implementation of certain employment practices that may be seen as constituting affirmative action.2102 Such provisions

raise difficult issues concerning their effect on groups of employees that may

be adversely affected by the provisions and their vulnerability to subsequent

legal challenge. The Civil Rights Act establishes procedures for precluding

subsequent challenge by persons (1) who, prior to entry of the order, had actual notice of the potential adverse effect and an opportunity to object, or

(2) who were adequately represented.2103 Parties to the decree may also seek to

intervene or join persons who may claim to be adversely affected.

2102. See, e.g., Thigpen v. Bibb County, Ga., Sheriff’s Dept., 223 F.3d 1231 (11th Cir. 2000);

Bishop v. Gainer, 272 F.3d 1009 (7th Cir. 2001); Maitland v. Univ. of Minn., 155 F.3d 1013 (8th

Cir. 1998).

2103. 42 U.S.C. § 2000e-2(n) (2000).
Employment Discrimination § 32.465

597

32.463 Attorney Fees

The court should be wary of parties’ attempts to settle claims for attorney

fees before a settlement of the class claims has been effected or where the defendants offer to settle class claims by payment of a lump sum on condition

that attorney fees be waived. The parties should be encouraged to settle claims

regarding attorney fees, but these negotiations preferably should not be commenced until the class claims have been resolved by trial or settlement.

32.464 Settlement Hearing

Hearings on approval of class action settlements in employment discrimination litigation may generate vigorous objections. Opposition often stems

from misunderstandings about the terms of the proposed settlement and will

be mitigated if the notice of settlement provides full information in comprehensible form. Class counsel may also schedule, in advance of the hearing,

meetings with the class at which counsel and the class representatives can explain in person the terms of the agreement and can answer questions. At the

outset of the hearing, before the judge hears objections from class members or

others, counsel should again describe in plain language the key features of the

settlement, clarify misunderstandings, and indicate why they believe it to be

advantageous to the class. The judge may also explain portions of the proposed

settlement that may have been confusing to class members. The judge’s notice

to the class of the proposed settlement typically should require that any objections or requests to be heard be filed in writing by a specified date. It is prudent, however, to permit persons who have not filed timely objections to express their views at the hearing, including representatives of employees who,

while not members of the class, claim they will be adversely affected by the settlement.

32.465 Implementation

Settlements of employment discrimination cases sometimes specify the

persons to whom awards will be made and the amount each person is to be

paid. More frequently, however, settlements provide only the basic principles

for determining these awards, contemplating further proceedings to ascertain

the factual matters on which the awards depend. The settlement may, for example, establish one or more funds to be shared by persons satisfying prescribed criteria; in this situation, class counsel may be required after the settlement to preliminarily identify those class members eligible to participate in

distribution, and provide those found ineligible an opportunity to present

their claims to the court or a special master. The settlement may provide for a

specified payment—whether a flat sum or an amount determined under a

formula—to each class member meeting specified criteria. If so, the defendants
§ 32.465 Manual for Complex Litigation, Fourth

598

may have a financial interest in challenging the claims of class members, and

referral to a magistrate judge or special master may be necessary in order to

conduct individual hearings. Also, a special master appointed under Federal

Rule of Civil Procedure 53 can monitor future implementation of injunctive

features of the settlement. Although Rule 53 contemplates that the appointment of a special master “shall be the exception and not the rule,”2104 Title VII

cases have a relaxed standard for assessing whether there are exceptional circumstances that warrant reference to a special master.2105 The statute authorizes the appointment of a special master where necessary to ensure compliance

with Title VII’s mandate to expedite discrimination cases, even though the circumstances might otherwise be unexceptional.2106

2104. See also La Buy v. Howes Leather Co., 352 U.S. 249, 254 n.4 (1957); Sierra Club v.

Clifford, 257 F.3d 444, 447 (5th Cir. 2001) (“The fact that a case has been pending for two years

is not so exceptional as to require the reference of dispositive matters . . . to a special master.”);

United States v. Microsoft Corp., 147 F.3d 935, 955–56 (D.C. Cir. 1998).

2105. See Goins v. Hitchcock, 191 F. Supp. 2d 860, 867 (S.D. Tex. 2002) (citing Hackley v.

Roudebush, 520 F.2d 108 (D.C. Cir. 1975)).

2106. 42 U.S.C. § 2000e-5(f)(5) (2000); see also Hackley, 520 F.2d at 154 n.181 (D.C. Cir.

1975) (“That provision was merely included so that the test of Rule 53, which only permits

masters to be appointed in exceptional circumstances, would be somewhat relaxed in the area of

Title VII, ‘where justice delayed is very often justice denied.’” (quoting House Comm. on Educ.

& Labor, 92d Cong., Legislative History of the Equal Employment Opportunity Act 1731

(Comm. Print 1972)).
599

33. Intellectual Property

.1 Introduction 599

.2 Patent Law 600

.21 The Statutory Framework 600

.22 Claim Construction Under Markman v. Westview Instruments 602

.221 Holding a Markman Hearing 604

.222 Structuring the Markman Hearing 606

.223 Timing the Markman Hearing 607

.224 Requesting a Markman Hearing 610

.225 Appeal 611

.23 Defining the Issues in Patent Litigation 611

.24 Injunctive Relief 619

.25 Discovery 622

.26 Experts 625

.27 Trial 627

.3 Copyright and Trademark Law 628

.31 Copyright 628

.311 Discovery 637

.312 Motions 639

.313 Experts 640

.32 Trademarks 640

33.1 Introduction

Intellectual property litigation comprises three related areas of the law:

patent, copyright, and trademark. Trade secret claims—seeking to protect

state-law-based rights in information—can appear under supplemental jurisdiction and often are related to patent issues (e.g., inventorship, ownership,

“best mode”).2107 Copyright actions arise out of the unauthorized copying or

exploitation of the “pattern of expression” reflected by writings, music, and

art.2108 Trademark cases, on the other hand, do not involve the protection per

se of an invention or original work, but involve disputes over the unauthorized

use of those “marks” of a product or service that are associated in the public’s

mind with that product or service.2109 Intellectual property litigation has grown

increasingly more complicated as technology, biology, and communications

have advanced, expanding claims beyond the traditional mechanical processes

originally contemplated by the various statutes in each area. Motions for temporary and permanent injunctive relief, frequently filed on an expedited basis,

2107. James Pooley, Trade Secrets § 3.01[2]–[3] (2003) (discussing statutory requirements

for patentability of an invention).

2108. Robert A. Gorman, Copyright Law 4 (Federal Judicial Center 1991).

2109. Id. at 5.
§ 33.21 Manual for Complex Litigation, Fourth

600

create additional complexities. This section focuses primarily on patent litigation, but also discusses issues peculiar to copyright and trademark cases that

may increase the complexity of otherwise straightforward litigation.

33.2 Patent Law

.21 The Statutory Framework 600

.22 Claim Construction Under Markman v. Westview Instruments 602

.221 Holding a Markman Hearing 604

.222 Structuring the Markman Hearing 606

.223 Timing the Markman Hearing 607

.224 Requesting a Markman Hearing 610

.225 Appeal 611

.23 Defining the Issues in Patent Litigation 611

.24 Injunctive Relief 619

.25 Discovery 622

.26 Experts 625

.27 Trial 627

33.21 The Statutory Framework

Patent law derives from Article 1, section 8 of the U.S. Constitution, which

authorizes Congress “[t]o promote the progress of . . . useful arts, by securing

for limited times to . . . inventors the exclusive right to their . . . discoveries.”

Congress exercised this authority through the 1793 Patent Act, most recently

revised in 1952 and codified at 35 U.S.C. § 101.2110 Patent law grants the inventor of a product or process, together with its useful improvements, exclusive right to the use and marketing of the invention, and protects the underlying concept or system as “usefully embodied.”2111 Obtaining a patent can be

lengthy and involved. The applicant must satisfy certain statutory conditions:

the invention must be (1) useful;2112 (2) novel;2113 and (3) non-obvious.2114 The

patent document itself contains a set of claims to identify the bounds of the

2110. See Graham v. John Deere Co., 383 U.S. 1, 3 (1966) (discussing constitutional grant

of authority and history of Patent Act).

2111. Section 101 of the Patent Act provides: “Whoever invents or discovers any new and

useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of

this title.” 35 U.S.C. § 101 (2000).

2112. Id.

2113. 35 U.S.C. §§ 101 & 102 (2000). In order to satisfy the requirement of novelty, the

invention cannot be anticipated by a product or process that is already in the public domain, or

cannot have an insignificant enough difference from that existing in the public domain that it

would have been obvious to a person skilled in the art of the invention.

2114. 35 U.S.C. § 102 (2000).
Intellectual Property § 33.21

601

patent owner’s monopoly. These claims define the limits of the invention and

serve to set the bounds for the patentee’s rights. Typically they are the result of

a back and forth negotiation between the patent applicant and the U.S. Patent

and Trademark Office (PTO). “Because others look to the patent claims to

determine what cannot be done without the patent owner’s permission, the

inventor must present claims that particularly point out and distinctly claim

the invention.”2115 To further the Act’s goals of promoting the “progress of the

useful arts,”2116 it also requires the patentee to make certain disclosures as to

the best mode of practicing the invention and to include a description sufficient to enable a person of ordinary skill in the art of the invention to do so.

Once the patent has been issued, the owner of the patent has the exclusive right

to make, use, or sell the invention for twenty years from the date of the original

patent application, at which time the patent expires and the invention becomes

part of the public domain. Extensions of the patent may be granted under limited circumstances.

Patent litigation typically arises out of the patent owner’s assertions of infringement of the patent resulting from unauthorized use of the patented

product or process.2117 Actions may also be brought by others to challenge the

validity of the patent itself, either through the PTO or by way of a declaratory

judgment action in federal court.2118 In addition, appeals from proceedings or

decisions of the Patent Office Board of Appeals, such as the denial of a patent,

can be brought in the district court for the District of Columbia. Patent appeals from any of the ninety-four district courts go to the Court of Appeals for

the Federal Circuit.

Patent cases can and often do involve a number of separate, but related,

claims and defenses. In addition to seeking injunctive relief and damages for

alleged infringement, plaintiffs may assert causes of action for unfair competition, antitrust, interference with business or contractual relations, and other

related claims.2119 Plaintiffs almost always allege willful infringement in order

2115. Herbert F. Schwartz, Patent Law & Practice 95 (Federal Judicial Center, 3d ed. 2001).

The Supreme Court, in Markman v. Westview Instruments, Inc., commented that “[t]he limits of

a patent must be known for the protection of the patentee, the encouragement of the inventive

genius of others and the assurance that the subject of the patent will be dedicated ultimately to

the public.” 517 U.S. 370, 389 (1996) (citing Gen. Elec. Co. v. Wabash Appliance Corp., 304 U.S.

364, 369 (1938)).

2116. Patent Act, ch. 11, 1 Stat. 318 (1793) (current version at 35 U.S.C. § 101 (2000)).

2117. Schwartz, supra note 2115, at 40–42.

2118. Id. at 42–44.

2119. Eastman Kodak Co v. Goodyear Tire & Rubber Co., 114 F.3d 1547 (Fed. Cir. 1997).

Most defendants also include a counterclaim for declaratory relief on essentially the same

grounds as their affirmative defenses.
§ 33.22 Manual for Complex Litigation, Fourth

602

to increase the damages potentially available should their claim prevail or as an

avenue to collect attorneys’ fees. Most defendants assert defenses of noninfringement, invalidity based on the prior art, and invalidity based on other defects.2120 Defendants may plead several of the statutory bars under 35 U.S.C.

§§ 102 and 103 or other sections of Title 35, as well as assert misuse of the patent or various equitable defenses. Equitable defenses include laches, unclean

hands, estoppel, patent misuse, and inequitable conduct before the PTO.2121

Just as plaintiffs often allege willful infringement, defendants will often raise a

defense of inequitable conduct based on a patentee’s failure to satisfy its obligations of full disclosure and candor to the PTO during prosecution of the patent application.2122

33.22 Claim Construction Under Markman v. Westview

Instruments

.221 Holding a Markman Hearing 604

.222 Structuring the Markman Hearing 606

.223 Timing the Markman Hearing 607

.224 Requesting a Markman Hearing 610

.225 Appeal 611

The construction of patent claims is pivotal to infringement actions (or

those challenging the validity of a patent), because the patent claims define the

patentee’s rights. It is only after the claims have been properly construed by the

court that the trier of fact can determine whether each element of the claim is

present, either literally or under the doctrine of equivalents, in the allegedly

infringing product or process.2123 The doctrine of equivalents extends patent

2120. Allegations of invalidity challenge whether the invention met the statutory requirements for patentability, such as novelty or non-obviousness. Section 103(a) of Title 35 precludes

issuance of a patent “if the differences between the subject matter sought to be patented and the

prior art are such that the subject matter as a whole would have been obvious at the time the

invention was made to a person having ordinary skill in the art to which such subject matter

pertains.” Section 103(b) excepts biotechnological processes under certain circumstances from

the operation of (a). Several primary considerations were identified by the Supreme Court in

Graham v. John Deere Co., as relevant to a determination of nonobviousness, such as the scope

and content of the prior art, as well as inquiry into “objective” considerations relating to economic success or social need. 383 U.S. 1, 17–18 (1966). See also Schwartz, supra note 2115, at

79–82 (discussing various secondary considerations applied by the courts).

2121. See Schwartz, supra note 2115, at 155–68.

2122. See id. at 155–61; see also Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326

F.3d 1226, 1233–34 (2d Cir. 2003).

2123. See, e.g., Loral Fairchild Corp. v. Sony Corp., 181 F.3d 1313, 1321 (Fed. Cir. 1999)

(“An infringement analysis entails two steps: (1) the claims must be construed; and (2) the
Intellectual Property § 33.22

603

protection to include accused products or processes that, although not infringing on the literal meaning of the claims, are not substantially different

from the patented device.2124 In a significant development, the Federal Circuit

foreclosed all resort to the doctrine of equivalents for any amendments narrowing a patent claim during prosecution, but the Supreme Court vacated the

appellate decision, rejecting the absolute bar rule adopted by the Federal Circuit. The Court, however, held the burden was on the patentee to prove that

the amendment should not give rise to estoppel.2125

Construing claims may also reveal whether the claim is novel or whether it

is obvious in light of the prior art, and the court applies the same claim construction for purposes of analyzing both infringement and validity. As a result,

claim construction can be, and often is, outcome determinative.

Markman v. Westview Instruments2126 reflected a significant development in

the construction of patent claims. The Court held that the interpretation of a

patent is exclusively a question of law for the court.2127 Likening claim construction to the interpretation of other written documents, the Court stated

“[t]he judge, from his training and discipline, is more likely to give a proper

interpretation to such instruments than a jury; and he is, therefore, more likely

to be right in performing such a duty, than a jury can be expected to be.”2128

Removing the issue of claim construction from the jury, it said, would also

contribute to certainty and uniformity in patent litigation.2129 Claim construction is now subject to de novo review by the Federal Circuit, even where construction involves determination of underlying factual issues.2130

As a result, many patent cases are resolved once the claim construction is

decided, either through summary judgment or settlement, with substantial

savings in judicial time and resources that would otherwise be spent in a

properly construed claims must be compared to the allegedly infringing device.”); NEC Corp. v.

Hyundai Elecs. Indus. Co., 30 F. Supp. 2d 560, 565 (E.D. Va. 1998) (infringement analysis is a

two-step determination).

2124. Schwartz, supra note 2115, at 141.

2125. Festo Corp. v. Soketasu Kinsoku Kogyo Kabushiki Co., 535 U.S. 722, 740 (2002).

2126. 517 U.S. 370 (1996).

2127. Markman v. Westview Instruments, 52 F.3d 967, 970–71 (Fed. Cir. 1995).

2128. Markman, 517 U.S. at 388–89.

2129. Id. at 391 (“[W]hereas issue preclusion could not be asserted against new and independent infringement defendants even within a given jurisdiction, treating interpretive issues as

purely legal will promote . . . intrajurisdictional certainty through the application of stare decisis

. . . .”).

2130. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (stating court

would “review claim construction de novo on appeal including any alleged fact-based questions

relating to claim construction”). The determination of whether the patent has been infringed,

however, remains a question of fact for the jury.
§ 33.221 Manual for Complex Litigation, Fourth

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lengthy, often complicated trial.2131 Claim construction also puts the court and

the parties in a better position to determine what issues remain in the case in

light of the court’s construction and to tailor the remaining course of the litigation accordingly.

There is no consistent approach among the courts as to the procedural

boundaries of claim-construction proceedings. Markman did not establish

when or how a patent was to be construed, only that it must be done prior to

submission of the case to the jury.2132 At least one jurisdiction has adopted a

special set of “Patent Local Rules” that dictate a prescribed series of disclosures

by each party that help to define the claim-construction issues in dispute and

lead directly to briefing on claim construction and a Markman hearing.2133 Accordingly, decisions on how to structure claim-construction proceedings involve several interrelated questions, the answers to which can affect subsequent

case-management strategies:

• Is a Markman hearing necessary? If so, what claim terms need to be

construed?

• How should the hearing be structured, and what submissions should

be considered?

• When should the hearing be held?

• What is the procedural vehicle through which claim-construction issues are raised?

• What happens if the claim construction is reversed on appeal?

33.221 Holding a Markman Hearing

There is no requirement that the court conduct a formal hearing to interpret the patent. Whether a hearing is warranted often turns on the degree of

ambiguity in the patent claim. Where the language of the patent claim is clear

the judge may be able to construe the claim based solely on the paper record.2134 If the language is truly unambiguous, the judge should not resort to

the use of extrinsic evidence or testimony.2135 The degree of ambiguity not2131. See William F. Lee & Anita K. Krug, Still Adjusting to Markman: A Prescription for the

Timing of Claims Construction Hearings, 13 Harv. J.L. & Tech. 55, 59 (1999); see also K-2 Corp. v.

Salomen S.A., 191 F.3d 1356, 1362 (Fed. Cir. 1999).

2132. See generally Markman, 517 U.S. 370 (1996).

2133. See, e.g., N.D. Cal. Patent L.R. (2002).

2134. See Schwartz, supra note 2115, at 102–14 (discussing meaning of claim language).

2135. See Vitronics Corp. v. Conceptronics, Inc., 90 F.3d 1576, 1583 (Fed. Cir. 1996); Biovail Corp. Int’l v. Andrx Pharms., Inc., 239 F.3d 1297, 1300 (Fed. Cir. 2001) (“When intrinsic

evidence unambiguously describes the scope of a patented invention, reliance on extrinsic evi-
Intellectual Property § 33.221

605

withstanding, the court has the discretion to consider both intrinsic and extrinsic evidence, including expert testimony, in interpreting the claims.2136 As a

consequence, some courts routinely conduct Markman hearings before construing the claim.2137 Markman hearings offer the court the opportunity to

question any expert or other witnesses offered (such as the inventor) on issues

related to the patent process and the technology. This enables the judge to gain

a better understanding of the claims as a whole and the meaning of the patent’s

terms from the perspective of a person “skilled in the relevant art.” The Federal

Circuit has cautioned, however, that such extrinsic evidence may not be used

for any purpose other than to assist the court in understanding the science and

what “one skilled in the art” would understand. Conversely, conducting a

Markman hearing may require the parties to produce their experts twice, both

dence is improper.”); ADC Telecomm., Inc. v. Siecor Corp., 954 F. Supp. 820, 831 (D. Del.

1997); Ekchian v. Home Depot, Inc., 104 F.3d 1299, 1302 (Fed. Cir. 1997). This “intrinsic” evidence has been held to include the language of the patent, its specifications, the prosecution

history, and the written description. See, e.g., Elkay Mfg. Co. v. Ebco Mfg. Co., 192 F.3d 973,

976–77 (Fed. Cir. 1999); NEC Corp. v. Hyundai Elecs. Indus. Co., 30 F. Supp. 2d 561, 565 (E.D.

Va. 1998) (court will look to claims, written description portion of the specification, and the

prosecution history in construing claim and resort to extrinsic evidence only where the intrinsic

evidence is insufficient to resolve ambiguities in the claim language). However, in Pitney Bowes,

Inc. v. Hewlett Packard Co., the Federal Circuit commented that there were circumstances where

the prohibition against consideration of Vitronics might properly be relaxed. 182 F.3d 1298, 1309

(Fed. Cir. 1999) (“[C]onsultation of extrinsic evidence is particularly appropriate to ensure that

[the judge’s] understanding of the technical aspects of the patent is not entirely at variance with

the understanding of one skilled in the art.”).

2136. See Pitney Bowes, 182 F.3d at 1308; ARG Indus., Inc. v. Cardinal IG Co., 239 F.3d

1239, 1249 (Fed. Cir. 2001) (noting times when “extrinsic evidence can and should be used to

inform a court’s claim construction” and trial court should have considered testimony offered

by scientific experts); see, e.g., Chad Indus., Inc. v. Automation Tooling Sys., Inc., 938 F. Supp.

601, 608 (C.D. Cal. 1996) (expert and inventor testimony as well as testimony of patent law expert); Eastman Kodak Co. v. Goodyear Tire & Rubber Co., 144 F.3d 1547, 1555 (Fed. Cir. 1997)

(expert testimony considered where language of claim remained ambiguous after looking at

intrinsic evidence); Genentech, Inc. v. Boehringer Mannheim GmbH, 989 F. Supp. 359, 363 (D.

Mass. 1999) (resorting to extrinsic evidence where claim terms were unclear); see also Schwartz,

supra note 2115, at 116–19 (discussing examples of extrinsic evidence) and cases cited therein.

2137. See, e.g., Bernhardt L.L.C. v. Collezione Europa USA, Inc., No. CIV. 1:01CV00957,

slip op. at 1 (M.D.N.C. May 30, 2003) (“Claim interpretation is a matter of law and is usually

accomplished with the assistance of a Markman hearing.”); S.S. White Burs, Inc. v. Neo-Flo,

Inc., No. CIV.A. 02-3656, slip op. at 1 (E.D. Pa. May 2, 2003) (stating claim construction “typically occurs following a ‘Markman hearing’”); Ill. Tool Works, Inc. v. Powers Fasteners, Inc., No.

01C7019, 2002 WL 1998300, at *2 (N.D. Ill. Aug. 28, 2002) (deciding “claim construction is

more properly left to a Markman hearing”). But see J.G. Peta, Inc. v. Club Protector, Inc., No.

02-1127, 1128, slip op. at 6 n.2 (Fed. Cir. 2003) (saying district courts not required to “conduct

evidentiary hearings as part of the claim construction process”).
§ 33.222 Manual for Complex Litigation, Fourth

606

at the hearing on claim construction and again at trial, thereby increasing litigation costs. The court should determine, based on the disputed claim terms

and the complexity of technology, whether a hearing is appropriate and what

type of evidence will aid the court in construing the claims.

In constructing procedural devices, two practical realities are likely to arise

at trial. First, no matter how well considered the court’s claim-construction

ruling, the parties are likely to “construe the construction”—i.e., disputes will

arise regarding the exact meaning of the court’s ruling. Second, the meaning of

a term previously thought to be undisputed may suddenly become disputed at

trial, perhaps because the term’s meaning was not considered to be significant

at the time of the Markman hearing. This typically occurs when both parties

initially agree that a term should be given its “usual meaning,” and the parties

then discover at trial that they disagree on the usual meaning of a previously

insignificant claim term.

33.222 Structuring the Markman Hearing

Claim construction hearings have “run the gamut from mid-trial sidebar

conferences that undergird relevance rulings . . . to virtual mini-trials extending over several days and generating extensive evidentiary records.”2138 The

length of the hearing, the evidence permitted, and the scope of the hearing are

all within the discretion of the trial court. Prior to holding a hearing, however,

consider requiring the parties to submit, in addition to any briefs, statements

setting forth each side’s proposed construction of the claims in dispute. Courts

have required parties to exchange proposed claim-construction statements that

include (1) any contentions regarding specialized meaning to be given claim

language; (2) a description of each element of the claim together with supporting specifications or material in the prosecution history; and (3) extrinsic

evidence that supports the parties’ proposed construction.

Parties also have been required to meet and confer in an effort to narrow

the issues and to prepare and submit a joint statement2139 that identifies (1) the

2138. MediaCom Corp. v. Rates Tech., Inc., 4 F. Supp. 2d 17, 21 (D. Mass. 1998) (citations

omitted). See also Schering Corp. v. Amgen, 25 F. Supp. 2d 293, 294 (D. Del. 1998) (one day);

Automation Tooling Sys., 938 F. Supp. at 604 (allocating two days to hearing, although only one

became necessary); Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 93 F.3d 1572, 1577 (Fed.

Cir. 1996) (five days); Loral Fairchild Corp. v. Victor Co. of Japan, Ltd., 906 F. Supp. 798, 802

(E.D.N.Y. 1995).

2139. See, e.g., N.D. Cal. Patent L.R. 3-1 (2002); see also Genentech, Inc. v. Amgen, Inc., 289

F.3d 761 (Fed. Cir. 2002) (district court did not abuse discretion in precluding Genentech from

amending its claim chart to include theory of infringement under doctrine of equivalents in light

of local rule); Precision Shooting Equip., Inc. v. High Country Archery, 1 F. Supp. 2d 1041, 1042

(D. Ariz. 1998) (stating that Northern District of California’s local rules “promote judicial effi-
Intellectual Property § 33.223

607

construction of the claims and terms to which the parties agree; (2) each side’s

construction of disputed claims and terms; (3) each side’s rebuttal to the proposed construction submitted by the opposing party; and (4) each proposed

witness at the claim-construction hearing together with a description of the

witness’s testimony.2140 These procedures apprise the judge of those portions of

the patent actually in dispute, helping the judge understand the relevant technology and determine the need, if any, for tutorials or the assistance of courtappointed experts prior to the hearing.2141 These procedures also force the parties to state definitively their competing positions, thereby avoiding the “shifting sands”2142 approach to claim construction.

33.223 Timing the Markman Hearing

Timing is one of the more problematic issues. Claim construction involves

interpreting the words of the claim from the perspective of one skilled in the

art, construed in light of the patent documents and the prosecution history.2143

Theoretically, claim construction can occur at virtually any point in the case:

prior to discovery, pursuant to motions for summary judgment,2144 or following the close of evidence at trial.2145 Nevertheless, the timing of the Markman

hearing can significantly affect the pretrial proceedings. Several courts and

commentators agree that early Markman hearings are preferable to delaying

claim construction until after the evidence has been heard at trial.2146 Although

ciency by presenting to the Court clearly delineated disputes of claim construction and clearly

defined issues of infringement and validity prior to any Markman hearing or trial”).

2140. Precision Shooting Equip., 1 F. Supp. 2d at 1042–43 (using local rules adopted by the

Northern District of California as guide); Pioneer Hi-Bred Int’l, Inc. v. Seed Co., No. CIV. 4-98-

CV-90577, 90578, 2000 WL 33363188, at *4 (S.D. La. May 5, 2000) (adopting structure of

Northern District of California’s local rules); Automation Tooling Sys., 938 F. Supp. at 604 (parties submitted statement of issues, exhibit list, and expected testimony).

2141. See, e.g., Biovail Corp. Int’l v. Andrx Pharms., Inc., 239 F.3d 1297, 1301 (Fed. Cir.

2001) (noting it was unnecessary to construe claim terms that were not relevant to the outcome

of the case).

2142. LG Elecs. Inc. v. Q-Lity Computer Inc., 211 F.R.D. 360, 367 (N.D. Cal. 2002) (citing

Atmel Corp. v. Info. Storage Devices, Inc., No. C. 95-1987, 1998 WL 775115, at *3 (N.D. Cal.

Nov. 5, 1998)).

2143. Schwartz, supra note 2115, at 101–02 (“Claim construction ‘begins and ends’ with

the actual words of the claims.”).

2144. MediaCom, 4 F. Supp. 2d at 22.

2145. See Sofamor Danek Group Inc. v. DePuy-Motech Inc., 74 F.3d 1216 (Fed. Cir. 1996).

2146. MediaCom, 4 F. Supp. 2d at 22 (“Questions regarding the construction of patents can

now safely be addressed in many circumstances prior to the completion of fact discovery, and

certainly before trial.”); MacNeill Eng’g Co. v. Trisport, Ltd., 126 F. Supp. 2d 51, 54 (D. Mass.

2001) (“It has now become generally accepted that . . . the best time to hold a Markman hearing
§ 33.223 Manual for Complex Litigation, Fourth

608

construing the claim after trial will permit the judge to hear all of the evidence

in the case, and thereby better understand the background of the patent and

any prior art,2147 there are several disadvantages:

• causing delay in submitting the case to the jury while the claim is being

construed, thereby making the evidence less fresh;2148

• requiring the jury to disregard evidence and testimony relating to alternative claim interpretations;2149 and

• forcing the parties to try the case presenting alternative claim constructions—parties will not likely base their case on a claim construction that has yet to be determined.

Holding Markman hearings prior to trial allows the court and the parties to

narrow the issues and, in some cases, provides an opportunity to focus discovery.2150 Early claim construction may also facilitate settlement and may permit

resolution, either in whole or in part, through dispositive motions, thereby

reducing litigation costs.2151 More importantly, once aware of the interpretation being given to the patent, the parties can plan their cases accordingly,

is at the summary judgment stage of the litigation . . . .”); Loral Fairchild Corp. v. Victor Co. of

Japan, Ltd., 906 F. Supp. 798 (E.D.N.Y. 1995). “With most aspects of the trial hinging on [claim

construction]—‘now strictly a question of law of the court’—a conservative court will generally

endeavor to make this ruling before trial . . . As in this case, this proceeding to assist the court in

ascertaining the law is likely to occur after discovery in which the parties have exchanged information relevant to their understanding of the claims.” Loral Fairchild Corp. v. Victor Co. of

Japan, Ltd., 911 F. Supp. 76, 79 (E.D.N.Y. 1996); see also Mark L. Austrian & Shaun Mohler,

Timing is Everything in Patent Litigation—Fulfilling the Purpose of Markman, 9 Fed. Cir. B.J. 227

(1999).

2147. Lee & Krug, supra note 2131, at 75; see also York Prods., Inc. v. Cent. Tractor Farm &

Family Ctr., 99 F.3d 1568, 1571 (Fed. Cir. 1996) (claims construction after trial before jury instructed); Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1580 (Fed. Cir. 1996) (noting

district court delayed construing claim until all evidence was heard at trial).

2148. Lee & Krug, supra note 2131, at 75–76; see also Thorn EMI N. Am., Inc. v. Intel

Corp., 936 F. Supp. 1186, 1189 (D. Del. 1996) (ruling on claims construction immediately before

trial and dismissing jury pending resolution of summary judgment motion sought upon issuance of ruling).

2149. Lee & Krug, supra note 2131, at 77.

2150. See MediaCom Corp. v. Rates Tech, Inc., 4 F. Supp. 2d 17, 22 (D. Mass. 1998).

2151. MacNeill Eng’g Co. v. Trisport Ltd., 126 F. Supp. 2d 51, 52 (D. Mass. 2001) (noting

Markman hearings “now required as a practical matter in virtually every patent case before serious settlement negotiations take place”). However, some commentators argue that Markman

hampers settlement and prolongs the litigation because of the large percentage of reversals on

appeal, leading to intransigence by defendants losing on the issue of claim construction and

forcing trial in order to have another opportunity at the appellate level. Lee & Krug, supra note

2131, at 69–70.
Intellectual Property § 33.223

609

eliminating the need to propose alternative claim constructions to the jury and

reducing the expense and complexity of the trial.2152

A number of scheduling options are available within the various pretrial

phases, such as holding the hearing before discovery, after expert discovery but

before concluding fact discovery, or after all discovery. There are advantages

and disadvantages to each. In most cases, the optimal time for a Markman

hearing will depend on the court’s assessment of which approach will best

utilize judicial resources in the specific case before it.2153 Construing claims at

the close of discovery is advisable if the parties have all relevant and necessary

information to articulate the issues or terms in dispute; parties must also be

able to provide the court with a full factual background within which to construe the claim.2154 In addition, should the case settle during discovery or as a

result of information developed during discovery, a potentially lengthy and

expensive hearing can be avoided.

One option is to permit the parties initially to conduct limited discovery,

including that of experts, only on issues relevant to claim construction. The

burden would be on the parties to conduct sufficient discovery to reveal all

relevant information not considered during the prosecution of the patent that

may affect the interpretation of the claim, as well as information bearing on

which claims are important to resolution of the dispute. The parties would also

have the burden of assisting the judge in understanding the technology and

technical language, through the use of tutorials or by consenting to a special

master or neutral expert. Once the claims have been construed, general discovery can proceed on the remaining issues, including questions related to validity, infringement, and other matters.

It is often difficult, however, to attempt to separate the discovery needed

for claim construction from fact discovery in general, and attempts to do so

can increase the number of discovery disputes. It may be advisable, therefore,

for the court to focus on the timing of the Markman hearing and allow the

2152. Austrian & Mohler, supra note 2146, at 228 (“Pretrial discovery, the selection of experts, and the content of their testimony on the issues of validity and infringement will depend

almost entirely on claim construction.”). However, the claim construction may be subject to

modification following trial and prior to the submission to the jury, where the court concludes

after listening to all the evidence presented, and considering the claim in context, that its previous construction was erroneous. See MacNeill Eng’g Co., 126 F. Supp. 2d at 57 (claim construction done during resolution of summary-judgment motions remained open to clarification or

modification for jury at trial).

2153. See, e.g., Toter, Inc. v. City of Visalia, No. CVF96-6234, 1997 WL 715459, at *3 (E.D.

Cal. July 14, 1997) (court finding that in case before it, “an early Markman hearing would not

promote the interest of judicial economy”).

2154. Id. at *2–3.
§ 33.224 Manual for Complex Litigation, Fourth

610

parties to proceed with fact and expert discovery in accordance with the set

schedule, so long as there is sufficient time for necessary discovery to be completed prior to the Markman hearing.

33.224 Requesting a Markman Hearing

Inextricably tied to the question of when a Markman hearing should be

held is the court’s determination of how counsel should raise the issue procedurally. Some judges have incorporated dates for hearings in early scheduling

orders or resorted to the promulgated local rules to address claim construction

issues, including timing.2155 Others have addressed claim construction upon

motion by the parties, such as a motion for claim construction or for a Markman hearing, or alternatively within the context of summary-judgment motions.2156 The advantage of claim construction in the context of a motion for

summary judgment is that only those elements of the claims that are truly in

dispute will be presented for construction. Claim construction can also arise in

the context of motions for injunctive relief, although the patent need not be

definitively construed in such instances.2157 When construing claims in conjunction with dispositive motions, however, it is important to separate the

question of claim construction from other legal issues in the case. One judge

noted the need not to conflate “the legal explication required by Markman

2155. See, e.g., Ill. Tool Works, Inc. v. Powers Fasteners, Inc., No. 01C7019, 2002 WL

1160087, at *1 (N.D. Ill. May 23, 2002) (scheduling order). See generally N.D. Cal. Patent L.R.

(2002) for examples of local rules governing claim construction.

2156. See, e.g., Precision Shooting Equip., Inc. v. High Country Archery, 1 F. Supp. 2d

1041, 1042 (D. Ariz. 1998) (motion filed by defendant seeking a Markman hearing); Toter, 1997

WL 715459, at *1 (defendant moved for Markman hearing pursuant to Fed. R. Civ. P. 42 or the

Markman decision); Ahlstrom Mach., Inc. v. Clement, 13 F. Supp. 2d 45, 46 (D.D.C. 1998)

(hearing argument supporting claim construction during hearing on motion for summary

judgment); MediaCom, 4 F. Supp. 2d at 22 (concluding claim construction should take place

within conventional motion practice and that “[f]ree-standing Markman hearings are of little

use in actual litigation”); Schwartz, supra note 2115, at 121 (“The claim construction ruling can

be made in a number of different contexts, including the resolution of (1) a motion for preliminary injunction, (2) a motion for summary judgment . . . , (3) a motion for judgment as a matter

of law, or (4) requests for jury instructions.”) (footnotes omitted). Those courts favoring early

Markman hearings generally have held them at the close of discovery or used summary judgment as the procedural vehicle through which the claims were construed. But see Control Res.,

Inc. v. Delta Elecs., Inc., 133 F. Supp. 2d 121, 126 (D. Mass. 2001) (conducting Markman hearing “prior to and entirely independently of the summary judgment hearing”).

2157. See, e.g., Int’l Communication Material, Inc. v. Ricoh Co., 108 F.3d 316, 318 (Fed.

Cir. 1997); Sofamor Danek Group, Inc. v. DePuy-Motech, Inc., 74 F.3d 1216, 1221 (Fed. Cir.

1996) (“Markman does not obligate the trial court to conclusively interpret claims at an early

stage in the case.”).
Intellectual Property § 33.23

611

with the fact finding that the Seventh Amendment ultimately reserves for the

American jury.”2158

33.225 Appeal

Markman implicates case management beyond when or how to conduct a

hearing. One significant implication stems from the de novo standard of review applied on appeal to the court’s interpretation of the patent claim.2159 The

Federal Circuit has reversed a significant number of claim constructions since

Markman.

2160 The parties can be assured of the certainty of the claim interpretation only after proceeding from the Markman hearing through discovery,

trial, and posttrial motions to the Federal Circuit.2161 Reversal of the district

court’s claim construction may result in a new trial, efforts to reopen discovery

and revise expert reports, and efforts by the parties to change their theory of

infringement.2162 The impact on judicial time and resources can be substantial.

Although interlocutory appeal of the court’s claim construction is theoretically

available, the Federal Circuit has been disinclined to grant such petitions. Another alternative is to submit claim construction issues to the jury through

special verdicts or interrogatories for an “advisory determination,” which the

court can either accept or reject.2163 As discussed in section 33.223, however,

delaying claim construction until after the trial can carry several disadvantages.

33.23 Defining the Issues in Patent Litigation

Patent cases often involve only one party, or a few interrelated parties, on

each side of a case, but can involve more than one patent or claim and multiple

allegedly infringing products, and can also include antitrust claims and con2158. Control Res., 133 F. Supp. 2d at 126 (quoting Amgen, Inc. v. Hoescht Marion Roussel, Inc., 126 F. Supp. 2d 69, 80 (D. Mass. 2001)).

2159. Although the issue of what standard of review applied on appeal was not addressed

by the Supreme Court in Markman, the Federal Circuit in the appellate opinion held that the

standard of review was de novo.

2160. Cybor Corp. v. FAS Tech., Inc., 138 F.3d 1448, 1476 n.4 (Fed. Cir. 1998) (Rader, J.,

dissenting and concurring) (noting Federal Circuit’s rate of reversal of claim interpretations was

high, reversing 53% of cases in whole or in part, and citing study reporting 40% rate of reversal

of claim interpretations by Federal Circuit).

2161. Id. at 1476.

2162. See, e.g., Cybor Corp., 138 F.3d at 1475 n.2.

2163. Laitram Corp. v. NEC Corp., 62 F.3d 1388, 1394 (Fed. Cir. 1995) (treating jury’s

decision on issue of claim construction, submitted by way of special interrogatories, as an advisory determination and finding that jury’s interpretation of claim was correct). See Fed. R. Civ.

P. 39(c) (West 2003).
§ 33.23 Manual for Complex Litigation, Fourth

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sumer class actions. The technical nature of the subject matter further complicates the action. Litigation over a patent or a series of related patents sometimes proliferates and leads to multiforum federal litigation requiring coordination through MDL proceedings, the imposition of stays on redundant actions, or informal cooperative arrangements. Discovery delays can be lengthy

without court management. Some of the obstacles in managing patent litigation can be avoided through consideration of the following issues before or at

the initial pretrial conference:

• Is there any related litigation pending in other federal courts that

would warrant transfer, dismissal, consolidation, or a stay of proceedings? In many cases, the owner of the patent has filed infringement suits against other defendants in other jurisdictions, or is defending challenges to the validity of the patent elsewhere. Piecemeal

litigation in patent cases generally is disfavored.2164 The initial casemanagement order should direct counsel to identify other cases relating to infringement of the patent, their status, and the judges to whom

they are assigned. Consolidation often is warranted where more than

one action involving or related to the patent is pending before the

same court.2165 The judge should review the cases to determine common questions of law,2166 and also to ascertain whether to exercise the

court’s discretion to transfer pursuant to section 1404(a)2167 or

whether Judicial Panel on Multidistrict Litigation transfer is appropriate under 28 U.S.C. § 1407 for centralized pretrial proceedings. The

MDL panel may decline to order such transfers, however, on the

ground that coordination can be achieved through the cooperative

efforts of the affected courts and counsel. Often the real parties in interest and the attorneys are the same, or at least related, in all of the

cases.

The court also has the discretion to dismiss the case in favor of

litigation pending in another jurisdiction “for reasons of wise judicial

2164. Smiths Indus. Med. Sys., Inc. v. Ballard Med. Prods., Inc., 728 F. Supp. 6, 7 (D.D.C.

1989) (“Piecemeal litigation in the complex and technical area of patent and trademark law is

especially undesirable. Rather, all of the parties’ related patent and trademark infringement

claims should be decided in the same court.”).

2165. See, e.g., Biochem Pharma, Inc. v. Emory Univ., 148 F. Supp. 2d 11, 12 (D.D.C. 2001)

(separate actions filed in same court by both plaintiff and defendants challenging decision of

Patent Appeal Board would be consolidated and then transferred).

2166. Fed. R. Civ. P. 42(a) (West 2003).

2167. See Biochem Pharma, 148 F. Supp. 2d at 13 (D.D.C. 2001) (transferring case to Georgia where “first-filed, well-advanced, related patent infringement action involving the same patent” was pending).
Intellectual Property § 33.23

613

administration.”2168 The general rule is that the first-filed suit will proceed while other pending litigation is dismissed or stayed.2169 In some

instances (such as where the identity of the parties is not the same or

jurisdiction is unavailable over all necessary parties), the priority rule

is not followed and other considerations take precedence.2170 Related

proceedings also may be pending before the Patent and Trademark

Office, and a stay may be warranted while those proceedings are resolved.2171

• Have there been any past decisions by other courts involving the same

patent? A final decision holding the patent invalid will preclude further

efforts to enforce the patent against others, provided the patentee “had

a full and fair chance to litigate” its validity2172 and regardless of any

earlier decisions upholding the patent.2173 In such circumstances, however, the patentee must have the opportunity to demonstrate under

the factors outlined in Blonder-Tongue Laboratories v. University of Illinois Foundation2174 that “in justice and equity”2175 it should not be

2168. Schnadig Corp. v. Collezione Europa U.S.A., No. 01C1697, 2001 WL 766898, at *1

(N.D. Ill. July 5, 2001); see also Abbott Labs. v. Selfcare, Inc., No. 98C7102, 1999 WL 162805, at

*2 (N.D. Ill. 1999) (granting motion to transfer to district where related action pending).

2169. See, e.g., Amersham Pharmacia Biotech, Inc. v. Perkin-Elmer Corp., 190 F.R.D. 644,

645 n.1 (N.D. Cal. 2000) (noting case had been stayed for six months pending resolution of arbitration demand in related litigation).

2170. Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 938 (Fed. Cir. 1993) (“There must,

however, be sound reason that would make it unjust or inefficient to continue the first-filed

action. Such reason may be the convenience and availability of witnesses, or absence of jurisdiction over all necessary or desirable parties, or the possibility of consolidation with related litigation, or considerations relating to the real party in interest.”); see also Kahn v. Gen. Motors

Corp., 889 F.2d 1078, 1081–83 (Fed. Cir. 1989) (discussing exceptions to first-filed rule); William Gluckin & Co. v. Int’l Playtex, 407 F.2d 177, 178 (2d Cir. 1969) (priority given to secondfiled suit where defendant in first suit was customer and balance favored letting second suit proceed); Schnadig, 2001 WL 766898, at *1–2 (denying motion to transfer and staying action pending resolution of motion to dismiss for lack of jurisdiction and to transfer in related action filed

in another jurisdiction).

2171. Reexamination and reissues are proceedings where stays may be sought pending

resolution of the PTO proceedings.

2172. Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 333 (1971).

2173. Miss. Chem. Corp. v. Swift Agric. Chems. Corp., 717 F.2d 1374, 1378 (Fed. Cir.

1983). Although a finding of validity does not preclude subsequent challenges to the patent, it is

entitled to some weight. The rationale behind the rule that a single finding of invalidity is fatal to

the patent but a finding upholding the patent does not rule the patent valid as against all others,

is that although one challenger may be unable to introduce clear evidence of invalidity, another

challenger may be able to do so.

2174. 402 U.S. 313, 334 (1971).
§ 33.23 Manual for Complex Litigation, Fourth

614

collaterally estopped by the adverse decision. On the other hand, a decision upholding the validity of the patent will not bar a new defendant from attacking the patent, and such a decision is not necessarily

binding even on the same court under the doctrine of stare decisis.

• Are there multiple patents or claims at issue in the case, and has the

plaintiff identified all of the defendant’s allegedly infringing products or

processes? Cases involving multiple patents, each with multiple claims,

can be a source of confusion, resulting in unduly lengthened and expanded pretrial and trial proceedings. Consider encouraging the parties to agree to proceed on a limited number of representative claims

and disputed models, so that findings regarding infringement on the

representative claims will apply to all claims.2176 This may simplify the

action and reduce jury confusion.

• Is venue appropriate? Section 1400(b) of Title 28 of the U.S. Code governs venue determinations in patent infringement cases. A corporate

defendant “is said to reside in any judicial district in which it is subject

to personal jurisdiction at the time the action is commenced.”2177

Thus, in many cases the determination of proper venue and personal

jurisdiction coalesce into a single inquiry.2178 In cases involving multiple defendants, venue must be proper as to each defendant.2179 Venue

relating to other causes of action involving a patent are subject to the

general venue statute.2180

• Is the case subject to arbitration? Section 294 of Title 35 provides for

voluntary arbitration in patent cases. Agreements to arbitrate must be

in writing and usually will be found in license agreements or technology transfer agreements. Issues that can arise include choice of law

provisions, whether any arbitration award will be res judicata as to issues that were or could have been raised in arbitration, and whether

2175. Id.

2176. See, e.g., Thomson, S.A. v. Quixote Corp., 166 F.3d 1172, 1173 (Fed. Cir. 1999) (parties agreed to base outcome of trial on three representative claims); Renishaw PLC v. Marposs

Societa’ Per Azioni, 974 F. Supp. 1056, 1061 (E.D. Mich. 1997) (parties agreed to try case on

basis of representative claims, and resolution of those claims would “constitute a final resolution

of all the asserted patents as if the case had been tried without representative claims”). See also

James M. Amend, Patent Law: A Primer for Federal District Court Judges 21–22 (1998).

2177. 28 U.S.C. § 1391(c) (West 2003).

2178. See, e.g., VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed.

Cir. 1990); Cook Group, Inc. v. Purdue Res. Found., No. IP02-0406-C-M/S, 2002 WL 1610951,

at *1, 2 (S.D. Ind. June 24, 2002).

2179. Cook Group, 2002 WL 1610951, at *2 n.1.

2180. 28 U.S.C. § 1391 (West 2003).
Intellectual Property § 33.23

615

collateral estoppel will apply (although section 294 may limit any preclusive effect against nonparties).

• Is there a need for judicial education? The judge often will need some

general explanation of the substance and terminology of the science or

technology addressed by the patent before dealing with the issues in

the case or developing a plan for discovery and trial. Some judges ask

counsel to provide a concise and objective overview—orally, in writing, or on tape or CD—of these technical matters, including a definition of key terms and concepts, at or before the initial conference. To

encourage candor, consider directing that these statements not bind

the parties and not be used later in the proceedings. Increasingly,

judges are seeking additional pretrial briefing on relevant technological or scientific issues.2181 Although experts will address those issues in

their trial testimony, the court may find it more helpful to learn the

fundamentals—the vocabulary and general intellectual framework of

the subject matter—in a setting with less immediate time constraints

in order to deal more intelligently with issues during the trial. Requesting that tutorials be videotaped will allow the court to review the

technology behind the patent as often as necessary over the course of

the litigation.

• Is referral to a magistrate judge, special master, or court-appointed expert

warranted? Use of a magistrate judge or court-appointed expert may

be warranted in handling discovery in patent cases or in assisting the

judge in understanding the technology involved.2182 Courts also have

appointed special masters, with technological expertise in the area, to

provide a report and recommendation on technical issues or claim

construction in patent cases.2183

2181. See, e.g., Affymetrix, Inc. v. Hyseq, Inc., 132 F. Supp. 2d 1212, 1216 (N.D. Cal. 2001)

(tutorial and hearing to assist in claims construction); Xilinx, Inc. v Altera Corp., No. 93-

20409SW, 1997 WL 581426, at *1 (N.D. Cal. 1997) (scheduling order issued by court included

dates for tutorial and claim-construction hearing).

2182. See, e.g., TechSearch, L.L.C. v. Intel Corp., 286 F.3d 1360, 1368 (Fed. Cir. 2002)

(technical advisor); In re Omerprazole Patent Litig., No. MDL 1291, 2001 WL 394843, at *1

(S.D.N.Y. May 18, 2001) (referral to special master for scheduling discovery and protective orders).

2183. See, e.g., Festo Corp v. Soketasu Kinsoku Kogyo Kabushiki Co., 72 F.3d 857, 865

(Fed. Cir. 1995) (noting district court found case “sufficiently complicated to be referred to a

special master for hearing and recommendations on the issues of patent validity and infringement”), vacated on other grounds, 520 U.S. 1111 (1997); Rohm & Haas Co. v. Lonza Inc., 997 F.

Supp. 635, 638 n.1 (E.D. Pa. 1998) (retaining independent expert to act as technical adviser to
§ 33.23 Manual for Complex Litigation, Fourth

616

• Has the plaintiff alleged willful infringement or is the defendant claiming

inequitable conduct? Whether the defendant engaged in willful infringement is an issue for the jury, while issues relating to the plaintiff’s inequitable conduct usually require a separate bench trial. Assertions of the defendant’s willful infringement or of the patentee’s inequitable conduct or fraud on the PTO2184 may further complicate discovery and trial by opening the door to discovery into matters otherwise protected by attorney–client privilege. Where these assertions

have substance, discovery into matters normally protected by attorney–client privilege may be warranted and can undermine the effectiveness of litigation counsel.2185 Relevant issues include whether litigation counsel was involved in the prosecution of the patent before the

PTO or provided pre-litigation advice regarding validity in cases

where the patentee is alleged to have acted with unclean hands. A

willful infringement claim may require inquiry into whether the defendant continued to market a product after notice of a patent, and

whether the defendant received advice of counsel.2186

• Should the case be bifurcated? Consider whether to bifurcate, or even

trifurcate, issues for purposes of discovery and for trial. Federal Rule of

Civil Procedure 42(b) states “[t]he 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 issue

. . . .” Bifurcation is appropriate where determination of one issue

could wholly eliminate the need to try another complicated or timeconsuming issue, where used to negate prejudice to a party, and where

the need to examine the same witnesses in both phases of the sepacourt); Xilinx, 1997 WL 581426, at *1 (appointing independent technical advisor to assist in

understanding the relevant technology).

2184. An assertion that the patentee acted with unclean hands, which is typically based on

an alleged misrepresentation or failure to disclose pertinent prior art or test results, merits attention by the court. Fraud may be asserted not only as a defense to the infringement claim, but

also as part of the foundation for an antitrust counterclaim. See Walker Process Equip., Inc. v.

Food Mach. & Chem. Corp., 382 U.S. 172, 173–74 (1965).

2185. See, e.g., Clintec Nutrition Co. v. Baxa Corp., No. 94C7050, 1998 WL 560284, at *4, 5

(N.D. Ill. Aug. 26, 1998) (granting protective order preventing defendant from calling plaintiff’s

lead trial counsel in proving willful infringement where other witnesses could testify to the

meeting at issue).

2186. Fromson v. W. Litho Plate & Supply Co., 853 F.2d 1568, 1572–73 (Fed. Cir. 1988);

Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389–90 (Fed. Cir. 1983).
Intellectual Property § 33.23

617

rated trial would be minimal.2187 The most common type of bifurcation in patent cases involves separating issues of liability from damages. In many patent cases, severing damages from other issues will

simplify the fact-finder’s task.2188 Bifurcation of the damages issue may

be particularly appropriate where multiple patents are involved.2189

Issues of willfulness2190 or equitable defenses2191 are potential candidates for bifurcation,2192 and separating antitrust counterclaims also is

common. Deferral of claims asserting unfair competition or antitrust

until resolution of the patent issues frequently results in the claims’

voluntary dismissal or settlement. In determining whether bifurcation

is appropriate, the judge in THK America Inc. v. NSK Co.2193 cited these

2187. HCC, Inc. v. R H & M Mach. Co., No. 96 CIV. 4920, 1998 WL 849417, at *1

(S.D.N.Y. Dec. 4, 1998) (finding that bifurcation of liability and damages in case before it would

result in duplicative testimony and would be inefficient) (citations omitted).

2188. See, e.g., Pioneer Hi-Bred Int’l, Inc. v. Asgrow Seed Co., No. CIV. 4-98-CV-90577,

90578, 2000 WL 33363188, at *3 (S.D. La. May 5, 2000) (concluding the bifurcation of patent

and nonpatent issues was not appropriate “due to the complexity of, and inter-relationship

among, the issues,” but finding bifurcation of liability and damages warranted). Trifurcation of

the statutory issues, equitable defenses, and damages may be advisable. But see T.S. Ellis, Judicial

Management of Patent Litigation in the United States: Expected Procedures and Their Effects, 9 Fed.

Cir. B.J. 541, 545 n.11 (2000) (commenting that “[i]n my experience, more often than not, bifurcating the liability and damages issues in the typical patent case does not result in the speedy

and efficient resolution of the entire case”).

2189. See Ellis, supra note 2188, at 545 n.11 (“In such cases bifurcation can lead to a more

expeditious and efficient resolution of the case, especially where there are substantial validity and

infringement issues and damages proof may vary depending on which, and how many, of a

group of patents are held valid and infringed.”).

2190. The Federal Circuit has recommended that the willfulness issue be bifurcated for

later trial to avoid unfairness. See, e.g., Quantum Corp. v. Tandon Corp., 940 F.2d 642, 643–44

(Fed. Cir. 1991). But see Belmont Textile Mach. Co. v. Superba, S.A., 48 F. Supp. 2d 521, 526

(W.D.N.C. 1999) (stating that bifurcation of trial on issues of willfulness and liability “would

cause greater delay and might complicate the proceedings by creating a piecemeal quality to the

trial, making it harder for the trier of fact to see the case as a whole”).

2191. See, e.g., Herman v. William Brooks Shoe Co., No. 95 CIV. 1324, 1998 WL 832609, at

*1 (S.D.N.Y. Dec. 1, 1998) (granting motion to reconsider prior order bifurcating trial on issue

of inequitable conduct from trial on issue of validity and infringement).

2192. See, e.g., In re Recombinant DNA Tech. Patent & Contract Litig., 850 F. Supp. 769

(S.D. Ind. 1993, 1994) (bifurcation of liability and damages warranted where case involved “extremely complicated technology” in both patent and genetics); Lemelson v. Apple Computer,

Inc., 28 U.S.P.Q.2d (BNA) 1412, 1421–24 (D. Nev. June 3, 1993); THK Am., Inc. v. NSK Co.,

151 F.R.D. 625, 632–34 (N.D. Ill. 1993) (affirming magistrate order denying bifurcation, and

noting defendant’s motion seeking bifurcation with two separate trials and two discovery periods was too broad and bifurcation would be costly and duplicative).

2193. 151 F.R.D. 625 (N.D. Ill. 1993).
§ 33.23 Manual for Complex Litigation, Fourth

618

factors as relevant: “(1) convenience; (2) prejudice; (3) expedi-tion;

(4) economy; (5) whether the issues sought to be tried separately are

significantly different; (6) whether they are triable by jury or the court;

(7) whether discovery has been directed to a single trial of all issues;

(8) whether the evidence required for each issue is substantially different; (9) whether one party would gain some unfair advantage from

separate trials; (10) whether a single trial of all issues would create the

potential for jury bias or confusion; and (11) whether bifurcation

would enhance or reduce the possibility of a pretrial settlement.”2194

Complaints in patent infringement usually consist of broadly drafted, generalized claims of infringement sufficient to satisfy Federal Rule of Civil Procedure 8, but are otherwise of little assistance to the court or the parties. Rule

9(b) governs allegations of fraud and may afford a basis for early dismissal of

inadequately pleaded fraud claims. Although an adequate basis for these allegations may exist for purposes of Rule 11, many may prove to be without

merit. In addition, answers tend to be pleaded generally—for example, by alleging noninfringement and invalidity without specifying more than the applicable statutory section. In many cases, defendants probably cannot provide an

answer in substantial detail if the lawsuit is the first notice regarding alleged

infringement of the patent. As a preliminary matter, the defendant will need to

order the file history for the patent from the PTO, which often takes several

weeks even if a request is made to expedite handling. The defendant also will

need to search for prior art, which, depending on the technology, may take

months of diligent searching.

Of course, the nature of a patent infringement claim or invalidity defense

encourages strategies to delay producing information through discovery or

otherwise until the opposing side has disclosed the basis for its claims, contributing to lengthy delays and high costs. One approach is to require the parties to

submit detailed statements of their claims and defenses early in the litigation,

either at the outset of the case, as part of a discovery scheduling order, or,

where the accused product is unavailable or otherwise not subject to examination, following limited discovery.2195 The plaintiff’s statement is generally expected to contain a detailed explanation of the infringement contentions, perhaps through an element-by-element claims chart for each infringement claim

asserted. The claims chart’s purpose is to specify how each element of a claim is

present in or “reads on” the allegedly infringing product or process. The de2194. Id. at 632.

2195. See, e.g., N.D. Cal. Patent L.R. 3.1 (2002) (Disclosure of Asserted Claims and Preliminary Infringement Conditions).
Intellectual Property § 33.24

619

fendant similarly would be required to respond in a corresponding level of

detail, including disclosures of all prior art relied upon to support challenges to

the patent’s validity.2196 Because claims of infringement and validity are closely

intertwined, the parties may seek to avoid disclosures, or they may provide

disclosures that lack sufficient detail. “First, the plaintiff does not want to be

pinned down to a claim construction until it knows what prior art exists . . .

[T]he defendant does not want to disclose the prior art it knows of, or its contentions as to how this art invalidates the claims asserted against it, until after

plaintiff announces its claim construction.”2197 Accordingly, the court should

scrutinize actions by the parties that are designed to delay disclosures (such as

requests for additional discovery); the court should also balance the competing

interests in setting disclosure dates.

With judicial encouragement, counsel may be willing to drop marginal

claims or defenses at the time of the initial conference, or at least agree that

discovery on those issues should be deferred. Consider at the initial pretrial

conference whether multi-staged discovery is appropriate, and then set a discovery schedule that affords sufficient time at each stage to permit the parties

to obtain factual support for their claims. Depending on how discovery is

structured, it may be helpful to set a date at the initial conference by which

time the defendant will be required to state those defenses it expects to litigate.

The court might also require disclosure of all prior art that the defendant will

use to challenge the patent. Under 35 U.S.C. § 282, disclosure of prior art must

be made “at least thirty days before the trial.” In order to permit adequate time

for trial preparation, however, generally it is wise to fix an earlier deadline.

33.24 Injunctive Relief

Intellectual property cases often are candidates for requests for injunctive

relief.2198 Preliminary injunctive relief in patent cases protects the value of the

statutory right to exclude, which cannot always be compensated through

money damages.2199 Under the traditional test, followed by the Federal Circuit,2200 a plaintiff seeking a preliminary injunction must demonstrate that

2196. Id. at 3.3.

2197. Amend, supra note 2176, at 19.

2198. 35 U.S.C. § 283 (2000) authorizes injunctive relief in patent cases.

2199. See, e.g., Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1456–57 (Fed. Cir. 1988)

(“[B]ecause the principal value of the patent is its statutory right to exclude, the nature of the

patent grant weighs against holding that monetary damages will always suffice to make the patentee whole.”).

2200. See, e.g., High Tech. Med. Instrumentation Inc. v. New Image Indus., Inc., 49 F.3d

1551 (Fed. Cir. 1995).
§ 33.24 Manual for Complex Litigation, Fourth

620

(1) it will suffer irreparable injury absent the injunction, (2) its injury will

outweigh the harm imposed upon the defendant if the injunction is granted,2201

(3) it is likely to succeed on the merits of the case,2202 and (4) issuance of an

injunction will not adversely affect the public interest. This four-factor test applies to temporary restraining orders as well. To carry its burden of proving a

likelihood of success at trial, the plaintiff must show that the patent is valid2203

and that it has been infringed. A showing of reasonable likelihood of success

and irreparable injury are crucial factors supporting issuance of an injunction

in patent cases. Failure to meet either will result in an injunction’s denial regardless of findings on the remaining factors,2204 although the court must consider all four factors in granting an injunction.2205 The Federal Circuit has held,

however, that where the defendant raises a “substantial question of invalidity,”

the plaintiff has not met its burden on the validity of the patent and a preliminary injunction will be denied.2206 In addition, although irreparable injury will

be presumed upon “a strong showing of likelihood of success on the merits

coupled with continuing infringement,”2207 this presumption can be rebutted

2201. See, e.g., A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001)

(“Any destruction of Napster, Inc. by a preliminary injunction is speculative compared to the

statistical evidence of massive, unauthorized downloading and uploading of plaintiffs’ copyrighted works—as many as 10,000 files per second by defendant’s own admission.”).

2202. Schwartz, supra note 2115, at 173 (“[A] patent owner will show a reasonable likelihood of success on the merits if, in light of the presumptions and burdens that apply during

trial, the patent owner clearly shows that (a) it will likely prove infringement and (b) its claim

will likely withstand a challenge to the validity and enforceability of the patent . . . .”). As part of

their burden of showing a likelihood of success on the merits, plaintiffs must show the likelihood

that they will prevail against any affirmative defenses. See, e.g., Dr. Seuss Enters. v. Penguin

Books USA, 924 F. Supp. 1559, 1562 (S.D. Cal. 1996) (“The plaintiff’s burden of showing a likelihood of success on the merits includes the burden of showing a likelihood that it would prevail

against any affirmative defenses raised by the defendant.” (copyright/trademark case)), aff’d, 109

F.3d 1394 (9th Cir. 1997).

2203. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1359 (Fed. Cir. 2001)

(“The patentee must, however, present a clear case supporting the validity of the patent in suit

. . . Such a case might be supported, for example, by showing that the patent in suit had successfully withstood previous validity challenges in other proceedings. Further support for such a

clear case might come from a long period of industry acquiescence in the patent’s validity.”)

(citation omitted).

2204. Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1556 (Fed. Cir. 1994).

2205. Id. at 1556 (Fed. Cir. 1994) (“a district court must consider all four factors before

granting a preliminary injunction to determine whether the moving party has carried its burden

of establishing each of the four”).

2206. Amazon.com, 239 F.3d at 1362–63.

2207. Reebok Int’l, 32 F.3d at 1556.
Intellectual Property § 33.24

621

by the defendant.2208 For example, a showing that the plaintiff delayed in seeking an injunction is evidence that the plaintiff has not suffered irreparable

harm.2209

Markman hearings are sometimes held in conjunction with preliminary

injunction motions, because a determination of reasonable likelihood of success can require construction of the patent in order to assess whether the patent has been infringed by the defendant’s product or process. Claims construction conducted at injunction proceedings is not always definitive, however, and the court might change its interpretation of the patent as the litigation progresses. In addition, the parties sometimes request expedited discovery

prior to a hearing on injunctive relief.2210 In some instances, granting a motion

for expedited discovery may be appropriate: more developed records prior to

the preliminary injunction hearing will better enable the court to judge the

parties’ interests and respective chances for success on the merits. In such

cases, discovery should be limited in scope to information needed to respond

to the motion for injunctive relief.2211 The parties should be encouraged to

reach an agreement prior to a hearing. To this end, consider requiring the parties to meet and confer to determine whether resolution of the issues raised in

the motion for injunctive relief is feasible through a stipulated order, eliminating the need for court intervention.

Federal Rule of Civil Procedure 65(c) requires successful plaintiffs to post a

bond for damages incurred by the enjoined party in the event that the injunction was wrongfully issued. The enjoined party also may request a stay of the

2208. Roper Corp. v. Litton Sys., Inc., 757 F.2d 1266, 1272 (Fed. Cir. 1985). See, e.g., Reebok

Int’l, 32 F.3d at 1557–58 (holding that defendant successfully rebutted presumption of irreparable harm by showing the product allegedly infringed is no longer produced or available for sale

by plaintiff and money damages adequate to compensate); Ill. Tool Works v. Grip-Pak, Inc., 906

F.2d 679, 681–82 (Fed. Cir. 1990).

2209. See, e.g., Hybritech Inc. v. Abbott Labs, 849 F.2d 1446, 1457 (Fed. Cir. 1988).

2210. Phila. Newspapers, Inc. v. Gannett Satellite Info. Network, Inc., No. CIV.A. 98-CV2782, 1998 WL 404820, at *1–2 (E.D. Pa. July 15, 1998); Jay’s Custom Stringing, Inc. v. Yu, No.

01CIV.1690, 2001 WL 761067, at *1 (S.D.N.Y. July 6, 2001) (denying temporary restraining

order (TRO) and granting expedited discovery and accelerated briefing on the motion for preliminary injunction (not an intellectual property case)); Chere Amie, Inc. v. Windstar Apparel,

Corp., 191 F. Supp. 2d 343, 344 (S.D.N.Y. 2001) (expedited discovery pursuant to motion for

preliminary injunction). Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1516 (9th Cir. 1992);

Wallace Int’l Silversmiths, Inc. v. Godinger Silver Art Co., 916 F.2d 76, 78 (2d Cir. 1990) (declining to order expedited discovery). Motions for TROs are often accompanied by motions for

expedited discovery.

2211. See, e.g., Phila. Newspapers, 1998 WL 404820, *2 (E.D. Pa. 1998) (noting that “courts

generally deny motions for expedited discovery when the movant’s discovery requests are overly

broad”).
§ 33.25 Manual for Complex Litigation, Fourth

622

injunction pending appellate review. (Appellate review of the grant or denial of

a preliminary injunction is for abuse of discretion.) In such instances, the court

may conclude that although a stay is not warranted, some additional time is

appropriate before the injunction becomes effective.2212

33.25 Discovery

Discovery sometimes can be conducted according to a prescribed sequence

of issues, particularly if severed trials are contemplated under Federal Rule of

Civil Procedure 42(b).2213 At the pretrial conference, however, it is helpful to

discuss with the parties whether discovery on priority issues will involve examination of the same witnesses and exhibits as discovery on the subsequent

issues, causing unnecessary expense and delay,2214 and whether deferral of discovery regarding damages may complicate efforts to evaluate the litigation for

settlement.

Limitations on the scope of discovery may be appropriate where the court

already has construed the patent claims. Regardless of the timing of the claim

construction, however, the parties should be prohibited from offering alternative constructions throughout the litigation and thereby expanding the scope

of discovery. Where the court has determined that a Markman hearing will be

held post-discovery, one option is to offer a window of additional and narrowly prescribed discovery post-claim construction, to take into account the

judge’s interpretation and minimize prejudice to one of the parties arising out

of an unexpected interpretation of the claim.

The large number of motions to compel in patent cases may result from

legitimate differences of opinion between the parties as to the interpretation to

be given terms of art used in discovery requests, thereby causing disputes over

whether information falls within the scope of the request. In other instances,

the responding party may be using differing definitions to avoid producing

information that may be harmful to its case. Instructing the parties that all

terms of art used in discovery are to be read broadly, inclusive of all applicable

2212. See Schwartz, supra note 2115, at 176–78 (noting that four factors similar to those

considered in granting or denying the injunction are considered in deciding whether the injunction should be stayed).

2213. See, e.g., Pioneer Hi-Bred Int’l, Inc. v. Asgrow Seed Co., No. CIV. 4-98-CV-90577,

90578, 2000 WL 33363188, at *1–3 (S.D. La. May 5, 2000) (considering whether discovery

should be staged).

2214. Pioneer, 2000 WL 33363188, at *3 (granting motion to stay discovery on issue of

damages until after liability is determined).
Intellectual Property § 33.25

623

definitions, will minimize motions to compel and accompanying requests for

sanctions.2215

Allegations of willful infringement present thorny discovery disputes. It is

best to ascertain at the initial pretrial conference the extent to which discovery

will be sought of matters that may be protected by the attorney–client privilege

or work-product doctrine and, if so, whether disclosure will be resisted. Reliance on opinions of counsel is the only prudent course for a defendant to follow in litigation. However, once the defendant asserts reliance on the advice of

counsel, the defendant voluntarily waives privilege over the opinion itself, and

straightforward application of the general case law regarding voluntary privilege waivers can lead to unanticipated results.2216 For example, application of

“subject–matter waiver” would require the defendant to disclose all privileged

communications on the subject of the opinion—typically infringement and

validity. On its face, this approach would require disclosure of all communications with counsel, including trial counsel, regarding infringement and validity.2217 If treated also as a traditional waiver of work-product immunity, the

waiver would result in disclosure of all of trial counsel’s internal communication and trial preparation materials. Recognizing this dilemma, courts have

tended toward practical solutions that balance a plaintiff’s reasonable inquiry

into the circumstances surrounding the opinion of counsel and the defendant’s

right to mount a defense and maintain confidential communications with trial

counsel.2218 Consider whether the privilege has been waived and the need to

control the scope of discovery from counsel or clients to ensure that the privilege is respected. Particularly in nonjury cases, the trial judge may conclude

that it is feasible to call on another judicial officer to conduct any in camera

inspections necessary to determine whether sufficient evidence of fraud exists

for the privilege to be waived. Use of a special master may be warranted if such

2215. See Amend, supra note 2176, at 25–26.

2216. In Novartis Pharm. Corp. v. Eon Labs. Mfg., Inc., 206 F.R.D. 396, 399 (D. Del. 2002),

Judge Farnan held that the alleged infringer waived privilege to withhold from discovery any

documents or material related to counsel’s noninfringement opinion, including work product.

2217. VLT, Inc. v. Artesyn Tech., Inc., 198 F. Supp. 2d 56, 57 (D. Mass. 2002) (stating that

“opinion of counsel letter as part of a defense to a claim of willful infringement operates as a

subject matter waiver”).

2218. For example, in situations where the opinion of counsel was prepared by a lawyer at a

firm different from trial counsel, courts will limit the waiver to communications with “opinion

counsel.” Where the opinion of counsel was prepared by the same firm as the firm serving as

trial counsel, but by a lawyer not actively involved in the litigation or a part of the litigation

team, courts again often limit disclosure to communications between the opinion writer and the

client representative who received the opinion. However, the thorniest issues arise where the

opinion writer is an active part of the trial team, although this circumstance is becoming exceedingly rare, in part because of the potential for the opinion writer to be a witness at trial.
§ 33.25 Manual for Complex Litigation, Fourth

624

disputes will be extensive and cannot be resolved by considering a few specimen documents.

It is helpful to inquire early about use of out-of-court “tests” of allegedly

infringing products (including software in copyright actions) or in-court demonstrations. If tests are contemplated, protocols should be established at an

early conference with respect to whom may attend or observe, criteria to permit use of the results in court, and when to disclose the results. It is also advisable to set a deadline for pretrial disclosure of any such tests or proposed demonstrations and indicate when objections to the admissibility of such evidence

will be considered.

Discovery delays may be eliminated by entering protective orders prior to

initial discovery being served. Some courts have incorporated standing protective orders as part of the initial pretrial conference;2219 however, the particular

patent case may dictate a more tailored order. The parties may prefer restricting disclosure of particularly sensitive information—such as production processes and customer information—to counsel and their experts. This procedure

is acceptable, but counsel should be cautioned to exercise restraint in designating materials as confidential.2220 Issues may also arise where a party’s patent

counsel or in-house counsel is also counsel of record in the litigation. In such

cases, consider “the nature and extent of the risk involved and the efficacy of

protective measures that have been or can be imposed”2221 in determining

whether to permit access to the opposing party’s confidential information.

Relevant considerations might include whether counsel is in-house or at an

outside firm, as well as his or her activities, including any involvement in matters relating to product design or related competitive decisions.2222 To the extent access is permitted, also consider including a provision in the protective

order that restricts any participation in the prosecution of patent applications

in the technical area at issue for a designated period of time.2223 It is best to address early the identification of experts who will review confidential materials.

2219. See infra section 40.25 for a sample order regarding preservation of documents, data,

and tangible things.

2220. See also In re Omerprazole Patent Litig., No. MDL 1291, 2001 WL 394843, at *1

(S.D.N.Y. Apr. 18, 2001) (protective order would contain safeguards that avoided inadvertent

disclosure of “attorney confidential” information).

2221. Pooley, supra note 2107, § 11.03[3] (“[T]hose who object to house counsel access will

make an argument . . . [that] no matter the saintly good faith of the individual, there are circumstances in which one’s information is put in jeopardy because of influential, indirect use that

may not only be undetectable after the fact by the owner, but may occur beyond the awareness

of the person to whom it was entrusted.”).

2222. Id.

2223. Id. § 11.03[4].
Intellectual Property § 33.26

625

In some cases the parties may prefer to have review of such information done

by a court-appointed expert or special master, rather than by someone associated with their adversary. For further protection, filing of sensitive documents

may either be waived under Federal Rule of Civil Procedure 5(d) or be made

under seal. Finally, consider circumstances under which a party may seek

modification of the order and whether, and to what extent, any protective orders should provide for the protection of confidential information that may be

sought from third parties.

33.26 Experts

Expert witnesses in patent cases typically fall into one of two categories:

(1) technical and damage experts; and (2) patent law experts. Technical experts

are those whose special training or experience in the applicable technology or

science qualifies them to express opinions bearing on

• the validity or invalidity of the patent, such as the scope and content of

the prior art, the level of skill in the art, and the obviousness or

nonobviousness of the claimed invention in view of the prior art; and

• whether with respect to the alleged infringement the elements of the

claim are met by the accused product or process.

Technical experts include both experts retained by the parties, as well as experts appointed by the court pursuant to Federal Rule of Evidence 706. Damages experts usually have training in accounting, patent licensing, and economics, and will testify about such issues as reasonable royalty, lost profits,

price erosion, convoyed sales, and the proper definition of the relevant market.

Patent law experts—patent attorneys, patent law professors, or former officials

of the PTO—are frequently offered to express background in the form of

opinions on the patent process, the duty of disclosure to the PTO, and whether

or not that duty has been violated by particular acts or omissions during the

prosecution of the patent. The use of patent law experts is controversial and

their acceptance varies widely from court to court.2224

2224. See, e.g., Endress + Hauser, Inc. v. Hawk Measurement Sys. Pty. Ltd., 122 F.3d 1040,

1042 (Fed. Cir. 1997) (stating “this court has on numerous occasions noted the impropriety of

patent lawyers testifying as expert witnesses and giving their opinion regarding the proper interpretation of a claim as a matter of law, the ultimate issue for the court to decide”); Talarico v.

Marathon Shoe Co., 182 F. Supp. 2d 102, 113–14 (D. Me. 2002) (patent attorney’s testimony

helped to articulate defendant’s defense); Neupak, Inc. v. Ideal Mfg., Sales Corp., 168 F. Supp. 2d

1012, 1016–17 (D. Minn. 2001) (patent attorney allowed to testify); Biomedical Polymers, Inc. v.

Evergreen Indus., Inc., 976 F. Supp. 98, 100 (D. Mass. 1997) (noting court has discretion

whether it will adopt expert legal opinion as own, use it for guidance, or ignore or exclude it).
§ 33.26 Manual for Complex Litigation, Fourth

626

The Supreme Court’s decision in Markman has affected the role of expert

testimony in patent cases. Although expert testimony remains admissible in a

Markman hearing—to aid the court’s understanding of the technology involved where the patent claim is ambiguous, or to explain the meaning of

terms of art within the relevant field as one skilled in the art would understand

them—the Court cautioned that the trial court is “not, however, obliged to

blindly follow such testimony.”2225 Accordingly, consider the purpose for

which expert testimony is being offered and whether, in light of the claim language, such testimony is necessary or would aid in understanding the technology or terms of art as needed to construe the claim.2226

Setting rules to govern the scope of expert discovery is advisable. Expert

reports in patent cases are often extremely complex, and a lengthy report typically will require significant back and forth between expert and counsel. Consider what types of expert material should be produced—for example, technical documents that the expert relied on in forming opinions—and whether

draft reports should be excluded from production. At trial, expert testimony

should be monitored to ensure that testimony regarding construction or interpretation of the claim is not offered. Expert testimony remains appropriate,

however, to explain the technology to the jury. Expert testimony may be appropriate to assist the jury in assessing the accused product or process in light

of the claim construction by the court, so that the jury can determine whether

the accused product has infringed the claims, either literally or under the doctrine of equivalents. Examples of other areas where expert testimony may

prove helpful include the patent examination process and the qualifications of

a person of ordinary skill in the art.2227 Testimony by patent law experts should

be avoided where the testimony seeks to give legal opinions or attempts to address “reasonable reliance” by the client on advice of counsel.2228

The court may also conclude that an independent expert should be appointed under Federal Rule of Evidence 706, particularly if the subject matter

is complex and the differences between the experts offered by the parties are

2225. Markman v. Westview Instruments, Inc., 517 U.S. 370, 387 (1996) (quoting A.

Walker, Patent Laws § 189, at 173 (3d ed. 1895)).

2226. See, e.g., Chad Indus., Inc. v. Automation Tooling Sys., Inc., 938 F. Supp. 601, 605

(C.D. Cal. 1996).

2227. Amend, supra note 2176, at 28. As this is usually stipulated to or established as a

predicate fact in the Markman hearing, such testimony may be unnecessary.

2228. See, e.g., Clintec Nutrition Co. v. Baxa Corp., No. 94C7050, 1998 WL 560284, at *9

(N.D. Ill. Apr. 26, 1998) (rejecting proposed expert testimony during the Markman hearing “as

to what the law is” and stating that the expert may only “help interpret the patent and the

meaning of its claims, discuss scientific principles, and define terms”).
Intellectual Property § 33.27

627

not attributable to factual disputes that a trial can readily resolve.2229 For example, such an expert may be helpful if the parties’ facilities or processes need to

be inspected and they are reluctant to permit access by the opposing experts. A

number of issues, including the timing, selection, discovery, and compensation

of court-appointed experts, their specific duties, and the handling of expert

communications, all require consideration by the court. Limiting the use of

court-appointed experts to explaining the general subject matter, without becoming involved in the disputes of the parties, will make it easier to maintain

neutrality. The court-appointed expert should generally have no ex parte

communications with the judge. Finally, consideration may also be given to

referral of the patent for reexamination by the PTO under 35 U.S.C. § 302,

with citations of prior art furnished under 35 U.S.C. § 301. In some cases, the

court may conclude that reference to a special master under Federal Rule of

Civil Procedure 53 is warranted.

33.27 Trial

To ensure a fair trial, whether it is a bench trial or a jury trial, the factfinder’s comprehension of the issues and of the evidence is critical. Bifurcation

of a patent jury trial or a phased trial considering major issues separately can

sometimes assist in properly focusing the jury’s attention.2230 For example, issues of infringement can be tried prior to other issues in the case, with the issue of remedies, including damages, often deferred.2231 On the other hand, bifurcation sometimes results in a “piecemeal” trial, making it harder for the jury

to see the case as a whole.2232 Additional techniques designed to improve juror

comprehension, as well as to assist in reducing the complexity of patent trials,

are discussed in Patent Law & Practice,

2233 published by the Federal Judicial

Center. These techniques include

2229. See, e.g., MediaCom Corp. v. Rates Tech., Inc., 4 F. Supp. 2d 17, 23–24 (D. Mass.

1998); Genentech, Inc. v. Buehringer Mannheim GmbH, 989 F. Supp. 359, 361 (D. Mass. 1997);

Rodime PLC v. Seagate Tech., Inc., No. CV92-6855, 1997 WL 813016, at *1 (S.D. Cal. July 3,

1997) (using court-appointed expert and special master in assessing scope of patent under doctrine of equivalents).

2230. See also Schwartz, supra note 2115, at 217 (noting that “jurors may benefit from being able to: (a) consider different patents separately, (b) consider different claims of the same

patent separately, or (c) separate method claims from apparatus claims”).

2231. Even where infringement has not occurred, the court must still try the issue of the

validity of the patent. See Stevenson v. Sears, Roebuck & Co., 713 F.2d 705 (Fed. Cir. 1983).

2232. Schwartz, supra note 2115, at 216.

2233. Id.
§ 33.31 Manual for Complex Litigation, Fourth

628

• imposing reasonable time limits on the length of a trial;2234

• conducting a multiphase trial of the issues before the same jury;2235

• encouraging the use of juror tutorials at the outset of or during the

trial;

• imposing limits on the number of expert witnesses and duplicative fact

witnesses;

• encouraging the use of charts, diagrams, models, and other visual aids;

• providing the jurors with exhibit notebooks containing, in addition to

the principal exhibits, the patent, any stipulations, preliminary instructions, claim construction (if done at the pretrial phase) and a

glossary of technical terms; and

• allowing the parties to provide periodic nonargumentative summations to the jury.

33.3 Copyright and Trademark Law

.31 Copyright 628

.311 Discovery 637

.312 Motions 639

.313 Experts 640

.32 Trademarks 640

33.31 Copyright

.311 Discovery 637

.312 Motions 639

.313 Experts 640

Section 102 of the Copyright Act provides specifically that copyright protection is accorded to “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be

perceived, reproduced, or otherwise communicated, either directly or with the

aid of a machine or device.”2236 Under the Act, the work itself must originate

with the author, even though the idea itself may have originated elsewhere. The

2234. See, e.g., Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 609 (3d Cir.

1995). Under Fed. R. Evid. 611(a) (West 2003), the court is to “exercise reasonable control over

the mode and order of interrogating witnesses and presenting evidence so as to . . . avoid needless consumption of time . . . .” However, the court should avoid imposing rigid hour limits.

2235. See, e.g., Belmont Textile Mach. Co. v. Superba, S.A., 48 F. Supp. 2d 521, 526

(W.D.N.C. 1999).

2236. 17 U.S.C. § 102(a) (2000).
Intellectual Property § 33.31

629

“originality” required is fairly minimal: There must be some element of creativity reflected in the work, and the work must be independently created by the

author.2237 Protected works include, although are not limited to, literary, dramatic, and musical works, audiovisuals, movies, recordings, and art, without

regard to their level of value or subjective view of artistry.2238 The Visual Artists

Rights Act of 19902239 extends protection to single or limited editions of visual

art, such as paintings, sculpture, and photography. The statutory rights accorded under the Copyright Act do not attach until the work has been “fixed,”

at which point state common-law rights against copying and related injuries

are preempted.2240

Copyright protection is limited to the expression of the idea, not the idea

itself.2241 “In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described,

explained, illustrated, or embodied in such work.”2242 Copyright protection

further will not extend to purely utilitarian works,2243 or to forms,2244 compilations such as ordinary telephone directories,2245 or where the subject matter

necessarily has limited forms of expression.2246 The creative selection, coordi2237. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991). For a further

discussion of the originality requirement under section 102 of the Act, see Gorman, supra note

2108, at 9–15.

2238. Section 102(a) categorizes works of authorship to include literary, musical, and dramatic works, pantomime, choreographs, pictorials, graphics, sculpture, motion pictures, audiovisual works, sound recordings, and architectural works.

2239. 17 U.S.C. § 106A (2000). Authors of works of visual arts have rights to claim

authorship and prevent the use of their names with works of visual arts they did not create, or

with works of visual art that have been distorted, mutilated, or otherwise modified in a way that

harms the author’s honor or reputation. They can also prevent certain intentional distortion,

mutilation, or other prejudicial modification and intentional or grossly negligent destruction of

their works.

2240. 17 U.S.C. § 102(a) (2000).

2241. Gorman, supra note 2108, at 15–23.

2242. 17 U.S.C. § 102(b) (2000).

2243. See, e.g., Mazer v. Stein, 347 U.S. 201, 218 (1954).

2244. Baker v. Selden, 101 U.S. 99, 101 (1879).

2245. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 341 (1991). “In order to qualify for copyright protection, a compilation must meet three requirements: ‘(1) the collection and

assembly of preexisting data; (2) the selection, coordination, or arrangement of that data; and

(3) a resulting work that is original, by virtue of the selection, coordination, or arrangement of

the data contained in the work.’” Lynx Ventures, LLC v. Miller, 190 F. Supp. 2d 652, 658 (D. Vt.

2002) (quoting Key Publ’ns, Inc. v. Chinatown Today Publ’g Enters., Inc., 945 F.2d 509, 514 (2d

Cir. 1991)).

2246. Morrissey v. Proctor & Gamble Co., 379 F.2d 675, 678 (1st Cir. 1967).
§ 33.31 Manual for Complex Litigation, Fourth

630

nation, or arrangement of unprotected facts or ideas, however, can be protected as long as the work meets the “minimal degree of creativity” standard

established by the Supreme Court in Feist Publications, Inc. v. Rural Telephone

Service Co.

2247

The Copyright Act confers certain protection on the owner of a copyright,

whether such ownership is vested in the original author, joint authors, employers where the work was created pursuant to employment, or persons to

whom a copyright has been transferred or licensed.2248 The Act accords to

copyright owners six exclusive rights, which are set forth in section 106:

(1) reproduction; (2) derivative works; (3) distribution; (4) performance;

(5) display; and (6) digital transmission.2249 A copyright is infringed by the unauthorized exercise of any of these exclusive rights by another. Although the

facts in many copyright cases are not necessarily complex, the legal analysis

often involves subtle concepts regarding whether section 106 rights have been

infringed and whether that infringement was direct or contributory.2250 Infringement can be innocent or intentional, and a plaintiff is permitted under

copyright law to assert a claim for contributory or vicarious infringement as

long as the plaintiff can also demonstrate an underlying act of direct infringement.2251

To prevail in a copyright infringement claim, the plaintiff must prove

(1) ownership of a valid copyright; and (2) that at least one of the exclusive

rights under section 106 has been violated.2252 The plaintiff must demonstrate

either actual copying (as opposed to independent creation) or proof of access

to the copyrighted work and that the copied work is “substantially similar” to

the original, to prove a violation of section 106.2253 Equitable remedies in the

form of injunctive relief are available in addition to money damages, reflecting

either actual damages or, at the plaintiff’s election, statutory damages.2254 Reg2247. 499 U.S. at 348.

2248. See 17 U.S.C. § 201 (2000). Section 201(d) establishes rights upon transfer of a copyright. Where the right has been transferred, the person to whom it is transferred “is entitled, to

the extent of that right, to all of the protection and remedies accorded to the copyright owner by

this title.” Id. § 201(d)(2). Any such exclusive transfer or license can be terminated, id. § 203,

and must be in writing. Id. § 204(a).

2249. Id. § 106.

2250. 17 U.S.C. § 501 (2000).

2251. Gershwin Pub’lg Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1161–62 (2d

Cir. 1971).

2252. Ellison v. Robertson, 189 F. Supp. 2d 1051, 1056 (C.D. Cal. 2002).

2253. See, e.g., Laureyssens v. Idea Group, Inc., 964 F.2d 131, 139–40 (2d Cir. 1992).

2254. 17 U.S.C. § 504 (2000); see also Gorman, supra note 2108, at 108 (discussing available

damages and profits under 17 U.S.C. § 504).
Intellectual Property § 33.31

631

istration is a prerequisite to maintaining a suit for infringement and in order to

obtain statutory damages, the copyright must have been registered under the

Act prior to infringement.2255

Among the defenses to an infringement claim is a common law doctrine

commonly referred to as the “fair use” doctrine, which has now been codified

in 17 U.S.C. § 107 to preserve the use of creative artistic works for purposes of

teaching, research, criticism, and news reporting.2256 Section 107 sets out several factors to be considered in assessing whether the defendant’s use was

“fair,” which are then balanced against the interest in protecting the exclusive

rights of copyright owners. These factors include (1) the purpose and character

of the defendant’s use, such as whether the use is commercial or private; (2)

the nature of the copyrighted work; (3) the amount and substance of the portion of the copyrighted work used in relation to the whole of the copyrighted

work; and (4) the effect of the use on the market for the copyright owner’s

rights.2257 Congress also has created a statutory “safe harbor” for “providers of

online services or network access, or the operator of facilities therefore”2258

through the Digital Millennium Copyright Act (DMCA).2259 The DMCA protects service providers who do not control the content transmitted via their

servers, as well as search engines that merely provide links to allegedly infringing content.2260 “The DMCA’s protection of an innocent service provider disappears ‘at the moment the service provider loses its innocence, i.e., at the

moment it becomes aware that a third party is using its system to infringe.’”2261

2255. 17 U.S.C. §§ 411, 412 (2000).

2256. Kelly v. Arriba Soft Corp., 280 F.3d 934, 942 (9th Cir. 2002).

2257. 17 U.S.C. § 107 (2000); Harper & Row Publ’g Inc. v. Nation Enter., 105 S. Ct. 2218

(1986).

2258. 17 U.S.C. § 512(k)(1)(B) (2000); see also Semiconductor Chip Prot. Act of 1984, 17

U.S.C. § 901 (affording protection to computer chips and thereby their codes).

2259. 17 U.S.C. § 512 (2000); see also Religious Tech. Ctr. v. Netcom On-Line Communication Serv., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995).

2260. See Ellison v. Robertson, 189 F. Supp. 2d 1051, 1070–72 (C.D. Cal. 2002); see also

ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 622 (4th Cir. 2001) (“As to direct

infringement, liability is ruled out for passive, automatic acts engaged in through a technological

process initiated by another.” (discussing H.R. Rep. No. 105-551(I), at 11 (1998))). Although the

DMCA protects service providers from money damages arising from posting or transmitting

infringing content, in most cases injunctive relief will still be available. To avail themselves of the

protection of the DMCA safe harbor, however, the defendant service providers must have, and

communicate to users, a policy for removing allegedly infringing material. ALS Scan, 239 F.3d at

625.

2261. In re Aimster Copyright Litig., 252 F. Supp. 2d 634, 657 (N.D. Ill. 2002) (quoting ALS

Scan, 239 F.3d at 625).
§ 33.31 Manual for Complex Litigation, Fourth

632

“At that point, the Act then shifts responsibility to the service provider to disable the infringing matter . . . .”2262

Many of the complexities accompanying copyright litigation arise out of

the growth and development of new technologies and transmissions, particularly on-line dissemination.2263 Works can now be easily replicated and accessed by numerous users, and new categories of works (such as hypertext)

have developed.2264 On-line linking and framing can create the potential for

copyright infringement, although the mere use of a copyrighted work in a

search engine may be a fair use.2265 The increasing use of the Internet as a

means of communication, and the ease with which material can be copied, create difficulties in copyright application and protection not contemplated by the

current Act and have spawned new legislation targeting these issues.2266 Other

developments in copyright law, many attributable to changing technology, are

designed either to protect the right in the work itself, such as performance

rights in digital transmissions, or to protect the measures used to prevent the

copying of works available in digital and other advanced technologies, such as

encryption and other programs.2267 The courts have continued to struggle with

the challenges presented by computer technologies and computer networks

and the role that copyright protection should play. These complexities will vary

from case to case, and inquiry into the following areas at the initial pretrial

conference will help to assess the need for close supervision:

• Has the copyright been registered? Before an action for copyright infringement can be instituted, the copyright must have been registered

2262. CoStar Group v. Loopnet Inc., 164 F. Supp. 2d 688, 700 (D. Md. 2001).

2263. The court in eBay Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058, 1067 n.16 (N.D.

Cal. 2000), noted that “applying traditional legal principles to the Internet can be troublesome

. . . .” See also ImOn, Inc. v. ImaginOn, Inc., 90 F. Supp. 2d 345, 346 (S.D.N.Y. 2000) (noting

that the Internet “is one of the most fluid, rapidly developing, and virtually daily changing areas

of commerce that the law has had to focus upon and endeavor to apply established principles

to”).

2264. See, e.g., ILOG, Inc. v. Bell Logic, LLC, 181 F. Supp. 2d 3, 13–14 (D. Mass. 2002)

(software programs).

2265. See, e.g., Kelly v. Arriba Soft Corp., 280 F.3d 934, 945–47 (9th Cir. 2002) (finding online linking and framing violated copyright owner’s public display right). See Ticketmaster Corp.

v. Tickets.Com, Inc., No. CV99-7654, 2000 WL 5253909, at *2 (C.D. Cal. Mar. 27, 2000) (hyperlinking did not constitute violation of Copyright Act).

2266. See, e.g., Digital Millenium & Copyright Act, 17 U.S.C. § 512 (2000); Visual Artists

Rights Act of 1990, 17 U.S.C. § 106(A) (2000).

2267. See, e.g., Intellectual Prop. & Communications Omnibus Reform Act of 1999, 17

U.S.C. § 1201 (2000).
Intellectual Property § 33.31

633

in the Copyright Office.2268 Registration timing, however, affects the

types of damages available. Where the copyright was not registered

prior to the infringing activity or within ninety days of the date the

work was first published, the plaintiff is precluded from seeking attorney fees or statutory damages.2269

• Where did the activity take place? Where the allegedly infringing activity

takes place is an important question, in determining personal jurisdiction and venue, and also in determining whom the plaintiff can sue.

Plaintiffs may base claims on actions by foreign defendants that occurred outside the United States, or interrelated activities involving

both U.S. corporations and foreign affiliates.2270 Foreign defendants

add additional complexity to the management of discovery and other

pretrial issues.2271 Jurisdictional issues may be more complicated where

the infringing activity took place over the Internet.2272 The courts have

held that where infringing material is posted on a Web site, the infringing acts occurred in the place where the Web site is created and

maintained.2273 Courts have looked to the “nature and quality of

commercial activity that an entity conducts over the Internet” in assessing whether personal jurisdiction can be exercised.2274 A relevant

inquiry is whether the defendant’s activity was active or passive. “A

passive Web site that does little more than make information available

2268. 17 U.S.C. § 411(a) (2000). The Act excepts from its requirements infringement actions “brought for a violation of the rights of the author under Section106(A)(a) . . . .” Id. However, if registration is refused, the plaintiff can bring an action for infringement and also challenge the propriety of the refusal to register in that action. Id.

2269. Id. § 412(2); see also Gerig v. Krause Publ’ns, Inc., 58 F. Supp. 2d 1261, 1268–69 (D.

Kan. 1999).

2270. See, e.g., Palmieri v. Estifan, 793 F. Supp. 1182 (S.D.N.Y. 1992).

2271. See, e.g., Byrne v. British Broad. Corp., 132 F. Supp. 2d 229, 237–39 (S.D.N.Y. 2001)

(denying motion to dismiss based on forum non conveniens).

2272. See, e.g., Colt Studio, Inc. v. Badpuppy Enter., 75 F. Supp. 2d 1104, 1109–10 (C.D.

Cal. 1999) (personal jurisdiction created from on-line membership subscriptions with consumers in California; subscriptions were continuing in nature); Zippo Mfg. Co. v. Zippo Dot Com,

Inc., 952 F. Supp. 1119 (W.D. Pa. 1997); Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir.

1997).

2273. Cable News Network, L.P. v. GoSMS.com, Inc., No. 00CIV.4812, 2000 WL 1678039,

at *3 (S.D.N.Y. Nov. 6, 2000) (noting that to find that the acts occurred where the Web site

could be seen would include “literally anywhere the internet can be accessed”).

2274. Zippo Mfg., 952 F. Supp. at 1124 (distinguishing cases of knowing and repeated

transmission of files over the Internet from situations where the defendant has posted information on a Web site that is simply accessible to users in other jurisdictions); Citigroup Inc. v. City

Holding Co., 97 F. Supp. 2d 549, 565 (S.D.N.Y. 2000).
§ 33.31 Manual for Complex Litigation, Fourth

634

to those who are interested in it is not grounds for the exercise of

personal jurisdiction.”2275

• Does the dispute raise issues of international law? One or more of the

various treaties that address copyright issues may become relevant if

international components are involved.2276 Plaintiffs may be alleging

infringement of foreign copyrights, as well as infringement under the

Copyright Act.2277 In addition, conflicts may result in the application

of foreign copyright law to resolve disputes.2278

• Are there any other actions pending in the same or other jurisdictions?

Copyright cases rarely involve infringements sufficient to trigger

multidistrict litigation or class actions,2279 but the Internet has created

the potential for multiple infringements in numerous jurisdictions.

For example, in In re Aimster Copyright Litigation,

2280 nine actions involving whether the distribution of MP3 music files through a Web

site operated by Aimster constituted copyright infringement were

transferred for coordinated and consolidated pretrial proceedings by

the Judicial Panel on Multidistrict Litigation. Declaratory judgment

actions seeking a determination of noninfringement can raise questions of jurisdiction and whether the action should be transferred or

stayed.2281 In some instances, the action reflects simply a “race to the

courthouse.”2282 Finally, issues of collateral estoppel may arise where

multiple infringements have occurred.2283

2275. Zippo Mfg., 952 F. Supp. at 1124.

2276. See, e.g., Uniform Copyright Convention, NAFTA, Berne Convention for the Protection of Literary and Artistic Works, and the Trade Related Aspects of Intellectual Property

Rights.

2277. Boosey & Hawkes Music Publishers, Ltd. v. The Walt Disney Co., 145 F.3d 481, 485

(2d Cir. 1998); Dam Things from Denmark v. Russ Berrie & Co., 290 F.3d 548, 554 (3d Cir.

2002).

2278. See, e.g., Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 91–92

(2d Cir. 1998) (finding Russian law would apply to issues of copyright ownership and nature of

copyright as to Russian plaintiffs, and U.S. copyright law would be applied to determine issue of

whether copyrights were infringed in the U.S. by defendant Russian language newspaper which

was published and available in New York).

2279. See, e.g., In re Literary Works in Elec. Databases Copyright Litig., MDL No. 1379,

2001 WL 204212, at *1 (S.D.N.Y. Mar. 1, 2001) (consolidated class action); In re “The Exorcist”

Copyright Infringement Litig., 411 F. Supp. 793 (J.P.M.L. 1976).

2280. 177 F. Supp. 2d 1380 (J.P.M.L. 2001).

2281. MP3Board v. Recording Indus. Ass’n of Am., No. C-00-20606, 2001 WL 804502, at

*3 (N.D. Cal. Feb. 27, 2001) (staying action in light of similar action pending in New York).

2282. See MP3Board, 2001 WL 804502, at *2 (stating “‘even if this action were deemed to

have been filed first, this action was filed as an anticipatory suit and therefore MP3Board would
Intellectual Property § 33.31

635

• Are there any criminal proceedings pending or matters under criminal investigation? The Copyright Act provides for criminal penalties, including imprisonment and a fine, for willful copyright infringement,2284 as well as penalties if the defendant engaged in fraud.2285 The

Act provides additional remedies in the form of mandatory seizure

and forfeiture or destruction.2286 If there is a pending criminal investigation, a motion to stay the civil action pending resolution of the

criminal case may occur.

• Are there any agreements to arbitrate? The Federal Arbitration Act requires parties to arbitration agreements to arbitrate all matters covered

under the agreement “save upon such grounds as exist at law or in equity for the revocation of any contract.”2287 Arbitration clauses are to

be broadly construed and will be presumed to apply to all disputes

arising under the contract, barring limiting language.2288 Doubts are

resolved in favor of arbitration. The courts have held that arbitration

agreements arising out of the Copyright Act are enforceable. “Congress has not asserted any ‘policy against arbitration of [a] claim for

the infringement of a valid copyright.’”2289 Arbitration agreements are

especially common in licensing agreements. The court should inquire

into the existence of any agreement that may underlie the claims and

whether any or all claims are subject to arbitration. In cases where a

portion of the case may be subject to arbitration, consider whether the

remainder of the action should be stayed.

not be entitled to rely on the first to file rule’” (quoting MP3Board v. Recording Indus. Ass’n of

Am., No. C-00-20606, at 6:27 to 7:1 (N.D. Cal. Sept. 26, 2000) (unpublished court order denying

plaintiff’s motion for preliminary injunction to prohibit defendants from proceeding in related

action before another district court))); Citigroup, Inc. v. City Holding Co., 97 F. Supp. 2d 549,

555 (S.D.N.Y. 2000) (discussing first-filed rule).

2283. See, e.g., Teevee Toons v. MP3.Com, Inc., 134 F. Supp. 2d 546, 546–47 (S.D.N.Y.

2001).

2284. 17 U.S.C. § 506(a) (2000).

2285. See id. §§ 506(c)–506(e).

2286. Id. § 506(b).

2287. 9 U.S.C. § 2 (2000).

2288. JVN Music, Inc. v. Rodriguez, No. 99CIV.11889, 2000 WL 827702, at *3 (S.D.N.Y.

June 27, 2000) (“Where there is a broad contractual arbitration clause, it is presumed that all

disputes under the agreement are arbitrable unless the clause is in no way susceptible to an interpretation that it covers the particular dispute.”).

2289. JVN Music, 2000 WL 827702, at *4 (finding copyright infringement clause arising out

of music contract to record exclusively for the plaintiff music company (quoting Kamakazi Music Corp. v. Robbins Music Corp., 684 F.2d 228, 231 (2d Cir. 1982))).
§ 33.31 Manual for Complex Litigation, Fourth

636

• Is the plaintiff seeking impoundment as one of the remedies sought? The

plaintiff may be seeking impoundment of the allegedly infringing material pursuant to section 503 of the Copyright Act.2290 Seizure can be

ex parte where the plaintiff shows a likelihood the allegedly infringing

goods may be destroyed or hidden, although the defendant can request a post-seizure hearing.2291 There is judicial discretion under section 503(b) to permanently dispose of the infringing material after final judgment, although destruction is not mandatory, as it is where

the defendant is criminally convicted of willful infringement.2292

• What is the duration of the copyright? The 1976 Copyright Act extended

the 1909 Copyright Act term from twenty-eight years with an additional renewal term if the author remained alive at the end of the first

term to the life of the author plus fifty years.2293 With the passage of the

1976 Act, “Congress altered the way the term of a copyright is computed so as to conform with the Berne Convention and with international practice.”2294 The Copyright Term Extension Act of 19982295 extended the term for works created after 1978 an additional twenty

years to the author’s life plus seventy years.2296 For a work created before 1978, where the initial term was twenty-eight years, the renewal

term was extended to sixty-seven years.2297

• Has the plaintiff raised state causes of action that are preempted by the

Copyright Act? Jurisdiction is exclusively in the federal courts for actions arising under the Copyright Act.2298 State law claims pertaining

to the subject matter of copyrights are preempted,2299 unless there is a

qualitative difference between the causes of action and the rights ad2290. Section 503 provides for impoundment “of all copies or phonorecords . . . and of all

plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such

copies or phonorecords may be reproduced.”

2291. Pepe (U.K.) Ltd. v. Ocean View Factory Outlet, 770 F. Supp. 754, 760 (D.P.R. 1991)

(ex parte seizure of allegedly counterfeit goods under section 1116(d)); Paramount Pictures

Corp. v. Doe, 821 F. Supp. 82, 84 (E.D.N.Y. 1993) (impoundment of allegedly pirated films).

2292. 17 U.S.C. § 506(b) (2000).

2293. Gorman, supra note 2108, at 37.

2294. Eldred v. Reno, 239 F.3d 372 (D.C. Cir. 2001) (citing H.R. Rep. No. 94-1476, at 135

(1976) (reprinted in 1976 U.S.C.C.A.N. 5659, 5751)).

2295. 17 U.S.C. § 302(a) (2000).

2296. See Eldred, 239 F.3d at 373–74.

2297. 17 U.S.C. § 304(a) (2000).

2298. 28 U.S.C. § 1338(a) (West 2003).

2299. 17 U.S.C. § 301(a) (2000).
Intellectual Property § 33.311

637

dressed by the Copyright Act.2300 However, state law claims preempted

by the Copyright Act are converted into copyright infringement claims

under the federal statute.2301

• Do the parties anticipate seeking protective orders? Motions for protective orders are common in copyright actions.2302

• Does the plaintiff assert vicarious or contributory infringement? The

scope of discovery will be affected by assertions of vicarious or contributory infringement.

33.311 Discovery

Two central issues in copyright cases are whether the copyright was infringed and the nature of the infringement. As a result, discovery may be merits based, looking at the infringement itself, or jurisdictional, seeking information on where and how the infringement occurred.2303 Complex damages calculations often become necessary, and discovery into the defendant’s finances,

including costs of production, overhead, and cost and expense allocation,

among other matters, can be extensive. Protective orders may be sought where

discovery pertains to the parties’ financial affairs.

Much of the information sought during discovery will be maintained in

electronic form. Discovery orders may be necessary to ensure that the form in

which information is maintained is not utilized by the parties to hinder or obstruct the discovery process.2304 Consider whether the parties should be re2300. See Tech. Based Solutions, Inc. v. The Elecs. Coll., Inc., 168 F. Supp. 2d 375, 380 n.3

(E.D. Pa. 2001) (holding allegations of misappropriation, unfair competition, and unjust enrichment preempted by the Copyright Act but breach of contract claim appeared qualitatively

different and would not be preempted); eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058,

1072 (N.D. Cal. 2000) (trespass); Ticketmaster Corp. v. Tickets.Com., Inc., No. CV99-7654,

2000 WL 525390, at *3–4 (C.D. Cal. Mar. 27, 2000) (contract, unfair business practices).

2301. 28 U.S.C. § 1338(b) (West 2003).

2302. Damiano v. Sony Music Entm’t, Inc., No. CIV.A. 95-4795, 2000 WL 1689081, at *1

(D.N.J. Nov. 13, 2000) (entering protective orders protecting confidentiality over discovery and

depositions); David J. Frank Landscape Contracting, Inc. v. La Rosa Landscape, 199 F.R.D. 314,

315 (E.D. Wis. 2001) (denying entry of broad protective order where parties failed to explain

why materials should be protected from disclosure); Apple Computer, Inc. v. Micro Team, No.

C98-20164, 2000 WL 1897354, at *1 (N.D. Cal. Dec. 21, 2000) (stipulated protective order);

Kleiner v. Burns, No. 00-2160, 2000 WL 1909470, at *3–4 (D. Kan. Dec. 15, 2000) (stipulated

protective order).

2303. Nat’l Football League v. Miller, 54 U.S.P.Q.2d (BNA) 1574 (S.D.N.Y. 2000); Citigroup, Inc. v. City Holding Co., 97 F. Supp. 549 (S.D.N.Y. 2000).

2304. See, e.g., Williams v. E.I. du Pont de Nemours & Co., 119 F.R.D. 648, 650–51 (W.D.

Ky. 1987) (permitting discovery of computerized database and encoding in Title VII action).
§ 33.311 Manual for Complex Litigation, Fourth

638

quired to provide print versions of extensive databases as opposed to transmitting the data in an electronic format. To the extent that print versions are supplied from electronic data, the court should address whether a party will be

permitted to provide print versions that contain less information than their

electronic counterparts. Additional information available in electronic format

may include, for example, hidden notations (metadata) indicating changes or

authors. The expense of access or production is also a factor. For example, in

cases where reconstruction of data or recovery from obsolete formats is at issue, allocating the costs of electronic discovery may be appropriate.2305 The

committee note to Federal Rule of Civil Procedure 34 recognizes that the burden “will vary from case to case, and the courts have ample power under Rule

26(c) to protect respondent against undue burden or expense, either by restricting discovery or requiring that the discovering party pay costs.”

Data retention (or destruction) policies can also be an issue, and different

computer back-up procedures may affect the availability, as well as the expense, of discovery. It is advisable to prohibit the routine deletion of relevant

documents, particularly E-mail,2306 and determine whether forensic analysis or

mirroring of computer hard drives is appropriate. Where the risk of spoliation

is high, ex parte seizure and forensic analysis of the offending party’s computer

equipment and data-storage facilities may be warranted. However, these measures should not be undertaken lightly, as the economic impact of such measures could be substantial. To the extent a party is permitted access to the

source of the electronic information, the court should address how the hard

drive contents and data storage facilities will be analyzed for relevant materials.

Trade secret and other sensitive or confidential information that is either undiscoverable or otherwise not relevant should be protected from disclosure,

and retained computer forensic experts should be closely supervised. One approach is to utilize a court-appointed computer expert, who would be subject

to a protective order precluding the disclosure of confidential information and

otherwise protecting the privacy rights of the parties. In one case, the courtappointed computer specialist provided a mirror image of the defendant’s hard

drive to the defendant’s counsel, who was then to review all recovered documents and produce those that were responsive to prior discovery requests. The

defendant’s attorney was to be the “sole custodian” of both the mirror image

disk and copies of documents retrieved from it over the course of the litigation.2307

2305. See Williams, 119 F.R.D. at 651.

2306. Playboy Enters., Inc. v. Welles, 60 F. Supp. 2d 1050, 1053 (S.D. Cal. 1999) (granting

plaintiff’s request to search hard drive for deleted E-mail).

2307. Id. at 1055.
Intellectual Property § 33.312

639

33.312 Motions

Motions for injunctive relief are frequently sought in copyright cases. The

Copyright Act provides for a preliminary injunction “to prevent or restrain

infringement of a copyright”2308 and, although not automatic, injunctions are

commonly granted where infringement is found.2309 In copyright cases, irreparable harm will be presumed where a likelihood of success in the copyright

claim has been shown.2310 The fact that money damages may be quantifiable

will not, in itself, preclude a finding of irreparable harm.2311 Similar to the

analysis under patent law, however, a finding of delay or laches on the part of

the party in seeking injunctive relief can rebut a showing of irreparable

harm.2312 In addition to enjoining further infringing conduct, the court may

order the defendant to recall the infringing products as part of the injunction.2313 The circuits have adopted varying tests in analyzing whether injunctive

relief is appropriate.

Summary judgment may be appropriate in cases where copying is not in

dispute. Many copyright infringement cases, however, turn on the issue of

substantial similarity, which usually must be resolved by the fact-finder.2314

Summary judgment is available where the works are “so dissimilar as to protectible elements that no reasonable jury could find for the plaintiff on the

question of substantial similarity.”2315 In other cases, the similarities relate to

nonprotected portions of the work, precluding infringement.2316 Summary

judgment is also warranted where preliminary issues, unrelated to “substantial

similarity,” are dispositive, such as whether the plaintiff obtained a valid copyright2317 or the rights of a licensee.2318

2308. 17 U.S.C. § 502(a) (2000).

2309. See, e.g., eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058 (N.D. Cal. 2000).

2310. Concrete Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 611 (1st Cir.

1988).

2311. Id. at 611 (“[C]opyright protects the unique and somewhat intangible interest of

creative expression. Unlike most property rights, the value of this interest is often fleeting.”).

2312. See, e.g., Nutrition 21 v. United States, 930 F.2d 867, 872 (Fed. Cir. 1991) (substantial

delay in period of time before seeking injunction sufficient to negate finding of irreparable

harm).

2313. CyberMedia, Inc. v. Symantec Corp., 19 F. Supp. 2d 1070, 1079 (N.D. Cal. 1998).

2314. Hoehling v. Universal City Studios, Inc., 618 F.2d 972, 977 (2d Cir. 1980).

2315. Sturdza v. U.A.E., 281 F.3d 1287, 1297 (D.C. Cir. 2002).

2316. See, e.g., Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763 (9th Cir. 2003); Cavalier v.

Random House, Inc., 297 F.3d 815 (9th Cir. 2002).

2317. Coles v. Wonder, 283 F.3d 798, 801–02 (6th Cir. 2002).

2318. Gardner v. Nike, Inc., 279 F.3d 774, 780–81 (9th Cir. 2002).
§ 33.32 Manual for Complex Litigation, Fourth

640

33.313 Experts

Expert testimony in copyright cases is primarily focused on whether actual

copying has occurred. “Copying may be established either by direct evidence of

copying or by indirect evidence, including access to the copyrighted works,

similarities that are probative of copying between the works, and expert testimony.”2319 Thus, for example, in Repp v. Webber,

2320expert testimony was probative on the similarities between two musical works, although a determination of whether in light of those similarities infringement had occurred was a

question for the fact-finder.2321 Similarly, “the opinions of experts may be

called upon in determining whether there is sufficient similarity between the

works so as to conclude that the alleged infringer ‘copied’ the work.”2322 Once

actual copying is established, the inquiry turns to whether the copying was

“actionable.”2323 Expert testimony may also be appropriate to explain technology or related processes,2324 but it is generally not admissible on liability.

33.32 Trademarks

Trademark claims are governed by the Lanham Act.2325 A trademark is

“any word, name, symbol or device” used to “identify and distinguish”

goods.2326 Trademarks identify the source or origin of a product. To be accorded protection, the trademark must be “distinctive” or have become identified with a particular source through its use in “commerce.”2327 The protec2319. Laureyssens v. Idea Group Inc., 964 F.2d 131, 140 (2d Cir. 1992).

2320. 132 F.3d 882 (2d Cir. 1997).

2321. See also Laureyssens, 964 F.2d at 141 n.9 (noting that there had been no expert testimony as to the ability to create the challenged puzzle based on a visual inspection of the copyrighted puzzle “which would help to resolve whether a question of actual copying has been

shown”).

2322. Dam Things from Denmark v. Russ Berrie & Co. Inc., 290 F.3d 548, 562 (3d Cir.

2002).

2323. Id.; see also Segrets, Inc. v. Gillman Knitwear Co., 207 F.3d 56, 62 (1st Cir. 2000)

(“‘The test is whether the accused work is so similar to the plaintiff’s work that an ordinary reasonable person would conclude that the defendant unlawfully appropriated the plaintiff’s protectible expression by taking material of substance and value.’” (quoting Concrete Mach. Co. v.

Classic Lawn Ornaments, Inc., 843 F.2d 600, 607 (1st Cir. 1988))).

2324. See, e.g., ILOG, Inc. v. Bell Logic, LLC, 181 F. Supp. 2d 3, 11 (D. Mass. 2002) (noting

that expert testimony would be “helpful to organize a particular program into various levels of

abstraction”).

2325. 15 U.S.C. § 1051 (2000). The Lanham Act also covers service marks, which distinguish services of one person from another, and trade names. See id. § 1127.

2326. Id. § 1127.

2327. Id. § 1052(f).
Intellectual Property § 33.32

641

tions offered by trademark law are less than those accorded copyright or patents. For instance, unlike owners of patents or copyrights, trademark owners

do not have exclusive use of a mark. Protection extends only to prevent the

mark from being used by others in a manner likely to cause confusion, mistake, or deception among consumers as to the source of the goods or services.

For a discussion of survey research methods applicable to trademark litigation,

see section 11.493. Courts have applied a number of factors to assess whether

an allegedly infringing use is likely to cause consumer confusion. These factors

include the similarity of the marks, the similarity of the parties’ products and

services, the strength of the plaintiff’s mark, evidence of actual consumer confusion, the markets involved, likelihood of confusion, and the sophistication of

buyers.2328

Trademarks are valid and enforceable as long as the mark is used in commerce, the owner adequately seeks to protect its rights to the mark, and the

mark has not been abandoned or become generic.2329 A mark need not be registered with the Patent and Trademark Office, although registration can be

considered conclusive evidence of validity and ownership. Where the owner

has met the incontestability requirements of section 1065 of the Lanham Act,

an allegedly infringing defendant is limited to the defenses set forth in section

1115(b) of the Act.2330 In addition, a federal trademark registration also affords

the owner nationwide rights, well beyond the local geographic market where

the mark is used. This attribute of federal registration affords wider protection

than state registration. To enforce a trademark in a foreign country, however,

the owner must comply with the trademark requirements of that country.

Many of the case-management considerations in a copyright case also apply to trademark cases. Similar issues arise relating to arbitrability, remedies

sought, and the scope and issuance of protective orders. Motions for injunctive

relief are common in trademark litigation and can be accompanied by requests

for seizure of the allegedly infringing goods.2331 The owner of a mark can also

seek to freeze the assets of the defendant under certain circumstances.2332 Damage to the goodwill associated with a trademark will usually meet the require2328. In re E.I. DuPont de Nemours Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973).

2329. See, e.g., Barcamerica Int’l USA Trust v. Tyfield Imps., Inc., 289 F.3d 589, 595–98

(9th Cir. 2002).

2330. Id. § 1115(b).

2331. Id. § 1116(a). Seizure is usually available only where the infringing goods are counterfeits, and the Act sets forth certain requirements that must be met before a seizure order will

issue. Id. § 1116(d); see also Ironclad, L.P. v. Poly Am., Inc., No. CIV.A. 3:98-CV-2600, 2000 WL

1400762, at *10 (N.D. Tex. July 28, 2000) (courts “routinely grant injunctive relief in trademark

infringement actions”).

2332. See Reebok Int’l Ltd. v. Marnatech Enters., Inc., 970 F.2d 552, 588–61 (1992).
§ 33.32 Manual for Complex Litigation, Fourth

642

ments for irreparable injury, and a showing of the likelihood of consumer

confusion together with evidence of prior rights in the mark are significant

factors in demonstrating a likelihood of success on the merits.

Technological advances also affect the application of trademark law. Infringement of trademarks in cyberspace complicate issues of origin, affiliation,

or sponsorship, as well as the extent of protection accorded trademark use in

metatags,2333 hyperlinks, and caching. Other considerations include the following:

• Is foreign commerce involved and extraterritorial jurisdiction

sought?2334

• Are the issues presented purely equitable or do they include distinct legal claims that will require a jury trial? For example, whether the

plaintiff is entitled to money damages upon a finding of infringement

is a jury question. Where the jury awards no damages, leaving only

equitable issues, courts have considered whether the jury verdict may

be treated as advisory and enter a contrary verdict.2335

• Where the Internet forms the vehicle for the infringing activity, is the

defendant subject to personal jurisdiction? Personal jurisdiction over

nonresident owners of Web sites often turns on whether the site is active or passive.

• If the action is in rem against an infringing domain name, has the

plaintiff met the requirements to bring an in rem action pursuant to

the Anticybersquatting Consumer Protection Act?2336

• Has there been a request for expedited discovery?2337

2333. Metatags are index words in Web pages that identify the page to browsers.

2334. Reebok Int’l, 970 F.2d at 554–55.

2335. See, e.g., Ironclad, 2000 WL 1400762, at *2–3.

2336. 15 U.S.C. § 1125(d)(2)(A) (2000).

2337. See, e.g., Phila. Newspapers, Inc. v. Gannett Satellite Info. Network, Inc., No. CIV.A.

98-CV-2782, 1998 WL 404820, at *3 (E.D. Pa. 1998) (denying motion for expedited discovery

filed in conjunction with preliminary injunction motion where discovery sought was broad and

voluminous and “without reasonable boundaries”).
643

34. CERCLA (Superfund)

.1 Introduction 643

.11 Statutory Framework 646

.12 The Three Phases of CERCLA Litigation 650

.2 Case Management 654

.21 Setting Up the Case 662

.22 Special Masters and Magistrate Judges 664

.23 Related Litigation 665

.24 Organizing Counsel 667

.25 Centralized Document Management 669

.26 Narrowing the Issues 670

.27 Joinder 672

.28 Managing Discovery 674

.29 Scientific and Technical Expert Testimony 676

.3 Settlement and Trial 677

.31 Allocation 677

.32 Settlement 682

.33 Approval of Consent Decrees 686

.34 Structuring the Trial 687

34.1 Introduction

.11 Statutory Framework 646

.12 The Three Phases of CERCLA Litigation 650

In 1980, Congress passed the Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601–9626 (1994),

to respond to the growing problem presented by abandoned or inactive hazardous waste sites.2338 CERCLA, often referred to as the Superfund, is premised

on the “polluter pays” principle.2339 It permits quick government response to

2338. Estimates of clean-up costs just for sites that were candidates for listing on the Environmental Protection Agency’s National Priorities List (NPL), and excluding Department of

Energy facilities, have ranged from $500 billion to $750 billion. See, e.g., United States v. A & N

Cleaners & Launderers, Inc., 854 F. Supp. 229, 236 (S.D.N.Y. 1994) (citing Office of Tech. Assessment, Assessing Contractor Use in Superfund, reprinted in 17 Chem. Waste Litig. Rep. (Law

Reps.) 715 (1989)). “[A]ccording to a survey of state hazardous waste officials conducted in 1998

by the Environmental Law Institute, states identified 69,000 ‘known and suspected sites.’ GAO

and others have estimated the number of contaminated sites in the country to range from

150,000 to 500,000, although only a small percentage of these sites are likely to warrant placement on the NPL.” Katherine Probst & David Konisky, Superfund’s Future: What Will It Cost?:

A Report to Congress 85 (2001).

2339. S. Rep. No. 96-848, at 13 (1980) (reflecting adoption of the principle that the polluter

should pay for hazardous waste remediation).
§ 34.1 Manual for Complex Litigation, Fourth

644

threats presented by hazardous contaminants and seeks to place the ultimate

cost of cleanup of hazardous sites directly on those responsible for the contaminants.2340

CERCLA’s primary goal is to address threats to human health and the environment from the release or threatened release of hazardous substances.2341

CERCLA directs the Environmental Protection Agency (EPA) to create and

maintain, based on certain criteria, a prioritized list2342 of hazardous sites eligible for cleanup under the Superfund. These sites form the basis for most

CERCLA claims. Once the site has been listed, EPA undertakes a Remedial Investigation/Feasibility Study (RI/FS) to develop, among other things, alternative cleanup strategies and determine the scope of the remedial action. In the

remedial investigation phase, EPA conducts a detailed investigation at the site,

seeking information regarding all site operations, and the extent of contamination at the site.2343 The feasibility study looks at remedial goals and alterna2340. See, e.g., Tippins Inc. v. USX Corp., 37 F.3d 87, 92 (3d Cir. 1994) (“CERCLA . . . has

its ‘bite’ in holding responsible parties financially accountable for the costs associated with a

remedial action at hazardous waste facilities.”).

2341. Although CERCLA authorizes the President to undertake response actions, much of

this authority has been delegated to EPA to function as the lead federal agency with responsibility for site cleanup pursuant to Exec. Order No. 12580, 52 Fed. Reg. 2923 (Jan. 23, 1987). The

authority to conduct certain response actions at certain sites under the jurisdiction, custody, or

control of other federal agencies, however, has been delegated to those agencies. Id.

2342. This list is referred to as the National Priorities List (NPL). See 42 U.S.C. § 9601

(West 2003). If a site is not listed on the NPL, EPA may only undertake removal, not remedial,

efforts using the Superfund. See, e.g., SCA Servs., Inc. v. Thomas, 634 F. Supp. 1355, 1382 (N.D.

Ind. 1986). A removal action is considered a short-term cleanup and typically is undertaken to

deal with an imminent threatened release. Expenditures by EPA are “limited by law to $2 million

and a duration of one year (unless a waiver is issued).” Probst & Konisky, supra note 2338, at 33.

2343. Section 104(e) of CERCLA grants EPA broad information-gathering authority, including access to information from persons who might know about the presence of hazardous

wastes at the site, and it permits imposition of a civil penalty against anyone who unreasonably

fails to comply with a section 104(e) information request. 42 U.S.C. §§ 9604(e), 9604(e)(5)

(West 2003). See United States v. Martin, No. 99 C 1130, 2000 WL 1029188, at *10 (N.D. Ill. July

26, 2000) (assessing a civil penalty of “$75 per day for each of the 607 days the defendant unreasonably delayed” in responding to government information requests under section 104);

United States v. Barkman, 784 F. Supp. 1181, 1190 (E.D. Pa. 1992) (“[The defendant’s] delay of

over 700 days in answering completely the Information Requests of the EPA constitutes, by virtue of the duration itself, an unreasonable delay.”); United States v. Tannery, No. 99 C 1130,

1992 WL 1458802, at *1 (N.D. Tex. Dec. 7, 1992) (imposing maximum penalty of $13,452,324

on the defendant who failed to comply with the government’s information request). EPA will

also have done extensive sampling and testing and may, in some instances, have undertaken a

removal action to remedy an immediate hazard. 42 U.S.C. § 9604 (West 2003).
CERCLA (Superfund) § 34.1

645

tives. EPA then prepares a record of decision (ROD), which sets forth the remedy selected and the anticipated costs.2344

The cleanup then moves into an engineering phase to design the remedy,

called remedial design, and finally into the remedial action phase, where the

remedy is actually implemented. Depending on the nature and extent of the

contamination and the cleanup technology selected, it can take many

years—an average of 11.4 years—to complete a cleanup at an NPL site, especially a site involving contaminated groundwater.2345 Complicating this process, EPA often initially divides a site into more than one “operable unit” corresponding “to different physical areas at a site or different environmental media (such as soil or groundwater).”2346 To the extent that the site includes more

than one operable unit, each unit goes through the process described above,

although multiple operable units sometimes proceed through the process simultaneously.

EPA can bring a CERCLA action at almost any point in the remedial process with respect to any operable unit or the site as a whole. Remediation need

2344. See 40 C.F.R. § 300.430(c)(5)(I), (f)(4), (f)(5) (1990). The selection of the remedy in

the ROD is governed by the National Contingency Plan (NCP) and is solely determined by EPA.

EPA is required to publish a proposed plan for remediation in the Federal Register for public

comment and then issue a ROD selecting the response action once public comments on the

proposed plan have been considered. United States v. Rohm and Haas, 721 F. Supp. 666, 674,

n.8 (D.N.J. 1989) (“The ROD presents the remedy in general terms and an estimate of its costs.

The figure may change during the remedial design phase when detailed engineering plans are

developed to implement the general remedial concept.”). Remedies must be in compliance with

all applicable or relevant and appropriate requirements (ARARs), which include any federal and

state cleanup standards or laws relating to a hazardous substance or remedial action (where

more stringent than any federal requirement or contained in a program authorized by EPA).

Probst & Konisky, supra note 2338, at 34; 42 U.S.C. § 9621(d)(2)(A)(i), (ii) (West 2003).

2345. U.S. GAO Rep. 97-20, Superfund Times to Complete the Assessment and Cleanup of

Hazardous Waste Sites 3 (Mar. 31, 1997). Completion of the remedy is assessed as of the date of

completion of construction. EPA considers “remedial action complete when a system for

pumping and treating contaminated groundwater has been installed, even though the system

may have to operate for years before the contamination is reduced to acceptable levels.” Id. at 7.

However, “[r]egardless of whether a site is on the NPL, and regardless of whether the EPA undertakes to clean it up or to order the PRPs [potentially responsible parties] to clean it up, a

CERCLA site may be cleaned up by any party, including but not limited to a state, a locality, a

corporation or an individual, who may then sue the PRPs for reimbursement directly under

CERCLA § 107(a)(4)(A) [for states] or (B) [any other party] and/or § 113(f).” Maxine Lipeles,

Hazardous Wastes 277 (3d ed. 1997).

2346. U.S. GAO Rep., supra note 2345, at 7, 8. See, e.g., United States v. Occidental Chem.

Corp., 200 F.3d 143 (3d Cir. 1999) (EPA divided remediation into two operable units); Kalamazoo River Study Group v. Rockwell Int’l, 107 F. Supp. 2d 817, 819 (W.D. Mich. 2000) (“four

Operable Units consisting of five disposal areas”).
§ 34.11 Manual for Complex Litigation, Fourth

646

not be complete before EPA acts. CERCLA requires only that there be an imminent release or threatened release of hazardous contaminants to initiate a

governmental response, or that the government (or a private plaintiff undertaking cleanup) has incurred response costs.2347 Many of the general principles

applicable to complex litigation apply to CERCLA actions.2348 A CERCLA case

demands “the attention of the judge as an administrator, adjudicator and mediator like no other civil litigation . . . [C]ourts are called upon to employ procedures in the multi-party Superfund site cases to foster economy and fairness

in a process which cannot be economical and often cannot be fair to all participants.”2349 This subsection addresses some of the special features of

CERCLA and discusses issues and problems peculiar to this type of litigation.2350

34.11 Statutory Framework

CERCLA cases often arise differently from most other complex litigation

and can take several forms. Typically, the process begins after the government

(usually EPA) has determined the need for a response action at the site. As part

of its investigation, EPA may seek information regarding the identity of all

persons or entities that may have owned or operated the site, or generated or

transported hazardous substances found at the site. These persons or entities

are statutorily liable under CERCLA and considered potentially responsible

parties, or PRPs.2351 CERCLA affords EPA (and, to a limited extent, private

parties that undertake a cleanup effort) several options, the choice of which

can shape the subsequent action:

• Section 107 cost recovery actions. Section 104 of CERCLA authorizes

EPA to conduct certain response actions using monies from the Superfund. Removal actions are considered interim actions and defined

2347. See, e.g., Romeo v. Gen. Chem. Corp., 922 F. Supp. 287, 289 (N.D. Cal. 1994) (suit

may be filed once a party has incurred some recoverable response cost).

2348. See infra section 10.

2349. Stanley S. Brotman & Jerome B. Simandle, Superfund Case Management and Settlement Processes, C352 ALI-ABA 175, 177 Superfund and Toxic Substances (Dec. 1, 1988). For an

excellent overview, see Ridgway M. Hall, Jr., et al., Superfund Response Cost Allocation: The Law,

the Science, and the Practice, 49 Bus. Law. 1489 (1994).

2350. A number of useful resources provide a good overview of CERCLA and how it has

been interpreted and applied by the courts, as well as by EPA. See Lipeles, supra note 2345; Robert V. Percival et al., Environmental Regulation: Law, Science, and Policy (4th ed. 2003); William

H. Rodgers, Environmental Law (2d ed. 1994); Allan J. Topol & Rebecca Snow, Superfund Law

& Procedure (1992 & Supp. 2003).

2351. 42 U.S.C. § 9607(a)(2) (West 2003).
CERCLA (Superfund) § 34.11

647

as those necessary to prevent the release of a hazardous substance,2352

while remedial actions are defined as actions consistent with a permanent remedy “taken instead of or in addition to removal actions.”2353

After EPA has incurred costs at the site and remedial actions are completed, the government can file a cost-recovery action against the PRPs

under section 107 to recover those costs. Section 107 also permits innocent plaintiffs, i.e., persons who are not also responsible or potentially responsible parties, to file a cost-recovery action against responsible parties to recover all monies expended in cleaning up a hazardous facility. Liability to the government (as well as to “innocent plaintiffs”) under section 107 is typically joint and several; the appropriate

allocation of responsibility among PRPs is typically addressed in private actions for contribution under section 113. These claims for contribution are often asserted as cross-claims or third-party claims by

defendants in section 107 actions initiated by the government.

• Issuance of a section 106 administrative order. CERCLA section 106(a)

authorizes the government to seek injunctive relief or to issue an administrative order compelling responsible parties to clean up, abate, or

otherwise remediate contamination at a site where EPA has determined that there is an “imminent and substantial endangerment to the

public health or welfare.”2354 Incentives for cooperation are fairly

strong: Failure to comply with an administrative order carries civil

penalties up to $27,500 per day for each violation occurring on or after

January 30, 1997.2355 PRPs who incur response costs in complying with

an administrative order may seek contribution from other liable parties pursuant to section 113(9f)(1) of CERCLA, described below. Section 106 orders issued by EPA can name as few as one and as many as

all PRPs at a site, and PRPs who refuse to comply with a section 106

order without “sufficient cause”2356 do so at their peril.

2352. Id. § 9601(23).

2353. Id. § 9601(24).

2354. Id. § 9406(a).

2355. Id. § 9604(e)(5), amended by Omnibus Consolidated Rescissions and Appropriations

Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321, and Civil Monetary Penalty Inflation Adjustment Rule, 61 Fed. Reg. 69360 (Dec. 31, 1996) (to be codified at 40 C.F.R. pts. 19, 27). Penalties

for violation of a section 106 order and treble damages under section 107(c)(3) are cumulative.

42 U.S.C. § 9607(c)(3) (West 2003).

2356. 42 U.S.C. § 9606(b)(1) (West 2003); see United States v. LeCarreaux, Civ. No. 90-

1672, 1991 WL 341191, at *25–27 (D.N.J. July 30, 1991) (financial condition not sufficient cause

for failure to comply).
§ 34.11 Manual for Complex Litigation, Fourth

648

CERCLA explicitly precludes jurisdiction to review section 106 orders,

except in an action by EPA to enforce an order or to recover penalties

for its violation, in an action for reimbursement by participating PRPs

under section 106(b)(2), or pursuant to a cost recovery action under

section 107.2357 Typically, EPA will first notify all identified PRPs of its

intent to issue a section 106 order in an effort to encourage the PRPs

collectively to undertake a remedial action.2358 CERCLA encourages

EPA to minimize litigation by facilitating agreements with PRPs.2359 To

the extent that the PRPs agree to a cleanup effort, the government will

enter into a consent decree with cooperating parties, setting forth the

work to be performed and the liabilities assumed.2360 Even in cases

where agreement has been reached and a consent order signed, judicial

review may nonetheless arise where the PRPs subsequently challenge

EPA actions (such as the remedy selected2361), oversight costs, consistency with the National Contingency Plan (NCP),2362 or proposed set2357. 42 U.S.C. § 9613(h) (West 2003).

2358. See id. § 9622(d)(1)(A), (B). In 1995, EPA issued a new model consent decree, which

eliminated a provision in its predecessor that “required defendants to commit to performing

additional remedy actions in the event the original remedy failed.” Press Release, Dept. of Justice, EPA Announces Model Superfund Consent Decree Designed to Improve Superfund Settlements and Cleanups (July 14, 1995), 1995 WL 414063, at *1 [hereinafter Model Superfund

Consent Decree].

2359. 42 U.S.C. § 9622(a) (West 2003). See also id. § 9622(g)(1) (EPA will also negotiate

settlements with de minimis PRPs (PRPs with extremely small volumetric contributions));

United States v. Occidental Chem. Corp., 200 F.3d 143, 147 (3d Cir. 1999) (“It is through § 122

that PRPs may agree, as opposed to being ordered under § 106(a), to do the remedial work at a

site in the first instance.”). Any sums recovered will be applied to reduce cleanup costs at the

site. See United States v. Cannons Eng’g Corp., 899 F.2d 79, 91 (1st Cir. 1990) (“The statute

immunizes settling parties from liability for contribution and provides that only the amount of

the settlement—not the pro rata share attributable to the settling party—shall be subtracted

from the liability of the non-settlors.”).

2360. See CERCLA §§ 122(d)(1)(A) & (B). It is not unusual for EPA to have reached

agreement with PRPs to conduct an RI/FS. However, the PRPs’ failure to agree to undertake any

other additional work at the site presents a challenge for subsequent efforts at settlement negotiation during litigation, as well as uncertainty as to total cleanup costs. See Model Superfund

Consent Decree, supra note 2358.

2361. See, e.g., In re Bell Petroleum Servs., Inc., 3 F.3d 889, 904–05 (5th Cir. 1993) (holding

EPA could not recover costs for implementation of interim measure found to be “arbitrary and

capricious”).

2362. United States v. N.E. Pharm. & Chem. Co., 810 F.2d 726, 747–48 (8th Cir. 1986),

cert. denied, 484 U.S. 848 (1987); United States v. Am. Cyanamid Co., 786 F. Supp. 152, 158

(D.R.I. 1992); United States v. Kramer, 757 F. Supp. 397, 436 (D.N.J. 1991). The NCP is codified

at 40 C.F.R. § 300 and specifies the procedures and requirements that apply to removal and remedial actions under CERCLA. Response actions by the government under section 107 must be
CERCLA (Superfund) § 34.11

649

tlement agreements between EPA and other PRPs.2363 In some cases,

the primary PRP group may have reached a settlement and entered

into a consent decree with the government on removal or remediation

efforts, but failed to agree on reimbursement of past costs, which may

trigger an action under section 107 by the government on that unresolved portion. Those PRPs that refuse to participate in cleanup actions or otherwise settle with EPA face issuance of the section 106 order, a possible enforcement action, or, if EPA has expended any monies at the site, a cost-recovery action under section 107.2364

• Section 113 contribution actions. Private-party PRPs may themselves

incur response costs a number of different ways, including by reimbursing the government for its response costs through a judgment or

settlement of a section 107 cost-recovery action; by performing actions

pursuant to a section 106(a) administrative order; by performing response actions pursuant to a settlement agreement with the government; or even by performing a voluntary cleanup. Private-party PRPs

generally will seek to recover an equitable portion of such costs from

other PRPs through a contribution action under section 113(f)(a) of

consistent with the NCP. United States v. Hardage, 982 F.2d 1436, 1444 (10th Cir. 1992)

(“Costs, by themselves, cannot be inconsistent with the NCP . . . As long as the government’s

choice of response action is not inconsistent with the NCP, its costs are presumed to be reasonable and therefore recoverable.”). Response costs must be “consistent with” the NCP, as well, for

actions by private parties under section 113. See 42 U.S.C. §§ 9607(4)(A) & (B) (West 2003). See

also Trimble v. Asarco, Inc., 232 F.3d 946, 956–57 (8th Cir. 2000) (where plaintiffs had no existing obligation to reimburse attorneys for response costs incurred on their behalf, they did not

have a viable cost recovery claim); Romeo v. Gen. Chem. Corp., 922 F. Supp. 287 (N.D. Cal.

1994) (response costs must be cognizable under CERCLA in order to make out prima facie case

(citing Ascon Props., Inc. v. Mobil Co., 866 F.2d 1149, 1153–54 (9th Cir. 1989))).

2363. See, e.g., United States v. Am. Cyanimid Co., No. 2:93-0654, 1997 U.S. Dist. LEXIS

4413 (S.D. W. Va. Jan. 27, 1997) (summary judgment granted in part and denied in part for

claims against sole PRP who refused to sign on to consent decree). See also United States v. Ottati & Goss, Inc., 900 F.2d 429, 443–45 (1st Cir. 1990) (raising issue of whether EPA overhead

costs could be reduced because EPA was at fault in delaying the litigation).

2364. See, e.g., Occidental Chem. Corp., 200 F.3d at 153 (issuing of a section 106 order

against the defendant after settlement negotiations failed); United States v. LeCarreaux, Civ. No.

90-1672, 1991 WL 341191 (D.N.J. July 30, 1991) (recalcitrant PRPs held liable for EPA response

costs and treble damages in EPA enforcement action). Often PRP groups that have agreed to

undertake a cleanup and enter into a consent order will have negotiated with EPA an agreement

that nonparticipating PRPs be named in a section 106 order. EPA further has determined that

“one important measure to encourage settlement is to maintain aggressive use of Section 106

administrative and judicial enforcement authorities to compel private party response.”

Memorandum: Interim Guidance: Streamlining the CERCLA Settlement Decision Process, 17 Envtl.

L. Rep. (Envtl. L. Inst.) 35014 (1987) [hereinafter Streamlining].
§ 34.12 Manual for Complex Litigation, Fourth

650

CERCLA. These actions are brought either as original claims or, where

the original PRPs are defendants in a cost-recovery action, as thirdparty claims.2365 In addition, PRPs that have settled with the government (e.g., pursuant to a consent order) or have otherwise undertaken

a removal or remedial effort can file an action for contribution or indemnity under section 113 against nonsettling or nonparticipating

PRPs. Where EPA allegedly failed to follow regulations and to perform

nondiscretionary acts, section 113(h)(4) also permits citizen suits

brought pursuant to section 310.2366

34.12 The Three Phases of CERCLA Litigation

Generally, CERCLA litigation will comprise three interrelated phases, each

of which have case-management implications: (1) liability; (2) determination

of remedy and recoverable costs, including challenges to response actions for

which costs were incurred; and (3) equitable allocation of response costs

among defendants. Cases that also involve government claims for damages for

destruction, injury, or loss of natural resources may require an additional

phase or may considerably complicate the first and second phases. In practice,

issues may cut across these phases:

1. Liability. CERCLA imposes liability on four classes of defendants for

cleanup of a site or facility: (1) past or present owners; (2) past or

present operators; (3) generators; and (4) transporters.2367 In order

to make out a prima facie case, a plaintiff must show only that the

defendant is a responsible party under section 107(a) (i.e., owner,

operator, generator, or transporter) and that there has been a release

or threatened release of a hazardous substance2368 from a “facility”2369

2365. But see Aviall Servs., Inc. v. Cooper Indus., Inc., 263 F.3d 134, 137–38 (5th Cir. 2001)

(costs incurred for voluntary cleanup not recoverable in contribution action in the absence of a

federal or state action under CERCLA § 106 or § 107(a)).

2366. 42 U.S.C. § 9613(h)(4) (West 2003). See Schalk v. Reilly, 900 F.2d 1091, 1095 (7th

Cir. 1990) (in order to prevent unnecessary delay, a citizen suit may not challenge a cleanup

prior to completion of the remedy); Ala. v. United States EPA, 871 F.2d 1548, 1557 (11th Cir.

1989).

2367. 42 U.S.C. § 9607(a) (West 2003).

2368. Id. § 9601(22) defines a “release” as “any spilling, leaking, pumping, pouring, emitting, emptying, discharge, injecting, escaping, leaching, dumping, or disposing into the environment.”

2369. Id. § 9601(9) defines a “facility” as

(A) any building, structure, installation, equipment, pipe or pipeline (including any pipe

into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment,
CERCLA (Superfund) § 34.12

651

that has caused the plaintiff to incur “response costs.” It is not necessary for the plaintiff to prove that the defendant “caused” the release, improperly disposed of the waste, or was otherwise “at

fault.”2370 Indeed, the plaintiff need only prove that some amount of

response cost has been incurred in response to a release or threatened release of a hazardous substance.2371 Moreover, where hazardous substances from multiple parties are commingled, the government need not establish that a particular defendant’s release caused

the incurrence of response costs.2372 CERCLA defenses are limited

and, although disputes about whether a particular defendant qualifies as a responsible party under section 107(a) may require factual

development, defendants have usually found it difficult to avoid liability.2373 Some equitable defenses do exist in an action for contribution under section 113, however, and defenses that negate an element of liability are occasionally successful.2374 Resolution of a PRP’s

liability as soon as practicable can facilitate negotiations on allocation and settlement.

Liability is joint and several in government actions under

CERCLA unless the defendant can prove that the environmental

ditch, landfill, storage container, motor vehicle, rolling stock or aircraft, or (B) any site or

area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or in

any vessel.

2370. See, e.g., Acushnet Co. v. Mohasco Corp., 191 F.3d 69, 77 (1st Cir. 1999) (“To satisfy

the causal element, it is usually enough to show that a defendant was a responsible party within

the meaning of [section] 9607(a); that cleanup efforts were undertaken . . . and that reasonable

costs were expended during the operation.”).

2371. United States v. Kramer, 757 F. Supp. 397, 417 (D.N.J. 1991); United States v. W.

Processing Co., 734 F. Supp. 930, 936–37 (W.D. Wash. 1990).

2372. United States v. Alcan Aluminum Corp., 990 F.2d 711, 721 (2d Cir. 1993); United

States v. Rohm & Haas Co., 939 F. Supp. 1142, 1150 (D.N.J. 1996). (“[F]inding a causal connection between [defendant’s] wastes and USA-EPA’s costs is not required by statute.”).

2373. CERCLA § 107(b) provides a defense to liability for releases caused solely by acts of

God, acts of war, or certain acts or omissions of unrelated third parties. 42 U.S.C. § 9607 (West

2003).

2374. See, e.g., Gould, Inc. v. A & M Battery & Tire Serv., 232 F.3d 162, 170 (3d Cir. 2000)

(Under the Superfund Recycling Equity Act, section 107(a) liability will not attach to persons

“who arranged for recycling of a recycling material.”); RSR Corp. v. Avanti Dev., Inc., 69 F.

Supp. 2d 1119, 1126 (S.D. Ind. 1999) (“[A]rranger liability may be defeated when a defendant

. . . was not disposing of, or delivering for treatment, a hazardous substance, but was selling a

useful product.”); but see United States v. A & N Cleaners & Launderers, Inc., 854 F. Supp. 229

(S.D.N.Y. 1994) (third-party defense and innocent landowner defense unavailable to PRP defendants when they failed to show they satisfied due care and precautionary requirements).
§ 34.12 Manual for Complex Litigation, Fourth

652

harm is divisible.2375 In determining divisibility of harms, many

courts have looked to section 433A of the Restatement (Second) of

Torts (1965), which provides that “[d]amages for harm are to be apportioned among two or more causes where (a) there are distinct

harms; or (b) there is a reasonable basis for determining the contribution of each cause to a single harm.”2376 This is a narrower inquiry

than that undertaken in allocating costs in contribution claims.

However, factual issues relating to the divisibility of harm or apportionment may be closely related to factual issues concerning allocation. Even where these issues prove insufficient to defeat joint and

several liability, they may be of critical importance in allocation.

2. Determination of remedy and damages. Under section 121(a) and

(b)(1), remedies must be “cost effective.”2377 EPA administrative action in selecting a remedy is likely to be determinative in a costrecovery action by the government seeking to recover “response

costs” incurred in a full or partial remediation at the site. In fact,

CERCLA precludes judicial challenge of a selected remedy prior to

its implementation.2378 Any judicial review of the government’s

choice of remedy is limited to the administrative record.2379 However, parties can and do challenge, among other things, whether the

2375. See, e.g., Centerior Serv. Co. v. Acme Scrap Iron & Metal Co., 153 F.3d 344, 348 (6th

Cir. 1998) (“Given the nature of hazardous waste disposal, rarely if ever will a PRP be able to

demonstrate divisibility of harm, and therefore joint and several liability is the norm.”). The

legislative history of the Superfund Amendments and Reauthorization Act (SARA) reflects that

Congress intended liability under CERCLA to be joint and several where appropriate. H.R. Rep.

No. 99-253(I) (1985), at 74–75, reprinted in 1986 U.S.C.C.A.N. 2835, 2856.

2376. Restatement (Second) of Torts § 433A (1965). See In re Bell Petroleum Servs., Inc., 3

F.3d 889, 895 (5th Cir. 1993); Alcan Aluminum Corp., 990 F.2d at 722. See also United States v.

R.W. Meyer, Inc., 889 F.2d 1497, 1507 (6th Cir. 1989) (discussing liability requirements under

Restatement (Second) of Torts § 875.).

2377. 42 U.S.C. §§ 9621(a), (b)(1) (West 2003). See, e.g., United States v. Am. Cyanamid

Co., 786 F. Supp. 152, 161 (D.R.I. 1992) (“As long as the actions taken by the government fit

within the NCP, the costs are presumed reasonable.”).

2378. 42 U.S.C. § 9613(h) (West 2003).

2379. Id. § 9613(j). See United States v. Akzo Coatings of Am., Inc., 949 F.2d 1409, 1423–34

(6th Cir. 1991); In re Acushnet River & New Bedford Harbor, 722 F. Supp. 888, 890–92 (D.

Mass. 1989); United States v. Wastecontrol of Fla., Inc., 730 F. Supp. 401, 404 (M.D. Fla. 1989)

(“Limiting judicial review of response actions to the administrative record also expedites the

process of review, avoids the need for time-consuming and burdensome discovery, reduces litigation costs and ensures that the reviewing court’s attention is focused on the information and

criteria used in selecting the response . . . .” (quoting H.R. Rep. No. 99-253, at 81 (1985), reprinted in 1986 U.S.C.C.A.N. 2835, 2863)); United States v. Rohm & Haas Co., 669 F. Supp. 672,

676–77 (D.N.J. 1987).
CERCLA (Superfund) § 34.12

653

costs sought by EPA were “response costs”2380 and whether the remedy was consistent with the NCP.2381 When a private party brings a

cost-recovery action, the burden is on the plaintiff2382 to prove that

the costs incurred were “necessary” at the time the remedial effort

was undertaken (i.e., an actual threat existed) and that the costs were

consistent with the NCP.2383 In an action brought by the government, the burden is on the defendant.

3. Allocation of response costs. Allocation issues center on equitably apportioning the costs of cleanup among the defendants. Section

113(f)(1) provides that the court “may allocate response costs

among liable parties using such equitable factors as the court determines are appropriate.” Because allocation decisions require the application of a host of factors to a complex factual record involving a

2380. Recoverable response costs include (1) the costs of investigating and monitoring

releases of hazardous substances and costs incurred in planning and undertaking response actions, including health assessment costs incurred by the Agency for Toxic Substances and Disease Registry (Folino v. Hampden Color & Chem. Co., 832 F. Supp. 757, 763 (D. Vt. 1993));

(2) the costs of administration, including the response agency’s indirect costs associated with

cleanups and related enforcement efforts (United States v. Am. Cyanamid Co., 786 F. Supp. 152,

157 (D.R.I. 1992)); (3) the costs of contractors that perform or support response actions on

behalf of the response agency (United States v. Lowe, 118 F.3d 399, 404 (5th Cir. 1997)); (4) the

costs of attorney time and other litigation expenses incurred by the response agency and the

Department of Justice (DOJ) (United States v. Gurley, 43 F.3d 1188, 1200 (8th Cir. 1994));

(5) DOJ indirect costs (United States v. Findett Corp., 75 F. Supp. 2d 982, 989–90 (E.D. Mo.

1999); and (6) prejudgment interest (United States v. Mottolo, 695 F. Supp. 615, 631 (D.N.H.

1988)). Oversight costs, site security costs and actual costs for implementing a remedy also are

recoverable. See United States v. Ottati & Goss, Inc., 900 F.2d 429, 443–45 (1st Cir. 1990) (challenging EPA overhead costs because EPA was at fault in delaying the litigation); Kelley v. Thomas Solvent Co., 790 F. Supp. 719 (W.D. Mich. 1990). Response costs have also been held to

include natural resource damages that result from a release. 42 U.S.C. § 9607(a)(4)(C) (West

2003). A private plaintiff cannot recover natural resource damages, and any monies recovered by

the government for natural resource damages are to be used to “restore, replace, or acquire the

equivalent of such natural resources.” 42 U.S.C. § 9607(f)(1) (West 2003). But see Struhar v. City

of Cleveland, 7 F. Supp. 2d 948, 951 (N.D. Ohio 1998) (response costs did not include medical

monitoring).

2381. See, e.g., United States v. Chapman, 146 F.3d 1166, 1169 (9th Cir. 1998) (government

must show that it incurred response costs); United States v. Hardage, 982 F.2d 1436, 1443–44

(10th Cir. 1992) (PRP could not show costs were inconsistent with the NCP simply by showing

individual costs were excessive or unreasonable); United States v. N.E. Pharm. & Chem. Co., 810

F.2d 726, 747–48 (8th Cir. 1986) (holding that defendants could not dispute costs as unreasonable when they were consistent with the NCP).

2382. See Carson Harbor Vill., Ltd. v. Unocal Corp., 990 F. Supp. 1188, 1193 (C.D. Cal.

1997), aff’d in part and rev’d in part, 227 F.3d 1196 (9th Cir. 2000).

2383. See Mass. v. Blackstone Valley Elec. Co., 867 F. Supp. 76 (D. Mass. 1994).
§ 34.2 Manual for Complex Litigation, Fourth

654

large number of parties, such decisions often represent the most

challenging aspects of CERCLA cases.

34.2 Case Management

.21 Setting Up the Case 662

.22 Special Masters and Magistrate Judges 664

.23 Related Litigation 665

.24 Organizing Counsel 667

.25 Centralized Document Management 669

.26 Narrowing the Issues 670

.27 Joinder 672

.28 Managing Discovery 674

.29 Scientific and Technical Expert Testimony 676

CERCLA has been roundly criticized as being draconian, inefficient, and

costly, with millions of dollars spent on litigation and attorney fees rather than

site cleanup. CERCLA liability virtually ensures that litigation will be complex

and protracted for a number of reasons. The scope of liability is extremely

broad, reaching a wide range of affected parties, from individuals and corporations, both domestic and foreign, to federal, state, and municipal governments, among others.2384 CERCLA draws within its net not only current and

past owners and operators of a contaminated facility, but also generators and

transporters of any hazardous material that was sent to the site. The quality

and quantity of the waste are not factors in assessing CERCLA liability and

provide no grounds for PRPs to avoid liability.2385 In addition, the courts have

consistently construed CERCLA provisions expansively to “avoid frustrating

[its] legislative purposes.”2386 For example, “owner” or “operator” liability under section 107(a) has been extended to include, among others, shareholders,

2384. 42 U.S.C. § 9601(21) defines “person” as an “individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, United States Government,

State, municipality, commission, political subdivision of a State, or any interstate body.”

2385. See Acushnet Co. v. Mohasco Corp., 191 F.3d 69, 76 (1st Cir. 1999) (CERCLA does

not require that there be some minimal quantity of hazardous waste before liability will attach);

B.F. Goodrich v. Betkoski, 99 F.3d 505, 517 (2d Cir. 1996) (CERCLA’s “‘hazardous substance’

definition includes even minimal amounts”). However, the Acushnet court, following in the

footsteps of the Second Circuit, stated that, in apportioning costs, fairness and equity could allow “a defendant [to] avoid joint and several liability for response costs in a contribution action

under § 9613(f) if it demonstrates that its share of hazardous waste . . . constitutes no more than

background amounts of such substances in the environment and cannot concentrate with other

wastes to produce higher amounts.” Acushnet Co., 191 F.3d at 77.

2386. Anspec Co. v. Johnson Controls, Inc., 922 F.2d 1240, 1247 (6th Cir. 1991).
CERCLA (Superfund) § 34.2

655

officers, employees, easement holders, lenders, and contractors.2387 Issues surrounding the liability of parent companies for activities of their subsidiaries2388

and of the liability of successor corporations2389 are still being vigorously contested,2390 as are issues related to liability for passive contamination. The issue

centers on whether there is a distinction between “release” and “disposal,” and

whether passive movement of contaminants is sufficient for PRP liability to

attach under section 107(a).2391 Commonly the problem, many sites targeted by

2387. See, e.g., United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir. 1990). This

decision imposed lender liability and subsequently led to the clarification of CERCLA applicability to lenders in the Superfund Amendments and Reauthorization Act (SARA) amendments

and the Asset Conservation, Lender Liab., and Deposit Ins. Prot. Act of 1996. H.R. 3610, 104th

Cong. (1996). See also Minyard Enter., Inc. v. Southeastern Chem. & Solvent Co., 184 F.3d 373,

380–81 (4th Cir. 1999) (contractor liable under CERCLA for contamination caused after rupturing underground storage tank during the process of removing it); Redwing Carriers, Inc. v.

Saraland Apartments, 94 F.3d 1489, 1512 (11th Cir. 1996) (“[A] ‘disposal’ may occur when a

party disperses contaminated soil during the course of grading and filling a construction site.”);

United States v. USX Corp., 68 F.3d 811, 822 (3d Cir. 1995) (“[CERCLA] § 107(a)(4) plainly

imposes liability on corporate officers and shareholders if they participate in the liabilitycreating conduct.”); Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417 (7th Cir.

1994) (officer or shareholder may be liable under CERCLA when actually participating in operation of the facility); Kaiser Aluminum & Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338

(9th Cir. 1992) (contractor who spread contaminated soil over uncontaminated portions of

property “disposed” of hazardous waste under CERCLA); Tanglewood E. Homeowners v.

Charles-Thomas, Inc., 849 F.2d 1568 (5th Cir. 1988) (person who moves contaminated soil can

be a responsible party under CERCLA).

2388. See, e.g., United States v. Bestfoods, 524 U.S. 51 (1998) (limiting operator liability of

parent company for subsidiary activity to active participation or control or misuse of corporate

form); United States v. Township of Brighton, 153 F.3d 307 (6th Cir. 1998) (municipality may

be operator of waste dump where it made repeated and substantial appropriations to fund

maintenance and to remedy substandard conditions); Schiavone v. Pearce, 79 F.3d 248, 253 (2d

Cir. 1996) (The imposition of operator liability on a corporate parent for a subsidiary’s activity

based on the parent’s control is supported by CERCLA’s statutory scheme, even though it may

be inconsistent with “traditional rules of corporate liability.”); United States v. TIC Inv. Corp.,

68 F.3d 1082, 1091 (8th Cir. 1995) (parent corporation independently liable for activities of

subsidiary); USX Corp., 68 F.3d at 822 (liability compatible with goals of CERCLA). See also

Richard B. Stewart & Bradley M. Campbell, Lessons from Parent Liability Under CERCLA, 6

Natural Res. & Env’t 7, 9 (1992).

2389. See United States v. Mex. Feed & Seed Co., 980 F.2d 478 (8th Cir. 1992).

2390. See Burlington N. & Santa Fe R.R. Co. v. Consolidated Fibers, Inc., No. Civ. A. 5:97-

CV-219-C, 1998 WL 460285, at *2 (N.D. Tex. July 24, 1998) (addressing issue of whether corporation was “dead and buried” and not amenable to suit at time CERCLA action filed).

2391. See United States v. 150 Acres of Land, 204 F.3d 698, 705 (6th Cir. 2000) (“Although

early CERCLA decisions interpreted ‘disposal’ to include passive movement of substances (i.e.,

with no human activity), two circuits have recently limited ‘disposal’ to spills occurring by human intervention.”). Compare Carson Harbor Vill., Ltd. v. Unocal Corp., 227 F.3d 1196,
§ 34.2 Manual for Complex Litigation, Fourth

656

CERCLA are former hazardous waste disposal sites to which numerous companies may have sent waste over many years. Liability under CERCLA has been

held to be retroactive and will attach for disposal or contamination that may

have occurred in years prior to the statute’s 1980 enactment.2392 Indeed, one

case considered whether CERCLA applied to a plant that had operated from

1886 to 1954.2393 Consequently, the number of PRPs at a given site, and involved in the litigation, can number in the hundreds. These parties usually will

be geographically dispersed, although CERCLA provides for nationwide service

of process to ensure that these parties do not avoid, on jurisdictional grounds,

responsibility for cleanup costs.2394

A CERCLA case also can be complicated because liability is strict, and

CERCLA imposes liability without fault, as well as joint and several liability.2395

1205–06, and Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 844–47 (4th Cir.

1992), with United States v. CDMG Realty, 96 F.3d 706, 710–11 (3d Cir. 1996), and United

States v. Petersen Sand & Gravel, Inc., 806 F. Supp. 1346, 1350–52 (N.D. Ill. 1992). Also unsettled is whether the disruption or movement of contaminated earth constitutes a “disposal.”

Compare Tanglewood E. Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573 (5th Cir.

1988) (landfilling and grading by developer constitutes disposal), with Alcan-Toyo Am., Inc. v.

N. Ill. Gas Co., 881 F. Supp. 342, 345–46 (N.D. Ill. 1995) (owners’ excavation and stockpiling,

which did not contribute to the preexisting contamination, did not constitute disposal). See also

Geraghty & Miller, Inc. v. Conoco, Inc., 234 F.3d 917, 929 (5th Cir. 2000) (possibility that environmental contractors caused migration of hazardous substances precludes summary judgment

that contractors are not liable as generators); Blasland, Bouck & Lee, Inc. v. N. Miami, 96 F.

Supp. 2d 1375, 1380 (S.D. Fla. 2000) (absent negligence, response-action contractor cannot be

held liable for failing to remedy contamination but not worsening it).

2392. See, e.g., Gould, Inc. v. A & M Battery & Tire Serv., 232 F.3d 162, 169 (3d Cir. 2000)

(Superfund Recycling Equity Act applied retroactively); In re Penn Cent. Transp. Co., 944 F.2d

164, 166 (3d Cir. 1991); United States v. Monsanto Co., 858 F.2d 160, 166–74 (4th Cir. 1988);

United States v. N.E. Pharm. & Chem. Co., 810 F.2d 726, 734 (8th Cir. 1986); HRW Sys. v.

Wash. Gas Light Co., 823 F. Supp. 318, 329 (D. Md. 1993); City of Phila. v. Stepan Chem. Co.,

748 F. Supp. 283, 289 (E.D. Pa. 1990); Kelley v. Thomas Solvent Co., 714 F. Supp. 1439, 1443–45

(W.D. Mich. 1989); O’Neil v. Picillo, 682 F. Supp. 706, 729 (D.R.I. 1988), aff’d, 883 F.2d 176 (1st

Cir. 1989). But see United States v. Olin, 927 F. Supp. 1502 (S.D. Ala. 1996), rev’d, 107 F.3d 1506

(11th Cir. 1997) (the sole exception to a uniform holding by the courts that the purpose and

history of CERCLA reflected Congress’s intent that it be applied retroactively; the decision was

reversed on appeal by the Eleventh Circuit).

2393. See Fishbein Family P’ship v. PPG Indus., Inc., 871 F. Supp. 764 (D.N.J. 1994). See

also Allied Corp. v. Acme Solvents Reclaiming, Inc., 691 F. Supp. 1100, 1103 (N.D. Ill. 1988) (the

relevant conduct spans nearly thirty years, and the operation had been closed for over fifteen

years before the court’s ruling).

2394. 42 U.S.C. § 9613(e) (West 2003). Section 9613(e), however, does not authorize service of process in foreign countries. United States v. Ivey, 747 F. Supp. 1235 (E.D. Mich. 1990).

2395. See United States v. Monsanto Co., 858 F.2d 160 (4th Cir. 1988); O’Neil, 682 F. Supp.

at 724–26; United States v. Chem-Dyne, 572 F. Supp. 802 (S.D. Ohio 1983). But see United
CERCLA (Superfund) § 34.2

657

Often, in cost-recovery actions brought under section 107, the government will

name a limited number of PRPs as defendants, usually targeting those considered to have been the largest volumetric contributors of waste to the site. A

defendant can avoid the imposition of joint and several liability only where it is

able to show that the harm is divisible and can be reasonably apportioned.2396

Defendants seeking to avoid joint and several liability bear the burden of proof

on both divisibility and apportionment.2397 As CERCLA liability can be extremely expensive, with site remedial costs averaging over $26 million,2398 the

States v. A & F Materials Co., 578 F. Supp. 1249, 1252–57 (S.D. Ill. 1984) (adopting moderate

approach based on Restatement (Second) of Torts, § 443(A), § 881 (1976), but vesting the court

with discretion to impose joint and several liability, even where injury is indivisible, if a fair apportionment method is available). In actions for contribution brought under CERCLA § 113,

courts have held that there is no joint and several liability among defendants. Instead, the court

is to equitably “allocate response costs among liable parties.” 42 U.S.C. § 9613(f)(1) (West

2003). See Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1514 (11th Cir. 1996).

2396. See Redwing Carriers, Inc., 94 F.3d at 1513 (“Recognizing Congress’ intent that ‘traditional and evolving common law principles’ should define the scope of liability under

CERCLA, courts have looked to the Restatement (Second) of Torts, particularly § 433A, for

guidance.” (citing In re Bell Petroleum Servs., Inc., 3 F.3d 889, 895 (5th Cir. 1993))); United

States v. Alcan Aluminum Corp., 990 F.2d 711, 721–24 (2d Cir. 1993); In re Bell Petroleum, 3

F.3d at 894; United States v. Alcan Aluminum Corp., 964 F.2d 252, 269 (3d Cir. 1992). In Kamb

v. U.S. Coast Guard, 869 F. Supp. 793, 799 (N.D. Cal. 1994), the court held that CERCLA liability could be apportioned where lead contamination at the site was divided into two discrete sections, one of which had not been used by defendants. Other courts have found imposition of

joint and several liability appropriate where the site was geographically divisible. See Pneumo

Abex Corp. v. Bessemer & Lake Erie R.R. Co., 936 F. Supp. 1250 (E.D. Va. 1996) (reasonable

basis for apportionment); cf. United States v. Broderick Inv. Co., 862 F. Supp. 272, 277 (D. Colo.

1994) (defendant not jointly and severally liable where the harm was geographically divisible,

contamination from one area has not merged or migrated to others, and defendant had no ownership interest in the land associated with one portion of site). However, although defendants

have had some limited success in showing divisibility, more commonly defendants, even if able

to prove the exact amount of waste they contributed to the site, find it difficult to prove the resulting proportionate harm to soil or groundwater. See O’Neil v. Picillo, 883 F.2d 176, 182 (1st

Cir. 1989) (where, of 10,000 barrels excavated, only 300–400 could be attributed to any given

defendant, defendants had burden of accounting for uncertainty); United States v. Ottati &

Goss, Inc., 630 F. Supp. 1361, 1396 (D.N.H. 1985) (“the exact amount or quantity of deleterious

chemicals or other noxious matter” couldn’t be pinpointed to each defendant); Chem-Dyne

Corp., 572 F. Supp. at 811 (defendants failed to meet burden as to divisibility of harm).

2397. New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1121 n.4 (3d Cir.

1997); United States v. Colo. & E. R.R., 50 F.3d 1530, 1535 (10th Cir. 1995). See also In re Bell

Petroleum, 3 F.3d at 903 (“[W]hether there is a reasonable basis for apportionment depends on

whether there is sufficient evidence from which the court can determine the amount of harm

caused by each defendant.”).

2398. See GAO Rep. 96-125, Superfund—Barriers to Brownfield Redevelopment 3 (June

26, 1996) (“EPA estimates that the average cost to clean up a site on the [NPL] . . . is $26 mil-
§ 34.2 Manual for Complex Litigation, Fourth

658

specter of joint and several liability spread among only the few named PRPs,

and the inclusion in section 113 of a right to contribution, encourage named

PRPs to search out all other potential defendants in order to reduce the PRPs’

own portion of the response costs.2399 As a result, CERCLA actions can involve

scores of defendants and third-party defendants, as well as multiple claims for

indemnification and contribution.2400

Although CERCLA affords a right to contribution and indemnity, there is

no consensus as to the statutory provision under which PRPs must proceed or

the method of determining each PRP’s share of liability. Circuits have generally

found that non-innocent PRPs (i.e., PRPs who have liability at the site) cannot

proceed under section 107 for cost recovery but are limited to bringing an action for contribution under section 113.2401 The distinction is significant.

Whereas there is a six-year statute for cost-recovery actions under section

107,2402 actions under section 113 are subject to a three-year limitation period.

Further, under section 107 a defendant sued for cost recovery may be jointly

and severally liable, but would be only severally liable under section 113 where

costs would be apportioned equitably by the court.2403 Under either provision,

however, there is no specified method of fair apportionment or factors to be

considered, and models of apportionment or allocation vary widely and can

result in complex technical inquiries.

Some CERCLA cases brought by the government become complex because

the action may have been filed at the early stages of cleanup while administralion.”); Katherine Probst, Footing the Bill for Superfund Cleanups: Who Pays and How? 1

(1995) (citing the average cost at $29.1 million). Some site remedial costs have exceeded $100

million. William D. Evans, Jr., CERCLA’s Third-Party Practice: Its “Cape Fear” Features, 9-4

Mealey’s Litig. Rep. Superfund 14 (May 24, 1996).

2399. Evans, supra note 2398, at 14 (“In April, 1996, the U.S. Environmental Protection

Agency (EPA) announced that 56 PRPs had agreed to pay up to $109 million to settle cleanup

claims at the Fike/Artel Superfund Site in Nitro, West Virginia.”).

2400. See, e.g., New York v. Exxon Corp., 744 F. Supp. 474 (S.D.N.Y. 1990) (including 15

primary corporate defendants and approximately 300 third-party defendants); United States v.

Stringfellow, 661 F. Supp. 1053 (C.D. Cal. 1987) (with more than 100 parties).

2401. See, e.g., New Castle County, 111 F.3d at 1121; Pinal Creek Group v. Newmont

Mining Corp., 118 F.3d 1298, 1301–06 (9th Cir. 1997); Redwing Carriers, Inc., 94 F.3d at 1497

n.4; Colo. & E. R.R. Co., 50 F.3d at 1535–37; Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761,

764 (7th Cir. 1994); United Techs. Corp. v. Brown-Ferris Indus., Inc., 33 F.3d 96, 98 (1st Cir.

1994). But see Town of Wallkill v. Tesa Tape, Inc., 891 F. Supp. 955, 959–60 (S.D.N.Y. 1995)

(both private and governmental PRPs can maintain claims under both section 107 and section

113); United States v. SCA Servs., Inc., 849 F. Supp. 1264 (N.D. Ind. 1994).

2402. 42 U.S.C. § 9613(g)(2) (West 2003).

2403. Hope Whitney, Cities and Superfund: Encouraging Brownfield Redevelopment, 30

Ecology L.Q. 59, 76–77 (2003).
CERCLA (Superfund) § 34.2

659

tive proceedings are still ongoing. In such instances, “the litigation in the

courthouse proceeds in a clumsy pas de deux with the administrative process

before the agency.”2404 The status of the cleanup at the time the action is filed

can significantly affect both the progress of the litigation and any settlement

efforts. Full information regarding the extent of contamination, including

scope as well as composition, may not be available. Similarly, estimates of the

total cost of remediation, central to allocation and settlement decisions, will

not have been made or may still be in the early stages of development, hindering the possibility of a global settlement. Where administrative proceedings are

ongoing, it is imperative that the court be informed early on of the administrative status in order to assess its likely effect on the progress of the litigation

and on allocation and settlement efforts.

Efficient management of CERCLA litigation helps prevent it from overwhelming the court and the parties and assists in reducing delay. Casemanagement strategies differ depending on whether the case is brought by the

government or by private parties and under which provision of the statute. A

critical factor is the number of PRPs. Fairly small sites with a small number of

PRPs will not require the oversight necessary in actions arising from larger

sites. Cost-recovery and contribution actions that involve numerous parties

expand the factual and legal issues. PRPs look for any avenue of escape in an

attempt to either avoid or minimize CERCLA exposure, and a court can expect

challenges raising a variety of issues.2405

2404. Brotman & Simandle, supra note 2349, at 188. “Discovery is being taken in the

courthouse to identify new parties while the agency propounds section 104 information requests. The Record of Decision (ROD) for Phase I of a cleanup may be under judicial review

while the parties battle before the agency in the Phase II RI/FS process; settlement of Phase I

issues in court may also depend on the Phase II administrative process coming into focus. Efforts by PRPs in court to allocate liability shares among themselves may deter the agency from

preparing a ‘nonbinding preliminary allocation of responsibility’ (NBAR) under SARA

§ 122(e)(3).” Id.

2405. See, e.g., United States v. Alcan Aluminum, 964 F.2d 252 (3d Cir. 1992) (also holding

that CERCLA liability does not require the presence of a “threshold quantity of a hazardous

substance”); United States v. Alcan Aluminum, 755 F. Supp. 531, 537 (N.D.N.Y. 1991) (presence

of a hazardous substance in waste sufficient for CERCLA liability); United States v. Carolawn

Co., 21 Envt. Rep. (BNA) 2124, 2126 (D.S.C. 1984) (rejecting defendant’s argument that hazardous constituents in waste in negligible amounts were not sufficient to meet CERCLA’s “hazardous waste” definition). See also Textron, Inc. v. Barber-Coleman Co., 903 F. Supp. 1570, 1581

(W.D.N.C. 1995) (rejecting argument that hazardous substances had biodegraded over time and

therefore did not cause contamination that required remediation); United States v. Conservation Chem. Co., 619 F. Supp. 162, 238–41 (W.D. Mo. 1985) (rejecting defendants’ argument

that their provision of lime slurry and fly ash for cleanup of an environmental site could not

expose them to CERCLA liability); New York v. Gen. Elec. Co., 592 F. Supp. 291, 297 (N.D.N.Y.
§ 34.2 Manual for Complex Litigation, Fourth

660

There are several questions that recur in CERCLA litigation:

• What is the status of site cleanup and the impact on the litigation of the

process? For example, have any consent decrees been entered in the

case, and what do they cover? Nonsettling PRPs may also challenge

proposed settlement consent decrees between the government and

other parties.2406 Has the action been brought by the government to recover the costs of early response actions at the site, while remedial decisions remain pending?2407 Is the remedy for the site appropriate and

consistent with the NCP, eliminating those challenges from the litigation?2408 What is the history of settlement negotiations and the best

way to structure a settlement process?2409 In cases where remedial decisions have yet to be made, is a stay of the litigation appropriate?

1984) (rejecting argument that used transformer oil, sold to control dust, was a product not

subject to CERCLA); United States v. A & F Materials Co., 582 F. Supp. 842, 844–45 (S.D. Ill.

1984) (sale of spent “caustic solution” could be a waste for purposes of CERCLA). But see 3550

Stevens Creek Assoc. v. Barclays Bank, 915 F.2d 1355 (9th Cir. 1990) (use of asbestos as a building material did not constitute hazardous waste for purposes of CERCLA).

2406. See, e.g., United States v. Kramer, 19 F. Supp. 2d 273, 276 (D.N.J. 1998) (non-settling

defendants raised numerous objections to a proposed consent decree between the government

and settling defendants).

2407. See, e.g., id. (cost-recovery action filed by government because of imminent expiration of statute of limitations on an initial removal action, although remedy had not yet been

implemented).

2408. In most cases the remedy (i.e., how the site is to be cleaned up) has been administratively selected by EPA. PRPs can and do raise challenges to the appropriateness of the remedy, as

well as to costs that EPA (or private parties) are seeking to recover. An example of a challenge to

the remedy might be that EPA is demanding the groundwater be made “drinking water” safe

where the water table is not used for residential purposes. Challenges to costs being sought by

EPA are typically based on the assertion that the costs were incurred pursuant to response actions inconsistent with the NCP. United States v. Kramer, 757 F. Supp. 397, 436 (D.N.J. 1991).

However, arguments that costs are the result of response actions inconsistent with the NCP are

not defenses to liability, but only to the recovery of specific costs. Ill. v. Grigoleit Co., 104 F.

Supp. 2d 967, 980 (C.D. Ill. 2000); United States v. Cantrell, 92 F. Supp. 2d 704, 717 (S.D. Ohio

2000). Where the action involves private parties seeking cost recovery, the burden is on the

plaintiff to prove that the response actions for which the costs were incurred were “necessary”

and “consistent with” the NCP. 42 U.S.C. § 9607(a)(4)(B) (West 2003); City of Heath v. Ashland

Oil, Inc., 834 F. Supp. 971, 976 (S.D. Ohio 1993). Response actions “carried out in compliance

with the terms of an order issued by EPA pursuant to section 106 of CERCLA, or a consent decree entered into pursuant to section 122 of CERCLA will be considered ‘consistent with the

NCP.’” 40 C.F.R. § 300.700(c)(3)(ii) (2003). Other response actions must be in “substantial

compliance” with the NCP to allow for private cost recovery. Id. § 300.700(c)(3), (c)(5)–(6).

2409. Defendants may seek a global settlement of the litigation, which may be difficult to

achieve where remedial decisions remain.
CERCLA (Superfund) § 34.2

661

• What is the likely size and scope of the case? Is referral to a magistrate

judge, special master, or allocation consultant warranted in light of the

likely size of the case? Are there sizeable groups of de minimis or de

micromis litigants, and is it possible to settle these groups out early in

the litigation? What is the feasibility of exercising supplemental jurisdiction over state law claims given the size and posture of the case?

Can the case be segmented and phased and, if so, what sequence will

best facilitate resolution?

• What costs are being sought and what is the best structure for achieving a

fair allocation among the PRPs? Relevant to this inquiry is whether the

plaintiff can prove causation and whether any PRP will be able to

show divisibility of harm given the characteristics of the site and the

contamination. Although CERCLA is a strict liability statute, PRPs

nonetheless frequently challenge causation. Most courts have held that

proof of liability under CERCLA requires only that the plaintiff prove

the PRP deposited waste at a site from which there was a release or

threatened release, and the government, particularly, is not required to

“fingerprint” waste.2410 Other factors that can affect the costs recovered

by the government, or equitable allocation among the PRPs in contribution claims, include the size of the “orphan shares” and how they

are handled. Orphan shares are the shares of companies that are out of

business, bankrupt, or dissolved and therefore cannot be assigned a

share of responsibility.

2410. See, e.g., Kalamazoo River Study Group v. Menasha Corp., 228 F.3d 648, 654 (6th

Cir. 2000); Alcan Aluminum Corp., 964 F.2d at 266. But see Idaho v. Bunker Hill Co., 635 F.

Supp. 665, 674 (D. Idaho 1986) (finding damage for which recovery is sought must still be causally linked to the act of the defendant where plaintiff is seeking recovery for injury to natural

resources). Actual contamination of the plaintiff’s property is unnecessary. Dedham Water Co.

v. Cumberland Farms Dairy, Inc., 889 F.2d 1146, 1154 (1st Cir. 1989). Moreover, a plaintiff is

not required to prove either that the specific defendant’s waste was “released” at the site or that

it caused actual contamination, to establish liability. United States v. Alcan Aluminum, 990 F.2d

711, 721 (2d Cir. 1993); United States v. Monsanto Co., 858 F.2d 160, 169 (4th Cir. 1988); Artesian Water Co. v. New Castle County, 659 F. Supp. 1269, 1281–82, aff’d, 851 F.2d 643 (3d Cir.

1988) (neighboring owners may recover response costs incurred as the result of the threat that

wastes from a hazardous site could migrate into their wells). However, several courts have held

that defendant’s waste must have caused the plaintiff to incur response costs before liability can

be imposed. See Acushnet Co. v. Coaters, Inc., 937 F. Supp. 988, 994–96 (D. Mass. 1996) (where

plaintiffs were unable to prove that the defendant’s creosote-treated utility pole butts contributed to response costs incurred by the plaintiffs, defendant would be absolved of CERCLA liability); Dedham Water Co., 889 F.2d at 1152–54 (defendant’s waste must have caused the plaintiff to incur response costs through either release or threatened release before liability can be

imposed). In addition, causation is a major player in pendent state tort claims for negligence.
§ 34.21 Manual for Complex Litigation, Fourth

662

34.21 Setting Up the Case

Early institution of an initial case-management order will help organize the

case, provide a preliminary identification of legal and factual issues, and educate the court as to the potential size and complexity of the litigation. The casemanagement order can then be revised as the case progresses. Counsel will

welcome a detailed agenda in advance of the conference. It is also helpful to

caution the parties to anticipate schedules with firm deadlines for the filing of

third-party claims or cross-claims for contribution and indemnity, amendment of the pleadings, the filing and hearing of motions, and the joinder of

additional PRPs identified as the litigation progresses. Timely joinder of all

PRPs is an important facet of judicial management in a CERCLA case. The

court should closely monitor identification of PRPs as discovery progresses.

Discuss with counsel the feasibility of an on-line depository for docket information, orders, opinions, or other information that the court or the parties

may want to disseminate.

In addition to items recommended in section 11, the following actions are

worth considering early on in the case and can be effected either through an

order sua sponte or through a case-management order issued in conjunction

with the initial Federal Rule of Civil Procedure 16 conference:

• consider whether the case is appropriate for liaison or joint counsel,

soliciting views of the parties in the method of selecting such counsel,

and establishing litigation committees or subcommittees to facilitate

communications between various groups of parties, liaison counsel,

and the court;

• consider whether the case should be bifurcated or trifurcated into two

or more phases, such as liability, amount, and recoverability of response costs and allocation;

• order the early exchange of information between the parties regarding

the identity of all known PRPs, including those documents reflecting a

party’s relationship with the site, and the production by the government to PRPs of all files relating to the site, including documents reflecting the history, operation, investigation, sampling, monitoring,

and remedial actions at the site—where EPA is a party, it can be ordered to produce the data it has collected through its site investigation

as well as the PRP responses to information requests under section

104(e), and its official record of decision created to determine the appropriate response under section 113(k);

• identify separate private party or government cases regarding the same

site, and any pending state or administrative actions at the site, and
CERCLA (Superfund) § 34.21

663

consider whether to consolidate private party and/or government

cases;

• identify any other proceedings arguably related to the CERCLA case

(e.g., toxic tort, insurance, bankruptcy);

• require parties to disclose the settlement history, if any, and inquire

into the existence of nonbinding allocation agreements or other preliminary allocation attempts—section 122(e)(3) encourages the government to provide a nonbinding preliminary allocation of responsibility (NBAR) to facilitate settlement negotiations (NBARs are not

admissible);

• if the action is based on a settlement consent decree, establish the type

of consent decree, whether the decree includes all PRPs, and whether

the parties anticipate objecting to or opposing the consent decree or

the existence of any other procedural or substantive issue; persons or

entities seeking to oppose the entry of the consent decree may seek

leave to intervene during the public notice period triggered by the notice of lodging of the consent decree;

• determine whether the case would benefit from a stay of litigation to

allow the parties to engage in serious settlement negotiations or, alternatively, whether the use of alternative dispute resolution strategies

would be helpful;2411

• encourage early discussions for de minimis settlements to minimize the

transaction costs incurred by small contributors—one commentator

has estimated that “those costs can easily reach $200,000–$300,000

every six months for small groups of de minimis or mid-volume

PRPs”;2412

• create a schedule for the identification, discovery, and coordination of

experts—a case-management order can promote cordial discussion,

providing that discussions among groups of litigants will not constitute evidence of a conspiracy and that an expert’s inadvertent disclosure of confidential information during such discussion will not waive

trade-secret or attorney work-product protections (in cases brought

by the government, the nature and scope of permissible expert testimony may be more limited than expert testimony relevant in private

party contribution actions. (For example, in government cost-recovery

2411. See, e.g., Lauren Stiller Rikleen, Managing Complex Environmental Disputes: From

Superfund to Brownfields—A Model Still Evolving, 31 Urb. Law. 591, 598–99 (1999).

2412. Martin A. McCrory, The Equitable Solution to Superfund Liability: Creating a Viable

Allocation Procedure for Businesses at Superfund Sites, 23 Vt. L. Rev. 59, 83 (1993).
§ 34.22 Manual for Complex Litigation, Fourth

664

cases, expert testimony might be limited to liability issues, divisibility

questions, and cost-accounting matters. Consider the schedule of expert identification and discovery in conjunction with the various

phases of the litigation. For example, expert testimony or allocation

issues in private party contribution cases will not be necessary until the

contribution claims are prepared and tried, which, in a case initiated

by a government cost-recovery action, is often in the third phase of

litigation.);

• establish a schedule for filing and hearing of motions;

• require each side to meet and agree on a statement of the factual and

legal issues in dispute, including defenses being asserted to liability and

any challenges to government action, particularly challenges to the selection of remedy; stipulations as to liability, or to elements of liability,

are useful in streamlining the case, particularly where the parties can

agree that such issues are not seriously in dispute; and

• determine the need for a document repository and other shared databases.

34.22 Special Masters and Magistrate Judges

Generally, the use of special masters in CERCLA cases has been approved

only for limited pretrial purposes. Several circuits have specifically rejected reference to a special master to make recommendations on dispositive motions or

to preside at trial in CERCLA cases.2413 Circuits have approved reference where

there is a need for extraordinary pretrial management as a result of the large

number of parties and vast amounts of evidence, in light of the significant

technical issues that pervade CERCLA litigation.2414 Special masters may also

prove helpful in analyzing the database and assisting in the development of an

allocation model.2415 Allocation inquiries typically involve technically complex

2413. In re United States, 816 F.2d 1083 (6th Cir. 1987) (reference rejected for dispositive

motions and trial even though there were over 200 defendants and over 600 third-party defendants in the case); In re Armco, Inc., 770 F.2d 103 (8th Cir. 1985). But see Washington v. United

States, 930 F. Supp. 474 (W.D. Wash. 1996) (objections to the magistrate judge’s report and

recommendation sustained on summary-judgment motion).

2414. See generally Thomas E. Willging, Laural L. Hooper, Marie Leary, Dean Miletich,

Robert Timothy Reagan & John Shapard, Special Masters’ Incidence and Activity: Report to the

Judicial Conference’s Advisory Committee on Civil Rules and Its Subcommittee on Special

Masters (Federal Judicial Center 2000).

2415. See, e.g., Chem-Nuclear Sys., Inc. v. Clinton, No. CIVA96-1233, 2000 WL 1898476, at

*1 (D.D.C. Sept. 18, 2000) (magistrate judge appointed as special master “for the purpose of

recommending findings of fact and conclusions of law on all issues presented” to the court).
CERCLA (Superfund) § 34.23

665

issues and review of sampling data, waste synergies, migration, and toxicity, as

well as the remedial measures proposed. Reference to a magistrate judge may

be appropriate for discovery, particularly to ensure the identification of all

necessary PRPs. Reference also may facilitate settlement negotiations, thereby

limiting the district judge’s involvement and preserving the ability to preside

on dispositive motions and at trial.2416

34.23 Related Litigation

The court and parties may need to make special efforts to identify cases

and claims that are related to the CERCLA case. Such proceedings may include

actions under other federal environmental statutes, such as the Resource

Conservation Recovery Act (RCRA) or the Clean Water Act (CWA), as well as

state judicial or administrative proceedings to enforce CERCLA-type laws. The

degree of federal–state cooperation will vary. In many instances, however, both

federal and state agencies are involved in cleanup enforcement actions and will

be working together. In addition, CERCLA requires that any remedies comply

with “all applicable or relevant and appropriate requirements” of state environmental laws, potentially adding additional issues to the CERCLA suit.2417

States also may proceed under state-administered RCRA programs.2418 In some

instances, state requirements may be more stringent than comparable RCRA

provisions.2419 CERCLA also provides for citizen suits under certain circumstances, which could arise in separate actions. Superfund Amendments and

Reauthorization Act (SARA) § 310(a) allows citizen suits against any person

(including the government) “alleged to be in violation of any standard, regulation, condition, requirement, or order which has become effective” or against

the government where it has failed “to perform any act or duty [under

CERCLA] . . . which is not discretionary.”2420 Because SARA also contains provisions limiting preenforcement review, the courts have split over how to handle citizen enforcement, including enforcement of other federal laws.2421

2416. For an example of a case where a magistrate judge was used both to manage discovery matters and to serve as settlement judge, see United States v. Kramer, 19 F. Supp. 2d 273, 278

nn.7 & 9 (D.N.J. 1998).

2417. 42 U.S.C. § 9621(d)(2), (3) (West 2003).

2418. See id. § 9626(b).

2419. Id. See also Lipeles, supra note 2345, at 100.

2420. 42 U.S.C. § 9659(a)(1) (West 2003).

2421. See Topol & Snow, supra note 2350, § 2.7 and cases cited in supplement (“[C]ourts

have shown a reluctance to permit the citizen suit provisions to serve as the basis for avoiding

SARA’s prohibition against pre-enforcement review.”); Marianne Dugan, Are Citizen Suits

CERCLA § 113(h)’s Unintended Victims?, 27 Envtl. L. Rep. (Envtl. L. Inst.) 10003 (Jan. 1997).
§ 34.23 Manual for Complex Litigation, Fourth

666

Further, although CERCLA cases are statutory and do not involve personal

injuries, the same release of hazardous substances into the environment that

triggers a statutory action may also be the basis for toxic tort cases, implicating

the same defendants and raising similar issues. Other private state law claims,

filed in state court or in federal court based on diversity, include insurance

coverage disputes and tort claims for personal injury or property damage, typically based on negligence, nuisance, trespass, or strict liability. Finally, one or

more PRPs may be in bankruptcy, introducing yet another layer of complexity.2422

If there is related litigation, consider whether coordination with the

CERCLA litigation is feasible. For example, coordination of insurance coverage

litigation with a CERCLA case could enhance the prospect of settlement of

both groups of cases. Discovery of insurance information, however, should

proceed as permitted under Rule 26(b). The same group of insurers often will

have carried the policies for many of the PRPs. The court may want to avoid

any formal consolidation, however, because the principal issues in these actions are distinct. Insurance litigation turns on contractual arrangements.2423

Incorporating coverage questions into a larger CERCLA action can involve

numerous insurers located across the country and can require application of

the laws of different states. As noted by one jurist, not only are state courts

“better prepared” to decide coverage cases, but “even if similar insureds were

grouped together into ‘omnibus’ declaratory judgment motion practice, individual situations might not be congruent.”2424 In addition, coverage litigation

can involve more than one waste site at which the insured is a PRP, and therefore involve facts and issues not relevant to the CERCLA litigation at hand.

Consider, however, whether an early order requiring production of documents

and depositions produced during discovery in related cases would assist in

streamlining discovery in the CERCLA case.2425

2422. Generally, governmental regulatory actions, such as EPA actions under CERCLA, are

exempt from the automatic stay provisions of the Bankruptcy Act, but a money judgment obtained in a CERCLA proceeding cannot be executed without approval from the bankruptcy

court. 11 U.S.C. § 362(b)(4) (West 2003). See, e.g., United States v. Nicolet, Inc., 857 F.2d 202,

209–10 (3d Cir. 1988). See also Topol & Snow, supra note 2350, § 7.7.

2423. But see City of New Orleans v. Kernan, 933 F. Supp. 565, 568 (E.D. La. 1996) (holding that the district court “can and should exercise” supplemental jurisdiction over state insurance claims arising out of CERCLA litigation to effect an orderly resolution of the case).

2424. Brotman & Simandle, supra note 2349, at 187.

2425. For a consideration of the factors involved in obtaining orders placing the case file

under seal, see infra § 11.432.
CERCLA (Superfund) § 34.24

667

The court should also consider whether it is appropriate to exercise supplemental jurisdiction over state law claims2426 or whether to reject such jurisdiction to avoid unduly complicating the litigation.2427 In cases involving outof-state defendants, typical in CERCLA actions, constitutional, statutory, and

fairness issues arise when nationwide service of process is used to obtain personal jurisdiction over parties to supplemental state law claims lacking an independent basis for federal jurisdiction.2428 Such issues include whether state

law claims introduce a right to a jury trial in a case that otherwise would be a

bench trial, and whether the jury’s findings of fact affect the outcome of what

would otherwise be nonjury issues.2429

34.24 Organizing Counsel2430

CERCLA cases are strong candidates for the appointment of liaison or lead

counsel, in light of the number of parties usually involved in such cases.

Counsel should (1) be sensitive to conflicts between their role as liaison counsel and the representation of their individual client; (2) keep all other counsel

informed and encourage their participation in the direction of the group’s

strategy; and (3) ensure that a balance is maintained between the “common

needs of the group and the divergent needs of an individual member . . . .”2431

Organization of counsel is essential in order for the court and the parties

to be able to communicate effectively. It minimizes duplicative discovery and

2426. See 28 U.S.C. § 1367(a) (West 2003) (creating supplemental jurisdiction for claims

related to federal question actions). See also New York v. Shore Realty Corp., 759 F.2d 1032,

1050 (2d Cir. 1985) (upholding supplemental jurisdiction over a state law nuisance claim in a

CERCLA suit); Kernan, 933 F. Supp. at 568 (exercising supplemental jurisdiction over insurance

claims); N.J. Dep’t of Envtl. Prot. v. Gloucester Envtl. Mgmt. Servs., Inc., 719 F. Supp. 325,

334–35 (D.N.J. 1989) (court exercised jurisdiction over state claims even after EPA, which had

removed case from state court, was dismissed from the litigation).

2427. See, e.g., Struhar v. Cleveland, 7 F. Supp. 2d 948, 954 (N.D. Ohio 1998) (refusing to

exercise pendent jurisdiction over plaintiff’s state claims after granting summary judgment to

defendant on the federal claims arising under CERCLA); Commerce Holding Co. v. Buckstone,

749 F. Supp. 441, 446–47 (E.D.N.Y. 1990) (differences in legal issues, standards of proof, a right

to jury trial, and remedies warrant exercise of discretion to dismiss pendent state claims without

prejudice). See generally Topol & Snow, supra note 2350, § 7.3, n.29.

2428. See Jon Heller, Note, Pendent Personal Jurisdiction and Nationwide Service of Process,

64 N.Y.U. L. Rev. 113 (1989); James J. Connors, Note, Nationwide Service of Process Under the

Comprehensive Environmental Response, Compensation, and Liability Act: The Need for Effective

Fairness Constraints, 73 Va. L. Rev. 631 (1987).

2429. Lytle v. Household Mfg., Inc., 494 U.S. 545, 550–55 (1990); Dollar Sys. v. Avcar

Leasing Sys., 890 F.2d 165, 170–71 (9th Cir. 1989).

2430. See generally supra section 10.22.

2431. Brotman & Simandle, supra note 2349, at 182.
§ 34.24 Manual for Complex Litigation, Fourth

668

motion practice and provides the court with an individual liaison for each

group to contact about scheduling and other nonsubstantive matters. It also

limits the number of attorneys seeking to argue motions or file papers. Counsel

should be advised of relevant guidelines, such as the avoidance of duplicative

efforts (e.g., providing in a case-management order that a party waives its right

to raise an issue unless it is first presented to a committee of counsel). Subjectmatter subcommittees can be created to work on what are likely to be common

issues relating to defenses, liability (e.g., standards for successor liability), joinder of parties, jurisdiction, discovery, remediation, and allocation. These

committees can be delegated authority to represent the parties in that group

for purposes of litigation, management, and trial preparation. To do this, the

court will need to determine a fair and efficient grouping of the parties. Lead

or liaison counsel then can be selected after consultation with the groups of

parties as to method and manner of selection, as well as compensation.

At the outset, it is useful to become familiar with the parties’ own efforts to

organize themselves in response to EPA’s prelitigation investigation at the site.

Often the primary PRPs will have formed a group that was represented in negotiations with EPA by common or joint counsel, and this same counsel may

also be representing the PRP group in the subsequent litigation. These PRPs

are also likely to have grouped themselves (usually by size) in a manner they

have already determined to be fair and effective—at least for administrative

purposes and for remediating the site—and that may be effective for the litigation as well. In such cases, the primary PRPs also may have established a binding allocation agreement among themselves and reached agreement on how

any monies will be distributed, thus minimizing conflicts and cross-claims.

The focus would then shift to an effective organization of the remaining parties, usually third-party defendants. In these third-party matters and in cases

where no agreement exists within the primary PRP group, conflicting interests

are common, and the court and the parties will need to be sensitive to the

problems that can arise from grouping parties that may have adverse claims.

The method of organization may vary. One approach is to allow the parties

to organize themselves, nominate lead and liaison counsel, propose a mode of

payment, define the authority of lead and liaison counsel, and define a committee structure. It may be sufficient for the court to suggest these topics as an

agenda for a meeting of counsel. The judicial role would then be simply to

evaluate any proposal to ensure that it meets the court’s litigation management

needs, and to issue an appropriate order for its implementation with any necessary modifications. The judge, of course, retains the final authority over

whether to enter an order adopting the parties’ recommendations.

Another alternative is to organize the parties based on similar interests

with respect to the legal issues, such as using the statutory classifications for

liability set out in section 107(a): owners, operators, generators, and transport-
CERCLA (Superfund) § 34.25

669

ers.2432 A third approach is to organize the parties by volumetric share of waste

sent to the site, thus separating large generators from small or de minimis participants.2433 This is a particularly useful classification for settlement purposes.

In fact, the court may establish a separate “settlement committee” of counsel

that focuses solely on settlement.2434 Other relevant communities of interest for

facilitating settlement may be defined by the type of substance a group of PRPs

sent to the site, its toxicity, or where it is located on the site.2435 Regardless of

how the parties are organized, the court should ensure that they have agreed to

a method of funding (typically pro rata) of group activities or other joint services, as well as the method of compensation of liaison counsel, and that this

agreement is put in writing. For example, the parties may undertake joint expert studies, retain an allocation consultant, or engage in private mediation.2436

34.25 Centralized Document Management

CERCLA litigation involves large numbers of documents. Consider the

feasibility, in light of the number of parties typically involved, of a central

document depository or shared database of documents produced during discovery. The document depository can be managed through an independent

entity, with the costs shared pro rata among the parties. Alternatively, to avoid

the costs of establishing and maintaining a separate and independent depository, the parties may be willing to vest lead counsel with the responsibility of

establishing and maintaining a uniform system of organization for all documents produced. Counsel would also be responsible for providing access for

the inspection and copying of documents to all parties, with the parties paying

the cost through the agreed on fee arrangement. Document databases can significantly reduce the associated cost and expense of discovery. Large volumes

of documents can be copied and distributed economically to the parties. They

then can be inspected and copied by interested parties, reducing the burden of

production on the producing party and the associated costs for all parties.

However the depository is set up, its custodian should be charged with keeping

2432. See, e.g., N.J. Dep’t of Envtl. Prot. v. Gloucester Env’t Mgmt. Servs., Inc., 668 F. Supp.

404 (D.N.J. 1987) (case-management order appointing five liaison counsel for the plaintiff, the

owner, the alleged operators, the alleged generators, and the alleged transporters); United States

v. Kramer, 757 F. Supp. 397, 410 (D.N.J. 1991).

2433. See, e.g., Denver v. Adolph Coors Co., 829 F. Supp. 340 (D. Colo. 1993) (order regarding approval of de minimis and mid-tier settlements).

2434. See Brotman & Simandle, supra note 2349, at 181 (suggesting negotiation process

might benefit from choosing negotiators who are not also serving as lead counsel).

2435. See, e.g., Kamb v. U.S. Coast Guard, 869 F. Supp. 793, 799 (N.D. Cal. 1994).

2436. See Brotman & Simandle, supra note 2349, at 181.
§ 34.26 Manual for Complex Litigation, Fourth

670

a copy of all documents produced in the case, from whatever source, as well as

other litigation documents (such as responses to interrogatories, document

requests, and deposition transcripts). Creating a central document depository

or a computerized document storage system can help ensure that newly joined

parties have access to the product of prior discovery and can hold demands for

additional discovery to a minimum. The benefits and detriments of using a

document depository are explored more fully in section 11.444.

34.26 Narrowing the Issues2437

Parties often plead defenses that they do not intend to pursue seriously or

that fly in the face of settled law. The initial conference can be designed to

eliminate such unmeritorious arguments. Requiring each side or group to

meet and develop an agreed-on statement of the factual and legal issues in dispute, as well as using the Rule 16 conference to clarify any ambiguities, should

help identify the genuinely controverted issues and force abandonment, or

quick disposition, of marginal issues. Pressing the lawyers to identify facts supporting each element of each claim or defense and to tie the claim or defense to

the legal framework of CERCLA may also help reveal the strengths and weaknesses of parties’ positions. Issues can then be outlined in a logical and practical sequence, to facilitate management of motions that might result, for example, in the dismissal of parties to the litigation (e.g., if a party falls within section 107(a) or if one of the narrow statutory defenses applies), or even of the

entire litigation (e.g., if the government’s remedy is consistent with the NCP).

Secondary issues can then be identified and incorporated into the casemanagement plan, which may also include a proposed structure for settlement

discussions and trial. Organizing issues in terms of the liability, the amount

and recoverability of costs, and the allocation phases of CERCLA litigation is

helpful.

Using the Rule 16 statements, the judge can group types of motions and

schedule filing of consolidated motions on similar issues according to a time

schedule to avoid duplicative and piecemeal motions. For example, the court

may establish a brief window within which particular types of motions may be

filed, such as motions under Rule 12 or Rule 56. Certain motions and thirdparty complaints can be deemed to include all defendants, and answers to

third-party complaints can be deemed to include all cross-claims and counterclaims against the third-party plaintiffs. There is sometimes, however, an impact of deeming cross-claims and counterclaims to encompass parties whose

2437. See also infra section 11.33.
CERCLA (Superfund) § 34.26

671

liability is determined to be de minimis. Exempting such parties from a deeming order avoids imposing disproportionate risks of extensive liability on them.

Another option is to defer the time for filing cross-claims until after de minimis

parties have settled the claims against them and generally obtained the benefit

of a bar against contribution claims as permitted under sections 122(g)(2) and

(5).2438

Summary judgment is a particularly effective tool for eliminating tenuous

claims and defenses in CERCLA cases.2439 Over the years, many issues raised by

defendants in CERCLA litigation have been resolved, including retroactivity,

joint and several liability, and whether CERCLA violates the Commerce Clause

or Due Process Clause.2440 In addition, the courts have interpreted CERCLA

broadly in order to effectuate the statute’s remedial purpose,2441 and wellsettled case law, particularly on the scope of CERCLA liability, allows courts to

dispose summarily of a number of challenges.2442 Summary judgment on the

issue of liability is common, often leaving only issues of allocation remaining

2438. See also infra section 40.42.

2439. E.g., whether a harm is capable of apportionment among multiple defendants. In re

Bell Petroleum Servs., Inc., 3 F.3d 889, 896 (5th Cir. 1993). See also United States v. Wade, 577 F.

Supp. 1326, 1330 (E.D. Pa. 1983) (granting summary judgment on the liability under CERCLA

of certain defendants, but requiring a trial on the issue of joint and several liability and allocation).

2440. See Solid States Circuits, Inc. v. EPA, 812 F.2d 383 (8th Cir. 1987); United States v.

Alcan Aluminum Corp., 49 F. Supp. 2d 96 (N.D.N.Y. 1999) (addressing challenges based on the

Takings Clause, Due Process Clause, and Ex Post Facto Clause); United States v. Dico, 189

F.R.D. 536, 544 (S.D. Iowa 1999) (rejecting defendant’s due process and takings arguments on

motion for judgment on the pleadings).

2441. See, e.g., Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 845 (4th Cir.

1992) (disposal not limited to “active participation” and includes passive migration). One commentator summarizes that federal courts “are shaping CERCLA by judicial interpretation to a

degree rarely if ever seen for any other statute.” In the first ten years after the enactment of the

Superfund, more than 1,000 reported decisions were handed down that bear on Superfund issues. Topol & Snow, supra note 2350, § 3.8.E.2.

2442. However, some issues believed to have been resolved have been reexamined, while

other cases have suggested a reluctance toward any further or continued expansion of CERCLA.

See, e.g., United States v. Bestfoods, 524 U.S. 51 (1998) (nothing in CERCLA suggests “that the

entire corpus of state corporation law is to be replaced” and holding parent corporation cannot

be held liable unless corporate veil pierced); ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d

351, 358 (2d Cir. 1997) (former owners and operators not liable for passive migration of contaminants); Dico, Inc., 189 F.R.D. at 543 (finding that the Supreme Court decision in E. Enters. v.

Apfel, 524 U.S. 498 (1998), had no impact on CERCLA retroactivity). See also New York Court

Rules CERCLA Can Be Applied Retroactively, Rejects Eastern Defense, 12-9 Mealey’s Litig. Rep.

Superfund 5 (June 11, 1999) (citing United States v. Alcan Aluminum, 49 F. Supp. 2d 96

(N.D.N.Y. 1999)).
§ 34.27 Manual for Complex Litigation, Fourth

672

to be decided.2443 Summary judgment may also be appropriate to determine

the amount of the government’s costs in government-initiated cost-recovery

actions. Consider using evidentiary hearings under Rule 43(e) to determine the

existence of a genuine issue of material fact. It may sometimes be appropriate

not only to determine liability through summary judgment, but also to allocate

responsibility for paying the response costs.2444

Particularly important in CERCLA litigation are prompt rulings on all

motions, which can help clarify liability and clear the path for the parties to

allocate damages among themselves. Where a primary party’s liability turns on

a legal issue of first impression, the court should balance the advantages of

certifying the questions for interlocutory appeal before allocating damages

against the disadvantages of delaying the progress of the case.2445

34.27 Joinder

Incentives for locating all possible PRPs can lead to a continuous parade of

new parties. The pretrial conference can assist the court in assessing the likely

number of additional PRPs that the parties may seek to add and help ensure

control over the size and shape of the litigation.2446 Where EPA’s investigation

2443. See, e.g., NutraSweet Co. v. X-L Eng’g Co., 227 F.3d 776 (7th Cir. 2000) (partial

summary judgment granted on issue of liability, and trial ordered for amount for which defendant was responsible). The biggest statutory area in which liability is disputed, and which is often difficult to resolve on summary judgment, is “arranger” liability. See, e.g., Mainline Contracting Corp. v. Chopra-Lee, Inc., 109 F. Supp. 2d 110, 188 (W.D.N.Y. 2000); RSR Corp. v.

Avanti Dev., Inc., 69 F. Supp. 2d 1119, 1126 (S.D. Ind. 1999); Freeport-McMoran Res. Partners

Ltd. P’ship v. B-B Paint Corp., 56 F. Supp. 823, 853 (E.D. Mich. 1999).

2444. See United States v. R.W. Meyer, Inc., 932 F.2d 568 (6th Cir. 1991) (affirming summary judgment allocating response costs among three entities). However, resolution of equitable

allocation issues may not be possible where the court has yet to determine the criteria it will use

for this process in order to permit the parties to determine what facts are relevant and not in

dispute.

2445. See United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir. 1990) (interlocutory appeal taken to obtain ruling on whether district court correctly interpreted and applied

CERCLA provision in denying motion for summary judgment by holder of a security interest in

contaminated real property). When the subject of the interlocutory appeal is not central to the

entire case, the court may decide to continue with other aspects of the litigation while the appeal

is pending. See supra section 15.12.

2446. See, e.g., City of Wichita v. Aero Holdings, Inc., No. 98-1360-MLB, 2000 WL

1480490, at *2 (D. Kan. Apr. 7, 2000) (allowing plaintiffs to add over 700 third-party defendants

would cause case to “‘mushroom’ in all directions and greatly delay resolution of the principal

case”). The court can guard against indiscriminate and fragmented joinder by requiring the

parties to set forth in detail the factual basis for each joinder motion. See, e.g., Brotman & Simandle, supra note 2349, at 183–84 (suggesting party seeking joinder be required to respond to a
CERCLA (Superfund) § 34.27

673

has been exhaustive, the number of unidentified PRPs remaining will be significantly less. Similarly, a primary PRP group that has undertaken remediation at the site will often have retained an outside investigator who will have

identified most other locatable PRPs, again reducing the number of parties

likely to be joined at a later date. The judge is advised to discourage joinder of

insignificant parties, or parties with no more than de micromis liability. Discussions with counsel about the feasibility of joinder of very small or de micromis parties will also assist in ensuring that the parties and the court have a

realistic view of the scope of the case. Each new party will likely want to catch

up with discovery and motion practice, thereby delaying the progress of the

action.2447 Furthermore, entry of a new party may create a conflict of interest

for counsel or grounds for recusal by the judge.2448

Targeting the first phase of discovery at identifying all PRPs and developing information about the quantity and quality of waste produced by each PRP

during the history of the site can minimize complications arising from joinder

issues. Moreover, discovery targeted at site owners and operators, and at transporters, often generates information concerning other PRPs. A reasonable but

firm deadline, which might be as long as a year, is advisable for adding parties

or cross-claims, absent special issues in individual instances. Once the deadline

for joinder is reached, the parties and the court will have an overview of the

size and scope of the litigation. At that point, pretrial, settlement, and trial

plans can proceed, addressing issues relating to all the parties, while consideration of late presented claims is deferred. This approach may be conducive to a

global disposition of the entire litigation. General discovery and other proceedings are sometimes stayed until the joinder deadline. In the interest of

avoiding unnecessary paper, the case-management order can provide that all

parties joined will be deemed to have denied the claim, obviating the need for a

formal pleading. Rulings on Rule 12 motions can also be deemed to apply to

new parties absent special circumstances.2449

standard set of interrogatories as to factual basis for joining new party as, among other things,

“an augment to Rule 11 concerning the integrity of the pleading” and to reduce “the risk of

misjoinder or baseless joinder”).

2447. See, e.g., City of Wichita, 2000 WL 1480490, at *2 (where court stated that “[c]ase

management of more than 700 parties would unequivocally require the implementation of new

orders, some of which would necessarily impose arbitrary discovery limitations . . . [which]

would be unfair . . . when the current defendants have enjoyed liberal discovery”).

2448. See United States v. New Castle County, 116 F.R.D. 19, 24 (D. Del. 1987) (denying

motion to name and realign various parties; court noted that adding new parties after deadline

would likely produce conflicts of interest for current counsel, would interfere with pretrial and

trial case-management plans, and would likely disrupt settlement efforts).

2449. See supra section 11.32.
§ 34.28 Manual for Complex Litigation, Fourth

674

Another approach is to postpone or stay joinder issues, contribution

claims, and other cross-claims until the litigation against the initial defendants

has been resolved. In cases with large numbers of PRPs, this keeps the organization relatively simple while a plan to remedy the site or to determine the

costs of the remedy is devised. The primary PRPs may also be more inclined to

reach out-of-court settlements with third parties without the expense of litigation. The disadvantage is that parties joined later may wish to relitigate those

issues or reopen discovery. This phased approach is more feasible where the

government has initiated the case, or in some contested consent decrees, but it

does not work well where the government is not involved in the litigation and

the primary PRP group has filed a separate action for contribution.

A third approach is to schedule rolling joinder dates. Rather than permitting motions for joinder at any time, rolling dates give the parties windows

within which to file joinder motions, permitting a consolidated hearing on all

joinder motions filed during that window, and lessening the burden on the

court as well as the parties. Similar orders regarding responsive pleadings and

discovery would apply as well. Whatever the approach to the joinder of new

parties, possible statute-of-limitations issues, both federal and state, should be

considered.

34.28 Managing Discovery

The preservation of evidence is critical in CERCLA cases. In some instances, only a few invoices or the recollection of one or two persons can connect a company to a site, while other cases may involve over a million documents.2450 Because relevant evidence may be decades old, PRPs may seek to

preserve evidence before filing a complaint. In such cases, Federal Rule of Civil

Procedure 27 authorizes prefiling depositions of percipient witnesses (and,

when feasible, the production or preservation of documents and other tangible

things).2451

2450. See, e.g., Fike Chemical Superfund Site, Panel Discussion and Perspectives on MultiParty CERCLA Litigation, Federal Judicial Center, Conference on Environmental Law and Natural Resources at 2 (Oct. 7, 1997) (when operator of site went out of business there were over 1.2

million business records “reflecting tens, if not hundreds of thousands of transactions with dozens of customers”).

2451. See In re Bay County Middlegrounds Landfill Site v. Kuhlman Elec. Corp., 171 F.3d

1044 (6th Cir. 1999) (district court did not abuse discretion in granting petition to take prefiling

deposition); In re Petition of Delta Quarries & Disposal Inc., 139 F.R.D. 68 (M.D. Pa. 1991)

(granting petition to depose ailing witness alleged to have personal knowledge of identity of

companies that disposed hazardous substances at landfill fifteen years earlier).
CERCLA (Superfund) § 34.28

675

Once the action has been initiated, CERCLA cases generally require a wellthought-out, structured discovery plan to avoid duplicative discovery, to

minimize the burden to the litigants and to the court, and to create a credible

database. Multiple, independent waves of discovery should be discouraged in

favor of a coordinated approach. Initially, the parties can be required to engage

in an informal exchange of information with appropriate protective orders for

sensitive relevant information. A number of parties may have responded to

EPA information requests under section 104(e), and EPA will have amassed a

vast amount of documents, reports, studies, and other information regarding

the site, all of which can proceed without a formal request if EPA is a party, or

through a coordinated request if EPA is not a litigant. Similarly, the site owner

and/or operator, almost always a party, can informally produce any records

reflecting transportation and shipment of waste sent to the site, including volume and type of material.

Included among effective discovery tools, particularly in cases where joint

or liaison counsel have been appointed, are the development and use of a

master set of interrogatories and requests for production for each side or

group. An early set of agreed-on interrogatories seeking information from

PRPs as to where and how records relating to the generation and disposal of

wastes were maintained, as well as identifying those persons with knowledge of

generation and disposal practices, can streamline document production and

make depositions more efficient. Potential areas of inquiry include the following: site investigations done by any party, including any statements taken; records of any sampling, testing, removal, or remediation conducted at the site;

documents in the possession of the parties reflecting materials, hazardous and

nonhazardous, shipped to the site; and contracts or other agreements relating

to disposal of waste material. Depositions should also be coordinated to preclude multiple depositions of the same party, with designated counsel responsible for conducting the depositions representing their respective sides or

groups of parties. One alternative is to require that all document discovery be

completed prior to taking any depositions except custodial depositions. Efforts

should be made to minimize discovery imposed on de minimis parties at the

early stages, where it is highly likely that they will settle out of the litigation.

The need for data concerning the parties’ respective contributions to the

contamination at the site coincides with the need to identify PRPs promptly,

but newly joined parties should not be permitted to delay the discovery process

while they are getting up to speed in the case. Towards this end, the discovery

plan can provide that, except upon a showing of good cause, new parties will

be deemed to have accepted the discovery previously propounded or depositions by counsel on behalf of their “group.” This would not preclude a party

with an individual interest not addressed by previous discovery from obtaining

this information. Further, coordinating deadlines for joinder of parties with
§ 34.29 Manual for Complex Litigation, Fourth

676

the schedule set forth in the discovery plan will help ensure that all parties, including those newly joined, have a fair opportunity to conduct adequate discovery. As discussed earlier, a centralized document repository and computerized data storage and retrieval can facilitate access to all available documents

and reduce discovery disputes at the same time that it creates a credible database. Without a credible database, the parties and the court cannot determine

whether the proposed remedy is based on faulty assumptions about the nature

of the problems, and the parties are not likely to accept proposed settlement

allocations. All phases of discovery should be coordinated with plans for resolving motions and for structuring the trial (e.g., on a bifurcated or trifurcated basis).

34.29 Scientific and Technical Expert Testimony

CERCLA cases are prone to battles of experts in highly technical areas,

such as chemistry, hydrology, and geology. Environmental experts testify on

aspects such as site conditions, migration of contaminants, geological conditions, and toxicity. Continuous testing and sampling of soil and groundwater

at a given site, as well as analyzing the synergistic and migratory capacities of

contaminants, are often necessary. At a minimum, procedures should be

adopted to produce a common database for the experts to analyze. The judge,

to reduce unproductive contentiousness and keep the focus on genuine issues,

may also encourage creation of an experts’ committee with responsibility for

defining issues, testing soil and allegedly hazardous materials, creating joint

databases, developing proposed factual stipulations, and splitting samples.2452

Some judges have directed the parties to have their experts meet without

counsel to identify and consider the technical issues relating to the proposed

remedial design.2453 Such a meeting can uncover erroneous assumptions and

avoid wasting resources on a remedy that might be technically flawed. In addition, such expert assistance may prove helpful in the settlement or allocation

process. Where the case appears to be headed for trial, or where motions for

summary judgment rely in part on scientific evidence, consider how best to

handle Daubert issues.2454

2452. See United States v. Price, 14 Envtl. L. Rep. (Envtl. L. Inst.) 20, 501 (D.N.J. 1984).

2453. See Jerome B. Simandle, Resolving Multi-Party Hazardous Waste Litigation, 2 Vill.

Envtl. L.J. 111 (1991).

2454. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), and discussion infra

section 23.2.
CERCLA (Superfund) § 34.31

677

34.3 Settlement and Trial

.31 Allocation 677

.32 Settlement 682

.33 Approval of Consent Decrees 686

.34 Structuring the Trial 687

34.31 Allocation

Allocation bears significantly on both settlement and trial. Once liability is

established, allocation is usually the most hotly contested issue in CERCLA

litigation. Defendants try to prove the harm is divisible in order to avert imposition of joint and several liability in cost-recovery cases by the government, as

well as challenging the method for equitable apportionment in private party

actions. Other arguments raised by PRPs seeking to avoid joint and several liability include (1) that the material was a product, not a waste; (2) that the

amount of hazardous constituents in the waste was negligible; and (3) that the

configuration of the waste was such that no hazardous constituents could escape.

A determination as to the divisibility of harm has been held to be “intensely factual,”2455 raising technically complex issues, such as relative toxicity,

migratory potential, synergistic capacities, and degree of migration of a particular waste, and these issues require the testimony of various technical experts. Apportionment based on equitable principles implicates these as well as

other considerations.2456 The statutory status of the PRP also can affect decisions on allocation. For example, under section 107(a), both generators and

transporters are liable for waste sent to the site. In addition to the liability of

the corporation, officers can be liable as individuals. This could mean that two

parties are responsible for the same waste. Equity suggests that an apportionment scheme take this into account in assessing the amount to be paid by each.

One of the major stumbling blocks in the allocation process is determining

the allocation method and the factors to consider. CERCLA § 113(f)(1) gives

the court broad discretion in adopting factors to be weighed among PRPs.2457

2455. United States v. Alcan Aluminum Corp., 990 F.2d 711, 722 (2d Cir. 1993).

2456. For a discussion of some of the “equities” balanced by a court in rejecting toxicity as

a basis for allocation, see Akzo Nobel Coatings, Inc. v. Aigner Corp., 197 F.3d 302, 305 (7th Cir.

1999).

2457. CERCLA § 113(f)(1) provides that “in resolving contribution claims, the court may

allocate response costs among liable parties using such equitable factors as the court determines

are appropriate.” 42 U.S.C. § 96113(f)(1) (West 2003). See also Kerr-McGee Chem. Corp. v.

Lefton Iron & Metal Co., 14 F.3d 321, 326 (7th Cir. 1994) (court may consider factors such as

the relative fault of the parties, relevant “Gore factors,” see infra note 2460, and any contracts
§ 34.31 Manual for Complex Litigation, Fourth

678

The simplest form of allocation is a volumetric allocation, basing apportionment on the amount of waste shipped to a site relative to the total amount of

waste.2458 Another basis for apportionment is to assign the parties to “tiers,”

again typically determined by volume, and then apportion liability by tier, with

each PRP in that tier assuming a pro rata share. The courts have also looked at

factors such as the volume and toxicity of each party’s hazardous waste,2459 the

degree of involvement and the degree of care exercised by a party, and the extent to which a party cooperated with public officials to prevent harm to the

public. These are known as the Gore factors2460 and are perceived as providing

a good but not exhaustive starting point for apportionment.2461 Other relevant

factors have included the economic status of the parties, traditional equitable

defenses such as mitigation, and the expense of doing cleanup work, among

between the parties regarding allocation); Env’t Transp. Sys. v. Ensco, Inc., 969 F.2d 503, 509

(7th Cir. 1992) (court has “power to weigh and consider relevant factors, including [relative]

fault”).

2458. Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1187 (9th Cir. 2000) (allocation by volume is reasonable basis for allocation); Acushnet Co. v. Mohasco Corp., 191 F.3d 69, 78 (1st Cir.

1999) (“[T]here is nothing to suggest that Congress intended to impose far-reaching liability on

every party who is responsible for only trace levels of waste.”); Bancamerica Commercial Corp.

v. Mosher Steel, Inc., 100 F.3d 792 (10th Cir. 1996); Kalamazoo River Study Group v. Rockwell

Int’l, 107 F. Supp. 2d 817, 840 (W.D. Mich. 2000) (finding quantity of PCBs released was most

important Gore factor under circumstances). Although pro rata apportionment is also a very

simple method of apportionment and may be appropriate in some cases, courts have held that it

was “at the very least, Congress’s intent that courts should equitably allocate costs of cleanup

according to the relative culpability of the parties rather than an automatic equal shares rule.”

Env’t Transp. Sys., 969 F.2d at 508.

2459. EPA considers toxicity to be “causally related to the cost of cleanup for only a few

substances (e.g., PCBs, dioxin).” Superfund Program: Non-Binding Preliminary Allocations of

Responsibility (NBAR), 52 Fed. Reg. 19,919, 19,920 (May 28, 1987) [hereinafter NBAR]. EPA

has further noted that the scientific community disagrees about degrees of toxicity and synergistic effects. Id.

2460. These factors originally appeared in section 3071(a) of House Bill 7020, which was

passed by the House in 1980 but not enacted as part of CERCLA. CERCLA, H.R. 7020, 96th

Cong. § 3071(a) (2d Sess. 1980). See 126 Cong. Rec. 26, 781 (1980); see also United States v. R.W.

Meyer, Inc., 932 F.2d 568, 571 (6th Cir. 1991); Amoco Oil Co. v. Borden, Inc., 889 F.2d 664,

672–73 (5th Cir. 1989).

2461. See generally Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344,

354 (6th Cir. 1998); Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 935 (8th Cir. 1995); Env’t

Transp. Sys., 969 F.2d at 509 (noting that the “Gore factors are neither an exhaustive or exclusive

list” of the factors to be considered); Kalamazoo River Study Group, 107 F. Supp. 2d at 822

(noting that the Gore factors are a non-exhaustive list enabling the court to “take into account

more varying circumstances than common law contribution”).
CERCLA (Superfund) § 34.31

679

others.2462 Several courts have also used a fault-based approach to apportionment.2463 Sometimes, zero allocation might be appropriate with respect to certain PRPs, as where, for example, the PRP’s disposal was “too inconsequential

to affect the cost of cleaning up significantly.”2464 In short, the court can consider “several factors, a few factors, or only one determining factor . . . depending on the totality of the circumstances presented.”2465 A preliminary determination as to the relevant factors can streamline both discovery and trial.

Alternatively, the court can permit the introduction of all evidence deemed

relevant to the issue by the parties and then make a determination as to which

factors have the most bearing on apportionment under the particular circumstances.

Orphan shares—shares of companies that are bankrupt or no longer in

business—can complicate the allocation process. Related issues arising in

conjunction with these now-defunct companies include whether or when a

corporation is “dead and buried” for purposes of CERCLA, the liability of successor corporations, and the impact of a discharge in bankruptcy on a

CERCLA claim. In the allocation process these shares must be borne by someone, and the “determination of who absorbs liability for orphan shares can

have significant consequences for PRPs, because the unattributable amount of

2462. Akzo Nobel Coatings, Inc. v. Aigner Corp., 197 F.3d 302 (7th Cir. 1999); United

States v. Davis, 31 F. Supp. 2d 45, 63 (D.R.I. 1998). For example, EPA, in preparing an NBAR

under CERCLA § 122(e), in addition to looking at volume and toxicity, also looks at criteria

included in the interim settlement policy, such as the “strength of evidence tracing the wastes at

a site to PRPs, ability of PRPs to pay, . . . public interest consideration, . . . [and] inequities and

aggravating factors . . . .” NBAR, supra note 2459, at 19,919. EPA rejected allocation models

based on toxicity, concluding instead that the use of volume and settlement criteria was more

desirable for “simplicity and other practical reasons.” Id. at 19,920.

2463. See, e.g., Browning-Ferris Indus. v. Ter Maat, 195 F.3d 953 (7th Cir. 1999) (affirming

an allocation by the district court that looked to the blameworthiness of the polluter as relevant

to an equitable allocation); United States v. Di Biase, 45 F.3d 541, 545 (1st Cir. 1995) (although

on notice of a potentially dangerous condition, PRP “twiddled his thumbs”); Kerr-McGee

Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321 (7th Cir. 1994); Env’t Transp. Sys., 969

F.2d at 510–12.

2464. PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 616 (7th Cir. 1998). See also

Acushnet Co. v. Mohasco Corp., 191 F.3d 69, 78 (1st Cir. 1999) (zero liability may be appropriate in some circumstances); Kalamazoo River Study Group v. Rockwell Int’l, 107 F. Supp. 2d

817, 839 (W.D. Mich. 2000) (holding defendant’s PCB contribution to total PCB was minimal

and defendant would not be required to contribute to cleanup).

2465. Akzo Nobel Coatings, Inc., 197 F.3d at 305 (rejecting toxicity as means for apportionment); Env’t Transp. Sys., 969 F.2d at 509; United States v. Pesses, 120 F. Supp. 2d 503 (W.D. Pa.

2000) (basing allocation on Gore factors).
§ 34.31 Manual for Complex Litigation, Fourth

680

liability . . . can be quite substantial.”2466 A number of options are available,

including apportionment among economically viable defendants only,2467 allocation among all liable defendants,2468 and apportionment among all viable

parties, plaintiffs, and defendants.2469

Another allocation determination issue is how to account for partial settlements. Many CERCLA actions will involve multiple settlement agreements.

Where the plaintiff is the government, the SARA amendments provide that any

settlement received “reduces the potential liability of the others by the amount

of the settlement.”2470 In government-initiated actions, this translates into a

dollar-for-dollar reduction in liability for nonsettlors.2471 A pro tanto approach

requires conducting a fairness hearing before the court approves a partial settlement.2472 Unresolved is how partial settlements should be credited in private

party actions. Some courts have applied the pro tanto approach to partial settlement credits in private CERCLA cases. A second method uses a “proportionate share” approach whereby nonsettlor liability is reduced by the proportionate share of fault of the settling defendants.2473 Usually, this approach re2466. David Sive & Daniel Riesel, Although Many Courts Provide for the Equitable Apportionment of Orphan Shares Under CERCLA, the Issue Is Not Yet Settled, Nat’l L.J., Mar. 3, 1997, at

B5.

2467. See, e.g., Unif. Comparative Fault Act § 2(d), 12 U.L.A. 37 (2002); Charter Township

of Oshtemo v. Am. Cyanamid Co., 898 F. Supp. 506, 509 (W.D. Mich. 1995) (“Equity . . . dictates that the shares that would have been attributed to parties that are now insolvent should be

apportioned among all the solvent PRPs.”).

2468. United States v. Kramer, 953 F. Supp. 592, 598 (D.N.J. 1997); Pneumo Abex Corp. v.

Bessemer & Lake Erie R.R. Co., 921 F. Supp. 336, 348 (E.D. Va. 1996) (plaintiff would have no

liability for orphan shares); Charter Township of Oshtemo, 898 F. Supp. at 509.

2469. See Allied Corp. v. ACME Solvent Reclaiming, Inc., 771 F. Supp. 219, 223 (N.D. Ill.

1990). See also Sive & Riesel, supra note 2466, at B5.

2470. 42 U.S.C. § 9613(f)(2) (West 2003). See United States v. Burlington N. R.R. Co., 200

F.3d 679, 697 (10th Cir. 2000) (PRP’s liability would be reduced by government settlement with

other PRPs).

2471. This approach, called pro tanto, is codified in the Uniform Contribution Among

Tortfeasors Act (UCATA), 12 U.L.A. 98 (2002). See In re Acushnet River & New Bedford Harbor, 712 F. Supp. 1019, 1027 (D. Mass. 1989) (“[T]he words of the statute are clear: the potential

liability of the others is reduced ‘by the amount of settlement,’ not by the settlor’s proportionate

share of . . . damages . . . .”); United States v. Cannons Eng’g Corp., 720 F. Supp. 1027, 1048 (D.

Mass. 1989), aff’d, 899 F.2d 79 (1st Cir. 1990); United States v. Rohm & Haas Co., 721 F. Supp.

666, 675 (D.N.J. 1989).

2472. See City of New York v. Exxon, 697 F. Supp. 677, 691 (S.D.N.Y. 1988) (“Before approving a CERCLA settlement, the Court must be convinced that it is fair, adequate, and reasonable, and consistent with the Constitution.”).

2473. The proportionate share approach is found in the Uniform Comparative Fault Act

(UCFA), 12 U.L.A. 57 (2002). For cases that have applied the proportionate approach in private
CERCLA (Superfund) § 34.31

681

quires the settling defendant’s percentage of fault be determined at trial in order to reduce the total damages to be attributed to the nonsettlor.2474 One

practical advantage of a proportionate share approach over a pro tanto approach is that extensive fairness hearings are not required.2475 The plaintiff,

however, would still have to litigate the responsibility of the settling party in

order to determine the amount recoverable from nonsettlors, arguably negating some of the benefits of settlement.2476 The majority of courts considering

the issue of partial settlement credits have adopted the proportionate share

approach.2477 Others have held that the choice of approaches is within the

sound discretion of the court, to be determined on a case-by-case basis.2478

There are several alternatives to consider in approaching allocation. One is

to encourage the retention of an allocation consultant or expert, with costs

apportioned among the parties and with possible settlement as a goal.2479 The

use of allocation experts has grown in CERCLA cases, and their function is to

assist in estimating PRP shares, taking into account volume, toxicity, contribution to the cost of remediation, and similar factors. Second, the court can

encourage the use of joint experts to share data and information. Often, the

original PRP group will have established a preliminary allocation among

themselves in order to apportion the immediate costs of cleanup,2480 may have

agreed to a process to determine binding allocation and distribution of any

party actions, see, e.g., United States v. W. Processing Co., Inc., 756 F. Supp. 1424, 1430 (W.D.

Wash. 1990); Lyncott Corp. v. Chem. Waste Mgmt., 690 F. Supp. 1409, 1419 (E.D. Pa. 1988).

2474. See Atl. Richfield Co. v. Am. Airlines, Inc., 836 F. Supp. 763 (N.D. Okla. 1993).

2475. See, e.g., Allied Corp. v. Acme Solvent Reclaiming Inc., 771 F. Supp. 219, 223 (N.D.

Ill. 1990) (“In a complex case such as this one, a fairness hearing would be long and arduous.”).

For a good discussion of the two approaches and their pros and cons from several perspectives,

see Marc L. Frohman, Rethinking the Partial Settlement Credit Rule in Private Party CERCLA

Actions: An Argument in Support of the Pro Tanto Credit Rule, 66 U. Colo. L. Rev. 711 (1995).

2476. See, e.g., Rohm & Haas Co., 721 F. Supp. at 678.

2477. Frohman, supra note 2475, at 748. “The analysis underlying these decisions concludes that, notwithstanding the pro tanto rule’s potential advantage in promoting settlement,

the proportionate rule is more consistent with CERCLA because of its incorporation of principles of comparative fault, with resultant greater equity, and its alleged greater judicial economy.”

Id. at 748–49. See McDermott, Inc. v. AmClyde, 511 U.S. 202, 207–08 (1994).

2478. Atl. Richfield Co., 836 F. Supp. at 765.

2479. See United States v. Kramer, 19 F. Supp. 2d 273, 278 (D.N.J. 1998) (parties retained

Clean Sites Inc., an outside environmental litigation support firm, as an allocation consultant).

The allocation process may be appropriate for the appointment of a special master.

2480. See, e.g., Kalamazoo River Study Group v. Rockwell Int’l, 107 F. Supp. 2d 817, 821

(W.D. Mich. 2000) (“Plaintiff’s individual group members have allocated among themselves

their percentage shares for response costs at the Site . . . .”).
§ 34.32 Manual for Complex Litigation, Fourth

682

monies received from litigation,2481 and may have already retained an independent consultant or arbiter. This process may be proceeding in tandem with

the litigation. EPA may also have established an informal allocation, based on

its investigation, or may have prepared a nonbinding allocation report (NBAR)

under section 122(e)(3), either of which can provide a good starting point for a

final allocation.2482

34.32 Settlement

CERCLA cases present unique settlement challenges, and settlement plays

an ongoing role in most such cases, regardless of their posture. EPA has recognized the importance of locating as many PRPs as possible as the first step in

the settlement process, noting that this step is “one of the most critical to success.”2483 CERCLA expressly encourages settlement and was designed “so that

the threat of disproportionate liability would encourage parties to settle early

with the United States and discourage dilatory and strategic behavior.”2484 The

SARA amendments authorize EPA to pursue settlements, and section 122 provides specific procedures and provisions to encourage settlement.2485 Section

122 also contains provisions governing the scope of the covenants that can be

provided. For example, except in “extraordinary circumstances,” settlement

agreements must include “reopeners” for future liability arising from “un2481. See United States v. Amoco Chem. Co., 212 F.3d 274, 277 (5th Cir. 2000) (Although

not previously obligated to execute a specific trust agreement, and having objected to trust

agreement setting forth allocation, the defendant’s signature on amended consent decree, by its

terms, created an obligation to “negotiate with the other settling defendants and agree to some

system of allocation.”).

2482. An NBAR, once issued, acts in effect as an offer of settlement. If the NBAR is accepted by the PRPs, EPA must provide a written explanation for rejecting the PRPs’ offer. 42

U.S.C. § 9622(e)(3)(E) (West 2003).

2483. Streamlining, supra note 2364. See, e.g., United States v. Cannons Eng’g Corp., 899

F.2d 79, 83 (1st Cir. 1990) (EPA notified 671 PRPs of possible liability).

2484. United States v. BASF Corp., 990 F. Supp. 907, 912 (E.D. Mich. 1998).

2485. See 42 U.S.C. § 9622 (West 2003); Streamlining, supra note 2364 (“The new provisions [of SARA] related to special notice, information sharing and negotiating moratoria are

particularly important. They attempt to strike a balance between the competing demands of

prompting more settlements, conserving limited government resources, and minimizing the

delay in the clean-up process.”). See, e.g., United States v. SCA Servs., Inc., 827 F. Supp. 526, 530

(N.D. Ind. 1993); Am. Cyanamid Co. v. King Indus., Inc., 814 F. Supp. 215, 218 (D.R.I. 1993);

Commercial Bank-Detroit v. Allen Indus., Inc., 769 F. Supp. 1408 (E.D. Mich. 1991). CERCLA

§ 122 includes, among others, provisions for mixed funding and de minimis settlements that seek

to ameliorate the harshness of the Act’s strict joint and several liability. 42 U.S.C. §§ 9622(b)(1),

9622(g) (West 2003).
CERCLA (Superfund) § 34.32

683

known conditions.”2486 EPA has issued numerous policies and guidance documents to inform PRPs of its approach as to these settlement provisions. For

example, EPA has issued guidelines to govern settlements with de minimis and

de micromis parties and to offer those parties as much finality as possible.2487

Where EPA has not identified de minimis parties or at least a de minimis volume of disposal, consider encouraging the agency or the parties to do so.

Similarly, at a site where a significant amount of waste is attributable to PRPs

that are insolvent or defunct, EPA can provide up to a specified amount of

“orphan share” funding as a settlement incentive.2488 EPA also enters into settlements with major PRPs (typically consent decrees with the United States),

which can include agreements to perform all site cleanup, to undertake only

certain work at the site, and to pay for all or only a part of past costs at the site,

leaving the remaining issues for further negotiations.2489 In virtually every instance, however, some form of allocation will have to be agreed to or developed by the PRPs for any real progress on settlement, whether in an enforcement action by the government or a private action for contribution.

2486. Id. §§ 9622(c)(1), 9622(f)(2)(6).

2487. Id. § 9622(g)(1). The statutory goal is to release such parties before transaction costs

accumulate. De minimis settlement decrees can also include reopeners, although the DOJ rarely

will include a reopener in a de minimis settlement. Typically, however, de minimis settlements

include a premium to account for the possibility that costs were underestimated, and in case the

de minimis parties have obtained finality. See, e.g., Cannons Eng’g Corp., 899 F.2d 79, at 88.

2488. Orphan share funding is in effect a form of compromise that reflects the shares of

defunct PRPs and results in the government recovering less than 100% of its claim from the

settling defendants. See Office of Enforcement Compliance & Assurance, EPA, Interim Guidance

on Orphan Share Compensation for Settlors of Remedial Design/Remedial Action and NonTime-Critical Removals (1996), available at http://cfpub.epa.gov/compliance/resources/policies/

cleanup/superfund/ (last visited Oct. 21, 2003); Office of Enforcement Compliance & Assurance,

EPA, Addendum to the “Interim CERCLA Settlement Policy” Issued on Dec. 5, 1984 (1997),

available at http://cfpub.epa.gov/compliance/resources/policies/cleanup/superfund/ (last visited

Oct. 21, 2003). EPA has also issued guidance interpreting section 122(b)(3), which allows EPA to

set up “special accounts” to hold money that is collected from PRPs to be used at that site. This

allows the government, for example, to settle with certain parties for money and to give some or

all of that money, as appropriate, to other parties who will perform site cleanup. See EPA, Consolidated Guidance on the Establishment, Management and Use of CERCLA Special Accounts

(2002), available at http://www.epa.gov/compliance/resources/policies/cleanup/superfund/

congui-estmgt-specacct.pdf (last visited Oct. 21, 2003). In addition to issuing these and other

policies and guidance, EPA has developed numerous model consent decrees to streamline and

speed up the settlement process. See, e.g., Office of Solid Waste & Emergency Response, EPA,

Model CERCLA RD/RA Consent Decree (2001), available at http://www.epa.gov/

compliance/resources/policies/cleanup/superfund/mod-rdra-cd.pdf (last visited Oct. 21, 2003).

2489. CERCLA § 122 and EPA’s Model CERCLA RD/RA Consent Decree largely guide the

terms, and especially the covenants, of such consent decrees. 42 U.S.C. § 9722 (West 2003);

Model CERCLA RD/RA Consent Decree, supra note 2488.
§ 34.32 Manual for Complex Litigation, Fourth

684

Judicial involvement may be desirable to structure cases for settlement.

When organizing counsel, consider whether to create a committee solely for

settlement issues, with the parties in agreement on the authority of the settlement representatives.2490 Some courts have referred settlement negotiations to

a magistrate judge or special master.2491 The magnitude of these cases and the

possibility that recusal would impose a serious hardship on the entire court

suggest that the trial judge should not be directly involved in settlement negotiations.2492 It is advisable to assess (1) whether a global settlement is possible,

or whether the parties are willing to agree to settlement of only certain portions of liability; (2) which parties are interested in settlement; (3) the level at

which de minimis and de micromis buyouts will occur; (4) which parties are

willing to participate in good faith in settlement negotiations; and (5) what

role the court should play.2493 In some cases, the parties are very interested in

initiating settlement discussions. Consider establishing a “settlement track,”

with firm deadlines, followed by a “litigation track” if settlement efforts fail.

Under such an approach the litigation aspects of the case would be stayed

while the parties pursued settlement, letting the parties avoid substantial transaction costs while exploring resolution of the case. Although discovery may be

necessary to further settlement negotiations and to undertake an allocation, it

can occur on a less formal and narrower basis than if full-blown litigation were

underway, and disagreements can be resolved without resort to motion practice. In enforcement cases brought by the government, where liability is not

seriously disputed, settlements can often be achieved once the government

produces its cost documents (which is often done in prefiling negotiations)

and after resolution of the validity of any asserted defenses on appropriate

motions. Close supervision of the settlement process can be essential. In one

case where the parties agreed to a settlement process protocol, the settlement

judge found that monitoring the process through biweekly conferences, insisting on adherence to the protocol, and ensuring that the attorneys did their

“homework” (e.g., submitting the names of consultants by a specific date) in

accordance with timeframes set during conferences substantially contributed

2490. Simandle, supra note 2453, at 121 (1991). Judge Simandle suggests that the parties be

“afforded the opportunity to consider whether they wish to use their existing liaison counsel as

the settlement representative, or whether they wish to choose a new settlement liaison counsel

whose roles and duties would be confined to the group’s settlement processes.” Id. at 122.

2491. See, e.g., United States v. Kramer, 19 F. Supp. 2d 273 (D.N.J. 1998) (referral of settlement to magistrate judge).

2492. See supra section 13.11.

2493. See generally Brotman & Simandle, supra note 2349, at 190–91.
CERCLA (Superfund) § 34.32

685

to a global settlement of the action.2494 In many CERCLA cases, however, the

parties will also be actively involved in continuous settlement negotiations

outside of any judicially structured schedule.

Pending administrative proceedings and the site’s status may affect the

settlement process, and the court may find it easier to conduct the settlement

negotiations in phases (e.g., with the first phase addressing past costs). Settlement negotiations will falter without a credible scientific and technical database and a reliable estimate as to the total cost of remediation. The court may

also consider having the parties’ experts involved in the settlement negotiations.2495 In addition, it may be helpful to explore with the parties the use of

alternative dispute resolution (ADR) strategies and techniques in designing an

approach to settlement.

One judge’s settlement process for CERCLA cases includes four major

elements:2496

1. Setting the stage. The initial question is whether the parties have sufficient interest in pursuing settlement. If the parties “agree to seek to

agree,” they can produce a written good-faith agreement to pursue

settlement of specified issues.

2. Organizing counsel and defining a timetable. Groups are created along

the lines discussed earlier under “Organizing Counsel” (see section

34.24) (i.e., by selecting a settlement liaison for each group of defendants and defining the authority of the liaisons). The initial task of

the liaison and the groups is to define a timetable for the process.

The timetable should be coordinated with the pretrial process and

should adapt the discovery program to settlement needs. A threshold

issue for the group is whether to participate in EPA’s formulation of

the remedial design or to devise an alternative design.

3. Joining additional parties and creating a database. The database

would consist primarily of data about the contributions of each

party to the site. Here, the emphasis is on identifying and joining

parties who contributed substantially to the problems and can be

expected to contribute substantially to a financial settlement. The

parties would then provide necessary information and develop the

structure of a database, perhaps with the help of consultants hired

2494. Telephone Interview with U.S. Magistrate Judge Mary Feinberg, Southern District of

West Virginia (Nov. 14, 2000) (on file with the Federal Judicial Center) (discussing United States

v. Am. Cyanimid Co., No. 2:93-0654, 1997 U.S. Dist. LEXIS 4413 (D. W. Va. Jan. 27, 1997)).

2495. Simandle, supra note 2453, at 132.

2496. Id. at 119–32.
§ 34.33 Manual for Complex Litigation, Fourth

686

jointly by the parties. Generally, information about insurance would

also be collected.

4. Allocating responsibility. This stage involves the hard negotiations

and should rely on outside assistance—a special master, a courtappointed mediator, or a consultant hired by the parties—to analyze

the data and recommend allocation models.

The role of the district court in the process is to rule promptly on those motions that define the liability of the parties and the contours of the issues. The

district judge who remains insulated from settlement discussions can more

appropriately preside at a bench trial, if necessary.

34.33 Approval of Consent Decrees

Consent decrees between the government and the parties must receive

public notice and comment. The United States “lodges” the consent decree

with the court, and notice of the decree’s availability is published in the Federal

Register. The government must consider any comments received and may

withdraw the decree if the comments disclose facts or considerations that indicate the proposed decree is “inappropriate, improper, or inadequate.”2497 If the

government continues to support the decree, it will file with the court any

comments received, along with a motion for entry of the decree once the public comment period has concluded. Often, nonsettling parties will challenge

entry of the consent decree because of the contribution protection it affords to

settling parties. Other common challenges are that the settling parties are not

bearing their proportionate share of the costs of remediation, that the remedy

selected is arbitrary and capricious, or that it is substantively or procedurally

unfair.”2498 Another issue tied to settlement is the manner in which settlement

monies will be allocated.2499

The court must then decide whether it is necessary or appropriate to hold

a hearing on the decree prior to making a decision to enter or reject it. Although it may be appropriate to hold an evidentiary hearing, the cost and expense of a hearing often obviate some of the benefits of settlement, particularly

where the parties are de minimis. As a result, courts will usually review the administrative record and the papers submitted and determine whether the set2497. 42 U.S.C. § 9622(d)(2) (West 2003).

2498. See, e.g., Topol & Snow, supra note 2350, § 7.15. “Thus, according to these courts, in

order for a settlement to be substantively fair, each settling party must be required to bear

cleanup responsibility in an amount that has some relationship to its relative contribution to the

adverse environmental conditions at the site.” Id. at 160.

2499. See supra section 34.12 at ¶ 3, “Allocation of response costs.”
CERCLA (Superfund) § 34.34

687

tlement is “fair, reasonable and consistent with the Constitution and the mandate of Congress.”2500 Settlements of private contribution or cost-recovery actions are not subject to the same statutory constraints as settlements with the

government, and they do not carry the same deferential standard of review.2501

However, courts have made similar “fair and reasonable” evaluations prior to

approving them, and it is good practice to look at various aspects of the settlement negotiations.

34.34 Structuring the Trial

CERCLA cases rarely go to trial, but when they do the trial is likely to be

complicated.2502 Most parties typically will have settled before trial, leaving only

a few parties remaining. A number of third-party claims may also have been

resolved.

Consider holding separate trials on liability, damages, and allocation of

response costs pursuant to Federal Rule of Civil Procedure 42. Alternatively,

consider bifurcating or trifurcating the trial into phases—liability, damages

(remediation plans), and allocation.2503 The order of trial (and of the corresponding settlement discussions) can be varied to address dispositive issues

first. Addressing challenges to the proposed remedy may crystallize issues relating to response costs and how they should be allocated. EPA ordinarily has

to determine the scope of proposed cleanup efforts before the court can allocate responsibility for remediation.

Except for natural resource damage claims, there is no right to a jury trial

in CERCLA cases.2504 One judge’s approach to a case involving damages to

2500. New York v. Exxon, 697 F. Supp. 677, 692 (S.D.N.Y. 1988); Topol & Snow, supra

note 2350, § 7.15. See Best Foods v. Aerojet-Gen. Corp., No. 1:89-CV-503, 961, 2000 WL

1238910 (W.D. Mich. Aug. 24, 2000) (evaluating whether settlement apportionment was fair).

Accordingly, a court is not “empowered to rewrite the settlement agreed upon by the parties” or

to “delete, modify, or substitute certain provisions of the consent decree.” Officers for Justice v.

Civil Serv. Comm’n, 688 F.2d 615, 630 (9th Cir. 1982).

2501. Topol & Snow, supra note 2350, at 162.

2502. See, e.g., United States v. Ottati & Goss, Inc., 694 F. Supp. 977 (D.N.H. 1988) (addressing the remedy and allocation), aff’d in part, vacated in part, 900 F.2d 429 (1st Cir. 1990);

United States v. Ottati & Goss, Inc., 630 F. Supp. 1361 (D.N.H. 1985) (dealing with liability);

Ottati & Goss, Inc., 694 F. Supp at 988–1000 (addressing the remedy and allocation).

2503. See, e.g., Kalamazoo River Study Group v. Rockwell Int’l, 107 F. Supp. 2d 817 (W.D.

Mich. 2000) (liability and allocation); United States v. Vertac Chem. Corp., 79 F. Supp. 2d 1034

(E.D. Ark. 1999) (liability and allocation).

2504. See United States v. N.E. Pharm. & Chem. Co., 810 F.2d 726, 749 (8th Cir. 1986);

United States v. Northernaire Plating Co., 685 F. Supp. 1410, 1413 (W.D. Mich. 1988) (citing

N.E. Pharm. & Chem. Co.).
§ 34.34 Manual for Complex Litigation, Fourth

688

natural resources was to focus case management on preparing a single case involving a primary defendant for a jury trial.2505 To ascertain the universe of

facts at issue, the judge ordered the litigants to request admission of any fact on

which they intended to offer evidence and they were precluded from offering

any evidence that was not subject to such a request. Each request had to be

detailed “to the level of specificity of a patent claim.”2506

Special verdict forms (see section 12.451), jury notebooks (see section

12.42), time limits for each side (see section 12.35), interim instructions (see

section 12.433), and other jury aids may be appropriate. Setting firm trial dates

and using other trial-management procedures are presumed.2507 

2505. The district court in In re Acushnet River & New Bedford Harbor, 712 F. Supp. 994 (D.

Mass. 1989), held that there is a right to trial by jury in cases involving recovery of damages to

natural resources because such cases are a form of statutory tort.

2506. In re Acushnet River & New Bedford Harbor, 712 F. Supp. 1019, 1030–31 (D. Mass.

1989). As the case settled on the eve of trial, the degree to which this procedure would have simplified the trial was never tested. It did, however, lead some of the parties to propound innumerable requests for admission lest an important fact inadvertently be excluded from the “universe.”

Id.

2507. See generally supra sections 11.212, 12.
689

35. Civil RICO

.1 Introduction 689

.2 Statutory Framework 692

.3 Case Management 702

.31 Pleadings 702

.32 Initial Conference 708

.33 Discovery 720

.34 Motion Practice 721

.35 Trial 722

35.1 Introduction

Congress enacted the 1920 Racketeer Influenced and Corrupt Organizations Act2508 (RICO) to respond to the “infiltration of organized crime and

racketeering into legitimate organizations operating in interstate commerce.”2509 Congress targeted organized crime through a broad statutory

scheme that included severe criminal penalties, fines, imprisonment, asset forfeiture,2510 and civil remedies in an effort to undermine the economic power of

racketeering organizations.2511 The statute further enabled private litigants to

act, in effect, as private attorneys general2512 to sue for injury to their businesses

or property caused by a RICO violation.

Civil RICO claims have alleged wrongs actionable under state and common law, as well as other federal statutes.2513 Although the statute was targeted

2508. 18 U.S.C. §§ 1961–1968 (West 2003).

2509. Comm’n on the Judiciary, U.S. Senate, Organized Crime Control Act of 1969, S. Rep.

No. 91-617, at 76 (1969). In 1969, the President’s Commission on Law Enforcement and Administration of Justice reported that organized crime was extensively involved in legitimate

business organizations and utilized tactics such as monopolization, terrorism, extortion, and tax

evasion “to drive out and control lawful ownership and leadership.” President’s Comm’n on

Law Enforcement & Admin. of Justice, The Challenge of Crime in a Free Society (1969).

2510. 18 U.S.C. § 1963(a) (West 2003).

2511. Id. § 1964(c). RICO also provides for equitable relief, including divestiture of defendant’s interest in the enterprise, restrictions on future activities, reorganization, or dissolution.

Id. § 1964(a). See Paul B. O’Neill, “Mother of Mercy, Is This the Beginning of RICO?”: The Proper

Point of Accrual of a Private Civil RICO Action, 65 N.Y.U. L. Rev. 172, 180 (1990).

2512. 18 U.S.C. § 1964(c) (West 2003). See Rotella v. Wood, 528 U.S. 549, 557 (2000)

(“The object of civil RICO is thus not merely to compensate victims but to turn them into

prosecutors, ‘private attorneys general,’ dedicated to eliminating racketeering activity.”).

2513. For example, until the enactment of the Private Securities Litigation Reform Act,

RICO claims were frequently asserted in cases alleging securities violations. See, e.g., Holmes v.

Sec. Investor Prot. Corp., 503 U.S. 258 (1992); Powers v. British Vita, 57 F.3d 176 (2d Cir. 1995).
§ 35.1 Manual for Complex Litigation, Fourth

690

at organized crime, courts have broadly construed RICO’s provisions, and its

scope has extended well beyond its original aim. Early efforts by lower courts

to restrict claims that appeared to exceed RICO’s original goals were overruled

by Supreme Court decisions that broadened the statute’s reach.2514 RICO

claims can now be found in a variety of contexts, including insurance and

business disputes, antiabortion and other protests,2515 consumer financial

services litigation,2516 family law,2517 and whistle-blower actions.2518 Although

the nontraditional uses of RICO have continued to expand despite significant

criticism by commentators and the courts, Congress has shown little inclination to narrow the statute’s focus or reach.2519

2514. Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985). See United States v. Turkette, 452

U.S. 576, 581 (1981) (Congress intended RICO to reach criminal as well as legitimate organization and breadth of statute signaled congressional intent to supersede authority of courts to

restrict its provisions). However, the Supreme Court has acknowledged that the statute does

have some limits. See Reves v. Ernst & Young, 507 U.S. 170, 184 (1993) (“Congress did not intend to extend RICO liability under § 1962(c) beyond those who participate in the operation or

management of an enterprise through a pattern of racketeering activity.”); H.J. Inc. v. N.W. Bell

Tel. Co., 492 U.S. 229, 239 (1989) (continuity required).

2515. See, e.g., NOW v. Scheidler, 510 U.S. 249 (1994).

2516. Robert M. Hatch et al., RICO Theories, Cases and Strategies in Consumer Litigation:

Strategies for Defending Section 1962 Claims, 53 Consumer Fin. L. Q. Rep. 140 (1999).

2517. See DeMauro v. DeMauro, 115 F.3d 94, 97 (1st Cir. 1997) (alleging RICO claims for

fraudulent concealment of marital assets by wife against husband arising out of divorce proceedings); see also Erin Alexander, Comment, The Honeymoon Is Definitely Over: The Use of Civil

RICO in Divorce, 37 San Diego L. Rev. 541 (2000).

2518. Beck v. Prupis, 162 F.3d 1090 (11th Cir. 1998), aff’d, 529 U.S. 494 (1999).

2519. “The ‘extraordinary’ uses to which civil RICO has been put appear to be primarily

the result of the breadth of the predicate offenses, in particular the inclusion of wire, mail, and

securities fraud, and the failure of Congress and the courts to develop a meaningful concept of

‘pattern.’” Sedima, 473 U.S. at 500. The Private Securities Litigation Reform Act of 1995

(PSLRA) eliminated conduct actionable as securities fraud as a predicate act, reflecting the only

time to date that Congress has restricted the reach of civil RICO. 15 U.S.C. § 78u-4(a) (2000).

See, e.g., Bald Eagle Area Sch. Dist. v. Keystone Fin., Inc., 189 F.3d 321, 330 (3d Cir. 1999) (A

RICO plaintiff “cannot avoid the RICO Amendment’s bar . . . if the conduct giving rise to [the]

[RICO] predicate offenses amounts to securities fraud.”); Mathews v. Kidder, Peabody & Co.,

Inc., 161 F.3d 156, 164 (3d Cir. 1998) (“It is clear from the legislative history that the intention

behind the RICO Amendment was ‘to address a significant number of frivolous actions based on

alleged securities law violations.’” (quoting 141 Cong. Rec. H2771 (daily ed. Mar. 7, 1995)

(statement of Rep. Cox))); Krear v. Malek, 961 F. Supp. 1065, 1076 (E.D. Mich. 1997) (PSLRA

applies retroactively to RICO claims). The PSLRA retains a narrow exception permitting RICO

allegations against defendants who had been criminally convicted of securities fraud. See Private

Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, § 107, 109 Stat. 737, 758 (codified

as amended at 18 U.S.C. § 1964(c) (West 2003)).
Civil RICO § 35.1

691

RICO has been called “arcane,”2520 “tormented,”2521 “complicated,”2522 and

“agonizingly difficult.”2523 Litigation under the statute is often time-consuming

and burdensome, both because RICO’s inadequately defined scope has resulted in conflicting legal doctrine and because of the breadth of the supporting allegations. RICO litigation can involve multiple defendants and multicount complaints where each count alleges a separate enterprise and a multitude of predicate acts.2524 In addition, RICO cases are often brought as class

actions, which can introduce additional complexities.2525

2520. Bryant v. Yellow Freight Sys., 989 F. Supp. 966, 968 (N.D. Ill. 1997) (RICO “fraught

with arcane mysteries”); Macy’s E., Inc. v. Emergency Envtl. Servs., Inc., 925 F. Supp. 191, 193

(S.D.N.Y. 1996) (“arcane eccentricities of RICO jurisprudence”).

2521. Combs v. Bakker, 886 F.2d 673, 677 (4th Cir. 1989) (characterizing RICO as a “tormented statute”); Sadighi v. Daghighfekr, 36 F. Supp. 2d 267 (D.S.C. 1999) (noting statute’s

“torment” was evident in courts’ interpretations of section 1965).

2522. Tafflin v. Levitt, 493 U.S. 455, 465 (1990); Cent. Distribs. of Beer Inc. v. Conn., 5 F.3d

181, 184 (6th Cir. 1993) (stating that RICO is “one of the most complex statutes ever enacted by

Congress”); Jennings v. Emry, 910 F.2d 1434, 1435 (7th Cir. 1990) (noting RICO is a complex

statute); Murray v. Midwest Real Estate Inv. Co., No. 98C1569, 1998 WL 919694, at *2 (N.D. Ill.

Dec. 30, 1998) (calling RICO “exceedingly complicated”); Brooks v. Bank of Boulder, 891 F.

Supp. 1469, 1477 (D. Colo. 1995) (“complicated”).

2523. Sun Sav. & Loan Ass’n v. Dierdorff, 825 F.2d 187, 196 (9th Cir. 1987) (Burns, J., concurring).

2524. Chapman & Cole v. Itel Container Int’l B.V., 865 F.2d 676, 685 (5th Cir. 1989) (“A

RICO cause of action by definition involves complex litigation and high legal costs.”).

2525. See Smith v. Berg, 247 F.3d 532, 534 (3d Cir. 2001) (putative class action against real

estate developer for misleading plaintiffs to purchase homes they couldn’t afford); VanDenBroeck v. CommonPoint Mortgage Co., 210 F.3d 696, 698 (6th Cir. 2001) (class action by borrowers

against lenders); Maio v. Aetna Inc., 221 F.3d 472, 474 (3d Cir. 2000) (class action complaint

alleging RICO violations against HMO); Stachon v. United Consumers Club, Inc., 229 F.3d 673,

674 (7th Cir. 2000) (class action suit against buying club); Moore v. Am. Fed. of Television &

Radio Artists, 216 F.3d 1236, 1243 (11th Cir. 2000) (denying motion for class certification on

RICO count where there were only a few common questions of law, and facts and plaintiffs

could not satisfy the requirements of Rule 23); Fogie v. Thorn Ams., Inc., 190 F.3d 889, 892 (8th

Cir. 1999) (class action alleging violation of RICO in operation of rent-to-own business); Hamm

v. Rhone-Poulenc Rorer Pharms., Inc., 187 F.3d 941, 951 (8th Cir. 1999) (finding district court

treated case as class action although no class had been certified at the time of ruling on the

summary-judgment motion), cert. denied, 528 U.S. 1117 (2000); Price v. Pinnacle Brands, Inc.,

138 F.3d 602, 604–05 (5th Cir. 1998) (class action alleging claims arising out of purchase of

trading cards).
§ 35.2 Manual for Complex Litigation, Fourth

692

35.2 Statutory Framework

RICO liability hinges on whether the defendant “person”2526 engaged in a

pattern of racketeering activity through specific designated offenses, referred to

as predicate acts. The specific elements necessary to state a claim vary according to whether the claim is brought under 18 U.S.C. § 1962(a), (b), (c) or (d).

The plaintiff must show that the racketeering activity adversely affected an interstate enterprise,2527 and that this adverse impact proximately caused injury

to the plaintiff’s business or property.2528 Racketeering activity is defined in

section 1961 to include activities that could be charged under a broad array of

federal and state criminal offenses.2529 To establish a pattern of racketeering, a

plaintiff must show that the defendant was responsible for at least two acts of

racketeering within ten years of each other, and that the predicate acts had a

common relationship and continuity.2530 Further, to establish the requisite

predicate acts, the plaintiff must plead and prove each element of the racketeering offense.2531

2526. “Person” is defined in section 1961(3) as including “any individual or entity capable

of holding a legal or beneficial interest in property.” The term has been liberally construed. See

Jund v. Town of Hempstead, 941 F.2d 1271, 1282 (2d Cir. 1991) (unincorporated political association); Pine Ridge Recycling, Inc. v. Butts County, 855 F. Supp. 1264, 1273 (M.D. Ga. 1994)

(counties and solid waste authorities).

2527. RICO: Civil and Criminal Law and Strategy § 7.04[2][e], at 7-45 to 7-47 (Jed S.

Rakoff & Howard W. Goldstein eds., 2002).

2528. See id. §§ 7.04[2][f], 7.04[2][g].

2529. Section 1961(1) defines “racketeering activity” as “any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or

dealing in a controlled substance which is chargeable under state law and punishable by imprisonment for more than one year,” or which is indictable under a wide variety of enumerated

offenses under Title 18 of the U.S. Code. It also covers any act indictable under Title 29, any

federal offense involving fraud in connection with Title 11, the sale of securities or controlled

substances, as well as any acts indictable under the Currency and Foreign Transaction and Reporting Act or the Immigration and Naturalization Act.

2530. Section 1961(5) defines a “pattern of racketeering” as requiring “at least two acts of

racketeering activity, one of which occurred after the effective date of this section and the last of

which occurred within ten years (excluding any period of imprisonment) after the commission

of a prior act of racketeering activity.” Acts of terrorism were recently added to RICO under

section 1961(1)(g), which provides for the inclusion of any act under 18 U.S.C.

§§ 2332b(g)(5)(B) & 2332b(a)(1)(B) (“[A]ttempting or conspiring to destroy or damage any

structure . . . within the United States . . . .”).

2531. See Rakoff & Goldstein, supra note 2527, § 7.04[2][c], at 7-41 to 7-44.
Civil RICO § 35.2

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The following substantive provisions of RICO (18 U.S.C. § 1962) apply to

any “person”:

• Section 1962(a) prohibits the investment of income or of the proceeds

of income derived from a pattern of racketeering activity or through

the collection of an unlawful debt, in an enterprise engaged in or

whose activities affect interstate or foreign commerce. It specifically

exempts from its scope the purchase of securities for purposes of investment and purchases “without the intention of controlling or participating in the control of the issuer,” as long as the securities do not

exceed 1% of the outstanding shares of any one class of securities and

do not confer the power to elect directors.

• Section 1962(b) makes it unlawful to acquire an interest in or control

of an enterprise engaged in or whose activities affect interstate or foreign commerce through a pattern of racketeering activity or the collection of an unlawful debt.

• Section 1962(c) prohibits anyone employed by or associated with an

enterprise engaged in or whose activities affect interstate or foreign

commerce from participating in its affairs through a pattern of racketeering activity or the collection of an unlawful debt.

• Section 1962(d) prohibits conspiracies to violate section 1962(a), (b),

or (c).2532

2532. To state a claim under section 1962(d), a plaintiff must plead that defendants agreed

to join the conspiracy, agreed to commit predicate acts, and knew that those acts were part of a

pattern of racketeering activity. See United States v. Patrick, 248 F.3d 11, 20 (1st Cir. 2001)

(conspiracy can be shown by tacit agreement); Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d

1134, 1140–41 (5th Cir. 1992); Glessner v. Kenny, 952 F.2d 702, 714 (3d Cir. 1991); Reddy v.

Litton Indus., Inc., 912 F.2d 291, 294–95 (9th Cir. 1990). Absent sufficient allegations of the

substantive violation of subsection (a), (b), or (c), the plaintiff’s claim under section 1962(d) will

be dismissed. See Salinas v. United States, 522 U.S. 52, 63 (1997). The circuits had split on the

issue of whether the defendant must have personally participated in or agreed to participate in

the commission of predicate acts. Some courts had required that a defendant agree to commit at

least two predicate acts, see, e.g., Miranda v. Ponce Fed. Bank, 948 F.2d 41, 47–48 (1st Cir. 1991),

while others had held that it was sufficient if a defendant agreed that some member of the enterprise would commit the predicate acts, see, e.g., United States v. Pryba, 900 F.2d 748, 760 (4th

Cir. 1990). See also United States v. Kragness, 830 F.2d 842, 860 (8th Cir. 1987). Following the

Supreme Court’s decision in Salinas, however, the courts have held that a defendant does not

need to personally commit predicate acts, or agree to commit them, in order to be liable under

section 1962(d). See, e.g., Patrick, 248 F.3d at 20; Smith v. Berg, 247 F.3d 532, 538 (3d Cir. 2001);

Lachmund v. ADM Inv. Servs., Inc., 191 F.3d 777, 784–85 (7th Cir. 1999); United States v.

Frega, 179 F.3d 793, 810 n.21 (9th Cir. 1999), cert. denied, 528 U.S. 1191 (2000).
§ 35.2 Manual for Complex Litigation, Fourth

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There has been significant litigation over the proper interpretation of several of

the statutory elements common across sections 1962(a), (b), (c), and (d)—

such as “enterprise” or “pattern”—as well as conflicts among the circuits over

the interpretation of certain elements peculiar to section 1962(c),2533 such as

“conduct or participate.”2534 Although sometimes referred to as “terms of

art,”2535 their interpretation remains a matter of debate and has varied among

the circuits. Despite the confusion as to the appropriate scope of these elements, a plaintiff’s failure to include factual allegations sufficient to satisfy basic components of each element, at least as that component has been interpreted within the relevant circuit, may result in dismissal.2536 Some of the most

litigated statutory terms are discussed below:

• Enterprise. Section 1961(4) broadly defines an enterprise as “any individual, partnership, corporation, association, or other legal entity, and

any union or group of individuals associated in fact although not a legal entity.”2537 In United States v. Turkette,

2538 the Court held that

RICO’s enterprise element encompassed both legitimate and illegitimate businesses. Turkette has been interpreted as establishing that an

“enterprise” must exhibit several basic characteristics: (1) there must

be a common or shared purpose among the members of the enterprise; (2) there must be some degree of continuity of organizational

2533. Section 1962(c) forms the basis for most of the civil RICO claims. In Sedima, S.P.R.L.

v. Imrex Co., 473 U.S. 479 (1985), the Supreme Court set out the four primary elements of a

§ 1962(c) claim. The plaintiff must show “(1) conduct (2) of an enterprise (3) through a pattern

(4) of racketeering activity.” Id. at 496 (footnote omitted).

2534. See Rakoff & Goldstein, supra note 2527, § 2.03[1], at 2-38 (“Post-Sedima RICO jurisprudence has been notable for confusion and inconsistency.”).

2535. Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir. 1989) (each concept “is a term of art

which carries its own inherent requirements of particularity”).

2536. Jennings v. Emry, 910 F.2d 1434 (7th Cir. 1990); Schmidt v. Fleet Bank, 16 F. Supp.

2d 340 (S.D.N.Y. 1998).

2537. The Supreme Court has noted in United States v. Turkette that “[t]here is no restriction upon the associations embraced by the definition: an enterprise includes any union or

group of individuals associated in fact.” 452 U.S. 576, 580 (1981). The courts generally have

broadly construed the definition of “enterprise” to include various types of organizations, both

legitimate and criminal, as well as combinations of different entities as “associations in fact.” See,

e.g., DeFalco v. Bernas, 244 F.3d 286 (2d Cir. 2001) (town); United States v. Patrick, 248 F.3d 11,

17 (1st Cir. 2000) (gang); Bachman v. Bear, Stearns & Co., 178 F.3d 930, 931 (7th Cir. 1999)

(“RICO statute reaches informal as well as formal organizations.”); United States v. Beasley, 72

F.3d 1518, 1525 (11th Cir. 1996) (religious cult); Cox v. Adm’r United States Steel & Carnegie,

30 F.3d 1347, 1349 (11th Cir.) (pension fund), modifying on reh’g, 17 F.3d 1386 (11th Cir. 1994);

Am. Mfrs. Mut. Ins. Co. v. Townson, 912 F. Supp. 291, 295 (E.D. Tenn. 1995) (marriage as enterprise).

2538. 452 U.S. 576, 580–81 (1981).
Civil RICO § 35.2

695

structure and members; and (3) the enterprise must be separate from

the pattern of racketeering activity.2539 The Court further held that to

satisfy the enterprise requirement, a plaintiff must show “evidence of

an ongoing organization, formal or informal, and . . . that the various

associates function as a continuing unit.”2540 These requirements are

easily met where the enterprise has a legal existence, such as a corporation or partnership.2541 Where the enterprise is an “association in

fact,” however, proof of the various elements becomes more difficult

and proof that demonstrates continuity or organizational structure

often overlaps with the proof relied on to show a pattern of racketeering activity. The courts have disagreed on the extent to which the same

evidence used to prove a pattern of racketeering activity can also be

2539. Id. at 583.

2540. Id. See VanDenBroeck v. CommonPoint Mortgage Co., 210 F.3d 696, 700 (6th Cir.

2001) (alleged enterprise of mortgage lender and secondary lender market “too unstable and

fluid an entity to constitute a RICO enterprise”); Stachon v. United Consumers Club, Inc., 229

F.3d 673, 676 (7th Cir. 2000) (enterprise of defendant, its franchisees, officers, directors, members, participating wholesalers, and participating manufacturers lacked distinct structure and

function); United States v. Gray, 137 F.3d 765, 772 (4th Cir. 1998) (government evidence

showed defendant ran a drug distribution ring that had identifiable structure from the existence

of a leader, an assistant, stash house workers, and a system of stash houses used to distribute

drugs); United States v. Parise, 159 F.3d 790, 795 (3d Cir. 1998) (continuity requirement met

even though each member of enterprise didn’t participate in it from beginning to end, and government needed only to show “alleged members who participated at one time or another were

part of an ongoing enterprise with a shared ‘organizational pattern’ and ‘system of authority’”);

United States v. Davidson, 122 F.3d 531, 535 (8th Cir. 1997) (The number and variety of crimes,

defendant’s financial support of his “underlings,” and defendant’s continued leadership of the

criminal organization, among other things, “demonstrate[d] an ongoing association with a

common purpose to reap the economic rewards flowing from the crimes, rather than a series of

ad hoc relationships.”); Amsterdam Tobacco Inc. v. Philip Morris, Inc., 107 F. Supp. 2d 210, 215

(S.D.N.Y. 2000) (“The vertical group described by plaintiff here is merely a reiteration of the

(alleged) racketeering activity.”). In addition, the RICO enterprise must be separate and distinct

from the RICO “person.” See, e.g., Brannon v. Boatmen’s First Nat’l Bank of Okla., 153 F.3d

1144, 1147–48 & n.4 (10th Cir. 1998).

2541. See, e.g., United States v. Kirk, 844 F.2d 660, 664 (9th Cir. 1988) (“Although the circuits are divided on the requirements for proof of an enterprise . . . under either test, the existence of a corporation fulfills the requirements of an ascertainable structure apart from the

predicate racketeering activity.”) (citation omitted); Bennett v. Berg, 685 F.2d 1053, 1061 n.9

(8th Cir. 1982) (“Where a legal entity is alleged as the RICO enterprise, this entity is likely to be

clearly distinct from the acts of racketeering.”), aff’d in part, rev’d in part in reh’g en banc, 710

F.2d 1361 (8th Cir. 1983).
§ 35.2 Manual for Complex Litigation, Fourth

696

used to prove the existence of an enterprise.2542 Note, however, that

evidence satisfying the requirement of “continuity” of the organization

may also satisfy the continuity required to show a pattern of racketeering activity. The circuits have varied in whether a plaintiff may

prove the existence of an enterprise through proof of a pattern of

racketeering activity.2543 Some circuits have interpreted the “separateness” criteria more strictly and have required varying degrees of proof

that an organization has a structure independent from that inherent in

the pattern of racketeering activity.2544 These courts have expressed the

concern that to permit proof of the enterprise to be inferred from the

pattern of racketeering activity would essentially make “‘every pattern

of racketeering activity [become] an enterprise whose affairs are conducted through the pattern of racketeering.’”2545

In addition, to the extent that the claim is brought under section

1962(c), a plaintiff must also plead and prove that the “enterprise” is

distinct from the defendant “person” against whom damages are

sought.2546 It is unclear whether this requirement exists for claims

2542. Turkette, 452 U.S. at 583 (1981) (“While the proof used to establish these separate

elements may in particular cases coalesce, proof of one does not necessarily establish the

other.”).

2543. See, e.g., United States v. Indelicato, 865 F.2d 1370, 1384 (2d Cir. 1989) (although

“enterprise” and “pattern” requirements are distinct elements of the claim, same evidence could

be used to prove both elements); United States v. Perez, No. 3:97CR48, 1999 WL 200696, at *2

(D. Conn. Feb. 23, 1999) (elements of relatedness and continuity necessary to establish pattern

can be proven through nature of RICO enterprise), aff’d, 242 F.3d 369 (2000), cert. denied, 532

U.S. 989 (2001).

2544. See, e.g., United States v. Darden, 70 F.3d 1507, 1521 (8th Cir. 1995) (proof must

show enterprise has existence beyond the association necessary to commit the predicate acts);

Amsterdam Tobacco, 107 F. Supp. 2d at 215 (enterprise would likely not exist were the predicate

acts removed from the equation (citing Schmidt v. Fleet Bank, 16 F. Supp. 2d 340, 349 (S.D.N.Y.

1998))); Zola v. Gordon, 685 F. Supp. 354, 373 (S.D.N.Y 1988) (enterprise must have an existence beyond that which is merely to commit each of the acts charged as predicated racketeering

offenses); United States v. Riccobene, 709 F.2d 214, 223–24 (3d Cir. 1983) (same).

2545. Chang v. Chen, 80 F.3d 1293, 1298 (9th Cir. 1996) (quoting Arlington v. Carpenter,

619 F. Supp. 474, 479 (C.D. Cal. 1985)); see also United States v. Bledsoe, 674 F.2d 647, 664 (8th

Cir.) (An enterprise cannot be proved absent “proof of some structure . . . separate from the

racketeering activity and distinct from the organization which is a necessary incident to the racketeering. The Act simply punishes the commission of two of the specified crimes with a 10-year

period.”), cert. denied sub nom. Phillips v. United States, 459 U.S. 1040 (1982).

2546. Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 158 (2001) (holding that

RICO applies “when . . . a corporate employee unlawfully conducts the affairs of the corporation

of which he is the sole owner—whether he conducts those affairs within the scope, or beyond

the scope, of corporate authority”); see also Fogie v. Thorn Americas, Inc., 190 F.3d 889, 898–99
Civil RICO § 35.2

697

brought under section 1962(a) or (b). Several cases have held that it is

not necessary to show that the “enterprise” is separate and distinct

from the “person” where the case arises under other provisions of section 1962.2547 Similarly, the courts have disagreed on whether an intracorporate conspiracy can be alleged under section 1962(d).2548 Most

courts have ruled that section 1962(c) was designed to punish only the

persons who run an enterprise illegally and not the enterprise itself,

which often will be an innocent victim of the racketeering activity.2549

Plaintiffs have nonetheless attempted to circumvent this requirement

by alleging, for example, that the defendant is an affiliate or parent

corporation.2550 Thus, in the situation where corporate employees are

alleged to have conducted the affairs of the corporate enterprise

through a pattern of racketeering activity, the courts generally have

(8th Cir. 1999) (finding parent and wholly owned subsidiary cannot be both the enterprise and

person, and allegations failed to satisfy distinctiveness requirement); Jaguar Cars, Inc. v. Royal

Oaks Motor Car Co., 46 F.3d 258, 264 (3d Cir. 1995) (officers or employees of legitimate corporation properly named as “persons,” with corporation serving as the “enterprise”).

2547. See, e.g., New Beckley Mining Corp. v. Int’l Union, United Mine Workers, 18 F.3d

1161, 1163 (4th Cir. 1994); Landry v. Airline Pilots Ass’n Int’l, 901 F.2d 404, 425–26 (5th Cir.),

cert. denied, 498 U.S. 895 (1990); Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local

Union 639, 883 F.2d 132, 140 (D.C. Cir. 1989) (noting cases where courts have held corporation

can be both person and enterprise under section 1962(a)), rev’d in part on other grounds, 913

F.2d 948 (D.C. Cir. 1990).

2548. Compare Fogie, 190 F.3d at 898–99 (no conspiracy can exist between a corporation

and a wholly owned subsidiary), with Webster v. Omnitrition Int’l, Inc., 79 F.3d 776, 787 (9th

Cir.) (conspiracy under section 1962(d) could extend to intracorporate conspiracy), cert. denied,

519 U.S. 865 (1996).

2549. See Hatch et al., supra note 2516, at 142–43.

2550. See, e.g., Bd. of County Comm’rs v. Liberty Group, 965 F.2d 879, 885 (10th Cir.

1992); Yellow Bus Lines, 883 F.2d at 139–40; Schofield v. First Commodity Corp., 793 F.2d 28,

29–30 (1st Cir. 1986); Bennett v. United States Trust Co., 770 F.2d 308, 315 (2d Cir. 1985). See

Hatch et al., supra note 2516, at 143–44 and cases cited therein; see also VanDenBroeck v. CommonPoint Mortgage Co., 210 F.3d 696, 701 (6th Cir. 2001) (sole shareholder of corporate “enterprise” can be “person” for purposes of RICO, and is sufficiently distinct from corporation to

satisfy separateness requirement); Brannon v. Boatmen’s First Nat’l Bank of Okla., 153 F.3d

1144, 1149 (10th Cir. 1998) (wholly owned subsidiary will be deemed distinct for purposes of

section 1962(c) where parent and subsidiary had distinct roles in common course of wrongful

conduct); Emery v. Am. Gen. Fin., Inc., 134 F.3d 1321, 1324–25 (7th Cir. 1998) (plaintiff failed

to state claim under RICO where parent corporation was alleged as “person” and its only involvement in racketeering scheme was limited to its status as parent of its subsidiary “enterprise”); Yellow Bus Lines, 883 F.2d at 141 (“[A]llowing plaintiffs to generate such ‘contrived

partnerships’ consisting of an umbrella organization and its subsidiary parts, would render the

non-identity requirements of section 1962(c) meaningless. We decline to permit such an ‘end

run’ around the statutory requirements.”).
§ 35.2 Manual for Complex Litigation, Fourth

698

rejected plaintiffs’ efforts to hold the corporation liable as a defendant,

either directly or vicariously.2551 Note, however, that some courts permit vicarious liability where an employer is benefited by its employee’s

section 1962(c) violations if the employer is distinct from the enterprise.2552 Claims brought under other subsections have not been subject to similar limitations, and courts have applied general principles

of vicarious liability depending on the circumstances and whether the

corporation was a victim.

2553 Claims alleging association-in-fact enterprises have been dismissed on pretrial motions for failure to identify

an enterprise that is more than a corporate entity and its agents conducting their regular business.2554

• Pattern of racketeering activity. Section 1961(5) defines “pattern” as “at

least two acts of racketeering activity within a ten year period.” In H.J.

Inc. v. Northwestern Bell Telephone Co.,2555 the Supreme Court addressed the meaning of the pattern requirement, holding a plaintiff

must show that the predicate acts “are related and that they are or pose

a threat of continued criminal activity.”2556 A pattern cannot be satis2551. See, e.g., DeFalco v. Bernas, 244 F.3d 286 (2d Cir. 2001); Cedric Kushner Promotions,

Ltd. v. King, 219 F.3d 115, 116–17 (2d Cir. 2000) (affirming district court dismissal where defendant alleged as RICO person was an employee of the RICO enterprise acting within the scope

of his authority); Parker & Parsley Petroleum Co. v. Dresser Indus., 972 F.2d 580, 584 (5th Cir.

1992); Miranda v. Ponce Fed. Bank, 948 F.2d 41, 45 (1st Cir. 1991). Contra Cox v. Adm’r United

States Steel & Carnegie, 17 F.3d 1386, 1398 (11th Cir. 1994) (person and enterprise not required

to be distinct under section 1962(c)), modified, 30 F.3d 1347 (11th Cir.), cert. denied, 513 U.S.

1110 (1995).

2552. See, e.g., Brady v. Dairy Fresh Prods. Co., 974 F.2d 1149 (9th Cir. 1992).

2553. Rakoff & Goldstein, supra note 2527, § 1.03(2), at 1-13 to 1-18, and cases cited

therein; Quick v. Peoples Bank of Cullman County, 993 F.2d 793, 797–98 (11th Cir. 1993) (section 1962(b)); Brannon v. Boatmen’s First Nat’l Bank of Okla., 153 F.3d 1144, 1149 (10th Cir.

1998) (section 1962(c)).

2554. See, e.g., Parker & Parsley, 972 F.2d at 583; Brittingham v. Mobil Corp., 943 F.2d 297,

300–03 (3d Cir. 1991) (“[A] § 1962(c) enterprise must be more than an association of individuals or entities conducting the normal affairs of a defendant corporation.”); Yellow Bus Lines, 883

F.2d at 141; Atkinson v. Anadarko Bank & Trust Co., 808 F.2d 438, 439 (5th Cir. 1987).

2555. 492 U.S. 229 (1989). Northwestern Bell resolved two conflicts among the circuits:

(1) whether the pattern requirement could be met by a showing of only a single scheme, or

whether separate multiple schemes must be alleged; and (2) whether a showing of two predicate

acts, by themselves, would satisfy the pattern requirement.

2556. Id. at 239. As with other provisions of the statute, the Court noted that in defining a

pattern of racketeering activity, Congress had intended “to take a flexible approach.” Id. at 238;

see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 n.14 (1985) (referring to the “continuity

plus relationship” language of the Senate Report in attempting to describe a pattern). The circuit

decisions following Sedima reflected differing views among the circuits as to when a pattern did
Civil RICO § 35.2

699

fied by sporadic and isolated activity.2557 Rather, to satisfy the relatedness requirement, there must be some showing of acts with similar

“purposes, results, participants, victims or methods of commission or

[that] are otherwise interrelated . . . .”2558 Continuity can be established

where the predicate acts have extended over a substantial period of

time (typically at least a year) or, alternatively, where the activity

threatens to continue into the future.2559 The Court offered examples

of several ways in which the continuity prong of the pattern requirement could be satisfied, such as where the racketeering activity is a

regular way of conducting an ongoing legitimate business, but emphasized that these were only illustrative of the innumerable possibilities and each case should be considered in light of its particular facts

and circumstances.2560 Circuit decisions following Northwestern Bell

have developed varying tests for determining whether the relationship

or continuity prongs have been established. For example, several circuits have adopted multifactor tests that consider such things as the

nature, number, and temporal relationship of the predicate acts;

whether the activity constituted a single scheme as opposed to several

schemes; the number of putative victims; and the presence of distinct

injuries to establish continuity.

2561 Other courts have broadly conor did not exist. See, e.g., United States v. Polanco, 145 F.3d 536, 541 (2d Cir. 1998) (“Predicate

acts ‘must be related to each other (“horizontal relatedness”) and they must be related to the

enterprise (“vertical relatedness”).’” (quoting United States v. Minicone, 960 F.2d 1099, 1106

(2d Cir. 1992))), cert. denied, 525 U.S. 1071 (1999); Morgan v. Bank of Waukegan, 804 F.2d 970,

975 (7th Cir. 1986) (pattern requires predicate acts involving separate transactions); Superior

Oil Co. v. Fulmer, 785 F.2d 252, 257 (8th Cir. 1986) (pattern not met where all predicate acts are

pursuant to one scheme); R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350, 1355 (5th Cir. 1985)

(single scheme sufficient).

2557. Sedima, 473 U.S. at 497 n.14.

2558. Northwestern Bell, 492 U.S. at 240. See, e.g., Combs v. Bakker, 886 F.2d 673 (4th Cir.

1989) (vacating district court decision and holding that pattern requirement did not require

different types of predicate acts, or objective).

2559. Northwestern Bell, 492 U.S. at 242.

2560. Id.

2561. See, e.g., W. Assocs. Ltd. P’ship v. Market Square Assocs., 235 F.3d 629, 634 (D.C.

Cir. 2001) (six-factor test was “flexible guide for analyzing RICO allegations on a case by case

basis”); Tabas v. Tabas, 47 F.3d 1280, 1296 (3d Cir. 1995) (noting that six factors established

before decision in Northwestern Bell remained relevant in determining whether a pattern existed,

although court was not required to apply them in every case); Wade v. Hopper, 993 F.2d 1246,

1251 (7th Cir.) (four-factor test), cert. denied, 510 U.S. 868 (1993); Prof’ls, Inc. v. Berry, 959 F.2d

231 (4th Cir. 1992); 420 East Ohio Ltd. P’ship v. Cocose, 980 F.2d 1122, 1124 (7th Cir. 1992)

(retaining five-factor test but assessing pattern requirement in light of Northwestern Bell and

looking at the specific facts of each case).
§ 35.2 Manual for Complex Litigation, Fourth

700

strued Northwestern Bell to mean that isolated acts of criminal activity

would not give rise to a RICO violation, rather than as establishing a

“determinative two-pronged test.”2562

Conversely, several courts have dismissed RICO claims for failure to

satisfy the pattern requirement where (1) the allegations involve completed or “close-ended” conduct lasting twelve months or less, where

there is no threat of future criminal conduct;2563 or (2) the claims involve only a single (or a few) victims, even though the conduct may

have lasted for many months or even years.2564 In the latter case, most

courts have held that criminal activity directed at only a single victim

does not pose a threat of long-term criminal conduct sufficient to satisfy the “continuity” requirement.2565 Several courts have noted that

particularly where the predicate acts of mail and wire fraud are alleged,

2562. Sun Sav. & Loan Ass’n v. Dierdorff, 825 F.2d 187, 192 (9th Cir. 1987). Still others

focus on certain factors, such as duration. Cofacredit v. Windsor Plumbing Supply Co., 187 F.3d

229, 241 (2d Cir. 1999) (“Although closed-ended continuity is primarily a temporal concept,

other factors . . . are also relevant . . . .”); Tabas, 47 F.3d at 1294; Rakoff & Goldstein, supra note

2527, § 1.04[2], at 1-35 to 1-48.

2563. See, e.g., Efron v. Embassy Suites, Inc., 223 F.3d 12, 19 (1st Cir. 2000) (acts comprising single effort over period of twenty-one months was not a pattern), cert. denied, 532 U.S. 905

(2001); Cofacredit, 187 F.3d at 243–44 (noting closed-ended continuity is not met where conduct occurred over less than two years); Word of Faith World Outreach Ctr. Church v. Sawyer,

90 F.3d 118, 123 (5th Cir. 1996) (where alleged acts “were part of a single, lawful endeavor,” acts

would not constitute continuing or threat of continued racketeering activity); Tabas, 47 F.3d. at

1294; Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1024 (7th Cir. 1992); Uni*Quality, Inc. v.

Infotronx, Inc., 974 F.2d 918, 922 (7th Cir. 1992); Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975

F.2d 1134, 1140 (5th Cir. 1992); Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1412–13

(3d Cir. 1991); Am. Eagle Credit Corp. v. Gaskins, 920 F.2d 352, 354 (6th Cir. 1990); Emcore

Corp. v. PricewaterhouseCoopers, LLP, 102 F. Supp. 2d 237, 252 (D.N.J. 2000) (closed-ended

continuity cannot exist where allegations relate to schemes lasting less than fourteen months);

KNK Medical-Dental Specialties, Ltd. v. Tanex, No. CIV.A. 99-5265, 2000 WL 1470665, at *7

(E.D. Pa. Sept. 28, 2000) (plaintiff failed to allege acts sufficient to show “closed-ended” continuity or threat of continued criminal activity).

2564. See, e.g., Wade, 993 F.2d at 1252; Boone v. Carlsbad Bancorporation, Inc., 972 F.2d

1545, 1556 (10th Cir. 1992); Hindes v. Castle, 937 F.2d 868, 872–76 (3d Cir. 1991) (“[I]t remains

an open question whether RICO liability is ever appropriate for a single-scheme, single-victim

conduct threatening no future harm.”); Lange v. Hocker, 940 F.2d 359, 362 (8th Cir. 1991). But

see Tabas, 47 F.3d at 1295 (inquiry is not whether there was only one victim or scheme but how

long the scheme lasted, the frequency of predicate acts, and whether there is a threat of continuing racketeering activity).

2565. But see Cocose, 980 F.2d at 1124 (the fact that no more than a single scheme is present

does not automatically bar the requisite continuity, but the presence of a single scheme is still

relevant to our inquiry).
Civil RICO § 35.2

701

the pattern requirement “helps to prevent ordinary commercial fraud

from being transformed into a federal RICO claim.”2566

• Conducting or participating in the affairs of an enterprise. Section

1962(c) prohibits participating in or conducting the affairs of an enterprise through a pattern of racketeering activity. The liability for

participating in the conduct of the enterprise through a pattern of

racketeering extends only to those who “play some part in directing

the enterprise’s affairs.”2567 The Supreme Court has made it clear that

the defendant need not be in upper management, nor is liability limited only to those with primary responsibility for the affairs of the enterprise.2568 The “operation or management” test is not easily satisfied.

The courts have held that there is a “difference between actual control

over an enterprise and association with an enterprise in ways that do

not involve control.”2569 For example, the provision of goods or services, including those by outside professionals such as accountants or

lawyers, will not, in itself, satisfy the test even though the enterprise

may benefit in some way.

2570 Liability may also extend to lower-level

employees who play some material role under the direction of upper

2566. Menasco, Inc. v. Wasserman, 886 F.2d 681, 685 (4th Cir. 1989). See also W. Assoc.,

235 F.3d at 637.

2567. Reves v. Ernst & Young, 507 U.S. 170, 179 (1993) (“Once we understand the word

‘conduct’ to require some degree of direction and the word ‘participate’ to require some part in

that direction, the meaning of § 1962(c) comes into focus.”).

2568. See also United States v. Parise, 159 F.3d 790, 796 (3d Cir. 1998) (where defendant

participated in conduct of enterprise’s affairs and was deeply involved in its operation, fact that

he held no formal title or role did not preclude finding that he participated within the meaning

of section 1962(c)). See Amsterdam Tobacco Inc. v. Philip Morris Inc., 107 F. Supp. 2d 210, 217

(S.D.N.Y. 2000) (the provision of goods subsequently illegally transported “does not constitute

operation or management sufficient to establish a RICO enterprise”); Bowdoin Constr. Corp. v.

R.I. Hosp. Trust Nat’l Bank, 869 F. Supp. 1004, 1009 (D. Mass. 1994) (dismissing claims against

law firms, even though they had knowledge of fraud and counseled concealment, as insufficient

to constitute control over operation and management), aff’d, 94 F.3d 721 (1st Cir. 1996). But see

DeFalco v. Bernas, 244 F.3d 286, 311 (2d Cir. 2001) (even though defendant had no role in management of town, evidence reflected his influence over town’s affairs and that he exerted some

control through threats and other actions); In re Sumitomo Copper Litig., 104 F. Supp. 2d 314,

325 (S.D.N.Y. 2000) (finding allegations of reciprocal assistance between defendants sufficient to

allege substantial assistance by defendant to satisfy operation and management test of Reves);

Clark v. Milam, 847 F. Supp. 409, 418 (S.D. W. Va. 1994) (known concealment can constitute

participation in control of enterprise).

2569. Redtail Leasing, Inc. v. Bellezza, No. 95 CIV. 5191, 2001 WL 863556, at *4 (S.D.N.Y.

July 31, 2001) (citing Schmidt v. Fleet Bank, 16 F. Supp. 2d 340, 346 (S.D.N.Y. 1998)).

2570. Univ. of Md. v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539 (3d Cir. 1993).
§ 35.31 Manual for Complex Litigation, Fourth

702

management,2571 although it is unclear whether liability will attach to

lower-level employees where they do not also play some management

or “directing” role.2572 The courts have differed in their approach to

this issue.2573 Finally, liability can extend to outsiders who are associated with the enterprise and exert control over it (for example, by

bribery), or who participate in the operation or management of the

enterprise; however, it generally will not extend to outside accountants

and counsel who render assistance but no control.

35.3 Case Management

.31 Pleadings 702

.32 Initial Conference 708

.33 Discovery 720

.34 Motion Practice 721

.35 Trial 722

35.31 Pleadings

Under Federal Rule of Civil Procedure 8(a)(2), the complaint is to contain

“a short and plain statement of the claim showing the pleader is entitled to relief.” The allegations are to be “simple, concise, and direct”2574 in order to assist

the defendant in understanding the claims alleged against it and the court in

conducting the litigation in an orderly fashion.2575 Compliance with Rule 8

conserves judicial and party resources that otherwise would be expended in

2571. Reves, 507 U.S. at 179; see, e.g., United States v. Viola, 35 F.3d 37, 43 (2d Cir. 1994)

(noting that Reves attached liability to those down “ladder of operation” and defendant “was not

on the ladder at all, but rather . . . was sweeping up the floor underneath it”).

2572. See, e.g., Goren v. New Vision Int’l, Inc., 156 F.3d 721, 728 (7th Cir. 1998) (“[S]imply

performing services for an enterprise, even with knowledge of the enterprise’s illicit nature, is

not enough to subject an individual to RICO liability under § 1962(c) . . . .” (referring to nonemployees hired to perform specific tasks)).

2573. See, e.g., MCM Partners, Inc. v. Andrews-Bartlett & Assocs., Inc. 62 F.3d 967, 978–79

(7th Cir. 1995) (“‘[D]irection’ requirement includes both those who direct, as well as those who

take direction.”) (citation omitted); Viola, 35 F.3d at 41 (“[I]t is plain that the simple taking of

directions and performance of tasks that are ‘necessary or helpful’ to the enterprise, without

more, is insufficient . . . .”); Peat, 996 F.2d at 1538–39 (“[N]ot even action involving some degree

of decision making constitutes participation in the affairs of an enterprise.”).

2574. Fed. R. Civ. P. 8(e)(1).

2575. See, e.g., Michaelis v. Neb. State Bar Ass’n, 717 F.2d 437, 439 (8th Cir. 1983)

(amended complaint with 98 pages and 144 numbered paragraphs justified dismissal with

prejudice, where plaintiff repeatedly violated Rule 8 and “style and prolixity of pleadings would

have made an orderly trial impossible”).
Civil RICO § 35.31

703

deciphering prolix or confusing allegations.2576 The length and complexity of

RICO complaints are sometimes related to the requirement to plead fraud with

particularity in claims alleging mail and wire fraud as predicate acts, while in

other circumstances they derive from an attempt to obscure non-compliance

with Rule 8 and the inclusion of irrelevant or conclusory allegations.2577 The

court should consider reviewing a RICO complaint shortly after filing to determine whether it satisfies Rule 8. Some courts faced with a RICO complaint

that is unintelligible, confusing, or otherwise violative of Rule 8 have dismissed

the complaint sua sponte and required the plaintiff to file a “RICO case statement”2578 along with an amended complaint.2579 Such an approach conserves

both judicial and party resources, and precludes the court, upon undertaking

review of the sufficiency of a complaint, from having to “forever sift through

its pages.”2580 Consider also dismissal with prejudice where the plaintiff has

been given the opportunity to file an amended complaint and persists in filing

a lengthy and confusing document. Although dismissal of a complaint for failure to comply with Rule 8 ordinarily should be with leave to amend,2581 where

the party either fails or is unable to rectify the problem, dismissal with prejudice might be appropriate.2582

2576. See, e.g., Nevigel v. N. Coast Life Ins. Co., 651 F.2d 671, 675 (9th Cir. 1981) (affirming dismissal with prejudice, noting that appellees “had to spend a large amount of time and

money” defending against poorly drafted proceedings and that proper consideration was the

right of appellees to be free from “costly and harassing litigation and the rights of litigants

awaiting their turns to have other matters resolved”); Gordon v. Green, 602 F.2d 743, 745 (5th

Cir. 1979) (compliance with Rule 8 conserves judicial resources).

2577. See, e.g., Vicom, Inc. v. Harbridge Merchant Servs., Inc., 20 F.3d 771, 776 (7th Cir.

1994) (stating “although RICO complaints often might need to be somewhat longer than many

complaints, RICO complaints must meet the requirements of Rule 8(a)(2) and Rule 8(e)(1)”).

2578. See infra section 40.44.

2579. Bryant v. Yellow Freight Sys., 989 F. Supp. 966 app. 5 (N.D. Ill. 1997); Richmond v.

Nationwide Cassel L.P., No. 93 C 6107, 1993 WL 433794, at *2 (N.D. Ill. Oct. 22, 1993).

2580. Jennings v. Emry, 910 F.2d 1434, 1436 (7th Cir. 1990); see also Vicom, 20 F.3d at 776

(“But given the fact that Vicom had already amended its complaint once, we think the district

court should have given more serious consideration to dismissing Vicom’s amended complaint

with prejudice” under Rule 8.); Hartz v. Friedman, 919 F.2d 469, 471 (7th Cir. 1990) (district

court could properly have dismissed RICO complaint as “egregious” violation of Rule 8);

Gordon, 602 F.2d at 745 (declining to “struggle” through 4,000 pages of pleadings to determine if

dismissal for lack of jurisdiction was proper, court vacated and remanded for dismissal of complaint for violation of Rule 8).

2581. See, e.g., Richmond, 1993 WL 433794, at *2; Gould v. Nat’l Westminster Bank, U.S.A.,

No. 3:99-CV-01892, 2000 WL 1339292 at *5 (D. Conn. Aug. 2, 2000) (“plaintiff is ordinarily

allowed to replead his complaint following the granting of a motion to dismiss”).

2582. Vicom, Inc., 20 F.3d at 776; Michaelis v. Neb. State Bar Ass’n, 717 F.2d 437, 439 (8th

Cir. 1983).
§ 35.31 Manual for Complex Litigation, Fourth

704

Rule 9(b) also plays a prominent role in RICO cases that allege predicate

acts of fraud. In such cases, Rule 9(b) governs the specificity required to plead

both the overall RICO elements and the elements of the predicate offenses, as

well as the elements of the RICO claim.2583 The impact of RICO allegations on

a defendant’s reputation makes it important to ensure that the claim is solidly

based.2584 Courts have varied in the level of specificity the plaintiff must plead

to survive a Rule 9(b) motion. Some judges have required the plaintiff to detail

the specific fraudulent acts committed by each defendant, where multiple defendants are involved.2585 Others insist that the plaintiff detail not only the specific fraudulent statements, but where, when, and how they were communicated.2586 The goal is to ensure that complaints sounding in fraud entail more

than general and vague statements of alleged misrepresentation, and plaintiffs

who fail to plead the underlying predicate acts with the specificity demanded

by Rule 9(b) risk dismissal of their RICO claims.2587

2583. Brooks v. Bank of Boulder, 891 F. Supp. 1469, 1476 (D. Colo. 1995). A number of

courts have held that non-fraud RICO claims are governed by Rule 8. See MCM v. AndrewsBartlett & Assocs., Inc., 62 F.3d 967 (7th Cir. 1995); McLaughlin v. Anderson, 962 F.2d 187, 194

(2d Cir. 1992) (holding that the district court should have evaluated plaintiff’s extortion claim

against the “more lenient pleading standards” of Rule 8(a)); Mendoza v. Zirkle Fruit Co., No.

CS-00-3024, 2000 WL 33225470, at *4 (E.D. Wa. Sept. 27, 2000); see also Rakoff & Goldstein,

supra note 2527, § 1.04[1], at 1-32 to 1-35. Some question remains, however, as to whether the

requirement of a RICO case statement effectively heightens the pleading standard of Rule 8. See,

e.g., Mendoza, 2000 WL 33225470, at *5 (noting that plaintiffs raised valid issue but its resolution was not necessary for purposes of court’s ruling).

2584. Schmidt v. Fleet Bank, 16 F. Supp. 2d 340, 346 (S.D.N.Y. 1998); see also Brooks, 891 F.

Supp. at 1477 (“A charge of racketeering, with its implications of links to organized crime [and

attendant consequences to a person’s reputation and goodwill], should not be easier to make

than accusations of fraud.”).

2585. Rakoff & Goldstein, supra note 2527, § 7.04[1] at 7-30 to 7-33.

2586. Id. See Anatian v. Coutts Bank of Switz., 193 F.3d 85, 88 (2d Cir. 1999) (plaintiff

failed to allege how communications were fraudulent), cert. denied, 528 U.S. 1188 (2000); Moore

v. PaineWebber, Inc., 189 F.3d 165, 173 (2d Cir. 1999) (plaintiff also must identify purpose of

mailing within the fraudulent scheme, and facts showing fraudulent intent); Ahmed v. Rosenblatt, 118 F.3d 886, 889 (1st Cir. 1997) (plaintiff required to state time, place, and content of

allegedly fraudulent communications).

2587. Allen v. New World Coffee, Inc., No. 00 CIV. 2610, 2001 WL 293683, at *3–4

(S.D.N.Y. Mar. 27, 2001) (dismissing plaintiff’s RICO claims where plaintiff failed to plead with

specificity); Poling v. K. Hovnanian Enters., 99 F. Supp. 2d 502, 509 (D.N.J. 2000) (dismissing

RICO claims for repeated failure to meet Rule 9(b)); Gottstein v. Nat’l Ass’n for the Self Employed, 53 F. Supp. 2d 1212, 1218 (D. Kan. 1999) (dismissing RICO claim for failure to set out

predicate acts with particularity); Elliott v. Foufas, 867 F.2d 877, 882 (5th Cir. 1989) (affirming

dismissal of complaint where plaintiff failed to plead with sufficient specificity to state a RICO

claim). The courts generally have relaxed Rule 9(b)’s strict pleading requirements where the

information needed to plead with the requisite particularity is in the exclusive control of the
Civil RICO § 35.31

705

The RICO case statement has proven useful in RICO litigation.2588 This

statement details both the factual and legal basis for the plaintiff’s claim.2589

One judge’s order required, among other things, that the plaintiff do the following:2590

• state whether the alleged unlawful conduct violated 18 U.S.C.

§ 1962(a), (b), (c), or (d);

• list each defendant, and state the alleged misconduct as to each;

• list each victim and state the manner in which they were allegedly injured;

• describe in detail the pattern of racketeering activity (or collection of

wrongful debt) alleged for each RICO claim, including the alleged

predicate acts, the dates, the participants, and the surrounding facts;

• describe the time, place, and content of each alleged misrepresentation

where the RICO claim is based on predicate offenses of mail or wire

fraud, as well as the identity of the persons to whom and by whom it

was made;

• state whether there had been a criminal conviction for violation of the

predicate acts, or if civil litigation had resulted in a judgment with respect to the predicate acts;

• describe the manner in which the predicate acts formed a pattern of

racketeering activity, whether they related to each other as part of a

common plan, and if so, to describe the plan in detail;

• describe in detail the alleged enterprise, including the names of the

persons or entities allegedly constituting the enterprise, its structure

and purpose, and the relationship and association of the defendants to

the enterprise;

• describe the relationship between the activities of the enterprise and

the pattern of racketeering activity, whether the pattern of racketeering

defendant. Ahmed, 118 F.3d at 890 (holding the district court was not required to make a second

determination of whether additional discovery was needed to permit the plaintiff to make the

specific allegations needed to support fraud claim where plaintiff failed to show such information was in the exclusive possession of the defendant).

2588. See, e.g., Northland Ins. Co. v. Shell Oil Co., 930 F. Supp. 1069, 1076 (D.N.J. 1996)

(RICO case statement is a case-management tool).

2589. See, e.g., Carne v. Dunn, No. Civ. A. 99-2776, 2000 WL 1134394, at *2 (E.D. La. Aug.

10, 2000) (plaintiff filed thirty-nine page RICO case statement).

2590. See Bryant v. Yellow Freight Sys., 989 F. Supp. 966 app. 5 (N.D. Ill. 1997); see also

Int’l Bhd. of Teamsters v. Carey, No. 00 CIV. 2952, 2001 WL 88210, at *2–3 (S.D.N.Y. Oct. 1,

2001) (order detailing content to be included in case statement); Darocha v. Crusader Sav. Bank,

No. CIV.A. 92-7264, 1995 WL 118208, at *3–4 (E.D. Pa. May 10, 1995).
§ 35.31 Manual for Complex Litigation, Fourth

706

activity and the enterprise are separate or merged into one, and what

benefits the enterprise receives from the pattern of racketeering;

• describe the direct causal relationship between the alleged injury and

the violation of the RICO statute; and

• set forth the facts that support the elements with respect to claims under 18 U.S.C. §§ 1962(a), (b), (c), and (d).

Courts generally have considered the RICO case statement as part of the

pleadings. Requiring the plaintiff to file a RICO case statement will assist the

court when ruling on motions under Rule 12 and Rule 9(b), in addition to

summary-judgment motions under Rule 56. In ruling on motions under Rule

12, courts have considered the facts stated in the RICO case statement in conjunction with the allegations of the complaint2591 The RICO case statement,

together with a reading of the complaint, will help narrow the issues and identify claims that lack merit, which can then be dismissed (with or without

prejudice) before significant time and effort is spent. Finally, these statements

can also help to “focus discovery . . . and provide a blueprint for trial.”2592

Some districts have adopted standing orders requiring the filing of a RICO

case statement within a certain period of time once the complaint is filed.2593

Other districts, however, only require the plaintiff to file a case statement

2591. See, e.g., McLaughlin v. Anderson, 962 F.2d 187, 195 (2d Cir. 1992) (noting district

court dismissed complaint after considering both complaint and RICO case statement); Allen

Neurosurgical Assocs., Inc. v. Lehigh Valley Health Network, No. CIV.A. 99-4653, 2001 WL

41143, at *3 n.1 (E.D. Pa. Jan. 18, 2001) (“The RICO case statement is a pleading that may be

considered part of the operative complaint for purposes of a motion to dismiss.”); Sadighi v.

Daghighfekr, 36 F. Supp. 2d 279, 288 (D.S.C. 1999) (considering both complaint and the second

amended RICO case statement on motion to dismiss); R.C.M. Executive Gallery Corp. v. Rols

Capital Co., 901 F. Supp. 630, 639 n.8 (S.D.N.Y. 1995) (“On a motion to dismiss, the Court

must take as true the allegations contained in the RICO case statements, along with those contained in the complaint.”). But see Carne, 2000 WL 1134394, at *2 n.1 (“The case statement provides the plaintiff’s claims of fraud in even more detail than their complaint, though the Court

does not rely on these allegations in its rulings.”).

2592. Northland Ins. Co. v. Shell Oil Co., 930 F. Supp. 1069, 1075 (D.N.J. 1996) (citing

RICO Case Statements, [Nov. 1988–June 1990] RICO Bus. Disputes Guide (CCH) ¶ 7453, at

10,273 (1990)).

2593. Price v. Pinnacle Brands, Inc., 138 F.3d 602, 605 (5th Cir. 1998) (noting plaintiffs had

been ordered to file RICO case statement); Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir. 1989)

(RICO standing order); Carne, 2000 WL 1134394, at *2 n.1 (standing order); Dixon v. Ford

Motor Credit, No. CIV.A. 98-2456, 2000 WL 713259, at *2 (E.D. La. May, 31, 2000); Poling v. K.

Hounanian Enters., 99 F. Supp. 2d 502, 508 (D.N.J. 2000) (plaintiff failed to file adequate RICO

case statement); Northland Ins., 930 F. Supp. at 1073 (adopting RICO case statement as part of

local rules); Lui Ciro, Inc. v. Ciro Inc., 895 F. Supp. 1365, 1377 (D. Haw. 1995) (plaintiffs must

file RICO case statement within thirty days of filing complaint).
Civil RICO § 35.31

707

where he or she “has demonstrated a real lack of understanding of the elements [of RICO]”2594 or where the court otherwise determines that such a

statement is necessary.2595 The failure to timely file a RICO case statement has

been grounds for dismissal, as has the filing of a statement that is deficient or

otherwise fails to provide the information requested.2596 The authority of a

court to order a RICO case statement has not been definitively established in

most jurisdictions. Nonetheless, while there have been occasional challenges to

orders requiring the filing of a RICO case statement as imposing heightened

pleading requirements contrary to Federal Rule of Civil Procedure 8(a), these

challenges generally have been rejected.2597 The courts have found implicit

authority for RICO case statements in federal and local rules, as well as federal

statutes.2598

2594. Bryant v. Yellow Freight Sys., 989 F. Supp. 966, 969 (N.D. Ill. 1997).

2595. See, e.g., Int’l Bhd. of Teamsters v. Carey, No. 00 CIV. 2952, 2001 WL 88210, at *1

(S.D.N.Y. Feb. 1, 2001) (plaintiff required to file case statement upon amending complaint);

Office Outfitters, Inc. v. AB Dick Co., Inc., 83 F. Supp. 2d 772, 775 (E.D. Tex. 2000) (noting,

after hearing on defendant’s motion to dismiss, magistrate judge recommended plaintiffs file

RICO case statement and defendants be allowed to renew their motions once the statement was

filed).

2596. Pierce v. Ritter, Chusid, Bivonia & Cohen, 133 F. Supp. 2d 1344, 1346 (S.D. Fla.

2001) (“[F]ailure to include a RICO statement as required by Local Rule 2.1 is grounds for dismissing both the Federal and State RICO counts.”); Gould v. Nat’l Westminster Bank, No. 3:99-

CV-01892, 2000 WL 1339292, at *5 (D. Conn. Aug. 2, 2000) (dismissing RICO claim “for complete non-compliance” with standing order); Paddlewheel Props., Inc. v. Waste Mgmt. of Miss.,

Inc., 23 F. Supp. 2d 670, 674 (S.D. Miss. 1997) (plaintiff’s filing of RICO case statement two

weeks after date due under court’s order did not warrant sanction of dismissal of complaint);

Lui Ciro, 895 F. Supp. at 1377–78 (under circumstances where it appeared plaintiff had no notice of standing order requiring filing of RICO case statement, court would not dismiss complaint under Rule 41(b)).

2597. See, e.g., Mendoza v. Zirkle Fruit Co., No. CS-00-3024–FVS, 2000 WL 33225470, at

*5 (E.D. Wash. Sept. 27, 2000) (declining to decide whether requiring RICO case statement conflicted with Rule 8(a)).

2598. See, e.g., Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir. 1989) (RICO Standing Order

was consistent with requirement of Rule 8 and highlighted for plaintiff particular requirements

for pleading RICO claim); Northland Ins. Co. v. Shell Oil Co., 930 F. Supp. 1069, 1071–75

(D.N.J. 1996) (finding support for RICO case statement in Judicial Improvements Act, the Civil

Justice Reform Act of 1990, Fed. R. Civ. P. 83 and 16, and court local rules, and stating that it

“does not constitute a heightened pleading standard”). But see Rakoff & Goldstein, RICO, supra

note 2527, § 1.04[1], at 1-35 (“Going further still (although perhaps beyond their authority),

some federal districts now require plaintiffs in private civil RICO actions to automatically file

‘RICO statements’ particularizing their allegations, regardless of whether or not the claims are

predicated on fraud.”). One court has noted that the strongest authority for RICO case statements is afforded under Rule 16. Northland Ins., 930 F. Supp. at 1075.
§ 35.32 Manual for Complex Litigation, Fourth

708

35.32 Initial Conference

Efficient management of RICO litigation requires early identification and

narrowing of the disputed legal and factual issues and identification of the precise statutory violations alleged. For example, some categories of damages,

such as claims for personal injury, usually are not allowed under RICO, and

one issue that can be addressed at the initial conference is the propriety of the

damage claims asserted by the plaintiff.2599 The pleadings often will reveal jurisdictional issues that will need to be addressed at the outset. After notice and

hearing, the complaint can be dismissed sua sponte, either in whole or in part,

where jurisdiction is clearly improper.2600 State and federal courts have concurrent jurisdiction over RICO claims,2601 and the court may also find it appropriate in some circumstances (e.g. where the predicate acts involve issues of state

law) to refrain from allowing the case to proceed in federal court. In addition,

where RICO provides the only basis for subject-matter jurisdiction in federal

court, the dismissal of the RICO claims may also warrant dismissal of supplemental state claims under 28 U.S.C. § 1367(a).2602 Absent unusual circumstances warranting the exercise of jurisdiction over supplemental state law

claims, they can be dismissed without prejudice.2603

Certain issues persistently appear in RICO litigation and can significantly

affect the viability of the claim. Addressing these issues early in the case can

reveal the presence of fatal flaws in the complaint before the court or the parties expend significant resources. Inquiry into the following areas either before

or in conjunction with the initial Rule 16 conference will assist the court and

the parties in identifying possible jurisdictional problems:

• Does the plaintiff have standing? In order to have standing to pursue a

RICO claim, a plaintiff must have “been injured in his business or

property by the conduct constituting the violation.”2604 The injury to

2599. Genty v. RTC, 937 F.2d 899, 918 (3d Cir. 1991); Grogan v. Platt, 835 F.2d 844, 847

(11th Cir. 1988).

2600. Bryant v. Yellow Freight Sys., 989 F. Supp. 966, 968 (N.D. Ill. 1997) (“[J]urisdiction is

not called into play by a litigant’s mere thoughtless incantation of the RICO acronym.”). See also

Michaelis v. Neb. State Bar Ass’n, 717 F.2d 437, 439 (8th Cir. 1983); Fed. R. Civ. P. 12(h)(3)

(West 2003).

2601. Tafflin v. Levitt, 493 U.S. 455, 458 (1990).

2602. See, e.g., Camelio v. Am. Fed’n, 137 F.3d 666, 672 (1st Cir. 1998).

2603. See, e.g., id. (the district court “erred in retaining jurisdiction over the state law

claims after it dismissed the federal claims on which jurisdiction was based”).

2604. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 495 (1985) (rejecting barriers to bringing

a claim erected by lower courts as unsupported by the statutory language and contrary to the

plain meaning of section 1964(c)); 18 U.S.C. § 1964(c) (West 2003); see also LaBabera v. Angel,

95 F. Supp. 656, 663 (E.D. Tex. 2000) (plaintiff’s cause of action will not accrue until the amount
Civil RICO § 35.32

709

business or property can be, but is not limited to, competitive injury.2605 It does not, however, extend to personal injury, emotional

distress or associated economic losses,2606 nor can a plaintiff recover

where, although injured, he or she ultimately suffered no pecuniary

loss.2607 In addition, the injury must arise from, and be proximately

caused by, the unlawful conduct.2608 Most courts have ruled that the

only injury compensable under section 1962(a), for example, is that

of damages is clear and definite, and damage assessment is currently premature and speculative).

There is some disagreement among the circuits on whether a plaintiff has standing under section

1962(a) only if he or she has been injured by the use or investment of racketeering income, as

opposed to where the injuries simply flow from the predicate acts. Compare Fogie v. Thorn

Ams., Inc., 190 F.3d 889, 895 (8th Cir. 1999) (standing under section 1962(a) exists only for

plaintiffs who are injured in the use or investment of racketeering income) and Office Outfitters,

Inc. v. AB Dick Co., 83 F. Supp. 2d 772, 778 (E.D. Tex. 2000) (plaintiff’s injury must flow “from

‘the investment of racketeering income into the [RICO] enterprise’”) (quoting Crowe v. Henry,

43 F.3d 198, 205 (5th Cir. 1995)), with Busby v. Crown Supply, Inc., 896 F.2d 833, 837 (4th Cir.

1990) (plaintiffs injured as a result of the predicate actions also have standing). The majority of

courts limit standing to persons injured by the use or investment of racketeering proceeds. See

Fogie, 190 F.3d at 895 (noting that seven of eight circuits addressing the issue limit standing to

use and investment).

2605. Sedima, 473 U.S. at 497 n.15.

2606. Berg v. First State Ins. Co., 915 F.2d 460, 464 (9th Cir. 1990) (denying RICO recovery

for personal injury, including emotional distress resulting in pecuniary losses, arising from cancellation of liability policy); James v. Meow Media, Inc., 90 F. Supp. 2d 798, 814 (W.D. Ky. 2000)

(“Personal injuries and mental suffering do not confer a person with standing to bring a RICO

claim because those types of damages are not injuries to ‘business or property.’”); Iron Workers

Local Union No. 17 Ins. Fund v. Philip Morris, Inc., 23 F. Supp. 2d 771, 790 (N.D. Ohio 1998)

(“RICO excludes from its ambit damages for personal injury [and] [c]laims for personal property injuries.”); City and County of S.F. v. Philip Morris, Inc., 957 F. Supp. 1130, 1138 (N.D. Cal.

1997) (physical injuries not recoverable). The courts have imposed some limitations on when

economic losses are compensable. See, e.g., Mario v. Aetna, Inc., 221 F.3d 472, 483–84 (3d Cir.

2000) (injury to business and property means financial loss); Imagineering, Inc. v. Kiewit Pac.

Co., 976 F.2d 1303, 1310 (9th Cir. 1992) (holding that “injury” requires proof of concrete financial loss); Fleischhauer v. Feltner, 879 F.2d 1290, 1300 (6th Cir. 1989) (plaintiffs could recover

only their direct investment in a fraudulent scheme and were not entitled to expectancy damages

or lost tax benefits); Stationary Eng’rs Local 39 Health & Welfare Trust Fund v. Philip Morris,

Inc., No. C-97-01519, 1998 WL 476265, at *5 (N.D. Cal. Apr. 30, 1998) (financial losses flowing

from personal injuries resulting from smoking are not recoverable under RICO).

2607. Steele v. Hosp. Corp. of Am., 36 F.3d 69, 70–71 (9th Cir. 1994) (where plaintiffs did

not pay excessive charges out of their own pockets, they did not suffer financial loss); Dornberger v. Metro. Life Ins. Co., 961 F. Supp. 506, 521 (S.D.N.Y. 1997) (plaintiffs must have incurred some out-of-pocket financial loss).

2608. Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 267–68 (1992).
§ 35.32 Manual for Complex Litigation, Fourth

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resulting from a defendant’s investment of racketeering income.2609

Claims under section 1962(a) alleging injury resulting from racketeering activity alone, rather than from the use or investment of racketeering income, may thus be subject to early dismissal.2610 Similar interpretations have been accorded the injury component under section

1962(b). Most courts have required that the alleged injury to the

plaintiff proximately result from the defendant’s interest in, or control

over, an enterprise.2611 On the other hand, a plaintiff suing under section 1962(c) need not prove any kind of special “racketeering injury”

but only that at least one of the predicate acts proximately caused the

requisite injury to the plaintiff.2612 Still unclear is whether the plaintiff,

to have standing under RICO, must also satisfy any special standing

requirement that may relate to the underlying predicate acts.2613 In

Beck v. Prupis, the Supreme Court resolved whether a suit can be

maintained under section 1962(d) for conspiracy where the alleged

injury results from wrongful acts that do not fall within the offenses

2609. See, e.g., Discon, Inc. v. NYNEX Corp., 93 F.3d 1055, 1063 (2d Cir. 1996) (plaintiff

must “allege a ‘use or investment’ injury that is distinct from the injuries resulting from predicate acts”); Parker & Parsley Petroleum Co. v. Dresser Indus., 972 F.2d 580, 584 (5th Cir. 1992)

(“[T]he causal language of section 1964(c) requires that the compensable injury stem from the

violation of the RICO section in question, so any injury under section 1962(a) must flow from

the use or investment of racketeering income.”); Danielsen v. Burnside-Ott Aviation Training

Ctr., Inc., 941 F.2d 1220, 1229 (D.C. Cir. 1991) (“[A] plaintiff . . . must plead and prove that his

injury flowed from the defendant’s use or investment of racketeering income.”); Falise v. Am.

Tobacco Co., 94 F. Supp. 2d 316, 349 (E.D.N.Y. 2000) (reinvestment of racketeering proceeds

into same enterprise is insufficient to satisfy “use or investment” requirement of section

1962(a)). But see Sadighi v. Daghighfekr, 36 F. Supp. 2d 279, 289 n.9 (D. S.C. 1999) (“[P]laintiffs

have standing to allege a 1962(a) claim when their injuries were proximately caused by either the

underlying predicate acts or the investment and use of the income derived from the predicate

acts.”) (citing Busby v. Crown Supply, Inc., 896 F.2d 833, 837–40 (4th Cir. 1990)).

2610. Hatch et al., supra note 2516, at 141–42.

2611. In claims under section 1962(b), see, e.g., Danielsen, 941 F.2d at 1229–30; Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1411 (3d Cir. 1991); Airlines Reporting Corp v. Barry,

666 F. Supp. 1311, 1315 (D. Minn. 1987). In Beck v. Prupis, 529 U.S. 494, 506 n.9 (2000), the

Court noted “[a]lthough we express no view on this issue, arguably a plaintiff suing for a violation of 1962(d) based on an agreement to violate 1962(a) is required to allege injury from the

‘use or invest[ment]’ of illicit proceeds.”

2612. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 495–96 (1985).

2613. See, e.g., Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 275–76 (1992) (court

declined to address issue); Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 286 (3d

Cir. 1991) (“[T]he standing inquiry in any civil RICO case depends solely on demonstrating

injury to business or property, and not on satisfying any standing requirement attached to the

predicate act.”); see also Gregory P. Joseph, Civil RICO, A Definitive Guide 40–43 (2d ed. 2000).
Civil RICO § 35.32

711

set forth in section 1961(1).2614 Although some courts had held that a

RICO conspiracy claim may be stated where a plaintiff is injured by

any actions that further a RICO conspiracy,2615 those circuits following

the majority rule precluded a plaintiff from maintaining a section

1962(d) conspiracy claim where the overt acts causing the injury do

not constitute racketeering activity.2616 The decision in Beck v. Prupis

clarified that “consistency with the common law requires that a RICO

conspiracy plaintiff allege injury from an act that is analogous to an

‘ac[t] of a tortious character . . . .’”2617

• Is the case barred by the statute of limitations? Three Supreme Court decisions are relevant in this context. In Agency Holding Corp. v. MalleyDuff & Assocs., Inc.,2618 the Court held that a private civil RICO action

was subject to a four-year statute of limitations period, drawing largely

on the limitations period governing the Clayton Act,2619 upon which

RICO’s civil enforcement provisions were modeled.2620 The Court did

not say, however, when a civil RICO claim would accrue. The circuits

split on the issue, adopting three distinct rules: (1) the injury and pattern discovery rule;2621 (2) the injury discovery rule;2622 and (3) the

“last predicate act” rule.2623 In Klehr v. A.O. Smith Corp.,2624 the Court

2614. 529 U.S. 494 (2000).

2615. Schiffels v. Kemper Fin. Servs., Inc., 978 F.2d 344, 348–51 (7th Cir. 1992); Shearin v.

E.F. Hutton Group Inc., 885 F.2d 1162, 1169 (3d Cir. 1989) (abrogated by Beck v. Prupis, 529

U.S. 494 (2000)).

2616. See, e.g., Beck v. Prupis, 162 F.3d 1090, 1098–99 (11th Cir. 1998); Miranda v. Ponce

Fed. Bank, 948 F.2d 41, 48 (1st Cir 1991); Reddy v. Litton Indus., Inc., 912 F.2d 291, 294–95 (9th

Cir. 1990), cert. denied, 502 U.S. 921 (1991).

2617. 529 U.S. 494, 505 (2000).

2618. 483 U.S. 143 (1987).

2619. 15 U.S.C. § 15 (2000).

2620. Agency Holding, 483 U.S. at 150. “Even a cursory comparison of the two statutes reveals that the civil action provision of RICO was patterned after the Clayton Act.” Id. The Court

noted that criminal prosecutions would be subject to a five-year limitations period “only because

Congress has provided such a criminal limitations period when no other period is specified.” Id.

at 151–52.

2621. See, e.g., Annulli v. Panikkar, 200 F.3d 189, 192 (3d Cir. 1998) (adopting injury and

pattern discovery rule after Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997)).

2622. See, e.g., Grimmet v. Brown, 75 F.3d 506, 512 (9th Cir. 1996); McCool v. Strata Oil

Co., 972 F.2d 1452, 1464 (7th Cir. 1992); Rodriguez v. Banco Central, 917 F.2d 664, 666 (1st Cir.

1990); see also Joseph, supra note 2613, at 175–76 for discussion and cases cited therein.

2623. See Keystone Ins. Co. v. Houghton, 863 F.2d 1125 (3d Cir. 1988) (claim accrued

when plaintiff knew each element of RICO claim existed, and period began anew with each new

injury and new predicate act that were part of the same pattern) (abrogated by Klehr v. A.O.

Smith Corp., 521 U.S. 179 (1997)).
§ 35.32 Manual for Complex Litigation, Fourth

712

rejected the last predicate act rule to determine when the statute was

triggered, but did not resolve what accrual rule did apply to RICO

claims.2625 Rotella v. Wood2626 eliminated the “injury and pattern discovery” rule (whereby “a civil RICO claim accrues only when the

claimant discovers, or should discover, both an injury and a pattern of

RICO activity”2627). The rejection of the “injury and pattern discovery”

rule left intact the rule preferred by the majority of the circuits, under

which the limitations period begins to run once the plaintiff knew or

should have known of the injury.2628 The Court warned, however, that

its decision should not be read as establishing a final rule.2629

• Are there any pending parallel state or federal civil actions involving the

same parties and issues that would warrant consolidation, a stay of proceedings, or abstention? The “pattern” pleaded in a RICO complaint

can involve activities in several states, and related RICO actions may

have been filed in other jurisdictions.2630 The court is advised to require the parties to identify and report the status of any related civil

2624. 521 U.S. 179 (1997).

2625. Id. at 186–88 (under the “last predicate act” rule, a plaintiff would be able to recover

for both the injury caused by the last predicate act and all the injuries caused by all of the racketeering activity, even where that activity fell outside the limitations period; the Supreme Court

found that the last predicate act rule was inconsistent with the Clayton Act rule, whereby the

statute begins to run when the defendant commits the injurious act).

2626. 528 U.S. 549 (2000).

2627. Id. at 553.

2628. See, e.g., Love v. Nat’l Med. Enters., 230 F.3d 765, 774 (5th Cir. 2000) (adopting

“separate accrual” rule where separate cause of action accrues at the time of each injury); The

Lares Group, II v. Tobin, 221 F.3d 41, 44 (1st Cir. 2000) (adopting injury discovery rule and

holding cause of action accrued at the time of discovery of each violation of section 1962);

Forbes v. Eagleson, 228 F.3d 471, 484 (3d Cir. 2000) (adopting injury discovery rule over injury

occurrence rule following Rotella); Poling v. K. Hovnanian Enters., 99 F. Supp. 2d 502, 511

(D.N.J. 2000) (cause of action does not accrue until all elements of RICO claim exist).

2629. Rotella, 528 U.S. at 554 n.2 (“In addition to the possibilities entertained in the Courts

of Appeals, Justice Scalia has espoused an ‘injury occurrence’ rule, under which discovery would

be irrelevant . . . and our decision in Klehr leaves open the possibility of a straight injury occurrence rule.”). But see Forbes, 228 F.3d at 484 (declining to adopt “injury occurrence” rule in favor of “injury discovery” rule).

2630. See, e.g., DeMauro v. DeMauro, 115 F.3d 94, 95 (1st Cir. 1997) (RICO claim involved

property that was subject of pending divorce); Metro Riverboat Assocs., Inc. v. Bally’s La., Inc.,

142 F. Supp. 2d 765, 766–67 (E.D. La. 2001) (state court and administrative proceeding also

pending relating to gaming license dispute); see also Slaney v. Int’l Amateur Athletic Fed’n, 244

F.3d 580, 591–92 (7th Cir. 2000) (dismissal of RICO claims against one defendant appropriate

where plaintiff participated in valid arbitration, which decision would be enforced under the

New York Convention).
Civil RICO § 35.32

713

proceedings in state courts or other districts. In some instances, consolidation of these cases may be appropriate.2631 In others, abstention

or a stay of proceedings pending resolution of the related litigation

may be warranted.2632 In Colorado River Water Conservation District v.

United States,

2633 the Supreme Court held that federal courts may stay

proceedings in extraordinary circumstances in deference to duplicative

parallel state actions. The Court set out several factors for determining

whether abstention was appropriate, including (1) inconvenience of

the federal forum; (2) avoiding piecemeal litigation; and (3) the order

in which jurisdiction was obtained by the federal and state courts.2634

Courts have considered additional criteria, such as whether the federal

plaintiff’s rights will be sufficiently protected by the state action and

which court first assumed jurisdiction over relevant property.2635 The

Colorado River Water Court emphasized, however, that abstention “is

an extraordinary and narrow exception to the duty of a District Court

to adjudicate a controversy properly before it.”2636 Other abstention

doctrines may also come into play.2637 For example, efficiency and

2631. See generally supra section 20.

2632. See, e.g., Humana, Inc. v. Forsyth, 525 U.S. 299, 307–08 (1999) (McCarran-Ferguson

Act did not block suit under RICO by HMO beneficiaries, and RICO’s application to beneficiaries’ claims would not “invalidate, impair, or supersede” state regulation of insurance). See also

Rakoff & Goldstein, supra note 2527, § 11.03[3] at 11-13 to 11-17.

2633. 424 U.S. 800 (1976).

2634. Id. at 818

2635. See Rycoline Prod. Inc. v. C & W Unlimited, 109 F.3d 883, 890 (3d Cir. 1997) (“The

factors the court must consider are: which court first assumed jurisdiction over a relevant res, if

any; whether the federal court is inconvenient; whether abstention would aid in avoiding piecemeal litigation; which court first obtained jurisdiction; whether federal or state law applies; and

whether the state action is sufficient to protect the federal plaintiff’s rights.”).

2636. Colorado River Water, 424 U.S. at 813 (citing County of Allegheny v. Frank Mashuda

Co., 360 U.S. 185, 188–89 (1959)). Other circumstances where abstention may be appropriate

include where federal court intervention would have “an impermissibly disruptive effect on state

policies.” Metro Riverboat Assocs., 142 F. Supp. 2d at 767. In addition, the constitutional issues

involved might be “presented in a different posture by a state court determination of pertinent

state law” or a “difficult question of state law bearing on policy problems of substantial public

import whose importance transcends the result in the case then at bar.” Colorado River Water,

424 U.S. at 814; see also New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S.

350, 361 (1989); In re Managed Care Litig., 135 F. Supp. 2d 1253, 1260 (S.D. Fla. 2001) (“Burford abstention, also know as the ‘primary jurisdiction doctrine’ is of dubious applicability

where the claim is brought under federal law and the remedy would be left to a state agency.”).

2637. See, e.g., Burford v. Sun Oil Co., 319 U.S. 315, 331–32 (1943); Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 727 (1996) (Burford abstention looks at whether plaintiff’s claim
§ 35.32 Manual for Complex Litigation, Fourth

714

fairness considerations may warrant entry of a stay “pursuant to [the

court’s] power to control its docket and to provide for a just determination of the cases pending before it.”2638 In such cases the courts balance the benefits that might accrue from a stay, such as simplification

and narrowing of the issues, against the possible burdens or hardships

that would be suffered by the parties if the stay were granted.2639

• Was the case removed from state court pursuant to 28 U.S.C. § 1441, and

is remand appropriate? Section 1441(c) affords the court discretion to

remand cases “in which state law predominates.” Recent cases have

interpreted section 1441(c) as permitting remand only where the state

law claims are separate and independent of the federal claim, and then

the court may remand only the state law claims.2640

• Should the court exercise supplemental jurisdiction over state law claims?

Section 1367(a) of Title 28 of the U.S. Code gives federal courts exercising original jurisdiction over federal claims supplemental jurisdiction over claims “that are so related to the claims in the [federal] action that they form part of the same case or controversy . . . .” The

court can decline to exercise supplemental jurisdiction over state law

claims under certain circumstances.2641

• Are there any pending criminal proceedings against one or more of the

parties? Criminal racketeering activity is an element of civil RICO liability, and civil RICO defendants often will be, or have been, the

subject of criminal investigation or prosecution. The court should determine the existence and status of any related criminal proceedings,

may be “in any way entangled in a skein of state law that must be untangled before the federal

case can proceed” (citing New Orleans Pub. Serv., 491 U.S. at 361)).

2638. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 864 (9th Cir.), cert. denied, 444

U.S. 827 (1979).

2639. Morris v. Am. Fed. of State, County and Mun. Employees, No. 99 CIV. 5125, 2001

WL 123886, at *2 (discussing five factors to be considered by courts in deciding whether to grant

stay); Cohen v. Carreo, 94 F. Supp. 2d 1112, 1118–19 (D. Or. 2000) (where claims in related

cases were similar, where plaintiff would suffer little harm if stay was granted and defendant

would be overly burdened if the case proceeded, and where stay would assist in narrowing issues,

stay should be granted).

2640. See, e.g., Mincy v. Staff Leasing, L.P., 100 F. Supp. 2d 1050, 1056 (D. Ariz. 2000); Doll

v. United States W. Communications, Inc., 85 F. Supp. 2d 1038, 1042 (D. Colo. 2000); Friedman

v. Bd. of Educ. Niles Township High Sch. Dist. 219, No. 97 C 9001, 1998 WL 102698, at *3 (N.D.

Ill. Feb. 27, 1998).

2641. See, e.g., Friedman, 1998 WL 102698, at *3 (declining to exercise supplemental jurisdiction where state law claims would require determination of novel issues of Illinois constitution).
Civil RICO § 35.32

715

as they may affect pretrial and trial planning. Where criminal and civil

RICO cases are proceeding concurrently, the criminal charges ordinarily should be tried first. Although in some instances a stay of the

civil litigation may be appropriate,2642 in other cases major portions of

discovery and other pretrial activity can proceed without prejudice to

the criminal case.2643 The judge should always consider the ongoing

criminal proceedings in managing the civil litigation.2644

• Are there any existing agreements to arbitrate that would preclude the

case from proceeding in federal court? Inquire into whether any arbitration agreement may govern the dispute, which would warrant referral

of the case to arbitration. The Federal Arbitration Act2645 provides that

arbitration agreements “shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in equity for the revocation

of any contract.”2646 The court can issue an order compelling arbitration where there has been a failure or refusal to comply with an arbitration agreement.2647 The Act provides for a stay of proceedings in the

district court where it determines that the case is subject to arbitration.2648 In Shearson/American Express, Inc. v. McMahon,

2649 the Supreme Court held that nothing in the text of RICO or the statute’s

legislative history “even arguably evinces congressional intent to ex2642. Morris, 2001 WL 123886, at *2 (staying action on motion of district attorney pending

disposition of criminal indictment). “Denying a stay motion may undermine a defendant’s Fifth

Amendment privilege against self-incrimination[,] . . . expand the rights of criminal discovery

beyond its limits, and expose the basis of the defense to the prosecution in advance of trial.” Id.

2643. See supra section 20.2. It may be appropriate in such instances to consider whether a

protective order is warranted, protecting civil discovery from government prosecutors. See

Rakoff & Goldstein, supra note 2527, § 8.03[2], at 8-8 to 8-9 (“However, there is no automatic

protection from government prosecutors for testimony sealed pursuant to a civil lawsuit.”).

2644. Madanes v. Madanes, 199 F.R.D. 135, 140 (S.D.N.Y. 2001) (privilege against selfincrimination warranted protective order “to place tight restrictions on the dissemination of

potentially incriminating information produced in discovery”).

2645. 9 U.S.C. § 1 (2000).

2646. Id. § 2.

2647. Id. § 4. “The Arbitration Act thus establishes a ‘federal policy favoring arbitration,’

. . . requiring that ‘we rigorously enforce agreements to arbitrate.’” Shearson/Am. Express, Inc. v.

McMahon, 482 U.S. 220, 226 (1987) (citations omitted).

2648. 9 U.S.C. § 3 (2000). Although the district court will still have jurisdiction over the

claim, the scope of review of an arbitrator’s award may be very narrow. Arbitration clauses covering other claims, but excluding claims pursuant to RICO, may nonetheless also be subject to a

stay. See, e.g., Rakoff & Goldstein, supra note 2527, § 8.03[1], at 8-5 to 8-7 and cases cited

therein.

2649. 482 U.S. 220 (1987).
§ 35.32 Manual for Complex Litigation, Fourth

716

clude civil RICO claims from the dictates of the Arbitration Act,”2650

and the Court rejected any claim of irreconcilable conflict between arbitration and RICO’s underlying purposes, which might have permitted overriding the provisions of the Arbitration Act.2651 An “overlap”

between the civil and criminal provisions does not preclude civil

claims from being arbitrated.2652

• Has the plaintiff adequately alleged proximate cause? Frequently considered in tandem with the standing analysis, the plaintiff further must

plead and prove that the injury suffered is direct, as opposed to derivative.2653 Section 1964(c) requires that the injury to the plaintiff’s

business or property be “by reason of” the defendant’s conduct, which

requires that the plaintiff show the injuries were proximately caused

by the misconduct of the defendant.2654 In Holmes v. Securities Investor

Protection Corp., the Court found that the primary focus in assessing

proximate cause was the directness of the relationship between the

plaintiff’s injury and the conduct alleged.2655 The circuits have imposed

2650. Id. at 238.

2651. Id. at 239–42.

2652. Citing its decision in Sedima, S.P.R.L. v. Imrex Co., wherein the Court had held that

simply because the same conduct “‘can result in both criminal liability and treble damages does

not mean that there is not a bona fide civil action.’” McMahon, 482 U.S. at 239–40. The Court

also rejected arguments that the RICO statute was too complex or that public interest in RICO

enforcement precluded arbitration. Id.; see also Gilmer v. Interstate/Johnson Lane Corp., 500

U.S. 20, 26 (1991) (noting that arbitration agreements were enforceable claims under RICO).

2653. See, e.g., Amsterdam Tobacco, Inc. v. Philip Morris, Inc., 107 F. Supp. 2d 210, 219

(S.D.N.Y. 2000) (there is no standing for indirectly injured parties and here plaintiff’s injuries

were “secondary to the alleged primary purpose of tax avoidance”). Factors considered include

whether the RICO offense targeted the plaintiff, whether there existed any intervening causes,

whether the harm was a direct result of the racketeering activity, and whether the consequences

were foreseeable and specifically intended. In re Am. Express Co. S’holder Litig., 39 F.3d 395,

399–400 (2d Cir. 1994).

2654. Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268–69 (1992); see also BCCI

Holdings, S.A. v. Khalil, 214 F.3d 168, 174 (D.C. Cir. 2000); Laborers Local 17 Health and Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 235 (2d Cir. 1999) (examining principles behind

proximate cause); Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, Inc., 171

F.3d 912, 920–21 (3d Cir. 1999). The Court reasoned that the “by reason of” language in RICO

should be given the same construction applied by the Court in previously interpreting identical

language in the Clayton Act, and that Congress had intended this construction in using the

phrase in RICO. Holmes, 503 U.S. at 267–68.

2655. Holmes, 503 U.S. at 269.
Civil RICO § 35.32

717

varying requirements on plaintiffs’ efforts to meet the proximate cause

element.2656

• Are the plaintiff’s claims subject to issue or claim preclusion? If related

cases have been concluded, the trial judge must consider potential

claim and issue preclusion. RICO provides that a final judgment in favor of the United States in a criminal proceeding estops the defendant

from denying the essential allegations of the criminal offense in any

civil proceeding brought by the United States.2657 Although the statute

is silent on the use of such convictions in cases brought by private

parties, courts have applied claim and issue preclusion in civil RICO

litigation.2658 Preclusion may arise from prior civil litigation in federal

or state court,2659 as well as prior administrative proceedings2660 or arbitration awards.2661 Considerations common to RICO cases, however,

may bar application of these doctrines in some cases, including differing burdens of proof,2662 an inability to litigate the issue in the prior

2656. See, e.g., Tex. Carpenters Health Benefit Fund v. Philip Morris, Inc., 199 F.3d 788,

789 (5th Cir. 2000) (injuries asserted by health maintenance organizations and insurance plans

too attenuated to satisfy proximate cause requirement); Newton v. Tyson Foods, Inc., 207 F.3d

444, 447 (8th Cir. 2000) (injuries alleged by cattle producers too attenuated to confer standing

where there were “many intermediaries and many potential causes of the reduced demand for

beef in the chain of causation”); Moore v. PaineWebber, Inc., 189 F.3d 165, 169–70 (2d Cir.

1999) (where predicate acts based on fraud, plaintiff must prove transaction and loss causation);

Camelio v. Am. Fed’n, 137 F.3d 666, 670 (1st Cir. 1998) (although plaintiff who was terminated

from employment alleged defendant committed predicate acts, the connection between plaintiff’s injury and the predicate offenses was too far removed from plaintiff’s loss of employment);

Bieter Co. v. Blomquist, 987 F.2d 1319, 1326 (8th Cir. 1993) (proximate cause requirement

should not be interpreted as “too narrow”).

2657. 18 U.S.C. § 1964(d) (West 2003).

2658. See, e.g., Appley v. West, 832 F.2d 1021, 1025–26 (7th Cir. 1987); Anderson v. Jonovich, 543 F. Supp. 1124, 1132 (W.D. Wa. 1982).

2659. See, e.g., Saud v. Bank of N.Y., 929 F.2d 916, 919 (2d Cir. 1991); Polur v. Raffe, 912

F.2d 52, 56–57 (2d Cir. 1990); Evans v. Dale, 896 F.2d 975, 977–78 (5th Cir. 1990).

2660. See Fry v. Gen. Motors Corp., 728 F. Supp. 455, 459–60 (E.D. Mich. 1989).

2661. See, e.g., Cent. Transp., Inc. v. Four Phase Sys., Inc., 936 F.2d 256, 260 (6th Cir.

1991); Benjamin v. Traffic Executive Ass’n E.R.R., 869 F.2d 107, 110–11 (2d Cir. 1989); Rudell v.

Comprehensive Acct. Corp., 802 F.2d 926, 931–32 (7th Cir. 1986). Some courts, however, have

held that prior adjudications in bankruptcy court will not bar subsequent civil RICO actions

based on claims which could have been raised in bankruptcy. Barnett v. Stern, 909 F.2d 973,

978–82 (7th Cir. 1990); Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183, 188–89 (5th Cir.

1990).

2662. See, e.g., Wilcox v. First Interstate Bank, 815 F.2d 522, 531 (9th Cir. 1987).
§ 35.32 Manual for Complex Litigation, Fourth

718

proceeding,2663 and lack of knowledge regarding the facts required to

allege a RICO violation.2664

• Are there any other miscellaneous defenses that may warrant dismissal?

In addition to theories of abstention, and although not frequently

raised, dismissal may be appropriate under doctrines of primary jurisdiction,2665 act of state,2666 or exclusive jurisdiction in the bankruptcy

court.2667

• Is the plaintiff seeking equitable relief? The failure to allege an injury

compensable under RICO may subject the claim to early dismissal. It

is unclear whether equitable relief is available to private litigants under

civil RICO.2668 Although many courts have held that a private civil

plaintiff is not entitled to injunctive relief, the right to seek other equitable remedies is less clear.2669

The pleadings play an important role in other ways as well. Where the underlying predicate offenses sound in fraud, Federal Rule of Civil Procedure

9(b)’s strict pleading requirements may result in extensive motion practice directed at dismissing all or parts of the complaint. Motions pursuant to Rule 12

are all but certain. The outcome of these motions can affect the scope of the

litigation by obviating discovery and other proceedings related to dismissed

2663. See, e.g., George v. United Ky. Bank, Inc., 753 F.2d 50, 53 (6th Cir. 1985).

2664. See, e.g., Norris v. Wirtz, 703 F. Supp. 1322, 1327 (N.D. Ill. 1989).

2665. See, e.g., H.J., Inc. v. N.W. Bell Tel. Co., 734 F. Supp. 879, 882 (D. Minn. 1990)

(finding agency had primary jurisdiction over reasonableness of rates, and holding it would

undermine congressional scheme of uniform rate regulation if plaintiff could obtain damages

based on a rate never found to be reasonable by agency), aff’d, 954 F.2d 485 (8th Cir.), cert. denied, 504 U.S. 957 (1992).

2666. W.S. Kirkpatrick & Co. v. Envtl. Tectonics Corp., Int’l, 493 U.S. 400 (1990).

2667. Walls v. Wells Fargo Bank, 255 B.R. 38, 46–47 (E.D. Cal. 2000) (dismissing plaintiff’s

RICO claims on basis that they were premised only on alleged violation of automatic stay provisions of Bankruptcy Code, which provides exclusive remedy for such violations); Mendoza v.

Zirkle Fruit Co., No. CS-00-3024, 2000 WL 33225470, at *10 (E.D. Wash. Sept. 27, 2000) (noting Immigration Reform and Control Act did not preempt claims under RICO).

2668. See, e.g., Price v. Pinnacle Brands, Inc., 138 F.3d 602, 605 (5th Cir. 1998) (stating

“[t]here is some question whether RICO affords private litigants the option of equitable remedies”); Bennett v. Berg, 685 F.2d 1053, 1064 (8th Cir. 1982) (noting injunctive relief might be

available as a remedy), aff’d in part, rev’d in part in reh’g en banc, 710 F.2d 1361 (1983).

2669. Johnson v. Collins Ent. Co., 199 F.3d 710, 726 (4th Cir. 1999) (“‘[T]here is substantial doubt whether RICO grants private parties . . . a cause of action for equitable relief.’” (quoting Dan River, Inc. v. Icahn, 701 F.2d 278, 290 (4th Cir. 1983))). Compare In re Fredeman Litig.,

843 F.2d 821, 828 (5th Cir. 1988), and Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076,

1082–83 (9th Cir. 1986), with Aetna Cas. & Sur. Co. v. Liebowitz, 570 F. Supp. 908, 910

(E.D.N.Y. 1983), aff’d on other grounds, 730 F.2d 905 (2d Cir. 1984).
Civil RICO § 35.32

719

claims and possibly by removing the jurisdictional predicate for supplemental

state law claims, allowing for their dismissal as well.2670 Consider procedures to

test the sufficiency of the pleadings early on, before significant litigation activity commences. As in most complex litigation, early institution of an initial

case-management order will help to organize the case, provide a preliminary

identification of legal and factual issues, and educate the court as to the issues

likely to increase the complexity of the litigation. Helpful strategies may include the following:

• Review the complaint upon assignment of the litigation to determine

the existence of any jurisdictional or other defects apparent on its face.

• Require the plaintiff to file a RICO case statement, amplifying and

clarifying the allegations in the complaint prior to receipt of responsive motions or pleadings. This case statement can require the plaintiff

to detail the factual basis for each allegation with specificity, as well as

the legal basis supporting the plaintiff’s theory on various elements of

the RICO claim.2671

• Require each side to develop an agreed-on statement of the factual and

legal issues in dispute, including damages claimed by the plaintiff and

defenses to liability being asserted.

• Require the defendant to advise the court and the opposing party of its

intention to file a motion under Federal Rules of Civil Procedure 9(b)

and 12, and whether the asserted defects can be cured through

amendment of the complaint.

• Establish a firm schedule for the filing and hearing of responsive

pleadings, including motions under Rules 9(b), 12, and 56.

• Stay formal discovery pending resolution of motions challenging jurisdiction and deficiencies in the complaint.

Where the complaint alleges additional claims not subject to a Rule 12

motion, consider whether discovery should proceed on those claims, pending

resolution of any motions seeking dismissal of the RICO claims. The court

may also assess whether such an approach would require duplicative discovery

or impose additional costs on the parties should the RICO claims survive.

2670. See 28 U.S.C. § 1367 (West 2003); see also Parker & Parsley Petroleum Co. v. Dresser

Indus., 972 F.2d 580, 584–90 (5th Cir. 1992); Spiegel v. Cont’l Ill. Nat’l Bank, 790 F.2d 638,

649–50 (7th Cir. 1986).

2671. See Darocha v. Crusader Sav. Bank, No. CIV.A. 94-7264 1995 WL 118208, at *3 (E.D.

Pa. May 10, 1995) (dismissing RICO counts and requiring plaintiff to file RICO case statement

with any amended complaint). For an example of a RICO case statement used by the Northern

District of Illinois, see Bryant v. Yellow Freight Sys., Inc., 989 F. Supp. 966, app. 5 (N.D. Ill. 1997).
§ 35.33 Manual for Complex Litigation, Fourth

720

35.33 Discovery

The RICO case statement can help weed out transactions and allegations

that are tangential or unrelated to alleged racketeering activity and can thereby

reduce the scope of discovery. The court should remind the parties of limits on

discovery found in the Federal Rules and require them to fully support any

requests for additional discovery beyond that permitted by the rules. Consider

also whether there is a need for limitations on the scope of discovery. Discovery issues may arise where related criminal proceedings are ongoing, triggering

the defendant’s Fifth Amendment privilege against self-incrimination and disputes regarding the discoverability of grand jury material. Unduly curtailing a

plaintiff’s discovery into alleged wrongdoing should be avoided. Ordinarily,

discovery into unrelated alleged criminal acts is disallowed,2672 but discovery

that relates to other alleged victims of the same pattern of racketeering activity

or to acts within the exclusive knowledge of the defendant may be warranted.2673

The specific elements necessary to prove a RICO violation can also pose

special problems in discovery. For example, the “pattern” requirement often

will involve discovery into a RICO defendant’s conduct and practices over an

extended period of time and with respect to numerous transactions. Similarly,

a plaintiff seeking to show an association-in-fact enterprise will be seeking information on the relationships between the participants and also their communications, activities, and other contacts in an effort to show the structure

and continuity of the enterprise. In some circuits, the plaintiff may be unable

to use proof of the racketeering activity to prove also the structure and continuity of the enterprise, substantially increasing the plaintiff’s discovery burden.

In deciding whether to put any limits on discovery, consider the nature of the

allegations and the complexity of the case. To the extent possible, it is best to

address potential discovery issues early in the litigation, well before depositions

begin, in order to avoid unnecessary conflict and discovery motions.

2672. See, e.g., Jolley v. Welch, 904 F.2d 988, 992–93 (5th Cir. 1990); Olive Can Co. v. Martin, 906 F.2d 1147, 1152–53 (7th Cir. 1990); Zerman v. E.F. Hutton & Co., 628 F. Supp. 1509,

1512 (S.D.N.Y. 1986).

2673. See, e.g., Michaels Bldg. Co. v. Ameritrust Co., N.A., 848 F.2d 674, 679–81 (6th Cir.

1988); Halperin v. Berlandi, 114 F.R.D. 8, 11–13 (D. Mass. 1986). However, the breadth of discovery permitted under Rule 26(b)(1) should be given careful consideration prior to any decision to limit areas of inquiry.
Civil RICO § 35.34

721

35.34 Motion Practice

The threat of treble damages and attorney fee awards, combined with the

potential damage to reputation, usually spur a defendant aggressively to pursue

early dismissal of RICO claims. Motions attacking the plaintiff’s standing to

bring the claim or other jurisdictional defects are common and often combined with motions challenging the sufficiency of the complaint on various

grounds.2674 In addition to Rule 12 and 9(b) motions, procedural motions often play a significant role. Typical procedural motions include motions (1) to

stay discovery pending resolution of non-RICO claims, arbitration, or completion of criminal proceeding; (2) for a protective order; and (3) to sever.2675

Also consider asking at the initial pretrial conference whether the defendant

plans to file motions challenging jurisdiction and, if so, on what grounds. Depending on the length and complexity of the complaint, it may be more efficient to set a schedule that requires that these motions be filed and decided

prior to the filing of motions challenging the sufficiency of the allegations.

It may be impossible to determine the sufficiency of some RICO claims

until the parties have concluded discovery. Accordingly, consider scheduling a

pretrial conference immediately following the close of discovery to determine

what claims and defenses remain viable. One alternative is to require the parties to file statements setting out all claims and defenses together with their

factual and legal bases. The judge may encourage the parties to reach stipulations. Moreover, in cases where disagreements remain, but where it appears

that material facts may be undisputed or without adequate support, encourage

the parties to file summary-judgment motions. Alternatively, the court can

exercise its Rule 16 power to dispose summarily of a claim or claims as to

which no facts remain in dispute.2676 Prior to entry of summary judgment sua

sponte, however, the parties should be given an opportunity to present arguments as to why judgment should not be entered.2677 If the elimination of

RICO removes the jurisdictional basis for supplemental state law claims, it is

2674. See, e.g., Combs v. Baker, 886 F.2d 673, 674 (4th Cir. 1989) (plaintiffs challenged

personal jurisdiction as well as subject-matter jurisdiction, venue, sufficiency of the complaint

and failure to join an indispensable party).

2675. Rakoff & Goldstein, supra note 2527, § 8.03[1]–[3], at 8-5 to 8-9.

2676. Cf. Diaz v. Schwerman Trucking Co., 709 F.2d 1371, 1375 n.6 (11th Cir. 1983); Holcomb v. Aetna Life Ins. Co., 255 F.2d 577, 580 (10th Cir. 1958) (“[T]he court has the power [at

the pretrial conference] to compel the parties to agree to all facts concerning which there can be

no real issue.”).

2677. See St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 435 (5th Cir. 2000) (“The

district court may enter summary judgment sua sponte if the parties are provided with reasonable notice and an opportunity to present arguments opposing the judgment.”)
§ 35.35 Manual for Complex Litigation, Fourth

722

wise for the court to reevaluate whether it will retain jurisdiction over those

claims.2678 Factors to be considered in determining whether to retain jurisdiction include comity, judicial economy, convenience, and fairness.2679

2678. Guidry v. Bank of La Place, 954 F.2d 278, 285 (5th Cir. 1992) (in cases where federal

claims have been dismissed and no basis exists for federal jurisdiction, district courts are “to

decide whether to retain jurisdiction [over state claims] based on considerations of judicial

economy, convenience, fairness and comity”); Scottsdale Ins. Co. v. Dorman, 153 F. Supp. 2d

852, 858 (E.D. La. 2001) (declining to retain jurisdiction over state law fraud claim after dismissal of RICO cause of action, because plaintiff would not be unduly prejudiced, matter had

not proceeded past pleading stage, plaintiff could refile claim in state court, and activity to date

in the case had focused on RICO).

2679. Camelio v. Am. Fed’n, 137 F.3d 666, 672 (1st Cir. 1998) (“[T]he balance of competing factors ordinarily will weigh strongly in favor of declining jurisdiction over state law claims

where the foundational federal claims have been dismissed at an early stage of the litigation.”).

35.35 Trial

RICO trials typically are not conducive to bifurcation. Moreover, some of

the technical issues in civil RICO trials may be particularly confusing to lay

jurors. Consider whether any or all of the following would assist the jury in

understanding some of these complexities:

• allowing joint presentation by the attorneys of a preliminary statement, either during voir dire or prior to the opening statements, to explain the general nature of the claims and some of the characteristics

and elements of a civil RICO case (e.g., that the case is a civil, not

criminal action; that the burden of proof is by a preponderance of the

evidence, not beyond a reasonable doubt; and that the use of the term

“racketeer” does not mean that the defendant is associated with “organized crime”);

• explaining to the jury that although the plaintiff must prove that the

defendant committed the underlying predicate act, proof of the commission of that act does not in itself constitute proof that the defendant violated RICO;

• permitting the parties to make mini-opening statements or summaries

of the relevant portions of witnesses’ testimony—for example, capsulizing for the jury that certain witnesses are being called to establish

the elements of a particular predicate act; and

• permitting the jurors to take notes.
Civil RICO § 35.35

723

Special verdicts or a general verdict with interrogatories may help avoid

confusion. Consider directing the jurors’ attention to the sufficiency of each

separate statutory and common-law claim submitted for their decision. Issues

may be submitted to the jury for decision sequentially, both to simplify deliberations and to obviate deliberation on issues rendered moot by an earlier verdict. Note that some courts have held that the jury should not be informed of

the treble damages provision.2680

2680. See Pollock & Riley, Inc. v. Pearl Brewing Co., 498 F.2d 1240, 1242 (5th Cir. 1974)

(antitrust).
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when printing double-sided copies.
Part IV

Sample Orders

_______________

40. Sample Orders 727
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when printing double-sided copies.
727

40. Sample Orders

.1 Order Setting Initial Conference 730

.2 Sample Case-Management Orders 734

.21 General 734

.22 Responsibilities of Designated Counsel 741

.23 Attorneys’ Time and Expense Records 743

.24 Scheduling Order 744

.25 Preservation of Documents, Data, and Tangible Things 746

.26 Document Depositories 749

.261 Order to Meet and Confer to Establish Joint Document Depository 749

.262 Order to Establish Separate Document Depositories 751

.27 Confidentiality Order 752

.28 Referral of Privilege Claims to Special Master 754

.29 Deposition Guidelines 756

.3 Order Creating a Web Site 762

.4 Class Actions Orders 763

.41 Order Certifying Class 763

.42 Order Setting Hearing on Proposed Class Settlement 765

.43 Combined Certification and Proposed Settlement Order 766

.44 Order Approving Settlement/Claims Procedure 768

.5 Orders in Special Cases 770

.51 Coordinating Proceedings in Different Courts 770

.52 Mass Tort Case-Management Order 773

.53 CERCLA Case-Management Order 779

.54 Civil RICO Case-Statement Order 783

.6 Sample Final Pretrial Orders 786

.7 Jury Questionnaire 786

Complex litigation generally has its own unique demands, and it calls for

counsel and the court to adapt any proposed order to those complexities. The

orders and forms that follow represent only a starting point for the court to

consider in structuring its approach to managing a particular set of complex

cases. Judges generally expect that experienced counsel will propose forms that

will deal with the unique features of the litigation at hand.

Although the orders presented below generally are composites of several

orders or revisions of a single order, we have not attempted to document the

origin of each provision of each order or the authority to issue such orders.

While judges have used variations and portions of these orders to manage

complex litigation, the authority to issue such orders may or may not have

been tested.

Additional sample orders and forms may be found in the United States

Judicial Conference’s Civil Litigation Management Manual (2001) (available

from the Federal Judicial Center), in the Federal Rules of Civil Procedure Appendix of Forms, and on various Internet sites created for specific complex

cases or MDL proceedings, some of which are listed below:
§ 40 Manual for Complex Litigation, Fourth

728

In re BankAmerica Corp. Securities Litigation, MDL No. 1264 (E.D. Mo.), at

http://www.bankofamericasettlement.com/ (last visited Nov. 10, 2003)

In re Baycol Products Litigation, MDL No. 1431 (D. Minn.), at

http://www.mnd.uscourts.gov/Baycol_Mdl/ (last visited Nov. 10, 2003)

In re Bridgestone/Firestone Tires, Inc., Products Liability Litigation, MDL No.

1373 (S.D. Ind.), at http://www.insd.uscourts.gov/Firestone/default.htm

(last visited Nov. 10, 2003)

In re Diet Drugs Products Liability Litigation, MDL No. 1421 (E.D. Pa.), at

http://www.fenphen.verilaw.com/ (last visited Nov. 10, 2003)

In re Holocaust Victim Assets Litigation, No. CV 96-4849 (E.D.N.Y.), at

http://www.nyed.uscourts.gov/Decisions_of_Interest/DOI_Archive/doi_

archive.html (decisions of interest archive, years 2000–2003) (last visited

Nov. 10, 2003)

In re Holocaust Victim Assets Litigation, at http://www.swissbankclaims.com/

index.asp (official settlement Web site) (last visited Nov. 10, 2003)

In re Inter-Op Hip Prosthesis Liability Litigation, MDL No. 1401 (N.D. Ohio),

at http://www.ohnd.uscourts.gov/Clerk_s_Office/Notable_

Cases/index.html (last visited Nov. 10, 2003)

In re Latex Gloves Products Liability Litigation, MDL No. 1148 (E.D. Pa.), at

http://www.paed.uscourts.gov/usmdl.asp (last visited Nov. 10, 2003)

In re Lorazepam & Clorazepate Antitrust Litigation, MDL No. 1290 (D.D.C.),

at http://www.dcd.uscourts.gov/district-court.html (last visited Nov. 10,

2003)

In re Merrill Lynch & Co., Inc., Research Reports Securities Litigation, MDL

No. 1484 (S.D.N.Y.), at http://www.nysd.uscourts.gov/ConsolidatedCases.

htm#15a (last visited Dec. 2, 2003)

In re Microsoft Corp. Antitrust Litigation, MDL No. 1332 (D. Md.), at

http://www.mdd.uscourts.gov/Opinions152/DisplayMDLCom.asp (last

visited Nov. 10, 2003)

In re Norplant Contraceptive Products Liability Litigation, MDL No. 1038

(E.D. Tex.), at http://www.txed.uscourts.gov/tableofc.htm (last visited

Nov. 10, 2003)

In re Phenylpropanolamine (PPA) Products Liability Litigation, MDL No.

1407 (W.D. Wash.), at http://www.wawd.uscourts.gov/wawd/

mdl.nsf/main/page (last visited Nov. 10, 2003)

In re Propulsid Prod. Liability Litigation, MDL No. 1355 (E.D. La.), at

http://propulsid.laed.uscourts.gov (last visited Nov. 10, 2003)
Sample Orders § 40

729

In re Rezulin Products Liability Litigation, MDL No. 1348 (S.D.N.Y.), at

http://www.nysd.uscourts.gov/rezulin.htm (last visited Nov. 10, 2003)

In re Serzone Products Liability Litigation, MDL No. 1477 (S.D. W. Va.), at

http://www.wvsd.uscourts.gov/serzone/ (last visited Nov. 10, 2003)

In re Silicone Gel Breast Implant Products Liability Litigation, MDL No. 926

(N.D. Ala.), at http://www.fjc.gov/BREIMLIT/mdl926.htm (last visited

Nov. 10, 2003)

In re Simon II Litigation (E.D.N.Y.), at http://www.nyed.uscourts.gov/

Decisions_of_Interest/DOI_Archive/DOI_2002/doi_2002.html (last visited Nov. 10, 2003)

In re St. Jude Med., Inc. Silzone Heart Valves Products Liability Litigation,

MDL No. 01-1396 (D. Minn.), at http://www.mnd.uscourts.gov/

Tunheim_Mdl/index.htm (last visited Nov. 10, 2003)

In re Vitamins Antitrust, MDL No. 1285 (D.D.C.), at http://www.dcd.uscourts.

gov/99ms197-2003.html (last visited Dec. 2, 2003)

In re Wireless Telephone Radio Frequency Emissions Products Liability Litigation, MDL No. 1421 (D. Md.), at http://www.mdd.uscourts.gov/

Opinions152/DisplayMDLCom.asp (last visited Nov. 10, 2003)

In re World Trade Center Disaster Site Litigation, (S.D.N.Y.), at

http://www.nysd.uscourts.gov/Sept11Litigation.htm (last visited Nov. 10,

2003)
§ 40.1 Manual for Complex Litigation, Fourth

730

40.1 Order Setting Initial Conference

UNITED STATES DISTRICT COURT

 DISTRICT OF 

In re: ) Master File No. 1

)

 2 LITIGATION )

) This Document Relates To:

) [All Cases]

Order No. 3

Preamble.4 The court wishes to express clearly its expectation that professionalism,

courtesy, and civility will endure throughout these proceedings. The Manual for Complex Litigation, Fourth at section 10.21 captures the spirit in these terms:

The added demands and burdens of complex litigation place a premium on

attorney professionalism, and the judge should encourage counsel to act responsibly. The certification requirements of Federal Rules of Civil Procedure

11 and 26(g) reflect some of the attorneys’ obligations as officers of the court.

Because of the high level of competence and experience that attorneys ordinarily bring

to this type of litigation, the court is confident that this objective will be achieved without judicial intervention.

It appearing that [the above styled case(s)] [the cases listed on Attachment ]

may merit special attention as complex litigation, the court ORDERS:

1. Initial Conference. All parties shall appear for a conference with the undersigned

on the day of [date] , at a.m./p.m. in [Court]room ,

United States Courthouse .

(a) Attendance. To minimize costs and facilitate a manageable conference, parties

are not required to attend the conference, and parties with similar interests

are expected to agree to the extent practicable on a single attorney to act on

their joint behalf at the conference. A party will not, by designating an attorney to represent its interests at the conference, be precluded from other representation during the litigation; and attendance at the conference will not

waive objections to jurisdiction, venue, or service.5

(b) Service List. This order is being mailed to the persons shown on Attachment

 , which has been prepared from the list of counsel making appearances with the Judicial Panel on Multidistrict Litigation. Counsel on this list

are requested to forward a copy of the order to other attorneys who should be
Sample Orders § 40.1

731

notified of the conference. A corrected service list will be prepared after the

conference.

(c) Other Participants. Persons who are not named as parties in this litigation but

may later be joined as parties or are parties in related litigation pending in

other federal and state courts are invited to attend in person or by counsel.

2. Purposes and Agenda. The conference will be held for the purposes specified in

Fed. R. Civ. P. 16(a), 16(b), 16(c), and 26(f) and subject to the sanctions prescribed in Rule 16(f). A tentative agenda is appended as Attachment .6 Counsel are encouraged to advise the court as soon as possible of any items that should

be added to the agenda.

3. Preparations for Conference

(a) Procedures for Complex Litigation. Counsel are expected to familiarize themselves with the Manual for Complex Litigation, Fourth and be prepared at the

conference to suggest procedures that will facilitate the just, speedy, and inexpensive resolution of this litigation.

(b) Initial Conference of Counsel. Before the conference, counsel shall confer and

seek consensus to the extent possible with respect to the items on the agenda,

including a proposed discovery plan under Rule 26(f) and a suggested schedule under Rule 16(b) for joinder of parties, amendment of pleadings, consideration of any class action allegations, motions, and trial. [The court designates and to arrange the initial

meetings of plaintiffs’ and defendants’ counsel, respectively.]7

(c) Preliminary Reports. Counsel will submit to the court by [date] , a brief

written statement indicating their preliminary understanding of the facts involved in the litigation and the critical factual and legal issues. These statements will not be filed with the clerk, will not be binding, will not waive

claims or defenses, and may not be offered into evidence against a party in

later proceedings.

(d) List of Affiliated Companies and Counsel. To assist the court in identifying any

problems of recusal or disqualification, counsel will submit to the court by

 [date] , a list of all companies affiliated with the parties and all

counsel associated in the litigation.

(e) List of Pending Motions. Counsel’s statement shall list all pending motions.

(f) List of Related Cases. Counsel’s statement shall list all related cases pending in

state or federal court and their current status, to the extent known.

4. Interim Measures. Until otherwise ordered by the court:

(a) Admission of Counsel. Attorneys admitted to practice and in good standing in

any United States District Court are admitted pro hac vice in this litigation.

Association of local cocounsel is not required.

(b) Pleadings. Each defendant is granted an extension of time for responding by

motion or answer to the complaint(s) until a date to be set at the conference.
§ 40.1 Manual for Complex Litigation, Fourth

732

(c) Pending and New Discovery. Pending the conference, all outstanding disclosure and discovery proceedings are stayed and no further discovery shall be

initiated. This order does not (1) preclude voluntary informal discovery regarding the identification and location of relevant documents and witnesses;

(2) preclude parties from stipulating to the conduct of a deposition that has

already been scheduled; (3) prevent a party from voluntarily making disclosures, responding to an outstanding discovery request under Federal Rule of

Civil Procedure 33, 34, or 36; or (4) authorize a party to suspend its efforts in

gathering information needed to respond to a request under Rule 33, 34, or

36. Relief from this stay may be granted for good cause shown, such as the ill

health of a proposed deponent.

(d) Preservation of Records. [See section 40.25.]

(e) Motions. No motion shall be filed under Rule 11, 12, or 56 without leave of

court and unless it includes a certificate that the movant has conferred with

opposing counsel in a good-faith effort to resolve the matter without court

action.

[(f) Orders of Transferor Courts. All orders by transferor courts imposing dates for

pleading or discovery are vacated.]

5. Later Filed Cases. This order shall also apply to related cases later filed in, removed

to, or transferred to this court.

6. Applications for Lead and Liaison Counsel Appointments. The court intends to appoint plaintiffs’ lead counsel and/or a plaintiffs’ steering committee, as well as

plaintiffs’ liaison counsel. Applications for these positions must be filed with the

clerk’s office on or before [insert date in advance of initial pretrial conference] .

The court will only consider attorneys who have filed a civil action in this litigation. The main criteria for these appointments are (1) willingness and ability to

commit to a time-consuming process; (2) ability to work cooperatively with others; (3) professional experience in this type of litigation; and (4) access to sufficient resources to advance the litigation in a timely manner. [Applications should

also set forth attorney fee proposals, rates, and percentages that applicants expect

to seek if the litigation succeeds in creating a common fund.]

7. Other Provisions. [Include any special instructions, such as procedures for presenting emergency matters prior to conference.]

Dated: 

United States District Judge

Attachments8

Notes:

1. In its order establishing a master case file—a decision that is frequently deferred until the

initial conference—the court should include provisions such as those contained in infra section

40.21, ¶ 1, and specify a master file number. The multidistrict litigation (MDL) number is used
Sample Orders § 40.1

733

if the litigation includes cases transferred under 28 U.S.C. § 1407. Documents that apply generally to all constituent cases are so identified; those that apply only to particular cases should

specify in their captions or by a separate list the style of case or case number that they apply to.

2. Courts frequently assign multiple litigation a descriptive name, both to serve as an abbreviated caption in orders, pleadings, and other documents, and to minimize confusion if parties

are changed or cases are dismissed. In multidistrict proceedings under 28 U.S.C. § 1407, the

name given by the Judicial Panel on Multidistrict Litigation is used.

3. If many orders may be entered during the litigation, the court should number its major

orders sequentially for convenient reference. An explanatory description of the nature of the

order is often added in parentheses. Transcripts of conferences at which rulings are made should

be included in the numerical sequence if no separate order incorporating these rulings will be

prepared.

4. The court may wish to use these or similar words to set a tone for the litigation. Supra

section 10.21 may provide further ideas along these lines.

5. In some cases the court may decide that the parties themselves should attend the conference with their counsel. See supra section 11.23.

6. As an alternative, the clause might read, “The items listed in the MCL 4th, section 11.21,

shall, to the extent applicable, constitute a tentative agenda.”

7. Designation of attorneys to organize these initial meetings may be useful both to fix responsibility and to reduce early factionalism among those interested in becoming lead or liaison

counsel. The attorneys designated by the court need not be persons who would be considered for

appointment as lead or liaison counsel.

8. For ease of drafting, as well as reference, append lists and lengthy directives (e.g., a protective order for confidential documents) as attachments rather than include them within the

body of an order. Sample orders and other materials from the MCL 4th may be incorporated by

reference.
§ 40.21 Manual for Complex Litigation, Fourth

734

40.2 Sample Case-Management Orders

.21 General 734

.22 Responsibilities of Designated Counsel 741

.23 Attorneys’ Time and Expense Records 743

.24 Scheduling Order 744

.25 Preservation of Documents, Data, and Tangible Things 746

.26 Document Depositories 749

.261 Order to Meet and Confer to Establish Joint Document Depository 749

.262 Order to Establish Separate Document Depositories 751

.27 Confidentiality Order 752

.28 Referral of Privilege Claims to Special Master 754

.29 Deposition Guidelines 756

40.21 General

[caption]

Order No. 

(Initial Case-Management Order)

Having considered the comments and proposals of the parties presented at the initial conference held [date] , the court ORDERS:

1. Pretrial Consolidation. The cases listed on Attachment are, until further order, consolidated for pretrial purposes. This order does not constitute a determination that these actions should be consolidated for trial, nor does it have the effect of making any entity a party to an action in which it has not been joined and

served in accordance with the Federal Rules of Civil Procedure.

(a) Master Docket and File. The clerk will maintain a master docket and case file

under the style “In re LITIGATION,”

master file number . All orders, pleadings, motions, and other

documents will, when filed and docketed in the master case file, be deemed

filed and docketed in each individual case to the extent applicable.

(b) Captions; Separate Filing. Orders, pleadings, motions, and other documents

will bear a caption similar to that of this order.1 If generally applicable to all

consolidated actions, they shall include in their caption the notation that they

relate to “ALL CASES” and be filed and docketed only in the master file.

Documents intended to apply only to particular cases will indicate in their

caption the case number of the case(s) to which they apply, and extra copies

shall be provided to the clerk to facilitate filing and docketing both in the

master case file and the specified individual case files.

(c) Discovery Requests and Responses. Pursuant to Fed. R. Civ. P. 5(d), discovery

requests and responses will not be filed with the court except when specifically

ordered by the court or to the extent offered in connection with a motion.2
Sample Orders § 40.21

735

[(d) Coordinated Actions. The actions listed on Attachment are not consolidated for pretrial purposes at the present time, but discovery in such cases

shall be coordinated with that in the consolidated actions to prevent duplication and conflicts.3]

2. Organization of Counsel4

(a) Plaintiffs. To act on behalf of plaintiffs with the responsibilities prescribed in

[Attachment ] [see section 40.22], the court designates—

(1) as Liaison Counsel: [name, address, telephone number] 

(2) as Lead Counsel: [name, address, telephone number] 

(3) as additional members of Plaintiffs’ Steering Committee:

 [names, addresses, telephone numbers] 

 

 

(b) Defendants. To act as liaison counsel on behalf of all defendants [except defendant(s) ] with the responsibilities

prescribed in [Attachment ] [see section 40.22, ¶4], the court

designates [name, address, telephone number] .

(c) Reimbursement. If agreement cannot be reached on a method for periodically

reimbursing attorneys for expenses incurred and paying them for services

rendered as lead or liaison counsel, the matter will be presented to the court

for resolution.

(d) Time Records. Counsel who anticipate seeking an award of attorney fees from

the court shall comply with the directives contained in [Attachment ]

[see section 40.23] regarding the maintenance and filing of contemporaneous

records reflecting the services performed and the expenses incurred.

3. Service of Documents

(a) Orders. A copy of each order will be provided to plaintiffs’ liaison counsel and

defendants’ liaison counsel for distribution as appropriate to other counsel

and parties. [A copy shall also be provided to counsel for defendant(s) 

 .]

(b) Pleadings, Motions, and Other Documents. Plaintiffs’ liaison counsel will be

provided with copies of each pleading, motion, or other document filed

by a party; defendants’ liaison counsel will be provided with copies of each

such document. [Pursuant to Fed. R. Civ. P. 5(b), service on liaison counsel

constitutes service on other attorneys and parties for whom liaison counsel is

acting.5]

[(c) Service of Original Complaints; Amendments Adding Parties. To eliminate disputes about service of process and to reduce the expense of such service, defendants [name] and [name] have agreed to waive service

of process for claims filed in federal court that fall within the scope of the

 [above-captioned] litigation, subject to the provisions of Rule 4(d). The
§ 40.21 Manual for Complex Litigation, Fourth

736

notice required by Rule 4(d) should be sent to [name and address of representative/counsel to receive service] and [name and address of representative/counsel to receive service] . Plaintiffs have 30 days

from the date of this order or the date of filing, whichever is later, to provide

notice of the original complaint or an amendment adding one or more of the

above defendants to the complaint.6]

4. Status Conferences

(a) Regularly Scheduled Conferences. The court will convene a status conference in

this litigation every [insert scheduled time] , subject to the court’s calendar. Except for emergencies, motions should not be brought for hearing at

any time other than a regularly scheduled status conference. To be heard at a

status conference, motions must be fully briefed at least [insert time

period] . Lead counsel for the parties shall (1) confer at least [insert time

period] before each scheduled conference and attempt to resolve outstanding disputes and (2) provide the court at least [insert time period] prior

to the hearing a joint letter listing all motions and other matters the parties

anticipate addressing at the conference. Parties should make every effort not

to notice depositions for days on which status conferences are scheduled, and

no deposition shall go forward on such days without prior leave of court.

(b) Telephone Conferences. Telephone conferences may be scheduled at the

court’s discretion by prior arrangement through the court’s chambers, if all

necessary parties are available and receive at least 24 hours notice.

5. Refinement of Issues

(a) General Briefing Requirements. Briefs in support of, or in opposition to, any

motions may not exceed [number of] pages without leave of court. Reply

briefs must be limited to [number of] pages without leave of court.

(b) Rule 12 Motions. [Include rulings on pending Rule 12 motions if appropriate,

or establish dates for filing, briefs, and arguments. For example, “The motions

of defendants A.B. and C.D. to dismiss the complaint of plaintiff E.F. for failure to state a claim on which relief may be granted are, upon consideration,

DENIED. A similar motion is hereby deemed filed by each other defendant,

and the same order deemed made on each such motion.”]

(c) Pleadings. Each defendant shall have until [date] , to file

its answer to the complaint, including any cross-claims or counterclaims.

Answers to any cross-claims or counterclaims will be filed by [date] .

Except for good cause shown, no additional parties may be joined as plaintiff,

defendant, or third-party defendant after [date] .

(d) Summary Judgment. The following issues may be submitted for early resolution on motions under Fed. R. Civ. P. 56: 

 

 .

Subject to further order of the court, motions seeking summary judgment on

these issues will be filed with supporting affidavits and briefs by [date] .
Sample Orders § 40.21

737

Opposing affidavits and briefs will be filed by [date] , and any reply

briefs by [date] .

(e) Class Action. Attorney [name] will serve as interim counsel to represent the proposed class until the court determines whether to certify the action as a class action. To pursue class action treatment, plaintiffs must file by

 [date] , a single, consolidated, special master amended complaint.

[Note: In an MDL proceeding, the consolidated class action complaints

should ordinarily be filed in the transferee district.] The parties shall meet and

confer to determine what, if any, expedited discovery needs to be conducted

to address the class issues and specify the date by which plaintiffs will file a

motion seeking class certification.7

A motion for class certification must do the following: identify the class(es)

and any subclass(es) for which they seek certification; detail the facts that

show satisfaction of the requirements of Fed. R. Civ. P. 23(a) and (b), including the identity of named plaintiff(s) to represent each class and subclass,

the qualifications of counsel for each class and subclass, and the rate, percentage, or other formula for calculating the amount of attorney fees counsel expect to request for representing the proposed class; present a plan for managing the litigation for trial; describe the forms, methods, and financing to be

used to give notice to class members; and identify and include reports and affidavits of any experts to be used to support class certification.

Defendants will file by [date] , any objections to class certification, specifying with particularity the factual and legal basis of their objection

and identifying any facts on which an evidentiary dispute exists. Defendants

must identify and include reports and affidavits of any experts to be used in

opposition to class certification.

[Optional] A hearing will be conducted by the court, under Rule 23(c), on

 [date] , at which time the parties may present affidavits and

declarations, extracts of depositions, responses to interrogatories, and documentary evidence relevant to any factual disputes. Only on a showing of good

cause will a party be permitted to call a witness to testify in person at the

hearing. In any event, only an expert whose report has been provided in the

motion or opposition will be permitted to testify.

6. Discovery

(a) Approval of Expedited Discovery. Permission to take expedited discovery of a

plaintiff and a plaintiff’s health care provider is granted if all of the following

conditions are present:

(1) plaintiff or a member of plaintiff’s family is terminally ill;

(2) there is an urgent need to record and preserve the testimony because of

the gravity of the illness; and

(3) [if applicable] plaintiff has completed the Plaintiff Fact Sheet and provided the medical authorizations required by the fact sheet and defen-
§ 40.21 Manual for Complex Litigation, Fourth

738

dants have had an opportunity to conduct a reasonable amount of informal discovery prior to the taking of any deposition.

(b) Initial Disclosures. Initial disclosures under Rule 26(a) shall be made unless a

party objects prior to or during the Rule 26(f) conference that disclosures are

inappropriate in the context of the litigation and the court reviews the objection and agrees not to require such disclosure. [Alternative, if agreed or the

court orders: The parties have agreed:/The court orders: that in light of the

discovery plan set forth below, the parties are relieved of the responsibility to

provide initial disclosures under Rule 26(a)(1).]

(c) Schedule. Discovery shall be conducted according to the schedule at Attachment [see section 40.24]. All discovery [other than on the issue(s) of ] shall be completed by [date] .

(d) General Limitations. All discovery requests and responses are subject to the

requirements of Fed. R. Civ. P. 26(b)(1), 26(b)(2), and 26(g). Discovery shall

not, without prior approval of the court, be taken of members of the proposed class or of persons in countries outside the United States; and any request for such discovery shall indicate why the discovery is needed and the

specific information or documents sought.

(e) Confidentiality Order. See Attachment [see section 40.27].

(f) Documents

(1) Preservation. See Attachment [see section 40.25].

(2) Numbering System. Counsel shall develop and use a system for identifying by a unique number or symbol each document produced or referred

to during the course of this litigation. All copies of the same document

should ordinarily be assigned the same identification number.

(3) Rolling Production. The parties must produce documents to which they

have not raised an objection on a rolling basis rather than waiting until

all documents responsive to a request have been gathered. The parties

must meet and confer regarding a schedule for the orderly production of

different categories of documents.

(4) Document Depositories. See Attachment [see section 40.26].

(5) Avoidance of Multiple Requests and Coordination of Document Production

with Other Courts. Counsel shall, to the extent possible, coordinate and

consolidate their requests for production and examination of documents

to eliminate duplicative requests from the same party in this proceeding

or in similar proceedings in other courts. No party shall request documents available to it at a document depository or from its own liaison

counsel.

[Alternative: Defendants have agreed [or “The court orders the parties”]

to produce in these proceedings all documents and information that they

produce in related litigation dealing with the same [insert the product,

event, or set of transactions that define the litigation] in other state and
Sample Orders § 40.21

739

federal courts, on the same schedule or as close to the same schedule as

practicable. Plaintiffs have agreed [or “The court orders”] that the sequence in which defendants produce the documents need not conform

to the requirements of Rule 34(b).]

(6) Privilege. A party who, relying on any privilege or on the work product

doctrine, does not produce all relevant or requested documents in response to a request for production of documents or a subpoena must

state that it is invoking a privilege and must specify which privilege or

doctrine it is invoking. The parties are to confer to determine the format

and time for production of privilege logs.

Where courts in other jurisdictions have ordered the production of

any document initially withheld by defendant as privileged or work

product, the party shall either produce the document in these proceedings or timely move for a protective order.

(g) Interrogatories. Counsel shall, to the extent possible, combine their interrogatories to any party into a single set of questions. No question shall be

asked that has already been answered in response to interrogatories filed by

another party [or in response to a “fact sheet” submitted by the same party (as

provided in section 40.52)] unless there is reason to believe that a different

answer will be given. [Without leave of court, interrogatories shall not include

more than separate questions, including subparts.] Pursuant to

Rule 26(e)(2), the parties must promptly amend answers to interrogatories to

provide complete additional or corrective information.

(h) Depositions. See Attachment [see section 40.29].

(i) Special Agreements. All parties shall be under a continuing duty to make

prompt disclosure to the court (and, unless excused by the court for good

cause shown, to other parties) of the existence and terms of all agreements

and understandings, formal or informal, absolute or conditional, settling or

limiting their rights or liabilities in this litigation. This obligation includes not

only settlements, but also such matters as “loan receipt” and “Mary Carter”

agreements, and insurance, indemnification, contribution, and damagesharing agreements.

7. Trial. Subject to further order of the court, the parties are directed to be ready for

trial on all issues [except ] by [date] .

[Counsel are advised that the court will require a listing in advance of trial of the

factual contentions each party expects to prove at the trial, identifying the witnesses and documents to be presented in support of each such contention, and the

court may preclude the presentation of any contention, witness, or document not

so identified.]

8. [Optional: Next Conference. The next pretrial conference is [tentatively] scheduled

for [date] . See ¶ 4(a) above.]

9. Later Filed Cases. The terms of this order, including pretrial consolidation, shall

apply automatically to actions later instituted in, removed to, or transferred to this
§ 40.21 Manual for Complex Litigation, Fourth

740

court (including cases transferred for pretrial purposes under 28 U.S.C. § 1407)

that involve claims of .

Objections to such consolidation or other terms of this order shall promptly be

filed, with a copy served on liaison counsel for plaintiffs and defendants.

Dated: 

United States District Judge

Attachments: [Attachments to this order can be found from sections 40.22 to 40.3.]

Notes:

1. See supra section 40.1.

2. As a means of keeping advised of the progress of discovery without unnecessarily burdening the clerks’ offices, the court may wish to add this provision: “At the time of requesting or

responding to discovery, the parties shall file with the clerk a one-page notice indicating the

nature of the discovery request or response.”

3. Coordination of discovery, including use of joint notices for common depositions, is

often appropriate even if consolidation is not warranted.

4. This order provides for appointment of only liaison counsel for defendants while providing for appointment of liaison counsel, lead counsel, and a steering committee for plaintiffs.

In many cases, of course, the same organizational structure for both plaintiffs and defendants

will be appropriate.

5. To ensure that each liaison counsel has a complete file, copies of all documents should be

served on both liaison counsel even if individual service is also to be made on other attorneys

and parties. If the court directs under Fed. R. Civ. P. 5 that service on all opposing counsel may

be made by serving liaison counsel, some additional time should be provided for liaison counsel

to make distribution among those counsel and parties interested in a particular document.

6. The court should encourage the parties to discuss waiver of service of process as contemplated by Rule 4(d). If the parties agree, the court should include a version of the bracketed

clause in an order.

7. Note that Rule 23(c)(1) provides that the class certification decision need only be made at

“an early practicable time.” The revised rule contemplates that the decision may come after rulings on Rule 12 motions and early motions for summary judgment.
Sample Orders § 40.22

741

40.22 Responsibilities of Designated Counsel

It is ORDERED:

1. Plaintiffs’ Lead Counsel. Plaintiffs’ lead counsel1 shall be generally responsible for

coordinating the activities of plaintiffs during pretrial proceedings and shall

(a) determine (after such consultation with other members of Plaintiffs’ Steering

Committee and other cocounsel as may be appropriate) and present (in

briefs, oral argument, or such other fashion as may be appropriate, personally

or by a designee) to the court and opposing parties the position of the plaintiffs on all matters arising during pretrial proceedings;

(b) coordinate the initiation and conduct of discovery on behalf of plaintiffs consistent with the requirements of Fed. R. Civ. P. 26(b)(1), 26(2), and 26(g), including the preparation of joint interrogatories and requests for production

of documents and the examination of witnesses in depositions;

(c) conduct settlement negotiations on behalf of plaintiffs, but not enter binding

agreements except to the extent expressly authorized;

(d) delegate specific tasks to other counsel or committees of counsel,2 as authorized by the court, in a manner to ensure that pretrial preparation for the

plaintiffs is conducted efficiently and effectively;

(e) enter into stipulations with opposing counsel as necessary for the conduct of

the litigation;

(f) prepare and distribute periodic status reports to the parties;

(g) maintain adequate time and disbursement records covering services as lead

counsel;

(h) monitor the activities of cocounsel to ensure that schedules are met and unnecessary expenditures of time and funds are avoided; and

(i) perform such other duties as may be incidental to proper coordination of

plaintiffs’ pretrial activities or authorized by further order of the court.

Counsel for plaintiffs who disagree with lead counsel (or those acting on behalf of

lead counsel) or who have individual or divergent positions may present written

and oral arguments, conduct examinations of deponents, and otherwise act separately on behalf of their clients as appropriate, provided that in doing so they do

not repeat arguments, questions, or actions of lead counsel.

2. Plaintiffs’ Liaison Counsel. Plaintiffs’ liaison counsel shall

(a) maintain and distribute to cocounsel and to defendants’ liaison counsel an

up-to-date service list;

(b) receive and, as appropriate, distribute to cocounsel orders from the court

[and documents from opposing parties and counsel];
§ 40.22 Manual for Complex Litigation, Fourth

742

(c) maintain and make available to cocounsel at reasonable hours a complete file

of all documents served by or upon each party [except such documents as

may be available at a document depository]; and

(d) establish and maintain a document depository [see section 40.261].

3. Plaintiffs’ Steering Committee. The other members of plaintiffs’ steering committee

shall from time to time consult with plaintiffs’ lead and liaison counsel in coordinating the plaintiffs’ pretrial activities and in planning for trial.

4. Defendants’ Liaison Counsel. Defendants’ liaison counsel shall

(a) maintain and distribute to cocounsel and to plaintiffs’ liaison counsel an upto-date service list;

(b) receive and, as appropriate, distribute to cocounsel orders from the court

[and documents from opposing parties and counsel];

(c) maintain and make available to cocounsel at reasonable hours a complete file

of all documents served by or upon each party [except such documents as

may be available at a document depository];

(d) establish and maintain a document depository [see section 40.261]; and

(e) call meetings of cocounsel for the purpose of coordinating discovery, presentations at pretrial conferences, and other pretrial activities.

5. Privileges Preserved. No communication among plaintiffs’ counsel or among defendants’ counsel shall be taken as a waiver of any privilege or protection to which

they would otherwise be entitled.

Dated: 

United States District Judge

Notes:

1. In litigation involving different types of claims, such as economic injury and personal

injury claims, the court and counsel may wish to create parallel structures for the cases.

2. In litigation involving cases in state and federal courts, the court and counsel should consider appointing a state–federal liaison committee to coordinate pretrial and trial activity, particularly discovery.
Sample Orders § 40.23

743

40.23 Attorneys’ Time and Expense Records

It is ORDERED:

1. Maintenance of Contemporaneous Records. All counsel shall keep a daily record of

their time spent and expenses incurred in connection with this litigation, indicating with specificity the hours, location, and particular activity (such as “conduct of

deposition of A.B.”). The failure to maintain such records will be grounds for denying court-awarded attorney fees, as will an insufficient description of the activity (such as “research” or “review of correspondence”).1

2. Filing.2 By the fifteenth day of each month, each firm that may seek an award (or

approval) of a fee by the court shall file [under seal with the clerk] [with lead

counsel or a budget/record/compensation committee established by lead counsel

and the court] a report summarizing, according to each separate activity, the time

and expenses spent by its members or associates during the preceding month (and

the ordinary billing rates of such attorneys in effect during the month) and the accumulated total of the firm’s time, hourly rates, and expenses to date. [Lead

Counsel shall file under seal with the clerk by the last day of the month a report

summarizing, for all participating counsel, such time and expenses reports, arranged according to the particular activities.]

Dated: 

United States District Judge

Notes:

1. The court may wish to include more specific guidelines concerning staffing, hourly rates,

reimbursable expenses, and required documentation. See supra sections 14.21–14.22.

2. In cases in which the court may award fees, time and expense records should ordinarily be

submitted through lead counsel, if one has been appointed, in order to assist lead counsel in

monitoring the activities of cocounsel and in preparing a single, consolidated report for filing

with the court. See supra section 14.212.
§ 40.24 Manual for Complex Litigation, Fourth

744

40.24 Scheduling Order

It is ORDERED:

1. Discovery1 shall be conducted according to the following schedule:

Discovery Time2

Interrogatories by all parties to ascertain

identity and location of witnesses and

documents, including computerized records 

Document production by all parties 

Lay-witness depositions

• noticed by plaintiffs 

• noticed by defendants 

Expert(s):

• plaintiffs:

– submission of reports 

– depositions 

• defendants:

– submission of reports 

– depositions 

Production of proposed computerized summaries

and samples:

• by plaintiffs 

• by defendants 

2. Except for good cause shown—

(a) relief from the above schedule shall not be granted and all discovery shall be

completed by [date] ;3

(b) discovery shall be limited to matters occurring after [date] [and

before [date] ];

(c) no more than interrogatories (including subparts) may be propounded to any party (exclusive of interrogatories seeking the identity and location of witnesses and documents);

[(d) no more than depositions may be taken by either plaintiffs or defendants, and no single deposition (other than of )

may take more than hours/days;4] and
Sample Orders § 40.24

745

(e) no amendment of pleadings may be made after [date] , and no additional parties may be joined as plaintiff, defendant, or third-party defendant

after [date] .

3. The parties are expected to be prepared for trial on all issues [except ]

by [date] .

Dated: 

United States District Judge

Notes:

1. Where initial disclosure is appropriate, provision should be made in the order. See also

supra section 40.21, ¶ 6(b). Note that the 2000 amendments to Rule 26(a)(1) contemplate that a

party in a complex case may object during the Rule 26(f) conference that initial disclosures are

“not appropriate in the circumstances of the action” and by such objection call for a judicial

ruling on the question.

2. The time for undertaking or completing some aspect of discovery may be stated either by

using specific dates or by reference to completion of discovery that should precede it. The listing

in this sample order of certain forms of discovery is not intended to suggest that they should be

undertaken in this sequence or that each item should be completed before other discovery is

undertaken. For example, in many cases, depositions should be conducted by both sides during

the same period of time, during which the parties may also be involved in preparing answers to

interrogatories and responses to requests for admission.

3. The extent to which a schedule for all discovery can be established at the initial conference

will depend on the circumstances of the litigation. In some complex cases it may be feasible to

establish a timetable only for certain portions of discovery, leaving for subsequent conferences

the setting of a schedule for other discovery and a final cutoff date for all discovery. In other

cases, a comprehensive discovery schedule—which may even include dates for preparation and

submission of a joint statement of contested and uncontested facts, and for identification of trial

witnesses and documents—can be established at the initial conference.

4. Other restrictions on discovery may be added.
§ 40.25 Manual for Complex Litigation, Fourth

746

40.25 Preservation of Documents, Data, and Tangible Things

[Caption]

Interim Order Regarding Preservation

[The primary purpose of this order is to have the parties meet and confer to develop

their own preservation plan. If the court determines that such a conference is unnecessary or undesirable, paragraph 3, Duty to Preserve, may be modified to serve as a

stand-alone preservation order.]

1. Order to Meet and Confer

To further the just, speedy, and economical management of discovery, the parties

are ORDERED to meet and confer as soon as practicable, no later than 30 days after

the date of this order, to develop a plan for the preservation of documents, data, and

tangible things reasonably anticipated to be subject to discovery in this action. The

parties may conduct this conference as part of the Rule 26(f) conference if it is scheduled to take place within 30 days of the date of this order. The resulting preservation

plan may be submitted to this Court as a proposed order under Rule 16(e).

2. Subjects for Consideration

The parties should attempt to reach agreement on all issues regarding the preservation of documents, data, and tangible things. These issues include, but are not necessarily limited to:

(a) the extent of the preservation obligation, identifying the types of material to

be preserved, the subject matter, time frame, the authors and addressees, and

key words to be used in identifying responsive materials;

(b) the identification of persons responsible for carrying out preservation obligations on behalf of each party;

(c) the form and method of providing notice of the duty to preserve to persons

identified as custodians of documents, data, and tangible things;

(d) mechanisms for monitoring, certifying, or auditing custodian compliance

with preservation obligations;

(e) whether preservation will require suspending or modifying any routine business processes or procedures, with special attention to documentmanagement programs and the recycling of computer data storage media;

(f) the methods to preserve any volatile but potentially discoverable material,

such as voicemail, active data in databases, or electronic messages;

(g) the anticipated costs of preservation and ways to reduce or share these costs;

and
Sample Orders § 40.25

747

(h) a mechanism to review and modify the preservation obligation as discovery

proceeds, eliminating or adding particular categories of documents, data, and

tangible things.

3. Duty to Preserve

(a) Until the parties reach agreement on a preservation plan, all parties and their

counsel are reminded of their duty to preserve evidence that may be relevant

to this action. The duty extends to documents, data, and tangible things in the

possession, custody and control of the parties to this action, and any employees, agents, contractors, carriers, bailees, or other nonparties who possess

materials reasonably anticipated to be subject to discovery in this action.

Counsel is under an obligation to exercise reasonable efforts to identify and

notify such nonparties, including employees of corporate or institutional

parties.

(b) “Documents, data, and tangible things” is to be interpreted broadly to include

writings; records; files; correspondence; reports; memoranda; calendars; diaries; minutes; electronic messages; voicemail; E-mail; telephone message records or logs; computer and network activity logs; hard drives; backup data;

removable computer storage media such as tapes, disks, and cards; printouts;

document image files; Web pages; databases; spreadsheets; software; books;

ledgers; journals; orders; invoices; bills; vouchers; checks; statements; worksheets; summaries; compilations; computations; charts; diagrams; graphic

presentations; drawings; films; charts; digital or chemical process photographs; video, phonographic, tape, or digital recordings or transcripts thereof;

drafts; jottings; and notes. Information that serves to identify, locate, or link

such material, such as file inventories, file folders, indices, and metadata, is

also included in this definition.

(c) “Preservation” is to be interpreted broadly to accomplish the goal of maintaining the integrity of all documents, data, and tangible things reasonably

anticipated to be subject to discovery under Fed. R. Civ. P. 26, 45, and 56(e)

in this action. Preservation includes taking reasonable steps to prevent the

partial or full destruction, alteration, testing, deletion, shredding, incineration, wiping, relocation, migration, theft, or mutation of such material, as

well as negligent or intentional handling that would make material incomplete or inaccessible.

(d) If the business practices of any party involve the routine destruction, recycling, relocation, or mutation of such materials, the party must, to the extent

practicable for the pendency of this order, either

(1) halt such business processes;

(2) sequester or remove such material from the business process; or

(3) arrange for the preservation of complete and accurate duplicates or copies of such material, suitable for later discovery if requested.
§ 40.25 Manual for Complex Litigation, Fourth

748

(e) Before the conference to develop a preservation plan, a party may apply to the

court for further instructions regarding the duty to preserve specific categories of documents, data, or tangible things. A party may seek permission to

resume routine business processes relating to the storage or destruction of

specific categories of documents, data, or tangible things, upon a showing of

undue cost, burden, or overbreadth.

4. Procedure in the Event No Agreement Is Reached

If, after conferring to develop a preservation plan, counsel do not reach agreement on

the subjects listed under paragraph 2 of this order or on other material aspects of preservation, the parties are to submit to the court within three days of the conference a

statement of the unresolved issues together with each party’s proposal for their resolution of the issues. In framing an order regarding the preservation of documents, data,

and tangible things, the court will consider those statements as well as any statements

made in any applications under paragraph 3(e) of this order.

Entered this day of , 20 

 United States District Court Judge
Sample Orders § 40.261

749

40.26 Document Depositories

.261 Order to Meet and Confer to Establish Joint Document Depository 749

.262 Order to Establish Separate Document Depositories 751

40.261 Order to Meet and Confer to Establish Joint Document

Depository

[Caption]

It is ORDERED:1

1. Defendants, in consultation with plaintiffs, shall establish and maintain a document depository program (a “depository”) in a manner to be agreed on by the

parties and/or ordered by the Court. The parties will propose to the court a formula for sharing the cost of maintaining the facility. The depository shall store all

materials produced by parties and third-parties in this proceeding that may be

needed for more than a single case, including documents, interrogatories, requests

for admission, requests for production of documents, deposition transcripts, and

similar materials. These materials shall be made available to any litigants in any

case in the above-captioned litigation [and to any litigants in any related state

court litigation].

2. Counsel must agree on computer hardware and software systems for scanning,

viewing, downloading, and printing documents from remote locations. The parties must agree about allocating fees to operate the depository. The document depository must not be operated as a profit center. Each attorney/party seeking access to the depository must sign the agreement regarding rules of usage, protection

of confidential documents, and payment of fees.

3. A party fully satisfies its obligation to produce documents to the parties in all cases

in this litigation by placing those documents in the depository and serving notice

of this placement on counsel in all affected cases. Such notice shall identify the

documents produced, using a unique alphanumeric identifier, and notice shall be

produced as documents are kept in the usual course of business or documents

shall be organized and labeled to correspond with the categories in the request set

forth in Fed. R. Civ. P. 34(b). This provision may be revised based on the parties’

submissions pursuant to paragraph 4 below.

4. Within days of this order, plaintiffs’ lead counsel (or a designated representative) shall meet with defendants’ lead counsel (or a designated representative) to

confer about the creation, financing, design, and operation of the depository and

shall endeavor to present to the court a stipulation outlining a protocol for the depository, as well as the organization, categorization, and/or indexing of the defendants’ responses to plaintiffs’ document requests. The parties shall present to the
§ 40.261 Manual for Complex Litigation, Fourth

750

court by [date] a proposed stipulation regarding the depository protocol

and, if necessary, a statement of any matters on which they disagree. In developing

this protocol, the parties shall consider potential protocols that would efficiently

use technologies (such as CD-ROM or Internet-based production) and that would

facilitate the parties’ prompt and effective access to the contents of the depository

and reduce parties’ need to travel to examine documents. Any technology used

must permit a hard copy of the document to be produced by the recipient.

5. Each party shall be responsible for delivering to the depository any documents

produced in this proceeding pursuant to Fed. R. Civ. P. 45. The party noticing a

deposition shall be responsible for delivering to the depository any transcription

(including videotape) of any deposition taken in any of the consolidated cases.

The party serving any objection, answer, or response to an interrogatory, Rule 34

request, or request for admission in any of the consolidated cases shall be responsible for delivering a copy to the depository.

6. Plaintiffs’ liaison counsel (or a designated representative) shall be responsible for

monitoring the content of the depository and shall provide periodic notification

to all plaintiffs’ counsel of the addition of materials to the depository, with a basic

description of the newly added materials.

7. Parties to the litigation may establish at their own expense private document depositories at other locations and make arrangements for obtaining documents for

inclusion in those depositories as they see fit. The depository established pursuant

to this order, however, shall be the official document depository for all consolidated cases.

Notes:

1. This order is derived primarily from an order issued in In re Bridgestone/Firestone, Inc.

ATX, ATX II, & Wilderness Tires Products Liability Litigation, MDL No. 1373 (S.D. Ind. Jan.

2001). Paragraph 2 is derived from an order issued in In re Serzone Products Liability Litigation,

MDL No. 1477 (S.D. W. Va. Oct. 17, 2002).
Sample Orders § 40.262

751

40.262 Order to Establish Separate Document Depositories

It is ORDERED:

1. Establishment of Depositories.1 Document depositories shall be established in

 [specify city] at such locations as the parties may agree on. In the absence

of agreement, the court upon motion shall designate such locations. Documents

produced by plaintiffs pursuant to formal or informal request shall be placed in a

plaintiff’s depository maintained at the expense of plaintiffs; those produced by

defendants pursuant to formal or informal request shall be placed in a defendant’s

depository maintained at the expense of defendants. Each depository will contain

equipment for producing copies and separately counting the copies that are made

for each party.

2. Filing System. The filing party shall place the documents in the depository in sequential order according to the document numbers, and the documents shall be

organized in groups in accordance with the document identification prefixes.

Documents without identification numbers shall be organized in an orderly and

logical fashion. Existing English translations of all foreign-language documents

shall be filed with the documents.2

3. Access, Copying, Log. Counsel appearing for any party in this litigation and the

staffs of their respective law firms working on these cases shall have reasonable access during business hours to each document in any such depository and may

copy or obtain copies at the inspecting party’s expense. Such inspection shall not

be subject to monitoring by any party. A log will be kept of all persons who enter

and leave the depository, and only duplicate copies of documents may be removed

from the depository except by leave of court. [Access to, and copying of, confidential documents is subject to the limitations and requirements of the order

protecting against unauthorized disclosure of such documents.]

4. Subsequent Filings. After the initial deposit of documents in the depository, notice

of all subsequent deposits shall be given to both liaison counsel.

Dated: 

United States District Judge

Notes:

1. This order contemplates creation of separate depositories for each side of the litigation.

Consider whether the needs of the parties for separate facilities can also be accomplished

through electronic means within a single facility. See order at supra section 40.261.

2. Provision may be made for use of the most appropriate technology for storage, retrieval,

and distribution of the documents, including electronic materials. See supra section 11.444.
§ 40.27 Manual for Complex Litigation, Fourth

752

40.27 Confidentiality Order

It is hereby ordered that the following provisions shall govern claims of confidentiality in these proceedings:

(a) Review of the confidential documents and information by counsel, experts, or

consultants for the litigants in the litigation shall not waive the confidentiality

of the documents or objections to production.

(b) The inadvertent, unintentional, or in camera disclosure of a confidential

document and information shall not generally be deemed a waiver, in whole

or in part, of any party’s claims of confidentiality.

(c) Only documents containing trade secrets, special formulas, company security

matters, customer lists, financial data, projected sales data, production data,

matters relating to mergers and acquisitions, and data which touch upon the

topic of price may be designated confidential, provided such documents have

not previously been disclosed by the producing party to anyone except those

in its employment or those retained by it. Such documents or parts thereof

will be designated after review by an attorney for the producing party by

stamping the word confidential on each page. [Alternative for an MDL relating to product liability litigation: Discovery material containing trade secrets,

or other confidential or proprietary research, development, manufacturing,

or commercial or business information, may be designated as confidential.

Without prejudice to a party’s right to seek production of the following information or of a party to object to its production, the information subject to

a confidentiality designation may include the following: customer names;

proprietary licensing, distribution, marketing, design, development, research,

and manufacturing information—not publicly filed with any federal or state

regulatory authority—regarding products and medicines, whether currently

marketed or under development; clinical studies not publicly filed with any

federal or state regulatory authority; information concerning competitors;

production information; personnel records and information; and financial

information not publicly filed with any federal or state regulatory authority.]

(d) If any party believes a document not described in the above paragraph should

nevertheless be considered confidential, it may make application to the court

or special master. Such application shall only be granted for reasons shown

and for extraordinary grounds.

(e) Documents designated confidential shall be shown only to the attorneys, the

parties, parties’ experts, actual or proposed witnesses, and other persons

whom the attorneys deem necessary to review the documents for the prosecution or defense of this lawsuit. Each person who is permitted to see confidential documents shall first be shown a copy of this order and shall further

be advised of the obligation to honor the confidentiality designation. The

parties agree that any discovery material produced in this litigation may be

used in all actions encompassed by this [insert product or other litigation
Sample Orders § 40.27

753

name] [MDL/class action] litigation and in any other action brought by or

on behalf of any other [insert product name] user who agrees to be

bound by the terms of this order.

(f) If a party believes that a document designated or sought to be designated

confidential by the producing party does not warrant such designation, the

party shall first make a good-faith effort to resolve such a dispute with opposing counsel. In the event that such a dispute cannot be resolved by the

parties, either party may apply to the court or special master for a determination as to whether the designation is appropriate. The burden rests on the

party seeking confidentiality to demonstrate that such designation is proper.

(g) At the time of deposition or within 10 days after receipt of the deposition

transcript, a party may designate as confidential specific portions of the transcript which contain confidential matters under the standards set forth in

paragraph (a) above. This designation shall be in writing and served upon all

counsel. No objection shall be interposed at deposition that an answer would

elicit confidential information. Transcripts will be treated as confidential for

this 10-day period. Any portions of a transcript designated confidential shall

thereafter be treated as confidential in accordance with this order. In filing

materials with the court in pretrial proceedings, counsel shall file under seal

only those specific documents and that deposition testimony designated confidential, and only those specific portions of briefs, applications, and other

filings that contain verbatim confidential data, or that set forth the substance

of such confidential information.

(h) In any application to the court or special master referred to or permitted by

this order, the court or special master may exercise discretion in determining

whether the prevailing party in such a dispute may recover the costs incurred

by it and, if so, the amount to be awarded.

Dated: 

United States District Judge
§ 40.28 Manual for Complex Litigation, Fourth

754

40.28 Referral of Privilege Claims to Special Master

It appearing that submission of claims of privilege to a special master1 appointed

under Fed. R. Civ. P. 53 is warranted by the expected volume of such claims and by the

likelihood that in camera inspection may be needed to rule on these claims and should

be accomplished, to the extent possible, by someone other than the judge to whom this

litigation has been assigned, the court hereby [“with the consent of the parties” or

“having notified the parties and provided an opportunity to be heard”] ORDERS:

1. Appointment. is appointed under

Rule 53 as special master for the purpose of considering all claims of privilege (including claims of protection against disclosure for trial preparation materials) that

may be asserted during the course of discovery in this litigation and for such other

matters as may be referred to such special master by the court, such as resolution

of disputes under the Confidentiality Order.

2. Procedures. The special master shall have the rights, powers, and duties provided

in Rule 53 and may adopt such procedures as are not inconsistent with that rule or

with this or other orders of the court. Until directed otherwise by the special master or the court, any person asserting a privilege shall create a privilege log that will

specifically identify the document or other communication sought to be protected

from disclosure, including the date, the person making the statement, the persons

to whom or in whose presence the statement was made, other persons to whom

the contents were or have been revealed, the general subject matter of the communication (unless itself claimed to be privileged), the particular privilege(s) or

doctrine(s) upon which protection against disclosure is based, and any other circumstances affecting the existence, extent, or waiver of the privilege. When appropriate, the special master may require that this documentation of claims of

privilege be verified.

3. Reports. The special master shall make findings of fact and conclusions of law with

respect to the matters presented by the parties and shall report expeditiously to the

court pursuant to Rule 53(f) as applicable in nonjury actions. Unless directed by

the court or believed advisable by the special master, the report shall not be accompanied by a transcript of the proceedings, the evidence, or the exhibits. Such

parts of the report, if any, that may be confidential shall be filed under seal pending further order of the court.

4. Fees and Expenses. Compensation, at rates mutually agreeable to the special master

and the parties, shall be paid to the special master on a periodic basis by the parties, together with reimbursement for reasonable expenses incurred by the special

master. The special master may employ other persons to provide clerical and secretarial assistance; such persons shall be under the supervision and control of the

special master, who shall take appropriate action to ensure that such persons preserve the confidentiality of matters submitted to the special master for review. Fi-
Sample Orders § 40.28

755

nal allocation of these amounts shall be subject to taxation as costs at the conclusion of the case at the discretion of the court.2

5. Distribution. A copy of this order shall be mailed by the clerk to the special master

and to liaison counsel for the parties.

Dated: 

United States District Judge

Notes:

1. See supra section 11.52.

2. The order may provide the specific compensation payable to the special master and specify the reimbursable expenses.
§ 40.29 Manual for Complex Litigation, Fourth

756

40.29 Deposition Guidelines

It is ORDERED1 that depositions be conducted in accordance with the following rules:

1. Cooperation. Counsel are expected to cooperate with, and be courteous to, each

other and deponents.

2. Stipulations. Unless contrary to an order of the court, the parties (and when appropriate, a nonparty witness) may stipulate in any suitable writing to alter,

amend, or modify any practice relating to noticing, conducting, or filing a deposition. Stipulations for the extension of discovery cutoffs set by the court are not

valid, however, until approved by the court.

3. Scheduling. All depositions in this litigation may be cross-noticed in any related

action pending in state court. Liaison counsel representing the side initiating a

deposition shall provide to all known state liaison counsel at least days notice

of all depositions filed by plaintiffs and defendants, respectively. Absent extraordinary circumstances, counsel shall consult in advance with opposing counsel and

unrepresented-proposed deponents in an effort to schedule depositions at mutually convenient times and places. [That some counsel may be unavailable shall not,

however, in view of the number of attorneys involved in this litigation, be grounds

for deferring or postponing a deposition if another attorney from the same firm or

who represents a party with similar interests is able to attend.]

Scheduling should take into account (a) the availability of documents from

among those produced by the parties and third parties, (b) the objective of

avoiding the need to subject any person to repeated depositions, and (c) the need

to preserve relevant testimony. As a general rule, no witness should be deposed on

the same subject more than once in this litigation. A party seeking to take a second

deposition of a witness shall provide the opposing party its basis for an exception

and a listing of the subjects for which it seeks to depose the witness. Second depositions on new subject matter shall be permitted only upon consent of the parties

or an order of this Court issued for good cause shown.

4. Location. The location of depositions should be as consistent as possible within

each city so that any videotape, videoconferencing, or other equipment can be left

in place.

5. Attendance

(a) Who May Be Present. Unless otherwise ordered under Fed. R. Civ. P. 26(c),

depositions may be attended by counsel of record, members and employees of

their firms, attorneys specially engaged by a party for purposes of the deposition, the parties or the representative of a party, counsel for the deponent, and

potential witnesses. While a deponent is being examined about any stamped

confidential document or the confidential information contained therein,

persons to whom disclosure is not authorized under the Confidentiality Order shall be excluded.
Sample Orders § 40.29

757

(b) Unnecessary Attendance. Unnecessary attendance by counsel is discouraged

and may not be compensated in any fee application to the court. Counsel who

have only marginal interest in a proposed deposition or who expect their interests to be adequately represented by other counsel may elect not to attend

and to conduct, pursuant to paragraph 13 of this order, supplemental interrogation of the deponent should a review of the deposition reveal the need for

such examination.

(c) Notice of Intent to Attend a Deposition. To allow counsel to make arrangements for adequate deposition space, counsel who intend to attend a deposition noticed in the above-captioned litigation should advise counsel for the

noticing party at least three days prior to the deposition, if feasible.

6. Conduct

(a) Examination. Each side should ordinarily designate one attorney to conduct

the principal examination of the deponent, and examination by other attorneys should be limited to matters not previously covered. Counsel should cooperate so examinations by multiple attorneys do not exceed the allotted

time.

(b) Transmittal of Copies. The attorney who conducts the principal examination

for the noticing party is responsible for assuring that a copy of the deposition

transcript, diskettes, and any videotapes are provided to the document depository and to liaison counsel.

(c) Objections and Directions Not to Answer. Counsel shall comply with Fed. R.

Civ. P. 30(d)(1). When a privilege is claimed, the witness should nevertheless

answer questions relevant to the existence, extent, or waiver of the privilege,

such as the date of a communication, who made the statement, to whom and

in whose presence the statement was made, other persons to whom the contents of the statement have been disclosed, and the general subject matter of

the statement, unless such information is itself privileged.

Any objection made at a deposition shall be deemed to have been made on behalf of all other parties. All objections, except those relating to form and foundation, are preserved.

(d) Private Consultation. Private conferences between deponents and their attorneys in the course of interrogation are improper except for the purpose of

determining whether a privilege should be asserted. Unless prohibited by the

court for good cause shown, such conferences may be held during normal recesses and adjournments.

(e) Continuation of Deposition. If a deposition is not finished on Friday of a

deposition week, it will continue on the following Monday, subject to the

availability of the witness. If the witness is unavailable, it will resume on a

newly noticed date.

7. Documents

(a) Production of Documents. Witnesses subpoenaed to produce documents

should ordinarily be served at least 30 days before the scheduled deposition.
§ 40.29 Manual for Complex Litigation, Fourth

758

Arrangements should be made to permit inspection of the documents before

the interrogation commences.

(b) Confidentiality Order. A copy of the confidentiality order shall be provided to

the deponent before the deposition commences if the deponent is to produce

or may be asked about documents that may contain confidential information.

[Counsel shall comply with the provisions of the confidentiality order when

examining a deponent about confidential information.]

(c) Copies. Extra copies of documents about which counsel expect to examine the

deponent should ordinarily be provided to opposing counsel and the deponent. Deponents should be shown a document before being examined about

it except when counsel seek to impeach or test the deponent’s recollection.

(d) Marking of Deposition Exhibits. Documents shall be referred to by the unique

alpha-numeric identifier assigned by the document depository.

8. Depositions of Witnesses Who Have No Knowledge of the Facts. An officer, director,

or managing agent of a corporation or a government official served with a notice

of a deposition or subpoena regarding a matter about which such person has no

knowledge may submit to the noticing party, a reasonable time before the date

noticed, an affidavit so stating and identifying a person within the corporation or

government entity believed to have such knowledge. Notwithstanding such affidavit, the noticing party may proceed with the deposition, subject to the right of the

witness to seek a protective order.

9. Recording Depositions by Nonstenographic Means

(a) Tape-Recorded Depositions. By so indicating in its notice of a deposition, a

party may record the deposition by tape recording in lieu of stenographic recording pursuant to Fed. R. Civ. P. 30(b)(2) and (3). Other parties may at

their own expense arrange for stenographic recording of the deposition, may

obtain a copy of the tape and transcript upon payment of a pro rata share of

the noticing party’s actual costs, and may prepare and file their own version

of the transcript of the tape recording.

(b) Videotaped Depositions. By so indicating in its notice of a deposition, a party

may record the deposition by videotape pursuant to Fed. R. Civ. P. 30(b)(2)

and (3).

(1) Rules for Videotaped Reporting

(i) Video Operator. The operator(s) of the videotape recording equipment shall be subject to the provisions of Fed. R. Civ. P. 28(c). At the

commencement of the deposition the operator(s) shall swear or affirm to record the proceedings fairly and accurately.

(ii) Attendance. Each witness, attorney, and other person attending the

deposition shall be identified on camera at the commencement of

the deposition. Thereafter, only the deponent (and demonstrative

materials used during the deposition) will be videotaped.
Sample Orders § 40.29

759

(iii) Standards. The deposition will be conducted in a manner to replicate, to the extent feasible, the presentation of evidence at a trial.

Unless physically incapacitated, the deponent shall be seated at a table or in a witness box except when reviewing or presenting demonstrative materials for which a change in position is needed. To the

extent practicable, the deposition will be conducted in a neutral setting, against a solid background, with only such lighting as is required for accurate video recording. Lighting, camera angle, lens

setting, and field of view will be changed only as necessary to record

accurately the natural body movements of the deponent or to portray exhibits and materials used during the deposition. Sound levels

will be altered only as necessary to record satisfactorily the voices of

counsel and the deponent. Eating and smoking by deponents or

counsel during the deposition will not be permitted.

(iv) Interruptions. [The videotape shall run continuously throughout the

active conduct of the deposition.] [Videotape recording will be suspended during all “off the record” discussions.]2

(v) Index. The videotape operator shall use a counter on the recording

equipment and after completion of the deposition shall prepare a

log, cross-referenced to counter numbers, that identifies the positions on the tape at which examination by different counsel begins

and ends, objections are made and examination resumes at which

exhibits are identified, and any interruption of continuous tape recording occurs, whether for recesses, “off the record” discussions,

mechanical failure, or otherwise.

(vi) Filing. [The operator shall preserve custody of the original videotape

in its original condition until further order of the court.] [Subject to

the provisions of paragraph 10 of this order, the original of the tape

recording, together with the operator’s log index and a certificate of

the operator attesting to the accuracy of the tape, shall be filed with

the clerk.] No part of a videotaped deposition shall be released or

made available to any member of the public unless authorized by the

court.

(vii) Objections. Requests for pretrial rulings on the admissibility of evidence obtained during a videotaped deposition shall be accompanied

by appropriate pages of the written transcript. If needed for an informed ruling, a copy of the videotape and equipment for viewing

the tape shall also be provided to the court.

(viii) Use at Trial; Purged Tapes. A party desiring to offer a videotape

deposition at trial shall be responsible for having available appropriate playback equipment and a trained operator. After the designation

by all parties of the portions of a videotape to be used at trial, an edited copy of the tape, purged of unnecessary portions (and any portions to which objections have been sustained), [may] [shall] be pre-
§ 40.29 Manual for Complex Litigation, Fourth

760

pared by the offering party to facilitate continuous playback; but a

copy of the edited tape shall be made available to other parties at

least days before it is used, and the unedited original of the tape

shall also be available at the trial.

10. Telephonic Depositions. By indicating in its notice of a deposition that it wishes to

conduct the deposition by telephone, a party shall be deemed to have moved for

such an order under Fed. R. Civ. P. 30(b)(7). Unless an objection is filed and

served within days after such notice is received, the court shall be deemed to

have granted the motion. Other parties may examine the deponent telephonically

or in person. However, all persons present with the deponent shall be identified in

the deposition and shall not, by word, sign, or otherwise, coach or suggest answers

to the deponent.

11. Waiver of Transcription and Filing. The parties and deponents are authorized and

encouraged to waive transcription and filing of depositions that prove to be of little or no usefulness in the litigation or to agree to defer transcription and filing

until the need for using the deposition arises.

12. Use. Depositions conducted in this litigation may be used in related cases in any

state court to the extent permitted by that state’s laws and rules. Depositions may,

under the conditions prescribed in Fed. R. Civ. P. 32(a)(1)–(4) or as otherwise

permitted by the Federal Rules of Evidence, be used against any party (including

parties later added and parties in cases subsequently filed in, removed to, or

transferred to this court as part of this litigation):

(a) who was present or represented at the deposition;

(b) who had reasonable notice thereof; or

(c) who, within 30 days after the filing of the deposition (or, if later, within 60

days after becoming a party in this court in any action that is a part of this

litigation), fails to show just cause why such deposition should not be usable

against such party.

13. Supplemental Depositions. Each party not present or represented at a deposition

(including parties later added and parties in cases subsequently filed in, removed

to, or transferred to this court) may, within 30 days after the filing of the deposition (or, if later, within 60 days after becoming a party in this court in any action

that is a part of this litigation), request permission to conduct a supplemental

deposition of the deponent, including the right to take such deposition telephonically and by nonstenographic means. If permitted, the deposition shall be treated

as the resumption of the deposition originally noticed; and each deponent shall, at

the conclusion of the initial deposition, be advised of the opportunity of nonattending parties to request a resumption of such deposition, subject to the right of

the deponent to seek a protective order. Such examination shall not be repetitive

of the prior interrogation.

14. Disputes During Depositions

(a) Disputes between the parties that arise during a deposition should be addressed to this [MDL] court rather than the district court in which the depo-
Sample Orders § 40.29

761

sition is being conducted. The undersigned will exercise by telephone the

authority granted under 28 U.S.C. § 1407(b) to act as district judge in the

district in which the deposition is taken.2

(b) Immediate Presentation. Disputes arising during depositions that cannot be

resolved by agreement and that, if not immediately resolved, will significantly

disrupt the discovery schedule or require a rescheduling of the deposition,

should be presented by telephone to the court. If the judge is not available

during the period while the deposition is being conducted, the dispute may be

submitted to Magistrate Judge by

telephone or as the judge may direct.3 The presentation of the issue and the

court’s ruling will be recorded as part of the deposition.4

Dated: 

United States District Judge

Notes:

1. See supra section 11.45.

2. The power to exercise authority over nonparty deponents outside the district is available

only in multidistrict litigation, unless the judge has been given an intracircuit or intercircuit

assignment.

3. See supra section 11.456.

4. If a simultaneous stenographic transcript is being made, the court may prefer that “off the

record” discussions be eliminated from the videotape.
§ 40.3 Manual for Complex Litigation, Fourth

762

40.3 Order Creating a Web Site

Order No. 

[Lead and Liaison Counsel for Plaintiffs and Defendants are directed to meet and

confer for the purpose of establishing] [The Court will create and maintain] a Web site

devoted solely to the [insert MDL name or caption] litigation. The site will contain

sections through which the parties, counsel, and the public may access court orders,

court opinions, court minutes, court calendars, frequently asked questions, court

transcripts, court docket, current developments, information about plaintiffs’ and defendants’ lead and liaison counsel, and other information to be identified by the parties

or the court and its staff.

Plaintiffs’ and defendants’ lead and liaison counsel should meet and confer to identify other information that might be included on the Web site, including

• documents stored in a document depository, or electronic links to such

documents;

• notices and schedules of depositions and other discovery requests;

• announcements relating to proceedings and events in this litigation;

• listings of related cases in the state courts and information about how to

contact judges and attorneys involved in such cases;

• documents, orders, or opinions in related cases that are of significant importance in this litigation; and

• any other materials the parties find to be important to facilitating the fair and

efficient conduct of this litigation.

Counsel need to ensure that the Web site is compatible with the Case Management/Electronic Case Filing (CM/ECF) system in place [or to be developed] in this

court. The Web site should contain appropriate linkages to information available

through the CM/ECF system.

Counsel may recommend, by motion, that a portion of the Web site be accessible

only to counsel for plaintiffs, counsel for defendants, or both. Any limitations, however, should be restricted to (1) matters that represent the work product of attorneys

for plaintiffs or defendants and are not otherwise available to other persons, and

(2) matters that are confidential under a protective order issued by this court. The

Web site should be established so that it is compatible with most communications

software, with a view toward making it publicly available.

Counsel are expected to use computers to prepare documents sent to the clerk or

to the judge’s chambers and to provide electronic versions of all documents.

Dated: 

United States District Judge
Sample Orders § 40.41

763

40.4 Class Actions Orders

.41 Order Certifying Class 763

.42 Order Setting Hearing on Proposed Class Settlement 765

.43 Combined Certification and Proposed Settlement Order 766

.44 Order Approving Settlement/Claims Procedure 768

Note: These class action forms have been adapted from antitrust litigation for illustrative purposes and may be adapted for other litigation by appropriate changes.

40.41 Order Certifying Class

[caption]

Order No. 

In accordance with the findings and conclusions contained in the Opinion [omitted] filed concurrently with this order, it is, ORDERED:

1. Class Certification. Civil Action No. , styled 

 shall be maintained as a class action on

behalf of the following class of plaintiffs:

[Describe class in objective terms to the extent possible. For example, “All persons and entities throughout the United States and its

territories (other than widget manufacturers and entities owned or

controlled by them) that, since [date] , have purchased widgets directly from any of the defendants or from any other widget

manufacturer.”]

with respect to the following cause(s) of action:

[Describe class claims as precisely as possible. For example, “Any

claims for damages or injunctive relief under federal antitrust laws

premised upon an alleged conspiracy among the defendants and

other widget manufacturers to restrict competition in the manufacture, distribution, and sale of widgets by setting the minimum prices

charged for widgets after [date] .”]

2. Class Representative; Class Counsel. Subject to further order of the court, [A.B.

Co.] is designated as class representative and [X.Y.] is designated as counsel for

the class.

3. Notice.1

(a) Class counsel shall by [date] , cause to be

mailed in the name of the clerk by first class mail, postage prepaid, to all class

members who can be identified through reasonable efforts, a notice written in
§ 40.41 Manual for Complex Litigation, Fourth

764

plain language and approved by the court. For illustrative examples of the

form of such notices, see the Federal Judicial Center’s Web site (www.fjc.gov)

and go to the “Class Action Notices” page. In addition to class members

identified through an examination of defendants’ records, this notice will also

be mailed to persons who are members of [National Widget Dealers Trade

Association].

(b) Class counsel shall cause to be published in the 

by [date] , a notice in substantially the same style and format as the

illustrative summary notices posted on the “Class Action Notices” page of the

Federal Judicial Center’s Web site (www.fjc.gov).

4. Exclusion. The notice to class members must inform them as to how they may

exclude themselves from the class.

5. List of Class Members. Class counsel will file with the clerk by [date] , an

affidavit identifying the persons to whom notice has been mailed and who have

not timely requested exclusion.

Dated: 

United States District Judge

Note:

1. See supra section 21.311.
Sample Orders § 40.42

765

40.42 Order Setting Hearing on Proposed Class Settlement

[caption]

Order No. 

The court having preliminarily reviewed the proposed settlement of this action, it is

ORDERED:

1. Proposed Settlement. The proposed settlement between the plaintiff class and the

defendants appears to be within the range of reasonableness and accordingly shall

be submitted to the class members for their consideration and for a hearing under

Fed. R. Civ. P. 23(e).

2. Hearing. A hearing shall be held in Courtroom , United States Courthouse,

 [address] , at a.m./p.m., on [date] , to consider whether

the settlement is fair, reasonable, and adequate and should receive the court’s final

approval.

(a) Objections by class members to the proposed settlement will be considered if

filed in writing with the clerk on or before [date] .

(b) At the hearing, class members may be heard orally in support of or in opposition to the settlement, provided such persons file with the clerk by [date] ,

a written notification of their desire to appear personally, indicating (if in opposition to the settlement) briefly the nature of the objection.

(c) Counsel for the class and for the defendants should be prepared at the hearing

to respond to objections filed by class members and to provide other information, as appropriate, bearing on whether or not the settlement should be

approved.

3. Notice. The parties to the proposed settlement shall by [date] , cause to

be mailed in the name of the clerk, by first class mail, postage prepaid, to members

of the class [who did not timely elect to be excluded from litigation] a notice in

plain language and in substantially the form of the Federal Judicial Center’s Illustrative Notices, which can be found on the Class Action Notices page of the Center’s Web site (www.fjc.gov). [Notice of the proposed settlement (and of the rights

of class members to object to or opt out of the proposed settlement) shall also be

given by publication in a summary form as illustrated on the Class Action Notices

page of the Center’s Web site.

The notice should include information about attorney fees sought by attorneys

for the class.1

Dated: 

United States District Judge

Note:

1. See Fed. R. Civ. P. 23(h)(1).
§ 40.43 Manual for Complex Litigation, Fourth

766

40.43 Combined Certification and Proposed Settlement

Order

 [caption]

Order No. 

In accordance with the findings and conclusions contained in the Opinion [omitted] filed concurrently, it is ORDERED:

1. Class Certification.1 Civil Action No. , styled 

 , shall be maintained as a class action on

behalf of the following class of plaintiffs:

[Describe class in objective terms to the extent possible. For example,

“All persons and entities throughout the United States and its territories

(other than [widget] manufacturers and entities owned or controlled by

them) that, between [date] , and [date] , have purchased [widgets] directly from any of the defendants or any other [widget] manufacturer.”]

with respect to the following cause(s) of action:

[Describe class claims as precisely as possible. For example, “Any claims

for damages or injunctive relief under federal antitrust laws premised

upon an alleged conspiracy among [widget] manufacturers to restrict

competition in the manufacture, distribution, and sale of [widgets] by

setting the minimum prices charged for [widgets] between [date] ,

and [date] .”]

2. Class Representative; Class Counsel. [A.B. Co.] is designated as class representative

and [X.Y.] is designated as counsel for the class.

3. Exclusion. The notice to class members must inform them as to how they may

exclude themselves from the class.

4. Proposed Settlement. The proposed settlement between the plaintiff class and the

defendants appears, upon preliminary review, to be within the range of reasonableness and accordingly shall be submitted to the class members for their consideration and for a hearing under Federal Rule of Civil Procedure 23(e). The terms

of the settlement are as follows:

 [describe terms in clear, nontechnical manner] 

 

 .

5. Hearing. A hearing shall be held in Courtroom , United States Courthouse

 , at a.m./p.m., on [date] , to consider

whether the settlement should be given final approval.
Sample Orders § 40.43

767

(a) Objections by class members (who do not timely elect to exclude themselves

from the class) to the proposed settlement should be considered if filed in

writing with the clerk on or before [date] .

(b) At the hearing, class members (who do not timely elect to exclude themselves

from the class) may be heard orally in support of or in opposition to the settlement, provided such persons file with the clerk by [date] , a

written notification of the desire to appear personally, indicating (if in opposition to the settlement) briefly the nature of the objection.

(c) Counsel for the class and for the defendants should be prepared at the hearing

to respond to objections filed by such class members and to provide other

information, as appropriate, bearing on whether or not the settlement should

be approved.

6. Notice

(a) Class counsel shall by [date] , cause to be mailed in the name of the

clerk by first class mail, postage prepaid, to all class members who can be

identified through reasonable efforts, a notice written in plain language and

approved by the court. For illustrative examples of the form of such notices,

see the Federal Judicial Center’s Web site (www.fjc.gov) and go to the Class

Action Notices page. A copy of a full notice combining certification and a

proposed settlement and using asbestos litigation as an example (as it appeared on May 5, 2003) is reproduced as Attachment A.

In addition to class members identified through an examination of defendants’ records, this notice will also be mailed to persons who are members of

[National Widget Dealers Trade Association].

(b) Class counsel shall cause to be published in the [publication] by

 [date] , a notice in substantially the same style and format as the illustrative summary notices posted on the Class Action Notices page of the Federal Judicial Center’s Web site (www.fjc.gov). A copy of a summary publication notice using asbestos litigation as an example (as it appeared on May 5,

2003) is reproduced as Attachment B.

7. List of Class Members. Class counsel will file with the clerk by [date] , an affidavit identifying the persons to whom notice has been mailed and who have not

timely requested exclusion.

Dated: 

United States District Judge

Attachments A & B: [See full asbestos notice and publication notice on the FJC Web

page (www.fjc.gov).]

Notes:

1. When the parties propose a settlement before a class has been certified, the court should

ordinarily determine whether the proposed class satisfies the requirements of Federal Rules of

Civil Procedure 23(a) and (b) before directing notice to be sent to the class. See supra section

21.632.
§ 40.44 Manual for Complex Litigation, Fourth

768

40.44 Order Approving Settlement/Claims Procedure

[caption]

Order No. ___________

In accordance with the findings and conclusions contained in the Opinion [omitted] filed concurrently, it is ORDERED:

1. Approval of Settlement. The settlement is, after hearing, determined to be fair,

reasonable, and adequate. It is, therefore, approved.

2. Award of Fees and Expenses. In accordance with the findings and conclusions contained in the Opinion [omitted], [X.Y.] is awarded $ as compensation and

$ as reimbursement for expenses, to be paid [from the settlement fund] [by

the defendants].1 [Application for an award from the settlement fund of additional fees and expenses in connection with further proceedings, including administration and distribution of the settlement fund, may be made to the court.]

3. Administration and Distribution of Settlement Fund

(a) Investment. [After payment of counsel fees and expenses as awarded by the

court,] the settlement fund shall, pending distribution to class members, be

held in interest-bearing investments to be approved by the court from time to

time.

(b) Allocation. The [net] settlement fund shall be allocated among the class members in proportion to their “qualified purchase,” which means the net price

(after discounts and allowances) paid by them to [widget] manufacturers for

[widgets] from [date] , to [date] .

(c) Claims; proof of purchases. Unless extended by the court (or the special master) class members shall have until [date] , to submit claims detailing,

with appropriate supporting proof, their “qualified purchases.”

(d) Special master.2 is appointed as

special master under Fed. R. Civ. P. 53 to review, tabulate, and (as appropriate) audit claims made by class members. The special master shall establish

procedures to resolve disputes regarding eligibility of persons to be members

of the class and regarding the amount of “qualified purchases” by such persons. The findings and conclusions of the special master identifying the class

members, their respective “qualified purchases,” and their allocable shares of

the settlement fund shall be reported to the court under Fed. R. Civ. P. 53(f)

as soon as is practicable. Compensation and expenses of the special master

will be paid from the settlement fund in such amount as the court may determine to be fair and reasonable.

(e) Distribution. The net settlement fund, with interest, shall be distributed to

class members as soon as practicable after the amount to which each member
Sample Orders § 40.44

769

is entitled has been determined. Any funds remaining after distribution has

been completed may be distributed as the court directs.

4. Notice. Class counsel shall by [date] , cause to be mailed in the name of

the clerk by first class mail, postage prepaid, to members of the class [who did not

timely elect to be excluded from litigation] a notice in plain language and in substantially the form of the Federal Judicial Center’s Illustrative Notices, which can

be found on the Class Action Notices page of the Center’s Web site (www.fjc.gov).

[Notice of the proposed settlement (and of the rights of class members to object to

or opt out of the proposed settlement) shall also be given by publication in a

summary form as illustrated on the Class Action Notices page of the Center’s Web

site.

The notice should include information about attorney fees sought by attorneys

for the class.

5. Reserved Jurisdiction of Court. The court retains jurisdiction over the settlement of

this case and may enter additional orders to effectuate the fair and orderly administration of the settlement as may from time to time be appropriate, including

the determination of persons to whom payment should be made in the event of

death or dissolution and the right to set aside a portion of the net settlement fund

not exceeding [$ ] [ % of the net fund] as a reserve for late

claims and other contingencies and to determine the appropriate disposition of

any portion of the reserve not distributed to the class members.

Dated: 

United States District Judge

Notes:

1. This assumes that an application for attorneys’ fees was heard concurrently with the

hearing on approval of the settlement. A joint hearing is recommended as an efficient and economical way to satisfy the notice requirement of Fed. R. Civ. P. 23(h)(1).

2. These sample forms contain provisions generally suitable if a special master is appointed

to administer the settlement. In other cases, use of a claims committee or magistrate judge may

be appropriate.
§ 40.51 Manual for Complex Litigation, Fourth

770

40.5 Orders in Special Cases

.51 Coordinating Proceedings in Different Courts 770

.52 Mass Tort Case-Management Order 773

.53 CERCLA Case-Management Order 779

.54 Civil RICO Case-Statement Order 783

40.51 Coordinating Proceedings in Different Courts

[caption]

Order No. 

It appearing that [the above-styled cases] [the cases listed on Attachment ]

share common issues with, and will involve common discovery with, certain cases

pending in [list other court(s)] (the “related actions”),

and that pretrial proceedings in all these cases should be coordinated to avoid unnecessary conflicts and expense, conserve judicial resources, and expedite the disposition

of all the cases, this court, after having consulted with counsel [and being advised that

similar orders will be entered in such other court(s)1], ORDERS:

1. Designated Counsel2

(a) Plaintiffs’ Lead and Liaison Counsel. and

 are designated as plaintiffs’ lead

counsel and plaintiffs’ liaison counsel, respectively, in this court, with the responsibilities prescribed in [Attachment ] [see section 40.21, paragraphs

1 and 2]. They may serve in similar capacities in the related cases if so

authorized or permitted by the courts in which such cases are pending and, in

any event, shall endeavor to coordinate activities in these cases with those in

the related cases.

(b) Defendants’ Liaison Counsel. is designated to

serve as defendants’ liaison counsel with the responsibilities prescribed in

[Attachment ] [see section 40.21, paragraph 4]. Defendants’ liaison

counsel may serve in a similar capacity in the related cases if so authorized or

permitted by such courts and, in any event, shall endeavor to coordinate activities in these cases with those in the related cases.

(c) Compensation. Attorneys designated as lead or liaison counsel by this court

and the other courts shall be entitled to reasonable compensation and reimbursement of expenses for services performed in such capacities, equitably

apportioned among the parties in these and the related cases benefiting from

such services. This court will cooperate with the other courts in making appropriate orders for such compensation and reimbursement if agreement
Sample Orders § 40.51

771

cannot be reached between such counsel and the parties for whom they are

acting.

2. Discovery3

(a) Joint Document Depositories. The document depositories prescribed in [Exhibit ] [see section 40.261] shall be established for the joint use of

parties in these related cases. [Subject to agreement regarding the sharing of

expenses,] counsel in the related cases shall have access to the documents in

such depositories to the same extent as counsel in the cases in this court. Parties will not make new requests for production of documents in these proceedings if such documents have already been produced and are available to

them in the related cases.

(b) Confidential Documents. Counsel in the related cases shall have access to confidential documents produced under the confidentiality order entered in this

court [see, e.g., section 40.27] on the same terms and conditions as counsel in

the cases in this court. Counsel in the cases in this court obtaining access to

documents marked confidential under similar orders entered in other courts

shall be subject to the terms and conditions of such orders.

(c) Depositions. Depositions of persons whose testimony will likely be relevant

both in these cases and in the related cases should ordinarily be cross-noticed

for use in all such cases. [The parties in the cases before this court are directed

to show cause within 60 days why the depositions previously taken in the related cases should not be usable in this court, subject to the right to conduct

supplemental examination on a showing of need.]

3. Consistency of Rulings. To avoid unnecessary conflicts and inconsistencies in the

rulings of this and the other courts on matters such as discovery disputes and

scheduling conflicts,

[Alternate 1—Deferral to Prior Rulings]

This court will adopt a ruling already made on such matters by another court in a

related case unless a different ruling is shown to be mandated by the laws and

rules governing this court or justified by particular circumstances of the cases before this court.

[Alternate 2—Lead Case]

Such disputes will initially be presented in case no. ,

pending in [name of court] , and the ruling made in that

case will be given effect in all [other] cases in this court unless a different ruling is

shown to be [mandated by the laws and rules governing this court or] justified by

particular circumstances of such cases.

[Alternate 3—Joint Special Master]

 is appointed under Fed. R. Civ. P. 53(a)(1)(C) to

serve as Special Master in these cases (and, under similar appointments by the

other courts, in the related cases) (1) to assist the respective courts in preparing

and monitoring schedules and plans for coordinated conduct of discovery and
§ 40.51 Manual for Complex Litigation, Fourth

772

other pretrial proceedings; (2) to recommend to the respective courts appropriate

resolution of discovery disputes, including controversies regarding limitations on

the scope or form of discovery and questions regarding claims of privilege and

confidentiality; and (3) to facilitate proper cooperation and coordination among

counsel.

[Alternate 4—Joint Hearings]

This court will be prepared to conduct consolidated hearings and pretrial conferences with judges of the courts where related cases are pending and to enter joint

rulings (except to the extent differences may be mandated by different laws or

rules governing the courts or justified by special circumstances in the various

cases).

4. Other Litigation. Upon application, these provisions may be ordered applicable to

cases involving the same common issues subsequently filed in other courts.

Dated: 

United States District Judge

Attachments [omitted]

Notes:

1. The terms of coordination between the affected courts should ordinarily be arranged—either by direct consultation between the judges of the courts or indirectly through

counsel—before this type of order is entered, and, if feasible, parallel orders should be entered

by the various courts. See supra sections 20.14, 20.31. References to coordinated proceedings

have also been incorporated in several forms. See, e.g., supra sections 40.29 and 40.3.

2. This form provides for appointment of lead counsel and liaison counsel for plaintiffs, but

only liaison counsel for defendants. In some cases, the same organizational structure will be

appropriate both for plaintiffs and for defendants.

3. Depending on the circumstances, it may be appropriate to condition access to discovery

materials either on a reciprocal obligation or on payment of fair compensation for a share of the

services involved in gathering the information. See section 20.312 for a discussion of mechanisms for allocating compensation among federal and state litigants. For examples of orders

allocating fees among federal and state attorneys based on a coordinated approach, see In re Diet

Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Products Liability Litigation, Pretrial Order

No. 467 (E.D. Pa. Feb. 10, 1999). See also In re Baycol Prods. Liab. Litig., MDL No. 1431, Pretrial

Order No. 25 (D. Minn. June 5, 2002).
Sample Orders § 40.52

773

40.52 Mass Tort Case-Management Order

[caption]

Order No. 

(Standard Procedures)1

It appearing that [the above-styled cases] [cases listed in Attachment ] involve

claims of death, personal injury, economic damages, punitive damages, and other

claims of damage arising as a result of [exposure to] [use of] [ products] [the incident occurring at on [date] ] and that other similar actions

may be filed in or transferred to this court in the future, the court ORDERS:

1. Filing of Order. A copy of this order shall be filed in each such case. In cases subsequently filed, a copy will be provided by the clerk to each plaintiff at the time of

the filing of the complaint and will be served with the complaint on any defendant

not previously a party in these cases. [In cases subsequently removed or transferred to this court, a copy will be provided by the clerk to each new party upon

removal or transfer.]

2. Pretrial Consolidation. All cases in this litigation are consolidated for pretrial purposes. This is not a determination that any of these actions should be consolidated

for trial.

3. Types of Cases. By order of the Judicial Panel on Multidistrict Litigation (MDL

Panel), numerous proposed class actions to remedy economic injuries alleged to

have been caused by [insert product name] have been transferred to this court

for coordinated pretrial proceedings. These cases and any proposed class actions

that are subsequently filed or transferred to or filed in this proceeding are referenced as Class Action Cases.

Numerous individual personal injury and wrongful death cases have also been

transferred to this court for coordinated pretrial proceedings. These cases and any

additional personal injury/wrongful death cases, brought on behalf of individual

claimants, filed in or transferred to this court are referenced as “Personal Injury

Cases.” [Insert and define any additional types of cases that are distinct and may

call for separate management.]

4. Presentation of Test Case Remand Motions. Plaintiffs’ liaison counsel in personal

injury cases shall consult with plaintiffs' counsel and identify for the court no

more than [e.g., five] cases in which motions for remand to state court based

on an arguable absence of federal subject-matter jurisdiction have been filed or are

expected to be filed. These remand motions should, as nearly as possible, be representative of the various remand issues raised in the personal injury cases in this

MDL litigation. In addition, plaintiffs’ counsel may identify one case in which a

motion to remand the case to the transferor court for trial has been made. Plaintiffs’ Liaison Counsel shall submit to the court by [date] the names and indi-
§ 40.52 Manual for Complex Litigation, Fourth

774

vidual case docket numbers of the cases identified as representative of the remand

issues in this MDL proceeding. The court will set a schedule for briefing or supplemental briefing of the remand motions in those cases and place these motions

on an expedited schedule for decision.

5. Filing Papers with the Court. The purpose of the following instructions is to reduce

the time and expense of duplicate filings of documents through use of a master

case file, while at the same time not congesting the master case with miscellaneous

pleadings and orders that are of interest only to the parties directly affected by

them. It is not intended that a party lose any rights based on a failure to follow

these instructions.

(a) Master Docket and File. The clerk will maintain a master docket and case file

under the style “In re Product Liability Litigation (MDL-XXXX)” as master file number [CV NN-1000-X]. Orders, pleadings, motions, and other documents bearing a caption similar to that of this

order will, when docketed and filed in the master case, be deemed to have

been docketed and filed in each individual case to the extent applicable and

will not ordinarily be separately docketed or physically filed in such individual

cases. However, the caption may also contain a notation indicating whether

the document relates to all cases or only to specified cases.

(b) Separate Filing. A document that relates only to a specific case and would not

be of interest except to the parties directly affected by it—such as an amended

complaint adding a party or a motion to dismiss a party—should bear the

caption and case number of that case rather than of the master case file. Such

a document will be docketed and filed in that case and not in the master case

file. Please note that cases removed or transferred to this court are assigned a

new case number in this court.

(c) Leave to Add Parties. Until otherwise directed, plaintiffs are granted leave,

without need for any special motion or order, to add other plaintiffs to any

pending (or subsequently filed, removed, or transferred) case if all plaintiffs in

the case (1) will be represented by the same counsel (or if counsel for existing

plaintiffs consent to the intervention), (2) are suing the same defendants, and

(3) [were exposed to defendants’ products] in the same state. The purpose of

this authorization is to avoid unnecessary filing fees and the delays inherent in

28 U.S.C. § 1407 transfers. The joinder of such parties will not be viewed as

affecting subsequent motions by either plaintiffs or defendants for separate

trials under Federal Rule of Civil Procedure 42(b).

6. Master Pleadings, Motions, and Orders

(a) Master/Sample Complaints. Plaintiffs’ steering committee has filed in this district [CV NN-10000-X]:

(1) a master complaint containing allegations that would be suitable for

adoption by reference in individual cases,

(2) a sample complaint illustrating how allegations from the master complaint can be incorporated into an individual case, and
Sample Orders § 40.52

775

(3) a master class action complaint containing allegations that encompass

the entire range of allegations and types of proposed class actions contained in individual cases filed in this court or transferred to this court by

the MDL panel.

The allegations of the master complaint and the master class action complaint

are not deemed automatically included in any particular case. However, in

order to avoid possible problems with statutes of limitations or doctrines of

repose, it shall be deemed (except to the extent a plaintiff thereafter files an

amended complaint disavowing such claims and theories or limits its claims

and theories to those contained in an amended complaint) that, as of this

date, for cases now pending in this court (or as of the date other cases are filed

in, removed to, or transferred to this court) a motion is filed in each such case

to amend the complaint to add any potentially applicable claims and theories

from the master complaint not contained in the complaint actually filed in

that case.

(b) Master Answers. By , each entity listed below will file in

[CV NN-1000-X] a master answer that incorporates its defenses in law or fact

to claims made against it in the various actions that are presently pending in

this litigation, including any cross-claims it makes against other defendants.

The answer will not attempt to provide a cross-reference to particular paragraphs or counts of the various complaints. The answer will, however, in a

“generic” manner admit or deny (including denials based on lack of information and belief) the allegations typically included in claims or cross-claims

made against it as well as make such additional allegations as are appropriate

to its defenses or cross-claims. This may be done through allegations such as

“It alleges that it is incorporated in State A; that it has its principal place of

business in State B; that during the period from (date) to (date) it manufactured, sold, and distributed products intended to be used in ; that

these products were intended to be used only by trained, knowledgeable

 and were accompanied by warnings and instructions that adequately explained such risks as were inherent and unavoidable in the products; that these products were not unreasonably dangerous, were suitable for

the purposes for which they were intended, and were distributed with adequate and sufficient warnings; that it is without knowledge or information at

this time sufficient to form a belief as to any averment that one of its products

was used in the procedure on which the plaintiff’s complaint is based; that to

the extent the plaintiff makes a claim for X (or under statute Y) it is not liable

because ; etc.”

(1) When so filed in [CV NN-1000-X], these answers constitute an answer in

each constituent case now pending or when hereafter filed in, removed

to, or transferred to this court except to the extent the defendant later

files a separate answer in an individual case.
§ 40.52 Manual for Complex Litigation, Fourth

776

(2) A defendant not listed below may also file a master answer in [CV NN1000-X] by [date] , or within 45 days after the first case in which it is

named as a defendant is filed in, removed to, or transferred to this court.

(c) Refinement of Pleadings. It is anticipated that an amended, more specific complaint and answer may be required before a case is scheduled for trial or remanded to a transferor court, but amendments of pleadings prior to that time

should generally be avoided.

(d) Motions; Orders. A motion, brief, or response that has a potential effect on

multiple parties (e.g., documents submitted in connection with a motion for

partial summary judgment asserting that punitive damages are not recoverable with respect to [the product’s use] in State A) will be deemed made in all

similar cases on behalf of, and against, all parties similarly situated except to

the extent such other parties timely disavow such a position. Additional motions, briefs, or responses addressed to such issues should not be filed or

submitted by other parties except to the extent needed because of inadequacy

of the original papers, to present unique facts, or because of a difference in

positions. Orders resolving such motions will likewise be deemed as made

with respect to all parties similarly situated unless the order indicates otherwise.

7. Service of Original Complaints; Amendments Adding Parties

(a) Acceptable Service. Exhibit is a list of the “National Defendants”—that

is, those entities that have frequently been named as defendants in these cases

filed throughout the United States—with the name and address of their national counsel and information provided by national counsel indicating the

state(s) in which they are incorporated, in which they have their principal

place of doing business, and in which they will or may contest personal jurisdiction. To eliminate disputes over service of process and reduce the expense

of such service, these defendants [have agreed] [shall inform the court within

 days as to whether or not they agree] to accept service of process in these

cases (without, however, waiving any objections to personal jurisdiction or

venue) if a copy of the summons and complaint is sent, by certified mail, return receipt requested, to the person or address shown in Exhibit . Defendants’ agreement [report to the court] should indicate whether it applies

to any case involving [insert product] claims filed in any federal district

court or in any state court of general jurisdiction.

(b) Extension of Time to Serve. Notwithstanding Fed. R. Civ. P. 4(m), plaintiffs

shall have thirty days after the date of this order (or, if later, thirty days after

the date a case is subsequently filed in, removed to, or transferred to this

court) in which to effect service on defendants.

8. Motions

(a) Meet and Confer. To avoid unnecessary litigation concerning motions, including motions relating to discovery disputes, counsel are directed to meet

and confer before filing a motion. In any motion filed, counsel for the moving

party must certify that a good-faith effort was made to resolve the dispute.
Sample Orders § 40.52

777

(b) Motions Under Federal Rules of Civil Procedure 11, 12, and 56. No motion shall

be filed under Rule 11, 12, or 56 without leave of court.

9. Inactive [Product] [Incident] Docket. The purpose of this paragraph is to establish a

procedure for separating cases in which the plaintiff has little or no physical impairment from cases with more serious impairments to assist the court in establishing priorities for managing its docket. The intent is to toll the operation of any

applicable statutes of limitation or repose while a case is listed as inactive. The

clerk shall establish a separate file called the “Inactive [product] [incident]

Docket,” which shall consist of (1) cases voluntarily dismissed pursuant to a general stipulation prepared by plaintiffs and defendants that sets forth their agreement that such cases can be revived if specific conditions are met, and (2) claims

initiated by a “Notice of Claim” procedure. To invoke the notice procedure, a

claimant must file an “Affidavit of Notice of Claim” that includes (1) the name(s),

address(es), and marital status of the claimant(s); (2) a brief statement of circumstances of claimant’s exposure(s) to the [product] [incident giving rise to the

common claims]; (3) a statement of the nature of the injury, disease, or condition

alleged to have been caused by the [product] [incident]; and (4) the names of the

entities to be given notice and whom the claimant proposes to serve.

Upon certification of the claimant(s) that notices have been sent to all listed

defendants in the manner set forth in the stipulation of agreement signed by

plaintiffs’ and defendants’ representatives, the claims shall be recorded on the inactive docket.

The filing of the Notice of Claim or the voluntary dismissal pursuant to the

stipulation shall toll all applicable statutes of limitation or repose regarding any

claims of the plaintiff or plaintiff’s spouse, children, dependents, heirs, or estates

arising relating to the exposure to [product] [incident]. Claims may be removed

from the inactive docket at any time by the filing and serving of a complaint.

Signing the stipulation referred to above signifies the consent of each signing party

to this procedure and to the tolling of the statutes of limitations or repose as described above.

10. Settlement

[Insert any special provisions to facilitate settlement, such as appointment of a

settlement judge or special master to assist the parties, a timetable for scheduling

settlement conferences, or procedures for using arbitration, minitrials, or summary jury trials. Also include any provision for contributions by later-settling parties to compensate designated counsel for services previously rendered.]

11. Discovery

[In addition to the orders presented below, see separate discovery orders in section

40.25 through 40.29.]

(a) Plaintiff Fact Sheets.2 Each plaintiff whose case has been transferred to this

court shall have days from the entry of this order to complete and serve

on defendants a plaintiff fact sheet and an authorization for release of medical

records. Counsel shall meet and confer to agree on an electronic format for

completion of the Fact Sheet. Transferred plaintiffs shall have days from
§ 40.52 Manual for Complex Litigation, Fourth

778

the date of this order to produce all documents requested in the fact sheet.

When defendants notify the MDL panel of additional cases for transfer to this

court, defendants shall serve plaintiffs in those cases with a copy of this order.

The information contained in the plaintiff fact sheet must be verified under

oath. Plaintiffs’ responses will be treated as answers to interrogatories under

Fed. R. Civ. P. 33 and requests for production of documents under Fed. R.

Civ. P. 34 and must be supplemented in accordance with Fed. R. Civ. P. 26.

(b) Document Requests. Within days of entry of this order, plaintiffs must

serve on defendants a master set of requests for production of documents.

Any objections [that have not been dealt with in other cases in this litigation]

to those document requests must be served within days after receipt of

the requests. Defendants will begin producing documents not subject to objection on a rolling basis upon entry of this order. The parties will meet and

confer regarding a schedule for the orderly production of different categories

of documents. The parties will seek to coordinate this schedule with document productions in pending state court proceedings.

(c) Expedited Discovery. Expedited discovery of plaintiffs and plaintiffs’ health

care providers will be allowed when all of the following condition exist:

1. the plaintiff or a member of plaintiff’s immediate family is terminally ill;

2. there is an urgent need to record and preserve the testimony because of

the gravity of the illness; and

3. plaintiff has fully completed the plaintiff fact sheet and provided the execution of medical authorizations required in the fact sheet and defendants have had a reasonable opportunity to conduct informal discovery

prior to the taking of a deposition.

Dated: 

United States District Judge

Notes:

1. See supra section 22.2.

2. For examples of plaintiff fact sheets, see In re Baycol Products Litigation, MDL 1431, Pretrial Order No. 10 (D. Minn. Mar. 18, 2002) and In re Phenylpropanolamine (PPA) Products

Liability Litigation, MDL No. 1407, Case Management Order No. 6 (W.D. Wash. Mar. 21, 2002).
Sample Orders § 40.53

779

40.53 CERCLA Case-Management Order

[caption]

Order No. 

It is ORDERED:

1. Limited Consolidation. Until further order of the court, the above-captioned actions, Civil Action No. and Civil Action No. (collectively, the “Actions”), are consolidated before the undersigned for the limited purposes of coordinated case management and discovery.

2. Lodging of the Administrative Record; Stay of Administrative Record Discovery. On

or before [date] , plaintiff, the United States of America, will lodge with the

court the administrative record developed by the Environmental Protection

Agency (“EPA”) in connection with the initial Remedial Investigations and Feasibility Studies (RI/FS) for the 

Landfill (the “Landfill”); on or before [date] , 

 plaintiff, the United States of America, will lodge with the court the administrative record developed by the EPA in connection with the record of decision (including the Supplemental Feasibility Study). No discovery shall be permitted at this time as to what documents constitute or will constitute these administrative records until further Order of the court.

3. Temporary Stay of Counterclaims, Cross-Claims, and Third-Party Claims. Until

 [date] , the date established herein for the second case-management conference, no counterclaims, cross-claims, or third-party claims in either of the Actions, and no claims related to the Landfill by defendants in one of the Actions

against defendants in the other of the Actions, shall be filed. The stay as to counterclaims and third-party claims shall be addressed at the second casemanagement conference. All counterclaims, cross-claims, or third-party claims

filed prior to the entry of this order are stayed until the second case-management

conference.

4. Filing of Claims. At the second case-management conference, scheduled herein,

the court will establish a schedule for filing of the claims referred to in paragraph

3. Nothing in this order shall prejudice the right of any defendant in either of the

Actions to assert any such claims, nor shall any such claims be barred by laches or

by any statute of limitations by virtue of the delay in filing such claims required by

this order.

5. Realignment of Pleadings. The United States of America, in Civil No. , and

the State Department of Environmental Protection, in Civil No. , are hereby

granted leave to file amended complaints, not later than [date] ,without

the necessity of a motion. The purposes of these amended complaints are to cure

misnomer problems; to add defendants; to dismiss defendants already named,

without prejudice; to conform the defendants named in the two amended com-
§ 40.53 Manual for Complex Litigation, Fourth

780

plaints to the degree that the plaintiffs deem appropriate; and to clarify the causes

of action, demands, and relief sought in the amended complaints to the degree

that the plaintiffs deem appropriate. Existing defendants who have already answered or otherwise responded to the complaint need not answer or otherwise

respond to the amended complaint unless they choose to do so. All other defendants shall answer or otherwise respond within the time provided in the Rules.

6. Joinder of New Parties. Except as provided herein or by subsequent order, no party

may join an additional party in this case. The joinder of new parties may occur

through the amendment of the complaints (see above), or by the coordinated

efforts of the defense litigation committee to be formalized by the defendants. The

defense litigation committee will serve as a clearinghouse for information pertinent to identifying new parties through coordinated discovery efforts. Discovery

with respect to joining new parties is discussed in paragraphs below. No

later than [date] , the defense litigation committee shall have assembled

a list of new parties whose joinder will be considered at the second casemanagement conference on [date] .

To the extent feasible, this listing shall be selective, seeking joinder of parties

with a relatively higher degree of alleged responsibility and continuing viability,

and avoiding joinder of parties with a relatively lower degree of alleged responsibility or which are of doubtful viability. It is anticipated that leave to file a consolidated third-party complaint joining the new parties in an orderly fashion, and

leave for individual defendants to file contractual indemnification claims, will be

granted at the second case-management conference. [There will be an additional

opportunity to join further new parties in the future as the cases unfold.]

7. Amendments. The goal of the amended complaints and the consolidated thirdparty complaint is to have a more unified and orderly set of pleadings and joinders

so that these Actions may go forward expeditiously.

8. Scope of Discovery. Discovery shall be limited at present to the following issues:

(a) Identification of new parties.

(b) Quantity, quality, and nexus of parties’ wastes to the 

 Landfill.

[It is anticipated that parties providing full discovery on these issues and believing

themselves to have no nexus of hazardous wastes to the Landfill will be permitted

to seek summary judgment in the near future.]

No discovery is permitted at this time regarding issues of “release or threatened

release” at the Landfill, or of “the incurring of response costs consistent with the

NCP at the Landfill.” Enlarging discovery to these issues, and the precise extent,

timing, and appropriateness of summary judgment motion practice relating to

some or all liability issues, will be considered at the second case-management

conference, following lodging of the administrative records under ,

above.
Sample Orders § 40.53

781

Forms of Discovery

9. Document Production. Production of documents shall be coordinated and go forward promptly and responses shall be served within days of service. The deposition of representatives of the EPA, the DEP [State Department of

Environmental Protection], or a defendant shall not go forward until that party

has responded to the document production request upon it.

10. Depositions. Depositions are permitted at this time only with respect to the issues

of identification of new parties and quantity, quality, and nexus. Such depositions

may be taken, on these issues, of existing parties and nonparties, except that no

depositions of representatives of the EPA or the DEP or of a defendant are permitted until that party has timely responded to the document production request

upon it. Scheduling of depositions on behalf of defendants will be coordinated

between the plaintiffs and the defense litigation committee, endeavoring to conduct not more than one deposition at a time.

11. Procedure for Scheduling Depositions

***

12. Interrogatories to Plaintiffs. The plaintiffs shall serve certified responses to a common set of interrogatories, derived from the set of interrogatories served by

 on behalf of fourteen defendants, pertaining to quantity, quality,

nexus, and identification of additional parties, within days after service, to

the same extent as if served on behalf of all defendants in the United States

case and all defendants in the state case. All other interrogatories are

stricken, without prejudice, and need not be answered.

13. Interrogatories to Defendants. The plaintiffs may propound a set of common interrogatories on the above issues upon each of the defendants, each of whom shall

serve certified responses to same within days after service.

14. Requests for Admission. Requests for admission shall not be served until further

order of the court, to be discussed at the second case-management conference.

15. Liaison Counsel for Defendants. The court recognizes the defendants’ selection of

 , , as liaison counsel for defendants with respect to communications from the court to the defendants.

16. Service List. Liaison counsel for the defendants shall prepare and promptly file

with the clerk the service list containing the names, addresses, and telephone and

facsimile numbers of attorneys appearing in this case and of unrepresented parties.

17. Cooperation Among Defendants; Defense Litigation Committee. Cooperation efforts

among defendants in the Actions for the purpose of coordinating discovery, trial,

counsel, or otherwise minimizing expenses in the Actions are being conducted at

the direction of the court for its convenience in the resolution of the Actions and

they shall not constitute evidence of conspiracy, concerted action, or any other

wrongful conduct in this or any other proceeding. The defendants are hereby directed to take reasonable steps to eliminate duplication of effort and redundant
§ 40.53 Manual for Complex Litigation, Fourth

782

discovery. The defendants have also informed the court that they have selected

and will continue to organize a defense litigation committee, the duties of which

shall be better defined before the interim status conference on [date] at

 .

18. Privileges Preserved. All information and/or documents exchanged among the defendants in the Actions shall be communicated for the limited purpose of assisting

in a common defense in this litigation only, and such exchange shall not constitute a waiver of any attorney–client work product, trade secret, or other privilege.

All discussions will be treated as not admissible into evidence in accordance with

the terms of Fed. R. Evid. 408.

19. Cooperation Between Plaintiffs and Exchange of Information. Exchange of information and/or documents between the plaintiffs relating to the prosecution of these

actions is communication for the limited purpose of assisting in a common cause

and shall not constitute a waiver of whatever attorney–client, work product, enforcement-sensitive, or any other privilege, if any, may apply.

20. Preservation of Documents. All parties and their counsel are hereby directed to

preserve any information in their possession, custody, or control that constitutes

or contains material or information that may be relevant in these Actions. All parties and their counsel are directed to take all reasonable steps to communicate the

requirements of this provision to the individuals employed by that party who

must know of this provision in order for it to be effective. Plaintiffs shall instruct

their RI/FS contractors and subcontractors (and any other of plaintiffs’ contractors and subcontractors) to preserve all such information.

Dated: 

United States District Judge
Sample Orders § 40.54

783

40.54 Civil RICO Case-Statement Order1

[caption]

Order No. 

It is ORDERED:

The proponent of the civil RICO claim shall file and serve [within days of

 ] a case statement that shall include the facts relied on to initiate the RICO claim. In particular, the statement shall use the numbers and letters set

forth below, unless filed as part of an amended and restated pleading (in which latter

case, the allegations of the amended and restated pleading shall reasonably follow the

organization set out below), and shall state in detail and with specificity the following

information:

1. State whether the alleged unlawful conduct is in violation of 18 U.S.C. §§ 1962(a),

(b), (c), and/or (d). If you allege violations of more than one section 1962 subsection, treat each as a separate RICO claim.

2. List each defendant, and state the alleged misconduct and basis of alleged liability

of each defendant.

3. List the alleged wrongdoers, other than the defendants listed above, and state the

alleged misconduct of each wrongdoer.

4. List the alleged victims, and state how each victim allegedly was injured.

5. Describe in detail the pattern of racketeering activity or collection of an unlawful

debt alleged for each RICO claim. A description of the pattern of racketeering activity shall:

(a) list the alleged predicate acts and the specific statutes allegedly violated by

each predicate act;

(b) state the dates of the predicate acts, the participants in the predicate acts, and

a description of the facts surrounding each predicate act;

(c) if the RICO claim is based on the predicate offenses of wire fraud, mail fraud,

fraud in the sale of securities, or fraud in connection with a case under Title

11 of the U.S. Code, the “circumstances constituting fraud or mistake shall be

stated with particularity,” Fed. R. Civ. P. 9(b) (identify the time, place, and

contents of the alleged misrepresentation or omissions, and the identity of

persons to whom and by whom the alleged misrepresentations or omissions

were made);

(d) describe in detail the perceived relationship that the predicate acts bear to

each other or to some external organizing principle that renders them “ordered” or “arranged” or “part of a common plan”; and
§ 40.54 Manual for Complex Litigation, Fourth

784

(e) explain how the predicate acts amount to or pose a threat of continued criminal activity.

6. Describe in detail the alleged enterprise for each RICO claim. A description of the

enterprise shall

(a) state the names of the individuals, partnerships, corporations, associations, or

other entities allegedly constituting the enterprise;

(b) describe the structure, purpose, roles, function, and course of conduct of the

enterprise;

(c) state whether any defendants are employees, officers, or directors of the alleged enterprise;

(d) state whether any defendants are associated with the alleged enterprise, and, if

so, how;

(e) explain how each defendant participated in the direction of the affairs of the

enterprise;

(f) state whether you allege [(i) that the defendants are individuals or entities

separate from the alleged enterprise, or (ii) that the defendants are the enterprise itself, or (iii) that the defendants are members of the enterprise]; and

(g) explain, if you allege any defendants to be the enterprise itself or members of

the enterprise, whether such defendants are perpetrators, passive instruments,

or victims of the alleged racketeering activity.

7. State whether you allege, and describe in detail, how the pattern of racketeering

activity and the enterprise are separate or have merged into one entity.

8. Describe the alleged relationship between the activities and the pattern of racketeering activity. Discuss how the racketeering activity differs from the usual and

daily activities of the enterprise, if at all.

9. Describe what benefits, if any, the alleged enterprise and each defendant received

from the alleged pattern of racketeering activity.

10. Describe the effect of the activities of the enterprise on interstate or foreign commerce.

11. If the complaint alleges a violation of 18 U.S.C. § 1962(a), provide the following

information:

(a) state who received the income derived from the pattern of racketeering activity or through the collection of an unlawful debt; and

(b) describe the use or investment of such income.

12. If the complaint alleges a violation of 18 U.S.C. § 1962(b), provide the following

information:

(a) describe in detail the acquisition or maintenance of any interest in or control

of the alleged enterprise; and

(b) state whether the same entity is both the liable “person” and the “enterprise”

under section 1962(b).
Sample Orders § 40.54

785

13. If the complaint alleges a violation of 18 U.S.C. § 1962(c), provide the following

information:

(a) state who is employed by or associated with the enterprise; and

(b) state whether the same entity is both the liable “person” and the “enterprise”

under section 1962(c).

14. If the complaint alleges a violation of 18 U.S.C. § 1962(d), describe in detail the

alleged conspiracy.

15. Describe the alleged injury to business or property.

16. Describe the relationship between the alleged injury and violation of the RICO

statute.

17. List the damages sustained by reason of the violation of section 1962, indicating

the amount for which each defendant allegedly is liable.

18. Provide any additional information you feel would be helpful to the court in processing your RICO claim.

Dated: 

United States District Judge

Note:

1. This order has been designed to establish a uniform and efficient procedure for deciding

civil actions containing claims made pursuant to 18 U.S.C. §§ 1961–1968 (“civil RICO”).
§ 40.7 Manual for Complex Litigation, Fourth

786

40.6 Sample Final Pretrial Orders

For examples of comprehensive pretrial orders and final pretrial orders, see

Judicial Conference of the United States, Civil Litigation Management Manual

188–207 (Sample Form 9); 257–68 (Sample Form 25); 299–357 (Sample Forms

35–41; and 361–75 (Sample Form 44) (2001). The Civil Litigation Management

Manual and all of the forms are available at http://www.fjc.gov (last visited

Nov. 10, 2003).

40.7 Jury Questionnaire

For examples of jury questionnaires and orders relating to jury management, see Judicial Conference of the United States, Civil Litigation Management Manual 358–60 (Sample Forms 42 & 43) and 376–82 (Sample Forms 45

& 46) (2001). The Civil Litigation Management Manual and all of the forms are

available at http://www.fjc.gov (last visited Nov. 10, 2003).
787

Index

(All references in index are to section numbers.)

admissibility

computerized data, 11.446, 32.43

depositions, 11.445, 11.455

early hearings, 11.34, 11.642

exhibits/documentary evidence, 11.445, 11.642

expert opinions, 11.48

foundation for, 11.445

governmental investigations, 11.491

requests for admissions, 11.445

stipulations of authenticity, 11.445

stipulations of fact, 11.471

affidavits

limits on length, 11.32

summary judgment, 11.34

alternative dispute resolution, 13.15, 20.313, 21.142, 21.5, 22.541, 22.71, 22.91, 34.21,

34.292

“American Rule,” see attorney fees

antitrust, 30

conflicts of interest, 30.3

data gathering, 30.2

expert opinion, 30.2

related proceedings, 30.4

appeals, see judgments and appeals

attorney–client privilege, see privileges

attorney fees, 14

“American Rule,” 14.11, 14.121

class actions, 21.7

common-fund, 14.12

discovery, 14.224

documentation and evidence supporting, 14.223

eligibility, 14.1

guidelines and ground rules, 14.21

hearings, 14.232

lodestar, 14.122

mass torts, 22.927

motion for, 14.22

motions, content of, 14.221

percentage-fee, 14.121

records, maintaining, 14.213

review

court of appeals, 14.121

district court, 14.231

staffing, 14.212
Manual for Complex Litigation, Fourth

788

attorney fees (continued)

statutory-fee, 14.13

timing, 14.222

attorneys, see counsel

bankruptcy

adversary proceedings, 10.123, 20

coordination with related litigation, 10.123

mass tort litigation, 22.5

appeals, 22.533

automatic stay, 22.541, 22.545

consolidation of claims, 22.512, 22.54

estimating the value of tort claims, 22.56

future claimant representation, 22.55

MDL transferee judge’s role, 22.511, 22.531

roles of district and bankruptcy judges, 22.52, 22.53

withdrawing the reference, 22.52

bellwether/test trial, see trial

CERCLA (Superfund), 34

allocation, 34.291

case management, 34.2

consent decrees, 34.293

costs, response, 34.12

counsel, organizing, 34.24

damages, 34.12

discovery, 34.28

document management, centralized, 34.25

experts, 34.29

issues, narrowing, 34.26

joinder, 34.27

liability, 34.12

magistrate judges, 34.22

related cases, 34.23

remedy, 34.12

response costs, 34.12

settlement, 34.292

special masters, 34.22

statutory framework, 34.11

trial, 34.294

civil RICO, 35

case management, 35.3

discovery, 35.33

initial conference, 35.32

motion practice, 35.34

pleadings, 35.31

statutory framework, 35.2

trial, 35.35
Index

789

class actions, 21

attorney fee awards

approval criteria, 21.71

reviewing fee requests, 21.72

case management, 11.213, 21.4

discovery, 21.41

relationship with other cases, 21.42

certification

deciding motion, 21.2

effect of multiple cases, classes, 21.25

hearings, orders, 21.21

interlocutory appeals of, 21.28

timing, 21.133

certification standards, 21.13

litigation class, 21.131

settlement class, 21.132

class counsel

criteria for appointment, 21.271

procedures for appointment, 21.273

selecting, 21.272

class representatives, appointing, 21.26

communications with class members

among parties, counsel, class members, 21.33

from class members, 21.32

notices, 21.31

precertification, 21.12

conference, initial, 11.213

defining class, 21.22

discovery, precertification, 21.14

Rule 23(a) requirements, 21.141

Rule 23(b) requirements, 21.142

discovery, postcertification, 21.41

in particular types of cases

civil RICO, 35.1

employment discrimination, 32.42

securities, 31.31, 31.5

initial case-management orders, 21.11

issues classes, 21.24

limited fund settlement, 21.132

notices

class certification, 21.311

settlement, 21.312

relationship with pending cases, precertification, 21.15

settlements

claims administrator, 21.661

class counsel, 21.641

class representatives, 21.642

conditional settlements, 21.652

criteria for evaluating, 21.62

judicial review, 21.61
Manual for Complex Litigation, Fourth

790

class actions, settlements (continued)

limited fund settlements, 22.73

magistrate judges, 21.644

objectors, 21.643

partial settlements, 21.651

reviewing proposed settlements, 21.63

special masters, 21.644, 21.661

undistributed funds, 21.662

subclasses, role of, 21.23

trials, 21.5

copyright, see intellectual property

counsel

class counsel, see class actions

committees of counsel, 10.221

compensation, 10.223

coordination in multiparty litigation, 10.22

disqualification, 10.23

lead counsel, 10.221

liaison counsel, 10.221

responsibilities, 10.21, 10.222

withdrawal, 10.23

court-appointed experts, 11.51

class action settlement review, 21.644

disclosure and discovery, 11.483, 23.344

mass tort litigation, 22.87

patent litigation, 33.26

courtroom technology

courthouse facilities, 12.12

digitized video depositions, 12.333

evidence presentation systems, 12.32

facilitating evidence presentation, 11.645

videoconferencing, 12.334

depositions

admissibility, 11.445, 11.455

discovery, 11.45

managing at trial, 12.33

managing pretrial, 11.45

pretrial, 11.45

videotaped from scientific experts, 23.345

discovery

business records, 11.446

computerized data, 11.446

depositions, 11.45

documents, 11.44

expert opinions, 11.48

foreign (extraterritorial), 11.494

governmental and grand jury investigations, 11.491
Index

791

discovery (continued)

in particular types of cases

CERCLA (Superfund), 34.28

civil RICO, 35.33

class actions, 21.14, 21.41

copyright cases, 33.311

employment discrimination, 32.43

mass torts, 22.8

patent, 33.25

securities, 31.6

interrogatories, 11.46

planning and control, 11.42

privilege claims, 11.43

protective orders, 11.43

relationship to issues, 11.41

requests for admissions, 11.47

sampling/opinion surveys, 11.493

special problems, 11.49

stipulations of fact, 11.47

electronic discovery, see discovery, computerized data

employment discrimination, 32

ADA, 32.24

ADEA, 32.23

case management, 32.4

Civil Rights Act of 1964, 32.22

class actions, 32.42

developments in the law, 32.3

discovery, 32.43

computerized records, 32.432

confidential information, 32.433

expert testimony, 32.435

from class members, 32.436

preservation of records, 32.434

statistical evidence, 32.435

FMLA, 32.25

initial pretrial conference, 32.41

settlement, 32.46

affirmative relief, 32.462

attorney fees, 32.463

hearing, 32.464

implementation, 32.465

timing, 32.461

statutory framework, 32.2

summary judgment, 32.44

Title VII, 32.21

trial, 32.45

evidence

see also expert scientific evidence

expediting presentation, 11.64
Manual for Complex Litigation, Fourth

792

evidence (continued)

limits on, 11.644

pretrial rulings on objections, 11.642

technology, using to present, 11.645

expert scientific evidence, 23

see also court-appointed experts

aggregation of, 23.272

assessing, preliminary considerations, 23.31

case management, 23.2

clinical medical judgment, 23.273

Daubert issues

criteria, 23.23

“fit” test, 23.25

initiating an inquiry, 23.351

the trilogy, 23.22

disclosures, 23.33

discovery

court-appointed experts, 23.344

nonretained experts, 23.343

nontestifying experts, 23.342

testifying experts, 23.341

videotaped depositions, 23.345

Federal Rules of Evidence, 23.21

final pretrial conference, 23.36

initial conference, 23.32

motion practice

handling challenges, 23.353

summary judgment, 23.354

timing of challenges, 23.352

research, 23.274

scope of appellate review, 23.26

trial, 23.37

toxicological vs. epidemiological, 23.271

experts

see also expert scientific evidence, court-appointed experts

in particular types of cases

antitrust, 30.2

CERCLA (Superfund), 34.29

copyright, 33.313

employment discrimination, 32.435

patent, 33.26

federal–state coordination, see multiple jurisdiction litigation

final pretrial conference, see pretrial procedures, conferences

initial conferences, see pretrial procedures, conferences

intellectual property

copyright law, 33.31

discovery, 33.311

experts, 33.313
Index

793

intellectual property, copyright law (continued)

motions, 33.312

patent law, 33.2

discovery, 33.25

experts, 33.26

injunctive relief, 33.24

issues, defining, 33.23

Markman hearing, 33.22

statutory framework, 33.21

trial, 33.27

trademark law, 33.32

judgments and appeals, 15

disposition of materials, 15.3

entry of final judgment, 15.2

interlocutory appeal, 15.1

jury instructions, see pretrial procedures, trial

litigation in multiple jurisdictions, see multiple jurisdiction litigation

magistrate judges, 10.14, 11.53

CERCLA (Superfund) cases, 34.22

class action settlement, 21.644

mass tort settlement, 22.91

referral of scientific evidence matters, 23.32

reviewing fee requests, 14.231, 21.727

mass torts, 22

assignment, intradistrict to single judge, 22.32

bankruptcy appeals, 22.533

case-management orders, 22.6

adding parties, 22.631

deferred docketing, 22.633

electronic communications, 22.635

issue identification and development, 22.634

pleadings and motions, 22.632

initial, 22.61

subsequent, 22.63

class actions, 22.7

certification, post-Amchen, 22.72

determining applicable law, 22.752

issues, identifying, 22.751

limited fund settlements, post-Ortiz, 21.132, 21.142, 22.73

medical monitoring, 22.74

discovery, 22.8

depositions, 22.84

documents, 22.85

experts, 22.87

initial disclosures, 22.82

interrogatories, 22.83

physical evidence, 22.86

sampling, 22.81
Manual for Complex Litigation, Fourth

794

mass torts, discovery (continued)

scientific evidence, 22.87

division of labor among judges, 22.53

estimating value, 22.56

future claimants, representation for, 22.55

future claims, discharging, 22.58

initial issues, 22.2

MDL transferee judge, 22.35, 22.531

multiple filings in federal district courts, 22.3

aggregating claims, 22.311–22.318

multiple filings in state and federal courts, 22.4

multiple filings in trial and bankruptcy courts, 22.5

consolidation, 22.51

transfer, 22.51

venue, 22.51

reference, withdrawing, 22.52

reorganization plan, confirming, 22.59

reorganization plan, negotiating, 22.57

settlement

attorney fees, 22.927

class certification, 22.921

evaluating merits, 22.923

fairness hearing, conducting, 22.924

fairness, adequacy, reasonableness, 22.922

information gathering, 22.924

judicial role, 22.91

nonmonetary benefits, evaluating, 22.925

presenting decision, 22.926

review, 22.92

tort claims

against debtors, 22.541

against other defendants, 22.542

automatic stay, expanding, 22.545

consolidation, 22.543

enjoining related cases, 22.545

transferring related nondebtor cases, 22.544

transfer, denial of, 22.34

transfer, interdistrict (including MDL), 22.33

trial, 22.93

multiple jurisdiction litigation, 10.225, 20

mass tort district and bankruptcy courts, 22.5

multidistrict transfers under section 1407, 20.13

related civil cases in different courts, 20.12

related civil cases in same court, 20.11

related criminal and civil cases, 20.2

related state and federal cases

identifying need for coordination, 20.311

jurisdictional conflicts, 20.32

specific forms of coordination, 20.313

threshold steps for coordinating, 20.312
Index

795

patent law, see intellectual property

pendent jurisdiction, 20.32

pretrial procedures, 11

conferences, 11.2

attendance, 11.23

case-management planning, 11.211

final pretrial, 11.6

initial, 11.11, 11.211

scheduling order, 11.212

scientific evidence, 23.32

settlement, 11.214

subsequent, 11.22

conferences in particular types of cases

civil RICO, 35.32

class actions, 11.213, 21.11

mass torts, 22.61

securities, takeover litigation, 31.71

discovery, 11.4

depositions, 11.45

documents, 11.44

expert opinions, 11.48

interrogatories, 11.46

planning and control, 11.42

privilege claims, 11.43

protective orders, 11.43

requests for admission, 11.47

stipulations of fact, 11.47

jury instructions, 11.65

pleading and motion practice, 11.32

prediscovery disclosure, 11.13

special referrals, 11.5

experts, 11.51

magistrate judges, 11.53

special masters, 11.52

summary judgment, 11.34

trial preparation

briefs, 11.66

date and place, 11.61

evidence presentation, 11.64

final motions, 11.66

final order, 11.67

jury demands, 11.62

jury instructions, 11.65

structure, 11.63

privileges

privilege claims, 11.43

umbrella protective orders, 11.432

“Vaughn Index,” 11.431
Manual for Complex Litigation, Fourth

796

questionnaires

exchanging, 20.313

in lieu of interrogatories, 22.83

prospective jurors, 12.412

requiring instead of depositions, 21.14

requiring of class members, 21.41, 31.31

sampling tool, 22.81

recusal, 10.121, 13.11, 34.27

RICO, see civil RICO

sanctions

authority for, 10.152

considerations, 10.153

principles for, 10.151

procedure for, 10.155

types, 10.154

securities, 31

class actions, 31.31, 31.5

discovery, 31.6

initial pretrial conference, 31.4

Private Securities Litigation Reform Act, 31.3

discovery stays, 31.34

pleading requirements, 31.32

safe harbor, 31.33

statutory framework, 31.2

takeover litigation, 31.7

discovery, 31.73

initial conference, 31.71

injunctive relief, 31.73

trial and settlement, 31.8

settlement, 13

agreements affecting discovery, 13.22

encouraging, 13.15

ethical considerations, 13.24

general principles, 13.11

in particular types of cases

CERCLA (Superfund), 34.292

class actions, 21.6

employment discrimination, 32.46

mass tort bankruptcy reorganizations, 22.57

securities, 31.8

partial settlements, 13.21

relationship to discovery, 13.12

review and approval, 13.14

side agreements, 13.24

timing, 13.12

techniques to promote, 13.13
Index

797

special masters, 10.14, 11.52

attorney fee review, 14.221, 14.231

computer experts, 11.446

deposition abuses, 11.456

discovery disputes, 11.424

federal–state coordination, 20.312

in particular types of cases,

class actions, 21.661 (administration), 21.727 (attorney fees), 21.644 (settlement review)

CERCLA (Superfund), 34.22 (case management), 34.292 (settlement)

employment, 32.465

mass tort litigation, 22.8 (discovery), 22.91 (settlement), 22.924 (settlement

review)

patent litigation, 33.23

scientific evidence, 23.32

settlement facilitation, 13.13

Superfund, see CERCLA (Superfund)

trademark, see intellectual property

trial, 12

administration, 12.1

bellwether/test, 20.132, 22.315, 22.56, 22.93

judge’s role in conduct, 12.24

conferences, 12.15

courthouse facilities, 12.12

demonstrative aids, 12.31

depositions, 12.33

alternatives, 12.334

editing, 12.332

presentation/videotaped, 12.333

summaries, 12.331

exhibits, 12.13, 12.32

evidence

advance notice, 12.23

presenting, 12.3

sequencing, 12.34

glossaries, 12.31

in particular types of cases

CERCLA (Superfund), 34.294

civil RICO, 35.35

class actions, 21.5

employment discrimination, 32.45

mass tort, 22.93

patent, 33.27

securities, 31.8

indexes, 12.31

judge unable to proceed, 12.6

judicial control, 12.35
Manual for Complex Litigation, Fourth

798

trial (continued)

jury trials, 12.4

exhibits, 12.435

final instructions, 12.434

impaneling jury, 12.41

interim and limiting instructions, 12.433

mistrial, avoiding, 12.44

notebooks, 12.422

notetaking, 12.421

peremptory challenges, 12.413

preliminary instructions, 12.432

questions from jurors, 12.423

readbacks, 12.436

supplemental instructions, 12.436

venire size, 12.411

voir dire, 12.412

multiparty cases, special procedures, 12.22

nonjury trials, 12.5

combined with jury trial, 12.53

findings of fact, conclusions of law, 12.52

prepared statements, 12.51

opening statements, 12.21

schedule, 12.11

time limits, 12.35

transcripts, 12.14

verdicts, 12.45

as matter of law, 12.452

general with interrogatories, 12.451

return of, 12.453

special, 12.451
The Federal Judicial Center

Board

The Chief Justice of the United States, Chair

Judge Pierre N. Leval, U.S. Court of Appeals for the Second Circuit

Judge Pauline Newman, U.S. Court of Appeals for the Federal Circuit

Judge Robert J. Bryan, U.S. District Court for the Western District of Washington

Judge James A. Parker, U.S. District Court for the District of New Mexico

Judge Sarah S. Vance, U.S. District Court for the Eastern District of Louisiana

Chief Judge Robert F. Hershner, Jr., U.S. Bankruptcy Court for the Middle District of

Georgia

Magistrate Judge Robert B. Collings, U.S. District Court for the District of Massachusetts

Leonidas Ralph Mecham, Director of the Administrative Office of the U.S. Courts

Director

Judge Barbara J. Rothstein

Deputy Director

Russell R. Wheeler

About the Federal Judicial Center

The Federal Judicial Center is the research and education agency of the federal judicial

system. It was established by Congress in 1967 (28 U.S.C. §§ 620–629), on the recommendation of the Judicial Conference of the United States.

By statute, the Chief Justice of the United States chairs the Center’s Board, which also

includes the director of the Administrative Office of the U.S. Courts and seven judges

elected by the Judicial Conference.

The Director’s Office is responsible for the Center’s overall management and its relations with other organizations. Its Systems Innovation & Development Office provides

technical support for Center education and research. Communications Policy & Design

edits, produces, and distributes all Center print and electronic publications, operates the

Federal Judicial Television Network, and through the Information Services Office maintains a specialized library collection of materials on judicial administration.

The Judicial Education Division develops and administers education programs and

services for judges, career court attorneys, and federal defender office personnel. These

include orientation seminars, continuing education programs, and special-focus workshops.

The Court Education Division develops and administers education and training programs and services for nonjudicial court personnel, such as those in clerks’ offices and

probation and pretrial services offices, and management training programs for court

teams of judges and managers.

The Research Division undertakes empirical and exploratory research on federal judicial processes, court management, and sentencing and its consequences, often at the request of the Judicial Conference and its committees, the courts themselves, or other

groups in the federal system.

The Federal Judicial History Office develops programs relating to the history of the

judicial branch and assists courts with their own judicial history programs.

The Interjudicial Affairs Office provides information about judicial improvement to

judges and others from foreign countries and identifies international legal developments

of importance to personnel of the federal courts.