In NFL concussion case, 3rd Circuit reopens door for personal injury class actions

April 19, 2016

(Reuters) – Can the National Football League tackle 19-year-old U.S. Supreme Court precedent?

The 3rd U.S. Circuit Court of Appeals opinion approving the NFL’s $1 billion class action settlement with more than 20,000 retired players devotes a lot of words to the U.S. Supreme Court’s landmark 1997 decision in Amchem v. Windsor. Most of those words are intended to draw a line between Amchem and the NFL litigation, which addresses claims that retired players had suffered traumatic head injuries. In one place in Monday’s 3rd Circuit ruling, Judge Thomas Ambro, who wrote the opinion for a panel that also included Judges Thomas Hardiman and Richard Nygaard, flat-out says, “Simply put, this case is not Amchem.”

The 3rd Circuit took such pains to discuss and ultimately distinguish Amchem because that case, along with the Supreme Court’s 1999 followup, Ortiz v. Fibreboard, pretty much killed off the use of class actions to settle large swaths of personal injury cases. Amchem, as you probably remember, struck down a proposed class action settlement that would have resolved present and future claims against a few dozen asbestos defendants, holding that class members who have already been injured have an inherent conflict with absent class members who will suffer an injury in the future. (In Ortiz, the justices said a settlement cannot bar absent class members from opting out just because class counsel and the defendants agree to a limited fund deal.)

Since Amchem and Ortiz, class action settlements of personal injury claims have been as rare as a 1933 Double Eagle. American Home Products (now Wyeth) spent billions in the early 2000s on a class action settlement in the fen-phen diet drug litigation. More recently, BP settled some personal injury claims in the Deepwater Horizon oil spill litigation through a class action. And that’s about it, at least in high-profile litigation.

Instead of class action settlements, mass torts are now resolved through consolidated multidistrict litigation, sometimes through piecemeal settlements between defendants and particular plaintiffs’ firms, sometimes – as in the Vioxx case – through a global matrix that has many of the same features as a class action. The most recent statistics show 40 percent of all civil litigation in U.S. courts takes place in an MDL. Not all of those MDLs involve personal injuries, of course, but lots do.

We can debate forever whether class actions or global MDL settlements are a fairer and more efficient way to resolve the claims of thousands of people. In MDLs, individual plaintiffs have their own lawyers, even though court-appointed lead counsel drive the litigation. In class actions, class counsel have obligations to everyone in the class and the court has oversight powers.

But over the past 20 years, since Amchem, the personal injury class action v. MDL dialectic has been almost entirely hypothetical – as, for example, in a concurrence by 3rd Circuit Judge Anthony Scirica in the court’s 2011 en banc decision in the antitrust class action Sullivan v. DB Investments – because Amchem and Ortiz seemed to have made class action personal injury settlements obsolete.

The 3rd Circuit’s NFL decision may have brought them back to life. In the NFL concussion case, as in the old Amchem case, some class members have already experienced horrible injuries but for others, symptoms haven’t yet developed. To comply with Amgen, the judge overseeing the NFL case, U.S. District Judge Anita Brody of Philadelphia, made sure these claimants of the future had their own counsel in settlement discussions with the NFL (albeit one who had been serving on the plaintiffs’ steering committee before the subclass was created). She also refused to allow the NFL to cap payouts under the settlement, although the settlement does include a maximum payout for each plaintiff based on factors such as diagnosis, age and years of play in the league.

Objectors to the settlement argued that Judge Brody’s structural protections hadn’t adequately resolved the conflicting interests of present and future class members. The 3rd Circuit said they had.

“Class counsel here took Amchem into account by using the subclass structure to protect the sometimes divergent interests of the retired players,” the opinion said. “Moreover, the terms of the settlement reflect that the interests of current and future claimants were represented in the negotiations. The monetary award fund will start paying out claims immediately, providing relief to those currently living with injuries (but) the fund is uncapped and inflation adjusted, protecting the interests of those who worry about developing injuries in the future.”

The NFL case began as an MDL before both sides decided to settle via a class action, as the 3rd Circuit judges pointed out, so thousands of retired players had their own lawyers to look out for their interests and advise them whether to take the deal. The one percent opt-out rate, according to the 3rd Circuit, despite the “many sets of eyes reviewing the terms of the settlement,” is a good indicator that plaintiffs’ negotiators represented the interests of all of the retirees.

The Supreme Court did not mean for Amchem to squelch all personal injury class action settlements, the 3rd Circuit said, quoting the Amchem court’s insistence that “even mass tort cases arising from a common cause or disaster may, depending upon the circumstances, satisfy the predominance requirement.”

New York University law professor Samuel Issacharoff, who argued at the 3rd Circuit for plaintiffs in favor of the class action, told me Tuesday that the court’s opinion should embolden defendants and class counsel to once again use class actions to resolve mass personal injury litigation, even with the higher bar for class certification in the post Wal-Mart v. Dukes era. The panel’s analysis was methodical and fact-bound, Issacharoff said, but its message is almost revolutionary: You can settle a mass tort via a class action.

I emailed one of the lawyers who argued the case for objectors, Deepak Gupta of Gupta Wessler, who passed my inquiry on to objectors’ counsel Brian Wolfman of Stanford Law School. Wolfman told me the interests of future claimants weren’t taken into account enough in the settlement, especially when you consider inflation. I asked whether the 3rd Circuit’s approval will lead to more mass torts class action settlements; Wolfman said that’s “too broad a question to answer yes or no.”

Paul Clement of Bancroft argued for the NFL at the 3rd Circuit. Howard Bashman of the beloved How Appealing blog also argued for objectors.

(This post has been corrected. An earlier version incorrectly identified Judge Anthony Scirica.)

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