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SCOTUS hasn’t looked at class action settlement in 17 years. Time to revisit?
November 10, 2016 / 8:40 PM / 10 months ago

SCOTUS hasn’t looked at class action settlement in 17 years. Time to revisit?

(Reuters) - The last time the U.S. Supreme Court ruled on a challenge to an approved class action settlement, AOL ruled the Internet, Bill Clinton was president and Donald Trump was months away from considering a run for the presidency in an October 1999 interview with Larry King. It was a long time ago, in other words.

The National Football League and plaintiffs' lawyers representing a class of more than 20,000 retired players said in Supreme Court briefs filed last Friday that there is no need for the justices to revisit the rules for protecting the interests of future class members. Those rules were set out in a pair of asbestos cases, 1997’s Amchem v. Windsor and 1999’s Ortiz v. Fibreboard, which, broadly speaking, established that class settlements can only be approved if plaintiffs with different sorts of injuries – and, thus, potential conflicts of interest – are adequately represented. Since those decisions, only a handful of mass torts have been resolved through class action settlements, rather than global settlements that resolve claims individually through an injury matrix.

The NFL’s $1 billion settlement of retired players’ traumatic brain injury claims, as I’ve reported, seemed to reopen the door to personal injury class action settlements. The plaintiffs' steering committee, co-led by Seeger Weiss and Anapol Weiss, recognized during mediation with the NFL’s lawyers at Paul Weiss Rifkind Wharton & Garrison that retired players who had already developed neurological disorders had different interests than those who might develop them in the future. The steering committee appointed counsel for these two subclasses – but the appointed lawyers came from the steering committee’s own ranks.

Ultimately, after rejecting an initial settlement proposal, the trial judge overseeing the consolidated litigation, U.S. District Judge Anita Brody, said the deal passed muster under Amchem and Ortiz because each subclass was fairly represented.

The 3rd U.S. Circuit Court of Appeals affirmed Judge Brody’s approval last March, agreeing that the two subclasses were fairly represented by the independent counsel appointed to protect their interests. “Simply put,” wrote Judge Thomas Ambro for a panel that also included Judge Thomas Hardiman and Richard Nygaard, “this case is not Amchem.”

Two groups of objectors (comprising 33 players in all) filed petitions for Supreme Court review. I’m focusing only on one of those petitions, Armstrong v. National Football League, because it asserts a broad argument that since Amchem and Ortiz, the 2nd and 3rd Circuits have split on what constitutes adequate representation of subclasses. According to Deepak Gupta of Gupta Wessler, Supreme Court counsel for the Armstrong objectors, the 2nd Circuit would not have approved the NFL concussion settlement because players who may develop certain brain diseases in the future were not adequately represented.

The steering committee member who represented their subclass, the objectors said, was conflicted because he also represented individual class members with current injuries. The petition called the 3rd Circuit’s approval of the settlement “a blueprint for circumventing Amchem and Ortiz.”

The 2nd Circuit, Gupta said in the objectors’ petition, held in the In re Literary Works case and again just last summer in the Visa and MasterCard interchange fee litigation that when different groups of plaintiffs have conflicting interests, those subclasses must have their own counsel. The 2nd Circuit is so clear on this point, the petition said, that if a retired football player sued in that circuit in a collateral attack on the class action settlement, the settlement might well be dissolved.

“The 3rd Circuit has drifted away from Amchem,” Gupta said. “The split (with the 2nd Circuit) could unravel this litigation years after the fact.”

That’s preposterous, according to the NFL and lawyers for the class. The NFL’s brief opposing Supreme Court review emphasized the overall fairness of the settlement, which generated only about 200 objectors and about 200 opt-outs. The league’s Supreme Court counsel of record, Paul Clement of Kirkland & Ellis, said the justices’ holdings in Amchem and Ortiz did not create a bright-line rule for class action settlements that resolve different sorts of claims. “Instead, the question is whether the settlement and the process that produced it eliminated the concerns identified in Amchem and Ortiz,” the NFL brief said. (It’s worth pointing out that Clement represented class counsel in the credit card interchange fee class action in their failed defense of the settlement at the 2nd Circuit.)

Plaintiffs’ Supreme Court brief in the NFL case, from counsel of record Samuel Issacharoff of New York University, went into more detail about why there really is no split between the 2nd and 3rd Circuits. According to plaintiffs’ lawyers, the 2nd Circuit cases objectors cite are easily distinguishable from the NFL concussion case because subclasses didn’t have their own counsel in either the credit card or literary works settlements. That’s a stark contrast, the brief said, from the NFL settlement, in which current and future claimants had their own lawyers – and in which hundreds of plaintiffs’ lawyers representing individual NFL players provided additional structural protection when they reviewed the deal with their clients in mind.

“Neither 2nd Circuit case demonstrates a circuit conflict or raises any concern that the settlement here would have been struck down had it been before that circuit,” the class brief said. “Neither looks remotely like this case, which involves what may be the most cohesive, self-aware class ever found in litigation: over 20,000 retired NFL players, all of whom are fully aware of the fact of having played in the NFL, more than 5,000 represented by hundreds of independent lawyers, and all flyspecking one of the most publicized civil settlements in history.”

I doubt the Supreme Court will take the case, but Gupta’s petition nevertheless raises an important point. If the NFL case does turn out to be a roadmap for class action settlements of personal injury claims, settlement negotiators should anticipate the need for independent counsel for subclasses. The sooner they protect against conflicts of interest, the lower the odds objectors will be able to delay the process.

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