United States: The Sedona Conference of 2001:
A Fresh Look at How to Handle Complex Litigation

Recently I had the honor to act as Co-Chair of an historic gathering of distinguished judges and lawyers assembled for the express purpose of reviewing and considering procedures to improve the handling of complex litigation in the State and Federal Courts.

The gathering was extraordinary because it included leading representatives of the appointed bodies who are revising the Federal Judicial Manual on Complex Litigation and devising rules to coordinate mass tort cases in State and Federal Courts. The occasion was the Third Annual Sedona Conference on Complex Litigation which was held in Santa Fe, New Mexico on April 19-20, 2001. The 15 faculty members included four sitting federal judges and three former federal judges, as well as the chairman of the ABA Litigation Section and the American College of Trial Lawyers Complex Litigation Committee. Registration was strictly limited so that there was almost one faculty member for every two participants. This was designed to promote dialogue and discussion rather than faculty lecturing. The participants themselves included a sitting federal judge, representatives from the Federal Judicial Center and experienced and well-known trial practitioners.

My principal responsibilities prior to the conference, were to work with my Co-chair, Federal Judge Thomas Martin of Wichita, Kansas, in planning the agenda and assembling the faculty.

The second major broad area under discussion at the Sedona Conference was the problems related to mass tort litigation particularly where actions arising from same accident or situation are brought in State and Federal Courts scattered throughout the county. This raises obvious problems of duplication form shopping, etc. This is also effected by the tension between the class action bar and personal injury lawyers bringing individual cases for particular clients who seek the greatest recovery for the individual client and do not want to be interfered with or displayed by a class action. Judge Racoff kicked off the discussion of mass tort with a report to the group in his capacity as Chair of the Subcommittee on Mass Torts of the United States Judicial Conference Bankruptcy Committee. He pointed out that a forthcoming (June, 2000) Penn Law Review Symposium on mass tort litigation includes an expression of widespread pessimism that a judicial solution to mass tort problems can be devised. One solution, which he wished to discuss, was bankruptcy organization under Chapter 11 of the Bankruptcy Code. Judge Racoff pointed out that actual insolvency is not needed simple a reasonable threat where a company faces potential insolvency justifies filing of the Chapter 11 Petition.

Judge Racoff pointed out the following advantages to handling of the mass tort situation in the bankruptcy Chapter 11 context:

1. It provides for nationwide jurisdiction and an automatic stay of related litigation in all State and Federal Courts.

2. It centralizes all the cases in one court having exclusive jurisdiction.

3. All creditors of the company, not just tort plaintiffs, are involved in the resolution.

4. Future claims (such as potential cancers or future asbestos related diseases) can be accommodated in the reorganization plant. A class representative can be appointed to represent the futures. These claims can be estimated and a trust can be credited with assets set aside for that trust.

5. "Channeling Injunctions" can be entered requiring payment of the future claims from the assets so set aside in trust.

6. The U.S. Bankruptcy Trustee represents all creditors.

7. All creditors get to vote on the final reorganization plan.

8. Approval of the plan brings global peace and final resolution to the situation.

Judge Racoff also pointed out a number of problems with the bankruptcy approach to mass tort litigation:

1. Bankruptcy may not be an option. It is slow to get started and because all creditors are involved it can take years to resolve the situation.

2. The management of the company may be reluctant to go into bankruptcy. They view it as a last resort because they may lose control of the company in the bankruptcy.

3. Bankruptcy still has a stigma and a negative market effect on the stock values.

4. There are legal and constitutional problems regarding the handling of future claims. It is difficult to estimate how much to reserve for future claims and constitutional challenges could come from limitations on what is available to present injured parties and creditors.

5. There’s the possibility of fraudulent or "prepackaged" bankruptcies.

6. There are Amkemp/Ortiz types of problems in determining the classes to be represented.

It was pointed out that the 1999 Report on Mass Tort concluded that bankruptcy was superior to limited fun settlements, was more efficient and fairer and more equitable. Advantages including the vote of the creditors, the independent trustee, judicial review, class representatives can be appointed for future claims and everyone has to compromise to their claims. Again, however, there are obstacles to bringing bankruptcy and it is not readily invoked. Judge Rosenthal also pointed out the case or controversy/due process obstacles to incorporating advantageous procedures which Judge Racoff noted into Rule 23 Proceedings before Article Three Courts. She reminded the group of Justice Brier’s dissent in Amkemp calling on Congress to act to deal with these situations. The bankruptcy solution is not perfect, but it may still be the best place left to go. Judge Rosenthal also pointed out that there had been discussion for a rule or legislation reversing Amkemp and lowering the standards for certification of a settlement class, that is treating it differently from a trial class. There was much resistance to such a proposal. The bankruptcy solution may be the least inadequate, but certainly not the best. It’s an in-ram approach rather than an in persona situation to get around the constitutional challenge.

Judge Rosenthal led a discussion of particular pop problem areas in dealing with mass torts. For one thing in discovery, it has been recommended to revise the rules for mass torts to eliminate the initial disclosure requirements in high-end complex cases either by agreement or by order of the court. Initial disclosure is rarely appropriate in a mass tort case. Secondly, it has been proposed to change the definition of what is relevant with respect to the scope of discovery. The present language relevant to "the subject matter of the case may be too broad." Attorney managed discovery should be limited to discovery related to the claims and defenses asserted by the parties. Then if there is to be further discovery into materials relevant to the subject matter, but not necessarily to the claims and defenses, such discovery should be closely supervised by the court. Mechanisms are needed to get court rulings and guidance on what is discoverable and need a case management structure imposed early in these cases. The new rule makes it harder to get initial material, but gets the Judge involved early in the case.

There was some discussion of possibly shifting the burden of the cost of discovery. It was noted that there is no real need for a rule change here because the courts already have the authority to impose costs on a party seeking costly discovery.

Mr. Hoell pointed out that after mass torts cases are consolidated, there are tools available to limit repetitive, duplicative and overly burdensome discovery. For example, in the Latex Gloves and Diet Drug cases, the Judge put together information forms for discovery against the plaintiffs seeking information about the claims, extended injury, whether there are future injuries involved, etc. Also it is often useful to appoint a special master for discovery proceedings and to get a website with a calendar for scheduling discovery.

Ms. Caulfield highlighted two particular discovery issues that arises in mass tort cases. One is the problem of access to Court records. Protective orders have become harder to get because of the developing First Amendment or Common Law Access Rules to Court records including discovery matters. Newspapers, competitors, objectors to settlement can all get documents filed in Court. This can become a strategic weapon. For example, one party can load up a summary judgment motion with documents that the other party does not want to be revealed and then send a copy and asked to talk. The other problem is the issue of waiver of privilege or trade secrets because of mistakes made in screening documents for production. She urged early agreement with the opposing counsel or the Court to deal with mistakes and privileged disputes. She suggested asking a Court in advance for a procedure to handle inadvertent production of privileged documents. There were mixed views about using special masters. Judge Racoff said that he prefers to use a Magistrate Judge, but participant Mr. Allen pointed out that a Special Master in a technology case can learn the technology involved in the discovery issues and then can help in settlement of the case. Mr. Savery pointed out that in the private Microsoft litigation former Judge Renfue was appointed the discovery master in California and was so well accepted by the parties that he is going to be jointly appointed in the MDL proceedings. There was also a Special Master appointed the breast implant litigation which worked out well. With respect to document depositories in the future there can be "virtual" depository on a secure website which means a single production, cost savings and easy access for everyone entitled to have access. There was discussion about how to handle the costs of documents, production depositions, technology and special masters. The Federal Judicial Center studied special masters in all cases not just mass torts and found that they were rarely used and when they were used it was usually with the consent of the parties.

Co-Chair Judge Thomas Marten of Kansas addressed the group on the issue of the future of the jury in complex litigation. He pointed out that the Seventh Amendment right to jury contains no exception for complex cases. He also espoused the view that every person has inherent wisdom if you know how to reach it and we don’t want mathematicians and engineers to determine what is just. He suggested recognition that there is more than one way to do things and that the courts and parties should be open to new methods and innovations to enhance jury comprehension. He pointed out the following steps he has been taking in complex cases to increase jury comprehension.

1. Allowing opening statements being made to the entire panel before jury selection. This not only shortens voir dire, but insures that jurors understand the case so that in voir dire they are more willing to respond to questions of counsel and more comfortable with the courtroom. Jurors will then be more attentive to questions on voir dire and people who are not selected will feel that they had a part in the case.

2. He instructs the jury immediately and gives them a written copy of the instructions of what the law is applicable to the case. These pre-instructions tell the jury what to look for and listen for when they are sitting.

3. Let the jury take notes.

4. Give the jury a notebook of trial exhibits so they can highlight, make notes on them and so forth.

5. Give the jurors water like everyone else has in the courtroom.

6. Should jury questioning be allowed. He thinks not. He thinks it would interfere with the trial, but would allow jurors to raise their hands if they don’t understand an answer. This would let the lawyer clear it up right at the time rather than waiting for later.

7. He allows some jurors to discuss the case at the end of the day. It is unrealistic to tell them not to discuss the case at all. They want to talk about it. So let them talk about it, but instruct them not to reach any conclusions yet until they have heard the entire case.

8. He meets with jurors after the trial and allows counsel to meet with them. This builds respect for the system.

9. He allows summaries to the jurors of testimony which is upcoming and the purpose of the testimony. These are mini summations which he permits counsel to make during the case. This prevents repetitive questioning by counsel to underscore the points they are making with the witness. They have already told the jurors what’s coming and why it is important.

10. He allows a witness to give all of her testimony in the plaintiff’s case rather than make her come back for the defense case.

In conclusion, Judge Marten urged lawyers not to talk down to the jurors or assume they are dumb by telling them the same thing five or six times. He also urged a narrative stipulation of uncontested facts and the use of a video about an industry or a situation to make the case clearer to the jurors. He also will allow lawyers to correct any mistakes or anything they forget to bring in by supplementation. This allows the lawyers to relax without having to repeat everything to make sure they covered all their points. The participants were very receptive to these innovative ways of making jurors more effective in complex litigation.