Complex Litigation: Punitive Damages Class II, page 3

COMPLEX LITIGATION (contined)

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Judge Jack Weinstein's analysis in In re "Agent Orange" Products Liability Litigation, 100 F.R.D. 718, 726 (E.D.N.Y. 1983), preserves the letter and spirit of 23(b)(1)(B). The strict standard is rejected because it "flies in the face of the language of Rule 23, which requires only that there be a 'risk' of impairment, not that there be a conclusive determination of impairment." Id. at 726.

The "proper standard is whether there is a substantial probability—i.e., less than a preponderance but more than a mere possibility—that if damages are awarded, the claims of earlier litigants would exhaust the defendants' assets." Id. This "substantial probability" test has become the prevailing standard. See, e.g., In re Joint Eastern and Southern District Asbestos Litigation, 129 BR. 710, 824-29 (1991) (collecting cases); Jenkins v. Raymark Industries Inc., 109 F.R.D. 269, 276-77 (E.D. Texas 1985), aff’d, 782 F.2d 468 (1986) (adopting the "substantial probability" test). Indeed, even the 9th Circuit recently rejected the argument that Dalkon Shield bars certification in the mass tort context, Valentino v. Carter-Wallace Inc, 97 F.3d 1227, 1230 (9th Cir. 1996) ("the law of this circuit... does not create any absolute bar to the certification of a multi-state plaintiff class action.").

The real failure: lack of evidentiary presentation

The failure of cases to establish limited fund certification stems more from lack of evidentiary presentation than from unrealistic legal barriers. In the cases cited by Prof. Mullenix, the problem was not that the litigants failed in their proof of the existence of a limited fund, but that the requisite proof was not undertaken. See e.g., Payton v. Abbot Laboratories, 83 F.R.D. 382, 389 (D. Mass, 1979); In re School Asbestos Litigation, 789 F.2d 996, 1005 (3d Cir. 1986).

The lesson here is simple: Litigants should submit persuasive evidence from which the court makes findings of fact demonstrating a limited fund under (b)(1)(B). See, e.g., Coburn v. 4-R Corp., 77 F.R.D. 43, 45-46 (E.D. Ky. 1977).

Prof. Mullenix states that punitive damages class certification may fail "because federal or state substantive law prohibits classwide determination of punitive damages."

However, the Supreme Court has suggested that there are (unspecified) due process limits on punitive damages awards, Pacific Mutual Life Insurance Co. v. Haslip, 499 (1991); TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993); and BMW of North America Inc. v. Gore, 517 U.S. 559 (1996). In TXO, the court observed that state and federal courts "have eschewed an approach that concentrates entirely on the relationship between actual and punitive damages. It is appropriate to consider the magnitude of the potential harm that the defendant's conduct would have caused to its intended victim if the wrongful plan had succeeded, as well as the possible harm to other victims that might have resulted if similar future behavior were not deterred." TXO, 509 U.S. at 2721-22.

The logic of the trilogy suggests that a consolidated award of punitive damages to a well-defined group or specific community may present an ideal balance between the due process rights of plaintiffs and defendants when a single tort has harmed many.

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