Mass Torts In A World of Settlements

An Interview with Professor Richard A. Nagareda of Vanderbilt University Law School

Professor Richard A. Nagareda is director of the Cecil D. Branstetter Litigation and Dispute Resolution Program at Vanderbilt University Law School in Nashville, Tennessee, and is an authority on mass tort litigation. Last year he released a new book, Mass Torts in a World of Settlement (Univ. of Chicago Press), that has been a conversation-starter in the mass tort world. v Five years ago, Professor Nagareda taught me the rules of evidence. He has won Vanderbilt’s Hartman Award for teaching in the upper-level curriculum and currently holds the Tarkington Chair in Teaching Excellence. He has put his pedagogical skill to work in Mass Torts in a World of Settlement, proposing and defending a new way of looking at the mass tort world. Professor Nagareda offers a unique perspective as a scholar because prior to entering the “ivory tower” he practiced with the Department of Justice and with a private firm in Washington, D.C. He has described his book as “on the ground” in that it deals with real world issues being confronted by lawyers and litigants in the here and now of mass torts. v He graciously lent his time to answer some questions about his book, his scholarship, and his observations on today’s mass tort climate.

Ben Scott: One of the major themes of your book is your argument that “a conception of mass torts primarily as a litigation problem obscures the reality that litigation operates as the prelude to administration” and that sometimes we “pound the square peg of mass torts into the round hole of litigation.” Can you give a brief summary of what you mean by that and why you see it as a problem that needs to be solved?

Prof. Nagareda: Whenever plaintiffs in mass tort litigation can make a credible threat to prevail at trial, everyone understands what the endgame will be. The endgame will consist of some effort to resolve the litigation in whole, or at least in substantial part, by moving claims out of the tort system and into some form of private administrative compensation regime. The basic move here is the same one that tort law made in the early twentieth century in the area of workers’ compensation. We can label the vehicle for this move however we want — as a class action settlement, as a reorganization plan in bankruptcy, or as a series of private contracts with the major plaintiffs’ law firms involved. But the endgame will involve shifting from tort to administration. One of the core arguments in my book is that the law of mass torts hasn’t caught up with this reality. Rather, it remains nostalgic for a past world that doesn’t exist — one in which each individual claimant is entitled to her proverbial “day in court” and to all the autonomy in the resolution of her individual claim that comes with that stylized ideal. When the endgame of mass torts is a form of mass administration, notions of individual autonomy drawn from a bygone era hinder our thinking more than they help. One can’t develop sensible solutions to any problem without first recognizing, in an unsentimental way, what the nature of the problem is in the first place.

Scott: What do you find to be the areas in which lawyers are mired in the past and slow to catch up to and be open to a new conception of mass tort? Particularly as to defense counsel?

Nagareda: Interestingly enough, it’s not the lawyers on either side who are lagging behind reality here. Rather, it’s legal doctrine that’s lagging behind what sophisticated lawyers understand we need to do. My book isn’t like many that one sees coming out of the academy these days. It proceeds from a core respect for and appreciation of what real lawyers actually do in the real world. It’s the lawyers in mass torts who are forward-looking and innovative, not the law.

Scott: What do you find to be the areas in which manufacturers seem to be slow to accept or adapt to mass tort, not simply as a new type of litigation, but as a new type of legal challenge altogether?

Nagareda: Making peace in mass tort litigation means putting together a complex business transaction — a deal that may well be worth just as much to the defendant manufacturer as any merger or leveraged buyout. Making peace means creating value — of bringing into being resources that would not otherwise be available if everyone were left to slog through the tort system for years. That being so, manufacturers should regard this form of “litigation” not so much as litigation in the courtroom sense but, rather, as another form of business transaction. The consequence is that folks on the business side of things shouldn’t just give over the management of the matter to the folks “in legal.” War is too important to be left to generals. So, too, one might say that mass tort litigation is too important to be left to litigators.

Scott: What are the practical, real-world benefits that manufacturers and their counsel can gain from taking a wider view of mass torts as an administrative challenge rather than simply high-volume litigation?

Nagareda: The benefit is to understand that making peace means creating value. For manufacturers, this value lies primarily in the gains from removing the overhang on the firm’s share price and the inhibition of its markets for capital associated with ongoing mass tort litigation. To unlock that value, manufacturers and their counsel need to see the full range of options on the table — everything from contract-based approaches (as in the recent Vioxx deal) to prepackaged reorganizations in bankruptcy (as in much of asbestos litigation today). Law school, in a way, inhibits this sort of cross-cutting vision by conveying the impression that contracts, civil procedure, professional responsibility, and bankruptcy are completely distinct things. As many mass tort lawyers today understand, the reality is that these are much more overlapping and contiguous things. And the tough choice for lawyers and their clients today is often which category to emphasize in order to deal with what kind of mass tort problem.

Scott: What are your thoughts with regard to “bellwether cases,” both as to whether they are a legitimate part of the mass tort resolution process and whether that means that traditional litigation expertise will likely always remain an important piece of mass tort representation?

Nagareda: This is an important and quite desirable development, even in the short period since I finished writing my book. Bellwether trials played a huge role in enabling the settling lawyers in the Vioxx litigation to get a much more accurate handle on the viability of claims in that subject area. As a result, the defense “team” for any mass tort certainly has to include genuine trial lawyers. It’s just that the team also has to include business-side people and deal-making lawyers.

Scott: What attributes would you counsel drug and device manufacturers to seek in their mass tort counsel?

Nagareda: The most important attribute is the ability to see the full range of options available. Don’t hire a litigator who continues to think that contracts, professional responsibility, class actions, and bankruptcy are completely separate bodies of law. Hire someone who starts from the premise that the really innovative legal work today in mass tort litigation is being done in the uncharted areas betwixt and between these traditional categories.

Scott: You’ve said before that one of the unique features of the mass tort landscape is that it is often the lawyers who are on the cutting edge of breaking new ground rather than judges or other governmental forces. Can you expound upon that a bit and why it is important?

Nagareda: Once one understands peacemaking in mass torts as a kind of business deal-making, then it becomes clear that the people setting the agenda are the people designing the deal. And those people are lawyers, not judges. The judges are situated in a much more reactive role. Still, I should underscore that many judges today have a much richer understanding of the real world of mass tort litigation than they did even a decade ago. My book is part of that effort, but the main movers here have clearly been lawyers, not academics.

Scott: You don’t stop at describing the unique world of mass tort, you propose a real-world solution of an administrative structure to govern resolution of mass tort claim rather than the ill-fit model of individual litigation. Can you briefly state the nature of your solution and why it may be appealing to manufacturers?

Nagareda: The hard question with which the law of mass torts continues to struggle is this: How can the law legitimately substitute a private compensation system for claimants’ preexisting right to sue in tort? That’s the central question, regardless of the particular means selected to make that substitution. The core argument at the end of my book is that, once one recognizes that the basic move here is from tort to administration, our thinking should open up to consideration of the role that public administrative bodies might play in legitimizing the deal. The approach sketched in my book offers manufacturers a quid pro quo: You can get real closure and real peace, but you need to acknowledge that what’s going on isn’t purely a private deal. Changing the compensation rules for people prospectively has a public dimension and accordingly should involve public institutions — not, I might add, to dictate solutions but, instead, to lend the force of law to sensible compromises crafted by private lawyers. All of this is in keeping with receptiveness in this country today to notions of genuine collaboration between the private and public sectors. Government cannot and should not try to solve every problem. But there is a role for government to enable and facilitate privately-crafted solutions.