Asbestos Law Information

Alternative Structures

None of the procedures discussed below was designed with mass toxic tort cases in mind. Federal class action rules have not been amended in two decades. Rules regarding consolidation of cases have a broad flexibility, but lack clear guidance and the capacity to produce a final judgment applicable to members of a class not before the court. Multidistrict litigation procedures were created almost twenty years ago with an eye toward pretrial management of complex commercial litigation. Parties resist application of col­lateral estoppel rules to individual tort claims, inhibiting any po­tential benefits.

Calls for reform of procedures for mass litigation have been heard frequently in the recent past.223 Nevertheless, asbestos cases currently clog the dockets of federal (and state) courts. Litigants, lawyers, and judicial personnel involved with asbestos cases are un­likely to benefit from the slow-moving, politicized reform process. Current participants in the litigation process are more likely than legislators and rule-making bodies to be able to create a solution tailored to the unique characteristics of asbestos litigation.

It is questionable whether reform of toxic tort procedure will be timely enough to meet the needs of asbestos litigants. Delay penal­izes litigants in an uneven fashion, resulting in major discounts of plaintiffs’ causes of action.224 Existing legal tools for management of large numbers of asbestos claims are discussed on the premise that courts need readily available methods to manage existing, growing caseloads.

Consolidation. Federal Rule of Civil Procedure 42(a) vests broad discretion in district judges to consolidate for “a joint hearing or trial” any matters in issue in “actions involving [one or more] common questionfs] of law or fact.”225 Rule 42(a) has wide applica-

  1. See, e.g., ABA Section of Litigation, Report and Recommendations of the Spe­
    cial Committee on Class Action Improvements, 110 F.R.D 195 (1986); Mullenix, Class
    Resolution of the Mass-Tort Case: A Proposed Federal Procedure Act, 64 Tex. L. Rev.
    1089 (1986); Panzer & Patton, Utilizing the Class Action Device in Mass Tort Litiga­
    tion, 21 Tort & Ins. L.J, 560 (1986); Rubin, supra note 1, at 448-49; Williams, Mass
    Tort Class Actions: Going, Going, Gone?, 98 F.R.D. 323 (1982).

    1. See the discussion supra at notes 108, 114-15.
    2. Fed. R. Civ. P. 42(a) provides:

(a) Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay,

bility to asbestos litigation. Its flexibility allows district courts to create procedures on a districtwide level that mimic the procedures created by Congress for multidistrict litigation. Cases can be con­solidated according to case characteristics for discovery, settlement, or trial purposes. Consolidations can be imposed on all or part of the asbestos caseload by the court as a whole or by individual judges. Appellate courts have given considerable deference to the judgments of trial courts on consolidations.226 One appellate court concluded that properly grouped asbestos cases “present precisely the kind of tort claims a court should consider consolidating for trial.”227

In considering whether to consolidate cases or issues, a district court needs to balance a host of factors, including “specific risks of prejudice and possible confusion[,] . . . the risk of inconsistent adju­dications, the burden on parties, witnesses and available judicial resources,” and the relative time and expense of individual adjudi­cations as compared with consolidated adjudications.228 In evaluat­ing specific risks of prejudice, the burden is on the objecting party to demonstrate the prejudicial effects.229 Preventive steps, such as use of notebooks and tabs for each case, repeated cautionary in­structions, or use of special verdict forms have been accepted as likely to prevent any prejudice that might otherwise infect the pro­ceedings.230

  1. See, e.g., Hendrix v. Raybestos-Manhattan, Inc., 776 F.2d 1492, 1495 (11th Cir.
    1985) (decision to consolidate is “purely discretionary” subject to review on a “clear
    abuse of discretion” standard); Neal v. Carey Canadian Mines, Ltd., 548 F. Supp,
    357, 383 (E.D. Pa. 1982), aff’d sub nom. Van Buskirk v. Carey Canadian Mines, Ltd.,
    760 F.2d 481 (3d Cir. 1985); see also Wilson v. Johns-Manville Sales Corp., 107 F.R.D.
    250 (S.D. Tex. 1985); In. re All Asbestos Cases, Memorandum Opinion (D. Md. Dec.
    16, 1983). See generally 9 C. Wright & A. Miller, Federal Practice and Procedure
    §§ 2383^2384 (1971).

    1. Hendrix, 776 F.2d at 1497,
    2. Id. at 1495. See also Arnold v. Eastern Air Lines, 681 F.2d 186, 193 (4th Cir.
      1982), cert, denied, 460U.S. 1102 (1983).
    3. See, e.g., Kershaw v. Sterling Drug, Inc., 415 F.2d 1009, 1012 (5th Cir. 1969);
      see also Neal, 548 F. Supp. at 383 (“defendants have not shown any demonstrable
      prejudice”). Cf. Hendrix, 776 F.2d at 1495 (requiring a showing of “specific risks of
      prejudice and possible confusion”).
    4. See, e.g., Hendrix, 776 F.2d at 1496-97 (notebook tabbed for each plaintiff and
      each defendant; repeated cautionary instructions); Neal, 548 F. Supp. at 383 (special
      interrogatories); Wilson, 107 F.R.D. at 255-57 (special interrogatories, appended to
      the opinion). In Newman v. Johns-Manville, Civ. Action No. M-79-124-CA (E.D. Tex.),
      Judge Parker used a stipulated product list, including dates of manufacture, to
      guide the jury’s decisions. A special verdict form led the jury through each of the
      elements of the cause of action as to each product, including dates for knowledge of
      the dangers of asbestos for each defendant (uniformly found to be 1945), and any
      award for each of the four plaintiffs against each of the defendants. The jury ver­
      dicts were returned on October 24, 1984. A copy of the verdict form is on file at the
      Federal Judicial Center. For a discussion of the jury deliberations in that case, see
      M. Selvin & L. Picus, supra note 222.

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Common factual and legal issues that have served as a basis for consolidated trials or hearings include

  • all issues relating to whether defendants negligently failed to
    adequately warn workers of the dangers of working with as­
    bestos and whether the failure to warn was the proximate
    cause of plaintiffs’ injuries (including the state-of-the-art de­
  • whether plaintiffs’ claims were barred by the statute of limi­
  • whether products supplied by defendants to plaintiffs’ work­
    site were the proximate cause of their injuries;233
  • whether defendants’ conduct was so outrageous as to warrant
    punitive damages;234
  • whether  the   “government  contractor  defense”  bars  liabil­
    ity;235 and
  • whether the state-law exclusion of the state-of-the-art defense
    in asbestos litigation violates equal protection of the laws.236

Courts have emphasized the economies that can be achieved by organizing the consolidated cases according to common elements. For example, in Hendrix, the court observed that “[a]ll of the ap­pellees . . . were insulators and had worked out of the same union hall . . . during the same time frame.” Each suffered from asbesto-

  1. Hendrix, 776 P.2d at 1494-95, Cf. Neal, 548 F. Supp. at 366 (separate trials
    for individual damages only). Regarding the repetitiveness of the state-of-the-art de­
    fense, see Wilson, 107 P.R.D. at 251-52.

    1. Neal, 548 P. Supp. at B66 n.3.
    2. Id. at 366. In Wilson, the issue of proximate causation based on exposure to
      defendants’ products was the subject of separate trials for groups of five plaintiffs.
      107 F.R.D. at 253. In Hendrix, four cases were consolidated and all issues were in­
      cluded in a single phase.

      1. Neal, 548 F. Supp. at 366; Wibon, 107 F.R.D. at 252.
      2. Tefft v. A.C. & S., Inc., slip op. (W.D. Wash. Sept. 15, 1982) (Lexis: Genfed
        library, Courts file) (separate trial for issue of whether the “injury-causing aspect of
        the product was … in compliance with a specific mandatory government contract
        specification relating to design or warning,” which is a statutory bar in Washington
        state); but cf, McCrae v. Pittsburgh Corning Corp., 97 F.R.D. 490, 493 (E.D. Pa. 1983)
        (rejecting motion from three of eighteen defendants for “Phase I” trial for govern­
        ment contract defense as “unwieldy and confusing” as applied to fourteen plain­
      3. In re Asbestos Litig., 628 P. Supp. 774 (D.N.J. 1986). In this action the district
        court sat en bane to establish the law of the case for all cases in the asbestos litiga­
        tion in the District of New Jersey on the availability of the state-of-the-art defense.
        Id. at 775. The court ruled, 8-5, that “under New Jersey law the state-of-the-art de­
        fense is not available, against a strict-liability claim, to a defendant-manufacturer of
        products containing asbestos.” Id, The court then certified an interlocutory appeal
        to the Third Circuit.

sis and was treated by the same physician, and they had “nearly identical” medical prognoses.237

In addition to organizing consolidations to conform to the major legal and factual elements of a case, there are practical consider­ations that make it desirable to limit consolidation of asbestos cases to those involving the same counsel for the plaintiffs. Often asbestos cases present themselves in that format naturally; work­ers from the same jobsite tend to seek the same lawyer-specialist. Consolidating by lawyer serves generally to keep the trial as simple as possible and to minimize settlement complications.

For resolution of legal issues within a district, consolidation allows a court as a whole to resolve a particular legal issue for all cases.238 Combined with the interlocutory appeal procedure of 28 U.S.C. § 1292, consolidation can lead to reasonably prompt resolu­tion of major issues.239

Class actions. Authority for courts to certify class actions in mass tort litigation, such as that involving asbestos products, is a challenging and oft-discussed issue.240 It is beyond the scope of this report to build on that mountain of legal commentary or to synthe­size it. Review of class action cases that relate directly to manage­ment of asbestos litigation is apt.

The Advisory Committee on Civil Rules clearly contemplated that “mass accident” cases would ordinarily not find suitable ac­commodations in the class action provisions of Federal Rule of Civil Procedure 23. The committee concluded that the individual injury and damages issues meant that “an action conducted nominally as a class action would degenerate in practice into multiple lawsuits

237.   Hendrix, TO F.2d at 1496. See also Neal, 548 F. Supp. at 383 (“all fifteen
claims arose out of the exposure of a group of employees working at the same plant
over substantially the same period of time to asbestos fiber and dust allegedly sup­
plied to the plant by supplier defendants”).

Similarly, after hearings involving all counsel, six judges of the District of Mary­land entered an order of consolidation setting criteria for grouping of cases by liai­son counsel. They were: “(1) common worksite; (2) similar occupation; (3) similar type of exposure; (4) type of disease; (5) whether plaintiffs were living or deceased; (6) status of discovery in each case; (7) whether all plaintiffs were represented by the same counsel; and (8) type of cancer alleged (e.g., lung, colon, mesothelioma).”

  1. See, e.g., cases discussed supra at notes 235 and 236.
  2. See, e.g., Neubauer v. Owens-Corning Fiberglas Corp., 686 P.2d 670, 571 (7th
    Cir. 1982) (statute of limitations), cert, denied, 459 U.S. 1226 (1983); Hardy v. Johns-
    Manville Sales Corp., 681 F.2d 334, 336-37 (5th Cir. 1982) (collateral estoppel).
  3. See authorities cited supra at note 223. See also Note, Mass Exposure Torts:
    An Efficient Solution to a Complex Problem, 54 U. Cin. L. Rev. 467, 473-98 (1985);
    Comment, Affirmative Judicial Case Management: A Viable Solution to the Toxic
    Product Litigation Crisis, 38 Me. L. Rev. 339, 352-60 (1986); Comment, Federal Mass
    Tort Class Actions: A Step Toward Equity and Efficiency, 47 Albany L. Rev. 1180

Chapter VII

separately tried.”241 Until recently, this dictum set the tone for treatment of motions for class certification in mass tort actions.242 Asbestos claims were denied class action status.243

Two recent decisions have altered the trend. In Jenkins v. Raymark Industries, Inc.,2** the U.S. Court of Appeals for the Fifth Circuit, in an interlocutory appeal, affirmed an order issued by Judge Robert M. Parker of the Eastern District of Texas certify­ing a class under rule 23(b)(3)245 composed of 755 asbestos personal injury claims filed in that district prior to January 1, 1985. Against the backdrop of an “avalanche of litigation,” the likelihood that the trend of filings would continue, and the delays in the trial queue,246 the court of appeals found that the class met all pre­requisites of rule 23(a)247 and the requirements of rule 23(b)(3).248 On the question of whether common issues “predominate” over in­dividual questions, the court ruled that the test is whether “common issues . . . constitute a significant part of the individual cases” and found that jury decisions in this case will “significantly advance the resolution of the underlying hundreds of cases.” Therefore, the court found no abuse of discretion in Judge Parker’s conclusion on that issue.249

  1. Fed. R, Civ. P, 23, Note of Advisory Committee on Rules, 1966 Amendment,
    subdivision (bX3) (1986).
  2. See, e.g., In re Northern Dist. of CaL, Dalkon Shield IUD Prods. Liab. Litig.,
    693 F.2d 847, 852-54 (9th Cir. 1982), cert, denied, 459 U.S. 1171 (1983); In re Federal
    Skywalk Cases, 680 F.2d 1175 (8th Cir.), cert, denied, 459 U.S. 988 (1982). In each of
    these cases, the district court had certified a class action and the court of appeals
    reversed. In the Dalkon Shield case, the district court had certified a statewide class
    action on the issue of liability under Fed. R. Civ. P. 23(b)(3) and a nationwide class
    action on the issue of punitive damages under Fed, R. Civ. P. 23(b)(l)(B); the court of
    appeals ordered both classes decertified.
  3. See, e.g., Yandle v. PPG Indus., 65 F.R.D. 566 (ED. Tex. 1974) (action by 570
    employees and survivors at single asbestos plant not certified because common ques­
    tions of law and fact do not predominate over individual one, and class action is not
    the superior method for adjudication).

    1. 782 F.2d 468 (5th Cir, 1986).
  4. Fed. R. Civ. P. 23(b)(3). Such a class is commonly referred to as an “opt out
    class” because plaintiffs have the option of refusing to be included in, and bound by
    the outcome of, the class trial. See Panzer & Patton, supra note 223, at 566.

    1. Jenkins, 782 F.2d at 470.

24’7. The prerequisites to a class action are numerosity (“the class is so numerous that joinder of all members is impracticable”), commonality (“questions of law or fact common to the class”), typicality (“claims … of representative parties are typi­cal of the claims … of the class”), and adequacy of representation (“representative parties will fairly and adequately protect the interests of the class”). Fed, R. Civ, P. 23(a) (1986). See also Panzer & Patton, supra note 223.

  1. The requirements of Fed. R. Civ. P. 23(bX3) are district court findings that
    “the questions of law or fact common to the members of the class predominate over
    any questions affecting only individual members, and that a class action is superior
    to other available methods for the fair and efficient adjudication of the contro­
  2. Id. at 472-73. See also In re School Asbestos Litig., 789 F.2d 996, 1010 (3d Cir,
    1986) (“resolution of one issue or a small group of them will so advance the litiga-

The common issues found to be included in the Jenkins class were product defectiveness as to each defendant’s products, identifi­cation of products to which plaintiffs were exposed, the date each defendant knew or should have known of the dangers related to their products (the state-of-the-art defense), and gross negligence and punitive damages.250 On the question of “superiority” of the class action device under rule 23(b)(3), the court held that “Judge Parker’s plan is clearly superior to the alternative of repeating, hundreds of times over, the litigation of the state of the art issues,”251

Shortly after the Fifth Circuit decided Jenkins, the U.S. Court of Appeals for the Third Circuit, also in an interlocutory appeal, af­firmed the conditional certification of an “opt out” class action for asbestos property damages actions brought by local school authori­ties.252 As in Jenkins, the court looked at some of the characteris­tics of asbestos litigation, especially the inconsistency of jury ver­dicts, and found that “the highly unusual nature of asbestos litiga­tion” influenced its decision to approve the certification.253

The common issues found in the School Asbestos Litigation were the “health hazards of asbestos, the defendants’ knowledge of those dangers, the failure to warn or test, and the defendants’ concert of action or conspiracy in the formation or adherence to industry practices.”254 Despite “serious concern” about manageability, the court applauded the district court’s “willingness to attempt to cope with an unprecedented situation in a somewhat novel manner” and concluded that the appeals court did “not wish to foreclose an ap­proach that might offer some possibility of improvement over the methods employed to date.”255

tion that they may fairly be said to predominate”). See generally 7 A C. Wright & A. Miller, Federal Practice and Procedure § 1778 (1986 ed.).

  1. Jenkins, 782 F.2d at 470-71, The jury was also to decide all the individual
    issues in the cases of the class representatives. Punitive damages would be awarded
    as a proportion of actual damages to be determined in minitrials after the class pro­
    ceedings. Id. at 474-75.

    1. Id. at 473.
  2. In re School Asbestos Litig., 789 F.2d 996 (3d Cir. 1986). The court rejected a
    proposed  mandatory  class action  for  punitive  damages  under Fed.  R.  Civ.  P.
    23(b)(l)(B) and affirmed the district court’s denial of certification under Fed. R. Civ.
    P. 23(bX2) class action. Id. at 1002-08. The rule 23(bXlXB) class was rejected because
    findings of a limited fund were not based on evidence of insolvency and because all
    of the property damage claims were not included in this action. Id. at 1008.

    1. Id. at 1011; see also id. at 1000-01.
    2. Id. at 1009.
  3. Id. at 1011. The court also observed that the district court might find addi­
    tional common issues or that it might decide to decertify the class altogether if man­
    ageability problems proved to be insurmountable.

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Although there is “growing acceptance of the notion that some mass accident situations may be good candidates for class action treatment,”256 these are the first appellate cases that extend the trend to mass toxic tort situations in which the harms were spread over time and were not the product of a single incident.257 As the Third Circuit observed, courts have come to realize that a class action “need not resolve all issues in the litigation”258 and that rule 23 has the flexibility of permitting subclasses to deal with variations of a major issue.259

Without negating the possibility and desirability of reform in class action procedures as applied to mass tort litigation, the evolv­ing law of class actions does permit flexible applications to asbestos litigation. When limited to the cases filed in a particular district, as in Jenkins, the legal complexity shrinks considerably: In no event will the law of more than one state be applicable to the claims of class members. The local form of the class action tempers traditional concerns about individual notice, interference with at­torney-client relationships, and other aspects of manageability. While the stakes will be high in most districtwide actions, they will not approach the monumental proportions of a nationwide class like the Agent Orange class action or even the asbestos school liti­gation.

Who will opt into a rule 23(b)(3) class? The Jenkins and School Litigation cases are likely to differ in this regard. In the district-wide class in Jenkins incentives for plaintiffs to participate flowed from the fact that the two co-lead counsel represented the vast ma­jority of plaintiffs in the district. While their preference might be for trials of smaller groups of plaintiffs, the judge found the class mechanism superior. A class action became the only means to gain immediate trials and results for their clients. As lead counsel, they also had relative confidence that they would be awarded adequate fees, which are controlled by the trial judge: The judge’s award both reduced the normal contingent fee amounts and resulted in a large award.260

  1. Id. at 1008.
  2. The Agent Orange litigation was a precursor. In that case, the Second Cir­
    cuit refused to block certification of a nationwide class action by denying a writ of
    mandamus. In re “Agent Orange” Prods. Liab. Litig., 506 F. Supp. 762 (E.D.N.Y.
    1980), modified, 100 F.R.D. 718 (1988), mandamus denied sub nom. In re Diamond
    Shamrock Chems. Co., 725 F.2d 858 (2d Cir. 1984), cert, denied, 465U.S. 1067 (1984).
  3. In re School Asbestos Litig., 789 F.2d at 1008, citing Fed. R. Civ. P. 28(c)(4)(A).
    For further discussion of severance of issues and use of subclasses in mass tort class
    actions, see Comment, Federal Mass Tort Class Actions: A Step Toward Equity and
    Efficiency, 47AlbanyL. Rev. 1180, 1221-29 (1983).

    1. In re School Asbestos Litig., 789 F,2d at 1010 n.ll; Fed. R. Civ. P. 23(cX4)(B).
    2. See Jenkins v. Raymark Indus., Inc., No. M-84-193-CA, Notice of Proposed
      Class Settlement (E.D, Tex. June 6, 1986), reprinted in Mealey’s Litig. Reps.: Asbes-

For counsel not appointed as lead counsel—and perhaps not part of the litigation team at all—there is a decided disincentive to rec­ommending that their clients opt into the procedure. These counsel would be forced to surrender control of their cases to the trial team and would have to forgo or compromise their fees. Their clients also may have a disincentive for joining the class action. A plaintiff with a meritorious claim may be more likely to receive a higher award.

In the school litigation, on the other hand, the plaintiffs’ and their lawyers are located across the nation and have more options. In many jurisdictions, the cases are pending in state courts. Local decision making seems likely to favor plaintiffs. Some lawyers spec­ulated that only the smaller school districts and those with weaker cases will not opt out of the national class. Presumably, a similar hemorrhage would occur in a nationwide class of personal injury plaintiffs.

Defendants objected strenuously to the class action procedure in Jenkins and were unsuccessful in the court of appeals. Their pre­ferred procedure was to have a limited number of plaintiffs consoli­dated, with a bifurcated procedure to control a jury’s decisions. Behind the legal arguments, their cash flow concerns loomed large. Even the settlement was seen by some as a “train wreck” for de­fendants. Districtwide or nationwide structured settlements, geared to the cash flow capacity of the defendant, are a device that may ease those problems in any future class actions.

The structure of the class action trial in Jenkins resembled that of the Newman case in that the jury would have been asked to return special verdict forms.261 Alternative classwide bases for cal­culation of punitive damages were conditionally approved by the court of appeals.262

The evolution of the Jenkins case seems instructive. Judge Parker first presided over individual trials, then used collateral es­toppel (discussed below), experimented with the “trial in the round,” and then with consolidation of thirty cases. A stepladder effect is evident. When he began to discuss the possibilities of a dis­trictwide class action, the lawyers saw this as no idle chatter. Thor-

tos, June 13, 1986, at 4,490 (fee of 20 percent awarded to all plaintiffs’ counsel; addi­tional 1 percent awarded to class counsel, for a total award of $22.51 million; a con­tingent fee of 83 percent would have produced an award of $85.7 million). See also Judge Parker Awards 20 Percent Fee in Texas Class Action, id., June 13, 1986, at 4,407.

  1. See the discussion supra at note 230.
  2. Jenkins, 783 F.2d at 474-75. The jury could find an aggregate amount for pu­
    nitive damages or find an amount for each class member to receive in relation to
    each dollar of compensatory damages.

Chapter VII

ough mastery of the trial issues, in part through the careful con­struction of special verdict forms, smoothed the way for a credible scheduling of a class action trial. In other districts, threats of class trials or mass consolidations have been treated as judicial puffery, perhaps because the lawyers recognize that experience with indi­vidual trials is a precondition to management of a mass trial.

The two specialist judges—Judges Parker and Lambros—both ex­hibit variations of a stepladder effect. The numbers of cases in the OAL clusters have increased steadily as the court and lawyers gained more experience and familiarity with the system. Judges who choose not to specialize could likely combine more cases for trial after they have assimilated the experience of a trial of an as­bestos case.

Multidistrict litigation procedures. In 1968, Congress created the Judicial Panel on Multidistrict Litigation (JPMDL) with authority to transfer civil actions filed in different districts to any district “for coordinated or consolidated pretrial proceedings.”263 The pur­pose of a transfer is “for the convenience of the parties and wit­nesses and . . . [to] promote the just and efficient conduct of such actions.”264 Multidistrict proceedings have been used to consolidate and simplify discovery in some nationwide product liability ac­tions.265 Asbestos personal injury claims, however, have been re­fused multidistrict proceedings on several grounds, especially the “virtually unanimous opposition of the parties to transfer.”266

More recently, the panel denied multidistrict treatment to twenty school property damage claims, in part because the panel was not “persuaded that these common questions of fact will pre­dominate over individual questions of fact presented in each action.”267 The panel also observed that “the great majority of par-

  1. 28 U.S.C. § 1407<a) (1986). The panel has authority to initiate a motion to
    transfer a group of cases. 28 U.S.C. § 1407(cXi).

    1. 28 U.S.C. § 1407(a).
    2. See, e.g., In re Richardson-Merrell, Inc., “Bendectin” Prods. Liab, Litig. (No.
      II), 533 F. Supp. 489 (J.P.M.D.L. 1982); In re “Agent Orange” Prods. Liab. Litig.,
      MDL No. 381 (unpublished opinions dated 5/8/79 and 10/18/88); In re A. H. Robins
      Co., Dalkon Shield IUD Prods. Liab. Litig., 406 F. Supp. 540 (J.P.M.D.L. 1975) (per
      curiam). At least nine products liability cases had been transferred to the panel as
      of July 1984. Transgrud, Joinder Alternatives in Mass Tort Litigation, 70 Cornell L.
      Rev. 779, 803-04 n.138 (1985).
    3. In re Asbestos and Asbestos Insulation Material Prods. Liab. Litig., 431 F.
      Supp. 906, 910 (J.P.M.D.L. 1977). See also In re Asbestos Prods. Liab. Litig. II, MDL
      No. 416 {J.P.M.D.L. 1980) (unpublished opinion). For further discussion of the his­
      tory of the MDL panel’s treatment of asbestos personal injury cases, see Hensler,
      supra note 1, at 57-60.
    4. In re Asbestos School Prods. Liab. Litig., 606 F. Supp. 718, 714 (J.P.M.D.L.
      1985). That conclusion, of course, differs from that of the Third Circuit on the same
      subject and from that of the Fifth Circuit on the importance of the common issues
      in personal injury asbestos litigation. At the same time, the panel observed that

ties responding to the Section 1407 motion [filed by three defend­ants] opposes centralization.”268

Respondents were not systematically asked about MDL proce­dures. Two lawyers, one representing plaintiffs, the other repre­senting a major defendant, opined that in hindsight the opposition to MDL certification was knee-jerk and short-sighted. Recognizing that MDL rules need updating to cope with mass tort litigation, the defendant’s lawyer saw value to the organizational structure that MDL certification would provide, especially that it would coordi­nate discovery. Discovery management would help defendants avoid the apparent contradictions when responses by local counsel in early cases are compared with more complete information avail­able to national counsel.

A major deficiency in MDL procedure is that the panel does not have statutory authority to transfer cases for trial. Despite this, courts have developed creative ways to extend the jurisdiction of the transferee court if a single trial appears to be appropriate. For example, in the Agent Orange Litigation, the transferee judge certi­fied a class action. In the Bendectin Litigation, the transferee judge, after being rebuffed in an effort to create a mandatory set­tlement class action under rule 23(b)(l)(B),269 consolidated all cases within his district and any others who voluntarily opted into the consolidated proceedings.270 In other cases, the transferee judge, using authority under section 1407 to rule on pretrial motions, may grant motions for change of venue to the transferee district, if that district is one in which the action “might have been brought.”271

Occasionally, the MDL panel has split litigation on the basis of differences in the claims and transferred cases to more than one district.272 The panel has also recognized the authority of a trans-

“the common questions of fact involved in these actions have been extensively liti­gated for the past ten years in connection with thousands of personal injury actions arising from alleged asbestos exposure.” Id, at 714. The fact that the panel recog­nizes the repetitiveness of the litigation and denies multidistrict status underscores the strength of their opinion that consolidated pretrial proceedings would not aid the management of the litigation.

  1. Id. at 714.
  2. In re Bendectin Prods. Liab. Litig,, 749 F.2d 300 (6th Cir. 1984).
  3. In re Bendectin Litig., MDL No. 486, Order of Consolidation and Separation
    (S.D. Ohio Nov. 16, 1983), No. 85-3858, argued (6th Cir, Oct. 9, 1986).
  4. 28 U.S.C. § 1404(a) (1986). The leading authority is Pfizer, Inc. v. Lord, 447
    F.2d 122 (2d Cir. 1971). See generally C. Wright, A. Miller & E. Cooper, Federal Prac­
    tice and Procedure, Jurisdiction 2d, § 3866 (1986). The panel explicitly recognizes
    the power of the transferee judge to rule on motions for change of venue as a
    method of consolidating actions for trial, Judicial Panel on Multidistrict Litigation,
    Rules of Procedure, Rule ll(b) (1986 ed.), and the practice has become “an accepted
    procedure,”  Weigel,   The Judicial Panel on Multidistrict Litigation,   Transferor
    Courts and Transferee Courts, 78 F.R.D 575, 581 (1978).
  5. See, e.g., In re Sugar Indus. Antitrust Litig., 399 F. Supp. 1397 (J.P.M.D.L.
    1975) (similar claims bifurcated and transferred to separate eastern and western dis-

Chapter VII

feree court to establish separate discovery tracks based on the nature of the factual issues or the existence of multiple defend­ants.273 Such powers seem to be prerequisites to any practical ap­plication of MDL procedures to proceedings with as many claims and defendants as are typical in asbestos litigation. Different treat­ment of claims from various states—perhaps combining all cases from districts within a state—would minimize differences in pre-trial discovery and motions based on difference in state law.274

Bankruptcy. Discussion of alternative structures for judicial res­olution of asbestos claims would not be complete without pointing out the role of the bankruptcy courts as a forum for the collective resolution of claims against asbestos defendants. At least six manu­facturers of asbestos products have filed for Chapter 11 reorganiza­tion in bankruptcy court.275 The mass treatment of cases in Chap­ter 11 exhibits striking parallels to the class action device.278

Participants in the formulation of the reorganization plan are forced to deal on a class basis with the unliquidated claims, present and future, of asbestos plaintiffs. Mechanisms created in the bank­ruptcy process, such as the Manville alternative dispute resolution facility, may provide examples of how to deal with classwide issues.277 The Manville facility is expected to approximate the

tricts because of production and marketing differences arising from geographical differences); Penn Central Sees. Litig., 325 F. Supp. 309 (J.P.M.D.L. 1971) (per curiam) (claims against same defendant transferred to separate districts because of differences in the claims). See also In re Petroleum Prods. Antitrust Litig., 419 F. Supp. 712, 714-15 nn.2-3 (J.P.M.D.L. 1976) (panel considers subgrouping of similar claims and transfer to more than one transferee district).

  1. See, e.g., In re Multi-Piece Rim Prods. Liab. Litig., 464 F. Supp. 969, 974
    (J.P.M.D.L. 1979) (“The transferee judge, of course, has the authority to group the
    pretrial proceedings on different discovery tracks according to the common factual
    issues or according to each defendant”); In re Upjohn Co. Antibiotic “Cleocin” Prods.
    Liab. Litig., 450 F. Supp. 1168, 1170 (J.P.M.D.L. 1978). 28 U.S.C. § 1407(a) explicitly
    recognizes the power of the panel to create or permit separate tracks or subgroups
    for discovery by providing that “the panel may separate any claim, cross-claim,
    counter-claim, or third-party claim and remand any such claims before the remain­
    der of the action is remanded.”

    1. See the discussion supra at notes 258 to 259.
    2. See supra note 29.
    3. See generally Note, Strategic Bankruptcies, supra note 29; Note, The Manville
      Bankruptcy: Treating Mass Tort Claims in Chapter 11 Proceedings,
      96 Harv. L. Rev.
      1121 (1983).
    4. The Manville reorganization plan was approved by the bankruptcy judge
      pursuant to the “cram down” provisions of the Bankruptcy Code, In re Johns-Man-
      ville Corp., 82 B 11656/76, Determination of Confirmation Issues (Bankr. S.D.N.Y.
      Dec. 18, 1986), reprinted in Mealey’s Litig. Reps.: Asbestos, Dec. 26, 1986, at 5,531.
      The plan provides for creation of two trust funds to compensate personal injury and
      property damage claimants. An operating company is created that will fund the two
      trusts in an amount specified in the plan. An injunction will protect the operating
      company from future asbestos claims and punitive damages claims. All claims,
      therefore, will be processed through procedures involving the trusts.

functions of the privately organized Wellingtonfacility and the ar­bitration process created in the Jenkins settlement. In one way, bankruptcy courts may be superior to trial courts: Bankruptcy courts are designed to gather information about finances, scrutinize the finite resources of the defendant, evaluate the reality of claims of poverty, and create a plan that responds to the debtors’ financial limits. In this way, the bankruptcy court actions approach those of a nationwide class action against a single defendant.

There are two types of alternative structures that apply mainly to case-by-case litigation: collateral estoppel and bifurcation.

Collateral estoppel. Despite the fact that offensive collateral es­toppel is technically available to preclude relitigation of issues by a party that has had a full and fair opportunity to litigate,278 the doctrine has had little success in expediting asbestos litigation.279 In tort litigation, collateral estoppel necessarily operates on an issue-by-issue basis and cannot be used to resolve the individual issues of exposure, proximate cause, and injuries.280 Because there is no self-evident test as to when collateral estoppel may be in­voked, the doctrine itself generates litigation that can be at least as duplicative and unproductive as the original issue.281 A carefully structured trial, with special verdict forms that precisely delineate repetitive issues, may produce results that are useful within a given district. Yet even that approach cannot guarantee results: A settlement before final verdict, as occurred in the Newman case in the Eastern District of Texas, may foreclose efforts to establish the prerequisites for issue preclusion.282

Several plaintiffs’ attorneys indicated that collateral estoppel would be their preferred approach. The likely outcome, however, would be to focus on the individual issues in a case, such as the plaintiffs injuries and exposure to specific products. Such a proce­dure may take much of the punch out of plaintiffs case by focusing attention away from the asbestos industry; several plaintiffs’ attor­neys articulated this reservation in discussing bifurcation,283

  1. See generally Parklane Hosiery v. Shore, 439 U.S. 322 (1979); Blonder-Tongue
    Laboratories v. University of 111. Found., 402 U.S. 313 (1971); Green, supra note 102,
    at 147-52.
  2. See, e.g., Hardy v. Johns-Manville Sales Corp., 681 F.2d 334 (5th Cir. 1982);
    see also Green, supra note 278, at 224 (“collateral estoppel has little potential to
    make a significant contribution in resolving the judicial administration difficulties
    engendered by asbestos litigation”).
  3. Green, supra note 278, at 186-207; Flanagan, Offensive Collateral Estoppel-
    Inefficiency and Foolish Consistency, 1982 Ariz. St. L.J. 45, 52-53.

    1. Green, supra note 278.
    2. Newman v. Johns-Manville, No. M-79-124-CA, Special Verdict (E.D. Tex. Oct.
      24, 1984); Note, Use of the Bifurcated Trial to Avoid Collateral Estoppel and the Ex­
      panding Concept of Final Judgment, 7 Sw. U.L. Rev. 161 (1975).
    3. See also Flanagan, Offensive Collateral Estoppel: Inefficiency and Foolish
      Consistency, 1982 Ariz. St. L.J. 45, 52-61 (collateral estoppel not efficient for asbestos

Chapter VII

An alternative to the forced use of collateral estoppel may be the agreement of the parties to be bound by the results of a test case, a device frequently used to resolve multiple antitrust litigation.284 In one district it was reported that plaintiffs refused to risk being bound by a single trial. On the other hand, in the Newman case,288 the court’s use of consolidation procedures took the choice away from the parties as to whether they would be bound by the bell­wether results in the consolidated cases.

Bifurcation. Bifurcation of trials into liability and damages phases is committed to the discretion of the trial court by rule 42(b) to the extent that the process does not intrude on the right to a jury trial guaranteed by the Seventh Amendment to the Constitu­tion.286 The Seventh Amendment does not create a general barrier to bifurcation of separable issues that are distinct and independent from each other.287 If, however, an issue such as damages is “so interwoven with that of liability that the former cannot be submit­ted to the jury independently of the latter without confusion and uncertainty,” bifurcation might violate the Seventh Amend­ment.288

Generally, a court has discretion under rule 42(b) to bifurcate distinct and independent issues. In exercising its discretion, a court is called on to consider any prejudicial effect that bifurcation may have on the outcome of the case, the convenience of the parties and the court, and any saving of resources.289 Because there are seri­ous concerns that the time savings from bifurcation may accrue at the expense of altering the outcome of the case, bifurcation deci­sions are to be made on a case-by-case basis.290 Typically, time sav-

cases because they settle without injecting the additional issue of collateral estop­pel).

  1. Panzer & Patton, supra note 223, at 561.
  2. See the discussion supra at notes 225 to 239.
  3. Fed. R. Civ, P. 42(b) (1986) provides:

(b) Separate trials. The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and econ­omy, may order a separate trial of any claim, cross-claim, counterclaim or third party claim, or of any separate issues or of any number of claims, cross-claims, counterclaims, third-party claims, or issues, always preserving inviolate the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States. [Emphasis added.]

  1. Rodriquez v. Banco Cent., 790 F.2d 172, 180 (1st Cir. 1986); see also 7A C.
    Wright & A. Miller, Federal Practice & Procedure § 1801, at 268 (1972).
  2. Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S.494, 500 (1931); see also
    Greenhaw v. Lubbock County Beverage Ass’n, 721 F.2d 1019, 1024-26 (5th Cir. 1983),
    and cases cited therein.
  3. Yung v. Raymark Indus., Inc. 789 F.2d 397, 400-01 (6th Cir. 1986) (trifurca-
    tion); Lis v, Robert Packer Hosp., 579 F.2d 819, 823-24 (3d Cir.), cert, denied, 439 U.S.
    953 (1978).

    1. Its, 579 F.2d at 824.

ings will be generated by hearing first an issue that will dispose of an entire case, such as eausation-in-fact.291 A danger of bifurca­tion, however, is that it may result in a “sterile or laboratory at­mosphere in which causation is parted from the reality of injury.”292 Hence, bifurcation is generally limited to cases in which ‘”the evidence pertinent to the two issues is wholly unre­lated’ and the evidence relevant to the damages issue could have a prejudicial impact on the jury’s liability determination.”293

In asbestos litigation, because any time savings generally accrue from hearing the issue that is most highly disputed, courts have often used a variation of bifurcation dubbed reverse bifurcation.294 In this variation, the first phase of the trial deals with whether plaintiff has an asbestos-related disease and, if so, what were the extent of the injuries and compensatory damages suffered as a result. Usually, a finding on the amount of damages is sufficient to settle the case.

In another variation—reverse trifurcation—plaintiff first pre­sents evidence for a jury decision on whether an asbestos-related disease is present. If the disease if proved, then evidence of expo­sure to, and defects in, defendants’ products follows. Evidence of damages concludes the trial. Another type of trifurcation involves restricting evidence on punitive damages until after eausation-in-fact and compensatory damages have been proved. Still another form of reverse trifurcation recommended by a defense lawyer is to begin with evidence of product exposure and thereby exclude any defendant whose product is not linked to the plaintiff(s). Only then would damages be shown, followed, if necessary, by proof of liabil­ity and punitive damages.295

Defendants applaud the reverse procedure because it focuses the evidence on the plaintiff and away from the asbestos industry. Plaintiffs object because they see the procedure as invariably focus­ing on the weakest part of their case, whether that be causation-in-fact or damages.296 From the court’s perspective, focusing on indi-

  1. See, e.g., In re Beverly Hills Fire Litig., 695 F.2d 207, 216-17 (6th Cir. 1982),
    cert, denied, 461 U.S. 929 (1983).

    1. Id. at 217.
    2. Helminski v. Ayerst Laboratory, 766 F.2d 208, 212 (6th Cir.) (quoting 9 C.
      Wright & A. Miller, Federal Practice and Procedure § 2390 (1971)), cert, denied, 106
      S, Ct. 386 (1985).
    3. Several district judges in the Eastern District of Pennsylvania use reverse bi­
      furcation procedures for most asbestos cases.
    4. Yet another variation of reverse trifurcation was approved in a recent appel­
      late decision, Yung v. Raymark Indus., Inc., 789 P.2d 397 (6th Cir, 1986): Trifurca­
      tion of statute of limitations, liability, and damages, in that order, was approved
      based on efficiency in trying the dispositive issue first and on lack of prejudice.
    5. The Fourth Circuit, in an unpublished opinion, recently rejected a challenge
      to bifurcation procedures used to establish general causation before other elements

Chapter VII

vidual damages avoids the necessity of time-consuming evidence re­lating to the state of the art and punitive damages. The parties agreed to exclude these two issues from phase II of the class action in the Eastern District of Texas. Their treatment signifies that the differences in the interests of plaintiffs, defendants, and the courts are reconcilable.

The question remains, however, as to whether exclusion of evi­dence on the dangers of asbestos permits a fair jury assessment of damages in a given case. A full assessment of damages to an indi­vidual requires information about future injuries that are likely to develop.297 In the context of asbestos litigation, all of these proce­dures at this stage should be seen as alternative ways of obtaining information with which to settle a case. Rarely does a case proceed to full trial. A jury that is unlikely to hear phase II or III of a trial will not have an opportunity to compensate for any narrowness in its phase I verdict. As juries are exposed to less of a case, one might expect their decision making to be less thorough and predict­able than with the alternative of a full trial, but there is no empiri­cal evidence on this point.298 In those rare cases that appear to need jury decision making, the alternative of a full trial or even a full summary jury trial may be fairer and more accurate, albeit less efficient, than bifurcated trials.