Alternative Dispute Resolution

Of the most common alternative dispute resolution processes (summary jury trial, minitrial, arbitration), only summary jury trial has had extensive use in more than one of the districts stud­ied. Arbitration is being tested on a large scale in the Eastern Dis­trict of Texas and has been used in some asbestos cases in the East­ern District of Pennsylvania. Judge-hosted settlement confer­ences—the most traditional of all the methods—are used in at least seven of the study courts.

Summary jury trials. Summary jury trial procedures involve a relatively brief presentation of a case, generally without live wit­nesses, to a mock jury, followed by a settlement conference.182 Summary jury trial procedures have become relatively popular among federal judges during the past decade, and courts have used the procedures for a wide range of cases.183 Judges and magis­trates who have used summary jury trials conclude that “it is likely to be most helpful when lawyers differ significantly in their assessment of the way the jury will react to the case, and when this disparity is unlikely to disappear without the active interven­tion of the court.”184

Two of the courts in this study have used summary jury trials in asbestos litigation—the Eastern District ofLouisianaand the Northern District of Ohio. In the Eastern District of Louisiana, Judges Martin L. C. Feldman and Charles Schwartz, Jr., have re­ported experience with summary jury trial procedures. Almost all of the cases reported to theFederalJudicialCenterhad settled or were expected to settle without a full trial. During 1986, Judge Schwartz presided over twenty summary jury trials, using seven days of trial time. Cases were clustered in groups of ten for pretrial preparation. Eighteen cases scheduled for summary jury trial set­tled before the scheduled summary trial and an additional eleven cases settled before they could be scheduled for summary trials.

  1. See generally D. M. Provine, supra note 130, at 68-76 and sources cited
    therein; Posner, The Summary Jury Trial and Other Methods of Alternative Dispute
    Resolution; Some Cautionary Observations, 53 U. Chi. L. Rev. 366 (1986).

    1. D. M. Provine, supra note 130, at 68-71.
    2. Id. at 71.

Judge Feldman reported that two summary jury trials and a settle­ment conference took twenty-three hours of time and saved ap­proximately five weeks of trial time.

Judge Thomas D. Lambros, who established the OAL, also cre­ated the summary jury trial procedure. In two of the early clusters of cases in the OAL, summary jury procedures were planned. The first cluster of ten cases settled on the eve of summary jury trial.186 The second cluster was scheduled for a three-day consoli­dated summary jury trial in September 1984.l86 Two panels of six jurors each heard the same presentations. The results were at the extreme positions of each side. One panel returned all defendants’ verdicts; the other exonerated some defendants and assessed puni­tive damages against others. The total award for six plaintiffs was $8.3 million, with $1.6 million being punitive damages. The panel that returned all defendants’ verdicts gave an advisory opinion on damages: $9 million.187 The cases settled on the eve of trial in Jan­uary 1985 for an undisclosed amount.188

Interviews with lawyers suggest that the use of summary jury trial procedures in asbestos cases in the Northern District of Ohio may be “overkill.” Under the OAL plan, summary jury trial comes on top of other settlement-enhancing strategies such as the use of computerized case matchings, opinions of neutral special masters, and relatively formal judge-hosted settlement conferences. Do the parties acquire more information about case values through the summary jury procedure? At the early stages of the OAL, there was little information about case values because there had been few, if any, trials of asbestos cases. Summary trials may have served as the basis for establishing a sense of what jury outcomes were possible. As such, they may have substituted for the few early trials that were held in asbestos cases in most of the other jurisdic­tions studied. Summary jury trials have not been used for asbestos cases in that district since 1984.

The underlying theory supporting summary jury trials is that they provide “what appears to be a reliable estimate of the prob­able result before a real jury”189 and that such an estimate will

  1. In re Ohio Asbestos Litig. Insulation Case Groups I and II, OAL Order Nos.
    14-16, 23 (N.D. Ohio May 23-Oct. 31, 1984).

    1. In re Ohio Asbestos Litig., OAL Order No. 20 (N.D. Ohio Aug. 30, 1984).
    2. In re Ohio Asbestos Litig. Insulation Case Groups III and IV, OAL Order No.
      22 (N.D. Ohio Oct. 5, 1984). Each jury rejected state-of-the-art and fiber defenses.

      1. In re Ohio Asbestos Litig., OAL Order No. 29 (N.D. Ohio Jan. 17, 1985).
      2. D. M. Provine, supra note 130, at 68.

Chapter VI

reduce the bargaining distance of the parties. Use of computer aids and special master opinions proceeds on the same information-needs theory. Viewed this way, the summary jury trial seems re­dundant. These summary proceedings impose additional pretrial costs on the parties—costs not incurred in settlements in other dis­tricts. By imposing an additional, costly barrier to be hurdled by a party intent on trial, the procedure threatens to increase the costs of litigation, contrary to the goals of the OAL,

A deeper and more general criticism of the summary jury trial procedure is that it is unpredictable and likely to be even more variable than jury verdicts issued after full trials190 or, for that matter, decisions by judges on the same or similar matters. In both the Northern District of Ohio and the Eastern District of Louisiana there were reports of one-sided summary jury trial verdicts that encouraged one or both sides to resist settlement.191 Unpredictabil­ity has at least two major ramifications. The results of the sum­mary jury trial may undermine the information generated by the computer matching process or by the special master, perhaps rais­ing one party’s expected outcome beyond the bargaining range sug­gested by those settlement aids. In the worst case, the verdict could lead to elimination of any overlap in settlement authority. In addi­tion, by producing an outlying result (e.g., a verdict of no liability or a high monetary award), the summary verdict may simply en­courage one party to hold out for an outcome close to that verdict. Increased unpredictability may increase pressure for settlement by providing information about the risks of jury trial, but that pres­sure is likely to be skewed toward the summary jury outcome.

Finally, it appears that the time demands of a summary jury trial would exceed the marginal gains in settlements for current

  1. See the discussion supra at note 160. In general, one would expect a jury
    hearing summary information to be less accurate in its judgments than one hearing
    full evidence, but perhaps the summary jury trial operates counterintuitively on
    this point. One can posit that a jury gets confused from too much information and
    that a concise presentation improves their capacity to grasp the issues. Empirical
    evidence, perhaps from laboratory studies, would be useful on this point. Cf. Posner,
    supra note 182, at 390 (“depending on the variance among juries, an arbitrator who
    is an experienced trial lawyer may render a decision more representative of what
    the average jury would come up with than the decision of any single jury”).
  2. In the Eastern District of Louisiana, a lawyer reported the following sum­
    mary jury verdicts and actual settlement amounts in asbestos cases in late winter
    and early spring of 1986.

Case           Summary Jury Verdict       SettlementAmount


A $35,000


B $0


C $0


D $80,000


See also Walsh, Teacher Pursues Hospital Suit After Court Experiment Fails, Washing­ton Post, June 26,1986, at Cl.

asbestos cases.192 As noted above, Judge Keeton’s formula allows little time for judicial settlement activity when trials are expected in fewer than 3 percent of all cases, and especially when trials are reasonably short, such as one week. Any benefit from summary jury trial is likely to be when there is a lack of jury verdict infor­mation about a specific type of litigation like asbestos. After a number of cases have been tried or settled, traditional sources of evaluation are likely to be superior.

Arbitration. In only one of the courts in this study have arbitra­tion procedures been used systematically and extensively for asbes­tos cases.193 In the Eastern District of Texas, as part of the settle­ment of the Jenkins case, two plaintiffs’ attorneys and counsel for the Wellington facility agreed that cases filed after the cutoff date for the class action would be subject to an alternative dispute reso­lution procedure. The procedure applies to approximately 1,000 pending cases and the parties envision submitting 60 cases per month.194 Each party designates an “arbitrator selector.” The two selectors meet to choose a list of arbitrators who will decide the cases.195

As the cases are certified for arbitration, plaintiffs attorney sup­plies the defendants with all information necessary for evaluation of cases, such as physician’s reports, test results, and medical records. If defendant chooses, plaintiff must submit to a medical exam by a physician of defendant’s choice. Defendant may also insist on a thirty-minute videotaped interview of plaintiff.196 Prior to arbitration, the parties have agreed to a forty-day period in which they will “negotiate in good faith and make a bona fide effort to resolve each case by negotiation.”197 If not settled within

  1. See Posner, supra note 182, at 383-85.
  2. Among the ten courts in which court-annexed arbitration is in force on an
    experimental basis, only one (Eastern Pennsylvania) reported more than 1 percent
    of its arbitration cases to be asbestos product liability cases. In that district, 2 per­
    cent of its arbitration cases (approximately 486 cases) were in that category. Federal
    courts in the Northern District of California, Western District of Texas, and West­
    ern District of Michigan each reported 1 percent asbestos cases, indicating a total of
    about eleven cases in all three districts. B, Meierhoefer & C. Seron, Court-Annexed
    Arbitration in Ten Pilot Federal District Courts: A Status Report 23, table 6 (Fed­
    eral Judicial Center 1987) (unpublished manuscript).
  3. Jenkins v. Raymark Indus,, Inc., No. M-84-193-CA, Order & Alternative Dis­
    pute Resolution Agreement, section II (E.D. Tex. Sept. 19, 1986). For a description of
    the plan, see Two-Step ADR Plan Set Up For Texas Asbestos Cases, 5 Alternatives 33

    1. Jenkins, supra note 194, at section V.
    2. Id. at section II.
    3. Id, at 2-3.

Chapter VI

that time period, they are placed on a list for arbitration within a ninety-day period.198 Judge Robert M. Parker, who presided over the class action, designated U.S. Magistrate Harry W. McKee as a “special monitor” to oversee the implementation and operation of the procedure.199 The progress as of February 1987 was that twenty-nine of the thirty cases in the first group were settled and the other case was placed on the pleural registry (inactive docket). In the second month, twenty-nine of fifty cases settled, two were placed on the pleural registry, ten were deferred, and nine were passed to the arbitration stage. Indications are that this procedure will not be able to keep up with the pace of new filings, which is currently estimated at 100 to 150 new cases per month in theBeau­mont division of the court. It is significant that the prearbitration settlements occur without a firm trial date. The credible threat of another class trial seems to operate as a substitute incentive for settlement.

Evaluation of an arbitration program, like evaluation of other case management systems, should be based on criteria of fairness, efficiency, and quality of results. As to fairness, at this stage of the operation of the program, only structural fairness can be exam­ined. Because the system was designed by parties who appear to have roughly equal bargaining power and because it is balanced in its terms, it is logical to assume that it is fair to all parties. Arbi­trators, selected by equal action of the parties, are directed to review and decide issues described in a neutral manner.

As to the quality of results, it is too soon to judge. Information about the views of the participants would be necessary. As to effi­ciency, the Keeton criteria point toward a different conclusion than in their application to summary jury trial. As designed by the par­ties, the arbitration program requires little judicial involvement. Appointment of a magistrate to monitor the program reduces the judge’s involvement even further. A danger is that the process will

  1. Id. at 4-5. The arbitrator can make one of seven findings: (1) no asbestos-
    related disease, (2) pleural changes with restrictive impairment, (3) pulmonary as-
    bestosis, (4) asbestos-related cancer, (5) confirmed mesothelioma, (6) pleural changes
    with no restrictive impairment, recommending placement on the pleural inactive
    docket, and (7) other. In making an award of damages, the arbitrator is directed to
    consider the “age of the plaintiff, the degree of asbestos related disability, extent
    and type of exposure to asbestos, smoking history, significant non-asbestos health
    problems relating to any disability, lost wages, dependents, medical records and
    other reports, increased risk of cancer, progression of asbestos-related injury, and
    pain and suffering.” Id. at 5-6.
  2. Id., order at 1. The court may have authority to impose sanctions, including
    attorneys’ fees, if the parties fail to live up to their agreement to negotiate in good
    faith. Fed. R. Civ. P. 16(f) and 23 and the inherent authority of the court may be
    sources of such a power.

become duplicative in the sense that one or both of the parties will insist on their right to trial and thus impose additional transaction costs on each other, adding preparation for trial to preparation for arbitration. Given that trial will be on a class action basis, how­ever, trial transactional costs are lower than otherwise would be the case.

Another aspect of the efficiency question is whether arbitration is necessary. The arbitration procedure seems to be a device that modulates the flow of cases through the system. These lawyer-spe­cialists know well the values of the cases. The Jenkins settlement itself demonstrated the existence of a formula acceptable to all par­ties for the global settlement of cases; the lawyers involved them­selves assert that they know the value of cases. At the same time, the postures of the parties indicate that the limiting factor is cash flow: the ability of defendants, including theWellington facility, to pay for all the cases in current dollars.

While cash flow is certainly a major concern expressed by de­fendants, it does not obviate the need for arbitration. Even if the parties can agree on an average value for each case, some proce­dure will be necessary for the parties to classify cases and obtain information about their values. In Jenkins, Special Master McGov-ern laid the groundwork for the settlement by systematically col­lecting information about the cases. The negotiation-arbitration procedure established in Jenkins II should be only marginally more expensive than a computer system. The arbitration system reserves the principal role in evaluating, settling, or trying cases for the parties. The role of the arbitrator is to provide an expert appraisal for those cases in which the parties agree that such an appraisal will be useful.

An additional feature of an arbitration system is that it removes a batch of routine cases from the court’s docket. In doing so, it lessens the need to create an alternative administrative mechanism that could result in a new bureaucracy (such as a special court or compensation tribunal).200 This may be an advantage or disadvan­tage depending on one’s perception of the need for a relatively per­manent administrative or judicial system to manage toxic tort cases.201


  1. See, e.g., Hensler, supra note 1, at 117-19.

See, e.g., Weinstein, supra note 1, at 15-21; see also Hensler,