Settlement

At the current stage of asbestos litigation, with rights of recovery firmly established, settlement is the single most important feature. A trial is a rare event, the history of which is savored and reanalyzed by trial attorneys and judges. In each district, a handful of trial verdicts provide the basic data about the values of cases. These verdicts support hundreds of settlements, a phenomenon that is not unprecedented in products liability litigation involving clear evidence of liability.¹²⁸ Settlements, in turn, establish pat­terns for future settlements.

As reported above, data from the Administrative Office of the U.S. Courts confirm that settlement is by far the dominant mode of disposition of asbestos cases. Seventy-three percent of all termi­nated asbestos cases were concluded by settlement (table 4), In con­trast, jury and bench trials accounted for 3 percent of the termina­tions.¹²⁷ The settlement rate for personal injury products liability cases in the ten district courts in this study was also 73 percent, with a 9 percent trial rate (table 5).

The unique features of asbestos litigation may contribute to the importance and dynamics of settlement. As discussed previ­ously,¹²⁸ general causation tends to be clearly established. Dis­putes arise as to whether a specific medical condition is asbestos-related and as to the seriousness of the condition, its future dan­gers, and the prognosis for future disability and treatments. Con­centration of cases within districts and specialization of counsel are also likely to have an impact on settlement practices and outcomes, as is the presence of multiple defendants.

The primary asbestos case management decisions facing federal courts concern the settlement of cases. Disposition management in­evitably brings a court to evaluate the impact of its policies on the settlement of cases. Indeed, many, perhaps most, courts structure the pretrial process in a way that is perceived to be an aid to set-

1. In the MER/29 litigation of the 1960s, after more than three years of litiga­
   tion, out of more than 1,000 dispositions, there had been eleven cases tried to jury
   verdict. Rheingold, The MER/29 Story—An Instance of Successful Mass Disaster
   Litigation, 56Calif.L. Rev. 116, 132-33, 137-39 (1968).
   1. See supra tables 4 and 5.
   2. See the discussion supra at notes 30 to 33.

Chapter VI

tlement. Diagnosis of the need for settlement intervention, selec­tion of the most efficient mechanism to achieve the court’s goals, and reevaluation of these interventions are continuing issues for courts with substantial asbestos caseloads.

Federal judges employ a wide spectrum of settlement interven­tions and roles in the ten districts studied. Table 8 charts those roles and activities.

TABLE 8

Overview of Settlement Practices in Ten Study Courts

 

	Judge-
	Hosted	Summary	Arbitra-	Special	Computer
Court	Conference	Jury Trial	tion	Masters	Evaluation	Traditional
Mass.	Yes	No	No	Proposed	Proposed	No
N.J.	Yes	No	No	No	No	No
E.Pa.	Yes	No	Yes	No	No	No
W.Pa.	No	No	No	No	No	Yes’
Md.	Yea”‘0	No	No	No	No	No
S.C,	No	No	No	No	No	Yes
E.La.	Yes	Yesh	No	No	No	No
E. Tex.	Yes	No	Yes	Yes	Yes	No
N.Ohio	Yes	Yes	No	Yes	Yes	No
E. Tenn.	No	No	No	No	No	Yes

^ttFine for late settlement imposed by at least one judge. At least two judges use summary jury trials, ^c All but one judge holds conferences.

Seven of the districts display active judicial involvement in the settlement process, ranging from the regular hosting of settlement conferences to creation of an arbitration or summary jury trial process to the use of special masters or computer evaluations to fa­cilitate settlement. Three of the districts exhibit traditional pat­terns in which the court schedules cases for trial and becomes in­volved in settlement only if the parties request specific participa­tion (e.g., to help resolve an impasse). Three of the districts have dispersed the cases to a number of judges with diverse practices, displaying a full spectrum of settlement roles. One of these dis­tricts has dispersed cases widely enough to support a study of the effects of different judicial practices on similar cases involving the same lawyers and local legal culture.¹²⁹

In her comprehensive study of settlement options for federal judges, Professor Marie Provine found that many judges prefer to

129. See the discussion infra at notes 168 to 170. In the other two districts, there has not been sufficient trial or settlement activity to support an evaluation at this time.

intervene selectively in cases, varying their approach according to the particular barriers to settlement presented by a case or type of case.¹³⁰ The goal is “to assess the obstacle(s) present in a particu­lar case and respond with a pretrial plan that will enhance settle­ment opportunities.”¹³¹ By using this approach, judges believe they “can promote more and better settlements than can be achieved through any other approach.”¹³²

One approach to the measurement of the efficiency of a settle­ment intervention was devised by Judge Robert Keeton (D. Mass.). He formulated this test: The time invested in an activity should in­crease the settlement probability sufficiently that, in the long run, the trial time saved through settlements will exceed the time in­vested in the settlement effort.¹³³ This report calls into question whether this formula has been applied. Are judicial efforts at set­tlement of asbestos cases necessary and efficient? If called for at one time, do they continue to be necessary? Do they serve values

1. D. M. Provine, Settlement Strategies for Federal District Judges 10-16 (Fed­
   eral Judicial Center 1986).
   1. Id. at 14.
   2. Id.
   3. Id. at 12-13 and app. B.

For example, if a case has an 80 percent chance of settlement without interven­tion and if a trial of that case would last five days, increasing the probability of settlement to 90 percent would justify an expenditure of four hours of time (40 hours X .90 – 40 hours X .80 = 4 hours). If, on the other hand, the impact on settle­ment is more marginal, such as increasing the probability of settlement from 98 to 99 percent, savings in trial time will justify twenty-four minutes of settlement (40 hours X .99 – 40 hours X .98 = .4 hours).

The formula is (P2 – PUTT = BE, where P equals the probability of settlement and PI and P2 refer to those probabilities before and after judicial intervention. TT equals the anticipated trial time (including any pretrial preparation and rulings on motions that would take place after settlement) and BE refers to the break-even point, that is, the maximum amount of time that should be invested in settlement intervention on pure efficiency grounds. For amplification of this schema, see R. Keeton, Making Wise Choices About Techniques of Judicial Involvement in Dispute Resolution (1985) (unpublished manuscript on file at theFederalJudicialCenter).

This formulation assumes, of course, that time investment is the only significant factor and that judicial intervention does not improve the quality of settlements. To justify routine settlement efforts, values other than efficiency, such as improving the consistency or fairness of the settlements, need to be served.

Settlements based on computer data are likely to be qualitatively different from jury verdicts and perhaps even from other settlements. Computer-based settlements, for example, are more likely consistent with each other than are jury verdicts, which may be influenced by a host of nonrational factors. See generally A. Chin & M. Peterson, Deep Pockets, Empty Pockets (Rand Corp. 1985). Whether those nonrational factors improve or impede the quality of the outcome may depend on personal values. For example, jury sympathy with workers exposed to asbestos may be based on an emotional identification quite compatible with traditional tort goals of deterring future misconduct. Negotiations among attorneys may, of course, be subject to a different array of nonrational factors.

Chapter VI

other than efficiency, such as quality of justice or fairness to par­ties?

Judicial intervention in settlement generally proceeds on some variation of one or two primary theories. The first is an informa­tion gap theory,¹³⁴ based on a judicial belief that the principal bar­rier to settlement is one or both parties’ lack of information about the value of the case. The missing information could refer to a spe­cific fact, such as the diagnostic report of an expert, or it could be uncertainty about the substantive or procedural law that will apply. The information gap may involve a total misjudgment of the value of a case due to inexperience of one or both lawyers. Typical remedies include tailoring discovery to supply missing facts, ruling on pretrial motions, thereby clarifying the law, or providing expert opinions about the value of the case or its strengths or weaknesses. Such opinions may originate from within the court (trial judge, other judge, magistrate) or from without (arbitrators, summary jury panels, neutral senior attorneys).

Another distinct view of the purpose of judicial involvement in settlement activity is based on a communications gap theory. It starts with a diagnosis that the principal barrier to settlement is the failure of the parties to communicate effectively about settle­ment, perhaps because of the unwillingness of either party to risk being considered weak for having broached the subject.¹³⁵ Other barriers include a lack of incentives, economic or psychological, to discuss settlement. A typical remedy is for the judge to host a set­tlement conference, introduce the subject of settlement first, medi­ate the communications between the parties, and, perhaps, create or identify some incentives for settlement.¹³⁶

This report uses both theories to assess the need for judicial intervention in settlement. The relevant issues are these:

• Is judicial assistance warranted or necessary to aid the parties to asbestos litigation in meeting informational or communica-

134. References to information bargaining are commonplace in the literature of negotiation. See generally I. Horowitz & T. Willging, The Psychology of Law 280-84 (1984); H. Raiffa, The Art and Science of Negotiation 56-58 (1982).

185. It is literally textbook advice to legal negotiators that “[a]lmost without ex­ception it is desirable to cause the opposing party in a negotiation to make the first realistic offer.” J. White & H, Edwards, The Lawyer as Negotiator (1976). If both parties have read the text, there is a communications gap.

136. There is evidence that a majority of lawyers (54 percent) prefer that the judge take an active role by expressing evaluations and probing into the merits of the case. A substantial minority (36 percent) prefer a judge who “simply facilitates communication.”W. Brazil, Settling Civil Suits: Litigators’ Views About Appropri­ate Holes and Effective Techniques for Federal Judges 46 (American Bar Association 1985).