by Cathy Yanni
This article will focus on the due process aspect of allocation methodologies in mass tort class actions and multidistrict litigations. This typically involves the substantive right to allocation and procedurally how the process is structured.
Let’s assume you have settled a mass tort and it is now time to allocate the settlement proceeds among the claimants. There is a variety of settlement models. For example, the settlement can involve all or almost all of the claims, e.g., Vioxx, ASR Hips or individual inventory settlements involving particular counsel or groups of counsel.
In an inventory settlement, the defendant settles based on an evaluation of each case by a law firm or group of law firms. The defendant may require that a certain percentage of the claimants accepts the allocation. The defendants negotiate a settlement grid or matrix with an agreed-upon settlement value. The values may be based on age or type of injury and may use a point or scoring system. Each point can be worth an agreed-upon value. The higher the points, the higher the allocated amount. On occasion, the defendant may negotiate a lump-sum amount, leaving the allocation process to the plaintiffs. Most settlements include a blow-out provision requiring an agreed-upon percentage of claimants to accept the settlement terms.
Whether you represent two or 2,000 plaintiffs in a class action or MDL, or you are one of two or 200 firms representing multiple claimants, allocation produces potential conflicts of interest among the competing claimants (ABA Model Rules of Professional Conduct, Rule 1.7). Counsel must obtain informed consent from each claimant and has an affirmative duty to communicate the settlement to the claimants (ABA Model, Rules 1.0, 1.4 and 1.8(g)).
The designer of the applicable allocation model must keep in mind that pursuant to Fed. R. Civ. P. 23(e), the settlement and the resulting allocation must be fair, adequate and reasonable.
Allocation necessarily pits mass justice against individual justice. When you are formulating the model, you need to determine how many injury categories are appropriate and what types of injuries will be compensated. Common injury categories include heart attack, stroke and death. Often, deductions for comorbidities are part of the allocation methodology, such as age, body mass index and smoking.
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