Amchem Products, Inc. v. Windsor

521 U.S. 591 (1997)

What's Going On?

Review of the appellate court's decision to reverse the district court's certification of a settlement-only class in a mass tort case brought to achieve global settlement of current and future asbestos-claims.

Who's Who?

Plaintiffs    :

Windsor, et al – representatives of a proposed class of individuals exposed to asbestos.

Defendant :

Amchem Products, Inc., et al – group of asbestos producers collectively known as CCR.

Facts:

In order to achieve global settlement of all asbestos-related claims, the federal courts consolidated all asbestos cases that had been filed, but were not yet on trial, in a single district court. Defendant CCR, a consortium of companies that produced asbestos, settled claims with the plaintiffs who had already filed claims. Plaintiffs in this case are representatives of a proposed class of individuals exposed to asbestos. Plaintiffs' lawyers and Defendant launched the instant case as a class action. This class action was intended to be settled, not litigated. Defendant and representatives of the plaintiff class presented to the district court a complaint, an answer, a proposed settlement agreement, and a joint motion for conditional class certification. The complaint proposed a class comprising all persons who had not filed an asbestos-related lawsuit against a CCR defendant, but who (1) had been exposed—occupationally or through the occupational exposure of a spouse or household member—to asbestos attributable to a CCR defendant, or (2) whose spouse or family member had been so exposed. The number of potential plaintiffs reached into the millions. A stipulation of settlement accompanied the pleadings that proposed to settle and to preclude nearly all class members from litigating against Defendant. The stipulation described four categories of compensable asbestos-related diseases, and the range of damages Defendant would pay to qualifying claimants in each category. The stipulation also provided that class members would receive no compensation for certain kinds of claims, even if otherwise applicable state law recognized such claims. Class members would be bound by the settlement in perpetuity, and only a few class members per year would have the option of rejecting the settlement and pursuing their claims in court. The district court certified the class and approved the settlement. The appellate court reversed, finding that serious intra-class conflicts precluded the class from meeting the adequacy of representation requirement of FRCP 23(a)(4).

Issue:

May settlement play a role in determining the propriety of class certification?

Decision:

Yes. The settlement-only class has become a stock device of FRCP 23(b)(3)'s current applications; however, courts are divided on the extent to which a proffered settlement affects court surveillance under Rule 23's certification criteria. The predominance requirement of Rule 23(b)(3) demands that common “questions of law or fact...predominate over any questions affecting only individual members.” The district court concluded that predominance was satisfied based on the class members' shared experience of asbestos exposure, and their common interest in obtaining a remedy while minimizing the costs of litigation. These considerations do not meet the predominance requirement stated in Rule 23(b)(3). The predominance inquiry focuses on the legal or factual questions applicable to each class member's case. The benefits that asbestos-exposed persons might gain from the settlement are not pertinent to the predominance inquiry. Furthermore, the adequacy requirement of Rule 23(a)(4) demands that the named parties “will fairly and adequately protect the interests of the class.” The adequacy inquiry seeks to uncover conflicts of interest between the named parties and the class they seek to represent. In this case, those who are currently injured seek generous immediate payments, in conflict with the interests of the exposure-only plaintiffs, who seek an inflation-protected fund for the future. Because there was no assurance that the class representatives properly understood their representational responsibilities, the adequacy requirement cannot be said to be met. Rule 23 cannot carry the large load heaped upon it by Defendant, Plaintiffs' counsel, and the district court. The judgment of the appellate court is affirmed.

Basic Rule:

In certifying a settlement-only class, a court must ensure that questions of law or fact predominate over any questions affecting only individual members, and that the named parties will fairly and adequately protect the interest of the class, as required by FRCP 23(b)(3) and 23(a)(4).

Concurrence and Dissent:

The Court was correct in concluding that settlement is relevant to class certification; however the Court reached its conclusion incorrectly. The Court underestimated the need for settlement in this mass tort case, and gave insufficient weight to settlement-related issues for the purposes of determining whether common issues predominate. In addition to other uncertainties, the Court inappropriately second-guessed the district court on the matter of adequacy of representation without first having the appellate court consider the matter.

Terms:

Consolidation :

The unification by the court of multiple actions, involving the same issues and parties, into one action.

Stipulation :

A voluntary agreement, regarding an issue, between opposing parties.

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