Prof. Zimmerman is guest blogging on Prawfsblawg, where this post originally appeared.
A curious thing is happening in a Bergen County court in New Jersey. A set of trials scheduled to go forward this summer were resolved through an unusual settlement process. In a case that involved more than 3,000 defective hip-implants, the parties reached a $1 billion global settlement in record time, using what the court described as an unprecedented series of "bellwether settlements."
By way of background, courts have used "bellwether trials" for a long time to resolve large numbers of similar lawsuits. In a bellwether trial (or trials), the parties select a small group of cases for jury trial out of a large group of similar claims. A steering committee of plaintiff and defense counsel then use information gleaned from trial outcomes to resolve the remaining cases. Bellwether trials have been used to resolve many high profile cases--perhaps most famously in the Vioxx litigation against Merck and, most recently, in GM's litigation over its defective ignition switches.
But instead of "bellwether trials," the court facilitated a system of "bellwether settlements." That is, rather than use juries to decide the merits and value of certain cases, the parties--supervised by the court, magistrates and special masters--relied on a structured sample of 21 mediations involving typical plaintiffs to forge a global settlement. It was hoped that the different settlement outcomes, much like a bellwether trial, would offer the parties crucial "building blocks"--providing critical information about how to globally resolve the remaining cases. And Judge Martinotti, the New Jersey judge designated to handle all of the cases, was incredibly successful. The process not only resolved more than 2,000 lawsuits in New Jersey state court, but another 1,000 pending lawsuits in federal multidistrict litigation, all in one fell swoop.
A few thoughts beneath the fold.
I suppose many bellwether trials are really bellwether settlements in disguise. Many of the cases that parties select as the "bellwether," as it happens, end up settling on the eve of trial. And because counsel in multi-district litigation share information, when enough cases settle, the parties learn how to structure a global settlement. So, here the court just chose to proceed based on the not-altogether-crazy idea that no case would reach a trial on the merits. But the court's complete embrace of a "bellwether settlement" scheme raises interesting questions. What do "bellwethers" mean when the procedures and outcomes lack any connection to the decisions a jury might reach?
Most proponents of bellwether trials often assume some role for a jury in resolving a complex dispute. First, bellwether trials provide a "dress-rehearsal" for other jury trials likely to come in a large case by helping parties hone their evidence and their arguments. Second, a bellwether jury verdict assures that any eventual settlement bears some relationship to the merits of the dispute. Third, the prospect of a jury trial in complex litigation wards off the threat of collusion and assures that the plaintiffs' counsel have sufficient bargaining strength in settlement negotiations. Cf. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 621 (1997) ("Class counsel confined to settlement negotiations could not use the threat of litigation to press for a better offer... and the court would face a bargain proffered for its approval without benefit of adversarial investigation"). Fourth, a bellwether jury serves an important democratic function with deep roots in the history of American adjudication--providing bulwark against unelected judges who may harbor biases about what makes for a fair global resolution.
By dispensing with the jury entirely, bellwether settlements risk all of these important benefits. But you could argue they have other advantages. According to Judge Martinotti, the process yielded important information about claims, remedies and strategies that parties often would not share in preparation for a high-stakes trial. First, although bellwether trials provide a good way to measure how random members of the community value common claims, they don't necessarily help counsel learn how random beneficiaries of a global settlement will value those same things. When the end-game is a global settlement, a focused sampling of arms-length negotiations could help counsel better identify solutions from the ground up.
Second, bellwether settlements also avoid the problem of outlier or clustering verdicts--unexpectedly high or lottery-like jury awards that are difficult to average and threaten the chances of a more global settlement. See Alvin K. Hellerstein, Managerial Judging: The 9/11 Tort Responder Litigation, 98 Cornell L. Rev. 127, 161-163 (2012)("at most, [bellwether trials would] have brought about settlements in individual claims or small clusters of claims, [but the] parties would not have had sufficient information to effect a wholesale global settlement."); Brian R. Martinotti, Complex Litigation in New Jersey and Federal Courts,44 Loy. U. Chi. L. J. 561, 575 (2012) ("[I]f the parties and counsel are in the midst of successful settlement discussions, a bellwether trial that results in a verdict outside the range of settlement—i.e., an outlier—may empower a party to go forth with the litigation and cause negotiations to break down.")
Finally, many leading members of the steering committees claimed that the structured mediations built "trust" among counsel in ways that don't easily occur until much later in multi-district litigation.
Bellwether settlements are part of a larger long-term trend taking place in the American courthouse. As public courts export more cases to private dispute resolution--like mandatory arbitration--they also have imported values from ADR to find new ways to creatively resolve disputes, usingcourt-annexed arbitration, special settlement masters and magistrates, and "problem solving" courts. See Judith Resnick, Diffusing Disputes: The Public in the Private of Arbitration, the Private in the Courts, and the Erasure of Rights, 124 Yale L.J. 2084 (2015)(describing policies that "press trial-level judges to become conciliators, to deploy other individuals as “neutrals” to mediate or to arbitrate in courts, and to outsource decision making to the private market"). The result may be solutions that promise more speed, input, legal access, and as some have described, "paths to justice" than traditional trials.
But the challenge is to determine what role our courts should play when large cases and "vanishing trials" push them to move outside their traditional public role as adjudicators--hearing adverse claims, supervising controlled fact-finding, and interpreting law. Judge Martinotti continues to play that traditional role in many complex cases. But like other judges in complex litigation, here his role seemed more like a public broker in a complex settlement marketplace--helping the parties set ground-rules and open the lines of communication to encourage people to enter into valuable contracts, exchange information about them, and in the process, and build trust necessary to forge a much larger, global settlement.