Distribution of Funds in Class Actions - Claims Administration

Most class action securities cases result in a settlement where the parties agree on a defined amount of money to be placed in a fund for distribution to eligible beneficiaries. Although the size of the fund and the losses suffered by eligible beneficiaries are defined, the number of potential beneficiaries who decide not to participate in the settlement by opting out and the number and value of losses eventually claimed by those eligible beneficiaries are not known until long after the settlement amount has been established. In any closed-end fund, like the securities class action settlements, there is the potential for a Goldilocks dilemma ―the fund may be too large or too small for the claims being made, not ―just right. The ensuing tensions created by this mismatch between funds available and claims on those funds can be one of the most significant problems in any settlement fund distribution. The ability of courts, special masters, and claims administrators to cope with this mismatch is critical to the success of the distribution process. Courts, lawyers, academics, and claims administrators have generally accepted the traditional approaches normally taken in securities class action distribution processes as appropriate under the circumstances. This Article presents several alternative approaches for coping with the mismatch dilemma that are worthy of consideration for incorporation in future distributions. The literature on distribution processes has given too little attention to the successes and failures in cases that have utilized non-traditional techniques, and it is likely that future distributions can benefit from these actual experiences. The following case studies in both securities and non-securities contexts illustrate the Goldilocks dilemmas that arise and discuss approaches that courts, lawyers, and claims administrators might take to ameliorate them in situations where there are too many opt-outs, too few claims, too many claims, too little money, or too much money

The Evolution of Asbestos Bankruptcy Trust Distribution Plans

The evolution of asbestos litigation from the early 1970s to the present has become the source of much analysis. One commentator divides this history into several phases: the heroic phase, bureaucratic floundering, adaptation and maturity, search for global settlement, expansion of the number of cases, and legislative reform in a new era. A neglected aspect of the history of asbestos litigation has been the evolution of asbestos bankruptcy trust distribution plans. Since 1982 there have been more than 70 corporations which have filed bankruptcy proceedings because of their exposure to asbestos liability. As these corporations emerge from bankruptcy, their plans of reorganization establish trust distribution plans to pay asbestos claimants. These distribution plans provide a unique window into the evolution of a marketplace for the evaluation of asbestos claims among plaintiffs’ lawyers. Notwithstanding the “maturity”5 of the mass tort, this evolution reveals the historic development of relative values and differentiation among asbestos personal injury claims from the perspective of lawyers who represent plaintiffs. Specifically, plaintiffs’ counsel have voluntarily strengthened qualification criteria and altered the balance of payments for discrete diseases to deal with the scarcity of resources in the bankruptcy trust context

Taking the Mass out of Mass Torts: Reflections of a Dalkon Shield Arbitrator on Alternative Dispute Resolution, Judging, Neutrality, Gender, and Process

Life in the modem and post-modem world has changed our understanding of many traditional legal matters. Although many died from plagues, wars, and some shipping and agricultural accidents in the years which preceded the Industrial Revolution and modem breakthroughs in medicine, the twentieth century has given rise to group injury and death -it unprecedented levels, all as we march toward growth, progress, and greater goods for greater numbers. Mass progress has resulted in mass injury, which in turn has transformed individualized justice into mass justice. Whether structured as large class actions or as thousands of individual cases dealing with the same accident, product, or chemical, lawsuits claiming compensation for the harms caused by the fruits of production of a mass industrialized society proliferate in our legal system and challenge many of the basic tenets of American, adversarial, common law adjudication

Science in the Court: Is There a Role for Alternative Dispute Resolution

It is suggested that alternative dispute resolution procedures might remedy perceived problems in court procedures for dealing with scientific questions in medical malpractice, product liability and toxic tort litigation

Second-Generation Dispute System Design Issues in Managing Settlements

Published in cooperation with the American Bar Association Section of Dispute Resolutio