CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

[27] Souter, J., delivered the opinion of the Court, which was unanimous except insofar as Scalia, J., did not join Part II—C.

Michael K. Kellogg argued the cause for petitioners. With him on the briefs were Mark C. Hansen, Sean A. Lev, [28] Stephen M. Shapiro, Michele L. Odorizzi, and Kenneth S. Geller.

Jerold S. Solovy argued the cause for respondents. With him on the brief for respondents Milberg Weiss Bershad Hynes & Lerach et al. were Ronald L. Marmer, C. John Koch, Jeffrey T. Shaw, Paul M. Smith, Thomas J. Perrelli, Arthur R. Miller, and Michael Meehan. Gerald Maltz filed a brief for respondents Cotchett et al.^[1]

Justice Souter delivered the opinion of the Court.^[2]

Title 28 U. S. C. § 1407(a) authorizes the Judicial Panel on Multidistrict Litigation to transfer civil actions with common issues of fact "to any district for coordinated or consolidated pretrial proceedings," but imposes a duty on the Panel to remand any such action to the original district "at or before the conclusion of such pretrial proceedings." Ibid. The issue here is whether a district court conducting such "pretrial proceedings" may invoke § 1404(a) to assign a transferred case to itself for trial. We hold it has no such authority.

I

In 1992, petitioners, Lexecon Inc., a law and economics consulting firm, and one of its principals (collectively, Lexecon), brought this diversity action in the Northern District of [29] Illinois against respondents, the law firms of Milberg Weiss Bershad Hynes & Lerach (Milberg) and Cotchett, Illston & Pitre (Cotchett), claiming malicious prosecution, abuse of process, tortious interference, commercial disparagement, and defamation. The suit arose out of the firms' conduct as counsel in a prior class action brought against Charles Keating and the American Continental Corporation for violations of the securities and racketeering laws. Lexecon also was a defendant, charged with giving federal and state banking regulators inaccurate and misleading reports about the financial condition of the American Continental Corporation and its subsidiary Lincoln Savings and Loan. Along with other actions arising out of the failure of Lincoln Savings, the case against Lexecon was transferred under § 1407(a) for pretrial proceedings before Judge Bilby in the District of Arizona, where the matters so consolidated were known as the Lincoln Savings litigation. Before those proceedings were over, the class-action plaintiffs and Lexecon reached what they termed a "resolution," under which the claims against Lexecon were dismissed in August 1992.

Lexecon then filed this case in the Northern District of Illinois charging that the prior class action terminated in its favor when the respondent law firms' clients voluntarily dismissed their claims against Lexecon as meritless, amounting to nothing more, according to Lexecon, than a vendetta. When these allegations came to the attention of Judge Bilby, he issued an order stating his understanding of the terms of the resolution agreement between Lexecon and the classaction plaintiffs. 102 F. 3d 1524, 1529, and n. 2 (CA9 1996). Judge Bilby's characterization of the agreement being markedly at odds with the allegations in the instant action, Lexecon appealed his order to the Ninth Circuit.

Milberg, joined by Cotchett, then filed a motion under § 1407(a) with the Judicial Panel on Multidistrict Litigation seeking transfer of this case to Judge Bilby for consolidation with the Lincoln Savings litigation. Although the judge entered [30] a recusal because of the order he had taken it upon himself to issue, the law firms nonetheless renewed their motion for a § 1407(a) transfer.

The Panel ordered a transfer in early June 1993 and assigned the case to Judge Roll, noting that Lexecon's claims "share questions of fact with an as yet unapproved settlement involving Touche Ross, Lexecon, Inc. and the investor plaintiffs in the Lincoln Savings investor class actions in MDL-834." App. 18. The Panel observed that "i) a massive document depository is located in the District of Arizona and ii) the Ninth Circuit has before it an appeal of an order [describing the terms of Lexecon's dismissal from the Lincoln Savings litigation] in MDL-834 which may be relevant to the Lexecon claims." Ibid. Prior to any dispositive action on Lexecon's instant claims in the District of Arizona, the Ninth Circuit appeal mentioned by the Panel was dismissed, and the document depository was closed down.

In November 1993, Judge Roll dismissed Lexecon's statelaw malicious prosecution and abuse of process claims, applying a "heightened pleading standard," 845 F. Supp. 1377, 1383 (Ariz. 1993). Although the law firms then moved for summary judgment on the claims remaining, the judge deferred action pending completion of discovery, during which time the remaining parties to the Lincoln Savings litigation reached a final settlement, on which judgment was entered in March 1994.

In August 1994, Lexecon moved that the District Court refer the case back to the Panel for remand to the Northern District of Illinois, thus heeding the point of Multidistrict Litigation Rule 14(d), which provides that "[t]he Panel is reluctant to order remand absent a suggestion of remand from the transferee district court." The law firms opposed a remand because discovery was still incomplete and filed a counter motion under § 1404(a) requesting the District of Arizona to "transfer" the case to itself for trial. Judge Roll deferred decision on these motions as well.

[31] In November 1994, Lexecon again asked the District Court to request the Panel to remand the case to the Northern District of Illinois. Again the law firms objected and requested a § 1404 transfer, and Judge Roll deferred ruling once more. On April 24, 1995, however, he granted summary judgment in favor of the law firms on all remaining claims except one in defamation brought against Milberg, and at the same time he dismissed Milberg's counterclaims. 884 F. Supp. 1388, 1397 (Ariz. 1995). Cotchett then made a request for judgment under Federal Rule of Civil Procedure 54(b). Lexecon objected to the exercise of Rule 54(b) discretion, but did not contest the authority of the District Court in Arizona to enter a final judgment in Cotchett's favor. On June 7, 1995, the court granted respondent Cotchett's Rule 54(b) request.

In the meantime, the Arizona court had granted the law firms' § 1404(a) motions to assign the case to itself for trial, and simultaneously had denied Lexecon's motions to request the Panel to remand under § 1407(a). Lexecon sought immediate review of these last two rulings by filing a petition for mandamus in the Ninth Circuit. After argument, a majority of the Circuit panel, over the dissent of Judge Kozinski, denied Lexecon's requests to vacate the self-assignment order and require remand to the Northern District of Illinois. The Circuit so ruled even though the majority was "not prepared to say that [Lexecon's] contentions lack merit" and went so far as to note the conflict between "what appears to be a clear statutory mandate [of § 1407 and § 1404]" and Multidistrict Litigation Rule 14(b), which explicitly authorizes a transferee court to assign an action to itself for trial. Lexecon v. Milberg Weiss, No. 95-70380 (CA9, July 21, 1995), p. 4. The majority simply left that issue for another day, relying on its assumption that Lexecon would have an opportunity to obtain relief from the transfer order on direct appeal: "[t]he transfer order can be appealed immediately along [32] with other issues in the event the petitioners lose on the merits [at trial]." Id., at p. 3.

Trial on the surviving defamation claim then went forward in the District of Arizona, ending in judgment for Milberg, from which Lexecon appealed to the Ninth Circuit. It again appealed the denial of its motion for a suggestion that the Panel remand the matter to the Northern District of Illinois, and it challenged the dismissal of its claims for malicious prosecution and abuse of process, and the entry of final judgment in favor of Cotchett. Lexecon took no exception to the Arizona court's jurisdiction (as distinct from venue) and pursued no claim of error in the conduct of the trial.

A divided panel of the Ninth Circuit affirmed, relying on the Panel's Rule 14 and appellate and District Court decisions in support of the District Court's refusal to support remand under § 1407(a) and its decision to assign the case to itself under § 1404(a). 102 F. 3d, at 1532-1535. While the majority indicated that permitting the transferee court to assign a case to itself upon completion of its pretrial work was not only consistent with the statutory language but conducive to efficiency, Judge Kozinski again dissented, relying on the texts of §§ 1407(a) and 1404(a) and a presumption in favor of a plaintiff's choice of forum. We granted certiorari, 520 U. S. 1227 (1997), to decide whether § 1407(a) does permit a transferee court to entertain a § 1404(a) transfer motion to keep the case for trial.

II

A

In defending the Ninth Circuit majority, Milberg may claim ostensible support from two quarters. First, the Panel has itself sanctioned such assignments in a rule issued in reliance on its rulemaking authority under 28 U. S. C. § 1407(f). The Panel's Rule 14(b) provides that "[e]ach transferred action that has not been terminated in the transferee district court shall be remanded by the Panel to the [33] transferor district for trial, unless ordered transferred by the transferee judge to the transferee or other district under 28 U. S. C. § 1404(a) or 28 U. S. C. § 1406." Thus, out of the 39,228 cases transferred under § 1407 and terminated as of September 30, 1995, 279 of the 3,787 ultimately requiring trial were retained by the courts to which the Panel had transferred them. Administrative Office of the United States, L. Mecham, Judicial Business of the United States Courts: 1995 Report of the Director 32. Although the Panel's rule and the practice of self-assignment have not gone without challenge, see, e. g., 15 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3866, p. 619 (2d ed. 1986) (hereinafter Wright, Miller, & Cooper); Trangsrud, Joinder Alternatives in Mass Tort Litigation, 70 Cornell L. Rev. 779, 809 (1985); Levy, Complex Multidistrict Litigation and the Federal Courts, 40 Ford. L. Rev. 41, 64-65 (1972), federal courts have treated such transfers with approval, beginning with the Second Circuit's decision in Pfizer, Inc. v. Lord, 447 F. 2d 122, 124-125 (1971) (per curiam) (upholding MDL Rule 15(d), the precursor to Rule 14(b)). See, e. g., In re Fine Paper Antitrust Litigation, 685 F. 2d 810, 820, and n. 7 (CA3 1982); In re Air Crash Disaster at Detroit Metro. Airport, 737 F. Supp. 391, 393-394 (ED Mich. 1989); In re Viatron Computer Sys. Corp., 86 F. R. D. 431, 432 (Mass. 1980).

The second source of ostensible authority for Milberg's espousal of the self-assignment power here is a portion of text of the multidistrict litigation statute itself:

"When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings." 28 U. S. C. § 1407(a).

Although the statute limits a transferee court's authority to the conduct of "coordinated or consolidated" proceedings and [34] to those that are "pretrial," these limitations alone raise no obvious bar to a transferee's retention of a case under § 1404. If "consolidated" proceedings alone were authorized, there would be an argument that self-assignment of one or some cases out of many was not contemplated, but because the proceedings need only be "coordinated," no such narrow limitation is apparent. While it is certainly true that the instant case was not "consolidated" with any other for the purpose literally of litigating identical issues on common evidence, it is fair to say that proceedings to resolve pretrial matters were "coordinated" with the conduct of earlier cases sharing the common core of the Lincoln Savings debacle, if only by being brought before judges in a district where much of the evidence was to be found and overlapping issues had been considered. Judge Bilby's recusal following his decision to respond to Lexecon's Illinois pleadings may have limited the prospects for coordination, but it surely did not eliminate them. Hence, the requirement that a transferee court conduct "coordinated or consolidated" proceedings did not preclude the transferee Arizona court from ruling on a motion (like the § 1404 request) that affects only one of the cases before it.

Likewise, at first blush, the statutory limitation to "pretrial" proceedings suggests no reason that a § 1407 transferor court could not entertain a § 1404(a) motion. Section 1404(a) authorizes a district court to transfer a case in the interest of justice and for the convenience of the parties and witnesses. See § 1404(a). Such transfer requests are typically resolved prior to discovery, see Wright, Miller, & Cooper § 3866, at 620, and thus are classic "pretrial" motions.

Beyond this point, however, the textual pointers reverse direction, for § 1407 not only authorizes the Panel to transfer for coordinated or consolidated pretrial proceedings, but obligates the Panel to remand any pending case to its originating court when, at the latest, those pretrial proceedings have run their course.

[35] "Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated." § 1407(a) (proviso without application here omitted). The Panel's instruction comes in terms of the mandatory "shall," which normally creates an obligation impervious to judicial discretion. Anderson v. Yungkau, 329 U. S. 482, 485 (1947). In the absence of any indication that there might be circumstances in which a transferred case would be neither "terminated" nor subject to the remand obligation, then, the statutory instruction stands flatly at odds with reading the phrase "coordinated or consolidated pretrial proceedings" so broadly as to reach its literal limits, allowing a transferee court's self-assignment to trump the provision imposing the Panel's remand duty. If we do our job of reading the statute whole, we have to give effect to this plain command, see Estate of Cowart v. Nicklos Drilling Co., 505 U. S. 469, 476 (1992), even if doing that will reverse the longstanding practice under the statute and the rule, see Metropolitan Stevedore Co. v. Rambo, 515 U. S. 291, 300 (1995) ("`Age is no antidote to clear inconsistency with a statute' " (quoting Brown v. Gardner, 513 U. S. 115, 122 (1994))).

As the Ninth Circuit panel majority saw it, however, the inconsistency between an expansive view of "coordinated or consolidated pretrial" proceedings and the uncompromising terms of the Panel's remand obligation disappeared as merely an apparent conflict, not a real one. The "focus" of § 1407 was said to be constituting the Panel and defining its authority, not circumscribing the powers of district courts under § 1404(a). 102 F. 3d, at 1533. Milberg presses this point in observing that § 1407(a) does not, indeed, even apply to transferee courts, being concerned solely with the Panel's duties, whereas § 1407(b), addressed to the transferee courts, says nothing about the Panel's obligation to remand. But this analysis fails to persuade, for the very reason that it [36] rejects that central tenet of interpretation, that a statute is to be considered in all its parts when construing any one of them. To emphasize that § 1407(b) says nothing about the Panel's obligation when addressing a transferee court's powers is simply to ignore the necessary consequence of selfassignment by a transferee court: it conclusively thwarts the Panel's capacity to obey the unconditional command of § 1407(a).

A like use of blinders underlies the Circuit majority's conclusion that the Panel was not even authorized to remand the case under its Rule 14(c), the terms of which condition the remand responsibility on a suggestion of the transferee court, a motion filed directly with the Panel, or the Panel's sua sponte decision to remand. None of these conditions was fulfilled, according to the Court of Appeals, which particularly faulted Lexecon for failing to file a remand motion directly with the Panel, as distinct from the transferee court.^[3] This analysis, too, is unpersuasive; it just ignores the fact that the statute places an obligation on the Panel to [37] remand no later than the conclusion of pretrial proceedings in the transferee court, and no exercise in rule making can read that obligation out of the statute. See 28 U. S. C. § 1407(f) (express requirement that rules be consistent with statute).

B

Milberg proffers two further arguments for overlooking the tension between a broad reading of a court's pretrial authority and the Panel's remand obligation. First, it relies on a subtle reading of the provision of § 1407(a) limiting the Panel's remand obligation to cases not "previously terminated" during the pretrial period. To be sure, this exception to the Panel's remand obligation indicates that the Panel is not meant to issue ceremonial remand orders in cases already concluded by summary judgment, say, or dismissal. But according to Milberg, the imperative to remand is also inapplicable to cases self-assigned under § 1404, because the self-assignment "terminates" the case insofar as its venue depends on § 1407. When the § 1407 character of the action disappears, Milberg argues, the strictures of § 1407 fall away as well, relieving the Panel of any further duty in the case. The trouble with this creative argument, though, is that the statute manifests no such subtlety. Section 1407(a) speaks not in terms of imbuing transferred actions with some new and distinctive venue character, but simply in terms of "civil actions" or "actions." It says that such an action, not its acquired personality, must be terminated before the Panel is excused from ordering remand. The language is straightforward, and with a straightforward application ready to hand, statutory interpretation has no business getting metaphysical.

Second, Milberg tries to draw an inference in its favor from the one subsection of § 1407 that does authorize the Panel to transfer a case for trial as well as pretrial proceedings. Subsection (h) provides that,

[38] "[n]otwithstanding the provisions of section 1404 or subsection (f) of this section, the judicial panel on multidistrict litigation may consolidate and transfer with or without the consent of the parties, for both pretrial purposes and for trial, any action brought under section 4C of the Clayton Act."

Milberg fastens on the introductory language explicitly overriding the "provisions of section 1404 or subsection (f)," which would otherwise, respectively, limit a district court to transferring a case "to any other district or division where it might have been brought," § 1404(a), and limit the Panel to prescribing rules "not inconsistent with Acts of Congress," § 1407(f). On Milberg's reasoning, these overrides are required because the cited provisions would otherwise conflict with the remainder of subsection (h) authorizing the Panel to order trial of certain Clayton Act cases in the transferee court. The argument then runs that since there is no override of subsection (a) of § 1407, subsection (a) must be consistent with a transfer for trial as well as pretrial matters. This reasoning is fallacious, however. Subsections (a) and (h) are independent sources of transfer authority in the Panel; each is apparently written to stand on its own feet. Subsection (h) need not exclude the application of subsection (a), because nothing in (a) would by its terms limit any provision of (h).

Subsection (h) is not merely valueless to Milberg, however; it is ammunition for Lexecon. For the one point that subsection (h) does demonstrate is that Congress knew how to distinguish between trial assignments and pretrial proceedings in cases subject to § 1407. Although the enactment of subsection (a), Act of Apr. 29, 1968, 82 Stat. 109, preceded the enactment of subsection (h), Act of Sept. 30, 1976, § 303, 90 Stat. 1394, 1396, the fact that the later section distinguishes trial assignments from pretrial proceedings generally is certainly some confirmation for our conclusion, on independent grounds, that the subjects of pretrial [39] proceedings in subsections (a) and (b) do not include selfassignment orders.^[4]

C

There is, finally, nothing left of Milberg's position beyond an appeal to legislative history, some of which turns out to ignore the question before us, and some of which may support Lexecon. Milberg cites a House Report on the bill that became § 1407, which addresses the question of trial transfer in multidistrict litigation cases by saying that, "[o]f course, 28 U. S. C. 1404, providing for changes of venue generally, is available in those instances where transfer of a case for all purposes is desirable." H. R. Rep. No. 1130, 90th Cong., 2d Sess., p. 4 (1968) (hereinafter H. R. Rep.), cited in Brief for Respondents Milberg et al. 25. But the question is not whether a change of venue may be ordered in a case consolidated under § 1407(a); on any view of § 1407(a), if an order may be made under § 1404(a),^[5] it may be made after remand of the case to the originating district court. The relevant question for our purposes is whether a transferee court, and not a transferor court, may grant such a motion, and on this point, the language cited by Milberg provides no guidance.

If it has anything to say to us here, the legislative history tends to confirm that self-assignment is beyond the scope of the transferee court's authority. The same House Report that spoke of the continued vitality of § 1404 in § 1407 cases also said this:

[40] "The proposed statute affects only the pretrial stages in multidistrict litigation. It would not affect the place of trial in any case or exclude the possibility of transfer under other Federal statutes.

. . . . .

"The subsection requires that transferred cases be remanded to the originating district at the close of coordinated pretrial proceedings. The bill does not, therefore, include the trial of cases in the consolidated proceedings." H. R. Rep., at 3-4.

The comments of the bill's sponsors further suggest that application of § 1407 (before the addition of subsection (h)) would not affect the place of trial. See, e. g., Multidistrict Litigation: Hearings on S. 3815 and S. 159 before the Subcommittee on Improvements in Judicial Machinery of the Senate Comm. on the Judiciary, 90th Cong., 1st Sess., pt. 2, p. 110 (1967) (Sen. Tydings) ("[W]hen the deposition and discovery is completed, then the original litigation is remanded to the transferor district for the trial"). Both the House and the Senate Reports stated that Congress would have to amend the statute if it determined that multidistrict litigation cases should be consolidated for trial. S. Rep. No. 454, 90th Cong., 1st Sess., p. 5 (1967).

D

In sum, none of the arguments raised can unsettle the straightforward language imposing the Panel's responsibility to remand, which bars recognizing any self-assignment power in a transferee court and consequently entails the invalidity of the Panel's Rule 14(b). See 28 U. S. C. § 1407(f). Milberg may or may not be correct that permitting transferee courts to make self-assignments would be more desirable than preserving a plaintiff's choice of venue (to the degree that § 1407(a) does so), but the proper venue for resolving that issue remains the floor of Congress. See Am- [41] chem Products, Inc. v. Windsor, 521 U. S. 591, 628-629 (1997); Finley v. United States, 490 U. S. 545, 556 (1989).^[6]

III

The remaining question goes to the remedy, which Milberg argues may be omitted under the harmless-error doctrine. Milberg posits a distinction between a first category of cases erroneously litigated in a district in which (absent waiver) venue may never be laid under the governing statute, see Olberding v. Illinois Central R. Co., 346 U. S. 338, 340 (1953), and a second category, in which the plaintiff might originally have chosen to litigate in the trial forum to which it was unwillingly and erroneously carried, as by a transfer under § 1404. In the first, reversal is necessary; in the second, affirmance is possible if no independent and substantial right was violated in a trial whose venue was determined by a discretionary decision. Since Lexecon could have brought suit in the Arizona district consistently with the general venue requirements of 28 U. S. C. § 1391, and since the transfer for trial was made on the authority of § 1404(a), Milberg argues, this case falls within the second category and should escape reversal because none of Lexecon's substantial rights was prejudicially affected, see § 2111. Assuming the distinction may be drawn, however, we think this case bears closer analogy to those in the first category, in which reversal with new trial is required because venue is precluded by the governing statute.

Milberg's argument assumes the only kind of statute entitled to respect in accordance with its uncompromising terms is a statute that categorically limits a plaintiff's initial choice of forum. But there is no apparent reason why courts [42] should not be equally bound by a venue statute that just as categorically limits the authority of courts (and special panels) to override a plaintiff's choice. If the former statute creates interests too substantial to be denied without a remedy, the latter statute ought to be recognized as creating interests equally substantial. In each instance the substantiality of the protected interest is attested by a congressional judgment that in the circumstances described in the statute no discretion is to be left to a court faced with an objection to a statutory violation. To render relief discretionary in either instance would be to allow uncorrected defiance of a categorical congressional judgment to become its own justification. Accordingly, just as we agree with Milberg that the strict limitation on venue under, say, § 1391(a) (diversity action "may . . . be brought only . . .") is sufficient to establish the substantial character of any violation, Brief for Respondents Milberg et al. 43 (citing Olberding, supra ), the equally strict remand requirement contained in § 1407 should suffice to establish the substantial significance of any denial of a plaintiff's right to a remand once the pretrial stage has been completed.

Nor is Milberg correct that our recent decision in Caterpillar Inc. v. Lewis, 519 U. S. 61 (1996), is to the contrary.^[7] In [43] that case, which got no new trial, the jurisdictional defect (a lack of complete diversity) had been cured by subsequent events. While the statutory error (failure to comply with the § 1441(a) requirement that the case be fit for federal adjudication when the removal petition is filed) "remained in the unerasable history of the case," id., at 73, in the sense that it had not been cured within the statutory period, it had otherwise been cured by the time judgment was entered. The instant case is different from that one, inasmuch as there was no continuing defiance of the congressional condition in Caterpillar, but merely an untimely compliance. It was on this understanding that we held that considerations of "finality, efficiency, and economy" trumped the error, id., at 75. After Caterpillar, therefore, since removal is permissible only where original jurisdiction exists at the time of removal or at the time of the entry of final judgment, the condition contained in the removal statute retains significance. But the § 1407(a) mandate would lose all meaning if a party who continuously objected to an uncorrected categorical violation of the mandate could obtain no relief at the end of the day.^[8]

Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

So ordered.

[1] Briefs of amici curiae urging reversal were filed for the Regents of the University of California by Shirley M. Hufstedler, Harold J. McElhinny, and P. Martin Simpson, Jr.; and for the Washington Legal Foundation by Daniel J. Popeo.

Briefs of amici curiae urging affirmance were filed for the Aerospace Industries Association of America, Inc., by Thomas J. McLaughlin and Mac S. Dunaway; for the American Council of Life Insurance et al. by Theodore B. Olson, Theodore J. Boutrous, Jr., Phillip E. Stano, Craig Berrington, and Phillip Schwartz; for Eli Lilly and Co. by Charles E. Lipsey; for Owens-Illinois, Inc., by James D. Miller; and for Credit Suisse First Boston Corp. et al. by Joseph T. McLaughlin and Monroe Sonnenborn.

[2] Justice Scalia joins this opinion, except as to Part II—C.

[3]The Ninth Circuit stopped short of expressly inferring a waiver from Lexecon's failure to file a motion for remand directly with the Panel, and any inference of waiver would surely have been unsound. Although the Panel's Rule 14(c)(i) does authorize a party to file such a motion, Rule 14(d) comes close to saying that only under extraordinary circumstances will such a motion be granted without a suggestion of remand by the transferee court. (The Rule reads: "The Panel is reluctant to order remand absent a suggestion of remand from the transferee district court.") Therefore, even if a party may waive the § 1407 remand requirement by failing to request remand from the transferor court, see 28 U. S. C. § 1406(b), Rule 14(d) precludes an inference of waiver from mere failure to request remand from the Panel.

In this case, moreover, one can say categorically that a motion before the Panel would have failed; the transferee court denied Lexecon's motion for a remand suggestion simultaneously with an order assigning the case to itself for trial, thus exercising the authority that the Panel's Rule 14(b) expressly purported to recognize. Under the Panel's own rules, in sum, Lexecon never had a chance to waive a thing.

[4] It is well to note the limitations of a related argument. It may be tempting to say that the incompatibility of a self-assignment under § 1404(a) with the Panel's mandate is confirmed by the authority of a transferor court to assign a case to a § 1407(a) transferee district for trial if that would be appropriate following pretrial proceedings under § 1407(a). But there is one circumstance in which a transferor court would be unable to do that. As noted, transfers under § 1407 are not limited by general venue statutes; those under § 1404 are.

[5] See n. 2, supra.

[6] Because we find that the statutory language of § 1407 precludes a transferee court from granting any § 1404(a) motion, we have no need to address the question whether § 1404(a) permits self-transfer given that the statute explicitly provides for transfer only "to any other district." 28 U. S. C. § 1404(a).

[7] In its brief to this Court, Milberg suggests that any decision rejecting multidistrict litigation courts' practice of ruling on § 1404 transfer motions should be applied only prospectively under Chevron Oil Co. v. Huson,404 U. S. 97, 106-107 (1971). Because this argument was not presented below, see Brief for Milberg Defendants in No. 95-16403 et al. (CA9), or to this Court when Milberg opposed petitioners' petition for certiorari, see Brief in Opposition for Respondents Milberg et al., it is unnecessary for us to consider it here.

Milberg's brief also argues that petitioners are not entitled to relief because the only claim that survived for trial should have been dismissed during pretrial proceedings. We do not address the propriety of the District Court's decision to allow this claim to go forward; the issue falls outside the question on which we granted certiorari. See this Court's Rule 14.1(a) ("Only the questions set forth in the petition, or fairly included therein, will be considered by the Court").

[8] Although Cotchett's request for an order of dismissal under Rule 54(b) was not granted until after the Arizona court had assigned the case to itself for trial,there is no reason to reconsider that dismissal order. It was perfectly proper as a pretrial order and, for that matter, was merely the formal reflection of the Arizona court's decision on the merits of the claims that had been resolved prior to that court's decision on the § 1404 transfer.

Before JOHN F. NANGLE, Chairman, S. HUGH DILLIN, MILTON POLLACK,^[1] LOUIS H. POLLAK, ROBERT R. MERHIGE, Jr., and WILLIAM B. ENRIGHT, Judges of the Panel.

OPINION AND ORDER

The record before us suggests that more than a million women have received silicone gel breast implants. Since the Food and Drug Administration held highly publicized hearings a few months ago about the safety of this product, a rush to the courthouse has ensued, although some litigation concerning the product has periodically been filed in the federal courts in the last several years.

This litigation presently consists of the 78 actions listed on the following Schedule A^[2] and pending in 33 federal districts as follows:

 [1099] 
  Middle District of Florida                     11 actions
  Northern District of California                 8 actions
  District of Colorado                            7 actions
  Southern District of New York                   7 actions
  Southern District of Ohio                       4 actions
  Western District of Oklahoma                    4 actions
  Eastern District of New York                    3 actions
  Central District of California                  2 actions
  Northern District of Florida                    2 actions
  District of Maryland                            2 actions
  Eastern District of Michigan                    2 actions
  District of Minnesota                           2 actions
  District of New Mexico                          2 actions
  District of South Carolina                      2 actions
  Western District of Washington                  2 actions
  Southern District of Florida                    1 action
  Middle District of Georgia                      1 action
  Northern District of Georgia                    1 action
  District of Hawaii                              1 action
  Northern District of Illinois                   1 action
  Southern District of Indiana                    1 action
  District of Kansas                              1 action
  District of Montana                             1 action
  District of New Jersey                          1 action
  District of Oregon                              1 action
  Eastern District of Pennsylvania                1 action
  Western District of Pennsylvania                1 action
  Western District of Texas                       1 action
  Southern District of Texas                      1 action
  District of Utah                                1 action
  Eastern District of Virginia                    1 action
  Southern District of West Virginia              1 action
  Eastern District of Wisconsin                   1 action

Before the Panel are four separate motions pursuant to 28 U.S.C. § 1407: 1) motion of plaintiffs in three Northern District of California actions to centralize all actions in the Northern District of California or any other appropriate transferee forum (these plaintiffs now favor centralization in the Southern District of Ohio); 2) motion of plaintiffs in one Northern District of California action to centralize all actions in that district; 3) motion of plaintiffs in seven actions to centralize all actions in either the Northern District of California or the District of Kansas; and 4) motion of plaintiffs in the Eastern District of Virginia action (Schiavone) to centralize in that district the medical monitoring claims that are presented in seven purported class actions.^[3]

The overwhelming majority of the more than 200 responses received by the Panel supports transfer. The major issue presented in the responses is selection of the transferee forum, with two large groups of parties aligned in favor of opposing views. The first large group of parties favors selection of either the Northern District of California (Judge Thelton E. Henderson or Judge Marilyn H. Patel) or the District of Kansas (Judge Patrick F. Kelly). This group includes 1) plaintiffs in at least 65 of the 78 actions before the Panel; 2) plaintiffs in at least 69 potential tag-along actions; and 3) approximately 250 attorneys who are purportedly investigating claims of more than 2,000 potential plaintiffs. The second large group of parties favors selection of the Southern District of Ohio (Judge Carl B. Rubin). This group includes 1) plaintiffs in nine of the 78 actions before the Panel; 2) plaintiffs in at least nine potential tag-along actions; 3) approximately 75 law firms that purport to represent approximately 4,000 actual and potential plaintiffs; and 4) sixteen defendants, including major silicone gel breast implant manufacturers Dow Corning Corporation (Dow Corning), Baxter Healthcare Corporation, McGhan Medical Corporation (McGhan), Bristol-Meyers Squibb Company and Mentor Corporation (Mentor).

Miscellaneous responses received by the Panel include i) opposition of plaintiff in one Colorado action to transfer of her action (Reid), ii) opposition of defendant General Electric Company to transfer of the four actions in which it is a party, iii) opposition of plaintiffs in four potential tag-along actions to transfer of their actions, and iv) support of plaintiffs in one action for the motion of the Schiavone plaintiffs.

On the basis of the papers filed and the hearing held, the Panel finds that the actions in this litigation involve common questions of fact and that centralization under Section 1407 in the Northern District [1100] of Alabama before Chief Judge Sam C. Pointer, Jr., will best serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. The actions present complex common questions of fact, as nearly all responding parties have acknowledged, on the issue of liability for allegedly defective silicone gel breast implants. Centralization under Section 1407 is thus necessary in order to avoid duplication of discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel and the judiciary.

We are not persuaded by various parties' requests for exclusion of certain actions or claims or for creation of a separate multidistrict litigation to handle medical monitoring claims. We point out that transfer under Section 1407 has the salutary effect of placing all actions in this docket before a single judge who can formulate a pretrial program that: 1) allows discovery with respect to any non-common issues to proceed concurrently with discovery on common issues, In re Multi-Piece Rim Products Liability Litigation, 464 F.Supp. 969, 974 (J.P.M.L. 1979); and 2) ensures that pretrial proceedings will be conducted in a manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties. It may be, on further refinement of the issues and close scrutiny by the transferee judge, that some claims or actions can be remanded in advance of the other actions in the transferee district. But we are unwilling, on the basis of the record before us, to make such a determination at this time. Should the transferee judge deem remand of any claims or actions appropriate, procedures are available whereby this may be accomplished with a minimum of delay. See Rule 14, R.P.J.P.M.L., 120 F.R.D. 251, 259-61 (1988).

Selection of the transferee court and judge for this litigation has been a challenging task. The parties' arguments in their briefs and at the Panel hearing in this matter have focused primarily on the relative merits of the suggested California and Ohio forums. Proponents of the California forum stress that i) both Judge Henderson and Judge Patel have tried breast implant actions and are thus very familiar with the issues raised in this docket, ii) several implant manufacturers, including McGhan and Mentor, have their principal places of business in California, and iii) California is presumptively the state with the largest number of actual and potential claimants in the breast implant litigation. Meanwhile, proponents of the Ohio forum emphasize Judge Rubin's familiarity with the litigation, gained by presiding over the consolidated breast implant action (Dante) in his district since January 1992. During that time, Judge Rubin has conditionally certified a nationwide, opt-out class of breast implant recipients; established a document depository; appointed a Plaintiffs' Lead Counsel Committee consisting of seven members; scheduled trial on common issues for June 1993; and initiated the dissemination of notice to class members.

We observe that either the Northern District of California or the Southern District of Ohio could be an appropriate forum for this docket and certainly the judges referred to are experienced and well-qualified to handle this litigation. We are troubled, however, by the volume and tone of the negative arguments with which opposing counsel have sought to denigrate each other's forum choices, litigation strategies and underlying motives. A brief recitation of a few of these arguments sufficiently conveys their flavor. For example, various parties argue that 1) parties in the Ohio forum have engendered a flurry of pretrial activity in an effort to dictate our decision on selection of the transferee court; 2) the class in the Southern District of Ohio was certified in a precipitous fashion, without according adequate notice or opportunity to be heard to interested parties nationwide; 3) defendants oppose the California forum only because the two trials there resulted in substantial verdicts against one of them; and 4) the plaintiffs who favor the California forum are forum shopping for a judge who has tried a breast implant action in which plaintiffs prevailed.

Essentially, these arguments are fueled by an acrimonious dispute among counsel, [1101] relating to control of the litigation as well as to how it should proceed (class versus individual treatment). It is neither our function nor our inclination to take sides in this dispute. But we are indeed persuaded that the level of acrimony has caused the parties and counsel on each side to harbor a perception that they would be unfairly affected by selection of any of the suggested forums. This perception of "unfairness" is unwarranted, because this Panel believes that all of the federal judges involved in these 78 actions would conduct these proceedings in a fair and impartial manner. Nevertheless, we recognize that in a mega-tort docket of this nature, involving claimants who may be experiencing litigation for the first time, such a perception could become a dark cloud over these proceedings and threaten their just and efficient conduct.

In light of these considerations, we have determined to look beyond the preferences of the parties in our search for a transferee judge with the ability and temperament to steer this complex litigation on a steady course that will be sensitive to the concerns of all parties. Because no single location stands out as the geographic focal point for this nationwide docket, the scope of our search embraced the universe of federal district judges. By selecting Chief Judge Pointer, a former member of our Panel, Chairman of the Board of Editors of the Manual for Complex Litigation, Chairman of the Judicial Conference's Advisory Committee on Civil Rules, and an experienced multidistrict transferee judge, we are confident that we are entrusting this important and challenging assignment to a distinguished jurist. We urge all parties and counsel to work cooperatively with one another and with Judge Pointer toward the goal of a just, efficient and expeditious resolution of the litigation.

IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C. § 1407, the actions listed on the following Schedule A be, and the same hereby are, transferred to the Northern District of Alabama and, with the consent of that court, assigned to the Honorable Sam C. Pointer, Jr., for coordinated or consolidated pretrial proceedings.

SCHEDULE A

MDL-926 — In re Silicone Gel Breast Implants Products Liability Litigation

Northern District of California

Elizabeth Wires v. Surgitek, et al., C.A. No. C-91-2132-JPV

Theresa Ramirez v. Dow Corning Corp., et al., C.A. No. C-92-0354-EFL-ARB

Sharon DeForest, et al. v. Dow Corning Corp., et al., C.A. No. C-92-0376-FMS-ENE

Nancy Ann Colagiovanni, etc. v. Surgitek, Inc., et al., C.A. No. C-92-0473-WHO

Loretta Patterson, et al. v. Coopersurgical Inc., et al., C.A. No. C-92-0662-SAW

Martha Luce, etc. v. Dow Corning Corp., et al., C.A. No. C-92-0732-EFL

Harriet Schnapper, etc. v. McGhan Medical Corp., et al., C.A. No. C-92-0733-BAC

Tamara Callas, et al. v. The Dow Chemical Co., et al., C.A. No. C-92-0793-SC

Central District of California

Rebecca Flattman, et al. v. Dow Corning Corp., et al., C.A. No. CV-92-1186-SVW

Christine House, et al. v. Dow Corning Wright, et al., C.A. No. CV-92-1547-WMB

District of Colorado

Karen Reid v. Dow Corning Corp., C.A. No. 90-S-1978

JoAnn Roberts, et al. v. Baxter Healthcare Corp., et al., C.A. No. 91-S-923

Robin Skinner v. INAMED Corp., et al., C.A. No. 91-S-2065

Judy Stoughton v. McGhan Medical Corp., et al., C.A. No. 91-S-2066

Lynda Roth v. Mentor Corp., et al., C.A. No. 92-414

Diana Hinton, et al. v. Baxter Healthcare Corp., et al., C.A. No. 92-415

Valerie Sommers, et al. v. Bristol-Myers/Squibb Co., et al., C.A. No. 92-416

[1102] Middle District of Florida

Carolyn Repetta v. Dow Corning Corp., et al., C.A. No. 90-1360-Civ-T-21

Mary Louise Smith, et al. v. Dow Corning Corp., et al., C.A. No. 90-1361-Civ-T-22C

Janice Buck v. Baxter Healthcare Corp., C.A. No. 90-1379-Civ-T-17

Judy Taylor, et al. v. Medical Engineering Corp. a/k/a Surgitek, C.A. No. 90-1408-Civ-T-10A

Santina ("Tina") Otis, et al. v. Dow Corning Corp., et al., C.A. No. 90-1562-Civ-T-21A

Sharon Fullerton, et al. v. McGhan Medical Corp., et al., C.A. No. 91-460-Civ-T-17B

Lori J. Phillips, et al. v. Surgitek-Medical Engineering Corp., C.A. No. 91-1043-Civ-T-21B

Patricia Bingamon v. Medical Engineering Corp. a/k/a Surgitek, C.A. No. 91-1108-Civ-T-17C

Patricia Esper, et al. v. McGhan Medical Corp., et al., C.A. No. 91-1117-Civ-T-22B

Helene Williams, et al. v. Minnesota Mining and Manufacturing Co., et al., C.A. No. 92-166-Civ-T-22B

Dorothy Keeney, et al. v. Minnesota Mining and Manufacturing Co., et al., C.A. No. 92-215-Civ-T-17C

Northern District of Florida

Sue Carol Hood, et al. v. Dow Corning Corp., C.A. No. 92-30061-RV

Mary Joan Gardner, et al. v. Dow Corning Wright Corp., et al., C.A. No. 92-30090-RV

Southern District of Florida

Tina Marie Pachivas v. McGhan Medical Corp., et al., C.A. No. 92-0572

Middle District of Georgia

Sylvia Wilson, et al. v. Surgitek, Inc., et al., C.A. No. 92-03-THOM

Northern District of Georgia

Debra Crouch v. Surgitek, Inc., et al., C.A. No. 92-CV-108-HTW

District of Hawaii

Heather Castellanos v. Surgitek-Medical Engineering Corp., C.A. No. 92-00031-DAE

Northern District of Illinois

Inez Barnett, et al. v. Bristol-Myers/Squibb, et al., C.A. No. 92-C-895

Southern District of Indiana

Beverly J. Shoun, et al. v. Dow Corning Wright, et al., C.A. No. IP92-285-C

District of Kansas

Cynthia Steward, et al. v. Dow Corning Corp., et al., C.A. No. 92-1105-K

District of Maryland

Lugene Yarbrough v. Dow Corning Corp., C.A. No. MJG-91-2964

Billie Rae Terrones v. Dow Corning Corp., C.A. No. S92-345

Eastern District of Michigan

Mickii Carter, et al. v. Dow Corning Corp., C.A. No. 92-CV-10016-BC

Denise Heinze, et al. v. Dow Corning Corp., et al., 92-CV-70920-DT

District of Minnesota

Caroline Bromm v. Dow Corning Wright, et al., C.A. No. 4-92-Civ-210

Darlene Ngo v. Dow Corning, C.A. No. 92-CV-00113

District of Montana

Julie Goodroad v. Mentor Corp., et al., C.A. No. CV-92-001-GF-PGH

District of New Jersey

Marianne Rullo v. Dow Corning Wright, et al., C.A. No. 92-1189(JCL)

District of New Mexico

Victoria Holt v. McGhan Medical Corp., C.A. No. Civ-92-0190-JB

Janet Peele v. Dow Corning Corp., C.A. No. Civ-92-0193-SC

Eastern District of New York

Stanley Drucker, et al. v. Dow Corning Corp., C.A. No. 91-Civ-2114

Marita Swirski, et al. v. Dow Corning Wright, et al., C.A. No. CV-92-0972

Violet W. Kennedy, et al. v. Dow Corning Wright, et al., C.A. No. CV-92-0973

[1103] Southern District of New York

Sandra K. Richman, et al. v. Dow Corning Corp., C.A. No. 90-Civ-5325

Antoinette Facchini, et al. v. Profiles & Contours, Inc., et al., C.A. No. 91-CV-3755(MSC)

Toni J. Cagle, et al. v. The Cooper Companies, Inc., et al., C.A. No. 91-CV-7828(KC)

Rebecca O. Crenshaw, et al. v. The Cooper Companies, Inc., et al., C.A. No. 92-CV-1099(MGC)

Linda K. Chance v. The Cooper Companies, Inc., et al., C.A. No. 92-CV-1650

Didi Kirschner, et al. v. Dow Corning Corp., et al., C.A. No. 92-CV-1741

Jo Ann Racaniello, et al. v. Dow Corning Corp., et al., C.A. No. 91-CV-7742

Southern District of Ohio

Brenda Brandenburg, et al. v. Dow Corning Corp., et al., C.A. No. C-1-91-0326

Marilyn Seckler, etc. v. Dow Corning Corp., et al., C.A. No. C-1-92-064

Donna Dante, et al. v. Dow Corning Corp., et al., C.A. No. C-1-92-057

Becky Percifull, et al. v. Dow Corning Corp., et al., C.A. No. C-1-92-260

Western District of Oklahoma

Denise Andree v. Medical Engineering Corp. d/b/a Surgitek, et al., C.A. No. Civ-91-2143-T

Linda L. Fender v. Dow Corning Wright Corp., C.A. No. Civ-91-388-W

Paula Norwood, et al. v. Medical Engineering Corp. d/b/a Surgitek, et al., C.A. No. Civ-91-1689-W

Maggie L. Cook v. Dow Corning Wright Corp., C.A. No. Civ-92-397-A

District of Oregon

Leaann Hall v. Heyer Schulte Corp. of Santa Barbara, C.A. No. 92-182

Eastern District of Pennsylvania

M.S. Boyer, etc. v. Medical Engineering Corp., et al., C.A. No. 92-CV-0570

Western District of Pennsylvania

Lisa M. Kyzer, etc. v. Dow Corning Corp., C.A. No. 92-0366

District of South Carolina

Debbie Droz, et al. v. Dow Corning Corp., et al., C.A. No. 2-92-0677-18

Connie Strickland v. Bristol-Myers/Squibb, et al., C.A. No. 4-91-3617-2

Western District of Texas

Marilyn S. Jennings v. The Cooper Companies, Inc., et al., C.A. No. W-91-CA-321

Southern District of Texas

Holly Galando v. Dow Corning Corp., et al., C.A. No. 8-92-792

District of Utah

Lori Campbell Gee v. Surgitek, et al., C.A. No. 91-C-704-G

Eastern District of Virginia

Mary Schiavone, et al. v. Dow Corning Corp., C.A. No. 92-225-A

Southern District of West Virginia

Phyllis J. Lane, et al. v. McGhan Medical Corp., C.A. No. 2:92-0206

Western District of Washington

Cynthia R. Malmlov v. Corning Inc., C.A. No. C-92-56

Sunny Powell-Naumann, et al. v. Heyer Schulte Corp., et al., C.A. No. C-92-5096

Eastern District of Wisconsin

Sharon Lea Busse, et al. v. Dow Corning Corp., et al., C.A. No. 92-0277

[1] Although Judge Pollack was unable to attend the hearing of this matter on May 29, 1992, he has, with the consent of all parties represented at the hearing, participated in this decision on the basis of the parties' briefs and the hearing transcript.

[2] In addition to the 78 actions listed on Schedule A, the Panel has been advised of the pendency in many federal district courts of approximately 200 other related actions. These actions will be treated as potential tag-along actions. See Rules 12 and 13, R.P.J.P.M.L., 120 F.R.D. 251, 258-59 (1988).

[3] The Section 1407 motions before the Panel included six additional actions that are not appropriate for inclusion in centralized pretrial proceedings. Three Eastern District of Virginia actions — Linda Chavez Rothwell v. McGhan Medical Corp., C.A. No. 3:91-CV-666; Jacqueline Butler Clark v. Baxter Healthcare Corp., C.A. No. 91-899-A; and Sonia Dunkinson v. Baxter Healthcare Corp., C.A. No. 92-77-A — have been dismissed. One Northern District of Illinois action — Mindy Saperstein, etc. v. Bristol-Meyers Company, et al., C.A. No. 92-C-0743 — has been remanded to state court. Two Northern District of California actions — Maria Stern v. Dow Corning, C.A. No. C-83-2348-MHP; and Mariann Hopkins v. Dow Corning Corporation, et al., C.A. No. C-88-4703-TEH, 1991 WL 328043 — have already been tried.

John C. Martland, Martland & Brooks LIT, Saugus, MA, David Pastor, Gilman and Pastor, LLP, Boston, MA, Stephen Rabin, Rabin Peckel, LLP, New York City, for Dean Delaventura, Plaintiffs.

Giselle J. Joffre, Ropes & Gray LLP, Brian E. Pastuszenski, Goodwin Procter LLP, Boston, MA, for Columbia Funds Trust I, Columbia Funds Trust II, Columbia Funds Trust III, Columbia Funds Trust V, Columbia Funds Trust VI, Columbia Funds Trust VII, Columbia Funds Trust VIII, Columbia Funds Trust XI, Defendants.

MEMORANDUM

YOUNG, District Judge.

It is the province of the Congress so to allocate jurisdiction and venue among the 94 United States District Courts as to "secure the Blessings of Liberty to ourselves and our Posterity," U.S. Const. pmbl., and achieve the "just, speedy, and inexpensive determination of every action,"^[1] Fed.R.Civ.P. 1. It is the province of the competent attorney to shop for a forum believed best suited to the client's cause. It is the province of the federal [148] judiciary fairly to mediate between the aspiration and the reality.

Since all 94 district courts follow identical rules concerning discovery and trial preparation, one excellent innovation in civil practice is the idea that a single judge might manage a number of "related" cases, getting them all ready for trial in a uniform manner and returning the "trial-ready" cases from whence they came (i.e., to the district courts with proper jurisdiction and venue) for trials before local juries.

I. Multi-District Litigation.

This excellent innovation has been codified by statute—28 U.S.C. § 1407(a)— which provides:

When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of the parties and witnesses and will promote the just and efficient conduct of such actions. Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated. . . .

So, multi-district litigation ("MDL") practice was born.

In order for a case to be transferred, the civil actions pending in different judicial districts must have one or more questions of fact in common. 28 U.S.C. § 1407(a). Additionally, the transfer must be convenient for the parties and the witnesses and must promote justice and efficiency. Id.

As in the present case, MDL is "used to manage mass torts." James M. Wood, The Judicial Coordination of Drug and Device Litigation, 54 Food & Drug L.J. 325, 337 (1999); see Desmond T. Barry, Jr., A Practical Guide to the Ins and Outs of Multidistrict Litigation, 64 Def. Couns. J. 58, 66 (1997) (stating that "the procedures are intended only as a guide to promote the fair and efficient resolution of complex litigation"); id. at 59 (noting the purpose of MDL is to "eliminate duplication in discovery, avoid conflicting rulings and schedules, reduce litigation cost, and save time and effort on the part of the parties, the attorneys, the witnesses and the courts").

The Judicial Panel on Multi-District Litigation has the authority to "centraliz[e] . . . cases in a single district called the transferee district for pretrial management . . ." Gregory Hansel, Extreme Litigation: An Interview With Judge Wm. Terrell Hodges, 19 Me. B.J. 16, 18 (2004) (emphasizing that transfers are for pretrial management only).^[2] The judicial panel is "neither a trial court, appellate tribunal, nor (as some have called it) a mysterious `Super Court.' Rather, it is simply a special judicial creature comprised of seven federal district or appellate court judges. . . ." Earle F. Kyle, IV, The Mechanics of Motion Practice Before the Judicial Panel [149] on Multidistrict Litigation, 175 F.R.D. 589, 589 (1998).

The panel considers a large number of cases, including patent and antitrust cases, and claims against pharmaceutical manufacturers. Id. at 589 n. 14. Indeed, some commentators anticipate that the Class Action Fairness Act of 1995, Pub.L. No. 109-2, 119 Stat. 4 (2005), may "generate more federal class actions of national scope[,] resulting in more multi-district litigation. . . ." Gary L. Sasso & Carlton Fields, Defense of Federal Regulation Class Actions, 728 PLI/Lit. 95, 162 (2005). But see infra note 9 and accompanying text.

The MDL process relies on the "informed discretion of the judiciary." H.R.Rep. No. 90-1130 (1968), reprinted in 1968 U.S.C.C.A.N. 1898, 1901; Barry, 64 Def. Couns. J. at 58 (noting that MDL requires "strong and creative action from transferee judges").

Over the past decades, judges have gained increasing authority over the pretrial process and the configuration of lawsuits themselves. One source of that control . . . is the ability of judges to insist that litigants combine their actions, by consolidation and multi-district litigation, so that the judiciary can consider related problems together. This increased judicial authority has come at the expense of the autonomy of at least lawyers, if not also their clients.

Judith Resnik, Whose Judgment? Vacating Judgments, Preferences for Settlement, and The Role of Adjudication at the Close of the Twentieth Century, 41 U.C.L.A. L.Rev. 1471, 1485-86 (1994) (emphasis added, footnotes omitted); see also In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig.-II, 953 F.2d 162, 165-66 (4th Cir.1992) (resolving a "serious question" by ruling that MDL transfers in no way expand a court's jurisdiction so as to allow them to reach those not a party to a case).^[3]

The Judicial Panel on Multidistrict Litigation acted upon 22,516 civil actions pursuant to 28 U.S.C. 1407 during the 12-month period ending September 30, 2004. The Panel transferred 10,681 cases originally filed in 91 district courts to 46 transferee districts for inclusion in coordinated or consolidated pretrial proceedings for 11,835 actions previously initiated in the transferee districts. . . . The Panel did not order transfer in 29 newly docketed litigations involving 268 actions.

Since the Panel's creation in 1968, it has centralized 211,317 civil actions for [150] pretrial proceedings. As of September 30, 2004, a total of 10,899 actions had been remanded for trial, 389 actions had been reassigned within the transferee districts, and 136,070 actions had been terminated in the transferee courts. At the end of this fiscal year, 63,959 actions were pending throughout 54 transferee district courts.

Leonidas Ralph Mecham, Judicial Business of the United States Courts, 2004 Annual Report of the Director 25, available at http://www.uscourts. gov/judbususc/judbus .html (last visited Jan. 29, 2006). Certain conclusions follow obviously from these statistics:

First, the MDL panel itself overwhelmingly favors the procedure it administers. Thus, once the MDL panel decides to consider a matter pursuant to Section 1407(a), transfer is more than likely.

Second, as compared to the processing time of an average case, MDL practice is slow, very slow. See Christopher J. Roche, A Litigation Association Model to Aggregate Mass Tort Claims for Adjudication, 91 Va. L.Rev. 1463, 1469 (2005) ("[D]elay is a common feature of mass tort litigation. Resolution of cases may take years, in some cases effectively precluding plaintiffs from any meaningful recovery."). Despite the assumption that "transfer and consolidation will promote judicial efficiency which will result in convenience to the parties and witnesses", Stanley J. Levy, Complex Multidistrict Litigation and the Federal Courts, 40 Fordham L.Rev. 41, 47 (1971), the purported "efficiency gains of consolidated trial are not supported by reality", Benjamin W. Larson, Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach: Respecting the Plaintiff's Choice of Forum, 74 Notre Dame L.Rev. 1337, 1364 (1999).

Third, as MDL practice flourishes, many cases are transferred out of their home courts and away from local juries, but few—very few—ever return for trial. The reasons are twofold. Most cases settle, and this is as it should be. MDL cases settle at approximately the same rate as cases handled in their home courts. Yet the "settlement culture"^[4] a for which the federal courts are so frequently criticized is nowhere more prevalent than in MDL practice. The Manual for Complex Litigation [151] seems virtually to command this result:

One of the values of multidistrict proceedings is that they bring before a single judge all of the federal cases, parties, and counsel comprising the litigation. They therefore afford a unique opportunity for the negotiation of a global settlement. Few cases are remanded for trial; most multidistrict litigation is settled in the transferee court. As a transferee judge, it is advisable to make the most of this opportunity and facilitate the settlement of the federal and any related state cases.

Federal Judicial Center, Manual for Complex Litigation (Fourth) § 20.132 (emphasis added).

[152] Thus, it is almost a point of honor among transferee judges acting pursuant to Section 1407(a) that cases so transferred shall be settled rather than sent back to their home courts for trial. This, in turn, reinforces the unfortunate tendency to hang on to transferred cases to enhance the likelihood of settlement. Indeed, MDL practice actively encourages retention even of trial-ready cases in order to "encourage" settlement. See, e.g., MDL No. 875 (subjecting thousands of asbestosis cases to MDL practice for over fourteen years). "The Panel is reluctant to order remand absent a suggestion of remand from the transferee district court." R. Proc. Jud. Panel Multidistrict Litig. 7.6(d). There are no public figures evidencing how often, if ever, the Panel has remanded a case over the objection of the transferee judge.

Although the Supreme Court has made clear that it was never the statutory intent that Section 1407(a) be interpreted as a super-venue statute allowing transfer for all purposes to the transferee judge, Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 118 S.Ct. 956, 140 L.Ed.2d 62 (1998), the Federal Judicial Center has long considered it "[a] major deficiency in MDL procedure . . . that the panel does not have statutory authority to transfer cases for trial." Thomas E. Willging, Report, Trends in Asbestos Litigation, Federal Judicial Center (1987). The Judicial Conference has lobbied^[5] for legislation "which would effectively overrule Lexecon by statutory amendment." Hon. Wm. Terrell Hodges, Chair of Judicial Panel Sees Role as Gatekeeper, The Third Branch, Nov. 2005, at 10 ("Hodges Interview"). Indeed, the chair of the MDL Panel could not be more straightforward:

We're hopeful that in this Congress the legislation will pass and that Lexecon will be a thing of the past. It's hard to know how many multidistrict dockets actually have been affected in some substantial way by the requirement of Lexecon that constituent actions be remanded to the transferor courts as soon as the case is ready for trial. A number of devices, frankly, have been utilized by innovative judges since Lexecon to minimize its effect.

Id. at 12.

Put aside the rather novel scene of the chair of an inferior tribunal denigrating a decision of the Supreme Court of the United States. The more important point is that the pursuit of settlement without offering a trial is both unwise—and a defense ploy.

Some, believing that any settlement is preferable to any trial, may consider this a desirable outcome.^[6] In actuality, however, [153] this marginalization of juror fact finding^[7] perversely and sharply skews the MDL

[154] This Page Contains Footnotes. [155] bargaining process in favor of defendants. Consider: All litigants bargain in the shadow of trial. Those averse to the inevitable uncertainties of the direct democracy of the American jury will factor the risks of trial into their settlement postures. Failure to arrive at a mutually acceptable settlement should, and in most cases does, result in a trial. In MDL practice, however, it is solely the transferee judge who controls the risk of trial. The litigant who refuses to settle can never get back to his home court to go before a local jury unless the transferee judge agrees.

Once trial is no longer a realistic alternative, bargaining shifts in ways that inevitably favor the defense. After all, a major goal of nearly every defendant is to avoid a public jury trial of the plaintiffs claims. Fact finding is relegated to a subsidiary role,^[8] and bargaining focuses instead on ability to pay, the economic consequences of the litigation, and the terms of the minimum payout necessary to extinguish the plaintiffs claims. Commentators generally agree that MDL practice favors the defense.

MDL proceedings are described as a "delaying tactic used by defendants" which "consume a great deal of time." Benjamin W. Larson, Comment, Lexecon, Inc. v. Milberg Weiss Beshad Hynes and Lerash: Respecting the Plaintiffs Choice of Forum, 74 Notre Dame L.Rev. 1337, 1364 (1999) (citing Mark Hermann, To MDL or Not to MDL? A Defense Perspective, Litig., Summer 1998, at 43, 46; Stanley J. Levy, Complex Multidistrict Litigation and the Federal Courts, 40 Fordham L.Rev. 41, 50 (1971)). Plaintiffs lose control over the management of their case. Wood, 54 Food & Drug L.J. at 337.

[A] plaintiffs motive in pleading to secure a particular jurisdiction may not be evaluated in the removal versus remand struggle. In response to this forum shopping, defense counsel have often filed a notice of removal alleging fraudulent joinder of the nondiverse defendant. Before a plaintiff has the opportunity to file a motion to remand, defense counsel often initiates a reference to the Judicial Panel averring that the case is pending in a United States district court. If, as a result of this reference, the Judicial Panel enters a transfer order, or a conditional transfer order, the plaintiffs counsel may face a David and Goliath situation. Upon receipt of a conditional transfer order or a tag-along transfer order, many plaintiffs' counsel certainly understand David's fears in the face of Goliath.

Mike Roberts, Multidistrict Litigation and the Judicial Panel, Transfer and Tag-Along Orders Prior to a Determination of Remand: Procedural and Substantive Problem or Effective Judicial Public Policy?, 23 Memphis St. U.L.Rev. 841, 842-43 (1993) (emphasis added, footnotes omitted). This "strategy allows the defense counsel to attempt to secure a [156] transfer order or conditional transfer order before the original federal district court determines, and in some cases even hears, the anticipated motion to remand." Id. at 843.

This case illustrates this problem. The defendants here removed the action to federal court. Though this Court was able to rule on the motion to remand, it did not have sufficient time to issue a memorandum explaining its order prior to the conditional transfer order. Judge Hodges is, of course, correct when he says, "Well, of course some parties want centralization; some don't", Hodges Interview at 10, but a more accurate statement would be "Defendants generally want centralization; plaintiffs generally don't."

It is precisely because MDL practice is perceived so clearly to favor the defense that Congress appears to have lost confidence in a judicial management mechanism that once had such great promise. The Class Action Fairness Act of 2005, Pub.L. No. 109-2, 119 Stat. 4 (2005), itself thought to be legislation that favors business defendants, see Natale v. Pfizer, Inc., 379 F.Supp.2d 161, 164-68 (D.Mass.2005), contains an unmistakable rebuke to the Panel on Multi-District Litigation in Section 4, which provides that no class action removed to federal court under its provisions shall thereafter be transferred to another district pursuant to Title 28, Section 1407(a) of the U.S.Code without the request of a majority of plaintiffs.^[9] See Pub.L. No. 109-2, 119 Stat. 4, 11-12 (2005) (codified at 28 U.S.C. § 1332(d)(11)(C)(i)).

Were transferee judges content to workup transferred cases for trial on a reasonably short time schedule, sensitive to the fact-finding contributions to be made by the American jury in the district where congressionally mandated venue is proper—while at the same time exerting every effort to settle all those cases amenable to settlement—perhaps MDL practice might earn back the respect it has lost.

A shining example of this technique is Judge Jack. See supra note 8. Another is Judge Eldon Fallon of the Eastern District of Louisiana, the transferee judge for the federal lawsuits involving Vioxx:

At last count, Merck faced close to 7,000 lawsuits related to Vioxx, and the number keeps growing. Two judges will play critical roles in how these cases play out. One is . . . U.S. District Judge Eldon Fallon of New Orleans.

Fallon has control of all the federal Vioxx lawsuits, and he is hearing the case that starts in Houston today. . . . Today's trial is the first of four Vioxx trials Judge Fallon has scheduled for the next few months. The four cases are intended to represent the range of alleged harms caused by Vioxx.

Fallon is following a strategy he's used before to push plaintiffs and drug makers to the settlement table, by trying representative cases and letting their outcomes in court set a price tag for an overall settlement. He's doing this despite Merck's insistence that it will not settle and that the company will take every case to court.

. . . . . . [157] Judge Fallon has promised a speedy trial.^[10]

Snighda Prakash, Federal Trial on Vioxx Opens in Houston, NPR Morning Edition, Nov. 29, 2005 (emphasis added), audio recording available at http://www. npr.org/templates/ story/story.php? story-Id=5030553 (last visited Jan. 30, 2006).

II. Multi-District Litigation Practice in This Case.

This case illustrates how all this works in America today. Dean Delaventura ("Delaventura") commenced this putative class action on March 21, 2005 in the Massachusetts Superior Court sitting in and for the County of Suffolk on his own behalf and on behalf of others similarly situated. See Notice of Removal [Doc. No. 1], Ex. A. Seeking to avoid federal court and MDL practice, the complaint stated a single cause of action for breach of contract. The defendants Columbia Acorn Trust and Columbia Funds Trusts I-IX ("Columbia"), alleging that this complaint was preempted by the Securities Litigation Uniform Standards Act of 1998 ("SLSA"), Pub.L. 105-353, 112 Stat. 3227 (1998) (codified in scattered sections of 15 U.S.C.), removed this matter to federal court from the Suffolk Superior Court on April 20, 2005. See Notice of Removal. Columbia also filed a motion to stay the proceedings while it pursued its efforts to fold this case into an already existing MDL docket involving "market timing" issues. Mot. to Stay [Doc. No. 5] at 2. Delaventura opposed the motion to stay, see Mem. in Opp'n to Mot. to Stay [Doc. No. 7], and filed a motion to remand the matter to state court on June 6, 2005, Mot. to Remand [Doc. No. 8]. Columbia filed an opposition to the motion to remand. Mem. in Opp'n to Mot. to Remand [Doc. No. 14] ("Columbia Opp'n"). The parties filed respective reply briefs. [Doc. Nos. 13, 15]. This Court granted an expedited hearing, [158] held on June 14, 2005. See Electronic Clerk's Notes (June 14, 2005).

Delaventura had moved to remand the matter to state court, asserting that his class action suit "allege[d] a single cause of action for breach of contract on behalf of certain holders of mutual fund shares", and that his complaint, therefore, was not preempted by SLUSA.^[11] Mem. of Law in Supp. of Pl.'s Mot. to Remand [Doc. No. 9] ("Delaventura Mem.") at 1. Delaventura argued that this Court's decision in Meyer v. Putnam Int'l Voyager Fund, 220 F.R.D. 127 (2004), counseled remand. Delaventura Mem. at 4-5. He asserted that this case—which alleged that Columbia's market-timing activity related to certain representations and warranties included in a prospectus and thus constituted a breach of contract—resembled Meyer, where shareholders alleged a breach of fiduciary duty as a result of market-timing activity. Delaventura Mem. at 4. Delaventura argued that removal under SLUSA was improper, as the class action claim was not "in connection with the purchase or sale" of Columbia Mutual Fund B shares. Id. at 5 (arguing the claim "limits the proposed class to `holders' of Class B shares as of February 24, 2004"). So, contended Delaventura, SLUSA should not apply nor preempt his state law claims. Id. at 6.

Columbia sought removal and transfer to the MDL panel, as "[t]he Federal Judicial Panel on Multidistrict Litigation has consolidated twelve of the suits with other market-timing cases in [MDL] No. 1586" and because "[a]mong the issues before the MDL Court is the scope of preemption under [SLUSA] . . ., specifically, whether particular cases within the market-timing MDL are either preempted by SLUSA or should be remanded to state court." Columbia Opp'n at 1. Columbia argued that Delaventura failed to demonstrate a reason why this market-timing case should not be heard by the MDL. Columbia Opp'n at 2. Further, Columbia argued that this Court's decision in Meyer, upon which Delaventura placed great weight, was decided prior to the creation of this MDL panel. Columbia Opp'n at 2. (arguing, also, that Meyer is distinguishable, as it involved an alleged breach of fiduciary duty rather than a breach of contract). Columbia contended that there was no good reason this matter should not be decided together with other similar matters in the MDL. Id. at 3, 4-7, 8-12 (citing the substantial interest in judicial economy).

At the close of the hearing, the Court denied Columbia's motion to stay and took Delaventura's motion for remand under advisement. The Court stated expressly, "If the multi-district litigation panel orders [the case] transferred[,] they'll do so over my opposition[,] which I now state on the record. I don't agree that this case be transferred." Transcript of Proceedings Held on June 14, 2005 [Doc. No. 16] at 22.^[12] On the supposition that the motion to remand might be denied, the Court then proceeded to hold an initial case management scheduling conference pursuant to Local Rule 16.1, placing the case on the Court's running trial list for July of 2006.^[13]

On July 28, 2005 this Court entered an order denying Delaventura's motion to remand. [159] See Order of July 28, 2005 [Doc. No. 20]. In its order, this Court indicated that a memorandum explaining the rationale for its decision would follow. This Court had found persuasive Columbia's substantive argument that, given applicable case law, the misrepresentation claims were, in actuality, "in connection with the purchase and sale of securities" and, as such, preempted by the federal law. On August 10, 2005, however, upon application by Columbia, this matter was ordered transferred to the Northern Division of the District of Maryland, and the case before this Court was closed. See [Doc. No. 21].

The Judicial Panel on Multi-District Litigation follows a courteous practice of advising the district judge who may lose a case as follows: "Although the consent of the transferor judge is technically not required for a transfer under Section 1407, the Panel prefers that all participating judges agree that transfer would be for the convenience of the parties and witnesses and would promote the just and efficient conduct of the litigation." See, e.g., Letter from Hon. Wm. Terrell Hodges to Hon. Rya W. Zobel (Oct. 26, 2005) (regarding MDL-1715—In re Ameriguest Mortgage Co. Mortgage Lending Practices Litigation). This Court received no comparable letter in this case and does not know whether the panel was ever advised of this Court's opposition to the transfer.

III. Conclusion

Current Muti-District Litigation practice is seriously flawed in that it is perceived to proceed not on neutral principles but in a manner that favors defendants. Were Congress to override Lexecon, this imbalance would be exacerbated and the already diminished role of the American jury further marginalized.

This Court's offer to try this case in July of 2006 still stands. Should the transferee court have the case ready for trial then— or any time thereafter—and be willing to return it, it will be promptly tried here in Boston.

[1] The extent of the congressional power in this regard has been an issue throughout the history of the Republic. See generally Michael G. Collins, The Federal Courts, the First Congress, and the Non-Settlement of 1789, 91 Va. L.Rev. 1515 (2005). Occasionally, Congress uses its powers to "regulate" the courts' jurisdiction simply to strip disfavored classes of access to a judicial branch Congress mistrusts. See, e.g., Gonzalez v. United States, 135 F.Supp.2d 112, 115 n. 5 (D.Mass.2001) (discussing the Antiterrorism and Effective Death Penalty Act of 1996, Pub.L. No. 104-132, 110 Stat. 1214 (codified in scattered sections of 8, 18, 22, 40, and 42 U.S.C)); Enwonwu v. Chertoff, 376 F.Supp.2d 42, 78-85 (D.Mass.2005) (discussing the provisions of the REAL ID Act of 2005, Pub.L. No. 109-113, Div. B., 119 Stat. 231, § 106, that strip the district courts of habeas jurisdiction over certain aliens facing deportation). It is reported that, having successfully eliminated the district courts, the executive will move on to eliminate the circuit courts as well. To the extent that jurisdiction continues to inhere in the courts of appeal, the executive is already arguing that it—not the judiciary—must do the constitutional fact finding. See Oral Arguments, Enwonwu v. Gonzales, No. 05-2053 (1st Cir. Jan. 11, 2006). At some point, of course, such restrictions on habeas jurisdiction implicate the Suspension Clause of the Constitution. U.S. Const. art I, § 9, cl. 2.

[2] MDL is said only to "concentrate," In re "Agent Orange" Prod. Liab. Litig., 506 F.Supp. 762, 790 (E.D.N.Y.1980), or "centraliz[e]," Hansel, 19 Me. B.J. at 18, cases for pretrial proceedings rather than permanently consolidate them.

[3] Though MDL practice does serve a purpose, it is certainly not without problems. Kyle, 175 F.R.D. at 589 (noting that "while Panel action may serve a `greater litigation good' and meet strong national needs of systemwide judicial economy, those `macro-litigation benefits' are not always universally celebrated"). The criticisms of MDL are many:

• "[T]here is no authority for trial of the mass tort case;"

• "[I]t does not resolve state court cases;"

• "[I]t hampers settlement because of the numbers of parties and difficulty in maintaining confidentiality;"

• "[B]ecause of the individual character of claims involving mixed issues of law, pretrial MDL coordination cannot accommodate a global resolution of cases."

Wood, 54 Food & Drug Law J. at 337 (footnotes omitted). It is also observed that "in the rush to file cases, baseless claims may be filed." Lawrence T. Hoyle, Jr. & Edward W. Madeira, Jr., "The Philadelphia Story": Mass Torts in the City of Brotherly Love, 2 Sedona Conf. J. 119, 145 (2001). Additionally, MDL often gives rise to choice of law issues. Elizabeth J. Cabraser, Certification of Non-Federal Question Claims in Federal Courts: Strategies for Plaintiffs, 679 PLI/Lit. 29, 73 (2002). Further still, MDL fails to "address the problem of competing class actions in different states, or in both federal and state courts." Hon. Lee H. Rosenthal, Proposals for Further Study: The Reporter's Call for Comment, Ass'n of Trial Law. of Am., Winter Convention Ref. Materials at 333 (2002).

[4] The shift from trials as the central icon of the federal courts to a "settlement culture" may be said to trace back to the tenure of Chief Justice Warren E. Burger. See Chief Justice Highlights Needs and Achievements in Year-End Report, Third Branch, Feb. 1984, at 1, 10 (calling for increased use of arbitration); see also Martin J. Newhouse, Some Reflections on ADR and the Changing Role of the Courts, Boston Bar J., Mar./Apr.1995, at 15, 17 ("[F]ormer Chief Justice Burger has consistently been a vocal advocate of ADR. . . ."). It reached its apogee during the period 1990-1995, when the Hon. William W. Schwarzer was Director of the Federal Judicial Center. A distinguished judge and author, see e.g., William Schwarzer, Managing Civil Litigation: The Trial Judge's Role, 61 Judicature 400 (1978), Judge Schwarzer is an outspoken advocate of managing toward settlement.

For criticism of this view, see Judith Resnik, Managerial Judges, 96 Harv. L.Rev. 374, 424 (1982). See also David S. Clark, Adjudication to Administration: A Statistical Analysis of Federal District Courts in the Twentieth Century, 55 S. Cal. L.Rev. 65 (1981); Owen M. Fiss, Against Settlement, 93 Yale L.J. 1073 (1984); Owen M. Fiss, The Bureaucratization of the Judiciary, 92 Yale L.J. 1442 (1983); Owen M. Fiss, Out of Eden, 94 Yale L.J. 1669, 1673 (1985); Kenneth P. Holland, The Twilight of Adversariness: Trends in Civil Justice, in Philip Dubois, ed., The Analysis of Judicial Reform 17 (1982); Dale Arthur Oesterle, Dangers of Judge-Imposed Settlements, 9 Litig. 29 (Spring 1982); Dale Arthur Oesterle, Trial Judges in Settlement Discussion: Mediators or Hagglers?, 9 Cornell L. Forum 7 (1982); Stephan Landsman, The Decline of the Adversary System: How the Rhetoric of Swift and Certain Justice Has Affected Adjudication in American Courts, 29 Buffalo L.Rev. 487 (1980); Carrie Menkel-Meadow, For and Against Settlement: For What Purpose the Mandatory Settlement Conference?, paper presented at the Annual Chief Justice Earl Warren Conference on Advocacy in the United States, Charlottesville, Va. (June 26-30, 1985) at 14; Arthur R. Miller, The Adversary System: Dinosaur or Phoenix?, 69 Minn. L.Rev. 1, 30-35 (1984). But see D. Marie Provine, Report, Settlement Strategies for Federal District Judges, Federal Judicial Center (1986) (criticizing academics and praising "settlement-oriented judges" who have a "fundamental commitment to enhancing settlement opportunities in federal courts").

Today, there is something of a judicial backlash against making settlement the central goal of our federal court processes. The District of Massachusetts is called a "pocket[ of resistance" to the settlement culture. Marc Galanter, The Hundred-Year Decline of Trials and the Thirty Years War, 57 Stan. L.Rev. 1255, 1273 & n. 63 (2005). I trace this reawakening of interest in our traditional trial processes to a moving speech given on April 26, 2003 to the annual meeting of chief district court judges by Hon. Joseph F. Anderson, Jr., Chief Judge of the District of South Carolina. Chief Judge Anderson there issued a powerful call to devote ourselves to the core function of the judicial office—the fair and impartial trial of cases. See also Hon. Joseph F. Anderson, Jr., Jury Service as the Palladium of Liberty', The State (Columbia, S.C.), Aug. 8, 2004. Alex Sanders, one of America's foremost jurists, minces no words:

Trial judges should return to being trial judges, instead of docket managers. They should start treating jury trials as a vindication of the justice system rather than a failure of the justice system. They should revere and respect the jury trial as the centerpiece of American democracy.

Alex Sanders, former Chief Justice, South Carolina Court of Appeals and former President of the College of Charleston, Ethics Beyond the Code: The Vanishing Jury Trial, Address to the Am. Trial Law. Ass'n (Dec. 2, 2005); see also Ad Hoc Comm. on the Future of the Civil Trial of the Am. Coll. of Trial Law., The "Vanishing Trial:" The College, The Profession, The Civil Justice System, 226 F.R.D. 414 (2005) ("The number of civil trials in federal court over the 40 years from 1962-2002 has fallen, both as a percentage of filings and in absolute numbers. . . . These numbers are particularly startling in light of the enormous increase in litigation over the same 40 year period."); Hon. Patrick E. Higginbotham, So Why Do We Call Them Trial Courts? 55 SMU L.Rev. 1405 (2002) (expressing his "concern over trial numbers" and noting "the decline in trials" and "the attending decline in participation of lay citizens . . . in our justice system"); John W. Keker, The Advent of the "Vanishing Trial": Why Trials Matter, The Champion (Sept./Oct. 2005) 32, 33 ("Judges led the charge to fewer trials and now they regret it."); Nathan Koppel, Trial-less Lawyers: As More Cases Settle, Firms Seek Pro Bono Work to Hone Associates' Courtroom Skills, Wall St. J., Dec. 1, 2005, at B1, (quoting Judge David Hittner—"we are losing sight of the basic right to trial by jury",—and Professor Marc Galanter—as "more and more judges begin to say, `We are really losing the trial as a societal institution,' many of them become less prone to push for settlements"); Leonard Post, 79% Decline: Federal Tort Trials Continue a Downward Spiral: Increased Use of ADR, Better Case Management Cited, Nat'l L.J., Aug. 22, 2005, at 7 (quoting Professor Stephen Burbank as saying "federal judges now give more attention to case management and nontrial adjudication than they give to trials" and that "it is quite clear that `trial' judges ought to spend more time on that activity from which [their] name is taken"); Hon. William G. Young, An Open Letter to U.S. District Judges, Fed. Lawyer, July 2003, at 30.

[5] While it is, of course, appropriate and necessary for the judiciary to speak out on matters of judicial administration, see Canon 4, Code of Conduct for United States Judges (2000), at least one commentator has been highly critical of such efforts to the extent they may affect substantive rights, see Judith Resnik, The Programmatic Judiciary: Lobbying, Judging, and Invalidating the Violence Against Women Act, 79 S. Cal. L.Rev. 269, 269-276 (2000).

[6]

I was a law clerk for a trial judge who hated trials. I describe her as a trial judge for the irony, and because conducting trials was part of her job description. In reality, however, a "coerced settlement" or "enter-my-courtroom-and-I'll-make-you-pay" or "anti-trial" judge would be a more accurate moniker. This jurist was happiest in her business suit, at her desk in chambers, in conference with trial attorneys, cajoling and imploring and yelling. She was never thrilled to find herself draped in a robe, in a courtroom, sitting on high.

The judge's distaste for trials was a bit about efficiency, but not much. . . . The judge's problem with trials was more spiritual: she didn't believe in them. Trials created "win/lose" scenarios, whereas the judge thought that "win/win" or "not win so much/not lose so much" were possible and better alternatives. With trials, outcomes are contingent on unpredictable jurors and wooden rules of evidence. And yes, trials cost money and, especially, time. In the judge's view, their costs far outweighed their benefits.

Paul Butler, The Case for Trials: Considering the Intangibles, 1

J. Empirical Legal Stud. 627, 627-28 (2004). "[One] federal district judge stated that he regarded the eight percent trial rate as evidence of `lawyers' failure." Judith Resnik, Trial as Error, Jurisdiction as Injury: Transforming the Meaning of Article III, 113 Harv. L.Rev. 924, 925 (2000) (discussing trial judges who espouse the viewpoint that settlements are preferable to trials). "Trials, to an increasing extent, have become luxury. . . . When cases are handled in a package or group instead of one at a time, it is hard, if not impossible, for the lawyers or the judge to maintain time-honored concepts of due process and the adversary system. Hon. Edwin Ludwig, The Changing Role of the Trial Judge, 85 Judicature 216, 217, 253 (2002).

[7] Abandonment of a fact-finding process signals a breakdown in America's adversary system. This is not always to be avoided. The adversary process has its limits. As a society, we have already abandoned the adversary system in labor disputes and issues involving the dissolution of marriage, preferring instead almost any solutions that will accommodate a continuing modus vivendi.

As the text demonstrates, in MDL practice fact finding generally appears far less important than forging some global settlement. Nor is this the only area once reserved for jury determination where today federal judges advance what they perceive to be more compelling goals than allowing our citizens independently to ascertain the facts. Such misguided efforts generally meet with disappointing results.

In the area of patent law, for example, jury fact finding has been supplanted in favor of judicial law declaring on the issues of how the skilled artisan would read the words of a patent claim, Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996); but see Arthur R. Miller, The Pretrial Rush to Judgment: Are the "Litigation Explosion," "Liability Crisis," and Efficiency Clichés Eroding Our Day in Court and Jury Trial Commitments?, 78 N.Y.U. L.Rev. 982, 1086-88 (2003), and whether a patent applicant who amends a claim intends to abandon matters earlier claimed, Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 344 F.3d 1359 (Fed.Cir.2003) (en bane); but see Amgen, Inc. v. Hoechst Marion Roussel, Inc., 287 F.Supp.2d 126, 134-36 (D.Mass.2003). Law declaring as to matters that are situational and case-specific is a recipe for disaster, however, as law declaring is a matter for precise analysis unaided by considerations of the burden of proof. A judge is duty-bound to adhere to her independent view of the law. She may be persuaded, but she owes deference only to a higher court and may never compromise. It is perhaps no accident, therefore, that having virtually abandoned any deference to the jury's fact-finding role, patent litigation is the slowest and most expensive litigation in the United States, with a district court reversal rate that once reached 42%. This argument is more fully developed in William G. Young, Ruminations on the Vanishing Trial: The Role of the Federal Circuit and the Fact Law Distinction, N.Y. Intellectual Prop. L. Ass'n (Jan. 13, 2006).

The most striking abandonment of jury fact finding is found in the area where one would last expect it—our criminal laws.

[Federal] criminal trials [are] rare events. Trials are the system's Potemkin village, a piece of pretty scenery for display on Court TV while real cases, and lives, are disposed of more casually off-camera.

That effect leads to another: a sharp decline in transparency. In a healthy system, the law is what it appears to be. The rules applied in court are the same as the rules on the street, and courts apply those rules often enough that citizens can tell what they are. In our system, substantive law is a tool for evading inconvenient procedures, and courtrooms are used for guilty pleas. [Federal criminal punishment is allocated behind closed doors, where the lawyers dicker over charges and sentences. Criminal codes do not describe the behavior that will actually land one in a prison cell, and sentencing rules do not accurately predict how long one will stay there. Instead, the law of crimes and sentences serves as a menu of threats for police and bargaining options for prosecutors. The real law—the law that governs individual cases—arises from discretionary decisions to order off the menu: police officers' arrests and lawyers' plea bargains. That law is invisible to outsiders.

William J. Stuntz, The Political Constitution of Criminal Justice, 119 Harv. L.Rev. 780, 817-18 (2006) (footnotes omitted).

Reflecting the triumph of plea bargaining over trial, George Fisher, Plea Bargaining's Triumph, 109 Yale L.J. 857 (2000), federal courts today routinely make the most crucial decisions about a citizen's liberty on a "mishmash of data including blatantly self-serving hearsay largely served up by the [government]." United States v. Green, 346 F.Supp.2d 259, 280 (D.Mass.2004), vacated in part by United States v. Yeje-Cabrera, 430 F.3d 1 (1st Cir.2005), and vacated and remanded by United States v. Pacheco, 434 F.3d 106 (1st Cir.2006). Indeed, the parties may freely bargain for an alternate reality that renders the rhetoric about "real offense sentencing", U.S. Sentencing Commission, Federal Sentencing Guidelines Manual 4-5 (2005), mere sophistry and bears so little relation to the facts as to mock our trial processes. Make no mistake. Whatever the Attorney General may say, see Amie N. Ely, Note, Prosecutorial Discretion as an Ethical Necessity: The Ashcroft Memorandum's Curtailment of the Prosecutor's Duty to "Seek Justice", 90 Cornell L.Rev. 237, 252-59 (2005), the bargaining over facts continues apace, even in the wake of United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). See, e.g., United States v. Bleidt, No. 05-CR-10144-WGY, Plea Hearing (Dec. 5, 2005) (aged and vulnerable nature of many victims omitted to secure plea); United States v. Fuller, No. 05-CR-10082-WGY-2, Plea and Sentencing Hearing (Nov. 16, 2005) (fraud loss amount understated to secure plea); United States v. Montilla, No. 04-CR-10160-WGY-3, Sentencing Hearing (Oct. 18, 2005) (drug quantity understated to secure plea); United States v. Siciliana, No. 04-C10372-WGY-1, Plea Hearing (Sept. 6, 2005) (same); United States v. Arco, No. 04-CR-10372-WGY-2, Plea Hearing (Sept. 6, 2005) (same). Moreover, the First Circuit embraces a regime in which such omissions are never brought to the attention of the judge. United States v. Yeje-Cabrera, 430 F.3d 1, 27-30 (1st Cir.2005) ("[T]he costs of monitoring compliance with . . . a mandatory [factual] disclosure system are high, and many of the efficiencies created by plea bargaining would be lost. . . . [Fact bargaining, therefore,] transgresse[s] no norm, constitutional or legal."). Judicial efforts to enhance the fact-finding process are met with resistance from a government that considers such efforts to be an "unfair obligation on [it]". United States v. Duverge, No. 05-CR-10265-WGY-1, Mot. to Recons. Re Proof of Enhancements [Doc. No. 37] (concerning trial and sentencing procedures). Of course, "[i]f fact bargaining is acceptable, then the entire moral and intellectual basis of the Sentencing Guidelines is rendered essentially meaningless. If `facts' don't really matter, neither does `judging' contribute anything. . . ." Berthoff v. United States, 140 F.Supp.2d 50, 67 (D.Mass.2001), aff'd No. 94-1714 (1st Cir. Nov. 29, 1995).

Fact finding is slow, labor intensive, and precise. It is also just—as just as any human endeavor in human history. The passing of the judicial interest in fact finding is the major reason that average on-bench time among active district judges has declined from 790 hours in 1980 to 490 hours in 2002. Federal Judicial Center, Chart, "Average Trial and Nontrial Time Reported on the JS-10 by Judges Who Were Active District Judges All Year and Reported Time for at Least 11 Months" (on file with the Court).

The eclipse of fact finding foreshadows the twilight of judicial independence. In patent law, fact finding is eschewed because the "fair preponderance" and "clear and convincing" standards are considered imprecise compared to case-specific judicial "law" declaring. As a result, United States patent litigation is the slowest and most expensive litigation in the world and its trial outcomes more uncertain than any other type of case. We denigrate fact finding in our criminal justice system in favor of plea bargaining and add "additional sentencing penalties for trial", Alexandra Natapoff, Speechless: The Silencing of Criminal Defendants, 80 N.Y.U. L.Rev. 1449, 1459 (2005), with the result that "[t]he federal system . . . punish[es] trials so severely that the results do not deserve public confidence", Ronald F. Wright, Trial Distortion and the End of Innocence in Federal Criminal Justice, 154 U. Penn. L.Rev. 79, 155 (2005). And we denigrate fact finding in MDL practice in favor of global settlements with the result that the adversary process is skewed in favor of the rich and the powerful.

Yet "[f]acts are stubborn things," Rex v. Wemms (John Adams's summation on behalf of the British soldiers accused of the "Boston Massacre"), in Hiller B. Zobel, The Boston Massacre 293 (1970), and a judicial system cannot long continue to command the respect and moral authority of the people it serves unless the judicial edicts are actually based on facts—facts found by American juries wherever the Constitution so commands.

[8] It can be argued that the appalling attorney misconduct castigated by Judge Janis Graham Jack in In re Silica Prods. Liab. Litig., 398 F.Supp.2d 563 (S.D.Tex.2005), is, in part, a consequence of counsel's belief that their transparently fraudulent proffered silicosis diagnoses would never be tested by cross-examination in the crucible of trial, but were, instead, nothing more than a bargaining chip in settlement negotiations. See Thomas A. Donovan, Can the Courts Prevent Being Used as an Instrument to Perpetuate Fraud?, Fed. Law., Nov./Dec.2005, at 5, 7 (suggesting that the sprawling and unresolved asbestosis MDL suffers from the same infirmities); Peter Geier, 'Sea Change' in Asbestos Torts is Here, Nat'l L.J., Oct. 31, 2005, at 1 (same).

[9] See also Myriam Gilles, Opting Out of Liability: The Forthcoming, Near-Total Demise of the Modern Class Action, 104 Mich. L.Rev. 373, 375 (2005) ("[i]n the ongoing and ever-mutating battle between plaintiffs' lawyers and the protectors of corporate interests, the corporate guys are winning. And they are winning because they have developed a new set of tools powerful enough to imperil the very viability of class actions in many—actually, most—areas of the law. In fact, I believe it is likely that, with a handful of exceptions, class actions will soon be virtually extinct.").

[10] Apparently Judge Fallon doesn't mess around:

Unlike the two previous state-level cases . . ., the federal case before U.S. District Judge Eldon Fallon of New Orleans got off to a quick start.

It took less than two hours to pick a jury. . . . Opening statements for the plaintiff . . . took less than an hour and Merck's opening didn't take much longer.

"1st Federal Vioxx Trial Focuses on Fla. Man's Death," The Boston Globe, Nov. 30, 2005, at D2.

Many hard-working transferee judges are, of course, comparable to Judges Jack and Fallon in their drive to get cases to trial, yet are hesitant to return them to their home districts because they fear increased delay stemming from the time necessary for the hometown judge to come up to speed on a complex case with many nuances, or because they fear that, as the hometown court is swamped with judicial business, the returned case will go to the bottom of the pile. These judges see legislative repeal of Lexecon as a way more efficiently to allocate judicial business among the 94 district courts. Conversation with Hon. Kathleen M. O'Malley (Jan. 23, 2006).

While these observations have bite, are they sufficient to support the profound step of a nationwide venue for MDL cases, largely at the option of defendants? More modest steps might achieve the same ends without margin-alizing hometown juries: e.g., the MDL panel could centralize cases in districts which have the largest number of pending actions to facilitate the trial of exemplar cases; transferee judges could be encouraged to work more closely with transferor judges to see that exemplar or ripe cases come promptly to trial; or—though this is well above the call of duty—the transferee judge could receive an intercircuit assignment to try the case in the hometown district. See Hodges Interview at 12. The federal courts' videoconferencing system can, to a certain degree, make this more palatable. See, e.g., United States v. Mazzeo, 306 F.Supp.2d 294, 303 n. 5 (E.D.N.Y.2004); Andrea Doreen, Ltd. v. Building Material Local Union 282, 299 F.Supp.2d 129, 135 n. 6 (E.D.N.Y.2004); Andrea Doreen, Ltd. v. Building Material Local Union 282, 250 F.Supp.2d 107, 110-11 n. 4 (E.D.N.Y.2003).

[11] Delaventura likewise argued that the Investment Company Act of 1940 did not preempt his claim. Delaventura Mem. at 7-8.

[12] The Electronic Clerk's Notes for this hearing state that "[i]f the MDL orders the case transferred, it will be done over the objection of this court."

[13] This date is "for real." Since most cases settle, for the past seven or eight years this Court—with rare exceptions—has commenced trial of each of the cases so assigned during the assigned month.

[514] John F. Dienelt, a member of the District of Columbia bar, argued the cause for appellant (Pitney Hardin, attorneys; Dennis R. LaFiura, Florham Park, on the briefs).

Norman Shabel, Mount Laurel, argued the cause for respondent (Shabel & DeNittis, attorneys; Stephen P. DeNittis, Marlton, on the brief).

Justice WALLACE, JR. delivered the opinion of the Court.

The issue presented is whether our Rule of Professional Conduct (RPC) 1.8(g) prohibits an attorney who represents more than one client from entering into an aggregate settlement of the clients' claims without each client consenting to the settlement after its terms are known. In the present case, an attorney agreed to represent 154 individual franchisee-plaintiffs in their claims against franchisor-defendant Jackson Hewitt, Inc.^[1] Each plaintiff entered into an identical retainer agreement that provided for settlement of the matter if a weighted majority of plaintiffs approved the settlement. A Steering Committee of four plaintiffs was established to represent the interests of all 154 individual plaintiffs. After the Steering Committee negotiated a settlement in principle, a weighted majority of plaintiffs approved it, but eighteen others did not. Defendant sought to enforce the settlement against all plaintiffs, and the motion court granted that application. The Appellate Division held that the fee agreement violated RPC 1.8(g) because it required advance consent to abide by the majority's decision and reversed. Tax Auth., Inc. v. Jackson Hewitt, Inc., 377 N.J.Super. 493, 496, 873 A.2d 616 (2005). We hold that RPC 1.8(g) forbids an attorney from obtaining advance consent from his clients to abide by [515] the majority's decision about the merits of an aggregate settlement. However, for the reasons expressed in section IV of this opinion, we apply this decision prospectively. We reverse and remand.

I.

Defendant Jackson Hewitt is a nationwide tax preparation service with its principal place of business in Parsippany, New Jersey. It has franchises throughout the United States. Plaintiff The Tax Authority, Inc. is a franchisee of Jackson Hewitt with its principal place of business in Maple Shade, New Jersey.

As part of their business operation, franchisees make Refund Anticipation Loans (RAL) to individual taxpayers in anticipation of the taxpayers receiving refunds from the Internal Revenue Service. The loans are repaid when the refunds are received. Prior to the 2000 tax season, Jackson Hewitt distributed monetary rebates called "Performance Incentive Rebates" arising out of those loans to its eligible franchisees. Beginning in the 2000 tax season, Jackson Hewitt discontinued issuing those rebates.

The individual franchisees believed that Jackson Hewitt breached the franchise agreement by failing to issue rebates. Because the franchise agreement prohibited the franchisees from filing a class action lawsuit against Jackson Hewitt or its affiliates, the franchisees collectively retained attorney Eric H. Karp (Karp) of Witmer, Karp, Warner & Thuotte LLP in Boston to represent the group in a mass lawsuit. As part of that representation, each of the 154 plaintiffs entered into an identical attorney-client retainer agreement with Karp. Plaintiffs agreed that the matter would be pursued on a collective basis with fees being shared by each plaintiff on a per-RAL basis. Each retainer agreement provided that

[t]he Client agrees that the Matter may be resolved by settlement as to any portion or all of the Matter upon a vote of a weighted majority of the Client and all of the Co-Plaintiffs. Each Plaintiff shall have one vote for each funded RAL for the 2002 Tax Season. The Client will be eligible to vote only if current in all payments required under this agreement.... A quorum for such vote shall be sixty percent (60%) of the votes eligible to be cast.

In addition to the majority-rules provision, the agreement provided that a four person Steering Committee would make the decisions regarding "all strategic and similar procedural matters other than the decision to settle the matter." The members of the Steering Committee were Robert Phillips, Robert Schiesel, George Alberici, and Kenneth Leese. Leese is the owner and president of the sole plaintiff herein, The Tax Authority.

The retainer agreement also specified that settlement proceeds would be apportioned according to each plaintiff's proportionate share of the RAL reserve. Specifically, the agreement provided that "[t]he Client will share in the net proceeds in the same ratio as its contribution to the RAL reserve for the 2002 Tax Season bears to the total contribution to the RAL reserve of all Co-Plaintiffs for the 2002 Tax Season." Formulas to calculate net proceeds, client contributions, and other necessary figures were also included. Prior to signing the retainer agreement, each plaintiff had an opportunity to consult with outside counsel.

In July 2002, Robert Schiesel, a member of the Steering Committee, died. No other plaintiff was appointed to fill that position on the Steering Committee.

In August 2002, Karp filed a single complaint against Jackson Hewitt, naming [516] each of the 154 franchisees as individual plaintiffs. Thereafter, the parties agreed to mediate their dispute. During mediation, Jackson Hewitt and the three member Steering Committee represented by Karp negotiated a settlement in principle that was reduced to a two-page document titled "JAMS Settlement Agreement" (JAMS Settlement). Jackson Hewitt's representatives and the three members of the Steering Committee all signed the JAMS Settlement, which was conditioned on approval by plaintiffs and by Jackson Hewitt's Board of Directors.

Karp had previously established a password-protected website to inform plaintiffs of developments in the case. In response to questions from various plaintiffs regarding the JAMS Settlement, on July 15, 2003, Karp posted an eleven-page document on the website that included a spreadsheet showing the calculation of each plaintiff's estimated net participation in the cash portion of the settlement. Karp later certified that Leese assisted one of Karp's associates "in creating and finalizing" the spreadsheet.

Leese helped to arrange a telephone conference call among most of the plaintiffs for the next day. During the conference call, which lasted approximately three hours, Karp attempted to answer any questions plaintiffs had about the JAMS Settlement. On July 17, 2003, and July 22, 2003, Karp submitted settlement ballots to plaintiffs and established August 1, 2003, as the deadline for voting.

At some point, Leese began to challenge Karp concerning the settlement. Leese believed that the other two members of the Steering Committee were meeting secretly with Karp. Leese then resigned from the Steering Committee on August 7, 2003, and declined to participate in a conference call of the Steering Committee scheduled for that same day.

Ultimately, a weighted majority of plaintiffs approved the JAMS Settlement. Counsel prepared a more detailed, formal settlement agreement. On October 30, 2003, Karp posted to the website a copy of the formal settlement agreement and emailed a copy to each plaintiff. He requested that each plaintiff submit a signed duplicate copy of the agreement to him by November 12, 2003. That deadline was later extended to November 17, 2003. On November 21, 2003, Karp emailed every plaintiff and posted a notice to the website stating that any plaintiff who did not submit a response by December 1, 2003, would be presumed to have declined the settlement. That communication also indicated that Karp would ask the court for leave to withdraw as counsel for parties declining the agreement due to a conflict between those plaintiffs who had signed the settlement agreement and those who had not. On November 24, 2003, Karp reiterated the settlement deadline of December 1, 2003, and informed plaintiffs that on December 2, 2003, he would file a motion to withdraw as counsel for those plaintiffs who had not signed the agreement.

On December 2, 2003, Karp filed the promised motion, originally seeking relief from representation of twenty-six of the 154 plaintiffs. The following day, Jackson Hewitt filed a motion to enforce the settlement agreement against all plaintiffs.

Karp filed a certification and a supplemental certification in the matter. He certified that after the JAMS Settlement was signed, Leese had assisted his associate in creating and finalizing the spreadsheet that showed each plaintiff's estimated net share in the proceeds. Karp set forth his efforts to explain the settlement to plaintiffs and stated that as of December 17, 2003, he had received signed approval from all but twenty plaintiffs.

[517] Three plaintiffs filed certifications in opposition to the settlement. Frederick Roberts claimed that Karp did not fully inform him of the "facts and circumstances of the proposed settlement" and that Karp failed to answer his questions regarding the settlement agreement. Susan McCumsey certified that after Robert Schiesel died in July 2002, she did not have proper representation on the Steering Committee. Leese certified that he had been a member of the Steering Committee and that initially, the entire Steering Committee had regular discussions with Karp. However, after the JAMS Settlement was signed on July 1, 2003, Leese claimed that his involvement with Karp and the Steering Committee changed. Leese stated in part:

7. Once I began to challenge Mr. Karp, I learned that the remaining members of the steering committee were meeting with Mr. Karp without my knowledge.

8. As a result, I believe that the plaintiff body did not have full representation once the steering committee began meeting without my knowledge or participation.

9. When I learned of this development, I terminated my relationship with Mr. Karp and was no longer a member of the steering committee.

By the time the trial court heard argument on the motions, only eighteen plaintiffs had not yet signed the settlement agreement. Fourteen of those eighteen plaintiffs were represented by counsel and four were not. They asserted that Karp violated RPC 1.8(g) by obtaining advance consent to abide by any settlement approved by a majority of plaintiffs, and that therefore, they should not be bound by the settlement.

The trial court granted both Karp's motion to withdraw as counsel for the non-signing plaintiffs and Jackson Hewitt's motion to enforce the settlement agreement. The court ruled that the former Disciplinary Rule (DR) 5-106 of the American Bar Association's (ABA) Model Code of Professional Responsibility (1980) (Model Code), required disclosure of the total amount of the settlement prior to each plaintiff's approval, whereas the present RPC 1.8(g) did not. Consequently, the court concluded that the weighted majority provision in the retainer agreement did not violate RPC 1.8(g) and that invalidating the settlement agreement would be "imminently unfair" to plaintiffs who favored the settlement and to defendant.

The Tax Authority was the sole plaintiff to appeal. The Appellate Division reversed, holding that an attorney-client agreement with a weighted majority provision for settlement of litigation was contrary to RPC 1.8(g) and unenforceable. Tax Auth., supra, 377 N.J.Super. at 496, 873 A.2d 616. In a thorough and well-reasoned opinion, Judge Weissbard found that "[t]he critical provision of the RPC is that the client consent to the final settlement." Id. at 506, 873 A.2d 616. While recognizing that some commentators advance good reasons for simultaneous representation and majority-rules provisions in retainer agreements, the Appellate Division observed that any change in the current interpretation of RPC 1.8(g) should come from the Supreme Court. Id. at 510, 873 A.2d 616.

We granted defendant's petition for certification. 185 N.J. 39, 878 A.2d 855 (2005). Defendant informed us at oral argument that except for The Tax Authority, the settlement has been executed and the appropriate monies disbursed to all other plaintiffs.

II.

Defendant's main argument is that the Appellate Division incorrectly interpreted [518] RPC 1.8(g) to preclude parties from agreeing to settle in any manner other than by unanimous consent. It asserts that "the Appellate Division relied almost exclusively on non-New Jersey authority applying DR 5-106, rather than authority interpreting RPC 1.8(g), notwithstanding the textual differences" between the two rules. Defendant also contends that the judgment below undermines New Jersey's strong public policy in favor of settling disputes. Alternatively, defendant urges that this is an issue of first impression, so if this Court affirms the judgment, the ruling should be applied prospectively only.

In contrast, The Tax Authority contends that the Appellate Division properly interpreted RPC 1.8(g). It maintains that a majority-rules mechanism to govern settlement creates an inherent conflict of interest between the parties and their counsel. The Tax Authority further argues that RPC 1.8(g) is necessary to safeguard the individual interests of each client, and that because the safeguards of court oversight for class actions are not present, each client must individually consent to a settlement agreement after the terms of the settlement are made known.

III.

Pursuant to the New Jersey Constitution, the Supreme Court has "jurisdiction over the admission to the practice of law and the discipline of persons admitted." N.J. Const. art. VI, § 2, ¶ 3. In discharging that responsibility, this Court has sought to maintain "public confidence in the judicial system." In re LiVolsi, 85 N.J. 576, 585, 428 A.2d 1268 (1981). "Given the critical importance of the constitutional power of this Court over the practice of law," ibid., this Court has promulgated Rules of Professional Conduct that govern attorneys in New Jersey. Those rules "serve as a road map for the conduct of attorneys to guide them in their relationships with their clients, other attorneys, the courts, and the public." In re Greenberg, 155 N.J. 138, 152, 714 A.2d 243 (1998), cert. denied, 526 U.S. 1132, 119 S.Ct. 1807, 143 L.Ed.2d 1011 (1999).

The "[a]greements between attorneys and clients concerning the client-lawyer relationship generally are enforceable, provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics." Cohen v. Radio-Elecs. Officers Union, 146 N.J. 140, 155, 679 A.2d 1188 (1996).

When contracting for a fee, . . . lawyers must satisfy their fiduciary obligations to the client. The lawyer must explain at the outset the basis and rate of the fee. In addition, the lawyer should advise the client of potential conflicts, the scope of representation, and the implications of the agreement. A retainer agreement may not provide for unreasonable fees or for the unreasonable waiver of the clients' rights.

[Id. at 156, 679 A.2d 1188 (citation omitted).]

An agreement that violates the ethical rules governing the attorney-client relationship may be declared unenforceable. Ibid.

In 1984, New Jersey adopted the ABA's Model Rules of Professional Conduct (1983) (Model Rules). Pressler, Current N.J. Court Rules, note on RPC 1.8 (2006); Jacob v. Norris, McLaughlin & Marcus, 128 N.J. 10, 19, 607 A.2d 142 (1992). At the time the conduct in the present case took place, RPC 1.8(g) provided that

[a] lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement [519] as to guilty or no contest pleas, unless each client consents after consultation, including disclosure of the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.

[Pressler, Current N.J. Court Rules, RPC 1.8(g) (2003).]

The precursor to that rule was DR 5-106. It is necessary to review the evolution of DR 5-106 and the case law interpreting it to better understand the meaning of RPC 1.8(g).

In 1969, the American Bar Association adopted the Disciplinary Rules of the Model Code, and in 1971, New Jersey adopted the Model Code. Jacob, supra, 128 N.J. at 19, 607 A.2d 142. Under the Model Code, DR 5-106 governed the settlement of multi-party litigation and provided that

[a] lawyer who represents two or more clients shall not make or participate in the making of an aggregate settlement of the claims of or against his clients, unless each client has consented to the settlement after being advised of the existence and nature of all the claims involved in the proposed settlement, of the total amount of the settlement, and of the participation of each person in the settlement.

[ABA/BNA Lawyers' Manual on Professional Conduct 51:375-76 (1999) (emphasis added) (quoting DR 5-106).]

That rule is commonly referred to as the "aggregate settlement" rule. See Lynn A. Baker & Charles Silver, The Aggregate Settlement Rule and Ideals of Client Service, 41 S. Tex. L.Rev. 227, 234 (1999).

The seminal case interpreting DR 5-106 is Hayes v. Eagle-Picher Industries, Inc., 513 F.2d 892 (10th Cir.1975). There, the eighteen plaintiffs retained a single lawyer to file an action against the defendant. Id. at 892. On the eve of trial, the parties reached a settlement agreement, which thirteen of the eighteen plaintiffs approved. Id. at 892-93. The following day, in open court, the trial court inquired whether any of the plaintiffs were opposed to the settlement. Id. at 893. After receiving no objections, the court entered a judgment of settlement. Ibid. Thereafter, two members of the plaintiff group claimed they did not hear the court's question and challenged the settlement. Ibid. After initially vacating the judgment, the trial court reconsidered and reinstated the settlement. Ibid.

The Tenth Circuit reversed, finding that an agreement that authorized settlement of a case "contrary to the wishes of the client and without his approving the terms of the settlement is opposed to the basic fundamentals of the attorney-client relationship." Id. at 894-95. The court was troubled by the majority-rules provision, stating that

[i]t is difficult to see how this could be binding on non-consenting plaintiffs as of the time of the proposed settlement and in the light of the terms agreed on. In other words, it would seem that plaintiffs would have the right to agree or refuse to agree once the terms of the settlement were made known to them.

[Id. at 894 (emphasis added).]

The court also found that the agreement posed an ethical problem for attorneys under DR 5-106 of the Kansas Code of Ethics. Ibid. In the court's view, that rule "requires the attorney to refrain from participating in a settlement on behalf of two or more clients unless each of them consents to it." Ibid. The court reasoned that "it was untenable for the lawyer to seek to represent both the clients who favored the settlement and those who opposed it." Ibid. As a result, the court concluded that "in a non-class action case such as the [520] present one," an arrangement that allows a majority to control the rights of the minority "is violative of the basic tenets of the attorney-client relationship in that it delegates to the attorney powers which allow him to act not only contrary to the wishes of his client, but to act in a manner disloyal to his client and to his client's interests." Id. at 894-95.

More than ten years later, the Appellate Court of Illinois reached a similar result. In Knisley v. City of Jacksonville, 147 Ill.App.3d 116, 100 Ill.Dec. 705, 497 N.E.2d 883 (1986), appeal denied, 113 Ill.2d 575, 106 Ill.Dec. 47, 505 N.E.2d 353 (1987), also decided under DR 5-106, the court invalidated a settlement agreement that had been approved by a majority of the plaintiffs. There, the sixty-one plaintiffs sought to enjoin the City of Jacksonville from issuing certain building permits. Id. at 884. After the plaintiffs' attorney entered into negotiations with the defendants, the attorney called a meeting of the plaintiffs to present a proposed settlement. Id. at 885. The attorney testified that as a result of that meeting, he believed that he had authority to settle. Ibid. When the defendants rejected the attorney's first settlement offer, a second settlement agreement was drafted. Ibid. Thereafter, the attorney contacted a majority of the plaintiffs; a majority agreed to the settlement. Ibid. After the attorney drafted documents to execute the settlement, one of the plaintiffs called the attorney to indicate her dissatisfaction with the settlement. Ibid. The attorney then held a second meeting with the plaintiffs, in which a "controversy arose among the plaintiffs as to whether the case should be settled." Ibid. As a result of that meeting, the attorney sought to withdraw as the plaintiffs' counsel. Ibid. Subsequently, the defendants filed a petition to enforce the settlement, and the trial court granted the petition. Id. at 885-86.

The appellate court reversed the trial court's enforcement of the settlement against those plaintiffs who opposed the settlement on appeal. Id. at 888. The court, however, affirmed the judgment for the plaintiffs who either approved the settlement or did not participate in the appeal. Ibid. In reaching its conclusion, the court first found that the record was "adequate to indicate that the plaintiffs never consented to be bound by the majority." Id. at 886. Second, the court concluded that enforcing the settlement against the dissenting plaintiffs would be "completely at odds" with DR 5-106, observing that Hayes was "remarkabl[y] similar[] to the instant case." Id. at 886-87.

The court then discussed the "sharp distinction" between class action lawsuits and simple joinder actions. Id. at 887. The court noted that unlike class action lawsuits, which require a court to determine the reasonableness of a settlement, "[i]n a joinder action there is no judicial review of the settlement and a party should not be bound unless he has specifically agreed to it." Id. at 887-88. The court found that "[f]undamental fairness is violated when a settlement is allowed to bind parties who object and no safeguards have been added to protect their interests." Id. at 888.

In 1977, the ABA undertook a review of the Model Code and established the Commission on Evaluation of Professional Standards, which "proposed substantial revisions in the form of ABA Model Rules that were adopted by the [ABA's] House of Delegates in final version on August 2, 1983." In re Seelig, 180 N.J. 234, 246, 850 A.2d 477 (2004). In July 1982, this Court requested that the New Jersey Supreme Court Committee on the Model Rules of Professional Conduct, chaired by United States District Court Judge Dickinson R. Debevoise (Debevoise Committee), consider [521] the ABA Model Rules. Ibid. A year later, on June 24, 1983, the Debevoise Committee issued a report recommending the verbatim adoption of many of the ABA Model Rules, including RPC 1.8(g). See Report of the New Jersey Supreme Court Committee on the Model Rules of Professional Conduct, N.J.L.J., July 28, 1983, at 1-2. In discussing that rule, the Debevoise Committee stated that "Model Rule 1.8(g) as amended in February 1983 is substantially the same as DR 5-106." Id. at 6. Thereafter, on July 12, 1984, this Court adopted many of the Debevoise Committee's recommendations, including the adoption of RPC 1.8(g)^[2] in place of DR 5-106. Kevin H. Michels, New Jersey Attorney Ethics: The Law of New Jersey Lawyering 3 (2006).

Recently, the Louisiana Supreme Court reached the same result under RPC 1.8(g) as had Hayes under DR 5-106. In re Hoffman, 883 So.2d 425, 433-34 (2004). In Hoffman, the six plaintiffs retained a single attorney to contest a will. Id. at 427. The plaintiffs agreed that one plaintiff would serve as the attorney's primary contact with all six plaintiffs. Ibid. Two of the plaintiffs signed an affidavit authorizing the attorney to negotiate and settle the case and accept "any amount in settlement... which is in excess of the amount" of that plaintiff's legacy under the will. Id. at 427-28. Thereafter, the attorney communicated with the lead plaintiff and accepted a settlement on behalf of all six plaintiffs in excess of their respective gifts under the will. Id. at 428. The two dissenting plaintiffs filed a complaint against the attorney with the Office of Disciplinary Counsel, claiming that they "were not consulted on [the] division of proceeds by [the attorney] nor did [they] consent to it." Id. at 429 (first alteration in original). The Louisiana Supreme Court held that RPC 1.8(g) had been violated and observed that

[u]nanimous informed consent by the lawyer's clients is required before an aggregate settlement may be finalized. The requirement of informed consent cannot be avoided by obtaining client consent in advance to a future decision by the attorney or by a majority of the clients about the merits of an aggregate settlement.

[Id. at 433 (citing ABA/BNA Lawyers' Manual on Professional Conduct, supra, at 51:375).]

Most scholars and commentators agree that a majority-rules provision is forbidden under RPC 1.8(g). See, e.g., Howard M. Erichson, A Typology of Aggregate Settlements, 80 Notre Dame L.Rev. 1769, 1809 (2005) ("As currently understood, the rule does not allow clients to agree ex ante to be bound by majority rule on settlement offers, for example."); Nancy J. Moore, The Case Against Changing the Aggregate Settlement Rule in Mass Tort Lawsuits, 41 S. Tex. L.Rev. 149, 165 (1999) ("[T]he aggregate settlement rule forbids lawyers [522] from entering settlement over the objection of any plaintiff, even when that plaintiff has agreed in advance to be bound by a vote of a majority or a supermajority."); Charles Silver & Lynn A. Baker, Mass Lawsuits and the Aggregate Settlement Rule, 32 Wake Forest L.Rev. 733, 763 (1997) ("The Rule clearly contemplates that a lawyer will confer with his or her clients before closing a deal whose details have already been hammered out."); Marc Z. Edell & Phillip J. Duffy, Ethical Pitfalls Confronting the Mass Tort Lawyer, 166 N.J. Lawyer 32, 34 (Jan. 1995) ("[A]n agreement between plaintiffs' counsel and plaintiffs that the decision of whether to accept a settlement will be governed by a majority vote is impermissible since the plaintiffs have a right to accept or reject a known quantity.").

Obviously, in adopting a model rule promulgated by the ABA, we give great weight to our Committee's interpretation of the rule as well as to the ABA's interpretation of the rule. As noted, the Debovoise Committee's recommendation to adopt most of the ABA's Model Rules declared that RPC 1.8(g) was substantially the same as DR 5-106. Similarly, in discussing RPC 1.8(g), the ABA/BNA Lawyers' Manual on Professional Conduct, supra, at 51:375, makes it clear that a "lawyer may not seek advance consent or consent by way of a majority vote of the lawyer's multiple clients."

We are in accord with the position expressed by the Appellate Division that any textual differences between the former DR 5-106 and RPC 1.8(g) are without significance. The underpinning of both rules is that when a lawyer represents more than one client, each client has the right to accept or reject the settlement after the terms are known. Simply stated, RPC 1.8(g) imposes two requirements on lawyers representing multiple clients. The first is that the terms of the settlement must be disclosed to each client. The second is that after the terms of the settlement are known, each client must agree to the settlement.

We conclude that RPC 1.8(g) forbids an attorney from obtaining consent in advance from multiple clients that each will abide by a majority decision in respect of an aggregate settlement. Before a client may be bound by a settlement, he or she must have knowledge of the terms of the settlement and agree to them.

IV.

Before the Appellate Division, defendant asserted that even if The Tax Authority was not bound by the majority vote, principles of equitable estoppel require the court to enforce the agreement because of the circumstances at the time the settlement was reached. The Appellate Division rejected that argument. Tax Auth., supra, 377 N.J.Super. at 511-14, 873 A.2d 616. Defendant does not make that same argument here but asserts that even if the majority-rules provision is invalid, this Court "should determine that such decisions on issues of first impression should only apply prospectively and that [The Tax Authority] remains bound by the settlement agreement."

The general rule is that judicial decisions will be applied retroactively. Velez v. City of Jersey City, 180 N.J. 284, 296, 850 A.2d 1238 (2004). Even so, "[o]ur tradition is to confine a decision to prospective application when fairness and justice require." Montells v. Haynes, 133 N.J. 282, 297, 627 A.2d 654 (1993). We emphasized in Montells that prospective application is "appropriate when `a court renders a first-instance or clarifying decision in a murky or uncertain area of the law . . .,' or when a member of the public could reasonably have `relied on a different [523] conception of the state of the law.'" Id. at 298, 627 A.2d 654 (alteration in original) (citations omitted).

Such is the case here. This is the first opportunity for this Court to interpret RPC 1.8(g). Plaintiffs' counsel represented plaintiffs that were from many different states and successfully sought to have all plaintiffs agree in advance to be bound by a weighted majority. That effort was a plausible, although incorrect, interpretation of RPC 1.8(g). In addition, defendant was led to believe that plaintiffs had agreed among themselves to be bound by a weighted majority vote and relied on that in reaching the settlement. The Tax Authority's president, Leese, was a member of the Steering Committee, assisted in reaching the JAMS Settlement, and signed it. Subsequently, he was actively involved in negotiating the voting mechanism for plaintiffs' approval of the settlement but ultimately rejected the final settlement. All of the other plaintiffs have consented to the settlement, and defendant has satisfied its terms with all other plaintiffs.

On balance, we conclude that prospective application of our holding, and thus enforcement of the settlement against The Tax Authority, is the appropriate and equitable disposition of this matter.

V.

Lastly, we recognize that some commentators have proposed that RPC 1.8(g) be changed to accommodate mass lawsuits. Professors Charles Silver and Lynn Baker suggest the rule should be amended to permit litigants to agree to abide by majority rule. Silver & Baker, supra, 32 Wake Forest L.Rev. at 769-70. They agree that "[b]ecause the stakes are so large and the issues so complex, settlement is both more urgent and more difficult in mass lawsuits than in other litigation, and the aggregate settlement rule is a complication that often gets in the way." Id. at 735-36. The complications they refer to include generating expense and delay, preventing defendants from obtaining finality, invading plaintiffs' privacy, and allowing a single claimant to hold out or block an entire settlement. Id. at 755-56.

In light of those and other concerns advanced in favor of permitting less than unanimous agreement in multi-plaintiff mass litigation, we refer this issue to the Commission on Ethics Reform for its review and recommendation to the Court.

VI.

The judgment of the Appellate Division is reversed. The case is remanded to the trial court to reinstate the judgment to enforce the settlement.

For reversal/remandment/reinstatement — Chief Justice PORITZ, and Justices LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE and RIVERA-SOTO — 7.

Opposed — None.

[1] Although Pacific Capital Bank, N.A. is a named defendant, its involvement is not at issue in this appeal. All references to defendant refer solely to Jackson Hewitt.

[2] RPC 1.8(g) was modified effective January 1, 2004, to include the term "informed consent." As modified, the rule provides:

A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients ... unless each client gives informed consent after a consultation that shall include disclosure of the existence and nature of all the claims ... and of the participation of each person in the settlement.

[Pressler, Current N.J. Court Rules, RPC 1.8(g) (2006).]

"Informed consent" is defined as "the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct." Pressler, Current N.J. Court Rules, RPC 1.0(e) (2006).

[768] [769] [770] Mark Lane, Washington, D.C., for defendant-appellant.

Robert A. Swift, Kohn, Swift & Graf, P.C., Philadelphia, Pennsylvania; Jon M. Van Dyke, Honolulu, Hawai'i, for plaintiff-appellee.

[771] Before: FLETCHER, PREGERSON and RYMER, Circuit Judges.

OPINION

FLETCHER, Circuit Judge:

The Estate of Ferdinand E. Marcos appeals from a final judgment entered against it in a class-action suit after a trifurcated jury trial on the damage claims brought by a class of Philippine nationals (hereinafter collectively referred to as "Hilao") who were victims of torture, "disappearance", or summary execution under the regime of Ferdinand E. Marcos. We have jurisdiction over the appeal pursuant to 28 U.S.C. § 1291 and we affirm.

FACTUAL BACKGROUND

This case arises from human-rights abuses —specifically, torture, summary execution, and "disappearance" — committed by the Philippine military and paramilitary forces under the command of Ferdinand E. Marcos during his nearly 14-year rule of the Philippines. The details of Marcos' regime and the human-rights abuses have been set forth by the district court at 910 F.Supp. 1460, 1462-63 (D.Haw.1995).

PROCEDURAL HISTORY

Shortly after Marcos arrived in the United States in 1986 after fleeing the Philippines, he was served with complaints by a number of parties seeking damages for human-rights abuses committed against them or their decedents. District courts in Hawai'i and California dismissed the complaints on the grounds that the "act of state" doctrine rendered the cases nonjusticiable. This court reversed in consolidated appeals. Trajano v. Marcos, 878 F.2d 1439 (9th Cir.1989). The Judicial Panel on Multidistrict Litigation consolidated the various actions in the District of Hawai`i.

In 1991, the district court certified the Hilao case as a class action, defining the class as all civilian citizens of the Philippines who, between 1972 and 1986, were tortured, summarily executed, or "disappeared" by Philippine military or paramilitary groups; the class also included the survivors of deceased class members. Certain plaintiffs opted out of the class and continued, alongside the class action, to pursue their cases directly.

A default judgment was entered in 1991 against Marcos' daughter, Imee Marcos-Manotoc, upon one of the direct plaintiffs' complaints. That judgment was appealed to this court, which affirmed the district court in 1992, rejecting arguments that Marcos-Manotoc was entitled to foreign sovereign immunity and that the district court lacked jurisdiction under the Alien Tort Claims Act, 28 U.S.C. § 1350, and under Article III of the U.S. Constitution. Trajano v. Marcos (In re Estate of Ferdinand E. Marcos Human Rights Litigation), 978 F.2d 493 (9th Cir.1992) ("Estate I"), cert. denied, 508 U.S. 972, 113 S.Ct. 2960, 125 L.Ed.2d 661 (1993).

Marcos died during the pendency of the actions, and his wife Imelda Marcos and son Ferdinand R. Marcos, as his legal representatives, were substituted as defendants.

In November 1991, the district court issued a preliminary injunction that prohibited the Estate from transferring, dissipating, or encumbering any of its assets. The Estate appealed from the preliminary injunction, and this court affirmed, rejecting arguments on foreign sovereign immunity, on abatement of the action upon the death of Marcos, on the district court's lack of authority to enter the injunction, and on subject-matter jurisdiction and cause of action under the Alien Tort Claims Act. Hilao v. Marcos (In re Estate of Ferdinand E. Marcos Human Rights Litigation), 25 F.3d 1467 (9th Cir. 1994) ("Estate II"), cert. denied, ___ U.S. ___, 115 S.Ct. 934, 130 L.Ed.2d 879 (1995).^[1]

[772] The district court ordered issues of liability and damages tried separately. In September 1992, a jury trial was held on liability; after three days of deliberation, the jury reached verdicts against the Estate and for the class and for 22 direct plaintiffs and a verdict for the Estate and against one direct plaintiff. Judgment was entered and the preliminary injunction modified to take account of the verdict.

The district court then ordered the damage trial bifurcated into one trial on exemplary damages and one on compensatory damages. The court ordered that notice be given to the class members that they must file a proof-of-claim form in order to opt into the class. Notice was provided by mail to known claimants and by publication in the Philippines and the U.S.; over 10,000 forms were filed.

In February 1994, the same jury that had heard the liability phase of the trial considered whether to award exemplary damages. After two days of evidence and deliberations, the jury returned a verdict against the Estate in the amount of $1.2 billion.

The court appointed a special master to supervise proceedings related to the compensatory-damage phase of the trial in connection with the class. In January 1995, the jury reconvened a third time to consider compensatory damages. The compensatory-damage phase of the trial is explained in greater detail below. After seven days of trial and deliberation, the jury returned a compensatory-damage award for the class of over $766 million; after two further days of trial and deliberation, the jury returned compensatory-damage awards in favor of the direct plaintiffs.

On February 3, 1995, the district court entered final judgment in the class action suit. The Estate appeals from this judgment.

JURISDICTION

The district court exercised jurisdiction under the Alien Tort Claims Act, 28 U.S.C. § 1350. The existence of subject-matter jurisdiction is a question of law reviewed de novo. Valdez v. United States, 56 F.3d 1177, 1179 (9th Cir.1995).

The Estate argues that this case does not "arise under" federal law for Article III purposes and therefore the federal courts cannot constitutionally exercise jurisdiction. This court has twice rejected these arguments in Estate I and Estate II. See 978 F.2d at 501-503, 25 F.3d at 1472-74. The published decisions in those cases are both the controlling law of the circuit and the law of this case. The Estate has presented no compelling arguments that the law has changed in the interim or that the two previous decisions of this court were "clearly erroneous and would work a manifest injustice". Leslie Salt Co. v. United States, 55 F.3d 1388, 1393 (9th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 407, 133 L.Ed.2d 325 (1995). We therefore decline to reconsider the Estate's arguments and instead follow the court's prior decisions as the law of the circuit and of the case.

The Estate also argues that the Alien Tort Claims Act does not apply to conduct that occurs abroad and that all of the acts on which Hilao's judgment is based occurred within the Philippines. Again, however, this court rejected the argument when the Estate made it in a prior appeal. See Estate I, 978 F.2d at 499-501 ("[S]ubject-matter jurisdiction was not inappropriately exercised under § 1350 even though the actions of Marcos-Manotoc which caused a fellow citizen to be the victim of official torture and murder occurred outside of the United States."). The Estate has offered no arguments for why we should not follow that decision as the law of the circuit and of the case, and we therefore decline to reconsider that decision.

DISCUSSION

I. Statute of Limitations

The Estate argues that the district court erred in not subjecting Hilao's claims [773] to a two-year statute of limitations. The question of the appropriate statute of limitations is a question of law that we review de novo. Mendez v. Ishikawajima-Harima Heavy Indus. Co., 52 F.3d 799, 800 (9th Cir.1995).

The Alien Tort Claims Act does not contain a statute of limitations. The Estate argues, therefore, that the courts should follow the general practice of adopting an analogous state statute of limitations if such adoption would not be inconsistent with federal law or policy. Because the Alien Tort Claims Act involves, as its title suggests, torts, and because the case was heard in the District of Hawai`i, the Estate argues that Hawai`i's two-year statute of limitations for tort claims should apply. The Estate argues alternatively that the appropriate statute of limitations might be that imposed by Philippine law, which appears to require that claims for personal injury arising out the exercise by a public officer of authority arising from martial law be brought within one year. Philippine Civil Code, Art. 1146. Hilao argues that the ten-year statute of limitations in the Torture Victim Protection Act, 28 U.S.C. § 1350 (note, § 2(c)) (the TVPA), is the most closely analogous federal statue of limitations, and cites to a recent district court case applying that limit to claims under both the Alien Tort Claims Act and the TVPA. See Xuncax v. Gramajo, 886 F.Supp. 162, 192 (D.Mass.1995). Alternatively, Hilao points to the conclusion in Estate II that a claim under the Alien Tort Claims Act is closely analogous to a violation of 42 U.S.C. § 1983, 25 F.3d at 1476 (citing Forti v. Suarez-Mason, 672 F.Supp. 1531, 1548-50 (N.D.Cal.1987)), and argues that the jurisprudence on statutes of limitations under § 1983 should govern.

We need not decide which statute of limitations applies because Hilao's suit was timely under any of the proposed statutes when equitable tolling principles are applied. The Senate Report on the TVPA states that the ten-year statute is subject to equitable tolling, including for periods in which the defendant is absent from the jurisdiction or immune from lawsuits and for periods in which the plaintiff is imprisoned or incapacitated. S.Rep. No. 249, 102d Cong., 1st Sess., at 11 (1991). Section 1983 generally borrows its statute of limitations from state laws, Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 462, 95 S.Ct. 1716, 1721, 44 L.Ed.2d 295 (1975), and incorporates equitable-tolling principles of either state or federal law in cases where a defendant's wrongful conduct, or extraordinary circumstances outside a plaintiff's control, prevented a plaintiff from timely asserting a claim. See, e.g., Hardin v. Straub, 490 U.S. 536, 109 S.Ct. 1998, 104 L.Ed.2d 582 (1989); Bianchi v. Bellingham Police Dept., 909 F.2d 1316 (9th Cir.1990); Williams v. Walsh, 558 F.2d 667 (2d Cir. 1977). Hawai`i courts have allowed equitable tolling in similar situations. See, e.g., Cleghorn v. Bishop, 3 Haw. 483, 483-84 (1873) (statute of limitations tolled during lifetime of King Kamehameha V because he was immune from suit; after his death, claim could be brought against estate).

Any action against Marcos for torture, "disappearance", or summary execution was tolled during the time Marcos was president. A Philippine attorney who testified as an expert witness at trial stated that in 1981 Marcos engineered the passage of a constitutional amendment granting him, and others acting at his direction, immunity from suit during his tenure in office. Another expert witness testified that many victims of torture in the Philippines did not report the human-rights abuses they suffered out of intimidation and fear of reprisals; this fear seems particularly understandable in light of testimony on the suspension of habeas corpus between 1972 and 1981, and on the effective dependence of the judiciary on Marcos. Given these extraordinary conditions, any claims against Marcos for injury from torture, "disappearance", or summary execution were tolled until he left office in February 1986. The Estate appears to concede that the claims in this suit were asserted in March 1986. Thus, the filing of this action was timely under any of the asserted statutes of limitations.

II. Abatement

The Estate argues that Hilao's cause of action abated upon the death of Marcos [774] because the federal common-law rule is that an action for an intentional tort abates upon the death of either party. See Heikkila v. Barber, 308 F.2d 558, 560-61 (9th Cir.1962). This court has previously rejected this argument in Estate II, analogizing Hilao's cause of action to claims for violation of the Eighth Amendment right to freedom from cruel and unusual punishment or of 42 U.S.C. § 1983, neither of which abates upon the death of the defendant. 25 F.3d at 1476. We reject the Estate's argument that that decision was clearly erroneous and simply follow Estate II as the law of the circuit and of the case on the issue of abatement.

III. Class Certification

A district court's decision to certify a proposed class is reviewed for an abuse of discretion. Barber v. Hawaii, 42 F.3d 1185, 1197 (9th Cir.1994).

A. Definition of the Class

The Estate challenges the certification of the class because, it argues, the class does not meet the requirement of Rule 23 that a proposed class be made up of people to whom effective notice of the pending action can be given and who will be bound by any judgment entered.

The district court defined the class as:

All current civilian citizens of the Republic of the Philippines, their heirs and beneficiaries, who between 1972 and 1986 were tortured, summarily executed or disappeared while in the custody of military or paramilitary groups.

The Estate does not allege that the certified class fails to meet any of the express prerequisites specified in Federal Rule of Civil Procedure 23(a); its only objection appears to be that the class "refers to the citizens of an entire nation". The court's definition of the class, however, refers only to those Philippines citizens who were (or whose decedents were) tortured, summarily executed or "disappeared" while in military custody during a 14-year period. This is not a class, as the Estate contends, the size of which is almost unlimited. Indeed, as Hilao points out, at the time the class was certified it was estimated, on the basis of documentation maintained by human-rights organizations, that the size of the class was 10,000 people, and following the trial on liability a total of 10,059 detailed and verified claim forms were received. In the end, 9,539 of the claims were found valid and awarded damages in the subsequent stages of the trial. The district court did not abuse its discretion in certifying the class as defined.

B. Representatives' Typicality of the Class

The Estate argues that the claims of the Hilao representatives are not typical of the claims of the class as required by Rule 23(a)(3) because there are significant individual questions in each case related to (1) the statute of limitations, (2) whether any compensable injury exists, (3) whether any injury was caused by Marcos' acts or omissions or was justifiable.

As to the statute of limitations, as discussed above, any applicable statute was tolled during the period that Marcos was in office in the Philippines, so there are no relevant individual statute-of-limitations issues: the applicable statute began to run at the earliest not when human-rights abuses were inflicted on each particular class member but in February 1986 when Marcos fled to Hawai'i. As to whether any compensable injury exists for a particular class member, that question is virtually identical in each case. Did the victim experience pain and suffering from the torture, summary execution, or "disappearance"? In the case of those who were executed or "disappeared", did their survivors suffer from the loss of the victim's earnings? As to whether any particular injury was caused by Marcos' act or omission, this question was resolved by the liability finding, discussed below, that Marcos was liable for any act of torture, summary execution, or "disappearance" committed by the military or paramilitary forces on his orders or with his knowledge. The district court's decision to certify the class was not an abuse of discretion.^[2]

[775] IV. Evidentiary Challenges

The Estate challenges the district court's admission of statements made by torturers to their victims and of various documents. Evidentiary rulings are reviewed only for an abuse of discretion and should not be reversed absent some prejudice. City of Long Beach v. Standard Oil Co., 46 F.3d 929, 936 (9th Cir.1995).

A. Hearsay Statements

1. Rule 801(d)(2)(D)

The Estate challenges the district court's admission under Federal Rule of Evidence 801(d)(2)(D) of statements made by members of the Philippine military or paramilitary forces to the plaintiffs or witnesses in this case. This evidence was used to show that those who committed the abuses were in the military and that Marcos either ordered specific acts taken by the military/paramilitary forces or knew of them yet failed to take effective measures to prevent them.^[3]

Section 801(d)(2)(D) provides that "A statement is not hearsay if ... [t]he statement is offered against a party and is ... a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship". The existence of an agency relationship is a question for the judge under Rule 104(a) and must be proved by substantial evidence but not by a preponderance of the evidence. United States v. Flores, 679 F.2d 173, 178 (9th Cir. 1982), cert. denied, 459 U.S. 1148, 103 S.Ct. 791, 74 L.Ed.2d 996 (1983).

The Estate challenges the district court's determination that an agency relationship existed between Marcos and the torturers on two grounds. First, it argues that the statements made by members of the military forces to their victims cannot be used in determining whether an agency relationship existed between the person making the statement and Marcos. The Estate cites to United States v. Jones, 766 F.2d 412, 415 (9th Cir.1985), for the proposition that "[t]he fact of agency cannot be proven by the alleged agent's extrajudicial statements". After Jones, however, the Supreme Court decided in Bourjaily v. United States, 483 U.S. 171, 177-81, 107 S.Ct. 2775, 2779-82, 97 L.Ed.2d 144 (1987), that a court may consider an out-of-court statement in making its Rule 104(a) determination of the admissibility of a statement under Rule 801(d)(2)(E). This court, relying on Bourjaily, has held that "out-of-court statements may themselves be considered in determining the preliminary question, under Rule 801(d)(2)(D), of the scope of [the agent's] employment duties". Arizona v. Standard Oil Co. of California (In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation), 906 F.2d 432, 458 (9th Cir.1990), cert. denied, 500 U.S. 959, 111 S.Ct. 2274, 114 L.Ed.2d 725 (1991). It therefore appears that Jones is no longer a correct statement of the law and the district court did not abuse its discretion in relying on the military members' statements to their victims in determining that an agency relationship existed between Marcos and the individuals who tortured the plaintiffs or their decedents.

The Estate also challenges the district court's reliance, in deciding to admit the [776] evidence under Rule 801(d)(2)(D), on expert testimony, introduced by Hilao, concerning the structure, organization, and control of the Philippine military, security, and intelligence forces; Marcos' relationship thereto; and the effect of Marcos' presidential decrees. The Estate challenges this testimony because the experts did not testify as to the actual membership of particular individuals in those military or paramilitary organizations. The district court was clearly entitled, however, to rely on this testimony, in connection with the statements reported by the torture victims as to the unit affiliations of various perpetrators of torture, in determining whether an agency relationship existed in order to make the statements admissible.

The district court did not abuse its discretion in admitting the statements challenged by the Estate.

2. Rule 803(24)

The Estate challenges the admission of "many hearsay statements" on the basis of the residual exception contained in Rule 803(24). The only citation the Estate provides for the hearsay statements it is challenging is to the district court's ruling. In that ruling, the district court said

All right. So you have in mind, the rulings made by the Court as to any conversations by military with any of the plaintiffs or witnesses, they are admitted pursuant to 801(d)(2)(D), since I think the evidence is clear at this point that Mr. Marcos was the commander in chief in absolute control of the military, and/or 803.24 deem to be — not 803.24 deem to be hearsay.

Thus, it is clear that the district court relied on Rule 803(24) only as an alternative ground for the admission of the statements of the torturers to their victims or witnesses. Because we have already determined that the district court did not abuse its discretion in admitting those statements under Rule 801(d)(2)(D), we decline to reach the Estate's Rule 803(24) challenge.

B. Documents

The Estate challenges the admission under Rule 803(8) of various Presidential Commitment Orders (PCOs); Arrest, Search and Seizure Orders (ASSOs); and Preventive Detention Actions (PDAs) signed by Marcos. Rule 803(8) allows the admission of "[r]ecords, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth (A) the activities of the office or agency, or (B) matters observed pursuant to duty imposed by law as to which matters there was a duty to report ..., or (C) ... factual findings resulting from an investigation made pursuant to authority granted by law ...".

The Estate alleges that the challenged documents relate to various detainees, not to the activities of any office or agency within the Philippines. It is pellucidly clear, however, that the district court did not abuse its discretion in holding that letters from President Marcos to the Minister of National Defense approving requests for PCOs and PDAs are records "setting forth ... the activities of the office" of the President.

The Estate also challenges the admission of the documents under Rule 803(24). As it did with the hearsay statements discussed above, the district court admitted the documents on a number of alternative grounds, including Rule 803(8) and Rule 803(24). Because we affirm the admission of the documents on the basis of Rule 803(8), we decline to reach the Estate's 803(24) challenge.

V. Instructions on Liability of the Estate

A claim that the trial court misstated the elements that must be proven at trial is a question of law to be reviewed de novo. Oglesby v. Southern Pacific Transportation Co., 6 F.3d 603, 606 (9th Cir.1993).

The district court instructed the jury that it could find the Estate liable if it found either that (1) Marcos directed, ordered, conspired with, or aided the military in torture, summary execution, and "disappearance" or (2) if Marcos knew of such conduct by the military and failed to use his power to prevent it. The Estate challenges the latter basis for liability, arguing that liability is not imposed under such conditions in analogous U.S. law claims, that "no international law decision ... has ever imposed liability upon a foreign official" on those grounds, and that [777] the district court essentially made the Estate liable on a respondeat superior theory that is inapplicable in intentional torts.

The principle of "command responsibility" that holds a superior responsible for the actions of subordinates appears to be well accepted in U.S. and international law in connection with acts committed in wartime, as the Supreme Court's opinion in In Re Yamashita indicates:

[T]he gist of the charge is an unlawful breach of duty by petitioner as an army commander to control the operations of the members of his command by `permitting them to commit' the extensive and widespread atrocities specified.... [T]he law of war presupposes that its violation is to be avoided through the control of the operations of war by commanders who are to some extent responsible for their subordinates.... [P]rovisions [of international law] plainly imposed on petitioner, who at the time specified was military governor of the Philippines, as well as commander of the Japanese forces, an affirmative duty to take such measures as were within his power and appropriate in the circumstances to protect prisoners of war and the civilian population. This duty of a commanding officer has heretofore been recognized, and its breach penalized[,] by our own military tribunals.

In re Yamashita, 327 U.S. 1, 14-16, 66 S.Ct. 340, 347-48, 90 L.Ed. 499 (1946). See also Art. 86(2), Protocol to the Geneva Conventions of August 12, 1949, opened for signature December 12, 1977, reprinted in 16 I.L.M. 1391, 1429 (1977) ("The fact that a breach of the Conventions or of this Protocol was committed by a subordinate does not absolve his superiors from penal [or] disciplinary responsibility ... if they knew, or had information which should have enabled them to conclude in the circumstances at the time, that he was committing or was going to commit such a breach and if they did not take all feasible measures within their power to prevent or repress the breach."); Art. 7(3), Statute of the International Tribunal for the Prosecution of Persons Responsible for Serious Violations of International Humanitarian Law Committed in the Territory of the Former Yugoslavia, 32 I.L.M. 1159, 1192-94 (1993) ("The fact that any [act of genocide, crime against humanity, or violation of the Geneva Conventions or of the laws or customs of war] was committed by a subordinate does not relieve his superior of criminal responsibility if he knew or had reason to know that the subordinate was about to commit such acts or had done so and the superior failed to take the necessary and reasonable measures to prevent such acts or to punish the perpetrators thereof."); see generally Lt. Cmdr. Weston D. Burnett, Command Responsibility and a Case Study of the Criminal Responsibility of Israeli Military Commanders for the Pogrom at Shatila and Sabra, 107 Mil.L.J. 71 (1985).

The United States has moved toward recognizing similar "command responsibility" for torture that occurs in peacetime, perhaps because the goal of international law regarding the treatment of noncombatants in war-time —"to protect civilian populations and prisoners ... from brutality", Yamashita, 327 U.S. at 15, 66 S.Ct. at 347-48 — is similar to the goal of international human-rights law. This move is evidenced in the legislative history of the TVPA:

[A] higher official need not have personally performed or ordered the abuses in order to be held liable. Under international law, responsibility for torture, summary execution, or disappearances extends beyond the person or persons who actually committed those acts — anyone with higher authority who authorized, tolerated or knowingly ignored those acts is liable for them.

S.Rep. No. 249, 102d Cong., 1st Sess. at 9 (1991) (footnote omitted) (citing Forti and In re Yamashita). At least one district court has recognized such liability. Xuncax, 886 F.Supp. at 171-73, 174-75 ("Gramajo was aware of and supported widespread acts of brutality committed by personnel under his command resulting in thousands of civilian deaths.... Gramajo refused to act to prevent such atrocities." "... Gramajo may be held liable for the acts of members of the military forces under his command."). See also Paul v. Avril, 901 F.Supp. 330, 335 (S.D.Fla.1994) ("Defendant Avril [former military ruler of Haiti] bears personal responsibility [778] for a systematic pattern of egregious human rights abuses in Haiti during his military rule ... He also bears personal responsibility for the interrogation and torture of each of the plaintiffs ... All of the soldiers and officers in the Haitian military responsible for the arbitrary detention and torture of plaintiffs were employees, representatives, or agents of defendant Avril, acting under his instructions, authority, and control and acting within the scope of authority granted by him."). The conduct at issue in this case involved violations by members of military or paramilitary forces of a jus cogens norm of international law parallel to the types of war crimes for which international law imposes command responsibility. Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 714-717 (9th Cir.1992) (prohibition against torture has attained status of jus cogens norm from which no derogation is permitted). In these circumstances, the district court's instruction on the second category of liability was proper under international law.

VI. Torture Victim Protection Act (TVPA)

The Estate challenges three aspects of the district court's jury instructions on the basis of the TVPA.^[4] The TVPA creates a cause of action against one who commits torture or extrajudicial killing and was intended to codify judicial decisions recognizing such a cause of action under the Alien Tort Claims Act. 28 U.S.C. § 1350, note; S.Rep. No. 249, 102d Cong., 1st Sess., at 3-5 (1991); H.R.Rep. No. 367, 102d Cong., 1st Sess., at 3-4 (1991).

A. Exhaustion

The Estate argues that the jury was not properly instructed because it was not required to find that each plaintiff had met the exhaustion requirement of the TVPA. The Act provides that "[a] court shall decline to hear a claim under this section if the claimant has not exhausted adequate and available remedies in the place in which the conduct giving rise to the claim occurred". 28 U.S.C. § 1350, note, § 2(b). The language of this provision, referring as it does to the court's authority to hear a claim, demonstrates that, contrary to the Estate's suggestion, the issue of exhaustion is one for the court, not for the jury. The Estate was therefore not entitled to the instruction it seeks.^[5]

B. Direct v. Vicarious Liability

The Estate next argues that the district court failed to instruct the jury that it could [779] only find the Estate liable for acts actually committed by Ferdinand Marcos. It points out that the Act imposes liability on any "individual who ... subjects an individual to torture ... or ... subjects an individual to extrajudicial killing". 28 U.S.C. § 1350, note, §§ 2(a)(1), (2). Thus, the Estate concludes, the jury should have been instructed that it could not find liability under the TVPA for acts of torture or summary execution of which Marcos was aware and failed to prevent.

As discussed above, however, the Senate Report makes clear that in enacting the TVPA, Congress intended to impose exactly the type of liability that the jury instructions allowed in this case:

[A] higher official need not have personally performed or ordered the abuses in order to be held liable. [R]esponsibility for torture, summary execution, or disappearances extends beyond the person who actually committed those acts—anyone with higher authority who authorized, tolerated or knowingly ignored those acts is liable for them.

S.Rep. No. 249 at 9. Thus, the district court's instructions on liability were proper under the TVPA.

C. Statute of Limitations

Finally, the Estate argues that the district court should have instructed the jury on the ten-year statute of limitations in the TVPA. The application of a statute of limitations, however, is a question of law for the court, not for the jury. Washington v. Garrett, 10 F.3d 1421, 1429 (9th Cir.1993). Thus, the Estate was not entitled to a jury instruction on the TVPA's statute of limitations. As discussed above, the district court did not err in allowing Hilao's action to proceed despite the TVPA's ten-year limit because the limitation is subject to equitable tolling.

VII. Proximate Cause

The Estate challenges an instruction given by the district court in the liability stage of the trial:

To determine the Estate of the late President Marcos is liable to any plaintiff for wrong alleged by the plaintiffs, you must determine whether the injury alleged by a plaintiff has been shown by a preponderance of the evidence to have been caused by reason of a person being taken into custody by an order of Ferdinand Marcos or under his authority.

We review the formulation of jury instructions in a civil trial for an abuse of discretion. Oglesby, 6 F.3d at 606. The Estate argues that under this instruction, the jury might have found it liable for a plaintiff's injuries only on the basis of the plaintiff being taken into custody on Marcos' authority, even if intervening causes were actually responsible for the injuries.

The instructions "considered as a whole" do not appear to be "misleading or inadequate". Id. The challenged instruction came directly after the district court's main instruction on liability, which required the jury to find either that Marcos had "directed, ordered, conspired with, or aided" in torture, summary execution, and disappearance, or that he had knowledge of that conduct and failed to use his power to prevent it. Thus, it is clear that the jury was required to find not merely that the plaintiffs were taken into custody under Marcos' authority but that once in custody the plaintiffs were tortured, executed, or disappeared on Marcos' orders or with his knowledge. The district court did not abuse its discretion in giving the challenged instruction. Alternatively, if there was any error in the district court's instruction, it is more probable than not that the error was harmless and therefore reversal is not required. Oglesby, 6 F.3d at 606.

VIII. Exemplary Damages

A. Exemplary Damages against an Estate

The question of whether exemplary damages are available against an estate is a question of law and therefore subject to de novo review. Twenty-Three Nineteen Creekside, Inc. v. Commissioner, 59 F.3d 130, 131 (9th Cir.1995).

The Estate argues that the district court erred in awarding exemplary damages against it because federal courts have disallowed [780] punitive damages against estates. Hilao argues that the district court looked to Philippine law in determining the appropriate damage standards, that Philippine law allows exemplary damages "by way of example or correction for the public good" in order to deter the public from emulating the defendant's conduct, that such damages are therefore different from punitive damages (which Philippine law does not allow), and that Philippine law does not bar the award of exemplary damages against an estate.

Hilao appears to be correct that the district court followed Philippine law on the issue of damages. We have found no ruling by the district court expressly choosing Philippine law, but the district court's jury instruction on exemplary damages is virtually identical to the jury instruction proposed by Hilao, and that proposed jury instruction lists as two of its sources Philippine Civil Code Articles 2229 and 2231.^[6] In addition to the jury instructions, Hilao submitted at least two memoranda on the question of damages to the district court between the verdict on liability and the trial on exemplary damages, and both memoranda base the request for exemplary damages on the same articles of the Philippine Civil Code. It therefore appears that the district court applied Philippine law to the question of exemplary damages. The Estate has not disputed Hilao's statement that Philippines law allows exemplary damages against an estate. We conclude that the district court did not err in allowing exemplary damages against the Estate.

B. Instructions and Procedure

The Estate argues that even if exemplary damages are available against a deceased's estate, the district court violated its rights under the Due Process Clause by holding the exemplary-damage phase of the trial before the compensatory-damage phase and by not instructing the jury that an exemplary-damage award must bear a relationship to compensatory damages.

1. Due Process Claims

The Estate claims that the sequence in which the district court held the damage phases of the trial violated its right to due process. We review de novo a claim of a violation of the Due Process Clause. In its most recent discussion of punitive damages, the Supreme Court wrote that "[o]nly when an award can fairly be categorized as `grossly excessive' in relation to [a State's legitimate] interests [in punishing unlawful conduct and deterring its repetition] does it enter the zone of arbitrariness that violates the Due Process Clause". BMW of North America, Inc. v. Gore, ___ U.S. ___, ___, 116 S.Ct. 1589, 1595, 134 L.Ed.2d 809 (1996). See also TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 458, 113 S.Ct. 2711, 2720, 125 L.Ed.2d 366 (1993) (Stevens, J.). The BMW Court identified three "guideposts" for measuring gross excessiveness: "the degree of reprehensibility [of defendant's conduct]; the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases". BMW, ___ U.S. at ___ _ ___, 116 S.Ct. at 1598-99.

The Estate's argument appears to challenge the district court's procedure and instructions as deficient with respect to the second BMW "guidepost". The Court's discussion of this issue, however, offers little support to the Estate's argument. The Court noted the "long pedigree" of "[t]he principle that exemplary damages must bear a `reasonable relationship' to compensatory damages". Id. at ___, 116 S.Ct. at 1601. The Court also pointed out that it had "refined this analysis [in TXO] by confirming that the proper inquiry is `"whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred"'". Id. (quoting TXO, 509 U.S. at 460, 113 S.Ct. at 2721 (emphasis in original) (quoting Pacific [781] Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 21, 111 S.Ct. 1032, 1045, 113 L.Ed.2d 1 (1991))). Finally, the Court reiterated its previous caution that a categorical approach to this question must be rejected: "`... "We ... cannot[] draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case."'" Id. at ___, 116 S.Ct. at 1602 (emendations in original) (quoting TXO, 509 U.S. at 458, 113 S.Ct. at 2720 (quoting Haslip, 499 U.S. at 18, 111 S.Ct. at 1043)).

Thus, the Court has not required, as the Estate would have it, that punitive damages be calculated on the basis of the amount of a previous award of compensatory damages. The fact that the excessiveness of a punitive-damage award is to be measured in part by the reasonableness of the relationship between the award and "the harm likely to result from the defendant's conduct as well as the harm that actually has occurred" undercuts the Estate's argument that a punitive-damage award must in all cases be determined after an award of compensatory damages, since compensatory damages will not include any recovery for harm that was likely to have occurred but did not actually occur. The departure from the usual sequence in this case did not violate the Estate's due-process rights. Certainly the Estate has no persuasive argument that the actual amount of exemplary damages awarded, $1.2 billion, was grossly excessive, given the eventual award of over $750 million in compensatory damages for the human-rights abuses inflicted on the nearly 10,000 class members.

The Estate also appears to argue that the district court's instructions on exemplary damages were erroneous because they granted the jury unrestrained discretion in arriving at its award.^[7] While the Supreme Court has indeed suggested that "unlimited" jury discretion in the determination of punitive damages might violate the Due Process Clause, Haslip, 499 U.S. at 19, 111 S.Ct. at 1043-44, these instructions did not grant the jury unrestrained discretion in its exemplary-damage determination.

The instructions in this case, like those in Haslip, "gave the jury significant discretion in its determination of punitive damages[, b]ut that discretion was not unlimited". Id. The Haslip Court found that the instructions given in that case "enlightened the jury as to the punitive damages' nature and purpose, identified the damages as punishment for civil wrongdoing of the kind involved, and explained that their imposition was not compulsory". Id. The district court's instructions here provided the same information to the jury. Indeed, while the Estate complains that its rights were violated because the jury was not instructed that a reasonable relationship must exist between the amounts of compensatory and exemplary damages, the actual instructions approved by the Supreme Court in Haslip contained no such explanation. Id. at 6, n. 1, 111 S.Ct. at 1037 n. 1. The district court's instructions did not leave [782] the jury with the unrestrained discretion that might violate the Due Process Clause.

2. Trifurcation

A trial court's decision to bifurcate —or, in this case, trifurcate — a trial is reviewed for an abuse of discretion. Exxon Co. v. Sofec, Inc., 54 F.3d 570, 575 (9th Cir.1995). In the absence of any constitutional problems with the district court's decision to hold the exemplary-damage phase of the trial prior to the compensatory-damage phase, the district court did not abuse its discretion by the sequence in which it conducted the proceedings below. The compensatory-damage phase presented much more complex questions, requiring the presentation of testimony taken in the Philippines before a special master, than did the exemplary-damage phase, which was closely related to the evidence in the liability phase. In addition, of course, the district court retained the authority, until the entry of judgment, to review and require a remittitur of the exemplary-damage award if the award was, in its view, excessive. Indeed, the procedure followed by the district court is not unprecedented in class-action suits. See Jenkins v. Raymark Industries, Inc., 782 F.2d 468, 474-75 (5th Cir.1986) (affirming plan for trial on punitive damages before actual damages in class-action suit; noting that since punitive damages are intended to create deterrence and protect public interest, focus is on defendant's conduct, and while Texas law bars a punitive-damage award to a plaintiff who does not receive a compensatory award, "the allocation need not be made concurrently with an evaluation of the defendant's conduct" and "[t]he relative timing of these assessments is not critical"). Thus, the order in which the stages of the trial proceeded was not an abuse of the district court's discretion.

IX. Methodology of Determining Compensatory Damages

The Estate challenges the method used by the district court in awarding compensatory damages to the class members.

A. District Court Methodology

The district court allowed the use of a statistical sample of the class claims in determining compensatory damages. In all, 10,059 claims were received. The district court ruled 518 of these claims to be facially invalid, leaving 9,541 claims. From these, a list of 137 claims was randomly selected by computer. This number of randomly selected claims was chosen on the basis of the testimony of James Dannemiller, an expert on statistics, who testified that the examination of a random sample of 137 claims would achieve "a 95 percent statistical probability that the same percentage determined to be valid among the examined claims would be applicable to the totality of claims filed". Of the claims selected, 67 were for torture, 52 were for summary execution, and 18 were for "disappearance".

1. Special Master's Recommendations

The district court then appointed Sol Schreiber as a special master (and a court-appointed expert under Rule 706 of the Federal Rules of Evidence). Schreiber supervised the taking of depositions in the Philippines of the 137 randomly selected claimants (and their witnesses) in October and November 1994. These depositions were noticed and conducted in accordance with the Federal Rules of Civil Procedure; the Estate chose not to participate and did not appear at any of the depositions. (The Estate also did not depose any of the remaining class members.)

Schreiber then reviewed the claim forms (which had been completed under penalty of perjury) and depositions of the class members in the sample. On the instructions of the district court, he evaluated

(1) whether the abuse claimed came within one of the definitions, with which the Court charged the jury at the trial ..., of torture, summary execution, or disappearance; (2) whether the Philippine military or paramilitary was ... involved in such abuse; and (3) whether the abuse occurred during the period September 1972 through February 1986.

[783] He recommended that 6 claims of the 137 in the sample be found not valid.^[8]

Schreiber then recommended the amount of damages to be awarded to the 131 claimants. Following the decision in Filartiga v. Pena-Irala, 577 F.Supp. 860, 863 (E.D.N.Y. 1984), he applied Philippine, international, and American law on damages. In the cases of torture victims, Schreiber considered:

(1) physical torture, including what methods were used and/or abuses were suffered; (2) mental abuse, including fright and anguish; (3) amount of time torture lasted; (4) length of detention, if any; (5) physical and/or mental injuries; (6) victim's age; and (7) actual losses, including medical bills.

In the cases of summary execution and "disappearance", the master considered

(1) [the presence or absence of] torture prior to death or disappearance; (2) the actual killing or disappearance; ... (3) the victim's family's mental anguish[;] and (4) lost earnings [computed according to a formula established by the Philippine Supreme Court and converted into U.S. dollars].

The recommended damages for the 131 valid claims in the random sample totalled $3,310,000 for the 64 torture claims (an average of $51,719), $6,425,767 for the 50 summary-execution claims (an average of $128,515), and $1,833,515 for the 17 "disappearance" claims (an average of $107,853).

Schreiber then made recommendations on damage awards to the remaining class members. Based on his recommendation that 6 of the 137 claims in the random sample (4.37%) be rejected as invalid, he recommended the application of a five-per-cent invalidity rate to the remaining claims. He then performed the following calculations to determine the number of valid class claims remaining:

                                                   Summary                                  Torture         Execution      DisappearanceClaims Filed                      5,372              3,677             1,010Facially Invalid Claims            -179               -273              - 66Remaining Claims                  5,193              3,404               944Less 5% Invalidity Rate            -260               -170              - 47Valid Claims                      4,933              3,234               897Valid Sample Claims                - 64               - 50              - 17Valid Remaining Claims            4,869              3,184               880

He recommended that the award to the class be determined by multiplying the number of valid remaining claims in each subclass by the average award recommended for the randomly sampled claims in that subclass:

                                                   Summary                                    Torture       Execution     DisappearanceValid Remaining Claims                4,869           3,184               880x Average Awards                    $51,719        $128,515          $107,853Class Awards                   $251,819,811    $409,191,760       $94,910,640

By adding the recommended awards in the randomly sampled cases, Schreiber arrived at a recommendation for a total compensatory damage award in each subclass:

                                                 Summary                                  Torture       Execution      DisappearanceClass Awards                  $251,819,811      $409,191,760     $94,910,640Sample Awards                 $  3,310,000      $  6,425,767     $ 1,833,515TOTALS                        $255,129,811      $415,617,527     $96,744,155

Adding together the subclass awards, Schreiber recommended a total compensatory damage award of $767,491,493.

2. Jury Proceedings

A jury trial on compensatory damages was held in January 1995. Dannemiller testified that the selection of the random sample met the standards of inferential statistics, that the successful efforts to locate and obtain testimony from the claimants in the random sample "were of the highest standards" in his profession, that the procedures followed conformed to the standards of inferential statistics, and that the injuries of the random-sample claimants were representative of the class as a whole. Testimony from the 137 random-sample claimants and their witnesses was introduced. Schreiber testified as to his recommendations, and his report was supplied to the jury. The jury was instructed that it could accept, modify or reject Schreiber's recommendations and that it could independently, on the basis of the evidence of the random-sample claimants, reach its own judgment as to the actual damages of those claimants and of the aggregate damages suffered by the class as a whole.

The jury deliberated for five days before reaching a verdict. Contrary to the master's recommendations, the jury found against only two of the 137 claimants in the random sample. As to the sample claims, the jury generally adopted the master's recommendations, although it did not follow his recommendations in 46 instances.^[9] As to the claims of the remaining class members, the jury adopted the awards recommended by the master. The district court subsequently entered judgment for 135 of the 137 claimants in the sample in the amounts awarded by the jury, and for the remaining plaintiffs in each of the three subclasses in the amounts awarded by the jury, to be divided pro rata.^[10]

B. Estate's Challenge

The Estate's challenge to the procedure used by the district court is very narrow. It challenges specifically only "the method by which [the district court] allowed the validity of the class claims to be determined": the master's use of a representative sample to determine what percentage of the total claims were invalid.^[11]

The grounds on which the Estate challenges this method are unclear. It states that to its knowledge this method "has not previously been employed in a class action". This alone, of course, would not be grounds for reversal, and in any case the method has been used before in an asbestos class-action case, the opinion in which apparently helped persuade the district court to use this method. See Cimino v. Raymark Indus., Inc., 751 F.Supp. 649, 659-667 (E.D.Tex.1990).

The Estate also argues that the method was "inappropriate" because the class consists of various members with numerous subsets of claims based on whether the plaintiff or his or her decedent was subjected to torture, "disappearance", or summary execution. The district court's methodology, however, [785] took account of those differences by grouping the class members' claims into three subclasses.

Finally, the Estate appears to assert that the method violated its rights to due process because "individual questions apply to each subset of claims, i.e., whether the action was justified, the degree of injury, proximate cause, etc.". It does not, however, provide any argument or case citation to explain how the methodology violated its due-process rights. Indeed, the "individual questions" it identifies — justification, degree of injury, proximate cause — are irrelevant to the challenge it makes: the method of determining the validity of the class members' claims.^[12] The jury had already determined that Philippine military or paramilitary forces on Marcos' orders — or with his conspiracy or assistance or with his knowledge and failure to act — had tortured, summarily executed, or "disappeared" untold numbers of victims and that the Estate was liable to them or their survivors. The only questions involved in determining the validity of the class members' claims were whether or not the human-rights abuses they claim to have suffered were proven by sufficient evidence.

Although poorly presented, the Estate's due-process claim does raise serious questions. Indeed, at least one circuit court has expressed "profound disquiet" in somewhat similar circumstances. In re Fibreboard Corp., 893 F.2d 706, 710 (5th Cir.1990). The Fibreboard court was reviewing a petition for a writ of mandamus to vacate trial procedures ordered in over 3,000 asbestos cases. The district court had consolidated the cases for certain purposes and certified a class for the issue of actual damages. The district court ordered a trial first on liability and punitive damages, and then a trial (Phase II) on actual damages. In the Phase II trial, the jury was "to determine actual damages in a lump sum for each [of 5] disease categor[ies] for all plaintiffs in the class" on the basis of "a full trial of liability and damages for 11 class representatives and such evidence as the parties wish to offer from 30 illustrative plaintiffs" (half chosen by each side), as well as "opinions of experts ... regarding the total damage award". 893 F.2d at 708-09. The Fifth Circuit noted that the parties agreed that "there will inevitably be individual class members whose recovery will be greater or lesser than it would have been if tried alone" and that "persons who would have had their claims rejected may recover".^[13] Id. at 709. The court said that

[t]he inescapable fact is that the individual claims of 2,990 persons will not be presented. Rather, the claim of a unit of 2,990 persons will be presented. Given the unevenness of the individual claims, this Phase II process inevitably restates the dimensions of tort liability. Under the proposed procedure, manufacturers and suppliers are exposed to liability not only in 41 cases actually tried with success to the jury, but in 2,990 additional cases whose claims are indexed to those tried.

Id. at 711. The court granted the petitions for mandamus and vacated the trial court's order, but it did so not on due-process grounds but because the proposed procedure worked a change in the parties' substantive rights under Texas law that was barred by the Erie doctrine.^[14]

[786] On the other hand, the time and judicial resources required to try the nearly 10,000 claims in this case would alone make resolution of Hilao's claims impossible. See Cimino, 751 F.Supp. at 652-53 ("If the Court could somehow close thirty cases a month, it would take six and one-half years to try these [2,298] cases ..."). The similarity in the injuries suffered by many of the class members would make such an effort, even if it could be undertaken, especially wasteful, as would the fact that the district court found early on that the damages suffered by the class members likely exceed the total known assets of the Estate.

While the district court's methodology in determining valid claims is unorthodox, it can be justified by the extraordinarily unusual nature of this case. "`Due process,' unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances". Cafeteria and Restaurant Workers Union, Local 473 v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961). In Connecticut v. Doehr, 501 U.S. 1, 10, 111 S.Ct. 2105, 2112, 115 L.Ed.2d 1 (1991), a case involving prejudgment attachment, the Supreme Court set forth a test, based on the test of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), for determining whether a procedure by which a private party invokes state power to deprive another person of property satisfies due process:

[F]irst, consideration of the private interest that will be affected by the [procedure]; second, an examination of the risk of erroneous deprivation through the procedures under attack and the probable value of additional or alternative safeguards; and third, ... principal attention to the interest of the party seeking the [procedure], with, nonetheless, due regard for any ancillary interest the government may have in providing the procedure or forgoing the added burden of providing greater protections.

501 U.S. at 11, 111 S.Ct. at 2112. The interest of the Estate that is affected is at best an interest in not paying damages for any invalid claims. If the Estate had a legitimate concern in the identities of those receiving damage awards, the district court's procedure could affect this interest. In fact, however, the Estate's interest is only in the total amount of damages for which it will be liable: if damages were awarded for invalid claims, the Estate would have to pay more. The statistical method used by the district court obviously presents a somewhat greater risk of error in comparison to an adversarial adjudication of each claim, since the former method requires a probabilistic prediction (albeit an extremely accurate one) of how many of the total claims are invalid.^[15] The risk in this case was reduced, though, by the fact that the proof-of-claim form that the district court required each class member to submit in order to opt into the class required the claimant to certify under penalty of perjury that the information provided was true and correct. Hilao's interest in the use of the statistical method, on the other hand, is enormous, since adversarial resolution of each class member's claim would pose insurmountable practical hurdles. The "ancillary" interest of the judiciary in the procedure is obviously also substantial, since 9,541 individual adversarial determinations of claim validity would clog the docket of the district court for [787] years. Under the balancing test set forth in Mathews and Doehr, the procedure used by the district court did not violate due process.

CONCLUSION

The district court had jurisdiction over Hilao's cause of action. Hilao's claims were neither barred by the statute of limitations nor abated by Marcos' death. The district court did not abuse its discretion in certifying the class. The challenged evidentiary rulings of the district court were not in error. The district court properly held Marcos liable for human rights abuses which occurred and which he knew about and failed to use his power to prevent. The jury instructions on the Torture Victim Protection Act and on proximate cause were not erroneous. The award of exemplary damages against the Estate was allowed under Philippine law and the Estate's due-process rights were not violated in either the determination of those damages or of compensatory damages. The judgment of the district court is therefore

AFFIRMED.

RYMER, Circuit Judge, concurring in part and dissenting in part:

Because I believe that determining causation as well as damages by inferential statistics instead of individualized proof raises more than "serious questions" of due process, I must dissent from Part IX of the majority opinion. Otherwise, I concur.

Here's what happened: Hilao's statistical expert, James Dannemiller, created a computer database of the abuse of each of the 10,059 victims based on what they said in a claim form that assumed the victim's torture. Although Dannemiller would have said that 384 claims should be examined to achieve generalizability to the larger population of 10,059 victims within 5 percentage points at a 95% confidence level, he decided that only 136 randomly selected claims would be required in light of the "anticipated validity" of the claim forms and testimony at the trial on liability that the number of abuses was about 10,000.

He selected three independent sample sets of 242 (by random selection but eliminating duplicates). Hilao's counsel then tried to contact and hold hearings or depositions with each of the claimants on the first list, but when attempts to contact a particular claimant proved fruitless, the same number in the next list was used. When the sample results for the first 137 victims proved insufficient to produce the level of sampling precision desired for the project, Hilao's counsel continued from case 138 to case 145. Eventually, 124 were completed from list A, 11 from list B, and 2 from list C.

The persons culled through this process went to Manilla to testify at a deposition (which Dannemiller thought was "remarkable"). Dannemiller Narrative Statement, p. 6. He opined that "this random selection method in determining the percentage of valid claims was fair to the Defendant" as "[a] random selection method of a group of 9541 individuals is more accurate than where each individual is contacted." Id. Further, the statistician observed that "[t]he cost and time required to do 9541 would be overwhelming and not justified when greater precision can and was achieved through sampling." Id. at 7. Finally, he concluded that "the procedures followed conformed to the standards of inferential statistics and therefore ... the injuries of the 137 claimants examined are representative of the 9541 victims." Id.

In accordance with the "computer-generated plan developed by James Dannemiller," the Special Master oversaw the taking of the 137 depositions in the Philippines. In accordance with the district court's order, the Special Master was to determine "(1) whether the abuse claimed came within one of the definitions, with which the Court charged the jury at the trial held in Hawaii, of torture, summary execution, or disappearance; (2) whether the Philippine military or para-military was or were involved in such abuse; and (3) whether the abuse occurred during the period September 1972 through February 1986." Special Master and Court Appointed Expert's Recommendations, p. 1. Based on a review of the deposition transcripts of the 137 randomly selected victim claims, and a review of the claims, the Special Master found that 131 were valid within the definitions which the court gave to the jury; the [788] Philippine military or para-military were involved in the abuse of the valid claims; and the abuse occurred during the period 1972 through February 1986. As a result, he recommended the amount of compensatory damages to be awarded to the valid 131 claimants, and for the entire class based on the average awards for torture, for summary execution (including lost earnings, which the Special Master determined should be capped at $120,000 per claimant, and which would be determined by the average for the occupation when a witness did not state the amount of income earned), and disappearance (including lost earnings similarly calculated). His report indicates that "for all three categories, moral damages as a proximate result of defendants' wrongful acts or omissions, Phil. Civ.Code §§ 2216, 2217 were weighed into the compensation." Id. at 7.

Thus, causation and $766 million compensatory damages for nearly 10,000 claimants rested on the opinion of a statistical expert that the selection method in determining valid claims was fair to the Estate and more accurate than individual testimony; Hilao's counsel's contact with the randomly selected victims until they got 137 to be deposed; and the Special Master's review of transcripts and finding that the selected victims had been tortured, summarily executed or disappeared, that the Philippine military was "involved," that the abuse occurred during the relevant period, and that moral damages occurred as a proximate result of the Estate's wrongful acts.

This leaves me "with a profound disquiet," as Judge Higginbotham put it in In re Fibreboard Corp., 893 F.2d 706, 710 (5th Cir.1990). Although I cannot point to any authority that says so, I cannot believe that a summary review of transcripts of a selected sample of victims who were able to be deposed for the purpose of inferring the type of abuse, by whom it was inflicted, and the amount of damages proximately caused thereby, comports with fundamental notions of due process.

Even in the context of a class action, individual causation and individual damages must still be proved individually. As my colleagues on the Sixth Circuit explained in contrasting generic causation — that the defendant was responsible for a tort which had the capacity to cause the harm alleged — with individual proximate cause and individual damage:

Although such generic causation and individual causation may appear to be inextricably intertwined, the procedural device of the class action permitted the court initially to assess the defendant's potential liability for its conduct without regard to the individual components of each plaintiffs injuries. However, from this point forward, it became the responsibility of each individual plaintiff to show that his or her specific injuries or damages were proximately caused by [the defendant's conduct]. We cannot emphasize this point strongly enough because generalized proofs will not suffice to prove individual damages. The main problem on review stems from a failure to differentiate between the general and the particular. This is an understandably easy trap to fall into in mass tort litigation. Although many common issues of fact and law will be capable of resolution on a group basis, individual particularized damages still must be proved on an individual basis.

Sterling v. Velsicol Chem. Corp., 855 F.2d 1188, 1200 (6th Cir.1988).

There is little question that Marcos caused tremendous harm to many people, but the question is which people, and how much. That, I think, is a question on which the defendant has a right to due process. If due process in the form of a real prove-up of causation and damages cannot be accomplished because the class is too big or to do so would take too long, then (as the Estate contends) the class is unmanageable and should not have been certified in the first place. As Judge Becker recently wrote for the Third Circuit in declining to certify a 250,000-member class in an asbestos action: "Every decade presents a few great cases that force the judicial system to choose between forging a solution to a major social problem on the one hand, and preserving its institutional values on the other. This is such a case." Georgine v. Amchem Prod., Inc., 83 F.3d 610, 617 (3d Cir.1996).

[789] So is this. I think that due process dictates the choice: a real trial. I therefore dissent.

[1] In August 1994, Hilao moved to modify the preliminary injunction to identify the Republic of the Philippines as an agent, representative, aider, or abettor of the Estate; the Republic argued that the court lacked jurisdiction over it under the Foreign Sovereign Immunities Act. In September 1994, the district court granted Hilao's motion. On appeal, this court found that the Republic was entitled to foreign sovereign immunity and vacated the district court's order. See Hilao v. Estate of Ferdinand Marcos (In re Estate of Ferdinand Marcos Human Rights Litigation), 94 F.3d 539 (9th Cir.1996).

[2] As to the question of "justification", the Estate has offered no support for its suggestion that torture, summary execution, or "disappearance" could be found justified under international law.

[3]Examples of the challenged statements include:

"I found out they were elements of the Intelligence Security Group of the Western Police District of Manila."

"They were members of the GT-205, 2d MIG, and the 231st PC company and the Fifth CSU."

"[T]he officers who were there were Lieutenant Joseph Mililay, Colonel Gallido, Captain Sebastian and Captain Calaunan and Major Escarcha."

"Colonel Aure ... said ... Don't you worry, the President would know about this ... and by eight o'clock he will get the report in front of him."

"Who arrested you?" "MISG military personnel, sir."

"What does MISG stand for?" "Military Intelligence Security Group, sir."

"... Lieutenant Pedro Tangco [who showed me the search warrant] belongs to the MISG, or the Metrocom Intelligence Security Group."

"... Colonel Antonia Uy ... informed my husband that his release was being countermanded by the President and from that time he will be placed under house arrest ..."

[4] The Estate suggests in a footnote in its opening brief that the district court erred by retroactively applying the TVPA, which was enacted on 12 March 1992. The summary mention of an issue in a footnote, without reasoning in support of the appellant's argument, is insufficient to raise the issue on appeal. See Retlaw Broadcasting Co. v. N.L.R.B., 53 F.3d 1002, 1005 n. 1 (9th Cir.1995); Acosta-Huerta v. Estelle, 7 F.3d 139, 144 (9th Cir.1992); International Olympic Committee v. San Francisco Arts & Athletics, 781 F.2d 733, 738 n. 1 (9th Cir.1986). We therefore decline to consider this issue.

[5]If the Estate is challenging the court's refusal to decline to hear Hilao's TVPA claim, that challenge fails. The legislature's intended operation of the exhaustion provision is set forth with remarkable clarity in the Senate Report:

[T]orture victims bring suits in the United States against their alleged torturers only as a last resort.... Therefore, as a general matter, the committee recognizes that in most instances the initiation of litigation under this legislation will be virtually prima facie evidence that the claimant has exhausted his or her remedies in the jurisdiction in which the torture occurred. The committee believes that courts should approach cases brought under the proposed legislation with this assumption.

More specifically, ... the interpretation of section 2(b) should be informed by general principles of international law. The procedural practice of international human rights tribunals generally holds that the respondent has the burden of raising the nonexhaustion of remedies as an affirmative defense and must show that domestic remedies exist that the claimant did not use. Once the defendant makes a showing of remedies abroad which have not been exhausted, the burden shifts to the plaintiff to rebut by showing that the local remedies were ineffective, unobtainable, unduly prolonged, inadequate, or obviously futile. The ultimate burden of proof and persuasion on the issue of exhaustion of remedies, however, lies with the defendant.

S.Rep. No. 249 at 9-10. The Estate has pointed to no evidence that it put forth even to raise the issue that Hilao had unexhausted remedies available elsewhere, let alone evidence sufficient to carry its burden. The district court therefore did not err in not declining to hear Hilao's TVPA claim on exhaustion grounds.

[6] Article 2229 provides that "[e]xemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages". Article 2231 provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence".

[7]The relevant portions of the instructions are as follows:

Exemplary damages are damages that are awarded by way of example or correction for the public good. In other words, exemplary damages reflect an award to the plaintiffs which may serve as a warning or deterrence to others that they should not copy or emulate the conduct for which you found Ferdinand Marcos responsible ... Unlike compensatory damages, which are to reimburse plaintiffs for their injuries, exemplary damages are to make an example of a defendant's conduct so others will not engage in the same practices.

The law does not require you to award exemplary damages. [T]he amount of an award of exemplary damages must not reflect bias, prejudice or sympathy toward any party. Nor should any award be intended to punish a defendant. Exemplary damages may only be awarded if you determine ... that defendant's conduct ... was malicious, wanton or oppressive....

There is no exact standard for fixing the amount of exemplary damages. The amount [is] any amount you believe necessary to fulfill the objective of exemplary damages, which is to deter similar conduct in the future by others. Any award you make should be fair in light of the evidence. You may consider the financial resources of the Estate of Ferdinand Marcos in fixing the amount of exemplary damages as well as the nature of the conduct for which you found the defendant responsible, the period the conduct continued, the number of people affected by that conduct, and the severity of the injuries to the plaintiffs and the class.

[8] Three torture claims and one summary-execution claim were recommended as invalid because the claimants presented insufficient proof that the abuses were committed by military or paramilitary forces. One summary-execution claim and one "disappearance" claim were recommended as invalid for insufficient evidence.

[9] The jury awarded more than recommended to six torture claimants and less than recommended to five torture claimants; more than recommended for lost earnings to two execution claimants and less than recommended for lost earnings to nineteen execution claimants; more than recommended for pain and suffering to three execution claimants and less than recommended to one execution claimant; less than recommended for lost earnings to six "disappearance" claimants; and more than recommended for pain and suffering to one "disappearance" claimant and less than recommended for three "disappearance" claimants.

[10] Although never expressly explained by the district court, the mechanics of this division, as represented by Hilao, are as follows: The 135 random-sample claimants whose claims were found to be valid would receive the actual amount awarded by the jury; the two sample claimants whose claims were held invalid would receive nothing. All remaining 9,404 claimants with facially valid claims would be eligible to participate in the aggregate award, even though the aggregate award was calculated based on a 5% invalidity rate of those claims.

[11] In its reply brief, the Estate for the first time "also questions the propriety of the methodology employed by the district court for determining the quantum of compensatory damages". Reply Brief at 13. Issues raised for the first time in a reply brief, however, are generally deemed waived, Dilley v. Gunn, 64 F.3d 1365, 1367 (9th Cir.1995), and we will not consider this issue.

[12] The degree of injury would, of course, be relevant to the computation of damages for each claim, but, as noted above, the Estate has waived any challenge to the computation of damages.

[13] This suggests that the procedure used here may present a more difficult issue of violation of the due-process rights of particular class members. In Cimino, that issue was resolved by the fact that "[p]laintiffs ... agreed to the procedure, thereby waiving their rights to individual damage determinations". 751 F.Supp. at 653. That does not appear to be the case here. However, no plaintiff in this case is raising that issue in this or any related appeal.

[14] Cimino, the district court case upon which the district court appears to have relied in choosing the procedure it followed here, was decided after Fibreboard by the same district judge whose order had been vacated in Fibreboard. The main difference between the procedures disapproved in Fibreboard and those used in Cimino appears to be that while the Fibreboard process would have presented the 41 cases of the class representatives and allegedly "illustrative" class members to the jury and used those cases to determine an aggregate damage award for the class, the Ciminoprocess presented to the jury a statistically significant random sample of class claims and awarded each of the non-sample claims the average of the damages awarded in the sample claims.

After Fibreboard, the Fifth Circuit approved a trial court's proposal to determine punitive damages in a mass-tort class-action suit by fully trying 20 sample claims on compensatory damages to the jury and then asking the jury to "establish the ratio of punitive damages to compensatory damages for each class member". Watson v. Shell Oil Co., 979 F.2d 1014, 1018 (5th Cir. 1992). The court distinguished this procedure from the one disapproved in Fibreboard because of the fact that the punitive-damage inquiry focuses primarily on the defendant's conduct — "the degree of culpability underlying a single act" — and because the jury was not to "extrapolate" the amount of actual punitive damages but rather to "determine a basis for assessment of punitive damages in the form of a ratio". Id. at 1019.

[15] Hilao suggests that this risk is balanced in part by other benefits the Estate received from the district court's method, including the plaintiffs' decision to forego certain damages (e.g., costs of medical treatment) that would not be "generic to the class members" and the special master's recommendation (followed by the jury) of a ceiling on damages for both lost wages and pain and suffering.

[489] Michael A London, Douglas & London, New York, NY, Jerrold S. Parker, Parker & Waichman, LLC, Great Neck, NY, Christopher A. Seeger, Seeger Weiss, LLP, New York, NY, Mitchell M. Breit, Milberg, Weiss, Bershad & Schulman LLP, New York, NY, David H. Abney, II, Justin R. Morgan, The Morgan Law Firm, Lexington, KY, Mark E. Burton, Nancy Hersh, Rachel Beth Abram, Hersh & Hersh, San Francisco, CA, Benjamin P. Mouton, John G. Allelo, McGlynn, Glisson & Koch, Baton Rouge, LA, Aaron Maurice Levine, Aaron M. Levine & Associates, Washington, DC, J. Pierre Tismo, Robert E. Sanders, Sanders, Tismo & Associates, P.S.C., Covington, KY, Kieran Shanahan, Shanahan Law Group, Raleigh, NC, for Plaintiffs.

Andrew R. Rogoff, Gay Parks Rainville, Nina M. Gussack, Samantha Kors, Matthew J. Hamilton, Michael D. Raffaele, Andrew E. Kantra, Elizabeth M. Ray, Pepper Hamilton LLP, Philadelphia, PA, Janet H. Kwuon, Reed, Smith, Crosby, Heafey, LLP, Los Angeles, CA, Jennifer E. Gysler, Jon F. Monroy, Monroy Averbuck & Gysler, Westlake Village, CA, Karen A. Braje, Reed, Smith, Crosby, Heafey, LLP, Oakland, CA, B. Todd Thompson, Millicent A. Tanner, Thompson Miller & Simpson PLC, Louisville, KY, Garland H. Barr, IV, J. Clarke Keller, Stites & Harbison PLLC, Lexington, KY, Diogenis C. Panagiotis, The Panagiotis Firm, Lafayette, LA, Elizabeth Haecker Ryan, Philip S. Brooks, Jr., Montgomery, Barnett, Brown, Read, Hammond & Mintz, L.L.P., New Orleans, LA, Jennifer Snyder Heis, Joseph P. Thomas, Ulmer & Berne, LLP, Cincinnati, OH, Bradley Risinger, Smith Moore LLP, Raleigh, NC, Charles Henry Carpenter, Pepper Hamilton, LLP, Washington, DC, Jon Berkelhammer, L. Cooper Harrell, Smith Moore LLP, Greensboro, NC, John W. Elder, Wynne Hall, Paine, Tarwater, Bickers & Tillman, Knoxville, TN, Jon Gilbert Roach, Watson & Hollow, PLC, Knoxville, TN, Allan Berger, Allan Berger & Associates, P.L.C., New Orleans, LA, Samuel J. Abate, Jr., McCarter & English, LLP, New York, NY, for Defendants.

MEMORANDUM & ORDER ON FEES

WEINSTEIN, Senior District Judge.

                            Table of Contents    I. Introduction................................................. 490   II. Procedural History........................................... 490 [490]   III. Fee Allocation............................................... 490   IV. Basis of Authority in Federal Courts......................... 491       A. Analogy to Class Actions.................................. 491       B. General Ethical Supervision............................... 492          1. Law.................................................... 492          2. Application of Law to Facts............................ 493    V. Parallel State Law........................................... 494   VI. Conclusion................................................... 496

I. Introduction

By this order the court exercises its power to control legal fees in a coordinated litigation of many individual related cases—in effect, a quasi-class action. Limiting fees is particularly appropriate in the instant litigation since much of the discovery work the attorneys would normally have done on a retail basis in individual cases has been done at a reduced cost on a wholesale basis by the plaintiffs' steering committee.

II. Procedural History

In April 2004, pre-trial proceedings were consolidated in actions against defendant Eli Lilly & Company for injuries alleged to have been caused by the prescription drug Zyprexa. See letter of April 14, 2004 from the Multidistrict Litigation Panel to the Clerk of the Eastern District of New York. After discovery and negotiations overseen by the court-appointed special discovery master and four special settlement masters, in November 2005 the defendant entered into a partial settlement covering some 8,000 individual plaintiffs. See In re Zyprexa Prod. Liab. Litig., No. 04-M1596, 2005 WL 3117302 (E.D.N.Y. Nov. 22, 2005) (approving settlement). Under court supervision, a complex claims administration process was developed. It will be administered by the special settlement masters. Id. Three different "tracks" for recovery are provided. The track selected depends on the nature of each plaintiff's injury and the estimated monetary value of the claim. Track A provides for a lump sum of $5,000. Tracks B and C allow substantially higher recoveries. Id.

III. Fee Allocation

On January 3, 2006, the four settlement special masters were directed to consult with the parties in order to arrive at a recommended fee schedule cap and allocation of expenses. See In re Zyprexa Prod. Liab. Litig., 233 F.R.D. 122 (E.D.N.Y. 2006). They were to suggest fees which were "the lesser of the maximum reasonable fee schedule they recommend, the fee agreed upon between the client and the attorney in an individual case, and the maximum amount permitted under the applicable local state rules or statutes." Id. at 122.

Upon consultation with counsel and with members of the plaintiffs' steering committee, the special masters proposed that the court: (1) cap all legal fees for "Track A" settlements ($5,000) at no more than 20%, with a maximum of $500 for costs and expenses to come off the top before computation of fees; (2) cap all other fees at 37.5% of recovery; and (3) work with the firms representing the settling plaintiffs to conduct case-by-case evaluations that might result in further changes in fee caps or allocation of expenses because of "unique circumstances." See letter of March 7, 2006 from special settlement [491] master Kenneth R. Feinberg on behalf of the four special settlement masters.

After careful consideration of the complicated and exceptional circumstances posed by this case, this court now adopts the special masters' proposal with two main modifications. First, the court reduces the cap from 37.5% to 35%. Second, in order to guarantee that all attorneys receive adequate but not excessive compensation, the special masters will have the power to vary fee caps upwards to a maximum of 37.5% and downward to 30% in individual cases on the basis of special circumstances; clients and attorneys may appeal to the court from any such adjustments. The special settlement masters will supervise the allocation of costs and expenses in individual cases; they will be limited to those incurred in individual cases, except for Track A cases where there is a cap of $500 as stated above.

The costs of the plaintiffs' steering committee in conducting general discovery and making documents and depositions available to all litigants, whether in federal or state courts, shall be paid out of the general settlement fund, not by individual plaintiffs. This allocation is particularly apt in the present case since all litigants, whether in federal or any state court, have access to the materials obtained in pretrial discovery. See In re Zyprexa Prod. Liab. Litig., 04-MD-1596, 2004 WL 3520248, at *4 (E.D.N.Y. Aug.18, 2004). See also letter dated January 30, 2006 to state court judges with Zyprexa cases from assigned federal judge suggesting coordination and cooperation. The amount to be paid to the plaintiff's steering committee for its discovery and other work shall be approved by the special settlement masters.

In carrying out their duties under this order, the special settlement masters shall act as a group, not individually.

IV. Basis of Authority in Federal Courts

A. Analogy to Class Actions

A district court has the explicit power to require reasonable fees in class actions. See Fed.R.Civ.P. 23(g)(1)(C)(iii); Fed.R.Civ.P. 23(h); cf. Fed.R.Civ.P. 23(e)(1)-(2) (dealing with approval of terms of settlement). See also In re "Agent Orange" Prod. Liab. Litig., 611 F.Supp. 1296 (E.D.N.Y.1985). While the settlement in the instant action is in the nature of a private agreement between individual plaintiffs and the defendant, it has many of the characteristics of a class action and may be properly characterized as a quasi-class action subject to general equitable powers of the court. See Fed.R.Civ.P. 23(g)(C)(iii); Fed.R.Civ.P. 23(h); Fed. R.Civ.P. 1 ("just . . . determination of every action"); cf. Fed.R.Civ.P. 23(e)(1)(2) (dealing with approval of terms of settlement); Agent Orange, 611 F.Supp. at 1304-05; In re Joint Eastern and Southern District Asbestos Litig., 129 B.R. 710, 784 (E.D.N.Y.1991); Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(11)(A) (permitting removal of "mass" actions to the federal courts). The large number of plaintiffs subject to the same settlement matrix approved by the court; the utilization of special masters appointed by the court to control discovery and to assist in reaching and administering a settlement; the court's order for a huge escrow fund; and other interventions by the court, reflect a degree of court control supporting its imposition of fiduciary standards to ensure fair treatment to all parties and counsel regarding fees and expenses. See Asbestos Litig., 129 B.R. at 863-69.

No one except the trial judge, assisted by special masters, can exercise this ethical control of fees effectively. Many of the individual plaintiffs are both mentally and physically ill and are largely without power or knowledge to negotiate fair fees; plaintiffs' [492] counsel have a built-in conflict of interest; and the defendant is buying peace and is generally disinterested in how the fund is divided so long as it does not jeopardize the settlement.

B. General Ethical Supervision

1. Law

The judiciary has well-established authority to exercise ethical supervision of the bar in both individual and mass actions. See, e.g., Ex parte Burr, 22 U.S. (9 Wheat.) 529, 530, 6 L.Ed. 152 (1824) ("[I]t is extremely desirable that the respectability of the bar should be maintained, and that its harmony with the bench should be preserved. For these objects, some controlling power, some discretion ought to reside in the Court"). See also Charles W. Wolfram, Modern Legal Ethics 22-27 (1986). This authority includes the power to review contingency fee contracts for fairness. See Taylor v. Bemiss, 110 U.S. 42 at 45-46, 3 S.Ct. 441 at 443-44, 28 L.Ed. 64 (1884) ("This . . . does not remove the suspicion which naturally attaches to such [contingency] contracts, and where it can be shown that they are obtained . . . by any undue influence of the attorney over the client, or by any fraud or imposition, or that the compensation is clearly excessive, so as to amount to extortion, the court will in a proper case protect the party aggrieved").

A federal court may exercise its supervisory power to ensure that fees are in conformance with codes of ethics and professional responsibility even when a party has not challenged the validity of the fee contract. Rosquist v. Soo Line R.R., 692 F.2d 1107, 1111 (7th Cir.1982). See also Farmington Dowel Prod. Co. v. Forster Mfg. Co., 421 F.2d 61, 90-91 (1st Cir.1970); Schlesinger v. Teitelbaum, 475 F.2d 137, 141 (3d Cir.), cert. denied, 414 U.S. 1111, 94 S.Ct. 840, 38 L.Ed.2d 738 (1973) (holding that the district court had the power to adopt a rule establishing a guideline schedule of fees in personal injury actions for seamen). Cf. In re Michaelson, 511 F.2d 882, 888 (9th Cir.), cert. denied, 421 U.S. 978, 95 S.Ct. 1979, 44 L.Ed.2d 469 (1975) (to protect clients from excessive fees and conflicts of interest, the court has authority to inquire into fee contracts). Supervision includes the power to determine that the fee contract was not obtained through undue influence or fraud and that the amount of the fee is not unfair or excessive under the circumstances of the case. See, e.g., Rosquist, 692 F.2d at 1111.

The explication of the reasons for reviewing contingency contracts in Farmington Dowel is persuasive. This was an antitrust suit filed under the Clayton Act. After plaintiff Farmington Dowel Company prevailed on its claims, the district court determined that $85,000 was a reasonable attorney's fee pursuant to section 4 of the Act. Upon examining the existing fee contract between Farmington Dowel and its attorneys, however, the district court refrained from awarding counsel any additional fee, in spite of the award required by section 4. It believed any increase in fee beyond that agreed upon in the contract would be unethical. Farmington Dowel Prod. Co. v. Forster Mfg. Co., 297 F.Supp. 924, 925-930 (D.Me.1969).

On appeal, the Court of Appeals concluded that the Clayton Act's fee award was statutorily mandated. Nonetheless, the court noted that the American Bar Association Canons of Professional Ethics place ethical limitations on attorney's fees; it recognized the district judge's authority to determine the maximum fee that would be appropriate within those limits. Farmington Dowel Prod. Co. v. Forster Mfg. Co., 421 F.2d 61, 87, 90 (1st Cir.1970). Accordingly, the court remanded the issue, [493] instructing the district court to award the statutorily mandated "reasonable fees," while using its discretion to restructure the terms of the original agreement so that the total fee would be in accordance with the Canons of Ethics. Id. at 90-91.

The Farmington Dowel court explained that a client's willingness to abide by his original fee contract "is relevant but not controlling, for the object of the court's concern is not only a particular party but the conformance of the legal profession to its own high standards of fairness." Id. at 90 n. 62. Excessive fees would adversely reflect on the courts and the bar, providing judges with strong reason to ensure that any fee contract meets reasonable standards. See also, e.g., Jacobs v. Mancuso, 825 F.2d 559, 564 (1st Cir.1987) (the final determination as to the reasonableness of the attorney's fees is firmly entrusted to the discretion of the court); Charles Kocoras, Commentary: Contingent Fees—A Judge's Perch, 47 DePaul L.Rev. 421, 422 (1998) ("It is sometimes a difficult enough job to bring about a just result in the substantive disputes between parties. The idea of getting enmeshed in determining how much a client should pay his lawyer is distasteful and unappetizing. Lawyers' fee issues, whether arising as part of a contingent fee contract or by virtue of statutory or other types of considerations, do not rank high on a judge's menu of things he or she cannot wait to address. But trial judges were not afforded the vote to oversee these matters—we have that responsibility and obligation by virtue of our office.").

Those courts that have considered the matter agree that their supervisory power does not imply a duty to examine every attorney's fee contract. The Court of Appeals for the Seventh Circuit, for example, advocates a case-by-case determination of the need for review. See Rosquist, 692 F.2d at 1111 (while "[a]n agreement between two freely consenting, competent adults will most often be controlling . . in the circumstances of this case, the district court was right to be wary not to become an unwitting accessory to an excessive fee"). In Farmington Dowel, the Court of Appeals for the First Circuit explained that a court's exercising of its supervisory power—an "ethical judgment" requiring the court "to arrive at a figure which it considers the outer limit of reasonableness"—must be "reserved for exceptional circumstances." Farmington Dowel, 421 F.2d at 90.

2. Application of Law to Facts

While the plaintiffs' attorneys in the present case are highly skilled and have achieved an exceptional result for their clients, there is a danger that adherence to any previously negotiated contingency fee contracts might result in excessive fees. The total settlement amount held in escrow is large, and the over 8,000 individual plaintiffs involved in the settlement are represented by only a handful of firms, all of whom can be expected to gain substantial fees from their numerous clients' combined recoveries. Yet these firms all benefitted from the effectiveness of coordinated discovery carried out in conjunction with the plaintiffs' steering committee and from other economies of scale, suggesting a need for reconsideration of fee arrangements that may have been fair when the individual litigations were commenced.

The risk of excessive fees is a matter of special concern here because of the mass nature of the case. As the Farmington Dowel court recognized, excessive fees can create a sense of overcompensation and reflect poorly on the court and its bar. Farmington Dowel, 421 F.2d at 90 n. 62. See also Rosquist, 692 F.2d at 1111 [494] ("Courts have a stake in attorney's fees contracts; the fairness of the terms reflects directly on the court and its bar."). Public understanding of the fairness of the judicial process in handling mass torts— and particularly those involving pharmaceuticals with potential widespread health consequences—is a significant aspect of complex national litigations involving thousands of parties. These considerations are enhanced where, as here, the Judicial Panel on Multidistrict Litigation has assembled all related federal cases "for coordinated or consolidated pretrial proceedings . . . [to] promote the just and efficient conduct of such actions." 28 U.S.C. § 1407 (emphasis added). Litigations like the present one are an important tool for the protection of consumers in our modern corporate society, and they must be conducted so that they will not be viewed as abusive by the public; they are in fact highly beneficial to the public when adequately controlled. Cf. generally Lester Brickman, Lawyers' Ethics and Fiduciary Obligation in the Brave New World of Aggregative Litigation, 26 Wm. & Mary Envtl. L. & Pol'y Rev. 243 (describing the financial incentives for lawyers bringing aggregate cases as risking both procedural and substantive fairness in some of these cases); Monograph, Individual Justice in Mass Tort Litigation 79-83 (1995) (describing ethical concerns regarding fees in mass actions).

V. Parallel State Law

Since this is a series of diversity jurisdiction cases, it is particularly useful to examine state law on fees. The obligation of a federal court to guard against excessive fees is reflected in state law. California, Connecticut, Florida, Illinois, Michigan, New Jersey; New York, Tennessee, Texas, among others, Dave rules or statutes limiting the percentage amounts of contingent fees. See Cal. Bus. & Prof.Code § 6146(a); Conn. Gen.Stat. Ann. § 52-251c(b); Fla. Bar Reg. R. 4-1.5(f)(4)(B)(i); Fla. Stat. Ann. § 73.092; Leonard C. Arnold, Ltd. v. N. Trust Co., 116 Ill.2d 157, 107 Ill.Dec. 224, 506 N.E.2d 1279 (1987) (local court rule limiting attorney fees to 25% of recovery when incurred in settlement of personal injury actions of minors was not inconsistent with any Supreme Court rules or statutes, and was consistent with circuit court's role in protecting estate of minors); Mich. Gen. Ct. R. 8.121 (1985); 22 N.Y. Comp.Codes R. & Regs. tit. 22, § 691.20; N.J. Ct. R. 1:21-7; Am. Trial Lawyers Ass'n, New Jersey Branch v. New Jersey Supreme Court, 126 N.J.Super. 577, 316 A.2d 19 (1974) (approving New Jersey Supreme Court rule governing contingency fee contracts); Tenn.Code Ann. § 29-26-120; Tex. Lab. Code Ann. § 408.221; Wis. Stat. § 655.013 (1986). See generally Lester Brickman, The Market for Contingent Fee-Financed Tort Litigation: Is It Price Competitive?, 25 Cardozo L.Rev. 65, 92 n. 105 (2003) (compiling state rules and statutes providing sliding scale or maximum limitations on contingent fees).

Connecticut, Illinois, Massachusetts, Pennsylvania, West Virginia, and other states have recognized that courts have the general authority to reduce a particular contingent fee if it is found to be "excessive," XL Disposal Corp. v. John Sexton Contractors Co., 168 Ill.2d 355, 213 Ill.Dec. 665, 659 N.E.2d 1312, 1315 (1995), or in violation of the rules of professional conduct, Beckman v. Gwiazda, No. CV 90-0439394S, 1991 WL 158156, at *5 (Conn.Super. July 31, 1991). See, e.g., id. (a judge may reduce the amount of fee charged if she finds that, based on her knowledge of the case before her, the fees are in violation of Connecticut Rule, of Professional Conduct 1.5); XL Disposal Corp., 213 Ill.Dec. 665, 659 N.E.2d at 1315 [495] (the court is duty-bound to guard against the collection of excessive legal fees, both contingent and fixed); Snow v. Mikenas, 373 Mass. 809, 370 N.E.2d 1001, 1003 (1977) (a judge is authorized to question the reasonableness of a contingency fee on his own motion where the attorney will collect a fee from funds to be distributed through him by court order); Carol v. Perlmutter, 41 Pa. D. & C. 702 (1941) (contingent fee contracts must be reasonable and commensurate with the amount of the services performed and the results obtained, and are subject to the supervision of the court as to reasonableness, when questioned by the parties or by interested third parties); Comm. on Legal Ethics of W. Va. State Bar v. Tatterson, 177 W.Va. 356, 352 S.E.2d 107 (1986) (under the Code of Professional Responsibility, Disciplinary Rule 2-106, the attorney has the burden to show reasonableness of contract, and if his or her fee is grossly disproportionate to services rendered and is charged to client who lacks full information about all relevant circumstances, the fee is "clearly excessive," even though the client has consented to the fee).

New York common law, as an example, permitted judges to modify contingency agreements prior to the enactment of that state's modern fee structure, even in cases in which the plaintiffs had executed enforceable contingency contracts. See, e.g., Gair v. Peck, 6 N.Y.2d 97, 188 N.Y.S.2d 491, 160 N.E.2d 43 (1959); In re Cohen, 7 N.Y.2d 488, 199 N.Y.S.2d 658, 166 N.E.2d 672 (1960). Gair v. Peck was an action against the Justices of the New York Supreme Court, Appellate Division, First Judicial Department, seeking a ruling that the Appellate Division lacked the power to adopt a rule regulating contingent fees in personal injury and wrongful death claims and actions. The rule at issue in Gair employed a sliding scale, ranging from 50% on the first $1,000 recovered to 25% on any amount over $25,000, or in the alternative, a percentage not in excess of 33 1/3% of the total sum recovered. The rule also provided that the receipt, retention, or sharing of fees in excess of those prescribed would constitute the exaction of unreasonable and unconscionable compensation, in violation of Canons 12 and 13 of the Canons of Professional Ethics of the New York State Bar Association. The New York Court of Appeals rejected the challenge, citing Chief Judge Cardozo's thorough opinion in People ex rel. Karlin v. Culkin, 248 N.Y. 465, 162 N.E. 487 (1928), confirming the power of the court to control attorneys within its bar, and finding that "[c]ontingent fees may be disallowed as between attorney and client in spite of contingent fee retainer agreements, where the amount becomes large enough to be out of all proportion to the value of the professional services rendered." Gair, 188 N.Y.S.2d 491, 160 N.E.2d at 48. Noting that the Appellate Division rule provided the court with the option to authorize a larger fee upon an application showing that the prescribed fee would be inadequate, the Gair court concluded that the rule was a permissible procedural shortcut, enabling New York courts to effectively prevent the enforcement of exorbitant fees. Id. at 52.

The trend in the states is to limit contingent fees in substantial cases to 33 1/3% or less of net recovery where fees are large. See Cal. Bus. & Prof.Code § 6146(a) (limiting contingency fees in medical malpractice suits to 40% of the first $50,000 recovered; 33 1/3% of the next $50,000; 25% of the next $500,000; and 15% of any amount of recovery over $600,000); Conn. Gen. Stat. Ann. § 52-251c(b) (sliding scale limiting contingent fees in personal injury, wrongful death or damage to property suits to 33 1/3% of the first $300,000; 25% of the next $300,000; 20% of the next [496] $300,000; 15% of the next $300,000; and 10% of any amount exceeding $1,200,000); Fla. Bar Reg. R. 4-1.5(f)(4)(B)(i) (schedule limiting contingent fees in personal injury, products liability, and property damage suits to 40% of any recovery up to $1 million; 30% of any portion of the recovery between $1 million and $2 million; and 20% of any portion of the recovery exceeding $2 million in cases where the defendant has filed an answer to the complaint); Fla. Stat. Ann. .§ 73.092 (limiting contingent fees in eminent domain proceedings to 33% of any benefit up to $250,000; 25% of the benefit between $250,000 and $1,000,000; and 20% of any benefit exceeding $1,000,000); Mich. Gen. Ct. R. 8.121 (imposing a maximum 33 1/3% limit of recovery on contingency fees in personal injury or wrongful death suits); N.J. Ct. R. 1:21-7 (providing a sliding scale limiting contingent fees in all tort suits to 33 1/3% of the first $500,000 net sum recovered; 30% of the next $500,000 recovered; 25% of the next $500,000 recovered; and 20% of the next $500,000 recovered; on all amounts recovered in excess of $2 million, counsel must make an application to the judge for reasonable fee in accordance with the limiting scheme; where the amount recovered is for the benefit of a client who was a minor or mentally incapacitated when the contingent fee arrangement was made, the fee on any amount recovered by settlement without trial shall not exceed 25%); 22 N.Y. Comp.Codes R. & Regs. tit. 22, § 691.20 (capping contingency fees in any personal injury or wrongful death suit at either 50% of the first $1,000 net recovery; 40% of the next $2,000 net recovery; 35% of the next $22,000 net recovery; and 25% of any net recovery over $25,000, or, if the initial contractual arrangement between the client and attorney so provides, 33 1/3% of any net recovery); Tenn.Code Arm. § 29-26-120 (limiting contingent fees in medical malpractice suits to 30 1/3% of all damages awarded); Tex. Lab.Code Ann. § 408.221 (capping contingent fees in worker's compensation lawsuits to 25% of the plaintiffs' recovery); Wis. Stat. § 655.013 (limiting contingent fees in medical malpractice suits to 33 1/3% or 25% of the first $1 million, depending on whether the liability is stipulated within a statutory deadline, and 20% of any amount over $1 million). Cf. Lester Brickman, The Market for Contingent Fee-Financed Tort Litigation: Is It Price Competitive?, 25 Cardozo L.Rev. 65, 91 (2003) (describing the one-third contingent attorney's fee as "standard").

Because the court recognizes the exceptional and complicated nature of this important case, the skilled work of the able attorneys involved in it, and the exceptional result achieved, fees in the present case have not been capped at 33 1/3%—almost a national norm—but rather at 35%, with the power in the special masters to depart upwards to a maximum of 37.5% and downwards to a minimum of 30% on the basis of special circumstances in individual cases.

It should be emphasized that the applicable fee under many state laws is less than the maximum fixed by this order. Nevertheless, the imposed cap is considerably less than the 40% or more insisted upon plaintiffs' attorneys in their discussion with the special masters. This order is likely to save tens of millions of dollars for the clients.

VI. Conclusion

Fees in all settling actions in this multidistrict litigation shall be determined as follows: (1) all legal fees for "Track A" claims ($5,000) shall be capped at no more than 20%, with a maximum of $500 for costs and expenses to come off the top before computation of fees; (2) all other legal fees shall be capped at 35% of the [497] client's recovery, regardless of whether the underlying retainer agreement or state law permits for a higher fee; (3) the special masters shall have discretionary authority to conduct case-by-case evaluations and to order reductions or increases of maximum fees down to 30% or up to 37.5% on the basis of special circumstances in individual cases; (4) the special masters shall have authority to ensure that costs and disbursements charged to individual plaintiffs are restricted to those reasonably allocated to the individual case and that they come off the top of the recovery before fee computation; (5) the costs, disbursements and fees of the plaintiffs' steering committee shall be paid out of the general settlement fund rather than by individual plaintiffs and the amount of this payment shall be approved by the special settlement masters; (6) the special settlement masters are only to act as a group and not individually; and (7) clients and attorneys may appeal to the court from any decision of the special settlement masters. Should state law or the private fee arrangement between client and counsel provide for a lesser fee than that provided under this order, the least fee shall be the one enforced.

SO ORDERED.