Class Actions and Mass Tort Litigation in a Global ContextProfessor Linda S. Mullenix

Saipan Peonage Litigation

Saipan Peonage Litigation Questions: What was the Saipan peonage

litigation? Who were the plaintiffs?

Defendants? Where was this litigation brought? What was the basis for the court’s

jurisdiction? What was the basis for the claims?

Saipan Peonage Litigation Questions: Is this litigation suitable for class action

treatment? Should the court certify a class action? Pursuant to what class category? What remedies are the class members seeking? What problems was there with a proposed class? What objections to class certification do the

Defendants raise? Do those objections have merit? Should the court approve a settlement class?

Saipan Peonage LitigationQuestions: How does this proposed class litigation

compare to: American mass tort cases? The Hilao-Philippine Marcos litigation? The Karadzic litigation? The Austrian fire litigation? The worldwide tainted blood products

litigation? The Holocaust era litigation?

Saipan Peonage Litigation

Does I v. The GAP, Inc., 2002 WL1000073 (D.N.Mariana Islands 2002)

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Factual background:

Plaintiffs: Saipan garment factor workers Class on behalf of 30,000 workers Workers are non-resident (many from multiple

Asian countries) Defendants: multiple contractor Ds; 19 settling Ds

Brylane, Cutter & Buck, Donna Karan, Gymboree, J. Crew, Jones Apparel, May Department Stores, Nordstrom, Oskosh, Phillips-Van Heusen, Polo Ralph Lauren, Sears Roebuck, Tommy Hilfinger, Warnaco, Calvin Klein, Brooks Brothers, Woolrich

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Factual background: Legal Basis for litigation (statutes):

RICO (Racketeer Influenced and Corrupt Organizations Act)

Alien Torts Claim Act Anti-Peonage Act

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Factual background: Allegations:

Ds conspiracy to dominate foreign garment work force

Conspiracy to deprive garment workers of basic human rights and protections

Peonage and involuntary servitude Exploitation of P class for Ds’ profit Ds conspiracy and common course of conduct

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Factual background: Forum: U.S. fed. Dist. Court Northern

Mariana Islands Procedural posture:

Consolidated cases under Rule 42(a) Motion for class certification Motion for preliminary approval of

settlement

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Class Action procedure:

Ps seek certification under Rule 23(a) Ps seek certification under Rules 23(b)(1), (b)(2),

and (b)(3) – all class categories Remedies sought:

Damages, punitive damages Plaintiffs propose damages proven on aggregate basis Damages by expert testimony, representative

sampling, polling, statistical analysis Independent monitoring program to prevent future

violations of law

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Ds arguments against class certification:

Lack of commonality Different plaintiffs Different factual backgrounds; different

experiences Voluntary hours, recruitment fees, threats, housing

and living conditions, restrictions on freedom of movement

Different employers Different injuries Different factories

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Ds arguments against class certification:

Lack of typicality: Highly individualized fact circumstances Different injuries Different defenses to individual class members

Lack of adequacy: Intra-class conflict between current and former

garment workers as to form of relief Lack of knowledge and understanding of lawsuit No role in decision-making Insufficient knowledge of duties and obligations in

lawsuit

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Ds’ arguments against class categories:

Rule 23(b)(1) category not suitable for damage class actions

Rule 23(b)(2) only for injunctive relief; not suitable for damage class actions

Rule 23(b)(3): Common issues do not predominate Claims require individualized proof and inquiry

into Ps mental states, alleged injuries, causes of alleged injuries

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Ds’ arguments against class categories: Rule 23(b)(3):

Lack of superiority: Numerous individual issues need to be tried on case-by-

case basis 30,000 class members/28 different factories/ different

departments/different supervisors/ 13 year period – class unwieldy

Aggregation into single action makes matters of proof difficult & unwieldy

Reasonable alternatives to class certification: Action under Fair Labor Standards Act

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Court’s decision on class certification: Class certification approved All Rule 23(a) pre-requisites satisfied:

Numerosity Commonality Typicality Adequacy

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Court’s decision on class certification:

Commonality (satisfied): Differences among class members do not

defeat commonality All injuries stem from same alleged

conspiracy among Ds Lawsuit challenges system-wide practice or

policy that affects all putative class members

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Court’s decision on class certification:

Typicality (satisfied): Alleged injuries all similar to class reps. Alleged injuries all flow from same alleged

common scheme, conspiracy, course of conduct Injuries are similar: allegation of economic and

other damages as result of Ds alleged pattern of racketeering, conspiracy, violation of constitutional, statutory and international human rights

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Court’s decision on class certification:

Adequacy (satisfied): Doe representatives had sufficient knowledge

and understanding of case to represent class Class counsel adequate No conflict between current and former class

members because action is not for damages for unpaid wages, but for injunctive and declaratory relief

Saipan Peonage Litigation Does I v. The GAP (N.D. Mariana Is. 2002): Court’s decision on class certification:

Rule 23 class categories: Grants certification under Rule 23(b)(1)(a); proper

because fundamental purpose is to establish independent monitoring program

Grants certification under Rule 23(b)(2); proper because primary relief is monitoring program, not damages

Grants certification under Rule 23(b)(3); proper because common questions predominate and class action is superior means to resolve

Saipan Peonage Litigation Questions: Is the court’s analysis of the Rule 23(a) requirements

sound? Has the court persuasively answered the Defendants’ arguments?

Can a court certify a class action under all three class categories? Does this present a contradiction? Is this really a class action for damages, or injunctive

relief? How would such a class be tried? Does the court comment sufficiently on the damages

portion of this case? How would damages be resolved in this class action?

Does the judge need more information at class certification about how damages will be tried?

Saipan Peonage Litigation

Preliminary Approval of the Class Settlement

Saipan Peonage Litigation Questions:

Is it unusual for a judge to certify a class and preliminarily approve the settlement in the same decision or order?

Do all the Ds agree to the settlement? Do the dissenting, non-settling Ds have a

right to object to the settlement? What problems do the court’s approval of

the settlement present for the non-settling Ds?

Saipan Peonage Litigation Preliminary approval of class settlement:

Two groups of Ds emerge: Settling Ds Non-settling Ds

Settling Ds deny engaging in or condoning unfair labor practices

Settling Ds deny liability for claims in the complaint

Saipan Peonage Litigation Preliminary approval of class settlement: Terms of the settlement (4):

Creation of code of conduct with garment suppliers Establishment of independent workplace and living

quarters monitoring Establishment of fund to pay for monioring

program and to compensate class members for harms

10% to cy pres fund to finance California litigation Payment of Ps’ costs and attorney fees, costs of

administration and notice program

Saipan Peonage Litigation Objections of Non-Settling Ds:

Selection of Verite (D) to monitor program unfair; will not act as neutral, impartial body

Conflicts of interest within the class Creation of cy pres fund to finance California

litigation unfair & unreasonable; diverst funds to non-parties

Opt-out notice plan is inadequate because it leaves many class members without effective notice

Saipan Peonage Litigation Preliminary approval of class settlement: Court finds settlement fair, adequate, &

reasonable Relies on settlement class decision in In re

Holcaust Victims Assets Litigation, 105 F. Supp. 2d 139 (E.D.N.Y. 2000)(settlement standards)

Saipan Peonage Litigation Court’s Preliminary Approval of

Settlement (5 reasons): Settlement not negotiated in haste

Settlement negoitations begun 3 years earlier Dozen draft agreements

Settlement agreement entered into in good faith

Arm’s-length negotiations Experienced counsel on both sides

Saipan Peonage Litigation Court’s Preliminary Approval of

Settlement (5 reasons): Allegations against Verite as program monitor

unsupported Settlement provisions for checks and controls on

program moitor No evidence in record of collusion No evidence in record of conflicts of interest

Final Questions: Is this an approiate class certification? Is this an appropriate exercise of judicial

authority to approve the preliminary settlement?

Does the court do an adequate job of assesing whether the proposed settlement is fair, adequate, and reasonable?

Is the GAP case a good model for resolving group harms?

Fine