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Keywords

settlementplaintifflawyercorporationclass action

settlementplaintiffdamageslitigationcorporationclass actioncompensatory damagesrespondent

Related Cases

Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S.Ct. 2295, 144 L.Ed.2d 715, 67 USLW 3681, 67 USLW 4632, 43 Fed.R.Serv.3d 691, 99 Cal. Daily Op. Serv. 4953, 1999 Daily Journal D.A.R. 6383, 1999 CJ C.A.R. 3596, 12 Fla. L. Weekly Fed. S 491

Facts

Fibreboard Corporation faced thousands of personal injury claims related to asbestos exposure, leading to a global settlement negotiation with plaintiffs' lawyers. A settlement of $1.535 billion was reached, with $1.525 billion from insurers and $10 million from Fibreboard. A class action was filed to certify a mandatory class of claimants, which excluded certain groups, and the District Court certified the class under Rule 23(b)(1)(B) based on a 'limited fund' theory. However, the adequacy of the fund and the inclusiveness of the class were contested.

Respondent Fibreboard Corporation was locked in litigation for decades. Plaintiffs filed a stream of personal injury claims against it, swelling throughout the 1980's and 1990's to thousands of claims for compensatory damages each year.

Issue

The main legal issues were whether the class certification under Rule 23(b)(1)(B) was appropriate given the claims of a limited fund and whether the class was adequately inclusive and represented.

The nub of this case is the certification of the class under Rule 23(b)(1)(B) on a limited fund rationale.

Rule

The court applied the principles of Rule 23(b)(1)(B), which requires that a mandatory class action on a limited fund theory must show that the fund is limited by more than the agreement of the parties and that it has been allocated to claimants within the class while addressing conflicting interests.

Applicants for contested certification of a mandatory settlement class on a limited fund theory under Rule 23(b)(1)(B) must show that the fund is limited by more than the agreement of the parties, and has been allocated to claimants belonging within the class by a process addressing the conflicting interests of class members.

Analysis

The Supreme Court found that the lower courts failed to demonstrate that the fund was limited independently of the parties' agreement and that the class excluded significant numbers of claimants. The Court emphasized that the certification process must ensure equitable treatment of all class members and that the characteristics of a limited fund class action were not met in this case.

The record on which the District Court rested its class certification did not support the essential premises of a mandatory limited fund class action.

Conclusion

The Supreme Court reversed the Fifth Circuit's judgment and remanded the case, concluding that the certification of the class was impermissible due to insufficient evidence of a limited fund and inadequate representation of class members.

Reversed and remanded.

Who won?

Fibreboard Corporation prevailed in the Supreme Court, as the Court found that the class certification was not justified under the applicable legal standards.

Fibreboard was allowed to retain virtually its entire net worth.

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Keywords

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