Asbestos at the Crossroads: Will a Mandatory Settlement Class Pass Muster?

Abstract

This article previews the issues and arguments in Ortiz v. Fibreboard, Corp., on appeal to the Supreme Court on its 1998-99 docket. The Ortiz appeal raises a number of issues, which the Court may or may not decide, including (1) whether the Ahearn settlement class satisfies the prerequisites of Rule 23(a); (2) whether the Ahearn settlement class could be approved as a Rule 23(b)(1)(B) mandatory class; and (3) whether the Ahearn settlement class satisfies the "case and controversy" and standing requirements of Article III of the Constitution.

The Supreme Court in Ortiz will again consider the validity of a class action asbestos settlement intended to resolve the claims of all "future claimants," in this instance against the Fibreboard Corporation and its insurers. The Ortiz appeal arises from extensive asbestos litigation in Texas and California, and the class settlement is commonly known as the Ahearn settlement after Gerald Ahearn, the class representative.

The Court's consideration of the Ahearn settlement class follows hard on the heels of its 1997 decision repudiating another asbestos settlement class, in Amchem Products Inc. v. Windsor, 117 S.Ct. 2231 (1997). Esteban Ortiz, the petitioner before the Supreme Court, is a dissident class member in the Ahearn settlement who opposes the federal court's approval of that settlement.

The Ortiz appeal is of tremendous immediate significance for the resolution of mass tort litigation, but the Court's discussion of class settlement principles will have broad-reaching impact on all types of class actions and future class settlements. The Court's 1997 Amchem decision addressed the problem of class-action settlements in the context of so-called "(b)(3) opt-out classes." In contrast, the Ortiz appeal involves a mandatory, non-opt-out class of future claimants: a type of class settlement that currently does not require the same due process protections as (b)(3) opt-out classes.

Defense attorneys and their insurers frequently prefer mandatory settlement classes to completely resolve all current and future claims, to achieve what the lawyers call "global peace." However, as the Ahearn settlement demonstrates, mandatory settlement classes implicate an array of novel legal issues for the Court. The two global asbestos settlements - Amchem and Ahearn - form twin bookends concerning the evolving doctrine of federal settlement classes. Thus, the Supreme Court has the opportunity, in two successive terms, to define the principles and limitations governing settlement classes in the federal arena.