Testimony on Proposed New Rule 16.1 of the Federal Rules of Civil Procedure

| October 16, 2023

Outline of American Tort Reform Association Testimony Regarding Proposed New

Outline of American Tort Reform Association Testimony Regarding Proposed New Rule 26.1 Advisory Committee On Civil Rules Public Hearing

The American Tort Reform Association (ATRA) is a broad-based coalition of businesses, corporations, municipalities, associations, and professional firms. Our mission is to establish and advance a predictable, fair, and efficient civil justice system.

ATRA commends the Committee for recognizing the critical need for rules governing multidistrict litigation (MDL), which has transformed the federal courts and has been misused for the mass filing of questionable and unsupportable claims. This litigation has overwhelmed both defendants and the federal courts.

Respectfully, the preliminary draft of Rule 16.1 is insufficient. It does not acknowledge these significant problems; nor does it provide needed, effective procedural safeguards for MDLs. ATRA urges the Committee to further develop the proposed rule with the goal of restoring balance to the MDL system.

Since Congress adopted the MDL statute in 1968, the mass tort litigation environment has significantly changed. An industry has developed around such litigation. Hundreds of millions of dollars are spent on generating claims for a single mass tort. Third party litigation funding supports these advertising campaigns and the filing of speculative litigation. With minimal screening, claims are filed en masse. Federal MDL dockets can go from zero to tens of thousands of questionable claims in only a few months.

The percentage of cases in federal MDLs has doubled over the past decade and more than tripled over the past two decades. In 2020, for the first time in history, MDL dockets, primarily product liability mass tort cases, made up more than half of the federal civil caseload. That percentage reached an astounding 73% as of the conclusion of the 2022 fiscal year.

The MDL system is not functioning properly. There is widespread agreement that a significant number of claims in product liability MDLs are not viable — as high as 40% to 50%. Cases that otherwise would not be filed if they had to stand on their own merit are filed in MDLs because plaintiffs’ attorneys believe that, given the sheer volume of case, defendants and courts will not scrutinize clear deficiencies in their claims when they are swept into a global settlement.

A rule governing MDLs is long overdue, but the preliminary draft of the proposed new Rule 16.1 (which largely offers a non-binding checklist for an initial management conference) is insufficient.

A proposed rule should:

Recognize and respond to the extraordinary surge of mass tort litigation in the federal courts and the widely acknowledged problems that result.
Include safeguards that require cases to be carefully screened when they are filed and that provide a mechanism for courts to dismiss speculative or otherwise nonviable claims at an early stage, as they would if litigated individually.
Encourage courts to rule on dispositive legal issues as early practical in the case, such as on novel theories of liability, general causation, preemption, or statutes of limitations that can affect all or many claims.

In addition, disclosure of third party litigation funding, which is intertwined with the growth of MDLs, should be adopted as part of an MDL rule or separately.

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