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 (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 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?