The ALI Draft Proposal to Bypass the Aggregate Settlement Rule: Do Mass Tort Individual Clients Need (or Want) Group Decision-Making?

The American Law Institute has recently undertaken an entirely new project - Principles of Law of Aggregate Litigation. The bulk of project is devoted to class actions; however, a number of sections address various forms of non-class aggregations, and there is an extensive discussion of non-class settlements, including controversial aggregate settlement Rule 1.8(g) of ABA Model Rules of Professional Conduct limits lawyer's ability to participate making an settlement of or against without informed consent of each client, in which clients have been advised of the existence and nature of all claims or pleas involved and of participation of each person in The ALI Reporters propose to bypass settlement rule by creating two exceptions. The first exception applies when total value of aggregated claims is more than $5 million and total number of is 40 or more. In these cases, proposal allows individual claimants, after consultation with counsel, to agree in advance to be bound to a proposed settlement when 75% of approve settlement or, settlement significantly distinguishes among different categories of claimants, a separate 75 [%] vote of each category of claimants approves settlement. Limited judicial review is available, but only if challenge is brought within 90 days, and even then, settlement will be unenforceable only if challenger's waiver was not adequately informed or 75% approval or 40 person/$5 million. The second exception applies when advance client waivers have not been obtained. Here lawyer may seek approval for fairness and adequacy of an settlement, but proposal provides no guidelines for determining under what circumstances courts should agree to do so. The reporters give two separate reasons for relaxing settlement rule. First, they argue that rule impedes multi-party settlement and is unnecessary to protect clients, given 75% approval requirement. Second, they argue that waivers of important rights are routinely granted, and there is no reason not to honor such waivers to enable group decision-making. This article challenges reporters' assumptions and argues in favor of maintaining status quo. The author argues that burden is on reporters to justify change and that they have not met that burden with respect to either of suggested rationales.