When a defendant settles a mass tort, it wants to achieve peace; one of the worst things that can happen is for plaintiffs to attempt to pursue claims that were and ought to have been extinguished in the settlement. An important version of this issue arises in the Vioxx mass tort. See In re: Vioxx Products Liability Litigation, No. 12-30560 (5th Cir. 2012).
Amicus, the Product Liability Advisory Council, weighed in on the issue, emphasizing the policy implications. Merck entered into a class action settlement in the Vioxx MDL. Afterwards, plaintiffs in Missouri sought to pursue claims that had already been resolved in the settlement. Specifically, the state court plaintiffs sought recovery of alleged economic damages for the price of Vioxx prescriptions that were owned, not by the Missouri plaintiffs, but by the MDL plaintiffs who settled their claims and were paid already. The MDL court stepped in, issuing an injunction under the All Writs Act, to protect and effectuate its orders regarding the settlement. The district court concluded that the injunction was necessary to prevent interference with years of effort, at great expense, to reach the massive settlement. Plaintiffs appealed.
PLAC noted that an MDL court has authority and flexibility to decide a case and to manage it, including to effectuate binding settlements that state courts may not frustrate or imperil. Injunctions in aid of the settlement are valid exercises of a federal court's authority under the All Writs Act.
The policy underlying this view is that, otherwise, the finality of virtually any class action involving pendent state claims could be defeated by subsequent suits brought in those states, asserting rights derivative of those already released by class members. As a practical matter, no defendant in consolidated federal court actions could reasonably be expected to consummate a settlement of the claims if those claims could later be reasserted under state law by different plaintiffs seeking recovery of the money already paid to the federal court plaintiffs.
The "clear and present risk" to the finality of the settlements reached, argued PLAC, was the duplication of effort, the re-litigation of claims that were settled, and a possible double recovery of the damages. The success of any federal court settlement is dependent on the parties' ability to agree to a release of all claims in exchange for fair consideration; if any of those claims can be re-litigated, there could be no certainty about the finality of the federal settlement, nor the amount a defendant will pay. This would threaten settlement efforts by the district courts, and hamper the utility of the MDL forum. Indeed, MDL litigation presents a unique opportunity to resolve large numbers of claims in an efficient manner. Parallel state court actions that functionally would require defendants to pay twice on the same claims would severely curtail the incentive to settle.
PLAC argued that the had been careful not to over-reach; the injunction forbids recovery only of the claims that have already been settled.