I found very interesting a recent post by Russell Jackson on his Consumer Class Actions and Mass Torts Blog, discussing a proposed settlement in In re Dry Max Pampers Litigation, which includes a ban on future class actions. This MDL involved claims that Dry Max diapers, a relatively new product introduced by Pampers, purportedly caused diaper rash, although CPSC and Health Canada studies failed to demonstrate any connection between these diapers and diaper rash. The proposed settlement involves equitable relief – providing certain educational information to consumers, and reinstating a money-back guarantee – along with cy pres relief (funding for certain medical research on infant skin health). The class members would give up their right to bring equitable claims (including incidental monetary damages that might be awarded on equitable claims), but would retain their right to sue for personal injuries and actual damages.
Most significantly, the class members would give up their right to bring future class action lawsuits on the issue presented by this case. Whether a denial of class certification by a federal court can bar future class actions in state courts is before the Supreme Court in the Smith v. Bayer Corp. case, which I previously posted about. This seems to be an effort to ensure that, regardless of the outcome of Smith v. Bayer Corp., class members in this case, assuming the settlement is approved, will not be able to bring new class actions, since they will get notice and expressly give up that right. I’m not sure I agree with Russell that Smith v. Bayer Corp. might make this settlement unworkable, but you never know what the Supreme Court might say. I agree that a ruling for the plaintiffs in Wal-mart v. Dukes could throw into question the aspect of this settlement that involves the class giving up certain rights to equitable claims for monetary relief. With the Supreme Court term ending soon, we’ll know where those things stand within a few weeks.
Also very interesting here is the proposal for notice to be entirely Internet based (a press release and website). Often one of the major obstacles to settling “nuisance” class actions is that notice costs may outstrip the case’s settlement value. If courts approve this form of notice, it will make it easier for parties to settle these kinds of cases.
Insurance companies may well be able to take advantage of this kind of a settlement if courts approve it. Insurers are often faced with putative class actions on which a denial of class certification is very likely, but plaintiffs’ attorneys tend to bring numerous putative class actions on the very same issue. This type of settlement could be a potential solution to the cost of repeated class action litigation on the same issue – individual insureds would not give up their right to sue for damages individually, but they would give up the right to bring a class action, in exchange for some equitable and/or cy pres relief. Another solution to this type of problem might be a favorable result in Smith v. Bayer Corp., depending on how that case comes down and how the opinion is written.