1. Class Actions and Mass Tort Litigation in a Global Context P rofessor Linda S. Mullenix Saipan Peonage Litigation

2. 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?

3. 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?

4. Saipan Peonage Litigation Questions: 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?

5. Saipan Peonage Litigation Does I v. The GAP, Inc., 2002 WL1000073 (D.N.Mariana Islands 2002)

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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?

21. Saipan Peonage Litigation Preliminary Approval of the Class Settlement

22. 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?

23. 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

24. 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

25. 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

26. 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)

27. 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

28. 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

29. 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?

30. Fine