UPDATE, July 22, 2014. I wrote the below post a little over six months ago. As predicted, the BAP Fund problem was easily solved by removing the cap entirely. Also as predicted, the releases of third-parties were dropped. Judge Brody then approved the settlement, but it’s not over yet, for the big reason I mentioned: it really doesn’t make sense to certify this case as a class action for settlement purposes. Several objectors just filed a petition to the Third Circuit arguing the class is “doomed.”


Yesterday, Judge Anita Brody of the Eastern District of Pennsylvania, who oversees the consolidated NFL concussion litigation, issued an order denying preliminary approval to the $760 million (not including class action or MDL attorney’s fees) settlement reached last fall and detailed in a filing earlier this month. The settlement had already raised complaints that it was inadequate. Although the awards ranged up to $5 million (e.g., for a player who played for five years or more and was then diagnosed with ALS before age 45), it seemed that the bulk of the awards would be much lower (e.g., under $600,000 for long-time NFL players diagnosed with moderate dementia after age 60).


But that wasn’t why Judge Brody denied preliminary approval. The primary issue identified by Judge Brody is not, to me, a very big deal: based on the size of the award fund, she wrote, it seems possible that “not all Retired NFL Football Players who ultimately receive a Qualifying Diagnosis or their related claimants will be paid.” Given the sizes of the awards and the number of potentially qualifying plaintiffs, “it is difficult to see how the Monetary Award Fund would have the funds available over its lifespan to pay all claimants at these significant award levels.” Although the retired federal judge who mediated the settlement (Judge Layn Phillips) said that there were a variety of economic and actuarial analyses showing the adequacy of the fund, none of that was presented to the court, and so Judge Brody did not have enough of a record to preliminarily approve the settlement.


That’s a simple, obvious problem. It should be easy enough to fix: unless Judge Phillips did a sloppy job — which I highly doubt — then the production of these analyses, and then maybe some comparatively modest adjustments to the fund, should cure that issue.


But a footnote on page 10 raises a bigger problem: “I have additional concerns including, but not limited to, the adequacy of the BAP Fund and the release of the NCAA and other amateur football organizations. These concerns will also have to be addressed.” 


The BAP Fund issue raised by Judge Brody should be easy to resolve. The BAP Fund pays for monitoring of the players, and, like with the settlement fund, the motion to approve didn’t provide enough information to show that the BAP Fund was large enough to accomplish its purpose. The production of the expert reports plus, maybe, some minor adjustments to the size of the BAP Fund should resolve the issue.


The release of the NCAA and amateur clubs is a bigger deal, though. The settlement agreement itself includes this clause:


Section 18.5 Covenant Regarding Amateur Football Litigation.

Settlement Class Members who receive Monetary Awards will agree, as a condition precedent to receiving Monetary Awards, to dismiss pending, and/or forebear from bringing, litigation relating to cognitive injuries against the National Collegiate Athletic Association and/or other collegiate, amateur or youth football organizations and entities.


This clause strikes me as problematic. It is by no means unusual for a class-action settlement to release parties who aren’t paying anything – for example, class-action settlements routinely release corporate entities related to the main defendant, as well as the officers and directors and employees of the defendant and those related entities – but the problem here is the lack of any clear relationship between the claims in the NFL concussion litigation and suits against the NCAA or other amateur organizations. To settle with the NFL, players also have to give up their claims against the NCAA and others unaffiliated with the NFL. That could be a problem. See In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1135 (7th Cir. 1979) (denying class action settlement approval in part because “settlement is an agreement where both sides gain as well as lose something”), cert. denied 444 U.S. 870 (1979).


Stepping back, it seems the clause was demanded (and agreed to) for a purpose unrelated to the litigation. It’s goal is to shut down concussion litigation as a whole, and not just as against the NFL. It’s of course understandable why the NFL would want such a clause: to get this shocking issue out of the spotlight. It’s also understandable why the class representative plaintiffs and their lawyers agreed to it: to resolve the case and obtain their compensation.


But that doesn’t mean Judge Brody can simply approve it. She’s obligated to look at the settlement for the benefit of the whole class, and this release of uninvolved third parties who have not contributed to the settlement is a bit much to swallow.


Which brings me to what I think is really the biggest issue in the NFL concussion settlement: why is it being proposed as a class action settlement in the first place?


The Plaintiffs’ motion to approve the class action settlement references (on page 30), Judge Scirica’s concurrence in Sullivan v. DB Investments, Inc., 667 F. 3d 273 (3d Cir. 2011), which discussed how the Supreme Court’s decisions in Amchem Products Inc. v. Windsor, 521 U.S. 591 (1997) and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), have caused “a shift in mass personal injury claims to aggregate non-class settlements.” That’s certainly true. One of the largest complex litigations in recent memory, the Vioxx cases, were settled without any class action component. The DePuy ASR hip litigation is also in the process of settling without any class action component, and it involves a claims process not much different in nature from the proposed NFL concussion process.


It’s easy to see why class action settlements are so disfavored these days. At their best, class-action settlements are frustrating and difficult to get approved by the court. At their worst, class-action settlements are literally impossible. As footnote 11 of the Plaintiffs’ motion discusses, in Rodriguez v. National City Bank, 726 F.3d 372 (3d Cir. 2013), the parties negotiated a settlement of a case involving racially-discriminatory lending policies, the district court preliminarily approved it, and then the Supreme Court decided Wal-Mart v. Dukes, after which the district court and the Third Circuit felt compelled to deny approval — even though all of the parties agreed, and there were no sustained objections to the settlement.


Indeed, sometimes defendants even agree to class action settlements just to turn around and claim the court lacked jurisdiction to approve the settlement. BP tried that trick play to weasel out of their own oil spill claims process; a few days ago, the Fifth Circuit thankfully told them no, but I presume BP will move for an en banc hearing and, if that fails, certiorari with the Supreme Court. BP’s already vowed to keep fighting.


Putting aside the Supreme Court’s war against class actions, and the standard shenanigans pulled by corporations to evade responsibility (which The Onion nailed this week with “New Study Reveals Nothing Pfizer’s Lawyers Can’t Take Care Of”), class-action settlements are hard to approve for good reason: the settlement typically terminates the claims of every class member.


Sure, individual plaintiffs can typically “opt out” and pursue their claims on their own, but the high acceptance rate of most class-action settlements usually leaves the remaining plaintiffs without enough leverage to compel any future settlement, and sometimes without the ability to pursue the claim at all. Defendants like the NFL can afford to adopt a scorched-earth strategy, force the plaintiffs’ lawyers (who are on a contingent fee, and so have to fund the litigation themselves) into a war of attrition, and then litigate until the end of time. The NFL receives roughly $1 billion annually in stadium subsidies and tax favors, and they can write off all of their legal expenses as a business expense. Plaintiffs’ lawyers, in contrast, get no subsidies whatsoever: instead, they get a tax penalty, because they have to pretend that the money they spend on cases is actually a loan, rather than a business expense.


Which brings us back to the initial question: why is the NFL concussion settlement being treated as a class action? It doesn’t have to be; the cases can be settled the same way Vioxx was settled and how most mass torts are being settled.


The answer is simple: because the NFL is trying to “save football,” as its often said. They need to crush these cases completely, and they don’t want just a settlement of these particular cases, they want the whole issue of concussions to go away entirely, to preserve the exact current form of the highly profitable, highly dangerous sport we call football. They think if the helmets get bigger or the penalty flags start flying, then fewer people will watch.


Will the NFL get the result they’re looking for? Is such a settlement even possible in the Wal-Mart v. Dukes and Comcast v. Behrend era? I don’t know; I think Judge Brody’s order is merely the first step in what may be a very long process.