Appendix — Lombardi v. Dow Chemical Co.

. | ae “oa Court, U.S.

87-4 36 | ,E1

FJ

No. SEP 15 1987

IN THE a

Supreme Court of the United States —

OCTOBER TERM, 1987

VINCENT C. LOMBARDI, et al, Petitioners,

Vv.

DOW CHEMICAL COMPANY, et al., Respondents.

RICHARD PINKNEY, et al., Petitioners,

Vv.

DOW CHEMICAL COMPANY, et al., Respondents.

CLARA FRATICELLI, et al., Petitioners,

Vv.

DOW CHEMICAL COMPANY, et al., Respondents,

and

GERALD HOGAN, Petitioner,

v.

DOW CHEMICAL COMPANY, et a/., Respondents.

In re “Agent Orange” Product Liability Litigation

SINGLE APPENDIX

(Volume II, Pages 621a-791a)

WAYNE MICHAEL MANSULLA

(Counsel of Record)

ASHCRAFT & GEREL

2000 L Street, N.W., Suite 700

Washington, D.C. 20036

(202) 783-6400

Counsel for Petitioners

iene anne aeatneminaiien

CASILLAS PRESS INC. — 1717 K STREET NW WASHINGTON DC 20036 — 223-1220

a

Vi

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(i)

INDEX

Volume I

Description Page

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, 506 F.Supp. 762 (1980) .................. la

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, 534 F.Supp. 1046 (1982) ................ 76a

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, 565 F. Supp. 1263 (1983) .............. 102a

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, 597 F.Supp. 740 (1984) ................ 13Sa

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, 100 F.R.D. 718 (1983) ................ 456a

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, 611 F.Supp. 1223 (1985) ............... 492a

District Court Opinion: Jn re “Agent Orange” Product

Liability Litigation, Lilley v. Dow Chemical Co.,

OO rs Caer I oh rere ke ee oR hahaa ea aens's 580a

Volume II

District Court Opinion: /n re “Agent Orange” Product

Liability Litigation, Fraticelli v. Dow Chemical Co.,

ee SN cw ai renee cd kiana bees 62la

District Court Opinion: /n re “Agent Orange” Produc!

Liability Litigation, Hogan v. Dow Chemical Co..,

ig em 8. ee ee ree 630a

District Court Opinion: /n re “Agent Orange” Product

Liability Litigation, 635 F.2d 987 (1980) ................... 641a

Court of Appeals Opinion: Jn re Diamond Shamrock

Chemicals Co., 725 F.2d 858 (1984) ............ ..... 668a

(ii)

Page

Court of Appeais Opinion: In re “Agent Orange” Product

Liability Litigation, 818 F.2d 145 (1987) ................... 676a

Court of Appeals Opinion: Jn re “Agent Orange” Product

Liability Litigation, 818 F.2d 187 (1987) ................... 752a

Court of Appeals Opinion: Jn re “Agent Orange” Product

Liability Litigation, Hogan v. Dow Chemical Co.,

Fraticelli v. Dow Chemical Co., 818 F.2d 210 (1987) ........ 766a

Court of Appeals Orders Denying Petitions for

OL PIE ee Pee cies 777a

Court of Appeals Orders Staying Issuance of the

I 6 SS xs ca dctewt woratl as cue Cone ey On eee 780a

List of Parties Below:

Crees WED: bo ci exsvene eee oe oe 786a

i

621la

In re “AGENT ORANGE” PRODUCT

LIABILITY LITIGATION.

Clara FRATICELLI, et al., Plaintiffs,

Ve

The DOW CHEMICAL CO., et al.,

the United States of america, etc.,

Defendants.

MDL No. 381.

CVD-82-1734.

United States District Court,

E.D. New York

May 9, 1985.

Robert C. Taylor, Jr., Ashcraft & Gerel, Washington,

D.C., Michael R. Salling, Fernandes, Salling & Salling,

Kapaa. Kauai, Hawaii, for pla ntiffs.

Leonard Rivkin, Rivkin, Leff, Sherman & Radler,

Garden City, N.Y., Philip Pakula, Townley & Updike;

Wendell B. Alcorn, Jr., Cadwalader, Wickersham & Taft;

William Krohley, Kelley, Drye & Warren; Thomas Beck,

Arthur, Dry & Kalish; Bruce Hecker, She & Gould, New

York City, of counsel; David R. Gross, Budd, Larner,

Kent, Gross, Picillo & Rosenbaum, New York City; Paul

V. Esposito, Lewis, Overbeck & Furman, Chicago, III.;

Henry G. Miller, Clark, Gagliardi & Miller, White Plains,

N.Y.; Tany S. Horg, Atty. Gen.; Michael A. Lilly,

Lawrence K. Lau & Gerald C. Yoshi, Deputy Attys. Gen.,

Honolulu, Hawaii; Arvin Maskin, Robert C. Longstreth,

Dept. of Justice, Washington, D.C., for defendants.

622a

WEINSTEIN, Chief Judge.

I. INTRODUCTION

Defendants have moved to dismiss or in the alternative

for summary judgment. They are the seven manufacturers

of Agent Orange; its purchaser, the United States; and the

former Regents of the University of Hawaii which tested

the product. Plaintiffs Clara Fraticelli, wife of William

Fraticelli (deceased), James K. Oshita, and Masao Takat-

suki, sue on behalf of themselves and a class of 35,000 un-

named residents of Kauai County, Hawaii, alleging that

they were all harmed by exposure to Agent Orange.

Jurisdiction is premised on 28 U.S.C. §§ 1331, 1332, 42

U.S.C. § 1983, and the Federal Tort Claims Act, 28

U.S.C. §§ 1346(b), 2671-80. For the reasons stated below,

the motions must be granted.

Il. FACTS

Fraticelli, Oshita, and Takatsuki were civilians

employed at the University’s Kauai Experimental Station

for Tropical Agriculture. Fraticelli worked in the fields as

an Equipment Operator from 1946 until his retirement in

1972. Oshita was similarly employed from 1961 to 1982

and Takatsuki from 1961 to 1980.

In 1966 and 1967 the University, pursuant to a contract

with the United States Department of Defense, conducted

tests by spraying on its fields chemicals including arsenic,

benzol, beryllium, zirconium, cadmium, chrome, lead,

flourine, 2, 3, 7, 8-tetrachlorodibenzo-p-dioxin (“TCDD”

or “Dioxin”) and other herbicides.

All three employees claimed exposure during a 1967 in-

cident. They stood by their tractors, which had been mark-

ed with flags as targets for aerial herbicide spraying, and

623a

were “drenched” by a substance they believe was Agent

Orange manufactured by one or more of the defendants.

They also believe they were exposed on two other occa-

sions. No protective clothing or showers had been pro-

vided.

Fraticelli died in April 1981 as a result of lung and

kidney cancer. He had a history of bladder cancer (which

did not recur after surgery), a metastatic brain tumor,

priapism dating back to 1962, and migraine headaches

dating back to 1946. He drank “2 to 3 shots of whiskey per

day for many years,” had family problems to which he at-

tributed his headaches and tensions, and smoked over one

pack of cigarettes per day, which his doctors told him was

“excessive.” (Hospital Record 7/23/73.)

Oshita was diagnosed as having liver dysfunction in

1969. In 1971 he had a kidney stone and was diagnosed as

having cancer of the bladder, which has not recurred since

surgery at that time. In 1980 chronic hepatitis was present,

and he alleged that he aiso suffered from diabetes, anemia

and chioracne at one time or another. He claims he discon-

tinued “moderate” drinking in 1971 and smoked one pack

of cigarettes per day for over 30 years. His hospital

records indicate no chloracne but do show that he “smokes

at least 1% packs a day and used to drink quite a lot of

alcoholic drinks.” (Hospital Record 11/23/71.) His father

died of stomach cancer at age 60. His maternal grand-

father died of cancer, and his two brothers both have

histories of kidney trouble.

Takatsuki was diagnosed as having cancer involving the

undersurface of the tongue and floor of his mouth in late

1978. He has a 60-80 pack per year history of smoking and

also a moderate alcohol intake, “mostly bourbon.”

(Medical Center Record 10/10/78.) He was treated with

624a

radiation therapy and there has been no recurrence as of

February, 1985. This plaintiff also claims to suffer from

chloracne although there is no mention of this in his

medical records supplied to the court.

In none of the extensive medical records of treating

physicians and hospitals supplied by plaintiffs’ counsel

could the court find any reference to Agent Orange.

Nevertheless, plaintiffs’ expert, Dr. Samuel P. Epstein,

had no doubt that plaintiffs’ various complaints were

caused by Agent Orange even though he had never seen

any of the plaintiffs. See Epstein affidavit, March 9, 1985;

see also the full discussion of Dr. Epstein’s evidence in /n

re “Agent Orange” Product Liability Litigation, 611 F.

Supp. 1223 (E.D.N.Y. 1985). His is the only evidence sup-

porting plaintiffs’ case. The facts in the instant case re-

quire rejection of Dr. Epstein’s proposed testimony. /d.

All three plaintiffs filed workers’ compensation claims

in which they listed each other as witnesses to the claimed

1967 incident and asserted knowledge of the causal nexus

between their illnesses and exposure to chemicals:

Fraticelli’s claim, filed October 1, 1979, asserts knowledge

in September, 1979; Oshita’s claim, filed July 12, 1979,

asserts knowledge on July 11, 1979; and Takatsuki’s

claim, filed January 7, 1981, asserts knowledge at an

unspecified day in January, 1979. Mrs. Fraticelli field a

workers’ compensation death benefit claim on May 28,

1981.

In their workers’ compensation claims plaintiffs

characterize their injuries as having been caused by a host

of toxic substances:

latent slow acting diseases from occupational ex-

posure ito arsenic and/or benzol, and/or

beryllium, and/or zirconium, and/or cadmium,

625a

and/or chrome, and/or lead, and/or fluorine,

and/or other toxis chemicals including but not

limited to dibenzo-p-dioxin (TCDD or Dioxin)

and other toxic herbicides, including but not

limited to phenoxy herbicides.

(Emphasis supplied.)

On April 21, 1982 the State of Hawaii Department of

Labor issued its decision accepting liability in both

Fraticelli claims and awarding his widow compensation in

an aggregate amount of slightly more than $73,000. On

October 19, 1981, the Department awarded James Oshita

slightly more than $23,000 for a period of total disability,

for permanent partial disability, and for disfigurement

from surgical scars. Plaintiff Takatsuki has indicated only

that his workers’ compensation claims were pending;

based upon their common exposure and the Department

of Labor decision as regards Fraticelli and Oshita, it is

assumed, without objection from counsel, that Takatsuki

has also obtained workers’ compensation.

On January 16, 1979 plaintiffs’ Hawaiian counsel en-

tered into an agreement with the Agent Orange Plain-

tiffs’ Management Committee to join in the Agent Orange

Product Liability Litigation, MDL No. 381. Yet plaintiffs

did not file their complaint, Civ. No. 82-0021, in the

Hawaii district court until January 11, 1982. The

Multidistrict Litigation Panel then transferred the Hawaii

action to the Eastern District of New York.

All three plaintiffs submitted administrative claims to

the United States on January 7, 1981. There is no informa-

tion indicating that these claims have been acted upon by

the government.

626a

Ill. LAW

A. Class Action

Plaintiffs in this action fail to meet the prerequisites of a

class action in any respect save numerosity. Fed.R.Civ.

P.23. The population-at-large of Kauai County, Hawaii

cannot make any claim in common with that based on in-

juries sustained by these employees during experiments at

the University of Hawaii. No harm to the residents of

Kauai County from contaminated herbicides has been

shown. Plaintiffs have not demonstrated a common in-

terest with the populace relative to their own work ex-

periences at the Experimental Station. Class certification

was properly denied.

B. Stature of Limitations

Plaintiffs’ claim against the chemical companies and

the University’s Former Regents is governed by the two-

year Hawaii statute of limitations for tort actions, which

provides:

Actions for the recovery of compensation for

damage or injury to persons or property shall be

instituted within two years after the cause of ac-

tion accrued * * *.

Haw. Rev. Stat. § 657-7 (1976).

The Supreme Court of Hawaii has held that a claim ac-

crues when the plaintiff discovers, or reasonably should

have discovered, the “negligent act, the damage, and the

causal connection between the former and the latter.”

Yamaguchi v. Queen’s Medical Center, 65 Haw. 84, 648

P.2d 689, 693-94 (1982).

Plaintiffs Oshita and Takatsuki and plaintiff Fraticelli’s

husband all nnew of the act, the damage and the causal

627a

nexus more than two years prior to the filing of this action

on January 11, 1982. Oshita filed a workers’ compensation

claim for the injuries on July 12, 1979; he stated that he

knew “of his disability resulting from his exposure to”

phenoxy herbicides and dioxin on July 11, 1979. Takat-

suki filed a Workers’ Compensation claim for the injuries

1 January 7, 1981; he stated that he knew “of his disabili-

ty resulting from exposure to” phenoxy herbicides and

dioxin “in January, 1979.” When Fraticelli filed a

Workers’ Compensation claim on October 1, 1979 for his

alleged injuries, he stated that he knew “of his disability,

resulting from exposure” to phenoxy herbicides and dioxin

“in September 1979.”

The latest date on which plaintiffs may be said to have

“discovered” the causal connection was September 1979,

more than two years prior to institution of the Hawaii

district court action. These are all civilian claims. The

certification of veterans’ claims as a class action had no

effect in tolling the statute of limitations. There was no

tolling of the statute by any concealment.

Wrongful death claims must be filed within two years of

the date of death. Haw. Rev. Stat. § 663-3. Fraticeili died

on April 27, 1981. The wrongful death action was timely

filed on January 11, 1982. As indicated below, this claim

must be dismissed for other reasons.

Accordingly, all claims of plaintiffs Oshita and Takat-

suki against the chemical companies and the Former

Regents of the University of Hawaii and all claims of

plaintiff Fraticelli, other than for wrongful death, are bar-

red.

The Federal Tort Claims Act requires, as prerequisite to

suit against the United States, a filing of an administrative

-~

—~<

628a

claim within two years of accrual. 28 U.S.C. § 2401(b)

(Supp. 1984).

Certified mail receipts show that administrative claim

forms were received by the government on January 12,

1981. While the argument of the government that plain-

tiffs must have known of their claims prior to January 12,

1979 is persuasive, there is no need to decide that factual

question now. There is also no point in analyzing the

government’s contention that plaintiffs have failed to ex-

haust their administrative remedies. See 28 U.S.C.

§ 2675(a).

C. Election of Remedies

Plaintiffs’ claim against the Former Regents of the Uni-

versity of Hawaii is barred by their receipt of workers’

compensation funds. Haw. Rev. Stat. § 386-5. The statute

provides:

The rights and remedies herein granted to an

employee or his dependents on account of a work

injury suffered by him shall exclude all other

liability of the employer to the employee, his

legal representative, spouse, dependents, next of

kin, or anyone else entitled to recover damages

from the employer, at common law or otherwise,

on account of the injury.

The statutory compensation remedy for workers is ex-

clusive. Evanson v. University of Hawaii, 52 Haw. 595,

483 P.2d 187 (1971). See also Jordan v. Rita, 670 P.2d 457

(S. Ct. Haw. 1983).

629a

D. Causation

Plaintiffs have submitted scientific expert testimony

in the form of medical affidavits. These affidavits suf-

fer from the same defects as those discussed at length

in the decision dismissing claims of veterans who opted

out of the class. In re “Agent Orange” Product Lia-

bility Litigation, 611 F.Supp. 1223 (E.D.N.Y. 1985).

The same Epstein affidavits already rejected, id. at 1238,

have also been relied upon by plaintiffs in the instant case

as their main support for resisting summary judgment.

As with the veteran plaintiffs, there is no admissible

evidence that Agent Orange caused plaintiffs’ illnesses.

Like many veterans, Fraticelli and Oshita smoked and

consumed alcohol. All plaintiffs freely admit exposure to

many toxis chemicals other than Agent Orange. There is

evidence of family histories of cancer and kidney disease.

Some of Fraticelli’s symptoms actually predated his alleg-

ed exposure to dioxin. As with the veterans who opted out,

the expert and other evidence that these plaintiffs rely

upon “fail(s) to show how the myriad illnesses at issue are

more likely caused by Agent Orange than by something

else. Their conclusions are wholly speculative.” 611 F.

Supp. at 1253.

The motion for summary judgment by all defendants

against all plaintiffs must be granted. The action is

dismissed without costs or disbursements. This opinion

constitutes a final judgment.

SO ORDERED.

630a

In re “AGENT ORANGE” PRODUCT

LIABILITY LITIGATION.

Gerald HOGAN, M.D., Plaintiffs,

The DOW CHEMICAL CO., et al.,

Defendants.

MDL No. 381, CV-81-991.

United States District Court,

E.D. New York.

May 10, 1985.

Robert C. Taylor, Jr., Ashcraft & Gerel, Washington,

D.C., for plaintiffs.

Leonard Rivkin, Rivkin, Leff, Sherman & Radler,

Garden City, N.Y., Philip Pakula, Townley & Updike;

Wendell B. Alcorn, Jr., Cadwalader, Wickersham & Taft;

William Krohley, Kelley, Drye & Warren, Thomas Beck,

Arthur, Dry & Kalish, David R. Ross, Budd, Larner,

Kent, Gross, Picillo & Rosenbaum, New York City; Paul

V. Esposito, Lewis, Overbeck & Furman, Chicago, III.;

Henry G. Miller, Clark, Gagliardi & Miller, White Plains,

N.Y., for defendants; Bruce Hecker, Shea & Gould, New

York City, of counsel.

Arvin Maskin, Dept. of Justice, Washington, D.C., for

third-party defendant United States.

MEMORANWJUM, ORDER, and JUDGNINT

63la

WEINSTEIN, Chief Judge:

Defendants, seven chemical companies who manufac-

tured the herbicide Agent Orange, have moved to dismiss

Dr. Gerald Hogan’s claims or in the alternative for sum-

mary judgment. Fed. R. Civ. P. 12(b), 56(b). They also

seek dismissal for failure to comply with a discovery

order. Fed. R. Civ. P. 37(b) and (d). Plaintiff opposes

these motions and urges that diversity of citizenship did

not exist at the time the suit was brought, making removal

to federal court improper.

' As indicated below, removal was proper. Plaintiff’s

willful failure to comply with a discovery order and his

failure to produce any evidence sufficient to show a causal

connection between his injuries and exposure to Agent

Orange require dismissal.

I. FACTS

Hogan is a medical doctor who worked as a civilian con-

tract physician for the United States Agency for Interna-

tional Development in a hospital in Vietnam in 1966. He

was in Vietnam for no more than four months. During the

first month he worked in a surgical and medical hospital

located in the center of the City of Da Nang. He left the ci-

ty only once during that month to visit a Special Forces

camp 75 miles southwest of the city. The rest of his time in

Vietnam he was a hospital patient.

Hogan claims that during that first month he was expos-

ed to Agent Orange because of his physical contact with

Vietnamese who had been exposed to Agent Orange and

because dioxin was in Da Nang dust. He was diagnosed in

632a

Vietnam as having had an allergic reaction to penicillin or

other allergens, an allergy which plaintiff was known to

have had prior to his arrival in that country.

Upon his return from Vietnam, plaintiff was found to

have allergic reactions to house dust, airborne molds,

grasses, ragweed, cattle and dog hair, feathers, wool, silk,

chocolate, and cola. He resumed his medical practice in

cardiovascular surgery at Georgetown University in 1967,

but left this position in 1971 due to declining health.

Currently, plaintiff claims that the following diseases

and symptoms over the last 18 years result from his ex-

posure to Agent Orange: elevated triglicerides; elevated C4

(B1-E-Globulin); immune deficiency; environmentally

triggered vasculitis; hemi Parkinson’s disease; acne-like

rash of the premalar area; weakness in extremities (possi-

ble peripheral neuropathy); hypoactive reflexes (possible

peripheral neuropathy); chest pains; palpitations; and ar-

rythmia.

The skin rashes, progressive vasculitis, and general

deterioration of neurological functions were identified in

1975. The remaining illnesses were diagnosed in 1978 and

subsequently.

II. PROCEDURAL HISTORY

On January 29, 1981, plaintiff sued the chemical com-

panies in the Second Judicial District Court of Nevada. He

charged that the defendants knew of the danger of contact

with Agent Orange and failed to warn him.

In February 1981, defendants removed the suit to

federal court based on diversity of citizenship. 28 U.S.C.

§§ 1332 and 1441. Plaintiff did not challenge the re-

moval. Once in federal court, the action was transferred

633a

to this court as part of the “Agent Orange” product liabili-

ty litigation, MDL 381.

In August 1984, defendants moved to dismiss or, in the

alternative, for summary judgment. Plaintiff did not reply

and defendants obtained a default judgment. Plaintiff's

Rule 60 motion to reopen was granted and defendants

renewed their motions.

Ill. LAW

A. Jurisdiction

Responding to defendants’ motion to dismiss or for

summary judgment plaintiff suggests that no diversity ex-

ists. He states that since 1979 he has spent time in Califor-

nia, Hawaii, Mexico, Texas, Florida and the Bahamas as

well as in Nevada. It is to this jurisdictional issue that we

first turn. McNutt v. General Motors Acceptance Corp.,

298 U.S. 178, 182-84, 56 S.Ct. 780, 782-83, 80 L.Ed.

1135 (1936).

A statement of residence says little about domicile; it

only declares where a party is living. John Birch Society

v. National Broadcasting Co., 377 F.2d 194, 199 (2d Cir.

1967). To change domicile, a person must take up

residence in a different place with the intent of remaining

there. Mas v. Perry, 489 F.2d 1396, 1399-1400 (Sth Cir.),

cert. denied, 419 U.S. 842, 95 S. Ct. 74, 42 L. Ed. 2d 70

(1974)

Diversity at the time suit was brought provides suffi-

cient predicate for jurisdiction. Stevens v. Nichols, 130

U.S 230, 231, 9 S.Ct. 518, 519, 32 L.Ed. 914 (1889).

Jurisdiction having once been vested, it is not divested by a

later change of domicile. Dery v.-Wver, 265 F.2d 804, 808

(2d Cir. 1959).

634a

Since plaintiff has never claimed a domicile other

than Nevada, he is a citizen of Nevada. All the evidence

supports that conclusion. In his Rule 60 motion plaintiff's

affidavit refers to Nevada as his “home state” when he

brought suit. See Sun Printing and Publishing Association

v. Edwards, 194 U.S. 377, 382, 24 S.Ct. 696, 697, 48 L.

Ed. 1027 (1904). In their removal papers, defendants as-

serted that plaintiff was a citizen of Nevada and plaintiff

failed to deny or to challenge removal; failure to object at

that time can be taken as an admission. Wilson v.

Republic Iron & Steel Co., 257 U.S. 92, 97-98, 42 S. Ct.

35, 37-38, 66 L. Ed. 144 (1921). Even now, his home ap-

pears to be in Nevada for that is where he repaired to give

his deposition. The court has diversity jurisdiction.

B. Rule 37 Motion to Dismiss

Pursuant to the Magistrate’s Pretrial Order Number 36,

defendants began what was to have been two days depos-

ing plaintiff in his home in Las Vegas on March 21, 1985.

The deposition began in the morning and lasted until

noon. After lunch, plaintiffs attorney informed defen-

dants’ counsel that plaintiff was not able to continue with

the deposition. Plaintiff claimed to be suffering from car-

diac arrhythmia resulting from atmospheric conditions.

There was no claim in the record of fatigue or mental con-

fusion.

The following day, plaintiff refused to continue and

suggested that he was considering discontinuing the suit.

On March 27, the issue of the suspended deposition was

raised with the Magistrate by telephone. At that time

plaintiff declared that he would continue the suit but he

sought an indefinite suspension of the deposition because

of ill health. In support of his contention he submitted an

635a

affidavit of Dr. William Rea, a Dallas physician. Based on

a telephone call from plaintiff in Las Vegas to Dr. Rea in

his Texas office, Dr. Rea concurred in plaintiff’s self-

diagnosis that plaintiff was suffering from cardiac ar-

rhythmia, fatigue and mental confusion resulting from the

stress of the deposition.

Defendants objected to plaintiffs request, arguing that

the telephonic diagnosis without’ any tests or physical ex-

amination was insufficient. The Magistrate ordered an in-

dependent examination. It was conducted on April 1, 1985

by Dr. Samuel Spagnolo, the Director of the Division of

Pulmonary Disease and Allergy and Professor of Medi-

cine at George Washington University School of Medi-

cine.

Dr. Spagnolo found plaintiff’s electrocardiogram nor-

mai and discovered no undue fatigue or mental confusion.

On April 2, in a telephone conference with all parties and

the Magistrate, plaintiff offered no additional evidence in

support of his request for an indefinite suspension of his

deposition. Finding that plaintiff had not sustained his

burden, the Magistrate ordered the deposition to continue,

but reduced it to one day’s duration. In consideration of

plaintiff's allergies, the Magistrate suggested that the

deposition be held in a hospital on April 4. Speed was

essential since a final argument on the long-pendiny mo-

tion for summary judgment had been scheduled for April

15.

On April 3, plaintiff's counsel informed the Magistrate

that plaintiff refused to abide by the discovery order

because he felt physically unable to do so. He did not wish

to voluntarily dismiss the suit but he was aware of the

potential consequences of his refusal to obey the

636a

Magistrate’s order. Plaintiff claimed that Dr. Spagnolo’s

report was inaccurate and that he suffered from cardiac

arrhythmia during the examination and continued to do

sO.

Defendants moved to have the claim dismissed. Fed. R.

Civ. P. 37(b)(2). A hearing on this motion was held on

April 15 by the court. There was no indication at the argu-

ment that plaintiff intended at any time to comply with the

Magistrate’s order.

Rule 37(b)(2) permits a wide panoply of sanctions

against a party who fails to obey a discovery order. It pro-

vides in relevant part that:

If a party * * * fails to obey an order to pro-

vide or permit discovery* * * the court in which

the action is pending may make such orders in

regard to the failure as are just, and among

others the following:

xe * kK KK

(C) An order striking out pleading or parts

thereof, or staying further proceedings until the

order is obeyed, or dismissing the action or pro-

ceeding or any part thereof, or rendering a judg-

ment by default against the disobedient party

* * *

(Emphasis supplied.)

The strength of any sanction under the Rule must be

proportionate to the degree and effect of a party’s defi-

ance of the discovery process and orders of the court. /n-

surance Corp. of Ireland, Ltd. v. Compagnie des Baux-

ites, 456 U.S. 694, 192 S. Ct. 2099, 72 L. Ed. 2d 492

(1982). While courts are reluctant to do so, in extreme

cases they have an obligation to apply the ultimate sanc-

637a

tion of dismissal. National Hockey League vy.

Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S. Ct.

2778, 49 L.Ed.2d 747 (1976); Societe Internationale Pour

Participations Industrielles et Commerciales, S.A., 357

U.S. 197, 78 S. Ct. 1087, 2 L. Ed. 2d 1255 (1958); Paine,

Webber, Jackson & Curtis, Inc. v. Inmobiliaria Melia de

Puerto Rico, Inc., 543 F.2d 3 (2d Cir. 1976), cert. denied,

430 U.S. 907, 97 S. Ct. 1178, 51 L. Ed. 2d 583 (1977);

Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974).

Dismissal is particularly appropriate when, despite a clear

warning, a party willfully disobeys a court order. See Na-

tional Hockey League v. Metropolitan Hockey Club, Inc.,

427 U.S. 639, 96 S. Ct. 2778, 49 L. Ed. 2d 747 (1976); see

also Note, “The Emerging Deterrence Question in the Im-

position of Discovery Sanctions,” 91 Harv. L. Rev. 1033,

1048-50 (1978).

Failure to cooperate in discovery is particularly ob-

jectionable when there is a substantial doubt about

whether there are facts sufficient to support a claim.

Fonseca v. Regan, 783 F.2d 944 (2d Cir.), cert denied,

U.S. , 105 S. Ct. 249, 83 L. Ed. 2d 1986 (1984);

Trans World Airlines, Inc. v. Hughes, 332 F.2d 602, 614

(2d Cir. 1964), cert. dismissed, 380 U.S. 249, 85 S. Ct.

934, 13 L. Ed. 2d 818 (1965). The plaintiff, having placed

the origin of his illness in issue, may not now refuse to

cooperate with defendants in discovery concerning the

crucial question of causation. A willful failure to comply

with the court’s order may be taken as an admission that

plaintiff's claims lack merit. Hammond Packing Co. v.

State of Arkansas, 212 U.S. 322, 351, 29 S. Ct. 370, 380,

53 L. Ed. 530 (1909).

The very nature of plaintiff's medical history creates

a serious question with respect to any causal connec-

tion between Agent Orange and his physical condition,

See, e.g., discussion of lack of causation in In re “Agent

Orange” Product Liability Litigation, 611 F. Supp. 1223,

638a

1260-63 (E.D.N.Y. 1985) dismissal of claims of veterans

who opted out of class). Given those initial doubts, plain-

tiff’s refusal to comply with the reasonable orders of the

Magistrate constitutes a gross form of spoliation, warrant-

ing an inference of lack of substance to the claim.

Plaintiff contends that his failure to obey is not willful

but instead results from his poor health and therefore does

not warrant a severe sanction. Societe Internationale Pour

Participations Industrielles et Commerciales, S.A., 357

U.S. 197, 212, 78 S. Ct. 1087, 1096, 2 L. Ed. 2d 1255

(1958); Flaks v. Koegel, 504 F.2d 702, 708-09 (2d Cir.

1974). He has failed, however, to produce any believable

evidence or raise any serious issue regarding Dr.

Spagnolo’s diagnosis and examination. The court concurs

with the Magistrate’s finding that the plaintiff’s claim of ill

health is untrue and is an excuse to prevent being embar-

rassed by a searching deposition. See Weisberg v.

Webster, 749 F.2d 864, 871 (D.C. Cir. 1984). Plaintiff

failed to offer any credible support for his argument when

he had the opportunity before the Magistrate and this

court. Diaz v. Southern Drilling Corp. 427 F.2d 1118,

1127 n. 4 (Sth Cir.), cert. denied, 400 U.S. 878, 91 S. Ct.

118, 27 L. Ed. 2d 115 (1970); Mohamed v. American Ex-

port Lines, 94 F.R.D. 327 (E.D.N.Y. 1982).

Ordinarily a single pretrial! violation would not war-

rant dismissal. United States Freight Co. v. Penn Central

Transportation Co., 716 F.2d 954 (2d Cir. 1983). When,

however, a party able to comply with a magistrate’s order

compelling discovery of an essential matter in his com-

plaint fails to do so while understanding the full range of

sanctions that may be marshalled against him, the court

has little option but to dismiss his suit to safeguard the

discovery process and the rights of other parties to the

suit. National Hockey League v. Metropolitan Hockey

Club, Inc., 427 U.S. 639, 96 S. Ct. 2778, 49 L. Ed. 2d 747

639a

(1976); Cine Forty-Second Street Theatre Corp. v. Allied

Artists Pictures Corp., 602 F.2d 1062 (2d Cir. 1979).

Plaintiff's obstinacy prejudices defendants by foreclosing

them from discovering further information as a basis for

their motion for summary judgment.

This court relies on the power of its Magistrates to con-

trol discovery informally with the cooperation of counsel

and parties. See United States District Court for the

Eastern District of New York, Standing Orders of the

Court on Effective Discovery in Civil Cases passim (effec-

tive March 1, 1984); Revised Report of the Special Com-

mittee on Effective Discovery in Civil Cases for the

Eastern District of New York (Wesely Committee), id. at

19 ff. The policy of the court, following the Wesely Com-

mittee and the bar’s recommendations, is to use sanctions

sparingly. Jd. at 51-54. Yet ignoring a party’s blatant at-

tempt to frustrate discovery would weaken the system,

denigrating the cooperative and forthcoming spirit among

litigants that the Standing Orders are designed to en-

courage and foster. Here the Magistrate did everthing

possible to obtain compliance with the Federal Rules of

Civil Procedure and this court’s Standing Orders, using

the telephone conferencing methods the court encourages.

Id. passim. The extreme sanction of dismissal must be ap-

plied.

C. Summary Judgment

Defendants have also moved to dismiss or for sum-

mary judgment on the grounds that plaintiff has failed

to show (1) that he was ever exposed to Agent Orange,

and (2) that Agent Orange caused the illnesses from which

he is allegedly suffering. The legal standards governing

these issues have alrcady been described. Jn re “Agen

Orange” Product Liability Litigation, 611 F. Supp. 1223

(E.D.N.Y. May 8, 1985). The facts in the instant case pro-

vide no basis for a finding of causality.

640a

Even accepting Dr. Hogan’s rather bizarre theory that

he was exposed to Agent Orange through city dust and

contact with his patients, there is no proof that the

diseases and symptoms suffered by him were caused by

Agent Orange.

The court has taken judicial notice of the dispositive

nature of the epidemiological studies on the issue of lack

of causation. See In re “Agent Orange” Product Liability

Litigation, 611 F. Supp. 1223 (E.D.N.Y. May 8, 1985).

Defendants add support to this evidence with the

testimony of three specialists, each of whom flatly denies

any causation. Plaintiff's experts are equivocal, one of

them referring to plaintiff's diseases as presenting a

“mystery.” None of plaintiff's experts show familiarity

with the critical studies of Agent Orange. Plaintiff’s expert

testimony provides no basis upon which a trier of fact

could rationally conclude that plaintiffs alleged injuries

were more likely than not caused by Agent Orange. They

would be excluded. /d.

IV. CONCLUSION

Were the case not dismissed under Rule 37, it would

have to be dismissed under Rule 56. Dr. Hogan’s claims

are dismissed. This opinion constitutes a final judgment.

SO ORDERED.

641la

In re “AGENT ORANGE” PRODUCT

LIABILITY LITIGATION

No. 1069, Docket 80-7079

United States Court of Appeals,

Second Circuit

Argued May 1, 1980.

Decided Nov. 24, 1980.

Thomas E. Moseley, John C. Sabetta and Leonard Rivkin,

New York City (Cadwalader, Wickersham & Taft, Townley &

Updike, New York City, Clark, Gagliardi & Miller, White

Plains, N.Y., Kelley, Drye & Warren, New York City, and

Rivkin, Leff & Sherman, Garden City, N.Y., on brief), for

defendants-appellants.

Irving Like, Babylon, N.Y., and Victor John Yannacone,

Jr., Patchogue, N.Y. (Edward F. Hayes, III and Malerba, Ab-

ruzzo, Clancy, Hayes, Downes & Frankel, Huntington, N.Y.,

Reilly & Like, Babylon, N.Y., W. Keith Kavenagh, Bayport,

N.Y., Albert J. Fiorella, Mineola, N.Y., Yannacone & Yan-

nacone, Patchogue. N.Y., Paul F. Corcoran, Mineola, N-Y.,

Aaron D. Twerski, Far Rockaway, N.Y., and Dorothy

Thompson and Greenwald & Greenwald, Los Angeles, Cal.,

on brief), for plaintiffs-appellees.

Before FEINBERG, Chief Judge, and VAN GRAAFEI-

LAND and KEARSE, Circuit Judges.

KEARSE, Circuit Judge:

This appeal presents the question whether claims asserted

by veterans of the United States armed forces against com-

642a

panies which supplied the United States government with

chemicals that are alleged to have been contaminated and to

have injured the veterans and their families, are governed by

federal common law. Defendants-appellants Diamond Sham-

rock Corporation, Monsanto Company, Thompson-Hayward

Chemical Company, Hercules Incorporated and the Dow

Chemical Company were the manufacturers of various herbi-

cides including “Agent Orange” (hereinafter collectively re-

ferred to as “Agent Orange”) for use by the military as de-

foliants in the Vietnam War. The plaintiffs, veterans of that

war and their families, allege that they have sustained vari-

ous physical injuries by reason of the veterans’ exposure to

Agent Orange. Plaintiffs seek redress of those injuries under

federal common law, and have invoked the “federal question”

jurisdiction of the district court. 28 U.S.C. § 1331{a) (1976).

Defendants contest the existence of a federal common law

cause of action, and moved below to dismiss for lack of sub-

ject matter jurisdiction. The United States District Court for

the Eastern District of New York, George C. Pratt, Judge,

denied their motion. Defendants obtained certification of the

jurisdiction issue and took this appeal pursuant to 28 U.S.C.

§ 1292(b) (1976).'

We agree with defendants that there is no federal common

law right of action under the circumstances of this litigation.

Accordingly, we reverse.

I

The present litigation began in late 1978 and early 1979,

when several individual veterans and their families com-

menced actions in the Northern District of Illinois and the

Southern and Eastern Districts of New York, claiming injury

' This Court granted defendants’ motion for leave to appeal by order

dated January 16, 1980.

643a

from the veterans’ exposure to Agent Orange and purporting

to represent several classes of injured persons and persons al-

legedly “at risk” of injury. The plaintiffs in most of these ac-

tions were represented by the same attorney, who filed sub-

stantially identical complaints in all actions, naming the

same defendant manufacturers. By order of the Judicial

Panel on Multidistrict Litigation, thirteen such actions, in-

volving thirty named plaintiffs, were transferred to the East-

ern District of New York and assigned to Judge Pratt for

coordinated or consolidated pretrial proceedings pursuant to

28 U.S.C. § 1407 (1976). Subsequently, additional actions

were filed and were transferred to the Eastern District. It ap-

pears that there are presently more than 800 named plaintiffs

in these proceedings.

After the transfer plaintiffs filed an amended complaint in

the action that the district court had designated as the lead

action for purposes of pretrial proceedings. Defendants

moved to dismiss on various grounds, and by opinion dated

August 14, 1979, the district court dismissed a number of

claims* and directed that a new complaint be filed. The sec-

ond amended complaint was filed on August 20, 1979, assert-

ing causes of action under the federal common law’ and pre-

? These included a claim for injunctive relief against further manufac-

ture of certain herbicides (which, the district court concluded, lay within

the primary jurisdiction of the Environmental Protection Agency), as well

as Claims asserted under 42 U.S.C § 1983 (1976) and various provisions

of the antitrust and trademark laws.

’ Plaintiffs also sought to assert a cause of action under the Federal In-

secticide, Fungicide and Rodenticide Act, 7 U.S.C. § 135 et seg. (1970)

(“FIFRA”). The district court declined to infer such a cause of action for

reasons we believe to be correct. See note 9 infra.

~644a

mising subject matter jurisdiction on 28 U.S.C. § 1331(a).

Defendants moved to dismiss for lack of subject matter juris-

diction. The motion was argued on October 3, 1979, and

after argument but prior to decision plaintiffs proffered a

third amended complaint. Defendants consented to the filing

of the new complaint, and the district court, at the urging of

the defendants, treated defendants’ motion to dismiss as hav-

ing been made with respect to that complaint. Accordingly, it

is the third amended complaint (hereinafter sometimes refer-

red to as the “Complaint’”) that is before us on this appeal.

A. The Third Amended Complaint

The basic thrust of the Complaint is relatively simple:

defendants manufactured a “phenoxy herbicide,” Agent

Orange, for use by the military in Vietnam. The herbicide

was allegedly contaminated with certain toxic organic chemi-

cals, including 2,3,7,8-tetrachlorodibenzo-p-dioxin (‘‘diox-

in”), which plaintiffs describe as “one of the most toxic sub-

stances ever developed by man.” (Plaintiffs’ Brief on Appeal

at 2.) The plaintiff veterans assert that they were exposed to

Agent Orange, and thus to the dioxin it contained, while

serving in Vietnam. They claim to have sustained various

physical injuries, or to be “at risk” of such injuries, by

reason of that exposure. Plaintiffs seek relief on a number of

* 28 U.S.C. § 1331(a) provides in part as follows:

The district courts shall have original jurisdiction of all civil

actions wherein the matter in controversy exceeds the sum of

value of $10,000, exclusive of interest and costs, and arises

under the Constitution, laws, or treaties of the United States

A cause of action which is founded on federal common law “arises

under” the laws of the United States within the meaning of § 1331(a). /I-

linois v. City of Milwaukee, 406 U.S. 91, 99-100, 92 S.Ct. 1385, 1390-

91, 31 L.Ed.2d 712 (1972); Ivy Broadcasting Co. v. American Tel. & Tel.

Co., 391 F.2d 486, 492 (2d Cir. 1968).

645a

theories, including strict product liability, negligence, and

breach of warranty.

What marks these proceedings as somewhat extraordinary

are the size of the plaintiff class and the scope of the relief

that is sought. Plaintiffs purport to represent the 2.4 million

veterans who served as combat soldiers in Southeast Asia

from 1962 through 1971, as well as most of the families or

survivors of those veterans. Fifteen plaintiff subclasses are

identified; many of these subclasses consist of persons who

are “at risk” of, but have yet to sustain, various physical in-

juries. Plaintiffs have alleged that “the combined liquid as-

sets of the ‘corporate defendants’ will be insufficient to fully

compensate the entire class of plaintiffs.” (Complaint { 15.)

Plaintiffs therefore seek, in addition to unspecified damages,*

a decree requiring defendants, upon a determination of liabil-

ity, to establish

a trust fund out of the current earnings of the de-

fendants in the nature of a reserve against the

claims of all the individual members of the plaintiff

class to insure that the compensation of any group

of individual plaintiffs will not impair the nights of

those not before the Court at that time.

(Complaint £ 9.) Plaintiffs also seek a permanent injunction

against further manufacture of Agent Orange.

Defendants deny that there is any causal connection be-

tween exposure to Agent Orange and the injuries that plain-

tiffs claim to have sustained, and vigorously contest the pro-

priety of the various remedial measures that plaintiffs seek to

impose on them. This case, however, is still at the pleading

* The third amended complaint alleges no specific ad damnum. The

second amended complaint, however, asserted damages “in the range of

$4 billion to $40 billion.”

646a

stage, and for purposes of deciding the jurisdictional ques-

tion before us, plaintiffs’ factual allegations must be accepted

as true.

B. The Decision of the District Court

Plaintiffs argue that federal common law should be applied

to their claims principally because of the unique federal nature

of the relationship between the soldier and his government,

relying chiefly on United States v. Standard Oil Co., 332

U.S. 301, 305, 67 S.Ct. 1604, 1606, 91 L.Ed. 2067 (1947)

(“Perhaps no relation between the Government and a citizen

is more distinctively federal in character than that between it

and members of its armed forces.”). They contend that this

interest brings the case within the doctrine of Clearfield Trust

Co. v. United States, 318 U.S. 363, 366, 63 S.Ct. 573, 574,

87 L.Ed. 838 (1943), which held that, in order to ensure un-

iformity and certainty, “[t]he rights and duties of the United

States on commercial paper which it issues are governed by

federal rather than local law.” Plaintiffs argue that the govern-

ment similarly has an interest in having all of its veterans

compensated by government contractors who manufactured

or marketed Agent Orange, and that application of the re-

spective state laws would impede recovery on a uniform

basis.

The district court rejected the contention that Clearfield

Trust stated the controlling principle, recognizing that the

United States, a party to Clearfield Trust, is not party to the

plaintiffs’ claims here.® Rather, the court recognized that

since the present action involves only private parties, the fed-

eral common law issue is controlled by the principles set

° We note that the defendants have impleaded the United States in the

present action. It is clear, however, that the jurisdiction of the district

court over the claims of the plaintiffs is not enhanced by third party com-

plaints. Cf. Louisville & Nashville RR. Co. v. Mottley, 211 U.S. 149, 29

S.Ct. 42, 53 L.Ed. 126 (1908).

647a

forth in Miree v. DeKalb County, 433 U.S. 25, 97 S.Ct.

2490, 53 L.Ed.2d 557 (1977), and Wallis v. Pan American

Petroleum Corp., 384 U.S. 63, 86 S.Ct. 1301, 16 L.Ed.2d

369 (1966). After reviewing the latter decisions, the district

court applied a three-factor test to determine whether federal

common law governs plaintiffs’ claims:

(1) the existence of a substantial federal interest in

the outcome of a litigation; (2) the effect on this

federal interest should state law be applied; and (3;

the effect on state interests should state law be dis-

placed by federal common law.

Slip op. at 17.

With respect to the first factor, the district court recognized

two principal federal interests that may be affected by the

present lawsuits: the federal government's interest in its rela-

tions with members of the armed forces, and its interest in its

relations with suppliers of war materiel. As to the govern-

ment’s interest in the welfare of its veterans, the court stated

that:

Soldiers serving in the armed forces are govern-

ment charges, entitled to government protection.

Torts Committed by war contractors against soldiers

in action constitute “harms inflicted” on the sold-

iers and “interference” with the relationship be-

tween soldiers and the government. Such harms

and interferences implicate federal interests iden-

tified in [United States v. Standard Oil, supra].

Id. at 18. The court rejected defendants’ contention that these

interests were already protected by the Congressionally-

648a

enacted scheme of veterans’ benefits, 38 U.S.C. § 310 et seq.

(1976),’ opining that

[t]he limited nature of compensation provided by

38 U.S.C. § 310 et seg. makes it an insufficient

guardian of the rights at stake in this litigation, viz.

the rights of soldiers to be protected from “harms

inflicted by others” and to be compensated for

harms already inflicted. The existence and extent

of these contested rights necessarily are intertwined

with the relationship between government and sol-

dier and thereby implicate federal interests.

Slip op. at 18-19. Finally, the court reasoned that because of

the large number of veterans claiming injury, and the large

potential liability of the five defendants, the foregoing federal

interests were “substantial” for purposes of the federal com-

mon law analysis:

The estimated number of involved veterans ranges

from thousands to millions, and the estimated po-

tential liability of the five war contractors ranges

from millions to billions of dollars. As the number

of veterans and the size of the claims against the

war contractors increase so the federal interest in

this litigation expands.

Id. at 20.

As to the government's interest in its relations with its

military suppliers—the court referred to a number of “‘specula-

tive” ways in which lawsuits such as the present ones might

738 U.S.C. §310 et seg., entitled “Compensation for Service-Connected

Disability or Death,” establishes for veterans a basic entitlement to com-

pensation from the government for injuries resulting from military serv-

ice, and sets rates of compensation for specific types and degrees of disa-

bility. These provisions do not address issues of the liability of third par-

ties to injured service personnel.

649a

adversely affect that interest, pointing out that in response to

any increase in their potential liability, military suppliers

might raise their prices, attach conditions to the use of their

products, or stop dealing with the government altogether."

The court concluded that

government relations with war contractors might

well be drastically altered by changes in the rules

governing liability of war contractors to soldiers for

injuries caused by inherently “dangerous” war ma-

terials.

Id. at 19-20.

Turning to the second part of its test, the court found that

the federal interest it had identified would be adversely af-

fected if the issues in these lawsuits were adjudicated under

state law:

Application of varying state laws would burden

federal interests by creating uncertainty as to the

rights of both veterans and war contractors. It

would also be unfair in that essentially similar

claims, involving veterans and war contractors

identically situated in all relevant respects, would

be treated differently under different state laws.

Id. at 21.

Finally, as to the third part of its test, the court determined

that application of federal common law would not have any

significant adverse impact on state interests. While noting

that “[t]ort claims are traditionally matters for state law,

which has developed comprehensive substantive and pro-

* The court also noted that if defendants are eventually held liable for

massive damages awards, the resulting blow to their financial health

could have serious repercussions in the national economy.

650a

cedural rules to govern them,” /d. at 22, the court distin-

guished the instant tort actions, finding that

state law has not considered the complex question

of a war contractor’s liability to soldiers injured by

toxic chemicals subject to federal regulation while

engaged in combat and serving abroad.

Id. at 23. The court concluded:

Because state law is no more or less developed as

to such claims than federal common law, applica-

tion of federal common !aw thereto would not sig-

nificantly displace state law.

Id.

Having found substantial federal interests that would be

adversely affected by application of state law to the instant

claims, and having determined that there were no substantial

State interests in having state law applied, the district court

ruled that plaintiffs had stated valid causes of action under

the federal common law.’ The court therefore held that it had

* The district court correctly determined that there is no private right

of action under FIFRA, 7 U.S.C. § 135 et seq. (1970). The current sta-

tute is the result of two principal enactments. The original FIFRA,

Pub.L.No.80— 104, 61 Stat. 163 (1947) (codified at 7 U.S.C. §§ 135-

135K (1976)), and the Federal Environmental Pesticide Control Act

(“1972 Act”), Pub.L.No.92-516, 86 Stat. 973 (1972) (codified at 7

U.S.C. §§ 136-136y (1976), which amended, and has now superseded,

the original Act. See Pub.L.No.91-516 § 4(b), 86 Stat. 998 (1972). Fol-

lowing the four-pronged analysis set forth in Cort v. Ash, 422 U.S. 66,

95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), we conclude that neither enact-

ment gives rise to a private right of action.

The four factors to be considered under Cort v. Ash are (1) whether

the plaintiff is “one of the class for whose especial benefit the statute

was enacted,” (2) whether there is “any indication of legislative in-

tent, explicit or implicit, either to create such a remedy or to deny one,”

(3) whether a right of action would be “consistent with the underlying

purposes of the legislative scheme,” and (4) whether the cause of action

65la

is “one traditionally relegated to state law, in an area basically the con-

cern of the States, so that it would be inappropriate to infer a cause of ac-

tion based solely, on federal law.” Jd. at 78, 95 S.Ct. at 2087.

As to the original FIFRA, which was in effect during the entire period

that plaintiff veterans served in Vietnam, we see no essential satisfaction

of any of the Cort v. Ash tests. First, there is no indication that the bill

was enacted for the especial benefit of military men. It is clear that Con-

gress’s intent was to protect the public in general, with perhaps some

special consideration for “agricultural producers and other users” of pes-

ticides and rodenticides, See [1947] U.S. Code Cong. Serv. pp. 1200,

1202 (quoting the Report of the House of Representatives Committee on

Agriculture). FIFRA makes no special mention of soldiers; and the

House report, which states that the bill was considered by the United

States Departments of Agriculture and the Interior, does not indicate that

the bill was considered by any military or defense agency. /d. As to the

second (and most important, see Leist v. Simplot, 638 F.2d 283 (2d Cir.

1980)) of the Cort factors, we see no clear indication of legislative intent

to create a private remedy. Plaintiffs have cited no legislative history on

this point, nor have they presented any detailed statutory analysis. The

Act itself is primarily concerned with establishing an administrative

scheme of labeling registration and enforcement; there are indications

that Congress expected that scheme to be the exclusive means of enforce-

ment. See [1947] U.S. Code Cong.Serv. supra, at 1202. We conclude

that this factor cuts against the plaintiffs. The third Cort factor is of little

assistance here. While a private right of action might enhance enforce-

ment of the Act's substantive provisions to some extent, it would also in-

crease the burden on manufacturers (without commensurately increasing

protection of injured persons who can recover damages under state prod-

uct liability law), something which the administrative scheme of registra-

tion was specifically intended to avoid. See [1947] US. Code

Cong.Serv., supra at 1202. Finally, the fourth Cort factor cuts strongly

against the plaintiffs. The area of product liability has been “traditionally

relegated to state law,” and this is no less true of the products regulated

by the FIFRA. See, e.g., Muncy v. Magnolia Chemical Co., 437 S.W.2d

15 (Tex.Civ.App. 1968). Thus, we conclude that the district court was cor-

rect in ruling that there is no private right of action under the original

FIFRA.

As to the 1972 Act, the unavailability of a private right of action is

even clearer. We find no riore positive indications in the first, third and

fourth Cort factors. More importantly, we find a negative indication as to

the second Cort factor, i.e. legislative intent, since Congress considered

and explicity rejected amendments that would have authorized citizen

652a

subject matter jurisdiction over the case, and denied defen-

dants’ motion to dismiss." This appeal followed.

Il

Both plaintiffs and defendants accept the three-part test

that the district court applied to the federal common law

suits to enforce the 1972 Act’s prohibitions. See People for Environmental

Progress v. Leisz, 373 FSupp. 589, 592 (C.D.Cal.1974) (discussing

legislative history); see also Kelly v. Butz, 404 F. supp. 925, 940

(W.D.Mich.1975). It is not for us to override that congressional determi-

nation.

© The court also denied defendants’ motion to strike portions of the

Complaint relating to plaintiffs’ demand that defendants be required to es-

tablish a trust fund. The court premised the denial on its conclusion that

defendants are not prejudiced by allowing these requests for

relief to remain in the [Complaint], since defendants have no

obligation to admit or deny plaintiffs’ requests for relief,

which therefore place no pleading burden on defendants.

at 24. In addition, it appears that the court declined to rule on a motion

to strike portions of the Complaint relating to class members who have

not yet been injured, but are said to be merely “at risk” of injury by

reason of a veteran’s exposure to Agent Orange. Defendants argue here,

as they have in moving for reargument below, that the district court

should have granted both motions to strike. We decline to reach these

questions. The district court, in granting certification under § 1292(b)

was primarily concerned with. the question of subject matter jurisdiction;

the certification mentions only that issue. While we are not restricted by

the district court’s limited certification, see Bersch v. Drexel Firestone

Inc., 519 F.2d 974, 994-95 (2d Cir.), cert. denied, 423 U.S. 1018, 96

S.Ct. 453, 46 L.Ed.2d 389 (1975), and may review the entire order of

the court below, Capital Temporaries, Inc. v. Olsten Corp., 506 F.2d

658, 660 (2d Cir. 1974), we conclude that review now of the trust fund

and “at risk” issues would be inappropriate. First, our ruling on subject

matter jurisdiction may end the federal court litigation. (It is unclear

whether any plaintiffs will seek to proceed on the basis of diversity juris-

diction.) More importantly, the district judge did not assess the merits of

either motion to strike, and we note that he has reserved decision on de-

fendants’ motion for reargument of these question, pending decision of

this Court on the question of jurisdiction. In all, we think the wiser

course is for this Court not to pass on them at this time.

SS lll

653a

issue, and for purposes of discussion we accept that

framework. But, focusing our consideration chiefly on the

first factor of the test, i.c., “the existence of a substantial

federal interest in the outcome of the litigation,” we disagree

with the district court’s analysis and conclude that the court

gave insufficient weight to the Supreme Court's repeated ad-

monition that

[i]n deciding whether rules of federal common law

should be fashioned, normally the guiding princi-

ple is that a significant conflict between some fed-

eral policy or interest and the use of state law in

the premises must first be specifically shown ...

Wallis v. Pan American Petroleum Corp., supra, 384 U.S. at

68, 86 S.Ct. at 1304, quoted with emphasis in Miree v. De-

Kalb County, supra, 433 U.S. at 31, 97 S.Ct. at 2494. Princi-

pally we reject the district court’s conclusion that there is an

identifiable federal policy at stake in this litigation that war-

rants the creation of federal common law rules.''

In considering plaintiffs’ contentions, it is essential to de-

lineate precisely the relation of the United States to the

claims here at issue. These claims are brought by former ser-

vicemen and their families against private manufacturers:

they are not asserted by or against the United States, and

they do not directly implicate the rights and duties of the

United States. They are thus unlike the claims in United

States v. Standard Oil Co., supra, in which the government

brought suit to recover for its payments to a soldier injured

as a result of the defendant's negligence, and Clearfield Trust

Co. v. United States, supra, in which the government

' Since we conclude that there is not now an identifiable federal pol-

icy, we need not reach the second and third factors of the test and specu-

late as to how state law, if it were already developed, would affect the

federal policy if it were identifiable —or vice versa.

654a

brought suit to enforce its rights in commercial paper issued

by it. In each of those cases the government was a party

seeking to enforce its own asserted rights, and analysis re-

veals two federal concerns which are inherent in such cases.

First, the government has an interest in having uniform rules

govern its rights and obligations. Second, the government

has a substantive interest in the contents of those uniform

rules. The first interest prize uniformity for its own sake and

is content-neutral; it does not dictate the substance of the fed-

eral common law rule to be applied. Thus, in United States

v. Standard Oil Co., supra, the Court applied federal com-

mon law, recognizing the government's interest in uniformity,

but refused to impose the liability argued for by the United

States as the substance of that law.

The present litigation is fundamentally different from Stan-

dard Oil and Clearfield Trust with respect to both uniformity

interest and substantive interest in the content of the rules to

be applied. Since this litigation is between private parties and

no substantial rights or duties of the government hinge on its

outcome, there is no federal interest in uniformity for its own

sake.'* See e.g., Miree v. DeKalb Country, supra, 433 U.S.

at 28, 97 S.Ct. at 2493. The fact that application of state law

may produce a variety of results is of no moment. It is in the

nature of a federal system that different states will apply dif-

ferent rules of law, based on their individual perceptions of

what is in the best interests of their citizens. That alone is

not grounds in private litigation for judicially creating an

“ Compare Bank of America Nat'l Trust & Sav. Ass'n v. Parnell. 352

U.S. 29, 32-34, 77 S.Ct. 119, 120-121, 1 L.Ed.2d 93 (1956). private liti-

gation involving the issues of whether certain government bonds were

“overdue” and whether the defendant had taken title to the bonds in good

faith. The Court observed that the question of when a government bond

is overdue is a matter of federal law, but held that question as to a party's

good faith are left to local law.

655a

overriding federal law. Indeed, even where a federal statutory

program governs the rights of private litigants and Congress

has left gaps to be filled by the courts, uniformity is not

prized for its own sake. For example, in Auto Workers vy.

Hoosier Corp., 383 U.S. 696, 701-05, 86 S.Ct. 1107, 1110-

1113, 16 L.Ed.2d 192 (1966), the Court dealt with a suit

under § 301 of the National Labor Relations Act, 29 U.S.C.

§ 185 (1976), to which federal common law applied. Yet in

determining the timeliness of such suits, the Court ruled that

the appropriate state statutes of limitations should apply, and

refused to impose a uniform federal period of limitations:

[T]imeliness ... is clearly a federal question, for in

§ 301 suits the applicable law is “federal law,

which the courts must fashion from the policy of

our national labor laws.” Textile Workers vy. Lincoln

Mills, 353 U.S. 448, 456, 77 S.Ct. 912, 917. |

L.Ed.2d 972.... We are urged instead [of referring

to state laws,] to devise a uniform time limitation

to close the statutory gap left by Congress. But the

teaching of our cases does not require so bald a

form of judicial innovation.

383 U.S. at 701, 86 S.Ct. at 1110. Thus, the prospect of uni-

formity is insufficient reason to invoke federal common law

in private litigation and if federal common law were invoked,

it would not ensure uniformity since frequently that law takes

its substance from local law.

The second fundamental difference between the present

litigation and the Clearfield Trust type of case is that in the

latter, the government's substantive interest in the litigation is

essentially monothetic, in that it is concerned only with pre-

serving the federal fisc, whereas here the government has

two interests and here the two interests have been placed in

Sharp contrast with one another. Thus, the government has an

656a

interest in the welfare of its veterans; they have given of

themselves in the most fundamental way possible in the na-

tional interest. But the government also has an interest in the

suppliers of its materiel imposition, for example, of strict lia-

bility as contended for by plaintiffs would affect the govern-

ment’s ability to procure materiel without the exaction of sig-

nificantly higher prices, or the attachement of onerous condi-

tions, or the demand of indemnification or the like. As plain-

tiffs’ counsel has observed, “this litigation will have a direct

and lasting impact on the relationship between the federal

government and war contractors ... and between the federal

government and veterans.” (Letter dated October 21, 1980,

V.J. Yannacone, Jr. to A. D. Fusaro.) It is obvious that the

government is interested. But unlike a simple uniformity in-

terest, neither the government's interest in its veterans nor its

interest in its suppliers is content-neutral. Each interest will

be furthered only if the federal rule of law to be applied

favors that particular group.

The extent to which either group should be favored, and

its welfare deemed “paramount” (see dissent of Chief Judge

Feinberg, post), is preeminently a policy determination of

the sort reserved in the first instance for Congress. The wei-

fare of veterans and that of military suppliers are clearly fed-

eral concerns which Congress should appropriately consider

in setting policy for the governance of the nation, and it is

properly left to Congress in the first instance to strike the bal-

ance between the conflicting interests of the veterans and the

contractors, and thereby identify federal policy. Although

Congress has turned its attention to the Agent Orange prob-

lem,'’ it has not determined what the federal policy is with

* Congress has directed the Administrator of Veterans’ Affairs to de-

sign and conduct an epidemiological study of veterans who were exposed

to Agent Orange, and to report periodically to Congress until the study is

completed. See Pub.L.No.96-151, 96th Cong., Ist Sess. (1979); 38

U.S.C. § 219 note (Supp.1980).

657a

respect to the reconciliation of these two competing interests.

Thus, this case is unlike Owens v. Haas, 601 F.2d 1242 (2d

Cir.), cert. denied, 444 U.S. 980, 100 S.Ct. 483, 62

L.Ed.2d 407 (1979), or Ivy Broadcasting Co. v. American

Tel. & Tel. Co., 391 F.2d 486 (2d Cir. 1968), in which the

court was asked to supplement with federal common law a

federal statutory program which itself embodied Congres-

sional policy determinations.'* In Owens, as Chief Judge

Feinberg observes, post, the Court “discerned a ‘federal reg-

ulatory scheme’”’ for the protection of prisoners. It is one

thing to discern a federal regulatory scheme from the statutes

Congress has enacted, as in Owens; it is another to devise

such a scheme in the face of inaction by Congress. The dis-

sent finds it anomalous that federal common law may apply

to prisoners but not to veterans. We suggest that the anomaly

lies not with the court in declining to devise a scheme, but

with Congress which has made specific provision for protec-

tion of the government's prisoners but not for its soldiers.

We conclude that in the present case, while the federal

government has obvious interests in the welfare of the parties

to the litigation, its interest in the outcome of the litigation,

i.e., in how the parties’ welfares should be balanced, is as

yet undetermined.'* The teaching of Wallis and Miree is that

before federal common law rules should be fashioned, the

* Plaintiffs contend that FIFRA (see note 9 supra) evinces a federal

interest in regulation of herbicides sufficient to call into play the federal

common iaw. But as this court has noted, FIFRA was not intended to

preempt state law even with respect to those matters it specifically regu-

lates. Chemical Specialties Mfrs. Ass'n v. Lowery, 452 F.2d 431 (2d cir.

1971). It is certainly an insufficient basis for a displacement of the entire

body of state product liability law.

* The large number of veterans claimed in the class does not reveal!

the content of a federal policy reconciling the competing interests, any

more than does the possibility that the defendant companies would have

to be liquidated to pay the claims of the class.

658a

use of state law must pose a threat to an “identifiable” fed-

eral policy. Wallis v. Pan American Petroleum Corp., supra,

384 U.S. at 68, 86 S.Ct. at 1304; Miree v. DeKalb County,

supra, 433 U.S. at 31-33, 97 S.Ct. at 2494, 2495. In the

present litigation the federal policy is not yet identifiable. We

conclude, therefore, that the district court erred in ruling that

plaintiffs’ claims were governed by federal common law. The

order denying defendants’ motion to dismiss for lack of sub-

ject matter jurisdiction is accordingly

Reversed.

FEINBERG, Chief Judge (dissenting):

This case presents us with a unique set of facts, parties,

and pleadings. Many aspects of plaintiffs’ case are trouble-

some, because plaintiffs seek unusual relief, both procedural

and substantive, as to which I express no view. But the issue

now before us is far narrower, and raises more familiar con-

siderations. That issue is whether a federal district court has

federal question jurisdiction over the action, see 28 U.S.C. §

1331(a), because the action arises under federal common law.

I agree with District Judge Pratt that this case should be tried

in federal court under rules of federal common law. I there-

fore dissent from the opinion of the majority.

That the present case is sui generis, and national in its

proportions, is evident from the complaint itself. The defen-

dants in this action are five of the largest chemical com-

panies in the nation, all of which admittedly manufactured

“Agent Orange,” a defoliant, for use by our nation’s armed

forces in Vietnam between 1962 and 1971. Plaintiffs’ suit is

brought on behalf of veterans, living and dead, and their par-

ents, wives, widows, orphans, and children, living, dead,

and stillborn. Plaintiffs allege that the Agent Orange supplied

by the defendants was “contaminated with ... polychlorinated

dibenzo—p—dioxins ... and polychlorinated dibenzo furans ..

659a

including 2,3,7,8,-tetra-chloro dibenzo p—dioxin (...

“Dioxin”), one of the most toxic substances ever developed

by man.” Plaintiffs further allege that as a result of exposure

to Agent Orange, they incurred, or have suffered an in-

creased risk of incurring, cancer, genetic damage, and an

early death. Judge Pratt noted that the defendants are “facing

aggregate claims which may eventually amount to billions of

dollars.” As the majority notes, the complaint identifies fif-

teen groups of plaintiffs, totalling over 800 plaintiffs who,

we are told, have filed complaints in 25 judicial districts all

across the country. By this time it is probable that 30 to 40.

districts are affected, since additional plaintiffs appear daily:

plaintiffs’ counsel assures us that many more complaints

would already have been filed, but for the request of Judge

Pratt not to do so until the question of class certification has

been resolved. How many plaintiffs will ultimately come for-

ward is unclear. Present plaintiffs assert that as many as

2,400,000 men and women who served in the armed forces

could be eligible to sue defendants—not to mention their par-

ents, dependents, and dead or stillborn children. The national

dimensions of the case as pleaded are too obvious to escape

notice. Identical complaints have been filed, inter alia, in

Massachusetts and California, in Illinois and Texas, and we

are informed that the Judicial Panel on Multidistrict Litiga-

tion has ordered all Agent Orange cases consolidated before

Judge Pratt. The plaintiffs in these cases complain of injuries

sustained as the result of service in our nation’s military, in a

national endeavor in a foreign land. To the non-legal mind, it

would be an odd proposition indeed that this litigation, so pa-

tently of national scope and concern, should not be tried in

federal court. ©

As for the legal mind, all involved in this case—the par-

ties, Judge Pratt, and the panel on appeal—appear to agree

that federal question jurisdiction depends upon whether a fed-

660a

eral common law rule of product liability should be applied.

See Illinois v. City of Milwaukee, 406 U.S. 91, 98-101, 92

S.Ct. 1385, 1390-1391, 31 L.Ed.2d 712 (1972); Ivy Broad-

casting Company v. American Telephone and Telegraph Com-

pany, 391 F.2d 486, 492-93 (2d Cir. 1968). Whether a fed-

eral rule should be applied, in turn, depends on three factors,

as discerned in Miree v. DeKalb County, 433 U.S. 25, 97

S.Ct. 2490, 53 L.Ed.2d 557 (1977), and Wallis v. Pan Ameri-

can Petroleum Corporation, 384 U.S. 63, 86 S.Ct. 1301, 16

L.Ed.2d 369 (1966):

(1) the existence of a substantial federal interest

in the outcome of the litigation;

(2) the effect on this federal interest shou!d state

law be applied; and

(3) the effect on state interests should state law

be displaced by federal common law.

Judge Pratt, in his thorough and able opinion, analyzed all

these factors and concluded that the fashioning of a federal

common law rule was warranted on the facts of the present

case. In a closely analogous case, Owens v. Haas, 601 F.2d

1242 (2d Cir.), cert. denied, 444 U.S. 980, 100 S.Ct. 483,

62 L.Ed.2d 407 (1979), this court recently arrived at the

same result. Owens is instructive because it represents the

most recent examination by this court of the “federal in-

terest” doctrine discussed in Miree and Wallis. A review of

the Owens facts and holding shows that Judge Pratt’s analysis

of the factors set forth above was correct.

In Owens, plaintiff was a federal prisoner who was injured

by country jail officials who were working under contract

with the federal government. Plaintiff sued for damages as,

inter alia, a third-party beneficiary of that contract. On that

theory, the ‘first question” before this court was whether

plaintiff's claims were ‘a matter of federal law or of state

66la

law”; the question was posed “both as a guide to contract in-

terpretation and as an alternate basis for jurisdiction in the

district court.” 601 F.2d at 1248. Writing for the panel, the

late Judge Smith noted that “the federal government owes a

duty of reasonable care to safeguard the security of prisoners

under its control,” and discerned a “federal regulatory

scheme” for maintaining the health and well-being of such

prisoners. /d. at 1249. Judge Smith then concluded that this

regulatory scheme generated “a federal interest in assuring

uniform treatment of federal prisons,” id., and that that in-

terest, combined with the government’s duty of reasonable

care, meant that “federal rights and obligations [did] ‘hinge

on the outcome’ of litigation in this area,” id. at 1249-50. As

a result, the court held that federal common law should

apply.

Looking, as the Owens court did, to Miree and Wallis, the

first question we must answer is whether the federal govern-

ment has a “substantial interest” in the outcome of this litiga-

tion. It is plain that this question must be answered affirma-

tively. As the Supreme Court observed in United States v.

Standard Oil Company, 332 U.S. 301, 67 S.Ct. 1604, 91

L.Ed. 2067 (1947),

Perhaps no relation between the Government and

a citizen is more distinctively federal in character

than that between it and members of its armed

forces. To whatever extent state law may apply to

govern the relations between soldiers or others in

the armed forces and persons outside them or non-

federal governmental agencies, the scope, nature,

legal incidents and consequences of the relation be-

tween persons in service and the government are

fundamentally derived from federal sources and

662a

governed by federal authority. See Jarble’s Case,

80 U.S. 397, 13 Wall. 397, 20 L.Ed. 587; Kurtz v.

Moffitt, 115 U.S. 487, 6 S.Ct. 148, 29 L.Ed. 458.

So also we think are interferences with that re-

lationship such as the facts of this case involve.

For, as the Federal Government has the exclusive

power to establish and define the relationship by

virtue of its military and other powers, equally

clearly it has power in execution of the same func-

tions to protect the relation once formed from

harms inflicted by others.

Id. 332 U.S. at 305-06, 67 S.Ct. at 1606-1607 (footnotes

omitted). This obviously federal relationship does not depend

primarily upon any particular statute, but rather inheres in

the federal government’s exclusive capacity to wage war. But

in the case before us this relationship can also be analyzed in

terms of Owens. In Owens, the federal government was

found to owe “a duty of reasonable care” to federal prison-

ers, a duty stemming from statutory enactment, specifically

18 U.S.C. § 4042.' Similarly, the federal government here is

under a statutory obligation to provide “an improved and uni-

form program of medical ... care for members [of the un-

iformed services] and certain former members of those serv-

ices, and for their dependents.” !0 U.S.C. § 1071. Further, in

Owens this court discerned in “the scheme of regulation of

federal prisons [an indication of] congressional intent to pro-

vide some general protections for federal prisons.” 601 F.2d

at 1249. Similarly, in the present case there is a statutory

scheme to provide “general protections” for members and

' 18 U.S.C. § 4042 provides, in pertinent part, that the “Bureau of

Prisons .. . shall . . . provide for the safekeeping, care, . . . subsistence,

.. . [and] protection .. of all persons charged with or convicted of of-

fenses against the United States .. ..”

663a

veterans of the uniformed services. See 10 U.S.C. §§ 1071-

87 (program of medical care for members of uniformed

services and dependents); 38 U.S.C. §§ 310-15 (schedule of

compensation to veterans and dependents for wartime dis-

abilities); §§ 321-22 (schedule of compensation to survivors

of veterans for wartime death); §§ 331-35 (same, peacetime

disabilities); §§ 341-42 (same, peacetime death); 50

U.S.C.App. § 454(a) (requiring adequate provision of shel-

ter, sanitary facilities, water supplies, heating and lighting ar-

rangements, medical care, and hospital accommodations be-

fore persons can be inducted into military service). See

also the various regulations governing the welfare of sol-

diers, all of which are, of course, promulgated under author-

ity granted by Congress. 10 U.S.C. § 121 (President’s power

to prescribe regulations); § 3012(g) Secretary of Army's

power to prescribe regulations).* The Secretary of the Army

is required by statute to be responsible for the “welfare, pre-

paredness, and effectiveness of the Army.” 10 U.S.C. §

3012(b)(1).

* E.G., Army Regulations 40-2, Army Medical Treatment Facilities,

General Administration (effective April 1, 1978) (requiring provision of

highest quality of patient care to soldiers in Army medical facilities):

Army Regulation 40-3, Medical, Dental, and Veterinary Care (effective

December 1, 1977) providing standards of policy, eligibility, treatment,

and administration, inter alia, in Army medical facilities); Army Regula-

tion 32-15, Clothing and Textile Materiel, Classification and Inspecti n

(effective October 1, 1976) (providing minimal standards for serviceabil-

ity of clothing of Army personnel); Army Regulation 210-16, Bachelor

Housing Management (effective September 15, 1975) (providing minimal

standards of adequacy for quarters of certain Army personnel); Army

Regulation 30-1, Army Food Service Program (effective July 1, 1977)

(providing standards for food and food services for Army personnel):

Army Regulation 28-1, Army Morale Support Activities (effective Feb-

ruary 15, 1979} (providing programs for maintenance of morale, esprit,

mental and physical fitness, and combat readiness of Army personnel. )

664a

The majority concludes that on the facts of this case “there

is no federal interest in uniformity for its own sake,” and that

there is no federal “substantive interest in the content of the

rules to be applied.” I disagree on both counts. As to unifor-

mity of treatment, this court noted in Owens that “[b]ecause

there is a federal regulatory scheme, there is a federal in-

terest in assuring uniform treatment of federal prisoners.”

601 F.2d at 1249. It is anomalous for this court to hold, on

the one hand, that the federal government has an interest in

“uniform treatment” of its prisoners sufficient to warrant the

use of a federal rule of recovery, and, on the other hand, that

the federal government has no such interest in “uniform treat-

ment” of its soldiers. The majority suggests that the anomaly

here lies “‘with Congress, which has made specific provisions

for the protection of the government’s prisoners but not for its

soldiers.” But a review of the statutory and regulatory provi-

sions cited above, especially 10 U.S.C. §§ 1071-87 (medical

care), § 3012(b)(1) (Secretary of Army’s responsibility for

“welfare” of Army personnel), and 38 U.S.C. §§ 310-15,

321-22, 331-35, 341-42 (veterans’ and survivors’ compensa-

tion), as well as myriad, detailed Army Regulations, de-

monstrates beyond doubt that Congress has made specific

provisions for the protection of its soldiers, both directly and

by delegation.

The majority also concludes that because the government

has arguably conflicting substantive interests in the outcome

of the litigation, “the federal policy is not yet identifiabie.”

The allegedly conflicting federal interests are in the welfare

of veterans and in the welfare of suppliers of war materiel.

But that the plaintiff veterans and the defendant contractors

have opposing interests in this litigation hardly means that

the paramount federal interest is somehow divided or self-

contradictory. The United States has a clear interest in the

protection of its soldiers from harm caused by defective war

665a

materiel. What other interests does the United States argu-

ably have that might conflict with this clear interest? One

such interest might be in seeing that defendants, as suppliers

of war materiel, are treated fairly. But that interest cannot be

said to conflict with the government’s interest in the safety of

its soldiers. Another such interest might be in preventing de-

fendants from being driven to bankruptcy by large damage

awards to Agent Orange plaintiffs, who have already made

claims assertedly greater than defendants’ combined liquid

assets. This, I take it, is what the majority means by its refer-

ence to the federal interest in the “welfare” of defendants.

But this interest lies in the future, and in the realm of specu-

lation. There will be time enough to deal with the potential

impact of defendants’ financial liability if and when they

incur any, if it is truly in the interest of the United States to

do so. By contrast, plaintiffs’ injuries— assuming for the mo-

ment that plaintiffs have a viable cause of action—lie in

large part in the present, and in the realm of the concrete.

The conclusion seems inescapable to me that the United

States’ interest in the “welfare” of defendants cannot ap-

proach, either in magnitude or in quality, its interest in the

welfare of the Agent Orange plaintiffs. In short, in the case

before us the paramount interests of the United States are in

the welfare of its veterans and in their fair and uniform treat-

ment.

Having discerned a signficant federal interest, we are next

required to determine whether or not a “significant conflict”

exists between that interest and the application of state law.

This factor is not reached by the majority. But that such a

conflict does exist in the represent case can hardly be dis-

puted. Given the “distinctively federal” character of the re-

lationship between the federal government and its soldiers,

there is an inherent federal interest in the uniform definition

of the aspects of that relationship involved in this case. As

666a

noted earlier, this inherent interest in uniformity was ob-

served by this court in Owens, 601 F.2d at 1249. The applica-

tion of state law to the present case would severely frustrate

this federal interest: If state law is applied in the present liti-

gation, and assuming again that the allegations in the com-

plaint are true, then veterans may well be subjected to shar-

ply differing rules of law in the pursuit of their remedies. For

example, the law of the various states is in flux, diverging

widely in the definition of what constitutes a “defective”

product—especially with respect to defectively designed

products—and in the availability of defenses based on the

“state of the art” and technological feasibility. See United

States Department of Commerce, Interagency Task Force on

Product Liability, Product Liability: Final Report II-6—10

(1977) (varying state law respecting “defectiveness,” espe-

cially in design—defect cases); id. at II-11-12 (same, re-

specting defense of “state of the art”). As a result, if the laws

of 30 or 40 state jurisdictions are separately applied, vete-

rans’ recoveries from Agent Orange injuries will vary

widely —despite the fact that these soldiers fought shoulder

to shoulder, without regard to state citizenship, in a national

endeavor abroad. In sum, the federal interest here in unifor-

mity would be defeated by the application of discrete and dif-

fering state laws. It is thus not necessary to reach the ques-

tion whether the other federal interest present in this case —

in seeing that soldiers are not harmed by defective war

materiel— would be frustrated by the application of state law.

Because the federal interest in uniformity would be defeated

by such an application, I conclude that the first two require-

ments of Miree and Wallis, as interpreted by this court in

Owens, are satisfied, as Judge Pratt concluded.

The third and last factor involves the extent to which state

interests would be affected, if state law were to be “dis-

placed” by federal common law in the present case. This fac-

667a

tor is also not reached by the majority. I agree with Judge

Pratt’s conclusion that the claims made by plaintiffs in this

unique and unprecedented litigation do not fall within the de-

veloped area of state tort law. As noted above, the states’

product liability law is in flux; with respect to a case as novel

as the one before us, a consistent and established body of

State law is even less discernible. Accordingly, I think that

Judge Pratt was correct in holding that the application of fed-

eral common law to the case before us would not “displace”

State law, because there is no substantial body of state law on

this point to be displaced. I thus conclude that all three fac-

tors, accepted by the majority as the proper analytical

framework, point to the use of a federal common law rule in

the present case, giving rise to federal question jurisdiction.

Because I conclude that the district court does have juris-

diction over the case before us, I dissent from the opinion of

the majority.

668a

In re DIAMOND SHAMROCK CHEMICALS COM-

PANY, the Dow Chemical Company, Monsanto Com-

pany, Hercules Incorporated, and T H Agriculture &

Nutrition Company, Inc., Petitioners,

In re “AGENT ORANGE” PRODUCT LIABILITY LITI-

GATION.

No. 754, Docket 83-3065.

United States Court of Appeals,

Second Circuit.

Argued Jan. 4, 1984.

Decided Jan. 9, 1984.

Certiorari Denied Feb. 27, 1984.

See 104 S.Ct. 1417.

Wendall B. Alcorn, Jr., Cadwalader, Wickersham & Taft,

New York City, for petitioners.

David John Dean, Carle Place, N.Y., Stephen J. Schlegal,

Chicago, Ill., Benton Musslewhite and Thomas Henderson,

Plaintiffs’ Management Committee, Houston, Tex., Irving

Like, Chairman, Law Committee, Babylon, N.Y., for re-

spondents.

Before NEWMAN and WINTER, Circuit Judges, and

MacMAHON, District Judge.*

WINTER, Circuit Judge:

This multi-district litigation in the Eastern District of New

York involves several hundred actions brought by veterans of

the armed forces of the United States, Australia and New

*Hon. Lloyd F. MacMahon, of the United States District Court for the

Southern District of New York, sitting by designation.

669a

Zealand who served in Vietnam at some time during the_

period 1961 to 1972 and by their spouses, parents and chil-

dren. Jurisdiction is based upon diversity of citizenship. Jn

re “Agent Orange” Product Liability Litigation, 635 F.2d

987 (2d Cir.1980), cert. denied, 454 U.S. 1128, 102 S.Ct.

980, 71 L.Ed.2d 116 (1981). The plaintiffs claim to have suf-

fered damages as a result of the veterans’ exposure to “Agent

Orange,” a term applied to a group of similar herbicides con-

taining toxic substances used by United States armed forces

in Vietnam. The defendant chemical companies allegedly

produced Agent Orange with unsafe levels of the chemical

byproduct commonly called dioxin. Plaintiffs’ theories of lia-

bility include negligence, strict liability, breach of implied

warranty, intentional tort and nuisance. They seek compen-

satory and punitive damages.

On December 16, 1983, Chief Judge Weinstein certified

two classes, one pursuant to Fed.R.Civ.P. 23(b)(3) and the

other pursuant to Rule 23(b)(1)(B). In re “Agent Orange”

Product Liability Litigation, 100 F.R.D. 718 (E.D.N.Y.

1983). Familiarity with his Memorandum and Order is as-

sumed. This pettiion for a writ of mandamus ensued. We

deny the petition.

We note again that mandamus is an extraordinary rem-

edy. Thus, “mere error, even gross error in a particular case,

as distinguished from a calculated and repeated disregard of

governing rules, does not suffice to support issuance of the

writ.” United States v. DeStefano, 464 F.2d 845, 850 (2d

Cir.1972). We note also that this action is “sui generis, and

national in its proportions” involving an extraordinary con-

stellation of facts, parties and pleadings. In re Agent Orange

Product Liability Litigation, supra at 995. (Feinberg, C.J.,

dissenting). Accordingly, it is not a case where mandamus is

particularly appropriate because a district court’s action is

likely to “encourage the use of similar procedures by ... dis-

670a

trict courts in the future.” United States v. Dooling, 406 F.2d

192, 199 (2d Cir.), cert. denied, 395 U.S. 911, 89 S.Ct.

1744, 23 L.Ed.2d 224 (1969).

Chief Judge Weinstein certified a class under Fed.

R.Civ.P. 23(b)(3) of United States, Australian and New

Zealand veterans, allegedly injured in Vietnam by Agent

Orange, and various members of their families, on the

grounds that common issues of law and fact predominated.

Specifically, he identified as common issues general causa-

tion, failure to warn and affirmative defenses arising out of

allegations concerning misuse by the government and federal

contract requirements.

The oral argument before us cast considerable doubt upon

the significance—not to say existence—of the issue of gen-

eral causation. As described by plaintiffs’ counsel, the issue

is limited to whether the many harms alleged could conceiva-

bly have been caused by Agent Orange without regard to, or

' Rule 23(b)(3) provides:

(b) Class Actions Maintainable. An action may be maintained

as a class action if the prerequisites of subdivision (a) are

satisfied and in addition:

(3) the court finds that the questions of law or fact common

to the members of the class predominate over any questions

affecting only individual members, and that a class action is

superior to other available methods for the fair and efficient

adjudication of the controversy. The matters pertinent to the

findings include:

(A) the interest of members of the class in individually con-

trolling the prosecution of defense of separate actions; (B) the

extent and nature of any litigation concerning the controversy

already commenced by or against members of the class; (C)

the desirability or undesirability of concentrating the litiga-

tion of the of the claims in the particular forum; (D) the dif-

ficulties likely to be encountered in the management of a

class action.

67la

differentiation among, levels of exposure. Defendants’ re-

sponse that anything, even water, can be harmful, wo. 1d

seem to dispose of the issue, so defined, without more. How-

ever, our skepticism on this particular score, which may be

alleviated by framing the issue in different terms, hardly

calls for issuance of the writ since it is clear that common is-

sues relating to the nature of the hazards caused by Agent

Orange are directly involved in the parties’ various conten-

tions regarding an alleged failure to warn, the defense of mis-

use and the so-called government contract defense. Plaintiffs’

claim that defendants conspired to conceal the dangers of

Agent Orange also raises a common issue of fact.

Common issues of fact of considerable significance thus

arguably exist. Potentially these include what each manufac-

turer knew and when he knew it, what each told the govern-

ment and when it did so, what the government learned on its

own and when it did so, what hazards of Agent Orange

were known then and are known now, what influence the

government exercised over the composition of the herbicide,

and what various manufacturers communicated to each other.

It is, of course, true that many issues are peculiar to the indi-

vidual plaintiffs, such as the nature of the exposure to the

herbicide, causation of individual ailments, and monetary

damages. Whether further subclasses may be possible must

be left to the future although it is clear that the residual indi-

vidual trials will be a considerable task. Nevertheless, it

seems likely that some common issues, which stem from the

unique fact that the alleged damage was caused by a product

sold by private manufacturers under contract to the govern-

ment for use in a war, can be disposed of in a single trial.

The resolution of some of these issues in defendants’ favor

may end the litigation entirely. Moreover, since these issues

may involve extensive documentary and testimonial evi-

dence, Chief Judge Weinstein found that obviating a retrial in

672a

countless individual cases will lead to substantial economies

in the use of judicial and private resources.

There are thus substantial grounds at this stage to support

his conclusion that the common issues predominate and that

a class action is the most efficient means of adjudicating

them. Moreover, there is no guarantee that a non-class action

decision on the common issues favorable either to a plaintiff

or to the defendants will be recognized as dispositive in later

cases under the doctrine of collateral estoppel as applied in

different states. See, e.g., Standage Ventures, Inc. v. State,

114 Ariz. 480, 562 P.2d 360 (1977) (reaffirming mutuality re-

quirement despite trend toward abolishing it); Howell v.

Vito’s Trucking and Excavating Co., 386 Mich. 37, 191

N.W.2d 313 (1971) (same). The unique common issues take

the case out of the general rule that “[a] ‘mass accident’ re-

sulting in injuries to numerous persons is ordinarily not ap-

propriate for a class action because of the likelihood that sig-

nificant questions, not only of damages but of liability and

defenses of liability, would be present, affecting the indi-

viduals in different ways.” Advisory Committee Note to

the 1966 Revision of Rule 23(b)(3), reprinted in 39 F.R.D.

69, 103 (1966). See In re Northern District of California

“Dalkon Shield” IUD Product Liability Litigation, 693

F.2d 847 (9th Cir. 1982), cert. denied, a

S.Ct. 817, 74 L.Ed.2d 1015 (1983); Payton v. Abbott

Labs, 100 F.R.D. 336 (D.Mass. 1983); Delaney v. Borden,

Inc., 99 F.R.D. 44 (E.D.Pa. 1983); Mertens v. Abbott

Laboratories, 99 F.R.D. 38 (D.N.H. 1983); Thompson y.

Procter & Gamble Co., No. C-80-3711, slip op., (N.D.

Cal. Dec. 7, 1982); Ryan v. Eli Lilly & Co., 84 F.R.D. 230

(D.S.C. 1979); McDaniel v. Johns-Manville Sales Corp.,

No.76-735, slip op., (N.D. Ill. May 31, 1979); Marchesi v.

Eastern Airlines, Inc., 68 F.R.D. 500 (E.D.

N.Y. 1975).

673a

Chief Judge Weinstein also found that the divergence

among states as to choice of law and product liability rules is

insignificant and that “a consensus among the states ... pro-

vides, in effect, a national substantive rule governing the

main issues in this case.” It is, of course, the law of this case

that plaintiffs’ claims arise under state law In re “Agent

Orange” Product Liability Litigation, 635 F.2d 987 (2d Cir.

1980), cert. denied, 454 U.S. 1128, 102 S.Ct. 980, 71

L.Ed.2d 116 (1981),? and it is possible that the law of every

State and Australia and New Zealand, including choice of law

rules, will at some point come into play. While we will not

disclaim considerable skepticism as to the existence of a “na-

tional substantive rule,” we note Chief Judge Weinstein’s de-

clared intention to create subclasses as dictated by variations

in state law. Given the unique aspects of this case arguably

creating a need for a single dispositive trial on the common

issues described above, we cannot say that the use of sub-

classes corresponding to variations in state law is a palpable

error remediable by mandamus.

Chief Judge Weinstein also certified a mandatory class

under Rule 23(b)(1)(B).* Relying upon findings of a Special

> That case did not decide whether potential defenses implicating fed-

eral interests such as the government contract defense would be governed

by federal or state law.

‘Rule 23(b)(1)(B) provides:

(b) Class Actions Maintainable. An action may be main-

tained as a class action if the prerequisites of subdivision (a)

are satisfied and in addition:

(1) the prosecution of separate actions by or against indi-

vidual members of the class would create a risk of

x* * Ke * K *

(B) adjudications with respect to individual members of the

class which would as a practical matter be dispositive of the

interests of the other members not parties to the adjudications

or substantially impair or impede their ability to protect their

interests.

674a

Master, he found that the defendants’ assets are at this time

sufficient to meet a judgment for compensatory damages. He

reasoned, however, that because punitive damages are de-

signed solely to punish rather than to compensate, courts ad-

judicating later individual claims would admit evidence as to

the payment of punitive damages in prior cases. Since this

might induce juries to reduce punitive awards to later claim-

ants, he found that an “adjudication with respect to indi-

vidual members of the class ... would as a practical matter

be dispositive of the interests of the other members not par-

ties to the adjudication.” He then certified a class under Rule

23(b)(1)(B) for the award of punitive damages. Given the

large number of potential claimants, estimated by the Special

Master to be over 40,000 and given the fact that punitive

damages ought in theory to be distributed among the indi-

vidual plaintiffs on a basis other than date of trial, the argu-

ment against his ruling does not justify issuance of a writ of

mandamus.*

Petitioners also attack Chief Judge Weinstein’s provi-

sions for notice to the class, which include written notice to

all plaintiffs and intervenors in actions brought in federal

courts and to all persons currently listed on the Veterans Ad-

ministration’s “Agent Orange Registry.” Provision is also

made for requests to radio and television networks and sta-

tions to broadcast notice, as well as notice by advertising in

a number of newspapers and magazines. Notice is also to be

given to the governors of each state who will be requested to

notify any state organizations dealing with the problems of

Vietnam veternas and then to notify Vietnam veterans ident-

ified by such organizations who may be a member of the

class.

* Subclasses may be necessary here because of variations in state law

governing the award of punitive damages.

675a

Chief Judge Weinstein found this to be the best notice

practicable under the circumstances, a conclusion which, if

not inexorable, is arguably correct, at least before the full re-

sults of the advertising and notice to the governors are

known.

Review of the many issues raised by the class certification

will be available when the ramifications of each aspect of the

ruling will be evident. We decide only that the petition for

mandamus is denied.

676a

In re “AGENT ORANGE” PRODUCT

LIABILITY LITIGATION

MDL NO. 381

Nos. 1140, 1141, 1097, 1139, 1081, 1134, 1135, 1100,

1101, 1098, 1099, 1105, 1106, 1102, 1103, 1115, 1119,

1136, 1122, 1123 1124, 1130, 1133, 1127, 1129, Docket

Nos. 84-6273, 84-6321, 85-6035, 85-6051, 85-6083,

85-6261, 85-6265, 85-6301, 86-6303, 85-6307, 86-6323,

86-6325, 86-6327, 86-6329, 85-6335, 85-6349, 85-6371,

85-6373, 85-6379, 85-6381, 85-6385, 85-6387, 85-6393,

85-6395, 85-6411

United States Court of Appeals,

Second Circuit.

Argued April 9, 1986.

Decided April 21, 1987.

Sherman L. Cohn, Robert A. Taylor, Jr., Washington,

D.C.; Richard L. Steagall, Peoria, Ill.; Benton

Musslewhite, Houston, Tex., Avram G. Adler, Francis

Kelly, Philadelphia, Pa. (Ashcraft & Gerel, Washington,

D.C.; Nicoara & Steagall, Peoria, IIl.; Adler & Kops,

Philadelphia, Pa.; James H. Brannon, Jamison & Bran-

non, Houston, Tex.; Joel Rome, Rome & Glaberson,

Philadelphia, Pa.; Marlene Penny Maynes, Cincinnati,

Ohio; Richard D. Heidemen, Louisville, Ky.; Stephen L.

Toney, Werner, Beyer, Lindgren & Toney, New London,

Wis.; Richard Ellison, Cincinnati, Ohio; James C. Barber,

Dallas, Tex.; William Beatty, Granite City, Ill; John T.

McKnight, Brunswick, Ga.;- Richard L. Gill, Gill &

Brinkman, St. Paul, Minn.; James H. Davis, Los Angeles,

Cal.; Kenneth R. Yoffey, Newport News, Va.; Richard L.

Powell, Augusta, Ga.; Joseph H. Latchum, Jr., Watkins,

677a

Chase, Latchum & Williams, Hampton, Va.; Lula Abdul-

Rahim, Duda, Rahim & Rotto, Oakland, Cal.; Robert D.

Gary, Gary & Duff, Lorain, Ohio; J. Edward Allen,

Forston, Bentley & Griffin, Athens, Ga.; Charles O.

Fisher, Walsh & Fisher, Westminster, Md.; William J.

Risner, Tucson Ariz.; Walter L. Blair, Blair & Starks,

Charles Town, W.Va.; Janet Frazier Phillips, Las Vegas,

Nev.; Russell Smith, Laybourne, Smith, Gore, Akron,

Ohio; H. Muldrow Etheredge, New Orleans, La.; Ford S.

Reiche, Barrett, Reiche & Sheehan, Portland, Me.; Sara

Hayes, Gage & Tucker, Kansas City, Mo.; William

Jorden, Jorden & White, Meadville, Pa.; Eugene P. Cicar-

do, Alexandria, La.; Carry R. Dettloff, Kistner, Schienke,

Staugaard, Warren, Michigan; James H. Bjorum, Cox,

Dodson & Bjorum, Corpus Christi, Tex.; Jack E. Lon-

don, Hollywood, Fla.; James T. Davis, Davis & Davis,

Uniontown, Pa.; Robert W. Kagler, Moundsville, W.Va.;

Michael Radbill, Philadelphia, Pa.; William T. Robinson,

III, Robinson, Arnzen, Parry, Covington, Ky.; William

Jarblum, Jarblum & Solomon, New York City; John R.

Mitchell, Charleston, W.Va.; Dennis A. Koltun, Miami,

Fla., of counsel), for plaintiffs-appellants objectors to the

class settlement.

John C. Sabetta, iownley & Updike, New York City

for appellee Monsanto Co.

George D. Reycraft, Cadwalader, Wickersham & Taft,

New York City, for appellee Diamond Shamrock

Chemicals Co.

Rivkin, Radler, Dunne & Bayh, Garden City, N.Y., for

appellee The Dow Chemical Co.

Kelley Drye & Warren, New York City, for appellee

Hercules Inc.

Clark, Gagliardi & Miller, White Plains, N.Y., for ap-

pellee TH Agriculture & Nutrition Co., Inc.

678a

Shea & Gould, New York City, for appellee Uniroyal,

Inc.

Budd Larner Kent Gross Picillo Rosenbaum Greenberg

& Sade, Short Hills, N.J., for appellee Thompson

Chemicals Corp.

Lawrence G. Sager, New York City; Stephen J.

Schlegel, Chicago, Ill. (Irving Like, Reilly, Like &

Scheneider, Babylon, N.Y.; Edward F. Hayes, III, Abruz-

zo, Clancy & Hayes, Huntington, N.Y.; Clayton P.

Gillette, Boston, Mass.; Thomas W. Henderson, Hender-

son & Goldberg, Pittsburgh, Pa.; David J. Dean, Dean,

Falanga & Rose, Carle Place, N.Y.; Gene Locks, Greitzer

& Locks, Philadelphia, Pa.; Stanley M. Chesley, Waite,

Schneider, Bayless & Chesley, Cincinnati, Ohio; Newton

B. Schwartz, Houston, Tex.; Phillip E. Brown, Hoberg,

Finger, Brown, Cox & Molligan, San Francisco, Cal.;

John O.Quinn, O’Quinn & Hagans, Houston, Tex., of

counsel), for appellee plaintiffs; Management Committee.

Before VAN GRAAFEILAND, WINTER, and

MINER, Circuit Judges.

WINTER, Circuit Judge:

This is the first of nine opinions, all filed on this date,

dealing with appeals from Judge Pratt’s and Chief Judge

Weinstein’s various decisions in this multidistrict litigation

and class action. This opinion begins with a section entitl-

ed “Overview and Summary of Rulings” that summarizes

the entire case and all of our decisions. The next section,

“Detailed History of Proceedings,” gives the background

for all of the appeals. Familiarity with this section may be

necessary to understand the various opinions that follow.

The present opinion also contains our rulings regarding

the certification of a class action and the approval of the

settlement between the plaintiff class and the defendant

679a

chemical companies. Two other opinions by this author

review the propriety of the distribution scheme for the

resultant fund and the grant of summary judgment against

those plaintiffs who opted out of the class action. Three

opinions by Judge Van Graafeiland resolve issues concern-

ing the liability of the United States to veterans, their

families, and the chemical companies. A fourth opinion

by Judge Van Graafeiland reviews the dismissal of actions

brought by civilian plaintiffs against the United States and

the chemical companies. Two opinions by Judge Miner

resolve issues concerning the validity of a fee agreement

among the members of the Plaintiffs’ Management Com-

mittee (“PMC”) and the district court’s award of attorneys’

fees.

Most of the appeals in this litigation were argued on

April 9-10, 1986. The appeal from the adoption of the

distribution scheme, however, was not taken until August

19, 1986 and was not argued until October 1. Because the

issues raised by the latter appeal were in many ways inter-

related with those argued in April, the panel had to sus-

pend consideration of these matters until it heard the

arguments in October.

I. OVERVIEW AND SUMMARY

OF RULINGS

By any measure, this is an extraordinary piece of litiga-

tion. It concerns the liability of several major chemicai

companies and the United States government for injuries

to members of the United States, Australian, and New

Zealand armed forces and their families. These injuries

were allegedly suffered as a result of the servicepersons’

exposure to the herbicide Agent Orange while in Vietnam.

Agent Orange, which contains trace elements of the

toxic by-product dioxin, was purchased by the United

680a

States government from the chemical companies and

sprayed on various areas in South Vietnam on orders of

United States Military commanders. The spraying genera-

ly was intended to defoliate areas in order to reduce the

military advantage afforded enemy forces by the jungle

and to destroy enemy food supplies.

We are a court of law, and we must address and decide

the issues raised as legal issues. We do take note, however,

of the nationwide interest in this litigation and the strong

emotions these proceedings have generated among Viet-

nam veterans and their families. The correspondence to

the court, the extensive hearings held throughout the na-

tion by the district court concerning the class settlement

with the chemical companies, and even the arguments of

counsel amply demonstrate that this litigation is viewed by

many as something more than an action for damages for

personal injuries. To some, it is a method of public protest

at perceived national indifference to Vietnam veterans; to

others, and organizational rallying point for those

veterans. Thus, although the precise legal claims is one for

damages for personal injuries, the district court accurately

noted that the plaintiffs were also seeking “larger remedies

and emotional compensation” that were beyond its power

to award. In re “Agent Orange” Product Liability Litiga-

tion, 597 F.Supp. 740, 747 (E.D.N.Y. 1984).

Central to the litigation are the many Vietnam veterans

and their families who have encountered grievous medical

problems. It is human nature for persons who have cancer

in themselves or serious birth effects in their children to

search for the causes of these personal tragedies. Well-

publicized allegations about Agent Orange have led many

such veterans and their families to believe that the her-

bicide is the source of their current grief. That grief is

hardly assauged by the fact that contact with the herbicide

68la

occurred while they were serving their country in cir-

cumstances that were unpleasant at best, excruciating at

worst.

When the case is viewed as a legal action for personal in-

jury sounding in tort, however — and we are bound by our

oaths to so view it — the most noticeable fact is the per-

vasive factual and legal doubt that surrounds the plain-

tiffs’ claims. Indeed, the clear weight of scientific evidence

casts grave doubt on the capacity of Agent Orange to in-

jure human beings. Epidemiological studies of Vietnam

veterans, many of which were undertaken by the United

States, Australian and various state governments

demonstrate no greater incidence of relevant ailments

among veterans or their families than among any other

group. To an individual plaintiff, a serious ailment will

seem highly unusual. For example, the very existence of a

birth defect may persuade grieving parents as to Agent

Orange’s guilt. However, a trier of fact must confront the

statistical probability that thousands of birth defects in

children born to a group the size of the plaintiff class

might not be unusual even absent exposure to Agent

Orange. A trier of fact must also confront the fact that

there is almost no evidence, even in studies involving

animals, that exposure of males to dioxin causes birth

defects in their children.

Both the Veterans’ Administration and the Congress

have treated the epidemiological! studies as authoritative.

Although such studies do not exclude the posibility of in-

jury and settle nothing at all as to future effects, they offer

little scientific basis for believing that Agent Orange caus-

ed any injury to military personnel or their families. The

scientific basis for the plaintiffs’ case consists of studies of

animals and industrial accidents involving dioxin. Dif-

682a

ference in the species examined and nature of exposure

facially undermine the significance of these studies when

compared with studies of the veterans themselves.

Proving that the ailments of a particular individual were

caused by Agent Orange is also extremely difficult. In-

deed, in granting summary judgment against those plain-

tiffs who opted out of the class action (the “optouts”.) the

district court essentially held that such proof was presently

impossible. The first evidentiary hurdle for such an in-

dividual is to prove exposure to Agent Orange an event

years past that at the time did not carry its current

significance. Such evidence generally consist only of oral

testimony as to an individual’s remembering having been

sprayed while on the ground and/or having consumed

food and water in areas where spraying took place. The

second and, in the view of the district court, insurmoun-

table hurdle is to prove that the individual’s exposure to

Agent Orange caused the particular ailment late en-

countered. Plaintiffs do not claim that Agent Orange

causes ailments that are not found in the population

generally and that cannot result from causes known and

unknown other than exposure to dioxin. Plaintiffs’ proof

of causation would consist largely of inferences drawn

from the existence of an ailment, exposure to Agent

Orange and medical opinion as to a causal relationship.

However, the difficulties in excluding known causes, such

as undetected exposure to the same or similar toxic

substances in civilian life, and the conceded existence or

unknown causes might make it difficult for any plaintiff

to persuade a trier of fact as to Agent Orange’s guilt.

Causation is nevertheless an absolutely indispensabie ele-

ment of each plaintiff’s claim.

The plaintiffs’ claims are further complicated by the fact

that an individual’s exposure to Agent Orange cannot be

683a

traced to a particular defendant because the military mix-

ed the Agent Orange produced by various companies in

identical, unlabeled barrels. No one can determine,

therefore, whether a particular instances of spraying in-

volved a particular defendant’s product. In addition, the

Agent Orange produced by some defendants had a con-

siderably higher dioxin content than that produced by

others. Because the alleged ailments may be related to the

amount of dioxin to which an individual was exposed, it is

conceivable that if Agent Orange did cause injury, only

the products of certain companies could have done so.

Difficult legal problems also arise from the considerable

uncertainty as to which product liability rules and statutes

of limitations apply to the various plaintiffs. The plaintiffs

come from throughout the United States, Australia, and

New Zealand, and each would face difficult choice of law

problems that might be resolved adversely to their claims.

Finally, doubt about the strength of the plaintiffs’

claims exists because of the so-called military contractor

defense. The chemical companies sold Agent Orange to the

United States government, which used it in waging war

against enemy forces seeking control of South Vietnam. It

would be anomalous for a company to be held liable by a

state or federal court for selling a product ordered by the

federal government, particularly when the company could

not control the use of that product. Moreover, military ac-

tivities involve high stakes, and common concepts of risk

averseness are of no relevance. To expose private com-

panies generally to lawsuits for injuries arising out of the

deliberately risky activities of the military would greatly

impair the procurement process and perhaps national

security itself.

An illustration of the many factual and legal difficulties

facing the plaintiffs is the dispute armong their counsel as

684a

to how many “serious” or “strong” claims there are. The

Plaintiffs’ Management Committee (“PMC”) estimates a

much smaller number than do counsel for the class

members who object to the settlement. Neither group has

hard evidence to support its estimates. If by “serious” or

“strong” one means a case likely to prevail on liability and

to result in a substantial damage award, then we believe

that every plaintiff would encounter difficulties in proving

causation and even graver problems in overcoming the

military contractor defense. If a case is considered

“serious” or “strong” because the plaintiff has grave

ailments or has died, then such cases do exist although

their numbers remain in doubt. What is not in doubt is

that the widespread publicity given allegations about

Agent Orange have led to an enormous number of claims

alleging a large variety of highly common ailments. The

illness claimants now attribute to Agent Orange include

not only heart disease, cancer, and birth defects, but also

confusion, fatigue, anxiety, and spotty tanning.

The procedural aspects of this litigation are also ex-

traordinary. Chief Judge Weinstein certified it as a class

action at the behest of most of the plaintiffs and over the

objections of all of the defendants. Certain issues, such as

the damage suffered by each plaintiff, were not, of course,

to be determined in the class action. Instead, they were to

be left to individual trials if the outcome of the class action

proceedings was favorable to the plaintiffs. Some plain-

tiffs opted out of the class action, but their cases remained

in the Eastern District of New York as part of a multidis-

trict referral.

The class certification and settlement caused the number

of claimants and the variety of ailments attributed to

Agent Orange to climb dramatically. It also has caused

disunity among the plaintiffs and increased the controver-

~ ssl |

685a

sy surrounding this case. Correspondence to this court in-

dicates that many of the original plaintiffs, most of whom

joined the motions for class certification, were never ad-

vised that use of the class action device might lead to their

being represented by counsel whom they did not select and

who could settle the case without consulting them. In the

midst of this litigation, original class counsel, Yannacone

& Associates, asked to be relieved for financial reasons.

Control of the class action soon passed to the PMC.Six of

the nine members of the PMC advanced money for ex-

penses at a time when the plantiffs’ case, already weak on

the law and the facts, was near collapse for lack of

resources. This money was furnished under an agreement

that provided that three times the amount advanced by

each lawyer would be repaid from an eventual fee award.

These payments would have priority, moreover, over

payments for legal work done on the case.

The trial date set by Chief Judge Weinstein put the par-

ties under great pressure, and just before the trial was to

start, the defendants reached a $180 million settlement

with the PMC. The size of the settlement seems extraor-

dinary. However, given the serious nature of many of the

various ailments and birth defects, plaintiffs attributed to

Agent Orange, the understandable sympathy a jury would

have for the particular plaintiffs, and the large number of

‘claimants, 240,000, the settlement was essentially a pay-

ment of nuisance value. Although the chances of the

chemical companies’, ultimately having to pay any dam-

ages may have been slim, they were exposed potentially to

billions of dollars in damages if liability was established

and millions in attorney’s fees merely to continue the

litigation.

The district judge approved the settlement. It is clear

that he viewed the plaintiffs’ case as so weak as to be vir-

686a

tually baseless. Indeed, shortly after the settlement, he

granted summary judgment against the plaintiffs who

opted out of the class action on the grounds that they

could not prove that a particular ailment was caused by

Agent Orange and that their claims were barred by the

military contractor defense.

In addition, Chief Judge Weinstein awarded counsel

fees in an amount that was considerably smaller than had

been requested by the attorneys involved. The size of the

award was clearly influenced by his skepticism about

whether the case should ever have been brought.

The final extraordinary aspect of this case is the scheme

adopted by Chief Judge Weinstein to distribute the class

settlement award. That scheme, which is described as

“compensation-based” rather than “tort-based,” allows

veterans who served in areas in which the herbicide was

sprayed and who meet the Social Security Act’s definition

of disabled to collect benefits up to a ceiling of $12,000.

Smaller payments are provided to the survivors of veterans

who served in such areas. No proof of causation by Agent

Orange is required, although benefits are available only

for non-traumatic disability or death. The distribution

scheme also provides for the funding of a foundation to

undertake projects thought to be helpful to members of

the class.

Many of the decisions of the district court were appeal-

ed, and we summarize our rulings here. In this opinion, we

reject the various challenges to the certification of a class

action. Although we share the prevalent skepticism about

the usefulness of the class action device in mass tort litiga-

tion, we believe that its use was justified here in light of the

centrality of the military contractor defense to the claims

of all plaintiffs. We also approve the settlement in light of

both the pervasive difficulties faced by plaintiffs in

687a

establishing liability and our conviction that the military

contractor defense absolved the chemical companies of

any liability. In a second opinion by this author, 818 F.2d

179, we afirm the distribution scheme’s provision for

disability and death benefits to veterans exposed to Agent

Orange and their survivors. We reverse the scheme’s

establishment of a foundation; however, the district court

may on remand fund and supervise particular projects it

finds to be of benefit to the class. A third opinion by this

author, 818 F.2d 187, affirms the grant of summary judg-

ment against the opt-out plaintiffs based on the military

contractor defense. On two grounds we hold that the

chemical companies did not breach any duty to inform the

government of Agent Orange’s hazardous properties.

First, at the time relevant here, the government had as

much information about the potential hazards of dioxin as

did the chemical companies. Second, the weight of present

scientific evidence does not establish that Agent Orange

caused injury to personnel in Vietnam. The chemical com-

panies did not breach any duty to inform the government

and are therefore not liable to the opt-outs.

In an opinion by Judge Van Graafeiland, 818 F.2d 194,

we affirm the district court’s dismissal of actions against

the United States by veterans on the grounds that they are

barred by the Feres doctrine and the discretionary func-

tion exception to the Federal Tort Claims Act. A second

opinion by Judge Van Graafeiland, 818 F.2d 204, affirms

the dismissal of an action against the United States by the

chemical companies seeking contribution or indemnity for

the $180 million they paid in settling with the plaintiff

class. A third opinion, 818 F.2d 210, affirms the dismissal

of civilian actions against the United States on discre-

tionary function grounds and of similar actions against the

chemical companies on statute of limitations and military

688a

_ contractor defense grounds.-A final opinion by the same

author, 818 F.2d 201, affirms the dismissal of the so-called

“direct” claims by families of veterans against the govern-

ment on Feres and discretionary function grounds.

An opinion by Judge Miner, 818 F.2d 216, invalidates

the PMC members’ agreement to repay on an “up front”

basis treble the expenses that any of them advanced. We

hold that this agreement creates a conflict of interest be-

tween the attorneys and the class by generating imper-

missible incentives to settle. A second opinion by Judge

Miner, 818 F.2d 226, affirms the district court’s award of

counsel fees except with regard to the abrogation of one

fee award.

Il. DETAILED HISTORY OF PROCEEDINGS

1) Early Proceedings

Plaintiffs allegedly were exposed to the herbicide Agent

Orange as a consequence of efforts undertaken by the

United States military forces to defoliate the jungle in

Vietnam. One purpose of this defoliation project, known

as “Operation Ranch Hand,” was to clear away foliage

near supply transport lines, power lines, and military

bases, and thus deprive enemy forces of protective cover.

The herbicide was also used to destroy crops available to

the enemy. Some plaintiffs claim to have been directly ex-

posed to the herbicide, while others claim that it conta-

minated the food and water they consumed or the ground

on which they slept.

Although various herbicides were used during the war,

Agent Orange was thought to be best suited for the

military’s purposes and was used most frequently. Agent

Orange was a mixture of the herbicides known as 2,4-D

ri

689a

and 2,4,5-T.' The manufacture of 2,4,5-T is said inevi-

tably to result in the production of dioxin, which is alleged

to be a highly toxic substance. Whether the trace elements

of dioxin in Agent Orange were hazardous to persons in

sprayed areas is sharply disputed. Indeed, the toxicity of

dioxin itself remains a controversial issue. See generally P.

Schuck, Agent Orange on Trial 16-21 (1986); M. Gough,

Dioxin, Agent Orange (1986).

The Agent Orange litigation began is July 1978, with the

filing of a lawsuit by Vietnam veteran Paul Reutershan,

now deceased, in Supreme Court, New York County. The

defendants were several chemical companies alleged to

have manufactured Agent Orange. That case was removed

to federal court and then transferred to the Eastern

District of New York. On January 8, 1979, Reutershan’s

estate filed an amended complaint seeking relief on behalf

of a class of veterans and their families injured by Agent

Orange. Several other complaints alleging similar class

claims were filed in late 1978 and early 1979. In March

1979, counsel for Reutershan’s estate and for defendant

Dow Chemical Co. jointly petitioned pursuant to 28

U.S.C. § 1407(c) (1982) for the establishment of a

multidistrict litigation proceeding. The Judicial Panel on

Multidistrict Litigation established Jn re In re “Agent

Orange” Product Liability Litigation, MDL No. 381, in

the Eastern District of New York. The first cases were

transferred to the Eastern District on May 8, 1979, and

nearly 600 cases have since been transferred. MDL No.

381 was assigned to then District Judge Pratt.

The third amended class complaint in the area des-

ignated by the court as the lead action alleged federal ques-

'“2,4-D” and “2,4,5-T” are the abbreviated names of 2,4-Dichlo-

rophenoxyacetic acid and 2,4,5-Trichlorophenoxyacetic acid respec-

tively.

690a

tion jurisdiction under the “common law and/or the

statuary laws of the United States.” Defendants moved to

dismiss this complaint for want of subject matter jurisdic-

tion. Judge Pratt adopted the federal common law theory

and accordingly denied the motion. Jn re In re “Agent

Orange” Product Liability Litigation, 506 F. Supp. 737,

743-49 (E.D.N.Y. 1979). However, a divided panel of this

court reversed. Jn re In re “Agent Orange” Product

Liability Litigation 635 F.2d 987 2d Cir. 1980), cert.

denied, 454 U.S. 1128, 102 S.Ct. 980, 71 L.Ed.2d 116

(1981). The class action thereafter proceeded in federal

court solely on the basis of diversity jurisdiction under 28

U.S.C. § 1332 (1982).

Defendants next moved for summary judgment based

on the so-called military contractor defense. The motion

contended that the plaintiffs’ claims against the chemical

manufacturers were barred on the grounds:

(1) that they merely manufactured and supplied

Agent Orange to the government pursuant to

validly authorized contracts[;] (2) that Agent

Orange was not manufactured before and has

not been manufactured since; (3) that they com-

pleted their compelled manufacture of Agent

Orange in strict compliance with the specifica-

tions supplied by the government, specifications

that contained no obvious or “glaring” defects

that would have alerted the defendants of any

impending danger in following them; and (4) that

they manufactured Agent Orange without any

negligence on their part.

In re “Agent Orange” Product Liability Litigation, 506

F. Supp. 762, 795 (E.D.N.Y. 1980).

Although Judge Pratt stated that this defense might be

available to the defendants, id. at 796, he denied defen-

69la

dants’ motion on the ground that their own descriptions of

their contract performance and their relationship to the

government raised issues of fact requiring a trial. Jd.

Judge Pratt planned to hold an initial trial on the

military contractor defense and allowed discovery on this

issue. He stated:

The elements of the defense will be uniquely

adapted to consideration and adjudication, se-

parate and apart from the issues of liability,

causation and damages. As a pract..al matter,

discovery as to these discrete issues will be rather

narrow compared to the discovery that some of

the other fact issues presented by this action may

require.

Id.

In addition, Judge Pratt stated his intention to certify a

class pursuant to Fed.R.Civ.P. 23(b)(3) of “persons who

claim injury from exposure to Agent Orange and their

spouses, children and parents who claim direct or

derivative injury therefrom.” /d. at 788. He noted that “it

may later prove advantageous to create subclasses for

various purposes.” Jd. Judge Pratt rejected plaintiffs’ re-

quest for certification of a “limited fund” class action pur-

suanht to Fed.R.Civ.P. 23(b)(1)(B), on the ground that

plaintiffs had failed to offer evidence that the defendants

were likely to become insolvent if held liable for plaintiffs’

injuries. Jd. at 789-90.

Following eleven months of discovery, defendants Her-

cules, Thompson Chemical, Riverdale Chemical,

Hoffman-Taft, Dow Chemical, TH Agriculture and

Nutrition, and Uniroyal again moved for summary judg-

ment on the military contractor defense. Defendants Mon-

santo and Diamond Shamrock did not join in the motion.

Judge Pratt granted summary judgment to Hercules,

—

692a

Thompson Chemical, Riverdale Chemical, and Hoffman-

Taft, but denied the motions of Dow Chemical, TH

Agriculture and Nutrition, and Uniroyal. Jn re “Agent

Orange” Product Liability Litigation 565 F. Supp. 1263

(E.D.N.Y. 1983). He also concluded that the planned

separate trial on the military contractor defense was not

desirable. He noted that discovery and argument of mo-

tions on the military contractor defense had revealed that

the defense implicated factual issues also central to both

liability and causation and thus should not be tried

separately. Subsequently, defendants Hercules and

Thompson Chemical were reinstated as defendants.

In 1980, Yannacone & Associates, a consortium of

lawyers who banded together for purposes of this litiga-

tion, was designated lead counsel for the representatives of

the plaintiff class. See 506 F. Supp. at 788 n. 32. In 1983,

the firm of Ashcraft & Gerel and attorneys Benton

Musslewhite, Steven Schlegel, and Thomas Henderson

joined Yannacone & Associates as lead counsel for the

representatives of the class. In September 1983, Yan-

nacone & Associates moved to be relieved of its duties as

class counsel, citing an inability to bear the costs

associated with the litigation. This motion was granted.

Ashcraft & Gerel sought to gain control of the case but

failed to do so and withdrew as class counsel. As we

describe infra, Musslewhite, Schlegel, and Henderson then

recruited additional attorneys to the PMC. See generally

Schuck, Agent Orange on Trial at 73-77, 94-95, 102-110.

Although not a member of the PMC, Ashcraft & Gerel has

continued to represent plaintiffs who have opted out of

the class action, certain civilian plaintiff, and certain class

members who object to the settlement.

2) Class Certification.

Judge Pratt’s duties as a newly-appointed member of

693a

this court precluded him from continuing as trial judge,

and in October 1983, Chief Judge Weinstein assumed

responsibility for MDL No. 381. After conferring with the

parties, he ordered the trial of the class claims to begin on

May 7, 1984. He formally certified a Rule 23(b)(3) class,

finding.

(1) that the affirmative defenses and the question

of general causation are common to the class, (2)

that those questions predominate over any ques-

tions affecting individual members, and (3) given

the enormous potential size of plaintiffs case and

the judicial economies that would result from a

class trial, a claim action is superior to all other

method for a “fair and efficient adjudication of

the controversy.”

In re “Agent Orange” Product Liability Litigation, 100

F.R.D. 718, 724 (E.D.N.Y. 1983) (“Class Certification

Opinion.”)

Chief Judge Weinstein defined the plaintiff class as

those persons who were in the United States,

New Zealand or Australian Armed Forces at any

time from 1961 to 1972 who were injured while in

or near Vietnam by exposure to Agent Orange or

other phenoxy herbicides, including those com-

posed in whole or in part of 2,4,5-tri-chloro-

phenoxyacetic acid or containing some amount

of 2,3,7,8-tetrachlorodibenzo-p-dioxin. The

class also includes spouses, parents, and children

of the veterans born before January 1, 1984,

directly or derivatively injured as a result of the

exposure.

Id. at 729.

In addition, Chief Judge Weinstein certified a Rule

23(b)(1)(B) mandatory class on the issue of punitive

694a

damages, though not on the ground, previously rejected

by Judge Pratt, that the claims against the defendants

could render them insolvent. Rather, he reasoned that

because the purpose of punitive damages is not to compen-

sate but to punish, some limits should be imposed on the

amount of punishment meted out to the defendants for a

single transaction. See Roginsky v. Richardson-Merrell,

Inc., 378 F.2d 832, 838 —42 (2d. Cir. 1967) (Friendly, J.)

Chief Judge Weinstein reasoned that punitive damages

might be awarded, if at all, only to the first plaintiffs to

receive a judgment. He concluded that

it would be equitable to share [a punitive damage

award] among all plaintiffs who ultimately

recover compensatory damages. Yet, if no class

is certified under Rule [23](b)(1)(B), non-class

members who opt out under Rule 123(b)(3) would

conceivably receive all of the punitive damages

or, if their cases are not completed first, none at

all.

F.R.D. at 728.

Chief Judge Weinstein also required that plaintiffs’

counsel, at their own expense, provide notice to the

members of the class as follows:

(1) Written notice was to be mailed to (a) all persons

who had filed actions in the federal district courts, or had

filed actions in state courts later removed to federal court,

that were pending in or transferred to the Eastern District;

(b) all persons who had intervened or sought to do so; (c)

each class member then represented by counsel associated

with the PMC who had not yet commenced an action or

sought to intervene; (d) all persons then listed on the

United States Government’s Veterans’ Administration

“Agent Orange Registry”;

(2) Announcements were to be sent to the major radio

<li

695a

and television networks, and to radio stations with a com-

bined coverage of at least one half of the audience in each

of the top 100 radio markets;

(3) Notice was to be published in certain leading na-

tional newspapers and magazines, in servicepersons’

publications, and in newspapers in Australia and New

Zealand;

(4) A toll-free “800” telephone number was to be obtain-

ed and staffed by persons who would provide callers with

basic information about the litigation;

(5) Notice was to be sent to each state governor re-

questing that he or she refer the notice to any state agency

dealing with the problems of Vietnam veterans.

The notice sent to individual veterans, reprinted in the

appendix to this opinion, informed potential class

members of the pendency of the class action and their

right to opt out of the Rule 23(b)(3) class. The notice made

clear that exclusion could be effectuated only by written

request, and an “Exclusion Request Form” was attached to

the notice for convenience.

Following certification of the two classes, the defen-

dants petitioned this court for a writ of mandamus to com-

pel the district court to vacate certification of the classes.

See In re Diamond Shamrock Chemicals Co., F.2d 858 (2d

Cir.), cert. denied, 465 U.S. 1067, 104 S.Ct. 1417, 79

L.Ed.2d 743 (1984). In denying the petition, we noted that

“mandamus is an extraordinary remedy,” id. at 859, and

that “[r]jeview of the many issues raised by the class cer-

tification will be available when the ramifications of each

aspect of the ruling will be evident.” Jd. at 862. We also

stated that “it seems likely that some common issues,

which stem from the unique fact that the alleged damage

was caused by a product sold by private manufacturers

under contract to the government for use in a war, can be

696a

disposed of in a single trial. The resolution of some of

these issues in defendants’ favor may end the litigation en-

tirely.” /d. at 860—61. We further observed that the notice

required was at least arguably the best practicable under

the circumstances. /d. at 862.

Various plaintiffs, as a means of challenging the settle-

ment, now appeal from the class certification. They con-

tend that the district court lacked subject matter jurisdic-

tion, that there were insufficient common questions of law

and fact to justify certification, and that the notice was in-

adequate.

3) The Settlement

In April 1984, Chief Judge Weinstein appointed three

special masters—Leonard Garment, Kenneth Feinberg,

and David Shapiro —to assist in negotiations over a settle-

ment of the class action. These negotiations intensified

during the weekend before trial. See Schuck, Agent

Orange on Trial at 49—66. On May 7, 1984, the day the

trial was to have begun, the class representatives and the

chemical companies agreed to settle the class claims for

$180 million. Thereafter, Chief Judge Weinstein con-

ducted eleven days of hearings on the proposed settlement

in New York, Atlanta, Houston, Chicago, and San Fran-

cisco. At these hearings, nearly 500 witnesses addressed

the fairness of the settlement. Chief Judge Weinstein also

considered “hundreds of written communications from

veterans, members of their families, veterans’ organiza-

tions and others . . . and read a large part of the relevant

literature, taking judicial notice of its substance.” Jn re

“Agent Orange” Product Liability Litigation, 597 F.Supp.

740, 748 (E.D.N.Y. 1984) (“Settlement Opinion”).

By May 6, 1984, the day before the settlement was

reached, some 2,440 class members had opted out of the

697a

Rule 23(b)(3) class action by filing requests for exclusion.

The settlement agreement provided for a period during

which persons who had opted out of the class could be

reinstated as class members if they filed a request with the

district court. Settlement Agreement { 8, id. at 865. Some

600 such requests were received. Chief Judge Weinstein

stated that he would consider late applications to rejoin

the class “sympathetically.” Jd. at 757.

In a lengthy opinion, reported at 597 F.Supp. 740

(E.D.N.Y. 1984), Chief Judge Weinstein approved the set-

tlement subject to hearings on counsel fees and

preliminary consideration of plans for distribution of the

settlement proceeds. Various members of the class appeal

from the approval of the settlement on the ground that the

$180 million award is inadequate.

4) Counsel Fees

By late 1983, the three remaining members of the PMC

— Schlegel, Musslewhite, and Henderson — found that

they lacked the resources necessary to continue the litiga-

tion. In order to attract new members both to finance and

staff the lawsuit, the members of the PMC entered into a

agreement whereby those members who advanced money

for expenses were to be repaid at three times the amount of

money advanced “off the top” out of any award of counsel

fees. The agreement also established a formula, later

rescinded, by which the remainder of the fee award was to

be distributed among the PMC members. As a result,

those who had advanced money for expenses 'n return for

a trebled repayment controlled six of the nine PMC votes.

Chief Judge Weinstein was not informed of this agreement

until after the case had been settled.

After the settlement, more than 100 applications for at-

torneys’ fees and expenses were submitted to the district

_

696a

disposed of in a single trial. The resolution of some of

these issues in defendants’ favor may end the litigation en-

tirely.” Jd. at 860—61. We further observed that the notice

required was at least arguably the best practicable under

the circumstances. Jd. at 862.

Various plaintiffs, as a means of challenging the settle-

ment, now appeal from the class certification. They con-

tend that the district court lacked subject matter jurisdic-

tion, that there were insufficient common questions of law

and fact to justify certification, and that the notice was in-

adequate.

3) The Settlement

In April 1984, Chief Judge Weinstein appointed three

special masters—Leonard Garment, Kenneth Feinberg,

and David Shapiro—to assist in negotiations over a settle-

ment of the class action. These negotiations intensified

during the weekend before trial. See Schuck, Agent

Orange on Trial at 49—66. On May 7, 1984, the day the

trial was to have begun, the class representatives and the

chemical companies agreed to settle the class claims for

$180 million. Thereafter, Chief Judge Weinstein con-

ducted eleven days of hearings on the proposed settlement

in New York, Atlanta, Houston, Chicago, and San Fran-

cisco. At these hearings, nearly 500 witnesses addressed

the fairness of the settlement. Chief Judge Weinstein also

considered “hundreds of written communications from

veterans, members of their families, veterans’ organiza-

tions and others . . . and read a large part of the relevant

literature, taking judicial notice of its substance.” Jn re

“Agent Orange” Product Liability Litigation, 597 F.Supp.

740, 748 (E.D.N.Y. 1984) (“Settlement Opinion”).

By May 6, 1984, the day before the settlement was

reached, some 2,440 class members had opted out of the

ll

697a

Rule 23(b)(3) class action by filing requests for exclusion.

The settlement agreement provided for a period during

which persons who had opted out of the class could be

reinstated as class members if they filed a request with the

district court. Settlement Agreement { 8, id. at 865. Some

600 such requests were received. Chief Judge Weinstein

stated that he would consider late applications to rejoin

the class “sympathetically.” Jd. at 757.

In a lengthy opinion, reported at 597 F.Supp. 740

(E.D.N.Y. 1984), Chief Judge Weinstein approved the set-

tlement subject to hearings on counsel fees and

preliminary consideration of plans for distribution of the

settlement proceeds. Various members of the class appeal

from the approval of the settlement on the ground that the

$180 million award is inadequate.

4) Counsel Fees

By late 1983, the three remaining members of the PMC

— Schlegel, Musslewhite, and Henderson — found that

they lacked the resources necessary to continue the litiga-

tion. In order to attract new members both to finance and

staff the lawsuit, the members of the PMC entered into a

agreement whereby those members who advanced money

for expenses were to be repaid at three times the amount of

money advanced “off the top” out of any award of counsel

fees. The agreement also established a formula, later

rescinded, by which the remainder of the fee award was to

be distributed among the PMC members. As a result,

those who had advanced money for expenses in return for

a trebled repayment controlled six of the nine PMC votes.

Chief Judge Weinstein was not informed of this agreement

until after the case had been settled.

After the settlement, more than 100 applications for at-

torneys’ fees and expenses were submitted to the district

698a

court. Hearings on these applications were held on

September 26 and October 1, 1984. On June 18, 1985,

Chief Judge Weinstein issued and amended order award-

ing a total of $10,767,443.63 in fees and expenses to 88 law

firms and individual lawyers for their work on behalf of

the class. Jn re “Agent Orange” Product Liability Litiga-

tion, 611 F.Supp. 1296, 1344-46 (E.D.N.Y. 1985). The

district court followed the so-called “lodestar” approach to

attorneys’ fees awards, see City of Detroit v. Grinnell

Corp., 495 F.2d 448 (2d Cir. 1974) (“Grinnel I’’), and City

of Detroit v. Grinnel Corp., 560 F.2d 1093 (2d Cir. 1977)

(“Grinnell IT’), using national hourly rates of $150 for

partners, $125 for law professors, and $100 for associates.

The court increased some fee awards by a quality

multiplier, ranging from 1.50 to 1.75, to reward those who

exhibited “exceptional or extraordinary skill” in the litiga-

tion. 611 F.Supp. at 1328. The court declined, however, to

apply and overall risk multiplier to the lodestar amount.

Appeals have been taken from these rulings.

As noted, the PMC agreement required a trebled return

of funds advanced off the top of any fees awarded by the

court. Some PMC members therefore stood to receive

enormously greater fees than they were awarded by the

court, while others stood to receive substantially less. For

example, David J. Dean, who was to have served as lead

trial counsel and was awarded $1,424,283 in fees by the

district court, would receive only $542,310 under the fees

sharing agreement. In contrast, Newton Schwartz, who

was awarded only $41,886 by the district court, would

receive $513,026 under the agreement.

Chief Judge Weinstein denied a motion by Dean to set

aside the fee-sharing agreement after concluding that the

agreement had no adverse impact on the interests of the

class. In re “Agent Orange” Product Liability Litigation,

611 F.Supp. 1452, 1458-62 (E.D.N.Y. 1985). However, he

699a

ordered that “[i]n future cases, as soon as a fee-sharing ar-

rangement is made its existence must be made known to

the court and through the court to the class.” Jd. at 1463.

Dean has appealed from that ruling.

5) Distribution of the Settlement

A number of proposals for distribution of the settle-

ment fund were presented to Chief Judge Weinstein. We

focus on the plans submitted by the PMC, by Victor Yan-

nacone, original lead counsel for the class, and by Special

Master Feinberg.

The PMC proposed to compensate all class members

who could prove that they suffered from any of 24 medical

conditions that the PMC’s experts associated with ex-

posure to Agent Orange. These conditions included

chloracne; peripheral and central neuropathy; various

liver disorders, including cirrhosis, chronic hepatitis, and

porphyria cutanea tarda; gastrointestinal conditions;

hematological, endocrinal, and metabolic problems;

benign and malignant tumors; birth defects; and miscar-

riages. The PMC proposal also suggested providing com-

pensation to claimants with other medical problems, such

as arthritis, heartburn, abdominal pain, and diarrhea, that

seem to have been reported in the literature as possibly ac-

companying Agent Orange exposure.” The PMC would

have adjusted each compensation award by a number of

“individual discount factors” to reflect a claimant’s finan-

cial needs and the legal and factual difficulties that the

claimant would have encountered in proving his or her

case in court. Accordingly, two claimants with similar

medical conditions might have received different

monetary awards depending, for example, on their col-

lateral source payments, numbers of dependents, and

ability to receive gratuitous services; the statutes of limita-

tions and availability of a strict liability cause of action

under the applicable state law; their action under the ap-

~700a

plicable state law levels of exposure to Agent Orange

and/or dioxiri, a factor the PMC has abandoned on ap-

peal; their individual and family medical histories; “life

style considerations”; and damages. The PMC suggested

that the settlement fund might also be used to provide

class-wide benefits such as “preventive and genetic

counseling, health monitoring, research and [group life

and health] insurance.”

The Yannacone proposal would have deferred any

distribution of the settlement fund to individual claimants

pending a survey of “who the Viet Nam veterans are, what

their present state of health is, and how many have already

died and from what causes.” Yannacone urged that a por-

tion of the settlement fund be used to establish a “Viet

Nam Veterans Legal Assistance Foundation” to assist class

members in obtaining disability benefits from _ the

Veterans’ Administration. Yannacone’s proposal pur-

ported to speak for thousands of veterans and their

families who “reaffirm[ed] their original position that the

purpose of the Agent Orange litigation was to establish a

trust fund for the benefit of all the Agent Orange victims

not to benefit any individual veteran at the expense of

their [sic] comrades-in-arms.”

Special Master Feinberg proposed that the greater part

of the settlement fund be distributed to individual veterans

and family members in the form of death and disability

benefits. The difficulties of establishing a causal link be-

tween a claimant’s injuries and exposure to Agent Orange

were to be avoided by compensating all claimants who had

been exposed to the defoliant and who later died or

became disabled as a result of non-traumatic causes. The

Special Master proposed that the remainder of the settle-

ment fund be used to provide services to the class as a

whole and in particular to children with birth defects.

Chief Judge Weinstein conducted a public hearing on

the various distribution plans on March 5, 1985. More

701a

than 40 speakers, including members of the PMC, Yan-

nacone, representatives of veterans organizations, and in-

dividual class members, participated in the hearing. The

PMC and other interested persons were allowed additional

time following the hearing to submit written comments on

the distribution proposals.

On May 28, 1985, Chief Judge Weinstein issued an

order establishing a plan for distribution of the settlement

fund. In re “Agent Orange” Product Liability Litigation

(“Distribution Opinion”), 611 F.Supp. 1396 (E.D.N.Y.

1985). He adopted with slight modifications the Special

Master’s proposal, which he described as “an elegant solu-

tion [combining] insurance-type compensation to give as

much help as posible to individuals who, in general, are

most in need of assistance, together with a foundation run

by veterans with the flexibility and discretion to take care

of individuals and groups most in need of help.” Jd. at

1400. The plan provided that 75 percent of the $180

million settlement fund, including accrued interest, would

be distributed directly “to exposed veterans who suffer

from long-term total disabilities and to the surviving

spouses or children of exposed veterans who have died.”

Id. at 1410-11. A claimant would qualify for compensa-

tion by establishing exposure to Agent Orange and death

or disability not “predominantly caused by trauma,

whether or not self-inflicied.” Jd. at 1412.

Chief Judge Weinstein offered four reasons for pro-

viding individual compensation payments only to disabled

veterans and to survivors of deceased veterans. First,

because the settlement fund was “not sufficient to satisfy

the claimed losses of every class member,” id. at 1411, it

would be equitable to limit payments to those with the

most severe injuries. Second, the payments would be made

only to veterans or survivors, and not to children who had

suffered birth defects and wives who had suffered miscar-

702a

riages, because “however slight the suggestion of a causal

connection between the veterans’ medical problems and

Agent Orange exposure, even less evidence supports the

existence of an association between birth defects [or

miscarriages] and exposure of the father to Agent Orange

in Vietnam.” Jd. Third, claim processing costs would be

minimized under the plan because claimants would not be

required to prove that they suffered from any particular

disease or that the disease was caused by exposure to

Agent Orange; the court reasoned that any alternative

eligibility criteria would require “[c]reation of a costly new

claims-processing bureaucracy” and “impose on the appli-

cant the enormous burdens of producing volumes of

medical records and paying expensive medical and legal

fees for complicated processing and testing.” Jd. Finally,

the distribution plan “‘obviate[s] the necessity for par-

ticularized proof’ and is ‘a fair response to the particular

difficulties that this class would have in gathering and

presenting evidence of damages.’” /d. (quoiing /n re

Chicken Antitrust Litigation American Poultry, 669 F.2d

228, 240 & n. 20 (Sth Cir. 1982)).

Chief Judge Weinstein rejected as “essentially

arbitrary,” id. at 1409, the PMC Plan to provide compen-

sation only for specified diseases. He reasoned that “[njo

factual basis exists for choosing or excluding any disease,

since causation cannot be shown for either individual

claimants or individual diseases with any appropriate

degree of probability.” Jd. In addition, he concluded that

the costs of establishing the existence of particular diseases

and applying individual discount factors would be burden-

some and expensive for both the fund and the claimant.

Id. at 1408-09.

Chief Judge Weinstein set aside most of the remainder

of the settlement fund to support a “class assistance foun-

dation that would “serve as a national focus for Vietnam

|

703a

veterans who are class member to mobilize themselves and

others to deal with their medical and related problems.”

Id. at 1432. The “broad mandates” of the foundation were

defined as “to found projects to aid children with birth

defects and their families and alleviate reproductive prob-

lems” and “to fund projects to help meet the service needs

of the class as a whole.” Jd. at 1437. The district judge

reasoned that the foundation was “[t]he most practicable

and equitable method of distributing benefits” to class

members who were neither disabled veterans or survivors

of deceased veterans, because “[d]Jistribution of thousands

of small individual payments would trivialize the

beneficial impact of the settlement fund on the needs of

the class.” Jd. at 1431.

The court offered a number of examples of the sorts of

programs for which the foundation might provide finan-

cial support. The projects that might be funded for

children with birth defects included “[p]rotection and ad-

vocacy services,” “[g]rants to hospitals and clinics,” “in-

surance programs,” “vocational training projects,” “grants

to establish peer support groups to enable children with

birth defects to discuss their problems openly among

themselves,” and “[g]rants or loans... to families in

grave financial need to help pay for essential medical serv-

ices.” Id. at 1438-39. Other possibilities “for funding of

classwide services” enumerated by the court included pro-

jects to “help class member veterans better obtain and

utilize VA services and to monitor the VA and other fed-

eral and state services to ensure that they are responsive to

the needs of the class,” to “increase public awareness of

the problems of the class,” to provide health information

and social service assistance to the class, and to “help

members of the class become a more integrated part of

society.” Jd. at 1440.

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704a

The foundation was to be administered by a board of

directors “comprised primarily of Vietnam veterans.” Jd.

at 1434. The court would apoint the initial board of direc-

tors of between 15 and 45 members, which would

thereafter be “self-governing and self-perpetuating.” Jd. at

1435. Subject only to the general supervisory authority re-

tained by the court, the board would control “every aspect

of foundation administration,” including “investment and

budget decisions, specific funding priorities, a detailed

grant application process, the actual grant awards, evalua-

tion mechanisms, and fundraising strategies.” Jd. The

court would play “[a] comparatively modest supervisory

role in the operation of the class assistance foundation,”

while retaining the power to “supervise foundation opera-

tions actively and exercise control as necessary to protect

the interests of the class.” Jd. at 1436.

Chief Judge Weinstein reappointed Special Master

Feinberg to oversee the implementation of the distribution

plan. Jd. at 1400. However, no claimants were to receive

payments and no services were to be funded until the ap-

pellate process was completed /d. at 1451.

The PMC filed an appeal and petition for a writ of man-

damus/prohibition on August 19, 1986, seeking to over-

turn the distribution plan. On September 5, 1986, Mr.

Yannacone filed a _ petition for a writ of man-

damus/prohibition seeking removal of the PMC as class

counsel and implementation of his proposed distribution

plan.

6) Dismissal of the Opt-Out Cases

After settling with the class, defendants moved on July

24, 1984, for summary judgment against the opt-outs.

Chief Judge Weinstein dismissed the opt-outs on the

aa wee

705a

grounds that, inter alia, no plaintiff was able as a matter

of law to produce sufficient evidence to allow a trier of

fact to find that Agent Orange had caused the particular

ailment(s) from which he or she suffered. Jn re “Agent

Orange” Product Liability Litigation, 611 F.Supp. 1223,

1256-63 (E.D.N.Y. 1985) (“Opt-Out Opinion”). As a sec-

ond, independently dispositive ground, Chief Judge

Weinstein held that the military contractor defense

precluded recovery. Jd. at 1263-64. Certain opt-out plain-

tiffs appeal from those decisions.

7) Proceedings Against the Government and

Miscellaneous Actions.

The first direct claim against the United States was

asserted by veterans who believed that they had been ex-

posed to Agent Orange. Ryan v. Cleland, 531 F.Supp. 724

(E.D.N.Y. 1982). The plaintiffs alleged that the govern-

ment and certain government officials were liable under

the Federal Tort Claims Act (“FTCA”), 28 U.S.C.

§ 1346(b) ef seq., for failing to warn them of the possible

dangers associated with exposure to Agent Orange and

neglecting to provide proper medical care for those who

had been injured by the herbicide. Judge Pratt held that

the United States was immune from suit under the FTCA

on the failure-to-warn claims because those claims were

“incident to and arising out of” the plaintiffs’ military

service and therefore fell within the exception to the

government’s waiver of sovereign immunity recognized in

Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95

L.Ed. 152 (1950), and its progeny. 531 F.Supp. at 728.

The remainder of the complaint was dismissed on various

jurisdictional grounds that are not challenged on appeal.

The government refused to participate in the negotia-

tions that culminated in the settlement of the class action.

706a

See Settlement Opinion, 597 F.Supp. at 879 (letter from

government counsel to court). In the settlement agree-

ment, the plaintiff class and the defendant chemical

manufacturers “expressly reserve[d] all rights and claims

which they now have, or may at any time be entitled to

assert against the United States, including its offices,

departments, agencies, representatives, agents and

employees.” Settlement Agreement 4 11, id. at 865...

Veterans and their families renewed their efforts to obtain

relief from the government following the settlement. In

July 1984, and Eighth Amended Complaint was filed on

behalf of a number of named plaintiffs (the “Aguiar plain-

tiffs”) and a proposed plaintiff class composed of veterans

who claimed injury from exposure to Agent Orange and

their spouses, parents, and children. In an attempt to cir-

cumvent the Feres doctrine, the complai

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