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                                         122 N.J.L.J. 764
                                        September 22, 1988


Appointed by the Supreme Court of New Jersey


Blanket Settlement
Offers to Multiple Plaintiffs

    The Inquirer, an attorney appearing for multiple plaintiffs in two separate suits, asks "whether or not it is ethical for a defendant to make 'blanket offers' to multiple plaintiffs."
    In the first suit, the attorney represented four passengers in an automobile who instituted suit against the driver of the car in which they were riding. The Inquirer states that there was no evidence, nor even an allegation, of any fact that would raise a potential conflict of interest among the various plaintiffs, although they did have different injuries and varying degrees of strength of their liability claims against the driver because their injuries occurred at different times during the course of the happening of the accident for which their driver was alleged to be partly responsible. It appears that on the eve of trial, the defendant's insurance carrier made offers of different amounts for each plaintiff passenger, which offers were conditioned, however, that "... the offer was all or nothing at all, either all the plaintiffs had to accept the offer or there was no offer." It further appears that the Inquirer contacted his clients, and that three of the four plaintiffs agreed to accept the offer; the fourth did not.

    The Inquirer asks:
    A) Is it ever appropriate for a plaintiff's attorney to represent multiple passengers who have no factual or legal conflict of interest between them, if a defendant's attorney or insurance carrier can ultimately, in fact, create a conflict by making a "tie in" offer, which one client wishes to accept and another does not?

    We perceive no ethical problem in the attorney's initial representation of the various plaintiffs. The problem arises when the offer of settlement is made by the defendant insurance carrier. In such event, the situation is governed by RPC 1.8(g), "Conflict of Interest: Prohibited Transactions," to wit:
        A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or no contest pleas, unless each client consents after consultation, including disclosure of the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.

    The Inquirer continues:

        B) If it is ethically appropriate for a plaintiff's attorney to, in fact, represent multiple passengers who have no factual or legal conflict of interest, then is it ethical for the defendant to make offers that are tied together and thereby place the plaintiff's attorney potentially, and in my particular case, in a conflict of interest situation?

    The question does not involve a matter of ethics whether such offer is made by the insurance carrier (who would not be governed by our Rules of Professional Conduct) or by the defendant's attorney, if the carrier's "tie-in" offer is transmitted by him to the plaintiffs' attorney.

    The Inquirer asks further:
        C) If it is not unethical for a defendant to make such a "tie-in" offer, and if such an offer, in fact, puts the plaintiffs' attorney in a conflict of interest situation (as temporarily occurred in my case), must the attorney then abandon both clients or may he continue to represent one client?

    The foregoing question, too, is governed by RPC 1.8(g) and, additionally, in situations other than those proscribed by the cited Rule, does not involve an ethical question. The "tie-in" offer being made did not create a conflict of interest situation insofar as the plaintiffs' attorney is concerned, since there was no decision to be made by him which would put him in the position of favoring one client over another, or having to make a decision in favor of one client to the detriment of the others. For example, to paraphrase the offer, the carrier apparently advised the Inquirer that they would pay stipulated sums for each plaintiff, but would not pay such monies unless all the plaintiffs agreed. Consequently, the determination or decision was not made by the Inquirer but, rather, by the four plaintiffs.
    The second situation which the Inquirer presents is substantially similar. It involves a suit by a number of plaintiff employees in a toxic chemical case. It appears that on the verge of trial the defendants' attorneys, who were operating through a joint defense committee, made a proposal which the Inquirer describes as a "contingent blanket offer." The defendants' attorneys advised that they would not make the offer unless they could be assured that every plaintiff would accept the proposal, and advised the Inquirer:
        ... that if the proposal were rejected by any more than an extremely inconsequential number of plaintiffs, they would not recommend such payment to their clients, but would rather make individual offers to certain plaintiffs and would withdraw the tentative offer for those approximate 100 plaintiffs with potential Statute of Limitations problems; and they would attempt to dismiss those plaintiffs prior to trial by virtue of "Lopez Hearings." The trial Judge who was overseeing settlement instructed us to advise our clients of this tentative "blanket" offer.
    The Inquirer states further:

        This offer was communicated to the plaintiffs in accordance with the Court's instructions; however, there was reluctance on the part of a fairly substantial number of plaintiffs to accept the settlement. However, when it was explained that if the settlement offer was not accepted, perhaps a hundred of their co-workers might have their claims dismissed, all but a very inconsequential number of plaintiffs accepted this settlement, and a separate settlement conference was held to resolve the claims of those few plaintiffs who had not accepted the settlement proposal.

    He, therefore, raises the following questions:
        A) Is it ethically appropriate for an attorney to represent multiple plaintiffs in a chemical exposure case where they have no apparent conflict of interest between them, but where one can be created de facto by the defendants' attorneys by means of a "blanket offer" in which the defendants state that either the entire group accepts the offer, or a substantial part of the offer will be withdrawn, and a substantial number of plaintiffs will be dismissed?

    We see no ethical problem involved in representing multiple plaintiffs in a chemical exposure case, or in any other case, where there is no apparent conflict of interest among the plaintiffs themselves. The conflict does not arise until the blanket offer is made, and in that event RPC 1.8(g) governs.

    The Inquirer continues:

        B) If it is ethical for an attorney to represent multiple plaintiffs in a chemical exposure case, (which I believe it is), does it then become unethical for that attorney to continue to do so when it appears that some of the plaintiffs have potential Statute of Limitations problems, whereas others do not?

    We see no ethical problem involved. The question of the Statute of Limitations is a matter of law and, presumably, would be dealt with by the trial judge during the course of the proceedings.
    The Inquirer asks further:
        C) If it is ethical to continue to represent the plaintiffs in such a situation, (which I believe it is), does it then become unethical for the defendants to make a "blanket offer" stating that if the entire group of plaintiffs does not accept the offer, than [sic] a substantial portion of the plaintiffs will receive no offer, and in fact, may have their cases dismissed? Such a circumstance, in my opinion, clearly gives the defendants the unilateral ability to place the plaintiffs' attorney in a conflict of interest situation where he is now called upon, in essence, to trade-off the best interest of some of the plaintiffs for the benefit of the whole group.

    The matter of the ethics of the defendants' insurance carriers is not one to be considered by this Committee. If the question relates to the blanket offer being transmitted by the attorneys for the defendants, we still perceive no ethical involvement by the defendants' attorneys, who, pursuant to their clients' valid instructions, tendered the blanket offer. It is those attorneys' obligation in representing their clients to make any legal offer they direct them to make.

    Lastly, the Inquirer asks:
        D) Finally, if it is ethical for a defendant to make such a "blanket offer", what is the plaintiffs' attorney to do in that situation if some of the plaintiffs refuse to accept the offer, and wishes [sic] to go ahead with their individual trials, and another group of plaintiffs wishes to accept the offer? Is he compelled then to remove himself from the entire case? or can he continue to represent any of the plaintiffs?

    The answer to this question, as well, is answered by RPC 1.8(g).

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