Fairness in Class Action Litigation Bill Moving Forward

Earlier this year we posted about the Fairness in Class Action Litigation Act when it was approved by the House Judiciary Committee.

Our readers know that this type of bill generally is aimed at the so-called no injury class actions in which not all of the class members are injured, sometimes even most of the class is not injured -- for example purchasers of a consumer product with an alleged design defect that has not manifested itself in most of the units. Such classes create issues for defendants, plaintiffs, and the courts. The bill's sponsors argue that when classes are certified that include members who do not have the same type and scope of injury as the class representatives, those members siphon off limited compensatory resources. Classes including uninjured parties can also artificially inflate the size of the class to command a larger settlement value.

Now comes word the bill is tentatively scheduled for consideration by the full House of Representatives early in 2016.

If enacted, the law would require the moving party to affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative or representatives. And any certification decision in a class action regarding personal injury or economic loss must include a determination, based on a rigorous analysis of the evidence presented, that the requirement was satisfied.

"The Rise of Empty Suit Litigation"

Two of my partners here at SHB, Victor Schwartz (of the famed “Schwartz on Torts” casebook) and Cary Silverman, just published a new article, “The Rise of “Empty Suit” Litigation®. Where Should Tort Draw the Line?”,  80 Brook. L. Rev. 599 (2015) .  

The article focuses on litigation where an individual or class action plaintiff has suffered no real harm, physical, emotional or economic.  These include:

·         claims for recovery of speculative emotional harm;

·         liability for the estimated cost of medical monitoring following exposure to a potentially harmful substance absent a physical injury;

·         class action litigation claiming that a product’s actual value was lower than the purchase price or that the resale value of a product diminished because of an alleged latent defect, even when the product functioned properly for most or all consumers; and

·         class actions challenging product labeling or advertising on behalf of all consumers where few, if any, of them were actually misled.

Empty Suit Litigation®” addresses both individual claims where there has been no real injury or economic loss, and class actions that rely on speculative or expert-driven theories of harm or class-wide damages.

Definitely worth checking out.  

 

Class Certification Denied in Drug Case

A federal court rejected a proposed class action in which plaintiffs alleged that a drug maker misstated the frequency of potential side effects.  See Saavedra v. Eli Lilly & Co., No. 12-09366 (C.D. Calif., 12/18/14).

Plaintiffs alleged they were harmed because the defendant allegedly understated the risk of withdrawal-related side effects, so they purportedly received a product that had less value than they expected it to have. Plaintiffs asserted that their proposed class met the requirements for Rule 23(b)(3). To qualify for certification under this subsection, a class must satisfy two conditions: (1) common questions of law or fact must “predominate over any questions affecting only individual members,” and (2) class resolution must be “superior to other available methods for the fair and efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). The predominance requirement is satisfied where common questions comprise a significant portion of the case and can be resolved for all class members in one adjudication. See In re ConAgra Foods, Inc.,  No. CV 11-05379 MMM AGRX, 2014 WL 4104405, at *29 (C.D. Cal. Aug. 1, 2014). 

Rule 23(b)(3)’s predominance prong also requires the moving party to show that “damages are capable of measurement on a classwide basis.” Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433 (2013). Specifically, this requires plaintiffs to tie their method of proving damages to their theory of liability. We have posted about the impact of this decision before, and here.

Plaintiffs relied on Dr. Joel W. Hay to establish their method of proving class-wide damages.  Plaintiffs did not seek damages for personal injuries. Instead, plaintiffs argued that class members were harmed because they purchased a product that was represented to have a lower risk of withdrawal side than it actually had.  Thus, plaintiffs claim they were injured because the drug as received was worth less than the drug as represented. However, plaintiffs did not assert that class members were harmed by being overcharged or by being induced to purchase something that they would not have otherwise purchased. Instead, plaintiffs argued that the harm was in receiving a product that had less value than the value of the product as class members expected to receive it. Plaintiffs thus seemed to use the term “value” to mean consumer utility—a concept distinct from and not directly related to price. According to plaintiffs, this consumer value or "utility" supposedly was the measure of the benefit that consumers believe they will obtain by using or owning a product.

Plaintiffs’ theory of injury thus was trying to be distinct from the typical benefit-of-the bargain claim
because it focused only on the demand side of the equation, rather than on the intersection of  supply and demand. In other words, plaintiffs sought to prove injury by showing that each class member received a drug that the average consumer would subjectively value less than the average consumer subjectively valued the drug he expected to purchase. In contrast, the typical benefit-of-the-bargain claim relies on a difference in fair market value (i.e. the amount that a willing
buyer and willing seller would both accept) between the product as represented and the product
actually received.

The court rejected this theory, and agreed with defendant that its flaws impacted predominance and superiority. Dr. Hay’s model looked only to the demand side of the market equation. By looking only to consumer demand while ignoring supply, Dr. Hay’s method of computing damages converts the lost-expectation theory from an objective evaluation of relative fair market values to a seemingly subjective inquiry of what an average consumer wants. But plaintiffs provided and the court found no case holding that a consumer may recover based on consumers’ willingness to pay irrespective of what would happen in a functioning market (i.e. what could be called sellers’ willingness to sell).


Second, at some point the subjective valuation had to be converted to actual dollar damages. But as Dr. Hay readily admitted, the prescription drug market is not an efficiently functioning market. Unlike markets for ordinary consumer goods, the prescription drug market is heavily regulated and restricted. The market is further complicated by insurance plans’ (or their absence’s) and their determinative effect on the price that an individual pays.  This price, in turn, relies on prices set by a complex array of contracts between such entities as health plan sponsors, third-party payers, pharmacy benefit managers, retail pharmacy chains, and the drug manufacturer.  Thus, depending on her insurance plan, an individual might pay nothing, a percentage of a “full price” determined by a contract between her insurance provider and another entity, a flat co-payment, or some other “full” price.

So, even assuming the expert's analysis could be used to compute the relative value consumers place on a drug having a lower withdrawal risk (which of course defendant disputed), Hay's proposed measure was highly flawed.  As noted, the numerous complicating factors in the prescription drug market sever the relationship between price and value. See In re POM Wonderful LLC, No. ML 10-02199 DDP RZX, 2014 WL 1225184, at *4 (C.D. Cal. Mar. 25, 2014) (stating that in contrast to an efficient market, in an inefficient market some information is not reflected in an item’s price). In other words, a consumer’s out-of-pocket cost for a drug is not a proxy for the drug’s value to that consumer. Thus, class members’ out-of-pocket costs are not a proxy for the value of the drug as represented. Therefore, applying the value ratio to class members’ out-of-pocket costs fails to tether the consumers’ relative valuations of product features to the drug's fair market value. Instead, it yields an arbitrary amount that is unrelated to the amount of harm incurred by individual class members.

While Dr. Hay might have been correct that a rational consumer would not pay more for the drug than she believes it is worth, a rational consumer would surely pay less than she believes the drug is worth. Thus, it does not follow that a consumer who pays a $20 co-payment believes that the drug is only worth $20. Therefore applying the refund ratio to that consumer’s co-payment does not yield an accurate approximation of the difference between the consumer’s subjective valuation of the drug as represented and the drug as actually received (even assuming plaintiffs' medical facts were right). 


Additionally, Dr. Hay’s model suffered from serious methodological flaws. He proposed conducting a survey in 2014 (or later) to estimate consumers’ valuation and apply this estimate to harms incurred by class members beginning in 2004, a decade ago.  With no legitimate basis for that leap.

Accordingly, plaintiffs failed to show that damages could be “feasibly and efficiently calculated” once liability issues common to the class were decided. Rahman v. Mott's LLP, No. 13-CV-03482-SI, 2014 WL 6815779, at *8 (N.D. Cal. Dec. 3, 2014); accord Lilly v. Jamba Juice Co., No. 13-CV-02998-JST, 2014 WL 4652283, at *9–10 (N.D. Cal. Sept. 18, 2014) (same). Plaintiffs’ failed to present a method of calculating damages that was tied to their theory of liability. The court therefore declined to grant the motion to certify a damages class under Rule 23(b)(3).

 

Mouthwash Class Action Washed Out

A federal judge earlier this month granted defendant's motion to dismiss a putative class action lawsuit accusing it of using misleading labeling on its market mouthwash.  See Suzanna Bowling v. Johnson & Johnson et al., No. 1:14-cv-03727 (S.D.N.Y., 11/4/14).

The issue here was preemption.  Plaintiff Bowling filed this action on behalf of herself and others similarly situated, alleging that the defendant violated (1) numerous state statutes, as well as (2) the Magnuson-Moss Warranty Act ("MMWA"), when it sold Listerine Total Care ("LTC"), a line of
mouthwashes. Defendant moved to dismiss on the grounds that the state law claims were preempted by the Food Drug and Cosmetics Act ("FDCA"). (Put the MMWA issue aside for today.)

Plaintiffs alleged that purported claims that the mouthwash can help with tooth enamel issues were false. But FDA had trod on this ground in "monographs" that set out labeling regulations for over-the-counter ("OTC") dental hygiene products.  First, in 1980, the FDA published a proposed
monograph ("1980 Monograph"), which found, inter alia, that "[t]he deposition of fluoride in dental enamel has been shown to increase resistance to enamel solubility and therefore dental decay" - or in plain English, flouride is good for preserving enamel. Second, in 1995, the FDA published a final monograph ("1995 Monograph"), which permits manufacturers of OTC drugs containing sodium
fluoride (such as LTC) to market the product as "aid[ing] the prevention of dental .. . decay,"'  along with "other truthful and nonmisleading statements [further] describing [this] use."  In other words, pursuant to the 1995 Monograph, manufacturers of OTC drugs containing sodium fluoride are allowed (1) to represent that such drugs prevent tooth decay and (2) to provide further labeling to explain how decay is prevented.  Furthermore, on multiple occasions, the FDA has sent letters to manufacturers of OTC drugs containing sodium fluoride to clarify the parameters of the Monographs.  In each of these letters, the FDA has objected to certain labeling practices - for example, certain representation that sodium fluoride "fights plaque"- but it has expressed no concern about the label "Restores Enamel."

Defendant moved to dismiss. In the context of OTC drugs, the FDCA expressly preempts state law labeling requirements that are "different from," "addition[ al] to," or "otherwise not identical with" federal labeling requirements. Under this standard, said the court, preemption is certainly appropriate when a state law prohibits labeling that is permitted under federal law. But it is also appropriate when a state law prohibits labeling that is not prohibited under federal law. The standard, in other words, is not only whether a state law actively undermines federal law. It is whether state law diverges from federal law at all.

That means, found the court, that plaintiffs would need to plead facts suggesting that the FDA has
affirmatively prohibited the challenged label language. Otherwise, plaintiffs' state law causes of action would be, in effect, imposing a labeling requirement that is "not identical with" labeling requirements under federal law. "Plaintiffs cannot meet this burden." If the FDA had prohibited the
"Restores Enamel" kind of label, there would obviously have been a regulation saying so. But there was no such regulation. As it stands, observed the court, the FDA has issued a monograph directly on point but declined to indicate either in the monograph itself or in advisory interpretations of the monograph that a phrase like "Restores Enamel" is misleading. If successful, this litigation would thus do exactly what Congress sought to forbid: using state law causes of action to bootstrap labeling requirements that are "not identical with" federal regulation.

Motion granted, 

Federal Court Decertifies "Natural" Damages Class Action- Naturally

A federal court last week ordered decertification of a damages class action challenging “all natural” fruit labels, due to deficiencies with the the plaintiffs' damages model. See Brazil v. Dole Packaged Foods, LLC,  No. 12-1831 (N.D. Cal., 11/6/14).

Our loyal readers know we have posted on Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), and its potential impact on proposed damages class actions. Here, plaintiff alleged that 10 products, three he purchased and seven that were "similar", had labels that were false and misleading, especially with regard to their use of the term "natural," because all ten products contain ascorbic acid (commonly known as Vitamin C) and citric acid, both allegedly synthetic ingredients.

The court granted in part and denied in part the plaintiff's Motion for Class Certification on May 30, 2014. With respect to the damages class, Brazil's damages expert, Dr. Oral Capps, had advanced three models for measuring the alleged price premium attributable to Dole's use of the "All Natural" label statements. Of those three, the Court originally accepted only the model based on econometric or regression analysis. The Court concluded that the Regression Model, as originally presented to the Court at the time, provided a means of showing damages on a class-wide basis through common proof, thus satisfying the Rule 23(b)(3) requirement that common issues predominate over individual ones.  In reaching this conclusion, the Court rejected Dole's argument that class certification should be denied because Dr. Capps had not yet run his full regressions.

On August 21, 2014, Dole filed a Motion to Decertify.  Readers know that the standard used by the courts in reviewing a motion to decertify is the same as the standard when it considered plaintiffs' certification motions. E.g,, Ries v. Ariz. Beverages USA LLC, 2013 WL 1287416 , at *3 (N.D. Cal. Mar. 28, 2013).  On a motion for decertification, the burden remains on the plaintiffs to demonstrate that the requirements of Rules 23(a) and (b) are met.. Id . (quoting Marlo v. United Parcel Serv., Inc., 639 F.3d 942 , 947 (9th Cir. 2011)); see also Negrete v. Allianz Life Ins. Co. of N. Am., 287 F.R.D. 590 , 598 n.1 (C.D. Cal. 2012).

In its Motion to Decertify, Dole made two chief contentions. First, Dole argued that the damages class certified under Rule 23(b)(3) should be decertified because Dr. Capps' Regression Model was fundamentally flawed, rendering it incapable of measuring only those damages attributable to Dole's alleged misbranding. Second, Dole contends that the damages class, as well as the injunction class certified under Rule 23(b)(2) , should be decertified because neither is ascertainable.  Let's focus on the former. 

To satisfy the Rule 23(b)(3) predominance requirement, plaintiff needed to present a damages model that was consistent with his liability case. Comcast, 133 S. Ct. at 1433. More specifically, the regression model purporting to serve as evidence of damages in this class action must measure only those damages attributable to Dole's alleged conduct. Specifically, the type of damages that Brazil's model sought to prove was restitution, a remedy whose purpose is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest. Kor. Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 , 1149 , 131 Cal. Rptr. 2d 29, 63 P.3d 937 (2003). The UCL, FAL, and CLRA - statutes relied on by plaintiff -- authorize California trial courts to grant restitution to private litigants. See Colgan v. Leatherman Tool Grp., Inc., 135 Cal. App. 4th 663 , 694, 38 Cal. Rptr. 3d 36 (2006). The proper measure of restitution in a mislabeling case, said the court, is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received. Restitution is then determined by taking the difference between the market price actually paid by consumers and the true market price that reflects the impact of the unlawful, unfair, or fraudulent business practices. See Werdebaugh v. Blue Diamond Growers, 2014 WL 2191901 , at *22 (N.D. Cal. May 23, 2014). Accordingly, Brazil had to present a damages methodology that can accurately determine the price premium attributable to Dole's use of the "All Natural Fruit" label statements.

Right out of the box, plaintiff had trouble with the methodology, which originally compared data on identical Dole products: the product before the label statement was introduced, and the same product after its label included the alleged misrepresentation.  But as it turned out, discovery revealed that the labels for nine of the ten products in the certified class did not actually change during the class period. So Dr. Capps had to change his methodology as a result, going to a type of regression methodology known as "hedonic price analysis" or "hedonic regression."  

Then, Dole identified six flaws with the new method [the "Model"]: (1) the Court approved a "sales" regression but Dr. Capps performed a "price" regression; (2) the Model confused "brand" and "label"; (3) the Model improperly used retail-level data; (4) the Model did not control for other variables; (5) the Model had data errors; and (6) the Model failed under Comcast. The Court relied on the latter three arguments to find that Dr. Capps' Model did not sufficiently isolate the price impact of Dole's use of the "All Natural Fruit" labeling statements, and therefore failed under Comcast to adequately tie damages to Dole's supposed misconduct.

Plaintiffs had represented that the Model could control for all other factors that may affect the price of Dole's fruit cups, such as Dole's advertising expenditures, the prices of competing and complementary products, the disposable income of consumers, and population.  But the court agreed with Dole, for example, that Brazil failed to show how the Model controlled for other variables affecting price. With respect to advertising, Dr. Capps admitted that he did not control for this variable -- i.e., whether any price premium on the challenged products was due to Dole's "All Natural Fruit" labeling claim rather than to its advertising expenditures. Moreover, many of Dr. Capps' assumptions about the competing products upon which his model relies were either wrong or untested. For example, it was not shown that Del Monte, Dole's chief competitor, actually made the "All Natural" labeling claim on its products. This methodology cannot survive Comcast, said the court. The whole stated objective of Dr. Capps' model was to isolate the price premium supposedly attributable to Dole's "All Natural Fruit" label claim. So if the model was unsure whether the non-Dole products actually made an "All Natural" labeling claim, then how could a court know whether the price premium the model generates is based on Dole's labeling claim rather than on some other factor? "Put simply, it cannot."   

The Model also overlooked differences in how the products are packaged. Consumers might be willing to pay a premium for fruit products packaged in a certain way. Many of the challenged products, such as the "Pineapple Tidbits," come in "four packs," or four, 4-oz. cups packaged together. But Dr. Capps' model treated a "four pack" as equal to a 16-oz can. There is no control for packaging convenience in the model, even though consumers might well pay a premium for the convenience of four individual fruit cups.

Thus, plaintiff had not met his burden to show that the model he proposed was capable of controlling for all other factors and isolating the price premium, if any, attributable to Dole's "All Natural Fruit" label only. As such, Comcast required the court to find that the Rule 23(b)(3) predominance requirement had not been satisfied.

Damages class decertified.

 (Court rejects ascertainability challenges to injunctive relief class. More on that another day.)

 

DRI Product Liability Conference Underway

This week I am attending the DRI Product Liability seminar.  Yesterday's highlights included a keynote address by Hon. Anne Northup, Commissioner of the Consumer Product Safety Commission.  Her remarks covered "The Past, Present, and Future of the CPSC."  She brings an interesting perspective, having formerly been a member of Congress.  As a mother of 6 kids and grandmother of 8, she feels well qualified to understand the use and abuse of children's products in particular. She emphasized that consumers value choice, a vibrant market, innovation and competition-- things that over-regulation can suppress.  She pointed to the onerous third-party testing requirements and record-keeping burdens in many of the recent CPSC rules.  She was cautiously optimistic that the continuing tough economy has given the majority Democrats on the CPSC some pause, as well as pointing to H.R. 2715 in which Congress told the Commission to simplify the burden of certification regulations.

I spoke at the session of the Mass Torts & Class Actions subcommittee, chaired by Glenn Kerner, on the topic of Medical Monitoring.  I tried to give the group some strategies to think about; e.g., recent federal cases have confirmed that the clarified pleading requirements of Twombly/Iqbal do apply to medical monitoring claims. E.g., Hagy v. Equitable Production Co., 2011 WL 1627920 (S.D. W.Va. April 28, 2011). That court dismissed the medical monitoring claim because plaintiff failed to allege sufficient specific facts showing the substance was hazardous, plaintiffs’ risk of future injury was a proximate result of the exposure, monitoring was reasonably necessary due to the increased risk, or that effective monitoring procedures exist. See also Bourgeois v. Exxon Mobil Corp., 2011 WL 6130767 (E.D.La. Dec.8, 2011).  I also touched on Jonathan Hirsch, et al. v. CSX Transportation Inc., 656 F.3d 359 (6th Cir. 2011), and its treatment of the exposure and risk elements of a medical monitoring theory.

Courts typically require that the prescribed monitoring regime is different from that normally recommended in the absence of exposure. One recent case exploring this notion which I pointed out  is In re Avandia Marketing, 2011 WL 4006639 (E.D.Pa. Sept. 7, 2011). In this class action involving the diabetes drug, the medical monitoring claim was denied because plaintiff failed to allege specific facts showing what medical monitoring would actually be needed because of exposure to the drug that would not already be recommended for some plaintiffs living with Type 2 Diabetes who did not take the drug.

Finally, I focused on Gates v. Rohm & Haas Co., 655 F.3d 255 (3d Cir. 2011), in which Third Circuit said it would "question whether the kind of medical monitoring sought here can be certified under Rule 23(b)(2)." If the plaintiffs prevailed, class members' regimes of medical screenings and the corresponding cost would vary individual by individual. A single injunction or declaratory judgment would seem to not be able to provide relief to each member of the class proposed in this case. Rule 23(b)(2) “does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.” Wal-Mart, 131 S. Ct. at 2557.

Court Permits Plaintiffs to Evade CAFA Mass Action Reach

Readers know that one of the effects of the Class Action Fairness Act has been to encourage plaintiff counsel to get creative in ways to defeat federal jurisdiction and keep mass torts and class actions in state courts.  Last week, a federal court remanded several cases brought by individuals who claimed that they developed non-Hodgkins lymphoma as a result of exposure to PCBs, despite the “mass action” provisions of CAFA.  Nunn v. Monsanto Co., No, 4:11-CV-1657(CEJ) (E.D. Mo. 11/7/11).

Under CAFA, federal courts have jurisdiction over class actions in which the amount in controversy exceeds $5,000,000 in the aggregate; there is minimal diversity among the parties; and there are at least 100 members in the class. 28 U.S.C. §1332(d). CAFA also provides federal jurisdiction over a “mass action,” which is defined as “any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact . . .” 28 U.S.C. § 1332(d)(11)(B)(i).

The district court stated that for it to have jurisdiction under the mass action provisions, defendants must demonstrate that there really are 100 plaintiffs. Defendants made a clever and powerful argument, pointing out that in addition to the cases and these plaintiffs subject to the remand motion,  plaintiffs’ counsel filed two separate, largely identical, cases in the state court (St. Louis City Circuit Court), one with 95 plaintiffs and one with 96 plaintiffs. This clearly evidenced plaintiffs’ counsel purposeful efforts to “splinter” a single mass tort case for the purpose of evading federal jurisdiction. That kind of rigging was rejected in cases like Freeman v. Blue Ridge Paper Prods., Inc., 551 F.3d 405 (6th Cir. 2008), and Westerfeld v. Independent Processing, LLC, 621 F.3d 819 (8th Cir. 2010), argued defendants.

The court felt obligated to disregard such manipulations, however.  Defendants’ contention that plaintiffs had deliberately divided their cases in order to avoid the mass action threshold was somehow "irrelevant."  Reference to the other identical cases was, the court thought, akin to defendant "consolidating" the cases; by excluding cases in which the claims were consolidated on
a defendant’s motion, Congress appears to have contemplated that some cases which could have been brought as a mass action would, because of the way in which the plaintiffs chose to structure their claims, remain outside of CAFA’s grant of jurisdiction. Citing Anderson v. Bayer Corp., 610 F.3d 390, 393 (7th Cir. 2010); see also Tanoh v. Dow Chem. Co., 561 F.3d 945 (9th Cir. 2009). 
 

So, another example of the numerical loophole to removal of mass actions, evading the Congressional intent. Plaintiffs' attorneys continue to resort to dividing their clients into groups of 99 or fewer plaintiffs to try to avoid federal court.


 

JPML Orders Gulf Oil Spill MDL to Eastern District of Louisiana

The Judicial Panel on Multidistrict Litigation yesterday selected New Orleans as the site of the oil spill litigation MDL. The Panel ordered coordination, and transferred 77 lawsuits to the Eastern District of Louisiana before U.S. Judge Carl J. Barbier (and referred to more than 200 potential tag along actions). In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in The Gulf of Mexico, MDL No. 2179 (Aug. 10, 2010). 

In its order, the Panel found that the cases indisputably share factual issues concerning the cause (or causes) of the Deepwater Horizon explosion/fire and the role, if any, that each defendant played in it. Centralization under Section 1407 would eliminate duplicative discovery, prevent inconsistent pretrial rulings, including rulings on class certification and other issues, and conserve the resources of the parties, their counsel, and the judiciary. Interestingly, the Panel noted that centralization may also facilitate closer coordination with Kenneth Feinberg’s administration of the BP compensation fund.

Over some objections, the Panel also concluded that it made sense to include the personal injury/wrongful death actions in the MDL. While these actions will require some amount of individualized discovery, in other respects they overlap with those that pursue only economic damage claims, found the Panel. The Order notes that the transferee judge has broad discretion to employ any number of pretrial techniques – such as establishing separate discovery and/or motion tracks – to address any differences among the cases and efficiently manage the various aspects of this litigation. See, e.g., In re Lehman Brothers Holdings, Inc., Securities & Employee Retirement Income Security Act (ERISA) Litigation, 598 F.Supp.2d 1362, 1364 (J.P.M.L. 2009). 

In terms of where the cases should be coordinated, the Panel noted that the parties advanced sound reasons for a large number of possible transferee districts and judges. They settled upon the Eastern District of Louisiana as the most appropriate district for this litigation. Without discounting the spill’s effects on other states, the Panel concluded that "if there is a geographic and psychological center of gravity in this docket, then the Eastern District of Louisiana is closest to it."

In selecting Judge Barbier, the Panel expressly declined the suggestion made at oral argument that, given the litigation’s scope and complexity, it should assign the docket to multiple transferee judges. "Experience teaches," said the Panel, that most, if not all, multidistrict proceedings do not require the oversight of more than one judge, provided that he or she has the time and resources to handle the assignment. Moreover, Judge Barbier has at his disposal all the many assets of the Eastern District of Louisiana which is accustomed to handling large MDLs. Judge Barbier may also, found the Panel, choose to employ special masters and other case administration tools to facilitate certain aspects of the litigation. See Manual for Complex Litigation, Fourth §§ 11.52, 11.53 (2004).


 

Parties File Joint Report in Toyota MDL

The three attorneys serving as interim plaintiffs' counsel in the Toyota multidistrict litigation have filed a joint Preliminary Report, pursuant to the Court’s April 14, 2010 CMO No. 1. See  In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation, No. 8:10-ml-02151-JVS-FMO (C.D. Cal.,  4/30/10).

Among the topics covered were many of the basic MDL structural issues, including the proposed structure and roles of designated counsel.  The parties recommended 18 attorneys to serve in leadership positions. More than 80 law firms and attorneys had filed applications by the May 3rd deadline to serve as lead counsel or in some other leadership role in this MDL.

The plaintiffs' attorneys also recommended establishment of a core discovery committee led by the co-lead counsel for the two types of cases, personal injury and economic loss.  Plaintiffs’ outlined their Core Discovery (types of information and documents, and types of discovery). Proposed core discovery  included: (i) Floor Mat,  (ii) Pedal, and (iii) Electronic Throttle systems issues. Plaintiffs' core discovery includes probing allegations of the existence of a defect in Toyota vehicles responsible for alleged sudden unintended acceleration; and the design and manufacture process for the engine throttle control system (including pedals, floor mats, electronic control systems, accelerator pedals, throttle bodies, etc.).  They also outlined proposed document discovery, as far back as the 1990s, claiming that design of that system began in the 1990s and that it was put in place in some vehicles as early as model year 1998.

Similarly, defendants outlined their proposed discovery in personal injury cases and economic loss cases. A key issue for them is the preservation of the vehicles in testable condition.

The parties offered a brief statement of the facts and legal issues, including class certification issues, standing issues, the application of the economic loss rule, choice of law, and the statute of limitations. Defendants’ specifically requested coordination with state court proceedings. There are now reportedly about 100 cases in 22 states.

Toyota has previously announced that it had retained an outside engineering and scientific consulting firm to conduct a comprehensive, independent analysis of Toyota and Lexus vehicles using the ETCS-i system (Electronic Throttle Control System with intelligence) for concerns related to unintended acceleration.

Toyota has provided members of Congress with an interim, first phase report from this expert on its evaluation of the ETCS-i system, consistent with the company’s commitment to transparency regarding the quality and safety of its vehicles