Class Discovery Sufficient for Merits Summary Judgment

Readers know that courts will sometimes, perhaps often, bifurcate discovery in a proposed class action between the discovery needed to assess certification issues and that related to merits issues. This procedural tool can save the parties costs, and expedite the crucial decision on class status, which needs to be made as soon as practicable.

Sometimes that class discovery can shed light on summary judgement issues as well.  In a recent case, the Eighth Circuit held that a class plaintiff was not entitled to merits discovery before the court considered summary judgment based solely on the class certification discovery.  See Toben v. Bridgestone Retail Operations, LLC,  No. 13-3329 (8th Cir. 5/13/14).

Patricia Toben filed a putative class action alleging a violation of the Missouri Merchandising Practices Act (MMPA).  Plaintiff alleged on behalf of the proposed class that defendant's service shop improperly charged 6 percent of labor charges as a shop supply fee. Defendant responded that the supply fee covered a wide array of essential stuff, such as cleaners and rags. Specifically, Bridgestone identified over 70 examples of shop supplies covered by the fee.

After limited discovery, Toben moved for class certification. Bridgestone moved for summary judgment. Toben moved to stay summary judgment pending merits discovery. The district court denied the stay and granted summary judgment.  Plaintiff appealed.

The court of appeals noted that plaintiff had set forth some kinds of facts she hoped to elicit from further discovery, but had not shown that the facts sought exist.  It is well settled that Rule 56 does not condone a fishing expedition where a plaintiff merely hopes to uncover some possible evidence. Mere speculation that there is some relevant evidence not yet discovered will never suffice.  Here, class discovery revealed relevant information about the shop supply fee, and plaintiff identified no documents or specific facts she believed would contradict that.

If all one had to do to obtain a grant of a Rule 56d motion were to allege possession by movant of certain information, every summary judgment decision would have to be delayed while the non-movant goes fishing in the movant's files.  Plaintiff's motion for a stay provided only "speculative hope" of finding evidence to support her claim.

Thus, the court could not conclude that the district court abused its discretion in denying it. Summary judgment affirmed.

 

 

 

Busy Mass Tort Court Revamps Procedures

Our readers recognize that Philadelphia (home base for MassTortDefense) is a hot-bed of mass tort activity, administering those cases through a Complex Litigation Center.  Now comes important news that the Honorable John W. Herron, Administrative Judge of the Trial Division of the Philadelphia Court of Common Pleas, recently issued an order that will alter and impact the handling of mass tort cases in this busy jurisdiction.

General Court Regulation No. 2012-01 represents the first general overhaul of the Complex Litigation Center’s practices in many years. The order  will revise and streamline the conduct of mass tort litigation in Philadelphia in a number of ways.   More on that in a minute.  What is also significant is the reason for the changes.  The order notes the pronounced upward trend in mass tort filings in this court, and the fact that the court’s disposition rate has not kept pace with filings; thus, a significant backlog has developed.  The order notes the impact of past policy which invited the filing of cases from other jurisdictions.  A "dramatic increase in these filings" occurred after the court’s leadership invited claims from other jurisdictions. In 2009, when published comments were offered encouraging the filing of claims in Philadelphia, out-of-state filings rose to 41%, and in 2011 reached 47%.

So, in response, Judge Herron’s order:

  • ends reverse bifurcation in all mass tort cases,
  • significantly limits the consolidation of non-asbestos cases,  unless agreed by all parties,
  • requires the deferral of all punitive damage claims,
  • requires, except upon showing of exigent circumstances, all discovery to take place in Philadelphia,
  • re-emphasizes mediation of cases,
  • limits expediting of cases based on exigent medical or financial reasons until the backlog of pending cases has been resolved, unless otherwise agreed by a majority of the defendants.

The Honorable Arnold New will be reassigned as a Coordinating Judge of the Complex Litigation Center. Judge New is an experienced and respected member of the Philadelphia Court of Common Pleas, having served on the bench for more than 20 years. He currently administers another of the Court’s innovative programs, the Commerce Program. To ensure a smooth transition, Regulation No. 2012-01 provides that Judge New will act as Co-Coordinating Judge of the Complex Litigation Center, sitting in tandem with the Honorable Sandra Mazer Moss. Judge Moss will assume senior status as of December 31, 2012, at which time Judge New will thereupon serve as the sole Coordinating Judge of the Complex Litigation Center and its Mass Tort Program.

The order advises that the court will entertain additional suggestions from the bar, and will open a comment period in November, 2012, to allow interested parties the opportunity to address the new procedures and to suggest any further changes that may be needed. 

There is little doubt that this court's Complex Litigation Center faces a daunting task in handling a large number of cases involving complex and sophisticated claims and defenses, while seeking to resolve them both fairly and efficiently.  Time will tell,  but the new procedures ordered by Judge Herron should improve the functioning of the Complex Litigation Center, and the ongoing process of review and comment invited by the order will allow interested parties the opportunity to see that the Center keeps moving in the right direction.
 

 

Use of Company Conduct Evidence to Prove Liability or Punitive Damages

As due process considerations have taken their more appropriate place in the law of punitive damages, see BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), trial courts have struggled with the intersection of traditional product liability law and new rules on evidence necessitated by such due process concerns. 

For example, plaintiffs frequently seek to use evidence of other allegedly similar conduct and allegedly substantially similar accidents, injuries, incidents for liability related issues such as notice and defect.  In Philip Morris USA, Inc. v. Williams, 127 S.Ct. 1057 (2008), however, the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards even in part upon the desire to punish a defendant for harm to persons that are not before the court. 

Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims.

The Supreme Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.”  That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted generally that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk. 

Another such conflict was seen in the recent Montana case involving the trial court's exclusion of a car seat manufacturer's evidence of regulatory compliance.  Malcolm v. Evenflo Co., 2009 WL 2917799 (Mont., September 14, 2009).  The state supreme court ruled that while the evidence should have been excluded from the jury's consideration of liability for compensatory damages, the evidence should have been admitted for purposes of assessing punitive damages.  It let stand the compensatory award, but vacated the punitive damages award.

The case arose from a motor vehicle accident during which plaintiff's decedent  rode in the back of an SUV in the OMW model 207 child seat. A northbound motorist swerved into plaintiff Malcolm's lane and forced Malcolm off the road. The vehicle rolled three times, traveled down a steep incline, and stopped in a ditch.  The left belt hook of the OMW broke off during the rollover. The seat belt slipped out from the open-ended belt hook on the opposite side of the seat. The forces of the accident ejected the OMW from the vehicle, which resulted in death, according to plaintiffs.

The theory at trial was strict liability in tort, design defect theory. The Malcolms claimed that the Evenflo OMW model 207 infant child safety seat constituted a defectively designed product that failed even though they had used the seat in a reasonably anticipated manner. The Malcolms pointed to the OMW's open-ended belt hook design that might have prevented the injury. The Malcolms contended that Evenflo could have manufactured the OMW using an allegedly  feasible superior alternative design that required the vehicle's seatbelt to be routed through an enclosed seat belt tunnel even when the seat was used without the base. The Malcolms also sought punitive damages. The Malcolms alleged that Evenflo “continued selling the defective product in conscious, deliberate and intentional disregard of the danger presented.”

Evenflo contended that the OMW model 207 was not defective in any way. Evenflo argued that the severity of the forces involved in the accident were the sole cause of the death. Evenflo argued that the “tremendous forces” that occurred during the rollover forced open the rear passenger door, which was immediately adjacent to Tyler's child seat. Evenflo posited that Tyler's car seat came into direct contact with the ground as the Suburban rolled. Evenflo argued that the contact caused the seat to detach from the seat belt system and ultimately fly out the open door.

The National Highway Traffic and Safety Administration (NHTSA) requires that all child restraint systems comply with the minimum requirements of Federal Motor Vehicle Safety Standard 213. See 49 C.F.R. § 571.213 (2009). NHTSA required Evenflo to conduct internal testing of the OMW to determine if it complied with the FMVSS 213 standards, which it did. NHTSA and Transport Canada, the Canadian testing agency, conducted random audit FMVSS 213 tests in addition to Evenflo's internal testing.

The first issue was the basic products issue: Evenflo argued that the trial court erred when it excluded any evidence that the OMW model 207 complied with FMVSS 213. Evenflo contended that the fact that the OMW model 207 passed 341 tests performed under FMVSS 213 was highly relevant to the claim that the model 207 was defective and unreasonably dangerous.

Evenflo noted that the standard would be admissible in a negligence case, and  there is no reason why such highly relevant evidence should not be used in strict products liability cases. Thus, Evenflo urged the Court to adopt the Restatement (Third) of Torts: Products Liability § 4 (1998). Section 4 provides that compliance with an applicable regulation is admissible in connection with liability for defective design. Evenflo noted that a majority of jurisdictions hold that compliance with product safety regulation is relevant and admissible on the question of defectiveness, even if it is not necessarily controlling.

The four-justice majority reiterated this court's adherence to “well-settled, decades-old principles of strict liability” that consider irrelevant a manufacturer's reasonableness and level of care. The court declined to adopt the Restatement (Third) of Torts: Products Liability, §4.  Montana thus continues to be one of those few states that cling to the now-discredited "bright line" verbal distinction between cases asserting strict liability in tort and those grounded in negligence theory. (This Court had previously distinguished strict liability from negligence when it rejected the “state of the art” defense, for example, because it raises issues of reasonableness and foreseeability --concepts fundamental to negligence law.)  It still argues that any attempt to inject so-called negligence principles into strict liability law would somehow sever Montana's strict products liability law from the core principles for which it was adopted.  The focus in design defect cases must be on “the condition of the product,” rather than “the manufacturer's conduct or knowledge."  And the way to do this, apparently, is to exclude relevant, material, probative evidence that the product passed regulatory muster.

On the punitive damages issue, Evenflo argued that the trial court's decision to exclude evidence of the OMW model 207's compliance with FMVSS 213 prevented it from introducing evidence bearing on its state of mind. A defendant's state of mind is a “key element” in assessing punitive damages, and the car seat maker should have been able to present evidence of its regulatory compliance. 

The trial court had concluded that the OMW model 207's compliance with FMVSS 213 had “absolutely no bearing at all upon the reprehensibility of the conduct of Evenflo.” But the supreme court could not sustain the verdict on punitives in light of the court's decision to exclude evidence that might show why Evenflo acted as it did, or failed to act, when the jury considered whether to award punitive damages. Evidence of Evenflo's good faith effort to comply with all government regulations, including FMVSS 213, would be evidence of conduct inconsistent with the mental state requisite for punitive damages.

Interestingly, the supreme court noted that while here a new jury here could consider evidence of the OMW model 207's compliance with FMVSS 213 for the purposes of determining whether Evenflo acted with actual fraud or actual malice, generally the Montana system provides for the presentation of evidence regarding liability for compensatory damages and punitive damages to the jury in a single proceeding. Thus, bifurcation is disfavored, and the trial courts must ordinarily trust that the jury will heed the court's instructions as to how to evaluate the evidence presented.

One dissenting justice would have also reversed the compensatory damages. He differed from the majority on how the trial was conducted and saw it as improperly biased against Evenflo. Two other dissenters agreed with the majority on the compensatory damages but would have sustained the punitive award, arguing that Evenflo's inability to present evidence of its compliance with regulations did not prejudice the company.

Parties Spar Over Possible Bifurcation In Mirapex MDL

Pfizer and the other defendants in the Mirapex litigation are seeking a bifurcated trial plan. In motions filed with the U.S. District Court for the District of Minnesota, where MDL-1310 is based, the defendants asked for separate liability and punitive damages phases. Defendants raised the legitimate concern that the jury may be swayed by financial considerations when determining liability.

In this litigation, plaintiffs allege that the drug causes a compulsive urge to gamble. The plaintiffs claim that Mirapex triggered compulsive behaviors, and that the defendants knew the risks but failed to properly study the effects or warn patients. As is so often the case, a label change (in February 2006) seems to have prompted litigation.

Defendants assert that bifurcation is warranted because evidence of defendants' finances is irrelevant to the issues of liability; introduction of such evidence during the liability phase would be unduly prejudicial. Bifurcation is thus necessary to prevent unfair prejudice to defendants during the liability determination. The motions note that the 8th Circuit has recognized bifurcated trial plans in a number of settings. Indeed, bifurcation is a common feature of pharmaceutical mass torts.

Plaintiffs oppose the proposal, arguing that the issue of liability and punitive damages are somehow “intertwined.” Meaning, of course, that they would like for the jury to consider the company’s financials when judging its conduct. Plaintiffs insist on a single trial where the fact finder considers “all the evidence at once.” To the extent some of that evidence should not be considered on the issues of liability, plaintiffs propose that the jury could be instructed to consider the financial information only in the proper context.

MassTortDefense has posted on the importance of proper trial plans here. The Mirapex motions present perhaps the most basic form of bifurcation or trial plan issue.  The timing of the punitive damages issues in class actions or other complex aggregated litigation can become highly complex and controversial. The questions as to punitive damages may include: a) whether they can be awarded; b) if so, whether as a lump sum, as a multiplier of individual compensatory damages, or on a per class member basis, c) whether they can be tried before individual liability as to specific class members, or as to absent class members, or non-bellwether plaintiffs has been decided; d) whether they can be awarded before the actual amount of compensatory damages has been determined; and e) how punitive damages are allocated among class members or the aggregated plaintiffs if not determined on a per plaintiff basis. State Farm Mutual Auto Insurance Co. v. Campbell, 538 U.S. 408 (2003). See In re Simon II, 407 F.3d 125 (2d Cir. 2005); Beck v. Boeing Co., 60 Fed. Appx. 38 (9th Cir. 2003); Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998); Johnson v. Ford Motor Co., 35 Cal.4th 1191,113 P.3d 82 (Cal. 2005) (rejecting aggregate disgorgement); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006).

Punitive damages are designed to punish a defendant for egregious conduct and deter future reprehensible conduct on the part of the defendant or others. Particularly in the context of juries unchecked by proper legal instructions and unorthodox trial plans that prematurely address the punitive damages issue, they constitute a serious litigation threat to product sellers today. In aggregated litigation, such damages have the potential to lead to crippling verdicts, and thus the threat of punitive damages may coerce “blackmail” settlements.

In recent years, the United States Supreme Court has identified a variety of constitutional limits on punitive damage awards. Specifically, such awards cannot be arbitrary punishments and cannot be grossly excessive. In Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007), the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.

One implication of the Court’s emphasis on avoiding misuse of evidence of harm to “strangers” clearly relates to the employment of reverse-bifurcated trial plans in aggregated cases, in particular trial plans in which the entitlement and amount of punitive damages (by ratio or dollar amount) is set in an early phase of the trial, well before the jury has considered whether the vast bulk of the plaintiffs have actually been injured by the alleged conduct of the defendant. E.g., In re Tobacco Litigation, 624 S.E.2d at 740 (W. Va. 2005)(holding that an aggregated, reverse-bifurcated punitive damage multiplier trial before adjudication of any affirmative defense would not be per se invalid). Some state courts favor this approach because it puts pressure on defendants to settle by creating the risk of a huge punitive damages burden before it has even been established whether many or most of the plaintiffs have any compensatory damages. Such a trial plan clearly creates an unnecessary and unreasonable risk of a due process violation under Williams, one that a simple jury instruction about the distinction between entitlement and reprehensibility cannot hope to address adequately. See, e.g., In re Simon II Litig., 407 F.3d at 138 (“In certifying a class that seeks an assessment of punitive damages prior to an actual determination and award of compensatory damages, the district court’s Certification Order would fail to ensure that a jury will be able to assess an award that, in the first instance, will bear a sufficient nexus to the actual and potential harm to the plaintiff class, and that will be reasonable and proportionate to those harms.”); Allison v. Citgo Petroleum Corp., 151 F.3d at 417–418 (stating that “because punitive damages must be reasonably related to the reprehensibility of the defendant’s conduct and to the compensatory damages awarded to the plaintiffs, . . . recovery of punitive damages must necessarily turn on the recovery of compensatory damages”); Southwestern Ref. Co. v. Bernal, 22 S.W.3d at 433 (“Under the [trial plan], the jury would decide punitive damages for the entire class without knowing the severity of the offense or the extent of compensatory damages, if any, for each of the 885 plaintiffs…. the modified trial plan is … prejudicial because it fails to ensure that punitive damages have some understandable relationship to compensatory damages and are not grossly out of proportion to the severity of the offense for each of the 885 plaintiffs.”).