MDL Defendant Moves for Coordination with State Court Proceedings

General Motors recently moved in Pennsylvania state court to to have discovery in an ignition defect lawsuit coordinated with the discovery in the 150+ cases in a federal multi-district litigation. In re General Motors LLC Ignition Switch Litigation, MDL No. 2543 (JPML June 9, 2014).

In many mass torts, plaintiffs have tactical options about choice of forum, including state vs. federal court.  Defendants have limited ability to impact these choices, including through removal to federal court of appropriate cases, and enforcement of venue rules and the forum non conveniens doctrine. It is not unusual for a federal MDL to be operating in parallel to a number of suits progressing in state courts, raising the same essential issues.

Such a posture raises a number of challenges regarding judicial administration, economy of judicial resources, efficiency for the parties, cost, and consistency (such as on protective orders).  While there is no mechanism for mandatory coordination of state and federal cases in this context, voluntary coordination is often utilized to reduce costs, delay, and the duplication of efforts. E.g., Dunlavey v. Takeda Pharm. Am., Inc., 2012 U.S. Dist. Lexis 120897 (W.D. La. Aug. 23, 2012). Many commentators encourage such coordination and cooperation.  E.g., Manual for Complex Litigation §§20.31, 22.4 (4th ed. 2004); The Judicial Panel on Multidistrict Litigation & The Federal Judicial Center, Ten Steps to Better Case Management: A Guide for Multidistrict Litigation Transferee Judges (2009); See the Multi-jurisdiction Litigation Guide.  

The defense motion here does a nice job of explaining why such coordination is essential and wise in the context of a product liability dispute. The MDL court had entered a Joint Coordination Order to prevent duplication of discovery, avoid undue burden on the courts and parties, save costs, and conserve judicial resources.  Some 13 state courts already adopted a similar order to govern the overlapping issues. 

Such coordination does not prevent a plaintiff from seeking necessary case-specific discovery, either through consent or through a motion. But more than 4 million pages of documents have already been produced in this MDL and it makes no sense to ignore that fact and have state court plaintiffs start discovery afresh. And it is impractical and unfair to expect a defendant to produce key company witnesses for deposition hundreds of time for every individual case, as opposed to allowing state court plaintiffs, through the coordination Orders, to meaningfully participate in the master MDL deposition of the key witnesses. 

Plaintiffs oppose the motion.

 

 

State Supreme Court Issues Opinion on Management of Discovery

Recently, the Colorado Supreme Court issued an opinion reaffirming that trial courts need to take an active, hands-on role in managing discovery and should consider cost-benefit and proportionality factors  to control excessive discovery. DCP Midstream, LP v. Anadarko Petroleum Corp., et al., Case No. 12SA307 (Colo. June 24, 2013). Note my colleagues at SHB filed an amicus brief on behalf of NAM in this matter. The decision is a victory for efforts to encourage a rule of reasonableness in discovery.

Plaintiff sued for breach of contract and other claims. During discovery, DCP sent Anadarko fifty-eight requests for production seeking millions of pages of paper and electronic documents and many of Anadarko's "title opinions"— attorney-authored opinions about the state of title to land or mineral interests. Anadarko refused to produce many of the requested documents. DCP then filed a motion to compel. Without holding a hearing, the trial court granted DCP's motion. The trial court did not address any of Anadarko's specific objections, nor did it provide any analysis under C.R.C.P. 26(b) in support of its conclusions. In a later written order, the trial court reasoned that DCP was entitled to discovery on any issue that is or may become relevant and ruled that Anadarko's title opinions were not privileged because they were based on public information.

Appeal ensued. The state Supreme Court noted that this proceeding raised important questions about the scope of discovery and the extent to which trial courts must manage the discovery phase of a case to accomplish the overriding purpose of the civil rules—"the just, speedy, and inexpensive determination of every action." C.R.C.P. 1. The state civil rules, and cases interpreting them, reflect an evolving effort to require active judicial management of pretrial matters to curb discovery abuses, reduce delay, and decrease litigation costs. See C.R.C.P. 16 committee comment ("It is expected that trial judges will assertively lead the management of cases to ensure that justice is served.").

This principle of active judicial management is reflected in the comments to the rules, and throughout the civil rules: e.g., C.R.C.P. 26(b) restricts the scope of discovery available as a matter of right; some material is limited to "good cause;" C.R.C.P. 26(b)(2) imposes limits on the number of depositions, interrogatories, and requests for production, and these limits can also be modified for "good cause."

The rules suggest that if a party objects to discovery because it is not relevant to a claim or defense, then the trial court must become involved. C.R.C.P. 26(b) requires trial courts to take an active role managing discovery when a scope objection is raised. When faced with a scope objection, the trial court must determine the appropriate scope of discovery in light of the reasonable needs of the case and tailor discovery to those needs. Because each case is unique and deserves unique treatment, the reasonable needs of the case will necessarily vary, depending on the subject matter and complexity of the case, the nature of the parties' claims or defenses, and the discovery necessary to resolve the dispute. To tailor discovery to the specific needs of the case, the Court said that the cost-benefit and proportionality factors listed in C.R.C.P. 26(b)(2)(F) will be helpful. These factors require active judicial management to control excessive discovery.

Bottom line, to resolve a dispute regarding the proper scope of discovery in a particular case, the trial court should, at a minimum, consider the cost-benefit and proportionality factors set forth in C.R.C.P. 26(b)(2)(F). When tailoring discovery, the factors relevant to a trial court's decision will vary depending on the circumstances of the case, and trial courts always possess discretion to consider any or all of the factors listed—or any other pertinent factors—as the needs of the case require.

So this one was vacated and remanded to the lower court for reconsideration.

Challenge to Federal-State Court Coordination Overture Prompts Response

One of the challenges of our system of federalism, and dual jurisdiction between state and federal courts, is the coordination of related cases pending in the two systems.  Perhaps nowhere does this happen more regularly than in the realm of mass torts.  Federal cases may be coordinated in an MDL, and several states, such as New Jersey, have a procedure to centralize mass tort filings in their state court system. See Hermann, et al. Statewide Coordinated Proceedings (2d ed. West 2004). But coordination between the state and federal level has been more difficult, more informal, more experimental. That is, state and federal judges, faced with the lack of a comprehensive statutory scheme, have undertaken innovative efforts to coordinate parallel or related litigation so as to try to reduce the costs, delays, and duplication of effort that can stem from such dispersed litigation. State judges, for example, can bring additional resources that might enable an MDL transferee court to implement a nationwide discovery plan or a coordinated national calendar

Recently, plaintiffs in state court cases in the Actos litigation sent the Actos federal MDL court a letter complaining that the judge improperly "intervened" by discussing the litigation "ex parte" with the state court judge.  The plaintiffs asserted that the federal court persuaded the state court judge to rule in a certain fashion on scheduling issues, including the time for discovery and trial dates. Plaintiffs complained that such "intervention" would prevent them from properly litigating their cases; violated the important policy of comity (citing the Anti-Injunction Act); and raised "objectivity" concerns.  Plaintiffs requested the federal court refrain from such communications in the future with any state court judges handling Actos cases, citing the Canons of Judicial Ethics.  Finally, the letter asked that plaintiffs further be heard on this issue at an upcoming MDL hearing.

At first blush, this seemed like an over-reaction by plaintiffs, and perhaps an attempt to intimidate the court into not doing what seems like a perfectly acceptable thing, informally coordinating litigation which raises similar issues, involves many of the same counsel, and likely will implicate many of the same discovery requests, fact and expert witnesses. We leave it to the loyal readers of MassTortDefense to decide for themselves about the tone of this letter.

So how did the federal court react? Judge Doherty is overseeing the federal multidistrict litigation, In re: Actos (Pioglitazone) Products Liability Litigation (MDL-2299). Her reaction came in the form of a "Memorandum Response." The court read the original letter as possibly alleging improper and unethical conduct by both the federal and state court judges, and doing so by making "completely specious" arguments. On the merits, the court began by noting that the Manual for Complex Litigation recommends cooperation and coordination among federal and state court judges in these mass tort contexts.  So does the state court-focused manual, Managing Mass Tort Cases: A Resource for State Court Judges, published by the Conference of Chief Justices. The important notion of comity was respected because the communication from the MDL court was merely an invitation asking whether state courts might see any benefit in talking about the litigation posture. An invitation to chat is not an "intervention." And any communications were in that same spirit.

The court's memorandum turned to the MDL schedule, its internal logic and consistency, and the ample opportunity all parties had to comment on and object to any of its provisions. The court then points out, logically, that an improper ex parte conversation involves a communication between the court and one , but not all parties -- not a conversation between two independent judges.

The court than labeled a "cautionary tale" those cases that warn attorneys against unsubstantiated allegations that bring the judiciary into disrepute. Finally, the court noted that the letter inaccurately cites the Code of Judicial Conduct. The canons clearly do not prohibit a judge from consulting with other judges to aid the judge in carrying out his or her responsibilities.

The court gave the authors the benefit of the doubt, deciding ultimately to view the letter as over-zealous, ill-advised, poorly thought out, regrettable hyperbole, and empty rhetoric, as opposed to something more troubling.   An interesting read for all our readers, especially those with MDL practices.

 

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.
 

 

ABA Urges Respect For Foreign Privacy Laws

“Commerce among nations should be fair and equitable.”  -- Benjamin Franklin

The global economy of the 21st century has given rise to an important international conflict of laws, the tension between foreign privacy laws and expansive discovery law in U.S. courts. Countries such as Germany, France and Switzerland, have established laws that protect the personal information of their citizens (including data privacy laws, banking secrecy legislation, as well as so-called “blocking” statutes). U.S. courts are increasingly being asked by litigants to compel discovery of information located outside of the U.S. despite such laws, and by their opponents to respect the policies that may preclude or limit such discovery.  These litigants express concern that the courts simply fail to understand the untenable position a global company is put in when such discovery proceeds. 

The American Bar Association last week weighed in on the issue, adopting a policy urging U.S. courts to respect foreign privacy laws when managing discovery in civil litigation.  The House of Delegates passed Resolution 103A  by a vote of 227 to 188 stating that U.S. courts in civil discovery disputes should consider and respect foreign privacy laws "where possible in the context of the proceedings before them." 

Those in favor of the resolution emphasized the “Hobson’s choice” for litigants who must choose between following laws in one jurisdiction or another, but not both, when discovery orders require disclosure.  The U.S. Supreme Court recognized the need to respect non-U.S. law in the discovery context of civil litigation at least as far back as 1987, when it held in Aerospatiale v. District Court of Iowa, 482 U.S. 522 (1987), that international comity compels American courts to take care to demonstrate due respect for any special problem confronted by the foreign litigant on account of its nationality or the location of its operations, and for any sovereign interest expressed by a foreign state. But most U.S. courts do not give weight to foreign statutes that limit pretrial discovery, even when based on a different and stricter views of privacy rights and disclosure obligations.

Growing globalization guarantees that more and more disputes in U.S. courts will involve protected data located in and subject to the laws of foreign countries.  The ABA is concerned that the courts of other countries may take a hardened view of U.S. laws and regulations to the detriment of U.S. litigants in their courts. Rulings by courts here that may be seen as parochial or insufficiently accommodating of interests of other legal regimes could also stymie the growth of global commerce, including the cross-border movement of personnel and the hiring of local employees.

 

 

New Law Takes Effect Regarding Venue, Removal

For all the litigators out there, a reminder that The Federal Courts Jurisdiction and Venue Clarification Act of 2011, H.R. 394, P.L. 112-63. took effect last week.  The act amends the federal jurisdictional statutes regarding diversity jurisdiction (28 U.S.C. § 1332), venue (28 U.S.C. §§ 1390-92, 1404), and removal (28 U.S.C. §§ 1441, 1446, 1454).  Legislative history here.

Among its provision, the new act states that, with respect to diversity, the district courts shall not have original jurisdiction of any civil action between citizens of a state, and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same state.

It modifies the citizenship rules to treat corporations as citizens of any foreign state: (1) by which it has been incorporated, and (2) where it has its principal place of business. It treats insurers as citizens of any foreign state: (1) of which the insured is a citizen, (2) by which the insurer has been incorporated, and (3) where the insurer has its principal place of business.

The law now dictates that, upon removal of any civil action with both removable and non-removable claims, the district court shall sever from the action all non-removable claims and remand them to the state court from which the action was removed.  So no discretion to hold on to such claims.

The law prescribes revised requirements for filing notices of removal, including allowing statements in the notice of the amount in controversy, when it exceeds the necessary amount, if the initial pleading seeks: (1) non-monetary relief; or (2) a money judgment, but where the relevant state practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded. Removal of the action is proper on the basis of an amount in controversy asserted this way,  if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds the amount required.

Importantly, the law now allows removal of a case based on diversity of citizenship more than one year after commencement of the action if the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.  This deals with a common plaintiff tactic in mass torts, such as the inclusion of a treater simply to defeat diversity. In 1988, Congress amended the statute to prohibit the removal of diversity cases more than one year after their commencement. This change was intended to encourage prompt determination of issues of removal in diversity proceedings, and it sought to avoid the disruption of state court proceedings that might occur when changes in the case made it subject to removal. The change, however, led some plaintiffs to adopt removal-defeating strategies designed to keep the case in state court until after the 1-year deadline passed. In those situations, some courts have viewed the 1-year time limit as `jurisdictional' and therefore an absolute limit on the district court's jurisdiction.

The new venue provision requires the issue of proper venue of any civil action brought in a U.S. district court to be determined without regard to whether the action is local or transitory in nature. It repeals the "local action" rule that any civil action, of a local nature, involving property located in different districts in the same state, may be brought in any of such districts.  It also allows a district court to transfer a civil action to any district or division to which all parties have consented.

Significantly, the act resolves a circuit split regarding the time each defendant in a multi-defendant case has to file a notice of removal. Traditionally, the defendant had 30 days from receipt of the plaintiff’s complaint to file a notice of removal.  But in multi-defendant cases, some courts have adopted the “first-served” rule, under which each defendant in a case had 30 days from the date on which the first defendant was served, while others adopted the “later-served” rule, which gives each defendant a 30-day period to file a notice of removal after that defendant is served.  The new law adopts the latter view (but keeps the unanimity rule.)

Appeals Court Unhappy With Plaintiffs' Advocacy

Today we note an opinion that, in its opening words, is about "two appeals that raise concerns about appellate advocacy." Both are appeals from grants of forum non conveniens in multidistrict litigation. See Gonzalez-Servin et al. v. Ford Motor Co. et al., No. 11-1665; Kerman et al. v. Bayer Corp. et al., No. 08-2792 (7th Cir. 2011).

The Ford case was an appeal from an order to transfer a case from the U.S. District Court for the Southern District of Indiana to the courts of Mexico, and was one of many offshoots of litigation arising out of vehicular accidents allegedly caused by defects in Bridgestone/Firestone tires installed on Ford vehicles.  All these cases have been consolidated in an MDL.

The 7th Circuit found the lower court's careful and thorough analysis demonstrated that it was acting well within its discretion in deciding that the Mexican courts would be a more appropriate forum for the adjudication of this lawsuit by Mexican citizens arising from the death of another Mexican citizen in an accident in Mexico.

What seemed to bother the panel is that plaintiffs did not cite an FNC case seemingly on all fours with the appeal in their opening brief, though the district court’s decision in their case was issued in 2011—long after the prior case.  In their response the defendants cited the case repeatedly and asserted that its circumstances were “nearly identical” to those of the present case. Yet, in their reply brief the appellants still didn't mention it, let alone try to distinguish it, said the panel.

The second case involved litigation against manufacturers of blood products used by hemophiliacs, which turned out to be contaminated by HIV.  This particular suit was brought by Israeli citizens allegedly infected by the blood products in Israel. The defendants, invoking forum non conveniens, moved to transfer the case to Israel.  There were two prior appellate decisions on point, said the panel, including Chang v. Baxter Healthcare Corp., 599 F.3d 728 (7th Cir. 2010), which arose from the same multidistrict litigation.  The court said that these plaintiffs' short treatment of the prior cases "left much to be desired." 

Overall, said the court, the plaintiffs' "advocacy is unacceptable." The panel then invoked a well-known symbol: "The ostrich is a noble animal, but not a proper model for an appellate  advocate."  The “ostrich-like tactic of pretending that potentially dispositive authority against a litigant’s contention does not exist" is "pointless,” said the court.

The opinion closes with pictures of an ostrich burying his head in the sand, and of a man in a suit doing the same.  The reminder here is, when there is apparently dispositive precedent, an appellant may urge its overruling, or distinguish it, or reserve a challenge to it for a petition for certiorari, but may not ignore it. 

 

Justice Souter To Resign -- A Mass Tort Perspective

Justice David Souter plans to retire from the Supreme Court when the current term ends in June. This announcement, and the inevitable speculation about the identity and judicial philosophy of his replacement, makes one wonder about the impact of the impending change on those of us in the mass tort and products liability field.

What jumps to mind? In the field of mass torts, Justice Souter authored the majority opinion in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), the decision rejecting a Rule 23(b)(1)(B) limited fund settlement class action in the asbestos mass tort litigation. After Ortiz, non-opt-out settlement class actions became difficult as a potential mass tort settlement mechanism, particularly as a potential vehicle for resolving future claims in mass torts.

Justice Souter, writing for a 5-3 majority, also authored the landmark ruling limiting punitive damages in the long-running Exxon Valdez saga. The Supreme Court overturned a $2.5 billion punitive damages award assessed against Exxon for the 1989 Valdez oil spill, holding that the award was excessive under (maritime) common law. See Exxon Shipping Co. v. Baker, 128 S.Ct. 2605 (2008). Justice Souter stated that, under maritime law, the upper limit for punitive damages is a 1:1 ratio to compensatory damages. Although the Court’s ruling was limited to maritime cases, its reasoning was not.

According to Souter, punitive damage awards, along with runaway juries and a lack of legislative standards, have led to unpredictable outcomes and outlier awards. The Court found that the best way to cure the defect was to impose a 1:1 ratio of punitive to compensatory damages as the upper limit for punitive damages. His infamous footnote 17, however, referenced “a body of literature” that documented the unpredictability of punitive damages. But then, somewhat puzzlingly noted that: “Because this research was funded in part by Exxon, we decline to rely on it.”  Court observers have speculated on why he bothered to refer to the literature if he wasn't going to rely on it. Of course, there are times – particularly in long running mass torts -- when litigants pay for relevant empirical studies that are used in litigation, in part because often the litigants are the only ones with enough at stake to pay for expensive research studies.  And both sides do it.


In the area of preemption, Justice Souter joined the majority in Riegel v. Medtronic, Inc., 128 S.Ct. 999 (2008), holding that the preemption clause of the Medical Device Amendments of 1976 (21 U.S.C. § 360k(a)) bars common-law claims challenging the safety or efficacy of a medical device marketed in a form that has received pre-market approval from the FDA. However, he sided with the anti-preemption forces in Altria v. Good, 129 S.Ct. 538 (2008), to form a narrow 5-4 majority holding that federal law doesn't preempt cigarette makers from state law suits accusing them of deceiving consumers by marketing "light" or "low tar" cigarette brands. This despite extensive regulation of the “lights” area by the Federal Trade Commission, dating to the 1960’s, and the Congressional mandates on labeling in the Federal Cigarette Labeling and Advertising Act of 1965. Similarly, Justice Souter sided with the majority in the recent Levine v. Wyeth, 129 S.Ct.  1187 (2009) decision, finding that FDA actions had not preempted a state law claim concerning warnings about the side effects of the drug Phenergan.  The effects of that decision are yet to be felt, but the majority risked creating a hodge-podge of inconsistent state-based regulation of drugs (through jury verdicts) that need a consistent, national regulatory approach.