Product Liability Seminar Offers Topical Mass Tort Session

We have posted before about the 2010 DRI Product Liability Conference in Las Vegas in April, as an event worth checking out.

Let me add that one of the attractive feature of the conference is that, in addition to the exceptional program put together for the main stage, there are many great Specialized Litigation Group (subcommittee) programs planned, including the highly-relevant-to-readers Mass Torts & Class Actions SLG.

At the Mass Torts & Class Actions SLG breakout session on Thursday, April 8th (likely to be more daring than Criss Angel, more talented than Terry Fator, more energetic than a Blue Man Group) includes:

Legislative and Regulatory Update: Impact of New Administration and New Statutes, Rollback on Preemption and Effort to Rollback Twombley
Jeffrey A. Holmstrand, McDermott & Bonenberger PLLC, Wheeling, West Virginia
Anthony Sammons, Dinsmore & Shohl LLP, Lexington, Kentucky

Emerging Class Action Issues: Impact of the ALI Project on Aggregation and Update on Problematic Causes of Action (Public Nuisance, Consumer Fraud Act and Medical Monitoring)
Richard A. Oetheimer, Goodwin Procter LLP, Boston, Massachusetts
John Parker Sweeney, Womble Carlyle Sandridge & Rice PLLC, Baltimore, Maryland

Emerging Mass Tort Issues: Examination of Daubert/ Frye Issues, Update on Green-Product Issues and Use of Risk Assessment Concepts
Robert C. James, TERRA Inc., Tallahassee, Florida
David C. Uitti, Dechert LLP, Princeton, New Jersey

Best Practices on Managing Mass Torts: Exploring the Virtual Law Firm, Cost Controls, Alternative Fee Arrangements and Early Case Dispositions
Moderator Kip T. Bollin, Thompson Hine LLP, Cleveland, Ohio
 

You can still register.

CAFA Mass Tort Removal in Drug Case

A federal court in Illinois recently denied remand of approximately 100 cases involving Trasylol, an anti-bleeding drug, citing the Class Action Fairness Act. Gilmore v. Bayer Corp., 2009 WL 4789406(N.D. Ill., 12/10/09). (Federal Trasylol litigation was consolidated in 2008 in the Southern District of Florida. In re Trasylol Prods. Liab. Litig., No. 08-MD-1928 (S.D. Fla.). The plaintiffs typically assert that the product causes heart and kidney complications, and that the defendants allegedly failed to warn of the risks.)

The suit was originally filed in state court. The defendants removed the case, but Judge G. Patrick Murphy remanded it for lack of federal jurisdiction. Additional plaintiffs were added in October, followed by a second removal motion. The defendants asserted diversity of citizenship under CAFA. The plaintiffs again sought remand.

The Southern District of Illinois ruled that the removing defendants asserted correctly that this case was a removable “mass action” within the meaning of CAFA. Among the actions covered by CAFA is a “mass action,” defined by the statute 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,” and in which there is minimal diversity of citizenship (at least one plaintiff is not a citizen of the same state as at least one defendant) and the plaintiffs each seek a recovery exceeding $75,000, exclusive of interest and costs. 28 U.S .C. § 1332(d)(11)(B)(i).

The court concluded that an independent review “discloses plainly that the removal of this case is proper under the CAFA.”  The operative complaint asserted claims on behalf of one hundred persons, the minimum number of plaintiffs required for the exercise of jurisdiction pursuant to CAFA's “mass action” provisions.  Further, this case obviously presented questions of law and fact common to the claims of all one hundred plaintiffs, said the court. Common questions of fact and law included, for example, what information Bayer, Bayer LLC, and Bayer Healthcare possessed concerning the alleged harmful effects of Trasylol, what information they elected to disclose to physicians and patients about those harmful effects, and what information they were required by law to disclose about those effects, according to the court.

With respect to the requirement of minimal diversity of citizenship, this jurisdictional prerequisite was satisfied in this case as plaintiff Thomas Gilmore is a citizen of Washington and Bayer is incorporated under Indiana law and has its principal place of business in Pennsylvania.

Finally, with respect to the jurisdictional amount in controversy under the CAFA's “mass action” provisions, the Court noted that in other cases involving allegations of personal injuries allegedly caused by the drug similar to the allegations contained in the operative complaint in this case that the plaintiffs' claims individually exceeded $75,000.

Our readers know that Congress enacted CAFA to allow more interstate class actions to be heard in federal court, and to address class action abuse.  "Mass actions" were recognized as class actions in disguise, and included in CAFA the provision to prevent the statute's objectives from being undermined by these "close substitutes that escape the statute's application." The courts increasingly offer a common sense reading of CAFA  that thwarts any attempt by plaintiffs' counsel to avoid federal court through the class-action substitute.

Climate Change Litigation and Legislation Update

Although we haven't posted about it much, a number of environmental groups, states and private citizens have brought litigation, seeking to turn climate change issues into mass torts. Thus far, the litigation, which has focused principally on greenhouse gas emissions, has not been very successful. Unlike typical mass tort litigation, some of these plaintiffs admit that part of the goal of the cases is to encourage Congress to act on legislation (leading to regulation) that would achieve some of the same goals.

One example is the mass tort suit filed in 2008 by residents of a small Alaskan village against two dozen energy companies, claiming that carbon dioxide and other greenhouse gases have left their town uninhabitable. Native Village of Kialina v. Exxon Mobil Corp., et al., 2008 WL 2951742 (C.D.Cal.)

Now comes word that a number of studies will be released in the near future, examining the potential impact of pending climate-change legislation, including its effect on food prices. Under the proposed climate-change legislation, a carbon offset, or credit, can be generated when a company reduces the amount of greenhouse gas emitted into the atmosphere. The resulting offsets can then be sold to other polluters or used by the producer to reduce its overall emission totals. Certain companies would have to pay penalties if they emit more than allowed without offsets.The House passed a bill, the American Clean Energy and Security Act of 2009, in late June. There is concern the bill doesn't provide sufficient incentives for food and agricultural companies to receive and generate carbon credits to offset their carbon emissions. The Senate is expected to take up its own climate bill next month. Critics say that the House bill also risks an increase in food and feed prices, and a reduction in the international competitiveness of U.S. businesses.

Again, the legislation and any resulting regulation may have a significant impact on whether the courts will breathe life into mass tort litigation relating to alleged climate change issues.

Guide for Multidistrict Litigation Transferee Judges Published By FJC

The Judicial Panel on Multidistrict Litigation and The Federal Judicial Center have recently released a new publication, "Ten Steps to Better Case Management: A Guide for Multidistrict Litigation
Transferee Judges."

As readers of MassTortDefense well know, Section 1407 empowers a transferee judge to exercise all the powers of the transferor court, with the exception of actually conducting the trial of the case (except in special circumstances). The stated purpose of this Guide is to briefly introduce some of
the “best practices”  -- in  the authors' view -- that transferee judges have developed over the years. It is designed as a complimentary piece to the guidance in the Manual for Complex Litigation (4th ed.), which addresses some of difficult management, intellectual, and legal challenges posed by MDL cases. 

The advice includes the suggestion to identify and appoint liaison counsel who are vigorous advocates, constructive problem-solvers, and also civil with their adversaries, because the judge cannot manage an MDL entirely alone. "To a large extent, you [judge] must rely upon lead counsel to assist you."

Another welcome suggestion: Rulings should be prompt and disciplined; scholarly
perfection is not required on all issues.  In particular, resolving discovery disputes expeditiously is important to avoid undue delay in any case, but particularly in an MDL, says the Guide.

In MDL litigation with parallel state cases, judges are urged to reach out to their state court colleagues "from the outset" to try to forge constructive working relationships with them. One way of doing this is to establish an MDL-specific website so that federal orders and rulings are readily available to state courts.

Worth a look for defense counsel with MDL practices.

 

Court Allows Plaintiffs to Structure Suits To Avoid CAFA

Two thousand Central American banana farm workers suing over their alleged exposure to a pesticide were permitted split up their suits to avoid federal court jurisdiction under the Class Action Fairness Act.  See Vanegas v. Dole Food Co., 2009 WL 690198 (C.D. Cal. 3/9/09).  The opinion allowed the plaintiffs to craft their suits against the Dole Food Co., Dow Chemical Co., and other defendants, so that they each have no more than 100 plaintiffs and avoid CAFA's mass action reach.

Plaintiffs allege that they were injured by exposure to 1, 2-Dibromo-3-chloropropane (“DBCP”), a toxic chemical sold under the brand names “Nemagon” and “Fumazone.” Plaintiffs allege that defendants manufactured, marketed, and distributed DBCP. Plaintiffs further allege that they were exposed to DBCP as a consequence of working on banana plantations in Costa Rica, Panama, Honduras, and Guatemala, owned or operated by defendants.

Plaintiffs were divided, alphabetically and by country, into 30 cookie cutter cases such that each case has less than 100 plaintiffs; they alleged claims for (1) products liability-negligence; (2) strict products liability; (3) products liability-defect in design, manufacture, and chemical composition; (4) products liability-breach of warranty; (5) fraudulent management; (6) intentional misrepresentation; (7) fraud by concealment; (8) general negligence; and (9) conspiracy.

Defendants removed, and plaintiffs sought remand. Plaintiffs argued that this case is not a “mass action” pursuant to the Class Action Fairness Act of 2005, 28 U.S .C. §§ 1332(d) and 1453, because their complaint s each contain less than 100 plaintiffs. Defendant responded that plaintiffs may not “gerry-mander their lawsuit to circumvent CAFA,” citing Freeman v. Blue Ridge Paper Products, Inc., 551 F.3d 405, 2008 WL 5396249, at *1 (6th Cir. Dec.29, 2008); Proffitt v. Abbott Laboratories, 2008 WL 4401367, at *5 (E.D.Tenn. Sept.23, 2008)). Defendants argued that plaintiffs cannot artificially splinter their actions to avoid jurisdictional thresholds.

The district court remanded, holding that the removal statute is to be “strictly construed against removal jurisdiction and any doubt must be resolved in favor of remand,” citing Hofler v. Aetna U.S. Healthcare of California, Inc., 296 F.3d 764, 767 (9th Cir.2002). These actions do not constitute “mass actions” under CAFA, said the court, because each of these actions has been brought by less than 100 plaintiffs. Tanoh v. AMVAC Chemical Corp., 2008 WL 4691004, at *5 (C.D.Cal. Oct.21, 2008). Nothing in CAFA suggests that plaintiffs, as masters of their complaint, may not “file multiple actions, each with fewer than 100 plaintiffs, to work within the confines of CAFA to keep their state-law claims in state court.” Tanoh, 2008 WL 4691004 at *5.

The court distinguished Freeman, saying the Sixth Circuit limited its ruling to one type of claim splitting. “In Freeman, the plaintiffs divided their suit into five separate suits with identical parties and claims, each covering distinct, sequential six-month time periods,” the court said. “By contrast, each of the cases at issue here involves distinct plaintiffs. Moreover, the Sixth Circuit explicitly noted that its holding is limited to the situation where there is “no colorable basis for dividing up the sought-for retrospective relief into separate time periods, other than to frustrate CAFA.”
 

Latest Federal Court Statistical Report Offers Snapshot of Mass Torts

An interesting snapshot of mass torts and product liability actions in the federal courts is found in the annual report, "Judicial Business of the United States Courts: 2008 Annual Report of the Director."  This report is produced by the Statistics Division, Office of Judges Programs, Administrative Office of the U.S. Courts The latest report shows that a surge in asbestos cases drove a significant rise in new federal personal injury and product liability litigation.

Overall, civil filings increased 4 percent in 2008 to 267,257, and the national pending civil caseload climbed 12 percent to 298,129, the report said.  The rise in diversity of citizenship filings resulted chiefly from personal injury cases related to asbestos, especially in the Eastern District of Pennsylvania, and diet drugs in the Eastern District of Arkansas. According to court officials, asbestos filings under MDL 875 and diet drug filings under MDL 1203 caused filings to swell by more than 19,500 cases. About 99,000 asbestos-related cases containing at least 3.3 million claims are pending in the MDL in the Eastern District of Pennsylvania. (In the Arkansas Prempro MDL, which consists of thousands of cases, the judge has ordered the plaintiffs to complete discovery involving defendants Pfizer Inc. and Wyeth Pharmaceuticals Inc. by Sept. 1 , 2009) .

In the 2007 reporting period, a total of 29,291 product liability cases were commenced in federal courts, and in the same period ending in 2008, that number jumped to 53,102, based largely on the surge in asbestos-related filings .

The United States Judicial Panel on Multidistrict Litigation acted upon 35,987 civil actions pursuant to 28 U.S.C. §1407 during the 12-month period ending September 30, 2008. The Panel transferred 8,156 cases originally filed in 92 district courts to 52 transferee districts for inclusion in coordinated or consolidated pretrial proceedings with 27,831 actions initiated in the transferee districts. Product liability cases involving the hormone therapy drug Prempro and the Kugel Mesh Hernia Patch were among the more significant of the Panel's transfer determinations during the report period. The Panel did not order transfer in 25 newly docketed litigations involving 150 actions.


Since the creation of the Panel in 1968, it has centralized 301,255 civil actions for pretrial proceedings. As of September 30, 2008, a total of 11,665 actions had been remanded for trial, 395 actions had been reassigned within the transferee district, and 186,747 actions had been terminated in the transferee court. At the end of this fiscal year, 102,448 actions were pending throughout 60 transferee district courts.

The federal judiciary calls the report the most comprehensive set of detailed statistical tables published on its work.


 

Update on Digitek Litigation

As posted by MassTortDefense, the Digitek MDL judge late in 2008 issued a pretrial order regarding multi-plaintiff complaints. In Pretrial Order No. 7, the court ordered the severance of most multi-plaintiff cases (other than spouses). In Re: Digitek Products Liability Litigation, MDL No. 1968 (S.D. W.Va.). The court noted that several complaints in this MDL action join multiple plaintiffs whose only apparent connection with one another is that they allegedly ingested the drug at issue. Other MDL judges have noted the case management, tracking, and other difficulties often accompanying that joinder practice, citing Vioxx and diet drugs.

Plaintiffs’ Co-Lead Counsel were to submit to the court a report identifying multi-plaintiff actions docketed prior to this Order that are subject to severance, and submit a suitable proposed severance order. One of the reasons plaintiffs resist such severance is the need to pay separate filing fees for all the separate claims filed, but the Order required the fees.


The plaintiffs in the Digitek multidistrict litigation then identified five class actions that they say meet the court's requirements for severance under Pretrial Order No. 7. The plaintiffs said that the five cases they identified have multiple class representatives, but  -- despite the order -- they propose that they be continued with multiple class representatives until "class certification issues are addressed and determined by the Court to ascertain suitability and typicality of the class representatives' claims."  These kinds of personal injury claims are typically inappropriate for class treatment.  Individual issues of causation, injury, and damages predominate over any alleged common issues.  Choice of law issues can make the class device unmanageable.

MassTortDefense also posted before about defendants' proposal to centralize the cases filed in New Jersey, and plaintiffs' proposal to designate the New Jersey cases as a mass tort.

New Jersey state court Digitek cases have now been designated a mass tort by a New Jersey Supreme Court Order, and have been assigned to the Bergen County Superior Court. The centralized mass tort docket has been assigned to Judge Jonathan N. Harris.

The state’s mass tort website states that Digitek is a medication used to treat heart failure and abnormal heart rhythm. The NJ complaints seek damages, medical monitoring and other relief due to the purchase or ingestion of allegedly defective Digitek tablets which the plaintiffs claim were released with as much as twice the appropriate thickness. The complaints further allege that patients were thus taking twice the intended dosage. A Class I recall was initiated by the defendants after receiving some reports of illness and injuries consistent with potential overdoses of Digitek. It is alleged that this condition is dangerous especially among individuals suffering from renal failure because the Digitek may accumulate in the body of such individuals, rather than be excreted normally in urine. 

The pattern of federal case MDL and mass tort treatment of multiple filings in a given state's court has been seen in numerous other pharmaceutical cases, including Vioxx and Seroquel.
 

National Juries For National Cases?

At MassTortDefense we typically focus on cases, statutes, and the like, but certainly can make room for a thought-provoking academic piece. Professor Laura G. Dooley, Valparaiso University, has written National Juries For National Cases: Preserving Citizen Participation In Large-Scale Litigation in the NYU Law Review. Her observation: procedural evolution in complex cases seems to have left the civil jury behind. The trend toward centralization of cases pending on the same topic in one court results in cases of national scope being tried by local juries; this reality is a catalyst for forum shopping and a frequent justification for calls to eliminate jury trial in complex cases altogether. Yet, the jury is at the heart of a uniquely American understanding of civil justice, and the Seventh Amendment still mandates its use in federal cases. This article makes a new proposal designed to the constitutional and functional value of citizen participation in the civil justice system by aligning the jury assembly mechanism with the scope of the litigation.

When parties litigate a case of national scope, often a mass tort, this article argues
that the proper jury pool is neither local (as in state court, where jury pools are typically defined along county lines) nor regional (as might be true in a federal district), but rather a national jury drawn from a national pool.

The professor argues that this idea would eliminate incentives to forum-shop into local jury pools, and would make the decision-making body commensurate with the polity that will feel the effects of its decisions. She also postulates a higher level of legitimacy for decisions rendered by a national jury in national cases because they would not be subject to the criticism that a local jury is imposing its values on the rest of the country, and because geographical diversification of the jury would enhance the quality of decision-making. She asserts that the allegedly waning legitimacy of the civil jury in large-scale litigation reflects the disparity between the scope of the local jury pool and the scope of the cases. Moreover, the democratic values animating the Seventh Amendment can best be realized in large-scale litigation by empaneling a national jury, she says.

Interesting. In mass torts, we certainly have seen considerable forum shopping by plaintiffs; frequent attempts by defendants to remove to federal court because of jury pool issues; much anxiety over the use and selection of bellwether trials; and ongoing debate about the role of MDL courts in the early trials in consolidated federal litigation. Readers may have some comments on this one....
 

Issue Preclusion in Mass Torts

Professor Byron Stier, of Southwestern Law School, has written an interesting article entitled, Another Jackpot (In)Justice: Verdict Variability and Issue Preclusion in Mass Torts.

In it, he notes that if there are no prior inconsistent verdicts, non-mutual offensive issue preclusion generally allows a finding by a single jury to bar re-litigation, in future cases, of the issue by the defendant who lost in the prior case. This approach, however, ignores the possibility that the first verdict delivered may have been an outlier, a fact that would be shown only if further verdicts were permitted to be delivered. In mass tort litigation, such a flawed approach may result in critical issues such as defect or negligence being resolved by only six jurors, when the potentially outlier verdict is then potentially applied to resolve the cases of thousands, perhaps bankrupting a company or an industry -- even when most juries would not so hold.

Focusing on mass tort litigation, this article by Professor Stier presents some growing empirical evidence of verdict variability and then critiques the use of issue preclusion, whose downside is applied only against defendants, not plaintiffs, because only defendants were parties to the prior action. As a result, the article argues, courts should exercise their discretion to deny issue preclusion in mass tort litigation. Instead, he asserts, courts should join the emerging consensus of mass tort management that ultimately better serves the goals of efficiency and public respect supposedly underlying issue preclusion: allow multiple verdicts to unfold a more balanced view of liability that will frequently be used for well-informed and far-reaching settlements. 

Given the administrative burden that mass torts can place on the courts, even with the use of management techniques such as an MDL, the temptation to use short-cuts to the traditional day in court promised all litigants and demanded by fundamental fairness can be immense. The professor offers some powerful arguments against one such short-cut.
 

Mass Tort Litigation Screenings Exposed

Professor Lester Brickman, of Cardozo School of Law, has published a fascinating article entitled, "The Use of Litigation Screenings in Mass Torts: A Formula for Fraud?"

At MassTortDefense, we would simply remove the question mark.

Plaintiff lawyers obtain the "mass" for some mass tort litigation by conducting screenings to sign-up potential litigants. These "litigation screenings" have no intended medical benefit, and thus this entrepreneurial response to highly profitable opportunities that arise in certain mass tort litigation should not be confused with true medical screening. In a litigation screening, potential litigants are solicited by lawyers or their agents by use of mass mailings, television and newspaper advertisements providing “800” telephone numbers, and by use of web sites purporting to provide medical information about toxic exposures, drugs, devices, or specific diseases but which are, in fact, “fronts” for law firms to whom the web site visitor is referred.

Screenings can be held in motels, shopping center parking lots, local union offices, and even lawyers' offices. There, an occupational history is taken by persons typically with no medical training, a doctor may do a cursory physical exam, and non-doctor technicians administer tests, such as X-rays, pulmonary function tests, echocardiograms and blood tests. The sole purpose of screenings is to generate "medical" evidence of the existence of an injury to be attributed to exposure to or ingestion of defendants' products – all pre-planned. Usually a handful of doctors ("litigation doctors") provide the vast majority of the thousands of medical reports prepared for that litigation.

By the good professor’s count, at least 1,500,000 potential litigants have been screened in the asbestos, silica, fen-phen (diet drugs), silicone breast implant, and welding fume litigation. Litigation doctors found that approximately 1,000,000 of those screened had the requisite condition that could qualify for compensation under plaintiffs’ legal theory, such as asbestosis, silicosis, moderate mitral or mild aortic value regurgitation or a neurological disorder. He further estimates that litigation doctors and screening companies have been paid well in excess of $250 million – huge number, but a tiny fraction of the contingency fees earned well in excess of $13 billion by his estimates.

The professor concludes that approximately 90% claims generated from the screenings were based on "diagnoses" of the type that U.S. District Court Judge Janis Jack, in the silica MDL, found were "manufactured for money."

He also presents the case that bankruptcy courts adjudicating asbestos related bankruptcies have effectively legitimized the use of these litigation screenings.

Professor Brickman's areas of expertise include legal ethics, contingency fees, mass torts, and asbestos litigation. He notes the significant volume of literature about the use of junk science in the court, even today, especially to try to prove general causation in mass torts. But his analysis is particularly valuable because it turns an empirical light on the use of litigation screenings to try to prove specific causation.
 

Proposed Accounting Rule Makes No Sense For Mass Torts

At MassTortDefense we typically focus on litigation, with a touch of legislation thrown in. A newly proposed accounting rule – yes accounting – gets our attention today. The rule would modify the standard accounting provisions governing the disclosure of the costs and contingencies of ongoing litigation, and in so doing assist plaintiffs’ attorneys and threaten the attorney-client privilege.

The change (Exposure Draft, Proposed Statement of Financial Accounting Standards, Disclosure of Certain Loss Contingencies) was proposed by the Federal Accounting Standards Board earlier this year, and would expand the loss contingencies that are required to be disclosed, the disclosure of specific quantitative and qualitative information about the loss contingencies, and a tabular reconciliation of the loss contingencies. (FASB is a private organization that establishes standards used in preparing financial reports that are officially recognized by the SEC and the American Institute of Certified Public Accountants.)

Problems? It may require companies to disclose things that are very remote. The information is also going to have to be updated on a quarterly basis. That will require extensive effort by both outside and inside counsel, increasing costs significantly. More importantly, it will also impact litigation strategy. Mass tort litigation is driven by plaintiffs’ attorneys, more so than by law, science, or medicine. The new disclosure rules would undermine the attorney-client privilege and work product protection, especially to the extent they seem to expect the company to give its own assessment of what the results will likely be. They seem to require greater disclosure of the company’s litigation strategy and analysis of the strengths and weaknesses of its position to a far greater extent than ever seen before. The rules thus tilt the litigation balance in favor of disclosing info to companies’ litigation adversaries and, thus, work to the ultimate detriment of shareholders without providing meaningful disclosure to investors.

As anyone who has handled mass tort litigation can attest, budgeting for future contingencies is extremely difficult, with the number of cases, the jurisdictions involved, the courts’ case management techniques, and the number of trials, having huge impact on costs and all being outside defendants’ direct control. Estimating the costs of continuing litigation is highly subjective, subject to huge swings as underlying assumptions change, and unlikely to provide financial statement users with meaningful or reliable information

The proposed change also stipulates that companies may avoid disclosing certain information if the disclosure would be prejudicial to the ongoing legal proceeding, but it is unclear how this provision would protect companies in practice.  Almost all the new disclosures seem to be potentially prejudicial in that way.

Pharmaceutical companies are among those most affected by this proposal, because of the mass tort litigation that they face. Six leading drug makers sent a letter last Friday objecting to the proposed rule. The companies are currently defending a wide range of lawsuits, including tens of thousands of product liability lawsuits, many of the lawsuits class actions.

Here's hoping that comments cause a re-thinking of a rule that seems ignorant of the world of mass torts.