Mass tort defense
The most cost-effective action by an attorney called upon to represent a company which has just become a defendant in a mass tort action is to move immediately to certify the plaintiffs “and all those similarly situated” as a class and insist that the action be bifurcated and proceed as a class-action on the issues of general liability at least through the conclusion of discovery.
The reason this kind of immediate response is still unheard of is obvious. It dramatically minimizes the fees which may be earned by time billing law firms engaged to defend the actions in the conventional fashion.
Mass tort litigation today
It is now common to see attorneys, or well coiffed actors simulating attorneys, soliciting on television, even during prime time in some smaller markets, for individuals suffering “serious” illness and resulting disability or the families of those who have already died as a result of some defective product, process, or procedure. The opening teaser suggests that the viewer may be entitled to substantial monetary compensation; that there is no charge for the initial consultation; and no legal fees unless there is a recovery.
This kind of solicitation by attorneys had been prohibited as “maintenance” (the support of litigation by a stranger without just cause), “champerty” (the support of litigation by a stranger in return for a share of the proceeds), and “barratry” (the bringing of “vexatious” litigation) for generations in the Anglo-American common law countries. Eventually, grudging acceptance of the realization that a contingent fee agreement is the only way for anyone lacking “independent means” or not a “high net worth” individual to gain access to the legal system in order to seek money damages or other compensation for personal injury, removed the prohibitions against maintenance, champerty, and barratry in civil litigation. Civil rights litigation in the 1960s eventually struck down the Bar Association prohibitions against lawyer advertising.
The manufacturers named in these TV solicitations and all the companies in their product supply chains are already or are soon to become defendants in some kind of “mass tort” case. The immediate response of any company facing this kind of litigation can often determine the course of economic survival for the company.
Where the first complaint filed in the mass tort action names more than one defendant, typically there is some effort to coordinate defense efforts among the multiple defendants. Even though it might appear that coordination of defense efforts among multiple defendants encourages common defense and permits otherwise competitive companies to pool their knowledge, expertise and resources, a wise and prudent company will ignore the temptation and “go it alone.”
Unless the multiple defendants in the mass tort case are members of a cartel or otherwise regularly conspire together, a common defense, or even a common defense strategy is not just contraindicated, but generally so impractical as to be nearly impossible in practice to accomplish.
Origins of the “modern” class action
Class actions were once limited to the efforts of a small group of enterprising attorneys who accumulated evidence of corporate wrongdoing or mistakes which led to generally quite small and economically inconsequential damages to individuals. Taking advantage of 1960s amendments to Rule 23 of the Federal Rules of Civil Procedure which allowed small claims by individual plaintiffs to be aggregated into a “class” and prosecuted as a “class-action” these clever attorneys were able to bring what came to be known as “penny overcharge cases” where the cumulative damages of all members of the class might amount to many millions of dollars even though no individual member of the class suffered more than a few dollars or a few cents worth of actual economic loss or damage.
These cases were generally settled relatively quickly and the attorneys for the class were awarded attorneys fees by the court based on their hourly billing rates and some kind of multiplier for their “success” in obtaining some benefit no matter how slight for the individuals who were members of the plaintiff class.
The defendants in these minimal damage overcharge cases were buying permanent protection from further liability and capping the cost of litigation by paying a limited amount of damages and attorneys fees which generally amounted to much less than the cost of defending the individual claims would be.
Asbestos changes the tort landscape
As the number of individual claims of personal injury and death attributable to asbestos and asbestos-containing materials reached the tens of thousands and courts were becoming overwhelmed, well-established companies such as Johns Manville were forced to seek protection under the bankruptcy laws. The small group of personal injury lawyers and their medical consultants handling these asbestos cases on an individual basis with contingent fee retainers permitting them to share anywhere from one-third to fifty percent of a victim’s recovery, steadfastly refused to consider aggregating these very serious claims in a class-action which would permit recovery over time from some kind of trust fund.
The small cottage industry which had grown up among defense firms were equally reluctant to allow aggregation of asbestos claims fearing loss of the hourly billings which were proliferating at the same rate as the claims were filed. By the time Johns Manville faced bankruptcy in 1982, the attorney’s fees paid to all the lawyers feeding off the asbestos cases had consumed two-thirds of the total recovery paid out by the manufacturers.
Agent Orange and the origin of mass tort class-action litigation
In 1978, the first claims by Vietnam combat veterans that they had suffered illness and many had already died as a result of exposure to dioxin contaminated phenoxy herbicides while “in country” during the war in Southeast Asia were filed. It soon became obvious that many thousands of Vietnam combat veterans were afflicted and when Victor Yannacone took over the cases he refiled them as the first mass toxic tort class-action in American legal history. In the prayer for relief of the class action complaint, instead of asking for some kind of money damages, on behalf of the veterans and their families, Yannacone asked the court to establish a trust fund from the current earnings of the corporate defendant war contractors—in order to deny them the opportunity of seeking protection under the bankruptcy laws—and from that trust fund over time pay the cost of medical care and treatment as well as other economic damage suffered by the veterans and their families.
In February, 1979, when an additional class-action was filed on behalf of the children of Vietnam veterans who were suffering from catastrophic polygenetic birth defects, Leonard Rivkin, as attorney for the Dow Chemical Company, joined with Yannacone to submit the action for consideration by the newly created Judicial Panel from Multidistrict Litigation. The Agent Orange litigation became MDL–381. Eventually, in 1984, the Agent Orange case was settled as a class-action and the trust fund suggested in the original complaint was created from the proceeds of the settlement, clearly identifying a path to prompt and just resolution of litigation involving large numbers victims claiming damage from dangerous and defective products.
The message of the Agent Orange settlement was clear and a number of perceptive attorneys soon recognized the value of consolidating toxic tort cases into some form of class action at least through the judicial resolution of the common questions of general liability.
Immediate response to multiple actions
Whether a mass tort case begins when individual plaintiffs or a small group of plaintiffs bring similar claims against a single company, a single company and one or more of the companies in its supply chain, or a large number of companies in an entire industry sector, the initial reaction of a company after recognizing that large number of individual suits may be filed with similar claims is to seek certification of the plaintiffs as a class as soon as possible whether the attorneys for the plaintiffs are willing or not.
In a mass tort case involving multiple defendants regardless of how they came to become defendants in the litigation, there is never any rational reason for joint action among the defendants other than to make reasonable agreements on procedural matters to prevent duplication of effort and multiplication of expense.
There is never any justification for the attorney representing your company to share their work product with any of the attorneys who may be representing other defendants. Failure of companies to monitor the activities of the attorneys representing them often leads to compromise of sensitive company information, including trade secrets and intellectual property as well as opening portals for potential cyber attack.
Joint defense agreements
Often, law firms representing a large defendant will present the attorney for a smaller defendant with a “joint defense agreement” suggesting that execution of such an agreement will avoid conflict of interest and waiver interest and limit exposure to malpractice liability based on unwittingly creating an attorney-client relationship with other parties, particularly co-defendants.
To enter into any such joint defense agreement without the fully informed consent of company management and a formal resolution approving the particular terms of the proposed joint agreement by the company directors as well as management, is malpractice!
Waiver of privilege
Since the attorney-client privilege only attaches to confidential communications between attorneys and their clients which are intended to remain private, any sharing of the contents of such communications, even with other attorneys pursuant to a joint defense agreement can defeat the privilege.
There is supposed to be a “joint defense privilege” also known as the “common interest privilege.” However, even those who most vigorously urge sharing communications among those aligned in a joint defense effort recognize that any “joint defense privilege” does not operate as an independent privilege, but is a limited exception to the well-established waiver rules. Just because communications which should be privileged become part of a joint effort to establish a common defense strategy does not mean that they will remain privileged.
Company management must always make it clear to any attorney representing their interests that all communications between the company and its attorneys are to be treated as both confidential and fully privileged never to be shared outside the Company without the fully informed consent of Company and, in certain cases, a resolution of the Company directors.
Some cooperation and coordination is appropriate in mass tort defense
Cooperation and coordination among defendants in mass tort litigation is appropriate with respect to motions directed against the complaint and procedural motions without significant substantive impact upon any defense which your company might have. Nevertheless, any cooperation and collaboration which minimizes redundancy of effort, reduces the costs associated with the litigation, and enhances the overall progress towards a resolution of the controversy should be encouraged.
Joint defense agreements with respect to discovery
It is quite proper for all of the attorneys and law firms representing all of the defendants in a mass tort action to agree upon some kind of division of labor with respect to document discovery and depositions. A joint defense agreement, however, must be memorialized with the procedures for protecting confidentiality of communications involving these areas of cooperation explicitly stated and carefully defined and delineated. The agreement must state clearly the extent to which discovery strategy and tactics will be disclosed and how the results of the discovery effort shared.
Alternatives to joint defense in mass tort litigation
One of the opportunities available to share information without compromising confidentiality or attorney client privilege in mass tort litigation is to make use of materials from such services as provided by the Product Liability Advisory Council (PLAC) which maintains a members-only website generally considered secure where non-confidential deposition transcripts, new case developments, and comments on case strategy are available.
These comments were occasioned by my disagreement with the general premise of an article entitled, Navigating Landmines in Mass Tort Joint Defense, by attorneys Ronald J. Levine, and Sharon A. O’Shaughnessy, which appeared on the Corporate Counsel website 23 March 2015. For the full text of their original article, as a professional courtesy, you are directed to http://www.corpcounsel.com/printerfriendly/id=1202721338904