Print Edition
August 2010 
|
|
|
|
|
|
|
Managing Mass Tort Litigation |
« Back
|
|
Pauline Renaud, December 2009 |
|
|
|
Mass tort litigation has seen a sharp increase in recent years, encouraged by legal developments and new scientific evidence confirming the dangerousness of certain products. As the spectre of bankruptcy is looming for many companies worldwide, it has become even more important than ever to address such litigation risks. Civil action involving numerous plaintiffs against one or many corporate defendants in court may cover several matters, such as mass disaster torts, mass toxic torts, mass product liability torts, and mass fraud torts. In order to mitigate risks as much as possible, companies need to take several key steps, the first being to recognise the magnitude of the problem. But there is no one-size-fits-all solution, which means companies need to be particularly careful when implementing their strategies to respond to unique problems created by mass tort litigation.
The rise in mass tort litigation over the last decade has various underlying drivers. In the US, for example, the number of litigations in product liability, sales and marketing, as well as air crash disaster, has burgeoned following accidents or revelations regarding the impact of certain products on people’s health.
In this regard, asbestos and tobacco-related litigation have represented a large number of mass tort cases. Some experts believe that the continued efforts of plaintiffs’ law firms have also largely contributed to the developments of such litigations, as they are considered to be particularly lucrative for plaintiff attorneys. “This is not to say that individual plaintiffs who are actually injured do not deserve compensation, but in many mass tort cases, the number of individuals on whose behalf suit is brought vastly exceeds the number of plaintiffs who are actually seriously injured,” says Mark F. Rosenberg, a partner at Sullivan & Cromwell LLP, arguing that, in such circumstances, not only are defendants hurt, but also plaintiffs, as money that may otherwise be available to compensate them will be paid instead to defend and settle unmeritorious claims. Because of the attractiveness to plaintiffs’ counsel of mass tort litigation, some law firms representing defendants have argued that the passage of federal asbestos tort reform would not stem the tide of mass tort litigation as a whole, but would, instead, simply result in asbestos plaintiffs’ counsel shifting their energy to other mass torts.
The increasing expertise in the plaintiff’s bar of bringing class actions is also believed to have encouraged the development of mass tort litigation in recent years, with many more firms specialised in that particular area of the law, given the high risk/great reward profile of such suits. This is particularly true for ‘third-party payer’ suits, explains Russell Jackson, a partner at Skadden Arps. “Each time a medicine is recalled or has a significant warning added to the label, there is a particularly robust trend of suits against the pharmaceutical industry brought by so-called ‘third party payers’ – primarily union health benefit funds and other ‘insurers’ who pay for members’ medicines – claiming they were defrauded and either paid too much for the product or never would have bought the product at all,” he says.
The US legal system itself also encourages the development of certain cases by, for example, permitting counsel to represent allegedly injured plaintiffs on a contingent fee basis. “Another driver of the mass tort litigation is the continued availability of favourable forums and laws for the pursuit of these cases,” explains Philip Goldstein, a partner at McGuire Woods. “While much on the tort reform spectrum over recent years has been positive, such as in Mississippi and Texas, many other jurisdictions continue to offer plaintiff counsel a hospitable location to file these types of cases.” Various self-reporting requirements under US law, and therefore the availability of public records, also provide an easy roadmap for litigation.
Recent developments
Global market turmoil has encouraged several countries to consider amending their laws on mass tort litigations, or even creating new laws. In Austria, for example, the civil proceedings code does not currently provide for the possibility of mass tort litigations. Similar proceedings, known as ‘class actions with an Austrian imprint’ however, allow an injured person to convey his or her claims to a third party for the sole purpose of filing a single lawsuit covering multiple claims. But with the financial crisis, discussions on a draft by the Austrian Federal Ministry of Justice, introducing class actions, were re-ignited. “Under the current draft, class actions would only be possible if they gather at least 100 claims, based on the same facts and raising the same points of law against the same persons or entities,” points out Árpád Geréd, a partner at BMA Brandstätter Rechtsanwälte GmbH. “Conversely, the new class action proceeding would greatly streamline the current proceedings by omitting the time and cost consuming findings regarding the level of each claim, and instead concentrating on the facts and points of law common to all claimants.” Mr Geréd adds that such class actions will likely be introduced in Austria sooner rather than later. Consequently, many companies will likely face mass tort litigation in the years to come for damages caused today, given the three-year-statute of limitations for tort claims in the country.
In other countries, several legal developments have also influenced mass tort litigation. In the US, the enactment of the Class Action Fairness Act by Congress is said to have shifted many mass torts from state courts to federal courts in recent months. In addition, several experts have noticed that many plaintiffs have been resorting to different theories of product liability, such as public nuisance, in mass torts. Simultaneously, some experts argue that several state courts have been retrenching from the Daubert standard – which is a rule of evidence regarding the admissibility of expert witnesses’ testimony during federal legal proceedings – and have therefore taken a more relaxed approach to admitting expert evidence on causation. As a result, some law firms fear that the combined effect of nuisance doctrines and the Daubert standard will mean that cases might survive to verdict, even in the absence of evidence regarding the dangerousness of a defendant’s product. “Additionally, plaintiffs have been looking to peripheral defendants – meaning companies that may have sold, but not produced an asbestos-containing product – in an effort to find viable defendants because many companies involved in the mass torts from their inception have filed for bankruptcy,” notes Kenneth R. Meyer, a principal of Porzio, Bromberg & Newman.
|
|
|
|
|
= requires subscription
