Betting the company: Five steps to effective mass tort defense

By Amy R. Fiterman and
M. Joseph Winebrenner
Faegre Baker Daniels

Mass tort litigation is a significant and increasingly more common liability exposure for businesses, both in and outside of Minnesota. Mass torts are more popular now than ever before. In the period from 2012-14, the Judicial Panel on Multidistrict Litigation received an average of 91 new multidistrict litigation  requests per year – up from 75 in 2002-04 and 44 in 1992-94.

Defending against a new mass tort can be daunting. The potential exposure can reach “bet the company” levels; the issues can be complex and expensive to defend; and the opposition can be more sophisticated and organized than that in ordinary one-off litigation. Here, we discuss five steps for in-house and outside defense counsel to consider when faced with a new mass tort.

Step One: Create a strong team—you’re going to need it

Dealing with a mass tort, whether as a part of an MDL or not, can be unwieldly. Organization and leadership are key. And the first step to getting control of strategy and organization is to create a collaborative leadership team between in-house and outside counsel.

From an in-house perspective, a company should make sure it identifies someone who can effectively manage outside legal counsel, help drive strategy decisions, and appropriately communicate needs and expectations to key corporate members.

Additionally, it is critical to quickly identify national counsel – the law firm, or lawyer, that will serve as the chief outside counsel and strategist in the defense of the litigation. The appointment of a national coordinating counsel can ensure that a consistent and deliberate defense strategy is employed in all individual actions, regardless of the jurisdiction, and can permit in-house counsel to manage the litigation by liaising with a single attorney, as opposed to separately managing the numerous local attorneys in charge of the day-to-day operations for each case.

National counsel should be highly seasoned attorneys who can provide key strategic insight, particularly in the early goings of a new mass tort. National counsel should then create an internal team of its own to ensure it has key strategists in place to lead both the legal and discovery fronts.

Step Two: Issue a comprehensive litigation hold

Everyone knows (or should know) that a litigation hold– a written communication to employees requiring the preservation of documents and electronic data relevant to the claims and defenses at issue— must be issued once a party can reasonably anticipate litigation. When faced with a mass tort, however, it is critical to issue a hold that adequately accounts for the scope of discovery that you anticipate will be relevant.

In mass tort cases, plaintiffs’ counsel often contend, sometimes successfully, that the defendant failed to comply with its preservation duty because of insufficiencies in the litigation hold – e.g., that it was issued too late, or that its scope and distribution were too narrow. These challenges can distract the parties and court by drawing attention away from the unmeritorious nature of the plaintiffs’ claims and onto the alleged “bad faith” of defendant in its discovery and preservation obligation. Defendants can avoid this side show altogether by crafting a litigation hold, as early as practicable, that is well-considered, both in scope of relevant documents and in breadth of employees to whom it is issued.

Step Three: Consider how to best structure the litigation

Whether, and if so, how, to coordinate mass tort litigation is an early strategic call that a company should explore with national counsel. In federal court, 28 U.S.C. § 1407 authorizes the Judicial Panel on Multidistrict Litigation (JPML) to transfer all related cases to a single judge for consolidated or coordinated pretrial proceedings so long as the transfer “will promote the just and efficient conduct of such actions.” Colloquially, this is known as multidistrict litigation. Several states offer analog procedures for the coordination of mass torts filed within a particular state. See, e.g., N.J. Ct. R. 4:38A (authorizing N.J. Supreme Court to designate case as “Multicounty Litigation” for centralized proceedings).

There are pros, cons, and uncertainties associated with centralized mass tort case management. For example, significant efficiencies are gained with centralized coordination of cases that would otherwise be litigated separately, by different judges, under different rules, and on different timelines. These efficiencies save time and defense costs. Instead of attending hundreds of status conferences each month, a defendant may have to attend one or two; and instead of negotiating with hundreds of different plaintiffs’ attorneys, and responding to hundreds of different requests for discovery, a defendant typically deals with a small group of lawyers appointed to the plaintiffs’ “steering committee,” who have authority from the court to speak and make decisions on behalf of the entire group of plaintiffs. As a result, a defendant can litigate common issues and perform its discovery work once, instead of having to re-litigate the same issues and reinvent the wheel in discovery for each and every pending case.

On the other hand, centralized management of mass torts can empower your opposition. Instead of facing hundreds of lawsuits filed by different lawyers pursuing their cases independently, defendants often face a conglomerate of plaintiffs’ attorneys that work together, divide labor and thereby present a more organized and formidable case. Moreover, centralization encourages the plaintiffs’ bar to file as many cases as possible, often including frivolous cases, which give the appearance of a widespread problem. This is done to inflate the plaintiffs’ leverage in settlement discussions, and can draw greater public attention, and give credence, to the plaintiffs’ allegations of liability.

Finally, several aspects of centralized management can either help or hurt a defendant. The luck of the judicial draw is one such factor. Once an MDL or analogous state court docket is commenced, the parties will deal with the same judge (chosen by the JPML) for all pretrial proceedings – including discovery, expert disclosures, class certification if necessary, and oftentimes dispositive motions.

Another factor to consider is choice of law. While MDL courts are ordinarily required to apply the same state law as the transferor courts would have applied absent transfer, MDL courts generally apply their own jurisprudence on issues of federal law, and application of the Federal Rules of Evidence and Federal Rules of Civil Procedure. Where circuit splits exist on such matters, the formation of an MDL can effectively change the law that applies to at least some of the plaintiffs’ claims – be it for the good or for the bad.

There is no uniform answer to the question of whether a defendant should seek, or consent to, centralized management of a new mass tort. It will depend on the defendant’s circumstances,  goals, and the merits of its defenses, among other things; and it should be the subject of early strategic talks with national counsel, who can provide recommendations not only on the issue of whether to centralize, but in the event centralization is pursued, on the specific jurisdiction and judge to target in the motion practice with the JPML – details that can greatly impact the end results of the litigation.

Step Four: Develop a discovery plan early

Discovery in mass tort litigation is extensive, time-consuming, and costly. Strategizing early with regard to the following issues can produce significant benefits in later phases of the litigation.

Plan ahead for the production of electronically stored information (ESI). As soon as practicable after commencement of a new mass tort, a defendant and its national counsel should perform an investigation to determine where documents and data relevant to the litigation reside. This is a time-consuming endeavor, and often one that requires multiple interviews of company employees and information technology personnel.

Contemporaneous with this investigation, litigation counsel should negotiate an ESI Protocol with opposing counsel that will govern document production throughout the litigation. This protocol should address, among other topics, the required format of production, and the use of search terms in document processing and review. With an ESI Protocol in hand and an estimate of the total ESI volume, a defendant and its national counsel can make informed decisions about discovery vendors, and plan ahead for the document collection, production, and review – often the most time consuming and expensive phase of mass tort litigation.

Because this process of identifying data sources is so time consuming, some companies opt to “map” this data well before a mass tort matter emerges. All litigation management for a company’s entire docket of cases, large or small, will benefit from understanding data sources before the need arises to collect it.

Negotiate favorable CMOs. MDL courts manage discovery through case management orders (CMOs), often stipulated to by the parties, and entered at the commencement of the litigation. It is important to take the CMO process seriously, and to try to negotiate reasonable limitations on discovery. These limitations should be in the form of discovery deadlines, limitations on the number of discovery requests each side can serve, as well as limitations on the number of document custodians and depositions each side can identify or take. To the extent feasible, discovery should not be left open-ended. Because it is so expensive, the opposition can use unreasonable, overly broad discovery requests as a form of harassment and bullying later in the litigation, if the merits are skewed against them. Effective CMO negotiations can prevent such abuses.

Even if a mass tort is not being managed through the MDL process, in total or in part, a defendant should consider seeking orders and/or cooperation of plaintiffs to coordinate discovery and use other case management tools (cross-noticing depositions, etc.) to avoid duplicative efforts and unnecessary costs.

Consider use of fact sheets. Many mass tort CMOs incorporate fact sheets – an alternative (sometimes a supplement) to traditional interrogatories and requests for production, where each plaintiff completes a court-approved worksheet of questions related to his or her claims, and produces a standard set of documents. These so-called “plaintiff fact sheets” can streamline the discovery process on the plaintiffs’ side, as they permit plaintiffs themselves to complete them without the assistance of an attorney. “Defendant fact sheets” are sometimes also employed, requiring defendants to provide specified information and documents that relate to issues on a case-specific, as opposed to litigation-wide, level.

Strategize offensively. While the vast majority of document production in mass tort litigation comes from the defendant, companies can gain great advantages by developing an early offensive discovery strategy. Litigation counsel should research the applicable law early to identify winning legal theories, and the facts that need to be proven or disproven to support those theories.

Armed with this information, counsel should craft strategic discovery requests designed to solicit those facts. On a related note, to the extent early discovery or other evidence demonstrates that some portion of the plaintiffs’ case inventory could be frivolous or non-conforming (e.g., certain plaintiffs did not use the defendant’s product or suffer the injury alleged), defendants should consider seeking a screening order to require plaintiffs to produce, as a prerequisite to pursuing their claims, objective evidence supporting a prima facie claim.

Such orders can be an effective method to weed out unsubstantiated claims, and to narrow the plaintiffs’ case inventory. Short of that, a defendant should be screening cases as soon as possible in the discovery process to seek early dismissals and reduce plaintiffs’ overall “inventory.”

Step Five: Plan for the conclusion at the beginning

Finally, it is important for a defendant facing a new mass tort to develop a strategy for its resolution. Will the company’s best interests be served through early global settlement? Through aggressive litigation followed by global settlement discussions? Or is the litigation significant enough to test through a series of bellwether trials? The company, together with national counsel, should perform a preliminary investigation into the merits of the case, identify strategic litigation-wide goals, and define “success” in terms of an end result. While these discussions can, and should, be revisited from time to time throughout the life of the litigation, identifying a resolution strategy early provides a target on which the entire team can focus.

Amy Fiterman is a partner at Faegre Baker Daniels; Joseph Winebrenner is an associate at the firm.