Drug Mass Tort: Choosing the State or Federal Court System

Arguably, pharmaceutical drug mass tort is in its heyday, with the advent of what seems to be an ever-increasing number of complicated drug litigations — Baycol, Propulsid, Rezulin, fen-phen and Gammagard, to name a few. [FOOTNOTE 1]



Thus, it is important to visit the tempestuous issue of the role of the federal Multidistrict Litigation (MDL) versus that of its New York state counterpart.



Multidistrict Litigation, a product of the federal court system, was established to handle civil lawsuits filed in different federal district courts. Simply, when cases have been filed in different district courts, they may be transferred to one court for pretrial proceedings.



If the MDL panel in Washington, D.C., approves the motion, it will assign a presiding MDL judge whose courtroom becomes the temporary forum for the cases. [FOOTNOTE 2]



The scope of the MDL court’s mandate is to handle pretrial proceedings only. Though at one time it was believed the MDL court could assign the transferred cases to itself for trial, [FOOTNOTE 3]the U.S. Supreme Court has determined that improper. [FOOTNOTE 4]



The MDL court oversees all discoveries and issues arising there from, including expert preclusion issues via Daubert [FOOTNOTE 5]hearings and summary judgment motions.



A Plaintiffs’ Steering Committee (PSC) is appointed by the judge and given ultimate responsibility for determining the overall strategy and decision-making regarding discovery, with a mandate to handle all discovery issues and matters directly or via subcommittees.



If there is more than one defendant not united in interest, a similar committee is created by the defendants. [FOOTNOTE 6]The PSC also creates an expense fund to pay its expenses through initial assessments on all MDL cases. A fee fund is also created, from which it is paid for its time from assessments based upon recoveries obtained.



NEW YORK’S SYSTEM



Before January 2002, New York had mechanisms for consolidating/coordinating mass tort cases for discovery, such as had been used in fen-phen, DES and Rezulin. [FOOTNOTE 7]Though not nearly as neat nor as thorough as the MDL rules — and not codified — the CPLR and judicial administrative authority were used to accomplish many of the same things. Coordinated state court cases were handled much like MDL.



This changed on Jan. 24, 2002, when Rule 202.69 of the Uniform rules for the New York State Trial Courts became effective. [FOOTNOTE 8]The rule, which is very similar to the MDL rules, codifies and clarifies many of the ad hoc procedures previously used in New York mass tort cases.



Similar to the MDL panel, the rule establishes a Litigation Coordination Panel, which sua sponte or upon application shall determine whether actions shall be coordinated before one or more justices. The criteria used are almost identical to those of MDL (complexity, common questions, duplicative or inconsistent rulings, among other things).



The designated coordinating justice is explicitly given the powers heretofore exercised — appointment of liaison counsel and steering committees, establishing master docket numbers, use of coordinated pleadings, and coordination with any federal action — as can the MDL judge.



The coordinating justice, like the MDL judge, also may require participation in settlement discussions and alternate dispute resolution. This is an important issue because getting the parties to the table during and near the end of discovery is extremely important to resolving these matters.



Finally and most importantly, like the MDL judge, the coordinating justice may only try a case where the parties have consented to same. (Assumedly consent would not be required where the case was filed in the county where the coordinating justice was sitting.)



When comparing federal and New York coordinated cases, the only major difference is that the case cost or fee assessments are not within the powers of the coordinating justice, whereas the MDL fees are routinely paid to the PSC from an assessment on recoveries.



STATE ABDICATES ITS PROACTIVE ROLE



Historically, the state PSCs generally abdicated a proactive role as to discovery, ending up doing little more than providing an infrastructure to coordinate case specific discovery and trial scheduling. [FOOTNOTE 9]



One reason for this was the then-generally faster pace of MDL. Despite the best efforts of court administrators, downstate courts — where most of the cases are filed based upon, in part, population distribution — continued to have inherently long delays at the trial court level. Coupled with the expansive right to interlocutory appeal and the long time it took to have the appeals decided, MDL was generally significantly faster.



Another reason for the state abdicating its proactive role was the greater authority of the MDL judge based upon the stronger power to sanction and lack of immediate appellate review.



Funding was yet another factor. The MDL’s routine prospective cost assessment on each case created a fund to cover expenses that even in the small- to middle-size mass torts can easily run half a million dollars or more.



Finally, the ability of the federal PSC and other committee workers to be paid for their efforts, versus the lack of any such payment in state court, lead to MDL doing the work.



This is not to say that some states do not routinely work semi-independently of MDL. Certain states, such as Oregon, generally coordinate with MDL but tend to proceed to trial before MDL is complete. This is due to a combination of fairly quick trial dates and varying limits on discovery and appellate review.



“Rocket docket” courts — which have short periods between filing a case and getting a trial date — have limited discovery and interlocutory appeals, so under the right circumstances they are able to lead a more active role.



WHERE IT STANDS TODAY



Given the realities of MDL mass tort pharmaceutical drug litigation and the tremendous cost, time and expertise required to prosecute these cases, the role of New York PSCs in mass tort pharmaceutical litigation has changed for four major reasons: Daubert, fee assessments, a perceived feeling of hostility toward these cases in the federal court system, and the change of relative pace between the federal and state courts.



In MDL, the court, using the Daubertdoctrine, acts as gatekeeper pertaining to experts. This doctrine sets a much higher level for allowing scientific testimony — some would say overly strict and anti-plaintiff — compared to New York courts.



Not only is the level higher, but Dauberthearings have routinely become minitrials, with plaintiffs’ experts on the stand for days, even when the defendant has little expectation of winning.



FEE ASSESSMENTS



Fee assessments are another important issue.



In the L-tryptophan case, the first big MDL of the 1990s, the PSC waived all case fee assessments, assessing only to cover expenses. That has not happened since. In fact, today it is the opposite, with fee fund assessment growing higher and higher.



In the 1996 Gammagard MDL, each case was assessed a fee of 6 percent of the total settlement/award, equivalent to 18 percent of the attorney’s fee under the New York one-third retainer — without taking expenses into account.



These higher fee assessments appear to be driven by a few firms that seem to see MDL pharmaceutical drug mass tort case fees, as well as those from other MDLs, as a source of income.



PERCEIVED ANIMOSITY



There is also the perceived animosity of the federal court system to plaintiffs in general. True or not, it is easy to find articles about the number of “conservative” judges and justices appointed over the last two decades who presently “overwhelm” the federal bench. The tort reform talk coming from some in Congress and the Executive Branch only reinforces this perception.



Finally, there is no longer a major time difference between litigating in state court and in federal MDL.



Through a combination of administrative judges acting faster to consolidate these cases before experienced judges, and the courts recognizing that these cases need to be handled quickly, the time difference to complete discovery between a federal and state case has not only disappeared, but in some instances the state is faster.



CONCLUSION



Given these incentives, is there any reason to believe that New York cannot do the work as well, if not better than, federal MDL?



New York has more than enough experienced counsel — many with MDL experience — to handle mass torts proactively on the state level.



While there is still at a slight economic disadvantage because the state PSC is unable to raise a fund to pay for expenses by prospectively assessing each case, this has been overcome by an informal system of raising funds.



Expenses are handled by either pooling voluntary contributions by the state PSC and the various committee members, or with the firms doing the work simply paying their own incurred expenses. [FOOTNOTE 10]The source of the expense funds can be supplemented by payments by other firms, which contribute to the costs voluntary or by the PSC providing firms who voluntarily contribute with a refined discovery package.



Finally, the codification of mass tort rules, though only slightly changing past practices, strengthens the role of the justices assigned these cases and puts forth a framework that all understand and can work within.



Two decades ago, state PSCs played a very large role in these cases, and that trend is returning — though with much more expertise and refinement.



With the return of these cases to an active state court, the state PSCs may now again work in accord with the federal PSCs, not as a follower, but as no less than equal partners, and in many cases as the leader.



Richard S. McGowan is of counsel at Weitz & Luxenberg. He specializes in mass tort pharmaceutical drug litigation.

::::FOOTNOTES::::