How big was multidistrict litigation this year? Really big. Stupendously big. The cases were so phenomenally large that they generated significant political interest, with the Obama administration and various government oversight departments getting actively involved. And, for once, a pharmaceutical manufacturer was not the primary target.
Consider what the year presented:
The largest oil spill in U.S. history.
The recall of more than 10 million vehicles, attended by horrendous accidents that killed and maimed people.
Toxic Chinese drywall installed in thousands of homes.
“These are cases with a lot of liability and a lot of damage,” said Ervin Gonzalez, a partner at Colson Hicks Eidson in Coral Gables, Fla., who serves on the plaintiffs’ steering committees in the oil spill and Chinese drywall multidistrict litigation (MDL).
In April, the Deepwater Horizon oil rig in the Gulf of Mexico exploded, killing 11 people and causing record environmental and economic damage along the coast. More than 200 lawsuits poured in against BP PLC, which leased the rig, and Transocean Ltd., which operated it. Also sued were Halliburton Co., which cemented the well, and Cameron International Corp., manufacturer of the device that malfunctioned just before the explosion.
Following a crowded hearing before the U.S. Judicial Panel on Multidistrict Litigation in Boise, Idaho, the lawsuits were consolidated in an MDL in New Orleans, where U.S. District Judge Carl Barbier is overseeing them. The cases run the gamut, having been filed by commercial fishermen, hotel owners, shareholders, environmental groups and the attorneys general of numerous states.”The BP case is the mother of all of them so far,” Gonzalez said. “That’s huge.”
The first big MDL of the year involved Toyota Motor Corp. After instituting two major recalls due to defects that caused some of its best-selling cars to suddenly accelerate out of control, Toyota faced more than 300 lawsuits asserting injuries, wrongful death and economic damages. The cases are now part of an MDL before U.S. District Judge James Selna in Santa Ana, Calif. Selna has denied Toyota’s motions to dismiss the litigation.
Meanwhile, the first bellwether trials took place this year in a massive MDL against the primary manufacturers of Chinese drywall: Taishan Gypsum Co. Ltd. and Knauf Plasterboard (Tianjin) Co. Ltd. The material, which was used in the rapid rebuilding following Hurricane Katrina, has been linked to bloody noses, headaches, insomnia and skin irritation. Those cases are now before U.S. District Judge Eldon Fallon in New Orleans.
In three trials, damages were awarded against the defendants. The first two, both in New Orleans, ended in awards of $2.6 million and $164,000. A third, in Florida state court, awarded $2.4 million to a homeowner couple. In October, Fallon approved a deal in which Knauf would pay for the repair of 300 homes, mostly in Alabama, Florida, Louisiana and Mississippi.
“I wouldn’t be surprised if, in a year, there is a similar program for Taishan,” said Dawn Barrios of Barrios Kingsdorf & Casteix in New Orleans, who serves on the plaintiffs’ steering committee in the Chinese drywall MDL. It’s unclear why so many big cases came down the pipe this year. One notable difference is that none of the big MDLs involved a recalled drug. In recent years, drugs such as Vioxx and Bextra have generated the most MDL action.
Plaintiffs’ lawyers say recent decisions by the U.S. Supreme Court finding that drug cases are subject to federal preemption rules have forced them to come up with new legal strategies. “That pre-emption issue is starting to affect how plaintiffs’ lawyers strategize their case, and MDLs aren’t good for that because you end up with federal law,” said Daniel “Dee” Miles, a shareholder at Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery, Ala., who serves on the plaintiffs’ liaison committee for the personal injury and wrongful death cases against Toyota.
Joel Smith, managing partner of the Columbia, S.C., office of Bowman and Brooke and Toyota’s co-lead counsel in the personal injury and wrongful death cases, chalked up this year’s cases to mere coincidence. “I don’t think it has to do with fact they’ve decided that pharmaceutical cases are no longer lucrative because of pre-emption,” Smith said.
The cases this year were greatly intertwined with politics. “Nobody can dispute that there is significant political involvement in the legal process,” Smith said. That might not be a new trend, he said, “but what we’re seeing now is, whenever anyone has a product issue that gets the attention of the public, it is also getting the attention of other constituencies that are investigating these issues beyond just the plaintiffs in federal court actions.”
Washington’s actions have had mixed results for lawyers in the MDL.
After the oil spill, the Obama administration set up a $20 billion fund paid for by BP to compensate those who lost business or suffered damages. For months, that fund, called the Gulf Coast Claims Facility, has been providing emergency relief and taking applications for final payments of damages. Claimants who take the final payments waive their right to sue BP. While that kind of trade-off might reduce the number of potential future lawsuits in the MDL, it hasn’t dampened the spirits of plaintiffs’ lawyers who hope to obtain higher damages through litigation.
“The individuals with smaller claims are rushing to the fund for payment, and that makes sense, but bigger claims will not be resolved through the funds,” Gonzalez said.
In December, the Justice Department sued a division of BP and eight other defendants for failing to keep the oil well under control before the explosion. The government hopes to recoup removal costs, economic losses and environmental damages. Barrios, who serves on a working group for the plaintiffs’ steering committee in the BP case, called the government’s lawsuit a “big plus” for the MDL because it could bring in federal government resources, which in other litigation have been difficult to obtain, she said.
In Toyota, the National Highway Traffic Safety Administration (NHTSA) and members of Congress began investigating an increasing number of reports involving suddenly accelerating Toyota vehicles. The investigations centered on the defects that were the subjects of the recalls — sticking accelerator pedals and entrapped floor mats — but also on an alleged problem in the electronic throttle control system. Toyota has denied any electronic problems but in April paid a record $16.4 million fine to the government after having waited four months to report the defects.
The agency’s involvement in the Toyota MDL has been a “mixed bag,” said Miles. “NHTSA was actively involved in the investigation, then it cooled its heels, and I’m not sure what NHTSA’s role is going to be here.”
The Chinese drywall MDL could carry political overtones, also.
“One of the things we hope will come out of this is legislation that requires foreign corporations doing business in the U.S. to make themselves available and to access their process in U.S. courts,” Gonzalez said. “It’s not right they enjoy making money in our country but, when they provide bad products that kill or maim or hurt, they can avoid accountability or responsibility.”
Amanda Bronstad can be contacted at firstname.lastname@example.org.
SUING TOYOTA: A TIMELINE OF LITIGATION AGAINST TOYOTA MOTOR CORP.
SPREADING FAST: A TIMELINE OF LITIGATION OVER THE GULF OF MEXICO OIL SPILL