Impressions on Duke Conference on Documenting & Seeking Solutions to Mass-Tort MDL Problems
By Bexis on May 14, 2018, Drug & Device Law Blog
Bexis has lots of opinions on what’s wrong with mass-tort (especially drug/device) MDLs. Heck, Bexis has even proposed amendments to the MDL statutes to correct the many severe problems that exist. Now, Congress has before it possible statutory changes (not holding our breath) and Civil Rules Committee is looking into the same problems. Maybe something will happen, although rules changes are notoriously protracted, and the cadre of MDL judges (15 judges control 18 MDLs that account for some 47% of the entire federal civil docket) and their plaintiff-side enablers will fight any attempts to curb MDL discretionary excesses.
In the midst of all this, the Duke Law School’s ongoing MDL best practices project held an invitation-only meeting recently, and Bexis was invited as one of the defense-oriented participants. This meeting was conducted under so-called “Chatham House” rules that preclude attributing particular statements to particular persons, so this post summarizing the meeting will not be of the “he said, she said” variety.
Early Dismissal of Meritless Cases
Defense-side participants produced a plethora of statistics that, in MDL after MDL, anywhere between 20% and 45% (eliminating outliers both ways) of all filed MDL cases are ultimately dismissed because the plaintiffs do not have evidence of the most basic information imaginable: (a) that they actually encountered the product of the defendant being sued; (b) that they suffered one of the injuries that the MDL was about; and (c) that that the timing and amount of the plaintiff’s exposure was plausible under the plaintiffs’ own causation theories. The missing information that was discussed was not anything expert-related, just product identification, injury, and plaintiffs fitting within whatever might be the plaintiffs’ own asserted parameters of causation.
Somewhat surprisingly, the plaintiff-side participants did not dispute the basic point – that meritless plaintiffs are widespread, running into the thousands of bogus plaintiffs in the larger MDLs. Indeed, most of the plaintiff-side speakers professed not just their recognition of the meritless claim problem, but their own annoyance at this phenomenon. The presence of large numbers of meritless cases artificially skewed who had what say on plaintiff steering committees, which partially depend on numbers of cases. At the back end, meritless cases produced a bunch of left-over plaintiffs, abandoned by their counsel (who never intended to try cases), bumbling around pro se.
Not one plaintiff-side speaker denied that numerous meritless cases existed in MDLs, or that the absence of effective Rule 8/12/TwIqbal procedures encouraged meritless filings. Evidently, the “park and ride” plaintiff-side lawyers who pump and dump cases into MDLs don’t attend conferences like this, or if they do, they keep quiet. At most, the plaintiff-side speakers tolerated bad cases because they would “all work out in the end.”
The defense side vehemently rejected that no-harm, no-foul approach. Defense participants argued that meritless cases weren’t harmless, but rather skewed MDL litigation from beginning to end – driving up discovery costs, forcing defendants to vet cases that plaintiffs should have done before filing, complicating random plaintiff selection for bellwether trials (more about such trials, below), and inflating settlement demands. Artificially inflated plaintiff numbers increase the psychological impact of MDLs, given how those numbers find their way into press descriptions and plaintiff solicitations. Masses of bogus plaintiffs also prevent proper resolution of “proportionality” issues in discovery, since they inflate P-side discovery arguments.
Further, FDA regulations do not contain any “bogus” case exception that would give defendants leeway not to report such cases in their adverse event filings. Phony cases lead to phony “signals,” since even though adverse event reporting is (according to the FDA) not supposed to establish causation, plaintiff-side experts routinely try to misuse them − and sometimes get away with doing so. When that happens, it’s garbage in, garbage out. Inflated plaintiff numbers lead directly to inflated reports, so that meritless cases end up supporting junk science. This effect is magnified by pleading that would be barred by TwIqbal in non-MDL cases that, such as use of “and/or,” that purport to sue multiple defendants when they could only have used one product, so that each defendant is obligated to report the “adverse event” to the FDA.
Matters livened up a bit further, with that morning’s report from 360 on the extreme position taken by plaintiffs in the Zofran MDL were taking on discovery – that discovery rules in MDLs only apply to defendants. They were demanding that only 8 of over 400 plaintiffs should submit to any discovery at all – giving bogus Zofran cases a free ride all the way to remand. The Zofran plaintiffs were so over the top that they even claimed an MDL judge lacked jurisdiction to order discovery. That’s what Joe Biden would call “malarkey,” and not a single plaintiff-side speaker defended, let alone took, that position.
The problem of widespread filing of bogus cases received the most support for (or the least opposition to) a rules change to facilitate early dismissal of meritless cases. A rules amendment would have to be simple – not a “Lone Pine” order, but rather something much more basic. A plausible version could be along the lines of mandatory initial discovery, which exists in “pilot project” form in both the District of Arizona and the Northern District of Illinois. The local rules could be adapted easily enough to require production of all evidence of product identification/exposure, diagnosis of an injury, and their relative timing within a relatively short fixed period (60-90 days would seem reasonable) after filing of a complaint. If a plaintiff couldn’t produce any facts or records that plausibly establish a claim, then the meritless action would be dismissed with prejudice. Maybe a mandatory initial disclosure rule would be limited to MDLs above a certain threshold (100? 500? 1000?) number of plaintiffs.
Defendants might have to compromise – giving something to get something. MDLs are notorious for imposing onerous discovery obligations on defendants, anyway, so frankly our side wouldn’t be giving up much, except for possibly timing. One possibility, discussed at the conference in a different context, could involve early technology-assisted review of some categories of electronic documents. We like predictive coding anyway, so as long as the timing is doable, there might be the basis of a workable compromise here.
Another possibility would be to amend Rule 20 to prohibit joinder of plaintiffs in the same complaint who have nothing in common except suing over the same product. These multi-plaintiff, misjoined complaints are the primary way that the “park and ride” lawyers file their cases, with practically no factual information about any of the plaintiffs. Not only do these improper plaintiffs cheat courts out of filing fees, but they burden defendants with the expense of vetting the plaintiffs’ cases. In addition to forbidding the practice, each misjoined plaintiff could also be required to make a non-refundable deposit into the MDL plaintiffs’ common benefit fund.
Finally, the issue of statute of limitations tolling agreements came up. There could be a legitimate problem, when a plaintiff’s lawyer finds him/herself up against the statute of limitations with a new client. We don’t have problems with tolling agreements, as long as they’re one-off, and not an excuse for further abuse. Tolling agreements cannot be an excuse for rampant failure to vet claims – the example given being “I have 2000 new cases, can I have a tolling agreement for two years.” Tolling agreements are only appropriate for a short period of time. We think that the same 60-90 day period mentioned above should be long enough to accommodate counsel who would otherwise have a legitimate need for a tolling agreement.
Interlocutory Appeal of Significant MDL Rulings
Another candidate for a rules change – one meeting with significantly more opposition from our colleagues on the other side of the “v.’ – is the interlocutory appeal of the resolution of certain “significant” motions typically made in MDLs. Such appeals would correct an imbalance in current practice in that, if defendants win a dispositive motion, it’s an appealable final order, but if defendants lose the same motion, no appeal is available because the denial isn’t final. Thus, the litigation continues, and the dispositive issue is appealed, if at all, years later – after a bellwether trial or a remand (in the rare event that happens).
That imbalanced access to appellate review is acceptable in an individual case, because delay caused by piecemeal appeals isn’t offset by the need to get things right, right away. What’s acceptable in a single case, becomes a much bigger problem when the downside of an erroneous denial of a dispositive motion could dispose of hundreds or thousands of cases, particularly an appeal much further down the road adds extraneous pressure to affirm, or else a great deal of MDL activity, based on the resolution defendants contend is erroneous, goes down the drain.
Attorneys on the plaintiffs’ side – as was the case throughout the conference – were content with the status quo. They pointed to existing certification procedures, but current procedures require the assent of the trial judge that denied the motion in the first place. If denial is intended to force settlement, which is often the case, that assent won’t be forthcoming. Plaintiffs pointed to the New Jersey Accutane litigation which has (in)famously been around for some fifteen years. But that analogy is poor. Most, if not all, of the delay in Accutane is not due interlocutory appeals, but rather from an prior judge’s extremely poor bellwether trial performance (almost every trial verdict was been reversed), or from appeals concerning the grant of dispositive motions – neither of which have any bearing on the current proposal for a Rule 23(f)-like equivalent permitting interlocutory appeals from motion denials in MDLs whether or not the MDL judge wants to allow it.
Ironically, the Rule 23(f) analogy was attacked by the plaintiff side as a bad analogy, because class actions were mostly “negative value” cases that, unlike mass torts, would go away without certification. We think the analogy, while not perfect, is better than the other side will admit, for reasons discussed in more detail when we turn to bellwether trials. Lawyers are, by nature, competitive, and the raised stakes of mass tort MDLs only exacerbates that tendency. Thus, both sides – but in particular the plaintiffs – pour more money into bellwether trials than the individual cases could possibly be worth. In that way, bellwethers become “negative value” cases, too.
Once again, a bit of serendipity strengthened the defense arguments. Just the day before, the Fifth Circuit reversed the bellwether trial verdict in the first of several consolidated trials in the Pinnacle Hip MDL. See In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Product Liability Litigation, ___ F.3d ___, 2018 WL 1954759 (5th Cir. April 25, 2018). This was the same MDL where the defendants had tried everything to obtain appellate review of the trial court’s erroneous rulings, including mandamus. Now, something like seven years of MDL activity in Pinnacle Hip has come to just about naught, largely because no interlocutory appeals process existed to provide timely review of repeated erroneous rulings.
We have to admit, though, the other side has a point that it would be difficult to create a one-size-fits-all interlocutory appeal rule defining exactly what “significant” MDL rulings would be subject to its purview. Preemption, for sure − nobody on either side disputed that a single preemption motion could be dispositive of so much (up to and including “all”) of an MDL to qualify. Everything else was subject to considerable debate.
Some Daubert motions can have the same MDL-wide preclusive effect; our 2016 top ten cases post discusses two (Mirena and Lipitor) of these (three (Zoloft) if you count the honorable mentions), but lots of other Daubert motions in MDLs would not come close.
Then there’s everything else. Choice of law was mentioned, so were punitive damages. The jurisdictional issue in Pinnacle Hip was critical, but most MDL judges aren’t that overreaching. So defining “significant” for the purposes of a rules change could well pose complex problems.
Having thought about all that, however, se say, “why bother?” Let defense lawyers in the particular MDL decide. Call it the “upon further review” rule if you want. In the NFL, the rules allow coaches a set number of challenges to just about any on-field calls, and if the team wins a challenge they get another one, up to some absolute limit. NFL coaches get to pick what calls they consider important enough to challenge. Let counsel do the same for MDL interlocutory review. Preemption orders should be appealable, and a set number (probably two or three) of other orders could be subject to interlocutory review at each separately represented defendant’s option. If the defendant wins the appeal, it gets another challenge.
We don’t think that approach will result in an undue number of appeals – especially since the Supreme Court just reduced the appellate courts’ workload by throwing out Alien Torts Claims Act cases against corporations, creating some give. Delay might be a more serious concern, but as with Rule 23(f), the MDL isn’t being stayed, so discovery and other activity would continue in the meantime.
Another issue raised, which would be beyond the control of the federal rules, is whether interlocutory appeals would sufficiently delay MDLs so as to encourage plaintiffs to file in state court. News flash – plaintiffs have been avoiding federal court for as long as we can remember. In one of Bexis’ first MDLs, some 1500 Bone Screwplaintiffs tried to hide out in state court in Tennessee (where the target defendant was “at home” jurisdictionally). They might even have gotten away with that, had Tennessee not had an unusually short one-year personal injury statute of limitations, which tripped up plaintiffs after they agreed to a universal discovery date that was more than a year before they filed all those multi-plaintiff complaints. See Maestas v. Sofamor Danek Group, Inc., 33 S.W.3d 805 (Tenn. 2000) (plaintiffs lose on cross-jurisdictional class action tolling; all 1500 cases dismissed). One more reason for plaintiffs to stay out of federal court doesn’t mean anything. If anything, avoiding federal court is harder now than before because the Supreme Court decided to enforce constitutional limits on personal jurisdiction.
There was considerable discussion of bellwether trials, but we have doubts that rules could solve the problems that were mentioned. Our view is to interpret the MDL statute as written, and restrict MDLs to “coordinated or consolidated pretrialproceedings.” 28 U.S.C. §1407(a) (emphasis added). A textualist approach to the MDL statute would, and we think should, mean no trials, “bellwether” or otherwise, in the MDL transferee court. Simple. No rules change needed.
But totally contrary to decades of MDL practice. Don’t hold your breath – although if someone wants to preserve it for appeal, this issue could be the next Lexecon.
There was some discussion of how bellwether plaintiffs are selected. The Manual for Complex Litigation favors random selection. MCL §22.315. We also lean towards random selection, although we recognize that the other side can game even a random system by either filing, or not filing, certain types of cases in the MDL. So even random selection needs to be policed to prevent plaintiffs from attempting to skew the result.
We also think that, if the rules were changed to facilitate the early dismissal of facially meritless claims, that would go a long way to solving the problems with random selection. Right now, any random selection process necessarily exposes the prevalence of meritless cases, so that plaintiffs are loathe to agree to what, abstractly, is the most statistically valid method of yielding a representative selection of cases.
Ensuring “representativeness” was also discussed, but we frankly think that’s futile. As someone pointed out, “random does not necessarily mean representative.” Even what might at the beginning be the most representative of cases ceases to be representative once both sides pour more resources into preparing and trying that case than it could possibly be worth if being tried outside of the MDL. We agree with the comment of one of the plaintiff-side speakers that “spending a million to win $500,000 is not an economic business model.” Both sides committing extraordinary resources to a bellwether trial is a sure way to ensure that the case for that reason alone ceases to have any representative value.
On the plaintiff side, keeping the business model economic, under MDL circumstances, only encourages the reduction of representativeness. Instead, we see plaintiffs focused on “ringing the bell” – adding punitive damages or consolidated plaintiffs to the mix to make the case harder to defend. That’s the practical (as opposed to the textual) reason we oppose bellwether trials. At minimum, as we’ve discussed before, defendants should take care to craft any Lexecon waivers to exclude punitive damages or consolidations. We didn’t hear any proposed rules changes that would meaningfully improve the bellwether trial system.
Third-Party Litigation Funding
The group discussed a proposal, pending in Congress, requiring automatic disclosure of third-party funding agreements. Interestingly, plaintiff-side speakers admitted that they demand disclosure of that kind of information themselves when setting up their steering committees, because their membership must be able to “take the heat,” and lawyers controlled by a “hedge fund” can’t be shaping their strategy. To at least some plaintiffs’ speakers, third-party funding meant “a dummy in the room and a ventriloquist outside.” One of the judges in attendance likewise thought that disclosure of third-party funding was a good idea to prevent conflicts. If both plaintiffs and the judiciary favor disclosure is necessary to prevent conflicts, then it is hard to justify not routinely disclosing it to all sides, as insurance is disclosed.
Proponents of such funding stated that it was only a “professionalization” of activities that had long gone on the plaintiff side of litigation. Perhaps, but that justification brings the response of “what, then, do you have to hide?” If third party litigation funding is truly professionalized, then again, it resembles insurance, which is subject to automatic disclosure. To be considered “mainstream,” third-party litigation funders need to act the part.
Proponents also raised the issue of disclosure of confidential work product if funding agreements are discoverable. This concern seems like a red herring to us, as the contracts are easily drafted to omit any attorney evaluations of litigation.
Proponents also distinguished two uses of litigation funding. The first, which is more similar to corporate litigation funding arrangements, involves loans to plaintiff-side law firms, secured either by their interests in specific litigation or by interests in their entire pending litigation inventory. These tend to have lower interest rates and involve less influence over litigation strategies or settlement decisions. Disclosure of such funding is, however, essential to gauging the relative resources of both sides in determining who is going to pay for what discovery in MDL situations. Plaintiffs should not be able to play at being David when their funding lines of credit are actually Goliath-sized.
The flip side is what was sometimes referred to as “payday lending” litigation funding − where the plaintiff is receiving what amounts to an advance on possible recoveries. A lengthy discussion was had of claimed abuses – covering the NFL concussion litigation and the recent New York Times exposé of what has gone on in the Pelvic Meshlitigation. In either case, immediate disclosure of litigation funding agreements would have prevented, or at least reduced, improper conduct, as transparency in funding would have raised red flags about the terms and timing of the agreements in question. Suspicious agreements could then have brought to the court’s attention, or been the subject of additional discovery into their provenance.
Additional discovery was another aspect of the third party litigation funding debate. Proponents argued, with some force, that disclosure of agreements would not be the end of matters. They raised potential use of discovery into litigation funding as a means of opening yet “another front” in MDL litigation and attempting to disrupt the opposing side’s ability to finance itself. We think that concern could be valid, but is easily addressed. Disclosure of insurance hasn’t (except in Louisiana) led to insurance companies being sued directly by opponents of their insureds. The work product issue raised above provides a useful analogy with, anything beyond the contract subject to a similar “good cause shown” and “otherwise unavailable” standard. There is no inherent reason that such funding should be the source of additional discovery, but requiring prior court approval serves as another check.
Finally, just as plaintiffs want a look at their opponent’s insurance to know how much defendants have available for settlement, or whether the other side has sufficiently deep pockets, defendants should be able to make similar judgments based on plaintiffs’ third-party litigation funding. A plaintiff who has to satisfy a funder is unlikely to take in settlement an amount that the defendant believes is reasonable if that means zero dollars in the plaintiff’s pocket. In this respect, discovery of litigation funding is justifiable for the same reason as third-party litigation liens. Very few plaintiffs would argue that insurance, health care, and other liens can be kept secret from the other side. Anyone who has a piece of the potential recovery is, in practice a real party in interest who should be at the table and whose identity should be known to all. All sides should know who is the ventriloquist and who is the dummy.
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Several other topics were also discussed at the Duke conference, but they overwhelmingly involved the plaintiff side − composition of a plaintiff-side steering committee, judicial efforts to increase diversity on such steering committees, and common fund assessments. But this post is already quite long, and these other topics are of less interest to our defense-oriented audience.