Mass Toxic Tort Litigation Expanding

Most companies and their in-house counsel have never needed to worry about potential mass toxic tort liability. That reality, however, is quickly changing.

In the asbestos litigation, for example, many of the traditional primary and secondary defendants – those companies that mined raw asbestos, manufactured asbestos-containing products, or were heavy users of asbestos – have been forced out of business. The onslaught of bankruptcies has resulted in companies that have not traditionally been the subject of asbestos lawsuits awakening to the new reality that they are becoming the new target defendants in these lawsuits.

As the most obvious defendants have gone bankrupt – more than 70 companies have been forced into bankruptcy as a result of the asbestos litigation – plaintiffs’ lawyers have cast an ever wider net in search of viable defendants with any pockets to pay settlements or judgments.

In fact, the net has been cast so wide that some defendants in the asbestos litigation have no apparent association with the manufacture or use of asbestos. In recent years, Campbell Soup Co., Colgate-Palmolive Co., E&J Gallo Winery and Dow Jones & Co. have found themselves defending asbestos lawsuits.

To date, RAND Corporation estimates that 8,400 entities have been named as defendants in asbestos lawsuits, at a cost to businesses and insurance companies of more than $70 billion.

So why do these companies find themselves in these lawsuits? One reason is the wave of mergers and acquisitions that has washed over the corporate world in the past decade has created another class of potential defendants, as plaintiffs seek to recover damages from successor companies for liabilities that a predecessor company may have incurred.

As the defendants have become more “peripheral,” so too have the plaintiffs. A recent RAND Corporation study estimates that more than 730,000 compensation claims for asbestos-related injuries have been filed in the U.S. thru 2002. This figure has risen sharply as workers from industries such as textiles, paper, glass, and food, who did not routinely handle asbestos, have filed workplace exposure claims and as families of exposed workers have filed claims for secondhand exposure.

While asbestos litigation may be unique in the sheer number of cases already filed and that may still be filed, we can expect that, as a toxic tort matures, and as the original defendants give way to subsequent generations of viable defendants, a similar pattern of ever more peripheral plaintiffs bringing suit against an ever wider circle of defendants will prevail in other toxic torts – whether for lead paint, mold, cleaning solvents, or a host of other substances.

New Age

We are entering the age of “mass” mass toxic tort litigation and your company might be next. So what can you expect if your company finds itself in one of these lawsuits?

It’s important to understand and appreciate that mass toxic tort litigation is a different ballgame than traditional civil litigation. The same substantive and procedural rules may not apply and, as a result, defense counsel may find that traditional litigation strategies may not be effective in the toxic tort setting.

One of the most significant differences revolves around the issue of jurisdiction, or derogatively referred to as forum shopping. Liberal venue rules in some states permit plaintiffs to file suit against companies in jurisdictions where little or none of the alleged harm actually occurred.

As a result, defendants in mass toxic tort lawsuits typically find themselves defending cases in states where the legal rules and culture favor plaintiffs, either because juries are known to award high damages, or because the law permits punitive damages awards, or because plaintiffs face less stringent evidentiary standards.

Although it is difficult for companies to control where they are sued, companies should not concede a plaintiff’s choice of jurisdiction. The location of a lawsuit often has much to do with the procedures you follow, the legal strategy you pursue and, frankly, the outcome of the case. Accordingly, defense attorneys should strongly consider contesting the jurisdiction when a more favorable alternative exists.

For example, cases where diversity jurisdiction exists or which implicate federal statutes may provide an avenue for defendants to remove a case from state to federal court. The Class Action Fairness Act 2005, signed into law by the president this year, may provide another avenue to challenge a plaintiff’s choice of jurisdiction.

Multidistrict Litigation

The question of jurisdiction is a high stakes issue as federal courts, especially those designated to oversee multidistrict litigations (MDLs) for purposes of consolidation, are likely to offer advantages from a defense perspective over state courts.

In many cases, judges assigned to oversee federal MDLs develop considerable expertise with a particular issue. Federal judges are also less likely to be swayed by emotional pleas. More stringent federal evidentiary rules may also make it more difficult for plaintiffs to admit into evidence questionable science or expert opinions.

Defendants in mass toxic tort cases may also find that strategies that served them well in traditional civil tort litigation may not succeed in the mass tort arena. Many jurisdictions where mass tort cases have been prevalent have established special judges, sessions and rules for these proceedings. Unlike in the federal courts where special judges and procedures generally have favored defendants, this has not always been the case in state courts.

Some state courts have master orders in place to govern pretrial procedures in toxic tort cases and the deadlines under these master orders can differ substantially from deadlines under the state’s rules of civil procedure. These master orders often establish highly expedited timetables and require defendants to turn over substantial amounts of information in response to master discovery.

Penalties for non-compliance with these master order requirements can be quite severe, to the point of stripping away a defendant’s defenses. With procedures so condensed, a strategy to delay and wait out the plaintiff is unlikely to succeed.

Neither should sophisticated defendants be deluded into thinking they can simply steamroll the opposition. Plaintiffs firms that handle mass tort cases have developed specialized knowledge and they are generally quite sophisticated at litigating these cases. They also come well-armed with experts and copious amounts of data.

In mass toxic tort litigation, once a company has been sued in one case, it is very likely to see additional lawsuits. Information that has been disclosed about a company and its alleged culpability, either through a pleading or by law firms sharing information, likely will be used by other plaintiffs’ attorneys to file additional lawsuits, creating a snowball effect.

Salvador Llach is a junior partner in the litigation department and a member of the product integrity and toxic torts practice group of the Boston law firm of Nutter McClennen & Fish LLP. He is extensively engaged in the defense of product liability claims involving consumer products and toxic torts, with an emphasis on multi-party and class action litigation. He can be reached at [email protected] and (617) 439-2365.