August 24, 2007
Lead Paint Litigation Downturn
According to an article in this week's National Law Journal, lead paint litigation is on the decline. The article by Amanda Bronstad -- Lead Paint Litigation is Beginning to Fade -- points to recent rulings in New Jersey, Missouri, Wisconsin, and Ohio that have dimmed plaintiffs' hopes. Here's an excerpt:
A series of recent rulings have stymied public nuisance claims made by dozens of cities and counties to recover damages related to lead paint, which has been found to cause learning disabilities in children.
In June, the New Jersey Supreme Court found that public nuisance claims could not be used in a lead paint case brought by more than 20 counties and cities. That same month, the Missouri Supreme Court ruled that the city of St. Louis failed to prove that the paint companies in its suit caused a public nuisance. Also, a Milwaukee jury in June concluded that lead paint was a public nuisance but that the defendant, NL Industries Inc., was not liable for the damages.
At the same time, a decision by the Ohio Supreme Court this month to uphold a law that limits damages in public nuisance claims could affect more than a half-dozen lead paint cases brought by several cities and the state's attorney general.
August 23, 2007
Concurrent Vioxx trials and the Merck litigation strategy
According to an article in today's Star-Ledger, New Jersey Judge Carol Higbee has met with lawyers to propose a plan to move Vioxx trials more quickly. Under her plan, four judges would preside over simultaneous trials, each involving multiple plaintiffs. Here's an excerpt:
In an effort to move the sheer volume of lawsuits, Judge Carol Higbee is proposing four simultaneous trials at the courthouse. Each trial would involve multiple plaintiffs from New Jersey, New York and Pennsylvania. Under the plan, which has been discussed in conference meetings between Higbee and lawyers involved in the cases, three other judges would be assigned to preside over the additional trials. All four trials are scheduled to begin Jan. 22 at the Atlantic City courthouse.
Merck has consistently opposed joint trials in the Vioxx litigation, insisting that the issues are too individualized to permit a fair trial with multiple plaintiffs. Merck's defense attorney Theodore Mayer of Hughes Hubbard & Reed was quoted in the article as saying, "We feel very strongly that justice in each case should not be affected by the large number of cases." Simultaneous separate trials presumably would not present the same problem, but the inclusion of multiple plaintiffs in each trial would.
This news comes on the heels of an article in the New York Times two days ago (see Byron Stier's prior post) pointing out that despite a number of plaintiff verdicts, no Vioxx plaintiff has yet been paid by Merck. With tens of thousands of Vioxx suits in the pipeline and with lengthy appeals from every judgment, plaintiffs could wait years for trial and, if successful, much longer for payment.
In this light, it's interesting to think about Merck's strategy. Merck steadfastly refuses to settle Vioxx cases, preferring to pay massive legal fees to litigate each case individually. It is reminiscent of the litigation strategy of the tobacco industry from 1954 to 1994. The tobacco defendants, however, knew that they could win virtually every case, in part by vastly outspending and outlawyering the opposition. That's not the case with Vioxx. Merck faces capable opposition with substantial resources to invest in the litigation. Trial outcomes have gone both ways. But that does not mean that Merck's strategy is wrong. To the contrary, it appears to have been a highly successful strategy of lowering settlement values.
It still seems likely, despite Merck's avowed disinterest, that the endgame will be some form of collective settlement. By avoiding class actions or joint trials, by declining to settle early, and by litigating each individual case to the hilt, Merck has improved its bargaining position. Its strategy forces plaintiffs' lawyers to think hard about which prospective clients' cases are worth pursuing, and undoubtedly has discouraged some lawyers from investing their time and resources in the litigation. When the hardball strategy reaches a point of diminishing returns, and as litigation costs continue to mount, it may make sense for Merck to seek a settlement or series of settlements. When the cost of litigating exceeds the cost of settling, a defendant can justify the expense only as long as it reaps a substantial strategic benefit, such as discouraging plaintiffs from piling on early in the litigation.
In the meantime, the judicial system cannot work on the assumption that an aggregate settlement is in the offing. The judges have to move forward with trying these cases, while respecting the individual issues. Judge Higbee's reported plan of simultaneous trials seems to be a reasonable step in that direction.
August 21, 2007
Plaintiffs Having Difficulty in Vioxx Litigation Against Merck
Interesting article in the New York Times -- Plaintiffs Find Payday Elusive in Vioxx Cases, by Alex Berenson. Thanks to Evan Anziska for pointing the article out. Here's an excerpt:
[N]one of the 45,000 people who have sued Merck, contending that they or their loved ones suffered heart attacks or strokes after taking Vioxx, have received payments from the company. The lawsuits continue, for now in a state of legal limbo, with little prospect of resolution.
In combating the litigation, Merck has made an aggressive, and so far successful, bet that forcing plaintiffs to trial will reduce the number of Vioxx lawsuits and, ultimately, its liability.
Promising to contest every case, Merck has spent more than $1 billion over the last three years in legal fees. It has refused, at least publicly, to consider even the possibility of an overall settlement to resolve all the lawsuits at once.
The strategy’s successes, from the view of Merck and its shareholders, are clear. In the last year, the company has won most of Vioxx cases that have reached juries. Though its stock plunged immediately after the Robert Ernst verdict, it has since risen 80 percent, easily outpacing those of other big drug makers. And estimates of Merck’s ultimate liability, once as high as $25 billion, are now closer to $5 billion, said C. Anthony Butler of Lehman Brothers.
The article also features several comments from Professor Peter Schuck of Yale Law School.