Mass Tort Litigation Blog

Mass Tort Crisis Management

Recent crises stemming from BP's oil spill and Toyota's acceleration problems have brought a swarm of media coverage, congressional hearings, regulatory agency activity, corporate news conferences, and lawsuits.  Indeed, theories of liability may stem not only from the initial traumatic incident or incidents, but from the corporation's putative mishandling of the crisis once it unfolds.  On the corporate side, what's called for is thoughtful and coherent crisis management that moves the corporation through the crisis in a way that resonates with corporate core values, thereby maintaining the value of the ongoing enterprise, and that is mindful of impending theories of liability.

Despite the great need for such a coherent approach to mass tort crisis management, what's remarkable is the apparent paucity of attention given the subject by legal scholars.  That may be because crisis management involves public relations and communications, as well as management and leadership; hence crisis management has been the focus of public relations consultants and some professors in communications schools and business schools.  But at the heart of corporate crises are frequently the law and liability, so law professors should not be absent.  Lawyers and law firms already occasionally promote their ability to handle an emerging corporate crisis by quickly assembling a team of lawyers from a broad array of areas -- see, e.g., Skadden's Crisis Management; and lawyer practitioners have delivered various continuing education talks and papers on crisis management, as well as an interesting short symposium paper by Harvey L. Pitt and Karl A. Groskaufmanis, When Bad Things Happen to Good Companies: A Crisis Management Primer, 15 Cardozo L. Rev. 951 (1994).  But while practitioners bring on-the-ground expertise, they may lack the theoretical depth and interdisciplinary zeal of law professors, and practitioners present a conflict-of-interest risk in preferring, for example, fee-heavy litigation over other methods of mass tort crisis management and resolution.  A full academic account of mass tort crisis management would entail an awareness and integration of various legal areas -- tort, procedure, litigation, ethics, regulatory action, congressional investigations and activity (including possible compensation funds), and pertinent constitutional issues -- with public relations and management.  I look forward to turning my attention increasingly to that task.

Where do you look for corporate crisis management expertise in mass torts?  Books, articles, law firms, or consultants?  Does your law firm market itself as offering corporate crisis management; if so, what's your approach?  If you work at a consulting group that does crisis management, do you have in-house lawyers that assist you or do you work with the corporation's outside counsel?  Feel free to post a resource or comment.

BGS

Update on Collective Redress in England and Wales

Back in November of 2008, England and Wales asked Lord Justice Jackson to review civil litigation costs and how those costs affected access to justice.  He recently issued his final report (a hefty 584 pages).  BBC News calls the report a "radical plan[ ] to shake up costs of civil cases."  Here's an excerpt of the story:

Lord Justice Jackson's Review of Civil Litigation Costs is a result of a recognition that it is simply too expensive for many people and small companies to bring or defend civil cases.

"What I want to do is to focus the system so less money is paid to intermediaries and others in the process, and more money is paid to victims," he told the BBC.

"I am concerned about individuals, small businesses and others who need to use the courts."

His proposals are radical. He has looked at the factors forcing costs up in civil actions, and in particular he has focussed on Conditional Fee Agreements (CFAs), more commonly known as "no win, no fee" agreements.

Despite BBC's headline, the final report was ultimately less radical than the preliminary one, which leaned toward abolishing England's cost-shifting "loser pays" rule.  The final report concludes that cost shifting should remain the norm (even in collective actions), but excepts personal injury claims from the norm.  Whether personal injury claims are brought individually or collectively, the final report recommends "qualified one-way costs shifting" where winning claimants could recover their costs from the defendant, but generally do not have to pay the defendant's costs if they lose.

Of additional import, the final report recommends that solicitors and barristers should be allowed to enter into contingency fee arrangements, which are currently prohibited.  Before entering into such an arrangement, the report recommends that claimants receive independent advice.  It also suggests capping the fees at 25%.

Finally, the report recommends making third-party funding available to personal injury claimants (including those involved in collective actions).  It defines third party funding as "The funding of litigation by a party who has no pre-existing interest in the litigation, usually on the basis that (i) the funder will be paid out of the proceeds of any amounts recovered as a consequence of the litigation, often as a percentage of the recovery sum; and (ii) the funder is not entitled to payment should the claim fail."  (Final Report at p. 17).  Very interesting.

For additional commentary on the report, here are links to Lovells, the UK's Financial Times, and BBC News.  Whether the suggested reforms will be implemented remains to be seen.

ECB

Chinese Drywall Litigation Update

The Sarasota Herald-Tribune reported yesterday that Florida's Senate Community Affairs Committee held a hearing to discuss both legislative and state agency action to prevent builders from using tainted Chinese drywall.  The article reports that Florida is considering the following legislative action:

• Providing relief on mortgage payment for homeowners trying to rehabilitate their homes;
• Developing a standard for remediating homes and certifying them as being free from the drywall problems
• Allowing homeowners to receive a tax break to offset their rehabilitation costs; and
• Providing help to homeowners trying to deal with insurance companies over the cost of the home rehabilitation.

The Consumer Product Safety Commission has received 1,051 reports from residents in 27 states who believe that Chinese drywall impacted their health or corroded metal components in their homes.  Meanwhile, Cain Burdeau, of the Associated Press, indicated that the Chinese drywall makers may ignore the multi-district litigation in New Orleans, which includes roughly 300 lawsuits.  Judge Eldon Fallon, who presided over the Vioxx litigation, has already found one Chinese company in contempt of court for ignoring the lawsuits.

UPDATE: New York Times story can be found here.

ECB

Fosamax Jury Update

CNN reports this morning that Judge Keenan has "called for a daylong 'cooling off' period" in the Fosamax (an osteoporosis drug) litigation.  Apparently jury deliberations became quite tense; the jurors have been deliberating for the last week over Shirley Boles's case.  Boles is a 71-year old retired deputy sheriff that lives in Ft. Walton Beach, Florida.  She claims that Fosamax caused her jawbone tissue to die.  By itself, the case is relatively small.  But, because Schering-Plough is looking to merge with Merck, all eyes are on the jury to see how vulnerable Merck is financially.  According to the New York Times, there are roughly 900 state and federal Fosamax cases with around 1,280 plaintiffs.

One of the jurors in Boles's case claimed that she was being both intimidated and threatened.  Judge Keenan has given the jury until 11:15 a.m. on Friday (tomorrow) to reach a decision before declaring a mistrial.

ECB