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ABA Section of Litigation Annual Conference, April 11-14, 2007: Different Venues: Different Verdicts

Different Venues, Different Verdicts: Headlines Across the Country Show Mixed Results for Corporations

Richard F. Scruggs Scruggs Law Firm, P.A. Oxford, Mississippi 38655 David W. Shelton Scruggs Law Firm, P.A. Oxford, Mississippi 38655

Introduction This paper discusses mass torts and how headline-grabbing verdicts (and the potential for future verdicts) affect litigation. Additionally, we address the challenges faced by the bench and bar in venues across the country in managing class actions, mass actions, and other complex litigation, particularly litigation that involves the aggregation of numerous plaintiffs and common (but sometimes complex) issues of fact, law, and/or science. Law firms across this country represent plaintiffs and defendants in nationally-significant litigation. Attorneys are sometimes called upon to defend corporate clients in their clients' "hometowns" (e.g. litigation against Microsoft in Washington State or against Wal-Mart in Arkansas). However, counsel for major corporations more often face juries in far-flung places where their business is conducted or where their products are distributed (e.g., Merck in Louisiana and Texas). Several well known plaintiffs' law firms represent clients across the country and in venues where corporations are located. Examples of this are the welding fume litigation, which is pending in an MDL in Cleveland, Ohio, the home of Lincoln Electric Company; and the insurance policyholder's litigation over insurance disputes on the Mississippi Gulf Coast as a result of, Hurricane Katrina. In those cases, insurance companies such as State Farm, Nationwide, and Allstate face litigation in the venues where they write and issue policies.

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ABA Section of Litigation Annual Conference, April 11-14, 2007: Different Venues: Different Verdicts

Verdicts in the Headlines (and the Probability for Future Headlines) It has been written that "mass torts, defined simply as litigation involving many claims of injury allegedly caused by the same product or tortious conduct, present obvious but novel casemanagement problems." 59 SMU Law Review 1579, Toxic Torts and Mass Torts (Summer 2006). Verdicts inarguably contribute to the ways in which attorneys and judges handle these case management problems, oftentimes driving a resolution one way or the other. Different venues also implicate additional strategic analysis, as attorneys regularly evaluate cases based on the venue and the likely juror attitudes in those venues. Most lawyers are familiar with tobacco litigation, pharmaceutical litigation, and other product liability litigation such as Ford/Firestone cases. These are all examples of national litigation that play out in the court rooms of various venues, and verdicts in those types of cases typically end up in the headlines. As of the time of this writing, verdicts in the headlines of national newspapers and websites include these types of cases in various venues. For example, it seems that there is a Vioxx verdict in the media on a regular basis, from venues ranging from New Jersey to California, as trials have been common in the litigation in which Merck is facing more than 25,000 lawsuits from individuals across the country who took Vioxx. Someone smart once advised writers to "Write what you know." With that in mind, our firm is involved in litigation over Katrina-related insurance disputes. While limited to Gulf Coast venues, this litigation has garnered national headline-grabbing verdicts. Interestingly, verdicts in the Katrina litigation have mostly come from the bench and not from the jury box. In June 2006, Leonard vs. Nationwide1 was tried not before a jury but in front of Judge L.T. Senter, Jr. in the U.S. District Court for the Southern District of Mississippi. In Leonard, the Court made important rulings, including one that invalidated the anti-concurrent cause clause found in all homeowners' insurance policies, which is a clause commonly used by insurance companies to negate coverage. Similarly, in a case that was tried to a jury, the same Court took the case out of the jury's hands and directed a verdict in favor of the insureds and against State Farm on January 11, 2007, in Broussard vs. State Farm.2 In Broussard, Judge Senter ruled that State Farm failed to meet its burden of proving that all damage to the Broussards' house was caused by water and therefore excluded from coverage. Judge Senter directed a verdict in favor of the Broussards and ordered State Farm to pay their policy limits of $212,000. He then handed the case to the jury to consider punitive damages, and the jury returned a punitive award of $2.5 million against State Farm. (Judge Senter subsequently reduced this award to $1 million on January 31, 2007.) Certainly, these verdicts in the headlines are expected to affect the litigation. Given the public media attention which is often given to mass tort litigation, verdicts (or more often, the likelihood of future verdicts) can spur resolution talks. Tobacco and asbestos litigation are examples from the 1980s and 1990s. It is likely that the plaintiffs' attorneys in the Vioxx litigation

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ABA Section of Litigation Annual Conference, April 11-14, 2007: Different Venues: Different Verdicts

and defense lawyers for Merck will eventually resolve all Vioxx litigation based on how juries in different venues decide those products liability cases. Sticking with the Katrina example, State Farm recently settled a portion of its Katrina-related insurance litigation following several court rulings and the above-mentioned verdicts. The verdicts discussed above and their subsequent media coverage (and the certain media coverage of possible future verdicts against insurance companies) certainly had some effect on State Farm's decision to settle portions of their litigation. In addition to the Katrina insurance verdicts, "mass tort" jury verdicts in various contexts are obviously recognized and considered by corporations and their insurers in their litigation strategy. One example that clearly evidences this trend is the Vioxx litigation, as the media repeatedly print a jury verdict "scorecard" for the Vioxx litigation after each jury verdict.3 In sum, the effects of media coverage on mass tort litigation cannot be underestimated.

Mass Tort Litigation and Case Management Issues Both state and federal courts in our country have crowded dockets, and plaintiffs sometimes have to wait years for their cases to proceed through the legal system. The Vioxx litigation and Katrina litigation are good examples of situations where a large number of individuals with claims based on a systematic wrong, attempt to prosecute their claims as quickly and efficiently as possible within our legal system. Tens of thousands of individuals have filed lawsuits against Merck across the country in various venues, and thousands of families have filed lawsuits in Katrina insurance-related cases, many of them in the same venue. Compounding the complex legal and factual issues facing the Courts are the extraordinarily difficult problems raised by the sheer number of cases. How can the 25,000+ Vioxx plaintiffs ever have their day in Court, even with courts in multiple venues hearing those cases? Cases relating to Hurricane Katrina insurance disputes, although smaller in number when compared to Vioxx litigation, can only be filed in a limited number of venues. Our rough mathematical skills tell us that if District Court Judge Senter could try one case every three days, the Court could only try approximately 120 cases a year assuming that Court is in session seven days a week, 52 weeks a year. At this rate, and with no new cases filed, some plaintiffs' day in court would take place in the next decade. In such mass complex litigation, delay is the enemy of the claimant and the friend of the defendant. Sometimes, despite the discussion above, verdicts do not result in resolution for whatever reason and the litigation logjam continues. In the absence of verdicts (or consistent verdicts), attorneys and Courts should be guided by what is perhaps the most fundamental rule of civil procedure in the federal system (and in most states) ­ Rule 1, which states in part that the Rules "shall be construed and administered to secure the just, speedy, and inexpensive determination of every action."4 Not surprisingly, for strategic reasons,

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For e xam ple, se e the Viox x sco reca rd at www .virsci.com/VioxxTrialScorecard.pdf. Fed eral R ule of C ivil Proc edu re 1 (20 07).

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ABA Section of Litigation Annual Conference, April 11-14, 2007: Different Venues: Different Verdicts

defendants in mass tort litigation typically oppose any efforts to streamline litigation and move it toward resolution. This roadblock for plaintiffs is exacerbated when their claims can only be filed in a limited number of venues. As a general rule, defendants oppose all suggestions of judicial economy and efficiency and usually suggest that procedural rules such as Rules 23 and 42, which have been known to promote the efficient handling of large numbers of cases, do not apply to their litigation for whatever reason. Defendants are especially opposed to the consolidation of cases (or common issues within cases). Defendants prefer to treat every case one by one, claiming that each case is unique with individualized facts that cannot be consolidated with another case. This can be described as the "snowflake" predicament: there is some truth that all plaintiffs' claims are unique in some individualized way and this makes each plaintiff's case a unique "snowflake" unlike any other case; however, the Federal Rules of Civil Procedure permit Courts to fairly and efficiently treat an accumulation of lawsuits like snow and Federal Rules 1, 23, and 42 provide the procedural snowplows. On the other hand, defendants, for their part, advocate the disfavored "tweezers" approach and desire to deal with one case at a time with a litigation strategy of delay. Mass tort litigation in today's world is usually in need of a vehicle to move it toward a resolution. Because of the number of cases pending and the lengthy nature of trials, most courts are unable to afford each plaintiff an individual trial. As a consequence, most plaintiffs are denied their day in court while their claims grow older. Courts should use their discretion to devise innovative and efficient procedures to move large numbers of cases on their docket towards a resolution, and the procedure should, to the fullest extent possible, achieve fairness to the parties and be conducive to judicial economy. Some ideas that litigants and Courts may consider include holding bellwether trials or common issues trials in the mass tort setting. In some instances, consolidating cases for trial or having issues trials on common factual or legal issues are the only mechanisms in which "mass tort" cases can effectively be streamlined and resolved consistent with the provisions of Federal Rule of Civil Procedure 1.

Jury Research One final issue that is a subject in this program that cannot be ignored is jury research. Without effective jury research, attorneys may not be able to achieve the verdicts that are critical to the success of mass tort litigation. While many attorneys may feel they are experts on potential jurors in their local jurisdictions, the value of jury research in other venues in so-called national cases cannot be emphasized enough. Counsel for all litigants regularly advise their clients regarding the possibility of six to twelve unknown persons sitting in judgment of their civil lawsuit. In high stakes litigation, corporations must decide whether to allow jurors to decide their fate in "bet the company" type of trials. Although a very few percentage of cases actually proceed to the point where jurors deliberate to

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ABA Section of Litigation Annual Conference, April 11-14, 2007: Different Venues: Different Verdicts

reach a verdict, how jurors will view certain factual and legal nuances is typically part of attorneys' strategy before the litigation really gets going. Jurors can be unpredictable to everyone involved, combining their preconceived notions with their inherent biases. While deferring somewhat to the jury research experts in this panel, jury research is a commonly used tool for attorneys representing plaintiffs and defendants in mass tort litigation where the settlement value of hundreds or even thousands of cases depend on what one or more juries may decide in bellwether-type jury trials. Attorneys on both sides of mass tort litigation typically hire trial consultant firms to conduct psychological research on individuals thought to be like-minded to potential jurors. Research conducted often includes mock trials, post-trial interviews, and surveys. Jury research often considers potential jurors' backgrounds, socioeconomic status, education level, and their desires to include or exclude emotion into facts without getting caught up in the complexities of the law. It is an inexact science, but jury research is certainly worthwhile to attorneys and their clients who simply want to figure out what is going on in the minds of men and women when presented with the facts of a particular case. The bottom line is that litigants, particularly defendant corporations or insurance companies, have concerns about the prospect of being judged by six to twelve unknown persons whom they have never met. As some scholars have written, parties' "trepidation can be so profound that it may serve as a primary motivator for early settlement (at least for the party that has the most negative perception of the jury)."5

Conclusion From the plaintiffs' perspective, headline-grabbing verdicts against corporations obviously influence decisions to resolve mass tort litigation. Regardless of the venue, corporations, insurance companies, and the like typically do not care for their names to be in the headlines when it comes to verdicts against them.

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ABA Section of Litigation Annual Conference, April 11-14, 2007: Different Venues: Different Verdicts

ABOUT THE PRESENTERS

Richard F. Scruggs Richard F. Scruggs is an internationally known trial lawyer who has fought and won high profile cases on behalf of average citizens. He is best known for his work on the unprecedented tobacco claims cases which resulted in the tobacco industry paying nearly $250 billion to help states defray Medicaid costs for smoking-related illnesses. Scruggs has been lead counsel on numerous other class action and cases of national significance including actions against predatory lenders, not-forprofit hospitals, asbestos companies, health maintenance organizations, and insurance companies. David Shelton David Shelton is an attorney practicing with the Scruggs Law Firm in Oxford, Mississippi. David is a 1996 honors graduate of Millsaps College and a 1999 honors graduate of the University of Mississippi School of Law. While attending law school, he was the Editor-in-Chief of the Mississippi Law Journal. After graduating from law school, David began his practice in Jackson, Mississippi with the law firm of Mitchell, McNutt & Sams and later Carroll, Warren & Parker. In 2004, David joined the Scruggs Law Firm in Oxford, Mississippi. David was admitted to the Bar in the State of Mississippi in 1999 and in the U.S. Virgin Islands in 2003. He is also admitted to practice in the District Courts of these jurisdictions, as well as the U.S. Courts of Appeals for the Third and Fifth Circuits.

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