Contributed By Shook Hardy & Bacon LLP
Predicting Mass Tort Filings
From 1992 to 2017, the number of multidistrict litigation (MDL) cases tripled. Product liability MDL cases account for 88% of that growth. While a 'big' mass tort litigation ten years ago might have included 1,000 cases, today litigations involving 10,000 or more cases are the rule. Some litigations – like the Transvaginal Mesh MDLs – have involved more than 100,000 total plaintiffs. In 2016, litigations paid USD429 billion for tort costs and compensation in the US tort system.
When product litigation strikes, companies face tremendous uncertainty and seemingly unlimited exposure. At the outset of a mass tort, understanding what is on the horizon, and planning accordingly, can make all the difference.
Anticipating lawsuit filing volume matters to a company’s planning and preparedness for litigation. Predicting filings and exposure can help companies allocate resources and manage disruptions to brand and business operations.
Potential mass tort liability can create financial hesitation, with damage to a firm’s stock price, its future earnings and even long-term prospects. Public misperception of litigation tarnishes not just a company’s name, but industry-wide reputation. Patients and consumers also suffer when safe and effective treatment options and products are forced out of the market, or when litigation chills R&D or new line launches, slowing the pace of innovation. Although some of these effects are unavoidable costs of business, others can be mitigated with case assessment at the outset of litigation.
Understanding the likely 'when', 'where' and 'how many' of mass tort filings allows for a more accurate prospective assessment. In particular, more accurately assessing case volume at pivotal points in a litigation allows defendants to better determine the litigation’s overall cost and a company’s potential exposure. This planning in turn leads to more accurate budget projections, reserves and financial reporting. Within a company, understanding the filing landscape allows inhouse counsel to more efficiently and effectively staff cases and allocate resources – both internal and external. Appropriate resource allocation can promote better litigation outcomes. In short, understanding what a litigation might look like before it materialises, and keeping abreast of possible ever changing numbers of said litigation, allows a defendant to act nimbly to anticipate challenges and combat them beforehand rather than react defensively in unfavourable circumstances.
For a company facing litigation uncertainty, the only thing better than insight is foresight.
Mass Tort Case Studies
The volume of mass tort litigation seen today cries out for some way for legal departments to better measure and plan. The case studies described below suggest a few tools to help companies do just that.
Take, for example, the drug and device context. All mass drug and device litigation rests on allegations that the product causes a certain common harm at a significant rate among a population of users. Thus, attempts to predict or quantify potential filings have typically focused on the claimed rate of harm and the overall user population.
Yet years of pharmaceutical and medical device litigation experience teaches us that no matter how long a product has been on the market or how many people have used it or claim injury, most mass tort litigation comes on the heels of some specific third-party impetus, such as modest regulatory action or the publication of new scientific or medical research. In the plaintiffs’ Bar playbook, such events serve both as purported evidence that the product causes harm and as a convenient anchor for arguments about state statutes of limitations. Although legally misguided, this thinking leads plaintiffs’ firms to file huge numbers of cases on the anniversaries of such impetus events. This behaviour provides a modicum of predictability to the timing and volume of mass tort filings.
The case studies below provide a look at mass torts with 'impetus' events. The data demonstrates filing spikes on and around the yearly 'impetus' anniversary in four litigations.
Case Study No 1
After more than three years of public advocacy and political lobbying driven by the plaintiff’s bar, the Food and Drug Administration (FDA) issued guidance leading to a black-box label change for a medical device product. Despite the fact that consumers had used the product and claimed injury for years, new filings jumped from a few per month to several hundred every month. Then, on the one-year anniversary of the FDA guidance, case filings nearly doubled overnight. That month, more than seven times as many plaintiffs filed claims as in any previous month. Two years after the change, the trend repeated:nearly twelve times as many plaintiffs filed on the two-year anniversary as had filed in any non-anniversary month. Altogether, nearly 70% of all claims were filed during three months of the four-year litigation.
Case Study No 2
After nearly four decades of use, a research agency classified a product as a potential health hazard. Despite further review and different conclusions by other authorities, case filings spiked on the anniversaries of the classification. On the two-year anniversary, six times as many claims were filed as in any previous month. On the three-year anniversary, 11 times as many claims were filed as that same baseline. Altogether, 30% of all claims were filed during three months of the four-year litigation.
Case Study No 3
After nearly 20 years on the market, and co-ordinated advocacy among plaintiffs’ lawyers and future plaintiffs, the FDA requested a minor label change for a pharmaceutical medicine. The first case filings followed shortly after. Filings on the two-year anniversary of the label update totalled nearly seven times the previous monthly high. Unlike Case Studies 1 and 2, however, the trend diminished in year three: new filings totalled only about two times the non-anniversary high. Still, 60% of all claims filed in the three-year litigation came within a handful of months surrounding the impetus anniversary.
Case Study No 4
After 15 years on the market, the FDA issued a notification regarding a medical device. Case filings began immediately. On the two-year anniversary of the notification, new filings were five times the previous monthly high (which had come on the one-year anniversary). Three years after the change, filings were three times the one-year spike. Altogether, 25% of all claims occurred over four months out of more than seven years.
Taken together, the studies show distinct, sizeable spikes on the anniversaries of litigation impetus events. Two-year anniversary spikes (or one year, in Case Study No 1) tend to be five to seven times higher than previous monthly high-water marks. But, on the third anniversary, there is variance: some litigations see even larger spikes of 11 or 12 times pre-anniversary baselines, while others see noticeably smaller spikes of only two or three times initial highs.
False Limitations Periods
These case studies demonstrate that plaintiffs’ lawyers seek to tie each state’s limitations period to the litigation 'impetus' and thus salvage otherwise stale claims. Tying their statute of limitations arguments to the stimulating event, plaintiffs’ attorneys are able to reach back decades and pile thousands of cases in an MDL, barred cases that would be barred if they had to stand on their own merit. This phenomenon helps explain the explosion of mass tort filings in recent years.
Most state statutes of limitations (SOLs) are one, two, or three years, with the most common being two years. Forty-three states (including the District of Columbia) have statutes of limitations that are three years or less. This explains why in each of the case studies, the largest spikes in filings come at the two and three-year marks. Regardless of other factors, the largest filing spikes – by far – are expected, and seen, within the three years after a litigation 'impetus'. Eight additional states have statutes of limitations that are longer than three years and generally have smaller population sizes, leading to significantly lower filing volumes more than three years post-impetus.
A majority of states apply a 'discovery rule', under which claims accrue and limitations begins to run upon a plaintiff’s discovery of an injury, its cause, or in some cases on discovery of the responsible party or tortious conduct.
In the modern mass tort landscape, such rules provide a jumping-off point for plaintiff arguments that public events that stimulate filings in practical fact also re-trigger state statutes of limitations for otherwise long-expired claims. To a plaintiffs’ attorney, announcement of a regulatory action or new scientific research provides a template story of health risk and liability:
The plaintiff lawyer’s somewhat singular job then becomes to conduct discovery supposedly drawing the company’s knowledge of the issue, or reasonable detection, further back in time. But just because regulatory action or scientific publication makes the barrier to bringing lawsuits lower, that does not mean that those developments revive already-expired claims or causes of action.
Basic principles underlying statute of limitations rules make this clear. First, the 'discovery' aspect of the 'discovery rule' generally refers to a plaintiff’s ascertainment of her injury, its cause, or facts supporting her claims. Individual plaintiffs are rarely directly familiar with such technical third-party actions as regulatory decisions, label changes, or updated scientific research – the impetus events that inspire the plaintiff’s lawyers to pursue litigation. Second, any argument that third-party stimuli 'trickle down' to plaintiffs through lawsuit advertisements, media and the like necessarily turn not on the plaintiff’s knowledge of potential claims, but on the knowledge of counsel or the media prior to the impetus event. Evidence of when the plaintiffs’ Bar or media first had notice of product-related health risks, or when it became 'reasonable' to publicise those risks, is more difficult to adduce and presents significant complications for a plaintiff claiming notice through such sources. Third, many regulatory and third-party actions are themselves the product of patient and plaintiff counsel advocacy, undermining the claim that risks were 'undiscoverable' until after the impetus event. And finally, in many litigations some small number of filings will pre-date the impetus event, belying any argument that no notice existed and no suit could have been brought until the third-party action.
As noted by Judge Clay Land, timeliness issues are some of the most common factors undermining the merits of cases filed in MDLs'; see in re Mentor Corp. Obtape Transobturator Sling Prod. Liab. Litig., No 4:08-MD-2004, 2016 WL 4705827, at *1 (M.D. Ga. Sept. 7, 2016) (“Some lawyers seem to think that their case will be swept into the MDL where a global settlement will be reached, allowing them to obtain a recovery without the individual merit of their case being scrutinized as closely as it would if it proceeded as a separate individual action. This attitude explains why many cases are filed with little regard for the statute of limitations and with so little pre-filing preparation that counsel apparently has no idea whether or how she will prove causation.”). The Advisory Committee on Civil Rules’ MDL Subcommittee reaffirmed this view in the November 2018 Subcommittee Report: "There seems to be fairly widespread agreement among experienced counsel and judges that in many MDL centralizations... a significant number of claimants ultimately (often at the settlement stage) turn out to have unsupportable claims, whether because the claimant did not use the product involved, or because the claimant had not suffered the adverse consequences in suit, or because the pertinent statute of limitations had run before the claimant filed suit" (Advisory Committee on Civil Rules, MDL Subcommittee Report (Nov. 1, 2018, Washington DC), at 142 (emphasis added)).
Even when confronted with the legal reality that many – if not most – of the cases filed in an MDL are barred by the statute of limitations, plaintiffs’ attorneys still undertake predictable mass-case filings on the annual anniversaries of the stimulating event. Companies facing such mass torts must plan accordingly, understanding that cases are and will be filed without regard to the dates of the plaintiffs’ exposures, injuries, or knowledge of other facts underlying their claims.
Case studies also demonstrate that lawsuit advertisements and negative publicity drive lawsuit interest. Manufacturers can expect to see a spike in filings following such events. These events may also increase the overall size of the annual statute of limitations spike. But the primary driver of the spikes themselves remains the false statute of limitations anniversary.
Over the last decade, the number of lawsuit advertisements run on television each year has tripled; see Cary Silverman, 'Bad For Your Health: Lawsuit Advertising Implications and Solutions', US Chamber Institute for Legal Reform, Pg. 1, October 2017. In the first half of 2018 alone, plaintiffs’ firms spent USD472 million on television advertising; see Daniel Fisher, 'How Plaintiffs’ Counsel Ads Create a Mass Torts Fiasco', Chief Executive, 16 November 2018. Advertisements concerning pharmaceutical/medical device lawsuits are the most numerous. And the numbers continue to rise; see Silverman at 1. Such advertising is particularly effective when paired with litigation events such as MDL formation, procedural developments that lower filing barriers and large verdicts.
One of the most effective forms of litigation advertising is that designed to advertise a particular development in the litigation and target a specific audience. For example, just days after a St Louis jury awarded a plaintiff tens of millions of dollars in a suit against a manufacturer, television viewers were deluged with ads associating the product with the alleged harm; see Fisher at 1. The ads that St Louis residents saw focused almost entirely on the monumental verdict. In fact, St Louis residents saw more advertising for that litigation than any other media market in the country, despite being only the 21st largest media market.
Understanding that markets are most heavily targeted by lawsuit advertisements – and the length and legal parameters of the statutes of limitations for such markets – may prove especially helpful for predicting case filing volume and timing. But advertising is not the only form of media contributing to the spike of mass tort lawsuits.
Mainstream media coverage of disproportionally large verdicts against manufacturers also helps motivate potential plaintiffs to join mass tort lawsuits. Two recent verdicts exemplify this phenomenon. One manufacturer reported that the number of lawsuits it faced increased from 5,200 to 8,000 just two weeks after a large plaintiff verdict. In another litigation, two plaintiff verdicts fuelled waves of future litigation, even when the verdicts were later reduced or vacated, events the general public tend to remain unaware of despite the numbers of such reduced or vacated awards.
Media coverage of regulations affecting products can also lead to landslides of filings. Filing surges can also be prompted by procedural orders or discovery in the litigation, such as:
These factors may also be somewhat predicted in time and can be expected to generate spikes. Moreover, such events occurring early in a litigation may contribute to whether anniversary spikes continue to increase (as in Case Studies 1 and 2), or whether filings peak at two years and trend noticeably smaller thereafter (as in Case Studies 3 and 4).
Perhaps surprisingly, though, the case studies demonstrate that although negative publicity in all its forms drives lawsuit interest and spikes in filings, the largest spikes do not correspond with publicity. The largest spikes are also the most foreseeable, as they consistently correspond with false statute of limitations anniversaries.
Although legally misguided, the plaintiff practice of predictable mass filings on the one, two and three-year anniversaries of litigation impetus events can help companies combat uncertainty in the face of product litigation. Although far from an exact science, even a little predictability goes a long way towards planning, preparing for and pursuing the best possible litigation and business outcomes.