Panel talks about trends in resolving mass tort litigation from BP to Vioxx

CHICAGO - Settling mass tort litigation can be a feat, to say the least.

There’s a variety of approaches to handling such cases; dozens to thousands of plaintiffs, not to mention all of their lawyers; defendants with the resources to carry on a years-long battle, but the desire to put it behind them; and serious claims with an oft-heavy price tag that gives both sides a reason to fight.

And even when a settlement is reached, that doesn’t mean the case is closed.

Just look at the litigation against BP over the 2010 Deepwater Horizon oil rig explosion that caused an oil spill in the Gulf of Mexico believed to be one of the worst environmental disasters in the nation’s history.

Stephen J. Herman, a New Orleans attorney who serves as plaintiffs’ co-liaison counsel on the BP litigation steering committee, said the parties spent years on the case before reaching a settlement the oil company later challenged and now wants the U.S. Supreme Court to review.

The settlement process was a “unique and daunting task,” Herman said at a June 11 complex litigation conference in Chicago.

Herman, of Herman Herman & Katz LLC, spoke on a panel about trends in the resolution of mass tort litigation, along with attorneys who discussed settlements in litigation involving Vioxx, Yasmin, ING Bank and Mercedes-Benz.

Herman said the BP litigation was unique in that dealt with a situation that had economic and environmental effects on individuals, businesses and governments. He said there was “no defined outer limit” in the case, which also dealt with an expansive law –the Oil Pollution Act – and issues with little past guidance from the courts.

The claims against BP were consolidated into multidistrict litigation (MDL) in 2010 in the Eastern District of Louisiana before U.S. Judge Carl J. Barbier, who scheduled a three-phase trial.  A class was created for plaintiffs making economic and property damage claims, as well as one personal injury claims.

The oil company in 2012 agreed to settle the private plaintiffs’ claims for about $7.8 billion, a deal Barbier approved.

But, Herman said BP then took a 180-degree turn and attacked the settlement. Among other claims, the company argued that the settlement, as written and approved, forced it to pay for economic losses that may not even have a connection to the oil spill.

A three-judge panel of the Fifth Circuit Court of Appeals in March disagreed, finding that the settlement’s terms were clear and BP had agreed to it. In May, the federal appeals court denied BP’s requests to take another look at its ruling and to prevent it from having to pay out the claims during its appeal.

The oil company then turned to U.S. Supreme Court to ask it to weigh in on its challenge. The high court on June 9 refused to let BP off the hook of beginning the claims payment process, but has not yet ruled on whether it will hear the company’s appeal.

Herman said there would be “big implications” if the Supreme Court decides to take the case as BP’s constitutional challenge seeks to use Rule 23, which governs class actions, to settle the dispute.

BP argues the lower court’s ruling violates Rule 23 because the settlement doesn’t require plaintiffs to prove their losses were caused by the oil spill, which it alleges means not all of the class members suffered the same injury and would make it pay out claims for losses not necessarily tied to the oil spill.

Saying the plaintiffs’ attorneys “worked had for years on the case” to reach the settlement, Herman said “it’s a shame” something the profession and the MDL panel “should be proud of has been tarnished in the media.”

While the settlement in the BP litigation has hit a bump in the road, a few of the other attorneys who sat on the June 11 panel with Herman talked about cases that have a smoother path to resolution.

Vioxx

Douglas R. Marvin, an attorney at Williams & Connolly LLP in Washington D.C., was on the legal team that represented Merck in litigation over the painkiller Vioxx.

He said the drug was pulled off the market more than a decade ago and led to more than 47,000 injury claims being filed. The pharmaceutical company fought claims for years and trials were held, many of which ended in victories for the company, while others went to the plaintiffs and a few resulted in hung juries.

Marvin said after the sixth trial, the judge told the lawyers he would continue to preside over trials, but that he wasn’t going to learn anything more and urged the parties to negotiate. So, they did.

The company had concerns about how to go about settling, given the large number of plaintiffs and lawyers involved, Marvin said, adding that Merck wanted “a global resolution and certainty.”

Marvin said it took about 10 months to hammer out a deal, although the parties had negotiated throughout the process.

It was a fixed-fund settlement in which a model was created to cover the vast majority of the claims and encourage plaintiffs to settle, rather than to opt-out.  Marvin said a provision provided the settlement wouldn’t take effect until 85-percent of the plaintiffs took the deal.

He said 99-percent of the claims have been resolved with about 30 remain pending, which are being handled individually. The fixed-fund model, Marvin said, has since been used in other cases, including litigation over Yasmin and NuvaRing.

According to published media reports, Merck settled 27,000 claims in 2007 for about $4.85 billion and years later, agreed to pay millions more to resolve claims and a government probe over its marketing practices.

Baycol & Yasmin

Gary D. McConnell, an attorney at Eckert Seamans Cherin & Mellott LLC in Pittsburgh, talked about litigation over Baycol, an anti-cholesterol drug, and the Yasmin line of birth control products. He previously served as associate general counsel for Bayer, the makers of both drugs.

When it came to the Baycol litigation, McConnell said Bayer took a rather traditional approach to the settlements. The company, he said, settled with some individual plaintiffs, but not others and then worked with law firms and lawyers representing plaintiffs in class actions to settle injury claims over the drug.

“Settling 3,100 cases is hard to do one at a time,” he said.

In regards to the Yaz litigation, McConnell said Bayer took a fixed-fee settlement approach to handle claims of plaintiffs specifically alleging gallbladder injury.

He said plaintiffs who brought their claims in state courts had to opt-in and those involved in the multidistrict litigation assigned to the Southern District of Illinois had to opt out.

A large portion of the 11,000-plus claims over Yaz have been settled, but some remain pending in the MDL, as well as in state courts across the nation.

ING Bank & Mercedes-Benz

Jonathan D. Selbin, an attorney with Lieff Cabraser Heimann & Bernstein LLP in New York, represents plaintiffs in class action lawsuit accusing ING Bank of not honoring a mortgage financing guarantee on some of its loans.

What made the settlement process different in this case, Selbin said, was that plaintiffs didn’t have to make a claim because there was a bank database listing all of its customers who had been harmed, something not all that common in class action litigation.

“It was a unique situation because we knew who everyone one,” he said, explaining that the settlement notice directs class members to go to a website, where they can find out how much money they could get before choosing to opt-out or object to the settlement.

A federal judge in Delaware last month approved the $20 million settlement in the ING Bank case.

Selbin encountered a semi-similar situation regarding notice when he handled class action litigation against Mercedes-Benz.

The consumer fraud suit was brought by owners and lessees of Mercedes-Benz vehicles equipped with an emergency response system. They accused Mercedes-Benz of committing fraud by promoting and selling the system without telling them it would become obsolete a few years later.

A judge in New Jersey’s federal court approved a settlement in 2011, providing class members either a $650 check or a $1,300 certificate toward the purchase of a new Mercedes-Benz vehicle depending on whether they paid for a system upgrade and if they still owned the vehicle.

Selbin said because there were records showing which members had upgraded their system, Mercedes-Benz was able to kick out checks to them right away.

Notice
The panel also discussed the importance and difficulties that arise when it comes to providing class members notice in mass tort litigation.

McConnell said notice is something attorneys may want to address in their fee agreements with clients. If attorneys can’t get ahold of their clients, he said they may find themselves in a tough spot when the time comes for class members to opt-in or opt-out.

Selbin said while notice via the internet has become more important in recent years, he’s been on a class counsel team that has dipped into its own pocket to send out reminders.

Patrick J. Ivie, executive vice president of class actions services at Kurtzman Carson Consultants in California, is more than familiar with the intricacies of notice. His company’s website states it has administered more than 1,500 settlements.

He said while email notice is more prevalent in today’s technology dominated world, notice through the mail is the “tried and true way.” For instance, he said his company’s research shows that only 17-percent of email notices are opened and that less than three percent of recipients actually follow the link in the email.

Ivie said notices sent on postcards are statically more efficient than those sent through the mail or in an email. He also said while attorneys used to put notices in newspapers, news articles and online posts about settlements have shown to be more useful in getting the word out.

The June 11 panel on mass tort litigation resolution was moderated by Elizabeth J. Cabraser of Lieff Cabraser Heimann & Bernstein LLP in California and was part of one-day event was hosted by Perrin Conferences on a variety of trends in complex litigation.

Cabraser, Adam L. Hoeflich of Bartlit Beck Herman Palenchar & Scott in Chicago and Silvio J. DeCarli, associate general counsel and chief litigation counsel of E.I. du Pont de Nemours & Co. in Delaware served as chairs of the conference.