Reducing Costs in Toxic Tort Litigation with Case Management and Defense Cooperation (Parts 1 and 2)

Transcription

1 Reducing Costs in Toxic Tort Litigation with Case Management and Defense Cooperation (Parts 1 and 2) By Kathleen Strickland Wednesday, March 17, 1993 A defendant facing a toxic tort lawsuit is confronted with divergent choices for handling such litigation. On the one hand there is a desire to pursue an aggressive defense all the way through to trial because the plaintiffs are not believed to be injured and to do otherwise would only encourage the filing of more cases. An aggressive defense dictates high transactional costs in the short run but hopefully lower transactional costs over the long term. On the other hand a defendant may seek to buy its way out as early as possible in order to reduce litigation costs at a particular toxic site. When to settle is a difficult question the answer to which will vary from site to site. In approaching toxic tort litigation it is difficult to prescribe a blueprint to be used for each and every toxic substance or site. The identity of the defendants, the identity of the toxic substance and the client s role changes with each site. However, a basic framework for preparing and resolving your case in your client s best interests can be suggested. The cost of a trial is significant. but it is only when plaintiffs know that you are willing to go to the mat that settlement demands plummet and new case filings decline. The trick is knowing which cases to settle and which to try because if you try the wrong one (and lose) then settlement demands and new filings will increase. There are disadvantages to settlement. It fuels the plaintiffs war chest against the nonsettling defendants, thereby causing feelings of mistrust between your client and the nonsettling defendants and enhancing a soft touch image among other plaintiffs attorneys. Nonsettling defendants may distrust such a defendant because it did not share in defense costs (thereby reducing their transactional costs) and became a traitor to the cause-the cause being to fight the battle through trial to dissuade the filing of meritless cases. However, sometimes the plaintiffs have a good medical case, i.e. the toxin did cause severe physical injury or death. These cases must be taken seriously in today s pro-environmental society and an early assessment of your client s liability should be made. If an opportunity for settlement presents itself only an unsophisticated defendant would fail to realize that your client had made a good deal. Even in non-medically serious cases, if you can pay low value settlements to resolve a large volume of cases, then the resultant savings in transactional costs may be worth it. There is a cost/benefit analysis that must be considered at each site. This analysis can only be made after the facts as to medical causation, damages and liability have been fully developed. For example, in a recent asbestos single case the jury awarded $2.5 million in compensatory damages and $4.5

2 million in punitive damages. In hindsight, the defendant is surely second guessing itself for not accepting the pretrial demand and settling the case: such a decision would have saved millions. At that point you can t afford to think about how settlement may appear to nonsettling defendants. Experience shows that in toxic tort cases plaintiffs will often only settle with only one or two defendants. Thus it is not only sometimes wise to settle, but it often becomes a race to settlement. Judging from experience in toxic tort litigation, it is difficult for a company to be both an appeaser (i.e., one who will pay money in virtually any case simply to keep litigation costs down) and a fighter (i.e., one who will aggressively litigate every case). In my experience most plaintiffs attorneys will not settle with a defendant at a low price early in the litigation unless the attorney is convinced that the settling defendant is a marginal or peripherally involved player. It may therefore be difficult if not impossible, for a defendant to buy its way out of cases cheaply unless and until plaintiffs attorney has identified a sufficient critical mass of big players. Plaintiffs do not want to risk finding that an early settlement was grossly disproportionate to the settling party s actual liability. Three Basic Representation Options Counsel needs to make an early assessment as to the role its client played in the toxic incident and whether there is even a remote chance that its product could have traveled an exposure pathway causing injury to the plaintiffs. There are three different approaches that a defendant should adopt depending upon this early assessment of its potential liability. Based on the circumstances of your case, you may decide that cooperation is not in the best interest of your client. In such an event you, of course, have the option to proceed on an individual basis. If it appears that your client is a small player, you should contact the plaintiffs attorney and attempt to obtain a dismissal with prejudice from the tort case or consent to a nonsuit. Most plaintiffs attorneys will not keep a defendant in a case if the defendant can show that there is no evidence of liability based upon an exposure assessment. The emphasis here is to spend the money on an early investigation and site workup rather than later on litigation costs. The only negative aspect to early settlement, even for nuisance value is that if the plaintiffs attorneys identify the defendant as a settlement source the defendant is likely to be named in more cases in the future. The plaintiff may insist on a dismissal without prejudice. If so, take it. The chances of the plaintiff refiling the lawsuit are very small and do not justify the transactional costs of staying in the case to battle over whether the dismissal should be with or without prejudice. Option 2: Defense Coordination If your client has some involvement or liability, but is neither the major target nor a negligible player, a cost-sharing agreement is desirable (after a substantial number of other defendants have also signed on). However, despite the desires of the defendants themselves, as suggested by the Manual for Complex Litigation. 2d., the court may force defense arrangements that divide the defense into separate groups predicated on their very separate interests, liabilities and punitive damage exposure in the case. While this approach may facilitate task sharing arrangements by spreading the workup responsibilities among the various firms and eliminating much duplicative effort, it is often in defendant s interest to oppose such court ordered groupings. If faced with such groupings a defendant should avoid being the lead or sole defendant within the group because you become a target, there are fewer defendants to cost share with, and you become stuck in a liaison role with the court and other counsel, resulting in higher transactional costs. Another model which still allows each defendant to be separately represented. rotates the various responsibilities for discovery workup and coverage between the firms on common issues such as medical causation and damages. When a deposition is taken for example, a participating defense group firm would be designated as lead. The other participating defense firms need not attend the deposition and arc assured that the deposition is competently taken and a deposition summary competently prepared. Each participating defense firm receives a copy and pays a pro-rata share of the bill. This option is attractive to many defendants because it reduces transactional costs yet allows a defendant to maintain control of its defense. Option 3: Joint Representation The third option is an arrangement similar to the former Asbestos Claims Facility (ACF) where one counsel represents either all of the defendants or all the defendants within a particular subgroup. Option three will only work if judges are willing to enter a general order that will cause the trials to be trifurcated with medical causation and damages tried first. If such an order were entered in the early stages of the case coherent and coordinated discovery could be maintained on behalf of all the defendants or all defendants within a sub-group. This approach results in a substantial savings in time and costs not only to the defendants but also to the court. A trifurcated trial avoids lengthy trials involving multiple defendants on liability and punitive damages. In the ACF arrangement, this approach radically reduced defense costs; 400 law firms were reduced to 40 or 50 law firms. It was a success not only due to the need for fewer defense counsel but also because the more coordinated approach to defending the case resulted in general orders that were advantageous to the defense, favorable motions in limine, selection of the best defense experts on medical

3 causation and damages, and use of law firms with trial experience in the area. In summary, the disadvantage of Options two and three is that both corral the defendants. In cases where your client is a small player it will not want to be corralled and targeted, and may try to get out of the case as early and as cheaply as possible. With the advent of case management orders, tracking cases and class actions, however, it is very unlikely that any judge would permit one of these massive cases to go to trial unless defendants are corralled in some fashion. Case Structure Shaping The Litigation Once you have decided the type of representation you will utilize (Option 1, 2 or 3) the next consideration is shaping the form of the litigation. Despite superficial adherence to the ideal of individually crafted justice large volumes of cases and inadequate judicial resources have created incentives for processing substantial numbers of claims in large batches with little attention given to the individual differences in claims. Since the civil justice system is organized primarily for individual litigation mass claims involving thousands of litigants with related but varying subclaims put a great strain on the courts. As a result, judges and policymakers have designed innovative procedures for combining individual claims. To face this mounting problem, the courts have developed a number of procedures that can be used to shape the form of litigation and avoid litigating hundreds or thousands of similar claims individually. They include class actions consolidation of cases, multidistrict litigation which permits transfer of related cases is the federal courts to a single district court that supervises all pretrial proceedings-and alternative dispute resolution-a voluntary claims resolution facility outside the court system to dispose of many claims. At the very least these procedures are designed to expedite pleadings discovery and other procedures that become cumbersome with multiple parties and to shape the form that the litigation will take as it proceeds through the court system. Class Actions For defendants and most plaintiffs, the worst arrangement of product liability or toxic tort cases is a class action lawsuit. The defendants need to unite and oppose any motion for class certification because these are the cases that are going to cost the defendants the most in terms of verdict and settlement dollars. They are also the hardest cases to defend because typically the plaintiffs attorneys will pick the best plaintiffs to be representatives of the class making it much more difficult for the defendants to defeat medical causation and damages issues. There are many disadvantages to plaintiff being apart of a class action: often the opt-outs arc greater than the class members. The criticism is that the plaintiffs lawyers and class representatives reap the money from a class action with little trickling down to the class members. Recently many plaintiffs lawyers vigorously opposed class certification of the breast implant cases. One argument is that class actions deal a blow to individualized justice with few plaintiffs lawyers representing large numbers of clients nationally. Of course, the ideal situation would be to try each of these mass toxic tort cases individually. Judges however, will not allow this. To do so, a court would have to designate one, two or three courtrooms for perhaps two or three years to handle nothing but these cases. The reality is that judges are going to consolidate the cases or certify a class action. It is fair to say that because of diverse property values, medical backgrounds and exposure histories, these cases are totally inappropriate for class actions. Unfortunately, however, there is a definite end in certifying class actions in toxic tort cases. Certainly, if asbestos is any predictor of future activity the courts are making their own classes to get rid of their long trailing trial calendar. In May 1991, Judge Kawaichi in Alameda almost sua sponte consolidated 524 cases for trial. This type of judicially imposed class action has been replicated in other state and federal courts. On July 29, 1991, 26,639 pending asbestos cases in 87 federal districts were transferred to the Eastern District of Pennsylvania for consolidated pretrial proceedings. The only difference is that. unlike other toxic tort claims asbestos cases have not been filed as class actions. The principle of grouping remains the same because the court system as structured cannot deal with these large numbers of cases. Class actions (groups of plaintiffs) or consolidations (groups of cases) are perceived as solutions to court calendar congestion. Certifying Subclasses By Personal Injury An alternative position that the defendants can take if a class is certified was employed in Wagner v. Anzon. Inc., No (Pa.Ct. Common Pis. July ) (where the court certified subclasses-one for those whose property was damaged and the second for those who suffered personal injury) is to have subclasses certified through categorization of personal injury so the defendants could unite and attack on medical causation and damages first. Chapter 30 in the Manual for Complex Litigation, 2d. used as a working manual for federal judges discusses class actions. The manual states that deciding whether to certify a class and defining its membership are rulings that often prove as important as those on the substantive issues. They typically affect the scope and timing of discovery, the duration and expense of litigation, the sums at stake and sometimes even the methods for proof on the merits.

4 The decision on whether or not to certify a class should be made carefully on the basis of sufficient information, at an early stage in the case. Federal Rule of Civil Procedure 23(c)(1) directs the court to determine as soon as practicable whether an action is to be maintained on behalf of or against a class. Early class determination enables the parties and the court to know what is really at stake, eliminates unproductive disagreements regarding the scope of discovery, saves time and expense that might be wasted on matters not properly involved in the litigation starts statutes of limitation running, and exposes potential conflicts that might result in disqualification of the judge or the attorneys. To be able to make a class determination as soon as practicable and, in turn, to facilitate the rapid accumulation of facts bearing on class issues, the court should become involved early in the litigation in developing a schedule for resolving Rule 23 issues. Through pretrial conferences discovery and scheduling orders and other management techniques, the court may fairly force the parties to develop the class issues with dispatch. The discovery program in cases brought as a class action should be structured to facilitate an early decision regarding certification and enable discovery on the merits of the controversy to be conducted efficiently and economically. Consolidation As noted above, it is best for defendants to try cases individually, because it is less expensive and increases the chances of a defense verdict. The more cases you have the greater likelihood that the jury will believe there is something to this and plaintiffs reap the benefit of their good cases helping to prove their bad cases (the spillover effect ). The plaintiffs burden of proof on causation, is inversely proportional to the number of cases to be tried the larger the group the smaller the burden because of the spillover effect. If defendants can control the groupings, then consolidations are tolerable and certainly preferable to class actions. Rule 42a of the Federal Rules of Civil Procedure provides that when actions involving a common question of law or fact are pending before the court, the court may order a joint hearing or trial of any or all of the matters at issue in the action it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay. Consolidations are the middle ground appeasing defendants desire for individualized justice, the court s desire to move its docket and the plaintiffs desire to group their cases together. Consolidation has been occurring nationally in the asbestos litigation for the last three to four years. Recently in Northern California 536 cases were consolidated for trial. There is a pending motion in Illinois to consolidate 3,000 asbestos cases for trial; approximately 900 asbestos cases were consolidated for trial in Baltimore. In Mississippi, 8,700 dioxin lawsuits have been consolidated. Cases can be consolidated for pretrial and trial or cases can be consolidated just for discovery. 2 Multidistrict Litigation 28 U.S.C empowers the Judicial Panel on Multidistrict Litigation to transfer multidistrict civil actions involving one or more common questions of fact to any district far coordinated or consolidated pretrial proceedings upon its determination that the transfer would be for the convenience of the parties and witnesses and would promote the just and efficient conduct of such actions. The panel s authority is not encumbered by venue restrictions and extends only to civil actions and only to pretrial transfers. For example, in California all breast implant cases have been transferred to San Diego for purposes of discovery and pretrial proceedings. Whether it is consolidation or multidistrict litigation ideally the defendants should have input into the casts to be consolidated and should suggest to the court if it is leaning towards consolidation the names of specific cases to be consolidated and the groups for consolidation. Ideally the defendants want to show the judge, at an early stage, that it is in the court s best interest to target the low value cases for trial in order to encourage settlement on the good cases and discourage meritless cases from being filed. This approach can drive down the overall settlement value of the remaining cases. The court, however, may feel that sending the plaintiffs best cases out to trial first would force the defendants to settle the remaining cases. If there is a concern that the court is pro-plaintiff then the defendants should attempt to reach an agreement with the plaintiffs on a joint list for consolidation. In our experience, often the defendants will be successful negotiating directly with the plaintiffs attorney because the plaintiffs attorney also does not want to risk the court excluding some of his or her suggested cases and will therefore be more receptive to a stipulation with the defendants. Case Management Orders Once a defendant decides which defense arrangement to use (settlement or individualized representation; task sharing; or joint counsel), and how the case is going to be structured (class action, consolidated, or tried individually), the next issue that needs to be addressed is the use of case management orders (CMOs) to structure the case in order to make the plaintiffs prove causation or face dismissal. Whether the case is a class action a consolidation or an individual case it 2 Courts favor consolidated interrogatories in multi-party litigation and the use of standard master interrogatories in multiple litigation

5 will still need a structure and case management orders will provide this organization to the benefit of defendants. All toxic tort defendants should recognize that some minimal degree of preparation is necessary in every case. The focus of the defense preparation should be upon obtaining court orders that will require the plaintiffs to prepare their case first. The assistance of the court should be enlisted to obtain case management orders that focus on the non-divisive issues early in the case. The defendants should therefore attempt to obtain a court order requiring the plaintiffs to disclose their experts and set forth individualized statements establishing a connection between the alleged toxic exposure and each plaintiff s medical complaints. The court can be persuaded to follow this approach if it can be convinced that it will both save judicial resources and provide an opportunity for a prompt, resolution of the entire case. The defendants should attempt to have the cases assigned to an all-purpose judge. The defense group will have an advantage if they present the court with a plan to assist the court in managing the cases. The side that suggests managerial techniques to the court develops an advantage in the litigation not only with that particular judge but with all the judges in the court system. The worst situation is for the court to begin to manage the litigation without input from either side. The reality is that unless approached by counsel with a litigation plan the court will eventually develop its own. The court will see that a fragmented defense group working against multiple plaintiffs firms is creating chaos with respect to the courts calendar and the court s ability to control the litigation. It is also better to go to the court first with at least one plaintiffs firm stipulating to the proposals and general orders being sought. The court can set up pilot programs with that plaintiffs firm. If the court likes what it sees it will give all parties a hearing but will ultimately order that all parties comply with the new procedures. 3 Once the court has adopted what were essentially and originally defense ideas filtered through a selected plaintiffs firm it will begin to manage the litigation through general orders of all types. The group that appears to the court to have the most interest in judiciously administering the case load is the side that the court will listen to most often as modifications and changes in the system are proposed. 3 If the plaintiffs s firms get to the judge first, the defense group will have the worst of all worlds-a plan they did not propose and a streamlined and focused litigation management system that assists the plaintiffs. If cases are bifurcated or trifurcated so that medical causation, damages and liability issues are tried prior to punitive damages, most defendants will settle rather than risk a punitive damage verdict before a jury that has already decided Phase 1 and/or 2 against them. Lone Pine The expression Lone Pine order has become a term of art for toxic tort cases. Lore v. Lone Pine Corp., No. L , slip op. (New Jersey Sup.Ct. Law Div. November 18, 1986), however, is only one of a series of mass tort cases recognizing that medical causation is the proper place to begin development of multi-plaintiff claims of toxic injury. Other cases illustrative of the Lone Pine concept are: Eggar v. Burlington Northern Railroad Co., No. CV BLG- JVB (D.Mt. December 18, 1991), where plaintiffs were ordered to submit separate statements regarding alleged exposure to be signed by the plaintiffs and the attorney under Rule 11, as well as an affidavit from a physician, based upon a reasonable degree of medical certainty supporting plaintiff s claims: Whiting v. Boston Edison Co., No MC (D.Ma. September 14, 1990), where plaintiff was required to file a statement of evidence containing a representation of specific competent testimony establishing a causal relationship between plaintiff s exposure and his disease: Brown v. BBC Brown Boveri. Inc., No (First Judicial District L.A.) (order of April 17, 1989), where plaintiffs were ordered to provide expert reports supporting their claims to a reasonable degree of medical and scientific certainty: Cherry v. Air Products and Chemicals Inc., No , (Pa.Ct. Common Pls., order of June 17, 1987), where plaintiffs were precluded from taking discovery, until they provided defendants with reports establishing medical causation and Adam v. Westinghouse Electric Corp., No. 1340CD 1988 (Pa.Ct. Common Pls., order of April 10, 1989) where the plaintiffs were ordered to file letters from experts reciting the injuries allegedly caused by chemical exposure and the reasons for their opinions. Proof Of Causation Key In Dolan v. Humacid-Macleod, No (Cal.Superior Ct. Venture Co.. July 2, 1991), Judge Melinda Johnson ordered each plaintiff with personal injure claims to identify the chemical or toxic substance to which that plaintiff was exposed the dates and place of exposure, the method of exposure the nature of the plaintiff s injuries and the identity of each medical expert who will support the claims. The case is a $3.5 billion lawsuit brought by 175 plaintiffs alleging injury from drilling muds discarded at what later became a residential subdivision. Plaintiffs claiming property damage had to submit their lot number and address the percentage and nature of their ownership interest the identity of the chemical substance that caused the alleged property damage the nature and extent of the contamination and the means of confirming its presence the amount of damages based on diminished value anticipated cleanup costs and the identity of each expert who will testify about the toxic contamination of property damage. Although the requirements ordered by Judge Johnson in Dolan are helpful to the defendants, it is important to note that her order was not a Lone Pine order because it contained no requirement of proof of causation linking the

6 plaintiffs problems to the defendants products through an exposure pathway. Therefore, it is up to the defendants to specifically organize and draft Lone Pine orders and persuade the court to adopt them in order to set up the case for a summary judgment motion. Courts Receptive To Lone Pine Orders Courts are receptive to Lone Pine orders. No court wants to spend judicial resources assisting the plaintiffs in proving meritless cases. The success of Lone Pine was due to the wording of the case management order. The following is the wording used in Lone Pine, which resulted in a judgment of dismissal with prejudice from the Superior Court of New Jersey: After the conference, case management order No. 2 was issued. Order, in part that on or before June 1, 1987; (1) plaintiffs would provide the following documentation with respect to each claim for personal injuries; (a) facts of each individual plaintiffs exposure to alleged toxic substances at or from the Lone Pine landfill; (b) reports of treating physicians and medical or other experts supporting each individual plaintiff s claim of injury and causation by substances from Lone Pine landfill; (2) plaintiffs would provide the following with respect to each individual plaintiff s claims for diminution of property value; (c) each individual plaintiffs address, including tax block and lot number for the property alleged to have declined in value; (d) reports of real estate or other experts supporting each individual plaintiff s claim of diminution of property values, including the timing and degree of such diminution and the causation of same. These were considered to be the basic facts plaintiff must furnish in order to support their claim of injury and property damage. Interrogatories to be propounded that would support a Lone Pine order would request the plaintiffs to list every chemical they were exposed to, to list every injury caused by the chemical to list the name of every doctor who says the injury was caused by the chemical, and to list the evidence they have that each defendant is responsible for the injury caused by the chemical. In Allen v. Agrico Chemical Co.,. No (D.C.M.la. August 1, 1990), the court found causation evidence insufficient to support plaintiffs personal injury claims. In a subsequent case entitled Renaud v. Martin Marietta Corp.,. 749 F.Supp (D.Colo. 1990), the court granted Martin Marietta Corporation s motion for summary judgment despite overwhelming evidence that the contamination was massive and the existence of plaintiff s injuries was uncontested. The court held that the plaintiffs must prove that the reprehensible acts of the defendants caused or increased the likelihood of the alleged injuries. General Orders In some jurisdictions, where certain types of toxic tort cases are commonplace, the courts enter standing orders requiring each plaintiff to provide medical causation evidence at the time the suit is filed. For example, in the asbestos litigation in Los Angeles, General Order 29 provides that each plaintiff must serve a completed case report 120 days prior to the mandatory settlement conference. The case report shall include a copy of all discoverable and non-privileged medical reports, reflecting X-ray results and evaluations and pulmonary function test numbers in the possession or under the control of plaintiff or plaintiff s counsel. The case report also includes a list of each product identification witness upon which plaintiff intends to rcly at trial, and for each such witness the plaintiff must state the full name, last known address, each defendant s product of asbestos-containing product the witness identifies, each place of exposure where the witness will identify a defendant s product or products, and the time period of each applicable identification. A general order in the asbestos litigation in San Francisco provides that counsel for the plaintiffs shall serve upon all defense counsel a writing specifying with respect to the particular case, the facts upon which plaintiff will rely to establish exposure to the products of each defendant and shall include each respective job description, the dates and locations at which plaintiff allegedly was exposed and the specific products to which plaintiff claims to have been exposed at each such location. Cost Sharing Finally, once the options are chosen, the structure that the case is going to take is chosen and case management orders are adopted, questions of ebst and task sharing and the grouping of the defendants must be addressed. Usually these issues will arise at the very beginning of a case in order to fund proactive measures. In my experience, the courts arc too solicitous of plaintiffs to summarily dismiss their cases merely because of the lack of diligence of their attorneys. Rarely will a court align itself with the defendants unless and until the particular, judge has had sufficient mass toxic tort litigation experience to realize that more often than not, the plaintiffs are on the side of the litigation that requires the most management. It is, therefore, important to emphasize to all toxic tort defendants that the failure or refusal to fund a reasonable level of defense preparation in the short term will ultimately cost thetas much more in the long run. The defendants who are able to gain the intellectual leadership of the group need to convince the unsophisticated defendants of the wisdom of this approach. Generally, it is the defendants with the most toxic tort litigation experience who become the intellectual leaders of the group. Good

7 common sense and a knowledge of the medical issues are essential to attaining a leadership role. All forms of defense coordination require some individual who is willing to accept that leadership. Cost sharing agreements are ways of reducing such costs and expenses as attorneys fees, expert fees, technical and investigative fees and administrative expenses. Perhaps the most efficient method is a task-divided cost-sharing agreement where tasks are assigned to committees such as a motions committee, a discovery committee, and an expert development committee with all defendants sharing the cost for these tasks. This of course argues for resisting any courtordered groupings of defendants or other fractionalization of the defense group, as discussed previously. Court-Imposed Cost-Sharing Not Recommended If some defendants do not wish to participate or pay any defense costs, it is not recommended for the others to seek a court-imposed cost-sharing order. Court-enforced costsharing results in inadequate control over the discovery process and in less than complete and timely access to the information developed. Most courts like the concept of a discovery coordinator since it makes complex cases more manageable for them. However, I have found that this method of managing the litigation primarily benefits the plaintiffs. Defendants prefer private cost sharing agreements whenever possible. As long as the non-participating defendants are relatively few in number, the fact that they are riding the other defendants coattails usually does not present a problem. A procedure can be established (following them to buy in to the joint defense work product on a COD basis. Apart from that, trying to construct a mechanism that will forcibly involve them is not worth the effort. If, on the other hand, there are an unacceptably large number of non-participating defendants, or the nonplayers represent a significant percentage of responsibility for the toxic exposure, then the remaining defendants can still join together and make an attempt to settle out of the litigation. The cost-sharing/task-sharing agreement would involve; paying court reporter fees (which should first be put out for bid) records gathering and document copying fees (again after bid) and a document retention database to be accessed by all counsel and located with a non-defendant company. The cost-sharing agreement would also provide for an expert development committee through which the major defendant(s) would take responsibility for locating experts sending them materials for review, preparing and developing them for trial. Once the experts are located, CVs and other experience-related documents are circulated to all defendants. Unless defendants object by a certain date the expert development committee would select experts for trial. Once these experts are selected. each defendant files the same joint designation of experts, preserving each defendant s right to use these experts in the event that some defendants settle out of the case before trial. Also recommended is the development of a motions committee and a discovery committee. The discovery committee would draft case management orders standard requests for production of documents and sets of interrogatories to be sent out on behalf of all defendants to the plaintiffs. Answers to interrogatories and the documents produced would be sent by the plaintiffs to each individual defendant for review and consideration in terms of that defendant s liability. While this admittedly increases plaintiffs costs, it will minimize defense costs. On a rotational basis, defense counsel could be designated to attend depositions of plaintiffs and non-medical experts. The cost of each deposition, including preparation time and the transcript, would be shared be all signatories to the agreement. This approach shares costs where possible yet keeps individual options open and defenses available to each defendant. Task And Cost Sharing Depending on the extent of task sharing arrangements, some cost splitting is inevitable. These amounts are subject to more precise accounting measures and would therefore inevitably involve some decision about allocation. If the numbers are relatively low, a per capita allocation will probably be acceptable. Included in these cost sharing elements would be photocopy expense, deposition transcription, private investigation work, expert witness fees and pre-trial court costs. The defense agreements concerning cost and task sharing should be reduced to written form that ensures all parties necessary access to records, original depositions investigative material and joint expert witnesses. Expert witnesses must be advised that all defendants in the group have a valid interest in securing their testimony where needed. This is necessary in the event that the party whose attorney hired and interviewed them drops out of the case for any reason. Non-participating defendants may wish to join the group late or simply attempt to use the benefits without paying their fair share. A fair but conciliatory approach to these parties is suggested. Late joiners should pay for the benefits developed in their absence. Freeloaders should be excluded from the benefits where it can be done gracefully and without appearing punitive. Certain defense materials can be sold to nonjoiners at a price that would roughly equate their cost of joining the group. It is not advisable for the defense group to go out of its way to penalize the non-participating parties. This can only cause trouble. Possible Cost Sharing Tasks The following tasks may be suitable for cost sharing: Non-Expert Depositions: Depositions of plaintiffs their relatives and co-workers should be the subject of a task sharing agreement. This should include an agreed upon format for questions and summary reports to the participating group. Access to transcripts should be assured. There is no need for every party to pay for the full participation of their

8 attorneys in such proceedings or for a transcript of every single deposition. Where the witness has some knowledge of a specific defendant s activities, separate representation may be required. If this situation develops unexpectedly the defendants representatives will have to pursue other areas of questioning and reserve potentially divisive questioning to a later session when all parties are represented. Interrogatories: Agreed upon sets of interrogatories should be prepared and approved by members of the group and the court if necessary. One party s counsel should be responsible for propounding interrogatories monitoring compliance, and moving to compel answers or further responses where necessary. Requests For Production Of Documents: The same format should be followed as described for interrogatories. Motions: Motions of common significance to the parties such as for case management orders, summary judgment and motions in limine should be prepared on behalf of the group by a designated counsel. Draft motions should be submitted to participating defendants counsel for pre-filing approval only. Court Appearances: Motions hearings, status conferences, trial setting conferences, pre-trial conferences and appearances, other than for purposes of settlement or trial, should be staffed by one attorney on behalf of several parties. Settlement conferences could also fall into this category, depending upon the extent of a defense agreement. This attending law firm should be charged with responsibility for reporting the events to the remaining parties. Records Collection: Medical, employment, governmental, historical, journalistic, police, and other records of relevance should be obtained and summarized for the group by a designated law firm. Investigations: Written materials, physical evidence and witness interviews obtained outside of the litigation process should be shared on a task and cost basis. Liaison: Liaison duties with the court and plaintiff counsel arc difficult to share among various parties at different stages of the case. It may be necessary to designate one firm as the liaison firm. If there is a high percentage defendant, its counsel would be the most likely candidate for this task. Defense Expert Consultation And Preparation: The retention of agreed-upon experts on non-diverse issues should be handled be one firm. This firm should meet with the expert and prepare a report on his or her opinions in the case. This report should be shared with all other participant parties. These experts should be prepared and presented for deposition by one firm. All parties must educate this firm as to their particular issues of importance. Plaintiff Expert Depositions: The taking of the opponents expert depositions may be a task that can be performed by one or two of the attorneys involved in the case. It depends upon the issues that are anticipated. A medical causation/damages expert would be the kind of witness that could be deposed by one attorney on behalf of the group. On the other hand, toxic waste identification would be too diverse an issue to leave to a representative of the coordinated effort. Counsel Sharing Coordination efforts should be worked out early among the defendants willing to participate and should include a limited element of counsel sharing where legal and other conflicts do not prevent such an arrangement. The existence of nonparticipating parties should not prevent a defense group from being organized. A variety of task and costs should be shared among as many defendants as possible. This should occur whether or not any of the parties share counsel. Counsel sharing should almost always encompass far fewer defendants than the task and cost sharing arrangement. Although there are potential disadvantages to counsel sharing a limited form of counsel sharing should always at least be considered in all toxic tort cases. Although there may be some cases in which even a limited form of counsel sharing is simply not possible, if the circumstances set forth below exist, counsel sharing should be employed. Counsel sharing can be done on a large scale (like the Asbestos Claims Facility), or on a more restrictive basis (such as often occurs among chemical or petroleum manufacturer defendants). Usually, counsel sharing will be best confined to a small number of defendants, with the following characteristics: Defendants who are not likely to have a diversity of important factual or legal issues. Defendants with in-house litigation managers whose competence and integrity is respected, and who share a common view of the proper case approach. Proper case approach may be an aggressive, nosettlement posture or a more conciliatory settlement oriented attitude. Defendants who have an historical relationship with one firm where questions about the firm s loyalty to the other members do not exist. It is very important that this firm enjoy the trust and confidence of all members of the group from the outset. Defendants who are motivated by the type of circumstances discussed earlier and have a pragmatic approach to the cases.

9 The Asbestos Example Against such a backdrop, the asbestos defendants were able to reach agreement on a national allocation formula applicable to both transactional and settlement costs. Having achieved this allocation goal the number of outside law firms were reduced with the defense of the 37 asbestos defendants consolidated and their representation given to two or three law firms in each region of the country. Overall, transactional costs were reduced dramatically. Significant reductions in liability costs both settlement and verdicts, were achieved in various parts of the country by means of counsel-sharing in the asbestos litigation. The most significant savings were achieved by an extremely aggressive policy of trying defensible cases. While transactional costs went up somewhat as a result of this policy, liability expenses went down. New filings dropped off by over 90%. Once liability expenses were reduced, the defendants then focused on cutting defense costs. Mass settlements were used to take advantage of reduced case values, and defendants made strategic judgments about simply not preparing many cases. The major cause of the unraveling of the Asbestos Claims Facility was probably the changed character of asbestos litigation (i.e., new work sites); such litigation remained expensive and, ultimately the old allocation formula did not reflect the new players and changed character of the litigation. The companies that benefitted from the old allocation formula refused to modify it. Obviously, the asbestos defendants were highly motivated and were in a setting that lent itself to a coordinated defense. Pragmatism became a predominant force in litigation decisions. All of these factors contributed to a highly coordinated defense. These circumstances probably will not occur in many toxic tort cases. The diversity of the defendants interests almost invariably will preclude a massive counsel sharing arrangement even if confined to a particular site. Few Defendants, One Toxic Most Easily Adapted There may be exceptions to this, however. A case with a relatively small number of defendants and essentially one toxic substance is probably most easily adapted to a broad joint counsel arrangement. Certain defendants at each site will have so little in conflict between their positions that sharing the same law firm is the only decision that makes sense. There are, however, often strong corporate loyalties to the regular outside attorneys, which can make this decision difficult unless pragmatism is the driving force in such decision making. A corporate defendant may not initially trust the competence or loyalty of the proposed shared counsel. Loyalty can become a real question when shared counsel is also the regular outside law firm of another defendant. These concerns should not prevent a joint defense approach involving shared counsel where there are good reasons to trust the competence and loyalty of the proposed firm. Outside attorneys may feel economically threatened by the suggestion of a counsel-sharing arrangement and can play upon corporate counsel s understandable concerns about the loyalty and competence of another firm. Such decisions require independent and reasoned thinking as opposed to an emotional or friendship-based approach. Suffice it to say, significant difficulty can occur where some parties lack familiarity with the attorney assigned to represent the group. Mistakes in communication or a failure to explain the basis of a strategic decision can raise concerns about whose interests are being protected, and whether the job of defending the company is being done properly. Still, the parties, however represented, will continue to have some interest and decision-making authority in the litigation, including questions of settlement and general trial strategy. The means by which this input is allowed can be important. In per capita contribution arrangements, voting by a majority of parties on important issues will be the obvious approach. In uneven allocations, the heavier contributors are likely to want a weighted voting process. This can become a point of major concern, as it was in the ACE An uneven allocation could be accompanied by proportionate weighted voting. such votes to occur only when a clear consensus cannot be reached on major decisions. Complete Joint Defense From a purely theoretical standpoint a complete joint defense with all defendants sharing one counsel would be the best arrangement. The defendants would be united on settlement and trial issues, and transactional costs would be kept to a minimum. Unfortunately such an approach would not work in most cases. From a pragmatic standpoint, the most likely implementation of a joint defense arrangement will be done on a piecemeal basis. You can expect defendants to begin by sharing tasks and costs; some limited counsel sharing arrangement may be developed. Any effort at a highly unified approach involving a single law firm for 90% or more of the defendants is probably too ambitious and doomed to failure in, most cases. The defendants in the asbestos litigation attempted this highly unified approach. While it worked well for a while, it was never able to keep its constituents happily in tow. There were problems with allocation, voting rights (weighted v. per capita), selection of defense counsel, settlement and trial strategy and variety of other problems. Some defendants were uncomfortable being represented by law firms that had longstanding relationships with their co-defendants. The defendants in that litigation ultimately reverted back to extensive task and cost sharing, and limited joint counsel arrangements. I believe this is the most that could be achieved at many sites. It would be important, however, to be able to recognize the occasional case in which all or most defendants could be represented by a single firm.

10 Initial resistance to broadening cooperation should not be viewed as a permanent roadblock to increased coordination. It should be treated as a first small step toward a larger goal. The parties should begin to see the benefits of coordination as these initial efforts start to show results. Grouping Defendants It appears unavoidable in this type of litigation that defendants will be grouped by the court unless they can satisfy the judge very early on that they have satisfactorily grouped themselves. There are too many defendants at a site and too many different categories for the court to not group the defendants and select lead counsel, liaison counsel and appoint committees. In fact, the Manual For Complex Litigation, 2d., suggests and encourages the grouping of defendants and selection of liaison counsel. It also encourages the court to adopt costsharing agreements as an additional tool for managing the litigation. See Manual for Complex Litigation, 2d., Chapter 20, 20.22, et seq. Liaison counsel is a term generally used to describe attorneys whose primary duties for the group involve essentially administrative matters, such as communications with other counsel. Lead counsel ordinarily, have the major responsibility for formulating and presenting positions on substantive and procedural issues during the litigation. Trial counsel may be selected to serve as principal attorneys for the group at trial in presenting arguments, making objections, conducting examination of witnesses and generally organizing and coordinating the work of the other attorneys on the trial team. Committees of counsel, which may be given such names as steering committees, coordinating committees, management committees, executive committees, discovery committees, and trial teams. may be formed to serve a wide range of functions, particularly in cases in which the interests and positions of group members are similar but not identical. The functions of lead, liaison and trial counsel and of each committee should be memorialized either in a court order or in a separate document drafted by the affected counsel. The extent to which court-imposed groupings will be harmful to a defendant depends on the defendant s role in the case. However, if your client is likely to become lead counsel for a group it should resist any grouping because inevitably it will incur increased transactional costs and increased visibility (thereby becoming a target that would probably not be the case had it not been lead counsel). All the defendants can cost share, as discussed, regardless of subgroupings although the above-suggested cost sharing is easier to implement if there arc no subgroups. In summary, it is better for the defendants to resist any grouping by the court. If the court forces groups on the defendants then a defendant should try to be one of many defendants in a larger group rather than the largest defendant in a smaller group. Judicial aggressiveness is a determinative factor, Lone Pine orders are desirable. CMOs and the summary judgment motion should work hand-in-hand with discovery geared toward providing the facts underlying the CMOs in order to support a future summary judgment motion. Establishing defense strategy early in the case can be very effective. Coordination in terms of cost sharing or task sharing agreements should be used to increase cost efficiency.

11 Reducing Costs in Toxic Tort Litigation with Case Management and Defense Cooperation (Part 2 of 2) Saturday, April 17, 1993 Part I of this article addressed methods of reducing costs in toxic tort litigation through case management options (7 TXLR 1189, March 10, 1993). Part II looks at the coordination of multiple defendants in toxic tort cases. There are three areas of inquiry that must be addressed each time a decision is made with respect to group strategy in a specific case: 1) Are the defendants capable of working together in a coordinated and cooperative fashion?: 2) If the defendants are capable of working together, should they attempt to establish some form of a coordinated defense? Generally, defendants capable of conducting a coordinated defense should do so, but specific circumstances may temper this conclusion: 3) If the defendants should attempt to establish some form of a coordinated defense, what activities should be coordinated? Activities subject to coordination include cost-sharing, tasksharing and, less frequently, counsel sharing. Before beginning a detailed analysis, it might be helpful to note that coordinated, cooperative or joint defense arrangements fall into several different patterns. On the low end of the coordination spectrum, all defendants are individually represented by separate counsel with an informal agreement not to go out of their way to damage each other s interests. The highest level of cooperation involves all defendants under the representation of a single law firm from commencement of a case through its conclusion. There are a variety of different joint approaches between these extremes that defendants should consider. The first question to ask is whether the defendants are capable of working together in a coordinated and cooperative fashion. The answer is usually yes, but it does depend upon a complex series of factors that fall into three broad categories: 1) factors that motivate defendants towards a coordinated defense: 2) distinct facts that are the basis for decision-making in certain litigation settings: and 3) pragmatic reasons to compromise other concerns or goals in favor of a coordinated defense. There are various motivational factors that will cause toxic tort defendants to move toward some type of a joint defense agreement. The effect of antagonistic defense posturing, high costs of defense, aggressive opposing attorneys, biased courts and negative public relations are examined. The costs of an uncooperative approach among defendants in toxic tort litigation can be overwhelming. Large plaintiff verdicts are often the result of poor defense coordination. Whether this takes the form of outright attacks on one another, or merely conflicting case theories, the result is usually bad for the defense. These antagonistic trial strategies occur when defendants do not cooperate on trial issues. It can be the result of ongoing difficulties between the parties or just poor trial planning. In either circumstance, the most effective defenses are not well communicated to the jury. Fingerpointing and conflicting defense theories have consistently produced bad courtroom results in every type of multiple defendant litigation. Companies that have previously experienced large jury verdicts as a result of such an adversarial relationship between defendants or those who have witnessed it from close range, will be motivated toward a more cooperative effort. High Defense Costs High transactional costs, such as lawyers fees litigation, costs and expert expenses are common in toxic tort cases. When the defendants are involved in enough active toxic tort cases with separate and uncoordinated defenses the costs of litigation will become large. Even though the cost per case might go down with an increase in the number of cases the overall cost increases. For example, the asbestos litigation began with very little coordination among defendants. Most companies were separately represented by counsel, each pursuing its, own discovery, motion work and trial preparation. Coordination began on an informal basis and eventually evolved into a highly coordinated defense in which 37 defendants came together with representation by joint counsel. It was in large part, the extremely high transactional cost; that motivated many of the asbestos defendants to join together. Although this joinder ultimately failed for other reasons, the group did experience a significant reduction in defense costs. In addition, a number of petroleum and chemical companies around the country have been involved in highly publicized toxic tort cases. For the last several years, these companies have routinely worked together from the outset of litigation for a coordinated defense. This generally involves a highly cooperative arrangement in which all grouped defendants are represented by a siingle law firm. This approach has enjoyed considerable cost savings success in most instances without significant detriment to the liability issues. Aggressive Plaintiffs Attorneys The aggressiveness of the plaintiffs attorneys can be a source of motivation to form a coordinated defense group. The competence funding and litigation approach of plaintiffs

12 attorneys will have a very direct effect on the way that the defendants respond to these cases. Defendants facing an aggressive opponent are much more likely to authorize their own counsel to do complete discovery, investigation, expert consultation motion work and trial preparation. The cost of such extensive work being done separately by each defendant should motivate the defendants to consider coordination. A capable plaintiffs attorney will also force the defendants to face the reality of a trial. The potential results always come into much sharper focus in these circumstances. The defendants may then recognize the value of coordinated approach that highlights the best defense issues. The attitude and actions of the court in connection with these cases can also be a significant motivational force. If the court develops a plaintiff-oriented approach to the case, defendants will feel more threatened by the potential outcome. This type of situation can be expected to motivate defendants to group together. Even a fair minded court can motivate defendants to coordinate. CMOs in large cases have become quite fashionable throughout the nation s judiciary. The form of CMOs vary widely, but generally include one or more designated liaison counsel. Inherent in the concept of liaison counsel is a grouping and organization of defendants. whether they want it or not. Cost-sharing can also be imposed upon the parties as part of a CMO. The prospect of such court-imposed joint defense arrangements or cost-sharing plans may be cause enough for defendants to initiate a limited joint defense agreement. A private agreement among defendants will almost always provide more control and flexibility than anything imposed by the court. Negative Public Relations A local history of negative health consequences or adverse publicity related to toxic exposure can be an important motivational factor to defendants. Juries will be comprised of ordinary citizens from the community. If these people have lived in fear of cancer or other health-related problems from an earlier publicized toxic exposure defendants chances of success at trial are reduced. Indeed, these types of trials have enough juror demographic problems without an additional overlying prejudice. Most such trials can be expected to last from one to four months. The length of such cases often removes the best defense jurors. The very people the defendants want such as professionals, business executives, managers and other individuals with demanding work schedules will most likely be excused from service. The heightened negative prospects associated with a jury trial under these circumstances should be a concern of the defendants. This should cause defendants to do whatever they can to improve their chances at trial. Increased-cooperation between the defendants is a logical response. Litigation Setting When certain factors are present in the litigation setting of a toxic tort case, a coordinated defense becomes more attractive. These factors include the effects of the number of parties to the case, the diversity of toxics involved, the differing contributions to the site by the defendants, the historical relationships of the companies and the quality of legal representation available. It is a fundamental rule of human nature that the more people involved in a problem. the less likely the chances of unanimous agreement concerning its resolution. Thus, the fewer the defendants, the more likely the coordination of a defense. While increased numbers of defendants may spread the financial exposure of settlement or judgments, it will always make coordination more difficult. The greater the number of different toxics, the less likely defendants will be able to agree to coordinate their defense. Each defendant can be expected to attempt to isolate their own toxic from the health problems identified by plaintiffs experts. Inevitably, some defendants may be tempted to implicate other defendants substances. Although such a tactic would be unwise, the mere existence of diverse toxic substances at a site will make defense coordination much more difficult. Significant differences in the roles defendants played at the site will likewise reduce the chances of defense coordination. For example, cases with only manufacturers and retailers are far less complicated than those with manufacturers, distributors, retailers, intermediate and end-users. Municipalities are also potential defendants in many toxic tort cases: however, municipalities in the regulatory cases or because they represent the taxpayers interest (i.e., the jurors), municipalities appear to expect more favorable treatment than other defendants and therefore will often not join coordinated defense efforts. Many courts automatically assume that defendants of different status in relation to the site cannot coordinate their defense. However, coordination is in the interest of such defendants because it reduces transactional costs and results in the pooling/sharing of information. Thus, selfimposed coordination will be preferable over court ordered coordination. Defendants Experience The history and experience of the defendants may influence the possibility of a coordinated defense. Defendants with experience in toxic tort cases are more likely to agree to joint defense activities having seen the benefits of such an approach in the past.

13 The drawbacks of a splintered or antagonist defense will be easier for them to appreciate. The absence of environmental litigation experience of some parties is clearly a factor in the floundering of defense coordination efforts as such defendants do not comprehend their exposure, or the danger of doing nothing about preparing the case for trial. Some of these toxic tort cases involve a certain percentage of defendants who are uninsured and have little in the way of assets. These defendants generally try to stay completely uninvolved in the litigation. They are likely to avoid any coordination efforts, largely because they cannot afford any other approach. These defendants do not prevent others from joining forces in defense of the case, but rather refrain from doing anything but riding on the coattails of others. This situation seems unavoidable in any large case. Hour to deal with such free-riders is discussed below. Previous litigation difficulties among the defendants can prevent coordination of the current case. Given the number of defendants who are involved in cases at different sites, there will be times when companies are co-defendants in more than one jurisdiction. If there have been problems in earlier cases, there is less likelihood that the parties will trust one another and cooperate in future cases. Business differences, wholly unrelated to the litigation at hand, could also tend to prevent coordination. Whether or not the defendants have been in a case together in the past, there may be business reasons that make trust and cooperation unlikely. For example, the parties may be intensely competitive in the marketplace. This may have lead to any number of preexisting problems including public relations battles, efforts to involve government entities against one another (i.e., antitrust), trade secret disputes or other litigation. These kinds of disagreements defy easy categorization, but may well exist and would tend to prevent defense coordination among those parties. Personality Problems Any discussion of past litigation or business differences would be incomplete if it did not address the influence of executive personalities on defense coordination efforts. Companies obviously act through their employees and trouble between companies often will be reflected in the personal relationships between people at various levels. If the chief executives of two co-defendant companies have developed a strong dislike for one another cooperation in the case at lower levels may be impossible. A more likely problem is the breakdown of relationships between the co-defendants in-house litigation management personnel. This may be at the general counsel level, or below. The possibilities for problems at that level are numerous. Disagreements about discovery, experts, trial issues, allocation, settlement, unification of defense and selection of lead counsel are but a few areas in which strong-willed and intelligent people can run into very basic disagreements. These differences in approach and personality can become major obstacles to any joint defense approach. Cost-conscious counsel will do their best to minimize these human factors and encourage cooperation for the benefit of all defendants. Defendants can generally select the counsel they wish to defend a case, subject to their financial ability to pay fees and possible conflicts of interest. Except to suggest a counsel sharing arrangement the defendants generally cannot do a lot about which attorneys represent others in the case. The law firms employed to defend a particular case will have an important effect on whether coordination efforts ran be successful. Law firms with experience in toxic tort litigation will generally attempt to coordinate some elements of the defense. By virtue of their experience in this field, they recognize the importance of uniting on the best defense issues and avoidance of activity that is harmful to one another. Firms without toxic tort litigation experience, or at least significant co-defendant trial work, may not see the benefit of a coordinated defense. They may adopt the short-sighted approach of trying to blame other defendants in the erroneous belief that such behavior will help their client s case. Conflicts of interest can prevent certain law firms from functioning as a shared counsel for several different companies. The number and type of conflicts that can occur are simply too numerous to cite exhaustively. A firm may simply know too much about one company from past dealings to fairly represent a co-defendant in the case. Joint counsel arrangements require a full disclosure of all potential conflicts of the law firm so that any party represented can make its own informed decision about the quality and loyalty of the firm involved. Historical Relationships Historical relationships between a law firm and one of the defendants will create more than a conflict of interest problem. Other defendants involved in the joint counsel arrangement will be prone to question whether the long term client s interests are being elevated above that of other parties represented jointly by the single law firm. Indeed, some law firms will be incapable of equal loyalty to all clients in a joint defense arrangements. The temptation to take care of one s long time source of revenue may simply be too great. In other instances the jointly represented clients may develop an unwarranted concern over this issue. If these concerns are not overcome by careful and complete communication from the attorneys a joint counsel arrangement will quickly fall apart.

14 Lawyer s personalities can have a significantly negative effect on the development of a joint counsel or sharing arrangement. Unfortunately, attorneys have acquired a reputation for possessing uncontrolled egos. This approach to interpersonal dealings is never productive will rarely lead to any agreement, and must be avoided if a coordinated defense is to be developed. Depending on the personalities of the outside attorneys, it may be necessary for the in-house corporate litigation managers to resolve many of the joint defense issues. These efforts would need to be initiated and undertaken directly between company officials. The outside attorneys should be excluded from this process if necessary. Coordination will be facilitated where firms have worked together on toxic tort cases in the past and trust each other s competence, diligence and integrity. Conversely, when the firms have not developed confidence in one another, or worse have come to a state of mutual distrust coordination will be very unlikely. Advisability Of Coordinated Defense Whether a coordinated defense is advisable depends entirely upon one single determination: Can the defendants achieve an overall savings by coordinating their defense? The answer to this question should consider not only transactional costs, but also the savings that can be achieved by lower settlements and defense verdicts at trial. The analysis involves some complex tradeoffs. The following sections will look at the advantages and disadvantages of defense coordination, and will ultimately conclude that coordination is generally advantageous because it increases the likelihood of a defense verdict, even though opportunities to employ joint counsel may be limited by the circumstances. Coordinated defenses can result in cost savings in several categories. The extent of sayings depends upon the extent of a joint defense. Since transactional costs can be substantial in this type of litigation simple task sharing can achieve litigation cost savings on a variety of matters including discovery motions work investigation court appearances, expert witness consultation, and liaison activities. Joint experts on non-diverse issues can be retained at a significant savings to all parties involved. Depending on the extent of cooperation, some of the defendants could enter into counsel sharing arrangements, reducing transactional costs dramatically. Reduction Of Payments Liability and settlement payments will on an overall basis, be reduced by the coordination of trial issues. Defendants gain greater control over most cases by being organized into a united front. They carry more weight and persuasiveness with the court and plaintiffs counsel. Lone Pine type orders are more likely where defendants, as a unified group try to persuade the court to weed out unfounded claims. The courts will more often agree with a largely united defense to reverse trifurcate these types of trials. If the California asbestos experience is any indication, most cases are settled if plaintiffs are successful in the first phase of a reverse trifurcated trial. The potential for time savings associated with this approach is appealing to most courts and the defendants are more likely to be prepared for such threepart trials in the context of a unified defense. The unified front approach presented through Lone Pine case management orders and the prospect of reverse trifurcated trials should result in an overall favorable effect on the settlement value of cases. Plaintiffs attorneys will rightfully be concerned that the defendants intend to focus their entire case on issues of medical causation and damages since this is ordinarily the defendants best approach and the area in which plaintiff s are often the weakest. Disadvantages Of Coordinated Defense There are of course, disadvantages and difficulties to maintaining a coordinated defense that should be considered and discussed. Many defense attorneys in the asbestos litigation believe, in retrospect, that measures that streamlined and coordinated the litigation benefited the plaintiffs and made marginal cases economically viable by reducing the plaintiffs costs. Defense coordination in that litigation has been referred to by some as a corralling or grouping of the defendants to make everyone s job a lot easier. As the primary means of solving calendar congestion problems the potential disadvantages of coordination must be carefully considered. Plaintiffs attorneys, in general tend to have less personnel and financial resources than defense firms. As a result, streamlining the handling of discovery, motions work expert witness issues and virtually all pretrial activity has made the plaintiffs attorneys tasks more manageable. The clearest example of this was the ACF s experience in actual trial of cases. The average settlement value of cases fell in direct relation to an increase in the number of cases that ACF tried and rose when fewer cases were tried. Consequently, it was essential that the defendants be well prepared for trial. As things progressed in the asbestos litigation the defendant s became highly unified through joint counsel. The streamlining that resulted reduced the plaintiffs attorneys workload significantly. This allowed them to devote more time and attention to case analysis and preparation, reduced their costs and allowed the marginally prepared and funded plaintiffs attorneys to stay in the cases. As marginal cases began to appear profitable, filings began to increase. The asbestos plaintiffs attorneys were also faced with fewer defense issues. The motions work, discovery and expert

15 witness activity began to fall into routine and less time consuming ad expensive patterns. Moreover, judges are being taught to streamline large cases with case management orders that: Eliminate worthless claims at an early stage; Consolidate similar issues so that they are not end lessly relitigated and; Avoid multiple discovery procedures. Two of the CMOs in Lore v. Lone Pine are used by the Judicial College as examples of case management that can be effective in achieving the listed goals. Benefit To Plaintiffs Attorneys? The practical result of this trend toward CMOs is that defendants will have little chance to avoid significant streamlining of toxic tort litigation. Plaintiffs attorneys will be afforded these time and cost saving benefits. This prospect strongly suggests that the defendants must organize and coordinate before CMOs are entered. Obviously, defendants should try to minimize the profitable effect streamlining has on many cases previously worthless to plaintiffs counsel by coordinating themselves and submitting their own case management plans from the very outset. If defendants simply resist the entry of CMOs, they will have little to say about the substance of these decisions. We have already explored the potential concerns that might arise with regard to the loyalty of joint counsel. Defense coordination efforts can produce potentially significant difficulties in the handling of administrative problems among the defendants. In task sharing arrangements, there is generally no precise accounting about the extent of work done by each party s attorneys. Rough justice is the guideline. Disputes can erupt, however, over the parties contributions both quantitatively and qualitatively. Precise accounting is possible in cost sharing arrangements, but disputes can easily arise once you get beyond routine expenditures. The retention of expert witnesses, for example, is a fertile area for disagreement. In one case defense counsel evidently attempted to secure the agreement of the defense steering committee to retain a firm of expert witness brokers in the case. Some of the coordinating defense efforts, refused. Some simply did not want to spend the money, but others objects to the substance of the approach as the use of expert witness brokers is often viewed unfavorably by experienced trial attorneys since the existence of these entities will usually come out in discovery, and quite possibly trial, feeding the hired gun image of retained experts. Punitive Damage Claims Toxic tort cases almost always contain punitive damage allegations. Punitive damages are not susceptible to joint defense agreements. Whatever coordination efforts may be undertaken in any other areas, a separate defense is essential to these kinds of claims. Though conceivably possible, it is very difficult to share counsel for this issue. Actual punitive damage trials would be very infrequent if the proper issues were advanced and accepted by the court. Unfortunately, many judges understand the in terrorem effect of punitive damage claims and refuse to bifurcate the issues in order to force defendants to settle. However, if a case is bifurcated or trifurcated, separate counsel for each defendant would not have to be summoned until the punitive damage phase. This was done successfully in the asbestos litigation by maintaining standby counsel who did nothing until notified of a phase three trial. These were very rare because defendants who lost both phases one and two universally settled. Conclusion Every location at which your client is a toxic tort defendant will have a variety of factors to be considered in deciding how to approach a joint defense arrangement. Understanding the factors that can influence the creation and extent of a defense coordination agreement will be helpful in this analysis. It is possible that co-defendants could be educated to work together by foreseeing motivational factors, rather than actually experiencing them. It is also possible that they could be encouraged to understand the importance of pragmatism in cases of this type. Recognizing the predispositional factors that give rise to a coordinated defense would allow an interested party to exploit the circumstances of a given case to promote a coordinated defense. The role of intellectual leadership in this kind of an organizational effort requires both a detailed understanding of the factors that will move the parties together successfully and a big picture view of the goals that need to be attained. Ultimately, people will often act in their own best interests. It is possible, recognizing all of the potential factors involved, that you would be able to organize an effective task and cost-sharing arrangement for your client as well as a limited counsel-sharing arrangement at various sites. While this example shows how disagreement can occur over fairly routine decisions, these problems are nevertheless usually solvable and do not pose major problems in task sharing arrangements.