Becoming masters of the universe: the how to's of multi-jurisdictional product liability litigation.

AuthorHughes, Annette

IN an increasingly globalized and connected world, purely "locally made" products are becoming increasingly rare. These days, most products are developed in a synergetic process where component parts are sourced from a variety of countries, and products are assembled or manufactured elsewhere and sold around the world. This presents a web of unique legal, practical and strategic challenges for product liability litigation, as the potential harm caused by a defective product is not quarantined within convenient jurisdictional boundaries. This brings a variety of risks to potential defendants as parties, courts and rules (of law and process) seek to overcome traditional jurisdictional constraints and effectively and fairly manage resulting litigation.

In any given matter, the question of how defendants can best address the challenges of multi-jurisdictional product liability proceedings requires a nuanced understanding of the relevant laws in each jurisdiction in play, as well as an appreciation for the ways in which those laws may be implemented (or not) and may complement or clash with one another. This article explores some of these issues, with a focus on practical measures which can be taken to prevent, prepare for and conduct international multi-jurisdictional product liability litigation. These measures provide a framework for minimizing the financial, reputational and other risks facing companies that are exposed to large-scale, international litigation, which can be tailored depending on the various jurisdictions in play at the relevant time.

  1. Duplicative Proceedings

    1. Risks Associated with Duplicative Proceedings

      There is a large scope for duplicity of proceedings in multi-jurisdictional litigation. As US District Court judge David F. Levi, Chair of the Advisory Committee on Civil Rules, recently explained:

      overlapping and duplicating class actions in federal and state court create serious problems that: (a) threaten the resolution and settlement of such actions on terms that are fair to class members, (b) defeat appropriate judicial supervision, (c) waste judicial resources, (d) lead to forum shopping, (e) burden litigants with the expenses and burdens of multiple litigation of the same issues, and (f) place conscientious counsel at a potential disadvantage. (1) This problem also exists in Australia and Canada, where different state and federal jurisdictions have their own unique procedural requirements, (2) as well as within Flurope. (3)

      All this said, the relatively superficial differences that exist within the various courts and frameworks of the United States, Canada or Australia, or within Europe or the E.U. arguably pale in comparison to fundamental divergences between the representative regimes in the United States and, for example, France. While globalization has mitigated distances between states and led to a sharing of legal principles between nations, this trend has not manifested in any sort of harmonized legal procedure. Corporate defendants can be subject to perpetual proceedings being launched around the world in respect of a single product.

      The Vioxx litigation provides a good clear example of this. Merck Sharpe & Dohme (Merck) was sued throughout the United States and Canada over the anti-inflammatory drug Vioxx, and also faced a Federal Court claim in Australia. Because of jurisdictional differences within the United States and Canada, there were 16 class actions filed against Merck in the United States in relation to Vioxx, and separate proceedings brought in the Canadian provincial courts of Ontario and Saskatchewan. (4)

      Unsurprisingly, this multiplicity of proceedings led to Merck incurring considerable unnecessary expense, and to add uncertainty, Merck was variously successful and unsuccessful as each piece of litigation played out (in the United States alone, Merck successfully defended 11 of the 16 class actions).

      This also meant that in the United States alone, Merck was forced to create a $950 million settlement fund in light of the constant stream of litigation and difficulties with predicting not only outcomes, but even interlocutory procedural developments (because of different courts approaching issues differently). In Australia, Merck was successful in partly defending the class action brought in the Federal Court, (5) which ultimately caused an 11% drop in profit for well-known plaintiff law firm Slater & Gordon, as a result of unpaid fees. (6)

    2. Practical Measures to Minimize Risks

      (a) Reach Agreement As to Governing Jurisdiction Prior to Litigation

      The relevant parties may wish to consider entering into an agreement that specifically provides which jurisdiction they will submit to in the event of a dispute. This could be exclusive or nonexclusive, and is more determinative than a governing law clause. (7) Of course, this can only assist in disputes where such agreements are possible--that is, personal injury product liability litigation can still generally be brought in a plaintiffs forum of choice.

      (b) Collaborate with International Counterparts and Research Widely

      Practitioners should familiarize themselves any similar proceedings commenced elsewhere in the world, particularly those affecting their client's international affiliates. If such litigation exists, it is more than likely plaintiff law firms will already be aware of this information and will be using it to inform their approach to the litigation they have commenced. This collaboration is sometimes very effectively driven or informed by the client themselves, but sometimes not.

      In addition to learning about the product and issues in the case, it is important to form an early understanding and appreciation of:

      * what documents have been produced in another proceeding (and whether and how they may be used in the current proceeding);

      * issues regarding potential waiver of privilege;

      * what foreign judgments exist that may be persuasive/followed;

      * other courts' attitudes to similar claims; and

      * any concessions that may have been made that would affect the current matter.

      (c) Take Advantage of

      Procedural Mechanisms for Dealing with Multi-Jurisdictional Proceedings

      There is a growing body of statutes, protocols and theories that can assist defendants facing duplicative proceedings. These include:

      (i) The MDL process

      Under the United States Multi-District Litigation (MDL) process, the Judicial Panel on Multidistrict Litigation (JPML) has discretion to transfer pending cases in federal district courts into a single federal court for all pre-trial proceedings, such as dispositive and evidentiary pre-trial motions, discovery, and settlement conferences. (8) Between 1968 and 2006, the JPML has transferred 194,929 actions, (9) including product liability claims.

      (ii) Class Action Fairness Act

      In 2005, the United States enacted the Class Action Fairness Act (10) (CAFA) to empower defendants to remove some class suits from state to federal courts and provide exclusive federal jurisdiction for matters in which the sum claimed exceeded $5,000,000. In Standard Fire Insurance Company v Knowles, (11) the United States Supreme Court found that plaintiffs could not circumvent CAFA by capping the value of their claims in an attempt to keep their cases in sympathetic state courts.

      (iii) European Union Council Regulation 44/2001

      The Council Regulation 44/2001 on jurisdiction and on recognition and enforcement of civil and commercial judgments (the Brussels 1 Regulation) is the primary legislative instrument in relation to cross-border procedures within the E.U. A number of revisions to the Brussels 1 Regulation have recently been proposed to extend its jurisdiction to disputes involving third country defendants, including those situations where the same issue is pending before a court inside and outside the E.U. (12)

      (iv) Class action judicial protocols for court-to-court communications within Canada and between US and Canadian courts

      A number of North American and international organizations have established non-binding procedural protocols to assist courts dealing with parallel actions. For example, in May 2012, the Superior Court of Quebec applied the

      Canadian Judicial Protocol for the Management of Multijurisdictional Class Actions for...

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