Global strategies and techniques for defending class action trials: defending the global company in multinational litigation.

AuthorSharko, Susan M.

CLASS ACTIONS and mass tort claims have been part of the litigation landscape in the United States for many years. While class actions have become the subject of widespread criticism in their country of origin, they have been embraced by some other countries, in which the experience with class legislation continues to develop, and where this mechanism has been viewed by some as a positive means of "collective redress".

As a result, mass tort drug and device cases commenced in the United States have led to multinational class action litigation. The absence of any international regime like the Multi-District Litigation ("MDL") system in the United States means that the burden of coordinating such litigation falls on the shoulders of the defense team as class actions become more commonplace as an outgrowth of mass tort litigation in the United States.

Recent experiences in Canada and Australia confirm the increase in class action activity. Recent appellate decisions in some common law provinces of Canada, particularly in Ontario, have encouraged Canadian judges to more readily certify class actions in those provinces, particularly in cases involving personal injury. Similarly, recent trial level and appellate court decisions in competition law cases threaten to erode the distinction between direct and indirect purchasers by suggesting the use of class proceedings legislation to provide a mechanism to calculate damages on a class-wide basis and assess damages on an aggregate basis. These developments, together with the tendency in some provinces of Canada, particularly Ontario, to certify, without first determining whether or not it exists, an undefined and uncertain alleged cause of action named "waiver of tort" as a common issue in many products liability cases, highlights the propensity, at least in some of the common law provinces, towards recognizing the possibility of liability based on a cursory review of the plaintiffs' allegations as a basis for certification. (3)

The increase in class action activity in Australia can be linked to the fact that there is no certification requirement or certification hearing. All that is required to commence and maintain class proceedings is that the lead plaintiff assert there are seven or more plaintiffs who have claims against the same defendant, that the claims arise out of similar or related circumstances, and that the claims give rise to substantial common issues of law or fact. These assertions are then incorporated into the originating process which is then filed and served, and a class action is underway. It is then open to the defendant to move to strike the class action, but Australian judges have so far been loathe to consider such motions early in a proceeding before the issues and relevant points of evidence have been clarified.

If a personal injury claim is denied certification in the United States, it should not be assumed that class proceedings will not be certified elsewhere. The absence of any certification requirement in Australia means that procedural matters like document production and discovery may have to be addressed earlier in a class action there than would be the case in a class action in the United States. In Canada, where broad document production and discovery are generally postponed until after a class action has been certified, there are commonly extensive depositions, including expert depositions, as part of the certification process. The court may also order early discovery and document production on matters related to certification as part of the certification process.

Multinational litigation also needs to accommodate matters such as forum non conveniens applications in different countries, the possibility of simultaneous depositions of company witnesses in different countries, expert depositions and different evidentiary rules, procedure and substantive law. It is not possible in this paper to consider all of the issues likely to arise in hearings and trials in multinational litigation. Instead, this paper addresses just some of the relevant differences and issues that arise for litigation in the United States, Canada and Australia:

(a) the availability and method for assessing aggregate damages;

(b) punitive damages;

(c) disparate regulatory regimes and the impact on pre-emption and "learned intermediary" defenses; and

(d) Daubert (4) and expert evidence.

  1. Aggregate Damages

    Damages will be the gist of any class action or mass tort drug and device claim in the United States, Canada and Australia. However, the approach taken to aggregate damages in these three countries varies.

    Courts in the United States generally disfavor certifying class actions brought by individual products liability claimants in drug and medical device cases because of the presence of significant individualized questions relating to each claimant's alleged injury, causation, and damages. (5)

    Aggregate damages are also rejected by courts in drug and medical device cases because of the need to show reliance, loss causation, or injury. (6) As the Hon. Jack B. Weinstein held recently in the Zyprexa[R] attorneys general suit, causes of action for alleged improper promotion of a medicine do not lend themselves to aggregate evidence or aggregate damages because individual analysis is a sine qua non of establishing reliance and injury and determining a person's damages. Judge Weinstein observed that "appellate class action decisions have held that issues of reliance, loss-causation, and injury are inappropriate for aggregation, due to the need to prove these elements on an individualized basis for each victim or injured party," and "statistical proof is in most instances insufficient to show reliance, loss-causation, or injury on the part of individual class members or claimants." (7) Judge Weinstein called this the "Individualized Proof Rule," which focuses on injuries to the individual as an element of a plaintiff's claims. (8)

    Likewise, in the 2008 decision of McLaughlin v. Philip Morris USA, Inc., (9) which was discussed at length in the Zyprexa decision, the Second Circuit Court of Appeals reversed the Eastern District of New York's certification of a class of smokers of "light" cigarettes based on plaintiffs' statistical evidence of reliance on the cigarette manufacturers' nationwide advertising campaigns. The Second Circuit opined that reliance on the alleged misrepresentation could not "be the subject of generalized proof. Individualized proof is needed to overcome the possibility that a member of the purported class purchased Lights for some reason other than the belief that Lights were a healthier alternative--for example, if a Lights smoker was unaware of the representation, preferred the taste of Lights, or chose Lights as an expression of personal style." (10) Aggregated proof was therefore not sufficient to support class certification because reliance and causation questions specific to each plaintiff overwhelm common questions. Moreover, aggregate damages were improper because "[r]oughly estimating the gross damages to the class as a whole and only subsequently allowing for the process of individual claims would inevitably alter defendants' substantive right to pay damages reflective of their actual liability." (11) By contrast, in a class action setting where common issues relating to injuries and damages predominate, aggregate damage awards are most often seen in the areas of antitrust, securities, employment discrimination, or consumer credit actions. After liability has been demonstrated in such cases, class members may seek to aggregate damages in a single class-wide adjudication using statistical methods of proof. Courts require that the proof of aggregate damages, which may be in the form of statistics or sampling data, be sufficiently reliable and accurate; a court may not rely upon an "incomplete damages model." (12) Defendants may seek to rebut aggregate statistical methodologies based on reliability of the statistical method or through the use of their own statistical evidence.

    Where damages are assessed in an aggregate form, remaining monetary awards may be distributed in accordance with the cy pres or "fluid recovery" doctrine. (13) However, in McLaughlin v. Philip Morris USA, Inc. the Second Circuit noted that "[w]hen fluid recovery is used to permit the mass aggregation of claims, the right of defendants to challenge the allegations of individual plaintiffs is lost, resulting in a due process violation." (14)

    Canadian class action statutes in some provinces permit the Court to determine in the aggregate, without the need for individual class members to establish their losses individually, the amount of damages which a defendant will be required to pay if found liable, if the elements of the statute are met in appropriate cases. Such damage awards can then be distributed to the class on a proportional or average basis, or in accordance with simplified claims procedures. (15)

    For example, section 24(1) of the Ontario Class Proceedings Act ("CPA") provides as follows: (16)

    The court may determine the aggregate or a part of a defendant's liability to class members and give judgment accordingly where:

    (a) monetary relief is claimed on behalf of some or all class members;

    (b) no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined in order to establish the amount of the defendant's monetary liability; and

    (c) the aggregate or a part of the defendant's liability to some or all class members can reasonably be determined without proof by individual class members.

    The condition precedent set out in (b) above often makes the award of aggregate damages unavailable. For example, in a negligent misrepresentation action or products liability action, issues of liability and damages are highly individualized and inextricably interrelated.

    Both at the certification stage and at any...

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