Legal Update April 15, 2016

Bellwether Trials: A Defense Perspective

Environmental torts such as chemical spills or issues that can arise during bellwether groundwater contamination may result in proceedings and discuss important hundreds or even thousands of lawsuits, often in considerations from the defendant’s perspective. multiple state and federal forums. Traditional judicial procedures are ill-suited to handle these An Overview of Bellwether Proceedings sprawling actions. Devices for aggregating The term “bellwether” comes from the practice claims, like class actions, are often inappropriate of placing a bell on a wether (a male sheep) to as well. In these situations, courts and litigants lead the rest of flock while grazing.1 The concept may seek to break the deadlock by fast-tracking appeared in the legal lexicon in 1972, when the a manageable number of individual cases for US Supreme Court noted that 12 of 85 plaintiffs discovery and trial—in so-called “bellwether” in a securities case had been selected as proceedings—with the hope that the outcomes “bellwether plaintiffs” for an initial trial.2 will shed light on the large number of cases It has since become a common mechanism to waiting in the wings. resolve environmental torts and other mass Although most discussions of bellwether torts where the sheer number of plaintiffs proceedings take the plaintiffs’ or the judge’s makes it impossible to try each plaintiff’s perspective, defendants stand to gain or lose just claim individually. as much from the process. Indeed, because In bellwether proceedings, a small cohort defendants are guaranteed repeat players when of plaintiffs is selected and their cases are it comes to litigating a mass tort, they face fast-tracked for any remaining discovery and unique considerations in deciding whether and trial. The bellwether parties can file dispositive how to participate. Defendants should not motions and motions in limine, discuss necessarily fear bellwether proceedings. individual settlements and, if these pretrial Properly utilized, they can elucidate how legal proceedings do not resolve the claims, then and factual theories will fare in the crucible of proceed to trial. The other plaintiffs’ cases are contested pretrial motions and trials. But when generally stayed during this time, although in bellwether proceedings are implemented some instances discovery also can proceed on an poorly—so early in the litigation, say, that overall basis. The process should not be geared defendants have not had time to sufficiently at prohibiting defendants from taking discovery understand the plaintiffs’ evidence and claims— of all plaintiffs, because as “a general proposition they can be not only unproductive but every party to a civil law suit has the right to take prejudicial to the defendants’ rights. In this legal depositions of the other party, absent a update, we seek to familiarize defendants with

protective order entered by the trial judge.”3 interested in testing. As one discussion of the Instead, this process is more of an ordering bellwether process put it, “common sense device that allows for an initial close dictates that the greater the number of trials to examination of a subset of the plaintiffs’ claims, be held, the greater the number of variables at with the expectation that the remaining issue, and the greater the discretion afforded in plaintiffs’ claims will be addressed once the selecting which cases will be tried, the larger the bellwether process runs its course. pool should be.”4 At the same time, the bellwether cohort must be small enough to be When the process works as intended, bellwether manageable. Striking the right balance is a mix proceedings produce a great deal of value for of art and science and depends on the legal and everyone. The parties can work through factual underpinnings of the case. dispositive or critical legal issues in front of the judge. They can see what arguments work—and In addition to deciding how many trials to hold, do not work—with the jury. They can learn what the parties must also decide how to populate the sorts of damages a jury might deem appropriate bellwether cohort. Methods vary. The Manual for certain types of alleged injuries. Most for Complex Litigation recommends that judges importantly, the parties and the court can use select test cases randomly or that the parties the information generated by the test cases to select mutually agreeable cases for trial.5 But in reassess the remaining litigation. The defendant practice purely random selection is rarely used, may realize that its exposure to liability and and mutual agreement can be hard to come by. damages is greater than it thought. Or plaintiffs’ Sometimes both parties each will select a counsel may realize that their claims are unlikely handful of candidates and have limited veto to sway a jury or judge. Having gained a better power over their opponents’ choices. Other sense of the “real-world” value of all of the times the parties opt to have the judge choose claims, the parties can, at least in theory, make from a pool populated by both parties. In this as more realistic and therefore more successful in so many aspects of bellwether procedure, the proposals to settle most or all of the global “right” outcome depends as much on the needs litigation. There are, of course, other ways to get of the parties as on any objective criteria. information about the strength of claims and A recent study suggests that plaintiffs may do a defenses, such as mock jury trials. But the “worse” job selecting bellwether candidates than bellwether process has clear advantages, defendants, in the sense that plaintiffs tend to guaranteeing “real-world” results and giving select less typical (and usually more plaintiff- both sides a shared frame of reference. favorable) cases for trial.6 This may make sense Considerations for Defendants for individual plaintiffs’ counsel, who usually operate on a contingency basis and whose goal A number of factors affect whether the may simply be to get to trial as quickly and bellwether process will serve this intended cheaply as possible. But for defendants, and function. Before agreeing to a bellwether even for plaintiffs, focusing on a handful of proceeding, defendants should think critically unrepresentative cases may undermine the about the following issues. process. In the words of the Fifth Circuit, this The selection of bellwether plaintiffs. risks turning the bellwether process into “a trial of fifteen (15) of the ‘best’ and fifteen (15) of the The court and the parties have a great deal of discretion in crafting bellwether procedures. ‘worst’ cases contained in the universe of claims” 7 Exactly how many plaintiffs to put in the in the litigation. With unrepresentative bellwethers, the defendants and remaining bellwether pool often depends on the type of dispute at issue and the variables the parties are plaintiffs might dismiss the outcome of a

2 Mayer Brown | Bellwether Trials: A Defense Perspective

bellwether trial as an aberration. Worse, if the defendant’s ability to depose plaintiffs or best plaintiffs’ claims are tried first, the conduct discovery, the process can prevent the remaining plaintiffs with comparatively weaker defendant from gathering necessary information claims might overvalue their claims, pushing the to determine whether to resolve claims quickly parties further from settlement. This would by way of settlement or dispositive motion. For serve no bellwether function at all. these reasons, it is generally preferable from a defense standpoint to hold off on bellwether At bottom, therefore, bellwether procedures procedures until after the parties have had a should ensure that test cases sufficiently mirror chance to conduct some limited discovery on all, the universe of cases. The fundamental objective or at least a substantial number, of the of bellwether litigation is not to resolve the plaintiffs.9 Plaintiffs, of course, generally are relatively small number of disputes in the incentivized to minimize costs, so they may push bellwether cohort but rather to inform for the creation of a “bellwether” process early defendants and plaintiffs of the plausible value on in an effort to short-circuit or minimize of the large number of remaining claims. discovery of their generally numerous clients. The timing of bellwether proceedings. Defendants also may seek a “Lone Pine” order, Another important consideration for defendants which is a pre-discovery order that “essentially is timing. The bellwether approach can be require[s]” a mass tort plaintiff to produce applied at nearly any stage of the litigation, from “information which plaintiffs should have had the outset of the case to right before trial. Courts before filing” suit, such as “information have even begun to explore “bellwether regarding the nature and substance of his settlement,” in which earnest settlement injuries, the circumstances under which he could discussions are held with a few select plaintiffs have been exposed to harmful substances, and and the results are used to build a settlement the basis for believing that the named “template” for the non-bellwether plaintiffs.8 defendants were responsible for his injuries.”10 Although every bellwether proposal must be Armed with this information about the plaintiffs’ assessed on its own terms, from the defendant’s claims, defendants can begin to assess the perspective, bellwether procedures are generally wisdom of bellwether proceedings from an even more worrisome the earlier in the litigation they playing ground. This makes bellwether discovery are employed. Remember that bellwether trials on a subset of plaintiffs less problematic and are most useful when their outcomes shed light more likely to lead to useful trials. on the larger litigation. When plaintiffs seek to The potentially binding effect of use bellwether procedures right from the start, bellwether proceedings. A significant however, the defendant—and many of the concern for defendants is whether the results of plaintiffs—may get no real idea on how the test cases will be given binding effect in later bellwether plaintiffs compare to their non- litigation. Previously, some trial courts had bellwether counterparts. imposed a binding framework on bellwether Early “bellwether discovery” thus risks putting trials by fiat. For example, in early asbestos the cart before the horse. Without the ability to litigation out of the Eastern District of Texas, the reasonably assess the strength of all of the trial judge held a number of bellwether trials and plaintiffs’ claims, defendants will justifiably be assigned each plaintiff to one of five different reluctant to extrapolate from the information categories of alleged asbestos-related disease. produced in bellwether discovery. Indeed, The judge then awarded the non-bellwether bellwether discovery can be not just ineffective plaintiffs damages equal to the average but counterproductive. By limiting the bellwether verdict rendered in their particular

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category. The Fifth Circuit declared—correctly— bellwether plaintiffs therefore should not be able that this practice violated the defendant’s to profit from a favorable bellwether ruling while Seventh Amendment right to a jury trial.11 sidestepping an unfavorable one. Following the Fifth Circuit’s decision, several To guard against the threat of unfair issue other circuits have held that bellwether trials are preclusion, at the start of the process, not binding unless parties expressly consent at defendants should consider seeking stipulations the outset of the procedure.12 from plaintiffs that any issues resolved in the Even if the bellwether court does not formally bellwether trials will not be treated as preclusive. make bellwether results binding, non-bellwether Defendants also could seek an early judicial plaintiffs might seek to give preclusive effect to determination that the results of bellwether an issue resolved against the defendant in a trials will not be used preclusively against any bellwether trial. This use of so-called “offensive party. Or all parties could agree at the start that non-mutual issue preclusion” can be the bellwether results can be used preclusively fundamentally unfair. The doctrine of issue against either side, ensuring that everyone has preclusion can only be used against someone, skin in the game. like the defendant, who was a party to the All this said, the results of bellwether original judgment, and not against others, like proceedings almost certainly will have some the non-bellwether plaintiffs, who were not effect on the remaining cases. A judge who parties to the original judgment. Issue decides a bellwether motion one way is likely to preclusion therefore can present a heads-I-win, reach the same result when faced with similar tails-you-lose bet against the defendant. The motions in the future. And a judge in a separate Supreme Court has warned that this form of forum who is presiding over parallel litigation issue preclusion should not be applied when its may find the first judge’s bellwether rulings application would be “unfair.”13 That almost persuasive, even if not binding. Defendants certainly will be the case in bellwether therefore stand to gain from favorable rulings in proceedings. Moreover, the threat of issue a bellwether process, much like non-bellwether preclusion can subvert the purpose of bellwether plaintiffs would. trials—offering non-binding information on the value of the remaining plaintiffs’ claims—and Coordination. When mass tort suits are filed, therefore make defendants less willing to agree plaintiffs’ counsel are unsurprisingly looking for to the process in the first place. what they believe are the best forums for their claims. They therefore may file in states with The unfairness of issue preclusion is especially little connection to the underlying dispute or apparent when the bellwether process is dodge federal courts’ jurisdiction through artful contrasted against class actions under Rule 23. pleading. The filings in disparate forums In a class action, the class representatives must complicate the bellwether process because there prove that they will fairly and adequately protect is no formal, rule-based mechanism to get class members’ interests and that their claims federal and state court judges to work together are sufficiently similar with all class members’ in mass tort cases. As a practical matter, though, claims. A class judgment in favor of the with the encouragement of counsel, judges may defendant also is binding on all class members. decide to coordinate their efforts. Some judges But neither is true in bellwether proceedings: might slow the pace of litigation on their dockets Bellwether plaintiffs might be cherry-picked to allow a bellwether process in a different based on their atypically strong claims, and jurisdiction to play out. The results of the defendants cannot use a bellwether judgment as bellwether process can then inform both binding against non-bellwether plaintiffs. Non-

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sets of litigation and help to contain costs Jed W. Glickstein while the bellwether trials in the +1 312 701 8704 otherjurisdictions progress. [email protected] Iteration. Bellwether proceedings are iterative Sarah E. Reynolds by their nature. Plaintiffs and defendants learn +1 312 701 7644 from the early trials and adapt accordingly. If a [email protected] defendant is successful in barring a proposed

expert’s testimony, for instance, later plaintiffs

might try to correct the deficiency by finding a Endnotes new expert or bolstering the old one. So 1 defendants should consider how broadly to In re Chevron U.S.A., Inc., 109 F.3d 1016, 1019 (5th Cir. 1997). frame their motions in the bellwether cases, 2 Affiliated Ute Citizens of Utah v. United States, 406 U.S. knowing that future plaintiffs who are still in 128, 140 (1972). discovery may be able to shore up weaknesses in 3 Colonial Times, Inc. v. Gasch, 509 F.2d 517, 521 (D.C. Cir. their cases. A sophisticated understanding of the 1975); cf. 28 U.S.C. § 2072(b) (stating that federal rules of entire litigation and of the particular legal and procedure “shall not abridge, enlarge or modify any factual elements in play is critical. substantive right”). 4 Eldon E. Fallon, Jeremy T. Grabill & Robert Pitard Wynne, Conclusion Bellwether Trials in Multidistrict Litigation, 82 Tulane L. Rev. 2323, 2347-48 (2008). Mass torts can involve so many claims that 5 Manual for Complex Litigation §22.315 (4th ed. 2004) traditional individualized resolution is (“To obtain the most representative cases from the available pool, a judge should direct the parties to select impossible. In such circumstances, courts and test cases randomly or limit the selection to cases that the parties must find ways to simplify, and parties agree are typical of the mix of cases.”). bellwether proceedings can be an important tool. 6 Loren H. Brown, Matthew A. Holian & Arindam Ghosh, Defendants should be attuned to the many ways Bellwether Trial Selection in Multi-District Litigation: in which bellwether proceedings can lead to Empirical Evidence in Favor of Random Selection, 47 successful outcomes, up to and including an Akron L. Rev. 663 (2015). 7 In re Chevron, 109 F.3d at 1119; see also id. at 1122 (Jones, agreeable global settlement. But they must also J., specially concurring); (explaining that where the “judge take care that the procedure is used intelligently allowed the parties to pick faces from the crowd of and appropriately. When used properly, plaintiffs,” ‘[a]s a ‘bellwether’, the exercise is pointless”); In bellwether proceedings can pay significant re Tylenol (Acetaminophen) Mktg., Sales Practices, and dividends for defendants. Prods. Liab. Litig. 2015 WL 2417411, at *1 & n.3 (E.D. Pa. May 20, 2015) (“A ‘bellwether case’ is a test case. ‘Bellwether’ trials should produce representative verdicts and settlements.”). For more information about the topics raised in 8 See Adam Zimmerman, The Bellwether Settlement, this Legal Update, please contact any of the PrawfsBlawg (June 8, 2015), following lawyers. http://prawfsblawg.blogs.com/prawfsblawg/2015/06/the- bellwether-settlement.html (discussing an approach used Mark R. Ter Molen by a New Jersey state court in litigation arising out of +1 312 701 7307 defective hip implants). [email protected] 9 See, e.g., In re 2004 DuPont Litig., 2006 WL 5097316, at *2 (E.D. Ky. Mar. 8, 2006) (“The court concurs that, at Chad M. Clamage least until additional discovery is obtained by defendants, +1 312 701 8090 the ‘bellwether’ approach is not appropriate.”); Meranus v. [email protected] Gangel, 1991 WL 120484 (S.D.N.Y. June 26, 1991), at *2 (“[I]t is important to proceed with some limited interrogatory discovery and to complete the appropriate

5 Mayer Brown | Bellwether Trials: A Defense Perspective document production. A deadline can then be established nMayer Brow is a global legal services organization advising many of the world’s largest companies, including a significant proportion of for the parties to take a final position with regard to the the Fortune 100, FTSE 100, CAC 40, DAX, Hang Seng and Nikkei index bellwether approach.”); see also Fallon, Bellwether Trials, companies and more than half of the world’s largest banks. Our legal supra, at 2344 (stating that the “initial step in the services include banking and finance; corporate and securities; bellwether process will require that the attorneys have litigation and dispute resolution; antitrust and competition; US some knowledge about the individual cases in the MDL” Supreme Court and appellate matters; employment and benefits; environmental; financial services regulatory & enforcement; and noting that in one prototypical bellwether litigation, government and global trade; intellectual property; real estate; tax; “this was achieved with limited case-specific discovery restructuring, bankruptcy and insolvency; and wealth management. through the exchange of plaintiff and defendant profile Please visit our web site for comprehensive contact information forms”). for all Mayer Brown offices. www.mayerbrown.com 10 Acuna v. Brown & Root Inc., 200 F.3d 335, 340 (5th Cir. Any advice expressed herein as to tax matters was neither written nor intended by Mayer Brown LLP to be used and cannot be used by any taxpayer for the purpose of 2000); see also, e.g., Arias v. DynCorp, 752 F.3d 1011, 1015 avoiding tax penalties that may be imposed under US tax law. If any person uses or (D.C. Cir. 2014); Avila v. Willits Envtl. Remediation Tr., refers to any such tax advice in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then (i) the advice was 633 F.3d 828, 833-35 (9th Cir. 2011). written to support the promotion or marketing (by a person other than Mayer Brown 11 LLP) of that transaction or matter, and (ii) such taxpayer should seek advice based on Cimino v. Raymark Indus., Inc., 151 F.3d 297, 320-21 (5th the taxpayer’s particular circumstances from an independent tax advisor. Cir. 1998); cf. id. at 336 (Garza, J., concurring) (stating the Mayer Brown comprises legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown “ ‘extrapolated’ damages determination” are not binding on Europe‐Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer the remaining plaintiffs but “are valuable in and of Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in themselves as indications of an appropriate settlement England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown Mexico, S.C., a sociedad civil formed under the laws of the State of range for each of the five disease categories involved”). Durango, Mexico; Mayer Brown JSM, a Hong Kong partnership and its associated legal 12 In re Hanford Nuclear Reservation Litig., 497 F.3d 1005, practices in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. Mayer Brown Consulting (Singapore) Pte. Ltd and its 1025 (9th Cir. 2007) (“We recognize that the results of the subsidiary, which are affiliated with Mayer Brown, provide customs and trade advisory Hanford bellwether trial are not binding on the remaining and consultancy services, not legal services. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions. plaintiffs.”); Dodge v. Cotter Corp., 203 F.3d 1190, 1199 “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown (10th Cir. 2000) (“[T]here is no indication in the record Practices in their respective jurisdictions. This publication provides information and comments on legal dissues an developments before us that the parties understood the first trial would of interest to our clients and friends. The foregoing is not a comprehensive treatment of decide specific issues to bind subsequent trials.”); In re the subject matter covered and is not intended to provide legal advice. Readers should seek legal advice before taking any action with respect to the matters discussed herein. TMI Litig., 193 F.3d 613, 625 (3d Cir. 1999) (“[A]bsent a © 2016 The Mayer Brown Practices. All rights reserved. positive manifestation of agreement by Non-Trial Plaintiffs, we cannot conclude that their Seventh Amendment right is not compromised by extending a summary judgment against the Trial Plaintiffs to the non- participating, non-trial plaintiff.”). 13 Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979).

6 Mayer Brown | Bellwether Trials: A Defense Perspective