Denise Miley was the last person you would accuse of reckless behavior. A successful accountant and placid mother-of-four, Miley’s riskiest decisions involved which cul-de-sac she should turn down on her suburban bike rides. Then, in September of 2014, Miley started taking Abilify to treat her depression. Within a few weeks, Miley transformed into a compulsive gambler who couldn’t be dragged from the blackjack table. She rode her bike 35 miles just to get to the casino. She played hooky from work and blew through her sons’ college savings fund. She would have done the same with her retirement but was thwarted by an alarmed husband. Instead, she took out a secret loan for $50,000. Miley wasn’t the only person to shed her personality that year. Reports filtered in across the country of formerly upstanding citizens suddenly caving to every passing vice. “I can’t stop calling prostitutes.” “I can’t stop eating Nutella.” “I can’t stop late night shopping.” One woman even reported collecting credit cards: “They were pretty!” she said. “I amassed so many of them. The Limited, Macy’s, Bloomingdales…” None of them had a good explanation for why they ruined their personal lives until they stopped taking Abilify, and the urges disappeared. Then they realized: “With SSRIs, there is no turn off switch.” These victims were the classic profile for a mass tort case. Separated across time, geography, and symptom, this vast group of newly minted victims had nothing in common save a defective product and the sense that they still deserved justice in a mass commercial age. Multidistrict litigations (MDLs), once a lowly cousin to the class action, now dominate the face of our civil courts. Below, we look at the good, the bad, and the ugly of these mass-packaged resolutions and what they say about our modern justice system.
What’s in A Mass Tort?
Mass torts are a natural byproduct of industrialization. Prior to the 20th century, most consumer products were sold in local or regional markets. Only when companies adopted standardized processes for production and sale could they hope to reach a national or even global market. Unfortunately, commanding bigger markets also meant magnifying the effects of any error. The first company to suffer the wrath of millions of consumers was General Motors after Ralph Nader published Unsafe at Any Speed, a shocking indictment of automobile safety standards. The book characterized the Chevy Corvair as a “one-car accident” that was liable to flip over at any sudden movement. While many dismissed Nader as a “Safety Nazi” and preferred the free spirited days of no seatbelts or airbags, his efforts catalyzed the growth of products liability litigation.
Just three years later, Congress passed the Multidistrict Litigation Act in 1968 which allowed federal courts to transfer factually related lawsuits to a single district judge for consolidated pretrial proceedings. Suddenly, plaintiffs had a means to “join forces against a foe with deep pockets” without overwhelming the courts with repetitive cases.
In recent years, as class actions become more difficult to achieve and fade from usage, MDLs have become the favored vehicle for aggregating claims and now account for nearly 40% of the civil cases in federal courts. Professor Arthur Miller, a leading scholar in civil procedure, describes the shift as a “reflection of the quest for efficiency, economy, and consistency of related claims.” Without MDLs, the vast majority of individual cases would bankrupt the plaintiff, if not the law firm, and be left to languish in some backwater court. While many MDLs involve pharmaceuticals (20%), they have also been organized around other industries including oil (Deepwater Horizon), insurance (Blue Cross Blue Shield Antitrust Litigation), and automobiles (GM Ignition), etc.
The FDA Can’t Save Us
Another reason mass torts have gained prominence is that much of America’s regulation is conducted retroactively. In theory, the first line of consumer defense is the Food and Drug Administration. The FDA’s stated mission is to protect the public health by regulating everything from lethal opioids to vegan puppy chow. This lineup includes nearly 270,000 production facilities (half of which are overseas) and over $2.6 trillion in consumer products. Anyone who believes that a rag taggle team of impoverished bureaucrats can accomplish this Sisyphean task just needs to pick up Bottle of Lies, a 2019 exposé that highlighted a myriad of quality and inspection concerns in the generic drug category alone.People have many complaints about the FDA, but if there’s one thing to say about it, it’s a partner in industry. Thanks to the honor system it operates by, the FDA approves drugs faster than its counterparts in Europe, Canada, and Japan. There isn’t a single test tube at the FDA. Instead, companies submit their own test results and wait for the verdict, a process akin to asking students to submit their own report cards. The FDA sees what the company wants it to see, which usually isn’t much. It doesn’t help that nearly half the budget for regulating the drug industry comes from the drug industry itself. Those fees for expediting drug approval really add up. It’s no surprise, then, when nefarious actors remain unchecked. Dr. David Graham, an FDA scientist who witnessed the Vioxx fiasco unfold, remarked, “I know that the FDA is responsible for 100,000 people being injured. And [the] FDA wants that to be swept under the rug nice and quiet.” While he couldn’t save us from Vioxx, Graham later redeemed himself by helping pull Fen-Phen and Redux from the troubled weight-loss market.
Where’s My Day in Court?
Once harmful products make it past the FDA’s safety net, it’s left to the courts to bully companies into compensating victims. Unsurprisingly, mass torts offer little in the way of personalization and can leave many plaintiffs feeling like a cheap commodity. The mass packaging of products led to the mass packaging of litigation. This dynamic invites outrage because it defies popular notions of justice. When most people suffer harm from a product, they envision a dramatic showdown on the stand, where their moving testimony is beamed down onto every American’s late-night TV channel. In short, they envision trial. One plaintiff, who was part of a gruesome pelvic mesh MDL, expressed her shock at the system: “I have thought about this whole process with regard to MDLs and had absolutely no idea it would be like this. I[n] some ways it feels like you are sent to a ‘holding jail’ while the legal system plays out. You try to get justice in your own area and then your case i[s] moved to another state and it is just ‘wait, wait, wait’ while your life falls into further destruction.” Others simply envision a conventional lawyer-client relationship. But the sheer number of claimants makes that relationship highly unlikely if not impossible. Imagine how most people first encounter the mass torts system. We’ve all seen the ads. The tawdry lawyer staring out at you across a lonely highway, inquiring after your loved ones. (Law firms can’t change them: the bar predetermines which language and formatting can be used).
A claimant responds to the ad and is then shipped off to an aggregator who is building an inventory of similar cases. When the aggregator brings that case to a federal court, it is consolidated with similar cases and sent to a transferee judge in a galaxy far, far away. The claimant may never meet her lead counsel, much less gain familiarity and trust with them. Another pain point is settlement culture. Most MDLs never make it to trial. Less than 3% of cases ever emerge from pre-trial negotiations and return to their court of origin. As Judge Jack Weinstein observes, “Federal judges tend to be biased toward settlement. We clean the dishes and cutlery so they can be reused for the long line of incoming customers. Settlements are the courts’ automatic washer-dryers.” Judges aren’t the only ones who hope for settlement. Lawyers aim for settlement so they can avoid bankruptcy and recoup their initial investment. Attorney Michael Prett, who handled the Dalkon Shield litigation, reported: “We handled over 1,000 Dalkon cases, and it took 20 years before we showed a profit… We borrowed heavily at high interest rates to finance the litigation. Even though we settled $55 million in claims, this will be the first year we’ll be in the black.” In many instances, plaintiffs also stand to benefit from a quick resolution. If Agent Orange cases had gone to trial, many believe the ordeal would have stretched out over 18 months and appeals could have lasted up to ten years. Imagine telling Vietnam vets they had to wait another decade before they could afford their next chemo treatment.
Why is Litigation So Expensive?
Finally, some groups point out the immense cost of the American legal system and particularly the legal fees collected by lawyers. Mass torts have been on the Republican chopping block for decades in the name of fostering innovation and protecting companies from frivolous law suits. One colorful critic, the U.S. Chamber Institute for Legal Reform, maintains that packs of trial lawyers are “hungry for big paydays” and offer their clients “pennies on the dollar” while they collect massive payouts. Lawyers are more level-headed about it. As mentioned earlier, law firms bankroll the substantial upfront costs of the proceedings with no guarantee of recovering them. Their fees are capped — generally at 33–40% — and are contingent on winning or settlement. The plaintiff’s lawyers are responsible for collecting generic and specific assets that prove a product causes illness. One plaintiff’s lawyer estimated that a single Vioxx case initially cost between $1 million and $1.5 million to develop. Sure, sleazy trial lawyer ads might attract some low rent individuals looking for jackpot justice, but if they aren’t filtered out by the initial marketing firm, they’ll be caught in one of the next dozen checkpoints. Initially casting a wide net allows lawyers to reach large numbers of disconnected plaintiffs that would otherwise be inaccessible. But ultimately, no sane tort lawyer will attempt a lawsuit without clients who exhibit significant injuries as well as a clear and compelling liability story in terms of what the company did wrong.
An Imperfect Peace
Any grand compromise among parties will have its limitations and require difficult trade-offs, but MDLs remain the last line of defense for millions of consumers against multinational companies. Without them, the average American’s well-being rests in the feeble hands of the FDA, with no method of recourse for when things go wrong. The justice system can no longer afford to try each dispute “as if it were a unique horse-and-buggy collision at a muddy intersection in nineteenth-century Cairo, Illinois.” The courts have taken a deeply vexing problem and done their best to cobble together a solution that is part public policy, part business deal, and part modern justice. We may not be able to get plaintiffs their own podium, but the least we can do is offer them a consolatory payout. P.S.
Denise Miley and her fellow Abilify-users waged a successful MDL against Bristol-Myers Squibb and Otsuka in 2019. Ms. Miley received an undisclosed settlement and restored her reputation as a paradigm of Midwestern motherhood.
About Colbeck: Colbeck is a strategic lender that partners with companies during periods of transition, providing creative capital solutions to meet their evolving needs. You can reach the team at email@example.com.