United States: Strategic Tactics For Defending Recall-Related Products Liability Litigation

The use of recalls by manufacturers of all varieties of products, from food to automobiles to pharmaceuticals, to make sure that their products are safe in order to succeed in the marketplace, maintain credibility with their customers and comply with governmental regulations is nothing new. Nor is the inevitable fallout of resulting personal injury litigation which follows such recalls. Recalls often generate a great amount of media attention. However, with the advent of social media, the 24-hour news cycle, and the overwhelming swell in plaintiffs' attorney television advertising, litigation claims, and often Congressional, governmental agency, Attorneys General, shareholder and other stakeholder investigations and lawsuits are more prevalent and rapid than ever. There is a vast network of plaintiffs' lawyers who regularly monitor governmental websites for recall announcements. Recall-related litigation can have mammoth, far-reaching, and even "bet the company" effects on manufacturers.

The legal implications of recalls are immense and diverse: from regulatory compliance to securities litigation to criminal investigations. This article aims to focus on a few brief helpful guidelines with regard to personal injury recall-related litigation: how to prepare to refute meritless claims while resolving claims with value in a manner which is cost-effective and timely, while protecting the manufacturer's interests, image, integrity, and stakeholder and related interests. Having a well-planned litigation strategy in place to prepare and defend against such litigation, while coordinating and protecting the manufacturer's other connected interests is crucial in surviving and navigating the often rocky terrain of recall-related litigation.

PRE-LITIGATION PLANNING

Even before the first lawsuit is filed, manufacturers and their counsel should begin planning for the inexorable personal injury litigation once a decision to recall a product has been made. Depending on the product involved, and whether the recall is voluntary or involuntary, consumer notification of recalls is typically spearheaded and closely monitored by the applicable governing agency (FDA, NHTSA, CPSC, etc.), and can involve press releases, direct consumer notifications, Internet notices, or point-of-sale notifications. Litigation counsel should be involved when possible in negotiations with compliance personnel and agencies to balance the necessity of providing adequate notice with the effects the notice could have on subsequent products liability litigation. Manufacturers can be certain that – if evidence of the recall is admitted at trial – the notice(s) will be a key, if not the key, piece of evidence shown to the jury.

Litigation counsel should be involved with all of the recall key players – communications, logistics, compliance, marketing, engineering, distribution – in coordinating the recall strategies, as emails, documents, and even witnesses from all aspects of those branches will undoubtedly be involved in subsequent litigation. Having a voice at the table from a litigation perspective can help shape and in some instances improve the manufacturer's defense later down the road. More importantly, involving litigation counsel in communications with recall coordination efforts may protect those communications as privileged in subsequent discovery efforts.1

While the law of spoliation and the duty to preserve evidence varies by jurisdiction and can be complex, once the recall efforts begin, an early, comprehensive and welldistributed litigation hold notice and evidence and document preservation system should be put in place as soon as possible. There is no general duty to preserve evidence before litigation is filed, threatened, or reasonably foreseeable, unless the duty is voluntarily assumed or imposed by a statute, regulation, contract, or another special circumstance.2 Thus, the "trigger" to preserve information will depend on the facts specific to each recall. Custodians and information technology personnel should be made aware of the gravity of this duty, as spoliation of evidence can be incredibly harmful in subsequent litigation, resulting in an adverse inference, or severe sanctions.3

Moreover, they should be advised that their communications moving forward should be treated as evidence that could be put on a big screen in front of a jury or the headline of a news story someday. There are unfortunately too many anecdotes about "smoking gun" emails, some of which include cringeworthy jokes or inappropriate comments made – particularly when consumer safety is involved – which severely harmed the defense of an otherwise defensible case. Retention of the products themselves can be particularly crucial in recall situations where products such as food or pharmaceutical products are recalled for potential manufacturing defect concerns. In those situations, manufacturers often routinely destroy such recalled products. However, careful consideration of whether to retain, and potentially test, samples of recalled products, should be made. This can be a double-edged sword. Manufacturers and their litigation counsel must balance concerns of possible claims of spoliation in future discovery battles with the possibility of retaining and testing samples which may not be representative or could be compromised while stored during protracted litigation. Moreover, depending on the facts of the case, the most advantageous defense strategy may be to focus on the claimant's actual product as opposed to retained recalled products.

There should also be coordination with litigation counsel regarding any possible revisions to manufacturing-related policies and procedures post-recall. Manufacturers will have to balance wanting to remedy the reason for the recall, governmental agency intervention and compliance, and the potential that such changes could potentially be admitted in subsequent product liability litigation and could be viewed disfavorably by jurors.

CONCERNS FOR EARLY LITIGATION STAGES

Once litigation begins post-recall, there are several early steps manufacturers and their counsel can take to gain an advantageous defensive posture in the litigation. The breadth and type of recall, and number of cases being filed, whether the litigation is in multidistrict ("MDL"), mass tort, consolidated or multiple individual proceedings will affect the strategic decisions made. Often times plaintiffs' attorneys will attempt to avoid MDL or mass tort actions, in which case quick and careful consideration should be made whether to transfer such cases to the consolidated proceedings. In recalls involving large numbers of claims, defense counsel and manufacturers should coordinate an early and efficient mechanism for tracking service of complaints, so as to avoid any cases "slipping through the cracks", which could result in losing the ability to transfer or remove a case, or in default judgment being entered against the manufacturer.

In individual recall-related cases, removing a case from state court to federal court should be an early consideration. It depends on the facts of the case and the venue, but generally defendants in products liability recall cases prefer to be in federal court, and plaintiffs prefer to be in state court. In federal court, defendants have the advantages of the Federal Rules of Procedure and Evidence, scheduling orders, wider jury pools, and federal procedural law, amongst others. Plaintiffs' attorneys often try to circumvent removal by filing complaints in state court which name retailers, prescribers, unrelated distributors or manufacturing facilities, employees, officers, directors, or other third parties as co-defendants in order to destroy diversity. In such instances, an early evaluation of the involvement, if any, of these co-defendants in the recall and the case is crucial to determine whether they have been fraudulently joined. If so, a manufacturer can nonetheless remove the case and assert fraudulent joinder of the codefendants. The doctrine of fraudulent joinder is an exception to the requirement that removal requires complete diversity. In a suit with named defendants who are not diverse, the diverse defendant may remove if it can establish that the non-diverse defendants were "fraudulently" named or joined to defeat diversity.4 Joinder is fraudulent if there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendant or seek a joint judgment.5 If the court determines that the joinder was fraudulent, it can disregard, for jurisdictional purposes, the citizenship of certain non-diverse defendants, assume jurisdiction over a case, dismiss the non-diverse defendants, and thereby retain jurisdiction.6 A denial of a motion to remand by a federal court in such situation is a "one-two punch", since it could also result in dismissal of third-parties affiliated with a manufacturer, including its officers, directors, and employees. This is of particular concern in an era of increased governmental scrutiny and focus on individuals within and in charge of product manufacturing companies.

Another crucial early litigation strategy is the evaluation and filing of a motion to dismiss some or all of plaintiff's claims. Given the widespread media coverage of most recalls, often plaintiffs' attorneys are quick to file large numbers of meritless cases using boilerplate complaints when their clients may not have suffered injuries, or in some instances may not have even purchased or used the recalled product, or if they did, their products were not defective. Using the standards in Iqbal and Twombly7 or their state progeny to weed out these baseless claims early on, forcing plaintiffs to "put up or shut up" with regard to the basic facts of their cases can save manufacturers resources, time, and effort in defending against a case without merit.

DISCOVERY

Discovery in recall-related litigation, particularly in cases involving enormous numbers of claims, can be arduous and cost manufacturers millions in man-hours and dollars. In defending these cases, manufacturers and their counsel should try to "tame the beast" before it gets out of control. Prior to the onset of discovery, it is critical to seek a discovery and electronically stored information ("ESI") plan with opposing counsel (or via motion practice if an agreement cannot be reached) which limits the scope and amount of discovery as much as reasonable, but possible. This can avoid lengthy and costly discovery battles later on, and often keeps manufacturers in the good graces of the court, as courts often spurn such fights between parties. During the course of discovery, although discovery rules are broad, companies should try to limit the discovery of recall-related evidence when possible. Defendants can object and seek to limit discovery based on requests which are overly broad, vague (i.e., "all documents in any way related to the recall"), or not reasonably calculated to lead the discovery of admissible evidence (i.e., seeks information regarding another recalled product or component part), or that it should be limited because of undue burden or cost (i.e., the product has a very long history or was widely, if not globally, distributed). The relatively recent proportionality requirements of Rule 26 of the Federal Rules, which permit limitations on discovery proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit, are an excellent resource for seeking to limit the discovery of recall-related evidence.

PREPARING FOR TRIAL

When preparing for trial, exclusion of recall-related evidence is key. Companies may successfully move to exclude recall evidence based on relevancy grounds, or in the basis that its probative value is substantially outweighed by the probability that its admission will create a danger of unfair prejudice or confusing or misleading the jury, or require an undue consumption of time.8 Courts may also exclude recallrelated evidence as inadmissible hearsay.9

Perhaps one of the strongest arguments companies have for exclusion of recall-related evidence is that it is a subsequent remedial measure. Courts routinely exclude evidence of product recalls under Rule 407.10 However, this exclusion is somewhat narrow. Post-accident studies, tests, and reports may fall outside of the exclusionary power of Rule 407, even if these documents later lead to a recall campaign.11 Moreover, courts may find that actions must be voluntary actions taken by the party in order to be excludable, and thus involuntary recall-related evidence will not be excluded.12 Certain state rules of evidence or common law may also have idiosyncratic applications of the subsequent remedial measures rule with regard to recall-related evidence.

Companies may also want to consider using recall-related evidence at trial to show their efforts to improve the product and to protect the public, where a plaintiff is seeking punitive damages.13 Where pre-recall complaints come into evidence, excluding recall evidence means that the manufacturer could lose the benefit of showing measures it took to make the product safer. Where the plaintiff ignored recall notices or refused remedial offers, recall evidence could assist with a contributory negligence defense.

With regard to jury voir dire, if recall-related evidence has been excluded prior to trial, a defendant should tread carefully to avoid questions relating to the recall, instead asking potential jurors such questions as: if they have read anything about or used the product; their thoughts on the product; whether they or anyone they know had a bad experience with it; if they have ever stopped using a product or decided not to use a product because they were worried about the safety of it and if so, what was the product what was the nature of their worry. Defendant should focus questions on any negative impressions, feelings or opinions about companies in terms of the testing of their products, the warnings that are issued on their products, the marketing of their products or the conduct of the sales representatives and marketing and advertising for their products that would make it difficult for them to be fair in a case involving a manufacturer. In the event the recall-related evidence is not excluded, manufacturers would want to delve into which potential jurors know about the recall, what they know about it, and of course whether they or someone they know purchased or used the recalled product (or any recalled product). In the event recall-related evidence is admitted at trial, consider requesting a jury instruction explaining that evidence of a recall campaign may only be considered after the plaintiff, independent of the recall, establishes by a preponderance of the evidence that a defect existed in the product.14

In conclusion, although litigation stemming from product recalls can be massive, expensive, and have worrisome and farreaching effects for companies, utilizing efficient, effective, and smart recall-related litigation strategies can ease the burden on manufacturers and get their focus back to what they do best – making safe, useful products for their customers to use and enjoy.

Footnotes 

1 In Re GM Ignition Switch Litig., 2015 US Dist. LEXIS 5199 (The notes and memoranda relating to the witness interviews conducted by the vehicle manufacturer's lawyers were protected from disclosure by the attorney-client privilege because the materials reflected confidential communications between the manufacturer's outside counsel and its current or former employees, agents and counsel, and the provision of legal advice was a primary purpose of the communications; the materials at issue were also protected from disclosure by the attorney work product doctrine under Fed. R. Civ. P. 26(b)(3) because the materials were prepared in light of a pending government investigation and anticipation of civil litigation, and plaintiffs could obtain the information by other means; the manufacturer had not waived either form of protection.)

2 Victor Stanley, 269 F.R.D. at 521 ("Absent some countervailing factor, there is no general duty to preserve. . . ." evidence); see also Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718 (Tex. 2003); Gilleski v. Community Med. Ctr., 765 A.2d 1103 (N.J. App. 2001); Kelly v. Sears Roebuck & Co., 720 N.E.2d 683 (Ill. App. Ct. 1999); Distefano v. Law Offices of Barbara H. Katsos, PC, No. CV 11-2893, 2013 U.S. Dist. LEXIS 47036, *16-18 (E.D.N.Y. Mar. 29, 2013) (concluding that the duty to preserve was triggered when client discharged counsel and noting that the Second Circuit has held that in certain circumstances, "a regulation can create the requisite obligation to retain records," even where litigation involving the records is not reasonably foreseeable) (internal citations omitted); Martin v. Keeley & Sons, Inc., 979 N.E.2d 22 (Ill. 2012) (noting that a voluntary undertaking requires a showing of affirmative conduct by the party evincing its intent to voluntarily assume a duty to preserve evidence, and that a mere opportunity to exercise control over evidence is insufficient to establish a special relationship that would establish a duty to preserve it); but see Powers v. S. Family Mkts. of Eastman, LLC, No.A12A2382, 2013 Ga. App. LEXIS 212 (Ga. Ct. App. Mar. 18, 2013) (holding that merely contemplating potential liability and completing an accident report after an investigation do not demonstrate contemplated or pending litigation).

3 See Fed. R. Civ. P. 37 or its state analogues

4 In re Briscoe, 448 F.3d 201, 215-16 (3d Cir. 2006); Hogan v. Raymond Corp., 777 F. Supp. 2d 906, 913 (W.D. Pa. 2011).

5 In re Briscoe, 448 F.3d at 217.

6 Id.

7 In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), the Supreme Court explained that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions. . . . Factual allegations must be enough to raise a right to relief above the speculative level." Id. at 555 (citation omitted). In Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937 (2009), the Court held that Rule 8 demands "more than an unadorned, the-defendant-unlawfully-harmed-me accusation," and therefore a complaint that offers only "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Id. at 678. The complaint is legally insufficient if it tenders "naked assertion[s]" devoid of "further factual enhancement." Id.

8 Fed. R. Evid. 401-403; Tompkins v. Medtronic, Inc., No. 92-16687, 1994 U.S. App. LEXIS 2843, *13 (9th Cir. 1994); Jordan v. General Motors Corp., 624 F. Supp. 72, 77 (E.D. La. 1985) (in part because the defect involved in the recall campaign was distinctly different from the defect alleged in instant matter, introduction of recall campaign evidence was irrelevant); In re Fosamax Prods. Liab. Litig., No. 06-md-1789, 2013 U.S. Dist. LEXIS 6631, at *8-9 (S.D.N.Y. Jan. 23, 2013) ("Court agrees that any conduct undertaken by Merck after Plaintiff's injury is irrelevant."); Long v. TRW Vehicle Safety Sys., 2011 U.S. Dist. LEXIS 119111, 10-11 (D. Ariz. Oct. 14, 2011) (excluding evidence of recall of seatbelt where there was only a slight connection between the recalled product and the product at issue because "the Court sees a risk of unfair prejudice that substantially outweighs the marginal probative value of the recall evidence.")

9 See Fed. R. Evid. 801-807; Accord Higgins v. GMC, 465 S.W.898, 900 (Ark. 1971) (recall letter may constitute admission by party opponent).

10 See, e.g., Velazquez v. Abbott Laboratories, --- F. Supp. 2d ----, 2012 WL 5330931, *9 (D. Puerto Rico Oct. 30, 2012) (recall notices ... are considered to be subsequent remedial measures under Rule 407); Giglio v. Saab-Scania of Amer., Inc., 1992 WL 329557, at *4 (E.D. La. 1992); Chase v. GMC, 856 F.2d 17, 21 (4th Cir. 1988); Cothren v. Baxter Health Care Corp., 798 F. Supp. 2d 779 (S.D. Miss. 2011); Hughes v. Stryker Corp., 423 Fed. Appx. 878 (11th Cir. 2011).

11 See Benetiz-Allende v. Alcan Aluminio do Brasil, 857 F.2d 26, 33 (1st Cir. 1988); Rocky Mountain Helicopters, Inc., 805 F.2d at 918.

12 See HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F.3d 1025 (6th Cir. 2002).

13 Holmes v. Wegman Oil Co., 492 N.W. 2d 107, 112-113 (S.D. 1992); Denton v. DaimlerChrysler Corp., 2008 WL 5111222, at *2 (N.D. Ga. 2008).

14 Manieri v. Volkswagenwek, 376 A.2d 1317 (N.J. Super. 1977); Allstate Ins. Co. v. Jaguar Cars, 915 F.2d 641, 649 (fn 16) (11th Cir. 1990).

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