American glean

The increase in EU claimants filing US class actions highlights the need for a consistent legislative framework for compensation claims, say Paul Llewellyn and Colleen Davies

It is trite to observe that we live in a globalised world; the banality of the observation, however, confirms its validity. Practitioners working in the product liability field have been grappling with cross-border issues for many years. Now the issues have become more complicated with the concentration of production in fewer companies, the increased global reach of major manufacturers and the growing harmonised regulatory framework in Europe.

These complexities are highlighted by the continuing allure to EU citizens of the US system of compensation and the increase in the occurrence of quasi-class actions in Europe.

Claimant referral networks

UK and US claimants’ counsel have been adept at cultivating strong professional associations. This is best reflected in the associations found between claimant law firms in US mass tort lawsuits (ie through various claimant steering committees) and within professional attorney organisations. These relationships provide the foundation for the exchange of information on specific manufacturers – including information about a particular product’s development and marketing history, product complaint trends and recall activity.

Foreign claimants in the US

It has been said that foreign claimants seeking redress in the US are like moths drawn to light. The attractions of the US forum are obvious enough:

  • access to liability theories not otherwise available, such as medical monitoring;
  • damages greatly in excess of anything that could be achieved in any European jurisdiction;
  • the sympathy of a jury rather than the forensic deconstruction of the evidence and law required of a judge;
  • discovery rules that are highly effective at inducing settlement; and
  • litigation that is without risk for a claimant under contingency fee arrangements, as compared with the invariable ‘loser pays’ costs rule in Europe.

    Despite all of these attractions, foreign claimants have faced significant difficulties in overcoming applications to oust jurisdiction on forum non conveniens grounds. Nevertheless, in recent years, UK and other EU claimants have filed US class actions against a variety of product manufacturers, including those in the automobile, pharmaceutical and medical device industries.

    Could there now be a renewed concerted effort to litigate in the US by UK claimants in particular?
    The possibility arises from the recognised difficulties in the UK of funding substantial product liability claims, particularly in the pharma sector. Legal aid is generally not available for such claims and claimant lawyers are often reluctant to undertake such cases under conditional fee arrangements (CFA). Even where they are prepared to enter into a CFA, after-the-event insurance to cover the defendant’s costs is difficult to obtain at reasonable cost and is sometimes not available at all.

    So can foreign claimants overcome forum non conveniens objections?
    A critical test in the raft of issues to be considered on a forum non conveniens motion is whether there is an adequate forum elsewhere. Historically, this has been easy to establish in respect of the UK, but because of funding difficulties there is considerable force in the argument that justice is, in effect, denied in some claims because they are impossible to fund. Justice cannot, therefore, in practice be obtained. One leading lawyer has said that his strategy in future in such cases will be to litigate in the US. He is determined to test the point.

    US lawyers in the EU

    The transatlantic traffic is not all one way. New forms of collective procedure, some very similar to US class actions, have been introduced in a number of EU countries such as Spain, Sweden and the Netherlands. Just as President Bush signed the Class Actions Fairness Act in January 2005, President Chirac was advocating the introduction of US-style class actions in France. The incongruity could only be matched by France declaring the beef burger to be the national symbol of haute cuisine and by President Bush declaring that the war in Iraq was a dreadful mistake and henceforth he would endorse French foreign policy.

    There are a number of practical constraints that will prevent the new EU collective procedures producing the recognised excesses of US class actions: the absence of juries, contingency fees, punitive damages and the existence of the ‘loser pays’ rules. It cannot be assumed that some of the constraints will not be removed or at least undermined. The belief of leading US class action claimant lawyers that Europe will become a fertile litigation culture was highlighted by an interview in The Lawyer on 24 October 2005 with Michael Hausfeld. Stated to be the head of a unique international network of likeminded claimant lawyers, he described his task as “a crusade to export America’s legal system around the world”.

    International discovery coordination

    Building upon these relationships and legislative trends, claimants’ counsel also share and coordinate discovery between foreign venues. For example, by having UK claimants’ counsel associate in US litigation, they become signatories to protective orders and thereby gain access to a product manufacturer’s discovery documents or witness depositions. Similarly, the joint retention of experts permits cross-border development of claimant liability themes, particularly on causation and damage theories.

    Claimants’ counsel can also coordinate to expose differences in how a product manufacturer handled a product and the development, manufacturing or marketing stage of a product cycle. For example, in US mass tort litigation, claimant lawyers will often focus on product warnings that took place in the UK or another foreign venue – but not in the US. This alternative focus becomes the cornerstone of liability or punitive damage arguments with assertions that injuries could have been avoided in the US had the manufacturer followed foreign labelling practices.

    Electronic discovery

    Claimants’ counsel in the US now routinely serve broad-based discovery demands requiring electronic data mining and production in jurisdictions outside the US. Such discovery is enormously expensive and burdensome to US manufacturers, which face related production, translation and review costs. Privacy and privilege laws of the foreign jurisdiction must also be considered prior to data transport to the US.

    Proactive defensive measures

    Given these trends, product manufacturers doing business in both the US and the EU have to be vigilant to ensure their defence counsel are equally coordinated and armed to combat these strategies. Proactive efforts must be undertaken to anticipate and counter these tactics on a substantive and procedural basis. Success is best ensured by a product manufacturer anticipating that the claimants’ bar will employ these crossborder litigation tactics.

    Companies doing business in the US and the UK should consider:

  • developing strong networks between their own defence counsel;
  • protecting confidential business documents from exchange outside the parameters of a given lawsuit by way of protective orders;
  • employing media advisers to monitor media trends; and
  • perhaps most importantly, scrutinising differences between manufacture, marketing and product-complaint tracking practices in the US and the EU to ensure consistency in the company’s product safety measures and regulatory compliance efforts.

    Paul Llewellyn is UK head of product liability and Colleen Davies is a partner at Reed Smith