Four Risks to Expect When Facing a Product Liability Claim

Risky Business:

Four Risks to Expect When Facing a Product Liability Claim

Kevin M. Quinley

Product liability litigation can be disorienting for medical device professionals. In fact, device executives ensnared in the product liability process can relate to the famous line from the movie“The Wizard of Oz,”when Dorothy comments to her dog Toto: “We’re not in Kansas anymore.”

Since managers at medical device companies can find the litigation experience jarring, it is important to calibrate expectations and arm medical device professionals with a better idea of what to expect. Knowing this and being braced—even if just psychologically prepared—can help prevent litigation from becoming a major business distraction. What can device professionals expect if they become defendants in product liability litigation?

Here are four prominent risks to expect:

1. Reputational Risks. Jury vengeance is problematic in the post-Enron world.Jury attitudes toward corporate defendants have morphed ominously. Specifically, juries are more likely to believe that corporations did something wrong if they have been accused. Juries now are more likely to believe that, where there’s smoke there’s fire. Over half of all “blockbuster awards”—those totaling more than a $100 million—have occurred in the last 10 years.

New business heroes are whistleblowers who uncover corporate wrongdoing. Resentment regarding CEO pay and perceived corporate excess can fuel Robin Hood ethics, where juries rob from the rich and give to the poor. According to “Punitive Damages: How Juries Decide,” a book by a group of economists and legal scholars, juries are quick to impose harsh penalties.

Using mock trials, authors found that jurors often:

• Systematically ignore instructions from judges;

• Are easily swayed by amounts requested by plaintiffs; and

• Mete out overly harsh punishments to companies for failing to deal with low-probability risks that they themselves wouldn’t have addressed had they been running the companies.

In addition, jurors do not like to hear about corporate cost/benefit analyses. Any risk-benefit analysis—honest or not—may get device firms in trouble with juries. It does not help when former drug company “detail men” state in interviews with personal injury lawyers that “manufacturers make a stark cost-benefit analysis. Are we going to lose more money getting sued over our drug than we would gain by lying about it?”1 Jurors often deem reprehensible the notion that a device firm puts an economic value on life. In everyday life, though, jurors often make tradeoffs between safety and things such as cost or convenience.

2. Risks from corporate documents. The latter includes, but is not limited to, hard copy documents, schematics, drawings, doodlings and quality assurance records. Personal injury attorneys likely will want all records pertaining to the medical device, its design and its manufacturing. They will seek notes of engineers and the minutes of quality meetings pertaining to the product. The mother lode is if opposing counsel can find a document that says something such as: “A $10 per product retrofit or re-design would fix the hazard, but it would be cost-prohibitive and nuke our ability to hit third-quarter numbers,” or “If we announce the issue to our doctor and hospital users, it’ll erode our market share and competitive edge versus Company X.”

Imagine an email message being magnified to the size of a three-foot by four-foot trial exhibit.
Examples of toxic emails that sunk some companies are:

• $3.75 billion settlement in Fen-phen litigation; email: “Do I have to look forward to spending my waning years writing checks to fat people worried about a silly lung problem?”

• In a sexual harassment suit, an oil company paid $2.2 million. Emails included “25 Reasons Why Beer is Better than Women.”

• An investment company had emails referring to stocks they touted as “pieces of junk” or “pieces of crap.” These emails were discovered by former N.Y. Attorney General Eliot Spitzer and led to a $100 million settlement.

While some of these examples come from outside the product liability or medical device realm, they are instructive nevertheless. These are “smoking guns” that will help personal injury attorneys hit pay dirt and seek punitive damages.

Opposing attorneys also likely will want all medical device reports (MDRs)—incident reports—that the manufacturer has filed on the product. If the device manufacturer produces these, the reports need to match up with what the plaintiffalready has pulled from a Freedom of Information Act request. Maybe the lawyer doesn’t really need the MDRs—he or she has them already but wants to catch the firm saying something different from what the manufacturer told the U.S. Food and Drug Administration.

Plaintiff attorneys will try to get ALL emails passing back and forth; even those off hard drives when you think they have been deleted. Chances are, they are accessible on servers, archives and backups.
The “DEL” key does not get rid of emails. Electronic discovery—or e-discovery—is burgeoning.Electronic discovery is much more expensive than paper discovery. The reason seems counter-intuitive: Firms are producing more information than ever before. Corporate execs, who a decade ago kept all files in a few cabinets, now have hundreds of times that amount of material stored on computers.

Often, email replaces hallway conversations. Then there are instant messages, websites and other types of new evidence that never existed before. Businesses save a high proportion of this information because they can store it relatively cheaply. Collecting the material is just the initial expense. Expenses zoom when lawyers must review the mountains of data created by the Information Age. The overall bill is so high that device companies may settle cases with no merit simply due to e-discovery costs.

3. Risks from ex-employees (especially the disgruntled kind).Plaintiff lawyers often want to show that financial considerations trumped quality and safety factors. In probing issues pertaining to a device’s design, development and manufacture, plaintiff lawyers seek the mother lode. The latter would be a former employee with an axe to grind about a company and its device. If attorneys can find an ex-employee who says he or she warned against a particular design or manufacturing decision that would have made the device safer, the plaintiff has turbo-charged the case for defect and punitive damages.

A vivid example of former employee headaches comes from recent automotive product liability litigation. An in-house attorney for a car manufacturer was tasked with producing electronic documents that would help the company fight multiple lawsuits due to vehicular rollovers. The lawyer later claimed the company fired him when he refused to hide documents. Plaintiff attorneys are pouncing on this in building their case.

“OK,”some device execs might think,“I don’t work for a car company.”True, but maybe your company had a layoff or merged with another firm. Key people needed for device defense have no further ties to you. This can provide a happy “hunting ground” for disgruntled ex-employees.

4. Risk from depositions. Plaintiffs may want to depose those in positions of corporate power. When personal injury lawyers take depositions of corporate representatives, they look for sound bites—even out of context—that they can use to portray the company as a bad corporate citizen. Plaintiff attorneys fish for sound bites.

For example, in one case, during a long deposition, the plaintiff attorney asked a corporate CEO,“What rules do you use and play by?”The CEO replied,“the golden rule.”The attorney began to move on but then—as an afterthought—asked what the CEO meant. The CEO’s reply?“He who has the gold, rules. ” That became the theme for the plaintiff’s case—a very effective theme. Some successful plaintiff attorneys say their goal is to get corporate executives to say impolitic things and then use those statements as their theme against the companies.

These four risks represent potential pitfalls for medical device firms that face product liability claims. In future articles, we will shift the focus from raising consciousness about these risks and toward discussing techniques for device firms to use to mitigate and manage these perils. Dorothy was right. We’re not in Kansas anymore. We are, unfortunately and occasionally, in the topsy-turvy world of product liability. Eventually, Dorothy got back to Kansas. With the right risk-management techniques, medical device firms can get back to equilibrium while facing liability challenges.

Reference:
1. Shahram Ahari, ex-drug rep quoted in “Drug Reps and the Art of Manipulation,”Trial, June 10, 2010, p. 30.

Kevin Quinley is vice president, Risk Services for Berkley Life Sciences, LLC. The views expressed here do not constitute legal advice, are his own and do not necessarily reflect those of Berkley Life Sciences or its customers. You can reach him at [email protected].