Defensive Strategies to Avoid Litigation and When Litigation is Unavoidable. Jennise Walker Stubbs Kelsey Copeland

Transcription

1 Defensive Strategies to Avoid Litigation and When Litigation is Unavoidable Jennise Walker Stubbs Kelsey Copeland

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3 General Tips to Avoid Litigation Determine risk (regulatory and litigation) Do not be static look for ways to improve risk profile on continuous basis Stay abreast of trends in law and litigation Assess risk and dispose of it quickly before litigation ensues

4 To Avoid Litigation: Assess Risk When is the most important time to assess risk? Entry into new industry or market New contract or business relationship Acquisition of company

5 To Avoid Litigation: Assess Risk Due Diligence Understanding emerging litigation trends Understanding regulatory and compliance issues FDA, FTC, CPSC, USDA, NAD, NITSA, FAA, etc. Analyzing current risks with existing contracts / products Insurance coverage

6 Assess Risk Regulatory Compliance Regulatory compliance review (daily, weekly, monthly, yearly): Current state of the business Currently maintaining compliance? Identify potential compliance hazards

7 Assess Risk Regulatory Compliance How to analyze? Speak with company employees Review documents Compare with regulatory requirements

8 Assess Risk Regulatory Compliance New business / market / contract Identify governing regulations and standards Identify status of compliance Identify compliance hazards Examples: Retail store seeking to become a food establishment Development and marketing of new products

9 Assess Risk Regulatory Compliance Risks associated with non-compliance: Fines Revocation of license Cessation of operations Civil litigation Criminal prosecution

10 Assess Risk Due Diligence Research every aspect of a deal to assess potential liability Leaving no stone unturned

11 Assess Risk Due Diligence Example: Acquisition of a medical device manufacturing company Assessed every product the company designed/manufactured Assessed regulatory obligations Assessed regulatory compliance and risk Assessed litigation liability on a state and federal level

12 Assess Risk Due Diligence Acquisition of a medical device manufacturing company (cont d) Determined regulatory status of products (compliance and obligations going forward): 510(k) vs. PMA devices Quality system requirements Medical device reporting requirements Recall, correction, and removal requirements Medical device tracking requirements Postmarketing surveillance studies

13 Assess Risk Due Diligence Acquisition of a medical device manufacturing company (cont d) Analysis of civil liability related to medical devices generally and specifically Analysis of the law of the home state of the purchaser and the company to be purchased Analysis of potential defenses available in those states and specific defenses available for manufacturers of the specific devices Analysis of potential damages for these types of claims

14 Assess Risk Due Diligence Acquisition of a medical device manufacturing company (cont d) Summary and analysis of overall risk of acquisition based upon regulatory issues, product liability law, and number of adverse events / recalls / prior litigation

15 Assess Risk Due Diligence Other examples: Medical device raw material supplier becoming brand device manufacturer Chemical company seeking to provide raw materials to product manufacturer

16 Sometimes, litigation is unavoidable.

17 You ve been sued. Now what? Obtain dismissal immediately Insufficient pleadings No personal jurisdiction No subject matter jurisdiction Expiration of statute of limitations Statutory grounds Improper joinder / misjoinder Preemption

18 You ve been sued. Now what? Obtain dismissal later Exclusionary motions / challenges to experts Summary judgment Change jurisdiction Remove to federal court Change venue

19 Dismissal Strategies: Insufficient Pleadings Motion to Dismiss Rule 91a (Texas) Unknown attorneys fees FRCP 12(b)(6) Re-pleading permitted Special exceptions

20 Dismissal Strategies: Personal Jurisdiction Daimler, AG v. Bauman, 571 U.S. (2014) A state court has general personal jurisdiction over a corporation if the state is the: place of incorporation and principal place of business

21 Dismissal Strategies: Personal Jurisdiction Bristol-Myers Squibb v. Superior Court of California, 582 U.S. (2017) A state court s specific jurisdiction cannot be conferred by acts within a state that are unrelated to the specific plaintiff s cause of action Example: Talc litigation

22 Dismissal Strategies: Subject Matter Jurisdiction Federal court subject matter jurisdiction Standing of plaintiff to sue Ripeness Mootness Sovereign immunity Can t be waived

23 Dismissal Strategies: Statute of Limitations When did the plaintiff know, or when should the plaintiff have known, about the injury at issue? Different SOLs for different states (keep choice of law in mind)

24 Dismissal Strategies: Preemption Supremacy Clause of the Constitution: Article VI, Clause 2: This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.

25 Dismissal Strategies: Preemption Express preemption When Congress has adopted a statute that explicitly displaces state law Example 21 U.S.C. 360k(a) (Medical device amendments to FDCA): No state... may establish or continue in effect with respect to a device intended for human use any requirement (1) which is different from, or in addition to, any requirement applicable under this chapter to the device, and (2) which relates to the safety or effectiveness of the device....

26 Dismissal Strategies: Preemption Implied preemption When federal law occupies the entire regulatory field, leaving no place for state law or When state law would conflict with federal law, either because simultaneous compliance with federal and state law is impossible or because state law thwarts the federal statutory scheme

27 Dismissal Strategies: Preemption Examples of conflict preemption: PLIVA, Inc. v. Mensing, 564 U.S. 604, 618 (2011) Impossibility preemption: Failure-to-warn claims against generic drug manufacturers are impliedly preempted; it is impossible for generic drug manufacturers to comply with state tort law while also complying with federal law Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, (3d Cir. 2016) Impossibility preemption applied to airplane manufacturer based on FAA regulations

28 Dismissal strategies: Improper Joinder / Misjoinder Multi-plaintiff cases: Do the claims arise out of the same transaction or occurrence? Plant explosion vs. product liability claims

29 Dismissal Strategies: Statutory Grounds Example: Biomaterials Access Assurance Act ( BAAA ) 21 U.S.C. 1601, et seq.: Biomaterials suppliers are immune from liability in personal injury actions under certain circumstances (1) Establish defendant qualifies as biomaterials supplier (2) Negate liability as a manufacturer (3) Negate liability as a seller (4) Negate liability for failure to meet contractual requirements

30 Dismissal Strategies: Summary Judgment Establish that there are no material issues of fact FRCP 56; TRCP 166a and 166a(i)

31 Dismissal Strategies: Challenging Experts Expert testimony required when issues are beyond the understanding of an average layperson File expert exclusionary motion to establish that (1) the expert is not qualified; (2) the testimony is not based on a reliable foundation; or (3) the expert s methodology was flawed

32 Other Options: Removal to Federal Court Federal question jurisdiction Diversity jurisdiction

33 Other Options: Removal to Federal Court Diversity Jurisdiction: Complete diversity of citizenship between Plaintiff and Defendant; $75,000 amount in controversy Fraudulent joinder / misjoinder Then, use dismissal techniques discussed previously to obtain diversity jurisdiction Issues to think about: Voluntary / involuntary rule One year rule

34 Be Aware: Current Litigation Trends Post terror attack litigation 1993 World Trade Center bombing: New York Port Authority initially found liable 9/11: manufacturers of airplanes sued Diesel exhaust Emissions monitoring suits Automobile patent litigation Fidget spinners

35 Current Litigation Trends Consumer class actions Shipping fees New Jersey Truth in Consumer Contract, Warranty and Notice Act (YES, it may apply to Texas companies) Water-related litigation Chloramine PFOA/PFOS Lead exposure

36 Current Litigation Trends Contamination / Exposure insurance litigation Benzene, arsenic, MTBE, vapor intrusion Agricultural run offs and residues Antitrust Water treatment chemical manufacturers

37 Current Litigation Trends Hydraulic Fracturing Contaminates of drinking water Releases toxic chemicals Induces earthquakes Generates pollution Water access

38 Final Thoughts Identify and eliminate risk that may lead to litigation, among other things whether through in-house counsel or outside counsel If litigation ensues, have a full understanding of the legal weapons at your disposal that will give you the upper hand

39 Questions?