Articles by Levick Experts
Mass tort litigation invariably presents a unique communications burden. In mass tort cases, liability has often already been established. Now the issue is: How much liability? Also, there are often thousands of cases filed against your company. In mass tort litigation, any comments that are made about one case can directly affect every other case of the same nature that involves the company.
Example: In July, you win a case that’s part of a mass tort litigation and you crow about it to the press. In August, your company loses the same kind of case, with the same claims and the same fact pattern, in a different jurisdiction. Now the jury retires to decide on punitives.
The plaintiff can then show your earlier press statements to the jurors for their consideration. Your gleeful expostulation sounds to them like gloating. You seem so pleased to be evading responsibility but the jurors aren’t going to let you get away with it this time. They’ll right the wrong by tacking on an extra $50 million or so in punitive damages.
It can get even worse. Assume all you do is to innocently inform the press that a case you litigated just settled for a mere $25,000. Considering the exposure in the case, that would seem a result you’d want the media to trumpet at full blast.
Yet that simple disclosure can obviate accounting procedures, actually devaluing the company itself even as it attracts unwanted SEC scrutiny. Corporations must report reserve funds for contingency liability and they use a dollar amount average to calculate what they report. That average may be based on a combination of very high numbers and very low ones.
When you tell the press that a case settled for $25,000, the analysts will do a little simple arithmetic using $25,000 as a basis for evaluating the entire reserve. The company may, in fact, be sufficiently reserved, but the one settlement figure you disclosed befuddles subsequent calculations and creates a perception of under-funding. Stock values plummet and the regulators come knocking at your door.
In mass tort cases, mandate vows of silence among all corporate spokespersons and fashion a communications campaign that supports a sound legal strategy. What should that campaign look like? What themes can be rolled out on behalf of a company that may be in bankruptcy, that is still litigating thousands of lawsuits, and that has been adjudged liable for manufacturing and marketing a deadly product a quarter of a century ago?
Take asbestos as an example. First, articulate some liability:
We will compensate everyone who has suffered asbestos-related damages as a result of our business activities. But we will also fight hard legally to ensure that we are not held responsible for false claims, for damages that are not asbestos-related, or for damages unrelated to the manufacturing and marketing of asbestos by this company.
First, you are not commenting on behavior that dates back two or three decades. That’s a fight you won’t likely win, especially in the press.
Second, the company is not trying to mitigate its liability by saying that asbestos was universally thought to be a good product in the past. True or not, the point simply won’t wash in today’s media. The far better tack is to accept responsibility rather than argue about ancient perceptions.
Having uttered the mea culpa for past actions and inactions, you can now complement contrition with a positive and socially useful stated goal:
It is essential that we protect ourselves from unwarranted liability because it is our goal to make sure that we have sufficient reserves to compensate everyone who’s justly entitled to compensation from us. Only by challenging unjust liability can we guarantee a just outcome for the people who have suffered in this situation.
The fact that 130 million people were actually exposed to asbestos, while 200 million people claimed to have been, supports the message on factual economic grounds. More than that, the company emerges as a problem solver, and a humane one as well.