How li­a­bil­ity can snow­ball

Bloomberg Businessweek (North America) - - Companies/industries -

de­fect cases against big com­pa­nies have been re­solved in this way. “You see it a lot with drug cases,” says at­tor­ney Bob Lang­don, who rep­re­sents dozens of plain­tiffs in ig­ni­tion-switch law­suits against GM but isn’t in­volved in the Spain-barthelemy case. “You get a $100 mil­lion ver­dict, and you don’t see an­other trial,” he says.

Ja­pan’s Takeda Phar­ma­ceu­ti­cal faced more than 3,000 law­suits over its Ac­tos di­a­betes drug. The com­pany lost three of the first four test cases that went to trial claim­ing the drug in­creased users’ risk of blad­der can­cer. Takeda suf­fered a blow in 2014 when a fed­eral jury in Lafayette, La., de­liv­ered a $9 bil­lion dam­ages ver­dict. A judge later ruled the award was ex­ces­sive and cut it to $36.8 mil­lion. Takeda lost a few more cases be­fore reach­ing a $2.4 bil­lion set­tle­ment in 2015 to re­solve all lit­i­ga­tion.

Plain­tiffs’ lawyers say there’s a dis­in­cen­tive in auto-prod­uct-de­fect suits. Each case costs $300,000 to $500,000 to try, ac­cord­ing to Lang­don. Pur­su­ing small or risky claims can be un­prof­itable for lawyers, who don’t get paid un­less their clients win. They won’t take on a case with lim­ited prospects for dam­ages or a big set­tle­ment.

State court cases can also en­cour­age par­ties to set­tle. In the Toy­ota sud­den-ac­cel­er­a­tion lit­i­ga­tion, in which plain­tiffs claimed flaws caused ve­hi­cles to speed out of con­trol, hun­dreds of suits were com­bined be­fore a fed­eral judge in Cal­i­for­nia. They never went to trial be­cause the com­pany lost a jury trial in state court in Ok­la­homa in 2013, spurring Toy­ota to set­tle ev­ery­where.

GM is keep­ing up its fight, es­pe­cially on the early cases. “Just be­cause a claim is filed, it doesn’t mean it’s valid,” GM’S Cain says. “At least 37 other driv­ers were in­volved in ac­ci­dents that night on the same bridge due to un­ex­pect­edly icy con­di­tions and in­clement weather,” Cain says of Spain and Barthelemy’s

John­son & John­son ASR ar­ti­fi­cial hip Plain­tiffs al­leged the im­plants were de­fec­tive. In 2013 jurors or­dered J&J to pay $8.3 mil­lion in the first case to go to trial. Later the com­pany set­tled other cases for $2.5 bil­lion; it raised the to­tal to about $3 bil­lion in 2015. The bot­tom line GM is re­ly­ing on test cases in state and fed­eral court to set set­tle­ment val­ues for hun­dreds of faulty-ig­ni­tion-switch claims.

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