Learning from Wile E. Coyote: Communications Strategies to Prevent the Multidistrict Litigation Timebomb from Going Off in Your Hands
by Michael Hotra and Matt Reid
Most people have never heard of multidistrict litigation (MDL), yet the number of these cases has skyrocketed over the last 10 years. Today, almost 70 percent of civil litigation filed in U.S. federal courts goes through the MDL process, impacting corporate budgets, legal department caseload and communications strategies.1
Multidistrict Litigation – a Primer
Before we dive into the communications considerations, let’s look at what MDLs are and why they present unique challenges. Multidistrict litigation began in the 1960’s in U.S. Federal Courts to ensure legal fairness and judicial economy. Perhaps the best way to illustrate the rationale for MDLs is with an example drawn from classic Saturday morning cartoons.2
Ten coyotes – predators in Utah, Arizona and New Mexico – have each sued the fictional Acme Corporation over similar personal injuries caused by Acme’s rocket powered roller skates. Without an MDL, Acme would have to endure the pretrial fact-finding process (discovery) and skirmishes over scope and relevance (e.g., the appalling failure rate of other Acme products) over and over. Instead, the coyotes’ cases can be consolidated for pretrial purposes through the MDL process.
In an MDL, a single federal judge makes decisions once and uniformly across all 10 cases about discovery and the application of federal rules of civil procedure to pretrial matters, as opposed to 10 different judges deciding on similar issues 10 different times, with potentially 10 different outcomes. The coyotes’ cases are then, in theory, sent back to the federal district courts in which the lawsuits were initially filed and readied for trial.
Importantly, these are not class actions with a single “representative” class member, they are distinct individual claims. In the last decade there has been a proliferation of federal MDLs, many at very large scale. Instead of ten coyotes suing Acme, it’s a pack of 15,000 and if the cases were all sent back to the federal district courts (they rarely are) they would take decades, if not centuries, to try individually. Defense costs alone would likely bankrupt Acme.
MDL judges manage thousands of cases in the MDL docket and have incredible influence and discretion on how to ascertain the value of legal claims. They often rely on a process whereby they set a handful of trials called bellwethers to establish claim valuation benchmarks that determine how the MDL caseload ultimately settles.
Guidance for Communicators
- Align with your CFO and General Counsel. MDLs often carry outsize risk and cost. Depending on the size of the company and the legal exposure, the MDL and the anticipated defense costs may draw the interest of analysts, investors, and media, and require SEC disclosure for years. Key leaders need to be aligned on the legal risk that an MDL represents to the enterprise and how that risk is communicated to internal and external stakeholders, including the board, and especially around quarterly earnings and legal milestones.
- Aligning on legal and communications strategy. It’s vital for communicators to help determine a communications strategy that best aligns with legal, business and reputation goals. Remember that alignment doesn’t mean everything has to be the same – a company can, for example, pursue an aggressive media strategy while entering settlement talks, or remain tight lipped with the press while aggressively litigating a case.
- Prepare for two tracks of legal activity. Most MDL claims settle, and often companies will retain separate litigation and settlement counsel. In these circumstances messaging must be consistent and closely coordinated, particularly since settlement talks frequently leak. There may also be overlap. Verdicts in bellwether bench trials can, for example, remain pending for many months while settlement talks stall or advance.
- Establish context for bellwether trials. Bellwether trials are often closely covered by local, trade, wire service and legal reporters, especially in large MDLs, since the individual outcomes have broader implications for plaintiffs and defendants. It is important for the company to put these verdicts in perspective for key stakeholders. Individual bellwether verdicts are directionally insightful but not dispositive; a single defense verdict doesn’t zero out liability and a single large plaintiff’s verdict does not portend doom.
- Develop a third-party strategy. Bellwether trials often attract third-party interest and commentary from legal scholars, victim advocates, state attorneys general, policymakers and others. Effective MDL communicators plan for and closely monitor third party activity, identifying third parties who are supportive of plaintiffs and developing communication strategies to address their commentary and agenda, as well as identifying those who may offer perspectives that are supportive of the company.
Thanks to effective communications around the MDL process, Acme was able to reach a settlement with thousands of coyotes that brought resolution to its legal claims and certainty to its investors. Acme can now return to developing its portfolio of related products: slingshots, giant magnets, anvils and catapults that are also sold via mail order to predators in the desert southwest.
1 See: https://www.rules4mdls.com/copy-of-mdl-cases-surge-to-majorty-of (accessed February 2023).
2 Credit to author Ian Frazier as inspiration for the article and the example herein, via “Coyote v. Acme” a short story cum product liability claim brought by Wile E. Coyote against the Acme corporation (Farrar Straus and Giroux, New York, 1996.)