Who’s Who Legal has brought together Greg Williams of Clayton Utz, Jorge Cesa of Souto Correa Cesa Lummertz Amaral Advogados and Tripp Haston of Bradley Arant Boult Cummings to discuss type and volume of work, recent trends and developments, the increasing sophistication of the plaintiffs' bar, and the legal market in their jurisdiction.
WWL: Which products have been the most common source of work in your jurisdiction over the past year? Does this mark a change from previous years, or has work remained consistent?
Greg Williams: In the past year we have seen a particular focus on medical device litigation in Australia.
This is not the first time that medical devices have been a focus of product liability litigation in Australia. However, it does suggest a shift away from pharmaceutical focused litigation of the past decade, perhaps attributable to a recognition by plaintiffs that the regulatory system for the approval of pharmaceuticals makes the proof of many causes of action difficult.
That said, it is notable that two significant pharmaceutical claims relating to thalidomide and dopamine receptor agonists have been settled within the past year.
Jorge Cesa: I do not see a focus on a specific kind of products in the judiciary, but rather a trend to intensify administrative regulation. Moreover, the Brazilian authority for Consumer Defence has been working intensively with recalls in order to enforce them, especially regarding the automobile industry. This scenario has not changed over recent years, but has intensified.
Tripp Haston: In the United States, pharmaceutical and certain medical device products liability litigation remains fairly steady. Substantial changes at the US Consumer Products Safety Commission over the past few years have resulted in an uptick in enforcement activities and related products liability litigation.
WWL: Large class actions and consolidated cases have been noted as a hot area. Would you agree that this has been the case in your jurisdiction?
Greg Williams: Class actions have been a feature of the Australian litigation landscape for some time and have been a favourite mechanism for the established firms of the plaintiffs’ bar to run significant product liability claims.
That trend certainly continues, but there are some signs that at least the more established members of the Australian plaintiffs’ bar are recognising that, while class actions have advantages for them of attracting publicity and providing a large base of potential claimants, they also carry significant risk.
In recent times we are seeing a shift away from the more established plaintiffs’ firms running product liability class actions (although they will still use the class action procedure for some other types of claims). This has let to some newer, and perhaps more entrepreneurial, plaintiffs’ firms moving into the product liability class actions arena.
Jorge Cesa: We do not have class actions in Brazil in the US Law sense, but rather collective actions. Some institutions – such as the Public Attorney’s Office, NGOs, states and municipalities – have standing to sue, which facilitates the use of such actions. Moreover, the Public Attorney’s Office – which in Brazil is also competent for civil cases – has the power to investigate all issues involved in a given case before initiating it. These investigations can be long and hard and may also represent a high investment in terms of time and money. I have no doubt that this field is the hottest one in the product liability arena.
Tripp Haston: In the United States, class action filings have declined, while consolidated federal litigations in multi-district litigation proceedings remain extremely robust. The class action filing decline is due to important federal legislation (Class Action Fairness Act) as well as recent US Supreme Court decisions (Comcast Corporation v Behrend; Standard Fire Ins Co v Knowles). Consolidated proceedings in the Philadelphia Court of Common Pleas, historically quite active, are down substantially.
WWL: Lawyers have reported further developments in the plaintiffs’ bar, with claims becoming more creative and sophisticated. Have you found this to be the case? What factors do you believe are behind this evolution?
Greg Williams: I am not sure whether this trend is true in Australia. However, we are seeing a greater diversity of firms entering the top ranks of the plaintiffs’ bar. Some of them are adopting novel marketing strategies (for example, one Australian firm employs Erin Brokovich as a spokesperson), but it is not yet clear that this translates into creativity and sophistication.
For many years, the Australian plaintiffs’ bar has been dominated by two firms, Slater & Gordon and Maurice Blackburn. In recent years these two firms have adopted dramatically different strategies. Slater & Gordon, which is listed on the Australian Stock Exchange, has focused on acquisition and expansion, both domestically and internationally. It appears to be focusing less on high-profile large-scale actions and more on unglamorous commoditised claims. One assumes that it uses efficiencies of scale to make this practice lucrative. Maurice Blackburn continues to focus on class actions, but more in the shareholder than product liability space (although it has not abandoned this sort of litigation entirely).
The shift in focus of the two traditionally dominant plaintiffs’ firms has left a gap in the market that is being filled by newer and smaller firms, such as Shine lawyers in Brisbane. However, I would dispute that these firms have yet attained a level of sophistication that matches that of Slater & Gordon or Maurice Blackburn.
Jorge Cesa: Although we can see very well-prepared plaintiff lawyers in the product liability scenario, I do not consider that the average level of plaintiff lawyers is clearly increasing. Nowadays in Brazil we have a huge number of lawyers, and some of them are highly qualified while others are not so good (ie, they are on the other end of the spectrum). So individual cases are not necessarily becoming more creative and sophisticated.
However, what we do see is an increase in the level of qualification of the prosecutors working for the Public Attorney’s Office, who are very well prepared, very well selected and many of whom are specialised in consumer law issues. This specialisation, the extent of their powers and the good conditions in which they work have been key for the development of the investigations they carry out and the cases themselves.
Tripp Haston: Blocked from establishing liability against generic pharmaceutical manufacturers by the US Supreme Court’s decisions in PLIVA, Inc v Mensing and Mutual Pharmaceutical Co Inc v Bartlett, plaintiffs’ counsel have engaged in inventive efforts to pin liability for generic pharmaceutical injuries upon the original patent-holder, or branded company, under a theory known as “innovator liability”. These efforts have failed in nearly all jurisdictions, with only a few outlier jurisdictions recognising this inventive legal theory. Plaintiffs’ inventive efforts to develop such liability are due to the growing number of generic pharmaceutical products over the past 10 years.
WWL: Has there been a change in regulatory activity this year? Which industry sectors have been most affected by any such changes? Has this changed the nature of the work you do for clients?
Greg Williams: We are seeing an increased focus by Australia’s consumer regulator, the Australian Competition & Consumer Commission (ACCC), on product safety issues. This comes as the ACCC starts to test the limits of the new powers it was granted with the introduction of the Australian Consumer Law in 2010. (The Australian Consumer Law harmonised and brought under the ACCC’s control and area that formerly involved a combination of federal and state regulation.)
In late 2013 the ACCC publicly stated that it was concerned about the safety of cheap goods imported into Australia from overseas and the adequacy of the quality assurance processes used by Australian retailers to ensure the safety of such goods.
It is my expectation that the ACCC will be proactive in taking enforcement action in the area of fast moving consumer goods and that is already resulting in an increase in the amount of legal work in the retail arena. The sorts of goods involved and the alleged losses may not be such as to give rise to product liability claims, but may well be the subject of regulator litigation or other enforcement action, which could result in fines, convictions or even representative verdicts that allow consumers to claim compensation.
Jorge Cesa: In March 2013, the Brazilian authority for Consumer Defence published a note suggesting procedures to be taken by state and municipal authorities in the event of accidents and possible accidents involving products. These procedures aim at investigating the product’s defect, informing other authorities about the problem, enforcing the implementation of the recall and punishing the manufacturer if any irregularity is proven. Consumer health and safety, which has been deemed highly important since the very beginning of the consumer protection laws, has been placed at the heart of the regulatory scenario for all sectors. It has also brought some changes in the nature of the work we provide in that our clients are more focused on avoiding future cases through our consultancy services.
Tripp Haston: If enacted, the FDA’s Notice of Proposed Rulemaking allowing generic pharmaceutical manufacturers to unilaterally change product labelling will effect a significant sea change in the pharmaceutical industry. One of the stated purposes for the proposed rule is to overturn the Supreme Court’s decisions in PLIVA v Mensing and Mutual Pharmaceutical Co v Bartlett, which recognised that most warning-based claims against generic drug manufacturers are pre-empted by federal law. Generic pharmaceutical companies, historically shielded from products liability litigation, will feel a significant pinch of liability exposure and increased monitoring costs if the rule is adopted and upheld as valid in the courts.
WWL: In terms of the legal marketplace and leading law firm players, have you noticed any significant developments? Has the product liability defence space been affected by an increasing globalisation of claims?
Greg Williams: As I have observed above, the plaintiffs’ bar has certainly been affected by a shift in focus from its two dominant players, allowing the entrance of new players into the product liability market. I expect this trend will continue and result in an increase in the general level of product liability litigation.
In the past few years the Australian legal market has been significantly affected by the entrance, for the first time, of international players at the top end of the market. As a result, a number of the important product liability defence firms are now part of either global alliances or Anglo-Australian mergers.
My own firm remains independent and has settled on a strategy on maintaining its independence and positioning itself as the country’s leading independent commercial firm.
More generally, Australia has had a long tradition of importing product liability claims that are already running in other jurisdictions. The globalisation of claims only tends to increase that propensity.
We are starting to see signs that the trend may sometimes run in the other direction, with the recent thalidomide litigation being an example of a claim that was first commenced in Australia and then spread to other parts of the world. More generally, the Australian litigation funding market, which has a number of unique features, is both exporting its significant players to other parts of the world (Bentham Capital in the United States is an offshoot of Bentham IMF, a publicly listed Australian funder) and attracting the interest of international capital.
Jorge Cesa: I have not seen any remarkable changes in the Brazilian marketplace, which remains closed to foreign law firms. In terms of cases, however, globalisation is indeed a reality. Some cases are global ones, such as those involving damages related to smoking. On the other hand, consumer protection authorities are well informed about the reality from abroad. For instance, if a recall has been initiated abroad without being repeated locally, the company will certainly be fined.
Tripp Haston: For many years now, product manufacturers have been turning to experienced regional or boutique firms to handle their litigation. This trend has only accelerated in the years following the fiscal crisis of 2008–2009 as clients have demanded greater value from their legal departments and outside counsel. Our firm and our clients have benefited from this trend. Some large multinational firms that have developed unique expertise in products litigation, notably Quinn Emmanuel Urquhart & Sullivan, DLA Piper and Hogan Lovells, remain as active as ever.
Globalisation has affected the product liability sector, as multinational product manufacturers are often engaged in related legal and regulatory proceedings in Europe, North America and Asia that must be carefully managed for consistency to effect optimal resolution.