How to Not be The Last Man Standing
In a Products Liability Lawsuit
Presenters
• Nick Brown, CEO, Global Aerospace, London, England
• Co-lead underwriter of the Aircraft Builders Council,
(ABC) in London, England
• Gary Fitzpatrick, Partner, Fitzpatrick & Hunt, Collier, Pagano,
Aubert, LLC
• Lead Counsel, Aircraft Builders Council (ABC)
• Rick Roberts, Ensign-Bickford Ind.
• RIMS Board of Directors
• President, Board of Trustees of the ABC
Today’s Objectives
• Discussion of a case study on products liability
• Fiction but based on real cases
• Dramatization and then analysis of what went wrong
• Lessons learned to make sure your company is not
caught short when sued for products liability
• Don’t want to be the “Last Man Standing”
• May or may not want to be the second to last as well
flying you to the hidden Pelagosia
PELAGOSTOS ISLANDS, Oceania
Unthreaded Corporation
P r e c i s io n M a c h in in g
DETROIT,
Michigan
DETROIT,
Michigan
BIGJET
DALLAS, Texas
Avionics and Systems
CHICAGO, Illinois
ZETA
HYDRAULICS, INC.
CLEVELAND, Ohio
LOS ANGELES, California
Fritz & Smith LLP
NEW YORK, New York
Supersonic
SYNDICATE 7534
LONDON, United Kingdom
Scenario
• Breaking News – Plane crash in Pelegostos Islands –
all 74 on Board are killed
• Bigjet 500 operated by Air Gosto crashed in a lagoon and
is a total loss
• Passengers
• 68 Passengers
• 3 from Singapore, one with an address in Texas
• 1 from Australia
• 4 French tourists
• 6 crew members (all from Pelegostos Islands)
Preliminary Facts
• At first - the cause of the accident is unclear
• Witnesses report having seen the pilot and co-pilot
drinking in a bar near the airport the night before the
flight
• The Pelegostan Air Safety Board takes control of the
investigation
The First Year After the Accident
• Law suit has been filed in Texas Court
• 72 decedents name the following in the lawsuit:
• BigJet
• Unthreaded
• Dated
• Zeta
• Aerovideo
• The lawsuit alleges unspecified aircraft design issues and
product failure
• BigJet files an FNC motion – DENIED!!
Litigation Process
• Plaintiffs race to the court house
• Wide net used to get to even smallest component
manufacturer(s)
United Airlines Sioux City
Accident Litigation
• Defendants
• United Airlines
• McDonnell Douglas
• General Electric
• Alcoa
• Titanium Metals, Inc.
• Reactive Metals, Inc.
Litigation Process
• Plaintiffs race to the court house
• Wide net used to get to even smallest component
manufacturer(s)
• Litigation holds
• Electronic discovery responsibilities
• Complete product history from original design through
service history
• Relevant contracts – customers, OEM, vendors, suppliers,
hull claim
Two Years Post Accident
• Pelegostan Air Safety Board report is inconclusive –
broadly exonerates the pilots and airline and points to
possible malfunction of the aircraft
• NTSB report refutes evidence of malfunction and
concludes probable cause was incapacity of pilots due to
alcohol consumption
• Fritz & Smith are coordinating efforts with other
defendants
Accident Investigation
• Daily contact/briefings with Company’s investigation
team on scene
• Inspections/testing of company parts/protocols/reports
• Interviews of company personnel (w/ counsel)
• Warnings, Service bulletins, customer letters
• Review of draft accident & group reports
• Liability issues/exposures and defenses are now
more defined
Taking Stock
• BigJet is considered the prime defendant
• Unthreaded is incensed as there is no evidence their part
failed in any way
• Supersonic claims manager suggests that a formal
defense sharing agreement should be reached with
BigJet early in the process
Contact with Other Parties
• Early dialogue/communication among counsel and
insurers
• Operate in a small world these days
• Contacts/communication from Plaintiffs’ counsel
• Gathering early intelligence on theories
• Possible early settlements by airline operator
• Include other parties/manufacturers on Releases
• Possible early funding/sharing agreements discussions
What is a Joint Defense Agreement?
•
•
•
•
Parties can exchange confidential information
In furtherance of common defense or interest
Preserve privileges already attached to such information
Can include shared work product, legal memoranda and
investigation
Three Years Post Accident
•
•
•
•
Significant discovery has been done on BigJet
Limited discovery on Unthreaded
No FORMAL JOINT DEFENSE AGREEMENT in place yet
Fritz & Smith thinks Unthreaded should be ready to try
the case due to weakness of plaintiff’s case on them
• INFORMAL verbal agreement with BigJet that
Unthreaded can have access to BigJet’s expert witnesses
• Fritz & Smith files summary judgment to dismiss
Unthreaded
3.5 Years Post Accident
• Mediation occurs
• F&S and Unthreaded counsel attend
• Supersonic does not send anyone
• Plaintiff demand is $25,000,000 from all defendants
• Aerovideo & Zeta have been dismissed (no payment)
• Dated has settled for $100,000 and is out of the claim
• BigJet offers $3,000,000 – REJECTED
• Mediator – Unthreaded can get out for $1,000,000
• Fritz & Smith and Unthreaded in response demand to be
released without payment like Aerovideo/Zeta - REJECTED
Later or Final Stages
• Are the JDA’s still holding together?
• Settlement Discussions
• Jointly through agreed funding/sharing agreement or
separate discussions
• Mediations
• Gaps can be finally bridged at this point
Assessing Trial Prospects
• Remaining line up of parties/defendants
• Focus groups/mock jury presentations
• Realistic assessment of liability
• Damages and exposures
• Judge, jury pool and applicable law
• Prior settlements and set-offs
• Realistic assessment of total trial costs
Four Years Post Accident
• Mediation Ongoing
• Supersonic again does not send anyone
• Unthreaded’s Summary Judgment –DENIED in the interim
• Fritz & Smith suggests putting up a joint offer with
Unthreaded putting up $500,000
• BigJet makes its own offer of $10,000,000 and settles.
• BigJet is now out of the claim
• Unthreaded’s offer of $500,000 – REJECTED
• Unthreaded Has Become:
The Last Man Standing
Post Mediation
• Plaintiff’s make final offer to Unthreaded
• $10,000,000 demand
• This is rejected by Fritz & Smith and in-house counsel
• Supersonic is only informed in a report from Fritz & Smith
after the event
Trial
•
•
•
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Trial is in Texas
Court rules NTSB report inadmissible
Unthreaded can’t use “drunk pilot” defense
BigJet does not make expert witnesses available to
Unthreaded
• Court applies Texas law for damages
• Jury Finds Unthreaded liable
The Award
• Unthreaded loses jury verdict
$260,000,000
Claims Prevention/Risk Mitigation
• Product Liability Seminars
• Product Integrity Committees
• Accident Investigation Procedures
• Have a “Go Team” Prepared in Advance
• Record Retention Policies – Follow Them
• Electronic Discovery Responsibilities
• Product Tracking Procedures
• “Duty to Warn”
• Contract Reviews – customers, vendors & suppliers – for
warranties and indemnities
In Summary
• Work as a team with your counsel and insurer
• Ensure effective communication
• Never underestimate the potential risk even if you believe
you are not liable
• Know the warning signs and don’t ignore them
• Pursue cooperation with other insureds
In Summary
• Work as a team with your counsel and insurer
• Ensure effective communication
• Never underestimate the potential risk even if you believe
you are not liable
• Know the warning signs and don’t ignore them
• Pursue cooperation with other insureds