The Early Bird Wins the Case

Evaluating and assessing billion-dollar exposures before it’s too late

May 25, 2022 Photo

You don’t need years of discovery and a fortune in legal fees and costs to posture a catastrophic claim for resolution. It can be done pre-litigation or relatively early in the litigation—before the damages mount; before parties, counsel, and others become invested to the point when emotion clouds reason and potentially sets the stage for a “nuclear” verdict.

Specifically, the opportunities to initiate resolution discussions can be at any of the following times:

•     Pre-litigation.

•     Before any significant litigation activity but after universe of cases is known.

•     While motions to dismiss are pending.

•     During fact discovery (if motions to dismiss are not granted).

•     While motions for summary judgment (MSJ) are pending.

•     After motion for summary judgment/pre-trial (if MSJ not granted).

•     During trial.

•     After verdict/on appeal.

Two steps are necessary, however, before resolution is attempted, and timing is everything.

Step One: Determine the Company/Insured’s Exposure

The level of exposure or number of potential plaintiffs and defendants are key variables in adjusting the strategy. Determining exposure must be done holistically and precisely and include the following:

•     Define victims, fatalities, and injuries to assess damages.

•     Research media and social media for information regarding victims to determine injuries and backgrounds, potential witnesses that may be relevant to the investigation and likely litigation, and other potential claims and claimants to incorporate into the exposure analysis.

•     Classify and categorize injuries to inform damages and bifurcate plaintiffs.

•     Prepare a preliminary damages model, ideally automated so that it can be updated continually and optimized as additional information becomes available.

Since little, if any, discovery will have been conducted pre-litigation or at an early stage in the litigation, look to social media and news media for valuable information. It is tantamount to free discovery and, in today’s world, a treasure trove of important details. One note of caution: This information is not provided under oath and verified, but it is still useful in evaluating and assessing exposure at an early stage.

We have developed the following classifications of injuries and damages model to be used in mass casualty events:

•     Critical—Permanently disabled. Traumatic brain, spinal, major abdominal or chest injuries requiring critical care, rehabilitation or long-term care, lengthy hospitalizations.

•     Deceased—Self-explanatory. Died as a result of the incident immediately or in the aftermath.

•     Severe—Major hospitalizations/surgeries due to major body system injury requiring critical care.

•     Moderate—Injury to extremities requiring hospitalization, treatment or minor surgical repair, likely in ER or outpatient facility. No broken bones or major organ damage.

•     Minor—Injuries such as lacerations, bruises, not requiring extensive medical treatment or hospitalization.

•     Emotional Distress, Moderate—Psychological injuries such as intentional infliction of emotional distress, negligent infliction of emotional distress, and post-traumatic stress disorder, seeking treatment by psychiatrist/counselor.

•     Emotional Distress, Minor—Minor psychological injuries, no counseling.

•     Indirect (Not in Attendance)—Indirect emotional claims exposure through media. This would create new law, but it is possible given the live broadcast.

Based on the above, determine—as best as possible—potential exposure and note critical caveats and outstanding information that could impact the evaluation. Once the injuries are classified, assess their exposure. We recommend using high/low numbers for exposure based on jury verdict reports for similar injuries as close to the venue as possible.

Step Two: Create Leverage for Negotiations and Fracturing Plaintiffs

Understanding your strengths will help improve your negotiation and settlement posture. Discount your exposure model by the strength and leverage in your case to come up with a reasonable assessment of total exposure for the case. Leverage is strength, and it gives the plaintiff’s counsel a downside, making them pause and think about the weaknesses as well as the strengths of their case.

It is important here to point out that the incident likely will create extraordinary sympathy for the victims. And, against this backdrop, the challenge is to bring the focus on legal defenses and position to concentrate on law, and not emotion. The legal team should be laser-focused on the development of defenses while the crisis management team deals with the daily emotional strings of the public. Everyone has tasks to perform.

Some additional steps:

•     Review and analyze all legal defenses to improve the insured’s legal position and potential outcomes. For example, where applicable, consider the Protection of Lawful Commerce in Arms Act (PLCAA) Congress passed to protect firearms retailers and manufacturers from certain lawsuits seeking damages arising out of the criminal conduct of third parties. This PLCAA defense could be put forward at the motion to dismiss stage and could require the dismissal of the entire suit. (See In Re Academy, Ltd. d/b/a Academy Sports + Outdoors, TX. S. Ct., June 25, 2021).

•     Consider pleading affirmative defenses up front and know the jury questions and instructions for each as a guide to the discovery that is needed to develop them.

•     Although plaintiff’s counsel chooses the battlefield, determine if you can remove to federal court or transfer to an out-of-state court, as that is traditionally more advantageous for defendants. However, as this is a jurisdiction-specific inquiry, be sure to consult local counsel for their knowledge and experience.

•     Exercise peremptory challenges of judges strategically.

•     Use motions to dismiss and preliminary motions where they can be credible and available tools to create leverage.

•     Consider outcome-determinative motions as early as possible and weigh the potential impact on the litigation and capacity to advance resolution, even if unlikely to be successful in court. Posture mediation with decisions on such motions pending to capitalize on potential leverage.

•     Consider declaratory actions to go on offense and give plaintiff’s counsel something to deal with and think about, while creating leverage for the defense.

•     Consider the likelihood of potential multidistrict litigation and coordinate with local counsel in respective jurisdictions—ideally local counsel from the regional offices of a large national law firm—for organized and orchestrated execution of litigation strategy.

Early case resolution is your friend and not your foe. While some time will be needed to methodically answer the billion-dollar question of what a catastrophic case is worth, the faster one can answer, the faster one can achieve resolution and closure for all. Winning here is not just about saving years of litigation costs and minimizing risks, but saving heartache, saving a company, jobs, and reputations. It’s about saving what’s priceless.

About The Authors
Multiple Contributors
Stratton Horres

Stratton Horres, retired, was most recently senior counsel at Wilson Elser Moskowitz Edelman & Dicker LLP.

Karen L. Bashor

Karen Bashor is partner at Wilson Elser.

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