STATEMENT OF

THOMAS J. McLAUGHLIN

PERKINS COIE LLP (SEATTLE, WA)

ATTORNEYS FOR

THE BOEING COMPANY

BEFORE THE

SUBCOMMITTEE ON COURTS AND

INTELLECTUAL PROPERTY

COMMITTEE ON THE JUDICIARY

UNITED STATES HOUSE OF REPRESENTATIVES

REGARDING

H.R. 2112

"MULTIDISTRICT, MULTIPARTY, MULTIFORUM TRIAL JURISDICTION ACT OF 1999"

JUNE 16, 1999

SUMMARY OF TESTIMONY OF THOMAS J. McLAUGHLIN

PERKINS COIE LLP

(Attorneys for The Boeing Company)

Mass tort accidents commonly result in numerous lawsuits filed in several different states, and in both state and federal courts.

Boeing has had practical experience with the problems and inefficiencies such lawsuits can create, and believes that H.R. 2112 will significantly reduce many of these problems.

Multiple lawsuits in different courts can:

increase the litigation costs of both plaintiffs and defendants;

burden witnesses and the parties with duplicative discovery;

produce inconsistent rulings on identical issues;

delay resolution of lawsuits; and

waste judicial resources.

Courts are currently consolidating cases to the extent they can under existing law--normally with the full support of the parties--and have demonstrated the benefits that can be achieved by even partial consolidation.

H.R. 2112 addresses the two main impediments to full consolidation:

the inability--following the Lexecon decision--to consolidate cases within the federal system for trial of common issues as well as for pretrial proceedings; and

cases that currently must remain in state courts because of limitations in federal statutes on jurisdiction and removal.

The additional burden on federal courts will not be significant, since most mass tort accidents generate federal proceedings anyway, and cases consolidated under H.R. 2112 may be remanded, where appropriate, at the time individual damage trials become necessary.

A uniform choice-of-law procedure will significantly reduce legal costs in these cases, but:

there should be no requirement that all issues are controlled by a single law;

there should be a set of presumptive rules applicable to the various categories of issues likely to arise.

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE,

My name is Thomas J. McLaughlin. I am a partner at the Seattle, Washington law firm Perkins Coie LLP. I have represented The Boeing Company for many years in litigation arising from airplane accidents.

I am pleased to appear before the Subcommittee to testify on H.R. 2112, the "Multidistrict, Multiparty, Multiforum Trial Jurisdiction Act of 1999." Boeing has had some practical experience with lawsuits of both types addressed by this legislation. We have experienced firsthand the procedural problems these lawsuits can create, and we believe this bill will go a long way toward solving several of these problems. We are therefore supporting the bill. I hope that testimony from the practical perspective of a litigant in these types of lawsuits will assist the Subcommittee in its consideration of the bill.

H.R. 2112 is applicable generally to multiple lawsuits arising from a single accident. The bill would eliminate two major impediments to consolidation of these lawsuits in a single forum--(1) limitations on the ability of the federal courts to consolidate cases that are within the federal system; and (2) the inability to consolidate cases that are outside of the federal judicial system.

Although air travel is one of the safest forms of travel, aviation accidents can and do occur. In such accidents, the injured passengers and crew typically are from numerous states and sometimes foreign countries. These individuals, or their families, hire their own attorneys. Often these attorneys reside in the plaintiff's hometown. Just as often, lawyers are hired who specialize in aviation and mass tort lawsuits and who may practice in cities far removed from the plaintiffs' residences. The various plaintiffs' lawyers usually file their lawsuits in various states, in both federal and state judicial systems. Typically, the forums in which suits are filed include (1) states in which one or more plaintiffs reside; (2) major cities such as New York, Los Angeles, and Chicago (where the specialist aviation attorneys have their offices); (3) forums where jurisdiction happens to exist over all the defendants a particular plaintiff wishes to sue; and (4) the forum in which the accident happened. In other words, the combination of a large number of plaintiffs with different residences, several sets of lawyers with offices in different cities, and various places where suit can possibly be filed typically results in lawsuits being filed in a multitude of different states.

Aviation accident lawsuits also tend to involve multiple defendants. The defendants sued by plaintiffs typically include the airline operating the airplane, the manufacturer of the airplane, and the manufacturers of the engines or other subcomponent parts suspected of being a cause of the accident. In addition, and depending upon the circumstances of the particular accident, plaintiffs may add defendants like the company that provided maintenance or overhaul services for the aircraft, the company that trained the flight crew, or even the U.S. government on claims such as negligence by the flight controller or weather-reporting service.

Thus, it is common after a serious accident to have many separate lawsuits filed, in several states, in both state and federal courts, with many different sets of plaintiffs' lawyers and several different defendants.

Despite this multiplicity of suits, the principal issue that must be resolved first in each individual lawsuit is virtually identical: Is one or more of the defendants liable? Indeed, in lawsuits arising out of major aviation disasters, it is common for the liability question to be bifurcated and resolved first, in advance of any trial on individual damage issues.

The waste of judicial resources--and the costs to both plaintiffs and defendants--of litigating the same liability question several times over in separate lawsuits can be extreme. Diverse sets of lawyers would normally be involved in each lawsuit, reflecting the different plaintiffs and different defendants in the suit. Different expert consultants and witnesses may be retained by the different plaintiffs' lawyers handling each case. The court in each lawsuit can issue its own subpoenas for records and for depositions of witnesses, potentially conflicting with the discovery scheduled in other lawsuits. Critical witnesses may be deposed for one suit and then re-deposed by a different set of lawyers in a separate lawsuit. Identical questions of evidence and other points of law can arise in each of the separate suits, meaning that the parties in each case may have to brief and argue--and each court may have to resolve--the same issues that are being briefed, argued, and resolved in other cases, sometimes with results that conflict.

From this it is apparent that consolidation of multiple cases arising out of the same major accident would be efficient, would reduce delay, and would reduce the expense to the parties and to the courts. As one might expect, consolidation is already occurring--to the extent it can under existing rules. It has been our experience that courts will consolidate lawsuits stemming from the same accident to the fullest extent possible under the current rules, normally with the support of all parties. The problem is not a dispute over whether further consolidation is desirable, but rather the lack of a legal mechanism or procedure to do so.

Federal courts have for many years strived to achieve the benefits of consolidation. They have used existing rules and common law principles to transfer lawsuits to the most convenient forum within the federal court system or, in the instance of foreign accidents having little connection with the United States, to dismiss lawsuits upon conditions that permit refiling of the claims in a more convenient foreign forum, where other lawsuits may already be pending.

Even the partial consolidation possible under the current rules has proven tremendously beneficial in reducing delays, litigation costs, and the drain on court resources. In such cases, the courts frequently establish a steering committee from among the various plaintiffs' lawyers to act as lead counsel, who then divide up among themselves the discovery motion and briefing tasks in the manner most beneficial and efficient for them. This efficiency reduces the burden on plaintiffs. Discovery is coordinated by the steering committee and the results are analyzed and shared among all parties at the same time. Plaintiffs in consolidated cases are often able to use the same liability consultants and experts, producing savings on one of the largest expenses of modern-day tort litigation. Disputed issues regarding choice of law, evidence, etc. are briefed, argued, and decided once with a uniform result, rather than separately in different lawsuits with possibly conflicting results. The consolidation is usually ordered in a forum that is most convenient for the majority of the parties and witnesses, again reducing delay, the expenses of travel, and other costs.

However, the consolidation that can be achieved by the federal courts under existing rules is incomplete. The basic benefit that we see to H.R. 2112 is that it will improve the federal judiciary's ability to fully consolidate suits arising out of the same major accident.

Section 2 of the bill, addressing the first of the impediments I mentioned earlier ("limitations on the ability of the federal courts to consolidate cases that are within the federal system"), would permit lawsuits consolidated for pretrial purposes by the Judicial Panel on Multidistrict Litigation before a single federal district court judge to be consolidated for all purposes, including trial. Currently, mass tort and other kinds of related cases "involving one or more common questions of fact" filed in different federal courts are often consolidated through the multidistrict litigation ("MDL") procedure under 28 U.S.C. § 1407. However, actions may be consolidated under Section 1407 only for "pretrial proceedings." Trial of common issues such as liability, or punitive damages, cannot now take place in the consolidated forum (or "transferee court") under Section 1407. This limitation can be extremely adverse to the interests of the litigants and the courts. There are obvious efficiencies to be gained from trying the common questions in a single forum, before a court that has become thoroughly familiar with the factual and legal issues in the lawsuit through the pretrial process.

Prior to 1998, this often undesirable and inefficient limitation of the MDL procedure was frequently countered by asking the transferee court before which the cases were pending for coordinated pretrial proceedings under Section 1407 to utilize another section, 28 U.S.C. § 1404, to transfer all the actions to itself for trial. However, Section 1404 is itself subject to substantive as well as jurisdictional and venue limitations. More significantly, the Supreme Court in 1998 ruled that a transferee court may not transfer cases to itself for trial. The Court in the Lexecon decision focused on a portion of Section 1407 that requires that each action consolidated for pretrial proceedings "shall be remanded by the [MDL P]anel at or before the conclusion of such proceedings to the district from which it was transferred unless it shall have been previously terminated." The end result, post Lexecon, is that a transferee judge cannot transfer all cases to itself or to another efficient single location.

The partial consolidation possible in 1999 certainly produces a significant measure of efficiency and cost-reduction benefits for the litigants as well as the courts. What is needed is a statutory revision that will permit a transferee court to do what it used to before the Lexecon decision.⁽¹⁾ H.R. 2112 will do this.

Section 3 of H.R. 2112, addressing the second major impediment to consolidation of lawsuits in a single forum mentioned above ("the inability to consolidate cases that are outside of the federal judicial system"), is applicable to multiple lawsuits filed in both state and federal courts arising from accidents in which twenty-five or more people have been killed or seriously hurt. Current federal statutes permit some, but not all, cases arising out of a single major accident to be filed in federal court, and permit some, but not all, such cases filed in state court to be removed to federal court.

The result is that some, but not all, cases are consolidated. This happens not because full consolidation is undesirable, but because current federal statutes restrict the ways in which consolidation can occur--apparently without any intention to limit consolidation. For example, plaintiffs who reside in the same state as any one of the defendants cannot file their cases in federal court because of lack of complete diversity of citizenship, even if all parties to the lawsuit want the case consolidated. This problem arose in connection with the Air Florida 737 that crashed into the Potomac River in 1982, after taking off from National Airport on a flight to Florida. In that case, the Florida citizens could not sue the Florida-based airline in federal court.

For those cases that cannot be brought into the federal system, no legal mechanism exists by which they can be consolidated. State courts cannot transfer cases across state lines. Similarly, no state court can transfer a case it may have arising out of a particular accident to the federal court in which the federally consolidated cases arising out of that accident are pending; state courts cannot expand federal court jurisdiction. If full consolidation is to occur, it must be as a result of federal legislation.

I do not believe that full consolidation will significantly increase the burden on federal courts, especially as compared to the benefits obtained. As I have mentioned, partial consolidation of these types of cases is already occurring and it would be rare if a major accident did not result in some consolidated federal cases. (Indeed, H.R. 2112 would be inapplicable if no case is filed in or removed to federal court.) It is therefore not a question of whether federal courts should be burdened with litigation arising out of major accidents--they already are--but rather whether we will permit the federal courts to handle all cases arising out of that accident efficiently.

Finally, I believe that enactment of a uniform federal choice-of-law rule will significantly reduce the legal costs for all parties, and the burden on the courts, in multiparty, multiforum lawsuits. Currently, even in cases consolidated in the federal courts under existing rules, the courts must apply the choice-of-law rules of the forum from which each case was transferred (i.e., where it was originally filed). The courts must then apply these various choice-of-law rules separately to each major issue in the claims against each defendant. With cases originally filed in several different forums, each of which may have a unique choice-of-law rule, the courts and the parties face a truly daunting task. Speaking from experience, I can tell you that the amount of time and money spent in briefing and arguing choice-of-law issues in such cases can be staggering. It is also difficult for our busy courts to find the time to work through the stacks of briefing and the arguments that are typically necessary on this issue. And settlement discussions can be delayed and hindered by confusion or uncertainty about which law will control the claims, thereby prolonging the entire litigation process.

However, we do not believe that the selection of a single law to govern all issues in all the lawsuits would be a fair or proper result. Thus, we are opposed to H.R. 2112's choice-of-law section as currently drafted. Moreover, we believe that the list of "factors" and the "relative importance" test will not achieve the desired goal of simplicity and predictability but will instead increase the uncertainty and expense associated with the selection of applicable laws.

We favor enactment of a set of presumptive choice-of-law rules applicable to the various issues that typically arise in cases covered by H.R. 2112. Any lawsuit has a number of discrete legal issues, such as who has standing to sue in a wrongful death case, the standard of liability to be applied to each defendant, the elements and measure of recoverable damages, the availability of punitive damages, etc. Some of these issues are "common issues" in the sense that they will ultimately be decided by a single jury in a consolidated trial in the transferee court. For example, the legal standard for imposing liability on defendant X should be the same in consolidated claims by plaintiffs A, B, etc. Otherwise, the jury in the consolidated trial will have to evaluate defendant X's conduct against two or more different standards and may find defendant X liable to plaintiff A but not to plaintiff B.

We favor selection of the law of the place where the alleged misconduct occurred to govern the common issues of liability and punitive damages. This presumptive rule is likely to result in different laws being applied to different defendants. This will not create a problem, however, because juries already apply different legal standards to different types of defendants. For example, product manufacturers can be found strictly liable for having delivered a defective product, air carriers can be found liable for failure to exercise the highest degree of care, and repair facilities can be found liable for failure to exercise ordinary care.

Another group of issues is unique to each case and, where appropriate, will be decided by separate juries in separate trials. For example, each plaintiff's claim for compensatory damages involves presentation of evidence unique to each particular case, such as information about employment earnings and relationships with surviving relatives. Such compensatory damage trials will typically take place in the transferor court after remand from the transferee court. Thus, different laws can be applied to different claimants without any risk of jury confusion or inconsistent results.

Over the years we have advocated adoption of preemptive federal legislation that would apply a uniform set of damage rules to all passengers. Absent such a uniform federal standard, we favor selection of the law of the domicile of the person who was injured or killed to govern the elements and measure of plaintiff's compensatory damages. Thus, in a wrongful death case, the law of the state of decedent's domicile would determine the proper plaintiff (e.g., must the claim be filed in the name of the estate administrator), the relatives entitled to receive compensation (e.g., under what circumstances can a sibling be awarded damages), the available elements of recovery (e.g., is loss of consortium recoverable), and the proper measurement of each recoverable element of damage (e.g., what method is used to discount future losses to a present value).

Application of domicile law will not create inefficiencies. In fact, in many, if not most, cases, compensatory damage trials will take place in court in the plaintiffs' domiciles, and the attorneys and judges who are involved will already be familiar with the local law. Even when the trial takes place in a state different from the plaintiff's domicile, the use of pattern jury instructions from the domicile state makes application of the selected law relatively easy.

Thank you, Mr. Chairman, and other members of the Subcommittee for this opportunity to address you on H.R. 2112. At this time, I would be pleased to answer any questions you may have.

PARTNER, SEATTLE OFFICE

AREAS OF EMPHASIS

REPRESENTATIVE TRANSACTIONS/CASES

USAir 737 accident, Pittsburgh (1994)

United Airlines 737 accident, Colorado Springs (1991)

Lauda Air 767 accident (1991)

Japan Air Lines 747 accident, Japan (1985)

USAir BAe-146 accident, California (1987)

Korean Air Lines 747 Flight 007 accident, U.S.S.R. (1983)

Air Florida 737 accident, Washington, D.C. (1982)

Litigation arising from general aviation accidents

Product liability litigation related to medical devices

Product liability prevention counseling for manufacturers of various types of products

State and federal legislation relating to tort and product liability

RELATED EXPERIENCE, SPEECHES AND PUBLICATIONS

The Boeing Company, Aerodynamicist, 1969-72

Co-author, "The Manufacturers' Perspective on the Modern Application of the Warsaw Convention and Recent Attempts at Reform," The Aviation Quarterly (1997)

Co-author, "Apportioning the 'Indivisible': Comparative Liability," Gonzaga Law Review (1991-92)

EDUCATION

Harvard University, J.D., cum laude, 1975

Ohio State University, M.S. (Aeronautical and Astronautical Engineering), 1969

Ohio State University, B.A.A.E., cum laude, 1969

ADMITTED TO PRACTICE

Washington

United States Supreme Court

United States Courts of Appeals: Sixth Circuit, Ninth Circuit, District of Columbia Circuit

United States District Courts: Western District of Washington; Eastern District of Washington; Eastern District of Michigan; Central District of California; Northern District of Illinois

THE BOEING COMPANY

FEDERAL GOVERNMENT CONTRACTS

The Boeing Company received the amounts listed below from Department of Defense and National Aeronautics and Space Administration contracts.

Year Amount

1998 $19.879 Billion

1997 $18.125 Billion

1. ⁰ Many kinds of litigation fit the § 1407 profile, as is evident from the sheer number of actions transferred by the MDL Panel over the course of its thirty-year history. Between 1968, when Congress enacted Section 1407(a), and September 30, 1998, the last year for which complete figures are available, a total of 140,867 civil actions were "[s]ubjected to Section 1407 [p]roceedings." Administrative Office of the United States, Judicial Business of the United States Courts 1998, at 33 & Supp. Tables S-21, S-22. Of these, 121,823 were transferred from one district to another for "coordinated or consolidated pretrial proceedings"; the other 19,044 actions were originally filed in the transferee district, id., though not necessarily assigned when filed to the eventual transferee judge. Almost 12% of the total number of transferred cases, or some 16,594 actions, were transferred pursuant to § 1407 in the twelve months ending September 30, 1998.

Of the 140,867 civil actions referenced above, 83,107 were terminated by the transferee courts. Only 4,952 were remanded by the MDL Panel to the transferor courts for trial. As of September 30, 1998, 52,529 actions were still pending in fifty-one transferee district courts. Id.