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

Todays 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 Dont 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

DETROIT, Michigan

DALLAS, Texas

CHICAGO, Illinois

HYDRAULICS, INC. CLEVELAND, Ohio

LOS ANGELES, California

Fritz & Smith LLP NEW YORK, New York

Supersonic LONDON, United Kingdom SYNDICATE 7534

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 Companys 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 plaintiffs case on them INFORMAL verbal agreement with BigJet that Unthreaded can have access to BigJets 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 JDAs 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 Unthreadeds 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 Unthreadeds offer of $500,000 – REJECTED Unthreaded Has Become: The Last Man Standing

Post Mediation Plaintiffs 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 Trial is in Texas Court rules NTSB report inadmissible Unthreaded cant 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 dont 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 dont ignore them Pursue cooperation with other insureds