It's Time to Rein In Mass Tort Madness

American households are footing the bill for hundreds of questionable injury lawsuits targeting U.S. businesses, and it’s a big bill. The yearly cost in higher prices for goods and services as businesses spend millions defending themselves exceeds a staggering $4,200 per year per family. So says a 2022 study from the U.S. Chamber of Commerce’s Institute for Legal Reform.

But now a little noticed rule change in the federal courts covering mass tort cases—where thousands sue for injuries claimed from a product or event—should mark the beginning of some relief for hard working American families, according to business defense lawyers.

On December 1, the Judicial Conference of the U.S. adopted Rule 16.1 that requires the vetting of those claiming injury, as in other tort actions, in cases transferred into the Multidistrict Litigation (MDL) process. The MDL process is a judicial construct, created by Congress in the late 1960s, to streamline mass tort cases filed across multiple jurisdictions. Instead of the hoped-for efficiency, though, MDLs opened the door for the trial bar to pile on claims created by non-attorney lead generators through TV, internet and newspaper ad come-ons. The claims generated from these ads often come from people suffering no injuries from the product—some claimants never even used the product. Businesses spend millions fighting the allegations but end up getting bullied by the sheer number of claims into settling for millions, or even billions. Consumers take the hit in higher costs.

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Unvetted Claims

“In mass tort cases many lawyers do not vet their clients’ claims,” Phil Goldberg, partner with prominent business defense firm of Shook, Hardy & Bacon, said in an interview. “Claimants often respond to an advertisement placed by claim generators. The generators then sell these claims to law firms. Intake meetings rarely take place, resulting in few claimants who even know who their lawyers are.”

Goldberg added that the lawyers find “strategic value in stockpiling as many claims as possible regardless of whether support exists for them. For example, the sheer number of claims [that] can be used to seek an MDL, make it appear there is a big problem needing to be solved, leverage a particular lawyer into a leadership position, and pressure defendants into mass settlements that pay unsupported claims.”

According to Goldberg, up to 50 percent of those claiming injury over hundreds of these lawsuits, discovered too late in many instances, had no basis for the claim.

The lawsuits, moreover, are often financed by unknown third parties, likewise with no direct connection to the cases. Their only stake is a return on investment. And, according to post-settlement investigations by news outlets, the big money backers are, in some instances, foreign entities that are sworn enemies of the United States.

The scheme has become so lucrative that the number of cases filed under MDLs has exploded. In 2012, MDLs took up 29 percent of the federal docket; they now consume nearly 70 percent of the docket. 

In August 2023, for example, the manufacturer 3M, admitting no liability, settled the Combat Arms earplug case for $6.01 billion.

“Of 500 Wave 1 plaintiffs in that MDL, 25.2% reportedly produced no evidence and dropped out of the case, and nearly three-quarters of the Wave 1 plaintiffs had no record of ever using the product at issue,” Deirdre Kole, assistant General Counsel to Johnson & Johnson, said in earlier testimony submitted to the Judicial Conference Advisory Committee. “Those cases should not have been filed.”

In an MDL action against Merck & Co.’s painkiller Vioxx, settled in 2007 for $4.85 billion, almost a third of injury claims were found to be unsubstantiated. 

In a rare pre-rule application of the reforms, Florida federal judge Casey Rodgers recently required that claims that Pfizer Inc.’s contraceptive Depo-Provera contributed to brain tumors contain allegations that the plaintiff has the “requisite physical injury,” and that the injury stemmed from the use of the product.

It's big business for the trial bar. In a forthcoming law review article, Cary Silverman, a Shook, Hardy, & Bacon partner, discusses a report revealing that lawyers and aggregators have invested more than $100 million into television advertising and social media to gather claims for a single litigation.

“As one mass tort litigation approached a global settlement, for example, more than 4,600 television ads ran in one month at a cost of about $778,000 in a quest to add to the tens of thousands of people who had already sued,” Silverman writes.

Who's Funding This?

The growth of third-party litigation funding has also increased exponentially. 

A 2024 Bloomberg Law investigation found that “major dedicated commercial litigation funders alone had more than $15 billion invested in U.S. litigation in 2023. Burford Capital, the largest dedicated litigation funder, grew from a $130 million investment fund in 2009 to an investment portfolio of $7.4 billion this year.”

And a separate 2024 Bloomberg investigation, Putin’s Billionaires Dodge Sanctions by Financing Lawsuits, showed that a subsidiary of Russian financial giant Alfa Group backed lawsuits in New York and London, both before and after three of its billionaire founders were sanctioned following the 2022 invasion of Ukraine.

The report stated that with “no reporting requirements and few regulations, deep-pocketed investors can pour millions of dollars into a case without ever appearing on a court docket. That’s opened a new kind of cross-border cash spigot used to skirt international law and the spirit of why sanctions were imposed in the first place.”

Rule 16.1 is just a first step in reforming the MDL process, business lawyers say. Necessary actions by Congress include: passage of the Litigation Transparency Act (H.R. 1109), that pulls the curtain back on third-party funding; and passage of the Protecting our Courts from Foreign Manipulation Act (H.R. 2675) that prohibits financing by foreign states and sovereign wealth funds. Both measures, introduced earlier this year, have seen limited action.

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