Lessons from Procedural Lapses That Sent Smokers' Claims Up in Smoke

It took years for the Engle action to wind its way through the courts, but when the Engle action was decertified, the court allowed a one-year “savings period” for the refiling of individual claims. Mr. Wilner, counsel for the putative plaintiffs, had previously undertaken to represent thousands of smokers, and when the Engle action was decertified, Wilner tried to reestablish contact with some of these smokers. As the one-year savings period was set to run, daunted by the sheer number and complexity of representing thousands of plaintiffs and being unable to contact all of his “clients,” Wilner filed prophylactic personal-injury actions on behalf of at least some of these clients.

During an interlocutory appeal of the trial court’s ruling on the preclusive effect of certain jury findings in the early stages of the Engle action, the trial court generally stayed proceedings with respect to most of the individual cases, and attempted to work with the parties on case-management protocols to work through the 4,432 cases. After roughly four years of machinations and the involvement of a special master, it came to the trial court’s attention that some 588 lawsuits were filed on behalf of plaintiffs who were dead before the personal-injury actions were filed, and on behalf of roughly 160 related loss-of-consortium plaintiffs. The trial court dismissed the 748 claims and denied counsel leave to replead, citing, among other things, lack of demonstrated diligence in ensuring that the lawsuits were properly filed in the first place, and lack of candor and diligence in bringing the matter before the court. The Eleventh Circuit affirmed.

Although brought to the court in a, hopefully, unusual procedural posture, the opinion offers some reminders and lessons for litigators.

The Eleventh Circuit opens its opinion by noting that “[a]s any lawyer worth his salt knows, a dead person cannot maintain a personal injury action” and that “a lawyer’s responsibilities to the court are not diluted even by an ocean of claims.” The Eleventh Circuit did not decide whether the trial court was correct in finding that the filings were an incurable nullity ab initio. Rather, the Eleventh Circuit agreed that the putative plaintiffs’ counsel failed to demonstrate pre-filing diligence and failed in its duty of candor and diligence post-filing.

Pretrial Lessons Learned (or Remembered)

1. Rule 16(b) allows innovative and inventive procedures to facilitate and expedite resolution of cases. The trial court used Rule 16(b) to evaluate two test cases for the preclusive effect that an earlier jury finding in the related Engle action might have on the pending actions. Although the Eleventh Circuit in an earlier opinion reversed the trial court’s ruling on the subject, it did not disapprove the trial court’s efforts, and Rule 16(b) appears to allow the trial court virtually unlimited discretion in devising means to facilitate the “just, speedy, and inexpensive disposition of the action.” See Fed. R. Civ. P. 16(c)(2) (A)–(O) (enumerating ways of facilitating just and speedy disposition) & (P) (allowing “other ways” to facilitate just, speedy, and inexpensive disposition).

2. Motions to amend must be made by motion, and proposed amendments should be attached. Although apparently not dispositive, both the trial court and the Eleventh Circuit noted that plaintiffs’ counsel’s initial request for leave to amend was not properly brought because (1) it was buried in the plaintiffs’ response to the defendants’ motion to dismiss, rather than in a separate motion; and (2) it failed to proffer the proposed amendment(s). A court probably should not deny a meritorious amendment solely on such procedural niceties, but a prudent lawyer also should not expose a proposed amendment to such unnecessary risk.

3. Failure to demonstrate diligence is the same as a lack of diligence. Both the trial court and the Eleventh Circuit were disturbed by the apparent lack of pre-filing diligence by the Wilner Firm in contacting clients or former clients and evaluating the viability of claims before filing, as required by Rule 11. But note that the holding of the Eleventh Circuit is that the Wilner Firm failed to demonstrate such diligence, not that the Wilner Firm failed to exercise such diligence (although it may be suspected from the lack of evidence). The Eleventh Circuit noted Wilner’s burden to establish plaintiffs’ entitlement to relief and went on to discuss what little the court was told about what the firm did as part of its pre-filing diligence and, perhaps most important, what the court was not told about pre-filing diligence:

That’s it. We are not told what the Wilner Firm did to keep up with its clients during the decade or so that Engle was winding through state courts, how many of those clients it lost touch with before Engle III came down in December 2006, what efforts it took following Engle III to reestablish contact, or how many of those missing clients it failed to contact before a lawsuit was filed on their behalf in January 2008. Nor are we told what information Wilner used to draft complaints for the missing clients, when those clients had last been in contact with the firm, or what efforts were taken to update client information and otherwise investigate the validity of their cases.

The Eleventh Circuit contrasted the dearth of information provided with the “great detail” the Wilner Firm provided in seeking an extension of time on another matter before the trial court.

In the end, the Eleventh Circuit said that Rule 17(a)(3), limiting the courts’ ability to dismiss complaints or deny amendments to name the real party in interest, “isn’t a plenary license to fix ‘pleading errors’” and “was not promulgated to allow lawyers to file placeholder actions,” in lieu of diligent investigation required by Rule 11.

Whether seeking leave to amend, an extension of time for filing, a finding of “not reasonably accessible” electronically stored information, or other relief, the movant generally must offer more than vague hand-waving and unsupported conclusions. The courts are looking for concrete facts supporting the relief sought.

4. Not all stays are created equal. The trial court and the Eleventh Circuit were also deeply troubled by the Wilner Firm’s lack of effort to cure the pleading deficiencies, or at least bring them to the court’s attention, during the four years the matter was pending. The Eleventh Circuit noted that Rule 11 requires not only pre-filing diligence but disclosure and candor upon learning of new facts showing a lack of merit to the prior filing(s).

Plaintiffs’ counsel argued that it was unable earlier to move to amend, or otherwise seek to cure the pleading defects, because of a general stay put in place by the trial court. Both the trial court and the Eleventh Circuit rejected the argument that the general stay precluded such motions. The Eleventh Circuit pointed out that plaintiffs’ counsel had, in fact, moved on a number of occasions (as many as 90) to amend pleadings where counsel became aware that a putative plaintiff died during the pendency of the action. Moreover, the Eleventh Circuit held that the stay would in no way excuse counsel’s failure to bring the issues to the court’s attention by motion or otherwise.

5. Lack of prejudice alone is inadequate to allow amendment under Rule 15 when the need for the amendment is caused by bad faith or unexcused lack of diligence. The Wilner Firm also argued that even if it were not shown to be adequately diligent, no prejudice would inure to defendants because no discovery was undertaken and no individual answers had even been filed, so it should be allowed to amend. The Eleventh Circuit rejected this argument, citing a number of cases holding that the lack of prejudice alone was insufficient to permit amendment where the lack of diligence was unexplained or unexcused.

The plaintiffs’ firm was clearly in a difficult position. Whether it was of its own making is for the reader to decide. The Eleventh Circuit appeared to believe so. Take these lessons to heart and remember: “A lawyer’s responsibilities to the court are not diluted even by an ocean of claims.”

Keywords: litigation, pretrial practice, discovery, tobacco plaintiffs, Wilner, Wilner Firm, Rule 16(b)

Jeffrey G. Close is a partner with Chapman and Cutler LLP in Chicago, Illinois.

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