INSIGHT: Advertising by Plaintiffs’ Firms Driving High Class Action Settlement Rate

The recent Xarelto settlement demonstrates that in “mass torts” litigation, the merits of lawsuits seem not to matter much, if at all. The reality is that it is the sheer volume of cases that a defendant faces that now drives corporate litigation strategy.

In March, Bayer and Johnson & Johnson agreed to settle more than 25,000 cases involving their jointly developed blood-thinning medication Xarelto for $775 million. They made this decision despite an unblemished record in court, having won six consecutive defense verdicts. Consider Bayer’s statement when the settlement was announced: “… this favorable settlement allows the company to avoid the distraction and significant cost of continued litigation.”

By contrast, the lawyers bringing these cases might say in response, “We win even when we lose ….”

Failure to Warn

Plaintiffs argued that the companies failed to warn of the danger of excessive bleeding when taking the medication. Xarelto, which is a blood-thinning drug, is prescribed for patients who have atrial fibrillation, deep vein thrombosis, and other serious ailments. The medication is intended to thin the patient’s blood in order to avoid clotting because the patients for whom it is prescribed are at risk for stroke, pulmonary embolism, and other life-threatening conditions.

Prior to the March settlement, plaintiffs’ lawyers aggressively searched for a viable case against the defendants. In the federal multidistrict litigation (MDL) before U.S. District Judge Edlon Fallon in the Eastern District of Louisiana, all three of the “bellwether” trials held there resulted in defense verdicts.

The other hotbed for Xarelto litigation was in the Philadelphia Court of Common Pleas. There were close to 2,000 active cases in the court, but the defendants had been victorious in the only three cases tried to completion.

Why Settle?

The question this losing streak for the plaintiffs’ bar raises is why the defendants on a winning streak would settle for such a large figure? The answer can be traced back to the plaintiffs’ lawyers marketing strategy, which was far more successful than their cases were in court.

Plaintiffs’ lawyers and so-called “aggregators” spent millions of dollars on advertisements to drive up the number of potential claimants. In 2016, Xarelto was the most targeted product of mass-torts lawyer advertisements on television. A total of $37 million was spent on 128,800 national television ads to identify potential plaintiffs. This does not include the money spent on local cable ads.

Plaintiffs’ lawyers also are strategic in the placement of their advertisements. They target jurisdictions with plaintiff-friendly judges, where they know their lawsuits will be allowed to proceed—what we refer to as “Judicial Hellholes.” We believe these jurisdictions offer plaintiff-friendly rulings and low barriers of entry.

Judicial Hellholes judges also have demonstrated a willingness to open their courtroom doors to cases from outside their respective cities and states. For example, in the Philadelphia Court of Common Pleas, a perennial hellhole, there were 1,854 cases targeting Xarelto in June of 2018, and out-of-state plaintiffs accounted for 84 percent of these cases.

St. Louis, previously No. 1 in the Judicial Hellholes’ rankings, was the home of the recent $4.5 billion talc verdict against Johnson & Johnson. There were 22 plaintiffs involved in that case, 17 of whom had no connection to Missouri.

Track Spending

The American Tort Reform Association releases quarterly reports that track spending for trial lawyer advertising in many of these Judicial Hellholes around the country. In Louisiana, home of the Xarelto MDL, a trial lawyer ad aired, on average, every minute in local broadcast networks across the three largest media markets in the second half of 2018. From July to December, viewers in New Orleans, Shreveport, and Baton Rouge were exposed to more than 250,000 of these advertisements purchased at an estimated cost of $16 million.

In St. Louis, trial lawyers spent $1.2 million on 14,000 ads in the third quarter of 2018. During that same time frame, close to three million ads for legal services aired on local broadcast networks in the 210 local media markets across the U.S.—totaling $226 million in spending to purchase these ads.

While these ads are annoying for viewers, and they are essential to the marketing strategy of class action lawyers, the most significant problem with these ads is that they can scare viewers into deciding to stop taking their medications. The Food and Drug Administration found that in 2016, 61 patients stopped using blood-thinner medications, Xarelto or Pradaxa, which had been prescribed for them, after viewing these commercials. Six of these patients died—three from stroke, one from cardiac arrest, one from a pulmonary embolism, and one from an unreported cause.

Dr. Ilana Kutinsky, the physician for one of the deceased, directly associated these ads with patients’ deaths said: “Patients are dying because they are afraid to take the medications prescribed for them due to the fear brought on by these negative and one-sided campaigns.”

Legislative Action

Legislatures around the country are starting to recognize the need to address the problems associated with trial lawyer advertising, and many have considered legislation to rein in their deceptive tactics. Legislation is pending in Texas that would protect viewers from deceitful advertisements and require certain disclosures in the ads, and a similar bill was just introduced in Louisiana.

Addressing this problem will help to ensure that patients will follow the medical advice of their doctors, not lawyers and their marketers. In addition, reform efforts are necessary to help restore fairness in litigation so that the law and the merits of lawsuits drive the outcome of cases—not the high volume of meritless claims.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Tiger Joyce is president of the American Tort Reform Association in Washington, D.C.