[co-authors: Jay Arora, Angelica Joa, Tess McMullin and Deanna Pama]

Dechert Re:Torts is a monthly newsletter covering news and developments related to product liability and mass torts litigation.

Inside this issue:

• Bipartisan Momentum Builds to Shine Light on Litigation Funders
• Will Solicitor General Prompt SCOTUS Ruling on Preemption of Climate Change Torts?
• Remote Depositions: When Mere Convenience Is Not “Good Cause”

Hot Topics

Bipartisan Momentum Builds to Shine Light on Litigation Funders

In October 2023, we discussed the efforts by Senators Joe Manchin (D-WV) and John Kennedy (R-LA) to address the concerns presented by opaque third-party litigation funding. Namely, the Senators were concerned that the existing litigation funding regime—which largely permits funders to operate in total anonymity—presented a national security risk. After a few quiet months of referral to the Judiciary Committee, there are some indications that the bill continues to build bipartisan momentum. On June 12, John Hickenlooper (D-CO) and Senate Judiciary Committee member, John Cornyn (R-TX) were both introduced as co-sponsors of the bill.

In the other chamber, also on June 12, the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet held a hearing titled “The U.S. Intellectual Property System and the Impact of Litigation Financed by Third-Party Investors and Foreign Entities.” Among the individuals testifying before the subcommittee was Professor Donald Kochan. Professor Kochan explained that his testimony could be distilled down to a single sentence, “We need to maintain a civil justice system outside the market if we are to preserve the civil justice system as a predictable, neutral, and accessible system that serves the market.” As he further explained, third-party litigation funding “is not a traditional investment. It does not produce anything. It just generates litigation. It takes bets on the outcome of litigation, with the investors counting odds.”

In the wake of this subcommittee hearing, Congressman Darrell Issa (R-CA) took action, proposing the “Litigation Transparency Act of 2024.” The proposed bill requires a party or any counsel of record for a party to “disclose in writing to the court and all other named parties to the civil action the identity of any commercial enterprise (other than counsel of record) that has a right to receive any payment that is contingent on the outcome of the civil action or a group of actions of which the civil action is part.” The bill is further applicable to “any civil action pending on or commenced after the date of the enactment of this Act.”

Takeaway: While no legislation is yet passed, there is evidence that momentum is building for Congress to address the currently unregulated third-party litigation funder market.

Environmental Edit

Will Solicitor General Prompt SCOTUS Ruling on Preemption of Climate Change Torts?

In closely watched climate change litigation by local and state governments against energy companies, the U.S. Supreme Court has signaled an interest in addressing the fiercely contested issue of whether the claims are preempted by federal law. In June, the Court invited the U.S. Solicitor General to express views on petitions by the city and county of Honolulu that go to the heart of the claims and whether they can proceed in any court.

In Sunoco LP v. City and County of Honolulu and Shell PLC v. Honolulu, HI, Honolulu claims that global energy companies knowingly concealed the environmental impact of their practices and products. Hawaii’s largest city seeks to recover under nuisance, failure-to-warn, and trespass theories for the cost of flooding, weather events, and other climate-related harms. Following unsuccessful attempts to remove to federal court, the Hawaii trial court denied the companies’ motion to dismiss for lack of jurisdiction and failure to state a claim, and the Hawaii Supreme Court affirmed.

Now, the energy companies are asking the U.S. Supreme Court to resolve a split among the courts. The two issues on appeal are (1) “[w]hether claims seeking damages for the effects of interstate and international emissions on the global climate are beyond the limits of state law and thus preempted under the federal Constitution” and (2) “[w]hether the Clean Air Act preempts state-law claims predicated on damaging interstate emissions.”

The companies cite a 2021 decision by the U.S. Court of Appeals for the Second Circuit holding that federal law preempted state law claims by municipalities against corporations for damages allegedly caused by global greenhouse gas emissions. See City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021). However, other courts are in line with the Hawaii Supreme Court decision. In 2022, the U.S. Court of Appeals for the Fourth Circuit found that a similar suit brought by the city of Baltimore against several oil and gas companies could proceed in state court. Mayor & City Council of Baltimore v. BP P.L.C., 31 F.4th 178 (4th Cir. 2022).

In their cert petition, the energy companies urge the Court to adopt a uniform federal standard for cases involving greenhouse gas emissions, noting that the Hawaii Supreme Court decision would allow “at least 50 different sets of state law [to] govern global climate change.”

Calls for the view of the Solicitor General typically indicate that at least four Supreme Court ­justices are interested in the case. In its response, the Solicitor General will likely take a position on whether the Court should grant or deny the cert petition and provide insight on its views of the merits of the case. If the Supreme Court grants review, its ruling could impact dozens of other climate change tort lawsuits pending in jurisdictions across the country.

Takeaway: The Supreme Court’s request for the Solicitor General’s views suggests it may be poised to take on the question of federal preemption of state law claims against energy companies for climate change, a burgeoning area of tort cases with the potential for broad national impact.

MDL Minute

Remote Depositions: When Mere Convenience Is Not “Good Cause”

Remote depositions gained widespread popularity during the COVID-19 pandemic. While the pandemic has ended, remote depositions have remained under some circumstances an alternative to traditional, in-person depositions. But, as one MDL court found, financial and practical convenience alone cannot displace a party’s right to traditional means of deposition discovery.

The federal district judge overseeing a large MDL vacated a magistrate judge’s order giving blanket permission for all plaintiffs in the MDL to appear for their depositions remotely. In re Chrysler Pacifica Fire Recall Prods. Liab. Litig., No. 2:22-cv-03040-DML-EAS, 2024 WL 3048495, at *1 (E. D. Mich. June 18, 2024). In Chrysler Pacifica Fire Recall Products Liability Litigation, the plaintiffs moved for a protective order, under Federal Rule of Civil Procedure 26(c)(1), requiring that all depositions be taken remotely. Id. at *1-2. Despite the plaintiffs’ failure to demonstrate the requisite “good cause” for a protective order, the magistrate judge granted the requested relief after sua sponte applying a different provision – Rule 26(b)(2)(C) – which permits courts to limit discovery where they determine it is available from a less burdensome or expensive source. Id. at *2-3.

On the defendant’s objection, the district judge vacated the discovery order, finding it “clearly” contrary to Rule 26. The district judge rejected the magistrate judge’s reliance on the court’s authority to limit “the frequency or extent” of burdensome and expensive discovery, which had “no bearing” on whether plaintiffs’ depositions should proceed in person or remotely, and could not be used to circumvent the burden to show “good cause” for a protective order. Chrysler Pacifica at *3 (citation omitted). The district judge found the plaintiffs’ complaints about routine inconveniences and expenses of a traditional deposition to be insufficient to impose a blanket requirement of remote depositions, which also carry disadvantages. Id. at *4. By contrast, plaintiffs who identified “serious and specific hardship,” or whose claims were involuntarily transferred to the forum, had shown good cause to suspend the general rule that plaintiffs are to be deposed in the forum where the litigation is pending. Id. at *4-5.

It is unclear whether Chrysler Pacifica suggests a broader trend favoring in-person depositions. Despite the financial and practical conveniences often afforded by remote depositions, there are tradeoffs – such as a greater risk of technical failures or diminished effectiveness of examination. Those burdens and benefits do not necessarily fall symmetrically among litigants. Whether the use of remote depositions among counsel will ease the “good cause” requirement remains to be seen.

Takeaway: Litigants should be mindful of the advantages and disadvantages of remote depositions, which may benefit one side more than the other and may be magnified in large-scale litigation. Parties should consider whether sufficient grounds exist to warrant remote deposition procedures, particularly where the parties disagree over their use.