With the proliferation of consolidated litigation in recent years, various courts have lamented the lack of scrutiny often given to individual cases prior to filing in a class action or multidistrict litigation. Given the structure of these mass proceedings, where claims are often resolved on a global level, with payout determined by the number of filings, individual claims frequently do not get meaningfully assessed.

This process has an obvious inherent risk of including meritless individual cases. Against this backdrop, recent federal court decisions demonstrate courts’ increased willingness to police meritless claims by assessing whether counsel’s pre-suit investigation was adequate.

The requirement that counsel conduct a meaningful pre-suit investigation is derived from Rule 11 of the Federal Rules of Civil Procedure. Rule 11 states that by filing a pleading, counsel represents that, to the best of their knowledge “formed after an inquiry reasonable under the circumstances,” the legal theories are warranted by existing law or nonfrivolous argument, and the factual contentions have evidentiary support or will have evidentiary support after a reasonable opportunity for further investigation.

This is an objective standard and is based on the circumstances as they existed at the time counsel filed the challenged paper.[1] Factors in determining whether the “reasonable inquiry” standard has been satisfied include how much time for investigation was available to the signer, whether he had to rely on a client for factual information, whether the paper at issue was based on a plausible view of the law and whether he depended on forwarding counsel or another attorney.[2]

Rule 11 authorizes the court to issue sanctions when it determines that the rule has been violated. While it is a “high bar” for the court to find that counsel failed to conduct a meaningful pre-suit investigation, recent case law shows a growing willingness to do so where meritless cases were filed in a consolidated litigation.

In Carroll v. E One Inc., the Third Circuit ordered plaintiffs to pay costs and fees even after they attempted to voluntarily dismiss the meritless cases.[3] The plaintiffs' counsel had filed suit on behalf of a class of firefighters, alleging they suffered hearing loss due to the “omni-directional design” of the manufacturer’s fire sirens, which “unnecessarily exposed the firefighters to dangerous levels of sound.”

The plaintiffs' counsel had brought 1,300 similar cases in 23 separate jurisdictions. The defendant manufacturer’s initial investigation into the claims revealed that the plaintiffs’ fire station had conducted routine yearly hearing tests, and nearly all the plaintiffs had been advised many years earlier that they had hearing loss, which was very probably caused by the loud noises to which they were exposed on the job. Consequently, those plaintiffs’ claims were barred by the statute of limitations.

When the defendant alerted the plaintiffs' counsel to the deficiencies in the cases and demanded costs and fees, the plaintiffs' counsel attempted to voluntarily dismiss the claims pursuant to Federal Rule of Civil Procedure 41(a)(1). The defendant then filed a motion challenging the plaintiffs’ ability to unilaterally dismiss the claims and seeking costs and fees.

The court held that because the defendant had already answered the complaint, the plaintiffs could only dismiss the case pursuant to Rule 41(a)(2), which states that “an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper.” While attorneys’ fees are typically not available when a case is dismissed with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2), the court held that an award of costs and fees may be appropriate where the plaintiffs' counsel failed to conduct a meaningful pre-suit investigation, and repeatedly brought claims and dismissed them with prejudice after inflicting substantial costs on the opposing party and the judicial system.

The court pointed out that even a brief discussion with their clients in advance of filing the suits would have alerted counsel to the time-barred nature of the plaintiffs’ claims. Instead, however, the plaintiffs' counsel had “shifted the costs of pre-suit investigation onto” the defendant.

In response, the plaintiffs' counsel argued that it was reasonable that they were unaware of the tests when they filed suit, because no other fire station in any other jurisdiction had conducted yearly hearing tests. The court rejected this argument, stating this fact “does not excuse counsel from speaking to his own clients before filing a lawsuit on their behalf. It highlights the importance that counsel treat each individual case in this aggregate litigation as just that, its own individual case. … [T]his case is an example of some of the excesses of modern mass tort litigation — when attention to an individual case is sacrificed for the sake of pursuing mass filings.”

The Third Circuit is not the only court to express such sentiments. Examining the incentive created by the MDL process to file cases that otherwise would not be filed if forced to stand on their own merit, the Middle District of Georgia stated:

Some lawyers seem to think that their case will be swept into the MDL where a global settlement will be reached, allowing them to obtain a recovery without the individual merit of their case being scrutinized. … This attitude explains why many cases are filed with little regard for the statute of limitations and with so little pre-filing preparation that counsel apparently has no idea whether or how she will prove causation.[4]

Similarly, in the infamous Engle class action filed on behalf of 3,700 Florida cigarette smokers, approximately one-third of the claims filed were meritless, including 588 personal injury claims filed on behalf of deceased plaintiffs, 160 claims for loss of consortium relating to the predeceased plaintiffs, 66 wrongful death claims on behalf of individuals who were still alive and 70 cases filed on behalf of plaintiffs who were not Florida residents.[5]

When these filing deficiencies were uncovered, counsel explained that the volume of cases filed made it difficult for counsel to track their own clients. This did not sit well with the court. Ordering millions of dollars in sanctions, the court stated, “the Court could never, in good conscience, sanction another lawyer in the future for failing to investigate a single claim if Counsel’s failure here to investigate hundreds of actions were to be passed over, thereby implying that Counsel’s indifference toward their professional obligations was acceptable because there were ‘just too many’ potential claimants to do the job properly.”

The second part of this article will discuss the importance of conducting plaintiff interviews, gathering basic information, avoiding language copied from dissimilar complaints and other issues.

Reprinted with permission of Law360.