Chapter

UNDERSTANDING MASS TORT DEFENDANT INCENTIVES FOR CONFIDENTIAL SETTLEMENTS: LESSONS FROM BAYER’S CERIVASTATIN LITIGATION STRATEGY

James Anderson

in Confidentiality, Transparency, and the U.S. Civil Justice System

Published in print May 2012 | ISBN: 9780199914333
Published online September 2012 | e-ISBN: 9780199980185 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199914333.003.0006
UNDERSTANDING MASS TORT DEFENDANT INCENTIVES FOR CONFIDENTIAL SETTLEMENTS: LESSONS FROM BAYER’S CERIVASTATIN LITIGATION STRATEGY

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This chapter describes the product liability case brought against Bayer for the cholesterol-lowering drug cerivastatin (Baycol), a powerful statin that was discovered to cause a muscular deterioration (rhabdomyolysis) that caused extreme pain and, in rare cases, death. After withdrawing it from the market, Bayer faced over 12,000 claims, which could have evolved into a mass tort. Instead of pressing for secret settlement agreements, as is common in such cases, Bayer chose to settle nearly all its cases according to a fixed schedule, without confidentiality. The chapter describes the benefits of such a strategy for both defendants and plaintiffs, arguing that it resembles “most-favored nation clauses” that prevent one contracting party in a trade agreement from reaching a separate agreement that offers a third party better terms than the initial contract. It was attractive to Bayer because it reduced the overall costs of a mass tort, and it was attractive to plaintiffs, who were assured that they were getting the same treatment as others with similar injuries.

Keywords: product liability case; litigation settlement; most-favored nation; trade agreements; mass tort

Chapter.  10235 words.  Illustrated.

Subjects: Constitutional and Administrative Law

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