$1B Settlement Reached in Stryker Hip Implant Mass Tort

Hon. Diane M. Welsh (Ret.)

Hon. Diane M. Welsh (Ret.)

Thousands of plaintiffs in New Jersey and around the country who had surgery to remove failed hip implants settled their claims November 3 in a deal that is expected to pay out more than $1 billion. It was reached after four months of negotiations with Stryker mediated by retired U.S. Magistrate Judge Diane Welsh, a JAMS mediator based in Philadelphia.

The global settlement with Howmedica Osteonics Corporation, a Mahwah, N.J., corporation that does business as Stryker Orthopaedics, resolves the claims of about 3,000 individuals who were implanted with Stryker Rejuvenate and ABG II Modular hip stems. Stryker agreed to a base payment of $300,000 to compensate plaintiffs who had to have a Rejuvenate or an ABG II hip implant device surgically removed before November 3, according to counsel. The payment will be doubled for plaintiffs who had devices removed from both hips, the attorneys said, and there will be additional payments for complications arising from the removal surgeries.

Between December 2013 and June 2014, Judge Welsh successfully mediated more than 20 bellwether cases that were filed in state court in New Jersey. She then successfully mediated the global settlement agreement for the federal Multi-District Litigation and the New Jersey litigation covering approximately 4,000 cases and is also open to claimants who have not yet filed suit.  Judge Welsh will now serve as the Claims Administrator to ensure that the settlement is carried out in accordance of the settlement agreement and she will decide appeals from claimants who are denied.

For additional coverage, please click here for coverage in the New Jersey Law Journal or here for Bloomberg coverage.

Protecting Confidentiality of Patent Infringement Settlements: Is Mediation Necessary?

James M. Amend, Esq.

James M. Amend, Esq.

By James M. Amend, Esq.

Parties regularly opt to keep terms, conditions and licensing agreements confidential when settling patent infringement disputes.  Often, patentees do not want the license terms to serve as precedent in other assertions of the patent(s).  Defendants may also not want other potential patent plaintiffs to believe they are a “soft touch.”  Whatever the reason, parties assume that the confidentiality provision will be effective against disclosure of the license terms by the other side or to third parties.  The assumption may be warranted in the former, but recent cases have cast serious doubt on the latter.

The Federal Circuit, for example, has held that such confidentiality provisions may not shield the license terms or their negotiations from either disclosure or admissibility on the issue of damages in other suits brought under the same patent(s).  However, it has intimated that this may not be the case if the negotiations were conducted in, and the settlement the result of, a mediation.  It appears that conducting patent infringement settlement negotiations in mediation maximizes the prospects for protecting at least the confidentiality of those negotiations, if not the license itself.

To put that thesis in context, under 35 U.S.C. Sec. 284, a patentee is entitled to at least a reasonable royalty if its patent is found to have been infringed.  A reasonable royalty is usually determined by an analysis of factors set forth in the Georgia-Pacific case that inform the hypothetical royalty rate the parties would have agreed to in negotiations conducted when the infringement began.  The first Georgia-Pacific factor—and the one most important here—is the royalties received by the patentee from existing licenses of the patent(s) in suit.  Prior to 2010, there was a question concerning whether existing licenses that were the result of litigation settlement were proper references, because they were not purely commercial but could be skewed by litigation considerations such as expense savings, risks of invalidity, etc.  That question was put to rest in ResQNet.com v. Lansa, Inc. (Fed.Cir. 2010), which held that of many licenses entered into by the patentee, “the most reliable license in this record arose out of litigation.”  Confidentiality of this license or its negotiation history was not at issue, but it became of heightened importance to patentees that did not want their litigation settlements to cap their damages in future litigation.  And, as will be seen below, it incentivized efforts by later defendants accused of infringing the same patents to discover not only the terms, but also the negotiation history of earlier licenses resulting from litigation settlements.

To read on about Mr. Amend’s discussion on Protecting Confidentiality of Patent Infringement Settlements, please read the full article from Law.com by clicking here.

An Employee is an Employee is an Employee: Alexander v. FedEx Ground

Joel M. Grossman, Esq.

Joel M. Grossman, Esq.

By Joel M. Grossman

In the 1920s, author Gertrude Stein famously said, “A rose is a rose is a rose.” In light of Alexander v. FedEx Ground, that phrase could just as well be: an employee is an employee is an employee. Alexander is one of many cases in which the company and the workers agreed that the workers would be treated as independent contractors and not as employees. In this case, the court deemed that agreement to be meaningless. Instead, quoting the leading California case on independent contractor vs. employee, S.G. Borello & Sons, Inc. v. Department of Industrial Relations, the court looked to see whether FedEx Ground had: “the right to control the manner and means of accomplishing the result desired,” and answered yes. Therefore the agreement signed is deemed irrelevant.

The court relied on several facts in determining whether FedEx Ground controlled, or maintained the right to control, FedEx drivers. First, the court noted that FedEx Ground by contract maintained the right to control the drivers’ and their vehicles’ appearance. Drivers were to be clean-shaven, have neat hair and no body odor. The vehicles, though owned by the drivers, had to be painted a very specific shade of white and had to display FedEx logos. FedEx Ground even maintained control over the shelving in the vehicles, with specific dimensions required. The drivers—who owned the vehicles—were free to use them for their own purposes when not delivering packages for FedEx Ground, but had to remove or cover up the FedEx logo.

The court also found that FedEx Ground had the right, and actually controlled the hours worked by the drivers, requiring them to work 9.5 to 11 hours a day. The court also found that FedEx Ground controlled important aspects of how and when drivers delivered their packages. It noted that FedEx Ground assigned the drivers specific areas and negotiated windows of delivery with the customers. Thus, the driver had to deliver the package to a client within the window that FedEx Ground, not the driver, had arranged. Though FedEx Ground did not control certain parts of the delivery process, the court noted the right to control does not need to be absolute. It must simply be extensive, so that it controls not just the final result—having a package delivered—but also the means and manner used to obtain that result.

For the rest of  Mr. Grossman’s discussion on the classification of employees vs. independent contractors, please read the full article from Law.com by clicking here.

Prepare for Mediation Success: Six Tips for Writing a Strong Brief

Zela "Zee" G. Claiborne, Esq.

Zela “Zee” G. Claiborne, Esq.

by Zela “Zee” G. Claiborne, Esq.

Writing a persuasive brief is one of the most important things an attorney can do to prepare for mediation of a business dispute.  A good brief provides the opposing side with information they need to consider.  Perhaps even more important though is an excellent brief that can help the mediator assist with successful resolution.

Here are six tips:

  1. Outline the facts of the case, describing them from your client’s point of view.  For example, what duties are included in the contract between the parties?  What were the actions that led to the claimed breach? Review the key facts in some detail but avoid repetition and leave out peripheral issues. Then edit to remove the excess words. Your brief will be most persuasive if it is pared down and covers only significant facts.
  2. Include a discussion of the law that applies to the case. Again, keep it short since a list of cases and lengthy legal arguments may be useful at trial, but will not be the basis for a mediated settlement. It is not a good idea to send the mediator a copy of your Complaint or Motion for Summary Judgment. It is even worse to outline the details of your latest discovery dispute. Mediation is not about winning or losing legal arguments. Put those items aside and focus on the key legal principles that apply and that should be considered when evaluating the case for settlement.  Then edit again.
  3. Watch your tone. There is a big difference between mediation advocacy and trial advocacy. Mediation advocacy can be persuasive without being overly adversarial or demeaning. Do not accuse your opponent of lying or of cooking the books. After all, the goal is to find a business solution that the parties can accept.  Hopefully, they will be able to shake hands at the end of the day.

For the rest of these tips on writing a strong brief, please read the full article from Law.com by clicking here.