Marks v. 3M Co. ( In re 3M Combat Arms Earplug Prods. Liab. Litig.)

IN RE: 3M COMBAT ARMS EARPLUG PRODUCTS LIABILITY LITIGATION This Document Relates to All Cases

No. 3:19md2885

United States District Court, N.D. Florida, Pensacola Division

December 22, 2022

HOPE T. CANNON, MAGISTRATE JUDGE

ORDER ^[1]

M CASEY RODGERS, UNITED STATES DISTRICT JUDGE

Federal litigation-particularly high profile multidistrict litigation-is not for the faint of heart. It can be a taxing rough and tumble business. Nevertheless, there are limits. Contumacious conduct and bad faith tactics have no place in the adversarial process, and when this occurs, federal courts are armed with broad discretion to rectify and deter the abusive practices through appropriate sanctions. Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 137 S.Ct 1178, 1186 (2017). Such is the case here.

The Wave 1 plaintiffs have collectively moved for an order precluding Defendant 3M Company from attempting to avoid any portion of its alleged liability for the CAEv2 claims in this litigation by shifting blame to the Aearo defendants (collectively “Aearo”), as a consequence for the company's explicit statements and conduct establishing itself as the sole responsible party for nearly four years in the MDL.^[2] Plaintiffs' motion is premised on theories of judicial estoppel, collateral estoppel, waiver, and implied assumption of liability, alleged violations of federal pleadings rules, and charges of bad faith conduct sanctionable under the federal courts' inherent powers. See ECF Nos. 3506-1, 3560. While each of these mechanisms represents a well-established approach to addressing some or all of a party's misconduct in a case, only one-the inherent authority of a federal court to moderate the conduct of those appearing before it-furnishes a legal and contextual framework that allows for consideration of the full range of litigation abuses alleged in this matter. On that basis alone, Plaintiffs' motion is granted.

“Federal courts possess certain inherent powers, not conferred by rule or statute, to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Goodyear Tire, 137 S.Ct. at 1186 (internal citations omitted). “That authority includes the ability to fashion an appropriate sanction for conduct which abuses the judicial process.” Id. The inherent power “can be invoked even if procedural rules exist which sanction the same conduct,” Chambers v. NASCO, Inc., 501 U.S. 32, 49 (1991), because those rules “are not substitutes for the inherent power,” In re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995). Whereas rules-based sanctions can reach only “certain individuals or conduct, the inherent power extends to a full range of litigation abuses” and serves to fill the gaps left by other sanctioning mechanisms. Mroz, 65 F.3d at 1575 (quoting Chambers, 501 U.S. at 46). Because of this expansive and potent scope, the inherent power “must be exercised with restraint and discretion,” and only in service of its dual purpose of “vindicat[ing] judicial authority without resorting to a contempt of court sanction and to make the prevailing party whole.” See Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017) (citing Chambers, 501 U.S. at 44-46).

To impose sanctions under its inherent power, a court must first find that a party's conduct “constituted or was tantamount to bad faith.” See Thomas v. Tenneco Packaging Co., Inc., 293 F.3d 1306, 1320 (11th Cir. 2002); see also Peer v. Lewis, 606 F.3d 1306, 1316 (11th Cir. 2010) (“Peer 1”) (“The key to unlocking a court's inherent power is a finding of bad faith.”). Bad faith, in this context, is judged by a subjective standard, see Purchasing Power, 851 F.3d at 1223-25, meaning the “inquiry should focus primarily on the [party's] conduct and motive, rather than on the validity of the case,” Wachovia Bank v. Tien, 406 Fed. App'x 378, 383 (11th Cir. 2010) (citing Rothenberg v. Sec. Mgmt. Co., Inc., 736 F.2d 1470, 1472 (11th Cir. 1984)). The standard may be met with either: (1) direct evidence of subjective bad faith; or (2) evidence of conduct “so egregious that it could only be committed in bad faith.” Hyde v. Irish, 962 F.3d 1306, 1310 (11th Cir. 2020) (quoting Purchasing Power, 851 F.3d at 1224-25); Byrne v. Nezhat, 261 F.3d 1075, 1125 (11th Cir. 2001), abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (“Without a ‘smoking gun' statement from the [party], i.e., ‘I know my claim is frivolous and I am pursuing this claim to harass the defendants,' a district court makes a determination of bad faith by drawing inferences from the conduct before it.”). A finding of bad faith is warranted where a party attempts to commit (or commits) a fraud on the court, knowingly raises a frivolous argument, argues a meritorious claim for the purpose of harassing an opponent, engages in purposely vexatious behavior, delays or disrupts the litigation, or hampers enforcement of a court order. See Chambers, 501 U.S. at 44-46; Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998).

When exercising its inherent power to sanction abusive litigation practices, a court must comply with due process both in determining bad faith and assessing sanctions. See Chambers, 501 U.S. at 50. The party to be sanctioned must receive (1) notice of the legal authority on which the sanctions would be based, the specific conduct that is alleged to be sanctionable, and the form of the potential sanctions; and (2) an opportunity to be respond to the invocation of sanctions and to justify its actions. Mroz, 65 F.3d at 1575-76. Once the requirements of due process are met and a finding of bad faith has been made, a court has “broad discretion” to fashion an appropriate sanction. See Peer I, 606 F.3d at 1316.

Here, 3M received fair notice from Plaintiffs' briefing, which sought sanctions under the court's inherent authority and outlined the conduct alleged to be sanctionable, see Pl. Briefs, ECF Nos. 3506-1 & 3560, and from a subsequent Order advising that the Court was considering inherent power sanctions, identifying the specific conduct that may warrant sanctions, and communicating the form of potential sanctions, see ECF No. 3571. See Mroz, 65 F.3d at 1575 (“Notice can come from the party seeking sanctions, from the court, or from both.”). 3M also had the opportunity to respond to, and be heard on, the issues of bad faith and sanctions. See Def. Response, ECF No. 3584. Therefore, 3M's due process rights have been properly preserved in this case, and the Court turns to the issue of bad faith.

The necessary context for the facts and inferences that compel a finding of bad faith in this litigation dates back to early 2019. At that time, 3M-arguing in the interests of justice, efficiency, and convenience-actively and successfully lobbied the Judicial Panel on Multidistrict Litigation for centralization of all CAEv2 claims in an MDL.^[3]After the matter was consolidated and transferred to the undersigned for coordinated pretrial proceedings, 3M vigorously litigated in the MDL for the next three-and-a-half years, negotiating for governing procedural and logistical rules; engaging in common corporate, military, and expert discovery, as well as case-specific discovery for 19 bellwether plaintiffs; completing case-specific discovery and dispositive motions practice for 374 Wave 1 cases;^[4] and extensively briefing (and orally arguing, as appropriate) issues ranging from the applicability of the federal officer removal statute (as to certain claims) and the federal government contractor defense (as to all design defect and failure to warn claims) to more than 260 motions in limine, 109 Daubert challenges, 42 case-specific summary judgment motions, 47 choice of law disputes,^[5]and 21 post-trial motions, not to mention countless discovery, procedural, and/or logistical disputes. Scorched earth battle was waged against every theory of liability alleged in this litigation, yet there was nary a whisper that Aearo, and not 3M, was the only proper target, or even a target at all.

Then came the bellwether trials, 16 in total over 14 months, resulting in 19 verdicts-13 plaintiffs' verdicts, 6 defense verdicts-totaling nearly $300,000,000 in jury verdicts. And that's when the bottom fell out. Suddenly, according to 3M, the MDL was a “failure,” this Court's legal rulings were riddled with “substantial” errors (only those in which Plaintiffs prevailed, of course), and the bellwether trial process was “tainted” and “flawed” (again, only with respect to trials in which Plaintiffs prevailed).^[6] It was time for a new forum-in the interests of justice, fairness, and efficiency (sound familiar?)-no more of this MDL nonsense.^[7]

Together with its MDL co-defendants, 3M devised a scheme to oust the Congressionally-established system for resolving mass tort disputes in Article III courts and install its new favored forum (for the moment, anyway), an Article I court, at the helm. Not because any of the entities was facing a bona fide threat of financial distress, and not due to managerial or operational difficulties that were jeopardizing the entities' continued viability. No, this was good old-fashioned litigation forum shopping, solely-and admittedly-designed to evade dissatisfactory legal rulings and verdicts in the MDL, and to avoid potential future liability for a non-debtor, 3M in the tort system.^[8]And there's the catch. 3M itself was not willing to pay the price of admission to an Article I forum-here, reorganization and submission to the oversight of a bankruptcy court. Not to be denied, the company hatched a workaround. Aearo would file for Chapter 11 bankruptcy protection but seek an extension of the statutory automatic stay of litigation to 3M, who would never file...