Another complication resulting from multiple-defendant litigation is the fact that one or more defendants may settle during the course of the case. In multiple-defendant litigation, lawyers from different defendants often take the lead on certain aspects of the case. Other lawyers, and their clients, begin to rely on the other party’s expertise on a particular subject. But when those parties settle, that expertise can be lost to the group. As a result, while there is a tendency to delegate issues amongst the defendant group, it is important that each defendant have some knowledge of all the issues in the case. That way, when a defendant settles, the remaining defendants can address the issues delegated to the now-settling defendant and continue preparing for trial.
Settlements impact multiple-defendant litigations in other ways. For example, when one defendant enters into a settlement agreement, the pressure for other defendants to settle increases. No defendant wants to be the “last man standing.” Additionally, the individual costs
of any cost sharing arrangements increase when some but not all defendants settle. As a result, as the number of defendants in the case decreases, the costs associated with the case for each of the remaining defendants increases. There is also an increase in pressure on the remaining defendants to take on more and more responsibility to prepare the case for trial.
In addition, the plaintiff may attempt to use the existence of settlement agreements to the disadvantage of the remaining defendants. For example, if a settlement agreement admits to the validity and infringement of a patent, the plaintiff customarily will want to get that settlement agreement admitted into evidence in the case as proof of non-obviousness. Moreover, if the settlement agreement provides for either a substantial royalty payment or a high royalty rate, the plaintiff invariably will want to rely on that document as evidence of the proper royalty rate to apply in calculating damages from the remaining defendants.
Defendants invariably will want to exclude that evidence because of its nature as a settlement and the potentially unfairly prejudicial value under Federal Rule of Evidence 403. While courts might exclude such settlement agreements or redact certain portions of them, it nevertheless is an issue the remaining defendants have to deal with that complicates the calculation of damages.