RC2 Corporation
RC2 Corporation (NASDAQ: RCRC) is headquartered in Oak Brook, Ill. and engages in the design, production and marketing of toys, collectibles, infant, mother and toddler products under brand names which include: Learning Curve Brands, The First Years, John Deere and Lamaze. Among the toy products it produces and manufactures are Thomas & Friends™ Wooden Railway toys, which are wooden toys based on the popular Thomas the Tank Engine character.
In June and September of 2007, RC2 initiated voluntary recalls of certain Thomas & Friends™ Wooden Railway toys due to potential excess lead levels in the surface paint on the toys which were manufactured in China. These recalls, along with recalls by another major toy manufacturer in the fall of 2007, were the focus of intense media attention across the country.
Shortly after the first recalls were announced in June 2007, RC2 was hit with an outbreak of class action litigation filed in state and federal courts across the country arising from the recalls. These complaints alleged claims for breach of warranty, medical monitoring and violation of state consumer protection statutes. A total of 23 class actions were filed in courts across the country. Five class actions were filed in state courts in five different states, and 18 cases were filed in federal courts across the country.
RC2 engaged Ice Miller to defend it in the class action litigation and regulatory matters involving state and federal regulatory agencies. A team of Ice Miller litigators led by Bart Murphy, Judy Okenfuss and Jim Petersen developed and implemented a strategy to resolve all 23 of the class action cases filed against RC2.
Shortly after one of the first state court cases was filed, RC2 entered into settlement discussions with plaintiff's counsel in this case which led to a mediation. Meanwhile on the federal front, the plaintiffs' counsel in the 18 federal class actions organized a lead counsel committee to coordinate the prosecution of the federal class actions. To manage the 18 federal class actions, Ice Miller filed a petition before the Judicial Panel on Multi District Litigation (JPML) seeking centralization of all 18 cases in a MDL proceeding in Chicago. The JPML granted the petition and transferred all the federal class action cases to the United States District Court for the Northern District of Illinois in Chicago. In the interim, Ice Miller was able to negotiate a nationwide class action settlement with all five state court plaintiffs. RC2 and the state court plaintiffs presented the settlement for preliminary approval to the Circuit Court of Cook County, Ill. where one of the state cases was pending. The state court settlement, which also resolved the claims of the federal court class plaintiffs, received preliminary approval from the Circuit Court of Cook County, Ill. Ice Miller then filed a motion in federal court to stay the 18 federal cases pending final approval of the state court settlement.
Plaintiffs' counsel in the federal cases then sought to stop the state court settlement and filed a motion for a preliminary injunction under the All Writs Act seeking to enjoin RC2 from proceeding with the state court settlement. Ice Miller opposed the motion for a preliminary injunction which sought to destroy the state court class action settlement. The federal court judge denied the motion for an injunction against RC2 and granted RC2's motion to stay the federal cases pending the resolution of the state court settlement. Ice Miller then negotiated an amended settlement agreement, without significant additional cost to RC2, under which the federal class action plaintiffs became a part of the settlement in order to achieve a global resolution. The amended settlement received preliminary approval 10 ½ months after the first federal class action was filed and received final approval 14 months after the first class action was filed. All 18 federal court class actions and the five state court actions were dismissed.
