Can a company intentionally lose a lawsuit?

Question

Let’s say a multiple-defendant tort suit is brought against Companies A and B. Company A would like to settle, but Company B does not wish to settle. Instead, for some reason, Company B would like to go to trial… and lose.* Is that allowed? Can a defendant go to trial, only to “throw” the case? Does A have any recourse?

*For instance, perhaps Company B has some damning evidence they wish to bring to light, or perhaps they are competitors and B had calculated that the fallout will be worse for A than B.

Edit: Here’s an example of when this might happen: Company A sells exclusively e-cigarettes. Company B sells a wide range of tobacco products. John Doe regularly smokes both A and B e-cigarettes, and when he gets lung cancer he decides to sue them jointly. Company A knows that if they lose the lawsuit, it will ruin their entire business, so A and John Doe reach a settlement agreement. Company B knows that e-cigarettes are only a small part of their business but all of A’s business, and they would like to prevent Company A from growing. So B goes to trial with John Doe and allows expert testimony on the dangers of e-cigarettes, releases internal documents to John Doe, and offers little defense. The court finds for Doe, and while Company B takes a small hit, the PR backlash practically ruins Company A.

Is this allowed?

Answer 1

There is no need to concede

First of all, the situation sounds like improper joinder. The first motion of A will be to separate their case from the case of B. This way any evidence B has on only A is irrelevant to the own case, and can no longer be brought at all. Only the evidence with relevance on B is admissable in B's separated case.

At any point, A can attempt to settle instantly with a confidentiality clause that demands that the plaintiff, lawyer, or class may not say anything about the contents of the settlement or they are liable for the same or even more amount that the settlement is over.

Even if A does not have been separated from the case against B by the time they have settled, the settlement allows them to file for dismissal of the case against them specifically. This dismissal is based on the settlement and is to be signed by A and the plaintiff. As a result, A is no longer a party on the lawsuit in any way - information and evidence B might hold that only describes A is irrelevant and can not be brought, in fact, the plaintiff's attorney might now have to object to any of it being brought or be liable against A!

A can of course concede

At any point, A can file a declaration for judgment on the merits or facts, and in that filing contain things like. "All the facts in plaintiff's complaint are true and we admit full liability." The judge then has to separate the cases of A and B, judge A as it does not bring a defense, and B is now a separate case - which means they can no longer bring evidence that is only against A.

Evidence on B that also works on A?

Now, the case against A is settled. The case against B goes forward. As long as any evidence is generalized or aimed at B, everything is fine. Experts can testify to either all products that A and B have in common or B's products specifically. They may not testify about a non-party (A).

If B now chooses to not bring effective defense, that is on them. However, B opens itself for liability against its shareholders for not minimizing the losses from the lawsuit.

Answer 2

It could be that company B wants the trial for the case law it would generate while A does not. Because U.S. Courts follow Common Law practices of stare decisis the case can create a precident that would affect the outcome of future similar decisions. Especially if this is a suit that is common or likely to be common in the future.

If A does not want the case law, they could settle while B wants the case law. Having the case law might be beneficial to B (say the law will restrict the damages paid to a value below that of A's settlement payment... B might still be guilty, but B loses a lot less Or the case law would make the tactic illegal... but B can compensate for the loss of that practice while A cannot).

Another reason is because A may feel it's guilty and it's easier to settle while B may feel it's not as guilty and wants a jury and a judge to review the complaint. Keep in mind that in U.S. Civil Courts, one does not have to show evidence that reaches Beyond Reasonable Doubt standards but Preponderance of Evidence (which is the judge or jury believing that the Plaintiff is more likely correct than they are not. As a respondent, you'd want the opposite decision. Additionally damages are awarded based on your share of liability (Many times, suits are over issues where it "takes two to tango" thus there might be some liability on both parties for damages to each.).

As for mechanisms preventing this, one is a process of "Discovery". Once the case is accepted by the court, it moves to Discovery which is a double-edged sword. All parties to a case can subpenoa evidence from opposing parties to build the case. A lot of civil cases in the U.S. end between the acceptance of the case and the first requests for discovery because discovery in the U.S. is very broad. One need not show that evidence exists in a record or file... merely that evidence COULD exist... in order for documents to be handed over... and could threaten to expose communications or evidence that the company is up to some funny stuff.... it need not be illegal or tortious... it could just be that it's embarrassing if the public knows about it (since the evidence will likely be given public exposure). Most companies will settle rather show the skeletons in their closets.

90% of all cases in the United States (Criminal or Civil) are settled out of court by the way.