In re Coloplast Corp., Pelvic Support Systems Products Liability Litigation

          PRETRIAL ORDER # 148 MEMORANDUM OPINION AND ORDER (RE: PETITION FOR AN AWARD OF COMMON BENEFIT ATTORNEYS' FEES AND EXPENSES)

          Joseph R. Goodwin, Judge

         Pending before the court is the Common Benefit Fee and Cost Committee's (“FCC”) Petition for an Award of Common Benefit Attorneys' Fees and Expenses (“Petition”).^[1] [ECF No. 2259]. In the Petition, the FCC asks the court to grant an award of attorneys' fees and expenses in the amount of 5% of the settlements and judgments subject to the court's ordered common benefit assessment. Following a period for objections, three plaintiffs' firms filed objections to the FCC's Petition, and the FCC replied. The Petition is ripe for consideration because briefing is complete.

         The seven multidistrict litigations (“MDLs”) before this court comprise one of the largest multidistrict litigation proceedings in this country's history. This nearly nine-year process is ongoing. What began as 36 plaintiffs suing one company for one allegedly defective pelvic mesh product transformed into over 104, 000 individual plaintiffs suing numerous defendants who manufactured many different pelvic mesh products. In addition to these complexities, many individual plaintiffs were implanted with different products manufactured by multiple defendant manufacturers across MDL lines. In tackling these complications, the plaintiffs' leadership organized and proposed to the court a structure for addressing global concerns that impacted cross-MDL issues. This required developing legal theories of liability and finding and vetting experts across the world who specialize in urology, surgery, materials, chemistry, and other specialties. It also required the taking of multitudinous depositions, analyzing, organizing, and storing tens of millions of defendant-produced documents, preparing and briefing hundreds of motions, preparing for and conducting bellwether trials, and eventually assisting many plaintiffs in reaching settlements. The fruits of this efficient process were made available to every plaintiff and their counsel. The court finds that every plaintiff benefited greatly from these efforts.

         This court is now evaluating whether common benefit counsel are entitled to 5% of all recoveries for their efforts in this litigation. The court must determine if this large group of lawyers acting for the common benefit has earned and is entitled to nearly half a billion dollars when in fact the majority of plaintiffs are individually represented. As is the case in most large multidistrict litigation, the answer is properly found by analyzing several factors, the most important of which is the total recovery received by all plaintiffs.

         In making this determination, I start with the commonsense observation that the common benefit work performed by leadership guaranteed that each plaintiff was the beneficiary of well-researched and briefed theories of liability with organized supporting factual resources and carefully vetted and developed expert opinion testimony making the case for general causation of damages resulting from allegedly defective products. Moreover, in the same vein of common-sense observation, I know that the leadership was able to provide informed settlement values to individual counsel as a result of their global experience in dealing with tens of thousands of cases. Finally, of the hundreds of firms representing 104, 000 plaintiffs subject to the holdback, only three law firms have objected to the Petition. These objections are either frivolous or untimely.

         Therefore, and as I will explain further below, after careful examination and after a lodestar crosscheck I find that the holdback and award of 5% is reasonable and appropriate in each of these MDLs. Accordingly, the Petition is GRANTED.

         I. Background

         The seven pelvic mesh MDLs assigned to this court are virtually unprecedented in size and scope. In 2010, the Judicial Panel on Multidistrict Litigation (“JPML”) transferred 36 individual pelvic mesh cases concerning the Avaulta line of pelvic organ prolapse repair devices, a device sold by C. R. Bard, Inc. (“Bard”).^[2] As time went on, numerous pelvic mesh cases were filed in different federal courts across the country against different pelvic mesh manufacturers. The plaintiffs' firms leading the litigation around the country discussed an MDL strategy, and in response to the similarity of pelvic mesh injuries allegedly caused by similar but different products manufactured by different defendants, requested that the JPML create three additional MDLs (2:12-md-2325, ^[3] 2:12-md-2326, ^[4] and 2:12-md-2327^[5]) and send them to this court pursuant to 28 U.S.C. § 1407.

         In transferring these MDLs, the JPML agreed with plaintiffs' leadership that: “The actions in each MDL share factual issues arising from allegations of defects in pelvic surgical mesh products manufactured by [the defendants]. Centralization therefore will eliminate duplicative discovery; prevent inconsistent pretrial rulings; and conserve the resources of the parties, their counsel and the judiciary.” In re Am. Med. Sys., Inc., Pelvic Repair Sys. Prods. Liab. Litig., 844 F.Supp.2d 1359, 1360 (J.P.M.L. 2012). Noting this court's role in presiding over the Bard MDL and its unique opportunity to preside over similar pelvic mesh cases, the JPML also stated: “[A] number of these actions are brought by plaintiffs who were implanted with multiple products made by multiple manufacturers. Centralization of the . . . MDLs in one court will allow for coordination of any overlapping issues of fact in such multi-product, multi-defendant actions.” Id. at 1361. Pursuant to 28 U.S.C. § 1407, the JPML sent a fifth MDL in 2012, 2:12-md-2387, ^[6] a sixth in 2013, 2:13-md-2440, ^[7] and a seventh in 2014, 2:14-md-2511.^[8]

         To the court's knowledge, the JPML has never assigned seven individual MDLs with different but related products and different manufacturers to a single cross-cutting MDL coordinated proceeding within one court. The plaintiffs' leadership tackled this enormous challenge by accepting the court's guidance and proposing a Plaintiffs' Counsel Organization Structure (“Proposal Structure”) in 2012, which called for a singular, cross-MDL plaintiffs' leadership structure to address common legal theories, defenses, experts, and scientific and medical claims. This court approved the Proposed Structure that facilitated the cross-MDL development and management of all facets of this litigation.^[9]

         It has been this court's goal to promote efficiencies and coordination across MDL lines. “In its most simplistic form, we have similar pelvic mesh products manufactured by different defendants that allegedly caused a variety of injuries to women. We suspect and hope that there are commonalities among the [multiple] MDLs.”^[10] Especially for the purposes of pretrial motions and discovery, this court has stated that “the most efficient way to handle the [multiple] MDLs is to consolidate as much as possible.” Id.

         Recognizing the challenges of litigating seven MDLs simultaneously, the plaintiffs' leadership proposed (and the court later appointed) a large 61-attorney PSC that was responsible for leading all of the litigation under a coordinated leadership structure. In order to promote the efficiencies, the court entered an order in all seven MDLs that stated: “It shall be the responsibility of the Coordinating Co-Lead Counsel to work across MDL lines in conjunction with the Executive Committee . . . .”^[11] The Executive Committee was also responsible for appointing a “singular PSC to coordinate across MDL lines in the . . . separate pelvic mesh MDLs before this court.”^[12] This singular PSC worked and collaborated across MDL lines to develop the litigation strategy and theories of liability, depose experts, and absorb the massive litigation costs. The court appointed only one PSC to coordinate and advance all seven of the MDLs. This leadership structure made it possible for the plaintiffs to address common issues that affected all seven of the MDLs and to work with attorneys who were assisting with common benefit efforts. This approach saved money and helped to prevent cross-MDL conflicts and duplicative work. Plaintiffs' leadership and the participating attorneys working for the common benefit of plaintiffs in these MDLs comprise what the court will refer to as common benefit counsel (“common benefit counsel”).

         Creating a plaintiffs' leadership organization of considerable size and with extensive experience was necessary. Moreover, the defendants were represented by some of the best law firms in the country. To achieve the goals of multidistrict litigation, I believed that a plaintiffs' leadership team would need to be very experienced, well-funded, and committed. The plaintiffs' leadership would be required to immediately create a structure defining this litigation and capable of the cooperative work of drafting master pleadings, plaintiff profile forms, plaintiff fact sheets, discovery plans, reporting procedures and funding arrangements necessary to achieve sufficient uniformity to allow the plaintiffs to benefit from the efficient cross-cutting MDL process. The PSC also addressed the economic disparity between the individual plaintiffs and the well-funded defendants. Leadership was required to spend tens of millions of dollars without guarantee of success. These costs continue but are a small part of what the common benefit fund was designed to compensate.

         It is my opinion that all of the progress and efficiencies in these MDLs would have been impossible without this organizational structure. The FCC has represented that 900, 000 hours were submitted by common benefit counsel for work performed for the common benefit of all MDL plaintiffs. Of those hours, the court appointed FCC has, after careful review, represented that 679, 191.20 of these hours qualified for the common benefit. Tens of thousands of cases have been resolved, for a total sum to date of $7.25 billion. Five-percent (5%) ($366, 102, 875.06) has been paid into the common benefit fund by defendants.

         Throughout this process, I issued orders dealing with the compensation to be received by plaintiffs' attorneys who worked on behalf of all the plaintiffs. For example, on October 4, 2012, I entered an Agreed Order Regarding Management of Timekeeping, Cost Reimbursement and Related Common Benefit Issues (“Management Order”) establishing preliminary procedures and guidelines for submitting applications seeking payment of common benefit fees and expenses.^[13]The Management Order appointed a Certified Public Accountant (“CPA”), paid with common benefit funds, to review all time and expense records for the MDLs. Pursuant to the Management Order, Chuck Smith, CPA, was required to work with the litigation's Co-Leads to manage the fund and administer payment for attorney expenses.^[14] I directed attorneys to record their time and expense records for review by the accountant every six weeks. The Management Order explicitly stated that counsel seeking consideration for common benefit compensation must acknowledge this court's “final, non-appealable authority regarding the award of fees” and that the parties “agreed to and therefore will be bound by the court's determination . . . [and] knowingly and expressly waive any right to appeal those decisions or the ability to assert the lack of enforceability of this Management Order or to otherwise challenge its adequacy.”^[15] Every member of the PSC approved this Management Order, and the Management Order was entered in the seven MDLs. On August 26, 2013, the court entered an “Agreed Order Establishing . . . [a] Fund to Compensate and Reimburse Attorneys for Services Performed and Expenses Incurred for MDL Administration and Common Benefit” (“Agreed Order”).^[16] The Agreed Order was entered in all seven MDLs. There, the court ordered MDL defendants to withhold a 5% assessment on plaintiff recoveries and directed defendants to pay the holdback assessments “directly into the . . . MDL Fund as a credit against the Settlement of Judgment.”^[17] The court explicitly stated in the “Assessments and Payments into the MDL 2326 Fund for All Covered Claims” that “[n]othing in th[e] Agreed Order is intended to increase the attorneys' fee paid by a client.”^[18] With the 5% assessment paid into the MDL Fund, the court allowed for payment of “common benefit work and expenses[] [u]pon a proper showing and Order of the Court.”^[19] Subsequent to these two orders, the court appointed attorneys involved in the leadership of this litigation to a committee, the FCC, to receive and analyze common benefit fund requests and make recommendations to the court.^[20]The FCC has filed the instant Petition, and the court now addresses it below.

         II. Common Benefit Attorneys' Fees - Jurisdiction and Authority

          The Supreme Court has long recognized an exception to the “American Rule” that prohibited a litigant's attorney from collecting attorneys' fees from the losing party. See Internal Imp. Fund Trs. v. Greenough, 105 U.S. 527, 537-38 (1881); Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975). The exception “has become known as the ‘common fund doctrine' or the ‘common benefit doctrine,' [which] permits the creation of a common fund for the purpose of paying reasonable attorneys' fees.” Eldon E. Fallon, Common Benefit Fees in Multidistrict Litigation, 74 La. L. Rev. 371, 374-75 (2014). The common fund doctrine is an equitable exception that creates a fund “for legal services beneficial to persons other than a particular client, thus spreading the cost of the litigation to all beneficiaries.” In re Vioxx Prods. Liab. Litig., 760 F.Supp.2d 640, 647 (E.D. La. 2010). Although originally used in the context of class actions, MDL courts commonly “cite[] the common fund doctrine as a basis for assessing common benefit fees.” Id. In the context of class actions, the common fund doctrine is used to remedy the free-rider problem, where a class member benefits from the class recovery while never paying for counsel. In re Zyprexa Prods. Liab. Litig., 594 F.3d 113, 129 (2d Cir. 2010). This is because, even though individual plaintiffs are usually represented by individual counsel in MDLs, “there are substantial similarities to class actions” that warrant compensating benefits conferred by plaintiffs' counsel for the common good. Id. at 130.

         A separate source of authority for MDL courts to assess attorneys' fees in common benefit fund cases comes from the inherent “‘managerial' power over the consolidated litigation.” In re Genetically Modified Rice Litig., No. 4:06 MD 1811 CDP, 2010 WL 716190, at *4 (E.D. Mo. Feb. 24, 2010). Unlike class actions, “the [statutory] authority to create an MDL flows from 28 U.S.C. § 1407.” In re Actos (Pioglitazone) Prods. Liab. Litig., 274 F.Supp.3d 485, 517 (W.D. La. 2017). Once cases are consolidated under the umbrella of an MDL court's pretrial jurisdiction, “the court's express and inherent powers enable the judge to exercise extensive supervision and control [over the] litigation.” Fed. Judicial Ctr., Manual for Complex Litigation, Fourth § 10.1 (2004). The Fourth Circuit also recognizes a district court's “broad discretion in coordinating and administering multi-district litigation.” In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig.-II, 953 F.2d 162, 165 (4th Cir. 1992).

         The third source for this court's authority to assess attorneys' fees in these seven interrelated MDLs is the Participation Agreement entered into by all counsel who voluntarily signed the agreement. The court's discretion includes the authority to “appoint lead counsel, recognize steering committees of lawyers, [and] limit and manage discovery.” Id. In these MDLs, the PSC entered into agreements with participating counsel who voluntarily signed the Participation Agreement, which was later incorporated into this court's Agreed Order. However, “[t]he agreement itself is not the source of the District Court's authority.” In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 617 Fed.Appx. 136, 143 (3d Cir. 2015). The source of the court's authority is in its discretion to manage the litigation in combination with the voluntarily entered into agreement. Id. “The agreement was simply incorporated into an order the District Court was empowered to issue.” Id. Because this court is empowered to “govern[] how to compensate the Steering Committee for its work and because [the Participation Agreement] was incorporated into that order, ” this court has the jurisdiction to adjudicate fund claims by attorneys participating in the common benefit fund process in the seven MDLs. Id. The court now addresses the methodology for assessing the common benefit fund under its jurisdiction.

         III. Methodology for Calculating Aggregate Attorneys' Fees Award

         Throughout the history of MDL common fund calculations, courts have employed three approaches when assessing the reasonableness of attorney's fees: (1) the lodestar method, (2) the percentage method, or (3) the blended method which combines the first two approaches. Fallon, supra, at 381. Under the lodestar method, a court multiplies “the reasonable hours expended on the litigation by an adjusted hourly rate” to produce a multiplier whereas the percentage method “compensates attorneys who recovered some identified sum by awarding them a fraction of that sum[.]” Id.

         Courts within our district frequently employ a blended approach. They award attorneys' fees based on a reasonable benchmark percentage of the fund verified by a lodestar cross-check. See, e.g., Jones v. Dominion Res. Servs., Inc., 601 F.Supp.2d 756, 758 (S.D. W.Va. 2009). Following this approach, the court will now (1) determine the value of the benefit common benefit counsel has provided to plaintiffs, (2) establish a benchmark percentage that common benefit counsel should be awarded based on awards given in similar MDLs, (3) apply the Fourth Circuit's Barber^[21] factors to assess the reasonableness of the benchmark percentage award, and (4) verify the reasonableness of the 5% award with a lodestar cross-check. In re Vioxx, 760 F.Supp.2d at 652.

         1. Valuation of the Benefit Received

          The simple question the court is addressing is what percentage of the total recovery by plaintiffs is attributable to the work by common benefit counsel. In making the commonsense observation that common benefit counsel benefited each plaintiff in these MDLs, the court must determine how much that benefit is worth. To answer that question, the court must first determine the total recovery by the plaintiffs and then determine what amount of that total recovery is directly attributable to the efforts of common benefit counsel.

         The court also notes that to date, not all plaintiffs have resolved their cases. This means that the total amount of recovery the 104, 000 plaintiffs will potentially receive is not yet known. However, this court is equipped with sufficient information to make a reasonable estimate as to the total amount of recovery the plaintiffs will receive. Having presided over these MDLs for nearly nine years, the court is intimately aware of the cases that remain, the alleged injuries of the women, and the range of possible verdicts and settlement values available to them. Therefore, for the purposes of evaluating how much common benefit counsel's contributions are worth, the court is uniquely situated to make a reasonable estimate of the final total recovery amount. Because not all of the recoveries have been paid by the defendants, these MDL funds are pay-as-you-go, meaning the payments into the MDL common benefit funds will continue after this court's order is entered. “Where the settlement provides benefits on a ‘pay-as-you-go' basis over a period beyond the point that a common benefit fee is to be awarded, the settlement fund also includes a reasonable estimate of the amount of future payments that will be made to” the individual plaintiffs. In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mex., on April 20, 2010, MDL No. 2179, 2016 WL 6215974, at *15 (E.D. La. Oct. 25, 2016) (citing In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 334 (3d Cir. 1998)).

         To date, the FCC represents that $7.25 billion has been paid out by the defendants to plaintiffs covered under the court's holdback. The FCC estimates that total settlements and judgments subject to the holdback will exceed $11 billion, and no objections were filed in response to the FCC's estimate. The court is fully aware of the plaintiffs' recoveries to date and finds that the estimate of $11 billion dollars is a reasonable estimate for the total amount of recoveries the plaintiffs will receive.

         2. Benchmark Percentage

         Now that the court has ascertained a reasonable estimate of the total recoveries the plaintiffs will receive, the next step requires the court “to arrive at an independent and justified reasonable percentage” for this litigation. In re Vioxx Prods. Liab. Litig., MDL No. 1657, 2013 WL 5295707, at *3 (E.D. La. Sept. 18, 2013). To clarify, the court is determining what percentage of each individual plaintiff's recovery should be reasonably awarded to the common benefit fund. That means that, whether a plaintiff was awarded $10, 000 or $200, 000, the court is assessing whether 5% of either of those figures is reasonable for common benefit compensation.

         The court does this in part by looking at comparable awards in similar MDLs with common benefit attorneys. See In re Actos, 274 F.Supp.3d at 524. Because the total anticipated recovery for all plaintiffs in these MDLs exceeds $1 billion, the court considers this a “super-mega-fund” litigation. Id. at 524-25. In In re Actos, the court found that the average fee awards in “super-mega-fund” litigation was 9.9%. Id. at 525. The court in In re Actos noted that “it, also, appears that as the size of the recovery increases, the percentage [awarded] tends to decrease.” Id. at 524.

         Super-mega-fund cases are often near the 5% the FCC has requested:

Case	Plaintiffs' Recoveries	Percent Award
In re Tyco Int'l, Ltd., 535 F.Supp.2d 249 (D.N.H. 2007)	$3.2 billion	14.5%
In re Royal Ahold N.V. Sec. & ERISA Litig., 461 F.Supp.2d 383 (D. Md. 2006)	$1.1 billion	12%
In re Actos, 274 F.Supp.3d 485	$2.4 billion	8.6%
In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., 553 F.Supp.2d 442, 480 (E.D. Pa. 2008)	$6.44 billion	6.75%
In re Vioxx, 760 F.Supp.2d 640	$4.85 billion	6.5%
Deepwater Horizon, 2016 WL 6215974, at *16	$13 billion	4.3%