United States District Court, S.D. West Virginia, Charleston Division
IN RE COLOPLAST CORP. PELVIC SUPPORT SYSTEMS PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ALL CASES
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%
|