Opioid judge orders companies to pay bulk of special master costs because they have 'greater discretionary funding'

By Daniel Fisher | Feb 14, 2018

CLEVELAND (Legal Newsline) - The judge overseeing hundreds of lawsuits against opioid manufacturers and distributors has ordered defendant companies to pay three-quarters of the costs of special masters who are overseeing settlement negotiations.

In an order issued Monday, U.S. District Judge Dan Aaron Polster said he was apportioning 75% of the costs to the defendants because the two sides "have dramatically different, asymmetric access to unencumbered assets." He originally proposed a 50/50 split in his Jan. 11 order appointing the special masters.

“The Court has given further consideration to the matter of apportionment, and now concludes imposing half the cost on each side is not appropriate in this case,” Polster said in his revised order.

“Plaintiffs consist mostly of public entities, which are dependent on taxes to function, often struggle to provide adequate services to their citizens, and frequently suffer budget shortfalls.”

Manufacturers and distributors, on the other hand, “are very large enterprises that generally have greater discretionary funding.”

The judge’s order doesn’t mention the fact that most of the plaintiffs have signed contingency fee contracts with private lawyers, limiting their responsibility for litigation expenses. Those contracts generally require the cities and counties to cover costs, including the cost of special masters, only out of money they recover from the litigation. If they lose, the outside lawyers eat the cost.

Those law firms are well-financed, thanks to their repeat role in multidistrict litigation and in the case of Hagens Berman and Motley Rice, the $260 billion tobacco settlement in 1998. Private lawyers in that case were awarded more than $14 billion in fees at a rate of $500 million a year. 

The magnitude of that cash flow was illustrated when one former Motley Rice partner, Jack McConnell, had to supply financial information as part of his confirmation as a federal judge. He told the U.S. Senate he expected to earn $2.5 million to $3 million a year in fees as his share of the tobacco settlement through 2024.

Last month, Judge Polster appointed three special masters to oversee settlement talks he hopes result in a master agreement to, in his words, “do something meaningful to abate this crisis.” Those masters are Cathy Yanni, David Cohen and Francis McGovern. 

Special masters coordinate settlement talks between the parties, assess legal filings and try to bring the two sides to an agreement. They typically earn hundreds of dollars an hour and in a complex MDL their costs can run to millions of dollars.

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Hagens Berman Sobol Shapiro, LLP Motley Rice U.S. District Court for the Northern District of Ohio

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