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Tuesday, January 28, 2020

Major plaintiffs firms that snagged states as opioid clients have been shut out of settlement talks by judge

Attorneys & Judges

By Daniel Fisher | Aug 20, 2019

Joe Rice of Motley Rice

CLEVELAND (Legal Newsline) - Recognizing the growing conflict between states and municipalities that are separately suing the opioid industry, U.S. District Judge Dan Polster has removed lawyers that represent both states and cities from any role in negotiating a potential class action settlement of opioid claims.

In an order yesterday, Judge Polster said law firms representing states and cities, including Motley Rice and Lieff Cabraser, “have a conflict of interest that bars them from representing, and negotiating on behalf of, the putative class.” In a follow-up statement today, the judge said he wasn’t accusing the lawyers of unethical practices but merely protecting the settlement negotiation process against conflict allegations. 

His order removed five of the seven top lawyers on the plaintiff team from class negotiations. 

The order makes it all but certain Judge Polster will approve a controversial “negotiation class” consisting of some 40,000 cities and counties in an effort to hammer out a global settlement of the multidistrict litigation concentrated in his court in Cleveland. 

State attorneys general (like Ohio's, who called it a "power grab") and some defendant companies oppose the proposal, saying it will hinder state settlement efforts and would violate federal law and U.S. Supreme Court precedent governing how class actions are formed. Judge Polster hasn’t yet approved the class.

The judge’s selection of Chris Seeger (of Seeger Weiss in New York) and Jayne Conroy (of Illinois' Simmons firm), two veteran attorneys with a number of MDL settlements under their belts, is also likely to generate criticism. Seeger seized control of the NFL players’ concussion litigation early in the process and helped negotiate a settlement that many players have criticized as unfair and overly lucrative for the lead plaintiff lawyers. 

Among other things, Seeger has been accused of steering players to a lawsuit-lending firm, Esquire Financial Holdings, at the same time as he urged the MDL judge to investigate other firms for predatory lending. At the time, Seeger told ESPN he resigned as director in 2016 and didn’t oversee its loans to players.

Seeger also negotiated a 2004 settlement of claims over the heartburn drug Propulsid that paid the lawyers $22.5 million but due to strict conditions the plaintiff lawyers agreed to distributed just $3.7 million to 32 of more than 4,000 claimants. University of Georgia Law School Professor Elizabeth Burch (who wrote the book on MDLs) uses the Propulsid settlement to demonstrate the problem of repeat-player MDL lawyers negotiating settlements that sometimes benefit them at the expense of their clients, thanks to mechanisms including “blow” clauses allowing the defendant to walk away if not enough plaintiffs agree to the deal, or agreements not to represent clients who reject it.

State AGs and other critics of the proposed negotiation class say a similar dynamic could be at work, as private lawyers motivated by their own fees negotiate a settlement on behalf of every city and county in the country without their informed consent. 

Under the proposal Judge Polster has indicated he will at least partially approve, a few dozen cities and counties would negotiate on behalf of all the rest and remaining class members would have one opportunity at the beginning of the process to opt out. After that, they would be bound to a fixed distribution plan, with the money flowing only to counties. 

Any dollar amount of the settlement would have to be approved by 75% of class members by number, plus a supermajority defined by other factors such as the severity of the opioid crisis in their area.

In his order, Judge Polster acknowledged the conflict for lawyers representing cities and counties who also represent states, which are mostly opposed to the negotiating class and see it as interfering with their own efforts to obtain money for abating the opioid crisis. The judge struck Russell Budd, Elizabeth Cabraser, Paul Geller, Joe Rice, and Troy Rafferty from the negotiating team because they “simultaneously represent entities seeking certification of the Class and States that fundamentally oppose the Class’s formation.”  

In a statement he said was prompted by news media inquiries, the judge said he “makes clear here that these attorneys have all been extremely helpful in pursuing litigation and settlement negotiations in this case and have not done anything unethical or otherwise inappropriate.”

The plaintiff lawyers also proposed they represent cities and counties in negotiations with state governments, which the state AGs opposed. Judge Polster agreed with the AGs, saying “the purpose of the proposed class is to facilitate negotiations between counties/cities and Defendants, not to interfere with any of the States’ settlement discussions or intrude in allocation discussions between a State and its own counties and cities.”

Opponents had noted the conflicted lawyers were still signing court papers so he ordered them to stop. Linda Singer of Motley Rice until now has appeared on many of the most important plaintiff filings. The judge said he was only appointing Seeger and Conroy as interim negotiators and may appoint more lawyers to the team later.  

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Organizations in this Story

Baron and BuddLevin PapantonioSeeger Weiss LLPMotley RiceLieff, Cabraser, Heimann & Bernstein,Robbins GellerSIMMONS HANLY CONROY LLC

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