PHILADELPHIA - A special master investigating how the prominent class action firm Hagens Berman handled failed lawsuits over the banned morning sickness drug thalidomide has chastised the firm in unusually strong terms for redacting the entire report it commissioned from an ethics expert, down to the letterhead and page numbers.
In a tartly worded, seven-page memorandum, William T. Hangley criticized attorneys at Hagens Berman for insisting the entire contents of the report by Abraham Reich of Fox Rothschild, a teacher of legal ethics at the University of Pennsylvania Law School, are privileged and cannot be shared with the defense. Hangley had ordered Hagens Berman to share unprivileged information with all “participants,” including defendants in the long-running legal contest,
“This is the second recent occasion on which, apparently, counsel has misunderstood an Order I considered pellucid,” Hangley wrote in his July 22 memo. “I will try to be more clear.”
To be clear, Hangley wrote, Hagens Berman may have destroyed the attorney-client privilege itself by sharing with its outside expert testimony from in camera hearings the court conducted in 2016 over the firm’s withdrawal from thalidomide litigation. The federal rules of procedure requiring parties to share information are “hardly stealth weapons,” he wrote, “and I sincerely hope they did not come as a surprise to Hagens Berman, its very able counsel, or its preeminent expert witness.”
“Nor should any of these knowledgeable attorneys have been surprised at my concern that the once-formidable shield of privilege the participants worked so hard to protect may have been breached irreparably by Hagens Berman’s wholesale surrender of the hearing transcripts and exhibits to an outside expert,” Hangley concluded.
Hagens Berman was ordered to pay $145,000 in sanctions in 2015 after defendants including GlaxoSmithKline uncovered evidence plaintiffs had known for years before they sued that they might have been exposed to thalidomide and that at least one had already sued, and settled, claims over the drug. Thalidomide was withdrawn from most markets in the early 1960s after massive worldwide publicity over its role in causing birth defects. Hagens Berman sought to withdraw from the litigation in 2014. One disgruntled former client sued the firm in May, accusing it of trying to protect its own reputation after fraudulently inducing her to sue.
Hagens Berman submitted an entirely redacted report this week, including explanations of why defendants couldn’t read details of Reich’s opinion because they involved matters covered by the privilege between the law firm and its former clients. Hangley filed his own version of the report, still containing large blacked-out sections but including a description of the expert’s assignment and his conclusion that the firm was justified in bringing the cases and justified in trying to drop them “based on information that was gained during the discovery process.”
Among the factors that doomed the cases was Pennsylvania’s two-year statute of limitations, which begins either at the time of injury or when the plaintiff should have discovered the injury through “reasonable diligence.”
Thalidomide was introduced in Germany in 1957 as a sedative, but banned in most countries by 1962 after an Australian obstetrician who gave it to his patients off-label as a morning sickness drug discovered their children were being born with birth defects. While the Food and Drug Administration never approved the drug, about 20,000 U.S. patients received thalidomide anyway, including several thousand women of childbearing age.
Hagens Berman took over thalidomide litigation in September 2011 from Gordon & Reeves, a partnership of an Australian lawyer who settled a thalidomide class action in his home country for $80 million and Kay Reeves, a Texas personal injury attorney. Gordon & Reeves originally partnered with the Lanier Law Firm and then switched to Hagens Berman.
The cases were based on supposedly new information including juicy allegations that thalidomide was developed by doctors who had served time as Nazi war criminals. Hagens Berman issued numerous press releases seeking potential clients and defending its conduct even as the cases collapsed.
In his report, Reich says the firm dropped the cases after it discovered certain facts that led it to believe it “no longer had a meritorious claim that these plaintiffs’ injuries were caused by exposure to Thalidomide.”
Hangley said he wanted “to nip one source of confusion in the bud; I refer to what looks suspiciously like the beginnings of a Hagens Berman step-back from its own strategic decisions.” The firm, in a July 7 filing, suggested it hired Reich because of the special master’s order.
“For the avoidance of doubt, I remind counsel that it was Hagens Berman and its attorneys, and only they, who decided (i) to engage a testifying expert and (ii) to hand previously privileged material to that expert, and that they took those steps without any prodding of any kind by me or by the Court,” he wrote. He ordered the firm to provide a newly redacted version by July 29.