CINCINNATI (Legal Newsline) - Private lawyers representing hundreds of cities and counties including Harris County, Texas, home to Houston, have asked a federal appeals court to block a judge’s order steering potentially billions of dollars in fees from opioid settlements to a small group of lawyers in charge of federal multidistrict litigation.
Saying they “should not be forced to pay for legal services they never received,” the municipal plaintiffs asked the Sixth Circuit Court of Appeals to strike down a May 9 order by U.S. District Judge Dan Aaron Polster awarding 7.5% of any fees to the Plaintiffs Executive Committee, a group of nationally prominent law firms that seized control of opioid litigation early in the game.
Judge Polster has already given tentative approval to settlements that would award PEC lawyers with more than $1 billion in fees and expenses. The judge has asserted jurisdiction even over lawsuits filed in state court, an aggressive position the municipal plaintiffs said isn’t supported by statute or prior court decisions.
The fee fight comes as defendants negotiate a wave of settlements with states and municipalities, with legal fees frequently set at around 10%. If Judge Polster’s order is upheld, those plaintiffs will be forced to steer 75% or more of their fee allocation to the PEC. The executive committee is a tight group of law firms that frequently lead mass-tort MDLs, including Motley Rice, Simmons Hanly, Morgan & Morgan, Lieff Cabraser, Weitz & Luxenberg and Napoli Shkolnik.
The dissident plaintiffs include Harris County, Albuquerque and hundreds of towns and cities in Arkansas and South Carolina. They are represented by private lawyers at Fears Nachawati and Watts Guerra of Texas, John B. White in Spartanburg, S.C. and others. Most of their cases were filed in state court. While many opioid lawsuits were removed to the federal MDL for pretrial discovery and motion practice, in March, the Sixth Circuit granted Harris County’s mandamus petition and ordered its lawsuit back to state court. Since then, the judicial panel on multidistrict litigation has halted transfers of cases into the MDL and the Judge Polster has begun remanding lawsuits out of his court for trial.
Even as he was acknowledging the limits to his authority over opioid litigation, on May 9, “without any prior motion, notice or opportunity for hearing,” Judge Polster issued an order requiring state-court plaintiffs to deposit 7.5% of any settlements to the federal common-benefit fund for lead attorneys. The order effectively would divert more than 75% of attorney fees and costs to the national leadership team, municipal plaintiffs complained. In Texas, for example, a state-level agreement caps fees and expenses at around 10%.
“Thus, the federal Plaintiffs’ Executive Committee lawyers (PEC) walk away with the lion’s share of the fee and cost compensation after doing no work at all in state cases,” the municipalities said.
Judge Polster also issued an order prohibiting state-court judges from requiring defendants to provide evidence they already produced for the federal MDL, while simultaneously blocking state-court plaintiffs from obtaining those documents unless they agreed to the common-benefit order. Judge Polster’s order purports to strip plaintiffs of their rights to compel discovery even though his court never had jurisdiction over them, the plaintiffs said.
Two years ago, Judge Polster rejected the PEC’s request for a 7% common-benefit fee amid a flood of opposition and the PEC stated it would not seek a global common benefit order requiring state-court plaintiffs to pay fees to the national committee. With his May 9 order, however, Judge Polster not only approved higher common benefit fees but gave the PEC the very thing the committee said it wasn’t seeking last year.
Judge Polster justified his order by citing the statistical work plaintiff experts did on ARCOS data, national prescription data the Drug Enforcement Administration maintains showing where every opioid dose was shipped. But the ARCOS data produced to the court only runs to 2014 and the plaintiffs said they have received superior data from defendants themselves. While Judge Polster and the PEC both boasted about obtaining the ARCOS data over stiff resistance from the federal government, the Washington Post successfully challenged a protective order making it public for anyone who wants it, the dissident plaintiffs said.
Judge Polster, who previously has expressed sympathy for the money plaintiff lawyers fronted in this litigation for their government clients, said the analysis of ARCOS data was a “virtually unprecedented expense” without saying how much it was. The municipal plaintiffs cited a previous report by the PEC pegging their spending on ARCOS data at around $1 million. Since then, the judge has approved some $2.3 billion in fees for plaintiff lawyers.
The judge, in his May 9 order, said he has “equity powers” to prevent the “free-rider problem” of plaintiff lawyers capitalizing on the work of their colleagues. While MDL courts have generally shied away from extending their jurisdiction over pure state-court cases, Judge Polster wrote, in this case he “firmly believes that levying a common benefit tax” is “crucial” because it would be “inequitable in the extreme” for other lawyers to profit from the PEC’s work in analyzing the ARCOS data.
He described the 7.5% fee as being “in the mainstream of MDL assessments generally.” He said he may not actually approve payment of that much to the lawyers but was holding it back in case it is justified.