CLEVELAND (Legal Newsline) - The federal judge in charge of multidistrict opioid litigation walked back an order that set off a rebellion among plaintiff lawyers who complained it would interfere with their cases in state court and steer billions of dollars in fees to a small group of attorneys who dominate the federal litigation.
Saying his previous order “could have been more clear,” U.S. District Judge Dan Aaron Polster issued a corrective order acknowledging he has no jurisdiction over state courts and rewriting a hypothetical model that had indicated members of the Plaintiffs Executive Committee would get 75% of the billions of dollars in anticipated fees from opioid litigation.
Rival plaintiff lawyers filed a mandamus brief in the Sixth Circuit Court of Appeals to stop Judge Polster’s earlier order, which they said would steer “common benefit” fees to lawyers who hadn’t done enough work to justify them. They also sought to block part of the order that appeared to prohibit state courts from ordering evidence discovery against defendants.
While state courts are courts of general jurisdiction, basic constitutional law limits the jurisdiction of federal courts to cases properly before them, a fact Judge Polster acknowledged in his June 8 order. He rewrote his prior order to make clear limits on discovery applied only to federal courts.
“This court did not intend to enjoin or preclude any state court from entering any discovery order it concludes is appropriate,” the judge wrote. “The Court meant only to emphasize that, in every related opioid case (both in state and federal courts), the presiding judge should be aware that plaintiffs, defendants, and third-parties have all spent great time and expense to produce to the MDL Repository an enormous amount of relevant discovery.”
The judge reiterated state plaintiffs would only have access to the MDL Repository if they signed a participation agreement under which 7.5% of any fees flow to the lead lawyers, however. Given that fees in opioid settlements so far have been running at around 10%, that still means the bulk of the fee income could go to a small group of prominent firms that tend to dominate most multidistrict litigation.
The judge also acknowledged a mathematical model he used in his previous order might have incorrectly suggested PEC members were being given 75% of the fees in any settlement, whether in state or federal court. The model assumed half of all fees went to states and the other to cities, counties and other municipal plaintiffs, with the PEC’s 7.5% share based on the entire fee award. Instead, the judge wrote, he should have made a hypothetical where the 7.5% common benefit fee applies only to the second half.
It all will likely be moot anyway, the judge concluded, as he “fully expects that parties in virtually every opioid case” will negotiate around his fee orders. In fact, private lawyers have so far negotiated about 30 “back-stop” agreements with state attorneys general to exceed Judge Polster’s 15% cap on fees, “yielding about $550 million in total additional contingent fee payments.”
“The Ongoing Common Benefit Order is meant to serve primarily as a source of context and last resort, applying only if the parties cannot come to their own agreement,” he wrote.