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MDL plaintiffs’ attorneys work on contingency, and, in a given MDL, some plaintiffs’ attorneys (particularly, those in leadership positions) will devote more time, effort, and financial resources to the case than others. Indeed, certain plaintiffs’ attorneys will do comparatively little work, merely monitoring the litigation on their individual client’s behalf until a settlement is reached. Recognizing these disparities and attuned to inefficiencies that may result if counsel is inadequately compensated, courts have recognized an inherent authority to assess “common benefit fees,” which are pooled in “common benefit funds.” These funds are then distributed to attorneys who perform “common benefit work,” and, in so doing, significantly contribute to the litigation.
The architecture for common benefit funds is typically established early in an MDL, though funds are not disbursed until later in the proceedings, after funding becomes available, whether through settlement of some or most of the plaintiffs’ claims or following a trial that results in a verdict for the plaintiff.
This module discusses three key considerations courts must address regarding common benefit funds. These are: (1) how to structure and administer the fund, including how to address issues that arise when litigation in state court is moving alongside the federal MDL; (2) how to establish the set-aside percentage; and (3) how to make disbursements from the fund to those attorneys who performed common benefit work.
For more on common benefit funds, see generally, Bolch J. Inst., Duke L. Sch., Guidelines And Best Practices for Large and Mass-Tort MDLS 64–80 (2d ed., 2018) [hereinafter Bolch Guidelines]; Fed. Jud. Ctr., Manual for Complex Litigation (4th ed. 2005) § 14 [hereinafter MCL]; Eldon E. Fallon, Common Benefit Fees in Multidistrict Litigation, 74 La. L. Rev. 371 (2014); Nora Freeman Engstrom & Todd Venook, Harnessing Common Benefit Fees to Promote MDL Integrity, 101 Tex. L. Rev. 1623, 1642 (2023).
Courts often create the basic structure for a common benefit fund early in the litigation. The Federal Judicial Center’s Manual for Complex Litigation offers the following guidance: “Early in the litigation, the court should define designated counsel’s functions, determine the method of compensation, specify the records to be kept, and establish the arrangements for their compensation, including setting up a fund to which designated parties should contribute in specified proportions.” MCL § 12.215. The Bolch Guidelines are in accord, noting that early guidance regarding common benefit funds “allows counsel to effectively manage the process and minimizes conflict at the end of the litigation.” Bolch Guidelines, supra at 68.
In anticipation of the possibility that, at some point in the future, there may be applications to the Court by attorneys for payment of common benefit fees or expenses, the Court now issues this Common Benefit Order No. 1 containing preliminary procedures and guidelines. The Court expresses no opinion regarding whether payment of any common benefit fees or expenses will ever be appropriate. This Order merely provides guidance so that, should the issue become ripe, any attorneys applying for common benefit fees or expenses will have notice of the standards that will be employed in assessing those applications. These guidelines are not meant to be exhaustive, and the Court may issue additional procedures, limitations, and guidelines in the future, if appropriate.
But see Memorandum and Order, In re Genetically Modified Rice Litig., MDL No. 1811 (E.D. Mo. Feb. 24, 2010) (creating common benefit trust fund after two bellwether trials).
While courts frequently establish the architecture for the fund early on, the fund generally remains unfunded until a later point in the litigation, typically after most claims have been resolved.
While courts approve the creation of, and ultimate disbursements from, common benefit funds, judges rarely oversee the day-to-day tasks associated with payments into or out of the fund. Instead, they either delegate those more granular responsibilities to a fee committee or to a special master.
Fee Committees. Fee committees are often comprised of members of the plaintiffs’ leadership team and are charged with tracking and allocating payments out of common benefit fund.
The compensation structure set forth in this Order shall be implemented by a “Fee Committee.” Members of the Fee Committee will include Co-Lead Counsel and other individuals to be selected by the Court from the PEC, Co-Liaison Counsel, and possibly others. The Fee Committee shall have the responsibility and discretion to allocate any Court-awarded attorneys’ fees and expenses to Participating Counsel, subject to the Court’s review and approval. If, and to the extent that, any portion of this MDL is certified as a class action under Fed. R. Civ. P. 23 for purposes of resolution and/or trial, any award of fees and expenses, including for common interest work, will be consistent with the standards and procedures of Rule 23, including Rule 23(h). Any award of fees and/or expenses shall be approved by the Court.
Special Masters. Courts also appoint special masters or other adjuncts—often CPAs or others with accounting expertise—and task these individuals with overseeing and administering the common benefit fund process. Often, the court will solicit recommendations from plaintiffs’ leadership as to who should serve in such capacities.
Pursuant to Federal Rule of Civil Procedure 53(a), the Court appoints Amy Gernon [a third-party attorney specializing in complex settlements] as the Special Master who will assist the Court with the management of the record keeping process for common benefit fund work, and should a CB Fund be established, with the management and administration of payments from such a fund (“CBF Special Master”).
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The Special Master shall make periodic reports to the Court regarding the work performed for the common benefit. Co-Lead Counsel may also request reports.
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The Special Master will maintain files consisting of all documents submitted to her by the parties and of any of her written orders, findings, and/or recommendations.
The Leadership has advised the Court that it has retained David J. White, a Certified Public Accountant with Heffler, Radetich & Saitta, LLP, to help develop and oversee the case time-and-cost management procedures and process for this litigation. The Leadership represents that Mr. White has extensive experience in all areas of time-and-cost management procedures, tax planning, and in the distribution and post-distribution phases of administering class action matters, and that he is well qualified to perform the case time-and-cost management oversight functions. The Court has reviewed Mr. White’s resume and accepts the representation of the Leadership that he is an independent and objective party who will fairly and diligently manage the submissions and determine whether those submissions are appropriate and that he is qualified and able to perform the designated responsibilities.
The GCL Leadership has advised the Court that it has preliminarily retained Philip A. Garrett, CPA, to establish the case time and cost management procedures and process for this litigation, and that pursuant to that retention, Mr. Garrett has begun to collect information from attorneys about their work and expenses in this litigation. The GLC Leadership has represented that Mr. Garrett is well qualified to perform the case time and cost management functions in that he has been previously appointed to do the same in other MOL cases such as Vioxx, Propulsid, Chinese Drywall and BP Oil Spill. The GCL Leadership has also advised that Mr. Garrett has served as the administrator of other MOL assessment accounts. The Court has reviewed the article cited above that was co-authored by Mr. Garrett and attorney Leonard A. Davis relating to case time and cost management, and the article authored by the Honorable Eldon E. Fallon relating to common benefit fees, and finds those articles informative on the matters of reporting common benefit time and expenses, the creation of an MOL assessment account and its management, and the appointment of an administrator for an MOL assessment account. The Court notes that the Motion filed by the PEC for the establishment of the GranuFlo Account included a copy of Mr. Garrett’s current curriculum vitae, which the Court has reviewed. The Court is satisfied that Mr. Garrett is qualified and able to perform the case time and cost management functions and to serve as the administrator of the GranuFlo Account to be established by this Order.
In many MDLs, certain plaintiffs pursue claims in parallel state court litigation. Those state court cases can pose issues when establishing common benefit funds, since attorneys representing plaintiffs in the federal MDL may rely on work product created by the attorneys litigating in state court, and vice versa. Similarly, in some cases, the majority of federal and state court cases may be resolved in one quasi-global settlement. Or, state and federal cases may settle on different timelines.
Accordingly, MDL judges have “contractualized” the common benefit process, often through a “Participation Agreement,” allowing state court attorneys to opt-in to participating in the MDL court’s common benefit fund. See Bolch Guidelines, supra at 71.
Exhibit A, attached hereto and incorporated herein, is a voluntary Participation Agreement between: (1) the Plaintiffs’ Steering Committee (“PSC”) and other plaintiffs’ attorneys who perform common benefit work in connection with the MDL, and (2) plaintiffs’ attorneys with cases solely in state court who elect to sign the Participation Agreement. The Participation Agreement is a private and cooperative agreement between plaintiffs’ attorneys only; and not defendants or defendants’ counsel. All plaintiffs’ attorneys who currently have cases pending in any state court and who want to become a Participating Counsel shall, within 45 days of this Order, execute the Participation Agreement. Any plaintiffs’ attorney who does not yet have an Invokana case filed in any federal or state court and who wants to become a Participating Counsel shall execute the Participation Agreement within 45 days of the date their first case is filed in any state court, if that lawyer intends to voluntarily become a Participating Counsel at the fee and expense percentages set forth herein…
Exhibit A, attached hereto and incorporated herein, is a voluntary Participation Agreement between plaintiffs’ attorneys who have cases pending in the MDL and/or in state court. The Participation Agreement is a private and cooperative agreement between plaintiffs’ attorneys only (“Participating Counsel”); and not Defendants or Defendants’ counsel. Participating Counsel shall automatically include all members of the Plaintiffs’ Leadership Group (as designated in CMO No. 4) by virtue of their appointment by the Court to the Plaintiffs’ Steering Committee, any State-Federal Liaisons that this Court may appoint, and any other plaintiff’s attorneys who execute the Participation Agreement (Exhibit A hereto). All plaintiffs’ attorneys who currently have cases pending in this Court or in any state court shall, within 45 days of this Order, designate whether or not they are a Participating Counsel or a Non-Participating Counsel by signing the appropriate section of the Participation Agreement…
There is some debate over whether federal courts may order lawyers with only state court cases to contribute to the federal common benefit fund. The vast majority of courts to consider the question have found that, because they lack jurisdiction over the state court cases, they cannot order defendants to withhold amounts that they may owe to state court plaintiffs and, by extension, to their counsel. See, e.g., Memorandum and Order, In re Genetically Modified Rice Litig., MDL No. 1811 (E.D. Mo. 2010) (compiling cases); In re Syngenta AG MIR 162 Corn Litig., 2015 WL 2165341, at *3 (D. Kan. 2015).
Some MDL courts add language expressly limiting the effect of their common benefit fund orders on parallel state court proceedings.
The Court recognizes the jurisdictional rights and obligations of the state courts to conduct their state court litigation as they so determine and that the state court litigations may include counsel who are Participating Counsel. The Participation Agreement and this Order shall not be cited by a Party to the Participation Agreement in any other court in support of a position that adversely impacts the jurisdictional rights and obligations of the state courts and state court Participating Counsel.
For more on state/federal coordination in the context of common benefit funds, see Bolch Guidelines, supra at 69–71.
Early in the proceedings, courts typically establish parameters outlining who can be compensated out of the common benefit fund and the types of work for which counsel can be compensated. See Bolch Guidelines, supra at 71. Typically, those counsel who perform joint work and who, as a consequence, will ultimately be paid out of the common benefit fund are dubbed “participating counsel.” These “participating counsel” agree to be bound by certain terms, including to only seek payment for work eligible for payment and to abide by certain recordkeeping requirements.
The recovery of common benefit attorneys’ fees and cost reimbursements will be limited to “participating counsel” as defined herein. Furthermore, participating counsel shall only be eligible to receive common benefit attorneys’ fees and cost reimbursement if the time expended, costs incurred and activity in question were (a) for the common benefit, (b) appropriately authorized, (c) timely submitted, and (d) approved by this Court.
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Signatories to the Motion seeking this order and those counsel who subsequently desire to be considered for common benefit compensation and as a condition thereof agree to the terms and conditions herein (“Participating Counsel”) acknowledge that the Court will have final, non-appealable authority regarding the award of fees, the allocation of those fees and awards for cost reimbursements in this matter. Participating Counsel have (or will have) agreed to and therefore will be bound by the Court’s determination on common benefit attorney fee awards, attorney fee allocations, and expense awards, and the Participating Counsel knowingly and expressly waive any right to appeal those decisions or the ability to assert the lack of enforceability of this Order or to otherwise challenge its adequacy.
The recovery of common benefit attorneys’ fees and cost reimbursements will be limited to “Participating Counsel.” “Participating Counsel” shall be defined as Lead Counsel and members of the Plaintiffs’ Steering Committee (along with members and staff of their respective firms), any other counsel authorized by Lead Counsel to perform work that may be considered for common benefit compensation, and/or counsel who have been specifically approved by this Court as Participating Counsel prior to incurring any such cost or expense.
“Participating Counsel” shall be defined as the Court-appointed Plaintiffs Steering Committee (along with members of their firm and staff) and any other counsel authorized by the Executive Committee or Lead Counsel who desire to be considered for common benefit compensation.
Participating Counsel shall only be eligible to receive common benefit attorneys’ fees and cost reimbursement if the time expended, costs incurred and activity in question were (a) for the common benefit, (b) appropriately authorized, (c) timely submitted, and (d) approved by this Court.
Courts generally require counsel for plaintiffs in an MDL to agree to set aside a specific percentage of their contingency fee to compensate participating counsel who perform common benefit work (for more on establishing set asides, click here). In exchange, counsel may draw upon materials and work product that is produced and created for the common benefit of all plaintiffs.
Pretrial Order No. 19 Ex. A, In re Vioxx Prods. Liab. Litig., MDL No. 1657 (E.D. La. 2005);
With respect to each client who they represent in connection with a Vioxx related claim, whether currently with a filed claim in state or federal court or unfiled or on a tolling agreement, each of the Participating Attorneys shall deposit or cause to be deposited in an MDL Fee and Cost Account established by the District Court in the MDL a percentage proportion of the gross amount recovered by each such client which is equal to three percent (3%) of the gross amount of recovery of each such client (2% fees; 1% costs). For purposes of this Agreement, the gross amount of recovery shall include the present value of any fixed and certain payments to be made to the plaintiff or claimant in the future. It is the intention of the parties that such assessment shall be in full and final satisfaction of any present or future obligation on the part of each Plaintiff and/or Participating Attorney to contribute to any fund for the payment or reimbursement of any legal fees, services or expenses incurred by, or due to, the MDL and/or any Common Benefit Attorneys…
As the litigation progresses and work product of the same type and kind continues to be generated, the PSC will provide Participating Attorneys with such work product and will otherwise cooperate with the Participating Attorneys to coordinate the MDL litigation and the state litigation for the benefit of the plaintiffs.
In general, only Participating Counsel will receive access to any discovery and plaintiffs’ work product materials produced through common benefit work by plaintiffs’ counsel in this MDL. In return for that access, they must agree to contribute a portion of any recovery from the defendants to the CB Fund to the extent ordered by this Court.
In some cases, transferee judges will require that plaintiffs’ counsel who seek to access the common benefit fund sign a “Participation Agreement,” which outlines the obligations and responsibilities of plaintiffs’ attorney who wish to perform and receive payment for common benefit work. Participation Agreements can be particularly useful when plaintiffs’ attorneys litigating in state court cases engage in tasks that benefit plaintiffs in a parallel federal MDL. Indeed, “[m]any judges have lauded efforts to contractualize common benefit assessments as avoiding jurisdictional issues, while still allowing the judge to determine the common benefit amount in order to preserve the legitimacy of the assessment.” Bolch Guidelines, supra at 71.
Case Management Order No. 14 (Revised), In re Fresenius Granuflo/Naturalyte Dialysate Prods. Liab. Litig., MDL No. 2428 (D. Mass. 2015) (emphasis added).
“Eligible Participating Counsel” is defined to be all members of the GCL Leadership, the PSC of this MOL and any other plaintiffs’ attorneys who voluntarily sign the Agreement. An attorney can be eligible to be included in a Joint Fee Petition only if the attorney’s cases and the claims of all of the attorney’s clients whether filed or not are subject to the Assessment.
This Participation Agreement is a private cooperative agreement between plaintiffs’ attorneys to share Common Benefit Work Product pursuant to Case Management Number (“CMO”) No. 14, the Order Regarding Management of Timekeeping, Cost Reimbursement and Related Common Benefit Issues. Any plaintiffs’ attorney who executes this Agreement or who is otherwise bound to this Participation Agreement by CMO No. 14 (“Participating Counsel”) is entitled to receive the Common Benefit Work Product created by those attorneys who have also executed, or have been deemed to have executed, the Participation Agreement, regardless of the venue in which attorneys’ cases are pending.
Non-participating counsel—i.e., those who elect not to execute a Participation Agreement or otherwise receive access to common benefit work in exchange for paying into the common benefit fund—are usually precluded from accessing such work. Thus, for example, they may not be able to access certain documents obtained in discovery.
If, despite that prohibition, a non-participating counsel nonetheless accesses common benefit work, some courts have required them to pay the same set-aside percentage into the common benefit fund as participating counsel who signed a Participation Agreement. Some courts impose additional penalties, including, for example, allowing plaintiffs’ leadership to seek attorneys’ fees and costs associated with a motion to enforce the prohibition on non-participating counsel’s access to common benefit work.
The fair liquidated damages for such unauthorized use of the common-benefit work product is equal to the assessment percentage being set by this order on the cases and claims that shall be assessed pursuant to the Participation Agreement. In addition, the Court will consider an application by the Leadership for payment of its fees and costs to enforce this order with respect to any unauthorized procurement of the common-benefit work product and/or the unauthorized use of the common-benefit work product.
“Common benefit work” is work that is in the common interest of the MDL plaintiffs. Many transferee judges define common benefit work broadly, which allows those administering the fund (a fee committee or special master), who generally are closer to the MDL’s day-to-day litigation demands, to make more specific determination about what work, exactly, qualifies. To provide additional guidance, courts sometimes provide examples of compensable work, or establish specific limitations on what types of work will be (and won’t be) compensable.
Compensable work is defined as work that is in the common interest of the MDL and is performed by Co-Lead Counsel, Co-Liaisons, the PEC, and by Participating Counsel when authorized by Co-Lead Counsel. In determining whether work meets this standard, the Court will rely on the procedures set forth in this Order, the advice of the Fee Committee on the type and quality of the work performed by Participating Counsel, and the Court’s judgment regarding how work performed contributed to the outcome of the MDL. It is anticipated that much of the work performed will be performed for the common interest of the MDL. Co-Lead Counsel will be expected to prosecute this case efficiently and to monitor attorney billing and expenses in order to minimize duplicative and unnecessary work. Co-Lead Counsel shall balance this need for efficiency with the need to maintain quality and thoroughness in prosecuting this MDL.
In order to provide Participating Counsel guidance about what is and is not compensable work in the eyes of the Court, the following are some examples:
It is not the intent of the Court to micro-manage the work of counsel. However, these examples, amongst other areas not specifically set forth, can be fertile grounds for unnecessary and duplicative work. The Court will rely on the efficacy of the procedures set forth herein and the enforcement of same by Co-Lead Counsel to ensure that the work done is meaningful and adds value. Participating Counsel, and all other counsel, are subject to their time being eliminated or reduced by the Fee Committee and/or the Court if this Order is not followed.
The following work may be eligible for payment from any CB Fund that the Court may establish
Common-benefit work may include, but is not limited to:
Courts generally require Participating Counsel to receive prior approval for their work in order for it to qualify as compensable “common benefit work.” By requiring prior approval, the court can minimize disputes regarding the type of work that is compensable, though this pre-authorization process can be cumbersome and increase the administrative burden on the entities charged with administering the fund.
Eligible Participating Counsel must be authorized to have performed the Common Benefit work for which they seek compensation and be authorized to have incurred Common Benefit expenses prior to expending any time and expenses that they believe should constitute Common Benefit work or Common Benefit expenses. The PEC and the Mass-PSC are hereby deemed to be authorized to perform Common Benefit work and to incur Common Benefit expenses.
In order to be eligible for reimbursement of common benefit expenses, said expenses must be: (a) for the common benefit; (b) appropriately authorized and timely submitted; (c) within the defined limitations set forth in this Participation Agreement and associated Order; and (d) verified by a partner or shareholder in the submitting law firm.
For the purposes of this Participation Agreement, “authorized” or “approved” in terms of common benefit expenses and common benefit work shall mean authorized and approved by Plaintiffs’ Co-Lead Counsel.
Time spent on matters common to all claimants in the MDL must be assigned by Plaintiffs’ Co-Lead Counsel to be eligible for consideration as common benefit time. No time spent on developing or processing individual issues in any case for an individual client (claimant) will be considered or should be submitted; nor should time spent on unauthorized work be submitted for consideration.
Courts typically require Participating Counsel (i.e., those counsel who sign a Participation Agreement entitling them to access common benefit work) to keep detailed, contemporaneous records of the common benefit work they perform. Often, transferee judges require that any time submissions be verified by a partner at the submitting law firm.
All time must be accurately and contemporaneously maintained. Participating Counsel shall keep a daily record of time spent in connection with common benefit work on this litigation, indicating with specificity the hours, location and particular activity (such as “conducted deposition of John Doe”). Time entries that are not sufficiently detailed may not be considered for common benefit payments. All common benefit work time for each firm shall be maintained in tenth-of-an-hour increments.
The forms detailing expenses shall be certified by a senior partner in each firm, and such certification should attest to the accuracy of the submissions. Attorneys shall keep receipts for all expenses. Credit card receipts are an appropriate form of verification if accompanied by a declaration from counsel that work was performed and paid for the common benefit. Cost records shall be electronically submitted to CPA and Co-Liaison Counsel on a monthly basis. Untimely submission of Cost records will result in a waiver of said costs. Unsubstantiated costs may be disallowed, as recommended by the CPA and/or Co-Lead Counsel.
Courts similarly establish schedules for the periodic submission and review of common benefit work performed for which Participating Counsel seek payment from a common benefit fund. “Generally, parties and judges prefer contemporaneous reporting requirements.” Bolch Guidelines, supra at 73. Of course, requiring contemporaneous reporting means that attorneys will submit payment requests before the common benefit fund has been funded. Id. But requiring contemporaneous, periodic submission and review can ensure that the entity charged with reviewing submissions (i.e., the special master, magistrate judge, or fee committee) spots issues in real time, allowing for smoother distributions once the common benefit fund has been funded and the disbursement process is in full swing.
Time and expense submissions are to be made on the 15th day of each month, beginning on January 15, 2016, at which date all qualifying time and expenses up to and including December 31, 2015 must be submitted to Plaintiffs’ Co-Lead Counsel. Thereafter, each submission should contain all time and expenses incurred during the calendar month prior to the submission date (i.e., the February 15, 2016 submission should include all time and expenses incurred during the month of January, 2016), all time and expense submissions should be accompanied by contemporaneous records and verified by a partner or shareholder in the submitting firm. Submissions of time and expense made after the 15th day of the month following the month in which the time or expense were incurred may be rejected. Only time and expense as defined in the Participation Agreement and the Joint Prosecution Agreement will be considered and recognized for common benefit consideration. As to Plaintiffs’ Counsel who are not among those described as Consortium Attorneys in the Joint Prosecution and Confidentiality Agreement whose prior work product will be considered as common benefit time and expenses predating the formation of this MDL, their and other Participating Counsel’s time and expense for new work product will be considered for common benefit fees and expenses commencing September 15, 2015, the date of the issuance of this Court’s Order Setting Initial Case Management Conference. Moreover, only that time and those expenses incurred for the common benefit of all cases, consistent with the terms of this Order (e.g., activities associated with completing the items to comply with CMO #1), shall be considered for common benefit reimbursement at the end of the litigation.
Amended Pretrial Order No. 37, In re Zantac (Ranitidine) Prods. Liab. Litig., MDL No. 2924 (S.D. Fla. 2020).
Monthly time and expense submissions shall be submitted by Common Benefit Counsel to Lead Counsel or its designee on a monthly basis, by deadlines and in accordance with the guidelines set forth herein. The first submission is due on September 1, 2020, and should include all time and expenses from February 14, 2020 (date of entry of PTO #1) through July 31, 2020. After this first submission, each monthly submission should include all common benefit time and expenses incurred during the preceding month and should be submitted by the fifteenth (15th) day of the following month (e.g., the submission due September 15, 2020, should contain all common benefit time and expenses incurred from August 1, 2020, through August3 1, 2020). Although counsel should endeavor to submit all common benefit expenses incurred in a certain month in the submission made on the 15th of the next month, the realities of third-party billing and credit card statement schedules may make such quick expense submission difficult in some circumstances. Thus, submission of “supplemental” common benefit expense reports will be permitted for those expenses incurred during the previous six months that—because of circumstances outside the Common Benefit Counsel’s control—could not have been submitted by the deadline. Any common benefit expenses submitted more than six months in arrears may not be considered or included in any compilation of common benefit expense calculation and may be disallowed, except for good cause shown and with approval of Lead Counsel. Supplemental submissions of common benefit time will be permitted only for good cause shown and with the approval of Lead Counsel.
Lead Counsel or their designee will review submitted time records and expenses to ensure they are reasonable and will notify submitting counsel if time or expenses are deemed not reasonable or deficient in any respects. Lead Counsel will take particular care to ensure that duplicative work is not being performed and will adhere to the procedures set forth herein. Lead Counsel will have the power to discount or eliminate non-compliant or unnecessary hours or expense
Common benefit funds are not used to front litigation costs, since the timelines don’t mesh. Common benefit fees are not collected until the parties have settled all or a significant proportion of the cases. Litigation costs, by contrast, start to accrue as soon as an MDL is coordinated. Given this temporal mismatch, the plaintiffs’ leadership may choose to create a designated pool of money, sometimes referred to as the “housekeeping fund.” As explained below, lead lawyers typically contribute to this housekeeping fund as a condition of serving in leadership, and they use this housekeeping fund to pay communal litigation expenses such as expert fees, filing charges, and deposition costs as those costs are incurred.
Not all litigation costs are paid out the housekeeping fund, however. Instead, some “held costs” are typically carried by attorneys until a settlement is reached, then reimbursed out of the common benefit fund. See Bolch Guidelines, supra at 66. Early in the proceedings, courts tend to specify which costs will be “held” and reimbursed out of the common benefit fund, and which will be paid upfront out of housekeeping funds.
1. Shared Costs
Shared Costs are costs incurred for the common benefit of the MDL as a whole. Shared Costs are costs that are paid out of the separate Stryker MDL PSC Fund account that has already been established by the PEC and funded by all members of the PEC, PSC and others determined by the PEC and its designation subcommittees. All Shared Costs must be approved by the PEC prior to payment. Shared Costs include: (i) certain court filing and service costs, if the filing and service of the materials were MDL materials, including for bellwether cases, and not those associated with a unique case; (ii) deposition and court reporter costs for non-case specific depositions and other certain bellwether case costs at the discretion of the PEC; (iii) document depository costs, including creation, operation, equipment, and administration, and costs attendant to training; (iv) PEC and PSC administrative expenses (e.g., expenses for equipment, technology, courier services, long distance, telecopier, electronic service, photocopy, and printing); (v) PEC and PSC group administration matters such as meetings and conference calls; (vi) accountants’ fees; (vii) fees and expenses paid to expert witnesses and consultants retained by the MDL to work on behalf of the MDL; (viii) printing, copying, coding, scanning (by approved outside vendors); (ix) research and other work by outside third-party vendors/consultants/attorneys retained by the PEC to assist in the common prosecution and administration of these actions including medical summaries of bellwether cases and claim review; (x) common witness expenses including travel; (xi) translation costs; (xii) bank and financial institution charges; (xiii) investigative services and costs; and (xiv) costs attendant to the settlement process, including mediation fees (JAMS), ethics counsel fees, and insurance.
2. Held Costs
Held Costs are those that will be carried by Plaintiffs’ Counsel and reimbursed when determined by the PEC and this Court to be authorized costs that are yet unreimbursed. Held Costs are costs incurred for the global benefit of the MDL. Contributions made to the Stryker MDL PSC Fund shall be reimbursable at the conclusion of the litigation or at such time as otherwise may be determined by a majority of the PEC. Held Costs are those that do not fall into the above Shared Costs categories but are incurred for the benefit of all Plaintiffs in general. No specific client-related costs, except for bellwether discovery and trial costs, may be considered as Held Costs. All costs of a substantial nature that meet these requirements and fall under the categories set forth below [depositions, status conferences, etc.] shall be considered Held Costs and qualify to be submitted for consideration by the Fee Committee and the Court for future reimbursement from the V40 Common Benefit Expense Fund.
In other cases, courts leave decisions regarding the administration of housekeeping funds to plaintiffs’ leadership counsel.
Case Management Order No. 14 (Revised), In re Fresenius Granuflo/Naturalyte Dialysate Prods. Liab. Litig., MDL No. 2428 (D. Mass. 2015) (noting that the common benefit fund was distinct from “any accounts” that the plaintiffs’ leadership created to fund the litigation).
Funding for a plaintiffs’ leadership-run housekeeping fund is often provided through periodic assessments on participating plaintiffs’ counsel in the MDL, generally defined as those with cases in the MDL and/or receiving access to common benefit work product generated by plaintiffs’ leadership and other counsel in the MDL.
Some courts expressly permit leadership counsel to levy assessments on firms to fund ongoing joint litigation costs. Sometimes referred to as “litigation funds,” these funds are “separate from the housekeeping fund and [are] intended to defray expenditures by lead counsel who ‘front’ the bulk of the costs and expenses of the litigation.” Bolch Guidelines, supra at 66.
Assessments
From time to time, as necessary to fund common benefit activity in the litigation, the Lead and Co-Lead Counsel, in consultation with the Common Benefit Special Master, CPA, and Common Benefit Fund Committee, must make assessments and may receive and hold funds. Once the Common Benefit Special Master and Common Benefit Fund Committee provide notice of an assessment, the assessed firms will have thirty (30) days to deposit their respective assessments into the Litigation Fund. If, after thirty (30) days, a firm has not deposited its assessment, then Participating Counsel from that firm will be ineligible for common benefit work while the firm is delinquent in its assessment and any common benefit work performed while the firm is in arrears will not be eligible for compensation. Failure to deposit assessments on a timely basis will also be a consideration during the Court’s annual leadership reappointment process. If a firm fails to deposit its assessment within 60 days of receiving notice of an assessment, and the firm does not demonstrate to the satisfaction of the Common Benefit Committee and Common Benefit Special Master good cause for such delinquency, Participating Counsel from that firm may be rendered ineligible for any compensation for common benefit work or expenses.
Litigation Fund Payments
The purpose of the Litigation Fund is to pay the costs necessary to fund the litigation as a whole and that are appropriately considered the shared responsibility of all counsel (“Shared Costs”). Shared Costs will be paid from the Litigation Fund. Shared Costs include, but are not limited to:
For more on housekeeping funds, see Bolch Guidelines, supra at 66.
Courts generally set aside 3% to 11% of the plaintiffs’ gross recovery as an “assessment percentage” or “holdback percentage” (so named because defendants “hold back” this percentage when they pay out gross recoveries to each plaintiff). Courts have considerable discretion in establishing the percentage, which will vary based on the unique circumstances of the case.
Common benefit funds typically are used to pay both fees and expenses, and courts generally set forth the percentages that will be set-aside for each of those cost categories. In addition, courts may decide that every plaintiffs’ lawyer is to be “taxed” the same percentage, or the court may make more individualized determinations, establishing different assessments based on different criteria.
For a sample of set-aside percentages, the court in Avandia Marketing MDL provided the following chart detailing comparable common benefit assessments. In re Avandia Mktg., Sales Pracs. & Prod. Liab. Litig., 2012 WL 6923367, at *5 (E.D. Pa. Oct. 19, 2012).
In re Vioxx Prods. Liab. Litig., MDL 1657, 2012 U.S. Dist. LEXIS 58262 (E.D.La. Apr. 25, 2012); PTO 19 ¶ 2, (E.D.La. Aug. 8, 2005)
8% maximum assessment for plaintiffs registering under the terms of the master settlement agreement, which settled Vioxx personal injury claims. (Previously, PTO 19 called for a 3% to 6% assessment in Federal and State cases, depending on the date the case was filed or the date of the coordination agreement.)
In re Oil Spill by the Oil Rig DEEPWATER HORIZON in the Gulf of Mexico, on April 20, 2010, MDL 2179, 2011 WL 6817982 (E.D.La. Dec.28, 2011), amended 2012 WL 37373 (E.D.La. Jan.4, 2012), and amended and superseded on reconsideration, 2012 WL 161194 (E.D.La. Jan.18, 2012)
6% in MDL cases for private claimants and 4% in MDL cases for State or local government claimants
In re DePuy Orthopaedics, Inc. ASR Hip Implant Prods. Liab. Litig., MDL 2197, CMO 13, II(B)(2) (N.D. Ohio, Nov. 28, 2011)
3% for common benefit attorneys’ fees and 1% for costs for MDL cases and State Court cases using MDL work product (subject to an increase to 6%—with 5% being allocated for fees and 1% for expenses—for counsel entering the Participation Agreement after sixty (60) days of the entry of the Order or ninety (90) days of their first case being docketed in any jurisdiction, whichever is later)
In re Fosamax Prods. Liab. Litig., MDL No. 1789, CMO 17 ¶ 3(f)(3), (S.D.N.Y. Apr. 28, 2011)
9% assessment for non-MDL cases utilizing MDL common benefit work product or participating in a PSC-coordinated resolution and in which an Assessment Option agreement was not signed
In re Oral Sodium Phosphate Solution–Based Prods. Liab. Action, MDL 2066, Order Regarding Common Benefit Fees and Expenses, at 3 (N.D.Ohio, Aug. 2, 2010)
4% assessment for MDL cases
In re Yasmin & Yaz (Drospirenone) Mktg., Sales Practices & Prods. Liab. Litig., MDL 2011, 2010 U.S. Dist. LEXIS 22361, 9–10 (S.D.Ill. Mar. 8, 2010)
6% to 10% assessments for MDL cases, depending on timing of participation
In re Genetically Modified Rice Litig., MDL 06–1811, 2010 WL 716190, at *6 (E.D.Mo. Feb.24, 2010)
6% to 8% fee assessments (plus an additional 3% for costs), depending on the plaintiff’s claims, in Federal cases, as well as State cases in which the parties agreed to such assessments or the State Court having jurisdiction ordered them
In re Phenylpropanolamine Prods. Liab. Litig., MDL 1407, 2009 U.S. Dist. LEXIS 126729 (W.D.Wash. Sept. 18, 2009)
4% assessment for Federal MDL cases and 3% assessment for State cases using common benefit work product
In re Bextra and Celebrex Marketing Sales Practices and Prods. Liab. Litig., MDL 1699, PTO No. 8A (Amended), at 4–5 (July 7, 2008
8% to 12% assessments for MDL cases, depending on participation level
In re Diet Drugs Prods. Liab. Litig., 553 F.Supp.2d 442, 458, 491 (E.D.Pa.2008)
6% in Federal cases and 4% in State cases
In re Latex Gloves Prods. Liab. Litig., MDL 1148, 2003 U.S. Dist. LEXIS 18118 (E.D. Pa. Sept. 5, 2003) (Ludwig, J.)
3% to 5% assessments, depending on the stage of the proceedings
In re St. Jude Med., Inc., MDL 1396, 2002 WL 1774232, at *2 (D. Minn. Aug.1, 2002)
6% assessment both for Federal and State cases
In re Baycol Prods. Litig., MDL 1431, 2002 WL 32155266, at *4 (D. Minn. June 14, 2002)
6% assessment for Federal cases and qualifying State cases
In re Protegen Sling and Vesica System Prods. Liab. Litig., MDL 1387, 2002 WL 31834446, at *1, 3 (D.Md. Apr.12, 2002)
9% assessment for Federal cases and 6% assessment for State cases
In re Rezulin Prods. Liab. Litig., No. 00 CIV. 2843(LAK), 2002 WL 441342, at *1 (S.D.N.Y. March 20, 2002)
6% assessment for Federal cases and 4% assessment for State cases
In re Propulsid Prods. Liab. Litig., MDL 1355, PTO 16, at 3–4 (E.D.La. Dec. 26, 2001)
6% assessment for Federal cases and 4% assessment for State cases
Courts may also impose higher set-asides as penalties for counsel who fail to comply with the court’s requirements for receiving common benefit payments.
The assessment amount will be a total of 6% (4% for attorneys fees and 2% for expenses). The assessment represents a holdback (In re Zyprexa Prods. Liab. Litig., 267 F.Supp.2d 256 (E.D.N.Y. 2006)) and shall not be altered. However, if any counsel fails to timely execute the Participation Agreement, such counsel and members of his/her firm may be subject to an increased assessment.
Pretrial Order No. 19, In re Vioxx Prods. Liab. Litig., MDL No. 1657 (E.D. La. 2005).
In some cases, courts have established common benefit assessments on a sliding scale, with lower assessments on claims that settle or are otherwise resolved earlier in the litigation. Such a structure encourages early settlements, accelerates recoveries to plaintiffs, and reduces the burden on the courts and parties. On the other hand, this approach may encourage counsel to settle meritorious claims sooner than might be optimal, from the client’s perspective.
Each Participating Case in which a judgment is entered or in which a resolution is reached with a signed settlement agreements shall be assessed for common benefit work and costs as follows on the gross monetary recovery
Professor Nora Freeman Engstrom and Todd Venook have proposed using sliding scale common benefit assessments to curb nonmeritorious claims. They urge courts to levy higher assessments on counsel who file more nonmeritorious claims and lower assessments on those who do not. See Engstrom & Venook, supra at 19.
In “super-mega-fund” litigation—i.e., cases with extremely large settlements, some courts have found lower percentages to be appropriate.
Because the total anticipated recovery for all plaintiffs in these MDLs exceeds $1 billion, the court considers this a “super-mega-fund” litigation. Id. at 524–25. In In re Actos, the court found that the average fee awards in “super-mega-fund” litigation was 9.9%. Id. at 525. The court in In re Actos noted that “it, also, appears that as the size of the recovery increases, the percentage [awarded] tends to decrease.” Id. at 524.
Case | Plaintiffs’ Recoveries | Percent Award |
In re Tyco Int’l, Ltd., 535 F. Supp. 2d 249 (D.N.H. 2007) | $3.2 billion | 14.5% |
In re Royal Ahold N.V. Sec. & ERISA Litig., 461 F. Supp. 2d 383 (D. Md. 2006) | $1.1 billion | 12% |
In re Actos, 274 F. Supp. 3d 485 | $2.4 billion | 8.6% |
In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., 553 F. Supp. 2d 442, 480 (E.D. Pa. 2008) | $6.44 billion | 6.75% |
In re Vioxx, 760 F. Supp. 2d 640 | $4.85 billion | 6.5% |
Deepwater Horizon, 2016 WL 6215974, at *16 | $13 billion | 4.3% |
Given the comparable recoveries and awards in similar-sized MDLs, and that 5% of $11 billion is reasonably comparable under all the circumstances with other MDL common benefit fund awards, the court finds the 5% benchmark for the FCC’s Petition is very reasonable.
When it comes to timing—i.e., when to determine the set-aside percentage—different transferee judges take different tacks, and there is no perfect moment. Setting the holdback percentage early in the litigation has the benefit of allowing parties to conduct litigation and discuss settlement knowing the percentage to be assessed. But a drawback is that, if the percentage is set too early, it will likely need to be revisited later in the litigation, duplicating effort.
On the other hand, setting the holdback percentage later allows the court to set the percentage in light of the ultimate gross settlement amount and with a clearer perspective on the actual work that Participating Counsel have dedicated to the litigation. But, this delay can deprive the parties of predictability and clarity, and the parties won’t necessarily go into settlement discussions with a clear financial perspective.
Cognizant of these advantages and disadvantages, some courts take a mixed approach; they set a percentage cap on common benefit assessment early in the litigation, while deferring the determination of the exact percentage to be deducted until later.
The Bolch Guidelines offer the following synthesis:
[T]he extent to which an allocation methodology, percentage caps, or other case-specific guidance can or should be provided early in the case is… variable. In some cases, there may be sufficient prior case developments, such that the transferee judge can comfortably set these expectations. But, in many cases, it will take time for the case to progress to the point that the transferee judge and even the parties know what work will be important, how much will be required to settle the case, and other key input variables. In those cases, some caution may be warranted as premature rulings followed by revisions can undermine the very normative goals the judge is seeking to further—to say nothing of potentially limiting the extent to which counsel will trust that this is the final set of guidelines and be able to conform their practices accordingly.
Bolch Guidelines, supra at 72.
As noted, when courts establish the set-aside percentage early in the MDL, they usually revisit that initial determination after a substantial number of cases have settled, in light of the total settlement amount. For more on establishing set-aside percentages to be paid from settlements into a common benefit fund, click here.
Pretrial Order No. 52, In re Boston Sci. Corp. Pelvic Repair Sys. Prods. Liab. Litig., MDL No. 2326 (S.D. W.Va. 2013) (establishing holdback percentage in order establishing common benefit fund).
With respect to each and every Covered Claim, Participating Counsel understand and agree that Defendant and its counsel will hold back a percentage proportion of the gross recovery that is equal to five percent (5%) of the Gross Monetary Recovery (“the Assessment”). Defendants or their counsel will deposit the Assessment in the MDL 2326 Common Benefit Fund (“the Fund”).
Case Management Order No. 14 (Revised), In re Fresenius Granuflo/Naturalyte Dialysate Prods. Liab. Litig., MDL No. 2428 (D. Mass. 2015) (establishing holdback percentage in order establishing common benefit fund).
For any case or claim subject to an Assessment under the terms of this Order, the amount of the Assessment shall be nine percent (9%) of the Gross Monetary Recovery, or such other amount as ordered pursuant to Paragraph 44 of this Order. This total Assessment shall be provisionally allocated as seven percent (7%) to compensate for common benefit fees, and two percent (2%) to compensate for common benefit expenses, and is subject to the right of PEC of this MDL and the Mass-PSC to request reallocation of the nine percent (9%) total Assessment between fees and expenses at the time the application for disbursement is made.
In other MDLs, courts establish the set-aside percentage only after a substantial number of cases have settled. When transferee courts determine the set-aside percentage at this point, they typically do so in the same order approving payments to attorneys from the common benefit fund, as discussed further here.
The seven multidistrict litigations (“MDLs”) before this court comprise one of the largest multidistrict litigation proceedings in this country’s history. This nearly nine-year process is ongoing. What began as 36 plaintiffs suing one company for one allegedly defective pelvic mesh product transformed into over 104,000 individual plaintiffs suing numerous defendants who manufactured many different pelvic mesh products. In addition to these complexities, many individual plaintiffs were implanted with different products manufactured by multiple defendant manufacturers across MDL lines. In tackling these complications, the plaintiffs’ leadership organized and proposed to the court a structure for addressing global concerns that impacted cross-MDL issues. This required developing legal theories of liability and finding and vetting experts across the world who specialize in urology, surgery, materials, chemistry, and other specialties. It also required the taking of multitudinous depositions, analyzing, organizing, and storing tens of millions of defendant-produced documents, preparing and briefing hundreds of motions, preparing for and conducting bellwether trials, and eventually assisting many plaintiffs in reaching settlements. The fruits of this efficient process were made available to every plaintiff and their counsel. The court finds that every plaintiff benefited greatly from these efforts.
This court is now evaluating whether common benefit counsel are entitled to 5% of all recoveries for their efforts in this litigation. The court must determine if this large group of lawyers acting for the common benefit has earned and is entitled to nearly half a billion dollars when in fact the majority of plaintiffs are individually represented. As is the case in most large multidistrict litigation, the answer is properly found by analyzing several factors, the most important of which is the total recovery received by all plaintiffs.
In making this determination, I start with the commonsense observation that the common benefit work performed by leadership guaranteed that each plaintiff was the beneficiary of well-researched and briefed theories of liability with organized supporting factual resources and carefully vetted and developed expert opinion testimony making the case for general causation of damages resulting from allegedly defective products. Moreover, in the same vein of common-sense observation, I know that the leadership was able to provide informed settlement values to individual counsel as a result of their global experience in dealing with tens of thousands of cases. Finally, of the hundreds of firms representing 104,000 plaintiffs subject to the holdback, only three law firms have objected to the Petition. These objections are either frivolous or untimely.
Therefore, and as I will explain further below, after careful examination and after a lodestar cross-check I find that the holdback and award of 5% is reasonable and appropriate in each of these MDLs. Accordingly, the Petition is GRANTED
Notably, over two years ago, the PEC moved for entry of an Order establishing a common benefit fee fund, see docket no. 3112, and the court “invited any interested party to file an opposition brief if they were so inclined,” Order at 1 (docket no. 3397). The Court received dozens of position papers, see id. at 1 n.1 and 2 n.3 (listing submissions) as well as a Report from the Court’s expert consultant at the time, Professor William B. Rubenstein, see docket no. 3319. After prolonged and serious consideration, the Court declined to enter an Ongoing Common Benefit Order at that juncture in the case.
. . .
About one year later, the “Big 3” Distributors and Janssen announced conditional global settlements with governmental-entity plaintiffs. These multi-billion dollar settlements are now finalized and initial payments will begin to flow shortly.
In addition to these two global settlements, however, various MDL Defendants have recently entered into other settlements of Opioid Cases that do not include common benefit provisions. As the Court anticipates that MDL Defendants will reach additional global and non-global settlements in the future, some of which may not include specific, negotiated, Court-approved and -supervised fee and cost structures providing for an equitable contribution towards compensation of counsel who performed common benefit work. Thus the Court concludes the time has now come to enter an Ongoing Common Benefit Order that applies to certain settlements and judgments in Opioid Cases.
. . .
When assessing common-benefit fees and costs combined, district courts generally award a fixed percentage of every recovery, often between 3% and 11%, as particular circumstances warrant. See 5 Rubenstein, Newberg on Class Actions, § 15:117 at 440-43. The Court concludes it is appropriate in this case to impose a holdback assessment of 7.5% going forward. This is in the mainstream of MDL assessments generally, and is here imposed in an MDL where the scope and magnitude of common benefit expenditures and effort is virtually unparalleled, and in which such costs and efforts will be ongoing for some time in connection with discovery, trials, and trial preparation in Tracks 7-11, and in coordination with related actions, all as the Panel contemplates and expects.
For discussion of the drawbacks of a late set-aside percentage, see this Order from Judge Vince Chhabria.
[L]ead counsel [earlier] proposed that [the holdback] be 7% of the gross amount recovered in a settlement or judgment, Monsanto argued that it was premature to set a percentage so early, before the Court could begin to conduct a meaningful assessment of the value of the work performed by lead counsel and others on behalf of other plaintiffs. The Court accepted Monsanto’s suggestion. The result was an order that laid the groundwork for the creation of a common benefit fund and specified who would be subject to it, but that left for another day a decision about the amount to be held back.
. . .
It is, of course, much easier to sort this out before money starts changing hands. Fortunately, money has not yet started changing hands, but we’re on the precipice of that. On reflection, the Court should have addressed the holdback issue earlier in the litigation. As noted in Section I, Monsanto argued that it was premature to set a holdback percentage at the outset. That argument may or may not have been correct. But at some point—likely after the ruling on general causation—it would have been advisable for the Court to revisit the holdback issue, setting both the scope and the percentage of the holdback, to ensure that the parties could conduct settlement discussions against a more predictable backdrop. If the Civil Rules Advisory Committee tackles the issue of attorney compensation in mass litigation, one issue potentially worth addressing is the timing of holdback orders.
As noted, some courts “split the baby.” They set a percentage cap on common benefit assessments early in the litigation, while deferring the determination of the exact percentage to be deducted.
In an effort to apprise all attorneys who represent a Plaintiff or Registry Claimant with a potential claim related to the Zantac MDL Cases of the proposed common benefit deductions at the earliest practicable time, Lead Counsel have requested that the Court approve common benefit deductions equal to six percent (6%) for attorneys’ fees and two percent (2%) for expenses, for a total of eight percent (8%), to be withheld and deducted from all future settlements or judgments involving individual personal injury and/or wrongful death claims involving the subject matter of this litigation.
Lead Counsel have represented to the Court that at this early stage of the litigation—following months of discussions and negotiations with defense counsel, preparations for and presentations at the Initial Conference and Preliminary Discovery Conference held on May 12 and 13, 2020, negotiations resulting in entry of the Stipulated Discovery and Case Management Schedule (DE # 875), preparation and filing of the Master Personal Injury Complaint on June 22, 2020 (DE # 887),and preparation and service of initial discovery, as well as their own internal discussions—they recognize the likely scope and enormity of the work and expenses that will be necessary for the prosecution of the individual personal injury and wrongful death cases in this litigation, as well as the substantial risks inherent in litigation of this nature. Lead Counsel have represented to the Court their desire to clearly communicate to non-leadership Plaintiffs’ and Claimants’ Counsel, at this early stage in this MDL, their binding commitment to seek a common benefit fee and expense percentage that is fair and reasonable and, further, that Lead Counsel will not seek to increase the common benefit fee and expense percentage during the course of this litigation, thereby allowing non-leadership Plaintiffs’ Counsel and Claimants’ Counsel and their clients to make an informed decision whether to participate in this MDL. Lead Counsel believe that non-leadership Plaintiffs’ Counsel and Claimants’ Counsel and their clients are entitled to know, up front, what Lead Counsel anticipate that they will be charged or assessed and to rely on the representations of Lead Counsel that their request for a common benefit fee and expense percentage will not be increased at a later stage in the litigation.
With this spirit of transparency and to encourage and incentivize non-leadership Plaintiffs’ Counsel and Claimants’ Counsel and their clients to participate in this MDL and associated Registry, and based on their assessment of the likely scope and enormity of work and expenses that will be necessary for the prosecution of this litigation, as well as the substantial risks inherent in this litigation, Lead Counsel have requested that the Court approve common benefit fee and expense deductions equal to six percent (6%) for attorneys’ fees and two percent (2%) for expenses, for a total of eight percent (8%), and have represented that, if approved by the Court, these percentages will remain fixed for the duration of this litigation and Lead Counsel will not later seek to increase the proposed common benefit deductions…
As noted, courts typically confirm (or establish, if a set-aside percentage hasn’t already been established) the final set-aside percentage after a substantial number of cases have settled. At that point, the court will have a firm idea of the gross settlement value and can confirm the total amount to be deducted from attorneys’ fees (which would otherwise be paid to individual plaintiffs’ lawyers, per their contingency fee contract), and deposited into the common benefit fund (to pay those attorneys who performed common benefit work).
Typically, plaintiffs’ leadership or a court-appointed fee committee make a formal request that the court approve the total set-aside amount to be deposited into the fund. Once approved, the total amounts will be divvied up and paid to eligible attorneys and firms (we discuss that process here).
Order & Reasons, In re Vioxx Prod. Liab. Litig., MDL No. 1657 (E.D. La Sept. 26, 2018)
On January 3, 2017, the Fee Committee unanimously recommended “that the entire amount of the common fund, less expenses reimbursed by the Court, be made available for the award of attorneys’ fees.”
If costs have exceeded the amount set-aside expressly to cover costs, attorneys may request that the excess be taken from the portion set aside for attorneys’ fee, leaving the gross set aside percentage intact.
Plaintiffs’ Co-Lead Counsel seek an award consistent with the Court’s prior Common Benefit Order of 9% of the amount of any settlement or judgments to be paid from the MDL fund for fees and 1% for reimbursement of common expenses. Because the amount of expenses incurred to date already exceeds the 1% holdback ordered in the Common Benefit Order, Plaintiffs’ Co-Lead Counsel also request that the Court order that any excess expenses be paid from the 9% attorneys’ fee award, rather than increasing the amount of the expense award.
Courts must then determine whether to grant the request to approve the total fee amount. Courts generally consider three approaches. These are (1) the lodestar method, (2) the percentage method, and (3) the blended method. Borrowing from the class action context, courts typically use a mix of the “lodestar method” and the “percentage method.” Often, courts call this approach the “blended method.”
(1) Lodestar method. The lodestar method involves two steps. First, courts determine the reasonable number of hours expended by participating attorneys on common benefit work. Then, the court multiplies that figure by an hourly fee rate. Given that MDLs typically involve cases filed in numerous jurisdictions, courts often apply a nationwide rate derived from average rates across the jurisdictions involved. Bolch Guidelines, supra at 77. The court may adjust that base, or “lodestar,” fee rate up or down by applying a multiplier derived from consideration of a number of factors.
This multiplier accounts for different factors in different courts, but most jurisdictions, adopt a version of the “Johnson factors.” See, e.g., Order & Reasons at 16, In re Vioxx Prods. Liab. Litig., MDL No. 1657 (E.D. La. 2010) (noting that in the Fifth Circuit, the lodestar calculation is adjusted by a multiplier based on the Johnson factors). Those factors “include (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.” Id.
The lodestar method is praised for its more comprehensive assessment of the value attorneys have added to a case. At the same time, however, it has been subject to serious criticism, both in the class action and MDL contexts. The Manual for Complex Litigation notes “the lodestar method is difficult to apply, time-consuming to administer, inconsistent in result, and capable of manipulation.” MCL § 14.121; accord Bolch Guidelines, supra at 76. Academics also worry that the lodestar method creates bad incentives to prolong the litigation and that it does not accurately reflect relative attorney contributions. See, e.g., Brian T. Fitzpatrick, Do Class Action Lawyers Make Too Little?, 158 U. Pa. L. Rev. 2043, 2051–52 (2010); Edward K. Cheng, Paul H. Edelman, & Brian T. Fitzpatrick, Distributing Attorneys’ Fees in Multidistrict Litigation, 13 J. L. Analysis 558, 567 (2021).
(2) Percentage method. Under the percentage method, a specific percentage of plaintiffs’ total recovery is allocated to the common benefit fund. The percentage method is easy to calculate and thought to provide more predictability for attorneys, encourage settlement, and discourage protracted litigation driven by a desire to rack up hours (and thus fees). Yet, it too has drawbacks. It may incentivize early settlement, with attorneys wanting larger fees relative to the time they invest in a case. Similarly, it can theoretically provide a windfall to attorneys where relatively little work was required to litigate the case (although, of course, if there is apt to be a windfall, the court can just adjust the percentage downward).
(3) Blended method. The blended method is by far the most common method to establish the common benefit fund. See Bolch Guidelines, supra at 76 (“The majority of courts use the percentage method in common fund cases, with many using a lodestar multiplier as a cross-check for reasonableness (i.e., a blended approach).”) It represents an attempt to marry the positive attributes of the lodestar and percentage methods. Id.
The court finds the blended percentage approach to be the best method for calculating reasonable attorney fees in this litigation.
Courts within our district frequently employ a blended approach. They award attorneys’ fees based on a reasonable benchmark percentage of the fund verified by a lodestar cross-check. See, e.g., Jones v. Dominion Res. Servs., Inc., 601 F. Supp. 2d 756, 758 (S.D. W. Va. 2009).
With the blended method, a percentage is selected and then cross-checked by applying the lodestar method. Excerpts from orders applying the blended method follow.
1. Valuation of the Benefit Received
The simple question the court is addressing is what percentage of the total recovery by plaintiffs is attributable to the work by common benefit counsel. In making the commonsense observation that common benefit counsel benefited each plaintiff in these MDLs, the court must determine how much that benefit is worth. To answer that question, the court must first determine the total recovery by the plaintiffs and then determine what amount of that total recovery is directly attributable to the efforts of common benefit counsel.
The court also notes that to date, not all plaintiffs have resolved their cases. This means that the total amount of recovery the 104,000 plaintiffs will potentially receive is not yet known. However, this court is equipped with sufficient information to make a reasonable estimate as to the total amount of recovery the plaintiffs will receive. Having presided over these MDLs for nearly nine years, the court is intimately aware of the cases that remain, the alleged injuries of the women, and the range of possible verdicts and settlement values available to them. Therefore, for the purposes of evaluating how much common benefit counsel’s contributions are worth, the court is uniquely situated to make a reasonable estimate of the final total recovery amount. . . .
To date, the FCC [Fee & Compensation Committee] represents that $7.25 billion has been paid out by the defendants to plaintiffs covered under the court’s holdback. The FCC estimates that total settlements and judgments subject to the holdback will exceed $11 billion, and no objections were filed in response to the FCC’s estimate. The court is fully aware of the plaintiffs’ recoveries to date and finds that the estimate of $11 billion dollars is a reasonable estimate for the total amount of recoveries the plaintiffs will receive.
2. Benchmark Percentage
Now that the court has ascertained a reasonable estimate of the total recoveries the plaintiffs will receive, the next step requires the court “to arrive at an independent and justified reasonable percentage” for this litigation. In re Vioxx Prods. Liab. Litig., MDL No. 1657, 2013 WL 5295707, at *3 (E.D. La. Sept. 18, 2013). To clarify, the court is determining what percentage of each individual plaintiff’s recovery should be reasonably awarded to the common benefit fund. That means that, whether a plaintiff was awarded $10,000 or $200,000, the court is assessing whether 5% of either of those figures is reasonable for common benefit compensation. The court does this in part by looking at comparable awards in similar MDLs with common benefit attorneys. [Discussion of comparable MDL percentages omitted].
Given the comparable recoveries and awards in similar-sized MDL, and that 5% of $11 billion is reasonably comparable under all the circumstances with other MDL common benefit fund awards, the court finds the 5% benchmark for the FCC’s Petition is very reasonable.
3. Barber Factors
The Fourth Circuit instructs courts to analyze fee awards using the factors known as the “Barber factors.” See Barber, 577 F.2d at 226 (adopting the Johnson factors from Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 718–19 (5th Cir. 1974))… Although the court is required to assess the reasonableness of awarding attorneys’ fees, “[n]ot all [Barber] considerations apply to every case.” In re Serzone Prods Liab. Litig., MDL No. 1477, 2007 WL 7701901, at *2 (S.D. W. Va. May 16, 2007). “[T]rial courts [have] wide discretion in how they weigh different criteria touching upon the value of the service provided…” Id…
a. Time and Labor Required (Factor 1); Preclusion of Other Employment (Factor 4); Attorney Expectations at the Outset of the Litigation (Factor 6)
The common questions of fact making cases appropriate for MDL coordination allowed for a coordinated approach to be developed over time and implemented by leadership across all of the MDLs. Common benefit counsel crafted certain consistent themes and legal theories, cross-MDL scientific and medical experts, and coordinated the efforts of developing evidence and legal issues. However, the abundant differences between defendants and individual products necessitated intense and sustained effort over several years by leadership to develop a cross-cutting theory of liability applicable to the dozens of different products while also cultivating the experts necessary to proving general liability for the benefit of plaintiffs’ attorneys working across MDL lines. The fact that this coordinated litigation ultimately involved seven MDLs with multiple products and multiple defendants required simultaneous efforts from teams of attorneys, working collaboratively on parallel tracks. The collective work from one product or one MDL aided the process overall while each product required specific focus in terms of liability discovery and pre-trial preparation, expert development, and trial work-up.
The opportunity costs and time limitations imposed by the circumstances of these MDLs were likewise onerous. This litigation is not only one of the largest—if not the largest—mass tort product liability litigations in this nation’s history, but it is the only mass tort products liability litigation in this country that has involved multiple related MDLs, each involving multiple products, coordinated before the same court simultaneously. For a number of years, the amount of time and effort necessary to coordinate this litigation significantly limited involvement in other matters for many of the lawyers responsible for leading this litigation. The burdens of funding this litigation through PSC contributions and tens of millions of dollars in held costs were substantial. The court has no doubt that pursuing this litigation limited, if not precluded, involvement in other litigations for many common benefit attorneys.
b. Novelty and Difficulty of the Issues (Factor 2); The Undesirability of the Case (Factor 10)
As recognized in In re Vioxx, “all products liability cases pose significant challenges to plaintiffs’ counsel” that are only compounded by the complexity “unique to the instant litigation.” 760 F. Supp. 2d at 656. Individually, the cases in these MDLs involve complex prescription medical devices implanted by surgeons through an invasive surgical procedure. Thus, plaintiffs’ leadership was not only required to address the difficult legal questions that arise in products liability cases generally but also had to navigate the unique regulatory, scientific and medical issues presented in these cases. There were also significant issues related to the treating physicians, which necessitated understanding and addressing questions such as surgical skill and experience, doctor training, patient selection, and in some cases, medical negligence.
The theory of how mesh allegedly caused injuries was a complex issue that required extensive research. Plaintiffs’ leadership had to develop and define theories of liability to create a coherent theory of the problems allegedly caused by mesh implantation. Because each defendant designed varying products, the plaintiffs were tasked with finding experts from different scientific fields, including pelvic repair surgeons, pain specialists, biomaterials experts, polymer scientists, biostatisticians, pathologists, and regulatory experts. The level of detail needed to discover and explain why plaintiffs believed certain products were defective compounded the complexity…
The risks and costs associated with leading this litigation have remained onerous from the beginning. With costs approaching tens of millions of dollars in expenses by common benefit counsel, the impediments to pursuing these cases were significant.
c. The Skill Required to Perform the Legal Services Adequately (Factor 3); The Experience, Reputation, and Ability of the Attorneys (Factor 9)
The novelty and difficulty of litigating seven separate MDLs in one court required unique skills to manage and coordinate such a large and varying process. Because the chance of success was not guaranteed in these cases, the quality of work is reflected in the significant verdicts achieved and the tens of thousands of settlements for plaintiffs. Managing this difficult task necessitated experienced attorneys who specialize in complex litigation.
The court appointed qualified and experienced counsel from across the country to lead plaintiffs’ efforts. Many of the leadership law firms specialize in mass tort litigation, which provided leadership with the background necessary to tackle common MDL problems and adapt to new developments unique to prosecuting seven related MDLs. These litigations required dedicated research and study to address the many novel legal, scientific, and medical issues. This meant undertaking enormous document discovery and taking depositions of the individual plaintiffs to develop a general theory of liability for these cases. In addition to the work by plaintiffs’ leadership, “[t]he quality of opposing counsel is also important in evaluating the quality of the work done by the Plaintiffs’ Counsel.” Jenson v. First Tr. Corp., CV 05-3124 ABC, 2008 WL 11338161, at *14 (C.D. Ca. June 9, 2008). It goes without saying that the defendants have hired qualified counsel. The plaintiffs’ success is a testament to their skills and experience.
d. The Amount Involved and the Results Obtained (Factor 8)
The most important factor in determining the reasonableness of a common benefit fund fee award is the “degree of the success obtained.”… To date, the majority of cases filed in the seven MDLs have been resolved. Of those cases that have reached settlements or verdicts, roughly $7.25 billion has been provided to the plaintiffs as compensation for their injuries with an estimated $3.75 billion in future recoveries. As a result of the work by the PSC, plaintiffs have been able to file claims in the seven MDLs and use the already-developed pretrial materials to seek relatively quick resolution of their cases. This benefited both the individual plaintiffs and the public at large by ensuring that alleged victims of pelvic mesh products across the country had access to a process that aided in compensating them for their alleged injuries in an efficient and streamlined process.
. . .
4. The Lodestar Cross-Check
When used as a cross-check, the lodestar analysis “is not undertaken to calculate a specific fee, but only to provide a broad cross check on the reasonableness of the fee arrived at by the percentage method.” In re Vioxx, 760 F. Supp. 2d at 652. The lodestar cross-check is used to assess the reasonableness of the percentage method, and district courts “need not review actual billing records” and are free to rely on time summaries submitted by attorneys. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 306–07 (3d Cir. 2005); see also In re Vioxx, 760 F. Supp. 2d at 659. Further, these MDLs encompass law firms from across the country and are national in scope. When selecting an hourly rate for determining legal fees the court cannot consider just one market because “‘the relevant legal community’ is one national in nature … [and the court will] consider those rates selected in similar MDLs.” In re Actos, 274 F. Supp. 3d at 522. In In re Actos, the court only described a reasonable range for a lodestar cross-check without specifically finding a lodestar multiplier. Id. That is because the purpose of the cross-check is to serve as another data point to assess the reasonableness of the award, but it is not the primary factor.
The FCC has represented to the court that participating attorneys seeking compensation for common benefit work performed approximately 900,000 hours. Of the 900,000 hours submitted, the FCC recognized 679,191.20 hours as providing common benefit. It is estimated that the total common benefit fund will reach $550,000,000 once all cases in these seven MDLs have either reached a settlement or gone to verdict. After subtracting held costs and expenses already paid from the fund, the FCC anticipates the fund will total $491,150,739.96. The FCC provided the court with a lodestar analysis for hourly rates at $300 and $500. There, the lodestar multipliers were 2.41 and 1.45, respectively. The range of hourly rates offered by the FCC is commensurate with figures produced in other MDLs. See In re Guidant, MDL No. 05–1708 (DWF/AJB), 2008 WL 682174, at *15 (D. Minn. March 7, 2008) (average attorney rate of $379.40 per hour); In re Vioxx, 760 F. Supp. 2d at 661 (average attorney rate of $443.29 per hour). Using a rough estimate of $400 per hour for a nation-wide effort, the lodestar cross-check amount (679,191.20 x $400/hour) is $271,676,480. The court then divides the anticipated amount by the cross-check amount (491,150,739.96 / 271,676,480) for a lodestar multiplier of 1.8.
While on the lower side of lodestar cross-checks, this amount is certainly within an acceptable range. See In re Nat’l Football League Players’ Concussion Injury Litig., No. 2:12-md-02323-AB, 2018 WL 1635648, *9 (E.D. Pa. Apr. 4, 2018) (upholding a $1 billion settlement with a lodestar cross-check multiplier of 2.96 while noting multipliers are frequently awarded in ranges from one to four)… Having established an initial benchmark percentage, analyzed common benefit counsels’ work under the Fourth Circuit’s Barber factors, and found all the factors to be reasonable compared against a lodestar cross-check, the court finds the 5% holdback assessment reasonable.
The court notes that this percentage results in a substantial amount of money awarded to common benefit counsel. However, based on the numerous factors discussed above and the awards given in similar MDLs, this court believes that the award given is conservative and serves to justly compensate common benefit counsel for their work without unnecessarily burdening the plaintiffs in this litigation. In return for their effort to produce all the benefits mentioned above, no individual plaintiff was, or ever will be, subject to more than a 5% holdback for all the benefit common benefit counsel created.
Order Regarding Plaintiffs’ Petition for an Award and Allocation of Common Benefit Attorneys’ Fees and Expenses, and Memorandum in Support, In re Ethicon Physiomesh Flexible Composite Hernia Mesh Prod. Liab. Litig., MDL No. 2783, (N.D. Ga. Nov. 14, 2022).Note that the amount of the settlement in this case was filed under seal—a practice that, though not common, occurs in some MDLs. Many scholars critique the practice of keeping settlement terms out of the public eye. See, e.g., Robert Timothy Reagan, The Hunt for Secret Settlements, 81 Chi-Kent L. Rev 439 (2006); Nora Freeman Engstrom et al., Shedding Light on Secret Settlements: An Empirical Study of California’s STAND Act, U. Chi. L. Rev. (forthcoming 2024).
In the Eleventh Circuit, the percentage method requires a district court to consider a number of relevant factors called “the Johnson factors” in order to determine if the requested percentage is reasonable. In re Equifax, supra at 1278 (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)).
(1) The Value of the Benefits of the Settlement and the Degree of Success Obtained (Johnson factor 8).
As recognized in Deepwater Horizon, 2016 WL 6215974 at *18, “the most critical factor in determining the reasonableness of a fee award is the degree of the success obtained,” and “[s]uccess is determined not only by the gross amount of the recovery but also by the number of individuals who benefit from the class settlement, the degree to which it provides them with full compensation for their injuries, and the extent to which the settlement benefits the public at large.” (citing, inter alia, Vioxx, 760 F. Supp. 2d at 657-68; In re Diet Drugs Prods. Liab. Litig., 553 F.Supp.2d 442, 472-73 (E.D. Pa. 2008), aff’d, 582 F.3d 524 (3rd Cir. 2009))…
Here, the current total value of all settlements subject to the common benefit assessment is confidential and has been provided to the Court under seal, and this amount has likewise been provided to counsel with Plaintiffs eligible for participation in the global settlement. This confidential amount includes the resolution of up to 3,600 individual claims—including the MDL plaintiffs and plaintiffs in the related New Jersey state court MCL at the time the settlement was reached.
Where, as here, the settlement may involve payments over a period beyond the point the common benefit fee is determined, the settlement fund also includes a “reasonable estimate” of the amount of future payments that are expected to be made to the plaintiffs. Deepwater Horizon, supra at *15 (“Where the settlement provides benefits on a ‘pay-as-you-go’ basis over a period beyond the point that a common benefit fee is to be awarded, the settlement fund also includes a reasonable estimate of the amount of future payments that will be made to claiming class members.”)…
Based upon the number of cases that will be resolved pursuant to a master settlement agreement and recently-filed cases remaining in the litigation that have not yet become part of any settlement agreement, and in light of the value of the master settlement agreement, the Plaintiffs’ leadership has provided their reasonable expectation of the final total value of all settlements and judgments to the Court under seal.
…For years, this Court worked directly with the parties in this litigation and their representative counsel to facilitate the potential for resolution in cases before this Court. This Court is well aware of the nature and quality of the work that was required by Plaintiffs’ leadership to work up multiple cases for trial and to ultimately negotiate and achieve a global settlement in this hard-fought litigation. The Court is familiar with the complicated factual and legal issues involved in these complex cases that comprise this litigation, and which would impact the value of any individual case.
The Court finds that the coordinated efforts by Common Benefit Counsel helped to level the playing field and reduce the bargaining power otherwise enjoyed by the Defendants. For the benefit of all plaintiffs, Common Benefit Counsel helped administer the MDL by establishing uniform procedures and protocols intended to promote efficiency and economy and has been a repository for information to assist all plaintiffs’ counsel. Common Benefit Counsel secured many important discovery, evidentiary and substantive rulings that apply on a litigation-wide basis. In the absence of MDL leadership’s efforts over the past several years to continue developing cases for trial, to defeat dispositive motions, and to win important pretrial victories for plaintiffs, the willingness of any of these defendants to pursue a global settlement strategy would have been negatively impacted. The overall coordination and collaboration by Common Benefit Counsel in the MDL, which provided all plaintiffs access to the same medical, scientific and legal expertise, influenced these defendants’ decision to invest in settlement of the cases in this MDL and in the related New Jersey State Court Physiomesh litigation.
The value of the benefit provided to the clients in this litigation is substantial and supports an award of the previously-ordered holdback amount of 9% as compensation for fees.
(2) Examination of Awards for Common Benefit Work in Comparable Cases and the Benchmark Percentage.
In In re Xarelto (Rivaroxaban) Prods. Liab. Litig., 2020 WL 1433923 (E.D. La. 2020), Judge Fallon entered a common benefit award of 12% in a product liability MDL settlement totaling $775,000,000,…
Similarly, in In re National Football League Players Concussion Injury Litig., 2018 WL 1635648 (E.D. Pa. 2018), the MDL court entered an order awarding attorney’s fees of 11% in a settlement involving a fund with a present value of $982.2 million, citing a study provided by plaintiffs’ counsel in that case showing that “the average fee award for class settlements is 13.7% nationwide with a median of 9.5%.” (citing Brian T. Fitzpatrick, An Empirical Study of Class Action Settlements and Their Fee Awards, J. Empirical Legal Studies, Vol. 7, Issue 4, pp. 811-846 (Dec. 2010))…
Analysis of other common benefit fee awards in similar product liability MDLs and other litigations involving similar-sized settlements to the global settlement achieved here further underscores the reasonableness of a 9% fee award in this MDL…
(3) Analysis of the Reasonableness of the Percentage Based Upon the remaining Johnson Factors.
. . .
Time and Labor Required (Factor 1); Attorneys’ Opportunity Costs In Pressing Litigation (Factor 4); Time Limitations Imposed by the Circumstances (Factor 7)
The time and labor required to move this litigation forward is reflected in the number of Common Benefit hours that have been submitted by Common Benefit Counsel, 50,993.25 total hours. However, Plaintiffs’ leadership’s work continues, primarily the responsibility of managing and administering the global settlement process and to bring all 3,600 MDL cases and related New Jersey State Court Physiomesh cases to a resolution…
Much like in In re Xarelto … “[Plaintiffs’ leadership] Counsel [in this MDL] had to negotiate trial plans and coordinate various schedules, engage in extensive discovery involving millions of pages of documents from Defendants and third parties, develop Plaintiff and Defendant Profile Forms, oversee bundled complaints and expend … thousands of hours on pleadings and complex motions practice,” the work-up of trial pool cases, and leadership “devoted itself to negotiating the terms of a private Settlement Agreement, which itself was time- and labor-intensive and complex.” See also, Id. at *7… The opportunity costs and time limitations imposed by the circumstances of this MDL were likewise onerous. For a number of years, the amount of time and effort necessary to develop and coordinate this litigation—and the complex and time-consuming negotiation of a global settlement agreement with Defendants—significantly limited involvement in other matters for the lawyers responsible for spearheading this litigation… Plaintiffs’ counsel also had to overcome the onerous challenges of moving this litigation forward during the unprecedented COVID pandemic that struck while trial pool cases were scheduled for trial. The burdens of funding this litigation through PSC contributions and millions of dollars in held costs strained the resources of Plaintiffs’ leadership. Indeed, for some of the firms involved in leadership who were directly responsible for coordinating and leading the litigation, the work required to pursue this litigation seriously limited, if not precluded their involvement in other litigation. Particularly the work relating to negotiating, achieving and overseeing a settlement process that includes all MDL plaintiffs and all plaintiffs in the related New Jersey state court litigation undoubtedly required constant attention and consistent effort.
The Novelty and Difficulty of the Questions (Factor 2); The “Undesirability” of the Case (Factor 10)
Individually, the cases in this MDL involve complex prescription medical devices, implanted by surgeons through an invasive surgical procedure. Thus, the Plaintiffs’ leadership was not only required to address the difficult legal questions that arise in product liability cases generally, but also had to navigate the unique regulatory, scientific and medical issues presented in these cases…
The disputed issues involved in these cases included a wide range of complicated scientific, medical and legal questions. Merely understanding from a scientific and medical perspective what was “wrong” with the Physiomesh product and with the defendants’ product warnings, and how these defects caused the plaintiffs’ injuries, required extensive study and research. All of these issues were, of course, bitterly disputed by the defendants… There was nothing routine or easy about these cases.
This litigation has also been hard-fought by the multiple defense firms involved. The defense fought to defeat the Plaintiffs’ cases, filing dispositive motions on nearly every claim in every case that moved toward trial, Daubert challenges against nearly every one of plaintiffs’ experts, attempts to limit Plaintiffs’ counsel’s ability to meet with treating doctors, efforts to curtail the Plaintiffs’ ability to put on evidence through in limine motions and other means, and attempts to inject regulatory-related defenses into these cases…
Finally, with respect to the desirability of this litigation, the prospects of litigating a complex product liability MDL against a multi-national corporate defendant, defended by multiple top U.S. defense law firms, were daunting from the outset. The past few years of hotly-contested litigation have proven that these cases would be strongly defended. The risks and costs associated with leading this litigation have remained onerous from the beginning… Again, while unanticipated at the outset, the COVID crisis only exacerbated the risks and difficulties Plaintiffs’ leadership had to overcome. Leading this litigation required fortitude and persistence, as well as substantial financial sacrifice. The well-represented corporate defendants litigated this MDL fiercely. Given the substantial costs per trial for the trial pool cases, the impediments to pursuing these cases were enormous.
The Skill Required to Properly Perform the Legal Service (Factor 3); The Experience, Reputation, and Ability of the Attorneys (Factor 9)
Managing this complex medical device product liability MDL necessitated the involvement of some of the country’s most experienced and knowledgeable attorneys in this area of the law. The lawyers appointed by the Court to lead the litigation on plaintiffs’ behalf in this MDL include attorneys from law firms from across the United States with significant experience in the area of mesh litigation. These attorneys and law firms involved in Plaintiffs’ leadership specialize in representing individuals who have suffered injury from prescription drugs and medical devices and have significant experience in mesh litigation developed over many years. The collection of attorneys necessarily included a broad array of experience and skills, from the conduct of electronic discovery and analysis of voluminous document production, to motions and briefing, to deposing experts and corporate representatives and preparing to take these complex cases to trial… This collective experience, knowledge and skill was vital to the success of the litigation, as these cases were defended by teams of attorneys from some of the nation’s largest, most experienced and capable defense firms… The fact that the plaintiffs have been able to withstand the legal firepower brought to bear by these highly-skilled and experienced defense firms to achieve a global settlement for which all MDL plaintiffs are eligible is a testament to the experience, skill and ability of Plaintiffs’ leadership.
Whether the Fee is Fixed and Contingent (Factor 6)
The Court’s analysis under the Johnson factor regarding whether the fee is fixed or contingent looks to the beginning of the case with an evaluation of the serious risks of non-recovery faced by Plaintiffs’ leadership when they committed themselves to this litigation on a contingency basis… This factor further supports the requested common benefit award. E.g., In re Diet Drugs, 553 F. Supp. 2d at 479 (“At the inception, and throughout this litigation, there was a substantial risk that the efforts of the Joint Fee Applicants would not be successful.”)
. . .
(4) Even though not required under Eleventh Circuit precedent, the Nine-Percent (9%) Fee is Supported by the “Lodestar” Cross-Check.
Again, as noted in In re Equifax, supra at 1278, there is no requirement in the Eleventh Circuit for a lodestar “cross-check” where the percentage fee award is reasonable according to the Johnson factors. See also, In re Abilify (Aripiprazole) Prods. Liab. Litig., 2019 WL 7859557, *8 at n. 57 (N.D. Fla. 2019) (citing several cases and noting “[t]he 11th Circuit does not require that a lodestar cross-check be done in determining common benefit fee awards.”). Nonetheless, the lodestar crosscheck here further serves to underscore the reasonableness of a 9% fee award.
. . .
Irrespective of what hourly rate were to be selected for the cross-check, the number of hours already expended in this litigation would yield a multiplier that would fall well within the range of reasonableness for similar litigations. Obviously, application of different hourly rates would yield a different lodestar multiplier, but the multiplier would still fall squarely within the range that courts have deemed reasonable irrespective of the hourly rate that one chose to utilize.
In Kay Co. v. Equitable Production Co., 749 F. Supp. 2d 455, 470 (S.D.W. Va. 2010), the court recognized that “Courts have generally held that lodestar multipliers falling between 2 and 4.5 demonstrate a reasonable attorneys’ fee.” This is consistent with the range of similar multipliers that courts have found reasonable as set forth in the chart contained within Co-Lead Counsel’s Petition…
Again, whatever hourly rate is employed to perform the lodestar cross-check, the Court finds that the lodestar multiplier supports the reasonableness of the fee requested by the FCC.
Many courts have commented on the similarities between class action fees (approved via Federal Rule of Civil Procedure 23(h)) and approvals of payments from common benefit funds. See, e.g., In re Cook Med., Inc., Pelvic Repair Sys. Prod. Liab. Litig., 365 F. Supp. 3d 685, 695 (S.D.W. Va. 2019) (noting that the “common benefit fund” doctrine is derived from the “common fund” doctrine in class action litigation). Though they share some attributes, there are important differences between the two.
First, class action attorneys’ fees are awarded from the entire settlement fund of a single case, and hover around 15% to 25% of plaintiffs’ gross recovery. See Theodore Eisenberg, Geoffrey Miller & Roy Germano, Attorneys’ Fees in Class Actions: 2009-2013, 92 N.Y.U. L. Rev. 937, 947 (2017); Brian T. Fitzpatrick, An Empirical Study of Class Action Settlements and Their Fee Awards, 7 J. Empirical L. Stud. 811, 812 (2010). By contrast, common benefit fee attorneys’ fee disbursements are awarded only from the amounts that have been set-aside from settlements or judgments specifically to compensate attorneys who performed work for the common benefit of all plaintiffs—sums that, as previously discussed, range from about 3% to 11% of each plaintiff’s total recovery. Thus, an MDL lawyer who has individual clients and also performs common benefit work tends to recover both from (1) her individual clients, via contingency fee contracts, and (2) the disbursement she receives from the common benefit fund.
Second, in the class action context, there is clear authority for the judge to pay class counsel. In particular, Rule 23(h) provides: “In a certified class action, the court may award reasonable attorney’s fees and nontaxable costs that are authorized by law or by the parties’ agreement.” In contrast, in the MDL context, judicial authority is a bit murkier. A transferee judge’s authority to compel payments to, and to make disbursements from, a common benefit fund derives from the “common fund doctrine, equity, quantum meruit, as well as broad managerial authority afforded an MDL Court.” In re Vioxx Prods. Liab. Litig., 760 F.Supp.2d 640, 647–48 (E.D. La. 2010). Some, in fact, question whether this authority is sufficient to justify transferee courts’ ability to establish common benefit funds in the first place. See Charles Silver, The Suspect Restitutionary Basis for Common Benefit Fee Awards in Multi-District Litigation, 101 Tex. L. Rev. 1652 (2023) (arguing that neither the common fund doctrine nor principles of restitution provide support for judicially created common benefit funds).
After the transferee court determines the total amount to be paid into the common benefit fund, that amount must be divvied up and paid to the specific attorneys and firms who performed common benefit work. Courts typically delegate the allocation task to individuals or a committee who is more familiar with each firm’s contributions to the litigation, such as the PSC, a fee committee, or a special master. The Bolch Guidelines counsel:
Although the court is, of course, the final arbiter, it should avail itself of the experience and insights of the PSC, or some subset thereof, whose members have stewarded the litigation efforts and who have observed the common benefit efforts of other non-PSC attorneys throughout the entire arc of the litigation.
Bolch Guidelines, supra at 78.
In tasking the PSC, a fee committee, or special master(s) with responsibility for collecting and reviewing requests for payments from individual firms or attorneys, courts often provide that entity with considerable discretion to establish procedures for attorneys and firms to apply for reimbursement and to make recommendations regarding specific payment amounts. However, the MDL court retains final authority to approve fees and other payments from the common benefit fund to the participating attorneys who performed common benefit work.
The Court hereby appoints, as the movants request, the three experienced jurists/special masters appointed under MDL Docket No. 3828 as Fee Panel Arbiters, to oversee and allocate the Common Benefit Funds and the Contingency Fee Funds.
Order Regarding Determination of the Common Benefit Attorney Fee Amount, In re Guidant Corp. Implantable Defibrillators Prod. Liab. Litig., No. MDL 05-1708DWF/AJB, 2008 WL 451076, (D. Minn. Feb. 15, 2008) (establishing procedures for requesting payment in same order establishing total common benefit fund amount).
The Court orders that a fee and cost allocation committee [CBAFCC] be created for the purpose of recommending to the Court the specific allocation of attorney fees and costs among all counsel entitled to share in the Common Benefit Attorney Fee Fund and all counsel and/or parties entitled to share in the Common Cost Fund. . . .
The CBAFCC shall submit to the Court for approval its proposed policies, procedures, guidelines, and protocol for performing its assigned task within 14 days of the date of this Order.
The CBAFCC shall file and serve a proposed allocation plan within 60 days of the date of this Order for court review and approval. The allocation plan should be fair and equitable, and should be the result of careful scrutiny of all applications for common benefit fees and costs.
It is the directive of the Court that the FCC [Fee and Compensation Committee] begin meeting to discuss the process of reviewing hours that are submitted as of March 15, 2016; determine an application process for applying for fees and expenses; and determine the mechanics of applications and the contents of the application.
It is the directive of the Court that any application that is submitted to the FCC shall be signed by a senior partner of the law firm attesting to its truth and accuracy. In setting out this directive, the Court is not by this Order setting a time by which applications are to be received. That timing will be determined by the Court in consultation with the FCC. It is the responsibility of the FCC to conduct meetings, at the appropriate time, during which any counsel who has submitted an application for common benefit compensation may, at his or her discretion, separately appear and present the reasons, grounds, and explanation for their entitlement to common benefit fees. Meetings shall be held at locations to be determined by the FCC. The FCC may set a limitation on the time allocated for any presentation.
At the appropriate time, the FCC shall make recommendations of fee allocations and cost reimbursements pertaining to all counsel applying for attorneys’ fees and costs. The FCC shall provide to each attorney, notice of recommendations of the FCC as it pertains to that particular attorney. In the event an attorney objects to the FCC’s recommendation, a written objection setting forth with specificity the basis of the objection shall be submitted to the FCC within 14 days of being informed of the recommendation. It is the intent of the Court that the FCC bring to the Court a recommendation that has been well vetted and is agreed to by all involved to the fullest extent possible.
After full consideration of objections by counsel, if any, the FCC shall submit the final recommendation of fee allocation and cost reimbursement to the Court. At the appropriate time, the Court will determine the process for consideration of any objections to the final recommendation of fee allocation and cost reimbursement submitted to the Court by the FCC. The Court retains jurisdiction and authority as to the final decisions and awards and allocations of awards for common benefit fees and expenses
Courts may also provide guidance regarding the allocation methodology itself.
1. The extent to which each firm made a substantial contribution to the outcome of the litigation. A law firm may contribute to the outcome of the litigation at any stage of the proceedings, including drafting master pleadings, common written discovery, liability depositions, expert work, briefing, hearings, trials, settlement, and coordination and administration of MDL 2325. All contributions are not necessarily equal and the FCC shall appropriately weigh the contributions.
2. The quality of each attorney or firm’s work. Attention shall be paid to the quality of the work performed separate and apart from the length of time required to perform it. An attorney or law firm providing common benefit should not be penalized for efficiency, nor should inefficiency be incentivized. The FCC shall consider all work that was a benefit and may likewise consider actions that were detrimental.
3. The consistency, quantum, duration, and intensity of each attorney or firm’s commitment to the litigation. The level of commitment, from the inception of the MDL through its resolution, demonstrated by a common benefit attorney or law firm shall be considered. The touchstone of common benefit work is that it must inure to the benefit of the claimants as a whole. Accordingly, emphasis should be placed on work product and materials that are provided to counsel to prepare for trial. While the total number of hours spent toward appropriate common benefit activities should be considered, the Court is primarily concerned with substantive contributions and not simply the total number of hours. For example, hours spent developing litigation strategies or preparing for and participating in trials generally provide greater common benefit than hours spent reviewing and coding documents.
4. The level of experience, reputation, and status of each attorney and firm, including partner participation by each firm. The extent and nature of participation by partner-level attorneys provides some evidence of the level of commitment to the litigation by attorneys seeking common benefit fees or expenses. Further, the participation and dedication by experienced attorneys from a law firm would provide some evidence of commitment as well.
5. The jurisdiction in which non-MDL common benefit work occurred. Common benefit work performed in state court litigation — whether the proceedings are consolidated or not — should be considered to the extent it contributed to the outcome of the litigation and benefitted the MDL. The Court recognizes, particularly to the extent there are agreements between state court attorneys and MDL leadership, that state court attorneys may make an application for common benefit fees and expenses to be fully considered by the FCC. In order for an attorney’s work in state court litigation to be considered for payment from the Common Benefit Fund, settlements from the requesting attorneys must include the five percent assessment provided for in PTO # 77, as amended by PTO # 174. In addition, counsel must comply with the 60-day deadline provided in the introductory paragraph of this Order.
6. Activities surrounding trials of individual claimants, including bellwether trials, consolidated trials, cases transferred or remanded for trial, and non-MDL trials that impacted proceedings on a common benefit level. The focus of this inquiry is the role played by counsel at trial. Greater emphasis is placed on substantive contributions made by counsel or the counsel’s team at a particular trial that provided a common benefit.
7. Membership and leadership in positions within the MDL. Membership and leadership in positions on committees engaged in common benefit work should be considered.
8. Whether counsel made significant contributions to the funding of the litigation and creation of the Common Benefit Fund. Contributions to the funding of the litigation include counsel’s contributions to the MDL through Plaintiffs’ Steering Committee assessments and held costs from expenses related to the common benefit of the litigation. The relationship of the contributions to the amount of funds received pursuant to PTO # 77 (as amended by PTO # 174) should be considered by the FCC.
9. Commitment to and efforts toward overall resolution of the litigation. The MDL process brought cases from multiple federal jurisdictions to this Court. The Court placed significant responsibility on certain counsel to actively participate in common resolution of cases and that work and effort should be considered by the FCC.
10. Any other relevant factors. The FCC will be guided by governing fee jurisprudence in determining the reasonableness of the allocation, including the factors enumerated in Barber v. Kimbrell’s, Inc., 577 F.2d 216, 226 (4th Cir. 1978). The Barber factors include (1) the time and labor required; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services; (4) the attorney’s opportunity costs in pressing the litigation; (5) the customary fee for like work; (6) the attorney’s expectations at the outset of litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the “undesirability” of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between the attorney and client; and (12) the size of the fee awards in similar cases. Id.
11. The FCC’s implementation of this Order and its recommendations to the Court regarding allocation of common benefit fee awards and reimbursement of expenses should be governed and guided by this comprehensive statement of general principles. The FCC is to consider the relative common benefit contribution of each attorney to the outcome of the litigation, including whether the attorney:
Other special considerations here include:
Once the transferee court has received and reviewed the recommendations from the entity tasked with proposing fee allocations, it may approve, deny, or modify the amounts to be allocated.
Recently, some scholars have suggested innovative methods of calculating common benefit payouts, though these methods have not received widespread adoption by courts to date. Edward K. Cheng and his collaborators, for example, propose using peer reports to calculate common benefit payouts. Under this scheme, participating firms would assess the relative contribution of other firms in the litigation. See generally Cheng et al., supra. Geoffrey P. Miller and Charles Silver similarly propose that common benefit compensation be established by specially appointed committee made up of individuals who have not performed common benefit work. See Charles Silver & Geoffrey P. Miller, The Quasi-Class Action Method of Managing Multi-District Litigations: Problems and a Proposal, 63 Vand. L. Rev. 105, 161 (2019).
