Elizabeth Chamblee Burch is a professor at the University of Georgia School of Law.
She has written a remarkable new book titled Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation (Cambridge University Press 2019).
She concludes that the system of cutting mass tort deals is unacceptable.
“The plaintiffs’ lawyers and defense lawyers encounter each other time and time again and develop these working relationships where they can exchange what benefits them the most,” Burch told Corporate Crime Reporter in an interview last week.
“The defense lawyers want closure and the plaintiff lawyers want common benefit fees. Those are the attorneys’ fees not that they get for their individual clients but for working for the group as a whole. And you would hope that those common benefit fees would be tied to the plaintiffs’ outcomes.”
“A traditional contingency fee would give the lawyer a third of the client’s recovery. The idea is that incentivizes lawyers to work hard on behalf of their clients.”
“What was happening more and more often was that the lead plaintiffs’ lawyers would negotiate with defense counsel to increase their common benefit fees. And defense counsel are not going to give up common benefit fees for nothing. They are clearly getting something in exchange. My worry is that this coordination may not benefit the plaintiffs.”
“And in doing the research, it was difficult to find the outcomes. I could find outcomes in only a handful of cases. One of the cases was startling. That was in the Propulsid litigation.”
“In litigation over the acid-reflux medicine Propulsid, only 37 of 6,012 plaintiffs (0.6%) recovered anything through the strict settlement program. Their collective recoveries totaled no more than $6.5 million.”
“Yet, defendant Johnson & Johnson agreed to pay lead lawyers more than $27 million in common-benefit attorneys’ fees. In return, what was left of the fund (some $45 million) would go back to Johnson & Johnson. So, it appears that plaintiffs’ lawyers profited, Johnson & Johnson paid the equivalent of a regulatory fine, and most plaintiffs were left to puzzle over why they were left empty-handed.”
The public reads this and they conclude – we are getting ripped off by trial lawyers.
“That is true in some cases,” Burch says. “I don’t think it is true of all trial lawyers. Trial lawyers are a fail safe in the system. Trial lawyers on the whole are a really good thing. But there is a niche group where the same players show up time and again. They get control of the litigation. And they tend to negotiate increases in their own common benefit fees. And we don’t know what the results look like for the plaintiffs.”
“Do we have safeguards in place that make us more confident that the outcomes must be fair and reasonable? And what I found in MDLs is that we don’t have these safeguards in place. When I see outcomes like those in Propulsid and then see in other cases the same kinds of settlement provisions that were engineered in Propulsid and I see them replicated in a whole bunch of deals and we don’t know what the outcomes look like, I’m worried.”
Of the mass tort deals that you came across, how many were you able to get results – as you did with Propulsid?
“Very few. We got some numbers with Vioxx. I wasn’t clear with Vioxx whether I was getting the full picture. Judge Eldon Fallon was in charge of both the Propulsid and Vioxx cases. And those two were the only cases where we got some numbers reported in full. You could figure out by and large who got what. It wasn’t easy. It took several weeks for me to pull together the numbers on Propulsid. I read transcripts, I read motions and documents. It was not like this was well advertised. But it was there for someone who wanted to piece everything together.”
“The other red flag is the secrecy. If what we know and what we can see is so troubling, what is not coming out? I see so many of these dockets being sealed. The settlements are private, even though they are judicially endorsed. The judge plays a pivotal role in trying to encourage the lawyers to enter into these settlements. That worries me. Plaintiffs don’t have a lot of free will or choice when they enter into these settlements.”
“Some of the provisions require the lawyers to say to the plaintiffs – we think you should take this deal, it’s a good deal for you, and if you don’t take it, we are not going to represent you anymore. That’s a real tough spot for a plaintiff to be in, particularly someone who is injured.”
How many plaintiffs’ lawyers are involved with these mass tort deals?
“You had the same 70 or so law firms who tended to occupy a large number of the leadership positions in these cases. The law firms are in my book and on my website – elizabethchambleeburch.com.”
“I have about a 40 page appendix in my book – and they are in there. You can see all of the lawyers.”
“I don’t argue that repeat players are bad per se. It’s just that there need to be checks and balances in the system to make sure that their incentives toward self-interest aren’t overshadowing the needs of the plaintiffs. And there are no checks and balances in the system at this point.”
What cases other than Propulsid can you point to that clearly shows an abusive system at work?
“We don’t have the outcomes. In the private deals that are disclosed, it is easy to find trades for common benefit fees. The judge will start off ordering a relatively low percentage of the common benefit fees – say four percent. Vioxx started out with a three percent common benefit fee. The lead lawyers then negotiated an eight percent common benefit fee with the defendant Merck. And then it came back and the judge reduced it to 6.5 percent.”
“But if you are thinking about three percent of $4.8 billion versus eight percent of $4.85 billion, that’s a huge raise. Even 6.5 percent is a huge raise that they managed to negotiate by virtue of dealing with the defendant.”
Is there something that can be done to figure out what the outcomes of these mass settlements are?
“We are working on a project that looks at the level of transparency and the laws requiring transparency.”
Why was the judge in the Propulsid litigation able to get the information out when most judges are not?
“He was not willing to seal documents and data in the same way that a lot of judges are. Sometimes both the plaintiffs’ lawyers and the defense lawyers will agree to have that information sealed. Plaintiffs’ lawyers have to represent their individual clients, not the public interest. If they think they can get more money by keeping information under the hood, then sometimes they have an ethical obligation for their clients. Sometimes it’s the private interest versus the public interest.”
Are there cases where some lawyers get fed up and blow the whistle on their fellow plaintiffs’ attorneys?
“I keep waiting. But no. In the class action area, we have groups like Public Citizen and Public Justice, the Impact Fund – they challenge collusive class actions. But there is nothing similar in the mass tort MDL area. The problem is they are private settlements. If you are not part of the settlement, you have no standing to object.”
“There is almost always a mass tort de jour – recent headlines include Essure, opioids, and talc,” Burch writes in her conclusion. “But incentives within multidistrict litigation tend to skew toward insiders’ self-interest, not the public interest or the plaintiffs’ interests. Left unchecked, self-interest can takeover. And there are no checks. There is thus an urgent need to look beyond a singular focus on the lawyers, the defendants, or the judge, and to improve the mass-tort system and its inhabitants as a whole. For a system that serves as the last line of defense for hundreds of thousands of plaintiffs, the status quo is unacceptable. Plaintiffs aren’t commodities on an assembly line or inventory in a lawyer’s filing cabinet – they’re people like us.”
[For the complete q/a format Interview with Elizabeth Chamblee Burch, see 34 Corporate Crime Reporter 4(12), January 27, 2020, print edition only.]