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Special Fee Master Appointed to Allocate $3B in Fees in Opioid MDL

March 10, 2020 | Posted in : Class Action / MDL, Contingency Fees / POF, Fee Allocation / Splitting, Fee Dispute, Fee Expert / Member, Fee Request

A recent Law 360 story by Kevin Stawicki, “Opioid Judge Taps Harvard Prof to Guide $3B Fee Fight, reports that the Ohio federal judge overseeing multidistrict litigation over the opioid epidemic tasked a Harvard Law School professor with helping the court navigate "novel" legal issues about how to compensate attorneys, some of whom say their payday could amount to more than $3.3 billion.  U.S. District Judge Dan Aaron Polster said in a notice that William B. Rubenstein, who previously worked on the multimillion-dollar NFL concussion settlement and subsequent fee fight, is best positioned to help navigate the debate over how much attorneys will be able to take home after the dust settles on a wave of opioid-crisis lawsuits.

Rubenstein will assist with navigating both the plaintiffs' request to establish a common benefit fund and attorney fees generally, the judge said, adding that the pleadings "raise complex and novel fee issues," as several parties and non-parties oppose the motion for the common benefit.  "Professor Rubenstein has written extensively about attorney's fees issues in complex litigation, including common benefit fees," Judge Polster said.  "The court has accordingly asked professor Rubenstein to assist with questions posed both by the present motion and attorney's fees generally, as these may arise."

The idea of a common benefit fund, which would set a 7% fee against a global settlement, has come under fire in recent months. Opioid manufacturers and distributors — including Johnson & Johnson and McKesson Corp. — pounced on the proposal in February, saying it was nothing more than a "transparent" attempt by lawyers on the plaintiffs' executive committee to grab settlement funds.  Approving the proposal would favor the lawyers over the parties in the litigation, even their own clients, the companies said.

After four attorneys general in October unveiled a proposed $48 billion deal with major drug companies and the nation's largest drug distributor, drug companies said 7% of the settlement would amount to more than $3.3 billion in fees.  "The [plaintiffs executive committee] seeks to grab a piece of every opioid-related resolution across the country, including settlements with the state attorneys general and of the many other actions brought in state court," the companies said in a memo to the court in February.

A group of 37 attorneys general have also argued that the fee request could irreparably disrupt progress made toward reaching a large national settlement by only applying to certain parts of settlements reached by attorneys general as well as to state court actions that are beyond the district court's jurisdiction, violating state sovereignty.

Another part of the settlement that has come under mounting scrutiny is Judge Polster's certification of the negotiation class, a novel mechanism designed to help more than 30,000 local governments pursue deals with pharmaceutical companies accused of fueling the opioid crisis.  Rubenstein was among the first to suggest the negotiation class as a way of breaking down 13 sets of national defendants based on legal claims and then crafting settlements with individual drug companies and binding plaintiffs to a structured settlement before the terms are negotiated.

As envisioned, any settlement would be put to a vote and require approval by 75% of voting governments.  A group of states fired off warning shots against that idea in February, saying only they, not cities and counties, can sue on behalf of their citizens.  By letting those political subdivisions settle claims they lack state-law authority to litigate, Judge Polster created an "alternative to state government," the coalition of states argued.