Welcome to Critical Mass, Law.com’s weekly briefing on class actions and mass torts. I’m Amanda Bronstad in Los Angeles. A litigation funding bill introduced in the U.S. Senate last week got a cold reception from the finance and plaintiffs side–oh, and they had a few suggestions on how to change it. Class action plaintiffs’ lawyers–as well as one of their harshest critics–lashed out at the special master in the Anthem data breach settlement. And I launch a new feature in Critical Mass with a conversation with plaintiffs attorney Richard Fields about how litigation funders have changed the financing of big cases.
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Balancing Act for U.S. Senate’s New Lit Funding Bill
It came as no surprise when defense lawyers praised legislation introduced in the U.S. Senate last week (read the bill here) that would force disclosure of third party financiers of class actions and mass torts, and plaintiffs lawyers and litigation finance firms, well, didn’t. My story on the reaction to that bill is here.
Critics weren’t opposed to all financing disclosures. In fact, they pointed to U.S. District Judge Dan Polster’s order last week forcing financing deals in opioid cases to be disclosed. Of course, that was in camera and with no discovery allowed. As my colleague Ben Hancock’s pointed out (see his story here), few judges are issuing litigation financing orders that would open the discovery doors.
Yet that’s what many in the defense bar really want. Why? Check out two recent stories in The New York Times (here and here). One discusses a federal indictment over alleged kickbacks involving doctors, lawyers and financing firms that provide up-front cash to plaintiffs. Another says women with pelvic mesh devices were pressured into getting unnecessary surgeries.
I asked Bentham IMF Chief Information Officer Allison Chock about those stories — and the new bill. Here’s what she said:
“The bad stories that have come out all have this common theme…these underlying causes are physically injured, or they are personal injury-type of claimants. The bill is substantially broader than this class of cases that seem to be the problem children. You could craft a much narrower rule that would apply in those types of cases.”
Report on Anthem Data Breach Attorney Fees Hit By Plaintiffs’ Lawyers and Class-Action Critic
A special master’s report on the $38 million fee request in the Anthem data breach settlement got a tongue lashing late Tuesday, when both the plaintiffs lawyers and objector counsel Ted Frank filed papers criticizing its findings. Here’s my story.
A quick backgrounder: U.S. District Judge Lucy Koh of the Northern District of California appointed a special master to look into potential overbilling after she said she was “deeply disappointed” in the fee request — mostly because it was made on behalf of 53 law firms. The special master’s report came out on April 24. And while he didn’t exactly accuse lead plaintiffs firms (Altschuler Berzon, Cohen Milstein, Lieff Cabraser and Girard Gibbs) of overbilling, he cut their request by $9 million.
Now to my story: Plaintiffs lawyers are sticking to their request — with fees for 53 firms and all. But Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, says the special master didn’t cut enough. There’s a lot of discussion about the contract attorney rates–the same subject at issue in a separate probe going on in securities class action settlements with State Street. A special master in that case filed his report on Monday under seal. But there’s a chance we’ll still see it: On Tuesday, U.S. District Judge Mark Wolf issued an order saying he sealed the report “temporarily to permit the parties to propose redactions.”
Q&A: How Lit Funding Has Expanded Lawyer ‘Mobility’
As part of a new segment in Critical Mass, I ask a plaintiffs lawyer a little bit about the business. I’m starting with Richard Fields of Fields PLLC. He was founder and CEO of Juridica Asset Management Ltd., managing $600 million in litigation funds, before starting his law firm, which has sued over opioids and Facebook privacy matters.
Q: How have plaintiffs firms changed in how they finance some of these big cases?
A: As far as how it’s affected the practice, it’s made lawyers more mobile. It’s easier to start a new law firm and raise capital for it. It’s easier for smaller firms to take on bigger cases and partner with the bigger firms. In some spaces, like the antitrust price fixing space, it’s brought a lot more Am Law 100 and 200 law firms to the plaintiffs opt-out practice, as an example.
Q: What advice do you have for lawyers who are trying to finance class actions and mass torts?
A: It’s hard for me to really take my experience on the corporate plaintiff’s side and try to project that on the mass tort space. That market has always had its own separate group of funders, and they do things different from the corporate space. It’s structured differently, deal terms are different. The cases are so different. But it’s out there. There’s obviously a lot of room in both the corporate plaintiffs’ space and mass tort space.
Who Got the Work?
A federal judge in California has appointed a 39-lawyer team to lead multi-district litigation alleging defects in older iPhones. Despite claiming to look for something “lean and mean,” U.S. District Judge Edward Davila on Tuesdayapproved the larger of two proposals: A coalition led by Joseph Cotchett(Cotchett, Pitre & McCarthy) and Laurence King (Kaplan Fox), according to this Law.com story.
“At first blush,” the coalition approach “may seem larger than necessary,” the judge wrote in his order. But he said the large number “is warranted in light of the projected size of the case, including the potential number of class members.” One interesting highlight: At last week’s hearing, covered here, Apple’s lawyers (Gibson, Dunn & Crutcher) made the unusual move of weighing in, calling the larger proposal “a recipe for gridlock, not efficiency.”
Here’s what else you need to know:
Ogletree Case Branches Out: Three shareholders of Ogletree Deakins have joined a $300 million gender discrimination class action against the firm. See Law.com’s story here. A former shareholder in California filed the initial Equal Pay Act suit in January, alleging discrimination in both pay and promotions. The new plaintiffs come from Colorado and Texas. Attorney David Sanford (Sanford Heisler Sharp), who brought the case, expected more plaintiffs would be added. The amended complaint also adds the current and former managing shareholders of the firm as defendants. Meanwhile: AT&T was hit with amended claims in a case alleging pregnancy discrimination. See that story here.
Fee Fight Sprouts: There’s a nasty brouhaha going on in the $1.51 billion settlement with Syngenta over GMO seed corn that now involves a lawsuit filed against plaintiffs attorney Mikal Watts. Check out my story here. The suit claims Watts (Watts Guerra) lured 10% of the 600,000 farmers to hire him on a 40% contingency rate instead of participating in the class action. Another group of lawyers accused Watts and others of shelving an earlier agreement so that they could get lucrative fees. Final approval is scheduled for Nov. 15.
Here’s why it matters. Similar fee fights have erupted between class action lawyers and those who bring individual cases. Another example? The litigation over water contamination in Flint, Michigan (see my coverage here). The judge in that case set a June 18 hearing on whether to remove lead attorneys whose management of the case has devolved into a fee fight. Should be interesting hearing to attend if you’re anywhere near Ann Arbor, Michigan.