A litigation funding company involved in the $1 billion NFL concussion settlement claims an order that has barred companies from entering into assignment agreements with ex-players is ambiguous and has demanded that the judge in the case provide further details.
Thrivest Specialty Funding filed a letter to U.S. District Judge Anita Brody of the Eastern District of Pennsylvania, asking her to schedule a conference regarding her recent decisions barring assignment agreements, and ordering the settlement claims administrator to bypass the agreements by paying the claimants directly. Thrivest, which filed the letter March 9, said it has asked for the conference so it can get clarity about the scope of Brody’s orders and whether Thrivest can appeal.
Thrivest is one of several litigation funders that have entered into funding agreements with retired football players who are in the process of seeking money from the class action settlement. However, Thrivest claims it has not yet been able to address the court directly about its agreements because Brody made her ruling barring assignments after the issue came before the court on a referral from a New York federal judge in another case that dealt exclusively with another litigation funding company, RD Legal.
Thrivest argues that, without having an opportunity to be heard, circumventing the agreements violates its due process rights.
“Disregarding fundamental due process considerations, the claims administrator’s ‘rules’ set forth a process that not only deprives the third-party funder of an opportunity to be heard, but also fails even to provide the funder with notice,” the letter, written by Fox Rothschild attorney Peter Buckley, said. “Allowing this process to proceed without modification will only result in further legal wrangling and disruption.”
Disputes about what types of litigation funding agreements should be valid under the NFL concussion settlement have been roiling ever since co-lead class counsel Christopher Seeger of Seeger Weiss told the court about the litigation funding agreements, many of which he argued were usurious.
A recent decision from the U.S. Court of Appeals for the Third Circuit in Obermayer Rebmann Maxwell & Hippel v. West may also have added some fuel to the debate, as litigation funders have pointed to the ruling as a clear recognition that most non-recourse litigation funding agreements can’t be considered loans in the eyes of the law because they involve substantial risk on the part of the lender. Several states, including New York, which, according to attorneys, governs many of the litigation funding agreements at issue in the NFL settlement, do not subject these types of agreements to usury laws.
On March 8, Thrivest in a separate filing asked the court to consider the Obermayer Rebmann case in regard to the NFL settlement funding disputes, saying it “demonstrates the flaw” in the efforts by class counsel to block the funding agreements.
“Even if structured as a loan, Thrivest’s non-recourse advance would not have been subject to usury laws,” the motion said. “Thus, the court should reject class counsel’s suggestion that Thrivest packaged its transactions as assignments, rather than as loans, to avoid regulatory oversight.”
According to Seeger Weiss partner TerriAnne Benedetto’s presentation before the court last year about the agreements, at least 200 class members have entered into funding arrangements. Thrivest has funding arrangements with 42 class members, and one agreement includes paying Thrivest $567,000 for an advance of $312,000, Benedetto told the court.
In its motion from March 8, Thrivest, however, said its rates are “among the lowest for non-recourse transactions and lower even than some recourse lenders.”
Buckley declined to comment about the pending litigation, and Seeger did not return a message seeking comment.