A litigation funding company has appealed a federal judge’s decision that barred third parties from entering into assignment agreements with former NFL players seeking recovery from the $1 billion concussion-related settlement.
Litigation funding company RD Legal, which has recently become the center of disputes in both Pennsylvania and New York federal courts, filed a notice of appeal Thursday in In re National Football League Players’ Concussion Injury Litigation. The three-page notice said the company was appealing to the U.S. Court of Appeals for the Third Circuit over the order U.S. District Judge Anita Brody of the Eastern District of Pennsylvania entered in early December that said settlement language specifically forbid lenders from entering into loan agreements that required ex-players to assign over their monetary claims.
The one-paragraph notice did not indicate the substance of RD Legal’s appeal.
Brody’s order regarding third-party funding agreements rejected arguments from funders that the language of the settlement agreement only forbid assigning a claimant’s tort claims, rather than monetary claims.
“A third-party funder that failed to perform proper due diligence before deciding to enter such an agreement is prohibited from now reaping the benefit of the contract,” Brody said.
According to Brody, all contracts assigning or attempting to assign the claims are “void, invalid and of no force and effect.” She said class members should return the money paid to them under the principle of rescission, or the funders could execute a waiver relinquishing the assignments and then the settlement claims administrator would withhold the amount from the class member’s monetary award.
“The anti-assignment language in the settlement agreement clearly states the intent that class members are unable to make assignments,” Brody said. “Thus, the court has little sympathy for a third-party funder that will not receive a return on its ‘investment.’”
Brody’s decision came to the court by way of a referral from U.S. District Judge Loretta Preska of the Southern District of New York, who is presiding over an action that the Consumer Financial Protection Bureau and New York Attorney General Eric Schneiderman brought against RD Legal over agreements it entered into with retired NFL players and people seeking recovery for injuries suffered during the Sept. 11, 2001, terrorist attack in New York.
After RD Legal told Preska that assignment agreements were allowed in the NFL settlement, Seeger Weiss attorney Chris Seeger asked Preska to transfer the issue to Brody. Seeger, who is co-lead class counsel in the NFL litigation, also filed a motion seeking to have the claims administrator withhold funds from several litigation funders who had entered agreements with claimants.
Seeger, however, later came under fire for failing to disclose his ties with Esquire Bank, a litigation funding company that also provided loans to ex-NFL players. Until May 2016, Seeger was a director at Esquire Financial Holdings, a holding company for Esquire Bank, which has provided some loans to ex-players. The bank was not included as one of the funders Seeger brought to the court’s attention.
Seeger later filed a declaration with the court outlining his history with Esquire Bank and said he did not previously mention the company’s loans because they were properly structured loans with reasonable rates.
David Willingham of Boies Schiller Flexner, who is representing RD Legal, did not return a call for comment. A spokeswoman for Seeger did not return a message for comment.