On this issue, Beck can’t speak. (Stop cheering, “Thank God for small favors.”) His firm, Dechert, is in the thick of the Vioxx litigation.
So this post is pure, unadulterated Herrmann. (Stop shouting, “We’d rather have Beck.”)
We’re thinking today about Judge Higbee’s recent decision awarding plaintiffs $3.7 million in attorneys’ fees (and costs) for their $4045 recovery under the New Jersey Consumer Fraud Act.
You won’t be surprised to hear that we’re not happy.
The decision came down on June 15 in the New Jersey coordinated Vioxx litigation. The opinion is written in letter format, so it probably has some funky cite form; in any event, it governs the case of Cona and McDarby v. Merck. We’re once again not able to upload the decision from where we’re blogging this weekend, but, on Monday morning, click here for a link to the decision.
Cona and McDarby tried their “Vioxx caused our heart attacks” product liability cases. They went one and one, sort of. McDarby won his product liability claim, and also recovered the purchase price of his Vioxx under the Consumer Fraud Act. Cona lost his product liability claim (for lack of causation), but won his CFA claim. The recoveries on the CFA claims were $45 and $4000, for a total of $4045 between the two plaintiffs.
The CFA has a mandatory attorneys’ fees provision. So the Weitz and Luxenberg firm submitted its fee petition for roughly $2 million (plus two enhancements), and the Lanier firm submitted its petition for roughly $2.6 million (but, generously, seeking no enhancements) — for fees attributable to the $4045 CFA recovery. (Plaintiffs sought almost another million in costs, too.)
Judge Higbee thought that awarding attorneys’ fees was mandatory. She analyzed the eight factors used to decide whether a statutory fee application is reasonable. She decided not to award any enhancements and to award only 80 percent of the requested fees and 80 percent of the requested costs. Plaintiffs’ counsel surely cried all the way to the bank.
Judge Higbee said that determining “reasonable counsel fees” was not easy. But, she said, “Merck could have settled the CFA claims at any time to avoid the potential counsel fee issue but chose not to do this.” Slip op. at 13. (We’re not as confident about this as Judge Higbee is. Plaintiffs’ counsel surely wouldn’t have accepted a $4045 offer, knowing that the CFA claim put a gazillion dollars in attorneys’ fees on the table. Perhaps a defendant in New Jersey can make an offer of judgment for one cause of action (not including attorneys’ fees) and thus eliminate any recovery of attorneys’ fees if the plaintiffs’ recovery at trial does not exceed the offer? We doubt it, but we’re not New Jersey lawyers, and we can’t say we’ve looked it up.)
Judge Higbee also recognized that the “plaintiffs may not have invested the time and money in pursuing the CFA claims if they did not also pursue the personal injury claim.” Id. Film at 11.
But consumer fraud is a serious problem (even if utterly unmoored to anything the legislature had in mind when it wrote the statute), and it cost a bunch of dough to sue Merck to prove the claim, so Judge Higbee ruled that an award of roughly $3.7 million in attorneys’ fees and costs for a recovery of $4045 on Consumer Fraud Act claims was appropriate.
We object to this result for five reasons.
First, we’re sane.
Second, the result threatens to permit the recovery of attorneys’ fees in every product liability case. Failure-to-warn product liability claims and Consumer Fraud Act claims will often be indistinguishable. If plaintiffs’ counsel plead correctly, they will henceforth put attorneys’ fees on the table in every product liability case in New Jersey. And it won’t be two-way, loser pays, attorneys’ fees. The New Jersey Consumer Fraud Act operates in one direction, mandating the recovery of attorneys’ fees by a prevailing plaintiff only. That result can’t be right in the product liability context.
Third, when overlapping product liability and consumer fraud claims are tried together, plaintiffs’ counsel are already compensated by receiving a one-third contingent fee on the product liability claim. Surely counsel will agree to take those cases without the added carrot of millions of extra dollars in attorneys’ fees for the two-bit Consumer Fraud Act recovery.
Fourth, we don’t think that prescription drugs, such as Vioxx, are “consumer” products, so we don’t think “consumer fraud” statutes should cover sales of those products. (We win that argument in some states and lose it in others. The folks defending Merck are pretty smart, so we assume that argument is a loser in New Jersey.)
Finally, on the same day that Judge Higbee was handing down her Vioxx decision, the New Jersey Supreme Court decided In re Lead Paint Litigation, __ A.2d __, 2007 WL 1721956 (N.J. June 15, 2007). There, the court held that claims brought against lead paint manufacturers seeking to recover abatement costs cannot be brought under the rubric of “public nuisance,” but instead would “be cognizable only as products liability claims.” Id. at *17. The New Jersey Product Liability Act created “one unified, statutorily defined theory of recovery for harm caused by a product.” Id. (citation omitted). “The language chosen by the Legislature in enacting the PLA is both expansive and inclusive, encompassing virtually all possible causes of action relating to harms caused by consumer and other products.” Id. “In light of the clear intention of our Legislature to include all such claims within the scope of the PLA, we find no ground on which to conclude that the claims raised by plaintiffs . . . are excluded from the scope of that Act.” Id.
Wouldn’t it make sense to extend that logic to consumer fraud claims that are actually product liability claims in disguise?