One of the things that fell by the wayside as the ALI’s Principles of the Law of Aggregate Litigation evolved was a provision discussing (with approval) the supposed power of MDL courts to create “common benefit funds” from which the plaintiffs’ coordinating counsel get paid. A fund, in itself, isn’t so bad – except: (1) when it’s created in part with assessments against plaintiffs who aren’t before the court (typically cases in state court), and (2) defendants are supposed to help collect these funds, which of course finance their adversaries. This second objectionable aspect is enforced through restrictions on the ability of defendants to settle cases against them.

We opposed these sorts of orders when they first showed up in the ALI draft:

In its black letter, the Draft supports allowing courts to order non-consenting plaintiffs in “other proceedings” to pay “common costs” to lawyers they have not retained. The draft now cites a District Court case allowing the practice. That’s not very impressive authority, given that the only appellate authority we know of which actually examined this type of arrangement flatly rejected it as a abuse of power. In re Showa Denko K.K. L-Tryptophan Products Liability Litigation-II, 953 F.2d 162, 166 (4th Cir. 1992).

Latest Draft Of ALI Principles Of Aggregate Litigation: Three Steps Forward, Two Steps Back” (5/9/07). Thankfully, this proposal was promptly deleted in the ALI proceedings.

But this kind of shakedown is still with us in actual MDL proceedings.

We had one of these orders imposed on us during the Bone Screw litigation years ago, but eventually concluded it wasn’t worth the trouble of opposing. But it still left a bad taste in our mouths.

Now, a decade or more later, we’re pleased to discover that at least one defendant has decided to stand up and fight such an order. In the Aredia/Zometa MDL, defendant Novartis (represented by Spriggs & Hollingsworth) has objected to a proposal by the plaintiffs that defendants be forced to deduct fees for plaintiffs’ MDL counsel from settlement of non-MDL cases. The grounds: that “the proposed Order (1) purports to grant the Court jurisdiction it does not have, and (2) unfairly and improperly prejudices [defendants].” Brief at 1. The principal authority cited? The same case we found when we looked at the issue two years ago.

We highly recommend that MDL defense counsel read this brief and consider whether their clients’ interests would be advanced by raising similar objections. We’re tired of defendants being forced to serve as collection agents for the benefit of the very lawyers who are suing them.