Last week, along with many of you, we attended the ACI Drug and Medical Device Conference in New York City. The quality of the presentations was uniformly high, and the collegiality and camaraderie were welcome, refreshing, and a lot of fun. There was plenty to drink. There was lots of food. Oh, and we got to see Hamilton! We should preface our comments by pointing out that we were skeptics – we knew how pricey (really, really pricey) tickets are, and we weren’t even positive we would enjoy this immensely innovative rap musical. To wit, one of our best beloved musicals of recent years was the wonderful, if short-lived, revival of Finian’s Rainbow that played the Great White Way a couple of years ago. We go for the traditional stuff, and had neither resources nor plans to spring for Hamilton.
But we got very lucky. A generous friend had bought four tickets a full year earlier in anticipation of the annual conference. And there was a last-minute cancellation. And we got to go. And it was worth all of the hype (and all of the money, if you have it). We enjoyed it so much that we came home and researched ticket availability to return with the Drug and Device Law Long-Suffering Companion. Tickets are on sale for next year, and we thought that we could avoid the crazy street prices by planning way ahead. Not so – even this far in advance, tickets (from official ticket sources, not ticket agencies) are way out of the reach of normal consumers. Sometimes, the early bird does not get the worm (or the greatest financial benefit).
And, with just a bit of creativity, we can glean the same message (among others) from today’s case. Dobbs v. DePuy Orthopedics, — F.3d —, 2016 WL 7015648 (Seventh Cir. Dec. 1, 2016), is an appeal of an attorney’s fee decision from the United States District Court for the Northern District of Illinois. (We’ll explain how it got there in a minute.) The plaintiff/appellant had direct-filed a product liability claim in the Hip Implant MDL in the Northern District of Ohio. Believing that the promised compensation was too low, he opted out of the global settlement and fired his lawyers, who had advised him to accept the global settlement, which included a 35% attorneys’ fee. (The global settlement provided one level of payment for unrepresented plaintiffs, and a second level, 35% higher, for represented plaintiffs.)
Less than two months after his lawyers withdrew their appearance, the plaintiff accepted the global settlement. Because he was considered “represented” for purposes of the settlement, he was paid the larger amount. (Not clear why he was considered “represented” when his lawyers had been fired.) His former lawyers asserted a lien on the award and sought to recover attorney’s fees. The MDL judge tried unsuccessfully to mediate the fee dispute in the Northern District of Ohio then transferred the case to the Northern District of Illinois, where the case would have been filed if the MDL had not been pending.
The Court of Appeals explained that, for choice of law purposes, “foreign cases filed directly in . . . an ongoing multidistrict litigation are treated as having originated” in the district in which they otherwise would have been filed. (Some of us are involved in MDLs that have included this provision in case management orders governing the litigation.) As such, the Northern District of Illinois properly applied its own choice-of-law rules, which led it to apply the substantive law of Illinois. Dobbs, 2016 WL 7015648 at *2.
Under Illinois law, “a discharged attorney is left to recover for services rendered under a theory of quantum meruit only. . . . Quantum meruit means ‘as much as he deserves.’” Id. at *3 (citations omitted). To determine how much an attorney “deserves,” the court may consider “the time and labor required, the attorney’s skill and standing, the nature of the cause, the novelty and difficulty of the subject matter, the attorney’s degree of responsibility in managing the case, the usual and customary charge for that type of work in the community, and the benefits resulting to the client.” Id. (citations omitted). This may or may not justify an award in the amount of the original contingent fee, depending on the work the attorney had done and how long before the settlement he or she was fired.
In this case, the Northern District of Illinois awarded the plaintiff’s discharged attorneys the full value of the contingent fee. The Seventh Circuit held that the court abused its discretion in making this award without sufficiently analyzing the relevant factors, merely reciting the attorneys’ claim that they “adhered to all case management orders, collected [the plaintiff’s] medical records and [prepared fact sheets], monitored the . . . litigation, and attended to all details of maintaining [the plaintiff’s] case.” Id., at *4. In other words, they likely behaved like other MDL plaintiff lawyers with large inventories and did nothing for the individual plaintiff after the very beginning of the litigation. Moreover, the Seventh Circuit held that the proximity of the firing to the plaintiff’s settlement did not relieve the district court of the responsibility to analyze the relevant factors and determine a reasonable fee.
And so the court reversed the decision and remanded the case to the district court for further consideration. The lawyers may still get 35% of the plaintiff’s settlement payment. Or they may not. You know our bias, since we deal with MDL plaintiff lawyers all day long. And the plaintiff may just end up with a bit of a windfall, since he was paid a settlement that would have been reduced by 35% if he had settled earlier. (We told you it was a winding road back to our Hamilton story.) Stay tuned.