Here is an interesting order that recently emerged from the Benicar multi-district litigation. Certain plaintiffs’ counsel (identified by name in the order) represent about 450 “plaintiffs who have settled their claims against defendants in exchange for a monetary payment.” In re Benicar (Olmesartan) Products Liability Litigation, 2019 WL 6271285, at *1 (D.N.J. Nov. 22, 2019). In connection with this settlement:
There is a settlement fund and administrator appointed as part of the overall settlement of this case. The settlement proceeds would be paid in bulk to [the lawyers] with the firm then responsible for distributing the proceeds to its clients.
Id. Nonetheless, these lawyers filed an “unopposed” petition “to establish a sub-fund and have a separate administrator and bank to deliver the funds to its clients.” Id.
We wonder, why incur all this additional administrative expense? Were counsel seeking to off-load the morass of ethical issues inherent in non-class aggregate settlements? See Principles of the Law of Aggregate Litigation §317, comment a (2010). Or were they simply churning their inventory, hoping to generate additional fees for the favored “administrator and bank”?
We’ll never know because the MDL judge denied the unopposed petition – pointedly asking similar questions. “[T]he necessity of such a scheme is not explained,” the court complained. Presumably counsel have “vast experience in dealing with personal injury cases,” including “experience distributing funds to their clients.” Id. So the court viewed this arrangement with a jaundiced eye:
The court’s concern is the plaintiffs. This is just another step in receiving the money they are entitled to. Furthermore, there is no indication each of the 450 clients has agreed to this proposal, particularly in light of the proposed requirement they indemnify the proposed Fund Administrator for certain claims. Counsel provides no evidence their clients understand what this means.
Id. The bank and administrator were not named, and no limit was imposed on “how long [they] can hold the funds before paying the plaintiffs.” Id. The court concluded that counsel should simply pay their clients themselves:
In short, the Court cannot conclude this Petition is in the best interest of these plaintiffs. Accordingly, the Petition is denied.