This post comes from the Cozen O’Connor side of the blog.

We’ve been following the Pinnacle MDL closely through the last two bellwether trials, starting with the news coming out of the second bellwether trial of particularly curious and prejudicial evidence being presented to the jury. Given that evidence, we expected a plaintiffs’ victory, an expectation that was borne out with a whopping $498 million verdict. It raised an immediate question: “What will the Fifth Circuit do?”

Well, we’re on our way to finding out. The defense recently filed their opening appellate brief. While it features the controversial evidentiary rulings, much more is in play. If you would like to take a look for yourself, here is the brief.  Below are some of the key issues, along with a quick description of the defense’s arguments:

Design Defect Claim against DePuy (Brief at 20-29): Claim that all metal-on-metal hip implants are defective is not viable under Texas law because a wholly different product cannot serve as a safer design; design claim is preempted because the FDA approved metal-on-metal hip implants; and design claim fails under Restatement (Second) of Torts 402A comment k (adopted in Texas), which recognizes that products like implantable devices are unavoidably unsafe and therefore not defective if properly made and warned about.

Continue Reading Briefing Underway in Appeal of Half-Billion-Dollar Verdict in Pinnacle MDL

Well that was something. When we left you last Thursday, the jury for the third bellwether trial in the Pinnacle Hip Implant MDL had just started its deliberations, and we once again expressed concern over the trial’s evidentiary and procedural rulings and the effect they might have on the verdict. Our concern-level was high. Last time, amidst similar concerns, the jury came back with a half-billion dollar verdict.

Apparently that was chump change. Everything is bigger in Texas. And this time it was over one billion. Let that sink in. Over one billion. That’s a massive amount of money. Has anyone even ever won that in a lottery? It’s 1,000 winners of Who Wants to Be A Millionaire. And then you have to add about 40 more winners because the actual verdict was about $1.04 billion.

Continue Reading The One-Billion-Dollar Verdict

This post comes from the Cozen O’Connor side of the blog.

After two months, the third bellwether trial in the Pinnacle Hip Implant MDL is coming to an end. The jury heard closing arguments yesterday and began deliberating late in the afternoon. They start up again this morning.

Much like the second bellwether trial, this trial was not without controversy. The signs were ominous before it began.  Two weeks before trial, the court issued a sua sponte order consolidating six separate plaintiffs for the trial, close to any defendant’s worst nightmare. The court also ruled that plaintiffs could serve notices that would require company witnesses who were outside the geographic reach of the court to nonetheless testify live via satellite. Defendants could not substitute trial depositions for the satellite testimony, even though trial depositions had already been taken, complete with cross-examination of the witnesses by plaintiffs’ counsel. This order was sufficiently controversial that a Fifth Circuit judge, while concurring with his colleagues’ decision to reject defendants’ writ of mandamus challenging the order, chose to issue a one-sentence concurring opinion saying that the MDL judge got it wrong.

Continue Reading Buckle Up: The Jury Is Out in the Pinnacle Hip Implant MDL’s Third Bellwether Trial

With one sentence, a circuit judge signaled yesterday that the Fifth Circuit is watching with acute interest what’s going on in the Pinnacle Hip Implant MDL in Dallas:

Although the district court misapplied Rules 43(a) and 45(c), I concur in the denial of the petition for a writ of mandamus.

Oh my. While that may not be a shot across the bow of the MDL bellwether process, it’s an attention-grabber.

Technically, this was a loss for the defendants. They asked the Fifth Circuit to direct the MDL court to vacate an order authorizing plaintiffs to subpoena company witnesses no matter where they are in the country to testify at a bellwether trial via satellite or other contemporaneous transmission. And the Fifth Circuit denied the petition. But petitions for writs of mandamus are always lost. The possibility of victory is so slim that the legal background sections of most petitions actually find it useful to argue that it is untrue that writs of mandamus are “never” issued. It’s only “hardly ever.”

Continue Reading The Defense’s Mandamus Petition in the Pinnacle Hip Implant MDL Yields an Unusual Victory

Here we go. Again. The third bellwether trial in the Pinnacle Hip Implant MDL starts on October 3 (less than two weeks away), and the parties began picking a jury two days ago. The lawyers are, no doubt, hunkered down in their hotels and war rooms preparing for a trial that could last through the start of the holidays. And much of the mass tort world will be watching. That’s because the jury in the last bellwether trial came back with an incredible half-billion-dollar verdict at the end of a multi-plaintiff trial in which the court issued a long series of controversial evidentiary and procedural rulings.

And now, even before opening statements, there are ominous signs for the defense at this third bellwether trial. Three days ago, the court issued an order sua sponte—that is, with no briefing—confirming that it is consolidating six different plaintiffs at this one trial. That’s a lot of plaintiffs and no doubt a lot of differences. It’s hard to imagine jurors effectively keeping straight the case-specific evidence presented by each of these half-dozen plaintiffs, all while trying to sift through and understand mountains of complex scientific and medical information and avoid allowing their feelings as to any one plaintiff to affect their judgment as to the others. Without even considering the facts of the cases, a six-plaintiff trial is not good for defendants. There’s a reason that plaintiffs’ lawyers prefer multi-plaintiff trials and that defendants do not.

Continue Reading Here Comes the Next Bellwether Trial in the Pinnacle Hip Implant MDL

This post comes from the non-Reed Smith side of the blog.

We’ve been posting for a few months about the procedural and evidentiary controversies that have arisen in the Pinnacle Hip Implant MDL bellwether process. The second bellwether trial involved significant evidentiary and procedural rulings that raised eyebrows across the defense bar (discussed here and here). After that trial unsurprisingly produced a ½ billion dollar jury verdict, the defense asked the MDL Court to stay further bellwether trials so that the Fifth Circuit could review those rulings. No luck. Instead, the MDL Court ordered that the next bellwether trial should happen—and quickly (discussed here). After all that, and with the third bellwether trial approaching fast, the defense must feel like the coyote lying flat on the ground staring up at the bottom of a plummeting anvil coming at him a second time.

Undaunted, however, the defense has now filed a motion to continue the third bellwether trial, a motion that raises serious concerns about the time allotted to “work-up” the plaintiffs’ cases that will be involved in the trial. The defense argues that the allotted time is simply too short, not providing enough time for the complex medical issues underlying each plaintiff’s case to be developed and understood so that a trial can produce the type of verdicts that can advance the MDL process. To illustrate this, the defense compared the discovery and pre-trial periods that led up to the second bellwether trial (Aoki) to those leading up to this trial:

  • In Aoki, there were 11 months between case selection and trial (2/27/2015-1/11/2016); here, by contrast, there are just 3 ½ months between case selection and trial (6/10/2016-9/26/2016).
  • In Aoki, there were more than seven months between case selection and the due dates for defendants’ expert reports (2/27/2015-10/9/2015); here, by contrast, there are just 2 ½ months between case selection and the due date for defendants’ expert reports (6/10/2016-8/26/2016).
  • The Aoki schedule afforded defendants eight weeks to respond to plaintiffs’ expert reports (8/14/2015-10/9/2015); here, by contrast, defendants are being given just two weeks to analyze and respond to plaintiffs’ expert reports.

(Defense Br. at 9.)

Continue Reading The Pinnacle Hip Implant MDL Continues—with a Motion for a Continuance

This comes from the non-Reed Smith side of the blog.

Just over two weeks ago, the defendants in the Pinnacle Hip Implant MDL petitioned the Fifth Circuit for a writ of mandamus (see here) directing the trial court to enter judgment on a verdict rendered by a jury last March in the second bellwether trial, a verdict awarding a half-billion dollars to five plaintiffs.  Defendants needed a judgment to clear the way for an appeal of the trial court’s controversial evidentiary and procedural rulings in that trial, rulings about which we’ve blogged multiple times (here and here).  Defendants also asked the Fifth Circuit to direct the trial court to stay further bellwether trials (the third is scheduled for September) pending the Fifth Circuit’s review of those ruling so that, if they are overturned, the same rulings would not infect subsequent bellwether trials.  This petition was undoubtedly a Hail Mary. Writs of mandamus are rare.

But the defendants may have already won. Last week, the trial court entered judgment (and reduced the jury’s award as it was required to do by statute), and the defendants now can file a proper appeal to the Fifth Circuit.  To coopt Hemingway, the court entered that judgment in two ways: “Gradually, and then suddenly.” So, why suddenly?  Did the defendants’ petition prompt it?  Who knows?  But keep in mind that the trial court still hasn’t entered judgment on the first bellwether trial, even though the jury in that trial rendered its verdict well over a year ago.

Continue Reading The Pinnacle Hip Implant MDL Court Finally Enters Judgment

We missed a day this week, so here’s an extra post to make up for it.

This opinion, Redman v. RadioShack Corp., Nos. 14‐1470, et al., slip op. (7th Cir. Sept. 19, 2014), doesn’t even mention cy pres, but its rationale could be saying (like we have), “cy pres, no way.”

Redman was a coupon settlement with the usual pathetic – less than one half of one percent – response rate to the settlement notice (itself sent to only 5 million of the estimated 16 million class members).

Slip op. at 7.  It involved something called the Fair and Accurate Credit Transactions Act, but that doesn’t matter for present purposes.  The settling parties claimed that this pathetic response was the same as acquiescence in the settlement’s terms, but Judge Posner saw through that easily:

The fact that the vast majority of the recipients of notice did not submit claims hardly shows “acceptance” of the proposed settlement: rather it shows oversight, indifference, rejection, or transaction costs.  The bother of submitting a claim, receiving and safeguarding the coupon, and remembering to have it with you when shopping may exceed the value of a $10 coupon to many class members.

Slip op. at 7.

But even that (although interesting for other reasons) doesn’t matter for present purposes.

What’s interesting to us is the number that Judge Posner does on the attorney fee request made by class counsel.

Wisely, class counsel (unlike some other settlements we can recall) didn’t even attempt to use the value of theoretical, but unsought coupons.  Counsel did, however, use the full face value of the coupons ($830,000), even though various factors (again not relevant to our point, but including that no change was given for less-than-face-amount uses) made them worth less than face value to the class who filled out the forms to get them.  Slip op. at 11-12.  Judge Posner pointed out, id. at 12, that the restrictions “chipping away” at the value of these coupons were “even more egregious” than in Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014), a settlement he had famously denounced as “scandalous.”  The nominal face value of the coupons, therefore, could not be used as part of the denominator for determining the reasonableness of class counsel’s fee request.

[W]hile we don’t know how much $830,000 of coupons would be worth to the class, we can be confident that it would be less than that nominal amount, doubtless considerably so. And we note that were the value only $500,000 − and it may indeed be no greater – the agreed‐upon attorneys’ fee award would be the equivalent of a 67 percent contingency fee.

Redman, slip op. at 14.

Counsel also sought to inflate the denominator for purposes of their fee request by including “administrative costs.”  Id. at 10.  That wasn’t proper either, because those costs did not represent any “value received” by the class at all, since none of that sum went into the pockets of class members:

[T]he roughly $2.2 million in administrative costs should not have been included in calculating the division of the spoils between class counsel and class members.  Those costs are part of the settlement but not part of the value received from the settlement by the members of the class. The costs therefore shed no light on the fairness of the division of the settlement pie between class counsel and class members.

Id. (emphasis added).  To treat “every penny” of administrative costs as “value” to the class was “perverse”:

[It] eliminated the incentive of class counsel to economize on that expense − and indeed may have created a perverse incentive; for higher administrative expenses make class counsel’s proposed fee appear smaller in relation to the total settlement than if those costs were lower.

Id. at 10-11 (emphasis added).

The only sums properly included in the denominator for purposes of determining the reasonableness of a class action fee request are “benefit to the class,” meaning “what the class members received”:

The ratio that is relevant to assessing the reasonableness of the attorneys’ fee that the parties agreed to is the ratio of (1) the fee to (2) the fee plus what the class members received.  At most they received $830,000. That translates into a ratio of attorneys’ fees to the sum of those fees plus the face value of the coupons [case-specific calculation omitted].  Computed in a responsible fashion by substituting actual for face value, the ratio would have been even higher because 83,000 $10 coupons are not worth $830,000 to the recipients.

Slip op. at 11 (emphasis added).

Cy pres?  No way!

Cy pres awards, like the “administrative costs” excluded in Redman, do not go into the pockets of class members – not one cent.  Indeed, cy pres awards are even further removed from being “benefit to the class” because, as Judge Posner acknowledged (but found insufficient), some of the costs at least were to give “notice to the class.”  Id. at 10.  Cy pres distributions, which take money supposedly belonging to class members and give it to non-class members (such as organizations devoted to fomenting more litigation, or class counsel’s law school) are the antithesis of “benefit to the class.”  Far from being sums “received by class members,” cy pres distributions take money away from the class and give it to supposedly deserving bystanders.

Whether or not courts should ever have the power to redistribute money belonging (if at all) to a class to persons not even in the class, under Judge Posner’s reasoning in Redman, there’s no way cy pres distributions can properly be considered in evaluating the reasonableness of a fee request.  The same “perverse incentive” exists, maybe even more strongly, with cy pres.  It’s an easy way to inflate the denominator artificially with sums that do not benefit the class – particularly when actually distributing the same money to class members would give rise to additional “administrative costs” that are themselves improper to include in that same denominator.

Although we would prefer to abolish cy pres outright as an abuse of judicial power, removing cy pres sums from the denominator in fee calculation strikes us as the next best alternative, since we believe that without the “perverse incentive” so aptly identified by Judge Posner, cy pres distributions would be few and far between.