Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation?

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Multidistrict litigation has been the subject of much controversy in recent years.  Defendants lament the pressure to settle claims that they believe frequently lack merit and the inefficiencies of modern multidistrict litigation.  In her recent book, Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation, Professor Elizabeth Chamblee Burch marshals a wide array of empirical data to suggest that a systematic lack of checks and balances may disadvantage plaintiffs in multidistrict litigation as well. Rather than faithfully representing them, she asserts that plaintiffs’ lawyers may sell them out in backroom settlements that compensate lawyers handsomely, pay plaintiffs little, and deny them the justice they seek. Please join Professor Elizabeth Chamblee Burch and Douglas Smith for a discussion of this important book.

Featuring: 

Prof. Elizabeth Chamblee Burch, Fuller E. Callaway Chair of Law, University of Georgia School of Law and author of Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation (Cambridge University Press 2019)

Douglas Smith, Partner, Kirkland & Ellis LLP

 

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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Litigation Practice Group, was recorded on Thursday, January 9, 2020, during a live teleforum conference call held exclusively for Federalist Society members.          

 

Micah Wallen:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is titled, "Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation?" My name is Micah Wallen, and I am the Assistant Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the experts on today's call.

 

      Today, we are fortunate to have with us Doug Smith, who is a Partner at Kirkland & Ellis. We also have Professor Elizabeth Chamblee Burch, who is a Fuller E. Callaway Chair of Law at University Georgia School of Law and is the author of the book we will be discussing today, Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation. After our speakers give their opening remarks, we will then move to audience Q&A.

 

Thank you both for sharing with us today. Doug, the floor is yours.

 

Doug Smith:  Thank you, Micah. We are here to talk about, with Professor Burch, about her book, Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation. And I think, as most people who follow this area are aware, that multidistrict litigation is a hot topic now with a lot of debate about how well it's working for plaintiffs and defendants. And there are many different proposals for reform of the procedures that are currently pending in front of Congress and in front of the Civil Rules Committee and in other venues.

 

      This is a very timely book, and we're lucky to have Professor Burch here to talk about it. It's got a lot of the inside scoop in recent mass torts. Professor Burch, how did you decide to write a book about mass torts in multidistrict litigation?

 

Prof. Elizabeth Burch:  Well, it's actually been a long time coming. It's a culmination of a bunch of different projects, but I started collecting data about six or seven years ago now. At first, I had sort of a side project that was looking at whether repeat players exist on the plaintiff's side.

 

And so I started way back when gathering a data set on plaintiff’s lawyers, and then I eventually expanded it to look at defense attorneys and then expanded it a little further to look at the settlements. And the more I looked at it, the more I realized there's really not a whole lot of data about multidistrict litigation and about the practices that occur in this space. And so thus became the impetus for the book, and it finally came out this past May.

 

Doug Smith:  Just for those who haven't had a chance to read your book yet, what kind of data did you go about trying to collect from the Defense and Plaintiff's Bar and other public sources?

 

Prof. Elizabeth Burch:  Well, there's about 40 different pages of tables in the back, so I'll give you just a thumbnail sketch. I looked at who the key players are on both sides, principally the defense firms since, obviously, the defense firms tend to be the same rather than necessarily the partners who are involved in the cases. And then I looked at a bunch of different rates about how many cases get tried, how many bellwether trials you have, how many judges issue Lone Pine Orders, and how many judges issue plaintiff fact sheets. At what point in the litigation do those tend to occur?

 

      I looked at, gosh, common benefit fees and tried to figure out what some of the averages are. To the extent that I could, I tried to look at outcomes for plaintiffs, but as you can imagine, it's really hard to get data on how plaintiffs substantively fair. So mostly what I concentrate on or what I think of as the procedural inputs, right, the things that we can see, the things that go into the soup pot rather than how the soup actually tastes on the way out.

 

      So there's a whole bunch of different data in there. Pretty much anything that you might want to know about multidistrict litigation, you can find somewhere in the book.

 

Doug Smith:  And did you have an opportunity to interview or talk with some of these repeat players in MDL cases on the plaintiff and defense side?

 

Prof. Elizabeth Burch:  I did. So I interviewed a few people formally for the book, but mostly I talked to a bunch of people just over the course of six years, getting to know the people and the space, attending conferences with them, talking with judges. I've presented to judges who work in this field, and so it gives me a sense as to what's on their minds, what the big issues are that are going on.

 

But as you'll see if you read the book, I think I managed to get just about everybody mad: the lead plaintiff lawyers, probably the defense attorneys, and definitely the judges. I'm an outsider. I take an outsider's perspective, even though this has been my field for, gosh, 13 or 14 years now.

 

Doug Smith:  And in the book, you discuss at length the experience of a typical plaintiff bringing a -- it may be a drug claim or some other kind of tort claim in an MDL case. Can you provide the audience with some description or perspective on the experience of a typical plaintiff in an MDL case?

 

Prof. Elizabeth Burch:  Sure. Sure. I can certainly try. I'll say that this is something I'm actually looking into in a lot more detail at the moment. I've started a procedural justice study to get a better sense as to what the plaintiffs think about this process. I haven't looked at the results of that study yet because it's still ongoing.

 

And so typically, I hear from plaintiffs who are not happy about the process. And whether that is typical or whether that's a result of the people who are more likely to call, I don't yet know since I haven't looked at all the different data.

 

But the concerns that I have are that plaintiffs go into this thinking that this is going to be like your typical car accident case where you can walk down the street, hire an attorney in your town, and then talk with your attorney about how your litigation is going to work. And that obviously works very different in this area. Even if plaintiffs go down the street and hire someone, their case tends to get aggregated before one of the law firms that is typical and has become typical in terms of handling these cases.

 

And so some of the plaintiffs have never actually met the lawyer who ultimately represents them. If they see their case and they see their complaint, they don't know who the attorney is who's actually signed on the bottom line. Many of them deal with case managers rather than their actual attorneys. And a lot of them are really frustrated because they don't necessarily know what's happening in their cases. They aren't kept up to date.

 

So I'd say there's a lot of frustration on the plaintiff's side in terms of communication between attorneys and clients.

 

Doug Smith:  And how do you think that the plaintiff's lawyers view their clients in these big MDLs? Do you think this is really lawyer-driven litigation or is it just kind of a function of the fact that these proceedings are so large and there are so many individual plaintiffs that it's harder for them to really service the plaintiffs the way they might want to be serviced?

 

Prof. Elizabeth Burch:  I think it's a range. I think that there are some firms who still try very hard to keep that individual attorney-client relationship going. But I think you're right, I think the model has begun to change now that you have advertisers and lead generators. The whole business model for plaintiff law firms who operate and mass tort litigation has really had to change.

 

And so it's a struggle, I think, for even the most diligent plaintiff's attorney to try to stay on top of, on the one hand, keeping up with the economics of the litigation and making it viable, and on the other hand, trying to keep their clients informed about what the current events are.

 

Doug Smith:  You also spend a lot of your book discussing in detail the procedures and the practical aspects of how the lawyers are submitted for committees that really are supposed to be in charge of running the MDL litigation on the plaintiff side. How does that selection process really effect an MDL in your view?

 

Prof. Elizabeth Burch:  Well, it's changed a lot. It used to be that plaintiff's lawyers got together and decided that they wanted to cooperate in a particular litigation, and it was all very consensual. Since then, it's become much more formalized. So the judges are the ones who are selecting lead plaintiff's lawyers and, even more so today, lead defense attorneys.

 

And when judges decide that they're going to select the leaders, they have a couple of different models. They can just defer to the plaintiff's lawyers and say look, go out. Fight it out amongst yourselves and then come back with a consensus slate. Or they can have a competitive model and say I want a full list of applications. Send me your applications by such and such date. And when they do that, they tend to look for qualities like whether they're going to be cooperative, whether they have experience, whether they have the ability to finance the litigation.

 

And my concern emerging from all of that is that the plaintiff's lawyers who are on the outskirts, the disenfranchised plaintiff's attorneys if you will, they don't necessarily have any sort of assurances about adequate representation. So they're not able to communicate often times directly with the judge. And yet, when the judge selects the lead plaintiff's lawyers, they tend to do so on qualities other than adequate representation. And they may not even know just yet what the big conflicts are among the plaintiffs at that point.

 

Doug Smith:  Yeah. Do you have any thoughts about how that process might be changed or improved? Or is it just something that's an intractable problem in MDL cases?

 

Prof. Elizabeth Burch:  Yeah. I don't think it's an intractable problem. Judges have been able to manage it on the plaintiff's side in terms of class actions. Not to say that class actions are perfect by any means. But thinking in terms of adequate representation and trying to figure out what sort of structural conflicts of interest exist that need their own representatives, thinking about that really early on in the process when you're figuring out what sort of discovery requests to make and beginning the negotiation process I think is a really critical and important component of procedural justice.

 

Prof. Elizabeth Burch:  Any mention that there are these repeat players, really, on both the defense and plaintiff's side, but in particular, on the plaintiff's side, these lawyers that end up getting selected for the committees in MDL after MDL. Do you think that's a good thing or a bad thing or do you have any views about that?

 

Prof. Elizabeth Burch:  Well, I have a lot of views about that. I don't know that I could reduce it to a good thing or a bad thing. I think there are certainly good things to be said about having repeat players. You do have expertise. You're not having to relearn how to do all these things, and that can be good. That can be good on both the plaintiff's side and the defense side. And it's certainly not surprising, right? We expect that attorneys in this area are likely to specialize.

 

      What I worry about, though, is that unlike in class actions, there are no structural assurances of fairness in multidistrict litigation. So you have the same sort of principal agent problems that exist in the class action context. And, yet, most of these deals end in private settlements, which means that, of course, judges aren't signing off in the same way that they would under Rule 23(e) to make sure that the settlement is fair, reasonable, or adequate.

 

And so when you have repeat players, the concern is that they're going to be playing the long game. They might be developing working relationships with their opponent. And in the course of that, they might be bargaining for what matters most to them, not necessarily for their clients. And I think that's less of a concern on the defense side than it is the plaintiff's side.

 

For defense attorneys, as you well know, it tends to mean ending the litigation with the least amount of costs possible. And then for the lead plaintiff's lawyers, the worry is that it might mean negotiating for common benefit fees. And those common benefit fees might be negotiated to the detriment of their client.

 

Doug Smith:  How do you mean to the detriment? Maybe you can explain to the audience what the common benefit fees are and how the negotiation of those could adversely affect the plaintiffs in the case or other lawyers not on the committees.

 

Prof. Elizabeth Burch:  Sure. So typically, what happens is that the judge at the very outset of the case will put into place a common benefit hold back order, which means that as cases settle that the plaintiffs and their attorneys have to put a certain percentage into a kitty, right? And that money is then going to be used to reimburse the lead lawyers for the money that they have spent litigating the case.

 

      And the numbers tend to be pretty modest at the outset. On average, it's about a 6.2 percent common benefit fee. But what tends to happen is that either the lead lawyers will ask for a raise as the litigation goes on or they'll use their bargaining power with the defendant to negotiate for a higher common benefit fee, typically through the settlement.

 

      And so my concern is that if I'm a defense attorney, I'm happy to roll out the red carpet treatment on fees. It doesn't cost me anything. It's the same amount of money regardless of how it gets divvied up among the plaintiffs and their attorneys, but I'm going to negotiate for something in return. And so that's where I tend to think about this as being a structural conflict of interest, that as a plaintiff, I would want my attorney to have interests that are aligned with mine. And so if their fee isn't tied to my outcome, then there's a reason to be concerned that they can increase their own fees in a way that doesn't benefit me.

 

Doug Smith:  And then you mentioned the potential for unfairness there or the lack of procedures that you might have in a class action. Do you have any thoughts about what can be done to improve that situation or proposals for reform?

 

Prof. Elizabeth Burch:  Well, I think it's a pretty easy fix, at least in that regard. Both class actions and common benefit fees are based on restitution principles. They're based on quantum meruit. And if we think about it as a restitutionary theory, then the only reason that lead lawyers should get money is because they have benefitted the people that they represent. And so thinking about it from those terms as a judge, then you have to say well, what did the plaintiffs actually receive in this particular litigation?

 

And so look past what I think of as the sticker price of the settlement fund. Even if the sticker price of the settlement fund is $100 million, if the plaintiff actually got a fraction of that money, then judges should be tying the common benefit fees to the money that the plaintiffs actually get and then giving the lawyers a percentage of that. And I think that that's an easy way to fix the system, not even with repeat players, right? It's a pretty powerful carrot if you're tying their contingency fees and their common benefit fees to the outcomes that they generate for their clients.

 

Doug Smith:  And I think you mentioned at the outset that there's really -- a lot of this isn't very public when it comes to how plaintiffs are compensated and how much they actually get and who gets what. Do you think that maybe some increased transparency there would help or be a positive reform?

 

Prof. Elizabeth Burch:  I would love that. I would absolutely love that. I think there are a lot of genuine questions about how much money does it take to put dollars in class members' hands versus non-class members' hands, if we think about class actions versus MDLs. There are legitimate questions about whether this is a good system and what the payouts actually look like. So getting data about substantive outcomes would be outstanding.

 

Doug Smith:  Now, one thing that has been debated a lot or seems to be a common view among the defense bar is that there's been increasing pressure in MDLs on defendants to just cut a check and settle the MDLs, just due to the number of claims that are at issue and the interim threat of having all those claims in an MDL. What are your thoughts on whether there's any undue pressure on defendants to settle? Do you think that's true or not? Or do you have any thoughts on that side?

 

Prof. Elizabeth Burch:  So it's hard to say in a blanket way, right? Every case is different, and the merits of every case are different. I do think on the whole that we should be trying the merits of the case more often, whether that's through engaging with motions to dismiss or Daubert motions or motions in limine or summary judgment motions, even bellwether trials.

 

      One of the things that I found surprising and somewhat frustrating was that in about a third of the cases that ended in private settlements, before they ended in a private settlement, a third of them had not had any ruling on the merits. And, again, as I define the merits, it's a motion to dismiss, it's a summary judgment motion, it's a bellwether trial, it's a class certification decision, etc.

 

      And so I find that troubling. I don't know why you would settle really early on when you're not able to test the merits. Maybe it's something about the judge. Maybe it's something about the case, but it seems like engaging with the merits is the only real way to figure out whether there's a strong case or a weak case.

 

Doug Smith:  Yeah. And in your book, you do provide a number of examples of MDLs where they have litigated the merits through motion practice. What are your thoughts about how feasible it is -- it seems like it's been done in several MDLs, but then if you look at the statistics overall, it may not be done in a large percentage of them. Do you have any thoughts on why that is or the feasibility of using motion practice to at least give you a sense of the merits of the cases?

 

Prof. Elizabeth Burch:  I will say that, at least in my data set, about 17 percent of the cases actually ended in what I labeled as a defense win, whether it was a summary judgment motion that was based on Daubert questions with general causation or whether it was a preemption issue. I also included in there arbitrations, so if cases got sent to arbitration, then I counted that as a defense win.

 

      So it's not as if none of these cases are getting litigated, and it's not as if defendants don't have any opportunity. But it does seem to be, by and large, judge specific. So whether the judge is thinking that this isn't a meritorious case, then they might be willing to entertain earlier motions, particularly motions that might be dispositive of the entire proceedings.

 

Doug Smith:  And you mentioned those, a large percentage of the cases where there really isn't an adjudication of the claims before settlement. And in your book, one example you discuss is that settlement and the Propulsid MDL and going through there. And maybe you can talk to the audience a little bit about what happened in that settlement and how representative that is.

 

Prof. Elizabeth Burch:  I go into great detail about the Propulsid settlement, and I'll try not to go in quite as much detail right now. But I do think it gives you some context for dry numbers and it was the earliest settlement within my data set, and I think it illustrates how a lot of the different settlement provisions work within this context.

 

But it's also important because the lead plaintiff's lawyers in that case pronounced that they were creating a template for all future litigation. So one of the things that I do is show how they were right in that pronouncement and show how a bunch of the subsequent deals replicate and refine the initial settlement in the Propulsid case.

 

So perhaps some of ya'll have heard about Propulsid. It was a really popular drug in the 1990s for heartburn. About 30 million people took it, manufactured by Johnson & Johnson. Johnson & Johnson had marketed it to pediatric hospitals for use in children with acid reflux, but it hadn't been labeled for that. And so the FDA had never approved Propulsid for the use in children, and there were a lot warnings within the context of the FDA.

 

The FDA warned the company that pediatric patients might be at greater risk, but the label changed, ended up getting watered down. Remember this is back in the 1990s. So Johnson & Johnson eventually withdrew Propulsid from the market in July of 2000, and there were a bunch of lawsuits in the wake of that proceeding that were all gathered in front of Judge Fallon in New Orleans.

 

So the way that the deal worked was that if 85 percent of death claims didn't enroll in the settlement, then Johnson & Johnson could walk away from the deal. So these are called walkaway or blow provisions, as ya'll have probably heard, and 100 percent of all the settlements within my data included these types of walkaway provisions.

 

The second thing that the dealmakers did in Propulsid was they designed an opt out form for non-settling clients. And you think opt out form, well, that means they're opting out of the settlement. But this one had a twist; it wasn't that you were opting out of the settlement. Instead, you were opting out of your attorney-client relationship. So when you sign this opt out form, it authorized your lawyer to withdraw from representing you, meaning that you're opting out of the representation.

 

So that then became the template for more sophisticated provisions that require attorneys to recommend the settlement program uniformly to all of their clients. 84 percent of the settlements that I saw included these mandatory recommendation provisions. It also became the template for withdrawal provisions, withdrawing from non-settling clients, and about 53 percent of the deals had these withdrawal provisions.

 

And so then very quickly, the medical records go to a panel of doctors. The doctors permit or deny the claims without any kind of explanation. And so Propulsid was usual in the sense that I could actually get numbers on how plaintiffs faired under the system. There was a total fund of somewhere between $84- and $105 million. So it depended on how many people ultimately signed onto the deal.

 

But only 37 out of 6,012 claims were deemed eligible for relief. That's 0.6 percent, and the total amount of money that went to plaintiffs out of the two settlements was $6.5 million. Lead lawyers, on the other hand, negotiated their attorney's fees and costs directly with Johnson & Johnson to the tune of $27 million. And I found that about 84 percent of all of the settlements that I examined allowed these plaintiff's attorneys to negotiate their fees directly with the defendants.

 

And, as I've said already, I find that that's problematic because it's a pretty stark departure from these types of traditional contingency fee principles. The rest of the money, $8.3 million, went to Canada. $8.3 million went to the Louisiana Health Public Initiative. And the leftover money reverted back to Johnson & Johnson, and so about 23 percent of the deals that I looked at had these reverter provisions back to the defense.

 

Doug Smith:  And so it seems like at least one possibility in the way things are working now is the plaintiff's lawyers will end up getting fees based on a theoretical amount that they're recovering for plaintiffs, but then defendants typically insist on some sort of review process in the settlement that results in a number of the claims being denied just because they don't even meet settlement criteria. So sounds like the way it's working out is that the plaintiff's lawyers may get a disproportional recovery because of that dynamic.

 

Prof. Elizabeth Burch:  That's certainly my concern. That's why I say, I call it the sticker price of the settlement fund. But looking at the actual recovery for the plaintiffs, I think, would be more important for these common benefit fees than the sticker price of the settlement fund, particularly when that money goes back to the defendants or goes somewhere else.

 

Doug Smith:  How involved are judges typically in these MDL settlements? And do you think that they should have a more active role or less active role?

 

Prof. Elizabeth Burch:  Yeah. It's interesting because you would think that with a private settlement, that it would be purely between the parties, but that was not what I found at all. I found that judges were actually very heavily involved in the settlement process. About 53 percent of the non-class proceedings in my data, the federal judges approved private settlements. So, again, these aren't class actions, but they approved these private settlements.

 

      And should they have more or less involvement? I don't think that they have the ability under current law to get involved in private settlements. I think what they're doing is they're getting involved at the request of the lead plaintiff's lawyers and the defense attorneys to try to help herd plaintiffs into deals that they might prefer to decline.

 

      I think there is a way for judges to get more involved. I think, as I mentioned earlier, if they award common benefit fees based on quantum meruit principles, then you have to figure out what the plaintiffs actually got out of the deal. And so if you're looking at the plaintiff's outcome, then that's a backdoor way to start thinking about awarding common benefit fees and looking at the settlement terms themselves.

 

Doug Smith:  Given all these MDLs that you've looked at, do you have a view on whether the judges that have been assigned them are really well-equipped to be involved, either at the settlement stage or even leading up to it? How prepared do you think the judges that are pointed to these MDLs are for this task of handling what's probably -- it's a far bigger litigation than most of the cases on their dockets.

 

Prof. Elizabeth Burch:  Yeah. These are really tough cases. And, I guess, the way I think about it is compared to whom? Right? Are they doing a good job? Well, what's going to happen if they're not doing anything? So I think judges, the ones that I have talked to, I have every faith that they're doing what they can to try to move the litigation along.

 

I do think judges are very pro-settlement, and that concerns me. It's not that parties shouldn't settle, but I think judges should have a trial-oriented view. And if cases ultimately settle along the way, then that's the party's choice, but I don't think that settlement should be the endgame.

 

Doug Smith:  And there have been, as we've discussed, there have been a number of proposals for reform aimed at mostly, maybe not the issues that you're most concerned about, but the idea on the part of the Defense Bar that there are a lot of claims that are filed in a big MDL like this, generated by advertising that really aren't very -- they're not good claims that are never really subjected to review except maybe at the settlement stage.

 

      So there have been a number of proposals for things like having some sort of required initial review or census or maybe making interlocutory review more readily available or mandatory so that the appellate courts can review decisions on these key motions for summary judgment and things like that. Do you have any view about how big a problem that is or whether the end, whether reforms like that would be worthwhile?

 

Prof. Elizabeth Burch:  Yeah. I guess I have heard, like you have, that there are problems with meritless claims, and I've heard it from both the Plaintiff's Bar and the Defense Bar. But I guess what I can't get a handle on is any data about it. So everyone says there are all these meritless claims, but we don't actually have any data that exists on the problem or why it's a problem. So when I think about meritless, I don't know that we have a good definition about what meritless means. I don't know that it's synonymous with fraudulent, for example.

 

So, for instance, the Vioxx litigation is often cited as an illustrative example. And in that particular case, the claims administrator asked for, I think, additional information on some 256 potentially fraudulent claims. 194 didn't ultimately respond. 62 did, and 39 overcame that initial suspicion. So at the very end of the case, Judge Fallon then said that there were only 2 out of 50,000 claims that were fraudulent.

 

So even if we're looking at that one example of litigation, it's really difficult for me to figure out the scope of the problem and the best way to combat it. So is it that people get a misdiagnosis from their doctors? Is it that the plaintiff's lawyers aren’t screening them properly? Is it that the plaintiff's attorney just isn't in regular communication with her clients?

 

Getting a handle on what the problem is, I think, is probably a better first step to figuring out whether there are meritless claims, what the sources of the meritless claims are rather than just treating it with a blanket protection of increasing barriers and hurdles for plaintiffs to get into the courthouse.

 

Doug Smith:  One other question that's on a related topic, could you talk about a little bit about the role of litigation finance on MDLs? There's been a lot of discussion about litigation finance engendering more litigation. Do you think that that's true? How big a role do you think it plays in these kind of mass tort MDLs that you've researched?

 

Prof. Elizabeth Burch:  It's certainly a growing industry. I wrote about it, gosh, back in 2011. And I'm not even sure I'd be able to recognize the key players in the industry anymore. There's litigation finance that means a lot of different things. It can mean loans to plaintiffs, like a payday lender or a tax refund anticipation loan. I think that's the more dangerous area, because you have plaintiffs who need money in order to pay rent while they're continuing to litigate, and there can be rates that are really high. But there are also loans that are made even to defendants who are continuing to litigate or to plaintiff's lawyers who prefer to use some sort of loan other than a brick and mortar bank type loan.

 

But it is a growing field, and I guess the question that I always have when we're thinking about disclosure is then what? Right? So even if the plaintiff's side has to disclose that they've gotten funding, what is the judge supposed to do with that information? I think it's a really deep network. There are plaintiff's lawyers who are involved in some of these funding companies, and there are connections that raise questions in my mind. But those aren't always very transparent, and so even disclosing the fact of funding wouldn't necessarily give you the information that you needed to know.

 

Doug Smith:  Do you think that there should be some sort of more formal mandatory disclosures about the terms of funding in MDLs?

 

Prof. Elizabeth Burch:  I’m not a -- yeah, I'm not against disclosure. So if the defense gets funding, I don't think the plaintiff's lawyers should have any business knowing about it and vice versa. So I think you could have disclosure to the judge but not the other side, in camera disclosure. But, again, it's the same sort of problem that judges have in class actions when everyone's deciding to settle. It's an information asymmetry problem.

 

      So you have disclosure, but then what's the judge supposed to do with that information? How are they supposed to vet it and figure out whether there are conflicts of interest?

 

Doug Smith:  One other example that was in your book, Professor Burch, that I thought was really interesting and maybe you could talk a little bit about because I think it illustrates some of these issues you've been discussing, is the NFL concussion cases and the MDL surrounding that. Maybe you can talk a little bit about that example?

 

Prof. Elizabeth Burch:  Sure. Yeah. And I think that goes back to our discussion about third-party funding. There's a lot in the book -- there's not a ton in the book about NFL. The one thing that I really focus on in the book is their example of third-party funding. And one of the concerns that I ran into was that one of the lead lawyers in that case was also on the board of directors of Esquire Bank, which is a third-party lending company. It lends money directly to plaintiff's attorneys as well as to the plaintiffs themselves.

 

And so the worry that I discuss is that when you have someone who is in a position to create delay in settlement payout—so at that point, the settlement had been negotiated, but the settlement claims administration process was underway—who was also making post-settlement loans to the plaintiffs stands to gain, perhaps, if there is a delay in that process. So the longer the payout process takes, the more people are likely to go look for funding from one of these third-party financiers.

 

      And if you're in the position to recommend the firm that you are also on the board of directors, then there's a concern about conflict of interest. And so that wasn't readily apparent. I think some newspapers dug it up after there were questions about third-party funding in that case. But it's just an example of we have disclosure and then what? Right? So what are we supposed to do with that information? Do we hope that other plaintiff's lawyers are going to vet it and say here's a good funder, here's a bad funder? Or can we really trust the judge to be able to decipher on their own whether this is a good arrangement or not?

 

Doug Smith:  And I think another interesting example that really illustrates another point you made about potential conflicts among the plaintiff's lawyers is the GM Ignition Switch litigation and how bellwether selection worked out there. Maybe you can talk a little bit about that example also for the audience because I thought that was an interesting, recent example.

 

Prof. Elizabeth Burch:  Sure. Yeah. That was a really fascinating one for people that were following it. This happened a few years ago now at this point. But Lance Cooper, who is an attorney here in Georgia, who was the one that actually discovered the ignition switch defect when he was working on Brooke Melton's case. Brooke Melton died on her way home, actually on her 29th birthday.

 

      And so he discovered the defect. He was put on the plaintiff's steering committee, but he's not what we would think of as a usual suspect in these MDLs. And so he was the only one that I talked to who was actually willing to go on the record and talk about his experience in the MDL. And he filed a motion to remove the lead plaintiff's lawyers after some of the bellwether trials started to occur.

 

And you might remember that the first bellwether trial, the plaintiff perjured himself on the stand and so it ended up getting dismissed. And so there was a lot of concern that the order of the bellwether trials had been rigged so that the lead plaintiff's lawyers could only try their own cases. So even if there was a really strong case, and there was a strong case. It was a case where a father of five children had died in a single car accident, I believe. That was put later in the bellwether selection process rather than first.

 

So he tried to remove the lead plaintiff's lawyers, and there's an interesting story there about what sort of obligations lead plaintiff's lawyers owe non-clients, and his litigation really brought that to the fore. But I don't think it was resolved in a way that you might expect or that might have been satisfactory, certainly from his perspective.

 

Micah Wallen:  All right. We'll go ahead and open up. Go ahead and ask your question.

 

Caller 1:  Hello. I do a lot of plaintiff's work in New York/New Jersey area, and I was a little surprised that you considered summary judgment motions and motions to dismiss on the merits when it's my experience that more often, it's an art of pleading that you either pled correctly or to the satisfaction of the judge or hopefully the law and that instead, I think a determination on the merits is when you go to trial and some fact finder finds facts that satisfy your cause of action. And I wonder if you could comment.

 

Prof. Elizabeth Burch:  So I actually agree with you on the motion to dismiss, and I think I misspoke in that sense. That wasn't something that I consider to be on the merits for purposes of my research. I did consider summary judgments to be a question on the merits, certainly a question about getting to the heart of the merits of the case. So I think cross-certification motions, summary judgment motions, motions in limine when they're dealing with expert evidence on causation questions, certainly bellwether trials, all of those, I think of as more traditional ways of getting at the merits. Obviously, not as close as we would like in terms of actual bellwether trials, but certainly closer than, say, a Lone Pine Order or a census order or a plaintiff's fact sheet might be.

 

Micah Wallen:  All right. We'll now go to our next caller.

 

David Emerson:  Yeah. This is David Emerson with The Federalist Society in Berkeley. I understand that this subject of conversation is on mass torts. My question has to do with, Professor, has to do with whether or not she's had an opportunity to consider whether there's anything to be learned from the shareholder or securities class action lawsuits. The way that they're handled, there are some similarities. Of course, there are enormous differences as well. But a lot of the third-party funding of litigation comes from the same source.

 

Prof. Elizabeth Burch:  That's interesting. I haven't -- I actually used to practice in securities class actions once upon a time. But it has been quite some time since I have dabbled in that world, so I wouldn't want to misspeak. But I do think you have a lot of the same phenomena in antitrust and securities and employment in the sense that you have a small group of players who are the real stakeholders in that kind of litigation.

 

So to that extent, I think it can share some of the concerns that I've identified. Although, I think on the whole, securities class actions and antitrust claims tend to be more prone to class certifications. So at least in theory, you have some structural assurances of fairness that are built in to Rule 23 in a way that you lack in this kind of multidistrict litigation, non-class context.

 

Micah Wallen:  All right, no other questions. Doug, back over to you.

 

Doug Smith:  Maybe Professor Burch had some final remarks or if there’s anything we didn't cover in her book that she wants to let the audience know. Otherwise, I think we can probably wrap it up. Professor Burch, do you have anything else you'd like to share?

 

Prof. Elizabeth Burch:  Well, I just want to say thanks for having me. It's been a really interesting project. I certainly welcome views from all different perspectives, and if there are things that I have missed on either side, I would love to hear about them.

 

Micah Wallen:  All right, and on behalf of The Federalist Society, I'd like to thank both of our experts for the benefit of their valuable time and expertise today. We welcome listener feedback by email at info@fedsoc.org. Thank you all for joining us. We are adjourned.

 

Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at fedsoc.org/multimedia.