7% Payment For Use Of Steering Committee’s Work Product Was Proper, Covering Both California State Cases And Other Federal Cases.
In re Avandia Marketing, Sales Practices & Product Liab. Litig., No. 14-2980 (3d Cir. July 2, 2015) (not precedential) involved a dispute between California firm Girardi Keese (GK) and an MDL Plaintiffs’ Steering Committee.
GK represented some clients using Avandia in both California state court cases and some federal cases which were coordinated for MDL pretrial purposes in E.D. Pa. district court. GK signed an Attorney Participation Agreement with the Steering Committee to pay 7% of the recovery of its clients’ claims arising from the use of Avandia into a litigation expense fund in exchange for use of the Steering Committee’s work product. The Agreement was incorporated in substantial part in a pretrial order by the district judge. GK refused to pay the 7%, apparently contending it was unfair to do so in connection with client recoveries in California state court. (The 7% broke down 4% from GK fees and 3% from clients’ shares of recovery.) The district judge, based on the Committee’s request, ordered the defendant drug manufacturer to hold back the 7% for common benefit rather than distribute to GK.
The Third Circuit affirmed. After finding the district court’s order to be final and appealable, the federal appeals court determined the district judge did have jurisdiction to enter the order because GK signed the Agreement and was no stranger to the district court’s pretrial order incorporating the Agreement being enforced. Although agreeing that the district court would not have had jurisdiction over California state-court cases, it did have power over GK based on the pretrial order. The appellate court also allowed for the opportunity to have GK put in for an award of fees from the common fund if it could prove a common benefit to all of the plaintiffs.
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