In re: Zyprexa Products Liability Litigation, No. 07-3815 (2d Cir. 2010)

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07-3815-cv; 07-5539-op In re: Zyprexa Products Liability Litigation 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2008 4 5 6 (Argued: March 12, 2009 Final Submission: June 17, 2009 Decided: February 3, 2010 Corrected: February 8, 2010) 7 Docket Nos. 07-3815-cv, 07-5539-op 8 ------------------------------------- 9 IN RE: ZYPREXA PRODUCTS LIABILITY LITIGATION 10 ******************************* 11 MULLIGAN LAW FIRM, 12 Appellant, 13 -v- 14 15 ZYPREXA MDL PLAINTIFFS' STEERING COMMITTEE II and ELI LILLY AND COMPANY, 16 Appellees.* 17 ------------------------------------- 18 19 Before: 20 McLAUGHLIN and SACK, Circuit Judges, and KAPLAN, District Judge.** Appeal from orders of the United States District Court 21 for the Eastern District of New York, No. 04-MD-01596 (Jack B. 22 Weinstein, Judge). This appeal concerns a set of orders by the * The Clerk of Court is directed to amend the caption to appear as set forth in this opinion. ** The Honorable Lewis A. Kaplan, United States District Judge for the Southern District of New York, sitting by designation. 1 district court regarding attorney compensation in this ongoing 2 multidistrict litigation. 3 jurisdiction to hear this interlocutory appeal and that it is not 4 appropriate for us to grant a writ of mandamus. 5 6 We conclude that we do not have Appeal dismissed; application for a writ of mandamus denied. Judge Kaplan concurs in a separate opinion. 7 8 9 10 11 12 13 ROBERT J. LACK, Friedman Kaplan Seiler & Adelman LLP, New York, NY (Eric Roberson, The Mulligan Law Firm, Dallas, TX, and William David George and Earnest W. Wotring, Connelly, Baker, Wotring LLP, Houston, TX, on the brief) for Appellant. 14 15 16 17 18 WILLIAM M. AUDET, Audet & Partners, LLP, San Francisco, CA (James M. Shaughnessy, Milberg LLP, New York, NY, on the brief) for Appellee Zyprexa MDL Plaintiffs' Steering Committee II. 19 20 21 22 23 ANTHONY VALE, Pepper Hamilton LLP, Philadelphia, PA (Nina M. Gussack, Philadelphia, PA, and Samuel J. Abate, Jr., New York, NY, on the brief) for Appellee Eli Lilly and Company. 24 25 PER CURIAM: This interlocutory appeal concerns the attorney 26 compensation structure established by the district court in this 27 ongoing multidistrict litigation ("MDL"), and the applicability 28 of that compensation structure to the Mulligan Law Firm 29 ("Mulligan"). 30 plaintiffs in upwards of seventy cases that have been transferred 31 by the Judicial Panel on Multidistrict Litigation to the United 32 States District Court for the Eastern District of New York (the Mulligan represents more than two thousand 2 1 "MDL court" or the "district court"), where they are being 2 considered alongside many similar cases. 3 the federal courts do not have jurisdiction over sixty-one of 4 these cases, all of which were originally filed in various state 5 courts, removed to federal courts, and then transferred to the 6 MDL court. 7 remand the cases to the state courts from which they came. 8 9 Mulligan asserts that It has therefore filed motions in the MDL court to While the motions to remand were pending, the district court instituted several attorney compensation protocols. 10 Included were a cap on attorneys' fees and the creation of a 11 common benefit fund -- generated by a three percent set-aside 12 from funds from all settlements and judgments -- to compensate 13 members of the appellee Zyprexa MDL Plaintiffs' Steering 14 Committee II (the "PSC II") for their work on behalf of all of 15 the MDL plaintiffs. 16 In a pair of orders dated August 17, 2007, the MDL 17 court (Jack B. Weinstein, Judge) ruled that all of Mulligan's 18 cases that were pending in that court were subject to these 19 attorney compensation strictures. 20 Mulligan from making any disbursements from a fund that it 21 maintained (the "Qualified Settlement Fund") until a fund 22 administrator had certified that the protocols had been adhered 23 to. The court also enjoined 24 Mulligan appeals from the August 17 orders. 25 asserts: 1) that the district court lacks jurisdiction over the 26 sixty-one cases for which remand motions are pending, and that it 3 The firm 1 therefore also lacks jurisdiction to impose a fee cap and a set- 2 aside requirement with respect to those cases, and 2) that the 3 court abused its discretion in sua sponte placing a cap on 4 attorneys' fees in all of the Zyprexa cases pending in the MDL 5 court. 6 The PSC II and Eli Lilly and Company ("Eli Lilly"), the 7 manufacturer of the drug Zyprexa and the defendant in the 8 underlying litigation, have moved to dismiss this interlocutory 9 appeal. 10 hear it. 11 conclude that we do not have such jurisdiction, we should grant 12 its petition for mandamus relief with respect to the sixty-one 13 cases over which, it asserts, the district court lacks 14 jurisdiction. 15 They assert, inter alia, that we lack jurisdiction to Mulligan disagrees. Mulligan further argues that if we We conclude that we do not have jurisdiction to hear 16 this appeal, and that mandamus relief is unwarranted. 17 We therefore dismiss the appeal. BACKGROUND 18 19 The multidistrict litigation underlying this appeal 20 consists of hundreds of lawsuits brought by thousands of 21 plaintiffs against Eli Lilly, which manufactures the drug 22 Zyprexa. 23 approved by the Food and Drug Administration to treat 24 schizophrenia and bipolar disorder. 25 subject of many lawsuits based on allegations that Zyprexa causes 26 diabetes. Zyprexa is an antipsychotic medication that has been 4 Eli Lilly had been the 1 In April 2004, thousands of Zyprexa cases that were 2 pending against Eli Lilly were transferred to the United States 3 District Court for the Eastern District of New York -- the MDL 4 court -- pursuant to an order of the Judicial Panel on 5 Multidistrict Litigation. 6 Liab. Litig., 314 F. Supp. 2d 1380 (J.P.M.L. 2004). 7 lawyers was established as the Plaintiffs' Steering Committee to 8 help prosecute the cases in the MDL court. 9 settled in late 2005. Transfer Order, In re Zyprexa Prods. A group of That litigation was See In re Zyprexa Prods. Liab. Litig., No. 10 04-MD-1596, 2005 WL 3117302, 2005 U.S. Dist. LEXIS 29071 11 (E.D.N.Y. Nov. 22, 2005). 12 Committee (the "PSC II") was then established to help prosecute 13 the many new Zyprexa cases that had been filed. 14 A second Plaintiffs' Steering As part of this second wave of Zyprexa litigation, 15 Mulligan, a Dallas-based law firm, filed scores of cases 16 involving thousands of plaintiffs in state and federal courts 17 throughout the United States. 18 removed by Eli Lilly to federal court and then transferred to the 19 MDL court. 20 brought by more than one thousand plaintiffs -- were improperly 21 removed, and that the federal courts do not in fact have 22 jurisdiction over them. 23 remand these cases to state court. 24 all times relevant to this appeal. 25 26 Many of the state-court cases were Mulligan asserts that sixty-one of those cases -- In 2006, Mulligan filed motions to The motions were pending at In an order dated March 28, 2006, the district court established the following fee restrictions for the Zyprexa 5 1 litigation: 1) all attorneys' fees for claims of less than $5,000 2 were capped at no more than twenty percent of the client's 3 recovery; 2) all other attorneys' fees were capped at thirty-five 4 percent of the client's recovery; and 3) four special settlement 5 masters, whom the court had appointed to oversee settlement 6 negotiations and administer settlement agreements, were given 7 discretionary authority to order reductions or increases of fees 8 down to thirty percent or up to thirty-seven and one-half percent 9 depending on the circumstances. 10 In an order dated December 5, 2006, the district court 11 granted in part a motion by PSC II to establish a common benefit 12 fund to compensate PSC II attorneys for their "significant 13 discovery work." 14 percent of judgments and settlements in favor of the plaintiffs 15 in any of the cases in the MDL court, including those for which 16 remand motions were pending, to be paid into the common benefit 17 fund. 18 cases that were at that time in state court. The court ordered a set-aside equal to three The court denied PSC II's motion, however, with respect to 19 At the end of 2006 or the beginning of 2007, Mulligan 20 reached a tentative settlement of all of the MDL cases against 21 Eli Lilly in which it represents the plaintiffs. 22 is contingent on certain conditions being fulfilled, including, 23 with respect to each case, the individual approval of the 24 plaintiff or plaintiffs that Mulligan represents.1 1 The settlement When this appeal was briefed, the relevant cases were all still pending before the district court, and the settlement 6 1 At a status conference on June 22, 2007, Mulligan 2 advised the district court of the tentative settlement and 3 inquired of the court as to the status of the fee cap and the 4 common benefit fund. 5 dated August 17, 2007, and filed August 23, 2007. 6 noted that although Mulligan's contracts with its plaintiffs call 7 for a fee of forty percent of recovery, the firm was nonetheless 8 bound by the March 2006 order and the cap on attorneys' fees 9 there instituted. The court responded with a pair of orders The first The second order rendered all of Mulligan's 10 cases pending before the MDL court, including the cases for which 11 motions to remand remained pending, subject to the March and 12 December 2006 orders. 13 Mulligan from making any disbursements from the Qualified 14 Settlement Fund until a fund administrator had certified that 15 there had been a segregation of funds representing both the 16 amount of fees sought by Mulligan in excess of the fee cap, and 17 the three percent set-aside for the common benefit fund. 18 19 The second order therefore enjoined Mulligan appeals from both of the August 17, 2007 orders. agreement was tentative. Since oral argument, we have received a communication from Mulligan implying that at least some of the individual cases at issue are now in the Indiana state court system, where the distribution of settlement proceeds has begun. See Letter from Robert J. Lack to Clerk of Ct. (June 17, 2009). Neither party has explained the chain of events that led to this, nor have the parties offered any arguments regarding the possible impact of this development on the case at hand. Nor are we aware of the exact status of all (or, indeed, any) of the sixty-one individual cases, originating not just in Indiana but also in California and New Jersey, that underlie this appeal. We therefore address only the arguments that are before us and the facts as they are set forth in the record on appeal. 7 DISCUSSION 1 2 I. Jurisdiction 3 Mulligan argues that we have jurisdiction over this 4 appeal under 28 U.S.C. § 1292(a),2 which confers on the federal 5 courts of appeals jurisdiction over, inter alia, "[i]nterlocutory 6 orders of the district courts of the United States . . . 7 granting, continuing, modifying, refusing or dissolving 8 injunctions, or refusing to dissolve or modify 9 injunctions . . . ." 10 Id. § 1292(a)(1). "As a general matter we have interpreted § 1292(a)(1) 11 to authorize an appeal only from an injunctive order that gives, 12 or aids in giving, substantive relief sought in the lawsuit in 13 order to preserve the status quo pending trial. 14 nonappealable under § 1292(a)(1) orders that were unrelated to 15 the substantive issues of the litigation and that instead 16 regulated, or purported to regulate, such matters as pretrial 17 discovery and disclosure." 18 Technicare Corp., 710 F.2d 940, 943 (2d Cir. 1983) (citations 19 omitted); cf. Polymer Tech. Corp. v. Mimran, 975 F.2d 58, 64 (2d 20 Cir. 1992) ("An order awarding interim fees during the course of 21 litigation is not an injunctive order subject to interlocutory 2 We have held Bridge C.A.T. Scan Assocs. v. Mulligan explicitly waives any assertion of jurisdiction under 28 U.S.C. § 1291. See Appellant's Reply Br. at 14 ("The steering committee argues that this case is not appealable under 28 U.S.C. § 1291 because the MDL court has not entered a final judgment. The Mulligan Firm agrees. As the Mulligan Firm said in its opening brief, the only appellate jurisdiction is under 28 U.S.C. § 1292(a).") (footnotes omitted). We therefore do not consider whether we have jurisdiction to entertain this appeal under it. 8 1 appeal."). 2 1292(a)(1)] somewhat gingerly lest a floodgate be opened that 3 brings into the exception many pretrial orders." 4 Ass'n v. E. Horne's Mkt., Inc., 385 U.S. 23, 24 (1966). 5 We have been instructed to "approach [section Switz. Cheese We conclude that the injunction at issue here does not 6 give or aid in giving substantive relief sought in the lawsuit. 7 Indeed, it does not so much as relate to the substantive issues 8 in the litigation. 9 regard is a conclusory one: The only argument Mulligan makes in this Because the only task that remains 10 in these cases is distribution of the settlement proceeds,3 and 11 because the injunction prevents Mulligan from distributing those 12 proceeds in accordance with its contracts with its clients, the 13 injunction "goes directly to the cases' substantive issues" as 14 they currently stand. 15 do not render the issues substantive. Appellant's Br. at 7. Those facts simply 16 "To qualify as an 'injunction' under § 1292(a)(1), a 17 district court order must grant at least part of the ultimate, 18 coercive relief sought by the moving party." Henrietta D. v. 19 Giuliani, 246 F.3d 176, 182 (2d Cir. 2001). The district court 20 orders here at issue do not relate to the ultimate relief that is 21 sought in this litigation. 3 Indeed, to the extent that there is a It appears that this is not entirely true, insofar as the settlement remains tentative for at least some plaintiffs. While some of the settlement proceeds have already been distributed in part, see Letter from Robert J. Lack to Clerk of Ct. (June 17, 2009), the claims of other plaintiffs remain unresolved, see Certification of Settlement Administrator at 2, Cope v. Eli Lilly & Co., No. 79D01-0602-CT-14, at 2 (Tippecanoe Super. Ct., Ind., June 15, 2009) (referring to cases for which settlement funds had not yet been approved by Eli Lilly). 9 1 "moving party" -- PSC II filed a motion to create the set-aside 2 fund, compliance with which is one requirement of the injunction 3 before us -- it is not a party to the litigation itself and is 4 therefore not seeking "ultimate, coercive relief." 5 words, the injunction at issue does not "give[], or aid[] in 6 giving, substantive relief sought in the lawsuit." 7 Scan Assocs., 710 F.2d at 943. 8 substance of the lawsuits. 9 10 In other Bridge C.A.T. The orders are collateral to the We therefore conclude that we lack jurisdiction to hear this appeal. 11 II. Mandamus 12 Anticipating that we might determine, as indeed we now 13 have, that we lack jurisdiction to hear this appeal, Mulligan 14 petitions for a writ of mandamus. 15 this common law writ.4 16 Columbia, 542 U.S. 367, 380 (2004). 17 extraordinary remedy reserved for really extraordinary 18 causes. . . . 19 judicial usurpation of power or a clear abuse of discretion will 20 justify the invocation of this extraordinary remedy." 21 (citations and internal quotation marks omitted). 22 given us no basis in fact or in law on which we might conclude 4 28 U.S.C. § 1651(a) codifies Cheney v. U.S. Dist. Court for Dist. of Mandamus "is a drastic and [O]nly exceptional circumstances amounting to a Id. Mulligan has "[A]ll courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651(a). 10 1 that the district court usurped its power or clearly abused its 2 discretion. 3 We will deny the petition. Finally, while Judges McLaughlin and Sack are in 4 sympathy with the carefully reasoned concurring views of Judge 5 Kaplan, the issues he addresses need not be resolved by this 6 panel in order to render our judgment here. 7 and Sack therefore decline to use the extraordinary means of an 8 advisory mandamus order for the purpose of resolving those 9 issues. 10 11 12 Judges McLaughlin CONCLUSION For the foregoing reasons, we dismiss the appeal for lack of jurisdiction and deny the petition for mandamus. 11 1 LEWIS A. KAPLAN , District Judge, concurring. 2 I concur in the dismissal of the interlocutory appeal and 3 denial of the petition for writ of mandamus. 4 however, to address whether a district court may order that a 5 percentage of settlement monies paid in pending multidistrict 6 litigation ( MDL ) cases be set aside to fund possible fee awards 7 to counsel whose efforts confer a common benefit when motions to 8 remand those cases remain undecided in the district court. 9 I write separately, This question arises frequently in MDLs, often affecting 10 hundreds or thousands of plaintiffs. It is important and, as it 11 has not been addressed by any circuit, novel. 12 concluded that the issue should be addressed head-on. I therefore have 13 14 Facts 15 Zyprexa is an anti-psychotic drug manufactured by Eli 16 Lilly and Company ( Lilly ). 17 treatment of schizophrenia and bipolar disorder in over twelve 18 million 19 individuals who were prescribed and took Zyprexa and claimed that 20 they consequently suffered injuries.1 21 patients. The It has been prescribed for the litigation below involved over 30,000 Many of these individuals filed personal injury law suits 22 in state courts across the country. Lilly removed most of the 23 cases to federal district courts. Some Zyprexa plaintiffs moved to 24 remand in the districts to which the cases were removed, arguing 25 that the federal courts lacked subject matter jurisdiction. 26 27 28 1 In re Zyprexa Prods. Liab. Litig., 549 F. Supp. 2d 496, 49899 (E.D.N.Y. 2008). 2 1 Beginning in 2004, the Judicial Panel on Multidistrict 2 Litigation ( JPML ) transferred thousands of the Zyprexa cases from 3 federal 4 Honorable Jack B. Weinstein in the Eastern District of New York for 5 coordinated or consolidated pretrial proceedings.2 6 motions, 7 districts, accompanied the transferred cases.3 district courts including throughout remand motions the United filed in States the to the Any pending transferor 8 Soon thereafter, Judge Weinstein appointed a Plaintiffs 9 Steering Committee ( PSC I ) composed of attorneys from thirteen 10 law firms who represented various individual plaintiffs. 11 was 12 conducting pretrial discovery for all plaintiffs, speaking for all 13 plaintiffs in pretrial proceedings, making and arguing any motions, 14 and pursuing settlement.4 responsible for, among other things, coordinating PSC I and In November 2005, virtually all of the cases then pending 15 16 in the MDL were settled.5 17 of a claims administration process pursuant to which settling cases 18 were divided into three tracks, attorneys fees were capped for The settlement contemplated the creation 19 20 2 See In re Zyprexa Prods. Liab. Litig., 314 F. Supp. 2d 1380, 1382-83 (J.P.M.L. 2004). 21 22 3 See FEDERAL JUDICIAL CENTER , MANUAL FOR COMPLEX LITIGATION FOURTH § 22.35, at 371 (2004) (hereinafter MANUAL ). 23 24 4 25 See In re Zyprexa Prods. Liab. Litig., No. 04 MDL 1596, 2004 WL 3520245, at *2-3 (E.D.N.Y. Jun. 17, 2004). 26 5 27 28 See In re Zyprexa Prods. Liab. Litig., 467 F. Supp. 2d 256, 261 (E.D.N.Y. 2006). 3 1 cases in each track, and special masters were appointed to oversee 2 and apply that process.6 3 In early 2006, the district court entered an order which, 4 as far as is relevant here, provided that the costs, disbursements 5 and fees of the plaintiffs' steering committee shall be paid out of 6 the general settlement fund to the extent approved by the special 7 masters.7 This was implemented in part by setting aside one percent 8 of the gross settlement amount payable to each settling plaintiff 9 in an escrow fund.8 10 The district court then appointed a second Plaintiffs 11 Steering Committee ( PSC II ) to coordinate pretrial proceedings in 12 the few non-settling early cases and in the thousands of incoming 13 and remaining cases, most of which had been filed, removed to 14 federal court, and subsequently transferred by the JPML following 15 the 16 establishment of a fund to compensate the attorneys who had worked 17 and would continue to work for the common benefit of all Zyprexa 18 plaintiffs after the original settlement. 19 granted the motion and provided for the establishment of a common original settlement.9 Lilly and PSC II moved for the The district court 20 21 6 In re Zyprexa Prods. Liab. Litig., 424 F. Supp. 2d 488, 490 (E.D.N.Y. 2006). 22 23 7 24 25 Id. at 497. 8 In re Zyprexa Prods. Liab. Litig., 467 F. Supp. 2d at 263. 26 9 27 28 See In re Zyprexa Prods. Liab. Litig., 467 F. Supp. 2d at 261. 4 1 benefit fund with certain details to be worked out in subsequent 2 proceedings.10 3 In due course, the district court ordered that three 4 percent of each remaining plaintiff s gross recovery, if any, 5 whether from a settlement or judgment, be placed in an escrow 6 account.11 7 recovery and half from fees otherwise payable to his or her 8 attorney.12 9 federal Zyprexa plaintiffs, including but not limited to members of 10 PSC II, were eligible to apply for compensation from this account. 11 Compensation would be granted only on a showing that the attorney 12 provided significant assistance to all plaintiffs. 13 If any money 13 remained in the fund after all claims on it settled, it would be 14 distributed on a pro rata basis to those who had paid portions of 15 their recoveries into the account.14 Half the money was to come from each plaintiff s Any lawyer who worked for the common benefit of all 16 10 17 Id. at 275. 18 11 19 In re Zyprexa Prod. Liab. Litig., No. 04 MD 1596, 2007 WL 2340790, at *1 (E.D.N.Y. Aug. 17, 2007). An earlier order imposed a set aside of a percentage of plaintiffs attorney s fees, rather than of each plaintiff s gross recovery. Following hearings before a special master and Judge Weinstein, the nature of the set aside was modified. Compare id. with In re Zyprexa Prod. Liab. Litig., 467 F. Supp. 2d at 266. 20 21 22 23 12 24 In re Zyprexa Prod. Liab. Litig., 2007 WL 2340790, at *1. 25 13 26 27 28 In re Zyprexa Prod. Liab. Litig., 467 F. Supp. 2d at 266. 14 Id. 5 1 Petitioner appellant the Mulligan Law Firm ( Mulligan ) 2 represents over two thousand plaintiffs who originally filed their 3 actions in state and federal courts in seven states and whose cases 4 against Lilly are pending in the MDL.15 Motions to remand sixty-one 5 of these cases to state courts remain pending in the district 6 court. 7 In December 2006, Mulligan and Lilly agreed in principle 8 to settle all of Mulligan s Zyprexa cases, although the settlement 9 had not yet been implemented as of the date of argument, because 10 the settling plaintiffs had not fully satisfied the preconditions 11 to 12 settlement funds in fact will be distributed to the Mulligan 13 plaintiffs.17 consummation.16 Hence, it was not then certain that the 14 Anticipating that the settlement would be finalized, the 15 district court enjoined Mulligan from distributing settlement funds 16 to itself or its clients until the fund administrator certified 17 that three percent of the funds designated for each settling 18 plaintiff had been set aside.18 19 be made to individual plaintiffs as soon as that can be done while 20 ensuring that sufficient funds have been held back to comply with 21 15 22 23 A-319, 349, 393, 589. 16 24 25 In re Zyprexa Prod. Liab. Litig., No. 04 MD 1596, 2007 WL 2340791, at *1 (E.D.N.Y. Aug. 17, 2007). 17 26 27 28 It specified that [p]ayments may Oral Arg. 11:34-36. 18 Id. 6 1 the three percent common benefit assessment. 19 2 oral argument, however, the court below had not awarded any fees or 3 costs out of the fund. 4 opportunity 5 applications are filed.20 to As of the date of Mulligan acknowledges that it will have the oppose any award of fees in the event fee 6 Plaintiffs appeal the district court s order enjoining 7 them from distributing any settlement funds without a certification 8 that the set-aside had been made.21 Alternatively, they seek a writ 9 of mandamus ordering the district court to vacate the injunction. 10 11 12 Discussion 13 14 15 16 I. Mandamus A. Mandamus and other prerogative writs are reserved for 17 18 The Traditional Mandamus Standard really extraordinary causes. 22 Mandamus is not to be used as a 19 19 20 Id. 21 20 22 23 Oral arg. 11:04-05; 11:24-27. 21 24 25 26 27 28 A-816. 22 Ex parte Fahey, 332 U.S. 258, 260 (1947); see also Aref v. United States, 452 F.3d 202, 206 (2d Cir. 2006) ( Mandamus is an extraordinary remedy, available only in extraordinary circumstances. (citing In re United States, 10 F.3d 931, 933 (2d Cir. 1993))); In re Nagy, 89 F.3d 115, 117 (2d Cir. 1996) 7 1 substitute for appeal, even though hardship may result from delay 2 and [a] perhaps unnecessary trial. 23 3 said that mandamus is not available unless the petitioner s right 4 to relief is clear and indisputable 24 and a direct appeal from a 5 final judgment would not be an adequate remedy.25 6 traditional formulations of the standard have spoken of using the Indeed, it often has been Moreover, while 7 8 (requiring an extraordinary showing to get mandamus review in lieu of appeal from final judgment (citing In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1312 (2d Cir.1988))); In re Repetitive Stress Injury Litig., 11 F.3d 368, 373 (2d Cir. 1993) ( The granting of a writ of mandamus is an extraordinary measure and should be done sparingly. ); United States v. Victoria-21, 3 F.3d 571, 575 (2d Cir. 1993) ( Such writs may not be used as a mere substitute for an appeal, but rather the power should only be exercised in extraordinary situations. ) (internal quotations omitted). 9 10 11 12 13 14 23 Schlagenhauf v. Holder, 379 U.S. 104, 110 (1964) (citations omitted); accord Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 383 (1953); Roche v. Evaporated Milk Ass n, 319 U.S. 21, 30 (1943); In re Ivy, 901 F.2d 7, 10 (2d Cir. 1990) (quoting Roche); cf. In re Traffic Executive Ass n-E. R.R.s, 627 F.2d 631, 634 (2d Cir. 1980) (denying writ where district court disapproved settlement agreement, noting that [t]he likelihood that class members will find it tedious and time consuming to prove their losses does not make this an out-of-the-ordinary case ). 15 16 17 18 19 20 24 21 E.g., Moses H. Cone Mem l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 18 (1983); Bankers Life, 346 U.S. at 384; In re Certain Underwriter, 294 F.3d 297, 302 (2d Cir. 2002); In re Aguinda, 241 F.3d 194, 202 (2d Cir. 2001); Drexel, 861 F.2d at 1312. 22 23 24 25 25 26 27 28 E.g., United States v. Giffen, 473 F.3d 30, 38 n.7 (2d Cir. 2006); United States v. Amante, 418 F.3d 220, 222 (2d Cir. 2005); In re SEC ex rel. Glotzer, 374 F.3d 184, 187-88 (2d Cir. 2004); United States v. Coppa, 267 F.3d 132, 138-39 (2d Cir. 2001); In re von Bulow, 828 F.2d 94, 98-99 (2d Cir. 1987). 8 1 writ to confine a lower court to the exercise of its proper 2 jurisdiction,26 it long has been clear that mandamus will not lie 3 to review a claim of mere error in a lower court s jurisdictional 4 determination.27 Indeed, any different view would conflict with the 5 requirement that the petitioner s right to relief be clear and 6 indisputable. 7 Mulligan argues that this Court may grant its petition 8 under the traditional mandamus standard because the district court 9 10 26 See, e.g., Parr v. United States, 351 U.S. 513, 520-21 (1956); Bankers Life, 346 U.S. at 382-83; Roche, 319 U.S. at 26; Hong Mai Sa v. Doe, 406 F.3d 155, 159 (2d Cir. 2005) (citing Richardson Greenshields Secs., Inc. v. Lau, 825 F.2d 647, 652 (2d Cir. 1987)). 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27 See, e.g., Ex parte Chicago, R.I. & Pac. Ry. Co., 255 U.S. 273, 275-76 (1921) (Brandeis, J.) (mandamus does not lie to review doubtful district court jurisdictional determination); In re Ivy, 901 F.2d at 10 ( [T]he writ will not issue to review an order overruling a plea to the jurisdiction . . . . (quoting Roche, 319 U.S. at 31)); Ward Baking Co. v. Holtzoff, 164 F.2d 34, 36 (2d Cir. 1947) (denying writ where [w]e are not satisfied that the district court clearly lacks jurisdiction ); see also United States v. DiStefano, 464 F.2d 845, 850 (2d Cir. 1972) (Friendly, J.) ( [M]ere error, even gross error in a particular case, as distinguished from a calculated and repeated disregard of governing rules, does not suffice to support issuance of the writ. ); accord, e.g., Nat l Right to Work Legal Def. v. Richey, 510 F.2d 1239, 1242 (D.C. Cir. 1975) ( If the lower court is clearly without jurisdiction, the writ will ordinarily be granted. If, however, the jurisdiction of the lower court is doubtful . . . the writ will ordinarily be denied. (quoting Ex parte Chicago, 255 U.S. at 275)) (citations omitted); Comfort Equip. Co. v. Steckler, 212 F.2d 371, 373 (7th Cir. 1954) ( If a rational and substantial legal argument can be made in support of the questioned jurisdictional ruling the case is not appropriate for mandamus or prohibition even though on normal appeal a reviewing court might find reversible error. (quoting Am. Airlines v. Forman, 204 F.2d 230, 232 (3d Cir. 1953))). 9 1 lacked jurisdiction to issue the set aside order in sixty-one of 2 the cases Mulligan originally filed in state court. At least until 3 the district court actually awards fees out of the common benefit 4 fund, however, Mulligan cannot demonstrate a need for traditional 5 mandamus because it has not yet suffered any injury. 6 it lacks a clear and indisputable right to relief28 even assuming 7 that the set aside order were erroneous. 8 is not the only potentially relevant standard. In any case, But traditional mandamus 9 10 B. 11 Advisory Mandamus 12 The stringencies of traditional mandamus standards admit 13 of a limited exception for what has been termed advisory mandamus 14 the use of mandamus to provide guidance on a novel question of 15 general or exceptional importance to the administration of justice 16 that should not await review by appeal from a final judgment. In Schlagenhauf v. Holder,29 the Supreme Court departed 17 18 in some degree from the traditional mandamus standards to 19 20 21 28 22 Moses H. Cone Mem l Hosp., 460 U.S. at 18; see also In re Vazquez-Botet, 464 F.3d 54, 57 (1st Cir. 2006) ( [E]ven 23 where the merits clearly favor the petitioner, relief may be withheld for lack of irreparable injury[.] (citing In re Martinez-Catala, 129 F.3d 213, 217 (1st Cir. 1997))); In re Nat l Presto Indus., Inc., 347 F.3d 662, 663 (7th Cir. 2003) (requiring showing of irreparable harm before granting mandamus relief); United States v. Wexler, 31 F.3d 117, 128 (3rd Cir. 1994) (same). 24 25 26 27 28 29 379 U.S. 104. 10 1 countenance the use of the writ for such advisory purposes.30 2 There, the Court indicated that mandamus may be used to settle 3 important 4 substantial allegation of usurpation of power by the district 5 court.31 6 mandamus to settle novel questions. 7 Court has written, [n]o one could reasonably suppose that the 8 [Supreme] Court has now subscribed . . . to a doctrine that any questions of first impression where there is a Thus, courts of appeals have some scope for use of On the other hand, as this 9 30 10 Kaufman v. Edelstein, 539 F.2d 811, 817 (2d Cir. 1976) (Friendly, J.). See generally Note, Supervisory and Advisory Mandamus Under the All Writs Act, 86 HARV . L. REV . 595 (1973) (hereinafter Harvard Note ). 11 12 13 The Supreme Court has recognized a second limited exception to traditional mandamus standards for the exercise of supervisory control of the District Courts by the Courts of Appeals. La Buy v. Howes Leather Co., 352 U.S. 249, 259-60 (1957). In La Buy, the district court, notwithstanding prior admonitions by the Seventh Circuit against excessive use of special masters, referred two antitrust cases to special masters on the ground that its docket was too congested. It did so in line with a prior practice of too frequent references to special masters that the Supreme Court characterized as little less than an abdication of the judicial function. 352 U.S. at 256, 258. In those circumstances, the Court held that supervisory mandamus was appropriate. Id. at 259-60. The case therefore appears to authorize supervisory mandamus when a plausible case could be made for the danger of frequent recurrence of a probably erroneous practice. See Harvard Note, 86 HARV . L. REV . at 60910; see also, e.g., United States v. Yemitan, 70 F.3d 746, 748 (2d Cir. 1995) ( [A]n arbitrary practice of sentencing without proferred [sic] reasons would amount to an abdication of judicial responsibility subject to mandamus. ) (dictum). 14 15 16 17 18 19 20 21 22 23 24 As demonstrated by the discussion below, because the practice challenged here was not probably erroneous, much less an abdication of the judicial function, supervisory mandamus has no proper role in this case. 25 26 27 28 31 379 U.S. at 110-11. 11 1 non-frivolous claim of error in a decision is a claim of 2 usurpation of power on the theory that courts are bound to decide 3 all issues correctly. 32 4 The Second Circuit s decisions subsequent to Schlagenhauf 5 do not resolve entirely the uncertainty as to the criteria dividing 6 appropriate from inappropriate uses of advisory mandamus. 7 cases that bear most strongly on the facts at bar are In re 8 International 9 Amante.34 In IBM, the Circuit granted mandamus to halt the district Business Machines Corp.33 and United States The v. 10 11 32 Kaufman, 539 F.2d at 819 (citations omitted). 12 33 13 687 F.2d 591 (2d Cir. 1982). 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 34 418 F.3d 220. Additionally, this Court has read Schlagenhauf as creating an escape hatch from the finality rule in the context of discovery, when the question is of extraordinary significance or there is extreme need for reversal of the district court s mandate before the case goes to judgment. Am. Express Warehousing, Ltd. v. Transamerica Ins. Co., 380 F.2d 277, 282 (2d Cir. 1967). Subsequent discovery cases also have invoked this standard. See, e.g., In re Attorney Gen. of the United States, 596 F.2d 58, 63 (2d Cir. 1979); Nat l Super Spuds, Inc. v. N.Y. Mercantile Exch., 591 F.2d 174, 181 (2d Cir. 1979); see also Glotzer, 374 F.3d at 187 (quoting Coppa, 267 F.3d at 137-38 (applying same standard, but without characterizing mandamus review as advisory )). These cases establish that mandamus sometimes may be granted to reverse an erroneous discovery ruling where the ruling orders discovery that could not be undone on appeal from a final judgment because the allegedly undiscoverable information will have been disclosed. But the discovery cases shed little light on the appropriate course in this case, in part because Mulligan would suffer no cognizable harm if review were denied unless and until there is a final order to disburse money it contributes to the set aside. 12 1 court s consideration of whether the Tunney Act requirement of 2 judicial approval of consent decrees in government antitrust cases35 3 applied to stipulations of dismissal under Federal Rule of Civil 4 Procedure 41(a)(1).36 5 disagreed with the district court s retention of jurisdiction to 6 consider the issue, but for three other reasons. 7 parties were united in their desire that the case be dismissed 8 outright.37 9 years, tying up one of the nation s largest industrial concerns, 10 during which time many of the underlying products [had become] 11 commercially outmoded. 38 12 the assertion that the Tunney Act applied to a Rule 41(a)(1) 13 dismissal in light of the plain language of the statute and the 14 clear and indisputable legislative history. 39 It did so, however, not simply because it First, both Second, the case already had gone on for thirteen Finally, there was no serious basis for Amante concerned a different question, viz. whether a 15 16 district court had erred in bifurcating a simple felon-in- 17 possession firearm case to require first a trial on the issue of 18 possession and then a separate trial on the issue of the prior 19 35 20 15 U.S.C. § 16(e)(1). 21 36 22 The district court had heard argument on the issue but had not yet issued a decision. 687 F.2d at 596. 23 37 24 Id. at 600. 25 38 26 27 28 Id. at 599-600. 39 Id. at 600-02. 13 1 felony conviction, the latter of which would take place only after 2 a jury finding of possession. 3 bifurcation order, the Circuit relied upon its conclusions that (1) 4 the issue was significant because [i]ts resolution will affect 5 numerous 6 administration of criminal justice, and (2) 7 available to the government other than mandamus. 40 in similar trials and will aid in the no remedy [wa]s Both IBM and Amante demonstrate that this Court has 8 9 defendants In granting mandamus to vacate the granted mandamus for advisory purposes when presented with 10 questions of significance and the district court had committed a 11 clear abuse of discretion and usurpation of power.41 12 both cases reached the merits of the issues presented by the 13 petitions as, of course, the Court was compelled to explain the 14 district court s error. 15 whether this Court may reach the merits for advisory purposes to 16 deny a petition for mandamus where the issue and need for review 17 are sufficiently pressing. In addition, But they did not involve the question This question was answered in the affirmative in Kaufman 18 19 v. Edelstein.42 20 had subpoenaed to testify in a civil antitrust case petitioned for 21 a writ of mandamus directing the district court to quash the 22 subpoenas. There, two expert witnesses whom the government Observing that the district court s denial of the 23 40 24 418 F.3d at 222. 25 41 26 27 28 Id. at 222; see also IBM, 687 F.2d at 603. 42 539 F.2d 811. 14 1 motions to quash clearly was no usurpation of power nor a clear 2 abuse of discretion, the Court, speaking through Judge Friendly, 3 stated that the only argument in favor of granting the writ was 4 that the case presented a novel and important issue.43 5 then discussed the merits of the case at some length, concluding 6 that, 7 witnesses from being called to testify, courts in their discretion 8 could protect expert witnesses when good cause was shown.44 9 Friendly listed a number of factors pertinent to deciding whether 10 a particular expert witness merited the protection of the court.45 11 In sum, we have held that it is appropriate for us to 12 discuss the merits of a challenged district court action to deny 13 mandamus when the question is of sufficient importance and there is 14 a dearth of guidance on the issue. although there existed no privilege The Court protecting expert Judge 15 16 C. Application To This Petition The district court s set aside order, in my view, raises 17 18 just such a question. 19 Circuit. The issue never has been addressed by this Yet it arises frequently in MDLs,46 many encompassing 20 21 43 Id. at 819. 22 44 23 Id. at 819, 821. 24 45 25 Id. at 822; see also Stans v. Gagliardi, 485 F.2d 1290, 1292 (2d Cir. 1973. 26 46 27 28 The Manual for Complex Litigation instructs courts [e]arly in the litigation to determine the method of compensation 15 1 hundreds and sometimes thousands of cases and affecting hundreds or 2 thousands of plaintiffs.47 3 applicable to [this] entire class of cases. 48 4 merits thus would offer guidance to both courts and litigants and 5 aid the efficient administration of justice. A resolution of the issue here would be A decision on the 6 7 8 II. The District Court s Order A. Subject Matter Jurisdiction 9 The fundamental question here is whether a district court 10 has subject matter jurisdiction power to order that settlement 11 funds be set aside to fund possible fee awards to counsel in MDL 12 cases that have been removed to federal court and in which motions 13 14 for lead and liaison counsel and establish arrangements for their compensation, including setting up a fund to which designated parties should contribute in specified proportions. MANUAL § 14.215, at 202. 15 16 47 17 See, e.g., In re Wilson, 451 F.3d 161, 163 (3d Cir. 2006) (30,000 - 35,000 plaintiffs with suits pending before MDL court); In re Diet Drugs, 369 F.3d 293, 298 (3d Cir. 2004) (MDL involved 18,000 individual lawsuits and over 100 putative class actions); In re Orthopedic Bone Screw Prods. Liab. Litig., 193 F.3d 781, 784 (3d Cir. 1999) ( thousands of plaintiffs in MDL); In re San Juan Dupont Plaza Hotel Fire Litig., 111 F.3d 220, 222 (1st Cir. 1997) ( hundreds of claims filed by thousands of plaintiffs consolidated in MDL); In re Dow Corning Corp., 86 F.3d 482, 485 (6th Cir. 1996) (440,000 plaintiffs elected to become class members for purposes of settlement in MDL); In re Food Lion, Inc. Fair Labor Standards Act Effective Scheduling Litig., 73 F.3d 528, 531 (4th Cir. 1996) (nearly 1,000 plaintiffs in MDL); In re Agent Orange Prod. Liab. Litig., 818 F.2d 145, 165-66 (2d Cir. 1987) (240,000 claimants in MDL). 18 19 20 21 22 23 24 25 26 48 27 28 SEC v. Stewart, 476 F.2d 755, 758 (2d Cir. 1973) (discussing standard for supervisory mandamus). 16 1 to remand remain undecided in the district court. In essence, 2 Mulligan argues that it does not and that we therefore either 3 should (1) decide the jurisdictional issues that were not passed 4 upon below and exempt from the set aside order any cases in which 5 removal was improper or, alternatively, (2) exempt all of these 6 cases from the set aside order on the theory that the entry of the 7 set aside order in advance of determination of the remand motions 8 was erroneous. These contentions are unpersuasive. The starting point for this analysis is the proposition 9 10 that a federal court has jurisdiction to determine its own 11 jurisdiction.49 12 reaches the merits of the case before it,50 it is empowered to issue 13 non-dispositive orders between the filing of the action and its 14 ultimate determination on the merits.51 While it must make this determination before it 15 49 16 United States v. United Mine Workers of Am., 330 U.S. 258, 291 (1947); Kuhali v. Reno, 266 F.3d 93, 100-01 (2d Cir. 2001). 17 18 50 Sinochem Int l Co., Ltd. v. Malaysia Int l Shipping Corp., 549 U.S. 422, 431 (2007) (citing Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 585 (1999) and Steel Co. v. Citizens for a Better Env t, 523 U.S. 83, 100-01 & n.3 (1998)). 19 20 21 22 23 24 25 26 27 28 51 See Sinochem, 549 U.S. at 431 (recognizing that federal court has leeway to choose among threshold grounds for denying audience to a case on the merits before determining jurisdiction and noting permissibility of dismissal of state law claims on discretionary grounds, dismissal based on Younger abstention, and dismissal under Totten v. United States, 92 U.S. 105 (1876), all before considering jurisdictional questions); United Mine Workers, 330 U.S. at 290 (district court unquestionably had the power to issue a restraining order . . . pending a decision upon its own jurisdiction ); see also id. at 295 (noting Supreme Court would affirm district court s judgment of criminal contempt as 17 1 Mulligan nevertheless argues that federal courts are 2 permitted, prior to a ruling disposing of any subject matter 3 jurisdiction challenge, to take only such actions as may aid 4 determining their jurisdiction and that actions reaching the merits 5 are void.52 6 reached the merits and thus went beyond the limits of the court s 7 authority. 8 Catholic Conference v. Abortion Rights Mobilization, Inc.53 in The district court s set aside order, in its view, Mulligan relies for this proposition on United States 9 Catholic Conference involved an appeal from an order 10 holding two non-party witnesses in civil contempt, over their 11 objection 12 jurisdiction, for refusing to comply with a subpoena. 13 Court held that a non-party witness can challenge the subject 14 matter jurisdiction of a court in defense of a civil contempt 15 citation.54 16 void if the district court lacked subject matter jurisdiction. 17 Mulligan argues that Catholic Conference therefore stands for the 18 proposition that federal courts are permitted only to take actions that the district court lacked subject matter The Supreme It stated further that the contempt orders would be 19 20 21 validly punishing violations of order then outstanding, even if it was later determined that the district court lacked jurisdiction). 22 23 52 24 Pet. Br. at 32-34. 25 53 26 27 28 487 U.S. 72 (1988). 54 Id. at 76. 18 1 in aid of determining [their] jurisdiction. 55 But he overreads the 2 decision. In Willy v. Coastal Corp.,56 the Supreme Court upheld a 3 4 district court s Rule 11 sanctions order notwithstanding a 5 subsequent determination that the district court had lacked subject 6 matter jurisdiction, and it rejected the petitioner s contention 7 that this result was precluded by Catholic Conference. 8 Court explained: As the [a] final determination of lack of subject-matter jurisdiction of a case in federal court, of course, precludes further adjudication of it. But such a determination does not automatically wipe out all proceedings had in the district court at a time when the district court operated under the misapprehension that it had jurisdiction. 57 9 10 11 12 13 Thus, a district court s order that is collateral to the merits 14 may be upheld despite a later conclusion that the court lacked 15 subject matter jurisdiction over the litigation.58 16 In this case, the set aside order simply imposed an 17 assessment in order to create a fund that could be used to 18 compensate attorneys who demonstrate that their efforts conferred 19 20 21 22 55 Pet. Br. at 32. 23 56 24 503 U.S. 131 (2001). 25 57 26 27 28 Id. at 137. 58 Id. 19 1 a benefit on Zyprexa plaintiffs generally.59 2 related to the ultimate merits than orders awarding attorney s 3 fees, which are collateral matters over which a court retains 4 jurisdiction even if it ultimately is determined to lack subject 5 matter jurisdiction.60 It does not preclude the Mulligan plaintiffs 6 from challenging any proposed distribution of funds on the ground 7 that they did not benefit from the efforts of counsel to whom a 8 distribution might be made. 9 set aside order was collateral to the merits and well within the 10 It is even less At least in these circumstances, the district court s power. 11 The district court s determination to defer consideration 12 of the jurisdictional challenges also was comfortably within the 13 bounds of its discretion. While it usually is advisable for 14 59 15 In re Zyprexa Prod. Liab. Litig., 467 F. Supp. 2d at 266. 16 60 17 18 19 20 21 22 23 24 25 26 27 28 See, e.g., Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990) ( It is well established that a federal court may consider collateral issues after an action is no longer pending. For example, district courts may award costs after an action is dismissed for want of jurisdiction. ); Moore v. Permanente Med. Group, Inc., 981 F.2d 443, 445 (9th Cir. 2003) ( It is clear that an award of attorney s fees is a collateral matter over which a court normally retains jurisdiction even after being divested of jurisdiction on the merits. ); see also In re Nineteen Appeals, 982 F.2d at 609 ( [A]n order which definitively resolves claims for attorney s fees and expenses payable out of a common fund is severable from the decision on the merits. ) (citing Trustees v. Greenough, 105 U.S. 527, 531 (1881)); Overseas Dev. Disc Corp. v. Sangamo Constr. Co., 840 F.2d 1319, 1324 (7th Cir. 1988) (declaring it to be settled that a decision awarding or denying attorney s fees and expenses from a common fund . . . is severable from the decision on the merits ); Memphis Sheraton Corp. v. Kirkley, 614 F.2d 131, 133 (6th Cir. 1980) (award of attorney s fees from common fund is collateral to the merits (citing Sprague, 307 U.S. at 780)). 20 1 district courts to rule on any challenge to subject matter 2 jurisdiction early in a lawsuit, district courts have broad scope 3 to manage their own dockets in light of considerations of economy 4 of time and effort for itself, for counsel, and for litigants. 61 5 The impact of such considerations in this case, and in some other 6 MDL and mass tort cases, often may suggest a different course. 7 Alleged mass torts, as the term implies, spawn masses of 8 litigation. Plaintiffs understandably sue in fora that they regard 9 as convenient or likely to be favorable including, in many 10 instances, state courts. 11 ways that raise issues concerning removability. 12 by similar considerations, frequently remove many of these cases to 13 federal courts. 14 numbers of remand motions, as occurred in this MDL.62 15 Mulligan alone has filed motions to remand in over 50 of its 16 Zyprexa cases.63 A 17 Indeed, some frame their complaints in Defendants, moved These tactical steps in turn often provoke large district judge managing such a complex Indeed, situation 18 reasonably may conclude that the court s time, especially early in 19 the litigation, is better spent on activities other than deciding 20 scores or hundreds of individual remand motions. It often would be 21 appropriate to conclude that many of the cases in which such 22 61 23 24 Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936). 62 25 See, e.g., Galati v. Eli Lilly & Co., No. 05-4338-CV-C-NKL, 2005 WL 3533387, at *1 (W.D. Mo. Dec. 22, 2005) (hundreds of remand motions pending in Zyprexa MDL). 26 27 28 63 A-814-15. 21 1 motions are filed are likely to settle and that the expenditure of 2 judicial resources on remand motions likely would be wasted. 3 Moreover, even if an MDL or comparable court dealt immediately with 4 remand motions pending at a given moment, new cases and new remand 5 motions are likely to be filed throughout the pendency of the 6 litigation.64 Deciding each motion prior to addressing other issues 7 common to all or most cases therefore could require a significant 8 expenditure of judicial time and resources, derailing the progress 9 of the litigation as a whole. Delays of this nature could well 10 frustrate the purpose of MDLs, which is to promote just and 11 efficient conduct of actions involving common questions of fact.65 12 While every case turns on its own facts, I cannot say 13 that the district court s decision to give priority to moving 14 thousands of Zyprexa cases towards settlement or other disposition 15 over focusing promptly on the hundreds of pending remand motions 16 was an improvident exercise of the broad discretion that inheres in 17 its docket management function. 18 19 B. The Common Fund Doctrine 20 The district court s set aside order raises also the 21 question whether a district court in an MDL or other litigation 22 involving a large number of separately represented individual 23 claimants, in which any recovery will be unique to each plaintiff, 24 25 64 See, e.g., In re Zyprexa Prods. Liab. Litig., 467 F. Supp. 2d at 261-62. 26 27 28 65 28 U.S.C. § 1407. 22 1 has the authority to create a fund out of those recoveries for the 2 purpose of financing an award of fees and expenses to those counsel 3 whose work benefits the entire group of plaintiffs. 4 this question lies in the common fund or common benefit doctrine. 5 The so-called American rule is that the prevailing 6 litigant ordinarily must bear the litigant s own attorney s fees.66 7 Since the nineteenth century, however, the Supreme Court has 8 recognized an equitable exception to this rule67 known as the 9 common fund or common benefit doctrine that permits litigants or 10 lawyers who recover a common fund for the benefit of persons other 11 than themselves to obtain reasonable attorney s fees out of the 12 fund, 13 beneficiaries.68 14 in courts of equity, 69 which recognized 15 the benefit of a lawsuit without contributing to its cost are thus spreading the cost of the The answer to litigation to its The doctrine reflects the traditional practice that persons who obtain 16 17 18 66 See, e.g., Alyeska Pipeline Serv. Co. v. Wilderness Soc y, 421 U.S. 240, 247 (1975). 19 20 67 21 Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980) (citing Cent. R.R. & Banking Co. v. Pettus, 113 U.S. 116 (1885) and Trustees v. Greenough, 105 U.S. 527 (1882)). 22 23 68 24 Id.; Alyeska, 421 U.S. at 245; Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 392-92 (1970); Sprague v. Ticonic Nat l Bank, 307 U.S. 161, 164-65 (1939); Cent. R.R., 113 U.S. at 124-25; Greenough, 105 U.S. at 532. 25 26 69 27 28 Boeing, 444 U.S. at 478 (citing Greenough, 105 U.S. at 532-37). 23 1 unjustly enriched at the successful litigant s expense. 70 2 acting 3 proportionally among those benefitted by the suit.71 in equity therefore may assess A court attorney s fees 4 In Alyeska Pipeline, the Supreme Court identified several 5 characteristics of cases in which the application of the common 6 benefit doctrine may be appropriate. 7 identifying the persons, or classes of persons, benefitted by the 8 recovery, ease in tracing the benefit flow from the fund to those 9 persons, and confidence that the costs of litigation can be shifted 10 with some exactitude to those benefitted by the litigation.72 11 Courts routinely employ the common benefit doctrine in 12 awarding fees to counsel in class actions73 which, when successful, 13 often result in lump sum recoveries that benefit identifiable 14 classes. 15 common fund doctrine was designed to remedy, as class members who 16 do not hire counsel nonetheless benefit from any recovery. 17 doctrine thus prevents the unjust enrichment of these class members 18 at the These include the ease in Class actions present also the free-rider problems the expense of class counsel by compensating counsel The in 19 20 70 21 22 Id. (citing Mills, 396 U.S. at 392). 71 Id. (citing Mills, 396 U.S. at 394). 23 72 24 Alyeska, 421 U.S. at 264 n.39; see Boeing, 444 U.S. at 47879; In re Nineteen Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litig, 982 F.2d 603, 607 (1st Cir. 1992). 25 26 73 27 28 See, e.g., Boeing, 444 U.S. 479-81; In re Agent Orange Prod. Liab. Litig., 818 F.2d 226, 237 (2d Cir. 1987). 24 1 proportion to the benefit they have obtained for the entire class, 2 rather than just the named class representatives with whom they 3 contracted. 4 members at the expense of the class representatives who contracted 5 with attorneys to prosecute the action.74 Likewise, it prevents the unjust enrichment of class Application 6 of the doctrine to class actions is 7 straightforward. The class generally is represented by counsel. 8 Any proceeds from the litigation are awarded to the class as a 9 whole or by a formula that permits determination of the amount of 10 the aggregate benefit conferred on the class. Courts may set some 11 percentage of the lump sum recovery as the fee or, using the 12 lodestar approach, ascertain the number of hours reasonably 13 billed to the class, multiply it by an appropriate hourly rate, and 14 deduct the product from any recovery.75 15 The situation is somewhat different with respect to MDLs 16 consisting of individual cases prosecuted by individual plaintiffs, 17 sometimes numbering in the thousands,76 and other litigation 18 19 74 Boeing, 444 U.S. at 477; Lindy Bros. Builders, Inc. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161, 165 (3d Cir. 1973); 4 NEWBERG ON CLASS ACTIONS § 14:6 (4th ed. 2002). 20 21 75 22 Goldberger v. Integrated Res., Inc., 209 F.3d 43, 47 (2d Cir. 2000). 23 24 25 26 27 28 76 For example, in many MDLs involving personal injury claims, courts have denied class certification pursuant to FED . R. CIV . P. 23(b)(3) based on findings that questions affecting individual members of the putative class regarding injury, causation and/or damages predominate over questions of fact or law common to the putative class. See, e.g., In re Rezulin Prods. Liab. Litig., 210 F.R.D. 61, 66-68, 71 25 1 involving large 2 Unlike most class actions, recoveries by individual plaintiffs or 3 groups of plaintiffs in such matters may occur at different times, 4 and individual plaintiffs or groups of plaintiffs, unlike most 5 individual class members, usually are represented by individual 6 counsel. Nevertheless, there are substantial similarities to class 7 actions as well. 8 such cases demands a similar approach to case management. District 9 courts typically appoint a lead counsel or plaintiffs steering 10 committee to coordinate and conduct pretrial proceedings on behalf 11 of all plaintiffs in order to avoid what otherwise might well 12 become 13 separately 14 predominantly from the work of the lead counsel or committee. chaotic.77 numbers of separately represented claimants. As an initial matter, the efficient handling of Moreover, represented, they while individual typically benefit plaintiffs also are often 15 The same equitable considerations that warrant payment of 16 class counsel out of common funds generated by their efforts apply 17 in these circumstances as well. The desirability indeed, the 18 19 (S.D.N.Y. 2002); In re Phenylpropanolamine Prods. Liab. Litig., 208 F.R.D. 625, 633 (W.D. Wash. 2002); see also In re Prempro, 230 F.R.D. 555, 566-67 (E.D. Ark. 2005) (consumer fraud claim). 20 21 22 23 24 25 26 27 28 77 See, e.g., Smiley v. Sincoff, 958 F.2d 498, 499 (2d Cir. 1992) (district court did not abuse its discretion in requiring that attorney fee paid to plaintiffs committee be distributed pro rata among committee members); Vincent v. Hughes Air West, Inc., 557 F.2d 759, 774-75 (9th Cir. 1977) (district court had authority to direct appointment of committee of lead counsel); MacAlister v. Guterma, 263 F.2d 65, 68 (2d Cir. 1958) (approving appointment of general counsel and consolidation of actions for pretrial purposes to avoid unnecessary expenses, duplication and delay in three stockholders derivative actions); MANUAL § 10.221 at 24-25. 26 1 compelling need to have pretrial proceedings managed or at least 2 coordinated by lead counsel or a steering or executive committee 3 demands the existence of a source of compensation for their efforts 4 on behalf of all. The logical, and a most equitable, source of 5 that is 6 benefit from that work. 7 source of funding for the common benefit work would enrich the non- 8 contributing individual plaintiffs unjustly at the expense of 9 either or both of the lead counsel and any contributing individual 10 plaintiffs.78 The district court thus acted within the scope of its 11 discretion when it established an account to compensate counsel for 12 common benefit work funded by a set aside of future Zyprexa MDL 13 recoveries.79 compensation recoveries of individual plaintiffs who Indeed, foreclosing those recoveries as a 14 Conclusion 15 16 17 78 See In re Diet Drugs, 582 F.3d 524, 546 (3d Cir. 2009) (approving district court s apportionment of settlement funds among class counsel in MDL pursuant to common benefit doctrine); In re Air Crash Disaster, 549 F.2d 1006, 1016, 1018-19 (5th Cir. 1977) (holding that district court properly exercised its authority to award fees to MDL lead counsel committee paid by other plaintiffs counsel pursuant to common benefit doctrine); see also Sprague, 307 U.S. at 166 ( That the party . . . neither purported to sue for a class nor formally established by litigation a fund available to the class, does not seem to be a differentiating factor so far as it affects the source of the recognized power of equity to grant reimbursements. ); Smiley, 958 F.2d at 499, 501 (holding that district court did not abuse its discretion in establishing fee structure whereby non-committee member attorneys placed percentage of their fees in escrow for pro rata distribution among committee members). 18 19 20 21 22 23 24 25 26 27 28 79 Zyprexa, 467 F. Supp. 2d at 265-67. 27 1 For the foregoing reasons, I conclude that the district 2 court did not err as a matter of law or abuse its discretion in 3 ordering a set aside of settlement monies in a common benefit fund. 4 I therefore concur in the denial of the petition and dismissal of 5 the appeal. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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