A Blatant Inequity: Contributions to the Common Benefit Fund in Multidistrict Litigation

By Downing, Jack | Missouri Law Review, Summer 2016 | Go to article overview

A Blatant Inequity: Contributions to the Common Benefit Fund in Multidistrict Litigation


Downing, Jack, Missouri Law Review


I. INTRODUCTION

The U.S. legal system is a remarkable mechanism that strives to operate with justice and efficiency. However, it is not without flaws and loopholes. Upon discovery, these defects are often exploited for the material benefit of those involved. (1) In a profession where every hour is counted, practicing attorneys often attempt to earn as much money as possible while expending the least amount of time. (2) Somewhere along the line, many attorneys lose sight of what really matters--serving their clients and the justice system.

This Note discusses a growing problem in cases with an established common benefit fund ("CBF") for attorneys' fees, where a judge orders all parties involved to set aside a percentage of the recovery to ensure that each attorney is adequately compensated for his or her services. Specifically, in federal multidistrict mass tort litigation, plaintiffs' attorneys often have clients in both federal and state court who have been harmed by the same party and through the same conduct. (3) In these circumstances, if a CBF is established in federal court, all attorneys involved will have access to the work product conducted in furtherance of the federal litigation. (4) There is nothing stopping those attorneys from applying the common work product to their current and future cases filed in state court. (5) Accordingly, if plaintiffs' attorneys are successful in their state court litigation, they will not have to contribute any portion of their state court recovery to the federal court CBF. (6) As a result, attorneys can effectively obtain the benefit of work product created by other attorneys without paying for it. Federal multidistrict litigation ("MDL") often involves hundreds of depositions, dozens of experts, and millions of documents for review. (7) The cost of this work product can amount to millions of dollars and tens of thousands of hours of time. (8) This inherent unfairness should not exist in our justice system.

This Note analyzes the nuances of this issue and offers resolutions to its fundamental problems. Part II includes an overview of the MDL litigation, the plaintiffs' lead counsel selection process, and the function and nature of CBFs. This Part will also include the judicial justification for creating a CBF in federal MDLs. Part III examines current problems with CBFs. In particular, this Part will focus on plaintiffs' attorneys' ability to use work product obtained for the federal MDL in their concurrent state court cases without having to contribute any portion of their recovery in state court to the federal CBF. Part IV will then examine the arguments for and against ordering plaintiffs' attorneys to contribute a portion of their state court recoveries to the federal CBF.

II. LEGAL BACKGROUND

In order to conserve judicial resources, the Judicial Panel on Multidistrict Litigation ("JPML") assigns a single district court, one with personal jurisdiction and proper venue, to an MDL pursuant to 28 U.S.C. [section] 1407.(9) This allows all relevant federal cases to be consolidated into a single proceeding. (10) For purposes of efficiency, similar cases in state court may be removed to the federal district court if diversity exists and the removal requirements are satisfied. (11) After the JPML assigns the case to the proper district court, the judge in that district will appoint a leadership counsel on behalf of all the plaintiffs in the MDL. (12) In making his or her decision, the judge considers a variety of different factors, including "the attorneys' ability to command the respect of their colleagues and work cooperatively" with everyone involved in the MDL. (13) Courts believe this is especially important, because the leadership counsel determines the plaintiffs' strategic course of action and establishes a CBF to which all of the plaintiffs' attorneys involved must contribute. (14)

The prevalence of MDL lawsuits has increased over the past several decades. …

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