The judge overseeing the multi-district litigation claims involving the opioid epidemic has ordered plaintiffs’ attorneys to disclose whether they have entered into any litigation funding agreements.
U.S. District Court Judge Dan Polster, of the U.S. District Court for the Northern District of Ohio, is overseeing several hundred consolidated lawsuits where many government entities – including states and cities – have sought recovery from drugmakers and distributors for the costs of dealing with opioid addiction. Plaintiffs have claimed that the pharmaceutical companies and affiliates have made misrepresentations about prescription opioids by downplaying risks and overstating benefits, and that the companies failed to take action in response to suspiciously large pharmacy orders and the like.
Judge Polster’s order directs the government entities’ lawyers to turn over to the court information about litigation funding agreements, to ensure that litigation funders do not have improper control over plaintiff decisions, such as when to accept a settlement offer.
Pursuant to the order, attorneys must provide sworn statements that there will not be any conflicts of interest and that the litigation funding companies will not be able to direct strategy.
The judge’s order states as follows:
It has come to the Court’s attention that there may be attorneys who represent parties in cases transferred to this MDL Court (‘MDL Cases’) who have obtained (or are contemplating) third-party contingent litigation financing in connection with those MDL Cases. By ‘third-party contingent litigation financing’ (‘3PCL financing’), the Court refers to any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of an MDL Case, by settlement, judgment, or otherwise.
The Court now ORDERS that any attorney in any MDL Case that has obtained 3PCL financing shall:
• share a copy of this Order with any lender or potential lender.
• submit to the Court ex parte, for in camera review, the following: (A) a letter identifying and briefly describing the 3PCL financing; and (B) two sworn affirmations – one from counsel and one from the lender – that the 3PCL financing does not: (1) create any conflict of interest for counsel, (2) undermine counsel’s obligation of vigorous advocacy, (3) affect counsel’s independent professional judgment, (4) give to the lender any control over litigation strategy or settlement decisions, or (5) affect party control of settlement.
The Court further ORDERS that attorneys in MDL Cases have a continuing duty to inform the Court if they obtain new or additional 3PCL financing during the pendency of MDL proceedings, and have a continuing duty to update their disclosures and affirmations if circumstances change during the pendency of the MDL proceedings. The Court will deem unenforceable any 3PCL financing agreements that are not compliant with this Order. Further, any attorney or lender whose affirmations prove to be untrue will be subject to sanction by the Court.
Absent extraordinary circumstances, the Court will not allow discovery into 3PCL financing. See Lambeth Magnetic Structures, LLC v. Seagate Tech. (US) Holdings, Inc., 2018 WL 466045 at *5 (W.D. Pa. Jan. 18, 2018) (holding the work- product doctrine shields discovery of 3PCL financing).
A Bloomberg news article about Judge Polster’s order, Opioid Judge Demands Review Of Litigation-Funding Deals, is available here. Another article, Judge In Opioid Cases Orders Disclosure Of Litigation Financing, is available here.