Triumph of the MDLs and the impact

of aggregate settlements on the
attorney-client relationship

Prof. George Conk
Fordham Law School
Problems of Aggregate settlement

1

Aggregate Settlements


Class actions

FRCP 23
Representative
plaintiffs
(commonality,
typicality, adequacy)
Fairness hearings
Judicial control of
common fund fees



Mass tort case
management
Bellwether trials
Settlement grids
A quasi class
action???
Do judges have a
“public fiduciary
obligation of
deliberative
engagement”?

Problems of Aggregate settlement

2

Amchem v. Windsor (1997)

FRCP 23 class vs. MDL consolidation

Proposed class: all who had been exposed
to D’s asbestos-containing products and

their exposed family members

District Court certified class – numerosity,
commonality, typicality, preponderance
Problems of Aggregate settlement

3

Amchem settlement structure

(1) settle and preclude litigating against
the manufacturers for all claims not filed
before the date of the action involving
compensation for asbestos-related
personal injury or death
(2)detailed administrative mechanism and
schedule of payments to compensate class
members who met defined asbestosexposure and medical requirements.
Problems of Aggregate settlement

4

Ginsburg for the majority
(Breyer, Stevens dissent)

Exposure only vs. sick claimants
Each has a significant interest in
individually controlling the prosecution of
[his case]“ and” a substantial stake in
making individual decisions on whether
and when to settle.“
Administrative settlement scheme
appropriate for Congress, not FRCP 23
Court
Problems of Aggregate settlement

5

Aggregate Settlements
Global settlement objective
creates tensions with the Rules of
Professional Conduct

6

Duties of lawyer to client

Competence

Diligence

Loyalty

Communication

Problems of Aggregate settlement

7

28 U.S.C. § 1407 Multidistrict litigation

(a) When civil actions involving one or
more common questions of fact are
pending in different districts, such actions
may be transferred to any district for
coordinated or consolidated pretrial
proceedings... for the convenience of
parties and witnesses and will promote the
just and efficient conduct of such actions.
Each action…shall be remanded… at… the
conclusion of such pretrial proceedings to
the district from which it was transferred..
Problems of Aggregate settlement

8

ASR Settlement Agreement

Between

DePuy Orthopaedics, Inc.
And

The Counsel Listed on the Signature
Pages Hereto
Dated As Of November 19, 2013

Problems of Aggregate settlement

9

ASR - threshold, requirements,
and time limits



94% participation threshold
Interested attorneys to report all
claims
Walk Away Deadline
Product usage proven by
contemporaneous medical records
General release required
Unrepresented claimants
Problems of Aggregate settlement

10

SETTLEMENT AGREEMENT

November 9,2007 between Merck & Co.,
Inc., and "Negotiating Plaintiffs'
Counsel" (the ''NPC'')
E. The NPC and Merck have agreed to
establish a pre-funded, structured private
settlement program, as set forth herein, to
resolve pending or tolled VlOXX claims
against Merck involving heart attacks,
ischemic strokes and sudden cardiac deaths
for an overall amount of $4,850,000,000.

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Vioxx – a global settlement

The Program is intended to resolve, in
lieu of further litigation, the claims of
all Clients* [in] any court of the United
States
G. A key objective of the Program is that,
with respect to any counsel with an Interest
in the claims of any Enrolled Program
Claimant, all other Clients in which such
counsel has an Interest shall be
enrolled in the Program.
12

Settlement

1.2.8.1. By submitting an Enrollment

Form, the Plaintiff's Counsel affirms
that he has recommended, or will

recommend [enrollment] to 100% of
[his clients].

13

Settlement

1.2.8.2. If any such Client disregards
such recommendation, or fails to submit
a [timely, complete] Enrollment Form

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The Vioxx Litigation

Plaintiff's Counsel shall to the extent
permitted by the equivalents to Rules
1.16 and 5.6 of the ABA Model Rules of
Professional Conduct **
(i) take all necessary steps to disengage
and withdraw from the representation
of such Client and to forego any
Interest in such Client

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AMENDMENT TO SETTLEMENT AGREEMENT

1.2.2. Section 1.2.8.1 of the Settlement
Agreement is hereby amended:

"Each [Plaintiff’s lawyer] is expected
to exercise his or her independent
judgment in the best interest of each
client individually before determining
whether to recommend enrollment in
the Program.
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Tension with the Disciplinary Rules
and Model Rules

17

ABA Model Rules
CLIENT-LAWYER
RELATIONSHIP

Problems of Aggregate settlement

18

MRPC 1.1 Comment [6] – consent to
co-counsel

Before a lawyer retains or contracts
with other lawyers outside the
lawyer’s own firm to provide or assist
in the provision of legal services to a
client, the lawyer should ordinarily
obtain informed consent of the client
and must reasonably believe that the
other lawyers’ services will
contribute to the competent and
ethical representation of the client
Problems of Aggregate settlement

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RPC 1.2: Scope of Representation and
Allocation of Authority between Client
and Lawyer
 (a) … a lawyer shall abide by a
client's decisions concerning the
objectives of representation and…
shall consult with the client as to the
means by which they are to be
pursued
 A lawyer shall abide by a client's
decision whether to settle a matter.
Problems of Aggregate settlement

20

Model Rule 1.7 Conflict of Interest: Current
Clients

(a) …A concurrent conflict of interest
exists if:
(2) there is a significant risk that the
representation of one or more clients
will be materially limited by the
lawyer's responsibilities to another
client, a former client or a third person
or by a personal interest of the
lawyer.
21

Rule 1.8 Conflict of Interest: Current Clients:
Specific Rules

(g) A lawyer who represents two or more
clients shall not participate in making an
aggregate settlement of the claims of..
the clients… unless each client gives
informed consent, in a writing signed by
the client.

22

Rule 1.8 Conflict of Interest: Current Clients:
Specific Rules – Comment [13]

Model Rule 1.2(a) protects each client's

right to have the final say in deciding
whether to accept or reject an offer of

settlement…

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Rule 1.8 Conflict of Interest: Current Clients:
Specific Rules

before any settlement offer is accepted

on behalf of multiple clients, the lawyer
must inform each of them about all the

material terms of the settlement,
including what the other clients will

receive or pay if the settlement or plea
offer is accepted.
24

Rule 1.8 Conflict of Interest: Current Clients:
Specific Rules

The lawyer's disclosure shall include the
existence and nature of all the claims
…and of the participation of each person
in the settlement.

25

R. 5.6 Restrictions on Right to Practice

A lawyer shall not participate in
offering or making:

(b) an agreement in which a restriction
on the lawyer's right to practice is part
of the settlement of a client
controversy.

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Rule 1.8 Conflict of Interest: Current Clients:
Specific Rules

[13] Aggregate Settlement

Differences in willingness to make or accept an offer of
settlement are among the risks of common
representation of multiple clients by a single lawyer.

Under Rule 1.7, this is one of the risks that should be

discussed before undertaking the representation, as
part of the process of obtaining the clients' informed
consent.
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RPC 1.16 terminating representation

A. In General.

1. If required by the rules of a
tribunal, a lawyer shall not withdraw

from employment in a proceeding
before that tribunal without its

permission.
28

RPC 1.16

2. … a lawyer shall not withdraw

from employment until the lawyer
has taken steps to the extent

reasonably practicable to avoid
foreseeable prejudice to the rights of

the client
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Model Rule 1.16 (b) Terminating the
Relationship

a lawyer may withdraw from

representing a client if:

(6) the representation will result in
an unreasonable financial burden on

the lawyer
30

ALI Aggregate Litigation
Project
client control of the settlement
process

31

§ 2 Circumstances required for aggregate
settlements to be binding

(a) Lawyers who represent non-class
members may settle on aggregate basis if:
Each claimant has reviewed..the formula
by which it will be divided and gives
informed consent
(b) in a goup of 40 or more clients may
agree in advance to be bound by collective
decisionmaking of at least 75% of
claimants
Problems of Aggregate settlement

32

ALI Aggregate Litigation – 3.17

§ 3.17 Circumstances Required for
Aggregate Settlements to Be Binding
(a) A lawyer or group of lawyers who
represent two or more claimants on a
non-class basis may settle the claims
of those claimants on an aggregate
basis provided that each claimant
gives informed consent, in writing.
33

ALI Aggregate Litigation – 3.17

Informed consent requires that each
claimant be able to review… the
formula by which the settlement will
be divided among all claimants.
Further…the total financial interest
of claimants' counsel be disclosed to
each claimant.
34

ALI Aggregate Litigation – 3.17

OR
(b) an individual claimant may agree in
advance to be bound in a proposed
settlement by the collective decisionmaking of a substantial majority of the
claimants represented by one lawyer or
group of lawyers who are covered by the
proposed settlement

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