In a sweeping ruling analyzing the authority of an MDL Judge to award “holdback” attorneys’ fees to lead counsel for common benefit work, Roundup MDL Judge Vince Chhabria of California refused to hold back for lead counsel 8.25 percent of all recoveries in state court Roundup cases brought by other attorneys and cases that settled without any lawsuit being filed at all.
Although not uncommon in MDL mass tort litigation, the Judge questioned the “breathtaking” extent of the proposed holdback and whether new rules should be drafted to clarify attorneys’ fee compensation:
The fact that counsel is even requesting such a far-reaching order—a request that has some support from past MDL practice—suggests that courts and attorneys need clearer guidance regarding attorney compensation in mass litigation, at least outside the class action context. The Civil Rules Advisory Committee should consider crafting a rule that brings some semblance of order and predictability to an MDL attorney compensation system that seems to have gotten totally out of control.
The opinion conducts a scholarly review of the bases of authority in MDL cases for the presiding judge to “tax” attorneys who benefit from the work of lead counsel, and how and to what extent lead counsel should be compensated for the “common benefit” of their efforts. Despite its prevalence in MDL litigation and even though the court entered a holdback order in the Roundup MDL itself, the Judge questioned how far the common benefit holdback can and should extend:
Perhaps the prevalence of these orders suggests that this Court is wrong about the limits of a district court’s authority. But perhaps instead it’s a sign that we are too quick to assume that MDL courts can do whatever they want. Few of those holdback orders meaningfully consider the power of a district court to issue them. Instead, they seem similar to the common fund order this Court adopted uncritically in this case: orders based on language proposed by lead counsel, which engendered little or no opposition and were adopted at the outset of an MDL.
UWWM will continue to monitor developments in this and other class and mass tort actions, and will publish additional bulletins and updates for the benefit of its clients and colleagues.
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