100 Pages Posted: 23 Apr 2016 Last revised: 28 Jan 2017
Date Written: January 27, 2017
When transferee judges receive a multidistrict proceeding, they select a few lead plaintiffs’ lawyers to efficiently manage litigation and settlement negotiations. That decision gives those attorneys total control over all consolidated plaintiffs’ claims and rewards them richly in common-benefit fees. It’s no surprise then that these are coveted positions, yet empirical evidence confirms that the same attorneys occupy them time and again.
Anytime repeat players exist and exercise both oligopolistic leadership control across multidistrict proceedings and monopolistic power within a single proceeding, there is concern that they will use their dominance to enshrine practices and norms that benefit themselves at consumers’ (or here, clients’) expense. Apprehensiveness should increase when defense lawyers are repeat players too, as they are in multidistrict litigation. And anxiety may peak when the circumstances exhibit these anti-competitive characteristics, but lack regulation as they do here. Without the safeguards built into class certification, judicial monitoring and appellate checks disappear. What remains is a system that may permit lead lawyers to act, at times, like a cartel.
Basic economic principles demonstrate that noncompetitive markets can result in higher prices and lower outputs, and agency costs chronicle ways in which unmonitored agents’ self-interest can lead them astray. By analyzing lead lawyers’ common-benefit fees, the non-class deals that they design, and the results they generate for their clients, this Article introduces new empirical evidence that multidistrict litigation is not immune to market or agency principles. It demonstrates that repeat players on both sides continually achieve their goals in tandem — defendants end massive suits and lead plaintiffs’ lawyers increase their common-benefit fees. But this exchange may result in lower payouts to plaintiffs, stricter evidentiary burdens in claims processing, or more coercive plaintiff-participation measures in master settlements.
These circumstances warrant regulation. Even though judges entrench and enable repeat players, they are integral to the solution. By tinkering with selection and compensation methods and instilling automatic remands after leaders negotiate master settlements, judges can capitalize on competitive forces already in play. Tapping into the vibrant rivalries within the plaintiffs’ bar allows judges to use dynamic market solutions to remap the existing regulatory landscape by invigorating competition and playing to attorneys’ adversarial strengths.
Keywords: MDL, Plaintiffs steering committee, PSC, Lead counsel, common benefit fees, nonclass settlement, state court plaintiffs, Propulsid, Vioxx, Ortho Evra, ObTape, Yasmin, Yaz, DePuy ASR Hip Implant, Fosamax, Pelvic Mesh litigation, TVM, Biomet, NuvaRing, Actos, Ethicon, American Medical Systems
JEL Classification: K13, K40, K41, L12, L13
Suggested Citation: Suggested Citation
Burch, Elizabeth Chamblee, Monopolies in Multidistrict Litigation (January 27, 2017). 70 Vanderbilt Law Review 67 (2017); UGA Legal Studies Research Paper No. 2016-21. Available at SSRN: https://ssrn.com/abstract=2768171