Before even moving for certification of the putative classes they seek to represent, Interim Class Counsel (ICC) in the In re Generic Pharmaceuticals Pricing Antitrust Litigation sought to insure they would get not only their own piece of the pie, but also a sizable sliver of everyone else’s. Claiming they are prosecuting potentially “the largest cartel case in the history of the United States,” the ICC petitioned the court for preemptive orders that would have placed in escrow 10 percent of any judgment or settlement entered into by parties who have opted out and brought their own suit directly (the Direct Action Plaintiffs). Subject to additional court approval, this common fund would then have been distributed among the ICC, ostensibly compensating them for their work, albeit with funds from cases involving plaintiffs they do not represent. Not surprisingly, the briefing between the various plaintiff groups on the issue was quite acrimonious. After nearly six months, Judge Cynthia Rufe, who presides over the sprawling MDL in the Eastern District of Pennsylvania, entered a two-page order denying the ICC’s request . . . at least for now.
Unprecedented relief sought
While the ICC argued that set-asides were a “not uncommon” means of ensuring “fair compensation from those who benefit from the[ir] extensive and valuable work . . . in leading this litigation,” Direct Action Plaintiffs countered that, in fact, “no MDL Court has ever entered a set-aside order in favor of an uncertified class.” Based on Judge Rufe’s Oct. 7 order, the two antitrust class action opinions on which the ICC primarily relied – Lidoderm and Linerboard – were not only outweighed by the numerous rulings from courts rejecting similar requests for a set aside, but also occurred at “significantly advanced” stages of the litigation, i.e. less than four months before trial was scheduled to commence (in Lidoderm) and “on the eve of the conclusion of discovery” after a sustained appeal of the ruling certifying the class (in Linerboard). As Judge Rufe recognized, “[b]ecause no classes have yet been certified [here] and the scope of the parties that would be affected by the orders has not been established, the traditional mechanisms of class actions may appropriately compensate any class counsel.”
Practical consequences loomed large
Direct Action Plaintiffs argued that requiring a set aside would amount to penalizing plaintiffs who elect to opt out of any potential class for exercising their “inherent right of exclusion.” Judge Rufe’s denial of the ICC’s motion, however, was not categorical and may have been driven more by the practical burdens it could have imposed on an already unwieldy litigation. For example, at separate points in her two-page order, Judge Rufe noted that payments from the proposed set-asides “would require Court approval” and “the proposed orders would create a significant administrative process with one or more administrators.” Judge Rufe may also have heard the Direct Action Plaintiffs’ arguments about the inefficient lack of coordination among the plaintiff groups that would follow from an entry of the set aside orders, as evidenced by the charge of civility in the final footnote of her Oct. 7 order. As she explained: “[T]here is a great deal of work to be done in this MDL and it should be undertaken in a spirit of collaboration and cooperation.”
Relief not foreclosed
Although Judge Rufe denied the ICC’s set-aside motion at this time, her denial was notably without prejudice. Her Oct.7 order instead recognized the amount of work the ICC are performing, and – citing Linerboard – stated that this “does not foreclose the possibility that the proposed mechanism or a similar one may be appropriate at some later stage to ensure fair compensation.”