Legal Fee Dispute Erupts in $2.1 Billion Opioid Settlement Case

In a significant development in the ongoing opioid litigation, a dispute has emerged over the allocation of $2.1 billion in legal fees from settlements with major pharmaceutical companies. The plaintiffs' executive committee, comprising firms such as Motley Rice, Simmons Hanly Conroy, and Lieff Cabraser Heimann & Bernstein, has taken action to dismiss an appeal by two law firms seeking a share of the common benefit fund.

The controversy centers around Goldstein, Russell & Woofter and Kelley & Ferraro, two firms that represented six Ohio cities in objecting to a proposed "negotiating class" structure for settlement talks. Despite their contribution to a successful appeal that overturned the certification of this novel approach in 2020, these firms found themselves excluded from the fee allocation process.

The common benefit fund, a standard feature in multidistrict litigation, is intended to compensate lead plaintiffs' lawyers for work that benefits all parties involved. In this case, the fund was established from settlements with nine defendants, including Janssen, McKesson, Teva, CVS, and Walmart.

The fee allocation process, as outlined in the settlement agreements, involved a specially appointed panel and limited appeal rights. U.S. District Judge Dan Polster of Cleveland was given the authority to make final, non-appealable decisions on fee distribution.

"Appellants knowingly and voluntarily agreed that the district court's order would be 'non-appealable' and thus waived their right to appeal to this court."

The plaintiffs' executive committee argues that Goldstein and Kelley waived their right to appeal to the 6th U.S. Circuit Court of Appeals by participating in the fee allocation process and agreeing to its terms. This stance is based on the explicit limitations set forth in the settlement agreements and Judge Polster's April 2022 order.

As of September 9, 2024, the 6th Circuit has not yet requested a response to the motion to dismiss the appeal. This dispute highlights the complex nature of fee allocation in large-scale litigation and the potential consequences of agreeing to limited appeal rights in settlement protocols.

The opioid epidemic, which has plagued the United States since the late 1990s, has led to unprecedented legal actions against pharmaceutical companies, distributors, and pharmacies. The multidistrict litigation overseen by Judge Polster since 2017 has resulted in significant settlements, with the $2.1 billion common benefit fund representing a substantial portion of the legal fees associated with these resolutions.

As this legal fee dispute unfolds, it serves as a reminder of the intricate challenges that can arise in the aftermath of large-scale settlements, even among the attorneys who worked to secure them.