In re Avandia Mktg., Sales Practices & Prods. Liab. Litig.

289 F. Supp. 3d 646
CourtDistrict Court, E.D. Pennsylvania
DecidedJanuary 2, 2018
DocketMDL NO. 1871; 07–md–1871
StatusPublished
Cited by1 cases

This text of 289 F. Supp. 3d 646 (In re Avandia Mktg., Sales Practices & Prods. Liab. Litig.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 289 F. Supp. 3d 646 (E.D. Pa. 2018).

Opinion

Rufe, J.

It has been brought to this Court's attention that Steven M. Johnson, Esquire is once again refusing to pay a seven percent assessment to the Avandia Multidistrict Litigation ("MDL") common benefit fund from claims that he settled in the state court action captioned Gabel v. GlaxoS mithKline *649,1 filed in the Twentieth Judicial Circuit in St. Clair County, Illinois, despite the Court's prior ruling that he do so. Rather than complying with this Court's ruling, Johnson now opposes the disbursement of funds in the Illinois court.

The Plaintiffs' Advisory Committee of the Avandia MDL moves this Court to issue an injunction, preventing the Illinois court from taking any further action to prevent or delay payment to the common benefit fund from any clients or counsel in the Gabel litigation. The Committee further moves this Court to enjoin the Illinois court from ordering any disbursement of the common benefit assessment monies that are currently held by counsel to GlaxoSmithKline ("GSK") in escrow, and to order GSK to pay forthwith the funds into the Avandia common benefit fund.

The dispute before this MDL Court concerned only whether Johnson and the Gabel claimants were subject to the seven percent assessment. This Court determined that, because Johnson's co-counsel used the Committee's work product to secure a settlement in the Gabel case, he and the Gabel plaintiffs were subject to the seven percent assessment on their gross recovery. Therefore, GSK was ordered to deposit the seven percent assessment it holds in escrow on behalf of Johnson and the Gabel plaintiffs into the Avandia common benefit fund. The United States Court of Appeals for the Third Circuit affirmed this decision.2

Johnson now attempts to relitigate this MDL Court's order in the Illinois Court. He also argues that applying the assessment puts him at risk of violating the Illinois Rules of Professional Conduct because he failed to advise his clients that their recovery may be subject to the assessment, and that applying the assessment may result in payments to his co-counsel that would otherwise be barred by Illinois rules concerning conflicts of interest. Because Johnson's arguments about his duties and his co-counsels' fees under the Illinois Rules of Professional Conduct can be separately litigated in the Illinois court, and do not affect the MDL Court's prior ruling that Johnson and the Gabel claimants are subject to the assessment, there is no reason for Johnson to continue to impede payment to the Avandia common benefit fund.

I. BACKGROUND

This Court has already ruled on Johnson's refusal to contribute to the common benefit fund; therefore, the following facts are taken from the Court's prior Memorandum Opinion issued on July 21, 2015:

In February 2015, the Plaintiffs Advisory Committee ("PAC") in the federal Avandia Multi-District Litigation ("MDL") filed a motion for an order to show cause why claims settled in the Illinois state court Avandia action captioned Gabel v. GlaxoSmithKline should not be considered "covered claims" subject to the Avandia MDL common benefit assessment, pursuant to Pre-Trial Order Number 70 ("PTO 70"). The Court issued the requested order to show cause. Lead counsel for the Gabel plaintiffs, the Law Offices of Steven M. Johnson, P.C. ("Johnson Firm"), contests the MDL Court's jurisdiction to enter or enforce any orders reaching it or its clients. The parties briefed the relevant issues, and the Court held a hearing on April 22, 2015, at which attorneys Michael Baum and Erick Rosemond testified as fact witnesses.....
*650The Avandia MDL was created in 2007 to consolidate, for pretrial proceedings, all product liability cases against GlaxoSmithKline, the maker of Avandia, filed in or properly removed to federal court. This Court, which oversees the Avandia MDL, created a Plaintiff's Steering Committee ("PSC"), which spent years conducting fact and expert discovery and briefing pretrial motions. On August 26, 2009, the Court entered Pretrial Order 70 ("PTO 70"), establishing the Avandia common benefit fund. This is a funding mechanism to reimburse plaintiffs' lawyers (including but not limited to PSC members) for expenses and time spent conducting discovery and litigating legal issues for the common benefit of all MDL plaintiffs.
Although all federal cases were consolidated in the MDL, thousands of Avandia cases were litigated in state courts. In some state court cases, plaintiffs' counsel entered into voluntary Attorney Participation Agreements with the PSC, agreeing to pay an assessment to the Fund, as outlined in PTO 70, in exchange for access to the MDL common benefit work product. By its express terms, once counsel signs on to the Attorney Participation Agreement, all Avandia claims in which counsel has a financial interest (including filed state and federal claims, as well as tolled and unfiled claims) are "covered claims," subject to a common benefit fund assessment. PTO 70 further provides that a total assessment of 7% of gross monetary recovery applies to all covered claims, with 4% deducted from attorneys' fees and 3% from the clients' shares of the recovery.
In 2009, the Johnson Firm filed a multi-plaintiff lawsuit, Gabel v. GlaxoSmithKline , in Illinois state court. The Complaint alleged that the claimants had been injured by the ingestion of Avandia. The Gabel case was litigated exclusively in state court; neither the individual plaintiffs nor the Johnson Firm litigated any Avandia claims in federal court.
In Spring 2012, Johnson attended an Avandia litigation meeting led by Paul Kiesel, who had been appointed by this Court as coordinating counsel for the MDL. The meeting was convened after thousands of MDL cases and claims had been settled, for the purpose of distributing the MDL's work product, dubbed "trial in a box," to attorneys still litigating Avandia cases in state courts. Kiesel announced that he would be circulating paperwork (the PTO 70 Participation Agreement and the PTO 10 Confidentiality Agreement), which the attorneys present should sign as a prerequisite to obtaining the MDL "trial in a box" flash drives being distributed at the meeting.
During that conference, Johnson met with Michael Baum of the law firm Baum, Hedlund, Aristel & Goldman ("Baum") and Erick Rosemond of Rosemond Law Group, P.C. ("Rosemond"), both of whom had cases in the MDL, had signed the PTO 10 Confidentiality Agreement and the PTO 70 Attorney Participation Agreement in the course of litigating those cases, and had performed common benefit work for the MDL. As signatories to the Participation Agreement, Baum and Rosemond agreed to pay "the assessment amount provided in paragraph 4 of [PTO 70] on all filed and unfiled cases or claims in state or federal court in which they share a fee interest."
Knowing of Baum and Rosemond's connection to the MDL, and "hopeful that by having a trial team, it would enable him to get the type of settlements he thought his cases ought to receive," Johnson asked Baum and Rosemond to serve as trial counsel in Gabel . Rosemond testified that Johnson understood *651

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Bluebook (online)
289 F. Supp. 3d 646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-avandia-mktg-sales-practices-prods-liab-litig-paed-2018.