In re Zyprexa Products Liability Litigation

• Decision Date: 03 February 2010
• Docket Number: Docket No. 07-3815-cv.
• Citation: 594 F.3d 113
• Parties: In re ZYPREXA PRODUCTS LIABILITY LITIGATION. Mulligan Law Firm, Appellant, v. Zyprexa MDL Plaintiffs' Steering Committee II and Eli Lilly and Company, Appellees.<SMALL><SUP>*</SUP></SMALL>
• Court: U.S. Court of Appeals — Second Circuit

594 F.3d 113

In re ZYPREXA PRODUCTS LIABILITY LITIGATION.

Mulligan Law Firm, Appellant, v. Zyprexa MDL Plaintiffs' Steering Committee II and Eli Lilly and Company, Appellees.^*

Docket No. 07-3815-cv.

United States Court of Appeals, Second Circuit.

Argued: March 12, 2009.

Final Submission: June 17, 2009.

Decided: February 3, 2010.

Robert J. Lack, Friedman Kaplan Seiler & Adelman LLP, New York, N.Y. (Eric Roberson, The Mulligan Law Firm, Dallas, TX, and William David George and Earnest W. Wotring, Connelly, Baker, Wotring LLP, Houston, TX, on the brief) for Appellant.

William M. Audet, Audet & Partners, LLP, San Francisco, CA (James M. Shaughnessy, Milberg LLP, New York, NY, on the brief) for Appellee Zyprexa MDL Plaintiffs' Steering Committee II.

Anthony Vale, Pepper Hamilton LLP, Philadelphia, PA (Nina M. Gussack, Philadelphia, PA, and Samuel J. Abate, Jr., New York, NY, on the brief) for Appellee Eli Lilly and Company.

Before: McLAUGHLIN and SACK, Circuit Judges, and KAPLAN, District Judge.^**

PER CURIAM:

This interlocutory appeal concerns the attorney compensation structure established by the district court in this ongoing multidistrict litigation ("MDL"), and the applicability of that compensation structure to the Mulligan Law Firm ("Mulligan"). Mulligan represents more than two thousand plaintiffs in upwards of seventy cases that have been transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the Eastern District of New York (the "MDL court" or the "district court"), where they are being considered alongside many similar cases. Mulligan asserts that the federal courts do not have jurisdiction over sixty-one of these cases, all of which were originally filed in various state courts, removed to federal courts, and then transferred to the MDL court. It has therefore filed motions in the MDL court to remand the cases to the state courts from which they came.

While the motions to remand were pending, the district court instituted several attorney compensation protocols. Included were a cap on attorneys' fees and the creation of a common benefit fund — generated by a three percent set-aside from funds from all settlements and judgments — to compensate members of the appellee Zyprexa MDL Plaintiffs' Steering Committee II (the "PSC II") for their work on behalf of all of the MDL plaintiffs.

In a pair of orders dated August 17, 2007, the MDL court (Jack B. Weinstein, Judge) ruled that all of Mulligan's cases that were pending in that court were subject to these attorney compensation strictures. The court also enjoined Mulligan from making any disbursements from a fund that it maintained (the "Qualified Settlement Fund") until a fund administrator had certified that the protocols had been adhered to.

Mulligan appeals from the August 17 orders. The firm asserts: 1) that the district court lacks jurisdiction over the sixty-one cases for which remand motions are pending, and that it therefore also lacks jurisdiction to impose a fee cap and a setaside requirement with respect to those cases, and 2) that the court abused its discretion in sua sponte placing a cap on attorneys' fees in all of the Zyprexa cases pending in the MDL court.

The PSC II and Eli Lilly and Company ("Eli Lilly"), the manufacturer of the drug Zyprexa and the defendant in the underlying litigation, have moved to dismiss this interlocutory appeal. They assert, inter alia, that we lack jurisdiction to hear it. Mulligan disagrees. Mulligan further argues that if we conclude that we do not have such jurisdiction, we should grant its petition for mandamus relief with respect to the sixty-one cases over which, it asserts, the district court lacks jurisdiction.

We conclude that we do not have jurisdiction to hear this appeal, and that mandamus relief is unwarranted. We therefore dismiss the appeal.

BACKGROUND

The multidistrict litigation underlying this appeal consists of hundreds of lawsuits brought by thousands of plaintiffs against Eli Lilly, which manufactures the drug Zyprexa. Zyprexa is an antipsychotic medication that has been approved by the Food and Drug Administration to treat schizophrenia and bipolar disorder. Eli Lilly had been the subject of many lawsuits based on allegations that Zyprexa causes diabetes.

In April 2004, thousands of Zyprexa cases that were pending against Eli Lilly were transferred to the United States District Court for the Eastern District of New York — the MDL court — pursuant to an order of the Judicial Panel on Multidistrict Litigation. Transfer Order, In re Zyprexa Prods. Liab. Litig., 314 F.Supp.2d 1380 (J.P.M.L.2004). A group of lawyers was established as the Plaintiffs' Steering Committee to help prosecute the cases in the MDL court. That litigation was settled in late 2005. See In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2005 WL 3117302, 2005 U.S. Dist. LEXIS 29071 (E.D.N.Y. Nov. 22, 2005). A second Plaintiffs' Steering Committee (the "PSC II") was then established to help prosecute the many new Zyprexa cases that had been filed.

As part of this second wave of Zyprexa litigation, Mulligan, a Dallas-based law firm, filed scores of cases involving thousands of plaintiffs in state and federal courts throughout the United States. Many of the state — court cases were removed by Eli Lilly to federal court and then transferred to the MDL court. Mulligan asserts that sixty-one of those cases — brought by more than one thousand plaintiffs-were improperly removed, and that the federal courts do not in fact have jurisdiction over them. In 2006, Mulligan filed motions to remand these cases to state court. The motions were pending at all times relevant to this appeal.

In an order dated March 28, 2006, the district court established the following fee restrictions for the Zyprexa litigation: 1) all attorneys' fees for claims of less than $5,000 were capped at no more than twenty percent of the client's recovery; 2) all other attorneys' fees were capped at thirty-five percent of the client's recovery; and 3) four special settlement masters, whom the court had appointed to oversee settlement negotiations and administer settlement agreements, were given discretionary authority to order reductions or increases of fees down to thirty percent or up to thirty-seven and one-half percent depending on the circumstances.

In an order dated December 5, 2006, the district court granted in part a motion by PSC II to establish a common benefit fund to compensate PSC II attorneys for their "significant discovery work." The court ordered a set-aside equal to three percent of judgments and settlements in favor of the plaintiffs in any of the cases in the MDL court, including those for which remand motions were pending, to be paid into the common benefit fund. The court denied PSC II's motion, however, with respect to cases that were at that time in state court.

At the end of 2006 or the beginning of 2007, Mulligan reached a tentative settlement of all of the MDL cases against Eli Lilly in which it represents the plaintiffs. The settlement is contingent on certain conditions being fulfilled, including, with respect to each case, the individual approval of the plaintiff or plaintiffs that Mulligan represents.¹

At a status conference on June 22, 2007, Mulligan advised the district court of the tentative settlement and inquired of the court as to the status of the fee cap and the common benefit fund. The court responded with a pair of orders dated August 17, 2007, and filed August 23, 2007. The first noted that although Mulligan's contracts with its plaintiffs call for a fee of forty percent of recovery, the firm was nonetheless bound by the March 2006 order and the cap on attorneys' fees there instituted. The second order rendered all of Mulligan's cases pending before the MDL court, including the cases for which motions to remand remained pending, subject to the March and December 2006 orders. The second order therefore enjoined Mulligan from making any disbursements from the Qualified Settlement Fund until a fund administrator had certified that there had been a segregation of funds representing both the amount of fees sought by Mulligan in excess of the fee cap, and the three percent set-aside for the common benefit fund.

Mulligan appeals from both of the August 17, 2007 orders.

DISCUSSION

I. Jurisdiction

Mulligan argues that we have jurisdiction over this appeal under 28 U.S.C. § 1292(a),² which confers on the federal courts of appeals jurisdiction over, inter alia, "[i]nterlocutory orders of the district courts of the United States . . . granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions. . . ." Id. § 1292(a)(1).

"As a general matter we have interpreted § 1292(a)(1) to authorize an appeal only from an injunctive order that gives, or aids in giving, substantive relief sought in the lawsuit in order to preserve the status quo pending trial. We have held nonappealable under § 1292(a)(1) orders that were unrelated to the substantive issues of the litigation and that instead regulated, or purported to regulate, such matters as pretrial discovery and disclosure." Bridge C.A.T. Scan Assocs. v. Technicare Corp., 710 F.2d 940, 943 (2d Cir.1983) (citations omitted); cf. Polymer Tech. Corp. v. Mimran, 975 F.2d 58, 64 (2d Cir.1992) ("An order awarding interim fees during the course of litigation is not an injunctive order subject to interlocutory appeal."). We have been instructed to "approach [section 1292(a)(1)] somewhat gingerly lest a floodgate be opened that brings into the exception many pretrial orders." Switz. Cheese Ass'n v. E. Horne's Mkt., Inc., 385 U.S. 23, 24, 87 S.Ct. 193, 17 L.Ed.2d 23 (1966).

We conclude that the injunction at issue here does not give or aid in giving substantive relief sought in the lawsuit. Indeed, it does not so much as relate to the substantive issues in the litigation. The...