In Re Avandia Marketing Sales Practices, 658 F. App'x 29

Background

MDL No. 1871 (Avandia) was centralized in the E.D. Pa.; the court created a Plaintiffs’ Steering Committee (PSC) and later a Plaintiffs’ Advisory Committee (PAC).
The MDL court entered Pretrial Order 70 (PTO 70), which created an Avandia Common Benefit Fund and attached a voluntary Participation Agreement providing for a 7% assessment on "Gross Monetary Recovery" of "Covered Claims" in exchange for MDL common-benefit work product.
Lawyers who signed the PTO 10 Protective Order or the Participation Agreement were defined as Participating Counsel; receipt of MDL work product obligated Participating Counsel to pay the 7% assessment on covered claims, including state-court cases.
In Illinois state court (Gabel), the Johnson Firm retained Baum and Rosemond as trial counsel; Baum and Rosemond had signed the MDL Participation Agreement (and PTO 10) and used MDL "trial-in-a-box" materials in preparing Gabel.
After Gabel reached a global settlement, the Illinois court ordered GSK to withhold 7% pending resolution of the MDL assessment dispute; the PAC asked the MDL court to decide whether PTO 70 applied to the Gabel settlement.
The MDL court held an evidentiary hearing, found that Baum and Rosemond’s participation and use of MDL work product brought the Gabel settlements within PTO 70, and ordered payment of the 7% assessment; the Johnson Firm appealed only on jurisdictional and personal-jurisdiction grounds.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the MDL court had subject-matter jurisdiction to enforce PTO 70 against state-court settlements	Johnson: MDL court lacks jurisdiction over purely state-court actions and thus cannot impose assessment	PAC/MDL: PTO 70 (and incorporated Participation Agreements) was within MDL court authority; incorporation gives the court power to adjudicate breaches	Court has jurisdiction because the Participation Agreement was incorporated into PTO 70 and the MDL court may enforce orders it issues; affirmed
Whether counsel who used MDL work product and had signed Participation Agreement are bound to pay 7% from state-court recoveries	Johnson: No—state cases are outside MDL reach; or court needed complaint/summons for personal jurisdiction	PAC: Signing protective/participation documents and using MDL materials created obligations enforceable by MDL court	Held that Baum and Rosemond (who signed agreements and used MDL work product) were subject to the 7% assessment; enforcement was proper
Whether the Johnson Firm implicitly agreed to PTO 70 by conduct (and thus is bound)	Johnson: Did not consent; MDL order cannot bind non-participating state-court counsel	PAC: Johnson’s conduct and retention of Participating Counsel who used MDL materials made the cases subject to PTO 70	District court found Johnson implicitly agreed, but appellate decision relied principally on Baum/Rosemond’s signed obligations—assessment stands
Whether MDL court lacked personal jurisdiction because it used an order to show cause instead of a complaint/summons	Johnson: Procedural defect; lack of personal jurisdiction	PAC: Personal jurisdiction over Baum/Rosemond not disputed; their conduct triggered obligations	Appellate court did not find personal-jurisdiction problem dispositive; obligations enforceable and assessment affirmed

Key Cases Cited

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (U.S. 1994) (court may enforce agreements incorporated into its orders)
In re Diet Drugs Prod. Liab. Litig., 582 F.3d 524 (3d Cir. 2009) (MDL courts may fashion compensation schemes for common-benefit work)
In re Avandia Marketing, Sales Practices & Prod. Liab. Litig., [citation="617 F. App'x 136"] (3d Cir. 2015) (Avandia I) (affirming MDL court authority to enforce Participation Agreement incorporated into PTO 70)
Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99 (3d Cir. 2015) (standard of review for jurisdictional questions)
CNA v. United States, 535 F.3d 132 (3d Cir. 2008) (review of district court factual findings for clear error)
Daubert v. Merrell Dow Pharm., 509 U.S. 579 (U.S. 1993) (referenced regarding Daubert proceedings and related MDL work product)