IN RE: VALSARTAN N-NITROSODIMETHYLAMINE (NDMA) CONTAMINATION PRODUCTS LIABILITY LITIGATION
Civil No. 19-2875 (RBK/JS)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE
September 18, 2019
MEMORANDUM OPINION AND ORDER
This Opinion addresses defendants’ request for discovery directed to plaintiffs’ “litigation funding.”1 Generally, defendants want to discover whether plaintiffs are backed by litigation funders, the details of the financing, and communications regarding the financing. The Court received defendants’ letter brief [Doc. No. 189] and plaintiffs’ opposition [Doc. No. 188]. The Court exercises its discretion to decide this discovery dispute without oral argument.
Background
By way of background, this Multidistrict Litigation (“MDL“) concerns various FDA and voluntary recalls of contaminated valsartan, a generic prescription medication indicated in the treatment of high blood pressure and other conditions.2 The February
Since the first case management conference in March, 2019, much has been done to organize and manage the case. This includes designating and approving the parties’ leadership structure (CMO No. 6, Doc. No. 96), and identifying the “core discovery” to be produced by defendants (April 29, 2019 Order, Doc. No. 88).3 In June, 2019, three consolidated “master complaints” were filed. These complaints generally grouped plaintiffs into three categories. The first master complaint addresses the claims of individual plaintiffs [Doc. No. 122] who allege they contracted various forms of cancer from consuming defendants’ contaminated valsartan. To date approximately 126 personal injury cases of this type have been filed. Plaintiffs’ counsel estimates approximately 2,000 cases may eventually be filed. The second master complaint [Doc. No. 123] is a nationwide medical monitoring class action filed on behalf of all “individuals who consumed [contaminated] generic valsartan-containing drugs ... at least since January 1, 2012[.]” Id. at ¶390. The potential class size is undoubtedly in the tens of thousands. The third master complaint (Doc. No. 121) is a nationwide economic class action filed on behalf of “[a]ll individuals and entities ... who, since at least January 1, 2012 to the present, paid any amount of money for a valsartan-containing drug [.]” Id. at ¶413. This class size is also expected to be very large.
To date, no formal discovery has been directed to plaintiffs. The Court expects to shortly approve “Fact Sheets” to be answered by all personal injury plaintiffs and the named class representatives. As to defendants, the “lead” parties have already produced most of what has been denominated as “core discovery.”
The present discovery dispute arose in the context of what questions would be included in plaintiffs’ Fact Sheet to be
Defendants seek to obtain information about Plaintiffs’ agreements and communications with any third-party funders of the litigation, including Plaintiffs’ documents and communications relating to or concerning any litigation finance obtained in connection with this litigation, documents and communications regarding conferences, meetings or conventions attended with the purposes of seeking litigation finance, and documents and communications relating to agreements to finance this litigation.
DLB at 1.
Not unexpectedly, plaintiffs object to producing discovery regarding their litigation funding. Albeit, plaintiffs are willing to produce some documents for an in camera review. Plaintiffs argue their private financial information is irrelevant to their claims and defenses and defendants have “no legitimate need for the requested information.” Plaintiffs’ Letter Brief (“PLB“) at 2. Plaintiffs, however, agree to submit documents to the Court for an in camera review, “where the litigation funding company has control or input into litigation decisions, including settlement, which could interfere with a plaintiff‘s control of his, or her lawsuit and the attorney-client relationship.” Id.
Defendants disagree with plaintiffs and contend “third-party funding represents a critical piece of information to which Defendants are entitled.” DLB at 1. Defendants argue the requested discovery is relevant to identifying, “the real party in interest as to some or all of the claims alleged in this action,” and whether plaintiffs have standing to sue. Id. Defendants also argue plaintiffs’ funding information is relevant to determining: (1) plaintiffs’ credibility and bias, (2) the scope of proportional discovery, (3) the scope of potential sanctions, and (4) the “medical necessity and the reasonableness of plaintiff‘s treatments.” Id. at 2. Defendants argue, “[t]he recent history of mass tort multi-district litigation is littered with examples of undisclosed non-party involvement gone wrong to the detriment” of the legal process and public health. Defendants also argue that “courts and legislators lean toward mandating disclosure of third-party funding.” Id. at 4.
Discussion
This is not the first instance, nor likely the last, where defendants in a MDL mass tort case seek discovery directed to plaintiffs’ litigation funding. Scores of courts and commentators have already addressed the issue. This Court can add little to the existing discourse and is left to essentially parrot what has already been written. At bottom, courts are split on the issue and plaintiffs and defendants can each cite to cases supporting their positions. What is not in dispute is that there is no binding Third Circuit precedent on whether a plaintiff‘s litigation funding is a proper subject of discovery. Nor is the Court aware of any published New Jersey District Court authority on point.5
After considering the present record and the relevant case law, the Court rules in plaintiffs’ favor. The Court finds that litigation funding is irrelevant to the claims and defenses in the case and, therefore, plaintiffs’ litigation funding is not discoverable.
The scope of relevant discovery is set forth in
To be sure, the Court is not ruling that litigation funding discovery is off-limits in all instances. In cases where there is a showing that something untoward occurred, the discovery could be relevant. In other words, rather than directing carte-blanche discovery of plaintiffs’ litigation funding, the Court will Order the discovery only if good cause exists to show the discovery is relevant to claims and defenses in the case. For example, discovery will be Ordered where there is a sufficient showing that a non-party is making ultimate litigation or settlement decisions, the interests of plaintiffs or the class are sacrificed or are not being protected, or conflicts of interest exist. However, no such evidence has been raised by defendants and, to date, the Court has not seen anything of the sort.
Although defendants raise a parade of horribles that could or may arise from litigation funding agreements, none has occurred
Even if plaintiffs’ litigation funding is marginally relevant, which is not the case, defendants’ requested discovery would be denied because it is not “proportional to the needs of the case.”
The parties have just begun to scratch the surface regarding discovery directed to the important issues in the case. Plaintiffs’ Fact Sheets are not finalized and defendants have only produced core and not complete
2. Defendants’ Authority and Arguments are Not Persuasive
Defendants’ argument that plaintiffs’ litigation funding is not only relevant but a “critical piece of information” is flatly rejected. DLB at 1. It is pure speculation to argue a potential litigation funder rather than the named plaintiff may be the real party in interest. Id. at 1-2. Defendants have not cited any evidence that a “third-party owns the rights to [this] action.” Id. at 2. This is not a patent case where the ownership of a patent is relevant to determining who has standing to bring the lawsuit. See Cobra International, Inc. v. BCNY International, Inc., No. 05-61225, 2013 WL 11311345, at *3 (S.D. Fla. Nov. 4, 2013). Also, despite their protestations, defendants have not cited to a single instance where a litigation funder owned the right to recover rather than being a passive investor that shares in the benefit of a recovery from an attorney‘s contingent fee.
Defendants’ argument that plaintiffs’ litigation funding is relevant to credibility and bias (DLB at 2) is misplaced. Plaintiffs are not seeking to identify who is paying the legal fees of a key witness. See Berger v. Seyfarth Shaw, LLP, No. C07-05279 JSW, 2008 WL 4570687, at *1 (N.D. Cal. Oct. 14, 2008); Bryant v. Mattel, 573 F. Supp. 2d 1254, 1274 (C.D. Cal. 2007).
In addition, the Court rejects the notion that it must know the details of plaintiffs’ funding arrangements to decide the scope of discovery, the outcome of discovery cost-shifting, and the proper assessment of sanctions. DLB at 2. The Court routinely decides these issues without inquiring as to how the parties finance their cases. If the Court accepted defendants’ argument, the source(s) of defendants’ assets and funding could become fair game for discovery. The Court has no intention of going down this “rabbit hole.”
Defendants cite to Orders in another MDL where the Court directed discovery of funding information to “inform discussions of medical necessity and the reasonableness of plaintiff‘s treatments.” DLB at 2. See In re: American Medical Systems, Inc. Pelvic Repair Systems Product Liability Litigation, MDL No. 2325, at 12-14 (S.D.W. Va. May 31, 2016), Pretrial Order #215 (Motion to Modify Subpoena or for Protective Order of Nonparties Surgical Assistance and Black Barber). Defendants cite to this Order to support their argument that, “failure to disclose [litigation funding] information can undermine and derail the MDL.” DLB at 1. However, unlike the pelvic mesh litigation, there is no contention here that any contrived or unnecessary medical treatment occurred. Nor is there a scintilla of evidence, as may have existed in the other MDL‘s defendants cite to (silicone breast litigation (1990‘s), diet drug litigation (early 2000‘s), and mesh litigation) that inappropriate or fraudulent diagnoses or treatment occurred.
The Court disagrees with defendants’ statement that there is a “shifting tide towards disclosure of third-party litigation funding information in courts . . . coupled by a similar movement in the legislative realm.” DLB at 5. This Opinion cites to substantial recent authority denying disclosure. Benitez, supra; MLC Intellectual Property, supra; Space Data Corp., supra. Further, the disclosure requirement in the Local Rules for the N.D. Cal. is limited to class actions. And, this adoption was not followed by a groundswell of copycats, including New Jersey.7
Defendants’ reliance on In Re: American Medical Systems, Inc., MDL No. 2325, 2016 WL 3077904, at *5 (S.D.W.Va. May 31, 2016), is misplaced. That case is a MDL involving AMS‘s pelvic mesh products. During the course of discovery AMS learned that some of the plaintiffs had corrective surgery arranged and funded through third-party funding companies. AMS then served subpoenas on the companies seeking documents relating to the plaintiffs’ funding. As to the documents the Court held were discoverable, the Court ruled they were relevant to understanding the plaintiffs’ “motivation” to undergo corrective surgeries. Id. at *5. The documents were also relevant to learning if the plaintiffs were “pressed” to undergo corrective surgeries and the “reasonableness of the costs associated with the corrective surgeries that the plaintiffs underwent.” Id. at *5. The AMS case is not remotely analogous to this litigation. To date, defendants have not even hinted at the fact that litigation funders may be funding plaintiffs’ treatment. There is also no evidence that third-party funders may be unreasonably padding plaintiffs’ damage claims. At this stage of the case, any argument to this effect is pure speculation.
Last, defendants’ reliance on Gbarabe v. Chevron Corp., Case No. 14-CV-00173-SI, 2016 WL 4154849, at *1 (N.D.Cal. August 5, 2016), is also misplaced. In Gbarabe, plaintiffs’ counsel represented a class of approximately 12,600 Nigerian individuals allegedly damaged by a 2012 drilling explosion off the coast of Nigeria. Plaintiffs’ lawyers were solo practitioners who acknowledged they were dependent on outside funding to prosecute the case. Id. at *1. The lawyers also conceded the relevance of their funding agreement. Id. The Court ruled that, “under the circumstances of [the] case, the litigation funding agreement is relevant” to the adequacy of representation in the case. Id. Here, plaintiffs do not concede the relevancy of defendants’ requested discovery. In addition, the Court has previously ruled that as a general matter a class action plaintiff‘s finances are off-limits to discovery. See Riddell, supra.
3. In Camera Review
As a coda to this Opinion, the Court will address plaintiffs’ offer that the
The rules of discovery must necessarily be largely self-enforcing. The integrity of the discovery process rest on the faithfulness of parties and counsel to the rules – both the spirit and the letter. Moreover, the discovery provisions of the Federal Rules are meant to function without the need for constant judicial intervention, and … those rules rely on the honesty and good faith of counsel in dealing with adversaries.
Defendants are not left out of this process. If defendants have good cause to believe the criteria for an in camera review is met, the Court will consider their application. What will not be Ordered is the automatic or carte blanche review of all
litigation funding agreements and documents.9 Speculation does not justify discovery. Benitez, 2019 WL 1578167, at *1.
CONCLUSION
In sum, the Court denies defendants’ request for carte blanche discovery of plaintiffs’ litigation funding as the discovery is irrelevant to the claims and defenses in the case. At best, the discovery is a side issue that does not help advance this complex litigation. To date, the litigation has run smoothly without the requested discovery and the Court expects this to remain the case. Defendants’ parade of horribles that might occur from litigation funding is pure speculation. To be sure, however, the Court is not ruling that plaintiffs’ litigation funding can never be discovered.
ORDER
Accordingly, for all the foregoing reasons, IT IS HEREBY ORDERED this 18th day of September, 2019, that defendants’ request that plaintiffs’ litigation funding be included in plaintiffs’ Fact Sheets is DENIED; and it is further
ORDERED that to the extent the request is made that the Court Order the automatic or carte blanche disclosure of plaintiffs’ litigation funding agreements and documents, the request is DENIED; and it is further
ORDERED the Court will review in camera plaintiffs’ litigation funding documents where plaintiffs’ counsel makes this request or if good cause exists to believe a litigation financer has control or input into plaintiffs’ litigation decisions, including settlement, which would interfere with a plaintiff‘s control of his or her lawsuit and the attorney-client relationship, or other good cause exists for the review. The Court will thereafter determine the scope of discovery, if any.
s/ Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge