Thursday, April 25, 2019

Updated: When Trial is Too "Expensive" for Law Firms

After posting this yesterday, Bryan Aylstock reached out to provide some procedural history.  While his information better contextualizes the letter that went out, as I note below, I am still troubled by the idea that a lawyer would dismiss his client's case unless she takes some affirmative action to the contrary. As my conversations with some of the affected plaintiffs reflect, at least some feel a great deal of pressure to dismiss their claims.

As I noted, for the last few months, I've been in touch with many TVM and POP mesh plaintiffs as part of a procedural justice study that I'm conducting.  Recently, I'd heard from multiple sources that the Aylstock, Witkin, Kreis & Overholtz law firm has been sending out letters to clients who haven't settled, suggesting that they dismiss their case without prejudice to avoid the expense of discovery while they continue to evaluate their settlement prospects.

The text of the AWKO letter (included fully below) tells recipients that "Judge Goodwin has set a series of aggressive deadlines designed to push your case towards a trial."  As I suggested yesterday, I suspect that’s what most plaintiffs want. (As plaintiffs often tell me, “this is not about the money for me.”)

Let me fill in some background on the “aggressive deadlines” order that the letter refers to. Judge Goodwin has maintained an “inactive docket” as well as an active docket of pelvic mesh cases.  (There were, at one point, over 104,000 cases pending before him.) On February 4, 2019, he issued Pretrial Order 328 in the Ethicon MDL, which moves a list of cases from the inactive to the active docket.  He begins his order by saying:

Despite representations in inactive docket orders proposed by the parties and entered by the court, that the cases on Exhibit A have been settled or entered into a settlement model, and despite repeated warnings by the court that cases will not remain on the inactive docket indefinitely, the number of cases on the inactive docket remains in the thousands.

Judge Goodwin thus removed the listed cases from the inactive to the active docket and put discovery deadlines in place. For instance, plaintiffs had to file their fact sheets by February 15, 2019; written discovery requests by March 25, 2019; and expert disclosures by May 24, 2019.

After a case completes the discovery process and goes through dispositive motions, like motions for summary judgment, it is ready either for trial in the Southern District of West Virginia (the location of the MDL) or a remand to its original court where it could then be placed on a trial docket. 

The AWKO letter says: "The imposition of these deadlines creates a problem--complying with them will require significant time and significant expense which, in turn, will make settling your Ethicon claim in the near future more difficult."

Consequently, the firm wants to dismiss clients’ claims that are in the settlement process:

To avoid this problem, we have reached a potential agreement with Ethicon to dismiss your claim without prejudice. This means that your case will no longer be subject to the deadlines that will decrease any near term settlement amount to you by increasing your costs.

As Aylstock explained, this letter only went out to clients who had indicated that they’d like to consider a potential settlement.  The firm negotiated an aggregate settlement with Ethicon awhile ago, and these cases are being processed through that program. 

When I asked him whether there was a walkaway provision within the deal that was driving this, he said that there was a walkway threshold (meaning that Ethicon could walk away from the deal unless enough plaintiffs participate), but that it was “exceedingly low” and had been already been met (and was met shortly after it was negotiated).

In my earlier post, I said that the law firm wanted their clients to dismiss their cases so that the firm can avoid the expense of actually having to take a case to trial.  (The letter mentions that the firm "believe[s] that it is in your best interest to dismiss your Ethicon case without prejudice" and recommends that the client accept "your Ethicon settlement offer.")

Aylstock said that he had no problem taking cases to trial and had lawyers flying around the country taking depositions all the time. Nor was he hesitant about spending money the money to do so.

Instead, he wanted those clients who were in the settlement process not to have to go through discovery expenses if they planned to take the settlement offer. He said a client would be no worse off for having a case dismissed without prejudice under the agreement he negotiated with Ethicon, which waives the statute of limitations. 

Judge Goodwin has stopped accepting cases into the MDL, so presumably if a case were dismissed and refiled it would be in a state or federal court outside of the MDL proceeding.  Aylstock likewise told me that the filing fee to refile a lawsuit would be far less than the costs of experts and that he thinks a plaintiff would not be back to square one because the firm would have only case-specific discovery left to do.

As I told him, what I found most troubling about the AWKO letter was this phrase: "unless you direct us not to, we will be dismissing your claim against Ethicon without prejudice." To me, this seems like a powerful use of default rules to push plaintiffs toward settlement.

The letter apparently went out sometime in the last week, and it gave recipients only until April 24 to decide.  The folks with whom I spoke had this to say about their conversations with the firm’s case managers:

  • Client 1: “I talked live with Ann and her tone was like a bull in a china shop. . . . She said, ‘You need to be ready for deposition in two weeks, hiring your own experts and witnesses, paying your way to fly around the country at your own dime.’”
  • Client 2: “I let them know that I do NOT want them to dismiss my case. They have told me that means I will likely be dropped from them. . . . Right now they are trying to bully me, and that just isn't working!”

Perhaps other clients feel differently.  Still, two points bear mention:

First, the lawyers are the ones who initially bear the expenses associated with discovery and trial, not clients. Ultimately, costs and attorneys' fees are deducted from any judgement or settlement that the plaintiff receives, but those should not be out-of-pocket expenses for the clients.

Second, it’s apparent that at least some of AWKO’s clients are under the impression (right or wrong) that they must settle or the law firm will no longer represent them.  When I asked Aylstock about this, he said, in a much more detailed way, that it depends on an individual analysis for each client.

In general, before withdrawing from representing a client, Fla. R. Jud. Admin. 2.060 requires attorneys to file a motion setting out the reasons for withdrawing and the client’s name and address.  The motion must be set for a hearing, and the firm must serve the motion on both the client and opposing counsel.

In contingency fees governed by Florida law, Faro v. Romani, 641 So. 2d 69, 71 (Fla. 1994), holds that when an “attorney withdraws from representation upon his own volition, and the contingency has not occurred, the attorney forfeits all rights to compensation.”  Only “if the client’s conduct makes the attorney’s continued performance of the contract either legally impossible or would cause the attorney to violate an ethical rule” is the withdrawing attorney entitled to a fee.

And Rule 4-1.2(a) makes it clear that: “A lawyer must abide by a client’s decision whether to settle a matter.”  Florida also has detailed rules for contingent fees that I found interesting:

(i) Without prior court approval as specified below, any contingent fee that exceeds the following standards are presumed, unless rebutted, to be clearly excessive:

Before the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action:
  • 1.) 33 1/3% of any recovery up to $1 million; plus 2.) 30% of any portion of the recovery between $1 million and $2 million; plus 3.) 20% of any portion of the recovery exceeding $2 million.
After the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action, through the entry of judgment:
  • 1.) 40% of any recovery up to $1 million; plus 2.) 30% of any portion of the recovery between $1 million and $2 million; plus 3.) 20% of any portion of the recovery exceeding $2 million.
If all defendants admit liability at the time of filing their answers and request a trial only on damages:
  • 1.) 33 1/3% of any recovery up to $1 million; plus 2.) 20% of any portion of the recovery between $1 million and $2 million; plus 3.) 15% of any portion of the recovery exceeding $2 million.
An additional 5% of any recovery after institution of any appellate proceeding or postjudgment relief or action is required for recovery on the judgment.

Comments welcome from all sides.  They will not show up immediately, but I will approve them as I see them coming in.

The entire letter follows: 

*CORRESPONDENCE ALSO SENT AS HARDCOPY VIA UPS*

Good Morning,

We hope this email finds you well. We would like to share important an important update regarding your transvaginal mesh claim against Ethicon.

As you know, your case is pending in the Ethicon multidistrict litigation (MDL) in West Virginia, overseen by Judge Goodwin. Despite the fact that your Ethicon case is part of a settlement process, Judge Goodwin has set a series of aggressive deadlines designed to push your case towards a trial.  The imposition of these deadlines creates a problem – complying with them will require significant time and significant expense which, in turn, will make settling your Ethicon claim in the near future more difficult. 

To avoid this problem, we have reached a potential agreement with Ethicon to dismiss your claim without prejudice.  This means that your case will no longer be subject to the deadlines that will decrease any near term settlement amount to you by increasing your costs. Because the proposed dismissal is without prejudice, you are entitled to re-file your case against Ethicon in the event that you ultimately reject your settlement offer.  Ethicon, however, has required that any such refiling not happen for one year from the date of dismissal.  Ethicon wants to insure that the settlement process be allowed to run its course without interference from cases in litigation.

 After considering the pros and cons of this potential agreement with Ethicon, we believe that it is in your best interest to dismiss your Ethicon case without prejudice.  We have written to you separately regarding your Ethicon settlement offer and have recommended that you accept the same, however, you chose to request a further review with the Special Master. Though the Special Master is currently reviewing those requests, we believe that the proposed agreement regarding dismissal without prejudice strikes a balance that allows the settlement process to continue without interference.

Accordingly, unless you direct us not to, we will be dismissing your claim against Ethicon without prejudice.  If you do not want us to dismiss your claim without prejudice in accordance with the above, you must contact us by April 24, 2019, and tell us the same.

If we do not hear from you on or before that date, we will dismiss your claim against Ethicon without prejudice. If you have any questions or concerns, or wish to inform us of your desire not to dismiss you claim, our toll free number is (877) 810-4808. We look forward to hearing from you.

Ann Jaye

Case Manager

Transvaginal Mesh Litigation
Aylstock, Witkin, Kreis & Overholtz

17 E. Main Street, Suite 200
Pensacola, FL 32502

Phone: (850) 202-1010

Toll Free: (888) 255-AWKO (2956)
Facsimile: (850) 916-7449
Email: ajaye@awkolaw.com

 

April 25, 2019 in Aggregate Litigation Procedures | Permalink | Comments (1)

Wednesday, April 24, 2019

When Trial is Too "Expensive" for Law Firms

For the last few months, I've been in touch with many TVM and POP mesh plaintiffs as part of a procedural justice study that I'm conducting.  Recently, I've heard from multiple sources that the Aylstock, Witkin, Kreis & Overholtz law firm has been sending out letters to clients who haven't settled, suggesting that they dismiss their case without prejudice to avoid the expense of trial.
 
Who bears trial expenses?  The lawyers, at least initially.  Ultimately, costs and attorneys' fees are deducted from any judgment or settlement.  
 
The text of the letter tells recipients that "Judge Goodwin has set a series of aggressive deadlines designed to push your case towards a trial." Good, right? That's what most plaintiffs want, I suspect.
 
But wait. The letter continues: "The imposition of these deadlines creates a problem--complying with them will require significant time and significant expense which, in turn, will make settling your Ethicon claim in the near future more difficult."  Now, that seems odd.  Why would that be?  A credible threat of trial is what raises settlement values and creates the pressure to settle in the first place.
 
Here's the clincher: the firm wants its clients to dismiss their claim without prejudice to avoid trial. "To avoid this problem" (i.e., the problem of expense for the law firm) "we have reached a potential agreement with Ethicon to dismiss your claim without prejudice. This means that your case will no longer be subject to the deadlines that will decrease any near term settlement amount to you by increasing your costs."
 
Wow.  So, the law firm wants their clients to dismiss their cases so that the firm can avoid the expense of actually having to take a case to trial?  The letter then mentions that the firm "believe[s] that it is in your best interest to dismiss your Ethicon case without prejudice" and notes that it recommends that the client accept "your Ethicon settlement offer."
 
Then, "unless you direct us not to, we will be dismissing your claim against Ethicon without prejudice."
 
I'm speechless.
 
The entire letter has been replicated below: 
 

*CORRESPONDENCE ALSO SENT AS HARDCOPY VIA UPS*

Good Morning,

We hope this email finds you well. We would like to share important an important update regarding your transvaginal mesh claim against Ethicon.

As you know, your case is pending in the Ethicon multidistrict litigation (MDL) in West Virginia, overseen by Judge Goodwin. Despite the fact that your Ethicon case is part of a settlement process, Judge Goodwin has set a series of aggressive deadlines designed to push your case towards a trial.  The imposition of these deadlines creates a problem – complying with them will require significant time and significant expense which, in turn, will make settling your Ethicon claim in the near future more difficult. 

To avoid this problem, we have reached a potential agreement with Ethicon to dismiss your claim without prejudice.  This means that your case will no longer be subject to the deadlines that will decrease any near term settlement amount to you by increasing your costs. Because the proposed dismissal is without prejudice, you are entitled to re-file your case against Ethicon in the event that you ultimately reject your settlement offer.  Ethicon, however, has required that any such refiling not happen for one year from the date of dismissal.  Ethicon wants to insure that the settlement process be allowed to run its course without interference from cases in litigation.

  After considering the pros and cons of this potential agreement with Ethicon, we believe that it is in your best interest to dismiss your Ethicon case without prejudice.  We have written to you separately regarding your Ethicon settlement offer and have recommended that you accept the same, however, you chose to request a further review with the Special Master. Though the Special Master is currently reviewing those requests, we believe that the proposed agreement regarding dismissal without prejudice strikes a balance that allows the settlement process to continue without interference.

Accordingly, unless you direct us not to, we will be dismissing your claim against Ethicon without prejudice.  If you do not want us to dismiss your claim without prejudice in accordance with the above, you must contact us by April 24, 2019, and tell us the same.

If we do not hear from you on or before that date, we will dismiss your claim against Ethicon without prejudice. If you have any questions or concerns, or wish to inform us of your desire not to dismiss you claim, our toll free number is (877) 810-4808. We look forward to hearing from you.

Ann Jaye

Case Manager

Transvaginal Mesh Litigation
Aylstock, Witkin, Kreis & Overholtz

17 E. Main Street, Suite 200
Pensacola, FL 32502

Phone: (850) 202-1010

Toll Free: (888) 255-AWKO (2956)
Facsimile: (850) 916-7449
Email: ajaye@awkolaw.com

 

April 24, 2019 in Aggregate Litigation Procedures | Permalink | Comments (3)