Mulligan Law Firm v. Zyprexa MDL Plaintiffs' Steering Committee II
Docket: Docket No. 07-3815-cv
Court: Court of Appeals for the Second Circuit; February 2, 2010; Federal Appellate Court
The interlocutory appeal addresses the attorney compensation structure set by the district court in ongoing multidistrict litigation concerning Eli Lilly's Zyprexa drug, which has been linked to diabetes. Mulligan Law Firm represents over two thousand plaintiffs across seventy transferred cases and contends that the federal courts lack jurisdiction over sixty-one cases originally filed in state courts. Consequently, Mulligan has sought to remand these cases back to state courts. While these motions are pending, the district court implemented compensation protocols, including a cap on attorneys’ fees and a common benefit fund financed by a three percent set-aside from settlements to compensate the Plaintiffs' Steering Committee II (PSC II). On August 17, 2007, the district court ruled that Mulligan's cases were subject to these protocols and prohibited them from disbursing funds from their Qualified Settlement Fund until compliance was certified. Mulligan appeals these orders, arguing that the district court lacks jurisdiction over the sixty-one cases and that imposing a fee cap was an abuse of discretion. The PSC II and Eli Lilly have moved to dismiss the appeal, claiming a lack of jurisdiction. Mulligan contests this and requests mandamus relief if the appeal is dismissed. The court ultimately concludes it lacks jurisdiction to hear the appeal and finds no grounds for mandamus relief, leading to the dismissal of the appeal. The broader context involves hundreds of lawsuits against Eli Lilly, initially consolidated in 2004 for litigation purposes, with a previous settlement in 2005 and the establishment of a new PSC II for subsequent cases.
Eli Lilly removed numerous state court cases to federal court, subsequently transferring them to the MDL court. Mulligan argues that sixty-one of these cases, involving over one thousand plaintiffs, were improperly removed, claiming a lack of federal jurisdiction. In 2006, Mulligan filed motions to remand these cases to state court, which remained pending during the appeal process. The district court imposed fee restrictions for the Zyprexa litigation in a March 28, 2006 order, capping attorneys' fees for claims under $5,000 at twenty percent of recovery, and at thirty-five percent for larger claims, with special settlement masters empowered to adjust fees within a range of thirty to thirty-seven and one-half percent. A subsequent December 5, 2006 order partially granted PSC II's motion to create a common benefit fund, mandating a three percent set-aside from plaintiff judgments and settlements in the MDL, but denied this for cases still in state court. By late 2006 or early 2007, Mulligan reached a tentative settlement with Eli Lilly for all MDL cases, contingent upon individual plaintiff approvals. During a June 22, 2007 status conference, Mulligan informed the court about the tentative settlement and inquired about the fee cap and common benefit fund status. The court issued two orders on August 17 and 23, 2007, confirming Mulligan’s adherence to the March 2006 fee cap despite its contractual fee of forty percent. The second order made all of Mulligan's pending cases subject to the earlier fee restrictions and prohibited disbursements from the Qualified Settlement Fund until proper fund segregation was certified. Mulligan appealed both August 2007 orders. Mulligan contends that the appeal falls under the jurisdiction of 28 U.S.C. § 1292(a), which allows appeals of certain interlocutory orders, particularly those related to injunctions that affect the lawsuit's substantive relief or preserve the status quo pending trial.
Nonappealable orders under § 1292(a)(1) pertain to matters such as pretrial discovery, not substantive litigation issues. An interim fee award does not qualify as an injunctive order for interlocutory appeal. The court emphasizes caution in interpreting § 1292(a)(1) to avoid excessive inclusion of pretrial orders. The injunction in question does not provide substantive relief related to the lawsuit. Mulligan's argument that the injunction impacts the distribution of settlement proceeds is deemed insufficient to classify the issues as substantive. For an order to qualify as an injunction under § 1292(a)(1), it must contribute to the ultimate relief sought, which is not the case here. PSC II's motion regarding a set-aside fund is noted, but PSC II is not a party seeking relief. Thus, the orders are collateral to the lawsuits, and the court lacks jurisdiction to hear the appeal. Mulligan's request for a writ of mandamus is also denied, as no grounds for judicial usurpation of power or abuse of discretion have been established. Judges McLaughlin and Sack express sympathy for Judge Kaplan's views but refrain from addressing them in this case. The appeal is dismissed for lack of jurisdiction, and the mandamus petition is denied. Following oral arguments, it was noted that some related cases may now be in Indiana state court, where settlement distributions have commenced.
Neither party has clarified the sequence of events leading to the current situation or the implications of these developments on the case. The status of the sixty-one individual cases from Indiana, California, and New Jersey, which relate to this appeal, remains unspecified. The court will focus solely on the arguments presented and the facts in the appeal record. Mulligan waives any claim of jurisdiction under 28 U.S.C. § 1291, and both the steering committee and the Mulligan Firm assert that the case is not appealable under this statute due to the absence of a final judgment from the MDL court. Instead, they agree that appellate jurisdiction lies under 28 U.S.C. § 1292(a). However, the assertion of non-appealability is questionable since some plaintiffs’ settlements are still tentative, and while certain settlement funds have been partially distributed, other claims remain unresolved. Additionally, all courts established by Congress have the authority to issue necessary writs to aid their jurisdictions, as outlined in 28 U.S.C. § 1651(a).
