NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 14-2980
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IN RE: AVANDIA MARKETING, SALES PRACTICES AND PRODUCTS
LIABILITY LITIGATION
*THE GIRARDI KEESE LAW FIRM,
Appellant
*(Pursuant to Rule 12(a), Fed R. App. P.)
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On Appeal from United States District Court
for the Eastern District of Pennsylvania
(E.D. Pa. No. 2-07-md-01871)
District Judge: Honorable Cynthia M. Rufe
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Submitted Pursuant to Third Circuit LAR 34.1(a)
June 1, 2015
Before: FISHER, JORDAN, and SHWARTZ, Circuit Judges.
(Opinion Filed: July 2, 2015)
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OPINION*
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*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
FISHER, Circuit Judge.
The Girardi Keese Law Firm (“Girardi Keese”) represents thousands of
individuals in their claims against GlaxoSmithKline, L.L.C., over the use of the drug
Avandia. Nearly all of these claims were brought in California state court, but some
claims wound up in the multidistrict litigation (“MDL”) coordinated for pretrial purposes
in the United States District Court for the Eastern District of Pennsylvania. In 2009,
Girardi Keese signed an Attorney Participation Agreement with the Avandia MDL’s
Plaintiffs’ Steering Committee. In the Agreement, Girardi Keese agreed to pay seven
percent of the recovery on its clients’ claims arising from the use of Avandia into a
litigation expense fund in exchange for the use of the Steering Committee’s litigation
work product. A few months later, the District Court issued a pretrial order establishing a
fund to compensate the Steering Committee for common benefit work and incorporating
a materially-identical form agreement.
Girardi Keese subsequently settled all of its clients’ claims but has refused to pay
seven percent of the settlement proceeds to the common benefit fund. The District Court
ordered GlaxoSmithKline to hold back seven percent of the settlement proceeds for the
common benefit fund. Girardi Keese challenges the District Court’s jurisdiction over the
dispute and the final fee award. We will affirm.
I.
Avandia is the trade name of a prescription drug developed and marketed by
GlaxoSmithKline to treat type-two diabetes. Thousands of individuals have sued
2
GlaxoSmithKline over allegations that Avandia increases the individuals’ risk of heart
failure. For the cases that were filed in or removed to federal court, the Judicial Panel on
Multidistrict Litigation consolidated the cases in the Eastern District of Pennsylvania in
2007 for coordinated pretrial proceedings. The District Court then appointed a Plaintiffs’
Steering Committee to direct the proceedings. One of the members of the Steering
Committee was an attorney at Girardi Keese.
In early 2009, the Girardi Keese attorney on the Steering Committee left the firm.
A few months later, on May 12, 2009, another Girardi Keese attorney, Keith Griffin,
signed a contract titled, “Attorney Participation Agreement,” with the Steering
Committee. The Agreement “incorporate[d] by reference any Order of the Court
regarding assessments and incorporate[d] fully herein all defined terms from such
Order(s).” App. at 205. The Agreement covered “each and every claim, case, or action
arising from the use of Avandia in which [Girardi Keese] has a financial interest, whether
the claim, case, or action is currently filed in state or federal court, or is unfiled, or is on a
tolling agreement.” Id. For these covered cases, Girardi Keese agreed to contribute seven
percent of the gross recovery to “the Plaintiff’s Litigation Expense Fund”—four percent
to come from Girardi Keese’s attorneys’ fees and three percent to come from the clients’
share of the recovery. Id. In exchange for seven percent of the recovery, the Steering
Committee promised to provide work product developed by the Steering Committee and
to “cooperate with [Girardi Keese] to coordinate the MDL litigation and the state
litigation for the benefit of the plaintiffs.” App. at 206. Additionally, the Agreement
3
authorized Girardi Keese to “apply to the Court for common benefit fees and
reimbursement of expenses” if 1) the Steering Committee requested assistance; 2) Girardi
Keese “expended time and efforts for the common benefit”; and 3) Girardi Keese
submitted an application “in accordance with the Court’s orders, or in the absence of such
orders, the procedures established by the [Steering Committee].” Id.
Shortly thereafter, the Steering Committee moved for the creation of a common
benefit fund to compensate attorneys for MDL administration and work product. On
August 26, 2009, the District Court granted the motion and adopted a proposed order
provided by the Steering Committee and GlaxoSmithKline as Pretrial Order 70. App. at
179. Pretrial Order 70 assessed a seven percent contribution—four percent from
attorneys’ fees and three percent from the clients’ share—to the common benefit fund for
any claim covered by the order. Pretrial Order 70 applied to “[a]ll Avandia claims,
regardless of whether those claims are subject to the jurisdiction of [the MDL], tolled,
unfiled, or filed in another jurisdiction” if, among other things, the attorney “sign[ed] on
to the Participation Agreement, attached hereto as Exhibit 1.” App. at 184. The order also
“incorporated herein [the] voluntary Attorney Participation Agreement.” App. at 183; see
also App. at 194 (“The Participation Agreement is attached hereto as Exhibit 1 and is
incorporated by reference and has the same effect as if fully set forth in the body of this
order.”). It set out a procedure by which attorneys who signed the Attorney Participation
Agreement could request payment from the fund for work performed for the common
benefit of plaintiffs and authorized by the Steering Committee. The Attorney
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Participation Agreement attached to Pretrial Order 70 as Exhibit 1 was materially
identical to the Attorney Participation Agreement Girardi Keese signed in May 2009.1
Girardi Keese only represented clients before the MDL in about twenty-five cases.
However, Girardi Keese represented clients with Avandia claims in thousands of cases in
a consolidated California state-court proceeding. In addition to its own work product,
Girardi Keese used MDL work product, in the form of expert reports, to oppose
GlaxoSmithKline’s motions for summary judgment in the California proceedings and
indicated to the state court that it would use a variety of MDL materials in a planned trial.
Ultimately, Girardi Keese and GlaxoSmithKline settled all of the cases for which Girardi
Keese served as counsel—whether in state court or before the MDL—in August 2012.
However, when GlaxoSmithKline indicated that it would withhold seven percent of the
settlement for each claim pursuant to the Attorney Participation Agreement, Girardi
Keese contested the applicability of the assessment to the California state-court cases.
On March 13, 2014, the Plaintiffs’ Advisory Committee, which replaced the
Steering Committee,2 moved for an order to show cause requiring Girardi Keese to
demonstrate why all of the claims for which it served as counsel were not subject to the
1
Compare App. at 196-200 (Pretrial Order 70), with App. at 204-07 (Girardi
Keese’s signed Agreement). Most of the (minor) differences appear to be in terminology:
“Eligible Counsel” as opposed to “Common Benefit Attorneys”; “Covered Claims” as
opposed to “Assessed Cases”; and “Avandia Common Benefit Fund” as opposed to
“Plaintiff’s Litigation Expense Fund.”
2
In 2012, the District Court declined to renew the Steering Committee. In its
place, the District Court appointed a group of coordinating counsel and a fee and cost
allocation committee that serves as the Plaintiffs’ Advisory Committee.
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seven percent contribution to the common benefit fund described by the Attorney
Participation Agreement. The District Court issued the order to show cause and held a
hearing on March 26, 2014.
After taking evidence and hearing argument at the hearing and receiving
supplemental briefing, on May 12, 2014, the District Court held that all of the settled
claims were subject to the seven percent assessment and ordered GlaxoSmithKline to
hold back the seven percent assessment from any settlement payments. App. at 7-8. The
court reasoned that Girardi Keese used MDL work product and that the Attorney
Participation Agreement covered all claims for which Girardi Keese served as counsel at
the time of resolution. App. at 5-7. Girardi Keese filed a timely appeal.
II.
We begin, as we must, with jurisdiction. The Plaintiffs’ Advisory Committee
questions the existence of our appellate jurisdiction over the District Court’s order.
Girardi Keese argues that the District Court lacked jurisdiction to order GlaxoSmithKline
to hold back the seven percent assessment. We address each jurisdictional issue in turn.
A.
Subject to limited exceptions not applicable here, we review final orders of the
district courts. 28 U.S.C. § 1291. The Plaintiffs’ Advisory Committee here suggests that
the order Girardi Keese appeals is not final because it is similar to “an MDL interim fee
award.” Appellees’ Br. at 1 (citing In re Diet Drugs Prods. Liab. Litig., 401 F.3d 143,
156 (3d Cir. 2005)). In that case, the district court was asked to make an award of
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attorneys’ fees to the MDL’s coordinating counsel. The court found that it was premature
to make a final award to counsel, but did award counsel $153 million and allowed
counsel to make another request for a final award in the future. In re Diet Drugs, 401
F.3d at 150-52. We held that such an award was not a final order under § 1291. This was
because “the total fee award has [not] been firmly established”; rather, the District Court
imposed “an interim award of attorneys’ fees . . . [, which] foresees further and additional
action by the district court, thus continuing, but not concluding, the fee litigation.” Id. at
156-57. We also determined that the interim fee award was not a “collateral order” that is
appealable under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949),
because it was not conclusive or otherwise unreviewable. 401 F.3d at 159-60. Thus, we
concluded we lacked jurisdiction over the appeal.
We have not addressed whether an appeal from a fee assessment is an appealable,
final order. We agree that a fee assessment may be properly analogized to a fee award to
determine whether the order is final, but we disagree with the Plaintiffs’ Advisory
Committee that the situation in In re Diet Drugs, 401 F.3d at 143, is the most analogous
situation to this case.
Rather, we conclude that this case is more similar to the situation in a different
Diet Drugs opinion: In re Diet Drugs Prod. Liab. Litig., 582 F.3d 524 (3d Cir. 2009). In
that case, we found that a final award of attorneys’ fees was an appealable, final order
because “it bestowed a definitive award on Class Counsel.” Id. at 537 n.30. Our
jurisprudence treats fee awards that have been “reduced . . . to a definite amount” as
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appealable, final orders. United Auto. Workers Local 259 Soc. Sec. Dep’t v. Metro Auto
Ctr., 501 F.3d 283, 286 (3d Cir. 2007).
Here, the fee assessment has been reduced to a definite amount. The cases for
which Girardi Keese serves as counsel have been settled. The District Court ruled which
of those cases was subject to an assessment—all of them—and stated how much of each
settlement must be contributed to the common benefit fund—seven percent. Accordingly,
because Girardi Keese’s payment obligation has been reduced to a definite amount, we
conclude that the District Court’s fee assessment is an appealable, final order, and we
have jurisdiction under 28 U.S.C. § 1291.
B.
Now we turn to the jurisdiction of the District Court to enter the order. Under 28
U.S.C. § 1407, district courts are empowered to conduct coordinated, consolidated
pretrial proceedings in cases transferred by the Judicial Panel on Multidistrict Litigation.
Section 1407, however, “does not expand the jurisdiction of the district court to which the
cases are transferred.” In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig.-II, 953
F.2d 162, 165 (4th Cir. 1992). Thus, “a transferee court’s jurisdiction in multi-district
litigation is limited to cases and controversies between persons who are properly parties
to the cases transferred.” Id. at 165-66. Relying on cases like In re Showa Denko and In
re Genetically Modified Rice Litigation, 764 F.3d 864 (8th Cir. 2014), Girardi Keese
argues that by essentially ordering Girardi Keese to comply with the Attorney
8
Participation Agreement, the District Court improperly exercised jurisdiction over the
California state-court cases even though they were not before the District Court.
In In re Showa Denko, the Fourth Circuit found that an order requiring state-court
plaintiffs to contribute a portion of any recovery in their cases to pay for the MDL
coordinating counsel exceeded the district court’s jurisdiction because those plaintiffs
“have not voluntarily entered the litigation before the district court nor have they been
brought in by process.” 953 F.2d at 166. Similarly, in In re Genetically Modified Rice, the
Eighth Circuit affirmed the district court’s ruling that it lacked jurisdiction to order state-
court plaintiffs to contribute to a common benefit fund for MDL coordinating counsel
because “the district court does not have the power to order parties in cases not before it
to contribute to the Fund” and “equity is insufficient to overcome limitations on federal
jurisdiction.” 764 F.3d at 874; see also Hartland v. Alaska Airlines, 544 F.2d 992, 1001
(9th Cir. 1976) (“[T]he District Court had not even a semblance of jurisdiction original,
ancillary or pendent to order anything or anybody, and least of all to compel lawyers who
were not parties to the action to pay $3,250 into a fund.”)
We agree with Girardi Keese that had the District Court simply ordered the firm,
as total strangers to the litigation, to contribute to the common benefit fund from the
settlement of its clients’ state-court cases, it would have exceeded its jurisdiction.
However, that is not what the District Court did here. The proper question we must ask is
did the District Court properly exercise jurisdiction to enforce the contract Girardi Keese
made with the Plaintiffs’ Steering Committee. We conclude that it did.
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A district court that supervises a multidistrict litigation “has—and is expected to
exercise—the ability to craft a plaintiffs’ leadership organization to assist with case
management.” In re Diet Drugs, 582 F.3d at 547. Included in that ability “is the power to
fashion some way of compensating the attorneys who provide class-wide services.” Id.
Here, the District Court issued an order—Pretrial Order 70—dictating how it would
allow the leadership organization—the Steering Committee—to be compensated. One
way was to assess a percentage of the recovery of the cases before the MDL. The District
Court also permitted the Steering Committee to, essentially, trade work product for a
share in the recovery in cases not before the MDL. The District Court identified a form
agreement that the Steering Committee and interested counsel must use to participate in
the common benefit scheme and “incorporated” the agreement into the order. App. at
183.
When a district court incorporates the terms of an agreement into a court order, “a
breach of the agreement would be a violation of the order.” Kokkonen v. Guardian Life
Ins. Co. of Am., 511 U.S. 375, 381 (1994). Because a district court has jurisdiction to
determine whether one of its orders has been violated, it may adjudicate whether an
agreement incorporated into a court order has been breached. Id. (describing this power
as within the court’s “ancillary jurisdiction”). Thus, if the District Court incorporated
Girardi Keese’s Attorney Participation Agreement into Pretrial Order 70, it had
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jurisdiction to determine whether Girardi Keese breached that agreement and, if so, to
remedy that breach.3
Although Girardi Keese signed its Attorney Participation Agreement before the
District Court entered Pretrial Order 70 and it is not exactly identical to the form
agreement appended to the order, we find that Girardi Keese’s Attorney Participation
Agreement was incorporated into Pretrial Order 70. We reach this conclusion for several
reasons.
First, Girardi Keese’s Attorney Participation Agreement contemplates and expects
that the District Court will enter an order concerning the agreement. In three places, the
agreement refers to an “Order of the Court regarding assessments.” See App. at 205
(stating that the agreement “incorporates by reference any Order of the Court regarding
assessments” and that the assessment will satisfy Girardi Keese’s obligations under the
contract “absent extraordinary circumstances recognized by MDL 1871 Court Order”) &
206 (stating that counsel may receive a distribution from the fund “pursuant and subject
to any Order of the Court regarding assessments or the Fund”). At the time Girardi Keese
and the Steering Committee entered into the Attorney Participation Agreement, no such
3
We need not be concerned that the District Court’s incorporation of the Attorney
Participation Agreement impermissibly expanded its jurisdiction by unilaterally bringing
non-parties before it because, as explained in greater detail below, the Attorney
Participation Agreement clearly contemplated that it would be governed by future court
order and Girardi Keese, having signed that agreement, cannot contend that it is not a
party properly before the District Court. See D.H. Blair & Co., Inc. v. Gottdiener, 462
F.3d 95, 103 (2d Cir. 2006) (recognizing that parties may consent to personal jurisdiction
by contractual agreement).
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order concerning assessments or a fund existed. Thus, the parties to the agreement
contemplated that the District Court would enter an order on assessments and a fund, and
that the order would govern the agreement.
Second, the Attorney Participation Agreement created continuing obligations on
both sides. Girardi Keese was obligated to pay the seven-percent assessment, and the
Steering Committee made a continuing promise:
As the litigation progresses and Common Benefit Work Product
continues to be generated, the [Steering Committee] will provide
[Girardi Keese] with such work product and will otherwise
cooperate with [Girardi Keese] to coordinate the MDL litigation and
the state litigation for the benefit of the plaintiffs.
App. at 206. Thus, at the time the District Court issued Pretrial Order 70, performance on
both sides of the agreement was still in progress and could be supervised by court order.
Finally, the terms of Pretrial Order 70 indicate that the District Court not only
incorporated into the order all agreements using the appended form order but also the
agreements made that used the same terms. Pretrial Order 70 states,
Participating Counsel are entitled to receive the MDL common
benefit work product and the state court work product of those
attorneys who have also signed the Participation Agreement and
shall be entitled to seek disbursements as Eligible Counsel pursuant
to paragraph 5 of this Order. In return, Participating Counsel agree to
pay the assessment amount provided in paragraph 4 of this Order on
all filed and unfiled cases or claims in state or federal court in which
they share a fee interest.
App. at 183. Thus, the important factor for whether an agreement is an Attorney
Participation Agreement that was incorporated into the order is not whether counsel
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signed the exact same form as appended to Pretrial Order 70. Rather, it is whether the
agreement contains the same obligations as those imposed by the order. Any agreement
between counsel and the Steering Committee that tracks the requirements of Pretrial
Order 70 was incorporated into the order.4
Pretrial Order 70 covered the same claims as those listed in Girardi Keese’s
Attorney Participation Agreement. Compare App. at 184 (defining covered claims for
Pretrial Order 70), with App. at 205 (defining “Assessed Cases” for Girardi Keese’s
Attorney Participation Agreement). They assessed the same percentage and split of
recovery from Avandia claims and directed GlaxoSmithKline to withhold the assessment
before distribution. Compare App. at 185, with App. at 205. As noted above, for all
intents and purposes, Girardi Keese’s Attorney Participation Agreement contained all the
requirements of Pretrial Order 70 and is materially identical to the appended form
agreement.
Therefore, because the parties understood that the Attorney Participation
Agreement would be governed by Pretrial Order 70, they had a continuing relationship
under the agreement that could be governed by court order when the District Court issued
the order, and Pretrial Order 70 incorporated agreements that contained the same
obligations as required by the order, we conclude that Pretrial Order 70 incorporated
Girardi Keese’s Attorney Participation Agreement.
4
It is irrelevant that Girardi Keese’s Attorney Participation Agreement was signed
before Pretrial Order 70 was issued. A court can incorporate an already-existing
agreement into a court order.
13
This is not, as Girardi Keese argues, finding subject-matter jurisdiction by
agreement of the parties. The agreement itself is not the source of the District Court’s
authority. Rather, the District Court’s authority over this dispute arose from its
responsibilities to appoint and supervise a coordinating committee of counsel. The
agreement was simply incorporated into an order the District Court was empowered to
issue.
Because it was within the District Court’s power to issue an order governing how
to compensate the Steering Committee for its work and because Girardi Keese’s Attorney
Participation Agreement was incorporated into that order, the District Court had
jurisdiction to adjudicate whether Girardi Keese5 breached the Attorney Participation
Agreement and thereby violated Pretrial Order 70.6
III.
Turning to the merits of this appeal, Girardi Keese’s sole argument is that the
District Court should have granted Girardi Keese compensation for the common benefit
work it performed. We review the District Court’s fee determination for abuse of
discretion, “which can occur if the judge fails to apply the proper procedures in making
5
Girardi Keese also suggests that the District Court lacked jurisdiction to order
GlaxoSmithKline to withhold the assessment from the clients’ share of the settlement
proceeds. However, Girardi Keese promised to contribute the entire assessment, and the
District Court could ensure that it complied with the agreement and Pretrial Order 70.
Whether it must reimburse its clients for that share of the assessment is a question
governed by the representation agreement between Girardi Keese and its clients.
6
We do not and need not decide whether, in the absence of Pretrial Order 70, the
District Court could exercise jurisdiction over Girardi Keese’s agreement with the
Steering Committee—a court-appointed and court-supervised entity.
14
the determination, or bases an award upon findings of fact that are clearly erroneous.” In
re Diet Drugs, 582 F.3d at 538 (internal quotation marks omitted).
Although Girardi Keese says it spent fourteen million dollars litigating its cases, it
did not offer evidence that its efforts were for the common benefit as opposed to solely
on behalf of its clients. We cannot say the District Court abused its discretion in failing to
consider or grant a credit for the common benefit Girardi Keese provided when no
evidence exists in the record that Girardi Keese actually provided a common benefit.
This is not to say, however, that Girardi Keese is not entitled to an award from the
common benefit fund. If Girardi Keese makes the “proper showing” to the District Court
required by Pretrial Order 70, then as “[a]ttorneys who have signed the Participation
Agreement” the firm would be entitled to an award from the common benefit fund. App.
at 188. If Girardi Keese believes it has provided a common benefit to all plaintiffs
litigating over Avandia, it may and should apply to the District Court for such an award.
IV.
For the reasons above, we will affirm the District Court’s order.
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