JULIE A. ROBINSON, Chief District Judge.
Presently before the Court are several matters bearing on the contours and direction of this multidistrict litigation ("MDL"), and on which counsel shall have the responsibility and authority to direct the course of the litigation going forward. Specifically, the Court must decide the Motion to Establish a Separate Litigation Track (Doc. 53) filed on December 17, 2019 by Plaintiffs' counsel in two cases that are part of this MDL, Schwegmann v. Hill's Pet Nutrition, Inc. and Hill's Pet Nutrition Sales, Inc.
On January 31, 2019, the United States Food and Drug Administration ("FDA") and Defendant Hill's Pet Nutrition, Inc. ("Hill's") announced a voluntary recall of certain Hill's canned dog food products due to elevated levels of Vitamin D.
In response, the Judicial Panel on Multidistrict Litigation ("JPML") established MDL No. 19-2887, In re: Hill's Pet Nutrition, Inc., Dog Food Products Liability Litigation, and transferred it to this Court on June 4, 2019.
Upon the creation of the MDL, this Court issued a Preliminary Practice and Procedure Order Upon Transfer Under 28 U.S.C. § 1407(a), in which it stated its intent to establish an organizational structure for the litigation and stayed all further discovery proceedings pending further notice.
Indeed, while pointing out that their cases involved non-recalled products, counsel nonetheless argued that in this MDL, "there is little risk of Plaintiffs' interests varying to such a degree that any group of plaintiffs will need a separate voice in leadership."
At a hearing on July 29, 2019, the Court heard extensive arguments from counsel regarding their qualifications and fitness to represent all Plaintiffs in this MDL. During that hearing, the spokesperson for the counsel group including the Schwegmann and Jubinville attorneys made no argument regarding the necessity for a separate litigation track or separate counsel for Vitamin D-deficient or non-recalled product, but instead represented that any early settlement would likely include claims relating to deficient Vitamin D.
Ultimately, the Court did not appoint any attorney representing the Schwegmann or Jubinville Plaintiffs to a leadership position. Rather, the Court selected as Plaintiffs' Co-Lead Counsel a group of attorneys referred to as the "Mason-Schwartz-Reese Group" ("MSR Group"), with the addition of one other attorney, Scott Kamber, who submitted a separate leadership application.
At the time, prior to his appointment to work collaboratively with the MSR Group, Mr. Kamber expressed the opposite view that cases involving non-recalled product should not remain a part of the MDL.
The Court noted in its July 31, 2019 Order Appointing Counsel that it believed that the group of attorneys selected would "best assist the Court in resolving these cases effectively, efficiently, and fairly."
Newly-appointed lead counsel for both sides appeared before the Court for an initial scheduling conference on August 19, 2019. The parties reported that they had chosen a mediator, scheduled mediation for October 29, 2019, and agreed upon a protective order, which the Court entered the same day.
Lead counsel in the MDL conducted an in-person mediation on October 29, 2019, as scheduled. The Eichhorn-Burkhard case—alleging a class of purchasers in Germany and the European Union—was filed the following day in this District, and Plaintiff's counsel listed MDL No. 19-2887 as a related case on the civil cover sheet.
On November 8, 2019, lead MDL counsel for Plaintiffs and Defendants submitted a joint status report updating the Court on their mediation efforts and stating that they were continuing to engage in good-faith negotiations, with an additional in-person mediation scheduled for December 17, 2019. At the parties' request and to facilitate further settlement discussions, the Court continued the stay of discovery pending the parties' next status report due on January 8, 2020.
On November 12, 2019, the parties to Eichhorn-Burkhard submitted a stipulation regarding the case's inclusion in the MDL that included certain conditions and limitations. Defendants' unsurprising position as stated in the stipulation was that while the case satisfies the definition of a "tag-along" under JPML Rule 1.1(h) because it involves common issues of fact with the coordinated and consolidated actions, Defendants were not waiving their arguments that a class action of European consumers is not viable by stipulating to the case's inclusion in the MDL.
Upon reviewing the stipulation, the Court ordered counsel for the parties in Eichhorn-Burkhard, as well as Plaintiffs' Co-Lead Counsel in the MDL, to appear at a telephonic status conference on December 11, 2019, to address whether the case should be deemed included in the MDL and the parties' positions on the appropriate nature and extent of coordination and/or consolidation.
On December 10, 2019, the FDA published a warning letter to Hill's wherein it summarized findings from its investigation and inspections of Hill's manufacturing facility conducted in response to the voluntary recall. The warning letter states, in part, that Hill's "did not sufficiently assess the probability that a vitamin D toxicity or deficiency hazard will occur in the absence of a preventative control as required by 21 C.F.R. § 507.33(c)(1)."
In the meantime, lead MDL counsel were preparing for their next mediation session on December 17, 2019. During that mediation, counsel in the Schwegmann and Jubinville cases— again counsel who had sought and been denied roles within MDL Plaintiffs' leadership—filed a motion to establish a separate litigation track.
On January 8, 2020, Defendants and Plaintiffs' Co-Lead Counsel reported that they were continuing with settlement discussions in good faith and requested a continued stay of discovery, which the Court granted.
As the Court hopes is evident from the foregoing procedural history, this MDL had been proceeding remarkably smoothly until recently, with both sides committed to good-faith settlement negotiations from the beginning. From all outward appearances, Co-Lead Counsel for Plaintiffs and Lead Counsel for Defendants have been working together cordially and effectively in the hope of resolving this litigation in a just and efficient manner. The motion to establish a separate litigation track and the opposition of Eichhorn-Burkhard's counsel to the full inclusion of that case in the MDL have thrown a wrench into the proceedings to the point of impeding the progress of settlement negotiations. The Court will briefly address its reasoning for denying the motion for a separate litigation track and ordering that Eichhorn-Burkhard be coordinated and consolidated with the MDL for pretrial proceedings, with no separate appointment of lead counsel for either matter at this time.
Schwegmann and Jubinville counsel argue that:
Relying in large part on the comments of Mr. Kamber at the initial scheduling conference, they argue that Plaintiffs' Co-Lead Counsel have expressly disclaimed any representation of consumers who purchased non-recalled products. They point to Co-Lead Counsel's refusal to provide them with a draft of the proposed consolidated complaint, which they contend is limited to claims on behalf of purchasers of recalled products, and the lack of communication regarding whether their clients might be included in any settlement and whether any release might unfairly prejudice them. Schwegmann and Jubinville counsel argue that while mediation is progressing rapidly, putative class members who purchased non-recalled products "are drifting unrepresented."
Both Defendants and Plaintiffs' Co-Lead Counsel oppose the motion to establish a separate litigation track. Defendants counter that creating a separate track at this premature stage of the litigation—with separate counsel and a different pretrial schedule—would undermine the efficiencies of consolidation, waste the Court's and the parties' resources, and unnecessarily slow down these proceedings, including mediation efforts.
Plaintiffs' Co-Lead Counsel state that they remain committed to fully investigating and prosecuting the claims of all Plaintiffs in the MDL, and that they have been working cooperatively with other counsel outside the appointed leadership group to achieve that goal. They represent to the Court that their commitment extends to any viable claims by Plaintiffs who purchased non-recalled products, and that they are drafting causes of action on behalf of such Plaintiffs to be included in either the current draft consolidated complaint or in a separate consolidated complaint. Plaintiffs' Co-Lead Counsel state that if mediation is unsuccessful, they will file the consolidated complaint(s), and then work with Defendants to propose a schedule for resolving threshold legal issues and to sequence discovery on remaining claims to promote the efficient prosecution of the litigation.
Plaintiffs' Co-Lead Counsel also explain why the substance of settlement discussions— and the draft consolidated complaint shared with Defendants' Lead Counsel to facilitate those discussions—should remain confidential, even from other attorneys whose clients are plaintiffs in the MDL. Both sides participating in the settlement negotiations have signed a confidentiality agreement, which is consistent with best practices in MDL proceedings.
Plaintiffs' Co-Lead Counsel state that they have expressly informed Defendants that the draft consolidated complaint is intended to include claims relating to non-recalled products. They also state that much has happened to inform mediation discussions since the outset of this litigation, including the FDA's December 10, 2019 warning letter.
Plaintiffs' Co-Lead Counsel point out that at no time leading up to Court's decision on lead counsel selection did Schwegmann and Jubinville counsel argue that the types of clients they represent—which both then and now included purchasers of recalled and non-recalled products—require independent lead counsel. Rather, as set forth above, they represented to the Court precisely the opposite and advocated for early meditation, which is now taking place. Plaintiffs' Co-Lead Counsel assert that the movant's arguments consist of mischaracterizations and unfounded speculation as to the substance of ongoing, confidential mediation discussions, and that their motion is essentially an improper attempt to revisit the Court's Order Appointing Counsel.
To be sure, it is within this Court's discretion to establish separate discovery and/or motion tracks as necessary to manage groups of cases with different factual and legal issues.
Plaintiffs' Co-Lead Counsel have adequately ensured the Court that they remain best positioned to investigate and prosecute all viable claims on behalf of all Plaintiffs, and the movants' speculative claim that their clients are not represented at mediation is insufficient to persuade the Court otherwise. It would be premature to guess at whether any eventual settlement might include claims relating to non-recalled products and on what terms. If such claims are included, then Plaintiffs asserting those claims will have the opportunity to accept or reject the settlement; if such claims are not included, then they will remain a part of this MDL pending further developments. And of course, any class settlement would be subject to this Court's scrutiny for fairness.
It may be that the Court will need to revisit this issue based on future developments, consider the additional appointment of counsel to advocate for the fair allocation of any settlement fund, or utilize other pretrial management tools, potentially including remand, to address the concerns raised by the movants. At this stage of the litigation, it is not to the parties' or the Court's advantage to create a separate litigation track with separate counsel at the helm. Rather, establishing multiple litigation tracks with competing groups of lead Plaintiffs' counsel at this time would be more likely to create inconsistency, inefficiency, and unnecessary costs by confusing the channels of communication and opening the door to duplicative and/or conflicting litigation efforts, thereby frustrating the purpose of MDL treatment.
Pursuant to D. Kan. Rule 23-A, the Court must decide whether Eichhorn-Burkhard should be deemed included in the MDL for coordinated and consolidated pretrial proceedings in accordance with the rules governing centralization found in 28 U.S.C. § 1407(a). Section 1407(a) provides for the transfer of civil actions when the JPML determines that "transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions."
As with respect to the motion to establish a separate litigation track for non-recalled products, both Defendants and Plaintiffs' Co-Lead Counsel oppose the creation of a separate track and the appointment of separate counsel for claims brought by foreign purchasers. Both point out that the factual allegations in Eichhorn-Burkhard are essentially identical to those asserted in the MDL, i.e., damages resulting from the purchase of recalled products. In fact, the sole claim in Eichhorn-Burkhard arises under the Magnuson-Moss Warranty Act, which is also asserted in the majority of the MDL cases. Defendants and Plaintiffs' Co-Lead Counsel argue that there is no reason why this case should be treated differently or separately from others, and that doing so would undercut the efficiencies to be gained from MDL consolidation and undermine ongoing mediation efforts.
While Plaintiff Eichhorn-Burkhard's counsel does not refute that her case involves the same core facts and the same type of claim as other cases already consolidated in the MDL, counsel contends that separate treatment and counsel are necessary because Eichhorn-Burkhard involves "an entirely different putative class, namely, persons who purchased the subject products in the European Union and Germany,"
First, the Court fails to see how early briefing on certain threshold issues that may be unique to Eichhorn-Burkhard, such as whether the Magnuson-Moss Warranty Act applies extraterritorially, need happen now while early mediation is ongoing. Dispositive rulings on foreign plaintiffs' claims during settlement negotiations would seem to disadvantage rather than advantage these plaintiffs. Indeed, Plaintiff Eichhorn-Burkhard's counsel's arguments suggest that they are focused more on what would be fair to them as attorneys, rather than on what would most benefit Plaintiff. They argue:
This statement misunderstands the purpose of MDL consolidation, which is to create efficiencies in pretrial proceedings. The Court has ordered Plaintiffs' Co-Lead counsel to manage claims filed by many other attorneys, all of whom have an interest in representing their own clients; the Court remains confident in Co-Lead Counsel's ability to do so. Further, delaying a ruling on whether this case should be consolidated with the MDL pending the outcome of motion practice would only serve to further complicate ongoing mediation discussions. If mediation is not successful or does not dispose of the entirety of this MDL, Defendants will almost certainly seek the dismissal of certain claims or groups of claims on jurisdictional and other grounds, yet no other party has suggested that a separate track or separate plaintiffs' counsel are currently required on that basis.
Second, Plaintiff Eichhorn-Burkhard's counsel fail to demonstrate that the addition of a new geographic location is a barrier to consolidation or that foreign purchasers' claims are so separate, distinct, and conflicting as to require separate lead MDL counsel. Plaintiffs' Co-Lead Counsel have indicated their intent to include such claims—which are based on the same facts as the claims of all other MDL Plaintiffs—in the consolidated complaint when it is ultimately filed.
Finally, Plaintiff Eichhorn-Burkhard's counsel's speculation that there may be a limited fund available to compensate all plaintiffs is an insufficient basis for creating a separate litigation track for foreign purchasers. As Plaintiffs' Co-Lead Counsel point out, Eichhorn-Burkhard's counsel do not support that there is a limited fund available here or that Defendants are in financial difficulty. Plaintiffs' Co-Lead Counsel add that "it would be premature to assume that there might be a settlement someday in which a German plaintiff alleging Magnuson-Moss claims would be treated differently than a Kansan or California resident alleging [an] identical Magnuson-Moss claim."
Plaintiffs' Co-Lead Counsel advise the Court that questions about their authority to represent all Plaintiffs have negatively impacted ongoing mediation efforts. At this early but critical stage of the litigation, the Court is skeptical of attempts to splinter Plaintiffs' leadership, and Eichhorn-Burkhard will be deemed fully coordinated and consolidated in the MDL for pretrial proceedings. As set forth above, if distinctions develop down the road that require the appointment of sub-class counsel or the use of other pretrial management tools for settlement, motion practice, or otherwise, the Court can address those issues at the appropriate time. For now, Plaintiffs' Co-Lead Counsel remain well-positioned to direct the course of this litigation on behalf of all Plaintiffs and may delegate work responsibilities among all Plaintiffs' counsel as the various cases included in the MDL require.
In closing, the Court must unfortunately note that it is troubled by some of the tactics that have come to light through the briefing on the foregoing matters. In its Practice and Procedure Order, the Court stated that "cooperation among counsel is essential to resolving this litigation in an orderly and expeditious fashion."
While it is a client's prerogative to choose his or her own attorney, it is the transferee court's role to choose lead counsel for an MDL, and no plaintiff whose claims are made part of an MDL has a right to lead MDL counsel of his or her own choosing. Nor do attorneys have a right to lead a subset of MDL cases on the basis that they personally filed those cases or have invested more time and resources in them than appointed lead counsel. The Court reminds all counsel that while they of course must zealously represent their clients' interests, they are also to act with courtesy and professionalism at all times.