Ever wonder how many lawyers can fit into one courtroom? Judge Catherine Perry of the U.S. District Court of the Eastern District of Missouri just may find out. On July 14, Judge Perry granted a motion to certify a class made up of lawyers in Downing v. Goldman Phipps PLLC.[1] Although plaintiffs have not made clear exactly how many lawyers will be in the class, they argued in their class certification briefing that there are more than 33 law firms and over 100 lawyers in the potential class.
What started it all, you ask? It is pretty simple: rice and money. In July 2006, it was discovered that genetically modified rice developed by Bayer CropScience LP (Bayer) had been introduced into the U.S. domestic supply of rice. Bayer’s rice had yet to be approved for human consumption, prompting several countries to ban the import of U.S. rice, which then caused the price of U.S. rice to plummet. In August 2006, thousands of rice farmers, and others involved in the rice business, filed numerous law suits against Bayer in federal and state courts seeking to recover for lost profits. All of the federal cases were consolidated in the Eastern District of Missouri as a multi-district litigation (MDL) (which was also before Judge Perry),[2] but many of the state cases remained separate. Because all of the cases shared a common fact pattern – the introduction of Bayer’s rice into the U.S. rice supply and subsequent drop in price – to avoid duplication of efforts, the court appointed a leadership group of attorneys to manage pretrial proceedings on behalf of all MDL plaintiffs. Such work included, among other things, managing discovery, taking and defending 167 depositions, and drafting and responding to dispositive motions. This work was performed on behalf of all plaintiffs, not just those represented by the attorneys performing the work, and plaintiffs in state court were allowed access to the work as well. In order to make sure everyone played nice, and the attorneys performing such work on behalf of all plaintiffs were compensated, the court ordered plaintiffs to establish a common-benefit trust fund (CBF Trust). The court required that a certain percentage of all money recovered by any plaintiff in any federal case be contributed to the CBF Trust, but did not (and could not for jurisdictional reasons) require contributions be made to the Trust from money recovered in state cases, which were not consolidated with the federal cases.
Eventually, after a few individual cases settled and a few more went to trial and were won by plaintiffs, all remaining plaintiffs (both state and federal) entered into a $750 million settlement with Bayer, some of which was paid into the CBF Trust. After the resolution of all cases, Judge Perry granted motions seeking up to $72 million in attorneys’ fees to be paid from the CBF Trust for the common-benefit work. The problem, however, was that the Trust had only obtained approximately $56.5 million from the monies recovered – leaving over a $15 million shortfall.
This shortfall in funds can be attributed, in part, to the fact that not all state plaintiffs contributed to the Trust. Some of the plaintiffs and their counsel in the rice MDL and related state actions had objected to the creation of the CBF Trust and refused to contribute money from any recovery obtained from cases brought in state court, despite having used and benefited from the work done by others in the MDL (such as use of witness deposition transcripts and discovery material). Essentially, these plaintiffs and their counsel tried to have their cake and eat it too. So, the other Bayer plaintiffs sued them for unjust enrichment, and the current class action was born. Former plaintiffs’ counsel/now defendants must face off against a class of lawyers seeking to force defendants to play nice and pay their fair share to the CBF Trust. With as much as $15 million at stake, the class has motivation to see this case to its resolution. The moral of this story just may be: Hell hath no fury like former co-counsel scorned.
