The Rezulin Case
Is It Wise For Massachusetts Lawyers To Take On Multidistrict Litigation?
By JEANNIE GREELEY
Medford attorney Robert J. Bonsignore knew back in 1998 that the time had come to wage battle against the makers of Rezulin, a drug used to treat Type II diabetes.
As a veteran pharmaceuticals litigator, he had been keeping a watchful eye on the drug since noticing that the financially troubled company was pushing hard for “fast track” FDA approval. Then, in late 1997, Rezulin was pulled from the shelves in England and Japan.
So when users began coming to him with signs of liver failure and heart problems, Bonsignore decided it was time to take the plunge.
And apparently his hunch was right.
Nationwide, Rezulin cases against pharmaceutical giant Warner-Lambert have snowballed into a mass tort that is still gaining momentum. More than 4,000 Rezulin suits have been filed across the country, including more than 100 class actions.
While some of these cases are just beginning to reach trial, the early results are promising for plaintiffs’ attorneys. Juries in Texas have delivered verdicts of $43 million and $25 million, while a jury in Oklahoma delivered an $11.5 million verdict. The company has won two defense verdicts so far — one in Maryland and the other in Texas.
But there is a twist to Rezulin litigation that will have a significant impact on Massachusetts lawyers who are trying to decide whether to take on these cases. In the summer of 2000, the mass tort was certified by a panel of federal judges as Multidistrict Litigation (MDL), a process in which all federal cases are grouped together for purposes of pretrial discovery and motions. To ensure continuity, the pretrial work is all handled by the same federal judge. The cases are then handed back to the individual attorneys for trial in the districts in which they were filed.
Bonsignore and fellow small-firm attorney Michael R. Hugo of Boston are now part of a nationwide team of attorneys who are leading the MDL. Both serve as members of the MDL’s discovery committee — a role that some view as the most important to the case. Hugo, for example, deposed the president of Warner Lambert and learned that the company feared a hostile takeover at the time they began marketing Rezulin — evidence that could provide a motive for getting a profitable drug on the market before its effects were thoroughly researched.
In spite of their involvement, both concede that MDLs can be a mixed blessing for plaintiffs’ lawyers.
On the positive side, the formation of an MDL gives plaintiffs’ firms more clout by forcing them to pool their finances and expertise. The MDL also allows local attorneys to benefit from the experience of some of the most successful mass tort litigators in the nation. And for those firms that don’t have dozens of partners to keep the cash flowing from other cases, handing the discovery process over to the MDL can allow small-firm lawyers to continue with their normal caseload until the pretrial work is completed.
But there are significant disadvantages as well. One of the biggest is that MDLs suck many cases out of the state courts and into the federal system, which is plagued by long delays. According to Bonsignore, this creates an advantage for defendants because the delays drive up the costs of the litigation, which places a disproportionate burden on smaller plaintiffs’ firms.
But cost isn’t the only concern among Massachusetts lawyers.
“Once you’re in the MDL, you lose control of the case,” says Boston plaintiffs’ attorney Douglas K. Sheff. “And that means that someone else’s mistake can hurt your client.”
For those who don’t like the group litigation process, keeping a case in state court can be an uphill battle. Diversity laws require most suits with parties in different states to be removed to the federal courts — and once in the federal system, the case automatically becomes part of the MDL.
According to Boston attorney Joseph B. Davis III, trying to keep a Rezulin case in the state courts is “like climbing Mount Everest in bare feet.”
But Hugo says the decision to get involved in the Rezulin MDL is an opportunity for a lawyer to propel his or her career forward.
“If you sit back and do nothing, nobody will ever know who you are,” he says. “It’s very easy to become a wallflower, and it’s very easy to become a force to be reckoned with.”
The Making of an MDL
Plaintiffs’ attorneys claim that Warner-Lambert knew about Rezulin’s serious side effects as early as the mid-1990s, but withheld this information from the FDA during the approval process.
As a result, the FDA approved the drug in January 1997, following a “fast track” approval process that took six months instead of the usual 14 months.
Just 10 months later, concerns about liver toxicity prompted the FDA to require the company to add new warnings to its Rezulin labels. It was the first of four label changes required during the three years the drug was on the market.
In March 2000, the FDA finally forced the company to withdraw Rezulin from the market. Since then, the FDA has estimated that 430 Rezulin patients have suffered liver failure, and linked the drug to at least 63 deaths. But plaintiffs’ attorneys estimate that “several hundred” deaths can be attributed to the drug.
Soon after the drug was pulled from the market, Bonsignore filed in Middlesex Superior Court what he claims was the second Rezulin suit filed in the country. He subsequently filed a class action suit in the same court, where he sought medical monitoring for Rezulin users whose symptoms were latent.
“People had roman candles going off in their livers,” says Bonsignore of a “slow burn” liver disorder resulting from Rezulin, which eventually led to total liver failure.
Both of those suits were eventually removed to federal court on motions by the defendant.
At the same time that Bonsignore filed his class-action suit, other class actions were being formed in several other states including Oregon, California and Texas.
With suits cropping up around the country, plaintiffs’ attorneys petitioned to transfer and consolidate the cases to one federal district court forum, per the Multidistrict Litigation statute (28 U.S.C. Sect. 1407(a)). The statute allows either party in the suit to request consolidation. If granted, a panel of federal judges assigns the consolidated cases to a single federal court judge who handles all pretrial motions, discovery and evidentiary hearings. The goal is to streamline the process for the courts and to avoid duplication for the attorneys.
Merits of an MDL
Some view consolidation of pretrial work as a boon for plaintiffs’ attorneys.
In addition to the pooling of financial resources, Hugo says the judge in an MDL will often allow for more thorough discovery and production of documents than is permitted in individual cases.
“The judge says ‘put up everything you got,’” says Hugo, who notes that the Rezulin discovery committee was able to retrieve documents the drug manufacturer had assumed were shredded. “That presents a much more ominous picture for a drug company like Warner Lambert.”
Attorneys in an MDL still pay for the depositions and related costs, but because so much of the information is shared, that only amounts to a handful of depositions compared to hundreds each attorney would have to conduct if they were going it alone.
“I’m able to do a humongous piece of litigation with three or four depositions,” Hugo says.
And there is a financial reward for the attorneys to devote their time to the group effort. Anyone who uses information developed through the joint discovery process is charged a 4 to 6 percent surcharge on the eventual verdict or settlement. That money is put into a pool called the “Common Benefit Fund,” which is then paid out to the lawyers who worked on the MDL. They are reimbursed for their expenses and paid an hourly rate for the time devoted to the case. If the MDL judge overestimates the percentage and there is money left over, it is apportioned to the Rezulin plaintiffs.
The cumulative legal expertise that makes up the MDL steering committee has helped level the playing field for plaintiffs, says Boston attorney Alex H. MacDonald, chairman of Robinson & Cole’s mass tort and complex litigation group.
“In the old days, mass torts were a David-and-Goliath battle,” he says, noting that drug manufacturers could basically overpower individuals or groups of plaintiffs with sheer size and resources. “It is no longer a David-and-Goliath battle. It is a Goliath-and- Goliath battle.”
The Rezulin MDL team, for example, includes such renowned plaintiffs’ attorneys as lead counsel Charles A. Mathis Jr. of Atlanta, Mark Robinson of California, Michael Papantonio of Florida, Arnold Levin of Philadelphia and the firm of Lieff-Cabraiser, which acts as liaison counsel.
The consolidation of cases in an MDL also increases the chances of a favorable settlement for plaintiffs, because it gives defendant companies an opportunity to dispatch thousands of cases in one fell swoop — a strategic move that can increase the company’s credibility in the eyes of shareholders.
“MDLs, by their nature, [provide an incentive for] both the plaintiffs’ bar and the defense bar to ultimately negotiate a global settlement,” says MacDonald, whose Fen-phen diet-drug suit resulted in a global settlement of $4 billion. “This sometimes can be really quite brilliant, efficient and judicious.”But Warner-Lambert, which has since been acquired by Pfizer, has only awarded a handful of settlements to date, most of which came after a verdict had already been reached.
Drawbacks of Multidistrict Litigation
While some attorneys see the MDL statute as promoting efficiency in the pretrial phase, others see it as a defense ploy to remove state cases to a federal forum.
“The best strategy for the defense is the strategy of delay,” says Sheff.
He says the delays in federal courts help defendants drive up costs and pressure cash-strapped plaintiffs to settle for less than the case is worth.
According to Bonsignore, delays also allow defendants to keep their money longer and finance the eventual settlements through the accumulated interest.
“At the end of the day they’re still going to have made $2 billion [from Rezulin], paid their claims and paid back their marketing costs,” he says.
Bonsignore argues that these delays mean some plaintiffs won’t live to see the outcome of their cases, like his terminally ill client who is giving depositions by videotape from his bedside
.For lawyers who have already filed their cases in federal courts, the formation of an MDL means a loss of control, since all similar federal suits automatically become part of the consolidated discovery process.
This is one of the reasons some Massachusetts attorneys have hesitated to take on Rezulin cases. Although Sheff has reviewed several Rezulin cases in the state, he is reluctant to file out of fear of being forced into the MDL, where he says attorneys can lose their independence and risk getting poor results for their clients.
MacDonald says the increased prospect of a global settlement can also be a downside for some plaintiffs’ attorneys.
“Few cases in the MDL will end up the subject of an actual trial,” he says. “It can happen, but it is rare … If you are like me — a lawyer who likes to try cases — the state forum becomes a preferable one.”
MacDonald speaks from experience, having served on the discovery committee in the Fen-phen MDL after filing in Middlesex Superior Court the nation’s first wrongful death suit against the diet drug manufacturer.
Attorneys also say MDLs can be cumbersome because each suit must go through the complete discovery and deposition phase of the MDL, even if much of that information is irrelevant to the individual case.
“The problem arises out of the fact that in any particular case, a practitioner who originated the case might require only a few documents to be looked at or certain witnesses … to be deposed,” says MacDonald, “and yet the MDL has to look at it all.”
And the MDL lawyers will devote most of their attention to the common elements of the consolidated cases.
“If there’s anything novel about your case … it’s going to be a long time before you get any real attention to your case,” says Davis.
There is also the issue of cost, which can work both ways depending on how involved you want to be in the MDL itself.
Lawyers whose cases are part of the MDL — or who use any information developed by the MDL — are required to pay 4 to 6 percent of their eventual verdict or settlement back to the MDL. Some attorneys will see this as an exorbitant fee while others will see it as a bargain.
For small-firm attorneys who can’t afford to drop everything for six months to conduct discovery in a mass tort, it may be a small price to pay to be able to continue working on income-producing cases. Others may feel they are paying for wide-ranging discovery that may not have any application to their particular case.
“Their work can be useless to you, and you have to pay for it,” says Sheff.
For attorneys who decide to take an active role in the MDL, there is the added cost and time demands of traveling for far-flung depositions and meetings with fellow steering committee members.
For example, Bonsignore recalls one tedious week of depositions in which he had to drive from Connecticut to Maine and then to New York. When he finally arrived, exhausted, in New York, he had to buy a new suit and change in his car in the parking garage.
State vs. Federal
One challenge that is inherent to all MDLs is that they are held in a federal forum as opposed to a state court.
Some lawyers might prefer a state court forum because they are more familiar with the rules, know the judges, believe the judges regard them as having integrity and believe they will have a bit of an advantage playing to a local jury.
And plaintiffs’ attorneys have historically viewed federal court judges as conservative in their decisions, having institutional biases that result from prior careers at large law firms, and overseeing federal court processes that are more demanding on plaintiffs’ attorneys in terms of timeframes and the presentation of documents.
“Federal rules are much more stringent upon plaintiffs’ lawyers, in my opinion, than they are on the defense,” says Sheff.
For example, federal court rules require that plaintiffs’ attorneys present a history of any prior testimony of an expert witness, including any depositions they may have taken part in. While defendants are required to do the same, the plaintiffs bear the burden of proof and suffer if they choose only to have a small number of expert witnesses testify on their behalf.
In light of these factors, plaintiffs’ attorneys, including Bonsignore, are trying to keep some of their cases out of the federal forum — a task that is proving to be a difficult one.
Diversity laws demand that any suit with opposing parties from different jurisdictions be removed to a common federal jurisdiction. Since Warner-Lambert is based in New Jersey, the company has a strong diversity argument for moving Massachusetts cases into federal court.
One way local attorneys are trying to thwart these efforts is to name a local party to the Rezulin suit. Bonsignore is awaiting a decision on a motion to remand one of his Rezulin cases from the U.S District Court of Massachusetts to the Middlesex Superior Court. That wrongful death suit, Boriakoff, et al., v. Parke-Davis, et al., names doctors who practice in the state as primary defendants, and also asserts that Warner-Lambert is registered to do business in the commonwealth.
“Why is it going to a federal court if I am suing a doctor in the same state?” Bonsignore asks.
But as plaintiffs’ attorneys scramble to find local parties for their suits — sometimes pharmacies and distributors — the defense counters with an argument of fraudulent joinder, claiming the local party’s connection to the suit is not strong enough to name them as a defendant.
However, Sheff believes there may be a way to circumvent this argument, and he cites state caselaw to support his argument. Earlier this year, in Cottam v. CVS Pharmacy, the Supreme Judicial Court decided that there is no general duty of a pharmacy to warn customers of potential side effects of prescription drugs. But, if the pharmacy provides a list of potential side effects to customers and warns them in part, they have assumed a duty to warn the customer in whole, according to Sheff.
He claims plaintiffs’ attorneys can use this case to support their attempts to keep Rezulin suits in Massachusetts by naming a local pharmacy.
Another strategy, according to Sheff, is to join forces with an attorney from a state where the drug manufacturer has stronger ties — such as New Jersey for Rezulin cases — or even to file suit in a state such as Mississippi, which is known for its permissive joinder rules.
While Sheff concedes that these tactics might not be the most attractive alternatives for Massachusetts attorneys, he says you must weigh the benefits against the possibility of having your case removed to federal court.
“What’s most important to me is what’s best for the client,” he says. “I would rather send the case elsewhere or work on the case to my inconvenience” than risk having the Rezulin case removed to the MDL and a federal forum.
Specific Massachusetts laws that are more conducive to state filings for Rezulin cases include 93A consumer protection laws, which allow for multiple damages and claims of breach of warranty, according to attorneys. Also, state cases accrue 12 percent interest rates from the date of filing. In some other states, cases don’t earn interest until the date of judgment.
Deciding Whether to Take on a Mass Tort
Many of the challenges of an MDL are those that plague any mass tort.
While the potential financial rewards are significant (a few MDLs recently concluded with multi-billion-dollar settlements), the risks are enormous.
Imagine devoting 20 to 100 percent of your time to a case on a contingency basis and having it go up in smoke.
“It’s high volume, time-consuming and risky,” says Bonsignore.
He estimates he has spent about $200,000 working on the Rezulin litigation so far. While he hopes his efforts will pay off, that hasn’t always been the case.
For example, he put considerable work into screening cases that involved Propulsid, a heartburn drug that was eventually pulled off the market when it was linked to fatal heart disease. But after screening about 400 potential Propulsid clients, none of them proved worthy of filing. The venture cost him about $100,000, which he claims is a “conservative estimate.”
Another hurdle that is common to mass torts is the “scorched earth” defense tactics that plaintiffs’ attorneys say large corporations typically engage in when faced with a large number of similar cases.
But both Bonsignore and Hugo say they plan to fight Warner Lambert on a case-by-case basis after the MDL discovery is completed, rather than working for a mass settlement.
“I want verdicts,” says Hugo. “These are great cases. You spend 10 minutes with these documents, and your head spins. Every once in a while you grab a golden goose, and we’ve got a golden goose here.”
