Xarelto Proposed Settlement
The death MDL settlements as we know and love them?
Foreword: Non leadership firms representing Xarelto plaintiffs facing potential dismissal from orders issued related to the proposed Xarelto settlement might find this article very beneficial.
Although it is still doubtful that the proposed Xarelto settlement will consummate, it appears that Judge Fallon is set to dismiss individual cases for failure to comply with orders arising from the proposed settlement. Such dismissals would arguably be ripe for appeal.
Spoiler Alert: MDL Judges arguably Lack Subject Matter Jurisdiction to issue orders arising from MDL settlements. Any case dismissed for failure to comply with an order issued absent jurisdiction over the subject matter giving rise to the order, would also be a juridical act undertaken without proper jurisdiction. Parties can not wave Subject Matter Jurisdiction, by act nor agreement. There is no time limit to file an appeal related to an order issued in the absence of jurisdiction over the Subject Matter. Orders issued lacking subject matter jurisdiction are null from the onset and void on their face. Res Judicata does not apply to orders issued in want of jurisdiction over the subject matter. See Citations of Relevant Law at the end of this article).
The Road to Hell and Good Intentions
Certain well intended MDL Judges, including Judge Eldon Fallon have subscribed to the theory that “MDLs are Quasi Class Actions” and despite the fact the USC 1407 provides MDL judges with no jurisdiction to participate in MDL settlements, MDL judges could none the less exercised the powers of their court and involved themselves in MDL settlements, reasoning that MDLs are merely Quasi Class Actions. MDL judges ascribing to the “MDLs as Quasi Class Actions” theory have reasoned intra alia that Federal Judges have jurisdiction over Class Action Settlements and therefore Federal Judges presiding over MDLs (Quasi Class Actions by their reasoning) have the same jurisdiction as a Federal Judge Presiding over a Class Action, so long as they comply with the requirements of FRCP 23, in particular the requirements of FRCP 23(e) .
MDL Judges willing to arguably overstep their jurisdiction and exercise the power of their courts in MDL settlements, have justified doing so by simultaneously complying with duties imposed under FRCP 23(e).
FRCP 23(e) requires Federal Judges presiding over Class Actions to conduct fairness hearings and approve any Class Settlement. These fairness hearings are intended in part to provide class action “absent plaintiff parties” protection from would be unscrupulous self-dealing lead class counsel.
Xarelto Settlement Where Activism turned to Tyranny
Prior to the Xarelto Settlement, all MDL judges who have inserted themselves into MDL settlements have complied with FRCP 23(e) by conducting fairness hearings to allow parties not represented by plaintiffs leadership a voice before imposing any order related to the settlement that might negatively impact any absent plaintiffs case. Judge Fallon conducted extensive fairness hearings in the settlement of the Vioxx litigation. For reasons unknown to the author, Judge Fallon apparently does not view Xarelto plaintiffs as being deserving of the same protections provided Vioxx plaintiffs.
Although Quasi Class Actions do not actually exist, (MDLs are not Quasi Class Actions) and MDL judges arguably have no jurisdiction to involve themselves in MDL settlements, the Judicial Activism undertaken by Quasi Class Actions MDL judges has arguably been beneficial to defendants as well as plaintiffs desiring efficient mass settlement. Neither defendants nor plaintiffs have complained in the past however, Judge Fallon’s failure to conduct fairness hearings related to the proposed Xarelto Settlement may result in an end to the long running gravy train of MDL settlements achieved by activist MDL Judges willing to overstep their jurisdiction to assist parties in effectuating settlement.
In addition to failing to conduct fairness hearings related to the proposed Xarelto settlement, Judge Fallon also appears to be set to dismiss individual plaintiffs’ cases for failure to comply with orders arising from the settlement. These orders were arguably issued absent jurisdiction over the subject matter. Any future order arising from the settlement orders, including an order dismissing a case for failing to comply with the settlement related orders, would also be issued without jurisdiction over the subject matter.
Appeals arising from the forgoing, may result in the creation of case law that puts an end to MDL judges inserting themselves into MDL settlements, making reaching mass settlement in MDLs a far more difficult task.
It should be noted I (John Ray) hold Judge Fallon in high esteem. I believe Judge Fallon is wise and fair minded. Despite the foregoing, even wise and fair-minded Judges can err. I do not view Judge Fallon as a tyrant in general however, acts of tyranny are acts of tyranny, without regard to the general character of those that commit the acts.
MDL Judges presiding over Class Actions (FRCP 23) not only have jurisdiction over settlement, Judges presiding over Class Actions have a duty to insure than any proposed settlement is fair to all parties including “absent” parties. FRCP 23(e) Requires Judges presiding over Class Actions to conduct fairness hearings, and rule on the fairness of a class action settlement.
Rule 23(e) is the only safeguard provided to absent class members under Rule 23, protecting these vulnerable parties from self-dealing class action lead counsel that might be inclined to act to the common detriment of absent class members vs the common benefit of those absent parties.
Conversely USC 1407, passed by Congress in 1968, formerly codifying Multidistrict Litigation as a means by which very Federal Jurisdiction can be imposed, provided no jurisdiction for MDL judges to oversee, assist in, issue orders related to or arising from, mass settlement. Additionally, USC 1407, having extended no “settlement jurisdiction” to MDL judges also provided no protection from would be self-dealing lead counsel in MDLs that might act to the common detriment of absent plaintiffs (those not represented by leadership firms).
How Can This Be?
Common Misconception: MDL Judges Have Jurisdiction of the Subject Matter as Well as Personal Jurisdiction to oversee or enter orders to assist mass settlement.
Jurisdiction over the Subject Matter: Arguably does not exist!
Personal Jurisdiction: Arguably does not exist, except for cases that arose in the MDL Courts home State and then only if that court would otherwise have jurisdiction.
Wait a Second!
Wait a Second – MDL Judges frequently involve themselves in MDL mass settlements, how do they justify acting in excess of their Jurisdiction? How could the question of these judges jurisdiction over MDL settlement remained unresolved?
No party to an MDL to date, has been so aggrieved by an MDL Judges overreach on settlement to force higher courts to deal with the issues. The Xarelto settlement is likely to change the foregoing.
The Birth of MDLs as Quasi Class Actions
Judge Jack B. Weinstein, presiding over the Zyprexa Litigation (MDL 1596), was the first MDL Judge (that we are aware of) to presume jurisdiction over settlement matters in Multidistrict Litigation under the “MDLs as Quasi Class Actions“ theory.
Weinstein reasoned that MDLs are “Quasi Class Actions” and cited (inter alia), his inherent authority under the “All Writs Act 28 U.S.C 1651” as providing him “inherent authority” over MDL settlements.
Judge Eldon Fallon, while presiding over the Vioxx Litigation, llowing Judge Weinstein’s Quasi Class Actions theory exerted his self-claimed inherent authority to wade into settlement of that litigation. Other MDL Judges (but not all) have also subscribed to Judge Weinstein’s “MDLs as Quasi Class Actions” theory.
Judge Eldon Fallon in Vioxx, as well as other “MDLs as Quasi Class Action Judges” have reasoned that their involvement in MDL settlements is equitable, so long as the provisions of FRCP 23(e), are observed. FRCP 23(e) is intended to provide protection from would be self-dealing lead Class Counsel. FRCP 23(e) obligates Federal Judges overseeing Class Actions to conduct fairness hearings (giving absent class members a chance to be heard) as well as rule on the fairness of any propose class settlement prior to approving the settlement and issuing any order related to the settlement that might negatively impact any individual plaintiff.
Judge Fallon in Vioxx as well as other “Quasi Class Action MDL judges” prior to the current Xarelto settlement have in fact held fairness hearings per FRCP 23(e) in all MDL mass settlements in which the court has involved itself via settlement related orders or other oversight.
Judge Fallon did not conduct fairness hearings before issuing orders related to the Xarelto settlement.
These “fairness hearings” are intended (according to “Quasi Class Action MDL judges”) to provide extend the protections provided absent parties in Class Action to absent parties in MDLs. In the MDL context “absent parties” would be all plaintiffs not represented by plaintiff’s leadership (retained by the leadership firms)
Why Do Xarelto Plaintiffs deserve Less Judicial protection than Vioxx Plaintiffs?
Only Judge Fallon could explain why he neglected to follow his own past reasoning (the requirement to conduct fairness hearings) and denied absent Xarelto Plaintiffs the same rights and protections as Vioxx plaintiffs.
Although the proposed Xarelto settlement is repeatedly referred to as a “Private Settlement” (extra udicial) reach by the parties, the label is inaccurate. The settlement was reached after negotiations between defense counsel and plaintiffs’ leadership. Plaintiffs leadership is not a party, nor do they represent any party (plaintiff) other than those retained by their respective firms.
Furthermore, the proposed Xarelto “Private Settlement” ceased to be Private (extrajudicial) the minute the “parties” crossed the threshold of the court seeking an order related to the settlement.
If the courts excuse for not conducting fairness hearings is “because this is a private settlement”, that dog simply won’t hunt.
Any contention that the court is acting under authority agreed to by the parties also fails. Plaintiff Leadership nor Defense Counsel all the “parties”. Plaintiff lead counsel can enter agreements binding on the clients retained by their firms (those parties) however, leadership does not represent all “parties” and therefore cannot stipulate to jurisdiction on behalf clients they do not represent. Additionally, issues related to subjected matter jurisdiction cannot be waived by stipulation or agreement by the parties.
Jurisdiction Under the “All Writs Act”?
[A]ll courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a).
In should be noted that Judge Weinstein, Judge Fallon and “Quasi Class Action MDL Judges” never appear to claim to have actual jurisdiction over MDL settlements, they instead cite their inherent authority, which would arise under the “All Writs Act”:
“All courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a).”
The All Writs Act however, only provides “inherent authority” over subject matter for which the given Federal Court otherwise has jurisdiction. Absent Jurisdiction over the Subject Matter of MDL settlement, MDL Judges have no inherent authority arising under 28 U.S.C. § 1651 related to the same subject matter (MDL settlements).
Judicial Activism Morphing into Tyranny
Judge Fallon, as well as other MDL judges who subscribe to the quasi-class action theory within the restraints of FRCP 23(e), have in the past been potentially guilty of well-intended judicial activism even when judicial acts arising from that activism may have strayed beyond their jurisdiction.
The inherent problem always accompanying judicial activism is the risk of activism turning into tyranny.
Xarelto Plaintiffs aggrieved by the proposed settlement, with no forum in which to voice their grievances, while plaintiff leadership arguably acting to their common detriment and a court turning a deaf ear to their plight, might justifiably feel they are victims of judicial tyranny.
Many Judicial Scholars have expressed concern over the possible negative consequences of judicial activism. Many of the concerns expressed by these judicial scholars have now been realized in the proposed Xarelto Settlement.
The Author would argue that Judge Fallon’s failure to conduct fairness hearings, while issuing orders related to the Xarelto settlement, that may negatively impact individual plaintiffs, crossed the line from judicial activism to judicial tyranny.
Don’t Take My Word for It
Due to the fact several members of Xarelto leadership directly threatening me and attempting to lead attorneys representing absent Xarelto plaintiffs (non-leadership) firms, to believe they are somehow at risk of ethical violations if they take the opinions of a non-lawyer (me) into consideration, I will provide the several links below to scholarly papers and articles written by judicial scholars who are actually attorneys. Draw your own conclusions.
Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation
Elizabeth Chamblee Burch
About Professor Burch: http://www.law.uga.edu/profile/elizabeth-chamblee-burch
Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation is available for purchase on Amazon. Professor Burch has been conducing research related to MDL settlements for many years. Her most recent work “Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation” is an eye opening read even for those that believe they are already familiar with all of the “dirty little lies and secrets” of mass torts.
Other work by Professor Burch includes “Monopolies in Mass Torts”
You can obtain a copy of Monopolies in Mass Torts free at the link above. This paper is somewhat of a prequel to Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation. If you read the prequel you will want to buy the book.
DUBIOUS DOCTRINES: THE QUASI-CLASS ACTION by Linda Mullenix
Note: This article written by Linda Mullenix in 2012 is as apt today as the day it was written.
About Professor Mullenix: https://law.utexas.edu/faculty/linda-s-mullenix
In the past few years, the term ―quasi-class action has been appearing with increasing, uncritical frequency in a spate of federal court decisions. While it may be premature to characterize these sporadic references as a trend, it is perhaps soon enough to call attention to the misuse of loose labels that carry with them significant consequences. Before the quasi-class action gains any further traction, there are several valid reasons for definitively quashing this quasi
Before the inspired fabrication of the quasi-class action, global agreements accomplished under MDL auspices had to be settled pursuant to formal class requirements and due process protections. By engrafting the label quasi-class action onto MDL procedure, self-interested actors have created a perfect staging ground for negotiating back-room deals that carry a false aura of judicial legitimacy, liberated from the constraints of the formal class action rule.
MDL judges, in turn, by endorsing the concept of the quasi-class action have greatly expanded the scope of their authority and have become complicit in allowing private parties to accomplish the very backdoor settlements that the Supreme Court and federal courts have disallowed for decades. The quasi-class action, then, represents an ultimate, cynical expression of an aggregate claims-resolution model that enables self-interested actors to resolve claims in the actors‘ best interests rather than the interests of injured claimants.
At first blush, the sheer frequency of federal use of the term quasi-class action would seem to suggest that the quasi-class action is a well-recognized and well-established doctrine in federal jurisprudence. Since 1946, sixty-eight federal cases have cited the label. However, careful reading of this case law suggests an entirely different conclusion: the quasi-class action is a phantasm. None of these cases actually discussed the concept of the quasi-class action, and rarely-cited authority is inapposite or inaccurate.
Important Case Law
Although SCOTUS has yet to address the question : Does and MDL Judge (like a Class Action Judge) have jurisdiction over settlement, as the question has yet to be presented to SCOTUS, the high court has ruled on other questions in a manner which may be of value to any firm representing a plaintiff in the Xarelto litigation if said plaintiff case is dismissed or otherwise prejudiced by any of the orders related to or arising from the prosed Xarelto Settlement.
Lexecon v Milberg (Scotus)
Note: Lexecon did not directly address the question of an MDL Judges jurisdiction over MDL settlement however, SCOTUS made it clear that USC 1407 does not extend an MDL judges jurisdiction beyond the exact language codified by Congress in 1407.
Federal Judges have broad discretion over many matters however, Federal Judges have no discretion in any matter (subject matter nor personal) beyond the specific grant of jurisdiction by Congress under which the court acts.
May a federal district court conducting “pretrial proceedings” under 28 USC section 1407(a) invoke section 1404(a) to assign a transferred case to itself for trial?
No. In an opinion delivered by Justice David H. Souter, the Court held that a district court conducting pretrial proceedings pursuant to section 1407(a) has no authority to invoke section 1404(a) to assign a transferred case to itself for trial. The Court noted that the Panel’s section 1407(a) instructions are crouched in the word “shall,” which “creates an obligation impervious to judicial discretion.” Justice Souter wrote for the Court that, “the straightforward language imposing the Panel’s responsibility to remand… bars recognizing any self-assignment power in a transferee court.” The opinion was unanimous except insofar as Justice Antonin Scalia did not join Part II-C.
Lexecon Inc. was a defendant in a class action lawsuit. Under 28 USC section 1407(a), the lawsuit was transferred for pretrial proceedings to the District of Arizona. Section 1407(a) authorizes the Judicial Panel on Multidistrict Litigation to transfer civil actions with common issues of fact “to any district for coordinated or consolidated pretrial proceedings,” but provides that the Panel “shall” remand any such action to the original district “at or before the conclusion of such pretrial proceedings.” After claims against it were dismissed, Lexecon brought suit against Milberg Weiss Bershad Hynes & Lerach and others (Milberg) in the class action lawsuit in the Northern District of Illinois. Ultimately, the Panel, under section 1407(a), ordered the case transferred to the District of Arizona. Afterwards, Lexecon moved for the Arizona District Court to remand the case to Illinois. Milberg filed a countermotion requesting the Arizona District Court to invoke section 1404(a) to “transfer” the case to itself for trial. Ultimately, the court assigned the case to itself and the Court of Appeals affirmed its judgment.
AMCHEM PRODUCTS, INC., et al., PETITIONERS v. GEORGE WINDSOR et al.
Note: AMCHEM arose from the asbestos litigation, the ruling addressed attempts to settle cases filed in MDLs as well as cases filed in Class Actions. SCOTUS did not address the question of MDL Courts jurisdiction (nor lack thereof) over MDL settlement as this issue was not raised. SCOTUS ruling in AMCHEM did however make it clear that any mass tort judge, whether presiding over an MDL or a Class Action, has a duty to protect the interest of “absent plaintiffs”.
Excepts from AMCHEM
This case concerns the legitimacy under Rule 23 of the Federal Rules of Civil Procedure of a class action certification sought to achieve global settlement of current and future asbestos related claims. The class proposed for certification potentially encompasses hundreds of thousands, perhaps millions, of individuals tie d together by this commonality: each was, or some day may be, adversely affected by past exposure to asbestos products manufactured by one or more of 20 companies. Those companies, defendants in the lower courts, are petitioners here.
Rule 23(e), on settlement of class actions, reads in its entirety: “A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.” This prescription was designed to function as an additional requirement, not a superseding direction, for the “class action” to which Rule 23(e) refers is one qualified for certification under Rule 23(a) and (b). Cf. Eisen, 417 U. S., at 176-177 (adequate representation does not eliminate additional requirement to provide notice). Subdivisions (a) and (b) focus court attention on whether a proposed class has sufficient unity so that absent members can fairly be bound by decisions of class representatives. That dominant concern persists when settlement, rather than trial, is proposed.
The settling parties, in sum, achieved a global compromise with no structural assurance of fair and adequate representation for the diverse groups and individuals affected. Although the named parties alleged a range of complaints, each served generally as representative for the whole, not for a separate constituency. In another asbestos class action, the Second Circuit spoke precisely to this point:
[W]here differences among members of a class are such that subclasses must be established, we know of no authority that permits a court to approve a settlement without creating subclasses on the basis of consents by members of a unitary class, some of whom happen to be members of the distinct subgroups. The class representatives may well have thought that the Settlement serves the aggregate interests of the entire class. But the adversity among subgroups requires that the members of each subgroup cannot be bound to a settlement except by consents given by those who understand that their role is to represent solely the members of their respective subgroups.” In re Joint Eastern and Southern Dist. Asbestos Litigation, 982 F. 2d 721, 742-743 (CA2 1992), modified on reh’g sub nom. Inre Findley, 993 F. 2d 7 (CA2 1993).
The Third Circuit found no assurance here–either in the terms of the settlement or in the structure of the negotiations–that the named plaintiffs operated under a proper understanding of their representational responsibilities. See 83 F. 3d, at 630-631. That assessment, we conclude, is on the mark.
The argument is sensibly made that a nationwide administrative claims processing regime would provide the most secure, fair, and efficient means of compensating victims of asbestos exposure. Congress, however, has not adopted such a solution. And Rule 23, which must be interpreted with fidelity to the Rules Enabling Act and applied with the interests of absent class members in close view, cannot carry the large load CCR, class counsel, and the District Court heaped upon it.
Subject Matter Jurisdiction Case Law
Note: There are literally thousands of appellate rulings related to Lower Courts (Federal) issuing judgments and orders in excess of their jurisdiction. The citations below are merely examples of the vast number of rulings on the subject.
Void judgment is one entered by court that lacks the inherent power to make or enter the particular order involved, and it may be attacked at any time, either directly or collaterally; such a judgment would be a nullity, People v. Rolland 581 N.E.2d 907, Ill.App. 4 Dist. 1991)..
Invalidity need to appear on face of judgment alone that judgment or order may be said to be intrinsically void or void on its face, if lack of jurisdiction appears from the record, Crockett Oil Co. v. Effie, 374 S.W.2d 154 (Mo.App. 1964).
Note: MDL Court Judges imposing themselves into MDL settlements never seem to actually claim to have jurisdiction in the record, instead they claim to have “inherent authority”. No authority exists absent jurisdiction.
Decision is void on the face of the judgment roll when from four comers of that roll, it may be determined that at least one of three elements of jurisdiction was absent: (1) jurisdiction over parties, (2) jurisdiction over subject matter, or (3) jurisdictional power to pronounce particular judgment that was rendered, B & C Investments, Inc. v. F & M Nat. Bank & Trust, 903 P.2d 339 (Okla. App. Div. 3, 1995).
A void judgment which includes judgment entered by a court which lacks jurisdiction over the parties or the subject matter, or lacks inherent Power to enter the particular judgment. or an order procured by fraud,can be attacked at any time, in any court, either directly or collaterally, provided that the party is properly before the court. Long v. Shorebank Development Corp., 182 F.3d 548 ( C.A. 7 Ill. 1999).
A void judgment is one which from its inception was a complete nullity and without legal effect, Lubben v. Selective Service System Local Bd. No. 2 7, 453 F.2d 645, 14 A.L.R. Fed. 298 (C.A. 1 Mass. 1972).
A void judgement is one which from its inception and forever continues to be absolutely null. without legal efficacy, ineffectual to bind the parties or to support a right, of no legal force and effect whatever, and incapable of enforcement in any manner or to any degree – Loyd v. Director, Dept. of Public Safety, 480 So. 2d 577 (Ala. Civ. App. 1985).
A judgment shown by evidence to be invalid for want of jurisdiction is a void judgment or at all events has all attributes of a void judgment, City of Los Angeles v. Morgan, 234 P.2d 319 (CaLApp. 2 Dist. 1491).
Res judicata consequences will not be applied to a void judgment which is one which from its inception is a complete nullity and without legal effect, Allcock v. Allcock 437 N.E. 2d 392 (Ill. App. 3 Dist. 1982).
Void judgment is one which has no legal force or effect whatever, it is an absolute nullity, its invalidity may be asserted by any person whose rights are affected at any time and at any place and it need not be attacked directly but may be attacked collaterally whenever and wherever it is interposed, City of Lufkin v. McVicker, 510 S.W. 2d 141 (Tex. Civ. App. – Beaumont 1973 1991)..
Disclaimer: The author of this article, John Ray, is not a lawyer. Nothing in this article should be taken as legal advice. The opinions expressed in this article are the opinions of the author. Publication of this article by any third party should not be considered an endorsement of nor agreement with the opinions expressed by the author.