Private Law Theory

ABSTRACT
MDL judges routinely require individually-retained plaintiffs’ attorneys (IRPAs) to pay court-appointed lead attorneys enormous sums – hundreds of millions of dollars in the largest proceedings – even though the former neither hire the latter nor agree to pay them anything. Wanting to establish the legality of forced fee transfers, judges argue that without them IRPAs would free ride on lead attorneys’ efforts and be unjustly enriched.

Although MDL judges regard the unjust enrichment theory as settled law, the Supreme Court has never considered it. The theory is also doctrinally incoherent and lacking in scholarly support. Both academic writings and the Restatement (Third) of Restitution and Unjust Enrichment support the practice of granting fee awards from common funds in class actions, but neither justifies coercive fee transfers in MDLs.

This article shows that the unjust enrichment theory does not warrant common benefit fee awards in MDLs. The analysis is mainly doctrinal. Part II sets out the elements of the common fund doctrine. Part III shows that neither the doctrine nor the general imperative to do equity it is said to embody supports forced fee transfers in MDLs. Part IV focuses on hybrid MDLs – which begin as consolidations of separate lawsuits but settle as class actions – and shows that the procedural change leaves unaltered the conclusions reached in Part III. Part V concludes by asking scholars who endorse fee-related procedures used in MDL to publish normative works that set out deep justifications for them.

This article is the last in a series of writings by the author that expose deficiencies in the many rationales judges have offered in defense of fee-related regulations that are applied in MDLs.

Silver, Charles M, The Suspect Restitutionary Basis for Common Benefit Fee Awards in Multi-District Litigations (December 7, 2022), Texas Law Review, Forthcoming; University of Texas Law, Legal Studies Research Paper.