The U.S. Court of Appeals for the Third Circuit is calling in outside help in hopes of resolving a dispute about whether New Jersey or Texas contingency fee rules should apply in multidistrict litigation over transvaginal mesh devices.
The appeals court asked the New Jersey Supreme Court to provide guidance on whether New Jersey court rules apply to pelvic mesh lawsuits that were filed in a New Jersey court by lawyers from Texas.
At issue in the malpractice case is whether the defendant lawyers should receive a 40% cut off the top of clients’ settlements, as Texas rules allow, or if those lawyers should be bound by New Jersey rules, which provide a 33.3% share of the settlement, after expenses.
The question posed appears novel—whether New Jersey public policy compels application of New Jersey’s contingency-fee rules to all cases filed in its courts.
But the plaintiffs were not New Jersey residents, the case was not litigated in New Jersey, and the case was ultimately settled in Texas—echoing the decentralized nature that is common in multidistrict litigation.
The suit was brought on behalf of 1,450 potential class members whose pelvic mesh suits were filed in New Jersey courts by a consortium of Texas law firms. The suit seeks an accounting of all deductions made from plaintiffs settlements, and the disgorgement of fees and expenses paid to those lawyers.
The Texas defendants, all from Houston, include the Potts Law Firm and Derek Potts, Bailey Peavy Bailey Cowan Heckaman, Junell & Associates, K. Camp Bailey, Burnett Litigation Center, Mesh Litigation Center, Steelman & McAdams and Annie McAdams.
The New Jersey defendants include Nagel Rice of Roseland and attorneys Bruce Nagel, Andrew O’Connor and Robert Solomon.
Plaintiffs Debbie Gore of Texas and Doris Lance-Smith of Alabama had their pelvic mesh cases filed in a New Jersey state court by the defendants. They signed retainer fees giving their lawyers a 40% cut of the winnings, in violation of New Jersey law.
‘How the Rules Should Work’
U.S. District Judge Madeline Cox Arleo of the District of New Jersey dismissed the class action suit in March, finding that Texas had the most significant relationship to the plaintiffs’ claims. But Judge Thomas Ambro of the Third Circuit, joined by fellow Third Circuit Judges Stephanos Bibas and Jane Roth, said the court of appeals failed to locate “any binding legal authority that squarely addresses the question presented in this case.”
Adam Slater of Mazie Slater Katz & Freeman in Roseland, representing the plaintiffs in the class action, said the court of appeals’ request to the New Jersey Supreme Court is “very significant.”
“I think it’s a very good development because the case law from New Jersey makes it very clear that if you’re going to file a case in the New Jersey Superior Court, you’re in for 100%,” he said.
Slater said his firm was “very optimistic that the Supreme Court will accept this,” adding that the case concerned “a fundamental issue that the Supreme Court really needs to definitively address.”
According to Slater, if the district court’s decision is upheld, it would mean that the legal fees paid by plaintiffs in New Jersey courts would vary based on where their lawyer is from, “and that’s not how the rules should work in New Jersey,” he said.
Mark Tallmadge of Bressler, Amery & Ross in Florham Park, representing McAdams and her firm, and Stephen Orlofsky, representing the other Texas lawyers and law firms, declined to comment on the case.
Calls to Thomas Quinn and Joanna Piorek of Wilson Elser Moskowitz Edelman & Dicker in Florham Park, representing Nagel Rice and its attorneys, were returned by Nagel, who said the question certified by the Third Circuit—”Whether New Jersey’s public policy interest in regulating those who use its courts compels application of the state’s contingency fee rules to a malpractice dispute between out out-of-state plaintiffs an out-of-state lawyers?”—appears to concern only the Texas defendants and not his firm.
He said, “The question does not involve a claim against local counsel, our firm, which has been dismissed.”