PENSACOLA, Fla. - A federal judge is targeting companies that invest in lawsuits, ordering that if any of them are involved in pushing claims over birth-control medication, they must be revealed.
Judge Casey Rodgers of Pensacola, Fla., on July 1 cited concerns with possibly "predatory" terms for the plaintiffs in a recently formed multidistrict litigation against Pfizer, Pharmacia and Prasco.
Third-party litigation funders front lawyers and plaintiffs with money to pursue litigation in exchange for a share of whatever it is recovered. That share exceeds laws regulating usury because the agreements aren't traditional loans - if plaintiffs recover nothing, so too does the funder.
"It is important that the plaintiffs in this MDL are not exploited by predatory lending practices, such as interest rates well above market rates, which can interfere with their ability to objectively evaluate the fairness of their options in the litigation."
Rodgers has for years presided over what was once the largest MDL in the federal courts system. It alleged 3M provided defective earplugs for military members, and the company's $6 billion settlement has been paying out claimants, shrinking the amount of pending cases from around 300,000 to about 32,000.
Now, Rodgers is handling dozens of consolidated lawsuits from women who used Depo-Provera and are citing recent studies that long-term use of it can result in an increased risk of a brain tumor.
There is no standard national rule for disclosure of TPLF funds, though an increasing amount of states like Oklahoma have moved for transparency in their state courts. Judges in federal districts in California and New Jersey have standing orders doing the same, and Rodgers' order applies only to the Depo-Provera MDL and not all cases in Florida's northern district.
“This order will lift the veil on undisclosed litigation funding that could allow the interests of non-parties to distort and disrupt both the legal process and ultimate outcome of this case,” said Alex Dahl, General Counsel of Lawyers for Civil Justice (LCJ).
The Advisory Committee on Civil Rules is weighing calls to make disclosure a requirement in all federal courts. LCJ is among those supporting that cause, and an October letter from 124 companies says they need TPLF disclosure "to understand who has control of the case."
"We know from experience that when TPLF is present in our cases, it fundamentally alters the dynamics and has a major impact on whether the dispute can be resolved through settlement," the letter says.
"We cannot make informed decisions without knowing the stakeholders who control the litigation - and we cannot understand the control features of a TPLF agreement without reading the agreement.
"Without this information, the settlement process often unravel when the nominal plaintiff or its counsel needs to obtain approval from the undisclosed non-party funders or uses the non-party as an excuse to retract a commitment to settlement."
Rodgers' order requires plaintiffs to show how much they were given by TPLF companies and the fees and rate of interest on them.
The practice of TPLF can be highly lucrative, even for foreign companies that some lawmakers fear push litigation in order to benefit their home countries. Sen. Ted Cruz last month warned Chinese companies could be funding environmental litigation that will harm America's energy market.
Sen. Thom Tillis hoped to include a provision in President Donald Trump's Big Beautiful Bill that would increase the tax rate on TPLF winnings but was beaten back. His measure would've doubled the rate on profits to 41%, treating them as income tax rather than capital gains.
The TPLF industry is currently valued at more than $16 billion and some analysts expect to grow to $26 billion over the next five years. Foreign investors aren’t taxed on TPLF profits because they are considered capital gains and offshore entities are exempt from such taxes.
