Blank Rome Obtains Dismissal of Putative Class Action for Legal Malpractice against Texas Law Firms
A Blank Rome team successfully obtained dismissal of a putative legal malpractice class action against four Texas law firms, filed in the U.S. District Court for the District of New Jersey, alleging that the law firms charged excessive contingency fees in violation of New Jersey law, in resolving the plaintiffs’ underlying pelvic mesh personal injury claims against Ethicon. The Blank Rome team moved to dismiss the complaint, arguing that Texas, not New Jersey, law applied to the retainer agreements between the Texas law firms and plaintiffs. The court agreed.
The plaintiffs were residents of Texas and Alabama, who sustained injuries in their home states following the implantation of pelvic mesh products manufactured by Ethicon. Both of the plaintiffs agreed to pay a 40 percent contingency fee to their Texas counsel if successful in their personal injury claims. In July 2014, the plaintiffs filed Master Short Form Complaints against Ethicon in the Superior Court of New Jersey, in multicounty litigation in which hundreds of claimants filed separate suits. New Jersey counsel was listed as counsel for the plaintiffs, and one of the Texas law firms was listed as co-counsel. No litigation took place in New Jersey after the complaints were filed, except a docket entry indicating that the matters were closed.
In 2016, Ethicon and the Texas law firms entered into an aggregate settlement agreement negotiated in Texas (the “Agreement”) to resolve several thousand pelvic mesh claims—including the plaintiffs’ claims—under the auspices of litigation pending in state court in Texas (the “Texas Court”). The Texas Court established a detailed and highly structured settlement process to determine, administer, and implement individual settlements. The Texas Court appointed a Texas Special Master to conduct this process, who, inter alia, reviewed the plaintiffs’ retainer agreements with their Texas counsel. In addition, the plaintiffs’ settlement amounts were reviewed and approved by the Special Master and adopted by the Texas Court.
Applying New Jersey’s choice of law analysis, the U.S. District Court agreed that the state with the most significant relationship to the substantive claims at issue is Texas, where there is no cap on permissible contingency fees. The court noted that the retainer agreements and fees charged by the Texas lawyers were approved by the Texas Special Master and the Texas state court judge overseeing the elaborate settlement process administered through that court. The New Jersey District Court found that the contingency fee charged was lawful under Texas law—and therefore the plaintiffs failed to state a claim for legal malpractice—and dismissed the complaint against all defendants.
The Blank Rome team comprised Stephen M. Orlofsky, Adrienne C. Rogove, and Michael R. Darbee. More information on this case is available at Blank Rome Obtains Dismissal of Putative Class Action for Legal Malpractice against Texas Law Firms (New Jersey Legal Pulse, March 26, 2020) and NJ, Texas Law Firms Beat Suit Over Pelvic Mesh Atty Fees (Law360, March 24, 2020).