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In re Valsartan N-Nitrosodimethylamine (NDMA) Contamination Products Liability Litigation

United States District Court, D. New Jersey, Camden Vicinage

September 18, 2019

IN RE VALSARTAN N-NITROSODIMETHYLAMINE (NDMA) CONTAMINATION PRODUCTS LIABILITY LITIGATION

          MEMORANDUM OPINION AND ORDER

          JOEL SCHNEIDER, UNITED STATES MAGISTRATE JUDGE

         This Opinion addresses defendants’ request for discovery directed to plaintiffs’ “litigation funding.”[1] Generally, defendants want to discover whether plaintiffs are backed by litigation funders, the details of the financing, and communications regarding the financing. The Court received defendants’ letter brief [Doc. No. 189] and plaintiffs’ opposition [Doc. No. 188]. The Court exercises its discretion to decide this discovery dispute without oral argument. Fed.R.Civ.P. 78; L. Civ. R. 78.1. For the reasons discussed herein, defendants’ request is denied.

         Background

         By way of background, this Multidistrict Litigation (“MDL”) concerns various FDA and voluntary recalls of contaminated valsartan, a generic prescription medication indicated in the treatment of high blood pressure and other conditions.[2] The February 14, 2019 Transfer Order of the Judicial Panel on Multidistrict Litigation is reported at In Re: Valsartan N-Nitrosodimethylamine (NDMA) Contamination Products Liability Litigation, 363 F.Supp. 3d 1378 (MDL No. 2875 2019). Plaintiffs generally allege defendants’ valsartan contained carcinogens that caused personal injuries and economic losses. Defendants deny their drugs caused any injuries or damages, although it is not disputed that at least some of defendants’ drugs were contaminated. Presently approximately 60 defendants are named. These defendants include manufacturers of the active pharmaceutical ingredient (“API”), suppliers, repackagers, wholesalers, and retailers. Some of the “lead” defendants, API manufacturers, are located in China and India. Given the number of potential plaintiffs, the amount in dispute, the seriousness of plaintiffs’ claimed injuries, and the fact that some “target” defendants are located overseas, this MDL will undoubtedly be costly to prosecute and defend.

         Since the first case management conference in March, 2019, much has been done to organize and manage the case. This includes designating and approving the parties’ leadership structure (CMO No. 6, Doc. No. 96), and identifying the “core discovery” to be produced by defendants (April 29, 2019 Order, Doc. No. 88).[3] In June, 2019, three consolidated “master complaints” were filed. These complaints generally grouped plaintiffs into three categories. The first master complaint addresses the claims of individual plaintiffs [Doc. No. 122] who allege they contracted various forms of cancer from consuming defendants’ contaminated valsartan. To date approximately 126 personal injury cases of this type have been filed. Plaintiffs’ counsel estimates approximately 2, 000 cases may eventually be filed. The second master complaint [Doc. No. 123] is a nationwide medical monitoring class action filed on behalf of all “individuals who consumed [contaminated] generic valsartan-containing drugs … at least since January 1, 2012[.]” Id. at ¶ 390. The potential class size is undoubtedly in the tens of thousands. The third master complaint (Doc. No. 121) is a nationwide economic class action filed on behalf of “[a]ll individuals and entities … who, since at least January 1, 2012 to the present, paid any amount of money for a valsartan-containing drug [.]” Id. at ¶ 413. This class size is also expected to be very large.

         To date, no formal discovery has been directed to plaintiffs. The Court expects to shortly approve “Fact Sheets” to be answered by all personal injury plaintiffs and the named class representatives. As to defendants, the “lead” parties have already produced most of what has been denominated as “core discovery.”

         The present discovery dispute arose in the context of what questions would be included in plaintiffs’ Fact Sheet to be answered. Specifically, defendants propose to require each plaintiff to produce the following: “all documents and communications related to funding or financing, if any, you or your counsel have obtained to pursue this litigation.”[4] Defendants’ letter brief identifies precisely what they want:

Defendants seek to obtain information about Plaintiffs’ agreements and communications with any third-party funders of the litigation, including Plaintiffs’ documents and communications relating to or concerning any litigation finance obtained in connection with this litigation, documents and communications regarding conferences, meetings or conventions attended with the purposes of seeking litigation finance, and documents and communications relating to agreements to finance this litigation.

DLB at 1.

         Not unexpectedly, plaintiffs object to producing discovery regarding their litigation funding. Albeit, plaintiffs are willing to produce some documents for an in camera review. Plaintiffs argue their private financial information is irrelevant to their claims and defenses and defendants have “no legitimate need for the requested information.” Plaintiffs’ Letter Brief (“PLB”) at 2. Plaintiffs, however, agree to submit documents to the Court for an in camera review, “where the litigation funding company has control or input into litigation decisions, including settlement, which could interfere with a plaintiff’s control of his, or her lawsuit and the attorney-client relationship.” Id.

         Defendants disagree with plaintiffs and contend “third-party funding represents a critical piece of information to which Defendants are entitled.” DLB at 1. Defendants argue the requested discovery is relevant to identifying, “the real party in interest as to some or all of the claims alleged in this action, ” and whether plaintiffs have standing to sue. Id. Defendants also argue plaintiffs’ funding information is relevant to determining: (1) plaintiffs’ credibility and bias, (2) the scope of proportional discovery, (3) the scope of potential sanctions, and (4) the “medical necessity and the reasonableness of plaintiff’s treatments.” Id. at 2. Defendants argue, “[t]he recent history of mass tort multi-district litigation is littered with examples of undisclosed non-party involvement gone wrong to the detriment” of the legal process and public health. Defendants also argue that “courts and legislators lean toward mandating disclosure of third-party funding.” Id. at 4. Discussion This is not the first instance, nor likely the last, where defendants in a MDL mass tort case seek discovery directed to plaintiffs’ litigation funding. Scores of courts and commentators have already addressed the issue. This Court can add little to the existing discourse and is left to essentially parrot what has already been written. At bottom, courts are split on the issue and plaintiffs and defendants can each cite to cases supporting their positions. What is not in dispute is that there is no binding Third Circuit precedent on whether a plaintiff’s litigation funding is a proper subject of discovery. Nor is the Court aware of any published New Jersey District Court authority on point.[5]

         1. As to Relevance, Plaintiffs Have the Better Argument

         After considering the present record and the relevant case law, the Court rules in plaintiffs’ favor. The Court finds that litigation funding is irrelevant to the claims and defenses in the case and, therefore, plaintiffs’ litigation funding is not discoverable.

         The scope of relevant discovery is set forth in Fed.R.Civ.P. 26(b)1). This Rule permits discovery regarding, “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” The Court agrees with the plethora of authority that holds that discovery directed to a plaintiff’s litigation funding is irrelevant. See Benitez v. Lopez, 17-CV-3827-SJ-SJB, 2019 WL 1578167, at *1 (E.D.N.Y. March 14, 2019) (“As to the litigation funding documents, Defendants fail to establish that such discovery is ‘relevant to any party’s claims or defense.’” Also stating, “[t]he financial backing of a litigation funder is as irrelevant to credibility as the Plaintiff’s personal financial wealth, credit history, or indebtedness. That a person has received litigation funding does not assist the factfinder in determining whether or not the witness is telling the truth.”); Miller UK Ltd. v. Caterpillar, Inc., 17 F.Supp.3d 711, 742 (N.D. Ill. 2014) (“Caterpillar is not entitled to discover the amount of money sought or received by Miller, the details of the agreement it has with its funder, or how much the funder will receive if Miller wins the case. In the setting of this case, that information is simply irrelevant.”); Kaplan v. S.A.C. Capital Advisors, L.P., S.A.C., No. 12-CV-9350 (VM)(KNF), 2015 WL 5730101, at *5 (S.D.N.Y. Sept. 10, 2015), aff’d, 141 F.Supp. 3d 246 (S.D.N.Y. 2015). (denying defendants’ request for plaintiffs’ litigation funding documents on the ground that “defendants did not show that the requested documents are relevant to any party’s claim or defense.”); Space Data Corp. v. Google LLC, Case No. 16-cv-03260 BLF (NC), 2018 WL 3054797, at *1 (N.D. Ca. June 11, 2018) (denying litigation funding discovery and stating, “[t]he Court is not persuaded that the materials sought are relevant to any party’s claim . . . .”); MLC Intellectual Property LLC v. Micron Technology, Inc., Case No. 14-cv-3657-SI, 2019 WL 118595, at *2 (N.D. Ca. Jan. 7, 2019) (denying litigation funding discovery and stating, “[t]he Court concludes that [defendant] is not entitled to the discovery it seeks because it is not relevant.”); Yousefi v. Delta Electric Motors, Inc., No. 13-CV-1632 RSL, 2015 WL 11217257, at *2 (W.D. Wash. May 11, 2015) (“[w]hether plaintiff is funding this litigation through savings, insurance proceeds, a kickstarter campaign, or contributions from [a] union is not relevant to any claim or defense at issue.”).

         To be sure, the Court is not ruling that litigation funding discovery is off-limits in all instances. In cases where there is a showing that something untoward occurred, the discovery could be relevant. In other words, rather than directing carte-blanche discovery of plaintiffs’ litigation funding, the Court will Order the discovery only if good cause exists to show the discovery is relevant to claims and defenses in the case. For example, discovery will be Ordered where there is a sufficient showing that a non-party is making ultimate litigation or settlement decisions, the interests of plaintiffs or the class are sacrificed or ...


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