## Facts

- Thousands of product-liability actions alleging diabetes-related and metabolic injuries from the prescription drug Zyprexa were centralized in an MDL in the Eastern District of New York.
- Eli Lilly & Co., the drug’s manufacturer, was the defendant; plaintiffs were represented by numerous firms with coordinated leadership and court-appointed special masters.
- After coordinated discovery and negotiations, the court approved a partial settlement in November 2005 covering approximately 8,000 plaintiffs.
- The settlement offered three recovery tracks: Track A provided a $5,000 lump-sum; Tracks B and C provided higher, individualized awards based on claim evaluation.
- The court directed special settlement masters to recommend a fee and expense regime that would not exceed the lesser of (i) a maximum reasonable schedule, (ii) the client-attorney agreement, and (iii) applicable state-law limits.
- The court considered whether to adopt a fee-capping structure to reflect economies of scale from common MDL work and to protect plaintiffs’ net recoveries.

## Issues

1. Whether an MDL court may use its inherent and supervisory authority to regulate and cap attorneys’ fees and costs for individual plaintiffs participating in an aggregate settlement.
2. Whether fee oversight in a non-certified aggregation may be informed by class-action fee-review principles.
3. How a court-imposed fee regime should account for individual retainer agreements and state-law contingency-fee limits.

## Decision

- The court held it had authority to supervise and cap attorneys’ fees and costs in the MDL settlement.
- The court approved a fee cap of 20% of gross recovery for Track A cases, permitting up to $500 in costs and expenses to be taken before calculating the fee.
- The court approved a fee cap of 37.5% of recovery for Tracks B and C cases.
- The court authorized case-by-case review for potential adjustments in unique circumstances, under judicial and special-master oversight.

## Legal Principles

- Federal courts have inherent authority and an ethical obligation to supervise attorneys appearing before them, including reviewing fee arrangements to prevent overreaching and ensure fairness in aggregate proceedings.
- When coordinated mass-tort litigation functions in practice as a quasi-class action, courts may apply class-action fee-oversight analogies to protect claimants and the integrity of settlement administration.
- A court-imposed fee schedule in aggregated litigation should not authorize fees exceeding the lesser of a reasonable cap, the individual client-attorney agreement, and applicable state-law limitations.
- Economies of scale created by common MDL discovery and leadership work may justify lower percentage fees, particularly for simplified settlement options requiring minimal individualized effort.

## Conclusion

The court approved a structured fee-capping regime for a large MDL settlement, reasoning that quasi-class aggregation, shared litigation work, and the court’s inherent supervisory role warranted judicial control of contingent fees and costs to protect plaintiffs and maintain fair settlement administration.


In re Zyprexa Prods. Liab. Litig., 424 F. Supp. 2d 488 (E.D.N.Y. 2006)