## Facts

- Thousands of plaintiffs filed personal-injury and economic-loss claims alleging that the antipsychotic drug Zyprexa (olanzapine), manufactured by Eli Lilly and Company, caused weight gain, hyperglycemia, and diabetes.
- The federal cases were centralized in a multidistrict litigation (MDL) in the Eastern District of New York, with related litigation proceeding in multiple state courts.
- The MDL was managed collectively through coordinated discovery, motion practice, and settlement efforts, with court-appointed lead and liaison counsel performing work intended to benefit all plaintiffs.
- A recurring management problem was how to allocate the costs of common-benefit work and prevent non-lead counsel from obtaining settlement value without contributing to leadership efforts.
- The court issued a memorandum and order addressing whether it could regulate plaintiffs’ attorneys’ fees and require contributions from individual recoveries to fund common-benefit work.

## Issues

1. Whether the coordinated Zyprexa MDL could be treated as a “quasi-class action” for purposes of judicial supervision.
2. Whether the district court had authority to cap plaintiffs’ attorneys’ contingent fees in the MDL.
3. Whether the district court could require set-asides from recoveries to compensate court-appointed counsel for common-benefit work performed for all plaintiffs.

## Decision

- The court characterized the Zyprexa MDL as a “quasi-class action” because it functioned as aggregated litigation administered through centralized judicial management and common-benefit work.
- The court held it had broad equitable power to regulate attorneys’ fees in this setting.
- The court approved fee controls that included caps on contingent fees charged by plaintiffs’ counsel.
- The court approved set-asides from plaintiffs’ recoveries to fund and compensate common-benefit work performed by leadership counsel for the benefit of all claimants.
- The court found these measures necessary to protect plaintiffs and to distribute litigation costs fairly across the group.

## Legal Principles

- In complex aggregate litigation that functions like group litigation, a federal court may treat an MDL as a quasi-class action and exercise equitable authority to supervise fee practices.
- A court’s inherent power to supervise the bar and protect litigants can support limits on private contingent-fee arrangements when court-managed proceedings materially shape outcomes for large numbers of similarly situated claimants.
- When leadership counsel performs work that materially benefits all plaintiffs, the court may allocate those costs through an across-the-board assessment on recoveries to prevent free riding and ensure equitable cost sharing.
- Fee caps and common-benefit assessments may be justified to prevent excessive fees, avoid windfalls tied to collective resolutions, and protect vulnerable plaintiffs who may have limited ability to police fee arrangements.

## Conclusion

The court treated the MDL as a quasi-class action and, invoking equitable authority, regulated plaintiffs’ attorneys’ fees by imposing contingent-fee limits and requiring common-benefit set-asides from recoveries to ensure fair cost allocation and plaintiff protection in court-managed aggregate litigation.


In re Zyprexa Prods. Liab. Litig., 433 F. Supp. 2d 268 (E.D.N.Y. 2006)