faulkFeatured Expert Column

by Richard O. Faulk, Hollingsworth LLP, with Bruce J. Berger and Robert E. Johnston, Hollingsworth LLP*

The United States Court of Appeals for the Second Circuit recently affirmed an award of costs against the plaintiff following a trial victory for Novartis Pharmaceutical Corp.  Hogan v. Novartis Pharm. Corp., 12-5085-cv (2d Cir. Dec. 17, 2013) (summary order).  The appeal arose from the Aredia®/Zometa® multidistrict litigation.  After the multidistrict court remanded the case to the Eastern District of New York for trial, a jury rendered a defense verdict based on plaintiff’s failure to prove that Zometa® caused her decedent’s jaw problems.  The Second Circuit affirmed, costs were awarded on the appeal, and the case was remanded for further proceedings. See 494 Fed. Appx. 132 (2d Cir. 2011). Thereafter, the district court awarded Novartis costs in the amount of $5,528.43.

On appeal from the cost award, plaintiff initially disclaimed liability because she was merely acting in a “representative capacity” on behalf of her husband’s estate.  While preparing the opposing brief, however, Novartis’ counsel learned that plaintiff was never appointed as executor or representative of the estate. The Second Circuit therefore concluded that plaintiff was personally liable because she was not authorized to represent her husband’s estate. Slip. Op. at 2-3.

Plaintiff next argued that she was entitled to relief based on “financial hardship.”  The Second Circuit rejected that argument. Plaintiff’s contingent fee agreement with her counsel “showed that funds to cover litigation costs were available” because the attorney agreed to “cover costs in return for a sizable share of any favorable judgment.”  Slip. Op. at 3.  Although plaintiff argued that such a result improperly imposed costs directly on counsel in the absence of bad faith or misconduct, the court held that the terms of the contingent fee contract itself established the availability of funds to pay the costs – and the district court’s decision to consider that resource “did not conflict with prior precedent and was not an abuse of discretion.” Id.; see Wilder v. Lask, 258 F.3d 126, 129 (2d Cir. 2001) (establishing rule against imposing costs directly on counsel).

Finally, although the Second Circuit noted its “concern” about the “misrepresentation that [plaintiffs’ counsel Daniel A. Osborn] appears to have made to the Court,” regarding her ability to represent her husband’s estate, it nevertheless denied Novartis’s parallel motion for sanctions, finding that at least one of the arguments advanced on appeal was not “patently frivolous.”  Slip. Op. at 4.  This is not the first time that a court has expressed concern regarding Osborn’s statements.  As summarized by one district court, “Oh, what a tangled web we weave, when first we practice to deceive!”  Wilson v. Novartis Pharm. Corp., Case No. 4:12-CV-684-A, slip op. at 1 (N.D. Tx., Feb 15, 2013).  In Wallace v. Novartis Pharm. Corp., yet another court found that Osborn’s failure to properly handle the substitution proceedings was “willful” because “Osborn knew what his caseload was and should have known what resources diligent pursuit of these cases would require of him.  His decision to take on a high-volume and apparently unmanageable caseload must have been known to him, and to the extent it was knowing, was willful.”  3:12-cv-01905-RDM, slip op. at 20-21 (M.D. Pa. Nov. 27, 2013) (dismissing case).  Five other cases have reached similar results. Further information is available from the authors.

*Hollingsworth LLP serves as counsel for Novartis in the Aredia®/Zometa® multidistrict litigation. Messrs. Berger, Johnson and partner Kate Latimer were counsel for Novartis in the case discussed above.