In Re: Stericycle, Inc., Sterisafe Contract Litigation

Filing 56

MEMORANDUM Order Signed by the Honorable Milton I. Shadur on 10/11/2013. Mailed notice by judge's staff. (srb,)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
)
)
IN RE: STERICYCLE, INC.,
)
STERISAFE CONTRACT LITIGATION
)
)
________________________________)

Case No. 13 C 5795
MDL No. 2455

MEMORANDUM ORDER
This Court has been designated by the Panel on Multidistrict
Litigation to preside over this MDL proceeding.

As the first

substantive step in that proceeding, the appointment of interim
class counsel to represent the putative plaintiff class is called
for.

This memorandum order is issued to confirm this Court’s

choice of one from among the four well-qualified applicants for
that appointment:

in alphabetical order, Audet & Partners, LLP

(linked with other firms), Gordon & Rees, LLP, Grant & Eisenhofer
P.A. (linked with other firms) and Hagens Berman Sobol Shapiro
LLP.
As indicated in the preceding paragraph, two of the four
applicants have tendered proposals in which the law firms named
in that paragraph would share the load with other firms, while
each of Gordon & Rees and Hagens Berman proposes to take on and
discharge the responsibility within the resources of its own
firm.

On September 18, in the course of an extended in court

proceeding--a proceeding that culminated in this Court’s ordering
the applicant firms to supplement their earlier submissions by
September 23 (as all four applicants have done since)--this

Court’s oral articulation of its own views had expressed a strong
preference for the single firm model, so long as that firm
possessed the essential ingredients of high quality lawyering,
extensive experience, a track record of significant successes, a
lawyer complement adequate to the task--and the list of necessary
ingredients could go on.1
This Court is of course well aware that Section 10.22 of the
Federal Judicial Center’s 2004 Manual for Complex Litigation:
Fourth (“Manual”) looks to a different pattern, with the form
suggested in Manual §40.21.2 providing for the designation of
lead counsel, liaison counsel and a Plaintiffs’ Steering
Committee.

But with all due respect, that multilayered format is

not one that fosters efficiency--instead it tends to promote a
duplication of effort via conferencing, as well as overlapping
work assignments and other inefficiencies too often attendant on
such a structure.

And that of course inevitably tends to

increase the lodestar figure without any corresponding increase

1

This should not at all be mistaken as a negative
reflection on the quality of the two applicants that have sought
to join with other firms. Although this Court has had no
personal experience with any of the law firms sought to be yoked
in the submission on behalf of the “Brucker Plaintiffs” (firms
whose curriculum vitae are quite impressive), it has in the past
dealt with Adam Levitt, the lead in-court presenter of the
proposal on behalf of the “Midgley Plaintiffs,” and attorney
Levitt and his law firm have acquitted themselves most admirably
in earlier litigation over which this Court presided. In sum,
what the decision has come down to is a choice from among four
well-qualified applicants (as this order has already said in its
first paragraph).
2

in meaningful lawyer output.2
In any event, the choice between the two firms that do
propose to act on a self-contained basis has been a difficult
one.

Each of them has impressive credentials to satisfy each of

the factors identified in Fed. R. Civ. P. (“Rule”) 23(g)(1)(A):3
(i) the work counsel has done in identifying or
investigating potential claims in the action;
(ii) counsel’s experience in handling class
actions, other complex litigation, and the types of
claims asserted in the action;
(iii) counsel’s knowledge of the applicable law;
and
(iv) the resources that counsel will commit to
representing the class.
And of course

23(g)(1)(B) understandably goes on to provide that

the court “may consider any other matter pertinent to counsel’s
ability to fairly and adequately represent the interests of the
class.”
Both law firm finalists have tendered thorough and

2

It is recognized that others may have different views,
but it was not this Court that coined the aphorism that “A camel
is a horse designed by a committee.” What has been said in the
text reflects a sense forged during this Court’s many years in
the practice of law (including class action participation on both
sides of the “v.” sign) and more years of evaluating applications
for fee awards in class actions (a task that too often reveals an
excess of lawyers seeking to share the wealth).
3

Although those criteria reflect what a court “must
consider” in the ultimate appointment of class counsel, they
obviously have equal force in the designation of interim class
counsel.
3

informative submissions as to each of the four criteria set out
in Rule 23(g)(1)(A).

Although this Court has vetted those

presentations with equal thoroughness in reaching its decision,
it sees no useful purpose to be served in detailing them here.
Instead what follows will pick and choose some highlights simply
to illustrate both candidates’ first-rate credentials for
potential appointment.
As for the first criterion, the Gordon & Rees team devoted
nearly a year (since October 2012) to the investigation of
Stericycle’s assertedly questionable activities in California, an
investigation that began after a Stericycle customer had come to
the law firm complaining about the fees and charges the customer
had been paying.

As for Hagens Berman, it hit the ground running

because counsel for a Stericycle insider (a former government
specialist for that company)--having earlier filed a 2008 qui tam
complaint under the False Claims Act--came to Hagens Berman to
ask it to bring what ultimately became the Lyndon Veterinary
Clinic action before this Court (13 C 2499).

Because of its

access to that whistleblower’s perspective and the sharing of
information with her qui tam counsel, Hagens Berman’s Complaint
provided more information than any other as to Stericycle’s
methodology and organizational structure.

And Hagens Berman has

since engaged in more active pursuit of the prosecution of the
putative class’ claims than Gordon & Rees (or the other two

4

candidates and their associated firms as well).
In terms of the second criterion under Rule 23(g)(1)(B),
both competing firms (and especially their lead litigators) have
sterling credentials.

Gordon & Rees’ Miles Clancy has a wealth

of trial experience (incidentally including the defense as well
as the prosecution of class actions).

But it must be said that

the track record of Hagens Berman and its lead partner Steve
Berman is even more impressive, having racked up such
accomplishments as a $1.6 billion settlement in the Toyota
Unintended Acceleration Litigation4 and a substantial number of
really outstanding big-ticket results.
It may be worth mentioning that to this Court’s recollection
it has had no first-hand judicial experience with either of the
two finalist firms--and it has been on the bench far too long to
have had litigation contact with either or their respective lead
partners while it was in the active practice of law.

But that is

not true of its colleagues in this District of more recent
vintage, an email inquiry to whom5 brought in return some high
praise of attorney Berman’s skills.

4

In that respect District Judges James Selna went out of
his way, at the windup of the case, in describing the settlement
as truly extraordinary--indeed unique--in terms of the benefits
conferred on the plaintiff class.
5

Under the Code of Conduct for United States Judges,
judge-to-judge communications are not of course subject to the
limitations applicable to other ex parte communications.
5

Little need be said as to the third factor mentioned in the
Rule (“counsel’s knowledge of the applicable law”), for lawyers
of the quality demonstrated by the curriculum vitae that each of
the two firms has supplied unquestionably have the tickets to
bring their broad legal knowledge to bear on any particularized
problems that may be posed by the current litigation.

That is

certainly true as to issues regarding class actions as such
(knowledge that counsel already have in abundance), and there is
no reason to believe that it will not also prove true as to
whatever substantive issues the current litigation will pose.
Lastly, each firm has pledged itself to commit all required
resources to the litigation.

This Court’s only initial pause in

reaching what had otherwise appeared to be a clear choice of
Hagens Berman6 stemmed from the Gordon & Rees emphasis on that
firm’s much larger size and, more specifically, its Chicago
presence (numbering 26 lawyers, in contrast to the Hagens Berman
three-lawyer office here).

But Hagens Berman’s supplemental

submission of September 23 has graphically demonstrated the

6

That choice was not made in terms of the primus inter
pares (“first among equals”) phrase often used to describe, for
example, the relationship between the Chief Judge of a District
or Circuit Court and his or her colleagues. Instead, obviously
with no offense intended, such a choice really echoes George
Orwell’s classic line from Animal Farm:
Some animals are more equal than others.
6

fallacy inherent in simply looking at those numbers.7
For one thing, Elizabeth Fagan (the managing partner of
Hagens Berman’s Chicago office) has outstanding credentials on
her own, and the Hagens Berman September 23 supplement confirms
the strength of support provided by the others in the Chicago
office as well.

But even more importantly in overall terms, that

September 23 response (emphasis in original) more than
convincingly refutes any claimed significance of the sheer
numerical comparison:
According to Gordon & Rees’ website, just 3 of the 26
lawyers in its Chicago office have class action
experience, in comparison to the three lawyers in
Hagens Berman’s Chicago office who are devoted
exclusively to prosecuting large scale class actions.
Moreover, according to the website, 49 lawyers at
Gordon & Rees nationwide reflect that they have class
action experience in comparison to the 53 lawyers at
Hagens Berman whose primary focus is prosecuting class
actions. Accordingly, Hagens Berman’s class action
dedication for plaintiffs--and demonstrated
results--overshadows Gordon & Rees’ traditional defense
firm size.
Conclusion
In sum, this Court is pleased to designate the Hagens Berman
firm as the interim lead counsel, and it looks forward to that

7

This Court does not of course question the good faith of
Gordon & Rees in advancing a numerical contrast as part of its
own sales pitch. But again in terms of the raw numbers rather
than Gordon & Rees’ bona fides in advancing them, this Court has
been put in mind of Mark Twain’s quotation, in his Autobiography,
of a statement attributed to Disraeli:
There are three kinds of lies:
statistics.
7

lies, damned lies and

firm’s prompt pursuit of the matter in the manner outlined in its
submissions.

With that appointment having taken place, this

Court next poses a question to the Hagens Berman people.
As part of the firm’s original application for appointment
as interim lead class counsel, Appendix A to that application set
out a proposed case schedule.

But that proposed schedule

specified its successive steps in terms of time frames such as
“Within -- days of appointment of Lead Class Counsel,” and it is
not clear from that designation whether the stated timetable was
intended to speak in relation to the current interim designation
rather than to the final appointment of class counsel.
Accordingly this Court orders a submission from the Hagens Berman
firm, on or before the scheduled October 17 status hearing,
expressly framed as a timetable in terms of the present posture
of the litigation.
One final item.

As part of the supplemental submissions

requested by this Court on September 18, all of which were timely
responded to by the designated September 23 date, counsel were
asked to submit in camera their respective views on an
appropriate fee structure.

This Court’s views on that subject

have always conformed to our Court of Appeals concept “that
attorneys’ fees in class actions should approximate the market
rate that prevails between willing buyers and willing sellers of
legal services” (Silverman v. Motorola Solutions, Inc., Nos. 12-

8

2339 and 12-2354, 2013 WL 4082893, at *1 (7th Cir. Aug. 14),
citing to In re Continental Ill. Sec. Litig., 962 F.2d 566, 572
(7th Cir. 1992) and In re Synthroid Mktg. Litig., 264 F.3d 712,
718 (7th Cir. 2001) and 325 F.3d 974, 975 (7th Cir 2003)).

And

this Court has always agreed with the Synthroid cases that
establishing fee schedules ex ante represents the preferred path
to take.8
But because interim counsel do not invariably become the
ultimate class counsel (even though that is most frequently the
case), this opinion will not disclose the proposed terms that
have been submitted in camera by Hagens Berman.

Instead any

announcement of the ex ante determination as to fees will await
the occasion of the ultimate choice of lead class counsel.

________________________________________
Milton I. Shadur
Senior United States District Judge
Date:

October 11, 2013

8

Indeed, that premise seems to this Court to support a
procedure of inviting bidding up front--not in terms of an
“auction,” an unfortunate and inaccurate label that connotes
competition based on price alone, but rather a procedure that
also takes into account an evaluation of the quality of class
representation (much as this opinion has done). In fact, in
these days, when the old notion of long-term fixed relationships
between clients and law firms has been overtaken by market
concepts (the so-called “beauty contest” is an example of that),
private litigants frequently make their selections of counsel in
much the same manner that this Court has employed in what are
pejoratively and misleadingly characterized as “auctions.”
9