JOHNSON et al v. MAZIE et al

Filing 52

OPINION & ORDER denying 5 Motion to Remand. Signed by Judge Robert B. Kugler on 3/27/2024. (jab)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
___________________________________________
Johnson et al.,
)
Plaintiffs,
)
v.
)
Civil No. 23-03420 (RBK/MJS)
)
David Mazie, Esq., Adam Slater, Esq. and
)
Order / Opinion On
Mazie Slater Katz & Freeman LLC,
)
MOTION TO REMAND
Defendants. )
)
KUGLER, United States District Judge:
THIS MATTER HAVING COMING BEFORE the Court on plaintiffs’ [“Johnson”] motion
to remand [“the Motion”] (Doc. No. 5) this action back to state court—N.J. Superior Court,
Essex County—where it originated;
DEFENDANTS [MAZIE] HAVING REMOVED this action to this Court and opposing
remand;
THIS COURT HAVING CONSIDERED the parties’ submissions without oral argument
pursuant to L. R. 78.1, for the reasons stated in the opinion below, and for good cause shown,
THE COURT HEREBY ORDERS: The motion to remand (Doc. No. 5 ) is DENIED.
OPINION
1.0

PROCEDURAL BACKGROUND

This matter arises from a dispute between the parties about the proper amount of
attorney fees that should have been awarded to Mazie for their work as plaintiffs’ counsel in
the Olmesartan Multi-District Litigation [“MDL”]. 1

1 The Olmesartan

MDL, consolidated by the Judicial Panel on Multi District Litigation in April 2015, concerned products liability
claims regarding certain, serious contraindications of taking the blood pressure medicine Olmesartan, a generic of the brand
name drug Benicar®. Generally, the contraindications resembled symptoms of celiac disease in those who ingested the drug
for several years: diarrhea, weight loss, persistent gastrointestinal upset, and, for some, hospitalization. In the summer of
2017, the MDL ended in a settlement for the thousands of U.S. consumers who experienced symptoms of varying severity
from ingesting Olmesartan. Each person who signed onto the Olmesartan settlement agreement typically had executed a
contingency fee agreement with a law firm that would secure for them a portion of the settlement proceeds according to the
settlement calculus based on the severity of symptoms. In other words, those who had signed a contingency fee agreement
with their law firms paid an agreed-upon percentage to the firms from the Olmesartan settlement award they received.

2

As a named representative of a putative class action of plaintiffs residing outside of
New Jersey, Johnson is suing Mazie for having received a larger amount of attorney fees for
their work in the Olmesartan MDL than, Johnson avers, is allowed by New Jersey Court Rule
1:21-7(i). 2 Johnson seeks to recover the excess of attorneys fees Mazie allegedly received as
Rule 1:21-7. Contingent Fees
(a) As used in this rule the term “contingent fee arrangement” means an agreement for legal services of an attorney or
attorneys, including any associated or forwarding counsel, under which compensation, contingent in whole or in part upon the
successful accomplishment or disposition of the subject matter of the agreement, is to be in an amount which either is fixed or
is to be determined under a formula.
(b) An attorney shall not enter into a contingent fee arrangement without first having advised the client of the right and
afforded the client an opportunity to retain the attorney under an arrangement for compensation on the basis of the
reasonable value of the services.
(c) In any matter where a client's claim for damages is based upon the alleged tortious conduct of another, including products
liability claims and claims among family members that are subject to Part V of these Rules but excluding statutorily based
discrimination and employment claims, and the client is not a subrogee, an attorney shall not contract for, charge, or collect a
contingent fee in excess of the following limits:
(1) 33 1/3 % on the first $750,000 recovered;
(2) 30% on the next $750,000 recovered;
(3) 25% on the next $750,000 recovered;
(4) 20% on the next $750,000 recovered; and
(5) on all amounts recovered in excess of the above by application for reasonable fee in accordance with the provisions of
paragraph (f) hereof; and
(6) where the amount recovered is for the benefit of a client who was a minor or mentally incapacitated when the contingent
fee arrangement was made, the foregoing limits shall apply, except that the fee on any amount recovered by settlement
before empaneling of the jury or, in a bench trial, the earlier to occur of plaintiff's opening statement or the commencement of
testimony of the first witness, shall not exceed 25%.
(d) The permissible fee provided for in paragraph (c) shall be computed on the net sum recovered after deducting
disbursements in connection with the institution and prosecution of the claim, whether advanced by the attorney or by the
client, including investigation expenses, expenses for expert or other testimony or evidence, the cost of briefs and transcripts
on appeal, and any interest included in a judgment pursuant to R. 4:42-11(b); but no deduction need be made for postjudgment interest or for liens, assignments or claims in favor of hospitals or for medical care and treatment by doctors and
nurses, or similar items. The permissible fee shall include legal services rendered on any appeal or review proceeding or on any
retrial, but this shall not be deemed to require an attorney to take an appeal. When joint representation is undertaken in both
the direct and derivative action, or when a claim for wrongful death is joined with a claim on behalf of a decedent, the
contingent fee shall be calculated on the aggregate sum of the recovery.
(e) Paragraph (c) of this rule is intended to fix maximum permissible fees and does not preclude an attorney from entering into
a contingent fee arrangement providing for, or from charging or collecting a contingent fee below such limits. In all cases
contingent fees charged or collected must conform to RPC 1.5(a).
(f) If at the conclusion of a matter an attorney considers the fee permitted by paragraph (c) to be inadequate, an application on
written notice to the client may be made to the Assignment Judge or the designee of the Assignment Judge for the hearing
and determining of a reasonable fee in light of all the circumstances. This rule shall not preclude the exercise of a client's
existing right to a court review of the reasonableness of an attorney's fee.
(g) Where the amount of the contingent fee is limited by the provisions of paragraph (c) of this rule, the contingent fee
arrangement shall be in writing, signed both by the attorney and the client, and a signed duplicate shall be given to the client.
Upon conclusion of the matter resulting in a recovery, the attorney shall prepare and furnish the client with a signed closing
statement.
(h) Calculation of Fee in Structured Settlements. As used herein the term “structured settlement” refers to the payment of
any settlement between the parties or judgment entered pursuant to a proceeding approved by the Court, the terms of which
provide for the payment of the funds to be received by the plaintiff on an installment basis. For purposes of paragraph (c), the
basis for calculation of a contingent fee shall be the value of the structured settlement as herein defined. Value shall consist of
any cash payment made upon consummation of the settlement plus the actual cost to the party making the settlement of the
deferred payment aspects thereof. In the event that the party paying the settlement does not purchase the deferred payment
component, the actual cost thereof shall be the actual cost assigned by that party to that component. For further purposes of
this rule, the party making the settlement offer shall, at the time the offer is made, disclose to the party receiving the

2

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unjust enrichment from the Olmesartan settlement in order to re-distribute those fees back to
the putative class of plaintiffs so they presumably obtain the settlement monies they should
have gotten. Specifically, the Johnson Complaint (Doc. No. 1-2 ) asserts these claims, all of
which stem from violation of the Rule:
- legal malpractice;
-conversion;
- unjust enrichment;
- improper, double recovery; and
- breach of contract for violating retainer agreements of Olmesartan plaintiffs.
On June 22, 2023, Johnson originally filed this civil action in the Superior Court of New
Jersey—Law Division, Essex County. 3 On June 23, 2023, Mazie removed the state action to
federal court based on federal diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1); federal
question jurisdiction pursuant to 28 U.S.C. § 1331; Grable jurisdiction; supplemental jurisdiction
pursuant to 28 U.S.C. §§ 1367 and 1441(c). Defendant’s Removal Notice¶ ¶ 4, 5, 35, 39, 41 (Doc.
No. 1).
On August 21, 2023, Johnson filed the motion, arguing that:
- this Court lacks diversity jurisdiction because even though all plaintiffs are/were legal
residents of jurisdictions outside of New Jersey, none of the plaintiffs’ recovery amounts from
Mazie’s excess award would equal $75,ooo
- this Court lacks federal question jurisdiction because all plaintiffs’ claims arise under
state product liability laws;
- this Court lacks Grable jurisdiction as no claim arises under or embeds federal law; and
- the Anti-Injunction act does not confer jurisdiction on this Court.
On October 7, 2023, Mazie opposed the motion (Mazie Opp., Doc. No. 9) to which, on
October 28, 2023, Johnson replied. Johnson Rep., Doc. No. 16. All submissions were timely.
2.0

LEGAL STANDARD
Under 28 U.S.C. § 1441(a), a defendant may remove an action filed in state court to that
federal court having original jurisdiction over the action. Once the action has been removed, a
settlement offer its actual cost and, if it does not purchase the deferred payment aspect of the settlement, the factors and
assumptions used by it in assigning actual cost.
(i) Calculation of Fee in Settlement of Class or Multiple Party Actions. When representation is undertaken on behalf of
several persons whose respective claims, whether or not joined in one action, arise out of the same transaction or set of facts
or involve substantially identical liability issues, the contingent fee shall be calculated on the basis of the aggregate sum of all
recoveries, whether by judgment, settlement or both, and shall be charged to the clients in proportion to the recovery of each.
Counsel may, however, make application for modification of the fee pursuant to paragraph (f) of this rule in appropriate cases
3 Johnson, et al. v. Mazie, et al., No. ESX-L-004010-23

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plaintiff may challenge removal by seeking its remand back to state court. See 28 U.S.C. §
1447(c) allowing a case removed to federal court to be remanded back to state court “[i]f at any
time before final judgment it appears that the district court lacks subject matter jurisdiction.”
To defeat a movant’s motion to remand, the opposing party bears the burden of
showing that the federal court has jurisdiction to hear the case. Abels v. State Farm Fire & Cas.
Co., 770 F.2d 26, 29 (3d Cir. 1995) (citing Pullman Co. v. Jenkins, 305 U.S. 534, 537
(1939)). Generally, where the decision to remand is a close one, district courts are encouraged
to err on the side of remanding the case back to state court. See Abels, 770 F.2d at 29 [stating:
"Because lack of jurisdiction would make any decree in the case void and the continuation of
the litigation in federal court futile, the removal statute should be strictly construed and all
doubts should be resolved in favor of remand.").
However, when the Court retains ancillary jurisdiction over a matter, the same legal
analysis applies as for pendent jurisdiction. See Owen Equip. & Erection Co. v. Kroger, 437 U.S.
365, 372–73 (1978). Since the Supreme Court decided United Mine Workers of Am. v. Gibbs, 383
U.S. 715 (1966), two requirements for the exercise of pendent jurisdiction have been clear:
First, the court must determine whether it has constitutional power to exercise jurisdiction;
and second, it must determine whether it should, in its discretion, exercise jurisdiction. Id. at
726. When a claim is ancillary to a lawsuit rather than pendent to a federal claim, a similar
power requirement as stated in Gibbs applies. Clarifying this requirement, the Supreme Court
stated in Aldinger v. Howard, 427 U.S. 1, 11-12 (1976):
“The doctrine of ancillary jurisdiction developed in the foregoing cases
[Supreme Court reviewed its own jurisprudence on this doctrine] is bottomed on
the notion that since federal jurisdiction in the principal suit effectively controls
the property or fund under dispute, other claimants thereto should be allowed to
intervene in order to protect their interests, without regard to jurisdiction. As this
Court stated in Fulton Bank v. Hozier, 267 U.S. 276, 280, 45 S.Ct. 261, 262, 69
L.Ed. 609 (1925):
‘The general rule is that when a federal court has properly acquired
jurisdiction over a cause, it may entertain, by intervention,
dependent or ancillary controversies; but no controversy can be
regarded as dependent or ancillary unless it has direct relation to
property or assets actually or constructively drawn into the court's
possession or control by the principal suit.’ ”
See also In re Paoli R.R. Yard PCB Litigation, 435 F.3d 717, 737-738 ( 3rd Cir. 1996) [demonstrating
that judicial economy can be a sufficient reason for a federal court to retain ancillary

5

jurisdiction in order to avoid the very real possibility of forum shopping].
3.0

DISCUSSION

The current dispute in this case is whether this Court has jurisdiction to resolve the
asserted fee dispute: Mazie has received not only contingency fees from each of its clients
who participated in the Olmesartan settlement but also a common benefit fee award because
of its efforts in the MDL as plaintiffs’ executive counsel. Johnson asserts this award amounts
to double payment and is in violation of the Rule.
This Court was the transferee court for the Olmesartan MDL, which awarded the
common benefit fees to plaintiffs’ counsel for their efforts expended in litigating the MDL.
This Court granted the award after reviewing for correctness and reasonableness plaintiff
counsels’ Final Recommendation and line-item accounting of each plaintiff firm’s hours spent
in litigating the MDL. See In Re : Benicar® (Olmesartan) Products Liability Litigation, 1:15-md02606-RBK-JS, Doc. No. 1263.
Important to resolving this motion is that this action is nearly identical to an action
previously filed in 2021 by the same plaintiffs’ counsel, which, as here, claimed that Mazie
violated the Rule because it had received excessive attorneys fees in the form of a common
benefit award in the Olmesartan MDL 4 This Court dismissed with prejudice the previous
lawsuit at Martino v. Mazie, 21-cv-20056 (RBK-MJS), 2022 WL 1443689 (D.N.J. May 6, 2022).
Upon appeal of that decision by Martino’s counsel, the Third Circuit affirmed this Court’s
resolution of the dispute. We had decided that the common benefit fund award to Mazie was
not “double-dipping” but proper remuneration for their legal efforts expended in the
Olmesartan MDL over and above any efforts for contingency fee clients. See Martino v. Mazie,
aff’d, No. 22-2019, 2023 WL 1990306 (3d Cir. Feb. 14, 2023). The significant difference
between this matter and Martino v. Mazie is that Johnson alleges this Court can have no federal
matter or diversity jurisdiction over the determination of an excess fee award to Mazie and
therefore cannot decide this matter. The Court sees that both the complaint filed in state
court and the motion seek to avoid this Court’s similar decision as in Martino: that the Rule
does not apply to common benefit law efforts of plaintiffs’ counsel in MDLs.
More specifically, to gird the remand motion, Johnson (Mot. Brf. at 6, 11, 13, 14, Doc.
No. 5) argues this Court lacks jurisdiction because:
-Mazie failed to show to a legal certainty that each individual plaintiff can recover more than
$75,000, thereby securing diversity jurisdiction;
4

Martino et al. v. Mazie, et al. 21-cv-20056, Doc. No. 26.

6

-Mazie also cannot show this matter raises a federal question, which cannot secure this Court’s
jurisdiction as the claims of all plaintiffs in this putative class turn not on federal, but only on
state, law; and
-the Anti-Injunction Act 5 does not confer jurisdiction.
Johnson’s contentions that this Court lacks jurisdiction are incorrect and unavailing.
Johnson has not foreseen that the underlying dispute—attorneys fees— is an ancillary issue to
the Olmesartan MDL claims—all product liability issues. Accordingly, this Court has and does
retains ancillary jurisdiction over all issues not central to the products liability issues of the
MDL, which, without doubt, include the fee dispute here.
By the doctrine of ancillary jurisdiction, federal courts retain jurisdiction over those matters
incidental to the central legal matters before them. See Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 379 (1994) defining an ancillary suit as
“[a] bill filed to continue a former litigation in the same court . . . to obtain and
secure the fruits, benefits and advantages of the proceedings and judgment in a
former suit in the same court by the same or additional parties . . . or to obtain
any equitable relief in regard to, or connected with, or growing out of, any
judgment or proceeding at law rendered in the same court.” Id. [citing Julian v.
Central Trust Co., 193 U.S. 93, 24 S. Ct. 399, 48 L. Ed. 629 (1904)].
Moreover, the Supreme Court has clarified that “a federal court may exercise ancillary
jurisdiction… to enable [the] court to function successfully, that is, to manage its proceedings,
vindicate its authority, and effectuate its decrees.” Peacock v. Thomas, 516 U.S. 349, 354
(1996). A federal court retains the power to enforce and consider challenges to settlements
entered into in cases originally filed with the court. Fox v. Consolidated Rail Corp., 739 F.2d 929,
932 (3d Cir. 1984). See also Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1371 (6th Cir.) [“Even in
those instances in which the court's original jurisdiction may have been questionable, it has
jurisdiction over settlement agreements, the execution of which renders the prior controversy
academic.”].
Regarding large, multi-district class actions, the Third Circuit has opined that “[a]
district court has the power to enforce an ongoing order against re-litigation so as to protect
See 28 U.S.C. § 2283 (“A court of the United States may not grant an injunction to stay proceedings in a State court except as
expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its
judgments”). The Anti–Injunction Act, limits the reach of the All Writs Act. On its face the Anti–Injunction Act is an absolute
prohibition against enjoining state court proceedings, unless the injunction falls within one of three specifically defined
exceptions: (1) as expressly authorized by Act of Congress, (2) where necessary in aid of its jurisdiction, or (3) to protect or
effectuate its judgments. The three exceptions are to be construed narrowly, and any doubts as to the propriety of a federal
injunction against state court proceedings should be resolved in favor of permitting state courts to proceed. In re Avandia
Marketing, Sales Practices and Products Liability Litigation, 289 F.Supp.3d 646, 653-654 (E.D. Pa. 2018) [citations omitted].
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the integrity of a complex class settlement over which it retained jurisdiction.” In re Prudential
Insurance Company of American Sales Practice Litigation, 261 F.3d 355, 367-68 (3d Cir. 2001)
[affirming injunction under All Writs Act where "continued litigation of these claims would
'unsettle' what had been thought to be settled" and disrupt procedures approved by the district
court]. The Prudential Court concluded that district court’s authority to execute its ruling “did
not end with the entry of the Final Order and Judgment.” Id. at 368; see also In re Linerboard
Antitrust Litig., 361 Fed. Appx. 392 (3d Cir. 2010) [finding that the district court erred in
concluding it would lose jurisdiction over the case once the class action had ended].
Other circuits have issued similar guidance about the nature of ancillary jurisdiction.
For example, the Eighth Circuit has held that "[w]hile a district court's jurisdiction typically
ends when a case is closed and judgment entered, a district court retains ancillary jurisdiction
to 'manage its proceedings, vindicate its authority, and effectuate its decrees.” Jenkins v.
Kan. City Mo. Sch. Dist., 516 F.3d 1074, 1081 (8th Cir. 2008) [citations omitted] [emphasis
added].
Of great interest, in a dispute over attorney fees after the settlement of a class action,
the Fourth Circuit held that:
“[T]he district court must have continuing jurisdiction to resolve the dispute in order to
protect the continued integrity of its order approving fair and reasonable fees in the first
instance. Moreover, just resolution of the issues raised by attorney's fees disputes
requires both an intimate working knowledge of what occurred during the course of the
class action and a uniform dispute resolution process.”
Marino v. Pioneer Edsel Sales, Inc., 349 F.3d 746, 753 (4th Cir. 2003). The Fourth Circuit also
noted that:
“[The plaintiff’s] claims were factually interdependent with other issues in
the [class action] because the amount of attorney's fees paid for work done in
connection with the [class action] can effect the fairness and reasonableness of
the class action settlement as a whole…[and] preventing [the judge] from
deciding whether [the plaintiff] is entitled to attorney's fees for work she
allegedly performed in connection with the [class action] would thwart [the
judge’s] ability to manage the [the class action]. Ibid.
This action not only arises from the same facts but also involves substantially the same
fee dispute previously decided in Martino v. Mazie, brought by the same plaintiffs’ counsel on
behalf of New Jersey plaintiffs 6 who had participated in the Olmesartan settlement. The key
6 These plaintiffs had been

litigants not in the Olmesartan MDL but in the Olmesartan Multi-County Litigation [“MCL”].

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difference between Martino v. Mazie and this action is the lack of jurisdiction claim. By way of
explanation, in Martino v. Mazie, this Court found that Mazie properly had earned a
contingency fee for guiding its Olmesartan MCL clients through the Olmesartan settlement. In
addition, Mazie also properly had earned a common benefit award because it was the MDL
plaintiffs’ executive firm, among others, that had taken depositions, paid for experts, written
and submitted to this Court briefs on various issues. In short, Mazie’s common benefit fund
award was justifiable remuneration because it had driven the MDL litigation to the settlement.
Put differently, Mazie’s litigation efforts in the Olmesartan MDL benefitted every plaintiff in
the MDL and every plaintiff in the MCL as well as every individual who, without having filed a
lawsuit, agreed to take part in the Olmesartan settlement.
In Martino v. Mazie, this Court found nothing in NJ Court Rule 1:21-7(i) that limited
Mazie from receiving a common benefit fund award in addition to earning contingency fees
from its clients. This is because the Rule concerns the Calculation of contingency fees in
Settlement of Class or Multiple Party Actions and does NOT concern common benefit
awards, which are taken from settlement amounts to reimburse those firms that have in effect
served as counsel to the entire coterie of settling parties. The Rule rightly calculates a
contingency fee amount on the basis of the aggregate sum of all recoveries, whether by
judgment, settlement or both, and shall be charged to the clients in proportion to the recovery
of each. And that is precisely what the Olmesartan settlement fund did: it paid an amount to
each to each participating individual based on the severity of their injuries. And that’s precisely
how Mazie was awarded contingency fees: based on the amounts awarded to each individual
who signed a contingency fee agreement with Mazie. The common benefit fund award to
Mazie was NOT and can NEVER be deemed a contingency fee amount. In short, a common
benefit fund is not a double contingency fee payment, as the Johnson plaintiffs imply, but a
separate, earned fee for prosecuting the MDL litigation.
The bottom line for Johnson and Martino is that this Court never relinquished its
ancillary jurisdiction. Such retention of jurisdiction ensures that disputes over attorneys’ fees
became settled and confirmed and that the settlement itself remains a stable event, stably
safeguarded. Although Johnson and the putative class of plaintiffs here attempt again to
challenge the Olmesartan settlement agreement and the attorney’s fees stemming therefrom,
Johnson has asserted no argument that disturbs this Court’s continuing jurisdiction over
ancillary fee issues. As the Fourth Circuit noted, “just resolution of the issues raised by
attorney's fees disputes requires both an intimate working knowledge of what occurred during
the course of the class action and a uniform dispute resolution process.” Pioneer, 349 F.3d at
753. Having been the Olmesartan MDL transferee court that oversaw the litigation and

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settlement as well as the Martino attack on the common benefit fund awards, this Court
possesses the details of the MDL that no other court has or will have.
4.0

CONCLUSION
Accordingly, as this Court retains ancillary jurisdiction over matters relating to the MDL
settlement and particularly the attorney fee awards, this Court can only decide that Johnson’s
motion to remand is denied.
Dated: 27 March 2024

/s Robert B. Kugler
The Honorable Robert B. Kugler
United States District Judge