In re Cardinal Health, Inc. Erisa Litigation
225 F.R.D. 552, 2005 WL 78917 (2005)
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Rule of Law:
When appointing lead counsel in a complex class action under Federal Rule of Civil Procedure 23(g), a court will prioritize counsel's extensive, subject-matter-specific experience and freedom from conflicts of interest over more generalized litigation experience.
Facts:
- Syncor International Corp. merged with Cardinal Health, Inc. in June 2002.
- Following the merger, Syncor continued to exist as a wholly-owned subsidiary of Cardinal Health, eventually being renamed Cardinal Health 414, Inc.
- The law firm Schiffrin & Barroway was already representing plaintiffs in a separate class action lawsuit against Syncor International Corp.
- In an unrelated case, Moore v. Halliburton, Co., a court found that Schiffrin & Barroway had engaged in questionable settlement tactics, including negotiating a settlement without the involvement of a lead plaintiff.
- The law firms Schatz & Nobel and Stull, Stull & Brody had an established professional relationship, having previously served as co-lead counsel in several other major ERISA litigations.
Procedural Posture:
- Numerous plaintiffs filed fourteen separate ERISA actions against Cardinal Health, Inc. in the U.S. District Court for the Southern District of Ohio.
- On December 15, 2004, the District Court consolidated the fourteen lawsuits into a single Consolidated ERISA Action.
- Five different groups of plaintiffs subsequently filed competing motions with the court, each asking for their chosen law firms to be appointed as Co-Lead Counsel and Liaison Counsel for the consolidated action.
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Issue:
Does a law firm's extensive, specific experience in ERISA litigation, combined with a lack of conflicts, outweigh other factors in the selection of lead counsel under Federal Rule of Civil Procedure 23(g) from among competing applicants?
Opinions:
Majority - Marbley, District Judge
Yes. A law firm's extensive and specific experience in the relevant legal field, coupled with an absence of conflicts and a positive professional record, are the most persuasive factors in appointing lead counsel under FRCP 23(g). The court found that the McKeehan Plaintiffs' proposed counsel, Schatz & Nobel and Stull, Stull & Brody, would best represent the class due to their deep experience in ERISA litigation and their established history of collaboration. The court rejected the Heitholt Plaintiffs' proposed counsel, Schiffrin & Barroway, for two primary reasons. First, their concurrent representation of plaintiffs against Syncor (now a Cardinal Health subsidiary) created a potential conflict of interest, as they would be seeking recovery for different classes from a potentially common pool of assets. Second, the firm's prior misconduct in the 'Halliburton' case, where they excluded a lead plaintiff from settlement negotiations, raised serious doubts about their ability to fairly and adequately represent the interests of the entire class. The other applicants were denied primarily because their experience, while impressive in complex litigation generally, was less specialized in ERISA cases than the appointed firms.
Analysis:
This order provides a clear framework for how district courts weigh competing motions for lead counsel appointment in complex class actions. It underscores that deep subject-matter expertise is often the most dispositive factor, valued more highly than general class action experience. The decision also serves as a strong cautionary example, demonstrating that a firm's potential conflicts of interest and prior ethical lapses in unrelated cases can be disqualifying. This reinforces the court's crucial gatekeeping function under FRCP 23(g) to ensure the putative class is represented by qualified, responsible, and unconflicted advocates.
