Second Circuit requires plaintiff’s counsel to pay costs for his contingency-fee client after Novartis trial victory



2d Cir. -- United States Court of Appeals for the Second Circuit

Complex Litigation


On December 17, 2013, the United States Court of Appeals for the Second Circuit affirmed the district court’s award of costs against the plaintiff following Novartis’s trial victory in Hogan v. Novartis Pharm. Corp., 12-5085-cv (2d Cir. Dec. 17, 2013).  The court held that plaintiff’s counsel had an obligation under a contingency fee contract with plaintiff to pay the costs and had agreed at oral argument, under penalty of contempt, to pay the costs on behalf of the plaintiff. 

The appeal arises out of the Aredia®/Zometa® multidistrict litigation.  In May, 2011 – after the case was remanded 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 the decedent’s jaw problems.  That verdict was affirmed by the Second Circuit, 494 Fed. Appx. 132 (2d Cir., 2011), costs were awarded on the appeal, and the case was remanded for further proceedings.  Thereafter, the district court awarded Novartis costs in the amount of $5,528.43.  Plaintiff appealed the cost award.

Plaintiff argued that she should not be liable for costs because a) she was indigent, b) she was acting in a representative capacity on behalf of her deceased husband’s estate, and c) that the costs were actually awarded against counsel, rather than the plaintiff.  While preparing the briefing in opposition, Novartis’s counsel became aware that the plaintiff had never been appointed as the executor or personal representative of her deceased husband’s estate.

The Second Circuit affirmed the award of costs.  It rejected plaintiff’s argument that she was acting in a representative capacity, holding that she “provided no basis for finding that she was authorized to represent her late husband’s estate,” as required under Rhode Island law.  The Second Circuit also rejected plaintiff’s request for equitable relief based on financial hardship.  The court found that she had failed to present any evidence demonstrating that she lacked adequate financial resources to pay the costs.  More importantly, the court noted that the only evidence she did submit – her contingency fee agreement with counsel – “showed that funds to cover litigation costs were available since she had entered into a private contract with her attorney in which he would cover costs in return for a sizable share of any favorable judgment.”  The court rejected plaintiff’s claims that the district court’s consideration of these contract terms ran afoul of prior Second Circuit precedent precluding the award of costs against a party’s counsel, stating “the fact that the district court considered the availability of funds from an individual who had contracted for an interest in her legal claim and who happened to be her attorney” does not conflict with the prior precedent and was not an abuse of discretion.

The Second Circuit denied Novartis’s parallel motion for sanctions against plaintiff’s attorney, finding that at least one of the arguments advanced on appeal was not “patently frivolous.”  The Second Circuit instead noted its “concern[] by the misrepresentation that Osborn appears to have made to the Court,” regarding the standing of the plaintiff to bring claims on behalf of her deceased husband.

This is not the first time that a court has expressed concern regarding Osborn’s statements to it.  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).  And in Wallace v. Novartis Pharm. Corp., the district court found that the 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).  See also,, e.g., Blumenshine v. Novartis Pharm. Corp., No. 08-0567-CV-W-SOW (W.D. Mo. July 23,2013) (dismissing case); In re Aredia® and Zometa® Products Liability Litigation (Cole), No. 3:06-MD-01760 (M.D. Tenn. June 10, 2013) (same); Carter v. Novartis Pharm. Corp., No. 4:12-CV-605-DPM (E.D. Ark. June 4, 2013) (same); In re Aredia® and Zometa® Products Liability Litigation (Spiese) , No. 3-06-MD-1760, 2013 WL 2317743 (M.D. Tenn., May 28, 2013) (same); In re Aredia® and Zometa® Products Liability Litigation (K. Wilson), No. 3:06-MD-01760 (M.D. Tenn. May 13, 2013) (same).

Novartis is represented in this case by Firm partner Robert E. Johnston.