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In re Chinese-Manufactured Drywall Products Liability Litigation

United States District Court, E.D. Louisiana

September 26, 2018

IN RE CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ALL CASES

         SECTION: L

          FALLON JUDGE

          SPECIAL MASTER'S WRITTEN REASONS CONCERNING REQUESTS FOR DISCOVERY

          WILKINSON MAG. JUDGE

         On January 10, 2014, the Court adopted Pretrial Order No. 28.[1] The Court noted that the parties had entered into nine class settlements, and that those settlements included funds which could be used to pay attorneys' fees and expenses. The Court then promulgated a six-step process to determine entitlement to the funds. In Step Five, the Court would determine the division of the global fee and cost award between individually-retained counsel and common benefit counsel. On July 18, 2016, the Court appointed the undersigned as Special Master “to conduct limited discovery regarding time and expense submissions, procedures, . . . and to make appropriate recommendations regarding [Step Five].”[2]

         On July 20, 2016, the Special Master reached out to the involved attorneys to solicit their thoughts on discovery.[3] This started a process whereby the Special Master received input from the involved attorneys by formal submission or, more often, by email. This process is detailed in the Special Master record. Between July 18, 2016 and June 1, 2017 (the final day of the evidentiary hearing), the Special Master sent or received 460 emails concerning the Step Five determination.

         Beginning on August 10, 2016, the Special Master periodically circulated detailed status reports to the attorneys.[4] The August 10 status report invited input concerning pending motions and the scope of discovery. On September 25, 2016, the Special Master promulgated Special Master Case Management Order No. 1, which addressed outstanding motions, ordered document production, and laid out a framework for depositions.[5]

         On October 7, 2016, some Objectors sent a letter to the Special Master requesting more expansive discovery.[6] On October 28, 2016, the Special Master modified CMO No. 1 in response to the Objectors' request.[7]

         On November 14, 2016, the Special Master promulgated Special Master Case Management Order No. 2, which established a protocol for the upcoming depositions.[8] In December 2016 and January 2017, the attorneys took four depositions: Philip Garrett (Court-appointed CPA)[9]; Russ Herman (Plaintiffs' Liaison Counsel, PSC member, and FC Co-Chair/Secretary)[10]; Sandra Duggan[11]; and Arnold Levin (PSC member and FC Chair).[12]

         In two letters dated February 8 and 15, 2017, Mr. Faircloth (one of the two appointed Objectors' Co-Liaison Counsel) requested additional discovery.[13] On April 5, 2017, the Special Master denied the requests, citing his reasoning in his October 28, 2016 ruling.[14]

         On April 23, 2017, the Special Master issued the Case Management Order Regarding Evidentiary Hearing.[15] The CMO required an exchange of witness and exhibit lists, and furthermore set forth the rules governing the hearing. In the interest of efficiency, the Special Master encouraged the use of declarations in lieu of live testimony.[16]

         On May 31 and June 1, 2017, the Special Master conducted an evidentiary hearing.[17] The Special Master stated that the entire MDL record would be considered part of the factual record (so that, in briefing the matter, the parties could refer to the MDL record to establish what the attorneys did or did not do for the common benefit).[18] The attorneys submitted approximately 750 exhibits into evidence. The following witnesses testified:

• Dawn Barrios, member of the PSC, testified concerning the work that she did for her individual clients.
• Luis Gonzales, a claimant represented by C. David Durkee, testified that concerning the circumstances surrounding his claim, including the hiring of his own contractor to remediate his home, and his recovery pursuant to Option 2 of the Knauf settlement.
• Jake Woody, senior counsel for BrownGreer (settlement administrator for the MDL settlements) testified concerning BrownGreer's accounting of the settlement funds.
• Kerry Miller, counsel for Knauf; testified concerning the circumstances surrounding the Knauf settlement.
• Russ Herman, who has served as the Plaintiffs' Liaison Counsel, a PSC member, and the FC Co-Chair/Secretary, testified concerning the PSC's conduct of the litigation and the FC's suggested allocation.
• Eric Hoaglund, an Objector; testified concerning the work he did for his individual clients. .
• C. David Durkee, an Objector; testified concerning the work he did for his individual clients.

         In addition to receiving testimony, the parties admitted approximately 750 exhibits into evidence. Many of these exhibits had been obtained through discovery.

         On September 12, 2017, the undersigned filed his Report and Recommendations into the record.[19] The undersigned subsequently transmitted to the Court the record that had been developed in the proceedings before the Special Master. This record included, among other things, written discovery, depositions, the transcript of the evidentiary hearing, and the exhibits that the parties had submitted into evidence.[20] On January 31, 2018, the Court issued its Order and Reasons Setting Common Benefit Fees, [21] thereby concluding Step Five.

         On July 3, 2018, the Step Six Final Recommendation of the Majority of the Fee Committee Regarding Allocation of the Common Benefit was filed into the record.[22] Numerous attorneys have filed responses. Some of these filings were under seal, but they have been made available for review by the interested parties.[23]

         On July 3, 2018, the Step Six Final Recommendation of the Majority of the Fee Committee Regarding Allocation of the Common Benefit was filed into the record.[24] Since then, numerous firms have filed responses to the recommendation.

         On August 21, 2018, the Court entered an order signaling its intent to appoint the undersigned as Special Master “to conduct limited discovery regarding time and expense submissions, procedures, and the relevant work of Philip Garrett, CPA, to make appropriate recommendations regarding these motions and objections.”[25] The Court later affirmed the appointment.[26]

         On August 22, 2018, the Special Master circulated an email to all attorneys known to have an interest in the Step Six determination:

I have reviewed the memoranda that have been filed in the public record (those not under seal), and I see that there is a difference of opinion concerning whether we should conduct any further discovery. If a party believes that we should engage in any further discovery, please send a group email detailing what discovery you envision and explaining why such discovery is necessary in light of the record that has already been developed (including but not limited to the record that was developed in dividing the fund between individually-retained counsel and common benefit counsel). Please email your thoughts in this respect (only if you support additional discovery) no later than the end of business on Wednesday, August 29, 2018. After I review any such proposals, I will set a deadline (probably five to seven days) for others to respond.[27]

         Attorneys representing two firms[28] subsequently requested discovery. Attorneys representing 20 firms[29] (including all seven firms that were represented on the Fee Committee as wall as 12 firms that were not represented on the Fee Committee) have explicitly stated that they oppose discovery.

         Parker Waichman's requests

         Parker Waichman submitted eight requests for discovery.[30] Baron & Budd joined in the requests.[31] The Special ...


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