Introduction
Shortly after he received the massive Opiate multidistrict litigation (MDL), the transferee judge appointed three special masters to do everything from meeting with the parties and mediating disputes to analyzing legal submissions, coordinating with other courts, and interpreting parties’ agreements.
Indeed, it was his special master who proposed a novel “negotiation class” as a means to unite cities and counties pre-settlement.
The court compensated these special masters “at their current MDL rates” but did not disclose them, allowing each to file itemized fee statements under seal instead.
Appointments included Cathy Yanni, an arbitrator who works for the for-profit arbitration company JAMS; the late Francis McGovern, who was a professor at Duke Law School; and David Cohen, a professional special master and former president of the Academy of Court-Appointed Masters.
For more than two decades, judges presiding over mass-tort proceedings like these have parceled their authority out to a range of “judicial adjuncts”—non-Article III judges who are judicially appointed to perform judicial or administrative tasks within a specific proceeding and range from public magistrate judges to privately paid special masters, claims administrators, escrow agents, and settlement masters.
Often appointed and rarely studied, these adjuncts work behind the scenes, out of the spotlight, yet wield enormous power over the nation’s largest and often most significant cases.
Outsourcing judicial power to private adjuncts raises no shortage of questions about cost, transparency, horizontal equity, oversight, and accountability. On the defense side, companies pay private adjunct fees on top of their white-shoe lawyers’ hourly rates.
And on the plaintiffs’ side, contingent-fee attorneys eventually deduct adjunct fees as a litigation cost, which means that it is not typically lawyers’ bottom line that suffers but plaintiffs’ settlement amounts.
Deeper questions abound as well: If private adjuncts must depend on the attorneys for future appointments and income, can they be neutral? What effect might their appointment have on creating precedent and adhering to the rule of law?
Without addressing these questions, the American Bar Association (ABA) recently called for courts to appoint one type of adjunct, special masters, regularly in MDLs.
Creating an MDL means that the Judicial Panel on Multidistrict Litigation has decided that dispersed federal cases share enough factual similarities that transferring and centralizing them before the same judge for pretrial purposes promotes justice and efficiency.
MDL has thus become the go-to mechanism for handling complex, high-profile mass torts,
such as cases against Juul over e-cigarettes
and Johnson & Johnson over talcum powder.
The “transferee judge,” the judge who receives these cases, bears enormous responsibility: The vast majority of cases are resolved by motion or settlement within the MDL. Historically, fewer than 3% of all transferred cases are ever remanded to their court of origin.
The ABA’s report proposed that MDLs in particular could “benefit from specialized expertise” and that “[e]ffective special masters reduce costs by dealing with issues before they evolve into disputes and by swiftly and efficiently disposing of disputes that do arise.”
The ABA’s resolution thus urged judges to appoint special masters at “the outset of litigation” and permit them to do everything from overseeing discovery and pretrial litigation to conducting trials based on parties’ consent, allocating settlements, and administering claims.
Failing to do so, it cautioned, “[r]egardless of the reason, . . . may disserve the goal of securing ‘a just, speedy, and inexpensive determination.’”
Yet neither this reproach nor the ABA’s claims about special masters’ utility included systematic empirical support.
In contrast to the ABA’s position, Federal Rule of Civil Procedure 53 condones appointing special masters for issues “that cannot be effectively and timely addressed by an available district court judge or magistrate judge.”
Put simply, it creates a presumption in favor of appointing magistrates in lieu of special masters.
And though the Manual for Complex Litigation suggests that courts enjoy broad authority to designate experts, technical advisors, and special masters, it too cautions that these judicial adjuncts can increase the already high costs of complex cases, warns that “[t]ruly neutral experts are difficult to find,” and suggests that it may be hard to know early on whether appointments are warranted.
“Reference to a special master must be the exception and not the rule,” the Manual explains.
Even the Federal Judicial Center’s Pocket Guide for Transferee Judges warns, “In a products liability MDL, it may be particularly difficult to appoint a completely disinterested special master with no prior relationship to any of the parties, since special masters are often practicing attorneys and tend to have substantial experience with similar disputes.”
In other words, special mastering is a business, and like most businesses, it requires repeat patrons.
Of course, the latest version of the Manual was written in 2004 and the Pocket Guide in 2011. The Federal Judicial Center last studied special masters twenty years ago.
Considering all civil cases, not just complex ones, that study found that judges appointed special masters in fewer than two of every 1,000 cases (0.2%).
But several years thereafter, one federal judge predicted “that we will see more and varied appointments of such adjuncts by the year 2020, to the benefit of the courts.”
It’s now 2020. This Article wades into this controversy to set aside the crystal ball and offer a fresh empirical look at all court-appointed adjuncts in products liability MDLs—not just special masters and magistrates. We built and hand coded an original dataset from all products liability proceedings centralized from 2004 to 2017 that closed by April 15, 2019—ninety-two proceedings that included class and nonclass settlements.
It is, to our knowledge, the first attempt that anyone has made to look under the tent and document courts’ interaction with and oversight of a growing industry that thrives upon settlements.
Our deep dive into appointments, costs, and proceedings’ duration ultimately prompts us to raise a caution flag about outsourcing judicial duties to private adjuncts.
In the existing academic literature, outsourcing has been both celebrated and condemned, often as the judicial role itself changes. Part I situates the debate amid judges’ shift from dispassionate arbiters to case managers to, now, supervisors. It also debunks some persistent myths about “burgeoning” caseload statistics along the way. Although surveying the existing literature on magistrates and special masters exposes a turf war between their various proponents, the primary purpose is to set the stage for our inquiry into how judges use these adjuncts in MDLs and highlight the remarkable scarcity of work on less traditional adjuncts like claims administrators, lien resolution companies, banks, and escrow agents.
Part II dives into the MDL ecosystem, placing our dataset within the world of multidistrict proceedings and debuting a taxonomy of the cast of characters who appear within it. Despite a call to arms over “a crisis in the courts,”
this Part demonstrates that today’s judges appoint what we collectively dub “judicial adjuncts” with no greater frequency than they did in past years with a lighter workload.
Adjuncts still appear at every stage: pretrial, settlement negotiations, and post-settlement.
What we did discover, however, was a vast settlement support network comprised of banks, claims administrators, notice experts, certified public accountants, and lien resolution administrators.
Part III moves from tallying and classifying these adjuncts to statistically analyzing their effects. In so doing, we are mindful that data and analytics can tell us only so much; justice cannot be measured solely by how long a proceeding lasts nor can one measure intangibles like the benefits or drawbacks of allowing adjuncts to operate behind the scenes.
Nevertheless, these findings should help inform courts’ cost-benefit calculus, and two key results are highlighted here.
First, it was surprising to find that proceedings with special masters lasted 66% longer than those without.
Of course, this raised a causal which-came-first question: Did judges appoint special masters to larger proceedings anticipating that they would be more difficult (and thus take longer) to resolve? Or did the special masters themselves cause that delay? Using a duration model made it possible to screen some noise by controlling for a proceeding’s outcome (settlements uniformly took longer), personal injury claims (which likewise took longer), and the number of actions (the more actions, the longer the proceeding lasted).
We found that appointing a judicial adjunct of any kind made the proceedings continue longer than they otherwise would, all else being equal.
Although adding another plaintiff’s action to a proceeding had almost no effect on how long it lasted, designating an adjunct meant that the proceeding was 43% less likely to end.
And for every additional adjunct appointed, there was a 12% decrease in the probability of a proceeding ending.
These findings raise questions about whether efficiency claims can justify appointing judicial adjuncts. To be sure, there may be other benefits such as specialized expertise and, perhaps more controversially, the ability to talk with parties behind closed doors,
but if judges rely on adjuncts primarily to ease their caseload and speed proceedings along, then they ought to reconsider.
Second, costs rise to the fore because parties are paying for both lengthier lawsuits and private adjuncts. But in considering adjuncts’ costs, we ran into a significant roadblock: Compensation information was either undisclosed or affirmatively sealed for 62.8% of private adjunct appointments.
Even though we couldn’t always identify the amounts charged, we were able to discern that plaintiffs alone bore the costs for 54% of private adjuncts, meaning that in over half of the appointments, defendants did not contribute.
Some of the payments that we could unearth ran into the millions. In the Actos proceeding, for instance, Special Master Gary Russo charged over $4.7 million, and Deputy Special Master Kenneth DeJean charged over $1.3 million.
To administer the Zyprexa settlement, Special Settlement Masters Ken Feinberg, Michael Rozen, Cathy Yanni, and John Trotter collectively charged over $9.4 million.
If proceedings with adjuncts cost more and last longer, why do judges appoint them? To piece together this puzzle, we supplemented our quantitative analysis with twenty-two semi-structured, confidential interviews. These interviews include conversations with special masters, magistrate judges, claims administrators, district judges, and plaintiffs’ and defense attorneys with a wealth of experience not only in our proceedings but also in MDLs spanning back to the 1960s.
Interviews revealed two competing narratives, which Part IV highlights. In one version, courts outsourced to effectively manage complex cases behind the scenes and closely monitored those appointed. In the other, repeat players in both the bar and the private-adjunct sector came to mutually beneficial arrangements that exposed real-life problems over capture, self-dealing, bias, transparency, and ad hoc procedures.
Shining light into this segment of the MDL world made it clear that privatization no longer exists on a parallel track with Article III courts—judges outsource their own power to private actors. As privatization occurs under the aura of the federal courts, it raises central questions about court access, cost, impartiality, and fairness, which intersect with existing literatures debating courts’ purpose, ad hoc rulemaking, and the judicial role.
Part V thus steps back to offer some larger institutional lessons and chart a path forward. As courts delegate authority to private adjuncts who, more often than not, plaintiffs must compensate, justice may come with a heavier price tag for those least able to afford it. Judges sometimes cite the enormous expense of complex proceedings as a whole as a reason to appoint an adjunct, but moving from the grandiose to the granular shows that those choices have real impact on individual plaintiffs. In the pelvic-mesh proceedings, for instance, one plaintiff’s settlement statement revealed a $6,200 fee for “settlement program expense allocation” plus a “Cathy Yanni Appeal Cost” of $2,000.
Costs, attorneys’ fees, and mandatory medical-lien holdbacks whittled a settlement offer of $195,000 down to less than $60,000.
As the New York Times reported, this plaintiff’s experience was not an anomaly: The average pelvic-mesh plaintiff received “less than $60,000” despite horrific injuries.
Medical costs alone can wipe plaintiffs out financially, and one claims administrator estimated that at least 15% of mesh plaintiffs were bankrupt.
Reducing costs—measured in both time and actual dollars—is thus crucial.
Appointing magistrate judges, whose salaries come from the general tax revenue, is often a better alternative. As salaried public employees, magistrates are further insulated from the capture, bias, and self-interest concerns that plague party-selected, party-compensated private adjuncts.
They can (and have) performed the same work as special masters, and sometimes even claims administrators, for far less expense.
They are already ensconced within the federal courthouse and they possess the legitimacy of federal office.
Plus, they are accustomed to the ways in which judges review their decisions, and clear paths exist for correcting error.
Far from complaining about the workload, our interviews suggest, in harmony with previous findings, that many magistrate judges want and enjoy MDL work.
As products liability MDLs play a policing role that impacts public health, it makes sense to use the general tax base to compensate the public servants who help resolve these disputes and to ensure that the work itself is both public and reviewable.