Subject: Litigation Funding

Class Action Filings on the Rise in Europe, Especially in Product Liability Cases Ahead of Full Implementation of the EU’s Representative Actions Directive

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Under the timeline imposed by the EU’s Directive of the European Parliament and of the Council on Representative Actions for the Protection of the Collective Interests of Consumers, the EU’s 27 member states were required to provide a collective litigation option to consumers by December 25, 2022, including by adopting or amending national law in jurisdictions where mechanisms for such litigation were not previously established. By June 25, 2023, member states are required to implement and begin applying these new mechanisms. But while that process is still ongoing, multiple EU member states have already taken legislative action to permit greater collective litigation mechanisms than previously available in their respective jurisdictions. Additionally, legal industry observers have already noted the increased presence of plaintiffs’ firms and litigation funders in the EU in response to the greater and increasing availability of representative and collective redress actions. See K. Henderson, Z. Okanyi, et al., European Class Action Report 2022, at 2, CMS (2022), available at https://cms.law/en/int/publication/cms-european-class-actions-report-2022.

In particular, one study noted that class action filings in Europe had increased more than 120% over the last five years (from 49 in 2018 to 110 in 2021), propelled by greater attention to potential mass actions by plaintiffs’ firms and increased availability of litigation funding. The data confirms what practitioners in this space already know: the plaintiffs’ bar in the EU is not waiting for the full implementation of the Representative Actions Directive. Of particular note, this rise is fueled, in significant part, by product liability, personal injury, and consumer mass actions.

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5 Major Drug and Device Developments of 2022

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As we ring in the new year, it is time once again to reflect on some of the most significant legal developments for drug and device companies this year. The list below is by no means exhaustive (who could forget the Rule 702 updates that took place this year, which will carry over into 2023?), but provides a brief recap and assessment of five of the most interesting and consequential developments affecting drug and device law in 2022.

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District of Delaware Chief Judge’s New Standing Order Requires Disclosure of Third-Party Litigation Funding

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The District of Delaware is the latest in a series of courts to require disclosure of third-party funding arrangements, a subject we have previously explored. The Chief Judge in the District of Delaware now joins other courts like the District of New Jersey and the Northern District of California in requiring these disclosures.

On April 18, 2022, Chief District Judge Colm F. Connolly of the United States District Court for the District of Delaware issued a standing order requiring litigants to disclose whether their cases are being financed by third parties. The standing order requires that, “where a party has made arrangements to receive from a person or entity that is not a party (a ‘Third-Party Funder’) funding for some or all of the party’s attorney fees and/or expenses to litigate th[e] action on a non-recourse basis,” either for “a financial interest that is contingent upon the results of the litigation” or “a non-monetary result that is not in the nature of a personal loan, bank loan, or insurance,” the party must disclose certain details of the funding relationship within 45 days of the entry of the standing order (i.e., by June 2, 2022) for existing cases, or within 30 days of the filing of an initial pleading or transfer of a new matter into the District.

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District of New Jersey Clarifies New Local Civil Rule Regarding Third-Party Funding Disclosures

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Over the last four months, we have tracked the District of New Jersey’s proposal and adoption of a new Local Civil Rule – L. Civ. R. 7.1.1 –  requiring lawyers to disclose details about third-party litigation funding.  The Clerk of the District of New Jersey has now issued a Notice to the Bar clarifying that this new Rule only requires the filing of a statement where third-party litigation funding exists.

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District of New Jersey Adopts Local Civil Rule Requiring Disclosure of Third-Party Litigation Funding

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The U.S. District Court for the District of New Jersey has adopted new Local Civil Rule 7.1.1, requiring lawyers to disclose details about third-party litigation funding.  On June 21, 2021, Chief Judge Freda L. Wolfson signed the order formally amending the Rule to include Section 7.1.1.

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District of New Jersey Proposes New Local Civil Rule Requiring Disclosure of Third-Party Litigation Funding

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The United States District Court for the District of New Jersey has announced proposed amendments to its Local Civil Rules, including a new rule – Civ. Rule 7.1.1 – regarding “Disclosure of Third-Party Litigation Funding.”

As we previously observed on this blog earlier this year, the exact dollar amount that third-party investors infuse into U.S. lawsuits each year is unknown, but conservative estimates begin at approximately $2.3 billion.  Currently, the District of New Jersey’s Local Civil Rules are silent as to litigation funding, but the District is focused on the importance of understanding the parameters of outside litigation funding and a mechanism for requiring disclosure.

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