3rd Circuit to Decide Judicial Authority Over Third Parties in MDLs in Ruling on NFL Concussion Case

The 3rd Circuit Court of Appeals has a heavy decision to make: just how much authority (if any) can a court exercise over a third party (non-party) in a class action or MDL claim? Judge Anita Brody voided the funding contracts between three consumer funders and thousands of ex-NFL players who were suing the league for injuries sustained during their playing years. But did Judge Brody have the authority to void those contracts? That’s what the 3rd Circuit must decide.

As reported in Reuters, a trio of consumer legal funders – RD Legal, Thrivest, and Atlas Legal Funding – all had funding agreements with ex-players in place. The funding agreements provided players upfront money to pay for lifestyle or medical bills while they awaited their settlement in the NFL concussion case.

That settlement eventually came – to the tune of $1 billion. However, Judge Anita Brody voided the funding contracts, claiming in part that the anti-assignment provision of the settlement nullifies the funding contracts.

But does a court’s authority over the disposition of a settlement extend to third parties, or non-parties in the claim?  Perhaps a court only retains power over a settlement for as long as that court oversees the claim itself, and once the claim is settled and the money is to be disbursed, any funding contracts already in place are beyond the scope of the court’s discretion?

That is what the 3rd Circuit must now decide, as the funders – led by RD Legal – have appealed her ruling. Thrivest also contends that in voiding the contracts, Judge Brody ignored an arbitration provision in its funding agreements that all disputes between players and funders be brought to arbitration. They claim her lack of deference to the arbitration agreement violates the Federal Arbitration Act.

The funders argue that MDLs and class actions are large enough as is, and there must be some boundary placed on them. There is some room for agreement on this point, as class counsel Samuel Issacharoff seemed willing to concede that a court’s discretion can’t extend into infinity. However, Issacharoff argues that Brody does retain the authority to void contracts that were entered into during the administration of the settlement, even if she maintains no oversight of the monetary disposition.

This is a key point, and one that the 3rd Circuit will have to wrestle with. The court is loathe to “stretch the outer bounds of Article III,’ according to Judge Bibas of the 3rd Circuit.

If the appeals court is to uphold Judge Brody’s decision, that may very well be what they end up having to do.

The 3rd Circuit Court of Appeals has a heavy decision to make: just how much authority (if any) can a court exercise over a third party (non-party) in a class action or MDL claim? Judge Anita Brody voided the funding contracts between three consumer funders and thousands of ex-NFL players who were suing the league for injuries sustained during their playing years. But did Judge Brody have the authority to void those contracts? That’s what the 3rd Circuit must decide.

As reported in Reuters, a trio of consumer legal funders – RD Legal, Thrivest, and Atlas Legal Funding – all had funding agreements with ex-players in place. The funding agreements provided players upfront money to pay for lifestyle or medical bills while they awaited their settlement in the NFL concussion case.

That settlement eventually came – to the tune of $1 billion. However, Judge Anita Brody voided the funding contracts, claiming in part that the anti-assignment provision of the settlement nullifies the funding contracts.

But does a court’s authority over the disposition of a settlement extend to third parties, or non-parties in the claim?  Perhaps a court only retains power over a settlement for as long as that court oversees the claim itself, and once the claim is settled and the money is to be disbursed, any funding contracts already in place are beyond the scope of the court’s discretion?

That is what the 3rd Circuit must now decide, as the funders – led by RD Legal – have appealed her ruling. Thrivest also contends that in voiding the contracts, Judge Brody ignored an arbitration provision in its funding agreements that all disputes between players and funders be brought to arbitration. They claim her lack of deference to the arbitration agreement violates the Federal Arbitration Act.

The funders argue that MDLs and class actions are large enough as is, and there must be some boundary placed on them. There is some room for agreement on this point, as class counsel Samuel Issacharoff seemed willing to concede that a court’s discretion can’t extend into infinity. However, Issacharoff argues that Brody does retain the authority to void contracts that were entered into during the administration of the settlement, even if she maintains no oversight of the monetary disposition.

This is a key point, and one that the 3rd Circuit will have to wrestle with. The court is loathe to “stretch the outer bounds of Article III,’ according to Judge Bibas of the 3rd Circuit.

If the appeals court is to uphold Judge Brody’s decision, that may very well be what they end up having to do.