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In re National Football League Players' Concussion Injury Litigation

United States Court of Appeals, Third Circuit

April 26, 2019

WILLIAM E. WHITE *RD Legal Funding, LLC; RD Legal Finance, LLC; RD Legal Funding Partners LP; Roni Dersovitz, Appellants *(Pursuant to Rule 12(a) Fed. R. App. P.) In Re: NATIONAL FOOTBALL LEAGUE PLAYERS' CONCUSSION INJURY LITIGATION **Cash4Cases, Inc.; *Atlas Legal Funding, LLC; Atlas Legal Funding I, LP; Atlas Legal Funding II, LP; Atlas Legal Funding III, LP, Appellants *(Pursuant to Rule 12(a) Fed. R. App. P.) **(Dismissed pursuant to the Clerk's Order dated 8/2/18.) In Re: NATIONAL FOOTBALL LEAGUE PLAYERS' CONCUSSION INJURY LITIGATION * Thrivest Specialty Funding, LLC, Appellant* (Pursuant to Rule 12(a), Fed. R. App. P.) THRIVEST SPECIALTY FUNDING, LLC, Appellant

          Argued January 23, 2019

          On Appeal from the United States District Court for the Eastern District of Pennsylvania District Court Nos. 2-12-md-02323, 2-18-cv-01877 District Judge: The Honorable Anita B. Brody

          TerriAnne Benedetto Seeger Weiss Samuel Issacharoff [ARGUED] Diogenes P. Kekatos Seeger Weiss Christopher A. Seeger Seeger Weiss Sol H. Weiss Anapol Weiss Counsel for Plaintiff Class

          Lynn B. Bayard Bruce A. Birenboim Brad S. Karp Paul Weiss Rifkind Wharton & Garrison Counsel for National Football League NFL Properties

          Ellen C. Brotman Jeffrey M. Hammer Michael D. Roth [ARGUED] Counsel for RD Legal Funding LLC, RD Legal Finance LLC, RD Legal Funding Partners LP, Roni Dersovitz

          Bridget C. Giroud Marissa R. Parker Stradley Ronon Stevens & Young Raul J. Sloezen [ARGUED] Counsel for Atlas Legal Funding LLC Atlas Legal Funding I LP Atlas Legal Funding II LP Atlas Legal Funding III LP

          Peter C. Buckley [ARGUED] Eric E. Reed Fox Rothschild Counsel for Thrivest Specialty Funding LLC

          Michael H. Rosenthal Rosenthal Lurie & Broudy Counsel for Andrew Stewart

          Robert C. Wood Law Offices of Robert C. Wood Counsel for William E. White

          Before: SMITH, Chief Judge, CHAGARES, and BIBAS, Circuit Judges



         This consolidated appeal involves issues tangential to the expansive National Football League (NFL) concussion injury litigation. Following approval of the settlement agreement in that class action in 2015, various class members entered into cash advance arrangements with third party litigation funders. Under the agreements relevant to the cases on appeal, class members purported to assign their rights to a portion of their settlement proceeds in exchange for receipt of immediate cash.

         In December 2017, Eastern District of Pennsylvania Judge Anita Brody, who had presided over the NFL class action and retained jurisdiction while the settlement was being administered, issued an order purporting to void in their entirety all of the assignment agreements. The District Court[1]explained that its ruling was necessary to protect vulnerable class members from predatory funding companies. Appellants RD, Atlas, and Thrivest, three groups of litigation funding entities, [2] now appeal that order and other related orders entered by the District Court.

         We commend Judge Brody for her very able handling throughout this extraordinarily complicated class action and settlement, and we appreciate her steadfast commitment to protecting class members' rights. In this instance, though, despite having the authority to void prohibited assignments, the District Court went too far in voiding the cash advance agreements in their entirety and voiding contractual provisions that went only to a lender's right to receive funds after the player acquired them. Accordingly, we will affirm in part and reverse in part in case 18-1040. We will dismiss cases 18-1639, 18-2582, and 18-1482 for lack of jurisdiction. We will vacate and remand in cases 18-2184 and 18-3005.


         In early 2012, MDL 2323 was formed to handle claims that had been filed by former professional football players against the NFL based on concussion-related injuries. On May 8, 2015, the District Court entered a final order certifying a class of former NFL players and approving the parties' final settlement agreement. This Court affirmed the District Court's judgment and upheld both the settlement and the certification of the class for settlement purposes. In re Nat'l Football League Players Concussion Injury Litig., 821 F.3d 410 (3d Cir. 2016). The Supreme Court denied certiorari review, Gilchrist v. Nat'l Football League, 137 S.Ct. 591 (2016); Armstrong v. Nat'l Football League, 137 S.Ct. 607 (2016), and the settlement went into effect on January 7, 2017.

         Under the settlement agreement, approximately 200, 000 class members gave up their claims in exchange for potential proceeds from an uncapped settlement fund. In order to receive an award, a class member must first submit a claim package including medical records reflecting a qualifying diagnosis, among other things. The Claims Administrator then conducts a preliminary review for deficiencies, investigates the claim as appropriate, and makes a determination as to whether the class member qualifies for a monetary award. Either the class member or the NFL can then appeal the monetary award determination. Only after any appeals are completed does the Claims Administrator pay out the individual's award.

         In March 2017, the claims submission process opened for class members who had been diagnosed with a qualifying illness prior to January 7, 2017. The first payouts for this group of players took place in mid-2017. Individuals without a diagnosis prior to January 7, 2017, were required to receive a diagnosis from a practitioner approved through the settlement Baseline Assessment Program (BAP). Class members could begin registering for appointments through the BAP system in June 2017. Thus, after entering into the settlement in May 2015, class members waited at least two years, and often longer, before receiving their awards.

         While waiting to receive their awards, hundreds of class members entered into cash advance agreements with dozens of litigation funding companies, including the three groups of funding entities who are appellants here. Under the agreements relevant to this appeal, class members purported to "assign" their rights to a portion of their settlement proceeds in exchange for immediate cash. The amount of proceeds assigned and the cash received varied with each class member's contract. The effective interest rate, calculated by comparing the amount of money assigned with the amount of money received, also varied significantly among the contracts.

         Under the agreements entered into by the Atlas entities and Thrivest, the funding companies obtained no right to submit a claim directly to the Claims Administrator and instead acquired only the right to receive settlement funds after the Claims Administrator had paid out the awards to the particular class members with whom they contracted. Under the RD entity agreements, the funding companies purported to obtain both the right to collect directly from the Claims Administrator and the right to collect after the award was paid out to the class member.[3] Under all of the agreements relevant to this appeal, class members expressly did not assign their legal claims against the NFL, nor did the funding companies acquire the right to assert legal claims. See, e.g., Atlas App. 890 ("[T]he Purchaser is in no way acquiring the Seller's right to sue.").

         Importantly, the May 2015 final settlement agreement included a provision under which Judge Brody broadly retained jurisdiction over administration of the settlement:

Section 27.1 Pursuant to the Final Order and Judgment, the Court will retain continuing and exclusive jurisdiction over the Parties and their counsel, all Settlement Class Members, the Special Master, BAP Administrator, Claims Administrator, Liens Resolution Administrator, Appeals Advisory Panel, Appeals Advisory Panel Consultants, and Trustee with respect to the terms of the Settlement Agreement. Any disputes or controversies arising out of, or related to, the interpretation, implementation, administration, and enforcement of this Settlement Agreement will be made by motion to the Court. In addition, the Parties, including each Settlement Class Member, are hereby deemed to have submitted to the exclusive jurisdiction of this Court for any suit, action, proceeding, or dispute arising out of, or relating to, this Settlement Agreement. The terms of the Settlement Agreement will be incorporated into the Final Order and Judgment of the Court, which will allow that Final Order and Judgment to serve as an enforceable injunction by the Court for purposes of the Court's continuing jurisdiction related to the Settlement Agreement.

         The settlement agreement also included an anti-assignment provision:

Section 30.1 No Assignment of Claims. Neither the Settlement Class nor any Class or Subclass Representative or Settlement Class Member has assigned, will assign, or will attempt to assign, to any person or entity other than the NFL Parties any rights or claims relating to the subject matter of the Class Action Complaint. Any such assignment, or attempt to assign, to any person or entity other than the NFL Parties any rights or claims relating to the subject matter of the Class Action Complaint will be void, invalid, and of no force and effect and the Claims Administrator shall not recognize any such action.

         The District Court incorporated all of the settlement terms into its final order dismissing the case.

         Following approval of the settlement, the District Court and class counsel took various steps to address cash advance agreements. In July 2016, class counsel first sent a letter to the class warning of predatory lending. The letter advised class members to avoid encumbering their settlement proceeds whenever possible. Atlas App. 1142 ("[I]f you are able to resist borrowing against any payments you might be eligible for under the Settlement, you should."). In June 2017, class counsel advised the Court that he was concerned with solicitations being sent to the class, including by high interest lenders, and received the Court's permission to send another letter to the class regarding the practice. In July 2017, Judge Brody scheduled a hearing for September 19, 2017, to address deceptive practices targeting the class, including solicitations from litigation funders.

         In an entirely separate proceeding in the Southern District of New York before Judge Loretta Preska, the Consumer Financial Protection Bureau (CFPB) and the New York Attorney General challenged the business practices of the RD funding entities. In that lawsuit, the Government claimed that RD was engaging in fraudulent lending practices through certain agreements related to settlement proceeds, including agreements with NFL class members. A question arose in the CFPB lawsuit as to whether the NFL settlement agreement's anti-assignment provision precluded class member assignments of settlement proceeds. Judge Preska determined that the most efficient way to resolve that issue would be to "refer" the question to Judge Brody because she had presided over the settlement negotiations and retained jurisdiction over administration of the settlement. On September 8, 2017, Judge Preska issued a referral letter alerting Judge Brody to the issue, but was careful to note that she was not transferring any portion of the case to Judge Brody.

         On September 19, 2017, Judge Brody conducted the scheduled hearing concerning deceptive practices. After learning of Judge Preska's referral letter, RD participated in the hearing, but other funding companies, including Atlas and Thrivest, were not involved. Following the hearing, class counsel filed a motion requesting that any disputed portion of a class member's award be withheld pending the Court's determination of whether the cash advance agreements were enforceable. The District Court granted Thrivest objector status as to the motion to withhold, and Thrivest submitted an opposition to class counsel's motion, arguing in part that the District Court lacked authority to adjudicate the enforceability ...

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