                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-5-2004

In Re: Diet Drugs
Precedential or Non-Precedential: Precedential

Docket No. 03-2025




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Recommended Citation
"In Re: Diet Drugs " (2004). 2004 Decisions. Paper 179.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/179


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                 PRECEDENTIAL                           MDL No. 1203
    UNITED STATES COURT OF                    District Court Judge: The Honorable
           APPEALS                                      Harvey Bartle, III
     FOR THE THIRD CIRCUIT

                                                 Argued on December 10, 2003
  Nos. 03-2025, 03-2063 and 03-2072
                                               Before: AMBRO, FUENTES and
                                                 CHERTOFF, Circuit Judges
       IN RE: DIET DRUGS
 (PHENTERMINE/FENFLURAMINE/
      DEXFENFLURAMINE)                              (Filed October 5, 2004)
PRODUCTS LIABILITY LITIGATION

  FLEMING & ASSOCIATES, LLP,
  on behalf of its clients subject to the
  Sixth Amendment to the Nationwide         George M. Fleming
Class Action Settlement Agreement with      Sylvia Davidow
 American Home Products Corporation,        Rand P. Nolen
Appellant in No. 03-2025                    Fleming & Associates, LLP
                                            1330 Post Oak Blvd., Suite 3030
JOEL ZUCKERBERG,                            Houston, TX 77056
Appellant in No. 03-2063
                                            Jonathan Massey (argued)
  HARITON & D’ANGELO, LLP and               Jonathan Massey, P.C.
     NAPOLI, KAISER, BERN &                 3920 Northampton Street N.W.
   ASSOCIATES, LLP, on behalf of            Washington, DC 20015
  themselves and their clients who are
 specifically identified in and/or whose    Mike O’Brien
claims are affected by Pretrial Order No.   Mike O’Brien, P.C.
                  2778,                     1330 Post Oak Blvd., Suite 2960
Appellants in No. 03-2072                   Houston, TX 77056

                                            Attorneys for Appellant
_______________                             Fleming & Associates, LLP

                                            N. Albert Bacharach, Jr.
                                            115 Northeast 6th Avenue
    On Appeal from the United States        Gainesville, FL 32601-3416
              District Court
 for the Eastern District of Pennsylvania   Attorney for Appellant
        Civil Action No. 99-20593           Joel Zuckerberg
                                             Houston, TX 77077
Paul J. Napoli
Denise A. Rubin                              Attorneys for Appellees
W. Steven Berman                             American Home Products Corporation
Napoli, Kaiser, Bern & Associates            (a.k.a Wyeth), Plaintiffs’ Class and Class
3500 Sunrise Highway, Suite T207             Counsel
Great River, NY 11739

Mario D’Angelo
Hariton & D’Angelo                                 OPINION OF THE COURT
3500 Sunrise Highway, Suite T207
Great River, NY 11739
                                             FUENTES, Circuit Judge:
Attorneys for Appellants
                                                     This appeal arises from the multi-
Napoli, Kaiser, Bern & Associates, LLP
                                             district litigation (MDL) 1203 diet drug
and Hariton & D’Angelo, LLP
                                             product liability litigation. The appeal
                                             concerns the validity of an amendment (the
                                             “Sixth Amendment”) to the Nationwide
Peter L. Zimroth
                                             Class Action Settlement Agreement (the
Arnold & Porter
                                             “Settlement A greem ent”) e xecu ted
399 Park Avenue
                                             between Appellants and American Home
New York, NY 10022
                                             Products Corporation (a.k.a. “Wyeth”)1 in
                                             relation to the diet drugs litigation. The
Robert D. Rosenbaum (argued)
                                             Sixth Amendment was approved by the
Sarah M. Brackney
                                             District Court in Pretrial Order (“PTO”)
Arnold & Porter
                                             No. 2778.         The Amendment gives
555 Twelfth Street
                                             claimants who would otherwise have been
Washington, DC 20004
                                             bound by the Settlement Agreement the
                                             right to opt out of the Agreement and
Arnold Levin
                                             proceed with tort litigation against Wyeth
Michael D. Fishbein (argued)
                                             in the event that the fund established to
Fred S. Longer
                                             pay claims und er the S ettlement
Arnold & Levin
                                             Agreement (i.e., the “Settlement Trust”)
510 Walnut Street, Suite 500
                                             becomes insolvent.       Under the Sixth
Philadelphia, PA 19106

Charles R. Parker                              1
                                                 American Home Products changed its
John Roberson
                                             name to Wyeth in March 2002. We use
Hill & Parker
                                             the name Wyeth.
5300 Memorial Drive, Suite 700

                                         2
Amendment, claimants’ rights to sue                  issued a press release reporting abnormal
Wyeth are subject to certain restrictions.           echocardiograms in a “higher than
Because of these restrictions, Appellants            expected percentage of” patients taking the
here argue that the District Court should            drugs. See Press Release, FDA, FDA
not have approved the Sixth Amendment                Announces Withdrawal of Fenfluramine
as fair, adequate and reasonable.                    and Dexfenfluramine (Fen-Phen) (Sept.
Appellants further argue that they were              15, 1997). Subsequent studies suggested
deprived of due process in that they (1) did         that the drugs may have been linked to
not receive adequate notice of the risk of           serious cardiopulmonary side effects,
Trust insolvency when they opted to be               including heart-valve regurgitation (the
bound by the Settlement Agreement and                reverse flow of blood through a closed
( 2 ) d i d n o t re c e i v e a d eq u a t e        valve of the heart).
representation.
                                                     After the withdrawal of the diet drugs,
        Because we believe that the Sixth            18,000 individual suits and 100 class
Amendment provides class members with                actions were filed in state and federal
additional rights that did not exist under           courts. In December 1997, the federal
the original Settlement Agreement                    cases were consolidated for pretrial
(specifically, the right to sue W yeth, albeit       purposes in the Eastern District of
subject to certain conditions) we will               Pennsylvania pursuant to MDL 1203. In
affirm the District Court’s approval of the          November 1999, Wyeth entered into a
Amendment as fair, adequate and                      Nationwide Class Action Settlement
reasonable. We reject the due process                Agreement with users of the diet drugs in
notice and adequate representation                   the United States.        After conducting
arguments, because those arguments relate            fairness proceedings, the District Court in
to the original Settlement Agreement, the            the Eastern District of Pennsylvania
validity of which is not properly before             certified a settlement class and approved
this Court, and have been previously and             the Settlement Agreement, finding it “fair,
finally heard and rejected by this Court.            reasonable and adequate.” See PTO 1415.
Accordingly, we hold the Sixth                       The Settlement Agreement became final
Amendment to the Settlement Agreement                upon exhaustion of all appeals. The
to be valid.                                         Settlement Agreement established the
                                                     Settlement Trust to administer Wyeth’s
 I. FACTUAL BACKGROUND AND
                                                     obligations to class members who agreed
      PROCEDURAL HISTORY
                                                     to participate in the Settlement.
       Prior to 1997, Wyeth sold two
                                                     Diet drug users who wished to opt out of
prescription drugs for the treatment of
                                                     the Settlement Agreement could do so by
obesity,       fenfluramine        and
                                                     filing an “Initial Opt Out” form by March
dexfenfluramine, marketed as “Pondimin”
                                                     30, 2000. Putative class members were
and “Redux.” In September 1997, the U.S.
                                                     informed of the right to opt out through
Food and Drug Administration (FDA)

                                                 3
“an elaborate and extensive plan of                  and to pursue claims against Wyeth subject
notice,” which included weeks of                     to certain limitations. These limitations
television, print, and internet advertising,         included a prohibition against “seek[ing]
patient notification materials provided              punitive, exemplary, or any multiple
through pharmacists and prescribing                  damages.” App. at 85-86.
doctors, a toll-free number, and a detailed
                                                             Diet drug users who currently suffer
“notice package” sent to all possible class
                                                     from severe heart-valve regurgitation or
members whose names and addresses were
                                                     from moderate reg urgitatio n w ith
known or who called the toll-free number.
                                                     complicating features, or who have less
PTO 1415. Persons who timely exercised
                                                     severe heart-valve conditions that progress
initial opt out rights were free to pursue
                                                     to the more serious levels in the fifteen
any and all claims against Wyeth. Those
                                                     years following execution of the
who did not remained members of the
                                                     Settlement Agreement, may claim and
class and agreed to be bound by the
                                                     re c ove r com pens ation u nder the
conditions and benefits of the Settlement
                                                     Settlement. The amount of their recovery
Agreement.         Upon ap proving the
                                                     is determined by damage “Matrices” that
Settlement Agreement, the District Court
                                                     assess factors such as severity and length
entered PTO 1415, which expressly “bars
                                                     of illness to calculate the damage award.3
and enjoins” all class members “from
                                                     Alternatively, class mem bers with
asserting, and/or continuing to prosecute”
                                                     conditions that would allow them to
any settled claim against Wyeth.2
                                                     qualify for these “Matrix” benefits (and
        The    S et tl em e n t A g r ee m ent       who fulfill other eligibility requirements
contained an exception to this bar,                  set out in the Agreement) may exercise
permitting class members who met                     “Back-End Opt Out” rights and pursue tort
specific physical requirements (diagnosed            claims against Wyeth, so long as they have
as having a severity of heart-valve                  not already made a claim for compensation
regurgitation defined as “FDA Positive”)             under the Settlement Agreement. Once a
to pursue “Intermediate Opt Out” rights.             class member discovers that his heart-
These rights allowed class members to opt            valve condition is serious enough to
out of the Settlement at a date beyond the           qualify him for Matrix-level benefits, the
Initial Opt Out period (without Wyeth                class member must make an election as to
asserting statute of limitations defenses)

                                                       3
                                                         Class members may receive payment
    2
      PTO 1415 further provides for the              based on one level of disease and “step
settlement court to retain “continuing and           up” to additional Matrix compensation if
exclusive jurisdiction . . . to administer,          they exhibit a Matrix-level injury by year
supervise, interpret and enforce the                 2015 and their heart-valve conditions
Settlement in accordance with its terms.”            increase in severity to a higher level before
                                                     they reach the age of 80.

                                                 4
which option to pursue. The Settlement                     likely claims.
Agreement specifically provides that “[a]
                                                                   However, after approval of the
Class Member may not exercise a Back-
                                                           Settlement Agreement, the Trust was
End Opt Out right after claiming any
                                                           inundated with Green Form claims for
Matrix Compensation Benefits.” App. at
                                                           Matrix benefits in a volume not anticipated
575. As with the Intermediate Opt Out,
                                                           by the experts who testified at the fairness
class members exercising Back-End Opt
                                                           hearing. As the District Court determined,
Out rights will not be blocked by statute of
                                                           a significant proportion of the filings came
limitations defenses, but are restricted
                                                           from a few law firms that represented large
from asserting punitive, exemplary, or
                                                           numbers of claimants. The District Court
multiple damages.
                                                           also observed that, in conducting their
          Thus, according to the system set                claims process, these firms carried out
out in the Settlement Agreement, any diet                  mass screening programs in which
drug users who fail to exercise Initial,                   cardiologists retained by the firms “made
Intermediate, or Back-End Opt Out rights                   unreasonable judgments on a broad scale”
are bound by the terms of the Settlement                   concerning the existence, history, nature,
Agreement and its bar against attempting                   and degree of heart-valve disease claimed.
to pursue any claims against Wyeth. For                    PTO 2640. The claims process was
those who remain in the Settlement, a                      further frustrated by the fact that several of
claim for Matrix benefits is made by                       the Green Forms submitted were
submitting a three-part “Green Form” to                    incomplete, which made it impossible for
the Settlement Trust.               Wyeth funds            Trust administrators to assess eligibility
payment of Matrix benefits through                         for the particular Matrix benefit claimed.
deposits into the Trust.                Under the          To ameliorate the situation, the District
Settlement Agreement, Wyeth’s funding                      Court ordered that all claims for M atrix
obligation is limited to $3.75 billion, plus               benefits be subjected to audit.
any increase in value of the principal of
                                                                  Despite this effort, the risk
the Trust. The fact of this limit was made
                                                           remained that the number of claims would
known to class members through the class
                                                           exhaust the Trust’s available funds.
notice. During the fairness hearing before
                                                           Additionally, the remedy intended under
the District Court, experts testified as to
                                                           the Settlement Agreement to address the
their conclusion that, after considering
                                                           problem of insufficient Matrix funds, the
e x t e n s iv e e p i d e m i o l o g i c a l a n d
                                                           Back-End Opt Out, was not available to
demographic evidence, $3.75 billion was
                                                           class members who had already filed
more than sufficient to pay all Matrix
                                                           claims for Matrix benefits. Therefore, in
claims anticipated under the Settlement.
                                                           response to the potential risk of Trust
Based on this evidence, to which none of
                                                           insolvency, Wyeth and Class Counsel
the parties objected, the District Court
                                                           executed a proposed Sixth Amendment to
found the funds sufficient to satisfy all
                                                           the Settlement Agreement, which would

                                                       5
create a new opt out right for class               Form submitted for Matrix benefits.6 By
members who claimed Matrix benefits by             extension, this provision allows the Trust
May 3, 2003, and were found medically              to determine whether a class member is
eligible for these benefits, but would             qualified to exercise a Sixth Amendment
otherwise go without payment under the             Opt Out.
original Settlement Agreement in the event
                                                           After conducting an approval
of funding insufficiency. 4 Under the Sixth
                                                   hearing, the District Court issued PTO
Amendment Opt Out right, claimants may
                                                   2778, finding the Sixth Amendment fair,
pursue a tort action but may not name any
                                                   reasonable and adequate.          However,
defendant other than Wyeth, may not join
                                                   Ap pellan ts argue that the Sixth
any other plaintiff (other than a derivative
                                                   Amendment deprives them of their full
plaintiff), and may not consolidate their
                                                   litigation rights by imposing new
action with any other.5         The Sixth
                                                   restrictions on their ability to pursue tort
Amendment Opt Out right is also subject
                                                   claims against Wyeth (i.e., limiting the
to the same restrictions placed on the
                                                   defendants whom they may name and join,
Intermediate and Back-End Opt Out in that
                                                   and barring consolidation of actions).
persons exercising this opt out may not
                                                   Related to this argument is Appellants’
pursue punitive, exemplary, or multiple
                                                   claim that the class notice pertaining to the
damages. In addition to the opt out
                                                   original Settlement Agreement was
provision, the Sixth Amendment also sets
                                                   inadequate for not specifically informing
forth criteria for the required level of
                                                   diet drug users of the risk of Trust
completedness of the three-part Green
                                                   insolvency and that their representation
                                                   was inadequate as a result of this risk of
                                                   insolvency. Thus, Appellants contend that
                                                   class members affected by the risk of
  4
    Before the District Court’s approval of        insolvency were denied due process and
the Settlement Agreement in August 2000,           should be permitted to opt out of the
the Settlement Agreement had been                  Settlement unconditionally.
amended five times. For convenience, we                        II. DISCUSSION
will refer to the Settlement Agreement as
it stood prior to approval of the Sixth
Amendment as the “original” settlement.
                                                      6
                                                        Thus, under the Sixth Amendment, a
      5
     The option is not available to class          claim for Matrix benefits will be deemed
members who have already received a                filed upon the Trust’s receipt of either (1)
payment of any Matrix benefit. Instead, a          “Part I” of a Green Form signed by the
residual amount of $255 million will               class member or (2) “Part II” of a Green
remain in the fund to pay claims arising           Form signed by a class member indicating
from progression of already compensated            that he accepts entitlements to M atrix
Matrix-level diseases.                             benefits.

                                               6
         A.       Fairness, Adequacy and
R e a s o n a b l e n e s s o f t h e S i x th
Amendment
       1. Additional Rights Provided by
the Sixth Amendment



       Under Federal Rule of Civil                   class members that the original Settlement
Procedure 23(e)(1)(A), a “court must                 Agreement did not contain. They stress
approve any settlement, voluntary                    that, in evaluating an amendment to a class
dismissal, or compromise of the claims,              action settlement, the court should
issues, or defenses of a certified class.”           consider whether the amendment provides
Subsection (C) states that “[t]he court may          additional benefits and protections for the
approve a settlement, voluntary dismissal,           class. See, e.g., In re Sulzer Prosthesis
or compromise that would bind class                  Liab. Litig., 2002 WL 553728, at *1 (N.D.
members only after a hearing and on                  Ohio Mar. 14, 2002) (granting approval to
finding that the settlement, voluntary               amended settlement agreement that
dismissal, or compromise is fair,                    increased overall value of the settlement
reasonable, and adequate.” In PTO 2778,              and eliminated liens on defendants’ assets
the District Court held that this standard           for the benefits of opt-outs). One purpose
for analyzing the fairness of a proposed             for which it is appropriate to approve such
settlement under Rule 23(e) should also be           an amendment is adjusting for changed
applied to analyze the fairness of a                 circumstances, particularly in light of the
proposed amendment to the settlement.                parties’ experience in implementing the
See Walsh v. Great Atl. & Pac. Tea Co.,              agreement. See, e.g., In re Joint E. & S.
726 F.2d 956, 965 (3d Cir. 1983) (A court            Dists. Asbestos Litig., 237 F. Supp. 2d
may approve a proposed class action                  297, 300 (E.D.N.Y. 2002).
settlement if it is “fair, adequate, and
                                                     The new Sixth Amendment Opt Out right
reasonable” to class members.).7
                                                     provides class members who claim Matrix
Class Counsel and Wyeth argue that the               benefits with at least some protection
Sixth Amendment provided new rights to               against the risk that their injuries would go
                                                     uncompensated if the Settlement Trust
                                                     becomes insolvent at some future time. As
    7
       This Court has not addressed the              it is now, Wyeth’s financial obligations to
proper standard for a District Court to              the settlement Trust are subject to a
review an amendment to a settlement                  specified maximum under the Settlement
agreement. Neither party argues, however,            Agreement. Wyeth, therefore, has no
that the District Court applied the wrong            further obligation to pay otherwise eligible
standard.                                            Matrix claimants once its $3.75 billion

                                                 7
funding contribution is exhausted.                 Appellants are correct that exhaustion of
                                                   funds voids the Settlement Agreement and
       Appellants do not argue that any
                                                   leaves them free to pursue their tort rights
provision of the Settlement Agreement
                                                   without restriction, “then Class Members
obligates Wyeth beyond this amount if the
                                                   will have lost nothing by [the District
Trust cannot satisfy all claims. Rather,
                                                   Court’s] approval of the Amendment.” Id.
Appellants claim that class members did
not receive adequate notice under Rule                      Further, the Amendment provides
23(e) of the risk of Trust insolvency.             that, if the Trust becomes insolvent, Wyeth
Thus, they argue from principles of                has the option of paying any eligible
contract and equity (discussed more fully          unpaid claims (although it would have no
below) that any unpaid class members               contractual obligation to do so) or leaving
would not have received the full benefit of        them unpaid, subject to the Sixth
their agreement under the Settlement due           Amendment Opt Out. This provision was
to a mutual mistake of fact concerning the         intended to give Wyeth an incentive to
Trust’s capacity to satisfy all potential          fund such benefits voluntarily in order to
claims. Therefore, Appellants contend that         avoid defending tort claims by unpaid
the Settlement Agreement is void and that          Matrix claimants (a threat that did not exist
unpaid claimants should be released from           before the Amendment). Consolidated
the agreement and permitted to sue Wyeth           Brief at 26. However, Appellants argue
without restriction.                               that Wyeth always had a right to
                                                   voluntarily fund unpaid Matrix claims
Even if Appellants are correct in these
                                                   despite the Sixth Amendment and,
contract and equity arguments, the District
                                                   therefore, that this provision of the
Court found that class members would
                                                   Amendment conferred no additional
suffer no harm by approval of the Sixth
                                                   benefit on Appellants. Appellant Brief at
Amendment. The Court explained that
                                                   25. We are not convinced by Appellants’
because Wyeth’s obligation to the class is
                                                   argument here. It is true that if Wyeth
capped at $3.75 billion, the Amendment
                                                   chooses to pay a claim in the event of
provides a new benefit by providing those
                                                   funding exhaustion, then the compensated
Matrix claimants who would otherwise go
                                                   claimant will simply have received his
unpaid “with a specific contractual right to
                                                   bargained-for benefit under the Settlement.
pursue their compensatory claims against
                                                   However, Appellants cannot view this
Wyeth” by opting out of the Settlement.
                                                   provision of the Amendment in isolation.
App. at 10. This right was nonexistent
                                                   The Amendment as a whole provides an
under the original Settlement Agreement
                                                   additional benefit to claimants through its
as eligible class members who filed Green
                                                   new opt out right in addition to the
F o rm s claim in g M atrix be nefit s
                                                   incentive it gives Wyeth to pay claims
relinquished their Back-End Opt Out rights
                                                   voluntarily.      A claimant’s chance of
and, consequently, agreed to be bound by
                                                   recovering damages is only strengthened
the Settlement. On the other hand, if

                                               8
by the added incentive provided by the opt          tort action against Wyeth at all if the Trust
out and voluntary payment provisions of             becomes insolvent. 8 The District Court
the Sixth Amendment combined. Thus,                 did not find sufficient reason to reject the
the Sixth Amendment provides all                    Amendment simply because the right to
claimants with additional protections               sue under it “comes at the price of certain
against being left empty-handed that did            restrictions and may not go so far as
not exist under the original Settlement             [Appellants] would like.” App. at 11.
Agreement.                                          Further, the District Court stressed that the
                                                    Sixth Amendment provides more security
                                                    for a Matrix claimant than the option
     2. Restrictions on          the   Sixth        proposed by Appellants because “[i]n the
Amendment Opt Out Right                             event of a funding shortfall, class members
                                                    cannot be at all sure they would be able to
        Appellants claim that the Sixth
                                                    undo the Agreement and sue Wyeth in
Amendment unfairly and unreasonably
                                                    tort.” App. at 11.
restricts the opt out right that it provides.
First, Appellants assert that the Sixth                     Ap pellan ts also specifically
Amendment Opt Out strips class members              challenge the reasonableness of the Sixth
of their rights to join plaintiffs and name         Amendment’s restriction on joinder,
additional defendants in any lawsuit filed          arguing from principles of civil procedure
against Wyeth. We are not persuaded by              that the plaintiff is “the master of his own
this argument because, as discussed above,          complaint” and that restrictions on joinder
the Sixth Amendment still provides class            deprive opt-out plaintiffs of the right to
members with an opt out right that did not          choose their jurisdiction. Appellant Brief
exist under the original Settlement                 at 26 (citing Holmes Group, Inc. v.
Agreement. The restrictions imposed                 Vornado Air Circulation Sys., 535 U.S.
apply only to suits brought by class                826, 831 (2002)). In response, Wyeth
members exercising the Sixth Amendment              asserts that it negotiated this restriction in
Opt Out and, in the absence of the
Amendment, these class members would
                                                      8
have no right to bring an action at all                 Class members may still have a right to
because they relinquished this right under          sue on a mistake of fact contract theory,
the Settlement Agreement when they                  asserted by Appellants here. However, in
claimed Matrix benefits. The provision of           such a case, they would argue that the
the Agreement barring class members who             Settlement Agreement is void, which
claim Matrix benefits from subsequently             would render the Sixth Amendment
exercising a Back-End Opt Out existed               irrelevant in any case and, thus, have no
before the Sixth Amendment.              See        bearing on the issue of whether the District
Settlement Agreement § IV.D.4.b.                    Court’s approval of the Amendment was
Without the Amendment, therefore, class             proper.
members would have no right to bring a

                                                9
order to prevent fraudulent joinders by             settlement, voluntary dismissal, or
plaintiffs attempting to block Wyeth’s              compromise.” This notice must inform
removal of state court actions to federal           class members of the existence of the
court.    Consolidated Brief at 31-36.              pending litigation and provide them with
Although Appellants also cite decisions of          the information “needed to decide,
the District Court in our case encouraging          intelligently, whether to stay in or opt out.”
the policy of joining claims and parties,           Amchem Prods. v. Windsor, 521 U.S. 591,
Appellant Brief at 27-28, they cite no case         628 (1997); see also Phillips Petroleum
law suggesting that it would be                     Co. v. Shutts, 472 U.S. 797, 812 (1985)
unreasonable for the parties to enter into a        (stating that class members must be
contract that imposed such a joinder                provided with meaningful notice and an
restriction as a condition of a right to sue        opportunity to exclude themselves from
that did not exist before (as it had been           the class). Appellants argue that the
specifically relinquished under the original        District Court’s finding of adequate notice
Agreement). Consolidated Brief at 37.               in approving the Settlement was premised
Again, despite the joinder restriction, the         in part on the assumption that the
Sixth Amendment still added new rights to           Settlement funds were sufficient to pay all
the Settlement Agreement without                    claims for Matrix benefits. To have been
depriving class members of any                      adequate, Appellants argue that the notice
preexisting rights.                                 should have informed the class that certain
                                                    members could receive no compensation if
                                                    the fund becomes insolvent. Appellant
      B. Class Members’ Due Process                 Brief at 34-35. Appellants assert that, for
Rights: Adequacy of Notice and Class                these class members “trapped inside the
Representation                                      settlement without their promised benefit,”
                                                    the Sixth Am endm ent’s litiga tion
                                                    restrictions amount to a deprivation of
       Appellants argue that M atrix                rights without notice or opportunity for a
claimants who would be left empty-handed            hearing. Id. at 35-36.
if the settlement funds prove to be
                                                            Appellants also argue that these
insufficient were deprived of their due
                                                    class members did not receive adequate
process rights in two instances: adequacy
                                                    class representation, as required by Rule
of notice and adequacy of class
                                                    23(a). Under Subsection (4), “[o]ne or
representation. First, Appellants claim that
                                                    more members of a class may sue or be
class members did not receive adequate
                                                    sued as representative parties on behalf of
notice of their opt out rights in accordance
                                                    all only if . . . the representative parties
with Rule 23(e). Under Subsection (B),
                                                    will fairly and adequately protect the
“[t]he court must direct notice in a
                                                    interests of the class.” Accordingly, class
reasonable manner to all class members
                                                    members with divergent or conflicting
who would be bound by a proposed

                                               10
interests cannot be adequately represented                   inadequate representation in light of this
by the same named plaintiffs and class                       potential risk, despite the fact that such a
counsel. Amchem, 521 U.S. at 625-26.                         situation has not materialized and was not
Appellants cite Stephenson v. Doe                            even contemplated at the time of the
Chemical Co., a case in which the Second                     Settlement. Although couched in terms of
C i r c u i t h e l d t h at u n a n t i ci p a t e d        the Sixth Amendment, in reality
developments, occurring even years after                     Appellants’ due process challenges take
the settlement, may render inadequate the                    exception to the notice and adequacy of
representation and notice afforded some                      representation involved with the original
class members. 273 F.3d 249, 261 (2d Cir.                    Settlement Agreement, insofar as they are
2001), aff’d in part, rev’d in part per                      centered around the alleged failure to
curiam, 539 U.S. 111 (2003).                   The           notify potential class members of the risk
Stephenson Court held that no class action                   of insolvency of the Trust. The District
orders were binding on these class                           Court here was faced with the question of
members and, therefore, upheld a                             whether a proposed amendment to the
collateral attack on the class settlement.                   original Settlement Agreement was proper,
Id. at 259. The Supreme Court’s per                          and it is the Court’s answer to that
curiam opinion affirmed Stephenson on an                     question that is being appealed, not the
equally divided 4-4 vote, and therefore is                   validity of the original settlement. For that
not binding. Still, Appellants cite it as                    reason, this appeal is not the proper
persuasive authority here. They argue that                   vehic le to challenge the original
the Sixth Amendment creates tw o                             Settlement Agreement. That Agreement
categories of class members, each one with                   resulted in a final order certifying the class
divergent interests: (1) those who either                    and approving the settlement, which was
claimed benefits early enough to be                          not addressed by the District Court in this
compensated or opted out of the                              matter. See In re Diet Drugs, 282 F.3d
Settlement under the known opt out rights                    220, 229 (3d Cir. 2002). To present such
in t h e A greement (i.e., Initia l,                         a challenge, Appellants must seek relief
Intermediate, or Back-End); and (2) those                    either under Rule 60(b)9 or through a
who claimed benefits later and are now left
with the restrictive Sixth Amendment Opt
Out right. Because of these divergent                         9
                                                                Rule 60(b) allows parties to petition for
interests, Appellants argue that having a
                                                             relief from final judgments due to, among
single class counsel for both groups of
                                                             other things, “mistake, excuse, or
class members resulted in inadequate
                                                             excusable neglect,” “fraud . . .,
representation. Appellant Brief at 39.
                                                             misrepresentation, or other misconduct of
       In short, Appellants claim that they                  an adverse party,” or if “the judgment is
received inadequate notice that the Trust                    void.” Fed. R. Civ. P. 60(b); see, e.g.,
could become insolvent and received                          Mayberry v. Maroney, 558 F.2d 1159,
                                                             1163 (3d Cir. 1977) (entertaining Rule

                                                        11
collateral attack on the order approving the          v. Local Union No. 469, 613 F.2d 1235,
Settlement. 10 Moreover, this Court has               1239 (3d Cir. 1980) (noting that “[t]he[]
already addressed the notice and adequacy             issues have not been briefed on appeal,
of representation with respect to the                 and it does not appear from the record that
original Settlement Agreement and we                  the parties thoroughly developed these
found the requirements of due process                 topics below” and further noting that “the
satisfied. See In re Diet Drugs, 282 F.3d             trial court should have an opportunity to
at 230-31; see also Shutts, 472 U.S. at 811-          pass on these important questions in the
12 (setting forth “procedural due process             first instance”).
protection[s]” necessary in order for a
                                                      Of course, Appellants are in no way
class action judgment to have binding
                                                      precluded from challenging the adequacy
force on absent class members). Due
                                                      of representation with respect to the
process does not require this Court to
                                                      negotiation of the Sixth Amendment here.
entertain challenges to adequacy of notice
                                                      However, we reject Appellant’s argument
and representation every time any case
                                                      that the Sixth Amendment created two
related to a class action judgment comes
                                                      groups of class members with divergent
up on appeal. See Epstein v. MCA, Inc.,
                                                      interests. At the time that the Amendment
179 F.3d 641, 648 (9th Cir. 1999) (“Due
                                                      was negotiated, the two classes Appellants
process requires that an absent class
                                                      identify–individuals who have already
member’s right to adequate representation
                                                      opted out or have been fully compensated
be protected by the adoption of the
                                                      and those that remain uncompensated and
appropriate procedures by the certifying
                                                      bound by the settlement–did not have
court and by the courts that review its
                                                      divergent interests. For obvious reasons,
determinations; due process does not
                                                      the former group had no interest
require collateral second guessing of those
                                                      whatsoever in the negotiation, while the
determinations and that review.”). If
                                                      latter group’s interest was to maximize the
Appellants have arguments that merit a
                                                      benefits available given the possibility that
Rule 60(b) motion or a collateral attack on
                                                      the Trust may become insolvent. Hence,
the validity of settlement as to certain class
                                                      class counsel only had one real interest in
members, then a record must be fully
                                                      negotiating the Amendment, and,
developed in the district court in the first
                                                      accordingly, there was no conflict.
instance. Cf. H. Prang Trucking Co., Inc.
                                                                    C. Justiciability

60(b) motion with respect to class action                    Appellants make the final argument
settlement).                                          that Matrix claimants who will not be paid
                                                      due to funding insufficiency should be
   10
      See, e.g., Stephenson, 273 F.3d 249             immediately released from the Settlement
(allowing collateral attack on a class action         so that they may pursue unrestricted
settlement).                                          actions against Wyeth in the tort system.


                                                 12
The District Court held that the principles
of justiciability prevented it from
addressing the issue of what the
consequences would be for the parties if
the Settlement Trust were actually to
become exhausted. The Court held that
the parties had no standing to bring such a
claim because they failed to allege harm
that is “actual or imminent, not
‘conjectural’ or ‘hypothetical.’” PTO
2778 (quoting Whitmore v. Arkansas, 495
U.S. 149, 155 (1990)). The Court further
pointed out that any future depletion of the
Trust remains purely speculative at the
moment, particularly since Wyeth could
still decide to supplement the funds
voluntarily in order to avoid further
litigation.   We agree that a funding
shortf all is neith er “actual” nor
“imminent” here. This is particularly true
given the measures currently undertaken
by Trust administrators, such as auditing
of Green Form claims, to ease the strain on
the Trust. Considering these measures,
and the fact that $2 billion still remains
available to the Trust to satisfy Matrix
benefits, depletion of the Settlement funds
may never occur. We, therefore, reject
Appellant’s claim here as it is not fit for
adjudication at this time.
           III. CONCLUSION
       For the foregoing reasons, we
affirm the order of the District Court as set
forth in PTO 2778, approving the Sixth
Amendment to the Nationwide Class
Action Settlement Agreement.




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