Diet Drugs v. ( 2019 )

NOT PRECDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 17-1625
____________
IN RE: DIET DRUGS (PHENTERMINE/FENFLURAMINE/DEXFENFLURAMINE)
PRODUCTS LIABILITY LITIGATION
NORMA SCHLAGER,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Nos. 2-99-cv-20593, 2-11-md-01203 and 2-15-md-01203)
District Judge: Honorable Harvey Bartle, III
Submitted under Third Circuit LAR 34.1 (a)
on January 12, 2018
Before: JORDAN and ROTH, Circuit Judges and MARIANI*, District Judge
(Opinion filed February 8, 2019)
OPINION
ROTH, Circuit Judge.
Norma Schlager appeals the District Court’s determination that she is not entitled
to additional benefits under the Diet Drug Nationwide Class Action Settlement
Agreement (Settlement Agreement) because her claim was untimely. We will affirm.
*
Honorable Robert D. Mariani, United States District Judge for the Middle District of
Pennsylvania, sitting by designation.
I.
A.
In November 1999, Wyeth, Inc., entered into a nationwide class action settlement
regarding its marketing of two “Diet Drugs,” fenfluramine (marketed as “Pondimin”) and
dexfenfluramine (marketed as “Redux”).1 The settlement arose out of multidistrict
products liability litigation alleging a link between Diet Drug ingestion and development
of valvular heart disease. The Settlement Agreement required Wyeth to contribute funds
to a Settlement Trust, which was tasked with administering the claims process,
determining eligibility for benefits, and paying benefits to eligible claimants.
A qualifying claimant’s recovery under the Settlement Agreement is determined
by two damage matrices, Matrix A and Matrix B. Each matrix includes “five ‘levels’ of
possible benefits” corresponding generally with “the type and severity of medical
conditions” that the claimant has experienced.2 Level I and II benefits are called low-
level matrix benefits, while level III, IV, and V benefits are characterized as high-level
matrix benefits. The claims of “Category One” class members—i.e., claimants with level
I or II claims pending as of November 9, 2004—are governed by the Seventh
Amendment to the Settlement Agreement, which created a separate claims-processing
1
Over the years, we have repeatedly been asked to resolve issues that have arisen in
connection with the Diet Drugs settlement. See, e.g., In re Diet Drugs Prod. Liab. Litig.,
706 F.3d 217, 223 (3d Cir. 2013); In re Diet Drugs Prods. Liab. Litig., 543 F.3d 179,
180-81 (3d Cir. 2008); In re Diet Drugs Prod. Liab. Litig., 401 F.3d 143, 148 (3d Cir.
2005); In re Diet Drugs Prod. Liab. Litig., 385 F.3d 386, 389 (3d Cir. 2004).
2
In re Diet Drugs Prod. Liab. Litig., MDL No. 1203, 2017 WL 937735, at *1 n.2 & n.4
(E.D. Pa. Mar. 9, 2017) (Dist. Ct. Op.).
2
and payment process for those low-level claims.3 As relevant here, the Seventh
Amendment permits a Category One class member whose medical condition worsens
from a lower severity level to a higher severity level to seek supplemental, high-level
matrix benefits.4 To qualify for such benefits, the class member must submit a properly
completed “Green Form” to the Trust. The Green Form must establish, inter alia, that
the claimant developed a high-level-qualifying condition by the earlier of (i) December
31, 2011, or (ii) 15 years after his or her last ingestion of Diet Drugs.5
Because the Settlement Agreement initially did not impose a Green Form filing
deadline, the District Court issued Pretrial Order 8559, known as “Court Approved
Procedure 16” (CAP 16), on November 8, 2010. CAP 16 provides as follows:
Green Form Filing Deadline. Any Class member who wishes to seek
Matrix Compensation Benefits must submit a completed and executed Green
Form Part I and Green Form Part II postmarked or delivered to the Trust no
later than four years from the later of (a) the entry of an Order approving this
Procedure or (b) the date on which the Diet Drug Recipient was first
diagnosed as having the last occurring condition or event upon which the
claim for Matrix Compensation Benefits is based. A Class Member who fails
to comply with this time period shall not be permitted to seek Matrix
Compensation Benefits for that condition.6
3
Wyeth and class counsel executed the Seventh Amendment in 2004 due to concerns
regarding the adequacy of the settlement fund, the integrity of the numerous low-level
claims, and the complications associated with auditing such claims. See In re Diet Drugs
Prod. Liab. Litig., 226 F.R.D. 498, 509-524 (E.D. Pa. 2005) (approving Seventh
Amendment). Category One class members, such as Schlager, were notified and
permitted to opt out of the Seventh Amendment. The claims of Category One class
members who did not exercise their opt-out rights were removed from the Trust for
processing by a separate Seventh Amendment Fund Administrator.
4
In re Diet Drugs Prod. Liab. Litig., 2017 WL 937735, at *1-*2.
5
Ohio App. 1447 (Settlement Agreement, Seventh Amendment § IX.A.1); In re Diet Drugs
Prod. Liab. Litig., 385 F.3d at 390.
6
Ohio App. 502-05 (emphasis added).
3
In sum, CAP 16 bars a Category One class member who has not submitted a completed
Green Form by either November 8, 2014, or within four years of being diagnosed with a
high-level condition—whichever comes later—from obtaining high-level matrix benefits.
B.
Schlager took Diet Drugs in the 1990s. In April 2003, she submitted a Green
Form to the Trust seeking level II matrix benefits. She did not opt out of the Seventh
Amendment. As a result, in March 2005, the Trust informed her that she qualified as a
Seventh Amendment Category One class member. After processing her claim, the Fund
Administrator sent Schlager a letter in March 2008 informing her that she was entitled to
a $2,000 “Minimum Payment Amount.”7
The following year Schlager’s medical condition allegedly worsened. In April
2009, Ron Schlager, Esq., Schlager’s son and attorney throughout these proceedings, sent
two letters to class counsel. He advised that Schlager “may require heart surgery” for
“covered complications” and inquired whether the related medical costs would be
covered by the Settlement Agreement.8 On September 2, 2010—two months before the
District Court approved CAP 16—Schlager underwent valvular heart surgery.
Years passed before Schlager (or her son) informed the Trust of her heart surgery
or sought supplemental benefits in connection with the surgery. In April 2014, Ron
7
Ohio App. 1081-90. The letter advised Schlager of her ability to obtain high-level matrix
benefits in the event her condition worsened by the cut-off date, but cautioned that the
letter provided only a summary of her anticipated benefits and that her “rights and
obligations” were “set forth in the 7th Amendment, which governs.” App. 1082-83.
8
Ohio App. 1031-32, 35.
4
Schlager emailed the Trust a copy of Schlager’s operative report, without more. He did
not formally request high-level matrix benefits or submit a Green Form. Norma Schlager
suffered a stroke two months later. In January 2015—more than two months after the
filing deadline—Schlager submitted to the Trust an incomplete Green Form seeking level
III benefits.9 The cardiologist certification portion of the Form, which is required under
the terms of the Settlement Agreement, was left entirely blank. In March 2015, the Trust
advised Schlager that her claim was being tentatively denied because she had not
submitted a completed Green Form by the CAP 16 filing deadline (i.e., November 8,
2014).10 In June 2015, after Schlager contested the tentative denial, the Trust issued a
“final determination” in which it denied Schlager’s claim for benefits as untimely.11
Schlager appealed to the District Court and requested that her challenge to the
Trust’s final determination proceed to arbitration, as contemplated by the Settlement
Agreement. The court referred her claim to arbitration. On October 27, 2015, before the
arbitration had begun but well after the filing deadline, Schlager submitted a completed
Green Form to the Trust, again seeking level III benefits in connection with her heart
surgery.12 Recognizing the untimeliness of her claim, Schlager filed a “Motion/Petition
for Relief” from the filing deadline set out in CAP 16. The District Court denied the
9
Ohio App. 100-31. The Green Form indicates that Ron Schlager filled out and submitted the
form on his mother’s behalf because she had “become incapacitated.” App. 101.
10
Ohio App. 498-501. The Trust also rejected the claim on the ground that Schlager had not
proven that she had ingested Diet Drugs. After she submitted additional evidence,
however, the Trust abandoned this rationale and accepted her assertion that she had
ingested Diet Drugs. In re Diet Drugs Prod. Liab. Litig., 2017 WL 937735, at *3 n.5.
11
Ohio App. 543-50.
12
Ohio App. 170-85.
5
motion in a pretrial order (PTO 9457), concluding that her claim was time-barred.13 The
arbitration hearing took place in August 2016. The arbitrator issued a report on
September 19, 2016, upholding the Trust’s determination that Schlager’s claim for
benefits was untimely. On March 9, 2017, the District Court issued an order (PTO 9485),
affirming the arbitrator’s ruling that Schlager’s claim was untimely and that she was not
entitled to equitable tolling of the filing deadline.14 Schlager now appeals.
II.15
At issue on appeal is Schlager’s entitlement to Seventh Amendment high-level
matrix benefits at severity level III. The Trust, arbitrator, and District Court concluded
that she was not entitled to those benefits because her claim was untimely. We agree.
Schlager became eligible to seek high-level matrix benefits on September 2, 2010,
the date of her valvular heart surgery. To obtain those benefits, she was required, under
the terms of CAP 16, to submit a completed Green Form to the Trust by no later than
November 8, 2014.16 Schlager thus had more than four years and two months from the
13
Ohio App. 26-40. Schlager sought to appeal PTO 9457 to this Court, but we dismissed the
appeal on jurisdictional grounds. App. 42-43.
14
In re Diet Drugs Prod. Liab. Litig., 2017 WL 937735, at *1-*6 (PTO 9485).
15
The District Court had jurisdiction under 28 U.S.C. § 1332. We exercise jurisdiction
pursuant to 28 U.S.C. § 1291. When reviewing a district court’s order upholding an
arbitration award, we review the district court’s factual findings for clear error and we
review its legal conclusions de novo. China Minmetals Materials Imp. & Exp. Co., v.
Chi Mei Corp., 334 F.3d 274, 278 (3d Cir. 2003); see In re Diet Drugs Prod. Liab. Litig.,
706 F.3d at 223. And we review a district court’s “exercise of the equitable authority to
administer and implement a class action settlement for abuse of discretion.” In re Diet
Drugs Prods. Liab. Litig., 543 F.3d at 184 n.10.
16
See CAP 16, App. 502-05 (“A Class Member who fails to comply with this time
period shall not be permitted to seek Matrix Compensation Benefits for that condition.”).
6
date of her surgery to perfect her claim for benefits. It is undisputed that she did not do
so. In fact, she did not submit a completed Green Form until October 27, 2015, nearly a
year after the applicable filing deadline. Accordingly, Schlager’s claim for high-level
matrix benefits was properly denied as time-barred.
Seeking to overcome this conclusion, Schlager contends that she should be
excused from the filing deadline because she did not receive adequate notice of CAP
16,17 as required by Federal Rule of Civil Procedure 23(e) and principles of due process.
The arbitrator rejected this argument, and the District Court affirmed. Both explained
that supplemental, class-wide notice of an amendment to a settlement agreement is
required only where the amendment has a “material adverse effect on the rights of class
members.”18 The District Court explained that CAP 16 did not adversely affect
Schlager’s rights because, absent CAP 16, her claim would be governed by
Pennsylvania’s four-year statute of limitations for contract claims, which began running
on the date of Schlager’s surgery (i.e., September 2, 2010).19 As a result, the court
concluded that supplemental notice was unnecessary because CAP 16 afforded Schlager
“nearly two more months to apply for compensation than she otherwise would have had
17
CAP 16 was published on the public Diet Drugs docket and on the Trust’s website.
18
In re Diet Drugs Prods. Liab. Litig., 2017 WL 937735, at *4-*5; see, e.g.,
Keepseagle v. Vilsack, 102 F. Supp. 3d 306, 313-14 (D.D.C. 2015) (citing authorities).
Schlager concedes that supplemental notice is required only in these circumstances. Op.
Br. at 30 (quoting In re Diet Drugs Prod. Liab. Litig., 2010 WL 2735414, at *6 (E.D. Pa.
July 2, 2010)). We will therefore accept that proposition for purposes of this appeal.
19
In re Diet Drugs Prod. Liab. Litig., 2017 WL 937735, at *5 (citing 42 Pa. C.S.
§ 5525).
7
under Pennsylvania law.”20 Because Schlager does not contest (or even address) the
court’s conclusion that, but for CAP 16, her claim would have been subject to the four-
year statute of limitations, we conclude for purposes of this appeal that the statute of
limitations would have applied to her claims.21 We thus affirm the District Court’s
conclusion that Schlager received sufficient notice because CAP 16 did not adversely
affect her rights, but rather extended her deadline for filing a claim for benefits.
Finally, Schlager argues that the arbitrator and District Court clearly erred by
concluding that her June 2014 stroke did not equitably toll the filing deadline. We have
held that equitable tolling is warranted “(1) if the defendant has actively misled the
plaintiff respecting the plaintiff’s cause of action, (2) if the plaintiff in some extraordinary
way has been prevented from asserting his or her rights, or (3) if the plaintiff has timely
asserted his or her rights mistakenly in the wrong forum.”22 Schlager has not made such
a showing. Before her stroke, Schlager had more than three years and nine months to file
20
Id.
21
Schlager repeatedly argues that CAP 16 shortened the Green Form filing deadline,
without acknowledging the District Court’s conclusion that CAP 16 actually extended the
deadline given the otherwise applicable four-year limitations period. Schlager has thus
waived any challenge to the applicability of Pennsylvania’s statute of limitations to her
claim for benefits. See, e.g., Kost v. Kozakiewicz, 1 F.3d 176, 182-83 (3d Cir. 1993). She
mentions the statute of limitations for the first time in her reply brief, contending only
that Wyeth stipulated in 2000 that it will not assert any statute of limitations defense. See
Reply Br. at 14 (quoting PTO 1415, App. 1228). But the cited stipulation does not apply
to Schlager. Rather, it applies only to a class member “who timely and properly
exercises [his or her] back-end opt-out rights and who initiates a lawsuit against [Wyeth]
. . . within one year from the date on which the back-end opt-out right is exercised.”
App. 1227-28. Schlager did neither of those things.
22
In re Cmty. Bank of N. Va. Mortg. Lending Pract. Litig., 795 F.3d 380, 400 (3d Cir.
2015) (cleaned up); see Hedges v. United States, 404 F.3d 744, 751 (3d Cir. 2005)
(“Equitable tolling is an extraordinary remedy which should be extended . . . sparingly.”).
8
a claim for benefits. And after her stroke, Schlager had more than four additional months
to file a timely claim. Significantly, Schlager has been assisted by her son, an attorney,
since she first began seeking benefits. The record does not establish that he was
incapacitated or prevented from preparing and filing a Green Form on her behalf, as he
did in January and October 2015, at any point during the fifty-month filing period.
Moreover, Schlager did not submit a fully completed Green Form until more than seven
months after the Trust first notified her that the untimely Green Form she had submitted
in January 2015 “was neither completed nor signed by” a cardiologist. Thus, Schlager
did not act with the diligence required to receive the benefit of equitable tolling.23 For
these reasons, the District Court did not err in concluding that “the record does not
demonstrate how or why [Schlager’s] medical condition prevented her from submitting a
completed Green Form within the deadlines set forth by CAP 16.”24
III.
For the foregoing reasons, we will affirm the District Court’s orders denying Ms.
Schlager’s claim for benefits as untimely.25
23
See, e.g., Cunningham v. M & T Bank Corp., 814 F.3d 156, 163 (3d Cir. 2016).
24
In re Diet Drugs Prod. Liab. Litig., 2017 WL 937735, at *5.
25
We have considered all remaining arguments in Schlager’s briefs and conclude that
they lack merit and do not warrant further discussion.
9