In Re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine) Product Liability Litigation

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-3818
IN RE: DIET DRUGS
(PHENTERMINE/FENFLURAMINE/DEXFENFLURAMINE)
PRODUCT LIABILITY LITIGATION
Sharon Bridgewater; Betty Brown-Riddle; Virginia Brutto; Dorothy Bryson;
Randy Chance; Mary Daley; Bethany Diggs; Nancy Femmer; Lorraine Fengel;
Karen George; Viola
Gierse; Jeanne Glardon; Diane Greer; Sandi Hanson;
Judy Hay; Linda Heddlesten; Deborah Hobart-Olson; Nancy Jines; Glenda Macy;
Diane McGath; Anita Myers; Lillian Olsen; Pamela Pickett; Barbara Pipes;
Peggy Rogers; Terry Rossell; Ronda Schuchmann; Rose
Sellers; Linda Smallman;
Ritzy Stokesberry; Denise Swanigan; Barbara Thoma; Charlene Toddd;
Thurma Walters; Betty Wilson,
Appellants
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 99-cv-20593)
District Judge: Honorable Harvey Bartle, III, Chief Judge
Submitted Pursuant to Third Circuit LAR 34.1(a)
June 4, 2010
Before: AMBRO, CHAGARES, and VAN ANTWERPEN, Circuit Judges.
(Filed June 7, 2010)
OPINION OF THE COURT
VAN ANTWERPEN, Circuit Judge.
Appellants are thirty-six class members of the Diet Drugs multidistrict litigation
(“Bridgewater petitioners”) represented by Joseph Simon. They appeal the order of the
United States District Court for the Eastern District of Pennsylvania denying as untimely
a motion for reconsideration or modification of pretrial order (“PTO”) 7763A. Appellees,
Class Counsel,1 (“Class Counsel”) assert that the District Court did not abuse its
discretion in denying the motion as untimely. We agree with Class Counsel and will
affirm the District Court’s order.
I.
Because we write solely for the parties, we will address only those facts necessary
to our opinion.
This appeal arises out of the In re Diet Drug Product Liability Litigation, a
multidistrict, nationwide product liability class action against the drug manufacturer
1
The District Court identified “Class Counsel” as including Arnold Levin of Levin,
Fishbein, Sedran & Berman; (2) Michal D. Fishbein of of Levin, Fishbein, Sedran &
Berman; (3) John J. Cummings, III of Cummings, Cummings, & Dudenhefer; (4) Stanley
Chesley of Waite, Schneider, Bayless & Chesley; (5) Gene Locks of Greitzer & Locks;
(6) Sol Weiss of Anapol, Schwartz, Weiss, Wilentz, Goldman, & Spitzer; and (7) Charles
Parker of Hill and Parker. The Court also other individuals as Sub-Class Counsel.
2
Wyeth.2 The District Court certified a class on August 26, 1999 to pursue claims against
Wyeth for the manufacture and distribution of Pondimin and Redux, two appetite
suppressants, after researchers discovered an association between taking the appetite
suppressants and developing valvular heart disease (“VHD”) and pulmonary hypertension
(“PPH”). We have recounted the background of this case several times and will not
recount it again now. See In Re Diet Drugs Prods. Liab. Litig., 582 F.3d 524, 529-37 (3d
Cir. 2009); In re Diet Drugs Prods. Liab. Litig., 385 F.3d 386, 389-91 (3d Cir. 2004); In
re Diet Drugs Prods. Liab. Litig., 282 F.3d 220, 225-29 (3d Cir. 2002).
Relevant to this appeal is PTO 7763A, the order in which the District Court
distributed the final fee award to attorneys who worked for the common benefit of the
class. The fee award compensated attorneys for work done related to the class action and
for their future work pursuant to administering the Settlement Trust3 until it closes in
2015. The District Court invited any interested parties to submit a memorandum and
attend a hearing on how to determine and distribute the final attorneys’ fee award. Ninety
law firms claimed entitlement to common benefit funds. After the hearing, an auditor
submitted a report of the compensable time and expenses claimed by counsel, and
informed the court that from the inception of the litigation Class Counsel expended
2
Wyeth was formerly known as American Home Products Corporation but changed its
name in 2002. In re Diet Drugs Prods. Liab. Litig., 582 F.3d 524, 530 n.2 (3d Cir. 2009).
3
Wyeth funded a large Settlement Trust to pay-out benefits to class members.
3
553,020.53 hours working for the common benefit of the class, producing a lodestar of
$156,849,247.24.
On July 16, 2007, Class Counsel and the Plaintiff’s Management Committee
(“PMC”) 4 submitted a joint-petition for a final fee award. In it, the joint-fee petitioners
noted that the Settlement Trust had paid out over $300 million in benefits per year to the
class since it started making payments in 2001. Specifically, it noted that the Settlement
Trust paid out $240 million in benefits in 2005 and 2006, and estimated,
it appears clear that even if the Trust pays out Matrix benefits 5 at half the
annual rate that has prevailed since the Trial Court approved the [Settlement
Agreement] during the remaining five years in which most Class Members
retain their eligibility for High Level Matrix benefits, substantially all the ~
$732 million that currently remains of the original Settlement Fund will be
exhausted.
(App. 206-07.) The joint-fee petitioners also speculated that, if claims continued to be
filed against the trust at the current rate of $240 million a year, the class members would
4
The Court appointed the PMC to oversee, coordinate, and consolidate proceedings
and to conduct discovery on behalf of all plaintiffs in this multidistrict litigation. The
original members included: (1) Arnold Levin of Levin, Fishbein, Sedran & Berman; (2)
John J. Cummings, III of Cummings, Cummings, and Dudenhefer; (3) Stanley Chesley of
Waite, Schneider, Bayless, and Chesley; (4) Michael Hausfeld of Cohen, Mistein,
Hausfeld & Toll; (5) Darryl J. Tschirn; (6) Elizabeth Cabraser of Lieff, Cabraser,
Heimann and Bernstein; (7) Will Kemp of Harrison, Kemp & Jones; (8) Diane Nast of
Roda Nast; (9) Michael Eschsner of Proctor & Papantonio; (10) John Restaino of Lopez,
Hodes, Restaino, Milman, Skikos & Polos; and (11) Roger Brosnahan of Brosnahan,
Joseph, & Suggs.
5
Matrix benefits are benefits paid out to class members who were diagnosed with
VHD after taking the appetite suppressants. The benefits were calculated through
matrices that provided for varying levels of compensation based on the severity of the
diagnosis.
4
receive a benefit that is greater than the total value of the Settlement Trust.6 Because the
joint-fee petitioners estimated that the entire Settlement Trust would be exhausted, they
requested an award based on the total amount in the Settlement Trust.
On April 8, 2008, the District Court ruled on the joint-fee petition for a final award
in PTO 7763A, the focal point of this appeal. The court valued the Settlement Agreement
at approximately $6.44 billion. It noted that, at the time the joint-fee petitioners filed
their claim, $732 million remained available in the Settlement Trust, and it estimated
“based upon that average amount of Matrix Benefits the Trust has paid per year . . . [,]
that is, approximately $240,000 per year,” that the Settlement Trust would be exhausted.
In re Diet Drugs Prods. Liab. Litig., 553 F. Supp. 2d 442, 469 n. 47 (E.D. Pa. 2008).
Assuming that the Settlement Trust would be exhausted, the District Court applied
percentage-of-recovery analysis to the entire $6.44 billion to determine the fee award for
counsel. It concluded an award equal to 6.75% of the recoveries was fair and appropriate,
and awarded the joint-petitioners $434,511,711.22 in fees. On July 21, 2008, the District
Court entered PTOs allocating the aggregate fee awards among the ninety joint-fee
applications, and certified the award as final. Two appeals followed. Because no one
sought a stay of the fee award, the award was distributed.
On April 8, 2009, the Bridgewater petitioners filed a motion to reconsider or
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Wyeth agreed to pay any shortfall if the Settlement Trust were inadequate to
compensate class members entitled to matrix benefits.
5
modify the fee award ordered in PTO 7763A under Federal Rule of Civil Procedure 60(b)
pursuant to subsections (1), (2), (3), and (6). In the motion, the Bridgewater petitioners
did not explain why they waited one year to file the motion. They did, however, argue the
fee award was excessive. The claimants noted that the monthly trust reports indicated
that the Settlement Trust only paid out $69,980,000 in benefits in 2007, and $53,722,117
for 2008, far below the estimated $240 million annual pay-out. Based on this
information, they contend there is a trend toward diminishing pay-outs and speculated
that there will be between $400 and 500 million remaining in the Settlement Trust when it
closes. Therefore, they assert that the firm of Levin, Fishbein, Sedran & Berman should
not have collect advanced attorneys’ fees on these funds because they may never benefit
the class.7 In response, Class Counsel offered an unopposed declaration from Warren
Bruck Bilkner, Ph.D., a bio-statistician who, after studying the Matrix payments,
concluded that there “is no reasonable basis to conclude that the monthly payments data
of the Trust for the period of January, 2007 through March, 2009 demonstrates a trend
7
We have noted that the appropriate inquiry for attorney fee awards is the benefit
actually received by the class. In re Prudential Ins. Co. v. Am. Sales Practice Litig., 148
F.3d 283, 336 n.116 (3d Cir. 1998). Therefore, Class Counsel’s award should be related
to the amount of the Settlement Trust that actually benefits the class, not just the amount
made available for the class. Id.If funds received by Class Counsel are not distributed to class members, then all
Class Counsel received fees based on funds that did not benefit the class. Joseph Simon,
the Appellant’s counsel, however, singled out Levin, Fishbein, Sedran & Berman to not
receive fees because he alleged that if fees were withheld from other firms “he will be
effectively blackballed from the ‘class action/mass tort world.’” (App. 9 n.5, 1144-45.)
6
toward decreasing Matrix payments over time.” (App. 9.)
On August 27, 2009, the District Court denied the Bridgewater petitioners’ Rule
60(b) motion as untimely. It found the one-year delay unreasonable because the
claimants offered no explanation for it, and the court could “discern no reason [for delay]
given that they had access to much of the information they relied upon to support their
motion” the day the PTO was ordered. (App. 10.) The court also noted “there would be
severe prejudice to the 90 different law firms that received their fees and costs pursuant to
PTO No. 7763A if we were to grant reconsideration.” (Id.) The Bridgewater petitioners
filed a timely appeal to this Court.
II.
The District Court had jurisdiction over this multidistrict litigation pursuant to 28
U.S.C. § 1332(a), and § 1407. We have jurisdiction under 28 U.S.C. § 1291 because
orders denying motions under Rule 60(b) are final orders. Lasky v. Cont’l Prod. Corp.,
804 F.2d 250, 253 (3d Cir. 1986). We review a district court’s denial of a Rule 60(b)
motion for abuse of discretion. Brown v. Phila. Hous. Auth., 350 F.3d 338, 342 (3d Cir.
2003).
III.
The Bridgewater petitioners filed a Rule 60(b) motion under subsections (1), (2),
(3), and (6) to reopen PTO 7763A on April 8, 2009, exactly one year after the District
Court entered PTO 7763A.
7
Motions filed pursuant to Rule 60(b) are “directed to the discretion of the trial
court, and its exercise of that discretion will not be disturbed unless there is clear error
and abuse of discretion.” SEC v. Warren, 583 F.2d 115, 120 (3d Cir. 1978). Relief should
only be made available if the claimant presents circumstances that overcome the “interest
in the finality and repose of judgments.” Harris v. Martin, 834 F.2d 361, 364 (3d Cir.
1987) (citation omitted).
All motions filed pursuant to Rule 60(b) must be made within a “reasonable time.”
Fed. R. Civ. P. 60(c). Additionally, claims made under subsections (1), (2), and (3) are
untimely per se if made more than one year from the date of the entry of the order or
judgment. Id.; Moolenaar v. Gov’t of Virgin Islands, 822 F.2d 1342, 1346 (3d Cir. 1987).
Therefore, claims made under clauses (1), (2), and (3) must be brought within one year of
the entry of judgment to be timely, but even if they are, they may still be untimely if an
unreasonable period of time has passed. Moolenaar, 822 F.2d at 1346; see also Sorbo v.
United Parcel Serv., 432 F.3d 1169, 1178 n.7 (10th Cir. 2005) (noting “the reasonable-
time requirement applies to all Rule 60(b) motions, even if the motion implicates and
satisfies the one-year limit as well”); C HARLES A LAN W RIGHT & A RTHUR R. M ILLER,
F EDERAL P RACTICE AND P ROCEDURE, § 2866, at 389, 391 (West 1995).
What constitutes a “reasonable time” depends on the circumstances of each case.
Delzona Corp. v. Sacks, 265 F.2d 157, 159 (3d Cir. 1959). A court considers many
factors, including finality, the reason for delay, the practical ability for the litigant to learn
8
of the grounds relied upon earlier, and potential prejudice to other parties. Kagan v.
Caterpillar Tractor Co., 795 F.2d 601, 610 (7th Cir. 1986); Ashford v. Steuart, 657 F.2d
1053, 1055 (9th Cir. 1981). What constitutes a “reasonable time” also depends on which
Rule 60(b) clause a claimant is trying to avail. We have noted that relief under Rule
60(b)(6) is extraordinary because it can be given for “any other reason justifying relief”
and is not subject to an explicit time limit. Coltec Indus. Inc. v. Hobgood, 280 F.3d 262,
273 (3d Cir. 2002). Therefore, a claimant must establish exceptional circumstances
justifying the delay for filing under Rule 60(b)(6).
The Bridgewater petitioners filed their Rule 60(b) motion exactly one year after
PTO 7763A was entered; therefore, their motion was not untimely per se under clauses
(1), (2), and (3). The Bridgewater petitioners did not offer any explanation for the one-
year delay in their motion to the District Court, and we will not review the four
explanations they have offered for the first time on appeal. See, e.g., Sovereign Bank v.
B.J.’s Wholesale Club, Inc., 533 F.3d 162, 182-83 (3d Cir. 2008). The District Court
considered the principles of finality, noted that the claimants did not explain their delay
and it could not intuit one, and noted the extreme prejudice that granting the Rule 60(b)
motion would have on the ninety law firms who have already received their fee awards.
Because the District Court considered the appropriate factors and gave a well-reasoned
explanation for its denial, we cannot find that the District Court abused its discretion.
Therefore, we will affirm it’s judgment.
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