In re Diet Drugs
| Decision Date | 26 February 2002 |
| Docket Number | No. 00-1393.,00-1393. |
| Citation | 282 F.3d 220 |
| Parties | In re DIET DRUGS (Phentermine, Fenfluramine, Dexfenfluramine) Products Liability Litigation, Lydia D. Gonzalez, Jo Ann Gorena, and Maria I. Smith, on behalf of themselves and the certified Texas Gonzalez class of all other similarly situated individuals and class counsel for the certified Texas Gonzalez class, Appellants. |
| Court | U.S. Court of Appeals — Third Circuit |
John W. MacPete (Argued), Grand Prairie, TX, Keith M. Jensen, Fort Worth, TX, for Appellants.
Peter L. Zimroth (Argued), Arnold & Porter, New York, NY, Robert D. Rosenbaum, Arnold & Porter, Washington, DC, Michael T. Scott, Reed Smith, LLP, Philadelphia, PA, for Appellee, American Home Products Corporation.
Arnold Levin (Argued), Levin Fishbein Sedran & Berman, Philadelphia, PA, for Appellees, Brown Class Representative Plaintiffs.
Before: SCIRICA, GREENBERG and COWEN, Circuit Judges.
In this matter involving competing mass tort class actions in federal and state courts, we address an interlocutory appeal in a complex multidistrict federal class action comprising six million members from an order enjoining a mass opt out of a state class. We will affirm.
The underlying case involves two drugs, both appetite suppressants, fenfluramine — marketed as "Pondimin" — and dexfenfluramine — marketed as "Redux." Both drugs were in great demand. Between 1995 and 1997, four million people took Pondimin and two million people took Redux. In 1997, data came to light suggesting a link between the drugs' use and valvular heart disease. In July 1997, the United States Food and Drug Administration issued a public health advisory alert. On September 15, 1997, American Home Products removed both drugs from the market. Subsequent clinical studies support the view the drugs may cause valvular heart damage.
Following the FDA's issuance of the public health warning, several lawsuits were filed. The number of lawsuits increased exponentially after American Home Products withdrew the diet drugs from the market. Approximately eighteen thousand individual lawsuits and over one hundred putative class actions were filed in federal and state courts around the country. American Home Products removed many of the state cases to federal courts, increasing the number of federal cases. In December 1997, the Judicial Panel for Multidistrict Litigation transferred all the federal actions to Judge Louis Bechtle in the United States District Court for the Eastern District of Pennsylvania, creating Multidistrict Litigation 1203 ("MDL 1203").
In April 1999, American Home Products began "global" settlement talks with plaintiffs in the federal action together with several plaintiffs in similar state class actions. The parties reached a tentative settlement agreement for a nationwide class in November 1999. Known as the "Brown class," the proposed class included all persons in the United States, as well as their representatives and dependents, who had ingested either or both of the diet drugs. The global settlement contemplated different kinds of relief, including medical care, medical screening, payments for injury, and refunds of the drugs' purchase price.
The purchase-price-relief provisions were separated into two sections, one for those who had taken the drugs for sixty days or less, the other for those who had taken the drugs for more than sixty days. Short term users were to be paid $30 per month's use of Pondimin, and $60 per month's use of Redux. Long term users would receive the same amounts per month, subject to a $500 cap and the availability of sufficient money in an overall settlement fund. Unlike short term users, long term users were entitled to other benefits, such as medical screening.
The District Court entered an order on November 23, 1999, conditionally certifying a nationwide settlement class and, concurrently, preliminarily approving the settlement. To opt out, a class member was to "sign and submit written notice to the Claims Administrator[s] with a copy to American Home Products, clearly manifesting the Class Member's intent to opt out of the Settlement." The opt-out period extended until March 23, 2000. The court scheduled a fairness hearing for May 1, 2000 on class certification and final settlement approval. On August 28, 2000, the District Court entered a final order certifying the class and approving the settlement.
In July 1997 — after the FDA warning, but before American Home Products withdrew the drugs from the market — appellants filed a putative class action in Texas state court, Gonzalez et al. v. Medeva Pharmaceuticals, Inc., et al. The Gonzalez case was one of the first cases filed and preceded the creation of MDL 1203 by several months. The proposed Gonzalez class, including all Texas purchasers of the two diet drugs, was a subset of what would become the Brown class. The Gonzalez action was limited insofar as it sought actual purchase-price recovery only, together with treble damages under the Texas Deceptive Trade Practices Act-Consumer Protection Act ("DTPA"), Tex. Bus. & Comm.Code, § 17.41 et seq.
The Gonzalez complaint did not allege a federal cause of action and the named parties were not diverse. Nonetheless, in January 1998, American Home Products removed the case to federal court shortly after MDL 1203 was created, contending federal diversity jurisdiction obtained. American Home Products asserted Medeva Pharmaceuticals, a non-diverse defendant, was fraudulently joined for the purpose of defeating diversity jurisdiction. Soon after removal to the United States District Court for the Southern District of Texas, the Gonzalez case was transferred to the Eastern District of Pennsylvania as a part of MDL 1203.
Shortly thereafter, the Gonzalez plaintiffs moved to remand the case back to Texas state court, contending Medeva Pharmaceuticals was a proper defendant. The Gonzalez plaintiffs also argued the amount-in-controversy requirement was not met, as purchase-price recovery would only amount to a few hundred or, perhaps, a few thousand dollars per plaintiff. Furthermore, they argued they would not be seeking statutory attorneys' fees under the ;Texas DTPA. As noted, on November 23, 1999, Judge Bechtle granted conditional certification of the Brown class and preliminary approval of the settlement. On February 15, 2000 — during the MDL 1203 opt-out period — the District Court granted the Gonzalez plaintiffs' motion for remand, finding that Medeva Pharmaceuticals was a proper defendant.
One month later, on March 14, 2000, the Gonzalez plaintiffs filed a new complaint, their "Fifth Amended Class Action Petition," in the District Court of Hidalgo County, Texas. They dropped their class claims against Medeva Pharmaceuticals and claimed entitlement to statutory attorneys' fees. Accordingly, American Home Products contends, the barriers to federal diversity jurisdiction were removed.
Less than a week later, on March 20, 2000, the Hidalgo County court held a hearing on certification of the Gonzalez class. On March 22, it certified the class, defined as "all persons who purchased dexfenfluramine (Redux) and/or fenfluramine (Pondimin) in Texas, who are solely seeking the recovery of the amounts to acquire same, as well as any statutory trebling which may result from the claims asserted under the Texas Deceptive Trade Practices Consumer Protection Act." The certification of the Gonzalez class occurred eight days before the end of the opt-out period for the Brown settlement. At this time, most members of the Gonzalez class were also members of the Brown class, except for those who had individually opted out.
On March 22, the same day as the entry of the Texas class certification order, the Gonzalez plaintiffs acted to erase this overlap, by moving, in Hidalgo County, for a court order opting out all of the unnamed members of the Gonzalez class from the Brown class. The Texas court scheduled a hearing for 9:00 a.m. the next morning. In response, American Home Products sought a temporary restraining order in the District Court for the Eastern District of Pennsylvania, the MDL court, seeking to prevent the Gonzalez class from implementing a mass opt out.
On March 23, hearings were held in both courts on their respective motions. In Texas, the Hidalgo County court held its hearing and the same day entered an order partially opting out the Gonzalez class from MDL 1203. The District Court for the Eastern District of Pennsylvania also issued an order that day, granting American Home Products's motion and entering a temporary restraining order directed against the relief sought at the Texas hearing. The federal order denied the effect of the sought-for opt out and ordered Gonzalez class counsel to refrain from pursuing the opt out. It was to remain in effect for ten days. A hearing was scheduled for March 29 "on whether to make the injunction permanent." The District Court's order was dated, "March 23, 2000 at 11:55 A.M." For what it is worth, the Hidalgo County court would later issue an order "clarifying" that its opt-out order had been issued before 11:55 Eastern Time.
The Texas opt-out order purported to opt out the Gonzalez class from MDL 1203 only partially:
[I]t is ... ORDERED, ADJUDGED AND DECREED that the unnamed members of the certified class in this case be [sic] are hereby opted-out of the proposed settlement in MDL 1203, solely to the effect that their purchase price recovery claims, and potential DTPA trebling of same, will be pursued in this case, accordingly, any and all of their other claims, including but not limited to, claims for medical screening, medical monitoring, personal injury, mental anguish and/or punitive damages are not effected [sic] by this order.1
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