The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: DIET DRUGS :
(PHENTERMINE/FENFLURAMINE/ : MDL NO. 1203
DEXFENFLURAMINE) PRODUCTS :
LIABILITY LITIGATION :
THIS DOCUMENT RELATES TO: :
:
SHELIA BROWN, et al. : CIVIL ACTION
:
v. :
: NO. 99-20593
AMERICAN HOME PRODUCTS :
CORPORATION :
MEMORANDUM IN SUPPORT OF PRETRIAL ORDER NO. 9576
Bartle, J. March 4, 2024
This is a further proceeding in this massive class
action settlement arising out of claims against Wyeth related to
the marketing of its Diet Drugs Pondimin and Redux which
plaintiffs alleged to have caused their valvular heart disease.
Before the court is the joint petition of class
counsel Michael D. Fishbein, Esq. and the law firm of Levin,
Sedran & Berman, LLP for an award of counsel fees relating to
work performed from March 25, 2022 through December 31, 2023 in
conceiving, designing, negotiating, drafting and obtaining
judicial approval of the Eleventh Amendment to the Class Action
Settlement Agreement (“Eleventh Amendment”) as well as for
responding to requests to the Claim Administrator and assisting
unrepresented claimants as set forth in Section II.S.3. of the
Eleventh Amendment. They seek a total of $408,137.50 -
$138,337.50 for Michael D. Fishbein, Esq., and $269,800 for
Levin, Sedran & Berman, LLP. This court has previously awarded
fees in Pretrial Order (“PTO”) Nos. 2262, 2859, 7763A, 8516,
8646, 8869, 9102, 9294, 9465, 9460, 9502, and 9514.
I
On August 28, 2023, the court approved the Eleventh
Amendment without objection. See PTO No. 9558. The parties
devised this amendment to further streamline claims processing
for the approximately 3,000 class members that remain eligible
to make a Matrix claim if they develop a qualifying medical
condition within the next four decades.
Pursuant to Section II.P. of the Eleventh Amendment,
Wyeth agreed to pay class counsel’s fees. It retained its right
to object to such proposed fees and stipulated that such fees
shall not exceed the lodestar calculation. Wyeth has not filed
any objections. A lodestar calculation is one way of
calculating a reasonable rate for counsel and is determined by
multiplying the number of hours counsel reasonably expended on
the matter by counsel’s reasonable hourly rate. Class counsel
now petitions the court for fees based on 498 hours they
expended in drafting and negotiating the Eleventh Amendment as
well as work communicating with pro se claimants in connection
with this amendment.
The parties entered into the initial Class Action
Settlement Agreement (“Agreement”) on November 18, 1999. Due to
difficulties experienced in reviewing, identifying, and timely
paying claims to eligible claimants, the parties created and
executed multiple amendments to streamline the review process of
medical claims. Between 2006 and 2019, class counsel submitted
annual petitions for reimbursement of fees and expenses, which
were reviewed by the court. During that time, approximately
forty-two thousand claims were processed pursuant to the
Agreement.
As time passed, the number of claims has greatly
decreased. From 2019 through 2022, the American Home Products
Settlement Trust (“Trust”), which was responsible for paying
claims, received sixteen Matrix claims and paid out $7,743,309
in Matrix benefits. In 2022, the Trust paid out $1,478,993 in
claims, yet incurred $983,672 in expenses. In the first quarter
of 2023, the Trust did not pay out any claims, but incurred
$60,000 in trustee fees and $82,807 in expenses. The claims
review system was also slow – taking around eleven months to pay
a single claim.
As the pace of claims slows, the high administrative
costs of the Trust and its claims processing system have become
disproportionately large. Concerned that such a system could be
a waste of settlement funds, the parties executed the Eleventh
Amendment in the interest of decreasing claims processing times
as well as greatly decreasing the costs of administration.
II
The instant petition, as noted above, has received no
objections from Wyeth. Nonetheless, the court must conduct a
“thorough judicial review” of the requested fee award as
required in all class action settlements. In re Gen. Motors
Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768,
819 (3d Cir. 1995). The court will analyze the reasonableness
of the settlement in light of the factors outlined in Gunter v.
Ridgewood Energy Corp., 223 F.3d 190 (3d Cir. 2000). It will
then apply a lodestar cross-check. In determining the
reasonableness of a proposed award for counsel in class action
settlements such as this, our Court of Appeals requires a
district court to consider the following ten factors:
(1) the size of the fund created and the
number of beneficiaries, (2) the presence or
absence of substantial objections by members
of the class to the settlement terms and/or
fees requested by counsel, (3) the skill and
efficiency of the attorneys involved, (4)
the complexity and duration of the
litigation, (5) the risk of nonpayment, (6)
the amount of time devoted to the case by
plaintiffs' counsel, (7) the awards in
similar cases, (8) the value of benefits
attributable to the efforts of class counsel
relative to the efforts of other groups,
such as government agencies conducting
investigations, (9) the percentage fee that
would have been negotiated had the case been
subject to a private contingent fee
arrangement at the time counsel was
retained, and (10) any innovative terms of
settlement.
In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2013 WL
3326480, at *3 (E.D. Pa. June 28, 2013) (citing Gunter, 223 F.3d
at 195).1 These factors shall not be applied in a formulaic way,
and a district court must recognize that one factor may outweigh
others. Id. What is important is that the court “evaluate what
class counsel actually did and how it benefitted the class.” In
re AT&T Corp. Sec. Litig., 455 F.3d 160, 165-66 (3d Cir. 2006)
(citing In re Prudential Ins. Co. Am. Sales Prac. Litig. Agent
Actions, 148 F.3d 283, 342 (3d Cir. 1998)).
A. Size of Fund
The size of the Settlement Fund totaled approximately
$6.44 billion. The Eleventh Amendment operates to benefit the
3,000 remaining class members that remain eligible for benefits
under the Agreement. It does so by speeding up claims
processing timelines and preserving limited funds. While this
is only a fraction of those individuals originally eligible for
a distribution, the work counsel has done has benefitted all
1. These factors were articulated in the context of class
action settlements where the court considered the reasonableness
of a percentage-of-recovery fee award. Although the award
proposed here is calculated based on the lodestar method of
recovery, the court will still consider these factors in order
to assure that the award is reasonable. The choice of
methodology “rest[s] within the district court’s sound
discretion.” In re Gen. Motors Corp, 55 F.3d at 821.
claimants remaining eligible for additional payments. Thus this
factor weighs in favor of granting the proposed fee award.
B. Presence or Absence of Substantial Objections
There have been no objections to the petition for
counsel fees. Further, there have been no objections to counsel
fee petitions since 2007. All prior objections were overruled,
some rulings were appealed, and our Court of Appeals affirmed.
See, e.g., In re Diet Drugs Prods. Liab. Litig., 385 F.3d 386
(3d Cir. 2004). This weighs in favor of granting the award.
C. Skill & Efficiency of Attorneys Involved
This court has previously recognized class counsel for
their skill and diligence. See, e.g., In re Diet Drugs Prods.
Liab. Litig., MDL No. 1203, 2010 WL 3292787, at *10 (E.D. Pa.
Aug. 19, 2010) (citing In re Diet Drugs Prods. Liab. Litig., 553
F. Supp. 2d 442, 474 (E.D. Pa. 2008)). Class counsel’s current
work in developing the Eleventh Amendment continues to
prioritize the changing needs of the class. This factor weighs
in favor of granting the award.
D. Complexity & Duration of Litigation
This multidistrict litigation has spanned nearly three
decades and could last at least in some form for four more
decades.2 The court has entered over 9,700 PTOs entered in this
2. The youngest claimant will turn eighty on September 30,
2063. After that date, she has four years during which she may
apply for a benefit under the Agreement.
matter. However, the bulk of the settlement activity has
already occurred. There are now only approximately 3,000
potential claimants remaining eligible for payment.
E. Risk of Non-Payment
Though typically non-payment is not a risk for cases
in which there has already been a settlement, in this instance,
class counsel undertook work on developing the Eleventh
Amendment to the Agreement without knowing whether it would be
approved by the court. Taking into account the history of the
litigation, however, this risk of non-payment was slight.
F. Amount of Time Devoted to Case by Class Counsel
Class counsel worked a total of 498 hours on Eleventh
Amendment-related matters. Wyeth did not object to this figure.
This time excludes all Diet Drugs-related work prior to March
25, 2022, when the parties began to discuss the concept of the
Eleventh Amendment. This figure, therefore, does not include
counsel’s traditional class counsel work. The time records,
submitted contemporaneously with the petition, corroborate this.
The 498 hours are reasonable.
G. Awards in Similar Cases
The instant petition, as noted above, seeks
$408,137.50 in fees, which is 0.0063% of the total Settlement
Fund, valued at roughly $6.437 billion. If this fee award is
paid out, class counsel will have been awarded a total of 7.171%
of the Settlement Fund over the course of the litigation. This
fee is only 5.2% of the total of claims paid out over the past
four years. Courts typically find an award between 4.8 to 15%
to be reasonable. This figure is within well-established
guideposts, both in the long- and short-term. This factor
weighs in favor of granting the petition.
H. Value of Benefits Attributable to Efforts of Class Counsel
Relative to Other Groups
Next, the court must consider the benefits created by
other groups, such as government agencies, in determining a
reasonable fee. No government entities or agencies participated
in the negotiation of this amendment, as is sometimes seen in
antitrust or securities cases. See In re Diet Drugs Prod. Liab.
Litig., MDL No. 1203, 2019 WL 2319286, at *5 (E.D. Pa. May 29,
2019). This factor weighs in favor of granting the fee
petition.
I. Percentage Fee that Would Have Been Negotiated Had the Case
Been Subject to a Private Contingent Fee Agreement at the Time
Counsel Was Retained
While the court has previously compared the fees
requested by the Major Filers in this litigation, they did not
participate in negotiating the Eleventh Amendment. Therefore,
this comparison is not apt. Further, our Court of Appeals has
“question[ed] the significance of this inquiry to class action
lawsuits” where recovery may exceed one billion dollars. See In
re Prudential Ins., 148 F.3d at 340.
J. Innovative Terms of Settlement
The terms of this amendment are innovative. This
amendment responds to the changing needs of the class members
while still preserving their appeal and opt-out rights. Rather
than relying on the parallel processing method which would
likely have kept administrative costs relatively high, class
counsel worked to decrease administrative costs more
dramatically through the negotiation of more novel review and
payment system. This factor weighs in favor of granting the fee
petition.
III
Finally, the court must perform a lodestar cross-
check, which is performed by “multiplying the hours reasonably
expended on the matter by the reasonable hourly billing rate
which then provides the court with the ‘lodestar calculation.’”
Diet Drugs, 553 F. Supp. 2d at 485. The proposed fee award is
then divided by the lodestar calculation. The resulting figure
is the lodestar multiplier. We must then compare this number to
the lodestar multiplier in similar cases. Id.
Here, the lodestar value is $408,137.50, and class
counsel has requested that amount. This request is in line with
our prior PTOs that have approved counsel fee payments. Class
counsel argues that the requested fee is appropriate because the
parties have agreed to this payment, payment of the lodestar
value is appropriate compensation for claims administration and
other professional services, and such payment would be
consistent with our prior decisions.
First, we determine whether the hourly rate is
appropriate. In the last petition, the hourly rate of Laurence
S. Berman, partner at Levin, Sedran and Berman LLP, was $750.
With inflation, this figure would be $950 per hour today. As
his hourly rate, which is currently $850, has not kept pace with
inflation, this hourly fee is reasonable. Michael D. Fishbein’s
current hourly rate is also $850 and is likewise reasonable.
The hourly rates of the support staff at Levin have also
remained close to or below their prior rates when inflation is
considered. Spending a total of 498 hours on the amendment is
similarly reasonable and a review of class counsel’s time
entries submitted with their petition confirms as such.
For these reasons, the court will approve a payment of
$408,137.50 to class counsel in connection with their work on
the Eleventh Amendment.