Bledsoe v. Dalkon Shield Trust

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: A. H. ROBINS COMPANY,

INCORPORATED,

Debtor.

CHESLENE BLEDSOE; BARBARA

No. 95-2662

RAYGOR,

Claimants-Appellants,

v.

DALKON SHIELD CLAIMANTS TRUST,

Trust-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Richmond.

Robert R. Merhige, Jr., Senior District Judge.

(CA-85-1307-R)

Argued: December 5, 1996

Decided: April 22, 1997

Before RUSSELL, WIDENER, and MICHAEL, Circuit Judges.

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Affirmed by published opinion. Judge Russell wrote the opinion, in

which Judge Widener and Judge Michael joined.

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COUNSEL

ARGUED: Anthony James Nemo, Sr., MESHBESHER & SPENCE,

LTD., St. Paul, Minnesota, for Appellants. Melody Gunter Foster,

DALKON SHIELD CLAIMANTS TRUST, Richmond, Virginia, for

Appellee. ON BRIEF: Michael J. Nemo, Sr., MESHBESHER &

SPENCE, LTD., St. Paul, Minnesota, for Appellants. Anne M. Glenn,

DALKON SHIELD CLAIMANTS TRUST, Richmond, Virginia;

Orran Lee Brown, Richmond, Virginia, for Appellee.

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OPINION

RUSSELL, Circuit Judge:

Cheslene Bledsoe and Barbara Raygor, claimants against the

Dalkon Shield Claimants Trust (the "Trust"), 1 appeal the district

court's order favoring the Trust, and denying their Rule 60(b) motions

to vacate Alternative Dispute Resolution ("ADR") decisions entered

against them. For the following reasons, we affirm.

I.

Cheslene Bledsoe and Barbara Raygor sought compensation from

the Trust for injuries arising from their use of the Dalkon Shield intra-

uterine device manufactured by the A.H. Robins Company. They

rejected the Trust's offers of compensation and elected to proceed

with binding ADR.

Bledsoe sought compensation for uncontrolled bleeding, pelvic

inflammatory disease and infertility. Raygor sought damages for

uncontrolled bleeding and embedment of the Dalkon Shield. As part

of the ADR process, Bledsoe, Raygor, and the Trust submitted State-

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1 On July 26, 1988, the district court approved A.H. Robins' "Sixth

Amended and Restated Plan of Reorganization" (the"Plan"). We

affirmed the Plan's confirmation. In re A.H. Robins Co., 880 F.2d 694,

696 (4th Cir. 1989), aff'g 88 B.R. 742 (E.D. Va. 1988), cert. denied sub

nom. Menard-Sanford v. A.H. Robins Co., 493 U.S. 959 (1989). The Plan

established the Trust, funded by A.H. Robins Company, to compensate

parties injured by the use of the Dalkon Shield intrauterine device. Sec-

tion 8.04 of the Plan directs all persons seeking compensation to follow

the claim procedures set forth in the Dalkon Shield Trust Claims Resolu-

tion Facility document.

2

ments of Facts and Issues for the referee's consideration. Prior to their

respective ADR hearings, both women submitted their complete med-

ical records and an affidavit from a board-certified obstetrician and

gynecologist stating that the Dalkon Shield caused their injuries. The

Trust categorically denied the women's assertions.

The referee denied compensation to both women on all of their

claims. Dissatisfied with the outcome of their hearings, and because

the referee's final written decision for each case recited certain seg-

ments of the Trust's pre-hearing Statement of Facts and Issues verba-

tim, Bledsoe and Raygor, pursuant to Federal Rule of Civil Procedure

60(b),2 moved the district court to vacate the referee's ADR decisions

and order new ADR hearings. They maintained that the referee exhib-

ited bias by relying upon and copying some of the Trust's Statements

of Facts and Issues as part of her final decisions.

After examining the purposes and goals of the ADR process, the

district court denied their motions to vacate the ADR decisions. It

concluded that Rule 60(b) was not the appropriate procedural mecha-

nism for seeking relief from a final and binding ADR decision. This

appeal followed.

II.

Bledsoe and Raygor contend that the district court erred in denying

their Rule 60(b) motions on the ground that Rule 60(b) relief was

unavailable to them. We review denials of Rule 60(b) motions for

abuse of discretion.3

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2 Bledsoe and Raygor sought relief from final judgment pursuant to

subsections b(4) and b(6), which provide in pertinent part:

(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discov-

ered Evidence; Fraud; etc. On motion and upon such terms as

are just, the court may relieve a party or a party's legal represen-

tative from a final judgment, order, or proceeding for the follow-

ing reasons: . . . (4) the judgment is void; . . . (6) any other

reason justifying relief from the operation of the judgment.

3 National Credit Union Admin. Bd. v. Gray, 1 F.3d 262, 265 (4th Cir.

1993).

3

Due to the large number of claimants, the Trust created the Claims

Resolution Facility (the "CRF"), which established three options by

which potential claimants could seek and receive immediate compen-

sation for their injuries in lieu of attempting to litigate their claims in

court.4

Bledsoe and Raygor initially tried to settle their claims under a pro-

vision known as Option 3. After evaluating the women's respective

claims, the Trust made each of them a settlement offer. Bledsoe and

Raygor rejected the offers, as they were entitled to do under CRF

§ E.4. Claimants rejecting their Option 3 settlement offers may elect,

instead of trial or arbitration, to have their claims proceed through an

In-Depth Review/Voluntary Settlement Conference or another volun-

tary ADR program. Bledsoe and Raygor elected to submit their

claims to the ADR program.

When Bledsoe and Raygor elected to proceed to ADR, they and

their respective counsel voluntarily signed an "Agreement to Submit

to Binding Alternative Dispute Resolution" (the"Agreement"). The

Agreement stated in pertinent part:

[The Claimant] has elected to proceed to[ADR] on her

or his claim against the [Trust]. This election is binding and

prohibits the Claimant from proceeding through in-depth

review and settlement conference, commencing or continu-

ing any litigation or commencing any arbitration or any

other proceeding or action against the Trust. Both the

Claimant and the Dalkon Shield Claimants Trust (collec-

tively the "Parties") agree to submit to ADR in accordance

with the Claims Resolution Facility (the "CRF") and the

First Amended Rules Governing Alternative Dispute Reso-

lution (the "ADR Rules"), which are attached and incorpo-

rated into this Agreement, and further agree that the ADR

Rules will govern the ADR proceedings. The Claimant

acknowledges that she or he has read and understands the

ADR Rules.

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4 See CRF §§ C, D & E.4 (describing each settlement option available

to claimants); Reichel v. Dalkon Shield Claimants Trust, No. 95-1031,

slip op. at 2-3 (4th Cir. March 26, 1997).

4

By electing to proceed to binding ADR and in consider-

ation of the Trust's agreement to be bound by any award,

the Claimant hereby-knowingly and voluntarily waives her

or his right to seek remedies against the Trust in a court of

law, including the right to a trial by a judge or by a jury. The

Claimant also knowingly and voluntarily waives her or his

option to proceed through in-depth review, settlement con-

ference and arbitration pursuant to the CRF.

The parties understand and agree that the maximum

award that the Claimant can receive in ADR is $10,000 U.S.5

The Parties agree that the referee's decision is final and

binding on the Parties.

....

The Trust shall pay the fees and expenses of the referee.

...

....

This Agreement shall be construed and determined in

accordance with the Claimants Trust Agreement, the Plan,

and the CRF.

. . .[T]he Trust agrees that if the referee issues an award in

favor of the Claimant, the Trust will process the award for

payment within ten (10) business days of receiving the ref-

eree's decision. (emphasis added).

The ADR Rules attached to and incorporated into the signed

Agreement stated in Rule I: "[t]he purpose of ADR is to allow claim-

ants whose offers are $10,000 or less the opportunity to present their

cases in person to a neutral person as quickly as possible and with as

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5 At the time Bledsoe elected ADR she was only entitled to a maximum

recovery of $10,000. Because Raygor elected ADR under the current

rules, she could recover a maximum of $20,000.

5

few legal complications as possible." ADR Rule XIIA.1 stated that

the referee shall issue a written decision no later than fifteen days

after the hearing. Additionally, the pre-hearing letter sent to Bledsoe

and Raygor introducing them to the ADR program informed them that

a claimant should be able to present her or his case to an independent

referee within six months after certification to ADR, the hearing lasts

no longer than two and one-half hours, and typically the awards are

higher than the settlement offers.

The above evidence demonstrates that Bledsoe and Raygor took

part in a voluntary, less adversarial, less costly, and more efficient

contractual alternative to trial. The ADR procedure was not court-

ordered, nor court-supervised. It was a quasi-judicial proceeding in

which a neutral third party gathered information from the participants

and issued an informal but final resolution regarding the submitted

claims. It operated under few restrictions. Its own rules, not those of

the courts, governed the process.6

Bledsoe and Raygor knowingly and voluntarily rejected the Trust's

Option 3 settlement offers. They elected to resolve their claims

through the ADR program with the obvious hope of securing a higher

award. Entering the ADR program however, was not a"sure thing."

There always existed the attendant risk that their claims could be

denied, and the referee could issue an adverse decision against either

party.

The Agreement, the ADR Rules, and the pre-hearing letter placed

Bledsoe and Raygor on notice that the referee's decision was binding

and final, and that there existed no mechanism by which the referee's

decision could be reviewed. By contractually and voluntarily submit-

ting their claims to the ADR program, Bledsoe and Raygor relin-

quished certain procedural mechanisms associated with a formal court

proceeding, one of which was the right of judicial review.

Neither the Agreement nor the ADR Rules contain a provision per-

mitting either party to seek a new hearing after the referee issues a

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6 Cf. Bernhardt v. Polygraphic Co. , 350 U.S. 198, 203 (1956) ("The

nature of the tribunal where suits are tried is an important part of the par-

cel of rights behind a cause of action.").

6

decision. The absence of any provision providing for post-decision

review is not unintentional. We believe that it constitutes a deliberate

omission, because any rule permitting such immediate review would

contravene the very goal of the ADR process -- the efficient, fair, and

final resolution of claims against the Trust. Consequently, we hold

that the district court did not abuse its discretion in finding that Rule

60(b) relief from this particular ADR procedure was not available to

those claimants who elected to have their claims resolved in ADR.

III.

As discussed above, the Agreement and the ADR Rules do not pro-

vide a mechanism for reviewing ADR decisions. Hence, no post-

decisional relief is normally available to either party. Nonetheless, the

district court determined that "individual fairness" required that post-

decisional relief be available in those extreme circumstances "where

the moving party demonstrates flagrant referee misconduct by clear

and convincing evidence."7 In order to review Bledsoe's and Raygor's

claims the district court invoked its exclusive jurisdiction and special

supervisory powers to resolve disputes regarding the implementation

of the Plan.8 It then considered the women's complaints regarding the

referee's decisions as if they had been filed with the court in a Motion

to Enforce Plan and Set Aside Referee's Decision. The district court

found that the record lacked clear and convincing evidence showing

the referee's decisions were biased and improper.

Bledsoe and Raygor do not appeal the district court's decision to

review their complaints as if filed as a Motion to Enforce Plan and

Set Aside Referee's Decision. Rather, they appeal what they believe

to be the unrealistic evidentiary burden required by the district court.

Having carefully reviewed the record, we hold that the district court

did not establish an unrealistic burden. Additionally, the record

reveals that Bledsoe and Raygor failed to present sufficient evidence

of referee misconduct. Accordingly, the district court did not abuse its

discretion in refusing to vacate the ADR decisions on the basis of par-

tiality.

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7 Bledsoe v. Dalkon Shield Claimants Trust, 197 B.R. 550 (1995).

8 § 8.05 of the Plan. See also In re A.H. Robins Co., 972 F.2d 77, 79

n.1 (4th Cir. 1992) (affirming the district court's exclusive jurisdiction).

7

IV.

For the foregoing reasons, the order of the district court appealed

from is accordingly

AFFIRMED.

8