Opposition Brief — Tallakson v. Baxter Healthcare Corp.

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No. 99-1140 FEB 0 7 2000

CLERK

IN THE )

Supreme Court of the United States

AARON THOMAS TALLAKSON, et ai.,

¥ Petitioners,

BAXTER HEALTHCARE CORPORATION, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

RESPONDENTS’

BRIEF IN OPPOSITION

FRED MAGAZINER

RICHARD A. BERKMAN

DECHERT, PRICE & RHOADS

4000 Bell Atlantic Tower

1717 Arch Street

Philadelphia, PA 19103

(215) 994-4000

Attorneys for Baxter

Healthcare Corporation

PHILIP S. BECK

ANDREW GOLDMAN

BARTLIT, BECK, HERMAN,

PALENCHAR & SCOTT

Courthouse Place

54 West Hubbard Street

Chicago, IL 60610

(312) 494-4411

Attorneys for

Alpha Therapeutic Corp.

February 7, 2000

SARA J. GOURLEY

EUGENE A. SCHOON *

SUSAN A. WEBER

CATHERINE V. BARRAD

ROBERT C. VARNELL

SIDLEY & AUSTIN

Bank One Plaza

Chicago, IL 60603

(312) 853-7000

Attorneys for Armour

Pharmaceutical Company

and Rhoéne-Poulenc

Rorer Inc.

GEOFFREY R.W. SMITH

Suite 455 West

1025 Thom. Jefferson St., N.W.

Washington, D.C. 20007

(202) 625-1224

Attorney for

Bayer Corporation

* Counsel of Record

WILSON-EPzs PRINTING Co., INc. -

(202) 789-0096 - WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether petitioners, who explicitly stated their inten-

tion to participate in a nationwide class settlement by

electing to file claims for payment under the settlement,

may, after two years, change their minds and seek, on

collateral attack, to have the final judgment that approved

the settlement declared void so petitioners can pursue the

individual litigation against defendants that the settlement

was intended to end?

(i)

RULE 29.6 STATEMENT

Pursuant to Rule 29.6 of the Rules of this Court,

respondents state the following:

The parent company of Rhéne-Poulenc Rorer Inc. is

Aventis S.A. All subsidiaries of Rhéne-Poulenc Rorer

Inc. are wholly owned.

The parent company of Armour Pharmaceutical Com-

pany is Rhér»-Poulenec Rorer Inc. All subsidiaries of

Armour are wholly owned.

The parent company of Bayer Corporation is Bayer

A.G. Schein Pharmaceutical, Inc., Onyx Pharmaceuticals,

Inc., Millennium Pharmaceuticals, Inc., and Myriad Gen-

etics, Inc. are non-wholly-owned subsidiaries of Bayer

Corporation.

Baxter Healthcare Corporation’s parent company is Bax-

ter International, Inc. Baxter owns stock in certain pub-

licly-traded companies and is filing this information under

seal with the Clerk of the Court.

The parent company of Alpha Therapeutic Corporation

is Green Cross International, Inc. Business Travel Spe-

cialists, Inc., G.C. Pharmaceutical (Singapore) Ptc Ltd.,

Grifols UK Ltd., and Grifols Italia SpA are non-wholly-

owned subsidiaries of Alpha Therapeutic Corporation.

QUESTION PRESENTED

RULE 29.6 STATEMENT

TABLE OF AUTHORITIES

INTRODUCTION

COUNTER STATEMENT OF THE CASE

TABLE OF CONTENTS

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errr ee etree er ee)

REASONS THE PETITION SHOULD BE DENIED.

CONCLUSION

tiie

(iii)

TABLE OF AUTHORITIES

CASES Page

Amalgamated Sugar Co. v. NL Indus., Inc., 825

F.2d 634 (2d Cir.), cert. denied, 484 U.S. 992

RIRUIPER sconctnnsdiverasacinnisacednbdeiocsieee neon eet Pie: 22

Amchem Prods., Inc. v. Windsor, 521 U.S. 591

CTD tccbiaaiihinineseresrsneinnendel teat Se ke - passim

Barney v. Holzer Clinic, Ltd., 110 F.3d 1207 (6th

tS. , ype REO DRM MR Ly. BT 33

Croyden Assocs. v, Alleco, Inc., 969 F.2d 675 (8th

Cir. 1992), cert. denied, 507 U.S. 908 (1998).... 17

Dowling v. Alpha Therapeutic Corp., No. 97-2410

(7th Cir., appeal dismissed July 16, 1997)........ 7

Epstein v. MCA, Inc., 126 F.3d 1235 (9th Cir.

1997), opinion withdrawn and superseded on

rehearing, 179 F.3d 641 (9th Cir.), cert. denied,

tS a. RRR cirri ate erase bea 16, 20

Gottlieb v, Wiles, 11 F.3d 1004 (10th Cir. 1998) .... 17

Harper v, Virginia Dep’t of Taxation, 509 U.S. 86

i) SRP RRM reese ASME ATL OMe Aah | te ee PS 19

In re Agent Orange Prod. Liab. Litig., 996 F.2d

1425 (2d Cir. 1993), cert. denied, 510 U.S. 1140

| RRS ETERB re cage ptec i ge ES sli / SER SE 18

In re Edwards, 962 F.2d 641 (7th Cir. 1992) ........ 15

In re Factor VIII or 1X Concentrate Blood Prod.

Liab. Litig. (MDL-986), 853 F. Supp. 454

Gees REE ih 4,21

In re Factor VIII or 1X Concentrate Blood Prod.

Litig., Appeals of Spece, Ibanez, and Mull &

Mull and In re Mull & Mull, 159 F.3d 1016 (7th

Cir. 1998), cert. denied, 119 S.Ct. 1488 (1999) ..passim

In re Rhéne-Poulenc Rorer Inc., 51 F.3d 1298 (7th

Cir.), cert. denied, 516 U.S. 867 (1995) .............. 22-23

Kansas City S. Ry. Co. v. Great Lakes Carbon

Corp., 624 F.2d 822 (8th Cir.), cert. denied, 449

eis WRU I ica ee ee 19

Liljeberg v. Health Servs. Acquisition Corp., 486

Wile UE RED lente ahaa hiastocs niente eee 13

Matter of Rhéne-Poulenc Rorer Inc., 51 F.3d 1298

(7th Cir.), cert. denied, 516 U.S. 867 (1995)...... 4

aaed

TABLE OF AUTHORITIES—Continued

Page

Matter of VMS Sec. Litig., 108 F.8d 1817 (7th

| Re Se st PAR ERS MP OMET 23

Neuberg v. Michael Reese Hosp. Found., 123 F.3d

OL. Cree Cai Ae Baba a 15

Norgaard v. DePuy Orthopaedics, Inc., 121 F.3d

ee ge. gp Ne beddli enn galase Aenea 15,19

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) ..19-20, 22

Otis v. Bayer Corp., No. 97-2556 (7th Cir., appeal

Gigentesed duly 84; 1007) ..0iksie ec... 7

Phillips Petroleum Co, v. Shutts, 472 U.S. 797

PRIUIIIE Sisaicinschanimcdricet cam te De es pele 13, 20

SEC v, Randolph, 736 F.2d 525 (9th Cir. 1984)... 21-22

Shults v. Champion Int'l Corp., 35 F.3d 1056 (6th

ae CIE aR Ee EN ed 17

Twigg v. Sears, Roebuck & Co., 153 F.8d 1222

CGR Cie. TG) cei 13

Wadleigh v. Rhéne-Poulene Rorer Inc., 157 F.R.D.

410 (N.D. Ill. 1994), rev’d, Matter of Rhéne-

Poulene Rorer Inc., 51 F.8d 1293 (7th Cir.

1995), cert. denied, 516 U.S. 867 (1995) ..... EPS 4

Walker v. Bayer Corp., 96-C-5024 (N.D. Ill.)........ 5

Williams v. Gen. Elec. Capital Auto Lease, Inc.,

159 F.3d 266 (7th Cir. 1998), cert. denied, 119

hae Se Cee ab ie bio shea 16

Zablocki v. Redhail, 434 U.S. 874 (1978) .............. 13

FEDERAL STATUTES

Balanced Budget Act of 1997, Pub. L. No. 105-33,

I 6

i ee Z, ii

FEDERAL RULE

Pear aa as Ce a a hd el, passim

OTHER AUTHORITY

Herbert Newberg & Alba Conte, Newberg on Class

Jf RARE me 18

IN THE

Supreme Court of the United States

No. 99-1140

AARON THOMAS TALLAKSON, ef al.,

* Petitioners,

BAXTER HEALTHCARE CORPORATION, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

INTRODUCTION

The petition arises from the second in a series of col-

lateral attacks upon the final judgment that approved the

nationwide factor concentrate class settlement. Under the

terms of that settlement, respondent fractionators’ paid

more than $600 million for claims that individuals con-

tracted HIV from the plasma therapies used to treat hemo-

philia, a bleeding disorder. A year ago, this Court de-

clined to review a previous collateral attack on this judg-

ment, brought by certain plaintiffs’ attorneys. In re

Factor VIII or 1X Concentrate Blood Prod. Liab. Litig.,

1“Fractionation” is the process by which plasma is separated

into its different components. Fractionators are Armour Pharma-

ceutical Co., Bayer Corp., Baxter Healthcare Corp., and Alpha

Therapeutic Corp. Also named as a defendant is Rhéne-Poulenc

Rorer Inc., the indirect parent corporation of Armour.

Appeals of Spece, Ibanez, and Mull & Mull and In re

Mull & Mull, 159 F.3d 1016 (7th Cir. 1998) (Opp.

App. 15a-22a), cert. denied, 119 S.Ct. 1488 (1999).?

The present petition is brought by a few class members,

most of whom are represented by the same attorneys in-

volved in that prior collateral attack. These class members

did not timely opt out of the class and settlement; to the

contrary, they filed claim forms seeking payment under

the terms of the settlement. The final judgment that

approved the class and settlement in May of 1997 ex-

plicitly extinguished their tort claims against fractionaiors.

Pet. App. 92.

Nevertheless, these class members have continued to liti-

gate their individual claims against fractionators in state

court. They claimed that 1) the judgment that approved

the class settlement was void and 2) the individual re-

leases required to receive payment under that judgment

should be treated as individual settlement offers. These

class members assert that, by refusing to sign their releases,

they can simply walk away from the settlement.

The district court—which had heard all these argu-

ments in the prior collateral attack—observed that “[t]his

case is the paradigm situation to employ the All Writs

Act,” 28 U.S.C § 1651(a). Opp. App. 6a. The court

2 Petitioners’ Statement of the Case begins with a pastiche of

truths, half-truths, and outright lies that are (a) devoid of any

citations to the record below and (b) in any event, irrelevant to

the issues presented in their petition. See Pet. 2-4. To support

fractionators’ Counter Statement of the Case, fractionators have

reproduced certain key materials in the appendix to this brief

(“Opp. App.”) and have lodged with the Clerk of the Court copies

of fractionators’ appendix to their brief in the court of appeals

(“FA”), which reproduces additional settlement documents and

excerpts from the record of this case. Fractionators have moved

to lodge this appendix under seal because it contains the medical

records of petitioners.

therefore granted fractionators’ motion to enjoin the law-

suits and denied petitioners’ cross motions for Rule 60

relief from the final judgment that approved the class

settlement. Opp. App. 1a-2a; Pet. App. 3-9. The United

States Court of Appeals for the Seventh Circuit affirmed in

an unpublished, one-paragraph order that relied upon rea-

soning set forth in the orders of the district court and the

judgment of the court of appeals that rejected the prior

collateral attack. Pet. App. 1-2.

There is nothing about the decision of the court of

appeals that is remotely worthy of review. The decisions

below do not conflict with the precedents of this or any

other court. Petitioners were not deprived of their day in

court. They simply lost on the merits. The judgments

below were correct and limited to the bizarre procedural

posture of petitioners’ claims (circumstances of petitioners’

own making). Accordingly, certiorari should be denied.

COUNTER STATEMENT OF THE CASE

1. Hemophilia is an incurable bleeding disorder caused

by deficiencies of certain clotting factors in the blood. It

is treated by administering the missing clotting factors to

the patient. In the late 1960s and early 1970s, fraction-

ators developed freeze-dried clotting factor concentrates

that resulted in “the return to a full range of activities for

many patients who were previously wheelchair-bound”

and, between 1968 and 1983, a doubling in the life ex-

pectancy of persons with hemophilia.* However, the ad-

vent of the disease now known as AIDS had a tragic

impact on persons with hemophilia. Before anyone knew

that AIDS was transmissible by blood and plasma prod-

ucts, thousands of hemophiliacs were infected with the

3 Leon W. Hoyer, M.D., Medical Progress: Hemophilia A, 330

New Eng. J. Med. 38 (Jan. 6, 1994).

EE a eT ek ee et ee

retrovirus now called HIV and known to be the cause of

AIDS. Opp. App. 16a.

2. Lawsuits have been filed in state and federal courts

alleging almost 800 cases of HIV transmission through

factor concentrates. In late 1993, all pending federal

factor concentrate cases were consolidated in the Northern

District of Illinois before Judge John F. Grady. In re

Factor VIII or 1X Concentrate Blood Prod. Litig. (MDL-

986), 853 F. Supp. 454, 456 (J.P.M.L. 1993). In 1994,

the district court certified a nationwide “issue” class for

the purpose of determining in a single trial whether the

fractionators were “guilty of ordinary negligence.” Wad-

leigh v. Rhéne-Poulenc Rorer Inc., 157 F.R.D. 410, 426

(N.D. Ill. 1994). The court of appeals subsequently

issued a writ of mandamus ordering the district court to

decertify the class. Matter of Rhéne-Poulenc Rorer Inc.,

51 F.3d 1293 (7th Cir. 1995). This Court denied cer-

tiorari, 516 U.S. 867 (1995), and the class was

decertified.

Sy a re ne

3. On April 19, 1996, fractionators proposed a settle-

ment that would pay up to $100,000 for each claimant

group related to (a) each HIV-positive hemophiliac who |

used factor concentrate and (b) certain persons allegedly :

infected with HIV through exposure to such hemophiliacs.

The total value of this part of the April 1996 settlement

proposal was limited to $600 million; if more than the :

anticipated 6,000 claims were filed, then each claimant

would be paid less than $100,000. FA 324, 332. The

Plaintiffs’ Steering Commitiee (“PSC”) rejected fractiona-

tors’ proposal. FA322.

After several months of intense negotiations, fractiona-

tors and PSC agreed to the present class settlement, in

which fractionators agreed to pay $100,000 for each

claim, even if the number of claims exceeded 6,000. Pet.

i ai i ane

App. 16 §B. The settlement agreement expressly re-

quired claimants to execute releases in order to receive

payment. Pet. App. 46 §M. Fractionators also under-

took to pay additional monies to resolve federal and state

Medicare and Medicaid claims as well as the claims of

most private health insurers, so that claimants would re-

ceive the settlement payments free and clear of most out-

standing claims. Pet. App. 50 § P(1). Finally, the settle-

ment agreement provided that a separate $40 million

fund, to be established by fractionators, would be the ex-

clusive source for all costs and attorneys’ fees, which

could be awarded by the district court. Pet. App. 44-45

§§ L(2) & (5).

4. In August 1996, PSC sought preliminary certifica-

tion of a nationwide settlement class in the case of Walker

v. Bayer Corp., 96-C-5024 (N.D. Ill.). FA 334-37. The

class notice and settlement agreement clearly stated that (a)

class members who wanted to receive payment under the

settlement (if the class and settlement received final ap-

proval) were required to file claim forms, and (b) per-

sons who wanted to opt out of the class in order to pursue

individual litigation were required to file opt-out forms on

or before October 15, 1996. Pet. App. 67-71; FA 23-27,

59-60. The notice and settlement agreement made equally

clear the consequences of failure to opt oui by that date. If

the class and settlement received final approval, judgment

would be entered barring any claim against fractionators

that an HiV-infected person allegedly suffered as a re-

sult of the use of factor concentrates processed or dis-

tributed during the ciass period. Pet. App. 33 § 6, 72

§ 9. The settlement agreement expressly stated that frac-

tionators would have the opportunity to review the opt-

out forms before making a final determination whether to

go forward with the settlement. Pet. App. 14 § A2(c).

The vast majority of persons who were entitled to file

claims did so.

ii |

All of the petitioners now before this Court filed claim

forms seeking payment under the terms of the notice and

settlement agreement. FA 91, 107, 119, 128, 138, 150,

191, 201, 211, 222, 251, 261. In deciding to file their

claim forms, several petitioners received separate legal

advice in addition to that available from class counsel.*

5. On November 25, 1996, the district court held a

day-long fairness hearing. FA 338. None of the peti-

tioners or their attorneys objected to the terms of the

settlement or raised any of the arguments now before

this Court. The district court did not rule immediately

upon the fairness of the settlement because, inter alia,

fractionators were still negotiating with the United States

government, state governments, and dozens of insurers

seeking to compromise claims against settlement monies

that would be paid to class members. FA 348.°

While these negotiations were underway, certain dissi-

dent plaintiffs’ attorneys argued that class members should

be given a new opportunity to opt out of the settlement

based upon “newly discovered” evidence and alleged

4The following claimant groups identified in their claim forms

their individual attorneys: Tallakson and Davon were represented

by Mull & Mull; the Castilles were represented by Barham &

Arceneaux; Jane Doe was represented by Roy Spece, and the

Lindgren claimant group was represented first by Michael Dan and

later by Mull. FA265, 142, 123, 154, 226. Mull, Spece, and 8

Arceneaux were key participants in the prior collateral attack on :

the class settlement. Arceneaux is counsel of record for all peti-

tioners.

5 Fractionators eventually paid more than $30 million to secure i

these compromises. Working with PSC and the hemophilia com-

muunity, fractionators also secured the passage of legislation that

endorsed the factor concentrate class settlement by name and pro-

vided that receipt of the $100,000 settlement payment would not

affect claimants’ eligibility for medical assistance and disability

payments. See Balanced Budget Act of 1997, Pub. L. No. 105-33,

§ 4735, 111 Stat. 251, 522.

oe ha

fraud on the part of fractionators and PSC. FA 364,

368-69. The district court addressed these matters at

a second fairness hearing on May 6, 1997. At the conciu-

sion of that hearing, the district court concluded that the

attorneys had not identified any new evidence or colorable

basis for their fraud allegations. FA 400-04. The court

stated that it had received form letters from some class

members, including at least one of the petitioners, seek-

ing to opt out based upon “new” information. FA 401-

03, 242. The court stated that “these letters have the

earmarks of having been written by well-intentioned people

who have simply been misled by erroneous information,”

FA 403, and refused to reopen the opt-out period.

6. On May 8, 1997, the district court entered final

judgment certifying the class, approving the settlement,

and ordering the parties to implement the settlement

agreement according to its terms. Pet. App. 77-94. The

final judgment expressly barred claims against fractiona-

tors by class members who had not filed timely opt-outs.

Pet. App. 92.

However, the district court continued to receive corre-

spondence from class members, again including one of the

petitioners, FA 247-49, and was concerned that “[m]Jany

class members appear to have been misled” about sup-

posed new information “by persons who have been en-

couraging them to request permission for late opt-outs.”

FA 427. Accordingly, on May 15, 1997, the district

court entered an “Order Concerning Requests for Late

Opt-Outs” that stated: “The purpose of this order is to

make clear that the judgment order of May 8 is a bar to

the filing of any individual suits by class members who

6 Two appeals were filed by nonparty class members, but were

voluntarily dismissed. See Dowling v. Alpha Therapeutic Corp.,

No. 97-2410 (7th Cir., appeal dismissed July 16, 1997); Otis v.

Bayer Corp., No. 97-2556 (7th Cir., appeal dismissed July 24, 1997).

did not opt out by October 15, 1996.” FA 427. The

court established a mechanism “to permit late opt-outs in

extraordinary circumstances” that “would have prevented

the class member from making an intelligent decision to

opt out prior to the deadline.” FA 426-27. None of the

petitioners sought to avail themselves of this procedure.

7. Thereafter, the dissident plaintiffs’ attorneys collat-

erally attacked the judgment that approved the class set-

tlement. They argued that the class settlement was void

based upon a variety of jurisdictional theories and under

this Court’s decision in Amchem Prods., Inc. v. Windsor,

521 U.S. 591 (June 25, 1997), which was decided after the

judgment that approved the factor concentrate class set-

tlement was final. The dissident attorneys argued that the

class settlement should be recharacterized as more than

6,000 irrevocable individual settlement offers that class

members were free to accept or reject and that the dissi-

dent attorneys should be allowed to collect from fraction-

ators up to $66,000 in attorneys’ fees from fractionators

for each settling client. FA 429, 434-36, 440-46; Opp.

App. 16a-17a.

The district court rejected the attorneys’ collateral at-

tack upon its judgment. FA 446-48. The court of ap-

peals in a unanimous decision written by Chief Judge

Richard Posner, ruminated, in dicta, that the settlement

“may well be questionable, both in its form ... and in

its terms,” Opp. App. 18a, but then emphatically held:

[T]here is no question of the district court’s having

exceeded its jurisdiction in entering the decree. All

the requirements of Article III were satisfied.

Even if they had not been, it is unlikely that the

settlement could be set aside at this late date... .

The principle that jurisdictional defects may be no-

ticed at any time is limited . . . by the equally im-

portant prinicple that litigation must have an end.

After a case has become final by exhaustion of all

appellate remedies, only an egregious want of juris-

diction will allow the judgments to be undone by

someone who, having participated in the case, cannot

complain that his rights were infringed without his

knowledge.

Opp. App. 18a-19a.7 This Court denied certiorari. 119

S. Ct. 1488 (1999).

8. Nevertheless, the dissident attorneys persisted in ar-

guing that the judgment that approved the class and set-

tlement was void and that class members could evade the

judgment of the district court and unilaterally withdraw

from the settlement by refusing to complete the paper-

work necessary to receive their settlement checks. Peti-

tioners’ counsel of record in this Court contended in No-

vember 1998—after the Seventh Circuit had rejected the

first collateral attack—that class members who failed to

opt out of the class settlement were not barred from pur-

suing individual litigiation unless they signed and returned

release forms. FA 463-64. Petitioner Michael Davon

published an Internet posting that stated: “My lawyers

tell me that I have no obligation not to pursue my own

litigation against the fractionators. The legal people I

have consulted feel that even the many people who signed

and returned the releases, but who have not been paid, are

not bound.” FA i148. Another Internet posting stated

that class members could opt out of the settlement in one

of two ways: (1) “[dJo nothing and not sign the release,

and you wili then automatically become an opt-out be-

cause the contract is not final until the check is signed[,]

sealed and delivered” or (2) send a letter to the “Claims

Administrator in Chicago expressing there was a breach

7 The court of appeals further held that the dissident attorneys

were estopped from challenging the class and settlement. Opp. App.

21a.

ee es

of contract, as the release is different from the original

documents.” FA 147.

Acting on this bad advice, petitioner claimant groups |

Tallakson, Chappie, Helm, Geraldo, Lindgren, Akers,

Davon, Castille, Robison, and Jane Doe failed to return

release forms. The Lay claimant group returned a re-

lease but subsequently purported to revoke the signature

on that release. FA 221. The Campbell group went so

far as to return settlement monies received after signing

the release. FA 118. Petitioners then filed or sought to

reactivate their state court lawsuits against fractionators.

FA 556-97.

9. On December 21, 1998, fractionators moved to en-

join the state court suits of petitioners. FA 472. Peti-

tioners filed cross motions under Rule 60 seeking relief

from the final judgment that approved the factor concen-

trate settlement. FA 477, 497. The district court ruled

in favor of the fractionators and against petitioners. In

denying the Rule 60 motions, the district court rejected,

inter alia, petitioners’ arguments that (1) the terms of the

release abrogated the class settlement agreement and con-

stituted a new offer that class members were free to re-

ject; (2) the final judgment approving the settlement was

void under Amchem Prods., Inc. v. Windsor, £21 U.S.

591 (1997); and (3) the final judgment was void because

there was no Article III case or controversy. Pet. App.

6-7. The district court also concluded that, “[clonsidering

the lapse of time itself, and the substantial changes of posi-

tion made by the numerous participants in the settlement

in the meantime, we believe [petitioners’] delay in pre-

senting these motions is inexcusable.” Pet. App. 8.

In a separate order entered the same day, the district

court granted fractionators’ motion for injunctive relief,

concluding that “[tJhis case is the paradigm situation to

employ the All Writs Act.” Opp. App. 6a. Among other

things, the district court rejected petitioners’ challenge to

the requirement that class members execute individual re-

leases in order to receive their settlement checks. The

court observed that the release requirement was “particu-

larly appropriate in this case,” where the settlement was

structured to provide compensation to “claimant groups”

rather than individuals. Opp. App. 7a. Moreover, as the

district court observed, “[n]ot one word was uttered by

these attorneys or their clients, in opposition to the re-

lease requirement” before final judgment was entered ap-

proving the class settlement. Opp. App. 7a. “For these

attorneys to argue at this late date that the requirement

of any release at all renders the order of May 8, 1997,

somehow unenforceable is a repetition of the kind of bad

faith they showed in their delayed challenge to the limi-

tation on their fees.” Opp. App. 7a.’

9. The court of appeals affirmed in an unpublished

order that relied upon the same panel’s opinion in the

prior collateral attack and the underlying orders of the

district court. Pet. App. 1-2.

REASONS THE PETITION SHOULD BE DENIED

This is not a case in which absent class members

sought to challenge fundamentally unfair provisions of a

class settlement of which they were unaware until after

final judgment was entered. Petitioners received notice of

the proposed class and settlement, chose to forego indi-

vidual litigation and to participate in the class settlement,

and filed claim forms seeking payment under the terms

of that settlement.

8 Additional arguments by petitioner Jane Doe were addressed

in a separate order of the district court. Opp. App. 10a-l4a. Jane

Doe has not raised those arguments before this Court.

Petitioners then changed their minds. They now seek

to deprive fractionators of their primary, bargained-for

benefit under this costly class settlement: peace from liti-

gation. The settlement agreement expressly provided that

fractionators would have the opportunity to analyze all

opt-out forms to evaluate their post-settlement litigation

exposure before committing to go forward with the class

settlement. Pet. App. 14 § A2(c). When fractionators

ultimately agreed to pay more than $600 million to class

members in this settlement, they did so with the under-

standing that they had been able to evaluate the litigation

exposure that would remain after the settlement was

implemented.

Petitioners want to change the terms of a done deal.

They bandy about the concepts of due process and Article

LI jurisdiction in an attempt to evade the final judgment

that approved the class and settlement. But the arguments

that petitioners attempt to raise are not properly presented

on the anomalous facts of this case. The petition there-

fore should be denied.

I. Petitioners first argue that the Court should grant

certiorari to “revisit the issue of how the constitutional

rights of class members can be vindicated.” Pet. 14.

They allege that the unpublished decisions below conflict

with judgments of several courts of appeals holding that

absent class members may raise due process challenges to

a final judgment on collateral attack. Pet. 15. See also

Pet. i. This issue does not merit review for at least five

reasons:

A. The decision below does not conflict with the hold-

ing of this or any other court. Neither the district court

nor the court of appeals held that absent class members

are foreclosed from collaterally attacking final judgments.

The courts below simply concluded that the arguments

presented by these petitioners lack merit—a determina-

tion that is factbound and does not merit review. See

Pet. App. 1-9; Opp. App. la-14a. The cases cited by

petitioners stand, at best, for the unremarkable proposition

that absent class members are bound by the judgment so

long as they were adequately represented and had sufficient

notice.®

B. The “issue of how the constitutional rights of class

members can be vindicated” is not properly presented be-

cause petitioners’ motions seeking relief from the final

judgment were untimely. Motions under Rule 60(b) (4),

(5), and (6), the provisions on which petitioners relied.1°

must be made “within a reasonable time.” Fed. R. Civ. P.

60(b). See generally Liljeberg v. Health Servs. Acquisi-

tion Corp., 486 U.S. 847, 863 (1988). Petitioners’ deci-

sion to challenge the class settlement more than 25

months after they filed for payment under the settlement

and 18 months after entry of the final judgment that ap-

proved the settlement was unreasonable on its face. In-

deed, as the district court observed, petitioners’ delay dem-

9 See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12 (1985)

(discussing due proocess requirements to assert jurisdiction over

absent class members); Zablocki v. Redhail, 424 U.S. 374, 380 n.6

(1978) (noting in passing that appellant, having waived it, could

not raise due process challenge on appeal on behalf of absent class

members); Twigg v. Sears, Roebuck & Co., 153 F.3d 1222, 1226

(11th Cir. 1998) (collateral attack allowed where notice of settle-

ment was inadequate) ; Barney v. Holzer Clinic, Ltd., 110 F.3d 1207,

1214 n.11 (6th Cir. 1997) (holding that plaintiff was not member

of class: footnote states in passing that adequacy of representation

may be challenged on collateral attack) ; In re Agent Orange Prod.

Liab. Litig., 996 F.2d 1425, 1434-35 (2d Cir. 1993) ( rejecting, for

second time, collateral attack based upon alleged inadequacy of

notice and holding blanket conflict of interest claims against class

counsel to be unpersuasive), cert. denied, 510 U.S. 1140 (1994).

10 Rule 60(b) (4) authorizes relief from void judgments; 60(b) (5)

authorizes, inter alia, relief when prospective application of a judg-

ment would be inequitable; 60(b)(6) is the catchall provision of

the rule.

onstrated the “bad faith” that was the hallmark of the

previous round of collateral attacks. Opp. App. 7a.

Nothing prevented petitioners from bringing a timely

challenge to the class settiement. Indeed, their principal

arguments—lack of Article III jurisdiction and inadequate

representation—could have been presented before the

judgment that approved the class settlement became final.

Petitioners received individual notice of the provisions of |

the class settlement in the fall of 1996. By October 15, |

1996, each and every one of the petitioners chose to file ae

a claim seeking payment under the terms of the class

settlement. FA 91, 107, 119, 128, 138, 150, 191, 201,

211, 222. 251, 261. Many of the petitioners were repre-

sented by personal counsel as well as class counsel during

this period. FA 265, 142, 123, 154. Several of those

lawyers, including petitioners’ present counsel of record,

expressly told the district court that they did not object to

final approval of the class settlement. FA 364, 380. Peti-

tioners made no effort to appeal the final judgment that

approved the class settlement. They did not challenge the

district court’s May 15, 1997, order, which explicitly

stated that late opt-outs from the class settlement would be

allowed only in extraordinary circumstances. FA 426.

Nor did they attempt to establish such circumstances.

Instead, petitioners sat back and waited while fraction-

ators distributed hundreds of millions of dollars to class

members, paid more than $30 million to state and federal

governments and insurers, established a $40 million at-

torney fee fund, and incurred millions of dollars in addi-

tional costs in connection with the implementation of the

class settlement. They waited while dissident plaintiffs’

attorneys (who represent many of the petitioners) liti-

gated the identical issues presented in this petition.

Only after fractionators announced that they would

seek injunctive relief to block petitioners’ state court law-

ee ee eee ee ee ee

suits did petitioners decide to file cross motions under

Rule 60. FA 471. Given this record, there is nothing

extraordinary about the court of appeals’ decision that

the district court acted within its discretion in conclud-

ing that petitioners were not entitled to back out of the

settlement.™

C. Petitioners concede that the determination that

their Rule 60 motions were untimely presents an “impedi-

ment” to consideration of their arguments, but contend

that Rule 60(b)(4) claims are “not subject to any time

limit.” Pet. 19-20, n.4.

The court of appeals specifically considered and re-

jected this argument in disposing of the first collateral at-

tack on the factor cor.centrate class settlement:

The appellants argue that “when subject matter juris-

diction is lacking or due process has been denied, the

final judgment is void, and its nullity must be recog-

nized in any collateral proceeding in which it is

asserted as binding.” This is an overstatement. The

11 Before the court of appeals, petitioners attempted to excuse

their tardiness by pointing to post-judgment developments—this

Court’s decision in Amchem Prods., Inc. v. Windsor, 521 U 5. 591

(1997), and petitioners’ receipt of the release forms that they were

required to sign to receive their settlement payments. But Amchem

was decided on June 25, 1997, just a few weeks after the factor

concentrate judgment became final. See Norgaard v. DePuy Ortho-

paedics, Inc., 121 F.3d 1074, 1075-76 (7th Cir. 1997) (denying Rule |

60(b) relief where appellant relied on a Supreme Court decision

that had been under consideration when judgment was entered, |

noting, inter alia, that appellant could have taken protective ap-

peal); Neuberg v. Michael Reese Hosp. Found., 123 F.3d 951, 955

(7th Cir. 1997) (Rule 60(b) motion filed 21 months after judgment

was untimely where movant had known of problems for 18 months

and Supreme Court decision upon which movant relied “had been

decided several months beforehand”). Moreover, all petitioners had

received their releases by the end of 1997. FA 510. Therefore,

these developments cannot explain petitioners’ failure to file their

Rule 60 motions until December of 1998. FA 477-78.

principle that jurisdictional defects may be noticed at

any time is limited, as we explained in /n re Edwards,

962 F.2d 641, 644 (7th Cir. 1992), by the equally

important principle that litigation must have an end.

After a case has become final by exhaustion of all

appellate remedies, only an egregious want of juris-

diction will allow the judgment to be undone by

someone who, having participated in the case, cannot

complain that his rights were infringed without his

knowledge. |

Opp. App. 18a-19a, cited in Pet. App. 1-2.

Petitioners respond that they were “absent” class mem-

bers and therefore had no duty to raise their objections to

the class and settlement before final judgment. Pet. 11-12.

This argument fails on the facts of this case because pe-

titioners were not truly “absent” class members in the

sense that term ordinarily is used. As set forth above,

these petitioners took the affirmative step of filing claim

forms that expressly stated petitioners’ intention to par-

ticipate in the settlement, with the knowledge that fraction-

ators would rely on those claim forms in determining

whether to go forward with the settlement. See Pet. App.

14 §A2(c), 47-48 § 02-3. Petitioners’ attorneys, in-

cluding their present counsel of record, participated in the

fairness hearings. FA 351, 360. Thus, petitioners had

sufficient information before final judgment was entered to

investigate virtually every argument that they now seek to

raise on collateral attack. See Williams v. General Elec.

Capital Auto Lease, Inc., 159 F.3d 266, 274-75 (7th Cir.

1998) (upholding order barring class members, who re-

ceived adequate notice, from relitigating their claims in

another forum), cert. denied, 119 S. Ct. 2392 (1999).

They chose not to pursue those arguments. the fact that

they later changed their minds about participating in the

class settlement does not excuse their failure to raise these

_ lll

nial

AAR Rn CNP De boa A pe

arguments on a timely basis. See Epstein v. MCA, Inc.,

179 F.3d 641, 648 (9th Cir.) (adequacy of representa-

tion is issue for trial court before entry of final judgment

and, where appropriate procedures were followed, should

not be second-guessed on collateral review), cert. denied,

120 S. Ct. 497 (1999).

D. Petitioners’ underlying due process arguments do

not merit this Court’s review. Petitioners contend that

the lower courts never considered their claim that the

class was inadequately represented. Pet. 13 n.2.

That is simply untrue. The district court specifically

found in its final judgment approving the class and settle-

ment that (a) the class had been vigorously represented

by class counsel and a class representative who shared

common interests with the class and (b) no collusion

existed between class counsel and fractionators. Pet. App.

87. The district court reiterated those findings in response

to the first collateral attack by dissident attorneys and the

present collateral attack. FA 437; Pet. App. 6-7; Opp.

App. 4a, 6a-7a. In rejecting the present collateral attack,

the Seventh Circuit explicitly adopted the reasoning of the

district court. Pet. App. 1-2.

1. Petitioners nevertheless complain that the class

could not have been adequately represented because class

12 None of the cases cited by petitioners supports the proposition

that classs members and their counsel can refrain from raising

timely objections to a class settlement and then collaterally attack

the settlement after final judgment has been entered and settlement

monies distributed. See Shults v. Champion International Corp.,

35 F.3d 1056, 1059 (6th Cir. 1994) (unnamed class members who

failed to seek to intervene lacked standing to appeal settlement

order); Gottlieb v. Wiles, 11 F.3d 1004, 1009 (10th Cir. 1993)

(absent class members appealed from denial of motion to inter-

vene) ; Croyden Associates v. Alleco, Inc., 969 F.2d 675, 680 (8th

Cir. 1992) (same; noting that unnamed class members have a

variety of options to protect their interests), cert. denied, 507 U.S.

908 (1993).

representative Susan Walker stated that approval of the

Class settlement would provide compensation to persons

like herself whose claims were time-barred. Pet. 5-6, 13

n.2. The susceptibility of Walker’s claim to a limitations

defense made her typical of the class that she represented;

not specifically because she was time-barred, but because

she had little chance of recovering any money in individ-

ual litigation. Indeed, the district court found in its judg-

ment approving the class and settlement that “[mJost class

members are faced with significant problems of limita-

tions, proximate cause and product identification, as well

as the task of persuading a jury that defendants should

be found negligent on the basis of acts and omissions that

preceded discovery of the AIDS virus.” Pet. App. 84.

Given these facts, it is not surprising that petitioners’

counsel of record, who was present at the final fairness

hearing at which Walker appeared, found no basis for

objecting to her adequacy as a class representative at that

time.

2. Petitioners urge that class counsel coerced class

members into participating in the settlement because,

under the express terms of the settlement agreement, frac-

tionators retained the option of withdrawing if too many

class members opted out. Pet. 13 n.2. The coercion

charge is unsupported and unsupportable. Class settle-

ment proposals often allow either plaintiffs or defendants

to withdraw from a settlement if the number of claimants

is different than that anticipated by negotiators. Herbert

Newberg & Aiba Conte, Newberg on Class Actions

§ 12.12 at 12-33-34 (3d ed. 1992). Here, hundreds of

people filed timely opt-out forms, and the settlement never-

theless went forward.

3. Petitioners also assert that fractionators have never

claimed that the settlement could survive analysis under

Amchem. Pet. 13-14 n.3. That is simply untrue. In re-

seein hihi Dl Ra a prt ted teil Gelbciel Cah 5

sponse to the first collateral attack on the judgment that

approved the class and settlement, fractionators stated:

“Even if Amchem applied to this case—and it did not—the

decision to certify a class and approve the class settlement

constituted a proper exercise of the District Court’s dis-

cretion.” 7% As the district court held in rebuffing that

initial collateral attack, the factor concentrate class settle-

ment is fundamentally different from the putative class

settlement in Amchem. FA 437. Here, the interests of one

group of class members are not being sacrificed in favor

of others. All eligible class members who follow the pro-

cedures for obtaining settlement payments are receiving

substantial compensation. Pet. App. 16-21 § B. Persons

who preferred to opt out on a timely basis have done so

without prejudicing their own interests. Pet. App. 31-

33 § F.

In any event, nothing in Amchem, which was decided

on a direct appeal, suggests that this Court intended to

reopen final judgments. Amchem was decided not on the

basis of constitutional claims, but under Rule 23. 521 U.S.

at 612-13.1* To the extent that Amchem established new

law governing class settlemer:ts, it does not apply to this

case because Amchem was decided after final judgment

was entered approving this class and settlement. Harper

v. Virginia Dep’t of Taxation, 509 U.S. 86, 95 (1993);

see also Norgaard vy. DePuy Orthopaedics, Inc., 121 F.3d

1074, 1075-76 (7th Cir. 1997) (denying Rule 60(b)

13 In re Factor VIII or 1X Concentrate Blood Prods. Litig., Ap-

peals of Spece and Mull & Mull, Nos. 98-1438, 1770, 1629, Brief of

Appellee Fractionators at 3 (7th Cir. 1998).

14 An alleged “error in interpreting a statutory grant of juris-

diction is not equivalent to acting with total want of jurisdiction”

and therefore does not render a final judgment a nullity. Kansas

City S. Ry. Co. v. Great Lakes Carbon Corp., 624 F.2d 822, 825

(8th Cir.), (rejecting collateral attack on final judgment), cert.

denied, 449 U.S. 955 (1980).

relief where appellant relied upon a Supreme Court deci-

sion that had been under consideration when judgment

was entered, noting, inter alia, that appellant could have

taken protective appeal) .}°

E. In an attempt to suggest the existence of circuit con-

flict where none exists, petitioners engage in page after

page of rumination about the Ninth Circuit’s decision in

Epstein v. MCA, Inc., 126 F.3d 1235 (9th Cir. 1997),

opinion withdrawn and superseded by Epstein v. MCA,

Inc., 179 F.3d 641 (9th Cir.), cert. denied, 120 S. Ct.

497 (1999). Petitioners rely heavily upon a 1997 panel

opinion that was later withdrawn. The Ninth Circuit

ultimately held that class members do not have a broad

right to challenge collaterally the adequacy of repre-

sentation if the certifying court makes a determination

of the adequacy of representation in accordance with this

Court’s precedent. 179 F.3d at 648 (discussing Phillips

Petroleum Co. v. Shutts, 472 U.S. 797 (1985). That

holding is wholly consistent with the decisions below in the

present case.

II. Petitioners next argue that the final judgment ap-

proving the class and settlement was void because the

district court lacked Article III jurisdiction. They claim

that the judgment derived from a “fake,” “false and

fraudulent” complaint. Pet. 20-21. The record does not

support their wild allegations, much less provide a basis for

a grant of certiorari.

1° Petitioners also rely on Ortiz v. Fibreboard Corp., 119 8. Ct.

2295, 2307 (1999). Ortiz is not instructive here because it deals

only with a Rule 23(b)(1)(B) class. See 119 S. Ct. at 2307. Peti-

tioners here are Rule 23(b)(3) class members, to whom, as this

Court recognized in Ortiz, the requirements of a limited fund do

not apply. See id. at 2315 (noting the difference in procedural

protections for the two types of class members).

A. As the court of appeals previously concluded, “{a]J]

the requirements of Article III were satisfied” with respect

to the final judgment approving the class settlement. Opp.

App. 18a. It cannot be disputed that a genuine contro-

versy exists between HIV-infected hemophiliacs and frac-

tionators. FA 530-31. The class settlement was negotiated

and approved in the context of multidistrict litigation that

had been underway since 1993. In re Factor VIII or IX

Concentrate Blood Prod. Liab. Litig. (MDL-986), 853 F.

Supp. 454 (J.P.M.L. 1993). That litigation was hotly con-

tested. As the district court observed in approving the final

settlement, “[t]he docket is over 70 single-spaced pages,

one indicator of the extent of this controversy.” Pet. App.

86. Dozens of hearings and pretrial conferences had been

held and the court had ruled upon numerous contested is-

sues, including almost 100 discovery motions, Pet. App. 86.

The class action complaint asserted that fractionators

were liable under a number of negligence and strict liability

theories. FA 269, 281-83. Fractionators answered the

complaint and denied those claims. FA 286-319. The

settlement proposal negotiated by fractionators and plain-

tiffs’ class counsel was subject to two fairness hearings after

conditional certification of the class. FA 338, 357. The

district court stated that it would reject the class settle-

ment if certain issues relating to government and insurer

reimbursement claims against class members were not

promptly resolved. FA 348, 351. Had the class not been

finally certified and the settlement approved, then the frac-

tionators would have litigated Susan Walker’s case, just

as they are litigating numerous other cases in state and

federal court.

B. Petitioners nevertheless assert that there was no

case or controversy because the parties had reached a

tentative settlement agreement before the complaint was

filed. Pet. 20-22. If that were the law, then courts would

lack jurisdiction over most consent decree litigation. See

SEC v. Randolph, 736 F.2d 525, 527 (9th Cir. 1984)

(reversing district court judgment “holding that no case

or controversy existed because the parties arrived in court

with the proposed judgment in hand”). Courts also would

lack jurisdiction to approve settlements in cases that had

been litigated for years; under petitioners’ theory, courts

overseeing such cases would lose jurisdiction the moment

the parties came to terms. “The fact that the parties have

arrived at a settlement agreement, however, does not lead

inevitably to the conclusion that no controversy exists be-

tween the parties up to the time the judgment is entered.”

Amalgamated Sugar Co. v. NL Indus., Inc., 825 F.2d

634, 640 (2d Cir.) (holding consent judgment was en-

titled to res judicata effect), cert denied, 484 U.S. 992

(1987).

In direct appeals in Amchem and Ortiz, this Court

declined to address similar arguments, that, if accepted,

would effect major changes in the law. Certainly, peti-

tioners’ collateral attempts to rewrite jurisdictional law

should be rejected.

C. Petitioners also suggest that the class representative’s

comment that her individual claim might be time-barred

deprived the district court of jurisdiction. Pet. 5-6, 13 n.2.

The strengths and weaknesses of the class representative’s

individual claim have nothing to do with Article III’s re-

quirement that there be a case or controversy. If a de-

fendant prevails on a motion for summary judgment on

limitations grounds, the plaintiff's case is dismissed; the

court does not lose jurisdiction. Therefore, the possibility

that fractionators could have asserted limitations as an

affirmative defense against the class representative did not

deprive the district court of jurisdiction.

D. Similarly, it is irrelevant that the Seventh Circuit

had previously decertified an inventive but fatally flawed

ee eee en ee

attempt to litigate the issue of negligence in a single class

trial involving the law of nearly every state. See In re

Rhéne-Poulenc Rorer Inc., 51 F.3d 1293, 1296 (7th

Cir.), cert. denied, 516 U.S. 867 (1995). The Walker

class simply did not present the same Seventh Amend-

ment and other infirmities inherent in the district court’s

earlier trial plan. Nothing about that decision deprived

the district court of jurisdiction over a subsequent class

action complaint.

III. Finally, petitioners ask this Court to grant cer-

tiorari because fractionators allegedly engaged in a “bait

and switch” by requiring class members to sign individual

releases that purportedly did not coincide with the scope

of the settlement agreement and the notice provided to

Class members. This inherently factbound claim does not

warrant review.

The settlement agreement expressly provided that claim-

ants would be required to sign releases in order to receive

payment. Pet. App. 46 §M. The district court carefully

reviewed the terms of the releases, the settlement agree-

ment, and the final judgment approving the class settle-

ment, and concluded that the releases were consistent with

the settlement. FA 440-43; Pet. App. 6; Opp. App.

6a-7a."© Over 6,000 claimant groups signed that release. In

rejecting the first collateral attack on the final judgment,

the Seventh Circuit found no support for the claim that

fractionators had engaged in “bait-and-switch” tactics.

Opp. App. 17a. In rebuffiing petitioners’ present collateral

attack, the court of appeals relied on the reasoning of the

district court. Pet. App. 1-2. There is nothing about

these determinations that merits the review of this Court.

16 See Mo’ ‘er of VMS Sec. Litig., 103 F.3d 1317, 1321 (7th Cir.

1996) (“Gi\en that the power to implement a settlement agreement

between the parties inheres in the district court’s role as supervisor

of the litigation, the exercise of that power is particularly appro-

priate for deferential review”).

CONCLUSION

For the foregoing reasons, the petition for writ of cer-

tiorari should be denied.

FRED MAGAZINER

RICHARD A. BERKMAN

DECHERT, PRICE & RHOADS

4000 Bell Atlantic Tower

1717 Arch Street

Philadelphia, PA 19103

(215) 994-4000

Attorneys for Baxter

Healthcare Corporation

PHILIP 8. BECK

ANDREW GOLDMAN

BARTLIT, BECK, HERMAN,

PALENCHAR & SCOTT

Courthouse Place

54 West Hubbard Street

Chicago, IL 60610

(312) 494-4411

Attorneys for

Alpha Therapeutic Corp.

February 7, 2000

Respectfully submitted,

SARA J. GOURLEY

EUGENE A. SCHOON *

SuSAN A. WEBER

CATHERINE V. BARRAD

RoBerT C. VARNELL

SIDLEY & AUSTIN

Bank One Plaza

Chicago, IL 60603

(312) 853-7000

Attorneys for Armour

Pharmaceutical Company

and Rhéne-Poulenc

Rorer Inc.

GEOFFREY R.W. SMITH

Suite 455 West

1025 Thom. Jefferson St., N.W.

Washington, D.C. 20007

(202) 625-1224

Attorney for

Bayer Corporation

* Counsel of Record

APPENDICES

APPENDIX A

; March 3, 1999

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MDL-986

IN RE FAcToR VIII on IX CONCENTRATE

BLoop Propucts LITIGATION

No. 96 C 5024

SUSAN WALKER, Administratrix of the

Estate of Steven Walker, Deceased,

Plaintiff,

Vv.

BAYER CORPORATION, BAXTER HEALTHCARE

CORPORATION, ALPHA THERAPEUTIC CORPORATION and

ARMOUR PHARMACEUTICAL COMPANY,

Defendants.

INJUNCTION ORDER

Consistent with the Final Order and Judgment in this

case on May 8, 1997, and the Order Concerning Requests

for Late Opt-Outs entered by the Court on May 15, 1997,

and pursuant to this Court’s authority under the All Writs

Act, 28 U.S.C. § 1651, IT IS HEREBY ORDERED

THAT:

1. The putative class action, Diaz v. Alpha Therapeu-

tic Corporation, Nos. 97 C 8468 and 98 C 627 (N.D.

Ill.), is permanently enjoined. Named plaintiffs Celeste

Diaz, Mark Laam, Judy Trullinger, Shirley Carlise, and

Scott Carthey, who filed timely opt-outs from the Walker

class settlement, remain free to file individual lawsuits in

appropriate venues. Named plaintiffs Michael and Mary

Castille and Joseph Singler are permanently enjoined from

instituting, assigning, maintaining, collecting or prosecut-

ing claims against defendants, or any of them, arising out

of any injury, disease, or harm of any kind that the HIV

infected person and members of such person’s Claimant

Group allegedly suffered as a result of use of factor con-

centrate processed and distributed during the period from

1978 through 1985, as described in the Settlement Agree-

ment and this Court’s final judgment of May 8, 1997.

2. The following persons who failed timely to opt out

of the Walker class settlement are permanently enjoined

from instituting, assigning, maintaining, collecting or pros-

ecuting any such claims against defendants as those de-

scribed above in paragraph 1: Michael Akers; Michael

Harrington; Lan Dusty Nguyen; Michael and Carolyn

Coons; Phillip Campbell; Matthew Damon Chappie;

Michael Davon; Trina Geraldo; Mark S. Helm; Sylvan

Hart; Victor K. Horr; mother of Henry Lay; Anthony

Lindgren; Shawn A. Robison; Eric Sommes, Aaron

Tallakson; Victoria Tody; Carl Weixler; and Lillian D.

Noblett and Enid F. Eckert, the heirs of Ross Eckert.

DATE: March 3, 1999 ENTER:

/s/ John F. Grady

Joun F. GRADY

United States District Judge

APPENDIX B

March 3, 1999

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MDL-986

IN RE FACTOR VIII orn IX CONCENTRATE

BLoop Propucts LITIGATION

No. 96 C 5024

SusAN WALKER, Administratrix of the

Estate of Steven Walker, Deceased,

Plaintiff,

Vv.

BAYER CORPORATION, ef al.,

Defendants.

MEMORANDUM OPINION ON FRACTIONATOR

DEFENDANTS’ MOTION TO ENJOIN CERTAIN

CLASS MEMBERS FROM LITIGATING

DUPLICATIVE LAWSUITS

In a separate order entered this date, the court is deny-

ing the motions of certain class members to relieve them

from the bar against proceeding with other lawsuits that

was contained in the order of May 8, 1997, approving

the class settlement in this case. We now turn to a mo-

tion the fractionator defendants have made to enjoin the

lawsuits these same plaintiffs have filed or may intend to

file in other courts.

In today’s companion order, we pointed out that the

arguments advanced by the Rule 60 movants were essen-

tially the same ones their attorneys had made in the litiga-

tion over attorneys fees. That is, they argued that the

Walker settlement was void under Amchem Products,

Inc. v. Windsor, 117 S. Ct. 2231 (1997), and that the

settlement is not binding on these plaintiffs in any event

because defendants abandoned the settlement and ex-

tended “new offers” to the plaintiffs, which they were free

to refuse. We noted that we have previously addressed

these arguments and found it unnecessary to do so again.

We will treat the “voidness” and “new offer” arguments

in the same way here, referring to them only to the extent

necessary for context.

The present motion seeks to enjoin the prosecution of

lawsuits brought by these attorneys in state and federal

courts on behalf of class members who elected not to opt

out of the class and on behalf of opt-outs who purport to

serve as class representatives of class members who did

not opt out. Defendants’ argument is that these plaintiffs

are barred by the order of May 8, 1997, from proceeding

with these separate actions, either individually or as pur-

ported class representatives. Defendants invoke our au-

thority to enforce the terms of the settlement pursuant to

Rule 23 of the Federal Rules of Civil Procedure as well

as our power under the All Writs Act, 28 U.S.C.

§ 1651(a). We enjoined the attorneys from seeking fees

apart from the cost and fee fund under the same author-

ity. See Order of February 18, 1998 at 20 n.8. In its

mandamus decision, the Seventh Circuit approved the

injunction as a proper exercise of this court’s authority

under the All Writs Act. In re Factor VIII or 1X Blood

Prods. Litig., 159 F.3d at 1020.

Realizing that this court has previously considered and

rejected their basic arguments, the plaintiffs, while renew-

ing those arguments, oppose the requested injunction on

additional grounds, as well. The new arguments still de-

pend upon the basic notion that the May 8, 1997, order

is void under Amchem and that the “new offers” have

abrogated the settlement.

Plaintiffs contend that the injunction requested by de-

fendants under the All Writs Act is inappropriate because

an alternative exists: defendants could assert the May 8,

1997, order as res judicata in each of the actions they

seek to enjoin. Plaintiffs point to certain statements of

this court at the status conference of November 18, 1998,

where we suggested that this approach would be prefer-

able to an injunction.

In retrospect, the court’s remarks at the November 18

status conference were premature. The issue had not been

briefed at that time, and we had not fully considered the

ramifications of our suggstion. Defendants correctly point

out that it would be unreasonable for them to have to

raise a res judicata defense in each of the cases these

plaintiffs have filed or might file in the future. Raising

the defense would involve the need to acquaint a number

of different judges with the complex legal and factual is-

sues in this litigation and, of necessity, the possibility of

inconsistent rulings. The party who lost the argument in

each trial court would be sure to appeal, adding further

expense and the possibility of inconsistent appellate rul-

ings. In short, the plaintiffs propose an inordinately ex-

pensive, duplicative, and ineffective means of resolving the

question of whether the order of May 8, 1997, bars addi-

tional litigation by these plaintiffs. In contrast, an in-

junction by this court, reviewable only by an appellate

court already familiar with the controversy, provides an

incomparably better alternative. This case is the paradigm

situation to employ the All Writs Act.

The attorneys who represent these plaintiffs could have

asserted the same kind of argument in the fee controversy.

They could have argued that an injunction was not neces-

sary because there was an available alternative: defend-

ants could raise the May 8, 1997, order as a bar to the

collection of any percentage fees where the attorneys might

obtain a judgment against the defendants on behalf of a

client, or as a defense to any suit brought ‘rectly against

the defendants by the attorneys on one or more of the

theories of liability (interference with contract, fraud, etc.)

they had asserted in that controversy. However, the

attorneys did not make that argument, nor did the Court

of Appeals suggest that this court should have stayed its

hand because of the availability of such an alternative.

Plaintiffs argue that in order to invoke the All Writs

Act, this court must have independent jurisdiction over

the persons to be enjoined. Plaintiffs are wrong. The

Act applies to them because it extends to all persons who

wrongfully seek to frustrate a federal court order, whether

or not they were ever parties to the case in which the

order was entered. United States v. New York Tel. Co.,

434 U.S. 159, 174 (1977): In re Baldwin-United Corp.,

770 F.2d 328, 338 (2d Cir. 1985). Some of these plain-

tiffs are members of the settlement class who did not opt

out, and there can be no question of our jurisdiction over

them. The All Writs Act gives us jurisdiction over the

other plaintiffs who did opt out but have filed class actions

in which they purport to represent class members who did

not opt out.

The second major argument made by the plaintiffs is a

farrago of previous contentions attacking the validity and

continued viability of the settlement. They contend that

the settlement is void under Amchem, that the tendered

releases departed from the terms of the settlement and

therefore constituted new offers, and that there is no con-

sideration for the releases as tendered. Therefore, plain-

tiffs argue the settlement is a nullity as applied to them,

and this court has no authority to enforce the settlement

order.

Plaintiffs contend in this connection that to require any

release in the settlement of a class action is “virtually

unheard of.” The contention that no release can be re-

quired as a condition of payment is another example of

something plaintiffs’ attorneys could have raised on behalf

of their clients before the settlement was approved. The

settlement agreement approved by the court after exten-

sive hearings specifically provided for releases. That re-

quirement was particularly appropriate in this case, where

entitlement to the payments would belong not only to in-

dividuals but sometimes to “claimant groups.” The possi-

bility of disputes among group members was easily fore-

seeable. Obtaining releases from each member of the

group was an obvious way of extinguishing all claims in

the group. Not one word was uttered by these attorneys

or their clients, in opposition to the release requirement

and we entered the order of May 8, 1997, in the belief

that the settlement agreement was satisfactory to all class

members who had not objected to it. For these attorneys

to argue at this late date that the requirement of any

release at all renders the order of May 8, 1997, somehow

unenforceable is a repetition of the kind of bad faith they

showed in their delayed challenge to the limitation on their

fees.

We continue to believe that the order of May 8, 1997,

is valid and enforceable. Defendants bargained for the

benefit of the order, and they are entitled to that benefit.

The only sensible way to enforce the portion of the order

that bars the filing of other lawsuits is to enjoin these

plaintiffs from filing or prosecuting such suits. Accord-

ingly, the proposed injunction order tendered by the de-

fendants will be entered, with one modification.’

Two of the cases that defendants seek to enjoin, the

Diaz and Harrington suits, were removed from state court

to federal court and then transferred here as part of the

MDL. Plaintiffs have pending motions to remand those

cases to state court for an alleged lack of federal subject

matter jurisdiction. Defendants argue that it is unneces-

sary to decide the remand motions if the suits are en-

joined, and we agree. But something has to be done with

the remand motions. Denying them as moot would seem

inappropriate where there is an unresolved challenge to

federal jurisdiction. We suggest that defendants withdraw

their opposition to remand. This court could then remand

the cases to the state courts where they were filed. The

cases would be subject to the injunction, and plaintiffs

would be unable to prosecute them. Defendants could

then file in the state courts whatever motions would be

appropriate in light of the injunction.

Defendants should notify the court and the Diaz and

Harrington plaintiffs by March 9, 1999, as to whether they

withdraw their opposition to plaintiffs’ remand motions.

If they do, the court will grant the motions.

1 The modification is that instead of limiting the opt-out plaintiffs

to filing individual suits “in their home states” they will be per-

mitted to file individual suits “in appropriate venues.”

CONCLUSION

For the foregoing reasons, Fractionator Defendants’

Motion to Enjoin Certain Class Members from Litigating

Duplicative Lawsuits is allowed. The injunction will be

entered this date.”

DATE: March 3, 1999 ENTER:

/s/ John F. Grady

JOHN F. Grapy

United States District J udge

2The plaintiff Jane Doe, represented by Roy G. Spece, has a

separate motion pending which seeks relief from the May 8, 1997

order, on the ground that the defendants agreed to allow her to opt

out of the settlement class. The court has requested further briefs

on that motion. In the event the motion is granted, we will vacate

the injunction as to plaintiff Jane Doe. If we deny the motion, the

injunction will remain in effect as to her.

10a

APPENDIX C

April 16, 1999

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MDL-986

IN RE FACTOR VIII or [IX CONCENTRATE

BLoop PropwuctTs LITIGATION

No. 96 C 5024

SusAN WALKER, Administratrix of the

Estate of Steven Walker, Deceased,

Plaintiff,

BAYER CORPORATION, BAXTER HEALTHCARE

CORPORATION, ALPHA THERAPEUTIC CORPORATION and

ARMOUR PHARMACEUTICAL COMPANY,

Defendants.

ORDER

The court has under advisement the Motion of the

Fractionator Defendants to Enjoin the Lawsuit of Jane

Doe and the corresponding Motion of Jane Doe for Re-

lief from judgment. The ultimate issue presented by both

motions is whether Doe should be granted relief from the

order of May 8, 1997 barring other lawsuits by class

members who did not timely opt out of the class settle-

lla

ment and from the injunction order of March 3, 1999,

specifically enjoining the lawsuits which certain class

members, including Doe, have filed in other jurisdictions.

In our memorandum opinion of March 3, 1999 (p. 8 n.2),

we indicated that in the event Jane Doe’s motion were

allowed we would vacate the injunction as to her.

An understanding of the dispute requires revisitation

of a concern the court had at the time it approved the

class settlement. It was the desire of everyone involved,

including the court, to ensure that each settling class mem-

ber, or claimant group, would receive the sum of $100,000

net of attorneys fees and net of any liens or claims for

reimbursement by medical insurers or providers. The

court recognized that the accomplishment of this objec-

tive would be time-consuming, complicated, and, perhaps

in some cases, unsuccessful because the lien or reimburse-

ment claimants might be unwilling to waive their claims.

The court wanted to give the parties adequate time to

exhaust the possibility of obtaining the necessary waivers

but, on the other hand, to provide for a point at which

class members would be free to opt out of the class if the

necessary waivers could not be obtained. Therefore, in

our order of March 5, 1997, we provided,

With respect to class members whose public reimburse

ment/subrogation or eligibility issues are not resolved

by December 31, 1997, the court intends to termi-

nate the settlement as to those class members and

deem them opt-outs from the date of such termina-

tion.

What we intended by the above-quoted provision was to

afford protection to class members who had elected not

to opt out on the assumption that their receipt of a net

of $100,000 could be guaranteed but whose expectation

would be disappointed by an inability to resolve a lien

or reimbursement claim. A class member in such a pre-

12a

dicament could derive no benefit from the settlement

(most of the medical bills incurred by class members far

exceeded the $100,000), and the only thing left to do

would be to proceed with whatever lawsuit could be

maintained. For that purpose, we would terminate the

settlement as to such [a] class member and deem the class

member an opt-out from the date of the termination.

It was not the court’s intent to permit a late opt out

by a class member whose $100,000 settlement would not

be subjected to diminution by a lien or reimbursement

claim, but who nonetheless belatedly decided that he or

she would be better served by proceeding with an indi-

vidual action. The time limit for opt outs was subject to

extension in individual cases based on extraordinary cir-

cumstances, but a mere change of heart about the attrac-

tiveness of the settlement versus opting out was not such

a circumstance.

With this background, we turn to an examination of

the case of Jane Doe, who did not timely opt out but who

has filed a lawsuit in the state of California against the

fractionator defendants and desires to proceed with it

notwithstanding the bar order of May 8, 1997 and the

injunction order of March 3, 1999.

Jane Doe has two arguments. Both of them are based

on the proposition that Inter Valley Health Plan had an

enforceable claim against Jane Doe’s $100,000 settle-

ment for the amounts of the medical benefits it had pro-

vided to Jane Doe’s deceased husband in connection with

the HIV infection that resulted in his death. The first

argument is, that Jane Doe was an automatic opt out by

reason of the fact that the claim of Inter Valley had not

been settled by the “deadline” of December 31, 1997.

The second argument is that by reason of an agreement

arrived at between the counsel for Jane Doe and counsel

for the Fractionators, Jane Doe was entitled to opt out

13a

in return for waiving an appeal from the order of May 8,

1997. These arguments are convoluted, difficult to follow,

and, to the extent they are based upon an alleged agree-

ment with counsel for the Fractionators, not supported

by the record. But most importantly, Doe has failed to

show that Inter Valley has any claim against her per-

sonally, or any claim against the proceeds of her claim

against the defendants for the wrongful death of her hus-

band. The defendants have satisfied the court that under

the law of California Jane Doe’s wrongful death claim

does not entitie her to seek recovery of medical expenses

incurred by or on behalf of the decedent. Therefore,

Inter Valley had no lien or reimbursement claim that had

to be waived before Jane Doe would be entitled to retain

the entire $100,000 settlement.

But more than that, even assuming Inter Valley did

have a claim against Jane Doe or her $100,000 settle-

ment, the Fractionators obtained a waiver of that claim

in return for a payment of $5,000 to Inter Valley. While

Doe suggests that Inter Valley might attempt to set aside

this settlement on the basis that there was a “misrepre-

sentation” by the Fractionators, there is no evidence that

there was any misrepresentation and no reason to suppose

that Inter Valley would have any success in setting aside

the settlement should it ever decide to make the effort.

In short, it does not appear that Jane Doe’s $100,000

settlement was subject to any claim by Inter Valley Health

Plan to begin with, but even if it had been, that claim

has been fully settled.1 The December 31, 1997 “dead-

1 Doe makes the point that there must have been some validity to

Inter Vailey’s claim, otherwise the Fractionators would not have

paid $5,000 to settle it. But in the context of this $600,000,000

settlement, a $5,000 payment is nothing more than nuisance value.

The Fractionators never acknowledged that Inter Valley had a

viable claim, and the $5,000 payment is consistent with a desire

14a

line” which the court intended as a shield for any un-

fortunate class members who could not obtain the neces-

sary waivers, has been seized upon by Jane Doe as a

sword. She relies upon a non-existent lien of Inter Valley

to relieve her of her decision not to opt out of the class

and to accept the settlement. What Doe is attempting

to do is to turn a non-existent lien problem into an excuse

for a late opt out that will permit her to pursue what she

regards as an option more advantageous than the settle-

ment. She has not persuaded us that she has any right

to do that.

Accordingly, the Fractionator[s’] motion to enjoin the

lawsuit of Jane Doe is allowed, and Jane Doe’s motion for

relief from judgment is denied. The effect of these rulings

on the two motions is that this court’s injunction order of

March 3, 1999, remains in effect as to Jane Doe.

DATE: April 16,1999 ENTER:

/s/ John F. Grady

JOHN F. GRADY

United States District Judge

simply to close the matter out. It is Do[e] who needs to explain why,

if Inter Valley thought it did have a viable claim under California

law, it would settle for the trivial sum of $5,000.

2It should be noted that there was nothing self-executing about

the December 31, 1997 date. We provided in our order of March 5,

1997 that any class member whose lien or reimbursement issues had

not been resolved by that date would have the settlement terminated

and would be deemed an opt-out as of the date of the termination.

The court made no such determination as to Jane Doe, nor would

it have made such a determination had she requested it, since there

was no lien or reimbursement issue that was any problem for her.

15a

APPENDIX D

IN THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Nos. 98-1438 and 98-1770

IN RE FAcToR VIII or [IX CONCENTRATE

BLoop PropuctTs LITIGATION,

APPEALS OF Roy G. SPECE, JR., ROSE MARIE IBANEZ,

and MULL & MULL.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 96 C 5024—John F. Grady, Judge.

No. 98-1629

IN RE MULL & MULL.

Petition for a Writ of Mandamus.

No. 94 C 5324—John F. Grady, Judge.

Submitted September 8, 1998—Decided October 19, 1998

16a

Before PosNER, Chief Judge, and BAUER and ROVNER,

Circuit Judges.

PosNER, Chief Judge. Five years ago, a nationwide

class action was filed on behalf of hemophiliacs who had

been infected in the early 1980s with AIDS virus (HIV)

contained in blood solids manufactured and sold by the

defendant drug companies for the treatment of hemo-

philia. Blood solids are manufactured from blood sold or

donated to blood banks and the defendants had failed

either to screen the blood for HIV or to process the blood

in a way that would kill any HIV in it. The class claimed

that the defendants were negligent in not taking these

precautions. After we granted mandamus, on grounds

unnecessary to recite here, to decertify the class, In re

Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir. 1995),

the parties’ lawyers continued to negotiate over a mass

settlement of the estimated 6,000 suits that either had

been or were expected to be filed by or on behalf of in-

fected hemophiliacs. The negotiations resulted in the cer-

tification of the class, though this time for settlement only,

and the entry, last year, of a consent decree. The decree

provided that each member of the class who was willing

to release the defendants from liability would receive

$100,000 net of attorneys’ fees and that the defendants

would establish a $40 million fund out of which attor-

neys’ fees would be paid in amounts to be determined by

the judge. The decree extinguished the rights of the law-

yers for those class members who signed a release to

enforce their contingent-fee contracts with such members,

because it provided that “no attorney’s fee shall be pay-

able by any class members other than those fees approved

by the Court to be payable from the [$40 million] fund.”

Contingent-fee contracts generally entitle the lawyer to

33 to 40 percent of any judgment or settlement. In the

case of a settlement that yielded a net of $600 million

17a

to the claimants, this would mean lawyers’ fees of $300

to $400 million (since a gross settlement of $900 million

would yield the claimants $600 million if their lawyers

were entitled to 33 percent), not $40 million, actually

less than $40 million since the fund was to be the exclu-

sive source of court costs as well as attorneys’ fees.

The few appeals from the consent decree were volun-

tarily dismissed. The process of obtaining releases from

members of the class began and is now substantially com-

pleted, with some 5,200 class members having executed

releases and been paid $100,000 each. Several hundred of

these class members are represented by the lawyers who

have filed, on their own behalf and not on behalf of their

clients, the two appeals and the petition for mandamus

that are before us for decision today.

These lawyers accuse the lawyers for the class and for

the defendants—groundlessly, as far as we can tell—of

defamation, bait-and-switch tactics, hoodwinking, infamy,

dishonesty, illegality, intimidation, extortion, hypocrisy,

hysteria, and Marxism. Yet they did not oppose the set-

tlement. They objected initially to the amount of the set-

tlement but their objection was rejected after a hearing

and they did not renew their opposition or appeal from

the consent decree, of which their clients have, as we have

noted, taken full advantage. And at no time did they

object to the attorney’s fee provision of the settlement.

Only after the time for appealing from the consent decree

had run did these lawyers advise the district court of

their view that the consent decree was invalid insofar as

it limited their fees and barred them from trying to en-

force their contingent-fee contracts with their clients.

They also instituted collateral attacks on the settlement in

the state courts of Louisiana, which resulted in a tem-

porary cessation of payments by the defendants to the

clients of these lawyers. The district judge responded to

[8a

these shenanigans by enjoining the lawyers from attempt-

ing to enforce their contingent-fee contracts or liens based

upon them, and he declared the contracts void to the ex-

tent that they are inconsistent with the consent decree.

The lawyers have challenged his actions both by appeal-

ing and by seeking mandamus.

The injunction is appealable without regard to finality,

28 U.S.C. § 1292(a)(1), and if the appellants are correct

that the consent decree is “void,” then the injunction,

being ancillary to it, would fall with it. If the consent

decree were truly void, the injunction based on it would

presumably also be void, and so unappealable because a

void order imposes no obligations; but in that event man-

damus would lie to vacate the injunction. DDI Seam-

less Cylinder Int'l, Inc. v. General Fire Extinguisher Corp.,

14 F.3d 1163, 1166 (7th Cir. 1994). The settlement em-

bodied in the consent decree may well be questionable,

both in its form (cf. Amchem Products, Inc. v. Windsor,

117 S. Ct. 2231 (1997), disapproving “settlement

classes,” albeit in different circumstances from those of

this case) and in its terms. That all the members of the

class should receive the identical payment, even though

the strength of their cases (some of which appear to be

barred by the statute of limitations) and the amount of

their damages must vary greatly, is downright weird. But

there is no question of the district court’s having exceeded

its jurisdiction in entering the decree. All the require-

ments of Article III were satisfied.

Even if they had not been, it is unlikely that the settle-

ment could be set aside at this late date. The appellants

argue that “when subject matter jurisdiction is lacking or

due process has been denied, the final judgment is void,

and its nullity must be recognized in any collateral pro-

ceeding in which it is asserted as binding.” This is an

overstatement. The principle that jurisdictional defects

19a

may be noticed at any time is limited, as we explained in

In re Edwards, 962 F.2d 641, 644 (7th Cir. 1992), by

the equally important principle that litigation must have

an end. After a case has become final by exhaustion of

all appellate remedies, only an egregious want of jurisdic-

tion will allow the judgment to be undone by someone

who, having participated in the case, cannot complain

that his rights were infringed without his knowledge. Stoll

v. Gottlieb, 305 U.S. 165, 171-72 (1938); In re Edwards,

supra, 962 F.2d at 644: Restatement (Second) of Judg-

ments §12 (1982). (On the Significance of participa-

tion, see, e.g., Williams v. General Electric Capital Auto

Lease, Inc., No. 97-1321, 1998 WL at * .

(7th Cir. Oct. 2, 1998).)

The practical wisdom of this rule is shown by the pres-

ent case. The defendants have paid out more than $500

million. Are they now to go around to all 5,200 class

members whom they have paid and ask for their $100,000

back so that this litigation can return to its starting

point? Not that the appellants are asking for this. They

just want more fees. But the $40 million cap on attor-

neys’ fees was an important part of the deal from the de-

fendants’ stand-point, given their commitment to pay each

class member a net of $100,000, so that the attorneys’

fees would have to come out of the defendants’ pockets.

If the cap is to be lifted the entire settlement must be re-

scinded and the parties returned to Square one by the

return of the moneys paid out under it. This would also

have to happen if the appellants decided to seek addi-

tional fees not from the defendants but from their own

clients; the defendants wouldn’t care, but of course the

clients would be entitled to rescind their releases, which

had been premised on the receipt of $100,000 net.

We are mindful that Fed. R. Civ. P. 60(b) (4) author-

izes, and the cases interpreting it require, “void” judg-

20a

ments to be set aside at any time. United States v. Indoor

Cultivation Equipment, 55 F.3d 1311, 1317 (7th Cir.

1995); Bally Export Corp. v. Balicar, Ltd., 804 F.2d

398, 400 (7th Cir. 1986). But set aside by the district

court; it is there that the motion must be filed; and the

appellants have never filed such a motion. But we don’t

want to give them false hopes. They will gain nothing by

trying to file such a motion in the future. For “void” is

just the name we give to those judgments that can be set

aside without regard to the usual limitations on challeng-

ing judgments after they have become final by exhaustion

of appellate remedies; and as the authorities cited in the

preceding paragraph make clear, a judgment is not to be

pronounced void merely because the court that entered

it may not have had jurisdiction. And, needless to say,

substituting for a 60(b)(4) motion in the district court

a petition for a writ of mandamus in the court of appeals

(cf. Cohen v. Illinois Institute of Technology, 581 F.2d

658, 662 (7th Cir. 1978); Cinerama, Inc. v. Sweet Music,

S.A., 482 F.2d 66, 71 n.3 (2d Cir. 1973) (Friendly,

J.)) shouldn’t enlarge the meaning of “void.” Indeed,

given the rule, the only occasion for using mandamus—a

last resort, a safety hatch where no other vehicle for ob-

taining judicial relief is available, e.g., Allied Chemical

Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980) (per

curiam)—to get rid of void judgments would be where

Rule 60(b) (4) relief had been sought in the district court

and denied there, and the order denying it was unappeal-

able, as in Moses v. Banco Mortgage Co., 778 F.2d 267,

275 (5th Cir. 1985). That is not this case.

Rule 60(b)(3) allows judgments to be set aside on the

ground of fraud, and the appellants argue that the settle-

ment was procured by fraud. But this rule (unlike

60(b)(4)) has a time limit of one year, which the appel-

lants have now exceeded, for as we have said they never

filed a Rule 60(b) motion, and so it is now too late for

re) oe Ree eee

2la

them to file such a motion bottomed on subsection (3).

Anyway their allegations of fraud are fantastic and even

preposterous. The most fantastic is the claim by one of

them that he was on the verge of negotiating a $1.8

billion settlement with the defendants when the class law-

yers by a dastardly maneuver preempted him by agreeing

to accept a measly $600 million. If this were true, which

we do not for a moment believe, the lawyer would have

been ethically obligated, as well as impelled by powerful

motives of self-interest, to bring this to the attention of

the district judge in the hearing that the judge conducted

(and the lawyer attended) on the fairness of the proposed

settlement.

Even if someone might have been or might still be able

to challenge the settlement, presumably someone who had

not had notice of or a fair opportunity to participate in

the proceeding yet had been adversely affected by it,

it is not these lawyers. Having participated in the settle-

ment proceeding and having failed to make timely ob-

jection to it, they are barred by the principles of waiver

and equitable estoppel from challenging the settlement

after it has become final and the defendants have paid

and the class members have received hundreds of mil-

lions of dollars. Skelton v. General Motors Corp., 860

F.2d 250, 259 (7th Cir. 1988).

Since the settlement stands, the judge’s power to issue

the injunction (and related declaratory relief) against

these lawyers’ enforcing the contingent-fee contracts or

liens based upon them was a proper exercise of the

court’s jurisdiction under 28 U.S.C. § 1651 (“all writs” )

to prevent interference with its orders. E.g., United States

v. New York Telephone Co., 434 U.S. 159, 172 (1977);

Williams v. General Electric Capital Auto Lease, Inc.,

Supra, at * ; United States v. Silva, 140 F.3d 1098,

1103 (7th Cir. 1998); In re VMS Litigation, 103 F.3d

1317, 1324 (7th Cir. 1996); In re Agent Orange Product

22a

Liability Litigation, 996 F.2d 1425, 1431 (2d Cir. 1993).

The settlement agreement guaranteed all acceding class

members $100,000 free of attorneys’ fees. The appellant

lawyers are now claiming the right to sue their clients

for a third or more (whatever the contingent-fee contract

provides) of the $100,000. This claim is not only a dag-

ger aimed at the heart of the settlement and therefore

properly enjoinable; it raises serious ethical concerns.

Having induced their clients to sign releases under the im-

pression that the consideration for the release was

$100,000 net, the lawyers now assert a right to turn on

the clients and take for their own benefit a substantial

fraction of that purportedly net recovery. It is true that

they don’t want to sue their clients, or even to undo the

settlement; they would be quite content to take the $15

million or so that they think their contingent-fee contracts

entitle them to out of the $40 million costs and attorneys’

fees fund, and indeed would greatly prefer this route to

having to sue hundreds of individuals. But if they did get

what they are seeking out of the fund, the settlement

would come apart, to the detriment of their clients, be-

cause there wouldn’t be enough money for the other law-

yers. In any event, the appellants’ insistence that not-

withstanding the consent decree the contingent-fee con-

tracts remain valid and enforceable—which means en-

forceable against the clients who signed them—created a

sufficient danger to the clients (as well as causing the

delay in payment to them that we mentioned earlier) to

warrant the district court’s enjoining these lawyers from

trying to enforce the contracts.

The order of the district court is

AFFIRMED.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.