Citizens for Consume, et al v. Abbott Laboratories,, et al

Filing 8018

Judge Patti B. Saris: MEMORANDUM AND ORDER entered. "ORDER: Plaintiffs' Motion for Imposition of Appeal Bond Under Federal Rule of Appellate Procedure 7 (Docket No. 7887) is ALLOWED and the appeal bond is imposed in the amount of $5,000.00." (Anderson, Jennifer)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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IN RE PHARMACEUTICAL INDUSTRY
AVERAGE WHOLESALE PRICE
LITIGATION
THIS DOCUMENT RELATES TO:
TRACK 2 SETTLEMENT

M.D.L. No. 1456
CIVIL ACTION NO. 01-12257-PBS

MEMORANDUM AND ORDER
January 4, 2012
Saris, U.S.D.J.
I. Introduction
Corinna Connick, who is not a class member, has filed a
motion to intervene in the class action settlement pursuant to
Fed. R. Civ. P. 24 on behalf of other similarly-situated
consumers.

Her apparent goal is to object to the proposed Track

2 class settlement of claims pending in the average wholesale
pricing (“AWP”) multi-district litigation.

The Court denied the

motion, and Connick filed a notice of appeal.

Plaintiffs have

filed a motion for the imposition of an appeal bond in the amount
of $241,500 against Connick, pursuant to Fed. R. App. P. 7.
Connick has filed an opposition.

After a review of the

submissions, the Court ALLOWS plaintiffs’ Motion for an Appeal
Bond in the amount of $5,000.

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II. Background
On March 4, 2009, Corinna Connick filed a motion to
intervene in the Track 2 settlement proceedings, seeking a court
order to appoint her as representative of the plaintiff class.
Connick then filed an objection to the proposed settlement on
March 9, 2009, claiming that the settlement allocation to
consumers was insufficient.

On May 16, 2011, Connick filed

another objection asserting that she had taken a drug implicated
by the settlement.

On August 29, 2011, the Court denied

Connick’s motion to intervene, finding that she was not a member
of the class because the drug Climara, which she claimed to have
purchased, was not on the Class drug list.

On September 27,

2011, Ms. Connick filed a pro se notice of appeal of the denial
of her motion to intervene.
On November 22, 2011, the Court held the final fairness
hearing for the Track 2 settlement.

Under the settlement, the

drug manufacturers have agreed to pay $125 million to satisfy the
claims of hundreds of Third-Party Payors and thousands of
consumers, many of whom are old and sick.

At the final fairness

hearing, Plaintiffs’ and Defendants’ counsel all agreed that
Connick’s pending appeal of my order denying intervention affects
the finality of the settlement agreement, and will delay
distribution of settlement proceeds to the class.

On December 8,

2011, the Court issued an order approving the class settlement.

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III. Discussion
Plaintiffs seek an appeal bond of $241,500 against Connick,
which includes $45,000 for attorneys’ fees, and administrative
costs of $196,500 associated with the delay of distributing the
settlement funds.
In civil cases, “a district court may require an appellant
to file a bond or provide other security in any form and amount
necessary to ensure payment of costs on appeal.”

Fed. R. App. P.

7. Whether an appeal bond should be imposed and at what amount
“is a matter best left to the sound discretion of the district
court.”

Skolnick v. Harlow, 820 F.3d 13, 15 (1st Cir. 1987).

When a district court finds that an appeal may be frivolous, the
district court may require security for costs.

Id.

Plaintiffs

argue that for Rule 7 purposes, “costs” include administrative
costs caused by the delay associated with an appeal, as well as
"just damages" and double costs under Fed. R. App. P. 38 as
penalty for a frivolous appeal, and any additional costs under
Rule 39.
In my view, Connick’s appeal is frivolous.

Her only ground

for intervening in the settlement is that she allegedly purchased
Climara, a brand name drug.

While purchases of estradiol, a

generic form of Climara, are covered by the class definition,
Climara is not on the Class drug list.

The evidence submitted

during the decade long history of this MDL demonstrates that
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prices for generic and brand name drugs are usually determined
based on very different formulas.

Thus allegations of fraudulent

markups for a generic do not necessarily indicate fraudulent
markups for the brand name drug.

As such, Connick’s argument

that she should be allowed to be a member of the class because of
the chemical similarity of the drugs is based on a false premise.
Connick’s appeal of the denial of her motion to intervene
could delay the distribution of settlement funds.

The class

settlement agreement defines “Final” and “Final Approval” to mean
“that the time has run for any appeals from a final approval
order of the MDL Court, or any such appeals have been resolved in
favor of this Agreement.”

Relying on this language, defendants’

counsel have stated that because the pendency of Connick’s appeal
leaves the door open for her to appeal or collaterally attack the
settlement agreement, they will not release the settlement funds
until her pending appeal is resolved.

Assuming, without

deciding, that this interpretation is correct, the appeal is
holding up distribution of the funds.
Some courts have held that Rule 7 costs may include
administrative costs to the class caused by the delay or
disruption of the settlement administration.

See Barnes v.

Fleet-Boston Fin. Corp., U.S. Dist. LEXIS 71072, at *8-9 (D.
Mass. 2006) (imposing interest on the settlement for one year as
costs); In re Compact Disc Minimum Advertised Price Antitrust

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Litig., 2003 WL 22417252 (D. Me. 2003) (imposing an appeal bond
in the amount of $35,000 to cover bank fees from administering
the class settlement).1

As such in some circumstances,

administrative costs are appropriate where there are significant
expenses required to manage the class settlement, delay from
appeal will cause additional costs, and the underlying statute
permits the award of damages or fee shifting.

See In re Cardizem

C.D. Antitrust Litigation, 391 F.2d 812, 817-818 (6th Cir. 2004)
(upholding a bond in the amount of $123,429 in incremental
administration costs in appeal of class settlement caused by sixmonth delay where state statute permitted it).
Plaintiffs submitted the affidavits of Daniel Coggeshall and
Steve W. Berman to document that the plaintiff class will suffer
approximately $196,500 in administrative costs, assuming the
appeal can be resolved in twelve months, and $45,000 in
attorneys’ fees and costs on appeal.

Class counsel Steve W.

Berman estimates $5,000 in out of pocket expenses.

Plaintiffs

seek administrative costs to maintain a post office box and tollfree number, to manage telephone calls and correspondence with
claimants, and to store data.

Plaintiffs estimate administration

costs of $7,500 to $10,500 per month.

While there is no evidence

that a bond would pose an undue hardship on the objector, there

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See generally 16A Charles Alan Wright, Arthur R. Miller,
Edward H. Cooper, Federal Practice & Procedure § 3953 (3d ed.
2006).
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are public policy reasons to minimize the hurdles to a litigant’s
right to appeal imposed by an appeal bond.
Connick opposes a bond because she says that the settlement
will not be delayed because Connick's claim for benefits is $20.
This is a bit disingenuous because she seeks to represent others
and to challenge the settlement more broadly.

Still, this is an

appeal of an order denying an individual’s inclusion in the
class, not a challenge to the settlement terms.

In this unusual

situation, imposition of administration costs for a delay is
inappropriate.
The Court will impose an appeal bond of $5,000 pursuant to
Fed. R. App. P. 7 and 38.

The plaintiffs would have had

administrative costs for the first few months in any event while
distributing the money.

Moreover, there is no applicable fee

shifting statute that would apply to an objecting putative class
member.

Cf. Int'l Floor Craft Inc. v. Dziemir, 420 Fed. Appx. 6

(1st Cir. 2011) (permitting inclusion of attorneys fees in Rule 7
bond where RICO allowed for attorneys fees as part of the costs
of the settlement).
IV. Order
Plaintiffs’ Motion for Imposition of Appeal Bond Under
Federal Rule of Appellate Procedure 7 (Docket No. 7887) is
ALLOWED and the appeal bond is imposed in the amount of $5,000.

/s/ PATTI B. SARIS
PATTI B. SARIS
United States District Judge

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