BROWN, et al v. AMERICAN HOME PROD, et al

Filing 5294

MEMORANDUM IN SUPPORT OF SEPARATE PRETRIAL ORDER NO. 9485 RE: NORMA M. SCHLAGER. SIGNED BY HONORABLE HARVEY BARTLE, III ON 3/9/2017. 3/9/2017 ENTERED AND COPIES MAILED AND E-MAILED TO LIAISON COUNSEL. (SEE PAPER # 110583 IN 11-MD-1203) (ems)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: DIET DRUGS (PHENTERMINE/
FENFLURAMINE/DEXFENFLURAMINE)
PRODUCTS LIABILITY LITIGATION

MDL DOCKET NO.

1203

THIS DOCUMENT RELATES TO:
SHEILA BROWN, et al.
v.
AMERICAN HOME PRODUCTS
CORPORATION

NO.

99-20593

THIS DOCUMENT RELATES TO:
Claimant:
Claim No.:

Norma M. Schlager
183/00 1947282

2:15 MD 1203

MEMORANDUM IN SUPPORT OF SEPARATE PRETRIAL ORDER NO.

Bartle, J.

March

9y.i5

9,

2017

Norma M. Schlager ("Ms. Schlager or "claimantu), a
Class Member under the Diet Drug Nationwide Class Action
Settlement Agreement

("Settlement Agreementu) with Wyeth,

seeks benefits from the AHP Settlement Trust ("Trustu).

Inc.,
Before

the court is her appeal from a September 19, 2016 determination
by an arbitrator that she did not establish the required
conditions necessary for recovery of Matrix Level III Benefits
because she did not file a timely claim.
1. Prior to March 11, 2002, Wyeth was American Home Products
Corporation.
In 2009, Pfizer, Inc. acquired Wyeth.

1

Under the Settlement Agreement, Matrix Compensation
Benefits

("Matrix Benefits") are awarded to compensate claimants

for medical conditions caused by Pondimin® or Redux™ ("Diet
Drugs") .

2

A claimant who seeks Matrix Benefits may demonstrate

her eligibility for those Benefits in one of two ways.

She may

be eligible if she was diagnosed by a Qualified Physician as FDA
Positive or as having mild mitral regurgitation by an
echocardiogram performed on or before January 3, 2003, provided
that she registered for Settlement Benefits by May 3, 2003.
Alternatively, she may be eligible if she was diagnosed by a
Qualified Physician on or before September 30, 2005 with
Endocardial Fibrosis, provided that she registered for benefits
by January 1, 2006.

2. Matrix Benefits are paid according to two benefit matrices,
(Matrix "A" or Matrix "B"), which generally classify claimants
for compensation purposes based on the severity of their medical
conditions, their ages when diagnosed, and the presence of other
medical conditions that also may have caused or contributed to a
claimant's valvular heart disease.
See Settlement Agreement,
§§ IV.B.2.b. and IV.B.2.d. (1)-(2).
Matrix A-1 describes the
compensation available to Diet Drug Recipients with serious
valvular heart disease who took the drugs for 61 days or longer
and who did not have any of the alternative causes of the
diseases that made the B matrices applicable.
In contrast,
Matrix B-1 outlines the compensation available to Diet Drug
Recipients with serious valvular heart disease who were
registered as having only mild mitral regurgitation by the close
of the Screening Period or who took the drugs for 60 days or
less or who had factors that would make it difficult to prove
that their heart disease was caused solely by the use of these
Diet Drugs.
-2-

The Seventh Amendment to the Settlement Agreement
provides that a Category One or Category Two Class Member 3 can
qualify to receive Seventh Amendment Matrix Level III,
Benefits from the Trust.

4

IV, or

See Seventh Amendment§ IX.A.l.

v

In

order to qualify for these "High-Level Benefits," the Class
Member must satisfy the deadlines set forth in§ IX.A.l.a of the
Seventh Amendment, which states in relevant part:
The Diet Drug Recipient whose condition
forms the basis for the claim has or had
High Matrix Level Qualifying Factors that
were diagnosed and occurred by the earlier
of: (i) December 31, 2011; or (ii) 15 years
after the date of the Diet Drugs.
Seventh Amendment§ IX.A.l.

The Class Member is also required

to submit a properly completed Green Form and accompanying
documentation.

Seventh Amendment§§ I.B.64, IX.A.l.

In

addition, she must:
(ii) qualif [y] for the payment of the
benefits on Matrix Levels III, IV or V under
the terms of the Settlement Agreement as it
existed before the Execution Date; and
(iii) qualif [y] as having the High Matrix
Level Qualifying Factors on the same Matrix
Level for which the Class Member qualifies
for benefits under the Settlement Agreement
as it existed before the Execution Date.
3. The definitions of Category One and Category Two are set
forth in§§ III.A.land III.A.2 of the Seventh Amendment to the
Settlement Agreement.
4. The Settlement Agreement matrices include five "levels" of
possible benefits.
In general, the level of benefits for which
a Class Member qualifies corresponds to the type and severity of
medical conditions she has experienced.
-3-

Seventh Amendment §§ IX.A.l.b(ii)-(iii).

If a Class Member who

was previously entitled only to Level I or Level II benefits
"progress[es] to more serious levels of valvular heart disease,"
she has "the right to 'step up' to higher amounts of
compensation" - that is Levels III,

IV, or V - "as those levels

occur pursuant to the settlement matrices."

Pretrial Order

("PTO") No. 1415 (Aug. 28, 2000).
In April 2003, Ms. Schlager submitted to the Trust a
Green Form seeking Level II Matrix Benefits.

She did not opt

out of the Seventh Amendment, and in March 2005 she was informed
that she qualified as a Category One Class Member.

In 2008, the

Seventh Amendment Fund Administrator finished processing Ms.
Schlager's claim and concluded that she had not established the
necessary medical conditions to qualify for Category One
benefits and that she was entitled to a Minimum Payment Amount
of $2,000.

In a letter to Ms. Schlager dated March 5, 2008, the

Fund Administrator summarized its conclusions as to her claim.
The letter stated, among other things:
You will be entitled to claim Matrix
Compensation Benefits at Levels III, IV or V
as modified by the 7th Amendment, if your
condition worsens so as to qualify at those
levels before December 31, 2011 or fifteen
years after the last use of the diet drugs,
whichever date is earlier.

-4-

The letter stated that "[t]he rights and obligations of Category
One Class Members, including restrictions regarding the
distribution of benefits, are set forth in the 7th Amendment,
which governs."
According to Ms. Schlager, her heart condition
worsened following the Fund Administrator's determination.

Ms.

Schlager's son, Ron Schlager, an attorney who is handling her
present appeal, wrote two letters to class counsel in April 2009
advising counsel that Ms. Schlager would likely require heart
surgery for "covered complications" and wrote to "affirm .
that the medical costs of this type would be covered."

Ms.

Schlager underwent surgery to replace her aortic valve on
September 2, 2010.
Two months later, on November 8, 2010, this court
approved Court Approved Procedure No. 16 ("CAP 16") in PTO 8559.
In pertinent part, CAP 16 modified the deadlines applicable to
Class Members seeking Matrix Benefits.

It stated, in relevant

part:
5. Green Form Filing Deadline.
Any Class
Member who wishes to seek Matrix
Compensation Benefits must submit a
completed and executed Green Form Part I and
Green Form Part II postmarked or delivered
to the Trust no later than four years from
the later of (1) the entry of an Order
approving this Procedure or (b) the date on
which the Diet Drug Recipient was first
diagnosed as having the last occurring

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condition or event upon which the claim for
Matrix Compensation Benefits is based.
PTO No. 8559 (Nov. 8, 2010).
In April 2014, Ms. Schlager submitted to the Trust a
copy of the operative report of her aortic valve surgery and
nothing more.

Nine months later, in January 2015, she submitted

a partially completed second Green Form to the Trust without a
required doctor's certification.

The Green Form sought Level

III benefits for her aortic valve surgery.

She has stated that

this Green Form was meant "to 'notify' the Trust again of the
aortic valve surgery."
The Trust informed Ms. Schlager in March 2015 that her
Level III claim was tentatively being denied because she had not
submitted a completed Green Form by the deadline of November 8,
2014 imposed by CAP 16 and because she had not provided adequate
proof of her use of Diet Drugs.

5

On June 17, 2015, the Trust

reiterated this denial in its Final Determination.
Pursuant to the Settlement Agreement, Ms. Schlager
appealed the Trust's Final Determination, and the court referred
her claim to· arbitration on July 7, 2015.

5. The Trust no longer contests Ms. Schlager's assertion that
she did indeed ingest Diet Drugs.
Following the petition of Ms.
Schlager on September 11, 2015 to submit new evidence, the Trust
agreed to consider pharmacy receipts of Diet Drugs as new
evidence and her petition was rendered moot.
-6-

On October 27, 2015, before the arbitration took
place, Ms. Schlager provided the Trust with a completed Green
Form seeking Level III benefits for her aortic valve surgery and
materials purporting to prove her use of Diet Drugs.

On

November 13, 2015, she filed a motion requesting determination
from this court on the timeliness of her claim.

On

January 27, 2016, the court entered PTO 9457, denying Ms.
Schlager's "motion/petition for relief" in which she sought a
determination from the court that her claim for Matrix Benefits
was not time-barred by CAP 16.
(Jan. 27, 2016).

See PTO No.

9457

The court found that Ms. Schlager's claim for

Matrix Benefits was untimely.

Id.

Following the entry of PTO 9457 and before
arbitration, Ms. Schlager filed three requests to submit new
evidence.

The first petition, filed September 11, 2015, was

rendered moot when the Trust agreed to consider pharmacy
receipts of Diet Drugs as new evidence.

The Chair of the

Arbitration Panel denied the second and third petitions on April
27, 2016 and May 6, 2016, respectively.
Ms. Schlager appealed PTO 9457 to our Court of
Appeals.

The appeal was dismissed for lack of jurisdiction on

April 14, 2016.
On August 24, 2016, an Arbitration Hearing took place
before the Arbitrator concerning Ms. Schlager's claim and the
-7-

Trust's Final Determination.

Thereafter, on September 19, 2016

the Arbitrator entered an Arbitration Report and Award
concluding that the findings of the Trust were not clearly
erroneous, as established by Rule 5 of the Rules Governing
Arbitration Process.

The Arbitration Report and Award stated

that Ms. Schlager did not file a timely claim.

Thus she failed

to establish the conditions required for recovery of Matrix
Level III Benefits as described in the Settlement Agreement as
modified by the Seventh Amendment.

See Seventh Amendment

§ IX.A.1.a.
Ms. Schlager has now appealed the Arbitrator's
decision to this court as permitted under the Settlement
Agreement.

See Settlement Agreement § VI.C.4.i.

We apply a

clearly erroneous standard of review to the Arbitrator's
findings of fact and conduct a plenary review of conclusions of
law.

First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,

947-49 (1995).

The ruling of this court is final and binding.

See Settlement Agreement§ VI.C.4.1.
In her first determination, the Arbitrator concluded
that CAP 16 was intended to apply to qualifying medical events
that preceded its establishment.

While Ms. Schlager disagrees

with this conclusion, she is incorrect.

It is clear that CAP 16

set deadlines for claimants who would experience a qualifying
health event before CAP 16 went into effect but who would not
-8-

seek benefits until after it went into effect.

For those who

had not yet experienced a qualifying medical event, CAP 16 set
the deadline of November 8, 2014 to submit the Green Form, four
years after the entry of PTO 8559.

In addition, it fixed the

deadline for those who had yet to experience such an event as
four years from "the date on which the Diet Drug Recipient was
first diagnosed as having the last occurring condition or event
upon which the claim

is based."

We turn to the second determination of the Arbitrator
which addressed Ms. Schlager's contention that CAP 16 should not
apply to her because she was denied adequate notice of it in
violation of Rule 23 of the Federal Rules of Civil Procedure and
the Due Process Clause of the Fifth Amendment.

6

The Arbitrator

6. Rule 23(c) of the Federal Rules of Civil Procedure states, in
relevant part:
For any class certified under Rule 23 (b) (3),
the court must direct to class members the
best possible notice that is practicable
under the circumstances, including
individual notices to all individuals who
can be identified through a reasonable
effort.
The notice must clearly and
concisely state in plain, easily understood
language:
(i)
the nature of the action;
the definition of the class certified;
(ii)
the class claims, issues, or defenses;
(iii)
(iv)
that a class member may enter an appearance through an
attorney if the member so desires;
(v)
that the court will exclude from the class any member
who requests exclusion;
the time and manner for requesting exclusion; and
(vi)
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made several findings.

First, she determined that CAP 16 did

not have a material adverse effect on the rights of Class
Members.

Second, she concluded that CAP 16 did not violate due

process considerations.
Ms. Schlager maintains that the Arbitrator erred in
finding that CAP 16 had no material adverse effect on her.

In

pertinent part, CAP 16 clarified the deadlines applicable to
Class Members seeking Matrix Benefits.
Members,

Category One Class

such as Ms. Schlager, who did not opt out of the

Seventh Amendment are bound by the Seventh Amendment, which
governs these Class Members' eligibility to progress to a higher
level of Matrix Benefits if their conditions worsened.
Seventh Amendment § IX.A.

7

See

CAP 16 did not reduce Class Members'

(vii)

the binding effect of a class judgment on members
under Rule 23 (c) (3).
Fed. R. Civ. P. 23 (c) (2) (B).
Rule 23(e) provides procedure with respect to a proposed
settlement, voluntary dismissal, or compromise.
Fed. R. Civ. P.
23 (e).
7. The Seventh Amendment provides that in order to qualify for
Level III, IV, or V Benefits, the Category One or Two Class
Member must satisfy the following deadlines and submit a
properly completed Green Form and accompanying documentation:
The Diet Drug Recipient whose condition
forms the basis for the claim has or had
High Matrix Level Qualifying Factors that
were diagnosed and occurred by the earlier
of: (i) December 31, 2011; or (ii) 15 years
after the date of the Diet Drugs.
See Seventh Amendment § IX.A.1.
-10-

eligibility for Matrix Benefits or create any contractual
obligation concerning eligibility for Matrix Benefits under the
Settlement Agreement.

The Settlement Agreement had always

provided deadlines for the occurrence of qualifying medical
conditions that made Class Members eligible for Matrix Benefits.
Rather, CAP 16 simply modified the deadlines for the submission
of the Green Forms by Class Members seeking these High Level
Matrix Benefits. 8
We note that without the imposition of CAP 16 there
would have been a four year statute of limitations for Ms.
Schlager's claim for Matrix Benefits beginning from the date of
her aortic valve surgery on September 10, 2010.

The

interpretation and enforcement of a class action settlement
agreement is governed by the principles of contract law.

In re

Cendant Corp. Prides Litig., 233 F.3d 188, 193 (3d Cir. 2000).
There is a four year statute of limitation period for contract
claims.

42 Pa. C.S. § 5525.

Ms. Schlager submitted her

completed Green Form on October 27, 2015, outside of the
four-year statute of limitation that would have existed without

8. Ms. Schlager incorrectly asserts that absent CAP 16, the
deadline for her to file for High Level Matrix Benefits under
§ VI.C.2 of the Settlement Agreement was December 31, 2015.
Prior to the existence of CAP 16, the Seventh Amendment did not
articulate a deadline to file for these benefits for Category
One or Two Class Members bound by the Seventh Amendment, such as
Ms. Schlager, who are eligible under§ IX.A.l of the Seventh
Amendment to qualify for High Level Matrix Benefits.
-11-

CAP 16.

CAP 16 did not rob Ms. Schlager of her right to seek

high level Matrix Benefits.

In effect, CAP 16 provided Ms.

Schlager with nearly two more months to apply for compensation
than she otherwise would have had without the entry of CAP 16.
CAP 16 did not affect her eligibility to be entitled to High
Level Matrix Benefits.
Ms. Schlager also challenges the Arbitrator's findings
that CAP 16 did not violate due process considerations and that
adequate notice of CAP 16 was provided.

9

In order to protect an

individual's due process rights under the Fifth Amendment, Rule
23(e) of the Federal Rules of Civil Procedure requires notice to
class members of the terms of a proposed settlement agreement.
See Fed. R. Civ. P. 23(e); see also Carlough v. Amchem Products,
Inc., 158 F.R.D. 314, 324

(E.D. Pa. Oct. 27, 1993)

Mullane v. Central Hanover Bank & Trust Co.,
(1950)).

(citing

339 U.S. 306

Our Court of Appeals has stated that "Federal Rule of

Civil Procedure 23(e)

itself makes clear that determinations

about settlement notices in class actions are within the
discretion of the district court."
Liability Litig.,

In re Diet Drugs Prod.

93 F. App'x. 338, 324

(3d Cir. 2004).

"Minor

9. To the extent Ms. Schlager argues that individual notice
through the mail was required by Rule 23(c) (2) of the Federal
Rules of Civil Procedure, that provision requires "the best
notice that is practicable under the circumstances" of a
settlement agreement.
Fed. R. Civ. P. 23(c) (2). Ms. Schlager
has already been properly notified of the Settlement Agreement
under Rule 23(c) (2) and she does not dispute that here.
-12-

modifications may be necessary to a settlement agreement (indeed
may be favorable to the class), and additional class notice is
not always required because, e.g., the cost of the notice would
take recovered money from the class."

In re Remeron End-Payor

Antitrust Litig., 2005 WL 2230314 at* 19 (D.N.J. Sept. 13,
2005).

PTO 8559 was posted on the Trust's website,

electronically posted on the docket, and it was served
electronically to all persons registered to receive such
service.
"Notice of [an amendment] is only required where the
amendment to the settlement agreement would have a material
adverse effect on the rights of class members.

In re: The

Prudential Ins. Co. of America Sales Practices Litig.,
962 F.Supp. 450 n. 10 (D.N.J. 1997) ."
(July 2, 2010).

PTO No. 8506

We have affirmed the Arbitrator's determination

that CAP 16 did not have a material adverse effect on Ms.
Schlager's rights.

We now conclude that the Arbitrator did not

err in determining that adequate notice of CAP 16 was provided
to Ms. Schlager.

Furthermore, we affirm the Arbitrator's

determination that CAP 16 did not violate due process
considerations.
Finally we review the determination of the Arbitrator
that Ms. Schlager's 2014 stroke did not toll the statute of
limitations set by CAP 16 as to her claim.
-13-

Ms. Schlager argues

that it should have been assumed that serious complications
would occur following the stroke of a 77-year-old person such as
Ms. Schlager.

According to her, the deadline set by CAP 16

should have been tolled due to her serious health issues.

Our

Court of Appeals has identified three principal, non-exclusive
situations in which equitable tolling may be appropriate:
"(1) where the defendant has actively misled the plaintiff
respecting the plaintiff's cause of action;

(2) where the

plaintiff in some extraordinary way has been prevented from
asserting his or her rights; or (3) where the plaintiff has
timely asserted his or her rights mistakenly in the wrong
forum."

Oshiver v. Levin, Fishbein, Sedran & Berman,

38 F.3d 1380, 1387

(3d Cir. 1994).

The plaintiff bears the

burden of presenting facts necessary to justify equitable
tolling.

Byers v. Follmer Trucking Co., 763 F.2d 599, 600-01

(3d Cir. 1995); Smith v. Shared Medical System, 2004 WL 1656635
at * 4 (E.D. Pa. July 23, 2004).

The record does not

demonstrate how or why her medical condition prevented her from
submitting a completed Green Form within the deadlines set forth
by CAP 16.

-14-

Ms. Schlager raises several arguments in her appeal
brief that were not addressed in the Arbitration Report and
Award.

10

We will not address those arguments here.
The decision of the Arbitrator is affirmed.

10. Ms. Schlager has included with her reply brief a document
that is not part of the Appeal Record.
Arbitration Rule 9.a
provides: "Absent prior approval by the Chair, no new evidence
may be considered by the Arbitrator at any time during the
Arbitration process.
The evidentiary record shall be limited to
records submitted to the Trust prior to its final
determination." Arbitration Rule 9.a.
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