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In re Briscoe

May 15, 2006

IN RE: KAREN A. BRISCOE, ET AL.; ALFRED LARA, ET AL.; WANDA T. KIZER, ET AL.*FN1; DEBRA ALEXANDER, ET AL.; RHONDA ALLEN, ET AL.; MARY GREEN, ET AL.; GLENDA D. ABBOTT, ET AL.; AND LESLIE BALES, ET AL., PETITIONERS


On Petition for a Writ of Mandamus to the United States District Court for the Eastern District of Pennsylvania (Related to MDL-1203 & 99-cv-20593) District Judge: Honorable Harvey Bartle, III.

The opinion of the court was delivered by: Sloviter, Circuit Judge.

PRECEDENTIAL

Argued December 13, 2005

Before: SLOVITER, SMITH and STAPLETON, Circuit Judges.

OPINION OF THE COURT

At issue in this case is the disposition of more than 14,000 actions filed by some 30,000 to 35,000 plaintiffs pending before the United States District Court for the Eastern District of Pennsylvania as part of the Multidistrict Diet Drug Product Liability Litigation, MDL-1203. Petitioners are 450 plaintiffs who originally filed their suits in Texas state courts. Defendant Wyeth removed the suits to the Texas federal district courts on the basis of diversity jurisdiction, even though petitioners had also named non-diverse parties as defendants. According to Wyeth, removal was proper because the additional defendants were named solely as a means to defeat federal jurisdiction. After the actions were transferred to the docket of MDL-1203, petitioners moved for a remand to state court. The District Court held that the non-diverse defendants were "fraudulently joined" because it determined that the claims against them are clearly time-barred under the governing Texas statute of limitations. It therefore dismissed all defendants except Wyeth, held that it has diversity jurisdiction, and denied the motions to remand. Claiming that the District Court committed a clear error of law, petitioners seek a writ of mandamus and ask that we direct the District Court to remand their cases to state court.*fn2

I.

This court has previously set forth various facets of the background to MDL-1203 and its class action settlement agreement. See In re Diet Drugs, 401 F.3d 143, 147-48 (3d Cir. 2005) (dismissing appeals for want of jurisdiction and denying mandamus petition for review of award and allocation of interim award of attorney's fees); In re Diet Drugs, 385 F.3d 386, 389-93 (3d Cir. 2004) (affirming approval of Sixth Amendment to the settlement agreement); In re Diet Drugs, 369 F.3d 293, 299 (3d Cir. 2004) (addressing District Court's injunction limiting scope of proceedings in state court); In re Diet Drugs, 282 F.3d 220, 225-29 (3d Cir. 2002) (addressing injunction against mass opt out from settlement agreement). We limit our discussion here to the facts pertinent to the present mandamus request.

On September 15, 1997, respondent Wyeth (then known as American Home Products Corporation) withdrew from sale on the United States market its widely prescribed appetite suppressants, or "diet drugs," known as fenfluramine ("Pondimin") and dexfenfluramine ("Redux"). Approximately six million people in the United States had taken one or both of the diet drugs prior to the withdrawal. Subsequent studies have linked ingestion of the diet drugs to valvular heart damage ("VHD"), including a condition known as heart-valve regurgitation (the reverse flow of blood through a closed heart valve). After the diet drugs were withdrawn, approximately 18,000 lawsuits were filed against Wyeth in state and federal courts nationwide. In December 1997, the Judicial Panel for Multidistrict Litigation ("JPML") consolidated the pending federal cases for coordinated pre-trial proceedings and transferred them as MDL-1203 to the docket of then District Judge Louis C. Bechtle in the United States District Court for the Eastern District of Pennsylvania.*fn3

In November 1999, Wyeth and representatives of the state and federal court plaintiffs executed a Nationwide Class Action Settlement Agreement ("Settlement Agreement"). The proposed class included all persons in the United States, including their representatives and dependents, who had ingested either or both of the diet drugs. Judge Bechtle granted provisional approval to the Settlement Agreement and initiated a wide-reaching notification program to alert all potential class members. The notice program had two essential parts:

The first part of the notice program was designed to make class members aware of the potential risks posed by Pondimin and Redux, of the legal rights arising from the use of those drugs, of the proposed nationwide class action settlement which would resolve such claims and of their opportunity to opt out or object to the Settlement. In addition, the first part of the notice program was designed to inform class members of the opportunity to obtain a court authorized "notice package" describing their legal rights in relation to the settlement by registering to receive the notice package through a 1-800 number (1-800-386-2070) or through the world wide web (www.settlementdietdrugs.com). The second part of the notice program was to provide a detailed "notice package" to each person who had registered through the 1-800 number or web site and to all other class members whose names and addresses were known to the parties.

In re Diet Drugs, MDL No. 1203 & Civ. No. 99-20593, 2000 WL 1222042, at *35 (E.D. Pa. Aug. 28. 2000). From November 1999 through March 2000, the notice was disseminated to potential class members through a broad spectrum of media, including: a television commercial; magazines; local and national newspapers; publications targeting healthcare providers and pharmacists; banner advertisements on the Internet directing class members to the official settlement website; and a direct mailing to all doctors and pharmacists believed to have prescribed Pondimin or Redux.

After the notice program, Judge Bechtle conducted a comprehensive evidentiary hearing on fairness of the Settlement Agreement. He then formally certified the plaintiffs' class and approved the Settlement Agreement (with four amendments) on August 28, 2000. Judge Bechtle made numerous factual determinations in connection with his approval of the Settlement Agreement, two of which are relevant here. First, he found that the dissemination of notice to class members was "highly successful," explaining that

[a] sophisticated media analysis demonstrated that 97% of women between the ages of 25 and 54 viewed one or more forms of televised or printed notice an average of 10 times. A reach and frequency analysis indicated that almost 80% of women between the ages of 25 and 54 were exposed to the message contained in the televised or printed forms of notice a minimum of five times. Women between the ages of 25 and 54 account for a vast majority of the use of diet drugs Pondimin and Redux. . . . In addition, a reach and frequency analysis indicated that the settlement message reached 97% of women 35 years and older an average of 11.4 times and that it reached 81% of women 35 years and older a minimum of five times. With respect to African-American women between the ages of 25 and 54, the reach and frequency analysis shows that the settlement message reached 97% of those women an average of 10.2 times and that 79% of African-American women between the ages of 25 and 54 viewed the message a minimum of five times. With respect to men age 25 through 54, 94% viewed the settlement message an average of 6.2 times and 54.3% were reached with the settlement message a minimum of five times.

Id. at *36 n. 16. Second, Judge Bechtle found that the diet drugs do not cause latent injuries -- a finding that was central to his determination of the adequacy of the class representation and his approval of the Settlement Agreement. Objectors to the Settlement Agreement had argued that a "futures" problem existed because issues regarding latency and the progression of VHD remained unsettled. Judge Bechtle rejected this argument, noting, inter alia,

The clinical and epidemiological studies demonstrate -- and all the experts agree -- that insofar as the use of fenfluramine or dexfenfluramine results in an increased prevalence of valvular regurgitation, that regurgitation is detectable by echocardiogram shortly after the patients discontinue use of diet drugs. Conversely, there is no evidence that the use of the drugs results in any increased risk of regurgitation that is "latent" and not detectable by today's sophisticated echocardiographic technology.

Id. at *46. After appeals terminated, the Settlement Agreement received "Final Judicial Approval" on January 2, 2002.

By its terms, the Settlement Agreement offered class members a chance to opt out from seeking benefits under the agreement and, instead, to pursue remedies against Wyeth through the tort system. The 450 petitioners before us are class members who exercised the opt-out right and filed 127 separate suits in Texas state courts from November 2002 to August 2003.*fn4 Petitioners are known as "intermediate" opt-outs because they exercised the opt-out right after an initial deadline of March 30, 2000. To qualify for an intermediate opt-out, class members had to take an echocardiogram and have a qualified physician find a medically relevant severity of heart-valve regurgitation as defined by the Settlement Agreement. Intermediate opt-out plaintiffs are entitled to sue Wyeth for compensatory damages, but they have agreed not to seek punitive, exemplary, or multiple damages. In return for this restriction, Wyeth has agreed to waive any statute of limitations defense to the suits against it. The Houston, Texas, law firm of Fleming & Associates, LLP, is counsel to all of the petitioners before us.

In their complaints, petitioners named as defendants both Wyeth and the individual physicians who prescribed them the diet drugs.*fn5 Petitioners raised state-law claims against Wyeth based on negligence, design and marketing defects, and inadequate and improper warnings. They raised separate claims of medical malpractice against the physicians for failure to warn of the dangers of the diet drugs, failure to prescribe the drugs under proper conditions, and failure generally to provide reasonable treatment and proper care. Petitioners asserted no claims under federal law.

Wyeth timely removed petitioners' cases under 28 U.S.C. § 1441 to federal district courts in Texas, arguing that petitioners "fraudulently joined" the physicians solely as a means to defeat federal-court diversity jurisdiction. Petitioners and the physicians are citizens of Texas, while Wyeth is a Delaware corporation with its principal place of business in New Jersey. Absent the physicians, it is undisputed that complete diversity of citizenship exists for purposes of 28 U.S.C. § 1332 jurisdiction.*fn6

The JPML eventually transferred all of petitioners' cases to the docket of MDL-1203. Petitioners moved for a remand to state court under 28 U.S.C. § 1447(c), arguing that the physicians were properly named, that the claims against the physicians are colorable under Texas law, and that complete diversity is therefore lacking. Wyeth argued that petitioners fraudulently named the physicians because the claims against them are clearly time-barred under the Texas two-year statute of limitations that governs claims against health care providers. As such, it argued, the physicians should be dismissed, and the claims against Wyeth as the lone defendant should be heard in federal court.

Judge Bechtle was succeeded as the presiding District Judge over MDL-1203 by the Honorable Harvey Bartle III, currently Chief Judge of the United States District Court for the Eastern District of Pennsylvania ("the District Court"). In August, September, and October 2004, the District Court issued seven separate Pre-Trial Orders ("PTOs") (numbers 3870, 3871, 3991, 3995, 4017, 4036, and 4054) in which he denied petitioners' motions to remand and dismissed all defendants from the actions except Wyeth. Because the District Court had previously issued a lengthy unpublished opinion on a similar remand motion from Texas plaintiffs in an action titled Accadia v. Wyeth, PTO No. 3666 (E.D. Pa. June 29, 2004), the District Court adopted its analysis in Accadia to reject the petitioners' motions.

In Accadia, the District Court explained that although Wyeth had withdrawn Pondimin and Redux from the market in September 1997, the plaintiffs did not file suit in Texas until mid-2003, which was more than five years after their physicians last prescribed the diet drugs. The District Court observed that the test in a fraudulent joinder inquiry is not whether the plaintiff fails to state a claim against the non-diverse defendant but merely whether the claim is colorable. The District Court agreed with Wyeth that the claims against the physicians are not colorable because they are time-barred. The Court rejected the argument that plaintiffs were unable to discover their injuries until the echocardiogram results revealed their alleged heart problems because actual knowledge of the particulars supporting a cause of action (such as receipt of an examination result) is not required to commence a limitations period. In addition, the District Court rejected the contention that plaintiffs were unable to timely discover their injuries because they experienced no symptoms of heart problems or failed to attribute any symptoms to the diet drugs. The Court agreed with Wyeth that the "extensive publicity" in Texas and nationwide that accompanied the September 15, 1997, withdrawal of the diet drugs put plaintiffs on notice of their injuries.*fn7 Moreover, even if the 1997 publicity was insufficient to provide notice, the District Court concluded that plaintiffs "certainly were put on notice by the end of March, 2000, by the comprehensive publicity campaign surrounding the nationwide class action Settlement Agreement with Wyeth." Motion App. at 387 (citation omitted).

The District Court rejected the contention that VHD can be latent. It noted that Judge Bechtle had found that diet-drug-related injury occurs at or near the end of the last use, with no latency period before the emergence of detectable injury. As class members and parties to the Settlement Agreement, plaintiffs were estopped from re-litigating the issue of latency. The District Court also rejected plaintiffs' reliance upon the Texas Constitution's "Open Courts" provision, which creates an exception to the state statute of limitations period if it would have been "impossible or exceedingly difficult" timely to discover the alleged wrong. The District Court further found no tolling based on the physicians' alleged fraudulent concealment of the dangers of the diet drugs, noting that there was no evidence that the physicians knew plaintiffs were injured or willfully concealed diet-drug injuries to deceive plaintiffs. Finally, the District Court found no basis for tolling in the terms of the Settlement Agreement. In conclusion, the District Court explained in Accadia that

[i]n light of the massive publicity concerning the health risks associated with the use of the diet drugs, the comprehensive notice program associated with the settlement, and this court's determination that diet drug induced valvular heart disease is not a latent disease, we find that plaintiffs, through the exercise of reasonable diligence, should have discovered their alleged injuries at the very latest by the end of March, 2000. Since plaintiffs did not file these actions until [more than two years later], their claims against their prescribing physicians are clearly time barred.

Motion App. at 394.

As noted, the District Court adopted its analysis in Accadia to reject petitioners' motions to remand their cases to state court. Petitioners then turned to this court by filing a petition ...


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