Opinion
Civil Action No. 03-5252.
July 2, 2004
MEMORANDUM
Before the court is the motion of defendant and counterclaim plaintiff, Linda J. Crouse, M.D. to stay all proceedings pending her appeal of the protective order entered by the court on May 24, 2004.
This action arises out of the administration of a trust established under the nationwide Class Action Settlement involving Wyeth's diet drugs Pondimin and Redux, commonly known as fen-phen. Plaintiffs, the Trustees of the AHP Settlement Trust ("Trustees"), have brought an action against defendant under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1964, et seq., as well as for various common law torts, including fraud. Dr. Crouse subsequently filed a number of counterclaims against the Trustees. She too pleads violations of RICO, as well as intentional misrepresentation and fraud, negligent misrepresentation, tortious interference with existing and prospective contractual relations, defamation, and civil conspiracy.
The class action, as well as Multi-District Litigation No. 1203, are both situated in this court. In accordance with the Class Action Settlement Agreement approved by this court in Pretrial Order ("PTO") No. 1415 in Brown v. American Home Products Corporation, Civ. A. No. 99-20593 (E.D. Pa. Aug. 28, 2000), the AHP Settlement Trust ("Trust") was established and funded by Wyeth to pay benefits to class members who suffered mitral or aortic heart valve regurgitation from ingesting fen-phen. To obtain those benefits, a class member was required to submit an echocardiogram read by a board-certified cardiologist certifying that the class member's condition met the definitions set forth in the Settlement Agreement. Settlement Agreement, § VI.C. The cardiologist was required to supply various medical information about the class member, including the echocardiogram readings, on a court-approved form known as a Green Form, and to attest to the accuracy of the information presented to the Trust under penalty of perjury. See Settlement Agreement, § VI.C.4; Green Form, Part II. The Green Form also has a section to be completed and signed by the claimant and one to be completed and signed by the claimant's attorney.
Dr. Crouse, a board-certified cardiologist, was engaged by various attorneys to read and certify the echocardiograms of some 2,500 class members. The complaint asserts that hundreds of Dr. Crouse's readings were not only medically unreasonable but that she and others were involved in a scheme to defraud the Trust. It further alleges that as a result of the Trust's reliance on her certifications given under oath, it paid out several million dollars to undeserving claimants. The Trust filed the present action seeking compensatory and punitive damages. As noted above, Dr. Crouse has counterclaimed under RICO, as well as for various common law torts including fraud and defamation.
We recently entered an order protecting the confidentiality of personal information about the thousands of class members eligible for Trust benefits and about the internal policies and procedures of the Trust. Castle v. Crouse, Civ. A. No. 03-5252, PTO (E.D. Pa. May 24, 2004). The order puts certain limits on who can receive information designated "confidential" and prohibits any "authorized" recipient from obtaining such information unless he or she has been provided with a copy of the protective order and has made a written statement that he or she has read the order and agrees to comply with its terms. Id.
The test under which we must consider defendant's motion to stay pending the appeal is: "(1) whether the stay applicant has made a strong application that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies." Republic of the Philippines v. Westinghouse Elec. Corp., 949 F.2d 653, 658 (3d Cir. 1991) (citing Hilton v. Braunskill, 481 U.S. 770 (1987)). "[T]he traditional stay factors contemplate individualized judgments in each case." Id.
The Trustees first argue that Dr. Crouse is not likely to succeed on the merits at this time because the Third Circuit has no jurisdiction to review the appeal. They maintain that this court's decision is not "final" and does not fall under the narrow "collateral order exception" as established in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949). Pursuant to 28 U.S.C. § 1291, "courts of appeals may review only 'final' decisions of the district courts." See Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1117 (3d Cir. 1986). Non-final judgments may be appealed "when they have a final and irreparable effect on the rights of the parties." Cohen, 337 U.S. at 545. "Discovery orders, being interlocutory, are not normally appealable." Cipollone, 785 F.2d at 1116. However, a small class of prejudgment orders "which finally determine claims of right separable from and collateral to, rights asserted in the action, too important to be denied review, and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated" may be reviewable.Cohen, 337 U.S. at 546. There are three requirements for a non-final judgment to be appealable. It must: "(1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) be effectively unreviewable on appeal from final judgment."Cipollone, 785 F.2d at 1117.
Significantly, our order does not conclusively determine any disputed question. We have not determined finally to whom Dr. Crouse may disclose confidential information. It is important to emphasize that the protective order in issue allows Dr. Crouse to obtain all of the information subject to the order and to disclose that information to "authorized persons," who are defined broadly as:
(A) the parties;
(B) employees of the AHP Settlement Trust;
(C) attorneys representing any of the parties to this action and the assisting employees of said attorneys;
(D) such other persons designated as authorized persons by the court as necessary;
(E) a state or federal grand jury or such other person or entity identified as the lawful recipient of documents or information that is the subject of a state or federal grand jury subpoena, a valid criminal trial subpoena, or an administrative subpoena served on the Trust or any custodian of the records of the Trust (although this shall not in any way affect any party's right to contest a subpoena); and
(F) employees, independent contractors, advisors (including retained counsel, officers, directors, employees, agents, contractors, experts, accountants, and auditors), and the successors and assigns of any of the foregoing.Castle v. Crouse, Civ. A. No. 03-5252, PTO, ¶ 2 (E.D. Pa. May 24, 2004). While the protective order does impose restrictions, it provides a mechanism whereby Dr. Crouse may seek relief from this court to disclose confidential information beyond those persons specifically described. The protective order reads in pertinent part:
In the event that a party has a need to disclose confidential information to persons other than those authorized under the terms of this order in order to prosecute, defend, and/or appeal this litigation, the party must request a stipulation by the opposing party with respect to each additional person the party reasonably believes such disclosure is required, which stipulation shall not be unreasonably withheld. The stipulation would then be presented to the court for its approval. If the parties cannot resolve this matter, the requesting party may seek appropriate relief from the court. That the requesting party agreed to review of confidential information under restrictions imposed by this protective order shall not be used as or otherwise constitute evidence as to whether the information at issue warrants protection against disclosure under the Federal Rules of Civil Procedure.Castle v. Crouse, Civ. A. No. 03-5252, PTO, ¶ 11 (E.D. Pa. May 24, 2004). If the court errs in refusing to allow disclosure, our error can be reviewed and corrected on appeal from a final judgment as in the case of any other discovery order.
In analyzing the need for a protective order, we weighed the privacy interests of the class members and the need of the Trust to combat fraud against the need of Dr. Crouse to prepare her case. We determined there was good cause to enter such an order under Glenmeade Trust Company v. Thompson, 56 F.3d 476 (3d Cir. 1995) ("Glenmeade"), and Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994).
The parties agreed that class members' personal information should be protected, and based on the strong privacy interest at stake we too agreed. As to the internal policies and procedures of the Trust, we reiterated that the Trust has an important interest in confidentiality, particularly in light of the large number of allegedly fraudulent claims filed and the steps it is taking in its investigations of those claims.
Over eighty-four thousand Green Forms were filed with the Trust under the Settlement Agreement, which was a number far in excess of what anyone ever expected when the Settlement Agreement was before the court for approval at the time of the Fairness Hearing in 2000. See Brown v. American Home Products Corporation, Civ. A. No. 99-20593, PTO 2662 (E.D. Pa. November 26, 2002). Although the Settlement Agreement originally called for a fifteen percent audit, based on a finding in November, 2002 that the number of claims submitted was "totally at odds with impressive and undisputed epidemiological evidence presented at the Fairness Hearing," the court found good cause to implement a one hundred percent audit requirement for all Fund B claims. Id. We also pointed out that the Trust is a fiduciary for tens of thousands of claimants. In its attempts to protect the large but limited fund it holds for those entitled to benefits, the Trust has developed and is developing procedures and policies to discover and protect against fraud. As stated in the Memorandum accompanying the protective order, this court has a compelling obligation to prevent the payment of finite Trust funds to miscreants. Unlimited distribution of information relating to internal policies and procedures of the Trust is likely to undermine both the Trust's and the court's efforts in this regard.
At the same time, we recognized that this information appeared to be relevant to Dr. Crouse's defense and counterclaims. The order does not prevent Dr. Crouse from receiving the information from the Trust for adequate preparation of her defense and pursuit of her counterclaims against the Trustees. Indeed, "employees, independent contractors, advisors (including retained counsel, officers, directors, employees, agents, contractors, experts, accountants, and auditors), and the successors and assigns of any of the foregoing" are all considered "authorized persons," with whom Dr. Crouse is permitted to share "confidential information" under the protective order without prior leave of court as long as those persons agree to maintain the confidentiality of that information. See Castle v. Crouse, Civ. A. No. 03-5252, PTO, ¶¶ 2(F), 7-21 (E.D. Pa. May 24, 2004). Beyond those persons and other persons designated "authorized," Dr. Crouse will be allowed to share confidential information if she can secure either a stipulation from the Trustees or approval from this court. See Castle v. Crouse, Civ. A. No. 03-5252, PTO, ¶ 21 (E.D. Pa. May 24, 2004).
In sum, Dr. Crouse's arguments against the protective order do not convince us that she is likely to succeed on the merits should the Court of Appeals determine that the order is presently appealable.
In her argument in favor of a stay, Dr. Crouse has not shown that she will be irreparably injured if the action goes forward during the pendency of the appeal. Dr. Crouse argues that it is unlikely that the Court of Appeals will decide the appeal until after the close of discovery in this matter. Even if she is correct, Dr. Crouse and a wide category of individuals are "authorized persons" who can receive "confidential information."See Castle v. Crouse, Civ. A. No. 03-5252, PTO at 6-7 (E.D. Pa. May 24, 2004). Moreover, as we have explained above, if Dr. Crouse wishes to make disclosures beyond those currently permitted to receive information, she may seek permission from the Trust, and if this is unavailing, she may seek relief from this court. Castle v. Crouse, Civ. A. No. 03-5252, PTO at 7 (E.D. Pa. May 24, 2004). Ultimately, any harm can be corrected by the Court of Appeals after a final judgment is entered. Dr. Crouse's right or ability to prepare her case will not be irreparably injured.
Under the third prong of Republic of the Philippines, 949 F.2d at 658, we must examine whether issuance of the stay will substantially injure the Trust. Dr. Crouse points out that there is presently a broad stay entered in the Diet Drugs litigation pending submission and approval of the Seventh Amendment to the Settlement Agreement. This stay, however, only prevents the processing and payment of Matrix Level I and II claims. See Brown v. American Home Products Corporation, Civ. A. No. 99-20593, PTO 3511 (E.D. Pa. May 6, 2004). The processing and payment of more serious claims under Matrix Levels III, IV, and V will continue. If the Trustees are entitled to recover funds, they should be able to do so expeditiously. They are not seeking the funds for themselves but are doing so in a fiduciary capacity for the benefit of class members.
Finally, we must determine where the public interest lies in deciding whether to grant a stay. See Republic of the Philippines, 949 F.2d at 658. There is always a strong public interest in having lawsuits move forward to resolution as speedily as possible. See Fed.R.Civ.P. 1.
Accordingly, the motion of defendant and counterclaim plaintiff Linda J. Crouse, M.D. to stay all proceedings pending her appeal of the protective order entered by this court on May 24, 2004 will be denied.