Opinion
M.D.L. No. 1430, Civil Action No. 01-10861-RGS.
March 16, 2005
MEMORANDUM AND ORDER ON INTERVENORS' MOTION TO COMPEL DISCOVERY
Counsel for Intervenors Valerie Samsell and Milton Greene brought this motion seeking "to Compel Discovery from Proponents of the Settlement and Third Parties and for Adjournment of the [MDL] Fairness Hearing." Intervenors assert that the parties to the MDL settlement have refused to comply with their requests for discovery concerning the MDL settlement negotiations, thereby hindering their ability to formulate a fully developed objection to the settlement. Intervenors request that the court postpone the fairness hearing until the discovery they seek has been produced. After review of the briefs, the court will deny the Intervenors' motion in all respects.
BACKGROUND
Intervenors are plaintiffs in a New Jersey state court action that parallels the federal MDL action. Judge Visalli, the presiding judge in New Jersey, has scheduled a trial of the New Jersey matter to follow the fairness hearing. Intervenors' counsel, who have pursued the New Jersey matter during the pendency of the MDL action, are thoroughly versed in the facts and issues raised by the MDL Lupron® litigation.
On November 17, 2004, this court allowed the New Jersey counsels' motion to intervene, with the caution that "[a]ccess to settlement documents will be decided on a request-by-request basis." Order on Motion to Intervene, at 1. On November 17, 2004, the Intervenors also filed a motion requesting a Rule 16 conference, a discovery schedule, and a postponement of the hearing on the motion of the MDL parties for preliminary approval of the MDL settlement. The court denied Intervenors' motion, and on November 24, 2004, preliminarily approved the MDL settlement. The court set March 15, 2005, as the deadline for objections, and scheduled a fairness hearing for April 13, 2005. The Intervenors have on several occasions beseeched the court to delay the fairness hearing, without success. The court also sanctioned counsel for the Intervenors for sending unauthorized and misleading communications to class members, and ordered the law firm of Kline Specter to pay for the distribution of a corrective notice.
The Intervenors have appealed the preliminary approval order to the First Circuit Court of Appeals, where the matter is pending.
Intervenors state that they have repeatedly since the November hearing requested access from the MDL parties to documents related to class certification. On February 3, 2005, Intervenors served interrogatories and document requests on the MDL parties. On February 16, 2005, the Intervenors served interrogatories and document requests upon various health plans. On February 17, 2005, Intervenors noticed the depositions of and/or served subpoenas for appearance at depositions on ten individuals and entities, including the MDL class representatives and counsel for the MDL parties.
Intervenors concede that as of March 3, 2005, they had received all of the sealed documents in this action that are pertinent to the issues resolved by the settlement agreement. (Motion at 12). MDL counsel note that Intervenors did not sign the protective order in this case, permitting them access to the documents, until February 9, 2005. MDL counsel also note that Intervenors have had access to the MDL defendants' document depository for a considerable length of time as a result of the parallel suit in New Jersey.
Intervenors claim, however, that they "still have not received any additional information or documentation regarding the settlement and the negotiations leading up to the settlement." (Motion at 12). Also, they complain that the recipients of the deposition notices have refused to appear. Intervenors state that they need information about the settlement negotiations and these depositions to discover: (1) the extent of the discovery undertaken in the MDL case and the MDL plaintiffs' counsels' evaluation of the likelihood of success; (2) plaintiffs' demands in the settlement negotiations; and (3) whether defendants, faced with Intervenors' parallel litigation, conducted a "reverse auction" with the collusion of plaintiffs' counsel.
DISCUSSION
Motion for Discovery
"Class members who object to a class action settlement do not have an absolute right to discovery; the Court may, in its discretion, limit the discovery or presentation of evidence to that which may assist it in determining the fairness and adequacy of the settlement." Hemphill v. San Diego Assoc. of Realtors, Inc., 225 F.R.D. 616, 619 (S.D. Cal. 2005). "The fundamental question is whether the district judge has sufficient facts before him to intelligently approve or disapprove the settlement." Id. at 619-20, citing In re General Tire Rubber Co. Sec. Litig., 726 F.2d 1075, 1084 n. 6 (6th Cir. 1984). "The criteria relevant to the court's decision of whether or not to permit discovery are the nature and amount of previous discovery, reasonable basis for the evidentiary requests, and number and interests of objectors."In re Lorazepam Clorazepate Antitrust Litig., 205 F.R.D. 24, 27 (D.D.C. 2001). "Discovery should be minimal and conditioned on a showing of need, because it will delay settlement, introduce uncertainty, and might be undertaken primarily to justify an award of attorney fees to the objector's counsel." Manual for Complex Litigation, Fourth, § 21.643 (2004).
The burden is higher when a party seeks discovery of settlement negotiations. "It is only proper where `the party seeking it lays a foundation by adducing from other sources evidence indicating that the settlement may be collusive.'" Vollmer v. Publishers Clearing House, 248 F.3d 698, 708 (7th Cir. 2001), quoting Mars Steel Corp. v. Cont'l Ill. Nat'l Bank Trust Co. of Chicago, 834 F.2d 677, 684 (7th Cir. 1987) (Posner, J.). See also In re Domestic Air Transp. Antitrust Litig., 144 F.R.D. 421, 424 (N.D. Ga. 1992); Hemphill, 225 F.R.D. at 620; In re Lorazepam, 205 F.R.D. at 28. "The timing of a settlement in relation to the start of litigation is an important indicator in determining whether collusion occurred." 248 F.3d at 708. In exceptional cases, circumstantial evidence may demonstrate collusion between class counsel and defendants to a degree sufficient to warrant discovery into settlement negotiations. In re General Motors Corp. Engine Interchange Litig., 594 F.2d 1106, 1123-32 (7th Cir. 1979) (noting that the settlement was in violation of a prior court order, that other class counsel were not informed or consulted about the settlement, that the settlement was reached only nine months after the filing of the complaint, that no notice had been mailed to class members, that discovery was incomplete, that the settlement abandoned claims by a subset of class members, and that attorneys' fees provisions generated suspicion that improper motives were at play).
Here, Intervenors admit that they have all of the documents they require other than those directly related to the settlement negotiations. Intervenors' counsel also do not lack knowledge of the issues, since they have nurtured the parallel New Jersey litigation to the trial stage. The only discovery sought by Intervenors, therefore, is that pertinent to the conduct of the settlement negotiations. (Motion at 12-13). However, Intervenors have failed to make any independent showing that the settlement may have been reached as the result of collusion. Intervenors point to three factors: (1) the settlement was announced "on the eve of" Intervenors' New Jersey trial; (2) Intervenors believe that class members are entitled to more money than the settlement provides; and (3) the settlement may release non-contributing parties, such as doctors or doctors' groups, from liability. Taken together, these factors offer little by way of "evidence" of collusion, especially in the light of the many factors demonstrating the opposite. The MDL action has been litigated in this court since 2001, and has been the subject of dozens of heated motions and oral arguments. Issues were taken up on appeal well before Intervenors were joined. The filings of the parties indicate that they conducted extensive discovery, and both sides have submitted lengthy expert reports. Class certification was fully briefed and a decision was pending in this court when the settlement was reached. Finally, based on a thorough review of the settlement, the court has preliminarily found that the settlement is fair.
Motion to Adjourn the Fairness Hearing
Intervenors' main argument for postponing the fairness hearing is that MDL counsel purposefully delayed their responses to Intervenors' discovery requests, leaving the Intervenors with insufficient time to formulate their objections to the settlement. The court will deny the motion to postpone the hearing for several reasons. First, the Intervenors failed to request leave of this court to conduct discovery. The court's Order allowing the Intervenors' motion to intervene stated that the court would decide whether Intervenors would have access to settlement documents on a request-by-request basis. The Intervenors waited until March 4, 2005, over three months after the preliminary approval hearing, to file any motions with this court. The court disagrees with Intervenors that it ever gave them the authority to propound discovery requests without its leave. To the extent that Intervenors feel that Judge Visalli authorized discovery as an extension of the New Jersey action, the proper forum for the enforcement of any such order is in Judge Visalli's court.
Second, Intervenors have no excuse for their delay. Even had this court authorized discovery requests, Intervenors did not file them until February of 2005. There can be no claim that Intervenors did not know of the pendency of the March 15 deadline. The court is unwilling to countenance the further harm to the class, which consists largely of elderly cancer patients, that would be caused by Intervenors' unjustified delay. This is especially true since, as noted previously, Intervenors appear to possess all of the substantive information required to object to the terms of the settlement.
Motions to Quash
Attorneys Theresa Loscalzo (counsel for Aetna), Thomas Sobol (counsel for MDL plaintiffs), and Dan Reidy (counsel for TAP Pharmaceutical), have moved to quash the deposition subpoenas served on them by Intervenors. Similarly, Southeastern Urological Association (SUA) has asked this court to quash a subpoena served by Intervenors. The motions to quash areALLOWED as Intervenors have failed to seek leave of court or to specify why these depositions are necessary to the court's adjudication of the fairness of the settlement. See In re Domestic Air, 144 F.R.D. at 424. Moreover, SUA has provided Intervenors with an affidavit stating that the refund check that is the subject of the subpoena is a refund of an overpayment for services that is totally unrelated to Lupron®. Accordingly, the court is puzzled as to why Intervenors continue in the pursuit of SUA's deposition. Moreover, even if the information had some relevance to the fairness hearing, Kline Specter have not endeavored to satisfy the requirements of the federal and Florida state patient privacy laws. See 45 C.F.R. §§ 164.501 (protected health information includes names of patient and payment history); 164.512(e)(1)(iii) and (iv) (steps to ensure notice to affected patients); FLA. STAT. Ch. 456.057(5)(a)(3) (patient records may not be furnished pursuant to a subpoena without "proper notice to the patient or the patient's legal representative by the party seeking such records.").
In defendants' "Response to Emergency Motions of Intervenors to Compel Discovery and for Adjournment of the Fairness Hearing," TAP asks the court to treat the opposition as a motion to quash the subpoena to its counsel, Dan Reidy. Response, at 15.
Originally, SUA filed its motion to quash with the United States District Court for the Northern District of Florida. SUA has withdrawn its motion from the federal court in Florida and refiled it here.
ORDER
Intervenors' motion to compel discovery is DENIED in all respects. The motions to quash are ALLOWED.
SO ORDERED.