369 F.3d 293 | 3rd Cir. | 2004
CHERTOFF, Circuit Judges
Attorneys for Appellants Keith Barlow, et al.
(Opinion filed May 25, 2004) Fred S. Longer, Esq. Arnold Levin, Esq.
John G. Harkins, Jr. (Argued) Michael D. Fishbein, Esq. Steven A. Reed Levin, Fishbein, Sedran & Berman Harkins Cunningham 510 Walnut Street 2800 One Commerce Square Suite 500 2005 Market Street Philadelphia, PA 19106 Philadelphia, PA 19103-7042
Attorneys for Appellees Attorneys for Appellant Plaintiff Class and Class Counsel Linda Smart
Robert D. Rosenbaum, Esq. George M. Fleming, Esq. Arnold & Porter Sylvia Davidow, Esq. 555 12 th Street, N. W. Rand P. Nolen Washington, D.C. 20004 Scott A. Love Fleming & Associates, L.L.P. Peter L. Zimroth, Esq. (Argued) 1330 Post Oak Boulevard, Suite 3030 Arnold & Porter Houston, TX 77056 399 Park Avenue
New York, NY 10022-4690 Mike O’Brien, Esq. Mike O’Brien, P.C. Attorneys for Appellee 1330 Post Oak Boulevard, Suite 2960 American Home Products Corporation Houston, TX 77056
Robert S. Conrad Attorneys for Appellants National Chamber Litigation Center, Inc. Linda Smart, Clara Clark, et al., 1615 H Street, N.W. and Linda Eichmiller, et al. Washington, D.C. 20062 Miriam Nemetz Denise A. Rubin Carl J. Summers Napoli, Kaiser, Bern & Associates Mayer, Brown, Rowe & Maw LLP 3500 Sunrise Highway 1909 K Street, N.W. Suite T-207 Washington, D.C. 20006 Great River, NY 11739 Attorneys for Amicus James H. Pearson The Chamber of Commerce M. Bain Pearson of the United States Pearson & Pearson, L.L.P.
M. Bain Pearson Ellen A. Presby 1330 Post Oak Blvd., Suite 2900 Steve Baughman Jensen Houston, TX 770456 S. Ann Saucer Baron & Budd, P.C. Attorneys for Amicus 3102 Oak Lawn Avenue, Suite 1100 Opt-Out Plaintiffs’ Counsel Dallas, TX 75219 Attorneys for Amicus Class Members Represented by OPINION Baron & Budd, P.C. W. Lewis Garrison
Chertoff, Circuit Judge. Ursula Tracy Doyle Garrison Scott Gamble & Rosenthal, P.C. P.O. Box 11310
This appeal arises out of the Birmingham, AL 35202 settlement of a complex multidistrict federal mass tort class action. As part of
Attorneys for Amicus the complicated settlement agreement, Opt-Out Plaintiffs’ Counsel class members were entitled to opt out at various stages. Those who chose to opt
Leslie A. Brueckner out initially were freed to pursue their Michael J. Quirk remedies elsewhere. Those who did not Trial Lawyers for Public Justice, P.C. opt out at the beginning were afforded 1717 Massachusetts Avenue, N.W., Suite opportunities to opt out “downstream” at 800 an intermediate stage or at the “back-end.” Washington, D.C. 20036 But those downstream opt-out rights were not absolute. Rather, members who
Attorneys for Amicus elected to delay an opt-out beyond the Trial Lawyers for Public Justice initial stage were informed that they would not have unfettered ability to litigate all resolving millions of claims in a way that claims elsewhere. Instead, among other affords deserving claimants some measure things, these so-called intermediate and of relief while preserving a defendant back-end class “opt-outs” were precluded business as a viable entity that can actually under the settlement agreement from pay compensation. See In re Gen. Motors pursuing punitive, exemplary, or multiple Corp. Pick-Up Truck Fuel Tank Prods. damages. Liab. Litig., 55 F.3d 768, 784 (3d Cir.
1995). All claimants benefit from such an The questions presented here arise outcome, because each has a fair from the District Court’s efforts to enforce opportunity at recovery. Later claimants the terms of the settlement against need not fear that the fund will be intermediate opt-out class members now exhausted before their turn comes, or that litigating their claims in various state the defendant will undertake a scorched courts. What appellee class counsel and earth defense that consumes assets appellee defendant fear is that counsel for otherwise available for compensation, or intermediate opt-outs will undermine the simply turn off the spigot by filing for efficacy of the settlement by evading or bankruptcy. The defendant, too, obviously circumventing the punitive damages benefits from a limit to liability that restrictions to which they are bound under ensures corporate survival. For this type the agreement. Appellants, who are of global settlement to work, however, the individual intermediate opt-outs now district court must successfully discharge pressing claims in state court, complain the herculean task of enforcing the terms that the District Court has gone beyond of the class settlement agreement against enforcing the plain restrictions of the the constant pressure of some settlement settlement and has taken steps that will class members who, having obtained part hamper or defeat plaintiffs’ ability to of a loaf through the agreement, now pursue claims that are not barred by the pursue alternative avenues to obtain settlement. additional slices. Otherwise, individual In one sense, the issues framed in class members’ activities “would be the appeal reflect efforts by creative disruptive to the district court’s ongoing counsel on both sides to interpret and settlement management and would apply settlement terms so as to gain jeopardize the settlement’s fruition.” advantage in the individual lawsuits Carlough v. Amchem Prods., Inc., 10 F.3d brought by intermediate opt-outs in 189, 204 (3d Cir. 1993). various state courts. B ut larger
As appealing as the efficiencies of institutional and fairness issues are at a nationwide mass tort class settlement stake. may be, however, the Supreme Court has The nationwide class settlement is repeatedly cautioned that they cannot a device that holds the promise of override fundamental principles of due process or faithful application of federal courts to intrude into the domain of controlling law. See Ortiz v. Fibreboard state courts administrating their own laws Corp., 527 U.S. 815, 845-48 (1999); implicates a host of sensitive concerns and Amchem Prods., Inc. v. Windsor, 521 U.S. is therefore limited. See, e.g., Rizzo v. 591, 620 (1997); Phillips Petroleum Corp. Goode, 423 U.S. 362, 379-80 (1976); v. Shutts, 472 U.S. 797, 812 (1985). Huffman v. Pursue, Ltd., 420 U.S. 592, Because a class settlement disposes of the 600-01 (1975). rights of many people who are absent from
In addition, as with any injunction, the proceeding and only virtually traditional principles of equity apply. The represented by class counsel, due process terms of any injunction, for example, must considerations such as adequacy of notice be commensurate with the violation the and adequacy of representation have court seeks to remedy. And practical special force. Ortiz, 527 U.S. at 847-48. considerations such as manageability and As we observed in our opinion in Georgine enforceability militate against an order that v. Amchem Prods., Inc.—in a passage enmeshes a district court in protracted endorsed by the Supreme Court, see 521 micromanagement of litigation in a state U.S. at 628—inadequacies in the quality of court. These principles of equity notice raise “serious fairness concerns.” 83 counseling restraint take on particular F.3d 610, 634 (3d Cir. 1996). significance when issues of federalism are Moreover, when a federal court involved. When federal courts are seeks to effectuate a settlement agreement confronted with requests for relief that by way of enjoining state court require interference with state civil proceedings, additional constraints qualify functions, “they should abide by standards its authority. We have held that district of restraint that go well beyond those of courts have the authority under the All private equity jurisprudence.” Huffman, Writs Act, 28 U.S.C. § 1651, to protect 420 U.S. at 603. their jurisdiction by enjoining state court
All of these concerns come to bear proceedings that interfere with a judicially on our resolution of the appeal from the approved settlement. See In re Prudential District Court’s orders in this case. For the Ins. Co. Sales Practices Litig., 314 F.3d reasons stated in this opinion, we agree 99, 103-05 (3d Cir. 2002) (hereinafter that the District Court had power under the Prudential II); In re Diet Drugs Prods. All Writs Act to supervise and curtail the Liab. Litig., 282 F.3d 220, 233-39 (3d Cir. actions of intermediate opt-out class 2002) (hereinafter Diet Drugs I). But the members in pursuing their individual Anti-Injunction Act, 28 U.S.C. § 2283, and claims. But we believe that the injunctions federalism concerns circumscribe this imposed some restrictions not fairly power and require that it be “construed comprehended within the terms of the narrowly” and invoked sparingly. Diet settlement agreement and class notice and, Drugs I, 282 F.3d at 233-34. The power of in certain ways, transgressed the limits of federalism and prudence that confine the Following the FDA’s issuance of exercise of federal judicial authority. the public health warning and W yeth’s
withdrawal of the diet drugs from the Emphatically, the District Court is market, approximately eighteen thousand empowered to protect its jurisdiction and individual lawsuits and over one hundred effectuate the settlement agreement. In putative class actions were filed in federal this case, however, elements of the and state courts around the country. Most protective orders in question must be plaintiffs alleged that the drugs caused refashioned to be consistent with fair class them to suffer from VHD. A small notice, to respect appropriate boundaries in fraction claimed the drugs caused them to relation to state courts, and to accord with s u f f e r f ro m pr i m a r y p u l m o n a ry t r a d it i o n a l p r i n c i p l e s o f e q u i t y hypertension (“PPH,” a rare and often fatal jurisprudence. lung disease), neurotoxic injuries, or other I. assorted injuries. In December of 1997, the Judicial Panel for Multidistrict
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Litigation transferred all the federal The history of this litigation was actions to Judge Louis Bechtle in the previously detailed in our opinion in Diet United States District Court for the Eastern Drugs I, 282 F.3d at 225-29. The cases District of Pennsylvania, creating marshaled before the District Court arose Multidistrict Litigation 1203 (“MDL
1203”). [2] from the marketing of two appetite suppressants, fenfluramine (sold as
In April of 1999, Wyeth began “Pondimin”) and dexfenfluramine (sold as “global” settlement talks with plaintiffs in “Redux”). Appellee American Home the federal action together with several Products [1] removed the drugs from the plaintiffs in similar state class actions. market in September of 1997, after data The parties reached a tentative settlement came to light suggesting a link between agreement for a nationwide class in use of the drugs and valvular heart damage November of 1999. Soon thereafter, on (“VHD”) and after the United States Food November 23, 1999, the District Court and Drug Administration (“FDA”) issued conditionally certified a nationwide a public health advisory alert. By that settlement class and, concurrently, time, four million people had taken preliminarily approved the settlement. Pondimin over the previous two years, and two million people had taken Redux. The Court scheduled a fairness
hearing for May 1, 2000 on class [1] American Home Products changed certification and final settlement approval. members who are medically and otherwise On August 28, 2000, the District Court eligible opportunities to opt out at a later time, at an intermediate stage. [4] Those who entered a final order certifying the class and approving the settlement. choose to opt out at an intermediate stage
receive no compensation but are permitted to pursue most of their “settled claims”
B. individually, subject to certain restrictions. The settlement agreement provides, in The settlement agreement embraces relevant part: all persons who took Pondimin or Redux. Wyeth undertook to pay up to $3.75 billion [Intermediate opt-outs] may (present value) to fund benefits to n o t s e e k p u n i t i v e , members of the class. Settling class exemplary, or any multiple members agreed in return to release W yeth damages against [Wyeth and from all claims arising out of their other released parties]; . . . . ingestion of the drugs, other than claims [Intermediate opt-outs] may based on PPH brought by individuals who not use any pre vious met certain medical criteria. verdicts o r j ud g m ents
against [Wyeth], or factual The agreement was crafted to avoid findings necessary to such an all-or-nothing choice at the threshold. verdicts or judgments, for Rather, several opt-out points were purposes of establishing envisioned at various places along the claims or facts in order to continuum of the settlement period. obtain a verdict or judgment Putative class members who wished to opt . . . . Nor may [an out entirely from the settlement, foregoing intermediate opt-out] . . . all benefits and any restrictions, were seek to introduce into obliged to file their opt-out notices by evidence against [Wyeth], March 30, 2000. Drug users who chose for any purpose, such a not to opt out initially became settlement verdict, judgment or factual class members, bound not to assert “settled finding. claims” against Wyeth except as the agreement permits. [3]
Joint App. 616-17. The agreement allows class In return for intermediate opt-outs’ acceptance of the limitation on punitive her physician in 2002, alleging claims of and multiple damages, Wyeth agreed not negligence, products liability, improper to assert any statute of limitations, laches, warnings, and fraud. Clark’s final or claims-splitting defenses against amended petition seeks recovery of allowed individual claims. compensa tory da ma ges , inc luding
damages for pain, disfigurement, mental In approving the settlement, the anguish, and medical expenses. Likewise, District Court expressly relied in part on Smart’s petition alleges claims against the finding that “class members had an Wyeth and her physician for actual opportunity to preserve their punitive damages for pain, disfigurement, anguish, damages claims by exercising the initial and medical expenses arising from state opt out.” In re Diet Drugs Prods. Liab. tort claims of negligence, failure to warn, Litig., No. 99-20593, 2000 WL 1222042, and design defect. at *49 n.22 (E.D. Pa. Aug. 28, 2000) (“Memorandum and Pretrial Order No. Meanwhile, in state court in 1415,” hereinafter “PTO 1415”). The Mississippi, class member Lonelle James, District Court also observed that the and others, also filed claims against Wyeth waiver of punitive damages was not an after exercising their intermediate opt-out inappropriate “trade-off,” since “punitive rights. James was selected as the first trial damage claims are often illusory” and plaintiff. Her claims were based on state subject to judicial limitation or reduction law theories of negligence, strict liability as a matter of fairness to the defendant. Id. for design and m arketing defect, In addition, the District Court expressly inadequate and improper warnings, retained jurisdiction to “enforce the misrepresentation, and breach of implied Settlement in accordance with its terms; warranty. James sought compensatory . . . and to enter such other and further damages—including damages for pain and orders as are needed to effectuate the terms m e n t a l a n g u i s h , l o s t e a r n i n g s, of the Settlement.” Id. at *72. disfigurement, physical impairment,
medical expenses, and loss of enjoyment This Court affirmed PTO 1415 of life—from both Wyeth and her without opinion. In re Diet Drugs Prods. physician. Liab. Litig., 275 F.3d 34 (3d Cir. 2001). Plaintiffs’ state court claims were
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pleaded in terms that appeared to abide by A number of class members who the terms of the settlement preclusion of did not exercise their initial opt-out rights punitive and multiple damages. But the elected to opt out at the intermediate stage. actual conduct of the litigation raised Plaintiffs Clara Clark and Linda Smart, justifiable fear in the District Court, and both represented by the Texas law firm of among the counsel for defendant and the Fleming & Associates, filed lawsuits in class, that the plaintiffs were seeking to Texas state court. Clark sued Wyeth and obtain through the back door what they were barred from receiving through the any medical condition of front. Reviewing the state court plaintiff caused by Wyeth submissions by Clark’s counsel, the other than mitral valve District Court found—and this is regurgitation [VHD ] or undisputed— that Clark’s case summary pulmon ary hyperten sion was “replete with statements leading secondary to mitral valve ineluctably to the conclusion that such regurgitation. punitive damages are being sought, even
Id. at ¶¶ 2-3. though not by that name.” In re Diet Drugs Prods. Liab. Litig., No. 99-20593, Soon thereafter counsel Fleming’s Memorandum and Pretrial Order No. other client, Linda Smart, found her state 2625, at 2 (E.D. Pa. filed October 16, court case brought to the attention of the 2002) (hereinafter “PTO 2625”). Clark’s District Court. The District Court noted case summary expressed the intent to offer that Fleming was obviously aware of the evidence concerning “‘tens of thousands ruling in the Clark litigation, but of people [who] were injured’”; Wyeth’s nevertheless had submitted a proposed jury guilt of “‘corporate avarice’”; and its charge containing inflammatory language alleged “‘goal of increasing profits at the and references to destruction of evidence expense of human life.’” Id. at 2-3. Worse and a cover up. The District Court yet, another submission (in a perhaps rejected the contention that this evidence Freudian slip) averred that, among other was admissible on issues properly before things, “‘[p]laintiff seeks punitive the state trial court and concluded that damages.’” Id. at 4. Before the District
to allow a class member to Court, Clark’s counsel disavowed that introduce into evidence or to claim as an error. The District Court argue the elements of a concluded, however, that Clark’s counsel punitive damage claim on was seeking to “circumvent” the punitive the condition that he or she damages bar and enjoined him from: does not specifically request introducing any evidence or punitive damages by name. making any statement . . . would create a giant before or argument to the loophole. court or jury related directly
In re Diet Drugs Prods. Liab. Litig., No. or indirectly to (a) punitive, 99-20953, Memorandum and Pretrial exem plary or multiple Order No. 2680, at 7 (E.D. Pa. filed d a m a g e s , h o w e v e r December 11, 2002) (hereinafter “PTO d e s c r i b e d ; a n d ( b ) 2680”). Consequently, the Court issued an malicious, wanton or other injunction similar to that in the Clark case. similar conduct of Wyeth, however described; . . . [or] Only a few weeks later, Wyeth
returned to District Court once again to that he will not introduce at address Clark. Reviewing Clark’s the trial any reference to amended trial exhibit list, the District Wyeth’s size, financial Court observed that it demonstrated condition, or worth. He “counsel’s motive to infect the trial with must also include as part of improper bad conduct evidence concerning his statement his trial Wyeth.” In re Diet Drugs Prods. Liab. exhibits, witness list, and Litig., No. 99-20593, Memorandum and points for charge . . . . Pretrial Order No. 2717 at 3 (E.D. Pa. filed
Id. at ¶ 2. January 29, 2003) (hereinafter “PTO 2717”). At the same time—and Back in Texas, the trial judge in the significantly—the District Court quoted Clark case held an extensive pretrial the state trial judge, who expressed his conference. On February 5, 2003, State commitment to assure “‘a fair verdict that District Judge Dennis Powell issued an is an approximation of the damages and extensive thirteen-page pretrial order. not a result of them [the jury] being Judge Powell’s carefully reasoned and incensed.’” Id. at 4. The District Court written opinion exhibited understanding of concluded that counsel Fleming had the effect of the settlement preclusion and merely withdrawn certain submissions and a determination to honor it. The State substituted others in an effort to District Judge perceptively observed that circumvent the prior injunctions. “not surprisingly, the plaintiff wants to try
the case in a manner that will maximize The District Court held Fleming in the chances of a significant recovery, and, civil contempt and issued an order, PTO not surprisingly, the defendant wants to try 2717, enjoining Clark and her counsel the case in a manner that will minimize the from commencing the state trial until chances of a significant recovery.” Joint Fleming submitted, and the Court App. 1281. Accordingly, the state court approved, a statement under oath that he flatly prohibited evidence relevant only to would obey PTO 2625. The order punitive or exemplary damages and provided: evidence relevant to other issues but That statement must declare unduly prejudicial or misleading. At the that with respect to Wyeth’s same time, Judge Powell said he would conduct he will not inject
not require the plaintiff to into the case any evidence, “try the case in a vacuum of statement, or argument, the defendant’s design,” directly or indirectly, that which could result in the connotes more than simple jury improperly speculating negligence or defective about liability issues and design without fault. The evidence (or the lack statement must also declare thereof) and factoring such concession] contains no speculations into causation finding that the injury was i s s u e s o r d a m a g e f o r e s e e a b l e b y t h e evaluations. defendant, or that the injury
was foreseeable from the Id. at 1282. d e f e c t i v e l y d e s i g n e d A good deal of the state pretrial product. The law requires order is devoted to analyzing Wyeth’s proof, the plaintiff pleaded purported willingness to stipulate or it, the defendant refused to concede certain issues so as to remove admit it was conceded, but them from the case. This offer—which then the defendant does not was brandished by Wyeth before the want the plaintiff to put on federal District Court during the Fleming evidence on that element. contempt proceeding that led to PTO
Id. at 1288-89. 2717—presumably would have eliminated any proper incentive for Clark to offer The state trial court noted an inflammatory evidence as part of a additional problem: the proposed negligence or design case. But the State concessions would place the court in a Distric t J ud ge, a rm ed with his dilemma. If certain issues were taken understandably greater familiarity with from the case with no actual admission by Texas tort law, found Wyeth’s apparent Wyeth, it would require the court to concessions to be less than they appeared. instruct the jury that defendant would be As he pointed out, the proposed automatically liable if the plaintiff’s injury concessions, which would supposedly were caused by Wyeth’s drug, without leave only causation and damages in the regard to fault. But this is a matter that case, would actually do no such thing. In could affect jury voir dire, Judge Powell the words of Judge Powell: explained, and might require striking
potential jurors who could not return a Likewise the defendant verdict on damages without “considering created the im pression whether absolute liability law was fair or before [U.S. District] Judge not.” Id. at 1290. Bartle that “they [Wyeth] also admitted that the injury For these reasons, Judge Powell was foreseeable,” and that declined to accept Wyeth’s concessions in “the injury is foreseeable their tendered form, although he remained f r o m t h e d e f e c t iv e l y open to a stipulation of outright admission d e s i g n e d p r o d u c t . ” on one or more of the elements of any Nonetheless, contrary to the cause of action. “No doubt some evidence representations to both that would be relevant to liability would c o u r t s , the [proposed also be relevant to causation, but this
submission would greatly simplify the memorandum to eliminate the phrase “the evidence . . . .” Id. at 1291. public is increasingly concerned and afraid
of the drug.” In re Diet Drugs Prods. Liab. Evidently, the parties found this Litig., No. 20593, Memorandum and invitation unappealing, and the action Pretrial Order No. 2828 (E.D. Pa. filed moved again to federal court in April 8, 2003) (hereinafter “PTO 2828”). Philadelphia. In March of 2003, the District Court conducted a lengthy Second, the order bars Clark and conference and reviewed and ruled on her attorneys from “introducing any voluminous deposition excerpts and evidence, making any statement before or proposed trial exhibits to determine argument to the court or jury, related whether the settlement agreement barred directly or indirectly to”: Clark from offering them into evidence at
[1] punitive, exemplary or trial. The District Court entered an order multiple damages, however that enforces a series of prophylactic described; prohibitions against introducing evidence deemed relevant only to punitive damages [2] malicious, wanton or or unfairly prejudicial when balanced other similar conduct of against probative value. Wyeth, however described;
. . . First, the order forbids plaintiffs from offering into evidence a list of [3] any medical condition of specific exhibits and deposition testimony. plaintiff caused by Wyeth And, except as specifically allowed by the other than left-sided mitral accompanying memorandum, it prohibits valve regurgitation or counsel from “making any statement or pulmo nary hypertension argument to the court or jury related secondary to mitral valve directly or indirectly” to the forbidden regurgitation; evidence. The District Court ruled, for
. . . . example, that Clark (1) could attack the credibility of certain medical review [4] Wyeth’s profits, size or articles by proving they were funded by financial condition; Wyeth, but not by showing that they were
[5] the amount or size of actually ghostwritten at the behest of Wyeth’s sales of diet drugs Wyeth; (2) could not offer any evidence of or other products; concealment of information or destruction of documents; (3) must redact portions of [6] Wyeth’s marketing or documents suggesting problems with promotion of diet drugs to Wyeth’s diligence in reporting serious the extent that Wyeth placed side-effects of the drugs to the FDA; and marketing or promotion (4) must redact an internal Wyeth ahead of health or safety
concerns; plaintiff James in her case in Mississippi state court. Appellants timely appealed [7] any deception or any PTO 2680 (Smart), PTO 2828 (Clark), and d e s t r u c t i o n , h i d i n g , PTO 2883 (James). overwriting, or deliberate miscoding of documents or In October of 2003, while those information by Wyeth; appeals were pending, Wyeth returned to
federal court seeking an injunction against [8] any involvement by other intermediate opt-outs—including Wyeth in the ghostwriting of Linda Eichmiller, also represented by articles; Fleming & Associates—pursuing claims in [9] primary pulmonary Georgia and Mississippi state courts. hypertension; Wyeth argued that counsel from Fleming
& Associates were seeking to introduce [10] neurotoxicity; and evidence in violation of PTO 2828 even [11] any other disease, though they had agreed to comply with illness or condition or PTO 2828 in other cases pending our persons suffering from any review of the order on appeal. other disease, illness or
Wyeth asserted that counsel sought condition caused by Redux to intr o d u c e evide nce re gard ing or Pondimin except for left- PPH—specifically, a label for Pondimin sided valvular heart disease noting that some users had suffered from or pulmonary hypertension PPH and a “black box warning” regarding second ary to left-sided PPH that the FDA was considering in valvular heart disease. connection with the approval of Id. at 1-3 (emphasis added). So, for Redux—even though plaintiffs were only example, the District Court allowed Clark claiming they suffered from VHD. The to prove that relevant warnings were District Court entered an injunction similar inadequate or wrong but said Clark “may to PTO 2828, Pretrial Order 3088 (“PTO not prove or argue that any such failure 3088”), and explicitly barred plaintiffs was deliberate or intentional.” Id. at 9. from seeking to introduce the PPH
evidence at trial. The District Court vacated its previous orders, PTO 2625 and PTO 2717, Plaintiffs timely appealed PTO in light of the more recent and 3088, and it was consolidated by orders of comprehensive PTO 2828. And, on June this Court with the other appeals from the 10, 2003, the District Court issued Pretrial District Court’s earlier similar orders. We Order 2883 (“PTO 2883”), which have jurisdiction under 28 U.S.C. § essentially incorporated the restrictions of 1292(a)(1). PTO 2828 and enforced them against
II.
A distasteful picture of the state the District Court’s orders for three court litigation emerges, displaying what primary reasons. First, they argue that the some might consider the excesses of our orders run afoul of the Anti-Injunction Act adversary justice system. Each side sought and All Writs Act. Second, they contend to manipulate the settlement agreement in that the Younger abstention doctrine order to optimize its advantage. Wyeth’s required the District Court to refrain from counsel resisted admitting, and sought to enjoining the state court proceedings. exclude, evidence that tended to support Finally, appellants argue that the orders any liability by Wyeth. Plaintiffs’ counsel, contravene the terms of the settlement notably Fleming, repeatedly skirted the agreement, are unmanageable, and run settlement and the District Court’s orders, afoul of principles of federalism and plainly seeking to inject prejudicial matter comity. into the state court cases, including
“The standard of review for the information about Wyeth’s profits and authority to issue an injunction under the sales that was clearly irrelevant to Anti-Injunction Act and the All-Writs Act negligence liabi lity, causation , or is de novo.” In re Prudential Ins. Co. of compensatory damages, and that could Am. Sales Practices Litig., 261 F.3d 355, only be relevant to obtaining punitive 363 (3d Cir. 2001) (internal citations damages. omitted) (hereinafter Prudential I). When The District Court properly reviewing a district court’s decision observed that, were plaintiffs’ counsel whether to abstain, “the underlying legal permitted to flout the limits of the questions are subject to plenary review, settlement, the but the decision to abstain is reviewed for
an abuse of discretion.” Grode v. M ut. floodgates will be open and Fire, Marine & Inland Ins. Co., 8 F.3d 953, the prohibition against 957 (3d Cir. 1993). “We review the terms punitive damages in the of an injunction for an abuse of discretion, court approved Settlement underlying questions of law receive de Agreement will be nothing novo review, and factual determinations but a dead letter, with are reviewed for clear error.” Prudential I, p o t e n t i a l l y d i r e 261 F.3d at 363. Finally, we apply plenary c o n s e q u ence s for th e review to a district court’s construction of settlement as a whole. a settlement agreement, but we review a PTO 2717. Faced with this prospect, the district court’s interpretation of a District Court entered the injunctions at settlement agreement for clear error. issue in this appeal in order to protect the Coltec Indus., Inc. v. Hobgood, 280 F.3d settlement against guerrilla warfare from 262, 269 (3d Cir. 2002) (citing In re the opt-out lawyers. Cendant Corp. Prides Litig., 233 F.3d 188,
Appellants now urge us to vacate 193 (3d Cir. 2000)). [5] by loose statutory construction.’” Chick Kam Choo v. Exxon Corp., 486 U.S. 140,
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146 (1988) (quoting Atl. Coast Line R.R. The All Writs Act empowers v. Bhd. Of Locomotive Eng’rs, 398 U.S. district courts to “issue all writs necessary 281, 287 (1970)). or appropriate in aid of their respective
The “protect or effectuate its jurisdictions and agreeable to the usages judgments” exception, known as the and principles of law.” 28 U.S.C. § 1651. “relitigation exception,” is “founded in the The authority the All Writs Act imparts to well-recognized concepts of res judicata district courts is limited, however, by the and collateral estoppel.” Id. at 147. “The Anti-Injunction Act, which prohibits relitigation exception was designed to injunctions “to stay proceedings in a State permit a federal court to prevent state court except as expressly authorized by litigation of an issue that previously was Act of Congress, or where necessary in aid presented to and decided by the federal of its jurisdiction, or to protect or court.” Id. effectuate its judgments.” 28 U.S.C. § 2283. We approved an injunction against
state court proceedings under the The two statutes act in concert, and relitigation exception in Prudential I. That “[i]f an injunction falls within one of [the case arose from the class settlement of Anti-Injunction Act’s] three exceptions, claims brought by Prudential policyholders the All-Writs Act provides the positive arising from allegedly fraudulent sales authority for federal courts to issue practices. Class members were free to injunctions of state court proceedings.” In choose settlement for some policies and re Gen. Motors Corp. Pick-Up Truck Fuel not for others. The notice of settlement Tank Prods. Liab. Litig., 134 F.3d 133, specifically advised each potential class 143 (3d Cir. 1998); see also Carlough, 10 member, however, that acceptance of the F.3d at 201 n.9. The pretrial injunctions at settlement would prevent any future issue here were not expressly authorized assertion of claims that had been or could by statute, so they may be justified only have been asserted with respect to any under the Anti-Injunction Act’s “in aid of policy for which the class member chose its jurisdiction” or “protect or effectuate its to settle. judgments” exceptions. These exceptions “are narrow and are ‘not [to] be enlarged Two class members accepted the
settlement for several policies but opted out for two others. They then brought a [5] We discussed at length the Florida state action to recover on the two distinction between contract construction excluded policies, basing their claims in and contract interpretation in Ram Constr. part on facts that also supported claims Co. v. Am. States Ins. Co., 749 F.2d 1049, arising from settled policies. In effect, 1053 (3d Cir. 1984). plaintiffs sought to undermine the the “in aid of jurisdiction” exception. settlement’s claim preclusion order.
“[A]n injunction is necessary in aid The District Court enjoined the of a court’s jurisdiction only if ‘some plaintiffs in the Florida action from “using federal injunctive relief may be necessary evidence common to the purchase and to prevent a state court from so interfering sale” of the settled policies. 261 F.3d at with a federal court’s consideration or 368. The injunction effectuated the disposition of a case as to seriously impair settlement agreement’s bar against new the federal court’s flexibility and authority claims based on “facts and circumstances to decide that case.’” Diet Drugs I, 282 underlying” the claims that had been F.3d at 234 (quoting Atl. Coast Line R.R., settled and released. Id. at 361. The order 398 U.S. at 294). One instance where we was designed to prevent new claims that have determined that a federal court may were based in whole or part on settled and enjoin state court proceedings to protect its released claims. The straightforward jurisdiction is when a federal court is injunction language mirrored the familiar “entertaining complex litigation, especially rules of claim and issue preclusion that are when it involves a substantial class of often applied by courts. persons from multiple states, or represents
a consolidation of cases from multiple This case differs from Prudential I, districts.” Id. at 235 (citing Carlough, 10 because under the settlement agreement F.3d at 202-04); see also In re Gen. opt-outs’ settled claims do not go to Motors, 134 F.3d at 145. judgment; rather, their claims proceed in state courts with limits on the type of Here, as in Prudential II, the damages they can seek. Thus the District District Court retained “continuing and Court had to enforce a damages exclusive jurisdiction . . . to administer, preclusion, not a claim preclusion. This supervise, interpret and enforce the was obviously more complicated because Settlement in accordance with its terms.” permitted claims could give rise to both Joint App. 398. In Prudential II, we allowable compensatory damages and explained: forbidden punitive damages.
T h e settlem ent h e r e Consequently, the concepts of issue represented a herculean and claim preclusion are not entirely effort to provide a fair and apposite here. We need not determine consistent framework for the whether the District Court had the resolution of millions of authority to effectuate the settlement claims. The comprehensive agreement’s punitive damages provision procedures implemented for under the Anti-Injunction Act’s relitigation this purpose were integral to exception, however, because in any case it this effort. Permitting had the power to issue the injunction under continued litigation of these 4226, at 551 (2d ed. 1995). [6]
claims would “unsettle” what had been thought to be
B.
settled, and would disrupt c a r e f u l l y c o n s t r u c t e d Any court determining whether to procedures for individual issue an injunction must consider several d i s p u t e r e s o l u t i o n . factors that guide and constrain its Allowing comprehensive s e t t l e m e n t s t o b e undermined in this way [6] Appellants raise the issue of would undeniably deter Younger abstention, the prudential similar settlements in the corollary to the Anti-Injunction Act’s future. statutory circumscription of federal courts’ ability to enjoin state court proceedings,
314 F.3d at 105; see also United States v. s ee Younger v. Harris, 401 U.S. 37 (1971), Alpine Land & Reservoir Co., 174 F.3d but we need address it only briefly. 1007, 1015 (9th Cir. 1999) (finding that Although Younger’s application to civil the “in aid of its jurisdiction” exception
proceedings between two private parties applies when district court retains remains relatively unclear, a consistent jurisdiction over a settlement agreement).
prerequisite is that “an important state As we have described above, the interest is implicated.” See Anthony v. punitive damages release is a central pillar Council, 316 F.3d 412, 418 (3d Cir. 2003). of the settlement agreement. Allowing We discern nothing about the state civil state court actions to run afoul of that proceedings at issue here—personal injury provision would fatally subvert it and suits sounding largely in state tort render the agreement (and the Court’s law—that can fairly be thought to jurisdiction) nugatory. The District implicate “important state interests.” The Court’s ability to give effect to that instances where the Supreme Court and provision is necessary in aid of its this Court have applied Younger to state jurisdiction. civil proceedings—such as state contempt proceedings, Juidice v. Vail, 430 U.S. 327 Yet “the fact that an injunction may (1977); judicial proceedings enforcing issue under the Anti-Injunction Act does state court orders, Pennzoil Co. v. Texaco, not mean that it must issue.” Chick Kam
Inc., 481 U.S. 1 (1987); and child support Choo, 486 U.S. at 151. Specifically, contempt proceedings, Anthony, 316 F.3d principles of comity, federalism, and at 421—involved proceedings qualitatively equity always restrain federal courts’
different from those at issue here. This ability to enjoin state court proceedings. much was inherent in our decision in See Mitchum v. Foster, 407 U.S. 225, 243 Prudential I and Prudential II, where we (1972); 17 Charles A. Wright & Arthur R.
upheld orders enjoining state tort Miller, Federal Practice and Procedure § proceedings. equitable authority. See Temple Univ. v. of its remedy in order to fit White, 941 F.2d 201, 214-15 (3d Cir. the nature of the violation 1991); Shields v. Zuccarini, 254 F.3d 476, which it has found. 482 (3d Cir. 2001). Of primary
941 F.2d at 215. The proper tailoring of importance, a party seeking an injunction injunctive relief is especially important must show that there is some legal when principles of federalism are transgression that an injunction would involved. See Rizzo, 423 U.S. at 371 remedy. [7] (“[A]ppropriate consideration must be In addition, any injunction a court given to principles of federalism in issues must be commensurate with the determining the availability and scope of wrong it is crafted to remedy—it is a equitable relief.”). In other words, “settled rule that in federal equity cases “federal courts should always seek to ‘the nature of the violation determines the minimize interference with legitimate state scope of the remedy.’” Rizzo, 423 U.S. at activities in tailoring remedies.” Stone v. 378 (quoting Swann v. Charlotte- City and County of San Francisco, 968 Mecklenburg Bd. of Educ., 402 U.S. 1 , 16 F.2d 850, 861 (9th Cir. 1992). (1971)); see also Forschner Group, Inc. v.
Here, the putative transgression that Arrow Trading Co., 124 F.3d 402, 406 (2d Wyeth sought to remedy through an Cir. 1997) (“It is well-settled that the injunction was appellants’ violation of the essence of equity jurisdiction has been the settlement agreem ent. Thus, two power to grant relief no broader than interrelated considerations guide our necessary to cure the effects of the harm review: (1) the proper construction of the caused by the violation”). As this Court settlement agreement’s punitive damages stated in Temple Univ. v. White, provision; and (2) the scope of the District While the scope of a district Court’s injunctions. In other words, we court's equitable powers to must construe the settlement agreement effect a remedy is broad, the and then determine the extent to which the relief which a district court District Court’s injunctions prohibited may grant can be no broader actions that contravened the terms of the than that necessary to settlement. An over-inclusive injunction corre c t the vio lation. would run afoul of well-established Indeed, a federal court is principles of equity and federalism. required to tailor the scope
1. The decision of a potential settlement class member to remain with [7] Put differently, a party seeking a the class or to opt out entirely at the permanent injunction must “succeed on threshold is a fateful one. The average the merits.” See, e.g., Temple Univ., 941 class member has had no hand in F.2d at 215. negotiating the terms of the settlement. As informed putative class members of the demonstrated in Prudential I, the consequences if they signed onto the class settlement’s preclusive effect may be and exercised intermediate opt-out rights: broad and strict. By waiving an initial opt-
If you exercise the out, the class member surrenders what may Intermediate Opt-Out right, be valuable rights, in return for you give up the right to countervailing benefits. In this case, receive further benefits important information for these potential u n d e r t h e S e t t l e m e nt class members included the availability, Agreement, but you may benefits, and disadvan tage of the choose to pursue in court intermediate opt-out right. any legal claims you may This opt-out choice raises a ha ve again st [W ye th] significant issue of fairness. As in relating to your use of Georgine v. Amchem Prods., the Pondimin and/or Redux. individual class members here have claims However, it is important to “that frequently receive huge awards in the understand that if you tort system.” 83 F.3d at 633. They can exercise the Intermediate hardly knowingly waive some of their tort Opt-Out right, and choose rights without a clear notice of what they to bring a lawsuit against are waiving. They may be entirely [Wyeth], your lawsuit will dependent on the class notice for this be subject to certain information. That is why we paid careful restrictions including the attention to the language of the class following : notice, which detailed the extent of the
! If you exercise your released claims, in upholding the Intermediate Opt-Out right injunction that enforced the preclusive and choose to bring a provisions of the settlement in Prudential lawsuit against [Wyeth], you I. 261 F.3d at 366-67. may not seek punitive or It follows that the preclusion multiple damages. language in the Diet Drugs class notice ! If you exercise your and settlement agreement must, in order to Intermediate Opt-Out right avoid due process concerns, be strictly and choose to bring a construed against those who seek to lawsuit against [Wyeth], you restrict class members from pursuing may only assert a legal individual claims. Cf. United States v. claim based on the heart Albertini, 472 U.S. 675, 680 (1985) valve condition of the (“Statutes should be construed to avoid r e l e v a n t D i e t D r u g constitutional questions . . . .”). Here, the Recipient that was [properly following language in the class notice d i a g n o s e d w i t h i n a [Wyeth and other released prescribed time period]. parties], but may only assert
a claim . . . based on the ! If you exercise your heart valve of the relevant Intermediate Opt-Out right Diet Drug Recipient which and choose to bring a w a s di ag no se d b y a lawsuit against [Wyeth], Qualified Physician as FDA both you and [Wyeth] will P o s i t i v e b y a n be subject to certain Echocardiogram . . . . additional restrictions that are desc ribed in the [2] With respect to [any Settlement Agreement. In intermediate opt-out] who order for [Wyeth] to be initiates a lawsuit against subject to these restrictions, any of the Released Parties such as waiver of any statute within one year from the of limitations defense, you d a t e o n w h i c h t h e must bring your lawsuit, if Intermediate Opt-Out right you choose to do so, within is exercised, [W yeth] shall one (1) year from the date not assert any defense based on which you exercise your on any statute of limitations Intermediate Opt-Out right. or repose, the doctrine of
laches, any other defense Wyeth Br., Ex. A at 12. The predicated on the failure to corresponding preclusive language in the timely pursue the claim, any s e t t l e m e n t a g r e e m e n t r e g a r d i n g defense based on “splitting” intermediate opt-outs appeared in three portions:
unfair business practices, [1] [An intermediate opt- deceptive trade practices, out] may pursue all of his or Unfair and Deceptive Acts her Settled Claims (except and Practices (“UDAP”), for those claims set forth in and other similar claims subparagraphs (e) and (g) of whether arising under I.53 [8] ), against Section
statute, regulation, or judicial decision; of Section VII.F.3. [9] a cause of action, any defense based on any release
Joint App. 615-17. signed pursuant to the Settlemen t A g r e e m en t, Three restrictions emerge. First, the and/or any other defense potential class members were told that based on the existence of the intermediate opt-outs will be allowed to S e ttle men t A g r ee m en t, “pursue all . . . Settled Claims” for timely excep t to th e exte nt diagnosed VHD , except for those p r o v i d e d h e r e i n . pertaining to consumer fraud or business [Intermediate opt-outs] may n o t s e e k p u n i t i v e , exemplary, or any multiple [9] Section VIII.F.3 provides: damages against [Wyeth or other released parties] . . . .
The Parties to the Settlement . . . shall not seek
[3] [Intermediate opt-outs] to introduce and/or offer the may not use any previous terms of the Settlement verdicts o r j ud g m ents Agreement, any statement, against [Wyeth], or factual transaction or proceeding in findings necessary to such connectio n with th e verdicts or judgments, for negotiation, execution or purposes of establishing implementation of this claims or facts in order to Settlement Agreement, any obtain a verdict or judgment statements in the notice against [Wyeth] under the documents appended to this doctrines of res judicata, Settlement Agreement, collateral estoppel or other stipulations, agreements, or doctrines of claim or issue admissions made or entered preclusion. Nor may into in connection with the [intermediate opt-outs] seek fairness hearing or any to introduce into evidence finding of fact or conclusion against [Wyeth], for any of law made by the Trial purpose, such a verdict, Court, or otherwise rely on judgment, or factual finding. the terms of this Settlement, L a w s u its in i t ia t e d by in any judicial proceeding, [intermediate opt-outs] shall except insofar as it is be subject to the provisions necessary to enforce the terms of the Settlement.
Joint App. 704. loss. Specifically included are claims for expressly forbidden were sought. such open-textured injuries as mental
S i g n i f i c a n t l y , e v i d e n t i a r y anguish, pain and suffering, and loss of restrictions are explicitly addressed in the consortium. Second, Wyeth agreed not to relevant provision of the agreement. The assert any defenses based on class agreement forbids prior adverse findings members’ failure to assert a timely claim or judgments against Wyeth from being and class members “may not seek punitive, placed in evidence for any purpose, as well exemplary, or any multiple damages.” as a wide range of evidence regarding the Finally, the provision addressed certain settlement agreement itself. This implies evidentiary restrictions: (1) intermediate to the reader of the agreement that the opt-outs may not “seek to introduce into drafters knew how to identify evidence evidence” earlier verdicts or judgments restrictions when they wished to do so. against Wyeth, or the factual findings There is no restriction, however, placed on underlying them; and (2) neither party can the use of evidence simply because it offer evidence regarding the settlement would be relevant in supporting punitive agreement, including evidence regarding damages. One deduces from the absence its negotiation or implementation. of such an evidentiary restriction that the The plain language is telling. The agreement meant only to block the i n t e r m e d i a t e o p t - o u t p r o v i s i o n specified type of damages award and not comprehensively promised that claims for types of evidence that are relevant to a wide variety of losses can be sought, so permissible awards but might also be long as they are for FDA-positive VHD. relevant to punitive damages. There is no limitation on VHD-related
Appellees seek to rebut this claims or causes of action. Moreover, language by referring to colloquy during there is no expression that opportunities to the fairness proceedings that they claim recover for mental anguish, pain, or loss of further refines the meaning of the punitive consortium will be impeded or hampered. damages preclusion. At an October 2002 If the drafters were concerned these type status hearing, one negotiator stated his of recoveries might become vehicles for understanding that sub rosa punitive awards, they might have limited them; they did not. the essence of this bargain
was that there would be no Instead, the authors of the punitive damages in these settlement specifically excluded only downstream opt out cases “punitive, multiple, and exemplary and that does not simply damages” from the laundry list of mean no punitive damages. allowable recoveries. This reinforces the W h a t [ W y e t h ] w a s natural conclusion that claims for VHD bargaining for, clearly, they were not restricted by the settlement, so were saying . . . we were long as forms of damages other than those willing to pay for what from any and all causes of juries dete rmine were actions, claims, damages, caused by our diet drugs e q u i t a b l e, l e g a l a n d without reference to some a d m in i s tr a t iv e r e l i e f , additional element that is interest, demands or rights, awarded by reference to of any kind or nature fault evidence. whatsoever . . . that have
been, could have been, may Joint App. 2149. This might be pertinent be or could be alleged or in construing the agreement as between asserted now or in the future parties who actually participated in the . . . on the basis of, negotiations. See, e.g., Bohler-Uddeholm connected with, arising out Am., Inc. v. Ellwood Group, Inc., 247 F.3d of, or related to, in whole or 79, 114 (3d Cir. 2001). But due process in part, the Released considerations counsel against binding Transactions [i.e., settled absent potential class members to policies under the settlement understandings that were not made express agreement]. in the class notice or settlement agreement. And we are particularly wary of binding 261 F.3d at 367 (emphasis omitted). In class members through statements made other words, any cause of action or claim after the settlement was finalized and after that was in any way related to a settled they had to choose whether to opt out. policy—even a claim that “could have
been” raised on the basis of such a Appellees urge that our decision in policy—was barred. This release language Prudential I disposes of appellants’ claims was indeed, as the class notice explicitly because they read that decision to hold that warned potential class members, “intended “when class members settle and release to be very broad.” Id. at 366. And the some of their claims— but preserve other District Court’s injunction in that case claims from the settlement—that release tracked the language of the class notice, bars the plaintiffs from offering evidence forbidding class members from bringing a relating to the released claims in any lawsuit “based on or related to the facts subsequent trial of the preserved claims.” and circumstances underlying the claims Wyeth Br. 36. But we think that the and causes of action” that were settled in settlement preclusion in Prudential I is the class action. Id. at 361. To block new different from this one, and different in a claims “based on facts” underlying other meaningful way. settled claims is simply to effectuate the The class notice in Prudential I class notice language releasing claims that informed class members that, in return for “could have been brought” based on the accepting settlements on some policy settled transactions. In other words, the claims, they would release the defendants release language in the Prudential settlement was typical general release limitation as if it were a limit on the language that prevents new causes of manner in which opt-out plaintiffs can action from overlapping with settled pursue their claims for compensation. causes of action with a “common nucleus Under this view, a plaintiff may show of operative facts.” Id. at 367. unreasonable behavior to recover
compensation for negligence, unless the Contrast the language in the Diet behavior was really unreasonable (so that Drugs release. The Diet Drugs release is it might support punitive damages). Put not structured as a broad claims another way, Wyeth urges that very strong preclusion, but as a bar only to the evidence of fault must be diluted so that it magnitude and type of relief. The only would not arouse the jury to award claims -based limitations are that (1) the punitive damages, if punitive damages claims must be based on a timely could be awarded—which they cannot be. diagnosed VHD injury, and (2) the claim In the absence of an explicit description of may not be for consumer or business this novel type of restriction in the losses. VH D-base d claims f or settlement agreement, we decline to compensation, including for pain, anguish, construe the agreement to imply an and loss of consortium, are not precluded evide nc e -dilution re quirement for or limited in any way. Indeed, the compensation claims that are clearly settlement agreement specifically contains preserved for the opt-out plaintiffs. Wyeth’s renunciation of any defense based on “‘splitting’ a cause of action.” What is 2. limited is the type and extent of damages
All of this is not to say that the for such VHD-claims. District Court was powerless to restrain If we were to accept Wyeth’s opt-out plaintiffs from evading the invitation to read this damages limitation prohibition against exemplary damages. as if it were a broad Prudential-type Even under a strict construction of the release of all claims that could be the basis settlement agreement, the District Court for a punitive damages award, we would was entitled to prevent circumvention of face an anomaly. Since the predicate to the damages limitation. The District Court any punitive or multiple damages award is acted consistently with the settlement a finding of tortious liability, Wyeth’s agreement, for example, when it enjoined logic would foreclose opt-out plaintiffs the introduction of certain types of from proving liability at all. That e v i d e n c e r e l e v a n t o n l y t o t h e interpretation would make the settlement impermissible purpose of obtaining agreement internally contradictory. punitive damages. Appellants conceded
this at oral argument. Tr. 9. So, as Of course, Wyeth does not press so appellants acknowledged, the District absurd a contention. But, in effect, Wyeth Court correctly banned evidence relating wants us to read this punitive damages to Wyeth’s size, profits, and sales figures, which is not probative of liability, intentional—would be probative of a causation, or compensation. Id. at 10, 13. failure to warn. And intentional or
reckless behavior is often relevant to But PTO 2828 swept far more showing conduct below the reasonable broadly, prohibiting Clark from offering standard of care necessary to make out a evidence that was relevant—indeed, highly case of negligence. [11] probative—on issues of negligence and failure to warn. [10] The District Court reasoned that such evidence, if suggestive [11] Certain categories of intentional as well of intentional misconduct, fell conduct—specifically, intentionally within the punitive damages bar because it tortious conduct—do not support a claim could support a punitive verdict or because of negligence in certain jurisdictions. it could inflame the state jury. The test Compare Dairy Road Partners v. Island that the District Court seemed to employ Ins. Co., 992 P.2d 93, 114-15 (Haw. was to place “off-limits” evidence that was 2000), Ins. Co. of N. Am. v. Miller, 765 not “necessary” to prove a claim to A.2d 587, 601 (Md. 2001), and Jamison v. compensation. PTO 2828, at 8. Excluded Encarnacion, 281 U.S. 635, 641 (1930) under this approach were pieces of with Landry v. Leonard N. East Ins. Co., evidence that “suggest malfeasance on the 720 A.2d 907, 910 (Me. 1998), Am. Nat’l part of the company that goes beyond mere Fire Ins. Co. v. Schuss, 607 A.2d 418, 423 negligence,” id. at 27, or that “connotes (Conn. 1992), and Walters v. Blackshear, more than negligence.” Id. at 32. 591 N.E.2d 184, 185 (Mass. 1992). The Intentional or reckless behavior distinguishing factor between intentionally may be highly probative of elements of and negligently tortious conduct is that an negligence or defective design cases. The intentional tortfeasor intends to bring failure to report adverse actions to the about the harm that results from his F D A — w h e t h e r a c c i d e n t a l o r actions. See Schuss, 607 A.2d at 423. Thus even in those jurisdictions where negligence and intentional torts are
A few examples suffice to illustrate the problem. The District Court correctly recognized that the use and content of a “black box” on the drug warning label
that produces unintended consequences “goes to the issue of failure to warn.” Id. at cannot be a foundation for a negligence 8. Accordingly, it authorized Clark to seek action.”); see also 57A Am. Jur. 2d to prove that warnings were “inadequate or Negligence § 30 (2004). As one major wrong and th at certain relevant treatise explains:
information was not reported or not reported on a timely basis to the FDA.” Id.
[I]ntentional conduct and at 9. But the Court held that to avoid even intentional risk-taking “implicat[ing]” punitive damages, Clark i s a n a l y z e d u n d e r could not prove that any such failure was negligence rules unless the intentional. As a consequence, the District defendant has a purpose to Court struck deposition testimony from invade the plaintiff’s Wyeth’s Associate Director of Safety interests or a certainty that Surveillance specifically admitting that such an invasion will occur. valvular heart disease reactions to the . . . The defendant who drugs were not reported to the FDA. Id. at intentionally takes a risk 33. The District Court also banned may or may not be testimony from other witnesses that they negligent; negligence will fought strenuously against any “black box” depend upon the seriousness warning. PTO 2828, at 31. This evidence of the risk and the reasons certainly tended to prove that the for taking it. defendant “knows or should know of a . . . . potential risk of harm presented by a In spite of the fact that it is product but markets it without adequately conduct and risk, not mental warning of the danger,” which is the state that determines definition of a “marketing defect” under negligence, the defendant’s Texas tort law. See Sims v. Washex Mach. state of mind is not Corp., 932 S.W.2d 559, 562 (Tex. Ct. App. necessarily irrelevant in a 1995); see also Jackson v. Johns-Manville negligence case. The Sales Corp., 750 F.2d 1314, 1318-20 & n.8 defendant’s knowledge of (5 th Cir. 1985) (en banc) (Mississippi law). facts that make a given act But under PTO 2828, this evidence was risky (as distinct from his placed out of bounds. attitude) is frequently important on the negligence
Similarly, the District Court placed issue. off-limits any evidence that mentioned medical side-effects other than VHD
Dan B. Dobbs, The Law of Torts § 116 (2001). itself. [12] This evidence was not offered to have no other purpose than to obtain support claims for these side-effects, since punitive damages.” Id. at 20. Evidence plaintiffs did not suffer from them. tending simply to show that Wyeth wanted Rather, they were offered for other to successfully market the diet drugs and purposes, such as to prove duty to warn. make a profit selling them would not be Evidence of the totality of the risks of relevant to show, for example, that Wyeth injury may be admissible under state law acted negligently. But excessive concern to show the scope of the duty to warn, with the image and marketing of the diet even if the individual plaintiff has not drugs at the expense of making efforts sustained all the injuries in question. See toward determining whether they were Dartez v. Fibreboard Corp., 765 F.2d 456, safe could be probative as to whether 468 (5th Cir. 1985). Nevertheless, the Wyeth breached a duty of care towards the District Court ruled out testimony about plaintiffs. delays in changing warning labels on
In effect, the District Court trimmed Pondimin if the warnings concerned PPH. evidence that was probative, but that it The Court justified this ruling on the viewed as unnecessary and so inculpatory ground that plaintiffs did not have these that it might inflame the jury to award side-effects, so that this evidence would damages that would punish Wyeth instead “have the effect of unfairly arousing the of simply compensating the plaintiffs. The jury against Wyeth.” PTO 2828, at 7. District Judge effectively adopted the role T h e D i s t r ic t C o u r t a l s o of a trial judge balancing probative value categorically prohibited plaintiffs from against unfair prejudice. Cf. Fed. R. Evid. offering evidence of “Wyeth’s marketing 403. By doing that, he moved beyond or promotion of diet drugs to the extent mere enforcement of the damages that Wyeth placed marketing or promotion restriction, and affected plaintiff’s right to ahead of health or safety concerns.” Id. at try her permissible liability case. 6. The Court took this step on the grounds
A trial is more than a matter of that “such evidence and argument can presenting a series of individual fact questions in arid fashion to a jury. The jury properly weighs fact questions in the [12] This ruling was not based on context of a coherent picture of the way claim preclusion. Intermediate opt-outs the world works. A verdict is not merely were limited to recovery for VHD but the sum of individual findings, but the were not barred from recovery for PPH, a assembly of those findings into that picture side-effect that is distinct from VHD . See of the truth. As the Supreme Court Joint App. 572-73, 616; PTO 1415, at 70;
instructed in Old Chief v. United States, In re Diet Drugs, No. 99-20953, evidence “has force beyond any linear Memorandum and Pretrial Order No.
scheme of reasoning, and as its pieces 3065, at 5 (E.D. Pa. filed October 10, come togeth er a na rrative gain s 2003). momentum, with power not only to a different judge. support conclusions but to sustain the
Appellees argue that Clark has no willingness of jurors to draw the cause to complain about losing access to inferences, whatever they may be, some evidence relevant to liability because necessary to reach an honest verdict.” 519 she was offered, and declined, Wyeth’s U.S. 172, 187 (1997). Unduly sterilizing a stipulation not to contest the element of party’s trial presentation can unfairly breach of duty. Wyeth Br. 46. Notably, hamper her ability to shape a compelling Wyeth did not offer to concede negligence and coherent exposition of the facts. or defective warning before the jury. It Of course, at trial this process of proposed, instead, a stipulation, in the evidentiary balancing is nuanced and form of a conditional double negative, that contextual. For that reason, “excluding would present two specific interrogatories evidence under Fed R. Evid. 403 at the to the jury—cause in fact and damages. pretrial stage is an extreme measure.” Joint App. 3371-72. Hines v. Consolidated Rail Corp., 926
This p a r s im o n i o u s — i n d e e d , F.2d 262, 274 (3d Cir. 1991). In In re illusory—offer was understandably Paoli R.R. Yard PCB Litigation, we rejected by Clark’s counsel. As State explained: District Judge Powell found, it simply [A] court cannot fairly misconceived Texas tort law, and would ascertain the po tential have created confusion for the jury. But relevance of evidence for beyond that, restricting plaintiff to a sterile Rule 403 purposes until it concession and the right to litigate two has a full record relevant to particularized questions would seriously the putatively objectionable disadvantage her at trial (as skilled counsel evidence. We believe that for Wyeth surely recognized). Jurors Rule 403 is a trial- oriented might well wonder at the fairness of rule. Precipitous Rule 403 determining causation and damages in a determinations, before the vacuum devoid of any suggestion of challenging party has had an liability or negligence. Intermediate opt opportunity to develop the out plaintiffs never agreed to relinquish record, are therefore unfair their right to try their allowed claims and improper. effectively in state court.
916 F.2d 829, 859 (3d Cir. 1990) (internal Moreover, removing critical issues citation omitted). In short, the District of fact from the jury without an adequate Court’s broad order prematurely struck the explanation runs the risk of distorting jury balance between probativeness and deliberations. The absence of proof that prejudice, and did so for trial proceedings would normally be expected can cause the yet to occur in another court system before jury to draw unwarranted inferences. “[T]here lies the need for evidence in all appropriateness of injunctive relief, the its particularity to satisfy the jurors’ court must give consideration to the expectations about what proper proof practicality of drafting and enforcing the should be.” Old Chief, 519 U.S. at 188. order or judgment. If drafting and For this reason, unless a stipulation enforcing are found to be impracticable, adequately concedes an element of proof, the injunction should not be granted.”). it can prejudice the party carrying the The District Court’s orders raise practical burden of proof. In this case, the proposed and institutional concerns in this regard. concession by Wyeth would, as Judge
PTO 2828, as we have seen, is not Powell saw, “raise a substantial possibility limited to protecting the core of the that one or more jurors would be settlement’s damages limitation by influenced by the lack of evidence and the forbidding plaintiffs from seeking such lack of explanation.” Joint App. 1290. damages in their pleadings or presenting Insofar as the injunctions barred the evidence relevant only to such damages. use of evidence that was relevant to Rather, the order enforces a series of genuine issues in the state trial—apart prophylactic prohibitions that affect from punitive, multiple, or exemplary plaintiffs’ ability to obtain permissible damages—they placed restrictions on opt- compensatory damages. As written, PTO out plaintiffs that went beyond the fair 2828—which is enforceable, of course, by terms of the settlement agreement. the sanction of contempt—would make it
very difficult for plaintiff to try the case 3. that is preserved to her under the Finally, we note that injunctions settlement agreement. must be enforceable, workable, and Numerous exhibits and portions of capable of court supervision. See Lemon testimony are excluded definitively, v. Kurtzman, 411 U.S. 192, 200 (1973) regardless of the purpose for which they (“[E]quitable remedies are a special blend are offered. By way of example, the of what is necessary, what is fair, and what District Court nixed deposition testimony is workable.”); United States v. Paramount about efforts by Wyeth employees to avoid Pictures, Inc., 334 U.S. 131, 161-66 (1948) a “black box” warning. It is not clear what (vacating injunction that implicated the recourse a plaintiff would have if, during “judiciary heavily in the details of business the course of trial, a W yeth employee were management” in order for supervision “to to assert that Wyeth was always be effective”); Rutland Marble Co. v. scrupulous and forthcoming on warning Ripley, 77 U.S. 339, 358-59 (1870) (“It is issues. By its terms, the order would manifest that the court cannot superintend appear to forbid plaintiff from offering the the execution of such a decree. It is quite deposition testimony for purposes of impracticable.”); Restatement (Second) of rebuttal or impeachment. Nor, on the face Torts § 943 cmt. a (“In determining the of the order, would plaintiff be justified in introducing evidence of failure to warn considerations were discussed in meetings regarding PPH on the ground that it about warnings? negates the trial testimony that W yeth is
Again, in the usual case counsel always forthcoming. Normally, a trial faced with such a question would ask the judge might well conclude such testimony trial judge for guidance either by way of opened the door for previously out-of- motion or sidebar. But PTO 2828 would bounds evidence. PTO 2828 does not vest make those questions fodder for the the state judge with that discretion. District Court, without a full appreciation Presumably, the parties—and the state of the flow of the testimony. Counsel court—would have to contact the District might have to seek, for example, Court and seek a modification of PTO telephonic sidebars with the District Court. 2828. The order creates a highly intrusive and Even more awkward is the broadly unworkable regulatory scheme. framed prohibition against offering Moreover, we emphasize, the rules evidence “related directly or indirectly” to imposed by PTO 2828 are not merely such topics as wanton or similar conduct enforceable by the usual mechanism of the by Wyeth, or Wyeth’s marketing of diet trial court’s sustaining objections or, drugs “to the extent Wyeth placed perhaps, granting a mistrial. Here, a marketing or promotion ahead of health or viola tion o f t he ru le — a w rong safety concerns.” Almost any proof guess—could result in a punitive sanction. related to negligence can be regarded as There will be strong pressure on counsel to “related indirectly” to wanton conduct. steer well clear of the line and possibly Hypothetically, imagine that Clark calls a forego offering admissible evidence that witness who will testify that Wyeth Clark would normally expect to get before officials were made aware of VHD the jury. dangers and reached a decision that no warning should be published. PTO 2828 This order is even more problematic could be read to preclude this evidence insofar as it bans counsel from making because it is “indirectly related” to argument “to the court” regarding these “wanton or similar conduct.” Of course, topics. Read literally (as counsel must), the evidence is also highly probative of this would prevent Clark from even negligence. arguing to the state judge, outside the
presence of the jury, that certain evidence Another hypothetical: Suppose falls within or outside the scope of PTO Wyeth calls a witness who testifies that 2828. We do not think the District Court decisions about warnings are made only actually meant to preclude such argument. after careful evaluation of scientific Indeed, it is hard to see what purpose evidence. Would PTO 2828 allow Clark’s would be served—and easy to see the attorney to cross-examine on (still problems that would arise— in restraining hypothetical) instances where marketing counsel from making arguments in state supervised by the District Court in this court. The point is that the District Court’s case is a landmark effort to reconcile the understandable effort to lock the door rights of millions of individual plaintiffs against impermissible attempts to obtain with the efficiencies and fairness of a exemplary damages led to an order that class-based settlement. Critical to this seriously interferes with Clark’s rights to effort was the allowance of downstream try her case. opt-outs, so that potential class members
were not faced with an all-or-nothing Implicit in our discussion as well is decision at the threshold. To make this the fact that PTO 2828 disrupts the state allowance meaningful, the settlement had court’s ability to manage its own judicial to protect Wyeth against its largest fear, process. As the previous illustrations potentially ruinous punitive damage suggest, PTO 2828 would remove from the awards. At the same time, it had to allow state judge a whole panoply of decisions intermediate opt-out plaintiffs to have a that he or she would normally be fair chance to litigate their claims and authorized—indeed obliged—to make. obtain those damages that were expressly But the process the order leaves is unclear. preserved. Some of the exclusions in the order are left to be applied by the state judge. Others are The District Court had, and still not. It is not clear, for example, whether has, the power to effectuate and protect the the state judge would determine whether terms of this bargain. But in doing so, the evidence is “related indirectly” to Court must be mindful of two limiting forbidden topics. considerations: (1) opt-outs must be able
to fairly litigate the claims preserved to As we have held, the District Court them under the agreement, and (2) had the unquestioned right to effectuate intrusion into state court proceedings the restraints of the settlement through an should be minimized. order limiting opt-out plaintiffs’ conduct in ancillary state proceedings. But we Accordingly, the District Court believe that that power must be exercised erred in imposing the evidentiary in a manner that minimizes entanglement restrictions of PTO 2828 because those in the state judge’s ability to supervise restrictions were overbroad and impinged judicial proceedings in his own courtroom. on plaintiffs’ rights under the settlement, Similarly, the order should be fashioned in and they unduly entangled the Court in the a manner that presumes that the state judge management of separate state court is capable and willing to enforce that proceedings. PTO 2828’s pre-trial settlement without close and intrusive evidentiary restrictions survive these supervision by the District Court. limiting principles only insofar as they
prohibit opt-outs from offering evidence
III.
that is relevant exclusively to forbidden The settlement approved and damages. See PTO 2828, ¶¶ (3)(a)-(b). As appellants themselves concede, an We note that although we have injunction to that effect is entirely limited the District Court’s ability to permissible. prohibit the parties from offering certain
evidence in their state court trials, the state Specifically, the following portions courts are presumably mindful of the of PTO 2828 must be vacated: (i) the obligation to honor the settlement categorical evidentiary restrictions in agreement, and to ensure that the parties Subsections (2)(b)-(c) and Subsections do not evade it. That will undoubtedly (3)(c)-(h), insofar as they preclude impel the state courts during trial to plaintiffs from introducing evidence exclude evidence when its prejudicial relevant to proving their VHD claims in effect (namely its tendency to inflame the state court; and (ii) the limitations on jury and improperly inflate compensatory exhibits and deposition testimony in damages) outweighs its probative value. Section (4), insofar as they preclude We are confident, particularly in light of plaintiffs from introducing evidence the previous state court orders in the relevant to proving their claims in state record, that the state courts can and will court. PTO 2828 is consistent with this capably manage this task. opinion insofar as it prohibits plaintiffs from “introducing any evidence” relevant In addition, our opinion leaves the exclusively to “punitive, exemplary or District Court free to consider other multiple damages, however described,” measures, aside from imposing evidentiary which specifically includes evidence of restraints, that will effectuate the “(a) Wyeth’s profits, size or financial limitations of the settlement agreement. condition”; and “(b) the amount or size of The District Court might consider, for Wyeth’s sales of diet drugs or other example, ordering language to be included products.” in a stipulation or proposed jury instruction
that would make it clear to the jury that PTO 2828 also runs afoul of this exemplary damages may not be awarded. opinion insofar as it prohibits the parties Or, the Court could direct the parties to from “making any statement or argument agree to a bifurcated trial—where damages to the court.” But the order is consistent are determined apart from liability—in the with this opinion insofar as it prohibits the event that the state court were to deem it parties from “making any statement or advisable. argument to the . . . jury related directly” to evidence relevant only to punitive Moreover, while we understand the damages. [13]
desirability of taking steps to protect the settlement agreement before a trial occurs,
the District Court is not without recourse restrictions to which intermediate opt-outs in the event that a verdict is rendered that are bound. But the Court’s power has to appears to grant punitive damages under be exercised consistent with the terms of the guise of some other damage category. the notice and agreement on which The precise circumstances that might arise potential class members relied at the outset are too speculative to discuss with of the process. Moreover, it has to be specificity. But post-trial remedies should applied to the state courts with appropriate not be categorically rejected. [14] consideration for limitations of equity,
federalism, and comity. We recognize that the District Court’s task is a difficult one, particularly Accordingly, we will vacate the in light of the patent efforts by plaintiffs’ Court’s injunctions and remand with counsel to press against the damages instructions to modify them in accordance
with this opinion.
NOTES
[2] Judge Bechtle has since retired, its name to Wyeth in March of 2002. We use the name Wyeth for the remainder of and Judge Harvey Bartle, III , now presides over MDL 1203. the opinion.
[3] “Settled claims” generally
[4] Some class members who did not included all conceivable claims arising out exercise an intermediate opt-out reserved of purchase and use of the diet drugs but a so-called “back-end” opt-out right. specifically excluded, among other things, Back-end opt-out rights are not at issue in claims based on PPH. this appeal.
[8] Subparagraphs (e) and (g) of . . . Section I.53 include, as part of the g. medical screening and definition of “Settled Claims,” all claims monitoring, injunctive and for damages or any other remedies for: declaratory relief[.] e. consumer fraud, refunds, Joint App. 572.
[10] We center our discussion on PTO mutually exclusive, intentional conduct 2828 because it was the most may be relevant to negligence so long as it comprehensive of the District Court’s does not involve intent to bring about the orders and appears to have established a harmful result. See Landry, 720 A.2d at baseline set of guidelines for all 910; Fowler V. Harper et al., The Law of intermediate opt-outs litigating their Torts § 16.9 n.2 (“An intentional act may claims in state courts, regardless of be negligent.”) (citing Dartez v. Gadbois, whether they were parties to PTO 2828. 541 S.W.2d 502 (Tex. Civ. App. 1976)); Counsel for Eichmiller et al., for example, see also Ghassemieh v. Schafer, 447 A.2d agreed to comply with PTO 2828 even 84, 89-90 (Md. Ct. Spec. App. 1982) though it did not specifically bind them. (“We see no reason why an intentional act
[13] Although we specifically address PTO 2828, the most comprehensive order, modify all orders at issue in this appeal so we expect that the District Court will that they are consistent with this opinion.
[14] At oral argument, we raised the question whether the District Court had power after a verdict to limit or remit a damage award that seemed so excessive that it amounted to exemplary damages. We particularly focused on the Rooker- Feldman doctrine. This decision is not the proper place to consider fully the extent to which the Rooker-Feldman doctrine might circumscribe the District Court’s ability to effectuate the agreement’s punitive damages provision after a jury has awarded a plaintiff damages. We note, however, that where “a federal court’s proper exercise of its jurisdiction to manage its cases has the secondary effect of voiding a state court determination, it is not a review of that order for purposes of the Rooker-Feldman doctrine.” Diet Drugs I, 282 F.3d at 242. On the other hand, the Full Faith and Credit Act, 28 U.S.C. § 1738, precludes a federal court from reconsidering a state court’s judgment as to the preclusive effect of a federal court judgment. See Parsons Steel, Inc. v. First Ala. Bank, 474 U.S. 518 (1986).
