Diet-Pill Litigation Finds Courts
Frowning on Mass Settlements

by Richard B. Schmitt
Copyright 1998 Dow Jones & Co., Inc.
Reprinted with permission of
The Wall Street Journal (January 8, 1998)

The six million people who took diet pills that have been linked to heart-valve damage and a rare but fatal lung disease should expect to get a big settlement from the manufacturers before too long. Right?

Fat chance.

Just a few years ago, it seemed that judges could resolve even the most complicated mass-injury cases with a single stroke of the pen. Settlements covering thousands of people -- known as class actions -- and involving products ranging from pickup trucks to heart valves regularly grabbed headlines. It seemed so easy that, in a big asbestos case, one federal judge in Texas loaded the lawyers on both sides into a van, drove them to his house and plied them with food and drinks until they came to terms.

Today, the party is over. Courts are rethinking the whole idea of allowing big class-action injury cases to go forward, reflecting a concern that past deals have done more to enrich lawyers than give much to the injured. Defendants are starting to resist massive deals, while challenging suits on scientific and other grounds. The big spoiler came in June, when the U.S. Supreme Court, in a case known as Amchem, threw out a supposedly model asbestos deal, saying it ran roughshod over the rights of thousands of alleged victims.

Back to Court

Even senior U.S. District Judge Louis Bechtle, who has forged more than his share of settlements and was assigned last month to oversee the burgeoning docket of diet-pill cases in federal courts, hasn't been so keen on class actions lately. In October, he carved out a limited settlement with one of the defendants in litigation over a bone screw used in spinal surgery. But he is also ordering hundreds of other individual bone-screw suits back to courts around the country, where they are being set for trial, with no immediate end in sight.

"We are in a new era," says Frank Woodside, a Cincinnati defense lawyer and veteran of several big medical-product cases, adding that companies don't necessarily like the new regimen, either, because it makes it harder to settle liability woes quickly. "It is going to be a mess," he predicts.

Already the diet-pill litigation is shaping up that way, with a deluge of suits triggered by studies linking the once high-flying drugs to heart-valve damage and a rare but fatal lung disease. In September, American Home Products Co., the marketer of two of the drugs, Redux and fenfluramine (the "fen" in the combination that came to be known as fen-phen), withdrew them at the request of the Food and Drug Administration, which soon urged the pills' erstwhile fans to consider medical checkups.

Picking Up the Tab

Since the summer, lawyers have gone all over the map filing several hundred suits. The claims allege, among other things, that the manufacturers were negligent in their testing of the drugs and didn't warn doctors and consumers about the health consequences. Some of the lawyers have even retained as a consultant the Minneapolis scientist whose government-funded research helped provide the evidence that led to the pills' withdrawal from the market. Many of the suits seek relief for people who aren't currently sick, on the theory that the companies should pick up the tab for diagnostic tests to determine whether the pills are causing any hidden problems.

About 100 of the suits seek class-action status, but most of those are filed on behalf of citizens of a single state, on the theory that a more tightly focused case might be more appealing to judges concerned about the problem of resolving differences among state laws.

In contrast with earlier cases, these class-action suits seek watered-down relief as part of a calculated attempt to play down individual differences in the health of plaintiffs that courts might seize upon to dismiss the suits. Instead of damage awards, most of the class actions request only "medical monitoring" -- which would entitle people to a few visits to the doctoras opposed to money in the bank.

Ploy for Big Fees?

But some see these suits as self-serving on the part of class-action lawyers without providing much benefit to consumers. "It is a ploy to leverage a settlement and get big fees," asserts Linda Mullenix, a law professor at the University of Texas. Based on emerging scientific data, even under the worst circumstances, the vast majority of people who have taken the pills will remain healthy, she notes.

The defendants, meanwhile, are giving no ground, calling the allegations unsupported by scientific proof, launching their own studies to rebut the evidence, and, in any event, steadfastly standing by the warnings they gave consumers of the risks of the pills. The litigation is "contrived" by lawyers, says Medeva Pharmaceuticals Inc., a maker of phentermine, the "phen" in the fen-phen cocktail, in a recent court filing. (American Home Products, in a statement, says it "acted responsibly in the marketing of these products according to FDA guidelines.")

But many plaintiffs' lawyers don't seem at all deterred by the new landscape. While class actions may be on the ropes, thousands of individual suits are in the works, including several score already filed that do seek large damage awards. The individual suits, like those seeking class-action status, also allege inadequate testing and warnings by the diet-pill companies, and some name individual physicians and clinics that prescribed the drugs.

A few weeks ago, a standing-room-only crowd of 450 lawyers showed up to learn the basics of diet-pill suits at a conference in Philadelphia organized by a publisher of legal newsletters. The turnout easily exceeded crowds at seminars the group put on when breast-implant suits were hot a few years ago; a second diet-pill conference is already in the works for the spring in Los Angeles.

The lawyers say the diet-pill situation is exactly the sort that cries out for fast relief. "We have six million potential time bombs. Years from now, it will be too late for most of these people," says Daniel Becnel, a Reserve, La., lawyer who says he is representing "thousands" of people in diet-pill lawsuits. "Lawyers have got to come up with innovative new ways of doing things because the existing system is just not working."

Ironically, Judge Bechtle, who is based in Philadelphia, has a reputation for doing just that. Among federal judges, he has been seen for years as the go-to guy in disaster cases, settling suits arising from the 1980 MGM-Grand Hotel fire in Las Vegas in a brisk 18 months, for example. Years later, he also helped fashion a big, if short-lived, settlement in breast-implant cases, scheduling the key round of talks during a major snowstorm, which had the effect of focusing lawyers who couldn't leave town because the airport had shut down.

Clearly, the judge enjoys cracking the whip; he often exhorts foot-dragging lawyers to "saddle up, boys!"

But he has also been in the cradle of the effort to limit class-action suits, and lawyers have noticed a "conservative tilt" in recent years, says John Cummings, a New Orleans plaintiffs' lawyer who was among the group that failed to persuade the judge to treat plaintiffs as a class in the bone-screw case. The settlement in that case was approved only after the judge found that the defendant, AcroMed Corp., would likely be driven out of business without a resolution. Class-action suits are "near impossible" in injury cases, given the federal rules and the recent Supreme Court decision, the judge says in an interview.

Fast Track

Judge Bechtle, 70 years old, declines to discuss the fen-phen suits, but he is putting the case on a fast track; he has already set a preliminary meeting with the lawyers for Jan 15. Despite recent problems with class-action suits, he notes, courts can still have an impact by coordinating the settlement of large numbers of individual suits. "Each one is like inventing the wheel," he adds. "We will have to do it in this one, too."

In the Amchem case, the Supreme Court certainly limited the options of judges in class-action cases, eviscerating a $1.3 billion asbestos deal that some thought a model for swiftly concluding protracted litigation. The high court held that the two sides were trying to settle the case without playing by the normal rules of class actions, which were set up for people who suffered roughly the same harm. The court held that the personal injuries incurred by the asbestos plaintiffs were too distinct to be handled en masse, in a ruling that was hailed in some quarters as a triumph of individual justice.

But the ruling is also ushering in a costly period of balkanized justice, in which injury battles are fought one state at a time, making the relief that people receive dependent on the local rules of engagement. Amchem means "everybody gets their day in court, no matter how inefficient that is," says Joseph Sanders, a professor at the University of Houston law school.

Split on Issues

That could be a big problem in fen-phen, where a big split exists around the country on some of the biggest legal issues in the case. Some plaintiffs' lawyers say the case is a perfect candidate for the award of punitive damages, which are intended to punish or deter corporate wrongdoers. But some states restrict such damages in cases where, as with the diet-pill makers, their products had been cleared in advance by federal regulators.

The class-action lawyers' main claim -- for regular doctor checkups for people who took the diet pills so they can monitor their health -- has been recognized in only about half the states, and even in those the ground rules vary widely.

In Pennsylvania, Judge Bechtle's home turf, the idea has been accepted in theory, if not always in practice. Last October, a longtime colleague of Judge Bechtle's on the Philadelphia federal court threw out a class-action suit on behalf of people claiming to be addicted to cigarettes who wanted to be regularly monitored for lung cancer and other ills. A few months before, a Philadelphia federal appeals court upheld a jury verdict rejecting monitoring for residents living near an old railroad yard who had allegedly been exposed to various toxic chemicals.

In diet-pill cases, "an awful lot of defendants are going to have an awful lot of defenses," says George Berry, a Los Angeles lawyer representing distributors of phentermine who have been named in some of the recent suits.

The manufacturers themselves have shown no early desire to settle. In fact, just the opposite seems to be true, with the most seemingly straightforward issues turning into major skirmishes.

In November, a group of the class-action lawyers asked American Home Products to change its message on a toll-free hot line set up for diet-pill users, which includes information on its recall and how to get refunds on pills that had been previously purchased. The lawyers claimed the information was incomplete and misleading, ignoring warnings issued by the FDA about the need for medical checkups. To help make their case, they trotted out an affidavit from the Minneapolis scientist, Mehmood Ahmad Khan.

Battle for Data

But American Home's lawyers refused the request. Then they issued a subpoena, seeking to take Dr. Khan's deposition and gain access to the raw data used in his study, which hasn't yet been formally published. The plaintiffs' lawyers are resisting, fearing the company wants to unfairly dissect the work before it is complete. "It mucks up the scientific process," contends Gary Mason, a Washington lawyer handling the case.

In the wake of the initial burst of outrage and demand for quick justice, some fen-phen users are getting a little edgy. Most lawyers expect the companies to take at least a few of the cases to court to test the extent of their liability before doing anything too dramatic, and that process may not begin in earnest for at least a year.

"The attorneys are dragging their feet," complains Denise Gordon, a Brooklyn, N.Y., party planner, and former diet-pill user, who says the medications caused her memory loss and shortness of breath. She adds she's ready to go to court now. "Where's the justice?"

Even some of the lawyers say they can't answer that question just yet. Arnold Levin, a Philadelphia class-action specialist with several diet-pill cases on file, says he has never seen a case where the liability seems so clear to him. On the other hand, he adds, "We are all part of a massive experiment."

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