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Hoormann v. SmithKline Beecham Corporation (Paxil Pediatric Settlement)

Topic(s): Class Actions – Objections to Proposed Settlements
Status: open
Date Of Involvement: 02/22/2007

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Along with the Prescription Access Litigation Project, Public Citizen filed objections challenging the proposed settlement to a class action for economic-damages against GlaxoSmithKline (GSK), the maker of Paxil. The suit had alleged that Paxil was dangerous and ineffective when taken by children under 18. Under the agreement, GSK will set aside $63.8 million into a settlement fund to pay class members' out-of-pocket expenses, attorneys' fees, and expenses. Public Citizen objected to the settlement, arguing that class members would not receive the full value of the settlement fund because requirements for proof of purchase and limitations built into the settlement agreement for distribution of the funds. In addition, because the settlement agreement was silent about what would happen to any funds remaining at the end of the claims period, we urged the court to award any remaining money as a cy pres distribution so that funds intended for the class would not revert to the defendant. Finally, class counsel requested a fee award of $16 million, and we urged the court to withhold awarding fees until the end of the claims period, at which time the value of the settlement to the class could be better assessed.

Because of our objections, the parties significantly improved the settlement. For example, class members without documentation of their Paxil purchases were able to receive up to $100, instead of $15 as provided under the settling parties’ initial proposal.