Bowling v. Pfizer

Class Actions — Objections to Proposed Settlements
Case Description: 

Cites: Bowling v. Pfizer, Inc., 143 F.R.D. 138 (S.D. Ohio 1992) (opinion issued during fairness hearings); Bowling v. Pfizer, Inc., 143 F.R.D. 141 (S.D. Ohio 1992) (approving merits of settlement); Bowling v. Pfizer, Inc., 922 F. Supp. 1261 (S.D. Ohio 1996) (opinion regarding attorney's fees), on reconsideration, 927 F. Supp. 1036 (S.D. Ohio 1996), aff'd, 102 F.3d 777 (6th Cir. 1996); see also Bowling v. Pfizer, Inc., 132 F.3d 1147 (6th Cir. 1998) (further appeal concerning attorney's fees); Bowling v. Pfizer, Inc., No. 98-4323 (6th Cir.) (pending appeal concerning class counsel's eligibility for "fees on fees").

Description: This class action involves the approximate 35,000 living patients implanted with an artificial heart valve. That valve has a tendency to fracture (resulting in death two-thirds of the time) because of design and manufacturing defects. The settlement provided for $80 million in cash for class members to settle their "fear" claims that the valve might break, money for research to try to develop a non-invasive diagnostic tool to detect problem valves, money to pay for the removal of risky valves, and a compensation scheme (ranging from $500,000 to $2 million) for U.S. class members whose valves fracture. Foreign claimants will generally, but not always, get less. Class members who suffer a fracture can ignore the automatic compensation scheme and go to court.

Public Citizen Involvement: We participated in the briefing and fairness hearing. We were responsible for significantly enhancing the reoperation benefits and helped (along with other objectors) on numerous other issues. We were also responsible for having the patients' spouses compensated (the settlement originally gave them zero). The defendants came up with $10 million for the spouses. The district court approved the settlement, which we appealed but later settled after obtaining a few additional improvements.

We were the only objectors that challenged the $33 million fee request made by class counsel. We took discovery on that issue (which several plaintiffs' counsel resisted). The various counsel refused to divulge their fee-sharing arrangements, and thus the court, the class members, and the public have no way of knowing whether these agreements--under which, we believe, class counsel agreed to pay large sums to other lawyers--were employed to buy off opposition or were, in reality, reasonable payments for work performed. The fee hearing was held in Cincinnati on September 14, 1995, before a visiting judge from another district appointed by Chief Justice Rehnquist. (The original district judge had recused himself on the fee request because class counsel's wife's nomination to be a federal judge in that district was pending). On March 1, 1996, the court handed down a 61-page opinion, cutting the fee for class counsel and his associated counsel to a total of $10.25 million, thus saving the class members about $20 million. The judge credited many of the arguments we made about the excessive fee request. Class counsel could also apply annually for fees for future work to implement the settlement, under strict guidelines similar to those we suggested. Our request to get access to counsels' secret fee-sharing agreements was denied, however, on the ground that counsel has complete discretion on how to divide fees once they are awarded.

Class counsel appealed the fee award to the Sixth Circuit, arguing that the $33 million request should have been granted. Meanwhile, we appealed the district court's decision permitting the fee-sharing agreements to remain secret. The Sixth Circuit affirmed all around, indicating that the fee award was well within the district court's discretion (and implying that, if anything, the award was too generous), and also holding that there was no obligation to disclose the fee-sharing arrangements now that the settlement was final on its merits. The court of appeals indicated, however, that the fee arrangements might have to be disclosed at the settlement approval stage, where there would be a concern that lead counsel might "buy off" objectors' counsel by cutting the latter counsel in on the fee.

After the Sixth Circuit affirmed the fee award, the original district judge, who had previously recused himself on fee issues, re-entered the picture and ruled on class counsel's first annual fee request for work performed to implement the settlement. The court awarded more than we recommended, but less than class counsel requested. Unfortunately, the court also stated that, over the next nine years, the court would award a set amount of $625,000 per year rather than scrutinize the work performed each year. In our view, this ruling was contrary to sound fee principles and the Sixth Circuit's earlier decision. We appealed that decision, and the Sixth Circuit agreed with us that future fee awards must be based on work actually done on a lodestar basis. The ruling has proved useful, saving the class hundreds of thousands of dollars.

One other fee issue has arisen. Class counsel has argued that he and his co-counsel are entitled to fees for time spent trying to obtain their fees, even when they are largely unsuccessful in doing so. We disagree, believing that in a common fund case such "fees on fees" are not permissible. The district court agreed with class counsel on this issue, and our Sixth Circuit appeal is pending.

Meanwhile, we have been involved in an important aspect of the settlement's implementation. Under the settlement, patients carrying certain high-risk Shiley heart valves are entitled to have valve replacement surgery paid for by the settlement fund (which includes payment for miscellaneous expenses, lost wages, and other items, as well as all reasonable medical expenses). The types of valves that qualify for these benefits are to be set by a panel of medical experts. On two occasions (most recently in late 1999), draft guidelines were issued by the panel and we submitted extensive comments. Over the years, we have argued that the guidelines are too restrictive based on existing epidemiological data comparing risk of fracture with re-operative mortality and morbidity risk. In the most recent round, the expert panel agreed with several of our positions and the guidelines have been significantly liberalized.

Status: As a result of our success in the fee appeals, additional cash payments to class members were made.