Supreme Court lets Third Circuit ruling on fen-phen evidence stand.

The Supreme Court recently declined to hear an appeal involving a fen-phen class action and let the Third Circuit's ruling stand, allowing plaintiffs to use evidence that the trial court had found to be barred under the terms of a prior settlement-agreement. (In re Diet Drugs Prods. Liab. Litig., 369 F.3d 293 (3d Cir. 2004).)

As part of a multidistrict class action settlement between users of two appetite suppressants--fenfluramine (Pondimin) and dexfenfluramine (Redux)--and the drugs' manufacturer, Wyeth, Inc., class members could opt out of the agreement at different stages. If they opted out initially, they could pursue remedies elsewhere with no restrictions. Class members who opted out later could pursue their claims separately but were prohibited under the agreement from seeking punitive damages.

At issue was whether evidence that these plaintiffs sought to introduce in their trials violated the settlement agreement. In the district court, Judge Harvey Bartle III issued injunctions barring certain evidence--including evidence showing that Wyeth was involved in ghostwriting medical review articles, concealed information, and destroyed documents. (2003 WL 22657123 (E.D.Pa. Oct. 30, 2003).) He found the evidence was relevant only to punitive damages or was "unfairly prejudicial when balanced against probative value." Bartle agreed with Wyeth that the plaintiffs were, in effect, seeking punitive damages, but not by that name.

The plaintiffs argued that the evidence was needed to prove compensatory damages allowed by the settlement. "We're not .just putting that evidence in to artificially inflate the damages; we're trying to win liability," said Michael Miller of Alexandria, Virginia, who represents many of the plaintiffs.

The Third Circuit held that the district court had gone too far. "In effect, the district court trimmed evidence that was probative, but that it viewed as unnecessary and so inculpatory that it might inflame the jury to award damages that would punish Wyeth instead of simply compensating the plaintiffs," Circuit Judge Michael Chertoff wrote. In doing so, the district judge "moved beyond mere enforcement of the damages restriction and affected [the] plaintiff's right to try her permissible liability case."

The Third Circuit vacated the injunctions, which it said "transgressed the limits of federalism and prudence that confine the exercise of federal judicial authority."

George Fleming, a Houston lawyer who is representing plaintiffs in the case, said the decision helps define the role of judges in multidistrict litigation and accurately reflects the settlement agreement. The agreement "envisioned that some people, alter the class action settlement, would go to trial in the state courts, and they would be able to utilize all the evidence they needed to prove negligence and products liability," he said.

Wyeth removed Pondimin and Redux--known as fen-phen when used in combination--from the market in 1997 after the drugs were linked to heart valve damage. The class was certified and settlement approved in 2000. Tens of thousands of cases brought by opt-out plain tiffs still are pending.

"Wyeth takes the position that they're a good company. We take the position that they're not--and that their conduct and their documents show that they're not," Fleming said. "If we can't show the jury that their conduct and their internal documents illustrate that, the plaintiff really doesn't have any hope of prevailing."

The court said that each side "sought to manipulate the settlement agreement in order to optimize its advantage." For example, "Wyeth's counsel resisted admitting, and sought to exclude, evidence that tended to support any liability by Wyeth." The plaintiffs sought to include "information about Wyeth's profits and sales that was clearly irrelevant to negligence liability, causation, or compensatory damages, and that could only be relevant to obtaining punitive damages," Chertoff wrote.

The plaintiffs agreed to omit balance sheets and sales data, but the appeals court allowed the rest of the disputed evidence. The settlement does not include any restriction "on the use of evidence simply because it would be relevant in supporting punitive damages," Chertoff wrote.

To enforce the settlement agreement without restricting evidence, the Third Circuit suggested that the trial court clearly instruct the jury not to award punitive damages, or that the court bifurcate the trial so that liability and damages are determined separately.