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In a huge victory for fen-phen plaintiffs who took advantage of an “intermediate opt-out” provision in the federal class action settlement to pursue their own lawsuits, the 3d U.S. Circuit Court of Appeals has ruled that although the federal judge overseeing the settlement has the power to prevent them from seeking punitive damages, he went too far when he issued a broad injunction that strictly limited the types of evidence they can present at trial. In its 33-page opinion in In re Diet Drugs, 2004 U.S. App. Lexis 10231, a unanimous three-judge panel concluded that Judge Harvey Bartle III of the Eastern District of Pennsylvania erred by imposing evidentiary restrictions that were “overbroad” and “unduly entangled the [federal] court in the management of separate state court proceedings.” The decision vacates significant portions of Bartle’s order, but upholds those that prohibit the opt-out plaintiffs from offering evidence that would be relevant only to a claim for punitive damages. “We agree that the District Court had power under the All Writs Act to supervise and curtail the actions of intermediate opt-out class members in pursuing their individual claims,” 3d Circuit Judge Michael Chertoff wrote. “But we believe that the injunctions imposed some restrictions not fairly comprehended within the terms of the settlement agreement and class notice and, in certain ways, transgressed the limits of federalism and prudence that confine the exercise of federal judicial authority,” Chertoff wrote in an opinion joined by judges Thomas L. Ambro and Julio M. Fuentes. The decision is a victory for attorneys John G. Harkins Jr. and Steven A. Reed of Harkins Cunningham in Philadelphia, who handled the appeal for a group of plaintiffs’ lawyers from Texas and Mississippi. The appeal stemmed from a series of orders Bartle handed down last year after lawyers for Wyeth complained that some plaintiffs’ lawyers were ignoring the settlement’s provisions that said opt-out plaintiffs had given up the right to seek punitive damages. MDL No. 1203. In the settlement, American Home Products, which has since changed its name to Wyeth, agreed to waive all statute of limitations issues so that plaintiffs could decide later whether to opt out and take their chances with a jury. But in return, the settlement also imposes a few strict conditions on the plaintiffs. Most important, the settlement papers said that such plaintiffs would give up their right to seek punitive damages and would be required to limit the focus of their claims to two specific heart-valve conditions allegedly caused by fen-phen: “left-sided mitral valve regurgitation or pulmonary hypertension secondary to mitral valve regurgitation.” Siding with Wyeth, Bartle found that one Texas lawyer had avoided using the word “punitive,” but that his court papers showed he was planning a trial presentation designed to ask the jury to punish Wyeth. Bartle noted that in his “bench brief” filed in Orange County, Texas, District Court, George M. Fleming of Houston’s Fleming & Associates said he intended to present evidence that “tens of thousands of people were injured” by fen-phen, and that Wyeth “acted maliciously and with callous indifference.” The brief also accused Wyeth of “corporate avarice,” and acting with “the goal of increasing profits at the expense of human life.” Bartle concluded that “the language of the bench brief is the language of someone who intends to present a case seeking to punish Wyeth for malicious conduct under Texas law.” The battles over how the Texas case and other upcoming trials should be conducted stretched over several months. In March 2003, Bartle issued a comprehensive order that enforced a series of prophylactic prohibitions against introducing evidence that Bartle said would be relevant only to punitive damages or unfairly prejudicial when balanced against its probative value. The order forbade all opt-out plaintiffs to present evidence that Wyeth had allegedly destroyed documents, or that Wyeth had engaged in “malicious, wanton or other similar conduct.”

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