Out of state Paxil class member objects to Madison County settlement

Steve Gonzalez Nov. 10, 2006, 4:30am

Stephen Tillery

Dwight Davis

Madison County Associate Judge Ralph Mendelsohn allowed a Florida woman to intervene in a recently settled Paxil class action over the objection of attorney Stephen Tillery.

But Mendelsohn, who held a hearing Wednesday, denied her motion to vacate the anti-suit injunction.

Barbara Jane Rose of Florida filed for leave to intervene so she could ask Mendelsohn to vacate his Oct. 6 order which stops competing suits against GlaxoSmithKline, the maker of Paxil.

When issuing the injunction Mendelsohn wrote, "The Court finds that the prosecution of other actions concerning the claims released by this settlement would result in fraud, gross wrong, or oppression and equity requires such actions be enjoined to prevent manifest wrong and injustice."

Mendelsohn concluded that competing class actions would jeopardize his ability to rule on the settlement and would substantially increase the cost of litigation.

He further concluded competing class actions would also create risk of conflicting results, would waste court resources, and could prevent plaintiffs and the class members from benefiting from any negotiated settlement.

"The Court also finds that simultaneous proceedings in other forums relating to the claims in the action would significantly impede the conduct of this litigation," Mendelsohn added.

Rose purchased Paxil for her minor son and is a class member in the Madison County suit as well as an earlier class action filed in Orange County, Calif.

She claims Mendelsohn's order improperly prohibits her from pursuing her claims in the Orange County case.

Rose's attorney, Patricia Murphy of Energy, Ill., told Mendelsohn that the anti-suit injunction was issued without notice to adverse parties, including her client, and without allegations of fact sufficient to warrant obviating the necessity of such notice.

"No court or judge shall grant a preliminary injunction without previous notice of the time and place of the application having been given the adverse party," Murphy argued.

Murphy claimed that there was no evidence presented to Mendelsohn sufficient to establish the existence of an emergency situation justifying the issuance of an injunction without notice.

Murphy also told Mendelsohn the preliminary approval failed to mention or alert his attention to the existence of other pending Paxil refund class actions.

According to Murphy, at the time the Madison County case settled, four uncertified class actions were pending elsewhere.

But class counsel Stephen Tillery argued that the case Rose was to join in Orange County has been stayed by that court's case management authority until the final fairness hearing in the Madison County case has been concluded.

Tillery also pointed out that the judges in the other three cases also have stayed their cases until his case has been resolved.

Murphy argued that neither she nor Rose received notice of the potential settlement negotiations of GSK and Tillery despite the high level of activity and costs being spent in the other classes.

"GSK did not notify any of the courts or putative class counsel in the other pending Paxil cases about settlement negotiations," Murphy argued. "Instead, the co-pay settlement was reached during confidential negotiations between GSK and Tillery."

"These parties specifically made confidentiality a requirement of the negotiations in an effort to exclude any input from counsel who was actually litigating the merits of the case in at least two other actions," Murphy added.

She also said, "These secret negotiations led to the drafting of and request for the anti-suit injunction."

Mendelsohn will hold the final fairness hearing at 9 a.m. on March 9, 2007.

According to Murphy, her client wants to join the Orange County case because the claims in that case are broader than Tillery's case which is now known as the Paxil co-pay settlement.

Murphy also argued that after attorney fees and administration expenses associated with class notice and claims administration, roughly $47 million of the $63.8 million dollar settlement will remain for payment to the class.

Plaintiffs, Teri Hoormann, Mary Kopsie, and Bonita and Mark Helfer filed suit alleging they suffered actual economic damages because GlaxoSmithKline promoted Paxil and Paxil CR for prescription to patients under the age of 18, while concealing negative information.

The settlement agreement states that all people in the United States who purchased Paxil for their minor children are eligible.

Class members who submit pharmacy records or other sufficient medical records showing they purchased Paxil or Paxil CR for a person under the age of 18 will receive the total amount of money paid for out-of-pocket expenses.

Class members who cannot locate or obtain pharmacy records showing the purchase of Paxil will receive $15 if they submit an affidavit submitting to the jurisdiction of the court and swearing under perjury they purchased Paxil.

In the event undocumented claims exceeds $300,000, payment to class members with undocumented claims will be reduced pro-rata so that no more than a total of $300,000 is paid to class members with undocumented claims.

Mendelsohn ordered Tillery to hire Rust Consulting of Minneapolis to supervise and administer the providing of the notice to class. Rust will determine which class members submitted the requisite proof and will then distribute their benefit to them in one payment.

Rust Consulting, which will be paid out of settlement funds, has administered more than 500 cases worth billions of dollars with class sizes ranging from 80 class members to more than 100 million.

In the event the amount of claims exceeds the amount remaining in the settlement fund after payment of attorneys' fees and expenses of legal notice and administration, each claimant will share the remaining funds pursuant to the proportionate share of his or her claim to the amount remaining.

GSK agreed to allocate $63,833,148 and any obligations it may otherwise have to pay for legal notice to class members, the claims of the class, interest, costs of the administration of the settlement, and the costs of the suit including attorneys' fees.

If any taxes are due as a result of income earned by the settlement fund, GSK also will pay them.

In the event that federal or state income tax liability is assessed against and paid for by GSK as a result of income earned by the settlement fund, GSK is entitled to be reimbursed from the settlement fund.

Dwight Davis of Atlanta, GSK's lead attorney, argued that Mendelsohn had a duty to issue the injunction and said that Rose could simply opt-out of the class and pursue her claims.

Davis also told Mendelsohn that dissolving the injunction would be "disruptive."

Tillery agreed with Davis and advised Mendelsohn that the notice has already been paid for and is set to be published in magazines and newspapers all over the country.

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