Attorney Stephen Tillery stands to reel in a whopping $16.8 million fee after settling a nationwide class action lawsuit against GlaxoSmithKline in Madison County Circuit Court.
But class members who claim the drug maker withheld negative information about the safety and effectiveness of the popular anti-depressant drug Paxil will only get $15 or their actual costs if they have proof.
The preliminary settlement was approved Oct. 6 by Associate Judge Ralph Mendelsohn. The order was originally filed under seal, but was unsealed Oct. 27.
"After motion practice and extensive arm's length negotiations, the parties have reached a proposed settlement of this litigation," the joint motion for preliminary approval states.
The plaintiffs, Teri Hoormann, Mary Kopsie, and Bonita and Mark Helfer, alleged 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.
"GSK denies each and every allegation, but has concluded that it will enter into this settlement agreement to avoid the further expense inherent in protracted litigation," the settlement agreement states.
Paxil is approved for the treatment of depression, generalized anxiety disorder, social anxiety disorder, panic disorder, obsessive compulsive disorder and posttraumatic stress disorder in adults.
According to GSK's website, Paxil CR and Paxil are approved only for adults 18 years and over. In some children and teens, antidepressants increase suicidal thoughts or actions. Young adults, especially those with depression, may be at increased risk for suicidal actions.
The settlement agreement states that all people in the United States who purchased Paxil for their minor children are eligible to join the class.
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.
The Settlement Fund
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.
Tillery plans to petition the Court for attorneys' fees and costs in an amount not to exceed 26 percent of the settlement fund.
His fee will be calculated based upon the total settlement fund, regardless of whether an individual class member claims their benefits.
GSK has agreed that it will not take a position, either publicly or in court, regarding Tillery's application for attorney fees and costs as long as payment of the fees comes solely from the settlement fund and does not require further payment.
Fees will be paid 10 days after Mendelsohn grants final approval.
GSK also waived its appellate rights to challenge or support any award of attorneys' fees.
Tillery also will ask Mendelsohn for an incentive award not to exceed $5,000 to be paid to each of the named plaintiffs from his award of fees and costs.
"The Court finds that the settlement reached is the result of arm's length negotiations, the settlement is fair, reasonable, adequate and in the best interests of the class," Mendelsohn wrote.
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.
"Any class member that wishes to be excluded from the class must serve a written request, detailing the class member's name, address and phone number on the settlement administrator, and class counsel no later than Feb. 23, 2007," 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.
"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 will hold a fairness hearing on March 9, 2007 at 10 a.m. to determine:
Mendelsohn also ruled that Rust Consulting will begin sending legal notice of the class by Dec. 31.
Tillery must serve GSK and Mendelsohn with proof, by affidavit or declaration, that the legal notice was disseminated.
Anyone who wishes to exclude themselves or object to the class has until Feb. 23, 2007 to do so.
All papers in support of the final approval must be filed and served before March 9, 2007, the day of Mendelsohn's fairness hearing and anyone wishing to receive money from the settlement fund must submit their claim on or before Aug. 31, 2007.
GSK's right to terminate settlement
GSK can terminate the settlement if at the end of the opt-out period more than 1,500 members of the class have opted-out.
It can also terminate the settlement if there is not enough public disclosure of the settlement, if Mendelsohn orders materially different or additional legal notice other than what was agreed to.