Third Circuit disposition — 034181np-pdf

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 03-4181
___________
IN RE: DIET DRUGS (PHENTERMINE/
FENFLURAMINE/DEXFENFLURAMINE)
PRODUCTS LIABILITY LITIGATION
Michelle Renee Corley,
Appellant
______________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
District Judge: Honorable Harvey Bartle, III
(MDL No. 1203)
Argued December 10, 2003
Before: AMBRO, FUENTES and CHERTOFF, Circuit Judges
(Filed March 12, 2004)

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_______________________
OPINION OF THE COURT
_______________________
Kenneth W. Lewis
Jeffrey T. Roebuck (argued)
Bush, Lewis & Roebuck, P.C.
1240 Orleans Street
Beaumont, Texas 77701
Attorneys for Appellant
Corley
Robert D. Rosenbaum
M. Sean Laane (argued)
Arnold & Porter
555 Twelfth Street, N.W.
Washington, DC 20004
Michael T. Scott
Paul B. Kerrigan
Reed Smith LLP
2500 One Liberty Place
Philadelphia, PA 29203
Peter L. Zimroth
Arnold & Porter
399 Park Avenue
New York, NY 10022
Attorneys for Appellee
Wyeth

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1 American Home Products changed its name to Wyeth in March 2002. We use the
name Wyeth.
FUENTES, Circuit Judge:
Appellant, Michelle Corley, appeals the decision of the United States District
Court for the Eastern District of Pennsylvania enjoining her from litigating a settled claim
against Appellee, Wyeth. Corley argues that her unintended participation in a settlement
with Wyeth resulted from “excusable neglect” because her former counsel failed to take
the steps necessary for opting out of the settlement. We review the District Court’s
decision for abuse of discretion. Because we find that Corley is bound by the acts of her
chosen counsel, we affirm the District Court’s decision barring Corley from litigating her
claim. We also affirm the District Court’s decision denying Corley’s request for further
discovery.
I.
We have previously set forth the basic facts in the Diet Drug litigation. See In re
Diet Drugs, 282 F.3d 230 (3d Cir. 2002). Because this opinion is written only for the
parties, we recite only the facts relevant to our decision.
Prior to 1997, Wyeth, then named American Home Products,1 sold two
prescription drugs for the treatment of obesity, fenfluramine and dexfenfluramine,
marketed as “Pondimin” and “Redux.” In September 1997, the United States Food and
Drug Administration (FDA) issued a press release reporting abnormal echocardiograms in
a “higher than expected percentage of” patients taking the drugs. See Press Release,

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FDA, FDA Announces Withdrawal Fenfluramine and Dexfenfluramine (Fen-Phen) (Sept.
30, 1998). Subsequent studies suggested that the drugs may have been linked to serious
cardiopulmonary side effects, including heart-valve regurgitation (the reverse flow of
blood through a closed valve of the heart).
After the withdrawal of the diet drugs, 18,000 individual suits and 100 class
actions were filed in state and federal courts. In December 1997, the federal cases were
consolidated for pretrial purposes in the Eastern District of Pennsylvania pursuant to
MDL 1203. In November 1999, Wyeth entered into a nationwide class action settlement
agreement with users of the diet drugs in the United States. After conducting fairness
proceedings, the District Court in the Eastern District of Pennsylvania certified a
settlement class and approved the settlement agreement, finding it “fair, reasonable and
adequate.” See Pretrial Order (“PTO”) 1415. The settlement agreement became final on
January 3, 2003, upon exhaustion of all appeals.
Diet drug users who wished to opt out of the settlement were required to file an
“initial opt-out” form no later than March 30, 2000. Class members were informed of
their initial opt-out rights through “an elaborate and extensive plan of notice.” App. at
259-68, citing PTO 1415. Persons who timely exercised initial opt-out rights were free to
pursue any and all claims against Wyeth. Those who did not remained members of the
class and agreed to be bound by the conditions and benefits of the settlement agreement.
Upon approving the settlement agreement, the District Court entered PTO 1415, which

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2 PTO 1415 further provides for the settlement court to retain “continuing and
exclusive jurisdiction . . . to administer, supervise, interpret and enforce the Settlement in
accordance with its terms.” App. at 342.
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expressly “bars and enjoins” all class members “from asserting, and/or continuing to
prosecute” any settled claim against Wyeth.2 App. at 340-41.
The settlement agreement contained an exception to this bar, permitting class
members who met specific physical requirements (diagnosed as having a severity of
heart-valve regurgitation defined as “FDA Positive”), and who timely exercised their
rights, to pursue “downstream” opt-out rights. Downstream opt-out rights fell into two
categories: “intermediate” opt-out and “back-end” opt-out. These rights allowed class
members to pursue claims against Wyeth, subject to certain limitations, including a
prohibition against “seek[ing] punitive, exemplary, or any multiple damages.” App. at
85-86.
In July 1999, Corley sued Wyeth, along with other plaintiffs, in Texas state court.
She sought damages for injuries from having used the diet drugs, including punitive
damages. Although Corley acknowledges that she received actual notice of the settlement
agreement before the initial opt-out deadline, she claims that her counsel failed to file a
timely “initial opt-out” form. App. at 387-90. Instead, in July 2000, her counsel filed a
“blue form,” the official registration form for participating in the settlement.
About a year and a half later, in January 2001, Wyeth agreed to an “inventory”

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settlement with several claimants represented by Corley’s then counsel, including her co-
plaintiffs in the Texas lawsuit. Wyeth offered to include Corley in this non-class
settlement, offering her $25,000. Corley declined the offer. At this point, her counsel
sent her a letter requesting that she sign a verification of her rejection of the offer and
terminating the attorney-client relationship. Corley Br. at 3. Corley did so, and
subsequently retained present counsel.
It appears from the record that Corley’s original counsel proceeded with the state
court action as though Corley had opted out, but mistakenly filed the form for her to
participate in the settlement. It was not until August 2002, when W yeth filed its state
court motion to dismiss Corley’s action, that Corley became aware of Wyeth’s position
that she had not properly opted out of the class. Corley Br. at 4.
In August 2002, Corley filed for intermediate opt-out rights. However, she
indicated on the form that she did so “under protest,” claiming that she should be able to
litigate her pending state court case as if she were an initial opt-out. Therefore, also in
August 2002, Corley filed an amended state court petition, attempting to sue Wyeth as an
initial opt-out. She sought punitive damages in this petition. Corley filed an initial opt-
out form in October 2002, long after the March 30, 2000 deadline had passed.
In response to Corley’s petition, Wyeth moved for the District Court to enforce
PTO 1415’s injunction against the litigation of settled claims. Wyeth asked the Court to
require Corley to proceed, if at all, as an intermediate opt-out, subject to the conditions

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placed on intermediate opt-outs under the settlement agreement.
Corley argued that her failure to file a timely initial opt-out constituted “excusable
neglect” because her former counsel had failed to follow her instructions. App. at 465.
She also claimed a need for discovery concerning the settlement offers that Wyeth made
to her and other claimants.
The District Court conducted the “excusable neglect” analysis outlined in In re.
Orthopedic Bone Screw Prods. Liab. Litig., 246 F.3d 315 (3d Cir. 2001) (Bone Screw),
and held that Corley should not be exempted from the initial opt-out deadline. See PTO
3030, App. at 2. The Court also found that “Wyeth would suffer unfair prejudice if [the
Court] allowed Ms. Corley to effect an initial opt-out beyond the March 30, 2000
deadline” because the impact of any relaxation of the deadlines in her case would be
multiplied many times “if others were similarly excused.” Id.; see also PTO 2447 (No.
99-20593, May 16, 2002), incorporated by reference in PTO 3030, App. at 441-49. The
District Court also denied Corley’s request for discovery.
II.
Corley bases her excusable neglect argument on the failure of her counsel to timely
file for initial opt-out. We find, however, that there was no excusable neglect in this case.
In evaluating excusable neglect, “clients must be held accountable for the acts and
omissions of their attorneys.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.
Partnership, 507 U.S. 380, 396 (1993). See also Walker v. Sun Ship, Inc., 684 F.2d 266,

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269 (3d Cir. 1982) (stating that “a civil litigant is bound by the action or inaction of his
attorney”). Under Pioneer, the analysis does not focus on whether the clients “did all they
reasonably could in policing the conduct of their attorney,” but “whether the neglect of
[the clients] and their counsel was excusable.” 507 U.S. at 396-97 (emphasis in original).
In Pioneer we outlined four factors that a court should consider in determining
whether a party’s failure to act was a result of excusable neglect: “the danger of prejudice
to the [non-moving party], the length of the delay and its potential impact on judicial
proceedings, the reason for the delay, including whether it was within the reasonable
control of the movant, and whether the movant acted in good faith.” 507 U.S. at 395.
Looking at the first of these factors, the District Court found that permitting an untimely
initial opt-out would unduly prejudice Wyeth. If Corley were permitted to sue as an
initial opt-out, she would be able to sue without the restrictions on punitive damages to
which intermediate opt-outs are subject. Wyeth would, therefore, lose this benefit of the
settlement agreement. Although Wyeth would still have to litigate Corley’s claim as an
intermediate opt-out, Wyeth would be subject to significantly greater potential damages
litigating Corley’s claim as an initial opt-out.
Considering the second Pioneer factor, the District Court found that with millions
of members in the class, the potential prejudice of allowing an exception to the initial opt-
out deadline could extend beyond this case and have detrimental effects on the settlement
and M DL. Wyeth points out that being able to determine the total number of initial opt-

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outs by a certain date was essential to the deal between Wyeth and the class. The
settlement agreement actually granted Wyeth the right “to terminate the settlement
agreement, at its discretion, based on the number of opt outs.” In re. Diet Drugs, 282
F.3d at 237 n.13. The settlement was only beneficial to Wyeth if it could determine ahead
of time whether the settlement would resolve most of the potential claims. “External
actions that would disturb that balance, by altering the number of opt outs through a
different mechanism, clearly would substantially interfere with MDL 1203.” Id.
Corley refutes this point, arguing that the District Court did not rely on any
evidence that motions similar to hers are pending or that there are any other claimants in
Corley’s position. Despite this assertion, we cannot say that the District Court abused its
discretion in finding that leaving the door open for other potential claimants could
threaten the settlement, particularly since Corley’s claim of excusable neglect is “neither
unique nor compelling.” See PTO 2447, incorporated by reference in PTO 3030, App. at
447. Corley’s counsel erred in filing the wrong form. The District Court addressed a
similar situation involving a separate class action litigant. In Schlosser, PTO 2447, the
District Court denied Schlosser’s claim of excusable neglect for his attorney’s failure to
inform him of the need to affirmatively opt out of the settlement after Wyeth had sent
them both notice packets. See PTO 2447, App. at 441-49. The District Court in
Schlosser found that “[t]he conduct of plaintiff’s former counsel . . . does not fall within
the parameters of excusable neglect. On the contrary, counsel’s conduct appears to have

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been patently inexcusable,” considering that timely filing was within his control. Id. at
447. Similarly, timely filing in Corley’s case was well within the control of her counsel,
and, under the third Pioneer factor, a court should consider whether counsel did “all he
reasonably could to comply with the court-ordered . . . date.” 507 U.S. at 396. Despite
the fact that Corley acted in good faith (also a consideration under Pioneer), the
circumstances surrounding her counsel’s mistake in filing the wrong form are neither
unique nor compelling.
Further, under Pioneer, Corley cannot shift responsibility for failure to timely file
to her counsel, particularly when both had actual and constructive notice of the deadline.
PTO 1415 describes the “elaborate and extensive plan of notice” provided to class
members. App. at 259-68. In addition, the record shows that Corley’s counsel was aware
of the deadline and filed timely opt-outs in other cases. App. at 524-26. This case is,
therefore, distinguishable from Pioneer, where the Court found counsel’s neglect in filing
a timely bankruptcy claim excusable in light of the “dramatic” inadequacies in the notice
provided. 507 U.S. at 398. This case is also distinguishable from Bone Screw, in which
excusable neglect was found, because this Court held that an untimely registrant lacked
actual notice of the deadline and that the class was given only “minimal constructive
notice” of the need to register for the settlement. 246 F.3d at 326-27. Although Corley
argues that W yeth’s actions did not give her sufficient notice that she had failed to timely
opt out of the class, the Bone Screw notice analysis focuses on the adequacy of class

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3 Under the agreed motion to abate, the parties could proceed with certain paper
discovery while deferring depositions, dispositive motions and trial.
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notice given before the opt-out deadline, not after it has already passed. Corley Br. at 17.
Considering the importance of accurately calculating initial opt-outs (to the
settlement and to Wyeth’s anticipating damages) and the potential harm in allowing
exceptions for claimants whose lawyers make avoidable mistakes, the District Court did
not abuse its discretion in denying Corley’s excusable neglect claim under Pioneer.
III.
In addition to excusable neglect, Corley makes an estoppel argument, claiming that
Wyeth took various actions that showed it regarded her as an initial opt-out, thus waiving
its right to enforce PTO 1415 against her. The first of these actions occurred in June
2000 when Wyeth filed an abatement in the state court action.3 Corley argues that
Wyeth’s motion to abate “[r]aises substantial questions as to the arrangement between
Wyeth and [Corley’s] former counsel” because, she contends, there would be no reason to
abate her claim unless Wyeth recognized her as an initial opt-out. Corley Br. at 20. In
addition, Corley cites to Wyeth’s $25,000 settlement offer (in January 2001) as
demonstrating an agreement between Wyeth and her former counsel to treat her as an
initial opt-out.
In response, Wyeth contends that, in fact, several plaintiffs were included in the
June 2000 abatement motion, some of whom had filed as initial opt-outs by the time of

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the motion and some of whom (including Corley) had not. App. at 530-53. Wyeth,
therefore, contends that inclusion in this abatement motion did not reflect a claimant’s
opt-out status or Wyeth’s view of that status. Further, Wyeth claims it had reason to abate
Corley’s state court action, even though she filed to participate in the settlement, because
Wyeth did not have a basis to seek dismissal of settled claims until January 3, 2002 when
the settlement agreement obtained final judicial approval. App. at 154. We agree that
Wyeth’s decision to seek abatement of Corley’s case rather than dismissal does not mean
that W yeth viewed her as having opt-out status.
In regard to the January 2001 settlement offer of $25,000, Wyeth contends that it
was part of an “inventory” settlement, sent to Corley and other plaintiffs represented by
her former counsel. The inventory settlement was an effort by Wyeth to manage its case
load while waiting for approval of the settlement agreement. Wyeth argues that sending
the offer does not show that it deemed Corley an initial opt-out because initial opt-outs
were not the only persons who had potential future claims. Some class members who
remained in the settlement still retained certain opportunities to litigate as, for example, a
claimant with primary pulmonary hypertension or a claimant qualifying for other
downstream opt-out rights. Wyeth Br. at 21, citing App. at 42-43, 85-90. Wyeth,
therefore, asserts that sending a settlement offer is not sufficient to show that it had
constructive notice of Corley’s intent to opt-out despite her failure to timely file. We find
this argument persuasive. In addition, the fact remains that Corley failed to file the initial

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opt-out form by the March 30, 2000 deadline, and the January 2001 offer in no way
affected or induced this failure to timely file. We, therefore, agree with the District
Court’s conclusion that Wyeth did “nothing . . . that can be deemed to work an estoppel
against it.” App. at 3. Accordingly, we find that the District Court did not abuse its
discretion in dismissing Corley’s estoppel argument as insufficient support for excusable
neglect.
IV.
Related to Corley’s estoppel argument is her request for additional discovery into
any settlement offers Wyeth made to claimants like Corley who had not timely opted out.
Corley argues that the District Court did not allow her time to conduct adequate discovery
into the circumstances surrounding her former counsel’s failure to properly file for initial
opt-out. She contends that this discovery could reveal negotiations between her counsel
and Wyeth over settlement and could establish that Wyeth had constructive notice of her
intent to opt out. However, Corley’s arguments do not persuade us that the District Court
abused its discretion in denying further discovery.
First, Corley argues that any negotiations that may have occurred pertaining to the
January 2001 settlement offer could reflect a waiver of the initial opt-out deadline and
thus help to show excusable neglect. Corley Br. at 8, 9. However, as discussed above,
any settlement offers extended before final approval of the settlement agreement are not
indicative of a recipient’s opt-out status.

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Second, Corley cites to the June 2000 agreed motion to abate. Her former counsel
agreed to this motion with Wyeth, although he did not include in it all of his clients who
were plaintiffs in the state court action. Corley asserts that because her former counsel
did not agree to include all of his clients, he and W yeth must have been “in
communication and negotiations at the time of the motion, and . . . each plaintiff was
discussed and a decision was made whether to include each plaintiff in the order.” Corley
Br. at 21. However, the record shows that Corley’s counsel unilaterally selected the
clients to be included and then provided the list to Wyeth. App. at 516, 530. Therefore,
choosing plaintiffs included in the abatement motion fails to demonstrate communication
between Wyeth and Corley’s counsel.
Corley’s misunderstanding as to her status as a settlement participant is
understandable. She did not know that her former counsel filed the wrong form, and
Wyeth did not immediately seek dismissal of her state court case. Nevertheless, we agree
with the District Court’s finding that her attorney’s error was neither unique nor
compelling. In short, Corley failed to demonstrate that further discovery would yield
anything other than her counsel’s mishandling of a filing that was reasonably within his
control. We will, therefore, affirm the District Court’s denial of Corley’s request for
discovery.

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