1As explained infra at § I(C), due to insurance coverage

issues, the settlement amount ranges from a low of $90 million to

a high of $110 million, depending on the outcome of claims against

three insurance companies.

2

The court sets out in this memorandum opinion and order its

findings of fact and conclusions of law. See Rule 52(a)(1). 

 IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

WICHITA FALLS DIVISION

VICTORIA KLEIN, et al., §

 §

Plaintiffs, §

 § Civil Action No. 7:03-CV-102-D

VS. § (Consolidated with 

 § Civil Action No. 7:09-CV-094-D)

O’NEAL, INC., d/b/a O’NEAL, §

JONES & FELDMAN §

PHARMACEUTICALS, et al., §

 §

Defendants. §

MEMORANDUM OPINION

 AND ORDER 

The court must decide whether the proposed $110 million1

settlement of this class action alleging personal injury and death

claims arising from the manufacture, marketing, and distribution of

E-Ferol Aqueous Solution (“E-Ferol”) is fair, reasonable, and

adequate, as Fed. R. Civ. P. 23(e)(2) requires, and not the product

of collusion between the parties. Following a two-day fairness

hearing and consideration of the parties’ extensive submissions,

and for the reasons that follow,2

 the court approves the settlement

and the request of the class plaintiffs’ attorneys for a fee award

of 30% of the settlement amount, reimbursement of reasonable and

necessary expenses associated with the litigation, $300,000 from

 

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3These are consolidated cases. Federal Insurance Company

filed a lawsuit in Northern District of Ohio seeking a declaratory

judgment that it has no duty to defend or indemnify the corporate

predecessor of CVS Revco D.S., Inc. (“CVS”) under an insurance

policy issued to CVS’s corporate predecessor for personal injury

claims arising from the manufacture and distribution of E-Ferol by

Carter-Glogau Laboratories, Inc., a former subsidiary, now known as

Retrac, Inc. The case was transferred to this court on June 16,

2009, see Federal Insurance Co. v. CVS Revco D.S., Inc.,

7:09-CV-094-D (N.D. Tex. docketed June 16, 2009), and was later

consolidated with the class action. In this memorandum opinion and

order, the court will refer to the class action as a single case

that does not include this declaratory judgment action.

- 2 -

the settlement amount to pay for costs of administration and

distribution of the settlement proceeds, and $75,000 each as

compensation for the two class representatives.

I

A

This mass tort class action arises from defendants’

manufacture, marketing, and distribution in 1983 and 1984 of EFerol, a vitamin E supplement administered primarily to premature

infants to aid in preventing a vision impairment known as

retrolental fibroplasia, believed to be caused by a vitamin E

deficiency.3 Defendants marketed E-Ferol as a vitamin supplement

rather than as a drug. The class plaintiffs allege that defendants

made this marketing decision so that they could bypass testing

requirements mandated by the U.S. Food and Drug Administration

(“FDA”) for the sale of a “drug”; there were no similar

requirements for new “supplements.” The class plaintiffs also

assert that defendants specifically marketed E-Ferol as a means of

 

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- 3 -

reducing or preventing retrolental fibroplasia, and that physicians

and hospitals began using E-Ferol under the mistaken impression

that it had FDA approval. E-Ferol’s appeal was its suitability for

intravenous administration, a delivery method that was considered

superior to the previously available oral or intramuscular

applications of vitamin E for premature infants. To allow for

intravenous use, E-Ferol contained an emulsifying agent known as

Polysorbate 80, which made the vitamin E water soluble.

Several months after the initial release of E-Ferol, medical

providers, the FDA, and the Centers for Disease Control and

Prevention (“CDC”) became aware of a pattern of harmful symptoms in

premature infants to whom the drug had been given. These

symptoms——which generally involved failure of the kidneys and

liver——in many cases led to brain injury, blindness, and/or death,

and came to be known as “E-Ferol syndrome.” The FDA and CDC

ordered defendants to conduct a full recall of the product and

began investigating possible causes of the symptoms that

neonatologists were reporting. Research determined that the

ingredient Polysorbate 80 in E-Ferol caused the symptoms associated

with E-Ferol syndrome. The investigation into E-Ferol eventually

led to criminal convictions for the defendant corporations as well

as some of their individual officers. See United States v. Hiland,

909 F.2d 1114 (8th Cir. 1990).

 

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4The Fifth Circuit denied defendants’ petition for leave to

appeal under Rule 23(f). One panel member would have granted the

petition. 

- 4 -

B

This lawsuit was filed as a putative class action on behalf of

all persons who were administered E-Ferol during the months that it

was in use, the representatives or heirs of persons whose deaths

were caused by E-Ferol, and family members, guardians, and legal

representatives of persons who died from or were injured by EFerol. Plaintiffs alleged claims for negligence, strict liability,

and negligent misrepresentation, and they sought actual and

punitive damages for the deaths and injuries that E-Ferol allegedly

caused. Judge Buchmeyer, to whom the case was initially assigned,

certified the following plaintiffs class under Rule 23(b)(3):

All persons in the United States, including

any estate representatives or heirs of

deceased persons, who, during the period from

November 1, 1983, until April 30, 1984, were

administered E-Ferol. Included in the class

are parents, spouses, children, guardians, and

legal representatives of such persons with

direct or derivative claims.

Klein v. O’Neal, Inc., 222 F.R.D. 564, 566 (N.D. Tex.) (Buchmeyer,

J.) (“Klein I”), pet. for leave to appeal denied, No. 04-00028 (5th

Cir. June 21, 2004) (per curiam) (order).4

Counsel for the class undertook a lengthy process of

identifying and contacting potential class members. They began by

obtaining a list from the FDA of all hospitals nationwide that had

 

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5Four potential class members opted out. Class counsel are

unaware of any independent suit related to E-Ferol filed by any of

them.

- 5 -

administered E-Ferol, and then contacting these hospitals to

request the names of the individual recipients. Eventually, 89

locations nationwide were identified as having administered EFerol. Some hospitals were willing to share information with class

counsel. Others did not produce information until they were

subpoenaed and/or were unsuccessful in moving to quash efforts to

obtain patient names. Once potential class members were

identified, class counsel contacted them and requested that they

complete a medical questionnaire and an authorization to release

hospital records.

Notification to the class was given in July 2006 by direct

mail (for those whose names and addresses were known) and through

simultaneous publication in numerous daily newspapers throughout

the United States, including USA Today, in an attempt to notify

unidentified class members whose hospital records were still

unknown. Class counsel also created a website at “www.eferol.com.”

The website contained information about E-Ferol’s distribution and

effects, an explanation of this lawsuit, links to the parties’

filings and the court’s opinions, a list of relevant deadlines, and

contact information for any person who believed he should be

included in the class. The court set September 11, 2006 as the opt

out date for class members.5

 

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- 6 -

Class counsel eventually identified 328 recipients of E-Ferol.

The class is currently comprised of 369 members, including the

families and representatives of deceased recipients. Of the 328

identified cases of E-Ferol administration, 34 are infants who

allegedly died from the effects of E-Ferol, 22 are infants who

allegedly suffered brain or neurological injuries (i.e., cerebral

palsy) from E-Ferol exposure, and 239 are class members who either

received E-Ferol without apparent injury, but require ongoing

medical monitoring, or are the parents of children who died after

being administered E-Ferol but whose deaths are not believed to

have been caused by E-Ferol. 

Also included are 33 claims that the court previously

dismissed due to defenses based on statutes of limitations or of

repose. See Klein v. O’Neal, Inc., 2008 WL 2152030, at *10 (N.D.

Tex. May 22, 2008) (Fitzwater, C.J.) (“Klein II”). In 2008

defendants moved for partial summary judgment, contending that (1)

all wrongful death and survival act claims based on deaths that

occurred more than two years prior to the lawsuit were time-barred,

and (2) claims by class members in Tennessee and Iowa were barred

by those states’ statutes of repose. The court denied summary

judgment as to most of the death and survivor act claims on the

basis that the statute of limitations may have been tolled under

the doctrine of fraudulent concealment. See id. at *7. But the

court granted summary judgment as to eight death claims, concluding

 

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6In Klein II the court raised sua sponte whether the class

should be decertified. Based on the arguments of the parties in

their summary judgment briefing——regarding the tolling effect of

plaintiffs’ reasonable reliance and defendants’ fraudulent

concealment——the court questioned whether issues common to the

class continued to predominate in the case. “[T]here are material

differences in the factual circumstances of each claim that could

affect the jury’s analysis . . . . [I]t now appears that

individualized fact issues predominate with respect to the reliance

and reasonable diligence inquiries.” Klein II, 2008 WL 2152030, at

*8-*9. The court ordered the parties to brief the question whether

the class should be decertified or modified in some way, but this

order was stayed pending the settlement negotiations that

eventually resulted in the proposed settlement. The court explains

below why the issue it raised in Klein II is no longer of concern.

- 7 -

that a reasonable jury could only find that the class members knew

that E-Ferol might have caused their child’s death. Id. at *6.

The court also dismissed 25 claims as barred by the Tennessee

statute of repose. It denied summary judgment dismissing the

single claim from Iowa, however, concluding that there was evidence

that the claimant had no knowledge about receiving E-Ferol until

after the lawsuit was filed. Id. at *10.6

After the court decided Klein II, it stayed the case so that

the parties could pursue settlement. The parties participated in

mediation, including a two-day meeting, in 2009. A retired United

States District Judge, John S. Martin, Jr. (“Judge Martin”), served

as mediator. Although the parties were initially unsuccessful,

subsequent negotiations over several months led to the Settlement

Agreement and Release (“Settlement Agreement”). As discussed more

fully below, in exchange for the release of all claims brought by

the class plaintiffs, the Settlement Agreement provides a lump sum

 

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7

Attorney’s fees for class counsel and other expenses will

also be paid from this lump sum.

- 8 -

payment to the class for distribution among its members.7 The

allocation to each member varies according to the category to which

the member’s claim is assigned. Medical experts retained by class

counsel determined each class member’s initial category, with

stronger claims resulting in higher-paying categorization. The

parties presented the Settlement Agreement to the court for a

preliminary fairness review in October 2009. 

Following initial approval, the class plaintiffs sent notices

to each class member informing the member of the details of the

Settlement Agreement, the member’s category assignment, and the

scheduled fairness hearing on February 16 and 17, 2010. The

notices also included instructions for how class members could

object to court approval of the Settlement Agreement, make requests

for a change in category, and/or submit documents supporting such

requests. The notices were sent in October 2009, and the deadline

for filing objections and making requests for category changes was

December 30, 2009. Class counsel also published a new notice in

USA Today containing information about the proposed settlement.

C

The Settlement Agreement comprehensively resolves all claims

between the class plaintiffs and defendants. The negotiations

between the parties and the drafting of the Settlement Agreement

 

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8The corporate defendants have no real assets other than their

right to insurance coverage for the claims raised by the class

plaintiffs.

- 9 -

included the input and eventual consent of various insurers of

defendants, who bear all responsibility for paying the settlement

proceeds.8

 The Settlement Agreement calls for a maximum payment of

$110 million to the entire class.

Two insurers of defendant Retrac, Inc. (“Retrac”)——Federal

Insurance Company (“Federal”) and Westchester Fire Insurance

Company (“Westchester”)——whose coverages together represent

approximately $17.5 million of the proceeds of the proposed

settlement, have not agreed to the Settlement Agreement. They also

dispute that they have a duty to indemnify Retrac for the class

plaintiffs’ claims. Resolution of these coverage questions remains

outstanding. The court dismissed an attempt by the class

plaintiffs to sue Federal and Westchester directly for the purpose

of establishing that they have a duty to indemnify Retrac for

claims brought by the class. See Klein v. O’Neal, Inc., 2009 WL

3573849, at *9 (N.D. Tex. Oct. 30, 2009) (Fitzwater, C.J.) (holding

that Texas law does not permit tort victim to file indemnity suit

directly against alleged tortfeasor’s insurer until after victim

first obtains judgment against tortfeasor). A third Retrac

insurance carrier, Mission Insurance Company (“Mission”), would be

responsible for $2.5 million in coverage, but Mission is insolvent

and class counsel are currently pursuing recovery from Mission’s

 

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- 10 -

receiver. 

A substantial majority of defendants’ relevant insurers,

representing $90 million of the proposed settlement, have agreed to

the Settlement Agreement. The unresolved nature of Federal’s and

Westchester’s liabilities, along with Mission’s insolvency, mean

that the total settlement amount is not certain, although it would

in any case be between $90 million and $110 million. If the

Settlement Agreement is approved, defendants will assign to the

class their respective rights of indemnification against Federal,

Westchester, and Mission.

Under the terms of the Settlement Agreement, each class member

is assigned to one of five categories. Category 1 consists of

death claims in which E-Ferol was a substantial cause of the death.

Category 2 represents death claims for which E-Ferol was only a

contributing cause of death. Category 3 is composed of claims that

E-Ferol was a substantial contributing cause of cerebral palsy or

another neuroglial impairment, with subcategories defined for

impairments that are (a) severe, (b) moderate, or (c) mild.

Category 4 contains claims alleging injury that do not qualify for

Categories 1 through 3, including claims for ongoing medical

monitoring costs due to the potential effects of E-Ferol. Category

5 consists of class members whose claims the court has previously

dismissed on various grounds, and it is divided into subcategories

based on the primary category under which the dismissed claim

 

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9

To calculate each class member’s individual share, the

percentage of the payout attributable to a category or subcategory

is divided equally among the claims of each E-Ferol recipient.

Multiple class members who derive their claims from a single EFerol recipient receive a pro rata share of the award that the

recipient would have received.

10Because under the Settlement Agreement class members can

challenge their category placement, and because the net payout to

each member depends on the total number of claimants in a

particular category, the actual money award for each claim is only

approximate at this point. But only two class members challenged

their category assignment by the December 30, 2009 deadline.

Therefore, any alteration in the category membership numbers——and

thus a modification of the payout to each class member——will be

insignificant.

11Category 5 class members receive a portion of the settlement

proceeds even though the court granted summary judgment dismissing

- 11 -

otherwise would fall. The initial assignment of a class member

into a category and subcategory was made by medical experts, and

the assignment was based on the strength of the medical records and

other evidence relevant to each class member’s claim.

The total settlement proceeds are allocated by percentages

among the five categories. Class members each take an equal per

capita share of the payout amount allocated to their particular

category or subcategory.9 The allocations are: (1) 40% for

Category 1 (approximately $2,001,594.20 per claim10); (2) 17.78% for

Category 2 (approximately $1,000,797.14 per claim); (3) 31.11% for

Category 3 (approximately $1,501,195.62, $1,250,996.34, or

$1,000,789.68 per claim, based on subcategory); (4) 9.29% for

Category 4 (approximately $35,027.19 per claim); and (5) 1.82% for

Category 511 (approximately $236,647.45, $118,323.27, or $4,141.50

 

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their claims.

- 12 -

per claim, based on subcategory). The attorney’s fees and expenses

that the court awards class plaintiffs’ counsel, and the awards to

the class representatives, are to be deducted from each class

member’s recovery on a pro rata basis.

The Settlement Agreement establishes a procedure whereby a

class member can request a category change. The class member must

first present the request to class counsel, supported by documents

and other evidence that demonstrate why the category change is

merited. If the class member is dissatisfied with class counsels’

decision, the member may request a review by an independent medical

examiner (“IME”), appointed by the court, to determine the

appropriate category. The decision of the IME is binding. If the

IME concludes that the class member should be re-categorized, the

costs of the review process must be borne out of the overall

settlement. If the request is unsuccessful, the costs must be paid

from the individual class member’s personal share of the

settlement. Class counsel included notice of each member’s initial

category assignment when the Settlement Agreement announcements

were mailed in October 2009. The court set a deadline of December

30, 2009 for class members to object to their category and submit

medical records or other evidence in support of a request for recategorization. As stated above, see supra note 10, only two class

 

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12The Settlement Agreement also provides for the addition of

class members who were not known at the time the agreement was

drafted, but who later come forward with evidence supporting their

inclusion in the class. The court is not aware of any person who

has sought inclusion in the class since it preliminarily approved

the Settlement Agreement.

- 13 -

members have sought review through this process.

There is no provision in the Settlement Agreement that allows

a class member to opt out. Under Rule 23(e)(4), however, the court

“may refuse to approve a settlement unless it affords a new

opportunity to request exclusion to individual class members who

had an earlier opportunity to request exclusion but did not do so.”

The Settlement Agreement provides that, if the court does allow

class members to opt out, each defendant or insurer can withdraw

from the settlement. Alternatively, defendants can choose to

ratify the Agreement notwithstanding an allowance for opt outs. In

the latter case, any class member who opted out would still be

counted for purposes of assigning category awards under the

settlement payout, but the funds that would otherwise be paid to

the excluded class member would be retained by defendants and not

included in the overall payment to the class.12

As a condition of obtaining an individual award under the

Settlement Agreement, a class member is required to execute a

release of all liability for defendants and their insurers.

Furthermore, the liability release covers “all Persons who provided

medical or health care services to any individual who allegedly

 

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13Throughout this memorandum opinion and order, the court cites

the Settlement Agreement attached as Exhibit A to class plaintiffs’

October 7, 2009 unopposed motion for preliminary approval of class

action settlement, approval of class action notices, and approval

of non-waiver agreement.

- 14 -

received E-Ferol, including but not limited to hospitals, doctors,

[and] nurses.” Settlement Agreement Ex. 9 at 2.13 The release

grants an unconditional release and discharge of all claims and

causes of action “connected in any manner or fashion with E-Ferol.”

Id. at 3.

D

Following notice of the proposed settlement, 97.3% of the

class members——359 of 369——responded to class counsel with

affirmative requests that the court approve the proposed

settlement. The 97.3% who approve include all but one class member

in Category 1, and all members in Categories 2 and 3.

Only three members of the class——Lawrence V. Long, Jr.

(“Long”), Sharon Jenkins (“Jenkins”), and Arthur Freeman Luckey

(“Luckey”)——objected to the Settlement Agreement by the December

30, 2009 deadline. Luckey withdrew his objection, with court

approval, before the fairness hearing began. Jenkins withdrew her

objection, with court approval, during the fairness hearing.

Jenkins and another class member, Cynthia Pinnock, have requested

changes in their category assignment. Now that the settlement has

been approved, these requests will be resolved according to the IME

review procedure established by the Settlement Agreement. The

 

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14Although CL’s name is stated in full in publicly-available

filings and was used during the fairness hearing, the court will

follow Rule 5.2(a)(3) and refer to her by her initials.

- 15 -

parties agreed to an extended deadline for Jenkins to file medical

records in support of her request for category change, which the

court approved. The court also agreed that Jenkins can submit

nominees for the court’s consideration when selecting an IME to

review her category change request. Following the withdrawal by

Luckey and Jenkins of their objections to the Settlement Agreement,

Long remains as the lone objecting class member. 

Long is a member of the class by reason of the death of his

daughter, CL.14 CL died in 1984 after receiving E-Ferol while in

the care of the neonatal intensive care unit at Miami Valley

Hospital (“Miami Valley”) in Dayton, Ohio. Because the E-Ferol

recipient list from Miami Valley was still unknown when notice was

mailed to class members in 2006, class counsel published notices of

this class action in two local newspapers: the Dayton Daily News

(Dayton, Ohio) and The Blade (Toledo, Ohio). In October 2007 class

counsel obtained the recipient list from Miami Valley, and they

mailed notice of the class action to Long. It was at this point,

according to Long, that he and his late wife first became aware of

the possibility that E-Ferol played a part in CL’s death. Long

then obtained independent legal representation (i.e., apart from

class counsel) and filed a motion seeking leave to opt out of the

class. He filed the motion on January 9, 2009, although the

 

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- 16 -

deadline for doing so had expired on September 11, 2006. The court

denied Long’s motion. Klein v. O’Neal, Inc., 2009 WL 1174638, at

*5 (N.D. Tex. Apr. 29, 2009) (Fitzwater, C.J.) (“Klein III”)

(holding, inter alia, that due process was satisfied because it was

undisputed that Long received constructive notice of the suit

through publication in July 2006, and failed to request opt out by

the court-ordered September 2006 deadline). Long has renewed the

request to opt out in a motion filed on September 23, 2009.

Essentially, Long seeks to opt out so that he can pursue an

independent lawsuit against the defendants and against Miami Valley

and the physicians who treated CL (the “Miami Valley Providers”).

Long maintains that he can obtain a larger award through an

independent lawsuit than he will receive under the proposed

settlement. He also objects to the provision of the Settlement

Agreement requiring that he release third-party medical providers,

such as the Miami Valley Providers, as a condition of receiving his

share of the settlement proceeds. In addition to objecting on

various grounds to the Settlement Agreement, Long also moves for

decertification of the class, for leave to intervene, and to opt

out of the class.

E

The court conducted a two-day fairness hearing on February 16

and 17, 2010. On the second day of the hearing, Jenkins, with

court approval, withdrew her objection, leaving Long as the lone

 

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15The purpose of both sides’ medical expert testimony is not

to prove the validity of their respective positions on the merits

of the case, but to enable the court to assess the strengths and

weaknesses of the class plaintiffs’ claims and defendants’ defenses

and thereby to determine whether the proposed settlement is fair,

reasonable, and adequate. This presentation has assisted the court

in determining the likelihood that the class plaintiffs will

succeed on the merits and has enabled it to compare the proposed

settlement amount with the likely recovery if the case were tried.

- 17 -

remaining objector. During the hearing, the parties, Long, and

Jenkins (until she withdrew her objection) presented evidence and

arguments regarding whether the Settlement Agreement is fair,

reasonable, and adequate, as Rule 23(e)(2) requires, and not the

product of collusion between the parties. They also presented

evidence through witnesses and exhibits. Counsel also crossexamined witnesses and presented argument. 

The class plaintiffs called several medical experts to testify

about the causes and effects of E-Ferol syndrome.15 The witnesses

each have experience researching E-Ferol, and several were among

the first and most prominent experts on the drug and its effects

during the initial response to E-Ferol syndrome in the 1980s. For

various reasons, including the fact that E-Ferol was only used for

a short period more than two decades ago, the available pool of

medical experts with knowledge about the drug is notably small. In

many cases, the experts retained by the class plaintiffs and

defendants are the same individuals who performed the foundational

research and analysis of E-Ferol syndrome. The authors of

virtually all the significant studies and published articles on E-

 

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- 18 -

Ferol were involved in this litigation at some point, and several

testified at the fairness hearing.

The class plaintiffs first presented Carl J. Bodenstein, M.D.

(“Dr. Bodenstein”), a neonatologist, who testified about the

initial process of discovering and diagnosing cases of E-Ferol

syndrome. Dr. Bodenstein coauthored the first published academic

article identifying E-Ferol syndrome and participated in the CDC’s

investigation during the period that immediately followed the

recall of E-Ferol. In relation to this class action, Dr.

Bodenstein reviewed the records of each class member to verify that

E-Ferol was administered and how much of the drug was used in each

case, and he determined the relationship between E-Ferol and the

claimed injuries or death.

The class plaintiffs next offered the testimony of Kevin Bove,

M.D. (“Dr. Bove”). Dr. Bove is a pediatric pathologist at

Cincinnati Children’s Hospital (a hospital that administered EFerol) and a professor at the University of Cincinnati College of

Medicine. He testified about his involvement with Dr. Bodenstein

in the early efforts to research the causes of E-Ferol syndrome.

Dr. Bove stated that the pathological markers associated with EFerol syndrome were distinct from typical liver problems among

premature infants. He also participated in the instant case by

reviewing the definition of the plaintiffs class as well as the

categorization of individual class members, and he concluded that

 

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16Prof. Underwood testified that he has now been granted tenure

as a member of the faculty of Baylor Law School.

- 19 -

both were consistent with the medical data regarding E-Ferol

syndrome. While the most well-developed evidence involving E-Ferol

syndrome involves the death cases, Dr. Bove also testified about

the medical evidence in the Category 3 brain injury cases, and he

admitted that the causation links were weaker in these cases

(although, in his view, still probable).

Dr. Bove’s testimony regarding the evidence of E-Ferol-related

brain injury was supported by William J. Martone, M.D. (“Dr.

Martone”), the final medical expert whom the class plaintiffs

called. Dr. Martone supervised the CDC investigation into E-Ferol

syndrome in 1984 and recommended to the FDA that E-Ferol be

recalled. He confirmed that there is a scarcity of research on

brain injuries caused by E-Ferol syndrome, although he testified

that he is confident such a connection exists.

After the two class representatives testified, lead class

counsel, Art Brender, Esquire (“Brender”), testified in support of

the settlement and the motion for attorney’s fees, costs, and

expenses. Brender was cross-examined by lawyers for Long and

Jenkins, who challenged his assertions about the fairness of the

settlement and class counsels’ request for attorney’s fees.

Plaintiffs then called Professor Jim Underwood (“Prof. Underwood”),

an Associate Professor of Law at Baylor Law School,16 who testified

 

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17Citations to “Tr.” are to a draft of the hearing transcript

prepared by the court reporter to assist the court in preparing

this memorandum opinion and order. Because the transcript is

subject to final editing and review by the court reporter,

quotations contained in this memorandum opinion and order may not

precisely match the wording of the final transcript. Likewise, the

transcript page numbers cited are those reflected in a version of

the draft available to the court, and the pagination of the final

transcript may be different. “Tr. 1:” refers to the transcript of

the first day of the hearing (February 16, 2010), and “Tr. 2:”

refers to the transcript of the second day of the hearing (February

17, 2010). 

- 20 -

that the settlement is fair, reasonable, and adequate and that the

requested award of attorney’s fees, costs, and expenses is not only

reasonable, but is less than expected in a case of this scale.

Drawing on his experience as a class-action litigator and professor

of torts and complex litigation (the thrust of which is federal

class action law), Prof. Underwood opined that class counsel had

provided exceptional representation to the class by identifying and

contacting as many potential members as could be found. He

testified that the motion practice in the case indicated hardfought litigation that placed an unusually high burden on the

attorneys and resulted in a favorable settlement for the class.

Prof. Underwood praised the arrangement of the settlement

categories and the process by which class members could appeal

their category placement. He concluded that “[t]his [settlement]

would be a poster child for a class action that works for the

benefit of the class.” Tr. 1:245.17 

The class plaintiffs concluded by making a video presentation

 

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consisting of several class members who could not attend the

hearing and of the decedents of some members. Several class

members attended some or all of the hearing and were introduced

after the parties’ opening statements. All of these class members

support the proposed settlement.

Defendants first presented Barry Chasnoff, Esquire

(“Chasnoff”), their lead counsel, who testified, among other

things, about the defenses to liability that his clients intended

to raise if the case were to proceed to trial. He stated that

defendants intended to challenge the class plaintiffs’ overall

expert evidence, especially the causation evidence related to the

Category 3 neurological injury claims. Defendants then called a

legal expert, Professor Charles Silver (“Prof. Silver”), a

professor at The University of Texas School of Law, who specializes

in class action research and has served as class counsel in

numerous cases. Prof. Silver, like Prof. Underwood, opined that

the settlement is fair and reasonable overall. He especially noted

the lengths to which class counsel had gone to identify and contact

as many individual members of the class as possible. He found it

significant that 97.3% of class members had affirmatively approved

the Settlement Agreement, and, of those who had not, only one had

raised formal objections. Prof. Silver stated that such

overwhelming affirmative support for a class action settlement, as

opposed to mere acquiescence by class members, was extremely rare,

 

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and this reinforced his conclusion that the proposed settlement is

fair and should be approved.

 Finally, defendants presented the testimony of Michael

O’Shea, M.D. (“Dr. O’Shea”), an expert on brain injuries in

premature infants. Dr. O’Shea testified regarding the asserted

weaknesses in the class plaintiffs’ claims, suggesting that

evidence of E-Ferol’s causation of the injuries——particularly for

the brain injury and cerebral palsy claims——was vulnerable to

attack. He pointed to a lack of peer-reviewed published materials

supporting a connection between E-Ferol and brain injuries.

Moreover, Dr. O’Shea opined that generating such evidence for trial

would be difficult or impossible, because little research had been

done on links to brain injury when E-Ferol was recalled, and the

passage of time prevents such studies from being feasible today.

Dr. O’Shea explained that, because virtually all of the E-Ferol

recipients were premature infants with significant health

challenges already, it would be hard for researchers to

definitively link a particular injury (such as cerebral palsy) with

E-Ferol. He also suggested that rates of brain injury allegedly

caused by E-Ferol are consistent with the occurrence of brain

injury among premature infants overall——i.e., E-Ferol may not have

increased recipients’ chances of developing brain injury. Dr.

O’Shea concluded that it would be necessary for the class

plaintiffs’ claims to overcome these significant hurdles if the

 

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settlement were not approved and the claims were tried.

After the class plaintiffs and defendants completed their

presentations, Long testified in support of his objections to the

Settlement Agreement. He primarily testified about CL’s medical

treatment, and he stated that no physician had informed him or his

wife of the possibility that E-Ferol could have caused CL’s death.

Long averred that he first became aware of the possibility that EFerol may have caused CL’s death when class plaintiffs’ counsel

mailed him notice after obtaining his identity from Miami Valley.

Long testified that he should be excluded from the settlement, on

two principal grounds: (1) the settlement amount was too low and

undervalued his claim, and (2) the release of third-party medical

providers infringed on his right to sue the Miami Valley Providers.

Long stressed that his right to his day in court would be

improperly extinguished if the proposed settlement is approved. 

In addition to their hearing testimony, the parties submitted

other evidence before and during the hearing, such as written

declarations and exhibits. They have also made post-hearing

submissions.

II

The court determines first whether the Settlement Agreement is

fair, reasonable, and adequate to the class plaintiffs as a whole

and not the product of collusion between the parties.

A proposed settlement in a class action must undergo rigorous

 

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testing by the court to ensure that the interests of absent class

members are represented. “The gravamen of an approvable proposed

settlement is that it be fair, adequate, and reasonable and is not

the product of collusion between the parties.” Newby v. Enron

Corp., 394 F.3d 296, 301 (5th Cir. 2004) (internal quotation marks

omitted); see also Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir.

1977). In exercising its discretion to approve a settlement, the

court must “ensure that the settlement is in the interests of the

class, does not unfairly impinge on the rights and interests of

dissenters, and does not merely mantle oppression.” Pettway v. Am.

Cast Iron Pipe Co., 576 F.2d 1157, 1214 (5th Cir. 1978); see also

Reed v. Gen. Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983).

Although the court must weigh the facts and law of the case to

determine the fairness of the settlement, this does not mean that

the court should reach conclusions as to the ultimate merits of the

claims or defenses. See Pettway, 576 F.2d at 1214 n.69; Cotton,

559 F.2d at 1330. “The court . . . must not try the case in the

settlement hearings because the very purpose of the compromise is

to avoid the delay and expense of such a trial.” Reed, 703 F.2d at

172 (internal quotation marks omitted). 

In evaluating a proposed settlement, “a trial judge is

dependent upon a match of adversary talent because he cannot obtain

the ultimate answers without trying the case. Indeed, that

uncertainty is a catalyst of settlement.” Id. at 175. Courts

 

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assess the efficacy of representation in large part by the

barometer of the relief that counsel have obtained for the class.

The adequacy of the representation is linked to the question

whether the settlement is fair and reasonable. See Reed, 703 F.2d

at 175; Parker v. Anderson, 667 F.2d 1204, 1211 (5th Cir. Unit A

1982). Where the court finds that counsel have adequately

represented the interests of the class, “the trial judge, absent

fraud, collusion, or the like, should be hesitant to substitute its

own judgment for that of counsel.” Cotton, 559 F.2d at 1330. The

Fifth Circuit has repeatedly stated that the opinion of class

counsel should be accorded great weight. Recognizing that various

class members may have different priorities in a class action, the

Fifth Circuit has concluded:

Where there is disagreement among the class

members concerning an appropriate course of

action, it may be impossible for the class

attorney to do more than act in what he

believes to be the best interests of the class

as a whole. If the attorney’s decision in the

face of such disagreement affects each class

member more or less equally, and no allegation

is made that the rights of a definable

minority group within the class were

sacrificed for the benefit of the majority,

the attorney’s views must be accorded great

weight, and the trial judge’s decision to

ratify the attorney’s action will seldom be

overturned.

Pettway, 576 F.2d at 1216.

A proposed settlement need not obtain the largest conceivable

recovery for the class to be worthy of approval; it must simply be

 

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18Consistent with prior references in this litigation, the

court will refer to the six tests set out in Reed as the “Reed

factors.”

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fair and adequate considering all the relevant circumstances. “If

the terms themselves are fair, reasonable and adequate, the

district court may fairly assume that they were negotiated by

competent and adequate counsel; in such cases, whether another team

of negotiators might have accomplished a better settlement is a

matter equally comprised of conjecture and irrelevance.” In re

Corrugated Container Antitrust Litig., 643 F.2d 195, 212 (5th Cir.

Apr. 1981). In the context of a class action settlement,

“compromise is the essence of a settlement, and the settlement need

not accord the plaintiff class every benefit that might have been

gained after full trial.” Pettway, 576 F.2d at 1214 n.69.

Accordingly, “[t]he trial court should not make a proponent of a

proposed settlement justify each term of settlement against a

hypothetical or speculative measure of what concessions might have

been gained; inherent in compromise is a yielding of absolutes and

an abandoning of highest hopes.” Cotton, 559 F.2d at 1330

(internal quotation marks omitted).

The court must apply a six-part test to determine whether the

proposed settlement is fair, reasonable, and adequate under Rule

23(e). See Newby, 394 F.3d at 301; Reed, 703 F.2d at 172. The six

Reed factors18 are: 

 

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(1) the existence of fraud or collusion behind

the settlement; (2) the complexity, expense,

and likely duration of the litigation; (3) the

stage of the proceedings and the amount of

discovery completed; (4) the probability of

plaintiffs’ success on the merits; (5) the

range of possible recovery; and (6) the

opinions of the class counsel, class

representatives, and absent class members.

Reed, 703 F.2d at 172 (citing Parker, 667 F.2d at 1209). In

balancing the six factors, “absent fraud or collusion, the most

important factor is the probability of the plaintiffs’ success on

the merits.” Parker, 667 F.2d at 1209.

“When considering [the Reed] factors, the court should keep in

mind the strong presumption in favor of finding a settlement fair.”

Purdie v. Ace Cash Express, Inc., 2003 WL 22976611, at *4 (N.D.

Tex. Dec. 11, 2003) (Lindsay, J.). “Particularly in class action

suits, there is an overriding public interest in favor of

settlement.” Cotton, 559 F.2d at 1331. Moreover, the public

interest in settlement is best served when a settlement binds all

parties without allowing for individual opt outs.

Class litigation when not abused can aid the

courts by its coagulation of numerous claims.

It follows that it is relevant to ask whether

a settlement results in a decision binding on

the class or whether it acts as a dispersing

agent. For example, the ability of the

Pettway class members to opt out of the

settlement and pursue individual claims

counseled against approval of a disputed

settlement. In contrast, class members here

who did not earlier opt out of the class are

bound by the settlement. In this sense the

settlement reduces the burdens placed on the

judicial system. Admittedly too broad to

 

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provide analytical heat, these heuristic

expressions nonetheless shape judicial

attitude and are properly the backdrop to the

[Reed] inquiries.

Reed, 703 F.2d at 175 (emphasis added). Thus courts are to adhere

to a strong presumption that an arms-length class action settlement

is fair——especially when doing so will result in significant

economies of judicial resources——absent evidence weighing against

approval. See Turner v. Murphy Oil USA, Inc., 472 F.Supp.2d 830,

843 (E.D. La. 2007) (“The public interest favoring settlement is

especially apparent in the class action context where claims are

complex and may involve a large number of parties, which otherwise

could lead to years of protracted litigation and sky-rocketing

expenses.”).

That one class member of 369 has objected to the proposed

settlement does not preclude the court from approving it. “[A]

settlement can be approved despite opposition from class members,

including named plaintiffs.” Ayers v. Thompson, 358 F.3d 356, 373

(5th Cir. 2004) (citing Reed, Parker, and Cotton). “[I]n assessing

the fairness of a proposed compromise, the number of objectors is

a factor to be considered, but a settlement can be fair

notwithstanding a large number of class members who oppose it.”

Pettway, 576 F.2d at 1215 (citing Cotton, 559 F.2d at 1331); see

also Reed, 703 F.2d at 174 (holding that while total number of

objectors is not dispositive, it is one factor that courts should

consider in conducting a fairness evaluation).

 

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Once a court is aware that there are objectors to a proposed

settlement, it must allow an opportunity for their objections to be

heard. Pettway, 576 F.2d 1219. “However, this is not to say that

the trial judge is required to open to question and debate every

provision of the proposed compromise.” Cotton, 559 F.2d at 1331.

When weighing the views of objecting class members, “the trial

court may limit its proceeding to whatever is necessary to aid it

in reaching an informed, just and reasoned decision.” Id. 

After allowing objectors to be heard, “[t]he trial court must

then examine the settlement in light of objections raised and set

forth on the record a reasoned response to the objections including

findings of fact and conclusions of law necessary to support the

response.” Pettway, 576 F.2d at 1219 (internal quotation marks

omitted) (quoting Cotton, 599 F.2d at 1331). The court must

analyze the facts and law relevant to the proposed settlement and

must state the reasons justifying its decision. See Cotton, 599

F.2d at 1330 (“A mere boiler-plate approval phrased in appropriate

language but unsupported by evaluation of the facts or analysis of

the law will not suffice.” (internal quotation marks omitted)).

“[I]t is essential that the trial judge support his conclusions by

memorandum opinion or otherwise in the record. An appellate court,

in the event of an appeal, must have a basis for judging the

exercise of the trial judge’s discretion.” Id.

 

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III

The court now turns to the Reed factors.

A

The court first looks for the existence of fraud or collusion

behind the settlement. “The Court may presume that no fraud or

collusion occurred between counsel, in the absence of any evidence

to the contrary.” Liger v. New Orleans Hornets NBA Ltd. P’ship.,

2009 WL 2856246, at *3 (E.D. La. Aug. 28, 2009). Here, no

allegations of fraud or collusion have been raised, and none is

apparent. As Long’s counsel began cross-examining Brender during

the fairness hearing, he stated that he had “no reason to believe

and [made] no claim on behalf of [his] client that this settlement

was the product of collusion or in any other untoward conduct by

yourself [Brender] or Mr. Chasnoff.” Tr. 1:173. And Judge Martin,

the mediator, avers that “[t]he settlement was reached only after

a period of hard fought negotiations,” Ps. Ex. 41 at 1, and “was

the result of arms length bargaining among the plaintiffs’ counsel,

the defendants and their insurers,” id. at 2. This opinion is

confirmed by the fairness-hearing testimony of counsel for the

class plaintiffs and defendants, and by the legal experts who

carefully evaluated the proposed settlement. See, e.g., Tr. 1:238

(testimony of Prof. Underwood) (“This case was hard fought from the

beginning.”); Ds. Ex. 2 at 7 (statement of Prof. Silver) (“[T]he

relationship between Class Counsel and Defendants was genuinely

 

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adversarial.”).

The court finds that the proposed settlement is not the

product of fraud or collusion. The evidence points unmistakably to

the conclusion that the Settlement Agreement was the culmination of

several years of pretrial proceedings, motion practice, and

forceful negotiations by the class plaintiffs and defendants. This

factor supports a finding that the settlement is fair, reasonable,

and adequate.

B

Under the second Reed factor, the court considers the

complexity, expense, and likely duration of the litigation. 

When the prospect of ongoing litigation threatens to impose

high costs of time and money on the parties, the reasonableness of

approving a mutually-agreeable settlement is strengthened. See

Ayers, 358 F.3d at 369. This factor weighs strongly in favor of

approving the proposed settlement. Although much has been done

since 2004 (when the class was certified), considerable work will

be required before the suit can proceed to trial. The testimony of

counsel for both sides supports the finding that, despite

substantial efforts already invested in this case, a great deal

more time and resources will be required to prosecute it to a

verdict. Brender states in his pre-hearing declaration that

“[this] litigation has been extremely expensive and will prove to

be even more so in the event this settlement is not approved.” Ps.

 

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19Each of the class plaintiffs’ experts noted that his research

conducted on brain injuries and E-Ferol would be worthy of

publication, suggesting that, although there may be evidence

supporting the class plaintiffs’ theories, they are not presently

well accepted or established. Otherwise, they might not be

considered worthy of publication.

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Ex. 29 at 14. He cites as examples of the cost entailed in

continued litigation the need to rely on a select number of E-Ferol

medical experts, the number and geographical diversity of class

members, and the need to develop evidence on the disputed issue of

causation. Id. Likewise, Chasnoff testified at the hearing that

“the sheer size [and] volume of medical evidence to be considered,

the number of individual witnesses who would be involved, and the

complexity of plaintiffs’ claims would assure a long, complex, and

expensive trial.” Tr. 1:10. 

The medical experts called by both sides offered evidence

regarding the nature of the scientific disputes, concerning both

the appropriate methodology and the substance of the claims that

would be at issue. They especially noted the complex causation

issues related to the Category 3 brain injury claims. Each of the

class plaintiffs’ medical witnesses opined that the brain injuries

could be tied to E-Ferol, but each admitted that there was no

published study that conclusively proves this link.19 See Tr. 1:65,

1:92, 1:133. These witnesses presented evidence about their

research and analysis——both at the time of the E-Ferol recall and

in preparation for this litigation——that sought to establish the

 

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brain-injury connection. Likewise, in his pre-hearing statement,

Prof. Underwood opines that “class members would face significant

issues of both general and specific causation and there is every

reason to believe that Defendants would mount formidable challenges

on these elements of the claims.” Ps. Ex. 28 at 12-13. 

Defendants intend to challenge vigorously the causation

evidence that the class plaintiffs offer to support their claims,

particularly for the Category 3 brain injury allegations and for

the claims for costs of ongoing medical monitoring for Category 4

class members who have suffered no apparent injuries. See Ds. Ex.

1 at 4-7. Dr. O’Shea testified at the hearing that the incidence

of brain injury is already high in any population of premature

infants. Consequently, there may be causes other than E-Ferol for

the injuries sustained by those in Category 3. See Tr. 2:138. He

opined that flaws existed in the class plaintiffs’ evidence, and he

concluded that there were “other factors which gave the [Category

3 claimants] a high risk of that brain dysfunction, regardless of

E-Ferol.” Tr. 2:139. Moreover, Dr. O’Shea asserted that the

theory supporting the Category 3 claims is itself flawed, even if

there were not adequate explanations, other than E-Ferol, for the

injuries. He opined that “the other issue that causes a lot of

doubt on the possibility of E-Ferol causing brain dysfunction is

that no one has been able to advance an argument of why that is

biologically possible.” Id. Although experts for the class

 

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asserted confidence in their conclusions, Dr. O’Shea testified that

he did not believe the study proved to a medical certainty that EFerol caused the neurological injuries. Tr. 2:141. Additionally,

defense counsel argued that, even though a significant amount of

discovery had already been conducted, additional fact-finding would

be required before the case could be tried. See Tr. 1:11.

Finally, defendants intend to appeal the court’s decision in

Klein II denying in part their motion for partial summary judgment

asserting the affirmative defense of limitations. They seek leave

to take an interlocutory appeal from that ruling. If the court

allows such an appeal, the trial will be delayed while the appeal

is prosecuted. If the court declines to grant leave to appeal,

defendants will presumably take such an appeal if there is an

adverse verdict, which will also delay a recovery for the class

plaintiffs. And, of course, if such an appeal were successful,

class members’ claims could be barred altogether. 

The issues recounted above make clear that prolonging the case

would lead to an increase in the already-sizeable investments of

time and resources by the parties over the seven years since the

case was filed. The fact that it has taken this long for the

litigation to proceed to the point of a possible settlement speaks

to the nature and scope of the issues in dispute. The contested

issues of causation and the reliability of the class plaintiffs’

medical theories tying their injuries to E-Ferol indicate that any

 

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further litigation would require more time and expense for the

parties to engage in a battle of medical experts. The efforts

required to prove the class plaintiffs’ claims at trial would

unquestionably be extremely complex and expensive, even if such

efforts were guaranteed to be successful (which, of course, they

are not). And approval of the proposed settlement would permit

class members to recover damages much sooner than would be possible

following a trial and probable appeal that might not be concluded

for several years. “Ultimately, if Plaintiffs were to succeed at

trial, they still could expect a vigorous appeal by Defendants and

an accompanying delay in the receipt of any relief.” Schwartz v.

TXU Corp., 2005 WL 3148350, at *19 (N.D. Tex. Nov. 8, 2005)

(Kinkeade, J.).

Approval of the Settlement Agreement provides relief while

simultaneously freeing class members and defendants alike from the

burdens and uncertainty inherent in additional litigation. The

court finds that the complexity, expense, and likely duration of

the case supports approving the proposed settlement.

C

Under the third Reed factor, the court considers the stage of

the proceedings and the amount of discovery completed. It

evaluates whether “the parties and the district court possess ample

information with which to evaluate the merits of the competing

positions.” Ayers, 358 F.3d at 369. A settlement can be approved

 

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under this factor even if the parties have not conducted much

formal discovery. See, e.g., Cotton, 559 F.2d at 1332.

Furthermore, “[t]he scope of the discovery to be conducted in each

case rests with the sound discretion of the trial judge.” Id. at

1333.

The testimony of lead counsel for the class plaintiffs and

defendants, the legal expert witnesses, and the court’s familiarity

with the discovery in this case confirm that the merits of the

claims are well known to both sides. Settlement negotiations took

place over a period of 14 months and did not begin until five years

after suit was filed. Moreover, the parties benefited from the

large number (estimated at over 130) of individual lawsuits

alleging E-Ferol claims that preceded this case, as well as the

prior criminal prosecution. The foundation laid by these cases

aided in the development of the facts in this action and provided

a means for counsel to measure the approximate value of the claims

of class members.

Class counsel were at some point able to identify and contact

personally almost all, if not all, known recipients of E-Ferol or

their representatives or survivors. This extensive contact with

the class meant that each claim could be thoroughly explored, and

it allowed the attorneys to evaluate the strength of their

respective cases using hard facts rather than mere class-wide

generalities. According to counsel, in addition to the

 

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depositions, interrogatories, and other formal discovery, the

parties engaged in considerable informal discovery prior to the

settlement negotiations. Class counsel collected discovery

materials from the previous E-Ferol lawsuits in addition to the

research generated specifically for this case. Both sides have

employed the services of medical experts to evaluate the claims of

class members and to understand their various strengths and

weaknesses. 

Prof. Silver notes that the duration of the current

case——which well exceeds his estimate of the typical duration of a

class action suit——along with the previous E-Ferol litigation

allowed both sides to appreciate the value of the claims.

“[C]onsequently, the defendants had no reason to overpay and Class

Counsel could easily recognize an inadequate offer.” Ds. Ex. 2 at

10. He opines that the previous E-Ferol lawsuits demonstrate that

defendants are not merely trying to use settlement in this case as

a means of avoiding discovery that might lead to subsequent cases.

Because the facts surrounding E-Ferol are now so well developed,

the Settlement Agreement likely represents a realistic estimate of

the value of the claims, rather than a bargain struck for some

ulterior purpose. Prof. Underwood confirmed during his hearing

testimony that the litigation was well developed and that the

motion practice evidenced by the court’s docket demonstrated that

the merits of the case were well understood by all parties. Tr.

 

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1:239-40.

The court finds that the litigation is at an appropriate stage

for settlement. Accordingly, this factor supports approving the

proposed settlement.

D

The fourth Reed factor examines the probability of plaintiffs’

success on the merits of their claims. See Ayers, 358 F.3d at 370.

Evaluating the likelihood of success “contains an internal

tension.” Reed, 703 F.2d at 172.

A district court faced with a proposed

settlement must compare its terms with the

likely rewards the class would have received

following a successful trial of the case. The

court, however, must not try the case in the

settlement hearings because the very purpose

of the compromise is to avoid the delay and

expense of such a trial.

Id. (citation and internal quotation marks omitted). Despite this

tension, absent fraud or collusion, the most important Reed factor

is the probability of plaintiffs’ success on the merits. Parker,

667 F.2d at 1209.

Attorneys for both sides presented testimony regarding the

class plaintiffs’ probability of success on the merits and the

obstacles to recovery. In his pre-hearing declaration, Brender

opines:

The probability of success on the merits in

this litigation hinges upon the strength of

the medical causation evidence, the

limitations defense in the death cases, the

liability facts, the passage of time since the

 

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injury, the strength of the medical research

by class medical experts, and the insurance

structure and financial viability of the

companies that insure both defendants.

Ps. Ex. 29 at 16. In his pre-hearing statement, defendants’

counsel, Chasnoff, agrees with Brender’s characterization of the

challenges to recovery by the class plaintiffs. Chasnoff notes

that defendants contested the causation element in each case: for

the death cases, he asserts that the class must prove that E-Ferol

caused the deaths of the medically-challenged premature infants in

Categories 1 and 2. See Ds. Ex. 1 at 4-5. As to the Category 3

brain injury cases, defendants maintain that the class cannot prove

causation within a reasonable degree of medical certainty. If the

settlement is not approved, defendants intend to present Daubert

challenges to the class plaintiffs’ medical evidence. See id. at

5-6. Concerning the Category 3 neurological injury claims,

specifically, Chasnoff opines that the medical evidence is wholly

insufficient to sustain recovery. Id. at 5 (“[Defendants will

argue that [plaintiffs’] theory of causation does not meet the

standards of reliability required by Daubert and its progeny.”).

As to the claims in Category 4, Chasnoff asserts, first, that some

class members’ home states do not recognize a cause of action for

medical monitoring (raising the possibility that these members’

claims would be dismissed), and, second, that all Category 4 claims

will face causation obstacles (i.e., demonstrating that E-Ferol

exposure either increased the risk of developing a serious latent

 

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disease or caused the deaths of the class members’ decedents). See

id. at 6-7. 

Dr. O’Shea’s report purports to undermine much of the evidence

on which the class relies, and he opines that there is too little

medical support for the conclusion that the administration of EFerol led to brain injuries such as cerebral palsy. He testified

that the main medical study supporting the Category 3 claims did

not involve a control group of premature infants to compare with

those receiving E-Ferol, and it did not account for variables that

could have caused the claimed injuries. See Tr. 2:136-37. These

challenges are especially potent because, due to the time that has

elapsed since the events in question, conducting additional studies

or research on E-Ferol’s neurological impacts would be difficult,

if not impossible. If the available evidence were shown to be

unreliable, this could preclude any recovery for class members in

Category 3. Additionally, brain injuries such as those included in

the Category 3 claims are not uncommon among premature infants,

even without the influence of E-Ferol, and virtually all of the

infants in question had significant health risks before they

received the drug. See id. at 139. The class plaintiffs, of

course, dispute the inadequacy of their evidence, but even class

counsel admits that if the case were to proceed to trial, “[some]

brain damage cases [would be lost] due to the complexity of medical

causation.” Ps. Ex. 29 at 18.

 

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Defendants also intend to appeal (with leave before final

judgment, or as of right afterward) the court’s partial denial of

their motion for partial summary judgment on limitations grounds.

Although the court rejected at the summary judgment stage

defendants’ limitations arguments (other than concerning the

Category 5 claims, which were dismissed), there are admittedly

complex questions of limitations and notice for a class action that

is based on events that occurred 26 or more years ago. A

successful outcome for defendants’ appeal would result in no right

of recovery for class members whose claims are time-barred.

Moreover, refusing to approve the settlement will preclude any

recovery for class members in Category 5 unless they prosecute and

prevail on appeal. The proposed settlement is notable in that it

provides reduced, although not insubstantial, recoveries for these

claims, even though defendants would essentially be immune to any

such liability if the case were tried on the merits and these

plaintiffs were unsuccessful on appeal.

The court finds that the evidence regarding the class

plaintiffs’ probability of success on the merits favors approving

the proposed settlement. On the one hand, the class plaintiffs

have asserted strong claims that are similar to others that have

obtained favorable settlements in prior E-Ferol lawsuits. There is

little dispute about the underlying liability of defendants for

manufacturing a defective product; the inherent dangers of E-Ferol

 

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- 42 -

are not contested; and the conduct at issue resulted in criminal

convictions. The claims of the class plaintiffs are compelling,

and jurors could be persuaded of their merit. 

On the other hand, the possibility of defendants’ successfully

appealing the court’s summary judgment decision presents a risk of

no recovery for many class members. Likewise, the difficulty of

proving causation, especially for the Category 3 claims, is real.

The medical evidence overall is based on a limited pool of

available information and would be subject to challenges both in

its inherent reliability and in its application to each claim.

Moreover, a jury might be reluctant to award damages for acts that

took place far in the past, particularly when considering claims

for emotional injury and the like. Finally, the Settlement

Agreement provides for sizeable awards to claims in Category 5

that, apart from the settlement, would have no chance of recovery

absent the prosecution of a successful appeal, necessitating

additional expense and perhaps substantial delay.

Accordingly, the fourth Reed factor favors approval of the

settlement.

E

1

The fifth Reed factor requires that the court consider the

range of possible recovery by the class. This factor compares the

recovery for the class under the proposed agreement with the likely

 

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estimated value of the claims if they went to trial. Under this

factor, a court should consider the views of objecting class

members when their “objections to the settlement agreement center

on their view that the relief it provides is inadequate.” Ayers,

358 F.3d at 370.

“Parties give and take to achieve settlements. Typically

neither Plaintiffs nor Defendants end up with exactly the remedy

they would have asked the Court to enter absent the settlement.”

Frew v. Hawkins, 2007 WL 2667985, at *6 (E.D. Tex. Sept. 5, 2007)

(internal citations omitted) (citing United States v. Armour, 402

U.S. 673, 681 (1971)). The court must determine whether, “[t]aking

into account the risks inherent in this litigation, as well as the

costs of litigation, the settlement amount is fair and reasonable.”

Quintanilla v. A & R Demolition Inc., 2007 WL 5166849, at *5 (S.D.

Tex. May 7, 2007). The court’s analysis of the reasonableness of

the recovery provided under the Settlement Agreement can take into

account the challenges to recovery at trial that could preclude the

class from collecting altogether, or from only obtaining a small

amount. “[A]fter determining if any legal or factual obstacles

exist, a district court must make an inquiry into whether the

settlement’s terms fall within a reasonable range of recovery,

given the likelihood of the plaintiffs’ success on the merits.”

Turner, 472 F.Supp.2d at 849-50 (emphasis added).

 

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2

The Settlement Agreement divides the class members into five

categories (and some sub-categories). Class members are classified

according to the type of injury claimed and the strength of

available proof. Settlement funds are allocated among these

categories by prescribed percentages, and each class member is

entitled to a pro rata share of the percentage allocated to the

member’s category. Under the Settlement Agreement, the death

claims in Category 1 (where E-Ferol can be shown to be a

substantial cause of the death) are allocated approximately $2

million per claim, while the Category 2 death claims (in which EFerol was only a contributing factor) are allocated approximately

$1 million. In Category 3, the recoveries for brain injuries range

between $1 million and $1.5 million, with larger amounts awarded

for more severe injuries. Category 4 claimants, who include

medical monitoring cases and death cases where E-Ferol is not

thought to be the cause of death, receive approximately $35,000.

Finally, the Category 5 claims, which the court dismissed in Klein

II on limitations grounds, are allocated sums ranging from $236,000

(for dismissed claims that would otherwise fall into Category 1) to

$118,000 (for dismissed Category 2 and 3 claims) to $4,000 (for

dismissed Category 4 claims). The payments to each of the classes

are reduced by the court’s award of attorney’s fees and expenses to

class counsel and of compensation to the class representatives.

 

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At the fairness hearing and in their written submissions

defendants have presented evidence that the proposed settlement

amounts are within the range of reasonableness for E-Ferol

litigation as compared with settlements in prior suits.

Defendants’ evidence reflects all known, prior lawsuits alleging

death or injury caused by E-Ferol (more than 130 individual cases,

all of which settled before trial). Using the settlement amounts

per claim from these cases, and adjusting for inflation,

defendants’ counsel compared the proposed recoveries in this case

with averages for the entire body of E-Ferol settlements. He found

that, for cases alleging death caused by E-Ferol, the median payout

was $1.562 million, and the mean was $2.005 million. See Ds. Exs.

1A and 1B. In E-Ferol settlements over personal injury claims, the

median value was $567,000 and the mean was $1.1 million. Id.

Defendants’ counsel opined that the mean values were greater than

the median due to a number of aberrantly high settlements reached

soon after the E-Ferol recall in the mid-1980s. See Tr. 1:17.

The data presented by defense counsel, the accuracy of which

is unchallenged, reveal that the anticipated payments under the

Settlement Agreement compare favorably with the median recoveries

obtained in prior settlements of similarly-classified injuries.

And they do not diverge greatly from the mean value, even taking

into account a number of high recoveries soon after the events took

place. In considering whether the settlement payments fall within

 

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20Some class members, of course, seek recoveries for ongoing

injuries.

- 46 -

the range of reasonably anticipated recoveries, the court is

mindful that the passage of time could likely lead to reduced jury

awards, even if defendants are found liable. Prof. Underwood

testified that a verdict in favor of the class would depend on a

jury’s being persuaded to award damages based on decades-old

injuries, and the temporal remoteness of the events could depress

the amounts of such judgments. See Tr. 1:242 (“[O]bviously the

claims that are filed early on . . . have generally the most

sympathetic, grieving parents, where the jury is probably going to

be inclined to award a greater amount of damages. So the time is

a big factor here.”). He noted that “there’s a real fear that the

jury is going to discount the damages just based upon the fact that

the emotional scars from the events have presumably scabbed over to

a certain extent, or at least that’s going to be the thought of a

lot of the jurors who have not had the unfortunate experience of

losing a child.” Id. at 241-42. The court finds it reasonable to

discount the potential recovery for a class of plaintiffs who seek

recoveries for injuries that occurred years ago.20 This is

particularly true when comparing such an estimate with many of the

settlements that are reflected in defendants’ data, most of which

occurred in the mid-1980s, when the events and injuries in question

were relatively contemporaneous with the litigation.

 

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Looking beyond E-Ferol litigation to a more comprehensive

examination of similar class action settlements, Prof. Silver

presents evidence that the payments under the Settlement Agreement

well exceed the typical recovery for such claims. See Ds. Ex. 2 at

15-26. He compares the recoveries in this case with those from

class action settlements in medical malpractice cases involving

claims of death or injury to victims between birth and one year of

age (the age of virtually all the recipients of E-Ferol). Prof.

Silver focuses his research on settlements from Texas and Ohio, but

he also reviews data from the other home states represented among

class members. In each case, the recoveries under Categories 1, 2,

and 3 of the Settlement Agreement exceed both the median and the

mean of settlement recoveries overall——often three or four times

higher than the typical amount. See id.

Prof. Underwood testified that the division of the settlement

funds among the various categories of the settlement were fair and

appropriate. See Tr. 1:244. He noted that the allocation of funds

was atypical, in that the neurological injury cases under Category

3 receive lower payments than the death claims under Categories 1

and 2. Prof. Underwood explained this anomaly by pointing to the

causation evidence. Whereas the causation arguments in the death

cases are fairly well established (although still disputed), the

medical evidence establishing causation in the brain injury cases

is much thinner and is vulnerable to challenge. Thus it is

 

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reasonable to reduce the value of Category 3 claims to account for

problems proving causation that would likely occur if the case were

tried. See Tr. 1:243-44. He also opines in his pre-hearing

declaration that “[t]he scarcity of class members who have voiced

any problems with the category into which they have been placed is

indicative of a fair and impartial process.” Ps. Ex. 28 at 15.

His analysis concludes that the overall recovery by the class, and

the divisions among categories, are adequate, fair, and reasonable.

The court finds that the evidence comparing the recoveries in

this case to those in other E-Ferol settlements supports approval

of the proposed settlement. Furthermore, the recoveries under the

proposed settlement are significantly higher than the typical

recoveries for class actions involving infant death and injury

claims in medical malpractice cases. The Settlement Agreement does

not contain any provisions for essentially valueless or so-called

“coupon” payments. Even the class members who have no apparent

injury will receive relief. According to Prof. Underwood, the

proposed settlement is a “poster child” for settlements that are

fair and beneficial to the class. Tr. 1:245. He opined that “most

of these class members probably would be getting zero dollars

because they probably wouldn’t even know that they had a claim,

much less had an advocate to push those claims, but for what

counsel has done here and the court’s decision to certify it.” Id.

Moreover, Category 5 payments represent recoveries by class

 

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21Long also seeks to bring claims against the Miami Valley

Providers. The court addresses this aspect of Long’s objections

infra at § IV(C).

- 49 -

members whose claims would be foreclosed absent a settlement

approved now or a successful appeal achieved after additional

expense and delay. As such, the reasonably expected recovery on

such claims is essentially zero. Yet, under the proposed

settlement, class members in this category will recover as much as

$236,000 apiece. Such favorable treatment for the Category 5

claimants is another factor that strongly supports approval.

3 

Long in part objects to the Settlement Agreement on the basis

that the payment he will receive as a member of Category 1 is

insufficient and undervalues his claim. He asserts that he could

secure a substantially greater recovery if he were permitted to

pursue an independent suit against defendants and others.21 In

support of this assertion, Long posits that his case is factually

similar to another E-Ferol suit that his attorney litigated in the

1980s, and which settled for approximately $6 million dollars, or

three times Long’s potential recovery here, without adjusting for

inflation. He also objects that the proposed settlement does not

require payments from a corporate successor of one defendant, who

is now known as CVS Revco D.S., Inc. (“CVS”). Defendants’ counsel

testified, and the class plaintiffs agree, that this is due to a

bankruptcy and corporate transaction that eliminated any liability

 

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that CVS could have for E-Ferol claims.

Some of Long’s arguments are misplaced when framed as

objections to the proposed settlement. It is true that the court

must compare the proposed settlement payouts to the various

categories with the potential recovery on those claims if the case

were tried. In this regard, knowing the settlement amounts of

prior E-Ferol suits is helpful in determining a reasonable range of

recovery. The court is not obligated, however, to evaluate each

individual class member separately to determine whether the

expected recovery for that claim is approximated by the settlement

amount. On the contrary, assuming that a claim (such as Long’s)

properly belongs within the class, the court can refuse approval

only if the recovery for the class under the proposed settlement

does not bear a reasonable relationship to the anticipated recovery

if the class went to trial. Thus to the extent that Long’s

arguments address whether the proposed settlement fails to obtain

a reasonable recovery for the class as a whole, they are relevant

to what the court must decide. But the court need not delve into

the merits of Long’s individual claim or hypothesize about what he

might recover in his own lawsuit against defendants and/or others.

Likewise, the court need not decide whether Long’s individual claim

resembles the earlier case that his attorney litigated and that

resulted in a $6 million settlement.

The uncontroverted evidence presented by defendants

 

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demonstrates that the settlement payments to class members are

within the range of reasonably expected damages for cases of this

type. See Turner, 472 F.Supp.2d at 849-50. Long’s desire to use

his counsel’s prior litigation experience as the benchmark for what

is a reasonable recovery in E-Ferol cases is unpersuasive,

particularly because a review of defendants’ data demonstrates that

the particular case on which Long relies is an outlier——it produced

the highest settlement of any E-Ferol lawsuit to date. See Ds.

Exs. 1A and 1B. The court agrees with Prof. Silver: “if you simply

pick the highest case and base your claim on that, well, that’s

really not what a person——a rational person would do when trying to

predict a result.” Tr. 2:83-84. It would be unreasonable for the

court to rely on the highest recorded recovery in any E-Ferol case,

obtained in 1986 (two years after the E-Ferol recall), as the

standard for evaluating the proposed settlement in this case more

than 20 years later. This is particularly true in light of Prof.

Underwood’s observation that the passage of time since the events

in question will likely result in a reduced verdict. See Tr.

1:241-42. The success of Long’s counsel in a prior case does not

mean that the proposed settlement is unfair to the class as a whole

simply because class members are not receiving what Long’s client

obtained by settling that case. 

The court is also unpersuaded that the exclusion of CVS from

the Settlement Agreement renders it unfair or inadequate to the

 

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class. The parties debated in their briefing and at the fairness

hearing the legal question whether CVS bore ongoing liability in

this case, or whether these liabilities were discharged in a prior

bankruptcy proceeding. Defendants maintain that CVS does not have

any liability for the actions of the corporation from which it

purchased assets and that, even if CVS were included in the pool of

liability defendants, the total payout amount under the settlement

would not be increased. Long has not presented evidence that, if

CVS were included in the proposed settlement, the amount paid would

be greater. Defendants posit that the settlement amount was

determined by estimating the value of the various claims and

arriving at a total aggregate amount——a calculation that the

inclusion of CVS would not alter. Chasnoff testified that the

parties did not “just start with a lump sum amount.” Tr. 2:9.

Rather, the settlement talks began with “an evaluation of . . .

what we believed was the——the settlement value of every class

member’s claim[], one by one, and that fed into an ultimate

settlement amount and that was in our minds as we negotiated.” Id.

In sum, Long, on the one hand, and the class plaintiffs and

defendants, on the other, have different views about CVS’s

potential liability. But that is not the point. What matters is

that the question is debatable, and the position taken by the class

plaintiffs and defendants is reasonable. Indeed, given the

approach taken by the class plaintiffs in this case and by

 

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plaintiffs generally in mass tort litigation, it is highly doubtful

that, if class counsel had a realistic (or perhaps any) prospect of

obtaining more money by seeking to hold CVS liable, they would have

opted not to sue CVS. The court’s opinion that the Settlement

Agreement is reasonable is bolstered by the fact that “[s]killed

and more than adequate lawyers for the class believe[] it to be a

good bargain.” Reed, 703 F.2d at 174. The omission of CVS and its

insurers from the proposed settlement does not undercut the finding

that the settlement is fair, reasonable, and adequate. 

The court concludes that the fifth Reed factor supports

approving the Settlement Agreement. The evidence demonstrates that

the recoveries allowed under the Settlement Agreement bear a

reasonable relationship to those in other E-Ferol litigation

settlements and compare favorably with settlements in similar class

actions overall. Especially when the expected recovery in this

case is discounted for the obstacles to the class’s succeeding on

the merits, see supra at § III(D), combined with the age of the

class plaintiffs’ claims, the settlement is fair, reasonable, and

adequate. Accordingly, this factor favors approval.

F

The sixth Reed factor examines the opinions of the class

counsel, class representatives, and absent class members. 

“Counsel are the Court’s ‘main source of information about the

settlement,’ Manual for Complex Litigation § 21.641, and therefore

 

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the Court will give weight to class counsel’s opinion regarding the

fairness of settlement.” Turner, 472 F.Supp.2d at 852 (citing

Cotton, 559 F.2d at 1330 (“[T]he trial court is entitled to rely

upon the judgment of experienced counsel for the parties.”)). The

Reed panel held:

in reviewing proposed class settlements,

a trial judge is dependent upon a match of

adversary talent because he cannot obtain the

ultimate answers without trying the case.

Indeed, that uncertainty is a catalyst of

settlement. Because the trial judge must

predict, the value of the assessment of able

counsel negotiating at arm’s length cannot be

gainsaid. Lawyers know their strengths and

they know where the bones are buried.

Reed, 703 F.2d at 175. Because the court is to give significant

weight to the opinion of class counsel, it is not routine for a

court to overrule a decision that settlement is in the best

interest of the class. “[T]he trial judge, absent fraud,

collusion, or the like, should be hesitant to substitute its own

judgment for that of counsel.” Cotton, 559 F.2d at 1330. The

opinions of class counsel and class representatives clearly favor

approving the Settlement Agreement. In his declaration, Brender

opines that “it is the overwhelming opinion and request of class

counsel, class representatives, and class members that the court

approve the settlement.” Ps. Ex. 29 at 22.

As for the class members, the support for approval is

overwhelming. Of 369 class members, 569 (97.3%) affirmatively

request that the court approve the settlement. See Ps. Feb. 8,

 

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22This number would increase slightly if the court included

Jenkins and Luckey. Because they withdrew their objections, the

court includes them among the class members who do not oppose the

settlement; it does not treat them as falling among those who

affirmatively request that the court approve it.

- 55 -

2010 App. 50.22 One person (Long), representing .27% of the class,

opposes the settlement. Moreover, support for approval of the

settlement is broad throughout the five categories. Of 24 members

of Category 1, all except Long request approval. All 28 members of

Category 2, and all 22 members of Category 3 support approval.

Concerning Category 4, which includes Jenkins, 250 of 257 class

members returned declarations, and all of them support approval.

Finally, 36 of 38 class members in Category 5 returned

declarations, and all of them support approval. Dozens of class

members attended the fairness hearing in person, and others

appeared through a video presentation. All requested approval of

the Settlement Agreement. 

It is notable that thorough judicial review of class action

settlements is required, at least in part, because in the typical

case, a court cannot know the opinion of the class that will be

bound by the proposed agreement. In this class action, however,

the court has the benefit of declarations from virtually all class

members evincing support for the settlement and requesting that the

court approve it. Prof. Underwood considered the proposed

settlement to be unique in that virtually the entire class has

requested approval by affirmative statement. See Ps. Ex. 28 at 17.

 

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He stated that he was unaware of any precedent for a court’s

failing to approve a proposed settlement as fair when it was

explicitly supported by 97.3% of the class. See id. at 18. Prof.

Underwood testified that “to the extent the court can divine what

the general class reaction is to settlement, that ought to be very

persuasive to a court as to whether or not this is fair, adequate,

and reasonable, because those are all opinions.” Tr. 1:246. As

even Long notes in his objections, “[p]resumably, all class members

who have not objected have no interest in or desire to opt-out and

are satisfied with the settlement.” Long Obj. 12.

“[A] settlement can be approved despite opposition from class

members, including named plaintiffs.” Ayers, 358 F.3d at 373. The

presence of objectors does not necessarily defeat a settlement, and

approval can be given even if a significant portion of the class

objects. “That several class members desire broader relief, which

has been foreclosed by prior court rulings, does not prevent

judicial approval of this settlement agreement, which promises

substantial relief to the class.” Id. This case, of course,

presents the flip-side of a settlement opposed by a substantial

number of class members and named plaintiffs. It is broadly

supported. Of three who objected, only one objector remains. And

an overwhelming percentage of those who do not object have done

more than acquiesce silently; they have affirmatively voted for the

settlement and requested court approval.

 

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Accordingly, the court finds that the opinions of class

counsel, class representatives, and class members support approval

of the settlement.

G

In sum, the court finds as follows: (1) there is no evidence

of fraud or collusion in the conduct of the litigation or the

negotiation of the Settlement Agreement; (2) the case, if allowed

to proceed to trial, would present highly complex issues of fact

and law, would entail considerable expense, and would likely remain

unresolved for a number of years; (3) the litigation is more than

adequately mature for the parties to know the merits of their

claims and defenses, especially considering the extensive research

done by class counsel and the wealth of information available from

prior E-Ferol lawsuits; (4) although the class plaintiffs present

strong liability arguments, for the class plaintiffs to prevail on

their claims there are significant issues related to limitations

and causation (particularly for the Category 3 brain injury claims)

that must still be overcome and that leave the ultimate result in

question; (5) the payments made under the Settlement Agreement are

within the range of reasonable expectations for recoveries if the

case were tried; and (6) approval is overwhelmingly supported by

class counsel, class representatives, and all but one class member.

Accordingly, the court finds and concludes from its analysis of the

Reed factors that the proposed settlement should be approved.

 

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IV

A

The court now turns to Long’s objections that do not fit

within the scope of a particular Reed factor and therefore were not

addressed in § III. The objections discussed below are made in

support of three forms of relief that Long seeks. First, Long

requests that he be permitted to opt out of the class, either by

the court’s reconsidering its decision in Klein III denying his

motion to opt out, or under the court’s authority under Rule

23(e)(4) to refuse to approve the proposed settlement unless it

affords a new opportunity to opt out. The court addresses this

objection in § IV(B). Second, and alternatively, Long requests

that the court refuse to approve the settlement on the ground that

it requires that class members release third-party medical

providers. The court addresses this objection in § IV(C). Third,

Long asks that the court grant his other objections, apparently as

grounds for disapproving the proposed settlement if he is required

to remain in the class. The court addresses these objections in

§ IV(D) and (E).

 

 Case 7:03-cv-00102-D Document 426 Filed 04/09/10 Page 58 of 108 PageID 13434
23Long cites his inability to opt out as a defect in the

proposed settlement, and he also requests the right to opt out as

the remedy for his objections.

24As noted above, notice was published nationally in USA Today

and in two newspapers near where Long resided: the Dayton Daily

News (Dayton, Ohio) and The Blade (Toledo, Ohio).

- 59 -

B

1

Long contends that he should be afforded an opportunity to opt

out of the case.23 He relies on the court’s authority under Rule

23(e)(4) to decline to approve the proposed settlement unless class

members are given a new opportunity to opt out. Long maintains

that his due process rights were violated because he did not have

actual notice of the class action until after the deadline to opt

out had elapsed. Long advanced similar arguments in his January 9,

2009 motion for leave to opt out of the class, which the court

rejected in Klein III. The court held that Long was deemed to have

received constructive notice of the class action through newspaper

publications in 2006.24 As such, his failure to opt out by the

September 11, 2006 deadline was binding. See Klein III, 2009 WL

1174638, at *4 (“[D]ue process does not require that Long be given

another opportunity to opt out after receiving actual notice of the

class action . . . . Because publication notice can satisfy due

process, Long does not have the right to opt out now, more than two

years after the deadline expired.”).

Under Rule 23(e)(4), the decision whether to allow a second

 

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opt out is left to the court’s discretion. Moreover, class members

who object to a proposed settlement on due process grounds “must

allege constitutional violations with ‘factual detail and

particularity.’” Newby, 394 F.3d at 309 (quoting Jackson v.

Widnall, 99 F.3d 710, 716 (5th Cir. 1996)). In support of his

objection, Long relies on a reformulation of his vaguely-worded

claims of due process violations, and he reiterates his prior

dissatisfaction with the constructive notice that he received. In

his post-hearing brief, Long supplements this objection with an

overview of cases that support the unremarkable premise that notice

by publication is less desirable than actual notice, although

still sufficient to satisfy due process in some circumstances.

Notably, he fails to offer any facts or arguments that demonstrate

that class counsel could through reasonable efforts have succeeded

in learning Long’s identity before the September 11, 2006 deadline

for opting out of the class. In fact, he acknowledges that he

would not have known about E-Ferol’s possible role in his

daughter’s death had class counsel not contacted his late wife and

him in the first place. This contact occurred after class counsel

obtained the recipient list from Miami Valley in October 2007 and

mailed notice of the class action to Long.

2 

The court declines in its discretion to refuse approval of the

proposed settlement on the ground that it does not permit a second

 

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25Although in Klein III the court stated that it reserved the

decision whether to allow a second opt out under Rule 23(e)(4), it

did not suggest that it would require the right to opt out as a

condition for approving a settlement. Having considered the

compelling reasons for not allowing a second opt out, the court

approves the proposed settlement despite the absence of this

opportunity.

- 61 -

opt out by class members.25 At the core of Long’s argument is the

claim that “[d]ue process and fundamental fairness suggest that

Long should be afforded at least one effective opportunity to optout and proceed with his own individual case against not only the

Drug Companies but also against the Ohio Medical Providers.” Long

Obj. 10. This argument is adequately addressed in Klein III.

Specifically, the court held:

If a class member is given proper notice, such

as constructive notice by publication, he is

deemed to have been given the opportunity to

opt out. To hold that a class member who

receives actual notice of a class after the

opt out deadline must always be given another

opportunity to opt out, even though he

received constructive notice before the

deadline, would defeat the purpose of

constructive notice. Actual notice would be

the only type of notice that could bind a

class member. But actual notice is not

invariably required. 

Klein III, 2009 WL 1174638, at *3. Long persists in contending

that he never had an “effective” opportunity to opt out of the

class. But as the court held, “[i]f a class member receives the

best possible notice practicable and fails to opt out by the

deadline, he is bound by the court’s actions concerning the class,

including settlement and judgment.” Id. at *2. Because Long has

 

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neither alleged nor established that class counsel failed to

provide him with the best notice practicable under the

circumstances, his arguments essentially reduce to the premise

that binding a party who received constructive notice via

publication is constitutionally deficient. This argument, however,

has often been rejected. See, e.g., Adams v. S. Farm Bureau Life

Ins. Co., 493 F.3d 1276, 1287 n.5 (11th Cir. 2007) (applying Fifth

Circuit precedent) (“Our case law makes clear that Rule 23’s

mandate that absentee class members be given ‘the best notice

practicable under the circumstances,’ . . . is consistent with the

due process requirements of the Constitution, and, in fact, that

Rule 23 goes beyond those requirements.” (citing In re Nissan Motor

Corp. Antitrust Litig., 552 F.2d 1088, 1103-04 (5th Cir. 1977))).

The court also overrules Long’s objection to the extent he

maintains that the class plaintiffs and defendants specifically

intended to prevent him from opting out. Long argues that

including non-opt-out provisions in the Settlement Agreement and

releasing defendants from the proposed settlement if the court

conditions approval on a second opt out suggest an improper

motivation to deny Long his rights. The court finds no persuasive

support for this assertion. Despite the best efforts of class

counsel, defendants were unyielding on certain key points,

including insistence on no opts out and on the requirement that

third-party medical providers be released. It is unremarkable that

 

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defendants would seek such relief. As the court stated in Klein

III, “[i]n a class action settlement setting, defendants seek and

pay for global peace——i.e., the resolution of as many claims as

possible.” Klein III, 2009 WL 1174638, at *3. The court finds

credible Chasnoff’s testimony that defendants were committed to

opposing any inclusion of an opt out provision in the Settlement

Agreement for any class member. See Tr. 1:20, 2:18 (stating that

defendants would not agree to pay substantial amounts to achieve

settlement without assurance that doing so would resolve all class

members’ claims). This testimony is corroborated by Judge Martin,

who states in his declaration that, during the negotiation process,

class counsel attempted to permit opt outs under the Agreement, but

defendants and their insurers refused. Judge Martin avers that

[a]s is often the case in matters involving

insurance coverage, the defendants and their

insurers were insisting that any payment by

them insure finality with respect to their EFerol liability. Therefore, defendants made

it a condition of their agreement to pay the

settlement amount that there be no opt outs

from the class[.]

Ps. Mot. App. 2. Although “plaintiffs’ counsel originally sought

to have the settlement agreement contain an opt out provision . . .

this was unacceptable to the defendants and their insurers[.]” Id.

According to Judge Martin, defendants were “adamant that they would

not pay substantial amounts of money if they would have to continue

to litigate with class members who opted out.” Id. 

This evidence not only defeats Long’s assertion of a motive

 

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26Additionally, defendants assert that allowing any member to

opt out of the class could imperil the class’s ability to recover

on the disputed insurance funds from Federal and Westchester. See

Tr. 2:15-19; see also supra § I(C). Long disputes this assertion.

- 64 -

directed toward him, it supports the court’s decision not to allow

a second opt out. Chasnoff testified that, were the court to allow

such opt outs, the proposed settlement might be unsalvageable.26

The court finds that, if the proposed settlement is not approved

and the parties are not able to reconstruct a mutually-agreeable

bargain, the class as a whole will be prejudiced. This is

particularly true of class members in Category 5, who stand to

recover nothing unless they first undergo the uncertainty, delay,

and additional expense of an appeal. The fact that the proposed

settlement allows defendants to back out if any class member is

permitted to opt out is one indication of the importance that

defendants place on maintaining the integrity of the class.

Another indication is found in Chasnoff’s testimony that

defendants’ insurers insisted that there be no opt outs. Chasnoff

testified that the settlement was a product of extensive bargaining

and give and take, and that tinkering with its elements could well

lead to no settlement. According to Chasnoff, “we have cobbled

together this settlement, and I don’t represent the insurers but I

. . . took them to be serious when they said this was a no opt-out

deal in their mind, and that’s how it has to be.” Tr. 2:15.

Finally, Prof. Silver testified that non-opt out settlements

 

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- 65 -

often benefit plaintiffs classes such as this one because the

promise of obtaining global peace provides an incentive for

defendants to offer a more generous settlement than they otherwise

would. He also opined that Long had already benefited greatly

because of the class action, because it was only through the

efforts of class counsel that Long became aware of E-Ferol’s role

in his daughter’s death (and thus of the possibility that he might

have a claim against defendants). Although Long seeks to opt out

of the class action and pursue an independent lawsuit, it is only

through this class action and the efforts of class counsel to

locate Long that he is in a position to recover any compensation

for his daughter’s death. Prof. Silver recognized that, if Long

had been engaged in individual litigation before being included in

the class, his opt out argument would be strengthened. But where,

as here, the only awareness of his claim came through the diligence

of class counsels’ work on behalf of the class, Long’s assertions

of due process violations have little, if any, force.

Accordingly, the court overrules Long’s objections based on

the lack of an opportunity for a second opt out.

C

Long also objects to the Settlement Agreement because it

releases third-party medical providers and therefore bars Long from

pursuing claims against the Miami Valley Providers. The liability

release covers “all Persons who provided medical or health care

 

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services to any individual who allegedly received E-Ferol,

including but not limited to hospitals, doctors, [and] nurses.”

Settlement Agreement Ex. 9 at 2. Long objects that the Miami

Valley Providers are not defendants and are not contributing to the

settlement. He maintains that eliminating the medical provider

release would not harm defendants or the class. Long asserts that,

under Ohio law, he has available causes of action against the Miami

Valley Providers that would not lead to any risk of liability for

defendants or their insurers. He therefore asks the court to

refuse to approve the proposed settlement due to the inclusion of

release. Long suggests that, if the release were removed, he would

agree to a clause indemnifying defendants if his lawsuit against

the Miami Valley Providers resulted in third-party actions against

defendants.

At the fairness hearing, attorneys for the class plaintiffs

and defendants addressed why the medical provider release was

included as a mandatory condition of the Settlement Agreement.

Brender testified that the release of third-party medical providers

was a key demand that defendants made from the beginning of the

negotiations. See Tr. 1:224. He stated that the class attempted

to negotiate around the provision, including requesting that it be

replaced with an indemnity agreement to shield defendants, but

defendants were unwilling to settle without a full release. Id.

(“[W]e tried very hard to negotiate that out of it. [We] attempted

 

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to get them to agree to indemnity type provisions and things of

that sort, and they were just firm.”). Judge Martin confirmed that

this was defendants’ position, and he stated that he was convinced

that there would be no settlement without such a release. Ps. Mot.

App. 2 at 2 (stating that defendants and their insurers “were

adamant that they would not pay substantial amounts of money if

they would have to continue to litigate . . . potential third-party

actions by healthcare providers and hospitals who were being sued

or might be sued by class members”). The initial discussions of

the release occurred in 2008, before Long moved for leave to opt

out. Brender testified that defendants insisted on a medicalprovider release as one of their key settlement demands beginning

with the earliest stages of settlement talks. See Tr. 1:202-03.

He opined that any recoveries from medical providers such as Miami

Valley would be rare, and thus it was a reasonable compromise to

accede to defendants’ insistence on a release given the great

benefits the class obtained in the Settlement Agreement. See Tr.

1:224. 

Chasnoff testified that he believed the release of medical

providers was a non-negotiable point for defendants’ insurers from

the outset of negotiations. See Tr. 2:10 (testifying that the

release was included in “the very first settlement document that we

created”). The insurers were concerned that, if the release were

not included, the sizeable payouts under the Settlement Agreement

 

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would fail to provide finality. He also testified that the

defendants themselves also sought insulation from any more

lawsuits, and that it was his opinion “that if [the release] is

dropped that the settlement will fall apart, if that term were not

in there.” Tr. 2:21. Another concern Chasnoff raised related to

Long’s assertion that his available Ohio claims against the Miami

Valley Providers would not potentially result in liability to

defendants. Chasnoff noted that, even if Long’s assertions about

Ohio law were correct, the elimination of a release would apply to

all class members, not simply to Long. Thus another state’s laws

could provide a cause of action against other medical providers,

which could potentially jeopardize defendants’ insulation from

liability or the expense of litigation. He concluded: “[T]he

insurers believe that if the medical providers’ claims are not

dismissed we could be paying 110 million dollars and still have to

deal with a lot of the same issues we’ve been dealing with for a

lot of years.” Tr. 2:20. Additionally, Prof. Silver provides

examples in his declaration of third-party releases adopted in

other class action settlements, opining that “similar provisions

appear in many settlements of mass tort lawsuits involving

allegedly defective drugs or medical devices. The releases vary in

scope, but many are broad, even all-inclusive.” Ds. Ex. 2 at 27.

Defendants’ desire to settle on terms that eliminate the risk

of further liability or additional E-Ferol litigation is

 

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reasonable. See Klein III, 2009 WL 1174638, at *3 (noting that in

a class action settlement setting, defendants seek and pay for

global peace). That entities such as the Miami Valley Providers

have not contributed to the proposed settlement does not preclude

the court from approving an agreement that releases them, provided

the settlement is fair, reasonable, and adequate to the class as a

whole. Furthermore, even assuming that Long’s Ohio-based claims

against the Miami Valley Providers would not allow for third-party

actions against defendants, the record does not eliminate the

potential for claims by other class members under the laws of other

states. And even if defendants could not be held liable, they

might face the expenses and burdens of litigation, despite paying

millions of dollars to settle with the very plaintiffs who would

bring the lawsuits. And there is no guarantee that class members,

including Long, could adequately fulfill an indemnity

responsibility, even if defendants’ insurers agreed to one.

Thus, although the release eliminates Long’s right to bring

claims against the Miami Valley Providers (who have paid nothing

toward the proposed settlement), the court finds that the provision

is essential to the viability of the proposed settlement and that

the Settlement Agreement, with the release included, is fair,

reasonable, and adequate to the class as a whole. Therefore,

Long’s objections on these grounds are overruled.

 

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27As discussed more fully below, see infra § V, both class

plaintiffs and defendants assert that Long lacks standing as a

class member to bring a motion for decertification. Long

apparently does not contest this contention. Instead, Long posits

that his arguments in favor of decertification are incorporated

into his overall objections to the settlement and that as an

objecting class member he can raise such arguments. The other

parties apparently do not contest this. The court can assume

arguendo that Long is able to raise certification issues in his

objections. 

Were Long’s objections on this ground meritorious, it would

likely raise an unusual procedural problem. It is not entirely

clear what remedy Long envisions the court’s providing if it

determines that his certification objections have merit. Long does

not clearly specify whether he is asking that the court refuse to

approve the agreement (because the case was improperly certified),

or whether he contends that the court should order the class

decertified (based, not on a formal decertification motion, but on

objections to the proposed settlement that are grounded in alleged

certification defects). The court need not choose either

alternative. As set forth below, Long’s objections do not prevent

approval of the Settlement Agreement because they fail to undermine

the proof adduced by the class plaintiffs and defendants that the

proposed settlement is fair, reasonable, and adequate. The

objections are therefore overruled.

- 70 -

D

Long adopts and incorporates his previously-filed and pending

motion for decertification of the class, which the court now

denies.27 See infra § V. Because Long incorporates his

decertification motion into his overall objections to the

Settlement Agreement, the court will address his arguments here to

assess whether they demonstrate that the settlement is not fair,

reasonable, and adequate to the class as a whole.

Long posits that the class should be decertified because the

requirements of Rule 23(b)(3), under which Judge Buchmeyer

certified the case as a class action in Klein I, were not met.

 

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28The tenor of Long’s arguments resembles concerns that the

court raised sua sponte in Klein II. In its opinion addressing

defendants’ motion for partial summary judgment, the court noted

that defenses of individual notice and reliance as to each class

member might defeat the Rule 23(b)(3) predominance requirement

necessary for a class action. See Klein II, 2008 WL 2152030, at *9

(“At the time of certification, it may not have been apparent to

Judge Buchmeyer that a fraudulent concealment defense would be at

issue . . . . [I]t now appears that individualized fact issues

predominate with respect to the reliance and reasonable diligence

inquiries.”). The court did not make a final determination,

however, that the class should be decertified. Instead, it

directed the class plaintiffs and defendants to submit briefing on

that question. Shortly after the court issued its order, the

parties requested a stay, which the court granted, so that they

could pursue settlement negotiations. Due to the stay, briefing on

the question of decertification has not yet been submitted. The

parties did, however, file responses to Long’s motion for

decertification, and they argue in favor of maintaining the case as

a class action.

- 71 -

Specifically, Long asserts that each member of the class will be

required to prove reasonable reliance on misrepresentations by

defendants and the exercise of reasonable diligence in

investigating the cause of injury or death in the member’s own

case. Otherwise, Long argues, each claim is vulnerable to being

barred by the Texas statute of limitations. He maintains that,

because these questions are necessarily individualized, the Rule 23

requirement of predominance is not met.28 Although he acknowledges

that there are common class-wide questions of liability and the

wrongfulness of defendants’ action, he argues that these questions

are well settled and will not be important disputed issues at

trial. Instead, according to Long, the important trial issues

will be individualized: proving causation for each claimant’s

 

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injuries, and (most important) the limitations-related questions of

reasonable reliance and reasonable diligence in each death claim.

In response, the class plaintiffs first note that Long seeks

to decertify the class based on deficiencies that existed at the

time certification was granted, even though Long would likely have

had no knowledge about E-Ferol or his claims were it not for class

certification and class counsels’ efforts to notify him. They

challenge Long’s assertion that liability will not be a contested

issue at trial. Although the class plaintiffs assert that they

have strong arguments in favor of a liability finding, they

maintain that this is still an open question. They posit that

virtually all E-Ferol recipients and their families were completely

unaware that the drug had been administered, or that a recall was

issued, and thus issues of class members’ knowledge would not be

difficult to resolve. The class plaintiffs argue that a class

action is a superior method for litigating the case because there

are very few medical experts with knowledge of E-Ferol and they

would not be able to participate in many discrete lawsuits, and the

tort system failed to inform the class members of their claims,

resulting in the formation of a sizeable class from uninformed EFerol recipients. Finally, they assert that the potential of a

fraudulent concealment defense does not defeat class certification

and that bifurcated trials could efficiently dispose of any

individualized motions related to damages.

 

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Defendants oppose Long’s decertification motion by arguing

that the certification requirements of Rule 23 ought to be applied

in the context of a proposed settlement where, as here, the parties

have made clear that they do not intend to proceed to trial. See

Ds. Jan. 25, 2010 Resp. 15 (citing Amchem Prods., Inc. v. Windsor,

521 U.S. 591, 620 (1997) (“Confronted with a request for

settlement-only class certification, a district court need not

inquire whether the case, if tried, would present intractable

management problems[.]”)). Defendants agree with the class

plaintiffs that the issue of liability is not resolved and would be

strongly contested if the case were tried. Furthermore, they

assert that Long’s contentions about individualized issues and

mini-trials are misplaced. They contend that, if the proposed

settlement is approved, there will be no individualized inquiry

into causation of class members’ injuries because there will be no

trial. Likewise, defendants point out that they will not raise

limitations defenses or other related issues if the settlement is

approved, which relieves the class of the burden of proving

individualized questions of knowledge, reliance, and reasonable

diligence. They reason that, because Long’s decertification

arguments are being raised as objections to the Settlement

Agreement (the approval of which would preclude a trial), they

constitute “purely hypothetical issues of trial administration.”

Ds. Jan. 25, 2010 Resp. 17.

 

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29The court recognized in Klein II that certification might

present problems were the class action to proceed to trial.

Although it is not apparent that these problems existed clearly at

the time Judge Buchmeyer granted certification, they became known

at least by the time defendants moved for partial summary judgment,

prior to settlement negotiations. See Klein II, 2008 WL 2152030,

at *8-*9. But because the proposed settlement is being approved,

these concerns are longer in play.

- 74 -

The court holds that Long’s assertions of defects in the

certification of the class are flawed because they are asserted as

objections at the settlement stage. Long opposes approval of the

proposed settlement on the ground that the class should be

decertified, and he argues for decertification based on potential

class-manageability problems that arise at trial. But if the

settlement is approved, it is axiomatic that there will be no class

manageability issues at trial——indeed, there will be no trial.

Thus Long is seeking decertification under the guise of objecting

to the proposed settlement based on arguments that fall away if the

settlement is approved.29 

The court can approve the proposed settlement if it is fair,

reasonable, and adequate to the class as a whole, according to Rule

23(e)(2). The Fifth Circuit has repeatedly made clear that the

district court’s decision whether to approve a proposed class

action settlement is controlled by the Reed factors. The court

agrees with the opinion of Prof. Silver, who notes that, rather

than claiming a defect in the Settlement Agreement (the relevant

issue in a fairness review), Long essentially seeks to stand in

 

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defendants’ shoes when he argues for decertification. Ps. Ex. 2 at

30. Prof. Silver explains:

Courts ordinarily allow litigants to assert

their own rights, not the rights of opposing

parties. In fact, however, Long has not

asserted that certification of the class for

litigation violated any of his rights or

harmed him in any way. To the contrary, he

has conceded that class certification helped

him by enabling Class Counsel to act for him

and, eventually, to inform him of his claim.

The harm (assuming there is one) stems from

Long’s failure to opt out before the deadline

expired. His attack on class certification is

an attempt to find an argument that might

succeed if the Court were to reject his demand

to opt out.

Id. (emphasis added). 

In the court’s view, the procedural peculiarity of Long’s

decertification arguments stems from the fact that his objections

on these grounds bear little relevance to the court’s analysis of

the proposed settlement under the Reed factors. His arguments do

not allege any unfairness or defect in the Settlement Agreement,

and they do not identify any harm to him or to other members of the

class (other than, possibly, that the class exists at all and that

he is a member). Indeed, a claim that class members would be

better served through decertification than by approval of the

Settlement Agreement is belied by the fact that 97.3% of the class

members have affirmatively sought approval. Rather than show how

the alleged certification flaws make the proposed settlement

unfair, Long merely asserts straightforward claims that the case

 

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30The court is not suggesting that a member of a plaintiffs

class could never object to a proposed settlement based on flaws in

class certification. But for any such objection to have relevance

in a fairness review, the member must attempt to demonstrate that

the flaws in certification somehow render the proposed settlement

unfair, inadequate, or unreasonable to the class as a whole.

Without speculating on what could constitute such a showing, the

court finds that Long’s decertification objections fail to meet

this relevance standard.

- 76 -

presents trial-related feasibility issues. But approval of the

settlement eliminates his trial-related decertification arguments.

Long’s objections overall——and particularly those framed as

decertification arguments——have the appearance of being unabashed

attempts to derail the settlement in hopes of somehow finding a way

to extricate himself from the class. But “[t]he court has already

denied Long’s request to opt out, and it declines to cover the same

ground under the guise of Long’s ‘objections’ to the proposed

settlement.” Klein v. O’Neal, Inc., 2010 WL 234806, at *4 (N.D.

Tex. Jan. 21, 2010) (Fitzwater, C.J.). Long does not show how the

certification objections, if valid, are relevant to the court’s

analysis of the Settlement Agreement.30 The court is therefore left

with the conclusion that Long’s arguments are essentially a lastditch effort to achieve opt out. Because his objections do not

relate to the fairness, adequacy, or reasonableness of the

Settlement Agreement to the class as a whole, they are overruled.

E

Finally, Long objects to the Settlement Agreement’s provision

that, if the court approves the settlement but its decision is

 

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appealed, defendants are not obligated to fund the settlement until

the case is finally resolved. Long requests that defendants be

ordered to place the funds in an escrow account immediately upon

court approval. He contends that, if defendants are permitted to

retain the settlement funds pending an appeal, the class members

will lose interest that would accrue in the interim. The court

overrules this objection. 

The court cannot approve some parts of a proposed settlement

and reject others. It must decide whether the Settlement Agreement

as a whole is fair, reasonable, and adequate. And it must

“consider the effect of the settlement as a whole,” and it cannot

“delete, modify or substitute certain provisions.” Cotton, 559

F.2d at 1331. “The settlement must stand or fall as a whole.” Id.

at 1332.

Moreover, Long has failed to demonstrate that the payment

provisions of the Settlement Agreement prevent the proposed

settlement from being fair, reasonable, and adequate to the class

as a whole. Given the overwhelming support for the proposed

settlement by the other class members and defendants, if there is

any delay in payment due to an appeal it will be due to an appeal

that Long files. Even if this were not so, the court would find

that the objection is insufficient of itself to warrant

disapproving the proposed settlement.

 

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31Long has also objected to the award of attorney’s fees

requested by counsel for the class plaintiffs. These objections

are not germane to the overall approval of the settlement; they

relate only to the motion for attorney’s fees. Accordingly, the

court overrules Long’s objections on these grounds infra at § VII

when deciding the motion for attorney’s fees.

32The motion to intervene is contingent on the proposed

settlement’s including a prohibition on class members opting out.

Because the settlement contains such a prohibition, the motion

remains to be decided.

- 78 -

F

For the foregoing reasons, the court overrules Long’s

objections to the Settlement Agreement.31

V

Before the class plaintiffs and defendants reached their

agreement on the proposed settlement, Long filed two other motions

that the court now addresses: a motion for decertification of the

class, and a motion to intervene32 and renewed motion for leave to

opt out. 

Long argues that he should be allowed to intervene as a

plaintiff rather than remain a class member. He seeks to intervene

as a means of preempting arguments by the class plaintiffs and

defendants that, as a class member, he does not have standing to

bring his motion for decertification. As a named plaintiff, Long

would have standing. He asserts in a footnote that he “does not

accept class counsel’s objection [that Long lacks standing to bring

the decertification motion] and maintains that, as a class member,

he has appropriate standing.” Long Mot. Intervene 2 n.1. He does

 

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33Long filed a single reply brief in support of both motions.

34Apart from his due process objections discussed below, Long

does not suggest any plausible reason for the court to apply

§ 1367(b) other than according to its plain meaning.

- 79 -

not, however, support this assertion beyond this conclusory

footnote. Moreover, in his reply brief in support of his motions

for decertification and to intervene,33 Long presents little, if

any, argument in support of his standing to bring a decertification

motion. In their responses to Long’s motions, the class plaintiffs

and defendants argue that Long——as a member of the class——lacks

such standing.

Long’s motion to intervene concedes that no available legal

procedure exists that would enable the court to grant him leave to

intervene as a named plaintiff. He admits that the supplemental

jurisdiction statute, 28 U.S.C. § 1367(b), facially prohibits

intervention because he and Retrac are both citizens of Ohio and

therefore complete diversity does not exist. Under the law at the

time the case was commenced, each named plaintiff was required to

be completely diverse from each named defendant. Furthermore, as

a non-diverse party, Long admits that, if § 1367(b) “is applied

according to its literal wording,”34 he cannot take advantage of

Rule 24. Long Mot. Intervene 3. 

Foreclosed from intervening, and thereby lacking standing to

bring his motion for decertification, Long asserts that his

position presents a “constitutional due process problem because

 

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35Long also argues in his motion for decertification that, if

the Settlement Agreement is approved and he exercises his right to

appeal, he will have standing as an objecting class member to raise

the issue of certification on appeal. The court assumes arguendo

that Long’s position is correct. Long’s objections on these

grounds are overruled, however, because his decertification

arguments fail to demonstrate (or even address) whether the

Settlement Agreement is fair, reasonable, and adequate to the class

as a whole, as set forth supra at § IV(D).

- 80 -

non-diverse class members such as Long in class actions commenced

before [enactment of the Class Action Fairness Act of 2005] are

precluded from participating directly in a case where their

substantial rights are being determined.” Id. Long concludes

that, notwithstanding the clear prohibition of § 1367(b), he should

be permitted to intervene because any other result would violate

his due process rights. Alternatively, he argues that the court

could cure this constitutional problem by refusing to approve the

settlement unless a second opt out is allowed under Rule 23(e)(4).

Long’s reply brief summarizes his prior arguments in support of

decertification, states that the question of decertification is

properly before the court (by reason of Long’s inclusion of the

issue in his formal objections to the Settlement Agreement),35 and

renews his assertion that he should be allowed to opt out of the

class (an issue also raised in his settlement objections).

In summary, Long brings motions for decertification and for

leave to intervene. But he essentially concedes that he does not

have standing to bring his decertification motion, and he further

admits that there is no legal mechanism that would permit him to

 

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36Because of the court’s disposition of Long’s motions and

objections, it need not decide defendants’ February 4, 2010 motion

to exclude and to strike documents and other materials proffered by

Long in support of his objections to the class settlement and

defendants’ February 10, 2010 motion to exclude expert reports

- 81 -

intervene in the case in order to gain standing. Instead, Long

relies on arguments that his request for decertification is

properly before the court via his settlement objections and that

his inability to intervene supports the conclusion that

constitutional due process rights mandate that he be allowed to opt

out. He states in his reply brief that “while [he] is not

withdrawing these motions, the same issues in substance are also

before the Court as a part of [his] Objection to the proposed class

settlement agreement.” Long Reply Br. 3.

The court denies Long’s motion for decertification to the

extent that such denial is necessary, and it does so for the same

reasons as are set out supra at § IV(D). Because Long sought to

intervene solely to establish standing to bring his motion for

decertification, the court’s decision not to decertify the class

may moot his intervention request. But assuming that he has

standing and considering the merits of the motion, the court holds

that Long has pointed to no legal grounds that would allow him to

intervene in the case, and his brief offers no compelling reason to

find constitutional error. The court therefore denies the motion.

And for the reasons explained supra at § IV(B), the court also

denies Long’s renewed request to opt out.36

 

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proffered by Long and Jenkins. These motions are therefore denied

as moot.

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VI

Accordingly, for the foregoing reasons, the court approves the

Settlement Agreement and finds that it is fair, reasonable, and

adequate to the class as a whole. The court’s analysis of the Reed

factors demonstrates that the proposed settlement adequately

compensates each class member based on the strength of the member’s

case. The allocation of damages among the various categories is

fair, reasonable, and adequate. Approval of the Settlement

Agreement is affirmatively supported by 97.3% of the class members.

Against this overwhelming group of supporters stands a lone

objector whose objections are animated primarily by his desire to

litigate his claims individually and against additional parties.

Concluding that the proponents of the settlement have met their

burden of proof, and finding no persuasive reason to deny approval,

the court approves the Settlement Agreement.

VII

Class counsel move for an award of attorney’s fees pursuant to

Rule 23(h)(1). They request (1) a fee award of 30% of the

settlement amount, to be distributed among the attorneys for the

class according to a fee sharing agreement; (2) reimbursement of

reasonable and necessary expenses associated with the litigation;

(3) $300,000 to be withheld from the settlement amount to pay for

 

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costs of administration and distribution of the settlement

proceeds; and (4) $75,000 for each of the two class representatives

as compensation for their efforts in representing the class over

the course of the litigation.

A

Class counsel undertook representation in this case under a

contingent fee agreement, and no fee-shifting statute applies.

Therefore, any award of attorney’s fees and costs will come from

the common fund obtained for the class plaintiffs through the

settlement. The proposed Settlement Agreement calls for the fees

and costs to be deducted from each class member’s recovery amount

on a pro rata basis. Long objects to the requested fee. As with

the proposed settlement, the other class members do not oppose

class counsels’ motion for fees and expenses.

Rule 23(h) provides that, “[i]n a certified class action, the

court may award reasonable attorney’s fees and nontaxable costs

that are authorized by law or by the parties’ agreement.” “In a

class action settlement, the district court has an independent duty

under Federal Rule of Civil Procedure 23 to the class and the

public to ensure that attorneys’ fees are reasonable and divided up

fairly among plaintiffs’ counsel.” In re High Sulfur Content

Gasoline Prods. Liab. Litig., 517 F.3d 220, 227 (5th Cir. 2008).

“[T]o fully discharge its duty to review and approve class action

settlement agreements, a district court must assess the

 

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reasonableness of the attorneys’ fees.” Strong v. BellSouth

Telecomm., Inc., 137 F.3d 844, 849 (5th Cir. 1998). Furthermore,

“the duty to investigate the provisions of the suggested settlement

includes the obligation to explore the manner in which fees of

class counsel are to be paid and the dollar amount for such

services.” Id. (internal quotation marks omitted). “The Court

must carefully scrutinize the attorneys’ fee award in a common fund

settlement because the interests of the attorneys conflict with

those of the class.” In re OCA, Inc. Sec. & Derivative Litig.,

2009 WL 512081, at *17 (E.D. La. Mar. 2, 2009). Because it has an

independent duty to review the fee request in the interests of

protecting the class, “a district court is not bound by the

agreement of the parties as to the amount of attorneys’ fees.”

Strong, 137 F.3d at 849 (internal quotation marks omitted).

The use of a common fund to pay attorney’s fees in class

action settlements is well established. See Boeing Co. v. Van

Gemert, 444 U.S. 472, 478 (1980) (“[T]his Court has recognized

consistently that a litigant or a lawyer who recovers a common fund

for the benefit of persons other than himself or his client is

entitled to a reasonable attorney’s fee from the fund as a

whole.”). But while the use of a common fund approach to

attorney’s fees is accepted, the method of calculating those fees

can vary. In this case, the class plaintiffs request that the

court use a “percentage” method of calculating fees, in which the

 

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37The familiar Johnson factors are (1) the time and labor

required for the litigation; (2) the novelty and complication of

the issues; (3) the skill required to properly litigate the issues;

(4) whether the attorney had to refuse other work to litigate the

case; (5) the attorney’s customary fee; (6) whether the fee is

fixed or contingent; (7) whether the client or case circumstances

imposed any time constraints; (8) the amount involved and the

results obtained; (9) the experience, reputation, and ability of

the attorneys; (10) whether the case was “undesirable;” (11) the

type of attorney-client relationship and whether that relationship

was long-standing; and (12) awards made in similar cases. Johnson,

488 F.2d at 717-19.

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court determines an appropriate percentage of the overall recovery

to award as a reasonable attorney’s fee. See Schwartz, 2005 WL

3148350, at *25. Long counters that the only acceptable method of

calculating the fee in the Fifth Circuit is to use the lodestar

method, which multiplies a reasonable hourly rate by the number of

hours reported by counsel to arrive at the “lodestar.” See, e.g.,

Strong, 137 F.3d at 850. Regardless which method is used, the

court should check the resulting fee against the twelve factors set

out in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th

Cir. 1974), to test the reasonableness of the fee and make

adjustments as warranted by the circumstances.37 See Schwartz, 2005

WL 3148350, at *28. In cases unlike this one——that is, cases

involving fee-shifting among parties and not involving a common

fund——the lodestar method is still preferred by courts. See

Gisbrecht v. Barnhart, 535 U.S. 789, 801-02 (2002).

“The law of the Fifth Circuit as to which of the two methods

should be employed in common fund cases is at best unclear.” In re

 

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Combustion, Inc., 968 F. Supp. 1116, 1134 (W.D. La. 1997). The

Fifth Circuit has yet to definitively endorse the percentage method

as a means of calculating fees in class action settlements, but

numerous district courts in this circuit have applied the

percentage method in common fund cases. See, e.g., In re OCA, Inc.

Sec., 2009 WL 512081, at *18 (“The Fifth Circuit has never

explicitly disapproved of the percentage method of calculating fees

in common fund cases.”); Schwartz, 2005 WL 3148350, at *25

(collecting cases); Shaw v. Toshiba Am. Info. Sys., Inc., 91

F.Supp.2d 942, 967 n.15 (E.D. Tex. 2000) (“[T]he Fifth Circuit has

never . . . reversed a district court judge’s decision to award a

fee as a percentage.”). The Manual for Complex Litigation

identifies the Fifth Circuit as the only circuit that has yet to

explicitly adopt the percentage method. Manual for Complex

Litigation (Fourth) § 14.121 (2010) (stating that Fifth Circuit

“seems to allow considerable flexibility in approving combined

percentage and lodestar approaches”). The Fifth Circuit has

affirmed, however, a district court’s use of the percentage method

in conjunction with an analysis of the Johnson factors. See

Longden v. Sunderman, 979 F.2d 1095, at 1100 n.11 (5th Cir. 1992).

But it has also stated in the recent case of In re High Sulfur that

“[t]his circuit requires district courts to use the ‘lodestar

method’ to assess attorneys’ fees in class action suits.” In re

High Sulfur, 517 F.3d at 228 (citing Strong, 137 F.3d at 850).

 

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District courts have noted, however, that Strong and In re High

Sulfur are not completely on point because the panel in Strong

explicitly noted that the case did not involve a common fund. See

Strong, 137 F.3d at 852 (distinguishing Supreme Court’s approval of

percentage fee in Boeing because “no fund was established at all in

this case.”); see also In re OCA, Inc. Sec., 2009 WL 512081, at

*18. Moreover, the dispute in In re High Sulfur involved a

district court’s distribution of the overall fee award from the

common fund among a number of plaintiff attorneys. Thus the

question of how the underlying fee itself should be determined was

not at issue.

Because of the lack of clarity, district courts have concluded

that, “though the Fifth Circuit has not explicitly accepted the

percentage method, it does appear to be amenable to its use, so

long as the Johnson framework is utilized to ensure that the fee

awarded is reasonable.” Turner, 472 F.Supp.2d at 860 (citations

omitted). To account for the Fifth Circuit’s preference for a

Johnson analysis, “numerous district courts in this Circuit have

primarily applied a ‘blended’ percentage method to determine a

reasonable fee award.” Id. The “blended” method, sometimes

referred to as the “hybrid” method, uses the percentage method to

establish a benchmark fee and then checks this amount against a

reasonableness test based on consideration of the Johnson factors.

See Shaw, 91 F.Supp.2d at 968. The benchmark percentage can be

 

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adjusted up or down on this basis. Such an approach respects the

Fifth Circuit’s preferences, given that the circuit “has affirmed

a court’s calculation of fees based on the percentage method when

the court also considered the Johnson factors, noting the judge’s

use of the percentage method merely demonstrated his preference ‘as

a matter of policy.’” In re OCA, Inc. Sec., 2009 WL 512081, at *18

(citing Longden, 979 F.2d at 1100 n.11).

To avoid deciding whether to follow one method over the other,

the court will decide the fee application under both the percentage

and the lodestar methods. The court will first examine the request

for attorney’s fees under the percentage method, coupled with a

Johnson-based cross-check. This is the method endorsed by lead

class counsel Brender in his fairness hearing testimony. See Tr.

1:166 (testifying that percentage method should be employed, but

stating that “a Johnson vs. Georgia Highway Express check is

[appropriate].”). The court will then calculate the lodestar

amount and apply the Johnson factors to provide a comparison to the

result reached under the percentage method. See In re Lease Oil

Antitrust Litig. (No. II), 186 F.R.D. 403, 444 (S.D. Tex. 1999)

(using the lodestar to cross-check a fee calculated under the

percentage method).

 

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38The attorneys state that, if the class succeeds in obtaining

the additional $20 million in insurance proceeds that are not part

of the Settlement Agreement, they will submit a separate fee

application.

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B

Class counsel request a fee award of 30% of the total

settlement amount, which represents $27 million.38 The Manual for

Complex Litigation states that “[a]ttorney fees awarded under the

percentage method are often between 25% and 30% of the fund.”

Manual for Complex Litigation (Fourth) § 14.121 (2010). It notes,

however, that “in ‘mega-cases’ in which large settlements or awards

serve as the basis for calculating a percentage, courts have often

found considerably lower percentages of recovery to be

appropriate.” Id. (noting that, in cases with common funds in

excess of $100 million, one survey found awards from 4.1% to 17.92%

were typical). One published study of reported class action

attorney’s fee awards concludes that, in settlements with amounts

similar to the one here, courts should typically find the request

reasonable with little second guessing if it falls between 17.6%

and 26.8% of the common fund. Moreover, fee requests that fall

between 26.8% and 36% percent should be considered potentially

reasonable, provided there is some affirmative justification for

the figure. See Theodore Eisenberg & Geoffrey P. Miller, Attorneys

Fees in Class Action Settlements: An Empirical Study, 1 Journal of

Empirical Legal Studies 1, 37-38 (2004). “If the request is

 

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relatively close to the average awards in cases with similar

characteristics, the court may feel a degree of confidence in

approving the award.” Id. at 36.

A review of other cases reveals that a fee request of 30% of

a common fund, although on the high end, is within the range of

reasonableness for settlements of this size. See, e.g., Turner,

472 F.Supp.2d at 867 (awarding attorney’s fees of 17% of $195

million recovery); Schwartz, 2005 WL 3148350, at *27 (“The

requested fee award of 22.2% of the [$149.75 million] Settlement

Fund is consistent with and, in fact, significantly less than

awards made in similar cases.”); In re Combustion, Inc., 968 F.

Supp. at 1142 (approving 36% fee based on $127 million settlement

fund). In a typical case, the court might be persuaded that, for

a settlement of $90-$110 million dollars, the appropriate

percentage benchmark is approximately 25%, which would fall within

the “presumptively reasonable” range identified by Eisenberg and

Miller. A benchmark of 25% acknowledges the pattern in class

action settlements with greater overall recoveries, as here, which

typically involve more modest percentages than are found in smaller

common-fund settlements. As the court will explain, however, this

initial benchmark does not take into account the unique

circumstances of this case that merit an increased fee. These

circumstances are examined through the court’s analysis of the

Johnson factors. 

 

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C

The court next considers counsels’ request under the Johnson

factors to determine whether a deviation from the benchmark

percentage range is appropriate and to test the overall

reasonableness of the fee. The court will analyze each relevant

factor separately and will then consider what deviation from the

benchmark percentage, if any, is warranted based on all the factors

considered together.

“The court must scrutinize the agreed-to fees under the

standards set forth in [Johnson], and not merely ratify a

pre-arranged compact.” Strong, 137 F.3d at 849 (internal quotation

marks omitted). The court’s analysis under Johnson must not be

merely conclusory, but must establish grounds for the court’s

decision on each of the relevant factors. “If the district court

has articulated and clearly applied the correct criteria, we will

not require the trial court’s findings to be so excruciatingly

explicit in this area of minutiae that decisions of fee awards

consume more paper than did the cases from which they arose.” In

re High Sulfur, 517 F.3d at 228-29. “Even though it is apparent

that the Johnson factors must be addressed to ensure that the

resulting fee is reasonable, not every factor need be necessarily

considered.” In re Combustion, Inc., 968 F. Supp at 1135. The

court sets forth its reasoning below, but it incorporates into this

discussion its findings regarding counsels’ efforts and the

 

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challenges presented by this litigation, as discussed supra at

§ III regarding the motion for approval of the Settlement

Agreement.

The first factor the court considers is the time and labor

required by the attorneys in litigating the case. Counsels’

billing records demonstrate the substantial and consistent workload

that the litigation required. During the course of providing

exceptional representation for the class plaintiffs, counsel

attempted to obtain all the required medical records and to

individually contact each E-Ferol recipient or the recipient’s

survivors. The age of the 20-year old medical records and the

recalcitrance of many hospitals to reveal the names of E-Ferol

recipients made these efforts more challenging and time consuming

than in a typical class action, and they sometimes involved

contested proceedings to obtain records. In addition to the large

volume of typical pretrial work, counsel sought and obtained class

certification, successfully defended a petition for leave to appeal

that ruling, opposed defendants’ partial summary judgment motion,

and engaged in extensive settlement negotiations. The issues in

the case——as reflected by the expert testimony at the fairness

hearing——were complex, and counsel were required to prepare

themselves in complicated matters in order to represent the class

effectively. The investment of time and effort by counsel is

underscored by the fact that this litigation has stretched on for

 

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seven years, with relatively few periods of inactivity. 

The legal experts testified that the volume of the docket

entries in this case stood out as particularly heavy when compared

with typical class actions. Prof. Underwood testified that he

reviewed the significant motions and pleadings in the case and

found that the case was notably more intensive than most suits of

this type: “a lot of class actions [a]re handled differently from

this one.” Tr. 1:238. He concluded that “this was hard fought

litigation, the gloves were off. This was a big case[.]” Id.

Likewise, Prof. Silver notes in his declaration that one study

found that the typical non-securities class action case lasted from

one to four years, whereas the instant litigation has lasted nearly

seven. See Ds. Ex. 2 at 10. The time and labor required in this

case justify an increase in the benchmark percentage fee that might

otherwise be considered presumptively reasonable. 

The next factor the court considers is the novelty and

complication of the issues presented in the case. This litigation

has presented challenging legal questions (i.e., limitations

defenses, causation of death or injury, fraudulent concealment, and

multi-tiered insurance coverage). Given the evidence and the

length of time that elapsed since the events in question occurred,

counsel were required to address legal issues that involved

considerable research into the facts and applicable law (law that

sometimes varied by state). Although E-Ferol cases had been

 

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litigated before this class action was filed, and defendants’

liability for injuries and the medical data surrounding some of the

claims were somewhat well developed, class counsel were still

required to expand on this foundation. Moreover, the complicated

legal questions surrounding statutes of limitations and repose, as

well as issues of reasonable reliance by class members, that arose

in this case were not present in the prior E-Ferol cases.

The court also considers the testimony of the medical experts

at the fairness hearing, and their pre-hearing submissions, about

the complexity of the medical causation issues. Experts for both

sides opined that there was uncertainty surrounding the medical

evidence supporting the class plaintiffs’ claims. Because the

community of medical experts with knowledge about E-Ferol is

narrow, class counsel were required to retain the handful of

specialists with sufficient understanding to analyze the medical

records. Moreover, as stated above, even obtaining these records

proved to be arduous, often requiring collateral litigation. The

expert testimony focused heavily on the disputed causation

arguments in the case. Because the class includes not only death

claims but also claims for neurological injuries and medical

monitoring, the burden of proving that E-Ferol caused the claimed

injuries is more difficult in this case than in many of the

previous E-Ferol lawsuits. The volume of discovery and pretrial

practice in this case, along with the duration of the litigation,

 

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confirms the complexity of the issues faced by class counsel. The

court finds that the complexity of the issues also favors an

increase in the benchmark percentage.

The court next considers the extent to which class counsel

were precluded from accepting other work due to the

responsibilities involved in litigating this case. Each lawyer

averred that this case precluded him from accepting other

engagements. Lead counsel Brender pointed to his billing records,

which reflect that work on this litigation has often been a daily

routine throughout the life of the case. The reported hours

demonstrate that work on other cases was often precluded.

Likewise, the lawyers from the Dent Law Firm submitted billing

records that show the demands that this case made on them. They

also averred that at least 20 complex litigation cases were turned

away to permit time to prosecute this action. The court recognizes

that, not only has this case required significant, almost weekly

investments of time (to the exclusion of other employment), but the

investment has been required over a period of seven years. The

decision to represent the plaintiffs class required a strong

commitment and resulted in the loss of other work. Accordingly,

the court finds, under the circumstances presented here, that this

factor favors an increase in the typical benchmark level.

Next, class counsel represented the class on a contingent-fee

basis, with no guarantee of any recovery. Not only did they

 

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39In some circumstances, this Johnson factor cannot be

considered. See Burlington v. Dague, 505 U.S. 557, 567 (1992).

But because this is a common fund case, the court is not precluded

from considering it. See In re Enron Corp. Sec., Derivative &

ERISA Litig., 586 F.Supp.2d 732, 791 (S.D. Tex. 2008) (“the holding

in [Dague] that enhancement of the lodestar by a multiplier based

on the contingent nature of a fee is not allowed when fees are

awarded to plaintiffs’ counsel under fee-shifting provisions of

statutes, does not apply to common fund cases.”).

- 96 -

represent plaintiffs who likely could not otherwise have afforded

counsel, they funded more than $1.8 million in litigation expenses,

incurring many of these costs before they were aware that the class

plaintiffs would realize any recovery. The contingent nature of

the fee favors an increase in the typical benchmark percentage.39

The court considers last the amount involved and the results

obtained. In this case, the results obtained for the class are

significant: $90 million dollars in settlement funds and the

possibility of another $20 million if ongoing insurance disputes

are favorably resolved. Notably, this is not a case where a large

sum is being recovered but the class is so numerous that each

individual is receiving only a token payment. On the contrary, the

allocation of this settlement fund means that plaintiffs in

Categories 1, 2, and 3 will receive between $1 million and $2

million apiece, before attorney’s fees and expenses are deducted,

and even claimants without identifiable injuries or whose claims

have been dismissed on limitations grounds will receive payments.

These recoveries are significant and have been shown to compare

favorably with the likely results even if the class members’ cases

 

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40The court has fully considered each of the Johnson factors,

although it has not explicitly addressed each one. Any factor not

mentioned is found to be inapplicable to the court’s determination

of the reasonableness of the fee and to have no impact on adjusting

the typical benchmark percentage fee upward or downward.

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were tried individually. Moreover, the attorneys point out that,

not only is the monetary recovery significant, this lawsuit

provided the first notice for many recipients or their survivors

about the effects of E-Ferol, and it provided answers to previously

unexplained injuries and deaths. These intangible benefits are

real and valuable, even if they cannot be readily valued

monetarily. For the foregoing reasons, the court finds that the

amount involved and the recovery obtained for the class merit an

increase from the typical benchmark percentage.

D

Based on its examination of the Johnson factors, and

considering the risks involved in counsels’ representation of the

class, the court finds that a percentage award of 30% is

reasonable.40 The court is particularly impressed with the size of

the recovery obtained for the class and the fact that this sum is

divided among a relatively small number of class members, so that

individual recoveries are substantial in most categories. Although

courts sometimes award class action attorney’s fees at a percentage

that is lower than 30%, class actions often involve so many class

members that the individual shares of the payout are highly

diluted. Fortunately for this class, this is not the case here.

 

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41Notice of the 30% fee request was included along with the

notice of the Settlement Agreement sent to each class member.

Ninety-seven percent of the class members responded with

affirmative requests that the court approve the settlement; no

members of the class (other than Long) oppose the fee request,

although they are entitled to do so under Rule 23(h)(2). Class

members who are otherwise satisfied with the amount of their pro

rata recoveries could reasonably be expected to object to a 30%

deduction if they considered this percentage to be excessive. The

absence of any complaint from all but one member of the class

underscores the court’s finding that a 30% fee request is

reasonable. 

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Additionally, the volume of work required and the seven-year life

span of the case mean that each lawyer was required to invest more

effort and time than is typically required of attorneys

representing a class. 

Furthermore, the testimony at the fairness hearing establishes

that the requested 30% fee is reasonable and is actually less than

might be expected given the duration of the case and the risks

involved. Noting the vast support from the class,41 Prof. Underwood

opined that “[y]ou could almost say in a case like this that the

traditional need for court supervision and approval is largely

unnecessary.” Tr. 1:247. In his pre-hearing declaration, Prof.

Underwood averred that, “[f]rom my experience defending personal

injury tort claims, a contingent fee of 30% would be on the low end

of the spectrum as I have tended to see contingency fee

arrangements in such cases typically ranging from 33% to 50%

. . . .” Ps. Ex. 28 at 18. These percentages tend to increase “as

the case takes on greater complexity and is further along in the

 

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procedural posture of the case.” Id. Finally, even defendants’

counsel opposes Long’s objections to the fee request, opining that

“[c]lass Counsel in this case have had to perform more work than

most attorneys in class actions. The zealous representation on

both sides has culminated in a compromise viewed as fair,

reasonable, and adequate by lead counsel with over seventy years

combined experience.” Ds. Feb. 14, 2010 Resp. 17-18.

E

The court now cross-checks its finding by analyzing the

request under the lodestar method. See Shaw, 91 F.Supp.2d at 968.

Under this method, the court takes the recorded hours worked by the

attorneys and multiplies them by a reasonable hourly rate. See,

e.g., Forbush v. J.C. Penny Co., 98 F.3d 817, 821 (5th Cir. 1996).

The resulting lodestar amount may then be adjusted upward or

downward depending on the court’s application of the Johnson

factors. See id.

Counsel provided records of billable hours expended on this

litigation from 2003 through 2009; the total of all three

attorneys’ time is approximately 22,032 hours. This time does not

include work done in the first three months of 2010, during which

the fairness hearing took place and numerous pleadings and briefs

were filed. To account for the attorneys’ time worked since

December 2009, the court will add 250 hours to the total of all

three attorneys (which is probably conservative). This results in

 

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42Although Long asserts that the requested 30% fee is excessive

and maintains that the lodestar method is the only acceptable means

of calculating a fee, he does not raise any specific objections to

the hours reported by class counsel.

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a total recorded time of 22,282 hours. The court has not

meticulously analyzed the reported hours line-by-line, but it has

generally reviewed the submitted hours, and they appear to be

reasonable. Long does not contend that the submitted hours are

unreasonable. In fact, he maintains that any fee award should be

made on this basis.42 Moreover, the evidence at the fairness

hearing was that the hours reported are reasonable. Prof.

Underwood testified that he was not surprised at the number of

reported hours——based on the duration and complexity of the

case——and that a similar number of hours would be necessary to

effectively prosecute a class action such as this one. See Tr.

1:228-29.

The attorneys have provided suggested figures to use as

reasonable rates for the lawyers’ time. Brender avers in a

discovery response that, during the pendency of this litigation, he

has worked on only one case with an hourly billing arrangement (the

majority of his work is on a contingent-fee basis). In that case,

he billed at the rate of $500 per hour. The lawyers from The Dent

Law Firm state that, had they entered into this representation with

an hourly billing arrangement, they would have charged $600 per

hour, based partially on their valuable experience having litigated

 

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prior E-Ferol cases. They also aver that any fee award under the

lodestar method should be calculated with a multiplier of at least

2.

“The Fifth Circuit has noted that a court is itself an expert

in attorneys’ fees and ‘may consider its own knowledge and

experience concerning reasonable and proper fees and may form an

independent judgment with or without the aid of witnesses as to

value.’” In re OCA, Inc. Sec., 2009 WL 512081, at *25 (quoting

Campbell v. Green, 112 F.2d 143, 144 (5th Cir. 1940)). Based on

its knowledge of the reasonable rates charged by attorneys of

similar experience and ability as those here, the court finds that

$500 per hour is a reasonable average rate to apply to all three

lawyers for the class. Taking this as a reasonable hourly rate and

multiplying it by the number of hours worked, the resulting

lodestar fee is $11,141,000 (i.e., $500 per hour x 22,282 total

hours). 

The court next considers whether the lodestar should be

adjusted based on its analysis of the Johnson factors. “The

purpose of a lodestar cross-check of the results of a percentage

fee award is to avoid windfall fees, i.e., to ensure that the

percentage approach does not lead to a fee that represents an

extraordinary lodestar multiple.” In re Enron Corp. Sec.,

Derivative & ERISA Litig., 586 F.Supp.2d 732, 751 (S.D. Tex. 2008)

(internal quotation marks omitted). The court concludes that an

 

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upward adjustment under Johnson is merited for the same reasons

that it concludes that an increase in the percentage benchmark fee

is appropriate. Applying a multiplier of 2.5 results in a fee

award of $27,852,500 (i.e., 2.5 x $11,141,000). Multipliers in

this range are not uncommon in class action settlements. See,

e.g., Forbush, 98 F.3d at 824 (affirming district court’s use of

multiplier of two); Vaughn v. Am. Honda Motor Co., 627 F.Supp.2d

738, 751 (E.D. Tex. 2007) (applying a multiplier of 2.26); Turner,

472 F.Supp.2d at 869 (“[T]he Court finds that a lodestar multiplier

range of 2.5 to 3.5 would be appropriate and reasonable in this

case.”); In re Combustion, Inc., 968 F. Supp. at 1133 (“Multipliers

ranging from one to four frequently are awarded in common fund

cases when the lodestar method is applied.”); Garza v. Sporting

Goods Props., Inc., 1996 WL 56247, at *33 (W.D. Tex. 1996) (“The

range of multipliers in large and complicated class actions have

ranged from 2.26 to 4.5.”). The court finds that a multiplier of

2.5 would be warranted due to the risks entailed in this lawsuit

and the zealous efforts of the attorneys that resulted in a

significant recovery for the class. This comports with the

testimony of Prof. Underwood, who opined that, in cases such as

this one, “[i]t’s not uncommon for courts to use multipliers of 2

or 3.” Tr. 1:251 (“[Y]ou could argue for a greater multiplier

here, given all the unique challenges of this case and the fact

that it took you seven years to reach a settlement, the prospects

 

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43The attorneys have submitted a fee sharing agreement that

states a division of the overall attorney’s fee as follows: lead

counsel Brender 45%; Dwain Dent 40%; Fred L. Strek, III 15%.

“[L]ead plaintiff and lead counsel’s decision that non-lead counsel

is entitled to some compensation is entitled to deference, although

the Court must still independently review it.” In re OCA, Inc.

Sec., 2009 WL 512081, at *23. The court finds that the proposed

fee-splitting arrangement is reasonable and approves the agreed

divisions.

44Consistent with the stated intentions of the attorneys, if

class counsel succeeds in obtaining additional insurance recoveries

through litigation against Federal, Westchester, or Mission

following the approval of the Settlement Agreement, counsel can

apply for an additional fee award.

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for getting paid were arguably slimmer, and the percentage of [the

attorneys’] time . . . was much greater[.]”). The result under

this lodestar cross-check results in an award of attorney’s fees

that is slightly greater than the award of 30% of the common fund

(i.e., $27,000,000 vs. $27,852,500).43 Accordingly, the court finds

that counsels’ request for an attorney’s fee award equaling 30% of

the class recovery is reasonable, and it is therefore approved

pursuant to Rule 23(h)(1).44

F

The court overrules Long’s remaining objections to the motion

for award of attorney’s fees. 

Long requests that the court apply a pure lodestar calculation

rather than the percentage method. The court disagrees, for the

reasons explained above, that strict adherence to the lodestar

method alone is required. Long also asks that the court exempt

from his portion of the approved settlement any attorney’s fees for

 

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actions that Long posits were against his personal interest. He

reiterates vague accusations that the elements of the Settlement

Agreement with which he disagrees are targeted at him, and he

complains that he should not be required to pay fees for

representation that resulted in such terms, or for class counsels’

work in defending against his objections. The court also overrules

these objections.

The work of class counsel, for which they are being awarded a

30% fee, resulted in a substantial recovery for the class as a

whole. Lead counsel for both sides, the legal experts who provided

evidence, and even Long’s attorney agreed that class counsel had

diligently worked on behalf of the class through the prolonged life

of this litigation. Although Long may be dissatisfied with parts

of the Settlement Agreement and his individual recovery, it is

indisputable that the only reason he is recovering a substantial

sum under Category 1 is due to the commendable work of class

plaintiffs’ counsel. It is reasonable, therefore, for attorney’s

fees to be paid out of Long’s portion, which is the product of

counsels’ efforts. Long’s dissatisfaction with the proposed

settlement does not mean that he can enjoy the benefits without the

corresponding obligation to compensate the attorneys who zealously

and capably worked to obtain a recovery on his behalf. The fact

that some of counsels’ efforts were aimed at opposing his

challenges to the proposed settlement does not alter the court’s

 

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conclusion. Class counsel succeeded in procuring a sizeable award

for Long and the class as a whole. It was necessary that they

oppose his objections to ensure that the settlement was approved.

They are entitled to be fairly and reasonably compensated for their

services in securing approval of a proposed settlement that is

fair, reasonable, and adequate to the class as a whole.

G

In addition to the 30% fee award, the court approves class

counsels’ request for compensation of expenses incurred in the

course of litigation. The court has reviewed the claimed expenses

and finds that they are reasonable. Credible evidence was

presented at the fairness hearing that the expenses submitted are

reasonable and that they are even less than might be expected,

particularly considering the volume of 20-year old medical records

that class counsel were required to assemble and analyze. Prof.

Underwood has reviewed class counsels’ expense reports, and he sees

“no items on those expense statements that appear inappropriate or

excessive.” Ps. Ex. 28 at 18. He applauds the attorneys’ decision

to seek reimbursement for the actual costs of outside consultants

rather than at marked-up rates. He concludes that, “[i]f anything,

the amount of these expenses is low.” Id. at 19. The court

approves reimbursement for the expenses submitted in the original

December 28, 2009 motion for attorney’s fees, as well as the

supplemental list of expenses submitted in class counsels’ February

 

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45Both named plaintiffs are in Category 4. The court finds

that their efforts on behalf of the class members, many of whom

will receive much larger recoveries under the Settlement Agreement

than they, merit such compensation.

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24, 2010 letter to the court. 

The court also approves the request for $300,000 to be set

aside to cover expenses associated with the administration and

distribution of the settlement funds to the class. There is no

basis in the record to find that this expense is unreasonable or

that class counsel should not be compensated for it. Any part of

the $300,000 remaining after the settlement funds have been

distributed will be allocated pro rata among class members

according to the categorical percentages under the Settlement

Agreement.

Finally, the court approves payments of $75,000 each for the

two class representatives, Victoria Klein and Ashley Swadley.

Given the duration of the litigation and the extent of their

personal participation, both named plaintiffs are entitled to

compensation above and beyond their recoveries under the Settlement

Agreement45 for their services to the class as a whole.

As with the 30% attorney’s fee award, no class member (except

Long) objected to any of the requests the court is approving in

§ VII(G). To the extent that Long specifically objects to these

requests, his objections are overruled.

 

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46Additionally, in view of the approval of the settlement, the

following motions are also denied without prejudice as moot: (1)

defendants’ May 9, 2008 motion to enforce scheduling order; (2)

defendants’ May 22, 2008 motion to limit designation of class

membership; (3) plaintiffs’ June 4, 2008 motion to stay

designation of plaintiff’s experts on general causation in

compliance with Fed. R. Civ. P. 26(a)(2) and defendants’ motion to

limit designation of class membership; and (4) defendants’ June 23,

2008 motion for entry of order certifying interlocutory appeal

under 28 U.S.C. § 1292(b). 

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* * *

For the foregoing reasons, the class plaintiffs’ February 8,

2010 motion to approve class settlement is granted, and their

December 28, 2009 motion for award of a reasonable attorney’s fee,

expenses, and costs, compensation for class representative, and

administrative costs is granted. Long’s September 23, 2009 motion

to intervene and renewed motion to opt out and motion for

decertification of the plaintiffs class are denied. Defendants’

February 4, 2010 motion to exclude and to strike documents and

other materials proffered by Lawrence V. Long, Jr. in support of

his objections to the class settlement and their February 10, 2010

motion to exclude expert reports proffered by objectors Lawrence V.

Long, Jr. and Sharon Jenkins are denied as moot.46

Within 30 days of the date this memorandum opinion and order

is filed, counsel for the class plaintiffs and defendants must file

proposed documents for the court’s consideration and entry to

effect the approved settlement and the entry of a final judgment,

as contemplated by Rule 58. Documents filed after the fairness

 

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hearing but before the filing of this memorandum opinion and order

need not be duplicated. It will assist the court if the parties

will also advise the court by letter of all matters that await

court action and, if pleadings have been filed concerning these

matters, identify them by docket number.

SO ORDERED.

April 9, 2010.

_________________________________

SIDNEY A. FITZWATER

CHIEF JUDGE

 

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