Opinion ID: 475526
Heading Depth: 2
Heading Rank: 2

Heading: The Settlement Agreement, the Pending Appeals, and the Present Disqualification Motion

Text: 10 Prior to May 7, 1984, with the class actions scheduled to go to trial on May 7, the parties negotiated a settlement of the class actions. The agreement called for the defendant chemical companies to pay a total of $180 million in settlement to the members of the plaintiff classes. 11 As a member of the PMC, Musslewhite had participated in the negotiations that led to the settlement agreement; he voted in favor of that agreement and spoke in support of it in the fairness hearings conducted by the district court in August 1984. Thereafter, however, Musslewhite became disenchanted with the proposed settlement agreement, and in January 1985, he withdrew from the PMC. 12 In January, 1985, the district court found the settlement to be fair, reasonable, and adequate under the circumstances, In re Agent Orange Product Liability Litigation, 611 F.Supp. 1296 (E.D.N.Y.1985), and in May 1985, it approved a distribution plan for the settlement fund, In re Agent Orange Product Liability Litigation, 611 F.Supp. 1396 (E.D.N.Y.1985). 13 Following the entry of final judgments approving the settlement, Ashcraft and Musslewhite, on behalf of the thousands of plaintiffs they represent, filed appeals contending that the settlement should be set aside. Ashcraft, on behalf of its clients and on behalf of 21 law firms around the country claiming to represent some 3,000 additional class members, filed a brief challenging the fairness, reasonableness, and adequacy of the settlement and contending, in addition, that the district court lacked subject matter jurisdiction of the litigation and had denied individual claimants due process in certifying the class. 14 Musslewhite filed a brief adopting the arguments made in Ashcraft's brief and making additional challenges to the sufficiency of the notice given to class members and the adequacy of the approved settlement. In responding to the present motion, Musslewhite stated that his view of the adequacy of the settlement, which he initially had favored, was changed by information that came to light only after the agreement was negotiated, as to the number of class members who did not receive notice of the class action and the number of class members who have claims to be satisfied from the settlement fund. He stated that whereas prior to the negotiations it was believed that there were some 20,000 claims to be asserted, only 4,000 of which were serious, it now appears that there are some 243,000 claims to be asserted, more than 128,000 of which are serious. These revelations caused Musslewhite to change his view that the settlement was adequate, to urge the other members of the PMC to reject the settlement, and to challenge the settlement on appeal. 15 Schlegel, on behalf of the PMC as it is presently constituted, moved to disqualify Ashcraft and Musslewhite from representing parties on the pending appeals, principally on the grounds that the combination of (1) Ashcraft's representation of both class members and individuals who chose to opt out of the class, (2) Musslewhite's participation in the negotiation of the proposed settlement on behalf of the class, and (3) the prior roles of Ashcraft and Musslewhite as members of the PMC and class counsel, have given them such a direct conflict of interest as to create a clear impropriety in violation of controlling standards of professional conduct. For the reasons below, we have concluded that the motion should be denied.