IN THE UNITED STATES DISTRICT COURT

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE DIET DRUGS (Phentermine/ )

Fenfluramine/Dexfenfluramine) ) MDL DOCKET NO. 1203

PRODUCTS LIABILITY LITIGATION )

____________________________________

)

THIS DOCUMENT RELATES TO: )

)

SHEILA BROWN, SHARON GADDIE, )

JOSE GADDIE, VIVIAN NAUGLE, )

QUENTIN LAYER, JOAN S. LAYER, )

JOBY JACKSON-REID and HARVEY )

E. REID, Individually and )

all others similarly situated, ) CIVIL ACTION NO. 99-20593

)

Plaintiffs, )

) CLASS ACTION

v. )

)

AMERICAN HOME PRODUCTS )

CORPORATION, )

)

Defendant. )

____________________________________)

MEMORANDUM OF PLAINTIFFS JANE SCUTERI,

ET AL., IN OPPOSITION TO JOINT MOTION FOR

AN ORDER CONDITIONALLY CERTIFYING A CLASS

ACTION TO EFFECTUATE A CLASS SETTLEMENT

Paul J. Napoli

Marc Jay Bern

Napoli, Kaiser & Bern, LLP

115 Broadway, 12th Floor

New York, NY 10006

(212) 267-3700

Attorneys for Plaintiffs Jane Scuteri, et al.

Of Counsel:

Kenneth J. Chesebro

1600 Massachusetts Avenue

Cambridge, MA 02138

December 6, 1999 (617) 661-4423

TABLE OF CONTENTS

I. PRELIMINARY STATEMENT 2

II. FACTUAL BACKGROUND 5

III. CONDITIONAL CLASS CERTIFICATION MUST BE DENIED BECAUSE

THE INSTANT CLASS ACTION “LAWSUIT” IS NOT A “CASE” OR

“CONTROVERSY” WITHIN THIS COURT’S ARTICLE III JURISDICTION.................. 9

A. This is a Feigned Proceeding Designed to Impose an

Alternative Dispute Resolution Mechanism on All

Users of AHP’s Diet-Drug Products and Their Families

Who Fail to Opt Out, Not an Article III “Case” or “Controversy”................... 10

B. Independently, There is No Conceivable Article III Jurisdiction to

Effect, as Required by the Proposed Settlement, the Sweeping Release

of Claims That Will Not Even Exist Until the Future and Thus That

Are Not Pleaded, and Cannot be Pleaded, in the Class Action Complaint... 14

IV. CONDITIONAL CERTIFICATION MUST BE DENIED UNDER

FED. R. CIV. P. 23(a) GIVEN THAT PROPOSED CLASS COUNSEL

HAVE MULTIPLE PREEXISTING, DISABLING CONFLICTS................... 19

A. Rule 23(a)(4) Requires Heightened Attention in the “Settlement Class”

Context to Ensure That Proposed Class Counsel Are Free of Any

Conflict of Interest, or Even an Appearance of a Conflict of Interest........ 20

B. Nearly All of the Proposed Class Counsel Have Preexisting Duties

to the Already Certified Jeffers Class That Prevent Them From

Adequately Representing the Putative Brown Class 23

C. The Rest of the Proposed Class Counsel Have Preexisting Duties to

One or More Already Certified State-Wide Class Actions That Prevent

Them From Adequately Representing the Putative Brown Class........... 38

D. All of the Proposed Class Counsel Have a Preexisting Interest

in a Pre-Scripted Outcome in Brown, Preventing Them From

Adequately Representing the Putative Brown Class 41

V. CONCLUSION.... 45

TABLE OF AUTHORITIES

Cases: Page:

Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997).. passim

Chicago & G.T. Ry. Co. v. Wellman, 143 U.S. 339 (1892)........ 12

City of Dawson v. Columbia Avenue Saving Fund, 197 U.S. 178 (1905) 10, 13

Dincher v. Marlin Firearms Co., 198 F.2d 821, 823 (2d Cir. 1952).......... 18

Fair v. International Flavors & Fragrances, Inc., 905 F.2d 1114 (7th Cir. 1990).......... 16

FASA Corp. v. Playmates Toys, Inc., 892 F. Supp. 1061 (N.D. Ill 1995)................... 16

General Telephone Co. of Southwest v. Falcon, 457 U.S. 147 (1982)........ 21

Guenther v. Stollberg, 495 N.W.2d 286 (Neb. 1993) 16

Hansberry v. Lee, 311 U.S. 32 (1940).. 21

In re Agent Orange Product Liability Litigation, 800 F.2d 14 (2d Cir. 1986)... 22

In re Asbestos Litigation, 90 F.3d 963 (5th Cir. 1996), rev’d,

Ortiz v. Fibreboard Corp., 119 S. Ct. 2295 (1999) ....... 17

In re Corn Derivatives Antitrust Litigation, 748 F.2d 157 (3d Cir. 1987),

cert. denied, 472 U.S. 1008 (1985)........ 22

In re Fibreboard Corp., 893 F.2d 706 (5th Cir. 1990)... 10

In re Fine Paper Antitrust Litig., 617 F.2d 22 (3d Cir. 1980)................... 24

In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation,

55 F.3d 768 (3d Cir.), cert. denied, 516 U.S. 624 (1995).. 19, 22

Kayes v. Pacific Lumber Co., 51 F.3d 1449 (9th Cir.), cert. denied, 516 U.S. 914 (1995................... 24

Kincade v. General Tire & Rubber Co., 635 F.2d 501 (5th Cir. 1981)............. 22-23

Laskey v. International Union, 638 F.2d 954 (6th Cir. 1981)... 23

Lazy Oil Co. v. Witco Corp., 166 F.3d 581 (3d Cir.) (Becker, J.)

cert. denied, 120 S. Ct. 178 (1999)................... 22

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).. 11, 15

Matsushita Electric Industrial Co. v. Epstein, 516 U.S. 367 (1996)........ 17

Maywalt v. Parker & Parsley Petroleum Co., 155 F.R.D. 494 (S.D.N.Y. 1994),

aff’d, 67 F.3d 1072 (2d Cir. 1995)... 22

McNutt v. General Motors Acceptance Corp., 298 U.S. 178 (1936)........ 11

Metro. Wash. Airports Auth. v. Citizens For Abatement of Aircraft Noise,

501 U.S. 252 (1991)........ 11

Mistretta v. United States, 488 U.S. 361 (1989)........ 14

Moore v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 47 (1971)........ 13

Muskrat v. United States, 219 U.S. 346 (1911)........ 13

National Super Spuds v. New York Mercantile Exchange, 660 F.2d 9 (2d Cir. 1981).......... 17

Northeastern Fla. Contractors v. Jacksonville, 508 U.S. 656 (1993)........ 14

Old Wayne Mut. Life Ass’n v. McDonough, 204 U.S. 8 (1907)........ 21

Ortiz v. Fibreboard Corp., 119 S. Ct. 2295 (1999).. passim

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)........ 21

Cases: Page:

Poe v. Ullman, 367 U.S. 497 (1961)... 11-12

Postal Tel. Cable Co. v. Newport, 247 U.S. 464 (1918)........ 21

SEC v. Randolph, 736 F.2d 525 (9th Cir. 1984) . 14

Swift & Co. v. United States, 276 U.S. 311 (1928)........ 13

Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885 (3d Cir. 1975).......... 16

United States v. Johnson, 319 U.S. 302 (1943)........ 11

Whitmore v. Arkansas, 495 U.S. 149 (1990).. 14, 17

Constitutional Provisions, Statutes and Rules:

U.S. Const, art. III......... passim

Fed. R. Civ. P. 23........ passim

Fed. R. Civ. P. 23(a)(4).... 4-5, 18-19, 24, 44

Fed. R. Civ. P. 23(b)(2) 25-26

Fed. R. Civ. P. 23(b)(3)(D). 20

Fed. R. Civ. P. 23(e)..... 20-21

Pa. R. Prof. Con. 1.1..... 27

Pa. R. Prof. Con. 1.3..... 27

Pa. R. Prof. Con. 1.4..... 27

Pa. R. Prof. Con. 1.7(a)............. passim

Pa. R. Prof. Con. 1.7(b)............. passim

Pa. R. Prof. Con. 1.8(a). 44

Pa. R. Prof. Con. 1.8(f).. 44

Pa. R. Prof. Con. 1.9(a). 27

Pa. R. Prof. Con. 2.1 27, 43

Pa. R. Prof. Con. 5.49(c) 44

Pa. R. Prof. Con. 8.5(b)(1)................... 23

Rules of Disciplinary Enforcement, Rule IV(B)

(available at ‹http://paed.uscourts.gov/locrules/RULES.HTM›)................ 23

Books and Articles:

John C. Coffee, Jr., The Corruption of the Class Action:

The New Technology of Collusion, 90 Cornell L. Rev. 845 (1995). 42

John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action,

95 Colum. L. Rev. 1343 (1995). 42

Deutsch, A Lawyer Opponents Can Like, N.Y. Times, July 4, 1999, § 3, at 2, col. 5 ........... 2

Susan P. Koniak, Feasting While the Widow Weeps: Georgine v. Amchem

Products, Inc., 80 Cornell L. Rev. 1045 (1995) .................... 21

Books and Artilces (continued): Page:

Stephen Labaton, Asbestos Cases in for Overhaul by Lawmakers,

N.Y. Times, June 28, 1999, at A1 . 3

Stephen Labaton, How a Company Lets Its Cash Talk, N.Y. Times, Oct. 17, 1999, § 3, at 1 ....... 3

5 J. Moore, T. Chorvat, D. Feinberg, R. Marmer & J. Solovy,

Moore’s Federal Practice (3d ed. 1998)...... 4, 22

National Settlement Program Expected to Cost Owens Corning $728M in 1999,

Mealey’s Litigation Report: Asbestos, July 16, 1999 ...... 2

Charles Ornstein, “Fen-Phen Secret Pact Criticized: Side Deal Contradicts

Plaintiffs’ Assertions,” Dallas Morning News, Nov. 20, 1999, at 1A .............. 31-32

Owens Corning Subsidiary Integrex is Born Out of Its NSP, Andrews Publications,

Asbestos Litigation Reporter, Oct. 15, 1999 .... 23

David L. Shapiro, Class Actions: The Class as Party and Client,

73 Notre Dame L. Rev. 913 (1998)........ 23

Donna Shaw, “Two Lawyers Seem to Deny Own Claims in Fen-Phen Case,”

Philadelphia Inquirer, Nov. 19, 1999, at A1 ................... 31

Laurence H. Tribe, American Constitutional Law (3d ed. 2000) ......... 11

7B Charles Alan Wright, Arthur R. Miller & Mary K. Kane,

Federal Practice and Procedure (1986)........ 21

Miscellaneous:

Brief of Legal Ethics, Civil Procedure, and Constitutional Law Scholars as

Amici Curiae in Support of Petitioners, in Ortiz v. Fibreboard Corp.,

No. 97-1704 (filed Aug. 6, 1998) .................... 20

Letter from Marc Jay Bern and Paul J. Napoli to Arnold Levin, Esq., and

Gene Locks, Esq., dated November 29, 1999 ...... 5, 22

Letter from Arnold Levin to Hon. Louis C. Bechtle dated November 30, 1999 ...... 5, 22

MEMORANDUM OF PLAINTIFFS JANE SCUTERI,

ET AL., IN OPPOSITION TO JOINT MOTION FOR

AN ORDER CONDITIONALLY CERTIFYING A CLASS

ACTION TO EFFECTUATE A CLASS SETTLEMENT

Jane Scuteri and twenty-two (22) other unnamed plaintiffs in this putative class action, who are identified in the margin and are represented by and appear through undersigned counsel,^[1] hereby submit this memorandum in opposition to the Joint Motion for an Order Conditionally Certifying a Class Action to Effectuate a Class Settlement, Preliminarily Approving a Class Settlement, Directing Class Notice, and Scheduling a Final Fairness Hearing, filed on November 19, 1999.^[2]

The first point is whether any basis exists for the exercise of Article III jurisdiction over the “lawsuit” that these settlement proponents have brought before the Court. The attorneys who presently seek to serve as Brown class counsel entered into a contract with AHP on October 7, 1999, in which they agreed to work together to create a “global” alternative dispute resolution (“ADR”) mechanism to resolve both personal injury claims that members of the putative Brown class currently have against AHP (and other entities), as well as personal injury claims that might accrue against AHP (and other entities) in the future. To implement this approach, these attorneys and AHP did not choose to proceed using ordinary contract law, creating a settlement program that plaintiffs could affirmatively elect to use as they wished, as has been done successfully by one major asbestos defendant.^[3] Nor did these attorneys and AHP choose to lobby Congress to enact legislation establishing an ADR mechanism and forcing plaintiffs to use it, as another major asbestos defendant is currently doing.^[4]

Instead, these attorneys and AHP agreed in the October 7 contract that, in exchange for a guaranteed $200 million payment by AHP to create a fund from which these attorneys could obtain fees, they would file the Brown “lawsuit” under which this Court would be asked to approve the creation of an ADR mechanism to resolve present and future personal injury claims, and under which all members of a class created pursuant to Fed. R. Civ. P. 23 would have their current and future tort claims against AHP (and other entities) released unless they both learned of the proposal and opted out by a given date. In this contract, the putative Brown class counsel specifically agreed that they would seek certification of the Brown class solely as a “settlement class,” not for purposes of litigation. In other words, these attorneys and AHP have come to this Court, hand in hand, agreeing that they will not litigate anything in the class action complaint, and seeking only this Court’s imposition of the ADR mechanism on the Brown class members.

How this enterprise could ever fit within the Article III jurisdiction of this Court, which is limited to the adjudication of actual “[c]ases” or “[c]ontroversies,” is nowhere addressed by the settlement proponents in their papers. As we demonstrate in Part III-A of this brief, where, as here, proposed class counsel agree in advance with the defendant to bring a “lawsuit” in name only, in which they will not seek to litigate anything in the class action complaint, Article III bars the federal court from exercising jurisdiction over such a feigned proceeding. Further, as we demonstrate in Part III-B, even apart from the entirely feigned nature of this proceeding, there can be no Article III jurisdiction on the part of this Court to effect the sort of sweeping release of claims that will not even exist until the future that is contemplated by the proposed settlement, as these claims are not pleaded and cannot be pleaded in the Brown class action complaint.

The second point that the settlement proponents have totally ignored in their papers in support of their joint motion is the issue of whether certification is barred under Fed. R. Civ. P. 23(a)(4)’s adequacy-of-representation requirement, in light of Brown class counsel’s multiple preexisting, disabling conflicts. Especially in the context of a “settlement class” effort such as this, Rule 23(a)(4) and due process require heightened attention toward possible sources of conflicts of interest. Here, Brown class counsel have preexisting duties to already certified classes — the Jeffers class pending in this Court, and state-wide class actions pending in seven states — that prevent them from adequately representing the putative Brown class. This attempted representation flies in the face of the rule, recently noted with approval by the Supreme Court, that “an attorney who represents another class against the same defendant may not serve as class counsel.” Ortiz v. Fibreboard Corp., 119 S. Ct. 2295, 2319 (1999) (citing 5 J. Moore, T. Chorvat, D. Feinberg, R. Marmer & J. Solovy, Moore’s Federal Practice § 23.25[5][e], p. 23-149 (3d ed. 1998)).

Further, all of the proposed counsel have a preexisting interest in a given outcome in this Brown “lawsuit,” preventing them from adequately representing the putative Brown class. Thus, no matter how personally honorable and competent proposed Brown class counsel may be in general, here the preexisting conflicts bar them from representing the Brown class. They must be replaced by other lawyers, ones untainted by these conflicts. No one disputes that plenty of fully competent, unconflicted lawyers are available who can be appointed in their stead.

Because this Court lacks Article III jurisdiction over the instant feigned “lawsuit,” and because Rule 23(a)(4) requires that proposed Brown class counsel must be replaced even if there is jurisdiction to hear the case, this Court cannot even conditionally certify the class.

II. FACTUAL BACKGROUND

The facts pertinent to the points raised in this brief do not appear to be in dispute. They are either plain on the face of the contract entered into between AHP and the attorneys who are now seeking to serve as Brown class counsel, or they were summarized in a letter to Brown class counsel in which undersigned counsel invited these attorneys to respond if anything set out in the letter was factually or legally incorrect. In the sole response to that letter, Brown class counsel disputed only the legal significance of the facts we laid out and did not dispute the accuracy of our factual summary, which we set out here and in the factual portions of Part IV, infra.^[5]

1. The contract between Brown class counsel and AHP was executed on October 7, 1999. It is entitled “Memorandum of Understanding Concerning Settlement of Diet Drug Litigation” (“MOU”). The contract was signed for AHP by its General Counsel, Louis Hoynes. See MOU at 46. All members of the Plaintiffs’ Management Committee (“PMC”) were party to the contract.^[6] Six other attorneys and law firms were party to the contract as well.^[7]

2. In the contract, AHP and these attorneys explicitly “agree[d] to propose a nationwide class action settlement which would resolve, on the terms set forth in” the contract, various “‘Settled Claims’ against AHP and other ‘Released Parties’ arising from” the use of AHP’s diet-drug products, Pondimin and Redux. MOU at 1. The signatories agreed that “this MOU is binding” and that they were required to “negotiate in good faith” to prepare the final text of a settlement agreement carrying out its terms “within 45 days from the date of this MOU.” Id. at 2.

3. Under the MOU itself, these attorneys agreed that the class would be generally defined to include: (a) “[a]ll persons in the United States, its possessions and territories, who ingested Pondimin and/or Redux (‘Diet Drug Recipients’), or their estates, administrators or other legal representatives, heirs or beneficiaries”); and (b) anyone else with a possible “right to sue AHP or any Released Party independently or derivatively by reason of their personal relationship with a Diet Drug Recipient, including without limitation, spouses, parents, children, dependents, other relatives or ‘significant others’ (‘Derivative Claimants’).” MOU at 9.

4. These attorneys also agreed “that the Settled Claims against AHP and other Released Parties” would “be settled, compromised and released,” MOU at 2, as follows. “Settled Claims” would be defined as including (with the sole exception of claims based on Primary Pulmonary Hypertension, or “PPH”) any conceivable sort of legal claim factually connected to Pondimin and/or Redux, “whether known or unknown, asserted or unasserted, regardless of the legal theory, existing now or arising in the future by any or all members of the Settlement Class against AHP and/or any Released Parties,” including “claims for damages or remedies . . . that may be created or recognized in the future by statute, regulation, judicial decision, or in any other manner.” MOU, Exhibit C, at 1-2.

5. These attorneys also agreed that the “Released Parties” would be defined broadly, to include not just AHP but (with limited exceptions): (a) each of AHP’s current and former officers, directors, employees, attorneys, agents and insurers, even if they were later discovered to have fault “based upon his, her or its own independent negligence or culpable conduct”; (b) each of AHP’s subsidiaries, affiliates and divisions, along with each of their current and former officers, directors, employees, attorneys, agents and insurers, again, even if they were later discovered to have fault “based upon his, her or its own independent negligence or culpable conduct”; (c) “[a]ny and all suppliers of materials, components, and services used in the manufacturer of Redux and/or Pondimin”; (d) “[a]ll distributors of Pondimin and/or Redux; and (e) “[a]ll physicians who prescribed, and all pharmacists and pharmacies who dispensed, Pondimin and/or Redux.” MOU, Exhibit D, at 1-2.

6. The attorneys also agreed that the class members whose present and future claims against these Released Parties would be released would potentially be eligible to receive various benefits from funds to be set aside by AHP for that purpose, to function in a manner akin to a workers’ compensation or other ADR mechanism, as outlined in the MOU. See MOU at 11-35.

7. In exchange for their agreement to seek the approval of this proposed ADR mechanism through the device of a “settlement class” action, in the October 7 contract AHP promised these attorneys that, upon final approval of the settlement, it would pay $200 million into an escrow account out of which these attorneys could seek a fee award from the Court and further that, although AHP would receive back the entire amount not actually awarded in fees, it would not oppose the Court awarding the entire $200 million in fees. MOU at 12, 43-44. However, payment of this sum was guaranteed only if these attorneys performed their contract to the letter, exactly as set out in the MOU; if they failed to do so “in any respect,” AHP was free to “terminate this MOU.” MOU at 41. (The MOU also provided for the creation of another, separate fund, containing up to $229 million, from which these and other attorneys could seek to obtain additional fees. See MOU at 43-44.)

8. Finally, with respect to the filings and proceedings that would be involved in the “lawsuit” that these attorneys had agreed to bring to implement this ADR mechanism, these attorneys agreed with AHP that they would “cooperate in all of these filings and proceedings and in any related appeals.” MOU at 40. In particular, these attorneys agreed in advance not to attempt actually to litigate the class action complaint that they had agreed to file. See MOU at 9 (“The Parties shall seek certification of a nationwide class solely for settlement purposes (the ‘Settlement Class’)”).

9. Five days after executing their contract with AHP these attorneys, on October 12, 1999, filed the Brown class action complaint in this Court. Although they had already contracted with AHP not to litigate this “lawsuit,” in a nod to the convention that plaintiffs in a complaint must actually set out facts and at least formally ask the Court to grant judgment on the claims, the complaint pleaded a negligence claim and sought personal injury damages and medical monitoring relief for all members of the Brown class. On October 12, 1999, the complaint was amended to add more parties. After that, nothing else occurred with respect to the claims set out in the complaint. Instead, on November 19, 1999, these attorneys filed the finalized settlement with the Court and jointly moved for conditional certification of the Brown “settlement class,” and for preliminary approval of the settlement and the issuance of notice.

III. CONDITIONAL CLASS CERTIFICATION MUST BE DENIED BECAUSE

THE INSTANT CLASS ACTION “LAWSUIT” IS NOT A “CASE” OR

“CONTROVERSY” WITHIN THIS COURT’S ARTICLE III JURISDICTION

Absent from the motion papers filed jointly by AHP and by proposed Brown class counsel in support of implementing the proposed ADR mechanism is any discussion of the basis for this Court to exercise Article III jurisdiction over this “lawsuit.” This Court’s jurisdiction is limited to the actual adjudication of “cases” or “controversies.” This joint effort by AHP and proposed Brown counsel, with whom it has contracted to establish an ADR mechanism to handle claims arising out of AHP’s diet-drug products, might be worth directing toward Congress, see, e.g., note 4, supra, but it falls outside the power of an Article III federal court. There are two separate reasons why. First, this is a transparently feigned proceeding, in which AHP guaranteed to make a $200 million payment for the benefit of the Brown class counsel if they filed a “lawsuit” against it, and both these attorneys and AHP agreed in advance that they would not litigate any of the claims in the class action complaint. Second, even if this were not a feigned proceeding, there can be no Article III jurisdiction on the part of this Court to effect the sort of sweeping release of claims that will not even exist until the future that is contemplated by the proposed settlement, as these claims are not pleaded and cannot be pleaded in the Brown class action complaint.

A. This is a Feigned Proceeding Designed to Impose an

Alternative Dispute Resolution Mechanism on All

Users of AHP’s Diet-Drug Products and Their Families

Who Fail to Opt Out, Not an Article III “Case” or “Controversy”

“The Judicial Branch can offer the trial of lawsuits. It has no power or competence to do more.” In re Fibreboard Corp., 893 F.2d 706, 712 (5th Cir. 1990) (Higginbotham, J.). Here, the Brown class action complaint was filed on October 12, 1999, solely as part of a joint venture between proposed Brown class counsel and AHP, formed five days earlier, to foist their negotiated ADR mechanism to govern claims brought against AHP (and other entities) upon a class of persons that these attorneys would soon seek to represent. These attorneys explicitly promised AHP that they would cooperate with it on all filings, and specifically that they would not seek to litigate anything in the class action complaint. Article III jurisdiction may not rest upon such “a contrivance between friends for the purpose of founding a jurisdiction which otherwise would not exist.” City of Dawson v. Columbia Avenue Saving Fund, 197 U.S. 178, 181 (1905) (Holmes, J.).

Article III, § 2, provides that the jurisdiction of the federal courts extends only to “[c]ases” or “[c]ontroversies.” The Supreme Court thus “has found unfit for adjudication any cause that ‘is not in any real sense adversary,’ that ‘does not assume the honest and actual antagonistic assertion of rights,’” and which thereby violates “a safeguard essential to the integrity of the judicial process.” Poe v. Ullman, 367 U.S. 497, 505 (1961) (opinion of Frankfurter, J.) (quoting United States v. Johnson, 319 U.S. 302, 305 (1943)). See generally Laurence H. Tribe, American Constitutional Law § 3-7, at 311-13, 319-20, § 3-12, at 361-64 (3d ed. 2000).

The burden of proving justiciability rests on those who invoke federal jurisdiction (here, the settling parties). Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). If “challenged by his adversary,” the party asserting jurisdiction cannot rest on his allegations and must prove jurisdiction “by a preponderance of evidence.” McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936). See also Lujan, 504 U.S. at 561, 567 n.3.^[8] Article III compels a court to look beyond the pleadings to the actual state of affairs when the complaint was filed, in light of all that has been learned. A court is not bound by what plaintiffs and defendants have alleged as to adversity, as “[f]ormal agreement between the parties that collides with plausibility is too fragile a foundation for indulging in . . . adjudication.” Poe v Ullman, 367 U.S. at 501. See also City of Dawson, 197 U.S. at 180 (“Court will look beyond the pleadings and arrange the parties according to their sides in a dispute”).

For example, in United States v. Johnson, 319 U.S. 302 (1943), the Supreme Court analyzed the existence of Article III jurisdiction over a lawsuit that a tenant brought against a landlord, at the request and the expense of the landlord, as a means of furthering the landlord’s interests. The Court dismissed lawsuit for want of a Article III “case” or controversy” on the basis that the lawsuit “was instituted as a ‘friendly suit’ at [the defendant’s] request;” that the plaintiff was represented by “counsel who was selected by [defendant’s] counsel” in advance of the lawsuit; and that the defendant agreed in advance to pay the plaintiffs’ counsel for bringing the suit. Id. at 304-05. See also id. at 304 (“Even in a litigation where only private rights are involved, the judgment will not be allowed to stand where one of the parties has dominated the conduct of the suit by payment of the fees of both.”).

The same sort of feigned “lawsuit” exists here. Before this “lawsuit” was brought the defendant, AHP, contracted in writing with the attorneys who filed the “lawsuit” and scripted its precise outcome. For this work, but only in the event that the prescribed outcome was actually achieved, AHP agreed to pay $200 million toward their attorneys’ fees, and not to oppose a fee award of this entire amount. That is, in advance of filing the class action complaint, which created the putative class, and thus before these attorneys could obtain any input from the class members, these attorneys made contractual commitments to the defendant, AHP, dictating precisely how they would carry out the representation once it began.

We emphasize that no showing of “fraud or trickery” on the court is required to render a friendly lawsuit nonjusticiable. Chicago & G.T. Ry. Co. v. Wellman, 143 U.S. 339, 344 (1892). Thus, a finding that this “lawsuit” falls outside the scope of the adjudicatory power of an Article III court is required regardless of how personally honorable proposed counsel for the Brown class may be in general, and even if they acted with the best of intentions in entering into the October 7 contract with AHP. A case need not be “‘collusive’ in the derogatory sense” to fail the Article III test; it need only reveal “a want of a truly adversary contest, of a collision of actively asserted and differing claims.” Poe v. Ullman, 367 U.S. at 505. Here, it is clear from the October 7 contract and the joint filings made by proposed Brown class counsel and AHP that this “lawsuit” is what Justice Holmes once called a “contrivance between friends for the purpose of founding a jurisdiction which otherwise would not exist.” City of Dawson, 197 U.S. at 181. In short, this is a joint venture, not an adversarial lawsuit. A federal court’s only constitutionally permissible option when such circumstances appear is to dismiss the action for lack of subject-matter jurisdiction.^[9]

Of course, the proposed Brown class counsel and AHP have referred, in urging support of the settlement, to the extended, adversarial, even heated negotiations between them on the terms of a “global” settlement to replace tort claims against AHP with claims that would henceforth be handled through an ADR mechanism. But tough negotiations are commonplace both in private contractual dealings and in the legislative process, so they can hardly distinguish those processes from federal litigation. How much struggle took place before the pleadings were submitted to this Court, before any sort of “lawsuit” existed even in name, proves nothing about whether what is now before the Court is a justiciable “case” or “controversy” within its Article III jurisdiction.^[10]

In sum, the settlement proponents here are attempting to use the federal courts not as a forum in which to litigate their differences (for there are none, reflected in the class action complaint, that anyone actually intends to litigate), but as an ad hoc legislative body, “a sort of junior-varsity Congress.” Mistretta v. United States, 488 U.S. 361, 427 (1989) (Scalia, J., dissenting). The settlement proponents here ask the federal judiciary to convert their privately negotiated ADR damages schedule into a nationwide rule of law binding on all absent class members. But the very purpose of the case-or-controversy requirement is to restrict the judicial branch to the adjudication of distinct, ripe disputes between bona fide adversaries. Our Constitution does not grant federal courts the power to legislate solutions, even in response to pressing problems: “It is not for [the federal judiciary] to employ untethered notions of what might be good public policy to expand our jurisdiction in an appealing case.” Whitmore v. Arkansas, 495 U.S. 149, 161 (1990).

B. Independently, There is No Conceivable Article III Jurisdiction to

Effect, as Required by the Proposed Settlement, the Sweeping Release

of Claims That Will Not Even Exist Until the Future and Thus That

Are Not Pleaded, and Cannot be Pleaded, in the Class Action Complaint

Independently, the principles of Article III require that conditional certification be denied because this Court lacks the power to effect the sort of sweeping release of claims that will not even exist until the future that is contemplated by the proposed settlement, as these claims are not pleaded and cannot be pleaded in the Brown class action complaint.

There is a vast temporal disconnect between the legal claims pleaded in the Brown class action complaint and the legal claims that would be released through the proposed Brown settlement — a disconnect of constitutional dimensions. The complaint pleads that various named plaintiffs ingested AHP’s diet drugs for a period of time and are currently injured; it pleads a negligence claim against AHP; and based on this claim of negligence on the part of AHP, it seeks personal injury damages and medical monitoring relief for the named plaintiffs and similarly situated members of the Brown class. On the face of the complaint, some or all of these claims may support a finding of Article III standing, in that they suggest that the named plaintiffs may be able to demonstrate that they and similarly situated class members have suffered an “injury in fact”: “an invasion of a legally protected interest which is (a) concrete and particularized, and (b) ‘actual or imminent, not conjectural or hypothetical.’” Lujan, 504 U.S. at 560 (citation omitted).

But as already noted, see pp. 6-8, supra, the scope of the release effectuated by the Settlement Agreement is vastly broader. The release is designed to give AHP, with respect to the members of the Brown class, “global” peace with respect to any future claims being brought against it, so that all such claims must be processed through the ADR mechanism set up by the Settlement Agreement (subject to the ability of some class members to exit the ADR mechanism on some claims in some circumstances). Thus, the release operates to wipe out claims against AHP and a vast array of other entities that will only accrue on behalf of class members in the future.

This sweeping release of all future claims, hard enough to square with basic principles of contract law,^[12] is impossible to square with the dictates of Article III. The authority of class plaintiffs to represent and bind absent class members under Rule 23, and thus to release the claims of class members, is limited by the scope of the class action complaint, which describes the typical “claims” held in common by the class. Class representatives can release only those claims pleaded in the complaint or arising from the very same factual predicate as those pleaded. National Super Spuds v. New York Mercantile Exchange, 660 F.2d 9, 18-19 & n.7 (2d Cir. 1981) (Friendly, J.).^[13] Because the named plaintiffs on the Brown class action complaint do not, by definition, currently possess unaccrued claims for injuries that they will experience only in the future and because, by definition, they have already been born and are already inside the Brown class, they fail to plead a wide range of claims that fall within the settlement’s definition of released claims, and thus cannot release or settle such claims on behalf of either current or future class members.

Of course, if a named plaintiff were to attempt to plead such claims and seek money damages for them in an effort to gain authority to release them — for example, by alleging that he or she might marry, after which the new spouse might become injured derivatively, or that he or she may have a child, which might become injured derivatively — the plaintiff would be laughed out of court. To establish standing under Article III, a plaintiff must demonstrate “that he has suffered an ‘injury in fact” that is “concrete both in a qualitative and temporal sense.” Whitmore, 495 U.S. at 155. Article III’s requirement of actual or imminent injury is “stretched beyond the breaking point when . . . the plaintiff alleges only an injury at some indefinite future time.” Lujan, 504 U.S. at 565 n.2. The absurdity of any such effort is obvious. Cf. Dincher v. Marlin Firearms Co., 198 F.2d 821, 823 (2d Cir. 1952) (Frank, J., dissenting) (“Except in topsy-turvy land you can’t die before you are conceived, or be divorced before ever you marry, or harvest a crop never planted, or burn down a house never built, or miss a train running on a non-existent railroad.”).

* * *

In its decision affirming the Third Circuit’s refusal to allow certification of the “settlement class” involved in Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997), the Supreme Court took note of the objection that had been made that the efforts of the settlement proponents in that case involved “not a justiciable case or controversy” falling within the scope of Article III, but instead “a nonadversarial endeavor to impose on countless individuals without currently ripe claims an administrative compensation regime binding on those individuals if and when they manifest injuries.” Id. at 612. But the Court was able to avoid a decision on this Article III issue, as had the Third Circuit below, by first addressing the class certification issue, see id. at 612-13, which it found easily dispositive of the case, ruling for the objectors. See also Ortiz v. Fibreboard Corp., 119 S. Ct. 2295, 2307 (1999) (adopting similar approach). Emphasizing the seriousness of the jurisdictional objections in Amchem, the Court stated that “[i]f certification issues were genuinely in doubt . . . the jurisdictional issues would loom larger.” 521 U.S. at 613 n.15.

It follows that, if this Court agrees with our argument in Part IV of this brief that conditional certification must be denied under Fed. R. Civ. P. 23(a)(4) given the conflict-of-interest problems affecting proposed Brown class counsel, it may avoid the Article III arguments just presented. Otherwise, it must rule on these arguments.

IV. CONDITIONAL CERTIFICATION MUST BE DENIED UNDER

FED. R. CIV. P. 23(a)(4) GIVEN THAT PROPOSED CLASS COUNSEL

HAVE MULTIPLE PREEXISTING, DISABLING CONFLICTS

The settlement proponents have not even come close to meeting their burden, in seeking conditional certification, to demonstrate compliance with Fed. R. Civ. P. 23(a)(4)’s requirement that proposed Brown class counsel be in a position to “adequately protect the interests of the class.” See In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 792 (3d Cir.), cert. denied, 516 U.S. 624 (1995) (“the party advocating certification bears the burden of proving appropriateness of class treatment”) (citing Davis v. Romney, 490 F.2d 1360 (3d Cir. 1974)). In the context of a proposed “settlement class” such as this one, the Rule 23(a)(4) requirement carries special force. Yet here proposed class counsel barely address Rule 23(a)(4), and they do not even address the key issue under it: whether their current status as counsel on other certified class actions against the same defendant, and/or the contract they entered into with AHP scripting in advance their representation of the instant Brown class, render them ineligible to serve here as class counsel.^[14]

A. Rule 23(a)(4) Requires Heightened Attention in the “Settlement Class”

Context to Ensure That Proposed Class Counsel Are Free of Any

Conflict of Interest, or Even an Appearance of a Conflict of Interest

As the Supreme Court held in Amchem, where, as here, a “settlement class” is proposed, in which the claims in the complaint will never be tried, although the court “need not inquire whether the case, if tried, would present intractable management problems” — a matter addressed by Fed. R. Civ. P. 23(b)(3)(D) — the “other specifications of the Rule . . . demand undiluted, even heightened, attention.” Amchem, 521 U.S. at 620. See also Ortiz v. Fibreboard Corp., 119 S. Ct. 2295, 2316 (1999) (“When a district court . . . certifies for class action settlement only, the moment of certification requires “heightene[d] attention.”) (quoting Amchem, 521 U.S. at 620).