Krueger v. Wyeth Inc, et al, No. 3:2003cv02496 - Document 435 (S.D. Cal. 2020)
Court Description: ORDER granting 433 Plaintiff's unopposed Motion for approval of plan to distribute residual Class Settlement funds. Signed by Judge John A. Houston on 11/10/2020. (jpp)
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Krueger v. Wyeth Inc, et al Doc. 435 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 APRIL KRUEGER, individually and on behalf of all others similarly situated, Plaintiffs, 13 14 Case No.: 3cv2496-JAH (MDD) v. 15 19 WYETH, INC. f/k/a AMERICAN HOME PRODUCTS, a Pennsylvania corporation; WYETH PHARMACEUTICALS f/k/a WYETH AYERST PHARMACEUTICALS, a Pennsylvania corporation; and Does 1 through 100, Inclusive, 20 Defendants. 16 17 18 ORDER GRANTING PLAINTIFF’S UNOPPOSED MOTION FOR APPROVAL OF PLAN TO DISTRIBUTE RESIDUAL CLASS SETTLEMENT FUNDS [DOC. NO. 433] 21 22 Pending before the Court is Plaintiff April Krueger’s Unopposed Motion for 23 Approval of Plan to Distribute Residual Class Settlement Funds. Doc. No. 433. Having 24 carefully considered the Plaintiff’s Motion; supporting Declarations and exhibits; 25 Defendant Wyeth’s Separate Submission in Support of Motion [Doc. No. 434]; and, the 26 law, the Court hereby GRANTS Plaintiff’s Motion. 27 /// 28 /// 1 Dockets.Justia.com 1 BACKGROUND 2 3 4 5 6 7 8 9 10 11 12 13 Plaintiff filed this consumer protection class-action lawsuit on December 12, 2003. Doc. No. 1. Plaintiff’s claims arose from the allegation that, between January 1995 and January 2003 (the “Class Period”), Defendants violated California consumer protection laws by conducting a long-term, systematic and widespread marketing campaign designed to misrepresent the benefits and health risks associated with their hormone replacement therapy (“HRT”) drugs (Premarin, Prempro, and Premphase). More specifically, Plaintiff alleged that the Defendants violated California’s Unfair Competition Law (“UCL”) and Consumer Legal Remedies Act (“CLRA”) by misrepresenting to consumers that its HRT drugs lowered cardiovascular, Alzheimer’s and/or dementia risk, and did not increase breast cancer risk. For their part, Defendants denied all of the Plaintiff’s allegations and claims and maintained that they had substantial legal and factual defenses to those claims. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On March 10, 2020, the parties’ entered into a Class Settlement Agreement. Doc. No. 400-3. The terms of the agreement provide that there will be no reversion of the $200,000,000 settlement amount and that in the event of excess funds, any such funds should be distributed “so as to benefit and promote the ongoing health, safety, and welfare of Settlement Class Members and California women similarly situated.” Id., at ¶ 4.8. On September 1, 2020, the Court issued its Order Granting Plaintiff’s Unopposed Motion for Final Approval of the Class Action Settlement. Doc. No. 432. Concerning the disposition of residual class settlement funds, the Court’s Order states: If the aggregate amount of paid claims to Settlement Class Members, plus the Plaintiff incentive award allowed by the Court, plus the Class Counsel fees and expenses awarded by the Court, plus the notice and administration costs, is less than the Settlement Amount (plus interest) remaining in the Common Fund, the Court will then determine and direct how the remainder of the funds should be distributed so as to benefit and promote the ongoing health, safety and welfare of Settlement Class Members and California women similarly situated. 2 1 2 3 4 5 6 7 8 9 10 At this time, the Court is inclined to distribute any excess or residual funds to major California medical centers and targeted research groups specializing in the detection, treatment, prevention, and cure of breast cancer, women’s cardiac issues, Alzheimer’s, and early-onset dementia; with additional emphasis on the care and treatment of such diseases for marginalized and diverse women in California communities that historically lack such care and treatment. Consistent with these goals and objectives, the Court grants Plaintiff 60 days from the entry of this Order to solicit and gather proposals for the distribution of any residual Settlement funds and present them to the Court in a further filing with appropriate declarations from the proposed entities and organizations. Id. at ¶ 22. 11 To date, the following payments have been made from the $200,000,000 Common 12 Fund: (a) $905,218.59, representing Class Counsels’ expenses; (b) $30,000, representing 13 Plaintiff April Krueger’s incentive award; (c) $50,000,000, representing Class Counsels’ 14 attorneys’ fees; (d) $784,769 to Kinsella Media, representing its Settlement Class Notice 15 costs; and, (e) $360,000 to Rust Consulting, representing its settlement administration 16 fees and expenses to date. See, Doc. No. 433-9, Decl. of R. Blake, at ¶ 5. Regarding 17 future expenditures from the Common Fund, the court-appointed Claims Administrator, 18 Rust Consulting, estimates that it will charge an additional $470,000 in professional fees 19 and expenses for the administration of this Class Settlement. Id., at ¶ 6. 20 Additionally, Rust Consulting reports that it has received 10,501 timely claims 21 thus far (i.e., claims submitted by the September 1, 2020, claim deadline). Of that 22 number, 9,943 are Option 1 claims, 483 are Option 2 claims, and 75 involve claims where 23 the claimant did not choose an option and have not yet responded to a deficiency letter. 24 Id., at ¶ 7. Assuming all Option 1 and 2 claims are found to be valid at the conclusion 25 of the verification and audit process, Rust Consulting believes that the maximum total 26 value of the Option 1 claims would be $4,560,257.52 and the maximum total value of 27 the Option 2 claims would be $698,623.38 -- for a combined maximum total value of 28 $5,258,880.90. Id. 3 1 Based on the payments that have been issued from the Common Fund thus far 2 ($52,079,987.59); the additional fees and expenses that Rust Consulting expects to 3 charge for its administration of the Class Settlement ($470,000); and, the maximum total 4 value of Option 1 and Option 2 claims submitted by Class Members ($5,258,880.90); 5 Rust Consulting projects that the Court will have at least $142,191,131.51 in residual 6 Class Settlement funds to distribute in accordance with paragraph 22 of its Final 7 Approval Order. Id., at ¶ 8. 8 LEGAL STANDARD 9 “Cy pres provides a mechanism for distributing unclaimed funds to the next best 10 class of beneficiaries.” In re Easysaver Rewards Litig., 906 F.3d 747, 760 (9th Cir. 11 2018). “Under the cy pres approach, ‘class members receive an indirect benefit (usually 12 through defendant donations to a third party) rather than a direct monetary payment.’ ” 13 Id. (quoting Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012)). Consequently, 14 cy pres “distribution options should be guided by (1) the objectives of the underlying 15 statute and (2) the interests of the silent class members.” Six Mexican Workers v. Ariz. 16 Citrus Growers, 904 F.2d 1301, 1307 (9th Cir. 1990). The cy pres remedy also “must 17 account for the nature of the plaintiffs' lawsuit.” Nachshin v. AOL, LLC, 663 F.3d 1034, 18 1036 (9th Cir. 2011). 19 ANALYSIS 20 Plaintiff’s motion seeks approval of a plan for a cy pres distribution of residual 21 funds to six California medical and research institutions; namely, Scripps Health – MD 22 Anderson, San Diego (“Scripps Health”), the University of California, Davis (“UCD”), 23 the University of California, San Diego (“UCSD”), the University of California, San 24 Francisco (“UCSF”), the University of California, Los Angeles (“UCLA Health”), and 25 the University of Southern California Keck Medicine (“USC Keck”). See, Doc. No. 433- 26 2, Decl. of David B. Byrne. The six institutions have all submitted detailed proposals 27 and budgets for medical research programs and community health projects that focus on 28 “the detection, treatment, prevention, and cure of breast cancer, women’s cardiac issues, 4 1 Alzheimer’s, and early-onset dementia; with additional emphasis on the care and 2 treatment of such diseases for marginalized and diverse women in California 3 communities that historically lack such care and treatment.” See, Doc. Nos. 433(3-8), 4 Exhibits A, B, C, D, E, & F. Importantly, each proposal caps indirect, administrative, 5 and overhead costs at 10% or less of the institution’s total proposed budget so as to 6 ensure that any residual Class settlement funds awarded will achieve the greatest impact 7 for the Class and women similarly situated. All total, the combined proposals seek 8 residual Class settlement funds in the amount of $142,126,497 – a figure slightly below 9 the projected $142,191,131.51 that Rust Consulting expects to have on hand at the end 10 of the claim administration process. 11 Having already determined that any residual Class settlement funds should be 12 distributed “so as to benefit and promote the ongoing health, safety and welfare of 13 Settlement Class Members and California women similarly situated”, the Court now 14 considers whether the six California medical and research institutions identified in 15 Plaintiff’s motion are appropriate cy pres beneficiaries based on (1) the nature of the 16 plaintiff’s lawsuit; (2) the objectives of the underlying statutes; and, (3) the interests of 17 the silent class members, including their geographic diversity. Nachsin, 663 F.3d at 18 1040. 19 I. 20 Appropriateness of the Proposed Cy Pres Beneficiaries a. The Nature of the Suit 21 As stated above, Plaintiff’s Class Complaint alleged that the Defendants violated 22 California consumer protection laws by misrepresenting to consumers that its HRT drugs 23 lowered cardiovascular, Alzheimer’s and/or dementia risk, and did not increase breast 24 cancer risk. Because these allegations were central to the Plaintiff’s suit, the Court’s 25 Final Approval Order expressed a preference for distributing “any excess or residual 26 funds to major California medical centers and targeted research groups specializing in 27 the detection, treatment, prevention, and cure of breast cancer, women’s cardiac issues, 28 Alzheimer’s, and early-onset dementia; with additional emphasis on the care and 5 1 treatment of such diseases for marginalized and diverse women in California 2 communities that historically lack such care and treatment.” Doc. No. 432, at ¶ 22. 3 Here, the research and community health projects identified in the six medical- 4 research institutions’ proposals clearly and adequately address the diseases of concern 5 in this lawsuit. Scripps Health’s proposal and corresponding $22,127,500 budget 6 involves cutting-edge research targeting breast cancer, heart disease, and dementia 7 treatments; as well as community health programs designed to treat and educate 8 marginalized communities in and around San Diego County. See, Doc. No. 433-3. UC 9 Davis proposes to use a $24,000,000 cy pres distribution to create unique research and 10 care initiatives in breast cancer, cardiovascular disease, Alzheimer’s, and early-onset 11 dementia – all within one of the most geographically broad and ethnically diverse 12 populations in California. See, Doc. No. 433-4. For its part, UC San Diego, seeks a 13 $24,000,000 cy pres distribution to fund groundbreaking research aimed at the 14 prevention, detection and treatment of breast cancer, cardiovascular disease and 15 neurological disorders in women. 16 $24,000,000 proposal involves numerous interlinked research and community health 17 projects related to overuse, misuse and unequal use of health care related to the diagnosis 18 and treatment of breast cancer, cardiac disease and dementia. See, Doc. No. 433-6. 19 UCLA Health’s proposal for a $23,999,510 cy pres distribution would provide important 20 care to underserved communities across Los Angeles County and fund critical research 21 in the areas of breast cancer, cardiovascular disease in women, and neuroscience. See, 22 Doc. No. 433-7. Lastly, USC Keck Medicine’s $23,999,487 proposal would fund a 23 number of exciting projects designed to advance the diagnosis, treatment, prevention and 24 cure of Alzheimer’s disease, breast cancer and cardiovascular disease in women, with 25 particular emphasis on mitigating the impact of these devastating conditions for women 26 from disadvantaged communities with major health disparities. See, Doc. No. 433-8. 27 28 See, Doc. No. 433-5. UC San Francisco’s For these reasons, the Court finds that, in proposing these six institutions as cy pres recipients, Plaintiff has sufficiently considered the nature of this lawsuit. 6 1 b. The Objectives of the Underlying Statutes 2 Plaintiff’s Complaint alleges violations of California’s Unfair Competition Law 3 (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq., and Consumer Legal Remedies Act 4 (“CLRA”), Cal. Bus. & Prof. Code §§ 1750 et seq. These statutes are meant “to preserve 5 fair competition and protect consumers from unfair market distortions.” Kwikset Corp. 6 v. Super. Ct., 51 Cal. 4th 310, 331 (2011). 7 In this case, the allegedly “unfair market distortions” involve the Defendants’ 8 representations concerning its HRT drugs and whether or not they lowered 9 cardiovascular, Alzheimer’s and/or dementia risk, and did not increase breast cancer 10 risk. Consequently, since the six institutions put forward for cy pres distributions have 11 all proposed to use their funds for medical research and community health projects aimed 12 at the detection, treatment, prevention and cure of breast cancer, women’s cardiac issues, 13 Alzheimer’s, and early-onset dementia, the Court concludes that they all satisfy “the 14 objectives of the underlying statute[s].” Six Mexican Workers, 904 F2d at 1307. 15 c. The Interests of the Class Members 16 The “touchstone of the inquiry” in distributing excess funds in a class action 17 settlement is whether the distributions bear a “substantial nexus to the interests of the 18 class members.” In re Easysaver Rewards Litig., 906 F.3d at 762. Here, the Class is 19 comprised of women who purchased the Defendants’ HRT drugs in California between 20 January 1995 and January 2003 (the “Class Period”). As such, Class members have a 21 significant interest in research and community health initiatives focusing on breast 22 cancer, heart disease, Alzheimer’s disease and dementia. 23 research and community health projects proposed by the six California medical 24 institutions will directly address these diseases, they will undoubtedly benefit the health 25 and well-being of Class members and all California women similarly situated – possibly 26 for generations to come. Therefore, the Court finds that each institution is an appropriate 27 cy pres beneficiary and that the Plaintiff’s plan for distributing residual Class settlement 28 7 Given that the medical 1 funds to the individual institutions is altogether reasonable and consistent with the 2 Court’s directive in its September 1, 2020, Final Approval Order. 3 II. The Cy Pres Beneficiaries’ Reporting Obligations 4 The Plaintiff’s Motion proposes that each cy pres beneficiary file an annual report 5 with the Court (through Class Counsel) detailing their overall progress, relevant medical 6 and scientific results, and expenditures for each of their approved and funded projects 7 and programs. Given the significant amount of funds involved and the scope and 8 duration of the six institutions’ research and community health projects, the Court finds 9 that this type of annual reporting is essential. Accordingly, each institution receiving a 10 cy pres distribution pursuant to this Order will be required to file a yearly report with the 11 Court (through Class Counsel) for a period of six (6) years, beginning in 2021. The 12 annual reports must be provided to Class Counsel on or before December 1st of the 13 relevant reporting year and include a reasonably detailed summary of the institution’s 14 progress, relevant medical and scientific results, and expenditures for each of their 15 individually approved and funded projects and programs. 16 III. Annual Conference Participation for Cy Pres Beneficiaries 17 Likewise, the Court specifically approves and incorporates the Plaintiff’s 18 recommendation that each cy pres beneficiary be required to participate in an annual 19 conference that will allow their funded faculty, researchers, and project leaders to meet 20 in a collaborative fashion, discuss the results of their work, and share ideas to advance 21 the study, treatment, and cure for breast cancer, Alzheimer’s disease, dementia, and 22 cardiovascular disease in women. To that end, the conferences will be held sometime in 23 the first quarter (January through March) of each year for a period of 6-years, beginning 24 in 2022, with each participating institution serving as the host on a one-time rotating 25 basis. In the inaugural year(s), this conference may need to be held virtually. However, 26 as soon as a large in-person gathering can take place, and stay within health and safety 27 protocols, the institutional hosts should hold the annual conferences at their campus- 28 facility. 8 1 Finally, to the extent any additional residual class settlement funds remain after 2 the claim administration process has been concluded; all related costs of settlement 3 administration have been satisfied; and, the six institutions’ proposed projects and 4 programs have been funded, the remaining monies shall be divided equally among the 5 institutions to help defray the cost and expense of their annual conferences. 6 7 8 CONCLUSION For the foregoing reasons, Plaintiff’s motion [Doc. No. 433] is hereby GRANTED. The Court further finds, and ORDERS the following: 9 1. Subject to there being sufficient residual Class settlement funds remaining after 10 the claim administration process has concluded and all related costs of settlement 11 administration have been satisfied, cy pres distributions will be made to the 12 following institutions in accordance with their written proposals and budgets: 13 a. Scripps Health – MD Anderson, San Diego - $22,127,500; 14 b. The University of California, Davis - $24,000,000; 15 c. The University of California, San Diego - $24,000,000; 16 d. The University of California, San Francisco - $24,000,000; 17 e. The University of California, Los Angeles - $23,999,510; and, 18 f. The University of Southern California Keck Medicine - $23,999,487. 19 2. To ensure that the cy pres distributions are utilized to achieve the maximum 20 possible benefit for the Class and women similarly situated, the institutional 21 beneficiaries may not apply more than 10% of their awarded funds to indirect, 22 administrative, and/or overhead costs. 23 3. To the extent that there are insufficient residual Class settlement funds to permit 24 the cy pres distributions set forth above, the distributions to each of the six 25 institutions will be reduced on a pro rata basis. 26 4. To the extent that there are additional residual class settlement funds remaining 27 after the claim administration process has concluded; all related costs of settlement 28 administration have been satisfied; and, the cy pres distributions set forth above 9 1 have been made, the remaining class settlement funds shall be divided equally 2 among the six institutions and shall be used solely to help defray the cost and 3 expense of their annual conferences. 4 5. Each institution that receives a cy pres distribution pursuant to this Order will be 5 required to file a yearly report with the Court (through Class Counsel) for a period 6 of six (6) years. The annual reports must be provided to Class Counsel on or 7 before December 1st of the relevant reporting year, beginning in 2021, and include 8 a reasonably detailed summary of the institution’s progress, relevant medical and 9 scientific results, and expenditures for each of their individually approved and 10 funded projects and programs. 11 6. Each institution that receives a cy pres distribution pursuant to this Order will be 12 required to participate in an annual conference that will allow their funded faculty, 13 researchers, and project leaders to meet in a collaborative fashion, discuss the 14 results of their work, and share ideas to advance the study, treatment, and cure for 15 breast cancer, Alzheimer’s disease, dementia, and cardiovascular disease in 16 women. The conferences will be held sometime in the first quarter (January 17 through March) of each year, beginning in 2022, for a period of 6-years, with each 18 participating institution serving as the host on a one-time rotating basis. 19 Conference details will be given to the Court and Class Counsel at least 60-days 20 prior to the scheduled conferences. 21 IT IS SO ORDERED. 22 23 24 25 26 DATED: November 10, 2020 ______________________________ Hon. John A. Houston United States District Judge 27 28 10
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