American Medicorp, Inc. v. Bristol-Myers Co.

81 F.R.D. 395, 1978 U.S. Dist. LEXIS 14193
CourtDistrict Court, District of Columbia
DecidedNovember 22, 1978
DocketM.D.L.No. 50; Misc. 45-70; Civ. A. Nos. 75-0035, 1159-70, 2453-70, 3355-70, 2452-70, 2544-70 and 3559-70
StatusPublished
Cited by40 cases

This text of 81 F.R.D. 395 (American Medicorp, Inc. v. Bristol-Myers Co.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Medicorp, Inc. v. Bristol-Myers Co., 81 F.R.D. 395, 1978 U.S. Dist. LEXIS 14193 (D.D.C. 1978).

Opinion

MEMORANDUM OPINION

CHARLES R. RICHEY, District Judge.

The Court now has before it two petitions for attorneys’ fees to be paid from the $7,930,000 fund created for the settlement of the claims of the plaintiff class composed of wholesale and retail druggists and nongovernmental hospitals in this litigation (the WRPH class). The first petition is that of the Committee of Counsel for the settling class (WRPH attorneys); the second is from the law firm of Dickstein, Shapiro and Morin. This partial settlement is the product of years of negotiation and preparation for litigation on behalf of this and other classes. Major claims on behalf of the United States government, the class composed of cities, counties, states and other political subdivisions, and the “competitor claims” of other drug companies are still pending.

On September 29,1978, immediately after the presentation of evidence concerning the fairness of the settlement, the Court heard evidence and arguments in support of and in opposition to both fee petitions. Having heard no objection to the settlement, and having determined from the papers, the evidence, and the arguments of counsel, that the settlement was fair, reasonable, and adequate, the Court issued an order on October 20, 1978, approving the settlement.

The settlement funds will not be distributed to members of the settling class until the process of approval of a settlement plan, the audit of class members’ claims, and the deduction of administrative ex[398]*398penses from the fund is complete. However, counsel for this class and for other classes have worked long and hard in this litigation. Therefore, it seems only fair to make an interim fee and cost award to the Committee of Counsel for the class now, without prejudice to the supplementation of the award later in the settlement distribution process. In addition, the Court will preliminarily rule on the request for attorneys’ fees of Dickstein, Shapiro and Morin, which has represented the non-settling plaintiff class composed of cities, counties, states and other public entities (the CCS class), and has served as liaison counsel to the private plaintiff classes throughout this litigation. The Dickstein firm’s claim is now denied, but without prejudice to its resubmission at a later date and supplementation of the record in support of the request.

I. BACKGROUND

A. The History of the Litigation

This litigation commenced with the filing of the civil complaint of the United States Department of Justice on March 19, 1970. This complaint alleged that Bristol-Myers Company and the Beecham companies had violated Sections 1 and 2 of the Sherman Act in the manufacture, marketing and sale of ampicillin and other semisynthetic penicillin products. The complaint also challenged the validity of certain patents owned by the defendants, and the legality of certain agreements relating to those patents.

The federal complaint was followed by the filing of private treble damage actions in several jurisdictions. These included actions brought as class actions on behalf of various CCS plaintiffs, on behalf of consumers, and on behalf of wholesale and retail druggists and non-governmental hospitals, as well as claims filed on behalf of two competitor plaintiffs. By order of July 22, 1970, the Judicial Panel on Multidistrict Litigation transferred all of the cases to the District of Columbia for pretrial purposes. Other “tag-along” cases were later transferred here. The cases were originally assigned to Chief Judge Sirica, and were later reassigned to this Judge.

In his order of May 9, 1972, Judge Sirica certified the druggist and non-governmental hospital classes as well as the consumer and CCS classes. That order upheld the druggist and non-governmental hospital classes against the challenge of the United States as well as against the defendants. The order also designated the current WRPH Committee of Counsel for the druggist and hospital classes. The original class certification has withstood several challenges. The only major change in class composition was a recertification of the wholesale and retail druggist and non-governmental hospital classes as a single class to facilitate this settlement on June 28, 1978.

Discovery efforts have been spearheaded by the government and CCS attorneys. By 1972, a document depository was established in Washington, D. C. During 1973 and 1974, numerous discovery questions were referred to a Special Master, many of whose rulings have been appealed to the Court. As to the non-settling classes, deposition discovery has commenced only recently, and defendants are threatening further delay.

The first significant settlement discussions were initiated by counsel for other plaintiff classes and the Beecham defendants after the Court suggested “non-adversary conversations” at a status hearing of October 7, 1974. These discussions were geared toward a global settlement. After several false starts, an ad hoc plaintiffs’ negotiating committee was appointed with the consent of all parties on August 8, 1975, which included Mr. David Shapiro, as chairman, and Messrs. Freeman, Kurland, Gross-man, Rubenstein, Burns, Kohn, Desiderio, and Dunne. This committee, counsel for the United States, defense counsel, and their principal clients, met in the Court’s jury room beginning on September 29,1975, to work out a complete settlement. By October 15, 1975, Beecham had agreed to offer $5.5 million, and Bristol to offer $21 million, making a total settlement package offer of $26.5 million for the settlement of all cases.

[399]*399The global settlement proposed by October 15, 1975 ultimately failed when plaintiffs were unable to agree upon the allocation of the fund among themselves. The United States agreed to accept $8 million in satisfaction of its damage claims. By the time the plaintiffs had agreed among themselves as to the division of the remaining $18.5 million in the spring of 1977, the defendants had decided to withdraw their offers. Since that time, negotiations have been geared toward partial settlements.

The Supreme Court’s decision in Illinois Brick Company v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), drastically affected the postures of all parties in these discussions. That decision was undoubtedly a primary impetus for this separate settlement. Through the elimination of the passing-on defense, Illinois Brick magnified the dollar value of the WRPH class claims based on direct purchases, at the expense of the claims of other plaintiffs which were based only on indirect purchases. As a direct result of that decision, the consumer claims were dismissed by this Court’s order of July 5, 1978. This increase in the relative significance of the druggist and private hospital claims apparently convinced the defendants that separate WRPH settlements would significantly reduce their exposure to damage claims. On April 16, 1978, Bristol offered $6 million for settlement of the claims based on both direct and indirect purchases of the WRPH classes. On June 16, 1978, Beecham offered $1.93 million for a similar settlement with the WRPH class.

B. The Settlement

The terms of the Beecham and Bristol-Myers settlements are virtually identical.

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Bluebook (online)
81 F.R.D. 395, 1978 U.S. Dist. LEXIS 14193, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-medicorp-inc-v-bristol-myers-co-dcd-1978.