In re Synthroid Marketing Litigation

197 F.R.D. 607, 48 Fed. R. Serv. 3d 740, 2000 U.S. Dist. LEXIS 1656, 2000 WL 198464
CourtDistrict Court, N.D. Illinois
DecidedFebruary 14, 2000
DocketNo. 99 C 6017
StatusPublished
Cited by1 cases

This text of 197 F.R.D. 607 (In re Synthroid Marketing Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Synthroid Marketing Litigation, 197 F.R.D. 607, 48 Fed. R. Serv. 3d 740, 2000 U.S. Dist. LEXIS 1656, 2000 WL 198464 (N.D. Ill. 2000).

Opinion

[608]*608 MEMORANDUM OPINION AND ORDER

BUCKLO, District Judge.

This case poses the problem of what a court is to do when nonparties in class action cases apparently attempt to cash in on a settlement reached by the parties by sending misleading communications to class members. In October 1999, I gave preliminary approval for a settlement agreement in this class action lawsuit concerning antitrust and related violations in the marketing of Synthroid, a brand name for a thyroid medicine. (The settlement has not been finalized.) On December 28,1999, the National Prescription Association (“NPA”), based in New Jersey, sent to various class members the letter that is the subject of this opinion. A number of the Third Party Payor class members (as well as Defendants) seek to have me enjoin further such communications and remedy any confusion with a court-approved communication to the parties who have received NPA’s letter. I grant the motion in part and deny it in part.

The NPA is not a party to this case. Along with a number of other individually represented companies, it moved to intervene in December 1999, a motion I denied on December 21, a week before it sent the letter at issue. The letter was sent to certain members of the Third Party Payor class. At a hearing on this motion on February 3, 2000, NPA’s attorneys were unable to say to whom the letter was sent and how many of the class members received it.

The letter was, as NPA’s attorney admitted, misleading — one of NPA’s lawyers called it a “botch.” (It was, however, signed by one Allen P. Langjahr, Vice President and General Counsel to NPA, and a member of the New Jersey bar (admitted 1984).) Incidentally understating by a half million dollars the total amount of the settlement that if approved would be distributed to the Third Party Payor class, the letter states that NPA is “pursuing claims” against the Defendants “in connection with certain payments processed by NPA ... or on behalf of various health benefit plans.” It then says that unless the Third Party Payor class members respond to the letter by filling out NPA’s opt-out form by one of several deadlines in January, none of which correspond to the January 24, 2000 opt-out date I set, NPA “will proceed with the investigation, litigation, and any settlement negotiations on your behalf’ (boldface in original). Most strikingly, it says that “in event of recovery under the proposed settlement, ... your plan will receive a proportionate share of any monetary recovery. NPA’s administrative fees of 22% will be deducted from NPA’s aggregate recovery amount .... ”

Needless to say, so far as the proposed settlement goes, each class member that is entitled to some part of it might file for its share itself, and need not pay NPA 22 percent of anything. Moreover, there are no “claims” to be “pursued” under the proposed settlement, but only monies to be claimed by parties entitled to those monies. NPA, further, is not the legal representative of anyone, because it is not an attorney, and so it cannot pursue claims, engage in any litigation, or take part in settlement negotiations on anyone’s behalf but its own. And it is not a Third Party Payor, and therefore not a class member. Finally, the settlement negotiations are over for this round. We have a proposed settlement that I have tentatively approved. The remaining litigation, such matters as this apart, involves dealing -with [609]*609the objections to the proposed settlement. I remark that NPA has lodged an objection.

If the letter is construed as an attempt to offer legal representation or advice by a non-lawyer, it may constitute unauthorized practice of law. Worse, the letter can be read as an attempt to skim off, by false pretenses, 22 percent of the amount due to some of the Third Party Payor class members. That might well constitute mail fraud or attempted mail fraud as well as violations of various state fraud statutes.

NPA’s attorneys say that nothing of the sort is going on. According to them, NPA is a perfectly legitimate enterprise that provides administrative services to benefit plans that are too small and thinly staffed to provide such services themselves. It also provides administrative services relating to prescriptions for insurers, including large companies, some of them among the Third Party Payor class members. NPA says it also monitors settlements to which its clients might be entitled, but either would not receive notice for some reason or would not be able or inclined to file claims on their own. In return for this service NPA charges a fee.

At the hearing on the motion for an injunction, NPA counsel represented that the letter had gone only to its clients. In a subsequent declaration filed by its corporate counsel, Mr. Langjahr, however, NPA says the letter went both to current and former customers. There can be no doubt, therefore, that the purpose of the letter was to solicit business and apparently thereafter, on the basis of lack of response, to claim that all of these past and present customers had agreed to allow NPA to file claims on their behalf, and to take 22 percent of the recovery for itself.

At the hearing NPA made the further statement that its clients would have understood the letter and not been misled by it and that it referred to services they had contracted for and expected to pay for. Accordingly, I ordered NPA to produce the contracts it relied on for its authority. NPA complied with my directive only in part. It produced what it says is a sample “but not exclusive” contract, but it did not produce actual contracts with any client and it is unclear whether this contract is in fact the contract with any of the persons to whom it sent the December 28 letter. I have read the sample contract, however, and find nothing in it that would give NPA authority to represent any of the recipients of the letter in this litigation or to claim a 22 percent fee.

Despite this, NPA has authored a proposed corrective letter that it proposes to send to the recipients of the first letter. The letter does state that it will only represent those who affirmatively inform NPA that it wishes it to represent them, and it reduces its fee to 15 percent “subject to the Court’s authority” (is that different from approval?). According to the letter, if recipients respond by giving NPA authority, it will file a claim form on their behalf. One thing the letter does not say, however, is that NPA in fact has filed an objection to the settlement. Furthermore, I agree with Defendants that the introduction to the letter, which indicates it is being sent by order and approval of the court, can and might be interpreted by customers as indicating approval of NPA’s role. I conclude that the letter should not be sent.

It is apparent, however, that some corrective communication needs to be sent. According to the declaration NPA has now filed, the letter was sent to 500 — 600 entities. It is possible that some of them did nothing intending that NPA should act on their behalf either because they had no objection to NPA’s proposed terms or because they believed this was what they had to do to participate in the settlement. If so, they may not file claims or do anything else that they might have done but for NPA’s letter. Others may have been so confused by the apparent inconsistencies between the Notice of Proposed Settlement and NPA’s letter that they declined to act thinking it would be too much trouble. An order giving clarification will therefore be sent to those who received the letter.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cobell, Elouise P. v. Kempthorne, Dirk
455 F.3d 317 (D.C. Circuit, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
197 F.R.D. 607, 48 Fed. R. Serv. 3d 740, 2000 U.S. Dist. LEXIS 1656, 2000 WL 198464, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-synthroid-marketing-litigation-ilnd-2000.