The Vioxx Settlement

Catch the thorough and fascinating Law.com report on the Vioxx settlement here.

And yes, only a Plaintiffs' trial lawyer from New Orleans can get away with similes like that!

Settlement negotiations began last December and have proceeded fitfully since, reportedly spurred on by Fallon and other judges. The final stretch began Thursday morning at the New Orleans offices of Russ Herman, liaison counsel for the plaintiffs, and wrapped up Friday morning around 5 a.m.

Herman says the primary lawyers for the plaintiffs included Chris Seeger of Seeger Weiss, Birchfield of Beasley Allen, and Arnold Levin of Levin, Fishbein, Sedrad & Berma. Merck was represented by Doug Marvin of Williams & Connolly, John Beisner of O'Melveny & Myers, and Adam Hoeflich of Bartlitt Beck. "It was a true, hard-fought rough and tough negotiation on a very high, professional plane," Herman told Legal Times, ALM's Washington weekly.

Herman says a general deal was struck 10 days ago. "But the devil's in the details and they can break down at any point," says Herman. "Nobody raised their voice. Or made threats. But people's positions were very hard. It was like each lawyer had a greased football and was running like a wild monkey."

I'm a student of the social psychology of conflict. Of in-groups and out-groups. Of choosing sides and aligning interests. Of polarization and cognitive biases.

But I just never get it when a newspaper reporter -- even someone living as rarefied a journalist's life as New York Times reporter Joe Nocera -- sheds crocodile tears for BigPharma.

Call me crazy. Call me neutral. But the recently settled Vioxx cases never struck me as low-merit, extortionate rip-offs nor as slam dunk victories for injured consumers or their survivors.

Why? For all the reasons Joe notes -- it's extremely difficult to prove that one assault on a person's physical well-being (the use of a potentially life-endangering drug) is a more likely explanation for stroke, heart attack or death than the thousands of other reasons we all eventually die -- obesity, smoking, genetic pre-disposition, exposure to toxic chemicals in the workplace, stress and the like.

John Doe's Alleged Vioxx-Related Heart Attack

In negotiating the settlement of litigation, I find it best when people actually engaged in the dispute are in the room because it tends to focus the parties on the intricacies, texture, dimensionality and simple messiness of real life.

With that in mind, I'll use a hypothetical to put a little flesh and blood into the debate. More precisely, I'm going to use a hypothetical John Doe who had a heart attack about ten months after he started taking Vioxx.

What Merck Did and Failed to Do

As Nocera acknowledges in his article Forget Fair, It's Litigation as Usual, Merck did not behave with the high level of caution the consuming public would expect of a drug manufacturer creating and marketing a product we ingest to help make us better. I mean, no one was taking Vioxx as a recreational drug, right? Here's what Nocera says about Merck's marketing of Vioxx.

[Merck] caught a serious case of blockbuster fever in the 1990s. In its effort to crank out drugs with $1 billion or more in annual sales - the definition of a blockbuster drug - it over-reached. . . .

Merck spent hundreds of millions of dollars marketing Vioxx, largely through direct-to-consumer advertising, portraying it as some kind of miracle pain reliever. So instead of having a few hundred thousand users in the short time it was on the market, it had 20 million. Its annual sales grew to $2.5 billion a year.

Even before the drug was approved by the Food and Drug Administration, there were rumblings in the scientific community that Vioxx might increase the risk of heart attacks or strokes. It's not quite right to say that Merck completely ignored those potential problems - but the company certainly tried to avert its eyes.

. . . At Merck . . . "there was a kind of studied ignorance" of the possibility that Vioxx could increase the chances of a heart attack - even after one study, called Vigor, suggested that the drug could quadruple the heart attack risk. Only in 2004, when another study confirmed the increased risk, did Merck finally react - by taking the drug off the market.

(emphasis mine).

So Merck was making billions of dollars on a drug that probably should not have been marketed to the general public. Merck ignored the medical research -- some of which showed the drug could quadruple the risk of heart attack -- until yet another study confirmed the increased risk.

Nevertheless, Nocera worries about a judicial system railroading Merck into creating a fund for people who are able to demonstrate that the drug likely caused stroke, heart attack or death.

John Doe's Bereaved Family Seeks to Recover for Their Devastating Loss

As Nocera notes, you can never really be certain what caused your cancer or heart attack. No one will ever know for sure why your brother had a stroke at 35 when everyone else in your family lived into their nineties. We all have medical histories that make us vulnerable to one or more life-threatening conditions that will eventually kill us off. As the National Geographic recently noted in the chart reproduced above, our odds of death from any and all causes are 100%.

We'd die if we lived in a bubble.

But John Doe died too young, leaving his hypothetical family to fend for themselves. He appeared to be in perfect health. Sure, he'd had a genetic pre-disposition to heart attack. But his family history gave no reason to believe he'd be stricken with sudden cardiac failure until he reached his 70's. He was only 42 years old when he died.

The Vioxx thing is in the news shortly after John Doe's death. As Nocera's article notes, Merck was finally forced to take the drug off of the market -- which alerted its customers to the possible ill-effects the drug had on their health.

Listen, Merck didn't voluntarily forego $2.5 billion in yearly sales out of the goodness of its corporate heart. It took the drug off the market because it foresaw billions of dollar of potential legal liability to a statistically predictable number of poeple -- among its millions of consumers -- who would allege that their strokes or heart attacks were caused by their consumption of Vioxx.

In the absence of Plaintiffs' lawyers willing to represent people on a contingency, would Merck have been concerned about liability? Would it have left the drug on the market longer?

The Way in Which "Claiming" Behavior Arises after Inexplicable Personal Calamity

But let's return to John Doe. He's been deceased for, say, a year, when a friend of his widow, pointing to an article in the New York Times about the dangers of Vioxx says to her "wasn't John taking Vioxx before he died?

"Sure," she says, "but John hated trial lawyers, particularly those who represent injured victims. I think he would have agreed with Times reporter Nocera who wrote" --

It is impossible to know what causes someone to have a heart attack, just as it is impossible to know why someone develops cancer. In the Vioxx litigation, the plaintiffs' lawyers were arguing, in effect, that the way to punish the company's bad behavior was to make it hand their clients large sums of money, even though they couldn't prove that the clients' heart attack had been induced by Vioxx. Meanwhile, the company argued that it was just as likely, if not more likely, that some other risk factor was involved, like smoking or obesity - even though it had put a product on the market that increased heart attack risk.

"John wasn't obese and he quit smoking in college," she says, wiping away a tear. "His physician said that the Vioxx could have contributed to his heart attack, but we'd have to hire a lawyer and an expert physician to determine whether it was Merck's negligence or random fate that caused John's death. I couldn't afford that."

Litigation as Regulatory System

Nocera complains that the free-market, law-based method of resolving such potential liabilities, should John Doe's widow pursue it, isn't a good way to regulate drug safety.

He might be right. But I doubt that the widowed Mrs. Doe would agree. After all, the regulatory system -- the FDA -- approved this drug for marketing to the general public. The regulatory mechanism didn't work.

And aren't we a nation that abhors federal regulation with nearly American Revolutionary zeal? Don't we believe that a market regulated by profit and loss and (hopefully) "enlightened self interest" is the economy that thrives. Don't we now smugly point to the demise of the Union of Soviet Socialist Republics (the country formerly known as Prince) to vindicate the superiority of a free market versus a regulated economy?

In the Vioxx litigation and settlement, you have the free market working at its most robust. A free market that includes a voice -- a small voice, but a voice nevertheless -- for the little people who make the American market the healthiest place in the world for Big Business to thrive (see CNN's report on 2006 Fortune 500 profits in its article A Profit Gusher of Epic Proportions here).

All the Vioxx settlement does is to give Mrs. Doe and her children the opportunity to prove that it was not genes or mold in the men's room at John's workplace or an early exposure to toxic chemicals in the oil town in which he grew up -- but his consumption of Vioxx -- that caused his untimely death.

If that is "Litigation as Usual" in a world which distributes its economic resources in a radically unequal way, I'd say that's pretty much as close to justice as we're ever going to get.

For other responses to the Nocera article, see the Angel Reyes blog post on the topic here and the other links provided in the Personal Injury Law Round-Up #37 by Austin attorney Brooks Schuelke.

Thanks to Drug & Device Law for pointing us to the CSPAN video of a recent forum on the VIOXX settlement here.

This American Enterprise Institute forum will not be beneficial to plaintiffs who are searching for advice on whether to accept the settlement themselves. I refer those people back to their attorneys.

Here's a link to a Yahoo discussion group for Plaintiffs making the decision whether to accept the offer.

For reporters who are following this story at depth, the video includes a sophisticated presentation by Jones Day attorney Mark Herrmann about settlement strategy from Merck's point of view; a provocative presentation by Professor George M. Cohen -- who calls the settlement proposal an illegal antitrust conspiracy -- and a scholarly presentation by Professor Nagareda on the public policy issues raised by the settlement of mass tort claims.

For attorneys who have been retained to provide their clients with a second opinion, Professor Cohen's presentation will be a useful addition to their own research and independent conclusions. Attorney Andy Birchfield -- the only forum speaker with first hand knowledge of the negotiations leading to the settlement proposal -- may be of the greatest interest as he walks counsel for Plaintiffs through the structure, purpose and effect of the proposed settlement program.

Speakers in this forum include:

The incredibly well-spoken Mark Herrmann of Jones Day and the Drug & Device Law Blog.

Mark modestly fails to mention in his Blog post concerning this video that he is one of the speakers on this panel.

Herrmann discusses the following questions:

1. did Merck's settlement strategy make sense; and,
2. will this settlement buy Merck peace.

George M. Cohen, University of Virginia Law School Professor who discusses ethical issues pertaining to the "settlement program proposal."

Professor Cohen not only concludes that attorneys recommending this proposal to their clients are violating professional ethics, but asserts that it constitutes an illegal antitrust "conspiracy" as well.

Vanderbilt Law School Professor Richard Nagareda, author of the book Mass Torts in a World of Settlement.

Professor Nagareda discusses the settlement from a dispute resolution public policy standpoint.

As a contract between Merck on the one hand and the "lawyers who have a large market share" on the other, Professor Nagareda suggests that the settlement proposal is more an artifact of the law flowing from the Supreme Court's AmChem opinion than of any legal "connivance" among the Plaintiffs' attorneys or between them and Merck.

This settlement proposal, he says, is a valuable and creative peace-making transaction for mass claims.

Andrew Birchfield, an attorney at Beasley Allen and co-lead counsel on the Plaintiffs' Steering Committee for the federal Vioxx litigation addresses the negotiations themselves and the structure of the settlement.

Andy says that in approaching settlement Merck required global peace -- that there couldn't be a "second round" because Merck had seen how disastrous open-ended liabilities could be for a corporation.

The plaintiffs' attorneys, says Birchfield, negotiated a settlement agreement designed to serve the best interests of each individual client no matter how strong or weak each of their cases might be.

Attorney Ted Frank of the American Enterprise Institute who once represented Merck in the Vioxx litgation.

Frank talks about the law and economics of the settlement proposal, focusing on the weakest link of Plaintiffs' cases -- causation.

See also the Blog of the Legal Times coverage of this forum here.

Getting our hands around the Vioxx settlement dynamics reminds us of the old story about the blind men and the elephant. Everyone has a different story to tell.

This one is about the power of a Judge who monitors the negotiations to decide when the time to close the deal is right and this particular Judge's wisdom in strategically using that power.

As the New Jersey Star Ledger reports (Lawyers hunkered down in Big Easy)

On Sunday, U.S. District Judge Eldon Fallon had telephoned plaintiff attorney Russ Herman in New Orleans and his Merck counterpart, Doug Marvin in Washington, D.C. "You're not going to get a deal done by e-mail," Fallon told them firmly.

The judge didn't care where they went, Herman said yesterday from his New Orleans office, he just wanted them -- all of them -- in one place. Fallon wanted the settlement done by the end of the week.

They converged in New Orleans, where they averaged three hours of sleep a night and lived on pizza, gumbo, diet coke and coffee.

And before dawn yesterday, they finalized the agreement . . .

This was not, of course, the first time these high-powered lawyers met to resolve the most aggressively defended pharmaceutical litigation in remembered history.

From the Star Ledger again

Herman, the plaintiff attorney in New Orleans, said the judges, including Fallon and state Superior Court Judge Carol Higbee from Atlantic City, ordered negotiations to begin last December. The judges' message, said Arnold Levin, who helped negotiate the settlement, was it was a good time to get started because the litigation had matured, or progressed.

Over the course of the past 11 months, two teams of attorneys -- 10 in all -- met face-to-face as many as 50 times in a variety of cities across the country. The negotiations, which remained confidential until late Thursday, involved as many as 100 conference calls, Herman said.

They Don't Call Them "Behind the Scenes" Negotiations for Nothing

As the Star Ledger coverage concludes:

"Negotiations over a multibillion settlement only work when they're done confidentially," Herman said, adding the attorneys were under orders by the judges to keep them secret.

In New Orleans, it was nearly 5 in the morning when the attorneys finalized the agreement. Most went off to their hotel rooms to nap or shower before they had to head over to a regularly scheduled conference before Judge Fallon.

And never underestimate the power of pizza, coca-cola and sleep deprivation to get the deal done.

No waterboarding required.

Having litigated complex commercial litigation in both State and Federal Courts, primarily in Los Angeles but also in other cities and states as well -- I don't believe there is any Court anywhere with a better group of Judges than those who preside over the Los Angeles Superior Court's Complex Case program in Central Civil West.

I was a true-believer of the benefits of the Complex Court on the first day my nine-figure environmental insurance coverage dispute was reassigned from a downtown courtroom to the Hon. Carolyn B. Kuhl, presently the Presiding Judge of "Complex."

My respect for the Complex Court only grew when I became Judge Victoria Chaney's superannuated law extern while pursuing my LL.M degree in Conflict Resolution at the Straus Institute.

So it is no surprise that Judge Chaney was one of those Judges who were highly instrumental in pressing the parties to resolve one of the most sophisticated mass tort cases ever -- and not by "twisting arms" or "banging heads," but by the art of case management, collaboration and principled persuasion.

Kudos are also owed to Susan Todd, staff writer for the Star-Ledger, who wrote the following account of the settlement negotiations from the Judges' perspective. Ms. Todd's article, Behind the scenes of the Vioxx settlement can be read in full here. Below is an excerpt from yesterday's paper.

By December 2006, there had been enough [Vioxx jury] trials for both sides to recognize the strengths and weaknesses of their arguments, [New Jersey Superior Court Judge Carol] Higbee said.

Both sides had spent a lot of money, but the litigation was still progressing too slowly.

That month, [U.S. District Judge Eldon] Fallon, Higbee and [Ass't Supervising Complex Court Judge Victoria] Chaney met in New Orleans. Over dinner, they prepared for a meeting the next morning with attorneys from both sides. It was time, the judges had decided, for the lawyers to discuss a resolution.

The judges urged the lawyers to begin talking. They asked for monthly meetings and regular progress reports. They emphasized, among other things, the need to move the cases along.

"We were simply not going to be able to continue this slow progress," Higbee said. "It would go on forever."

Six months later, in June, the judges notified the team of plaintiff attorneys they intended to meet with Merck's legal team, Higbee said. The pace of the litigation weighed on the judges.

"Trying the cases one at a time was no longer going to be an option," Higbee said. "We never thought we would try all the cases, but there was a chance we would try another 500 cases."

The judges told Merck's lawyers they would have to start spreading the cases out among more judges, which would diminish the chance of getting a settlement. "The chance of a fair resolution was much more likely," Higbee said, "while there was a control of the litigation by the three judges."

The Judges' Management Strategy Plus the Three-Year Statute of Limitations, Pushed the Negotiations Along

Kent Jarrell, an outside spokesman for Merck's legal team, said the possibility of the lawsuits being spread out among additional judges was "a factor" that pushed the negotiations along. But Jarrell said the three-year statute of limitations, which arrived at the end of September, also was a big factor.

The statute of limitations on filing new cases gave Merck a clear definition of the litigation's magnitude, and that would prove to be a key factor in Merck's ability to formulate a settlement.

The settlement negotiations, which grew more serious during the summer months and into the fall, culminated in the early morning hours of Nov. 9.

"Both sides had a similar goal -- to settle as much of the litigation as possible and to pay people with the strongest cases, the most serious injuries, the most money," the judge said.

Higbee believes the settlement will ultimately succeed. "I'm anticipating they will get more than 85 percent of the cases," she said.

Claiming that the $4.85 billion Vioxx Settlement improperly "allows [defendant] Merck to dictate the advice a lawyer will offer" to clients, some Vioxx plaintiffs' attorneys have asked the federal judge overseeing the deal to "keep some of their clients outside the settlement while still allowing other clients to accept it."

Under the global settlement agreement reached by lead counsel in New Orleans last month, "if the lawyers want any of their clients to receive money from the settlement, they must recommend the deal to all their clients."

Those attorneys resisting the requirement are saying not only that the provision "would prevent them from offering the best independent judgment for each client" but that "[a]greeing to the provision might open them to future lawsuits from disgruntled clients."

All quotations above are from Alex Berenson's New York Times article, Some Lawyers Seek Changes in Vioxx Settlement.

Previous commentary on the ethics of this provision by legal bloggers, including our own thoughts here, can be found at the Legal Ethics Forum here, the Wall Street Journal Law Blog here, FindLaw here; the Mass Tort Litigation Blog here; Drug and Device Law here (but please don't call them for comment); Texas Lawyer here; and, Pharmalot here.

Have you ever seen such high level free legal advice in your lifetime? And it's not even redundant. So, no, Concurring Opinions, I don't think we've saturated the legal blogosphere. I think everyone is just taking a deep breath to sort through the talent and find their niche.