Friday, August 6, 2010

Drug Manufacturer's Precertification Settlement Effort Invalidated As Improper Class Communication: County of Santa Clara v. Astra USA, Inc.

On July 8, 2010, District Court Judge William Alsup entered an interesting order in County of Santa Clara v. Astra USA, Inc., 2010 U.S. Dist. LEXIS 78312, 22-23 (N.D. Cal. July 8, 2010), relating to defendant Bristol-Meyers Squibb’s effort to obtain accord and satisfaction of pending, but uncertified, overcharging claims by mass-mailing refund checks to putative class members. The Court noted that 2003 amendments to Rule 23 made it unclear whether pre-certification settlements required court approval. However, the plaintiffs approached the issue from a different angle, attacking the substance of the communication with the class as improper. The Court agreed, concluding that the defendant had omitted significant information in its communication, and as a result, the release obtained was deemed invalid under California law:
The duty and authority to protect the putative plaintiff class and uphold the policies of Rule 23 extends to the limited ruling in this case. BMS has omitted material information and misled the putative plaintiff class: the letter did not contain the complaint or Ninth Circuit opinion, did not describe the claims, did not contain the current status of the case, did not provide contact information for the plaintiffs' attorneys, did not explain how the aggregate net basis methodology can actually decrease the payment amount, and tried to establish a veneer of CMS authorization that was clearly not accurate. Indeed, misleading the putative plaintiffs, offering a potentially much decreased settlement, and not cooperating with the plaintiffs all show a lack of good faith. Thus, the plaintiffs' motion for corrective action is Granted. The accord and satisfaction release is invalid in California. Any checks cashed will be deducted from any recovery obtained herein (or presumably elsewhere) by the recipients. It is not necessary for BMS to make any corrective communications.
See County of Santa Clara, 2010 U.S. Dist. LEXIS 78312, 22-23.

No comments:

Post a Comment