November 1, 2006
GlaxoSmithKline Reaches Paxil Settlement
Article in the Washington Post -- GlaxoSmithKline Reaches Paxil Settlement, by the Associated Press. The case is pending in Madison County, Illinois before Judge Ralph Mendelsohn. Here's an excerpt:
GlaxoSmithKline PLC has agreed to pay $63.8 million to settle a lawsuit's claims that it promoted its antidepressant drug Paxil for use by children and adolescents while withholding negative information about the medication's safety and effectiveness.
Members of the class, including all U.S. residents who bought Paxil and Paxil CR, a controlled-release version of the drug, for their children each could get full refunds if they have records of their purchases. Anyone without such documentation can get $15 returned to them.
As part of the settlement, GlaxoSmithKline denies the lawsuit's claims, including that consumers paid too much for the drugs, but the world's second-largest pharmaceutical company wants to resolve the matter to avoid further litigation costs.
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It's interesting to see a post-CAFA class action settlement in Madison County. Here are a few additional tidbits about the Paxil settlement from the Washington Post article and from an article in yesterday's Madison St. Clair Record -- http://www.stclairrecord.com/news/newsview.asp?c=186091. First, the judge has not yet given final approval to the settlement; he gave preliminary approval on Oct. 6, unsealed the settlement on Oct. 27, and scheduled a hearing for March 9, 2007 to decide whether the settlement is fair. Second, like the light cigarettes class action that Judge Weinstein recently certified in E.D.N.Y. (Schwab v. Philip Morris), the Paxil class action seeks economic damages rather than compensation for personal injury. Third, class counsel has requested that the court approve an incentive payment of $5000 to each of the class representatives. Fourth, the settlement includes a walkaway provision under which defendant GSK may terminate the settlement if more than 1500 class members opt out.
I'm curious whether this class action predated CAFA and therefore was not removable to federal court, or whether GSK and class counsel agreed to file this as a settlement class action in Madison County. It's a nationwide class action with significant stakes; surely if filed after CAFA it could have been removed. If it was filed pre-CAFA, then we might view this class settlement as one of the last of a dying breed -- state court nationwide class actions that defendants settle rather than facing a Madison County judge and jury. If, on the other hand, CAFA applies but the parties chose to file a settlement class action there, then we might view it as representing something very different -- a defendant using a state court to achieve a nationwide settlement that might be more difficult to get certified and approved in federal court. Or am I missing something?
Posted by: Howard Erichson | Nov 1, 2006 6:42:23 PM