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Johnson v. Smithkline Beecham Corp.

United States District Court, E.D. Pennsylvania

May 8, 2018



          Paul S. Diamond, J.

         Defendants in this thalidomide products action ask me to reallocate exclusively to Plaintiffs' counsel the fees and costs incurred by Special Discovery Master William T. Hangley, whom I appointed to address the discovery complaints made by those same Defendants. The fees and costs Defendants find particularly irksome were incurred when Mr. Hangley inquired into the circumstances surrounding the formation of an unsavory agreement by which lead Defendant GlaxoSmithKline would not seek sanctions against Plaintiffs' counsel Hagens Berman Sobol Shapiro in return for Plaintiffs withdrawing their products claims against GSK. Until Mr. Hangley completes this inquiry, I cannot determine which (if any) “party is more responsible than other parties for the reference to [Mr. Hangley].” Fed.R.Civ.P. 53(g)(3). Accordingly, I will deny Defendants' Motion without prejudice.


         I have previously set out the tortuous background of this litigation. (See Doc. Nos. 371, 482.) Briefly, from 2011 to 2014, fifty-two Plaintiffs represented by Hagens Berman initiated actions in which they alleged that some fifty years before, thalidomide had caused them to suffer severe birth defects. The drug was produced or distributed by Defendants GlaxoSmithKline LLC, GlaxoSmithKline Holdings (Americas) Inc., Sanofi-Aventis U.S. LLC, and Grünenthal GmbH. Most of the Complaints were initially filed in state court and removed to this Court. See Johnson v. SmithKline Beecham Corp., 724 F.3d 337, 360 (3d Cir. 2013). The verifications attached to those Complaints were signed by Counsel.

         The Appointment of a Special Discovery Master

         Anticipating a statute of limitations affirmative defense, Plaintiffs alleged, inter alia, that Defendants' fraudulent concealment had tolled the running of the limitations clock. (See Doc. No. 76.) Some Plaintiffs also alleged that they could not reasonably have discovered until very recently that thalidomide had caused their birth injuries. (Id.) Defendants moved to dismiss, arguing that because Plaintiffs had sustained their birth injuries in the late 1950s or early 1960s, their claims necessarily were time-barred. (Doc. Nos. 74, 86.) Because I was obligated to accept Plaintiffs' allegations as true, however, I denied Defendants' Motions and allowed discovery to go forward. (Doc. No. 92); see also Van Buskirk v. Carey Canadian Mines, Ltd., 760 F.2d 481, 498 (3d Cir. 1985) (“Since the applicability of the statute of limitations usually involves questions of fact for the jury, defendants bear a heavy burden in seeking to establish as a matter of law that the challenged claims are barred.”).

         Defendants promptly sought to learn when each Plaintiff knew or reasonably should have known that thalidomide may have caused his or her birth defects. (See Doc. No. 95.) After Defendants complained that Plaintiffs had repeatedly failed to comply with these critical discovery requests, Defendants urged me to dismiss all Plaintiffs' claims with prejudice. (Doc. No. 232; see also Doc. Nos. 147, 154, 166, 206, 222.) Although I declined to dismiss, I recognized the legitimacy of Defendants' complaints. Accordingly, on June 17, 2014, I proposed appointing Mr. Hangley in the hope that he would resolve Defendants' discovery difficulties. (Doc. No. 239); see also Fed.R.Civ.P. 53(b)(1). Indeed, I ordered Mr. Hangley, inter alia, to “[m]onitor[] and report[] on Plaintiffs' compliance with their discovery and disclosure obligations respecting the Thalidomide discovery issue, and . . . ensure Plaintiffs' compliance with [those] obligations.” (Doc. No. 256 ¶ 4(b).) No Party objected to Mr. Hangley's appointment, or to my Order that the Special Master's fees and costs would be paid equally by Plaintiffs (fifty percent) and Defendants (fifty percent). (Id. ¶ 9.)

         Hagens Berman Seeks to Withdraw After Defendants Seek Sanctions

         By the time Mr. Hangley was able to confer with all counsel, the claims of several Plaintiffs had been terminated because the facts refuted Plaintiffs' allegations. (See Doc. Nos. 168, 258, 263, 265.) Accordingly, on July 17, 2014, Mr. Hangley ordered Hagens Berman to “investigate each of the remaining active cases” and “decid[e] [by September 16, 2014] whether it should continue to be prosecuted or dismissed with prejudice by consent.” (Doc. No. 268 ¶ 1.) In July and August, 2014, GSK and Grünenthal asked me to sanction Hagens Berman (but not its clients) for its bad faith prosecution of three of these time-barred matters. (Doc. Nos. 258, 281, 310.) I referred the sanctions requests to Mr. Hangley-again, without objection from any Party. (Doc. No. 316.)

         On October 28, 2014-well after briefing and argument of the Sanctions Motions- GSK's counsel reported that GSK had reached an extraordinary “agreement” with Hagens Berman: GSK would withdraw its Sanctions Motions in exchange for all Plaintiffs (save one) dismissing with prejudice their claims against GSK. (Letter from Michael T. Scott to Court, Doc. No. 394.) GSK later clarified that-despite their prior representation that the “agreement” included “[a]ll plaintiffs currently represented by Hagens Berman”-the “agreement” did not include the six Plaintiffs as to whom Hagens Berman had filed Motions to Withdraw between May and October, 2014. (Doc. No. 397.) Accordingly, on November 14, 2014, Hagens Berman moved for voluntary dismissal of the claims twenty-eight Plaintiffs' had brought against GSK. (Doc. No. 409.)

         Mr. Hangley Inquires Into the Propriety of the GSK-Hagens Berman “Agreement”

         It appeared to me that the “agreement” benefitted GSK and Hagens Berman to the detriment of the twenty-eight Plaintiffs, who would give up their claims for no benefit. Accordingly, I ordered Mr. Hangley to determine whether these Plaintiffs had knowingly, voluntarily, and intelligently agreed to dismiss their claims against GSK. (Doc. No. 420); see also Green v. Nevers, 111 F.3d 1295, 1301 (6th Cir. 1997); United States v. Mercedes-Benz of N. Am., Inc., 547 F.Supp. 399, 400 (N.D. Cal. 1982) (the court may “look behind” a stipulation of dismissal “to determine whether there is collusion or other improper conduct giving rise to the dismissal”). Although Defendants did not object, Hagens Berman objected vigorously, unsuccessfully seeking mandamus to stop Mr. Hangley's inquiry. See In re Alexander, No. 15-2245, 2015 WL 3479384, at *1 (3d Cir. May 29, 2015). On August 10, 2016, Mr. Hangley submitted a Report in which he reluctantly recommended that I grant the dismissals, noting that Hagens Berman had at least partially obstructed his inquiry. (Doc. No. 535 at 4, 35.) I have not yet ruled on Plaintiffs' Motions for Voluntary Dismissal or decided whether to accept the August 10 Report and Recommendation.

         At this point, I turned my attention to the six Plaintiffs who had refused to dismiss their claims against GSK and the other Defendants. In its Motions to Withdraw from representing the six, Hagens Berman stated that that the firm could not, consistent with its professional obligations, continue to prosecute the claims. (Doc. Nos. 207, 301, 342, 343, 375, 382.) Needless to say, this gave rise to concerns respecting both the propriety of Hagens Berman's actions throughout the litigation and the viability of the consents to dismiss the firm had already obtained. See Chester v. May Dep't Store Co., No. 98-5824, 2000 WL 12896, at *1 (E.D. Pa. Jan. 7, 2000) (withdrawal denied where there is “no suggestion that counsel was unaware of his client's history and propensities when he accepted the representation and proceeded to litigate this matter”). Accordingly, on March 14, 2016-without objection from any Party-I ordered Mr. Hangley to advise me as to whether to grant the Motions to Withdraw. (Doc. No. 532.)

         Because Mr. Hangley anticipated questioning the six Plaintiffs (one of whom has since passed away) and their Hagens Berman lawyers (now adverse to their clients with respect to the withdrawal motions) about privileged communications, he proposed proceeding in the absence of Defendants or their counsel. (Doc. No. 539.) Defendants readily agreed. On December 12, 2016, all three Defendants waived participation in the proposed in camera proceedings. (Doc. No. 546.) Mr. Hangley conducted those proceedings on September 26, 27, and 28, 2017, during which he sought to ...

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