## Facts

- Thousands of plaintiffs in the New York Diet Drug Litigation asserted personal-injury and loss-of-consortium claims arising from use of the “fen-phen” diet drugs against American Home Products (AHP) and related defendants.
- AHP agreed to pay a large lump sum intended to resolve nearly all fen-phen claims handled in the coordinated New York County proceeding.
- The settlement was negotiated and administered through Napoli Kaiser & Bern, LLP (Napoli), which represented both its own clients and plaintiffs referred by other law firms.
- Under the settlement structure, AHP paid a single lump sum; Napoli then divided that sum and set individual settlement offers for claimants.
- Attorneys’ fees for Napoli and for referring counsel were to be paid from the individual claimant allocations.
- An amended order dated November 7, 2001 approved the settlement, finding it fair and reasonable and in compliance with ethical requirements.
- Parker & Waichman LLP (P&W), a referring firm, later objected to the settlement’s administration, claiming that Napoli’s allocation practices and communications created conflicts and involved misconduct—such as favoring Napoli’s own clients, failing to tell clients that Napoli (not AHP) determined individual offer amounts, and mischaracterizing the special master’s evaluation of individual offers.
- P&W previously sought to intervene, but its motion was denied by order dated November 24, 2003, with the court directing that the request be made in a pending companion matter.
- In the motion decided in this case, P&W moved under CPLR 2221 for leave to renew or reargue the earlier denial of intervention. Other plaintiffs (including the “Abramova” plaintiffs) also sought leave to intervene.
- The proposed intervenors sought access to materials submitted in support of the 2001 settlement-approval order and sought the ability to pursue relief, including a motion to vacate the approval order based on alleged fraud and ethical violations.

## Issues

1. Whether P&W and other claimants satisfied CPLR 2221 requirements to renew or reargue the prior order denying intervention.
2. Whether, upon renewal or reargument, the movants should be permitted to intervene in the settled mass-tort proceeding to pursue disclosure and challenge the settlement-approval order.
3. Whether intervention was an appropriate procedural means for the movants to seek disclosure of settlement-approval submissions and to pursue vacatur of the 2001 approval order based on alleged misconduct in the settlement allocation process.

## Decision

- The court granted reargument/renewal under CPLR 2221 and, upon reargument, granted P&W and the other proposed intervenors leave to intervene as parties.
- The court allowed intervenors to seek disclosure of materials submitted in support of the November 7, 2001 amended order approving the settlement.
- The court’s ruling permitted intervenors to pursue further relief within the action, including an effort to vacate the settlement-approval order; the court did not finally decide the merits of the misconduct allegations in this motion.

## Legal Principles

- CPLR 2221 permits renewal or reargument where the movant meets the statute’s standards and shows a basis to revisit the prior ruling.
- Intervention may be granted where proposed intervenors show a sufficient interest in the proceeding and where allowing participation will not unfairly prejudice existing parties.
- A party seeking relief from a judgment or order based on alleged fraud or similar wrongdoing generally must proceed in the same action by motion to vacate (rather than by a separate collateral lawsuit).
- In a mass-tort settlement using a lump-sum payment followed by counsel-controlled allocation among many clients, allegations that allocation and disclosures were improper can justify allowing affected parties to intervene to obtain the record and pursue appropriate relief.

## Conclusion

The court permitted a referring firm and affected claimants to intervene, after renewing/rearguing a prior denial, so they could obtain settlement-approval submissions and pursue relief—including a motion to vacate the prior settlement-approval order—based on alleged conflicts, misallocation, and misstatements tied to how a lump-sum fen-phen settlement was divided among individual claimants.


In the Matter of New York Diet Drug Litigation, 15 Misc. 3d 1114(A) (2007)