In re Inter-Op Hip Prosthesis Liability Litigation

Sulzer Orthopedics, Inc. and related entities (Sulzer) (defendants) sold hip implants with a manufacturing defect that could cause them to fail. After the defect was discovered, Sulzer recalled the affected implants, but 26,000 had already been implanted in patients (plaintiffs). The numerous lawsuits that followed the recall were consolidated in a multidistrict litigation (MDL) in the Northern District of Ohio. In the MDL action, Sulzer and the patients submitted a proposed nationwide settlement of the patients’ claims, with the class certified under Federal Rule of Civil Procedure 23(b)(3). The settlement created a trust funded by Sulzer that would make varying agreed payments to class members and their spouses and perform other functions. The settlement also (1) placed a lien on Sulzer’s assets in favor of the trust until the trust was fully funded (which was expected to happen in six years); (2) provided that if Sulzer ever settled a claim with an opt-out claimant for more than the agreed class-member payouts, all class payouts would be increased to match that higher amount; and (3) stated that if a class member opted out, the unused payout money would be distributed among the remaining class members. Several class members objected that the settlement’s terms—particularly the depletion of Sulzer’s available assets to fund the trust, the lien on any other assets, and the settlement-matching provision—made it so unlikely that an opt-out claimant would be able to collect an individual judgment against Sulzer after the settlement that the opt-out provision was illusory. The objectors claimed that an illusory opt-out provision meant that, in reality, class membership was mandatory, which was not allowed for this type of mass-tort action.