PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-1180
_____________
In Re: DIET DRUGS
(PHENTERMINE/FENFLURAMINE/
DEXFENFLURAMINE)
PRODUCT LIABILITY LITIGATION,
Carmen Cauthen and Ricky Leon Cauthen,
Appellants
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Nos. 2-99-cv-20593, 2-12-md-01203)
District Judge: Hon. Harvey Bartle, III
_______________
Argued
November 13, 2012
Before: SCIRICA, FISHER, and JORDAN, Circuit Judges.
(Filed: January 28, 2013)
_______________
W. Steven Berman
Napoli Bern Ripka & Associates
1 Greentree Center - #201
Marlton, NJ 08053
Paul J. Napoli
Napoli, Kaiser, Bern & Associates
3500 Sunrise Highway - #T-207
Great River, NJ 11739
Denise A. Rubin [ARGUED]
Napoli, Bern, Ripka & Shkolnik
350 Fifth Avenue - #7413
New York, NY 10118
Counsel for Appellants
Heidi L. Levine
DLA Piper LLP (US)
1251 Avenue of the Americas
New York, NY 10020
Raymond M. Williams
DLA Piper LLP (US)
1650 Market Street - #4900
Philadelphia, PA 19103
Anand Agneshwar [ARGUED]
Arnold & Porter LLP
399 Park Avenue
New York, NY 10022
2
Geoffrey J. Michael
Anna K. Thompson
Daniel S. Pariser
Arnold & Porter LLP
555 Twelfth Street, NW
Washington, DC 20004
Counsel for Appellees Wyeth LLC
And Wyeth Pharmaceuticals Inc.
Michael D. Fishbein
Laurence S. Berman
Arnold Levin
Mary E. Gately
Levin, Fishbein, Sedran & Berman
510 Walnut Street - #500
Philadelphia, PA 19106
Charles R. Parker
Locke Lord
600 Travis Street - #3600
Houston, TX 77002
Counsel for Class Counsel and Plaintiffs Liaison
Counsel
Jules S. Henshell
Semanoff, Ormsby, Greenberg & Torchia
2617 Huntingdon Pike
Huntingdon Valley, PA 18974
Counsel for AHP Settlement Trust
_______________
OPINION OF THE COURT
_______________
3
JORDAN, Circuit Judge.
In November 1999, Wyeth L.L.C. (“Wyeth”) entered
into a nationwide class action settlement agreement (the
“Settlement Agreement”) with the users of certain diet drugs
linked to various health problems. The United States District
Court for the Eastern District of Pennsylvania certified the
settlement class and entered a pre-trial order enjoining
members of the class from suing Wyeth for injuries related to
those drugs. Appellants Carmen and Ricky Leon Cauthen
brought a lawsuit against Wyeth in the Court of Common
Pleas of Philadelphia County, Pennsylvania, seeking to
redress Ms. Cauthen‟s injuries from primary pulmonary
hypertension (“PPH”), a condition that she alleges was caused
by the diet drugs. Wyeth moved the District Court to enjoin
the suit, arguing that it did not qualify under the Settlement
Agreement as a cause of action that could proceed despite the
settlement. The District Court agreed and enjoined the
Cauthens‟ lawsuit. For the reasons that follow, we will
affirm.
I. Background
A. Class Action Suit and Settlement Agreement
Between 1994 and 1997, American Home Products
Corporation, now Wyeth, marketed and sold fenfluramine and
dexfenfluramine, prescription weight loss drugs. After
studies linked the drugs to valvular heart disease, and
following a U.S. Food and Drug Administration (“FDA”)
public health advisory, Wyeth withdrew the drugs from the
4
market in 1997. Thousands of individuals subsequently filed
suit, alleging that they had been injured by the drugs.
In December 1997, the Judicial Panel on Multidistrict
Litigation entered an order transferring all diet drug cases in
federal court to the United States District Court for the
Eastern District of Pennsylvania for consolidated pre-trial
proceedings. Nearly two years later, Wyeth entered into a
Settlement Agreement with users of the diet drugs in the
United States and presented the agreement to the District
Court for approval. On August 28, 2000, the District Court
certified the class, approved the Settlement Agreement, and
entered Pre-Trial Order (“PTO”) No. 1415. That order
provided that the District Court “retains continuing and
exclusive jurisdiction over this action and each of the Parties,
including [Wyeth] and the class members, to administer,
supervise, interpret and enforce the Settlement in accordance
with its terms.” (Supplemental App. at 8.)
Aside from certain narrow exceptions, the Settlement
Agreement enjoins class members from suing Wyeth for all
diet drug-related injuries. One of the exceptions is at issue in
this case: the Settlement Agreement allows class members to
sue Wyeth if they can demonstrate that they developed PPH1
through the use of the diet drugs. To qualify for the
exception, a class member must draw on “[m]edical records”
to demonstrate the “exclus[ion]” of certain medical
1
PPH is a condition that “deprives the lungs of oxygen
[and] can cause hypoxemia and hypercapnia, resulting in
ventilator insufficiency.” 14 Roscoe N. Gray & Louise J.
Gordy, Attorneys’ Textbook of Medicine ¶ 205.75 (3d ed.
2011).
5
conditions. (App. at 787-88.) To exclude one such condition,
which is referred to as “greater than mild restrictive lung
disease,” a class member is required by § I.46.a(2)(c) of the
Settlement Agreement to produce “pulmonary function tests”2
(“PFTs”) showing that the class member‟s “total lung
capacity” is greater than “60% of predicted at rest.” (Id.
(Settlement Agreement, § I.46.a(2)(c)).)
B. The Cauthens’ Lawsuit
In June 2011, the Cauthens filed a complaint in the
Philadelphia County Court of Common Pleas, alleging that
Ms. Cauthen, a member of the settlement class, developed
PPH “as a result of ingesting Diet Drugs.” (Id. at 3.) The
Cauthens produced a “[p]ulmonary consultation note”
prepared by Dr. Terry Fortin (id. at 795-97), a cardiologist
certified by the American Board of Internal Medicine. Dr.
Fortin stated in the consultation note that, based on a PFT she
had conducted, Ms. Cauthen‟s “total lung capacity [is] 56%,”
and Dr. Fortin acknowledged that Ms. Cauthen‟s lungs
“clearly have some restriction.” (Id. at 796.)
Because Ms. Cauthen‟s only PFT showed that she had
lung capacity of less than 60 percent of predicted at rest,
Wyeth notified the Cauthens that they were prohibited from
2
“Pulmonary function tests are a group of tests that
measure how well the lungs take in and release air and how
well they move gases such as oxygen from the atmosphere
into the body‟s circulation.” Pulmonary function tests:
MedlinePlus Medical Encyclopedia (Dec. 12, 2011),
http://www.nlm.nih.gov/medlineplus/ency/article/003853.htm
(last visited Jan. 3, 2013).
6
bringing their claim, as Ms. Cauthen did not satisfy
§ I.46.a(2)(c) of the Settlement Agreement. The Cauthens
declined to drop the lawsuit. Wyeth then filed a motion in the
District Court seeking to enjoin the Cauthens‟ state court
lawsuit for failing to satisfy the precondition for suit provided
by the Settlement Agreement. Opposing Wyeth‟s motion, the
Cauthens submitted a declaration by Dr. Fortin stating that,
“to a reasonable degree of medical certainty[,] … Ms.
Cauthen has primary pulmonary hypertension secondary to
her use of [one of the diet drugs] in early 1997.” (Id. at 808.)
In her declaration, Dr. Fortin alluded to the
requirement in § I.46.a(2)(c) of the Settlement Agreement
that lung capacity must be greater than 60 percent of
predicted at rest, and she said that “[i]nsight into underlying
pathophysiology can often be gained by comparing the
measured values for pulmonary function tests obtained on a
patient at any particular point with normative values derived
from population studies.” (Id. at 809.) “The percentage of
predicted normal [lung capacity],” she continued, “is used to
grade the severity of the abnormality.” (Id.) She explained
that the normative values used to calculate a patient‟s
percentage of lung capacity predicted at rest “are based upon
averages for persons of similar height, weight, age, ethnicity,
etc.” (Id.) According to Dr. Fortin, the “standard average
reference” used to calculate Ms. Cauthen‟s percentage of lung
capacity was 5.37 liters, a value “taken from the Crapo/Hsu
Duke modified guide at [Duke] University.” (Id. at 810.) Dr.
Fortin further explained that, through a battery of tests
conducted on April 28, 2009, she had determined that Ms.
Cauthen had a lung capacity of 3.03 liters. Dividing 3.03
(Ms. Cauthen‟s lung capacity) by 5.37 (the average lung
capacity of individuals matching Ms. Cauthen‟s demographic
7
profile), yields Ms. Cauthen‟s percentage of lung capacity
predicted at rest, 56.4 percent.
Dr. Fortin went on to downplay that result by
challenging the accuracy of the denominator in the above
equation. The figures used to represent average lung capacity
by demographic characteristics, she asserted, “are only
averages and may vary in actual practice.” (Id. at 809.) “The
5.37 liter reference is only a reference value,” she continued,
“and does not actually represent M[s]. Cauthen‟s total lung
capacity. … [T]he 5.37 liter reference value is just a
predicted average of [a] wom[a]n‟s total lung capacity who
fits Ms. Cauthen‟s age, height, race and weight.” (Id. at 810.)
In fact, Dr. Fortin claimed, the value taken from the
Crapo/Hsu Duke modified guide “is just one of the many
references available that are out there.” (Id.) Without
providing any other reference, Dr. Fortin concluded “to a
reasonable degree of medical certainty that we just do not
know conclusively what the true reference value for Ms.
Cauthen should be.” (Id.) Dr. Fortin did offer, however, that,
“[i]f we were to use a reference value of 5.05, just 32ccs less
than the 5.37 reference originally used[,] then Ms. Cauthen‟s
total lung capacity percent predicted calculation would be
60%.” (Id. at 811.)
Dr. Fortin also asserted that comparing an individual‟s
lung capacity with the average capacity of persons having a
similar demographic profile is important but not
determinative in diagnosing PPH. “Cardiologists,” she
assured the District Court, “know about the limitations of the
percent predicted calculation on a [PFT] and must rely on
other methods in order to determine a specific patient‟s true
total lung capacity, such as radiology studies and an exam of
8
the patient‟s body habitus.” (Id. at 810.) In fact, Dr. Fortin
claimed, “whether [Ms. Cauthen‟s] total lung capacity percent
predicted calculation is 56% or 60% is clinically irrelevant”
(id.), and “Ms. Cauthen‟s diet drug use was the cause of her
[PPH]” (id. at 811). Without further explanation, Dr. Fortin
declared that, “[b]ased upon [her] review of the April 28,
2009 Pulmonary Function Test and other objective tests,”3
she had “ruled out any restrictive lung disease as a cause of
Ms. Cauthen‟s [PPH].” (Id.)
Unconvinced, the District Court held that the Cauthens
had not produced a PFT that supported their claim that Ms.
Cauthen “does not have greater than mild restrictive lung
disease,” as required by § I.46.a(2)(c) of the Settlement
Agreement. (Id. at 7.) Dr. Fortin‟s declaration did not alter
the Court‟s conclusion for two reasons. First, the doctor
acknowledged that Ms. Cauthen‟s only PFT demonstrated
that she has a total lung capacity of only 56 percent of
predicted at rest. Ms. Cauthen thus did not meet the
definition of PPH provided in § I.46.a(2)(c). Second, the
Settlement Agreement requires class members who wish to
make a claim related to PPH to establish, “through a
pulmonary function test only, the absence of greater than mild
restrictive lung disease.” (Id. at 6.). Because Dr. Fortin‟s
declaration is not the type of medical record contemplated in
the Settlement Agreement as sufficient to establish a PPH
claim, the Court held that it was not relevant to determining
whether Ms. Cauthen satisfies § I.46.a(2)(c).
3
Dr. Fortin did not explain what those tests were or
how they led her to her ultimate diagnosis.
9
The District Court accordingly entered PTO No. 8753
granting Wyeth‟s motion and enjoining the Cauthens from
prosecuting their lawsuit in state court. The Cauthens then
filed this timely appeal.
II. Discussion4
On appeal, the Cauthens argue that the District Court
erred in two general ways. First, they claim that the District
Court misunderstood Dr. Fortin‟s declaration and that her
declaration demonstrates that Ms. Cauthen in fact has PPH
that was caused by her use of the diet drugs and not by mild
restrictive lung disease. Second, they argue in the alternative
that, even if Ms. Cauthen does not meet the technical
definition of PPH provided by the Settlement Agreement, the
District Court should have reformed the Settlement
Agreement, given changes in diagnostic capabilities that have
rendered obsolete the requirement that a putative plaintiff
4
The District Court had jurisdiction pursuant to 28
U.S.C §§ 1332 and 1407. The District Court‟s order directing
the Cauthens to dismiss their complaint in the Court of
Common Pleas of Philadelphia County is an injunction, and
we therefore have jurisdiction under 28 U.S.C. § 1292(a)(1).
We apply “plenary review to a district court‟s construction of
settlement agreements,” but we review any underlying factual
findings for clear error. Coltec Indus., Inc. v. Hobgood, 280
F.3d 262, 269 (3d Cir. 2002); cf. In re Cendant Corp. Prides
Litig., 233 F.3d 188, 193 (3d Cir. 2000) (“[C]ontract
construction, that is, the legal operation of the contract, is a
question of law mandating plenary review,” while “contract
interpretation is a question of fact, and review is according to
the clearly erroneous standard.”).
10
demonstrate lung capacity greater than 60 percent of
predicted at rest.
A. The Effect of Dr. Fortin’s Declaration
Settlement agreements are interpreted according to
“basic contract principles.” In re Cendant Corp. Prides
Litig., 233 F.3d 188, 193 (3d Cir. 2000). When the terms of a
contract are clear and unambiguous, its meaning “must be
determined from the four corners of the contract.” Glenn
Distribs. Corp. v. Carlisle Plastics, Inc., 297 F.3d 294, 300
(3d Cir. 2002); see also Am. Eagle Outfitters v. Lyle & Scott
Ltd., 584 F.3d 575, 587 (3d Cir. 2009) (“When the words are
clear and unambiguous, the intent of the parties must be
determined from the express language of the agreement.”
(internal quotation marks omitted)). In contrast, “if the
written contract is ambiguous, a court may look to extrinsic
evidence to resolve the ambiguity and determine the intent of
the parties.” Glenn Distribs., 297 F.3d at 300. A contract
provision is ambiguous under Pennsylvania law5
if, and only if, it is reasonably or fairly
susceptible of different constructions and is
capable of being understood in more senses
than one and is obscure in meaning through
indefiniteness of expression or has a double
meaning. A contract is not ambiguous if the
court can determine its meaning without any
guide other than a knowledge of the simple
5
The parties agree that Pennsylvania law controls this
issue. (See Appellants‟ Opening Br. at 29 (citing
Pennsylvania contract law); Appellee‟s Br. at 13 (same).)
11
facts on which, from the nature of the language
in general, its meaning depends; and a contract
is not rendered ambiguous by the mere fact that
the parties do not agree on the proper
construction.
Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d
604, 614 (3d Cir. 1995) (internal quotation marks omitted).
Under those standards, we cannot credit the Cauthens‟
arguments that Dr. Fortin‟s declaration either supplanted the
requirements of the Settlement Agreement or otherwise
satisfied them.
First, the Cauthens contend that, because a board
certified cardiologist “determined that Ms. Cauthen‟s PPH is
not related to … restrictive lung disease,” Ms. Cauthen “has
the right to make a claim against [Wyeth] for PPH under the
definition of PPH in the Settlement Agreement” (Appellants‟
Opening Br. at 27), notwithstanding that her sole PFT showed
her total lung capacity to be less than 60 percent of predicted
at rest. Specifically, the Cauthens point to Dr. Fortin‟s
statements that “whether [Ms. Cauthen‟s] total lung capacity
percent calculation is 56% or 60% is clinically irrelevant”
(App. at 810), and that, “to a reasonable degree of medical
certainty[,] … Ms. Cauthen‟s diet drug use was the cause of
her primary pulmonary hypertension.” (Id. at 811.)
According to their argument, the District Court should have
disregarded the requirements of the Settlement Agreement
because a physician unilaterally declared that Ms. Cauthen
has PPH that was caused by the diet drugs and not restrictive
lung disease.
12
The Settlement Agreement, however, clearly and
unambiguously states that a putative PPH plaintiff must
demonstrate, through a PFT, that her total lung capacity is
greater than 60 percent of predicted at rest. That is the only
way, under the specific terms of that agreement, to rule out
“greater than mild restrictive lung disease” as a cause of PPH.
Ms. Cauthen produced only one PFT, which showed that her
lung capacity was only 56 percent of predicted at rest. Her
physician‟s confident assertion that Ms. Cauthen‟s PPH was
caused by the diet drugs is therefore irrelevant in the face of
the Settlement Agreement, which requires a showing that a
putative plaintiff‟s lung capacity is greater than 60 percent of
predicted at rest.
Second, the Cauthens argue that Dr. Fortin‟s
declaration is not meant to replace the requirements of
§ I.46.a(2)(c), but rather that the declaration is a “medical
record” that confirms the absence of greater than mild
restrictive lung disease. (See Appellants‟ Opening Br. at 25
(when considered in light of Dr. Fortin‟s declaration, “Ms.
Cauthen has presented a pulmonary function test to
demonstrate that she has PPH in accord with the
settlement”).) Dr. Fortin‟s declaration, they contend,
“demonstrates a lung capacity of at least 60% when the 5.37
total lung volume … is even slightly reduced to reflect the
Plaintiff‟s true lung capacity in the algorithmic formula used
to calculate lung function.” (Appellants‟ Opening Br. at 25-
26.) The District Court therefore erred, the Cauthens argue,
when it did not interpret the declaration to mean that Ms.
Cauthen‟s percentage of lung capacity predicted at rest was
actually greater than 60 percent, or, at least, a jury should be
given the chance to so conclude.
13
Even if the Settlement Agreement could be read to
allow Dr. Fortin‟s declaration to be an adequate substitute for
or adjunct to a PFT, however, the Cauthens have overstated
Dr. Fortin‟s position. She never said that Ms. Cauthen‟s lung
capacity is actually greater than 60 percent of predicted at
rest, only that it cannot be known “what the true reference
value for Ms. Cauthen should be.” (App. at 810.)
Accordingly, the Cauthens cannot credibly say that Dr.
Fortin‟s declaration establishes that Ms. Cauthen‟s lung
capacity is greater than 60 percent.6 The District Court
6
The Cauthens contend that this case should be
governed by PTO No. 3699, a case in which the District
Court considered and accepted a medical expert‟s declaration
as a means of satisfying a separate provision of the Settlement
Agreement. There, the District Court interpreted a provision
of the PPH exception that requires a putative plaintiff to
produce “a diagnosis based on examinations and clinical
findings … by cardiac catheterization” that the plaintiff‟s
“normal pulmonary artery wedge pressure” is less than or
equal to 15 mm Hg. (App. at 42.10 (Settlement Agreement,
§ I.46.a(1)(a)).) The putative plaintiff produced a “Cardiac
Catheterization Report” showing a wedge pressure range of
14 to 16 mm Hg. (App. at 14.) Because the report straddled
the range of the PPH exception, the District Court considered
a declaration by the plaintiff‟s medical expert who reviewed
the cardiac catheterization report and opined that the
plaintiff‟s “wedge pressure [was] 14 mm Hg” and thus fell
under the wedge pressure requirement. (App. at 14.) Based
on that declaration, the Court found that the plaintiff satisfied
the PPH exception and declined to enjoin his claims.
The facts of PTO No. 3699 are much different than
those of this case. Whereas the results of the cardiac
14
therefore did not err in concluding that the Settlement
Agreement unambiguously requires a showing through a PFT
that a putative plaintiff‟s lung capacity is greater than 60
percent of predicted at rest and that Dr. Fortin‟s declaration
did not provide that showing.7
catheterization report in PTO No. 3699 spanned the threshold
wedge pressure value required by the Settlement Agreement,
hindering the District Court‟s ability to determine whether the
putative plaintiff‟s pressure fell outside the PPH exception
(greater than 15 mm Hg), or within it (less than or equal to 15
mm Hg), Ms. Cauthen‟s PFT unambiguously falls short of the
PPH exception embodied in § I.46.a(2)(c). The District Court
did not need the assistance of a medical expert to understand
that a lung capacity percentage that is less than 60 percent of
predicted at rest falls outside the exception.
7
The Cauthens also argue that the District Court
should have allowed a jury to consider Dr. Fortin‟s
declaration under rule 702 of the Federal Rules of Evidence.
They assert that because Dr. Fortin is unquestionably an
expert in the field of cardiac medicine, her opinion “would be
admissible in a court of law” (Appellants‟ Opening Br. at 37),
and because her opinion would be admissible, it would “[b]y
definition … have a reasonable medical basis in fact.” (Id.)
The District Court accordingly exceeded its authority as a
gatekeeper, they argue, by rejecting Dr. Fortin‟s expert
opinion as “evidence that could not be considered under the
strictures of the Settlement Agreement.” (Id. at 38.)
But the Cauthens have not established the
requirements of rule 702. First, Dr. Fortin‟s specialized
medical knowledge, as embodied in her declaration, would
not “help the trier of fact to understand the evidence or to
15
determine a fact in issue.” Fed. R. Evid. 702(a). To
determine whether a declaration is helpful, this Court looks to
the “„proffered connection between the scientific research or
test result to be presented and particular disputed factual
issues in the case.‟” In re Paoli R.R. Yard PCB Litig., 35
F.3d 717, 743 (3d Cir. 1994) (quoting United States v.
Downing, 753 F.2d 1224, 1237 (3d Cir. 1985)); see also
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 591
(1993) (adopting Downing‟s connection requirement). A
court “must examine the expert‟s conclusions in order to
determine whether they could reliably flow from the facts
known to the expert and methodology used.” Oddi v. Ford
Motor Co., 234 F.3d 136, 146 (3d Cir. 2000) (internal
quotation marks omitted). Even if a party proffers expert
testimony based on scientific knowledge, “„[a] court may
conclude that there is simply too great a gap between the data
and the opinion proffered.‟” Id. (quoting Gen. Elec. Co. v.
Joiner, 522 U.S. 136, 146 (1997)). “Rule 702‟s „helpfulness‟
standard requires a valid scientific connection to the pertinent
inquiry as a precondition to admissibility.” In re Paoli, 35
F.3d at 743 (internal quotation marks omitted).
Dr. Fortin‟s declaration did not conclude that Ms.
Cauthen‟s total lung capacity is greater than 60 percent of
predicted at rest. She asserted only that Ms. Cauthen‟s lung
capacity percentage cannot be determined because “we just
do not know conclusively what the true reference value for
Ms. Cauthen should be.” (App. at 810.) That cannot help the
trier of fact reach the necessary conclusion that Ms.
Cauthen‟s total lung capacity, demonstrated by a PFT to be
3.03 liters, is greater than 60 percent of predicted at rest. At
best, Dr. Fortin‟s declaration would provide evidence that Ms.
Cauthen‟s total lung capacity predicted at rest might not be 56
16
B. The Cauthens’ Reformation Argument
In the alternative, the Cauthens contend that the
District Court, which “retains a special responsibility to see to
the administration of justice” in a class action settlement
(Appellants‟ Opening Br. at 35 (internal quotation marks
omitted)), should have reformed the Settlement Agreement.
Although they never sought reformation of the Settlement
Agreement before the District Court, they now argue that the
Court should have reformed the Settlement Agreement
because diagnostic procedures for PFTs have changed. They
claim support for that argument in the following statement in
Dr. Fortin‟s declaration:
Automated spirometry systems usually have
built-in software that can generate a preliminary
interpretation, especially for spirometry.
Today, most clinical pulmonary function testing
laboratories use a microprocessor-driven
pneumotachometer to measure air flow directly
and then to mathematically derive volume.
These pre-programmed values are based upon
averages for persons of similar height, weight,
age, ethnicity, etc.
percent. But a trier of fact could not use the declaration to
conclude that Ms. Cauthen‟s total lung capacity is actually
greater than 60 percent, and Dr. Fortin failed entirely to
provide the “scientific connection” needed to bridge the gap
between a percentage of lung capacity that falls below 60
percent and one that does not. Accordingly, Dr. Fortin‟s
declaration is not an expert opinion that could be “helpful” to
a trier of fact, even if there were a fact question.
17
(App. at 809.) Placing emphasis on the word “today,” the
Cauthens interpret that statement to mean that “on the modern
pneumotachometers used at the present time, pre-
programmed algorithms measure air flow directly and then
mathematically derive volume, precluding manual
adjustments to the algorithms that were permitted on the older
machines in use when the Settlement Agreement was
negotiated and entered.” (Appellants‟ Opening Br. at 23-24.)
Essentially, the Cauthens argue that modern diagnostic
instruments are cause for reformation of the agreement.
Because they did not raise that argument below, it is
waived. “It is axiomatic that arguments asserted for the first
time on appeal are deemed to be waived and consequently are
not susceptible to review in this Court absent exceptional
circumstances.” Tri-M Grp., L.L.C. v. Sharp, 638 F.3d 406,
416 (3d Cir. 2011) (internal quotation marks omitted). That
“general rule serves several important judicial interests,”
including “protecting litigants from unfair surprise;
promoting the finality of judgments and conserving judicial
resources; … preventing district courts from being reversed
on grounds that were never urged or argued before them,” id.
(alteration and internal quotation marks omitted), “ensuring
that the necessary evidentiary development occurs in the trial
court, and preventing surprise to the parties when a case is
decided on some basis on which they have not presented
argument,” Barefoot Architect, Inc. v. Bunge, 632 F.3d 822,
835 (3d Cir. 2011).
It is true that the waiver rule “is one of discretion
rather than jurisdiction, and it may be relaxed whenever the
public interest so warrants.” Id. at 834-35 (citation,
alteration, and internal quotation marks omitted). “[W]e will
18
still address arguments raised for the first time on appeal in
exceptional circumstances,” and we retain the discretion,
“exercised on the facts of individual cases,” to determine
“what questions may be taken up and resolved for the first
time on appeal.” Tri-M Grp., 638 F.3d at 416 (internal
quotation marks omitted). But there are no exceptional
circumstances in this case that would permit us to ignore the
waiver rule. “The waiver rule applies with greatest force
where the timely raising of the issue would have permitted
the parties to develop a factual record.” Barefoot Architect,
632 F.3d at 835. The parties did not develop in the District
Court the arguments in favor and against reformation, and
that Court was not allowed to perform its vital function of
developing a complete factual record on the relevant changes,
if any, in diagnostic technology and procedures. Without the
aid of factual development by the District Court, we cannot
adequately evaluate the merit of Dr. Fortin‟s assertion that
diagnostic technologies have changed to such a degree that
reformation is called for.8
8
Even in the absence of a waiver, it appears that the
Cauthens would have difficulty with the merits of their
argument. While a district court retains “general equitable
power to modify the terms of a class action settlement,” In re
Cendant, 233 F.3d at 194, when the plaintiff demonstrates
that there has been “a significant change either in factual
conditions or in law,” Rufo v. Inmates of Suffolk Cnty. Jail,
502 U.S. 367, 384 (1992), Dr. Fortin‟s declaration alone
provides little proof that diagnostic procedures have indeed
changed to the degree that reformation is warranted. Dr.
Fortin said that “[t]oday, most … laboratories use a
microprocessor-driven pneumotachometer.” (App. at 809.)
She did not, however, explain how diagnostic procedures
19
III. Conclusion
For the foregoing reasons, we will affirm the decision
of the District Court.
were different in the past or why the recent changes create the
need to reform the Settlement Agreement.
20