Latest Class Action Decision Shows That The Battles Were Important

We aren’t the first to note the latest class action denial in the prescription medical product liability field, In re Panacryl Sutures Products Liability Cases, No. 5:08-MD-1959-BO, slip op. (E.D.N.C. Nov. 13, 2009). 360 (subscription only) beat us to the punch the other day. But just because we aren’t first, doesn’t mean there’s nothing in Panacryl worth blogging about.

We view decisions like Panacryl as vindication of all the fuss we made for more than two years about the ALI’s Principles of Aggregate Litigation project.

We’ve pointed out before – and consider it a significant legal accomplishment – that class certification in personal injury actions involving prescription medical products are routinely denied these days. Earlier this year, we gave the defense bar its highest grade – an “A” – for largely eliminating this sort of class action. We said then:

[I]n the late 1980s, we had to take class actions in product liability litigation very seriously. While there were never a lot of certifications, there were enough of them that – during the Bone Screw litigation, for example – plaintiffs would argue that there was some sort of “modern trend” favoring certification of personal injury class actions. . . .

Then our side prevailed in [Amchem and Ortiz]. After that – with a lot of blood, sweat, and good legal argument from our side – class actions (at least successful ones) largely disappeared from mass torts. . . . The few courts willing to certify class actions in drug and medical device cases have so far gotten shot down on appeal. . . . And with the enactment of CAFA, most class action decisions going forward, and essentially everything in mass torts, will be made by federal courts applying post Amchem/Ortiz law. . . .

As a measure of how far out of the mainstream tort class actions have become over the last couple of decades, the ALI’s Aggregate Litigation principles project, for all its pro-plaintiff leanings in other areas of the law, states quite clearly that personal injury class actions are disfavored for a variety of reasons.

“Taking Stock” post.

More or less removing the threat of class actions in mass tort litigation involving prescription drugs and medical devices has gone a long way to making the risks of this type of litigation manageable – as opposed to the existential threat pharmaceutical mass torts posed back in the days of Bone Screw and Fen-Phen. With the class action threat gone, the likelihood of a mass tort settlement gone wild has become quite remote.

Cases like Panacryl remind us why that is. In Panacryl, the plaintiffs claimed that the defendant’s synthetic surgical stitches (a medical device) were defective and caused or facilitated various types of post-surgical infections. Mass tort litigation followed an FDA Class II recall (It seems like every recall of a drug or medical device turns into a mass tort these days, doesn’t it?), and in the inevitable MDL, plaintiffs sought a nationwide class action that would have joined together more than 2 million users of these stitches – the vast majority of whom suffered no complications from using this product.

Because it was a nationwide class action, the first and foremost question raised was whether the law of all fifty states would apply. If it did, then there’s lots of law holding that the multiplicity of jurisdictions makes renders the class action uncertifiable. What did plaintiffs argue? Why, that the defendant’s principal place of business should apply to all claims, of course. Slip op. at 4. Last refuge of a scoundrel and all that.

Fortunately, the Panacryl court rejected that argument:

First, the court had no trouble finding that the states’ approach to products liability created numerous conflicts. Slip op. at 4-5. Well . . . duh. You've got a court in California, but nobody else, allowing "misrepresentation" liability for a brand-name company in a generic drug case. Then you've got West Virginia, but nobody else, rejecting the learned intermediary rule. Could anybody really deny the conflict question with a straight face?

So what does a court do with that conflict? Before ending up in the MDL, these plaintiffs filed in New Jersey, a state known both for having a lot of drug and device companies headquartered there, and for having relatively (not as much as before, though) pro-plaintiff substantive law. That meant that New Jersey choice of laws principles applied.

That means the court had to decide whether principal place of business could trump the place of injury as a choice of laws principle. Well, that’s one of the main issues that had to be fought out in the ALI’s Principles of Aggregate Litigation project. In fact, one of the three floor motions at the ALI annual meeting last May, was on that precise subject. We – and a lot of other folks – fought long and hard to keep principal place of business as a choice of laws rule out of the final Principles. In that, we were successful. The result, as we reported shortly after the meeting, was:

Principal place of business and choice of law – The reference is still there, but the next sentence now reads: “At the present time, choice-of-law principles that point towards application of the law of the defendant’s principal place of business remain quite rare across the various states.” This position is also now described as an “outlier” in the Reporters' Notes. The Schwartz amendment will add language to the effect that whatever choice of law principles are applicable to litigation generally apply equally to aggregated litigation. We’d rather not see principal place of business mentioned at all, but short of that, it’s essentially a complete fix.

Final report on ALI Principles of the law of Aggregate Litigation, available here.

The defendant in Panacryl succeeded, too. Relying on a recent and directly on point case out of the New Jersey Supreme Court, Rowe v. Hoffman LaRoche, Inc., 917 A.2d 767 (N.J. 2007) (which we reviewed here), the court held that in personal injury actions, the individual plaintiff’s home state/place where the injury occurred should control:

[H]aving considered the contacts relevant to the competing interests of the states in light of Rowe, this Court concludes that the competing interests of the states, the most important factor, weighs in favor of applying the law of each plaintiff’s home jurisdiction.

Panacryl, slip op. at 10.

That’s one – and it’s the big one. Once the court concluded that the plaintiffs’ nationwide class action had to be governed by the law of all 50 states, denial of class certification occurred pretty much as a matter of course.

Except. . . .

Plaintiffs argued that, if the court couldn’t certify the whole class, it should still give them half a loaf and certify an single-issue class action under Fed. R. Civ. P. 23(c)(4). Slip op. at 18-19.

That’s another biggie – the misuse of “single-issue” certifications where the litigation as a whole is too diverse to be certified. This issue, as well, was a major bone of contention in the ALI’s consideration of the Principles of Aggregate litigation. Making sure that single-issue classes stayed rare was the subject of another of the floor amendments offered last May at ALI. Again, we think we got most of what we wanted:

Broad Use of Single Issue Classes – this is the subject of the Beisner amendment that the Reporters largely agreed to. We expect it to end up some neutral language and a statement regarding the law being divided on the point. We expect a substantial, if not complete, fix.

Final report on ALI Principles of the law of Aggregate Litigation, available here.

We pointed out back then that the bulk of precedent rejected the use of Rule 23(c)(4) as a way to break up inherently individualized litigation into bite-sized, certifiable bits. The leading case is Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996), which flatly held that a “district court cannot manufacture predominance through the nimble use of [bifurcation],” because “a cause of action, as a whole, must satisfy the predominance requirement of (b)(3).” Id. at 745 n.21. Rule 23(c)(4) isn’t a way to make the predominance requirement of Rule 23(b)(3) disappear:

Reading Rule 23(c)(4) as allowing a court to sever issues until the remaining common issue predominates over the remaining individual issues would eviscerate the predominance requirement of Rule 23(b)(3); the result would be automatic certification in every case where there is a common issue, a result that could not have been intended.

84 F.3d at 745. The problem with broad use of single-issue certifications is that it invites courts to ignore what’s left over – which is entirely improper. Cf. McLaughlin v. American Tobacco Co., 522 F.3d 215, 234 (2d Cir. 2008) (rejecting piecemeal certification; “given the number of questions that would remain for individual adjudication, issue certification would not ‘reduce the range of issues in dispute and promote judicial economy”); In re St. Jude Medical, Inc., 522 F.3d 836, 841-42 (8th Cir. 2008) (Rule 23(c)(4) certification improper where “trials will still be required” for remaining individualized issues).

And beyond Castano, a raft of federal district court decisions have reached the same conclusion – a lawsuit that’s individualized and not certifiable as a whole can’t be broken down into smaller, certifiable parts by the use of Rule 23(c)(4). We start with Blain v. Smithkline Beecham Corp., 240 F.R.D. 179 (E.D. Pa. 2007), one of Bexis’ cases that we discussed here. Blain rejected Rule 23(c)(4) single-issue certification, holding that “only after the court has found that the cause of action satisfies the predominance requirements of Rule 23(b)(3) may it certify common issues pursuant to Rule 23(c)(4).” Id. at 190. See also Rowe v. E.I. duPont de Nemours & Co., 2009 WL 2424086, at *2 (D.N.J. July 29, 2009) (“Because the medical monitoring . . . is not applicable to the “class as a whole” . . . [it has] not met the 23(b)(2) requirement and, thus, certification under 23(c)(4) would be improper”); Henry v. St. Croix Alumina, LLC, 2008 WL 2329223, at *4-5 (D.V.I. June 3, 2008) (“a claim for relief taken in its entirety must satisfy the predominance requirement of Rule 23(b)(3) before the court may select certain issues for piecemeal certification”); In re Welding Fume Products Liability Litigation, 245 F.R.D. 279, 312 (N.D. Ohio 2007) (“a court must not manufacture adherence to the requirements of Rule 23 through the nimble use of subdivision (c)(4)”); In re General Motors Corp. Dex-Cool Products Liability Litigation, 241 F.R.D. 305, 314 (S.D. Ill. 2007) (same); Taylor v. CSX Transportation, Inc., 2007 WL 2891085, at *14 (N.D. Ohio Sept. 28, 2007) (“Plaintiffs must still satisfy that the issues to be determined by class adjudication predominate over the claims as a whole, including the claims in the separate individual issue trials.”); In re Katrina Canal Breaches Consolidated Litigation, 2007 WL 2363135, at *1 (E.D. La. Aug. 16, 2007) (“Rule 23(c)(4) issue certification is allowed only if the Rule 23(b) requirements are first met as to the claim”); O’Neill v. The Home Depot U.S.A., Inc., 243 F.R.D. 469, 481 (S.D. Fla. 2006) (“[n]or may the Court certify a single issue when the case as a whole fails to meet the requirements of Rule 23”); Fisher v. Ciba Specialty Chemicals Corp., 238 F.R.D. 273, 316 (S.D. Ala. 2006) (“courts have emphatically rejected attempts to use the (c)(4) process for certifying individual issues as a means for achieving an end run around the (b)(3) predominance requirement”); Hyderi v. Washington Mutual Bank, FA, 235 F.R.D. 390, 398-99 (N.D. Ill. 2006) (quoting and following Castano); Hamilton v. O’Connor Chevrolet, Inc., 2006 WL 1697171, at *6 (N.D. Ill. June 12, 2006) (“a class action movant cannot gerrymander predominance by suggesting that only a single issue be certified for class treatment . . . when other individualized issues will dominate or be meaningfully material to the resolution of the absent class members’ claims”); Snow v. Atofina Chemicals, Inc., 2006 WL 1008002, at *9 (E.D. Mich. March 31, 2006) (“Rule 23(c)(4) may not be used to circumvent the predominance requirement”); Perez v. Metabolife International, Inc., 218 F.R.D. 262, 273 (S.D. Fla. 2003) (“sub-issues cannot be separated out from those that require individualized treatment unless the common issues in the action as a whole predominate”); Rink v. Cheminova, Inc., 203 F.R.D. 648, 651 (M.D. Fla. 2001) (finding Castano analysis of Rule 23(c)(4) “persuasive”); Robertson v. Sikorsky Aircraft Corp., 2000 WL 33381019, at *19 (D. Conn. July 5, 2001) (“[a]n action must be considered as a whole in order to determine whether or not the predominance requirement has been satisfied”); Neely v. Ethicon Inc., 2001 WL 1090204, at *5 (E.D. Tex. Aug. 15, 2001) (Rule 23(c)(4) “does not operate independently from the rule of predominance found in 23(b)(3)”; predominance inquiry cannot be limited to “common issues” alone); In re Jackson National Life Insurance Co. Premium Litigation, 183 F.R.D. 217, 225 (W.D. Mich. 1998) (“certification of the question . . . is inappropriate, for the cause of action as a whole certainly does not satisfy the predominance requirement of Rule 23(b)(3)); Arch v. American Tobacco Co., 175 F.R.D. 469, 496 (E.D. Pa. 1997) (“Plaintiffs cannot read the predominance requirement out of (b)(3) by using (c)(4) to sever issues until the common issues predominate over the individual issues”), aff’d, 161 F.3d 127 (3d Cir. 1998).

To this line of cases can now be added the Panacryl decision. The court held, as to Rule 23(c)(4):

But Rule 23(c)(4) may not be used to manufacture predominance for purposes of Rule 23(b)(3). Plaintiff’s trial plan does not eliminate the necessity of applying the laws of several jurisdictions or the individualized inquiry into whether [the product] caused each plaintiff’s injuries.

Slip op. at 19 (Castano quote omitted).

Panacryl thus demonstrates why engaging on the ALI’s Principles Project for Aggregate Litigation was both a good and necessary thing to do. In Panacryl, as in many class actions involving prescription drugs and medical devices, the key certification questions are those that were most controversial in the ALI – strained choice of law arguments to get around the importance of the plaintiff’s residence in personal injury actions, and slicing, dicing, and pureeing causes of action to avoid the predominance requirement for damages class actions. Of the three main issues that we took to the floor of the ALI, only medical monitoring didn’t raise its ugly head in Panacryl.

There's always good reason to fight the good fight.

There's No Claim for Negligent Misrepresentation on the FDA Either

We had to comment on the most intriguing case of Hughes v. Boston Scientific Corp., 2009 WL 3817586 (S.D. Miss. Nov. 12, 2009). Hughes involved a PMA device, something called a "HydroTherm Ablator," that allegedly malfunctioned and injured the plaintiff. Thereafter, the defendant (1) changed its adverse event reporting algorithm in response to FDA concerns, and (2) still later, instituted a Class II recall of the device.

Faced with the inevitable Riegel-based preemption motion, the plaintiff did two interesting things: First, she tried to turn what was basically a warning-based cause of action into a "manufacturing defect" claim:

[T]his so-called “manufacturing defect” manifests itself through [defentant's] failure to properly label, warn and correct perceived faults in the [device] because [defendant] failed to provide proper injury and malfunction data to the FDA. Under the plaintiff's theory, if [defendant] had properly informed the FDA of the [device's] fault rate and malfunction errors, then the FDA would have required different or supplemental warnings and labeling and perhaps manufacturing changes.

2009 WL 3817586, at *10.

The second thing plaintiff did was to relabel what was essentially a fraud-on-the-FDA claim as "negligent misrepresentation" and "negligence per se" - all based upon the defendant's changing the algorithm upon which its adverse event reporting was based. 2009 WL 3817586, at *10.

Neither of these innovations worked, although the court did call the plaintiff's theories "novel and intriguing." 2009 WL 3817586, at *10.

The court quite correctly held, in light of the policies that led to preemption in Buckman, that scienter - whether the alleged mis-reporting to the FDA was considered "fraudulent" or "negligent" - didn't matter a hill of beans. It was still second guessing the adequacy of the defendant's reports to the FDA combined with speculation that, with "true" information, the FDA might have done something differently that would have prevented the device from being used. As such, that raised all the policy grounds that supported preemption in Buckman:

The Buckman holding did not turn on intentional versus negligent violation of FDA regulations, but on the principle of maintaining a “federal statutory scheme” put in place by Congress. The Supreme Court found that allowing the Buckman plaintiffs' claim would “exert an extraneous pull on the scheme established by Congress, and it [was] therefore preempted by that scheme.” Under this rationale, claims asserting misrepresentations, intentional or otherwise, made to the FDA regarding Class III medical devices are preempted by federal law.

2009 WL 3817586, at *11 (Buckman citations and quotes omitted). In other words "negligent misrepresentation on the FDA" is just as preempted as fraud on the FDA, and for the same reasons.

But there's more. "Novel and intriguing" theories produce novel and intriguing opinions - especially when rejecting such theories. Otherwise they can produce really bad law.

The court then turned both barrels on the negligence per se claim - by both barrels, we mean both state law (failure to state a claim) and federal law (preemption).

The court recognized that FDCA-based negligence per se was widely rejected as a matter of state law - because state negligence per se doctrines do not operate in the face of contrary legislative intent. "[N]umerous courts have rejected negligence per se claims based on alleged violations of FDA regulations as contrary to Congressional intent." 2009 WL 3817586, at *11. We're pleased to note that, of the nine decisions in the ensuing string citation, six of them involved orthopedic bone screws (where we first came up with these state-law-based defenses to FDCA-based negligence per se). As we said yesterday - you scratch our precedent, we'll scratch yours.

Citing another Bone Screw case (if the defendant was Sofamor, Danek, Smith Nephew, or Acromed, and the date is between 1995 and 2001 - chances are its a Bone Screw case), the court goes on to recognize that only "substantive violations" (your product didn't conform to the intended design) rather than "administrative violations" (failure to go through FDA procedures properly) could qualify as negligence per se under state law:

[S]ince such administrative requirements lack independent substantive content, they do not impose a standard of care, the breach of which could form the basis of a negligence per se claim. The defendant contends likewise, i.e., that the reporting regulations contained in the MDA which the plaintiff maintains were not properly met in this case are the type of administrative tools used by the FDA to facilitate the administration of its underlying regulatory scheme and are, thus, administrative, and not substantive, federal regulations. This court agrees.

2009 WL 3817586, at *12. That's two important non-preemption based defenses to FDCA-based negligence per se. They do come in handy.

Switching back to preemption, the court in Hughes observed that negligence per se claims remained preempted where they "would necessarily impose requirements on the device that are ‘different from, or in addition to,’ the requirements of the FDA." 2009 WL 3817586, at *12. That's another defense to remember in this type of case - the purportedly "parallel" claim may well, upon closer examination, not really be "parallel" at all.

[T]here is more to a negligence per se claim (under applicable state law) than a simple prima facie showing that a statute or regulation has not been followed. In other words, the violation in and of itself does not constitute negligence per se. Rather, the defendant may still prevail by showing that he or she acted reasonably under the circumstances. As such, common law tort principles of the reasonableness of the defendant's actions invade the cause of action. Once a state's tort law becomes ingrained with the cause of action, it runs afoul of Riegel.

2009 WL 3817586, at *12 (discussing Bausch v. Stryker Corp., 2009 WL 2827954,(N.D. III. Aug. 31, 2009)). The court concluded this would be the case with plaintiff's negligence per se under Mississippi law.

This court elects to follow the well reasoned and majority rule rejecting negligence per se claims arising out of violations of FDA regulations. Further, the court finds that the attempt by the plaintiff to enlarge or expand the reach of Riegel by claiming that misrepresentation of, or failure to report correct data, to the FDA amounts to a manufacturing defect, while a novel theory, is not warranted under existing law.

2009 WL 3817586, at *12.

Finally, the plaintiff tried to claim that the subsequent recall voided the defendant's device approval and precluded preemption. Harkening back to some of the things we discussed in our "Total Recall" post, the court held that, not only didn't the recall not preclude preemption ("this recall only further serves to prove that regulation of Class III medical devices such as the HTA is the exclusive province of he FDA, 2009 WL 3817586, at *12) - it also amounted to an inadmissible subsequent remedial measure:

[E]vidence of subsequent remedial measures is inadmissible to prove negligence, demonstrate culpable conduct in a breach of warranty claim, or establish product defect. . . . Thus, any evidence of the voluntary HTA recall is irrelevant to the facts of this case and inadmissible under Rule 407, especially in the face of complete preemption of the plaintiff's claims.

2009 WL 3817586, at *12.

Hughes is definately a precedent we're going to be scratching whenever we come up against FDCA-based negligence per se claims.

Doing Good By Doing Well

We just love to see our victories put to good use by other lawyers in later cases.

So we got a big kick out of Pustejovsky v. Wyeth, No. 4:07-CV-103-Y, 2009 U.S. Dist. LEXIS 101513 (N.D. Tex. Sept. 4, 2009).

We didn't get a big kick out of the facts, since we had nothing to do with them: Dr. Collini prescribed generic Reglan to treat Pustejovsky's acid reflux. After using the drug for three years, Pustejovsky developed the movement disorder "tardive dyskinesia." She filed a product liability complaint against assorted manufacturers of generic Reglan.

In earlier decisions, the trial court denied PLIVA's motion for summary judgment on the ground of preemption and granted Wyeth and Schwarz Pharma's motions because they hadn't manufactured the drug that Pustejovsky ingested. Id. at *3-4. In the new decision, PLIVA sought summary judgment based on the learned intermediary doctrine.

The treating physician, however, hadn't relied on anything PLIVA said in deciding to prescribe the drug. Dr. "Collini had not read the package insert . . . and, as a result, did not rely on the warnings included by PLIVA in deciding whether to prescribe" the drug. Id. at *9. "Instead, Collini relied on what she learned in medical school, continuing medical education, her own experience, and the experience of her colleagues in weighing the risks and benefits" of the drug. Id. "Because Collini was aware of the possible risk involved . . . but decided to prescribe it to Plaintiff anyway, the allegedly inadequate warning was not a producing cause of Plaintiff's injury." Id.

Fine, fine, fine.

But we weren't tickled until we read the last chunk of the decision.

Pustejovsky argued that, "based on testimony by other, non-treating doctors, Collini 'would likely have modified her practice as well.'" Id. at *10. The argument is that, even though this particular treating physician denied that the package insert affected her decision to prescribe, other physicians said that a different label changed their prescribing habits, and proof of what others did should suffice to avoid summary judgment.

That issue was front and center back when Herrmann briefed and argued, and Bexis supported with an amicus brief (are we an ugly tag team, or what?) the defense position in Ackermann v. Wyeth, 526 F.3d 203 (5th Cir. 2008). There, the Fifth Circuit went our way, holding that (at least under Texas law) the issue is the subjective conduct of the actual treating physician, not an objective standard of how a supposedly "reasonable" physician would have acted. (That argument is at pages 32 to 36 of Wyeth's opening brief in Ackermann; the brief is available on Westlaw at 2007 WL 5746840.)

In Pustejovsky, the Northern District of Texas naturally followed the Fifth Circuit's lead. The court held that evidence of what non-treating physicians would have done was "too speculative to rebut Collini's unequivocal statements that she did not rely on or even read PLIVA's warning in prescribing" the drug. Pustejovsky, 2009 U.S. Dist. LEXIS, at *10. Additionally, Pustejovsky "must rebut PLIVA's evidence showing that an allegedly proper warning would not have changed the decision of Collini, the treating physician." Id., citing Ackermann (bold in original).

That's proof that defending pharmaceutical product liability cases is a team effort. You scratch our precedent; we'll scratch yours. Keep up the good work.

Rimbert - No Do-Overs

We've discussed the New Mexico case of Rimbert v. Eli Lilly before twice: once concerning the learned intermediary rule, and a second time when the plaintiff's only expert got Daubertized.

Well, the third time's the charm. Rimbert has finally been dismissed. See the order here. Summary judgment was not really surprising after the plaintiff's only expert is excluded. What was is how hard the plaintiff still fought dismissal even after losing her expert.

Plaintiff's latest claim was that she should get a do-over; that is after, standing and falling with one expert, plaintiff should be allowed to take the case back to square zero with a replacement expert. But the plaintiff made it easy for the court to deny the motion. She hid the ball until the end - not even identifying who the "new" expert might be. Slip op. at 6. That, and the fact that the plaintiff had already played out the string until the end with her prior, excluded expert, led to denial of the motion to substitute a new expert. Slip op. at 7-8.

Moral of story: You can't go to the bullpen after the game is over.

Congratulations to Andy See at Shook Hardy for winning the case (and for passing along the news to us). Not asleep at the wheel, that one.

Already Out of Date....

That's us.

At least, that's what blog reader Geoff Klingsporn over at Davis, Graham just told us about our new Conte/generic drug non-liability scorecard. We're not offended, because the reason for our falling short is the best, a new decision - from West Virginia this time - throwing out yet another attempt by a plaintiff to hold a branded drug manufacturer liable for a supposed labeling defect in a generic drug it never made. The new case is Meade v. Parsley, C.A. No. 2:09 -cv-00388, slip op. (S.D.W. Va. Nov. 13, 2009). The best part of Meade? It's explicit rejection of Conte, of course:

So far, Conte, which recognized but declined to follow Foster, is the only decision in several like actions that has allowed the plaintiff to proceed against [a brand-name defendant] when only the generic version of the drug was ingested. . . . Inasmuch as the remaining claims against [the brand-name defendants] require a duty of care to the plaintiffs or proximate cause, summary judgment is proper as to [them].

Slip. op. at 9 (discussion of Foster omitted).

Keep it up guys. We hope Conte gains even less traction than New Jersey's oft-rejected DTC exception to the learned intermediary rule.

Another Trip Through Scholarship

The law reviews just keep on coming.

And one in a thousand articles keeps begging to be read.

We liked Nicholas Pace and William Rubenstein's RAND Working Paper titled, "How Transparent are Class Action Outcomes?: Empirical Research on the Availability of Class Action Claims Data" (on SSRN here). Their thesis is not exactly a news flash: It's very difficult to track what happens in a class action claims process, such as how many class members actually receive payment and, if so, how much. But it's nice that someone looked at this empirically, even if it's only a small sample. In the words of one (of the three) paragraphs of the abstract:

"This paper examines the extent to which claiming data are available and recommends ways to increase transparency in this area. We reviewed the official court files in a sample of 31 class action settlements and we also made direct inquiries to the judges, lawyers, and settlement administrators in another set of 57 cases. Searching through the case files and communicating with the participants, we were able to gain access to data in fewer than one of five closed cases. Despite the significant time and effort we put into the task, the final outcomes of four of five class action cases were beyond our discovery. It is not that the data are non-existent - claims administrators or parties certainly have them - it is, rather, that they are secreted away. The outcomes of publicly approved settlements lie locked in private files."

Pace and Rubenstein were nice for empirics; Jeffrey O'Connell and Patricia Born are nice for thought-provoking. Their article, recently posted to SSRN here, is titled, "The Similar Cost and Other Advantages of an Early Offers Reform for Products Liability Claims for Personal Injury Compared to General Liability Claims Therefor." (Actually, it's nice for thought-provoking, but crappy for "title." We proofread that title a few times to be sure that we'd typed it correctly there.) Anyway, these guys think this system would be a good idea:

"[A] defendant facing a personal injury claim is given the option within 180 days after a claim is filed of offering to guarantee periodic payments for a claimant’s medical expenses and wage loss beyond any other applicable coverage, plus 10 percent for attorneys’ fees. There would be no compensation for pain and suffering. The claimant in return agrees to foreclose further pursuit of a normal tort claim for both economic and non-economic losses.

"Offers could be turned down by claimants, but only in cases where the defendant’s injurious acts were the result of gross misconduct provable beyond a reasonable doubt."

The authors think that such an "early offers plan would reduce the time it takes to pay losses by at least two years, and also greatly reduce the costs of such claims."

Finally, for folks litigating in New York state courts, Patrick Connors has posted at SSRN "Which Party Pays the Costs of Document Disclosure?" Connors wants to maintain flexibility in deciding who will pay the cost incurred in producing electronic discovery. In the words of the second paragraph of the abstract:

"In Lipco Elec. Corp. v. ASG Consulting Corp, the New York Supreme Court concluded that 'the party seeking discovery should incur the costs incurred in the production of discovery material.' However, this rule limits the inherent flexibility of Article 31, and is neither supported by the text of the CPLR, nor by the case law cited in the opinion. This article respectfully submits that the disclosure process will function more efficiently and fairly without a general rule requiring the party seeking 'documents or any things' to bear the costs of production. Parties should be encouraged to discuss disclosure costs as early as possible, and request a protective order from the court if necessary."

That's this week's trek into academia. Now it's back to the real world for a while.

Scorecard: Non-Manufacturer, Name-Brand Defendants In Generic Drug Cases

Regular blog readers know how we feel about Conte v. Wyeth, Inc., 85 Cal. Rptr.3d 299 (Cal. App. 2008), review denied (Cal. Jan. 21, 2009) – the case that held a brand-name drug manufacturer potentially liable for “misrepresentations” even though it did not manufacture the drug that allegedly harmed the plaintiff. We criticized virtually every aspect of Conte here, here, here, and here. We gave Conte our nod as the worst judicial decision of 2008 in our field. Bexis wrote an amicus brief in support of the ultimately unsuccessful effort to get the California Supreme Court to review the Conte decision. In short, we thought Conte was bad news all around.


Last week we put up a guest post with some good news about Conte – in the year since it had been decided, no other court had found its reasoning to be persuasive. Our guest posters observed:

For those keeping score, this makes 31 courts in 19 states that have refused to impose liability on a brand name drug manufacturer for injuries caused by its competitors’ generic drugs.

We took that as a very subtle rebuke. It had to be subtle – it’s our blog, after all.


But they have a point. After all, isn’t keeping score one of the things we do? We maintain current scorecards on drug/vaccine preemption, medical device preemption, cross-jurisdictional class-action tolling (if you don't know, don't ask), and no present injury plaintiffs.


Well guys, it worked – you got us off our duffs. We haven’t put together a scorecard on a new topic in over a year, so that sounded like a good idea. What follows is a chronological list of every judicial decision we know of that addresses the issue of whether a name brand (also known as “pioneer” or “listed”) drug manufacturer can be liable in a suit where the plaintiff only took a generic version of that drug, which was manufactured and marketed by somebody else.

• Foster v. American Home Products Corp., 29 F.3d 165, 168, 171 (4th Cir. July 14, 1994) (applying Maryland law). Promethazine (Phenergan) case. Name brand manufacturer not liable under negligent misrepresentation theory.


• Flynn v. American Home Products Corp., 627 N.W.2d 342, 350-52 (Minn. App. May 15, 2001). Fenfluramine (Pondimin) case. Name brand manufacturer not liable under fraudulent misrepresentation, negligent misrepresentation, or consumer fraud theories.


• Beutella v. A.H. Robins Co., 2001 WL 35669202, at *2 (Utah Dist. Dec. 10, 2001). Metoclopramide (Reglan) case. Name brand manufacturer not liable under any (unspecified) theory.


• DaCosta v. Novartis AG, 2002 WL 31957424, at *8-9 (D. Or. March 1, 2002). Ergot alkaloid (Migranal) case. Name brand manufacturer not liable under strict liability, or fraud theories.


• Block v. Wyeth, Inc., 2003 WL 203067, at *2 (N.D. Tex. Jan. 28, 2003). Metoclopramide (Reglan) case. Name brand manufacturer not liable under negligence, negligent misrepresentation, fraud, conspiracy, or malice theories.


• Sloan v. Wyeth, 2004 Extra Lexis 202, at *3-12 (N.J. Super L.D. Oct. 13, 2004). Metoclopramide (Reglan) case. Name brand manufacturer not liable under fraud, negligent misrepresentation, fraudulent concealment, or consumer fraud theories.


• Sheeks v. American Home Products Corp., 2004 WL 4056060, at *1-2 (Colo. Dist. Oct. 15, 2004). Metoclopramide (Reglan) case. Name brand manufacturer not liable under negligent misrepresentation or statutory products liability theories.


• Reynolds v. Anton, 2004 WL 5000272, at *?? [towards end of opinion] (Ga. Super. Oct. 28, 2004) (Westlaw doesn’t provide jump cites to state trial orders anymore, which ticks us off). Methylphenidate (Ritalin) case. Name brand manufacturer not liable under overpromotion or any other theory for failure of proximate causation.


• Kelly v. Wyeth-Ayerst Laboratories Co., 2005 WL 4056740, at *2-5 (Mass. Super. May 6, 2005). Metoclopramide (Reglan) case. Name brand manufacturer not liable under products liability, negligence, Restatement (Second) of Torts §323 (1965), negligent misrepresentation, breach of warranty, or consumer fraud.


• Tarver v. Wyeth, Inc., 2005 WL 4052382, at *2 (Mag. W.D. La. June 7, 2005), adopted, 2006 WL 1517546, at *2-3 (W.D. La. Jan. 26, 2006) Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability or negligent misrepresentation theories.


• Sharp v. Leichus, 2006 WL 515532, at *2-6 (Fla. Cir. Feb. 17, 2006), aff’d per curiam, 952 So.2d 555 (Fla. App. Jan 22, 2007). Metoclopramide (Reglan) case. Name brand manufacturer not liable under fraud, negligent misrepresentation, fraudulent concealment, or market share theories.


• Possa v. Eli Lilly & Co., No. 05-1307-JJB-SCR, slip op. at 2-3 (M.D. La. May 10, 2006). Fluoxetine (Prozac) case. Name brand manufacturer not liable under statutory product liability theory.


• Colacicco v. Apotex, Inc., 432 F. Supp.2d 514, 539-43 (E.D. Pa. May 25, 2006), aff’d on other grounds, 521 F.3d 253 (3d Cir. 2008), vacated on other grounds, 129 S. Ct. 1578 (2009). Paroxetine (Paxil) case. Name brand manufacturer not liable under all (negligence, negligence per se, negligent misrepresentation, fraud, consumer fraud, infliction of emotional distress, or implied warranty) theories for lack of duty or causation.


• Goldych v. Eli Lilly & Co., 66 Fed. R. Serv.3d 799, 2006 WL 2038436, at *3-8 (N.D.N.Y. July 19, 2006). Fluoxetine (Prozac) case. Name brand manufacturer not liable under negligence, negligent misrepresentation, fraud, fraudulent concealment, or consumer fraud theories.


• LeBlanc v. Wyeth, Inc., 2006 WL 2883030, at *5-6 (W.D. La. Oct. 5, 2006). Amiodarone (Cordarone) case. Name brand manufacturer not liable under statutory product liability theory.


• Adamson v. Ortho-McNeil Pharmaceutical, Inc., 463 F. Supp.2d 496, 505 (D.N.J. Nov. 16, 2006), reconsideration denied, 2007 WL 604790 (D.N.J. Feb. 20, 2007). TriNessa (Tri-Cyclen) non-personal injury case. Name brand manufacturer not liable under consumer fraud theory for not advertising that generic drug was available more cheaply.


• Barnhill v. Teva Pharmaceuticals USA, Inc., 2007 WL 5787186, at *2-3 (S.D. Ala. April 24, 2007). Cephalexin (Keflex) case. Name brand manufacturer not liable under Restatement (Second) of Torts §402B (1965), strict liability, negligence, failure to test, failure to train physicians, express warranty, or implied warranty theories.


• Green v. Wyeth Pharmaceuticals, Inc., 2007 WL 6428717, at *1 (Ala. Cir. May 14, 2007). Metoclopramide (Reglan) case. Name brand manufacturer not liable under any (unspecified) theory.


• Clark v. Pfizer, Inc., 2008 Phila. Ct. Com. Pl. Lexis 74, at *20-32 (Pa. C.P. March 14, 2008). Gabapentin (Neurontin) non-personal injury case. Name brand manufacturer not liable under warranty theory. Name brand manufacturer could be liable under negligent misrepresentation or intentional misrepresentation theories for sums paid to generic manufacturers for off-label uses.


• Swicegood v. Pliva, Inc., 543 F. Supp.2d 1351, 1354-59 (N.D. Ga. April 2, 2008). Metoclopramide (Reglan) case. Name brand manufacturer not liable under strict liability, negligence, fraudulent misrepresentation, negligent misrepresentation, Restatement (Second) of Torts §324A (1965), concealment, or implied warranty theories.


• Pustejovsky v. Wyeth, Inc., 2008 WL 1314902, at *2 (N.D. Tex. April 3, 2008). Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability, negligence, fraud, or misrepresentation theories.


• Stanley v. Wyeth, Inc., 991 So.2d 31, 33-35 (La. App. May 2, 2008). Amiodarone (Cordarone) case. Name brand manufacturer not liable under statutory product liability or negligent misrepresentation theories.


• Wilson v. Wyeth, Inc., 2008 WL 2677049, at *3-4 (W.D. Ky. June 30, 2008). Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability or negligent misrepresentation theories.


• Morris v. Wyeth, Inc., 2008 WL 2677048, at *3-4 (W.D. Ky. June 30, 2008). Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability or negligent misrepresentation theories.


• Smith v. Wyeth, Inc., 2008 WL 2677051, at *3-4 (W.D. Ky. June 30, 2008). Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability or negligent misrepresentation theories.


• Westerlund v. Wyeth, Inc., 2008 WL 5592753, at *?? (N.J. Super. Law Div. Oct. 20, 2008). Amiodarone (Cordarone) case. Name brand manufacturer not liable under statutory product liability or any other theory.


• Mensing v. Wyeth, Inc., 2008 WL 4724286, at *5 (D. Minn. Oct. 27, 2008). Metoclopramide (Reglan) case. Name brand manufacturer not liable under negligent misrepresentation, misrepresentation by omission, fraudulent concealment, or constructive fraud theories.


• Conte v. Wyeth, Inc., 85 Cal. Rptr.3d 299, 309-311 (Cal. App. Nov. 7, 2008), review denied (Cal. Jan. 21, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under strict liability theory. Name brand manufacturer may be liable under negligent misrepresentation or fraudulent misrepresentation theories.


• Huck v. Trimark Physicians Group, 2009 WL 3760458, slip op. at 1-2 (Iowa Dist. Feb. 27, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under any (unspecified) theories.


• Cousins v. Wyeth Pharmaceutical, Inc., 2009 WL 648703, at *2 (N.D. Tex. March 10, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under any (unspecified) theories for lack of duty.


• Schrock v. Wyeth, Inc., 601 F. Supp.2d 1262, 1266- (W.D. Okla. March 11, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under any (unspecified) theory for failure of causation.


• Moretti v. Wyeth, Inc., 2009 WL 749532, at *3-4 (D. Nev. March 20, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under Restatement (Second) of Torts §§310, 311, 323 (1965), misrepresentation by omission, constructive fraud, negligent misrepresentation, or fraudulent concealment theories. Conte rejected as contrary to law and policy.


• Fields v. Wyeth, Inc., 613 F. Supp.2d 1056, 1060-61 (W.D. Ark. May 11, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability, strict liability, negligence, fraudulent misrepresentation, negligent misrepresentation, fraudulent concealment, or implied warranty theories.


• Stoddard v. Wyeth, Inc., 630 F. Supp.2d 631, 633-34 (E.D.N.C. June 24, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under express warranty, implied warranty, negligence, negligent omission, negligent misrepresentation, negligent undertaking, fraud, intentional infliction of emotional distress, negligent infliction of emotional distress, or consumer fraud theories.
  
• Bartlett v. Mutual Pharmaceutical Co., ___ F. Supp.2d ___, 2009 WL 3126305, at *25 n.40 (D.N.H. Sept. 30, 2009). Sulindac case. Dictum recognizing "widespread rejection" of theories of "innovator liability."


• Burke v. Wyeth, Inc., 2009 WL 3698480, at *2-3 (S.D. Tex. Oct. 29, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under statutory product liability, negligence, strict liability, implied warranty, misrepresentation, fraudulent concealment, consumer fraud, or gross negligence. Conte rejected as anomalous and contrary to law.
• Meade v. Parsley, 2009 WL 3806716, slip op. (S.D.W. Va. Nov. 13, 2009). Metoclopramide (Reglan) case. Name brand manufacturer not liable under unspecified "many theories of liability." Conte is considered and rejected.

Actimmune Suit Gutted

We confess, we saw it first on 360 - but we had to put our two cents in. The plaintiffs' inability to plead fraud with particularity has just gutted a high profile Actimmune suit. (360 calls it an "MDL" but our commenters say it's not, and since the opinion itself doesn't mention anything about an MDL, we won't either; we've revised this post accordingly.)

As regular readers might remember, the Actimmune case involves allegations of off label promotion notable in that the FDA brought criminal charges against the company's CEO. He was convicted of fraud but acquitted of misbranding charges based on the off-label promotion allegations. Judge Patel dismissed the Actimmune plaintiffs' first attempt at a complaint in In re Actimmune Marketing Litigation, 614 F. Supp.2d 1037 (N.D. Cal. 2009). As we discussed here, plaintiffs failed to plead a variety of RICO elements with sufficient plausibility under Twombly/Iqbal.

Well, the Actimmune plaintiffs (your usual purely economic loss class action - no allegation that the drug (or the promotion) actually injured anybody) ditched RICO altogether and brought essentially the same claim under various consumer fraud statutes, most importantly California's.

Last week, they lost again - mostly. See Actimmune Marketing Litigation, No. 3:08-cv-02376-MHP, slip op. (N.D. Cal. Nov. 6, 2009). We'll get to the substance in a minute, but first we have to comment that the opinion contains one of the more humorous typos that we've encountered lately - at least we assume it's a typo. Discussing the defendant's press release, the opinion states:

For example, on August 28, 2002, the day that the October 2000 study’s results were released, [the defendant] distributed a press release proclaiming that the study showed that [the drug] “reduces morality by 70% in Patients with Mild to Moderate [IPF]” and that “[the drug] is the only available treatment demonstrated to have clinical benefit in IPF....

Slip op. at 5 (emphasis added). We assume that the word should be "mortality" - otherwise the defendant must have been running some very interesting clinical trials.

Okay, enough fun - back to work.

By far the most important ruling in the opinion is how the California consumer fraud statute interacts with federal pleading - specifically Rule 9(b), requiring that fraud be pleaded with particularity. Plaintiffs argued that a recent California Supreme Court decision, In re Tobacco II Cases, 46 Cal. 4th 298 (2009), had gutted a 2004 voter initiative and let consumer fraud plaintiffs sue in certain circumstances even if they couldn't identify the offending statement that they supposedly relied upon. As stated in the Actimmune slip opinion:

Further, under the UCL, plaintiffs do “not need to demonstrate individualized reliance on specific misrepresentations to satisfy the reliance requirement.” Tobacco II, 46 Cal. 4th at 327 (emphasis added). . . . In sum, “a plaintiff must plead and prove actual reliance to satisfy the standing requirement of section 17204 but . . . is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where . . . those misrepresentations and false statements were part of an extensive and long-term advertising campaign.” Id.

Slip op. at 13. Plaintiffs therefore argued that they could get away without pleading anything about who relied on what.

Judge Patel essentially said, "sorry, but you're in federal court, and you still have to plead fraud with regularity under this court's rules":

Although Tobacco II altered the pleading requirements for a UCL plaintiff seeking to represent a class of similarly situated individuals, it did not relieve class representatives from the burden of satisfying Rule 9(b) when their allegations sound in fraud. As is discussed at length below, plaintiffs’ claims under the fraudulent prong of the UCL — which are predicated entirely on misstatements made by defendants — unmistakably sound in fraud and thus must be pled with specificity.

Slip op. at 13 (emphasis added). That's the main take away from this latest Actimmune opinion - regardless of Tobacco II, in federal court plaintiffs still have to plead fraud with particularity in cases brought under the California consumer fraud statute - at least where the plaintiff is alleging some sort of misstatement.

Because the plaintiffs hadn't plead their consumer fraud claims under Rule 9(b) with any more particularity than the RICO claims the court had previously found "implausible" under Twombly/Iqbal, those claims got bounced. Slip op. at 16-24. There's a lot of case-specific discussion which we'll leave to our readers. Suffice it to say that plaintiffs' inability to plead fraud with specificity under Rule 9(b) infected all of their claims (consumer fraud (all three statutory prongs), statutory false advertising, Legal Remedies Act, and unjust enrichment) under California law.

We do note Judge Patel's favorable disposition of our pet peeve, the fact-free FDCA violation claim - "[plaintiffs] must at a minimum, however, identify the statutory or regulatory provisions that defendants allegedly violated." Slip op. at 23.

Plaintiffs also sought to claim under the consumer fraud statutes of 39 other states. Slip op. at 25. They did not have an in-state representative for 34 of those states, resulting in dismissal. Id. There's no extended explanation; we presume that territoriality is the bedrock reason - that you can't sue under a state consumer protection statute without being a resident, or at least alleging a transaction in the state.

For two other states, the plaintiffs alleged an in-state plaintiff - but hadn't bothered to plead the elements of any claim under the the state statute. Slip op. at 26. Seems a little strange, but that's what apparently happened.

Of the three remaining states, two (Ohio and Georgia) required reliance. Thus the plaintiff's Rule 9(b) problems sank those claims as well. Id. Finally, the court turned to Missouri law and concluded that "Missouri courts have interpreted the [statute]in the broadest conceivable manner, absolving plaintiffs of any showing of reliance." Id. The court thought that plaintiffs might have pleaded enough if they didn't have to plead reliance at all, but wasn't sure because Missouri law hadn't been briefed, so it asked for additional briefs, specifically on whether one of the plaintiffs had a claim under that one state's law. Slip op. at 27.

The court also indicated that, if a Missouri law claim were all that's left, it would transfer that claim to a federal court in Missouri. Id.

All the fraud-based consumer fraud claims, and those for the unrepresented states, were dismissed with prejudice - no third bite at the apple on properly pleading fraud. Plaintiffs were given one more try at a couple of California consumer fraud theories that didn't have to involve fraud, but were warned not to come back with the same old misrepresentation claims that they had twice failed to plead. Slip op. at 28.

There might not be much left of this case.

More MDL Panel Empirics

We're delighted when our blog gives people food for thought.

So we were tickled pink when Daniel A. Richards, a student at Fordham University School of Law, told us that one of our blog posts had given him a topic for his law review note. And Daniel was kind enough to send us a link to his just-published note, "An Analysis of the Judicial Panel on Multidistrict Litigation's Selection of Transferee District and Judge." (As we reported a couple of months ago, two distinguished scholars examined this question in their recent paper, "Between Cases And Classes: The Decision To Consolidate Multidistrict Litigation" (SSRN link here). In that empirical analysis, three factors stood out as statistically significant in the Panel's selection of transferee courts: (1) districts containing a tag-along (later-filed) case, (2) districts supported by the defendants, and (3) districts represented by a judge serving on the Panel. As for the selection of transferee judge, the factors cited by the Panel most frequently were "experience with similar or complex cases" and "appropriate workload." The judges chosen to serve the transferee role were fairly experienced, with a mean of 13 years serving as a judge. And service as the chief judge of the transferee district (at some point during the judge's career) increased the likelihood that the Panel would pick that judge.)

Richards' note addresses the same subjects, but not as empirically. Rather, he read (God love him) every MDL transfer order entered between 2003 and 2008. He then identified the factors that the Panel cited most frequently in those decisions to justify its selection of transferee court and judge.

And the conclusion is . . .

"In general, when the JPML is explaining its reasoning for selecting a transferee district and judge, it most frequently cites the docket conditions of a transferee district or judge, the preference of the parties, the concentration of constituent actions, and the location of an important party in the litigation." 78 Fordham L. Rev. at 343.

Richards also breaks down the data by the nature of the MDL proceedings -- antitrust, product liability, securities, etc. He then identifies factors that seem to be more important in one category of case than another. For example, "[a]lthough the general experience of the transferee judge is likely an important factor in products liability MDLs, it is less so in securities MDLs. Also, geographic centrality is an important factor in products liability MDLs and is less important in antitrust MDLs." Id. at 345.

Sadly, all of this work doesn't lead to very concrete conclusions. It's still awfully hard to guess how the MDL Panel will apply in any one case the many variables that go into its selection of transferee court and judge, and it remains terribly difficult to advise clients on this subject.

But we're delighted to see that a law student has joined the ranks of those wrestling with these issues, and perhaps we'll see more work in this field in the future.