Monday, July 28, 2014

Privacy of Medical Information: Still No Harm, Still No Foul

We expanded our practice into data privacy and security out of practical necessity.  Expectations surrounding privacy of personal information are evolving, and the laws that regulate data privacy change every day, generally to expand protection for private information.  Another thing that has changed is that we used to say that drug companies and medical device manufacturers are typically not HIPAA-covered entities.  While this still may be generally true, we have come to find that many drug and medical device companies, if not HIPAA-covered entities themselves, have subsidiaries that are.  Regardless, whether HIPAA covered or not, drug and medical device manufacturers increasingly have possession of private personal health information for the patients who are treated with their products. 
Our collective interest in data privacy led us to give you our gloss on Regents of the University of California v. Superior Court, 220 Cal. App. 4th 549 (2013), which involved claims under California’s Confidentiality of Medical Information Act.  Unlike HIPAA, the CMIA permits a private right of action and allows for the recovery of substantial statutory damages.  The case involved the theft of a hard drive containing medical records, and the California Court of Appeal held that a plaintiff cannot sue where private information was lost, but there is no evidence (or even an allegation) that anyone ever viewed it.  The vast majority of data privacy cases, all of them class actions, do not and cannot allege any actual harm to the plaintiffs.  The Regents case was no exception, and the California court came absolutely to the correct conclusion:  No harm, no foul. 
The Court of Appeal has now followed that opinion with another that got it right, but for slightly different reasons that should help put an end to this kind of wasteful litigation.  In Sutter Health v. Superior Court, No. C072591, 2014 WL 3589699 (Cal. Ct. App. July 21, 2014), a thief again stole computer media that contained medical records.  As in Regents, no one knows what happened to the information:  For all anyone knows, the thief took the stolen computer apart, wiped it clean, and sold it in pieces.  Maybe he is using the hard drive as a door stop.  Nobody knows, and the plaintiffs could not and did not allege that anyone ever viewed their medical information. 
The earlier Regents opinion had reasoned that because no one ever viewed the medical information, no “release” of confidential information had occurred, as required to state a CMIA claim.  A conclusion with which we wholeheartedly agree.  The Court of Appeal in Sutter Health went one step further and held that there was no alleged “breach” of confidential information in the first place.  Sure, confidential information changed hands.  But the harm against which the statute protects is the breach of confidentiality.  A mere change of possession does not amount to a breach and thus does not invoke the statute’s remedies.  As the court observed,

No breach of confidentiality takes place until an unauthorized person views the medical information.  It is the medical information, not the physical record (whether in electronic, paper, or other form), that is the focus of the Confidentiality Act.  While there is certainly a connection between the information and its physical form, possession of the physical form without actually viewing the information does not offend the basic public policy advanced by the Confidentiality Act. . . .  This change of possession increased the risk of a confidentiality breach.  But the Confidentiality Act does not provide for liability for increasing the risk of a confidentiality breach.
Sutter, at *6.  We like this statement because it makes so much sense.  It is also the counter statement to the absurdity that otherwise would prevail:  If the mere change of possession, and nothing more, were sufficient to state a claim, plaintiffs could force expensive litigation and potentially recover statutory damages when nothing actually happened to them.  As the court said, “We cannot interpret a statute to require such an unintended result.”  Id at *7. 

Unintended?  We suppose we agree with that, but other words come to mind.  Such as unfair.  Or unjust.  Or “you gotta be kidding me.”  Choose your own term, and bear in mind that data privacy issues will not go away anytime soon.  The CMIA is not the cash cow that the plaintiffs' bar thought it might be, but they will keep trying to find something else. 

Friday, July 25, 2014

Guest Post - Another Third Party Payor Case Is Shown The Door

Today we have this guest post from Reed Smith's Andrew Stillufsen about a recent defense win in a third party payer (or is it"payor"?) case here in the Eastern District of Pennsyvania.  We hope you find it as interesting as we did.  As usual all credit and/or blame belong to the guest poster.


Travelers Indemnity Co. v. Cephalon, Inc., is a third party payor case where plaintiffs – workers compensation insurers – claimed that they were injured by paying for prescriptions for defendant drug company’s  pain medications which were written as a result of its alleged off-label marketing of the drug.  2014 U.S. Dist. Lexis 95075 (E.D. Pa. July 14, 2014).  SPOILER ALERT:  as with similar cases, even after extensive discovery and an amended complaint, plaintiffs still failed to allege facts sufficient to establish standing or to support any of their fraud claims.  Motion to dismiss granted.

Before the court could address plaintiffs’ substantive claims, it first had to determine whether the allegations were sufficient to establish standing.    To establish standing, the plaintiff must show that they suffered a cognizable injury. Id. at *16-18.   “The contours of the injury-in-fact requirement, while not precisely defined, are very generous, requiring only that the claimant allege some specific, identifiable trifle of injury.”  Id. at *17.  (citations and internal quotations omitted).  Under the now-familiar TwIqbal analysis, plaintiffs failed to allege sufficient facts to show even a mere “trifle.” 

In this case, plaintiffs essentially alleged two theories of injury.  First, they claimed they were injured because “they did not get what they paid for,” as plaintiffs paid for drugs that were not safe or effective due to defendant’s alleged fraudulent off-label marketing.  Second, but for the alleged off-label marketing, plaintiffs  claimed they were injured when they paid for more expensive drugs when less-expensive drugs were available.  Id. at *18-19.

To support their first theory, plaintiffs pointed to the labeling and FDA-mandated “dear-doctor” letters stating the drugs were contraindicated for certain users.  In addition, plaintiffs claimed that the medications had never been proven safe and effective for any use other than the approved indication.  However, the court warned that “the liberal use of conclusory adjectives such as ‘ineffective’ will not establish standing without factual allegations to show that the plaintiffs themselves were injured by paying for the drugs.”  Id. at *19.  Major point one:  Furthermore, “[t]he absence of data or evidence affirmatively proving that a drug is safe and effective in treating a particular condition, without more, does not support the conclusion that the drug is actually ineffective or unsafe for the use.”  Id. at *21.  (citation omitted).  In addition, the court noted that “[t]he fact that a drug poses even a significant possibility of harm does not, by itself, establish injury-in-fact to the party paying for the drug.”  Id. at 24 (emphasis added).  As Carl Sagan would say, “absence of evidence is not evidence of absence.”

Looking at these allegations through the TwIqbal lens,  the court held that plaintiffs did not plead sufficient facts “to show that they paid for an ineffective drug, or that the drug’s safety risks resulted in some expenditure by the plaintiffs themselves.”  Id. at *24-25.  Therefore  plaintiffs’ first theory – that they did not get what they paid for – failed.

Plaintiffs’ second theory - that they paid for more expensive drugs when less expensive ones were available - suffered the same result.  Major point two:  The court lucidly noted that “[a] plaintiff is not injured simply because it paid for a more expensive drug. If this were so, then any successful marketing campaign  - no matter how truthful – that induced a consumer to purchase the more expensive of competing products would cause economic injury.”  Id. at *25 (quotations omitted).  Plaintiffs “must also plead facts to show that the drug was prescribed or purchased in reliance on untrue statements or misrepresentations about the drug’s attributes.”  Id. at *28. 

Once again, plaintiffs could not meet their burden.  Somewhat nonsensically, plaintiffs pointed to defendant’s price reductions, made to compete with generic competitor and to maintain market share, as evidence.  The court was not impressed.  It held that plaintiffs not only failed to “name any equally effective, safer, less expensive drug that doctors might have prescribed,” but they also did not “identif[y] any demonstrably false statement or material omission by the defendants about the safety or efficacy” of the medications.  Id at *28-29.  Therefore, no cognizable injury, no standing, motion granted, complaint dismissed. 

In some helpful dicta, the court also booted plaintiffs’ substantive claims.  Since the amended complaint contained numerous allegations that the alleged off-label marketing campaign was intentionally deceptive, plaintiffs’ intentional and negligent misrepresentation claims “sounded in fraud.”  Therefore, these claims were subject to Rule 9(b)’s “heightened pleading requirements.”  Id. at 32. 

On this count, plaintiffs again failed to meet their burden, as they “fail[ed] to identify a single false statement, misrepresentation or deliberate material omission” by defendants.  Id. at 34.  Major point three:  Plaintiffs’ argument that off-label promotion “is ipso facto fraudulent” was simply incorrect, as “[c]ourts have consistently held that off-label promotion is not inherently deceptive, and does not support a private action for fraud or negligent misrepresentation unless the promotion includes an untruthful or misleading statement about the safety or efficacy of the drug itself.”  Id. (emphasis added). 

A similar fate befell plaintiffs’ state unfair competition laws.  “State consumer protection statutes do require that a plaintiff have suffered an ascertainable loss or injury as a result of a defendant’s alleged wrongdoing.”  Id. at *44.  Since the court had already found that plaintiffs failed to allege sufficient facts to show a cognizable injury, they couldn’t satisfy this requirement either.  Plaintiffs’ unjust enrichment claim was also dismissed, as plaintiffs failed to show a cognizable loss or that defendant engaged in  fraudulent behavior.  Id. at 48. 

In sum, this decision falls squarely in line with previous third party payor decisions.  While making splashy allegations about off-label promotion may look good on paper, courts will show  the door to these claims without particularized allegations about what the defendant did and how it hurt plaintiff. 

Thursday, July 24, 2014

Testing the Limits of Prescription Drug Preemption

Just how far can a state go in regulating prescription drugs?  The simple answer is that states can go nowhere and that FDA is king in this field under the FDCA and the Supremacy Clause.  But we all know that it is not that simple.  We are reminded every day when we come to work that states regulate prescription drugs by allowing state-law tort lawsuits, although federal preemption is a mighty shield where it applies.  We are also aware that states regulate the practice of medicine, as well as regulating the pharmacies that dispense prescription drugs on doctors’ orders. 
So before we blithely tell our various state regulators to stand down and keep their hands off, let’s take a more nuanced view, including revisiting what is going on in Massachusetts over the narcotic pain medication Zohydro.  As we have previously said, Zohydro ER is an extended release version of hydrocodone, but it is the only hydrocodone analgesic on the market whose sole active ingredient is hydrocodone.  Others contain acetaminophen, and removing that component mitigates the risk of liver damage for which acetaminophen is well known. 
After the FDA approved Zohydro in December 2013, the state of Massachusetts and others tried to prohibit its use because of concerns over abuse.  In Massachusetts, the state issued an emergency order banning the prescription, ordering, dispensing, and administration of Zohydro—essentially a state-law order taking an FDA-approved drug off the market.  On April 15, 2014, the District of Massachusetts enjoined the law as an obstacle to the purposes and objectives of Congress.  In other words, it was a textbook example of implied conflict preemption, and the only solution was for the state requirement to give way, which is what the district court held in granting a preliminary injunction.  Zogenix, Inc. v. Patrick, No. 14-11689-RWZ, 2014 WL 1454696 (D. Mass. Apr. 15, 2014).  Our post on that decision is here. 
To be honest, since a federal “yes” trumps a state “no,” we thought that would be the end of this particular controversy, if not the larger battle over prescription opioids generally.  But we were wrong.  One week after the district court’s order, Massachusetts replaced its blanket prohibition with a set of regulations that purport to limit, but not entirely prohibit the prescription and use of Zohydro.  See Zogenix, Inc. v. Patrick, 2014 U.S. Dist. LEXIS 92382, at **3-4 (D. Mass. July 8, 2014).  For prescribers, the regulations required individual assessment of each patient, including discussing risks and benefits and entering into “agreements” regarding the use, storage, and disposal of the drug.  Most significantly, the regulations required that each prescribing physician supply a “Letter of Medical Necessity” indicating compliance with the regulations and verifying “that other pain management treatments have failed.”  Id. at *4 (emphasis in original). 
For pharmacists, the regulations limited who could handle Zohydro and set a number of prerequisites for dispensing the drug, including storing it in a locked cabinet, dispensing it in child-proof containers, reviewing the “Letter of Medical Necessity,” providing warnings and counseling, and checking the patient’s history.  Id. at *5.  Considered all together, the state’s message was that, if it could not outright prohibit the prescription and use of Zohydro, it would instead make doctors and pharmacists jump through so many hoops before the product reached the hands of patients that it would be too much trouble to try. 
So now what do we do?  For the record, we still think that state regulations such as these are preempted by federal law, but we acknowledge that burdens like those imposed here – as opposed to all-out prohibitions – present a more difficult issue.  It’s at least the same sort of problem raised by recent state attempts to regulate into oblivion the off-label use of certain drugs used to terminate pregnancies.
The manufacturer moved again for a preliminary injunction, arguing with substantial justification that the regulations were a de facto ban on Zohydro.  And even if they were not, federal law still preempted the regulations because the FDA approved Zohydro for a specific use and purpose:  “management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.”  Id. at *10.  The state regulations set a different standard:  Instead of other options being merely “inadequate,” the state law requires that “other pain management treatments have failed.”  According to the manufacturer, the state’s new requirement was preempted because it undermined the FDA’s power to approve drugs for specific uses.  Id.
We think the manufacturer has a point, and so did the district court in holding that there is no “health” exception to federal preemption:

Sure enough, the Commonwealth’s police powers permit it to regulate the administration of drugs by health professionals . . . But it may not exercise those powers in a way that is inconsistent with federal law.  Preemption principles have no less heft because health is a matter of “special concern” to the states. . . .  To say as [the Commonwealth does], that they are exercising their constitutional authority does not answer the question.  I must do as Savage [v. Jones] instructs and assess whether the regulations prevent the accomplishment of the FDCA’s objective that safe and effective drugs be available to the public. 

Id. at *11.  As we said the last time we discussed this case, helpful preemption authority sometimes comes in unexpected places, and this quote is a good one that we will store away. 
On the merits of the dispute, the drug manufacturer got only half of what it wanted.  Federal law preempted the prescriber regulation because its mandate that physicians verify that “other pain treatments have failed” was too vague.  Exactly what “other pain treatments” must have failed?  Other opioids?  And how long ago must “other pain treatments” have failed?  Zohydro is a scheduled drug, subject to a thirty-day maximum prescription.  Does a doctor have to try “other pain treatments” every time he or she refills the prescription, or every second or third time? 
At bottom, the Massachusetts regulations could be interpreted (including by the state’s own expert) as making Zohydro a last-resort opioid, thus making it less available, or even “severely frustrat[ing] Zohydro’s availability.”  Id. at **13-14.  According to the district court, “That presents a constitutional problem.”  Id. at *13.  Physician regulations enjoined. 
The district court, however, denied the injunction of the pharmacy regulations because the manufacturer had not proved that the regulation would affect pharmacies’ willingness to carry the drug.  Perhaps most telling, the district court noted both that the Commonwealth could move to lift the injunction and that the manufacturer could renew its motion on the pharmacy regulations “upon a more detailed submission.”  Id. at *16.  So unlike last time, we are under no illusions that the final word has been said.  Will Massachusetts amend its regulations?  Will the manufacturer hire pharmacy experts make another run?  The answers are probably yes on both counts, and the resulting order will again help us understand just how far states can go in regulating prescription drugs.  We at the Drug and Device Law Blog hope that the district court treads lightly and pays all due deference to federal law. 

Wednesday, July 23, 2014

Court Dismisses Balderdash Solodyn Complaint


The genius who devised the theory of evolution.  The statesman who defended Western Civilization against the Nazis.  The man who freed a subcontinent via the majesty of nonviolent resistance.  The greatest basketball player of all time.  The composer of Shaft.  The Pope's favorite saint.  Our national emblem. 


What do these heroes have in common?


Today’s case is Dimieri v. Medicis Pharm. Corp., 2014 U.S. Dist. LEXIS 95409 (M.D. Fla. July 14, 2014).  Dimieri ingested Solodyn for the treatment of acne.  He discontinued use of Solodyn  after experiencing “numbing pain in the crown of his head” and noticing alleged hair loss.  He alleged that Solodyn was making him bald.  That, apparently, ranks as an injury.  He brought a complaint against the defendant for failure to warn, strict liability, breach of warranties, misrepresentation, negligence, and fraud. 


The defendant filed a motion to dismiss all the claims, arguing that they ran afoul of the learned intermediary doctrine, TwIqbal pleading standards, and the requirement that fraud claims be articulated with specificity.  The court agreed with the defendant, and dismissed the complaint, while affording the plaintiff with leave to try again and amend. 


The court rejected the failure to warn claim because, on the face of the complaint, there was no hint that the doctor – the learned intermediary – had been inadequately warned or that any additional warning would have made a difference.  The plaintiff did not allege the extent of his physician’s knowledge regarding the risk of consuming Solodyn.  The plaintiff did not assert whether his physician’s knowledge of Solodyn was inadequate, which is the relevant question.  The complaint contained the usual sloppy formulation about how the defendant failed to warn “Plaintiff and other people”, but the court rightly deemed that allegation to be too vague to imply that the physician had inadequate knowledge of the risks of Solodyn.  In any event, the complaint offered the court no reason to infer that any inadequacy of warnings to the plaintiff’s physician proximately caused the plaintiff’s injury. 


Maybe the plaintiff was trying to allege a design or manufacturing defect, but the plaintiff did not identify the source or nature of any such alleged defect.  The “Complaint fails to make a sufficient causal connection; Plaintiff does not state what possible defect in Solodyn might have caused the hair loss or deny the existence of other factors which might have caused his hair loss.”  Id. at *13.    


The warranty claims flunk Florida law, which requires that the parties be in privity. The plaintiff did not allege the existence of privity between himself and the defendant.  Nor did the plaintiff allege any sort of substantial contact with the defendant’s representative.  At most, the complaint said that “Defendant impliedly warranted that “SOLODYN’ was a safe and suitable medication to be used to help acne,” but such a boilerplate statement does not come close to showing the existence of a warranty or the presence of privity. 


The misrepresentation claims were also woefully vague and general.  They were bereft of any specific misrepresentation given to the plaintiff’s physician regarding Solodyn, or of any personal contact the plaintiff may have had with the alleged fraudulent advertising.  Consequently, such claim was barred by TwIqbal, lack of specificity, and the learned intermediary doctrine.  The plaintiff did allege that the bottle of Solodyn lacked a proper label and that “improper information” was provided to him, preparing the reader for something actual, and meaty and specific.  Maybe even something hair-raising.  But, alas, such expectations are dashed because there is no there there. The complaint furnishes no specificity as to the content of this information (or misinformation).  Again, the learned intermediary doctrine applies and the pleading falls far short of the specificity standard under Fed.R.Civ.P. 9(b) for fraud and misrepresentation. 


As is often the case, the negligence claim is a bit of a puzzler.  We often get the sense that it is designed by plaintiffs to be a forlorn catchall.  Dimieri based his claim for negligence on these two sentences:  “Plaintiff relied on the superior knowledge of the Defendants and their instructions for ‘SOLODYN’ and thus sustained damages as a result from the improper instructions furnished by Defendant,” and “[a]s a direct and proximate result of the negligent acts of the Defendant, Plaintiff has been awarded damages in the amount in excess of $20,000.00.”  The court declined to play catchall.  The claim was devoid of that first element of a negligence claim that we all learned in law school:  existence of a duty between the defendant and the plaintiff.  But even if the plaintiff had made the old school try at stating a duty, it would not have been recognized at law because of the learned intermediary doctrine. 


The court’s disposition of the Dimieri complaint was clean and efficient.  Perhaps there was no need to reach the most interesting question:  is baldness really an injury?  As alluded to above, some very successful, happy men achieved great things despite being follicularly challenged.  And we’ve barely begun the list of clean-headed heroes.  Our baldest presidents were also our greatest.  John Adams had a great wife, his son had the best post-presidential career (think Amistad), Eisenhower oversaw Operation Overlord, and Garfield had the most colorful assassin.  Lionel Messi won the award for most outstanding player in the recent World Cup, but to any impartial eyes the player who most consistently made positive differences for his team was Arjen Robben, who runs around the field like Robert Duvall doing a St. Vitus Dance.  Rock and roll artists define cool, and two of the coolest are Billy Corgan (lead dirge-singer of Smashing Pumpkins) and Ed Cassidy, drummer in the late, lamented LA band Spirit.  Cassidy was called Mr. Skin.  The skin he displayed was his scalp.  The only reason anyone ever watched the ABC courtroom drama Murder One was because the bald star (like everyone else, we forget his name) who oozed gravitas and menace.  When Senator Alan Cranston ran for president, there were some who predicted that his baldness would doom his candidacy.   Cranston turned the issue around, asserting that baldness proved his virility – he wasn’t wasting valuable hormones growing hair.  And we all know how well he did. Adlai Stephenson at least got nominated.  He lost to Eisenhower (see above), but his bald head was so full of wit and wisdom that he made the term "egghead" respectable. 


It’s not just men who made the most out of a glowing pate.  Sinead O’Connor rocked a dome, masterfully covered a Prince tune, and produced one of the two or three all-time weirdest moments on SNL.  The only reason to watch the first Star Trek movie was Persis Khambatta, an arresting presence in what was otherwise a turgid mess.    Demi Moore has shown off all sorts of crazy looks, including a head as bald as Bruce Willis’s. 


Where were we?


If nothing else, the Dimieri case shows a court that insists on factual pleading.  A plaintiff is not going to satisfy TwIqbal with bald assertions.


Tuesday, July 22, 2014

No Duty for Sales Representatives in the Operating Room

            If anyone is still shocked that medical device manufacturers’ sales representatives are present during surgery – don’t be.  It’s a common practice.  If you don’t believe us, see our posts here and here.  Surgeons believe manufacturers’ representatives have an important role to play in making sure the surgical instruments and the surgical team are fully prepared.  That means that reps are in the OR to stay. 

            With that comes the very real possibility of sales representatives being sued by plaintiffs who believe something went wrong during surgery or the possibility of manufacturers being sued for the alleged acts/omissions of their representatives during surgery.  Our earlier posts cover both situations and today we’ve stumbled upon another example of the latter -- McCartney v. U.S., No. 2:13-CV-1118 TS, slip op. (D. Utah Jul. 16, 2014).   Plaintiff underwent multiple surgeries involving implantation of defendant’s spinal cord stimulator.  One or more of defendant’s representatives was present during plaintiff’s surgeries.  McCartney, slip op. at 1-2.  During one of the procedures, one of these reps called the plaintiff’s wife to ask about the location of the plaintiff’s pain.  Plaintiff’s wife didn’t know which leg was afflicted.  Id. at 2.

            Plaintiff brought two negligence claims against the manufacturer based on its representatives being present during his surgery.  The first claim is premised on an alleged general duty of care owed by manufacturers to ensure that their devices are properly implanted.  Id. at 4.  In support, plaintiff alleged that the manufacturer’s representatives “instructed” his surgeon as to how to implant the stimulator (an act) and failed to ensure that the device was properly implanted (an omission).  Id. at 6.  The difference between an act and an omission was critical to the court’s decision on whether there was a duty.  “Acts of misfeasance typically carry a duty of care while nonfeasance generally implicates a duty only in cases of special legal relationships.”  Id.  

            In this case, however, neither portion of plaintiff’s claim survived.  While the complaint alleged that the defendant’s reps instructed the surgeon – it contained no facts to back that up.  So, on misfeasance, plaintiff’s claim didn’t meet the TwIgbal standards.  Id. at 7.  As to nonfeasance, the court concluded “that there is no special relationship between medical device manufacturers and patients such that medical device manufacturers owe a duty of care for their nonfeasance during a physician’s surgery.”  In other words, the mere presence of a sales rep in an operating or treatment room does not create a duty. 

            But what about something beyond simply being present?  That was plaintiff’s second cause of action – that defendant voluntarily undertook a duty to make sure the device was properly implanted when its sales rep called plaintiff’s wife during the surgery.   Plaintiff argued that by placing this call, the defendant (via its rep) “involved itself in medical-decision making in some affirmative way.”  Id. at 8.  Given that plaintiff’s wife’s response was “I don’t know” – we think common sense alone negates plaintiff’s argument.  Fortunately, the court also had a strong legal basis for rejecting the argument.  Relying on Restatement (Second) of Torts § 324A regarding a voluntary undertaking, the court found that plaintiff didn’t allege any facts that defendant acted unreasonably in its undertaking or that anyone relied on defendant’s undertaking.  What was there to rely on?  Without supported allegations that defendant’s representative supplied misinformation or that plaintiff’s surgeon relied on said misinformation, plaintiff hasn’t stated a claim for liability for a voluntary undertaking.  But the court did give plaintiff a little wiggle room here and dismissed the claim without prejudice in case evidence about reliance or misinformation is revealed during discovery. 

            While this case worked out okay for defendants, the role of manufacturer’s representatives in the operating room is anything but plain and simple.  Like we’ve seen with other cases, this is a very fact sensitive issue.  And the lines between duty and no duty; reasonable and unreasonable; breach and no breach are very blurry.  We know the answer is not removing the reps from all treatment situations, they provide a valuable service.  The only partial answer we do have is training, restraint and caution.  That doesn’t solve all of the problems, but it’s a start.    

The Next Best Thing to Removal

Okay, so you’d really like to remove that case that the other side filed in one of the notorious litigation tourist traps, but. . . .  The insignificant in-state – that is to say, nondiverse – defendant was held not to be fraudulently joined, so your case was remanded to state court.  What next?

Defense lawyers shouldn’t give up.  We’ve written before about Bauman and the new personal jurisdiction arguments it may provide.

But other, less novel approaches also exist.  How about forum non conveniens?

That’s the lesson of the recent California trial court decision in In re Accutane Drug Cases, 2014 WL 3579826, slip op. (Cal. Super. L.A. Co. July 21, 2014), obtained courtesy of Brian Ziska at Shook Hardy.

The defendant in Accutane was the same boat as a lot of defendants in California litigation.  Plaintiffs from all over the country, literally from New York to Washington state, joined a factually insignificant  in-state drug distributor (McKesson Corp.) for the purpose of defeating diversity jurisdiction, and for that reason alone.  We’ve blogged about this fact pattern before, and it’s undoubtedly duplicated in dozens of fraudulent joinder/remand cases from California.

Once back in state court, the defendant moved to have the case sliced up (severing the 7 non-resident plaintiffs that had been misjoined in one complaint) and shipped off to the states where these litigation tourists lived on grounds of forum non conveniens.  The court (Judge Freeman of the L.A. County complex litigation docket) agreed and sent the tourists home.

Suitable Alternative Forum – Basically, any state in the U.S. is a suitable alternative forum.  Slip op. at 3-5.  Beyond that, consenting to jurisdiction in the proper forum and making suitable statute of limitations arrangements take care of this factor.  Id. at 4-5.

Private Interest Factors – These litigation tourists don’t belong here.  Slip op. at 6.  They don’t live here; weren’t treated or prescribed the drug in question here.  Id.  The target defendant isn’t from here, either.  Id. at 6.  The only party with any connection to California is McKesson, and it has next to nothing to do with any issues in the case.  The drug wasn’t made or tested here.  Id.

That means that there are no California fact witnesses.  It also means there’s no easy way for a California state court to subpoena the fact witnesses.  Id. at 6-7.  Litigating these cases in the plaintiffs’ home states is cheaper and more efficient.  Id.

Public Interest Factors – California has more litigation tourists than probably any other state (although Illinois might beg to disagree).  Our courts and jurors are being overburdened by litigation of no concern to the community.  Slip op. at 7.  “[C]ompared to the Plaintiffs’ domiciles, California’s interest in hearing these particular Plaintiffs’ claims is small.”  Id.

Other Considerations – Plaintiffs go home!  Go east - or north - young lawyers.

Where all parties live outside California, and the action arises elsewhere, forum non conveniens may compel dismissal.  California has no interest in providing a forum for disputes between nonresidents involving claims about which California has no interest:  Under these circumstances, even if general jurisdiction is assumed, it would be an abuse of discretion for a trial court to do anything but dismiss the actions.

California’s interest in the case is minimal.  The two major Defendants, . . . are located outside of California, and manufactured [the drug] outside of California.  It was distributed in California by the one California party to the case, McKesson Corporation.  However, all of the listed Plaintiffs are out-of-state residents, and were prescribed Accutane outside of California by non-California physicians. Thus, notwithstanding the listed Plaintiffs’ choice of California as a forum, these competing facts (demonstrating California's miniscule interest in these particular claims) demonstrate that granting the motion is appropriate.

Slip op. at 8 (citations and quotation marks omitted) (emphasis original).

These are strong words that we like to hear.  We’ve cheered on similar forum non conveniens progress in Illinois.  We hope to see more rulings like this – that’s why we’re letting you know about the decision.

As for these plaintiffs, they can:  (1) never re-file, (2) re-file in their home state's court, where they may well find themselves in federal court on diversity jurisdiction, (3) re-file in some other federal court (and perhaps be transferred), or (4) re-file in the defendant’s home state (not as attractive as before) where the forum defendant rule may prevent removal.

Monday, July 21, 2014

Preemption Made Easy

The reason that the court’s decision in Wagner v. Pfizer, 2014 U.S. Dist. LEXIS 94281 (W. D. Wisc. July 11, 2014), is useful is not because it dismisses state-law claims against generic manufacturers on the basis of preemption and other defenses we like.  It certainly does those things, and that’s good.  But we see decisions like that almost every week.  What Wagner does, however, is add to the quality of those decisions, not just their quantify.  Its opinion is clear and unhesitating.  It takes on Mensing and Bartlett preemption and the non-existence of failure-to-update claims in barely more than three crisp pages.  And, along the way, it provides uncomplicated and convincing passages that all of us can use in our future briefing.  

Wagner is a hormone therapy (synthetic progestin) case in which the plaintiff sued both generic and brand manufacturers using the usual claims, and some not so usual claims.  The generic manufacturers moved for judgment on the pleadings.  From there, the court went to work.  It described Mensing and Bartlett in the simplest of terms:  

In Mensing, the Supreme Court held that the FDCA preempts any state law that would require companies to improve generic drug labels.  Mensing, 131 S. Ct. at 2577-78.  The Court reasoned that it would be impossible for those companies to both change the generic drug label and maintain sameness with the corresponding brand-name drug label.  Id.  In Bartlett, the Court extended the principles in Mensing to cover state defective-design laws.  Bartlett, 133 S. Ct. at 2470.  To comply with the defective-design tort law, the Court determined that generic drug companies would have to either change the drug's formula or change its label.  Id. at 2474.  Alternatively, generic drug companies could choose to stop selling the generic drug.  Id. at 2477.  The Court held that the first two options were impossible because of the FDCA and the last option, withdrawal of the product from the market, was unreasonable. Id. at 2470.  Thus, under Mensing and Bartlett, where a generic company faces only these three options to satisfy a state law duty and avoid liability, that state law is preempted by the FDCA.

Id. at *7-8.  

Simple enough, and the court didn’t back away from any of it in the face of plaintiff’s claims.  Plaintiff’s state law claims were numerous: “varieties of negligence; strict products liability; misrepresentation; breach of warranty; consumer fraud; assault and battery; and infliction of emotional distress.”  But they all attacked labeling or design, and the court saw that: 

The factual allegations underlying each of Wagner's claims are that the Generic Defendants should have either improved the safety of MPA by changing the formula or strengthened the warnings on the label.  But the Generic Defendants could not comply with the FDCA and avoid liability under Wagner's state-law theories.  These claims are thus preempted by the FDCA because the Generic Defendants cannot change the formula or the label of MPA without violating federal law. 

Id. at *8-9.  The court held all these claims preempted.

The court was equally succinct in taking down plaintiff’s claim that the generic defendants failed to update their products’ labels to match changes made to the labels of the brand-name drugs.  Id. at *10.  Generic manufacturers’ obligations to update labels come from the FDCA, not from state law.  But the FDCA does not authorize private plaintiffs to enforce its provisions:

[T]the FDCA does not provide a private cause of action for its enforcement.  21 U.S.C. § 337(a); Morris v. PLIVA, Inc., 713 F.3d 774, 777 (5th Cir. 2013) (citing Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 349 n.4, 121 S. Ct. 1012, 148 L. Ed. 2d 854 (2001)).  The FDA exclusively, not private citizens, has the authority to enforce the FDCA labeling requirement on generic drugs.  As mentioned above, the question of whether Wagner could use state tort law to effect the same enforcement result to her private benefit is not entirely settled, but most courts that have addressed the issue have decided against allowing it.  See, e.g. Morris, 713 F.3d at 777. 

Id. at *11-12.  In other words, plaintiff’s failure-to-update claim had no basis in law.

The court believed that it had no basis in logic either.  In her claims against the brand-name manufacturers, plaintiff alleged that labels for those drugs were deficient.  Yet her failure-to-update claim alleged that the generic manufacturers should have adopted those (supposedly deficient) labels.  That logic leaves a hole big enough for causation to fall through:

[E]ven if her private claim were not barred, [alleging that the generic manufacturers should have matched the brand-name drug labels] is inconsistent with Wagner's theory of the case.  Wagner alleges that the brand-name labels are themselves inadequate.  Thus, even if the Generic Defendants had timely updated their labels, Wagner would not have been adequately warned of the dangers of the drugs she was taking.  Under Wagner's own theory of the case, the Generic Defendants' failure to timely update their labels to a different but still deficient form could not be a cause of Wagner's injuries. 

Id. at *12.  The court dismissed plaintiff’s failure-to-update claims.

More opinions should be written this clearly and succinctly.