Monday, July 23, 2007

Does The Rise Of The Consumer Fraud Class Action Mean The Decline Of The Learned Intermediary Doctrine? Nah!

This guest post was written by Sean P. Costello. Mr. Costello is an associate resident in the Atlanta office of Jones Day. This post is entirely his work. It, of course, represents only his views, and not the views of his clients or firm:


A couple of weeks ago, I guest posted about the Federal Judicial Center’s April report on the Class Action Fairness Act’s effects. The FJC reported that federal class action filings had indeed increased in the months since CAFA, just as everyone predicted.

Two things were particularly noteworthy about the report’s findings: personal injury class action filings were down; and state-law fraud class actions were up, way up. The fact that state-law fraud class actions had increased was not remarkable; we all expected it and CAFA’s sponsors all but promised it. But the extent to which those filings had increased (they tripled) was impressive.

Reflecting the sentiment of most of this blog’s readers, I commented that these fraud-based class actions are merely products liability cases by another name. Open the shiny new box with the pretty ribbon, and inside you find the same lump of coal. Class certification had become next to impossible in traditional products liability cases, so plaintiffs’ lawyers took a page from the marketing world and rebranded their cases with a trendy new moniker: “consumer fraud.”

It turns out that I got it backwards. The plaintiffs’ bar isn’t turning to consumer fraud to make class certification easier. They’re doing it because the drug companies and device manufacturers left them no alternative.

That, at least, is what the plaintiffs’ lawyers responsible for the latest round of consumer fraud class actions would have us believe. Fortuitously, the same day my guest post appeared (July 9), The National Law Journal published an article by the excellent Amanda Bronstad entitled “Consumer Class Actions Usurping Personal Injury Claims.” The bloggers over at pointoflaw.com mentioned the story in a July 19 post, as well.

Ms. Bronstad’s article is based on interviews with lawyers and anecdotes, not the hard data of the FJC report. But it identifies the same trend that emerges from the FJC report’s hard data: consumer fraud class actions up, products liability class actions are down, and greater disparity in those numbers can be expected. One thing in particular jumped out at me in reading the article. It was what attorney Robert Brava-Partain, the ubiquitous suer of pharmaceutical companies, had to say. According to him, “[t]here are more [consumer fraud class action] cases now because the drug companies are more aggressive with these drugs.” Aggressive with what? According to the article, “marketing and advertising” of prescription drugs.

Ah, of course. Where’s my head? The tripling of consumer fraud class actions in federal court – of which, I’m willing to bet, a substantial number are against drug and device manufacturers – is a consequence of pharmaceutical company marketing, not the plaintiff class action bar’s rebranding campaign.

I don’t buy it. And I’m sure none of the defense-oriented types reading this buys it either. That said, the argument that direct-to-consumer marketing is responsible for increased consumer class actions against drug companies is worth taking seriously, because the venerable learned intermediary doctrine is likely to be the subject of more frequent challenges in the consumer fraud class action world.

Now, a lot of bandwidth has been devoted to the learned intermediary doctrine on this blog in recent weeks, but I thought it would be worthwhile to take a closer look at the doctrine in the context of the consumer fraud class action.

What will become of the learned intermediary doctrine in the face of the ascendant consumer fraud class action? Will courts get queasy applying it outside the traditional tort box? Can we expect to see more courts pulling a Karl (the name of the West Virginia decision pilloried by Herrmann and Beck a few weeks ago) and looking for ways to avoid applying the doctrine?

The short answers are:

1) The doctrine is not going anywhere. If anything, it will only get stronger.

2) No, quite the opposite.

3) Unlikely.

I took a look at the few decisions where the issue has been directly addressed and was encouraged by what I found.

Texas has become a much better place to be a class action defendant than it was even a few years ago, thanks to substantive and procedural reforms. Thus, you might expect it to do the right thing with the learned intermediary doctrine. You’d be right.

The Texas Supreme Court hasn’t weighed in, but several Texas courts of appeal have. They have held – as far as I can tell, unanimously – that the doctrine applies to consumer fraud (or “deceptive trade practices act”) claims, just as it applies to traditional products liability cases. See, e.g., Bean v. Baxter Healthcare Corp., 965 S.W.2d 656, 661 (Tex.App.-Houston [14th Dist.] 1998, no writ); Jordan v. Geigy Pharmaceuticals, 848 S.W.2d 176 (Tex.App.-Fort Worth 1992, no writ). The Fifth Circuit, predicting that the Texas Supreme Court would do the same, held that the learned intermediary doctrine barred consumer fraud claims in In re NorPlant Contraceptives Prods. Liab. Litig., 165 F.3d 374, 377-79 (5th Cir. 2003). That case is noteworthy, because the Fifth Circuit rejected the argument that the learned intermediary doctrine was a common law “defense” and, thus, inapplicable to statutory consumer fraud claims; according to the Fifth Circuit, it is instead a common law “doctrine,” which makes a difference. See id. at 378. If you want to explore why it makes a difference and why that difference matters, read the decision.

The news is also good in Pennsylvania. At least twice, its courts have applied the doctrine to bar consumer fraud claims. See Albertson v. Wyeth Inc., 2003 WL 21544488 (Pa. Com. Pl. July 8, 2003); Luke v. American Home Products Corp., 1998 WL 1781624 (Pa. Com. Pl. Nov. 18, 1998); see also Heindel v. Pfizer Inc., 381 F. Supp. 2d 364 (D.N.J. 2004) (applying Pennsylvania law and holding that learned intermediary doctrine barred Pennsylvania consumer fraud claims). In Albertson, the court flatly rejected the argument that direct-to-consumer marketing called for an exception, observing that “the consumer still require[s] a prescription from a physician, a learned intermediary, to acquire [a drug].” Albertson, 2003 WL 21544488 at *12.

One pleasant surprise is New Jersey. While New Jersey recognizes the learned intermediary doctrine, it created an exception in direct-to-consumer marketing cases in Perez v. Wyeth Labs., Inc., 161 N.J. 1, 734 A.2d 1245, 1247 (1999). That case was discussed in one of the earlier posts on the doctrine. In spite of Perez, in a case involving consumer fraud claims aimed at the direct-to-consumer marketing of Claritin (then a prescription drug), the court in New Jersey Citizen Action v. Schering-Plough, 842 A.2d 174 (N.J. Super. Ct. 2003), applied the learned intermediary doctrine’s animating rationale – but not the doctrine itself – to hold that the consumer fraud claims were barred: “The intervention by a physician in the decision-making process necessitated by his or her exercise of judgment whether or not to prescribe a particular medication protects consumers in ways respecting efficacy that are lacking in advertising campaigns for other products.” Id. at 177-78. The court summed up why a consumer alleging fraud in the marketing of a prescription drug shouldn’t win: “The ultimate consumer is not in fact free to act on claims made in advertising.” Id. at 178. Who cares whether you call it the learned intermediary doctrine or not. If it gets the claim dismissed, it’s good enough for me. I put this in the “win” column.

Though there’s no published Florida state court decision just yet, last month, a Florida federal district court predicted that the Florida courts would likewise apply the doctrine to consumer fraud claims, and proceeded to hold that the plaintiffs’ Florida consumer fraud claims were barred. The case is Beale v. Biomet, Inc., – F. Supp.2d –, 2007 WL 1836696 (S.D. Fla. June 15, 2007), and the opinion has some real muscle. Because it didn’t have any Florida case law to work with (other than that recognizing and applying the doctrine in traditional tort cases), the court turned to other federal decisions. Surveying that landscape, the court concluded that most federal courts to have considered the issue have held that the learned intermediary doctrine trounces consumer fraud claims. The court wasn’t taken in by the plaintiffs’ attempt to disguise the nature of their claims by using the “consumer fraud” label: “While Plaintiffs have provided various names for their claims against [the defendant], the claims are ultimately based upon [the defendant’s] alleged failure to warn of the risks of the device.” Id. at *10. And that was more than enough to trigger the learned intermediary doctrine. Even better, the court stomped on the idea that there should be some sort of exception for direct-to-consumer marketing, noting that Perez stands alone (or stood alone until Karl). Beale, 2007 WL 1836696 at *13.

If the handful of decided cases thus far is any indication, the learned intermediary doctrine has a bright future in the emerging “no-injury,” consumer fraud class action world.

1 comment:

Dave W said...

Nice job with the Beale summary.