Wednesday, October 31, 2007

Scary Issues For This Halloween

1. The Department of Justice charged the former associate general counsel of Tenet Healthcare with violating the False Claims Act. The suit alleges that Christi Sulzbach certified that Tenet was in compliance with Medicare laws despite being aware that Tenet had entered into employee contracts with doctors that might be considered suspect under the laws.

This report comes from HealthLaw 360. (This link should attach at least to the lead of the article. It's possible that you must subscribe to read the entire item.)

2. Ingredients exported from China are often made by chemical companies that are neither certified nor inspected by Chinese drug regulators. The companies therefore apparently export unapproved or counterfeit ingredients, according to today's New York Times. (Pharmalot adds more here.)

3. The New Jersey Supreme Court is considering whether Merck can be liable to folks who ingested Vioxx and allegedly suffered "silent heart attacks," Torts Prof Blog reports.

4. The two of us are still going strong, blogging on into our second year. Now that's scary!

Happy Halloween!

Tuesday, October 30, 2007

Thanks For The Memories!

What a swell birthday we had.

Above the Law, How Appealing, Point of Law, the Mass Tort Litigation Blog, the Torts Prof Blog, the D and O Diary, and the IP ADR Blog all wished us a happy birthday.

Thanks, guys; we're touched.

Hey, do we know how to party, or what?

Happy Birthday To Us!

It sure doesn't feel like a year since we started blogging. (On some Saturday mornings, struggling to write a new post, it feels like it's been a decade.)

Actually, we're not sure if it has been a year. We posted our "Disclaimer" on October 28, 2006, published our first post on November 15, and learned of the existence of Google Analytics (and thus began to monitor traffic) on December 3. But we're declaring today, October 30, to be our anniversary.

(On the other hand, we won't be rigid about this. We'll accept all birthday presents that arrive any time between late October and early December.)

Our one-year anniversary seems like an appropriate time for reflection (quite a change of pace for this blog) and pontification (to which you've now become accustomed; indeed, perhaps numbed).

First, the technology:

We run this site on "Blogger." The price is right -- it's free. We track visitors on "Google Analytics." It's also free. And we collect pdfs to which we link in our posts on "FileDen." FileDen, you'll be startled to hear, is free. The only cost involved in this endeavor is the sweat and tears the two of us shed trying to generate interesting content.

Those free services do have some limitations, but we weren't sure how long we'd keep this up, and we weren't interested in investing serious dough in an experiment that might fail. (We're told that one limitation of the free services is Blogger's "Next Blog" icon. Since so many blogs contain pornography, apparently there's a fair chance that, if you click on the "Next Blog" icon, you'll stumble onto something salacious. We've never bothered with that icon, and we figured that our readers are intelligent enough to understand that we're responsible only for this blog; some other clown writes the next one. (We do, however, now have an image in our mind of our visitors -- half saying, "Egad! Porn? Blech!" and the other half madly searching for the "Next Blog" icon.))

Second, the numbers:

We had about 50 pageviews on an average weekday last December. Adam Smith, Esq., then wished us a happy zero birthday on his widely read blog, sending a few more visitors our way. Howard Bashman, over at How Appealing, reads Adam Smith, Esq., so he took a look -- and promptly ridiculed our "Disclaimer." He was right, of course: The disclaimer's an outrage.

But, more importantly, so many people read How Appealing that quite a few of them looked to see what Howard thought was so funny, and a bunch of those folks became regular visitors to our site. Thank you, Howard! We'll do our best to say something worth ridiculing again soon.

As of today, we're gratified -- heck, we're dumbstruck! -- by the traffic to our little experiment. In our first year on the web, we've drawn nearly 60,000 pageviews, with readers from 98 countries, including every continent except Antarctica. Also, although we've seen traffic from the Ivory Coast, Nigeria, Ghana, and South Africa, no one seems to visit us from sub-Saharan Africa. (Hey! United Nations! Let's get some computers down there. We want to feel loved!) And traffic is growing exponentially over time. In the last 30 days, we've received over 11,000 pageviews to this site. (After today's post, we'll be lucky to hang on to a fraction of that.) According to Justia Blawg Search, we're the most widely read product liability blog of "all time." And Technorati ranks us near the top one-tenth of one percent of blogs of all kinds (which includes sports, politics, porn, and everything else; there's some tough competition there). Maybe these stats aren't the greatest (some of you've told us that) -- but, we gotta believe we've done something right.

So, thank you. You're the reason we do this, and we appreciate your readership.

Finally, our three thoughts:

Thought number one: Blogging is hard. Hard. The law is a jealous mistress. So is blogging. Combine the two and blogging about the law is a downright ... well, you get our drift.

As in: We've each written books, and law review articles, and supreme court briefs. This is harder. Much, much harder.

To attract and maintain a readership, we must regularly post fresh content about interesting issues, written in a readable style. "Regularly" is the bear. When we started this venture, we figured that we each had a bunch of things we wanted to say in print and hadn't yet gotten around to. So we thought we'd start blogging. About six weeks (and 18 or 20 posts) later, we'd about used up all of that. Yet we have to continue to come up with new content several times each week. It ain't easy.

Especially if you're going to say "interesting" things in a "readable" style. "Interesting" really demands our personal attention. Face it, lawyers are a lot of things, but "interesting" ain't what usually comes to mind. So we can't ask a bunch of young lawyers to ghostwrite for us because, frankly, it generally takes an experienced eye to identify issues worth discussing -- especially in an area so esoteric as drug and medical device product liability litigation. And we do our best not merely to report -- "A case came down. The case held 'X.' Therefore, a case came down." -- but rather to analyze. That's not always easy. Finally, a "readable" style again means that it has to be one of us who's doing the writing. For us, that means that random pinch-hitters won't do.

Here's just one example. Although we write about legal issues here, we often try not to write like lawyers. We use contractions. We use the first person. We're self-deprecating. "Self-deprecating" is a particular risk in the legal game we play. We have referred to ourselves, for example, as "Beck and Herrmann, the blogging Luddites." We figure you'll understand. You read what we write. You come back for more. We assume you think we're reasonably concerned and intelligent fellows (if a bit fascist on the issues we discuss), and you won't hold our sense of humor (such as it is) against us.

Most lawyers are not that way. Law firm brochures usually talk about "numerous," "complex," and "multijurisdictional." Rarely do you hear that, "We couldn't spell 'FDA' if you spotted us two letters."

So we're condemned to writing this blog ourselves. We don't get much help.

Thought number two: We're unusual in that this blog is not affiliated with a law firm. Thus, although Bexis works at Dechert and Herrmann toils at Jones Day, this is neither the Dechert nor Jones Day blog. There are good reasons for that. If we write enough words, we'll surely say something that could come back to haunt one of our colleagues or clients; better to blame us, not the institutions. In fact, we sign all posts "Beck/Herrmann" in part to conceal who's to blame for any particular rant that may come back to haunt us. (And, of course, that's one reason for our outrageous "Disclaimer.")

In a sense, however, that lack of affiliation is foolish. If one reason for blogging is to raise a firm's profile in a particular field, then the firm should stake a claim to the product. But that's really not one of our reasons....

Using this blog for law firm promotion would be really tricky when it's co-hosted by head-to-head competitors, as our two firms are. (In fact, the two of us personally have, in the past, been head-to-head competitors. In the Bone Screw wars, Herrmann's client settled; Bexis' client objected to the settlement. We spent several months beating each other about the head and shoulders with baseball bats. We're over it now.)

But we're happy with this unaffiliated (and seemingly competitive) arrangement. We're pretty good about sharing with each other opportunities that the blog creates. And our law firms appear to be happy with our efforts. (It's either "happy" or "blissfully ignorant." Either one will do.) Perhaps other bloggers will learn from our experience and make better choices in the future.

Finally, the spoils:

If you're a cost-benefit kind of person, here's the calculus: This is hard, relentless work. But it offers both personal satisfaction and real benefits. One of the benefits is that blogging is a self-fulfilling prophecy.

Suppose you know a little about drug and device product liability law. You set up the "Drug and Device Law Blog." Lo and behold, people start sending you e-mails containing unpublished decisions, creative ideas, heads ups, reprints of law review articles, links to interesting websites, and everything else having to do with drug and device law. Eventually, you'll come to know a great deal about drug and device law. By creating an on-line megaphone, people perceive you as being at the center of your little universe. Over time, in an odd way, you do indeed gradually move toward the center of that universe.

Another benefit of blogging is that it dramatically raises your personal profile in the world. The two of us have never been press hounds. The press, however, searches on-line to find experts willing to comment on legal topics. If you're on-line, you get found. We've been interviewed this year, as a result of having blogged, by the Wall Street Journal, Forbes, National Public Radio, Bloomberg TV, American Lawyer, and others. We've had offers to publish -- either on-line or back in the paper world -- at least a half dozen of our posts. Blogging is an awfully tough route to achieve this relatively minor celebrity status, but, if that turns you on, go for it.

We're impressed by the blogosphere. Smart people say very intelligent things on-line very quickly after news breaks and judicial decisions are handed down. The web is intensely self-correcting; if people make mistakes, many others quickly identify the errors. And there's a weird sense of community with many people whom you've never met, but who you come to respect over time for their thoughts and style.

So, thank you for your support. We'll keep plugging along. And, if we manage to keep up our energy, you'll be reading about our second anniversary in October 2008.

Have a piece of cake on us.

Sunday, October 28, 2007

A Med Mal Tangent (Harris v. Mt. Sinai)

We generally stick to the product liability side of drug and device law, but occasionally we slip over to the medical malpractice side.

One half of your dynamic blogging duo recently represented an obstetrician and health clinic in an appeal from the largest medical malpractice verdict in the history of the State of Ohio -- $30 million, with a motion on file for tens of millions more in prejudgment interest. Last Thursday, the Ohio Supreme Court ruled that the defendants were entitled to a new trial.

Plaintiff's counsel in the trial court was Geoffrey Fieger, the former Michigan gubernatorial candidate and defense counsel for Dr. Jack Kevorkian, who assisted several terminally ill patients in committing suicide.

Roger Parloff describes the case, and the Ohio Supreme Court decision, nicely at Fortune magazine's Legal Pad blog. For those who are curious, here's a link.

Friday, October 26, 2007

Why Mediation Shows The Future Of Litigation

Mediation is increasingly the preferred vehicle for resolving business-to-business disputes.

Sophisticated parties include mediation clauses in contracts. Even when parties haven't agreed in advance to mediate, they often opt for mediation as a prelude, or alternative, to litigation.

Why? Because mediation avoids the expense and distraction inflicted by the discovery process. Corporate clients insist: Avoid discovery, and resolve the case.

Here's what has us scratching our heads: Parties who mediate, avoiding discovery, are agreeing to resolve their disputes based on imperfect information. Parties who mediate probably won't have scrubbed every last fact on their side of a dispute, and they won't have access to every last fact from the other side. Despite that imperfect knowledge, they're ready to settle. That approach may cost a few bucks in settlement value, but it saves many more bucks in discovery costs.

To our eye, mediation is often a perfectly sensible choice.

But, if parties are willing to mediate without first obtaining complete information, why aren't they willing to litigate without obtaining complete information? If sophisticated litigants often prefer a quick resolution at lower cost, why doesn't society make that option available to everyone? Why doesn't litigation have only a limited discovery process (which would be more affordable and less distracting than our current system) before presenting disputes to a decision-maker?

Frankly, this makes sense for any number of reasons.

First, the current discovery process involves, in all too many cases, producing documents that literally outstrip human comprehension -- tens of millions of pages of electronic records that no human being could read in a lifetime dedicated only to that pursuit. Since no one can read the documents, and computer searches for information are necessarily imperfect, the vast scope of discovery guarantees that facts will be lost and disputes will be resolved imperfectly.

Second, after those documents are produced, they are then distilled at trial into an abbreviated presentation that necessarily omits much of what was learned during discovery. The distillation process incorporates yet more error into our dispute resolution process.

Finally, in jury trials, the decision-maker is a half dozen (or a dozen) people with no advanced education about the nature of the dispute. Whether a case involves epidemiology, reinsurance contracts, or the design of complex machinery, placing these disputes into the hands of a jury guarantees yet more error.

Since the system is guaranteed to yield imperfect results, why should we pretend, during the discovery process, that gathering more information always serves a purpose? Why not simply agree to submit pared-down disputes, based on pared-down discovery records, to a fact-finder, and then agree to be bound by a slightly imperfect result?

That is, after all, what sophisticated parties do voluntarily -- by electing mediation, or arbitration, or some other alternative to full-bore litigation. That's a sensible choice, and it's one that the market increasingly demands. Isn't it likely that society in general may soon revolt against our current discovery process and insist that we instead resolve cases quickly and inexpensively based on less perfect information?

Fail to Warn about Anything - Liabilty for Everything?

We’ve had the misfortune to encounter recently failure to warn claims that we think should be dismissed (well, we think all claims against our clients should be dismissed – but these especially) because they just don’t make any sense. The claims we’re ticked off about at the moment involve a disconnect between the allegations and the facts. Specifically, because they involve warnings about kinds of injuries that the plaintiffs themselves don’t even claim to have.

Yeah, that’s right – some plaintiffs have the gall to say that our clients’ warnings about, say, gallstones (that’s a good one), are “inadequate,” even though they’ve never suffered from a gallstone in their lives.

We see this mostly in the context of mass torts, where the name of the game is to try to overwhelm defendants with as many claims as possible, even if there’s no basis for them. There’s a flurry of advertising trying to scare people about Drug X, and the hotlines collect claims by people who don’t have the condition that originally motivated the litigation. We’ve also encountered this type of warning claim in one-off cases, mostly where something goes south (usually an expert, but sometimes a treater) on what was originally thought to be the main claim – think of a claim where the plaintiff starts off claiming overdose, but then neither the records not the experts can support that.

In either event, what we wind up with are plaintiffs who claim something like this: “So what if I didn’t actually have a stroke? You still didn’t warn about the risk of stroke. If you’d told the truth about strokes I’d have been so scared I wouldn’t have bought your product at all, no matter what my prescriber told me, and I wouldn’t have been gotten kidney failure…. Oh, yeah, and by the way, because you didn’t warn about stroke, it doesn’t matter that you did warn about the risk of kidney failure in 13 different ways.”

Needless to say, to us this kind of claim is bogus. For one thing, the argument stretches the fabric of causation too thin. The act that the plaintiff claims would have been deterred is the purchase of the product in the first place, not an improper use of the product. Well, the purchase of an FDA-approved prescription medical product is not, in and of itself, the kind of act the law of torts should be seeking to deter. What product liability law is supposed to be about is preventing injuries from defective products – and if the manufacturer warned of the only injury that actually happened, then there’s no defect.

In our opinion.

The other really obnoxious thing about this kind of claim is that it dramatically expands both liability and the scope of discovery. It expands liability because an inadequate warning about anything all of a sudden turns into liability for everything – even risks about which the defendant actually give an adequate warning. It expands discovery because any purportedly inadequate warning about any conceivable risk suddenly becomes relevant in every case, because the plaintiff can just say “if you’d warned about that, I wouldn’t have followed my doctor’s orders and used that product.”

Anyway, the good news is that this type of claim has been recognized for what it is and has generally been rejected. There’s a really smart professor, Dan Dobbs, who wrote his own book on torts (before Bexis did), and he says these claims are beyond the pale. “[T]he injury suffered [by a plaintiff] must be within the class of injury that the warning requirement was meant to avoid.” Dan B. Dobbs, The Law of Torts, at 1018 (2001). He uses an asbestos example to make his point, but the rationale is just as the same for a claim that a stroke warning could be relevant where the plaintiff suffered from kidney failure:

For example, the plaintiff, if properly warned that asbestos might cause cancer, might have ceased to work around asbestos. . . . But the failure to provide such warning would not result in liability if the plaintiff, not being warned, kept her job and lost a hand in a job-related machine accident. In that example, failure to warn would be a cause in fact. . .but it is not a proximate legal cause. It is not, in other words, within the risk that a warning was designed to avoid.

Id.

There are also decisions in our own area of expertise that refuse to allow a plaintiff to recover for injury “A” with an allegation that the defendant failed to warn solely about injury “B.” Drug warnings relating to injuries that a plaintiff did not suffer are simply irrelevant. For example, a vaccine recipient who suffered Guillain-Barre syndrome couldn’t raise allegations of inadequate warnings concerning “other risks such as serum sickness or myelitis”:

The question of the adequacy of the warnings must be confined to consideration of whether the warnings were sufficient to inform the plaintiff of the risk of the particular condition or disease which allegedly caused his injury. . . . [A] determination that warnings were inadequate with respect to some other condition does not bear on our conclusion that [plaintiff] was adequately informed of the risk of severe allergic reaction to the swine flu vaccine.

Mills v. United States, 764 F.2d 373, 379 (5th Cir. 1985).

For some reason vaccine cases first seemed to attract this sort of claim. In Novak v. United States, 865 F.2d 718, 726 (6th Cir. 1989), the court likewise ruled that “the district court erred in finding the warning inadequate, negligent, and insufficient because it did not specifically caution those who may have experienced ‘viral encephalitis’” where “[i]t was not proven that [plaintiff] had actually suffered from viral encephalitis.” In Novak it must have been rather obvious that the plaintiff was alleging remote warning claims to avoid having to prove that he suffered from the correct injury.

The New York Court of Appeals (the highest court in that state) confronted a similar claim in Martin v. Hacker, 628 N.E.2d 1308 (N.Y. 1993). Martin was a classic example of the “type two” case we mentioned earlier. The plaintiff alleged inadequate warnings because there wasn’t a contraindication (something telling doctors don’t use the product at all in a particular situation) due to an supposedly increased risk of suicide in “depressed” patients. The plaintiff’s proof failed – because nobody could establish that the decedent was depressed. The plaintiff tried to go ahead with the claim anyway, but the court said no way. It held, “we are not concerned with the adequacy of the Contraindications section” because the decedent “had no history of” depression. Id. at 1313.

A classic “type one” mass tort example of the “you failed to warn about something else” claim arose in In re Rezulin Products Liability Litigation, 331 F. Supp.2d 196 (S.D.N.Y. 2004). The rap against Rezulin has been that it causes liver problems, but in their rush to solicit all the claims they could, the plaintiffs’ attorneys ended up with a number of claims that did not involve liver injury at all. Since they couldn’t be bothered proving anything about those plaintiffs’ actual injuries, the MDL counsel tried to go with the liver injury warning case they’d developed even where there was nothing wrong with these plaintiffs’ livers – alleging instead that these plaintiffs wouldn’t have used Rezulin at all if there’d been a better lever warning.

Plaintiffs’ final contention is that the alleged failure adequately to warn of the risk of liver damage was causally connected to their injuries, even assuming that they sustained no liver injury, because an adequate disclosure of the hepatic risks would have deterred physicians from prescribing the drug although such potential side effects as headaches and nausea were insufficiently grave to have done so. . . .

Id. at 201. The court tossed those claims out on their proverbial ear. This “argument fail[ed]” for several reasons: (1) the expert who supposedly supported the claim didn’t treat any of the plaintiffs and couldn’t say what the actual treaters would have done; (2) plaintiffs couldn’t prove that the nondisclosed risk “was sufficiently high that it would have changed the treating physician’s decision,” and (3) because the risk wasn’t the one the plaintiffs suffered, “the evidence upon which plaintiffs rely is insufficient to justify an inference that the physicians who treated these plaintiffs would not have prescribed the drug.” Id. Moreover, as to the injuries that these plaintiffs did have, “the PDR specifically warned of the[m]” so the warnings that mattered were adequate as a matter of law. Id. at 202.

In Pennsylvania, breast implant plaintiffs sued, not only manufacturers, but physicians – presumably because they wanted to defeat diversity jurisdiction. They alleged the same sort of claim, only couched in informed consent rather than product liability, that the prescribiing doctors failed to discuss certain risks (gel bleed, infection, autoimmune diseases) when the only thing they suffered from was something else (capsular contracture). The court held that this kind of warning liabilty was too broad to be permitted:


If I accept plaintiffs’ argument, the law will be permitting recovery for a risk that the plaintiff assumed because the plaintiff might have made a different decision as a result of knowing of other risks for which the plaintiff did not experience any harm.
In re Silicone Breast Implant Litigation, 64 D. & C. 4th 21, 25-26 (C.P. Allegheny Co. 2003). To allow liability based upon undisclosed risks that never happened “would have a reach that extends far beyond the purposes for the doctrine.” Id. at 26.

There are a number of other cases that say more or less the same thing. Eck v. Parke, Davis & Co., 256 F.3d 1013, 1020 (10th Cir. 2001) (failure to warn of concomitant use of two drugs noncausal where prescriber did not prescribe concomitantly); King v. Danek Medical, Inc., 37 S.W.3d 429, 446-47 (Tenn. App. 2000) (“theoretical possibility that some pedicle screw devices. . .can cause various bone problems, without proof that it occurred to these plaintiffs. . ., cannot defeat summary judgment”); Peterson v. Parke Davis & Co., 705 P.2d 1001, 1004 (Colo. App. 1985) (“the request for an instruction that [defendant] had a duty to warn of all known dangers was properly denied. In a failure to warn case, the plaintiff has the burden of proving that the manufacturer gave inadequate warning of the danger which caused the injury”); In re Norplant Contraceptive Products Liability Litigation, 1997 WL 81094, at *1 (E.D. Tex. Feb. 21, 1997) (“[W]hether the Norplant physician warnings were not adequate with respect to an injury not alleged is not relevant to whether physicians were adequately warned of [p]laintiffs’ alleged injuries”).

We think these cases are rightly decided. In product liability, failure to warn is truly the last refuge of the scoundrel, for a lot of reasons, such as not having to spend the money to get engineering experts to come up with alternative designs. There’s a difference between bare “but for” causation and the kind of legal cause necessary before the law will impose liability. It’s what lawyers call “substantial factor”:

The word “substantial” is used to denote the fact that the defendant’s conduct has such an affect in producing the harm as to lead reasonable men to regard it as a cause, using that word in the popular sense, in which there always lurks the idea of responsibility, rather than in the so-called ‘philosophic sense,’ which includes every one of the great number of events without which any happening would not have occurred. Each of these events is a cause in the so-called “philosophic sense,” yet the effect of many of them is so insignificant that no ordinary mind would think of them as causes.

Restatement (Second) of Torts §431, comment a (1965).

A claim that a failure to warn about one thing would have fortuitously prevented an entirely separate injury (that may well have been adequately warned about) by causing the plaintiff’s prescribing physician not to prescribe the product at all or the plaintiff to disobey doctor’s orders is simply too tenuous a causal link. In the words of the Restatement, that kind of thing is merely “one of the great number of events without which any happening would not have occurred,” and that’s not enough.

Wednesday, October 24, 2007

Our First Reader Poll: Herrmann on TV

This link takes you to Bloomberg television. The video clip of Herrmann discussing Warner-Lambert v. Kent is currently the first item on this Bloomberg page, but that may change over time. If you don't immediately see the clip with his name on it, just word-search for Herrmann, and you'll find it.

Here's our first ever reader poll: Should Herrmann be pleased or mortified?

So far, it's two to nothing in favor of mortification.

Current Issues In Pharmaceutical Litigation And Policy

The ABA Section of Litigation Products Liability Committee is sponsoring a one-day seminar on Wednesday, November 14, about current issues in pharmaceutical law and policy. The program will be held at Hoffman-LaRoche's headquarters in Nutley, New Jersey. Panels will discuss investigating personal injury claims, valuing settlements, a primer on pharmacology, creative theories in pharmaceutical litigation, and coordinated or consolidated proceedings in state courts. Speakers include Hon. Marina Corodemus, Hon. Helen Freedman, and one of your humble scribes. For all who are interested, here's a link to the program brochure.

If you attend, and you're a regular visitor to this blog, please do introduce yourself. (Heck, you can introduce yourself even if you're not a regular reader of this blog. But then you probably wouldn't have read this.)

Curmudgeon, Meet Benjamin Franklin

Man, are we tickled. We just learned that The Curmudgeon's Guide to Practicing Law, written by the Herrmann half of your dynamic blogging duo, was a finalist in the competition for a Benjamin Franklin Award this year as an outstanding independently published book.

PMA, the Independent Book Publishers' Association, presents Benjamin Franklin Awards each year to the previous year's most outstanding independently published books. Publishers nominate hundreds of books in the competitions for each of the genres. Top practitioners in each category then judge the editorial and design merit of the nominated books. The judges select three books as finalists in each category, and one book receives the award. American Bar Association Publishing nominated The Curmudgeon's Guide in the category of "Career," and PMA's judges selected the book as one of three finalists. For a complete list of finalists in all categories, visit the PMA website (http://www.pma-online.org/pubresources/benfrank2007_finalist.aspx).

The ceremony itself resembles the Academy Awards, although without the movie stars. For each category, someone from the PMA Board reads the finalists as a video plays showing the nominated books. The winner is then announced and comes up to accept the award and make a few short remarks.

"Author of the award-winning Curmudgeon's Guide." One of the two of us (we won't say which) thinks those words sound mighty cool.

Tuesday, October 23, 2007

Another Thought On Warner-Lambert v. Kent

We've been thinking a lot about Warner-Lambert v. Kent, the case formerly known as Desiano. We've thought about it here, and here, and here, and here, and here, for example.

We're thinking about it one more time. One of your humble scribes -- Herrmann -- is slated to be interviewed about the case tomorrow by Brian Sullivan, on Bloomberg TV's "In Focus." (We understand the show is broadcast from noon to 2 p.m. Eastern, but we're not sure whether the interview will be live or taped. Sorry we can't be of more help than that, but we don't watch too much daytime TV these days.)

Anyway, that interview will demonstrate two things: First, Herrmann has a face that was made for radio (or blogging -- he chose his hobby well). Second, Warner-Lambert v. Kent may have serious implications for the pharmaceutical industry; that's why Bloomberg TV cares about it.

In addition to our previous ruminations about the case, one more thing struck us when we were flipping through the briefs getting ready for the interview: The Supreme Court really does have to resolve the circuit split between the Second and Sixth Circuits on this issue.

Here's the current state of play: If you live in Michigan and file a product liability lawsuit against the manufacturer of a prescription drug, your claim is statutorily barred -- unless you can prove that the drug manufacturer defrauded the FDA. The Sixth Circuit Court of Appeals (which has jurisdiction over appeals from decisions by Michigan federal courts) has held that the "fraud-on-the-FDA" exception is preempted, so the plaintiff's claim is barred -- period. See Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004).

In contrast, the Second Circuit (which has jurisdiction over appeals from decisions by New York federal courts) held that the "fraud-on-the-FDA" exception is not preempted, so Michigan plaintiffs are able to pursue their product liability claims. See Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2006), cert. granted sub. nom Warner-Lambert v. Kent, 2007 WL 1420397 (Sept. 27, 2007).

If a plaintiff brings a product liability claim against a drug company, the law of the plaintiff's home state typically governs that lawsuit. Thus, if you live in Michigan and think that one of Pfizer's drugs hurt you, you can sue wherever you want -- Michigan (where you live), New York (where Pfizer is headquartered), or in any other court where jurisdiction and venue are proper. But, no matter where you file your lawsuit, Michigan state law will govern your claim: You were prescribed the drug in Michigan; you were warned, if at all, about the drug's side effects in Michigan; you bought the drug in Michigan; you ingested the drug in Michigan; you were injured, if at all, in Michigan. Choice-of-law rules say that your lawsuit, no matter where it's filed, will be governed by Michigan law.

If Michigan law governs your claim no matter where it's filed, why does it matter whether you sue in federal court in your home state of Michigan or in Pfizer's home state of New York?

Because you'd rather win, that's why.

If a Michigan plaintiff sues in federal court in Michigan, then the Sixth Circuit decision in Garcia controls: The fraud-on-the-FDA exception is preempted, and the plaintiff's product liability claim is statutorily barred. Plaintiff loses.

If the same Michigan plaintiff sues in federal court in Pfizer's home state of New York, then the Second Circuit decision in Desiano governs: The fraud-on-the-FDA exception is not preempted, so the plaintiff is able to pursue the claim. Plaintiff goes to trial and has a chance to win.

What does that mean in the real world? People who live in Michigan will file their product liability lawsuits in federal courts in the drug manufacturers' home states. If you're suing Pfizer, you sue in New York and take advantage of Desiano. If you're suing a drug company headquartered in California, you file your lawsuit in federal court in California. You don't have Desiano, a Second Circuit case, to protect you, but at least you're not doomed by Garcia, a Sixth Circuit case. Instead, you can fight the issue anew in the Ninth Circuit Court of Appeals, and learn whether or not your claim survives.

That situation -- forum-shopping to take advantage of varying judicial interpretations of the interplay between federal and state law -- is not tenable. But, until the Supreme Court speaks, that's the state of play in America.

Nice job, Supreme Court: Granting cert in Warner-Lambert v. Kent was a good idea.

Now the only question is whether we can explain this stuff tomorrow in a way that mere mortals can understand it. Tune in, and find out.

Saturday, October 20, 2007

When Litigation and Science Collide (Childs article)

We've never met Bill Childs, but we like him. He's an Associate Professor at Western New England School of Law, and he hosts the Torts Prof Blog, where he keeps the content both fresh and informative. We thus read with interest his recent article in the Nebraska Law Review, "The Overlapping Magisteria of Law and Science: When Litigation and Science Collide."

We didn't know what the word "magisteria" meant, so we borrowed as our title here the part of Childs' title that came after the colon. (Actually, footnote 7 of Childs' article tried to educate us: "'Magisteria' is a term for the teaching authority of a particular area of inquiry." But even that left us a little fuzzy, so we stuck to words we understand.)

Anyway, Childs' article focuses on two related issues that can arise in mass tort litigation. First, when one party cites peer-reviewed literature, the opposing party may seek discovery into the peer-review process. This can, of course, chill scholars' willingness to act as peer reviewers. Second, Daubert and the comments to Federal Rule of Evidence 702 instruct courts to consider whether scientific evidence "has been subjected to peer review and publication" as one factor in deciding whether expert testimony should be admissible. This encourages expert witnesses to engage in "litigation-driven scholarship;" expert witnesses seek publication of their ideas in peer-reviewed journals to increase the likelihood that the experts' testimony will be admissible in court.

Ultimately, Childs doesn't mind discovery into the peer-review process, because he thinks it may (beneficially) educate courts about the nature of peer review, although Childs does propose some limits on that type of discovery. And Childs doesn't mind rules that encourage expert witnesses to publish their litigation-driven work, because he believes that scholarship may merit publication even though the research was undertaken for a partisan purpose.

We agree with some of Childs' ideas; we disagree with others. But we figured there was one thing we could add to the mix: a practitioner's perspective. Academicians do fine scholarship, but they're sometimes surprised to learn how things play out in the real world.

Here are our thoughts on litigation-driven scholarship:

1. Childs focuses on scholarship by folks who can at least hold themselves out as "scholars." His article discusses at some length a book written by two historians, one from City University of New York and one from Columbia University's Mailman School of Public Health. (One of your humble scribes has opposed these two historians in litigation; we'll steer far clear of any commentary on their work.)

But what about "experts" who are plainly two-bit clowns? We're thinking, for example, of a fellow with an undergraduate degree in engineering who was fired by a company, never worked in academia, and now makes his living solely by giving expert testimony against his former industry. We've seen letters to and from such folks fretting that they must continue to submit their silly articles to every conceivable peer-reviewed journal, because only a peer-reviewed publication will preserve their careers. If you send an article to enough journals, one will ultimately publish it, and "expert" testimony based on that article may survive Daubert scrutiny.

Maybe we're ultimately criticizing peer review itself. If all peer-reviewed journals maintained high standards, then litigation-driven nonsense would never make its way into print, and junk science would routinely be junked. But we're not that confident in the screening process. We'd like to see some recognition in the academic literature that "litigation-driven scholarship" doesn't always mean retaining a distinguished gentleman with a D. Phil. from Oxford to undertake an extra experiment or two. It often means retaining Bozo the Clown and hoping that, if he sends out copies of his work to enough journals, it will slip through the cracks somewhere and make its way into print.

2. There's one huge difference between research undertaken by pharmaceutical companies and research sponsored by litigants. Historically, drug companies didn't publish the results of every clinical trial they undertook. (Don't jump to conclusions here. This wasn't necessarily because of evil motives. Journals were often not interested in publishing an article that said, basically, "we tested a drug and it didn't work." Publish a bunch of those puppies, and watch your readership drop. Companies simply could not publish results that didn't interest the journals.) But companies did typically report the results of clinical trials -- including null and negative studies -- to the FDA as part of New Drug Application submissions. An expert government agency thus had access to these results. Negative trials were not deep-sixed entirely.

Not so in litigation. Counsel can retain non-testifying consultants, ask them to conduct studies, and then conceal entirely the unfavorable results. So long as the consultants are not asked to testify, no one will ever even know that the studies were done at all. Unlike work performed by drug companies, litigation-driven scholarship can be permanently concealed from everyone -- period. That possibility skews the debate in an unfortunate way.

3. Finally, we'd like to see some empirical work done here. We know that drug companies occasionally run clinical trials that fail. But we wonder whether any expert witness retained by plaintiffs' counsel in mass tort litigation has ever run an experiment that failed. We suspect not.

If we're right, that means one of three things: (1) Plaintiffs' experts pick their theories exceptionally well, or are exceptionally lucky, (2) lots of negative experiments are being run by non-testifying consultants, so the results are never made public, or (3) litigation-driven "scholarship" is a breed unto itself, so terribly biased that its results are truly suspect. (We won't say which of those we think is most likely, but we suspect regular readers of this blog can intuit where we stand.)

That's our rant for the day. As usual, we feel much better now. That's for bearing with us.

Friday, October 19, 2007

But it's our nights and weekends . . .

Jane Genova, over at Law and More, exhorts one of your humble scribes -- Herrmann -- to write a companion book to The Curmudgeon's Guide to Practicing Law. (Here's a link to the exhortation.)

We're flattered. Really, we are.

Sadly, blogging alone is a full-time job.

Actually, on a moment's reflection, being a lawyer at Jones Day is, alone, a full-time job.

Blogging is a really weird extracurricular activity that, if it were your job, would alone be a full-time job.

Between lawyering and blogging, however, there's not much extra time for writing another book.

Unless we take leave of our senses.

Or the topic is too good to resist.

Or, who knows?

Thanks for the thought, Jane.

The FDA's Amicus Curiae Briefs On Preemption - Redux

A long time ago – blogwise, anyway – we put together a post that described and linked to all the FDA’s amicus curiae briefs that the Agency had filed in favor of preemption in prescription drug and medical device product liability litigation. Several things have happened since then. One of those things was that we dug up another FDA pro-preemption brief from 1991. Another thing that happened was the government filing another amicus brief in support of preemption. A third thing that happened is technical to us – we changed our storage website, and we’re not so sure how well the old links continue to work. But the most important thing that’s happened since last year is that now we’ve got a much bigger audience. At least five times as many people visit this blog daily now as did last December.

Because we don’t know anywhere else – on the web or off – where a complete set of the FDA’s amicus briefs supporting preemption is publicly available, we’re repeating and updating our earlier post.

As everyone who litigates drug and medical device cases knows, the FDA has filed a number of briefs as amicus curiae over the past few years on the subject of preemption. We thought it would be a good idea (and a public service) to collect them all in one place. Not only is this collection a resource in its own right, but a review of these briefs will show that: (1) by and large, the FDA has been much more consistent than the plaintiffs’ bar gives the Agency credit for, and (2) the advent of the FDA’s pro-preemption advocacy – far from being a figment of the change in political administrations that took place in January, 2001 – actually began, while the Democrats still ran the Agency.

What happened wasn’t so much that the FDA changed its position, but that the type of lawsuits being filed by plaintiffs have been infringing more and more directly on the FDA’s prerogative to approve prescription medical products and to control their labeling.

The very first brief that we know of in which the FDA advocated federal preclusion of state law came in 1991. The FDA filed its Statement of Interest the Food and Drug Administration, Biffle v. Eli Lilly & Co., No. 91-02496-A (Tex. Dist., filed Feb. 18, 1991). The FDA advocated in Biffle preemption of state-law discovery that would have revealed the identities of persons filing adverse experience reports with the Agency. Coincidentally, or not, Biffle was a suicidality case involving an anti-depressant. The trial court ignored the FDA’s position and the company sought mandamus. The Texas Supreme Court reversed, Eli Lilly v. Marshall, 850 S.W.2d 155 (Tex. 1993), and precluded the discovery, but the reversal was not based on preemption grounds.

The next FDA amicus brief to argue in favor of preemption – and the first to take a pro-preemption position on a matter of substantive law – involved what have become known as “fraud-on-the-FDA” claims. Under a fraud on the FDA theory, courts applying state law supposedly had the power to ignore in-force FDA decisions if those decisions were deemed to have been “fraudulently” obtained by the defendants. Obviously, such claims posed a direct threat to, and inherent conflict with, the Agency actions that were being challenged as fraudulent. When the question of preemption of fraud on the FDA claims reached the Supreme court in early 2000, the Court asked the Agency for its views. The Department of Justice (the FDA’s lawyers) filed an amicus brief urging that the Court take the case and find fraud on the FDA claims preempted on the basis of that conflict (the Agency argued against express preemption). See Brief For United States As Amicus Curiae, Buckman Co. v. Plaintiffs’ Legal Committee, No. 98-1768 (U.S., filed June 7, 2000).

The Supreme Court agreed with the FDA and accepted the appeal in Buckman. The FDA/DOJ filed a second amicus brief in the Buckman case on the merits, which once again argued that fraud on the FDA claims were preempted as inherently conflicting with federal agency decisions. See Brief For United States As Amicus Curiae Supporting Petitioner, Buckman Co. v. Plaintiffs’ Legal Committee, No. 98-1768 (U.S., filed Sept. 13, 2000). The Supreme Court unanimously agreed that fraud on the FDA claims were impliedly preempted. Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001).

Also in 2000 the FDA elected to file a brief supporting preemption of common-law tort claims in a case where the plaintiffs had moved for injunctive relief under state law to force a manufacturer to make changes in FDA-approved labeling and to issue “Dear Doctor” letters. Finding these claims were a direct challenge to the FDA’s control over labeling content and over issuance of such letters to physicians, the FDA argued that these claims could not stand in the face of the Agency’s approval of the existing warnings and the FDA’s power to order notices to the public, and that the FDA had primary jurisdiction over such matters. See Statement Of Interest Of The United States, Bernhardt v. Pfizer, Inc., 00 Civ. 4042 (LLM) (S.D.N.Y., filed Nov. 13, 2000). The court agreed that the FDA had primary jurisdiction and did not reach preemption. Bernhardt v. Pfizer, Inc., 2000 WL 1738645 (S.D.N.Y. Nov. 22, 2000).

After the change in administrations, a similar situation arose in 2002, where plaintiffs obtained an injunction under state law against a manufacturer’s continuation of FDA-approved advertising. In re Paxil Litigation, 2002 WL 1940708 (C.D. Cal. Aug. 16, 2002). Once again the Agency found that claim was a direct threat to the FDA’s superintendence of what regulated manufacturers could tell the public about regulated products and argued in favor of preemption. See Brief Of The United States, In re Paxil Litigation, No. CV 01-07937 MRP (C.D. Cal., filed Sept. 5, 2002). The district court, while not finding preemption, reconsidered its order and withdrew the injunction. In re Paxil Litigation, 2002 WL 31375497 (C.D. Cal. Oct. 18, 2002).

At approximately the same time, the FDA also intervened in litigation in California litigation that sought to enforce a state proposition that mandated birth defect warnings under certain circumstances – even with respect to FDA-approved product labeling. The litigation sought to force manufacturers of smoking cessation devices to include teratogenicity warnings. The Agency, however, had nixed precisely these warnings. The FDA considered the risk of birth defects from use of these products to be much less of a risk to the developing fetus than the risks posed by cigarette smoke if pregnant women, deterred by the state-law warnings from using the devices, continued to smoke. When this litigation reached an appellate stage in 2002, the FDA filed an amicus brief taking the position that, once the Agency had ruled that no warning was appropriate, state law could not hold the manufacturer liable for following the FDA’s direction in preference to the state proposition. See Amicus Curiae Brief of the United States of America in Support of Defendants/Respondents, Dowhal v. SmithKline Beecham Consumer Health Care LP, No. A094460 (Cal. App. filed March 25, 2002).

The intermediate California appellate court disagreed with the FDA and held that the state proposition had been exempted from preemption by a federal statute. Dowhal v. SmithKline Beecham Consumer Healthcare, 100 Cal. App. 4th 8, 122 Cal. Rptr. 2d 246 (2002). On further appeal to the California Supreme Court, the FDA submitted a second amicus brief in the same case making mostly the same arguments. See Amicus Curiae Brief Of The United States Of America, Dowhal v. SmithKline Beecham Consumer Healthcare, LP, No. A094460 (Cal., filed July 18, 2003). Siding with the FDA, the California Supreme Court reversed and held that the litigation was preempted – even an express savings clause could permit state law to prevail in a direct conflict situation involving supreme federal law. Dowhal v. SmithKline Beecham Consumer Healthcare, 32 Cal. 4th 910, 12 Cal. Rptr. 3d 262, 88 P.3d 1 (2004).

The next FDA intervention in state-law tort litigation occurred in state court in Tennessee. In medical device litigation, the plaintiffs contended that the product in question was approved by the Agency through one method of review, and the defendant contended that a different method of review had been used. The FDA filed a brief, siding with the defendant, stating how the product was approved, and arguing that plaintiff’s contrary contentions misapplied the FDCA and were therefore preempted. See Statement Of Interest Of The United States Of America, Murphee v. Pacesetter, Civ. No. ct-005429-00-3 (Tenn. Cir. 30th Dist., filed Dec. 12, 2003). The litigation did not produce any opinion resolving the issue.

Shortly after the turn of the millennium, plaintiffs started filing suits alleging that selective serotonin uptake inhibitors (“SSRIs”), medication approved to treat clinical depression, caused suicide. Since depression – the condition being treated – also caused suicide, these claims were problematic from a scientific standpoint. The FDA reviewed this issue several times and until recently refused to permit suicidality warnings on these products as to any category of user (and to date still requires only pediatric warnings). Ignoring the FDA’s resolution of this issue, plaintiffs alleged in state-law litigation that warnings the FDA had prohibited were mandated by state tort law. Beginning in 2002, the FDA filed several amicus briefs arguing that its decisions not to require suicide/suicidality warnings preempted claims asserting a state-law duty to provide those same warnings. See Brief For Amicus Curiae The United States Of America, Motus v. Pfizer, Inc., Nos. 02-55372, 02-55498 (9th Cir., filed Sept. 3, 2002); Amicus Brief For The United States, Kallas v. Pfizer, Inc., No. 2:04CV0998 PGC (D. Utah, filed Sept. 15, 2005); Brief for Amicus Curiae United States of America, Colacicco v. Apotex Corp., C.A. No. 05-5500-MMB (E.D. Pa., filed May 10, 2006); Brief of United States as Amicus Curiae in Support of Defendants-Appellees, Colacicco v. Apotex Corp., No. 06-3107 (3d Cir., filed Dec. 4, 2006). The court in Motus avoided the preemption issue. Motus v. Pfizer Inc., 358 F.3d 659 (9th Cir. 2004). The Kallas litigation settled before there was any decision. The district court in Colacicco agreed with the FDA and found the SSRI claim preempted, Colacicco v. Apotex, Inc., 432 F. Supp.2d 514 (E.D. Pa. 2006) – and now (since this post was originally drafted), so has the Court of Appeals. Colacicco v. Apotex, Inc., 521 F.3d 253 (3d Cir. 2008). A certiorari petition is pending in the Supreme Court.

In a case that (unlike the SSRI litigation) did not involve a purported drug risk previously passed upon by the Agency, the FDA has taken the position that, unless it would have found the scientific basis insufficient, there is no preemption prior to the FDA actually taking a regulatory position. See Letter Brief of the United States as Amicus Curiae, Perry v. Novartis Pharmaceuticals, C.A. No. 05-5350 (E.D. Pa., filed Sept. 21, 2006). The FDA distinguished the SSRI cases as involving state-law challenges to actual FDA decisions, and the court ultimately ruled the same way. Perry v. Novartis Pharmaceuticals Corp., 456 F. Supp.2d 678 (E.D. Pa. 2006).

In the only instance where the FDA actually changed a specific prior legal position in an amicus filing having to do with preemption, the FDA argued that express preemption applied under the Medical Device Amendments (“MDA”) for pre-market approved (“PMA”) devices – the most rigorously reviewed type of medical device. Acknowledging that it was reversing a 1998 position against preemption, the FDA determined in 2004 that the FDA’s PMA process produced “device specific” requirements that preempted most product liability claims against this category of product. See Letter Brief of United States as Amicus Curiae, Horn v. Thoratec, No. 02-4597 (3d Cir., filed May 14, 2004). The appellate court, which had invited the FDA’s participation, agreed with the Agency and affirmed preemption, notwithstanding the regulatory reversal of position. Horn v. Thoratec Corp., 376 F.3d 163 (3d Cir. 2004).

Similarly, the FDA supported broad express preemption of product liability claims against a Class III PMA medical device in a brief filed in opposition to the certiorari petition in Riegel v. Medtronic. See Brief for the United States as Amicus Curiae, Riegel v. Medtronic, Inc., No. 06-179 (U.S., filed May 23, 2007). The Supreme Court accepted certiorari in Riegel notwithstanding the government’s recommendation. Riegel v. Medtronic, Inc., 127 S .Ct. 3000 (U.S. 2007) (mem.). And as we duly reported, Riegel was a big win for preemption in the medical device context. Riegel v. Medtronic, Inc., 128 S. Ct. 999 (U.S. 2008).

The FDA also filed a brief in support of preemption in the Warner Lambert v. Kent case. See Brief for the United States as Amicus Curiae Supporting Petitioners, Warner Lambert Co. v. Kent, No. 06-1498 (U.S., filed Nov. 2007). We discussed that brief here. There was never a decision in Kent. With Chief Justice Roberts recused, the Supreme Court split 4-4, the effect *as we explained, here) being an automatic affirmance with no precedential value. Warner Lambert Co. v. Kent, 128 S.Ct. 1168 (2008) (per curiam).

A couple more FDA amicus briefs on preemption topics are have been filed since the original date of this post, in Wyeth, Inc. v. Levine. First, as we’ve mentioned, the United States Supreme Court requested the government’s view on whether to accept the Levine certiorari petition. The Government did so in December, 2007. See Brief for the United States as Amicus Curiae, Wyeth v. Levine, No. 06-1246 (U.S., filed December 21, 2007). We reviewed that brief, here. After the Supreme Court accepted certiorari, the Solicitor General filed a brief on the merits, also supporting preemption. See Brief for the United States as Amicus Curiae Supporting Petitioner, Wyeth v. Levine, No. 06-1246 (U.S., filed June, 2007). Levine presents essentially the same question the FDA has already briefed in Motus, Kallas, and Colacicco.

We’ve provided links to all of these amicus briefs. We believe that they demonstrate how the Agency’s trend in favor of preemption began before the change of administration, and thus cannot be waved away as political. Rather, the FDA’s advocacy of preemption is almost entirely a reflection on the more regulatorily invasive types of claims being brought against FDA-regulated manufacturers. We also believe that, with the exception of Horn, the FDA has been quite consistent in its positions. The Agency’s position is, and has been that tort claims which either ignore FDA decisions, or threaten to undermine the Agency’s authority over the approval or labeling of regulated products, are preempted. That’s the position that the Agency has taken in these amicus briefs, and it’s also the position that it has taken in its 2006 Final Rule. See 71 Fed. Reg. 3922, 3933-36, 3967-69 (FDA Jan. 24, 2006).

Thursday, October 18, 2007

The 2007 FDCA Amendments And Preemption

As practically anybody bothering to read this blog knows, a large bipartisan majority of Congress just passed, and the president signed, a new bill that strengthens the FDA. Like just about everybody else, we thought that, overall, what Congress produced was a good idea. It seems that these days all statutes have to have names, but you would think the folks that think of them could have been a little more creative than the “Food and Drug Administration Amendments Act of 2007.” Well, they didn’t, so we’re going to have to call it “FDAAA” – don’t ask how to pronounce that.

Anyway, the ink’s hardly dry on the FDAAA before the plaintiffs are at it again, claiming that an obscure “rule of construction,” facially applicable only to a single section of the new act, somehow undermines preemption as to the FDCA as a whole. “Poppycock” doesn’t begin to describe how we view this latest gambit – but this is a G-rated blog (not that we’d expect any children to read it, but you know what we mean).

So where to start? How about with the practical? Probably the most basic reason that the FDAAA, or more specifically Pub. L. 110-85 §901(a) – to be codified at 21 U.S.C. §355(o)(4)(I) (we told you the ink wasn’t dry yet) – can’t possibly do what plaintiffs claim is that it was passed with overwhelming support from industry. Regular visitors to this blog will remember that, once upon a time, during the history of the FDAAA, the plaintiffs’ crowd actually did try to slip an anti-preemption poison pill into the bill. We blogged about that a couple of times here and here. That provision read:

Nothing in this act or the amendments made by this act may be construed as having any legal effect on any cause of action for damages under the law of any state (including statutes, regulations, and common law).

Well, the effect of that ploy was immediate and far-reaching. Industry – our clients – threatened to withdraw its support from what became the FDAAA, and within days the offending provision was promptly removed. We blogged about that, too.

Compare that reaction to industry’s response to the “rule of construction” currently being put forward by the plaintiffs – which is to say nothing at all, or at most a collective shrug of the shoulders. If this little snippet attached to the tail end of §901(a) really did what plaintiffs claim, there wouldn’t have been an FDAAA. We’ve already explained why preemption means a lot to our clients. Well, our clients were paying close attention, and nothing as destructive of preemption as plaintiffs claim the “rule of construction” is could possibly have found its way into the FDAAA without a huge legislative dust-up.

Enough about the dog that didn’t bark.

Let’s look at what plaintiffs are baying at the moon about these days. Section 901(a) is entitled “Postmarket Studies and Clinical Trials – Labeling.” It has five sections, most of which have subsections and sub- subsections. In short, it’s something that would look right at home in the Internal Revenue Code. Subsection 4, “Safety Labeling Changes Requested By Secretary,” has nine sub-subsections, the last of which is our friend the “Rule of Construction.” If you want to see precisely how this “rule” looks statutorily, tucked into its overall context, take a look at pages 8-9 of the “preemption Roundup” we linked to a little more than two weeks ago.

That “rule” isn’t very long. It’s entire text is:

This paragraph shall not be construed to affect the responsibility of the responsible person or the holder of the approved application under section 505(j) [that means the drug manufacturer] to maintain its label in accordance with existing requirements, including subpart B of part 201 and sections 314.70 and 601.2 of title 21, Code of Federal Regulations (or any successor regulations).

21 U.S.C. §355(o)(4)(I).

The first thing that positively jumps out from subsection (4)(I) – compared to the true anti-ption poison pill plaintiffs’ congressional allies attempted to insert earlier – is its facially limited scope. The real poison pill applied to the entirety of the Food and Drug Act, beginning “Nothing in this act or the amendments made by this act….” This “rule of construction” applies only to this “paragraph,” which means only §355/901, and nothing else.

From that limited scope alone, it should be evident, without having to look past the plain language that the provision, that it can’t possibly alter the scope of preemption generally. It doesn’t purport to affect anything more than the new FDA post-marketing powers over safety-relate labeling changes. The FDAAA augmented the FDA’s post-approval powers to make labeling changes. There’s certainly nothing in §355/901 that gives manufacturers any more freedom to make unilateral changes in the labeling contrary to prior FDA instructions or FDA labeling requirements.

And even then, all the new “rule” does is to ensure that the pre-existing “responsibilities” of drug manufacturers (that’s what’s in 21 C.F.R. §314.70 (§601.2 isn’t generally applicable to drugs)) with respect to post-approval label changes aren’t adversely “affect[ed]” by the new powers granted to the FDA. That makes sense too. Congress was attempting throughout the FDAAA to augment the FDA’s post-approval powers over labeling (and drug safety generally), not to reduce them by some unintended implied repeal of what the FDA already could do.

Well, it should be immediately obvious that this “rule” can’t possibly affect any preemption argument based upon the FDCA as it stood prior to the addition of the FDAAA, since the “paragraph” to which that “rule” refers didn’t even exist then. All of the prescription drug preemption arguments we’ve ever seen relate to the FDA’s exercise of its pre-FDAAA powers. Some of those arguments seek to maintain the primacy of decisions the FDA took more than a decade ago.

That the “rule” couldn’t possibly affect anything that went before is also self evident from the face of FDAAA itself. The 2007 amendments weren’t even in effect until quite recently. See FDAAA §909 (“This subtitle takes effect 180 days after the date of enactment of this Act”). Given when the FDAAA was enacted, that date was September 27, 2007. So it is impossible for the “rule” to affect any FDA action – no matter what it could be – taken before that date, since before that the FDAAA, and the “rule,” didn’t exist. There’s nothing in the FDAAA making it retroactive.

So what does the “rule” in fact do? It affects the FDA’s powers under the new §901. That section enhances FDA’s power to supervise the safety and labeling of prescription drugs after they’re approved and on the market. To take one of many examples, §901 authorizes FDA to demand that manufacturers undertake additional post-approval studies or clinical trials to assess either a “known serious risk” or “signals of serious risk” related to the use of a drug, §901(3)(b), and to implement new safety labeling changes on an expedited basis depending on what such studies show (or upon receipt of any other new information). §901(4)(A). The “rule” makes sure that these new FDA powers don’t displace the Agency’s pre-existing authority under existing FDA regulations – such as the Changes Being Effected (“CBE”) provisions of 21 C.F.R. §314.70.

Thus, under the “rule of construction” the new FDA powers conferred by §901 explicitly don’t displace anything that already existed – both the arguments that defendants in prescription drug product liability litigation use to advance implied preemption, and the arguments that plaintiffs use to oppose implied preemption are preserved by the explicit terms of the “rule.” That’s what the “rule” says, and that’s why, as we pointed out before, the industry did not find anything obnoxious about it, as opposed to the previous anti-preemption poison pill that so briefly surfaced during FDAAA’s path to enactment. In terms of preemption, the “rule” is a standstill agreement, nothing more.

Beyond the statutory language, the new plaintiff arguments that we’ve seen also excerpt snippets from the FDAAA’s legislative history. Our first response to that is “so what?” As we’ve just finished discussing, the text of §355(o)(4)(I) seems clear enough as to what it affects and what it doesn’t. That being the case, there’s no occasion, under fairly basic principles of statutory construction, to look to legislative history at all. There are more cases on this point than we care to think about, but here are a few: Lamie v. United States Trustee, 540 U.S. 526, 534 (2004) (“when the statute’s language is plain, the sole function of the courts – at least where the disposition required by the text is not absurd – is to enforce it according to its terms”); FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000) (“If Congress has done so, the inquiry is at an end; the court must give effect to the unambiguously expressed intent of Congress.”); United States v. Gonzales, 520 U.S. 1, 6 (1997) (“there is no reason to resort to legislative history” where a “straightforward statutory command” exists particularly where “the legislative history only muddies the waters”); Ratzlaf v. United States, 510 U.S. 135, 147-48 (1994) (rejecting reliance on Senate and House Reports, concluding that “we do not resort to legislative history to cloud a statutory text that is clear”).

Beyond that, what the plaintiffs are trying to pass off as “legislative history” is pretty lame. The best legislative history – the stuff we lawyers can find in the big books in the library (U.S.C.C.A.N.) – is in the formal reports published about legislation by the Senate and House of Representatives committees that put the legislation together in the first place. E.g., Thornburg v. Gingles, 478 U.S. 30, 44 (1986) (committee reports are “the authoritative source for legislative intent”). T’aint none of that here. The House Report on the FDAAA doesn’t say anything about the “rule of construction.” The Senate didn’t issue a report on FDAAA, and neither did the conference committee that reconciled the two bodies’ differences.

Thus, plaintiffs have nothing that even purports to represent the combined views of even one house of the Congress. Nope, all they’re offering is a few statements by individual members of Congress. Well, you know and we know that congresspeople love to talk. When a major bill is passed, it’s usually possible to find somebody saying just about anything either side might want. The courts know this too. That’s why reliance upon statements by individual legislators isn’t worth very much. Again there are plenty of cases to this effect, so we’re only being representative here. E.g., General Dynamics Land Systems., Inc. v. Cline, 540 U.S. 581, 599 (2004) (“the remarks of a single legislator, even the sponsor, are not controlling in analyzing legislative history”); Chrysler Corp. v. Brown, 441 U.S. 281, 311 (1979) (same); Zuber v. Allen, 396 U.S. 168, 186 (1969) (“[f]loor debates reflect at best the understanding of individual Congressmen”).

Another aspect of “legislative history” – equally slippery, to be sure – but probably a more accurate taking of Congressional temperature given its recency, is to look at what the FDAAA as enacted did not contain. Only a few months before, Congress had a chance actually to do what plaintiffs falsely claim that it did. The anti-preemption poison pill that surfaced over the summer would have put Congress on record against preemption with respect to the entire FDCA. It didn’t pass. In fact, the total lifespan of an explicit attempt to eliminate prescription drug preemption in the current Congress was measured in days.

In light of the abject failure of plaintiffs’ allies in Congress to persuade that body to restrict preemption in prescription drug product liability litigation, the current effort by plaintiffs to recast the “rule of construction” into the anti-preemption language that Congress refused to pass only weeks before positively reeks. If somebody who wasn’t a lawyer (say, one of our clients) tried to do the same thing in a non-litigation context (such as, in an advertisement), that person would be open to prosecution for consumer fraud as a bait and switch.

To us, that’s what the current plaintiffs’ arguments amount to – a legislative “bait and switch.” Plaintiffs’ allies couldn’t get Congress to do what they wanted, expressly disapprove preemption, so they seize upon something innocuous, and through a few speeches they gave on the floor, seek to switch that innocuous provision into something that they couldn’t get Congress to do. Only in litigation….

Not only that, the current plaintiffs’ arguments we’ve seen mischaracterize what was actually said in those speeches. What seemed to attract the individual speakers’ ire was “field” preemption, not the kind of conflict preemption that we’re raising on behalf of our clients. Thus, the “additional views” of 12 House members – not included anywhere in the House Report– say only that by giving FDA new post-approval, safety-related powers (in their individual views) Congress did not “intend to occupy this regulatory field.” Additional Views accompanying H.R. Rep. 110-225 (July 11, 2007), at 197. That’s field preemption if we’ve ever seen it. The remarks made by Senator Kennedy are the same. See 153 Cong. Rec. S11832 (“We do not believe that the regulatory scheme embodied in this act is comprehensive enough to preempt the field or every aspect of state law. . . . It is absurd to argue that the FDA, even with the enhanced resources provided by this legislation, commands the field when it comes to postmarket drug safety.”). Either ATLA didn’t give its friends the right talking points, or ATLA’s friends (probably accurately) realized that actually attacking implied preemption would have brought about the same fate for the “rule of construction” as had befallen the earlier anti-preemption poison pill provision – its removal from the legislation.

To the extent that implied preemption based upon conflict with FDA actions was actually discussed during the passage of the FDAAA, individual members of congress supported it. See, 153 Cong. Rec. S11839-40 (discussing correctness of preemption holding in Dowhal v. SmithKline Beecham, 88 P.3d 1 (Cal. 2004), that plaintiffs could not pursue state law claims for manufacturer’s failure to provide warnings determined by FDA to be scientifically unsubstantiated); id. at 11840 (endorsing approach to preemption taken in Sykes v. Glaxo-SmithKline, 484 F. Supp. 2d 289 (E.D. Pa. 2007), – another case we like – where court found state law claims barred by conflict preemption).

We’re not saying that we’re comfortable supporting our preemption position with the statements of individual members of Congress – we don’t think that’s a very strong argument – only that it goes to show that mining the “legislative history” of a bill is sort of like mining the Bible: if you look hard enough, you can find support for practically any proposition.

Another thing that should be considered is that Congress knew full well the preemption “lay of the land” when it passed the FDAAA. Specifically it had to know about the FDA’s views about prescription drug preemption as expressed in the preemption preamble to the January 24, 2006 drug labeling Final Rule. Notwithstanding that knowledge, Congress elected to leave the FDA’s well-known views intact. So what, you say? Well legally, that has the effect of an implicit endorsement. Here, there was “remedial legislation” (the anti-preemption poison pill) proposed in Congress. It was not enacted. Courts are loath “to overturn. . .judicially” something that “Congress, by its positive inaction, has allowed. . .to stand.” Flood v. Kuhn, 407 U.S. 258, 283-84 (1972). The same rule has been applied in the FDCA context, where the administrative “backdrop” and Congress’ acquiescence in it narrowed the “range of plausible meanings” that the FDCA could have. Brown & Williamson, 529 U.S. at 144-45. Here, if Congress disagreed with the FDA’s 2006 position on prescription drug implied preemption, the FDAAA was a golden opportunity for it to do something about it. It had the anti-preemption poison pill before it and did not enact it. Instead, it reinforced the FDA’s own powers, making the need for supposedly “parallel” state tort litigation even less necessary. See Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 349, 352 (2001) (that FDA “has at its disposal a variety of enforcement options that allow it to make a measured response” shows lack of need for supposedly “parallel” state tort proceedings). If anything the history of the FDAAA reinforces the validity of implied conflict preemption.

At bottom, though, we think the whole FDAAA business is a tempest in a teapot. This isn’t a case of express preemption. The FDAAA (or at least this part of it) has nothing to do with medical devices. Preemption in the prescription drug context is based entirely on implied, conflict preemption. If you’re not sure what the difference between express and implied preemption in the FDCA world is all about read our prior post. The important thing is that implied preemption involves actual conflict between federal law and state-law contentions. It’s not affected by anything Congress puts in a statute.

In the prescription drug context, implied conflict preemption (not field preemption, either) arises from the authoritative federal actions of the FDA acting within the scope of its congressionally delegated authority. It does not turn on whether Congress has occupied the field, or what Congress said generally (in Dowhal Congress had expressly tried to save the state statute in question), but arises because the FDA addressed a specific question and the plaintiffs are saying that state law can reach a contrary conclusion. State law that would require different warnings from what the FDA has determined to be appropriate conflicts with FDA’s authority and is thus preempted.

Ne’er the express and implied twain shall meet. The United States Supreme Court looked at this point repeatedly and has held that “neither an express pre-emption provision nor a saving clause ‘bar[s] the ordinary working of conflict pre-emption principles.’” Buckman, 531 U.S. at 352 (2001); Geier v. American Honda Motor Co., 529 U.S. 861, 869 (2000) – to name two. In Geier, for example, the Court held that even an express savings clause that explicitly preserved “state law” could not immunize a tort claim from preemption where the claim conflicted with federal agency action.

That’s with an express saving clause. The “rule of construction” plaintiffs advance is nothing of the sort. That “rule” mentions neither preemption nor state law. Plaintiffs have to pile inference upon inference just to connect up §355(o)(4)(I) to preemption in the first place (they make this jump because §314.70, which the “rule” references, is something they use in their anti-preemption arguments). But even if the FDAAA had contained something worthy of the description “savings clause,” that provision would have no effect upon implied conflict preemption. Such provisions have no bearing upon the workings of implied conflict preemption – which arises by virtue of the direct operation of the Supremacy Clause, and not by virtue of anything stated, or not stated, in any statute or regulation.

Thus the plaintiffs’ seizing upon the FDAAA bears no little resemblance to the flailings of a drowning man. The “rule of construction” in §355/901 doesn’t even purport to affect anything other than that section or to affect anything that went before. Their supposed “legislative history” is so weak as to be non-existent and ignores that Congress, only weeks earlier, had the opportunity to do precisely what plaintiffs wanted – but declined. And we’re dealing with implied, conflict preemption anyway, as to which the conflict itself, not any “saving” language (assuming there were any) controls.

Tuesday, October 16, 2007

Litigation Hold Memos

We have received several times over the last few days a blast e-mail from an e-discovery outfit advising us that "litigation hold memos" -- the documents instructing employees to preserve all relevant documents once litigation is reasonably anticipated -- are protected by the attorney-client privilege.

Here's the key excerpt from that blast e-mail:


"ARE LITIGATION HOLD DIRECTIVES ISSUED BY COUNSEL TO THEIR CLIENT PROTECTED AS PRIVILEGED COMMUNICATIONS OR WORK PRODUCT?

Generally, yes.

The Courts have held that litigation hold directives issued by counsel to their clients are protected as privileged communications or work product. Gibson v. Ford Motor Co., No. 06-1237, 2007 U.S. Dist. LEXIS 226, at *19-20 (D. Ga. Jan. 4, 2007); Rambus, Inc. v. Infineon Technologies AG, 220 F.R.D. 264 (E.D. Va. 2004)."


Those two cites may be useful, so we're sharing them with readers of this blog.

On the other hand, we're less convinced than the folks at CyberControls (who sent the blast e-mail) that the existence of the privilege matters.

Why? Let us count the ways.

(Actually, only two reasons spring to mind.)

First, it's likely that witnesses will be asked at depositions what they did to preserve documents. Although witnesses may not remember the precise date on which they received a "litigation hold" memo or the precise scope of the litgation hold, the witnesses will remember something. (Indeed, diligent defense counsel will make sure that witnesses remember something, for fear of otherwise being accused of having permitted spoliation of evidence.) After a few witnesses testify about what documents they retained and why, opposing counsel will have a pretty good sense of the contents of the supposedly privileged litigation hold memo.

Second, and perhaps more important, defense counsel is likely to choose to waive any privilege that attaches to a litigation hold memo. If there's ever a discovery dispute about e-document retention (and those spats are becoming increasingly common), defense counsel is likely to attach the litigation hold memo as Exhibit A to an opposition brief. Although that memo does not by itself prove that the client diligently sought to preserve documents, a carefully written litigation hold memo is a good first step toward proving that your client acted reasonably. Since the defendant is likely to voluntarily make the litigation hold memo public, any privilege that attached to the memo is likely to be waived.

We're thus pleased to learn that some courts have held litigation hold memos to be protected by the attorney-client privilege. And, by virtue of having written this post, we've added the cites to two cases so holding to this little electronic shoebox of case authority. In the end, however, we're not sure that we care.

Litigation hold memos should be carefully considered and carefully crafted, both to be sure they achieve their purpose and to demonstrate the reasonableness of your client's conduct. When the reasonableness of that conduct is put in issue in a lawsuit, however, the existence of a privilege won't make any difference at all.

Sunday, October 14, 2007

Warner-Lambert v. Kent and Corporate Headquarters

We've been asked two questions repeatedly since the Supreme Court granted certiorari in Warner-Lambert v. Kent. We're answering both of them publicly today.

First, we have no idea why the Supreme Court took the case. No one does. (Well, actually, nine people know, but they wear robes, and they're not talking.)

There are two possibilities.

On the one hand, Kent created a circuit split. The Sixth Circuit had previously held that the "fraud-on-the-FDA" exception under the Michigan statute was preempted, and the Second Circuit held in Kent that it was not. A difference of opinion in the federal appellate courts is a ground for granting certiorari, and that circuit split might explain the Supreme Court's decision to take the case.

On the other hand, the Supreme Court might have taken Kent in part because the Court was unhappy with the Second Circuit's decision and wants to reverse it. That's a less likely explanation, in our view, but we won't rule it out.

So our answer to the first question -- "Why did the Supreme Court grant cert in Kent?" -- resembles our answers to so many other questions posed at this blog: We don't have a clue.

On to Question #2: If the drug industry's position prevails in Kent -- so federal law displaces certain state law provisions that expand plaintiffs' possible recoveries -- will drug companies move to, or reincorporate in, states that have favorable laws?

We think we know the answer to this one: No.

First, companies probably won't move their corporate headquarters to take advantage of any change in the law effected by Kent. State legislatures give, and state legislatures taketh away. Since state governments always have the power to change state law, companies won't (and shouldn't) uproot themselves to move to a state with this type of (possibly) temporarily favorable product liability law.

Okay, so companies won't move their headquarters after a favorable decision in Kent. What about taking the alternate step of reincorporating in a state with favorable product liability law? Suppose you're a drug company headquartered in New Jersey, as so many are, but incorporated in a state other than New Jersey. If industry prevails in Kent, should you reincorporate in New Jersey?

Again, no.

First, many factors affect where a company incorporates itself. Favorable product liability law may be well down the list.

And, second, an industry victory in Kent will affect only some -- but not all -- of the product liability cases filed against you.

If a California physician prescribes a company's drug to a California resident, and the Californian ingests the drug, and claims to have been injured by it, in California, California law will govern that lawsuit. That result holds true even if the drug company is headquartered in -- or headquartered and incorporated in -- New Jersey. The choice of law rules for product liability cases typically apply the law of the state of the injury -- here, California -- to decide the case.

Thus, if a New Jersey plaintiff sues your drug company, you get the benefit of New Jersey law -- no matter where you're headquartered -- and if a California plaintiff sues you, you're dealing with California law -- again, no matter where you're headquartered. Don't move or reincorporate even if (knock on wood) business wins a smashing victory in Kent; there's no way to make New Jersey law apply to all plaintiffs' claims against you.

A few readers are probably thinking that we're not being aggressive enough here. Drug companies should not simply reincorporate in New Jersey, but should also press to change the choice-of-law rules, so that New Jersey law would govern all lawsuits filed against New Jersey companies.

Not so fast.

First, that would require a sea change in the law, and it's tough to create sea changes.

Second, that's a sea change that would, overall, hurt industry. Choice of law is one of the sharpest arrows in industry's quiver to defeat motions to certify class actions. If residents of all 50 states bring a single class action lawsuit against a drug company, the company almost always wants to avoid class certification. One compelling way to avoid certification of a putative nationwide class is to explain that California law governs the claims of California plaintiffs, and New York law governs the claims of New York plaintiffs, and Illinois law governs the claims of Illinois plaintiffs, so roping plaintiffs from all 50 states into a single class would create a judicial nightmare.

If we changed the law, so that New Jersey law would govern all claims brought against New Jersey companies, this choice-of-law headache would evaporate. New Jersey law would govern the claims of all class members, the judicial nightmare vanishes, and more classes might be certified.

How about advocating for a smaller change in choice-of-law rules? New Jersey law would not govern in their entirety the claims of all plaintiffs suing a New Jersey company, but would instead govern only requests for punitive damages.

On its face, this seems like a clever idea: New Jersey law bars punitive damages in product liability cases unless a plaintiff proves that the drug company defrauded the FDA; a victory in Kent would probably eliminate the exception and leave in place a rule that plaintiffs simply could not recover punitive damages in products cases.

This approach to choice of law, folks might argue, has some appeal. If a California plaintiff ingests a drug in California, then perhaps California law should govern the compensatory damages piece of the litigation. But, if a New Jersey drug company did something wrong, the corporate misconduct occurred in New Jersey, so New Jersey law should govern the punitive damages piece of the case.

Not so fast! That is not, and should not be, the law.

Moreover, industry shouldn't want that to be the law. In class action litigation, plaintiffs are always seeking to have some part -- any part! -- of a lawsuit certified for classwide treatment. A court's decision to rope together the claims of thousands, or hundreds of thousands, of plaintiffs into a single proceeding will inevitably put huge pressure on the defendant to settle the case. Plaintiffs don't care which piece of a case is certified for class treatment; just about any certification will do the trick.

If individual legal issues -- such as the law governing punitive damages -- can be teased out of a case and governed by a single state's law, that's a dangerous precedent. Plaintiffs will immediately start isolating other supposedly discrete legal issues, saying that one state's law can apply to those issues, and seeking class certification of those narrow issues. (That doctrine is often called depecage, and it's a dangerous one for defendants in our current class action world.) As an industry, we cannot be lending support to that approach. (Indeed, we've previously criticized an automobile manufacturer on this very ground.)

In the end:

1. We don't know why the Supreme Court granted cert in Kent.

2. No matter what the result in that case, drug companies should not be revisiting their choices of corporate headquarters or states of incorporation.

And:

3. Don't count your chickens before they hatch. The Supreme Court has not yet ruled in Kent, and there's absolutely no guarantee that we'll like what we read on the day that decision comes down.

But you can't blame us for hoping.

Friday, October 12, 2007

Promoting Diversity

We’ve been thinking about how our clients, prescription drug and device manufacturers, could do a better job of promoting diversity – diversity jurisdiction, that is. For you non-lawyers, “diversity” refers here to diversity of citizenship. That in turn depends upon whether the defendants are residents of different states than the plaintiffs. Diversity of citizenship matters to lawyers like us because, for reasons going back to the founding of the USA, lawsuits in which the parties are citizens of different states may, at the defendants’ option, be heard in federal, rather than just state, courts. The current diversity statute is 28 U.S.C. §1332.

The reason for diversity jurisdiction is that out-of-state residents sued in a plaintiff’s home state were thought to be vulnerable to what lawyers call “home cooking” – that local judges would favor local plaintiffs (and their lawyers) over folks from out of state, particularly when those folks are richer than the local folks. In the words of a prominent plaintiff’s lawyer:


[W]hat I call the ‘magic jurisdiction,’ . . . [is] where the judiciary is elected with verdict money. The trial lawyers have established relationships with the judges that are elected; they’re State Court judges; they’re popul[ists]. They’ve got large populations of voters who are in on the deal, they’re getting their [piece] in many cases. And so, it’s a political force in their jurisdiction, and it’s almost impossible to get a fair trial if you’re a defendant in some of these places. The plaintiff lawyer walks in there and writes the number on the blackboard, and the first juror meets the last one coming out the door with that amount of money. . . . The cases are not won in the courtroom. They’re won on the back roads long before the case goes to trial. Any lawyer fresh out of law school can walk in there and win the case, so it doesn’t matter what the evidence or the law is.
Dickie Scruggs, as quoted in PointOfLaw.

Federal courts, where the judges are appointed for life rather than elected, where the districts are larger than the counties by which state courts are typically structured, and where there are uniform nationwide procedural rules (mostly), were thought to give out-of-state defendants a fairer shake.

Anyway, those of us who defend large out-of-state corporate defendants accused of injuring in-state plaintiffs – such as the “out-of-state multi-million dollar drug manufacturers” mentioned in the concurring opinion in State ex rel. Johnson & Johnson Corp. v. Karl, 647 S.E.2d 899, 917-18 (W. Va. 2007), that we blogged about previously – think that these concerns are still valid in all too many places (and we’re not just talking about the so-called “hellhole jurisdictions”).

This assessment is shared by plaintiffs’ lawyers like Mr. Scruggs.

Which brings us back to the point of this post – promoting diversity jurisdiction. Just say you’re a plaintiffs’ lawyer and you’re interested in inviting a drug or medical device manufacturer into your jurisdiction for a little home cooking. The problem is that the deep-pocketed out-of-state defendant is, well, out of state. To avoid having the defendant be able to move (technically “remove”) the case to the corresponding federal district court, you’ve got to sue somebody else as well, somebody who lives in the same state as the plaintiff. That way, under the statute, all of the defendants are no longer from other states, and there’s no diversity jurisdiction.

The plaintiff doesn’t have to want to pursue this in-state defendant. All the plaintiff has to do is keep him/her/it around for a year. The statute governing how to get cases into federal court prohibits removal on the basis of diversity jurisdiction once the action has been pending in state court for a year. 28 U.S.C. §1446(b). After that the plaintiff can cut the fellow in-stater loose with no jurisdictional consequence.

In that situation, the enterprising plaintiff’s lawyer has a number of choices. One choice would be to sue the prescribing physician for malpractice. In most places, that would be a viable claim (unless the statute of limitations has run), but it has a major disadvantage: as we’ve discussed, given the learned intermediary rule, the prescribing physician is probably the most important fact witness in the whole case. Unless they’ve got a real good malpractice case, most plaintiffs aren't going to want to get on their “learned intermediary’s” bad side by suing him/her.

Another possibility, if the plaintiff received the targeted drug or device in a hospital setting, would be to sue the hospital as an intermediate “supplier” of a defective product. The biggest problem there, is that in the overwhelming majority of jurisdictions that kind of claim just won’t fly. Most places view hospitals as providers of services rather than products, e.g., Perlmutter v. Beth David Hospital, 123 N.E.2d 792, 794 (N.Y. 1954), or otherwise bar strict liability-type pass-through liability claims against hospitals. E.g., Budding v. SSM Healthcare System, 19 S.W.3d 678, 682 (Mo. 2000); La. Rev. Stat. §40:1299.41(A)(8).

For quite a few years, the non-diverse defendant of choice in this situation was the pharmacy from which the plaintiff had obtained the drug or (less commonly) medical device. This resulted in some pharmacies in plaintiff-favored counties having more suits pending against them than they could keep track of. Such a state of affairs, however, can have the unfortunate consequence of driving pharmacies out of the area – which inconveniences the local jury pool and might make them more receptive to tort reform arguments.

More, importantly, the law has also been shifting in the direction of exempting pharmacies from liability, unless they did something affirmatively wrong such as filling a prescription with the wrong drug. Requiring pharmacies simply to give drug warnings interfered with the prescriber’s responsibilities under the learned intermediary rule. E.g., Madison v. American Home Products Corp., 595 S.E.2d 493, 495-96 (S.C. 2004); Moore v. Memorial Hospital, 825 So.2d 658, 662 (Miss. 2002); Cottam v. CVS Pharmacy, 764 N.E.2d 814, 819-20 (Mass. 2002); Frye v. Medicare-Glaser Corp., 605 N.E.2d 557, 559-61 (Ill. 1992); Coyle v. Richardson-Merrell, Inc., 584 A.2d 1383, 1386088 (Pa. 1991). The proliferation of precedent precluding suits against non-negligent pharmacies has made them less inviting targets to home cooking plaintiffs.

The result has been an explosion of claims over the past few years of claims being made against entities affiliated with the manufacturer defendants – intermediate distributors and (especially) manufacturers’ representatives.

A number of manufacturers, particularly in the medical device field, use a network of intermediate distributors to get their products from the factory into the hands of the doctors and hospitals who prescribe and use their products. In recent years, these distributors have increasingly found themselves in the legal cross-hairs. Ellis v. C.R. Bard, Inc., 311 F.3d 1272, 1280 (11th Cir. 2002); Maher v. Novartis Pharmaceuticals Corp., 2007 WL 2330713, at *4 (S.D. Cal. 2007); Goss v. Schering-Plough Corp., 2006 WL 2546494, at *2 (E.D. Tex. Aug. 30, 2006); In re Prempro Products Liability Litigation, 2006 WL 617981, at *2 (E.D. Ark. Mar. 8, 2006); King v. Centerpulse Orthopedics, Inc., 2006 WL 456478, at *4 (N.D. Ohio Feb. 24, 2006); Martin v. Merck & Co., 2005 WL 1984483, at *3-4 (E.D. Cal. Aug. 15, 2005); Aronis v. Merck & Co., 2005 WL 5518485, at *1 (E.D. Cal. May 3, 2005); Fagan v. AmsourceBergen Corp., 356 F. Supp.2d 198, 207-10 (E.D.N.Y. 2004); Landree v. University Medical Products USA, Inc., 2004 WL 413287, at *2 (D. Minn. Mar. 1, 2004); Chamian v. Sharplan Lasers, Inc., 2004 WL 2341569, at *8 (Mass. Super. Sep. 24, 2004).

Distributors have some defenses available, such as tort-reform statutes that exempt non-manufacturing intermediate distributors from liability in quite a few states, as long as the manufacturer is solvent and subject to suit. The other category, sales representatives, unfortunately, cannot avail themselves of such protection.

The result has been a veritable explosion of suits alleging personal liability against manufacturers’ sales representatives in prescription medical product liability litigation: Legg v. Wyeth, 428 F.3d 1317, 1325 (11th Cir. 2005); Southern v. Pfizer, Inc., 471 F. Supp.2d 1207, 1216-1217 (N.D. Ala. 2006); Anderson v. Merck & Co. Inc., 417 F. Supp.2d 842, 847-848 (E.D. Ky. 2006); Kite v. Zimmer US, Inc., 2006 WL 3386765, at *2 (D. Nev. Nov. 22, 2006); Thompson v. Medtronic, Inc., 2006 WL 3544937, at *2-3 (D. Nev. Dec. 7, 2006); Gordon v. Pfizer, Inc., 2006 WL 2337002, at *6-7 (N.D. Ala. May 22, 2006); Prempro, 2006 WL 617981, at *1; Bloodsworth v. Smith & Nephew, 2005 WL 3470337, at *6-7 (M.D. Ala. Dec. 19, 2005); Baker v. Merck & Co., 2005 WL 5517236, at *2 (D. Nev. Sept. 13, 2005); Faison v. Wyeth, Inc., 353 F. Supp.2d 1273, 1278-79 (S.D. Ga. 2004); Catlett v. Wyeth, Inc., 379 F. Supp.2d 1374, 1381-82 (M.D. Ga. 2004); Braden v. Wyeth, 2004 WL 3569804, at *2 (N.D. Ala. June 30, 2004); Davis v. Wyeth, Inc., 2004 WL 3569806, at *5 (M.D. Ga. June 10, 2004); Sobkowski v. Wyeth, Inc., 2004 WL 3581799, at *3-4 (M.D. Fla. June 24, 2004); Fowler v. Wyeth, 2004 WL 3704897, at *4 (N.D. Fla. May 14, 2004); Lewis v. Wyeth, 2004 WL 3569843, at *4 (N.D. Fla. Apr. 29, 2004); Petty v. Wyeth, 2005 WL 2893734, at *4 (N.D. Fla. Apr. 28, 2004); Lizana v. Guidant Corp., 2004 WL 3316405, at *2-3 (S.D. Miss. Jan. 21, 2004).

This list (as you should expect by now) is simply the cases since 2004 where the claims against the sales representatives were dismissed. We aren’t in the habit of doing research that plaintiffs could use, and we aren’t starting here. You’ll just have to take our word for it that there are quite a few other cases where the unfortunate sales representatives have been held in the litigation past a motion to dismiss.

All this litigation that threatens to expose distributors and sales representatives to separate liability is obviously disruptive to manufacturers’ sales networks – not to mention to their relationships with the people and entities who now find themselves being sued individually. We’ve thought about this, and concluded that it’s gotten to the point where manufacturers might well wish to consider taking steps to defend not only themselves, but those who are increasingly being caught up as pawns in the games that plaintiffs’ counsel are playing to try to force litigation into their preferred, non-federal fora.

What we’re suggesting won’t work in all situations – a lot of states are just too big – and it might also prove to be too expensive or too inefficient to work in others. But, it would be effective in keeping manufacturers out of quite a few jurisdictions they’d rather avoid. And it would help get sales representatives and distributors out of litigation in quite a few places.

If manufacturers want to keep their distributors and sales representatives from being sued simply to defeat diversity, make sure that these entities are themselves diverse. That is – if a manufacturer has, say, a sales rep in Biloxi and another across the state line in Bogalusa, have Biloxi service Bogalusa, and vice versa. If the plaintiffs can’t get any advantage in terms of defeating diversity from suing a sales representative, then they’ll presumably stop doing it (if only to save service of process fees). These claims were almost never brought before plaintiffs started to view sales representatives and distributors as targets to defeat diversity. If the bull’s-eye is removed from these entities’ backs, then it’s reasonable to assume that the recent explosion in litigation against them will abate.

Sure, it will be a little more expensive and time-consuming, having to travel across state lines. But look at it this way. Avoiding just one Madison or St. Clair County megaverdict can pay for quite a few local motel room rentals made by St. Louis-based sales representatives.

Anyway, that’s our thought for the day. Corporations are used to structuring things to reduce their potential exposure to legal liability. Indeed, the corporate form itself came into being as a way to shelter investors from unlimited liability. Given what’s been happening lately, it’s probably past time to considering structuring the distribution network for prescription drugs and medical devices (and maybe other products as well) to try to avoid the increased prospect of liability that exists whenever plaintiffs are able to make defendants sample their home cooking.