Thursday, January 29, 2009

Government By Contingent Fee In Pennsylvania

We've posted before - here, here, and here - about the constitutionality issues (among many other problems) that we think are inherent whenever governmental units hire, without legislative approval, private outside contingent fee counsel to sue people (especially our clients) for money damages. Indeed, the issue is pending right now in the Supreme Court of California in County of Santa Clara v. Superior Court, 80 Cal. Rptr.3d 629 (Cal. 2008) (order granting review).

Well, we've now learned that the issue is headed to the Pennsylvania Supreme Court as well, as Janssen Pharmaceuticals, the manufacturer of Risperdal, is challenging the power of the Commonwealth's "General Counsel" (an appointee of the governor, as opposed to the Attorney General - a separately elected office currently held by a different political party) to hire a contingent fee lawyer ostensibly to represent the state in suing over alleged off-label promotion.

Here's a copy of the application for extraordinary relief that Janssen recently filed, seeking intervention by the Pennsylvania Supreme Court. It makes for interesting reading.

We hope the court decides to grant the appeal. It's really hard for a government to act in an unbiased fashion towards all citizens when it's being represented by someone with a financial interest in a particular outcome.


Defense Wins Summary Judgment In First Seroquel Test Cases

As Product Liability Law360 (subscription required), Bloomberg News , AmLaw, and several plaintiff blogs have already mentioned, AstraZeneca scored big yesterday in the Seroquel litigation. Bloomberg reports that "AstraZeneca faces about 9000 lawsuits with more than 15,000 plaintiffs in the U.S. over claims that Seroquel causes diabetes." The news is that yesterday Chief Judge Anne C. Conway, who presides over the Seroquel multidistrict litigation, orally granted summary judgment dismissing both of the two Florida bellwether plaintiffs (Guinn and Haller) whose cases were scheduled to go to trial on Monday February 2, 2009.

Bexis has been up to his eyeballs in defending the Seroquel litigation, and the relevant documents were filed under seal, so that limits what we can say at this point. Once an opinion comes down (maybe Monday), perhaps there'll be more - since, temperamentally, we'd like not to leave any plaintiff-side comments go unrebutted in the blawgosphere.

Right now we simply tip our hats and congratulate AstraZeneca and its lawyers for a very nice job and an excellent result on the toughest playing field there is - MDL litigation.

Wednesday, January 28, 2009

A Grace Note To Beisner And Miller

We enjoyed John Beisner and Jessica Miller's paper, "Litigate the Torts, Not the Mass: A Modest Proposal for Reforming How Mass Torts are Adjudicated," just published by the Washington Legal Foundation. (We liked Richard Nagareda's foreword to the monograph, too. And we're pleased to see that the authors are giving a talk based on their paper on this Friday morning, which will be available on-line here. We're just in a happy mood today.)

Beisner and Miller's thesis, in a nutshell, is that the judicial system could better litigate mass torts if (1) diversity jurisdiction were expanded to allow more claims to proceed in federal court, (2) courts adopted more aggressive winnowing procedures to separate the wheat from the chaff at the outset of mass torts, (3) class action tolling of statutes of limitations were eliminated in mass torts to provide clearer guidance as to when all claims must be filed, and (4) ethical rules were revised to account for the unique problems posed by mass tort settlements.

We're chiming in with an extra thought on the third point -- the need to eliminate class action tolling in the mass tort context.

Here's the background: American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), held that "the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action." Id. at 554. The Supreme Court announced that tolling rule for three reasons: (1) to avoid prompting absent class members to intervene or file separate complaints to preserve their claims, (2) to protect absent class members who reasonably chose not to intervene or file a separate case in reliance on the pendency of the class action, and (3) because the Court saw no harm to the statute of limitations, since the filing of the class acion put the defendant on notice of all claims against it.

Beisner and Miller object to American Pipe tolling in the mass tort context for three reasons. First, Beisner and Miller explain that "the vast majority of [mass tort] plaintiffs file individual complaints notwithstanding the hypothetical availability of class action tolling." Beisner & Miller, at 37. Second, the parties in mass torts often reach tolling agreements, which render class action tolling redundant. Id. Third, American Pipe tolling makes it impossible for the parties or the courts to "get a grasp of the size or scope of the litigation until years after the deadlines contemplated by the applicable statutes of limitations," which renders settlement more difficult. Id. at 37-38.

Beisner and Miller also note that courts almost never certify mass tort personal injury classes, which distinguishes mass torts from other fields of law in which classes are more likely to be certified and tolling is thus arguably justified. Id. at 38-39.

We'd like to add two more thoughts to the mix:

First, the Supreme Court decided American Pipe in 1974, when the MDL statute was just six years old. MDL procedure was in its infancy, and the phrase "mass torts" had not yet entered the lexicon. In 1974, courts arguably had a reason to worry about absent class members filing an avalanche of individual lawsuits if the pendency of a class action didn't toll the statute of limitations: How would courts manage the vast number of cases?

Times have changed. Courts now routinely manage thousands, or tens of thousands, of individual lawsuits that are filed as part of MDL proceedings. If the MDL transferee judge thinks it likely that he or she will certify a class, then the court can stay the individual cases pending a class certification decision and, if appropriate, notice of the right to opt out of the class. If, on the other hand, the MDL transferee judge recognizes that the court is unlikely to certify a personal injury class, then the court can begin to process the deluge of individual cases, as appropriate. (So too in state courts, where many states have enacted "mini-MDL" procedures. See Mark Herrmann & Geoffrey Ritts, "Statewide Proceedings," The National Law Journal (Oct. 13, 2003).)

It is now routine for courts to manage a slew of individual lawsuits filed as part of a mass tort proceedings. Time and experience have undercut American Pipe's concern about the judicial system's inability to process individual lawsuits that would be filed absent class action tolling.

Second, the Supreme Court's assertion that absent class members reasonably rely on the pendency of a class action to postpone filing individual complaints is simply not true in the context of mass tort class actions.

In some class action contexts -- allegations of discrimination at one manufacturing plant, or allegations that the properties surrounding one lake have been affected by groundwater pollution, for example -- it's possible that many people in the small community affected by the local dispute may in fact be aware of the pendency of the class action and may rely on the putative class action to protect their rights.

But, in the context of mass torts, this is simply not true. When tens of thousands of patients have received a medical implant, or hundreds of thousands of patients have ingested a drug, those patients are exceedingly unlikely to be aware that a class action has been filed on their behalf. In this context, the legal fiction of reliance is a fantasy indeed. See Mark Herrmann, "Class Actions: Are you a class member?," The National Law Journal (Sept. 19, 2005).

Moreover, in other contexts, class action procedure basically acknowledges that absent class members are often unaware of the pendency of the class action lawsuit. The rules require courts and parties to notfiy absent class members (including giving individual notice "to all members who can be identified through reasonable effort") when a Rule 23(b)(3) class is certified. And the rules again require notice to be given when certified class actions are settled. Fed. R. Civ. P. 23(e).

Why would the rules require giving notice if the absent class members were already aware of the pendency of the class action and able to monitor its progress? Because, we submit, outside of the context of class action tolling, the rules more honestly recognize that most absent class members are unaware that the class action is pending. That truth undercuts one of the main rationales for American Pipe's tolling doctrine.

So: "Hear, hear!" to Beisner and Miller. Fight the noble fight!

But don't miss a trick. There are even more reasons than you offered in your paper to justify altering the class action tolling rules in the context of mass torts.

Tuesday, January 27, 2009

The Ethics Of Genetic Research

This guest post was written by J.C. McElveen, of Jones Day. We thank him for the contribution:


In the late 1980s, members of the Havasupai tribe, an Indian tribe that lives at the bottom of the Grand Canyon, approached an Arizona State University anthropologist with whom the tribe had been working for several decades and asked if he could help shed some light on what the tribe members perceived to be an “epidemic” of diabetes within the tribe. Suspecting that genetics might be playing a role, the anthropologist got an ASU genetics professor involved, and, pursuant to several agreements and informed consents, the blood of over 200 tribal members was collected, in the early 1990s, to evaluate the genetics of diabetes among the Havasupai. Rather quickly, the researchers found that diabetes was occurring too frequently, and there was too little genetic variability among the tribe members, to conclude that the diabetes was related to genetics, and a paper to that effect was published in 1991.

However, the research did not stop there. From the early 1990s until the early 2000s, research using the blood continued, without the knowledge of the Havasupai. That research included research on schizophrenia and research on theories about population migrations from Asia to North America in ancient times, over the Bering Strait land bridge. The latter research conflicts with the Havasupai belief that, as a people, they originated in southwestern North America.

Once the Havasupai learned of this additional research, they banished ASU teachers and employees from the reservation and, ultimately, the tribe and certain tribal members sued the Regents of the University of Arizona. The most recent decision in this case, Havasupai Tribe of the Havasupai Reservation v. Arizona Board of Regents, 2008 WL 5047641 (Ariz. App. Div. 1) (Nov. 28, 2008), decides only issues having to do with whether certain procedural requirements were satisfied by the tribe and tribal members, before filing suit. However, the allegations in the suit raise very real issues regarding the extent to which genetic material can be used. Basically, the Havasupai claim that they provided blood samples only to ASU researchers, and only for the purpose of studying diabetes among tribal members. Instead, the tribe alleges, the blood was given to people outside ASU, was used for research having nothing to do with diabetes, and was even used (as the decision says) for “evolutionary genetics” research rather than “medical genetics” research. The tribe’s and tribal members’ causes of action included negligence, fraud, and breach of fiduciary duty, trespass and invasion of privacy. As to this last cause of action, the individual tribal members alleged invasion of personal privacy, and the tribe alleged invasion of cultural and religious privacy.

This case presents many interesting issues, one of which is: “Is this ‘injury’ compensable?” The court did address that issue, in the context of ruling on whether the tribe and the tribal members had made claims which “contain[ed] facts sufficient to permit [the defendant] to understanding the basis upon which liability is claimed and . . . [which set out] a specific amount for which the claim can be settled, and the facts supporting that amount,” as the Arizona statute permitting claims against public entities or public employees requires. A.R.S. 12-821.01(A) (The Arizona Notice of Claim Statute).

The court said that invasion of privacy by testing blood or urine samples beyond the consent given is a well-recognized cause of action (citing Norman-Bloodsaw v. Lawrence Berkeley Laboratory, 135 F.3d 1260 (9th Cir. 1998), and Doe v. High-Tech Institute, Inc., 972 P.2d 1060 (Colo. App. 1998). Similarly, “dignitary torts,” such as those alleged by the tribe, do not require proof of physical manifestations of injury (citing to Rumbauskas v. Cantor, 266 N.J. Super. 39, 629 A.2d. 1359 (N.J. App. 1993), rev’d on other grounds, 138 N.J. 173, 649 A.2d. 853 (N.J. 1994)), and Snakenberg v. The Hartford Casualty Insurance Co., Inc., 299 S.C. 164, 383 S.E.2d (S.C. App. 1989).

This case is far from over. The majority opinion drew a sharp dissent, and it will either be appealed to the Arizona Supreme Court, or go back to the Maricopa County, Arizona Superior Court for further proceedings (or, of course, it may be settled).

Is this type of case just an “informed consent” case: i.e., if the “informed consent” had been broader, there would be no viable claims? Or, does this case have broader implications?

In many way, this case is similar to Moore v. Regents of the University of California, 271 Cal. Rptr. 146, 793 P.2d. 479 (Cal. 1990). In that case, a patient’s leukemia cells were turned into a cell line and patented by his physicians without his knowledge or consent. The patient was allowed to sue for breach of fiduciary duty to disclose facts material to the patient’s consent, or performance of a medical procedure without first having obtained the patient’s consent.

At the very least, the Havasupai case expands this concept to a broader range of scientific research than just medicine. In all likelihood, as individual’s genes become more available, and more commercial opportunities arise as a result of discoveries about them (think about a gene in an individual, or in a group of people, that protects against a type of cancer), the law in this area is going to become much more complex.

Monday, January 26, 2009

Ideas For Voir Dire

We're collecting here various thoughts for voir dire questions in drug or device product liability cases that we've stumbled across recently. Some of the questions are new and interesting; some are tried and true; all are worth considering before you pick your next jury.

First:

"Has your confidence in the FDA increased, decreased, or stayed about the same in recent years?"

People whose confidence in the FDA has decreased in recent years have probably been paying careful attention to news reports about product recalls, and those people are disturbed by what they've heard. We're told that roughly 10 to 20 percent of respondents will answer "yes" to this question, and those people are dangerous jurors for the defense, so you should strike them.

On the other hand, fewer than 5 percent of respondents -- and often 0 percent -- will say that their confidence in the FDA has increased in recent years, and the reasons for increased confidence are more ambiguous. Thus, this question provides useful information to the defense without the trade-off of providing useful information to the plaintiffs.

The second questions -- the old stand-bys:

"Do you believe that, if there's an injury, the person who's hurt should receive compensation?"

and

"Do you believe that drugs should be 100 percent safe?"

We have no special insights into those questions, but you should always consider asking them in drug cases. Lord knows where they'll lead.

Third, these are some questions that we recently heard a federal judge suggest for the defense in drug product liability cases:

"Are you currently taking any medications?"

If so: "Do you need those medicines? Do they help you? Do you know how much money the drug company spent to develop that drug? Do you understand that, although the drug is helping you, the drug has possible side effects? Do you understand that every drug has possible side effects?"

Those questions aren't especially creative, but when a federal judge talks, we listen.

Finally, this isn't exactly a voir dire question, but we're sure folks can put it to good use -- perhaps in voir dire -- so we're sharing it:

Someone recently told us about an uncle who injured his hip in an accident in the days before medical device companies invented hip implants. Before surgery, the physician asked the routine question those days: "How would you like me to permanently fuse your hip during surgery? Shall I fuse your hip permanently in the sitting position (so you'll never stand again), or shall I fuse your hip in the standing position (so you'll sit awkwardly for the rest of your life)?"

We had forgotten about those types of choices, and the fact that people no longer face those dilemmas makes us awfully proud of what we do for a living.

In a drug or device product liability trial, it just can't hurt to remind the jurors, early and often, of how dramatically modern medicine has improved our lives.

Thursday, January 22, 2009

Closing The Arguments On Conte

As we reported yesterday, the California Supreme Court denied the petitions for review in Wyeth v. Conte. We’ve posted extensively on why we think Conte is a particularly dangerous expansion of tort liability because it simply ignores what product liability has been about for 50 years – that responsibility for product-related injuries follows profit obtained from the manufacture and sale of products.

Sadly, it looks like the court that more or less invented strict product liability is no longer all that much interested in its creation. Shades of Doctor Frankenstein. So now we’ve got to deal with this grotesque chimera of product liability and misrepresentation set loose to lumber across the California landscape.

Just about the only bright side (from our defense-minded perspective) of the whole Conte mess is that apparently a decision by one panel (“division”) of the California Court of Appeal has next to no stare decisis effect on other divisions of the Court of Appeal, even within the same appellate district. That means there's no such thing as "one and done" in California. There will be other chances to convince other panels of the Court of Appeal that our view of Conte – and of the scope of products liability generally – ought to prevail.

So with that in mind, we offer our closing arguments on Conte, for the good of the order. Consider what follows as free legal torches and pitchforks for going after the Conte monster, should you be so lucky as to get a chance to convince another California Court of Appeal, create a conflict, and thus lay the groundwork for another attempt to convince the California Supreme Court that the jurisprudential underpinnings to products liability really do matter.

We're also lazy. A lot of what follows is taken in more or less edited form from the amicus brief that Bexis filed with the California Supreme Court in Conte – a copy of which we’re making available, here.

One major problem with Conte is that the court placed form over substance. It let a plaintiff take a product liability cause of action – an inadequate warning claim governed by product liability principles such as the learned intermediary rule – and by calling it a “misrepresentation,” thereby avoid fundamental limitations inherent in the why product liability was created in the first place. It’s something that the California Supreme Court didn’t allow in Merrill v. Navegar, Inc., 26 Cal.4th 465, 478 (2001), when it held that negligent-entrustment-based claims against gun manufacturers were “product liability” actions subject to limits placed on such claims, no matter how the plaintiffs tried to “recast” their claim as something else.

Calling an inadequate warning claim based upon product labeling a “misrepresentation,” and allowing liability against the purported author of the misrepresentation even though the defendant didn’t profit from selling the product is a dramatic expansion of liability that is:

1. Rejected by the overwhelming majority of courts nationwide, as well as by the Third Restatement of Torts;

2. Contrary to bedrock product liability principles going all the way back to seminal decision in Greenman v. Yuba Power Products, 59 Cal.2d 57 (1963), that created product liability – specifically that liability stems from a manufacturer’s profit in making and selling products to the public;

3. Unnecessary to prevent injustice to plaintiffs, because traditional tort principles provide ample basis for assessing liability against generic drug manufacturers on the basis of their use of drug labeling created by others;

4. Adopted with no consideration of its implications on either the law or society; and

5. An unpredictable and open-ended penalty upon research and innovation in the development of new products, especially prescription drugs.

What happened in Conte is that the Plaintiff – like some 60% of all current users of prescription drugs – took a generic drug in accordance with her physician’s prescription. Then things happened. The drug allegedly caused a serious and debilitating adverse reaction. As do almost all plaintiffs in prescription drug product liability litigation, she claimed that the drug’s label failed to warn adequately of this risk. So she brought a routine product liability action for inadequate warnings against the drug’s generic manufacturers.

But because it was a generic drug, the plaintiff made a claim that users of pioneer drugs can’t bring. She also sued a non-manufacturer – Wyeth, which made pioneer version of the drug that plaintiff never took at all. Incorporating all of the standard product liability allegations about the allegedly inadequate label, she changed the name of the claim to “misrepresentation.” Wyeth did not make any drug plaintiff took. So Wyeth got sued even though it didn’t make any product that injured the plaintiff. Not only that, but the product at issue was a competing generic drug that, because it was cheaper, had driven Wyeth’s product off the market so effectively that Wyeth no longer even made its pioneer product.

What plaintiff alleged was liability for somebody else's product sold after the defendant's own sales had ceased.

More stuff happened. The prescribing physician was deposed. He testified that he neither read nor relied upon any warnings that might have come with the generic drug. Conte v. Wyeth, Inc., 168 Cal. App.4th 89, 111-12 (2008) (“[n]o evidence suggests that [the prescriber] relied on” generic warnings). That testimony killed the plaintiff’s standard product liability case, because under California (and almost all other states') law, a plaintiff cannot establish causation in an inadequate warning case where the prescribing physician did not rely upon the allegedly defective warning. E.g., Ramirez v. Plough, Inc., 6 Cal.4th 539, 555-56 (1993); (summary judgment required where drug warnings were never read); Motus v. Pfizer Inc., 358 F.3d 659, 661 (9th Cir. 2004) (same; physician considered warning inappropriate) (applying California law).

Under these facts, if Conte were an ordinary prescription drug product liability case, plaintiff would have been out of court and out of luck, just like Motus. But because federal law requires that generic manufacturers use verbatim the labeling initially prepared by the inventor of the drug – here, Wyeth – plaintiff got a second bite at the apple against Wyeth, even though she indisputably never used Wyeth’s drug, and Wyeth no longer even manufactured it. Conte, 168 Cal. App.4th at 95 & n.1.

The prescriber testified that he also didn’t read Wyeth and its pioneer labeling when prescribing for the plaintiff. Rather, he relied solely on clinical experience and did not consult any drug labeling. However, he had to learn about the drug somewhere. So he testified that years earlier, when he was still “in residency training,” he “probably” read Wyeth’s label for its pioneer product, and that at unspecified times he “generally” consulted the Physician’s Desk Reference (“PDR”), which for anybody who doesn’t know, compiles FDA-approved drug labeling. Conte, 168 Cal. App.4th at 98 n.4, 99. Thus, the plaintiff asserted that there were “misrepresentations” in this whatever labeling the prescriber had read at some whatever time in the relatively distant past.

That was enough for at least one division of the Court of Appeal. The court held that a “misrepresentation” based entirely on product labeling-based wasn’t bound by the limits of product liability law. Thus the plaintiff could proceed against the non-manufacturer pioneer company, even though the plaintiff’s claims against the actual manufacturers were properly dismissed on warning causation grounds. Conte, 168 Cal. App.4th at 114.

Actual manufacturer off the hook. Former manufacturer of competing product that plaintiff never took on the hook. Curiouser and curiouser.

Well, Conte is an end run around the heart of modern product liability, which was created – not just for California but for the nation – in Greenman v. Yuba Power Products, some fifty years ago. Greenman recognized a core principle of social responsibility that justified what was then a new form of liability:


The purpose of this [product] liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market.
59 Cal.2d at 63. In other words, because manufacturers profit from the sale of their products., it is appropriate for them to answer for injuries caused by defects in those products.

Time after time, ever since Greenman, liability for injuries caused by allegedly defective products has been justified by reference to this “paramount policy.” Price v. Shell Oil Co., 2 Cal.3d 245, 251 (1970). Specifically as to inadequate warning claims the court in Anderson v. Owens-Corning Fiberglas Corp., 53 Cal.3d 987 (1991), held, “[i]t is only reasonable therefore that as between the injured user and the one who places the product on the market the latter should bear the loss.” Id. at 998 (citation and quotation marks omitted).

“[T]he risk of injury can be insured by the manufacturer and distributed among the public as a cost of doing business.” Ray v. Alad Corp., 19 Cal.3d 22, 31 (1977).

“Regardless of the identity of a particular defendant or of his position in the commercial chain, the basis for his liability remains that he has marketed or distributed a defective product.” Daly v. General Motors Corp., 20 Cal.3d 725, 739 (1978).

“[T]he fundamental reasons underlying the imposition of [product] liability are to deter manufac­turers from marketing products that are unsafe, and to spread the cost of injury from the plaintiff to the consuming public.” Brown v. Superior Court, 44 Cal.3d 1049, 1062 (1988).

Accord Carlin v. Su­perior Court, 13 Cal.4th 1104, 1110 (1996) (quoting and following Greenman); Cronin v. J.B.E. Olson Corp., 8 Cal.3d 121, 133 (1972) (same); Luque v. McLean, 8 Cal.3d 136, 145 (1972) (same); Price, 2 Cal.3d at 251 (same); see also Vandermark v. Ford Motor Co., 61 Cal.2d 256, 262-63 (1964) (retailers subject to product liability because “[t]hey are an integral part of the overall pro­ducing and marketing enterprise that should bear the cost of injuries”). Similarly, in Cadlo v. Owens-Illinois, Inc., 125 Cal. App.4th 513, 519-20 (2004), another division of the First District rejected a misrepresentation theory that sought to hold a non-manufacturing predecessor corporation liable in an asbestos case. If Cadlo goes by the wayside, we can also look for a new wave of asbestos liability.

So what is product liability? Under Merrill, a “product liability” case includes every legal theory that implicates the social policies that caused the doctrine’s creation by seeking product-related damages from product manufacturers. “Product liability” is no more – and no less – than “the liability of those who supply goods or products for the use of others. . .for losses of various kinds resulting from so-called defects in those products.” 26 Cal.4th at 478 (quoting Prosser & Keeton on Law of Torts §95, at 677 (5th ed. 1984). “Reformulating” product claims so that they sounded in “negligence” did not make them any less a form of “product liability”:

[T]his is a products liability action based on negligence, which asserts that the [product] was defective in design. . . . [I]mplicit in both the negligence and strict liability theories of products liability is that the defendant manufacturer was engaged in the business of distributing goods to the public . . . . [Plaintiffs’ claim] is therefore simply a reformulated claim that the [product], as designed, fails the risk/benefit test [for defective design].

Id. at 481 (citations and quotation marks omitted).

The result in Merrill was consistent with Peterson v. Superior Court, 10 Cal.4th 1185 (1995), where the court found no analogy between product liability and rental real estate since a landlord was “not a part of the manufacturing or marketing enterprise of the allegedly defective product that caused the injury in question.” Id. at 1188. Existence of “a continuous course of business [is] a condition to application of” product liability. Id. at 1207. Otherwise the “primary justification for shifting accident costs” is inapplicable. Id.

Still earlier, in Daly the court was “disinclined to resolve the important issue before us by the simple expedient of matching linguistic labels which have evolved either for convenience or by custom.” 20 Cal.3d at 736. Because rigid application of labels only “reward[ed] adroit pleading and selection of theories,” id. at 738, the court instead “examine[d] the foundational reasons” for product liability and applied comparative fault to all such actions. Id. at 736. Thus, for decades, a defendant's manufacture or sale of the injury-causing product has delineated product liability, no matter what the name of the cause of action.

The misapplication of the tort of “misrepresentation” in Conte should be viewed in this same light. While it was an issue of first impression in California, many courts across the country have addressed this precise question, and they overwhelmingly reject liability of pioneer drug manufacturers for injuries caused by generic competitors. These courts have generally followed Foster v. American Home Products Corp., 29 F.3d 165 (4th Cir. 1994), which found “no authority for [plaintiff’s] assertion that one manufacturer can be held liable for injuries stemming from an­other manufacturer’s product,” and “no basis in the federal drug approval scheme for treating drug manufacturers differently from other manufacturers in products liability actions.” Id. at 171 (affirming summary judgment against misrepresentation claim). See also Swicegood v. Pliva, Inc., 543 F. Supp.2d 1351, 1354-59 (N.D. Ga. 2008); Demahy v. Wyeth Inc., 2008 WL 4758615, at *13 (E.D. La. Oct. 28, 2008); Mensing v. Wyeth, Inc., 2008 WL 472426, at *5 (D. Minn. Oct. 27, 2008); Morris v. Wyeth, Inc., 2008 WL 2677048, at *4 (W.D. Ky. Jun. 30, 2008); Smith v. Wyeth, Inc., 2008 WL 2677051, at *4 (W.D. Ky. Jun. 30, 2008); Wilson v. Wyeth, Inc., 2008 WL 2677049, at *4 (W.D. Ky. Jun. 30, 2008); Pustejovsky v. Wyeth, Inc., 2008 WL 1314902, at *2 (N.D. Tex. Apr. 3, 2008); Barnhill v. Teva Pharmaceuticals USA, Inc., 2007 WL 5787186, at *2-3 (S.D. Ala. Apr. 24, 2007); Colacicco v. Apotex, Inc., 432 F.Supp.2d 514, 540-41 (E.D. Pa. 2006), aff’d & rev’d in part on other grounds, 521 F.3d 253 (3d Cir. 2008); LeBlanc v. Wyeth, Inc., 2006 WL 2883030, at *6 (W.D. La. Oct. 5, 2006); Goldych v. Eli Lilly & Co., 2006 WL 2038436, at *3-6 (N.D.N.Y. Jul. 19, 2006); Laisure-Radke v. Par Pharmaceutical, Inc., 2006 WL 901657, at *4 (W.D. Wash. Mar. 29, 2006); Tarver v. Wyeth, 2006 WL 1517546, at *2-3 (W.D. La. Jun. 7, 2005); Tarver v. Wyeth, 2005 WL 4052382, at *2 (W.D. La. Jun. 7, 2005); Doe v. Ortho-Clinical Diagnostics, Inc., 335 F. Supp.2d 614, 626 (M.D.N.C. 2004); Murphy v. Aventis Pasteur, Inc., 270 F. Supp.2d 1368, 1377 (N.D. Ga. 2003); Block v. Wyeth, Inc., 2003 WL 203067, at *2 (N.D. Tex. Jan. 28, 2003); DaCosta v. Novartis AG, 2002 WL 31957424, at *9 (D. Or. Mar. 1, 2002); Stanley v. Wyeth, Inc., 991 So.2d 31, 34 (La. App. 2008); Flynn v. American Home Products Corp., 627 N.W.2d 342, 350 (Minn. App. 2001); Westerlund v. Wyeth, Inc., No. MID L02174-05, slip op. at 3 (N.J. Super. Oct. 20, 2008); Kelly v. Wyeth, 2007 WL 3407466, at *2 (Mass. Super. Oct. 23, 2007); Kelly v. Wyeth, 2007 WL 1302589, at *5 (Mass. Super. Apr. 12, 2007); Green v. Wyeth Pharmaceuticals, Inc., 2007 WL 5760596, at *1 (Ala. Cir. May 15, 2007); Sharp v. Leichus, 2006 WL 515532, at *4 (Fla. Cir. Feb. 17, 2006), aff’d per curiam, 952 So.2d 555 (Fla. App. 2007); Kelly v. Wyeth, 2005 WL 4056740, at *2 (Mass. Super. May 6, 2005); Reynolds v. Anton, 2004 WL 5000272, slip op. at 8 (Ga. Super. Oct. 28, 2004); Sheeks v. American Home Products Corp., 2004 WL 4056060, at *2 (Colo. Dist. Oct. 15, 2004); Sloan v. Wyeth, 2004 Extra Lexis 202, at *11-12 (N.J. Super L.D. Oct. 13, 2004); Beutella v. A.H. Robins Co., 2001 WL 35669202, at *2 (Utah Dist. Dec. 10, 2001).

The black letter of the Third Restatement of Torts likewise considers product-related misrepresentation to be a subset of product liability. For product-related physical harm, the Restatement recognizes the liability of “[o]ne engaged in the business of selling or otherwise distributing products” for a misrepresentation made “in connection with the sale of a product.” Restate­ment (Third) of Torts, Products Liability) §9 (1998); accord id. at comment a (§9 “appl[ies] to commercial product sellers”). Nothing in Restatement §9 suggests that there could be actionable product-related misrepresentations on the part of a non-manufacturer or seller.

The sort of “foundational” analysis conducted in Daly and Merrill is precisely what Conte lacks. The claim rested upon routine allegations that drug labeling understated or omitted risks. See, e.g., Carlin, 13 Cal.4th at 1109-10; Brown, 44 Cal.3d at 1055; Stevens v. Parke, Davis & Co., 9 Cal.3d 51, 58 (1973) (all product liability actions involving similar claims). Calling them “misrepresentations” does not make them, in substance, any less product liability allegations.

Nor does a generic drug manufacturer’s use of a pioneer drug’s labeling – mandated by federal law – warrant a departure from the policy-based tenet that “[i]n the context of products liability actions, the plaintiff must prove that the defective products supplied by the defendant were a substantial factor in bringing about his or her injury.” Rutherford v. Owens-Illinois, Inc., 16 Cal.4th 953, 968 (1997). Identifying the actual manufacturer is not difficult in modern generic drug litigation. Cf. Sindell v. Abbott Laboratories, 26 Cal.3d 588, 611 (1980) (addressing different situation prior to passage of Hatch-Waxman Amendments). Now, the FDA’s regulations require generic manufacturers to identify their products; ensuring that such manufacturers will always be identifiable through their labeling. 21 C.F.R. §314.94(a)(8)(iv).

Uniquely for any product, the Hatch-Waxman Amendments, Pub. L. No 98-417, 98 Stat. 1585, to the FDCA give generic manufacturers the legal ability (after expiration of pioneer drug patents) – indeed, the obligation – to use for themselves certain aspects of the pioneer drug manufacturer’s intellectual property: (1) the clinical testing that established the drug’s safety and efficacy; and (2) the pioneer manufacturer’s labeling. See 21 U.S.C. §355(c)(3)(E)(iii-iv) (generic may rely upon prior studies); §355(j)(2)(A)(1)(v) (generic required to use “same” label). If the generic manufacturer believes that the labeling needs to be changed, it must apply to the FDA to change both its own and the original labeling. 21 C.F.R. §201.80(e). All companies choosing to enter the generic drug market are governed by these statutory requirements.

Generic manufacturers’ exercise of this statutory right does not create any legal issues uniquely warranting imposition of liability for generic products upon pioneer companies. Under Hatch-Waxman, generic drug manufacturers are simply another type of successor corporation, and a successor’s later use of acquired assets does not imposes liability upon a prior owner. To the contrary, once a generic manufacturer has succeeded by operation of law to the pioneer manufacturer’s prior research and labeling, the generic drug manufacturer is in the same position with respect to those assets as any other corporate successor to other corporate assets. Cf. Ray, 19 Cal.3d at 33-34 (imposing “product line” liability on a successor corporation that had “the opportunity. . .of passing on to purchasers of new. . .products the costs of meeting [injury] risks”). Thus, should there be “misrepresentations” in the labeling that Hatch-Waxman allows a generic manufacturer to use, under Ray that liability falls upon the generic successor to the pioneer labeling that is actually profiting from its use of that labeling.

Further, to the extent that Hatch-Waxman gives generic manufacturers the right to use pioneer labeling as their own, under traditional tort law they may also be liable for “passing off” that labeling under Restatement (Third) of Torts, Products Liability §14 (1998). See Cravens, Dargan & Co. v. Pacific Indemnity Co., 29 Cal. App.3d 594, 599 (1972) (“[o]ne who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer”) (quoting Restatement (Second) of Torts §400(1965)).

Thus, there is thus no common-law impediment to retaining, in the generic drug context, the fundamental proposition from Greenman that liability follows profit. Generic manufacturers may be liable under traditional theories for purported defects in pioneer labeling to which they have succeeded under the terms of the Hatch-Waxman Act.

As existing common law readily accommodates claims involving generic drug labeling, there is no reason that a plaintiff claiming injury from a generic drug should be better off – with an extra cause of action against a non-manufacturing pharmaceutical company – than an identical plaintiff who took a pioneer drug. Cf. Ramirez, 6 Cal.4th at 555-56; Motus, 358 F.3d at 661. Plaintiffs who cannot prove that a generic drug manufacturer’s inadequate warning caused their injuries should lose, as would any other plaintiff in any other product liability case.

In applying the law of “negligent misrepresentation” to a non-manufacturer, Conte purported to apply the venerable test for duty first formulated in Rowland v. Christian, 69 Cal.2d 108 (1968). See 168 Cal. App.4th at 105-07. But Conte distorted one Rowland factor, “foreseeability of harm,” almost beyond recognition, and refused even to consider other factors, most notably the “consequences to the community of imposing a duty to exercise care with resulting liability for breach.” 69 Cal.2d at 113. See 168 Cal. App.4th at 106.

Legal “duties” are “merely conclusory expressions that, in cases of a particular type, liability should be imposed for damage done.” Christensen v. Superior Court, 54 Cal.3d 868, 885 (1991) (citation and quotation marks omitted). Thus, “‘duty’ is not sacrosanct in itself, but [is] only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.” Merrill, 26 Cal.4th at 477.

The vague and open-ended interpretation of foreseeability in Conte provides no viable yardstick for liability. It held, in effect, that because pharmacists were legally permitted to substitute bioequivalent generic products for more expensive pioneer drugs it was “foreseeable” that a physician would rely upon labeling for the pioneer product even if prescribing a generic product that, by mandate of the Food and Drug Administration (“FDA”), came with its own package insert. 168 Cal. App.4th at 105. That application of pure foreseeability trumped both time and space. The purportedly foreseeable reliance here occurred, if at all, “during [the prescribing doctor’s] residency training” – whenever and wherever that might have been – or in some unspecified “general” way. Id. at 99 & n.6. Conte’s unbridled version of foreseeability flatly ignores the labeling that actually accompanied the drug that is actually prescribed.

Such a strained view of foreseeability is especially inappropriate in the case of pioneer drugs, given the extraordinarily burdensome nature of the proposed duty and its social cost. As explained in Castaneda v. Olsher, 41 Cal.4th 1205, 1219 (2007), in evaluating the social consequences of increased tort liability, an “extraordinarily burdensome” duty combined with “its likely social cost” demands a showing of “greater foreseeability,” not the open-ended approach to foreseeability employed in Conte.

Imposition of liability based upon nothing more than pure “foreseeability” has been barred at least since Thing v. La Chusa, 48 Cal.3d 644 (1989), because, as the court put it, “there are clear judicial days on which a court can foresee forever.” Id. at 668. Thing thus rejected the proposition that “foresight alone provides a socially and judicially acceptable limit on recovery of damages.” Id.

Rather than 20/20 hindsight, legal foreseeability is a “sliding-scale balancing formula.” Delgado v. Trax Bar & Grill, 36 Cal.4th 224, 237 (2005). The “mere presence” of foreseeability does not confer liability. Rather, “social policy must at some point intervene to delimit liability even for foreseeable injury.” Parsons v. Crown Disposal Co., 15 Cal.4th 456, 476 (1997) (citation and quotation marks omitted). Foreseeability is thus balanced against “policy considerations – i.e., the social utility of defendant’s conduct, and the consequences to the com­munity of imposing a duty.” Id.

Conte should not be followed because the Court of Appeal simply refused altogether to consider the “consequences to the community” of its decision, finding the record inadequate. 168 Cal. App.4th at 106-07. But if the record lacked any basis to evaluate a change in the law, the law should not have been changed. It was improper to divorce foreseeability analysis from the other Rowland factors – and in particular to eschew analysis of the social consequences of expanded liability. See Delgado, 36 Cal.4th at 243 (“expressly reaffirm[ing]” that “imposition of a high burden requires heightened foreseeability”).

“Duty, being a question of law, is particularly amenable to resolution by summary judgment.” Parsons, 15 Cal.4th at 465. California courts regularly evaluate the social consequences of expansive tort theories without demanding what amounts to an independent exercise in quasi-legislative fact finding. E.g., Castaneda, 41 Cal.4th at 1217; John B. v. Superior Court, 38 Cal.4th 1177, 1192-93 (2006); Delgado, 36 Cal.4th at. 243-44; Merrill, 26 Cal.4th at 483-84; Sharon P. v. Arman, Ltd., 21 Cal.4th 1181, 1194-96 (1999); Parsons, 15 Cal.4th at 474-75. The Court of Appeal erred in imposing "foresee forever" liability without considering relevant social policies – policies that would in fact have precluded imposition of any such liability.

In particular, “acceptance” of product liability and the “terms of its applicability have been determined to a large extent by the fundamental policies which underlie it.” Anderson, 53 Cal.3d at 995. Dramatic expansion of liability for product defects, in and of itself, implicates basic issues of social policy and the divide between judicial and legislative functions. Another division of the First Appellate District recognized this fact in In re Firearm Cases, 126 Cal.App.4th 959 (2005), when it held:

The potential impact [would be] staggering. . . . Imposing novel tort theories on economic activity significantly affects the risks of engaging in that activity, and. . .is a form of regulation administered through the courts rather than the state’s regulatory agencies. . . . Courts should therefore be chary of adopting broad new theories of liability, lest they undermine the democratic process through which the people normally decide whether, and to what degree, activities should be fostered or discouraged.

Id. at 990-91 (citations and quotation marks omitted). But Conte simply ignored any and all jurisprudential concerns.

The California Supreme Court has repeatedly recognized the overriding policy considerations that attach to prescription drugs, given their unique life-saving attributes and their dependence upon extensive scientific research and continual innovation. In Brown, the court discussed these public policy issues at some length:

"[P]ublic policy favors the development and marketing of beneficial new drugs even though some risks, perhaps serious ones, might accompany their introduction, because drugs can save lives and reduce pain and suffering." 44 Cal.3d at 1063.

It is contrary to “the public interest,” to deter prescription drug manufacturers from undertaking research into the development of new drugs “because of the fear of large adverse monetary judgments.” Id. at 1058.

Even when not deterred altogether from developing innovative products, prescription drug manufacturers could be forced by the “cost of insurance and defending against lawsuits” to reduce drug availability and increase drug prices. Id. at 1063.
In Moore v. Regents of the University of California, 51 Cal.3d 120 (1990), the Supreme Court reiterated that tort theories should not be expanded in ways that might adversely affect research, development, and availability of new prescription drugs. Moore rejected liability that would “threaten[] to destroy the economic incentive to conduct important medical research.” Id. at 146. Conte did not even pay lip service to Moore’s warning that courts “should be hesitant to impose [new tort duties] when to do so would involve complex policy decisions, especially when such decisions are more appropriately the subject of legislative deliberation and resolution.” Id. at 135-36 (following Brown).

Further, the intensive regulatory regime to which prescription drugs are subject is “signi­ficant” to any assessment of liability:

In this context, it is significant that the FDA pre­cludes drug manufacturers from warning about every conceivable adverse reaction; they may warn only if there exists significant medical evidence of a possible health hazard. They are also specifically precluded from warning of adverse reactions when differences of opinion exist within the medical community with regard to potential adverse reactions.

Carlin, 13 Cal.4th at 1114 (regulatory citations omitted).

The symbiotic relationship between pioneer and generic drugs supports the “conclu[sion] that research and development will inevitably decrease as a result of imposing. . .liability.” Id. at 1117 (characterizing the public policy conclusions in Brown). Under Hatch-Waxman, a manufacturer of a pioneer drug has only the seventeen-year life of its patent to recoup its re­search expenses for that drug, and to make a profit, before low-priced generic competition – unburdened by significant research or development costs of its own – effectively drives the pioneer drug off the market. Cf. Moore, 51 Cal.3d at 168 (discussing patent issues in context of for prescription medical products). Out of this finite revenue stream, the pioneer manufacturer must also factor in the inevitable expense of product liability.

But after Conte, a pioneer manufacturer’s exposure to product liability may not decrease as its market share evaporates under generic competition. Rather, that exposure stays the same – or even increases – given the decision’s reliance upon "foresee forever" foreseeability. But unconstrained foreseeability, in the case of pioneer drugs, has an inevitable effect of penalizing precisely the research and innovation that Brown sought to foster. 44 Cal.3d at 1058. Companies inventing new drugs incur more liability, while non-innovative generic manufac­turers have less responsibility for their own products.

A patented pioneer drug is, by definition, innovative. These are the products that by virtue of their novelty have a higher profile. They will garner the lion’s share of publicity, medical journal articles, scientific prizes, and professional attention. They are what physicians of tomorrow will learn about in their training. Generic drugs, by contrast, save money but do not otherwise advance public health. Thus, unless product liability is anchored to product manufacture, reliance claims of the sort Conte permits inevitably will gravitate to these high-profile products – those which break new ground and offer new cures. And liability under Conte is entirely open-ended. As Conte itself demonstrates, a purported “misrepresentation” can be actionable years or even decades after the statement was made.

This sort of liability cannot be anything but a profound disincentive to innovation and research – repugnant to everything the Supreme Court sought to preserve in Brown. Pioneer manufacturers that have long since ceased making or selling a product end up saddled with liability that can only be recouped by raising the prices of other, unrelated pioneer products. Such disincentive is the necessary byproduct of divorcing product liability from product manufacturing. Conte thus had to ignore the social consequences aspect of the Rowland test in order to impose “misrepresentation” liability upon pioneer drug manufacturers. Once that factor is considered, such novel liability theory could never be seriously entertained.

And there is more. Anytime that product liability diverges from product manufacturing, significant free rider problems are created. Like everything else, extra safety precautions cost money. The sole rationale for generic drugs is their lower price. Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 676 (1990) (purpose of Hatch-Waxman was “to enable new [generic] drugs to be marketed more cheaply and quickly”). They have no other competitive advantage, so any means of reducing their costs (and hence their price) will be tempting. Any shift in liability that transfers product liability expenses to pioneer manufacturers correspondingly reduces the incentive for generic manufacturers to behave responsibly towards the safety of their own products.

To take one example, pioneer manufacturers learning of promising new uses for their products have incentives to conduct clinical trials. 21 U.S.C. §355(c)(3) (new use lengthens patent exclusivity). With no such incentive, generic manufacturers would profit more from immediate, illegal off-label marketing. But should those trials uncover a serious safety problem, with liability divorced from manufacture, the pioneer company conducting the studies could end up saddled with liability for irresponsible off-label use – particularly if in the interim the generic manufacturer happened to become judgment-proof.

A “misrepresentation” under Conte need not be anything more than a claim that study results were not disclosed quickly enough. But demands for ever earlier disclosure of preliminary research directly attack the process by which medical innovation occurs. Thus, Conte’s expanded liability is antagonistic to both research and product safety – penalizing responsible non-manufacturers that have no control over misconduct by their competitors.

Moreover, the implications of expanded misrepresentation liability extend far beyond prescription drugs. Any product can be “misrepresented.” Competing product manufacturers will now risk liability whenever their warnings discuss shared product hazards. For example, one family may own different makes of cars. A plaintiff can claim reliance on one company’s inadequate tire inflation or infant car seat installation warning, even if an accident occurred during use of a different car. Under Conte, if one car company goes bankrupt, its surviving competitors become subject to suits over warnings about products they did not make.

And the expansive misrepresentation theory recognized in Conte is not even limited to competing manufacturers. Anybody could be the source of an alleged, product-related misrepresentation. To take some obvious examples, Consumer Reports Magazine or Under­writers Testing Laboratories could well be forced out of business (at least in California). Independent evaluation of the safety risks of products becomes a very risky business indeed if every evaluation could be an actionable misrepresentation about an entire product line.

That “misrepresentation” liability for product-related injuries would not be limited to those involved in bringing products to market is evident from Conte’s extensive reliance upon precedent having nothing to do with anyone’s manufacture, sale, or distribution of products. See 168 Cal. App.4th at 104-05 (discussing Garcia v. Superior Court, 50 Cal.3d 728 (1990), involving the duty of a parole officer to a crime victim, and Randi W. v. Muroc Joint Unified School District, 14 Cal.4th 1066, 1077 (1997), involving alleged misrepresentations in an employee letter of recommendation). Because Conte refused to address the social consequences of expanding liability for product defects to non-manufacturers, it is not persuasive precedent and its rejection of the majority rule that manufacturers are only liable for injuries caused by their own products should not be followed.

The novel “misrepresentation” cause of action permitted by Conte is fundamentally at odds with prior California precedent, runs roughshod over the policies that underlie the creation of product liability, and strips away fundamental limitations upon what is, at bottom, an action against a product manufacturer over warnings about a product-related risk. The sort of expansive liability asserted here should be the province of the legislature rather than the courts:

Courts should be hesitant to impose new tort duties when to do so would involve complex policy decisions, especially when such decisions are more appropriately the subject of legislative deliberation and resolution.

Mirkin v. Wasserman, 5 Cal.4th 1082, 1104-05 (1993) (citations and quotation marks omitted).

With the considerable caveat that these arguments were not successful in getting the California Supreme Court to review Conte, we offer them to counsel defending pioneer drug companies faced with proliferating “misrepresentation” claims in the wake of Conte. Remember, you get what you pay for.

Wednesday, January 21, 2009

Conte v. Wyeth: Review Denied

In Conte v. Wyeth, a California appellate court held that the manufacturer of a brand name drug could potentially be held liable for an injury allegedly caused by the generic version of the drug.

Our earlier rant about that case was here.

Today, the California Supreme Court refused to review the appellate court decision. Although we can't yet locate the order on the California Supreme Court website, counsel in the case received the following e-mail notice:


CONTE v. WYETH, INC.
Case: S169116, Supreme Court of California
Date (YYYY-MM-DD): 2009-01-21
Event Description: Petitions for review denied
Notes:
Baxter, J., is of the opinion respondent's petition should be granted.

Using The Internet To Improve Class Actions

One of your humble scribes -- Herrmann -- has teamed up with two co-authors to publish
"Making Class Actions Work: The Untapped Potential of the Internet," 69 U. Pitt. L. Rev. 727 (2008), which is just hitting newsstands today.

In the article, Herrmann, his colleague Brad Harrison, and his former colleague (and now Dean of the Lewis & Clark Law School) Bob Klonoff first canvas the current uses of the internet in class action litigation. The authors go on to propose ways that the internet can be used to improve class action procedure in the future. Among other proposals, they suggest creating a centralized website that contains all information about pending federal class action lawsuits, webcasting certain class action proceedings, and using the internet to facilitate two-way communications between absent class members, counsel, and the court.

We can't yet find a decent link on-line, but we'll provide one here if we ever unearth one.

UPDATE: Here's the promised link, now that we have both a pdf of the article and the necessary copyright permission to reprint. Enjoy!

Welcome to the Blogosphere, Russell Jackson!

We're pleased to see that Russell Jackson, of Skadden, has launched a new blog about consumer class actions and mass torts.

Russsell's columns in the National Law Journal have always been insightful, and we look forward to reading his new ideas on-line.

Welcome to the blogosphere, Russell!

Tuesday, January 20, 2009

How Much Should Judges Make?

In case you missed it, we're providing this link to Adam Liptak's article in today's New York Times: "How Much Should Judges Make?"

Apparently, a couple of empirical studies suggest that judicial pay is unrelated to "the quantity and quality of the work judges produce."

We'll just stand aside and watch the arguments fly.

Wait! Blogging Works!

When Herrmann published a post last week saying that blogging doesn't necessarily generate new business for lawyers, the blogosphere lit up like a Christmas tree. (The ornaments can be seen, among other places, here, here, here, here, here, and here.)

The on-line community told us that, if our blog wasn't generating significant business, then we're bad bloggers. Among other things, (1) we don't know how to write, (2) we don't know how to use the blog for business development, (3) we're insufficiently self-promoting on the blog, and (4) we're too self-promoting on the blog.

On the other hand, we heard that the experience of at least some other bloggers (such as Scott Greenfield at Simple Justice) resembles ours.

We also heard -- intelligently, we thought -- that we work at firms that are already exceptionally well known in a practice area that is already overflowing with lawyers, and a blog naturally doesn't have much effect in that environment.

In this post, Herrmann (alone again; don't blame Beck) offers one final follow-up point. We'll then stop fretting about whether blogging works and go back to thinking about drug and device law.

Here's the one final point:

The fact that our blog hasn't generated significant new retentions from new clients does not mean that blogging yields no benefits.

To the contrary.

First, blogging yields many intangible benefits.

We enjoy blogging. Blogging forces us to stay abreast of our field of law. We stay remarkably current on breaking news, because readers send us information. We influence the public debate. And so on.

Second, we also receive many tangible benefits from blogging -- just not, to date, significant new business directly attributable to the blog.

We're not press hounds, but we view raising our personal and our firms' profiles as a tangible benefit. (Law firms pay public relations folks to draw media attention to the firms' lawyers; presumably there's some value there.) And blogging has fairly dramatically raised our public profiles. But for blogging, we would not have had the following opportunities, among others:


1. We have appeared on television on CNBC, Bloomberg News, and C-SPAN.

2. We have been interviewed by, and quoted in, The New York Times, The Wall Street Journal, and countless other publications.

3. We were solicited to write a by-lined book review that appeared in The Wall Street Journal.

3. We have been offered a possible book deal by a major academic press.

4. We have been invited to speak innumerable times, including at academic symposia, CLE programs, and bar meetings.

5. We have been asked to write for many different publications.


And, needless to say, blogging creates a relatively high on-line presence for us.

Please don't take our public confession that blogging hasn't generated significant new business to mean that blogging has no benefits at all.

Blogging has many benefits, both tangible and intangible.

The question we posed last week, however, was a narrow one: Does blogging alone generate significant new business for lawyers who handle large matters at large firms?

In our experience to date, it does not.

We continue to believe that the efficacy of blogging as a business development tool will vary with the size of a lawyer's firm and the nature of a lawyer's practice.

(Last week, the blogosphere shredded us for our heresy; this week, it'll laud us for our insight. Ah, well: As long as they spell the name right. It's "Herrmann" with two r's and two n's.)

Monday, January 19, 2009

The Role Of Inside Counsel In Deposition Preparation

We're still feasting from our notes of the ACI Drug and Device Conference in New York last month. This post combines our thoughts with the ideas of one of the speakers at the conference. (We're not sure if that person cares to be identified here, so we're not naming him or her -- but not all of the thoughts that follow are our own.)

Inside counsel are typically overseeing the defense of many cases. Outside counsel, in contrast, are retained to wallow in the facts of specific cases. This makes the sessions at which counsel prepare corporate witnesses for deposition a little funny -- because inside counsel often attend those sessions, but they're generally not intimately familiar with the witness-specific facts needed to prepare the witness. What is the proper role of inside counsel in witness preparation?

There are several.

First, inside counsel is the company itself. The presence of inside counsel assures the witness that preparation is necessary, and that the company encourages participation.

Second, inside counsel knows the company. If a preparation session reveals that some additional corporate employee should be interviewed, or some fact should be scrubbed, inside counsel may be best able to identify the people with knowledge or to follow up to learn the needed details.

Depending on the sophistication of the witness, however, inside counsel may be able to play a broader role. Some witnesses understand the litigation process -- they've been deposed many times before, have testified at trial, and would probably pass the Bar exam if they ever bothered to sit for it.

Other witnesses are much less sophisticated about the litigation process, and inside counsel can help bring these witnesses up to speed before fact-specific deposition preparation begins. Inside counsel can sit down with a witness (perhaps even before outside counsel arrives) and explain the nature of giving deposition testimony, rather than trial testimony; the difference between civil and criminal proceedings; the identity of the defendants in the litigation and how that affects the possible personal liability of the witness; the particular piece of the puzzle that the witness will be asked about, and why the witness isn't supposed to know every possible relevant fact; why the company values participation as a witness in litigation; and the like.

Preparing the witness on these topics calms the witness and helps inside counsel and the witness develop a rapport.

Inside counsel can also run interference for the witness within the company. Inside counsel can call the witness's supervisor and explain the witness's absence from his or her regular job duties.

Inside counsel may -- or may not -- also want to submit formal praise of a witness who devotes the necessary time and study to deposition preparation and thus performs well under pressure. On this point, we're not sure that we agree with the speaker at ACI. The speaker suggested that submitting a favorable review as part of the employee's formal job evaluation shows the witness that the deposition time was well spent, and shows the supervisor that the employee performed a necessary task well.

We're less sanguine about that. We can certainly imagine plaintiff's counsel unearthing this type of favorable job evaluation and putting it to unsavory use. We can hear the closing argument now: "This company is so evil that it actually views testifying for the company as part of an employee's job. Look at this evaluation: Mr. Smith 'prepared conscientiously for the deposition' and 'did a good job at the deposition itself'! You can feel the cover-up right here in the company's own documents! Do you suppose the company would have congratulated Mr. Smith if he had admitted that the company didn't test its product appropriately? You can see the lesson being taught here -- stand by the cover-up, and you'll get a raise."

Perhaps this post offers two lessons: First, inside counsel have several productive roles they can play in witness preparation; they should play those roles effectively. Second, as always, think hard about "hindsight bias" -- how every written word, no matter how well-intended, may some day be used against a corporate defendant.

Friday, January 16, 2009

Second Circuit Agrees To Review Weinstein's Zyprexa Class Certification

This just in:

The Second Circuit has granted Eli Lilly's petition under Rule 23(f) to review Judge Weinstein's decision certifying a class in the Zyprexa litigation.

Our earlier posts about Judge Weinstein's order are here and here.

The entire text of the Second Circuit's docket entry reads:


1/15/09 Order FILED GRANTING motion leave to Appeal 23(f) by Petitioner Eli Lilly and Company. Petitioner, through counsel, moves pursuant to Federal Rule of Civil Procedure 23(f) and 28 U.S.C. 1292(b) for leave to appeal the district court`s order granting plaintiffs` motion for class certification and also to appeal the district court`s order denying summary judgment incorporated therein by reference. Upon due consideration, it is hereby ordered that the petition is granted. The Clerk shall issue a scheduling order. Per PNL, JAC, DAL. Written by FP. [Entry date Jan 15 2009 ] [YV]

A Push Away From 510(k)?

This morning's Washington Post, among other places, reports that there's a movement afoot to cause the FDA to review all high-risk medical devices through pre-market approval, rather than the less rigorous pre-market notification (or "510(k)") process.

That's a mixed bag.

This would surely increase the time it takes to get new devices on the market, which could, in some cases, hurt the public health.

But this would increase the amount of pre-market review by the FDA, which could, in some cases, protect the public health.

Here's what we add to the discussion: None of the articles that we've seen mentions that pre-market approval preempts later product liability claims (under Riegel v. Medtronic). Pre-market notification typically does not result in preemption (under Medtronic v. Lohr, 518 U.S. 470 (1996)).

While policy-makers are thinking about the appropriate review process, they might also think about the legal implications of that choice after a device is being sold.

To Cert. Or Not To Cert.

Back in the antedilvuian days when we were in law school, the practice we learned was to include Supreme Court denials of certiori as subsequent history when citing cases in briefs. We've pretty much been doing it ever since.

Lately, however, we've seen a lot fewer "cert. denied"s in the briefs other legal stuff we've been reading. Within the last month we've (well, one of us) had a conversation with a lawyer we think highly of who told us that he thinks some courts affirmatively don't want "cert. denied" added to citations, since such denials are of no precedential effect - which as a substantive matter is true.

So maybe it's time for "cert. denied" to join the second person familiar, words like "whereinbefore," the comma before "and," and distinctions between "who" and "whom" in the dustbin of grammatical history

So we thought we'd ask you, our readers, what you think of this burning issue. Do you include "cert. denied" in your citations and why?

It's Friday, so you should have come to expect this kind of thing from us by now.

Thursday, January 15, 2009

Thoughts On The New FDA Guidance On Off-Label Information

We’re hardly the first to report it, but the FDA has followed through with the draft guidance proposal that we discussed last year and thus has thawed a bit the agency’s cold war against truthful off-label “promotion.” If you’re familiar with that post, nothing we say here will come as any great surprise.

The new, no-longer-draft, Guidance can be found here. If you’re willing to pay, it’s also on Westlaw, at 2009 WLNR 664485. The Federal Register statement that accompanied the guidance is at 74 Fed. Reg. 1694 (FDA Jan. 13, 2009).

When we first heard about this a couple of days ago, we thought about preparing a grand, definitive work on what the FDA did. But that’s really administrative law, and that’s not really our thing. Not only that, there’s only two of us. Over at the FDA Blog they can draw on a whole firm of FDA specialists; and Reed Smith’s got 150 potential blog contributors in their health/products group. So we decided to leave that kind of grunt work to those guys – and you know what? They’ve come through, here and here. So if you want the particulars of each and every little regulatory hoop the FDA has set up, see ya.

Well, there’s that, and the fact that we were busy and couldn’t get around to it until now, so they basically scooped us. Hey, we’re lawyers, we can rationalize anything.

But we’re also litigators, and it’s through that perspective that we view the Guidance.

The most important thing we see in the Guidance right is the dichotomy between the FDA’s legal justification for its off-label promotion ban, and the agency's policy reasons for the new exception, which follow immediately afterwards. The two don’t fit together very well.

The FDA’s legal justification for the ban is absolutist – having nothing whatever to do either with the truth of the information, or with the safety of the off-label use involved. Take a look:

[T]he FD&C Act and FDA’s implementing regulations generally prohibit manufacturers of new drugs or medical devices from distributing products in interstate commerce for any intended use that FDA has not approved as safe and effective or cleared through a substantial equivalence determination. The Agency recognizes the value of having new indications and intended uses for products approved or cleared by FDA and encourages sponsors of medical products to seek such approvals or clearances. An approved new drug that is marketed for an unapproved use is an unapproved new drug with respect to that use. An approved drug that is marketed for an unapproved use (whether in labeling or not) is misbranded because the labeling of such drug does not include "adequate directions for use" Similarly, a medical device that is promoted for a use that has not been approved or cleared by FDA is adulterated and misbranded.

Guidance, at “Purpose” (don't blame us for the lack of page numbers).

This analysis confirms what we’ve said before about the FDA’s prohibition of off-label promotion not distinguishing in the slightest between truthful and untruthful speech – and not only that, the FDA's ban applies without regard to whether the information would benefit or harm the public health.

Since we’re litigators, not regulators, we find that interesting in two respects. First, we know we sound like a broken record, but the law’s failure to distinguish between truthful and untruthful speech makes the ban subject to First Amendment challenge. And since it doesn't turn on safety either, its rationale looks weaker every day. In short, the First Amendment requires that truth be a defense to an off-label promotion claim because blanket government suppression of truthful speech is unconstitutional. When all else fails, defendants have the First Amendment defense to fall back on.

Second, we don’t have to wait for all else to fail. That the FDA’s ban on off-label promotion turns on neither truth nor safety is critical to whether private plaintiffs being able to bring suit in the first place – whether such suits sound in product liability, RICO, false claims, or anything else. That’s because the FDCA, in 21 U.S.C. §337(a) prohibits private enforcement of violation claims. FDCA enforcement, as we’ve discussed several times before, is solely a government responsibility.

But what about parallel claims or negligence per se?

What about them? A single line can’t be “parallel.” There must be some pre-existing state-law duty for a violation claim to track, otherwise there’s nothing more than a naked FDCA violation barred by §337(a):

[F]or an FDCA violation to be “parallel” to a state law claim of any sort, a traditional state tort duty must actually exist. There must be something for the asserted FDCA violation to be “parallel” to.

More Thoughts on “Parallel” Requirements. Hey! Other people quote us, so we can quote ourselves every now and then.

If you don’t believe us, the recent Sprint Fidelis decision took a page right out of our book (blog?) when it said essentially the same thing while addressing negligence per se:

A claim of negligence per se simply adopts the standard of care imposed by a statute or regulation as the standard against which the defendant's conduct is evaluated. Stated differently, negligence is the breach of a legal duty, and under a negligence per se theory, the measure of that legal duty comes from a statute. . . . With this understanding of the foundations for negligence per se, it becomes clear why it cannot apply here. The negligence per se doctrine is not a magic transforming formula that automatically creates a private right of action for the civil enforcement, in tort law, of every statute.

2009 WL 35467, at *13 (citation and quotation marks omitted). No matter how you approach the problem, there’s gotta be an underlying tort, or else the claim fails under §337(a).

But since the FDA’s off-label promotion ban doesn’t turn on safety, that means there’s no plausible state-law cognate in the product liability field to provide the “parallel” for a private violation claim. That means that a suit alleging “illegal promotion” because a manufacturer of an FDA-regulated product allegedly promoted an off-label use doesn’t belong in a product liability action.

Ditto for the off-label promotion ban having no relation to truth or falsity. That means that there’s no plausible state-law cognate in the fraud/consumer fraud area, since those state-law claims turn on truth or falsity. Once again the state-law parallel is elusive. The same holds true in the RICO context for predicate acts of mail fraud/wire fraud - claims also dependent upon falsity. Epogen & Aranesp Off-Label Marketing & Sales Practices Litigation, 2008 WL 5335062, at *7 (C.D. Cal. Dec. 17, 2008).

In all these situations, there's nothing more than the FDA’s decision to ban off-label promotion – and only the government can enforce that.

So on the legal front, we like the new Guidance because it provides us with a pithy statement by the FDA itself of the statutory basis for its off-label promotion ban. The agency’s statement will be very handy in exposing attempts to enforce the FDA’s ban as the private enforcement actions that they are.

We’ll turn to the next paragraph now.

Contrast the legal underpinnings of the FDA’s off-label promotion ban with the policy rationale the agency gives for the new Guidance. The difference could not be starker – while truth and safety are irrelevant to the ban itself, the new Guidance is all about safety and truth:

FDA does recognize, however, the important public health and policy justification supporting dissemination of truthful and non-misleading [information] on unapproved uses of approved drugs and approved or cleared medical devices to healthcare professionals and healthcare entities. Once a drug or medical device has been approved or cleared by FDA, generally, healthcare professionals may lawfully use or prescribe that product for uses or treatment regimens that are not included in the product’s approved labeling. . . . These off-label uses or treatment regimens may be important and may even constitute a medically recognized standard of care. Accordingly, the public health may be advanced by healthcare professionals’ receipt of [information] on unapproved new uses of approved or cleared medical products that are truthful and not misleading.

2009 WL 35467, at *13 (hypertechnical parenthetical omitted) (emphasis added).

Note that we put the rabbit in the hat.

How?

We’ve substituted “[information]” for “medical journal articles and medical or scientific reference publications” – the language that the FDA uses in the Guidance. And we didn’t do that just to make the block quote shorter.

We did it because we don’t think there’s a legally valid distinction to be drawn between the narrow universe of truthful information that the Guidance permits manufacturers to distribute and the broader universe of other, equally truthful information – especially considering the intended audience of trained medical professionals.

For example, as long as a textbook is in fact “truthful and not misleading,” why does it matter whether it was “edited or significantly influenced by. . .individuals having a financial relationship with the manufacturer,” as the Guidance requires? Why, for that matter, must information be in the form of an article or a textbook at all? If the information is truthful – and contains necessary disclosures of potential financial conflicts and off-label status – this sophisticated audience can be relied upon to give it the weight it deserves, which in a lot of cases would undoubtedly be immediate consignment to the circular file.

We think that, once the FDA recognizes an exception for any sort of truthful information, then the public health rationale for banning truthful information evaporates. If we have to file another First Amendment brief on off-label use, this new exception to the FDA’s ban will be front and center of an argument that the ban is so inconsistent and riddled with holes that it can’t stand scrutiny under Greater New Orleans Broadcasting Ass’n v. United States, 527 U.S. 173 (1999), and Rubin v. Coors Brewing Co., 514 U.S. 476 (1995).

Properly presented to a court, this new Guidance badly undercuts whatever rationales the government could offer for the ban, since it effectively concedes that disclaimers and disclosures are sufficient guarantees that truthful information won’t nevertheless be “misleading.” That moves the legal arguments involving off-label promotion a long way in the direction of the drubbing that the FDA took in Thompson v. Western States Medical Center, 535 U.S. 357 (2002).

Now both of our blogging compatriots point out that Congressman Waxman, for one, believes that the FDA is being too lenient. We find that a little hard to believe given that the information the FDA deigns to allow manufacturers to distribute:
  • Must be a textbook or genuinely peer-reviewed medical article;
  • Must discuss an “adequate and well-controlled clinical investigation[]”;
  • Must include extant contrary scientific evidence;
  • Can’t be edited or influenced by the manufacturer that distributes it;
  • Must disclose every conceivable basis for potential financial conflict of interest;
  • Must be clearly labeled as involving an off-label use; and
  • Cannot be distributed as part of any other promotional activity.
Maybe we’re just dense, but arguing that doctors and other professional health care personnel can’t be trusted with this kind of information doesn’t seem to pass the red face test.

So, if Congressman Waxman wants to recriminalize the distribution of this sort of material, more power to him (Dirty Harry would put it differently). While the prospect of an FDA enforcement action is a big deal from a practical and financial standpoint, and we’d never tell a client to violate the law, from a constitutional perspective it really doesn’t matter that much what the would-be Big Brothers in Congress might do now. The more truthful speech Congress chooses to criminalize, the bigger a First Amendment target they put on the FDA’s ban on off-label promotion.

If, as appears to be the case, pornography on the Internet is constitutionally protected, what plausible argument can there be that the type of scientific speech the FDA’s new Guidance permits is not entitled to at least as much protection from government prohibition?

A Quick Apology

We have accidentally re-sent to subscribers to our blog a couple of old posts.

We apologize for this. We respect your time, struggle not to clutter your e-inbox, and are working to fix the technical glitch.

(We know you don't want to hear our tale of woe, but we're thinking of trying to upgrade to a new blogging platform, which would add some useful bells and whistles to the blog. We're cretins, so our attempt at upgrading the blog somehow caused old posts to be re-sent. We're sorry, and we're fixing it.)

Wednesday, January 14, 2009

Welcome, . . . Blogosphere!

Want to kick up some dirt in the blogosphere?

Publish a blog post about . . . blogging!

Herrmann's post on Monday about "blogging as a business development tool" attracted some attention around the web. We welcome our new readers from the Wall Street Journal Law Blog (nice photo, Dan), Above the Law (which sent us nearly 700 visitors with that little throwaway line and link), Simple Justice (okay, okay; a book is in the mail), Legal Blog Watch, Law and More (here and here), Mr. Thorne, Speechwriter-Ghostwriter, and LexBlog.

There was also quite a reaction in the "comments" to our own original post.

On that last score, we particularly liked the speculation that we were so famous before we started blogging that any additional prominence due to blogging simply couldn't attract more business. Thanks, Mom.

(And a special note to "commenters" Kevin and Kevin: Gentlemen, back to your corners!)

Tuesday, January 13, 2009

Guest Post - In Defense Of Preemption & FDA Regulatory Authority

This is the first of what we hope will be many guest posts by Bert Rein, a founding partner of Wiley Rein, LLP. Among many other accomplishments, Bert represents Wyeth in the pending Wyeth v. Levine appeal in the Supreme Court.

What follows are Bert's own thoughts, for which he gets all the credit and/or blame:

Judge Kyle’s comprehensive rejection on preemption grounds of all plaintiffs’ claims in the Medtronic Sprint Fidelis litigation is providing a rallying point for legislative efforts to repeal or override the express preemption clause of FDCA’s Medical Device Amendments. Judge Kyle not so subtly pointed in this direction by proclaiming that “the absence of particular remedy . . . does not imply . . . the lack of a legal wrong” (quoting Pacelli v. de Vito, 972 F. 2d 871, 879 (7th Cir. 1992)) and noting that Congress’s retroactive repeal of preemption language in the Federal Railroad Safety Act had permitted claims relating to a noxious gas discharge following a derailment to proceed after initial dismissal. Lundeen v. Canadian Pac. Ry. Co., 532 F.3d 682, 687 (8th Cir. 2008). Given the attractive facts of the Sprint Fidelis case from a plaintiff’s perspective – product recall, serious injury and an alleged manufacturing defect not reflecting a clear or particularized benefit/cost judgment by FDA – Sprint Fidelis is an almost ideal poster child for urging legislative action on medical device preemption with a potential spillover to prescription drugs, perhaps even before Levine is decided by the Supreme Court. It is, therefore, none too soon for those of us who care about safeguarding a unitary FDCA regulatory regime and scientifically based regulatory standards to start making our case to the public as well as the courts.

First, to the extent possible, we need to ensure that rational debate over how best to regulate devices and drugs is not overwhelmed by the plaintiff bar's focus on isolated instances of alleged negligence or by sympathy for the injured. An argument for having states regulate the design, testing and labeling of medical devices and prescription drugs through their own legislative/administrative regimes is, at best, a hard sell. No state has resources or expertise coming close to FDA nor has there been any political push for comprehensive state device and drug regulation. Even if there were reasons to believe that specific local factors required localized regulatory approaches – and no one has identified any – proponents of state based device and drug regulation would still have to justify the enormous costs and confusion inevitably arising from multiple state regulatory regimes. On this battle front, proponents of a unitary, federal regulatory regime clearly have the upper hand.

Second, we need to counteract plaintiffs' fallback position that state regulatory standards that merely “supplement” federal standards to make devices and drugs “safer” are an unalloyed public good. This argument conveniently ignores the “no free lunch” principle. In almost all cases, the proposed “safety” improvements would increase manufacturing costs, drag out access to market for beneficial new products or deter beneficial use. The critical question whether design modifications, additional pre-approval testing or added warnings would or would not, on balance, serve the overall public health interest is one that can be answered best by a scientifically staffed agency considering the interests of the entire potential patient population. Any attempt to resolve that core regulatory issue in the context of a specific alleged injury in a trial before a lay jury is a proposition whose lack of merit may seem obvious to those deeply involved but now needs to be laid bare for the general public.

Third, we need to deal with the contention that tort actions are not really conduct regulation but simply a means of forcing manufacturers whose products caused an injury, whether or not avoidable, to bear a cost that would otherwise fall on an innocent victim. Plaintiffs' arguments on this score speak with the proverbial forked tongue – they claim both that tort suits are necessary to discipline manufacturer conduct and protect against future harm and simultaneously that tort suits do not require conduct changes, only money payments.

We need to force the opponents of preemption to come clean on whether they are advocating state-based device and drug regulation as an exclusive tool, two-tier federal/state regulation or exclusively federal regulation with a compensation/insurance overlay for injury. If they seek to duck the issue of how best to regulate, and focus exclusively on compensation, we need to question whether the tort system with its heavy administrative costs, long delays and essentially random distribution of relief is a beneficial means of providing compensation to anyone except lawyers and their coterie of selected “experts”. Even more fundamentally, as we move toward universal health care and a more pervasive welfare state, we need to question why those even unavoidably injured by medical devices or drugs need greater relief than those harmed by industry-wide lay-offs, natural disasters or any of the other exigencies of a modern society.

Sprint Fidelis is a commendable high-water mark in giving due deference to FDA – even when FDA leaves regulatory choices to manufacturer’s discretion – and full weight to express preemption language. It is potentially troublesome from a legislative perspective, however, because it is not clear that the FDA/tort law conflict involved would require dismissal under conflict preemption theory, thus placing the onus of denying relief on Congress’s decision to block state action by express language rather than, as in the case of conflict preemption, Congress’s decision to enact a comprehensive and protective federal regulatory regime. The legislative risk is clear and, hopefully, the stimulus to reinforce the public policy factors supporting unitary federal regulation is equally clear. Putting these factors into simple words and supporting them with practical examples and understandable studies should be an urgent priority.