Friday, January 29, 2010

Fraud on the FDA - It's Garcia over Desiano in Texas

Texas, like Michigan, imposes a strong presumption of non-defectiveness on drug labeling approved by the FDA.  As to the Michigan statute (which has been around longer), the Sixth Circuit (where Michigan is located) ruled that an exception to the presumption for fraud on the FDA was preempted by Buckman.  Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961, 965-66 (6th Cir. 2004).  The Second Circuit, which ordinarily has nothing to do with Michigan, held to the contrary in Desiano v. Warner-Lambert & Co., 467 F.3d 85, 98 (2d Cir. 2006), aff'd by equally divided court, 552 U.S. 440 (2008).  Everyone knows we prefer Garcia (where Bexis filed an amicus brief) to Desiano - and that overall Garcia's been winning.

We're pleased to say that the streak continues.  The other day a federal court in Texas came down strongly on the Garcia side of the line, holding that the Texas exception for fraud on the FDA was preempted:
this court determines that the rationale in Garcia is persuasive and that extending the holding of Buckman to fraud-on-the-FDA exceptions is warranted. The court finds that the concerns in Buckman hold true not only where a plaintiff brings a fraud-on-the-FDA claim but also where it seeks to show an exception to the presumption here. To avoid any intrusion upon the FDA's right to police fraud itself, the court follows Garcia and finds that section 82.007(b)(1) [the Texas fraud on the FDA exception] is preempted in some circumstances, including as here, where Plaintiffs ask the court to reach the conclusion opposite of that reached by the FDA, that Defendants did not withhold information or mislead it.
Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 2010 U.S. Dist. Lexis 6390, at *32 (N.D. Tex. Jan. 27, 2010).  Because there was no dispute that the drug's label was approved, the failure to warn claim was dismissed.

There's other interesting stuff in Lofton, some good, some bad, but we'll save that for some other post.

Thursday, January 28, 2010

Docs For The Goose, Docs For The Gander – Round II

Over two years ago (have we really been at this so long we can say that?) we wrote a post “Docs for the Goose, Docs for the Gander,” in which we praised Weiss v. Astellas Pharma, US., Inc., 2007 WL 2137782 (E.D. Ky. June 25, 2007), for requiring an even playing field when it came to the always-contentious issue of informal defense interviews with plaintiffs’ treating physicians. In Weiss, the plaintiff’s counsel claimed exclusive rights to informal access to a treater, and did certain things to try to prejudice that treater against the defense case. Fed up with that conduct the court in Weiss ordered that the defendant be given equal informal access.

We praised Weiss, because while we support informal interviews, we support a level playing field even more. Defense counsel are content to live by whatever rules that courts set – as long as the rules are the same for both sides.  If they're not, we'll live by the rules, but we'll certainly not be content.

For similar reasons, we’re also reasonably happy with the recent decision in In Re: Ortho Evra Products Liability Litigation, MDL No. 1742, slip op. (N.D. Ohio Jan. 20, 2010). Even though Ortho Evra does it by a wholly different route, it's a step towards the same ultimate outcome as Weiss – a level playing field (or at least close to it) for informal contact with treating physicians.

But the playing field is set up rather differently.

The defendants in Ortho-Evra were concerned about the same sorry litany of prejudicial plaintiff conduct that we’ve already chronicled in our Weiss post. Thus they sought “to prevent an unfair advantage by Plaintiffs lobbying their theories of liability and causation upon the treating physicians during the ex parte contact.” Id. at 1.

Predictably the plaintiffs (or their lawyers, who benefit from being able to threaten and cajole treaters in private) blew their tops and raised a bunch of objections. We won’t go into those because the court rejected them all. Instead, the court let plaintiffs know that “woodshedding or gaining an unfair advantage by ambush when engaged in ex parte contact with treating physicians. . .will not be tolerated. Slip op. at 3.

“Based upon [the court’s] experience with lead counsel in this litigation,” id., the court added some specific guidelines to make sure that treating physicians would not be lobbied or pressured about liability issues:
[The court] allow[s] Plaintiffs’ counsel to have ex parte contact with treating physicians with the following limitations. Specifically, Plaintiffs’ counsel may meet ex parte to discuss the physicians’ records, course of treatment and related matters, but not as to liability issues or theories, product warnings, Defendant research documents or related materials. Violations of this approach, as stated above, will result in sanctions.
Slip op. at 3 (emphasis added). We hope that “liability theories” is construed broadly enough to preclude the familiar tactic of threatening to sue treaters for malpractice if they give unfavorable testimony in product liability litigation.

The court cited two cases as precedent. In one of these, In re Nuvaring Products Liability Litigation, 2009 WL 775442, at *2 (E.D. Mo. March 20, 2009), the plaintiffs’ counsel were a bit more reasonable than the crew running Ortho-Evra and agreed that it “would be appropriate” for all informal “interview[s] should be limited to the particular plaintiff's medical condition at issue in the current litigation.” Id.

A second decision, from New Jersey state court in Gaus v. Novartis Pharmaceuticals Corp., No. MID-L-007014-07-MT, slip op. (N.J. Super. L.D. Oct. 29, 2009) (Zometa-Aredia), forbade both sides from all informal contact with treaters “in the interests of fairness”:

[N]o party – Plaintiffs nor Defendants – shall engage in ex parte contacts with Plaintiffs’ treating physicians or influence the deposition or trial testimony of Plaintiffs’ treating physicians. To hold otherwise would facilitate the potential for either counsel to influence Plaintiffs’ treating physicians. To ensure that all parties have the same right of access to all nonparty fact witnesses, this court shall prohibit the parties from engaging in ex parte contacts with Plaintiffs' treating physicians.
Gausslip op. at 18. Gaus is another way to level the informal interview playing field.

As we said, we like informal interviews and we like a level playing field. That’s why of the various approaches we still prefer Weiss. As a practical matter, we think things work best when both sides can talk to treaters. There is value in such interviews, which is why both sides like to do them. As defense counsel, it lets us know early on if the case is a really bad one that we should advise the client to settle. It can also help zone out treaters that didn’t really have much to do with the condition in question and prevent unnecessary depositions.

As for important treaters, however, informal interviews simply aren’t going to eliminate formal discovery. In mass torts, those doctors have to be deposed, if for no other reason than to preserve their testimony during prolonged litigation. Anybody could get hit by a bus tomorrow, so it’s in neither side’s interest to do nothing between an informal interview and a subpoena for testimony at trial.

If we can’t get Weiss, then we suppose we’d rather have Gaus. A total prohibition of informal interviews is less efficient than allowing them, but it’s still a level playing field. Like we said, we can live with any form of level playing field.

Ortho-Evra, while only our third choice, is definitely better than nothing. Like the court in that case, we’ve had our “experience” – treating physician’s depositions in several mass torts have brought to light all sorts of interesting things, from the aforementioned malpractice threats to invitations for treaters to “consult” with a plaintiff’s expert on the case. Thus, limiting the subject matter of informal plaintiffs’ counsel interviews to the facts of the plaintiff’s medical condition and treatment is a big step in the right direction.

The specific threat of “sanctions” made in the Ortho-Evra order is another important aspect. But to be effective, the sanctions cannot simply be a $500 slap on the wrist. A sanction must remediate the effects of any improper conduct to work properly. So, beyond fines, a court needs to be ready to enforce an order of this sort with preclusions and adverse inferences if violative conduct has exerted undue influence upon a treater’s testimony that cannot otherwise be cured.

So we give three cheers to Weiss, two cheers to Gaus, and one cheer for Ortho-Evra.

Finally, as a service to our readers, we’d like to remind them of the resources available on the blog that concern the informal interview issue.

First, we have our 50-state survey of state law on whether or not defendants can conduct informal interviews with treating physicians, here. Let us know if we’ve missed anything.

Second, we have a detailed discussion of how the filing of a personal injury lawsuit works a waiver of the physician-patient privilege in our Weiss post, here. That post also discusses whether state-law restrictions are applicable in federal court in diversity actions, and contains a collection of cases that discuss why informal interviews are a good idea as a matter of policy.

Third, we have a lengthy post on why HIPAA does not preempt state law concerning informal physician interviews in the litigation context, here. HIPPA contains a litigation exception.  This free stuff about HIPAA preemption is especially valuable to attorneys handling smaller cases, since the other side has been known to spring the bogus HIPAA preemption argument in those sorts of cases in hope of sneaking one by unprepared counsel.

Wednesday, January 27, 2010

Bridge Closed For Repairs - The Supreme Court's Latest On RICO’s Causation Requirement

RICO (the "Racketeering Influenced Corrupt Organizations" statute) is a square hammer that plaintiffs’ lawyers try to force into the round hole of drug and device litigation. So why are we seeing an increase in RICO cases? Well, there’s that whole treble damages and attorney’s fees aspect that makes a RICO claim lucrative, and then there's the class action aspect, which we've already discussed.  We also suspect (we know) that plaintiffs' lawyers love to bandy about nasty words like “racketeering” and “wire fraud.” Sounds like we’re talking about the mob, right? There’s good reason for that – RICO was originally enacted and intended to go after mobsters – but in today’s world of hungry and creative plaintiffs’ lawyers, RICO’s gotten out of hand and is becoming a run-of-the-mill claim we see in many mass tort settings.

That’s why we are hopeful about the Supreme Court’s RICO decision from a few days ago. In Hemi Group, LLC v. City of New York, slip op., 559 U.S. __ (2010), Chief Justice Roberts reaffirmed that RICO has a proximate cause requirement, and that requirement has teeth.  More to the point, he also rejected the argument we always hear in drug/device RICO cases – that proximate causation is satisfied by a mere showing of “foreseeability.” Typically, the plaintiffs’ RICO causation argument goes something like this: you [big bad manufacturer] lied in your marketing [i.e. wire fraud] to physicians, and of course it was reasonably foreseeable that your lies would cause the physicians to prescribe [insert offending product] to me [if it’s a consumer case]/the patient [if it is a third party payor case], causing me [the consumer/TPP] to be injured “by reason of” your fraud.

After the Court’s decision in Bridge v. Phoenix Bond & Indemnity Co., 128 S.Ct. 2131 (2008), we suspect (we know) that plaintiffs’ lawyers were feeling emboldened to bring this sort of “fraud on a third party” RICO claims. In Bridge, the Court found a sufficiently direct link between the alleged wrongful conduct and the plaintiff’s injury where the fraud was alleged to be directed not at the plaintiff, but at a governmental body(which gave the defendant a business advantage over the plaintiff).

But luckily, the Court just slammed that “third-party fraud” door shut in the Hemi case, and made clear that plaintiffs were misreading Bridge if they thought it stood for the proposition that a RICO case survives whenever the alleged fraud is directed at a third party and the resulting reliance by a third party caused the plaintiff to suffer harm, simply because that reliance was “foreseeable.”

Hemi involved a claim by the Big Apple that Hemi LLC, a New Mexico company, violated RICO by selling cigarettes online (sans NYC’s sales tax) and thus preventing the city from collecting tax it was due on sales of cigarettes to NYC residents. The City’s causation theory went like this: The Jenkins Act requires Hemi to file a report with New York State tax administrators listing the name, address, and quantity of cigarettes purchased by state residents. Hemi did not file this report, which meant the state did not have the information to pass on to the city, which meant that the city was deprived of a means to go after city residents for the cigarette taxes they owed but had not paid. Got all that? So in other words, by failing to dime out its customers to the state, Hemi was allegedly liable to the city for the taxes Hemi’s customers should have paid. Sounds like multiple levels of independent actors to us… Sort of like Steinfeld to Tinker to Evers to Chance.

And that’s exactly what the Court found. RICO requires a proximate cause showing – that the RICO injury occurred “by reason of” the RICO fraud – and that proximate cause showing in turn requires a “direct relation between the injury asserted and the injurious conduct alleged.” Slip Op. at 6 (quoting Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268 (1992) – a biggie in the RICO causation firmament of cases). The Court was (rightly) troubled by the “attenuated” causal chain alleged by the city, because there were so many steps the Court had to take to trace causation from Hemi’s action to the alleged harm. In fact, “[b]ecause the City’s theory of causation requires us to move well beyond the first step, that theory cannot meet RICO’s direct relationship requirement.” Slip Op. at 7. The city’s causal theory was further complicated by the fact that liability “rests not just on separate actions, but separate actions carried out by separate parties.” Slip Op. at 8 (emphasis in original). Sound familiar?  Think "prescribing physician."

And importantly, the Court concluded that the foreseeability test of proximate causation – advocated by the dissent – has been specifically considered and rejected by the Court (in Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) – another RICO causation hall-of-famer). Got that, plaintiffs? In other words, your favorite argument – that RICO causation is established because the prescribing physicians’ reliance and decision to prescribe was a “foreseeable” and “intended” result of the fraud – has been rejected by the Supreme Court not once, but twice.

But what about Bridge? Well, the Court kind of gave a backhand to that case and made clear that it should not provide any solace to drug and device plaintiffs. In a nutshell:

The City’s theory in this case is anything but straightforward: Multiple steps, as we have detailed, separate the alleged fraud from the asserted injury. And in contrast to Bridge, where there were “no independent factors that account[e]d for [the plaintiff’s] injury,” here there certainly were: The City’s theory of liability rests on the independent actions of third and even fourth parties.
Slip op. at 12 (our emphasis). In other words, we were right: A consumer can’t recover under RICO because of the independent actions of that pesky learned intermediary (and sometimes the insurer), and a third-party payor’s alleged harm is also remote, because it depends on the independent actions of the prescriber and the consumer.

Nothing against RICO, but we are hopeful that Hemi signals the beginning of the end for RICO claims in drug and device cases. And before the plaintiffs’ bar gets incensed about poor plaintiffs left without a remedy, remember – RICO really is, and always has been, a square hammer in this context, and there are still plenty of other (traditional) avenues for plaintiffs to seek recovery.

Tuesday, January 26, 2010

The Old One-Two On Appeal, Too (and Two)

Not quite a year ago we noted the Daubert tour de force that the defense completed in Feusting v. Zimmer, 2009 WL 174163 (C.D. Ill. Jan. 26, 2009).  Two notorious plaintiff experts - James Pugh and then Robert Rose - excluded in the same case.  Well we're pleased to report that the second exclusion has now been affirmed on appeal at Feusting v. Zimmer, Inc., No. 09‐1362, slip op. (7th Cir. Jan. 25, 2010).  Here's the synopsis:
In our earlier opinion we excluded the testimony of Dr. James Pugh, Fuesting’s initial causation expert. On remand, Fuesting employed the services of Dr. Robert Rose, who testified that the knee implant oxidized while it was implanted because Zimmer used a faulty sterilization process. Dr. Rose’s testimony suffers from the same deficiencies upon which we excluded Dr. Pugh’s testimony in the earlier opinion.
Slip op. at 1-2.

Rose did a lot of things wrong, which you can read about in the opinion, but to our minds the most blatant was to blame the alleged device failure on "oxidation" when the device had sat around on a shelf for six years after explantation, and not to offer any way of distinguishing between pre-implant oxidation, in-situ oxidation (assuming that happens at all), and post-explant explantation.  Slip op. at 4.

Congrats to Zimmer and its legal team for not only getting both Pugh and Rose thrown out in the same case, but keeping both wins on appeals.

Monday, January 25, 2010

No State-Law Market For "Fraud On The Market"

As we said last week, because it’s a Dechert case, we can’t comment directly on Clark v. Pfizer, Inc., 2010 WL 163583, slip op. (Pa. Super. Jan. 19, 2010).  However, we were sufficiently inspired by what's in the opinion that we thought this would be a good time to put in our two cents worth about one of the theories that the Clark plaintiffs pursued:  "fraud on the market."

As defense lawyers, we want to do our part in killling off this pernicious import from federal securities law.  So we decided to take an in-depth look at all of the the precedent that rejects application of a “fraud on the market” reliance presumption to state-law claims.

Just to make sure that everyone’s with us, briefly “fraud on the market” is a doctrine that waters down fraud (and, plaintiffs would like to say, other liability theories based on claimed misinformation) by presuming reliance in certain limited circumstances. See Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (4 justice majority of 7-justice court).  It's not a state law claim - the Supreme Court has never applied a "fraud on the market" presumption to state law even in securities cases.

The presumption arose because the Supreme Court bought a questionable proposition – that securities markets are “efficient” and "developed." in other words, because there are so many participants in national stock markets, and those participants have such a voracious appetite for information, then anything about a particular stock is essentially instantaneously reflected in that stock’s price. Because of that (rather questionable) conclusion, any plaintiff in a securities fraud suit is “presumed” to rely on any material disinformation.

That's the theory.  In practice, however, what “fraud on the market” is really all about is class actions – reliance is ordinarily considered an individualized issue that's kryptonite to the supposed "superman" of class actions . Without “fraud on the market,” there probably wouldn’t be very many securities class actions. Conversely, if plaintiffs could import the “fraud on the market” presumption of reliance into non-securities contexts – such as consumer fraud/common-law fraud/warranty litigation against our drug/device clients – an invasion of class actions would follow like night follows day.

It’s hardly surprising that, because we don’t want class actions certified against our clients, we’re not big fans of “fraud on the market,” and we want to remain see it tightly confined to securities litigation (indeed, abolished altogether, if we were kings of the world).

So far our side's been pretty successful (as in Clark). In the interests of maintaining that success, we offfer here a state-by-state break down of the precedent refusing to adopt “fraud on the market” or similar presumed reliance theories to state-law (not federal - no RICO or antitrust cases here) causes of action – everything from product liability to consumer fraud to state securities and other statutes.  A lot of the cases reading "In re [fill in the blank] Securities Litigation" are cases refusing to apply "fraud on the market" to pendent state law claims, whether or not the decision applied that theory to the federal causes of action.

We remind defense counsel to use this chart with appropriate caution.  In particular, there's some contrary precedent, maybe a dozen or two cases nationwide.  It mostly falls into two categories:  (1) interpretations of state securities law statutes, and (2) older federal cases, involving tag-along pendent state claims from the era of "certify first and worry later" that existed prior to the Supreme Court's crackdown on class actions in the mid-1990s.  Adhering to our policy of not doing the other side's research for them, we don't include it here.  Just be aware that there are some stray adverse cases out there, and research accordingly.

Second, we don't claim to have comprehensively researched presumed reliance theories other than "fraud on the market" – it took us bloody long enough as it is – but we've included whatever we happened to encounter along the way.  There may well be other cases rejecting presumed reliance claims that we didn't find if they didn't use the magic words "fraud on the market."

Everybody except lawyers can stop reading now, since what follows is really dry:  a list of the cases, organized by the law of the jurisdiction, that have refused to apply presumed reliance theories (mostly "fraud on the market"), in state law actions of various kinds.  We apologize for not categorizing them by the precise claims involved, but you defense lawyers out there have to have something to justify billing your clients for.

Here goes:

All (or a lot of different state’s) Law

Gariety v. Grant Thornton, LLP, 368 F.3d 356, 370 (4th Cir. 2004); In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 783 (3d Cir. 1995); In re Neurontin Marketing, Sales Practices & Products Liability Litigation, 618 F. Supp.2d 96, 111-12 (D. Mass. 2009); In re Neurontin Marketing, Sales Practices & Products Liability Litigation, 257 F.R.D. 315, 324 (D. Mass. 2009); Miller v. General Motors Corp., 2003 WL 168626, at *4 (N.D. Ill. Jan. 26, 2003); Poulos v. Caesars World, Inc., 2002 WL 1991180, at 9 n.10 (D. Nev. June 25, 2002); In re Ford Motor Co. Vehicle Paint Litigation, 182 F.R.D. 214, 221-22 (E.D. La. 1998); In re Newbridge Networks Securities Litigation, 926 F. Supp. 1163, 1175 (D.D.C. 1996); Kelley v. Mid-America Racing Stables, Inc., 139 F.R.D. 405, 410-11 (W.D. Okla. 1990); Moskowitz v. Lopp, 128 F.R.D. 624, 632 (E.D. Pa. 1989); In re Bexar County Health Facility Development Corp. Securities Litigation, 125 F.R.D. 625, 636 (E.D. Pa. 1989); Snider v. Upjohn Co., 115 F.R.D. 536, 542 (E.D. Pa. 1987); Rosenberg v. Digilog Inc., 648 F. Supp. 40, 43-44 (E.D. Pa. 1985) (can’t tell what state’s law); Seiden v. Nicholson, 69 F.R.D. 681, 686 (N.D. Ill. 1976). See “Tort Law – Indirect Reliance – New Jersey Supreme Court Rejects Fraud-On-The-Market Theory,” 114 Harv. L. Rev. 2550, 2550 (June 2001).


Ex parte Household Retail Services, Inc., 744 So.2d 871, 880 n. 2 (Ala. 1999); Ex parte Exxon Corp., 725 So.2d 930, 933 n.3 (Ala. 1998).


We didn’t find anything useful along these lines under Alaska law.


Osuna v. Wal-Mart Stores, Inc., 2004 WL 3255430, at *6 (Ariz. Super. Dec. 23, 2004); Siemer v. Associates First Capital Corp., 2001 WL 35948712, at *23 (D. Ariz. March 30, 2001); Hoexter v. Simmons, 140 F.R.D. 416, 424 (D. Ariz. 1991); Persky v. Turley, 1991 WL 327434, at *10 (D. Ariz. Dec. 19, 1991).


Frelin v. Oakwood Homes Corp., 2002 WL 31863487, at *10 n.45 (Ark. Cir. Nov. 25, 2002).


Mirkin v. Wasserman, 858 P.2d 568, 580 (Cal. 1993); Whiteley v. Philip Morris Inc., 11 Cal. Rptr.3d 807, 854 (Cal. App. 2004); Stevens v. Owens-Corning Fiberglas Corp., 57 Cal. Rptr.2d 525, 541-42 (Cal. App. 1996); In re GlenFed, Inc. Securities Litigation, 60 F.3d 591, 592 (9th Cir. 1995) (applying California law); In re Actimmune Marketing Litigation, 614 F. Supp.2d 1037, 1054 (N.D. Cal. 2009); In re Actimmune Marketing Litigation, 2009 WL 3740648, at *14 (N.D. Cal. Nov. 6, 2009); Gonzalez v. Proctor & Gamble Co., 247 F.R.D. 616, 624-25 (S.D. Cal. 2007); Gartin v. S & M NuTec LLC, 245 F.R.D. 429, 438 (C.D. Cal. 2007); Mathews v. Centex Telemanagement, Inc., 1994 WL 269734, at *8 (N.D. Cal. June 8, 1994); In re Cypress Semiconductor Securities Litigation, 836 F. Supp. 711, 714-15 (N.D. Cal. 1993); In re ZZZZ Best Securities Litigation, 1994 WL 675160, at*2 (C.D. Cal. May 25, 1994); In re Allergan Inc. Securities Litigation, 1993 WL 623321, at *12 (C.D. Cal. Nov. 29, 1993); In re Verifone Securities Litigation, 784 F. Supp. 1471, 1488 (N.D. Cal. 1992); In re Sunrise Technologies Securities Litigation, 1992 WL 359636, at *9 (N.D. Cal. Sept. 22, 1992); XOMA Corp. Securities Litigation, 1990 WL 357807, at *14 (N.D. Cal. Dec. 27, 1991); In re Keegan Management Co. Securities Litigation, 1991 WL 253003, at *9 (N.D. Cal. Sept. 10, 1991); Knapp v. Gomez, 1991 WL 214172, at *3 (S.D. Cal. June 25, 1991); In re Software Toolworks, Inc. Securities Litigation, 1991 WL 319033, at *6 (N.D. Cal. June 17, 1991); Flashman v. Singleton, 1991 WL 83963, at *5-6 (N.D. Cal. March 20, 1991); In re Ramtek Securities Litigation, 1991 WL 56067, at *8 (N.D. Cal., Feb. 4, 1991); In re 3Com Securities Litigation, 761 F. Supp. 1411, 1419 (N.D. Cal. 1990); In re Wyse Technology Securities Litigation, 1990 WL 169149, at *5 (N.D. Cal. Sept. 13, 1990); In re Ramtek Securities Litigation, 1990 WL 157391, at *3-4 (N.D. Cal. Sept. 7, 1990); Cytryn v. Cook, 1990 WL 128233, at *8 (N.D. Cal. July 2, 1990); Victor v. White, 1989 WL 108276, at *7 (N.D. Cal. July 26, 1989); In re Technical Equities Federal Securities Litigation, 1988 WL 147607, at *7 (N.D. Cal. Oct. 3, 1988).


Farmers Insurance Exchange v. Benzing, 206 P.3d 812, 820-22 (Colo. 2009); Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095, 1104 (Colo. 1995); Garcia v. Medved Chevrolet, Inc., ___ P.3d ___, 2009 WL 3765481, at *9 (Colo. App. Nov. 12, 2009); In re WorldCom, Inc. Securities Litigation, 2006 WL 557149, at *2 (S.D.N.Y. March 7, 2006) (applying Colorado law); Schwartz v. Celestial Seasonings, Inc., 185 F.R.D. 313, 317-18 (D. Colo. 1999); In re Synergen, Inc. Securities Litigation, 154 F.R.D. 265, 267 (D. Colo. 1994).


Contreras v. Host America Corp., 453 F. Supp.2d 416, 420 (D. Conn. 2006).


Malone v. Brincat, 722 A.2d 5, 13 (Del. 1998); Gaffin v. Teledyne, Inc., 611 A.2d 467, 474-75 (Del. 1992); NACCO Industries, Inc. v. Applica Inc., ___ A.2d ___, 2009 WL 4981577, at *25 (Del. Ch. Dec. 22, 2009); Anglo American Security Fund, L.P. v. S.R. Global International Fund, L.P., 2006 WL 1494360, at *3 & n.41 (Del. Ch. May 24, 2006); Manzo v. Rite Aid Corp., 2002 WL 31926606, at *4 (Del. Dec.19, 2002), aff’d, 825 A.2d 239 (Del. 2003); In re WorldCom, Inc. Securities Litigation, 336 F. Supp.2d 310, 320 (S.D.N.Y. 2004) (applying Delaware law); Burekovitch v. Hertz, 2001 WL 984942, at *7 (E.D.N.Y. July 24, 2001) (applying Delaware law).

District of Columbia

Williams v. Purdue Pharma Co., 297 F. Supp.2d 171, 177 (D.D.C. 2003).


Kahler v. E.F. Hutton Co., 558 So.2d 144, 145 (Fla. App. 1990); Raulerson v. R.J. Reynolds Tobacco Co., 1997 WL 34628064 (Fla. Cir. March 3, 1997); Mergens v. Dreyfoos, 166 F.3d 1114, 1119 (11th Cir. 1999) (applying Florida law); Prohias v. Pfizer, Inc., 485 F. Supp.2d 1329, 1337-39 (S.D. Fla. 2007); Miller v. AstraZeneca Pharmaceuticals, LP, 223 F.R.D. 659, 664 (M.D. Fla. 2004); Jacobs v. Osmose, Inc., 2002 WL 34241682, at *4 (S.D. Fla. Jan. 3, 2002); Hamilton Partners, Ltd. v. Sunbeam Corp., 2001 WL 34556527, at *16 (S.D. Fla. July 3, 2001); Butterworth v. Quick & Reilly, Inc., 998 F. Supp. 1404, 1410-11 (M.D. Fla. 1998); Joy v. Brown & Williamson Tobacco Corp., 1998 WL 35229355, at *5 (M.D. Fla. May 8, 1998); Butterworth v. Quick & Reilly, Inc., 171 F.R.D. 319, 322 (M.D. Fla. 1997); Waters v. International Precious Metals Corp., 172 F.R.D. 479, 502 (S.D. Fla. 1996); In re Checkers Securities Litigation, 858 F. Supp. 1168, 1179 (M.D. Fla. 1994); In re Cascade International Securities Litigation, 840 F. Supp. 1558, 1583 (S.D. Fla. 1993); Tapken v. Brown, 1992 WL 178984, at *24 (S.D. Fla. March 13, 1992); In re Sahlen & Assoc., Inc. Securities Litigation, 773 F. Supp. 342, 371 (S.D. Fla. 1991).


White v. BDO Seidman, LLP, 549 S.E.2d 490, 493 (Ga. App. 2001); Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1369 n.39 (11th Cir. 1997) (applying Georgia law); Next Century Communications Corp. v. Ellis, 214 F. Supp.2d 1366, 1371-72 (N.D. Ga.), aff’d, 318 F.3d 1023 (11th Cir. 2002); In re ValuJet, Inc., 984 F. Supp. 1472, 1481 (N.D. Ga. 1997); Wells v. HBO & Co., 813 F. Supp. 1561, 1569 (N.D. Ga. 1992).


We didn’t find anything useful along these lines under Hawai’i law.


Gerstein v. Micron Technology, 1993 WL 735031, at *9 (D. Idaho Jan. 9, 1993).


De Bouse v. Bayer, ___ N.E.2d ___, 2009 WL 4843362, at *5-6 (Ill. Dec. 17, 2009); Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 161-64 (Ill. 2002); Hartmann v. Prudential Insurance Co., 9 F.3d 1207, 1212 (7th Cir. 1993) (applying Illinois law); Oshana v. Coca-Cola Co., 472 F.3d 506, 514-15 (7th Cir. 2006); Scott v. GlaxoSmithKline Consumer Healthcare LP, 2006 WL 952032, at *3 (N.D. Ill. April 12, 2006); Amzak Corp. v. Reliant Energy, Inc., 2004 WL 1882482, at *6 n.2 (N.D. Ill. Aug. 19, 2004); Miller v. General Motors Corp., 2003 WL 168626, at *4 (N.D. Ill. Jan. 26, 2003); Tylka v. Gerber Products Co., 1999 WL 495126, at *13 (N.D. Ill. July 1, 1999); In re First Merchants Acceptance Corp. Securities Litigation, 1998 WL 781118, at *13 (N.D. Ill. Nov. 4, 1998); Gilford Partners, L.P. v. Sensormatic Electronics Corp., 1997 WL 757495, at *12 (N.D. Ill. Nov. 24, 1997); Gilford Partners, L.P. v. Sensormatic Electronics Corp., 1997 WL 570771, at *12 (N.D. Ill. Sept. 10, 1997); In re Soybean Futures Litigation, 892 F. Supp. 1025, 1060 (N.D. Ill. 1995); Searls v. Glasser, 1994 WL 523712, at *14 (N.D. Ill. Sept. 23, 1994); In re Information Resources, Inc. Securities Litigation, 1994 WL 124890, at *4 (N.D. Ill. April 11, 1994); Morse v. Abbot Laboratories, 756 F. Supp. 1108, 1112 (N.D. Ill. 1991); Good v. Zenith Electric Corp., 751 F. Supp. 1320, 1323 (N.D. Ill. 1990); Katz v. Comdisco, Inc., 117 F.R.D. 403, 412 (N.D. Ill. 1987).


Kantner v. Merck & Co., 2007 WL 3092779 ¶¶ 17-19 (Ind. Super. April 18, 2007); Zandman v. Joseph, 102 F.R.D. 924, 929 (N.D. Ind. 1984).


We didn’t find anything useful along these lines under Iowa law.


Porter v. Merck & Co., 2005 WL 3719630, at *3 (Kan. Dist. Aug. 19 2005); In re Cessna 208 Series Aircraft Products Liability Litigation, 2009 WL 274509, at *6 (D. Feb. 5, 2009); Antonson v. Robertson, 141 F.R.D. 501, 508 (D. Kan. 1991).


Mittman v. Rally’s Hamburgers, Inc., 278 F. Supp.2d 831, 843 (W.D. Ky. 2003) (we think so, anyway).


In re Rezulin Products Liability Litigation, 524 F. Supp.2d 436, 441 (S.D.N.Y. 2007) (applying Louisiana law).


Howard’s Rexall Stores, Inc. v. Aetna U.S. Healthcare, Inc., 2001 WL 501055, at *5 (D. Me. May 8, 2001); In re One Bancorp Securities Litigation, 136 F.R.D. 526, 533 (D. Me. 1991).


Agbebaku v. Sigma Aldrich, Inc., 2003 WL 24258219, at *10 (Md. Cir. June 24, 2003); Cofield v. Lead Industries Ass’n, Inc., 2000 WL 34292681, at *10 (D. Md. Aug. 17, 2000); In re Medimmune, Inc. Securities Litigation, 873 F. Supp. 953, 968 (D. Md. 1995).


Aspinall v. Philip Morris Cos., 813 N.E.2d 476, 490 n.23 (Mass. 2004); Young v. Deloitte & Touche, LLP, 2004 WL 2341344, at *5 (Mass. Super. Sept. 20, 2004); In re TJX Cos. Retail Security Breach Litigation, 246 F.R.D. 389, 395-96 (D. Mass. 2007); In re Fidelity/Apple Securities Litigation, 986 F. Supp. 42, 49 (D. Mass. 1997); Mallozzi v. Zoll Medical Corp., 1996 WL 392146, at *11 (D. Mass. March 5, 1996); Van de Velde v. Coopers & Lybrand, 899 F. Supp. 731, 738 (D. Mass. 1995); Wells v. Monarch Capital Corp., 1991 WL 354938, at *13 (D. Mass. Aug. 23, 1991); In Re Bank of Boston Corp. Securities Litigation, 762 F. Supp. 1525, 1536 (D. Mass. 1991); In re Jiffy Lube Securities Litigation, 1990 WL 10010982, at *10 (D. Md. Oct. 31, 1990).


Krieger v. Gast, 197 F.R.D. 310, 320 (W.D. Mich. 2000); Yadlosky v. Grant Thorton, L.L.P., 197 F.R.D. 292, 299 (E.D. Mich. 2000); O’Neil v. Appel, 165 F.R.D. 479, 505 (W.D. Mich. 1996); In re Rospatch Securities Litigation, 1991 WL 427890, at *11 (W.D. Mich. July 22, 1991).


Thompson v. American Tobacco Co., 189 F.R.D. 544, 553 n.4 (D. Minn. 1999); In re Digi International, Inc. Securities Litigation, 6 F. Supp.2d 1089, 1104 (D. Minn. 1998), aff’d, 14 Fed. Appx. 714 (8th Cir. 2001); Bruzer v. Danek Medical, Inc., 1998 WL 1048225, at *7 (D. Minn. Oct. 1, 1998); In re SciMed Securities Litigation, 1993 WL 616692, at*7 (D. Minn. Sept. 29, 1993).


In re Zyprexa Products Liability Litigation, ___ F. Supp.2d ___, 2009 WL 4260857, at *56-60 (E.D.N.Y. Dec. 1, 2009) (applying Mississippi law); Coleman v. Danek Medical, Inc., 43 F. Supp.2d 629, 635 n.4 (S.D. Miss. 1998) (common-law fraud).


We didn’t find anything useful along these lines under Missouri law.


We didn’t find anything useful along these lines under Montana law.


We didn’t find anything useful along these lines under Nebraska law.


Picus v. Wal-Mart Stores, Inc., 256 F.R.D. 651, 659 (D. Nev. 2009); In re Stratosphere Corp. Securities Litigation, 1 F. Supp.2d 1096, 1123 (D. Nev. 1998).

New Hampshire

Mulligan v. Choice Mortgage Corp. USA, 1998 WL 544431, at *7 n.6 (D.N.H. Aug. 11, 1998); Rothwell v. Chubb Life Insurance Co., 191 F.R.D. 25, 31-32 (D.N.H. 1998).

New Jersey

International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., 929 A.2d 1076, 1088 (N.J. 2007); Kaufman v. i-Stat Corp., 754 A.2d 1188, 1195-96 (N.J. 2000); Lee v. Carter-Reed Co., L.L.C., 2009 WL 2475314, at *6 (N.J. Super. A.D. Aug. 14, 2009); Dabush v. Mercedes-Benz USA, LLC, 874 A.2d 1110, 1121 (N.J. Super. A.D. 2005); New Jersey Citizen Action v. Schering-Plough Corp., 842 A.2d 174, 178-79 (N.J. Super. A.D. 2003); Fink v. Ricoh Corp., 839 A.2d 942, 963-64 (N.J. Super. L.D. 2003); In re Neurontin Marketing, Sales Practices And Products Liability Litigation, 257 F.R.D. 315, 324 (D. Mass. 2009) (applying New Jersey law); Southeast Laborers Health and Welfare Fund v. Bayer Corp., 655 F. Supp.2d 1270, 1287-88 (S.D. Fla. 2009) (applying New Jersey law); McNair v. Synapse Group, Inc., 2009 WL 1873582, at *9 (D.N.J. June 29, 2009); In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 2009 WL 2043604, at *21-22 (D.N.J. July 10, 2009); Prohias v. Pfizer, Inc., 485 F. Supp.2d 1329, 1337-38 (S.D. Fla. 2007) (applying New Jersey law); In re Marsh & McLennan Companies, Inc. Securities Litigation, 501 F. Supp.2d 452, 495 (S.D.N.Y. 2006) (applying New Jersey law); Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 380-381 (D.N.J. 2004); Brown v. Philip Morris Inc., 228 F. Supp.2d 506, 518 (D.N.J. 2002); In re Rezulin Products Liability Litigation, 210 F.R.D. 61, 68 (S.D.N.Y. 2002) (applying New Jersey law); Morgan v. Markerdowne Corp., 201 F.R.D. 341, 347 (D.N.J. 2001); Weikel v. Tower Semiconductor Ltd., 183 F.R.D. 377, 400 n.12 (D.N.J. 1998); In re Crazy Eddie Securities Litigation, 802 F. Supp. 804, 812 (E.D.N.Y. 1992) (applying New Jersey law); Faktor v. American Biomaterials Corp., 1991 WL 336922, at *7 (D.N.J. May 28, 1991); Cammer v. Bloom, 711 F. Supp. 1264, 1298 (D.N.J. 1989); In re ORFA Securities Litigation, 654 F. Supp. 1449, 1460 (D. N.J. 1987).

New Mexico

Freedman v. Value Health, Inc., 2000 WL 630916, at *9 (D. Conn. March 24, 2000) (applying New Mexico law); In re Mesa Airlines Securities Litigation, 1996 WL 33419894, at *19 (D.N.M. May 31, 1996) (we think so, anyway).

New York

Baron v. Pfizer, Inc., 840 N.Y.S.2d 445, 448 (N.Y.A.D. 2007); Klein v. Robert’s American Gourmet Food, Inc., 808 N.Y.S.2d 766, 773 n.1 (N.Y.A.D. 2006); Ackerman v. Price Waterhouse, 683 N.Y.S.2d 179, 192 (N.Y.A.D. 1998); Strauss v. Long Island Sports, Inc., 401 N.Y.S.2d 233, 236-38 (N.Y.A.D. 1978); Stellema v. Vantage Press, Inc., 470 N.Y.S.2d 507, 510 (N.Y. Sup. 1983); Securities Investor Protection Corp. v. BDO Seidman, LLP, 222 F.3d 63, 71-73 (2d Cir. 2000); In re Pfizer Inc. Securities Litigation, 584 F. Supp.2d 621, 644 (S.D.N.Y. 2008); Hunt v. Enzo Biochem, Inc., 530 F. Supp.2d 580, 598-99 n.138 (S.D.N.Y. 2008); Prohias v. Pfizer, Inc., 485 F. Supp.2d 1329, 1337-38 (S.D. Fla. 2007) (applying New York law); Feinberg v. Katz, 2007 WL 4562930, at *6 (S.D.N.Y. Dec. 21, 2007); In re Marsh & Mclennan Companies, Inc. Securities Litigation, 501 F. Supp.2d 452, 495 (S.D.N.Y. 2006); Cromer Finance Ltd. v. Berger, 2003 WL 21436164, at *13 (S.D.N.Y. June 23, 2003); Waksman v. Cohen, 2002 WL 31466417, at *5 (S.D.N.Y. Nov 4, 2002); In re Motel 6 Securities Litigation, 161 F. Supp.2d 227, 232 (S.D.N.Y. 2001); Redtail Leasing, Inc. v. Bellezza, 1997 WL 603496, at *6-7 (S.D.N.Y. Sept. 30, 1997); Rowe v. Marietta Corp., 955 F. Supp. 829, 835 (W. D. Tenn.1996) (applying New York law); In re Motel 6 Securities Litigation, 1997 WL 154011, at *5-6 (S.D.N.Y. Apr. 2, 1997); In re ICN/Viratek Securities Litigation, 1996 WL 164732, at *12 (S.D.N.Y. April 9, 1996); Banque Arabe et Internationale D’Investissement v. Maryland National Bank, 850 F. Supp. 1199, 1221 (S.D.N.Y. 1994), aff’d, 57 F.3d 146 (2d Cir. 1995); Turtur v. Rothschild Registry International., Inc., 1993 WL 338205, at *6-7 (S.D.N.Y. Aug. 27, 1993); In re Crazy Eddie Securities Litigation, 802 F. Supp. 804, 812 (E.D.N.Y. 1992); Schultz v. Commercial Programming Unlimited Inc., 1992 WL 396434, at *4 (S.D.N.Y. Dec. 23, 1992); In re Nord Resources Corp. Securities Litigation, 1992 WL 1258516, at *9-11 (S.D. Ohio, Dec. 16, 1992) (applying New York law); In re Donahue Securities Inc., 2004 WL 3152763, at *5-6 (Bkrtcy. S.D. Ohio 2004) (applying New York law).

North Carolina

We didn’t find anything useful along these lines under North Carolina law.

North Dakota

We didn’t find anything useful along these lines under North Dakota law.


In re Marsh & McLennan Companies, Inc. Securities Litigation, 501 F. Supp.2d 452, 495 (S.D.N.Y. 2006) (applying Ohio law); Graham v. American Cyanamid Co., 2000 WL 1911431, at *6 (S.D. Ohio Dec. 21, 2000), aff’d, 350 F.3d 496 (6th Cir. 2003); Stavroff v. Meyo, 987 F. Supp. 987, 1002 (N.D. Ohio 1995), aff’d mem., 129 F.3d 1265 (6th Cir. 1997) (the affirmance makes clear this is Ohio law); In re Donahue Securities Inc., 2004 WL 3152763, at *6 (Bkrtcy. S.D. Ohio 2004).


Bunch v. Kmart Corp., 898 P.2d 170, 171-72 (Okla. App. 1995).


Beebe v. Pacific Realty Trust, 99 F.R.D. 60, 71 (D. Or. 1983).


Weinberg v. Sun Co., 777 A.2d 442, 446 (Pa. 2001); Clark v. Pfizer, Inc., ___ A.2d ___, 2010 WL 163583, at *6 (Pa. Super. Jan. 19, 2010); Commonwealth v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., 2010 WL 2603913 slip op., at pp. 11-14 (Pa. C.P. June 25, 2010); Aubrey v. Sanders, ___ Fed. Appx. ___, 2009 WL 3059055, at *2 (3d Cir. Sep. 24, 2009) (applying Pennsylvania law); Hunt v. United States Tobacco Co., 538 F.3d 217, 227-28 (3d. Cir. 2008); Peil v. Speiser, 806 F.2d 1154, 1163 n.17 (3d Cir. 1986) (applying Pennsylvania law); Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 380-381, 384-386 (D.N.J. 2004) (applying Pennsylvania law); Wallace v. Systems & Computer Technology Corp., 1997 WL 602808, at *24 (E.D. Pa. Sept. 23, 1997); In re Herley Securities Litigation, 161 F.R.D. 288, 292 (E.D. Pa. 1995); In re Westinghouse Securities Litigation, 832 F. Supp. 948, 989 (W.D. Pa. 1993), rev’d in part on other grounds, 90 F.3d 696 (3d Cir. 1996); Friedman v. Lansdale Parking Authority, 1993 WL 338174, at *7 (E.D. Pa. Aug. 30, 1993); In re Scott Paper Co. Securities Litigation, 142 F.R.D. 611, 617 (E.D. Pa. 1992); In re Atlantic Financial Federal Securities Litigation, 1990 WL 188927, at *6 (E.D. Pa. Nov. 28, 1990); Gavron v. Blinder Robinson & Co., 115 F.R.D. 318, 325 (E.D. Pa. 1987).

Rhode Island

We didn’t find anything useful along these lines under Rhode Island law.

South Carolina

Gunnells v. Healthplan Services, Inc., 348 F.3d 417, 435-36 (4th Cir. 2003) (applying South Carolina law); Pitten v. Jacobs, 903 F. Supp. 937, 952 (D.S.C. 1995).

South Dakota

We didn’t find anything useful along these lines under South Dakota law.


In re Sofamor Danek Group, Inc., 123 F.3d 394, 403-04 (6th Cir. 1997) (applying Tennessee law).


McManus v. Fleetwood Enterprises, Inc., 320 F.3d 545, 549 (5th Cir. 20 2003) (applying Texas law); Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315, 320-321 (5th Cir. 2002) (applying Texas law); In re Enron Corp. Securities, Derivative & ERISA Litigation, 284 F. Supp.2d 511, 644 (S.D. Tex. 2003); Gyarmathy & Assoc., Inc. v. TIG Insurance Co., 2003 WL 21339279, at *3 n.6 (N.D. Tex. June 3, 2003); McNamara v. Bre-X Minerals Ltd., 197 F. Supp.2d 622, 698 (E.D. Tex. 2001); Florida Dept. of Insurance v. Chase Bank National Ass’n, 2001 WL 124951, at *4-5 (N.D. Tex. Feb. 9, 2001), aff’d, 274 F.3d 924 (5th Cir. 2001); Griffin v. GK Intelligent Systems, Inc., 87 F. Supp.2d 684, 690 (S.D. Tex. 1999); Zuckerman v. Foxmeyer Health Corp., 4 F. Supp.2d 618, 628 (N.D. Tex. 1998) (since overruled on various other grounds by various cases); Steiner v. Southmark Corp., 734 F. Supp. 269, 279 (N. D. Tex. 1990), mod. on other grounds, 739 F. Supp. 1087 (N. D. Tex. 1990).


We didn’t find anything useful along these lines under Utah law.


We didn’t find anything useful along these lines under Vermont law.


Borow v. nVIEW Corp., 1994 WL 285458, at *2 n* (4th Cir. June 29, 1994) (in table at 27 F.3d 562) (adopting trial court opinion that's not online anywhere) (applying Virginia law).


In re Metropolitan Securities Litigation, 2009 WL 36776, at *4-5 (E.D. Wash. Jan. 6, 2009).

West Virginia

Basham v. General Shale Products Corp., 1993 WL 65086, at *4 n. 4 (4th Cir. March 10, 1993) (in table at 989 F.2d 491) (applying West Virginia law).


Staudt v. Artifex, Ltd., 16 F. Supp.2d 1023, 1031 (E.D. Wis. 1998).


We didn’t find anything useful along these lines under Wyoming law.

If you find that we "missed a spot," let us know.  We'll add the case.

Friday, January 22, 2010

You say no injury, I say no standing

The standing requirement. . . . Are you asleep yet?

Okay, few things induce yawning and cure insomnia as much as discussions about standing and jurisdiction, but in the world of no-injury lawsuits, we defense lawyers have to pay attention to such things. Standing (for the non-lawyers) is a requirement that courts impose on parties who want to sue. To have standing (at least in federal court), you need to have: (1) suffered an injury – which can be economic or not, but for our discussion today, let’s stick with an economic injury; (2) causally connected to the conduct complained of; and (3) redressable by the court.

As a practical matter, standing (generally -- there are almost always exceptions to rules) means that you can’t sue a car dealer for selling a car for a false representation unless you actually bought the car. If you bought the car, you have an injury: money paid, causally connected to the false statement you complain of, and your claim is “redressable” – that is, a court can help you by ruling that you get your money refunded. But if you only thought of buying the car, or if you watched while someone else bought the car, even if you are angered by the car salesman, you have no standing to sue. (For purposes of this discussion, we’re ignoring the exception – we told you there were exceptions – that at times the law grants people standing to sue on behalf of the public.)

In federal courts, standing requirements come from the case or controversy requirement of the judicial power under Article 3 of the U.S. Constitution ("The judicial Power shall extend to all Cases, in Law and Equity, . . .--to Controversies"). Therefore, if you don’t have a real “case” or “controversy,” the courts have no authority (“jurisdiction”) to hear your gripe. States have their own versions of this constitutional grant of judicial authority; some are like the federal version, some aren’t (more exceptions) – so we’ll stick with the feds.

Now, just because you have standing does not mean you win your case, or get awarded damages. But it does get you past the first hurdle – the courthouse door – and thus into the game. And sometimes, especially class actions where the plaintiff’s goal is to pressure a defendant into settlement through the sheer size of the claim, getting into the game is the game.

This brings us to our case for the day. In a per curiam opinion not yet released for publication, the Alabama Supreme Court vacated a nationwide class certification involving Wyeth’s nonsteroidal, anti-inflammatory drug, Duract. Wyeth, Inc. v. Blue Cross and Blue Shield of Alabama, 2010 WL 152123 (Ala. Jan. 15, 2010). Wyeth marketed Duract, as approved, for durations of up to 10 days. Doctors, as is their right, didn’t always adhere to that limit (“off-label use”).

When patients began having liver problems following prolonged use, Wyeth petitioned FDA and received approval to change the package insert (the “labeling”) to describe the reports of liver problems resulting from the overuse of the drug and reemphasize that Duract was intended “only for the short term (10 days or less).” When Wyeth nonetheless continued to receive reports of adverse liver effects for long-term users of Duract, it concluded that no change in the package insert could guarantee that physicians would stop prescribing Duract for long-term use. Therefore, Wyeth voluntarily withdrew Duract from the market on June 22, 1998.

Could people with liver damage recover? Was the labeling adequate? We don’t have to deal with those questions – the potential real “cases” and “controversies” – because that’s not what the Alabama case was about.

Instead, as part of the process of withdrawing Duract from the market, Wyeth voluntarily instituted a customer-refund program for customers who still had Duract capsules in their possession. The program provided that Wyeth would reimburse retail customers at the rate of $1.15 per capsule for every Duract capsule returned to Wyeth, a price above the retail cost of the capsules – and required no receipt – in order to provide a greater incentive for return. Wyeth used a different formula to reimburse pharmacies, distributors, and wholesalers for the capsules of Duract those entities had in their possession. So far, this sounds like model conduct.

But Wyeth couldn’t, and thus didn’t, make the pharmacies, distributors, and wholesalers, etc., reimburse Third Party Payers (“TPPs”) (we have acknowledged before the inconsistency in spelling; is it the made up “payors” or the blander sounding “payers”?), see here – health insurance companies that pay, in whole or in part, the health-care costs of insureds in exchange for premiums.

Thus the TPPs didn’t receive money back that they had paid either to pharmacies or their insureds for Duract capsules that went unused. On this basis, Blue Cross sued Wyeth – in Alabama state court – demanding that Wyeth pay them too, that is, that Wyeth should refund the cost of the same drug twice. The TPPs alleged unjust enrichment, and (of course) sought to represent a class of all TPPs that paid for Duract capsules that went unused following the withdrawal of the drug.
Because the case was filed prior to the enactment of the Class Action Fairness Act, 28 U.S.C. § 1332(d), discussed here, it remained in state court, but the standing analysis was done using federal precedent (so we assume that Alabama follows federal standing precedent).

Blue Cross alleged that it and other TPPs “conferred on [Wyeth] a benefit in the form of the consideration of the purchase price paid by [the putative class members] for unused Duract.” Blue Cross claimed it would not have paid for the (unused) Duract capsules had it known that they would go unused (due to the recall). (Talk about hindsight being 20/20!)  The complaint concluded that the “[r]etention of the benefit conferred upon [Wyeth] by [the putative class members] is inequitable and has resulted in the unjust enrichment of [Wyeth].” 2010 WL 152123, *2-3.

Let’s remember that Blue Cross’s claim is NOT that it paid Wyeth for Duract that went unused. Individuals and pharmacies that paid for Duract received refunds. Rather Blue Cross asserted it indirectly enriched Wyeth by . . . HONORING ITS INSURANCE OBLIGATIONS TO ITS INSUREDS. Hmmm.

After a hearing on the class-certification motion, the trial court entered an order certifying a nationwide class of TPPs “who paid for the prescription drug Duract that was not used as of the date of its withdrawal from the market on June 22, 1998.” Any TPPs that purchased Duract directly from Wyeth (and who therefore were covered by the refund program) were excluded from the class.

We’ve beaten TPP class actions half to death already, so instead of addressing the Alabama Supreme Court majority’s indisputably correct finding that Blue Cross failed to meet its burden under the class action rule that common questions of law and fact predominate where the unjust enrichment claim would require application of the laws of all 50 states, id. at *9-10, we’d rather discuss the court’s less indisputable treatment of standing. 

Wyeth contended at the outset that Blue Cross lacked standing to serve as class representative because it did not sustain an injury of a nature required for standing. As Wyeth put it, Blue Cross did not allege any loss, financial or otherwise, resulting from the withdrawal of Duract from the market. Blue Cross did not allege that it made payments to insureds or to pharmacies that were more than it would have made had the withdrawal not occurred. Finally, Blue Cross received the same premiums from its insureds that it normally would receive in exchange for paying their health-care expenses. Id. at *2.

Blue Cross countered that Wyeth's argument go to the merits of the unjust-enrichment claim rather than to the question of standing. Blue Cross alleged that the payments made by TPPs for the purchase of Duract were “erroneously made, and would not have been made if the TPPs had been aware that substantial portions of the Duract for which it conferred a benefit would be unused due to the withdrawal of Duract.” In other words, under the particular theory of unjust enrichment urged by Blue Cross, the withdrawal of Duract from the market retroactively made every TPP's payments, to the extent allocable to those Duract capsules that eventually went unused, an unjust benefit to Wyeth. Id. at *3.

A majority of the Alabama Supreme Court sided with Blue Cross on that. After distinguishing “standing” from the “mere failure to state a cognizable cause of action or legal theory, or a failure to satisfy the injury element of a cause of action,” the majority concludes that “[t]he issue Wyeth seeks to frame for this Court as one of “standing” is, “in reality, an issue as to the cognizability of the legal theory asserted by [Blue Cross], not of [Blue Cross’s] standing to assert that theory or the subject-matter jurisdiction of this Court to consider it.” Id. at *3.

The dissent (everybody on the Court agreed that the class certification was wrong) – which we think got it right – disagreed on the issue of standing – and would have made the trial court dismiss the case entirely. “Standing,” Justice Woodall, reminds us, “requires injury in fact to the plaintiff.” 2010 WL 152123, *10. “Further, the injury must be to a ‘legally protected right.” Id. “A plaintiff who alleges no such injury “‘has no standing to sue either on [its] own behalf or on behalf of a class.’” Id. (citations omitted).

In the instant case, Blue Cross

alleges that it honored its contractual obligations to its insureds by paying pharmacies for Duract at the time the medication was dispensed to its insureds. [It] does not claim that, after the medication was dispensed, it had any legal interest in the medication or any right to control the manner in which the medication was, or was not, used. Although it alleges that it paid for Duract that was unused because of the later withdrawal of that drug by Wyeth, it does not explain how that withdrawal affected any of its legal rights. Instead, [it] simply says that it wants its money back. In my opinion, more is required to allege an injury to a “legally protected right.”
Id. “Because [Blue Cross] had no standing, the trial court had no subject-matter jurisdiction, and, consequently, no alternative but to dismiss the action.” Id.

If this sounds a bit familiar, we grant you a cyber-pat on the back (and maybe suggest that you, like we, might consider getting a life). In 2002, the Fifth Circuit dealt with an almost identical case involving – guess what – Duract and class action standing. Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315 (5th Cir. 2002).
In Rivera, both the individual and the employee benefit plan that paid for drug sued Wyeth to recover economic damages, alleging breach of implied warranty, unjust enrichment, and violation of Texas Deceptive Trade Practices Act (DTPA). The District Court certified a class action, which the Fifth Circuit reversed.

The Fifth Circuit characterized plaintiffs’ claims in Rivera thusly:
Rivera's claim to injury runs something like this: Wyeth sold Duract; Rivera purchased and used Duract; Wyeth did not list enough warnings on Duract, and/or Duract was defective; other patients were injured by Duract; Rivera would like her money back. The plaintiffs do not claim Duract caused them physical or emotional injury, was ineffective as a pain killer, or has any future health consequences to users. Instead, they assert that their loss of cash is an "economic injury."
The plaintiffs never define this “economic injury,” but, instead, spend most of their brief listing helpful suggestions on how a court could calculate damages. These arguments are relevant (if at all) to redressability, not injury. Merely asking for money does not establish an injury in fact.
283 F.3d at 319.

We love that line so much, we have to repeat it: “Merely asking for money does not establish an injury in fact.” Id. Or as Justice Woodall puts it, “[Blue Cross] does not explain how that withdrawal affected any of its legal rights. Instead, [it] simply says that it wants its money back.” 2010 WL 152123, *10.

And Rivera continued:
The confusion arises from the plaintiffs' attempt to recast their product liability claim in the language of contract law. The wrongs they allege-failure to warn and sale of a defective product-are products liability claims.  Yet, the damages they assert-benefit of the bargain, out of pocket expenditures-are contract law damages. The plaintiffs apparently believe that if they keep oscillating between tort and contract law claims, they can obscure the fact that they have asserted no concrete injury. Such artful pleading, however, is not enough to create an injury in fact.
283 F.3rd at 320-321 (citation omitted).

In the end, it matters whether courts grant standing to litigants who have no injury and who “just want their money back”; defendants have their hands full defending cases in which there is a “dispute . . . presented in an adversary context and in a form historically viewed as capable of judicial resolution.” See Sierra Club v. Morton, 405 U.S. 727, 732 (1972) (citations omitted). There is no need to expand litigation to cover cases where there is no actual injury. Doing so defeats the standing requirement and threatens to involve courts in hypothetical disputes.

With the number of suits these days, the legal system shouldn’t stand for such an expansion.

Thursday, January 21, 2010

Wajert-Bexis Published On FDA Shift Away From Internal Oversight

Proving they can do more than just blog, Dechert's two longest-running bloggers, Bexis and Sean Wajert (who writes the Mass Tort Defense Blog), along with associate Vince Gallo, recently wrote a "Legal Backgrounder" for the Washington Legal Foundation analyzing the FDA's decision to do away with the vetting of its Warning Letters by actual lawyers before such letters are issued.

The predictions:  (1) more warning letters about less important things; (2) poorer quality and more mistakes as FDA employees apply their own subjective standards concerning what's a violation and what isn't; (3) increased liability risks as the folks on the other side of the "v." pick up on letters suffering from defects (1) and (2); and (4) a greater likelihood of warning letters that improperly curtail the First Amendment rights of regulated entities.

If that kind of stuff interests you, take a look.

Wednesday, January 20, 2010

Caveat Emptor

Caveat Emptor....

That’s the take-away that we gleen from the Transobturator Sling Products MDL, where the court recently granted in part and denied in part a motion to quash a subpoena served on a non-party former competitor (!!) of the device manufacturer that's a defendant in that MDL.

Here’s the back story:  the defendant in this MDL is Mentor Corporation. Mentor manufactured a medical device called “Obtape,” a sling designed to treat female stress urinary incontinence. Ethicon, Inc., a wholly-owned subsidiary of Johnson & Johnson, manufactures a competing product, “Gynecare TVT.” Mentor’s Obtape was removed from the market in 2006 amid concerns about serious complications arising from the device’s use, and ... well, you can guess what happened after that.

Fast-forward three years, and plaintiffs in the Transobturator Sling Products MDL, apparently having exhausted all possible discovery against the defendant, issued a subpoena to Ethicon - the competitor. Plaintiffs asked for a number of items, including:

1) testimony and documents regarding statements Ethicon made in a TVT product pamphlet entitled “Selecting the Right Mesh:  Important properties of implant materials used in urogynecological surgery” (“Pamphlet”); 2) testimony and documents regarding Mentor’s 510(k) application to the Food and Drug Administration (“FDA”), in which Mentor claimed that ObTape is the substantial equivalent of TVT; and 3) testimony and documents regarding all testing that was conducted on TVT, including published clinical trials and internal Ethicon studies.
Order at 2.

Ethicon, naturally, objected on grounds that evidence relating to its TVT device was not relevant, that the subpoena called for Ethicon to provide gratis expert testimony about Mentor’s application to the FDA for approval of the Obtape device, and that the subpoena was unduly burdensome and sought highly confidential and trade secret materials.

The Court’s January 14 Order agreed with Ethicon that it was not required to provide “unretained expert opinions” regarding Mentor’s application to the FDA, but otherwise, the Court required Ethicon - a non-party to the litigation - to provide the information sought in the subpoena. The Court found the evidence about Ethicon’s Gynecare TVT was "relevant" because plaintiffs said that Ethicon’s product was the “gold standard” and thus was a feasible alternative design. Order at 4. The Court also found the evidence relevant to Mentor’s defenses that the Obtape was “state of the art,” that Mentor complied with existing industry standards, and that there was no feasible safer alternative design to the Obtape. Id.

But how did the Court get around the seemingly insurmountable trade secret and confidentiality concerns raised by Ethicon with respect to its internal studies? Here’s where that old saw, caveat emptor, comes into play – because Johnson & Johnson (aka Ethicon’s parent) purchased Mentor in early 2009. Therefore, the Court reasoned, “the present record does not reveal the basis for the contention that a need presently exists to protect the disclosure of Ethicon information from Mentor since both entities are currently owned by the parent company, and thus presumably are no longer competitors.” Order at 10.

The "good news" (in the silver lining sense), at least for the rest of us, is that the court made it pretty clear that the decision was controlled by the fact that Mentor and Ethicon are now related entities and no longer competitors, Order at 10 n.3, so this opinion should not be used as a vehicle to willy-nilly subpoena trade secret and confidential documents from non-party competitors.  Be thankful for small favors.

It is also "good news" of a sort that the court had the sense to extend the protection of the protective order to Ethicon’s documents.  At least non-parties dragged into litigation, have the same confidentiality rights as the defendant that made the allegedly defective product.

But how about making plaintiffs pay costs for this sort of fishing expedition into a non-party's files?  Heck, we think they ought to write that into the next revision of the Federal Rules.

The bad news (in the dark cloud sense), of course, is that this is another example of a court not fully appreciating the burdens imposed when it blesses overbroad requests that target sensitive materials, as well as the potential for mischief and misuse that lurks whenever a court orders confidential documents to be produced to the bad guys. And regardless of the court’s statements limiting the scope of this decision, you can bet that aggressive plaintiffs’ lawyers could try to abuse this opinion in the future. But if those lawyers try to sell this opinion as a broad mandate on sweeping non-party discovery, it will be up to the defense to educate the court – beware what the plaintiffs’ lawyers are selling.

Fraud on the Market Takes It on the Chin in Pennslyvania

It's times like this that make us nostalgic for a multi-firm blog.

Yesterday, the Pennsylvania Superior Court issued a decision affirming the decertification of a putative non-personal-injury class of consumers who purchased Neurontin for alleged "off-label" uses. We can't comment on the case because of Dechert's involvement, but you can take a look at the unanimous decision in Clark v. Pfizer here.

Tuesday, January 19, 2010

There'll Always Be Posner (again)

Last week's decision in Carr v. Tillery, 2010 WL 92487 (7th Cir. Jan. 12, 2010), was not, strictly speaking, a product liability case. But it involves some key players in that field, and a very key location. And, truth be told, the case appeals to the voyeur within us.

The players are former partners in a plaintiff class action law firm that made a nice business out of hauling corporations (e.g., IBM, Pfizer, Xerox) into Madison County, Illinois. The courthouse is in Edwardsville. It's a lovely courthouse. Very unlovely things have happened there. Madison County calls itself the horseradish capital of the World. We are tempted to call it the "horse[not radish] lawsuit" capital. In 1998 there were only two class actions filed in Madison County. And then something changed to transform the local court into a drive-through class certification franchise. Why? Everyone has their favorite explanation. Some point to the nature of the bench-bar relationship. The press reported that at least one Madison County judge (now retired) received significant campaign contributions from attorneys … when the judge was running unopposed for re-election. Hmmmm. Before we descend into tedious cynicism, let's just leave it at this: there were some huge verdicts in that Edwardsville courthouse, and Madison County showed up on the ATRA's listing of "judicial hellholes" often enough that we expect its jersey number has been retired. Retired or not, Madison County is still on ATRA's Watch List.

Sadly, as Judge Posner tells it, those huge verdicts apparently did not purchase perfect contentment for our justice-seeking, do-gooder plaintiff attorneys. Rather, they commenced "mortal combat" over division of fees. Carr, 2010 WL 92487 at *1. The law firm ceased to engage in the practice of law in 2003, but "continued a twilight existence to administer the allocation of fees." Id. (Throughout the opinion, Posner's prose rises to the majesty of the subject matter.) There were "a flurry of lawsuits" filed by the ex-partners against each other in Illinois state court. Id. In one Madison County proceeding, the judge shooed a newspaper reporter out of the courtroom while the ex-partners duked it out over dollars. Those ex-partners seemed to have resolved their disputes via a "Memorandum of Understanding" drafted by Carr. Id. Not quite. Carr later added a counterclaim that he had been fraudulently induced to sign that Memo of Understanding. Id. (Yes, the one he drafted.) The Illinois courts rejected Carr's counterclaim and dismissed the lawsuits, pursuant to the Memorandum of Understanding, in 2006. The dismissals were affirmed by the Illinois Appellate Court in 2007 and Carr did not seek review by the Illinois Supreme Court. Id.
Thus ends the tale, right? No, not even close.

Since we're reading a Seventh Circuit opinion, that means somehow this fee dispute made its way into federal court. Carr was now accusing his ex-partners of, inter alia, violating RICO (where the "R" stands for racketeering -- that sort of thing really reduces the chance of a kumbaya ending). Carr wanted his share of the fees -- pegged at $20 million -- as well as punitive damages. Id. The defendants sought dismissal of the case, because, well, how do we put this, it's over. The district court agreed, granting a 12(b)(6) motion to dismiss the federal claim and the supplemental state law claim on the ground of res judicata. Posner could not resist pointing out that res judicata is an affirmative defense and that the defendants should have filed under 12(c). Thus, the district court "jumped the gun in dismissing the case under Rule 12(b)(6)." No worries, though, because "plaintiff does not complain of the error." Id.

So the first thing the opinion decides is that Judge Posner is smarter than the litigants and the district judge. (Honestly, Your Honor, we already knew this. We always will.)

Now we get to the guts of the case. Dressing the same old allegations in a RICO costume does not make for a new case. "You cannot maintain a suit, arising from the same transaction or events underlying a previous suit, simply by a change of legal theory." It's nothing more than "claim-splitting." Id. at *2. Moreover, Illinois has a "single refiling" rule (even counting dismissals without prejudice). That rule comes out to bite the plaintiff big-time. In 2007, while the state court appeal was pending, Carr had filed four more state court actions. Then he filed the federal action. Then he dismissed the four state court actions. Id. The defendants must have been confused and vexed by all this. We know we are (confused, that is, not vexed). The Seventh Circuit rules that the Illinois "single refiling" rule, being a substantive rule of preclusion, applies in federal court, and that, counting the four state court actions separately (because, big surprise, they were pretty much the same suit), the plaintiff violated it several times over. Id. at *3.

So the Seventh Circuit agrees with the defendants, who groused about their ex-partner's parade of lawsuits. (Yes, we should have posted an Irony Alert. These defendants are, after all, plaintiff class-action lawyers.)

The Seventh Circuit holds that the district judge was right to dismiss the case, but not because of res judicata. Carr was now claiming that the defendants had violated the Memorandum of Understanding. Remember? The one he had drafted, but now says he had been duped into signing? That claim had not been decided in state court. But it had been included in the four state actions that had been voluntarily dismissed. So it is the Illinois "single refiling" rule, not res judicata, that finally halts the parade. Id. at *5.

At this point Posner engages in an almost metaphysical discussion of whether the RICO complaint is so frivolous as to deprive the court of federal jurisdiction -- which would engender "a certain perversity" because Carr would be permitted to refile his case.

Not again?!

But Posner to the rescue.  Just in the nick of time, he concludes that the RICO claim is "weak, indeed feeble" and a "nonstarter," but -- unluckily for Carr -- not yet so frivolous as to warrant dismissal on jurisdictional grounds. Id. at *5-7. Posner is torturing the plaintiff at this point, isn't he?

By the way, if you think you have heard this jurisdictional discussion before, then you have really been paying attention. Our recent summary of the earlier Posner opinion in the Nightingale case goes over similar ground.  Let's just say that Posner opinions are rife with certain jurisdictional leitmotifs.

Now comes the fun part. The defendants had appealed because they think their request "for sanctions should not have been denied. The plaintiffs' lawyers may secretly agree, for they make no attempt to counter the arguments for sanctions made in the defendants' brief." Carr, 2010 WL 92487 at *7. (Ouch! Note to selves:  when the other side asks the court to sanction our side, we should always explain our disagreement.) There does appear to be one potential obstacle to sanctions: section 1927 of the Judicial Code does not reach misconduct that occurred before the case appears on the federal docket. But that old bugaboo, "common law power," permits the court to sanction the plaintiff anyway. Id. at *8. Here are the factors set forth by the Seventh Circuit to justify sanctions:

  • motive to harass, evinced by the "vitriolic tone of the complaint," and the character of the briefing and oral argument;
  • failure to cite a controlling case on the "single refiling" rule
  • "disingenuous efforts at distinguishing" that case in the reply brief; 
  • false statement in the brief that "Carr does not seek to relitigate issues from the 2004 litigation;" 
  • improper attempt to raise issues in the reply brief that had not been mentioned in the opening brief; and  
  • failure to attempt to rebut the cross-appeal on sanction.

These facts, and others, convinced Judge Posner that the "litigation is groundless," that "plaintiff is out of control," and that "his lawyers are neglecting their duties as officers of the state and federal courts by failing to rein him in." Id. at *9. Consequently, the Seventh Circuit orders the district court to impose monetary sanctions on the plaintiff. Posner also throws out a tease by noting that the defendants had not sought sanctions "for misconduct in the proceedings in this court." Id. (When you litigate before Judge Posner, you lose even when you win.) Lastly, the Seventh Circuit directs the district court to consider "whether to enjoin Carr from conducting further litigation arising from actions by the defendants of which he has complained in his voluminous filings to date." Such injunctions would "complement" monetary sanctions, and seem appropriate because of the unlikelihood that the plaintiff "will accept defeat gracefully." Id.

In short, it's another virtuoso performance by Judge Posner. But let's not forget to credit the defendants for making effective, heartfelt arguments against meritless, repetitive, harassing litigation. We might even quote them some day -- maybe the next time we're in Madison County.

There has lately been a fair amount of discussion about how certain unusual words crop up in appellate matters. We've heard how a litigant dazzled the Supreme Court by characterizing an irrelevant question as "orthogonal." We've also heard that Justice Scalia sputters when he hears what is arguably a non-word, "choate." While it doesn't show up in Judge Posner's opinion in the Carr case, there is a word that comes to mind when we are treated to a battle among plaintiff attorneys -- schadenfreude.

Monday, January 18, 2010

Holiday Edition - Thanks

It's MLK day.  It's a firm holiday, we're not supposed to be here, but we are.  But since it's a holiday, rather than write a substantive post (that's work), we thought we'd take care of some other business.

First, our sharp-eyed readership has probably already noticed, but there's been a minor site change.  The 2009 "vote for this blog" ABA Journal Blawg 100 has been retired and replaced with an "Honoree" badge.  That's right. Enough of you took time to vote for us that we're on the ABA Blawg 100 for the second straight year - in the "practice specific" category.  Thanks to our readers for thinking enough of us to bestow that honor.

Second, we also got named a "top 50 health administration blog."  We're not sure what it means, or exactly what criteria were used to determine this ranking, but we're thankful for it as well (we flatter easily).

Third, Bexis is taking his "made for radio" good looks and his opinionated voice to blog talk radio on "the Legal Docket" tonight at 9:30 p.m.  You can tune him in here.

Fourth, and finally, as soon as we get the paperwork finalized, we expect we'll be syndicating our "better" posts on the Forbes "Street Talk" blog.  We're not there yet, but we could be by this time next week.

Again, thanks to our loyal readers.  None of this could happen without you.

Thursday, January 14, 2010

Once More Into The Breach

As long-time readers know, this blog was founded by a couple of guys who first got to know each other defending co-defendant manufacturers in the Orthopedic Bone Screw Mass Tort.  That fact significantly colors what you read here.  A lot of the issues that we harp on – off-label use, medical device preemption, fraud on the FDA, cross-jurisdictional class action tolling, broken device cases, expert testimony on issues of (FDA) law (that's just off the tops or our heads) – we spent close to a decade litigating in Bone Screw land.

It wasn’t a bad living. 360 (requires subscription) recently named one of our old Bone Screw cases (Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001)) as the top product liability case of the last decade. (It also stole a post idea we’d kicked around but never gotten off our duff to write up).  Even though we've moved on, our pet peeves haven't.

But probably the most singularly "Bone Screw" issue was the theory that a surgeon could be liable under an "informed consent" rationale just because s/he didn't tell a patient about the FDA regulatory status (that is to say, off-label use) of the drugs/medical devices used in the patient’s treatment. And we Bone Screwers killed that theory dead – maybe not as dead as we killed fraud on the FDA, but pretty darn close.

The claim was essentially unheard of until Bone Screw plaintiffs invented it to make doctors (who had always discussed only how a drug or device could help/hurt you) sitting ducks for liability. When Bone Screw was over, the overwhelming majority rule rejected that kind of claim, holding that informed consent didn’t go beyond medical information, the risks, benefits (and in some places, alternatives to) medical procedures. Legal stuff, like how thin the FDA chose to slice a particular regulatory approval salami, was beyond the pale of informed consent:

[T]he FDA labels given to a medical device do not speak directly to the medical issues surrounding a particular surgery. The category into which the FDA places the device for marketing and labeling purposes simply does not enlighten the patient as to the nature or seriousness of the proposed operation, the organs of the body involved, the disease sought to be cured, or the possible results. The FDA administrative label does not constitute a material fact, risk, complication or alternative to a surgical procedure. It follows that a physician need not disclose a device’s FDA classification to the patient in order to ensure that the patient has been fully informed.
Southard v. Temple University Hospital, 781 A.2d 101, 107 (Pa. 2001). See also Earle v. Ratliff, 998 S.W.2d 882, 891-92 (Tex. 1999); Hansen v. Universal Health Services, 974 P.2d 1158, 1159-60 (Nev. 1999); Packard v. Razza, 927 So.2d 529, 534 (La. App. 2006); Blazoski v. Cook, 787 A.2d 910 (N.J. Super. A.D. 2002); Alvarez v. Smith, 714 So. 2d 652, 654 (Fla. App. 1998); Osburn v. Danek Medical, Inc., 520 S.E.2d 88, 92 (N.C. App. 1999), aff’d, 530 S.E.2d 54 (N.C. 2000); Klein v. Biscup, 673 N.E.2d 225, 231 (Ohio App. 1996); Balderston v. Medtronic Sofamor Danek, Inc., 285 F.3d 238, 239 n.2 (3d Cir. 2002) (applying Pennsylvania law); Bogle v. Sofamor Danek Group, Inc., 1999 WL 1132313 *7 (S.D. Fla. April 9, 1999); In re Orthopedic Bone Screw Products Liability Litigation, 1996 WL 107556 (E.D. Pa. March 8, 1996), reconsideration denied, 1996 WL 900351 (E.D. Pa. May 21, 1996); cf. Daum v. Spinecare Medical Group, 61 Cal. Rptr.2d 260, 271-73 (Cal. App. 1997) (FDA regulatory status not part of common law informed consent obligation; discussion of status only required where FDA regulations say so).

All of them, even the 2006 straggler, involved “spinal fixation” (read: bone screws). And once that appellate wave got going, there was essentially nothing on the other side. A lot of these case, moreover, cited Bexis’ 1998 article in the Food and Drug Law Journal, which when published was the first major law review article on off-label use (there are a bunch more good ones since).

So why the trip down memory lane?

Because we haven’t said a peep on this issue in over two years, and it’s never a good idea, as a defense lawyer, to let your guard down. That’s especially true when the issue is primarily faced in medical malpractice cases, and its relation to product liability is indirect – strong, but indirect.

It’s indirect because the primary threat posed in the product liability context from the informed consent/regulatory status theory is, and always has been, its potential to get doctors at odds with our clients. If docs are obligated to discuss FDA stuff, where would that information have to come from? Given the learned intermediary rule, if it ever became a tort for doctors not to tell patients about off-label use, then the next shoe to drop would be plaintiffs suing doctors over not getting the right (or enough) information about off-label use. Forced to defend that sort of claim, doctors may well point fingers at the FDA-regulated manufacturers.

The indirect nature of the interest becomes a problem because we (that is, product liability defense lawyers) don’t ordinarily represent doctors in malpractice cases. FDA-related issues often seem foreign and arcane to our colleagues who do practice malpractice defense. And worse, the insurance companies that pay for most med-mal defense don’t often want to pay for a lot of legal research of the sort necessary to get their counsel up to speed on this sort of peculiar theory. Usually, they’d rather settle.

That’s why Bexis wrote the 1998 article, and then followed with dozen or so amicus briefs on the same issues in most of the cases that we've cited.  It's a good idea to provide doctors using our clients' products with the wherewithal to defeat a theory against them before it becomes a theory against us.  That way we could praise the Lord and pass the ammunition in cases where our clients weren't (yet) directly involved.

And so we arrive at the catalyst for this post, DeNeui v. Wellman, 2009 WL 4847086 (D.S.D. Dec. 9, 2009), in which the informed consent/FDA regulatory status theory reared its ugly head yet again. (Maybe) Ironically, DeNeui was also a spinal fusion surgery case, but in the neck (“cervical”), not lower down where doctors normally use those bone screws. And since the FDA has long since bowed to medical reality and moved bone screws on-label for spinal use, bone screws weren’t at issue in DeNeui.

Instead, DeNeui involved something called “bone morphogenetic protein (BMP).” Id. at *1. We didn’t know what that was, so we Googled it. Here’s what Wikipedia has to say (among other things). There are apparently 20 of these proteins:

Clinical uses

Members of the BMP family are potentially useful as therapeutics in areas such as spinal fusion. BMP-2 and BMP-7 have been shown in clinical studies to be beneficial in the treatment of a variety of bone-related conditions including delayed union and non-union. BMP-2 and BMP-7 have received Food and Drug Administration (FDA) approval for human clinical uses. At between $6000 and $10,000 for a typical treatment, BMPs can be costly compared with other techniques such as bone grafting. However, this cost is often far less than the costs required with orthopaedic revision in multiple surgeries.
After surgery, the plaintiff alleged she suffered a suite of symptoms that sound like something happened to one or more of the cervical nerves, “difficulty breathing, swallowing, and speaking.” DeNeui, 2009 WL 4847086, at *1. How that relates to bone growth, we don’t know, but along with the usual malpractice claims, the plaintiff threw in that the defendant surgeon “breached his duty to obtain [plaintiff’s] informed consent by failing to inform her about the material risks associated with the surgery, including. . .the use of [the product] in a manner that was not approved by the FDA.” Id.

Defense counsel (we presume med-mal counsel) moved to dismiss, citing a couple of the cases we've already mentioned. Surprisingly (to us) the court elected not to follow what it characterized as “the apparent majority viewpoint that a physician does not have to inform a patient about an off-label use of an FDA-approved drug in order to obtain that person's informed consent.” Id. at *3. It did so because of its view that South Dakota had adopted the “rule that the standard measuring the performance of the physician's duty to disclose is conduct which is reasonable under the circumstances.” Id. (referring to the state’s adoption of Canterbury v. Spence, 464 F.2d 772, 785 (D.C. Cir. 1972)). From Canterbury, the court leaped directly to the question of what was “material” (“a risk is generally defined as material when a reasonable person. . .would be likely to attach significance to the risk”) and held that to be a jury question (“the issue of the materiality of the off-label use of [the product] is to be decided by a jury”).  WL 4847086, at *3-4.

Slow down Fast Eddie.  Sorry to say, but the court missed a step – a critical one. Before there can be a “material” risk, there first has to be a risk. FDA regulatory status, whether use of a product is on or off the label, isn’t a risk at all. Let’s look at the court’s initial description of Canterbury, which we don’t have any problem with:

[South Dakota] adopt[ed] the Canterbury v. Spence rule that the standard measuring the performance of the physician’s duty to disclose is conduct which is reasonable under the circumstances.” Id. (citing Canterbury v. Spence, 464 F.2d 772, 785 (D.C. Cir .1972)). The South Dakota Supreme Court elaborated that “a reasonable disclosure [is] one which appraises the patient of all known material or significant risks inherent in a prescribed medical procedure, as well as the availability of any reasonable alternative treatment or procedures."
DeNeui, 2009 WL 4847086, at *3 (emphasis added). Thus, neither Canterbury nor the South Dakota Supreme Court case adopting it held that informed consent requires disclosure of everything “material” (in the sense the it might, rightly or wrongly, impact upon a patient’s decision). Informed consent requires the disclosure of “risks” – “material risks.”

Not having a piece of paper from the FDA, saying this product is approved for that intended use, isn’t a risk. Nor is having that piece of paper going to do the patient any good. An FDA regulatory approval does not make the likelihood of any medical complication more or less likely. It makes the cure of the condition being treated no more or less likely. All it means is that the FDA found enough information to permit the agency to make a judgment as to safety and effectiveness. A drug approved on January 1, 2010 is no safer than it was the day before. See the Southard quote, above.

Law isn’t medicine. That’s where the DeNeui court made its fundamental mistake. But the reasons why that decision is truly wrong-headed come from the corresponding fact that doctors aren’t lawyers – and if we’re smart, we’ll leave the medical profession to what it does best and won’t use threats of liability to try to force doctors to subscribe to the FDA Law Blog.

We don’t like the idea of strict liability for doctors practicing medicine. And make no mistake about it, strict liability is what DeNeui-style FDA-based informed consent is all about. A central, undeniable fact is that off-label use is very widespread. In Bexis’ 1998 law review article, the then-current estimates of off-label use ran as high as 60% overall. 53 Food & Drug L.J. 71, 80 (1998). We don’t think that’s changed much. See 2006 Caputo WLF brief, at 20 (percentages in the same range).

Percentages this high tell us that a great deal of off-label use – probably most of it – is standard of care medical practice.  And you don't have to believe us.  Here's what the FDA said in 2008:
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 (or, in the case of a medical device cleared under the 510(k) process, in the product's statement of intended uses). These off-label uses or treatment regimens may be important and may even constitute a medically recognized standard of care.
That’s why, as we’ve discussed in other contexts, off-label use is paid for by government programs such as Medicare. 42 U.S.C. §§1396r-8(k)(6), 1395x(t)(2)(B)(ii). For all we know from the DeNeui opinion, the use of the bone growth proteins in that case was also standard of care. The Wikipedia article (admittedly, not the most authoritative source) suggests that it may well be.

We should be encouraging doctors to follow the standard of care. We should not be imposing liability upon a doctor who practices standard-of-care medicine, just because s/he didn’t also tell the patient that, of the 20 bone growth proteins, this particular one wasn’t FDA approved for this particular bone in the body even though it could be malpractice (defined as deviating from the standard of care) not to do it..

The informed consent theory allowed in DeNeui has the potential to do just that – hold bunches of doctors liable for medical treatments that represent the standard of care. What good does that do? Requiring every doctor on pain of liability to tell every patient about every off-label use is a recipe for a monumental waste of physician time (telling patients useless information) and energy (having to learn that useless information to tell it to the patient). For another thing, it adds no benefit. Legally compliant informed consent already requires doctors to tell patients about all material medical risks and benefits of treatments, and in many jurisdictions, things like treatment alternatives. That’s what patients need to know – how likely is this to help me; how likely is it to hurt me? Not that “the FDA has allowed the manufacturer to put this on the label.”

So if a patient – say Ms. DeNeui – is: (1) already receiving standard of care treatment and (2) accurately informed of all the material risks and benefits of that treatment, what benefit is there to telling her, “Oh, by the way, the FDA hasn’t approved using this or that drug for this treatment”?

Not much. In fact, we think it would do more harm than good.

In the great majority of cases, the regulatory informed consent theory allowed in DeNeui threatens to hurt medical treatment – by turning a patient away from standard-of-care medicine in the mistaken belief that, because the FDA hasn’t given it the Good Housekeeping seal of approval, there must be something wrong with it. That’s what any lawyer would have to say, anyway, because otherwise where’s the causation? This kind of suit, allowing liability where the doctor met the medical standard of care, only encourages more lawsuits, and thus higher costs for everything, without doing anything to benefit patient safety, since the standard of care is precisely what the law otherwise encourages doctors to maintain.

Nor do we place much stock in the court’s disclaimer that “[h]ere the issue is whether the physician should have informed plaintiffs of off-label use of [this product] under the facts of this case, not whether such disclosure is required in all cases.” DeNeui, 2009 WL 4847086, at *4 n.5. There’s simply no way to predict – when a doctor’s trying to decide what s/he should tell the next patient – whether that patient is going to become the next “this case” in a judicial footnote. There’s always a next case. And doctors, as potential defendants, have to worry about that. So every doctor in every case in South Dakota is potentially staring down the muzzle of this blunderbuss theory, wondering if his/her next case might also be a court's next case.

After all, in "this case," DeNeui, 2009 WL 4847086, at *4 n.5, there isabsolutely no indication that the FDA ever rejected a submission concerning either the product or the use. So what ends up happening? Doctors giving their patients standard of care treatment become insurers for anything that might go wrong because they don’t recite that some of what they are doing uses drugs or medical devices in ways that the FDA has not reviewed - not that the FDA has rejected, just not reviewed.

DeNeui involved major neck surgery. It's safe to say that (unless Ms. DeNeui was given a bullet to bite) there was probably more than one drug and more than one device being used – in all likelihood lots more. Is the doctor supposed to recite the FDA regulatory history of each? Let's be conservative here. If in a surgery there were just five different drugs/devices utilized, assuming an general average of 50% off-label use, then 97% of such surgeries are likely to involve at least one off-label use (50% multiplied five times is a little more than 3%). Thus the De Neui theory, wrongly equating FDA regulatory status with “risk,” has the potential to expose a lot of doctors to a lot of liability.

The upshot? There will be windfall recoveries as doctors are held liable to patients who received medically proper treatment. After a few of those, the boilerplate in standard informed consent forms gets changed. Insurance companies require them to include, say: “some of your medical treatment may include prescription of drugs or medical devices for purposes that have yet to be reviewed or approved by the FDA.”


When are plaintiffs’ lawyers ever satisfied?

Where do we go from there, if the fallacy of FDA status = risk is accepted? Perhaps the initial informed consent duty gets expanded to require “specific” discussions. Then we’ve turned doctors into lawyers. Doctors end up having to spend the limited time that they could be learning about the latest medical advances and (hopefully improving) standards of care, and instead try to sort out which of thousands of possible uses of prescription drugs and devices are on label and which are not. There’s a good reason that, in this area, the majority rule – indeed, every appellate court that we know of – rejects precisely what the court in DeMeui allowed. It’s a theory of liability with huge downsides that either the court didn’t hear about or ignored.

Our bottom line is this, and we know it from experience. The law of informed consent already requires patients to be told about medical risks and benefits – even if the FDA never existed. Many, probably the majority of, off-label uses are standard of care. At worst, off-label status implies a need for more study. And if a plaintiff’s medical condition is grave enough that an experimental treatment with unknown risks is the best medicine can offer, then certainly that patient should know that what’s being proposed is a crapshoot. But the law already requires that, without going further and turning doctors into lawyers and requiring them to recite FDA regulatory status of the drugs and/or medical devices involved.

Do off-label uses have medical risks? You betcha. And warnings about those risks are what the law (and all that the law) should require. Doctors should tell patients directly about material medical risks. There’s no need to filter that discussion through the carnival mirror of FDA legal status. There are lots of reasons why something could be off-label that have nothing to do with medical risk/benefit. “Gold standard” FDA studies are expensive and time consuming. FDA approval could be underway (it can take years). The medical condition may be so rare that doing those studies isn’t cost effective. The drug could be off-patent and subject to generic competition. Are doctors supposed to try to explain that, too, to their patients?

So tell patients what they need to know to give truly informed consent – medical risks, benefits, and alternatives. Doctors know how to do that. It’s the kind of information they’ve been trained to handle since medical school. Forcing medical professionals to go beyond what they’ve been trained to do, and to grapple with FDA approval information that may well be unrelated to medical risks does neither the patient nor the doctor any good.

The only people who profit from injecting legal information, such as FDA regulatory status, into medical informed consent discussions are lawyers - so they can play "gotcha." For anyone needing medical care, it’s a spectacularly lousy idea.

We hope that DeMeui gets overturned or reversed. Otherwise, will the last doctor to leave South Dakota please turn out the lights?