Thursday, December 06, 2012

Stuff


The big developments – the Caronia opinion , and the Supreme Court’s grant of certiorari in Bartlett – along with other distractions, such as our ABA Blawg 100 award, have left us with a pile of unblogged stuff that we think is of interest to our readers.

Today we’re taking a crack at that pile.  We apologize in advance if these discussions aren’t as detailed (and thus aren’t as useful) as our usual posts.

California Leans Daubert
California has long gone its merry, idiosyncratic way in the Daubert/Frye wars.  The California Supreme Court has fashioned something called “Kelly/Leahy” after the names of the two most important opinions.  However, in Sargon Enterprises, Inc. v. University of Southern California, ___ P.3d ___, 2012 WL 5897314 (Cal. Nov. 26, 2012), the court spoke about California expert admissibility with a distinct Daubert accent.  Sargon (great name – it evokes space aliens, unknown elements, or even ancient Sumer) is a drug/medical device case only in the loosest sense.  It’s about an alleged “breach of a contract for the [defendant] to clinically test a new implant the [plaintiff] had patented.”  Id. at *1.  The expert testimony at issue involved lost profits.  Id. at *2.  The testimony was vague and tautological, involving the expert’s supposition that the defendant, because it was “innovative,” would have joined the “big six” dental implant manufacturers.  But he measured “innovation” according to “the proof is in the pudding” – successful companies were “innovative,” less successful ones less so.  Why was the plaintiff company “innovative” even though it was small?  That opinion was a bunch of gobbledygook and jargon amounting to “because I think so.”  See Id. at *3-5.  The trial court threw the expert out.  The Court of Appeals reversed and found the testimony admissible, then the California Supreme Court granted review.

This blog doesn't care all that much about the ins and outs of calculating lost profits, but we do care about the standards for expert admissibility.  Sargon is noteworthy for the court’s repeated reliance on the federal precedent that we have (usually) come to know and love, starting with “[u]nder California law, trial courts have a substantial 'gatekeeping' responsibility.”  Sargon, 2012 WL 5897314, at *14 (footnote citing Joiner and Kuhmo Tire omitted).  That leads to “[e]xclusion of expert opinions that rest on guess, surmise or conjecture is an inherent corollary to the foundational predicate for admission of the expert testimony.”  Id.

We also read that the “court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.”  Id. at *15 (again citing Joiner).  Daubert itself follows hard on the heels, with “the gatekeeper's focus must be solely on principles and methodology, not on the conclusions.”  Id. at *16.  Then we get a second helping of Kuhmo:  “the gatekeeper's role is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.”  Id.  And, just like federal law, review of expert exclusion decisions is “for abuse of discretion.”  Id.  The court ultimately held that the opinion was properly excluded and that the trial court had done all the right Daubert-type things like holding a hearing:

The trial court did not abuse its discretion in the sense of making a ruling that was irrational or arbitrary. It presided over a lengthy evidentiary hearing and provided a detailed ruling . . . .  The trial court also excluded the expert testimony for proper reasons. It properly found the expert’s methodology was too speculative for the evidence to be admissible. . . .  [The expert’s] reasoning was circular. He concluded that the Big Six were innovative because they were successful, and that the smaller companies (excluding [plaintiff]) were not innovative because they were less successful.  In essence, he said that the smaller companies were smaller because they were not innovative. The trial court properly considered this circularity in the reasoning as a basis to exclude the testimony

Id. at *20.

There’s a large body of case-law under Daubert and by and large we like it.  States going off on their own tangents are a source of uncertainty that the other side can exploit.  Thus we commend California’s evident embrace of most things Daubert in the Sargon decision.
Repairing Some of the Levaquin Damage – But Not Nearly Enough
We’ve been following the Levaquin litigation mostly from afar (for which we should be grateful), and often in white-knuckled silence, as one problematic ruling after another was handed down.  The not-all-that-surprising result was that a test case called Schedin (under which still more adverse rulings may be found) produ ced a finding of not just liability, but liability for punitive damages.

Well, recently, the Eighth Circuit got a shot at the Levaquin [fill in descriptive noun of your choice].  Unfortunately, while it addressed some of the most egregious errors, it didn’t repair anywhere near all the damage.  See In re Levaquin Products Liability Litigation, ___ F.3d ___, 2012 WL 5971181 (8th Cir. Nov. 30, 2012).
 
Most importantly, the court of appeals held as a matter of law that there wasn’t enough evidence to justify the imposition of punitive damages (which reduced the size of the verdict by well over half):

As a matter of law, the record evidence failed to establish [that the defendant] deliberately disregarded the risk of tendon injuries in elderly patients taking corticosteroids, as required for punitive damages under Minnesota law.  By warning of that risk in its package insert, [defendant] actively sought ways to prevent the dangers associated with its product.  The 2001 warning also was published in the PDR, a reference widely used by physicians.  Regardless of [defendant’s other] alleged actions . . ., we cannot characterize [it] as hiding information it openly published.  The 2001 warning was in [the prescriber’s] physical possession and was specific and clear if read.  For drug warnings to succeed in protecting patients, doctors must order their practice and their continuing medical education so as to find time to learn about new and updated warnings for the drugs the doctor is prescribing.

Id. at *7 (emphasis added).  That’s good, we like cases holding that punitive damages are barred by warnings, even if inadequate.  Moreover, because the plaintiffs undoubtedly threw all the mud in their possession against the wall in this bellwether trial, this ruling probably kills punitive damages for the rest of the Levaquin MDL.  It’s pretty hard to conceal deliberately something that you specifically warn about.

Still, since the District Court construed the Minnesota punitive damages bifurcation statute narrowly and allowed in all sorts of prejudicial evidence only “tangentially” related to the compensatory claims, In re Levaquin Products Liability Litigation, 2010 WL 4867588, at *3 (D. Minn. Nov. 23, 2010), we think that the entire verdict should have been reversed.  We know how punitive damages work in practical terms, and we have no doubt that admission of evidence purportedly relevant only to “motive and intent” id., seriously prejudiced the presentation of the entire case before the jury.

Then there’s failure to warn.  The plaintiffs were allowed to proceed on two theories, including a bizarre failure to “include comparative . . . toxicity information in the package insert” claim.  2010 WL 4867588, at *3.  The Eighth Circuit pointedly did not endorse the comparative labeling claim.  Id. (“we need not address whether the district court erred in denying [defendant's] motions based upon [plaintiff’s] comparative toxicity theory”).  The court found “harmless error” because the plaintiff could recover on the other, more standard, warning theory.  Id.

We think that’s a cop-out.  In the first place, the FDA strictly regulates when a manufacturer can make product comparisons.  See 21 C.F.R. §§201.57(c)(2)(iii); 201.80(c)(3)(v) (requiring “substantial evidence derived from adequate and well-controlled studies”).  In the second place, before Levaquin, no state anywhere had held that the pharmaceutical duty to warn included an obligation to recommend somebody else’s product as “safer.”  Comparative warning claims were rejected in Baycol litigation.  In re Baycol Products Litigation, 532 F. Supp.2d 1029, 1040-43 (D. Minn. 2007).  This issue thus provokes one of our largest pet peeves – federal courts exercising diversity jurisdiction have no power to “predict” novel and expansive theories of tort liability.  Yes, even in the Eighth Circuit.  E.g., Leonard v. Dorsey & Whitney LLP, 553 F.3d 609, 612 (8th Cir. 2009) (“[o]ur duty is to conscientiously ascertain and apply state law, not to formulate new law based on our own notions of what is the better rule”).

We have the same objection to allowing liability on the other, more normal warning claim – because the defendant actually did warn.  It “changed the tendon warning in the package insert” to make it stronger.  Levaquin, 2010 WL 4867588, at *4.  Nonetheless, liability was affirmed:

Courts disagree about whether simply changing the package insert warnings insulates a drug manufacturer from failure-to-warn liability, and Minnesota courts have not decided this issue.  Many courts considering the question have held a properly worded package insert is a sufficient warning as a matter of law, at least when it is combined with an entry in the PDR.

Id.  That should have been the end of it.  The plaintiff should have gone home empty-handed.  Since Minnesota state courts admittedly have not recognized such liability, and it’s certainly not the majority rule elsewhere, a federal court supposedly applying state law can’t go making things up.  Leonard, supra.  Only by characterizing the question as whether warnings “insulate[]” the defendant, 2010 WL 4867588, at *4, rather than whether plaintiff could maintain a claim on the first place for inadequate warnings in the presence of an adequate package insert, could the court pretend that it was declining to make new law.  Of course, it was really making new – and quite bad – law.

We make the same observation about causation.  The prescriber never testified that he relied on Dear Doctor letters, and the court conceded that it was a “stretch” to base warning causation upon speculation that he might have “relied on his colleagues’ comments about particular drugs.”  Levaquin, 2010 WL 4867588, at *6.  We reiterate.  That should have been the end of it.  The opinion cites no Minnesota law allowing causation to be premised on either warning letters or through some sort of gestaldt from colleagues.  Federal courts should not create new grounds for liability from whole cloth.

So overall, we’re quite disappointed in the outcome.  Assuming that Schedin was the MDL plaintiffs’ preferred bellwether case, we have to conclude that these are very weak cases, indeed – a conclusion supported by plaintiff losses in two subsequent Levaquin trials.  The courts should not be bending over backwards to encourage liability where none should exist.
Restricting Cross-Jurisdictional Class Action Tolling − Backwards
Anybody who follows this blog at all closely knows that we hate cross-jurisdictional class action tolling.  It’s the subject of one of our more obscure scorecards.  Sorry, but we don’t find any merit in a doctrine that rewards the mere filing of meritless litigation - we see too much of it already.  Fortunately, most courts haven't adopted it either.

That’s why the otherwise far afield FDIC v. Countrywide Financial Corp., 2012 WL 5900973 (C.D.Cal. Nov. 21, 2012), caught our eye.  Not only did the court reject cross-jurisdictional class action tolling (as does California, see Jolly v. Eli Lilly & Co., 751 P.2d 923, 936-37 (Cal. 1988)), but it did so despite the plaintiff having filed a federal statutory action that would ordinarily be subject to American Pipe class action tolling.  The earlier class action, however, was cross-jurisdictional, having been filed in state court:

American Pipe tolling cannot apply to a class action filed in state court, even if the claims in the state class action are federal.  The complaint in [the earlier case] expressly did not seek to meet the requirements of Rule 23.  The class action could continue if it complied with California procedural rules. . . .  A rule restricting American Pipe tolling effect to class actions filed in federal court is also more consistent with the practices of the states themselves.  Very few states toll the claims of individuals based on a class action filed in another jurisdiction (called “cross-jurisdictional tolling”).  The reasoning of those courts that reject cross-jurisdictional tolling is equally applicable to the situation here.

2012 WL 5900973, at *13-14 (citations omitted).

So there you have it.  Judicial rejection of cross-jurisdictional class action tolling works both ways.  Not only do federal class actions not toll the statute of limitations in subsequent actions filed in state court, but state class actions don’t toll federal statute of limitations, even as to a claim that, had both actions been in federal court, would have benefited from the ill-considered American Pipe rule.

1 comment:

Cocaine Princess said...

Congrats on your award!!