Yesterday, our 15-year-old son looked at the falling flakes and wondered aloud whether it was ever going to stop snowing. He's prone to complaint (future plaintiff lawyer) but, in truth, the ten-foot high snowbanks and the sheets of devilish, black ice are a bit depressing. We knew the arrival of 30 page Zyprexa opinion by Judge Weinstein, In re Zyprexa Products Liability Litigation, 2011 U.S. Dist. LEXIS 6207 (E.D.N.Y. Jan. 20, 2011), would move us along the happy-sad meter, but we didn't know which direction.
Not to put too fine a point on it, but Zyprexa rulings are a big deal. The Zyprexa litigation involves a big-selling medicine prescribed for important psychological maladies (including schizophrenia and bipolar disorder), with allegations that the drug is contributing to the American epidemics of obesity and diabetes. It involves claims for wrongful death, personal injury, consumer fraud, and securities violations. There have been third-party claims, federal and state civil actions, and a federal criminal action. Decisions in the Zyprexa litigation made our ten-best list in 2010 (the Second Circuit's reversal of Judge Weinstein's certification of a RICO class action by third-party payors), our ten-best list in 2009 ("Pigs Get Fat, Mississippi Got Slaughtered"), and our ten-worst list in 2008 (Judge Weinstein's certification of the RICO action). Zyprexa rulings have kept us rather busy. We've blogged about the case's treatment of Daubert challenges, caps on attorney fees, and sanctions for disclosure of confidential documents. And much more.
It's been riveting. Maybe that shouldn't come as a surprise, because the stakes have been so high, the lawyers on both sides have been so energetic and creative, and the judge has been so ... well, it's Judge Weinstein, after all. We might not agree with more than thirty percent of what Judge Weinstein writes, but there's no getting around the fact that he is brilliant, careful, and prolific. So a 30 page opinion by Judge Weinstein is like a new Oliver Stone film -- we know it'll be interesting and fear it'll be infuriating.
Except that the first 26 pages consists of listing counsel. That is one of the perils of an MDL. We flipped through the pages quickly and ended up reading a very short, straightforward discussion about learned intermediaries. Anxiety gave way to delight. Judge Weinstein granted summary judgment in a case because the plaintiffs' treating physicians testified that they "were aware of the potential metabolic side-effects of Zyprexa, including diabetes, at the time they made their prescription decisions." 2011 U.S. Dist. LEXIS at *95. Two of the doctors supplied the strongest possible statements: "none of the information they have learned about Zyprexa would have changed their treatment." Id. A third doctor stated that "he would not necessarily have treated [plaintiff] differently, and that today he would still 'tend not to change that a medicine' that a patient is already taking." Id. at *95-96. That's the sort of testimony that makes your average defense lawyer somewhat content, but also somewhat uneasy, as he or she is walking away from the deposition. It's enormously useful to know that even Judge Weinstein agrees that such testimony can end a case.
As is typical, the plaintiff did not take this sort of thing lying down. First, they submitted expert reports to the effect that a "reasonably prudent doctor" would not have prescribed the drug if they had known the truth. Id. at *97. Nice try. But the actual treating doctors testified that "they were already aware of the risks of diabetes at the time Zyprexa was prescribed." Id. Apparently, Judge Weinstein did not buy the implicit assertion by the plaintiff's experts that the treaters committed malpractice. Moreover, the plaintiffs' experts shaved things a bit too fine. They said that an informed physician would not have prescribed Zyprexa as a first-line agent. But, as is often the case with antipychotics, the plaintiff had already tried other drugs. Zyprexa here was not a first-line agent. Id. Next?
There always is a next, isn't there? And that "next" was something we've seen as often as the Seinfeld "The Contest" episode (with some striking similarities). The plaintiff trotted out the "overpromotion" theory. Judge Weinstein gave it short shrift: the plaintiff's doctors were aware of the risks, and there was no evidence that they were misled by detailers. Id. at * 98. Perhaps this was the part of the opinion that gladdened our hearts most. If Judge Weinstein can scrape the overpromotion theory off his shoe in a single paragraph, maybe that threadbare theory really is headed for the dustbin of history.
None of this clears our driveway or makes the trains run on time, but it puts us in a sunnier mood and maybe that makes it easier to deal with the insults of Winter.
Monday, January 31, 2011
Friday, January 28, 2011
Hoosier State Gets Its First MDA Preemption Decision
This guest post comes courtesy of Scott Kaiser at Shook Hardy. He deserves all the credit and all the blame, as the case may be - but it looks like credit to us.
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Indiana now has its first appellate decision concerning MDA preemption. McGookin v. Guidant Corp., ___ N.E.2d ___, No. 71A04-1001-CT-101, Slip op. (Ind. Ct. App. Jan. 21, 2011).
The decision is a straightforward affirmation of two familiar themes: that Riegel (not Wyeth or other non-medical device cases) provides the preemption rules governing Class III medical devices; and that “may” does not mean “must” when determining what constitutes a federal requirement under the MDA’s express-preemption clause.
McGookin involved the unfortunate and unexplained death of a 14-month old infant born with complete heart block. According to the medical records and product testing introduced at trial, the “device provided therapy at all times.” Slip op. at 3. The crux of Plaintiffs’ case was not a design or manufacturing defect. Rather, Plaintiffs’ theory of defect was that the pacemaker’s labeling did not adequately warn that the pacemaker had not been tested on infants or in the particular implantation configuration in this case – i.e. abdominal implant with a unipolar epicardial lead.
The case was tried in August 2009. The jury returned a defense verdict.
Plaintiffs appealed, complaining that the trial court’s preemption ruling erroneously prevented Plaintiffs from arguing that Guidant could have and should have offered a different label than the one approved by the FDA:
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Indiana now has its first appellate decision concerning MDA preemption. McGookin v. Guidant Corp., ___ N.E.2d ___, No. 71A04-1001-CT-101, Slip op. (Ind. Ct. App. Jan. 21, 2011).
The decision is a straightforward affirmation of two familiar themes: that Riegel (not Wyeth or other non-medical device cases) provides the preemption rules governing Class III medical devices; and that “may” does not mean “must” when determining what constitutes a federal requirement under the MDA’s express-preemption clause.
McGookin involved the unfortunate and unexplained death of a 14-month old infant born with complete heart block. According to the medical records and product testing introduced at trial, the “device provided therapy at all times.” Slip op. at 3. The crux of Plaintiffs’ case was not a design or manufacturing defect. Rather, Plaintiffs’ theory of defect was that the pacemaker’s labeling did not adequately warn that the pacemaker had not been tested on infants or in the particular implantation configuration in this case – i.e. abdominal implant with a unipolar epicardial lead.
The case was tried in August 2009. The jury returned a defense verdict.
Plaintiffs appealed, complaining that the trial court’s preemption ruling erroneously prevented Plaintiffs from arguing that Guidant could have and should have offered a different label than the one approved by the FDA:
Although Guidant’s label complied with the FDA requirements of its premarket approval, other FDA regulations gave Guidant the ability to add to or strengthen those regulations without prior FDA approval. The Indiana Product Liability Act incorporates a “reasonableness” component in determining whether warnings are inadequate. Therefore, it becomes a jury question as to whether Guidant acted reasonably in failing to add to or strengthen its warnings pursuant to 21 C.F.R. § 814.39(d). The label, for example, could have informed consumers and physicians that the pacemaker had not been tested in infants or with epicardial leads, or with an abdominal implant. The label could have stated that use with epicardial leads in infants was contraindicated. The trial court therefore erred in granting Guidant’s motion for summary judgment and ruling that any attempt to impose liability on Guidant under substantive legal theories . . . predicated on challenges to conduct of Guidant allowed by and not in violation of any applicable federal requirements are preempted.The Court of Appeals of Indiana rejected Plaintiff’s argument and affirmed the judgment. Noting that Plaintiffs “do not allege that Guidant violated federal requirement,” the Court of Appeals of Indiana described what Plaintiffs were really alleging: “they contend that Guidant should be liable for its failure to add warnings that are permitted, but not required, by federal law. We cannot imagine a plainer example of an attempt to impose a standard of care in addition to the FDA’s specific federal requirements.” Slip. op. at 13.
Thursday, January 27, 2011
Buckman Preemption – The Good, The Bad, And The Ugly – And (This Just In) The Funky
We’re returning to the topic of implied Buckman preemption today to discuss three recent decisions, Hughes v. Boston Scientific Corp., ___ F.3d ___, 2011 WL 184554 (5th Cir. Jan. 21, 2011); LeFaivre v. KV Pharmaceutical Co., ___ F.3d ___, 2011 WL 148730 (8th Cir. Jan. 19, 2011); and Goldsmith v. Allergan, Inc., 2011 WL 147714 (C.D. Cal. Jan. 13, 2011). But before we get to these cases, we have to reiterate some things that we said not too long ago in our Bashing Bausch post. These have to do with the relationship between implied preemption under Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), and express preemption under Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), and Riegel v. Medtronic, Inc., 552 U.S. 312 (2008). Specifically, defendants need to keep in mind what implied Buckman preemption can and can’t do.
Specifically, as a matter of express preemption, Lohr created – under the rationale that remedies don’t matter – an exception for largely undefined state-law claims that are “identical” to FDA regulatory standards. “Nothing in §360k denies [a state] the right to provide a traditional damages remedy for violations of common-law duties when those duties parallel federal requirements.” 518 U.S. at 495. We have to live with that. The Supreme Court was unanimous on the point. Then there’s the Riegel dictum that MDA preemption “does not prevent a State from providing a damages remedy for claims premised on a violation of FDA regulations; the state duties in such a case “parallel,” rather than add to, federal requirements.” 552 U.S. at 330.
Keep that in mind. Express preemption allows “parallel” state law duties “premised on a violation of FDA regulations.” If such a claim exists, it may well fail for other reasons, but it won’t be expressly preempted.
Now we turn to implied preemption. We know now – even if we don’t like it – after Wyeth v. Levine, 129 S. Ct. 1187 (2009), and Altria Group, Inc. v. Good, 555 U.S. 70 (2008), that with implied preemption, we have a presumption against preemption to deal with. That is, where, under Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), there isn’t.
When isn’t there a presumption?
There's no presumption when we’re concerned with the dealings between the FDA and the manufacturer in question. “[T]he relationship between a federal agency and the entity it regulates is inherently federal in character because the relationship originates from, is governed by, and terminates according to federal law.” 531 U.S. at 348.
Keep that in mind, too.
Finally, Buckman – as a matter of implied preemption – held that preemption (akin to lack of standing) applies to bar certain types of FDCA violation claims by virtue of 21 C.F.R. §337(a), the statute’s preclusion of private enforcement.
Where is this reservoir of implied preemption found?
Where the federal claims aren’t parallel.
And when aren’t violation claims parallel?
Where the claim doesn’t have a state-law equivalent to be parallel to, but instead is wholly a creature of the FDA regulatory scheme:
To recap:
(1) Parallel violation claims aren’t expressly preempted by the statute’s “different from or in addition to” language.
(2) Parallel violation claims must parallel “traditional” state tort law.
(3) Buckman implied preemption is the converse – it preempts violation claims that are not grounded in “traditional” tort law.
(4) With Buckman implied preemption, there’s a presumption against preemption, again, with respect to traditional state law violation claims.
(5) With Buckman implied preemption, there’s not a presumption against preemption for claims grounded in the “relationship” between the FDA and (we’ll presume) the defendant.
With those propositions in mind, we turn to the most recent case, Hughes, 2011 WL 184554. Hughes “focus[ed] primarily on [plaintiff’s] claim that [the defendant] failed to provide adequate warnings.” So we’re not dealing with a manufacturing defect claim. Is this claim parallel to “traditional” tort claims? That’s the key question. The answer, evident from the face of the complaint is (to us) no:
Think about that claim for a minute. Where's the parallel tort duty? What state common-law doctrine (as opposed to statutory-based requirement) requires anybody to report anything to a governmental agency? Whether it's child abuse, adverse events, financial improprieties, whatever, the source of all obligations to report to the government - as opposed to duties to warn individuals - is statutory or regulatory.
There's no state common-law tort duty at all to report anything to the FDA.
Thus, as we see it, Hughes is the same as Buckman, in that the the obligation to report arises from the "relationship" between the FDA and the manufacturer, and nothing else. So that claim should have been preempted.
We call Hughes “bad” because that didn't happen.
It's not all bad. The Hughes court first affirmed the throwing out all of the plaintiff’s standard product liability claims (manufacturing, design, and warnings). 2011 WL 184554, at *5. So far, so good. That illustrates another point we've made. Riegel preemption remains extremely broad. The easy to prove product liability claims, even under the worst decisions, are gone. All the plaintiffs have left, no matter how much slack they get cut, is a rather technical regulatory based claim.
The first statement in Hughes that we really don’t like looks innocuous. The court “[a]ssum[es] that a failure to warn claim may be pursued under Mississippi law as [plaintiff] argues.” 2011 WL 184554, at *6.
Assuming?
Why?
Where’s the legal argument that it doesn’t?
Apparently there wasn’t any. That doesn’t look like a screw up by the court. Instead, the defendant – for who knows what reason (money?) – chose to litigate with one hand tied behind its back.
Any defendant that does that – does not give the court state-law bases why these violation claims fail – is more likely to lose. Period. A good state-law ground: (1) may induce the court not to reach preemption at all (that is preferentially to choose the non-constitutional ground), or (2) improves the atmosphere by demonstrating that the claim in question is pretty darn poor in any event and isn't worth salvaging.
Folks, there are lots of state-law obstacles to tort claims asserting FDCA violations. We’ve dealt with these extensively in our negligence per se-related posts – particularly here and here. They need to be utilized.
Defense counsel who litigate only half a case – particularly when the half they do pursue is preemption – aren’t doing their clients any favors by saving a little money. It’s a case of penny-wise and pound foolish. All they’re doing is increasing the likelihood of losing.
We don't like defendants losing, even when it's not our case. It's the reverse of the rising tide floating all boats. It's a major reason why we write this blog.
Turning back to Hughes’ treatment of the law, we have the statement “a failure to warn claim limited to an assertion that the defendant violated a relevant federal statute or regulation is ‘parallel’ to federal requirements as defined in Riegel.” 2011 WL 184554, at *6. That’s true, as far as it goes, which is limited to Riegel and express preemption. The minimal discussion of such claims in Riegel is limited to reiterating Lohr’s conclusion that a violation claim isn’t “different from or in addition to” under the MDA preemption clause.
Hughes analogizes to an earlier case called Gomez. However, Gomez involved a very different kind of violation claim – a “negligence claim alleging that the defendant had defectively manufactured the device.” Hughes, 2011 WL 184554, at *7 (describing Gomez).
But a manufacturing-related claim is about as "traditional" a tort claim as anyone could ask for. Such a claim is a world away from a claim that the defendant didn’t report stuff to the FDA. But Hughes missed that distinction entirely, lumping blindly lumping together manufacturing defect claims in other cases with the peculiar warning claim before it, based entirely on failure to report, as unpreempted violation claims. Id. at *8.
Where’s Buckman?
Where’s any discussion of violation claims that aren’t “traditional,” but rather are grounded in the “relationship” between the FDA and its regulated manufacturers?
Not yet. That holding was limited to express preemption.
Then Hughes turns to “negligence per se” and dodges most issues – limiting itself to preemption.
There's that damn waiver again - the defendant throwing away half its defense.
What do we mean? Well, how about Sumrall v. Mississippi Power Co., 693 So.2d 359 (Miss. 1997)? In that case, the Mississippi Supreme Court rejected negligence per se based upon OSHA violations because, similarly to the FDCA, Congress expressed an intent that OSHA violations not become mixed up in private civil litigation:
Why give away the argument that Mississippi negligence per se principles would not, as a matter of state law, recognize a cause of action predicated on the violation of a statute expressly intended by its legislative draftes to be enforced only by governmental entities?
Hughes in this respect is no different than Bausch – where the defendant also gave away this argument, likewise soundly grounded in state supreme court precedent. Perhaps predictably, Hughes blindly follows Bausch, holding that, simply because state law generally allows “negligence per se,” there’s an unpreempted FDCA-based cause of action. 2011 WL 184554, at *8 (plaintiff “is not foreclosed by §360k from arguing at trial that the doctrine of negligence per se is available”) (citing Bausch).
But again, under express preemption, if the claim is assumed (because nobody bothers to argue otherwise) to be a “traditional” state-law tort claim, then, yes there’s no preemption because of the way Lohr read the “different from or in addition to” language.
So while Hughes so far is bad, it’s not necessarily wrong.
What was left in Hughes is fighting in the trenches, against paid FDA experts opining on what the law supposedly is. 2011 WL 184554, at *9-10. Apparently, there are some bad facts:
Finally, we get to Buckman, and here everything heads south. Instead of evaluating whether the failure-to-report claim implicates the “relationship” with the FDA, as per Buckman, the court simply says this isn’t fraud on the FDA claim. “The plaintiffs in Buckman were attempting to assert a freestanding federal cause of action based on violation of the FDA's regulations; the plaintiffs did not assert violation of a state tort duty.” 2011 WL 184554, at *11. Well, that’s simply wrong as a matter of history. Buckman was postured as being predicated on a state law duty - the duty not to commit fraud. Cf. Cipollone v. Liggett Group, Inc., 505U.S.
Hughes then states that there’s a “recognized state tort claim,” 2011 WL 184554, at *11, but doesn't cite any case in the history of Mississippi law that created any common-law (as opposed to statutory) duty to report something to a government agency. Hughes thus entirely papers over the yawning gap between a failure to warn and a failure to report claim. Once again Bausch raises its ugly head. Id. But Bausch, wrong as it was on a lot of things, at least involved a manufacturing defect claim predicated on violation of FDA good manufacturing practices. There's simply no traditional state law claim in Hughes. Instead, the court did just what the Mississippi Supreme Court rejected in Chisolm, 942 So.2d at 143 – it allowed plaintiffs to use a reporting violation to “to create a legal obligation under Mississippi law.”
Hughes goes from bad to even worse at the end of its preemption discussion. We’ll quote the language first:
This passage reminds of a certain scuplture on the campus of Harvard University known as the “statue of three lies.” In all of three sentences, Hughes committed three major legal blunders. (1) It ignored that Buckman was entirely an implied preemption case, whereas Riegel was entirely an express preemption case, thus there is no inconsistency at all between the two because they dealt with different doctrines. (2) It overlooked that the entire violation question in Riegel was waived (552 U.S. at 229 (“we decline to address that argument”)) - so Riegel didn’t “unequivocally hold” anything at all about such claims. (3) It ignored the fundamental difference between the “manufacturing” claim in Gomez, and the failure-to-report claim before it, with the former being a long-recognized tort claim, and the latter being a creation solely of FDCA reporting requirements.
So we think Hughes is really bad. As to preemption it’s worse than Bausch, which for all its faults, at least involved a something that bore passing resemblance to a traditional state-law claim. But us kvetching isn’t going to get either decision off the books. As we already mentioned, Hughes and Bausch have one notable thing in common. In neither case was the FDCA violation claim proper on state law, but in both cases the defendants never bothered to make state law arguments.
You can’t do that guys – not with the post-Levine legal climate surrounding preemption in the FDCA context. We’ve said before that 2011 would probably the year that the contours of the parallel violation exception to PMA preemption would be decided. So far, we'd have to say that the year's not off to a very good start.
We’re sticking LeFaivre, 2011 WL 148730, with our “ugly” moniker because while we could see some logical way of arriving at the court’s result, we can’t stomach the route that the Eighth Circuit took to get there. LeFaivre involved improperly manufactured drugs. That much is not in dispute. The FDA “filed a complaint” over certain manufacturing violations, and the defendant (actually more than one, but the court treated them as a unit) entered into a “consent decree” in which it “stipulated . . . that it had sold drugs that were ‘adulterated’” under the FDCA. Id. at *1.
So LeFaivre is another “bad facts” case. A civil suit, seeking economic damages for the same conduct was filed. There isn’t any express preemption in prescription drug cases, so the defendant raised an implied preemption defense under Buckman. It got lucky. The trial court threw the case out, finding it to be nothing more than an attempt at private enforcement of the FDCA, which was barred under §337(a) as construed in Buckman. LeFaivre, 2011 WL 148730, at *2.
Recall the last three of the five propositions that we listed above with respect to Buckman preemption. They have to do with the distinction between “traditional” common-law claims and “non-traditional” claims arising as a consequence of what the FDCA requires manufacturers to do.
Well, as we’ve already said in connection with Hughes, a manufacturing defect claim can be a state-law analogue to an allegation of violation of FDA good manufacturing practice regulations (assuming the regulations aren’t too vague – a state-law ground, and that the violation actually pertains to the product at issue).
So it would have been rational for an anti-preemption court to view the manufacturing violation claims in LeFaivre as paralleling a “traditional” state-law tort theory and, under Buckman, escaping preemption.
But the Eighth Circuit didn’t do that. Instead, it construed the §337(a) argument as some sort of “field preemption” case – which it really isn’t, unless the “field” is so shrunken as to correspond to the sort of non-traditional tort claims that Buckman addressed. “The Court’s comments in [Levine] regarding drugs and drug labeling strongly imply that field preemption does not apply in the present case.” LeFaivre, 2011 WL 148730, at *5. It also found no conflict preemption, since there was no impossibility or obstacle raised by requiring the defendant to manufacture its drugs in compliance with FDA regulations applicable to all drug manufacturers. Id. Well, duh.
Turning to Buckman, LeFaivre didn't couch its analysis in terms of a manufacturing defect claim having a state-law analogue and thus not being preempted because it wasn't solely a creature of federal law. Instead, it construed Buckman as a field preemption case:
That’s just ugly. Buckman has nothing to do with “field preemption.” It is purely an implied conflict preemption case. Use of the word “field” didn't occur in the court’s preemption analysis, but rather in the context of whether a presumption against preemption applied:
Having twisted Buckman into something unrecognizable, LeFaivre went on to conclude that “the present case is distinguishable from Buckman because [plaintiff’s] state-law claims are not fraud-on-the-FDA claims, as they focus on harm that is allegedly perpetrated against consumers rather than the FDA.” 2011 WL 148730, at *8. We don’t know all the facts of LeFaivre, but as described in the opinion, both the nature of the claim – improper/defective manufacturing – and the nature of the facts – a violation already administratively adjudicated and thus well beyond a bare allegation – are such that we can’t say that the result violates either the language or policy of Buckman.
So we can’t describe the result in LeFaivre as necessarily bad (even though the defendant lost the preemption issue), but it sure was ugly.
We saved the best for last, Goldsmith v. Allergan, Inc., 2011 WL 147714 (C.D. Cal. Jan. 13, 2011) – and a tip of the cyber cap to Kurt Karst at Hyman, Phelps for originally sending it along to us .
We consider Goldsmith to be an unimpeachable (if conservative) use of Buckman preemption in that the decision concluded that a purported state-law violation claim unrelated to any “traditional” state tort theory was preempted. Goldsmith was a consumer fraud claim out of California alleging that the defendant should have to pay for “allegedly market[ing a drug] as a “multi-use” product to encourage administering physicians to use a single vile [sic] of [the drug] for more than one patient.” 2011 WL 147714, at *1.
Goldsmith offered no allegations that there was anything wrong with the design, manufacturing or labeling of the drug.
Thus Goldsmith did not involve any traditional product liability claim, only an allegation of off-label promotion.
As in Buckman, therefore, the claim arose solely because of an FDCA violation. State common law doesn’t have a concept of off-label promotion.
Goldsmith contains a lot of discussion about pleading fraud under Fed. R. Civ. P. 9(b), and concludes that the complaint was insufficient with respect both the misrepresentation and reliance elements. 2011 WL 147714, at *5 (“Plaintiff never alleges that he saw any ads and relied on them”), at *7 (“Plaintiff has not alleged facts showing that Defendant's alleged representations were false or misleading”). Thus Goldsmith contains a caveat – that such allegations might escape Buckman preemption if instead they paralleled a state-law fraud claim. 2011 WL 147714, at *3 (“Plaintiff’s [consumer protection] claims are actionable if they include properly pleaded allegations of false or misleading representations that resulted in Plaintiff's injuries”). That also fits within Buckman’s rationale, which as discussed above, predicates §337(a) preemption/lack of standing on the state law claim at issue being purely a creature of the FDCA without any common-law analog.
For these reasons – its fidelity to Buckman in both rationale and result – we bestow our “good” designation on Goldsmith.
Finally, while we were writing this post (yesterday) we noticed Funk v. Stryker Corp., No. 10-20022, slip op. (5th Cir. Jan. 25, 2011), had appeared on the Fifth Circuit’s website.
Even though it's not a Buckman case, we decided to add Funk because it’s an important appellate decision. It creates a circuit split with Bausch, as both decisions arise from the same defect allegations involving the same device. Circuit splits are one criteria the United States Supreme Court uses to decide whether to accept a case for appeal, and if any case deserves further review, it's Bausch.
But Funk – there’s no other way to say it –is rather funky. Unfortunately (maybe even for us on the defense side), the plaintiff screwed up his appeal and only appealed from the original, pretty pathetically pleaded, complaint. Slip op. at 5. That original complaint was so poor that there wasn’t much question that the claims were all preempted.
Thus, the conflict between Funk and Bausch is more with respect to TwIqbal than preemption. Contrary to Bausch, Funk holds that a parallel violation isn’t adequately pleaded without specifying both how the FDCA was violated and that the violation caused the plaintiff’s injury:
Because Funk found that the only arguably unpreempted (violation) claim was insufficiently pleaded under TwIqbal, it didn’t have to reach any controversial preemption questions under Riegel or (as discussed above) under Buckman.
Specifically, as a matter of express preemption, Lohr created – under the rationale that remedies don’t matter – an exception for largely undefined state-law claims that are “identical” to FDA regulatory standards. “Nothing in §360k denies [a state] the right to provide a traditional damages remedy for violations of common-law duties when those duties parallel federal requirements.” 518 U.S. at 495. We have to live with that. The Supreme Court was unanimous on the point. Then there’s the Riegel dictum that MDA preemption “does not prevent a State from providing a damages remedy for claims premised on a violation of FDA regulations; the state duties in such a case “parallel,” rather than add to, federal requirements.” 552 U.S. at 330.
Keep that in mind. Express preemption allows “parallel” state law duties “premised on a violation of FDA regulations.” If such a claim exists, it may well fail for other reasons, but it won’t be expressly preempted.
Now we turn to implied preemption. We know now – even if we don’t like it – after Wyeth v. Levine, 129 S. Ct. 1187 (2009), and Altria Group, Inc. v. Good, 555 U.S. 70 (2008), that with implied preemption, we have a presumption against preemption to deal with. That is, where, under Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), there isn’t.
When isn’t there a presumption?
There's no presumption when we’re concerned with the dealings between the FDA and the manufacturer in question. “[T]he relationship between a federal agency and the entity it regulates is inherently federal in character because the relationship originates from, is governed by, and terminates according to federal law.” 531 U.S. at 348.
Keep that in mind, too.
Finally, Buckman – as a matter of implied preemption – held that preemption (akin to lack of standing) applies to bar certain types of FDCA violation claims by virtue of 21 C.F.R. §337(a), the statute’s preclusion of private enforcement.
Where is this reservoir of implied preemption found?
Where the federal claims aren’t parallel.
And when aren’t violation claims parallel?
Where the claim doesn’t have a state-law equivalent to be parallel to, but instead is wholly a creature of the FDA regulatory scheme:
[T]he fraud claims exist solely by virtue of the FDCA disclosure requirements. Thus, although [Lohr] can be read to allow certain state-law causes of actions that parallel federal safety requirements, it does not and cannot stand for the proposition that any violation of the FDCA will support a state-law claim. In sum, were plaintiffs to maintain their fraud-on-the-agency claims here, they would not be relying on traditional state tort law which had predated the federal enactments in questions. On the contrary, the existence of these federal enactments is a critical element in their case.531 U.S. at 353 (emphasis added).
To recap:
(1) Parallel violation claims aren’t expressly preempted by the statute’s “different from or in addition to” language.
(2) Parallel violation claims must parallel “traditional” state tort law.
(3) Buckman implied preemption is the converse – it preempts violation claims that are not grounded in “traditional” tort law.
(4) With Buckman implied preemption, there’s a presumption against preemption, again, with respect to traditional state law violation claims.
(5) With Buckman implied preemption, there’s not a presumption against preemption for claims grounded in the “relationship” between the FDA and (we’ll presume) the defendant.
The Bad – Hughes v. Boston Scientific
With those propositions in mind, we turn to the most recent case, Hughes, 2011 WL 184554. Hughes “focus[ed] primarily on [plaintiff’s] claim that [the defendant] failed to provide adequate warnings.” So we’re not dealing with a manufacturing defect claim. Is this claim parallel to “traditional” tort claims? That’s the key question. The answer, evident from the face of the complaint is (to us) no:
[Plaintiff] proceeded on the theory that [defendant] failed to comply with the FDA’s MDR regulations requiring a manufacturer of a Class III device to report incidents.2011 WL 184554, at *3. Specifically, the plaintiff claimed that the defendant’s reporting “algorithm” caused a failure to report certain injuries (burns similar to hers) that the FDA required be reported. Id. That claim is supported by your usual FDA expert spouting legal conclusions - that the defendant broke the law.
Think about that claim for a minute. Where's the parallel tort duty? What state common-law doctrine (as opposed to statutory-based requirement) requires anybody to report anything to a governmental agency? Whether it's child abuse, adverse events, financial improprieties, whatever, the source of all obligations to report to the government - as opposed to duties to warn individuals - is statutory or regulatory.
There's no state common-law tort duty at all to report anything to the FDA.
Thus, as we see it, Hughes is the same as Buckman, in that the the obligation to report arises from the "relationship" between the FDA and the manufacturer, and nothing else. So that claim should have been preempted.
We call Hughes “bad” because that didn't happen.
It's not all bad. The Hughes court first affirmed the throwing out all of the plaintiff’s standard product liability claims (manufacturing, design, and warnings). 2011 WL 184554, at *5. So far, so good. That illustrates another point we've made. Riegel preemption remains extremely broad. The easy to prove product liability claims, even under the worst decisions, are gone. All the plaintiffs have left, no matter how much slack they get cut, is a rather technical regulatory based claim.
The first statement in Hughes that we really don’t like looks innocuous. The court “[a]ssum[es] that a failure to warn claim may be pursued under Mississippi law as [plaintiff] argues.” 2011 WL 184554, at *6.
Assuming?
Why?
Where’s the legal argument that it doesn’t?
Apparently there wasn’t any. That doesn’t look like a screw up by the court. Instead, the defendant – for who knows what reason (money?) – chose to litigate with one hand tied behind its back.
Any defendant that does that – does not give the court state-law bases why these violation claims fail – is more likely to lose. Period. A good state-law ground: (1) may induce the court not to reach preemption at all (that is preferentially to choose the non-constitutional ground), or (2) improves the atmosphere by demonstrating that the claim in question is pretty darn poor in any event and isn't worth salvaging.
Folks, there are lots of state-law obstacles to tort claims asserting FDCA violations. We’ve dealt with these extensively in our negligence per se-related posts – particularly here and here. They need to be utilized.
Defense counsel who litigate only half a case – particularly when the half they do pursue is preemption – aren’t doing their clients any favors by saving a little money. It’s a case of penny-wise and pound foolish. All they’re doing is increasing the likelihood of losing.
We don't like defendants losing, even when it's not our case. It's the reverse of the rising tide floating all boats. It's a major reason why we write this blog.
Turning back to Hughes’ treatment of the law, we have the statement “a failure to warn claim limited to an assertion that the defendant violated a relevant federal statute or regulation is ‘parallel’ to federal requirements as defined in Riegel.” 2011 WL 184554, at *6. That’s true, as far as it goes, which is limited to Riegel and express preemption. The minimal discussion of such claims in Riegel is limited to reiterating Lohr’s conclusion that a violation claim isn’t “different from or in addition to” under the MDA preemption clause.
Hughes analogizes to an earlier case called Gomez. However, Gomez involved a very different kind of violation claim – a “negligence claim alleging that the defendant had defectively manufactured the device.” Hughes, 2011 WL 184554, at *7 (describing Gomez).
But a manufacturing-related claim is about as "traditional" a tort claim as anyone could ask for. Such a claim is a world away from a claim that the defendant didn’t report stuff to the FDA. But Hughes missed that distinction entirely, lumping blindly lumping together manufacturing defect claims in other cases with the peculiar warning claim before it, based entirely on failure to report, as unpreempted violation claims. Id. at *8.
Where’s Buckman?
Where’s any discussion of violation claims that aren’t “traditional,” but rather are grounded in the “relationship” between the FDA and its regulated manufacturers?
Not yet. That holding was limited to express preemption.
Then Hughes turns to “negligence per se” and dodges most issues – limiting itself to preemption.
[Defendant’s] preemption defense only requires us to decide which of [plaintiff’s] state law causes of action are foreclosed under § 360k. . . . We need not decide, therefore, whether Hughes will be able to invoke the doctrine of negligence per se as a matter of Mississippi law.Id. at *8.
There's that damn waiver again - the defendant throwing away half its defense.
What do we mean? Well, how about Sumrall v. Mississippi Power Co., 693 So.2d 359 (Miss. 1997)? In that case, the Mississippi Supreme Court rejected negligence per se based upon OSHA violations because, similarly to the FDCA, Congress expressed an intent that OSHA violations not become mixed up in private civil litigation:
In Otto v. Specialties, Inc., 386 F.Supp. 1240, 1244-45 (N.D. Miss. 1974), the District Court for the Northern District of Mississippi was forced to make an Erie determination of whether OSHA regulations were admissible as evidence of negligence under Mississippi negligence law. In finding the regulations to be not admissible, the district court stated:693 So.2d at 366-67 (emphasis added). Cf. Chisolm v. Mississippi Dept. of Transportation, 942 So.2d 136, 143 (Miss. 2006) (negligence per se is “a tool for assessing a breach of duty only after a legal duty has already been established. It cannot be used to create a legal obligation under Mississippi law”).We believe the Supreme Court of Mississippi, if faced with this question, would recognize, as we do, that what is at stake here is a question of judicial buttressing of legislative goals. We believe that with this recognition would come a realization that, before the judiciary undertakes to supplement legislatively designed sanctions it should first inquire whether any supplementation was foreseen or is needed. Such an inquiry into OSHA has been made by the federal courts, which have concluded that no private civil remedy is needed to fulfill the goals established by Congress in its adoption of the statute. That this determination was made in the context of a federal civil remedy and not within the framework of the negligence per se doctrine is to us irrelevant, since both concepts share a common raison d'etre - a judicial addition to statutory penalties thought to be inadequate to the purposes the legislative branch sought to promote.Otto, 386 F.Supp. at 1245.
We concede that the Mississippi courts need not be bound in this matter by the federal determination of OSHA's purpose and effect. We believe, however, that the Supreme Court of Mississippi would be persuaded by the logic of those opinions to refuse to permit the utilization of OSHA safety standards in this case, either as conclusive proof or evidence of negligence by [the defendant].
We are persuaded by the district court's reasoning and hold that, in light both of it and of this Court's clearly stated rule that governmental codes and regulations are not admissible unless given compulsory force by the state legislature, evidence of OSHA regulations is not admissible to show negligence.
Why give away the argument that Mississippi negligence per se principles would not, as a matter of state law, recognize a cause of action predicated on the violation of a statute expressly intended by its legislative draftes to be enforced only by governmental entities?
Hughes in this respect is no different than Bausch – where the defendant also gave away this argument, likewise soundly grounded in state supreme court precedent. Perhaps predictably, Hughes blindly follows Bausch, holding that, simply because state law generally allows “negligence per se,” there’s an unpreempted FDCA-based cause of action. 2011 WL 184554, at *8 (plaintiff “is not foreclosed by §360k from arguing at trial that the doctrine of negligence per se is available”) (citing Bausch).
But again, under express preemption, if the claim is assumed (because nobody bothers to argue otherwise) to be a “traditional” state-law tort claim, then, yes there’s no preemption because of the way Lohr read the “different from or in addition to” language.
So while Hughes so far is bad, it’s not necessarily wrong.
What was left in Hughes is fighting in the trenches, against paid FDA experts opining on what the law supposedly is. 2011 WL 184554, at *9-10. Apparently, there are some bad facts:
[A]ny danger that the jury in this case may apply the plain terms of the MDR regulations in a different or more stringent manner than the FDA intended is considerably mitigated by the summary judgment evidence indicating that the FDA disapproved of [defendant’s] reporting practices. . . . [T]he FDA told [defendant] that when information regarding a burn is “ambiguous” as to whether the burn requires medical treatment or intervention, the burn must be reported.Id. at *10. When a defendant has bad facts, it can’t afford to give up available defenses.
Finally, we get to Buckman, and here everything heads south. Instead of evaluating whether the failure-to-report claim implicates the “relationship” with the FDA, as per Buckman, the court simply says this isn’t fraud on the FDA claim. “The plaintiffs in Buckman were attempting to assert a freestanding federal cause of action based on violation of the FDA's regulations; the plaintiffs did not assert violation of a state tort duty.” 2011 WL 184554, at *11. Well, that’s simply wrong as a matter of history. Buckman was postured as being predicated on a state law duty - the duty not to commit fraud. Cf. Cipollone v. Liggett Group, Inc., 505
Hughes then states that there’s a “recognized state tort claim,” 2011 WL 184554, at *11, but doesn't cite any case in the history of Mississippi law that created any common-law (as opposed to statutory) duty to report something to a government agency. Hughes thus entirely papers over the yawning gap between a failure to warn and a failure to report claim. Once again Bausch raises its ugly head. Id. But Bausch, wrong as it was on a lot of things, at least involved a manufacturing defect claim predicated on violation of FDA good manufacturing practices. There's simply no traditional state law claim in Hughes. Instead, the court did just what the Mississippi Supreme Court rejected in Chisolm, 942 So.2d at 143 – it allowed plaintiffs to use a reporting violation to “to create a legal obligation under Mississippi law.”
Hughes goes from bad to even worse at the end of its preemption discussion. We’ll quote the language first:
[Defendant’s] interpretation of Buckman barring this otherwise parallel state claim is inconsistent with the Supreme Court’s reasoning in Riegel, decided long after Buckman. Riegel unequivocally held that parallel state claims survive a defendant’s preemption defense under the MDA because states may impose an additional “damages remedy for claims premised on violation of FDA regulations.” Riegel, 522 U.S. at 330. Our conclusion in this respect is also supported by our decision in Gomez, decided years after Buckman, in which we permitted a negligence claim for defective manufacturing to proceed.2011 WL 184554, at *12.
This passage reminds of a certain scuplture on the campus of Harvard University known as the “statue of three lies.” In all of three sentences, Hughes committed three major legal blunders. (1) It ignored that Buckman was entirely an implied preemption case, whereas Riegel was entirely an express preemption case, thus there is no inconsistency at all between the two because they dealt with different doctrines. (2) It overlooked that the entire violation question in Riegel was waived (552 U.S. at 229 (“we decline to address that argument”)) - so Riegel didn’t “unequivocally hold” anything at all about such claims. (3) It ignored the fundamental difference between the “manufacturing” claim in Gomez, and the failure-to-report claim before it, with the former being a long-recognized tort claim, and the latter being a creation solely of FDCA reporting requirements.
So we think Hughes is really bad. As to preemption it’s worse than Bausch, which for all its faults, at least involved a something that bore passing resemblance to a traditional state-law claim. But us kvetching isn’t going to get either decision off the books. As we already mentioned, Hughes and Bausch have one notable thing in common. In neither case was the FDCA violation claim proper on state law, but in both cases the defendants never bothered to make state law arguments.
You can’t do that guys – not with the post-Levine legal climate surrounding preemption in the FDCA context. We’ve said before that 2011 would probably the year that the contours of the parallel violation exception to PMA preemption would be decided. So far, we'd have to say that the year's not off to a very good start.
The Ugly – LeFaivre v. KV Pharmaceutical
We’re sticking LeFaivre, 2011 WL 148730, with our “ugly” moniker because while we could see some logical way of arriving at the court’s result, we can’t stomach the route that the Eighth Circuit took to get there. LeFaivre involved improperly manufactured drugs. That much is not in dispute. The FDA “filed a complaint” over certain manufacturing violations, and the defendant (actually more than one, but the court treated them as a unit) entered into a “consent decree” in which it “stipulated . . . that it had sold drugs that were ‘adulterated’” under the FDCA. Id. at *1.
So LeFaivre is another “bad facts” case. A civil suit, seeking economic damages for the same conduct was filed. There isn’t any express preemption in prescription drug cases, so the defendant raised an implied preemption defense under Buckman. It got lucky. The trial court threw the case out, finding it to be nothing more than an attempt at private enforcement of the FDCA, which was barred under §337(a) as construed in Buckman. LeFaivre, 2011 WL 148730, at *2.
Recall the last three of the five propositions that we listed above with respect to Buckman preemption. They have to do with the distinction between “traditional” common-law claims and “non-traditional” claims arising as a consequence of what the FDCA requires manufacturers to do.
Well, as we’ve already said in connection with Hughes, a manufacturing defect claim can be a state-law analogue to an allegation of violation of FDA good manufacturing practice regulations (assuming the regulations aren’t too vague – a state-law ground, and that the violation actually pertains to the product at issue).
So it would have been rational for an anti-preemption court to view the manufacturing violation claims in LeFaivre as paralleling a “traditional” state-law tort theory and, under Buckman, escaping preemption.
But the Eighth Circuit didn’t do that. Instead, it construed the §337(a) argument as some sort of “field preemption” case – which it really isn’t, unless the “field” is so shrunken as to correspond to the sort of non-traditional tort claims that Buckman addressed. “The Court’s comments in [Levine] regarding drugs and drug labeling strongly imply that field preemption does not apply in the present case.” LeFaivre, 2011 WL 148730, at *5. It also found no conflict preemption, since there was no impossibility or obstacle raised by requiring the defendant to manufacture its drugs in compliance with FDA regulations applicable to all drug manufacturers. Id. Well, duh.
Turning to Buckman, LeFaivre didn't couch its analysis in terms of a manufacturing defect claim having a state-law analogue and thus not being preempted because it wasn't solely a creature of federal law. Instead, it construed Buckman as a field preemption case:
The Court in Buckman specifically applied field preemption to state-law fraud-on-the-FDA claims because policing fraud against federal agencies “is hardly a field which the States have traditionally occupied.” Buckman, 531 U.S. at 3472011 WL 148730, at *8.
That’s just ugly. Buckman has nothing to do with “field preemption.” It is purely an implied conflict preemption case. Use of the word “field” didn't occur in the court’s preemption analysis, but rather in the context of whether a presumption against preemption applied:
Policing fraud against federal agencies is hardly a field which the States have traditionally occupied, such as to warrant a presumption against finding federal pre-emption of a state-law cause of action. To the contrary, the relationship between a federal agency and the entity it regulates is inherently federal in character because the relationship originates from, is governed by, and terminates according to federal law. Here, petitioner’s dealings with the FDA were prompted by the MDA, and the very subject matter of petitioner's statements were dictated by that statute's provisions. Accordingly – and in contrast to situations implicating federalism concerns and the historic primacy of state regulation of matters of health and safety – no presumption against pre-emption obtains in this case.531 U.S. at 347-48 (all citations and quotation marks omitted) (emphasis added). If Buckman had been about “field preemption,” it would have had to deal with all the other defendants and all the other myriad causes of action that had been alleged in the Bone Screw litigation. Further, as we’ve discussed before, “field preemption” is where the unfortunate presumption against preemption was invented. Buckman would never have found that the presumption didn't apply to a field preemption claim..
Having twisted Buckman into something unrecognizable, LeFaivre went on to conclude that “the present case is distinguishable from Buckman because [plaintiff’s] state-law claims are not fraud-on-the-FDA claims, as they focus on harm that is allegedly perpetrated against consumers rather than the FDA.” 2011 WL 148730, at *8. We don’t know all the facts of LeFaivre, but as described in the opinion, both the nature of the claim – improper/defective manufacturing – and the nature of the facts – a violation already administratively adjudicated and thus well beyond a bare allegation – are such that we can’t say that the result violates either the language or policy of Buckman.
So we can’t describe the result in LeFaivre as necessarily bad (even though the defendant lost the preemption issue), but it sure was ugly.
The Good – Goldsmith v. Allergan
We saved the best for last, Goldsmith v. Allergan, Inc., 2011 WL 147714 (C.D. Cal. Jan. 13, 2011) – and a tip of the cyber cap to Kurt Karst at Hyman, Phelps for originally sending it along to us .
We consider Goldsmith to be an unimpeachable (if conservative) use of Buckman preemption in that the decision concluded that a purported state-law violation claim unrelated to any “traditional” state tort theory was preempted. Goldsmith was a consumer fraud claim out of California alleging that the defendant should have to pay for “allegedly market[ing a drug] as a “multi-use” product to encourage administering physicians to use a single vile [sic] of [the drug] for more than one patient.” 2011 WL 147714, at *1.
Goldsmith offered no allegations that there was anything wrong with the design, manufacturing or labeling of the drug.
Thus Goldsmith did not involve any traditional product liability claim, only an allegation of off-label promotion.
As in Buckman, therefore, the claim arose solely because of an FDCA violation. State common law doesn’t have a concept of off-label promotion.
[T]he Court agrees with Defendants suggestion that Plaintiff's [consumer protection] claims are based on conduct promoting [the drug] for off-label use. . . . These, and related allegations . . . constituted an attempt to shoehorn allegations that Defendant had engaged in off-label promotion in violation of the FDCA into state consumer fraud causes of action.2011 WL 147714, at *3 (quotation marks omitted). Allegations of this sort are simply attempts to enforce the FDCA privately in violation of §337(a). “No matter how artfully the Complaint is pleaded in attempting to enforce the FDCA, Plaintiff cannot enforce the FDCA’s off-label advertising provisions simply by calling it a violation of [a consumer fraud statute].” Id. at *8.
Goldsmith contains a lot of discussion about pleading fraud under Fed. R. Civ. P. 9(b), and concludes that the complaint was insufficient with respect both the misrepresentation and reliance elements. 2011 WL 147714, at *5 (“Plaintiff never alleges that he saw any ads and relied on them”), at *7 (“Plaintiff has not alleged facts showing that Defendant's alleged representations were false or misleading”). Thus Goldsmith contains a caveat – that such allegations might escape Buckman preemption if instead they paralleled a state-law fraud claim. 2011 WL 147714, at *3 (“Plaintiff’s [consumer protection] claims are actionable if they include properly pleaded allegations of false or misleading representations that resulted in Plaintiff's injuries”). That also fits within Buckman’s rationale, which as discussed above, predicates §337(a) preemption/lack of standing on the state law claim at issue being purely a creature of the FDCA without any common-law analog.
For these reasons – its fidelity to Buckman in both rationale and result – we bestow our “good” designation on Goldsmith.
The Funky – Funk v. Stryker
Finally, while we were writing this post (yesterday) we noticed Funk v. Stryker Corp., No. 10-20022, slip op. (5th Cir. Jan. 25, 2011), had appeared on the Fifth Circuit’s website.
Even though it's not a Buckman case, we decided to add Funk because it’s an important appellate decision. It creates a circuit split with Bausch, as both decisions arise from the same defect allegations involving the same device. Circuit splits are one criteria the United States Supreme Court uses to decide whether to accept a case for appeal, and if any case deserves further review, it's Bausch.
But Funk – there’s no other way to say it –is rather funky. Unfortunately (maybe even for us on the defense side), the plaintiff screwed up his appeal and only appealed from the original, pretty pathetically pleaded, complaint. Slip op. at 5. That original complaint was so poor that there wasn’t much question that the claims were all preempted.
Thus, the conflict between Funk and Bausch is more with respect to TwIqbal than preemption. Contrary to Bausch, Funk holds that a parallel violation isn’t adequately pleaded without specifying both how the FDCA was violated and that the violation caused the plaintiff’s injury:
This complaint is impermissibly conclusory and vague; it does not specify the manufacturing defect; nor does it specify a causal connection between the failure of the specific manufacturing process and the specific defect in the process that caused the personal injury. Nor does the complaint tell us how the manufacturing process failed, or how it deviated from the FDA approved manufacturing process.Funk, slip op. at 7. Instead, an adequately pleaded complaint “specifies with particularity what went wrong in the manufacturing process and cites the relevant FDA manufacturing standards [the defendant] allegedly violated.” Id. at 8.
Because Funk found that the only arguably unpreempted (violation) claim was insufficiently pleaded under TwIqbal, it didn’t have to reach any controversial preemption questions under Riegel or (as discussed above) under Buckman.
Funk does, however, hold that it’s proper to take judicial notice of “publically-available documents and transcripts produced by the FDA, which were matters of public record.” Slip op. at 9. T hat’s a useful – if we think rather self evident – holding.
Wednesday, January 26, 2011
While We Wait On Mensing, Another Circuit Shoots Down Generic Preemption
We’re all curious to see what the Supreme Court does with the generic prescription drug manufacturers’ preemption defense in Actavis Elizabeth, LLC v. Mensing, which is scheduled for argument on March 30. In the meantime, the Ninth Circuit has weighed in on the issue, aligning with the Fifth Circuit and the Eighth Circuit and rejecting the generics’ preemption defense.
The case was filed by the guardians of a child who developed liver complications after taking OTC ibuprofen. See Gaeta v. Perrigo Pharms. Co., __ F.3d __, 2011 WL 198420, at *1 (9th Cir. Jan. 24, 2011). The Gaetas claimed that Perrigo should have warned of the increased risk of liver injury and renal failure when ibuprofen is taken concurrently with other hepatotoxic drugs. Id. The district court held, pre-Wyeth v. Levine, that the conflict preemption doctrine barred failure to warn claims against Perrigo. Id. at *2. Even after Levine, the district court stuck to its guns and denied the plaintiffs' motion for reconsideration. Id.
The Ninth Circuit reversed, acknowledging that the Supreme Court’s Levine decision does not control the issue, but “does foreshadow a similar disposition” with respect to the preemption defense in both the brand name and generic contexts. Id. at *4. In quick order, the Ninth Circuit surveyed the state of the law, found that every post-Levine decision agreed there was no generic preemption (other than the Gaeta district court), and rejected Perrigo’s conflict preemption arguments:
(1) It was not impossible for Perrigo to comply both with state-law warning duties and FDA regulations. Perrigo could have provided additional warnings through a “changes being effected” (CBE” ) label change, requested a label change through the “prior approval” process, or requested FDA to send “Dear Doctor” letters to health care professionals. Id. at *5-8.
(2) There was no “clear evidence” that FDA considered and rejected stronger warnings. Although FDA in 2002 and 2006 considered additional hepatotoxicity warnings relating to ibuprofen, “[n]owhere does Perrigo point to any evidence that the FDA was presented with and actually considered the risk of hepatotoxicity due to concomitant use of ibuprofen and other drugs known to be hepatotoxic, which is the specific warning requested by the Gaetas in this case.” Id. at *10.
(3) Allowing state-law warning claims to proceed would not frustrate the purposes and objectives of FDA’s regulatory scheme. Although Perrigo argued that expanding liability would force generics out of business and remove low-cost drugs from the market, the court found that Congress’s goal of delivering low-cost drugs did not supplant the FDCA’s overarching goal of ensuring the safety and efficacy of those drugs. Id. at *11. The court also found it “speculative” to assume that “consumers will lose confidence in generic drugs if they contain warings different from those of the brand name drugs.” Id. at *12.
We’ll have to wait a few more months to see if the Supreme Court agrees with the Gaeta court’s decision or its underlying rationales, but in the meantime, add the Ninth Circuit to the roster of courts rejecting genericss’ preemption defense.
The case was filed by the guardians of a child who developed liver complications after taking OTC ibuprofen. See Gaeta v. Perrigo Pharms. Co., __ F.3d __, 2011 WL 198420, at *1 (9th Cir. Jan. 24, 2011). The Gaetas claimed that Perrigo should have warned of the increased risk of liver injury and renal failure when ibuprofen is taken concurrently with other hepatotoxic drugs. Id. The district court held, pre-Wyeth v. Levine, that the conflict preemption doctrine barred failure to warn claims against Perrigo. Id. at *2. Even after Levine, the district court stuck to its guns and denied the plaintiffs' motion for reconsideration. Id.
The Ninth Circuit reversed, acknowledging that the Supreme Court’s Levine decision does not control the issue, but “does foreshadow a similar disposition” with respect to the preemption defense in both the brand name and generic contexts. Id. at *4. In quick order, the Ninth Circuit surveyed the state of the law, found that every post-Levine decision agreed there was no generic preemption (other than the Gaeta district court), and rejected Perrigo’s conflict preemption arguments:
(1) It was not impossible for Perrigo to comply both with state-law warning duties and FDA regulations. Perrigo could have provided additional warnings through a “changes being effected” (CBE” ) label change, requested a label change through the “prior approval” process, or requested FDA to send “Dear Doctor” letters to health care professionals. Id. at *5-8.
(2) There was no “clear evidence” that FDA considered and rejected stronger warnings. Although FDA in 2002 and 2006 considered additional hepatotoxicity warnings relating to ibuprofen, “[n]owhere does Perrigo point to any evidence that the FDA was presented with and actually considered the risk of hepatotoxicity due to concomitant use of ibuprofen and other drugs known to be hepatotoxic, which is the specific warning requested by the Gaetas in this case.” Id. at *10.
(3) Allowing state-law warning claims to proceed would not frustrate the purposes and objectives of FDA’s regulatory scheme. Although Perrigo argued that expanding liability would force generics out of business and remove low-cost drugs from the market, the court found that Congress’s goal of delivering low-cost drugs did not supplant the FDCA’s overarching goal of ensuring the safety and efficacy of those drugs. Id. at *11. The court also found it “speculative” to assume that “consumers will lose confidence in generic drugs if they contain warings different from those of the brand name drugs.” Id. at *12.
We’ll have to wait a few more months to see if the Supreme Court agrees with the Gaeta court’s decision or its underlying rationales, but in the meantime, add the Ninth Circuit to the roster of courts rejecting genericss’ preemption defense.
Tuesday, January 25, 2011
Snowbird Can’t Escape The Statute of Limitations She Left Behind
It’s cold here in Philadelphia and in much of the country. Really cold, your-car-makes-weird-noises-you-start-it cold. When it’s this cold up here, people start fantasizing about moving to Florida and leaving their snow shovels, rock salt, hats, coats, gloves, and all that behind.
Is there a point to this about drug and device law, you may wonder? Yes, there is. Like those constricting coats and scarves that keep us warm but limit our freedom of movement, many states in the Northeast and middle Atlantic states have two-year statutes of limitations for tort claims. But Florida, a sunnier land for tort plaintiffs, has a four-year statute. And snowbirds with potential causes of action might think that they left their home state’s restrictive statute of limitations behind with their snowblowers when they moved to Florida. Chapman v. Depuy Orthopedics, 2011 WL 149329 (M.D. Fla. Jan. 18, 2011), shows that ain’t necessarily so.
The plaintiff in Chapman had her hip replaced in 1995, when she lived in Virginia. She moved to Florida in 2000 and was treated by a Florida doctor, although he sent her x-rays back to her doctor in Virginia. In late 2006, a fatigue fracture was detected, and the injury manifested itself and was discovered in Florida. She returned to Virginia for treatment and had another hip replacement there in 2007. She sued Depuy in Florida in June 2009, more than two years, but less than four years, after detection of the problem with her replacement hip. Depuy moved for summary judgment, arguing that her claim was untimely under Virginia law. Plaintiff argued that she left Virginia’s statute of limitations behind and that Florida’s statute of limitations applied.
The court applied Florida’s choice of law rules to decide which state’s law to apply. Florida follows the “most significant relationship” test, which considers a bunch of factors. The bad news for Depuy is that the place of injury is usually considered the key factor in tort cases, and some judges stop their analysis right there.
But usually does not mean always. The Chapman court found “that the place where the injury occurred is little more than happenstance under the circumstances presented here.” Id. at *2. The court relied on the facts that plaintiff received her replacement hip in Virginia, had follow up care there from 1995 to 2000, had her x-rays sent there after she moved to Florida, and returned to Virginia for treatment when the hip failed in 2006. Id. The only factor favoring Florida was that the injury manifested itself and was discovered there, but that did not override the other factors. As a result, the court held that “Virginia, the state where the product was delivered and where all the significant medical services were rendered, has a greater interest in applying its law to determine the duties and liabilities arising from those activities than Florida.” Id. at *3.
That was the ballgame for plaintiff. The clock on her claim unquestionably started to run in December 2006, when the fatigue fracture was found, and her June 2009 lawsuit was therefore too late under the Virginia statute of limitations. Id.
A tip of the hat to David Walz of Carlton Fields, who alerted us to this little gem.
Is there a point to this about drug and device law, you may wonder? Yes, there is. Like those constricting coats and scarves that keep us warm but limit our freedom of movement, many states in the Northeast and middle Atlantic states have two-year statutes of limitations for tort claims. But Florida, a sunnier land for tort plaintiffs, has a four-year statute. And snowbirds with potential causes of action might think that they left their home state’s restrictive statute of limitations behind with their snowblowers when they moved to Florida. Chapman v. Depuy Orthopedics, 2011 WL 149329 (M.D. Fla. Jan. 18, 2011), shows that ain’t necessarily so.
The plaintiff in Chapman had her hip replaced in 1995, when she lived in Virginia. She moved to Florida in 2000 and was treated by a Florida doctor, although he sent her x-rays back to her doctor in Virginia. In late 2006, a fatigue fracture was detected, and the injury manifested itself and was discovered in Florida. She returned to Virginia for treatment and had another hip replacement there in 2007. She sued Depuy in Florida in June 2009, more than two years, but less than four years, after detection of the problem with her replacement hip. Depuy moved for summary judgment, arguing that her claim was untimely under Virginia law. Plaintiff argued that she left Virginia’s statute of limitations behind and that Florida’s statute of limitations applied.
The court applied Florida’s choice of law rules to decide which state’s law to apply. Florida follows the “most significant relationship” test, which considers a bunch of factors. The bad news for Depuy is that the place of injury is usually considered the key factor in tort cases, and some judges stop their analysis right there.
But usually does not mean always. The Chapman court found “that the place where the injury occurred is little more than happenstance under the circumstances presented here.” Id. at *2. The court relied on the facts that plaintiff received her replacement hip in Virginia, had follow up care there from 1995 to 2000, had her x-rays sent there after she moved to Florida, and returned to Virginia for treatment when the hip failed in 2006. Id. The only factor favoring Florida was that the injury manifested itself and was discovered there, but that did not override the other factors. As a result, the court held that “Virginia, the state where the product was delivered and where all the significant medical services were rendered, has a greater interest in applying its law to determine the duties and liabilities arising from those activities than Florida.” Id. at *3.
That was the ballgame for plaintiff. The clock on her claim unquestionably started to run in December 2006, when the fatigue fracture was found, and her June 2009 lawsuit was therefore too late under the Virginia statute of limitations. Id.
A tip of the hat to David Walz of Carlton Fields, who alerted us to this little gem.
Monday, January 24, 2011
Will The Supreme Court Tackle a Plaintiff End-Run Around No Private Right of Action?
Okay, that's a klutzy title. The football obsession doesn't leave us until the morning after the Super Bowl. But the Iggles have been ignominiously bounced from the NFL playoffs, so the Supreme Court oral arguments have been our favorite spectator sport over the last week. One involved the continuing saga of the Anna Nicole Smith case. Who would've thought that case would outlive her? And yet, the case we paid the most attention to was Astra, USA v. Santa Clara County. The issue in that case is whether federal courts may confer a private right to sue for breach of contract on third-party beneficiaries of a government contract when the statute mandating the contract contains no private right of action. Are you excited yet? Ready to break out the chips and beer? Ready to wave that foam #1 finger?
Federal law imposes ceilings on prices that drug manufacturers may charge for prescription medicines that are sold to certain health care facilities providing services to the poor ("340B entities"). Federal law also, as a condition of participating in state Medicaid programs, requires drug manufacturers to enter into contracts with HHS. These contracts are called Pharmaceutical Pricings Agreements ("PPAs"). Under the PPAs, drug manufacturers agree to provide discounted prices to the 340B health care providers and entities. If HHS believes that a manufacturer is not complying with the requirements, the PPA authorizes HHS to initiate an informal dispute resolution process. Neither the federal laws nor the PPA provide for a 340B entity, or any third-party beneficiary of the agreement, to enforce the price ceiling.
In this case, Santa Clara County brought suit on behalf of numerous 340B entities, alleging that the drug companies were not complying with the price ceilings. The claim was not brought under the federal statute, because everybody agreed that the federal statute did not provide for a private right of action. Instead, the County pursued a third-party beneficiary breach of contract claim. The district court dismissed the third-party beneficiary breach of contract claim because neither the statute nor the pricing agreement reflected an intent to provide private parties the right to sue to enforce the pricing requirements.
And then the Ninth Circuit entered the picture. The Ninth Circuit reversed and held that federal common law permits a third-party beneficiary, such as a 340B entity, to bring a breach of contract action to enforce the statutory drug pricing provisions incorporated into the agreements. The case was remanded and a discovery dispute ensued. The plaintiff filed an interlocutory appeal to the Ninth Circuit, which invited HHS to file an amicus brief. Sometimes you get more than you ask for. The government brief stated that “it never imagined that a 340B entity could bring a third-party beneficiary lawsuit” and that such a lawsuit would confer “rights never intended” by the pricing agreements. Did that rather clear expression of government intent change the Ninth Circuit's mind? No, it did not. Instead, the Ninth Circuit simply reissued its earlier decision, changing it only to open up discovery. Strangely, the Ninth Circuit did not discuss HHS's position that permitting a private right of action would disrupt the statutory scheme. 588 F.3d 1237 (9th Cir. 2009).
Why are we interested in this rather Byzantine set of facts with an almost-as-Byzantine procedural posture? We've written often about various ways in which plaintiffs attempt to bring actions alleging violations of the FDCA even though there is clearly no private right of action under that statute. Here, for example. Most courts reject those efforts. But every once in a while a court will flout Congressional intent and permit such an action to go forward. For example, the recent Bausch abomination seized upon negligence per se as a basis for a plaintiff cause of action to proceed. Talk about waving a finger (though not number 1) at Congressional intent and Buckman.
So while Astra, USA is more different-from than similar-to our sort of case, it is interesting to see what happens to a plaintiff that uses a clever way (here, third-party beneficiary contract theory) to circumvent Congressional intent. It should come as no surprise that we agree with the position of the pharmaceutical companies in the case, as well as the government amicus, that unless Congress intends to create a private right of action, a cause of action does not exist and the courts may not create one. Because Congress didn't decide to create a private cause of action to allow the 340B entities to enforce the statutory price ceilings via damage suits, the federal courts cannot create such a right. Congress expected HHS to exercise judgment in enforcing price ceilings. To permit third party beneficiaries to sue drug companies for alleged overpricing would run afoul of the requirement that only Congress can authorize private enforcement of the Public Health Service Act.
The lawyer for the pharmaceutical companies barely got a minute into her presentation before Justice Sotamayor asked why this wasn't a straight contract case. The lawyer made the point that contracting parties "had no discretion to confer Article III power on courts to enforce an act of Congress." Justices Kennedy and Breyer seemed concerned as to whether, absent the contract theory, there was any remedy. The answer is that yes, there is a regulatory remedy.
The government amicus lawyer went next, arguing that this was "not an ordinary contract and it does not transform the 340B program from a regulatory scheme into a contractual one." The government lawyer also made the point that "[t]his isn't a negotiated agreement." The PPA contracts merely repeat the terms of the statute. Signing such a contract serves to "mark entry into the regulatory scheme" and it "would be very odd then to say that the entire area is regulated by breach of contract law rather than by the hundreds of pages of regulations and statutory provisions that govern the providers' rights here." The government lawyer also addressed the problem of individual actions disrupting the federal scheme: "if you start permitting covered entities to bring suit, this is essentially a preemption question, but you then have 50 different State regimes, State court regimes, put onto, grafted onto, the Medicaid rebate requirements." Sound familiar? You noticed that "preemption" word, right?
The lawyer for Santa Clara County argued that normal contract laws should apply to the case. Justice Scalia pounced on that thought: "but the third-party beneficiary has rights under the normal contract only when the parties intend him to have rights.... And I have trouble finding that intent here." Interestingly, Justice Sotomayor seemed to agree that the contract manifested no intent that third parties could enforce the price ceiling. Justice Alito asked whether it was possible for the parties to intend that third parties benefit, but not that they be able to sue. The answer? "Yes." [Narrow-grounds-of-opinion alert.]
Justice Breyer asked the County lawyer to address two major questions: "One of them is Congress, in the statute it incorporated here, didn't want a private person to be able to enforce it. And the second one is it is going to create a mess." Chief Justice Roberts elaborated on the "mess" point, pointing out that a private right of action puts "an awful lot of power and authority in the hands of one beneficiary and one lawyer saying -- all they have to do if filing a suit saying, look, we get a hundred doses of Lipitor from this program, we think we should get less. And if they win, the whole country's -- the pricing of Lipitor under this program has changed.... That strikes me as an argument in favor of leaving the enforcement with the Secretary." Chief Justice Roberts later observed that a lot of the County's argument came from "the earlier world of implied right of action jurisprudence that has changed dramatically in the last 30 years."
It's impossible to predict what the Supreme Court will do, but perhaps Justice Ginsburg summarized where the Court is likely headed: "Congress has not provided for a private right of action to enforce the terms of the statute. The contract embodies the terms of the statute. So it would be passing strange if Congress, as we now read Congress, says we want private parties out of this, this is to be between the agency and the manufacturer, to say the exact same result, the same aim can be achieved through this third-party beneficiary route." As indicated above, it's possible the Court will go off on narrow grounds, and we'll get something on whether there was an intention to benefit third-parties, or an intention to permit certain specific avenues of enforcement by third parties. But it is also possible we'll get something broader on why parties should not be able to do an end-run around Congressional decisions not to create a private right of action. Something along those lines could make us third-party beneficiaries of some very nice language.
Federal law imposes ceilings on prices that drug manufacturers may charge for prescription medicines that are sold to certain health care facilities providing services to the poor ("340B entities"). Federal law also, as a condition of participating in state Medicaid programs, requires drug manufacturers to enter into contracts with HHS. These contracts are called Pharmaceutical Pricings Agreements ("PPAs"). Under the PPAs, drug manufacturers agree to provide discounted prices to the 340B health care providers and entities. If HHS believes that a manufacturer is not complying with the requirements, the PPA authorizes HHS to initiate an informal dispute resolution process. Neither the federal laws nor the PPA provide for a 340B entity, or any third-party beneficiary of the agreement, to enforce the price ceiling.
In this case, Santa Clara County brought suit on behalf of numerous 340B entities, alleging that the drug companies were not complying with the price ceilings. The claim was not brought under the federal statute, because everybody agreed that the federal statute did not provide for a private right of action. Instead, the County pursued a third-party beneficiary breach of contract claim. The district court dismissed the third-party beneficiary breach of contract claim because neither the statute nor the pricing agreement reflected an intent to provide private parties the right to sue to enforce the pricing requirements.
And then the Ninth Circuit entered the picture. The Ninth Circuit reversed and held that federal common law permits a third-party beneficiary, such as a 340B entity, to bring a breach of contract action to enforce the statutory drug pricing provisions incorporated into the agreements. The case was remanded and a discovery dispute ensued. The plaintiff filed an interlocutory appeal to the Ninth Circuit, which invited HHS to file an amicus brief. Sometimes you get more than you ask for. The government brief stated that “it never imagined that a 340B entity could bring a third-party beneficiary lawsuit” and that such a lawsuit would confer “rights never intended” by the pricing agreements. Did that rather clear expression of government intent change the Ninth Circuit's mind? No, it did not. Instead, the Ninth Circuit simply reissued its earlier decision, changing it only to open up discovery. Strangely, the Ninth Circuit did not discuss HHS's position that permitting a private right of action would disrupt the statutory scheme. 588 F.3d 1237 (9th Cir. 2009).
Why are we interested in this rather Byzantine set of facts with an almost-as-Byzantine procedural posture? We've written often about various ways in which plaintiffs attempt to bring actions alleging violations of the FDCA even though there is clearly no private right of action under that statute. Here, for example. Most courts reject those efforts. But every once in a while a court will flout Congressional intent and permit such an action to go forward. For example, the recent Bausch abomination seized upon negligence per se as a basis for a plaintiff cause of action to proceed. Talk about waving a finger (though not number 1) at Congressional intent and Buckman.
So while Astra, USA is more different-from than similar-to our sort of case, it is interesting to see what happens to a plaintiff that uses a clever way (here, third-party beneficiary contract theory) to circumvent Congressional intent. It should come as no surprise that we agree with the position of the pharmaceutical companies in the case, as well as the government amicus, that unless Congress intends to create a private right of action, a cause of action does not exist and the courts may not create one. Because Congress didn't decide to create a private cause of action to allow the 340B entities to enforce the statutory price ceilings via damage suits, the federal courts cannot create such a right. Congress expected HHS to exercise judgment in enforcing price ceilings. To permit third party beneficiaries to sue drug companies for alleged overpricing would run afoul of the requirement that only Congress can authorize private enforcement of the Public Health Service Act.
The lawyer for the pharmaceutical companies barely got a minute into her presentation before Justice Sotamayor asked why this wasn't a straight contract case. The lawyer made the point that contracting parties "had no discretion to confer Article III power on courts to enforce an act of Congress." Justices Kennedy and Breyer seemed concerned as to whether, absent the contract theory, there was any remedy. The answer is that yes, there is a regulatory remedy.
The government amicus lawyer went next, arguing that this was "not an ordinary contract and it does not transform the 340B program from a regulatory scheme into a contractual one." The government lawyer also made the point that "[t]his isn't a negotiated agreement." The PPA contracts merely repeat the terms of the statute. Signing such a contract serves to "mark entry into the regulatory scheme" and it "would be very odd then to say that the entire area is regulated by breach of contract law rather than by the hundreds of pages of regulations and statutory provisions that govern the providers' rights here." The government lawyer also addressed the problem of individual actions disrupting the federal scheme: "if you start permitting covered entities to bring suit, this is essentially a preemption question, but you then have 50 different State regimes, State court regimes, put onto, grafted onto, the Medicaid rebate requirements." Sound familiar? You noticed that "preemption" word, right?
The lawyer for Santa Clara County argued that normal contract laws should apply to the case. Justice Scalia pounced on that thought: "but the third-party beneficiary has rights under the normal contract only when the parties intend him to have rights.... And I have trouble finding that intent here." Interestingly, Justice Sotomayor seemed to agree that the contract manifested no intent that third parties could enforce the price ceiling. Justice Alito asked whether it was possible for the parties to intend that third parties benefit, but not that they be able to sue. The answer? "Yes." [Narrow-grounds-of-opinion alert.]
Justice Breyer asked the County lawyer to address two major questions: "One of them is Congress, in the statute it incorporated here, didn't want a private person to be able to enforce it. And the second one is it is going to create a mess." Chief Justice Roberts elaborated on the "mess" point, pointing out that a private right of action puts "an awful lot of power and authority in the hands of one beneficiary and one lawyer saying -- all they have to do if filing a suit saying, look, we get a hundred doses of Lipitor from this program, we think we should get less. And if they win, the whole country's -- the pricing of Lipitor under this program has changed.... That strikes me as an argument in favor of leaving the enforcement with the Secretary." Chief Justice Roberts later observed that a lot of the County's argument came from "the earlier world of implied right of action jurisprudence that has changed dramatically in the last 30 years."
It's impossible to predict what the Supreme Court will do, but perhaps Justice Ginsburg summarized where the Court is likely headed: "Congress has not provided for a private right of action to enforce the terms of the statute. The contract embodies the terms of the statute. So it would be passing strange if Congress, as we now read Congress, says we want private parties out of this, this is to be between the agency and the manufacturer, to say the exact same result, the same aim can be achieved through this third-party beneficiary route." As indicated above, it's possible the Court will go off on narrow grounds, and we'll get something on whether there was an intention to benefit third-parties, or an intention to permit certain specific avenues of enforcement by third parties. But it is also possible we'll get something broader on why parties should not be able to do an end-run around Congressional decisions not to create a private right of action. Something along those lines could make us third-party beneficiaries of some very nice language.
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