Thursday, March 31, 2011

Mensing Oral Argument In Stream Of Consciousness

Everybody knows we’re interested in prescription drug preemption.  That means we’re interested in the Mensing/Demahy appeal in the Supreme Court that was orally argued yesterday.

First of all, here’s a link to the transcript.  You don't have to take our word for it.

As to generic drug preemption, we're quite frankly conflicted.  We of course like preemption, but after our side lost Wyeth v. Levine, 129 S. Ct. 1187 (2009), we also don't want to see our brand-name clients get stuck with liability on some new cockamamie legal theory – read, Conte – for drugs made by generic manufacturers.  To force brand name manufacturers to increase the price of their other drugs to pay for liability for drugs they don't make on some theory relating to drugs they no longer even sell is crazy for a lot of reasons.

If the generics win on preemption, simple necessity will force plaintiffs claiming injury from generic drugs to advance such theories (they’re already doing so, even without the additional incentive), and as Conte shows there’s always a judge somewhere ready to adopt any liability theory, no matter how bizarre.

Given our mixed feelings, we think we can give a pretty neutral take on yesterday’s oral argument.  We warn you in advance, however, that this discussion will be rather stream of consciousness.  We’ve read the transcript, and flagged what we find interesting/important, but we haven’t imposed much organization on our thoughts.

Our take going in was that the specter of Levine hangs over all implied preemption arguments these days, especially involving prescription drugs.  Indeed, since Levine the defense side of the generic preemption argument hasn’t had much success.  And that’s how the oral argument started out.  It didn't take long at all for the Chief Justice (Roberts, for any Supreme Court newbies) to hit defense counsel (Jay Lefkowitz of Kirkland & Ellis, arguing first as appellant) with good old Levine.  The question was pitched pretty much as a softball, and counsel distinguished Levine as turning on an FDA changes-being-effected ("CBE") regulation that allowed brand name manufacturers to strengthen warnings without FDA pre-approval.  According to both defendants and the government, generic manufacturers don’t have the same leeway (although the government's position is that the generics lose anyway).

If the generics lose the Chief, who was for preemption in Levine, it's likely lights out.

The defense response brought out the new doyenne of the anti-tort-preemption wing of the Court (with Justice Stevens finally retiring), Justice Ginsburg.  She, of course, brought up the government's position that regardless of the CBE regulation, the generics lose anyway, because they could have approached the FDA informally and proposed a label change that would affect all relevant labels (generic and branded).  We’re calling this – as did some justices during the argument – the "take steps" rationale.  This argument posits that even if generic manufacturers couldn't change their labels unilaterally (given a statutory requirement that their labels remain the “same” as the last branded label), they could nevertheless have opened a dialogue with the FDA.

There is, however, no FDA requirement for generics to do that, nor any FDA regulation even setting out such an informal process.  The generic side’s initial response to “take steps” was to point that out.  Having been engaged in litigation involving FDA-regulated products for quite some time, however, we know that there's a great deal that the FDA does that the Agency doesn’t (for one reason or another) put in its regulations.  It might be a good idea for courts to make the FDA engage in more rulemaking, but we didn’t think that was the issue before the Supreme Court in Mensing/Demahy.

The way the oral argument played out, however, it’s possible that might happen.

The second arrow in the generics’ quiver was that the "take steps" rationale seeks to insert common-law tort plaintiffs into the determination, as between the FDA and those (generic drugs) it regulates, of what those entities should and should not ask the FDA to do.  Once one gets into that sphere, the shadows of the Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), case start to fall on the legal landscape.  Buckman certainly held that, when the common law tries to dictate to the FDA and those it regulates how they should interact with one another, the presumption against preemption goes out the window.

But does this aspect of Buckman do more than that?  Does it also preempt claims that are predicated on how a defendant did (or did not) interact with the FDA – as opposed to the usual warning claim that simply challenges the adequacy of an FDA-approved label?

We’ll probably find out in a few months.

There's also a "proves too much" element in the “take steps” rationale.  Specifically, if the generics had to take steps to lobby the FDA for a label change, do branded manufacturers have a similar obligation?  That point was brought up by Justice Scalia, who at times seemed ready to re-fight the Levine war. That’s another vote that the generics have to have to win.

And what does this informal "take steps" rationale entail?  At what point does the generics' admitted obligation to report adverse events spill over into an obligation to go beyond that and ask that the labeling actually be changed?  Justice Sotomayor – a vote that the plaintiffs need to win – was all over that one.  The generics drew a line between reporting of adverse events, which was mandatory, and informally seeking a label change, which they placed within the penumbra of Buckman's discussion of the exclusively federal relationship between the FDA and those it regulates.  So there’s the Buckman argument again.

But if there is an ability to ask, which the generics concede, how would that square with the "impossibility" prong of implied preemption as interpreted in Levine?  That the FDA might not act doesn't mean that simply asking is impossible.  It was undisputed in these cases that the generics never even asked.  That position seemed to be Justice Kagan's take on this debate.  She is a vote the plaintiffs pretty much have to have to win.

Again, the generics’ counter was the Buckman proposition – that common-law plaintiffs shouldn't be suing over what manufacturers did or did not do vis a vis the FDA.

But Buckman was also a practical decision, Justice Roberts pointed out.  Here, unlike Buckman, the government wasn't particularly concerned that the FDA would be overwhelmed by large numbers of such requests.  Justice Ginsburg also referred to the government's lack of concern.  That’s a legitimate point, because the fraud on the FDA theory at issue in Buckman was malleable enough essentially to challenge anything and everything submitted to the FDA.  A "take steps" rationale, particularly if somehow confined to generic manufacturers, would affect a much smaller universe.

That was a practical distinction, but given that §337(a) says no private enforcement, then does it really matter how much private enforcement is asserted?  But back to first principles – is a failure to ask even an FDCA violation, or rather simply something within a generic (or branded, for that matter) manufacturer's discretion?  Lots of labels could be changed, but must they be?  The generics' position was no, that if the FDA thinks a label change is appropriate, it will convey that conclusion to the generics, at least once the branded product has been driven off the market by generic competition.

Then we heard from Justice Breyer, who, as usual, was concerned with practicalities.  If a generic comes across new information suggesting a risk, what then? The response was basically report everything to the FDA and let the agency make up its mind. Can a state turn that FDA reporting obligation into some sort of "reasonable man" requirement?  Would something conflict?  The generics argue yes, since the plaintiffs aren't just seeking reporting, they're demanding that the manufacturers “take steps’ to get the FDA to make a label change.

So far, so good, but then Justice Breyer – a critical swing vote on preemption issues – goes further and throws in a fraud on the FDA hypo:  can the states "get involved" because the manufacturer "purposely didn't tell anybody" about some "really serious problem"?  The generics of course answered "no" because that would not just be a penumbra from Buckman, that is Buckman.  Plainly Justice Breyer was seriously interested in the Buckman aspect of the case.

Justice Kagan pulled back from hypos, and asked whether the plaintiffs were really alleging anything more than “traditional” failure to warn. The generics argued that the straight warning claim is preempted because there's no mechanism (like the CBE regulation) by which generics can simply change the label that goes to physicians.  Interestingly, Justice Kagan agreed with that.  But she offered up the FDA's “take steps” position as an alternative.  Again, the generics attacked that as not being based on any FDA regulation, or anything at all except a Federal Register "preamble" (which became a dirty word in Levine), and that even after all that the FDA ultimately makes the decision.

Then Justice Kennedy made a startling statement – that this case may even be "a fortiori" from Buckman.  Whoa.  Justice Kennedy is another crucial swing preemption vote.  If that was really what he thinks, then that sounds like good news indeed for the generics, since he voted against preemption in Levine.

Justice Sotomayor raised some serious questions of congressional intent – why would Congress:  (1) create a system where only brand-named products are subject to tort suits? or (2) create differing reporting/misbranding requirements for different kinds of drugs?  As to the first, we'd of course say that the Court got it wrong in Levine, but that's not what one does in an oral argument.  The generics’ counsel started with the second, responding that never, since there have been generic drugs, has the FDA found a generic drug with the statutorily required labeling (that is to say, labeling that’s the “same” as the last branded label for the drug) to be in violation of the Act.  As to the first question, counsel argued that Congress intended generics to be cheap – "pennies" rather than "dollars" per pill.  That’s the generics’ obstacle preemption argument, although it was not presented as such.

Both Justices Ginsburg and Sotomayor engaged on these points - the former raising branded generics, which she said don't fit a description of a generic with lesser capability, and the latter wondering whether generics would ever have sufficient information to propose label changes in the first place.  They were hostile to the notion that the “low cost” rationale allowed generics to, as they saw it, cut corners on safety.  The generics didn’t back down.  They argued that, if the FDA wants generics to go beyond reporting and to start evaluating safety risks in the first instance (something they're arguably not equipped to do) then the FDA should engage in notice and comment rulemaking, because that would be a huge change in their business models.

So much for the defense (although it did reserve time for rebuttal)

The plaintiff's side got the same treatment.  Lewis Bograd, their counsel, barely got his "they want the right to do nothing at all" argument out of his mouth before Justice Scalia pounced, pointing out the adverse event reporting requirement and suggesting that it was up to the FDA to decide how serious the risk really was.  Levine was the rejoinder – that state court juries are perfectly up to that task.  After a little Scalia speech, the plaintiff offered that, if the FDA had actually said no to a request, then that's "clear evidence" that the FDA would have said no.

To us that sounds like more of a tautology than a real concession.

We then get an interesting observation from Justice Breyer that, rather than Levine, the case is more like Buckman, because any supposed duty to tell the FDA something, amounts to a claim that private plaintiffs can enforce that duty, as opposed to the FDA "enforcing their own stuff."  That’s Buckman.  Conversely Levine was a case of the defendant having the power to change its own warning without prior FDA involvement.  If that's what he really thinks (as opposed to playing devil's advocate), that would be good news for the generics, because Justice Breyer also was against preemption in Levine.

So two key swing justices, Kennedy and Breyer, each made comments during oral argument equating generic preemption, and the “take steps” rationale, with Buckman rather than Levine.  That  bears watching.

Although promising to answer Justice Breyer's question about FDA enforcement, plaintiffs’ counsel didn’t.  Instead he offered up the "take steps" rationale, which plaintiff contended was not “impossible” under a Levine rationale.  Maybe he would have gotten around to answering Justice Breyer's question in time, but other justices intervened.  The Chief wanted to know the FDA's turnaround time, which counsel claimed (not based on generic drug data) is about three, or maybe four (he used both figures) months.  He got caught by Justice Scalia mixing statistics of generic apples and branded oranges.

Justice Sotomayor wanted to know how much the defendants would have to know to trigger the “take steps” obligation to lobby the FDA, since many adverse event reports involving generics go to the brand-name manufacturer because generic substitution confuses doctors as to whose drug was actually used.

Interesting question.

The plaintiffs’ answer was interesting, too – standard tort law jargon that the generics should be held to the standard of an “expert” and should have affirmatively examined the FDA's adverse event database.  So it came out that plaintiffs are asseting obligations that go beyond reporting and shade into independent research.

Justice Scalia immediately called plaintiffs on the "expert in the field" point, which was essentially an argument to treat the generic manufacturer as if it were a branded manufacturer.

Plaintiff's counsel, of course, tried to avoid Justice Scalia's logic by arguing that because the generic drugs were being used off-label, the generics had no more or less expertise than a branded manufacturer would have had, because off-label uses have not been studied.

Oops.  Off-label use gets into Buckman, which was the paradigmatic off-label use case.

Thus, along came Justice Breyer to nail down the point that the claim goes beyond mere reporting to the "obligation" to "initiate a label change."  Reporting, Justice Breyer observed, is Buckman.  The second obligation, to do more than just report, becomes superfluous once the FDA has all the information.  Counsel disagreed that it was superfluous, essentially claiming, based on Levine, that the FDA is incompetent and overmatched.  Justice Breyer interprets plaintiff's claim as the generics having to "do their best to change the label" by lobbying the FDA.

Now we hear from Justice Alito for the first time.  He is another Levine pro-preemption vote that the defendants here have to retain.  His hypo was whether there would still be an obligation to "take steps" if the FDA ruled that, in general, there was no obligation for generics to request a label change. That pretty much stumped plaintiffs’ counsel, who confessed he couldn't answer, but that it may be a "direct conflict."

Justice Alito interpreted plaintiff's theory as leading to that hypothetical, as the "informal" process contemplated by the "take steps" rationale was "nowhere provided for under the FDA rules," and thus could not be required under the existing scheme.  If that wasn't devil's advocacy, then, Alito seems leaning towards preemption.

Assuming there's no firm regulatory basis for the "take steps" process, plaintiffs’ counsel retreated to a "misbranding" obligation.  But that's FDCA violation language.  We hear from Justice Kennedy again, wondering now the case is now different from Buckman.  We're dealing with a statutory relationship that "did not permit a cause of action."  Time to backpedal – plaintiffs can't afford to lose both Breyer and Kennedy. Their answer was basically Levine, that this was simply a warning case, something "traditional."

But Justice Kennedy persisted.  If there wasn’t a cause of action in the context of a "formal" FDA-manufacturer relationship in Buckman, how can there be a cause of action predicated on the "informal" relationship assumed by the "take steps" rationale?  (That was probably what Justice Kennedy meant by his prior "a fortiori" comment.)  Counsel didn't exactly follow and gave two answers: (1) that Buckman involved a "bizarre" non-traditional cause of action, and (2) you can't find preemption because it would preclude suit in some 70% of all prescriptions, which are now generic. The first response simply disrespects Buckman, while the second is a sort of “floodgates” argument that, while it may have independent force, wasn’t really on Justice Kennedy's point.

After deferring to the SG on a regulatory question, plaintiffs' counsel closed with some point about Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005), not involving any form of CBE.  We confess we're not sure why he thought that was so important to go out of the way to raise it, particularly because Bates was an express preemption case.

Next the Court heard from the government (Edwin Kneedler, deputy SG), which promised to be interesting because the government swings both ways, agreeing with the generics that the CBE requirement is inapplicable, but agreeing on the bottom line with the plaintiffs, based on the informal "take steps" process.

The government didn't get very far either before being interrupted.  It was a very hot court.

Justice Kagan asked whether an "opportunity" to "take steps" - short of an "obligation" – was enough to defeat impossibility preemption.  A plaintiff-side softball.  The SG's position was, as long as there was no prohibition, then state law wasn't asking for the impossible.

Justice Scalia didn't appreciate that.  If the manufacturer could be liable on such a loosy goosey rationale, why not a physician who did not suggest a label change to the FDA?  The government’s counsel seemed well prepped, because he had a coherent answer to a question that came sort of out of left field (or perhaps "right field," because it's Scalia).  He said, no, because a physician could warn the patient without having to involve the FDA at all.

Pretty decent answer.  Unfortunately it went downhill from there.

The Chief Justice asked what if "take steps" produced a boilerplate request to consider a label change attached to each and every adverse event report?  And what if the FDA rejected the boilerplate request; would that lead to preemption?  Here the government’s lawyer got a little confused.  His overall position was that an FDA rejection is preemptive, but then what about a boilerplate request?  That's a real problem with an informal process that has no clearly set standards.  Both the Chief and Justice Scalia hammered that position – why not boilerplate – and the government never had a good answer.  All it could offer was a non-notice and comment FDA preamble.

We know what the Court did to such an FDA preamble in Levine.

Justice Alito wanted to know if the FDA had analyzed the economic consequences of the new "take steps" process (or "opportunity") that its brief relied upon to overcome preemption.  Answer:  No.  But somehow it stems from the "misbranding requirements of the Act" which generics are subject to.  Thus the government denied the process was really something new.

So we returned to misbranding.

Justice Sotomayor decided to help out, asking if generics, in addition to reporting adverse events, also had a duty to "monitor the safety of the drug."  There was no explicit FDA requirement to do that, the government answered, but it's not in conflict with anything in "the Act" (whether the FDCA or Hatch-Waxman, at this point, we aren't sure).

Justice Scalia went after that statement, wanting to know how any generic could decide when a label change was necessary under a duty to "monitor safety," since all a generic manufacturer does is "replicate" pills.  The government argued that state law can impose a duty to investigate safety that goes beyond the FDA’s regulations.

But what the government really wanted to discuss was Buckman – even to the point of giving Justice Scalia short shrift.  Buckman was "totally different" because it was predicated on lying to the FDA and thus on the existence of the FDA....

That was as far as he got before the Chief reminded the government of the "flood the FDA" rationale in the brief that the government filed in Buckman.  Why no similar prediction here?

The response was a pre-prepared speech:  that the Buckman claim would have made it a tort to lie to the FDA, while this case remained about the warning given to physicians.  And somehow, preemption was an affirmative defense here rather than an element of a cause of action as in Buckman (we’re scratching our heads over that one).  So there's no preemption if there's enough evidence to request a label change under the same standard as the CBE requirement (even though the CBE requirement isn't applicable).

In short, not one word about the Chief's question about the FDA getting flooded with (probably boilerplate) requests.  The Chief tried one last time and got nowhere.  Because it was not impossible to "take steps" (even though the process is entirely extra-regulatory), then impossibility preemption can't preclude a plaintiff from saying the defendant should have talked to the FDA specifically about a label change.

The defense rebuttal made the most of what overall we'd have to say was a weak performance by the government.  The government's position favored jury trials over violations of FDA duties that aren't anywhere in FDA regulations. The same general duty to inform was also raised in Buckman, etc., etc.

Justice Sotomayor didn't entirely disagree, but distinguished Buckman as not involving a duty to inform plaintiffs (meaning their physicians), as opposed to the FDA.  Where's the impossibility?

The defense answer, because the presentation of the "take steps" rationale was so weak, was that generics can't change the label, which the government admits, and “take steps” process is something ginned up from nothing.  It's not set forth anywhere, and would only worsen the existing backlog (giving figures) of label requests made by the branded manufacturers by dumping who knows how many informal requests on top of those.  Thus, he answered the Chief's question that the government avoided.

But, as Justice Kagan observed, the generics in these cases never asked at all.  The generics’ response hammered the same point – that they did everything they were supposed to do, and the government shouldn't make up new requirements after the fact.

That brought in Justice Ginsburg, who stated that preemption isn't about whether the defendant violated the FDCA (something that ignored Buckman’s no private right of action holding), but only about a conflict with federal law.  So is there a conflict if you have to "tell the FDA" and the FDA doesn't say no?  Actually not a bad question, because the generic's response is that Buckman puts the process of telling the FDA off-limits to tort suits.  Justice Ginsburg mused that Buckman was "a very odd case."

In a sense Justice Ginsburg probably summed it up pretty well.  From the oral argument, it appears that this case is going to be a lot more about Buckman - and a lot less about Levine - than we had thought beforehand.

There appear to be three pro-preemption justices, Scalia, Alito, and Roberts (although he asked the generics tough questions, too), and three anti-preemption ones, Ginsburg, Sotomayor, and Kagan (it's a little hard to tell with her, but as a former SG she may not be inclined to go against the government).  Thomas, as always, said nothing, but his concurrences in both Levine and Buckman indicate he's a tough sell on implied preemption.  But both Justices Kennedy and Breyer seemed fixed on generic preemption being a variant of Buckman preemption because the CBE warning change process is off the table, and "take steps" involves interactions with the FDA (and, we should point out, causation based on speculation on what the FDA might have done).

It's going to come down, we think, to the credibility of the informal "take steps" process, or whether the FDA's anti-preemption stance in Mensing/Demahy is treated with as little deference as its pro-preemption stance was in Levine, both being predicated (it was pointed out) on a preamble with little else behind it.

From how badly the lower courts have treated generic drug preemption in the wake of Levine, we were expecting to be writing an obituary after this oral argument that the handwriting was on the wall, and the generics were doomed.  We can't say that.  If the swing justices see this as a Buckman situation, the generics could win.  If they do, both the legal and practical consequences are likely to be far-reaching.

But we're not going to blog about those possible consequences until the Court decides.

Wednesday, March 30, 2011

Yesterday's Santa Clara Decision and Its Implications for the FDCA

We fingered Astra v. Santa Clara County as a potentially interesting case from the moment that the Supreme Court granted cert.  Here's how we described the case on four days after certiorari was granted:

The statute in question is the Public Health Service Act because the case involves Medicare drug pricing issues.  But to us, the case fairly screams out "Food, Drug & Cosmetics Act."  The issue boils down to whether private plaintiffs can use "federal common law" as a way to get around the fact that certain statutes (such as the FDCA) don't allow private enforcement.
"Interesting Supreme Court Cert. Grants" (DDLaw 9/30/10)

Well, yesterday, the court decided the case.  And we'd have to say that it didn't disappoint.

But first, the background.  As we've stated time and time again, Congress explicitly precluded private rights of action under the FDCA.  The Supreme Court so held in Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001).  The relevant FDCA provision is 21 U.S.C. §337(a), which states:
“[A]ll such proceedings for the enforcement, or to restrain violations, of this chapter [the entire FDCA] shall be by and in the name of the United States.”
Because of §337(a), Buckman held that attempts by private litigants to enforce the FDCA, disguised as common-law actions for "fraud on the FDA," were preempted.  Violation claims that “exist solely by virtue of the FDCA disclosure requirements,” 531 U.S. at 353, were impliedly preempted because the FDCA “leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance with the medical device provisions.”  Id. at 349 n.4 (citing §337(a)).  Absent any independent state-law basis, private FDA fraud claims conflicted with and were preempted by the FDCA’s exclusive grant of federal prosecutorial authority.  Id. at 353-54.

There are a lot of cases that follow Buckman and do this.  For example, in Goldsmith v. Allergan, Inc., 2011 WL 147714 (C.D. Cal. Jan. 13, 2011), the court reached the same conclusion concerning a consumer fraud claim that, in substance, sought simply to litigate a supposed FDCA violation:
[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.
Id. at *3 (quotation marks omitted).

For courts that have difficulty dealing with the word "preemption," we've always thought that the same result can be reached through a standing analysis or something similar.

That brings us to Astra v. Santa Clara, which demonstrates the "something similar."  Like Buckman the case involves a statute, the Public Health Services Act, that doesn't permit private rights of action, because Congress stated numerous times in the statute, 42 U.S.C. §256b, that "the secretary" (meaning the federal Dept. of HHS) "shall establish . . . mechanism[s]" to ensure compliance with the Act's requirements.  See §256b(a)(5)(A)(ii), (a)(5)(D), (a)(7)(A), (a)(D)(1)(b)(i), (d)(1)(B)(i), (d)(1)(B)(iv)(I), (d)(2)(A).  It's a really complex statute, folks.  Between the two, we'd say the FDCA's preclusion of private actions is even more explicit, because it directly addresses who does, and doesn't, get to do the enforcing.

But the result is the same - no private enforcement.  Because of Congress' repeated reservation of the "secretary's" powers, in Astra v. Santa Clara, "[i]t is conceded that Congress authorized no private right of action under [the Act] for covered entities who claim they have been charged prices exceeding the statutory ceiling."  Slip op. at 1-2.  Or, as the Court stated later:
Recognition of any private right of action for violating a federal statute, currently governing decisions instruct, must ultimately rest on congressional intent to provide a private remedy. Congress vested authority to oversee compliance with the [the Act] in HHS and assigned no auxiliary enforcement role to covered entities.

Slip op. at 5-6.

The Court did not buy into the idea that supposedly invoking the common law to sue over something identical to what the statute requires was any different than suing over the statute itself:
The form agreements . . . serve as the means by which drug manufacturers opt into the statutory scheme. A third-party suit to enforce an HHS-drug manufacturer agreement, therefore, is in essence a suit to enforce the statute itself.  The absence of a private right to enforce the statutory ceiling price obligations would be rendered meaningless if [the Act's] entities could overcome that obstacle by suing to enforce the contract’s ceiling price obligations instead. The statutory and contractual obligations, in short, are one and the same.

Slip op. at 6-7 (emphasis added) (citations omitted).

Again, since we're products lawyers, our interest is in making the analogy to the FDCA.  A supposed private "common law" action that simply parrots the FDCA's regulatory standards "is in essence a suit to enforce the statute itself."  Such an action can't be disguised as a common-law suit because it is "one and the same" with the statute itself, and Congress forbade private enforcement actions.

We further note that in Astra v. Santa Clara, the Court gave short shrift to the same sort of "common law litigations accords with the purpose of the statute" argument that the Court used in Wyeth v. Levine.  According to the court, if that was what Congress wanted, it wouldn't have restricted enforcement powers to the government:
Suits like the County’s, the Court of Appeals reasoned, would spread the enforcement burden instead of placing it entirely on the government.  But spreading the enforcement burden . . . is hardly what Congress contemplated when it centralized enforcement in the government. . . .  Far from assisting HHS, suits by [the Act’s] entities would undermine the agency’s efforts to administer both Medicaid and [the Act] harmoniously and on a uniform, nationwide basis.  Recognizing the County’s right to proceed in court could spawn a multitude of dispersed and uncoordinated lawsuits. . . .  With HHS unable to hold the control rein, the risk of conflicting adjudications would be substantial.
Slip op. at 8-9 (various citations omitted).

This is preemption language without calling it preemption.  If it works for the PHSA, it's worth making the same arguments - supported by Buckman, as well - with respect to "parallel violation" claims under the FDCA, which even more emphatically bars private enforcement.  Buckman by any other name will smell as sweet.

Tuesday, March 29, 2011

Putting Our Economy at Risk

We've already commented a couple of times on GSK's reorganizing of its corporate structure to move its corporate nerve center from Pennsylvania to Delaware - and that was before ATRA named GSK's earstwhile local court, our own Philadelphia Court of Common Pleas, the number 1 "Hellhole Jurisdiction" in the country.  It seems that GSK reconstituted itself as a Delaware LLC with only Delaware members.  This had been enough, under prevailing law to move GSK's corporate "nerve center" to Delaware.  See Hoch v. Eli Lilly & Co., 736 F.Supp.2d 219, 222-23 (D.D.C. 2010); White v. SmithKline Beecham Corp., 2010 WL 3119926, at *4 (E.D. Pa. Aug. 5, 2010).

Not so fast.  Nothing is ever easy - not here in Philly, anyway.  Now comes plaintiff to take a great deal of intrusive jurisdictional discovery in order to get a court to second-guess whether GSK actually moved enough of its corporate decision making structure out of the City of Brotherly Litigation.  Oppose enough removal petitions, and eventually some plaintiff will get lucky and find an indulgent federal judge.

Last week that happened to GSK.  In Brewer v. SmithKline Beacham Corp., 2011 WL 1103627 (E.D. Pa., Mar. 24, 2011), one of our local federal judges concluded that GSK had failed to jump through enough corporate hoops to move its "nerve center" to Delaware, and thus create the diversity jurisdiction that would allow GSK to escape the Philadelphia Court of Common Pleas.  Specifically, the court ruled that GSK:
  • Hadn't moved its corporate books and records from Philadelphia to Delaware fast enough.  Id. at *8.
  • Didn't move its listed business address from Philadelphia to Delaware fast enough.  Id.
  • Hadn't done enough to move its dealings with the federal government Philadelphia to Delaware.  Id.
  • Not enough of the GSK's executives had moved their offices from Philadelphia to Delaware.  Id.
  • GSK's office in Wilmington didn't have enough furniture.  Id. at *9.
  • GSK's Delaware office still forwarded too many telephone calls to Philadelphia.  Id.
  • GSK held its Delaware board meetings, not at its office, but at a local Wilmington bank.  Id.
  • GSK's Delaware board meetings weren't long enough or substantive enough.  Id.
  • GSK's directors spent more time preparing "outside of Delaware" (we assume, in Philly) than they did actually attending the Delaware board meetings.  Id.
  • The agendas for GSK's Delaware board meetings were prepared in Philadelphia.  Id.
  • GSK's Delaware office generally wasn't big enough.  Id.
  • GSK's Delaware office still forwarded too much of its mail to Philadelphia.  Id.
Having thus second-guessed a Delaware corporation's conformity with Delaware corporate law, the Pennsylvania court concluded that GSK's "nerve center" remained in Philadelphia - and therefore it had been served in its "home" court (nothing like home, sweet home) - and therefore the action had to be remanded to Philadelphia:
Because the decisions affecting the business operations and activities of LLC are made in Philadelphia, Pennsylvania by its officers and directors there and Holdings has delegated its operational decision-making related to LLC's business to LLC, we conclude that the defendant's principal place of business is Philadelphia.  Additionally, the defendant has not satisfied its burden to show that the place of actual direction and control of Holdings's investment functions is any place other than in Pennsylvania.
Brewer, 2011 WL 1103627, at *10.  And these kind of decisions aren't appealable.

Why is this post so factual?

Because each and every one of these bullet points can be corrected.  For a company that has already changed its fundamental corporate structure because it no longer wanted to be sued in Philadelphia hundreds of times over by forum-shopping plaintiffs from all around the country, adding more space in Delaware and moving more executive offices and functions to Delaware isn't much additional effort.

If the courts are going to, in effect, order corporations to move their jobs out of Philadelphia in order to escape its court system, then unfortunately that's probably what they'll do - if they've already jumped through a bunch of corporate hoops, to escape Pennsylvania's First Judicial District, what are a few more?

We like Philadelphia.  We live here.  We pay taxes here.  But let's face it, reverse bifurcation (in most cases), multi-plaintiff trials, supine gatekeepers, and other Philadelphia CPisms we can do without.  And even when our trial judges do the right thing, which is more often than ATRA suggests, they're as likely as not to get reversed by Pennsylvania's increasingly radical pro-plaintiff Superior Court.

So if asked by a Philly pharma (or other) company that's finally had enough of its home-court disadvantage, we'll have to tell them that they can create diversity if they shift some of their operations - what percentage depends on what decisions like Brewer say is required (and a comfort zone, too) - to Delaware or some other more congenial state.  Zealous representation and all that.  But still we don't have to like it.  We'd much rather that the jobs, tax revenue, etc. stay in our home town.  We'd much rather somebody, be it the governor, the legislature, or our Supreme Court step in and fix the problems that drove GSK's decision in the first place.

Monday, March 28, 2011

Heparin Daubert Rulings

Some interesting Daubert rulings recently came out of the Heparin MDL. We are involved in the litigation, so we cannot say much. Here are some highlights from the decision in In re Heparin Prod. Liability Litigation, MDL No. 1953 (N.D. Ohio March 21, 2011):

-- The plaintiff's microbiologist expert was not permitted to testify "about other instances of Chinese products being tainted, adulterated or contaminated, such as cough syrup and dog food. His sparse and random anecdotal knowledge does not qualify him as an expert about specific problems involving Chinese suppliers." Slip op. at 8. He was also foreclosed from testifying "that the conduct of Defendants indicated that they 'consciously disregarded' the welfare of patients receiving their products." Id. at 10.

-- What would a product liability case be without ubiquitous plaintiff's expert Dr. Parisian? Answer: fairer and better. The Heparin MDL Judge did permit Parisian to testify about some things, but dropped an interesting footnote: "I assure all counsel that I will take whatever steps I deem appropriate and necessary to restrain the not uncommon impulse of some witnesses, including some expert witnesses, to elaborate impermissibly on their answers. I remind counsel, though, that they need to carefully frame their questions so they do not invite such elaboration." Slip op. at 12 n. 2. Those are general comments, but they reside in the section on Parisian. The Judge also held that Parisian could not testify about:

* "medical or physiological causation issues"

* "a narrative history of Heparin contamination, which must be presented through direct evidence"

* the "ultimate question" that the defendant's "monitoring, quality control measures, or recalls were ineffective or inadequate."

* "the reasonableness of the Defendants' conduct"

Slip op. at 13-15.

-- The plaintiffs sought to bring in an 'expert" who would tell the jury that "China is a risky place from which to acquire source materials," that there is a "cultural phenomenon within the Chinese business environment, such as intentional counterfeiting, 'quality fade,' 'savings culture,' show and 'shadow' factories and other manufacturing 'games or tactics,'" etc. Slip op. at 16. This expert claimed that "he can 'see beyond the facade in China' in a way that others cannot." Id. at 17. Pause and take all that in for a moment. Now watch the court do its work: the expert was "not qualified to offer opinions about Chinese cultural norms, behavior and business conduct," such opinions "are neither reliable nor relevant to the issues in this case," and, even if they were relevant, the "slight probative value his opinions might have is substantially outweighed by the risk of unfair prejudice." Slip op. at 17-19.

Friday, March 25, 2011

Florida Food Class Certification Vacated, But....

Today the Eleventh Circuit vacated the certification of a Florida consumer protection (FDUTPA) class action in Fitzpatrick v. General Mills, Inc., ___ F.3d ___, No. 10-11064, slip op. (11th Cir. March 25, 2011).  The complaint alleged false statements about the health benefits of Yoplait yogurt.  The trial court has certified a class consisting of class as “all persons who purchased YoPlus in the State of Florida to obtain its claimed digestive health benefit.”

Generally we cheer when class certification are reversed.  But not this time.  Check out what the court actually said:
The district court’s analysis in its Order on Motion for Class Certification is sound and in accord with federal and state law. . . .  And, if the definition of the class had been in accord with the legal analysis, we would have readily affirmed. . . .  In its analysis, the district court repeatedly stated that a plaintiff need not prove reliance on the allegedly false statement to recover damages under FDUTPA . . . [a]nd, this is correct.

The court reversed because the class definition was too narrow - that it "takes into account individual reliance."  Id. at 9.  The proper definition, according to the court, should simply have been "all purchasers . . . in the state of Florida."  Id. at 8 n.1.

We don't know when we've last seen a class certification reversed on this basis - if ever.
Slip op. at 8-9.  Not what we like to see.

West Virginia Legislature Clarifies Public Policy

We were quite concerned a couple of years back when, in the wake of the West Virginia Supreme Court's horrible decision in State ex rel. Johnson & Johnson Corp. v. Karl, 647 S.E.2d 899 (W. Va. 2007), rejecting the learned intermediary rule, a federal district court in that state undertook to apply West Virginia law to out-of-state plaintiffs in Woodcock v. Mylan, Inc., 661 F. Supp.2d 602 (S.D.W. Va. 2009) - claiming that Karl established "public policy" and therefore mandated use of forum state law no matter how unrelated the suit.  See our post, here.  For that, we awarded Woodcock a place in our bottom ten worst decisions of 2009.

Some deterrent that was.

Last year another West Virginia federal court did the same thing, in Vitatoe v. Mylan Pharmaceuticals, Inc., 696 F.Supp.2d 599 (N.D.W. Va. 2010).

Poor Mylan - it's the only major drug company based in West Virginia.  Our post on the subject was entitled "Why Drug Companies Should Beware Of Doing Business In West Virginia."  Our advice at least attracted some attention in West Virginia.

Well, we're happy to report - or, more accurately have it reported to us by Phil Combs of Allen, Guthrie & Thomas (thanks, Phil) - that the West Virginia legislature has stepped in to stop this choice-of-law foolishness.

Here's a copy of the final, enrolled bill, passed March 12, which declares the public policy of West Virginia to be that the applicability of the learned intermediary rule is to be decided on the basis of the residence of the plaintiff at the time s/he took the drug:
§55-8-16. Choice of Law in Pharmaceutical Product Liability Actions.

(a) It is public policy of this state that, in determining the law applicable to a product liability claim brought by a nonresident of this state against the manufacturer or distributor of a prescription drug for failure to warn, the duty to warn shall be governed solely by the product liability law of the place of injury (“lex loci delicti”).
Mylan (and the rest of us) can rest a little easier, at least after the effective date of July 1, 2011.

Nevada Punitive Damages Case Goes To Supreme Court

The #2 case on our list of bottom ten cases from 2010, Wyeth v. Rowatt, 244 P.3d 765 (Nev. 2010), has just been appealed to the Supreme Court by the defendant.  Here's an as-filed copy of the petition for certiorari.

Here are the questions that the Supreme Court is being asked to review:
Critical to the first issue are the unusual facts surrounding the first verdict that the jury rendered.  The trial was truly a cautionary tale about why it's really a bad idea to consolidate otherwise unrelated claims against the same drug for a single trial, but the circumstances of the verdict were truly strange.  The consolidated case was supposed to have been bifurcated into compensatory and punitive phases, but after an "improper and inflammatory closing argument," pet. at 2, the jury awarded $134.6 million in supposedly compensatory damages alone.  It soon became clear that the jury - without receiving any instructions at all on the standards for punitive damages (because that was supposed to be in phase II) - had improperly awarded punitives.  How clear was the jury's runaway behavior?  When informed that they were supposed to return for the second, punitive phase, the juror's response was "we already did that."  Id. at 6.
1. Whether, when a verdict has been tainted by a jury’s passion or prejudice, due process requires a trial court to grant a new trial instead of remittitur.
2.  Whether, and in what circumstances, a trial court violates due process when it awards a substantial amount in compensatory damages but nevertheless proceeds to award punitive damages in an amount exceeding [a] one-to-one ratio. . . .

The trial court, after having refused to give a "not to punish" instruction in the first phase, Pet. at 6, tried to back and fill by ordering a "compensatory" re-deliberation, and then holding the punitive phase, but the damage had been done.  The jury was dead set on punishment before ever being instructed on punitive damages.  Id. at 7.  The combined total of compensatory damages, and then the punitive damages from the plaintiff's second bite at the apple (which took less than two hours of jury deliberation), was practically identical to the first - 134.1 million - a .0037 (less than four tenths of one percent) difference from the first verdict.  Id. at 6-7.

The judge remitted the gigantic verdicts to a still huge almost $58 million total sum.  Pet. at 8.

Every court that reviewed what went on agreed that the verdict was tainted by passion and prejudice.  The first question submitted to the Court is when a verdict is so tainted, can it simply be cured by a remittitur, or does due process mandate that there must be a new trial.  The defendant's position is that, while remittitur is OK for verdicts that are merely excessive, remittitur can't cure verdicts that are the product of an inflamed and prejudical jury deliberation - or, as the Supreme Court said a long time ago, “No verdict can be permitted to stand which is found to be in any degree the result of appeals to passion and prejudice.”  Minneapolis, St. Paul & Sault Ste. Marie Railway Co. v. Moquin, 283 U.S. 520, 521 (1931).

The second issue concerns the Supreme Court's language in Campbell (under Due Process) and holding Exxon Shipping (under federal maritime common law) that where there is a "substantial" compensatory award (and the almost $23 million supposedly compensatory awards to the three plaintiffs - which were 121, 132, and 751 times their actual damages - would certainly qualify as "substantial"), then the maximum permissible punitive award should not exceed compensatory damages.

Both of these questions are of great interest to us.  We've seen over and over again the other side trying, sometimes successfully, sometimes not, to whip the jury into a frenzy.  Unless a complete new trial is the sanction for that kind of thing - thus taking away tainted liability findings as well as $$$ - there's essentially no deterrent to such misconduct, since even a small portion of a gigantic verdict is a lot.

The one-to-one ratio issue has come up repeatedly ever since Campbell, but since the Campbell language was not a holding (and not a personal injury case), it's never been resolved.  The lower courts are all over the lot - the petition needs more than three pages (pp. 19-22) just to detail the extent of the divergent opinions.

We'll let you know what happens.  It's not easy to get the Supreme Court to accept an appeal, but we're really rooting for this one.

Thursday, March 24, 2011

To Us, That Doesn't Follow

We’re always open to flattery, and it’s flattering to us when somebody thinks that we provide the best legal research available (at least without a prescription).  Occasionally, we’ll Google our blog, otherwise known as “ego surfing,” to see what's out there.  We did that not too long ago and came up with a new law review article, Samuel Raymond, “Judicial Politics & Medical Device Preemption After Riegel,” 5 N.Y.U.J.L. & Lib. 745 (2010), which is on line here.

The first half of the article is where we thought we were being flattered. The author, a 2011 law graduate, got the bright idea of trying to analyze empirically a phenomenon that we’ve simply accepted – that we’ve referred to on more than one occasion as “strange things happen in tort preemption cases.”

Like the article, we include the Supreme Court in that statement.  And we also agree that one of the strangest of the strange things that happens in tort preemption cases is what the article charitably calls Court’s “intermittent” resort to a presumption against preemption.  5 N.Y.U.J.L. & Lib. at 750.  That presumption is one “doctrinal element which causes uncertainty and confusion in the lower courts and among academics.”  Id.  It confuses us, too, we might add - at least when we don't think of the presumption as something employed like a drunk uses a lamppost, for support rather than illumination.

Specifically, the article recognizes that the tort preemption defense, both because of the power of the defense and the increasing politicization of tort law, tends to draw highly ideological reactions from our purportedly “neutral” judiciary.  “Preemption has invited strongly ideological reactions, and has been characterized as a fundamentally political issue.”  5 N.Y.U.J.L. & Lib. at 752.

And how.

But unlike us, this article purports to light a candle rather than just railing at the judicial darkness (there's got to be a connection to that lamppost somewhere) to measure the extent of the politicization of preemption using several parameters:

The empirical question I seek to answer is whether these factors have influenced judges in defining whether a claim is parallel.  I look to certain variables, including the type of court deciding a case, whether the litigants live in the state where the judge sits, the political party of the judge or the person who appointed them, and factors which correlate with ideology like race and gender.
Id. at 747.  So the author's looking at whether it’s a state rather than a federal court, whether the court is favoring an in-state party (plaintiff or defendant), whether the judge was elected (or the person appointing an appointed judge) as a D or an R, and race or gender.

That seems OK to us.  Preemption is a matter of federal law overriding state law, so it’s logical to think that state judges may have a different perspective than federal ones.  All other things being equal (which, of course, they rarely are), we’d think a state court would be more protective of state law and a federal court more amenable to application of federal law.

“Home cooking” is another issue, although plaintiffs forum shop and defendants remove cases for strategic reasons, so “in-state” is subject to systemic manipulation.  Lot’s of out of state plaintiffs flock to favorable state court forums – particularly in Philadephia and New Jersey – that also happen to be the home states of pharmaceutical defendants.  This is sufficiently prevalent that our clients are starting to leave those states.  With all the tactical considerations that go into where a plaintiff files a suit, and where it ends up, we wouldn't put too much weight on the stats.  It's pretty clear, from both sides' behavior, which courts real lawyers think favor which side, and "home cooking" is only a minor factor.

Political party – that’s pretty obvious.  Most plaintiffs’ lawyers tend to support (and more importantly, give money to) Democrats, and most Chamber of Commerce types do the same for Republicans.  Most of our judicial races (except retentions) here in Pennsylvania are partisan elections, although cross-filing is allowed, so we’re well aware of the peculiar “iron triangle” of lawyer political contributions, judicial candidates, and political party endorsements that comes into play in such elections.  Not that appointive systems are that much better (in the sense of being less political), except that at least the appointing person (as opposed to the electorate) has some idea who the would-be judges are.  But, with plenty of exceptions for political log rolling, it is likely that Rs will appoint Rs and Ds, Ds.  To paraphrase the late Philly mayor Frank Rizzo, who are politicians supposed to give jobs to, their enemies?

Race and gender? We’re not sure how much that adds to things like political parties.  Both are the subjects of political skewing.  This may end up as a double count of the same thing.

So what about the flattery?

We’re getting there.  Before the article could conduct any sort of statistical analysis, the author had to find a universe of post-Riegel medical device preemption cases.  He decided to use the selection of cases provided by our post-Riegel preemption scorecard, which at the time had seventy-five decisions in it.

Between February 20, 2008, the date the Riegel case was decided, and July 15, 2010, American courts have ruled on 75 cases involving devices the FDA preapproved for the market under § 360k of the Medical Device Amendments.75

75 See Jim Beck & Mark Herrmann, (New) Medical Device Preemption Scorecard.
5 N.Y.U.J.L. & Lib. at 760.

That’s pretty cool, since this is one of the areas where we’ve striven to be comprehensive, rather than just favoring our pro-defense worldview.  To get cited as the key (indeed, only) authority for collecting these cases in a published law review article wasn’t something we expected when we began blogging, but hey, we’ll take it.  The author could have used any source.  He could even have done his own research.  Instead he decided to use us.  On this topic, anyway, somebody other than us thinks we’re the best around.

So what does the article discover?

There were 21 state cases decided by 47 judges.  81% of the state cases and 87% of the state judges (some were appellate cases decided by multi-judge panels) threw out the claims based on preemption.  That compares to 54 cases decided by federal judges or magistrates.  Most of those, at the time, were single-judge federal trial (district) courts.  44 of those found preemption, or about 81% of the federal judges and 75% of the cases. 5 N.Y.U.J.L. & Lib. at 760-61.

The article interprets these statistics as showing – counterintuitively – that “there is broad parity between state and federal courts on preemption.”  Id. at 764.  It ascribes this result to two factors:  (1) “[p]arity may exist because state courts almost always mimic federal courts” on preemption, and/or (2) “the exception created by the 'parallel’ requirements language of Riegel is so narrow that lower courts have very little discretion.  Id.

Having practiced in state and federal courts for decades, and having filed lots of preemption motions in both, we disagree.  We think the result is due to a skewed sample.  We're pretty sure about this because, after all, we compile the scorecard.  First of all, a lot more stuff slips under the radar screen in state court, especially on the trial court level (where very little ends up reported), than in federal courts, where Westlaw and Lexis get a much greater percentage of the total results using PACER (a nationwide electronic docketing system).

With state courts, we’re much more dependent upon what our readers send us.  Most of our readers are defense lawyers.  All lawyers are more inclined to publicize their wins than their losses.  So most of what we get in terms of state trial court decisions will favor preemption.

Also, to throw out a case on preemption almost always requires a judge to do some work and write an opinion.  A preemption motion can be denied in a one-line order that may or may not even mention preemption.  With state courts, we think there’s a relative overrepresentation of preemption wins in our chart, compared to federal courts, simply as a result of what we find out about.

That’s one reason the sample is skewed.

Another even more important skewing factor is procedural posture.  Of the first 75 cases on the list, there are three state supreme court decisions (Despain, Troutman, and Blunt).  Each of them found preemption unanimously, and in none of them were “parallel” claims asserted.  That’s because these cases were appealing pre-Riegel preemption orders in which “parallel” claims weren’t as important, because the existential preemption question was at that time undecided.  After Riegel, those plaintiffs were stuck with their pre-Riegel records not asserting “parallel” claims, and thus they got mowed down like sitting ducks.  That’s at least 21 different state-court justices right there.  On these small sample sizes that’s more than enough to wipe out an overall anti-preemption bias in state court.

We think a more accurate reading of the attitudes of state versus federal courts towards preemption would be on an open question, rather than the one substantially closed by Riegel.  In that respect we offer the split on preemption as applicable to investigational devices that existed after Lohr and before RiegelLohr had nothing to do with investigational devices, which are the pre-approval incarnation of the PMA devices in Riegel.  What happened?  Well every federal court found preemption, and every state court did not. Compare Chambers v. Osteonics Corp., 109 F.3d 1243, 1248 (7th Cir. 1997); Martin v. Telectronics, 105 F.3d 1090 (6th Cir. 1997); Blinn v. Smith & Nephew Richards, Inc., 55 F. Supp.2d 1353 (M.D. Fla. 1999; Touchet v. Ace Medical Co., 1998 WL 531887 (E.D. La. Aug. 24, 1998); Chmielewski v. Stryker Sales Corp., 966 F. Supp. 839 (D. Minn. 1997); Berish v. Richards Medical Co., 937 F. Supp. 181 (N.D.N.Y. 1996) (all finding preemption), with, Baird v. American Medical Optics, 713 A.2d 1019 (N.J. 1998); Niehoff v. Surgidev, 950 S.W.2d 816, 821 (Ky. 1997); Connelly v. Iolab Corp., 927 S.W.2d 848 (Mo. 1996); Armstrong v. Optical Radiation Corp., 57 Cal. Rptr.2d 763 (Cal. App. 1996) (all finding no preemption).

As far as party, there was a distinct split, as “Democratic” judges let plaintiffs skate past preemption, even after Riegel, 30% of the time, while “Republican judges did so only 13.5% of the time.  5 N.Y.U.J.L. & Lib. at 762.  We don’t doubt that this is an accurate finding.

In-state residents escaped preemption 28% of the time, while out-of-state plaintiffs escaped preemption 15% of the time.  Turn that around and look at defendants, and the article indicates that in-state defendants lost preemption motions 21% of the time, and out of state defendants lost their motions 24% of the time.  So there was “home cooking” on both sides, but more pronounced with in-state plaintiffs, whose success rate was almost twice as high.  Id. at 762-63.  There are further breakdowns by federal and state courts, but some of the sample sizes are so small, that we don’t think the conclusions are meaningful.

As for race/gender, women and minorities were actually more pro-preemption in the sample.  The white men refused to find preemption almost 22% of the time, while the women/minorities did so only 14% of the time.  Id. at 763.  The article notes a small sample size, and we agree.  The difference is not enough to be significant.

The article should have stopped there, instead it goes on to lambaste a preemption proposal made by one of our founding fathers, Mark Herrmann (as well as Dave Alden, who’s still at Jones Day), in a law article, “The Meaning Of The Parallel Requirements Exception Under Lohr And Riegel,” 65 N.Y.U. Ann. Survey of Am. L. 545 (2010). We discussed Mark’s article, here.

The author of the article obviously thinks he has a great career ahead of him as a plaintiff’s lawyer, and maybe he does, but we have to take issue with his criticism of Mark’s article as “nontextual and controversial” and contrary to Supreme Court “dicta.”  5 N.Y.U.J.L. & Lib. at 774.

That’s hooey.

The argument that express and implied preemption work in tandem to limit “parallel” claims is firmly supported by controlling Supreme Court precedent.  The first Supreme Court case to discuss “parallel” claims was Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996).  Lohr was a pre-TwIqbal case decided on the pleadings – not a procedural posture we would have recommended at the time.  Because the only thing in the record was the complaint, Lohr involved only extremely vague allegations of supposed FDCA violations, and the Court knew it.  “[T]he precise contours of their theory of recovery have not yet been defined” but “it is clear that the [plaintiffs’] allegations may include claims that [defendant] has, to the extent that they exist, violated FDA regulations.”  518 U.S. at 495.

Lohr addressed only that issue.  Declaring that “[n]othing 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,” it found those claims unpreempted.  Id.  The mere addition of a damages remedy did not render such duplicative state-law claims “different from” federal requirements.  Id.  Lohr didn’t consider anything other than express preemption under the Medical Device Amendments (where §360k came from).

Implied preemption was addressed in Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), where the Court looked into whether there was something in the FDCA – other than the §360k(a) preemption clause – that preempted the fraud on the FDA claims the plaintiffs claimed fell within Lohr’s “parallel” violation rationale.  Those fraud on the FDA claims undoubtedly came within the scope of Lohr’s “parallel claims.

That didn’t get them past preemption.  The Court unanimously held that not every “violation of the FDCA will support a state-law claim.”  Id. at 353. The unpreempted violation claims in Lohr “arose from the manufacturer’s alleged failure to use reasonable care in the production of the product, not solely from the violation of FDCA requirements.”  Id.  In other words, there was some pre-existing state-law liability theory for the claim in Lohr to be “parallel” to.

Not so in Buckman. Violation claims that “exist solely by virtue of the FDCA disclosure requirements,” id., were impliedly preempted for a different reason – because the FDCA “leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance with the medical device provisions.”  Id. at 349 n.4 (citing 21 U.S.C. §337(a)).  Absent any independent state-law basis, private FDA fraud claims conflicted with and were preempted by the FDCA’s exclusive grant of federal prosecutorial authority.  Id. at 353-54.

Thus Herrmann’s article was fully supported by binding Supreme Court precedent when it observed that implied preemption operates to knock out those “parallel” claims that, in fact aren’t “parallel” to anything in state law.  Those claims are simply improper attempts to enforce a claimed FDCA violation through private litigation – which Congress prohibited in §337(a) – applicable to both drugs and devices, but unfortunately not to food.

But there are indeed violation claims, like manufacturing defect claims, that are, in fact “parallel” to well-established state common law claims.  We know that.  That brings us to our third Supreme Court case, Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005), a non-FDCA case involving violation claims under a different statute (involving pesticides/herbicides). So what must a court do with an otherwise unpreempted “parallel” violation claim?  Bates tells us. Courts have to make sure that such claims actually are “parallel” to relevant federal requirements, and not some lawyer twisting a malleable regulation is some way the relevant agency would never dream of doing.  Id. at 454.  To “survive preemption” the state law claim, while it “need not be phrased in the identical language,” must be “genuinely equivalent.”  Id.  “[A] manufacturer should not be held liable under a state [parallel] requirement . . . unless the manufacturer is also liable” under federal law “as defined by [the agency].”  Id.

And what’s the best way to make sure that something’s genuinely equivalent? That would be for the FDA to have already decided the issue. Two justices concurred on precisely that ground in Buckman:

This would be a different case if, prior to the instant litigation, the FDA had determined that petitioner had [done what the plaintiffs claimed it did] and had then taken the necessary steps to remove the harm-causing product from the market.  Under those circumstances, respondent’s state-law fraud claim would not depend upon speculation as to the FDA's behavior in a counterfactual situation but would be grounded in the agency’s explicit actions. In such a case, a plaintiff would be able to establish causation without second-guessing the FDA’s decisionmaking or overburdening its personnel, thereby alleviating the Government's central concerns regarding fraud-on-the-agency claims.
Buckman, 531 U.S. 354 (Stevens & Thomas concurring) (emphasis added).

That’s what Herrmann’s article has behind it – the holdings of the only three Supreme Court cases that have actually considered “parallel” violation claims.  The admitted “dicta” that the article wants to apply instead is from Riegel, where the Court “decline[d] to address” such claims “in the first instance” because they had been waived. 552 U.S. at 330.

To sum up our reaction to the second half of the article, it’s pretty clear that the author doesn’t want to work for our side after graduation.  One doesn’t go disparaging the only relevant Supreme Court precedent (as opposed to dictum) as “nontextual” unless one labors on the other side of the “v.”.  There’s lots of Supreme Court precedent we don’t like – see Wyeth v. Levine, 129 S. Ct. 1187 (2009), as Exhibit A – but we don’t disregard it in favor of dictum.

That’s why we don’t deny Herrmann’s argument is “controversial.”  So is ours, which is essentially the same as Herrmann’s.  Everything about preemption is controversial.

It’s also appropriate to note that, in attacking Herrmann, the article’s very first argument is the least valid of the propositions it sought to draw from its statistical survey of post-Riegel preemption cases – that there’s no difference, in terms of attitudes towards preemption, between state and federal courts. The article states:

First, the data in this article suggests that state courts are generally trustworthy in carefully applying preemption, and dismiss claims at similar rates as federal courts. That consistency rebuts the concern that state courts will create disparity and uncertainty throughout the United States. It also demonstrates that state courts take preemption quite seriously, and will not simply disregard Supreme Court precedent to protect local interest groups. That undermines the assertion that further federal preemption is needed to successfully constrain state courts.
5 N.Y.U.J.L. & Lib. at 774. That’s a great deal of weight to put on such a badly skewed data set. With apologies to Lloyd Bentsen, we know that data set – that data set was a friend of ours – heck, we created that data set.  We know that, as to state courts, it’s doubly biased by both selection criteria and the procedural posture of the state court decisions that we were able to lay our hands on.

But then again, there are lies, damn lies, and statistics.  It may well have been that the entire purpose of the statistical analysis (and thus the first half of the article) was to create bogus data to support a bogus legal conclusion, in order to attack Herrmann’s (and our) preemption position with respect to “parallel” claims.  That’s certainly how the statistical analysis was used.

We do believe that the author will be right at home working for the other side – he already understands their expert witnesses.