Most defense lawyers, if given the choice, would probably pick North Carolina and Montana over New Jersey and Rhode Island as places to try cases. But as we mentioned yesterday, the bisphosphonate litigation continues chugging along in its merry, contrarian way.
In the federal litigation that’s being thrown off by the Aredia/Zometa MDL, the score is now tied (after yesterday’s Hogan verdict in Rhode Island), 1-1. We’re told that Hogan was a defense pick.
Good pick.
In what we’re told was a case chosen by the other side, a North Carolina jury last year in Fussman brought back a $287,000 compensatory verdict together with an evanescent $12.6 million punitive award, according to Lexis. Actually, the compensatory verdict was $287,001, including a munificent $1 for loss(?) of consortium. Sounds like it wasn't much of a loss.
Not so good a pick.
Why? Because in Fussman the plaintiffs chose a case under North Carolina law. Thus, they ran afoul of that state’s punitive damages caps. Poof! T here went nearly $12 million of the $12.6 million punitive award. Since it was an early case, we presume it’s being appealed, too.
State court bisphosphonate trials are likewise knotted up at 1-1. The defense scored a win – in a case also (we’re told) picked by the plaintiffs – in the usually pro-plaintiff New Jersey state courts. In Bessemer, a jury in mostly blue collar Middlesex County found 7-2, that the defendant’s warnings about the relevant risks were perfectly adequate, according to contemporaneous sources. There's an appeal there, too, we're told.
An even worse pick.
Finally, today the United States Supreme Court denied certiorari in the fourth bisphosphonate case, Stevens. In Montana of all places, plaintiff picked up $3 million plus in a case that, by all rights, was barred by the statute of limitations (the plaintiff sued some four years after a diagnosed injury). However, in a decision that would have merited a place in last year’s bottom ten if not decided on practically the last day of the year (after our post), the Montana Supreme Court in Stevens v. Novartis Pharmaceuticals Corp., 247 P.3d 244 (Mont. 2010), recognized the dubious doctrine of cross-jurisdictional class action tolling in order to save that plaintiff from the consequences of sleeping on her rights. Cf. In re Aredia & Zometa Products Liability Litigation, 754 F. Supp.2d 939 (M.D. Tenn. 2010) (bisphosphonate MDL refusing to recognize same doctrine less than a month earlier).
So with that little legal assist, the plaintiffs and the defendants round the first turn in bisphosphonate neck and neck, but with each side winning in, relatively speaking, unlikely jurisdictions. Who knows? Maybe going forward the plaintiffs will buck the Michigan product liability statute while the defense will prevail in Central LA. Better yet, maybe the defense will win all of this year’s cases.
Tuesday, May 31, 2011
Monday, May 30, 2011
Defense Verdict in Hogan
We have recently highlighted a few decisions coming out of Hogan v. Novartis Pharmaceuticals Corp., No. 06-Civ-260 (BMC) (EDNY), and we’ve got some good news to report. After a week and a half long liability-only trial in the EDNY Brooklyn division, a six-member jury returned a defense verdict after about five hours of deliberation on Wednesday. Plaintiff Karlene Hogan alleged that her late husband developed ONJ after using the Novartis drug Zometa® to treat his widespread and aggressive multiple myeloma.
As we reported previously, the defense was able to exclude testimony from ubiquitous plaintiff expert and – as the Court put it – “superlawyer” Dr. Suzanne Parisian before trial. The Court also shut down plaintiff’s efforts to get in irrelevant and prejudicial “corporate conduct” evidence from other experts and through corporate documents. We didn't necessarily agree with the Court that the FDA was a "sideshow" in a prescription drug product liability case, but at least the Court excluded the plaintiff's effort to introduce what truly would have been a "sideshow."
Among her witnesses at trial, plaintiff called oral surgery expert Dr. Robert Marx, who claims to have discovered ONJ and has testified in several cases in the bisphosphonate litigation. Dr. Marx testified that a pathologist who analyzed samples from Mr. Hogan’s jaw incorrectly concluded that the specimen showed cancer. The defense case was headlined by a local oncology expert and their national expert on bisphosphonates and bone. The jury answered “no” to the first question on the verdict form: “Did plaintiff prove by a preponderance of the evidence that the Zometa® used by Mr. Hogan medically caused his jaw condition?” That is what we in the business call a resounding defense win.
The Court made some noteworthy rulings on the elements of plaintiff's causes of action along the way. For example, when the Court denied defendant’s motion for judgment as a matter of law (while making clear that it would revisit defendant’s argument should the jury return a plaintiff verdict), it made two important, good rulings. First, the Court concluded that Rhode Island would apply the learned intermediary doctrine and held that Novartis had no duty to warn Mr. Hogan directly. Here is what the Court said:
Second, the Court refused to instruct the jury on the heeding presumption. Rather, the Court reasoned that the heeding presumption was something a court takes into account in deciding whether to allow a claim to proceed to the jury.
We offer congratulations to the Novartis trial lawyers, Bruce Berger and Robert Johnston of Hollingsworth LLP and Jesse Graham of Rivkin Radler, and thank them for sending us the transcripts.
* * * * * *
Once again, we pause on this Memorial Day to salute those who made the ultimate sacrifice. Over the last year we have visited Normandy. We have attended a ceremony at Arlington for a departed colleague. Today in particular those and other memories overwhelm us with sadness and gratitude.
As we reported previously, the defense was able to exclude testimony from ubiquitous plaintiff expert and – as the Court put it – “superlawyer” Dr. Suzanne Parisian before trial. The Court also shut down plaintiff’s efforts to get in irrelevant and prejudicial “corporate conduct” evidence from other experts and through corporate documents. We didn't necessarily agree with the Court that the FDA was a "sideshow" in a prescription drug product liability case, but at least the Court excluded the plaintiff's effort to introduce what truly would have been a "sideshow."
Among her witnesses at trial, plaintiff called oral surgery expert Dr. Robert Marx, who claims to have discovered ONJ and has testified in several cases in the bisphosphonate litigation. Dr. Marx testified that a pathologist who analyzed samples from Mr. Hogan’s jaw incorrectly concluded that the specimen showed cancer. The defense case was headlined by a local oncology expert and their national expert on bisphosphonates and bone. The jury answered “no” to the first question on the verdict form: “Did plaintiff prove by a preponderance of the evidence that the Zometa® used by Mr. Hogan medically caused his jaw condition?” That is what we in the business call a resounding defense win.
The Court made some noteworthy rulings on the elements of plaintiff's causes of action along the way. For example, when the Court denied defendant’s motion for judgment as a matter of law (while making clear that it would revisit defendant’s argument should the jury return a plaintiff verdict), it made two important, good rulings. First, the Court concluded that Rhode Island would apply the learned intermediary doctrine and held that Novartis had no duty to warn Mr. Hogan directly. Here is what the Court said:
I see nothing in Rhode Island case law, including the Castrugnano case, to suggest that Rhode Island would require direct patient warning in pharmaceutical drug cases. Just because 4024 A of the second restatement says nothing about the learned intermediary doctrine doesn't bother me. There are a lot of states that adopted both.That is a significant ruling because, as far as we know, no other court has addressed whether Rhode Island would adopt the learned intermediary doctrine.
If Rhode Island doesn't accept the doctrine in the way that most courts have, then it's likely it's going to look to the third restatement, which requires direct warnings when the manufacturer has reason to know that the health care provider will not be in a position to reduce the risk to the patient. Unlike the mass inoculation vaccine scenario that the restatement mention in one of its comments, Zometa is a very serious therapy that is commenced after consultation with doctors.
Plaintiff has admitted in the joint pretrial order that Zometa is admitted [sic, probably should be "administered"] at infusion centers and the patient sees the package or gets any written information about it. Plaintiff doesn't despite Zometa's successful bone manufacturer, even if it can lead to ONJ. As intended there Zometa is a type of drug learned intermediary doctrine encourages a doctor-patient dialogue. Zometa does not fall within the exception of the restatement and I, therefore, find a direct warning to Mr. Hogan was not required.
Second, the Court refused to instruct the jury on the heeding presumption. Rather, the Court reasoned that the heeding presumption was something a court takes into account in deciding whether to allow a claim to proceed to the jury.
We offer congratulations to the Novartis trial lawyers, Bruce Berger and Robert Johnston of Hollingsworth LLP and Jesse Graham of Rivkin Radler, and thank them for sending us the transcripts.
* * * * * *
Once again, we pause on this Memorial Day to salute those who made the ultimate sacrifice. Over the last year we have visited Normandy. We have attended a ceremony at Arlington for a departed colleague. Today in particular those and other memories overwhelm us with sadness and gratitude.
Friday, May 27, 2011
Federalism And Tort Reform
On Wednesday, we discussed the relevant parts of pending tort reform legislation. Earlier in the month we updated our favorite federalist point, which is that federal courts should not issue expansive interpretations of state tort law when sitting in diversity jurisdiction.
OK, what do those two things have to do with one another.
Well, one of our fellow travelers on tort matters, Walter Olsen, has a thoughtful piece over at Cato on whether federalist principles limit the ability of congress to impose top-down tort reform on the states - although we hasten to point out that even a quasi-libertarian like him sees a role for federal tort reform in products liability and class actions. Here's his point:
Walter doesn't say anything in particular about the punitive damages legislation we commented on, we think he'd find them to be OK, since they're tied to FDA regulation, and we think he's agree that federal regulation of the drugs and medical devices (at least those in interstate commerce) is constitutional.
But what does he think about malpractice reform? Go read his post for all the details, but basically he thinks the better way to go would be to require anybody who's care is being subsidized by the federal government have to agree to whatever limitations on suit that Congress might think is appropriate.
Interesting idea ... and an interesting question.
OK, what do those two things have to do with one another.
Well, one of our fellow travelers on tort matters, Walter Olsen, has a thoughtful piece over at Cato on whether federalist principles limit the ability of congress to impose top-down tort reform on the states - although we hasten to point out that even a quasi-libertarian like him sees a role for federal tort reform in products liability and class actions. Here's his point:
[T]he Constitution contemplates federal supervision of state courts when they reach out to assert power over transactions and litigants outside their own boundaries. It has far less to say about intruding upon the authority of those courts over disputes that arose between their own residents and are unmistakably under their own law. . . . Where does this leave federal-level liability reform? It suggests a very real difference between areas like product liability and nationwide class actions—in which suits ordinarily cross state lines, and the majority of runaway verdicts are against out-of-state defendants—and more conventional kinds of tort litigation arising from car crashes, slip-and-falls, and medical misadventure, where cases are mostly filed against locally present defendants. As a rough rule of thumb, it’s worth presuming that most of the local suits do not externalize heavy costs across state lines and should accordingly be left alone by Congress unless it is itself vindicating some constitutional right or coordinating the functioning of some constitutionally authorized federal government activity.
Walter doesn't say anything in particular about the punitive damages legislation we commented on, we think he'd find them to be OK, since they're tied to FDA regulation, and we think he's agree that federal regulation of the drugs and medical devices (at least those in interstate commerce) is constitutional.
But what does he think about malpractice reform? Go read his post for all the details, but basically he thinks the better way to go would be to require anybody who's care is being subsidized by the federal government have to agree to whatever limitations on suit that Congress might think is appropriate.
Interesting idea ... and an interesting question.
Thursday, May 26, 2011
What’s Up With Removal Before Service?
It was one of our biggest issues in the blog’s first couple of years – whether a defendant’s removal of a case before service on: ( 1) the forum defendant where an out-of-state defendant is sued in its own state’s court, or (2) anybody (including the removing defendant), would result in the unserved forum defendant not counting for removal/remand purposes. Application of plain statutory language meant that, in products cases where defendants had the bad fortune of residing in a jurisdiction considered pro-plaintiff, out-of-state plaintiffs could not keep sharp-eyed defendants from defeating the forum defendant rule by removing as soon as they learned of an action.
We played a role in popularizing the tactic, blogging about it here, here, here, here, here, here, here, here, here, here, and here. Trying to organize our multiple posts, we put up a comprehensive post that tried to round up every removal-before-service decision we could find (at least the ones taking the position we liked) back in October, 2009.
But since then – over a year and a half – we’ve said nothing about removal before service. It’s not like we haven’t covered other removal issues…. Heck we discussed two removal issues just this past week, but we hadn’t gone back to the well of pre-service removal.
Well, a reader recently emailed us and asked why.
We didn’t have a good reason, except maybe indolence (or Herrmann retiring). So we thought we’d take a stroll down Memory Lane and see what, if anything, has happened on that front since our last big post back in late 2009.
What we’ve found is that the dispute still simmers. Our side says, follow the “plain language” of 28 U.S.C. §1441(b), which states that only defendants “properly joined and served” at the time of removal count as forum defendants. The other side urges that the statutory language should be ignored in favor or either some version of “intent” or the assertion that removal before service is some sort of high-tech game that the courts don’t have to put up with because it produces an “absurd” result.
There’s law going both ways – the dispute itself certainly hasn’t gone away. In fact, the most recent case we’ve seen, Hawkins v. Cottrell, Inc., ___ F. Supp.2d ___, 2011 WL 1898867 (N.D. Ga. May 19, 2011), observed that “the federal district courts have been inundated with a flood of cases addressing this issue.” Id. at *3. We'd like to think we contributed to that in some small way.
Hawkins, however, came up with a weird (or at least novel) reading of §1441(b) – that somebody had to be properly served before removal, or else the “none of the defendants properly joined and served” language” (the court thought) made sense. Id. at *6. It didn't seem to matter that scores, if not hundreds, of other cases had found before service to be proper (or if improper, not on this ground). Rather, the court held that its “reading of the statute necessarily restricts removal to cases where at least one defendant has been served.” Id. at *5.
The Hawkins court reached its admittedly novel result by splitting hairs. It relied on a state law (in Georgia) that an action can be “commenced” but not yet “pending” for purposes of removal. Id. at *7. How that would apply to states like Pennsylvania (where plaintiffs can start litigation with a bare summons without filing a complaint), or New York (where there’s a 10-day grace period after service before an action is considered filed) is unclear. Actually, though, Hawkins was just the absurd results rationale masquerading as straight statutory interpretation, since it relies upon the same old “Congress couldn’t have foreseen the technology” argument to reach its result, just moved to another part in the argument:
But yes, Hawkins definitely demonstrates that the controversy remains. Our Westlaw search – “1441(b)” within the same paragraph as “properly joined” limited to cases after our last comprehensive post – found a bunch of other cases.
We don’t do plaintiffs’ research for them, so they’ll have to find the relatively few “purpose”/”absurdity” cases for themselves, but we’re happy to provide a list of the recent cases (since our last compilation) holding that removal before the forum defendant is served is proper and creates diversity jurisdiction. Here they are:
California: Allen v. Eli Lilly & Co., 2010 WL 3489366, at *2 (S.D. Cal. Sept. 2, 2010) (“clear language” of statute allows removal before service of forum defendants); Carreon v. Alza Corp., 2010 WL 539392, at *2 (N.D. Cal. Feb. 9, 2010) (following plain meaning, finding nothing absurd about the result); Timmons v. Linvatec Corp., 2010 WL 2402918, at *1 (C.D. Cal. Jan. 24, 2010) (removal before service allowed forum defendant to be ignored), reconsideration denied, 2010 WL 2402924, at *1 (C.D. Cal. March 9, 2010) (“the plain language of the statute states that it only applies when the local defendants have been ‘properly joined and served’”); Haseko Homes, Inc. v. Underwriters Insurance Co., 2010 WL 358531, at *2 (S.D. Cal. Jan. 22, 2010) (removal proper where forum defendant not served; defendant may remove before being served).
Georgia: Gibson v. Wal-Mart Stores East, LP, 2010 WL 419393, at *2-4 (M.D. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored; distinguishing cases where diversity is lacking).
Hawai’i: Watanabe v. Lankford, 684 F. Supp.2d 1210, 1218-19 (D. Haw. 2010) (following plain meaning, finding nothing absurd about the result).
Illinois: In re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Relevant Products Liability Litigation, 2010 WL 3937414, at *11 (S.D. Ill. Oct. 4, 2010) (“[T]his action was removed before the forum defendant was served. This fact, standing alone, is a sufficient ground for denying Plaintiff's motion to remand.”).
Louisiana: Billiot v. Canal Indemnity Co., 2010 WL 4975622, at *2 (W.D. La. Nov. 8, 2010) (removal before service allowed forum defendant to be ignored); Stewart v. Auguillard Construction Co., 2009 WL 5175217, at *3-4 (E.D. La. Dec. 18, 2009) (following plain meaning, finding nothing absurd about the result; forum defendant rule not resurrected by post-removal service).
Maryland: Robertson v. Iuliano, 2011 WL 476520, at *3 (D. Md. Feb. 4, 2011) (following plain meaning, finding nothing absurd about the result).
Missouri: Terry v. J.D. Streett & Co., 2010 WL 3829201, at *2 (E.D. Mo. Sept. 23, 2010) (following plain meaning, finding nothing absurd about the result); Wallace v. Tindall, 2009 WL 4432030, at *3-4 (W.D. Mo. Nov. 30, 2009) (improper service allowed forum defendant to be ignored).
Nevada: Lamy v. United Parcel Service, Inc., 2010 WL 1257931, at *2 (D. Nev. March 27, 2010) (removal before service allowed forum defendant to be ignored).
New Jersey: Bivins v. Novartis Pharmaceuticals Corp., 2010 WL 1463035, at *1 (D.N.J. April 12, 2010) (forum defendant rule not resurrected by post-removal service).
North Carolina: Chace v. Bryant, 2010 WL 4496800, at *2 (E.D.N.C. Nov. 1, 2010) (removal before service allowed forum defendant to be ignored).
Texas: Evans v. Rare Coin Wholesalers, Inc., 2010 WL 595653, at *2 (E.D. Tex. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored).
West Virginia: Leonard v. Mylan, Inc., 718 F. Supp.2d 741, 743 n.2 (S.D. W.Va. 2010) (recognizing removal before service as proper; plaintiffs did not seek remand)
A few observations. First, in some of these cases the removing defendant was actually served first, and took advantage of the plaintiff’s delay in serving the would-be forum defendant. In others the removing defendants learned about the litigation, in one way or another, before anyone had been served. We don’t think the distinction matters because the statute doesn’t distinguish between the two situations. Obviously, the Hawkins court (but not much else) does.
Second, we note with some satisfaction that more than half of the cases we’re seeing on removal before service don’t involve drugs and devices. We’re glad to see other defendants jumping on the bandwagon. When everybody relies upon removal before service, it gets harder for the other side to characterize it as some sort of procedural gimmick that shouldn’t be allowed.
Third, we also came across a useful law review article on the subject, M. Curry, “Plaintiff's Motion To Remand Denied: Arguing For Pre-Service Removal Under The Plain Language Of The Forum-Defendant Rule,” 58 Clev. St. L. Rev. 907 (2010), which marshals the arguments in favor of pre-service removal, and critiques the arguments against.
We also found a decision that demonstrates how removal before service can have collateral benefits, although a screw-up by the other side is necessary. In In re Trasylol Products Liability Litigation, 2011 WL 830287 (S.D. Fla. March 8, 2011), the defendant successfully removed some cases before service, and (we assume) won the removal before service argument as remand was denied. After that, the plaintiffs apparently fell asleep at the switch. After losing the remand motion, they never bothered to complete service against anybody. After time passed (enough for the statute of limitations to run), the defendant pounced on this error, and moved to dismiss – again successfully. Removal before service didn’t in any way prevent these plaintiffs from doing what any competent plaintiff should do, and complete service after removal:
Thus, in courts that follow the plain meaning of §1441(b) in removal before service cases, smart defendants should be making sure that the plaintiffs in fact do complete service. Plaintiffs have 120 days to do this under Rule 4(m). After that, it’s open season for dismissal. However, even smarter defendants, as in Trasylol, make sure to wait until after the statute of limitations has run.
But we have to say that plaintiffs aren’t the only ones who do dumb things. Removal before service can only be used to obtain jurisdiction in a truly diverse case – one that could have been brought in federal court in the first instance. Hair-trigger removal only provides a way around the forum defendant rule (that even diverse cases aren’t removable where the defendant is sued in its home court), but not around a fundamental lack of diversity. Removal before service of a non-diverse case (where the plaintiff and at least one of the defendants are citizens of the same state) can’t create federal jurisdiction. E.g., Jennings-Frye v. NYK Logistics Americas Inc., 2011 WL 642653, at *3-4 (C.D. Cal. Feb. 11, 2011) (“case law is clear that a defendant who is a citizen of plaintiff’s state destroys complete diversity, regardless of whether that defendant was properly served prior to removal”); Smith v. Federal Express Corp., 2010 WL 3634347, at *3 (E.D. Mich. Sept. 14, 2010) (“including the unserved defendant, destroys diversity and eliminates this Court’s jurisdiction”); O’Brien v. Cessna Aircraft Co., 2010 WL 4721189, at *15 (D. Neb. July 21, 2010) (“Diversity of citizenship among the parties is determined . . . regardless of whether each party has been served at the time of removal”).
This is pretty basic 1-L civil procedure, so we don’t recommend removing a non-diverse case just because the plaintiff hasn’t gotten around to serving the non-diverse defendant. For one thing, it could lead to fee-shifting sanctions, and telling a client it has to pay the other side’s lawyers is also something unpleasant. But more fundamentally, even if the plaintiff is asleep at the switch, it’s not a good idea to remove a non-diverse case. There’s no subject matter jurisdiction, and subject matter jurisdiction can be challenged at any time. That means that a defendant removing a non-diverse case for lack of service on a non-diverse defendant could end up spending a lot of time and effort litigating a case to a favorable result, and have everything taken away when the plaintiff finally wakes up (or a court sua sponte raises subject matter jurisdiction).
Overall, we’d have to say based on our review, that removal before service is alive and well, and that the good guys – the “plain meaning” argument – seem to have the upper hand at the moment. The dispute is likely to continue for some time, because remand orders are not appealable, and removal by definition takes place at the outset of the case. Even if somebody were inclined to challenge a successful removal on appeal long after the fact, that’s still in the future.
We played a role in popularizing the tactic, blogging about it here, here, here, here, here, here, here, here, here, here, and here. Trying to organize our multiple posts, we put up a comprehensive post that tried to round up every removal-before-service decision we could find (at least the ones taking the position we liked) back in October, 2009.
But since then – over a year and a half – we’ve said nothing about removal before service. It’s not like we haven’t covered other removal issues…. Heck we discussed two removal issues just this past week, but we hadn’t gone back to the well of pre-service removal.
Well, a reader recently emailed us and asked why.
We didn’t have a good reason, except maybe indolence (or Herrmann retiring). So we thought we’d take a stroll down Memory Lane and see what, if anything, has happened on that front since our last big post back in late 2009.
What we’ve found is that the dispute still simmers. Our side says, follow the “plain language” of 28 U.S.C. §1441(b), which states that only defendants “properly joined and served” at the time of removal count as forum defendants. The other side urges that the statutory language should be ignored in favor or either some version of “intent” or the assertion that removal before service is some sort of high-tech game that the courts don’t have to put up with because it produces an “absurd” result.
There’s law going both ways – the dispute itself certainly hasn’t gone away. In fact, the most recent case we’ve seen, Hawkins v. Cottrell, Inc., ___ F. Supp.2d ___, 2011 WL 1898867 (N.D. Ga. May 19, 2011), observed that “the federal district courts have been inundated with a flood of cases addressing this issue.” Id. at *3. We'd like to think we contributed to that in some small way.
Hawkins, however, came up with a weird (or at least novel) reading of §1441(b) – that somebody had to be properly served before removal, or else the “none of the defendants properly joined and served” language” (the court thought) made sense. Id. at *6. It didn't seem to matter that scores, if not hundreds, of other cases had found before service to be proper (or if improper, not on this ground). Rather, the court held that its “reading of the statute necessarily restricts removal to cases where at least one defendant has been served.” Id. at *5.
The Hawkins court reached its admittedly novel result by splitting hairs. It relied on a state law (in Georgia) that an action can be “commenced” but not yet “pending” for purposes of removal. Id. at *7. How that would apply to states like Pennsylvania (where plaintiffs can start litigation with a bare summons without filing a complaint), or New York (where there’s a 10-day grace period after service before an action is considered filed) is unclear. Actually, though, Hawkins was just the absurd results rationale masquerading as straight statutory interpretation, since it relies upon the same old “Congress couldn’t have foreseen the technology” argument to reach its result, just moved to another part in the argument:
[T]he Court implicitly assumed that service of process would always occur prior to removal. The only reason removal is even possible prior to service is due to the advent of electronic case filing and waiver of service rules that could not have been foreseen when the current removal statute was enacted.Id. at *6 (discussing and attempting to analogize to Murphy Brothers, Inc., v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999)). Basically the Hawkins court was dead set against reading §1441(b) as written and determined to remand no matter what.
But yes, Hawkins definitely demonstrates that the controversy remains. Our Westlaw search – “1441(b)” within the same paragraph as “properly joined” limited to cases after our last comprehensive post – found a bunch of other cases.
We don’t do plaintiffs’ research for them, so they’ll have to find the relatively few “purpose”/”absurdity” cases for themselves, but we’re happy to provide a list of the recent cases (since our last compilation) holding that removal before the forum defendant is served is proper and creates diversity jurisdiction. Here they are:
California: Allen v. Eli Lilly & Co., 2010 WL 3489366, at *2 (S.D. Cal. Sept. 2, 2010) (“clear language” of statute allows removal before service of forum defendants); Carreon v. Alza Corp., 2010 WL 539392, at *2 (N.D. Cal. Feb. 9, 2010) (following plain meaning, finding nothing absurd about the result); Timmons v. Linvatec Corp., 2010 WL 2402918, at *1 (C.D. Cal. Jan. 24, 2010) (removal before service allowed forum defendant to be ignored), reconsideration denied, 2010 WL 2402924, at *1 (C.D. Cal. March 9, 2010) (“the plain language of the statute states that it only applies when the local defendants have been ‘properly joined and served’”); Haseko Homes, Inc. v. Underwriters Insurance Co., 2010 WL 358531, at *2 (S.D. Cal. Jan. 22, 2010) (removal proper where forum defendant not served; defendant may remove before being served).
Georgia: Gibson v. Wal-Mart Stores East, LP, 2010 WL 419393, at *2-4 (M.D. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored; distinguishing cases where diversity is lacking).
Hawai’i: Watanabe v. Lankford, 684 F. Supp.2d 1210, 1218-19 (D. Haw. 2010) (following plain meaning, finding nothing absurd about the result).
Illinois: In re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Relevant Products Liability Litigation, 2010 WL 3937414, at *11 (S.D. Ill. Oct. 4, 2010) (“[T]his action was removed before the forum defendant was served. This fact, standing alone, is a sufficient ground for denying Plaintiff's motion to remand.”).
Louisiana: Billiot v. Canal Indemnity Co., 2010 WL 4975622, at *2 (W.D. La. Nov. 8, 2010) (removal before service allowed forum defendant to be ignored); Stewart v. Auguillard Construction Co., 2009 WL 5175217, at *3-4 (E.D. La. Dec. 18, 2009) (following plain meaning, finding nothing absurd about the result; forum defendant rule not resurrected by post-removal service).
Maryland: Robertson v. Iuliano, 2011 WL 476520, at *3 (D. Md. Feb. 4, 2011) (following plain meaning, finding nothing absurd about the result).
Missouri: Terry v. J.D. Streett & Co., 2010 WL 3829201, at *2 (E.D. Mo. Sept. 23, 2010) (following plain meaning, finding nothing absurd about the result); Wallace v. Tindall, 2009 WL 4432030, at *3-4 (W.D. Mo. Nov. 30, 2009) (improper service allowed forum defendant to be ignored).
Nevada: Lamy v. United Parcel Service, Inc., 2010 WL 1257931, at *2 (D. Nev. March 27, 2010) (removal before service allowed forum defendant to be ignored).
New Jersey: Bivins v. Novartis Pharmaceuticals Corp., 2010 WL 1463035, at *1 (D.N.J. April 12, 2010) (forum defendant rule not resurrected by post-removal service).
North Carolina: Chace v. Bryant, 2010 WL 4496800, at *2 (E.D.N.C. Nov. 1, 2010) (removal before service allowed forum defendant to be ignored).
Texas: Evans v. Rare Coin Wholesalers, Inc., 2010 WL 595653, at *2 (E.D. Tex. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored).
West Virginia: Leonard v. Mylan, Inc., 718 F. Supp.2d 741, 743 n.2 (S.D. W.Va. 2010) (recognizing removal before service as proper; plaintiffs did not seek remand)
A few observations. First, in some of these cases the removing defendant was actually served first, and took advantage of the plaintiff’s delay in serving the would-be forum defendant. In others the removing defendants learned about the litigation, in one way or another, before anyone had been served. We don’t think the distinction matters because the statute doesn’t distinguish between the two situations. Obviously, the Hawkins court (but not much else) does.
Second, we note with some satisfaction that more than half of the cases we’re seeing on removal before service don’t involve drugs and devices. We’re glad to see other defendants jumping on the bandwagon. When everybody relies upon removal before service, it gets harder for the other side to characterize it as some sort of procedural gimmick that shouldn’t be allowed.
Third, we also came across a useful law review article on the subject, M. Curry, “Plaintiff's Motion To Remand Denied: Arguing For Pre-Service Removal Under The Plain Language Of The Forum-Defendant Rule,” 58 Clev. St. L. Rev. 907 (2010), which marshals the arguments in favor of pre-service removal, and critiques the arguments against.
We also found a decision that demonstrates how removal before service can have collateral benefits, although a screw-up by the other side is necessary. In In re Trasylol Products Liability Litigation, 2011 WL 830287 (S.D. Fla. March 8, 2011), the defendant successfully removed some cases before service, and (we assume) won the removal before service argument as remand was denied. After that, the plaintiffs apparently fell asleep at the switch. After losing the remand motion, they never bothered to complete service against anybody. After time passed (enough for the statute of limitations to run), the defendant pounced on this error, and moved to dismiss – again successfully. Removal before service didn’t in any way prevent these plaintiffs from doing what any competent plaintiff should do, and complete service after removal:
[I]t is undisputed that Plaintiffs have never perfected service. . . . The issue thus boils down to whether [defendant] has waived the defense of lack of personal jurisdiction by its conduct of this litigation. I find that [it] has not. While [the] strategy of removing this case to federal court before service could be perfected certainly rises to the level of “legal gamesmanship,” it does not constitute “overt wrongdoing,” an attempt to “avoid service,” or a general appearance in the case sufficient to forfeit the defense.2011 WL 830287, at *6. Dismissal for failure to perfect service is not something one wishes to discuss with ones client.
Thus, in courts that follow the plain meaning of §1441(b) in removal before service cases, smart defendants should be making sure that the plaintiffs in fact do complete service. Plaintiffs have 120 days to do this under Rule 4(m). After that, it’s open season for dismissal. However, even smarter defendants, as in Trasylol, make sure to wait until after the statute of limitations has run.
But we have to say that plaintiffs aren’t the only ones who do dumb things. Removal before service can only be used to obtain jurisdiction in a truly diverse case – one that could have been brought in federal court in the first instance. Hair-trigger removal only provides a way around the forum defendant rule (that even diverse cases aren’t removable where the defendant is sued in its home court), but not around a fundamental lack of diversity. Removal before service of a non-diverse case (where the plaintiff and at least one of the defendants are citizens of the same state) can’t create federal jurisdiction. E.g., Jennings-Frye v. NYK Logistics Americas Inc., 2011 WL 642653, at *3-4 (C.D. Cal. Feb. 11, 2011) (“case law is clear that a defendant who is a citizen of plaintiff’s state destroys complete diversity, regardless of whether that defendant was properly served prior to removal”); Smith v. Federal Express Corp., 2010 WL 3634347, at *3 (E.D. Mich. Sept. 14, 2010) (“including the unserved defendant, destroys diversity and eliminates this Court’s jurisdiction”); O’Brien v. Cessna Aircraft Co., 2010 WL 4721189, at *15 (D. Neb. July 21, 2010) (“Diversity of citizenship among the parties is determined . . . regardless of whether each party has been served at the time of removal”).
This is pretty basic 1-L civil procedure, so we don’t recommend removing a non-diverse case just because the plaintiff hasn’t gotten around to serving the non-diverse defendant. For one thing, it could lead to fee-shifting sanctions, and telling a client it has to pay the other side’s lawyers is also something unpleasant. But more fundamentally, even if the plaintiff is asleep at the switch, it’s not a good idea to remove a non-diverse case. There’s no subject matter jurisdiction, and subject matter jurisdiction can be challenged at any time. That means that a defendant removing a non-diverse case for lack of service on a non-diverse defendant could end up spending a lot of time and effort litigating a case to a favorable result, and have everything taken away when the plaintiff finally wakes up (or a court sua sponte raises subject matter jurisdiction).
Overall, we’d have to say based on our review, that removal before service is alive and well, and that the good guys – the “plain meaning” argument – seem to have the upper hand at the moment. The dispute is likely to continue for some time, because remand orders are not appealable, and removal by definition takes place at the outset of the case. Even if somebody were inclined to challenge a successful removal on appeal long after the fact, that’s still in the future.
Wednesday, May 25, 2011
Punitive Damages Legislation Of Interest
Thanks to the folks over at the FDA law blog for tipping us off to interesting provisions of pending legislation that emerged earlier this week from various house committees. The bill, H.R. 5, is part of the ongoing debate over health care, and where it will ultimately go is unclear, but it contains some interesting ideas about punitive damages and it has a raft of sponsors.
There are a variety of provisions governing “health care lawsuits” generally (statute of limitations, caps, contingent fees, periodic payments, etc.), but we’re just going to point out those unique to prescription medical product liability litigation. Those are found in section “c” and mostly deal with punitive damages. The bill provides:
- No punitive damages against drug, device, or vaccine makers (or component part makers) where the FDA had allowed the product in the market, whether through “approval, clearance, or licensure,” unless the FDA finds that the defendant did not “substantially comply” with FDA regulations.
- There’s no requirement that the FDA “affirmatively” establish compliance – only non-compliance.
- Plaintiffs can’t name prescribers in the same lawsuit as prescription medical product manufacturers (although court can consolidate separate actions), nor can prescribers be sued in class actions.
- Lawsuits over tamper-resistant packaging must prove “substantial” noncompliance with FDA regulations by “clear and convincing” evidence.
- There’s an exception for fraud on the FDA, which since the legislation is federal, would not seem to be subject to Buckman preemption.
- There’s an exception for bribery.
- If there’s a conflict with the Vaccine Act, that statute controls.
Like we said, the fate of the aspects of the legislation helpful to prescription medical product manufacturers is tied to the broader issue of health care reform. That’s a subject upon which we have, and will, resolutely decline comment. But we thought that our readers would be interested in legislation that strengthens and extends the compliance defense to punitive damages recognized by a number of states to all cases involving prescription medical products.
Tuesday, May 24, 2011
Distributor Held Fraudulently Joined
Yesterday we brought you some welcome news on the pharmacy front in the never-ending struggle against fraudulent joinders. But outside of certain parts of Illinois, we’ve generally done OK where the fraudulently joined party is a pharmacy.
Today, we feature a rarer bird – a court’s decision that a claim brought against a local distributor also constituted fraudulent joinder. The case is Askew v. DC Medical, LLC, 2011 WL 1811433 (N.D. Ga. May 12, 2011), decided under Georgia law. That’s important, because the law concerning distributors is not nearly as uniform as the 48-state consensus against pharmacy liability mentioned in yesterday’s Walton case.
Askew is a device case – not surprising because medical device companies tend to have networks of local product distributors more than do pharmaceutical companies. To support the claim of fraudulent joinder, the defendant submitted a “declaration” by the distributor that:
The court held that the declaration put the onus on the plaintiff to offer more than bare legal conclusions in response. Id. at *5. Under Georgia law, “[a] distributor can be held liable for negligent failure to warn only if, at the time of the sale, it had actual or constructive knowledge that its product created a danger for the consumer.” Id. at *4 (citation and quotation marks omitted). Interestingly, the court analogized to TwIqbal pleading standards, even though Rule 12 was not technically applicable to fraudulent joinder:
2011 WL 1811433, at *5 n.5. That should be lesson one – use TwIqbal pleading standards by analogy to emphasize that the plaintiffs have nothing to back up their allegations against a fraudulently joined defendant.
A paucity of factual support was exactly what the court found in Askew:
Id. at 6 (emphasis added). That’s fraudulent joinder lesson two. Get specific facts to contradict the plaintiff’s legal conclusions. Remember, the whole point of the fraudulent joinder doctrine is that parties are being sued for no good reason – if a defendant can’t show that, then it’s highly likely that fraudulent joinder will fail.
There were a few other theories, too, but once negligent failure to warn went by the boards, those followed rather meekly. There was no warranty claim because there was no privity. 2011 WL 1811433, at *7. The distributor’s lack of knowledge (or, more precisely, the absence of any facts suggestive of knowledge) also defeated the fraud claim. Id. Civil conspiracy isn’t an independent tort and falls with the other claims. Id.
Askew demonstrates that our side can win fraudulent joinder motions involving distributors. But it’s hard. We need both good law (Georgia’s actual or constructive knowledge standard) and good facts (establishing same). It’s rather reminiscent of Billy Joel’s “new fashion” – “all you need are looks and a whole lot of money” – but fraudulent joinder is a tough standard for our side to win. Congrats to the winner in Askew.
Today, we feature a rarer bird – a court’s decision that a claim brought against a local distributor also constituted fraudulent joinder. The case is Askew v. DC Medical, LLC, 2011 WL 1811433 (N.D. Ga. May 12, 2011), decided under Georgia law. That’s important, because the law concerning distributors is not nearly as uniform as the 48-state consensus against pharmacy liability mentioned in yesterday’s Walton case.
Askew is a device case – not surprising because medical device companies tend to have networks of local product distributors more than do pharmaceutical companies. To support the claim of fraudulent joinder, the defendant submitted a “declaration” by the distributor that:
- It “did not know of any alleged defect in the . . . device before it was distributed for use in Plaintiff's surgery.”
- It “was not involved in the design, manufacture, testing, or regulatory approval of the . . . device.”
- It “was not involved in the promotional, marketing, description, or application materials for the ASR device.”
- That the distributor received the device “already labeled and sealed” and did not disturb it.
The court held that the declaration put the onus on the plaintiff to offer more than bare legal conclusions in response. Id. at *5. Under Georgia law, “[a] distributor can be held liable for negligent failure to warn only if, at the time of the sale, it had actual or constructive knowledge that its product created a danger for the consumer.” Id. at *4 (citation and quotation marks omitted). Interestingly, the court analogized to TwIqbal pleading standards, even though Rule 12 was not technically applicable to fraudulent joinder:
Although the Court applies the standards governing allegations of fraudulent joinder to this case rather than the Twombly/Iqbal pleading standards, those cases usefully illustrate the inadequacy of Plaintiff's conclusory allegations to rebut uncontroverted affidavit testimony denying [the defendant distributor’s] knowledge of the . . . Device’s alleged defects.
2011 WL 1811433, at *5 n.5. That should be lesson one – use TwIqbal pleading standards by analogy to emphasize that the plaintiffs have nothing to back up their allegations against a fraudulently joined defendant.
A paucity of factual support was exactly what the court found in Askew:
Plaintiff has not produced evidence that [the defendant distributor] had actual or constructive knowledge of alleged defects in the . . . device prior to its distribution for use in Plaintiff's surgery. While the burden on Defendants to show fraudulent joinder is a heavy one, Plaintiff must point to some evidence that supports her claim against [the distributor] now that the allegations in their Complaint have been controverted.
Id. at 6 (emphasis added). That’s fraudulent joinder lesson two. Get specific facts to contradict the plaintiff’s legal conclusions. Remember, the whole point of the fraudulent joinder doctrine is that parties are being sued for no good reason – if a defendant can’t show that, then it’s highly likely that fraudulent joinder will fail.
There were a few other theories, too, but once negligent failure to warn went by the boards, those followed rather meekly. There was no warranty claim because there was no privity. 2011 WL 1811433, at *7. The distributor’s lack of knowledge (or, more precisely, the absence of any facts suggestive of knowledge) also defeated the fraud claim. Id. Civil conspiracy isn’t an independent tort and falls with the other claims. Id.
Askew demonstrates that our side can win fraudulent joinder motions involving distributors. But it’s hard. We need both good law (Georgia’s actual or constructive knowledge standard) and good facts (establishing same). It’s rather reminiscent of Billy Joel’s “new fashion” – “all you need are looks and a whole lot of money” – but fraudulent joinder is a tough standard for our side to win. Congrats to the winner in Askew.
Monday, May 23, 2011
Seventh Circuit Shoves the S.D.Ill. Back Into Line On Removal
We've remarked before about the odd, detrimental position that the Southern District of Illinois has taken towards removal, fraudulent joinder, and diversity jurisdiction in cases claiming that pharmacies should be liable for prescription drugs just like any other intermediate product seller. The Illinois Supreme Court, as a substantive matter, has rejected pharmacy liability repeatedly as a consequence of the learned intermediary rule. See Happel v. Wal-Mart Stores, Inc., 766 N.E.2d 1118, 1127 (Ill. 2002); Frye v. Medicare-Glaser Corp., 605 N.E.2d 557, 559-61 (Ill. 1992); Kirk v. Michael Reese Hospital & Medical Center , 513 N.E.2d 387, 392 (Ill.
Well, we think that's come to an end. As we also discussed before, with the Yazmin/Yaz litigation, the S.D. Ill. got its own MDL. Where a judge stands apparently depends somewhat on where s/he sits, and in that litigation, the court broke ranks and - rather than tolerate a large number of similar state-court suits trenching on the MDL - held that, contrary to a lot of other S.D. Ill. precedent - pharmacy liability claims constituted fraudlent joinder, and denied remand.
MDLs are a little different from individual litigation in other ways, too. For one thing, plaintiffs lawyers have lots and lots of "clients" and are not adverse to using them as cannon fodder when they want to make a legal point - or at least try to. That's what happened in Yazmin/Yaz. Counsel for one of the non-remanded plaintiffs, named Walton, decided to risk tanking the client's claim in order to appeal the failure to remand. So poor Ms. Walton defaulted on discovery obligations, the MDL court dismissed her case with prejudice as a sanction, and the plaintiff's lawyer challenged the dismissal for lack of federal subject matter litigation.
Yeah, a plaintiff can do that.
But the plaintiff had better be right, because if s/he loses the appeal - no more case.
That's usually a deterrent, except in MDL litigation, where there are plenty of plaintiffs available to be sacrificed, Grindelwald-style, to the "greater good."
Well, we're happy to report that, today, plaintiff Walton lost - big time. See Walton v. Bayer Corp., slip op. (7th Cir. May 23, 2011). And in losing, Walton should bring the Southern District of Illinois' removal precedent back into line with the rest of the country's (the S.D. Ill. is bound by 7th Circuit precedent).
Here's what the Seventh Circuit had to say in Walton:
(1) Yeah, dismissal of a case as a sanction is appealable, and can be challenged for lack of subject matter jurisdiction. Slip op. at 3-4. The plaintiff (or more to the point, counsel) can "wager[] her entire claim on being proved right about jurisdiction." Id. at 4.
(2) Don't make us laugh; of course a case about strokes and possible strokes meets the $75,000 jurisdictional minimum for diversity jurisdiction. Otherwise "her suit [would] not [be] worth the expense of litigating it." Slip op. at 4-5.
(3) The plaintiff's claim of a technical violation of one of the minor requirements of the rules for removal (not attaching an as-served copy of the summons), was trivial. The summons were added promptly and there was not even a whiff of prejudice. Slip op. at 5-6. "[T]otally inconsequential" defects in removal papers don't deprive federal courts of jurisdiction. Id. at 6.
After having sacrificed credibility with the court (never a good thing with Judge Posner) by making dumb arguments, the plaintiff went on to her significant argument - and lost that, as well.
(4) In light of the learned intermediary doctrine, as applied to pharmacists by the Illinois Supreme Court, the claims against the pharmacist defendant in Walton were "utterly groundless." Slip op. at 7-8.
(5) The "common defense" exception to fraudulent joinder doesn't apply to the pharmacy liability claims, because plaintiffs also allege (as all plaintiffs do) that the manufacturer defendants failed to warn/concealed the risk from the medical community. Since pharmacists are within the group allegedly targeted by the concealment, their position with respect to the learned intermediary rule/warning claims isn't in fact the same as the other defendants. With the defendants in differing positions, the "common defense" exception doesn't apply.
(6) Bye-bye hellholes; diversity jurisdiction exists.
Walton should kill off the unduly constricted reading of fraudulent joinder that courts in the Southern District of Illinois were using to remand cases where jurisdiction exists. Might it do more? Anybody representing of the unfortunates in a case that was remanded to a hellhole improperly should take a look. Most decisions aren't retroactive, so it seems to us that there's a decent argument that Walton created a new ground for removal by overturning existing Southern District precedent. That should help if the case is less than a year old, and possibly more (we haven't looked into whether grounds for removal might exist in older cases).
Anyway, thanks, Judge Posner, for shoving the Southern District of Illinois back into line on fraudulent joinder - and Sherry Knutson, of Sidley Austin for tipping us off to the Walton opinion.
Well, we think that's come to an end. As we also discussed before, with the Yazmin/Yaz litigation, the S.D. Ill. got its own MDL. Where a judge stands apparently depends somewhat on where s/he sits, and in that litigation, the court broke ranks and - rather than tolerate a large number of similar state-court suits trenching on the MDL - held that, contrary to a lot of other S.D. Ill. precedent - pharmacy liability claims constituted fraudlent joinder, and denied remand.
MDLs are a little different from individual litigation in other ways, too. For one thing, plaintiffs lawyers have lots and lots of "clients" and are not adverse to using them as cannon fodder when they want to make a legal point - or at least try to. That's what happened in Yazmin/Yaz. Counsel for one of the non-remanded plaintiffs, named Walton, decided to risk tanking the client's claim in order to appeal the failure to remand. So poor Ms. Walton defaulted on discovery obligations, the MDL court dismissed her case with prejudice as a sanction, and the plaintiff's lawyer challenged the dismissal for lack of federal subject matter litigation.
Yeah, a plaintiff can do that.
But the plaintiff had better be right, because if s/he loses the appeal - no more case.
That's usually a deterrent, except in MDL litigation, where there are plenty of plaintiffs available to be sacrificed, Grindelwald-style, to the "greater good."
Well, we're happy to report that, today, plaintiff Walton lost - big time. See Walton v. Bayer Corp., slip op. (7th Cir. May 23, 2011). And in losing, Walton should bring the Southern District of Illinois' removal precedent back into line with the rest of the country's (the S.D. Ill. is bound by 7th Circuit precedent).
Here's what the Seventh Circuit had to say in Walton:
(1) Yeah, dismissal of a case as a sanction is appealable, and can be challenged for lack of subject matter jurisdiction. Slip op. at 3-4. The plaintiff (or more to the point, counsel) can "wager[] her entire claim on being proved right about jurisdiction." Id. at 4.
(2) Don't make us laugh; of course a case about strokes and possible strokes meets the $75,000 jurisdictional minimum for diversity jurisdiction. Otherwise "her suit [would] not [be] worth the expense of litigating it." Slip op. at 4-5.
(3) The plaintiff's claim of a technical violation of one of the minor requirements of the rules for removal (not attaching an as-served copy of the summons), was trivial. The summons were added promptly and there was not even a whiff of prejudice. Slip op. at 5-6. "[T]otally inconsequential" defects in removal papers don't deprive federal courts of jurisdiction. Id. at 6.
After having sacrificed credibility with the court (never a good thing with Judge Posner) by making dumb arguments, the plaintiff went on to her significant argument - and lost that, as well.
(4) In light of the learned intermediary doctrine, as applied to pharmacists by the Illinois Supreme Court, the claims against the pharmacist defendant in Walton were "utterly groundless." Slip op. at 7-8.
Pharmacies . . . can’t be expected to warn their customers of the possible defects and dangers of the prescription drugs they sell. It would be senseless, especially given drug regulation by the Food and Drug Administration and the extensive tort liability of drug manufacturers, to make pharmacies liable in tort for the consequences of failing to investigate the safety of thousands of drugs.Id. at 8-9. It doesn't matter how Illinois gets to that point, since what's "important is that in 48 states including Illinois" a pharmacy cannot be liable where there are risk warnings directed to physicians. Id. at 10.
(5) The "common defense" exception to fraudulent joinder doesn't apply to the pharmacy liability claims, because plaintiffs also allege (as all plaintiffs do) that the manufacturer defendants failed to warn/concealed the risk from the medical community. Since pharmacists are within the group allegedly targeted by the concealment, their position with respect to the learned intermediary rule/warning claims isn't in fact the same as the other defendants. With the defendants in differing positions, the "common defense" exception doesn't apply.
[A]pplying the common-defense exception to this case is barred by the plaintiff’s allegation that the [manufacturer] defendants concealed the existence of [the drug's side effects. . . . [The pharmacy] was no doubt one of the entities from which the [manufacturer] defendants (if the charge of concealment against them has any merit) concealed the side effects.Slip op. at 11. Plaintiff must be held to her allegations, and would prevented by judicial estoppel from arguing "no, I didn't mean it about concealment" later on. Id. 12-15.
(6) Bye-bye hellholes; diversity jurisdiction exists.
Walton should kill off the unduly constricted reading of fraudulent joinder that courts in the Southern District of Illinois were using to remand cases where jurisdiction exists. Might it do more? Anybody representing of the unfortunates in a case that was remanded to a hellhole improperly should take a look. Most decisions aren't retroactive, so it seems to us that there's a decent argument that Walton created a new ground for removal by overturning existing Southern District precedent. That should help if the case is less than a year old, and possibly more (we haven't looked into whether grounds for removal might exist in older cases).
Anyway, thanks, Judge Posner, for shoving the Southern District of Illinois back into line on fraudulent joinder - and Sherry Knutson, of Sidley Austin for tipping us off to the Walton opinion.
Not Swallowing the Whistle
Last week we settled a case. It was a good settlement. But we groused about it a bit, because we thought the judge should have granted us summary judgment on preemption grounds. The denial of summary judgment was truly "summary." There was no written opinion at all, and the judge's few statements at the hearing hardly qualified as any sort of legal analysis. What was going on?
Then we took a look at a recent book, Scorecasting: The Hidden Influences Behind How Sports are Played and Games are Won, by Moskowitz and Wertheim. The book, in a manner reminiscent of Moneyball or Freakonomics, uses data to unearth some surprising truths, debunk a lot of conventional wisdom, and raise interesting questions. For example, there is no valid reason to believe that a player with a "hot-hand" will continue to score at will. Or, you probably know that home teams enjoy an advantage, but do you know when and why? Or -- and this is the topic of today's intellectual frolic and detour -- when and why do sports referees "swallow the whistle?"
Sports have rules and somebody's got to enforce them: umpires in baseball, referees in football, etc. When hockey games are in their final minutes or in overtime, referees don't call as many penalties. One of the all-time great examples in football is when the Giants upset the then-unbeaten Patriots in the Super Bowl. In the closing minutes of the game, David Tyree caught a pass against his helmet that some call the single greatest play in a championship game. But what some people forget is that Eli Manning threw that pass only after escaping the clutches of a Patriots lineman. In fact, Manning was in those clutches so long that, under the rules, he could (and people in Boston will howl that he should) have been called "in the grasp" and the play would have ended. So would the Giants' chances. History would have changed. But the referee didn't blow his whistle. He let the players decide the game. Similarly, Moskowitz and Wertheim analyze statistics from baseball, comparing umpire balls-and-strikes calls against a machine. It turns out that umpires are right way more than they are wrong, but their error rate goes way, way up in failing to call ball four or strike three. That is, the rules enforcers are seemingly reluctant to be outcome-determinative.
We wondered whether something like that happens in the law. Maybe our judge thought there ought to be some sort of settlement, even if the plaintiffs' case had certain legal and factual weaknesses. Granting us summary judgment would have knocked that out. Not granting summary judgment keeps the case alive and leaves open the possibility that the parties will reach agreement. In fact, we did. Maybe the judge thinks that rough justice was done. Or maybe the judge is just happy to have the case off the docket. (And we make no bones about our belief that it is pernicious and counterproductive for judges to shape their rulings to aid docket management rather than to follow the law. It's wrong and ultimately counterproductive.) Maybe judges sometimes swallow the whistle.
Unlike Moskowitz/Wertheim, we don't have data to back up that allegation. But if judges do swallow the whistle at crucial moments, we don't think it's at all benign. At least in sports, swallowing the whistle affects both sides equally. In the sort of litigation we do, it's almost always the defense side that files Daubert motions and summary judgment motions. So a judicial reflex against granting dispositive motions disproportionately hurts defendants. Moreover, sports referees swallow the whistle because they know that fans pay to see players, not refs, decide the game. The last time we looked, litigation was not a spectator sport and was not being conducted for the amusement of paying fans.
Anyway, these are just musings. The case is over and we're on to the next thing. But we'd be fascinated if anybody could assemble data and do a sort of Moneyball or Freakonomics or Scorecasting-type analysis on our business.
Today we report on a case where the referee did not swallow the whistle. In Barnhill v. Teva Pharmaceuticals USA Inc., 2011 U.S. Dist. LEXIS 51222 (S.D. Ala. May 10, 2011), the court granted summary judgment to the defendant and ended the case. The plaintiff went through "a stormy course of SJS" after taking cephalexin, a generic substitute for Keflex. Barnhill, 2011 U.S. Dist. LEXIS 51222 at *4. SJS is a bad disease, SJS plaintiffs are entirely sympathetic, and SJS cases are tough. By the time the defendant moved for summary judgment, the plaintiff had three remaining claims: (1) negligent failure to warn, (2) negligent failure to conduct post-marketing surveillance; and (3) breach of the implied warranty of merchantability. Id. at * 10.
The plaintiff claimed that the warning was inadequate "because the information about SJS was listed as an 'Adverse Reaction' rather than under 'Warnings'. Id. at * 17. Even assuming such inadequacy, the claim failed for want of proximate cause. There was simply no evidence that the prescribing doctor would have done anything different if the warning had been different. In fact, at the time of her deposition, which was ten years after the treatment at issue, the doctor continued to prescribe cephalexin. The plaintiff tried to prop her claim up via the heeding presumption, but "Alabama courts have not recognized such a presumption." Id. at * 20. In any event, a heeding presumption "would not alone establish proximate cause." Id. at *21. At this point the court relies on Thomas v. Hoffman-Laroche, Inc., 949 F.2d 806 (5th Cir. 1992), where the Fifth Circuit rejected the contention that causation can be presumed from an inadequate warning. This is the first discussion of Thomas we've seen in a while and is, as far as we know, the first use of Thomas in Alabama.
The court certainly puts Thomas to good use. "Heed" means that the learned intermediary would have incorporated the additional risk into the risk-benefit calculation, but there was no evidence that didn't happen here. And it's not as if the plaintiff pointed to some bit of missing information. It was an issue of where the information resided in the label. "Stated differently, the warning label was not wrong, it simply was not forceful enough. Because there is no evidence that a more forceful warning would have changed Dr. Jaalouk's decision to prescribe cephalexin, Plaintiff has failed to establish proximate cause." Id. at * 22.
The plaintiff's claim for negligent failure to conduct post-marketing surveillance evolved. At first, the defendant read that claim the way most of us would, and responded with evidence showing that the defendant followed FDA regulations requiring the reporting of adverse events for its drug. It fulfilled whatever post-marketing surveillance duty it had. But the plaintiff argued that the defendant was negligent because it "did not track the adverse event experience of other cephalexin manufacturers." Id. at * 24 (emphasis in original). There is no such duty. So much for that claim.
Finally, the breach of implied warranty of merchantability claim turned on dicta in an Alabama Supreme Court decision. Alabama law generally does not recognize a cause of action for breach of implied warranty of merchantability for inherently dangerous products. The issue is whether there's an exception for products that affect a "significant number of persons." Id. at * 25. Well, maybe there is and maybe there isn't? (Guess which way we vote.) But it doesn't matter because it doesn't look like there have been more than two cases of SJS-from-cephalexin in the United States from 1992 to 2008. The plaintiff offered an unreliable study and some bad math to suggest a bigger number, but the court didn't buy it. Id. at * 26-27.
In short, the court blew the whistle.
Then we took a look at a recent book, Scorecasting: The Hidden Influences Behind How Sports are Played and Games are Won, by Moskowitz and Wertheim. The book, in a manner reminiscent of Moneyball or Freakonomics, uses data to unearth some surprising truths, debunk a lot of conventional wisdom, and raise interesting questions. For example, there is no valid reason to believe that a player with a "hot-hand" will continue to score at will. Or, you probably know that home teams enjoy an advantage, but do you know when and why? Or -- and this is the topic of today's intellectual frolic and detour -- when and why do sports referees "swallow the whistle?"
Sports have rules and somebody's got to enforce them: umpires in baseball, referees in football, etc. When hockey games are in their final minutes or in overtime, referees don't call as many penalties. One of the all-time great examples in football is when the Giants upset the then-unbeaten Patriots in the Super Bowl. In the closing minutes of the game, David Tyree caught a pass against his helmet that some call the single greatest play in a championship game. But what some people forget is that Eli Manning threw that pass only after escaping the clutches of a Patriots lineman. In fact, Manning was in those clutches so long that, under the rules, he could (and people in Boston will howl that he should) have been called "in the grasp" and the play would have ended. So would the Giants' chances. History would have changed. But the referee didn't blow his whistle. He let the players decide the game. Similarly, Moskowitz and Wertheim analyze statistics from baseball, comparing umpire balls-and-strikes calls against a machine. It turns out that umpires are right way more than they are wrong, but their error rate goes way, way up in failing to call ball four or strike three. That is, the rules enforcers are seemingly reluctant to be outcome-determinative.
We wondered whether something like that happens in the law. Maybe our judge thought there ought to be some sort of settlement, even if the plaintiffs' case had certain legal and factual weaknesses. Granting us summary judgment would have knocked that out. Not granting summary judgment keeps the case alive and leaves open the possibility that the parties will reach agreement. In fact, we did. Maybe the judge thinks that rough justice was done. Or maybe the judge is just happy to have the case off the docket. (And we make no bones about our belief that it is pernicious and counterproductive for judges to shape their rulings to aid docket management rather than to follow the law. It's wrong and ultimately counterproductive.) Maybe judges sometimes swallow the whistle.
Unlike Moskowitz/Wertheim, we don't have data to back up that allegation. But if judges do swallow the whistle at crucial moments, we don't think it's at all benign. At least in sports, swallowing the whistle affects both sides equally. In the sort of litigation we do, it's almost always the defense side that files Daubert motions and summary judgment motions. So a judicial reflex against granting dispositive motions disproportionately hurts defendants. Moreover, sports referees swallow the whistle because they know that fans pay to see players, not refs, decide the game. The last time we looked, litigation was not a spectator sport and was not being conducted for the amusement of paying fans.
Anyway, these are just musings. The case is over and we're on to the next thing. But we'd be fascinated if anybody could assemble data and do a sort of Moneyball or Freakonomics or Scorecasting-type analysis on our business.
Today we report on a case where the referee did not swallow the whistle. In Barnhill v. Teva Pharmaceuticals USA Inc., 2011 U.S. Dist. LEXIS 51222 (S.D. Ala. May 10, 2011), the court granted summary judgment to the defendant and ended the case. The plaintiff went through "a stormy course of SJS" after taking cephalexin, a generic substitute for Keflex. Barnhill, 2011 U.S. Dist. LEXIS 51222 at *4. SJS is a bad disease, SJS plaintiffs are entirely sympathetic, and SJS cases are tough. By the time the defendant moved for summary judgment, the plaintiff had three remaining claims: (1) negligent failure to warn, (2) negligent failure to conduct post-marketing surveillance; and (3) breach of the implied warranty of merchantability. Id. at * 10.
The plaintiff claimed that the warning was inadequate "because the information about SJS was listed as an 'Adverse Reaction' rather than under 'Warnings'. Id. at * 17. Even assuming such inadequacy, the claim failed for want of proximate cause. There was simply no evidence that the prescribing doctor would have done anything different if the warning had been different. In fact, at the time of her deposition, which was ten years after the treatment at issue, the doctor continued to prescribe cephalexin. The plaintiff tried to prop her claim up via the heeding presumption, but "Alabama courts have not recognized such a presumption." Id. at * 20. In any event, a heeding presumption "would not alone establish proximate cause." Id. at *21. At this point the court relies on Thomas v. Hoffman-Laroche, Inc., 949 F.2d 806 (5th Cir. 1992), where the Fifth Circuit rejected the contention that causation can be presumed from an inadequate warning. This is the first discussion of Thomas we've seen in a while and is, as far as we know, the first use of Thomas in Alabama.
The court certainly puts Thomas to good use. "Heed" means that the learned intermediary would have incorporated the additional risk into the risk-benefit calculation, but there was no evidence that didn't happen here. And it's not as if the plaintiff pointed to some bit of missing information. It was an issue of where the information resided in the label. "Stated differently, the warning label was not wrong, it simply was not forceful enough. Because there is no evidence that a more forceful warning would have changed Dr. Jaalouk's decision to prescribe cephalexin, Plaintiff has failed to establish proximate cause." Id. at * 22.
The plaintiff's claim for negligent failure to conduct post-marketing surveillance evolved. At first, the defendant read that claim the way most of us would, and responded with evidence showing that the defendant followed FDA regulations requiring the reporting of adverse events for its drug. It fulfilled whatever post-marketing surveillance duty it had. But the plaintiff argued that the defendant was negligent because it "did not track the adverse event experience of other cephalexin manufacturers." Id. at * 24 (emphasis in original). There is no such duty. So much for that claim.
Finally, the breach of implied warranty of merchantability claim turned on dicta in an Alabama Supreme Court decision. Alabama law generally does not recognize a cause of action for breach of implied warranty of merchantability for inherently dangerous products. The issue is whether there's an exception for products that affect a "significant number of persons." Id. at * 25. Well, maybe there is and maybe there isn't? (Guess which way we vote.) But it doesn't matter because it doesn't look like there have been more than two cases of SJS-from-cephalexin in the United States from 1992 to 2008. The plaintiff offered an unreliable study and some bad math to suggest a bigger number, but the court didn't buy it. Id. at * 26-27.
In short, the court blew the whistle.
Friday, May 20, 2011
Another Third Party Payer Class Action Denial
We already posted once today about third party payers and class actions, so this will be short. In the Neurontin litigation certification of a purported nationwide class of TPPs was recently denied (again) in In re Neurontin Marketing & Sales Practices Litigation, MDL 1629, slip op. (D. Mass. May 17, 2011). The rationale, which the court considered to be a denial of reconsideration, involved what the plaintiffs considered their best facts, having to do with an indication where, supposedly, there was "no reliable scientific evidence" to support off label use - although that doesn't mean that it didn't in fact work. Once again predominance defeated certification, because statistical analysis doesn't equal individualized proof of reliance. Slip op. at 9. "[T]reating physicians varied widely in their reasons for prescribing Neurontin." Id.
Thus, in order to differentiate those prescriptions that were caused by fraud from those that were attributable to nonfraudulent off-label marketing or other independent factors, a factfinder would have to perform a granular doctor-by-doctor analysis. This would be unmanageable.Slip op. at 11.
AT&T v. Concepcion in Drug/Device Cases?
Like everybody else we took a look at the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, slip op., 131 S. Ct. 1740 (U.S. 2011), on the Federal Arbitration Act’s preemption of state law limiting the enforceability of class action waivers. However, just as the Capitol Steps’ first reaction to a political scandal is “what rhymes with it?” our first reaction to major new precedent is “is it useful in drug/device litigation.”
Our reaction to AT&T Mobility is “maybe.” Reading the case, we don’t think that it’s possible to restrict it's scope just to class-action-based arbitrations, which is it’s precise factual context. Rather, since the motivating force behind FAA preemption is the “liberal federal policy favoring arbitration,” 131 S. Ct. at 1745, we’d have to say that state law purporting to invalidate limitations on non-arbitration class actions is a fortiori preempted. By that we mean that, if contractual limits on class actions in arbitration are enforceable under the FAA, given its arbitration-friendly policy, then contractual limits on class actions outside of arbitration are even more favored, since litigated class actions are even more invasive of arbitration rights.
So we think that AT&T Mobility invalidates all state law attempts to obstruct arbitration waivers involving class actions, whether the state is attempting to preserve class action in or out of arbitration.
However, drug and medical device manufacturers don’t enter into contracts with patients. Also, personal injury class actions have all but disappeared in drug/device litigation. Thus it’s unlikely that AT&T Mobility will have much effect on class actions involving end users of our client’s products.
But that’s not necessarily the end of it. Recently drug and device manufacturers have seen an onslaught of suits (most of which have been dismissed for one reason or another) brought by third-party payers. A fair number – enough to be more than just annoying – of them are brought as class actions. See Kinetic Co. v. Medtronic, Inc., 2011 WL 1485601 (D. Minn. April 19, 2011) (most of TPP class action dismissed on preemption grounds); In re Actiq Sales & Marketing Practices Litigation, 2011 WL 1103796 (E.D. Pa. March 23, 2011) (denying summary judgment on substantive grounds in TPP class action); District 1199P Health and Welfare Plan v. Janssen, L.P., ___ F. Supp.2d ___, 2011 WL 1086004 (D.N.J. March 21, 2011) (granting motion to dismiss against TPP class action); In re McKesson Governmental Entities Average Wholesale Price Litigation, ___ F. Supp.2d ___, 2011 WL 758858 (D. Mass. March 4, 2011) (partially granting certification motion in TPP average wholesale price litigation); Sergeants Benevolent Ass’n Health & Welfare Fund v. Sanofi-Aventis U.S. LLP, 2011 WL 824607 (Mag. E.D.N.Y. Feb. 16, 2011), adopted, 2011 WL 1326365 (E.D.N.Y. Mar 30, 2011) (denying class certification of TPP class action).
Well, TPPs often do enter into contracts directly with drug and device manufacturers. We think that, in the context of TPP litigation, AT&T Mobility would support arbitration provisions precluding class actions and other representative litigation – at least as to state-law based claims. While the preemption analysis would not extend to federal statutory claims such as RICO, our impression is that the kind of state-law obstructionism that led to AT&T Mobility is not widespread with respect to federal question causes of actions.
So we’d recommend that drug/device manufacturers consider the value of arbitration clauses in their dealings with TPPs, with particular emphasis on the threat of TPP class actions.
Our reaction to AT&T Mobility is “maybe.” Reading the case, we don’t think that it’s possible to restrict it's scope just to class-action-based arbitrations, which is it’s precise factual context. Rather, since the motivating force behind FAA preemption is the “liberal federal policy favoring arbitration,” 131 S. Ct. at 1745, we’d have to say that state law purporting to invalidate limitations on non-arbitration class actions is a fortiori preempted. By that we mean that, if contractual limits on class actions in arbitration are enforceable under the FAA, given its arbitration-friendly policy, then contractual limits on class actions outside of arbitration are even more favored, since litigated class actions are even more invasive of arbitration rights.
So we think that AT&T Mobility invalidates all state law attempts to obstruct arbitration waivers involving class actions, whether the state is attempting to preserve class action in or out of arbitration.
However, drug and medical device manufacturers don’t enter into contracts with patients. Also, personal injury class actions have all but disappeared in drug/device litigation. Thus it’s unlikely that AT&T Mobility will have much effect on class actions involving end users of our client’s products.
But that’s not necessarily the end of it. Recently drug and device manufacturers have seen an onslaught of suits (most of which have been dismissed for one reason or another) brought by third-party payers. A fair number – enough to be more than just annoying – of them are brought as class actions. See Kinetic Co. v. Medtronic, Inc., 2011 WL 1485601 (D. Minn. April 19, 2011) (most of TPP class action dismissed on preemption grounds); In re Actiq Sales & Marketing Practices Litigation, 2011 WL 1103796 (E.D. Pa. March 23, 2011) (denying summary judgment on substantive grounds in TPP class action); District 1199P Health and Welfare Plan v. Janssen, L.P., ___ F. Supp.2d ___, 2011 WL 1086004 (D.N.J. March 21, 2011) (granting motion to dismiss against TPP class action); In re McKesson Governmental Entities Average Wholesale Price Litigation, ___ F. Supp.2d ___, 2011 WL 758858 (D. Mass. March 4, 2011) (partially granting certification motion in TPP average wholesale price litigation); Sergeants Benevolent Ass’n Health & Welfare Fund v. Sanofi-Aventis U.S. LLP, 2011 WL 824607 (Mag. E.D.N.Y. Feb. 16, 2011), adopted, 2011 WL 1326365 (E.D.N.Y. Mar 30, 2011) (denying class certification of TPP class action).
Well, TPPs often do enter into contracts directly with drug and device manufacturers. We think that, in the context of TPP litigation, AT&T Mobility would support arbitration provisions precluding class actions and other representative litigation – at least as to state-law based claims. While the preemption analysis would not extend to federal statutory claims such as RICO, our impression is that the kind of state-law obstructionism that led to AT&T Mobility is not widespread with respect to federal question causes of actions.
So we’d recommend that drug/device manufacturers consider the value of arbitration clauses in their dealings with TPPs, with particular emphasis on the threat of TPP class actions.
Thursday, May 19, 2011
Experts Offering Evidence of Corporate Intent, Ethics, And The Like
Returning from the ALI meeting, Bexis had sitting in his inbox the final hard copies of update 14 for his Drug/Device products liability book. For those of you that use Bexis' book, that means there's more to use, but for Bexis that means that it’s time to start on update 15. A legal author’s work is never done. This time he’s planning to update the chapter on evidence.
It's also time for our Thursday long post - time to kill two birds with one stone.
Right now the book has a short subsection on corporate intent evidence in drug and device cases. That section states simply that corporate motive and intent evidence (usually offered by some purported “expert”) has generally been found inadmissible by courts trying drug and medical device product liability cases. There’s one footnote, citing four cases from three jurisdictions: Smith v. Wyeth-Ayerst Laboratories Co., 278 F. Supp.2d 684, 700 (W.D.N.C. 2003); Figueroa v. Boston Scientific Corp., 2003 WL 21488012, at *4 (S.D.N.Y. June 27, 2003); In re Diet Drugs Products Liability Litigation, 2001 WL 454586, at *2 (E.D. Pa. Feb. 1, 2001); In re Diet Drugs Products Liability Litigation, 2000 WL 876900, at *9 (E.D. Pa. June 20, 2000).
We think Bexis can do better than that with this update – and we think we can make a blog post out of it as well. So let’s take a look. What have courts held about corporate motive and intent evidence lately?
Probably the best treatment of the subject, of the cases coming down since this part of the book was updated, is in In re Rezulin Products Liability Litigation, 309 F. Supp.2d 531 (S.D.N.Y. 2004). There, three purported corporate ethics “experts” were excluded for a variety of reasons. First, their ethics opinions were “speculative” in the sense that they were based upon “subjective belief.” Id. at 543-44. Second, ethical matters were not relevant to product liability litigation, as it was unrelated to the alleged defects being claimed. “While the defendants may be liable in the court of public opinion, or before a divine authority . . ., expert opinion as to the ethical character of their actions simply is not relevant to these lawsuits.” Id. at 544. Third, ethics evidence was argumentative and prejudicial. Id. at 545. Fourth, expert witnesses aren’t really qualified at divining corporate intent, which is something that lay jurors are equally competent to judge, should it be relevant to anything. Id. at 546-47.
Other cases have also considered and rejected ethics/intent-related testimony for one or more of the reasons articulated by the Rezulin court. In re Trasylol Products Liability Litigation, 2010 WL 1489793, at *7-9 (S.D. Fla. Feb. 24, 2010), largely followed Rezulin in excluding disguised business ethics evidence:
The court in Deutsch v. Novartis Pharmaceuticals Corp., ___ F. Supp.2d ___, 2011 WL 790702 (E.D.N.Y. Mar. 8, 2011), also found corporate intent evidence to be improper on multiple grounds, relying primarily on Rezulin:
Essentially the same result occurred in In re Fosamax Products Liability Litigation, 645 F. Supp.2d 164 (S.D.N.Y. 2009), with vague and conclusory ethics testimony being excluded:
Likewise, the court in In re Baycol Products Litigation, 532 F. Supp. 2d 1029 (D. Minn. 2007), blew out corporate ethics evidence as “only marginally relevant’ and not a proper subject for expert testimony:
Corporate ethics testimony also bit the dust in In re Mentor Corp. ObTape Transobturator Sling Products Liability Litigation, 2010 WL 1727828 (M.D. Ga. Apr. 27, 2010). An author of a general business ethics textbook was found unqualified to testify about what it was “appropriate” for a medical device company to do:
Corporate ethics testimony was excluded as unscientific and unduly prejudicial in Wolfe v. McNeil-PPC, Inc., 2011 WL 1673805 (E.D. Pa. May 4, 2011):
In In re Prempro Products Liability Litigation, 554 F. Supp. 2d 871 (E.D. Ark. 2008), aff’d in pertinent part, rev’d in part on other grounds, 586 F.3d 547, 571 (8th Cir. 2009), a purported expert ran amok at trial. Among other things, the witness' “editorial about pharmaceutical companies putting sales and marketing before science” should have been excluded. Id. at 881. Similarly, in Lopez v. I-Flow Inc., C.A. No. 08-1063, slip op. at 19-20, 2011 WL _______ (we’ve sent this to Westlaw; there will be a cite in a few days) (D. Ariz. Jan. 26, 2011), the court rejected intent testimony for lack of personal knowledge, helpfulness to the jury, and as outweighed by prejudice, confusion, etc. See also In re Heparin Product Liability Litigation, 2011 WL 1059660, at *7 (N.D. Ohio March 21, 2011) (witness must “not express any views as to Defendants’ intent, motives, or state of mind”); In re Gadolinium-Based Contrast Agents Products Liability Litigation, 2010 WL 1796334, at *13 (N.D. Ohio May 4, 2010) (“[n]or may [the witness testify as to [defendant’s] knowledge, motivations, intent or purposes”); Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 2008 WL 4878066, at *6-7 (N.D. Tex. July 25, 2008) (opinions “regarding Defendants’ ethical obligations, motive, state of mind, asserted knowledge, and alleged conduct” excluded as “personal opinions or legal conclusions based on Defendants' alleged behavior”); In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 2007 WL 1964337, at *8 (D. Minn. June 29, 2007) (witness “not allowed to testify as to [defendant’s] knowledge” or “whether Guidant's conduct was ethical”); Bessemer v. Novartis Pharmaceuticals Corp., 2010 WL 2300222 (N.J. Super. L.D. April 30, 2010) (“state of mind, intent, motive, or ethics” “are not the proper subject of expert opinion testimony” and would be “speculative”).
Rezulin also demonstrates that there are really two types of evidence at issue in most of these sorts of cases. Not only is there the kind of thing that first attracted our attention – that is, the giving of outright opinions about whether a defendant acted properly – but there’s also the broader issue of bringing in an expert to review documents s/he had nothing to do with preparing and/or knows nothing about and then, in effect, giving the lawyer’s closing argument from the witness stand, in some sort of narrative casting the defendant in the worst possible light. So there’s really a distinction between “ethics” evidence and “conduct” evidence. Rezulin excluded this sort of “narrative” evidence as well:
So one thing that will be happening is the division of the one existing paragraph in the book into two, one involving corporate ethics/intent directly and the other the sort of “narrative” held inadmissible in Rezulin.
Other cases (mostly the same cases, actually) similarly exclude narrative-type evidence in drug/device cases. For instance, in Prempro the court reversed its own rulings at trial and held:
Whew!
Yup, we’d have to say that this part of Bexis’ book requires updating. It will be, but blog readers just got a sneak preview.
It's also time for our Thursday long post - time to kill two birds with one stone.
Right now the book has a short subsection on corporate intent evidence in drug and device cases. That section states simply that corporate motive and intent evidence (usually offered by some purported “expert”) has generally been found inadmissible by courts trying drug and medical device product liability cases. There’s one footnote, citing four cases from three jurisdictions: Smith v. Wyeth-Ayerst Laboratories Co., 278 F. Supp.2d 684, 700 (W.D.N.C. 2003); Figueroa v. Boston Scientific Corp., 2003 WL 21488012, at *4 (S.D.N.Y. June 27, 2003); In re Diet Drugs Products Liability Litigation, 2001 WL 454586, at *2 (E.D. Pa. Feb. 1, 2001); In re Diet Drugs Products Liability Litigation, 2000 WL 876900, at *9 (E.D. Pa. June 20, 2000).
We think Bexis can do better than that with this update – and we think we can make a blog post out of it as well. So let’s take a look. What have courts held about corporate motive and intent evidence lately?
Probably the best treatment of the subject, of the cases coming down since this part of the book was updated, is in In re Rezulin Products Liability Litigation, 309 F. Supp.2d 531 (S.D.N.Y. 2004). There, three purported corporate ethics “experts” were excluded for a variety of reasons. First, their ethics opinions were “speculative” in the sense that they were based upon “subjective belief.” Id. at 543-44. Second, ethical matters were not relevant to product liability litigation, as it was unrelated to the alleged defects being claimed. “While the defendants may be liable in the court of public opinion, or before a divine authority . . ., expert opinion as to the ethical character of their actions simply is not relevant to these lawsuits.” Id. at 544. Third, ethics evidence was argumentative and prejudicial. Id. at 545. Fourth, expert witnesses aren’t really qualified at divining corporate intent, which is something that lay jurors are equally competent to judge, should it be relevant to anything. Id. at 546-47.
Other cases have also considered and rejected ethics/intent-related testimony for one or more of the reasons articulated by the Rezulin court. In re Trasylol Products Liability Litigation, 2010 WL 1489793, at *7-9 (S.D. Fla. Feb. 24, 2010), largely followed Rezulin in excluding disguised business ethics evidence:
Despite Plaintiffs’ argument that the opinion at issue is not an ethical opinion because [the witness] does not use the word “ethical” or “unethical” in his Report . . ., this Court will consider [its] substance. . . . Much of the testimony in dispute relates to [defendant’s] responsibilities, the studies that [it] should have done to comply with drug safety principles, and the issues that [defendant] should have addressed earlier than it did. The Court finds that this proffered testimony is akin to the ethics testimony found to be inadmissible in Rezulin. . . . The Court finds this testimony inadmissible because it is a reflection of [the witness’] own subjective beliefs and personal views and does not rest on knowledge as required by Rule 702.Id. at *8; see id. at *9 (“speculation about [the defendant’s] subjective motivations . . . is not a proper subject for expert testimony”). See also In re Trasylol Products Liability Litigation, 709 F. Supp.2d 1323, 1347 (S.D. Fla. 2010) (witness lacked expertise “to infer . . . knowledge and intent and present those inferences to the jury”); In re Trasylol Products Liability Litigation, 2010 WL 4052141, at *8 (S.D. Fla. Feb. 24, 2010) (opinion concerning defendant’s “knowledge, motive, intent, and state of mind . . . are inadmissible . . . because they have no basis in any relevant body of knowledge or expertise and lie outside the proper bounds of expert testimony”); In re Trasylol Products Liability Litigation, 2010 WL 4259332, at *8 (S.D. Fla. Feb. 24, 2010) (“[t]he question of intent or motive is a classic jury question and not one for experts”).
The court in Deutsch v. Novartis Pharmaceuticals Corp., ___ F. Supp.2d ___, 2011 WL 790702 (E.D.N.Y. Mar. 8, 2011), also found corporate intent evidence to be improper on multiple grounds, relying primarily on Rezulin:
[The witness] scatters improper personal opinions, speculation, and state of mind inferences throughout the narratives in her report. Such opinions are inadmissible insofar as the opinions of expert witnesses on the intent, motives, or states of mind of corporations, regulatory agencies and others have no basis in any relevant body of knowledge or expertise. In addition, “bad company” opinions that are not based on any FDA regulation or other applicable standard are similarly inadmissible.Id. at *45. In addition, the witness was found generally unqualified to testify about corporate ethics, and to have no basis beyond subjective personal opinion for any assertion that “ghostwriting” (preparation of scientifically accurate articles for others to claim authoship) was unethical or otherwise improper. Id. at *46.
Essentially the same result occurred in In re Fosamax Products Liability Litigation, 645 F. Supp.2d 164 (S.D.N.Y. 2009), with vague and conclusory ethics testimony being excluded:
To the extent [defendant] challenges testimony about purported general ethical standards . . . [its] motion is GRANTED . . . . [A]uthorities such as the 1964 Declaration of Helsinki [] providing generally accepted international standards such as “The health of my patient will be my fist consideration” . . . [and] that “[t]rust and honesty are essential virtues that permeate all aspects of human life, including the drug approval process” . . . are so vague as to be unhelpful to a fact-finder.Id. at 194 (quoting Rezulin); see id. at 192 (“the knowledge, motivations, intent, state of mind, or purposes of [defendant and] its employees . . . is not a proper subject for expert or even lay testimony”); 195 (same).
Likewise, the court in In re Baycol Products Litigation, 532 F. Supp. 2d 1029 (D. Minn. 2007), blew out corporate ethics evidence as “only marginally relevant’ and not a proper subject for expert testimony:
Personal views on corporate ethics and morality are not expert opinions. Further, expert testimony that is merely speculation or pure conjecture based on the expert’s impressions of the physical evidence must be excluded as not based on any reliable methodology or scientific principle.Id. at 1053; see id. at 1054 (“testimony . . . that [] speculates as to [defendant’s] motive, intent or state of mind, or speculates as to motives of the FDA or what other drug companies would do is excluded”); 1058 (ethics opinion concerning “preclinical and clinical testing not only lacks foundation, but is also speculative and will not assist the fact-finder”); 1067 (ethics opinion “is legal argument that does not qualify as expert testimony”); 1069 (“an expert may not testify as to ethical issues or to his personal views”).
Corporate ethics testimony also bit the dust in In re Mentor Corp. ObTape Transobturator Sling Products Liability Litigation, 2010 WL 1727828 (M.D. Ga. Apr. 27, 2010). An author of a general business ethics textbook was found unqualified to testify about what it was “appropriate” for a medical device company to do:
[The witness] has no expertise in the fields that would qualify a witness to testify about what scientific information should be reported to the FDA or to testify about medical device industry standards for warning physicians and patients about potential adverse effects of a medical device. Therefore, she is not qualified to offer an opinion about the appropriateness of [defendant’s] conduct.Id. at *4. The “code of ethics” that the witness purported to interpret was such that “anyone who reads and understands the English language can interpret and apply [its] principles.” Id. at *4 n.3.
Corporate ethics testimony was excluded as unscientific and unduly prejudicial in Wolfe v. McNeil-PPC, Inc., 2011 WL 1673805 (E.D. Pa. May 4, 2011):
Simply because [the witness’] subjective views of ethics are informed by well-known principles does not convert them into objective, reliable, scientific knowledge. . . . Whatever benefit could be derived from his opinions about [defendant’s] social responsibility and ethical obligations is vastly outweighed by the tendency of such testimony to encourage the jury to impose liability on an improper basis.Id. at *8-9.
In In re Prempro Products Liability Litigation, 554 F. Supp. 2d 871 (E.D. Ark. 2008), aff’d in pertinent part, rev’d in part on other grounds, 586 F.3d 547, 571 (8th Cir. 2009), a purported expert ran amok at trial. Among other things, the witness' “editorial about pharmaceutical companies putting sales and marketing before science” should have been excluded. Id. at 881. Similarly, in Lopez v. I-Flow Inc., C.A. No. 08-1063, slip op. at 19-20, 2011 WL _______ (we’ve sent this to Westlaw; there will be a cite in a few days) (D. Ariz. Jan. 26, 2011), the court rejected intent testimony for lack of personal knowledge, helpfulness to the jury, and as outweighed by prejudice, confusion, etc. See also In re Heparin Product Liability Litigation, 2011 WL 1059660, at *7 (N.D. Ohio March 21, 2011) (witness must “not express any views as to Defendants’ intent, motives, or state of mind”); In re Gadolinium-Based Contrast Agents Products Liability Litigation, 2010 WL 1796334, at *13 (N.D. Ohio May 4, 2010) (“[n]or may [the witness testify as to [defendant’s] knowledge, motivations, intent or purposes”); Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 2008 WL 4878066, at *6-7 (N.D. Tex. July 25, 2008) (opinions “regarding Defendants’ ethical obligations, motive, state of mind, asserted knowledge, and alleged conduct” excluded as “personal opinions or legal conclusions based on Defendants' alleged behavior”); In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 2007 WL 1964337, at *8 (D. Minn. June 29, 2007) (witness “not allowed to testify as to [defendant’s] knowledge” or “whether Guidant's conduct was ethical”); Bessemer v. Novartis Pharmaceuticals Corp., 2010 WL 2300222 (N.J. Super. L.D. April 30, 2010) (“state of mind, intent, motive, or ethics” “are not the proper subject of expert opinion testimony” and would be “speculative”).
Rezulin also demonstrates that there are really two types of evidence at issue in most of these sorts of cases. Not only is there the kind of thing that first attracted our attention – that is, the giving of outright opinions about whether a defendant acted properly – but there’s also the broader issue of bringing in an expert to review documents s/he had nothing to do with preparing and/or knows nothing about and then, in effect, giving the lawyer’s closing argument from the witness stand, in some sort of narrative casting the defendant in the worst possible light. So there’s really a distinction between “ethics” evidence and “conduct” evidence. Rezulin excluded this sort of “narrative” evidence as well:
[The] “history of Rezulin” is merely a narrative of the case which a juror is equally capable of constructing. . . . Such material, to the extent it is admissible, is properly presented through percipient witnesses and documentary evidence. . . . [T]he glosses that [the witness] interpolates into his narrative are simple inferences drawn from uncomplicated facts that serve only to buttress plaintiffs' theory of the case. As plaintiffs’ Rezulin “historian,” therefore, [the witness] does no more than counsel for plaintiff will do in argument, i.e., propound a particular interpretation of defendant’s conduct. Accordingly, [the witness’] testimony relating to the “history of Rezulin” is inadmissible.309 F. Supp.2d at 551 (various citations omitted).
So one thing that will be happening is the division of the one existing paragraph in the book into two, one involving corporate ethics/intent directly and the other the sort of “narrative” held inadmissible in Rezulin.
Other cases (mostly the same cases, actually) similarly exclude narrative-type evidence in drug/device cases. For instance, in Prempro the court reversed its own rulings at trial and held:
If an expert does nothing more than read exhibits, is there really any point in her testifying as an expert? . . . [T]the use of the “regulatory expert” to deal with large volumes of documents is subject to abuse. The expert did not explain the documents, provide summaries, or tie them in to her proposed regulatory testimony. [The witness] did not provide analysis, opinion, or expertise.554 F. Supp.2d at 886. See Heparin, 2011 WL 1059660, at *8 (witness “may not give a narrative history . . . which must be presented through direct evidence”); Deutsch, 2011 WL 790702, at *45 (excluding a “a factual narrative of events” because it lacked “analysis, opinion, or expertise” and because it included “personal opinions, speculation, and state of mind inferences throughout”); Lopez, slip op. at 18-19 (excluding “report [that] simply presents a narrative of selected regulatory and corporate events and quotations”); Gadolinium, 2010 WL 1796334, at *13) (witness “may not provide a narrative history of [the product], which must be presented through direct evidence”); Trasylol, 709 F. Supp.2d at 1346-47 (excluding “pure factual narrative regarding [the drug’s] regulatory history”); Trasylol, 2010 WL 4259332, at *8 (a “narrative . . . is lay matter that is not a permissible subject of expert testimony”); In re Viagra Products Liability Litigation, 658 F. Supp.2d 950, 967 (D. Minn. 2009) (“there is no evidence that the jury could not be presented with these same documents and draw from them the relevant regulatory history”); Fosamax, 645 F. Supp.2d at 192 (“[a]n expert cannot be presented to the jury solely for the purpose of constructing a factual narrative based upon record evidence”); Prempro, 554 F. Supp. 2d at 880 (testimony that “simply read and summarized the documents, as any layperson could have done” should have been stricken); 887 (“an expert witness simply summariz[ing] a document (which is just as easily summarized by a jury) with a tilt favoring a litigant, without more, does not amount to expert testimony”).
Whew!
Yup, we’d have to say that this part of Bexis’ book requires updating. It will be, but blog readers just got a sneak preview.
Wednesday, May 18, 2011
New Sharkey Preemption Article
Catherine Sharkey, one of the leading academic commentators on preemption in the administrative context, has released a new article on the subject, entitled "Inside Agency Preemption." Here's a link to an online copy of the article. The Sharkey article has a broad scope, and includes a proposal for a state notification procedure for preemption similar to that process outlined for AG notification in the Class Action Fairness Act, and coordinating agency-state consultation about preemption issues through the little-known Office of Information and Regulatory Affairs ("OIRA"). Here's the description from the Article's Abstract:
Being the preemption nerds that we are, however, we were interested in the presentation in the article of the response of major federal agencies - including the FDA - to President Obama's "search and destroy" preemption directive of May 20, 2009, which we covered here. We haven't seen anything like this anywhere else. Prof. Sharkey put down the pen and picked up the phone and extracted progress reports of a sort from seven major federal agencies (including NHTSA, EPA, and the CPSC in addition to FDA) on their response to the Obama memorandum.
That alone makes the Sharkey article worth the read. We won't steal Prof. Sharkey's thunder (not that we could), but we note her description of the FDA as "less forthcoming," "opaque," "close to the vest." Sharkey Article at 12, 27. Sound familiar? The article discusses the FDA's recent preemption provisions, not only in high-profile areas such as the Mensing generic drug implied preemption case, but also on less traveled roads such as OTC drugs and bottled water. Article at 25-26. The FDA's continuing reliance on, at least, express preemption contrasts markedly to the more thoroughly domesticated response to the Obama Memorandum that Prof. Shakey describes for NHTSA. Article at 16-24.
Anyway, if you're interested in this sort of preemption inside baseball, by all means give the latest Sharkey Article a read. You won't be disappointed.
[T]he Article addresses possibilities for reform, including a novel attorney general preemption notification provision and a blueprint for external review of newly proposed internal oversight procedures. The specific reform measures are guided by the twin overarching goals of (1) creating a "home" within agencies for consideration of the federalism values at stake in preemptive rulemaking and ensuring participation in the rulemaking process by suitable representatives of the state regulatory interests; and (2) establishing a system of internal agency policing of the empirical and factual predicates to arguments for preemption, coupled with external oversight. This journey inside agency preemption charts preemption’s future path.Good luck. Unless the next election brings about a reversal of the current political deadlock in Washington, we question whether anything of significance will get done in that (or a lot of other) context.
Being the preemption nerds that we are, however, we were interested in the presentation in the article of the response of major federal agencies - including the FDA - to President Obama's "search and destroy" preemption directive of May 20, 2009, which we covered here. We haven't seen anything like this anywhere else. Prof. Sharkey put down the pen and picked up the phone and extracted progress reports of a sort from seven major federal agencies (including NHTSA, EPA, and the CPSC in addition to FDA) on their response to the Obama memorandum.
That alone makes the Sharkey article worth the read. We won't steal Prof. Sharkey's thunder (not that we could), but we note her description of the FDA as "less forthcoming," "opaque," "close to the vest." Sharkey Article at 12, 27. Sound familiar? The article discusses the FDA's recent preemption provisions, not only in high-profile areas such as the Mensing generic drug implied preemption case, but also on less traveled roads such as OTC drugs and bottled water. Article at 25-26. The FDA's continuing reliance on, at least, express preemption contrasts markedly to the more thoroughly domesticated response to the Obama Memorandum that Prof. Shakey describes for NHTSA. Article at 16-24.
Anyway, if you're interested in this sort of preemption inside baseball, by all means give the latest Sharkey Article a read. You won't be disappointed.
Tuesday, May 17, 2011
How Is Generic Preemption Like Fraud On The FDA?
A couple of months ago, we provided our stream-of-consciousness impressions of the Mensing/Demahy generic preemption argument to the Supreme Court. As we mentioned then, we were all set to write an obituary on generic preemption. After all, since Wyeth v. Levine, 555 U.S. 555 (2009), generic preemption had lost in every court of appeals to consider the issue, and the government (the Solicitor General) had weighed in on the anti-preemption side as well.
As we remarked then, the generic side appeared to do much better than expected during the oral argument. Not only were they sympathetically received by the three justices (Roberts, Scalia, Alito) who had dissented in Levine, but two critical swing justices (Kennedy, Breyer), seemed to be of the view - we say "seemed" because oral argument prognostication is only a little better than reading tea leaves - that Mensing fell under the aegis of preemption as recognized in Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001). Here are some excerpts from that post:
Since then, we've had the opportunity to discuss this aspect of Mensing with a couple of lawyer friends whose opinions on these sorts of issues we respect a lot. They'll have to remain nameless because we don't have permission to identify them, and can't get it on short notice. But the upshot is that they also noticed the same thing and think that there's a good chance, maybe even 50-50, that enough members of the Court might buy the Buckman argument to tip the balance in Mensing.
We thought we'd explain how that can be in a little more coherent fashion, that is more coherently than in our oral argument post. The major way in which, functionally, Mensing is different from Levine is that, to enforce the statutory (Hatch-Waxman amendments to the FDCA) mandate that generic labeling be the "same" as the label carried by the original branded drug that the generics are copying, generic manufacturers are not permitted to change their labels through the "changes being effected" (CBE) process. That was a big deal in the Levine debacle because CBE doesn't require FDA pre-approval.
At least that's the government's position, as well as the plaintiff's fallback in Mensing. Note that this is not completely nailed down as a statutory/regulatory matter, and the smoothest path for the plaintiffs to win in Mensing, would be for the Court to hold that that the CBE exception applies to generic drugs.
But for present purposes, that's neither here nor there.
Anyway, the FDA had previously taken the position that CBE did not apply to generics, and after getting lambasted in Levine for position switching, it wasn't about to execute another about face. Since the current administration is anti-preemption (at least in product liability cases), it had to come up with another rationale to get to that result.
That rationale was referred to at the Mensing oral argument as the "take steps" theory. In a very simplified fashion, it goes like this: Even though the generics couldn't be forced to change their label without FDA pre-approval due to the unavailability of the CBE loophole, they could have done other things - taken other steps - to get the FDA to agree that the label (including, if necessary, the label for the branded drug at issue) should be strengthened in the way plaintiffs wanted. These "steps" were somewhat ill-defined, but that hardly matters. Basically, the argument is that nothing prevented the generic defendants from, in a variety of ways, in effect lobbying the FDA to beef up the relevant warnings.
That's not "impossible," right? After all anybody can always lobby. The constitution protects the right to "petition" (what lobbying was called in the 18th century) the government.
But let's think about "take steps" for a minute. For one thing, it potentially has extremely broad scope, which may be why an anti-preemption administration invented it. Like we just said, anybody can lobby about anything. If all that's necesary to make a direct conflict with a government regulation - any regulation about anything - melt away is to argue that the defendant could have lobbied the relevant agency to change the offending regulation to eliminate the conflict, then there isn't a whole lot left of conflict preemption. And could that argument be extended further to the notion of lobbying Congress to change statutes? We don't know, but that nose poking into the tent in Mensing has an awfully big camel behind it.
That's one.
Second, when we're talking about a cause of action centering on a supposed state-law tort duty (that's what all these cases are, at bottom, about), upon defendant manufacturers to lobby the FDA, then state tort law is invading the regulatory space - the relationship between the regulated defendant and the agency regulating it. There's where Buckman comes in. One aspect of Buckman is that the Court was unwilling to give state tort-based intrusions of the regulatory space the benefit of the doubt:
Buckman, 531 U.S. at 347-48 (citations and quotation marks omitted).
So the "take steps" rationale for avoiding preemption runs into Buckman problems because the nature of the duty embraced by the purported state-law theory tells the defendant that it should have done something more or different with respect to its dealing with the FDA, as opposed to, in Levine, its dealing with the plaintiff or the prescribing physician.
Note that we said "purported." That's another possible point of Buckman vulnerability for the "take steps" argument. Forget for a moment about the FDA and prescription drugs. Have you ever heard of a state-law tort duty, anywhere, that imposes on the defendant a duty to change existing government policy? We've heard about warnings, design, and manufacture, and even more exotic (and generally rejected) things like duty to test, but we sure haven't heard of a duty to lobby. Analyzing "take steps" as some sort of "parallel violation" claim, it would fail because there's no pre-existing state-law tort duty that parallels what the plaintiffs are asserting. Rather, it's a purely regulatory claim. Buckman had something to say about that, as well:
So a second area where the "take steps" theory of liability - or of evading preemption - runs into Buckman trouble is that it involves a novel state-law duty that couldn't exist in the absence of the FDCA and the FDA. After all, if there wasn't a statutorily created federal agency in the first place, then there couldn't be any duty to lobby it.
A third possible collision point between "take steps" and Buckman has to do with the administrative interference rationale expressed in that case. See 531 U.S. at 351 (concluding that agency fraud claims would create "an incentive [for manufacturers acting defensively] to submit a deluge of information that the Administration neither wants nor needs, resulting in additional burdens on the FDA's evaluation of an application"). While the government in Mensing, unlike the SG's position in Buckman, disclaimed any fear of additional administrative burden, the question was posed in oral argument that "take steps" would create an incentive to lobby the FDA about a variety of things, including attaching "boilerplate" requests for label changes to every adverse event report. A large amount of defensive lobbying would seem to have the same, if not more, potential for gumming up the agency's works as the flood of unnecessary information invoked in Buckman. At least, that's the argument.
Finally, there's another way in which the "take steps" theory in Mensing bears troubling resemblence to the fraud-on-the-FDA claims held preempted in Buckman. That's causation. To find liability on a fraud-on-the-FDA theory would required a causal chain running through the FDA. A jury would have to conclude that, but for the fraud, the FDA would have come to a different regulatory conclusion than it in fact did, and that this different regulatory outcome would have in some way (such as keeping a product off the market altogether) prevented the plaintiff's injury.
But postulating liability on a counterfactual hypothetical that the FDA would have done something other than it in fact did is not only speculative, but creates a very real conflict with the real world - that is, the hypothetical inherently conflicts with what the FDA actually did.
Well, the "take steps" theory requires the same sort of FDA-based causation chain. In order for "take steps" to be causal as to either plaintiff Mensing or plaintiff Demahy, the lobbying that the manufacturers hypothetically could have done must have, again hypothetically, caused the FDA to do something other than what it actually did - in Mensing, say, to have ordered the manufacturers to change their label in some way that would have led to plaintiffs not receiving the drug (presumably because their prescribers would have read the hypothetically different label and made different prescribing decisions). In fact, the FDA did no such thing.
That's the same questionable FDA-based causation as in Buckman, dependent on a hypothetical set of facts in which the FDA would have done something different - something that conflicts, that is - from what it actually did.
Anyway, we don't know if, once the process of putting pen to paper (or whatever is the computer-based equivalent), the Buckman analogy will in fact muster enough votes to produce a pro-preemption ruling in Mensing, but we can see how, by creating and arguing the "take steps" theory of liability, the plaintiffs and the SG created the potential for a head-on collision with Buckman in a case that started out as a relatively simple warning case that did not not seem to implicate Buckman very much.
Mensing could be decided any day now. We're watching with a lot more interest now than we had when the Supreme Court originally accepted the appeals.
As we remarked then, the generic side appeared to do much better than expected during the oral argument. Not only were they sympathetically received by the three justices (Roberts, Scalia, Alito) who had dissented in Levine, but two critical swing justices (Kennedy, Breyer), seemed to be of the view - we say "seemed" because oral argument prognostication is only a little better than reading tea leaves - that Mensing fell under the aegis of preemption as recognized in Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001). Here are some excerpts from that post:
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.
****
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."
****
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.
Since then, we've had the opportunity to discuss this aspect of Mensing with a couple of lawyer friends whose opinions on these sorts of issues we respect a lot. They'll have to remain nameless because we don't have permission to identify them, and can't get it on short notice. But the upshot is that they also noticed the same thing and think that there's a good chance, maybe even 50-50, that enough members of the Court might buy the Buckman argument to tip the balance in Mensing.
We thought we'd explain how that can be in a little more coherent fashion, that is more coherently than in our oral argument post. The major way in which, functionally, Mensing is different from Levine is that, to enforce the statutory (Hatch-Waxman amendments to the FDCA) mandate that generic labeling be the "same" as the label carried by the original branded drug that the generics are copying, generic manufacturers are not permitted to change their labels through the "changes being effected" (CBE) process. That was a big deal in the Levine debacle because CBE doesn't require FDA pre-approval.
At least that's the government's position, as well as the plaintiff's fallback in Mensing. Note that this is not completely nailed down as a statutory/regulatory matter, and the smoothest path for the plaintiffs to win in Mensing, would be for the Court to hold that that the CBE exception applies to generic drugs.
But for present purposes, that's neither here nor there.
Anyway, the FDA had previously taken the position that CBE did not apply to generics, and after getting lambasted in Levine for position switching, it wasn't about to execute another about face. Since the current administration is anti-preemption (at least in product liability cases), it had to come up with another rationale to get to that result.
That rationale was referred to at the Mensing oral argument as the "take steps" theory. In a very simplified fashion, it goes like this: Even though the generics couldn't be forced to change their label without FDA pre-approval due to the unavailability of the CBE loophole, they could have done other things - taken other steps - to get the FDA to agree that the label (including, if necessary, the label for the branded drug at issue) should be strengthened in the way plaintiffs wanted. These "steps" were somewhat ill-defined, but that hardly matters. Basically, the argument is that nothing prevented the generic defendants from, in a variety of ways, in effect lobbying the FDA to beef up the relevant warnings.
That's not "impossible," right? After all anybody can always lobby. The constitution protects the right to "petition" (what lobbying was called in the 18th century) the government.
But let's think about "take steps" for a minute. For one thing, it potentially has extremely broad scope, which may be why an anti-preemption administration invented it. Like we just said, anybody can lobby about anything. If all that's necesary to make a direct conflict with a government regulation - any regulation about anything - melt away is to argue that the defendant could have lobbied the relevant agency to change the offending regulation to eliminate the conflict, then there isn't a whole lot left of conflict preemption. And could that argument be extended further to the notion of lobbying Congress to change statutes? We don't know, but that nose poking into the tent in Mensing has an awfully big camel behind it.
That's one.
Second, when we're talking about a cause of action centering on a supposed state-law tort duty (that's what all these cases are, at bottom, about), upon defendant manufacturers to lobby the FDA, then state tort law is invading the regulatory space - the relationship between the regulated defendant and the agency regulating it. There's where Buckman comes in. One aspect of Buckman is that the Court was unwilling to give state tort-based intrusions of the regulatory space the benefit of the doubt:
[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. . . . 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.
Buckman, 531 U.S. at 347-48 (citations and quotation marks omitted).
So the "take steps" rationale for avoiding preemption runs into Buckman problems because the nature of the duty embraced by the purported state-law theory tells the defendant that it should have done something more or different with respect to its dealing with the FDA, as opposed to, in Levine, its dealing with the plaintiff or the prescribing physician.
Note that we said "purported." That's another possible point of Buckman vulnerability for the "take steps" argument. Forget for a moment about the FDA and prescription drugs. Have you ever heard of a state-law tort duty, anywhere, that imposes on the defendant a duty to change existing government policy? We've heard about warnings, design, and manufacture, and even more exotic (and generally rejected) things like duty to test, but we sure haven't heard of a duty to lobby. Analyzing "take steps" as some sort of "parallel violation" claim, it would fail because there's no pre-existing state-law tort duty that parallels what the plaintiffs are asserting. Rather, it's a purely regulatory claim. Buckman had something to say about that, as well:
We must also reject respondent's attempt to characterize both the claims at issue in Medtronic . . . and the fraud claims here as claims arising from violations of FDCA requirements. . . . [I]t is clear that the Medtronic claims 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. In the present case, however, the fraud claims exist solely by virtue of the FDCA disclosure requirements. Thus, although Medtronic 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.531 U.S. at 352-53 (citations and quotation marks omitted). If Buckman stands for anything, it's that Congress prohibited private rights of action under the FDCA, and attempts to assert such private rights in the guise of tort claims are preempted.
So a second area where the "take steps" theory of liability - or of evading preemption - runs into Buckman trouble is that it involves a novel state-law duty that couldn't exist in the absence of the FDCA and the FDA. After all, if there wasn't a statutorily created federal agency in the first place, then there couldn't be any duty to lobby it.
A third possible collision point between "take steps" and Buckman has to do with the administrative interference rationale expressed in that case. See 531 U.S. at 351 (concluding that agency fraud claims would create "an incentive [for manufacturers acting defensively] to submit a deluge of information that the Administration neither wants nor needs, resulting in additional burdens on the FDA's evaluation of an application"). While the government in Mensing, unlike the SG's position in Buckman, disclaimed any fear of additional administrative burden, the question was posed in oral argument that "take steps" would create an incentive to lobby the FDA about a variety of things, including attaching "boilerplate" requests for label changes to every adverse event report. A large amount of defensive lobbying would seem to have the same, if not more, potential for gumming up the agency's works as the flood of unnecessary information invoked in Buckman. At least, that's the argument.
Finally, there's another way in which the "take steps" theory in Mensing bears troubling resemblence to the fraud-on-the-FDA claims held preempted in Buckman. That's causation. To find liability on a fraud-on-the-FDA theory would required a causal chain running through the FDA. A jury would have to conclude that, but for the fraud, the FDA would have come to a different regulatory conclusion than it in fact did, and that this different regulatory outcome would have in some way (such as keeping a product off the market altogether) prevented the plaintiff's injury.
But postulating liability on a counterfactual hypothetical that the FDA would have done something other than it in fact did is not only speculative, but creates a very real conflict with the real world - that is, the hypothetical inherently conflicts with what the FDA actually did.
Well, the "take steps" theory requires the same sort of FDA-based causation chain. In order for "take steps" to be causal as to either plaintiff Mensing or plaintiff Demahy, the lobbying that the manufacturers hypothetically could have done must have, again hypothetically, caused the FDA to do something other than what it actually did - in Mensing, say, to have ordered the manufacturers to change their label in some way that would have led to plaintiffs not receiving the drug (presumably because their prescribers would have read the hypothetically different label and made different prescribing decisions). In fact, the FDA did no such thing.
That's the same questionable FDA-based causation as in Buckman, dependent on a hypothetical set of facts in which the FDA would have done something different - something that conflicts, that is - from what it actually did.
Anyway, we don't know if, once the process of putting pen to paper (or whatever is the computer-based equivalent), the Buckman analogy will in fact muster enough votes to produce a pro-preemption ruling in Mensing, but we can see how, by creating and arguing the "take steps" theory of liability, the plaintiffs and the SG created the potential for a head-on collision with Buckman in a case that started out as a relatively simple warning case that did not not seem to implicate Buckman very much.
Mensing could be decided any day now. We're watching with a lot more interest now than we had when the Supreme Court originally accepted the appeals.
Monday, May 16, 2011
Standing in the Rain
"For lo the Winter is past, the rain is over and gone." Song of Solomon, 2:11. Except it's not gone. The torrents of Spring have arrived in the Delaware Valley. Yesterday was dank and stormy, and it shows no signs of letting up. "There is a sound of abundance of rain." Kings, 18:41. We do not like that sound. Not even a little. We've seen one YouTuber who shares our attitude about Spring rain: He shoots it. We used the word "Spring" above, but here it's really nothing but a season of mud. We'd move back to California for the better weather, but we'd miss our friends, Italian pork sandwiches, and that month of perfect early Fall weather. Plus, we'd hate dealing with traffic on the I-10, Bus. & Prof. Code 17200, and the fact that we'd always be the ugliest, least fit person in the room.
The rain kept us indoors yesterday. The Phillies' loss darkened our mood some. The thunder (and the effect it has on our skittish dogs) made it worse. Then we read cases, which made things even worse. Pretty much everything we read was dumb, depressing, or dense. And, as if nature loves alliteration, a leak sprung in the ceiling and those cases also became damp. We will say only a little about one of those soggy cases.
In Rikos v. Procter & Gamble Co., 2011 WL 1707209 (S.D. Ohio May 4, 2011), the plaintiff filed a putative class action against P&G for allegedly making misleading claims about the health benefits of a daily food supplement called Align. (In addition to reading cases, we also devoted a chunk of Sunday to reading the New York Times, which had a big article on "functional foods" and the claims made on their behalf.) The plaintiff claims to have read the Align claims, believed they were true, purchased Align in reliance on such claims, and then didn't get what was promised. The claims were brought under California law (including that bad old Bus & Prof. Code section 17200 alluded to above).
P&G made lots of arguments. We're focusing on one. (By the way, P&G is one of the all-time most successful companies in American history. Once, when we were in college and were either bored or fueled by a beer called Old Bohemian that cost, so help us, $1.50 per six-pack, we decided to count every P&G product in our dorm room. P&G makes an astounding amount of stuff. Coffee, detergent, and toothpaste barely begin to tell the story. And if you ever work with somebody from that great company, make sure you spell it right. It's "er" not "or." One P&G alum taught us to remember that P&G makes better products.) P&G argued that the named plaintiff lacked Article III standing to seek injunctive relief "because he does not and cannot allege a threat of future injury." Rikos, 2011 WL 1707209 at *5. Since this plaintiff now claims to know that the Align claims are not in alignment with reality, he won't buy the product anymore. He don't need no stinking injunction.
Maybe this issue is old hat to some of you federal jurisdiction junkies out there, but P&G's argument actually works. It turns out there is ample case law holding that "the standing of unnamed class members will not suffice to give the Court jurisdiction to grant injunctive relief." Id., citing Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir. 1999). That sort of derivative standing might work in some state courts, but it doesn't supply Article III standing in federal courts.
Thus, you have yet another reason to move cases into federal court. If somebody is alleging a consumer fraud class action and says (as they must) that they are now on to the fact that the product claims are bunk, you can use Article III standing to toss out requests for injunctive relief. That's pretty good news, isn't it? Why, we think for a moment that we can almost see the clouds parting. We're misty-eyed.
The rest of the Rikos opinion is pretty terrible. The less said about it. the better. Maybe all those bad bits will eventually be lost in time, like tears in rain.
The rain kept us indoors yesterday. The Phillies' loss darkened our mood some. The thunder (and the effect it has on our skittish dogs) made it worse. Then we read cases, which made things even worse. Pretty much everything we read was dumb, depressing, or dense. And, as if nature loves alliteration, a leak sprung in the ceiling and those cases also became damp. We will say only a little about one of those soggy cases.
In Rikos v. Procter & Gamble Co., 2011 WL 1707209 (S.D. Ohio May 4, 2011), the plaintiff filed a putative class action against P&G for allegedly making misleading claims about the health benefits of a daily food supplement called Align. (In addition to reading cases, we also devoted a chunk of Sunday to reading the New York Times, which had a big article on "functional foods" and the claims made on their behalf.) The plaintiff claims to have read the Align claims, believed they were true, purchased Align in reliance on such claims, and then didn't get what was promised. The claims were brought under California law (including that bad old Bus & Prof. Code section 17200 alluded to above).
P&G made lots of arguments. We're focusing on one. (By the way, P&G is one of the all-time most successful companies in American history. Once, when we were in college and were either bored or fueled by a beer called Old Bohemian that cost, so help us, $1.50 per six-pack, we decided to count every P&G product in our dorm room. P&G makes an astounding amount of stuff. Coffee, detergent, and toothpaste barely begin to tell the story. And if you ever work with somebody from that great company, make sure you spell it right. It's "er" not "or." One P&G alum taught us to remember that P&G makes better products.) P&G argued that the named plaintiff lacked Article III standing to seek injunctive relief "because he does not and cannot allege a threat of future injury." Rikos, 2011 WL 1707209 at *5. Since this plaintiff now claims to know that the Align claims are not in alignment with reality, he won't buy the product anymore. He don't need no stinking injunction.
Maybe this issue is old hat to some of you federal jurisdiction junkies out there, but P&G's argument actually works. It turns out there is ample case law holding that "the standing of unnamed class members will not suffice to give the Court jurisdiction to grant injunctive relief." Id., citing Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir. 1999). That sort of derivative standing might work in some state courts, but it doesn't supply Article III standing in federal courts.
Thus, you have yet another reason to move cases into federal court. If somebody is alleging a consumer fraud class action and says (as they must) that they are now on to the fact that the product claims are bunk, you can use Article III standing to toss out requests for injunctive relief. That's pretty good news, isn't it? Why, we think for a moment that we can almost see the clouds parting. We're misty-eyed.
The rest of the Rikos opinion is pretty terrible. The less said about it. the better. Maybe all those bad bits will eventually be lost in time, like tears in rain.
Subscribe to:
Posts (Atom)