Practice Pointer Follow Up

            First and foremost here at the Drug and Device Law Blog, we like good, strong defense decisions.  If those decisions contain lessons (or reminders) for our everyday practice – so much the better.  That’s why we’ve blogged about cases that let us remind you to check publicly available information about plaintiffs, make sure the plaintiff was alive when she filed suit, and search bankruptcy filings to see if plaintiff disclosed her lawsuit.  We blogged about a bankruptcy discharge case a few months ago out of state court in Massachusetts.  So, when we stumbled across a recent federal court decision on the issue, we thought we’d pass it along and take a look to see what else was going on in federal court on this issue.

            The case that prompted this post is a holdout from the Vioxx MDL – In re Vioxx Products Liability Litigation, 2012 WL 4097200 (E.D. La. Sep. 17, 2012).  Plaintiff Sandra Elliott filed her Vioxx lawsuit in 2006 and later filed for bankruptcy in 2009, but did not disclose to the trustee her claims against Merck.  Id. at *1.  While the bankruptcy was still pending, Merck moved for summary judgment on the grounds of judicial estoppel.  Id.  The fact that the bankruptcy was still pending is one of the things that caught our eye about this case.  We’re sure you won’t be surprised to learn that plaintiff’s primary argument in opposition to the motion to dismiss was – I’ll just go back and amend my bankruptcy petition and then no harm, no foul.  The court didn’t see it that way.

            There are three requirements for judicial estoppel to apply: “(1) [T]he party is judicially estopped only if its position is clearly inconsistent with the previous one; (2) the court must have accepted the previous position; and (3) the non-disclosure must not have been inadvertent.”  Id. at *2 (citation omitted).   It is the second two factors which are most often at issue in the bankruptcy non-disclosure context. 

Let’s start with number 3.  We can imagine that almost every plaintiff when faced with this type of motion to dismiss argues inadvertence.  The definition of an inadvertent non-disclosure can vary from court to court.  In the Fifth Circuit “[a] nondisclosure is considered inadvertent only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment.”  Id. (emphasis added and citation omitted).  Knowledge and/or motive give “rise to an inference of intent sufficient to satisfy the [bad faith] requirements of judicial estoppel.”  In re Coastal Plains, Inc., 179 F.3d 197, 210 (5th Cir.1999).  The Third, Eighth, Tenth, and Eleventh Circuits have also adopted this reasoning.   See, e.g., Eastman v. Union Pac. R.R. Co., 493 F.3d 1151, 1157 (10th Cir.2007); Stallings v. Hussmann Corp., 447 F.3d 1041, 1048 (8th Cir.2006); Barger v. City of Cartersville, Ga., 348 F.3d 1289, 1294 (11th Cir.2003); Ryan Operations G.P. v. Santiam–Midwest Lumber Co., 81 F.3d 355, 363 (3d Cir.1996). 

As the Vioxx court explained, at least applying Fifth Circuit law:  “the motivation sub-element is almost always met if a debtor fails to disclose a claim or possible claim to the bankruptcy court ... because of potential financial benefit resulting from the nondisclosure.”  In re Vioxx, 2012 WL 4097200 at *3.  We can’t conceive a situation in which a plaintiff lacks a motive to conceal her claims – the financial motive is strong and always present.  So at least in the 3^rd, 5^th, 8^th, 10^th and 11^th Circuits, if your plaintiff failed to disclose her lawsuit in her bankruptcy proceedings – it wasn’t inadvertent. 

What about element #2 – the court must have accepted the previous position.  When a bankruptcy has been discharged, certainly the court has accepted the plaintiff’s statement of her assets and made a ruling based on that.  But, what about in a situation like Ms. Elliott’s where the bankruptcy proceedings are still open and in response to a summary judgment motion based on judicial estoppel, she seeks leave to amend her bankruptcy petition?  In the Fifth Circuit it doesn’t matter.  The Vioxx court explained the recent decision in Love v. Tyson Foods, Inc., 677 F.3d 258 (5th Cir.2012): 

The Fifth Circuit held that the district court did not abuse its discretion when it granted summary judgment, because the plaintiff had not adequately addressed his failure to disclose his claims in his original bankruptcy petition—that is, at the time [plaintiff] failed to meet his disclosure obligations, which is the relevant time frame for the judicial estoppel analysis. The Love Court found it significant that [plaintiff] did state that he would pay his creditors before collecting any money from his claims against [defendant], but he made this assertion only after [defendant] brought his nondisclosure to light.  On the other hand, [plaintiff’s] disclosure obligations arose long beforehand, and he had not adequately explained why he did not meet those obligations at that time. The court also noted that if a debtor who is caught concealing his claims by an opponent could then disclose his claims in order to fix the problem, there would virtually no incentive for a debtor to disclose his claims until forced to do so by an opponent.

In re Vioxx, 2012 WL 4097200 at *4.  “[A] plaintiff may not be permitted to pursue a claim that was omitted from a bankruptcy petition, even if that plaintiff reopens her bankruptcy proceedings and amends her petition.”  Id. at *3.  Tough love.

            This hard line by the Fifth Circuit prompted us to poke around and see what some of the other circuits were doing.  Our research is by no means exhaustive and should only be used as a jumping off point – but we did find a few other decisions worthy of mention. 

            First, the Fifth Circuit is not alone it is embracing of judicial estoppel for undisclosed claims in bankruptcy:  White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472, 480 (6th Cir.2010) (affirming grant of summary judgment dismissing plaintiff's undisclosed sexual harassment claim); Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314, 325 (3d Cir. 2003) ("Applying a lesser sanction [than judicial estoppel] . . . would reward [plaintiff] for what appears to be duplicitous conduct in the course of its bankruptcy proceeding. [Plaintiff] would still reap the benefit of any recovery . . . . In addition, the integrity of both the bankruptcy process and the judicial process would suffer."), cert. denied, 541 U.S. 1043 (2004); Payless Wholesale Distribs., Inc. v. Alberto Culver, Inc., 989 F.2d 570, 571-72 (1st Cir.) ("In order to preserve the requisite reliability of disclosure statements and to provide assurances to creditors regarding the finality of plans which they have voted to approve . . . [plaintiff's] failure to announce [its] claim against a creditor precludes it from litigating the cause of action at this time."), cert. denied, 510 U.S. 931 (1993).

            The Ninth Circuit, however, doesn’t join in.  Instead, that court has held that rather than invoking judicial estoppel, allowing a plaintiff to remedy his “inconsistent assertions by allowing him to reopen his bankruptcy case, thereby giv[es] the bankruptcy trustee an opportunity to administer the unscheduled claims.” Dunmore v. United States, 358 F.3d 1107, 1113 (9th Cir. 2004).  So, in the Ninth Circuit, the failure to disclose may be remedied by reopening the bankruptcy case and properly disclosing the claims.  This then leads to decisions such as Cannata v. Wyndham Worldwide Corp., 798 F.Supp.2d 1165 (D. Nev. 2011) in which the court denied judicial estoppel in favor of an “alternative equitable solution” that allowed plaintiff to pursue her claims but limited any potential award to “the amount necessary for the repayment of her creditors as determined by the chapter 7 estate trustee. [Plaintiff] will receive nothing.”  Id. at 1176.  The court reasoned:  “This solution also serves to discourage others not disclosing assets during bankruptcy proceedings.”  Id.  It certainly discourages that plaintiff from aggressively pursuing her claims.

We also found an interesting twist in the Eleventh Circuit.  The Eleventh Circuit would appear to be a judicial estoppel friendly jurisdicition.  See Robinson v. Tyson Foods, 595 F.3d 1269, 1276 (11th Cir. 2010) (summary judgment granted on judicial estoppel grounds in employment discrimination action; plaintiff had "motive to conceal her claims in order to keep any settlement proceeds" which made "a mockery of the judicial system").  Likewise, in an earlier decision, Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1288 (11th Cir.2002), the court granted defendant’s motion for summary judgment on the ground of judicial estoppel and held that allowing an amendment or re-opening of the bankruptcy proceedings would “diminish the necessary incentive to provide the bankruptcy court with a truthful disclosure of the debtor's assets.” Id. at 1288.  Two years later, the court called that decision into question in Parker v. Wendy's Int'l, Inc., 365 F.3d 1268, 1272 (11th Cir. 2004):  “it is questionable as to whether judicial estoppel was correctly applied in Burnes. The more appropriate defense in the Burnes case was, instead, that the debtor lacked standing.”  The difference between the cases – in Parker the bankruptcy trustee intervened and sought to pursue the action on behalf of the estate.  Finding the trustee wasn’t burdened by the debtor/plaintiff’s non-disclosure, summary judgment was denied.  Something to watch out for.

Finally, we refer you to the case of Byrd v. Wyeth, 2012 U.S. Dist. LEXIS 18590 (S.D. Miss. Feb. 15, 2012) because we happened upon it.  It contains a discussion of the difference between a Chapter 7 and a Chapter 13 bankruptcy and why the judicial estoppel analysis may differ.  We’ll leave that for another day.

Vaccine Act Preemption - Post-Bruesewitz

Breaking news here.  The Ninth Circuit has upheld a preemption-based dismissal of a Vaccine Act case. See Holmes v. Merck & Co., No. 08-16557, slip op. (9th Cir. Sept. 25, 2012).  As the docket number indicates, the Holmes appeal has been pending for over about 4 years.  It was resubmitted in 2011 after Bruesewitz v. Wyeth, 562 U.S. ___, 131 S. Ct. 1068 (2011).

Holmes involved MMR vaccine administered to a one-year-old baby.  Plaintiffs claimed that the vaccine caused seizures, brain damage and ultimately death.  Slip op. at 11794.  Plaintiffs sought compensation on the child's behalf through the federal system and received $250,000.  Id.  Not satisfied with that, they sought to ring the tort bell as well, on their own behalf, filing a wrongful death action in Clark County (Las Vegas) Nevada court.  Fortunately, there was diversity of citizenship.

The defendant received summary judgment on the basis of Vaccine Act preemption, and plaintiffs appealed.  The main issue was whether the parent's could dodge preemption by filing an action in their own behalf while simultaneously taking advantage of the Act's compensation system on behalf of their minor child.

Plaintiffs hinged their arguments mostly on the fact that the Vaccine Act only provides compensation and requires exhaustion of administrative remedies to those allegedly (we say allegedly because the Act does not require that causation be proven - as long as the vaccine and injury are on the Act's administrative list) physically injured by vaccines, not to next of kin.  Plaintiffs claimed that, by filing a separate wrongful death action on their own behalf, they could in effect double dip, receiving both federal and common-law compensation.  Slip op. at 11800.

In Holmes, the Ninth Circuit said no:

The exhaustion requirement in Section 11 is only a subsection of Congress’s larger statutory scheme to ensure that vaccine manufacturers have an affordable and predictable way of handling injured parties’ compensation claims.  Though parents are not bound by Section 11’s exhaustion requirement, they are not free from the Act’s tort liability limitations.  Regardless of whether a plaintiff is the vaccine-recipient or the parent of one, Section 22 expressly preempts design-defect claims seeking compensation for injury or death caused by a accine’s unavoidable side effects.  §300aa-22(b). Section 22 expressly preempts tort suits based “solely” on the manufacturer’s failure to provide direct warnings to the injured party.  §300aa-22(c).

Slip op. at 11800.

The Act's triple-barrelled elimination of design claims, imposition of a warning compliance defense and mandating of the learned intermediary rule "indicates that Congress expressly intended to prohibit states from regulating large aspects of tort suits against vaccine manufacturers."  Id. at 11802.  Thus, technicalities of state law (whether the plaintiff was the injured person or somebody bringing a wrongful death action) did not affect the Act's preemption of substantive claims - the design and warning claims were the same no matter who the plaintiff was:

Given the structure and broad purpose of the Act as a whole, it is most reasonable to apply Section 22 to all design defect and failure to warn claims arising out of a vaccine-related injury or death, not just those that could have first been brought in the Vaccine Court.

Slip op. at 11805.  Instead, the Act's preemption clauses apply to "any civil action for damages arising from a vaccine-related injury" without limiting the identity of the plaintiff.  Id. at 11806 (quotation marks omitted).  Moreover, to allow different claims for different categories of plaintiff would "create[] a convoluted trial and liability scenario," since where the vaccine recipient was not dead, both sets of claims would otherwise be tried together.  Id.  There was no basis for believing that "Congress gave greater rights" to family members than to the injured persons themselves.  Id.

 To allow parents to bring claims that were otherwise barred by the Vaccine Act also was at war with the broader purposes of the Vaccine Act:

[I]f we were to conclude that the parents of those suffering a vaccine-related injury could bring design defect and failure to warn claims outside of [preemptive] limitations, we would be acting contrary to the statute’s central purpose of managing vaccine manufacturers’ liability because our construction would do little to protect the vaccine manufacturers from suit.

 

Slip op. at 11807.  Protection from liability, after all was why Congress acted in the first place.

So You’re Telling Me There’s a Chance

Anything can happen. You’ve probably heard the claim that a million monkeys in front of a million typewriters would eventually type one of Shakespeare’s sonnets.  But good luck waiting for the release of “A Monkey’s Immortality Sonnet.”  In sports, old-time Dodger fans used to say, “Wait’ll next year,” and the next spring they thought, “Anything can happen.”  That is, until summer passed, and the Brooklyn Bums disappointed them again.  “Anything can happen” makes for great drama in movies too.  A barely .500 club fighter from South Philly wins the heavyweight title.  But it took two movies.  Bobsledders from tropical Jamaica go to the Winter Olympics.  Oh, wait, that was real.  But they didn’t win. 

In musings, sports and entertainment, “anything can happen” can be a source of fun and inspiration.  Not so much in the courts. 

Bonander v. Breg, Inc., 2012 U.S. Dist. LEXIS 132620 (D. Minn. Sept. 18, 2012), is a summary judgment opinion in a failure to warn pain pump case.  The doctor who inserted the pain pump in the plaintiff’s shoulder said he never read the product label.  Id. at 5.  He didn’t listen to sales reps.  Id.  He didn’t spend a lot of time reading Dear Doctor Letters and didn’t remember reading one from the defendant.  Id.  He didn’t expect medical device companies or their sales reps to be the ones who supplied him with information about the risks and benefits of their medical devices.  Id.  He relied instead on his training, the literature and his interaction with colleagues.  Id. 

So the defendant moved for summary judgment: no causation because a different warning from the defendant wouldn’t have mattered to this doctor.  Id. at *1.  He wouldn’t have looked at it, much less considered it. 

Sounds like a winner, right?  Unfortunately, anything can happen. 

The court denied the motion.  The reason?  Four years after the plaintiff’s procedure the doctor stopped using pain pumps for shoulder surgeries after seeing an article in a medical journal that linked pain pumps and the type of injury that the plaintiff had.  Id. at *8.  But that doesn’t undermine the doctor’s testimony that he didn’t consider risks/benefit information coming from medical device companies.  It underscores it.  He got this information from a journal. 

The court conceded that the doctor “did not rely on medical device companies to provide such information,” but concluded nonetheless that the doctor “may still have responded to a warning” that was communicated to him.  Id. at *11.  This reasoning has us thinking of Lloyd Christmas: “So you’re telling me there’s a chance.”   

The court also said that the doctor never “foreclosed the possibility” that he would have heeded a warning communicated to him by the defendant.  Id. at *7-8.  But more important, it seems, is that he never opened it.  We don’t think that summary judgment should be defeated by mere possibilities.  Inferences must be “reasonable.”  

Remember, this was summary judgment.  The plaintiff already had discovery and an opportunity to seek evidence and testimony from the doctor.  It wasn’t early spring in 1951 Brooklyn.  It was late summer with the Dodgers out of the pennant race.  Much like all those early Dodger seasons (at least, pre-1955), we think the court should have put an early end to things.