More Punitive Damages Preemption, Sixth Circuit Reaffirms Garcia

The following is a guest post by Laura Mastrangelo at Reed Smith, who gets all the credit, and takes all the blame, for its contents.  Take it away Laura....

*********

There was a fair amount of preemption action on punitive damage statutes last week, at least with respect to those states that limit punitive damages for FDA approved drugs and devices.  John Sullivan provided excellent coverage of Zimmerman v. Novartis Pharmaceutical Corp., ___ F. Supp. 2d ___, 2012 WL 3848545 (D. Md. Sept. 5, 2012), yesterday here, so I won’t belabor that discussion further.  Flying more under the radar, though, the Sixth Circuit issued an opinion in Marsh v. Genentech, Inc., ___ F.3d ___, 2012 WL 3854780 (6th Cir. Sept. 6, 2012), which dovetails nicely with the District of Maryland’s analysis in Zimmerman.  In Marsh, the Sixth Circuit affirmed its previous holding in Garcia v. Wyeth-Ayerst Laboratories, 385 F.3d 961 (6th Cir. 2004), that the fraud exception to Michigan’s bar on products liability suits against drug manufacturers is preempted, even where Plaintiffs haven’t alleged fraud-on-the-FDA in the classical sense.

Plaintiffs brought consolidated products-liability actions against drug manufacturers Genentech, Inc. and Xoma (U.S.) LLC (collectively, “Genentech”) to recover for injuries allegedly sustained from use of the psoriasis medication Raptiva, alleging strict products liability under design-defect and failure-to-warn theories, negligence, breach of warranty, and fraud.  Id. at *1.  The action consolidated four different plaintiffs, but apart from their dates of use and alleged injuries, the allegations for the four were identical.  Id., n.2.

Plaintiffs claimed that, both prior to and after FDA approval, Genentech knew of dangerous side effects that it concealed from the public and did not include in the drug’s label.  Id. at *1.  Specific to the arguments at issue here, Plaintiffs further alleged that Genentech “intentionally and negligently failed to update statement of contraindications, warnings, precautions, and adverse reactions that Defendant affirmatively knew about” and “intentionally and negligently failed to comply with various [FDA disclosure regulations].”  Id.

Genentech moved to dismiss, and won.  The district court held that Genentech was entitled to immunity under the Michigan Products Liability Act (the Act) and that Plaintiffs’ claim that immunity did not apply was preempted by federal law.  Id. at *2.  Citing Garcia, the district court explained that federal law preempts tort claims premised on the Act’s exceptions absent a finding by the FDA itself that the manufacturer had committed fraud or bribery.  Id.  The district court concluded that, because Plaintiffs had not alleged that the FDA had found that Genentech committed fraud, their claims were preempted.  Id.

It’s not news that Michigan law is very favorable to drug manufacturers, providing that a drug manufacturer or seller is not liable for injuries caused by the use of its products “if the drug was approved for safety and efficacy by the [FDA], and the drug and its labeling were in compliance with the [FDA’s] approval at the time the drug left the control of the manufacturer or seller.”  Mich. Comp. Laws §600.2946(5).

Statutory immunity does not apply, however, if the manufacturer or seller:  (a) Intentionally withholds from or misrepresents to the FDA information concerning the drug that is required to be submitted under the FDCA, and the drug would not have been approved, or the FDA United States food and drug administration would have withdrawn approval for the drug if the information were accurately submitted, or (b) Makes an illegal payment to an official or employee of the United States food and drug administration for the purpose of securing or maintaining approval of the drug.  2012 WL 3854780, at *2-3.  The Michigan Supreme Court has described the Act’s immunity provision as “an absolute defense to a products liability claim” premised on the determination that “compliance with federal governmental standards (established by the FDA) is conclusive on the issue of due care for drugs.”  Taylor v. Smith-Kline Beecham Corp., 658 N.W.2d 127, 130-31 (Mich. 2003).

Following Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), the Sixth Circuit previously held in Garcia that suits against drug manufacturers under Michigan law in which the Plaintiffs seeks to defeat immunity by invoking the Act’s fraud exceptions are equivalent to fraud-on-the-FDA claims and are thus preempted.  2012 WL 3854780, at *4.  Even though, under Michigan law, fraud on the FDA is an exception to a grant of immunity to the manufacturer rather than a stand-alone cause of action, it nonetheless ultimately “requir[es] proof of fraud committed against the FDA” to succeed, and is therefore preempted.  Id.  “Garcia thus essentially requires treating a plaintiff's fraud arguments against manufacturer immunity as a threshold “claim” that can be preempted.”  Id.

Here, Plaintiffs attempted to argue that Garcia did not apply because their claims − in what was basically a pleading trick − did not invoke the Act’s fraud exception.  Id.  Though Plaintiffs’ theory was somewhat unclear, the Court interpreted the argument to be that immunity should not apply because of Genentech’s alleged non-compliance with the terms of the FDA’s approval of Raptiva, in that Genentech failed to comply with the FDA’s post-marketing reporting requirements.  Id.  However, the purported “non-compliance” was precisely the same fraud on the FDA allegations that the same court had ruled preempted in Garcia.

The court noted that Plaintiff’s allegations of non-compliance “do not fit comfortably within the statutory language requiring compliance for immunity to apply,” because the complaint alleged that Genentech did not comply with the terms of the FDA approval by failing to update its application or submit safety reports, not that “the drug and its labeling” did not comply.”  Id. at *5.  Further, the complaint also did not allege that the dose of Raptiva she received was adulterated or that its label varied from the label that the FDA approved.  Id.

Thus, the Court considered the allegation of failure to submit reports to the FDA that the FDA requires “to be a species of fraud on the agency under the state Act.”  Id.  “Indeed, the Michigan Act’s fraud exception specifically encompasses at least some of the misconduct Marsh alleges − a manufacturer “[i]ntentionally withhold[ing] from ... the [FDA] information concerning the drug that is required to be submitted under the [FDCA] ‘when the FDA “would have withdrawn approval for the drug if the information were accurately submitted.’”  Id.

Further, even if Plaintiffs’ allegations did constitute “non-compliance” (as opposed to fraud on the FDA) within the meaning of the Act, the claim “that immunity does not apply triggers the same concerns that animated Buckman and Garcia[,]” and is therefore preempted.  Id.  In short, Plaintiffs could not plead around preemption.

Plaintiffs claimed  that “Genentech failed to submit updated safety information to the FDA as required of all applicants by FDA Form 356h and generally applicable FDA regulations,” and thus they rely on “federal enactments [a]s a critical element in [their] case.”  Quoting Buckman, 531 U.S. at 353.  Moreover, this alleged wrong was perpetrated upon the agency, and thus implicates the “inherently federal” relationship described in Buckman.  Id. at 347.  Finally, Plaintiffs’ suit would require a court to rule on the adequacy of Genentech’s post-marketing disclosures to the FDA, which is the kind of “inter-branch[ ]meddling” that concerned the Court in Buckman.  See Garcia, 385 F.3d at 966.  Having a court determine whether any non-disclosed information “ ‘may reasonably affect the statement of contraindications, warnings, precautions or adverse reactions in the draft labeling,’ “would both usurp the agency's role and go beyond the court's institutional expertise.”  Marsh, 2012 WL 3854780, at *5.

The Court did not take a position, however, as to whether an allegation of “substantive non-compliance that is unique to the terms of approval of a particular drug or that more directly involves a consumer, such as a chemical variance or an inaccurate label, would be preempted under Garcia,” as the allegations there did not implicate such a holding.  Id., n. 9.

As a final note, the Court dismissed Plaintiffs’ other arguments, concluding first that the fact that Plaintiffs’ substantive claims sound in negligence and strict products liability would not enable her to avoid preemption, because so did the claims in Garcia.  Id. at *6.  Moreover, Wyeth v. Levine did not change the analysis either, because “[a]lthough preemption principles do not foreclose state-law failure-to-warn claims once the FDA has approved a drug, Michigan law does so.”  Id.  Finally, the Court rejected Plaintiffs’ argument that as an affirmative defense, Defendants bore the burden of establishing compliance with its FDA approval, because the complaint “makes clear that Marsh could not defeat Genentech's arguments for immunity.”  Id. at *6-7.

A Truddle, not a Muddle, through Mensing and Buckman

The scope of Mensing is one of the hotter issues in drug and device law these days. (The Bartlett appeal is one example.) To our defense-hack eyes, Mensing seems perfectly straightforward: a claim is preempted to the extent it alleges that the risks of a generic drug were not adequately disclosed. But the doctrinal landscape has quickly grown messy and treacherous. There is already a lot of legal kudzu out there, courtesy of plaintiff-lawyer ingenuity or judicial discontent with Mensing. Some attorneys and judges do not like preemption at all. Some do not smile upon the differential treatment between brandeds and generics. Accordingly, we get clever arguments and brittle analyses that limp along the page, proudly indifferent to the manner in which they manage to muck things up. It reminds us of what must surely be one of the most cynical observations of all time, when Thomas Hobbes wrote that "Reason scouts and spies for the passions." Nice (in the sense of being foolish) distinctions are drawn to preserve bogus claims.




Still, every once in a while Reason seems to stand up quite well for itself. That is the case with Truddle v. Wyeth, LLC et al., 2012 WL 338715 (N.D. Miss. Aug. 14, 2012), where the court dealt with Mensing in as clean and fair and straightforward a fashion as could be expected. The case is sad. A nineteen year old man was treated for gastritis. The doctor prescribed metoclapramide. The young man began suffering from hallucinations, extreme restlessness (akathisia), and suicidal impulses. He eventually took his own life. His parents filed suit against both brand-name and generic manufacturers, alleging negligence, strict liability, breach of warranties, misrepresentation, fraud, and negligence per se, all grounded upon an alleged failure to warn of the risks of side effects. The plaintiffs' counsel withdrew from the case (the opinion does not tell us why, prompting us to engage in all sorts of pointless speculation), the case was removed to federal court, and the generic defendants filed a motion to dismiss the case because of Mensing preemption.



The generic defendants argued exactly what we would expect them to argue -- that Mensing governed the entire case because all of claims, no matter what the styling, were predicated on an alleged failure to warn, and the generic defendants lacked any power to add warnings. The generic defendants "anticipate[d] that the Plaintiffs would argue that the Generic Defendants should have used an additional means of communicating warnings to physicians, such as letters to health care providers, and suspended sales of the drug until the brandeds were changed." Truddle, 2012 WL 3338715 at *3. The defendants also anticipated that the plaintiffs might try to assert "design defect or other legal theories to escape the preemptive reach of Mensing." That's certainly a lot of anticipation, especially against a pro se plaintiff. Maybe it is smart to trot out, and then knock down, the other side's arguments, rather than wait for the court to endeavor to help out the pro se plaintiffs. In any event, the battle-lines are pretty well drawn in Mensing cases. The potential avenues for circumventing Mensing no longer arrive as a surprise.





The Truddle court granted the generic defendants' motion and dismissed all claims on the grounds of Mensing preemption. Even though the plaintiffs asserted various theories of recovery, "all theories stem from the Generic Defendants' alleged failure to warn of the side effects of the drug." Truddle, 2012 WL 3338715 at *4. Even when the plaintiff complained of activities that might at first blush seem different from disclosing risks on the label, such as failure to investigate or test, any knowledge that would have been acquired from such investigation or testing "would have been helpful" only insofar as it would have been "communicated through labeling - which would not have made any difference as long as the Generic Defendants were following the FDA's labeling regulations." Id. The generic defendants could not have unilaterally improved the labeling even if they wanted to -- that is the point of Mensing. The Truddle judge offers a healthy dose of clear-thinking, and we wouldn't mind seeing that spread to other courts, including a couple we can walk to in ten minutes.



That ends that. Or at least, it could. But the plaintiffs' fraud and misrepresentation claims attacked the defendants for fraud on the FDA, and the Truddle court seized the opportunity to bring some additional clarity on that issue. There was a need for clarity, because a couple of Fifth Circuit cases introduced some unnecessary puzzlement into the Buckman issue. In the first case, which we would like to call the "Bad case," but which the official reporter calls Hughes v. Boston Scientific Corp., 631 F.3d 762 (5th Cir. 2011), the Fifth Circuit held that a state tort claim for negligence "that attempted to prove breach of a state law duty by asserting a violation of FDA regulations was not a fraud-on-the-FDA claim that would be preempted by Buckman." Truddle, 2012 WL 3338715 at *6. The negligence claim in Hughes was predicated on the manufacturer's failure to comply with the applicable federal statutes and regulations. Well, if there is no private right of action under the federal laws (and there isn't) what exactly are we talking about in Hughes? The negligence claim, pled under Mississippi law, charged, inter alia, that the defendant manufactured and distributed the product inconsistently with its FDA PMA approval by failing to report serious injuries and malfunctions of the device as required by MDR regulations. The Hughes court said that this theory was different from a fraud-on-the-FDA theory that would be preempted under Buckman. Maybe - but that does not make it a valid action under state law. Hughes looks like sheer nonsense, but it is Fifth Circuit nonsense, so the Truddle court had to navigate around it.



The Truddle court did so by holding fast to another case, which we like to call the "Good case," but which you will want to cite as Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 672 F.3d 372 (5th Cir. 2012). In Lofton, the Fifth Circuit applied Buckman preemption, in contrast to the Hughes court's unconvincing effort to dodge it. The plaintiff in Lofton alleged that the manufacturer of Motrin had not warned consumers of the risk of autoimmune reactions to the drug. The failure to warn claim was brought under Texas law, which establishes a rebuttable presumption that a drug manufacturer is not liable for failure to warn if the FDA approved the warnings in question. Texas law is specific that such a presumption can be rebutted if the defendant withheld information from the FDA. The issue is whether that fraud-on-the-FDA exception was preempted by Buckman. Sound familiar? We've written about this issue before, discussing another pair of cases, with the good one being Garcia v. Wyeth-Ayerst Labs., 585 F.3d 361 (6th Cir. 2004), and the bad one (wretched, awful, horrible, etc - we're tempted to unload the thesaurus on this one) is Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006), aff'd by an equally divided court sub nom. Warner-Lambert Co. LLC v. Kent, 552 U.S. 440 (2008). Desiano seems nutty in calling off Buckman preemption when fraud-on-the-FDA is part of an exception instead of the cause of action itself, and we would hate to see other courts latch onto the Desiano rationale. Mercifully, the Lofton court did not do so. In Lofton, the Fifth Circuit applied Buckman preemption because the relationship between the manufacturer and the federal regulator was central to the matter at issue.



The Truddle court, after being confronted with the sloppiness of Hughes and the sanity of Lofton, divined a unifying Buckman principle that it believed compelled preemption in the Truddle case: "It is likely that the Plaintiffs' fraud-on-the-FDA theory would be preempted under Buckman, as the theory concerns the 'inherently federal' relationship between the FDA and the Generic Defendants, which are entities regulated by the FDA." Truddle, 2012 WL 3338715 at *7. Now it may be that the Truddle court simply (and rightly)  preferred the interpretation of Buckman in Lofton, but it didn't have to go there because Mensing answered the question.  Lofton versus Hughes made no difference since, in either case (or in neither case) where a generic product is involved the statutory "sameness" rationale of Mensing controls (neither Hughes nor Lofton involved generics).  Clearly, the Truddle court did not merely use reason to scout and spy for a preordained result. It returned to first principles. Those first principles result in more vigorous applications of Mensing and Buckman.

Fifth Circuit Breaks Buckman Tie

Does Buckman v. Plaintiff's Legal Commmittee, 531 U.S. 341 (2001), apply any time that a plaintiff raises a fraud on the FDA allegation in litigation, or is it limited to causes of action denominated "fraud on the FDA?  Most courts have agreed with the Sixth Circuit that Buckman applies across the board.  See , 385 F.3d 961 (6th Cir. 2004).  A persistent minority, however, has limited Buckman to complete "fraud on the FDA" causes of action.  See Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006).  The Supreme Court attempted, but failed, to close the split in Desiano, but failed - splitting 4-4.  See Warner Lambert LLC v. Kent, 552 U.S. 440 (2008).
Garcia v. Wyeth-Ayerst Laboratories

Both Garcia and Desiano involved the "fraud on the FDA" exception to a Michigan tort reform statute that imposes a presumption of adequacy on warnings that are FDA approved - that is, just about every warning.  The Michigan statute was essentially dispositive.

Then Texas passed a similar presumption statute that is almost as dispositive in the ordinary case as Michigan's.  It was only a matter of time before the Fifth Circuit would be called upon to decide the same question as in Garcia/Desiano.

Also in the mix is the Supreme Court's later, extremely anti-preemption, decision in Wyeth v. Levine, 555 U.S 555 (2008).

We're pleased to be able to report that, unanimously, the Fifth Circuit has agreed with Garcia and given Buckman a broad reading that can't be avoided by simple pleading strategems.  The rationale of Buckman applies anytime fraud on the FDA is asserted by a civil litigant:

Buckman’s fraud-on-the-FDA analysis is more factually and legally apposite to the interpretation of §82.007(b)(1) [the Texas statute]. Moreover, Levine preserves common law state tort claims that parallel or reinforce the agency’s efforts but do not involve the relationship between the federal regulator and the regulated entity, the dispositive factor for federal preemption in Buckman.  In fact, neither the majority nor dissent in Levine cut back on Buckman or, indeed, found a state law fraud-on-the-agency theory viable in this broader context.  Only by denying that the Texas statute is what it is - a requirement to prove fraud on the FDA - can Levine prevail or Buckman be distinguished.

Lofton v. McNeil Consumer & Specialty Pharmaceuticals, No. 10-10956, slip op. (5th Cir. Feb. 22, 2012).

Nor does the "presumption against preemption" (assuming it survived PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011)) apply where fraud on the FDA is being alleged:

Even with the benefit of Levine and PLIVA, this court is unable to assess the current scope or existence of the presumption against preemption.  We take refuge in the conclusion that because §82.007(b)(1) requires a Texas plaintiff to prove fraud-on-the-FDA to recover for failure to warn, this requirement invokes federal law supremacy according to Buckman.

Lofton, slip op. at 13.

Buckman, of course, found the presumption inapplicable because federal agency fraud is a "uniquely federal" area of the law.  531 U.S. at 347-48.

Thus, Lofton aligned itself with Garcia.  We repeat the Fifth Circuit's excellent analysis in full:

Desiano’s and [plaintiffs'] focus on “traditional” tort duties is unpersuasive when the statute at issue conditions recovery on “establishing” what amounts to fraud on the agency.

Also unpersuasive is the idea that it makes a difference for preemption purposes whether fraud-on-the-FDA has become an “element” of traditional tort claims because of the state statutes, or an item of rebuttal to a defendant’s affirmative defense.  We reject [plaintiffs'] specific argument that §82.007(b)(1) “is merely a legislative means to produce some evidence” of fraud on the FDA to counter the insulation from liability otherwise afforded by §82.007(a)(1).  Either way, under the Texas provision, a plaintiff must “establish” a violation of FDA’s required disclosures.  In so doing, the plaintiff necessarily re-treads the FDA’s administrative ground both to conduct discovery and to persuade a jury.  [Plaintiffs'] artful reasoning overlooks the reality of trial practice and the precise statutory language.

We also disagree with the Second Circuit that statutes like §82.007(b)(1) and the Michigan statute do not pose the same over-disclosure problems that Buckman contemplated.  The Supreme Court was concerned that “disclosures to the FDA, although deemed appropriate by the Administration, will later be judged insufficient in state court.”  Buckman, 531 U.S. at 351.  When the FDA has not found fraud, two sorts of interference arise from these claims.  First, §82.007(b)(1) allows the state court to interject varying views on what disclosures are sufficient.  The resulting uncertainty compels manufacturers to flood the FDA with information to ensure that they retain the §82.007(a)(1) presumption of non-liability.  FDA in turn loses control over its ability, based on scientific expertise, to prescribe – and intelligently limit – the scope of disclosures necessary for its work.  Second, the statutory requirement of proving fraud-on-the-FDA may directly invade the agency’s processes when close questions of “withholding” or “misrepresentation” arise.  These dangers are inherent in Buckman’s concern to preserve the agency’s discretion to police the conduct of regulated entities.

While Desiano strains to evoke distinctions between the claim in Buckman and the Michigan statute, the Sixth Circuit’s approach is more faithful to Buckman.  In cases like this, where the FDA has not found fraud, the threat of imposing state liability on a drug manufacturer for defrauding the FDA intrudes on the competency of the FDA and its relationship with regulated entities.  Under such circumstances Buckman found a violation of the Supremacy Clause.  Thus, §82.007(b)(1), is preempted unless the FDA itself has found fraud.

Lofton, slip op. at 14-16.

Obviously, we agree with with Lofton.  In fact, we said pretty much the same thing way back when when Desiano was first before the Supreme Court in Kent.

Why Agency Fraud Is Like Fraud On The FDA

In our rather terse (due to firm involvement) post on Monday concerning Merck & Co. v. Ratliff, ___ S.W.3d ___, 2012 WL 413522 (Ky. App. Feb. 10, 2012) – beating both BNA and 360 by two days, BTW – we mentioned the “interesting” aspects of that case.  Having noodled it a bit more, we’ve concluded that one of these deserves a little more attention.


We noted that, in Ratliff, the court recognized similarities between “fraud on the market” and agency fraud theories such as fraud on the FDA.  Id. at *7.  We agree, and we’d like to explain a bit why this is so.

“Fraud on the market” as our posts on that subject have discussed, is a legal doctrine, so far (thankfully) unique to securities litigation, that waters down the traditionally rather stringent standards for proving fraud by creating a “presumption” of reliance in certain limited circumstances.  See Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (4 justice majority of 7-justice court).  “Fraud on the market” isn’t a state-law claim.  Neither the Supreme Court nor any state high court has extended the “fraud on the market” presumption to any state-law action, even in the securities realm.  That proposition was what our 50-state fraud on the market post was intended to (and we think, did) establish.

In Basic, Inc., the Supreme Court bought a questionable proposition – that securities markets are uniquely “efficient” and “developed.”  In other words, because there are so many participants in national stock markets, and those participants have such a voracious appetite for information, then anything about a particular stock is essentially instantaneously reflected in that stock’s price.  Because of that (rather questionable) conclusion, any plaintiff in a securities fraud suit is “presumed” to rely on any material disinformation.

Even assuming that’s true in the securities arena – a proposition we don’t really accept – it’s certainly not true where prescription medical products are concerned.  Prescription products, being available only by prescription, necessarily require medical approval before their use.  Doctors’ knowledge and attitudes span a vast spectrum. We see that all the time in making causation motions under the learned intermediary rule.  We can beat causation in a prescription medical product case by:  (1) showing that the highly educated and motivated prescriber knew all about the risk from independent continuing review of relevant literature, or conversely, (2) that the prescriber isolated him or herself from the influence of our client by not reading warnings at all and not paying attention to pharmaceutical detailing.

Thus, there’s absolutely no basis for a Basic, Inc. presumption of reliance on any different information that might have been disseminated by a pharmaceutical or medical device manufacturer.  Any given prescriber might already know it – or might never rely on that source – or even both at the same time.

[T]here is no prescription drug “market,” at least as that term is understood in the securities context. . . .  [T]he only “market” for a prescription drug is the potential group of patients who will be prescribed it by their physician, and if the side effects of the drug make it overly risky to ingest, the doctor will either not prescribe it or the patients will decide not to take it. . . .  [T]he decision to take a particular drug is a medical one, not one based on an comparative analysis of risk versus price.

Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 380 (D.N.J. 2004).  For these reasons, differing degrees of physician reliance have consistently defeated any presumption of reliance in learned intermediary situations.  See De Bouse v. Bayer, 922 N.E.2d 309, 319 (Ill. 2009) (rejecting “market theory” of causation; plaintiff “fails to allege that her particular doctor was actually deceived by any of [defendant’s] advertisements or statements”); International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., 929 A.2d 1076, 1087-88 (N.J. 2007) (“to the extent that plaintiff seeks to prove only that the price charged for [the drug] was higher than it should have been as a result of defendant’s fraudulent marketing campaign, and seeks thereby to be relieved of the usual requirements that plaintiff prove an ascertainable loss, the theory must fail”); Clark v. Pfizer, 990 A.2d 17, 27 (Pa. Super. 2010) (“statistical probability does not substitute for actual inquiry, as a general showing of percentages does not tend to prove that the class members’ specific doctors relied upon Defendants’ statements or that Defendants’ statements were the proximate cause of an injury”); New Jersey Citizen Action v. Schering-Plough Corp., 842 A.2d 174, 177-78 (N.J. Super. A.D. 2003) (“the intervention by a physician in the decision-making process necessitated by his or her exercise of judgment whether or not to prescribe a particular medication protects consumers in ways respecting efficacy that are lacking in advertising campaigns for other products”); Commonwealth v. Ortho-McNeil-Janssen Pharmaceuticals Inc., 2010 WL 3548474 (Pa. C.P. June 25, 2010) (“application of the fraud on the market theory was rejected”; citing “evidence that doctors . . . prescribed off-label use of [the drug] to class members for reasons wholly unrelated to defendants’ alleged fraudulent marketing”); UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121, 133-34 (2d Cir. 2010) (“prescribing doctors do not generally consider the price of a medication when deciding what to prescribe for an individual patient”); In re St. Jude Medical, Inc., 522 F.3d 836, 839-40 (8th Cir. 2008) (“evidence concerning the reliance or non-reliance of individual physicians and patients” defeats generalized proof of causation); Zafarana v. Pfizer, Inc., 724 F. Supp.2d 545, 558 (E.D. Pa. 2010) (“there could be no justifiable reliance in general due to the operation of the learned intermediary doctrine”); In re Zyprexa Products Liability Litigation, 671 F. Supp.2d 397, 453-54 (E.D.N.Y. 2009) (“almost one million [drug] prescriptions, or . . . over one hundred thousand ‘episodes of care’ would necessarily require individualized consideration of the circumstances of each case”); In re Neurontin Marketing, Sales Practices & Products Liability Litigation, 257 F.R.D. 315, 326 (D. Mass. 2009) (given “individualized requirements for approval or reimbursement imposed on various plans' members and, to some extent, their prescribing physicians,” “questions . . . regarding individual doctor's exposure to defendants’ misrepresentations and the causal nexus between those misrepresentations and plaintiffs’ injuries” involved “millions of disparate and varied human interactions”).

So how does this precedent relate to fraud on the FDA?  There isn’t as much law because Buckman Co. v. Plaintiff’s Legal Committee, 531 U.S. 341 (2001), held such claims preempted and thereby eliminated the need to come up with other defenses, but when one thinks about it, the theories bear considerable resemblance.

The fraud on the FDA theory in Buckman was typical. It alleged that “but for” the defendant’s “fraud” committed on the agency, the product in question would not have been granted approval and therefore could not have been sold:

Plaintiffs say petitioner made fraudulent representations to the Food and Drug Administration (FDA or Administration) in the course of obtaining approval to market the [devices]. Plaintiffs further claim that such representations were at least a “but for” cause of injuries that plaintiffs sustained from the implantation of these devices:  Had the representations not been made, the FDA would not have approved the devices, and plaintiffs would not have been injured.

531 U.S. at 343.  Note the resemblance to the fraud on the market cases – no mention whatever of the intervening medical decisions of the prescribing/implanting physicians.

Just as “fraud on the market,” through the imposition of a “presumption” of reliance, seeks to take the “learned intermediaries” out of the causation picture, so does fraud on the FDA.  Instead of presuming reliance, fraud on the FDA presumes that the FDA would not have taken the regulatory step it was purportedly fraudulently induced to take – in most cases approval of a product.  By so presuming that the FDA would have acted differently than it actually did (also why such claims inherently conflict with government decisions and must be preempted), fraud on the FDA would take the learned intermediary physicians out of the causal chain.  If the product could not be legally marketed, then it would never have been available to the doctors in the first place.

Both fraud on the market and fraud on the FDA thus seek to bypass the individualized decision-making of prescribing physicians through use of generalized presumptions that don’t correspond to the way things really work.  Just as physicians have varied reactions to allegedly withheld information, so does the FDA.  Revocation of approval of a drug or device is a serious step that the FDA rarely takes.  It never revoked approval of any of the bone screws involved in Buckman.  Not even a recall constitutes the revocation of approval:

[T]he argument is predicated on the faulty assumption that the recall invalidated the [products’] PMA [pre-market approval].  Plaintiffs have cited no authority for that proposition, and [defendant] correctly notes that the PMA process is governed by a completely separate statutory and regulatory regime than that governing withdrawal of a PMA – a process to which the [products] have never been subjected.

In re Medtronic, Inc. Sprint Fidelis Leads Products Liability Litigation, 592 F. Supp.2d 1147, 1155 (D. Minn. 2009), aff’d, 623 F.3d 1200, 1205 n.4 (8th Cir. 2010) (affirming for reasons stated by district court).  Accord Blanco v. Baxter Healthcare Corp., 70 Cal. Rptr.3d 566, 579 (Cal. App. 2008) (“The fact the FDA implemented a Class I recall of the [product] does not alter our conclusion. . . . we have found no evidence in the record to support the conclusion the FDA revoked the [product’s] PMA”); Erickson v. Boston Scientific Corp., 2011 WL 7036060, at *6 (C.D.Cal. Dec. 12, 2011) (recall not equivalent to revocation of approval); Theofanis v. Boston Scientific Corp., 2003 WL 24049229, at *2 ¶16 (S.D. Ind. 2003) (same). Thus, even if the FDA did determine that it had been defrauded, there’s no reason to assume that revocation of approval would be the responsive action of the Agency.

Thus, no presumption of revocation is valid in fraud on the FDA cases.  What happens when that presumption is eliminated?  The same as with fraud on the market, that’s what.  Fraud on the FDA plaintiffs face exactly the same conundrum – non-reliance of most prescribing physicians on information directed to the FDA but not to them.  That, too, arose in Bone Screw cases prior to Buckman.  For example, a dozen or more opinions in Tennessee refused to apply any fraud on the FDA presumption, and threw out the claims on causation grounds, citing that state’s rejection of fraud on the market presumptions:

[E]ven Tennessee did recognize “third party” fraud, [plaintiff] cannot prove several necessary elements of his claim – reliance and proximate cause.  Similar to negligent misrepresentation, reliance is an essential element of any action for fraudulent misrepresentation. Carter had provided no evidence that his physician . . . relied upon any misrepresentations to the FDA in deciding whether to use the . . . device in his spinal fusion surgery.

Carter v. Danek Medical, Inc., 1999 WL 33537317, 5 (W.D. Tenn. June 3, 1999) (citing In re Sofamor Danek Group, Inc., 123 F.3d 394 (6th Cir. 1997), and analogizing to Tennessee’s refusal to dispense with “actual reliance” through “a fraud-on-the-market theory of fraud”); accord, e.g., Ponthieux v. Danek Medical, Inc., 1999 WL 33486689, at *8 (W.D. Tenn. May 28, 1999) (same).  There are another half-dozen or more cases cases decided by the same judge employing he same rationale.

Thus, we think that the court in Ratliff was indeed onto something when it analogized between fraud on the market and fraud on the FDA.  Both are theories that seek to avoid the disparate medical decisions made by numerous treating physicians.  Both do so by invoking presumptions that don’t reflect what actually happens in the real world (at least in the world of drug and device litigation).  Thus, if Buckman had never happened, many of the same reasons why courts reject fraud on the market in prescription medical product litigation would also apply to bar fraud on the FDA claims as well.

Throw Enough Mud at the Wall and Some of it Will Stick

            We could have gone with “if at first you don’t succeed, try, try again.”  Or, Dory’s famous “Just keep swimming” from Disney’s Finding Nemo.  But, when talking about plaintiffs, slinging mud just feels more appropriate (to us).  And, I guess somewhere in here is a backhanded compliment about being persistent, but really we would describe our children as “persistent” when they ask for the 20^th time to go see the latest Disney movie – and it wouldn’t be a compliment.  In fact, under our breath you’d probably catch a few words we wouldn’t want our children to hear.  Since our message here isn’t for impressionable children but rather hardened plaintiffs’ counsel – we’ll shout it right out:  YOU CAN’T BRING A *&$%#%& CLAIM FOR FRAUD ON THE FDA.  Phew, that felt good.

            In a much more diplomatic and reserved fashion, that is what the court said in Pontious v. Medtronic, 2011 U.S. Dist. Lexis 140717 (D. Kan. Dec. 7, 2011).  Plaintiff attempted to bring her fraud-on-the-FDA claim as a consumer fraud action alleging that “[d]efendants violated the KCPA . . . when they willfully failed and refused to timely report information . . . as required by  21 C.F.R. § 805.50(a).”  Id. at *5-6.  The court quickly concluded that

Here, as in Buckman, the federal regulation is critical to plaintiff's state-law claim. . . . Claims that a defendant failed to make a report to the FDA as required by the [MDA] are among those that are preempted and cannot give rise to a state law cause of action.

Id. at *6-7 (citations omitted).  Like putting lipstick on a pig, it doesn’t matter if you dress it up as strict liability, negligence, misrepresentation, or consumer fraud – state law claims for alleged failure to provide information to the FDA are preempted under Buckman.  End of story. 

            Well, it wasn’t quite the end of this story.  Having not succeeded and wanting to keep swimming, plaintiff decided to throw a little mud.  While the court granted defendant’s motion to dismiss, it also granted plaintiff’s motion to amend her complaint.  Plaintiff’s new consumer fraud claim alleges “that defendants designed, manufactured, marketed, distributed, and/or sold a defective product; and . . .that defendants violated the KCPA by willfully marketing and/or selling that defective product.”  Id. at *10.   Because the claim now focuses on alleged misrepresentations to consumers rather than to the FDA, the court found the new claim not preempted under Buckman.  Id.   Although not willing to toss out the amended complaint, the court did recognize that it was “short on facts” supporting plaintiff’s consumer fraud claim and acknowledged that the claim might still be preempted “to the extent that any misrepresentation was based on a failure to comply with the FDA’s regulatory standards.”  Id. at *11.  The court just wasn’t quite ready to go there yet.   

            So, while it is clear to us that the fat lady has sung on fraud-on-the-FDA claims, this plaintiff, at least, has lived to fight another day.

No Stand Up Comity In New York

A friend of ours, we'll call him “Anonymous,” let us know about the recent decision in Forman v. Novartis Pharmaceuticals Corp., ___ F. Supp.2d ___, 2011 WL 2559386 (E.D.N.Y. June 27, 2011).  We reviewed it, and were somewhat taken aback that – after the court in Desiano v. Warner–Lambert & Co., 467 F.3d 85 (2d Cir. 2007), presumed to know more about Michigan law than either the Michigan courts (Taylor v. Smithkline Beecham Corp., 658 N.W.2d 127 (Mich. 2003)) or the Sixth Circuit (Garcia v. Wyeth-Ayerst Laboratories, 385 F.3d 961 (6th Cir. 2004)), with jurisdiction over Michigan – yet another court out of New York now presumes to know New Jersey law better than the New Jersey courts (McDarby v. Merck & Co., 949 A.2d 223 (N.J. App. Div.2008)), and the New Jersey federal courts, which have followed McDarby.  See Stanger v. APP Pharmaceuticals, LLC, 2010 WL 4941451, at *4 (D.N.J. Nov. 30, 2010); Baker v. APP Pharmaceuticals, LLC, 2010 WL 4941454, at *4 (D.N.J. Nov. 30, 2010); Haggerty v. Novartis Pharmaceuticals Corp., 2009 WL 5064779, at *4 n.4 (D.N.J. Dec. 15, 2009).

We made that point to our friend.

His response?

“Hey, its New York!  You're looking for humility?”

We wouldn’t dream of going that far.  After all, we know more than a few Yankees fans.

We’d just like to see a little comity every now and then.

That would preferable to the current, absurd situation where, in a prescription drug case in Michigan, or in a punitive damages case involving drugs in New Jersey, the plaintiffs lose under those states’ application of the fraud-on-the-FDA preemption rule of Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), to their own law.  But if plaintiffs can somehow wheedle their way into court in New York, then the same claims survive.

We made this last point in our initial discussion of Desiano way back in 2006, where we urged federal courts to “remember federalism” and not construe state causes of action differently from the courts of those states.  With New York courts continuing to boldly go where no courts have gone before (or since), and forum-shopping plaintiffs following them, we think it’s time to review this issue.

First, Buckman (with the caveat that Bexis’ role in that case gives us more than the usual defense interest in its correct application).

Buckman, at the Supreme Court level, involved a separate claim for fraud on the FDA – because that was the only thing appealable at the time.  The original orders, In re Orthopedic Bone Screw Products Liability Litigation, 1995 WL 273600, at *2-3 (E.D. Pa. March 2, 1995) (PTO 12), and In re Orthopedic Bone Screw Products Liability Litigation, 1997 WL 305257, at *2-3 (E.D. Pa. March 28, 1997) (reaffirming PTO 12 in light of Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996)), rev’d, 159 F.3d 817 (3d Cir. 1998), rev’d, 531 U.S. 341 (2001), dismissed not only separate causes of action for fraud on the FDA, but also claims dependent upon allegations that either asserted fraud on the FDA or sought private enforcement of the FDCA.

In the instant case, plaintiffs' fraud-on-the-FDA claim is not interchangeable with the Lohrs’ negligence claim.  This is so not because a state common-law fraud claim is preempted by the MDA, but because the fraud claim at issue here has as its object the FDA and not plaintiffs.  That object transforms an otherwise simple fraud claim that would not be preempted by the MDA according to the reasoning of Lohr into one that is precluded by virtue of the fact that the MDA does not provide for a private right of action.

1997 WL 305257, at *3.

However, the requirements of the federal rules allow only (with irrelevant exceptions) final judgments, and not partial dismissals, to be appealed.  Compare that to, say, the New York rule.  The major players in the Bone Screw litigation faced many other claims and allegations.  Only the FDA consultant – Buckman – had an appealable order.  Thus, that the Supreme Court in Buckman considered only a stand-alone claim, was simply the happenstance of the procedural background.

Let’s look – once again – at the reasons why the Supreme Court in Buckman (without dissent) found preemption:

• First of all, “the relationship between a federal agency and the entity it regulates is inherently federal in character.”  Buckman, 531 U.S. at 347.  That means, among other things, that there’s no presumption against preemption, id., because such a presumption (assuming it exists at all) is enjoyed only by “traditional state tort law principles” and not “any sort of fraud-on-the-agency theory.”  Id. at 352 (distinguishing Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984)).
• Claims asserting fraud on the FDA inherently “conflict with, and are therefore impliedly pre-empted by” the “ample” powers the FDA has to combat fraud itself.  351 U.S. at 348.
• Conflict preemption also arises because the “balance” among the regulatory objectives that the FDA seeks “can be skewed by allowing fraud-on-the-FDA claims under state tort law.”  Id.
• How does this skewing take place?  One way the “balance” can be upset, is for tort claims to encourage regulated entities to supply more information than the FDA decides that it wants.  Id. at 348-49.  The FDA's "flexibility is a critical component of the statutory and regulatory framework.”  Id. at 349.
• “State-law fraud-on-the-FDA claims inevitably conflict with the FDA’s responsibility to police fraud consistently with the [FDA's] judgment and objectives.  As a practical matter, complying with the FDA’s detailed regulatory regime in the shadow of 50 States’ tort regimes will dramatically increase the burdens facing potential applicants-burdens not contemplated by Congress in enacting the FDCA and the MDA.”  Id. at 350.
• The increased administrative burden of particular concern to in Buckman was “fear” of an entity’s FDA submissions being second-guessed (“judged insufficient”) by state juries, which creates “an incentive to submit a deluge of information that the Administration neither wants nor needs.”  Id. at 351.
• Buckman found “clear evidence that Congress intended that the MDA be enforced exclusively by the Federal Government.”  Id. at 352 (citing 21 U.S.C. §337(a)).
• “[F]raud claims [that] exist solely by virtue of the FDCA disclosure requirements” are different from claims involving “alleged failure to use reasonable care” that only happen to “parallel federal safety requirements.”  351 U.S. at 353. “[T]he sort of litigation” where “the existence of these federal enactments is a critical element in [plaintiffs’] case . . . would exert an extraneous pull on the [FDCA], and it is therefore pre-empted.”  Id.

Thus, in Buckman preemption was directed at “any sort of fraud-on-the-agency theory” because:  (1) the relationship of a federally regulated entity with its federal regulator is none of the states’ business, (2) state-law second-guessing of submissions to the FDA “inevitably” encourages a “deluge” of unnecessary information that the FDA neither wants nor needs, and (3) state-law claims with FDCA violations as a "critical element" violate the FDCA's express provision for "exclusive" federal enforcement.

Then along comes Desiano, completely ignoring the substance of the Buckman preemption decision while focusing on the form of action.  A duly enacted Michigan statute, as construed by that state’s highest court (see Taylor, supra), precluded all tort claims involving FDA-approved drugs – “traditional” or not.  That statute had a fraud-on-the-FDA exception that predicated any and all state tort liability on a finding of agency fraud.  The Sixth Circuit, held that just like the Buckman plaintiffs, Michigan was butting into an “inherently federal” regulatory relationship, and that this exception also put state juries in the position of second-guessing the sufficiency of submissions to the FDA.  See Garcia, 385 F.3d at 965-67 (e.g., statute “raise[d] the same inter-branch-meddling concerns that animated Buckman”).

Desiano refused to give comity to the Sixth Circuit’s judgment concerning the law of a Sixth Circuit state.  467 F.3d at 89-92.

Fresh from deciding to ignore the Sixth Circuit, Desiano also looked past the fraud-on-the-FDA-related floodgate holding back the possible torrent of state liability, and saw only that liability itself.  That’s the only way that the Second Circuit could fly in the face of the unanimous contrary holding in Buckman and find any sort of presumption against preemption.  Id. at 94 (the statute “did not invent new causes of action premised on fraud against the FDA” but “rather [] regulate[s] and restrict[s] when victims could continue to recover under preexisting state products liability law”).

That’s both completely true – and completely specious.  The Michigan statute – unlike a single claim – made everything hinge upon a state-law jury’s determination that an FDA-regulated entity had defrauded its regulator.  In Buckman-speak, it made the FDCA violation a "critical element" of every state cause of action.  Thus, in terms of Buckman's rationale for implied preemption, the Michigan statutory exception isn’t better, it’s worse.  All liability becomes predicated on a finding of agency fraud.  Not only is the state’s intrusion into an “inherently federal” regulatory relationship indistinguishable from Buckman, but the statutory exception makes practical stakes much higher.  The higher the stakes, the more “fear” potential defendants will have of an adverse outcome, and with that fear comes a correspondingly greater “incentive” to “deluge” the FDA with stuff it doesn’t want or need.

So Desiano looked everywhere except at the fraud-on-the-FDA claim itself:

[Plaingiffs] here are not pressing “fraud-on-the-FDA” claims, as the plaintiffs in Buckman, [but] are, rather, asserting claims that sound in traditional state tort law.  In Buckman, the Supreme Court mentioned two characteristics of preempted “fraud-on-the-FDA” claims that distinguish them from claims sounding in preexisting common law.  The Buckman Court suggested that the source and “vintage” of the duty the drug maker is accused of breaching in “fraud-on-the-FDA” claims is different from the source and “vintage” of the duty that obtains in traditional tort claims.  On this basis, the Buckman Court distinguished the plaintiff's unpreempted claims in Silkwood. . . .

467 F.3d at 94.

But the defendants in Desiano weren’t asking the court for preemption of the underlying state-law claims.  They didn’t have to.  The Michigan legislature had already decided to restrict those claims as a matter of state (not federal) law.  Desiano raised the state-law claims as a strawman, despite Buckman involving only the state-law trigger for liability.  Moreover, Buckman distinguished Silkwood because the latter case's claims were “not based on any sort of fraud-on-the-agency theory, but on traditional state tort law principles.”  351 U.S. 352 (emphasis added).  The statutory trigger in Desiano was anything but "traditional" - that's why it took a statute to create it.

And the distinction of Silkwood encompassed “any sort of fraud-on-the-agency theory” – Buckman’s reasoning wasn’t limited to “causes of action.”

Ignoring that point was the next way that Desiano went astray:

The second difference between common law actions and “fraud-on-the-FDA” claims, suggested in Buckman, is that in FDA-fraud cases, proof of fraud against the FDA is alone sufficient to impose liability.  In Buckman, there were no freestanding allegations of wrongdoing apart from the defendant's purported failure to comply with FDA disclosure requirements.  And Buckman explicitly distinguished Medtronic [which we call Lohr] on this ground.  Medtronic, the Buckman Court said, involved a “common-law negligence action against the manufacturer of an allegedly defective” product.

467 F.3d at 95.  However, the statutory trigger in Desiano involved an explicit fraud-on-the-FDA trigger.

Via a smoke-and-mirrors analysis that looked past Michigan’s fraud-on-the-FDA trigger to the “traditional” claims restricted by state (not federal) law, Desiano thus stood Buckman on its head – converting that Court’s intensely practical concerns about the inherent effects of a particular “theory” into a pedantic concern limited to “freestanding” claims.

Then, what of Buckman’s declaration that a federal regulator-regulatee relationship is “inherently federal” and thus off-limits to state tort law?  What of the practical concern over the consequences of “fear” of state second guessing?

In effect, Desiano held that Buckman didn’t really mean what it said:

[T]hese worries, if deemed controlling, would prove too much.  They would result in preemption of a scope that no one is contemplating, let alone advocating. . . .  So long as a court or jury is allowed to consider evidence of fraud against the FDA in an ordinary common law tort suit . . ., there will be substantial inducements on the pharmaceutical industry to provide the federal agency with just the kind of information that troubled the Buckman and Garcia Courts. . . .  [U]nless a state barred the submission of evidence of fraud against the FDA in run of the mill tort cases, the policy concerns that Buckman expressed in a very narrow context would seemingly justify invalidating any product liability suit brought against a drugmaker.  We do not believe Buckman meant to go anywhere near so far.

467 F.3d at 97. In other words, because we don't think the problems are as serious as the Supreme Court did, we're ignoring the Supreme Court.
 

For one thing, exclusion of fraud on the FDA evidence is exactly what most courts have done.  We’ve collected those cases here (and there are more since then).

For another thing, the Supreme Court recently gave the back of its hand to this sort of “you couldn’t have meant what you said” argument as a ground for limiting preemption.  That’s not a court’s job; that function lies with the legislature:

[I]t is not this Court's task to decide whether the statutory scheme established by Congress is unusual or even bizarre. . . .  [D]ifferent federal statutes and regulations may, as here, lead to different pre-emption results.  We will not distort the Supremacy Clause in order to create similar pre-emption across a dissimilar statutory scheme.  As always, Congress and the FDA retain the authority to change the law and regulations if they so desire.

PLIVA, Inc. v. Mensing, ___ U.S. ___, 2011 WL 2472790, at *12 (U.S. June 23, 2011).
 
Same here.
 
If the Michigan legislature objects to the way that preemption interacts with its statute, it could change the statute.  If Congress objects, it could modify §337 to allow certain private enforcement actions with respect to prescription drugs as it has with food.  Judicial predilections that preemption might somehow “prove too much,” Desiano, 467 F.3d at 97, aren’t substitutes for legislative (or regulatory) fixes – assuming any fix is needed.

That’s enough on Desiano. We won’t even go into the opinion's almost singular (we’d certainly never seen it before) resort to the Buckman oral argument transcript in its effort to limit what the Buckman decision actually held.  See 567 F.3d at 95-96 & n.8.


Our friend was indeed right.  Don’t expect humility – or even adherence to what’s supposed to be binding precedent – from New Yorkers, at least those with Article III lifetime appointments.  If they can make law there, they'll make law everywhere.

Oh, and it’s not just us who look askance at Desiano.  So did (and presumably does) the Supreme Court.  Presumably because of Desiano’s crabbed reading of Buckman (because that’s what the defendants argued) the Court granted certiorari in Desiano – although by then the lead plaintiff (Desiano was an appeal from an MDL, and individual plaintiffs get treated like cannon fodder in MDLs) was somebody named Kent.

As we of course reported, the result in Kent was a 4-4 tie, resulting in a non-precedential affirmance.  Warner-Lambert Co., LLC v. Kent, 552 U.S. 440 (2008) (per curiam order).

But the missing vote on the Court in Kent was Chief Justice Roberts.

And as subsequent events have shown, not just in Mensing, but in Riegel v. Medtronic, Inc., 552 U.S. 312 (2008), Wyeth v. Levine, 555 U.S. 555 (2009), and Bruesewitz v. Wyeth LLC, 131 S. Ct. 1068 (2011), too, the Chief is one of preemption’s best friends on the Court – particularly in FDCA-related cases.

All that means that Desiano – which wasn’t very persuasive (unless you're pro-plaintiff and result-oriented) to start with – is a thin reed indeed to be hanging one’s judicial robes on.  It’s one of the few adverse decisions out there that we can say with some certainty would be reversed if ever brought before the entire Court.

Which brings us – finally – to Forman.  New Jersey passed a tort reform bill a while ago that had a couple of provisions relevant to drug/device manufacturers.  For one thing it created a rebuttable presumption of adequacy for FDA-approved warnings (N.J.S.A. §2A:58C-4) that ordinarily is “virtually dispositive of such [warning] claims.”  Perez v. Wyeth Laboratories Inc., 734 A.2d 1245, 1259 (N.J. 1999).  For another thing, the statute completely barred punitive damages against makers of FDA-approved products, except upon a showing of fraud on the FDA.  N.J.S.A. §2A:58C-5(c).

The Appellate Division of the New Jersey Superior Court took a look at this provision in McDarby v. Merck & Co., 949 A.2d 223 (N.J. App. Div. 2008).  Notably, McDarby was decided after Desiano, so the court had the opportunity to consider whether to follow the Second Circuit down the path to perdition.  McDarby didn’t – and reversed a punitive damages award:

Although the decision in Buckman must be read in light of the recent affirmance, by an equally divided Court, of the Second Circuit’s decision in Desiano, we nonetheless find Buckman to be controlling precedent in this case.  We reach this conclusion because we perceive a difference between the purposes of compensatory and punitive damages that renders the distinctions drawn by the Desiano court between the fraud claims before it and those in Buckman inapplicable in the present context. . . .  [T]he statutory focus, like that in Buckman, is narrowly drawn upon a defendant’s act of knowingly withholding from or misrepresenting to the FDA information material to the harm alleged.  This limited claim for punitive damages, focused upon deterring a manufacturer's knowingly inadequate response to FDA informational requirements, thus differs from the common law compensatory claims at issue in Desiano. . . .

Although there are differences between the fraud-on-the-FDA claim asserted in Buckman and [plaintiff's] punitive damage claim premised on the withholding of information . . . we find the single focus upon fraud on the FDA in each to be sufficiently similar to warrant the application of Buckman to this case. . . .  Because the punitive damages provisions of N.J.S.A. 2A:58C-5c impinge upon federal statute and regulation to the same extent that was recognized in Buckman, we find the principles of implied preemption applied by the Court in Buckman to be applicable here.

949 A.2d at 273-76 (we omitted the court's long discussions of both Buckman and Desiano, since we’ve already inflicted our own on you).

Later, the New Jersey Supreme Court dismissed an appeal it had previously granted in McDarby without comment as improvidently granted.  McDarby v. Merck & Co., 979 A.2d 766 (N.J. 2009).   That suggests that New Jersey's highest court had no problem the Appellate Division's preemption analysis.

Still later, another panel of the Appellate Division held that punitive damages claims were preempted under McDarby, because they necessarily conflicted with what the FDA actually did.  See Cornett v. Johnson & Johnson, 998 A.2d 543, 567 (N.J. Super. App. Div. 2010) (noting that such an award would be regulatorily contrafactual – requiring that “the FDA would have responded differently” than it in fact did).  Ignoring what the FDA actually did in favor of what a state-law jury says it should have done seems like a pretty raw conflict to us.  (We note that the New Jersey Supreme Court recently accepted an appeal in Cornett, 15 A.3d 325 (N.J. 2011), although we’re not sure on what issue – there were a lot of other things going on in the case).

Unlike McDarby, we see the New Jersey statute as quite similar to what was at issue in Desiano – at least in one respect.  They were both worse, in terms of the reasoning that drove Buckman, than Buckman itself.  Like Buckman, the punitive damages statute drove New Jersey law squarely into the inherently federal field of overseeing people's interactions with a federal regulatory agency.

Even more directly than Buckman, punitive damages based upon fraud on the FDA amounts to private enforcement of perceived FDCA violations that is prohibited by §337(a), because the sole function of punitive damages is to punish and/or deter illegal conduct.

And again, the fear factor driving regulated entities to over-submit (and thus gum up the FDA’s works) is much worse than Buckman (and, for that matter, worse than Desiano).

Why?

Dollars.  Punitive damages can be larger than compensatory damages – potentially much larger.  Depending on what court is interpreting what part of State Farm Mutual Auto. Insurance Co. v. Campbell, 538 U.S. 408 (2003), punitive damages can be as large, up to four times as large, or even up to ten times as large, as compensatory damages.

So in a punitive damages case take the “fear” that motivated the Supreme Court to find preemption in Buckman and multiply it several times over.  Then you’ll have the amount of fear that the prospect of punitive damages for fraud on the FDA can generate.

But nope, that’s not how the New York court in Forman read the law.  Instead it extended Desiano to New Jersey’s punitive damages statute – holding that the New Jersey judges in McDarby (and of the “[n]umerous state and federal courts [that] have relied on McDarby,” 2011 WL 2559386, at *6) didn’t know what they were doing.  See id. at *7 (deciding, like Desiano, not to give comity to New Jersey state and federal court decisions).

A Yankees fan for sure.

But the Forman opinion has several howlers of its own.  First, it applied the Levine “clear evidence” standard.  2011 WL 2559386, at *3.  That standard in nowhere found in Buckman, and Levine distinguished Buckman – it did not subsume it.  Second, Forman adopted Levine’s “congressional silence” rationale, 2011 WL 2559386, at *5, when (as Buckman discussed at length) Congress has been anything but silent.  From the inception of the FDCA, that statute has prohibited private enforcement actions (and that’s all a punitive damages award can be) against purported FDCA violators via §337(a).  Third, it suggests an open question about whether "the legislature intended for the NJPDA to still apply to products liability cases against manufacturers involving FDA-approved drugs and warnings if the exception to the statute was satisfied," 2011 WL 2559386, at *8, when the statute also includes the general presumption of adequacy recognized in Perez.  Fourth, it states, 2011 WL 2559386, at *11, that Levine applied a presumption against preemption to punitive damages, when in fact punitives were never at issue in the case.  See Levine v. Wyeth, 944 A.2d 179, 182-83 (Vt. 2006) (verdict consisted entirely of “economic damages,” “noneconomic damages,” and “prejudgment interest”).

Beyond these assorted errors, Forman is simply Desiano once-removed – even further out on a limb.  The court rotely follows Desiano and holds that, because there isn’t “a specific cause of action for fraud-on-the-FDA” and punitive damages aren’t “based solely on the wrong of defrauding the FDA,” it can’t be preempted.  2011 WL 2559386, at *9.

As we've already explained, we say “so what?” to that, since the punitive damages claim puts states in the business of overseeing federal regulatory interactions equally as much as in Buckman, and it's even scarier from an over-submission standpoint, given the larger verdict potential.  But logic was never Desiano’s strong point.  Significantly, Forman doesn’t even bother discussing the Supreme Court’s reasons why it found preemption in Buckman.  Even more than Desiano, this new decision elevates Forman over substance (sorry, couldn't resist).

Thus, there’s not even a whisper of Buckman’s holding that states have no business intervening in the regulatory relationship between the FDA and the agency’s applicants.  Forman simply holds that, because Silkwood applied a presumption against preemption, it would, too.  2011 WL 2559386, at *10.  But as we’ve seen, Buckman specifically distinguished Silkwood – and rejected a presumption against preemption – because “any” agency fraud “theory” (not cause of action) overstepped the proper bounds of state law.  531 U.S. at 347, 352.

Instead of following on-point New Jersey precedent, Forman turned instead for support to two Utah District Court cases decided “following Levine.”  2011 WL 2559386, at *12.  Suffice it to say that those cases aren’t very impressive; we looked at them recently, here.

Finally, Forman relied upon the implied preemption analysis in a “very recent” Supreme Court case to find a “high threshold” for implied preemption.   2011 WL 2559386, at *12 (citing Chamber of Commerce of United States v. Whiting, 131 S.Ct. 1968, 1985 (2011).  By not citing Buckman, Forman seems to imply that, maybe, Buckman is somehow overruled.  Hardly, since Whiting in fact cited Buckman as an example of preemption when states sought to involve themselves in "uniquely federal areas of regulation."  131 S. Ct. at 1983.  In fact, Whiting specifically reaffirms the core of Buckman's preemption reasoning:

[T]hose cases all concern state actions that directly interfered with the operation of the federal program.  In Buckman, for example, the Court determined that allowing a state tort action would cause applicants before a federal agency to submit a deluge of information that the agency neither wants nor needs, resulting in additional burdens on the agency's evaluation of an application, and harmful delays in the agency process.

131 S. Ct. at 1983.  From that description, it seems that the Supreme Court, at least, still believes that Buckman meant exactly what it said, and that its policy rationale doesn't prove too much.

Even more tellingly, however, Forman never cited the most recent Supreme Court decision specifically concerning FDCA implied preemption.  That’s most peculiar, because Mensing was decided on Monday, June 23, while the Forman opinion issued four days later.

As we recall, Mensing was big news.  We heard of Mensing on the same day it was decided.  We’d hazard a guess that the Internet is equally available in the Eastern District of New York.

What did Mensing have to say about the presumption against preemption that Forman found so important?

Well, the majority gave it the back of its hand – in an FDCA implied preemption case – by not mentioning any such preemption at all:

The Supremacy Clause establishes that federal law “shall be the supreme Law of the Land ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Where state and federal law “directly conflict,” state law must give way. We have held that state and federal law conflict where it is “impossible for a private party to comply with both state and federal requirements.” We find impossibility here. It was not lawful under federal law for the Manufacturers to do what state law required of them.

Mensing, 2011 WL 2472790, at *8-9 (citations, but not quotation marks, omitted).

That’s it.

No presumption against preemption necessary to decide an FDCA implied preemption case.

There’s more. Four justices (Justice Kennedy did not join this part) hold – for historical reasons dating back to the Framers – that there’s no presumption against preemption in any kind of preemption case.  Id. at *10-11 (holding that Supremacy Clause is a “non obstante” provision intended to “indicate[] that a court need look no further than the ordinary meaning of federal law, and should not distort federal law to accommodate conflicting state law”).

Moreover, Mensing is also substantively bad news for Desiano, Forman, and anybody else looking favorably on fraud on the FDA theories.  A fraud on the FDA theory necessarily requires a jury to find that, but for the supposed fraud, the FDA would have done something different than it actually did.  Without the FDA doing something different, there can’t be causation.  Cornett, for example, discussed that point quite recently.

But not as recently as Mensing.

In Mensing, the majority scathingly dismissed contrafactual speculation that maybe the FDA would have done something differently if a defendant done something differently as a “Mouse Trap game.”  2011 WL 2472790, at *9.  Contrafactual speculation that, if the defendant did something else, so might the FDA, did not obstruct preemption in the least:

Accepting [plaintiffs’] argument would render conflict pre-emption largely meaningless. . . .  We can often imagine that a third party or the Federal Government might do something that makes it lawful for a private party to accomplish under federal law what state law requires of it. . . .  Following [plaintiffs’] argument to its logical conclusion, it is also possible that, by asking, [defendants] could have persuaded the FDA to rewrite its generic drug regulations entirely or talked Congress into amending the [statute].

If these conjectures suffice to prevent federal and state law from conflicting for Supremacy Clause purposes, it is unclear when, outside of express pre-emption, the Supremacy Clause would have any force.  We do not read the Supremacy Clause to permit an approach to pre-emption that renders conflict pre-emption all but meaningless.

Id. at *10. In light of Mensing, it certainly looks like the Supreme Court is not at all inclined to push a presumption against preemption into the fraud-on-the-FDA sphere – particularly since Buckman specifically held, without dissent, that no such presumption applied.

Our bottom line:  In both Michigan and New Jersey, the locals got it right the first time around.

Utah Preemption Split Deepens

We've blogged before about the split among Utah courts about whether Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), preempts the fraud on the FDA exception to Utah's statutory bar (Utah Code Ann. §78B-8-203) against punitive damages where the product complies with FDA standards.

The first case, Grange v. Mylan Laboratories, 2008 WL 4813311 (D. Utah Oct. 31, 2008), got it right.  Buckman's rationale extends to any state-law assertion of fraud on the FDA that could bring about submission to the FDA of unnecessary and unwanted information due to fear of later tort liability.

Indeed, since punitive damages can (and often do) exceed compensatory damages in their amounts, allowing punitive damages based on fraud on the FDA is even more likely to bring about the prophylactic conduct that Buckman decried than the claim in Buckman itself - particularly since punitive damages are frankly intended to "deter" the conduct they punish - and thus create precisely what Buckman held was unacceptable.

The next case, Lake-Allen v. Johnson & Johnson, 2009 WL 2252189 (D. Utah July 27, 2009), botched the issue, for some reason asserting that Buckman involved express preemption.  We criticized this patently wrong result here.

The third case blew it as well, for many of the same reasons - although not so blatantly as in Lake-Allen.  Stanley v. Mylan, Inc., 2010 WL 3718589 (D. Utah Sept. 17, 2010).  That court got it in its head that Wyeth v. Levine, 555 U.S. 555 (2009), somehow superseded Buckman, although the Court in Buckman took great pains (we'd say too great pains) to distinguish fraud on the FDA allegations.  We commented on Stanley here.

Could this be an adverse trend?

We don't think so.  We're pleased to let everybody know that the judge who originally decided Grange took a second look at the whole question recently - and decided that, yes, Grange was right and the two other decisions, well, were not:

Mylan's Motion to Dismiss Plaintiff's claim for punitive damages is granted.  The Court has reviewed its decision in Grange v. Mylan Laboratories, Inc., 2008 WL 4813311 (D. Utah).  This Court fmds that its decision in Grange is not changed by the subsequent decision in Wyeth v. Levine, 129 S. Ct. 1187 (2009), or the holdings in Lake-Allen v. Johnson & Johnson, 2009 WL 2252198 (D. Utah 2009) or Stanley v. Mylan, Inc., 2010 WL 3718589 (D. Utah 2010).  This Court finds that Plaintiff's claim. for punitive damages is tantamount to a showing that Defendant committed fraud-on-the-FDA.  Fraud-on-the-FDA claims are preempted by the United States Supreme Court decision Buckman Co. v. Plaintiff's Legal Comm 'n., 531 U.S. 341, 348 (2000).

Pierce v. Mylan Laboratories, Inc., No. 1:10-cv-00104-TC, slip op. at 2 (D. Utah May 17, 2011).

Thanks to Kamie Brown at Ray Quinney & Nebeker for sharing this win with us.

Timberlake Summary Judgment In Sync with Preemption

We've been following Timberlake for a while. See here and here. We mean the product liability case against Synthes, not the pop singer (though, in truth, his appearances on SNL have been consistently superb and have convinced us, against all expectation, that he really is a talented fellow). The plaintiff Timberlake claimed injuries from an allegedly defective artificial intervertebral spinal disc (the ProDisc). What first caught our attention was that the plaintiff sued not only the manufacturer but also a couple of doctor-entrepreneurs who formed the company that researched and developed the ProDisc. We thought the theory of fraud liability against non-manufacturers was worse than novel; it was "funky." The court agreed and dismissed those defendants.

What was left was no longer funky. It became merely familiar. The ProDisc is a Class III medical device. It went through the FDA's rigorous premarket approval (PMA) process. The FDA made many requests for information and insisted on numerous revisions. The ProDisc's full application was approximately 8800 pages long. On August 14, 2006, ProDisc received premarket approval by the FDA. The FDA-approved labeling consisted of a number of documents, including a package insert, technique guide for surgeons, and a patient guide -- the contents of all of which were specified by the FDA.

So why aren't the plaintiff's product liability claims preempted? Last week, the court held that the claims are preempted, and that they are not saved by the dreaded "parallel" claim exception. Timberlake v. Synthes Spine, Inc., 2011 U.S. Dist. LEXIS 17034 (S.D. Texas February 18, 2011). It's a well-reasoned, clear decision, with no strings attached.

In addition to claims for product liability in strict liability and negligence, the plaintiff also alleged breach of express warranty and fraud/misrepresentation. The court concluded that those claims rested either on assertions that the product was defective -- even though the FDA had found the ProDisc was safe and effective -- or that patients and physicians had not been properly warned -- even though the the PMA process necessarily involves a determination that the FDA-approved label for the device is neither "false nor misleading." Timberlake, 2010 U.S. Dist. LEXIS 17034 at *22-24. The plaintiff's argument is in a box. The box is not quite the same box that Justin Timberlake and Andy Samberg sang about, though it is similar because it is a sort of gift for drug and device defendants. It is a preemption box.

But not so fast, said the plaintiff, who offered two arguments: (1) the FDA approved the product and labeling only because it had been lied to, and (2) the defendants violated FDCA requirements, thus committing a parallel" violation. The first argument takes about as long to get rid of as it takes to mouth the two syllables Buck-man. Id. at 26.

The second argument takes a little longer, if only to unpack the plaintiff's argument and scan the evidence ... or the lack of it. To the extent that the plaintiff alleged parallel claims based on violations of the FDA approval process, that would be "equivalent to fraud on the FDA claims, and thus Buckman preemption applies." Id. at * 28. The plaintiff also suggested that the defendants did not manufacture or label the ProDisc in a manner consistent with that approved by the FDA in the ProDisc's PMA. Note our use of the word "suggested." The problem is that the plaintiff failed to offer proof sufficient to create an issue of fact on the parallel claim. The plaintiff "failed to cite to any evidence in the record, including his own experts' testimony, showing that Defendants violated the specifications imposed by the FDA as part of the ProDisc's PMA with respect to the manufacturing and labeling of his ProDisc." Id. at * 33-34 (emphasis in original). The plaintiff's expert stated that the defendants failed an FDA inspection at one of their manufacturing facilities. But the plaintiff offered no evidence that the particular device in question had been manufactured at the facility that failed the FDA inspection. Id. at *34 n. 8.

Timberlake is the latest in a recent string of decision where courts have required specificity to support invocation of the parallel claims exception. See here, for example. Maybe it's a trend. Or maybe it's a case of what goes around comes around. (Yeah, at this point we're sacrificing all logic just to squeeze in another Timberlake song title. Just be grateful that, given the device at issue, we didn't allude to Sexyback. Oops -- darn it.) It reminds us of another pop culture icon, Charlie Sheen, and one of the odd parts of his recent radio rant (okay, the whole thing was plenty odd) where he blurts out that he is "winning." It's nice to be winning and we'd like to think that we're not delusional or intoxicated. Rather, the summary judgment result in Timberlake, especially the hemming in of parallel claims, seems fully justified.