Friday, September 28, 2012

Obsesssed With FDCA Preemption

How obsessed are we, you ask?  Well, when (courtesy of Mealey’s; we probably wouldn’t have seen the case at all otherwise) we read McCormack v. Hiedeman, ___ F.3d ___, 2012 WL 3932735 (9th Cir. Sept. 11, 2012), we didn’t think about pro-life. pro-choice, or even preliminary injunctions.


No, we thought about FDCA preemption.

You see, going all the way back to McDermott v. Wisconsin, 228 U.S. 115 (1913), essentially the first FDCA successful preemption case ever, it has been established that a product, labeled in compliance with FDA regulations (although in 1913, it wasn’t the FDA yet), and traveling in interstate commerce, cannot be excluded by state law.  In McDermott the Court recognized the preemption of a state statute that prohibited any product – including products labeled in accordance with the FDCA – unless they carried a state-specific label that was inconsistent with federal law.  The Supreme Court barred the state from prohibiting importation and sale of the federally-approved product:

If truly labeled within the meaning of the [predecessor of the FDCA], his goods are immune from seizure. . . . [T]he Wisconsin statute provides that they shall bear the label required by the state law and none other. . . . . In others words, it is essential to a legal exercise of possession of and traffic in such goods under the state law that labels which presumably meet with the requirements of the Federal law, and for the determination of the correctness of which Congress has provided efficient means, shall be removed from the packages before the first sale by the importer. . . . Conceding to the state the authority to make regulations consistent with the Federal law for the further protection of its citizens against impure and misbranded food and drugs, we think to permit such regulation as is embodied in this statute is to permit a state to discredit and burden legitimate Federal regulations of interstate commerce, to destroy rights arising out of the Federal statute which have accrued both to the government and the shipper, and to impair the effect of a Federal law which has been enacted under the Constitutional power of Congress over the subject.

* * * *

. . .The legislative means provided in the Federal law for its own enforcement may not be thwarted by state legislation having a direct effect to impair the efficient exercise of such means. For the reasons stated, the statute of Wisconsin, in forbidding all labels other than the one it prescribed, is invalid.

288 U.S. 133-34, 137.

So what happened in McCormack?  The state of Idaho passed a “fetal pain” statute limiting abortions to the first 20 weeks of pregnancy.  Apparently an ordinary termination was beyond this particular plaintiff’s means.  2012 WL 3932735, at *1.  However, plaintiff “learned that medications inducing abortions had been approved for use in the U.S. and could be purchased over the internet.”  Id.  That’s exactly what she did.  Somehow, the opinion doesn’t give details, the plaintiff “ingest[ed] one or more medications she reasonably believed to have been prescribed by a health care provider practicing outside” the state.  Id., see id. (plaintiff “reiterated that the medications were prescribed by a physician”).  These unidentified medications – prescribed by a physician – induced an abortion/miscarriage.  Id.

That abortion, however, was illegal under state law, and plaintiff was threatened with prosecution for using the drugs, albeit as prescribed, in that fashion.  Id. at *2-3.

The rest of the McCormack opinion is devoted to constitutional arguments concerning state restrictions on abortions.  That’s not germane to this blog.  But one other aspect of the decision caught our eye:

In addressing [defendant’s] argument, the district court stated that, [plaintiff] “clarified at oral argument that the FDA-approved medication she procured through the internet was prescribed by a physician.” . . . The district court's findings of fact, namely that [plaintiff] received from a physician FDA-approved medication used to induce an abortion, were not clearly erroneous. These facts were offered in both [plaintiff’s] declaration and her complaint. [Plaintiff] stated in her declaration that the medication was “approved for use in the United States”. . . . In her complaint, [plaintiff] stated that “physicians providing abortion services in the United States often prescribe medications approved by the U.S. Federal Drug Agency (“FDA”) to cause women to abort their pregnancies medically, i.e., non-surgically.”. . . . Here, prosecuting attorney [defendant] did not offer any controverted affidavits as to whether the pills were obtained from a physician over the internet or whether they were FDA-approved.

McCormack, 2012 WL 3932735, at *9 (our emphasis added; other emphasis removed).

Thus, as far as we can tell, in McCormack the plaintiff was threatened with state prosecution for using an FDA-approved (and presumably duly labeled) prescription drug in accordance with a physician’s prescription.  In other words, the state was seeking to ban the use of an FDA-approved prescription drug.  We don’t know for sure whether the use is on- or off-label, but we don’t think that matters much since the Supreme Court has held that “off-label” usage . . . for some other purpose than that for which [the product] has been approved by the FDA is an accepted and necessary corollary of the FDA’s mission to regulate in this area without directly interfering with the practice of medicine.”  Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341, 350 (2001) (citation omitted).

Now, we don’t doubt that all states can regulate physicians, and thus can regulate the ability of physicians to prescribe off-label.  Thus we have no preemption-related quarrel with Planned Parenthood of Cincinnati Region v. Strickland, 531 F.3d 406 (6th Cir. 2008), allowing a state to do precisely that in the abortion context.  However, the state in McCormack didn’t do that – it didn’t go after the physician, but rather after the purchaser/user of the drug  – who according to the (rather limited) facts, took the drug as prescribed.  As a conceptual matter that’s hard to distinguish that from what the First Circuit did in Bartlett v. Mutual Pharmaceutical Co., 678 F.3d 30 (1st Cir. 2012) – hold that a plaintiff can prevail on a purported state-law duty that the defendant drug manufacturer must remove its properly labeled, FDA-approved product from the market altogether in that state.

Practically every other court to consider that issue – in the common-law context – has held that removal from the market claims are preempted.  States simply can’t prohibit the marketing and use of FDA-approved drugs.  See, e.g., Smith v. Wyeth, Inc., 657 F.3d 420, 423 (6th Cir. 2011), cert. denied, 132 S. Ct. 2103 (2012) (rejecting “failure-to-withdraw” argument); Mensing v. Wyeth, Inc., 658 F. 3d 867, 867 (8th Cir. 2011) (vacating earlier opinion to the extent that it embraced the “failure-to-withdraw” theory); Moore v. Mylan, Inc., 840 F. Supp.2d 1337, 1352 n.14 (N.D. Ga. 2012) (“any such state law duty [to cease marketing a drug] would directly conflict with the federal statutory scheme in which Congress vested sole authority with the FDA to determine whether a drug may be marketed in interstate commerce”); Jacobsen v. Wyeth, LLC, 2012 WL 3575293, at *9 (E.D. La. Aug. 20, 2012) (“If state law could require a generic drug manufacturer to wholly withdraw from the market based on the unreasonable danger of the product (which is all a successful failure to withdraw from the market claim could be), it necessarily must repudiate the label approved by the FDA”); Strayhorn v. Wyeth Pharmaceuticals, Inc., ___ F. Supp.2d ___, 2012 WL 3261377, at *16 (W.D. Tenn. Aug. 8, 2012) (holding failure to withdraw claims “invalid” and preempted); Aucoin v. Amneal Pharmaceuticals, LLC, 2012 WL 2990697, at *9 (E.D. La. July 20, 2012) (“[t]o require a generic manufacturer to remove a drug from the market would repudiate the label approved by the FDA”); In re Darvocet, Darvon & Propoxyphene Products Liability Litigation, 2012 WL 2457825, at *1 (E.D. Ky. June 22, 2012) (refusing to follow Bartlett and rejecting “failure-to-withdraw” theory); Johnson v. Teva Pharmaceuticals USA, Inc., 2012 WL 1866839, at *5 (W.D. La. May 21, 2012) (rejecting “failure to withdraw argument”); Eckhardt v. Qualitest Pharmaceuticals, Inc., ___ F. Supp.2d ___, 2012 WL 1511817, at *6 (S.D. Tex. April 30, 2012) (a state law requirement that the drug be completely withdrawn from the market, based solely on a theory that the federally mandated label was inadequate, would also impermissibly conflict with federal law and be preempted”); Fulgenzi v. PLIVA, Inc., ___ F. Supp.2d ___, 2012 WL 1110009, at *7 n.5 (N.D. Ohio March 31, 2012) ( “failure-to-withdraw” theory preempted); Metz v. Wyeth, ___ F. Supp.2d ___, 2012 WL 1058870, at *4 (M.D. Fla. March 28, 2012) (removal from market claim preempted); Cooper v. Wyeth, Inc., 2012 WL 733846, at *6 (M.D. La. March 6, 2012) (“[i]f state law could require a generic drug manufacturer to wholly withdraw from the market based on the unreasonable danger of the product (which is all a successful failure to withdraw from the market claim could be), it necessarily must repudiate the label approved by the FDA”); In re Darvocet, Darvon & Propoxyphene Products Liability Litigation, 2012 WL 718618, at *2-3 (E.D. Ky. March 5, 2012) (“that [defendants] should have simply stopped selling [the drug] is an oversimplified solution”); Bowman v. Wyeth, LLC, 2012 WL 684116, at *6 (D. Minn. March 2, 2012) (rejecting “failure-to-withdraw” theory); Moretti v. PLIVA, Inc., 2012 WL 628502, at *5-6 (D. Nev. Feb. 27, 2012) (liability for “continued distribution” held preempted); Lyman v. Pfizer, Inc., 2012 WL 368675, at *4 (D. Vt. Feb. 3, 2012) (allegation that defendant “could have simply stopped selling the product” held preempted); Coney v. Mylan Pharmaceuticals, Inc., 2012 WL 170143, at *5 (S.D. Ga. Jan. 19, 2012) (“Finding that state law prohibits [defendant] from doing what federal law explicitly requires [defendant] to do would be tantamount to conferring supremacy upon the state law”); Fullington v. PLIVA, Inc., 2011 WL 6153608, at *6 (E.D. Ark. Dec. 12, 2011) (removal from market claim preempted); Gross v. Pfizer, Inc., 825 F. Supp.2d 654, 659 (D. Md. 2011) (“no state law duty that would compel generic manufacturers to stop production of a drug” could “exist, as it would directly conflict with the federal statutory scheme in which Congress vested sole authority with the FDA to determine whether a drug may be marketed in interstate commerce”); In re Reglan Litigation, 2012 WL 1613329 (N.J. Super. Law Div. May 4, 2012) (“conflict between state and federal law would be much more pronounced if the state courts upheld a decision that an FDA-approved drug should not have been on the market”).

Since federal power to permit the marketing – and thus the purchase and use – of FDA-approved prescription drugs is necessarily supreme over state power to prohibit such marketing and use, as the above precedent abundantly holds, then the state source of power is irrelevant.  State legislation purporting to ban the marketing of an FDA-approved product (what the Supreme Court held preempted in McDermott back in 1913) is just as preempted as a tort claim ostensibly raising a common-law duty to do the same thing.

Thus, when we see the state in McCormack threaten to prosecute the user of an FDA approved drug for a prescribed use of that drug (not diverting the drug to some non-prescribed purpose, which would not raise any preemption question), we have to say “hold on.”  Interstate commerce in prescription drugs, once they’re approved by the FDA, can’t be prohibited by state law.  States can regulate physicians all they want, but once they go beyond that to the sale and prescribed use of FDA-approved drugs, well, we think there’s a bit of a Supremacy Clause problem there.

No Discovery From IRBs in California


We’re not comfortable saying much because we have tangential involvement (not on this appeal), but blog readers, particularly in California, might be interested in the recent decision in Pomona Valley Medical Center v. Superior Court, No. B241684, slip op. (Cal. App. Sept. 24, 2012) (for publication).  We haven’t researched it thoroughly, but we believe that Pomona Valley is the first case in California (and maybe the country) to hold an Institutional Review Board ("IRB") exempt from civil discovery under what in most states are considered "peer review" privilege statutes.  As the court in Pomona Valley discussed, however, California’s statute is broader than most such statutes.

Thursday, September 27, 2012

Who Needs TwIqbal?: Round II

The following is a guest post by Mollie Benedict and Amanda Villalobos, both of Tucker Ellis, about a recent dismissal they won of one of those all-too-common California "consumer protection" strike suits where nobody's really injured.  They get all the credit for the win, and all the blame for this post.

*************

In an April 27, 2012 post, “Who Needs TwIqbal?”,  John Sullivan examined a putative class action in New Jersey federal court, Young v. Johnson & Johnson.  Sullivan credited the defendant for putting a standing argument (usually a bench player) into the starting line-up  in the case, and both standing and federal preemption came through in the clutch:  The court dismissed Plaintiff’s claims that he had been misled by representations on the labels of the margarine substitute Benecol Spread, finding both that (1) Plaintiff lacked standing because he had not alleged any injury and (2) his claims were preempted because he sought to impose labeling requirements that were not identical to those imposed by the Federal Food, Drug and Cosmetic Act (FDCA) as amended by the Nutrition Labeling and Education Act (NLEA).

Reid v. Johnson & Johnson, 2012 U.S. Dist. Lexis 133408 (S.D. Cal. Sept, 17, 2012) is a west coast rematch – another putative class action involving Benecol spread, this time in federal court in San Diego.  As in Young, Plaintiff alleged that the defendants made misleading claims regarding Benecol’s trans fat content and the cholesterol-lowering benefits of Benecol’s key ingredient, plant stanol esters.  Plaintiff claimed he purchased the product in reliance on these alleged misrepresentations, asserting causes of action under California’s consumer protection statutes, the Unfair Competition Law, the False Advertising Law,  and the Consumer Legal Remedies Act.
Defendants again brought standing off the bench to lead off, arguing that Plaintiff lacked standing because he suffered no injury in fact and, more significantly, because no reasonable consumer was likely to be deceived by Benecol’s label claims, a standing requirement under all three consumer protection statutes.  Although the court found that Plaintiff had adequately pleaded an injury in fact because he alleged that he “paid more for Benecol, and would have been willing to pay less, or nothing at all, if he had not been misled by the representations and practices”...
[Editorial note:  This proves that California is even more extreme than New Jersey]
...it also found that Plaintiff “has not set forth alleged facts showing that Benecol’s statements may deceive a reasonable consumer.”  Score another win for standing.
But preemption, still waiting on deck, again came to the plate to hog some of the glory.  As mentioned in Sullivan’s Young post, the NLEA contains a broad express preemption provision prohibiting states from establishing labeling requirements that are not identical to federal regulations.
The court concluded that because Benecol’s claims regarding plant stanol esters and their cholesterol-reducing properties were permitted by federal law, Plaintiff’s claims were preempted.  The court based its preemption analysis on an enforcement discretion letter issued by FDA in 2003.  The letter advised that, based on new scientific evidence, the agency would relax the content requirements for products eligible to bear the plant stanol ester health claim codified in 21 C.F.R. §101.83.  While Benecol’s label conformed to the requirements of the 2003 letter, Plaintiff contended the letter did not constitute a final agency action and did not have the force and effect of federal law, so Benecol should be required to, but did not, conform to 21 C.F.R. § 101.83.
The court disagreed, finding that “[t]he [2003] letter reflects the FDA’s position” and that “Plaintiff’s plant [stanol] esters claim essentially … seeks to impose a different, outdated interim rule requirement for  Defendants from that set forth in the 2003 FDA Letter….”  Id. at *21-22.
[Editorial note:  The FDA letter in Reid was not a warning letter, which are different]
The court also found that Plaintiff’s trans fat claims were barred by preemption. According to Plaintiff, Benecol’s “No Trans Fat” and “No Trans Fatty Acids” statements constituted unauthorized nutrient content claims even though the FDA permits the statements “0g trans fat” or “0 grams trans fat” to appear on food labels.  The court, relying on the doctrine of common sense, disagreed with Plaintiff and noted that an attempt to distinguish the statements “No Trans Fat” and “0 grams trans fat” was unreasonable because the two terms are functionally equivalent. 

Defendants also argued that Plaintiff’s claims should be dismissed based on primary jurisdiction and its closely related cousin, judicial abstention.  While the court found application of primary jurisdiction to be inappropriate in this case, it declined to rule on the issue of judicial abstention, leaving open the possibility that it too may have been a basis to bar Plaintiff’s claims.

Wednesday, September 26, 2012

Breaking Up is Easy to Do


We all know how easy it is to complain about bad decisions. Right now, sports pundits and fans are holding a gripeathon about the National Football League 's replacement referees. There has been more talk about the officiating mistakes than about the athletic performances. A sense of perspective is in order.  The comparison baseline is not perfection. It is not as if the regular referees got all their calls right. Does anybody remember Ed Hochuli (actually a very good ref who is also a Phoenix attorney) incorrectly calling a deadball?  And who stared at the Steelers-Seahawks Super Bowl in disbelief a couple of years ago, as every call of consequence went against Seattle? Still, there is no denying that the replacement refs have authored an amazing number of egregious errors already in only three weeks of football. The blown call at the end of the Monday night game (it benefitted the Seahawks, so some are saying Karma is at work, though it is hard to see why Karma would hose the Packers) is prompting some fans to call for a boycott. If either Obama or Romney could step up and do something about the referee lockout, he'd probably help his election campaign big time. He would certainly get Wisconsin's electoral votes.



One of the most interesting things about the replacement referee situation is the substitute teacher syndrome. Did you ever have a substitute teacher in elementary school who seemed sort of weak or clueless?  Wouldn't the class end up becoming incredibly disruptive? Even the kids who were ordinarily well-behaved started acting like delinquents. We remember back in seventh grade one of the star students hoodwinking a substitute teacher into thinking that his name was Billy Paul. Billy Paul was an R&B singer .  More specifically, he was a practitioner of  TSOP -The Sound of Philadelphia. Billy Paul’s big hit was "Me and Mrs. Jones." The teacher was puzzled at how the rest of us howled in laughter when she would scream in exasperation, "Billy Paul, get back in your seat!" "Billy Paul, you leave that girl alone!"  After NFL week one, it seemed that many players had sized up the replacement refs as being like bad substitute teachers -- tentative and insecure.  Just like 'Billy Paul,' the players took advantage.  By 'took advantage,' we mean that the players started perpetrating all sorts of mayhem on their opponents.  Things got chippy.  One especially devious Ram delivered a nasty shot to a Redskins receiver after a play was over.  The aggrieved receiver responded by throwing the ball at the offender.   Bad idea.  As so often happens, the ref saw the reaction, not the instigation.  The receiver drew a penalty and backed his team up.  The team's field goal attempt missed.  Game over.    



The substitute teacher syndrome is like the "broken glass" theory of policing. One of the most brilliant minds on governance and policing was James Q. Wilson, who died earlier this year. Some of us were lucky enough to take classes with Wilson, who was a dynamic speaker with an even more dynamic mind.  Some labeled Wilson a neocon, but he was really a policy skeptic.  He was a political scientist who liked to get his fingernails dirty with data.  He wrote about groundbreaking analyses of poverty and bureaucracy.  With all that, he was most famous for his writings on crime.  Wilson was brilliant on that topic, and he managed to make a difference.  Wilson wondered why people commit crimes.  Crime is a disease in the body politic.  It is an odd disease, because it is a product of human choice.  Most people do not choose crime.  Some do, they do so repeatedly, and they betray the social contract.  Wilson found that people are far more likely to make that destructive choice if they are in an environment that welcomes destruction.  If a window was broken in a neighborhood, and was not repaired, that appearance of disorder sent a message that disorder was okay. Crime rates would be higher in such areas. Wilson recommended that cops arrest people for quality-of-life crimes (disorderly conduct, etc.) and help create an appearance of order in the community. That approach, plus a relentless use of statistics (CrimeStat), seemed to play a significant role in reducing crime rates in American cities.  (Yes, we know there are other theories about that as well, including the controversial Freakonomics argument that increasing abortions led to decreasing crime.  We are not touching that one.) 



We wonder whether the substitute teacher or broken glass theory applies to litigation. If courts permit sloppy, absurd practices, they ineluctably invite more. Our home turf, the Philadelphia Court of Common Please, has been taking a beating for its pro-plaintiff, anti-business court system. We do not agree with all of the criticisms, but it is undeniable that when a judge explicitly invites plaintiffs to engage in litigation tourism, when the court as a matter of course makes nutty venue/forum non conveniens rulings, and when it allows plaintiff lawyers to cobble together multi-plaintiff cases that maximize prejudice against corporate defendants -- well, as Wilson showed, chaos begets chaos.  Pretty soon, Philadelphia's City Hall (which houses the Court of Common Pleas civil cases) rang out a clickety-clack of cowboy boots, and if you yelled  "Roll Tide!" in the hallways, you'd probably get at least a couple of high-fives.  Nevertheless, as an article in Monday's Wall Street Journal showed, there's a new sheriff in town.  Judge Herron has implemented many changes in the Philly courts, including a rule against consolidating plaintiffs in tort cases.  That is a welcome reform and it is a big deal.  We get how plaintiffs are supposed to be the master of the complaint, but the plaintiff lawyer is not supposed to be the master of the court docket.  When plaintiff lawyers self-consolidate multiple plaintiffs into a tort action, they create an artificial case with a perfect plaintiff who gets in every piece of corporate conduct and other evidence -- an array of awfulness that would not come in with a single plaintiff.  It stacks the deck and is unfair to defendants.  It is also unfair to the courts.  The consolidated cases are not only a method of beating defendants into settlements, they are also a method of beating the court out of the extra filing fees for separately filing plaintiff.  Courts are noticing all this.



So today's post is not a complaint at all.  Instead, we celebrate how courts are starting to get things right on joinder and severance issues.  Philly has taken a step in the right direction.  Other courts are taking similar steps.  We offer a tip of the cyber cap to Mike Imbroscio for sending us a recent severance victory in the Accutane MDL.  The particular case is called Aranda v. Hoffman-Laroche, Inc., No. 8:12-cv-1426-T-30TBM (M.D. Fla. Sept. 20, 2012), and we have written about it before.  It has, to say the least, a peculiar history.  The case was originally filed on behalf of 69 plaintiffs alleging injuries from Accutane.  It was filed in a state court with a hellholish reputation as bad as Philly.  But after a little fact-checking made clear that the plaintiffs’ effort to stymie diversity was phony, the case ended up in federal court.  Post MDL, the defendant moved to sever the plaintiffs.  In a refreshing and straightforward opinion, the court granted the motion and severed the cases.



First, the plaintiffs’ joinder was flat-out inappropriate under Fed. R. Civ. P. 20(a).  The plaintiffs resided in different states, allegedly ingested Accutane at different times, and were allegedly diagnosed with different adverse reactions to Accutane.  (Note the word "allegedly."  Based on the discovery provided by the plaintiffs, their Accutane use and adverse reactions was by no means established.)    Thus, the plaintiffs' claims did not arise "out of the same transaction, occurrence, or series of transactions or occurrences."  Fed. R. Civ. P. 20(a).  There were different Accutane warnings at different times, which would necessarily have a profound effect on liability issues, and could potentially confuse juries confronted with multiple plaintiffs.  Second, the Aranda court emphasized that "[m]any federal courts hold that product liability cases are generally inappropriate for multi-plaintiff joinder because such cases involve highly individualized facts and '[l]iability, causation, and damages will ... be different with each individual plaintiff.'" Aranda, slip op. at 1, quoting In re Prempro Prods. Liab. Litig., 417 F. Supp. 2d 1048, 1059-60 (E.D. Ark. 2006).  The Aranda court also cites supporting precedent from the Silica, Diet Drug, Baycol, and Rezulin litigations.   Third, the cobbling together of different plaintiffs with different claims and, no matter how much the plaintiff lawyers pretend otherwise, different legal theories, would "likely hamper the orderly, efficient, and expeditious handling of the plaintiffs' claims as the litigation progresses."  Tesfaye Abebe v. Takeda Pharmaceuticals (In re Actos Prod. Liab. Litig.), No. 6:11-md-02299 (W.D. La. May 3, 2012  The motion to sever in Aranda was brought under Rule 21, which relates to misjoinder of parties.  That rule makes clear that severance can be granted "[o]n motion or on its own, the court may at any time, on just terms add or drop a party."  Fed. R. Civ. P. 21.  The Aranda court cited both Rule 21 "and the Court's inherent authority to control its own docket."  Aranda, slip op. at 2.   Fourth, the court ordered that each "severed plaintiff shall also pay a filing fee to the Clerk of the Court."  Id. At 3.  For some plaintiff lawyers, that last bit hurts the most.    

 

The Aranda severance adds to a growing list of courts that are putting a stop to improper mass tort self-consolidations.  As we said earlier, it is easy to complain about bad decisions.  It turns out that it is even easier to praise good ones.       


Tuesday, September 25, 2012

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 3rd, 5th, 8th, 10th and 11th 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.

Monday, September 24, 2012

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.

Friday, September 21, 2012

Returning to a Favorite Spot

            One member of our blogging team (we’ll let you guess who) recently returned from her (well, that narrows it down a bit) first real camping trip.  The kind with a tent, sleeping bags, no electricity.  You get the idea.  This wasn’t just a step, but rather a huge leap outside this blogger’s comfort zone – which runs more toward poolside bar service somewhere where the view is only obstructed by palm trees.  Before the trip images of big red welts from mosquito bites, spiders and ticks taking up residence in our hair, and critters of any size wandering around at night left us more than a little disconcerted.  An ample supply of wine was stowed with the gear.  A Google maps search had located nearby hotels.  And the iPhone car charger was packed.  We were ready for anything.
            Most importantly, as it turns out, we were ready for some fun.  The weather near the Appalachian Trail in Pennsylvania was almost perfect.  Sunny and warm during the day.  Just chilly enough at night to make you want to huddle around the camp fire.  Perfect weather for hiking, fishing, roasting marshmallows and hot dogs, and telling ghost stories.  The perfect environment for separating the kids from their DVD players, iPads and assorted other portable electronic devices – something we quickly realized was necessary when, as we drove into the mountains we heard from the back seat:  Wow, it’s like a real life 3D movie.  Yikes! (But don’t tell them about the car charger). 
            Perhaps best of all was the stillness of the early mornings.  No alarms going off.  No sounds of traffic congestion.  No being bombarded by streaming bad news from all over the world.  Just big, deep breaths of fresh air.  It made us think of …well, of camping again.  Much like the sandy beaches and umbrella drinks (which remain our top destination for relaxing) – when you discover a place you like, you find yourself wanting to return.  Even on the ride home, you start thinking about the next time.  Fun places are fun places.  So, we revisit them with fond memories of the last trip and anticipation that more fun is right around the corner.
            That’s sort of how we feel about the Aredia/Zometa litigation.  We’ve been there before, we generally like it, and so we go back again. 
            This week, the A/Z litigation added to its lengthy string of successes (see prior posts on A/Z cases here) with a Daubert (slip op.) and a summary judgment (slip op.) win all rolled into one in the case of Conklin v. Novartis Pharmaceuticals Corporation, No. 9:11-cv-00178-RC, (E.D. Tex. Sept. 19, 2012).  
While the case was pending in the Aredia/Zometa MDL, the court granted defendant’s motion for summary judgment on plaintiff’s (and 7 other TX residents’) failure to warn claims.  Daubert slip op. at 5.  Shortly after remand, in an attempt to avoid the implications of the MDL court’s ruling, plaintiff notified the remand court that the case would proceed on “design defect under Texas law.”  Id. at 8.  Plaintiff claimed that Dr. Robert Marx, an oral surgeon and one of plaintiffs’ leading MDL experts, had an alternative design theory that saved her remaining claims.  Id.   As Dr. Marx’s declaration was plaintiff’s sole support for those remaining design defect claims, the court first ruled on defendant’s motion to strike under Daubert.
Dr. Marx’s opinion was that a decreased dosage and/or frequency of Zometa administration would both reduce the risk of the side effect suffered by plaintiff (ONJ) and still efficaciously treat cancer-related bone damage.  Id. at 16.  Unfortunately for plaintiff, the court found both that Dr. Marx was unqualified to render such an opinion and that the opinion itself was unsupported.  First, the court noted that Dr. Marx is neither an oncologist nor pharmacologist and therefore not qualified to offer an opinion on what dosage of Zometa would effectively treat cancer-related bone damage.  Further, in disqualifying Dr. Marx, the court noted that he “had to rely on studies or opinions of other experts to opine of the efficacy or utility of his ‘safe alternative design.’”  Id.
But the court didn’t stop there.  Delving deeper into the shaky foundation of Dr. Marx’s opinion, the court stated:
The analytical gap, in Dr. Marx’s opinion is demonstrated by setting out his premises and conclusions:
Premise: Studies show that a certain regimen of Zometa helps treat cancer-related bone conditions, but may cause ONJ.  
Premise: Other studies show that less Zometa will result in less ONJ.
Conclusion: A regimen using less Zometa will help treat cancer-related bone conditions.
This is a classic logical fallacy—an irrelevant conclusion.
It is not helpful to the finder of fact for Dr. Marx to state that a drug used to fight cancer related diseases has a particular negative side effect, and that reducing the dosage and/or frequency of that drug will reduce the occurrence of the negative side effect. Rather, Dr. Marx must also provide some factual support that reducing the dosage and/or frequency of that drug will not only reduce the occurrence of the negative side effect, but will also be effective at fighting cancer-related diseases. Unfortunately, Dr. Marx offers no evidence as to the efficacy of a reduced Zometa regimen . . .
Id. at 18.  Based upon Dr. Marx’s inability to show that a reduced dose or duration of Zometa treatment would be as efficacious as the FDA-approved dose or duration, Dr. Marx’s “alternative design” opinion was stricken.
          The court then turned to defendant’s motion for summary judgment.  The MDL court having done away with plaintiff’s failure to warn, and by extension her breach of express warranty claims, Summary judgment slip op. at 8, the remand court was left to consider strict liability design defect, negligence per se and breach of implied warranty.  First, the court quickly recognized that plaintiff’s negligence per se and breach of implied warranty claims were “re-packaged design defect or failure to warn claims.”  Id.   Since the MDL court had ruled that plaintiff’s failure-to-warn claims were foreclosed, and since plaintiff had offered no admissible evidence of a safer alternative design -- the court granted summary judgment for defendant.  Id. at 9-11.    Two wins, no waiting.
          As you know from our prior posts, the Conklin decision is just the latest in a string of defense wins in the Aredia/Zometa litigation.  But just like a good vacation – we don’t mind revisiting if the trip brings a smile to our face.
          As always congratulations and thanks to our friend Joe Hollingsworth for keeping us up to speed on this litigation.

Thursday, September 20, 2012

Chantix Daubert Leaves Us Wanting More

Here's another guest post from Reed Smith's Eric Alexander.  Maybe we'll get him his own account next time.

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After the overwhelming response to our first post last week – the list of the recipients of those firm holiday cards we never actually send got a bit longer – we agreed to do another this week.  We also vowed to make this post more positive than the first.  We would not want to get an unfounded reputation for being unduly negative, critical, and crotchety.  A well-founded reputation is fine, but we wanted to try to find a case with something to praise.  It seems that finding a praiseworthy case some weeks is about as hard as resisting a cheeky alliterative title for our posts.  (There sure are some b-words to pair with “bayou” when discussing a Louisiana case.)  So, we found a case with some good parts and some bad parts.  Like many meals out.  On an MDL-wide Daubert, getting a satisfying entrée is sufficiently unlikely that you often have to make sure you enjoy your salad - butter lettuce, pear, blue cheese, and walnuts or pecans is nice, but lay off the raspberry vinaigrette.


The decision in In re Chantix Varenicline Prods. Liab. Litig., MDL No. 2092, 2012 U.S. Dist. LEXIS 130144 (Aug. 21, 2012), is like that.  The defendant took a shot at the whole ball of wax - general causation - “whether Chantix [a prescription drug for smoking cessation] is capable of causing the adverse neuropsychiatric events alleged,” as the Court put it.  It missed.  A definitive “no” on general cause would have pretty much ended the MDL, and MDLs (other than Seroquel) have a way of lasting past Daubert decisions.  Similarly, most restaurants tend to like you to order some apps and sides with your entrée, have a few drinks along the way, save room for dessert and a nice aperitif, and maybe offer you a wafer thin slice of beef to finish you off.  It is a rare joint that says, in essence, “You really came here for the porterhouse, so have that first and we’ll see if you have any room left after that.”  But we digress.  The entrée here was not prepared too well.  Maybe it was how it was ordered.  Maybe it should have been sent back.  Maybe it was because the chef/court was confused about what it was preparing/deciding.  We’ll get to that.  Since we are trying to be positive, we will discuss the tasty part first.

The court precluded plaintiffs’ experts – three of them were challenged specifically and addressed in the opinion, but the Conclusion suggests the ruling applies to all of plaintiffs’ experts – from offering testimony about what the defendant knew or that it misled the FDA.  For one of the experts, the court said she could not testify to “labeling changes based on that knowledge.”  In the Conclusion, the exclusion is of testimony “whether defendant ‘intentionally misled the FDA.’”  Since we are still being positive, we will not dwell on the lack of consistency.  We will praise something not normally praised – lack of detailed analysis.  The court kicks this testimony from the first expert up, Dr. Furberg, with “as such opinions are necessarily based on speculation.”  The other two experts challenged for such “opinions” fell without elaboration.

There are a bunch of other reasons why an expert should not be able to testify about – or opine about, which is not really the same thing – these subjects, but speculation is a good reason.  So, the court stops discussing it.  No authority is cited; the case defendant cited In re Rezulin Prods. Liab. Litig., 309 F. Supp. 2d 531, 543 n. 32, 560 (S.D.N.Y. 2004), is actually brushed aside a few pages earlier.  We recall writing the challenge to an expert offering testimony on corporate intent that was granted in In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., No. MDL 1203, 2000 WL 876900 (E.D. Pa. June 20, 2000), and later expanded in In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2001 WL 454586 (E.D. Pa. Feb. 1, 2001), and later adopted in said Rezulin opinion – yes, the Rezulin court did preclude the same Dr. Furberg and others from offering testimony on the “intent, motive or state of mind of corporations or regulatory agencies.”  Back then, we had to look to a range of non-products cases to cobble together support for a proposition that seemed obvious – an expert in regulatory matters, pharmacology, epidemiology, or whatever should not be allowed to get on the stand and offer up their take on what the drug manufacturer, its employees, FDA, or its employees knew, thought, or intended at a point in time.  We used to have spend time in briefs explaining all the reasons why this was so.  As courts have fallen in line on this, including, it seems, just about every drug or device MDL court to offer up a Daubert decision on the plaintiffs’ experts since Diet Drugs – because the plaintiffs’ expert keep offering intent testimony – we now have an established proposition the adoption of which required the Chantix court no analysis or citation.  Like food – we are just not going to make analogies to smoking – simple can be better than complicated.

Taking this same approach on whether the experts can testify FDA was misled is similarly logical and avoids some thorny issues.  If an expert is speculating when offering up a testimony on what the company knew, then she is certainly speculating when she says the FDA was misled, which necessarily involves a guess at what FDA knew and thought.  Even former FDA officials who become experts do not get to speculate on what another specific FDA official would have done with additional or different information.  In re Diet Drugs Prods. Liab. Litig., 2001 WL 454586, *19 (yeah, did that, too).  We do think that the line of cases that exclude evidence, expert or otherwise, offered to show that FDA was misled – starting with Bouchard v. American Home Products, 213 F. Supp.2d 802 (N.D. Ohio 2002) – is right even after Levine.  We also see why a court would be hesitant to rely on preemption to exclude evidence in a pharmaceutical products case these days.

While the Chantix court excluded the “knew” and “misled” testimony, it hastened to add that the experts could say what the defendant “should have known” and what information it provided to FDA.  We will be curious to see how those lines are held at trials, as the veteran testifiers for plaintiffs do have a way of suggesting what they cannot say directly.  But “should have known” and therefore “should have” taken some action does not sound like a basis for punitive damages and “knew” and “decided not to” take some action does.  Similarly, you feel much better about avoiding punitives when no witness has testified that FDA was “misled” into taking or not taking some regulatory action based on what the company submitted or “failed” to submit.  (We would urge that words like “failed,” “chose,” and “decided” are a way that impermissible knowledge and intent testimony actually gets offered by the cagey experts and lawyers.)  So, we would take these exclusions, even with the clarifications about what can be offered.

That said, the rest of the opinion was grounds for indigestion.  Every challenge to opinions from the seven experts at issue on “general causation,” “biological plausibility,” and mechanisms for causation was shot down.  In so doing, the court permitted speculation and theories (without any showing of general acceptance) and never identified any study relied upon by the challenged experts that had the hallmarks of reliable evidence of causation, at least as the court explained it . Rule 703 is never mentioned.  In general, the court took the opposite approach of the Steve McConnell's Seventh Circuit idol in Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319 (7th Cir. 1996) (Posner, J.), ironically another smoking cessation aid case, which famously declared, “But the courtroom is not the place for scientific guesswork, even of the inspired sort. Law lags science; it does not lead it.”  The basic approach was to criticize the defendant’s challenge, pump up the expert’s qualifications and number of citations in the expert’s report, and cite caselaw (sometimes miscite) for the propositions that the judge’s gatekeeper role under Daubert does not supplant cross-examination, that most criticisms go to weight, and expert testimony can still be admitted if it fails multiple Daubert factors.  It also fundamentally misunderstood the task at hand, often seeming to be rejecting a “no evidence” summary judgment motion rather than a Daubert challenge to specific experts’ testimony.

How did this happen?  We weren’t there and haven’t read the briefs, but a few things leap out.  First, the day before the Daubert hearing, the court issued a partial summary judgment ruling that the Chantix label as changed in 2009 “is sufficient as a matter of law for warnings regarding neuropsychiatric injuries” (and the SOL would start running as of that change) and the court “the court considers the pending motion to exclude certain of plaintiffs’ experts in light of its prior ruling on the label sufficiency.”  That had two implications as we read it:  1) that the court thought it was now established that Chantix can cause a range of neuropsychiatric injuries and 2) that the court did not understand – luckily, we do get to speculate on what judges understand – the relationship between labeling and causation.  Even if Chantix does have the potential to cause neuropsychiatric injuries, an expert’s opinion that it does may still not be admissible.  He may not base his opinion on reliable studies or he may apply an unreliable methodology in evaluating the studies, as by contending that an odds ratio less than 1.0 favors causation.  He may have good qualifications in one area, but base his opinion solely on the type of studies he would never come across in his day job (e.g., a rat study guy trying to rely on epidemiologic studies).  The reverse is also true: an expert can have admissible but incorrect opinions that Chantix can cause neuropsychiatric injuries.  Here, however, because the court clearly felt Chantix can cause neuropsychiatric injuries, the challenge to each expert was treated as something of an affront and the burden of demonstrating the reliability and admissibility of the expert’s opinions was not placed on the plaintiffs, who should have had it as the proponents of the evidence.

In addition, the court seemed to think the fact that warnings in the Chantix label, or in FDA’s communications, became more forceful and prominent over time was important to the analysis of causation.  There was no discussion of the well-known disclaimers in labeling regulations that “a causal relationship need not have been definitely established” or various FDA statements that labeling (and reporting of adverse events) should not be viewed as admissions of causation.  Although the court discussed whether actions by FDA – its mission is to protect public health, after all – are based standards relevant to consideration of causation evidence under Daubert, its insistence on looking at FDA actions and inconsistency in how it did so was befuddling.  Unfortunately, it appears that the defendant may have pushed the court to keep blurring the lines between admissibility under Daubert and what FDA has done/said, as it raised (according to the court) various arguments about how the plaintiffs’ experts interpreted studies or adverse event data different than how FDA did.  The record also included defendant’s “Introduction and Statement of Facts Relevant to all Daubert Motions,” 154 exhibits from defendant, plaintiffs’ “Omnibus Memorandum of Facts and Law,” and 215 exhibits from plaintiffs, plus more stuff with the reply.  With a dash of hindsight, we can certainly question whether all the background not really relevant to the admissibility of the opinions of the challenged experts ended up distracting the court from the real issues.

Second, for whatever reason, after three years of presiding over the Chantix MDL, the judge did not like the defendant or its motions, at least as we read the opinion.  When the first sentence in the “Relevant Factual Background” is that “this is a multidistrict product liability action concerning Chantix, touted by defendant to aid in smoking cessation” (emphasis added), you might get a hint at where the court is going.  If the court really was “consider[ing] only whether Chantix is capable of cause the adverse neuropsychiatric events alleged,” then marketing conduct does not matter.  Nor does how “severe” the events are being alleged, something the court notes several times.  The standards for admissibility of expert evidence do not change based on whether defendants marketed aggressively (or misleadingly) or whether the injuries alleged are really bad.  As Mike Tomlin says, “The standard is the standard.”

We said a “few things” leap out at us to why the portion of the opinion on causation was so bad.  We have given two, really three if you count subparts like the Federal Rules of Civil Procedure require.  There are more, but to go into them would come across as too negative, which we are resisting.  Anyway, we started by saying that the Chantix opinion was like a meal out with some good parts and some bad parts.  It was really like a meal that left us nauseated, but we thought back and remembered that we liked the bread.  And maybe the butter.

Basile v. H&R Block - It's Finally Over (and That's a Good Thing)

Today's guest post is by Jim Sargent, of Lamb McErlane, who was one of the winning attorneys in the Basile v. H&R Block decision his post discusses.  Way to go Jim (and everybody else on the team)!  Bexis and Jim go back a ways, since Bexis wrote PLAC amicus briefs in the Samuel-Bassett case that Jim mentions in this post.  As always, the guest blogger gets all the credit/shoulders all the blame for his post (unless the links don't work - that would be Bexis' fault).

Basile, although not a drug/device opinion, is an important class certification decision in Pennsylvania.

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The Pennsylvania Supreme Court’s most recent decision on class actions is in Basile v. H&R Block, Inc., ___ A.3d ___, 2012 WL 3871504, slip op. (Pa. Sept. 7, 2012) ("Basile III").  Basile was a putative class action commenced way back in 1993, claiming that the defendant breached a fiduciary duty to its customers by not sufficiently disclosing that its “rapid refunds” of federal taxes actually were high interest consumer loans.  Plaintiffs claimed that the defendant was a "fiduciary" as a way of avoiding reliance and individualized issues that prevent certification of this sort of claim.


The class was certified in 1997 by the late Judge Bernard Avellino, based on a “presumption” that an agency relationship existed between the defendant and some 600,000 customers.  Over the next 15 years there then ensued 9 separate appeals – the case was before the Superior Court 5 (twice before the court en banc) times and the Supreme Court 4 times – which well may make it the longest appellate record in Pennsylvania history.

On the first appeal, the Supreme Court rejected the notion that any agency relationship supported Plaintiffs’ claim that a fiduciary duty existed between the defendant and the class.  Basile v. H & R Block, Inc., 761 A. 2d 1115 (Pa. 2000) ("Basile I").  In its September 7, 2012 opinion the Court reiterated that it meant what it said the first time, rejecting the contention that a “confidential relationship” (the “fiduciary” claim under another name) existed, thus knocking out the remaining foundation for Plaintiffs’ claim.

In the course of the 19 year history in Basile, the Supreme Court clarified the law of agency, Basile I, supra, 761 A. 2d 1115, the aggrieved party doctrine (after some Superior Court funny business with appellate issues), Basile v. H & R Block, Inc., 973 A. 2d 417 (Pa. 2009) ("Basile II"), and now, in this latest opinion, the “confidential relationship” doctrine.

Probably most important in the long term, though, is what the Court had to say about the principles governing class certification. .

Its September 7 Basile III opinion reversed the Superior Court and affirmed the trial court decertification order.  Think about what the Superior Court had done.  It had held that that this class had to be certified; that decertification was an abuse of discretion.  Writing in a 6-0 decision (Justice Orie-Melvin attended argument but is now suspended from the Court), Justice Saylor disposed of some eighty-year-old dictum, and held that a “confidential relationship” sufficient to give rise to a fiduciary duty is “‘intensely fact-specific,’” 2012 WL 3871504, at *7-8, and not suited to class-certification.  The Court therefore held that the class was properly decertified.

Justice Saylor’s rulings on class action procedure and his reflections generally on the class action mechanism bear taking specific note.  Speaking for a unanimous court, he rejected the Superior Court’s attempt to flip the burden of proof on class certification.  Evidence sufficient to defeat summary judgment (where all inferences benefit the plaintiff), does not create grounds for certification of a class (where the plaintiff bears the burden).  To support class certification facts must be “properly determined . . . not assumed.”  2012 WL 3871504, at *6.  “[D]eferring close consideration of class certification to the time when facts are determined by a jury at trial (namely, in connection with the verdict) is incompatible with the governing procedural rules.”  Id.

Towards the end − after once describing class actions as “collectivized treatment,” id. at *6 − the opinion returns to this theme, stating:  “We are cognizant of the tendency toward sanctioning the use of class actions as a convenience to address colorably meritorious claims in an aggregate fashion, where these might not otherwise be capable of being redressed practically on an individual basis.”  Id. at *8.  However, the Court rejected this temptation, holding that the approach to class treatment reflected in Pennsylvania’s class action rules “stems from limitations inherent in the judicial rulemaking process, the impact of collectivized treatment of individual claims on defendants’ substantive rights,” and “the limited policymaking role of the courts (as compared with the legislative branch) in terms of manipulating substantive law.”  Id.

[Editor's note:  On this blog, we refer to the "tendency" that Court rejected in Basile III "judicial triumphalism."]

The Court’s rejection of Plaintiffs’ invitation to fashion a judicial solution to a legislative problem should be applauded.  In contrast, 9 months earlier in Samuel-Bassett v. Kia Motors America, Inc., 34 A.3d 1 (Pa. 2011), the same Court approved certification of a class of automobile owners on claims of out-of-pocket expense for brake repairs under an express warranty, where there was no proof that each class member had sustained any (let alone similar) repair expenses.  The Court stated: “…a certification proceeding is a preliminary inquiry whose purpose is to establish who the parties to the class action are ‘and nothing more.’” 34 A.3d at 21-22 (quoting Pa. R.C.P. No. 1707 cmt). That plaintiff was not required to prove anything about the defendant’s liability at the certification stage and the trial court was prohibited from factoring the perceived adequacy of the “underlying merits of the class’s claims into the certification decision.”  Id. at 22. The Court continued: “By the same token, pre-trial class certification proceedings do not require a mini-trial; the class is not obligated to establish liability during the class certification phase.”  Id. (citations omitted).  The Court then discounted the importance of individual proof of out-of-pocket costs for each class member:  “As our previous analysis shows, [plaintiff] and the class adduced sufficient evidence during certification proceedings to show a common source of liability.  Any question regarding individual expenditures resulting from varying attempts to repair the defect was not a ground to reject the commonality found on other issues, to defeat the predominance of common issues and, ultimately, to deny certification of the class at the preliminary stages of trial.”  Id. at 28.

But less than a year later, the Court is rejecting, unanimously, “assumed facts” and requiring “close consideration of class certification”in the name of “limitations inherent in the judicial rulemaking process” and “the limited policymaking role of the courts” in Basile III.

There is no easy explanation for the differences between Samuel-Bassett and Basile III.  It may be significant that Samuel-Bassett languished with the Court for 3 1/2 years after argument (during which time Basile II author Justice Greenspan left the bench), whereas Basile III was decided with lightening speed for the Court (4 months from May 8 argument to September 7 decision).

Some will always say, most particularly Plaintiff's counsel in Samuel-Bassett, that the two decisions can be distinguished purely on the grounds of "waiver," since the Samuel-Bassett Court concluded that defense trial counsel had waived objection to the molded verdict after trial.  But Justice Saylor’s strong dissent in Samuel-Bassett argued that there was no waiver and that Samuel-Bassett would not be cited as a waiver case in the future.  34 A.3d at 64.  Moreover, "waiver" usually gives appellate judges a quick exit, and yet Chief Justice Castille wrote an 80-page opinion in Samuel-Bassett that labored hard to justify the result, which certainly didn't conserve judicial resources, and is not convincing.

Others will say that the two decisions can't be reconciled.  After all, Justice Saylor, who vehemently dissented in Samuel-Bassett, wrote for the unanimous court in Basile III.  They will say there are now two alternative sets of policies in Pennsylvania:  the "class actions are favored" rationale and acceptance of collectivized proof in Samuel-Bassett and the proscription against using procedural vehicles to change substantive law in Basile III – the second of which appears to line up better with the evolving federal standards articulated in Hydrogen Peroxide and Dukes.

It may be that, Justice Saylor, who is next in line to be Chief, will usher in a new era.  Or perhaps the Court is slowly awakening to the misuse of the class action mechanism in circumstances where the effect is to relieve plaintiffs of the burden of proving all elements of their claims.  Philadelphia has earned a reputation nationally for favoring plaintiffs in class actions that might not fly in other jurisdictions.  See The City of Unbrotherly Torts, Wall St. J., Dec. 3, 2011 (noting that Philadelphia state court is a “destination of choice” for plaintiff classes due to fewer settlements and higher verdicts); see also Am. Tort Reform Found., Judicial Hellholes 2011-2012, at 3–8 (2011) (listing Philadelphia as the number one “judicial hellhole”); id. at 2 (“Judicial Hellholes have been considered places where judges systematically apply laws and court procedures in an unfair and unbalanced manner.”) (emphasis omitted); id. at 3 (“Of greatest concern is the Complex Litigation Center (CLC) in Philadelphia, where judges have actively sought to attract personal injury lawyers from across the state and the country.”).  In Daniel v. Wyeth, Nos. 63-64 EDA 2011, before the Supreme Court from the decision of a panel of the Superior Court overturning the trial court's JNOV on punitive damages, Justice Castille was reported to have remarked that sustaining the award would result in Pennsylvania being labeled a "judicial hellhole."  Legal Intelligencer, 9/12/12.  Perhaps the Court finally has gotten the message.