We have been accused of using this Blog as our personal travelogue, posting details of our various adventures notwithstanding the tenuous-at-best connections to the case descriptions that follow. Guilty. Today, for example, we wanted to let you know that you should not miss the opportunity for a visit to the hallowed Bluebird Cafe if you find yourself in Nashville. This tiny venue, featured on the “Nashville” television show, has been a launching pad for the careers of many of Nashville’s top singer-songwriters, many of whom continue to pay visits through fame and beyond. It is most famous for its “songwriters’ roundtable” format, which, for almost 35 years, has featured a circle of songwriters in the middle of the room (not on the stage), taking turns playing songs—famous (some very very famous) and not—and telling stories. It is nothing short of delightful, and, for former Nashville residents and inveterate songwriter fan girls like us, it is awe-inspiring. On New Year’s Eve, we were privileged to see four songwriters whose collective credits would fill a wall, playing and singing their hits and their best songs (not always the same thing) in a room filled with 90 lucky people who were as thrilled as we were. Seriously, don’t miss it.

But, though the Blog indulges tourism in many respects (tenuous connection alert), it draws the line at blatant litigation tourism. And, as the Eastern District of Pennsylvania’s smackdown emphasized, you won’t find a more blatant or ill-advised example of litigation tourism than today’s case.  In Monroe v. Ethicon, 2019 U.S. Dist. LEXIS 219722 (E.D. Pa. Dec. 23, 2019), the two plaintiffs filed their suits in the consolidated pelvic mesh litigation in the Philadelphia Court of Common Pleas.  Along with claims against the manufacturer of their pelvic mesh devices, the plaintiffs included claims against a Pennsylvania raw materials supplier – the supplier of the resin that the manufacturer used in the fabrication of its polypropylene mesh.

There is backstory.  In 2014, several mesh plaintiffs in the same consolidated litigation sued the same raw material supplier.  The supplier filed preliminary objections to the complaint (the Pennsylvania state court version of a motion to dismiss) alleging that it was immune from liability under the Biomaterials Accessibility Assurance Act, a federal statute that bars claims against such suppliers in suits alleging injuries caused by the finished medical devices in which the raw materials are used. (You can read our other posts about the Act here.) As the court explained, “Congress intended the Act to protect suppliers of raw materials and component parts … who do not design, produce or test a final medical device,” from lawsuits alleging that devices using the raw materials are defectively designed or inadequately tested or that they are accompanied by inadequate warnings. Monroe, 2019 U.S. Dist. LEXIS 219722 at *13-14.   The judge entered an order finding the supplier to be a “biomaterials supplier” under the terms of the Act, and, as such, immune from the plaintiffs’ claims. The judge dismissed the claims against the supplier with prejudice. Subsequently, the parties entered into a stipulation under the terms of which the plaintiffs agreed not to name the supplier in any Philadelphia County mesh case. No one did, for five years.

Enter the plaintiffs in today’s case. In September 2019, both plaintiffs, neither of whom had any connection to Philadelphia, filed suits under the Philadelphia mesh master docket number and included the resin supplier as a defendant. The supplier moved to dismiss both cases. The plaintiffs adduced no additional evidence, mounted no new arguments, and supplied no additional affidavits. Nevertheless, they argued that the judge – the same judge who had issued the 2014 order – should not apply his own earlier order.   The judge granted the supplier’s motion and ordered the plaintiffs to file new complaints that did not include the supplier.   When they did, the remaining defendant (the mesh manufacturer) removed the cases to the Eastern District of Pennsylvania. The plaintiffs moved to remand, arguing that the supplier was not fraudulently joined and that, as a “forum defendant,” it prevented the federal court from exercising diversity jurisdiction. On the plaintiffs’ motion to remand, the court explained, “The question is not whether the claims against the forum defendant lack merit but rather whether these claims are wholly insubstantial and frivolous such that they should have never been [sic] brought.” Id. at *26 (internal punctuation and citations omitted).   As the court emphasized, the plaintiffs simply made “the same arguments [the judge] had already considered” and rejected. Id. at *27.   Moreover, the plaintiffs “chose to sue in the one case and one forum where there is a definitive ruling preventing [the supplier] from being a party. Id. at *27. With no appellate ruling on the issue, no other Pennsylvania county would have been bound by the Philadelphia judge’s earlier order. The court concluded, “We just cannot countenance this flouting of a dismissal order with prejudice in the same case.” Id. at *31. The court denied remand and transferred both cases to federal district courts that made sense under the facts of the cases. Nor did the court find a basis for certifying an interlocutory appeal. Instead, the court stated, the plaintiffs could sue the supplier in another Pennsylvania county or in federal district court if they really believed they had claims against the supplier.

But we all know they don’t believe anything of the sort. The fraudulent joinder of the supplier was in aid of one purpose: defeat of federal jurisdiction for plaintiffs seeking the well-known “hospitality” of Philadelphia’s trial court. We would bet a whole lot of money that, thwarted in this effort, the plaintiffs will not file separate suits against the resin supplier.

We love this decision. We enjoy few things more than watching mass tort plaintiff lawyers beaten at their own game, especially when they slide their chess pieces right into the grip of the queen. This was a slam-dunk, and we are delighted that the court acknowledged that.

We were going back through some old cases the other day and came across a gem from our hometown court right here in in San Francisco.  It caught our eye because it deals with an angle of federal preemption on which we have written before and which we think is underappreciated, so we’re going to write about it again.  The issue is implied preemption, more specifically implied preemption where the plaintiff cannot produce “newly acquired information” supporting the drug warning that the plaintiff claims a drug manufacturer should have added to its labeling.  This is a pathway to implied preemption separate and apart from introducing “clear evidence” that the FDA would not have allowed the warning purportedly required by state law.

We will get more into these two pathways in a minute, but it all matters because of the FDA’s Changes Being Effected regulations and ultimately Wyeth v. Levine, where the Supreme Court held that a drug manufacturer could comply with both federal drug regulation and state-law duties to warn by unilaterally strengthening its labeling under the CBE regs.  No impossibility, no preemption.

We have always thought that the Supreme Court was far too generous in its reading of the CBE regulations and the extent to which they actually allow drug manufacturers to change their labels.  But even taking Wyeth v. Levine at face value, it was not the end of implied preemption.  Prescription drug manufacturers most commonly try to invoke implied preemption with “clear evidence” that the FDA considered and rejected the warning purportedly required by state law.  The example that most readily comes to mind is Dolin v. GlaxoSmithKline LLC, 901 F.3d 803 (7th Cir. 2018), where the Seventh Circuit held that federal law preempted the plaintiff’s state law warnings claims because the FDA had repeatedly instructed the company not to add the warning that the plaintiff wanted.

There is, however, more than one way to skin a cat.  Another avenue to implied preemption is to argue that the drug manufacturer could not have changed the drug warnings as the plaintiffs command because there is no “newly acquired information” to support the warning.  That too is grounded in the CBE regulations, which do not allow additional warnings based on information already submitted to the FDA when the drug labeling was approved.

This was the way to summary judgment late last year in a Pradaxa case in California state court.  See Pradaxa Cases, No. CJC-16-004863, 2019 WL 6043513 (Cal. Super. Ct. Nov. 8, 2019).  We have written on Pradaxa cases before—most recently Roberto v. Boehringer Ingelheim here, and another post here covers “newly acquired information” cases, too.  The California summary judgment order is the most succinct, particularly in setting forth a very helpful two-prong framework.

Like all Pradaxa plaintiffs, the California plaintiff alleged that the product—which is an anticoagulant—placed her at an increased risk of bleeding, and that the defendant manufacturer should have warned more strongly about that risk.  The court, however, found those claims to be impliedly preempted.  Here is the quote that you will want to focus on:

Warning preemption analysis is a two-prong analysis, assessed by the Court.  (See Merck Sharp & Dohme Corp. v. Albrecht (2019) 139 S. Ct. 1668, 1676. . . .)  “First, the plaintiff must show that there existed ‘newly acquired information’ such that the defendants could unilaterally change the label pursuant to the CBE regulation without FDA approval. . . .”  . . . Second, “if the plaintiff can point to the existence of ‘newly acquired information’ to support a labeling change under the CBE regulation, the burden then shifts to the manufacturer to show by ‘clear evidence’ that the FDA would not have approved the labeling change made on the basis of this newly acquired information.”

Pradaxa, 2019 WL 6043513, at *2 (some citations omitted).  We saw this two-prong formulation for the first time in Roberto, but we repeat it here because it so cleanly captures two avenues to implied preemption in one gloss.  The plaintiff has to produce “newly acquired information” to support the demanded change.  And it can’t be just any old evidence—it has to be meaningful, concrete, and not previously submitted to the FDA:

“[N]ewly acquired information” is defined as: “data, analyses, or other information not previously submitted to the [FDA], which may include (but is not limited to) data derived from new clinical studies, reports of adverse events, or new analyses of previously submitted data (e.g., meta-analyses) if the studies, events, or analyses reveal risks of a different type or greater severity or frequency than previously included in submissions to FDA.” (21 C.F.R. § 314.3(b) [emphasis supplied].)

. . . [I]t also cannot be rooted in conjecture or hypothesis. Rather, it must conclusively establish, by scientifically valid measurable and statistically significant data, that the different or increased risks are actual and real.

Id. at *3.  If the plaintiff cannot make this showing, i.e., demonstrate that the CBE regs can apply in the first instance, only then does the burden shift to the defendant to produce “clear evidence” that the FDA would not have permitted the proposed stronger warning.

From there, it was a short walk to summary judgment.  Plaintiffs produced evidence that they claimed would support a stronger warning, but with regard to all of it, the court found (repeatedly) that the manufacturer “submitted this information to the FDA before Pradaxa’s warning was initially approved.”  Id. at *4-*5.  The information therefore was not “newly acquired” and it could not support a label change under the CBE regulations.  Because the manufacturer therefore could not have complied with the alleged state law duties without violating federal law, the state law claims were preempted.

Not every case will involve the same factual and regulatory history as Pradaxa, but we still think these are very useful cases in understanding and applying implied preemption.

We keep reading in Law360 and other publications about defense law firms that are ramping up cannabis practice groups. Our own firm is one of them. These developments sparked an interest. After all, won’t many of the principles we’ve worked with over the years for prescription and OTC medications apply to pot and its dressed-up cousins? Or is that just wacky? We’d like to be invited to join a CBD group, even as an adjunct member, but we won’t hold our breath. Anyway, plaintiffs are apparently doing something similar, as we start to see lawsuits alleging problems with cannabidiol (CBD) products. (We have written before about whether the learned intermediary rule should apply to cannabis lawsuits.) Such cannabis lawsuits often focus on whether the CBD product is as strong as advertised.

One example is Snyder v. Green Roads of Florida LLC, 2020 WL 42239 (S.D. Fla. Jan. 3, 2020), a class action against a manufacturer/distributor/seller of various CBD products including but not limited to CBD Oil, CBD Gummies, CBD capsules, CBD Terpenes, CBD Topicals, CBD Syrups, CBD Tea, and CBD Coffee. (There was just one defendant. Thus, surprisingly in this case, there was no joint defense.) There were multiple named plaintiffs. Though they purchased different items, each plaintiff claimed that the product labels misrepresented the amount of CBD that each product contained and that, as a result, each plaintiff was over-charged.

The defendant moved to dismiss the case to the extent that the plaintiffs lacked standing to sue over products they did not purchase, and to dismiss or stay the case because the FDA had primary jurisdiction to decide how CBD products should be labeled. The court mostly went the defendant’s way. The standing issue came first. Article III standing requires a plaintiff to have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The requirement of standing is meant to weed out phony controversies. Standing principles are fully applicable in the class action context. It is not a terribly high standard, but it isn’t so low as to permit plaintiffs to assert claims based on the marketing of products that they did not purchase.

So that’s a problem for the Snyder class action, as the complaint listed products that no named plaintiff bought. But what about future purchases? Who knows what the future holds, right, man? That stoner logic cannot help the plaintiffs because the allegations in the complaint made it clear that the plaintiffs “will not purchase more of Defendant’s products so long as the labelling does not meet their standards.” Accordingly, the Snyder court dismissed the complaint “to the extent Plaintiffs have failed to allege facts sufficient to demonstrate their standing to pursue class action claims based on products they did not purchase on the product labels in making his decision to purchase that the product labels misrepresented the amount of CBD that each product contained and that, as a result, each was over-charged for the products each purchased.” Far out – as in out of court.

Next is the issue of primary jurisdiction. CBD products are regulated at the federal and state level. The substance and scope of such regulation is in flux, but its existence is undeniable. Effective January 1, 2020, the state of Florida began regulating CBD products, including their labelling with respect to the number of milligrams of hemp extract contained in a product. As for the federal level, regulatory oversight of CBD ingestible products, including labelling, is currently the subject of rulemaking at the FDA. The FDA fairly recently conducted a public hearing and instituted an agency task force on CBD regulations. The Snyder court recognized that “[a]lthough the FDA rulemaking process in ongoing, the FDA is under considerable pressure from Congress and industry to expedite the publication of regulations and policy guidance regarding CBD products.”

Given that regulatory backdrop, did the plaintiffs’ beef with CBD strength labelling come within the embrace of primary jurisdiction? Four factors are baked into the primary jurisdiction doctrine: (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry activity to a comprehensive regulatory scheme that (4) requires expertise or uniformity in administration. These four factors are not exclusive and courts “seem heavily influenced by a fifth factor in cases implicating FDA jurisdiction: whether the FDA has shown any interest in the issues presented by the litigants.”

All of those five factors militated in favor of primary jurisdiction in the Snyder case. First, the FDA is exercising regulatory authority over ingestible and other CBD products, even if there is “uncertainty with respect to whether the FDA will conclude that some or all CBD products are food additives, supplements or nutrients that can be safety marketed to the public and, if nutrients, whether the labelling standards and requirements for CBD products will be different or the same as for other nutrients.” Second, the FDA’s exercise of regulatory authority over CBD products is proper and within the FDA’s jurisdiction. Third, the Agriculture Improvement Act of 2018 explicitly recognized the FDA’s authority to regulate products containing cannabis-derived compounds. Fourth, the exercise of regulatory authority by the FDA over the labelling of ingestible CBD products requires “both expertise and uniformity in administration.” Among other issues with which the FDA is concerned are “whether CBD products pose safety risks, how the mode of delivery affects safety, whether there are dosage considerations related to safety, whether there is a need for manufacturing standards, and whether there are standardized definitions for the ingredients in, for example, hemp oil.” Fifth, the FDA “obviously has expressed an active interest in regulating the manufacture and marketing of CBD products.”

These five factors added up to primary jurisdiction in this case. The public interest in the litigation justifies a stay and “would not prejudice Plaintiffs to any significant degree.” At the same time, “[c]ourts would benefit greatly from the FDA’s regulatory framework.” Consequently, the Snyder court stayed the tort case “until the FDA completes its rulemaking regarding the marketing, including labelling, of hemp-derived ingestible products.” The court’s reasoning is blunt and right on.

While the focus of this blog is on product liability cases, we have had occasion to touch upon Lanham Act cases involving litigation between commercial competitors.  One reason is because Lanham Act cases provided significant early precedent for the principle that FDA exclusive enforcement powers prohibit plaintiffs from bringing what amount to private FDCA violation claims in the guise of private civil litigation.  You’ll find no shortage of posts here expounding that 21 U.S.C. §337(a) represents express congressional policy that nobody but the FDA can seek to enforce the FDCA in a court of law.  The concept took a hit with the Supreme Court’s decision in POM Wonderful v. Coca-Cola Co., 134 S.Ct. 2228 (2014), discussed here, but that decision involved food, not drugs or devices, which is an important distinction because the FDA does not pre-approve food labels.  And indeed, drug and device cases post POM Wonderful have done a good job of holding to that distinction finding that POM Wonderful didn’t open the door to Lanham Act claims that are based on proving FDCA violations.  A couple of 2019 cases discussed here and here.

Which brings us to today’s case – Belcher Pharmaceuticals, LLC v. Hospira, Inc., slip op. (M.D. FL Jan. 7, 2020).  The facts here are interesting.  The drug at issue was epinephrine.  Defendant had been manufacturing the drug since before the 1938 enactment of the FDCA.  Therefore it was grandfathered – did not need FDA approval.  However, the drug was in short supply.  So, the FDA asked the defendant to increase production, which defendant did.  A few years later, plaintiff had a competing product approved.  By 2017, the shortage was over and the FDA ask defendant to stop manufacturing its grandfathered product.  Defendant complied.  Not surprisingly, once defendant discontinued its product, plaintiff saw an increase in the sales of its product.  Slip op. at 1.  Plaintiff brought suit under the Lanham Act alleging that defendant falsely advertised its product as FDA-approved when it was not and sought recovery of any profits defendant made “for doing what the FDA requested.”  Slip op. at 2.  Talk about no good deed goes unpunished.

First, it was undisputed that defendant “never explicitly marketed its products as FDA-approved.”  Slip op. at 6.  Rather, plaintiff argued that defendant misled consumers into believing the product was FDA-approved merely based on the fact that defendant was selling its product.  Plaintiff pointed to the fact that defendant’s labeling and packaging included indications for use and shelf-life representations.  Id.  So, the pre-1938 product had labeling that looked like labeling that would routinely accompany FDA approved products.  OK?  And?  There has to be more right.  Yep.

[T]he very act of placing a drug on the market, with standard package inserts often used for FDA-approved drugs fails to state a claim under the Lanham Act because it would usurp the FDA’s authority to enforce the Food, Drug, and Cosmetics Act.

Id. at 7-8 (citations omitted).  The court doesn’t elaborate, but it doesn’t need to.  Where a case involves the intersection of the Lanham Act and the FDCA and would require the court to interpret and/or apply the FDCA, such claims are not permitted.  It’s not a products case, but any decision that trumpets FDA authority deserves a shout out on this blog.

Someone asked us the other day whether spoliation sanctions could lie against a non-party for alleged loss/destruction of electronically stored information sought through a third-party subpoena.  On the one hand, assuming there is personal jurisdiction, the substantive discovery rules do not vary between parties and non-litigants subjected to valid subpoenas.  On the other hand, other than monetary sanctions, Rule 37(e), regarding discovery sanctions for spoliation appears directed solely against parties.

So we thought we’d take a look.

Initially, we should be clear that we are discussing whether a third-party subpoena creates a duty to preserve – not whether such a duty exists in the absence of any legal process.  In the latter situation there is pretty clearly no duty.  Shamrock-Shamrock, Inc. v. Remark – a recent case involving Florida state discovery rules – demanded a subpoena as a prerequisite to any third-party preservation duties:

[L]itigants may employ various legal mechanisms to impose upon a third party a duty to preserve necessary evidence.  For example, a third party may be required to produce particular evidence it possesses in response to a subpoena. . . .

In this case, there was no statute, contract, or discovery request that would impose a clearly defined duty on [a third party] to preserve any potentially relevant evidence.  Thus, a duty would arise only through [the party’s] purported knowledge of [the] pending litigation. . . .   As such, [plaintiff] would like us to announce that [the third party] owed a duty to it based on the foreseeability of litigation.  Considering the traditional approach to defining legal duty, we decline to do so. Indeed, such a broad pronouncement would be tantamount to declaring a general legal duty on any nonparty witness to anticipate the needs of others’ lawsuits.  There are innumerable circumstances in which a nonparty to litigation may have evidence relevant to a case and may know of its relevance.  But that knowledge, by itself, should not give rise to a duty to safeguard the evidence in anticipation of litigation.

271 So. 3d 1200, 1205–06 (Fla. App. 2019) (rejecting independent action for spoliation for lack of duty) (citation omitted).  Accord In re Delta/AirTran Baggage Fee Antitrust Litigation, 770 F. Supp.2d 1299, 1307-08 (N.D. Ga. 2011) (rejecting “sweeping and novel theory of spoliation” that a subpoena served in different litigation could create a preservation duty to plaintiffs in other litigation).  But see Woods v. Scissons, 2019 WL 3816727, at *4 (D. Ariz. Aug. 14, 2019)  (third party’s spoliation “imputed” to party absent any subpoena at all where spoliator was “not a disinterested non-party”).

Nor are we addressing third-party subpoenas directed against the federal government (such as the FDA).  These are governed by departmental regulations issued pursuant to United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951).  We addressed that issue, here.

The first place we tried, the Sedona Principles, downloadable here, turned out to be a dud.  The “meat” in the principles is in what are called “comments.”  Comment 5(a) has a section on “Preservation by non-party in response to Rule 45 subpoena,” which states:

Case law concerning the preservation obligations of a subpoenaed non-party in litigation is not well defined.  Some courts have noted that the issuance of a subpoena creates a duty to preserve.  However, since Rule 45 imposes duties on the requesting party and the court to shield a non-party from undue burden and expense, there may be some question whether an overbroad subpoena creates a duty to preserve.

Sedona Principles, Public Comment Version, at 44 (3d ed. 2017) (footnotes omitted).  The Principles simply suggest that a “good practice for the requesting party” is to “to engage the non-party in good faith discussions about the scope of the subpoena, sources of potentially responsive ESI, and the costs of preserving and producing relevant ESI.”  Id.

The footnotes cited one case, In re Napster, Inc. Copyright Litigation, 462 F. Supp.2d 1060 (N.D. Cal. 2006), but in that case the third-party subpoena target had, by the time sanctions were sought, been joined as a party.  Id. at 1065.  Further, the third–party target “acknowledged a duty to preserve documents . . . based on plaintiffs’ subpoena.”  Id. at 1068.  Thus the issue we’re interested in was effectively conceded in Napster.

The question seems to arise most frequently in connection with securities litigation subject to the stay provisions of the Private Securities Litigation Reform Act, which imposes preservation obligations only on “parties” during the duration of the stay.  15 U.S.C. §78u-4(b) (3)(C)(i).  Several courts have decided to improve upon the statute by permitting “preservation subpoenas” directed at third parties in order “to impose an affirmative duty on those parties to preserve the evidence.”  New York State Teachers’ Retirement Systems v. General Motors Co., 2015 WL 1565462, at *5 (E.D. Mich. April 8, 2015).  “[P]reservation subpoenas . . . impose[] a legal obligation on third parties to take reasonable steps to preserve relevant documents.”  In re Heckmann Corp. Securities Litigation, 2011 WL 10636718, at *5 (D. Del. Feb. 28, 2011).  In In re Tyco International, Ltd., Securities Litigation, 2000 WL 33654141 (D.N.H. July 27, 2000), such subpoenas would “give specified third parties notice of the action and impose upon them only a duty to preserve certain relevant evidence,” id. at *5, but had to be particularized, and could not “call for the preservation of an open-ended, boundless universe of materials.”  Id. at *4 (citation and quotation marks omitted).  Tyco relied on a similar order entered in In re Grand Casinos, Inc. Securities Litigation, 988 F. Supp. 1270 (D. Minn. 1997), holding that third-party subpoenas “would further Congress’ intent by subjecting relevant evidence to a ‘stay put’ directive . . . in [the hands] of third-parties,” which in turn strongly implied that a subpoena imposed a preservation duty on the third party receiving it..  Id. at 1272.  See Avenue Capital Management II, LP v. Schaden, 2015 WL 758521, at *3 (D. Colo. Feb. 20, 2015) (“preservation subpoenas . . . put those parties on notice of their duty to preserve certain documents”); In re Refco, Inc., 2006 WL 2337212, at *4 (S.D.N.Y. Aug. 8, 2006) (“courts have generally permitted plaintiffs in PSLRA actions to issue subpoenas [to] specified third parties [that] . . . impose upon them . . . a duty to preserve certain relevant evidence in their possession”).  None of these cases have involved any claim that a third-party’s preservation obligation extended to actions taken before any subpoena was received – indeed, the rationale is the opposite, these subpoenas are justified precisely to create the sought after duty.  See Neibert v. Monarch Dental Corp., 1999 WL 33290643, at *1 (N.D. Tex. Oct. 20, 1999) (“The only obligation imposed on the identified non-parties by the proposed subpoenas . . . is that they not destroy any records presently in their possession or which come into their possession at a later date”).

Similar results have occurred in a number of non PSLRA cases.  In City of Lindsay v. Sociedad Quimica y Minera de Chile S.A., 2012 WL 2798966, at *5 (E.D. Cal. July 9, 2012), the court assumed that it could hold in contempt “any third party that fails to comply with the issued subpoenas,” which assumes that such subpoenas necessarily impose a duty to preserve on a third-party recipient.  Id. at *5.  See In re Broiler Chicken Grower Litigation, 2017 WL 3841912, at *4 (E.D. Okla. Sept. 1, 2017) (“subpoenas to third parties [will] ensure that they too retain evidence”); Garcia v. Target Corp., 276 F. Supp. 3d 921, 925 (D. Minn. 2016) (“third-party subpoenas” mean that “third parties will be on notice of any obligation to preserve evidence”); Bright Solutions for Dyslexia, Inc. v. Doe 1, 12015 WL 5159125, at *3 (N.D. Cal. Sept. 2, 2015) (“the entities that have the information . . . are not parties and thus have no duty to preserve absent a court order”); Johnson v. U.S. Bank National Ass’n, 2009 WL 4682668, at *2 (S.D. Ohio Dec. 3, 2009) (third party subpoena obliges recipient “to describe responsive documents and protect them for subsequent production”); In re Rosenthal, 2008 WL 983702, at *8 (S.D. Tex. March 28, 2008) (third-party who “disregards a subpoena . . . may be found in contempt”).  Again, these cases all seem (in some, the discussion is quite brief) to focus on post-subpoena evidence.  See Swetic Chiropractic & Rehabilitation Center, Inc. v. Foot Levelers, Inc., 2016 WL 1657922, at *3 (S.D. Ohio April 27, 2016) (a “non-party . . . does not have a duty to preserve information absent a court order”); Koncelik v. Savient Pharmaceuticals, Inc., 2009 WL 2448029, at *2 (S.D.N.Y. Aug. 10, 2009) (it “is certain is that without preservation subpoenas, the third party corporations in possession of potentially relevant information are free to destroy that information”).

Some cases do suggest that no independent preservation duty arises even from receipt of a third-party subpoena.  Gambino v. Payne, 2015 WL 1823754 (W.D.N.Y. April 22, 2015), stated flatly that “the only duty under a subpoena to preserve materials is when the served party claims a privilege or protection from the subpoena and has to preserve the materials until the privilege or protection issue is settled.  Id. at *5.  In Comeens v. Harden Manufacturing Corp., 2014 WL 12650101 (N.D. Ala. April 3, 2014), the plaintiffs “fail[ed] to explain how issuing third-party subpoenas” would be any more effective at preserving documents “than the anti-spoliation letters [they had] already issued.  Id. at *2.  Goodman v. Praxair Services, Inc., 632 F. Supp. 2d 494 (D. Md. 2009), conducted an elaborate “control” analysis concerning allegedly spoliated documents held by a third party, id. at 515-16, that would have been entirely unnecessary if the third-party itself had a preservation obligation.  Id. at 516 (“conclud[ing] that [defendant] did not have the sufficient legal authority or practical ability to ensure the preservation of documents prepared by” the third party).  In Novak v. Kasaks, 1996 WL 467534, at *2 (S.D.N.Y. Aug. 16, 1996), the court separately ordered “that all non-parties upon whom subpoenas have been served in this action are to preserve all documents and other materials responsive to such subpoenas.”

Courts also tend to be more sensitive to burdens imposed on nonparties by overly broad third-party subpoenas.  Rule 45 itself requires requesting parties to “take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.”  Fed. R. Civ. P. 45(d)(1).  “[I]t has been consistently held that ‘non-party status’ is a significant factor to be considered in determining whether the burden imposed by a subpoena is undue.”  United States v. Amerigroup Illinois, Inc., 2005 WL 3111972, at *4 (N.D. Ill. Oct. 21, 2005) (citations omitted).  Thus, “[n]on-parties have a different set of [discovery] expectations” and “concern for the unwanted burden thrust upon non-parties is a factor entitled to special weight in evaluating the balance of competing needs.”  Cusumano v. Microsoft Corp., 162 F.3d 708, 717 (1st Cir. 1998) (citations omitted).  “[T]he undue burden calculus is more protective of non-parties than it is for parties.”  Charles v. Quality Carriers, Inc., 2010 WL 396356, at *1 (S.D. Ind. Jan. 28, 2010).

[T]he considerations of proportionality, efficiency, and judicial economy that govern the [subpoena] requests are case-specific. . . .  Plaintiffs have not identified any non-PSLRA case where a court lifted a stay while a motion to dismiss was pending to permit the serving of document preservation subpoenas on hundreds let alone thousands of third-parties covering a 10-year time period and thousands of products.

In re Broiler Chicken Antitrust Litigation, 2017 WL 1682572, at *5 (N.D. Ill. Apr. 21, 2017).  “[N]on-parties have greater protections from discovery and that burdens on non-parties will impact the proportionality analysis.”  Hume v. Consolidated Grain & Barge, Inc., 2016 WL 7385699, at *3 (E.D. La. Dec. 21, 2016) (quoting E. Laporte & J. Redgrave, “A Practical Guide to Achieving Proportionality Under New Federal Rule of Civil Procedure 26,” 9 Fed. Cts. L. Rev. 19, 57 (2015)).  “[T]he Court should be particularly sensitive to weighing the probative value of the information sought against the burden of production on the non party.”  Fears v. Wilhelmina Model Agency, Inc., 2004 WL 719185, at *1 (S.D.N.Y. Apr. 1, 2004).

[I]t is not [the subpoenaed persons’] lawsuit and they should not have to pay for the costs associated with someone else’s dispute.  Not only is it fundamentally unfair for non-parties to bear the significant litigation costs of others, but also if this Court were to allow litigating parties . . . to impose such a burden on non-parties, then the likelihood of cooperation by non-parties in the future would be placed in jeopardy.

Guy Chemical Co. v. Romaco AG, 243 F.R.D. 310, 313 (N.D. Ind. 2007).

We’ve discussed the law essentially straight up in this post.  In any given case we could find ourselves on either side of the issue.

Over the past few weeks, our loyal readers have descended into the “Stygian Depths” and then climbed to the “Elysian Fields” with us as we reviewed the 10 worst and 10 best cases of 2019.

If you found yourself wanting more information on these cases and their impact – perhaps with a side of CLE credit – we’re pleased to announce that four of your bloggers (Bexis, Steven Boranian, Steve McConnell, and Rachel Weil) will be presenting a free 90-minute webinar on “The good, the bad and the ugly: The best and worst drug/medical device decisions of 2019” on Friday, January 24 at 12 p.m. EST.

This webinar is presumptively approved for 1.5 general CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.5 credit under New York’s Approved Jurisdiction Policy.

The program is free and open to anyone interested in tuning in, but you do have to sign up, which you can do here.

We don’t often write about statutes of limitations because the cases tend to be fact bound and not all that illuminating on larger points of law and/or practice.  However, a case in California struck a chord with us recently because it highlights a point that we think every litigator should understand:  Tolling agreements should not and typically do not revive already-stale claims, and they should be drafted to leave no ambiguity about that specific point.  As the lawyers demonstrated in Rustico v. Intuitive Surgical, Inc., No. 18-cv-02213, 2019 WL 6912702 (N.D. Cal. Dec. 19, 2019), care in drafting can mean the difference between winning and losing.

Here is what you need to know.  The plaintiff underwent a surgical procedure on January 12, 2012, and experienced a complication that one surgeon purportedly attributed to “problems” and a “malfunction” with surgical equipment.  Id. at *1-*2.  Notwithstanding the complication, the plaintiff was discharged days later in good condition, and although she was seemingly no worse for the wear, she contacted an attorney in September 2013 after seeing a television advertisement.  Id. at *2.  The timing is obviously important—the plaintiff’s outreach to counsel was just a few months short of two years after her procedure.

As it turns out, attorneys for the device manufacturer had sent plaintiffs’ counsel a tolling agreement for cases involving the device, under which the tolling period would be triggered by notice from the plaintiffs’ lawyers.  Because the devil is in the drafting, we will lay out relevant terms verbatim:

[The agreement will] toll the applicable statute of limitations for a three month period starting on the date [Defendant] is provided with a claimant’s name.  If necessary, this period may be extended upon agreement of the parties. . . .

. . . .

The tolling of the applicable statute of limitations is not intended to and shall not for any purposes be deemed to limit or adversely affect any defense, other than a statute-of-limitations defense, that [Defendant] has, may have, or would have had in the absence of this agreement.  Nor does this agreement waive or release any statute of limitations defense that could have been asserted before the date of the tolling period.  Upon completion of the tolling period, [Defendant] will have all the defenses available to it as it had on the first day of the tolling period.

Id. at *2 (emphasis added).  The highlighted text at the end will become important because the plaintiffs’ attorney executed the tolling agreement on August 9, 2013, but did not send the plaintiff’s name (and thus commence the tolling) until February 3, 2014—more than two years after the plaintiff’s procedure.  Id. at *2.

You are no doubt starting to see how this played out.  The parties extended the tolling agreement again and again, until the plaintiff finally filed a complaint in the Northern District of California on April 13, 2018.  Was the claim time barred?  The answer was clearly yes, since by the time the plaintiff became a party to the tolling agreement, her claim was already untimely.

The district court’s order granting summary judgment for the defense came down to (1) choice of law, (2) the express terms of the tolling agreement, and (3) application of California’s discovery rule and doctrine of fraudulent concealment.

First, the district court determined that California’s two-year statute applied, rather than Connecticut’s three-year statute.  Although the plaintiff had her procedure in Connecticut, she resided in Florida and the Defendant was headquartered in California.  Id. at *1.  The district court therefore applied California’s “governmental interest” framework for choice of law, and it determined that because California was the forum and because the only defendant was a California resident, California was the only state interested in applying its statute of limitations.  Id. at *4-*7.  The discussion is long, but that’s the gist of it, and it left the plaintiff trying to evade California’s two-year statute.

Second, Plaintiff attempted to evade the statute by invoking the tolling agreement and arguing that the defendant was equitably estopped from asserting a statute-of-limitations defense.  This is where the tolling agreement spoke for itself.  The agreement did not prevent the defendant from asserting the statute because the claim was already untimely when the tolling period commenced.  Id. at *7-*8.  Recall that counsel signed the tolling agreement in August 2013, but did not give notice to commence the tolling until months later—in February 2014, which is more than two years later than the plaintiff’s alleged complication in January 2012.  The plaintiffs simply could not explain away the agreement’s express terms, under which the plaintiff became a party to the agreement on February 3, 2014, and the defendant expressly did “not waive or release any statute of limitations defense that could have been asserted before the date of the tolling period.”  Id. at *8-*9.  If there is one takeaway from this post, this is it.  The agreement’s clear language (and counsel’s faulty calendaring) made the difference.

Third, the plaintiff argued that California’s discovery rule and doctrine of fraudulent joinder delayed the accrual of her claims.  Id. at *12-*15.  But California’s discovery rule requires only inquiry notice for claims to accrue, and “so long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her.”  Id. at *12 (quoting Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1111 (1988)).  Plaintiff’s surgeon had told her and her husband that she experienced a complication and that there had been “problems” and a “malfunction” with the surgical equipment.  That was enough to find as a matter of undisputed fact that the plaintiffs knew or should have known, or at least had the suspicion, that they had a claim.  Id. at *13.  Finally, fraudulent concealment does not apply “if a plaintiff is on notice of a potential claim,” as the plaintiffs were here.  Id. at *14.

This is a good case to put away for reference.  The particular facts may not recur, and we express no opinion here on whether tolling agreements are a good idea.  Sometimes they are, and sometimes they are not.  If, however, you draft and execute one, be careful and be clear.

We had to shake our heads at the recent 360 story entitled, “Allergan Breast Implant Risk MDL Heading to New Jersey” – the link is here for those of you with a subscription.

The idea of a “risk” MDL seems bizarre.  The story involves a particular type of cancer, and states that “four proposed class actions” are being coordinated.  If it’s one thing that our federal and state class action cheat sheets teach, it is that class actions are inappropriate for cases involving personal injury.  Hence, it appears that the description of a “risk” MDL is shorthand for class actions alleging a “risk” of that type of cancer in persons who have never (and probably will never) be diagnosed.

But according to the story, at least some of these would-be class representatives have actually “fallen victim” to the cancer.  That’s another blatant class action no-no – actually injured persons cannot represent classes of purportedly “at risk” persons with no present injury.  E.g., Amchem Products, Inc. v. Windsor, 521 U.S. 591, 624 (1997) (“exposure-only plaintiffs especially share little in common, either with each other or with the presently injured class members”) (citation and quotation marks omitted).  Further, if (as the 360 article states) the plaintiffs are demanding that the defendant “cover the costs of removing and replacing” the products, there are no state-law claims for medical monitoring either, because (putting aside the many other individualized issues) medical monitoring is just that:  an action solely for costs of “monitoring,” not prophylactic treatment.  This kind of claim was tried, and roundly rejected, in the cases involving Shiley heart valves we list in our compensatory injury cheat sheet.

But it gets worse.

This isn’t your mother’s breast implant litigation.

Breast implants are now Class III pre-market approved (“PMA”) medical devices.

That means express preemption under Riegel v. Medtronic, Inc., 552 U.S. 312 (2008).  Even one of the worst post-Riegel preemption decisions recognized that 21 U.S.C. “Section 360k provides immunity for manufacturers of new Class III medical devices to the extent that they comply with federal law.”  Bausch v. Stryker Corp., 630 F.3d 546, 553 (7th Cir. 2010).  That’s a statement of the “parallel claim” exception to PMA preemption that courts have read into Riegel.

Back to the 360 article.  “The suits allege that [defendant] used a loophole in the U.S. Food and Drug Administration’s reporting requirements” and “it wasn’t until the agency tightened the requirements in 2017 that more adverse event reports came to light.”  Translation:  the complained-of reporting complied with the FDA’s requirements at the time, and when the FDA changed its requirements, the defendant changed its reporting to remain in compliance.  The complaints claim that, while “[m]anufacturers are supposed to report possible safety concerns about their products to the FDA through its public, searchable database” called “MAUDE,” the defendant instead “report[ed] them in so-called alternative summary reports, which are not required to be reported to MAUDE.”  Translation:  the defendant used an available, if “overlooked,” FDA reporting procedure to satisfy its legal obligation to report adverse events.  Or, as the FDA itself puts it on its website:

In 2017, the FDA began to sunset the ASR [alternative summary report] Program and requiring manufacturers with ASR exemptions to submit, in addition to the spreadsheet, a companion report that includes the total number of events being summarized.

We were also able to find the FDA’s – now withdrawn – guidance on alternative summary reports on its website, here.

Thus, it is readily apparent that the complaints don’t state any actual FDCA violation – only that the defendant, until 2017, had a choice as to how to report adverse events to the FDA, and chose the most streamlined route (allowing “submi[ssion] in a line-item format,” according to the then-applicable FDA guidance) available for meeting its FDA reporting obligations.  When the FDA “rolled out more rigorous reporting requirements in 2017,” the defendant also complied, which resulted in more public reports.

Thus, the plaintiffs in this “risk MDL” are claiming that, even though the FDCA did not obligate the defendant to use MAUDE reporting prior to 2017, some state common-law duty to use MAUDE existed and gave rise to tort liability.  What part of “different from or in addition to” (the preemptive language of §360k(a)) don’t these plaintiffs understand?  The claims described by 360 facially assert state-law reporting duties both “different from” FDA requirements (which at the time allowed “alternative summary reports”) and “in addition to” those same requirements.  What the 360 article reports isn’t even a “failure to report” claim – because at minimum that kind of claim asserts an actual violation of an FDCA reporting duty.  Again, this much is established even in cases we love to hate.  A failure-to-report claim:

alleges that, under federal law, [a defendant] had a “continuing duty to monitor the product after pre-market approval and to discover and report to the FDA any complaints about the product’s performance and any adverse health consequences of which it became aware and that are or may be attributable to the product.”  It further alleges that [defendant] failed to perform its duty under federal law to warn the FDA.

Stengel v. Medtronic Inc., 704 F.3d 1224, 1232 (9th Cir. 2013) (applying Arizona law) (emphasis added), overruled on state law grounds, Conklin v. Medtronic, Inc., 431 P.3d 571, 578-79 (Ariz. 2018).  Here, assuming the 360 article is accurate, no actual federal reporting violation is alleged.  At all times, the defendant’s reporting complied with what FDA regulations then allowed.  Sure, these plaintiffs don’t like what FDA regulations permitted – but that’s precisely why Congress imposes preemption in this type of case.

So our reaction to the “risk MDL” described in the 360 article is that:  (1) it can’t be a class action; (2) state law doesn’t provide the relief being requested; but in any event (3) the only common issue should be that the whole thing is preempted under Riegel.

How many of us entered law school dreaming of following the paths of Brandeis, Marshall, etc. in the field of constitutional law? How many of us now can go weeks, or even months, without reading a Supreme Court case? Paying off student loans led many of us to work for law firms where there was far less available to do in constitutional law than in, say, commercial disputes, securities, or product liability law. But we’re not mooning over the path not taken. Somewhere in that perineum between law school graduation and partnership, we learned that while constitutional law gets the headlines, it can also be in some ways, a less satisfying practice area. We don’t merely mean that it doesn’t pay as much, at least not reliably. The problem with constitutional law is that it turns too much on the predilections of a few judges, and turns too little on rules and realities. Statutory interpretation or antitrust analysis or a Daubert dispute demand rigor. Perhaps there is rigor in unwinding the doctrinal wanderings of First or Fourth Amendment law (and their “penumbras”), too, but politics and prejudice seem to take positions at the head of the line in those flashy areas. (There is currently an abortion case before the Supreme Court that asks whether a precedent set way, way back in 2016 should be overturned. Question: what has changed? Answer: politics and the makeup of the nine solons who get to tell us what the constitution means.).

Every once in a while, constitutional law intersects with other legal battlegrounds in interesting ways. Our blog, for example, has had multiple occasions to discuss the tension between the First Amendment and regulatory/judicial restraints on drug and device marketing. Now comes a brilliant, nervy law review article that examines this issue and makes some exciting proposals. The article is by Florida law professor Lars Noah, it appears in the Fall 2019 edition (volume 92) of the Temple Law Review, and is entitled, “Does the U.S. Constitution Constrain State Products Liability Doctrine?” The article is insightful and blessedly brief, so you should check it out yourself. We won’t step on too many of the article’s points, but here is a preview that we hope will inspire you to take a look at the article before you draft your next summary judgment brief.

Professor Noah begins by focusing on the dreadful decision by the New Jersey Supreme Court in the Perez case holding that the learned intermediary doctrine, which limits the duty to warn when selling prescription drugs and devices, did not apply whenever manufacturers had engaged in direct-to-consumer (DTC) advertising. The article boldly suggests that the rule announced in Perez might run afoul of the Constitution. After all, in cases such as Virginia State Board of Pharmacy and Thompson v. Western States Medical Center, the Supreme Court has applied the first amendment to limit government efforts to bar truthful and nondeceptive pharmaceutical advertising.

(The article reminds us that Perez involved a contraceptive. The New Jersey court apparently believed that the product “did not qualify as a therapeutically important product,” and seemed willing to carve out another exception to the learned intermediary doctrine for “lifestyle” drug and devices, whether or not directly advertised to consumers.)

Professor Noah points out that the DTC exception in Perez “plainly singles out for unfavorable treatment defendants that engage in commercial speech simply because some of the judges in that state have no use for the practice.” That sounds like content-related discrimination (both speaker- and topic-based) against certain speech.

The article does not confine itself to the Perez issue. It explores whether constitutional protection should extend to the marketing of certain products that implicate certain rights. Contraceptives – such as the product at issue in Perez – would be among those products, something we’ve noted here on the Blog. An analogy is drawn to the First Amendment’s requirement of tolerating some defamatory falsehoods in order to avoid chilling valuable speech. Why shouldn’t other fundamental rights (think of some of the most controversial SCOTUS opinions, such as Griswold, Roe, and Heller) require tolerating the “sale of certain arguably defective products lest suppliers become spooked about distributing even nondefective versions that individuals have a right to use“?

That is not an absolute principal; there aren’t that many absolutes in constitutional law. Professor Noah proposes that “Constitutional regard for ensuring the availability of certain products would not entirely insulate sellers, just as authors and publishers remain subject to defamation lawsuits, but it would necessitate imposing a higher pleading standard on plaintiffs. In order to really safeguard constitutionally valuable products, even allegations of negligence would not suffice, instead, courts should have to recognize a regulatory compliance defense.”

The article concludes that “[t]he time may have come to extend the U.S. Supreme Court’s drive to constitutionalize the domain of speech torts into the field of products liability.” That notion is intriguing not only because of its potential scope and consequences, but also because it is grounded in precedent and logic. At a minimum, we should ponder possible constitutional dimensions before we put the finishing touches on our dispositive motions.

We all know that absent extraordinary circumstances, failure to warn claims against generic drug manufacturers are preempted under PLIVA, Inc. v. Mensing, 564 U.S. 604 (2011).  But as far as we are aware, no other court has been asked to decide whether that same preemption applies to cross-claims for contribution or indemnity.  Until now.

In Haney-Williams v. GlaxoSmithKline LLC, 2019 WL 7284737 (D. Nev. Dec. 27, 2019), plaintiff filed a failure to warn claim against the manufacturer of a generic drug prescribed to treat her epilepsy.  She also brought claims against the pharmacy that filled the prescription alleging they gave her the wrong strength of the medication.  Plaintiff originally also sued the manufacturer of the brand name product, but dropped those allegations early on.  Id. at *1.

The pharmacy filed a cross-claim against the generic manufacturer for comparative negligence, equitable indemnity, and declaratory relief, along with some contract-based claims. Id.  The contract-based claims were dismissed because the contract had expired prior to plaintiff’s injury.  Id. at *5.  The generic manufacturer moved to dismiss both the direct action by the plaintiff and the contribution claims by the pharmacy as preempted.

The failure to warn claim was easily dismissed under Mensing after the court took judicial notice of the ANDA which identified the drug as a generic product, a fact that was omitted from the complaint.  Id. at *3.  The court then turned to the pharmacy’s cross-claims.  Under Nevada law, a comparative negligence claim provides that “each defendant is severally liable to the plaintiff only for that portion of the judgment which represents the percentage of negligence attributable to that defendant.”  Id. at *4.  Similarly, equitable indemnity “allows a defendant to seek recovery from other potential tortfeasors whose negligence primarily caused the injured party’s harm.”  Id.  Under both scenarios, recovery is only permitted from another tortfeasor.  Therefore, for the pharmacy to recover under either theory, there would have to be some way the generic manufacturer could be find liable.  Id.  But, because plaintiff’s sole cause of action against the generic manufacturer is preempted, the generic manufacturer cannot be found a tortfeasor and there can be no derivative claim.  As the pharmacy’s request for declaratory relief was derivative to its other claims, it too was dismissed.

The rationale is simple, straightforward and should apply in all preemption cases resulting in a complete dismissal of plaintiff’s claims, not just generic preemption.  A little surprising that it has taken this long to get this one in the books.  Granted it’s a twist we don’t see that often.  But if you do find yourself in this vexing situation, it’s good to know the law is on our side.