Antitrust was our favorite course in law school.  That law school was located in the south side of Chicago, city of big shoulders and bigger minds (Posner, Easterbrook, et al.) who weren’t shy about subjecting antitrust law to flinty-eyed analysis.  It was exciting.  It was logical.  It focused on real world results.  Earlier Chicago School antitrust pioneers included Aaron Director, Ronald Coase, and Robert Bork.  You have probably heard of that last fellow.  His nomination to SCOTUS descended into a partisan circus resulting in his rejection, which was due as much to his beard and his lip-smacking over the SCOTUS case inventory “intellectual feast” as to his actual qualifications for the office.  His nomination also resulted in a new verb used for clobbering SCOTUS nominees: to “Bork” someone, especially someone who has a substantial written record.

 

We would hate to be Borked.

 

Applied correctly (i.e., Chicago-ly), antitrust law looks at how things really work and what really makes sense.  It is, in short, quite different from drug and device product liability law, where the realities of science, medical practice, and warnings are submerged in fanciful morality tales.  So it is with some exhilaration that we take this brief summer vacation away from Fosamax, Bausch, and the latest insane talc verdict to consider an antitrust case, Washington County Heath Care Auth., Inc. v. Baxter Int’l Inc., 2018 U.S. Dist. LEXIS 112064 (N.D. Ill. July 5, 2018).  That case is of interest to us because it turns on the real world realities of regulation and recalls.  Spoiler alert:  FDA regulation is extensive and voluntary recalls are not easy. (Nobody on the blog had anything to do with the case.  The opinions herein are wholly/only ours, not the parties’ or their lawyers’.)  

 

In Washington County Health Care Authority, the plaintiffs claimed that  the two largest producers of intravenous saline products violated the Sherman Antitrust Act by colluding to increase prices by initiating a series of bogus voluntary recalls that depleted the saline inventories of health care facilities throughout the nation.  The defendants filed a motion to dismiss, arguing that this theory is implausible.  They cited Twombly.  We on this blog often cite Twombly, but now we are reminded that Twombly was an antitrust case.  The defendants won their motion to dismiss, because the plaintiff’s theory that the defendants maneuvered their way into voluntary recalls was implausible.   Substitute the word “nutty” for “implausible” and you’d be a little closer to the truth.

 

Why was the plaintiffs’ theory nutty?  At different times, the two defendants issued voluntary recalls of IV saline due to leaks and the presence of particulate matter.  So, as an initial matter, you’ve got to believe that manufacturers would intentionally make up a story that their products were defective.  Who does that?  (As a DDL defense hack, we feel the Washington County Health Care Authority case pulling us through the looking-glass.  We’re used to hearing plaintiffs gripe that our clients should have recalled their products.  Can you spell damned-if-you-do-damned-if-you-don’t?) Further, to make out an antitrust case, there must be evidence that the two manufacturers agreed on this plan.  Was there any actual evidence of this agreement?  There was not.  The plaintiffs identified “parallel behaviors,” but those behaviors “are no more probative of an agreement than of independent self interested conduct.”  Moreover, the behaviors weren’t all that parallel. First, the timing was not quite consistent.  Second, one manufacturer recalled eight times as much product as the other.  Why would one conspirator confer such a benefit on its rival? 

 

There is another problem with the antitrust complaint.  Agreement or no agreement, the complaint contained no allegations suggesting that the reasons the manufacturers provided for the recalls were false.  The complaint did not say there weren’t leaks or there weren’t particulates.  Rather, the complaint characterized the defects as “inconsequential” or “technical,” thus permitting the defendants to engage in the recalls “without significant business or reputational risks.”  That contention is facially implausible, but it is also undercut by the FDA’s classification of the recalls as Class I or II, which are the two most serious recall designations.  A Class I recall occurs when “there is a reasonable probability that the use of, or exposure to, a volatile product will cause serious and adverse health consequences or death.”  21 C.F.R. § 7.3(m)(1).  A Class II recall “is a situation in which use of or exposure to, a violative product may cause temporary or medically reversible adverse health consequences or where  the probability of serious health consequences is remote.”  No rational manufacturer would willingly walk into those categories.  

 

Even more basically, and no matter what category is implicated, voluntary recalls “impose high upfront costs and invite FDA scrutiny of the very instrument of the unlawful agreement.”  FDA considers a removal of a product from the market to be a voluntary recall if it “regards the product as involving a violation that is subject to legal action e.g., seizure.” 21 C.F.R. § 7.46(a).  Thus, the court concluded that a complaint “premised on a theory that the defendants intentionally manufactured a public health crisis by orchestrating  bogus product recalls that would, despite the public health crisis and rigorous regulatory oversight of product recalls, escape the FDA’s attention, lacks facial plausibility.”   And then there is a consideration of the practicalities of recalls.  “Product recalls are expensive and draw attention from regulators, especially in the pharmaceutical industry.”  The recalling company must submit a detailed recall strategy for evaluation by the FDA, must actually implement recall notifications, and must vigilantly monitor the recall and provide periodic updates to the FDA (tracking the number of purchasers notified of the recall and their responses, among other things).  21 C.F.R. § 7.42; 21 C.F.R. § 7.53. None of that is cheap or easy. 

 

Finally, it is hard to say that the non-agreement to cook up an expensive, self-inflicted reputational wound succeeded in raising prices.  The complaint acknowledged that in response to the saline solution shortage, the FDA permitted saline to be imported from foreign manufacturers – “another fact that illustrates the implausibility of the plaintiffs’ theory that the defendants colluded in a manner that convinced their regulator to allow imports from foreign competitors.” 

 

Hurray for the Windy City, where smart professors and smart judges are happy to blow away frail antitrust fables.  Now if only those winds could also clear the terrain of silly drug and device cases.   

 

When Justice Gorsuch was first nominated for the Supreme Court, we took a look at his preemption decisions and were favorably impressed.  We’re doing the same thing today with respect to the new nominee, Brett Kavanaugh, currently a judge on the United States Court of Appeals for the District of Columbia.  Our job today won’t be as easy because there isn’t nearly as much state-law-based diversity tort litigation in the DC Circuit.  Heck, there aren’t even any states in the DC Circuit.  So it’s not likely that we’ll find a Caplinger v. Medtronic, Inc., 784 F.3d 1335 (10th Cir. 2015), in Judge Kavanaugh’s judicial resumé.

But we can try.

Our search for Kavanaugh opinions containing some form of the word “preempt!” produced 19 cases.  Over half of them could be eliminated immediately, because “preempt!” appears only in a different opinion, one not written by the possible next Supreme Court justice.

We found only two Kavanaugh opinions concerning preemption that weren’t in the administrative context.  The most significant of those was Doe v. Exxon Mobil Corp., 473 F.3d 345 (D.C. Cir. 2007), where Judge Kavanaugh dissented, in part on preemption grounds, from the court’s decision not to hear an appeal in one of those now (thankfully) eliminated Alien Tort claims involving plaintiffs and conduct that took place entirely overseas.  In dissent, Judge Kavanaugh would have dismissed the Alien Tort claims on non-justiciability grounds due to interference with American foreign policy . Id. at 359-64.  A few remaining state-law tort claims would be preempted  for essentially the same reason:

[T]he possibility that state law (in this case, D.C. tort law) will produce something more than incidental effect in conflict with express foreign policy of the National Government requires preemption of the state law.  Although we need not resolve the issue here, the state-law tort claims are likely preempted as a result of the State Department’s specific statement of harm to foreign policy.

Id. at 365 (dissenting opinion) (citations omitted).  The Doe case rattled around the DC Circuit for quite some time.  Judge Kavanaugh dissented again in Doe v. Exxon Mobil Corp., 654 F.3d 11 (D.C. Cir. 2011), vacated, 527 F. Appx. 7 (D.C. Cir. 2013), but did not reach preemption in that opinion.  Finally, he participated in the ultimate dismissal of the case after Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013), again not reaching preemption.  See Doe v. Exxon Mobil Corp., 527 F. Appx. 7 (D.C. Cir. 2013).

Another Kavanaugh opinion that wasn’t administrative in nature was Mills v. Giant of Maryland, LLC, 508 F.3d 11 (D.C. Cir. 2007).  It was a garbage class action, filed on behalf of DC residents who allegedly were lactose intolerant but didn’t know that yet.  The district court had dismissed the case on FDCA preemption grounds – that the warning plaintiffs demanded was different from the labeling required by the FDA.  Id. at 13.  Judge Kavanaugh, however, didn’t reach preemption.  Instead, he found that DC “tort-law principles foreclose failure-to-warn liability when the risk that some people might have an adverse reaction to the food is ‘widely known.’”  Id. at 13-14.  Having affirmed dismissal on state-law grounds, there was no need to reach preemption.  Id. at 15-16.  At least that ruling suggests that Judge Kavanaugh is a tort conservative.

Interestingly, both Doe and Mills are from 2007 and were Judge Kavanaugh’s first preemption decisions, since he joined the DC Circuit the year before, in 2006.  He does not appear to have encountered preemption in the common-law tort context since.

A lot of the DC Circuit’s docket is administrative in nature, and in that procedural posture it is often the plaintiffs – various regulated businesses of one sort or another – that seek preemption, specifically additional preemption of state regulations beyond that recognized by the relevant federal agency.  That’s not an easy position to win, as it arrays the government on the side against preemption.  One of the administrative cases is Illinois Public Telecommunications Ass’n v. F.C.C., 752 F.3d 1018 (D.C. Cir. 2014), involving telephone refunds.  Preemption was rejected.  First, since the FCC had issued only a voluntary (“may, but are not required”) order covering the subject at issue.  State decisions not to issue refunds thus were not preempted.  Id. at 1024.  Second, given the statutory scheme, the FCC’s decision not to preempt state decisionmaking was not “arbitrary or capricious.”  Id. at 1025-26.  Another such Kavanaugh decision – indeed, the with opinion the most occurrences of “preempt!” − was a total bust, as the preemption argument in American Road & Transportation Builders Ass’n v. E.P.A., 705 F.3d 453 (D.C. Cir. 2013), was both barred by the statute of limitations and previously adjudicated in a different court.

That’s basically it. In no other opinion has Judge Kavanaugh used “preempt!” in the Supremacy Clause context that interests us.

So our conclusion is that, unlike a lot of areas, Judge Kavanaugh has not left a lot of tort preemption footprints during the course of his judicial career.  What little there is, we like.  And that one administrative preemption opinion?  It doesn’t bother us much.  Shockingly, not all preemption arguments are meritorious, and from the discussion in Illinois Public, we might not even have found preemption.

What follows is a rather involved guest post by Reed Smith‘s Kevin Hara.  Actually, Kevin has contributed enough to the Blog over the last couple of years that he’s more of a crypto-blogger than a guest.  Instead of the more common case-specific post, Kevin has put together his own 50-state survey on state statutes of repose.  A lot of states have a variety of different statutes of repose.  Some of these statutes (such as those based on useful life) can be useful in prescription medical product liability litigation, others (like those involving fixtures to real property) – not so much.  Anyway, in this guest post Kevin endeavors to sort things out on a nationwide basis.  As always our guest bloggers deserve 100% of the credit, and any blame, for their work.

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Although this relatively recent Law360 article discussed statutes of repose, this powerful affirmative defense remains underutilized, so this post revisits it and digs a little deeper.  This defense, where applicable, provides a potentially swift conclusion to an action with accompanying cost savings for the client.  Further, defense counsel may move to dismiss at the pleading stage, where the applicability of the defense is apparent from the complaint.  Many courts view statutes of repose as substantive, rather than procedural, unlike statutes of limitation – so the plaintiff cannot escape by becoming a litigation tourist.

The state of Tennessee’s statute of repose serves as a perfect example of a bright line application in a prescription product liability action, regardless of a plaintiff’s knowledge wherein “a delay, even without knowledge of the hazard involved in the delay, may preclude the bringing of an otherwise meritorious claim.”  Montgomery v. Wyeth, 580 F.3d 455, 463, 466 (6th Cir. 2009) (applying Tennessee law).  Tennessee courts have explained this rule succinctly:

A statute of limitations governs the time within which suit may be brought once a cause of action accrued. A statute of repose limits the time within which an action may be brought, but it is entirely unrelated to the accrual of a cause of action and can, in fact, bar a cause of action before it has accrued.

Jones v. Methodist Healthcare, 83 S.W. 3d 739, 744 (Tenn. App. 2001) (emphasis added).

The Texas Supreme Court provided a thoughtful analysis of that state’s clear-cut statute of repose:

Indeed, the key purpose of a repose statute is to eliminate uncertainties under the related statute of limitations and to create a final deadline for filing suit that is not subject to any exceptions, except perhaps those clear exceptions in the statute itself.  In recognizing the absolute nature of a statute of repose, we have explained that while statutes of limitations operate procedurally to bar the enforcement of a right, a statute of repose takes away the right altogether, creating a substantive right to be free of liability after a specified time.  The whole point of layering a statute of repose over the statute of limitations is to fix an outer limit beyond which no action can be maintained.  One practical upside of curbing open-ended exposure is to prevent defendants from answering claims where evidence may prove elusive due to unavailable witnesses (perhaps deceased), faded memories, lost or destroyed records, and institutions that no longer exist.

Methodist Healthcare Sys. of San Antonio v. Rankin, 307 S.W.3d 283, 286-87  (Tex. 2010 ) (internal citations and marks omitted) (emphasis added)

The Tennessee and Texas statutes of repose are elegant in their simplicity:  you are either in, or you’re out.  Period.  No ifs, ands, or buts.  Iowa, Connecticut, and North Carolina are a few of the states with similarly straightforward statutes of repose.  However, perhaps because they are so unyielding – and unlike statutes of limitation, the vast majority of which are subject to the discovery rule – statutes of repose are often more limited in scope, and therefore not uniformly applicable to manufacturers of prescription medical products.

That said, statutes of repose add a significant item to any defense practitioner’s toolbox because they can take a case, and simply “nip it in the bud,” a common expression that is illustrative here.  Indeed, it is a phrase that sometimes gets mixed up, such as with the malapropism “nip it in the butt,” which got us to thinking about something else that often leads to confusion: music.  All too often, people misapprehend the words to a song, and there are a multitude of websites with compilations of some of the more notable – and incidentally, most humorous – misheard song lyrics, including Mentalfloss , Huffington Post, and New Musical Express, but here are some of the best.  Perhaps the most famous example is the Jimi Hendrix classic “Purple Haze,” with famous phrase “Excuse me while I kiss the sky,” interpreted erroneously as: “Excuse me while I kiss this guy.”

Who can forget the San Francisco Bay Area’s own all-time great rock band Creedence Clearwater Revival’s song “Bad Moon Rising,” with part of the chorus, “There’s a bad moon on the rise,” replaced with “There’s a bathroom on the right.”  (In fact, this error became prominent that front man John Fogerty was known to purposefully sing that rendition and gesture to the proverbial restroom.)  Another prime example is the upbeat Johnny Nash song “I Can See Clearly Now,” with the line from the refrain “I can see clearly now, the rain is gone,” somehow thought to be: “I can see clearly now, Lorraine is gone.”  It would be remiss not to mention The Monkees, and their hit “I’m A Believer,” with the eternally ecstatic line, “Then I saw her face, now I’m a believer!” instead substituted with the diametrically opposed – and frankly cruel, but evocative – “Then I saw her face, now I’m gonna leave her!”

Bexis pointed out that one could interpret the chorus of British band ELO’s chart topper “Evil Woman,” “Evil woman,” as “You need a woman.”  He also misunderstood for years (until the advent of lyrics services on the Internet) the line in Steppenwolf’sFrom Here To There Eventually” as “cause benign, rather than “caused by man.”

These faux pas are fitting metaphors for failing to comprehend the importance of statutes of repose.  While it is easy enough to have a chuckle when a friend butchers a line in a favorite song, failing to seize an opportunity to secure a dismissal with prejudice is no laughing matter.  Defense counsel should thoroughly consider and explore all possible options for resolving a case quickly in the name of expediency and client satisfaction.

To assist with those aims, here is a rundown of the applicable statutes of repose for all 50 jurisdictions, including discussions of which states apply the discovery rule, which utilize presumptions rather than complete defenses, and other subtle variations, beginning with those states whose statutes are most likely to apply to prescription product claims.

States With Statutes That Are Applicable To Prescription Product Liability Claims

 Alabama – Alabama applies a unique, common law, 20 year rule of repose which “arose within the context of property disputes,” but according to the Alabama Supreme Court “the rationale underlying the rule is not so limited and, accordingly, the rule has been applied in other contexts, including those alleging tort claims.”  Ex parte Liberty National Life Insurance Co., 825 So. 2d 758, 763-64 (Ala. 2002); see also Owens-Illinois, Inc. v. Wells, 50 So.3d 413, 420 (Ala. 2010) (ruling that “Alabama’s 20-year common-law rule of repose does not begin to run on a claim until all the essential elements of that claim, including an injury, coexist so that the plaintiff could validly file an action”).

Colorado – Col. Rev. Stat. § 13-21-403(3).  Applies a presumption of non-defectiveness more than “[t]en years after a product is first sold.”  See Mile Hi Concrete, Inc. v. Matz, 842 P.2d 198, 205 (Colo. 1992).

Connecticut – Conn. Gen. Stat. § 52-577a.  An action is foreclosed “more than 10 years after the manufacturer relinquished “possession or control of the product,” absent fraud or express warranty.

Florida – Fla. Stat. § 95.031(b).  A products liability action is barred “more than 12 years after delivery of the product,” with exceptions for latent disease or injury, and fraudulent concealment.

Georgia – O.C.G.A. § 51-1-11(b)(2).  Precludes any action “after ten years from the date of the first sale for use or consumption” of a product that causes injury.

Idaho – Idaho Code § 6-1403(b).  Rebuttable presumption that injury “caused more than ten (10) years after time of delivery” occurred after product’s safe life, rebuttable “by clear and convincing evidence.”

Illinois – 735 ILCS 5/13-213(b).  Forbids any “product liability action” on any theory after 12 years from the first sale or 10 years after the purchase by an initial consumer, unless brought within two years of discovery of alleged injuries.   Davis v. Toshiba Mach. Co., 710 N.E. 2d 399, 401 (Ill. 1999) (weakening statute of repose by allowing discovery rule in cases not involving latent injuries).

Indiana – Ind. Code § 34-20-3-1(b).  Action must commence within “10 years after delivery of the product to initial user,” but may be brought within two years after accrual. See, e.g., Land v. Yamaha Motor Corp., 272 F.3d 514, 515-516 (7th Cir.2001) (ruling that where it was “undisputed” that injury and filing suit occurred more than 10 years after product purchase by initial user, statute of repose barred product liability action.) (emphasis added).

Iowa – Iowa Code § 614.1(b). Bars product liability action on any theory 15 years after purchase of a product absent express warranty or concealment. See Albrecht v. GMC, 648 N.W.2d 87, 95 (Iowa 2002) (the “allegations of the petition establish[ed] that the present suit falls with the scope of section 614.1(2A)(a) and was brought more than fifteen years after the product in question was first purchased,” precluding plaintiff’s action); Cf. Merner v. Deere & Co., 176 F. Supp.2d 882, (E.D. Wis. December 18, 2001) (under Wisconsin’s borrowing statute that 15 year Iowa statute of repose barred plaintiff’s claims).

Kansas – Kan. Stat. Ann. § 60-3303(a)(b)(1).  A presumption arises that a product’s “useful safe life,” expires 10 years after delivery, rebuttable by “clear and convincing” evidence; see also Kan. Stat. Ann. § 60-513(b), barring claims more than 10 years old.  The useful safe life statute of repose applies to prescription drugs.  Baughn v. Eli Lilly & Co., 356 F. Supp. 2d 1166, 1172 (D. Kan. 2005).  In Ehrenfelt v. Janssen Pharms., ___ F. Appx. ___, 2018 WL 2945911 (6th Cir. June 11, 2018), a prescription drug product liability case, the Court of Appeals for the Sixth Circuit held “that the exceptions in Kan. Stat. Ann. § 60-3303(b)(2)(D) [for latent injuries] appl[ied] even when the harm was caused less than ten years after delivery.”   Id. at *2.  Therefore, the plaintiff’s claims for alleged injuries from use of a drug was not barred under the general 10 year statute of repose, § 60-513(b).

Kentucky –  K.R.S § 411.310(1).  Presumption that a product was not defective for injury “more than five (5) years after the date of sale . . . or more than eight” years after manufacture, rebuttable by a preponderance of evidence.

Michigan – Mich. Comp. Laws § 600.5805(13).  Technically not a statute of repose, but after a product has “been in use for not less than 10 years,” the plaintiff is not entitled to any presumption improving his case.  But see Hall v. GMC, 582 N.W.2d 866, 867 (Mich. App. 1998) (“claim could be pursued under Michigan law, which has no statute of repose,” and where statute of limitations did not prevent claim).

Minnesota – Minn. Stat. § 604.03.  Provides an affirmative defense for injuries occurring after “the expiration of the ordinary useful life of the product,” which is a jury issue.   Hodder v. Goodyear Tire & Rubber Co., 426 N.W.2d 826, 830 (Minn. 1988) (“We hold, therefore, that … [product’s useful life] is a factor to be weighed by the jury in determining the fault of the manufacturer and the fault of the user.”).

Nebraska – Neb. Rev. Stat. § 25-225.  Bars claims filed more than 10 years after product manufactured in Nebraska, otherwise the statute of repose of the state of manufacture applies, not to exceed 10 years, or 4 years from date of injury if no statute exists, applicable to prescription products.  King v. Pfizer, Inc., 2016 U.S. Dist. Lexis 111456, 17-18 (D. Neb. Aug. 19, 2016) (fraud based claims for injuries allegedly resulting from prescription drug are “grounded in product liability,” such that the substantive right of the statute of repose cannot be removed “by court action,” whereby passage of the 10-year period, following  plaintiff’s first prescription “vested the Defendants with a substantive right under § 25-224(2),” barring the action).

North Carolina – N.C. Gen. Stat. § 1-46.1.  Prohibits product liability claims “more than 12 years after . . . initial purchase for use or consumption.”  See Willoughby v. Johnston Memorial Hosp. Authority, 2016 WL 4091370, at * 13-14, 791 S.E.2d 283 (table) (N.C. App. Aug. 2, 2016) (affirming summary judgment for manufacturer of surgical table, including indemnity claim, notwithstanding that alleged injuries occurred in 2009, and actual loss in 2015); In re Mentor Corp. Obtape Transobturator Sling Prods. Liab. Litig., 2016 WL 4385846, at *3 (M.D. Ga. Aug. 15, 2016) (applying North Carolina law) (plaintiff suffered alleged injuries when she experienced mesh erosion, which foreclosed claims per statute of repose).

Ohio – Ohio Rev. Code § 2305.10(C)(1).  Precludes claims more than 10 years after product delivery to first consumer, but applies discovery rule to prescription drugs, which reduces the provision’s utility.

Oregon – Or. Rev. Stat. § 30.905(2).  An action “must be commenced before the later of 10 years after” product’s purchase, or the expiration of the statute of repose in state of manufacture.  Wrongful death actions must be brought within 3 years after death or 10 years after product purchased, whichever occurs sooner.  O.R.S. § 30.905(3)-(4).  Dortch v. A. H. Robins Co., 650 P.2d 1046, 1052-53 (Or. App. 1982), overruled on other grounds, (IUD manufacturer properly dismissed; statute of repose limited “manufacturer’s liability to ten years and [gave] each plaintiff a full two years to commence an action after the cause of action accrue[d],” and finding that the claim was barred.); Philpott v. A.H. Robins Co., 710 F.2d 1422, 1425 (9th Cir. 1983) (plaintiff’s claims “barred by ORS 30.905,” where “she did not learn of a causal connection between her pelvic disorders and the Dalkon Shield until . . . nine years and eight months after she purchased and began using” the product).

Tennessee – Tenn. Code Ann. § 29-28-103(a).  An action must be brought “within ten (10) years” from purchase, or “one (1) year after the expiration” of product life. See, e.g., Jenkins v. Novartis Pharmaceutical Corp., 2013 WL 1760762, at *3 (E.D. Tenn. Apr. 24, 2013) (implied warranty claim against prescription drug manufacturer was prohibited by statute of repose where motion to amend was filed more than 10 years post injury “by both the six-years-from-injury provision of § 29-28-103(a) and the ten-years-from-purchase provision of § 29-28-103(a)).” Tennessee case law bars any discovery rule or fraudulent concealment exception to the statute. Greene v. Brown & Williamson Tobacco Corp., 72 F. Supp.2d 882, 886 (W.D. Tenn. 1999) ( “[a]n equitable ‘discovery rule’ is not available to toll the statute of repose” and holding that “the Tennessee Supreme Court would decline to create an equitable exception for fraudulent concealment”).

Texas – Tex. Code Ann. § 16.102(b) cuts off actions 15 years “after the date of the sale of the product” with exceptions for latent disease and express warranty, but is not subject to tolling.  See Methodist Healthcare System v. Rankin, 307 S.W.3d 283, 290 (Tex. 2010) (“the essential function of all statutes of repose is to abrogate the discovery rule and similar exceptions to the statute of limitations” and a “statute of repose, by design, creates a right to repose where the applicable statute of limitations would be tolled or deferred”); Salgado v. Great Dane Trailers, 2012 WL 401484, at *2 (S.D. Tex. Feb. 6, 2012) (“[a] statute of repose … does not run from the time a cause of action arises, but from some other date or event selected by the Legislature,” and is “not subject to judicially crafted rules of tolling or deferral”) (internal citations and quotations omitted).

Washington – Wash. Rev. Code Ann. § 7.72.060(1)(b)(i-iii).  Rebuttable presumption that an injury “more than twelve years after . . . delivery,” occurred after expiration of a product’s useful life, with exceptions for express warranty, concealment, and latent injuries.

Wisconsin – Wis. Stat. § 895.047(5-6).  Precludes action for products manufactured “15 years . . . or more” before a claim with exceptions for negligence, latent disease, and express warranty, and asbestos actions).

States With Statutes That Are Not Applicable To Prescription Product Claims

By contrast, the following states have statutes of repose that are inapplicable to prescription product liability actions, generally because they have statutes that pertain only to real property improvements or the statutes contain exclusions for defective products.

Alaska – Alaska Stat. § 09.10.055(2).  Actions must be brought “within 10 years,” of the “last act alleged to have caused the personal injury,” property damage, or death, but expressly excludes defective products.

Arkansas – Ark. C. Ann. § 16-56-112.  Applicable to property actions only; Brown v. Overhead Door Corp., 843 F. Supp. 482, 490 (W.D. Ark. 1994) (ruling that statute of repose was limited to real property improvements, holding that “Arkansas courts when called upon to do so will hold that the manufacturers of mass produced fungible goods do not fall within the protection of the statute, particularly when the defendant manufacturer is not involved in the installation of the product and had nothing to do with the design of the improvement within which it is installed”).

California – Cal. Civ. Proc. Code § 337.15 (10 years for latent deficiencies).  See McCann v. Foster Wheeler LLC, 225 P.3d 516, 529 (Cal. 2010) (finding that California’s statute of repose was applicable to latent deficiencies in real property improvement, “not to personal injury actions.”).

Delaware – 10 Del. C. § 8127.  Applicable only to claims pertaining to real property improvements, within six years of substantial completion.

District of Columbia – D.C. Code § 12-310.  Real property claims only, within 10 years of substantial completion of project.

Hawaii – Haw. Rev. Stat. § 657-8.  Available only for claims within 10 years of substantial completion of improvement to real property, and two years after accrual.

Maine – 14 M.R.S.A. § 752-A.  Statute applicable only to real property, within 10 years of the project or services rendered, but no more than 4 years after discovery.

Maryland – Md. Code Ann. § 5-108.  Does not apply to product liability, but for property improvements within 20 years and 10 years against architect or engineer.

Massachusetts – Mass. Ann. Laws Ch. 260 § 2B.  Allows claims within 6 years of substantial completion of improvement, and owner taking possession.

Mississippi – M.C.A. § 15-1-41.  Claims must be brought within 6 years of acceptance or actual occupancy for real property improvement.

Missouri – Mo. Rev. Stat. § 516.097.  Applicable to real property improvement claims within 10 years of substantial completion.

Montana – Mont. Stat. § 27-2-208.  Statute allows claims within 10 years of improvement, including to damage caused by a defective product related to the improvement.

Nevada – N.R.S. § AB 125, § 2.  Applies to real property improvements, six-year statute of repose.

New Jersey – N.J.S.A. § 2A: 14-1.1.  Real property improvements only, within 10 years of substantial completion.

New Mexico – N.M.S.A. § 37-1-27.  Repose only for improvements to real property, 10 years of substantial completion.

New York – While New York has no true statute of repose, courts require notice of an action to any party responsible for professional performance, such as architects and engineers, after 10 years have elapsed.  Six year statute of limitations for construction defects, N.Y. C.P.L.R. § 214-d.

Oklahoma – 12 Okla. Stat. Ann. Tit. 12 § 109.  Claims for real property improvements must be brought within 10 years of substantial improvement.

Pennsylvania – Although the statute of repose, 42 Pa. C.S.A. § 5536(a), is generally applicable only to real property improvements, it may apply to product manufacturers in certain cases, such as to manufacturers of asbestos.  See, e.g., Graver v. Foster Wheeler Corp., 96 A.3d 383, 386-87 (Pa. Super. 2014) (granting j.n.o.v., applying the 12 year statute of repose relating to real property improvements to 13 story boiler in asbestos action because statutes of repose are substantive, and may bar actions before they accrue).

South Carolina – S.C. Code Ann. § 15-3-640.  Must be brought within 8 years of substantial completion of improvement to real property.

South Dakota – S.D.C.L. § 15-2A-3.  Applicable to real property improvements only, within 10 years of substantial completion.

Utah – U.C.A. § 78B-2-225.  Actions for real property improvements may not be brought later than nine years after completion.

Vermont – Vt. Stat. Ann. Tit. 27A, § 4-116(a).  Applicable only to Common Interest Ownership claims within six years after the cause of action arose.

Virginia – Va. St. § 8.01-250.  Claims must be brought within five years for injuries resulting from improvements to real property, but does not apply to manufacturers of equipment.

West Virginia – W. Va. Code § 55-2-6a.  Applies to claims related to real property, construction or design within 10 years of occupancy or acceptance, but excludes product manufacturers.

Wyoming – Wyo. Stat. § 1-3-111.  Applicable only to real property improvements, if a claim is brought within 10 years of substantial improvement.

States In Which Courts Ruled That Statutes Of Repose Were Unconstitutional

New HampshireHeath v. Sears, Roebuck & Co., 464 A.2d 288, 296 (N.H. 1983) (statute of repose unconstitutional where plaintiffs were “deprived arbitrarily of a right” to sue).

North DakotaDickie v. Farmers Union Oil Co., 611 N.W. 2d 168, 173 (N.D. 2000) (product liability statute of repose violated equal protection clause).

Rhode IslandKennedy v. Cumberland Eng’g Co., 471 A.2d 195, 201 (R.I. 1984) (holding that state “Constitution forbids absolute bars to recovery” prior to accrual).

ArizonaHazine v. Montgomery Elevator Co., 861 P. 2d 625, 630 (Ariz. 1993) (holding statute of repose unconstitutional, ruling “A.R.S. § 12-551 abrogated that constitutional right [to bring action] by barring the action even before the injury occurred,” and that “the attempted statutory abrogation of their claim fails.”).

 

Statutes of repose can be a defense counsel’s best friend by providing an inexpensive and decisive avenue for disposal of an action, even before the claims have accrued in certain jurisdictions. However, each state is different, and practitioners need to research potentially relevant provisions thoroughly.  After all, a missed opportunity to end the case before it begins is no song and dance.

This post comes solely from the Cozen O’Connor side of this blog.

 

Last week, the Judge in the Testosterone Replacement Therapy (TRT) MDL threw out an over $140 million jury verdict. In re Testosterone Replacement Therapy Prods. Liab. Litig. Coordinated Pretrial Proceedings, 2018 U.S. Dist. LEXIS 111724 (N.D. Ill. July 5, 2018). It wasn’t the first time that the testosterone MDL court did something like that. Last December, it threw out a $150 million verdict. That’s almost $300 million in verdicts total. It’s got to take some strength to toss such hefty verdicts—testosterone or not.

In each instance, the court found the jury’s verdict to be so internally inconsistent that it required a new trial. In the verdict tossed last week, the jury found for the defendants on a failure to warn claim based in strict liability claim but found for the plaintiff on a failure to warn claim based in negligence. That sure does seem inconsistent.

Each claim turned on the same two disputed elements: (i) whether the TRT product, AndroGel, was unreasonably dangerous and (ii) whether its unreasonable dangerousness was a cause in fact and legal cause of the plaintiff’s injury (a heart attack). Id. at *419. In an attempt to save the verdict, plaintiff’s attorneys tried to reconcile these two findings. They argued that the strict liability claim had a different focus from the negligence claim. The strict liability claim focused on the AndroGel product itself and whether its deficient warnings caused plaintiff’s heart attack, while the negligence claim focused on defendants’ conduct and whether their negligence caused plaintiff’s heart attack. Id. at *420.

Um . . . . Okay. That does describe a different focus. But, either way, whether viewed as a product with deficient warnings or as defendants who negligently provided deficient warnings, the jury was ultimately answering the same question: did the AndroGel cause the heart attack? The causation questions were precisely the same:

[Plaintiff] has not articulated any theory, supported by evidence, of how [defendants’] breach of its duty of care could have been the cause in fact and legal cause of [Plaintiff’s] heart attack unless AndroGel itself was a cause in fact and legal cause of the heart attack. As [defendants] put the point in [their] reply, regardless of what the elements of each claim “focus on,” the claims share an essential causation question—whether AndroGel caused [plaintiff’s] heart attack.

Id. at *422. The court threw out the jury’s verdicts on both claims:

The verdicts on these claims are inconsistent under the instructions given to the jury. When this happens, the Court cannot accept one of the two inconsistent verdicts while discarding the other; both of them have to go.

Id. at *424-25.

But the jury also found for plaintiff on a misrepresentation claim, and that claim did not require a finding of “unreasonable dangerousness,” be it through deficient warnings or otherwise. Accordingly, the court found that this particular pro-plaintiff verdict was not necessarily irreconcilable with the jury’s finding against plaintiff on the strict liability claim. Id. at *425. Yet the court ordered a new trial on the misrepresentation claim too. It was not sufficiently distinct and separable from the other claims to protect against injustice resulting from two separate trials with separate verdicts. In particular, the jury received a single causation instruction for all claims:

[T]he Court does not believe that it can appropriately order a new trial limited to the negligence and strict liability claims while keeping the misrepresentation verdicts intact. A court may order a partial new trial only if “it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice.” In this case, one of the key disputed issues was causation, specifically whether AndroGel cased [plaintiff’s] heart attack. The jury was given a single causation instruction that covered all of the claims. Thus the issue of causation on the two claims that have to be retried due to the inconsistency of the jury’s verdicts is anything but “distinct and separable” from the issue of causation on the misrepresentation claims. For this reason, the Court concludes, it would be impossible to limit a new trial to the inconsistent claims “without injustice.” The appropriate remedy for the jury’s inconsistent verdicts on the strict liability and negligence claims is “[a] new trial on all claims.”

Id. at *426-27.

So out goes another hefty jury verdict in the testosterone MDL. The last time the MDL court did this, when it tossed out the $150 million verdict in December 2017, the jury at the second trial awarded $3.2 million. That’s not a small verdict, but it’s almost $147 million smaller than the first verdict. That’s a pretty significant, as they say, delta. So let’s see what happens in the new trial this time.

Even if Bexis and McConnell like to sport overalls and tool around in souped-up tractors, we are not farmers.  We have grown enough heirloom tomatoes, ghost peppers, rainbow chard, purple basil, and other suburban garden staples, however, to know that “you reap what you sow” is usually true, assuming the levels of hydration, sunshine, and soil pH are appropriate.  (There are pleasant exceptions, like asparagus from prior owners or berries spread by critters, and undesired interlopers, like Japanese hops and any number of leafy weeds.)  It is often true in litigation too.  When the Bauman and Walden decisions came down in early 2014, it should have been apparent that the sort of litigation tourism that had driven so many verdicts and settlements based on fear of verdicts in plaintiff-friendly places was going to be a risky proposition going forward.  While we and many others touted these rulings and proclaimed what should happen with personal jurisdiction in such cases, the plaintiffs’ bar did not give up on what had been such a lucrative approach.  Instead, they continued filing multi-plaintiff cases in their desired jurisdictions, even though almost all of the plaintiffs had no ties to the jurisdiction and the defendants were not “at home” there.  They also fought against motions and appeals with sometimes creative arguments that generally flew in the face of what the Supreme Court had already ruled.  While these packaged tour cases remained in these dubious jurisdictions, they sometimes progressed to trial and, aided by lenient views of the admissibility of junky causation evidence or other rulings that tend to drive up verdicts, scored some really big verdicts.  While some defendants surely settled along the way, others stuck it out to get to appellate rulings that would undo everything with a pronouncement that “this plaintiff’s case never belonged here in the first place.”

If you are reading this and thinking about the talc litigation in Missouri, then you would be right.  It is not the only litigation to follow this pattern, but it has been one of the most visible.  The timeline implicated by Ristesund v. Johnson & Johnson, — S.W.3d –, 2018 WL 3193652 (Mo. Ct. App. June 29, 2018), is where we will start, because it shows the sowing to which we alluded so awkwardly above. Bauman and Walden come out in February 2014, signaling a tightening of the general personal jurisdiction standard and a refusal to expand the specific personal jurisdiction standard.  In September 2014, plaintiff, a South Dakota resident, filed a lawsuit in Missouri state court about alleged ovarian cancer from talc in cosmetic products along with a Missouri resident and seventy-three other non-Missouri residents.  Plaintiffs pushed forward through discovery and motions to a series of trials.  Motions to dismiss for lack of personal jurisdiction for the claims of the non-Missouri residents were denied based on the conclusion that the court’s jurisdictions over the claims of the sole Missouri resident was enough.  In February 2016, the estate of a non-Missouri plaintiff named Fox won a large verdict and then defendants appealed.  In May 2016, Ristesund won her own large verdict and then defendants appealed.  In June 2017, the Supreme Court issued the BMS decision, essentially rejecting reliance on the ties of (misjoined) plaintiffs to establish specific personal jurisdiction over the claims of a plaintiff who would not otherwise be able to establish general or specific personal jurisdiction.  In October 2017, the Missouri Court of Appeals ruled in Fox v. Johnson & Johnson, 539 S.W.3d 48 (Mo. Ct. App. 2017), that plaintiff did not establish personal jurisdiction consistent with constitutional requirements and should not get a chance to do so on remand.  (We detailed the decision here.)  The same court considered almost the same issues in Ristesund about two weeks ago.

Pretty straightforward, one would think.  Plaintiff, to her credit, even conceded that BMS controlled and the trial court lacked personal jurisdiction over defendants as to her claims. Ristesund, — S.W.3d –, 2018 WL 3193652, *2.  That meant the verdict could not stand.  The only issue left was plaintiff’s argument that “fairness requires” that she have an opportunity on remand to develop arguments and evidence support personal jurisdiction.  This is where that timeline mattered.  As in Fox, the plaintiff “had a full and ample opportunity to discovery and introduce any and all evidence that she believed would establish personal jurisdiction over the Defendants.” Id. at *3.  While not all plaintiffs try to gather and introduce evidence of personal jurisdiction, recall that this case was filed after Bauman was decided.  It went to trial after a personal jurisdiction motion was denied, an appeal on a companion case focused on personal jurisdiction, and scores of cases (see our cheat sheet) had been decided around the country on applications of Bauman that anyone would have realized undercut personal jurisdiction in this case.  The plaintiff lawyers pursuing all of these cases took a calculated gamble to work up these cases and win big verdicts in a court where personal jurisdiction was tenuous at best, as long as the defendants were willing to sustain the trial losses and get to appeals. Ristesund could have sued in South Dakota—where she lived—or in New Jersey—where the defendants were based—but she chose the litigation tourist route.

Her last gasp was to claim that BMS being decided after her trial verdict somehow entitled her to another chance to prove personal jurisdiction.  The court’s rejection of this contention can stand on its own.

Principles of fairness do not dictate or warrant remand. The pronouncement in BMS neither introduced new concepts in the law nor relied upon new principles of law. BMS was not a decision that “came out of nowhere.” To the contrary, the parties in BMS, as in Daimler, argued long standing principles of personal jurisdiction in our jurisprudence. The parties before us were well aware of the legal principles being argued before the Supreme Court, as evidenced by their pleadings and argument before the trial court.  Ristesund was not precluded from broadening the scope of her claims for personal jurisdiction while her case was before the trial court . . . . Similar to our reasoning in Fox, we are not persuaded that the law either warrants or permits us to now return this matter to the trial court for a “do-over.”

Id. at *5.  That sounds pretty fair to us.

 


Way back in law school we learned that a plaintiff suing for negligence must satisfy four elements:  (1) duty, (2) breach, (3) causation, and (4) injury.  Every one of these elements can be a battleground.  Even what seems like the simplest inquiry – whether the plaintiff was injured – can be controversial.  We have seen cases where a plaintiff alleged increased chance, and consequent  fear, of injury.  Is that enough?  Psychological injuries present a host of difficulties.  Remember the “zone of injury” cases?  Some injury issues manage to be at once both straightforward and intractable.  One of the all-time great movies about litigation, The Fortune Cookie, centered around that great bugaboo of small-time litigation – soft tissue injury.  Not everyone who dons a neck-brace is really hurt. 

 

The element of breach can also be knotty.  Was the defendant insufficiently careful?  How much care is reasonable?  What is the standard of reasonableness?  Reasonable person?  Reasonable riveter?  Reasonable podiatrist?  When we sat on a jury in a med-mal case a couple of months ago, pretty much the only issue in play was whether the doctor had paid close enough attention to his patient’s hemoglobin levels.   Some jurors wanted to throw up their hands, exasperated at the impossibility of knowing what a doctor should do.  Theoretically, the breach element drops out in strict liability cases.  Fault should not matter.  But when the claim is strict liability failure to warn, negligence principles creep back into the case.  It can be hard for a defendant to win summary judgment on breach.  Courts are quick to throw that issue to the jury.  And then, like the jury we sat on, some poor fact-finders will want to throw the issue right back.

 

More often, it is the causation element that constitutes summary judgment bait.  In this blog, we have spilled a lot of web-ink on the causation issue, whether it be medical causation (did this drug or device hurt the plaintiff?) or warning causation (would a different warning in the label have steered the doctor away from this product?).  If the doctor did not even read the label, our clients win.  Some commentators say that there are five, not four, elements, because causation actually involves separate questions of but-for causation and proximate causation.  That latter item has given rise to quasi-philosophical musings.  Maybe something played a role in the causal chain, but is it so remote or obscure that putting the defendant on the hook for damages would be unfair?  Maybe Donny was a dolt to leave a lit candle on the dresser in his rental apartment, but should he be on the hook if a burglar broke in, knocked the candle onto the rug, and set the place ablaze?  Proximate causation, in the views of some, can boil down to whether it was reasonably foreseeable that the breach of the duty of care would cause this particular harm.  But evaluating foreseeability can almost seem like an epistemological exercise.  Whose perspective counts?  What are the sources of foreseeability?  We’ve always thought that foreseeability was a fuzzy criterion, because it can be altered by so many things – including court opinions.  Now that we know how clumsy burglars can be, thanks to F. Supp. or Law360 or the Philly Inquirer or Eyewitness News, shouldn’t we be extra-careful about leaving lit candles behind?  (Similarly, in Fourth Amendment jurisprudence, the notion of reasonable expectation of privacy seems mercurial.  Don’t SCOTUS pronouncements themselves shape such expectations?  Once we read how cops can identify marijuana grow-rooms via thermal imaging, doesn’t our expectation of privacy somehow diminish?  But we digress.)   

 

If proximate cause turns, at least in part, on foreseeability, so does the first negligence element, duty.   Today’s case, Martinez v. Walgreen Co., 2018 WL 3241228 (S.D. Texas July 3, 2018),  is about the scope of duty.  Maybe the Martinez case will end up being one for the law books.  Even though the defendant in Martinez is not a drug or device company, we feel duty-bound to report on it.  The defendant was a pharmacy, and the claim was the pharmacy dispensed the wrong prescription to its customer.  The medication incorrectly given to the customer allegedly caused the customer to experience hypoglycemia, which adversely affected his ability to drive (blurry vision, dizziness, etc.), which resulted in a series of auto wrecks that killed the occupants of other vehicles.  Those other drivers/passengers happened to be in the wrong place at the wrong time.  The estates of those victims sued the pharmacy for dispensing the wrong drug.  Even assuming that the pharmacy was negligent and that such negligence caused the terrible injuries, and assuming that the pharmacy owed a duty to its own customer to get the prescription right, did the pharmacy owe a duty of care to the people in the cars struck by its customer?    

 

The federal court, applying Texas law, said No, and granted summary judgment to the pharmacy.  In Texas, pharmacists are considered health-care providers and owe their customers a duty of care.  That much is clear.  But Texas courts have not recognized a general common-law duty for health-care providers towards third parties for injuries that may be the result of the provider’s negligence to the patient.  So far, so bad for the plaintiff.  Nevertheless, Texas has recognized a duty for medical professionals towards third parties in very limited circumstances when the breach of a duty to the patient gives rise to a reasonably foreseeable harm to an identifiable person or class of persons as a consequence of that breach.  For example, if a medical facility housing a criminally insane patient – one who presented a clear danger to the public – failed to control that patient and permitted him to shoot someone, the facility could be liable for breach of the facility’s duty to control the patient.  Is that a good analogy to what happened in Martinez?  Perhaps the best case that plaintiffs cited was one in which a Texas court held that a doctor who failed to warn a patient who had a known history of drug abuse not to drive while under the influence of Quaaludes and the patient then drove and injured third party motorists.  Pretty close, right? 

 

But Texas courts over the years have considerably reined in the duty to third parties.  Thus, physicians have no duty to warn epileptic patients not to drive and mental health professionals have no duty to warn third parties about specific threats (the law might be different elsewhere).  Texas courts have also ruled that pharmacists have no duty to warn about the potential side-effects of medication.  Against this not entirely consistent or clear legal backdrop, the Martinez court asked the following question:  “Under Texas law does a pharmacist owe a duty to unconnected third parties for the negligent prescription of medication?”  The court answered that question in the negative because “In order for a third-party duty to arise, the breach of the health-care provider’s duty to the patient must create a reasonably foreseeable consequence to an identifiable party or class.  Here, Plaintiffs are not identifiable third parties.”  The defendant pharmacy had no duty to control its customer’s behavior or to warn him about side effects.  To find a duty to the plaintiffs, the court would have to find that “a pharmacist has a general duty to the public for negligent provision of medication.  The Texas Supreme Court has never held that such a duty exists, and thus, this Court, Erie-bound cannot so find now.”  Well, that sort of respect for Erie is eerily refreshing, isn’t it?

 

The plaintiffs still did not give up.  They argued that the pharmacy’s dispensation of the wrong medicine violated a statute and that, therefore, this was a case of negligence per se.  The negligence per se doctrine simply means that a defendant’s violation of a statute removes the need for a jury to assess whether the defendant was careless.  The statute itself sets the bar for due care.  But what that means is that negligence per se answers the breach question –  “negligence per se does not impose a duty.”  It is the absence of duty in the Martinez case that puts the plaintiff out of court.   It is the absence of duty in the Martinez case that puts that case in our blog. 

 

 

When we first looked at the decision for today’s post, we thought about comparing it to fan fiction. If you aren’t familiar with the term it is fiction stories written about characters from an original work of fiction created by fans of the original work as opposed to its creator. Pretty straightforward in concept. But while fan fiction has become more mainstream in recent years (one of the most popular fan fiction websites has almost 600,000 entries under the Harry Potter category alone), it still has a fairly bad reputation as the dark side of geek fandom. And let’s face it, the bulk of the people writing fan fiction aren’t going to be the next J.K. Rowling. And, fan fiction is at its core a product of fandom. So, you have to be fairly well-versed in the original to even think about understanding its offspring. That said, fan fiction having found a home on the internet has led to the development of communities that rally around the original work and discuss and debate everything from literary theory to pop culture.

But upon further reflection, we think the court’s decision in Proffitt v. Bristol Myers Squibb Co., 2018 U.S. Dist. LEXIS 111895 (S.D.W.Va. Jul. 5, 2018), is more like a reimagining of an old classic. There are many lists of books based on other books. Some authors create sequels or prequels to old classics. Possibly delving into storylines that were only marginally touched in the original. Those might be classified as published fan fiction – and some of it quite good. Wicked, for instance, long before it was a hit Broadway musical, was a Wizard of Oz spinoff about the life of the Wicked Witch of the West written by Gregory Maguire. But there are books that are re-tellings of original masterpieces designed to give the reader a more modern or updated take. For example, if you’ve read A Thousand Acres by Jane Smiley and you haven’t read Shakespeare’s King Lear, you should. Shakespeare’s king has to divide his kingdom among his three daughters and only realizes too late which one is the worthiest. Smiley updated the story to a farm in Iowa and overall paints a kinder picture of the sisters but the parallel cannot be denied.   Or, what about Bridget Jones’ Diary and Pride and Prejudice. Bridget and Elizabeth Bennett certainly have plenty in common, but Helen Fielding really stayed close to Jane Austen’s classic when she wrote Mark Darcy who is unquestionably Fitzwilliam Darcy in the 20th century.

So what’s the upshot of all of this, other than perhaps to inspire a summer reading list? Sometimes a story is so good it’s worth telling again, just updated. That’s essentially what the court did in Proffitt. The slip opinion is 12 pages long and almost 5 full pages are block quotes. We don’t mean that to be a negative thing. The court found it needed to say little new because the important stuff was already written.

Plaintiff sued the manufacturer of an antipsychotic drug he took alleging it caused him to develop tardive dyskinesia (limb twitching, facial tics, jaw clenching, etc.). Id. at *1. Plaintiff brought claims for negligent and strict liability failure to warn and breach of implied warranty of merchantability based on a failure to provide a reasonable warning. Id. at *2. Defendant moved to dismiss the complaint on the ground that plaintiff’s claims were insufficiently pleaded. That’s chapter 1 – the background.

In Chapter 2 – the standard of review – the court recounts what has fondly become known on this blog as TwIqbal. Here, the court didn’t need to reinvent the wheel. The Fourth Circuit had already summed it up quite nicely in Nemet Chevrolet, LTD v. Consumeraffairs.com, Inc., 591 F.3d 250 (4th Cir. 2009). The complaint needs enough facts to state a claim that is plausible on its face. Proffitt, at *3-4.

Moving into Chapter 3 – the analysis – the court found two more significant texts on which to rely. Remember, all of plaintiff’s claims are based on alleged failure to warn about tardive dyskinesia. But the drug’s label always contained a warning about that very condition. While plaintiff failed to even allude to the warning in his complaint, the court quoted all 5 paragraphs about tardive dyskinesia. Id. at *6-8. Which led the court to observe that plaintiff’s complaint neither alleges how that warning was inadequate or what an appropriate warning would look like. Id. at *8.

And here is where Proffitt really becomes a re-telling of Reed v. Pfizer, Inc., 839 F. Supp.2d 571, 575-77 (E.D.N.Y 2012). Because Reed had already done all the work. It explains exactly why given facts like Proffitt, a failure to warn claim can’t survive a TwIqbal challenge. The Reeds, like the Proffitts¸ failed to identify how the warning given by the defendant about the very risk at issue was inadequate. In both Reed and the more recent version, Proffitt, plaintiffs failed to allege any facts to suggest that the warnings in both cases were insufficient, erroneous, or contained misrepresentations. See generally Proffitt, at *8-12. Sometimes there is simply no improving on the original:

To cut to the chase, the fact (taken here as true) that [Reed/Proffitt] suffered from certain conditions that were also identified risks of ingesting [the drug] is tragic, but cannot alone make plausible a claim that defendants misrepresented or hid those risks in some way. Plaintiffs have alleged factual content sufficient only to make plausible that [Reed/Proffitt] ingested [the drug] and thereafter suffered serious harm. If such allegations were sufficient to state a failure to warn claim, then anyone experiencing harm after using a product where the harm is a warned-of risk could successfully plead a claim. Perversely, the pleaded fact that a warning was given would be the only pleaded fact supporting the claim that a lawfully adequate warning was not given. To allow such a naked claim to go forward would merely green light for plaintiffs an expedition designed to fish for an in terrorem increment of the settlement value, rather than a reasonably founded hope that the discovery process will reveal relevant evidence.

Id. at *11-12 (quoting Reed, other citations omitted).

Reed had also already done a good job of collecting many supporting cases but the Proffitt court updated the citations as well. Id. at *12-14.

And so the decision concludes by acknowledging the great work of the prior courts to have dealt with the issue and dismissing plaintiff’s claims as inadequately pleaded. Once again TwIqbal triumphs over a factually barren complaint.

We’ve seen stories lately that an increasing trend towards online sales of prescription drugs could become as much of a threat to retail drugstores as online shopping generally has become to department stores.  For non-prescription drugs, that future is already here – just Google “OTC Drugs Online” and check out the results.  Or you can go to your favorite general online marketplace and search for the name of a commonly used OTC drug.

When we see something like this, we immediately wonder, “what are the product liability implications?”  We thought we’d take a look.

For this thought experiment, assume that plaintiff X purchased a generic drug online through a large internet marketplace, and now claims to have suffered injury. We’re using generic drugs as an example because preemption would preclude product liability claims against the manufacturer – but if it’s a foreign manufacturer, as is often the case online, well….  But put that aside for the moment, too.

What happens when a plaintiff sues the operator of an online marketplace for injuries caused by a product purchased through that market place?

The plaintiff almost always loses.

Why?  Two reasons.  First, unless the operator actually buys the product and resells it (which happens sometimes, but not a lot), the marketplace isn’t considered a product “seller.”  It’s more like the shopping mall than like any individual store.  Second, a federal statute, the Communications Decency Act, precludes a website operator from being liable for content on its site that is created and uploaded by others.

Both prongs of this defense were recently on display in Oberdorf v. Amazon.com, Inc., 295 F. Supp.3d 496 (M.D. Pa. 2017), which dismissed a non-drug/device product-related personal injury claim brought by plaintiffs who were allegedly injured by a product allegedly bought on the “Amazon Marketplace.”  This “marketplace” is described as:

a vehicle through which third parties may independently offer products for sale.  This service . . . is currently utilized by more than one million third-party vendors.  These third-party vendors decide which products they wish to sell, obtain their stock from manufacturers or upstream distributors, and set their own sales price.  They provide a description (including, perhaps, a photograph) of the product to [the marketplace], which [it] uses to create a listing on its website.

Id. at 497-98 (footnote omitted).  Notably, this is one of the sites where one can currently purchase OTC drugs.

According to Oberdorf, marketplace users “are informed that they are purchasing from an identified third party, and not from [the marketplace] itself.”  Id. at 498.  Except is special cases, the marketplace itself “has no interaction with the third-party vendor’s product at any time.”  Id.  The site’s supervision over its third-party marketers is limited to:  (1) collecting payments, from which it deducts its fee; (2) its platform being the exclusive means of communicating with customers; (3) editorial rights over the contents and appearance of product listings; and (4) imposing rule governing shipping and returns.  Id.

Plaintiffs purchased the product in Oberdorf from a third-party vendor that, once suit was brought, they were “unable to make contact” or serve with process.  Id.  They sued the marketplace  instead

Plaintiffs lost, on the two above-mentioned grounds.  Under Pennsylvania common law, an online retailer was not a “seller” of such products, as that term was used in Restatement (Second) of Torts §402A (1965).  It did not design, manufacture, or sell the product.  Instead of being a store, the online marketplace acted more like “a sort of newspaper classified ad section.”  295 F. Supp.3d  at 501.  Oberdorf compared the marketplace to a product auctioneer that, in Musser v. Vilsmeier Auction Co., 562 A.2d 279 (Pa. 1989), was held not to have attributes of a “seller” that could be subject to §402A strict liability:

Like an auctioneer, [the marketplace] is merely a third-party vendor’s “means of marketing,” since third-party vendors − not [the marketplace] − “cho[o]se the products and expose[ ] them for sale by means of” the Marketplace.  Because of the enormous number of third-party vendors (and, presumably, the correspondingly enormous number of goods sold by those vendors) [the marketplace] is similarly “not equipped to pass upon the quality of the myriad of products” available on its Marketplace.  And because [the marketplace] has “no role in the selection of the goods to be sold,” it also cannot have any “direct impact upon the manufacture of the products” sold by the third-party vendors.

Oberdorf, 295 F. Supp.3d 501 (quoting Musser).

In holding online websites displaying goods sold by others not to be product “sellers” subject to strict liability, Oberdorf appears squarely in the legal mainstream.  In the only state court decision we’ve seen that’s on point, an Ohio trial court held:

[The internet platform] did not in any way modify the [product] purchased by [plaintiff’s decedent].  Nor did [it] distribute the product as the packaging, handling and shipping were performed by [another defendant] and shipped directly to [still another defendant].  {the platform’s] services − allowing the product to be uploaded to its marketplace − were not connected to any aspect of the product which ultimately resulted in the decedent’s death.  Any issues with labeling, concentration, instructions, warnings, etc., were aspects of the product are unconnected to the services [the platform] performed.

Stiner v. Amazon.com, Inc., 2017 WL 9751163, at *6, slip op. (Ohio C.P. Sept. 20, 2017).  That the actual sellers were “a Chinese company . . . not subject to process” or “insolvent” did not justify imposing liability on someone who was not a seller at all.  Id. at *5. See id. at *7-9 (not a seller under state Little FDCA Act or Uniform Commercial Code either).

Similar federal decisions include:  Milo & Gabby LLC v. Amazon.com, Inc., 693 F. Appx. 879, 885 (Fed. Cir. 2017) (online marketer not a product “seller” for purposes of copyright infringement); Fox v. Amazon.com, Inc., 2018 WL 2431628, at *2, 7 (M.D. Tenn. May 30, 2018) (online “information service and system designed so multiple users across the world can access its servers and browse its marketplace at the same time” not a “seller” as defined by Tennessee product liability statute); Erie Insurance Co. v. Amazon.com, Inc., 2018 WL 3046243, at *2 (D. Md. Jan. 22, 2018) (website operator not a “seller” under Uniform Commercial Code”) (fire subrogation case); McDonald v. LG Electronics., USA, Inc., 219 F. Supp.3d 533, 542 (D. Md. 2016), reconsideration denied, 2017 WL 4163348, at *1-2 (D. Md. May 8, 2017) (online marketer not a product “seller” under strict liability or the UCC); Inman v. Technicolor USA, Inc., 2011 WL 5829024, at *6 (W.D. Pa. Nov. 18, 2011) (online auctioneer not a “seller” for §402A purposes); Stoner v. eBay, Inc., 2000 WL 1705637, at *2 (Cal. Super. Nov. 1, 2000) (online auctioneer not “an active participant in the sale of the auctioned goods and services” so as to be liable for copyright infringement).

The second basis for immunity of an Internet website from liability for online sales made by those advertising on the site was federal preemption.  Oberdorf held that all the plaintiff’s tort claims were barred by 47 U.S.C. §230 (the “Communications Decency Act” or “CDA”), which provides that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

[I]t is clear from [plaintiffs’] papers that they are, in fact, attempting to hold [defendant] liable for its role in publishing an advertisement for [the seller’s] product.  In other words, [plaintiffs] are attempting to “treat[ defendant] as the publisher or speaker of … information provided by” the seller.  Therefore, these claims are barred by §230 of the CDA.

Oberdorf, 295 F. Supp. at 502-03 (footnote omitted) (quoting statute).  See also Id. at 503 n.52 (CDA would bar product liability claims had they not already been dismissed).

Once again, Oberdorf appears to be in the strong majority of courts holding that product liability actions brought against non-seller online entities are barred by the CDA.  In general, the CDA “provides immunity to [any] publisher or speaker of information originating from another information content provider.”  Green v. America Online, 318 F.3d 465, 471 (3d Cir. 2003).  The CDA has repeatedly been held to preempt product liability claims against website owners.  See Erie Insurance, 2018 WL 3046243, at *3 (“even if I am incorrect with respect to my conclusion that [defendant] is not a seller . . ., I conclude that the CDA would preclude the claims in any event”); McDonald, 219 F. Supp.3d at 538 (CDA immunized online retailer from warning-based claims); Hinton v. Amazon.com.DEDC, LLC, 72 F. Supp.3d 685, 691-92 (S.D. Miss. 2014) (CDA immunized online retailer from product liability suit over product obtained from third-party through interactive internet site); Inman, 2011 WL 5829024, at *6-7 (CDA precluded all claims against internet retailers for injury from allegedly toxic products purchased online); Doe v. MySpace, Inc., 629 F. Supp.2d 663, 665-66 (E.D. Tex. 2009) (CDA barred strict liability claim); Reyes v. LA VaporWorks, 2017 WL 1717406, at *1-2 (Cal. Super. Feb. 16, 2017) (CDA prevents “plaintiffs in product liability cases [from] seeking to hold interactive computer service providers liable for the failure to prevent or screen” “defective product[s] from allegedly being sold” online); Stoner, 2000 WL 1705637, at *3 (in enacting the CDA “Congress intended to remove any legal obligation of interactive computer service providers to attempt to identify or monitor the sale of such products”); Stiner, 2017 WL 9751163, at *11-14 (“to the extent that §230 is applicable to the instant case, the immunity provided thereunder would further support the finding already made by the court that [defendant] is not a supplier or seller of the [product] and that it cannot be held liable under the specific facts of this case”); cf. Gentry v. eBay, Inc., 121 Cal. Rptr.2d 703, 712-16 (Cal. App. 2002) (CDA precludes action against online auctioneer for allegedly counterfeit products); Gibson v. Craigslist, Inc., 2009 WL 1704355, at *4 (S.D.N.Y. June 15, 2009) (CDA immunizes online website from liability for facilitating sales of “inherently hazardous objects, such as handguns”).

The practical reason why we’re seeing a proliferation of attempts to sue internet platforms was alluded to in both Oberdorf and Stiner – online sales platforms are allowing a plethora of products to be sold by a myriad of manufacturers who, before such technologies, had no way of selling worldwide.  The proliferation of online product retailing is leading to more and more situations where product liability plaintiffs are left with nobody, as a practical matter, for them to sue.  It will be very interesting to see what happens when some plaintiff claims SJS-TENS from some drug purchased online.

Particularly after Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), and Daimler AG v. Bauman, 134 S. Ct. 746 (2014), how many of the “more than one million third-party vendors,” Oberdorf, 295 F. Supp.3d at 498, on that particular website, and uncounted others utilizing similar websites worldwide, are likely even to be subject to personal jurisdiction anywhere in the United States?  Moreover, as we have discussed before, the expansive “stream of commerce” jurisdiction theory, which purports to allow suit anywhere that a product happened to injure someone has never commanded a majority on the Supreme Court, and is falling further out of favor after BMS.  With traditional defendants disappearing, it is not surprising to see plaintiffs attempt to sue non-traditional entities, but for now the law is not letting them get away with it.

Your Reed Smith bloggers are part of their firm’s Life Sciences Health Industry Group — a collective that includes not only your bloggers’ compatriots in drug/device product liability defense, but esteemed colleagues assisting health and life sciences companies with issues and opportunities related to regulatory compliance, IP, tech, transactions, and many other areas.

We mention this because we recently received an invitation to a free CLE webinar that two of our regulatory colleagues – Celeste Letourneau and Katie Pawlitz – will be presenting on Wednesday, July 11. It’s on “Clinical Trial Contracts and Investigator-Initiated Study Grant Contracts.”

Typically, we try not to be overly shameless with our shameless plugs. We usually restrict ourselves to just letting our loyal readers know about their bloggers’ upcoming speaking engagements or key drug/device defense industry events.

But we found ourselves just so personally interested in this webinar that we couldn’t help but share it with you. Here’s the webinar description:

Understanding the regulatory underpinnings related to the conduct of clinical trials serves to support compliance with applicable laws and promote efficient negotiation. This program is intended to describe the standards, regulations and requirements that are, or should be, addressed in contracts for the conduct of clinical trials to support FDA applications. The speakers will also address the various FDA and health care laws commonly referenced in clinical trials contracts and discuss fraud and abuse considerations related to clinical trial contracts and investigator-initiated study grant contracts, including the Anti-Kickback Statute, as well as transparency laws related to the same, such as the federal Sunshine Act.

The webinar (and CLE credit) are free, but you do have to register, which you can do here.

We love the unexpected. We loved standing up after what we thought was the finale of the fireworks show last night only to be left breathless by a stunning and unexpected encore.  We loved walking in to a “quiet family dinner” for our recent advanced birthday to find the room filled with dear relatives and friends shouting “surprise.”  But sometimes it is nice when things happen just as they are supposed to (which, in the jurisprudential world, may actually be unexpected!), like they did in today’s case, a terrific summary judgment decision out of the Eastern District of New York.  (A shout out to Tom Kurland of Patterson, Belknap for the victory and for sending us the decision before it was available online.)

In Chandler v. Janssen Pharms. Inc., et al., — F.Supp. 3d —,  2018 WL 3212422 (E.D.N.Y June 29,  2018), the plaintiff, placed in foster care in 1996 when he was six years old,  began taking Risperdal the next year after displaying aggression at school.  He continued to have serious psychiatric and behavioral problems and to take Risperdal in gradually increasing doses, until 2009.  That year, during a visit with his psychiatrist, the plaintiff complained that his breasts were enlarged.  The psychiatrist recommended that the plaintiff stop taking Risperdal, which he observed was “probably responsible for the breast enlargement,” and noted that he had been aware of the correlation between the drug and breast enlargement for several years. The plaintiff continued to see psychiatrists, and to take antipsychotic medications, until late 2012.   In April 2014, he underwent bilateral mastectomies to remove his enlarged breast tissue.  In March 2015, he filed suit alleging that the defendants failed adequately to wan about rate of incidence of gynecomastia (breast enlargement) in pediatric users of Risperdal.  Specifically, although the label at all relevant times, had always included a Precaution about gynecomastia, the plaintiff alleged that gynecomastia should have been listed in the “Warnings” or “Adverse Reaction” section, and that gynecomastia rates were two to five times higher than the 2.3% rate listed in the label after October 2006, when Risperdal was approved for pediatric use.  He alleged that his doctor would not have prescribed Risperdal if he had known about the higher incidence rate.

The defendants moved for summary judgment, arguing that the plaintiff had not produced admissible evidence that the Risperdal gynecomastia warning was inadequate.   The defendants argued that the only “evidence” supporting the plaintiff’s warnings claim was the two cherry-picked clinical studies that ostensibly demonstrated the higher incidence rate, a “contention that [was] inadmissible without expert testimony.” Chandler, 2018 WL 3212422 at *6.

The court explained that, under the learned intermediary doctrine, a drug warning is “adequate as a matter of law if it clearly and unambiguously notifies the prescribing physician of the particular adverse reaction that forms the basis of the plaintiff’s complaint.” Id. (citations omitted).  Because the Risperdal label always warned that the product could cause gynecomastia, the plaintiff could not prove that the label was inadequate.   The court also rejected the argument that the label should have included an incidence rate for gynecomastia before the drug was approved for use in children, noting that the defendants “were clearly keeping abreast of knowledge” of the drug through available methods and were “taking steps to bring that knowledge to the attention of the medical profession.”   Id. (internal punctuation and citation omitted).  Finally, the court held that the plaintiff had not produced admissible evidence that the gynecomastia incidence rate in the 2006 and 2007 labels was inadequate.  The plaintiff relied on two studies (of eighteen conducted around the same time)  that allegedly showed higher incidence rates, but the plaintiff “introduce[d] no  expert testimony on the validity of [those]  studies, either standing alone or  compared to the other sixteen studies, or [on]  the regulatory requirements of labeling.” Id, at *8.  Without an expert, the court held, the plaintiff could not opine on the “statistical or methodological differences between the studies or why the two studies he cited were correctly decided in comparison to the other sixteen.” Id.  Concluding, “To be clear, while the two studies could be evidence of higher incidence rates, the absence of an expert to interpret and validate them precludes their admission,” id, the court held that Risperdal’s gynecomastia warnings were adequate as a matter of law at all relevant times.

Warnings Causation

Though the defendants were entitled to summary judgment based on the adequacy of the warning, the court went on to consider the issue of warnings causation; in other words, whether a different warning would have changed the plaintiff’s doctors’ decisions to prescribe the drug. The court added, “if the treating physician is aware of the risks of a drug, independent of any warning by the manufacturer, such knowledge constitutes an intervening event relieving the manufacturer of any liability to a patient under a failure to warn theory.” Id. at *10 (internal punctuation and citations omitted).   In this case, both of the plaintiff’s prescribing physicians knew of the possible correlation between Risperdal and gynecomastia “both before and during the time that they prescribed the drug” for the plaintiff. Id.  One of the doctors testified that he wasn’t sure he would have changed his prescribing decisions even if he knew the risk was higher.  The other  testified that, although he knew of the gynecomastia risk from other  sources, he didn’t read the label or advise the plaintiff of the risk, both of which constituted intervening causes, “severing the causal connection between Defendants’ alleged failure  to warn and Plaintiffs’ injury.” Id. (citation omitted).  Finally, the court disregarded the plaintiff’s guardian’s affirmation to the effect that she would not have consented to the Risperdal prescription if the plaintiff’s doctor had advised her of the gynecomastia risk.  The court explained, “A failure to obtain informed consent might be a viable theory of liability against [a] physician or … hospital,” but neither was a party to the lawsuit.  Because the plaintiff could not establish specific (warnings) causation, the court held that the defendants were entitled to summary judgment on that basis as well.

We love a good warnings decision, and we are delighted that we had the chance to bring this one to you.   We hope you all had a great holiday.