When a drug or device case goes to trial, who is the most important witness?  Let’s straightaway eliminate the plaintiff as a possible answer to that question.  Based on what we’ve heard from jurors (both real and mock), when plaintiffs prevail it is often despite themselves.  So then who?  A credible company witness can turn things around and defuse jury anger over company conduct.  Or that witness can make things much worse by squirming or fencing.  Or the plaintiff lawyers could overplay their hand by overplaying videotaped testimony, thereby boring the jurors into catatonia. What about experts?  Most jurors will tell you they discounted the experts from both sides, viewing paid-for testimony with measured skepticism. 

 

For our money, the most important witness is often the plaintiff’s prescribing or treating physician.  People trust doctors.  It is easy to see a particular plaintiff’s doctors as practicing medicine, not litigation.  They talk about what they actually did to treat a patient.  It seems that they truthfully recount reality, not merely mouth a script authorized by the lawyers.  Perhaps it is a vast oversimplification, but when we assess cases as being favorable or unfavorable, as being a good or bad case for bellwether trial selection, or when we assess settlement valuation, whether the plaintiff’s doctors offer a thumbs up or thumbs down on the product ranks near the top of the criteria.

 

Sometimes figuring out what the plaintiff treaters will say amounts to a game of chicken.  We can read the medical records.  That part is easy.  We can depose the doctors on the obvious medical questions about what happened.  But it becomes a bit terrifying when it comes to asking doctors the bottom line questions of whether the product in question actually caused the injury, or whether the doctors would still use the product knowing what they know now.  It’s nice to get helpful testimony, but one is always wary about eliciting testimony that kills one’s case.  If things go kablooey, it is time for the dunce cap and time for a difficult conversation with the client.  So you nibble a bit with your questions here and there, and pounce only if things look really promising.

 

And then what?  Is the doctor’s opinion – for that is where we are now – admissible?  Can we label it as an expert opinion?  Do we need to disclose the doctor as an expert?  If so, what does the disclosure need to say?  This process can also amount to a game of chicken.  How much or how little of a preview is required?  Playing this game wrong can have severe consequences.

 

That was certainly the case in Webb v. Zimmer, Inc., 2018 WL 836366 (E.D.N.Y. Feb. 12, 2018).  It is a knee replacement product liability case.  What do we learn from the Webb case?  To begin with, it doesn’t pay to be less than forthcoming with opposing counsel about your expert witnesses.  The plaintiff side did not inform the defense that a treater would also testify as an expert on a key issue, and then tried to bring the witness in as an expert at the last minute, after a summary judgment motion was filed.  That is a classic backfilling operation. The Webb court provides a solid discussion of what treaters can and can’t testify to when no expert report is provided.  Ultimately, the plaintiff was allowed to get away with belated testimony about the doctor’s own response to different warnings, but only at the price of having to pay for having a second deposition of the doctor.  Other non-treatment opinions were excluded. The Webb case offers a decent lists of do’s and don’ts.

 

Let’s flesh out the particulars. 

 

 

The physician/maybe-expert was Dr. Unis, who performed a right total knee replacement on the plaintiff using the defendant’s knee flex system.  At the time, Dr. Unis was using this product for all of his primary knee replacements, regardless of the specifics of his patients’ conditions.  That was because Dr. Unis felt “comfortable with the nuances of the system which [he believes] contributes to the success of putting in an implant.”  Ten days after the initial knee surgery on the plaintiff, Dr. Unis remarked that the plaintiff “really looked great.”  But that greatness did not last.  Dr. Unis later performed three revision surgeries on the plaintiff’s knee.  The plaintiff was displeased and filed a lawsuit alleging the usual array of product liability claims.  After discovery and the usual pretrial skirmishes, the plaintiff abandoned her design defect theory and confined her claims to those based on a failure to warn theory.  What was the relevant warning?  It actually seems pretty complete.  It informed the surgeon that soft tissues should be balanced and components positioning confirmed to minimize edge loading.  Under “Patient Counseling Information,” the insert stated that because prosthetic joints are not as strong, some might need to be replaced at some point.

 

 

The defendants filed a motion for summary judgment.  In her opposition papers, the plaintiff included an affidavit from Dr. Unis that, among other things, addressed the failure to warn theory, including what Dr. Unis would have done if the warning had been improved. The defendants then sought to exclude the Unis affidavit on the grounds that the plaintiff did not disclose Dr. Unis as an expert witness on the failure to warn elements, and because the plaintiff did not provide the required disclosures under Rule 26(a).

 

Now let’s turn to a bit of history.  Prior to 2010, when Rule 26(a)(2)(C) was added, as a general rule, parties did not need formally to designate treating physicians as experts or serve expert reports summarizing their opinions in order to bring those treaters in to testify.  Rather, the treating physician was considered a special species of fact witness and could offer medical opinions only if such opinions were formed during the course and scope of treatment of the plaintiff.  Information or opinion that was acquired by the treating physician from an outside source was out of bounds.  Things changed significantly after the adoption of Rule 26(a)(2)(C) in 2010, though not many lawyers seem to know it.  Under the new rule, a treating physician may offer factual testimony as well as opinion testimony regarding his patient’s diagnosis, treatment, prognosis, or causation as long as the proper disclosure is served on the other side.  Rule 26(a)(2)(C) requires a statement regarding “(i) the subject matter on which the witness is expected to present evidence under 702, 703, or 705; and (ii) a summary of the facts and opinions to which the witness is expected to testify.” Fed. R. Civ. P. 26(a)(2)(C). This requirement is much more extensive than formerly had been required for treaters, though still less extensive than expert reports and disclosures required under Rule 26(a)(2)(B) for retained experts.  Without the required disclosure under either Rule 26(a)(2)(B) or Rule 26(a)(2)(C), a treating physician may testify only as a fact witness regarding patient treatment.

 

In the Webb case, the plaintiff tendered an expert disclosure for Dr. Unis as an expert witness, but provided no summary of his expert opinions, as required by Rule 26(a)(2)(C). Instead, that disclosure revealed that Dr. Unis’s testimony would be confined to his care and treatment of the plaintiff, as well as “causation” and “any other questions that relate to the issue of plaintiff’s damages.”  Not a word was whispered about the effect of the warnings.  Following the initial disclosures, the plaintiff withdrew her initial expert reports for revision, based on her revised theory of the case. Remember, that revised theory centered on failure to warn.  The defense counsel asked about the scope of Dr. Unis’s expert opinions, and made clear that the defense assumed that Dr. Unis would not offer opinions related to the adequacy of the product warnings or that a failure-to-warn caused the injuries.  The plaintiff’s counsel responded that “I am not sure we disagree,” and that Dr. Unis’s opinions would “not be as an expert but as a fact witness to what he observed and concluded about the product and the plaintiff’s physical condition based on his personal experiences in this case.”  Again, there was no hint about warnings. 

 

The Webb court held that this expert disclosure provided no indication that Dr. Unis intended to testify as to the plaintiff’s failure to warn theory, or that he would utilize outside information to form his expert opinions.  That conclusion seems utterly inescapable. By contrast, the Unis affidavit submitted by the plaintiff in opposition to the summary judgment motion contained Dr. Unis’s “thoughts regarding the adequacy of Zimmer’s warnings or what he would have done differently had he known about any alleged improper warning or contraindication.”  Significantly, the Webb court concluded that “these statements constitute an expert opinion. These paragraphs do not contain treatment explanations or opinions as to the Plaintiff’s diagnoses; these are statements of hypothetical thoughts or actions that involve outside information.”  Wow.  We have always thought that it was pure speculation for a physician to offer post hoc testimony about what he or she would have done had the warnings said what the plaintiff’s lawyer – with 20/20 litigation and medical hindsight – now says the warning should have said.  But Webb now gives defense lawyers an additional ground to repel such testimony:  it is expert testimony that implicates the disclosure requirements of Rule 26(a)(2)(C).  Check your file.  We bet that the plaintiff lawyer did not supply the requisite disclosure.

    

Unfortunately, the Webb court did not flat-out preclude the belated “expert” testimony about warning causation.  The court held that the plaintiff’s failure to comply with Rule 26(a)(2)(C) did not automatically preclude the affidavit under Rule 37(c). A district court has wide discretion to impose sanctions, including severe sanctions, under Rule 37.  The typical sanctions analysis militated in favor of some sort of sanctions in the Webb case for the plaintiff’s expert shell-game, because the plaintiff offered “no persuasive explanation for not appropriately disclosing Dr. Unis’s expert testimony, which is beyond what is properly given by a treating physician.”  Moreover, the defendants would be prejudiced if the court were to allow portions of the Unis Affidavit to be admitted  — without allowing the defendants to conduct additional discovery.  Thus, the court decided to reopen discovery only to allow the defendants to re-depose Dr. Unis on the failure to warn theory and his affidavit.  The Webb court further ordered plaintiff’s counsel pay the defendants’ reasonable attorney’s fees associated with the renewed deposition of Dr. Unis, as well as reasonable attorney’s fees that the defendants’ incurred in bringing the motion to strike.  Literally, the plaintiff lawyers paid the price for failing to disclose the true scope of the treating doctor’s opinion.  Time will tell whether that price was high enough. 

 

 

 

This should not be controversial. It has been settled since Hahn v. Richter, 673 A.2d 888 (Pa. 1996) that in Pennsylvania prescription drugs are exempt from strict liability. And since Tincher v. Omega Flex, Inc., 104 A.3d 328 (Pa. 2014) re-worked Pennsylvania’s strict liability law, we’ve only reported one federal court decision that erroneously, in our opinion, concluded that Tincher allowed a strict liability manufacturing defect claim in a prescription medical device case. But that hasn’t stopped plaintiffs from continuing to try to pursue strict liability under Pennsylvania law. The most recent federal court to be confronted with the argument rejected it outright. Some TwIqbal and preemption are in the mix too so this one really hits on some of our favorites.

Plaintiff alleged he developed an acute kidney injury as a result of taking the prescription drug Jardiance. Bell v. Boehringer Ingelheim Pharmaceuticals, Inc., 2018 U.S. Dist. LEXIS 24802, *1 (W.D. Pa. Feb. 15, 2018). Defendants moved to dismiss the complaint on three grounds: 1) Pennsylvania law bars all non-negligence based claims; 2) the complaint fails to satisfy TwIqbal across the board; and 3) the claims against the non-NDA holding entity are preempted. Id. at *2-3.

Defendants’ first argument sought to dismiss not only strict liability design defect and failure to warn, but also gross negligence, breach of express and implied warranty, and all fraud and misrepresentation claims. Plaintiff’s response on strict liability was that Hahn is “antiquated.” Id. at *7. Hahn may be about to turn 22, but that means it’s only been legally drinking in bars for a year. Hardly over the hill. Not to mention, antiquated isn’t a legal standard that would allow a federal court to simply ignore the controlling law as announced by a state Supreme Court. Further, the court points out that Tincher expressly recognized the Hahn prescription drug exception (as did Lance v Wyeth, 85 A.3d 434 (Pa. 2014) which demonstrates that the Pennsylvania Supreme Court has not changed its position – Hahn is still good law. See Bell at *7-8.

But Hahn doesn’t just say no strict liability, it says “that negligence is the ‘only’ recognized basis of liability” in prescription drug cases. Id. at *8. So, on that basis, and ample federal precedent, the court dismissed plaintiff’s breach of warranty claims. Id. at *8-9. The case law applying Hahn to fraud and misrepresentation claims appears to be more divided and on this one the court opted to follow the cases that adopted a more narrow interpretation. Id. at *9-10. We think Hahn’s negligence only holding could easily be read as a bar to intentional misrepresentation and fraud which do not sound in negligence. The Bell court, however, concluded that because Hahn requires manufacturers to warn of both risks that should have been known as well as risks that were known, the latter is akin to a claim of intentional concealment of a known risk which would support a fraud or misrepresentation claim. So, those claims were not barred by Hahn.

The last challenge was to plaintiff’s gross negligence claim which the court dismissed as not recognized as an independent cause of action in Pennsylvania. Id. at *11.

But we need to quickly return to plaintiff’s surviving negligence and fraud/misrepresentation claims. They aren’t barred, but neither were they adequately pleaded. Apparently plaintiff’s counsel did not do a good job proofing the complaint because the court pointed out it appeared to be cut and paste from another complaint filed by a woman. Id. at *13 (complaint uses “her” and “she” pronouns). Cookie cutter complaints don’t survive under TwIqbal because they lack any of the necessary factual detail to support plaintiff’s claims. This complaint contained

no factual details about when Bell contracted diabetes, whether he has type I or type II diabetes, whether he has other medical conditions, who his treating physicians were, why he decided to take Jardiance, what alternatives to Jardiance were discussed, whether he read the warnings, how long he took Jardiance or at what dose or why he believes his acute renal failure was caused by Jardiance.

Id. The complaint was equally lacking regarding defendants. There were no specific allegations concerning how the warnings “fell below the standard of care,” how any defendant’s alleged breach of duty caused plaintiff’s injury, how the design was defective, or what safer alternatives existed. Id. at *13-14. The court was unwilling to “infer defectiveness” based only on “a generic description of how [the class of drugs] work[s]” and “formulaic legal conclusions.” Id. at *15.

All claims were dismissed under TwIqbal, but plaintiff only gets to amend his complaint to try to state a claim for those that survived the first part of the court’s analysis as recognized under state law.

So, that brings us to the final question – are the claims against the non-NDA holder preempted on the grounds that it had no ability to change the drug’s label or design. The plaintiff seemingly concedes that post-approval design defect claims would be preempted, but that he is making a claim that the defendant should have designed a safer product before approval. Id. at *17-18. The court briefly discussed some cases that have dealt with the issue of pre-approval design defect claims. We cover it here, along with our analysis that there is no such valid claim. But, because none of plaintiff’s claims survived TwIqbal, the court didn’t have to decide the preemption issue. Defendant can re-raise it after plaintiff files his amended complaint.

 

We’ll be hitting all the Presidents’ Day sales today, but something tells me we’ll be disappointed because we won’t be able to buy, beg, borrow, or steal a new one.  So we keep trying.

With plaintiffs desperate to find some way to continue pursuing aggravated, aggregated product liability litigation in their favorite venues after Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (“Bauman”), and Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), we thought we’d look at one likely target that we haven’t spent much time on before.  At the tail end of the BMS decision, the Court left open a caveat:

[W]e leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.  See Omni Capital International, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 102, n.5 (1987).

BMS, 137 S. Ct. at 1784.  We have offered our opinion that we don’t think there will turn out to be a dime’s worth of practical difference between the two, due to the extent that BMS, a Fourteenth Amendment case relied on Walden v. Fiore, 134 S. Ct. 1115 (2014), which was as federal a cause of action as they come, being a constitutional Bivens action filed in federal court.  We still believe that’s right, but it’s a bit more complicated than we thought at first, a later on in this post.

Let’s start with what “federal court” means.  While we’ve always thought that cases in federal court based on diversity jurisdiction were on the Fourteenth Amendment side of the personal jurisdiction line, we’d never researched it.  It wasn’t hard.  Looking for cases with “diversity,” “Fourteenth Amendment,” and “personal jurisdiction” in the same paragraph was enough.  Too much, actually – since that search produced over two thousand cases – but it didn’t take long to get the answer.  From the first case:

The United States District Court for the Southern District of Florida, sitting in diversity, relied on [a state longarm statute] in exercising personal jurisdiction over a [non-]resident. . . .  The question presented is whether this exercise of long-arm jurisdiction offended “traditional conception[s] of fair play and substantial justice” embodied in the Due Process Clause of the Fourteenth Amendment.

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464 (1985).  Lots of other appellate cases stand for the proposition that cases in federal court on diversity jurisdiction are governed directly by the Fourteenth Amendment.  E.g., Cossart v. United Excel Corp., 804 F.3d 13, 18 (1st Cir. 2015); Philos Technologies, Inc. v. Philos & D, Inc., 802 F.3d 905, 912 (7th Cir. 2015); Creative Calling Solutions, Inc. v. LF Beauty Ltd., 799 F.3d 975, 979 (8th Cir. 2015); Carmouche v. Tamborlee Management, Inc., 789 F.3d 1201, 1203 (11th Cir. 2015); SFS Check, LLC v. First Bank, 774 F.3d 351, 355-56 (6th Cir. 2014); ClearOne Commications, Inc. v. Bowers, 643 F.3d 735, 763 (10th Cir. 2011); Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009); Mullins v. TestAmerica, Inc., 564 F.3d 386, 398 (5th Cir. 2009); Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002); Chung v. NANA Development Corp., 783 F.2d 1124, 1125 (4th Cir. 1986); Steinberg v. International Criminal Police Org., 672 F.2d 927, 930 (D.C. Cir. 1981).

Thus, we think it’s a lock that for the types of cases we typically discuss on this blog, which sound in diversity if they’re in federal court, that Bauman/BMS applies to all personal jurisdiction issues.  Indeed, some of the cases we read indicate (like we think) that there is no difference between the Fifth and Fourteenth Amendments’ Due Process clauses when it comes to personal jurisdiction. See Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 943 n.12 (11th Cir. 1997); Akro Corp. v. Luker, 45 F.3d 1541, 1545 (Fed. Cir. 1995).

This means that, to get around Bauman/BMS, and to assert personal jurisdiction against non-resident defendants, litigation-tourist plaintiffs would have to do the opposite of what they have normally done for decades and instead plead some sort of federal claim if they have any hope of arguing that some hypothetical lesser standard of Due Process applies under the Fifth Amendment.  Even assuming plaintiffs desperate enough to jettison decades of prior practice, there aren’t many of these statutes around.  The False Claims Act is a federal statute that authorizes nationwide service of process, see 31 U.S.C. §3732(a), but by no stretch of the imagination could it apply to the sorts of product liability/consumer fraud claims that are our opponent’s stock in trade.

RICO also provides for nationwide service of process. 18 U.S.C. §1965(d).  RICO has a major limitation – from the standpoint of a product liability plaintiff – in that the statute does not allow recovery of personal injury damages.  Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979); see, e.g., Safe Streets Alliance v. Hickenlooper, 859 F.3d 865, 886 (10th Cir. 2017); Blevins v. Aksut, 849 F.3d 1016, 1021 (11th Cir. 2017); Williams v. BASF Catalysts LLC, 765 F.3d 306, 323 (3d Cir. 2014); Fiala v. B & B Enterprises, 738 F.3d 847, 853 (7th Cir. 2013); Jackson v. Sedgwick Claims Management Services, Inc., 731 F.3d 556, 565 (6th Cir. 2013) (en banc); Ironworkers Local Union 68 v. AstraZeneca Pharmaceuticals, LP, 634 F.3d 1352, 1364 (11th Cir. 2011); Upper Deck Co., LLC v. Federal Insurance Co., 358 F.3d 608 (9th Cir. 2004); Hughes v. Tobacco Institute, Inc., 278 F.3d 417, 422 (5th Cir. 2001); Hamm v. Rhone-Poulenc Rorer Pharmaceuticals, Inc., 187 F.3d 941, 954 (8th Cir. 1999); Bast v. Cohen, Dunn & Sinclair, PC, 59 F.3d 492, 495 (4th Cir. 1995); Laborers Local 17 Health & Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 241 (2d Cir. 1999).  Even more of a drawback for purveyors of nationwide class actions, is the statute’s causation requirements almost always having precluded reliance on classwide statistical evidence, as we discussed here.

Another possibility would be the Magnuson-Moss Warranty Act, although MMWA also has a number of substantive drawbacks for plaintiffs, not the least of which is prescription medical products not being “consumer” goods.  Kanter v. Warner-Lambert Co., 122 Cal. Rptr.2d 72, 86 (Cal. App. 2002); MHA, LLC v. Siemens Healthcare Diagnostics, Inc., 2017 WL 838797, at *2 (D.N.J. March 2, 2017); In re Minnesota Breast Implant Litigation, 36 F. Supp.2d 863, 876 (D. Minn. 1998); Goldsmith v. Mentor Corp., 913 F. Supp. 56, 63 (D.N.H. 1995); Kemp v. Pfizer, Inc., 835 F. Supp. 1015, 1024 (E.D. Mich. 1993).

In this regard, however, the citation BMS gives to the Omni Capital case is particularly ominous for MMWA plaintiffs.  Omni Capital was a federal question case, alleging violations of several federal securities statutes.  498 U.S. at 99.  The Court held that, even if the Fifth Amendment Due Process Clause did allow Congress to expand personal jurisdiction with a statute providing for nationwide service of process (the footnote cited in BMS was itself a caveat that the Court had “no occasion to consider the constitutional issues raised by this theory”), no jurisdiction existed because Congress had not in fact done so.  “[U]nder Rule 4(e), a federal court normally looks either to a federal statute or to the long-arm statute of the State in which it sits” to determine personal jurisdiction.  Id. at 105.  An “implied” cause of action did not include implied nationwide service of process.  “[W]e would not automatically graft nationwide service onto the implied private right of action.”  484 U.S. at 107.  Nor would the Court in Omni Capital go beyond the limits to service of process expressly provided in Rule 4:

We would consider it unwise for a court to make its own rule authorizing service of summons.  It seems likely that Congress has been acting on the assumption that federal courts cannot add to the scope of service of summons Congress has authorized.  This Court in the past repeatedly has stated that a legislative grant of authority is necessary. . . .

The strength of this longstanding assumption, and the network of statutory enactments and judicial decisions tied to it, argue strongly against devising common-law service of process provisions at this late date for at least two reasons.  First, since Congress concededly has the power to limit service of process, circumspection is called for in going beyond what Congress has authorized.  Second, as statutes and rules have always provided the measures for service, courts are inappropriate forums for deciding whether to extend them.  Legislative rulemaking better ensures proper consideration of a service rule’s ramifications within the pre-existing structure and is more likely to lead to consistent application.

Id. at 109-10 (citations and footnotes omitted).

Thus, unlike the FCA or RICO, MMWA falls into the same category as the securities statutes in Omni Capital – it contains no provision for expanded service of process of any sort.  Alisoglu v. Central States Thermo King of Oklahoma, Inc., 2012 WL 1666426, at *3-4 (E.D. Mich. May 11, 2012); Bluewater Trading LLC v. Fountaine Pajot, S.A., 2008 WL 2705432, at *2-3 (S.D. Fla. July 9, 2008), aff’d, 335 F. Appx. 905, (11th Cir. 2009); Weinstein v. Todd Marine Enterprises, Inc., 115 F. Supp. 2d 668, 671 (E.D. Va. 2000); see Walsh v. Ford Motor Co., 807 F.2d 1000, 1012, 1018-19 (D.C. Cir. 1986) (reversing decision that “veered off course” by “regard[ing] Magnuson-Moss as an Act intended to facilitate nationwide class actions”).  What that means for Magnuson-Moss plaintiffs is:

The end result of Omni is to require a court to apply in federal question cases such as this case where there is no provision authorizing nationwide service of process a personal jurisdiction test very similar to that used in diversity cases:  Where a federal court’s subject matter jurisdiction over a case stems from the existence of a federal question, personal jurisdiction over a defendant exists if the defendant is amenable to service of process under the forum state’s long-arm statute and if the exercise of personal jurisdiction would not deny the defendant due process.

Alisoglu, 2012 WL 1666426, at *4 (citations and quotation marks omitted) (emphasis added).

While the current version of Rule 4 was amended to address the specific situation presented in Omni Capital – an overseas defendant ostensibly not amenable to service of process in any state (see Rule 4(k)(2)) – plaintiffs who sue defendants (like our clients) that are amenable to suit in some states are subject to state-law limitations on service of process unless a federal statute expressly allows otherwise:

(k) Territorial Limits of Effective Service.

(1) In General. Serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant:

(A) who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located;

(B) [special rules for third party practice − not relevant to personal injury plaintiffs – and indispensable parties – ditto]; or

(C) when authorized by a federal statute.

(Emphasis added).

Thus, under both controlling precedent and the language of Rule 4, our opponents should not be able to utilize federal causes of action to evade Bauman/BMS – unless they can plead into some statute (like the FCA or RICO) that provides nationwide service of process – and those other statutes have attributes that preclude their use in product liability.  Getting back to Walden v. Fiore, this interplay between personal jurisdiction and Rule 4 is what ultimately led to the application of Fourteenth Amendment personal jurisdiction principles in what was a federal question case.  Bivens is an implied right of action (similar to Omni Capital in that respect), thus no statutory expansion of personal jurisdiction was available, and a state long-arm statute subject to the Fourteenth Amendment was the only other option for the plaintiff, even with a federal cause of action involved:

Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.  This is because a federal district court’s authority to assert personal jurisdiction in most cases is linked to service of process on a defendant “who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”  Fed. Rule of Civ. Proc. 4(k)(1)(A).  Here, Nevada has authorized its courts to exercise jurisdiction over persons “on any basis not inconsistent with … the Constitution of the United States.”  Thus, in order to determine whether the Federal District Court in this case was authorized to exercise jurisdiction over petitioner, we ask whether the exercise of jurisdiction comports with the limits imposed by federal due process on the State of Nevada.

Walden, 134 S. Ct. at 1121 (citations and quotation marks to Bauman omitted).  Walden is Supreme Court precedent demonstrating that Rule 4(k)(1)(A) imports the Fourteenth Amendment’s – and thus Bauman/BMS – Due Process analysis into federal causes of action unless a federal statute expressly provides otherwise.  Thus, plaintiffs can’t get away from Bauman/BMS even by raising federal statutory causes of action like MMWA that don’t authorize nationwide service of process.

Finally, even if plaintiffs somehow grab the BMS-caveat brass ring, and find some federal statute that provides for expanded service (and thus expanded personal jurisdiction), they would run squarely into the principle discussed in Dick Dean’s prescient guest post of a few weeks back – “[j]ust because there is specific jurisdiction over one claim . . ., that is insufficient to find specific jurisdiction over all claims.”  This guest post cites the relevant cases holding that personal jurisdiction must be determined on a claim-by-claim basis, so we won’t repeat them here.

We’ll add only that this claim-by-claim precedent is incompatible with any novel expansion of “pendent jurisdiction” (which has been a subject matter jurisdiction concept) to allow courts to hear otherwise Bauman/BMS-barred claims because one claim somehow squeaks through.  Recent cases rejecting “pendent jurisdiction” as an end run around Bauman/BMS include:  Lexington Insurance Co. v. Zurich Insurance (Taiwan) Ltd., ___ F. Supp.3d ___, 2017 WL 6550480, at *3 (W.D. Wis. Dec. 21, 2017); Greene v. Mizuho Bank, Ltd., ___ F. Supp.3d ___, 2017 WL 7410565, at *4-5 (N.D. Ill. Dec. 11, 2017); Spratley v. FCA US LLC, 2017 WL 4023348, at *7 (N.D.N.Y. Sept. 12, 2017); Famular v. Whirlpool Corp., 2017 WL 2470844, at *6 (S.D.N.Y. June 7, 2017); MG Design Associates, Corp. v. Costar Realty Information, Inc., 224 F. Supp.3d 621, 629 (N.D. Ill. 2016), partially reconsidered on other grounds, 267 F. Supp.3d 1000 (N.D. Ill. 2017); In re Testosterone Replacement Therapy Products Liability Litigation, 164 F. Supp.3d 1040, 1048-49 (N.D. Ill. 2016); In re: Bard IVC, 2016 WL 6393596, at *4 n.4 (D. Ariz. Oct. 28, 2016); In re: Zofran (Ondansetron) Products Liability Litigation, 2016 WL 2349105, at *5 n.5 (D. Mass. May 4, 2016); Demaria v. Nissan, Inc., 2016 WL 374145, at *7-8 (N.D. Ill. Feb. 1, 2016); Tulsa Cancer Institute, PLLC v. Genentech Inc., 2016 WL 141859, at *4 (N.D. Okla. Jan. 12, 2016); Hill v. Eli Lilly & Co., 2015 WL 5714647, at *7 (S.D. Ind. Sept. 29, 2015); In re Plavix Related Cases, 2014 WL 3928240, at *9 (Ill. Cir. Aug. 11, 2014).

Notably, most of these rejections of pendent jurisdiction come in the context of unsuccessful attempts to maintain nationwide class actions after Bauman/BMS.  The jurisdictional noose is tightening around litigation tourists.  It is important that they not  be given any wiggle-room by virtue of the “federal court” caveat in BMS.

Disclaimer:  Any resemblance between the substance of this post and that of a certain recent, wrongly-decided case out of the Northern District of California is purely intentional.

If you’re not interested in Pennsylvania product liability law at the moment, come back tomorrow. This particular post is not limited to (or even primarily about) prescription medical products.

Back in 2014 the Pennsylvania Supreme Court worked a revolution in product liability when it decided Tincher v. Omega Flex, Inc., 104 A.3d 328 (Pa. 2014) (“Tincher I”).  We blogged about Tincher I here and here, and discussed its prescription medical product implications (or lack of same) here and here.

We detailed in our first post the harsh criticism that Tincher I directed against the strict liability jury instruction (from a case called Azzarello) that had previously been the law.  Here is some flavor from that post – there’s lots more where that came from.

After all that preface, Tincher overruled Azzarello.  “Azzarello articulates governing legal concepts which fail to reflect the realities of strict liability practice and to serve the interests of justice.”  Slip op. at 74.  It got rid of Azzarello’s relegation of the “unreasonably dangerous” prong of §402A to a preliminary question of law to be decided courts rather than juries.  It criticized Azzarello for “approv[ing], and thereby essentially requir[ing], instructions which informed the jury that, for the purposes of a supplier’s strict liability in tort, ‘the product must, therefore, be provided with every element necessary to make it safe for its intended use’.”  Id. at 75.  “Subsequent decisional law has applied Azzarello broadly, to the point of directing that negligence concepts have no place in Pennsylvania strict liability doctrine.” Id.     These errors, Tincher went on to explain, “led to puzzling trial directives that the bench and bar understandably have had difficulty following in practice, including in the present matter.” Id.

Thus, Tincher disapproves of three key aspects of prior Pennsylvania strict liability law:     (1) the “each and every element”/”guarantor” jury instruction; (2) taking “unreasonably dangerous” issues away from the jury and giving them to courts; and (3) the strict separation of negligence and strict liability concepts.

Thus, one thing that we always considered self-evident is that, after Tincher I, the Azzarello jury instruction – the one with the “any element” defect test and the “defendant as guarantor” of product safety language – was reversible error.

However, others seemed to have much more trouble with this self-evident proposition than we did. Because Tincher I did not reverse outright, but simply remanded for further proceedings, the plaintiffs’ side tried to throw smoke that maybe the Azzarello instruction was still OK (or at least not reversible error).  A couple of foolish, but fortunately uncitable, Superior Court memorandum decisions seemed to agree, at least in crashworthiness cases. See American Honda Motor Co. v. Martinez, 2017 WL 1400968, at *4 (Pa. Super. April 19, 2017); Cancelleri v. Ford Motor Co., 2016 WL 82449, at *2 (Pa. Super. Jan. 7, 2016).  Even more foolishly, a post-Tincher I update to the Pennsylvania Suggested Standard Jury Instructions, retained the Azzarello “any element” defect test, while omitting the “unreasonably dangerous” element of strict liability that Tincher I reaffirmed as part of Pennsylvania law. See Pa. SSJI (Civ.) §16.20(1).  At that point, this continuing denial of the obvious became too much for Pennsylvania defense practitioners to suffer in silence any longer.  Thus, last year the Pennsylvania Defense Institute, later joined by the Philadelphia Association of Defense Counsel, issued their own competing product liability suggested jury instructions.  Anyway, these plaintiff-side attempts to deny the obvious are now at an end.

As we mentioned, Tincher I remanded for further proceedings concerning the relief to which the defendant was entitled.  On remand, the trial judge also tried to deny the obvious, and denied any relief at all, finding the Azzarello instruction to be, at most, harmless error even after Tincher I.  But yesterday the Superior Court unanimously reversed that holding in a published opinion. See Tincher v. Omega Flex, Inc., ___ A.3d ___, No. 1285 EDA 2016 (Pa. Super. Feb. 16, 2018) (per Lazarus, J., with Platt, and Strassburger, JJ., joining) (“Tincher II”).

Here are the highlights. Tincher II held that the Pennsylvania Supreme Court meant what it said in Tincher I, so that a court commits “fundamental error” if it uses an Azzarello jury charge in a strict case. Tincher II, slip op. at 23.  What language was fundamental error?  This language:

The charge [that was given] contained all of the product liability law under Azzarello that the Supreme Court has now disapproved, including a definition equating a defective product with one that “leaves the suppliers’ control lacking any element necessary to make it safe for its intended use,” and a declaration that a manufacturer “is really a guarantor of [a product’s] safety” but not “an insurer of [that] safety.”

Id. at 18.  Tincher II did not consider this to be a difficult ruling.  “There is no question” that the Azzarello charge given during the trial was “incorrect.”  Id.  Indeed, as “the trial court gave a charge under law that the Supreme Court has explicitly overruled in this very case.  Such a charge would appear to be a paradigm example of fundamental error.”  Id. at 23 (emphasis added).  Likewise, on page 20 of the Tincher II slip opinion:  an Azzarello charge “fail[s] to conform to the applicable law, as stated in Tincher” and thus is “fundamental error.”

There’s lots more where that came from:

  •  “If an incorrect definition of ‘defect’ under Azzarello calls for a new trial, an incorrect definition of ‘defect’ under Tincher should call for the same result.”  Tincher II, slip op. at 22-23.
  •  “There is no question that the error was fundamental to the case. It dealt with the principal issue disputed by the parties − whether there was a defect.”  Id. at 25.
  • “[T]hat the jury may have heard evidence about risk and utility during the trial does not mean that it rendered a verdict based on the risk/utility standard adopted by the Supreme Court as one way to find a product defective.  In fact, the verdict could not mean that, because the jury was never instructed to make findings under such a standard.  Rather than being asked to balance risks and utilities, the jury was told only to find whether [product] “lacked any element necessary to make it safe” − regardless of whatever reasonable risk/utility considerations might have gone into the decision to market [product] without such an element.”  Id. at.26.
  • “[T]he trial court had no authority to deny a new trial on the basis of its own speculation about what the jury would do under the Supreme Court’s new formulation of the law.”  Id. at.27.
  •  “The trial court’s declaration that the new legal reformulation resulting from the Supreme Court’s thorough and extensive decision . . . can cause no change to the verdict undervalues the importance of the Supreme Court’s decision.” Id. at 27 (emphasis added).
  •  “The Supreme Court said nothing in Tincher[I] to suggest that mere proof of a ‘defect’ under post-Azzarello strict liability law would be sufficient to prove an “unreasonably dangerous defective condition” under Tincher[I]’s new formulation.”  Id. at 28.
  •  “[T]he Supreme Court’s statement that the ‘question of whether a party has met its burden of proof’ may properly be removed from a jury’s consideration” . . . was referring only to a trial court’s ability to decide ‘a dispositive motion.’” Id. at 29.

Thus, in a precedential opinion, Tincher II has at last answered the obvious question.  Yes, after Tincher I, charging a §402A strict liability jury in Pennsylvania with the old Azzarello “any element”/”guarantor” language is “disapproved,” “incorrect,” “fundamental error,” and in and of itself requires a new trial.  Go forth and sin no more.

 

With one glance at the calendar, regular readers of this blog will have been able to predict the content of these prefatory paragraphs, later to be (tenuously) tied to today’s case. On Monday and Tuesday, as we have for nearly twenty years, we attended the annual Westminster Kennel Club Dog Show, the second-oldest continuous sporting event in the United States (behind only the Kentucky Derby) in Manhattan.  The show draws the best representatives of almost 200 dog breeds, including two breeds eligible to compete this year for the first time: the Nederlandse Kooikerhondje and the Grand Basset Griffon Vendeen.  About 3,000 total entrants are narrowed, during daytime breed judging, to one “best of breed” winner from each breed, then (during the familiar nighttime televised portions) to seven group winners.

The climactic event is the selection of the best-in-show winner from the seven group winners.   (BTW, if you haven’t seen the movie Best in Show, we think it is one of the funniest movies ever made, and, like all good humor, it skates very close to a lot of truths.)  This year, unlike some years, none of the “breeds of our heart” was represented in the final seven, so we watched with excited anticipation but without a favorite.  Not so the sellout crowd.  A pug named Biggie, with a sad human interest backstory (google it), got roars, as did Flynn the Bichon Frise and the Giant Schnauzer that was the top-winning show dog in the country for 2017.  But the crowd favorite was a Sussex Spaniel (a cheerful-looking, low-slung, long-eared spaniel breed with a shiny golden-liver coat) named Bean.  Every time Bean got close to the “bait” – the treats his handler was carrying – he sat up on his haunches and begged.  Needless to say, the crowd swooned.  And we admit that this was insanely cute.  But Bean took it too far, doing his trick right under the judge’s nose, including when was supposed to “free stack” (get himself into a stretched, square stance without his handler placing his feet in the proper positions).

Ultimately, the beautiful little Bichon was Best in Show, and Bean’s begging was for naught, kind of like today’s case (we warned you), a terrific jurisdictional decision out of the consolidated Xarelto litigation in the Superior Court of Los Angeles County, California. In In re Xarelto Cases, 2018 WL 809633 (Cal. Super. Feb, 6, 2018), the plaintiffs sued several manufacturers and a distributor, claiming various injuries and alleging the usual litany of causes of action.  Appearing specially, the (non-resident) manufacturer defendants moved to quash service of the plaintiffs’ summons, arguing that California courts lacked jurisdiction over them.  In response, the plaintiffs served jurisdictional interrogatories and requests for production comprising 113 separate discovery requests, seeking information about marketing and clinical trials allegedly performed by the non-resident defendants in California, including free sample voucher programs, as well as information about the functions the resident distributor defendant performed for the non-resident manufacturers.  The defendants moved for a protective order, alleging that none of the pending jurisdictional discovery was permitted under the United States Supreme Court’s three recent jurisdiction decisions (Bauman, BMS, and BNSF Railway Co. v. Tyrrell, 127 S.Ct. 1549 (2017)), and the plaintiffs countered with a motion to compel responses to the outstanding discovery requests.

The court explained it weighed three factors in deciding whether to permit the jurisdictional discovery: 1) the nature of the jurisdictional facts the plaintiffs sought to discover; 2) whether sufficient methods of investigation were available to the plaintiffs without formal discovery; and 3) the likelihood that the plaintiff could establish the necessary facts. Xarelto, 2018 WL 809633 at *10.  It concluded, “. . . [T]he Court has weighed these factors, and finds that Plaintiff has not made a prima facie case for personal jurisdiction in order to conduct the requested jurisdictional discovery.” Id. (citation omitted).

First, under Bauman, because none of the manufacturer defendants was incorporated or had its principal place of business in California, the courts lacked general jurisdiction.  Second, with respect to specific jurisdiction, noting that the (non-resident) plaintiffs were allegedly injured in their home states, the court held that, under BMS, neither the fact that clinical trials were performed in California nor the fact that the manufacturers hired a resident distributor was sufficient to establish that the plaintiffs’ claims “arose out of” the defendants’ contacts with California.  As such, the court found, “the proposed discovery seeks information on, at best, merely tenuous contact between the Defendants and California.” Id. The court concluded, “Consistent with BMS . . . , the requested discovery will not likely lead to the production of facts establishing jurisdiction over the defendant, based on the allegations of the complaint.  Under these circumstances, the Defendants’ requested protective order is appropriate.” Id. at *11.  That’s right — not a single one of the 113 discovery requests was allowed.

We love this decision. Its correct application of the Supreme Court’s mandates underscores the demise of litigation tourism and emphasizes the futility of plaintiffs’ pervasive and reprehensible joinder of distributors in quest of jurisdiction.  We hope other courts follow suit.  And we’ll keep you posted.

Class actions hold our interest, even though we do not see them all that often anymore in the drug and medical device space. Maybe we are the rubbernecking motorists who can’t resist slowing down to gaze at someone else’s fender bender.  Maybe we are the children at the zoo who rush to the reptile house to gawk at creatures charitably described as unsightly.  Or maybe it’s because class actions are such odd ducks.  Our civil litigation system is conceived around concepts of due process.  Yet, a class action defendant can be compelled under threat of state authority to pay money to people who have never proved a claim or an injury, and an absent class member can be bound to the result of a proceeding in which he or she has never appeared.  What could possibly go wrong?

We expect many of you are like us, so we have gathered here a trio of significant class action opinions that caught our eye over the last few weeks. All hail from California.  All are important for unique reasons.  None involves drugs or medical devices, but the opinions are relevant generally to class settlements, expert opinion, and standing to appeal—topics that readily cross over.  So, without further delay, here we go.

Nationwide Class Settlements and Choice of Law: In re Hyundai and Kia Fuel Economy Litig., No. 15-56014, 2018 WL 505343 (9th. Cir. Jan. 23, 2018).  We will start with the opinion that has received the most attention and is probably the most important—the Ninth Circuit’s opinion reversing a nationwide class settlement because the district court did not consider the impact of varying state law. Id. at **12-13.  The procedural history for these multiple class actions resulting in a nationwide settlement is long and dizzying.  The important point is that the district court certified a settlement class that offered benefits to class members (automobile purchasers allegedly defrauded by representations regarding fuel mileage) and substantial fees to class counsel.

However, in certifying the class, the district court overly relied on a well-worn principle—that the inquiry on whether common issues of law predominate is relaxed with a settlement class.  Because the district court was certifying a class for settlement only, it ruled that a choice-of-law analysis was unnecessary. Id. at *11.

That was the district court’s mistake. As the Ninth Circuit explained:

Because the Rule 23(b)(3) predominance inquiry focuses on “questions that preexist any settlement,” namely, “the legal or factual questions that qualify each class member’s case as a genuine controversy,” a district court may not relax its “rigorous” predominance inquiry when it considers certification of a settlement class.  To be sure, when “[c]onfronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” But “other specifications of the Rule—those designed to protect absentees by blocking unwarranted or overbroad class definitions—demand undiluted, even heightened, attention in the settlement context.

Id. at *5 (emphasis added, citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)).  The district court’s error therefore was threefold.  First, it failed to conduct a choice-of-law analysis to determine the controlling substantive law. Id. at *12.  Second, the district court failed to acknowledge that laws in various states materially differed from California law.  Third, the district court did not consider whether material variations in state law defeated predominance under Rule 23(b)(3).

This is not to say that the district court lacks discretion on remand to certify another nationwide settlement class. We do know, however, that the district court will have to subject any newly proposed nationwide settlement to choice-of-law analysis and will have to decide whether state laws differ and whether any differences defeat the predominance of common legal issues.

Class Certification and Admissibility of Expert Opinions: Apple, Inc. v. Superior Court, No. D072287, 2018 WL 579858 (Cal. Ct. App. Jan. 29, 2018). Our second case held that a trial court can consider only admissible expert opinion evidence submitted in connection with a class certification motion and that California has only one standard for admissibility of expert opinion, Sargon Enterprises, Inc. v. University of So. Cal., 55 Cal. 4th 747 (2012).  In other words, Sargon applies at the class certification stage, a point about which we have often wondered, but for which we never had a clear answer.

Until now.  We wrote about Sargon here when it came out in 2012.  The opinion moved California away from its unique “Kelly/Leahy” test and toward a more Daubert-like standard.  In the new California Court of Appeal case, the trial court certified a class of consumers, but expressly refused to apply Sargon to the declarations of the plaintiffs’ experts. Id. at *1.  You will not be surprised to learn that the experts in question were damages experts who offered the opinions that damages could be calculated on a classwide basis.  Id. at **2-5.  Over multiple rounds of briefing, the defendant objected to the opinions and urged the trial court to apply Sargon.  The plaintiffs resisted.

In the end, the trial court ruled that “[t]he issues [the defendant] raises with respect to the materials Plaintiffs’ experts will rely upon in forming their opinions and whether Plaintiffs’ experts’ analyses rely on accepted methodologies and whether the analyses are correct are issues for trial.” Id. at *6.  The court therefore certified the class. Id.

In reversing, the California Court of Appeal issued a very straightforward holding:

[T]he court may consider only admissible expert opinion evidence at class certification.  The reasons for such a limitation are obvious.  A trial court cannot make an informed or reliable determination on the basis of inadmissible expert opinion evidence.  And certifying a proposed class based on inadmissible expert opinion evidence would merely lead to its exclusion at trial, imperiling continued certification of the class and wasting the time and resources of the parties and the court.

Id. at *8 (internal citations omitted). The Sargon case involved expert opinion presented at trial, but the Court of Appeal saw “no reason why Sargon should not apply equally in the context of class certification motions.” Id. at *9.

Moreover, although the plaintiffs argued that the result would have been the same even if the trial court had applied Sargon, the Court of Appeal disagreed.  The experts’ opinions were crucial to the trial court’s order, and there were significant individual issues for each consumer that the experts attempted to brush over. Id. at *11.  The Court of Appeal found that if the trial court had applied Sargon to these opinions, “there is a reasonable chance it would have excluded these declarations and found plaintiffs’ showing to be lacking.” Id. The Court of Appeal found similar deficiencies with the experts’ estimate of the size of the class, making it “difficult to see on the current record how plaintiffs’ formula could be found reliable.” Id. at *12.

Class Actions and Standing to Appeal: Hernandez v. Restoration Hardware, Inc., No. S233983, 2018 WL 577716 (Cal. Jan. 29, 2018). Our final class action opinion for today is Hernandez v. Restoration Hardware, where the issue was whether an unnamed class member has standing to appeal from a class action judgment under California procedure.  The California Supreme Court decided that an unnamed class member does not have standing to appeal without first intervening as a party in the trial court.  In Hernandez, the plaintiff sued a retailer for violating credit card laws, and after several years of litigation, the trial court certified a class and held a bench trial resulting in a substantial award.  An unnamed class member received notice of the class action, but she neither intervened as a party nor opted out.  Instead, her attorney filed a notice of appearance on her behalf. Id. at *1.

The controversy began when class counsel requested a 25 percent fee. Again the absent class member did not formally intervene, but instead appeared through counsel at the fairness hearing and argued mainly procedural points. Id. at *2.  The trial court nonetheless granted the fee request, and the unnamed class member appealed. Id. at *3.

In holding that the unnamed class member was not a “party aggrieved” and had no standing to appeal, a unanimous California Supreme Court followed Justice Traynor’s 75-year-old decision in Eggert v. Pacific Sales S&L Co., 20 Cal. 2d 199 (1942).  The Court’s main point was that absent class members have ample opportunity to become parties of record in class actions, either by filing a complaint in intervention or by filing an appealable motion to set aside and vacate a class judgment. Id. at *4.  This appellant did neither, making her neither a “party” nor “aggrieved.”  The Supreme Court also rejected the invitation to follow Rule 23 of the Federal Rules of Civil Procedure, which gives class members who informally object to settlement the right to appeal. Id. at *5.  The federal approach does not address California’s statutory requirement for appeal, and it cannot be reconciled with the controlling authority, Eggert.  As the California Supreme Court concluded,

Following Eggert and requiring intervention does not discourage unnamed class members from filing a meritorious appeal.  Rather, it continues a manageable process under a bright-line rule that promotes judicial economy by providing clear notice of a timely intent to challenge the class representative’s settlement action.  Formal intervention also enables the trial court to review the motion to intervene in a timely manner. . . .  By filing an appeal without first intervening in the action however, [the appellant] never became an “aggrieved party” of record to the action as our law requires.

Id. at *7. According to the California Supreme Court, this absent class member made the strategic decision to wait and see if she agreed with the result in the trial court, and that was not sufficient to perfect the right to appeal. Id. The Court also reasoned that the prevailing rule protects against wasteful and meritless objections, recognizes the fiduciary duties of class representatives and their counsel, and respects the doctrine of stare decisis. Id. at **7-8.

There you have it—all you need to know about three important decisions. Someday you might need them.

We have written extensively on the travesty of the Neurontin trilogy (like here and here) and noted how the plaintiffs’ efforts to fit cases based on alleged off-label promotion of the prescription SSRIs Celexa and Lexapro into the same rubric have not been as successful. Today’s case addresses what we understand to be some of the last few cases in the MDL.   In re Celexa & Lexapro Mktg. & Sales Practs. Litig., MDL No. 09-02067-NMG, 2018 U.S. Dist. LEXIS 13579 (D. Mass. Jan. 26, 2018).  This summary judgment decision addresses three cases, one by a third party payor on behalf of a purported class and two by parents of former pediatric users.  As always, we reserve the right to focus on the parts we want and to make gratuitous statements about how these cases exemplify much of what is wrong with civil RICO and consumer fraud cases over prescription drugs.

A little background on the litigation and these cases should help.  The allegations centered on the claim that the manufacturer of these drugs had caused economic injury to the plaintiffs by promoting the use of the drugs for pediatric patients when they were only approved for adult use.  To dispose of the plaintiffs’ cases, the court did not have to resolve whether the manufacturer engaged in such promotion, let alone whether any promotion was untruthful—which we think it would need to be to impose liability consistent with the First Amendment.  Celexa was approved to treat depression in adults in 1998 and an application to treat depression in adolescents was filed in 2002.  FDA denied that application based on a lack of efficacy in one of the two clinical studies.  Lexapro was approved to treat depression in adults in 2002 and an application to treat depression in adolescents was filed in 2008 and approved a year later.  The Celexa label always stated that “safety and effectiveness in pediatric patients have not been established” and, starting in 2005, described the results of certain pediatric trials.  The Lexapro label had similar language until the pediatric indication was added.  The first individual plaintiff sued over the prescription, purchase, and intermittent use of Celexa by a thirteen year old depressed patient in 2002-2003.  The second individual plaintiff sued over the prescription, purchase, and use of Celexa and later Lexapro by an eight to fifteen year old autistic patient from 2003 to 2010.  The TPP plaintiff sued over prescriptions paid for a relatively small number of Celexa prescriptions for pediatric beneficiaries from 1999 to 2004 and for a somewhat larger number of Lexapro prescriptions for pediatric beneficiaries between 2012 and 2015, but also claimed to represent a nationwide class of payors.  The plaintiffs asserted a mix of federal civil RICO and state consumer fraud claims and, skipping some procedural history, the court entertained summary judgment motions.

The consideration of the RICO requirements of injury and causation resolved all issues. For those of you who know RICO or have just followed along with some of our posts, RICO requires an injury to “business or property” as a matter of standing.  Relying on the Neurontin cases, these plaintiffs claimed that they had been injured because they paid for drugs that were not effective for the indications for which they were prescribed.  They claimed, however, that any payment for an off-label prescription was an injury because they contended that FDA had somehow been defrauded in connection with the applications for pediatric indications.  2018 U.S. Dist. LEXIS 13579, *19.  If you are following along, then you might wonder how this theory could apply to Celexa prescriptions or the earlier prescriptions of either drug.  First things first, though, as the Celexa court had to unpack the Neurontin rulings to see if they supported plaintiffs’ relaxed standard.  They did not, so plaintiffs had to prove lack of efficacy.  The TPP and second plaintiff could not:  “[T]he FDA in this case approved the drug for use in adolescents.  There is no conclusive or even strongly suggestive evidence of inefficacy in this case and plaintiff have presented no evidence as to the inefficacy for [the second plaintiff] or for any of [the TPP’s] plan members.” Id. at *22.  As one might expect with prescriptions over the eight years, the second individual plaintiff’s prescribing physician testified that the drugs had been effective with the patient’s autism.  The TPP’s evidence resembled what we have seen in other cases—no proof from physicians for the plan beneficiaries and the plan still pays for pediatric prescriptions for both drugs, contrary to the allegations in the case.

Plaintiffs’ attempted end run was that they had experts who would say FDA was somehow defrauded about efficacy for pediatric use—presumably just for Lexapro, as FDA rejected the only application for a pediatric indication for Celexa, and not for autism, as that was not an indication for either drug.  As the court noted, and we will let the Neurontin characterizations lie, plaintiffs’ “fraud theory is a tenuous attempt to shoehorn the facts of this case into the facts of Neurontin, where there were no positive, or even equivocal, clinical trials for the indications at issue.” Id. at *25.  Here, FDA “determined that two clinical studies were positive” and “FDA is the exclusive judge of safety and efficacy and a court should not question that judgment unless new information not considered by the FDA develops.” Id. (internal quotes and citation omitted).  Keep in mind that RICO is federal, so there is no preemption.  Not too shabby.  And summary judgment for the manufacturer on two of the plaintiffs.

On the remaining plaintiff, the first individual, the manufacturer challenged causation.  In part because we think the analysis was somewhat confused, we will skip to what mattered and probably applies to other plaintiffs with similar claims.  The prescribing physician’s testimony did not support reliance on a sales representative’s discussion of Celexa at all. Id. at *30.  While he did acknowledge a possibility of some unrecalled exposure to off-label promotion, this is not enough to avoid summary judgment on an issue for which the plaintiff bears the burden of proof.  “A mere possibility that the doctor could have, at some point, encountered off-label promotion, although he has no memory of it, does not rise to the level of a disputed material fact.” Id. at **30-31.  That sounds like what courts are supposed to say when evaluating a summary judgment motion on proximate cause for failure to warn with a prescription medical product.  The court here called this “but-for causation,” but we will not quibble. Summary judgment was awarded to the manufacturer on the last plaintiff’s RICO claim and the analysis on RICO determined the result of the various consumer fraud claims.  Like we said up front, this was all without reaching whether the manufacturer did anything wrong with its promotion.

 


Our first stint in a law firm was on the transactional side.  Yes, it sounds crazy even to us, but we spent our first 18 months in the profession pulling all-nighters on triple-tier financings of leveraged buyouts, doing clueless due diligence in far-flung back-offices, drafting trust indentures, ‘slugging’ at the printers, and collecting acrylic cubes as gaudy monuments to all those 23 billable hour days.  There was one problem: we labored in pure, unadulterated idiocy.  We would negotiate incessantly over boilerplate whilst the truly important issues crept by us without our paying the slightest attention to them.  Eventually, we were visited by Feedback, that process law students think they want from their future employers but maybe really shouldn’t.  There is something to that ignorance-is-bliss business.  But we were not completely ignorant; we suspected that we were doing a rotten job.  It turns out that we were not alone in that assessment.  Our supervisor gently sat us down and reported that we were becoming widely known as the Deal Doofus.   Every hour we devoted to a matter required two or three hours from a senior associate to remedy.  Our transactional sojourn simply was not working out for anyone.  But we didn’t need to box up our personal belongings, hand in our key-card, and head for the exit just yet.  There was an alternative: get thee to the Litigation Department.  And so we did. 

It is possible we learned nothing from our brief duncitude in the Corporate Department save a little bit of humility.  Then again, we might have learned this: if you acquire a corporation via merger or stock sale, you also acquire that corporation’s tort liabilities.  By contrast, if you acquire the corporation’s assets, you probably don’t acquire the tort liabilities.  As a product liability litigator, we have come to know this as the issue of successor liability.  That issue enjoys its own mention in this blog’s index, which you can find to the lower-right side of this post.  Perhaps we do not bloviate over that topic nearly so much as preemption, but it can be important.  It can be a get-out-of-jail card, a way of extricating a client from a case before the hyper-expensive merits-discovery machine gets rolling.

Shortly before the end of 2017, we wrote a post entitled “EDNY Rejects Successor Liability in Hip Implant Case.”  That case involved product liability claims against a hip implant manufactured by Portland, an Australian company, that had sold its assets before the plaintiffs filed their action.  One of the parties sued by the plaintiffs was Portland, but that went nowhere because it was apparently judgment proof.  The plaintiffs also sued the company that acquired the assets, including the hip implant business.  Applying both New York law (because it governed) and Pennsylvania law (because it was fun),  the court held that there was no successor liability because the acquirer had not expressly assumed liability, there was no continuity of ownership or management, it was not a mere continuation of the business, and the acquisition was not a fraudulent effort to evade liability.  The court also looked at whether the product line exception – available under Pennsylvania but not New York law – might save the case for the plaintiffs.  The answer was “No” because the acquisition did not cause the former company’s insolvency, and the acquirer did not purchase the predecessor’s good will.  Part of the rationale of the product line exception is that a company should not profit from the predecessor’s good will whilst also dodging responsibility.  But that did not happen the in the EDNY case.

It also did not happen in the case we discuss today, Gentle v. Portland Orthopaedics Ltd., 2018 WL 771333 (E.D. Wash. Feb. 7, 2018).  That case applied Washington state law and also concluded that successor liability, whether viewed through traditional principles or the dreaded product line exception, did not apply to the product liability claims.  The claims were similar to the EDNY case. The defendants were similar.  The analyses were similar.  So were the results.  Perhaps we have an area of drug and device liability law that is pretty well resolved.   

In Gentle, the plaintiffs argued that the defendants were liable as manufacturers/sellers under the doctrines of successor liability, acting in concert, agency, and vicarious liability.  The actual manufacturer (Portland, just as in the EDNY case we blogged about last December) went bankrupt.  The moving defendants acquired substantially all the assets associated with the hip implant product line.  Standard successor liability would not work here, because we have none of the following:  (1) the purchaser expressly or impliedly agrees to assume the obligations of the predecessor; (2) the transaction amounts to a consolidation or merger; (3) the purchasing corporation is merely a continuation of the predecessor; or (4) the transaction is fraudulent and intended to escape liability.  But the Washington Supreme Court adopted the product line liability rule, so we’re not done yet. 

The theory behind the product line liability rule is that the “benefit of being able to take over a going concern manufacturing a specific product line is necessarily burdened with potential product liability linked to the product line.” To prove product line liability under Washington law, a plaintiff must show that the product line transferee: has acquired virtually all of the transferor’s assets; holds itself out as a continuation of the transferor by producing the same product line under a similar name; and benefits from the transferor’s goodwill.  Washington law also limits the product line liability rule to cases where the predecessor corporation must be unavailable as a source for the plaintiff’s remedy and the successor corporation must have contributed to the predecessor’s unavailability.  The plaintiff argued that that last requirement of causation was not truly part of the test, but lost, and that’s too bad for the plaintiff because the court concluded that the successor companies “did not cause the destruction of Plaintiffs’ remedy against Portland Ortho.”  Further, the plaintiffs did not demonstrate that the defendants had acquired substantially all of Portland’s assets.  For instance, they did not acquire assets related to the manufacture and distribution of the hip implant product line outside the United States, nor did they acquire accounts receivable, cash, contracts, or goodwill.  Just as in the EDNY case, the failure to acquire goodwill was a key point in the court’s reasoning:  “Under Washington law, product line liability contemplates the benefits derived from the goodwill of the corporation, not a single product line.”  Indeed, the plaintiffs conceded that the original manufacturer had no goodwill at the time of the asset purchase.  Thus, the Gentle court had no problem granting summary judgment to the plaintiff.

So if any of you litigators have to play transactional lawyer sometime in the future, or if you are merely rendering advice to colleagues working on an acquisition, do not be shy about advising them to choose an asset purchase over a stock purchase if possible, to find some assets to exclude from the deal, and no-way-no-how buy the goodwill.  Maybe the result is that you’ll have one less litigation to handle down the road, or maybe such litigation will be way easier to win.  Either way, your client will likely be happier.

 

 

We’ve seen the latest affirmance of largely identical verdicts in a consolidated MDL trial in Campbell v. Boston Scientific Corp., ___ F.3d ___, 2018 WL 732371 (4th Cir. Feb. 6, 2018).  We’re not discussing Campbell’s merits today.  For present purposes, suffice it to say that the consolidation- and punitive damages-related rulings aren’t that much different from Eghnayem v. Boston Scientific Corp., 873 F.3d 1304 (11th Cir. 2017), about which we blogged, here.

More generally, both of those cases, as well as the course of the Pinnacle Hip litigation described in several of our prior posts as well as in In re Depuy Orthopaedics, Inc., 870 F.3d 345 (5th Cir. 2017) (“Pinnacle Hip”) (which we discussed, here), illustrate an adverse trend in MDLs.  That trend is to replace the traditional (if anything in MDL practice can be called traditional) bellwether trials with consolidated multi-plaintiff trials including allegations of punitive damages.  We’ve already expressed our jaundiced view towards consolidated product liability trials as inherently prejudicial against defendants, for a variety of reasons discussed in that post.  For obvious reasons, facing punitive damages is likewist not favorable to a defendant in a trial.

As our prior consolidation post discussed at some length, defendants saddled with consolidated trials in personal injury cases used to have reason to expect appellate relief.  Identical or nearly identical verdicts were considered evidence that the jury was either unable to keep multiple individual cases straight or overwhelmed by all the factual evidence, or both.  However, the recent Campbell decision, added to other recent events, makes us believe that the ability to obtain such relief has never been more questionable.

Hence, we offer an idea that has been percolating here ever since the decision in Pinnacle Hip.  We mentioned it at last December’s ACI Drug and Medical Device Litigation conference, and it was received as a good idea by most defense counsel we talked to, so here goes….

Only you can prevent multi-plaintiff consolidated punitive damages trials.

We recognize that such trials cannot always be prevented – this idea wouldn’t have worked in Campbell, for example − but MDL defendants should seriously consider limiting their so-called “Lexecon waivers,” to the extent they are willing to give them at all.

What does that mean?

Basically, Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), held that MDL judges can’t try cases transferred to them from another judicial district under the MDL statute, 28 U.S.C. §1407.  They can try cases properly filed in the same judicial district and then transferred to them as related cases (what happened in Campbell), but all other MDL trials require a Lexecon waiver of trial in the original transferor court.

The Fifth Circuit made clear in the Pinnacle Hip decision that a Lexecon waiver, like any other waiver, must be “clear and unambiguous” to be effective. Id. at 351.  Thus, we think it would be a good idea for MDL defendants to tailor any future Lexecon waivers so that they apply only to single-plaintiff trials, and exclude punitive damages.  As for consolidation, a Lexecon waiver excluding consolidation simply preserves the manner in which cases have been tried, including MDL bellwethers, for decades or longer.  As for punitive damages, bifurcating out such allegations has been commonplace in asbestos litigation, and has been employed in other mass torts as well, such as opt out cases in the Diet Drug litigation.

Even if courts seem less inclined to recognize it, everyone on the defense side knows how prejudicial multi-plaintiff consolidations and punitive damages allegations are during trials. To the extent possible, defendants should consider self-help, in the form of limited Lexecon waivers, to prevent such prejudicial procedures.

Today’s guest post is by Reed Smith‘s Lisa Baird, who has written about her recent experience with mandatory initial discovery, as practiced in a “Pilot Project” in place in certain federal district courts.  It was interesting – in the “stop and think before you remove to federal court” sense of interesting.  As always our guest posters deserve 100% of the credit, and any blame, for their guest posts.  The floor is yours, Lisa.

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Last summer, my firm’s clients faced two matters filed in rapid succession in the District of Arizona and the Northern District of Illinois.  As luck would have it, these are the only two districts participating in the Federal Judicial Center’s Mandatory Initial Discovery Pilot Project (MIDPP), and that meant we were in for a bit of a surprise.

When the pilot project first was announced in April 2017, it received a smattering of attention in the legal press before seemingly fading from view.  So you may be asking yourself (as I did), what is the MIDPP?   The short answer is that, in the adopting courts, it has worked significant changes to the Federal Rules of Civil Procedure regarding discovery and responsive pleading without following the usual procedures for rules amendments.  It also has up-ended the important principle from Ashcroft v. Iqbal, 556 U.S. 662 (2009), that an inadequate complaint “does not unlock the doors of discovery.”

Some important takeaways about the MIDPP are that:

  • Answers must be filed even if a motion to dismiss “or other preliminary motion” has been or will be filed, unless the court defers the responsive pleading deadline “for good cause” and the motion to dismiss is on one of three specified grounds: (1) lack of subject matter or personal jurisdiction; (2) sovereign immunity; or (3) absolute or qualified immunity of a public official.
  • Mandatory initial disclosures—which supersede the initial disclosures otherwise required by Federal Rule of Civil Procedure 26(a)(1)—are due within 30 days of the response to the complaint.  A 30-day extension of this deadline is provided for only if the parties certify that they have a good faith belief the case will settle within that additional 30-day period.
  • The MIDPP’s mandatory initial disclosures include:
      • Names and contact information for persons likely to have discoverable information, along with a description of the information they are believed to possess;
      • Written or recorded witness statements, unless privilege or work product is asserted;
      • A list of documents, electronically stored information (ESI), and tangible things that may be relevant and are known to exist, regardless of who possesses them; and
      • A statement of facts relevant to each claim or defense “and the legal theories upon which it is based.”
  • All hard copy documents and ESI falling within the subject matter of the initial disclosures must be produced within 40 days after service of the initial disclosures themselves “unless the court orders otherwise.”  In other words, ESI usually will have to be produced about 90 days after service of the complaint (service date + 21 days for responsive pleading + 30 days for mandatory initial disclosures + 40 days to make ESI production).
  • The parties have a continuing duty to supplement their productions within 30 days of the discovery of any new ESI.
  • Parties must disclose “facts relevant to the claims and defenses in the case, whether favorable or unfavorable, and regardless of whether they intend to use the information in presenting their claims or defenses.”

Make no mistake:  the discovery and answering obligations imposed by the MIDPP are onerous and there is little flexibility in the model documents as written.  In practice, it appears that individual judges sometimes are willing to exercise discretion to continue the “mandatory” deadlines when reason and good judgment dictate doing so, even though the MIDPP contemplates only limited extensions in very narrow circumstances.  Given that one of the initial messages about the MIDPP was that its requirements were mandatory and parties could not opt out of the required initial disclosures, however, it probably would be best not to count on routine extensions or exceptions.

The stated purpose behind the MIDPP certainly is laudable enough: reducing cost and delay in litigation.  But the net effect in more complex cases—such as product liability actions filed against drug and medical device manufacturers—may be the opposite.

In drug and device product liability litigation, discovery burdens are unequal and fall more heavily on defendants, and there is no reason to think that will change under the MIDPP.  Moreover, motions to dismiss are an essential tool for reducing costs and speeding up case resolution in drug and device cases because of unique, dispositive issues such as preemption.  Yet because the MIDPP forces the parties into immediate, extensive, mandatory discovery and forces the defendant to answer before any motion to dismiss is heard or decided, sweeping litigation may be well underway before the court decides that the case lacks sufficient merit to proceed.

For example, manufacturers of medical devices with premarket approval rely heavily on Riegel v. Medtronic, Inc., 552 U.S. 312 (2008), and the often-dispositive issue of preemption.  But the MIDPP forces these defendants to engage in early, mandatory discovery and to file an answer the complaint, even when the defendant’s preemption-based motion to dismiss is pending and likely dispositive of the lawsuit.

Perhaps the only silver lining for drug and device manufacturers is that MDL-bound cases are among the few types of civil cases excluded from the MIDPP.

For those interested in the details, the District of Arizona rolled out its MIDPP for cases filed on or after May 1, 2017 though General Order 17-08, and the Northern District of Illinois rolled it out for cases filed on or after June 1, 2017 (and assigned to participating judges) through General Order 17-2005 and a Standing Order.  There also are users’ manuals for both courts (D. Ariz. and N.D. Ill.) as well as checklists (D. Ariz. and N.D. Ill.).  This pilot project is meant to last three years, and so far it is limited to these two districts.

Surely there is room for improvement, however.  If not wholesale revisions that acknowledge the Supreme Court’s pronouncement in Iqbal that the “doors of discovery” do not unlock for a deficient complaint, then perhaps an expansion of the lists of motions which defer the duties to answer and provide the mandatory discovery.  Or a provision allowing the parties to agree that the deadlines should be delayed in a given case, when a potentially meritorious motion to dismiss is pending.  Or explicit recognition that courts may extend the deadlines for answering and providing mandatory discovery in their discretion.  Or, if getting on with it is so important, then a companion requirement for expedited motions to dismiss so that they can be briefed and ruled on before any duty to answer and provide mandatory discovery arises.

The Federal Judicial Center suggests providing comments about the MIDPP (or any other civil procedure issue) to the Committee on Rules of Practice & Procedure for the U.S. Courts at its email address.  The District of Arizona has an email box for providing comments to that court; it also has an annual conference on March 9, 2018, and one would think the MIDPP would be a central topic of discussion during the civil breakout session.  The Northern District of Illinois has an email box for comments on proposed amendments to the local rules, and although that email address is not identified as being for the MIDPP specifically, one would think that it would work for that purpose as well.