It’s been a while since we’ve discussed pre-service removal, other than to mention a recent case.  Our last major post was “What’s up with Removal Before Service,” back in May 2011.

Since then, we pointed out an important statutory development – that when Congress rewrote other parts of the removal statute (28 U.S.C. §1441(b)) in 2011, it left intact the language that, read according to its terms (often referred to as “plain meaning” in the cases), allows pre-service removal.  That’s important, because the major argument against pre-service removal is that it’s “gamesmanship” (as if joining 99 disparate plaintiffs in a single complaint isn’t) that leads to “absurd” results that Congress could not have intended.  “However, one person’s ‘gamesmanship’ is strategy to another.” Francis v. Great West Casualty Co., 2018 WL 999679, at *2 (M.D. Ga. Feb. 21, 2018).

[F]rom a policy perspective, §1441(b) protects non-forum defendants from plaintiffs’ procedural maneuvering to deprive these defendants of their statutory right to litigate in a federal forum. . . . This protection . . . is particularly important because the forum defendant rule creates an opportunity for procedural gamesmanship on the part of plaintiffs attempting to keep an action in state court, and thus blocking removal, by either improperly joining a forum defendant, or not serving the forum defendant that they have no intention of pursuing.

In Re Plavix Products Liability & Marketing Litigation, 2014 WL 4954654, at *6 (D.N.J. Oct. 1, 2014) (citations omitted).

That Congress, knowing full well that pre-service removal was being routinely practiced, elected to leave intact the statutory language enabling pre-service removal, makes the “absurdity” argument a much harder sell.  After all, if the statute’s language permits too much “gamesmanship,” the proper response is for Congress to amend the statute, as it did back in 1948 when the “properly joined and served” language was first added.  See Goodwin v. Reynolds, 757 F.3d 1216, 1220-21 (11th Cir. 2014) (discussing 1948 amendment).  It is not the courts’ role to usurp Congress by making ad hoc modifications of statutory language, whenever judges feel like it, particularly when Congress had the opportunity to amend the statute again in 2011, but declined to do so.

[U]nder the plain meaning of §1441(b) an out-of-state defendant, by monitoring state court dockets electronically or otherwise, can dash to the federal courthouse almost immediately with a notice of removal before the complaint is served on it and on an in-state defendant.  As a consequence of advances in technology, there may well be fewer diversity actions precluded from removal under §1441(b) than heretofore.  If this result is deemed to be bad public policy, the remedy lies with Congress which, subject to constitutional limitations, controls the scope of this court’s subject matter jurisdiction and any right of removal.

Valido-Shade v. Wyeth, LLC, 875 F. Supp.2d 474, 478 (E.D. Pa. 2012), summarily aff’d, No. 14-4608 (3d Cir. April 29, 2015).

Enough ranting (for now).  In any event, since our “What’s up” post, we’ve also written several individual posts about:

Christison v. Biogen Idec, Inc., 2011 WL 13153242 (N.D. Cal. Nov. 14, 2011)

Poznanovich v. AstraZeneca Pharmaceuticals LP, 2011 WL 6180026 (D.N.J. Dec. 12, 2011)

Boyer v. Wyeth Pharmaceuticals, Inc., 2012 WL 1449246 (E.D. Pa. April 26, 2011)

Davis v. Hoffmann-La Roche, 2014 WL 12647769 (Mag. N.D. Cal. Jan. 14, 2014), adopted, 2014 WL 12647768 (N.D. Cal. Jan. 31, 2014)

Young v. Bristol-Myers Squibb Co., 2017 WL 2774735 (D. Del. June 27, 2017)

Cheung v. Bristol-Myers Squibb Co., 282 F. Supp.3d 638 (S.D.N.Y. 2017)

So, that’s six additional pre-service removal cases from five states since our last comprehensive post in 2011.  Let’s see how many more there are out there that we’ve missed.

The first thing we note is that some appellate authority now exists.  Since remand is unappealable (28 U.S.C. §1447(d)), appellate review is rare in remand situations.  Most recently, in Bank of New York Mellon v. Mazza, ___ F. Appx. ___, 2018 WL 3524899 (3d Cir. July 23, 2018), the court observed (albeit refraining from deciding the issue) “that every Court of Appeals to have addressed the issue has concluded that defendants in state-court actions may indeed remove them before being served with process.”  Id. at *2.  Mazza cited Novak v. Bank of N.Y. Mellon Trust Co., 783 F.3d 910, 914 (1st Cir. 2015); La Russo v. St. George’s University School, 747 F.3d 90, 97 (2d Cir. 2014), and Delgado v. Shell Oil Co., 231 F.3d 165, 177 (5th Cir. 2000).

Delgado, of course, is from the antediluvian period before modern, technologically-aided pre-service removal, but the Fifth Circuit did state unequivocally that “service of process is not an absolute prerequisite to removal.”  231 F.3d at 177.  Rather, the language of §1441(b) “consciously reflect[s] a desire on the part of Congress to require than an action be commenced against a defendant before removal, but not that the defendant have been served.”  Id.  See also McCall v. Scott, 239 F.3d 808, 813 n.2 (6th Cir. 2001) (“Where there is complete diversity of citizenship . . . inclusion of an unserved resident defendant in the action does not defeat removal under 28 U.S.C. §1441(b).”).

Delgado was also cited in La Russo, where the Second Circuit held:

The argument lacks merit.  Nothing in sections 1441 or 1446 requires a removing defendant to have appeared in the state court proceeding prior to removal.  Nor is there merit in [plaintiff’s] claim that removal was improper because [a defendant] was not served.  Service of process upon a removing defendant is not a prerequisite to removal.

747 F.3d at 97 (citing not only Delgado, but also City of Ann Arbor Employees’ Retirement System v. Gecht, 2007 WL 760568, at *9 (N.D. Cal. March 9, 2007) – a modern pre-service removal case rejecting the “absurd results” argument).

Delgado was also cited in Novak, which is an even more powerful embrace of pre-service removal.  First, the First Circuit stated:

[W]e think it is clear that a defendant generally need not wait until formal receipt of service to remove.  There is no indication that . . . Congress intended to prohibit a defendant from filing a notice of removal before having been formally served

7893 F.3d at 912. A few pages later, Novak held:

[We find] no indication that a defendant was also prohibited from filing a notice of removal before service. We read the statute to contemplate otherwise.  Our interpretation thus aligns with the decisions of other federal courts that have considered this question. . . .  As far as we can tell, every one has concluded that formal service is not generally required before a defendant may file a notice of removal.  And, because Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change, we find it informative that Congress made no effort to cast aside this clear consensus among federal courts when it amended §1446 in 2011 without making any substantive change to subsection (b)(1)

Id. at 914 (citations and quotation marks omitted).  In addition to Delgado and LaRusso, Novak added Whitehurst v. Wal-Mart, 306 F. Appx. 446, 448 (11th Cir. 2008) (“nothing in the removal statute, or any other legal provision, requires that a defendant be served with the complaint before filing a notice of removal”), and Sutler v. Redland Insurance Co., 2012 WL 5240124, at *2 (D. Mass. Oct. 24, 2012), another district court case recognizing pre-service removal.  With Court of Appeals decisions now breaking in our favor, we can start trying to change the minds of district courts that have previously gone the other way.

Also, since our 2011 post − although not in a pre-service removal situation − the Seventh Circuit in Morris v. Nuzzo, 718 F.3d 660 (7th Cir. 2013), helpfully noted that the “properly joined and served” language in §1446(b) creates “a service-based exception to the forum defendant rule, meaning that a properly served out-of-state defendant will not be prevented from removing a case when the plaintiff has named but not yet served a resident defendant.”  Id. at 670 n. 3.

As far as the district courts go, here is what we now have – in addition to what we found back in our 2011 post (we did miss some back then, which we’re backfilling now).  As always, we do not do the other side’s research for them, so what follows are all cases allowing pre-service removal – except for those cases we listed back in 2011:

Alabama

Seong Ho Hwang v. Gladden, 2016 WL 9334726, at *5-7 (M.D. Ala. Dec. 21, 2016); Sasser v. Florida Pond Trucking, L.L.C., 2016 WL 3774125, at *4-5 (Mag. M.D. Ala. June 24, 2016), adopted, 2016 WL 3769754 (M.D. Ala. July 14, 2016); Pathmanathan v. Jackson National Life Insurance Co., 2015 WL 4605757, at *3-5 (M.D. Ala. July 30, 2015); Goodwin v. Reynolds, 2012 WL 4732215, at *3-6 (N.D. Ala. Sept. 28, 2012), aff’d on other grounds, 757 F.3d 1216 (11th Cir. 2014); Lemley v. Midwest Automation, Inc., 2009 WL 1211382, at *1 & n.2 (S.D. Ala. May 1, 2009).

Alaska

Seeds v. ERA Alaska, 2013 WL 11311389, at *3 (D. Alaska Nov. 4, 2013).

California

Saratoga Advantage Trust Technology & Communications Portfolio v. Marvell Technology Group, Ltd., 2015 WL 9269166, at *2 (N.D. Cal. Dec. 21, 2015); Sherman v. Haynes & Boone, 2014 WL 4211118, at *1 (N.D. Cal. Aug. 22, 2014); Wilder v. Bank of America, N.A., 2014 WL 12591934, at *4 (C.D. Cal. June 30, 2014); Davis v. Hoffmann-La Roche, 2014 WL 12647769, at *2 (Mag. N.D. Cal. Jan. 14, 2014), adopted, 2014 WL 12647768 (N.D. Cal. Jan. 31, 2014); Fontalvo v. Sikorsky Aircraft Corp., 2013 WL 3197071, at *9-10 (S.D. Cal. June 20, 2013); Regal Stone Ltd. v. Longs Drug Stores California, L.L.C., 881 F. Supp.2d 1123, 1127-29 (N.D. Cal. 2012); May v. Haas, 2012 WL 4961235, at *2-2 (E.D. Cal. Oct. 16, 2012); Christison v. Biogen Idec, Inc., 2011 WL 13153242, at *1 (N.D. Cal. Nov. 14, 2011); Cucci v. Edwards, 510 F. Supp.2d 479, 482-84 (C.D. Cal. 2007); Waldon v. Novartis Pharmaceuticals Corp., 2007 WL 1747128, at *2-3 (N.D. Cal. June 18, 2007); City of Ann Arbor Employee’s Retirement System v. Gecht, 2007 WL 760568, at *8-9 (N.D. Cal. March 9, 2007).

Delaware

Young v. Bristol-Myers Squibb Co., 2017 WL 2774735, at *2 (D. Del. June 27, 2017); Munchel v. Wyeth LLC, 2012 WL 4050072, at *3-4 (D. Del. Sept. 11, 2012); Hutchins v. Bayer Corp., 2009 WL 192468, at *10-11 (Mag. D. Del. Jan. 23, 2009).

District of Columbia

Middlebrooks v. Godwin Corp., 279 F.R.D. 8, 11-12 (D.D.C. 2011).

Florida

Bergmann v. State Farm Mutual Automobile Insurance Co., 2016 WL 9414108, at *2 (N.D. Fla. Dec. 28, 2016); ViSalus, Inc. v. Then, 2013 WL 3682239, at *3 (M.D. Fla. July 12, 2013); Visalus, Inc. v. Knox, 2013 WL 3462176, at *1-2 (M.D. Fla. July 9, 2013); North v. Precision Airmotive Corp., 600 F. Supp.2d 1263, 1268-70 (M.D. Fla. 2009); Valerio v. SmithKline Beecham Corp., 2008 WL 3286976, at *2 (S.D. Fla. Aug. 7, 2008); Bolin v. SmithKline Beecham Corp., 2008 WL 3286973, at *2 (S.D. Fla. Aug. 7, 2008); Masterson v. Apotex, Corp., 2008 WL 2047979, at *2 (S.D. Fla. May 13, 2008).

Georgia

Francis v. Great West Casualty Co., 2018 WL 999679, at *2 (M.D. Ga. Feb. 21, 2018); McClain v. Bank of America Corp., 2013 WL 1399309, at *3 (S.D. Ga. April 5, 2013).

Illinois

Graff v. Leslie Hindman Auctioneers, Inc., 299 F. Supp.3d 928, 934-37 (N.D. Ill. 2017); Selective Insurance Co. v. Target Corp., 2013 WL 12205696, at *1 (N.D. Ill. Dec. 13, 2013); In re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, 2013 WL 656822, at *3-4 (S.D. Ill. Feb. 22, 2013); Massey v. Cassens & Sons, Inc., 2006 WL 381943, at *2-3 (S.D. Ill. Feb. 16, 2006).

Indiana

In re Bridgestone/Firestone, Inc., 184 F. Supp.2d 826, 828 (S.D. Ind. 2002).

Kentucky

United Steel Supply, LLC v. Buller, 2013 WL 3790913, at 1-2 (W.D. Ky. July 19, 2013); Darsie v. Cone, 2010 WL 2923285, at *5 (E.D. Ky. July 22, 2010); Stanley v. Insights Training Group, LLC, 2009 WL 3514590, at *1-2 (W.D. Ky. Oct. 29, 2009).

Louisiana

Lewis-Wallace v. Johnson, 2018 WL 1531921, at *2 (E.D. La. March 29, 2018); Leech v. 3M Co., 278 F. Supp.3d 933, 941-43 (E.D. La. 2017); Sexton v. Exxon Mobil Corp., 2017 WL 6803443, at *2 (Mag. M.D. La. Sept. 15, 2017), adopted, 2018 WL 283259 (M.D. La. Jan. 3, 2018); Mendoza v. JLG Industries, Inc., 2016 WL 6872107, at *2 (E.D. La. Nov. 22, 2016); Gorman v. Schiele, 2016 WL 3583645, at *2-3 (Mag. M.D. La. June 8, 2016), adopted, 2016 WL 3580669 (M.D. La. June 28, 2016); Gorman v. Schiele, 2016 WL 3583640, at *5-6 (Mag. M.D. La. May 20, 2016), adopted, 2016 WL 3580669 (M.D. La. June 28, 2016); Colletti v. Bendix, 2016 WL 770646, at *2 (E.D. La. Feb. 29, 2016); Williams v. Boyd Racing LLC, 2016 WL 236993, at *3 (W.D. La. Jan. 19, 2016); Groves v. Farthing, 2015 WL 3646724, at *4-5 (E.D. La. June 10, 2015); Harvey v. Shelter Insurance Co., 2013 WL 1768658, at *2 (E.D. La. April 24, 2013).

Maryland

Al-Ameri v. Johns Hopkins Hospital, 2015 WL 13738588, at *1-2 (D. Md. June 24, 2015); Moore v. Svehlak, 2013 WL 3683838, at *15 (D. Md. July 11, 2013); Clawson v. FedEx Ground Package System, Inc., 451 F. Supp.2d 731, 736 (D. Md. 2006).

Massachusetts

Sutler v. Redland Insurance Co., 2012 WL 5240124, at *2 (D. Mass. Oct. 24, 2012).

Michigan

Gordon v. Home Loan Center, LLC, 2011 WL 1261179, at *7 (E.D. Mich. March 31, 2011); Revere v. MERS, 2010 WL 1541506, at *2 (E.D. Mich. April 19, 2010).

Mississippi

Holmes v. Lafayette, , 2013 WL 654449, at *1 (N.D. Miss. Feb. 21, 2013); Ott v. Consolidated Freightways Corp., 213 F. Supp.2d 662, 665-66 (S.D. Miss. 2002).

Missouri

Gray v. Monsanto Co., 2018 WL 488935, at *2 (E.D. Mo. Jan. 19, 2018); Travers v. Five Below, Inc., 2017 WL 2813320, at *2-3 (E.D. Mo. June 29, 2017); Johnson v. Emerson Electric Co., 2013 WL 5442752, at *4 (E.D. Mo. Sept. 30, 2013); Taylor v. Cottrell, Inc., 2009 WL 1657427, at *2 (E.D. Mo. June 10, 2009); Brake v. Reser’s Fine Foods, Inc., 2009 WL 213013, at *2-3 (E.D. Mo. Jan. 28, 2009); Johnson v. Precision Airmotive, LLC, 2007 WL 4289656 at *6 (E.D. Mo. Dec. 4, 2007).

Montana

Mahana v. Enerplus Resources U.S.A. Corp., 2012 WL 1947101, at *2-3 (Mag. D. Mont. May 30, 2012), adopted, 2012 WL 4748178, at *1 (D. Mont. Oct. 4, 2012).

New Jersey

In Re Plavix Products Liability & Marketing Litigation, 2014 WL 4954654, at *4-6 (D.N.J. Oct. 1, 2014); Westfield Insurance Co. v. Interline Brands, Inc., 2013 WL 1288194, at *2-4 (D.N.J. March 25, 2013) Poznanovich v. AstraZeneca Pharmaceuticals LP, 2011 WL 6180026, at *3-5 (D.N.J. Dec. 12, 2011); Jaeger v. Schering Corp., 2007 WL 3170125, at *2 (D.N.J. Oct. 25, 2007); Yocham v. Novartis Pharmaceuticals Corp., 2007 WL 2318493 at *3 (D.N.J. Aug. 13, 2007); Frick v. Novartis Pharmaceuticals Corp., 2006 WL 454360, at *3 (D.N.J. Feb. 23, 2006).

New York

Cheung v. Bristol-Myers Squibb Co., 282 F. Supp.3d 638, 643-44 (S.D.N.Y. 2017); Petit v. Bristol-Myers Squibb Co., 2012 WL 11893525, at *1-2 (S.D.N.Y. March 23, 2012); Stop & Shop Supermarket Company LLC v. Goldsmith, 2011 WL 1236121, at *6 (S.D.N.Y. March 31, 2011); Deveer v. Gov’t Employees Insurance Co., 2008 WL 4443260, at *4 (E.D.N.Y. Sept. 26, 2008); In re Fosamax Products Liability Litigation, 2008 WL 2940560, at *2, 5 (S.D.N.Y. July 29, 2008).

Oklahoma

Howard v. Crossland Construction Co., 2018 WL 2463099, at *2 (N.D. Okla. June 1, 2018); Magallan v. Zurich American Insurance Co., 228 F. Supp.3d 1257, 1260-62 (N.D. Okla. 2017).

Pennsylvania

Rehmeyer v. Peake Plastics Corp., 2016 WL 7375027, at *3 (E.D. Pa. Dec. 20, 2016); Figured v. Davies, 2016 WL 3148392, at *3 (M.D. Pa. June 2, 2016); Parker Hannifin Corp. v. Federal Insurance Co., 23 F. Supp. 3d 588, 594 (W.D. Pa. 2014); Hutton v. KDM Transport, Inc., 2014 WL 3353237, at *4 (E.D. Pa. July 9, 2014); Valido-Shade v. Wyeth, LLC,, 875 F. Supp.2d 474, 477-78 (E.D. Pa. 2012), summarily aff’d, No. 14-4608 (3d Cir. April 29, 2015); Zokaites Properties, LP v. La Mesa Racing, LLC, 2012 WL 3144127, at *17 (W.D. Pa. Aug. 1, 2012); Banks v. Kmart Corp., 2012 WL 707025, at *2 (E.D. Pa. March 6, 2012); Boyer v. Wyeth Pharmaceuticals, Inc., 2012 WL 1449246, at *2 (E.D. Pa. April 26, 2011); Copley v. Wyeth, Inc., 2009 WL 1089663, at *3 (E.D. Pa. April 22, 2009); Vanderwerf v. Glaxosmithkline, PLC, 2005 WL 6151369, at *1 (E.D. Pa. May 5, 2005).

South Carolina

Fisher v. Pelstring, 2009 WL 10664813, at *2-4 (D.S.C. Sept. 29, 2009).

Tennessee

Linder v. Medtronic, Inc., 2013 WL 5486770, at *1-2 (W.D. Tenn. Sept. 30, 2013).

Texas

Cadena v. ASI Lloyds, 2018 WL 1904839, at *3 (Mag. W.D. Tex. Jan. 5, 2018), adopted, 2018 WL 1899750 (W.D. Tex. Feb. 13, 2018); Doe v. Geo Group, Inc., 2016 WL 3004675, at *3 (W.D. Tex. May 24, 2016); Reynolds v. Personal Representative of the Estate of Johnson, 139 F. Supp.3d 838, 841-43 (W.D. Tex. 2015); Breitweiser v. Chesapeake Energy Corp., 2015 WL 6322625, at *4-7 (N.D. Tex. Oct. 20, 2015); Rios v. Cooper Tire & Rubber Co., 2014 WL 12613385, at *3 (E.D. Tex. March 26, 2014); Carrs v. AVCO Corp., 2012 WL 1945629, at *1-3 (N.D. Tex. May 30, 2012).

West Virginia

Bloom v. Library Corp., 112 F. Supp.3d 498, 506 (N.D.W. Va. 2015); Konikowski v. Wheeling Island Gaming, Inc., 2012 WL 5378252, at *4 (N.D.W. Va. Oct. 31, 2012); Vitatoe v. Mylan Pharmaceuticals, Inc., 2008 WL 3540462, at *2-5 (N.D.W. Va. Aug. 13, 2008).

*          *          *          *

Finally, while not doing the plaintiffs’ research for them, we can safely state, after reading the “absurd result” cases, that the most dangerous form of pre-service removal is by a forum defendant alone, or equivalently, in a case where only forum defendants are sued.  That’s widely seen as a direct slap at the forum defendant rule.  The next most dangerous removals are those taken by forum defendants in cases where there are also non-resident defendants.  The most sympathetic pre-service removal scenario is when the removal is initiated by a non-resident defendant – the type of party that diversity jurisdiction was originally intended to protect.  When defendants have a choice, therefore, it would be best to let the non-resident defendant carry the flag in pre-service removal cases.

One can also hope that current trends in personal jurisdiction might result in dismissal in cases where defendants previously sought to rely upon pre-service removal, since jurisdiction over one affiliated, but separate, “forum defendant” corporation no longer translates into jurisdiction over other corporate defendants.  If, as occurs often in mass tort cases, the plaintiff is also a non-resident of the jurisdiction where suit is brought, then the plaintiff may well not be able to obtain jurisdiction over the non-resident corporate defendant.

For at least forty years we’ve been hearing that soccer is going to supplant baseball, basketball, or football among America’s top three sports.  It hasn’t happened.  Maybe we heirs of Washington, Jefferson, Ruth, Rice, and Chamberlain have limited enthusiasm for one-nil scores and players diving and mimicking death throes in a cheap effort to extract a penalty kick.


Meanwhile, we have seen boxing subside in the country’s consciousness, bullied out of the way by mixed martial arts (MMA). It’s hard to believe one of those M’s does not stand for mayhem.  Forget about the Marquis of Queensbury’s niceties.  In MMA, the contestants are free to kick, choke, and elbow each other.  Hit a man when he’s down?  That’s not forbidden in MMA. Nope, that’s when the action is just getting started.  Pretty much anything goes in MMA.  
But you cannot use anabolic steroids.  If you test positive, you get suspended.  Rules are rules.  

The plaintiff in In re Lyman Good Dietary Supplements Litigation, 2018 U.S. Dist. LEXIS 131668 (SDNY Aug. 6, 2018), was an MMA fighter who was suspended because he tested positive for a banned substance.  The court employs the short-hand reference “andro” for the banned substance, and so shall we.  The plaintiff claimed that he had unknowingly ingested andro that was present in two dietary supplements that had been labeled to be free of any banned substances. The plaintiff alleged that the manufacturers and sellers of the dietary supplements promised that the products were “safe,” “without the use of banned substances,” “banned substance free,” and in compliance with “strict quality assurance procedures.”  The presence of andro broke such promises, and the plaintiff’s career had suffered a serious bruise. The plaintiff sued the manufacturers, high ranking executives at the manufacturers, and the retailer. The causes of action were interesting, including some you’d expect (breach of warranties, fraud, deceptive practices, false advertising, negligence, and strict liability) and some you wouldn’t (intentional infliction of emotional distress, assault and battery).  The defendants moved to dismiss and ended up winning more than they lost.

The court dismissed the claims for fraud, assault and battery, and intentional infliction of emotional distress.  Fraud claims are subject to heightened pleading requirements, which the complaint didn’t come within a puncher’s chance of satisfying. All we get are general allegations of fraudulent intent, along with generalized motive to earn profits.  That isn’t nearly enough.  The court applied a rear naked choke to the fraud claim and counted it out.  The assault and battery claim was a wild swing and miss.  The plaintiff’s theory was that putting a substance in someone’s body without consent is battery, but there was no case support for that, plus the plaintiff never alleged the requisite intention to inflict injury.  Here comes a reverse guillotine, and watch the court slice off the assault and battery claims.  Lack of intent is also what doomed the claim for intentional (or reckless) infliction of emotional distress.  The court also could identify no alleged outrageous conduct that went “beyond all possible bounds of decency.”  (To be sure, when one is dealing with MMA, it might seem difficult to meet that standard.) 

The court dismissed the claims against the executives, both on the merits and for want of personal jurisdiction.  Suing executives is fairly rare, and there are reasons for that.  Piercing the corporate veil requires a showing that the executives exercised compete domination and disregarded corporate formalities, including use of corporate funds for personal purposes.  At most, the complaint alleged that the individual defendants were high-level officers with wide-ranging authority, but an officer or director is not personally liable for the torts of a corporation merely by reason of occupying an important office.  The complaint utterly failed to allege that the executives used corporate domination to perpetrate a fraud.  In any event, there was no personal jurisdiction over the individuals.  They all had general authority over their corporations, but were not the primary drivers of the particular transactions in New York that gave rise to the litigation.  Hello sleeper hold, and good-bye claims against the individual defendants.  

The retailer prevailed on most of its motions to dismiss.  The claims for implied warranty of fitness for particular purpose, express warranty, and false advertising were carried out of the ring, but the claim of implied warranty of merchantability emerged unscathed.   The only express warranty by the retailer listed in the complaint was a statement in its 10-K annual report that the company used quality control procedures and that it refused to sell products that did not comply with law or were unsafe.  Those representations are pretty general, and the plaintiff did not even claim to have read them or relied upon them prior to purchase.  Nor did the annual report constitute a form of advertisement.  The court granted the plaintiff leave to amend the claim for implied warranty of fitness for particular purpose because, even though the complaint was bereft of any assertions that the plaintiff and the store had any conversations about how the plaintiff would use the supplements to prepare for MMA combat, the plaintiff wanted to add six paragraphs alleging precisely such conversations.  If such conversations did take place, it would not be “outside the realm of reasonable knowledge” that professional competitions require drug testing.   Thus, the particular purpose warranty claim might live to fight again.

The opinion in Lyman Good is solid and clear.  It goes through the different causes of action and defendants one-by one, jab by jab.  It reminds us that MMA is not the only place where rules are rules.

Remember the days when saying things like no cutting, no backsies, no do-overs were the laws you lived by. Or when “calling” something actually gave you priority. When invoked, these rules of the playground were difficult to challenge. And if challenged, the rule-maker always had the option of the comeback position “times infinity.” Now you could try the “times infinity plus one,” but you risked being called out for shenanigans on that. Simpler times? Perhaps. But debates over hierarchy and convention did occur. Take for example, the classic case of Harry v. Lloyd and the question of whether you are permitted to triple stamp and double stamp. While that dispute may have gone unresolved, the judge in In re Bair Hugger Forced Air Warning Devices Prods. Liab. Litig., 2018 U.S. Dist. LEXIS 133061 (D. Minn. Jul. 25, 2018) had no problem relying on the no take backs rule when it came to plaintiffs’ Lexecon waivers.

In case anyone needs a quick reminder, Lexecon refers to the decision in Lexecon v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998) in which the Supreme Court held that an MDL court could not hold the trial of a transferred case without the consent of the parties. Leading to the birth of the Lexecon waiver.

As we often do when reviewing a new case, we take a look back on the blog to see if we’ve dealt with the topic before. Certainly we’ve shared our thoughts on Lexecon waivers several times. See here, here, and here.  But, we think the issue of retracting a Lexecon waiver is an issue of first impression for us. In fact, the Bair Hugger opinion notes that there is not much precedent on the issue. So, we decided to look at the case law ourselves.

It appears that the first time the question of retracting a Lexecon waiver was addressed was in In re Fosamax Prods. Liab. Litig., 815 F. Supp. 2d 649 (S.D.N.Y. 2011), upholding on reconsideration 2011 WL 1584584 (S.D.N.Y. Apr. 27, 2011). In that MDL, the court ordered the parties to select 25 cases that would be worked up and create the pool from which bellwether trial cases would be selected. One of the conditions of selection was that the parties would execute Lexecon waivers. Id. at 650. After bellwether trials had started, one plaintiff sought to withdraw her waiver on the grounds that her husband was too ill to attend trial in New York (they resided in Alabama) and citing the Americans with Disabilities Act (“ADA”).

In deciding what standard to apply to a request to retract a Lexecon waiver, the court found

The Lexecon waivers at issue here, on which both parties have relied during the discovery and bellwether selection phases of the Fosamax MDL, reflect plaintiffs’ and defendant’s consent to trial before this Court, and are analogous to a stipulation of fact or a stipulation to proceed for trial before the court without a jury.

In re Fosamax, 2011 WL 1584584 at *2. Because one party cannot unilaterally dissolve a stipulation supported by sufficient consideration, the waiver could only be retracted “upon a showing of good cause such as fraud, collusion, mistake or duress” or if the waiver was unconscionable, contrary to public policy, or ambiguous. In re Fosamax, 815 F. Supp. 2d at 653. The court concluded that the waivers were valid stipulations because they were given in exchange for permission to conduct discovery before remand and they were unambiguous. Id. at 654. Plaintiff failed to demonstrate good cause because her case was filed in the Middle District of Tennessee which is where it would be remanded for trial if she was relieved of her Lexecon waiver. Plaintiff’s argument that her husband couldn’t travel for trial didn’t hold up since plaintiffs had since moved to Alabama. Both the transferee and transferor courts were not near her home.

The next court to address the issue was In re Zimmer Durom Hip Cup Prods. Liab. Litig., 2015 WL 5164772 (D.N.J. Sept. 1, 2015). Here, 8 cases were selected as bellwethers and 2 were selected as the initial trial cases. Id. at *1. Counsel for plaintiffs in the first 2 trial cases agreed to waive Lexecon. Shortly after that, a Joint Case Management Order was entered stating that “Plaintiffs and Defendants waive their respective rights under [Lexecon]” and “consent to trial of the cases in the MDL by this Court.” Id. Over 4 months later, Plaintiffs’ Liaison Counsel raised for the first time their position that the language in the order did not cover all plaintiffs in the MDL. Id. at *2. Another 4 months passed before plaintiffs sought to formally retract the waivers.

The court found the language in the joint order was unambiguous and applied to all plaintiffs in the MDL. Id. at *3. Having found a valid waiver, the court had to consider whether it could be rescinded and whether Plaintiffs’ Liaison counsel’s agreement bound all plaintiffs in the MDL. The court examined both the standard utilized in In re Fosamax and the Third Circuit standard for modifying stipulations – the avoidance of manifest injustice. Id. at *4. Plaintiffs argued that the waiver on behalf of all plaintiffs was a mistake. The court found plaintiffs’ failure to take any steps to correct the mistake for months after the order was entered undermined their argument. Moreover, carelessness is not good cause. Id. And, the parties had relied on the waiver in the bellwether selection process. While the waiver could not be retracted and extended beyond the 2 initial trial cases, the court held that it only applied to plaintiffs represented by Plaintiffs’ Liaison Counsel, not every plaintiff in the MDL. Id. at *5 (acknowledging the liaison counsel had authority to enter into stipulations for all MDL plaintiffs, but that “such action would necessitate additional documentation and discussion with” individual plaintiffs’ counsel that did not occur in this instance).

That sets the stage of Bair Hugger and application of the good cause standard to requests to retract Lexecon waivers. Like in the prior cases, the litigation was at the bellwether discovery and trial phase. Eight plaintiffs waived and became the bellwether pool. After the first bellwether trial, which resulted in a defense verdict, the remaining 7 cases moved to retract their Lexecon waivers. In re Bair Hugger, 2018 U.S. Dist. LEXIS 133061 at *9. Resorting to playground rules – shenanigans. The reasons given by plaintiffs were (i) the court’s ruling applying the law of plaintiff’s state of residence rather than Minnesota law which plaintiffs contended made a “material difference in the posture of the case,” (ii) lack of consideration, (iii) no inconvenience to the parties or the court, and (iv) defendants never waived. Id. at *11.

The court quickly dismissed each argument. As to choice of law, plaintiffs provided no grounds for reasonably expecting a contrary ruling and

[r]egardless, it is unlikely that a “material difference in the posture of the case” even amounts to “good cause” for retraction. If it did, any MDL party who disliked a court’s rulings could simply issue a Lexecon retraction and undo months of work performed in reliance on the Lexecon waiver. The prospect of these unilateral retractions would undermine the bellwether trial process.

Id. at *11-12. So much for plaintiffs’ poor loser, I’m taking my toys and going home argument.

As to plaintiffs’ remaining arguments: There was consideration for the waiver. Plaintiffs got to move “to the front of the line to try their cases.” Id. at *12. The parties and the court would be inconvenienced as “changing course now would waste the resources expended in advancing the current list of Bellwethers and would delay the more than 4,500 cases in this MDL by many months.” Id. at *12-13. And, it was unclear whether defendants even needed to waive Lexecon as they reside in Minnesota, but if they did, their agreement to try the cases in Minnesota was a waiver. Id.

So, the Lexecon waivers hold up in Bair Hugger. It is not a robust body of law, but the cases at least seem in agreement on treating Lexecon waivers as pre-trial stipulations bound by the jurisdiction’s applicable law on rescinding or modifying such agreements. Whether that be good cause or manifest injustice, it’s safe to say “I take it back” is as valid an argument as “I’m rubber and your glue. . .”

Nothing emphasizes the impermanence of just about everything as Hawaii – where Bexis is right now on vacation.  On Kauai, Bexis had a boat drop scheduled to Kalalalu Beach, for three days on the Kalalau Trail, all permits obtained.  But several months ago, the heavens opened, and the Na Pali Coast received over an inch of rain an hour for more than a day.  A large number of avalanches, floods, and sinkholes ensued.  The road washed out in numerous places, as (more importantly) did people’s homes – so the best trail in Kauai is closed indefinitely.

That’s not even the worst of it. At least there are plans (on Hawaiian time) to reopen both the road and the trail.  But our favorite resort on the Big Island has been closed for several years.  The Kona Village Resort was damaged by the same 2011 tsunami caused all that horrible destruction in Japan.  For almost a decade, it has been abandoned on the shore at Kaupulehu tied up in layers of debt and litigation.  Although now there’s a rumor that it might reopen in 2019 – we’ve seen those before, so we’ll believe it when we see it.

But even that’s not the worst of it.  Our last trip to the Big Island, we swam in some lovely naturally heated tide pools.  We won’t be able to do that again.  They’re now covered by hundreds of feet of lava from the “Fissure 8” eruption that started on May 2, 2018.  In a geologically active area such as Hawaii, even the land itself is impermanent.

Impermanence is also a legal phenomenon.   Long-time readers of the blog may recall a series of posts from the Mark Herrmann era describing how the two of us fought an ultimately losing battle during the American Law Institute’s Aggregate Litigation Principles Project to keep the ALI from endorsing the practice of “cy pres.”  Not-so-long-time readers might be wondering, “what the heck is that?”  Here’s our description of cy pres from an earlier post:

For those of you new to all this, “cy pres” is the name given to schemes – virtually exclusively in class actions – whereby courts take money supposedly belonging to class members that class counsel can’t or won’t (due to expense) identify and give it to non-class members (mostly charities) who were not damaged in any way by the claimed conduct of the defendants. We know of no legal power invested in the judiciary to take money away from supposedly injured litigants and give it to persons who are essentially bystanders.  There are methods of doing this.  When done privately, it’s called “theft.”  Publicly, it would involve the powers to tax, appropriate, and levy fines, which belong to branches of government other than the judiciary.  We further believe that use of cy pres to facilitate class actions violates the Rules Enabling Act, since procedural rules (such as Rule 23) can’t change the substantive law.  There’s not much more “substantive” than taking money supposedly belonging to injured litigants and giving it to non-parties.

The result was Principles of Aggregate Litigation §3.07 (ALI 2010), entitled “Cy Pres Settlements,” which seemed to enshrine into black-letter law the doctrine that it’s OK to give away purported class members’ money to whatever charity the judge and the lawyers decide to favor.

We kept up a rear-guard battle against cy pres, however, helping draft a proposal for Lawyers for Civil Justice to amend Fed. R. Civ. P. 23 to abolish cy pres. That was a long shot, since the very judges whose power cy pres augmented would have to approve such a change.  Also, were heartened by Chief Justice Roberts’ concurring opinion in Marek v. Lane, 134 S.Ct. 8 (2013), suggesting that the Supreme Court might also have concerns about this peculiar institution.

Then, last May, the Supreme Court granted certiorari in a case we had previously described as a “poster child” for cy pres abuse.  In re Google Referrer Header Privacy Litigation, 869 F.3d 737 (9th Cir. 2017).  This appeal, now called Frank v. Gaos, No. 17-961, 138 S. Ct. 169 (April 30, 2018), features just about everything we don’t like about cy pres:

  • Excessive counsel fees – class counsel stands to walk away with fully 38% of the settlement as fees.  869 F.3d at 747.
  • Lack of classwide recovery – the court declared the entire settlement “non-distributable” because, even without opposition, neither the class members nor their damages could be determined.  Id. at 742.
  • Excessive cy pres – nothing is more excessive than 100% − six uninjured charities took 100% of what class counsel left behind, and the 129 million supposedly injured class members took nothing.  Id. at 743.
  • Rampant conflict of interest − Three of the charities were law schools – and they all had ties to counsel in the case.
  • Litigation industry self-perpetuation – cy pres recipients were expected solicit more lawsuits by “educat[ing]” the public and “publiciz[ing]” privacy issues.  Id. at 746-47.

By now, with briefing completed, we thought we’d take a look at the arguments that are being made to the Supreme Court in opposition to the use of cy pres class action settlements.

First and foremost is the petitioner’s brief, filed by friend-of-the-blog Ted Frank.  As we expected, he pulls no punches about the impropriety of a procedure that we’ve said amounts to judicially sanctioned theft.  The brief starts off by describing cy pres as “one of the most notorious devices used to create the illusion of compensation.”  Id. at 2.  “All the money went to class counsel and to favored nonprofit organizations affiliated with class counsel and the defendant.”  Id.  Petitioner seeks (pp. 15-16) five cy pres-related holdings from the Court:

  1. A settlement that compromises a class’s claims, but seeks to pay class counsel an amount disproportionate with the actual and direct benefit to the class, is not fair or reasonable under Rule 23(e).

Here, the fundamental fact of Due Process is, that “settlement-fund proceeds, having been generated by the value of the class members’ claims, belong solely to the class members.”  Neither courts nor counsel can “divert that property to third parties.”  Id. at 17.

All that courts need to accomplish this result is to apply a simple principle to the Rule 23 fairness hearing: regardless of whether a settlement is “adequate,” it is not fair or reasonable if the settlement pays attorneys’ fees that are disproportionate to the actual and direct benefit realized by the class compromising its claims.

Id. at 21.  Cy pres provisions are a means to “structure the deal to obfuscate the true [a]llocation . . . by larding the [settlement] analysis with hypothetical class recoveries and amorphous ‘benefits’ that ultimately have little value to the class.”  Id. at 23.

First, basing a fee award solely on the “size of the cy pres fund” allows “class attorneys . . . to reap exorbitant fees regardless of whether the absent class members are adequately compensated.”  Id. at 28.  Second, cy pres is “an enticing settlement feature for lawyers interested in promoting their own personal political or charitable preferences.”  Id. at 29.  The brief contains several examples of such conduct.  Id. at 29-30.  Second, with “no resistance from class attorneys,” defendants can even use cy to “benefit themselves” by directing funds to their preferred charities.  Id. at 30.  Again, several concrete examples are discussed.  Id. at 30-33.  Third, cy pres awards to non-parties “fail to redress class members’ alleged injuries for which they are waiving their rights.”  Id. at 33.  Here, another of our primary gripes comes into play.  “Rule 23 cannot operate to ‘abridge, enlarge or modify any substantive right,’” id., but altering who owns what is as “substantive” an application as we can think of.  More examples.  Id. at 33-35.  Fourth, cy pres “permit[s] otherwise unthinkable class certifications” and “induce[s] plaintiffs to pursue doubtful class claims” because they can settle without proving causation or damages. Id. at 35.

[C]y pres incentivizes both the bringing of otherwise unprofitable “strike suits” that would be infeasible to litigate due to unmanageability or questionable merit and their settlement on terms mutually agreeable to class counsel and the defendant.

Id.  A “class action that yields fees for class counsel and nothing for the class − is no better than a racket.” Id. at 36 (quoting In re Walgreen Co. Stockholder Litigation, 832 F.3d 718, 724 (7th Cir. 2016)).  Fifth, cy pres results in subsidizing the “political . . . preferences of class counsel or the defendant without regard to the views of “a substantial proportion, or even a majority, of class members.

Requiring class members to surrender their rights to subsidize speech by a third party that he or she does not wish to support raises serious First Amendment concerns.

Id. at 36.  If a union can’t even collect dues from its own members because of their First Amendment rights, see Janus v. AFSME, Council 31, 138 S. Ct. 2448, 2478 (2018) (“draw[ing] the line at . . .requir[ing] all employees to support the union irrespective of whether they share its views”), how can a court impose a charitable donation on unknown class members?  Sixth, cy pres “often create the appearance or reality of judicial conflicts of interest.”  Id. at 37.  “[A]n open-ended cy pres doctrine is fundamentally incompatible with the judicial role” of “providing relief to claimants . . . who have suffered, or will imminently suffer, actual harm.”  Id. at 38.

Petitioner also argues that all-cy-pres settlements simply cannot be approved under Rule 23:

Any settlement, like this one, that provides no direct benefit to the class, cannot be approved.  “Because the settlement yields fees for class counsel and zero benefits for the class, the class should not have been certified and the settlement should not have been approved.”

Id. at 39 (quoting In re Subway Footlong Sandwich Marketing Litigation, 869 F.3d 551, 557 (7th Cir. 2017)).  We would go further, since we don’t think any cy pres settlements should be approved.  Indeed, the existence of a cy pres component is an admission that, even with no legal opposition, plaintiffs are unable to prove causation or damages.  Such suits should not be brought.  We have criminal prosecutors and other governmental entities to handle such cases.  “[N]early every consumer class-action settlement leaves over 90%, and often over 99%, of the class uncompensated.”  Id. at 45.  We don’t need civil lawyers who are perversely incentivized through cy pres to do as little work as they can possibly get away with.

  1. Cy pres awards are inappropriate in class-action settlements where it is feasible to distribute settlement proceeds to class members.  Whether it is feasible to distribute settlement proceeds is determined by whether such relief can be distributed to some identifiable class members . . .  and not whether the proceeds could be distributed to every potential class member.

Plaintiffs, who have resolutely opposed any ascertainability prerequisite to class certification, do a backflip when it comes to cy pres and settlement.  “Under the standard set by the Ninth Circuit, it is not considered ‘feasible’ to provide any compensation to class members when it would be infeasible to compensate all of them.”  Petitioner’s br. at 49 (emphasis original).  This is using ascertainability to prevent compensation of class members.  “[I]t is nearly always feasible to distribute settlement funds to some class members.”  Id. at 50 (emphasis original).  “[C]y pres distribution when distribution to some of the class is possible is ‘contrary to the interests’ of the class.”  Id. at 51 (quoting In re BankAmerica Corp. Securities Litigation, 775 F.3d 1060, 1068 (8th Cir. 2015)).  Using cy pres to take money from any class members when some are identifiable thus violates class counsel’s “fiduciary duty to class members.”  Id. at 50-51.

  1. If a class-action settlement cannot provide direct relief to the class, the settlement class cannot be certified.

Again, we agree, even though we might go further.  If “it is somehow impossible to make any distribution to the class, that simply suggests that it was error to certify this settlement class.”  Petitioner’s br. at 52.

In short, the class action is not “superior to other available methods for fairly and efficiently adjudicating the controversy” because every single class member is worse off than if they opted out and reserved their claims to litigate individually.

Id. at 53.  That’s what a zero-dollar settlement like this one means.  Class members are giving up something and not getting anything.

  1. If cy pres is to be permitted at all, there should be strict restrictions against the payment of money to recipients with any significant current or prior relationship with the parties, attorneys, or judge.

In particular, this argument rejects “distribution of cy pres funds to class counsel’s alma mater instead of the class.”  Petitioner’s br. at 54.  This is just another questionable practice enabled by the creation of a “remedy” that is outside of both the law and the rules, and thus essentially ungoverned.

The better rule is to require settling parties to have the burden to demonstrate that neither the court nor any “party has any significant prior affiliation with the intended recipient that would raise substantial questions about whether the selection of the recipient was made on the merits.”

Id. at 55-56 (quoting – ironically – Principles of Aggregate Litigation §3.07, comment b).  Once again, bright line, prophylactic rules are best.  The potential for conflict of interest is simply too great to allow any cy pres award to an entity with ties to the litigants or to the court.

  1. At a minimum, courts should substantially discount cy pres distributions relative to direct payments to class members for purposes of calculating attorneys’ fees based on a percentage of the recovery.

In one paragraph, petitioner’s final argument is that the “indirect and attenuated” – if any – value of a cy pres settlement to any class member requires that such payments “should at least be heavily discounted in the fee calculation to better align incentives.”  Petitioner’s br. at 56-57.

If even a quarter of these arguments succeed, then cy pres distributions of class action settlements will – quite rightly in our view – be cast into the proverbial dustbin of history.  Perhaps Congress, or a state legislature for a state class action, could create such a remedy, but they haven’t.  Our bottom line is that no authority currently exists to allow courts, with or without the connivance of counsel, to take money belonging to certain persons (here, absent class members) and give that money to other persons (here, lawyer-selected charities) without the express approval of the original owners.

As one might expect, the Frank case also produced a bunch of interesting amicus briefs.  Since we spent much longer than we had expected on Ted’s brief, our rundown of the objector-side amici will be significantly briefer – but we’re providing links so anyone interested can read them in their entirety.

Of greatest interest, of course, is the position taken by the government itself – as to which we find a lot to like:

United States of America

The cy pres question need not be reached because Spokeo casts substantial doubt on whether the class representatives suffered sufficiently significant injury to confer Article III standing.  Brief at 11-15.

Cy pres as used in the trust area is irreconcilable with its use in class-action settlements.  Id. at 16-17.

Cy pres raises serious concerns where class members receive no compensation.  Id. at 18.

Cy pres raises serious concerns about collusion against the interests of absent class members.  Id. at 19-20.

Cy pres raises serious concerns about conflicts of interest by counsel and even courts.  Id. at 20.

Cy pres raises serious concerns about the creation of new, extra-statutory remedies.  Id. at 20-21.

Cy pres is improper unless it redresses the specific injuries of the plaintiff class.  Id. at 22-26.

Cy pres is improper when there is any non-arbitrary way of distribution to class members.  Id. at 26-28.

Cy pres distributions should be discounted, ideally entirely, in calculating attorneys’ fees.  Id. at 28-32.

In a nutshell, here are the highlights of other important amicus curiae briefs in Frank v. Gaos:

State Attorneys General – eighteen of them

Cy pres in consumer class actions diverts money away from injured consumers, aggravating the original problems, and should not be recognized.  Brief at 4-8.

Cy pres settlements circumvent statutory and judicial class action standards in violation of the Rules Enabling Act.  Id. at 8-11.

Once again, the Ninth Circuit is out of line.  Id. at 11-13.

Cy pres-only settlements should be per se invalid.  Id. at 13-16.

Cy pres awards should be disregarded in the calculation of attorneys’ fees.  Id. at 16-20.

Chamber of Commerce of the USA

If class actions were better policed at the front end, by denying class certification to no-injury class actions in the first place, the problems with cy pres settlements would never have arisen.  Brief at 5-11.

Cy pres settlements would not be needed if courts properly enforced Rule 23’s commonality and predominance requirements.  Id. at 11-13.

Injury should not be presumed for purposes of class certification.  Id. at 14-15.

Cy pres settlements are symptomatic of meritless, but expensive, class action litigation.  Id. at 16-18.

Conflicts between class counsel and absent class members are inherent in cy pres settlements.  Id. at 18-22.

If allowed at all, cy pres settlements should be strictly regulated.  Id. at 22-26.

Lawyers for Civil Justice

Cy pres awards are inherently inconsistent with Rule 23’s requirement that settlements be “fair, reasonable, and adequate.”  Brief at 9-10.

Cy pres, as it previously existed in non-adversarial trust law, has nothing to do with adversary class actions.  Id. at 11-14.

Cy pres is an improper exercise of judicial power under Article III of the constitution.  Id. at 14-18;

Cy pres violates the Rules Enabling Act by permitting fines against defendants not recognized by substantive law.  Id. at 18-20.

If otherwise permitted, cy would violate the Due Process rights of absent class members.  Id. at 20-21.

Compelling diverse class members to finance speech by either plaintiff-side or defendant-side advocacy groups violates the First Amendment.  Id. at 21-22.

The existence of a cy pres award indicates that the action itself cannot support class certification.  Id. at 23-24.

Cato Institute & Americans for Prosperity

Cy pres violates the Due Process and First Amendment rights of absent class members whose property is being taken and given to charities for the purpose of plaintiff-side advocacy.  Brief at 4-7.

Constitutional rights could be better protected by requiring opt-in class actions.  Id. at 8-10.

Cy pres inevitably leads to self-dealing and violation of professional ethics by class counsel.  Id. at 12-15.

Class counsel use cy pres to increase personal gain at the expense of absent class members.  Id. at 16-18.

Defendants utilize cy pres to lower settlement costs.  Id. at 18-19.

Cy pres erodes judicial neutrality through conflicts of interest in selecting recipients.  Id. at 19-20.

Zero dollar class actions cannot be “superior” to anything.  Id. at 21-22.

There are always better alternatives to cy pres awards.  Id. at 22-24.

Cy pres is a disguise for parties and courts to lobby for special benefits.  Id. at 24-25.

Once again, the Ninth Circuit is out of line.  Id. at 25-29.

Compelling diverse class members to finance speech by either plaintiff-side or defendant-side advocacy groups violates the First Amendment.  Id. at 29-34.

Manhattan Institute for Policy Research

Unlike cy pres in the trust area, which is legislatively recognized, cy pres in the class action context is not based on any recognized grant of power.  Brief at 7-13.

Cy pres violates the Rules Enabling Act by modifying substantive legal remedies.  Id. at 14-15.

Payments to charities are not a remedy recognized by substantive law.  Id. at 16-21.

Cy pres is only allowable where recognized by substantive law.  Id. at 21-23.

Center for Constitutional Jurisprudence & Atlantic Legal Foundation

A class action that cannot deliver any relief to class members does not present an Article III “case or controversy.”  Brief at 4-6.

Compelling diverse class members to finance speech by either plaintiff-side or defendant-side advocacy groups violates the First Amendment.  Id. at 6-8.

Center for Individual Rights

Compelling diverse class members to finance speech by either plaintiff-side or defendant-side advocacy groups violates the First Amendment.  Brief at 3-6.

Opt-out class actions violate the First Amendment.  Id. at 6-10.

New Jersey Civil Justice Institute

Cy pres converts Rule 23 class actions into a substantive remedial scheme.  Brief at 2-8.

An all-cy pres settlement cannot be “superior” under Rule 23 standards.  Id. at 9-16.

There are a couple of other briefs filed by persons with more narrow interests related to copyrights or internet privacy that we don’t think would be of sufficient interest to our members to bother with.

Finally, in accordance with the parties’ agreed-upon schedule, that appears to have been adopted by the Court, the pro-cy pres forces won’t start filing their briefs until the end of August.  With that schedule, it is quite possible that oral argument will occur before the end of the year.

These days, when the subject turns to victorious Philadelphia sports teams, most people think green, and “fly” and “Philly Special.” But we are not most people.  We live firmly and fondly in the past, 2008 to be exact.  So we relished every moment of our beloved Phillies’ Alumni Weekend this past weekend.  We cheered ourselves hoarse as a beloved former centerfielder, under a one-day contract, “retired as a Phillie.”  (Mahalo, “Flyin’ Hawaiian.”) And we, along with 35,000 of our closest friends, wept as the widow of our 2008 ace spoke to the crowd on the occasion of her late husband’s enshrinement on the Phillies’ “Wall of Fame.”   (R.I.P., “Doc.”)  And finally, as the members of the 2008 World Champion Phillies marched out to be honored, we allowed ourselves to be transported back to the ecstatic aftermath of our closer’s final slider in a perfect save season.  For sure, victory is sweet.

As it has been, six times now, in post-BMS personal jurisdiction decisions out of the Essure litigation.  In Hinton v. Bayer Corp., 2018 WL 3725776 (E.D. Mo. July 27, 2018), ninety-four plaintiffs from thirty different states filed a joint complaint in a Missouri state court, alleging that they were injured by the defendant’s birth control device.  The defendant removed the case to the Eastern District of Missouri on the basis of diversity jurisdiction.  Of the ninety-four plaintiffs, only thirteen were Missouri residents.  Some of the non-Missouri residents were not diverse to the defendant; however, the defendant moved to dismiss and sever the claims of the non-Missouri plaintiffs before the court ruled on subject matter jurisdiction (and remanded for lack of complete diversity).   The plaintiffs moved to stay determination of the motions to dismiss pending determination of subject matter jurisdiction, but the court declined, explaining that “addressing [the defendant’s] challenge to personal jurisdiction over the claims of the non-Missouri plaintiffs presents the more straightforward inquiry” under recent precedent, justifying a decision to deviate from the usual course of deciding subject matter jurisdiction ahead of personal jurisdiction. Hinton, 2018 WL 3725776 at *2.   As the court emphasized, “Remanding this case for lack of complete diversity only to have the case removed again later once the non-Missouri plaintiffs are dismissed would be a waste of judicial resources.  Ruling [on] personal jurisdiction first is in the interests of judicial economy and expeditiousness.” Id. (citation omitted).

And so the court proceeded to address the defendant’s motion to dismiss the claims of the non-Missouri plaintiffs for lack of personal jurisdiction. The defendant conceded that the court had specific jurisdiction over it regarding the thirteen Missouri plaintiffs, but argued that the court did not have general jurisdiction over it and did not have specific jurisdiction over it with regard to the non-Missouri plaintiffs.  The plaintiffs did not argue that the court had general jurisdiction over the defendant; instead, they argued that the court had specific jurisdiction over the defendant with regard to the claims of all of the plaintiffs because the defendant had conducted “a number of clinical trials” in Missouri and had worked on regulatory approval for the product in Missouri, and because “St. Louis was one of eight cities targeted as part of a broader marketing plan to increase sales and revenue.” Id. at *3.

The court explained that, under BMS, specific jurisdiction depends on “an affiliation between the forum and the underlying controversy, principally [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Id. (citation to BMS omitted).  In this case, the plaintiffs did not see marketing in Missouri, did not purchase the product in Missouri, were not prescribed the product in Missouri, did not purchase the product in Missouri, and were not injured by the product in Missouri.  “Furthermore, none of the plaintiffs alleged that she participated in a Missouri clinical study or reviewed or relied on” such studies in deciding to use the product. Id. at *4.  As such, the court held, “Even assuming that discovery would prove exactly what Plaintiffs contend happened in Missouri with respect to . . . marketing and clinical trials, the individual plaintiffs’ claims are too attenuated from those activities to provide specific ‘case-linked’ personal jurisdiction.” Id. (citation omitted).   With no “connection between the forum and the specific claims at issue,” id. (citation to BMS omitted), the court held that it did not have jurisdiction over the claims of the eighty-one non-Missouri plaintiffs and dismissed all of those claims.

And so the defendant hit a figurative home run, expanding its already-prominent role in the elimination of litigation tourism in Missouri. We love this string of decisions, we love BMS, and we will keep you posted as its family of progeny continues to grow.

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

 

The MDL court in the Testosterone Replacement Therapy (“TRT”) litigation involves more than just individual product liability cases. It includes a class action. In particular, a single named plaintiff, Medical Mutual of Ohio (“MMO”), seeks to represent a class of third-party payers (“TPPs”)—entities such as health benefit plans and HMOs—who will claim to have suffered economic damages when they reimbursed payments for medically inappropriate TRT prescriptions. The prescriptions were medically inappropriate, MMO argues, because they were the result of the class’s reliance on misrepresentations about the safety and efficacy of off-label uses for TRT. MMO wants the putative class to get its money back. And more. It wants treble damages and legal fees under RICO (it also asserts state-law negligent misrepresentation claims).

Now, in a class action, sameness is important. As viewed by plaintiffs’ attorneys, sameness is everything. The more sameness, the better. Differences, on the other hand, are deadly. They kill class actions. Accordingly, when a plaintiff files a motion to certify a class, like MMO did here, the briefing relentlessly focuses on sameness. And the defendants, you can be assured, focus on the differences. And then the court decides.

And in this instance, the Court saw a whole lot of differences. Med. Mut. of Ohio v. Abbvie Inc., 2018 WL 3586182 (N.D. Ill. July 26, 2018).

We’ll start with experts. MMO put up an expert to say that TPPs act the same way with regard to drugs listed on their formularies, in particular that TTPs usually make formulary changes “only once they receive notice” from FDA about safety or efficacy concerns. Id. at 11. If this sounds over-simplified and likely not true, it’s because it is. But MMO had an expert give this opinion because, if it were accepted, MMO could then argue that defendant misled the class by hiding data and risks before the FDA issued any notice. The problem for MMO, however, is that plaintiff’s expert didn’t have the data to support this opinion. He just said it:

But an opinion must be connected to the existing data by more than the ipse dixit of the expert. An expert’s opinions may be inadmissible because there is simply too great an analytical gap between the data and the opinion offered. That is the case here.

Id.

The court also rejected this expert’s opinion that the defendants interacted with all TTPs in the same way using “the same common promotional strategies.” Id. at *12. Among other deficiencies, the record showed that the expert reached his opinion before beginning his work. He relied on materials selected and gathered by the plaintiff’s attorneys and allegations in MMO’s complaint, not his own investigation. Id.

Plaintiff also put up a causation and damages expert—the well-traveled Dr. Meredith Rosenthal—who performed a regression analysis to show that the defendants’ alleged misrepresentations damaged all TPPs in the same way. The flaw in the analysis, however, was that it purported to measure the effect of the alleged misrepresentations on doctors and patients. In other words, it focused on direct-to-consumer and physician promotion, not promotion to and contact with the TPPs, the would-be class members asking for their money back. Id. at *8-9. This didn’t work. Proximate causation requirements for RICO claims are stringent. Evidence of anything less than a direct causal connection to the plaintiff’s injury fails. The court found Dr. Rosenthal’s opinion to be irrelevant and simply ignored it. Id. at *10.

The court next set its sights on the “adequacy” requirement of a class action, in particular whether MMO itself could be an adequate class representative. Anything that could subject MMO to unique or unusual defenses—differences from other class members—could render MMO an inadequate class representative. The court found two big problems for MMO. First, MMO appeared to react belatedly and ineffectively to a notice that the FDA was investigating the safety of TRT with regard to heart attack, strokes and death. In particular, MMO did not institute a prior authorization requirement for the reimbursement of TRT prescription payments until four years after the notice, and made a number of admitted missteps along the way. Id. at *14. Second, and maybe related, its formulary management practices did not include an annual clinical evaluation of safety and efficacy of the drugs on its formulary. The court found, with the help of testimony from a defense expert, that these practices did not meet industry standards and could subject MMO to unusual defenses. Id. at *15. The Court held “that MMO is an inadequate class representative and on that basis denies MMO’s motion for class certification.” Id.

Not done there, the court also held that the plaintiff did not meet the predominance requirement of a class action, concluding instead that individual issues will predominate over common questions of law or fact. Id. In other words, there wasn’t enough sameness to dominate the individuality. For instance, MMO could not “show that each TPP actually received defendants’ alleged misrepresentations. Id. at *16. The court found that this was an individualized inquiry, varying by TPP:

Namely, defendants highlight evidence demonstrating that whether a TPP receives sales calls and clinical information from defendants depends on the number of beneficiaries the TPP insures; whether the TPP permits or prohibits meetings with drug manufacturers as a matter of policy; whether the TPP prefers to hear only business information, only clinical information, or both; and whether the TPP adopts formularies without modification from a [pharmacy benefit managers].

Id.

The court rejected MMO’s argument that it should infer that all TTPs received the misrepresentations because “defendants spent millions on promotional efforts aimed at TPPs . . . including standardized promotional materials”—a kind of fraud-in-the-air theory. Id. at *17. Finding ample reason to doubt that the promotional materials were standardized, the court reasoned that “one would need to know what particular representations a TPP received in order to assess whether that TPP was exposed to half-truths.” Id. That’s “TPP-by-TPP proof,” the very antithesis of class treatment. Id.

On reliance, the court held that individualized issues would also predominate over common issues, persuaded by defendants’ evidence that the formulary management process was complex, not standardized:

Defendants point to evidence tending to show that TPPs’ formulary and utilization management decisions are complex and individualized. Some TPPs do not meet with drug manufacturers at all and are thus unlikely to rely on information from them. Some TPPs use PBMs but customize the PBMs’ standardized formularies. Other TPPs, including MMO for much of the class period, adopt their PBMs’ formularies without modification but make their own utilization management decisions.

Id. at *18.

In short, the court found a lot of reasons to deny class certification. You can find even more in the court’s opinion, which we recommend for your reading list. It is a template for how to defend against these type of TPP class actions.

The whole business of discovery in civil litigation is dreary and depressing.  In a mass tort, a defendant can rack up defense verdicts yet still incur discovery costs that exceed the damage amounts sustained by defendants found liable in other torts. Little wonder that the mass of defense lawyers in mass torts lead lives of quiet desperation. At least, that’s true for the poor drudges who must review documents for responsiveness and privilege.

 

We’ve been thinking about Henry David Thoreau.  An anniversary is almost here.  Walden was published on August 9, 1854.  Thoreau built a cabin near the shore of Walden Pond and began living in it on July 4, 1845, “alone in the woods, a mile from any neighbor.” It was a declaration of independence.  He lived there for two years, two months, and two days.  The book took eight years to write, and there is much more artifice in it than straight nature reporting.  Whatever you think about American exceptionalism, Thoreau exemplified many traits that, for better or worse, seem at the core of the American ethos:  embrace of self-reliance and ecological preservation, and stand-offishness with respect to politics and society.  We wondered whether Thoreau wrote anything about discovery.   Our well-worn volume of Walden contains an index, but we found no reference to “discovery.”  Nor was there a word about document requests.  The best we could do was the famous passage in the “What I Lived For” chapter that explains the project at hand:  “I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.” There’s that word “discover,” but we suspect Henry had something else on his mind.

 

Thoreau never had the misfortune to encounter Federal Rules of Civil Procedure 26, etc.  Had he, he might have drafted an interrogatory about discovery:  “whether it is necessary that it be as bad as it is, whether it cannot be improved as well as not.” Most of what we do in civil litigation is discovery, and most of that is a waste of time.  Such time wasting would have mightily irked Henry:  “As if you could kill time without injuring eternity.”  From Thoreau’s revelatory prose we now turn to a judicial opinion that makes those of us who spend time opposing discovery want to retreat to the woods.
Today’s case is In re: Genentech Herceptin (Trastuzumab) Marketing and Sales Practices Litigation, 2017 WL 9939631 (N.D. Okla. May 8, 2018). The defendants wanted to argue preemption, and the plaintiffs engaged in what has become the typical response of insisting on wide-ranging discovery to test the preemption defense.  “Wide-ranging” is an understatement.  From the court’s description, it seems that the plaintiffs wanted pretty much everything.  The defendants countered with something less than everything.  And so we end up with cross discovery motions.  The plaintiffs filed a motion to compel while the defendants filed a motion for a protective order regarding all unanswered preemption discovery requested by the plaintiffs.  The court granted every one of the plaintiffs’ motions to compel discovery responses, and denied every one of the defendants’ motions for protective order.  The opinion is a sadness machine.  That machine is fueled by two all-too-common judicial impulses: (1) letting plaintiffs conduct any discovery they want, and (2) hostility to the preemption defense.  Why, it is almost as if the court was unhappy with the defendants for even raising the preemption defense.
At least the court was convinced that the preemption issue should be decided prior to class or merits discovery.  But the court entertained what it called “a more realistic view of the discovery required for resolution of the preemption motion.” “Realistic” turns out to mean exceedingly broad.  According to the court, the defendants’ preemption motion “relies upon evidence regarding its communications with FDA and its manufacturing process, both of which Plaintiffs are entitled to explore before responding to the motion.”  Consequently, the “preemption defense opened doors in discovery that may well have stayed closed if the only issue was breach of a state-law warranty.”  Open doors are bad.  They let in all sorts of unwanted things – traffic noises, heat, peddlers and, bugs, to name a few.  And bad ideas.
Here, the court opened the door very wide indeed.  For example, the plaintiffs wanted all correspondence between the manufacturer and the FDA relating to product labeling – both pre and post approval.  They also asked for all Establishment Inspection Reports, FDA Form 483s, and Warning Letters issued by the FDA relating to the labeling.  That scope might make sense if the defendants were raising Wyeth v. Levine “clear evidence” preemption.  But they weren’t.  Rather, the defendants argued that the proper inquiry is whether they could “independently do under federal law what state law requires” and whether they could, as a matter of law, “make a unilateral label change that would satisfy the state-law obligation alleged in Plaintiffs’ Complaint.”  That’s Mensing/Bartlett.  That’s different.  That’s straightforward.  That’s binary. The defendants quite logically argued that they were “not raising a Wyeth-type preemption defense and that Plaintiffs ‘have no need for discovery relating to an argument [they] will never make.’”   The defendants also argued that even under the Wyeth changes-being-effected analysis, the plaintiffs could not possibly unearth any “newly-discovered information” that would prompt a labeling change, because it was clear that the FDA knew the relevant information.  End of story.  End of inquiry.  End of discovery.
The defendants were being very Thoreauvian.  They wanted to “simplify, simplify.”  But the court, perversely, was having none of it.  Here is what the court said:  “This Court – and not Defendant – will ultimately decide how to apply Supreme Court law to the evidence presented. Plaintiffs are entitled to advocate for the Wyeth standard, and their requested discovery is relevant to the impossibility preemption analysis in Wyeth.”
And here we must digress.  We are reminded of a story about a legendary D.C. Circuit judge who had stayed on the bench a bit too long.  His practice for oral argument was to consult index cards filled with questions written up by his clerks.  By “ consult,” we mean that he would read off the questions, word for word.  At one argument, he read off a question and managed to stump a polished advocate.  Said polished advocate was stumped because the question had absolutely nothing to do with the case.  Awkward silence. Then the clerk ran up to the side of the bench and whispered frantically, “ That’s the next case, the next case.”  The elderly judge was having none of it.  He sputtered, “ We’re not getting to the next case until this lawyer answers my question!”
In the In re Herceptin case, it is as if the judge was listening to a different case – certainly a different argument.  No wonder, then, that the discovery analysis is so wrong.  Granting the discovery requests would require search of “an extensive regulatory database containing over four million documents.”  The defendants argued proportionality, but the court finds “this proportional to the needs of the case, considering the importance of the issues raised in this multi-district litigation action, the substantial amount in controversy, Defendant’s access to relevant information, Defendant’s resources, and the importance of the discovery in resolving the issues.” So now, in addition to the court’s laissez-faire (or is it les bon temps roulez?) attitude toward discovery, evident disaffection with preemption (at one point, the court bemoans how the plaintiffs “will be deprived of resolution of their state-law claims if the [preemption] defense is successful”), and misconstruction of the defense arguments, we get that other discovery bugaboo about how an MDL  can make even the most extravagant plaintiff discovery request seem proportional.  There is good authority to the contrary (see here, for example), but you won’t see it cited by this court.
Thus, the plaintiffs walk off with a clean sweep win.  They will get communications occurring prior to FDA approval relating to the “Chemistry, Manufacturing and Controls” because such information could be relevant to an obstacle preemption defense that the defendants are not raising.  The plaintiffs will get discovery on the approval process for the purpose of exploring whether FDA “weighed the competing interests relevant to the particular requirement in question, reached an unambiguous conclusion about how those competing interests should be resolved … and implemented a conclusion via a specific mandate …”  Hmm.  That “unambiguous” bit sounds like the Third Circuit’s Fosamax analysis that is sure to be trashed by SCOTUS next year.  To be clear, it is hard to blame the plaintiffs for their approach.  They smartly asked for as much as the court would give them, which turned out to be the whole kit and caboodle.
But wait.  There’s more.  The plaintiffs will not only get everything under the sun involving the product labeling, but will also get all documents and communications touching on the mass, volume or density of the medicine available in a vial.  Naturally, inevitably, ineluctably, the court rejected the defendants’ argument that, “even if additional documents exist, they would be cumulative and would not meaningfully alter the preemption analysis.”  Why?  Here is the court’s answer:  “If one document certainly exists saying ‘ x,’ – which is relevant to overcoming a preemption defense – it is not overly speculative that other similar documents exist in Defendant’s files.” Huh?  That’s like saying that no evidence could ever be cumulative. If there is some evidence of something, we must collect all such evidence.
The defendants even lost an argument that should have been a sure winner – that discovery on “the number of rejected lots is irrelevant because these batches never reached customers.”  Nobody bought those products.  But the court wasn’t buying the argument, because the preemption defense “is not devoted to the substantive claims.”  Well, if a defense is not devoted to substantive claims, it is not really a defense, is it?
The court’s opinion in In re Herceptin leaves us dissatisfied and puzzled.  Near the end of Walden, Thoreau tells us that he “left the woods for as good a reason as I went there.  Perhaps it seemed to me that I had several more lives to live, and could not spare any more time for that one.  It is remarkable how easily and insensibly we fall into a particular route, and make a beaten track for ourselves.”  To our mind, the court’s all-in approach to discovery in Herceptin is an overly-beaten track.  It is certainly insensible.

Today’s post is an update to our post from just a few weeks ago regarding McWilliams v. Novartis AG, No. 2:17-CV-14302 (S.D. Fla.). At that time, the court denied summary judgment on plaintiff’s failure to warn claims, but applying New Jersey law dismissed plaintiff’s claim for punitive damages. Since the case involves an FDA-approved prescription drug, having found that New Jersey law applied to the punitive damages claim, the decision to dismiss seems very straightforward to us because according to the New Jersey Products Liability Act (“NJPLA”):

Punitive damages shall not be awarded if a drug or device or food or food additive which caused the claimant’s harm was subject to premarket approval or licensure by the federal Food and Drug Administration.

N.J. Stat. Ann. § 2A:58C-5. But plaintiff didn’t think that was where the story should end, so she filed a motion for reconsideration. Look before you leap. Be careful what you ask for. You don’t always get what you want. Whatever adage you want to use, the bottom line is still no punitive damages.

Plaintiff’s argument was solely focused on the exception to the NJPLA’s ban on punitive damages for prescription drugs. That exception says that the prohibition on punitive damages does not apply “where the product manufacturer knowingly withheld or misrepresented information required to be submitted under the agency’s regulations, which information was material and relevant to the harm in question.” N.J. Stat. Ann. § 2A:58C-5. In its decision last month, the court held that plaintiff had not argued that the exception applies and so the court did not have to address it. McWilliams v. Novartis AG, 2018 U.S. Dist. LEXIS 113862, *22 n.3 (S.D. Fla. Jul. 9, 2018).

In her motion for reconsideration, plaintiff pointed to a footnote in her opposition to the motion for summary judgment in which she did argue that she had adduced evidence of information withheld from or misrepresented to the FDA that made whether the exception applied a triable issue of fact. McWilliams v. Novartis AG, 2018 WL 3637083, *2 (Jul. 31, 2018). That footnote also stated plaintiff’s belief that “punitive damages under New Jersey law are not preempted.” Id. (citations omitted).

The court agreed that it had not considered plaintiff’s argument regarding the punitive damages exception and so granted plaintiff’s request to consider it. Id. And upon considering it, promptly concluded that it was indeed preempted.

If we’re talking about a misrepresentation to the FDA, we’re talking about fraud-on-the-FDA, so we’re talking about Buckman. It feels like a direct line to us. An express even. No stops, twists, turns, or curves. The exception to the punitive damages ban in the NJPLA is a fraud-on-the-FDA claim and Buckman says those are not allowed.  The federal circuit courts that have considered the issue (in the context of similar provisions of Michigan and Texas law) are split with the Fifth and Sixth Circuits finding the exception preempted and the Second Circuit not. Compare Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004) and Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 672 F.3d 372 (5th Cir. 2012) with Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006), aff’d by equally divided court, 552 U.S. 440 (2008). We discuss the split in more detail here, and we’re guessing we don’t need to tell you on which side of the issue we come down.

Fortunately the court in this case was persuaded that the punitive damages exception is “substantially the same” as fraud-on-the-FDA and therefore preempted by Buckman – noting that that was in fact the position of the majority of courts to have considered the issue. McWilliams, 2018 WL 3637083, *3. Another notch on the Garcia/Lofton side of the divide.

Every now and then, the Reed Smith powers that be make seats in the firm’s skybox at the Phillies’ (first place – who woulda thunk?) stadium available to folks like us.  As a result we attended back-to-back concerts by the Eagles and Billy Joel last weekend.  Yes, we know that dates us – that was obvious from crowd demographics – but we don’t mind.  Joel (who according to Wikipedia, caught his first big break in Philly back in 1972) played until nearly midnight after the show’s opening was delayed by a cloudburst.  He made sure to perform “Allentown” with its Pennsylvania themes, but Joel being Joel, he also played “New York State of Mind.”

Our immediate Philadelphian chip-on-our-shoulder reaction was, “Don’t bring that New York %@#&*! down here.  If you have to sing about New York CIty, at least play “Miami 2017” (he didn’t).”  But then we got back to work, and we ended up thinking, actually there is at least one good recent reason for us to look to New York.

TwIqbal.

Over the last few weeks, New York courts have produced two of the best TwIqbal decisions that we’ve ever seen: Quintana v. B. Braun Medical, Inc., 2018 WL 3559091 (S.D.N.Y. July 24, 2018), and Oden v. Boston Scientific Corp., ___ F. Supp.3d ___, 2018 WL 3102534 (E.D.N.Y. June 4, 2018).  If more courts applied TwIqbal as faithfully as this duo, you know what?  Lawyers on the other side might actually have to comply with Rule 11 and actually investigate their cases before filing them.

Both cases involve Class II medical devices (IVC filters), so their TwIqbal application is not related to federal preemption and so-called “parallel” violation claims.  They’re just straight-out TwIqbal fundamentalism.  So, for those of you who file TwIqbal motions in order to force plaintiffs to plead what the heck their cases are about (most of us D-siders these days), and who use our TwIqbal Cheat Sheet to find good cases in your jurisdiction to cite, here’s a rundown of the relevant rulings.

Warning Defect

Given the nature of a warning-based product defect claim, “a claim premised upon a failure to warn theory should be dismissed in the event a plaintiff fails to plead facts establishing how or why the warning provided was inadequate.”  Oden, 2018 WL 3102534, at *6.  “[C]onclusory” warning allegations that failed TwIqbal are:

  • “Defendant failed to provide sufficient warnings and instructions”
  • “Defendant knew or should have known, and adequately warned that its product created a risk of serious and dangerous side effects, including but not limited to. . . .”
  • “The warnings given did not accurately reflect the risk, incidence, symptoms, scope or severity of such injuries to the consumer”
  • Defendant “only provides limited information [concerning] possible complications”
  • “Defendant’s warnings page on their website . . . fails to address the full extent of complications [and] magnitude of risks involved”

Id. None of this boilerplate, individually or collectively, survived TwIqbal.  “[T]he Complaint fails to provide facts identifying how or why the included warnings were inadequate.”  Id. at *7.  Given the warnings referenced in the complaint (labeling, broduct brochure, instructions for use, website), the complaint came nowhere near meeting TwIqbal requirements:

[T]he Complaint fails to provide facts identifying how or why the included warnings were inadequate.  Although Plaintiff claims that Defendant failed to warn or otherwise provided inadequate warnings of all of the aforementioned risks, the Complaint is silent as to how the warnings that were indisputably provided . . . were inadequate.  Moreover, Plaintiff has failed to provide the necessary factual nexus showing how the warnings that were provided were insufficient since merely asserting that warnings were not “adequate” or “sufficient” are nothing more than legal conclusions.  Without facts setting forth what the warnings stated and how and/or why the warnings were inadequate, Plaintiff’s failure to warn claim is insufficiently pleaded.

Id. at *7 (citations and quotation marks omitted).

Another pleading deficiency was the complaint’s failure to distinguish between “actual injuries Plaintiff experienced versus those complications which potentially could result from implantation of the [device].”  Id. (emphasis original).  “Nor does the Complaint contain any nonconclusory allegations that Plaintiff’s treating physician was not adequately informed or apprised of the potential risks.”  Id.  In a learned intermediary case, “to the extent Plaintiff’s failure to warn claim is premised upon Defendant’s alleged failure to warn ‘consumers’ . . . such a claim is not viable in the first instance.”  Id.  Thus a plaintiff must plead “facts to suggest that [the] physician did not possess independent knowledge about the risks associated with” the device.  Id.

Likewise, in Quintana, “Plaintiff’s allegations of inadequate warnings” were “for the most part, conclusory.”  2018 WL 3559091, at *6.  Plaintiff “fails to identify how those warnings were inadequate.”  Id.  Further, plaintiff failed to plead warning causation under the learned intermediary rule:

To this point, Plaintiff alleges, “as a direct and proximate cause of the wrongful acts and omissions of Defendants, Plaintiff suffered economic damages, severe injuries, and emotional distress.”  This conclusion, however, is not sufficient to plausibly show that the failure to warn Plaintiff’s physician caused Plaintiff’s injuries because we know nothing about what caused her [injury] – i.e., what about the device failed or what was Plaintiff’s diagnosis – nor anything about whether Plaintiff would have heeded an appropriate warning.

Id.

Design Defect

Oden held that a design defect claim is properly TwIqballed where it “fails to identify a particular problem in the design of [the device] and . . . merely plead[s] that the [device]  is ‘defective.’”  2018 WL 3102534, at *4.  A mere “list of allegedly unreasonable risks” “does not identify a specific component or particularized issue with the design itself.”  Id.  Similarly, describing a product as “unreasonably dangerous” when it “left the hands of the Defendant” does not adequately allege a defect.  Such descriptions “lack[] any facts indicating the particular component that was defective or otherwise identifying a specific problem.”  Id.  “Without such facts, Plaintiff’s design defect claim fails.”  Id.  Moreover, a design defect claim must allege an alternative design:

Plaintiff’s design defect claim also fails on the independent ground that the Complaint does not plead the existence of a feasible alternative design. . . .  [A] plaintiff must plead facts alleging the existence of a feasible alternative design.  The only paragraph in the Complaint specifically referring to this element merely states that “safer, reasonable alternative designs existed and could have been utilized,” but fails to identify what feasible alternative designs are available.

Id. at (citations and quotation marks omitted).  Pleading the availability of a “different” product (“retrievable,” as opposed to “permanent[]”) doesn’t hack it, “since the design and purpose of these two products is different.”  Id.

In pleading design defect, Quintana required plaintiffs to allege “a specific defect” as well as “facts about the “circumstances of the purported failure of the [device] that would give rise to the inference of proximate cause.”  2018 WL 3559091, at *4.  “A boilerplate reference to a design defect” that the product was “unable to withstand . . . normal” conditions failed TwIqbal.  Id.  As to product “risks,” a complaint must “state [] facts to indicate how those risks resulted from a specific design defect” and “how that defect was a substantial factor in causing [plaintiff’s] injuries.”  Id.  “[T]he assumption that [a] device must have failed because of reports of failures or complications by other consumers is plainly inadequate” to plead a design defect.  Id.  As in Oden, alleging a product to be “unreasonably dangerous” doesn’t adequately allege a defect.  Id.  A plaintiff must plead “how [a] problem rendered the product defective, whether it affected his [device], [and] how it caused [the] alleged injuries.”  Id. (citation and quotation marks omitted).  Further, “res ipsa loquitur is an evidentiary principle and does not apply to pleading requirements.”  Id. at *5.  Even if res ipsa were appropriate, it is insufficient when “Plaintiff fails to provide sufficient factual exposition to account for the possibility that other factors caused [the] injury.”  Id.  Finally, “[i]t also appears that Plaintiff’s design defect claim fails for failure to allege a feasible design alternative.”  Id. at 5 n.5.

Manufacturing Defect

The plaintiff’s “conclusory” allegations in Oden failed to plead a manufacturing defect “since they fail to allege a specific manufacturing defect affecting the [device] implanted in Plaintiff as compared to other [devices] that were produced by Defendant.”  2018 WL 3102534, at *5 (emphasis original).  “[A] claim devoid of allegations that a particular unit differed when compared to others in the same product line will be dismissed.”  Id.  “[A]lleg[ing] that some ‘condition or conditions’ existed that ultimately caused Plaintiff’s injuries” is a “vague assertion” that “fails to place Defendant on notice as to what the particular error in the manufacturing process was.”  Id.

Quintana did not involve a manufacturing defect claim.

Express Warranty

Oden reiterated that, to pursue a claim for breach of express warranty, “plaintiff must allege that there was an affirmation of fact or promise by the seller, the natural tendency of which was to induce the buyer to purchase and that the warranty was relied upon to [Plaintiff’s] detriment.”  2018 WL 3102534, at *8 (citation and quotation marks omitted).  An allegation that, somewhere in the defendant’s “literature, advertisements, promotions and . . . representations by their marketing team and sales agents,” a promise was made that the device was “safe, effective and fit for implantation” in various ways didn’t cut the mustard.  Id.  Even assuming these were “material statements amounting to a warranty,” no reliance was pleaded:

[T]he Complaint merely alleges Plaintiff’s purported “reliance” without providing any underlying factual details concerning when, where and how such reliance arose. Even assuming that Plaintiff was provided with a brochure . . ., the Complaint is devoid of any facts that would permit the inference that Plaintiff actually read these statements and directly relied upon them when making the decision to utilize Defendant’s product.  In addition, there are no facts illustrating that Plaintiff’s physicians ever reviewed the statements contained on Defendant’s website or those set forth in the product brochure prior to making the decision to recommend use of the [device].  Without such allegations, any purported claim that such reliance existed is implausible.

Id. at *9 (citations and quotation marks omitted).

In Quintana express warranty claims failed equally miserably.  “Plaintiff has failed to adequately plead reliance because her amended complaint lacks details regarding whether and how Plaintiff or her physicians reviewed and relied upon these warranties.”  2018 WL 3559091, at *7 (citations omitted).

Implied Warranty

Quintana did not involve implied warranty claims, but Oden did – two claims, for both merchantability and fitness for a particular purpose.  2018 WL 3102534, at *9-10.  Merchantability claims were TwIqballed, for lack of a proper defect claim, as already detailed.  Id. at *9.  Fitness claims failed because they were “altogether conclusory.”  Id. at *10.  “Where a plaintiff fails to plead that a defendant knew of the particular purpose for which that plaintiff was buying a product, a complaint will be dismissed.”  Id. at *9 (citation and quotation marks omitted).  This complaint didn’t so plead.  Id. at *10.  “[A] product’s intended or ordinary purpose is not necessarily equivalent with a particular purpose for which Plaintiff seeks to purchase a product.”  Id.  “Moreover, the Complaint does not contain any factual allegations leading to the inference that Defendant was aware that Plaintiff and/or his physicians were directly relying upon Defendant’s skill and judgment when the determination was made to purchase the” device.  Id.

Other

Both the Oden and Quintana complaints also contained the usual litany of fraud, fraudulent concealment, negligent misrepresentation, and consumer fraud claims.  These were all dismissed as well.  Oden, 2018 WL 3102534, at *10-15; Quintana, 2018 WL 3559091, at *7-10.  The fate of these claims was mostly decided under the particularity standards of Fed. R. Civ. P. 9(b) rather than TwIqbal.  Oden was of the view that the consumer fraud claims were subject only to TwIqbal standards, 2018 WL 3102534, at *14, and dismissed them on that basis:

[T]his cause of action fails because Plaintiff has not sufficiently pleaded causation.  Although Plaintiff sets forth certain statements contained on Defendant’s website and in its product brochure, these allegations neither explicitly state nor permit the plausible inference that Plaintiff actually saw these statements prior to making the determination (in conjunction with his physicians) to purchase the [device]. . . .  [T]he relevant factual background to support the above [allegations] is simply lacking.  As a result, Plaintiff has failed to sufficiently plead the third element of this claim.

Id. (citations omitted).

Quintana dismissed consumer fraud claims on the same basis, 2018 WL 3559091, at *10, although it is unclear whether the dismissal was under Rule 8 or Rule 9(b).  Unlike Oden, Quintana also applied TwIqbal to the plaintiff’s negligent misrepresentation claim, out of an abundance of caution, id. at *9 and held the claim inadequately pleaded under the learned intermediary rule.

[E]ven under the more lenient standards of Rule 8(a), Plaintiff’s negligent misrepresentation fails because she has not plausibly alleged reliance. . . .  [Plaintiff’s] allegation indicates only that Plaintiff relied on her physician’s advice and leaves open the question whether the physician relied on Defendants’ representations when giving Plaintiff that advice.  Because Plaintiff fails to plausibly allege what misrepresentation her physician relied on, her negligent misrepresentation claim is dismissed.

Id.

Finally, remember that we’re very picky on our TwIqbal Cheat Sheet.  We only include cases where a motion to dismiss was granted in its entirety.  In none of our 200+ drug/device TwIqbal cases did a single claim survive dismissal (sometimes on grounds other than TwIqbal).  New York has always been a productive source for TwIqbal Cheat Sheet cases:

Black v. Covidien, PLC, 2018 WL 573569 (W.D.N.Y. Jan. 26, 2018); Rincon v. Covidien, 2017 WL 2242969 (S.D.N.Y. May 22, 2017); Teixeria v. St. Jude Medical S.C., Inc., 193 F. Supp.3d 218 (W.D.N.Y. 2016); Morrison v. Hoffmann-La Roche, Inc., 2016 WL 5678546 (E.D.N.Y. Sept. 29, 2016); Adams v. Stryker Orthopaedics, 2016 WL 2993213 (S.D.N.Y. May 23, 2016); Ortiz v. Allergan, Inc., 2015 WL 5178402 (S.D.N.Y. Sept. 4, 2015); Rodman v. Stryker Sales Corp., 2014 WL 5002095 (S.D.N.Y. Oct. 7, 2014), aff’d, 604 F. Appx. 81 (2d Cir. 2015); Cordova v. Smith & Nephew, Inc., 2014 WL 3749421 (E.D.N.Y. July 30, 2014); Burkett v. Smith & Nephew GMBH, 2014 WL 1315315 (E.D.N.Y. March 31, 2014); Simon v. Smith & Nephew, Inc., 990 F. Supp.2d 395 (S.D.N.Y. 2013); Bertini v. Smith & Nephew, Inc., 2013 WL 6332684 (E.D.N.Y. July 15, 2013); Goldin v. Smith & Nephew, Inc., 2013 WL 1759575 (S.D.N.Y. April 24, 2013); In re Pamidronate Products Liability Litigation, 842 F. Supp.2d 479 (E.D.N.Y. 2012); Reed v. Pfizer Inc., 839 F. Supp.2d 571 (E.D.N.Y. 2012); Bowdrie v. Sun Pharmaceutical Industries Ltd., 2012 WL 5465994, (E.D.N.Y. Nov. 9, 2012); Desabio v. Howmedica Osteonics Corp., 817 F. Supp.2d 197 (W.D.N.Y. 2011); Gelber v. Stryker Corp., 752 F. Supp.2d 328 (S.D.N.Y. Sept. 14, 2010); In re Fosamax Products Liability Litigation, 2010 WL 1654156 (S.D.N.Y. April 9, 2010); Ilarraza v. Medtronic, Inc., 677 F. Supp.2d 582 (E.D.N.Y. 2009); Horowitz v. Stryker Corp., 613 F. Supp.2d 271 (E.D.N.Y. 2009); Lewis v. Abbott Laboratories, 2009 WL 2231701 (S.D.N.Y. July 24, 2009).

But you will find a couple of citations in Quintana and Oden to TwIqbal cases that we don’t include because they only dismissed complaints in part.  See Parillo v. Stryker Corp., 2015 WL 12748006 (N.D.N.Y. Sept. 29, 2015); DiBartolo v. Abbott Laboratories, 914 F. Supp.2d 601 (S.D.N.Y. 2012).  That’s OK – it’s a matter of legal judgment what to cite for any particular proposition.  Our philosophy is that we want to be picky, so we don’t give anyone a bum steer with a case citation that may be harmful on some other TwIqbal point.  As Billy Joel would say, “It’s no big sin to stick your two cents in if you know when to leave it alone.”

A couple of weeks ago, the Drug and Device Law Dog Walker texted us midday to report that a coyote had been spotted in our suburban neighborhood and that we should be vigilant when the Drug and Device Law Little Rescue Dogs were out in the yard. We scoffed, insisting that it must have been the neighborhood fox, known to all for years (we live right next to Valley Forge National Park).  The conversation went back and forth for a while, eventually including descriptions of larger size, different coloration, and much longer legs than the fox’s.  We remained unconvinced.  Eventually, our neighborhood e-mail chain came alive with close-up photos of what was undeniably a coyote, taken a scant hundred yards away in a neighbor’s back yard.   Because we are law nerds, it occurred to us that coyotes are just like causation:  an expert can assert a causal link, and assert it again, but, ultimately, there has to be evidence to support the assertion.

As the court agreed in today’s case, a nice (albeit unreported) affirmance of a HUMIRA summary judgment victory out of Maryland’s Court of Special Appeals. In Larson v. Abbott Labs., Inc., 2018 WL 3479236 (Md. Ct. Spec. App. July 19, 2018), the plaintiff, a highly-educated space engineer who had been diagnosed as HIV-positive years before, alleged that the defendant’s psoriasis medication caused him to become sufficiently immunocompromised that he contracted progressive multifocal leukoencephaly (PML).  PML is an often-fatal viral brain disease that left the plaintiff physically disabled and cognitively impaired, and unable to care for himself.  PML is caused by a virus that that is present in the bodies of most adults in the United States but that generally remains inactive except in severely immunocompromised people. HUMIRA’s prescribing information warned that medications of its class had the potential to affect defenses against infection, and that the safety and efficacy of the medication in immunosuppressed patients had not been evaluated.  The warnings did not specifically mention HIV patients.

The plaintiff had been diagnosed as HIV-positive five years before he took HUMIRA. During that time, he treated his plaque psoriasis with home remedies.  When it worsened, he asked his treater about treatment with HUMIRA.  She sought information from the defendant, then referred the plaintiff to a physician who concluded from the information that, because the plaintiff’s HIV was well controlled and that he was not severely immunocompromised (and because a tuberculosis skin test came back negative), he was an appropriate candidate for the medication.  What was unknown to the doctor – and apparently to the plaintiff – was that recent lab results revealed progression of his HIV disease.   (The plaintiff’s infectious disease specialist had attempted to contact him with the results, but he hadn’t responded by the time he began his HUMIRA treatment.) Within three months after beginning his treatment, he began exhibiting headaches and extreme fatigue.  His condition worsened, and he was diagnosed with PML shortly thereafter.

The plaintiff filed suit, asserting the usual product liability claims. His primary causation expert was a “highly-regarded infections disease specialist with significant experience” treating HIV-positive patients. Larson, 2018 WL 3479236 at *7.  The defendant moved to exclude the expert’s opinion.  The trial court granted the motion, and, because the plaintiff was left without expert causation testimony, the court granted summary judgment for the defendant.  The plaintiff appealed.

The plaintiff presented several questions for the appellate court’s determination, including questions related to the trial court’s holdings about the adequacy of the product’s warnings. The appellate court found that it needed to consider only one question – whether the trial court erred in barring the testimony of the plaintiff’s general and specific causation experts and granting summary judgment – because a negative answer to that question obviated the need to consider any of the others.  In the process, the court rejected the plaintiff’s argument that the it needed to address the adequacy of the warnings whether or not the plaintiff could establish medical causation.  As the court explained,

Generally, the “proximate causation element” in a failure to warn case against a pharmaceutical manufacturer is established by proof that the allegedly inadequate warning was a substantial contributing factor to the plaintiff’s injury. . . . In certain product liability cases, however, such as the case before us, the parties disagree over whether sufficient evidence exists to show that the product, itself, can cause the specific injury alleged and, therefore, whether the manufacturer had a duty to provide different or additional warning to prevent the injury. . . . . What is often termed “general causation” is present “when a substance is capable of causing a given disease. . . . General causation, therefore, relates to the element of duty — i.e., whether the risk of the type of injury the plaintiff suffered was reasonably foreseeable, and therefore, whether the manufacturer had a duty to warn the prescribing physician in the first place. . . . Evidence demonstrating [medical] causation . . . must exist independent of whether the manufacturer’s allegedly defective warning label was a proximate cause of the injury. In other words, evidence of general and specific causation was necessary in this case to establish [the defendant’s] duty to warn . . . .

Id., at *9-10. And so the court proceeded to determine whether the trial court had erred in excluding the plaintiff’s causation experts. The plaintiff’s causation theory was that “the immunosuppressant effect of HUMIRA permitted the ‘unmasking’ of [the virus that causes PML], despite the fact that” the plaintiff was not as immunosuppressed as HIV-positive patients who develop PML” even in light of his most recent lab results.  Id.  Maryland is a Frye state.  Under that standard, as the court explained, an expert’s opinion is admissible only if the basis of the opinion is “shown to be generally accepted as reliable within the expert’s particular scientific field.” Id. at *12 (internal punctuation and citations omitted). The standard applies equally to new scientific techniques and to accepted methods applied to support novel theories.

With respect to plaintiff’s main causation expert, the trial court had held that his causation conclusions “[had] not been sufficiently tested and proven to qualify as reliable forensic conclusions rather than scientific hypothesis.” Id. at *13.   The expert’s primary contention was that, “in addition to general HIV disease progression, some additional functional immune deficit must be present for PML to occur,” and that HUMIRA caused that deficit in the plaintiff. Id.   The trial court held that the expert had not considered other potential contributing factors, and that he could not provide a sufficient factual basis for his opinion that HUMIRA was “the missing link.” Id. at *14.

The appellate court stated that, “to constitute a sufficient basis for his general causation opinion, Dr. Jacobson needed to provide support for his contention that” the class of drugs was “known to be associated with an increased risk of PML” at the time the plaintiff took the drug. Id. The plaintiff contended that this support was to be found in the expert’s reference to the drug’s black-box warning about opportunistic pathogens coupled with “well-documented reports of PML occurring in patients who had received” this class of drugs.” Id. But, the court pointed out, the expert did not discuss the “well-documented reports of PML” or explain how the reports helped form the basis of his opinion.   The plaintiff also asserted that the expert relied on “peer reviewed studies, reviews of other biologicals, and FDA Adverse Event Reporting data,” but, the court found, he did not explain how the existence of case reports demonstrated a causal connection, and, the one article he cited related to a drug with a different mechanism of action than HUMIRA’s.

The court echoed the trial court’s holding that there “is sound scientific reasoning to suggest that [the drug’s immunosuppressive effect] could be a factor, but it falls short of showing with any degree of reliability that it is a factor, much less a substantial contributing cause” of the plaintiff’s PML. Id. at *15 (emphasis in original).   The court also reviewed the depositions of the plaintiff’s other experts, and held that, although they “believed that [the plaintiff’s] use of HUMIRA likely contributed to his immunological decline, none could provide a sufficient factual basis for that conclusion. . . . Indeed, [one] conceded that a scientifically reliable causal association” had not been established, id., and another stated “more unequivocally that he believed that [the plaintiff’s increased immunosuppression]” occurred “independent of HUMIRA, representing progression of his HIV disease.”  The same expert discussed an article establishing “the theoretical possibility” that the class of drugs was associated with PML, but explained that “it [didn’t] necessarily establish causation . . . .” Id.

The court commented that it agreed with the trial court that “it may well be that additional research will confirm some or all of [the expert’s] hypotheses. What is determinative in this case, however, is that those causal theories have not been established now nor were they established” when the plaintiff took the drug.  The court also acknowledged that there were ethical obstacles to conducting controlled studies on HIV-positive individuals, and that, because PML is a rare disease, “the amount of epidemiological data that could be useful is limited.”  But this didn’t excuse the experts’ theoretical causation opinions.  The court concluded, “We hold that [the plaintiff’s] experts’ opinions were not grounded on an adequate supply of data, and, therefore, the circuit court properly excluded their testimony.” Id. at *16,

We love a good expert exclusion. BTW, the coyote pictures are really cool.  E-mail us, and we will send them to you.