Today’s case is, we think (and certainly hope), unlike any other case we have discussed in 2018. To begin with, Duntsch v. State, 2018 Tex. App. LEXIS 10131, 2018 WL 6445369 (Texas Ct. App. 5th Dist. Dec. 10, 2018), is an appeal from a criminal conviction. Since we have droned on incessantly about how our happiest days as a lawyer were spent prosecuting crooks, everyone on the blog knows that we have first dibs on criminal cases. In Duntsch, the issue was whether a criminal assault statute could apply to a case of medical malpractice. The Texas court ended up affirming a neurosurgeon’s conviction for “intentionally or knowingly causing serious bodily injury to an elderly individual while using or exhibiting a deadly weapon” – the “deadly weapon” being his hands, surgical tools, and a medical implant. As described by the court, the defendant neurosurgeon comes across as not only incompetent, but also arrogant. Indeed, read a certain way, the court’s recital of the facts of the case portrays a sociopath. Nevertheless, a criminal conviction for assault with a deadly weapon against an actual surgeon, no matter how bad the surgeon’s conduct (and the court makes it sound bad bad bad bad), seems unprecedented.

We will confine ourselves to the facts in the Texas appellate decision, though this case has received extensive coverage. There is an article in D Magazine calling the defendant “Dr. Death.” There are several accounts on the web. There is a multi-part podcast devoted to this extraordinary story. One of the themes running through these accounts is the alleged failure of the medical system, in terms of credentialing, reporting, and med-mal limitations. The moral of the tale, so we are told, is that the criminal justice system was the last, best, necessary resort after other systems failed to protect patients. You can decide for yourself whether that moral is fitting here.

The particular offense involved back surgery on an elderly woman. It is an understatement to say that the result was not the desired reduction of pain. Rather, the patient’s pain dramatically increased. Even worse, the woman suffered from “drop foot” and incontinence. It appears that the defendant put the pedicle screw in exactly the wrong place. The surgery was a sequence of terrible errors. “There were holes where they shouldn’t be in the bone.” Further, there was testimony that the defendant was distracted during the surgery by the deteriorating condition of another back surgery patient, who subsequently died. The defendant got into an argument as to whether the other patient required a craniotomy. Meanwhile, the defendant’s surgical technique for the patient in front of him on the operating table was, according to doctors and nurses present during the surgery, abominable. One doctor characterized the procedure as a “catastrophic surgical misadventure.”

One of the eyewitnesses to the disastrous surgery was the device representative. We have written in the past (here, for example) on whether the presence of a device representative during a surgery can present problems for the manufacturer in a product liability case. But here, the device representative’s testimony was damning for the defendant doctor. The rep said that surgery was “chaos from the beginning,” that the pedicle screw erroneously was placed into soft tissue rather than bone, and that there was more bleeding during the operation than there should have been.

The jury heard not just about the subject surgery, and not just about the other back surgery that went fatally wrong and that distracted the defendant, but also about several other surgeries where the defendant committed awful malpractice. In one especially sad case, the defendant operated on old friend and managed to turn him into a quadriplegic. In another, a fellow surgeon described the defendant as operating at the level of first or second year neurosurgery resident. Multiple patients died from the defendant’s treatment. Think of how this evidence of other catastrophic results played out at trial. Every day in the courtroom the jurors must have seen injured people using crutches, walkers, wheelchairs and worse. They must have also seen loved ones overcome with grief and anger. Evidence of other acts is powerful stuff. Sometimes it can be too powerful.

The evidence of other acts did not come only from victims. An office manager who worked for the defendant acknowledged that the defendant “had an unusual number of bad outcomes” compared to other doctors for whom she had worked. She also described an instance where the defendant had asked her to alter some medical records after the fact. Perhaps even worse, a nurse practitioner who was also an ex-girlfriend of the defendant was quizzed about some incendiary emails the defendant had sent her, including one where the defendant described himself as a “stone-cold killer.” She did not interpret the email to reveal a criminal mind, but the jury was free to do so.

An expert doctor testified for the defense that the defendant’s errors were “known complications” that a “poorly-trained surgeon could do,” and that have, in fact, occurred in the past. In other words, the defense added up to arguing that the defendant was an idiot but not quite a criminal.

After all the evidence rolled in, the jury convicted the defendant. The sentence was life imprisonment. Let that sink in for a moment.

The two key issues on appeal were whether the other terrible surgery results should have been admitted into evidence and, most fundamentally, whether the evidence was enough to support a finding of criminal intent on the part of the defendant. The two issues have a lot to do with one another, of course. As we said up top, the criminal statute applies to someone who “intentionally or knowingly causes serious bodily injury” to an elderly person. The state did not claim that the defendant actually intended to inflict harm on the patient. Consequently, the issue was one of knowledge. A person acts “knowingly” with respect to a result of his conduct if “he is aware that his conduct is reasonably certain to cause the result.” The court concluded that a jury could reasonably find that the defendant was reasonably certain that his conduct would seriously injure his patient inasmuch as the defendant was aware of his recent track record of inflicting extremely rare and serious complications on his surgery patients, and was also told during the surgery in question that he was botching the operation.

The prior surgeries came into evidence not merely to show that the defendant was a rotten surgeon, but to show that the defendant had the knowledge of those results in his head, and that such knowledge added up to the requisite culpable state of mind (in law school we learned to call it mens rea). As the prosecution contended, the other acts here were contextual, not extraneous. The court agreed, and held that the other surgeries were properly admitted per Fed. R. Evidence 404(b). They were similar to the surgery at issue, and they shed light on the defendant’s state of mind.

The defendant offered a pretty good argument that there is something wrong with the fact that the evidence of the surgery in question took up less than a day of trial, while the evidence of the prior surgeries took up another twelve days. But the court reasoned that the prior surgeries were probative on a highly disputed point (the defendant’s mental state). Moreover, the trial court repeatedly instructed the jury that the prior surgeries were to be considered “only … in determining intent, knowledge, motive, absence of mistake or lack of action of the defendant, if any, alleged in the indictment in this case and for no other purpose.”

The appellate court also rejected the defendant’s argument that the “stone-cold killer” email was substantially more prejudicial than probative. The prosecutor certainly emphasized that email during closing argument. We can understand why the prosecutor would do that, but use of evidence in closing argument makes it that much harder to argue harmless error. The prosecutor’s bet paid off, given that the appellate court did not find error. We probably would have gone the more prudent route and kept mum about it in argument, trusting the jurors to seize upon it during deliberations. Maybe that’s why we are now a hypercautious civil defense hack.

One of the three appellate judges in Duntsch dissented, arguing that the evidence at trial did not prove the defendant’s “knowledge.” The dissenter believed that evidence of the prior bad surgeries at most showed what the defendant should have known, not what he actually knew, about his poor surgical skills. One passage in the dissent is particularly persuasive: “Appellant was not on trial for being a doctor generally or, more to the point, for being a doctor who lacked adequate training or technique – neither of those things is a crime. And, criminal trials are not reverse class actions.” The dissent makes other useful points, and suggests that the evidence could have supported a finding of recklessness, which would have been a lesser offense. But the dissent was only a dissent, so the majority’s affirmance of the conviction on the most serious offence charged held sway. Interestingly, the dissent agreed with the majority that there is no broad policy reason to exempt physicians from the reach of the criminal code when medical malpractice sinks to the defined level of culpability.

Duntsch is an extreme case. It is a memento mori painted on the edge of tort law, reminding us of what can happen when things go horrifically wrong.

We’ve always hated the Ninth Circuit’s decision in Stengel v. Medtronic Inc., 704 F.3d 1224 (9th Cir. 2013) (applying Arizona law), holding that allegations of failure to provide adverse event reports (“AERs”) to the FDA created a viable, and unpreempted, state law claim.  Now our #2 worst case of 2013 is effectively gone.  Kaput.

Today the Arizona Supreme Court in Conklin v. Medtronic, Inc., No CV-17-0322-PR, slip op. (Ariz. Dec. 18, 2018), expressly – and unanimously − disagreed with Stengel’s misinterpretation of Arizona product liability warning law, and since the Arizona Supreme Court is “supreme” on state-law issues, Stengel is invalid.  We’ll get directly to the good stuff:

We disagree with Stengel. . . .  In Stengel, the Ninth Circuit held that the [Medical Device Amendments] did not expressly or impliedly preempt the plaintiffs’ Arizona common law failure-to-warn claim based on Medtronic’s alleged failure to submit adverse event reports to the FDA.  That holding, however, was based on the unsupported premises that “Arizona law contemplates a warning to a third party such as the FDA” and that, “[u]nder Arizona law, a warning to a third party satisfies a manufacturer’s duty if . . . there is ‘reasonable assurance that the information will reach those whose safety depends on their having it.’”  Neither premise comports with Arizona law. . . .  [E]stablished law does not recognize a claim merely for failing to provide something like adverse event reports (which may not qualify as “warnings” under Arizona law) to a government agency that has no obligation to relay the information to the patient.

Because Stengel incorrectly recited and applied Arizona law, we decline to follow it. . . .  [O]ur case law contemplates that a medical device manufacturer may satisfy its duty to warn consumers by properly warning a third party, such as a learned intermediary.  But the FDA is not a learned intermediary or other relevant third party in that analysis.  And we are not aware of any case that supports the proposition that a manufacturer is independently required under Arizona law to warn a governmental regulatory body.

Slip op. at 10 ¶¶30-31 (citations omitted) (emphasis added, except for final emphasis, which is original).  Put the red flag on Stengel.

So how did the Conklin court reach this exemplary conclusion?  The path begins with an excellent preemption ruling in the trial court, Conklin v. Banner Health, 2015 WL 10688305 (Ariz. Super. Oct. 30, 2015), in a case involving a pre-market approved infusion pump.  That decision held all negligence per se claims (including the failure to report claim at issue here), preempted under Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001).  The intermediate Arizona appellate court reversed preemption of the failure to report claim, following Stengel.  See Conklin v. Medtronic, Inc., 418 P.3d 912, 919 (Ariz. App. 2017).  A further appeal produced today’s opinion.

The Arizona Supreme Court first recognized that, contrary to Stengel, there is no presumption against preemption in express PMA preemption cases.  “[A]lthough federal laws are presumed not to preempt state laws, courts do not invoke that presumption when the federal statute contains an express preemption clause.”  Slip op. at 3 ¶8 (citations and quotation marks omitted).  Interestingly, though, Conklin ultimately based its decision mostly on implied, not express, preemption, id. at 7 ¶21 (finding duty-to-report claim impliedly preempted and not reaching express preemption), so the presumption against preemption didn’t really figure in the result.

Conklin also utilized the “narrow gap” metaphor to describe the interaction of express preemption and implied preemption in PMA device cases:

Read together, these two types of preemption, operating in tandem, have created a “narrow gap” for pleadings.  To make it through, a plaintiff has to sue for conduct that violates a federal requirement (avoiding express preemption), but cannot sue only because the conduct violates that federal requirement (avoiding implied preemption).

Slip op. at 6 ¶18 (citations and quotation marks omitted).

The one aspect of the plaintiff’s duty-to-report claim that Conklin held to be expressly preempted was the assertion that the FDA was obligated to make AERs widely available to the public.  Federal law did not require that, so:

[T]o the extent [plaintiff] argues that the FDA either has or assumed a duty to convey information from adverse event reports to treating physicians, patients, or more broadly public consumers . . ., [that] claim is expressly preempted because it likewise would impose under state law a requirement that is “different from, or in addition to,” any applicable federal requirement.

Id. at 6 ¶20 (regulatory citations omitted).

The broader implied preemption ruling was based, as indicated above, on the absence of any reporting duty owed under state law.  Conklin “assume[d] without deciding” that AERs could be “warnings” under state law, but several “but cf.” citations indicated its disinclination to so rule.  Slip op. at 7 ¶22. The learned intermediary rule, which the court previously adopted in Watts v. Medicis Pharm. Corp., 365 P.3d 944 (Ariz. 2016) (we discussed Watts here and here), proved to be key.  Under Arizona law, prescription medical product warnings need only go to learned intermediaries, and the FDA didn’t qualify as a “learned intermediary.” Arizona’s learned intermediary rule “only extends . . . to prescribing and other health-care providers.”  Slip op. at 8 ¶26. There was never any state-law obligation to warn the FDA:

The FDA is not a health care provider and does not prescribe anything for patients. . . .  Accordingly, even if we assume that adverse event reports may constitute relevant warnings, Arizona law does not permit a manufacturer to satisfy its duty to warn end-user consumers by submitting adverse event reports to the FDA.  And conversely, a manufacturer does not breach its duty to warn end users under Arizona law by failing to submit adverse event reports to the FDA.  [Plaintiff] cites no authority, and we are aware of none, for the proposition that Arizona law requires a manufacturer to warn a federal agency.

Id. at 8 ¶¶26-27 (citations omitted).  The duty to warn in Arizona “has not been extended to require a manufacturer to submit warnings to a governmental regulatory body.”  Id. at 8 ¶28.  Submitting AERs to the FDA does not provide “reasonable assurance” that such information “will reach end users (or end users’ health care providers) because the FDA is not required to publicly release such reports.”  Id. at 9 ¶28 (citations omitted).

Thus, the lack of any Arizona state-law duty to report was fatal to plaintiff’s reporting-based claims.  While Conklin held that such claims don’t exist from the outset, the case was litigated and appealed on preemption grounds.  Thus followed the preemption ruling that plaintiff’s purported reporting claims were purely FDCA-related, and thus preempted under Buckman:

Because only federal law, not state law, imposes a duty on [defendant] to submit adverse event reports to the FDA, [plaintiff’s] failure-to-warn claim is impliedly preempted under 21 U.S.C. § 337(a).  Absent an independent state law duty to submit adverse event reports to the FDA, [plaintiff’s] failure-to-warn claim, at bottom, is an attempt to enforce a federal law requirement.  That claim is impliedly preempted under the MDA.

Slip op. at 9 ¶29 (Buckman citations omitted).

Then came the slicing, dicing, and pureeing of Stengel that we quoted at the outset.  Conklin closed by dispatching the other cases plaintiff relied on, thus performing the additional service of highlighting the questionable validity of Fiore v. Collagen Corp., 930 P.2d 477 (Ariz. App. 1996).  See Id. at 11 ¶33 (Fiore “adopted a minority view . . ., and in any event likely does not survive Riegel”).

On this blog, we have declared, until we are blue in the face, that it is a usurpation of state court power for a federal court sitting in diversity to make up new theories of liability under state law.  That’s what Stengel did, and thankfully, in Conklin, the state high court thereby bypassed by the Ninth Circuit’s novel ruling had both the opportunity and inclination to call out the trespassing federal court.  Once again:

We disagree with Stengel. . . . Stengel incorrectly recited and applied Arizona law.

Slip op. at 10 ¶¶31-32.

Mic drop.

You can waive remand.  That’s Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998).  But, if you agree to remand, you’re going back whence you came.  So said the Judicial Panel on Multidistrict Litigation earlier this month in In re: Biomet M2A Magnum Hip Implant Products Liability Litigation, 2018 WL 6426830 (JPML Dec. 6, 2018).

That’s pretty much all the 4-paragraph opinion says on this issue of first impression.  The JPML cannot “redirect the remand” to a non-originating court.  What the opinion doesn’t tell is why the request was being made in the first place.  So, we did a little digging.  At issue were three cases selected for remand from this MDL.  The Chadwick case had been originally filed in state court in New Jersey and subsequently removed to federal court.  Plaintiffs included as a defendant a company whose sole role in relation to the device at issue was to supply raw materials.  That company, a New Jersey company, was the only thing establishing venue in New Jersey.  Memo. Of Law in Support of Motion of Defs. To Vacate Conditional Remand Order, No. TXS/4:14-cv-00232, Dkt. No. 12-1 (JPML), at 2-3.  Plaintiff is a resident of Wyoming and Biomet is an Indiana company.  The New Jersey defendant filed a motion to dismiss based on the immunity afforded raw material suppliers under the Biomaterials Access Assurance Act (“BAAA”).  Feels like the New Jersey company was present simply to allow some forum shopping by plaintiff.  Prior to remand, however, plaintiff agreed to dismiss the raw material supplier and with that dismissed the only link to New Jersey.  Id.

The second case, Carter, was filed in the Southern District of New York before being transferred to the MDL.    Plaintiff Carter, however, lived in Virginia and had surgeries in Virginia and North Carolina.  Her complaint does not include any allegation why venue would be appropriate in New York.  Id. at 3-4.  Similarly, the plaintiff in the Richards case filed suit in the Southern District of Texas, but she resides and had surgery in cities that fall in the Northern District of Texas.  Id. at 4.

At the time of remand, the MDL judge was willing to grant the parties’ request that these three cases be transferred to appropriate venues that were not their originating courts.  However, in the suggestion of remand, the judge concluded that he had no authority to grant the relief requested by the parties and listed the remand jurisdiction for each case as the original transferor courts.  Id. at 5.

Defendants argued that the logic of Lexecon should apply.  In effect, that there was no difference between waiving remand to the transferor court to allow trial to take place in the MDL and waiving remand to the transferor court to allow trial to take place in a different, but appropriate venue.  Id. at 6.  Defendants also made the points that denying the request now was simply inefficient because they would file change of venue motions post-remand that were highly likely to succeed and that at least as to New Jersey and New York there were also personal jurisdiction issues.  Residents of Wyoming and Virginia were suing Indiana companies in New Jersey and New York.  And that hasn’t been allowed since Daimler AG v. Bauman, 571 U.S. 117 (2014).

But the JPML was unpersuaded finding that the statute, 28 U.S.C. § 1407(a), afforded it “no discretion.”  The only remand destination allowed is the original transferor court, even if the parties agree that jurisdiction is improper.  In re: Biomet, at *1. 

So, other than this now being the rule of law, to us it is also indicative that Congress did not contemplate the current forum shopping practices.  Cases should be remanded from where they came because they should have been filed in appropriate jurisdictions from the outset.  But, we know that’s not the reality.  We are optimistic that the issue will be resolved correctly post-remand, but where venue is so clearly not present, we don’t see the harm in arming the JPML with the tools to get the job done.

We opposed the FDA’s ill-advised 2013 proposal to revamp the process for changing generic drug labeling from the outset.  We had legal objections – that an FDA regulation could not alter the statutory “sameness” requirement imposed on generic labeling.  We had practical objections – that the change was a sop to the plaintiffs’ bar, intended primarily to reduce generic preemption in civil litigation, rather than to pursue any legitimate FDA objective.  And we had procedural objections – that FDA had secretly colluded with the plaintiffs’ bar in coming up with the proposal.

We were hardly the only ones to object, and the proposal was repeatedly deferred.  Once the proposal was postponed until after the 2016 election, we pronounced it dead.  Either the Ds would win, and approach the preemption issue directly by changing the makeup of the Supreme Court (Mensing/Bartlett were 5-4 decisions), or the Rs would win and the FDA would stop carrying water for the plaintiffs’ bar.

The latter happened, with [fill in the blank] consequences for the country and the world, but with predictable consequences for the FDA’s generic labeling proposal.  After a reasonable interval, the FDA formally put an end to the lingering 2013 proposal last week.  Here is the bottom line, from a December 13 statement posted on the FDA’s website:

In November 2013, the FDA proposed a rule . . ., which, if finalized, would have allowed generic drug makers to independently – meaning, without prior FDA review and approval – update and promptly distribute new safety information in drug labels. This is something that currently only branded drug makers can do.

This rule, if implemented, would have allowed generic manufacturers to independently update their drug labels with new information. We heard from manufacturers that they believed this change would have imposed on them significant new . . . liabilities. We heard arguments that the proposed rule could impose new costs on generic manufacturers that might have raised the price of generic drugs. . . . And, among other challenges, the new policy would have resulted in labels for the same drug that varied between different generic manufacturers, for some period of time. This could have led to consumer and provider confusion.

Today, the FDA is withdrawing this proposed rule. . . .

Dick Tracy signing off!  The bottom line is that, after five years, nothing has changed, particularly the scope of and basis for generic preemption.  Nor will there be any change to the FDA’s requirement of agency preapproval to changes to the “highlights” section of branded drug labeling – another potential source of preemption in civil litigation (this isn’t mentioned in the FDA statement, but is discussed in the accompanying Federal Register notice).

This agency coup de grâce is accompanied by the usual regulatory word salad about “ensur[ing] that generic companies continue to engage in an appropriate level of post-market safety surveillance” and “hurdles that – if the rule was implemented – could compromise public health.”  The FDA admitted:

[A]dditional or different warnings [could] temporarily appear in generic drug labeling compared to the brand drug – depending on the availability of information to various manufacturers and the timing of updates.  Such differences, even if temporary, could undermine confidence in generic drugs and their therapeutic equivalence.  We understand that the proposed rule may have also led to confusing, conflicting generic labels that were crowded with redundant safety information. Individual generic manufacturers might have added additional and at times superfluous information to their individual labels to avoid the risk of liability for failure to warn.

This, of course, is a problem hardly limited to generic drugs.  Competing branded drugs have all of these issues, too, which is one reason that the FDA frequently imposes class-wide labeling. There’s a solution for it – called “Expedited Agency Review” (“EAR”) – that would involve the FDA at an earlier stage in all labeling changes to ensure that this kind of chaos from occurring.  EAR was proposed as an alternative to the 2013 proposal, but is not mentioned in the FDA’s statement, probably because it would require “additional resources and help from Congress.”

The FDA’s statement does contain a useful clarification of the responsibility for labeling changes, after a branded “reference listed drug” is withdrawn from the market:

If the brand drug manufacturer has voluntarily withdrawn their marketing application, generics that reference the brand medicine can still be approved and marketed.  But the brand drug manufacturer is no longer responsible for making any necessary label updates that generic applicants can follow.

See also Federal Register Notice.  We add emphasis to this statement, since today is also the first anniversary of T.H. v. Novartis Pharmaceuticals Corp., 407 P.3d 18 (Cal. 2017), a case in which the California Supreme Court failed to recognize this basic fact.

More information on the withdrawal of the FDA’s 2013 generic labeling proposal is available at 83 Fed. Reg. 64299 (FDA Dec. 14, 2018)

Our last post talked about carbohydrate-rich Thanksgiving food. Today, we are talking about a putative class action on the labeling of certain diet foods, particularly in regard to “net carbs” and sugar alcohols. This was not planned. Colella v. Atkins Nutritionals, Inc., No. 17-cv-5867 (KAM), 2018 WL 6437082 (E.D.N.Y. Dec. 7, 2018), on the other hand, has all the hallmarks of a case brought for no reason other than to reward the lawyer. The same lawyer brought multiple cases in multiple courts raising the same allegations. The purported class representative in this one claimed to have bought only three of the thirty-one products he sued over and it is hard to imagine how he sustained any harm, let alone a harm that continues. Two of the other cases produced decisions on similar issues, which the Colella court cited frequently, so this was not really new ground. We will just cite those now and cut back on internal cites later: Fernandez v. Atkins Nutritionals, Inc., No. 3:17-CV-1628, 2018 WL 280028 (S.D. Cal. Jan. 3, 2018); Johnson v. Atkins Nutritionals, Inc., No. 2:16-CV-4213, 2017 WL 6420199 (W.D. Mo. Mar. 29, 2017). That will also be the last of our references to dieting, a subject with which we stubbornly deny knowledge.

Plaintiff centered his consumer fraud and warranty claims on the allegations that sugar alcohols in a number of the defendant’s products should count toward any tally of net carbohydrates and their consumption does affect blood sugar levels. Sugar alcohols are used as sweeteners in a number of foods and, as it turns out, FDA has a fairly developed history of addressing them in connection with labeling. Predictably, especially if you have read other posts on lawsuits over food labeling, the defendant’s motion to dismiss the amended complaint teed up express preemption under the FDCA and primary jurisdiction, along with TwIqbal and substantive state law. The end result was that plaintiff lost most of his claims, but will get a third chance to plead a consumer fraud claim as to a portion of his apparent issues with the labeling for defendant’s products. As we have noted before, we do think it is better to assess whether viable state law claims have been supported by factual pleading (with or without the heightened standard applicable for fraud-based claims like the plaintiff here was asserting) before turning to whether express preemption or primary jurisdiction would apply. The Colella court flipped the order of analysis, so something is left at least for now.

We will follow the court’s order of analysis in our discussion after a little more on the claims. The products’ labeling, and the company’s website, made clear that all counts of “net carbs” excluded sugar alcohol (like they excluded fiber). They further touted the low number of net carbs and explained that sugar alcohols could be ignored because they do not impact blood sugar like other carbohydrates that count toward the net carbs total. Plaintiff claimed this was a misrepresentation of the available science and that sugar alcohol consumption did have an impact on blood sugar. He also claimed FDA agreed that sugar alcohol should be counted toward total carbohydrates (but not net carbs). Lastly, he claimed he had relied on the labeling’s statements about net carbs and sugar alcohol in buying three products (once, apparently). Based on this, he wanted a range of damages for a purported class of purchasers of a bunch of products.

The express preemption analysis was fairly thorough and technical, because non-identical state law claims as to nutrient content labeling and health-related claims are expressly preempted but the regulations are complicated on those issues. What was not complicated was the rejection of plaintiff’s call to a presumption against preemption. Bexis should be happy with the quotation of Puerto Rico v. Franklin California Tax-Free Tr., 136 S. Ct. 1938, 1946 (2016), for the proposition that where a statute includes an express pre-emption clause, “[the court] do[es] not invoke any presumption against pre-emption but instead ‘focus[es] on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.’” It was also acknowledged that there is express preemption of “state law requirements regarding nutrient content claims” under the FDCA and POM Wonderful. Statutes and regulations require labeling of nutrients in food, including “[t]otal fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, dietary fiber, and total protein contained in each serving size or other unit of measure.” The regs also spell out how sugar alcohols should be handled and we will just repeat what the Colella court wrote:

Relevant to the instant case, “§ 101.9(c)(6) …. requires that food labels include … a statement of the number of grams of total carbohydrate in a serving, and a statement of the number of grams of total dietary fiber in a serving.” Fernandez, 2018 WL 2128450, at *4. Dietary fibers and sugar alcohols are considered carbohydrates for the purpose of calculating “total carbohydrates,” and the FDA provides extensive guidance regarding the treatment of sugar alcohols. 21 C.F.R. § 101.9(c)(6)(i)-(iv). Disclosure of sugar alcohols and their weights in the nutrition facts panel of a label is voluntary, however, if a claim is made about the grams of sugar alcohol on the label, disclosure must be made in accordance with 21 C.F.R. § 101.9(c)(6). Section 101.9(c)(6)(iv) states: “[a] statement of the number of grams of sugar alcohols in a serving may be declared voluntarily on the label, except that when a claim is made on the label or in labeling about sugar alcohol or total sugars, or added sugars when sugar alcohols are present in the food, sugar alcohol content shall be declared.” 21 C.F.R. § 101.9(c)(6)(iv); see also Fernandez, 2018 WL 2128450, at *4.

Statements about nutrients, however, do not necessarily have express preemption.

Under § 101.13(i)(3), “the label or labeling of a product may contain a statement about the amount or percentage of a nutrient if … [t]he statement does not in any way implicitly characterize the level of the nutrient in the food and it is not false or misleading in any respect.” Thus, “A nutrient content claim governed by § 343(r)(2) is …any claim outside of the nutrition-facts box that the manufacturer has chosen to make about the same kind of nutrients discussed inside the … nutrition information box.” Id.

With that backdrop, the court came to different conclusions about express preemption as to claims based on simply listing the number of net carbs or explaining how calculated them, on the one hand, and claims based on characterizing the number of net carbs as “Only Xg Net Carbs” and discussing the impact of sugar alcohols on blood sugar, on the other. Much of the analysis related to plaintiff’s argument that statements about net carbs cannot be preempted because they are not explicitly mentioned in the regulations. “Plaintiff’s argument that Section 343(q) of the NLEA and its implementing regulations, do not specifically list Net Carbs as a nutrient nor require the inclusion of Net Carbs in the Nutrition Facts panel is unavailing. The broad language in Section 343(r)(1) includes claims regarding nutrients, and relationships of nutrients, ‘of the type’ required by paragraph (q)(1) or (q)(2), obviating the need for specific categorical references to nutrients and nutrient relationships . . . ” The court also did not require that the FDA had to have expressly permitted the challenged labeling language. Here, there was ample evidence that FDA considered the language without prohibiting them. Among that evidence was the rejection of a citizen petition on the net carbs description in one of the products, noting “The agency has not generally objected to the use of ‘net carbohydrate” type information on food labels if the label adequately explains how the terms are used. If [the] FDA determines that such statements or their explanations are false or misleading, we will take appropriate action.” Thus, the court concluded that, “while the FDA may not have considered the exact language addressed …, it had clearly addressed the substance of the claims at issue.”

Statements about the products having “only” a certain number of grams of net carbs and explaining whether sugar alcohols have an effect on blood sugar levels did not have the same record and were not preempted. Implied nutrient claims—the implication of “only” is the net cabs in these products was low—are subject to misbranding unless FDA has set a criteria and it has been met. That has not happened with net carbs yet. As to explaining blood sugar impact, the court did not consider that to be a claim about nutrient content or a health related claim. We get the former, but the explanation of the latter was lacking. At least in the lay sense, saying nutrients in the food do not impact blood sugar does seem like a claim about health.

Getting past preemption did not mean plaintiff was done. Primary jurisdiction was looming. As would be expected, every claim that was preempted was also subject to primary jurisdiction. The net was cast a little broader, though.

Upon consideration of plaintiff’s claims and application of the four factors, primary jurisdiction applies with regard to plaintiff’s Net Carbs figures and calculations, and the “Only Xg Net Carbs” statements, as “[i]t is clear that it is the FDA’s role to decide what calculation methods manufacturers may use, not the courts.” Johnson, 2017 WL 6420199, at *9. Primary jurisdiction does not apply to plaintiff’s claims as to whether the labeling statements on the impact of sugar alcohols on blood sugar are false or misleading, as that is a factual issue within the traditional real of judicial competency.

Boiling it down, the distinction seemed to be that it is for FDA to determine the criteria for low net carbohydrate food, which is closely related to a number of issues it already decides. While there was not much analysis as to the discussion of blood sugar impact, the court clearly felt that was the sort of thing that it could decide as misleading or not without treading on regulatory toes.

Only after addressing preemption and primary jurisdiction did the court turn to whether New York state law claims for consumer fraud and warranty had been stated on the face of the complaint. Consumer fraud was not and it was not very close. Facts were not asserted that the challenged labeling was deceptive in a material way, which should require extra facts under Fed. R. Civ. P. 9(b). Nor did asserted facts establish any injury. Even with a reduced bar for economic injury from an allegedly over-priced product, “plaintiff only conclusorily asserts that Atkins Nutritionals charges a premium for its products and provides no facts regarding what the premium was, what price he paid for the products, or the price of non-premium products.” So, plaintiff did not assert any consumer fraud claim, regardless of what defense might apply.

He also did not have a warranty claim, because New York requires timely notice and that was not alleged. The court declined to adopt an exception to this rule for consumer products. This defect could not be cured with re-pleading. The plaintiff would get a third shot at pleading facts for some consumer fraud claim not subject to express preemption or primary jurisdiction. We have a hard time seeing a claim based solely on sugar alcohols and whether the amounts in these products affect blood sugar levels. Plaintiff can claim this information was material to his decision to buy this manufacturer’s Chocolate Chip Cookie Dough Bar, Sweet & Salty Trail Mix, and Chocolate Peanut Candies over other items at his local Wal-Mart, but it is hard to imagine facts supporting that convenient assertion.

 

It took us more than a week, but we finally put away the last serving pieces from last week’s family Hanukkah celebration.  We love Hanukkah, a festive holiday that celebrates victory over a tyrant king, a reclaimed temple, and a small quantity of oil that should have lasted only one night but that miraculously burned for eight nights.  In commemoration, we light candles for eight nights. And we use oil.  Lots and lots of oil.  Like, eight dozen potato latkes-worth of oil.   Though the holiday has far less religious significance than does Christmas, it is a time for family and gifts and food and song and celebrating the “miracle” of the bit of oil that improbably shed eight nights of light.

In a similar vein (pun intended), today we celebrate a very short, but surprisingly bountiful, decision out of the inferior vena cava (“IVC”) filter MDL pending in the Southern District of Indiana.  We love warnings causation, a potent doctrine too often rendered toothless by passive judges.  Not so in In re Cook, Inc. IVC Filters Marketing, Sales Practices, and Prods. Liab. Litig. (Tonya Brand), 2018 WL 6415585 (S.D. Ind. Dec. 5, 2018).   In the IVC filter MDL, the plaintiffs allege that the filters are prone to tilting, migrating, fracturing, and perforating the inferior vena cava.  In Brand, the defendants’ IVC filter was inserted in the plaintiff’s inferior vena cava to prevent pulmonary embolism during an upcoming spine surgery.  Two years later, the plaintiff began to experience pain on the inside of her right thigh.  Shortly thereafter, the plaintiff noticed something protruding from her thigh and pulled out a portion of her IVC filter.  The plaintiff was required to undergo open surgery to remove the rest of the filter.  The plaintiff sued, alleging that the instructions for use (“IFU”) that accompanied her filter did not adequately warn her physician of the risks associated with the filter.

The court explained that, under Georgia’s learned intermediary doctrine, the plaintiff could prevail on her warnings claims only by proving both that the warnings in the IFU were inadequate and that the inadequate warnings proximately caused her injuries.  The court emphasized, “Where the learned intermediary has actual knowledge of the substance of the alleged warning and would have taken the same course of action the plaintiff contends should have been provided, . . .  the causal link is broken and the plaintiff cannot recover.”  2018 WL 6415585 at *3.  The plaintiff’s physician testified that he was aware of all of the relevant risks when he implanted the Plaintiff’s IVC filter.  His knowledge of the risks was not based on the IFU; rather, it was based on his “education, training, and experience.”  Id.    Moreover, the doctor testified that he continued to use the defendant’s filter even after the plaintiff’s filter fractured, and that nothing about the plaintiff’s experience changed his mind about IVC filters in general or about the specific filter he used in the plaintiff.  The court held, “In the face of this devastating testimony, Plaintiff fails to raise a genuine issue of material fact on the proximate causation element” of her failure-to-warn claims.  Id.  at *4.

The plaintiff also argued that the defendants breached Georgia’s continuing post-sale duty to warn because they did not warn her physician, after he implanted her filter, of the filter’s propensity to  perforate and fracture.  She alleged that, if the defendants had provided such a warning, her doctor “potentially could have removed the filter before it fractured and pieces migrated throughout [her] body.” Id.   The court rejected this argument as well, holding that it was based on speculation and that the evidence, including the fact that the plaintiff’s physician continued to use the same filter in patients even after the plaintiff’s filter fractured, suggested that no post-placement warning would have prompted the doctor to retrieve the plaintiff’s filter any earlier.  As such, the plaintiff “fail[ed] to raise a genuine issue of material fact that any post-implant failure to warn caused her injuries.”   Id.   Because the plaintiff failed to sustain her burden of proving the causation element of her warnings claims, the court granted summary judgment for the defendants on those claims and on the claims that were based on them.

We make these same arguments over and over and over again in our medical device cases.  We often don’t prevail, even on clear records.  We wish that more courts had the clear-eyed approach to warnings causation that this MDL judge employed.  We will keep you posted on similar decisions.  And we still have a couple dozen potato latkes in the freezer, in case you are in our neighborhood.

Contrary to rumor, we are not on the verge of changing our name to the Filter Device Litigation blog. True, we are now on a several consecutive weeks run of sharing very good IVC opinions. In fact, we will likely have two this week. The recent outbreak of good sense largely emanates from Indiana, but today’s case, Broge v. ALN Int’l, Inc., 2018 U.S. Dist. LEXIS 204486 (N.D. Cal. Dec. 3, 2018), shows that logic can prevail even in (gasp) the Bay Area. Hold your nasty comments – we were born in the Bay Area and admire it endlessly. Our native-son regard for the place does not prevent us from acknowledging that defense-friendly product liability wins there are as rare as football wins this season on either side of the Bay. But the Raiders and 49ers both won last Sunday, and now we have a case from ND Cal. that insists that plaintiffs lob in the occasional fact in their complaints. Sometimes man bites dog. Sometimes Adam Sandler puts out a good movie. Sometimes a politician commits candor. Sometimes our kids answer our texts.

In Broge, the plaintiff’s IVC filter had become embedded in her vena cava wall. It took two surgeries to remove the filter. She sued in Santa Clara County Superior Court, alleging strict liability failure to warn and manufacturing defect, breach of warranty, negligent and fraudulent misrepresentation, and the inevitable violations of California Business & Professions Code sections 17200 and 17500. The only defendant was ALN International, though the complaint devoted a lot of space to the conduct and knowledge of other entities, including ALN Implants Chirurgicaux and ALN Implants. The case was removed to federal court on the basis of diversity of citizenship, and then the defendant filed a motion to dismiss. The court granted the motion in part, and its opinion noted that it was odd of the complaint to sue one entity based on alleged sins of another. That opinion can be found at Broge v. ALN Int’l, Inc., 2018 WL 2197524 (N.D. Cal. May 14, 2018). The plaintiff was given leave to amend and did so, but did not do so very well. The defendant filed another motion to dismiss. In scrutinizing the amended complaint, the Broge court did not merely cite the Twombly and Iqbal cases, it actually applied them. That spelled doom for the amended complaint, which did not contain much beyond bare conclusions.

Take the failure to warn claim, for example. The plaintiff alleged that another entity, ALN Implants, should have known and discovered the defects. That would not affix liability to the actual defendant in the case. Further, as is all too typical, the amended complaint contained mere conclusions that better warnings would have altered the physician’s decision to prescribe the IVC filter. The plaintiff’s curative amendment cured nothing.

The manufacturing defect claim fared no better. In an earlier complaint, the plaintiff simply said the product “contained manufacturing defects.” That is obviously not good enough. On the next go-round, the plaintiff said that the IVC filter at issue did not conform to a hook design that should have permitted easy removal. Well, that at least seems a bit better. But the amended complaint still failed to allege how the product deviated from the design – all it talked about was the result. Even worse, the amended complaint still, almost perversely, hung the alleged hook malfunction on an entity that was not in the lawsuit, ALN Implants.

The negligent misrepresentation claim offered no facts suggesting that the defendant lacked reasonable grounds to believe its safety and efficacy representations were not true, the warranty claim rested in part upon a representation by a third party, and the fraud claim lacked specificity on the who, what, when, where, and how. The Cal. Bus. Code claims were merely fraud claims in another guise, so they also did not make the grade. There was also a claim for punitive damages. Because that claim was derivative of the fraud claim, it, too, was a goner.

The Broge court dismissed the claims, but because California is a land of not just second, but third, chances, the plaintiff was given, again, leave to amend. Perhaps the court will eventually grow weary of reading threadbare complaints that contain more ambition than facts. As long as the court keeps coming out with precise, demanding opinion that respect pleading standards, we won’t grow weary of reading such opinions.

Today’s case is not our usual fare.  But we’ve never seen this kind of appeal succeed before, so we’re going to spare a few minutes for something a little odd but important.

First of all, the patient and the medical device manufacturer are on the same side – they’re both plaintiffs in Alcresta Therapeutics, Inc. v. Azar, 2018 U.S. App. LEXIS 33961 (D.C. App. Dec. 3, 2018).  Because in this suit, the medical device manufacturer and the patient are aligned in their desire to get the patient access to the device.  Defendant is the Secretary of Health and Human Services.  And the issue is the billing code, or lack thereof, assigned by HHS to the device.

The device, Relizorb, is a cartridge containing an enzyme that predigests fats in enteral formula.  So the device is designed to be used with enteral feeding via a stomach tube for people with illnesses who have difficulty digesting and absorbing essential fats.  Id. at *2.  Relizorb is expensive and is not needed by all enteral feeding patients.  Id. at *6-7.  Feeding tube systems consist of many different parts that are not pre-packaged together, but that are coded and priced together by the HHS as an “enteral feeding supply kit.”  Id. at *2.  Many other products used for enteral feeding are priced and coded separately.  HHS determined, however, that Relizorb should be coded as part of the supply kit rather than separately.  Id.  That decision has led Medicare and private insurers to deny reimbursement for Relizorb which in turn has prevented the patient from getting Relizorb and the manufacturer from selling it.  So, they sought a preliminary injunction ordering HHS to assign the device a temporary billing code that doesn’t treat Relizorb as a component of the enteral feeding supply kit allowing it be separately priced.

The district court denied the injunction and the only issue on appeal was whether plaintiffs had demonstrated irreparable injury.  Id. at *5.  That, and of course, whether they had standing to challenge HHS’s coding determinations.  HHS argued that coding decisions are not determinations of the reimbursement rates and that the only way plaintiffs should be allowed to proceed is to challenge a specific reimbursement denial through the Medicare appeals process.  Id. at *7.  But, in this instance, the coding decision dictated the reimbursement rate.  HHS had no evidence that it made any separate pricing determination separate from the coding decision.  Therefore, both the patient and the manufacturer had standing because they demonstrated “they are harmed by a lack of opportunity to obtain reimbursement that is caused at least in significant part by HHS’s coding determination” and a new, independent billing code would redress that harm.  Id. at *8.  The new billing code wouldn’t set the reimbursement rate, but it would allow the agency to set a reimbursement rate for the device.

A similar argument prevailed on irreparable harm.  The patient-plaintiff cannot afford to buy Relizorb without insurance reimbursement and the manufacturer-plaintiff can’t sell Relizorb because patients cannot get insurance reimbursement.  Id. at *10.  The detriment to the manufacturer threatened to put it out of business.  For the reasons noted above on standing, plaintiffs demonstrated a sufficient connection between the HHS coding decision and their irreparable harm “that success on the merits would meaningfully redress those injuries.”  Id. at *11.

This may be a rare situation, but important for our clients, and therefore us, to be aware of.

 

The FDA has recently released a proposed rule “to establish requirements for the medical device De Novo classification process” provided in 21 U.S.C. §360c(f)(2).  FDA, “Medical Device De Novo Classification Process,” 83 Fed. Reg. 63127 (Dec. 7, 2018).  This de novo classification option is a relatively recent addition to the FDCA (via the 1997 FDA Modernization Act), and provides:

(ii) In lieu of submitting a report under section 360(k) [a/k/a/ §510(k)] . . ., if a person determines there is no legally marketed device upon which to base a determination of substantial equivalence . . ., a person may submit a request under this clause for the Secretary to classify the device.

(iii) Upon receipt of a request . . ., the Secretary shall classify the device subject to the request under the criteria set forth in subparagraphs (A) through (C) of subsection (a)(1) [meaning Class I, Class II, or Class III] within 120 days.

(iv). . . .

(v) The person submitting the request for classification under this subparagraph may recommend to the Secretary a classification for the device and shall, if recommending classification in class II, include in the request an initial draft proposal for applicable special controls, as described in subsection (a)(1)(B), that are necessary, in conjunction with general controls, to provide reasonable assurance of safety and effectiveness and a description of how the special controls provide such assurance. Any such request shall describe the device and provide detailed information and reasons for the recommended classification.

360c(f)(2)(ii-v) (emphasis added).  The emphasized statutory language establishes the standard to which these “de novo” devices are held: “reasonable assurance of safety and effectiveness.”  That’s important to preemption because of what Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), had to say over twenty years ago:  “provid[ing] the FDA with a ‘reasonable assurance’ that the device is both safe and effective[,] [d]espite its relatively innocuous phrasing . . ., is a rigorous one.  Manufacturers must submit detailed information regarding the safety and efficacy of their devices, which the FDA then reviews.”  Id. at 477.

Famously, Lohr also declared that the 510(k) substantial equivalence process “[t]he 510(k) process is focused on equivalence, not safety.”  Id. at 493 (emphasis original).  That is certainly cannot the case with de novo devices, since by definition there is no equivalence determination to be made.  Indeed, the FDA “may decline to undertake a classification request submitted under clause (ii) if [it] identifies a legally marketed device that could provide a reasonable basis for review of substantial equivalence.”  21 U.S.C. §§360c(f)(2)(iv).

We’ve expounded at great length in our “Lohr Has Two Shadows” post about how Lohr had been an anachronism ever since it was decided because Congress toughened up the original 510(k) process that Lohr addressed with the Safe Medical Devices Act of 1990.  The SMDA imposed the same “reasonable assurance of safety and effectiveness” standard on substantial equivalence determinations that Lohr had praised as “rigorous in Lohr.  See 21 U.S.C. §§360c(a)(1)(B), 360c(f)(1)(A)(v).

Nevertheless, since Lohr, the judiciary has engaged in a conspiracy to ignore the SMDA and treat all 510(k) medical devices as if they were evaluated under minimalistic standard that the Supreme Court addressed in 1996.  With de novo devices, it’s going to be a lot harder for judges to continue sticking their heads in the sand and chanting “Lohr, Lohr, Lohr” every time a non-PMA device is at issue.

The FDA’s proposed rule makes clear that the de novo process is essentially the SMDA’s “special controls” regime without the fig leaf of substantial equivalence:

The De Novo classification process provides a pathway to ensure the most appropriate classification of a device consistent with the protection of the public health and the statutory scheme for device regulation. This pathway is intended to limit unnecessary expenditure of FDA and industry resources that may occur if devices for which general controls or general and special controls provide a reasonable assurance of safety and effectiveness are subject to a PMA due to a lack of a predicate.

83 Fed. Reg. at 63129 (emphasis added).  No longer can the SMDA standard for clearance of Class II devices be dismissed as involving “equivalence, not safety.”  It’s the same “rigorous” standard that Lohr equated with PMA – only extended to other classes of devices, in particular:

For any class II recommendation, the De Novo request must also provide an initial draft of proposed special controls along with a description of how the special controls provide reasonable assurance of safety and effectiveness.

Id. at 63130.

The proposed regulations firmly establish that de novo devices are to be evaluated for “safety and effectiveness,” not equivalence, in practically every aspect of their FDA review:

  • “If the submitter recommends that the device be classified as class II, FDA proposes that the recommendation must include a draft proposal for applicable special controls, and a description of how those special controls provide reasonable assurance of safety and effectiveness of the device.”  Id. at 63133.
  • “FDA proposes that the De Novo request include reference to any published standard relevant to the safety or effectiveness of the device.”  Id.
  • “For a clinical investigation involving human subjects, FDA proposes to require that a discussion of . . . safety and effectiveness data, adverse reactions and complications, patient discontinuation, patient complaints, device failures . . . and replacements. . . . FDA would use the summary of investigations in assessing safety and effectiveness of the device.”  Id.
  • “Valid scientific evidence is evidence . . . from which it can fairly and responsibly be concluded by qualified experts that there is reasonable assurance of the safety and effectiveness of a device under its conditions of use.”  Id. at 63133-34.
  • “The proposed benefit and risk considerations section would expressly require that, “pursuant to the determination of safety and effectiveness section of the regulations, a discussion be included demonstrating that . . . the probable benefit to health from use of the device outweighs any probable injury or illness from such use (i.e., a discussion demonstrating the safety and effectiveness of the device) when the device is used according to its labeling.”  Id. at 63134.
  • “Any safety and effectiveness data to assist FDA in assessing whether the clinical investigation supports that a reasonable assurance of safety and effectiveness exists. FDA would assess reasonable assurance of safety and effectiveness by evaluating the valid scientific evidence submitted to support the De Novo request. FDA would review the data to assess whether the data supports the claims made in the indications for use and demonstrates that the probable benefits of the device outweigh the probable risks.”  Id.
  • “Discussion of data on any adverse reactions to the use of the device . . . or complications related to the use of the device. . . . Frequency data and severity data are particularly useful in safety and effectiveness determinations. FDA would review the rates of complications in clinical investigations in assessing the safety and effectiveness of the device.”  Id.
  • “FDA would need all discontinuation data in order to determine the safety and effectiveness of the device.” Id.
  • “Trends in complaints may point to possible risks posed by the device. FDA would review such trend analyses in assessing the safety and effectiveness of the device.”  Id. at 63135.
  • “In analyzing failures, factors such as location, user application, and repeat component failures may apply. FDA would review such analyses in assessing the safety and effectiveness of the device.”  Id.
  • “Statistical analysis of the results from each clinical investigation. The statistical analysis should specify and discuss all effects. FDA would review such analyses in assessing the safety and effectiveness of the device.”  Id.
  • Any “contraindication, precaution, warning, or other limiting statement relevant to the use of the device. . . . This includes information regarding any special care to be exercised by a practitioner or patient for the safe and effective use of the device.”  Id.
  • “[I]f a De Novo request relies primarily on data from a single investigator at one investigation site, the De Novo request must include a justification showing why these data and other information are sufficient to demonstrate the safety and effectiveness of the device.”  Id.
  • “FDA further proposes to require that a De Novo request include a discussion of the clinical significance of the results, pursuant to the determination of safety and effectiveness.”  Id.
  • “FDA proposes to require that the De Novo request include any other identification, discussion, and analysis of any other data, information, or report relevant to the safety and effectiveness of the device.”  Id.
  • “FDA proposes that the De Novo request must include other information that is necessary for FDA to determine whether general controls or general and special controls provide a reasonable assurance of safety and effectiveness of the device. Examples would include marketing experience outside the United States, medical device reporting (MDR) data . . ., and patient preference information.”  Id. at 63136.
  • “FDA proposes to require the De Novo requester to update its pending De Novo request with new safety and effectiveness information . . . as such information becomes available.”  Id.
  • “FDA proposes that FDA would be able to inspect relevant facilities prior to granting or declining a De Novo request. Such an inspection is intended to assist FDA in determining whether a reasonable assurance of safety and effectiveness can be provided by general or general and special controls.”  Id. at 63137.

Emphasis added in all cases.  Once all of these safety/effectiveness requirements are complied with, the FDA would issue an “administrative order” granting the request and specifying the de novo device’s classification.  Id.  By such orders “FDA would determine the safety and effectiveness of the device using the criteria specified in the determination of safety and effectiveness section of the regulations.”  Id. (citing 21 C.F.R. §§860.289(d), 860.7).

Given the proposed regulations’ emphasis on determinations of device “safety and effectiveness” throughout, as well as its reliance on “special controls” customized to each de novo request, we think that de novo devices should be protected by preemption under Lohr and Riegel v. Medtronic, Inc., 552 U.S. 312 (2008).  We have here device-specific requirements intended “to provide reasonable assurance of safety and effectiveness” of these devices

Oddly, there is no explicit discussion – or even mention – of “preemption” in the FDA’s proposed rule.  So that nobody ends up buying a pig in a poke, we advise that industry-side comments to this proposal should request the FDA to specify explicitly that it believes the de novo process provides preemptive protection under 21 U.S.C. §360k(a), for all products that the FDA concludes have “reasonable assurance of safety and effectiveness” under 21 U.S.C. §360c(f)(2), and in accordance with Lohr‘s analysis .  While, in the past, FDA opinions on preemption haven’t always been helpful, or even intelligible, this time it might be.

A federal court in Utah ruled the other day that it had no personal jurisdiction over a corporate parent, even though the plaintiffs alleged that the defendant subsidiary was the “alter ego” of its owner.  We read the order with great interest for a couple of reasons.  First, one of our first assignments out of law school was to respond to discovery and write motions for an insurance company’s parent—a holding company that held considerable assets, but did not underwrite insurance policies.  We have learned over the years that some companies don’t care so much about corporate parents being sued, and others care a great deal.  Our insurance company client was in the “cared a great deal” bucket, leaving us to parse endlessly how the “company” differed from the “group,” how the company did all the business and had all the employees, and how they all scrupulously observed every corporate formality.  It usually worked, because it was all true.  The holding company was a holding company, and the insurance company had the wherewithal to answer for his own debts.  Ever since this experience, we have held a persistent (perverse?) interest in alter ego, agency, and other ploys to “pierce the corporate veil.”

The second reason the recent District of Utah case caught our interest is because one of the underappreciated aspects of the Supreme Court’s reset of general personal jurisdiction in Bauman is how the Court discarded so-called “agency jurisdiction.”  That was where a court could impute a subsidiary’s forum contacts to the corporate parent by applying a relaxed “agency” standard.  That form of jurisdiction does not exist anymore.  See Daimler AG v. Bauman, 571 U.S. 117, 134-36 (2014).  The Supreme Court closed the loop when it recalibrated specific personal jurisdiction in BMS and held that specific jurisdiction cannot be based on another defendant’s forum contacts.  See Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1783-84 (2017).

So where did that leave the plaintiff in the recent Utah case who was trying to sue a medical device company and its corporate parent?  Because there was no general jurisdiction over the non-resident parent, the plaintiff had to prove specific jurisdiction through the rigorous and difficult-to-prove “alter ego” standard.  The case is Jorgensen v. Wright Medical Group, Inc., No. 2:18-cv-366, 2018 WL 6250606 (D. Utah. Nov. 29, 2018), and the plaintiff sued the medical device manufacturer (the “company”) and its holding company (the “parent”) alleging injuries resulting from treatment with the device.

The district court rejected jurisdiction over the parent, and there are three interesting points.

First, the district court considered evidence, even though it was ruling on a motion to dismiss.  In an attempt to establish sufficient forum contacts, the plaintiffs alleged that both the company and the parent “sold, distributed, and marketed” the device within Utah.  Id. at *2.  But the parent submitted uncontroverted affidavits explaining that it did no business in Utah and had no place or business or property there.  Id.  The plaintiff submitted press releases and SEC filings where the parent spoke of its medical device business generally, but the district court found that consolidated statements are a “common business practice” that did not undermine the specific facts in the sworn affidavits.  Id. at *3.  The lesson is that unproven allegations will not carry the jurisdictional day.  Even on a motion to dismiss, courts can and should consider evidence.

Second, the alter ego standard is difficult to meet.  In attempting to attribute the company’s forum contacts to the parent, the plaintiff relied on the same press releases and SEC filings as before, but they were not sufficient.  Rather, “(1) there must be such unity of interest and ownership that the separate personalities of the corporation and the individual [shareholder] no longer exist . . . and (2) the observance of the corporate form would sanction a fraud, promote injustice, or an inequitably result would follow.”  Id at *4.  This standard is based on Utah law, but it is similar to standards we have seen in other states.  Here, the parent’s affidavits again held sway:  They attested that the parent “maintains separate accounting and banking records from the accounting and banking records of [the company].”  Id.  The plaintiff neither rebutted this evidence, nor alleged that any fraud or injustice would result from observance of the corporate form.  Id.

Third, in what might be the most useful part of the order, the district court denied “jurisdictional discovery.”  Id. at 5.  The following standard applied:  “‘The district court does not abuse its discretion by denying jurisdictional discovery where there is a very low probability that the lack of discovery’ would affect the outcome of the case.”  Id.  The plaintiff had to suggest specific discovery that would lead to a different result, and he came up with just one set of documents that purportedly would show the parent’s “direct involvement” in the medical device at issue.  But another plaintiff had offered those same documents to establish liability against the parent in another case, and the parent was dismissed, making is “highly unlikely” that the documents would make a difference here.  Id.

All is not lost for this plaintiff.  He still has jurisdiction over the medical device company, although we know nothing from this order about the arguable merits of his claims.  He will not, however, be allowed to reach into the parent company’s pockets.