We seem to be having an administrative law moment at the DDL blog. That subject matter area is seldom sexy. It can be, frankly, quite dry. But administrative law can have a huge impact on drug and device law. Yesterday, Bexis discussed cases holding that agency rules that did not undergo required notice and comment procedures could not then be used to clobber defendants via False Claim Act claims. As the former Vice President once said in another context (because we are a G-treated, family-friendly blog, we will delete the expletive) this is a big deal.

How else could administrative law ride to the rescue of our clients? Think about how some plaintiff regulatory experts criticize drug or device makers for their alleged departures from FDA guidances. What if those guidances are not worth the paper in the Federal Register on which they are not printed? Or think about adverse regulatory actions, such as inspections, that make ugly cameo appearances in tort cases. On October 9, 2019, the White House issued a pair of Executive Orders that attempt to rein in agency rule-making that itself does not follow the rules. The two Executive Orders restrict the ability of federal administrative agencies to regulate through guidance documents. Such regulation by guidance is something that the FDA does frequently. Perhaps in the future it will happen less frequently. (Here is an example of recent FDA legislation via guidance.)

The Executive Order on Promoting the Rule of Law through Transparency and Fairness in Civil Administrative Enforcement and Adjudication (you can find it here) is more general in scope. It begins with the (we hope) unarguable proposition that agency actions should not be arbitrary and that their substantive rules and interpretations should be published in the Federal Register: “Unfortunately, departments and agencies (agencies) in the executive branch have not always complied with these requirements.” Then we get another unarguable proposition: “No person should be subjected to a civil administrative enforcement action or adjudication absent prior public notice of both the enforcing agency’s jurisdiction over particular conduct and the legal standards applicable to that conduct.” Okay. All well and good. As that great proponent of fair and humane administrative law, Vladimir Ilyich Ulyanov (known to his pals as Lenin), once asked, What is to be done?

Here is what the Executive Order requires:

“When an agency takes an administrative enforcement action, engages in adjudication, or otherwise makes a determination that has legal consequence for a person, it may apply only standards of conduct that have been publicly stated in a manner that would not cause unfair surprise.” Everybody is against unfair surprise, right? But there is more:

“Any decision in an agency adjudication, administrative order, or agency document on which an agency relies to assert a new or expanded claim of jurisdiction — such as a claim to regulate a new subject matter or an explanation of a new basis for liability — must be published, either in full or by citation if publicly available, in the Federal Register (or on the portion of the agency’s website that contains a single, searchable, indexed database of all guidance documents in effect) before the conduct over which jurisdiction is sought occurs. If an agency intends to rely on a document arising out of litigation (other than a published opinion of an adjudicator), such as a brief, a consent decree, or a settlement agreement, to establish jurisdiction in future administrative enforcement actions or adjudications involving persons who were not parties to the litigation, it must publish that document, either in full or by citation if publicly available, in the Federal Register.”

The Executive Order also affords an opportunity to contest agency determinations. Further, within 120 days of the Order “each agency that conducts civil administrative inspections shall publish a rule of agency procedure governing such inspections.” The Order insists on appropriate procedures for information collections, and instructs agencies “to encourage voluntary self-reporting of regulatory violations by regulated parties in exchange for reductions or waivers of civil penalties” and “to provide pre-enforcement rulings to regulated parties.”

That all sounds like basic fair play. The agencies and plaintiff lawyers must hate it.

Next, let’s talk about the other Executive Order (which you can find here). As its title suggests, the Executive Order on Promoting the Rule of Law through Improved Agency Guidance Documents more specifically tackles the issue of guidance abuse. The goal is “to ensure that Americans are subject to only those binding rules imposed through duly enacted statutes or through regulations lawfully promulgated under them, and that Americans have fair notice of their obligations.” The Order observes that “Departments and agencies in the executive branch adopt regulations that impose legally binding requirements on the public even though, in our constitutional democracy, only Congress is vested with the legislative power.” True enough. The growth of the administrative state is, along with advances in nuclear physics, one of the most significant developments of the 20th Century. That administrative state (again, like physics) offers as many threats as benefits.

Here is the problem: “Agencies may clarify existing obligations through non-binding guidance documents, which the APA exempts from notice-and-comment requirements. Yet agencies have sometimes used this authority inappropriately in attempts to regulate the public without following the rulemaking procedures of the APA. Even when accompanied by a disclaimer that it is non-binding, a guidance document issued by an agency may carry the implicit threat of enforcement action if the regulated public does not comply. Moreover, the public frequently has insufficient notice of guidance documents, which are not always published in the Federal Register or distributed to all regulated parties.” Also true. Also threatening.

What is the solution? The Order requires “that agencies treat guidance documents as non-binding both in law and in practice, except as incorporated into a contract, take public input into account when appropriate in formulating guidance documents, and make guidance documents readily available to the public.” Going forward, each guidance document must “clearly state that it does not bind the public, except as authorized by law or as incorporated into a contract.” There will be ‘procedures for the public to petition for withdrawal or modification of a particular guidance document, including a designation of the officials to which petitions should be directed.” There must also be “a period of public notice and comment of at least 30 days before issuance of a final guidance document, and a public response from the agency to major concerns raised in comments.” There are other requirements, as well. The result should be less bogus agency legislation-via-guidance, and more clarity as to which guidances still have any force and what the extent of that force is.

More concretely and immediately, we harbor real doubts that, for instance, the FDA’s guidance documents concerning internet promotion/off-label promotion of drugs/devices can stand in the wake of these Executive Orders. And if the guidances cannot stand as a matter of federal administrative law procedure, their ability to influence state tort litigation is even more questionable.

Last term, in a case that the Blog completely ignored, the Supreme Court held that a provision of the Medicare Act, 42 U.S.C. §1395hh(a)(2), required the Centers for Medicare & Medicaid Services (“CMS”) to subject all Medicare-related determinations “that establish[] or change[] a substantive legal standard” to formal notice-and-comment rulemaking.  Such determinations explicitly include (as per that statutory provision) “scope of benefits,” “payment for services,” and “eligibility of individuals, entities, or organizations to furnish or receive services or benefits.”  Id.  The case is Azar v. Allina Health Services, 139 S. Ct. 1804 (2019).  Allina didn’t involve anything concerning prescription medical products, so it didn’t seem particularly relevant to us.  Allina also made what appears to be a fine distinction that only administrative lawyers – that is, not us – could love:

The government’s interpretation can’t be right.  Pretty clearly, the Medicare Act doesn’t use the word “substantive” in the same way the APA does − to identify only those legal standards that have the “force and effect of law.”

139 S. Ct. at 1811.  The decision that the Supreme Court affirmed had filled in the blanks to hold:

In other words, as relevant here, the Medicare Act requires notice-and-comment rulemaking for any (1) “rule, requirement, or other statement of policy” that (2) “establishes or changes” (3) a “substantive legal standard” that (4) governs “payment for services.” Id. §1395hh(a)(2). . . .  “Substantive law” is law that “creates, defines, and regulates the rights, duties, and powers of parties.”  A “substantive legal standard” at a minimum includes a standard that “creates, defines, and regulates the rights, duties, and powers of parties.”

Allina Health Services v. Price, 863 F.3d 937, 943 (D.C. Cir. 2017) (citation omitted), aff’d, 139 S. Ct. 1804 (2019).

So what?  Get to the point.

To put it bluntly, Allina may well mean “sayonara” for a lot of False Claims Act litigation, including those bedeviling our prescription medical product manufacturing clients – because CMS has been shirking its regulatory responsibilities for many years.  So said a judge in our neighborhood, just the other day.  See Polansky v. Executive Health Resources, Inc., 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019).  Polansky also involved reimbursement, and it followed these logical steps:

  1. The Medicare Act required CMS to subject all “substantive legal standards” to notice and comment rulemaking. 1395hh(a)(2).
  2. Allina held that “substantive legal standards” swept more broadly than just what had force of law under the Administrative Procedure Act.
  3. The District of Columbia Circuit got it right on what “substantive legal standards” did mean in §1395hh(a)(2).
  4. The standard at issue in Polansky affected how much somebody could get reimbursed by Medicare, and thus was a “substantive legal standard.”
  5. CMS (as with virtually everything else it has done) didn’t use notice-and-comment rulemaking.
  6. Therefore the improperly promulgated standard could not be enforced by anybody by means of the False Claims Act.

That last step, of course is the most important one, so we’ll quote Polansky’s holding directly:

The determinative issue in this Court’s Allina analysis is whether the . . . policy referenced in the 1989 Manual and its predecessors is a “substantive legal standard” within the scope of Section 1395hh(a)(2).  If so, then Relator’s . . . claims fail as a matter of law, because it is undisputed that the . . . policy did not go through notice and comment as required by Section 1395hh(a)(2) for substantive legal standards.  Applying the definition elucidated by the District of Columbia Circuit, it is clear that the . . . policy contained in the CMS manual is a “substantive legal standard” and therefore required notice and comment rulemaking procedures.

Polansky, 2019 WL 5790061, at *14 (emphasis added).  With respect to any “substantive legal standard” “contained in agency manuals that had not been promulgated pursuant to notice and comment, Allina compels the conclusion that there can be no FCA liability.”  Id. at *16.

That’s a big deal.  It’s almost like preemption, since it doesn’t matter how strong or weak (and the court thought these claims were pretty weak, see id. at *8-10) the FCA claim is, if such a claim is based on something CMS did that hasn’t gone through notice-and-comment rulemaking, the claim fails.  So every pending Medicare-related FCA claim – including all claims against prescription medical product manufacturers or suppliers − needs to be examined for invalidity under Allina.

Perhaps fittingly Polansky was decided on Election Day.  In the Eastern District of Pennsylvania at least, it was time to throw the bum FCA claims out.

We’ve been backing the proposition that the Erie doctrine concerning federal courts’ prediction of state law precludes courts clothed only with diversity jurisdiction from expanding state tort liability in novel ways since just about the beginning of the Blog.  However, our analyses have tended to be forward looking.  We typically start with the Supreme Court’s definitive statement in Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3 (1975), that federal courts are “not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.”  Id. at 4.  We then typically address ourselves to the law of circuit where the infraction arose.

Today, we’re mostly going in the opposite direction to discover the genesis of this principle, although we will keep an eye out for other United States Supreme Court precedent to the same effect.  Erie conservatism, of course, has its origins in the Supreme Court’s seminal directive in Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) (Brandeis, J.), that, “[e]xcept in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State.”  Id. at 78.  Erie condemned federal courts’ disregard of state law “which is often little less than what the judge advancing the doctrine thinks at the time should be the general law on a particular subject.”  Id.  Federal judges may not “brush[] aside the law of a state in conflict with their views.”  Id.

Expressing core constitutional principles of federalism, the Court in Erie declared that “no clause in the Constitution purports to confer . . . power upon the federal courts” to “declare substantive rules of common law applicable in a state.”  Id. at 78.  When a federal court “declare[s]” a substantive rule of state law not firmly anchored in clear state legislative or decisional authority, it “invade[s] rights which . . . are reserved by the Constitution to the several States” and engages in “an unconstitutional assumption of [state] powers.”  Id. at 79-80.  Erie thus restored the States’ prerogative to “define the nature and extent” of a litigant’s rights, an “object [that] would be thwarted if the federal courts were free to choose their own rules of decision whenever the highest court of the [S]tate has not spoken.” West v. AT&T Co., 311 U.S. 223, 236 (1940).

Subsequent high court decisions have recognized that “Erie was deeply rooted in notions of federalism.”  Boyle v. United Technologies Corp., 487 U.S. 500, 517 (1988).  Erie sought to achieve, or at least shoot for, “twin aims”:  “‘discouragement of forum-shopping and avoidance of inequitable administration of the laws[.]’” Salve Regina College v. Russell, 499 U.S. 225, 234 (1991) (quoting Hanna v. Plumer, 380 U.S. 460, 468 (1965)).  The comity between the respective powers of the states and federal courts that Erie required was “fundamental to our system of federalism.”  Johnson v. Fankell, 520 U.S. 911, 916 (1997).  Erie principles thus prohibit “federal judges” from “displac[ing] the state law that would ordinarily govern with their own rules of federal common law.”  Boyle, 487 U.S. at 517.  Thus, “a federal court is not free to apply a different rule however desirable it may believe it to be, and even though it may think that the state Supreme Court may establish a different rule in some future litigation.”  Hicks v. Feiock, 485 U.S. 624, 630 n.3 (1988).

This intent to preserve our system of federalism should inform a federal court’s Erie analysis.  When a state’s highest court has decided the issue at hand, its ruling “is to be accepted by federal courts as defining state law.”  West, 311 U.S. at 236.  When that has not occurred, “[t]he proper function” of a federal court “is to ascertain what the state law is, not what it ought to be.”  Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 497 (1941).  “[I]t is the duty of the [federal judge] in every case to ascertain from all the available data what the state law is and apply it rather than to prescribe a different rule, however superior it may appear.”  West, 311 U.S. at 237.  Diversity jurisdiction “does not carry with it generation of rules of substantive law.”  Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 426 (1996).

As the above discussion demonstrates, while the Supreme Court’s admonition in Day & Zimmerman against federal courts “engraft[ing]” novel liability onto existing state tort law is the most direct statement of Erie-based conservatism with respect to state law, it is not the only – or even the most recent – expression of this principle.  The doctrine did not arise, full-blown, in Day & Zimmerman, like Athena springing from the head of Zeus.  Rather, the principle of Erie conservatism has strong and deep roots in the Court’s Erie jurisprudence, that reach back to Erie v. Tompkins itself.


Plaintiffs in (mostly) prescription drug cases have tried, with decreasing success, to limit the scope of implied impossibility preemption under the Mensing/Bartlett line of supreme court precedent to generic drugs.  It’s not a particularly satisfying rationale, but the simple claim that “those were generic drug cases” did at least convince some courts that really wanted to be convinced.  In response to that, we highlighted (among other things) Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, 702-03 (3d Cir. 2016), which applied Mensing/Bartlett preemption principles outside of the FDCA context altogether – to a product liability case involving an airplane crash.

The proposition is that of course implied impossibility preemption principles, as enunciated by Mensing and Bartlett, apply to non-generic drugs.  Implied preemption principles are not governed by any particular statutory scheme, so not only does Mensing/Bartlett preemption apply to all aspects of the FDCA, they apply to any statutory scheme presenting similar federal/state conflict issues.

Well, now we have another example of a fortiori application.  The same impossibility preemption rationale, based mostly on Bartlett, applied recently to a case that didn’t even involve product liability, but rather banking.  See Anderson v. Wells Fargo Bank, N.A., 2019 WL 4773972 (D.S.D. Sept. 30, 2019).  Anderson involved purported wrongful discharge claims by certain bank employees based on those employees’ past criminal records.  Here is the conflict:

A federal statute . . . requires [defendant] to investigate an individual’s criminal history before hiring them.  [Defendant] may not hire individuals convicted of certain offenses without [prior agency] consent.

Id. at *1 (citations omitted).  Plaintiffs all had disqualifying convictions that they did not disclose and that were missed in an earlier, less comprehensive background check.  Id. at *2.  Once a better database became available, defendant rescreened plaintiffs (with their consent).  The rescreening revealed the disqualifying convictions, and as required by federal statute, plaintiffs were discharged.  Id.

Plaintiffs’ suit for supposed “fraudulent” termination ran headlong into preemption under Bartlett.

State law is “impliedly pre-empted where it is impossible for a private party to comply with both state and federal requirements.”  Plaintiffs here assert [defendant] should not have fired them when it became clear they were . . . ineligible. . . .  If the court concluded plaintiffs’ state law liability claims were not preempted, [defendant] would be confronted with an impossible choice: face potential federal liability under . . . for employing ineligible individuals or face state law liability for “fraudulently” terminating employees.  [The federal statute] “prohibited [defendant] from taking the remedial action required to avoid liability under” plaintiffs’ theory of the case.

Anderson, 2019 WL 4773972, at *6 (two Bartlett citations omitted).  Because defendant “cannot comply both with [federal law] and with the state law fraud statutes as plaintiffs construe them” the claims in Anderson were preempted.  Id.

While the statute provided an exception if prior agency consent was obtained, such consent had not been sought, and after the fact that pre-approval requirement.  Defendant “did not have an option to suspend plaintiffs’ employment to allow them to obtain a waiver.”  Id. at *7.  The case thus presented a classic Mensing/Bartlett impossibility preemption situation, where immediately applicable common-law claims had to give way in the face of mandatory pre-approval by a government agency.  There was no “general fraud exception” to impossibility preemption.  Id. (“Plaintiffs do not cite any authority for a more general fraud exception to preemption law and the court is aware of none.”).

Our non-generic prescription drug preemption cheat sheet demonstrates that plaintiffs have been increasingly unsuccessful in their attempts to cabin Mensing/Bartlett preemption to generic drugs only.  That is as it should be.  Since implied preemption principles apply to all federal regulations, even banking, a fortiori Mensing/Bartlett preemption applies to other parts of the FDCA.


A couple of weeks ago we compared New Jersey litigation with New Jersey food and decided we liked the food better. No aspersions were intended. After all, we grew up in New Jersey and still worship at the altars of Seton Hall Prep, Bruce Springsteen, and the New York football Giants. Anyway, we might need to revisit that comparison. New Jersey product liability law is pretty good. It might not be as tasty as a DeLorenzo’s tomato pie, but it is clear and logical. Gazing across the Delaware River from our current perch in Philly, we are green (definitely not Eagle green) with envy.

A recent decision, Hindermyer v. B. Braun Med., 2019 U.S. Dist. LEXIS 189193 (D.N.J. Oct. 30, 2019), stokes that envy. The plaintiff in Hindermyer alleged existing and threatened injuries from an implanted IVC filter. An IVC filter is a medical device that traps and filters blood clots that develop in the lower extremities. The goal is to prevent such blood clots from reaching the lungs. Originally, IVC filters were implanted permanently. But manufacturers later offered another type of IVC filter that was retrievable and intended for removal after the risk of a thrombotic event subsides. The IVC filter implanted in the plaintiff was of the permanent variety. Over the years, the FDA issued alerts regarding potential complications from IVC filters possibly migrating or causing perforations. Those alerts urged doctors to remove the filters after the risk of pulmonary embolisms subsided. The plaintiff in Hindermyer alleged that despite those alerts, the defendants manufactured and promoted their IVC filters for long term use. Eight years after the IVC filter was implanted, she went into he hospital for pain that was possibly caused by the IVC filter. The IVC filter was still located where it had been implanted. There was no migration. The plaintiff’s doctors did not counsel removal of the filter. The filter had not caused any of the feared serious complications, such as fracture, etc. Nevertheless, the plaintiff alleged that the filter put her at greater risk of those complications. In the complaint, the plaintiff asserted the following ten causes of action against the defendants: (1) negligence; (2-4) design, manufacturing, and warning defect claims pursuant to the New Jersey Products Liability Act, N.J.S.A. 2A:58C-1 et seq. (“NJPLA”); (5) breach of the express warranty; (6-7) breaches of the implied warranty of fitness and implied warranty of merchantability; (8) fraudulent misrepresentation; (9) fraudulent concealment; and (10) negligent misrepresentation. The defendants moved to dismiss the complaint, arguing that all the claims were subsumed by the NJPLA and did not meet that statute’s standards.

The threshold issue was whether the NJPLA did, indeed, govern all the claims in the case. The Hindermyer court explained that the legislative intent behind the NJPLA was “to limit the expansion of product liability law” and to “limit the liability of manufacturers so as to balance[] the interests of the public and the individual with a view towards economic reality.” [We have heard plaintiff lawyers argue that the NJPLA is aberrational. They have even had the chutzpah to argue that position to a New Jersey MDL court as a reason to steer clear of New Jersey bellwether trials! Apparently the concepts of balance and economic reality are aberrational.] In Hindermyer, it was clear that the NJPLA controlled. However the claims were styled, whether as implied warranty, fraud, or whatever, the plaintiff was alleging physical injuries from a product. The case looked like a product liability duck and quacked like a product liability duck. The claims sought product liability damages, so it was subsumed by the NJPLA.

The NJPLA contemplates the usual trio of product liability theories: design defect, manufacturing defect, and failure to warn. The plaintiff in Hindermyer did not allege what needed to be alleged to sustain any of those theories. First, the plaintiff failed to plead a feasible alternative design – that is, “the availability of a technologically feasible and practical alternative design that would have reduced or prevented the plaintiff’s harm without substantially impairing the reasonably anticipated or intended function of the product.” Her notion seemed to be that the permanent IVC filter implanted in her should have been retrievable. But retrievable and permanent are not alternative designs; rather, they are alternative products. The plaintiff did not allege that the temporary version was capable of being made when her IVC filter was implanted. Moreover, her filter was marketed and sold as a permanent filter, whereas retrievable filters are designed to be removed. In the court’s view, permanent and retrievable filters are “inadequate comparators.” Because are entirely different products, the court dismissed the design defect claim.

The plaintiff in Hindermyer fared no better with her manufacturing defect cause of action. Such a claim must plead a deviation from the intended design of the product. The plaintiff did not manage to do that. She had “not identified, within even in general terms, a particular error or mishap in the manufacturing process that caused her Vena Tech filter to deviate from Defendants’ own standards, nor does she contend that her device failed to conform to other identical units.” The gravamen of the plaintiff’s complaint was that her IVC filter did, in fact, conform to the fundamental design of the product as being a permanent implant. Accordingly, the court concluded that the manufacturing defect claim was “inconsistent with [the plaintiff’s] theory of the case,” and dismissed it.

Finally, the Hindermyer court held that the plaintiff lacked standing to sue over a failure to warn of risks that she did not suffer. The plaintiff had not alleged that the defendants “had a duty to warn about chronic right side pain – her only alleged symptom.” Merely being at risk of other complications is not enough. The same reasoning requires dismissal of the plaintiff’s express warranty claim.

So there it is: a fully praiseworthy New Jersey product liability opinion. (Sure, the court refers to the FDA substantial equivalence process as 501(k) instead of 510(k), putting us in mind of Levi’s jeans as opposed to an unfairly maligned FDA regulatory regime, but we assume that error will be corrected before too long – certainly before the next Eagles-Giants tilt.)

This post is from the non-Reed Smith side of the blog.

If you know this blog, you know we leave no stone unturned when it comes to preemption.  As far as we know, Greager v. McNeil-PPC, Inc., 2019 WL 5549524 (N.D. Ill. Oct. 28, 2019) is a preemption issue of first impression.  Plaintiff alleged she suffered an injury from her use of name-brand and generic ibuprofen products.  Id. at *1.  The manufacturer and distributor of the generic product moved to dismiss on the basis of preemption asking the court to apply the conflict preemption rule established by Mensing and Bartlett.  The court agreed.

The analysis is pretty straightforward.  Generic drugs receive FDA approval via abbreviated new drug applications (ANDA) and upon a showing that the generic drug is equivalent to a previously approved branded drug.  Federal law then applies a “duty of sameness” to generic drugs.  A generic drug and its labeling must be identical to those approved for the brand drug.  Id. at *2.  This process applies to both prescription and over-the-counter (OTC) drugs.  Because of this “sameness” requirement, the Supreme Court has held that it would be impossible for generic manufacturers to comply with both federal law and any state tort law that held that the product or its labeling was defective.  Unlike brand drugs which, under certain circumstances, have a process that allow them to change their labeling without FDA approval, generic manufacturers have no such option.  So claims against generics are preempted.

Plaintiff argued that OTC drugs are different because of the savings clause in 21 U.S.C. §379r.  This regulation that applies to OTC drugs contains a provision expressly preempting any state law that is “different from or in addition to, or that is otherwise not identical with, a requirement under this chapter.”  Id. at *3.  But the regulation goes on to provide:  “Nothing in this section shall be construed to modify or otherwise affect any action or the liability of any person under the product liability law of any State.”  §379r(e).   Plaintiff argues, therefore, that it was Congress’ intent to preserve products liability claims like hers.

The court, adopting defendants’ argument, focused its analysis on the “nothing in this section” language.  The savings clause applies solely to the express preemption established in §379r but does not apply to the conflict preemption on which defendants are relying and the court is applying.  So, while the plaintiff was drawing attention to the fact that OTC and prescription drugs are governed by different regulations:

The key distinction in the relevant regulatory structure and case law in not between prescription and non-prescription drugs but between NDA holders and ANDA holders.

Id. at *4.  All of the cases cited by plaintiffs turned on the availability of the CBE process.  Since it is undisputed that that process is not available to the generic manufacturer in this case and since all of the claims are premised on either failure to warn or improve the product – they are all dismissed.

As we mentioned in our recent Preemption Teaser post, last month’s concurrence in denial of certiorari in Lipschultz v. Charter Advanced Services (MN), LLC, ___ S. Ct. ___, 2019 WL 5300908 (U.S. Oct. 21, 2019), provides an indication that, at least to some extent, Justice Thomas might have found a kindred spirit of sorts in Justice Gorsuch (who joined that concurrence) as to some of his hitherto idiosyncratic preemption views.  In particular, the opinion repeated, id. at *2, the “freewheeling judicial inquiry” catchphrase from Justice Thomas’ concurrence in Wyeth v. Levine, 555 U.S. 555, 558 (2009), in which he, alone among the Justices, rejected the concept of “obstacle to purposes and objectives” implied preemption (which hereafter we’ll just call “obstacle”) altogether for precisely that reason.

As an alternative to “obstacle” preemption, the Lipschultz concurrence posits a theory whereby implied conflict preemption occurs when state law “logically contradicted the ‘Constitution,’ the ‘Laws of the United States,’ or ‘Treaties.”  Id. at *1 (quoting Supremacy Clause).  Under such a theory, “final agency action” would have “preemptive effect” as to “federal standards and policies that are set forth in, or necessarily follow from, the statutory text.”  Id. (quoting Thomas concurrence in Wyeth v. Levine, 555 U.S. 555 (2009)).  Since the petitioner in Lipschultz didn’t make this argument, Justices Thomas and Gorsuch concurred in the denial of certiorariId. at *2.  That amounts to an engraved invitation to make the argument in the future.

On to Buckman.  In concluding that fraud on the FDA claims were preempted in Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), the 7-justice majority followed what was essentially an obstacle preemption rationale.

The conflict stems from the fact that the federal statutory scheme amply empowers the FDA to punish and deter fraud against the Administration, and that this authority is used by the Administration to achieve a somewhat delicate balance of statutory objectives. The balance sought by the Administration can be skewed by allowing fraud-on-the-FDA claims under state tort law.

Id. at 348.  Thus Buckman’s analysis looked to:  (1) the FDA’s extensive disclosure requirements; (2) the FDA’s ability to detect, deter, and punish fraud; (3) the FDA’s nuanced position on off-label use; and (4) that tort claims attacking the adequacy of submissions to the FDA could gum up the regulatory works with additional, unnecessary paper.  Id. at 348-51.

The two main holdings in Buckman are, first, that claims attacking agency decisions as fraudulently obtained are preempted, and second, that private persons (such as tort plaintiffs) lack the ability to enforce the FDCA and thus cannot assert claims in which purported violations are a “critical element.”  Id. at 353.

Applying Justice Thomas’ preemption views, how can we reach the same result?

First of all, the scope of preemption cannot “wander far from the statutory text.”  Levine, 555 U.S. at 583 (Thomas, J., concurring).  Philosophically, for Justice Thomas, preemption rests upon supreme federal powers that are “few and defined.”  Id. at 585.  The Supremacy Clause grants supremacy only to “[t]his Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties,” id. at 586, so that is where preemption starts and stops – not “broad federal policy objectives, legislative history, or generalized notions of congressional purposes that are not contained within the text of federal law.”  Id. at 587.

This rationale alone should be plenty to support Buckman’s second prong, concerning private FDCA enforcement.  The pertinent statutory language, as Buckman aptly put it, “leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance.”  531 U.S. at 349 n.4.

(a) Except as provided in subsection (b), all such proceedings for the enforcement, or to restrain violations, of this chapter shall be by and in the name of the United States. . . .

(b)(1) A State may bring in its own name and within its jurisdiction proceedings for the civil enforcement, or to restrain violations, of [enumerated FDCA provisions concerning] food . . . located in the State.

21 U.S.C. §337(a-b).

“Pre-emption must turn on whether state law conflicts with the text of the relevant federal statute or with the federal regulations authorized by that text.”  Levine, 555 U.S. at 588 (Thomas, J., concurring).  See also Virginia Uranium, Inc. v. Warren, 139 S. Ct. 1894, 1901 (2019) (“a litigant must point specifically to ‘a constitutional text or a federal statute’ that does the displacing or conflicts with state law”) (Gorsuch, J., joined by Thomas & Kavanaugh, JJ.).  With respect to private FDCA enforcement masquerading as a state-law tort, nobody claims – at least in this century − that the federal government lacks the constitutional authority to enact the FDCA and invest enforcement solely (for everything other than some food-related provisions) in the hands of the FDA.  Thus a “comparison between federal and state law,” that reveals a state-law action seeking to impose liability for failure to comply with purported “duties” created by the FDA/FDCA has found something directly contrary to the express terms of the federal act.  Preclusion of private FDCA enforcement flows directly from the express terms “set forth in” the FDCA.  Lipschultz, 2019 WL 5300908, at *2.

Turning to agency fraud claims, we are informed by Justice Thomas’ discussion in Mensing, 564 U.S. at 621-23, that the Supremacy Clause is a “non obstante” provision understood by the Framers to preempt state law where it “logically contradicted. . . the ‘Laws of the United States.’”  Lipschultz, 2019 WL 5300908, at *1 (discussing Mensing).  As mentioned in Lipschultz, Justice Thomas is by no means wedded to “physical impossibility” as the defining characteristic of impossibility preemption.

The Court . . . has not explained why a narrow “physical impossibility” standard is the best proxy for determining when state and federal laws “directly conflict” for purposes of the Supremacy Clause.  There could be instances where it is not “physically impossible” to comply with both state and federal law, even when the state and federal laws give directly conflicting commands. . . .   Therefore, “physical impossibility” may not be the most appropriate standard for determining whether the text of state and federal laws directly conflict.

Levine, 555 U.S. at 590 (Thomas, J., concurring) (citation omitted).

Indeed, the Supremacy Clause “suggests that courts should not strain to find ways to reconcile federal law with seemingly conflicting state law,” since non obstante provisions “specif[ied] that they did not want courts distorting the new law to accommodate the old.”  Mensing, 564 U.S. at 622 (citations omitted).  In such situations, preemption is appropriate, under Justice Thomas’ view of the law, to prevent FDA-regulated manufacturers from “be[ing] required continually to prove the counterfactual conduct of the FDA and [regulated] manufacturer in order to establish the supremacy of federal law.”  Id. at 623.

Preemption of agency fraud claims fits neatly within this framework.  A fraud on the FDA claim is nothing more – and nothing less – than the assertion that a state-law jury can ignore whatever in-force FDA (or other federal) regulatory determination is under attack because that decision was allegedly induced by the defendant’s lies or omissions to the agency.  Purported “counterfactual conduct of the FDA” is inherently at issue in such claims, as causation turns on the plaintiff’s contention that a fully-informed agency would not have made the decision that it did.  Further, fraud on the FDA claims are in logical contradiction with federal law.  They necessarily conflict with whatever in-force agency decision the plaintiff is attacking.  Forget impossibility.  If federal supremacy is to mean what Justice Thomas says it means, then the lawful decisionmaking processes of federal agencies, within the scope of their properly delegated authority, cannot be open to collateral attack by state law.  That is the sort of “direct conflict” that would be preemptive in Justice Thomas’ view of the preemption world.

Indeed, in Buckman itself, Justice Thomas agreed with preemption, given evidence “that the Food and Drug Administration (FDA) has done nothing to remove the devices from the market, even though it is aware of the basis for the fraud allegations.”  531 U.S. at 354 (Thomas, J. joining Stevens, J. concurring opinion).  Only if “the FDA had determined that [defendant] had committed fraud,” would the inherent logical conflict between the agency fraud claim and the agency’s actual decision be resolved, and thus remove the basis for preemption.  Id. at 354.

Under those circumstances, respondent’s state-law fraud claim would not depend upon speculation as to the FDA’s behavior in a counterfactual situation but would be grounded in the agency’s explicit actions.  In such a case, a plaintiff would be able to establish causation without second-guessing the FDA’s decisionmaking

Buckman, 531 U.S. at 354.

We here at the DDLaw Blog are perfectly content with the Buckman majority’s resort to “obstacle” preemption to preclude agency fraud allegations and private FDCA enforcement.  However, given the doctrinal disdain that Justice Thomas (and perhaps Justice Gorsuch) have for this form of implied preemption, we offer the above as an example of the sort of argument that a defendant can make to ensure that the preemptive force of Buckman survives such doctrinal disputes.  Given the current makeup of the Court, a successful implied preemption argument in the prescription medical product liability context is unlikely without the votes of both of these justices.  Early in the Blog’s existence, we lost Justice Thomas in Warner-Lambert Co., LLC v. Kent, 552 U.S. 440 (2008), and the result was a 4-4 non-precedential tie on a Buckman issue.

Thus, we think that defendants would be well advised to accept the invitation extended in Lipschultz to frame their Buckman preemption arguments not only in the traditional way that the Buckman Court did, but also in a way that would allow Justices Thomas and (perhaps) Gorsuch also to rule in favor of preemption.

They are often called “snap removals” or “wrinkle removals.”  They refer to cases removed to federal court before a forum defendant is served, which is one way to comply with the forum defendant rule in 28 U.S.C. § 1441(b)(2).  That statute says that a civil action otherwise removable on diversity jurisdiction may not be removed if any defendant “properly joined and served” is a citizen of the forum state.

Thus, we have “snap removals.”  If you remove a case before the forum defendant is served, complete diversity should carry the day.  Sure, many plaintiffs have complained that this race to the federal courthouse violates the spirit of the removal statute, but the authorities are trending in the direction of following the statute’s plain language (you can read our most recent reports here and here).  Pre-service removal therefore is common and accepted in many places, if not most.

Here is today’s question:  If the timing of a removal is so important, when is a case considered removed?  We believe a case is removed as soon as the notice of removal hits the federal docket, but two federal courts last week went the other way and ruled that a case is “removed” only after notice of the removal is filed and served in state court.

The earlier of the two cases was a classic race.  A non-Pennsylvania plaintiff filed her complaint against Pennsylvania defendants in Pennsylvania state court at 10:06 a.m., and the defendants removed the case at 1:55 p.m. before they were served.  That, however, is not the end of the story.  Plaintiff served all defendants with a copy of the complaint 20 minutes later—at 2:15 p.m.—and the defendants filed their notice on the state docket at 4:11 p.m.  See Brown v. Teva Pharmaceuticals, Inc., No. 19-3700, 2019 WL 5406218 (E.D. Pa. Oct. 23, 2019).

The second case was even more compressed.  A non-New Jersey plaintiff sued a New Jersey defendant in New Jersey state court at 9:35 a.m., and the defendants removed the case to federal court at 10:14 a.m.—one minute before the plaintiff personally served the complaint.  Although the defendant beat the service clock, it did not file and serve notice in state court until 11:17 a.m.  Dutton v. Ethicon, Inc., No. 18-17199, 2019 U.S. Dist. LEXIS 180567 (Oct. 18, 2019).

All in a day’s work, right?  The defendants argued that they removed their cases before any forum defendant was served, thus complying with the forum defendant rule.  Both district courts disagreed, and they remanded the cases for essentially the same reason—the plaintiffs completed service before the defendants could complete all the steps required for removal.  The removal statute provides that a removing party must give notice to adverse parties and file a copy of the notice in state court, “which shall effect the removal and the State court shall proceed no further unless and until the case is remanded.”  28 U.S.C. § 1446.

That is the language that both courts seized on:  “which shall effect the removal.”  As the District of New Jersey explained:

By language alone, § 1446 requires three steps for effectuating removal to federal court:  defendants must file the notice of removal in federal court, provide written notice to all adverse parties, and file a copy of the notice with the clerk of the state court.  Indeed, the phrase “which shall effect the removal” in § 1446(d) . . . makes it clear that removal is not “effected” until all three steps are completed.

Dutton, at *14; see also Brown, at *2 (“Significantly, § 1446(d) further provides that the written notification of all adverse parties and the filing of a copy of the removal notice with the state court clerk ‘shall effect the removal.’”).

The defendants, for their part, argued that they complied with the forum defendant rule because they had not been properly joined and served when they initiated removal, but the District of New Jersey rejected that argument as contrary to the plain language of the statute.

Although these orders resulted in remand, they also reaffirmed the vitality of pre-service removal (“snap removal”) as a means to comply with the forum defendant rule.  Both cite Encompass Insurance Co. v. Stone Mansion Restaurant, Inc., 902 F.3d 147 (3d Cir. 2018), the recent (and binding) Third Circuit case approving pre-service removal (you can read our breaking news post on Encompass here).  Moreover, the district court in Dutton denied remand over other cases where the defendant had clearly filed the required notice in state court before it was served.  In one case the defendant removed the case eleven minutes after it was filed and provided notice in state court a mere two minutes later—too fast for the plaintiff’s process server to beat.

The plaintiff cried foul, but the district court followed Encompass:  “Here as the circuit court signaled in Encompass, [the defendant’s] filing of notice of removal within minutes of the timestamping of [the] complaint does not make removal improper under § 1441(b). . . . [T]he Encompass court recognized the possibility of such docket monitoring and accelerated filing and found that such conduct does not violate either the language or the intent of the removal statute.”  Dutton, at *20-*21.

The moral of the story is that pre-service removed has gained further support, but move fast.  It could make a difference in some courts.

The actual words written by Shakespeare and spoken by Antonio in The Tempest are “Whereof what’s past is prologue.”  Antonio is trying to convince Sebastian to murder his father the king and take the crown for himself.  When Shakespeare wrote these words, he intended Antonio to convey to Sebastian that everything that had happened in their lives up to that point was merely prologue; just an introduction to the great things that were to happen next.  In other words, Shakespeare was implying that everything that came before doesn’t matter because there is a new future ahead.  However, like many Shakespearian phrases, the modern interpretation has twisted things around and assigned the exact opposite meaning.  Today, if someone says to you – your past is prologue – chances are they mean to tell you that your past is of great importance because it defines your present and even your future.  And when someone is trying to tell you that perhaps a prior act is “water under the bridge,” they’ll tell you your past is not prologue to them.  Whichever definition you choose to favor, what today’s case tells us is that your past doesn’t matter much when deciding if personal jurisdiction exists.

Plaintiff in Franklin v. Coloplast Corp., 2019 WL 5307085 (N.D.N.Y Oct. 21, 2019) alleges she was injured by defendants’ vaginal and pelvic mesh implant.  In addition to suing the U.S. based subsidiary, plaintiff sued the foreign (Danish) parent company.  As we know, facts are very important to personal jurisdiction inquiries.  So, here are some of the key facts:

  • Foreign parent acquired the product, including the patent, in 2006 and from then until 2012, foreign parent sold and marketed the product including in the United States. at *1.
  • The marketing activities of the parent included a surgical skills workshop in New York in 2011 and the use of New York doctors as speakers at a program held in Cancun, Mexico in 2007. at *5.
  • In 2012, the wholly-owned U.S. subsidiary took over marketing the product in the United States. The subsidiary became responsible for the “testing, development, regulatory clearance, distribution, marketing, sale, and drafting” of the product’s labeling and information.  at *2.
  • The parent licenses the intellectual property to the subsidiary who is the sole manufacturer and distributor of the product in the United States.  
  • The U.S. subsidiary has its own independent management structure and maintains its own separate financials and records.  The subsidiary and parent do not share employees.
  • In 2015, plaintiff underwent surgery during which defendant’s mesh was implanted.

Based on these facts, the court assessed the jurisdictional question under New York law.  For the presence of a subsidiary to confer jurisdiction over the parent, the subsidiary must be either an agent or mere department of the parent.  Id. at *3.  To determine if that was the case, the court employed the Second Circuit’s four-factor test.  The only satisfied factor was common ownership.  The remaining factors have to do with the relationship – financial dependency, control of personnel, and control over marketing and operational policies.  Factors two and three were ruled out by the above-described separate corporate formalities of the two corporations.  As to factor four, that’s where plaintiff first tried to rely on prologue.  Plaintiff pointed to 2008 marketing materials developed by the foreign parent.  However, “[e]ven assuming the same materials were still in use by the subsidiary when plaintiff received her [] implant in 2015, that does not demonstrate general control over the marketing of the subsidiary as a whole.”    Id. at *4.  The subsidiary offered an affidavit from its president that showed it alone was responsible for marketing since 2012 and that no marketing employees reported to any employee of the parent.  Therefore, the subsidiary’s contacts with New York would not be imputed to the parent.

The court then had to assess whether the foreign parent’s own contacts conferred jurisdiction.  Here the court examined three provisions of New York’s long-arm statute.  First, C.P.L.R. §302(a)(1) provides that jurisdiction can be established if the defendant transacted business in the state and the lawsuit arises from that activity.  This is plaintiff’s second attempt to use prologue to establish parent’s contacts with New York.  For example, in 2006 parent announced it had acquired and would be manufacturing the product.   The court found this “heavily attenuated by the passage of time and the intervening change brought about by [subsidiary] assuming responsibility for manufacturing and marketing.”  Id. at *5.  Plaintiff listed six other “contacts,” all of which suffered from the same problem – the most recent was in 2011, a full four years before plaintiff’s surgery and before the change in marketing, manufacturing, and distribution responsibility.  It is undisputed that the foreign parent did at one time manufacture and market the product.  But that is all simply too long ago to matter.

Plaintiffs make only two arguments not premised on prologue. First, that thousands of the mesh products have been sold in New York, which is simply irrelevant given that subsidiary has been responsible for those sales since 2012 and maintains separate profits and losses from the parent.  Id. at *6.  Finally, plaintiff argues that her complaint alleges that the foreign parent conspired with the subsidiary to distribute a defective product.  But that is all it is – an allegation without support:

Although if she could provide any evidence that this was true, it would allow for a finding of personal jurisdiction, her legal conclusion of conspiracy is insufficient to hale a Danish company into court in Utica, New York.


Plaintiff’s second long-arm statute argument under §302(a)(2) requires both that defendant committed a tortious act with the state and that the defendant be physically present in the state.  The foreign parent demonstrated that it has no U.S. offices, is incorporated in Denmark, maintains its business records there, and does not market the product in the U.S.

The final long-arm statute provision, §302(a)(3) requires a tortious act within the state, that the cause of action arise from that act, that it have caused harm to a person in New York.  In addition, under §302(a)(3)(i), plaintiff must demonstrate that defendant “regularly does or solicits business; engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in the state.”  Id. at *7.  Or, under §302(a)(3)(ii) plaintiff must demonstrate that defendant “expected or reasonably should have expected the act to have consequences in the state; [and] the defendant derives substantial revenue from interstate or international commerce.”  Id.

Under the first section, “persistent” and “ongoing” are the key.  Since the foreign parent has ceded all activity regarding the product in the United States to the subsidiary, it is not engaged in any persistent or ongoing activity in New York.  Id.  Under the second, the “simple likelihood” that defendant’s product would end up in New York is not sufficient.  And that is really all plaintiff has on this point.  There is no “tangible manifestations” showing the parent should have known the product would have reached New York.  Id. at *8.

Plaintiff’s reliance on outdated and irrelevant facts to attempt to obtain jurisdiction were insufficient and the parent company was dismissed.  Whether you consider this an example of the past is prologue (Shakespeare) or the past is not prologue (modern) – clearly intervening changes and current circumstances are more important than history in deciding personal jurisdiction.

The focus of this blog is on product liability cases, but every once in a while a case from another subject matter area tugs at our elbow, begging for attention. Today’s case, Kurin, Inc. v. Magnolia Medical Technologies, Inc., 2019 U.S. Dist. LEXIS 184382 (S.D. Cal. Oct. 23, 2019), is an interesting – albeit somewhat baffling – Lanham Act/state unfair competition decision. Both the plaintiff and defendant manufactured and marketed blood collection devices designed to reduce false positive blood culture results. The plaintiff and defendant were competitors. The plaintiff challenged the defendant’s representations to customers that the defendant’s device was registered as a class I device. The plaintiff also challenged the defendant’s packaging of its device as “Rx only.” According to the plaintiff, these representations falsely implied that the defendant’s device had been FDA reviewed and approved when, in fact, it had only gone through 510(k) clearance. The defendant filed a Rule 12(c) motion for partial judgment on the pleadings, contending that the Lanham Act and state law claims should be dismissed because they raised issues over which the FDA has primary jurisdiction and/or were preempted by the Food Drug and Cosmetic Act.

We’ve written about primary jurisdiction before – here, for example. It is not exactly the same thing as preemption, but it is preemption-adjacent. Just as a reminder, here are the four criteria for applying primary jurisdiction: (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority, (3) pursuant to a statute that subjects an industry or activity to a comprehensive scheme, and that (4) requires expertise or uniformity in administration. We have also written about the meh POM Wonderful SCOTUS case before, and it was the authority chiefly relied upon by the Kurin case in holding that at least some of the plaintiff’s Lanham Act claims fell within the primary jurisdiction of the FDA, and at least some of the state-law claims were preempted by the FDCA.

The Kurin case involves an intersection between the Lanham Act and the FDCA. The former protects commercial interests against unfair competition, while the latter protects health and safety. In the POM Wonderful case, SCOTUS described how to navigate that intersection. There might be complexity in doing so, but this much is clear: “actions in conflict with an FDA policy choice are barred.” That is a vital principle, and the Kurin court pledges allegiance to it. In Kurin, the defendant argued, and the court agreed, that the plaintiff’s claims of misrepresentation required the court “to improperly interpret and enforce FDA regulations.” While we hate the split infinitive, we like the logic of the court’s ruling. Thus, to the extent the plaintiff was claiming that the defendant’s medical device was misclassified, the court dismissed such claims.

But the court left some wiggle room for the plaintiff: “Notwithstanding, to the extent Kurin’s allegations merely infer that the market or consumers has been misled by Magnolia’s representation that the Steripath device is ‘listed and registered’ a Class I device, those allegations remain.” Hmmmm. Let’s right away confess that we do not exactly know what the court is saying. Is that use of “infer” even correct? And has the court actually left the heart of the plaintiff’s claim, whatever it is, intact? That ambiguity also resides in the court’s disposition of the “Rx only” claim. The defendant argued that the plaintiff’s beef with the “Rx only” language was verboten because the FDCA required the defendant to include the “Rx only” language in the product’s labelling. The defendant’s argument seems correct to us.

Yet perhaps you’ve noticed that none of the authors of this blog is, or ever has been, a judge. What seems correct to us is by no means guaranteed to persuade someone who actually is a judge. So it is, sadly, here. The Kurin court held that the plaintiff, as a competitor, could bring an action alleging that consumers were misled by the “Rx language.” That makes no sense. It makes even less sense after the Kurin court acknowledged “that any remedial measures involving the label is likely in the FDA’s domain.” So why does the claim survive? The court tells us that the issue of consumer reliance “is not within the FDA’s primary jurisdiction.” Maybe. But if the falsity of the representation is within such primary jurisdiction, what is really left for the court? Those question marks hang in mid-air, because the Kurin court ultimately held that the “Rx only” allegations were merely conclusory and, therefore, insufficiently pleaded. The opinion trails off, like someone who runs out of thought and breath simultaneously, croaking out a weak “anyway….”

As we said at the outset, the Kurin case was like someone tugging on our sleeve, begging for attention. Sometimes that person tugging on our sleeve exudes more excitement than sense. Sometimes the tugs are in service of something useful and important. To the extent that the Kurin case recognizes and applies primary jurisdiction, it offers something useful and important.