Most lawyers’ eyes light up when they talk about the big, bold, flashy pieces of judicial work. Justice Scalia’s opinions, especially his dissents. Judge Posner’s exercises in legal scholarship. Judge Kozinski’s witty amalgamations of law and pop culture.
We like those works well enough, but we also appreciate finely tuned but less flashy opinions that methodically work through the issues with clear, step-by-step analysis. Although such opinions, unlike Justice Scalia’s dissents, will not be published in book form outside of the Federal Reporter or the regional reporters, they are nice examples of the judicial craft. These opinions often prove more useful to practicing lawyers than their showier counterparts.
Pennsylvania Employee Benefit Trust Fund v. Zeneca, Inc., 2010 WL 1816234 (D. Del. May 6, 2010), is a good example of a well-crafted opinion. This case has been kicking around for five years: the district court found the plaintiffs’ claims preempted, the Third Circuit affirmed, the Supreme Court GVR’d the preemption decision in light of Wyeth v. Levine, and the Third Circuit sent the case back to the district court for further proceedings in light of Wyeth. We have followed this case as it went up and down the judicial ladder.
With preemption unfortunately out of the picture, the court considered the more meat-and-potatoes questions whether plaintiffs had adequately pleaded consumer fraud, unjust enrichment, and negligent misrepresentation claims. The plaintiffs were individuals and health benefits providers who alleged that defendants committed consumer fraud by marketing Nexium even though, according to plaintiffs, the defendants’ older drug Prilosec supposedly worked as well as Nexium in most patients. We have real problems with this theory and would love to see a good judge wrestle it to the ground. But Judge Robreno’s careful dissection of the plaintiffs’ individual claims works just as well.
Come to think of it, there must also be a story behind how Judge Robreno, who usually sits in the Eastern District of Pennsylvania, ended up with this case in the District of Delaware – but we don’t know it, so we’ll just have to let it pass.
The court started with choice of law analysis because the case was filed in Delaware; plaintiffs were from Pennsylvania, New York, and Michigan; and the defendants’ principal place of business was Delaware. Choice of law isn’t all that interesting to most people, and many judges blow through choice of law to get to the meat of the case. This opinion, however, provides a comprehensive explanation of Delaware’s choice of law approach (the “most significant relationship” test in the Restatement (Second) of Conflict of Laws) and then applies that test to each of the three states. 2010 WL 1816234 at *3-14. As we have told you before, we are noncommittal about most choice of law questions, so we will just tell you without comment about the interesting steps in the analysis.
The first step in the choice of law analysis requires a court to decide if a conflict exists between the laws of the two states. Judge Robreno looked at the consumer protection laws of each relevant state and held that Delaware’s consumer protection law conflicted with the consumer protection laws of the other three states: Pennsylvania law requires reliance and Delaware law does not; New York law requires a plaintiff to show the defendant’s deceptive act caused plaintiff’s injuries and Delaware law does not; and Michigan law is limited to transactions concerning goods for personal, family or household purposes and Delaware law does not contain this limitation. Id. at *7-12. As we will see when we get to the merits, these differences were critical because the conflicting elements in Pennsylvania, New York, and Michigan law provided the basis for dismissing the consumer fraud claims. (The court also found no relevant differences in the law of unjust enrichment and negligent misrepresentation in the four states.)
The next step in the choice of law analysis is assessing the various individual factors in the most significant relationship test, and the court did that in detail. Id. at *7-13. The court found that the alleged misrepresentations were made in Delaware because “that is the place where the substance of the factual statements comprising the alleged misrepresentations emanated.” Id. at *7. But the alleged misrepresentations were received and relied upon by plaintiffs in the plaintiffs’ home states. Id. at *8. This choice arises frequently in choice of law cases: should a court apply the law of the defendant’s home state, which usually has an interest in regulating the defendant, or of the plaintiff’s home state, which usually has an interest in protecting its citizens? Which state has the most significant interest, the state where the defendant supposedly took tortious acts or the state where the plaintiff allegedly felt the effects of those acts? Judge Robreno held that the plaintiffs’ home states had the most significant interest and applied the consumer fraud law of Pennsylvania, New York, and Michigan. Id. at *9-13. Our noncommittal stance on choice of law questions does not stop us from cheering that result solely because the defense wanted the plaintiffs’ home state law to apply. We are not noncommittal in our pro-defense stance.
Having spent many pages on questions most judges address in paragraphs or even footnotes, the court took equal care in considering whether the plaintiffs stated claims under the consumer protection laws of the three states. Pennsylvania was easy: its Unfair Trade Practices and Consumer Protection Law requires a plaintiff to establish justifiable reliance, and plaintiffs’ complaint did not plead that the Pennsylvania plaintiffs relied upon or were even aware of the marketing and advertising claims that formed the basis of plaintiffs’ claims. Id. at *16. Bye bye, Pennsylvania claims.
The New York plaintiffs put up more of a fight. The New York plaintiffs claimed their law does not require them to prove justifiable reliance and therefore it did not matter that their complaint lacked any allegation that they purchased Nexium in response to defendants’ representations about the quality of Nexium compared to Prilosec. Id. at *17. Wrong, the court said, because New York law required plaintiffs to prove causation, and “a plaintiff must allege some awareness of a defendant’s misrepresentations prior to purchasing the product in order to establish the element of causation.” Id. Plaintiffs did not plead any such awareness and therefore did not state a claim under New York law. Fuhgeddaboudit, New Yorkers.
The court then considered the Michigan plaintiffs. If you were paying attention to the foreshadowing in the choice of law section, you would suspect that their claims would be dismissed for failure to allege purchases for personal, family or household purposes, and you would be right. The Michigan plaintiff was the Rehabilitator of The Wellness Plan, a third party payor, and the complaint lacked any allegations that this plaintiff’s purchase of Nexium was for personal, family or household purposes. Id. at *20. See ya, Michiganians.
These rulings made it easy to dispose of the unjust enrichment and negligent misrepresentation claims. Unjust enrichment requires a connection between the enrichment and the impoverishment – in other words, a causal connection between defendants’ alleged misrepresentations and plaintiffs’ decision to purchase Nexium over Prilosec – which plaintiffs did not plead. Id. at *20. And the negligent misrepresentation claim was dismissed because it requires reliance and plaintiffs did not plead that, either. Id. at *21-22.
The only sour note in this otherwise melodious opinion is that the court dismissed the claims without prejudice and granted plaintiffs leave to amend. Id. at *22. In our minds, five years is enough time to get it right, but we understand that careful judges sometimes bend over backwards to give plaintiffs one more chance to replead their claims. If the court rules on whether their new complaint states a claim, we’ll let you know what happens.