The Third Circuit issued an important medical monitoring decision yesterday. Sheridan v. NGK Metals Corp., 2010 WL 2246392 (3d Cir. June 7, 2010). Although this case does not involve a drug or a device, several rulings should prove useful to lawyers who handle drug and device cases. To get the key points of this hot little decision in your hands quickly, we’ll cut right to the chase without Monty Python clips, exercises in alliteration, or references to our favorite movies. Believe it or not, that stuff takes time.
One plaintiff in Sheridan worked at a beryllium plant for many years; another pair of plaintiffs lived near a beryllium plant. They brought separate putative class actions alleging they were exposed to beryllium above background levels and seeking medical monitoring for chronic beryllium disease, or CBD. Plaintiffs did not have either CBD or beryllium sensitization, a precursor to CBD. In order to develop CBD, a person first must have a genetic marker that recognizes beryllium in the lungs as an antigen, be exposed to beryllium, and develop beryllium sensitization. Beryllium sensitization itself is asymptomatic, and only some persons with beryllium sensitization will end up developing CBD. As you can imagine, the parties’ experts had different opinions about the likelihood of developing beryllium sensitization from beryllium exposure and the likelihood of developing CBD after beryllium sensitization. Nonetheless, the district court granted summary judgment on the medical monitoring claim.
The primary question on appeal was whether plaintiffs could sustain their medical monitoring claims under Pennsylvania law. Pennsylvania recognizes medical monitoring claims if a plaintiff can prove seven elements (legal elements, not elements like beryllium), including that “as a proximate result of the exposure, plaintiff has a significant increased risk of contracting a serious latent disease.” 2010 WL 2246392 at *7. For the Sheridan plaintiffs, the key question was whether a person exposed to beryllium above background levels but who did not have beryllium sensitization had a significantly increased risk of contracting CPD.
If this were the first case to address this issue, we would expect it to resolved by analysis of the competing expert opinions. But there was no clean slate. Other Pennsylvania cases had considered the effect of beryllium exposure. Per Sheridan, the Pennsylvania Superior Court had held in Pohl v. NGK Metals Corp., 936 A.2d 43 (Pa. Super. Ct. 2007), alloc. denied, 952 A.2d 678 (Pa. 2008), that plaintiffs exposed to beryllium who did not have beryllium sensitization did not have a significantly increased risk of developing CBD and therefore had no claim for medical monitoring. 2010 WL 2246392 at *8. Several state trial courts had followed Pohl. Id. at *8-9.
And so the Third Circuit had to decide how much weight to give these state-court decisions. That’s an Erie question, and the Third Circuit was in the business of predicting Pennsylvania law. The court, we’re pleased to say, got it precisely right. We’ve argued since the very beginning of this blog that federal courts exercising diversity jurisdiction aren’t allowed to get adventurous with state law. And Sheridan agrees with us. The Third Circuit held that “[u]nlike our role in interpreting federal law, we may not ‘act like a judicial pioneer’ in a diversity case.” Id. at *9 (citation omitted).
As required by Erie, in a diversity case the question before the federal court was how the state’s highest court would resolve the issue. The Third Circuit found Pohl a reliable predictor of the position the Pennsylvania Supreme Court would take on the issue because that court had twice denied allocatur (discretionary review in Pennsylvania similar to certiorari), Pohl was a decision by Pennsylvania’s second highest court, and Pohl had been followed in 31 Pennsylvania state trial court decisions. Id. at *10. The Third Circuit therefore followed Pohl’s holding and affirmed summary judgment after disposing of some individual factual points raised by each plaintiff. Id. at *10-14.
What makes this holding especially interesting is that the prior state court decisions did not involve the typical pure question of law – e.g., does Pennsylvania law recognize medical monitoring – but a question of law with a heavy factual component – “whether, under Pennsylvania law, a person exposed to beryllium above background levels, absent sensitization, can be at a ‘significantly increased risk’ of contracting chronic beryllium disease.” 2010 WL 2246392 at *1. Some trial judges might consider similar issues to be factual rather than legal and not controlled by precedent, but the Third Circuit found that the Pennsylvania courts had ruled on this precise question as a matter of law. The Third Circuit’s holding could prove very useful in seeking economical dispositions of repetitive mass tort claims brought against drug and device defendants. We often see similar issues raised again and again in litigation even after they have been resolved by state appellate courts, and sometimes those issues can be resolved only after expensive relitigation of the settled issue. Sheridan would support a speedy disposition of similar claims that have been definitively decided by a controlling court.
We recognize, of course, that there is a flip side: we might not like a decision granting preclusive effect to a prior state appellate court decision on a question with a heavy factual component if the prior decision went against our clients. Although each situation will depend on the facts and the specific nature of the question, on balance the approach used in Sheridan should prove more useful than harmful to drug and device defendants. If a state court had decided an issue as conclusively as the issue resolved by Pohl and subsequent decisions, most drug and device companies usually would either settle the cases, not contest the issue, or contest the issue with new evidence not presented to the prior courts. But not all plaintiffs will be that savvy about an unfavorable decision, or they will try to extract a settlement for less than the defense costs of litigating the same issue again and again. Sheridan supports a streamlined approach.
We told you that Sheridan contains a bunch of good stuff, and it also had a useful ruling on claim preclusion. Plaintiff Sheridan had brought an earlier lawsuit alleging that she was actually injured by beryllium exposure and seeking compensatory and punitive damages, but not medical monitoring. The court granted summary judgment in 2003 because she had not been diagnosed with CBD and therefore did not have a compensable injury. 2010 WL 2246392 at *14. She then brought the current case seeking medical monitoring. The district court granted a motion for judgment on the pleadings based on res judicata, and the Third Circuit agreed. The court said that it took “a broad view of what constitutes the same cause of action” and looked to the “essentially similarity of the underlying events giving rise to the various legal claims.” Id. at *15 (citations omitted). That the earlier lawsuit had sought damages for actual injuries while the current lawsuit sought medical monitoring for future injuries did not matter because the underlying assertions giving rise to each claim were the same and Sheridan could have sought medical monitoring in the alternative in her first suit. Id. at *15-16.
Like that? There’s more. The Third Circuit reviewed the district court’s dismissal on 12(b)(6) grounds of plaintiffs’ claim that an engineering firm responsible for testing beryllium levels at the facility was liable for failing to report the results to people living near the plant. Plaintiffs’ claim was based on so-called “Good Samaritan” liability – §324A of the Restatement (Second) of Torts, which has been adopted in Pennsylvania and governs liability to others for “negligent performance of an undertaking” (another of those legal mouthfuls). 2010 WL 2246392 at *16-17. The Third Circuit held that to be liable under section 324A, “the defendant must have assumed an affirmative duty to be liable to third parties for negligently performing that duty.” Id. at *17.
Nothing like that here. The court found that the engineering firm worked for and reported the results to the owners and operators of the plant, and plaintiffs did not allege that the firm negligently performed its duty to its paying customers. Its contract did not require the firm to do anything for anybody else. The engineering firm thus could not be held responsible for negligently failing to warn plaintiffs (that is, people it didn’t contract with) about harmful beryllium exposures unless the firm actually had undertaken the duty to warn plaintiffs. Id. at *17. Because the firm did not undertake that duty, the Third Circuit affirmed the dismissal of this claim. Id. at *17-18.
We like Sheridan because our clients also face medical monitoring claims. They’re always brought as class actions because the plaintiffs aren’t really hurt at all, so the claims aren’t worth much. Although Sheridan did not rule on class certification, Sheridan’s careful factual analysis, which established that the disease allegedly to be monitored occurred only in a few people with prior immunological reactions, demonstrates that assessing whether medical monitoring could be warranted depends on the nature of individual medical conditions and can’t be made on a one-size-fits-all, classwide basis.