Not quite a year ago we noted the Daubert tour de force that the defense completed in Feusting v. Zimmer, 2009 WL 174163 (C.D. Ill. Jan. 26, 2009). Two notorious plaintiff experts – James Pugh and then Robert Rose – excluded in the same case. Well we’re pleased to report that the second exclusion
As we said last week, because it’s a Dechert case, we can’t comment directly on Clark v. Pfizer, Inc., 2010 WL 163583, slip op. (Pa. Super. Jan. 19, 2010). However, we were sufficiently inspired by what’s in the opinion that we thought this would be a good time to put in our two cents worth about one of the theories that the Clark plaintiffs pursued: “fraud on the market.”
As defense lawyers, we want to do our part in killing off this pernicious import from federal securities law. So we decided to take an in-depth look at all of the the precedent that rejects application of a “fraud on the market” reliance presumption to state-law claims.
Just to make sure that everyone’s with us, briefly “fraud on the market” is a doctrine that waters down fraud (and, plaintiffs would like to say, other liability theories based on claimed misinformation) by presuming reliance in certain limited circumstances. See Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (4 justice majority of 7-justice court). It’s not a state law claim – the Supreme Court has never applied a “fraud on the market” presumption to state law even in securities cases.
The presumption arose because the Supreme Court bought a questionable proposition – that securities markets are “efficient” and “developed.” in other words, because there are so many participants in national stock markets, and those participants have such a voracious appetite for information, then anything about a particular stock is essentially instantaneously reflected in that stock’s price. Because of that (rather questionable) conclusion, any plaintiff in a securities fraud suit is “presumed” to rely on any material disinformation.
That’s the theory. In practice, however, what “fraud on the market” is really all about is class actions – reliance is ordinarily considered an individualized issue that’s kryptonite to the supposed “superman” of class actions . Without “fraud on the market,” there probably wouldn’t be very many securities class actions. Conversely, if plaintiffs could import the “fraud on the market” presumption of reliance into non-securities contexts – such as consumer fraud/common-law fraud/warranty litigation against our drug/device clients – an invasion of class actions would follow like night follows day.Continue Reading No State-Law Market For “Fraud On The Market”
The standing requirement. . . . Are you asleep yet?
Okay, few things induce yawning and cure insomnia as much as discussions about standing and jurisdiction, but in the world of no-injury lawsuits, we defense lawyers have to pay attention to such things. Standing (for the non-lawyers) is a requirement that courts impose on parties who want to sue. To have standing (at least in federal court), you need to have: (1) suffered an injury – which can be economic or not, but for our discussion today, let’s stick with an economic injury; (2) causally connected to the conduct complained of; and (3) redressable by the court.
As a practical matter, standing (generally — there are almost always exceptions to rules) means that you can’t sue a car dealer for selling a car for a false representation unless you actually bought the car. If you bought the car, you have an injury: money paid, causally connected to the false statement you complain of, and your claim is “redressable” – that is, a court can help you by ruling that you get your money refunded. But if you only thought of buying the car, or if you watched while someone else bought the car, even if you are angered by the car salesman, you have no standing to sue. (For purposes of this discussion, we’re ignoring the exception – we told you there were exceptions – that at times the law grants people standing to sue on behalf of the public.)
In federal courts, standing requirements come from the case or controversy requirement of the judicial power under Article 3 of the U.S. Constitution (“The judicial Power shall extend to all Cases, in Law and Equity, . . .–to Controversies”). Therefore, if you don’t have a real “case” or “controversy,” the courts have no authority (“jurisdiction”) to hear your gripe. States have their own versions of this constitutional grant of judicial authority; some are like the federal version, some aren’t (more exceptions) – so we’ll stick with the feds.
Now, just because you have standing does not mean you win your case, or get awarded damages. But it does get you past the first hurdle – the courthouse door – and thus into the game. And sometimes, especially class actions where the plaintiff’s goal is to pressure a defendant into settlement through the sheer size of the claim, getting into the game is the game.Continue Reading You say no injury, I say no standing
Proving they can do more than just blog, Dechert’s two longest-running bloggers, Bexis and Sean Wajert (who writes the Mass Tort Defense Blog), along with associate Vince Gallo, recently wrote a “Legal Backgrounder” for the Washington Legal Foundation analyzing the FDA’s decision to do away with the vetting of its Warning Letters by
Caveat Emptor….
That’s the take-away that we glean from the Transobturator Sling Products MDL, where the court recently granted in part and denied in part a motion to quash a subpoena served on a non-party former competitor (!!) of the device manufacturer that’s a defendant in that MDL.
Here’s the back story: the defendant in this MDL is Mentor Corporation. Mentor manufactured a medical device called “Obtape,” a sling designed to treat female stress urinary incontinence. Ethicon, Inc., a wholly-owned subsidiary of Johnson & Johnson, manufactures a competing product, “Gynecare TVT.” Mentor’s Obtape was removed from the market in 2006 amid concerns about serious complications arising from the device’s use, and … well, you can guess what happened after that.
Fast-forward three years, and plaintiffs in the Transobturator Sling Products MDL, apparently having exhausted all possible discovery against the defendant, issued a subpoena to Ethicon – the competitor. Plaintiffs asked for a number of items, including:
1) testimony and documents regarding statements Ethicon made in a TVT product pamphlet entitled “Selecting the Right Mesh: Important properties of implant materials used in urogynecological surgery” (“Pamphlet”); 2) testimony and documents regarding Mentor’s 510(k) application to the Food and Drug Administration (“FDA”), in which Mentor claimed that ObTape is the substantial equivalent of TVT; and 3) testimony and documents regarding all testing that was conducted on TVT, including published clinical trials and internal Ethicon studies.
It’s times like this that make us nostalgic for a multi-firm blog.
Yesterday, the Pennsylvania Superior Court issued a decision affirming the decertification of a putative non-personal-injury class of consumers who purchased Neurontin for alleged “off-label” uses. We can’t comment on the case because of Dechert’s involvement, but you can take a look at the
Last week’s decision in Carr v. Tillery, 2010 WL 92487 (7th Cir. Jan. 12, 2010), was not, strictly speaking, a product liability case. But it involves some key players in that field, and a very key location. And, truth be told, the case appeals to the voyeur within us.
The players are former partners
It’s MLK day. It’s a firm holiday, we’re not supposed to be here, but we are. But since it’s a holiday, rather than write a substantive post (that’s work), we thought we’d take care of some other business.
First, our sharp-eyed readership has probably already noticed, but there’s been a minor site change. The
As long-time readers know, this blog was founded by a couple of guys who first got to know each other defending co-defendant manufacturers in the Orthopedic Bone Screw Mass Tort. That fact significantly colors what you read here. A lot of the issues that we harp on – off-label use, medical device preemption, fraud on the FDA, cross-jurisdictional class action tolling, broken device cases, expert testimony on issues of (FDA) law (that’s just off the tops or our heads) – we spent close to a decade litigating in Bone Screw land.
It wasn’t a bad living. 360 (requires subscription) recently named one of our old Bone Screw cases (Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001)) as the top product liability case of the last decade. (It also stole a post idea we’d kicked around but never gotten off our duff to write up). Even though we’ve moved on, our pet peeves haven’t.
But probably the most singularly “Bone Screw” issue was the theory that a surgeon could be liable under an “informed consent” rationale just because s/he didn’t tell a patient about the FDA regulatory status (that is to say, off-label use) of the drugs/medical devices used in the patient’s treatment. And we Bone Screwers killed that theory dead – maybe not as dead as we killed fraud on the FDA, but pretty darn close.Continue Reading Once More Into The Breach
We’ve previously written about Allergan’s First Amendment challenge to the FDA’s regulations relating to off-label promotion (here (last of four parts), here, and here), but in the grand tradition of the First Amendment, the war of words is escalating, mud is being slung, and court filings are name-dropping Trojan priests – but more on that later.
The past month has been busy, with the government filing its “Motion To Dismiss Or For Summary Judgment,” the public interest group Public Citizen filing an amicus brief supporting the government. As we discussed earlier, a consortium of public interest groups (some rare disease associations and the Washington Legal Foundation) already made an amicus filing in support of Allergan’s motion – we guess Public Citizen’s trying to even the score.
Anyway – the government’s motion. It is a 45-page whopper chock-full of pronouncements about the practical effect of numerous FDA regulations relating to promotion and labeling, so it is definitely worth a read for anyone interested in this area of the law. We’re only providing the highlights here.
The motion does exactly what you’d expect. It first tries to sidestep the grave constitutional issues raised by Allergan by claiming this whole shooting match isn’t ripe for adjudication. So how does the government do that? It argues that Allergan’s case relates to two proposed communications: (1) truthful warnings and safety information relating to the (off-label) use of Botox to treat a number of spasticities; and (2) promotional speech relating to an off-label use for which Allergan has an sBLA (that’s jargon for a supplemental application for approval, involving a biologic) pending. Because Allergan hasn’t actually said anything yet on these two topics, the FDA hasn’t had the opportunity to shut that speech down. Therefore, says the government, where’s the beef? (OK, those are our words, but that’s the gist of the argument).
Now, the government has a bit of a problem here, because the ripeness requirement is relaxed in the First Amendment context. The government acknowledges this, but then goes on to argue that there is no live dispute involving “actual or threatened application” of a regulation to bar particular speech. Mot. at 13 (quoting Renne v. Geary, 501 U.S. 312, 320 (1991)). We don’t think that makes a whole lot of sense (unless you’re the government). The government’s actually saying that Allergan has to expose itself to actual prosecution – at least in the FDA’s eyes – in order to tee up this arcane, convoluted regulatory scheme for scrutiny by a court? Hmm. But we get the strategy. Every lawyer remembers first-year Con Law; courts don’t reach constitutional issues unless they have to do so, and the government’s clearly hoping that it can play keepaway until at least April, when the FDA expects to issue a decision on the sBLA.Continue Reading Beware The FDA Bearing Regulations: An Allergan Update