October 2016

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Not all personal jurisdiction cases coming out of Pennsylvania are bad.  To be sure, an ED Pa judge’s recent embrace of the consent theory to get around Bauman was bad news – almost as bad as Philadelphia 76ers soon-to-be superstar Ben Simmons’s foot injury.  Happily, a much better opinion arrived last week:  Baker v. Livanova PLC et al., No. 1:16-cv-00260 (M.D. Pa. Sept. 29, 2016).  The author was Judge John E. Jones, the same judge who presided over the intelligent design case a couple of years ago.  Judge Jones has a reputation for being smart and trying to get things right, and the Baker decision won’t hurt that reputation one bit.

Baker is a putative class action, seeking medical monitoring based on an allegation that a heater-cooler system for regulating blood temperature during open heart surgeries exposed patients to a nasty bacterium.  In addition to suing companies that the court calls “Sorin” and “Sorin USA,” the plaintiffs also sued the parent company, LivaNova PLC, which is incorporated and headquartered in the United Kingdom.  The issue was whether there was personal jurisdiction over LivaNova.  (Sorin and Sorin USA did not contest personal jurisdiction.)  The plaintiffs said there was specific jurisdiction over LivaNova based on: (1) LivaNova’s contacts with Pennsylvania regarding the heater-cooler system, (2) LivaNova functioned as the alter ego of its subsidiaries, and (3) the almost ancient case of Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), placed distributors on the jurisdictional hook.  Note that general jurisdiction was not at issue, so the lovely Bauman case does not make even a cameo appearance. Then again, neither does the Walden case, which was decided by SCOTUS around the same time as Bauman and which says very important things about specific jurisdiction.  But even without discussing Walden, Judge Jones addresses plaintiffs’ argument correctly and coherently.  You might even say that the Baker case has an intelligent design.Continue Reading M.D. Pa. Finds No Specific Personal Jurisdiction over Parent Company

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This post does not involve a drug/device case – or even a tort case − but counsel worried about potentially abusive litigation funding should take a look at WFIC, LLC v. Labarre, ___ A.3d ___, 2016 WL 4769436 (Pa. Super. Sept. 13, 2016), in which a statewide appellate court, in a precedential decision, invalidated a litigation funding agreement as “champertous.”

WFIC involved commercial litigation. The underlying litigation is not important, except for its being extensive and expensive, and that the result was a significant verdict (low eight figures) – but not the nine-figure whopper that the plaintiffs had been hoping for.  2016 WL 4769436, at *1.

After entry of judgment, to keep the litigation going during the appeal, the plaintiff’s lawyer rejiggered his own fee arrangement so that various litigation funders, who had previously advanced funds, would be paid out the lawyer’s contingent fee.  Id.  The funds from the eventual satisfaction of the affirmed judgment were insufficient to satisfy obligations to the various litigation funders, the expectations of the original plaintiff (WFIC was an assignee of the original plaintiff, id. at *3 n.10), and also provide counsel with a fee.  Id. at *2.  As a result, various parties sued various parties.  Id. at *3.  The appeal in question pitted plaintiffs’ counsel against the world over whose priorities (if any) in the remaining funds were superior to his under the litigation funding agreement.  Id.

The Superior Court didn’t decide the priority question.  Instead the three-judge panel unanimously declared the litigation funding agreement itself “champertous,” and therefore void and unenforceable by anyone.  WFIC, 2016 WL 4769436, at *5 (“we conclude that the 2008 Fee Agreement is champertous and, therefore, invalid”).  In Pennsylvania, “champerty” is defined as:

[T]he unlawful maintenance of a suit in consideration of some bargain to have a part of the thing in dispute or some profit out of the litigation. . . . An agreement by a stranger to defray the expenses of a suit in which he has no interest or to give substantial support and aid thereto in consideration of a share of the recovery or the proceeds thereof is condemned by the courts as champertous[.]

Id. (emphasis added) (discussion of “maintenance” – essentially the same thing without a written agreement – omitted).  “[T]he common law doctrine of champerty remains a viable defense in Pennsylvania.”  Id.Continue Reading Litigation Funding Contract Invalidated as Champertous in Pennsylvania

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FDA-regulated products now account for an estimated one-fifth of overall economic activity in the U.S. They have also been the focus of a litigation explosion. This timely guide covers all aspects of litigation involving drugs, medical devices, vaccines and other FDA-regulated prescription products.
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