This guest post is by Reed Smith associate Lora Spencer, who (as you might suspect) calls Texas her home.  In her first rodeo on the blog, she discusses a recent MDL decision that she thinks is a few pickles short of a barrel, and hopes it’s not a harbinger of things to come.  Not exactly a conniption fit, but close.  As always our guest posters deserve 100% of the credit (and any blame) for what they write.

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“Everything is bigger in Texas”—or is it? The plaintiffs in Aron v. Bristol-Myers Squibb, 2018 U.S. Dist. LEXIS 39146 (S.D.N.Y. Mar. 9, 2018), would have y’all believe that pharmaceutical manufacturer tort liability, at least, is bigger in Texas.  But, first, before getting to this “Texas Expansion,” here are some interesting “reported” facts about Texas.  Pay attention, there may be a pop quiz, if not now, perhaps at your next networking event.  Knowing such factoids will surely make your “lone star” shine brightly.

Texas is a really BIG state. Texas is ranked 2nd in the country in population and size.  Texas’s total area is twice the size of Germany (albeit half the size of Alaska).  Of 45 United States presidents – three of them hail from Texas—all of them since 1963, hence the slogan “read my lips, no new Texans.”  King Ranch, located in south Texas, is considered “the birthplace of Texas ranching” and is larger than Rhode Island.  Texas also has the most rattlesnakes of any state.  And the weight of the catfish consumed by Texans each year exceeds that of the Paris Eiffel Tower (at least the one in Texas).  “Texas is just too big,” said no Texan ever.  Apparently Aron takes the same view.

Aron purported to apply Texas law in what appears to be the first reported opinion from the Farxiga MDL.  Maybe future opinions will be better.  Aron denied the defendants’ motion to dismiss plaintiffs’ amended complaints under Rule 12(b)(6).  Id. at *9.  Farxiga has only one labeled indication—lowering blood glucose in adults with type 2 diabetes.  Id.  Because everything is bigger in Texas, so is the complaint, which included three Texas plaintiffs with no business being joined in the same complaint.  Getting a free pass on misjoinder, these three plaintiffs brought “causes of action claims, under Texas law, based on the defendants’ failure to warn of [drug] risks …, negligent testing, and gross negligence.” Id. *16.

Failure to Warn

The most important thing about Texas product liability law is that most of it is now statutory.  Under Texas law, in a products liability suit, a statutory presumption precludes a defendant drug manufacturer from being liable for failure to warn claims if its warnings were approved by the Food and Drug Administration (FDA).  Texas Civ. Prac. & Rem. Code Ann. § 82.007.  However, a plaintiff may rebut this presumption by establishing one or more of five statutory exceptions.  Id. at (b)(1-5).

In Aron, the relevant exceptions were § 82.007 (b)(1) and (3).  2018 U.S. Dist. LEXIS 39146, at *17.  Section (b)(1) allows a plaintiff to rebut the presumption by proving fraud on the FDA—that “the defendant, before or after pre-market approval … withheld from or misrepresented to the [FDA] required information that was material and relevant to the performance of the product and causally related to the claimant’s injury.”  Civ. Prac. & Rem. § 82.007(b)(1).  Section (b)(3) avoids the presumption if the plaintiff can show off-label promotion – that “the defendant recommended, promoted, or advertised the pharmaceutical product for an indication not approved by the [FDA], the product was used as recommended, promoted or advertised; and the claimant’s injury was causally related to the recommended, promoted, or advertised use of the product.”  Id. at (b)(3).

As regular blog readers know, a claim predicated on fraud on the FDA should be preempted. Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001).  Unsurprisingly, the defendants argued the FDA fraud exception is preempted by federal law. Aron, 2018 U.S. Dist. LEXIS 39146, at *20.  The court noted conflicting Fifth and Second Circuit decisions concerning § 82.007(b)(1) and a similar Michigan statute. Compare Lofton v. McNeil Consumer & Specialty Pharms., 672 F.3d 372 (5th Cir. 2012) (applying Texas law) (discussed here), with Desiano v. Warner Lambert & Co., 467 F.3d 85, 95 (2d Cir. 2006) (applying Michigan law), aff’d by equally divided court, 552 U.S. 440 (2008).  However, because the plaintiffs did not plead the fraud exception with “sufficient particularity,” Aron did not decide the preemption issue.  Id. at *21.  Given the other rulings in Aron, its punting on preemption is probably just as well.  In true Texas fashion, Hi-Yo Silver away!  The plaintiffs failed to rebut the presumption using §82.007 (b)(1). Id.

However, fraud on the FDA is only one of § 82.007’s five exceptions.  Properly raising any one of them will get a plaintiff past a presumption-based motion to dismiss.  Id. at *17.  Plaintiffs got away with pleading the “off-label” marketing exception, under § 82.007 (b)(3). Id. at *20.  Plaintiffs alleged:  (i) defendants promoted Farxiga to prescribing physicians for off-label uses, specifically obesity and hypertension, (ii) such off-label promotion caused the physician to prescribe Farxiga for off-label use, (iii) plaintiffs used Farxiga for off-label purposes, and (iv) off-label use caused the plaintiffs injuries.  Id. at *20-22.  Plaintiffs cited press releases, advertisements, and clinical trial protocols to support their claim that off-label marketing occurred.  Id.  However, Aron failed to discuss the pleading of causation  Not one of the various off-label statements was linked to any particular prescriber, let alone to a prescription that caused these plaintiffs’ injuries.  Never mind that physicians may, and often do, prescribe drugs for unapproved uses as part of their practice of medicine.  Aron let the plaintiffs slide on causation.  All hat and no cattle.

Negligent Testing

Aron also allowed the plaintiffs’ negligent failure to test claim to stand.  2018 U.S. Dist. LEXIS 39146, at *22.  The plaintiffs alleged the defendants negligently failed to test Farxiga thoroughly before releasing the drug into the market, failed to analyze pre-market test results, and failed to conduct sufficient post market testing and surveillance.”  Id. at *23.  Defendants argued the plaintiffs’ negligent testing claim is “inextricably intertwined” with the plaintiffs’ failure to warn claim and is inadequately pleaded. Id. The Fifth Circuit, applying Texas law, has so held—twice.  “[A] negligent testing claim is, as a matter of Texas law, a variation of an action for failure to warn.” Dow Agrosciences LLC v. Bates, 332 F.3d 323, 333 (5th Cir. 2003) (applying Texas law), reversed on other grounds, 544 U.S. 431 (2005) (preemption).  Plaintiff’s “negligence claims, such as the alleged failure to adequately test [the product], are subsumed within” a failure to warn claim. Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912 n.5 (5th Cir. 1992) (applying Texas law).

Even though Fifth Circuit law should have controlled on this point of state law, Aron chose to follow cases that it asserted recognized “an independent cause of action based on negligent failure to test.”  Id. at *22-23.  The most significant of the three, Am. Tobacco Co. v. Grinnell, 951 S.W. 2d 420 (Tex. 1997), certainly did not.  Rather, the Texas Supreme Court’s holding was quite the opposite:

[Plaintiff’s] negligent testing claim is predicated on [defendants’] duty to test and ascertain the dangers inherent in its products about which it must warn consumers.  Because the negligent testing claim is inextricably intertwined with the [plaintiffs’] negligent failure to warn claim, we hold that summary judgment was also proper on this claim.

Id. at 437.  “Inextricably intertwined” is about as far from “an independent cause of action” as you can get.  Of the other two cases, Murthy v. Abbott Laboratories, 847 F. Supp.2d 958 (S.D. Texas 2012), is notorious for improperly construing Texas law.  The other, Romero v. Wyeth Pharmaceuticals, Inc., 2012 WL 12547449, at *4 (E.D. Tex. Aug. 31, 2012), essentially followed Murthy. Aron is another instance of improper federal court judicial activism attempting to push state (Texas) law where no state court has ever gone.

Gross Negligence

Apparently, in Texas, it is not enough just to plead negligent testing. The plaintiffs also pled gross negligence.  2018 U.S. Dist. LEXIS 39146, at *24.  The defendants argued that “[i]t is merely a restatement of plaintiff’s deficient negligence count.” Id.  However, Aron looked to the elements of gross negligence, and held the plaintiffs sufficiently pled facts to support an inference of gross negligence.  Id. at *25.  Those facts oddly included a September 2013 “post market” study.  Id. at *26.  Supposedly, the defendants “terminated” that study in “2013 without posting any results.”  Id. at *9.  However, the FDA did not approve Farxiga until January 8, 2014. Id. at *9.  That does not sound like gross negligence, but rather a preempted fraud on the FDA claim.  Whether or not anything was “posted,” the alleged study termination occurred before the FDA’s approval of this product, so the only reporting duty was imposed by federal law—not Texas law—and it ran to the FDA.  Any public “posting” of product-related information before FDA approval would illegally promote an unapproved product, which almost certainly explains lack of any such post.

With Aron, the Farxiga MDL is not exactly off to a good start.  Will this be another instance of MDL abuse in the making?  Saddle up, and get ready for a wild ride, the prominent phrase “Everything is BIGGER in Texas” is unfortunately reflected in Aron’s approach to product liability.