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The recent law review article by the always interesting and extremely prolific Lars Noah, “‘Market Shift Liability’ for Generic Drugs:  Market Share Theory’s Eccentric New Cousin,” 13 Tex. A&M L. Rev. 1415 (Spring 2026), warrants discussion.  We usually agree with Prof. Noah, but we don’t buy the central premise of the article:  that innovator liability – that the imposition of liability upon the original manufacturer to obtain FDA approval for a drug for injuries later caused by competing generic knock-offs – is similar to the now mostly passé market share liability theory from the 1980s.

The two theories have completely different origins, for one thing.  Market share liability was a causation dodge, created by various pro-plaintiff courts when plaintiffs were unable to meet the basic substantive product liability element of product identification in DES litigation.  DES was, in a sense the country’s first generic drug (no patent protection), with the result being the anybody with the necessary facilities could make it.  But back then (from the 1940s until 1971), people didn’t keep good records, and the alleged injuries skipped to the next generation and were thus very delayed.  So market share liability cut those plaintiffs a break by removing the but-for-causation requirement that they sue the actual manufacturer of the injurious product.

Innovator liability has nothing to do with causation, but-for, or proximate.  It’s a preemption dodge, pure and simple.  It didn’t gain any significant traction until after the Supreme Court, in PLIVA, Inc. v. Mensing, 564 U.S. 604 (2011), and Mutual Pharmaceutical Co. v. Bartlett, 570 U.S. 472 (2013), preempted virtually all product liability claims against generic drug manufacturers.  So the theory wasn’t “a thing“ until after preemption required plaintiffs to look elsewhere for somebody to sue.  Indeed, innovator liability creates, rather than solves, causation problems as warning causation depends on prescribing doctors supposedly relying on the inadequate labels of drugs that they never actually prescribed, and that may have been substituted after-the-fact by the actions of independent pharmacies.  As we’ve discussed elsewhere, warning liability does not exist when the actor never read the allegedly defective warnings.

But while we find that aspect of “Market Shift Liability” a bit of a stretch, we wholeheartedly agree with Prof. Noah’s comprehensive critique of what we will continue to call “innovator liability” – since we are unapologetic defense hacks.  See 13 Tex. A&M L. Rev. at 1416 n.2 (quoting pro-plaintiff article that called “innovator liability” a “catchy name” created by “lawyers who represent drug companies”).  Cf. Id. at 1452 n.176 (we being the unnamed “bloggers” referred to in this footnote).

So, we’ll skip the article’s extended discussion (pp. 1421-52) of the development of both market share liability and innovator liability and go directly to that critique.  Note:  that’s not to say these origin stories aren’t interesting in their own right – Prof. Noah’s thorough and often wry exposition is quite readable – but it’s not what prompted us to find the article blogworthy.

So what does the esteemed Prof. Noah find objectionable about innovator liability?  Like us, just about everything.

  • “[V]iew[ing] the generic drug as a product of the brand-name manufacturer’s choices . . . seems only slightly less plausible than viewing NDA holders as pushers of prescription drugs sold by their competitors.”  13 Tex. A&M L. Rev. at 1453.
  • Pro-innovator liability articles “mak[e] a series of indefensible assumptions that create[] a caricature far removed from the messy reality surrounding these tort claims,” and “entirely ignor[e] the far more important role of learned intermediaries.”  Id. at 1454 (footnote omitted) & 1456 (footnote omitted).
  • Innovator liability will “accelerate” abandonment of the market by “brand-name manufacturers.”  Id. at 1458.  “If exit occurs prior to the approval of any ANDAs, the first to apply may have to file a petition to confirm that the NDA’s withdrawal did not occur because of concerns about safety or effectiveness.  Id. (footnote omitted).  This would create a “regulatory void . . . , leaving the FDA alone to drive future revisions to the labeling.” Id
  • To avoid potentially catastrophic “long tail” innovator liability, brand manufacturers could well seek to “persuade the FDA to withdraw the license in a way that would altogether prevent subsequent generic entry,” by engaging in liability reducing “product hopping.”  Id. at 1461.  What some view as “anticompetitive” behavior would gain the “legitimate business justification of “minimiz[ing] exposure to tort” liability.  Id. at 1462-63.
  • Treating drug labeling “as completely disembodied from the drug itself” is “visiting liability on purveyors of ideas and information that foreseeably might lead to physical injury,” which is recognized as having serious First Amendment implications.  Id. at  1465.
  • First Amendment implications “become[] more pointed . . . as misrepresentation claims threaten to penalize speech further removed from efforts to sell an allegedly injurious product.”  Id. at 1467 (footnote omitted).  There are “alarming free speech consequences of starting down this freewheeling path.”  Id. (footnote omitted).
  • Treating “the NDA sponsor as the ghost author for ANDA sponsors” might even (were it not for preemption) “allow plaintiffs injured by generic prescription drugs to assert design defect claims against brand-name manufacturers.”  Id. at 1470-71 (footnote omitted).
  • Innovator liability “seemingly would impose liability on the sponsor of an approved NDA that never came to market . . . because it could foresee that ANDA sponsors would mimic its never-used labeling.”  Id. at 1472-73 (footnote omitted).
  • “[P]redicating [innovator] liability on the supposed control exercised by the brand-name drug manufacturer hardly makes sense,” as “basing such claims instead on alleged misrepresentations arguably obviates any requirement of identity between the advertised product and the substitute product that caused an injury.”  Id. at  1474.  That could lead to liability based on warnings concerning “substitute product[s] posing somewhat different risks” such as “pharmacy-compounded versions.”  Id.

Thus, Prof. Noah concluded that innovator liability was “counterintuitive” and the rationales offered by courts and commentators to justify it were “muddle-head[ed].”

Even with its limited uptake to date, however, market shift liability threatens to cause far greater disruption of the pharmaceutical sector (as well as tort doctrine) than market share liability ever did.  For these and other reasons, innovative activity should not get singled out while imitative activity largely escapes any obligation to compensate patients injured because of alleged defects in prescription drugs. . . .  [C]ourts in other jurisdictions need to resist the temptation to produce lazy knock-offs of [California innovator liability].

13 Tex. A&M L. Rev. at 1476.

Defense counsel (and their amici curiae) confronted with plaintiffs advocating innovator liability should consult this article and consider relying upon not only the arguments it makes, but also on the copious material that the footnotes we’ve omitted provide.  In addition, feel free to utilize the Blog’s own material on innovator liability – our score card collecting all the cases that have addressed it in chronological order, and our 50-state survey.  We keep both of these current.

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Federal officer jurisdiction is having a moment.  In November 2024, we called federal officer jurisdiction the quiet middle child of the federal jurisdiction family, but then earlier this year the Supreme Court decided Chevron USA Inc. v. Plaquemines Parish.  That opinion held that federal officer jurisdiction was broader than many previously thought, which we commented on here. 

The Supreme Court’s opinion got Bexis to start beating the federal officer jurisdiction drum (actually, in true Bexis form, he was restarting a riff that he took up way back in 2020).  We more recently posted on a case called Griffin v. Optum, Inc., where the Eighth Circuit approved federal officer jurisdiction over claims against pharmacy benefit managers (“PBMs”) in the long-running opioid litigation.  Because the defendant PBMs performed their functions under contracts with a federal agency, they successfully removed a lawsuit filed by a state attorney general to federal court, despite the AG’s efforts to “disclaim” recovery based on any federal-related activity. 

The Second Circuit has now joined the chorus, and it too has approved federal officer jurisdiction over opioid-related claims against PBMs.  In County of Westchester v. Express Scripts, Inc., No. 24-1639, 2026 WL 2589574 (8th Cir. Sept. 2, 2026), multiple New York counties sued PBMs over harms allegedly caused by the use and abuse of opioid pain medications.  We have seen this play before.  The counties alleged that PBMs contributed to the alleged harms through their benefit management function, such as managing drug formularies and rebates. 

The PBMs, however, performed formulary and rebate work in part under contracts with the Defense Department, the federal Office of Personnel Management, and the VA.  So they removed the cases to federal court under federal officer jurisdiction. 

This is where it gets interesting.  The counties cynically amended their complaints to add broad disclaimers purporting to abandon “any claims or recovery arising out of the Removing Defendants’ work on behalf of any federal entity,” and they moved to remand.  We have seen this play before too, and in the Eighth Circuit’s Griffin case, the “disclaimer” did not work.

It did not work in the Second Circuit either.  The central problem with the disclaimers is one of indivisibility.  As the court explained, the PBMs did not maintain separate federal and non-federal books of business.  Instead, they conducted singular negotiations with pharmaceutical manufacturers on behalf of all clients—federal plans and private plans alike.  In addition, the alleged community-wide harms were similarly indivisible, flowing from conduct that could not be neatly separated into federal and non-federal components.

The “disclaimers” therefore were ineffective.  In so holding, the Second Circuit followed opinions from multiple other circuits.  Relying for example on the First Circuit’s reasoning in Puerto Rico v. Express Scripts, Inc., the Second Circuit explained that a valid disclaimer must “clearly carve out certain factual bases, whether by time span or location,” so that no state court would ever need to evaluate whether the defendant acted under a federal officer.  By contrast, a disclaimer that requires the state court “to determine the nexus between the charged conduct and federal authority” is not valid because it is circular.  If permitted, such a disclaimer would require federal contractors to prove in state court that they were acting under federal contracts, which would negate their right to have a federal defense judged in federal court in the first place. 

The Second Circuit found that the plaintiffs’ disclaimers fell squarely into the circular category.  Whether in state or federal court, the plaintiffs were targeting rebate negotiations that were the same for federal and non-federal programs.  Federal defenses would likewise cover the whole of the alleged conduct.  In other words,

As a result, “Whether in state or federal court, Defendants will continue to press that the alleged conduct and resulting harm necessarily implicate their federal work and are subject to federal defenses.  More fundamentally, in deciding whether to enforce the disclaimers, either court will have to ascertain whether the harms from opioids distributed via federal and non-federal programs can be disaggregated at all.”  County of Westchester, at *8.  That determination belongs in federal court.

Having determined that the counties’ disclaimers were ineffective, the Second Circuit held that federal officer jurisdiction under 28 U.S.C. § 1442(a)(1) existed.  More specifically, the plaintiffs’ claims met the three-part test for federal officer removal under the Supreme Court’s Plaquemines Parish opinion. 

First, the PBMs were acting under a federal officer.  They administered formularies, processed claims, negotiated rebates, etc.—tasks that federal agencies would otherwise have had to perform themselves.  One PBM defendant operated under a detailed Statement of Work subject to weekly agency briefings and formal reviews.  Another had a similar deal with the VA, showing an “unusually close relationship involving detailed regulation, monitoring, or supervision” that satisfies the “acting under” prong. 

Second, the PBMs were sued for conduct “relating to any act under color of [federal] office.”  Under Plaquemines Parish, this requirement “sweeps broadly.”  The court found a clear relation between the plaintiffs’ allegations and the PBMs’ federal work because the rebate negotiations implicated federal clients, and they could not be bifurcated between federal and non-federal plans. Even the diffuse public-nuisance claims—targeting community-wide costs—necessarily encompass harms flowing from federally-administered prescription drug programs.

Third, the PBMs were asserting a colorable federal defense.  Namely, a government-contractor defense, a defense under a plan for military personnel, and federal preemption under the Federal Employees Health Benefits Act.  The court noted that these defenses need not be clearly sustainable—only colorable—and the plaintiffs’ sole counterargument was that they had disclaimed claims implicating those defenses, which the court had already rejected.

Federal officer jurisdiction is no longer the quiet middle child, if it ever was.  Following County of Westchester and other cases, including from the Supreme Court, we would say that federal officer jurisdiction is ready to shine. 

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Over the life of the Blog, there have been many posts taking issue with the pro-plaintiff leanings of California courts, which have resulted in many questionable decisions on issues ranging from expanding personal jurisdiction to shrinking preemption to re-writing the duties of medical product manufacturers under California law.  We have also thrown more than a little shade at the California federal courts, which, while less unitary, have been worse than the average federal court on the issues that come up in our sort of cases.  For instance, a number of California federal courts have been hostile to removals and even more have often found ways to deny motions to dismiss based on preemption and inadequate pleading.  We cannot say that the tide has turned with the California federal judiciary, but we have seen a number of decisions over the last year or so where we were pleasantly surprised at how these courts came out on the issues that matter to us.  In Mizuno v. Sanofi Vaccines U.S. Inc., No. 2:26-cv-012115-CKD, 2026 WL 2392200 (E.D. Cal. Aug. 17, 2026), a long-time magistrate judge dismissed all the claims against prescription drug manufacturers without leave to amend.  Even though it raised one of our yellow flags, Mizuno is a good decision from a somewhat unexpected source.

As should happen, the plaintiff’s obvious sloppiness and apparent laziness worked against him.  (Some of the info below is from the docket not the decision.)  First, the case was brought in state court against two companies not based in California.  When defendants removed, plaintiff did not move to remand.  Second, plaintiff did not decline to have the case assigned to a magistrate for all purposes.  The decision says the parties consented, id. at *1, but actually neither side objected to the assignment in time.  Third, when the defendants moved to dismiss the original complaint, plaintiff responded by filing an amended complaint, but it did not address the issues raised in that motion.  That failure factored into the Mizuno court’s decision not to give plaintiff a third chance to file a complaint that stated a non-preempted, non-time barred recognized claim.

It may also be the case that plaintiff’s complaint omitted some of the basic facts about the drug at issue and his use of it.  The decision does not say what the drug was approved for, why it was prescribed to plaintiff, who prescribed it, or much of anything about plaintiff’s actual medical course.  The first approved indication would have been apparent from the materials the court took judicial notice of at defendants’ request, hence our yellow flag.  Usually when the court leaves out the serious medical need being addressed though the use of the medical product over which the plaintiff is suing that is a bad sign.  Here, the approved indication makes what the court identified as the shortcomings in plaintiff’s complaint that much worse, assuming plaintiff’s use was within or close to the indication.  Here we definitely go beyond the decision to set out the facts of the case.  Defendants’ prescription medication was approved for “the treatment of adult and pediatric patients 12 years and older with chronic graft-versus-host disease (chronic GVHD) after failure of at least two prior lines of systemic therapy.”  GVHD is a potentially debilitating and life-threatening inflammatory and fibrotic condition that arises in a high percentage of patients after a bone marrow or stem cell transplant.  Its most common manifestation at the time of diagnosis is in the skin.  The transplants that trigger the chronic GVHD are themselves for very serious conditions like leukemia.  So, when the Mizuno plaintiff brought product liability claims for injuries to his skin and the court considered the motion to dismiss the amended complaint, this important context was missing.

The first issue the Mizuno court addressed was whether the second amended complaint was time-barred on its face under California’s two-year statute of limitations.  Plaintiff alleged that within a month of starting his medication, he experienced “a significant increase in rash, itching, and pain”—skin conditions he apparently had before starting the medication—and discontinued it.  Id. at *3.  He then had a videoconference with his prescribing physician to discuss his belief that the new medication was to blame.  Id.  Yet he took two years and ten days to sue.  Id.  Courts often seem to mention the discovery rule without delving deeply into allegations supporting it before letting late plaintiffs slide.  However, because the amended complaint in Mizuno did not identify a date within two years of filing when his claim allegedly accrued, let alone facts supporting the “manner of discovery,” plaintiff could not rely on the discovery rule.  Id.  Indeed, because the first motion to dismiss raised the statute of limitations, the failure of the amended complaint to plead the discovery rule properly “suggests plaintiff cannot fix the defect.”  Id.  Given that plaintiff was apparently taking the medication to treat chronic GVHD, including skin manifestations, his complaint to his physician that he believed the medication increased his skin problems is a pretty strong indication of the date of accrual of his claims.  Still, plaintiff might have gotten a chance to re-plead were it not for the main reason we are discussing Mizuno, implied preemption.

Plaintiff’s claim for negligent failure to warn—he had dropped his strict liability claims from the first complaint—was so conclusory that it probably would have failed TwIqbal had preemption not been raised.  Back when Twombly and Iqbal came out, we welcomed the authorization for courts to look at the plausibility of claims based on facts asserted in the complaint, which was a step up from the standard practice of allowing conclusory allegations of the elements of claims to suffice.  Still, winning preemption of a warnings claim as to a branded prescription drug at the motion to dismiss stage was a long shot back then.  Once Albrecht upgraded the Levine mess, however, it became clear that federal courts do have to decide preemption as a matter of law.  The majority position, expressed most notably in the Second Circuit’s Gibbons decision (discussed here and ranked here), is that plaintiffs who want to avoid preemption of their branded prescription drug warnings claims have to plead that there was newly discovered evidence after approval of the drug’s label that would have allowed the manufacturer to change the relevant warnings unilaterally under the CBE regulations.  (We carved out branded prescription drugs from generic prescription drugs because the manufacturers of the latter can never change the substance of their labels unilaterally.)  Mizuno is one of several California federal courts we have seen apply this requirement without making up some loophole (such as the need for the plaintiff to get lots of discovery before it can plead a non-preempted claim).  One was the Owens case discussed here, which Mizuno cited along with Gibbons and cases we discussed here and here.  Id. at *4.  With the proper standards in mind, it was clear that plaintiff’s generalities did not identify newly acquired evidence that could have led to a labeling change through a CBE submission:

Here, the first amended complaint alleges in general and conclusory fashion that “[f]ollowing Rezurock’s approval, Defendants received and possessed post-marketing adverse event reports through FDA-mandated reporting systems, including FAERS” and “[o]n information and belief, Defendants’ pharmacovigilance systems—including FAERS data review, internal signal detection algorithms, and periodic safety update reports—identified dermatologic events [of increasing severity and chronicity] that differed in severity, persistence, and clinical presentation from those described in the approved labeling.”

Id.  Without facts supporting a basis for the use of a CBE, plaintiff’s warnings claim was preempted.  The same ruling held for the slightly repackaged negligence claim and the strict liability failure to warn claim that plaintiff had dropped.  Id. at *5 & 6.

Negligent design was even easier to ditch, a dynamic we have lauded more than a few times.  Changing the drug’s design to avoid the alleged defect of a risk of skin injuries would have been a major change that a manufacturer cannot make unilaterally.  Id. at *5.  Under Bartlett and some progeny within the Ninth Circuit, that claim is preempted.  Id.

Lastly, plaintiff asserted an implied warranty claim that California does not recognize for prescription drugs.  Id. at *5.  Plaintiff’s proposed pivot to pleading an express warranty claim instead was rejected because “[t]he court finds no indication that plaintiff can plead facts to state a plausible claim,” given his inability to plead facts about specific representations in his two complaints.  Id.  Again, with the added context of the drug’s indication and plaintiff’s actual medical situation, it is hard to imagine an express warranty from the manufacturer directly to the plaintiff that the medication would prevent any worsening of his preexisting skin problems.  The actual physician labeling, which plaintiff surely never read, and the patient brochure clearly made no such promise.  To the extent the alleged warranty came from the labeling, it would have been preempted anyway.  That was the end of Mizuno, dismissal without leave to file a third complaint.  Not waiting for the inevitable third, or even fourth, strike is good practice.

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Some of us are on the mailing list of the Rabiej Litigation Law Center.  Recently, we received an email entitled “Rare Mass-Tort MDL Consensus Among Opposing Counsel & Judges.”  Since such a broad consensus is indeed “rare,” we read the email.  Apparently, a recent conference resulted in “a rare consensus:  holding ‘pilot trials’ very early in an MDL provides substantial value to everyone involved.”  Here is how the email described the “pilot trial” concept:

[A]ttendees were confident that pilot trials could successfully substitute for later bellwether trials, so long as the main issues across the cases are properly represented.  These pilot trials would quickly familiarize the court with the central issues, paving the way for early preemption and Daubert rulings while offering both parties clear insight into potential trial outcomes to foster earlier resolutions.

*          *          *          *

In addition to ”picking representative pilot cases, . . . participants highlighted several priority topics . . .”:

  • Judicial Selection of Cases:  Having judges choose pilot cases avoids the typical disagreements between opposing counsel.
  • Standardized Discovery:  Product-liability standard case timelines for document production and expert disclosures should apply to pilot trials.
  • Binding Preemption & Daubert Precedent:  Preemption and Daubert rulings in pilot trials ought to bind all cases in the MDL, provided notice and an opportunity to be heard are given.

The email mentioned only one example:  that a “pilot-trial proposal was introduced in the Depo-Provera MDL” but never came to fruition due to a settlement.  Our understanding is that the Depo-Provera proposal really wasn’t much different than a bellwether trial, only earlier.  Nonetheless, from a defense perspective that proposal had several meritorious features:

  • The chosen “pilot” plaintiffs were reasonably representative; they were not either side’s best or worst cases.
  • Plaintiffs were not allowed to rig the selection process by dismissing their weakest cases to maximize the possibility of a good result.
  • The initial work-up centered on two defense-friendly issues:  general causation and preemption, which ensured focused discovery and motion practice.
  • As already mentioned, the overall handling of cases in the Depo Provera MDL required early plaintiff vetting on proof of use and injury

Still, as to the “pilot trial” concept generally, color us unconvinced for essentially the same reasons that we don’t like the aforementioned “bellwether trial” concept either.  As Bexis wrote about a similar MDL conference back in 2018:

There was considerable discussion of bellwether trials, but we have doubts that rules could solve the problems that were mentioned.  Our view is to interpret the MDL statute as written, and restrict MDLs to “coordinated or consolidated pretrial proceedings.”  28 U.S.C. §1407(a) (emphasis added).  A textualist approach to the MDL statute would, and we think should, mean no trials, “bellwether” or otherwise, in the MDL transferee court.  Simple.  No rules change needed. . . .  [I]f someone wants to preserve it for appeal, this issue could be the next Lexecon.

(Emphasis original).  If “we’re all textualists now,” as Justice Kagan famously announced, then the “pretrial” limitation that Congress created in the MDL statute (28 U.S.C. §1407), should mean just that – “pretrial proceedings” only.  Thus, any sort of “trial” goes beyond the power Congress conferred in the MDL statute, and the Supreme Court would likely so hold, if the issue ever came before it.

We are bolstered in that respect by what the Supreme Court recently held about statutory interpretation in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024):

[S]tatutes, no matter how impenetrable, do − in fact, must − have a single, best meaning.  That is the whole point of having written statutes; every statute’s meaning is fixed at the time of enactment.  So instead of declaring a particular party’s reading “permissible” in such a case, courts use every tool at their disposal to determine the best reading of the statute and resolve the ambiguity.

In an agency case as in any other, though, even if some judges might (or might not) consider the statute ambiguous, there is a best reading all the same. . . .  In the business of statutory interpretation, if it is not the best, it is not permissible.

Id. at 400 (citations and quotation marks omitted).

The permissible scope of multidistrict proceedings is set by a statute, 28 U.S.C. §1407.  That statute provides, in pertinent part:

When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. . . .  Each action so transferred shall be remanded . . . at or before the conclusion of such pretrial proceedings to the district from which it was transferred. . . .

(b) Such coordinated or consolidated pretrial proceedings shall be conducted by a judge or judges to whom such actions are assigned. . . .  The judge or judges to whom such actions are assigned . . . may exercise the powers of a district judge in any district for the purpose of conducting pretrial depositions in such coordinated or consolidated pretrial proceedings.

(c) . . . The panel shall give notice to the parties in all actions in which transfers for coordinated or consolidated pretrial proceedings are contemplated. . . .  

Id. §1401(a-c) (emphasis added).  From reading this statutory language, we think, first, that Congress’ limitation of the scope of MDLs to “pretrial proceedings” was intentional, and second, that the “best,” and therefore only permissible, construction of “pretrial” cannot include “trials” of any sort.

So regardless of both sides’ agreement, either in an MDL or in an MDL-related conference, that a “pilot trial” might be a good idea, as §1407 currently stands, holding one would be ultra vires.  There are plenty of non-“trial”-related ways to obtain binding MDL-wide pretrial rulings on issues like preemption and Rule 702 (we don’t say Daubert).  One example is the recent show-cause order in the Talc MDL.  Creating another atextual “trial” variant isn’t one of them under the MDL statute as it currently stands.

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Every law student learns the same tidy hierarchy on day one of Torts. Negligence is harder to prove than strict liability, because strict liability does not require showing the defendant did anything wrong, only that the product itself was defective. And recklessness is harder still than negligence, reserved for conduct that goes well beyond a failure to use reasonable care. It is a clean pyramid, narrower at each level. Today’s case takes that pyramid, turns it upside down, balances it on its point, and calls it a ruling.

The case is Apuzzo v. Karl Storz Endoscopy-America, Inc., 2026 WL 2494546 (D. Conn. Aug. 25, 2026), involving a broken urological device. We filed this one away at first as a routine malfunction-theory dismissal, the kind we can write up in three paragraphs and move on. Then we kept reading, and the ruling kept getting stranger, all the way to a punitive damages claim that survives on the very allegation the court used to save the design defect and negligence claims.

Plaintiff underwent a routine cystoscopy, during which a cystoscope sheath was inserted exactly as intended. During the procedure the sheath fractured and its tip detached inside the bladder, requiring surgical removal. Id. at *1. Plaintiff’s amended complaint pressed three theories of product liability under the Connecticut Product Liability Act (“CPLA”) — strict liability, negligence, and recklessness. The defendant manufacturer moved to dismiss the whole thing because even after one amendment prompted by the court’s own suggestion that it needed more factual specificity, the allegations are thin.

Plaintiff tried to plead strict liability four different ways — malfunction, manufacturing defect, design defect, and failure to warn. Three of the four went nowhere. Start with the malfunction theory, which is usually a plaintiff’s best friend in a broken-device case because it lets circumstantial evidence stand in for a specific defect. The catch in Connecticut is that the theory only kicks in when the product is unavailable for inspection because it was lost, destroyed, or otherwise inaccessible. Id. at *3. Here, the metal fragment that broke off inside the plaintiff was surgically retrieved. Plaintiff never alleged the device was unavailable for inspection, and an argument about unavailability raised for the first time in an opposition brief does not count. Id. at n.1. Malfunction theory dismissed.

Manufacturing defect fared no better. Plaintiff’s entire theory boiled down to alleging that the device fractured, and fractures like that do not happen absent a defect, therefore it was defectively manufactured. Id. at *4. That is circular reasoning dressed up as a factual allegation. The court called it what it was – a conclusory pleading that identifies no specific component and no deviation from any manufacturing standard or specification. Nothing beyond the bare fact of the break itself. Manufacturing defect dismissed. Id.

Failure to warn went down for the same reason it almost always does at the pleading stage when a plaintiff phones it in. The complaint recited that the warnings were inadequate and that adequate warnings would have prevented the injury, without a single factual allegation about what the warnings actually said or how they fell short. Conclusory in, conclusory out. Failure to warn dismissed. Id. at *5.

So far, so unremarkable. Then we get to design defect, and the court finds the allegations “barely” sufficient. Id. But apparently that is enough in Connecticut, a state admittedly generous on design defect pleading. The standard does not require a plaintiff to identify a specific defect so long as there is some evidence of an “unspecified dangerous condition.” Id. at *4-5. But look at what actually got plaintiff over the line here. The device fractured during normal use, and before the plaintiff’s procedure, the defendant had received other complaints of metal fatigue and fracture in the same device. That is the entire factual predicate. No allegation about what feature of the design caused the fatigue. No allegation about an alternative design that would have avoided it. No allegation about a manufacturing or engineering standard the design fell short of. Just — it broke, and apparently it has broken before.

Strip away the label and squint, and that is the malfunction theory wearing a different coat. The court spent an entire section three pages earlier explaining why a plaintiff can’t get past the door on malfunction theory without a threshold showing of unavailability. Then it let functionally the same inference through the design defect door, with the only addition being an allegation of prior unspecified complaints that says nothing about the design at all. If prior complaints of breakage, without any indication of what aspect of the design was responsible, are enough to plead an unspecified dangerous condition, then a plaintiff never has to identify anything about the design in the first place. The device broke, other units apparently broke too, ergo the design is defective. That is malfunction theory with an extra data point.

Here is where the pyramid really tips over. The amended complaint never got around to pleading a standalone negligence count, but the court found enough scattered negligence-flavored allegations buried in the strict liability count to construct one anyway and rule on it. Negligence requires proof of a breached duty of care, conceptually a heavier lift than strict liability’s focus on the product’s condition rather than the manufacturer’s conduct. So, what did the court have to work with? The same allegation that got design defect over the line — that the defendant had received complaints of metal fatigue and fracture in the device before this plaintiff’s procedure. Id. at *5-6. That is the entire factual basis for the claim. How many complaints? What did they say? Which component, which failure mode, which use conditions? What warnings, if any, already accompanied the device regarding fracture risk? In other words, what facts support an inference that the defendant’s conduct could be judged unreasonable? None of that appears anywhere in the complaint, and none of it troubled the court. The allegation of unspecified prior notice was enough, standing alone, to make it plausible that the defendant knew or should have known the product was dangerous and unreasonably failed to do anything about it. Id. A claim that requires more than strict liability, not less, survived on categorically less information than the strict liability claims the court had just dismissed as too conclusory to proceed.

If you thought the ladder from strict liability to negligence collapsing was strange, wait until you see what happens to recklessness. Recklessness, under Connecticut law, is supposed to require more than negligence and more than gross negligence. The standard is “highly unreasonable conduct, involving an extreme departure from ordinary care, in a situation where a high degree of danger is apparent.” Id. at *7.  It is meant to be the hardest tier to plead, reserved for conduct a jury could punish with punitive damages precisely because it goes well beyond a failure to exercise reasonable care.

The court let the punitive damages claim survive on the theory that the defendant was aware of but failed to respond to notice that its devices had fractured during normal use, and that continuing to sell the device after that notice amounted to a conscious disregard of known risk. Read that sentence again, then flip back to the negligence holding, which survived on the theory that the defendant knew or should have known its product was dangerous and sold it anyway. Those are not two different theories supported by two different sets of facts. They are the identical allegation, doing double duty as both the floor of the pyramid and the ceiling. If the same recycled prior-complaints allegation satisfies both negligence and recklessness, then recklessness has been quietly redefined as whatever gets a defendant past a motion to dismiss on negligence, plus nothing.

This opinion gets the easy calls right and the hard ones backwards. Malfunction theory, manufacturing defect, and failure to warn were all correctly dismissed for exactly the kind of conclusory, circular pleading that should not survive TwIqbal in any circuit. But then, the court used a single unadorned allegation, that the defendant had received unspecified prior complaints about fracture, to sustain design defect and negligence claims, and to bootstrap that same negligence claim into a punitive damages theory. One allegation, three separate legal thresholds cleared, each threshold supposedly requiring more than the last. The pyramid was supposed to get narrower as you climb. Here, it is the same width from the ground floor to the penthouse. So the case moves forward on the strength of an allegation that was, by the court’s own word, barely enough.

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None of the Pelvic Mesh Litigation shenanigans – criminal and otherwise – that were graphically described in Elizabeth Chamblee Burch’s recent book, The Pain Brokers (One Signal Publishers 2026), which we reviewed here, could have happened without somebody footing the bill.  Those somebodies were – and are in most, if not all, mass torts – third party litigation financiers.  TPLF is also behind those ubiquitous lawyer ads on late night TV.

But practically all such funders don’t want the public – and especially their litigation opponents (who are our clients) − to know who they are, how much skin they have in the game, and how much control they have over their financed litigants.  We (Bexis mostly) have been involved in the effort to add a TPLF disclosure requirement with teeth to the federal rules for the past several years.

The process for amending the Federal Rules of Civil Procedure is glacial, so states have started to act on their own.  We blogged here about the comprehensive TPLF regulatory framework that Georgia enacted last year.  In this post we are pleased to discuss a similar effort in Ohio that was recently signed into law and will go into effect this October.  The complete as-enacted statute (known as HB 105) is available here.

Unlike the current federal effort, which is limited to disclosure of TPLF contracts, and which is necessarily limited to federal cases (which includes MDLs), the Ohio effort has many substantive elements, including an outright ban on transnational TPLF.  §1357.07.  That provision seems to have garnered the most publicity, but the rest of the statute is actually more important to the general conduct of litigation.  It may also serve as a template for other states.

First, the Ohio statute separates TPLF into “consumer” (TPLF that resembles payday lending), which involves loans of less than $400,000 to individuals, see §1357.01(F), and “commercial” (larger dollar amounts and funding directed to lawyers and law firms.  See §1357.01(C).  There are various exceptions for more traditional lenders, insurers, pro bono and public interest operations, contractual indemnitors, familial loans, and contingent fee arrangements with lawyers.  See §1357.01(D and G).  The legislature made clear it intended to regulate “a narrow range of consumer legal funding agreements and commercial litigation financing agreements as contemplated in the holding of the Ohio Supreme Court in Rancman v. Interim Settlement Funding Corp., [789 N.E.2d 217 (Ohio 2003)]” and “to preserve and reinforce the general public policy expressed in that holding against champerty and maintenance.”  Id. §1357.011.  Here’s what the Ohio Supreme Court held in Rancman:

Equally troubling is a champertor’s earning a handsome profit by speculating in a lawsuit and by potentially manipulating a party to the suit. . . .  [A] lawsuit is not an investment vehicle.  Speculating in lawsuits is prohibited by Ohio law.  An intermeddler is not permitted to gorge upon the fruits of litigation.  Except as otherwise permitted by legislative enactment . . . a contract making the repayment of funds advanced to a party to a pending case contingent upon the outcome of that case is void as champerty and maintenance.  Such an advance constitutes champerty and maintenance because it gives a nonparty an impermissible interest in a suit, impedes the settlement of the underlying case, and promotes speculation in lawsuits.

789 N.E.2d at 221 (citation omitted).  Note the “otherwise permitted by legislative enactment.”  Ohio’s vigorous judicial enforcement of existing laws against champerty and maintenance was surely a catalyst for equally vigorous legislative action.

The legislature’s desire to regulate TPLF consistent with this holding explains many of the limitations imposed by the statute.

We’ll start with the “consumer” TPLF, since the statute does.  In enacting this statute, Ohio plainly intended to do away with the sleazy conduct that permeated the “Pain Brokers.”  First, “consumer legal funding companies” cannot do business in Ohio without registering with the state attorney general and filling out a detailed application.  §§1357.011 to .02.  Consumer TPLF contracts must:

  • Be “completely filled in” at signing;
  • Contain several “disclosures: (1) the total funds “paid to the consumer”; (2) a list of all one-time and recurring charges and how they accrue; (3) the “maximum amount” the consumer owes from litigation proceeds; (4) the “cumulative” maximum when there is more than one agreement between the parties; (5) a 10-day no-penalty cancellation period, and means to cancel; (6) an all-caps notice of the right to cancel; (7) an all-caps notice that the funder has “no role” in deciding any settlement; (8) an all-caps notice that the funder cannot control or influence the funded plaintiff’s counsel; and (9) an all-caps statement that the funding is totally non-recourse;
  • The funded party’s attorney must operate solely on contingency, meaning no separate payments from the funder;
  • The funded party’s attorney must ensure that “all disclosures” have been given to the funded party;
  • The funded party’s attorney must ensure that the terms of the funding contract, including payments, are satisfied;
  • No referral fees or any other compensation can be paid by the funder to the funded party’s counsel;
  • The funded party’s counsel must “follow all applicable rules of professional conduct . . . in all aspects of the transaction.”

§1357.03.  Further, all violations by the funder constitute violations of the Ohio consumer protection statute, and are so enforceable either by the funded party or by the Ohio attorney general.  And in addition, any violation “renders the consumer legal funding agreement unenforceable.”  Id.

A number of other TPLF shady practices, many of which occurred in “Pain Brokers,” are banned:  (1) referral payments either to or from law firms and/or health care professionals; (2) false advertising; (3) referral arrangements with particular law firms and/or health care professionals; (4) not providing TPLF contract documents; (5) stacking TPLF for the same claim; (6) making or influencing litigation decisions, including settlement, counsel selection, experts, or strategy; (7) waiving any remedy; (8) paying costs or fees, including attorney fees; (9) charging penalties or excessive “service” fees; (9) attorney-owned TPLF; and (10) faked claims.  §1357.04.

Attorneys representing consumer TPLF clients cannot share confidential client information without the client’s written consent and only provide the TPLF with confidential discovery information in compliance with all protective orders, court rules, and ethical requirements.  Lawyers are also prohibited from having financial interests in any TPLF that lends to their clients.  §1357.05(A-B).

The statute also provides for disclosure of consumer TPLF agreements to the attorney general, the public, and opponent seeking TPLF discovery.  §1357.05(C-E).  Disclosure of TPLF agreements to the AG must be made within 14 days of resolution of the funded matter, and the AG must then “promptly publish the contents” (with certain redactions) on a public website.  Georgia’s similar requirement has already yielded public registration data.  During litigation, opponents may seek discovery of TPLF agreements, as “[a]ny provision of a consumer legal funding agreement . . . that prohibits or limits discovery of the agreement or the parties to the agreement is void and unenforceable.”  Id.

Now for the statute’s regulation of “commercial” TPLF.  It’s much shorter.  Part of that is because, as one might expect, a lot of it is similar or identical to what we just described for “consumer” TPLF, albeit with some modifications reflecting that funded parties are not just individuals.  Consumer TPLF faces registration requirements, but not as detailed.  §1357.08.  A similar prohibition against disclosure of confidential information in violation of protective orders is imposed, as is an almost verbatim ban on TPLF interference with settlement and other litigation decisions.  §1357.09(A-B).  The disclosure requirements for commercial TPLF are also essentially identical.  §1357.09(C-E).  Unlike consumer TPLF, the statute does not ban offering or accepting referral fees.  Nor are equivalent disclosures and attorney-related restrictions imposed, reflecting that the recipients are expected to be more sophisticated commercial entities.  Nor are statutory violations committed by commercial TPLF subject to a private right of action under the Ohio consumer protection statute.  Instead, enforcement is limited to actions brought by the state attorney general:

The attorney general may file a complaint seeking any equitable remedy, including barring a commercial litigation financier or consumer legal funding company from doing business in this state in the capacity as a commercial litigation financier or a consumer legal funding company, if the commercial litigation financier or consumer legal funding company is found by a court of competent jurisdiction to have violated this chapter.

Id. at §1357.10.

We have a couple of closing observations.  First, defendants in mass torts should be making sure that all Ohio plaintiffs (and plaintiffs from other states, such as Georgia, with similarly strict TPLF regulations), are complying with those state-law TPLF requirements.  State statutes like Ohio’s protect and apply to all Ohio citizens, regardless of what court their litigation is venued.  Thus the Ohio, Georgia, and other state TPLF statutes apply to citizens of those states in federal MDLs and analogous state aggregated proceedings, and defendants should be on the lookout to enforce compliance, if the plaintiffs comply voluntarily.

Second, while most of these statutory provisions are substantive, those of us involved in seeking to have TPLF disclosure added to the Federal Rules of Civil Procedure will have to be careful that any federal rules disclosure requirements does not result in the nullification of even better state disclosure TPLF mandates, such as Ohio’s, by Supreme Court rulings concerning the exclusivity of the federal rules in federal court.  See Berk v. Choy, 607 U.S. 187 (2026) (state medical malpractice affidavit-of-merit requirements do not apply in federal court); Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393 (2010) (same for state class action limitations).

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We were saddened this week to hear about the passing of Dolly Parton. A prolific and wonderful songwriter, she was also a relentless force for good.  A shining example of her goal of improving the world is her Imagination Library, which she started to make sure as many kids as possible had a chance to read. Since its founding in 1995, the library has donated over three hundred million books to children across the world. As Dolly put it:

When I was growing up in the hills of East Tennessee, I knew my dreams would come true. I know there are children in your community with their own dreams. They dream of becoming a doctor or an inventor or a minister. Who knows, maybe there is a little girl whose dream is to be a writer and a singer.

The seeds of these dreams are often found in books and the seeds you plant in your community can grow across the world.

Dolly planted a remarkable number of those seeds, and in many ways she represented the best of us. Things seem a little darker knowing that such a positive driver of goodness is gone. We will miss her voice, her smile, and her charity, but we trust that her example of doing good will live on.  It’s hard to relate that to our blogging, but ultimately we all have to turn back to the nine to five (OK, OK, we couldn’t help it).

Today’s case is another “LifeVest” wearable defibrillator case (we’ve blogged about prior cases involving this device here and here).  Pellegrin v. Zoll Medical Corp., 2026 WL 2409216 (E.D. La. Aug. 1, 2026). Plaintiff was prescribed a LifeVest for her cardiac care after suffering heart failure. She claimed that she experienced two unnecessary discharges from the device when she was not undergoing a cardiac event. She alleged chronic neck pain following the alleged shocks from the device—although the court noted she had a history of cervical spine problems. The defendant moved to dismiss based on preemption.

Continue Reading More LifeVest PMA Preemption
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Shortly after the Supreme Court decided Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), we predicted that that the other side would attempt to use that decision “for nefarious purposes.”  We chronicled their first, “meat-axe” attempt here, where MDL plaintiffs argued that Loper Bright somehow abolished implied preemption in tort cases altogether.  Not surprisingly, that argument got the back of the judicial hand.  In re Suboxone (Buprenorphine/Naloxone) Film Products Liability Litigation, 761 F. Supp.3d 1069, 1086 (N.D. Ohio 2024) (Loper Bright “says little, if anything, about preemption doctrine” since preemption “involves determining the intent of Congress, not an agency”).  A second broad-brush attempt – this time attacking PMA preemption − failed equally miserably in Ehlers v. Abiomed, Inc., 792 F. Supp.3d 941 (E.D. Mo. 2025). “[B]ecause the Riegel Court did not defer to the FDA’s interpretation of the MDA’s preemption clause,” so Loper Bright did not apply at all.  Id. at 952 n.1 (emphasis original).  We found that argument particularly ironic, since the Supreme Court opinion that actually did rely on FDA statutory interpretation, explicitly employing Chevron deference, was the pro-plaintiff decision in Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996).

But in the past couple of months, plaintiffs in much higher profile product liability cases have had their Loper Bright-based anti-preemption arguments roundly rejected. 

In Monsanto Co. v. Durnell, 146 S. Ct. 2001 (2026), which we’ve already discussed more generally here and here, the Supreme Court rejected the plaintiff’s claim that the EPA’s “procedures for registering pesticides and approving pesticide labels” were ultra vires under Loper Bright, and therefore (plaintiff argued) could not have preemptive effect.  146 S. Ct. at 2013.  That was flatly “incorrect.”  Id.  Given the statute’s express delegation of power to EPA to enact regulations and to “determine” labeling compliance, Loper Bright, had no effect at all on preemption.

[The statute] empowers EPA to “prescribe regulations. . . .”  And [it] expressly directs EPA to register pesticides and determine that [their] labeling complies with [the statute’s] many specific requirements.  During that extensive registration process, EPA critically evaluates the pesticide label to ensure that the label contains all warnings necessary to protect human health.  After EPA makes a determination about the appropriate warnings for a pesticide’s label, a manufacturer is legally required to use that label unless and until EPA subsequently approves or requires a new label.

Id. (citations omitted).  Given the EPA’s regulatory power, Durnell considered it just like the FDA – indeed, Riegel v. Medtronic, Inc., 552 U.S. 312 (2008), the FDA PMA preemption decision, was “dispositive here.  If FDA’s premarket approval of medical devices preempted additional state-law requirements, so too must EPA’s registration of pesticides and approval of pesticide labels.”  146 S. Ct. at 2012.

Even more recently, in Yousefzadeh v. Johnson & Johnson Consumer, Inc., ___ F.4th ___, 2026 WL 2192415 (2d Cir. July 30, 2026), another appellate court rejected a similar Loper Bright-related argument in the OTC drug preemption context.  “[T]he FDCA authorizes the FDA to promulgate regulations, including labeling requirements, that govern OTC drugs; these regulations therefore fall within the scope of the FDA’s authority and have preemptive effect.“  Id. at *7 (citations and footnote omitted).  The footnote directly addressed Loper Bright:

To the extent Consumer Plaintiffs contend that Loper Bright [citation omitted], upends this rule by overturning Chevron [citation omitted], and ending the era of Chevron deference, that argument fails.  Following Loper Bright, . . . [a] statute may nevertheless still authorize an agency to “give meaning to a particular statutory term,” and to “prescribe rules to ‘fill up the details’ of a statutory scheme” through regulation.  Thus, Loper Bright does not subvert agencies’ authority to promulgate preemptive regulations pursuant to the authority vested in them by statute − authority the FDCA vests in the FDA here.  Indeed, the Supreme Court has given preemptive effect to federal regulations since before Chevron.

Id. at *7 n.9 (Loper Bright citations and quotation marks omitted).

So far every court that has been presented with a Loper Bright argument against preemption in a product liability case has rejected it – uniformly recognizing that Loper Bright: (1) only deals with agency interpretation of statutes, (2) does not reduce in the least the power of the FDA (and similarly situated agencies) to promulgate regulations, and to approve products, pursuant to congressional delegations of power, and (3) that such discretionary agency actions have full preemptive force.

Now, if only a defendant would only use Loper Bright equally aggressively to contest the continued viability of Lohr.

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Last week we reviewed our 2020-25 Best and Worst lists to see if any patterns emerged in terms of the federal circuits.  Our tentative conclusions were that the Fifth Circuit is pretty defense-friendly and that the Third Circuit is pretty active, both good and bad.  

This week we surveyed state court cases from the same lists. We ended up with an even smaller sample, so any conclusions are even less valid.  But let’s pretend we are an expert witness in Cook or Alameda County, and offer broad opinions premised on bare-bones data and shoddy methodology.  

Here is what we found:

2020 best: Rios (Ill.), Boone (Ct.), Cavanaugh (Fla.), Stiens (Ky.), 

2020 worst: Hammons (Pa.), Russell (Ky.), Mize (Cal.), Risperdal (Cal.), 

2021 best: State ex rel. Hunter v. J&J (Okla.), Albert (Pa.), Hyrmoc (N.J.)

2021 worst: No state cases

2022 best: Dearinger (Wash.), Amiodarone (Cal.), Kline (Cal.)

2022 worst: Glover (Ct.), People v. J&J (Cal.), Blackburn (Ala.), Center for Inquiry v. Walmart, Inc. (D.C.)

2023 best: Center for Envtl. Health (Cal.), Onglyza (Cal.), Hyrmoc (N.J.), Alcazar (Ind.), M.T. v. Walmart (Kansas)

2023 worst: State ex rel. Shikada (Haw.), Estate of Cronin (Nevada), 

2024 best: Shears (W. Va.), In re Natl. Prescript. Opiate (Ohio), Himes (Cal.)

2024 worst: Gilead (Cal.), Himes (Cal.), Providence Health Syst.-Oregon (Oregon), Zantac (Del.), Herzog (Cal.), 

2025 best: Zantac (Del.), Eastern Maine Med. Cntr. (Maine), Silverstein (N.Y.) 

2025 worst: Hall (Wash.), In re Ranitidine (Cal.)

It is no surprise that California produced the most bad cases – six. But it also produced the most good cases – five. And one of those bad cases was Gilead, with its wretched duty to innovate, which was recently reversed by the California Supreme Court in a decision that will make our 2026 Best list.  So while we still think California’s view on admissibility of expert testimony is feeble (we wish Sargon was so gone), the real takeaway is that California is the biggest state with the most litigation, so it hogs the limelight for both good and ill. (We will resist saying anything too snarky about the west coast, but it is hard to miss the fact that, besides California, there are very bad cases from Nevada, Oregon, Washington, and, most western of all, Hawaii.) New Jersey is the only other state with more than one case from the Best list.  Pennsylvania and Kentucky (we would not have guessed that last one) each planted one case among the Best and one among the Worst.  So did Delaware, but it is the same case: the Delaware Supreme Court reversed the lower court’s bad expert rulings in the Zantac litigation. That reversal was not merely on the 2025 Best list, it topped the list.

As with the federal cases, our analysis is probably – check that, certainly – plagued by selection bias.  The truth is that good and bad cases can show up anywhere. Count on California and New Jersey to keep us busy, and that is no cause for despair.  For every bad case emerging from those benighted jurisdictions, there is usually a good one, as well.  

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We have all had the experience of ordering something online, watching the delivery truck icon crawl across the map for three days, and then opening the box to find everything is exactly fine. No harm, no foul, just a mildly stressful shipping odyssey. Now imagine a plaintiff’s lawyer showing up at your door insisting that because the box could have arrived damaged, you should treat it as if it did arrive damaged and sue somebody for the full purchase price. That is, more or less, the theory a relator tried to sell the court in Ellis v. CVS Health Corp., 2026 U.S. Dist. LEXIS 137176 (E.D. Pa. Jun. 22, 2026), a False Claims Act (“FCA”) case decided earlier this summer, and we are pleased to report the court was not buying what he was selling.

The case is a qui tam action concerning biologics, complex protein-based medications that need to be shipped within a specific temperature range because their chemical structure. Their medical value can degrade if they get too hot or too cold for too long. That much is undisputed. It is also undisputed that shipping biologics to patients’ homes, so-called “cold-chain” shipping, carries an inherent risk of what the industry calls “excursions,” meaning brief exposures outside the labeled storage temperature. Id. at *31.

By the time the case reached summary judgment, what remained was a single theory — that three specific temperature-sensitive drugs were “worthless services” under the FCA because of the shipping temperature issues, meaning the government had effectively paid for nothing when it reimbursed pharmacies for these medications. The missing ingredient was any actual proof that any drug was actually worthless.

Worthless services claims under the FCA require the plaintiff to show that what the government paid for had no medical value, not just diminished value — “[s]ervices that are ‘worth less’ are not ‘worthless.’” Id. at *23. After years of litigation and nearly six years of a government investigation that ultimately declined to intervene, plaintiff still could not identify a single dose of any of the drugs that was actually damaged by a shipping excursion. The manufacturers’ own stability studies, which measure how much temperature stress a given drug can withstand before losing potency, showed that the drugs could tolerate colder temperatures for longer than the excursions plaintiff alleged. A fact plaintiff conceded. Id. at *14.

So, plaintiff tried to build a workaround. Lacking proof that any given biologic was actually compromised, plaintiff argued that the shipping process was so “systemically vulnerable,” and defendant’s methods so “utterly deficient,” that the medications could simply be presumed compromised, or at least presumed unmarketable, without any need to show actual impairment. The court was having none of it. In the court’s words, this theory “would take the concept of worthless services to an untenable extreme, finding medical worthlessness with no evidence that any drug’s efficacy was impaired in any way.” Id. at *4.

That is about as clean a rejection as a defendant could hope for, and it is worth sitting with for a second. The court did not say plaintiff’s proof was thin. The court said the entire theory, taken on its own terms, would prove too much. Under plaintiff’s logic, any risk of temperature deviation, no matter how brief, no matter whether it ever actually affected the drug, would be enough to render an entire product line “worthless” and trigger fraud liability under a statute whose whole premise is proof of a false claim.

Plaintiff threw a fair amount of expert firepower at the problem, including a pharmacy practice expert, a packaging design engineer, and a chemist. The packaging and pharmacy experts offered opinions that defendant’s shipping practices were inadequate. But as the court noted, criticizing a company’s process is not the same as proving damage to the product, and “[f]laws in [defendant’s] procedures do not inexorably prove flaws in the drugs.” Id. at *17. The chemistry expert came closest to the mark, theorizing that different rates of freezing and thawing could cause different degrees of protein damage through a phenomenon called cryo-concentration. Interesting theory. Untested theory. On cross-examination, the expert admitted that confirming which effect actually occurred would require running an actual test replicating the shipping conditions, and he never ran one. He just “extracted” data from other people’s studies and reached his own conclusion. The court was unimpressed.  Hypothesis is not a substitute for evidence, particularly when “substantial data . . . flatly contradicts an expert’s theory.” Id. at *19. An opinion that a bad process could theoretically cause harm is not the same as evidence that harm occurred, and a court is not required to let a jury fill that gap with speculation.

When the science did not cooperate, plaintiff pivoted to an economics-flavored argument that the drugs were “economically worthless” because they were technically eligible for return under defendant’s customer-friendly replacement policy, regardless of whether their potency was ever actually affected. Plaintiff’s expert economist testified that the drugs would be economically worthless “even if the stability, efficacy, and safety of the medicine were not affected” by the shipping process. Id. at *21. The court shut this down explaining that this theory rests on a “presumed market value,” which is “a construct not found in the False Claims Act, or any decision applying it.” Id. And logically, the court noted, “if the medication had therapeutic value, securing payment for it cannot constitute fraud.” Id. at *21-22. We appreciate a court that is willing to call a made-up legal concept exactly what it is. Whether a drug has therapeutic value is, as this court correctly framed it, a binary question. It either does or it does not. Maybe doesn’t get the job done.

Plaintiff’s argument that the court spent the most time on was that the FDA-approved label and the United States Pharmacopeia amounted to absolute standards, such that any excursion outside the ranges they identify was a per se violation supporting a finding of worthlessness. The court walked through how worthless services claims can, in appropriate cases, borrow standards from regulations or industry practice to define what counts as worthless, particularly where the product either works or does not work on a “black-and-white” scale, and where noncompliance is so extreme it amounts to gross negligence. But the court found that neither the FDA label nor the USP came close to establishing the strict, zero-tolerance rule plaintiff needed.

On the FDA label, the court noted that the label simply specifies one of a few general storage categories and “do[es] not purport to address the effects of excursions on the medications or . . . how the drugs should be transported.” Id. at *29. The USP fared no better for plaintiff. The court pointed to language explicitly acknowledging that drugs “may be held at temperatures outside their labeled storage requirements” and that excursions “may be acceptable provided stability data and scientific/technical justification exists demonstrating that product quality is not affected.” Id. at *33-34. In other words, the USP itself assumes excursions happen and builds in a process for evaluating them rather than banning them outright.

The court also found defendant’s conduct cut against any finding of gross negligence. Defendant spent time and money testing and re-testing the packaging and maintained a policy of promptly replacing any drug reported to have arrived frozen, which the court noted was one of the two compliance options the USP itself offers pharmacies when a deviation is reported. Id. at *34. An organization that is trying, even imperfectly, is not an organization acting “without even slight care.” Id. at *27.

We flag this decision not just for our FCA enthusiasts, but for anyone defending economic loss class actions built on a similar architecture — plaintiff cannot prove that any specific unit of a product actually failed, so plaintiff instead argues that the entire product line, or an entire class of transactions, should be treated as categorically worthless or defective because of a generalized, systemic risk that harm could have occurred somewhere, to someone, at some point. Strip away the FCA-specific vocabulary and this court’s reasoning offers a useful playbook for knocking down economic loss claims regardless of the statute involved. 

The relator here had six years of government investigation and years of party discovery to find one damaged dose and could not do it. In the end all he could do was advance multiple theories asking the court to treat speculation as proof. Instead, the court granted summary judgment. The box arriving a little cold did not mean everything inside it was ruined. Some shipments really do arrive exactly fine. This one, for defendant, arrived on time and intact.

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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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