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Politics makes strange bedfellows.  So does the law.  Weird cases also make weird law.  The Supreme Court decision in National Pork Producers Council v. Ross, No. 21–468, — S. Ct. — , 2023 WL 3356528 (U.S. May 11, 2023) (“NPP”), evidences each of those old saws.  Deciphering just what the Supreme Court held entails interpreting a 3-D Rorschach image by touch.  Charting which justices joined which opinions on which issues looks like a psilocybin-induced Venn diagram.  We are not looking do either of those, but we will weigh in on what NPP means for non-product liability cases involving FDA-regulated medical products.  The most prominent litigation in this space these days relates to reproductive rights.  Are we down to talk about NPP and its impact on reproductive rights litigation?  You know us.

The core issue in NPP is the dormant commerce clause (“DCC”), which we have described as follows:

The dormant commerce clause perks up every once in a while to announce that a state’s effort to regulate commerce has gone too far.  James Madison originally harbored doubts that states could impose shipping tonnage duties, given that the commerce clause invested such powers in a unitary, federal authority.  In the judicial context, Chief Justice Marshall first alluded to the dormant commerce clause in Gibbons v. Ogden, 22 U.S. 1 (1824).  The notion is that implicit in the power of Congress to regulate commerce is a corollary constraint on the power of states to enact legislation that interferes with or burdens interstate commerce.  A state cannot regulate commerce occurring wholly outside its borders.  A state law violates the dormant commerce clause’s extraterritoriality principle if it either expressly applies to out-of-state commerce or if it has that practical effect, regardless of the legislature’s intent.

See here.  In that case, the Fourth Circuit knocked out a Maryland law designed to prevent price gouging on drugs because of its extraterritorial reach.  We (and one of our guest bloggers) have touted the DCC as something of an adjunct to preemption in placing limits on state actions that affect medical products and their manufacturers.  See, e.g., here, here, and here.  We do not often see them applied in the same case in our space, though, with preemption typically used to knock out specific state tort claims and the DCC mostly used to challenge state laws.  There is no particular reason why they cannot work hand in hand, as seen in some of the suits seeking to knock out state laws and threatened state actions related to medication abortion. 

The oldest Supreme Court decisions we know about relating to products regulated by the FDCA or its predecessor, the Pure Food Act, are McDermott v. Wisconsin, 228 U.S. 115 (1913), and Savage v. Jones, 225 U.S. 501 (1912).  They look a lot like they are analyzing preemption, the DCC, or the plain old CC.  Yet, neither mentions preemption, the Supremacy Clause, the DCC, or the CC.  Both talk a fair amount about “commerce” and the respective roles of the states and federal government.  And both invalidated state laws that conflicted with federal laws and had extraterritorial effects.  A hundred years later, we detailed three rounds of litigation over Massachusetts’ serial efforts to ban, or at least substantially limit, the use of FDA-approved pain medications.  While preemption ruled the day for the first two rounds, the third round saw the manufacturer relying on the DCC in trying to knock out more permissive regulations. 

Since Bartlett (and in some cases before it), stop selling claims as to NDA and ANDA drugs have been widely preempted.  However, we cannot recall any of them looking to the DCC or CC to buttress the preemption arguments.  As one district court put it, it was “aware of no state law duty that would compel generic manufacturers to stop production of a drug that under federal law they have the authority to produce.”  See Gross v. Pfizer, Inc., 825 F. Supp.2d 654, 659 (D. Md. 2011), aff’d, 741 F.3d 470 (4th Cir. 2014).  The word “generic” in that sentence was not limiting, as the logic applied more broadly:  “Nor could such a state law duty exist, as it would directly conflict with the federal statutory scheme in which Congress vested sole authority with the FDA to determine whether a drug may be marketed in interstate commerce.”  Id.  Of course, in the context of medication abortion, the marketed version of mifepristone is a generic, proceeding under an ANDA approval, so no extension is needed.  Nonetheless, given the history of courts shucking and jiving to find ways not to preempt tort claims—often expanding state law to do so—it is more than an academic exercise to evaluate whether the CC or DCC provide some oomph to keep states’ hands off of whether and how FDA-approved drugs can be prescribed, dispensed, and used.

This can be seen by the request of the court in one of the active medication abortion cases against a state (discussed here) for the parties to brief how NPP affected the DCC issues in that case.  Rather than summarizing or critiquing those briefs, which largely focused on whether the balancing test from Pike v. Bruce Church, Inc., 397 U.S. 137 (1970), survived NPP, we have our own spin on things.

First, NPP did limit using the DCC to invalidate state laws based on their extraterritorial effects to state actions that discriminate against out-of-state economic interests, consistent with Healy v. Beer Institute, 491 U.S. 324 (1989).  Extraterritorial effects, even without discriminatory intent, are still part of the analysis, though.  In that Fourth Circuit case we mentioned above, the court looked to Healy (which knocked out a Connecticut wholesale beer pricing law) and Pharmaceutical Research & Manufacturers of America v. Walsh, 538 U.S. 644 (2003), but not to Pike.  We find it unlikely, but not impossible, that some state law about medication abortion might still violate Healy and Walsh.  For instance, Sorsaia primarily involves a challenge to a state trying to prevent in-state use of an FDA-approved drug for its FDA-approved use.  Other state laws affecting FDA-approved drugs are more likely to have the required protectionist bent.

Second, the discussion in the various part of NPP about whether states can ban “ordinary consumer goods” despite the DCC is somewhat irrelevant to medication abortion or any FDA-approved drug.  Pork, like horsemeat, foie gras, shark fins, fireworks, and plastic bags—products discussed in the cited cases—is an ordinary consumer good.  Prescription drugs are not.  You never need an authorization from a licensed professional to buy pork or fireworks.  And no federal agency specifies an intended use for these products.  Consider “street drugs” and other drug that have at times been widely illegal to manufacture, import, sell or possess.  Without diving into the intricacies and inconsistencies of the federal Controlled Substances Act, states cannot without federal acquiescence declare a schedule I drug to be legal within its territorial boundaries.  Likewise, states cannot ban a drug that FDA has approved, including ones that once were considered street drugs.  They can regulate doctors, pharmacies, and grocery stores, but cannot ban an FDA-approved drug like they can pork that comes from pigs not raised in a specific way, the gist of the California law at issue in NPP. 

Third, in addition to not being ordinary consumer goods, prescription drugs are clearly products where “national uniformity” is important.  Across multiple opinions, NPP recognized that the DCC applies with added effect where there is such an interest in national uniformity.  There was no such interest in the record for how pigs are raised, but we know there is such an interest for prescription drugs because Congress said so in connection with enacting the FDCA in 1938 and in a number of related laws since then.  One of those laws, FDAAA in 2007, established the REMS system, which reflects the importance of national uniformity in the delivery of healthcare.  After NPP, prescription drugs, like mifepristone, that are subject to REMS continue to have an even stronger basis to argue that state restrictions that fall short of facial bans still run afoul of the DCC.  That brings us full circle, because FDA approvals and REMS—particular for generic drugs subject to the duty of sameness—should have very strong preemption arguments.  Generic mifepristone sure does.

Interestingly, NPP was not the first time a California law related to pork was decided by the Supreme Court.  In National Meat Ass’n v. Harris, 565 U.S. 452 (2012), which we discussed here but which no NPP opinion mentioned, preemption ruled the day and the DCC never came up.  That was because the California law relating to practices in swine slaughterhouses was inconsistent with a federal law, the Federal Meat Inspection Act.  The unanimous Court opinion in Harris, which reversed the Ninth Circuit, was written by Justice Kagan.  In NPP, she sided with majority position to affirm the Ninth Circuit, although not with much of its reasoning.  It should be obvious that state actions against FDA-approved drugs with REMS plans are much closer to what was decided in Harris than what was decided (if you can call it that) in NPP, where there was no federal law on point with the California law.  So, while the DCC has certainly been reduced by NPP, it still has some teeth, while preemption has not been affected.  If anything, the contrast between Harris and NPP underscores how the Supremacy Clause (on which preemption is based) operates.  Boiled down to suit our needs, it provides “the Laws of the United States [made pursuant to the Constitution] . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the Constitution or Laws of any State to the Contrary notwithstanding.”  That means that the existence of a federal law that can compared against some potentially contrary state law makes it much easier for judges to evaluate preemption than the somewhat amorphous and changeable DCC.

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For several years, we have blogged about the controversy over whether the American Law Institute (“ALI”) should put its Restatement Third of Torts imprimatur on no-injury medical monitoring.  Here’s the latest update, as that effort nears culmination.  As reported by the ALI, on Monday May 22, at the Institute’s 100th Anniversary annual meeting:

Continue Reading Always Liability Increases (ALI)?  Not Yet with Medical Monitoring.
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A plaintiff lawyer recently filed a case against our client in North Carolina.  He has made a settlement demand that any rational observer would regard as ambitious to the point of outrageous.  Despite that crazy number, we are on fairly friendly terms with the plaintiff lawyer. We jawbone at each other in a generally good natured way. The plaintiff lawyer told us that he reads this blog regularly.  Very well then. He should read what follows and think on it when we cackle to him about how good (by which we mean reasonably receptive to the defense position) North Carolina law and judges (both federal and state) are.  

Asby v. Medtronic, Inc., 2023 U.S. Dist. LEXIS 87496 (May 18, 2023), is an opinion once again demonstrating the value of TwIqbal. It is a surgical stapler case from North Carolina that was dismissed in its entirety, albeit without prejudice.  The plaintiffs alleged that a surgical stapler (used to form a seal between two internal body structures) had become “stuck” and resulted in permanent injuries. The complaint included claimed for design defect, failure to warn, negligence, breach of implied and express warranties, and violation of North Carolina’s Unfair and Deceptive Practices Act (NCUDTPA).  The defendant filed a Rule 12(b)(6) motion to dismiss.  The court granted that motion.

As a kind of overture to the particular rulings, we should observe that the complaint was vague and inconsistent, alleging that the defendant supposedly manipulated adverse event reporting to avoid a recall – when a recall had already happened.  Further, the plaintiffs made florid allegations about an FDA report that were refuted by the report itself, which was innocuous and did not focus on any particular product.  Since the FDA report was referenced in the complaint, the court could consider it.  The court sorted through the various claims, and such sorting did not go well for the plaintiffs. 

The design defect claim (sounding only in negligence, because North Carolina does not countenance strict liability drug or device claims), flunked because it failed to plead an alternative design or to address statutory risk/utility factors.  Under North Carolina law, a plaintiff alleging design defect must demonstrate either (a) the existence of a “safer, practical, feasible, and otherwise reasonable alternative design or formulation that could then have been reasonably adopted and that would have prevented or substantially reduced the risk of harm without substantially impairing the usefulness, practicality, or desirability of the product,” or (b) the product design “was so unreasonable that a reasonable person, aware of the relevant facts, would not use or consume a product of this design.”  Interestingly, the North Carolina statutes set out factors to consider in determining whether a manufacturer acted unreasonably and, in addition to the usual risk/benefit issue, a key point is “[t]he extent to which the labeling for a prescription or nonprescription drug approved by the United States Food and Drug Administration conformed to any applicable government or private standard that was in effect when the product left the control of its manufacturer.”  (Thus, even in mesh cases, FDA compliance is admissible in North Carolina.) The plaintiffs’ complaint in Asby not only “fails to identify how the design is inadequate, but the complaint also fails to cite alternative feasible alternative designs which were safer.”          

What about FDA compliance?  The plaintiffs alleged that the defendant concealed risks by choosing to submit reports through the non-public Alternative Reporting System (“ARS”) rather than the public-access Manufacturer and User Facility Device Experience (“MAUDE”).  The plaintiffs also alleged that the FDA recall of the device was due to a design defect in the stapler device.  But the plaintiffs’ claim about FDA reporting and the product recall was, as mentioned above, inconsistent and unsupported by the documents cited in the complaint.  Claims about serious injury were refuted by the FDA’s recall, which was Class II (a recall of products that “may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote”) and did not reference any such serious injuries.  

In North Carolina, learned intermediary principles apply to medical devices as well as to prescription drugs.  The plaintiffs’ warning claim in Asby failed under the learned intermediary rule, as it was bereft of any allegation that the plaintiff’s surgeons “read or heard any of the defendant’s warnings regarding [the staplers], let alone relied on them.”  In Asby, the plaintiffs’ allegations did “not move their failure to warn claim from possible to plausible.”  

The Asby court also followed well established authority that “North Carolina law does not recognize an independent cause of action based on a failure to test or surveil one’s product after marketing.”  Such allegations, as well as anything to do with design, inspection, promotion etc., “are subsumed by the Asbys’ failure to warn and ineffective design claims that the court already has dismissed.”  

Then there are the usual warranty claims, meeting their usual and dismal fate.  The stapler is a surgical device being used for its intended surgical purpose, so goodbye to the claim for implied warranty of fitness for a particular purpose. The use of the stapler in this case was not “peculiar or different from its ordinary use.”  Then, as is common, the express warranty claim simply failed to state the terms of the supposed warranty.  The complaint “never identifies any express warranty made by any defendant.” 

Finally, we get to the NCUDTPA claim.  We’d call it a make-weight claim, except that it imposes treble damages.  (It is, after all, a statute modeled on federal FTC law, rather than product liability principles.)  First, what amounts to a faulty breach of warranty claim is not necessarily a consumer protection violation.  Second, the plaintiffs were not permitted to repackage an invalid failure to report claim as a consumer protection claim.  In any event, claims under the NCUDTPA are subject to F. R. Civ. P 9(b)’s heightened pleading standard, and the complaint “fails to plead with sufficient particularity under Federal Rule 9(b) who made the representations, and the alleged content of these misrepresentations.”  Finally, to the extent the plaintiffs asserted that the defendant had attempted to mislead the FDA itself (and that seems to be a big chunk of the complaint), that assertion was preempted under Buckman.   (Dear Buddyroo Plaintiff Lawyer: please read this section of Asby with care.  Half of your complaint is about alleged frauds on the FDA. North Carolina law does not recognize such a claim, and if it did, Buckman preemption would foreclose it.)

Our favorite all-time football player is Lawrence Taylor.  He played at the University of North Carolina.  We loved the way he squashed quarterbacks.  And we love the way North Carolina courts squash bad drug and device complaints.    

The Asby case has been added to two cheat sheets (TwIqbal and duty to test) and two blog 50-state survey (failure to read and failure to report).

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The Eleventh Circuit’s recent decision in Rosell v. VMSB, LLC, ___ F.4th ___, 2023 WL 3398509 (11th Cir. May 12, 2023), has nothing whatever to do with prescription medical product liability litigation, but defense counsel should know about it because is rejects one trick that plaintiffs in complex litigation use to claim appellate jurisdiction.  Specifically, it rejects the concept of “partial dismissal” under Fed. R. Civ. P. 41(a), as a tool to create a final appealable order following partial dismissal of an action.

Continue Reading Plaintiff Cannot Create Appellate Jurisdiction Through Partial Dismissal
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Montana became the first state to ban TikTok this month.  You no doubt have seen the press and have read the spirited discussion condemning foreign spies on the one hand and championing First Amendment rights on the other.  Litigation has already commenced.  But, while all that was developing, you may have overlooked that Montana also enacted a number of tort reform laws that garnered much less attention.  Earlier this month, Montana passed a law allowing for greater transparency in litigation financing, a topic we have followed for years (including recently here).  Montana has also limited third-party bad faith lawsuits against insurers, which even plaintiff-friendly California banned more than 30 years ago. 

We will focus on the new Montana law that is directly in our wheelhouse—reform of product liability lawsuits.  On May 4, 2023, Montana’s governor signed Senate Bill 216 into law, and it enacted a number of measures intended to restore some balance to product liability lawsuits in Big Sky Country. 

As we read it, SB 216 provides for six significant changes:

First, the law expands Montana’s relatively complex comparative fault regime in a number of ways.  It expressly allows a defendant in a strict liability or breach of warranty case to assert that the plaintiff’s damages were caused by a person whom the plaintiff has released from liability.  Montana law already held that triers of fact must consider released or settled parties when apportioning fault.  That requirement, however, was limited to negligence claims.  It now applies to all product liability claims, including those sounding in strict liability and breach of warranty.  The law also expressly states that a defendant can raise the plaintiff’s contributory fault, regardless of the legal basis, and the negligence or fault of others. 

Second, the Montana law reaffirms that unreasonable misuse of the product is a defense.  More significantly, however, it now defines “unreasonable misuse” to include use of the product in a manner that contravenes warnings or instructions appearing on or with the product.  In other words, failing to heed warnings or instructions when you should have known about them is now per se “unreasonable misuse” and potentially a complete defense. 

Third, it is a defense now in Montana that a product or its labeling could not have been made safer by the adoption of a reasonable alternative available at the time the product was first sold.  This is an affirmative defense, so presumably it will be the defendant’s burden to show the absence of a reasonable alternative.  We would prefer that it were the other way around, i.e., that the plaintiff has to prove the existence of a reasonable alternative, which is the law in a number of states.  Exactly how Montana courts will assign the burden in practice remains to be seen.

Fourth, the Montana law enacts a ten-year statute of repose running from the date the product was first sold or leased to any person.  There are, however, a number of twists.  The statute of repose is tolled if the defendant seller knowingly or negligently concealed a defect or unsafe condition and the concealment caused the injury.  The statute of repose also does not apply if the product is subject to a government-mandated, safety-related recall, so long as the plaintiff’s lawsuit is related to the reason for the recall.  This last provision will have little impact in the drug and medical device world, where the vast majority of recalls are voluntary, and not ordered by the FDA.  Still, the requirement that the lawsuit relate to the reason for the recall is welcome. 

The statute of repose does not apply where the product “causes a respiratory or malignant disease with a latency of more than 10 years,” which we will call the “asbestos exception.”  Finally, if the seller has warranted or advertised that a product will last for longer than ten years (“guaranteed to last 15 years, or your money back!”), a plaintiffs has until two years after that time period expires to sue, so long as nothing else (such as the statute of limitations) otherwise bars his or her suit. 

Fifth, the Montana law creates a qualified safe harbor for regulatory approval and compliance.  Specifically, where products have complied with safety-related regulations or were approved for sale by the government, the Montana law creates a rebuttable presumption that the products are not defective and that the manufacturers of the products were not negligent.  This is a big change, because Montana had been one of only two states (the other being Pennsylvania) where compliance evidence was inadmissible in strict liability actions if offered by defendants.

Now, Montana juries must be instructed on the rebuttable presumption of no defect and no negligence where:  (a) the product and its labeling complied with relevant mandatory safety rules applicable at the time of manufacturer; (b) the product gained premarket licensing or approval and the seller complied with all agency requirements; or (3) the product was a drug or medical device “approved for safety and efficacy” by the FDA and was in compliance at the time it left the seller’s control and was not recalled or withdrawn.  We like that Montana expressly applies the presumption of no defect and no negligence to drugs and medical devices, but we can foresee disputes over the meaning of “approved for safety and efficacy.”  We can also foresee Buckman-style preemption coming into play if a plaintiff contends that a drug or medical device was not in compliance because the defendant defrauded the FDA.  Even where the presumption of no defect and no negligence applies, it is rebuttable—although with the burden presumably fixed firmly with the plaintiff. 

Sixth, the new law attempts to provide protection for retailers, who usually have nothing to do with a product’s design, manufacture, or labeling and are often included in lawsuits only to defeat diversity of citizenship.  On the plus side for retailers, the Montana law states that a plaintiff cannot bring a product liability action against a retailer unless there is an independent basis to do so—i.e., the retailer actually had some control over the product’s design, assembly, packaging, etc.; the retailer altered or installed the product; or the retailer made a separate warranty.  These provisions all make sense, but they are weakened by what follows.  A plaintiff in Montana can still sue a retailer for product liability where the product manufacturer cannot be identified, is not subject to personal jurisdiction, or is bankrupt and judgment proof—potentially converting retailers into insurers for reasons that we cannot articulate.  The exception for lack of personal jurisdiction is particularly perplexing because it seemingly applies even if the plaintiff has sued the manufacturer somewhere else.  Finally, the statute also preserves a claim against a retailer who had “actual knowledge” of the defect that caused the plaintiff’s injury and sold the product anyway. 

The Montana law was effective on passage, and it applies to claims that accrue on or after that date.  We will see how this plays out, but are encouraged. 

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Over the past few months, Bexis, with the substantial help of several Reed Smith associates, has prepared a law review article – “Federal Preemption and the Post- Dobbs Reproductive Freedom Frontier” – which will soon be published in the Food & Drug Law Journal.  A draft of this article is now available on SSRN.

The core premise of Bexis’ article is very simple:  Once the FDA has said “yes” and approved a particular drug for a particular indication (“intended use”) for sale in the United States, federal preemption precludes any state from saying “no” and trying to ban that same FDA-approved drug.  It doesn’t matter whether that drug is morphine, methadone, minoxidil – or mifepristone.

Continue Reading Mifepristone Manufacturer Wins First Round in West Virginia
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After recent posts on the AHM (or Hippo) litigation, we read the excellent FDA reply brief and considered yet another post on the subject.  With the oral argument before the Fifth Circuit yesterday and more briefs and decisions to come, we elected to deal with a topic that was not quite so weighty.  In some ways, you cannot get much farther from the issues in medication abortion litigation to a decision on transfer of venue in serial litigation over the labeling of certain over-the-counter medications.  In other ways, the issues overlap quite a bit.  Venue can really matter.  Getting before the particular district judge who decided AHM—instead of any of the other 672 district judges in the country—was surely part of the plaintiffs’ strategy in AHM.  If that case had been transferred to the District of Maryland, where APA challenges to FDA actions are usually decided, then we might have expected very different district court rulings and a very different panel in the Fourth Circuit for any appeal.

Plaintiffs in consumer fraud cases, like in product liability litigation, surely try to game where their cases are heard.  In addition, while state law claims in consumer fraud cases about FDA regulated medical products can run smack into preemption and the AHM case involved only federal law “claims,” both hinge on invalidating or ignoring FDA decisions.  (We could go a step further and note the big FDA news from last week relates to the possibility that progestin-only oral contraceptives will become available OTC.  Although progestin-only hormonal contraceptives have not been the subject of as much product liability litigation as combination hormonal contraceptives, OTC availability will surely spawn a range of litigation.)

Meza v. Procter & Gamble Co., No. EDCV 23-91 JGB (SHKx), 2023 WL 3267861 (C.D. Cal. Apr. 27, 2023), is one of a number of challenges to labeling certain OTC medications as “non-drowsy.”  We have written on how one of these resulted in express preemption because the monograph called for labeling that was different than what the plaintiff urged.  Meza involved a well-known family of OTC cold, cough, and flu products that contain the same cough suppressant, dextromethorphan.  Apparently, one particular plaintiff firm has been filing and dismissing cases around the country that assert the same basic claims against the manufacturers of any “non-drowsy” OTC medications containing dextromethorphan.  We have been fighting against and writing about litigation tourism for a really long time, but we can say this litigation as a whole entails some of the most blatant forum shopping we have seen.  So blatant, in fact, that a case was transferred from the district (the division within the district, even) where the plaintiff lives and bought defendant’s product to the district where the defendant is headquartered.  That is not something you see every day.

Meza sought class treatment—nationwide and state-specific—for people allegedly duped into purchasing these well-known products because the labeling said “non-drowsy,” even though it also said “may cause drowsiness.”  (We suspect that most people who shop for cold and cough medication have an understanding that the “nighttime” versions have antihistamines and the “daytime” or “non-drowsy” versions do not.  A similar percentage of potential purchasers probably also knows that dextromethorphan can make you pretty loopy, especially if you exceed recommended doses—see the opening scene in Stripes.)  One thing refreshing about the treatment of venue in Meza is that the court properly focused on the plaintiff’s counsel, which had brought more than a dozen similar class actions around the country, rather than the plaintiff, who they apparently recruited so that they could bring Meza where they brought it.  This is clearly one of those situations where the focus on the plaintiff’s counsel as decision makers and actors provides a better picture of what is really going on.

What was going on was that Clay, a similar case against this defendant, was brought by these lawyers in the SDNY in 2021, but was dismissed right after these lawyers dropped the appeal of the preemption decision from the same district that we mentioned above.  A few days after that, Meza was filed in the same district where a judge had previously rejected preemption in a similar case these same lawyers had filed against another defendant.  In fact, the Meza plaintiff purchased defendant’s product within the district after the dueling decisions had come down.  The plaintiff lawyers had a similar case against yet another defendant in the SDNY dismissed when the judge followed the prior SDNY decision over the CD Cal decision.  Rather than move to dismiss Meza, the defendant moved to change venue to the Southern District of Ohio.  While that was pending and soon after the second SDNY decision, the Meza plaintiff amended her complaint in an attempt to stick in the CD Cal and avoid preemption.  Got it?

The rules for transfer of venue under 28 U.S.C. § 1404(a) are somewhat fuzzy and within the discretion of the district court.  There is also an inference that the plaintiff’s choice of forum holds absent a strong showing to the contrary.  2023 WL 3267861, *3.  However, there is a growing body of law that “forum shopping” is a good reason to reject plaintiff’s choice.  Id.  The trick is to distinguish what is forum shopping from what is a legitimate choice of forum.  In our experience, litigation tourists stand out like, well, tourists and should be subject to transfer of venue under 1404 if they are not dismissed for lack of personal jurisdiction.  Even when the same named plaintiff is not bouncing around between courts, there can be “an equally strong inference of forum shopping when parallel actions are filed by the same law firm, and such strategic machinations by plaintiff’s counsel are equally discouraged under Section 1404(a).”  Id. at *4.  Rather than deny that the case was essentially refiled with a different purported class rep to avoid an adverse ruling in the SDNY, plaintiff’s counsel argued that the inclusion of California state consumer protection claims (instead of New York consumer protection claims) made Meza different than Clay.  The Meza court rejected plaintiff’s argument, noting that “the core allegations in this action are copied and pasted verbatim from the complaint in Clay,” that the “substance of the lawsuits appear to be identical,” and that “[c]ases need not be identical for a court to draw an inference of forum shopping from them.”  Id.  Plaintiff’s counsel had also voluntarily dismissed at least five other cases against other manufacturers of “non-drowsy” products in response to motions to dismiss.  Id. at *5.  In addition, even though plaintiff’s counsel maintained two other “non-drowsy” SDNY cases after the first preemption ruling, the Meza court saw this as “judge shopping,” which was just as bad.

Plaintiff’s response was essentially the schoolyard response:  “no, you are the forum shopper.”  The defendant had not sought to change venue in Clay and it had an adverse ruling in the CD Cal that would be worth avoiding.  However, the Meza court rejected that argument, because the defendant did not have evidence of plaintiff’s counsel’s forum shopping before the dismissal in Clay and it was seeking transfer to its home district, not to the SDNY.  Id.  Altogether, there was clear evidence that plaintiff’s counsel was forum shopping and, “since this is a putative class action, and a nationwide one at that, the Court defers even less to Plaintiff’s chosen forum.”  Id. at *6.  Thus, transfer “would serve as a useful deterrent to Plaintiff’s forum shopping.”  Id.  The other factors, which generally weighed in favor of transfer, largely involved case-specific evaluations that are less interesting to the larger issues here.  However, the fact that plaintiff sought a nationwide class action—and she had purchased the defendant’s products so she could replace a prior purported class rep—weighed against there being greater ties between the parties and the CD Cal than between the parties and the SD Ohio.  Id. at *7-8.  So, the case was transferred to the SD Ohio, where absent another voluntary dismissal there will likely be a ruling on a motion to dismiss based on preemption.

If you are like us, then you might be wondering how these plaintiff lawyers get away with all of these dismissals without prejudice after the defendant has filed its motion to dismiss, among other things.  Well, there is a bit of a loophole in Fed. R. Civ. P. 41.  Until the defendant has answered or moved for summary judgment, the plaintiff can voluntarily dismiss without prejudice without the defendant’s agreement, the court’s permission, or any payment of the defendant’s fees.  A motion to dismiss does not count, and many defendants will move to dismiss on preemption up front, and without an answer or any discovery, to help reduce the costs of litigation.  When this happens, the plaintiff lawyers can play the games described above.  However, defendants should not forget about the option to seek costs of the prior action “[i]f a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant.”  Fed. R. Civ. P. 41(d).  While this only applies if it is the same plaintiff, nothing deters this version of forum shopping quite as much as footing the defendant’s bills.

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We have a weak spot for criminal cases.  We also have a weak spot for doom-scrolling,  inevitably provoked by the country’s insane politics over the last eight years.  And we have a weak spot for visiting nearby Delaware, home of tax-free shopping, excellent beaches, Dogfish Head Brewery, and judges who know corporate law.  We live in one of those “tri-state areas,” and if we were presented with a choice of being before a judge in Pennsylvania, New Jersey, or Delaware, our first choice would be the First State.  Delaware judges usually get to the heart of the matter, interpret statutes correctly, and seldom engage in fantasy.  Perhaps you noticed how a Delaware judge recently steered a very high profile case toward settlement by issuing no-nonsense rulings.  We’ve been in that same judge’s courtroom.  He is lightning smart and wastes zero time.

So imagine our giddiness when Bexis flipped us a Delaware Chancery Court case involving a criminally convicted drug executive who sought indemnification from his former company based on a pardon from former President Trump.  Intermune, Inc. v. Harkonen, 2023 Del. Ch. LEXIS 108 (Del. Chancery Ct. May 10, 2023), is a legal-political-corporate feast. The judge was really cooking. Bring a big spoon and wear a bib.

In Intermune, the plaintiff was a drug manufacturer.  Thus, as far as we’re concerned, we’re already in man-bites-dog territory.  But the drug company was not looking to bite a dog; it was looking to bite its former CEO.  More specifically, the company was looking to take a bite out of the former CEO’s claim for indemnification.  Sit back and enjoy this odd tale. In 2009, a federal jury found beyond a reasonable doubt that the CEO acted with intent to defraud when he directed his company to issue a “false and misleading press release [in 2002] about the results of one of the Company’s clinical trials.” (Bexis wrote about this criminal case here.) The company and its insurers had advanced the CEO’s defense costs.  After the CEO was convicted, the insurer demanded its money back from the company, invoking a policy exclusion for crimes involving intentional fraud.  The company refused, the dispute went to arbitration, and the insurer won.  Now the issue was between the company and the CEO as to who was on the hook for the CEO’s defense costs.  The CEO claimed that under Delaware law, the company was required to indemnify him.  The company filed an action for a declaratory judgment that the former CEO was not entitled to indemnification.  The parties then filed cross motions for summary judgment and the issue was packaged neatly for the court.

Or was it really so neat?  There was a long lead up to this case.  The former CEO had litigated his conviction for nine years, all the way to the Supreme Court, and lost every time.  Let’s list the losses:

  • the jury found the CEO guilty,
  • the trial court denied his motion for acquittal,
  • the trial court denied his motion for a new trial,
  • the appellate court denied his direct appeal,
  • the former CEO lost a petition for writ of error coram nobis,
  • he lost a collateral appeal, and
  • his two petitions for a writ of certiorari to the U.S. Supreme Court were denied. 

The legal system had not treated the former CEO kindly.  But the political system rode to the rescue.  On January 19, 2021, on the next to last day of the Trump presidency, the former CEO received a Trump presidential pardon. Such a pardon, of course, qualifies as a Very Big Deal.  You might even say it was Huge.  But did it make any difference under Delaware law regarding corporate indemnification?  Section 145(c) of the Delaware General Corporation Law provides that a corporate officer is entitled to indemnification if he was “successful on the merits or otherwise.”  Did the presidential pardon make the former CEO successful?  The court in Intermune answered with a resounding No.  A presidential pardon does not eliminate a conviction, or erase guilt, but only restores all “basic civil rights” that the conviction had taken away.  Further, indemnification of legal expenses is not a such “basic” civil right.  Moreover, as the court reasoned, “even if, somehow, corporate officer indemnification qualified as a corporate civil right restored by a federal pardon, [the CEO] never lost it because he never had it.” Nor is a pardon an adjudication of innocence.  The pardon arrived with a letter from the U.S. Pardon Attorney.  That letter explained that, “although full and unconditional,” the pardon did not “erase or expunge” the CEO’s conviction or “indicate his innocence.”  The CEO was convicted; he did not “succeed.”  Getting a pardon is not “success,” at least not in the sense relevant under section 145(c).  As the Intermune court explained, “convictions do not constitute success, on the merits or otherwise.  The Pardon did not overturn [the CEO’s] conviction.  End of story.”

Well, it was not quite the end of the story.  The former CEO had another argument in support of indemnification, though it was equally devoid of merit.  The former CEO contended that indemnification should be interpreted broadly in his favor, and that he should be permitted to relitigate the issue of whether he had acted in good faith in issuing the press release.  The CEO asserted that certain post-conviction events, including the position the company unsuccessfully took against the insurer, supported his claim of acting in good faith.  The Intermune court reasoned that section 145 incorporated preclusion principles.  Bad faith was an element of the crime for which the CEO was convicted.  The conviction actually decided the issue of good faith, and the CEO had a full and fair opportunity to litigate his intent.  By this point, the Intermune court counted up the number of times the CEO had litigated intent, and the result was impressive:  “[The CEO] litigated intent at least ten times.  Adding the insurance arbitration brings the figure to twelve.  The quasi-legal memorandum makes thirteen. … [The CEO] seeks to use this proceeding as a fourteenth opportunity to relitigate his state of mind.  But there is nothing new.”

What about the company’s earlier arguments against the insurer?  The CEO said that the company “admitted” during the parties’ insurance arbitrations that he “acted with an indemnifiable state of mind.”  The Intermune court disagreed.  First, the company’s arbitration position in favor of indemnification was not a “concession of fact.”  Second, “[u]nder Section 145, [the CEO’s] conviction is what matters, not what the Company once thought about it.”  Third, the CEO’s argument runs afoul of Delaware law’s preclusion of corporate indemnification of “crimes committed with bad faith intent.”  The CEO might genuinely disagree with his conviction, but such disagreement does not permit him “to redo his prosecution.”

Photo of Michelle Yeary

Today’s case is Thelen v. Somatics, LLC, 2023 WL 3338221 (M.D. Fla. May 5, 2023).  It is a straightforward products liability case involving a medical device used in electro-convulsive therapy.  Plaintiff alleges the device caused a permanent neurological injury, memory loss, and brain damage and that the manufacturer is liable for failure to warn, design defect, manufacturing defect, and breach of express warranty under Nebraska law.  Defendant moved for summary judgement, and while certain of defendant’s arguments were not adopted by the court, in the end plaintiff was left with only a portion of his failure to warn claim.

The court found there were genuine factual disputes as to the statute of limitations, id. at *2, and whether the learned intermediaries had independent medical knowledge of the alleged risks.  Id. at *3. The court also determined that plaintiff had admissible expert evidence on both general and specific medical causation.  Id. at *3-4.  But, on the individual claims, plaintiff’s path to trial was full of hurdles he could not overcome.

On his negligent failure to warn claim, plaintiff alleged that defendant failed to adequately investigate reports of serious adverse events, failed to report adverse events to the FDA, and violated FDA’s reporting and record keeping requirements.  The court found the latter two preempted.  The duty to report to the FDA is a duty that runs to the FDA.  It is not a duty owed to plaintiff under state law.  Id. at *5.  On that basis, the court distinguished an alleged failure to investigate as a duty grounded in state tort law, not dependent on any federal requirement. 

Plaintiff’s remaining three claims were all dismissed in their entirety.  Plaintiff alleged a manufacturing defect claim but adduced no evidence that the device used to treat him deviated from the device’s intended design or specifications.   On breach of express warranty, plaintiff pointed to statements made on defendant’s website, but neglected to provide any evidence that anyone relied on those statements or even looked at the website.  Absent reliance, that claim also failed.  Finally, Nebraska applies the “consumer expectations” test to claims for design defect – is the product more dangerous than the ordinary consumer would anticipate.  Plaintiff argued that the relevant consumers are patients, not physicians and the court agreed.  However, plaintiff offered no evidence to establish the expectations of the ordinary consumer.  Plaintiff offered only his own expectations, “which may or may not reflect the ordinary knowledge common to the community.”  Id. at *6. 

Overall, defendant won more than it lost and plaintiff is left with only a part of his warning claim to take to trial. 

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Each of these cases is significant enough to merit its own post, but since they came down within a week of each other, we’re discussing both of them here.  They are:  Gahl v. Aurora Health Care, Inc. ___ N.W.2d ___, 2023 Wisc. LEXIS 137 (Wis. May 2, 2023), and M.T. v. Walmart Stores, Inc., ___ P.3d ___, 2023 WL 3135662 (Kan. App. April 28, 2023).

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