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This post comes solely from the Cozen O’Connor side of the blog.

 

The MDL court in the Testosterone Replacement Therapy (“TRT”) litigation involves more than just individual product liability cases. It includes a class action. In particular, a single named plaintiff, Medical Mutual of Ohio (“MMO”), seeks to represent a class of third-party payers (“TPPs”)—entities such as health benefit plans and HMOs—who will claim to have suffered economic damages when they reimbursed payments for medically inappropriate TRT prescriptions. The prescriptions were medically inappropriate, MMO argues, because they were the result of the class’s reliance on misrepresentations about the safety and efficacy of off-label uses for TRT. MMO wants the putative class to get its money back. And more. It wants treble damages and legal fees under RICO (it also asserts state-law negligent misrepresentation claims).

Now, in a class action, sameness is important. As viewed by plaintiffs’ attorneys, sameness is everything. The more sameness, the better. Differences, on the other hand, are deadly. They kill class actions. Accordingly, when a plaintiff files a motion to certify a class, like MMO did here, the briefing relentlessly focuses on sameness. And the defendants, you can be assured, focus on the differences. And then the court decides.

And in this instance, the Court saw a whole lot of differences. Med. Mut. of Ohio v. Abbvie Inc., 2018 WL 3586182 (N.D. Ill. July 26, 2018).

We’ll start with experts. MMO put up an expert to say that TPPs act the same way with regard to drugs listed on their formularies, in particular that TTPs usually make formulary changes “only once they receive notice” from FDA about safety or efficacy concerns. Id. at 11. If this sounds over-simplified and likely not true, it’s because it is. But MMO had an expert give this opinion because, if it were accepted, MMO could then argue that defendant misled the class by hiding data and risks before the FDA issued any notice. The problem for MMO, however, is that plaintiff’s expert didn’t have the data to support this opinion. He just said it:

But an opinion must be connected to the existing data by more than the ipse dixit of the expert. An expert’s opinions may be inadmissible because there is simply too great an analytical gap between the data and the opinion offered. That is the case here.

Id.

The court also rejected this expert’s opinion that the defendants interacted with all TTPs in the same way using “the same common promotional strategies.” Id. at *12. Among other deficiencies, the record showed that the expert reached his opinion before beginning his work. He relied on materials selected and gathered by the plaintiff’s attorneys and allegations in MMO’s complaint, not his own investigation. Id.

Plaintiff also put up a causation and damages expert—the well-traveled Dr. Meredith Rosenthal—who performed a regression analysis to show that the defendants’ alleged misrepresentations damaged all TPPs in the same way. The flaw in the analysis, however, was that it purported to measure the effect of the alleged misrepresentations on doctors and patients. In other words, it focused on direct-to-consumer and physician promotion, not promotion to and contact with the TPPs, the would-be class members asking for their money back. Id. at *8-9. This didn’t work. Proximate causation requirements for RICO claims are stringent. Evidence of anything less than a direct causal connection to the plaintiff’s injury fails. The court found Dr. Rosenthal’s opinion to be irrelevant and simply ignored it. Id. at *10.

The court next set its sights on the “adequacy” requirement of a class action, in particular whether MMO itself could be an adequate class representative. Anything that could subject MMO to unique or unusual defenses—differences from other class members—could render MMO an inadequate class representative. The court found two big problems for MMO. First, MMO appeared to react belatedly and ineffectively to a notice that the FDA was investigating the safety of TRT with regard to heart attack, strokes and death. In particular, MMO did not institute a prior authorization requirement for the reimbursement of TRT prescription payments until four years after the notice, and made a number of admitted missteps along the way. Id. at *14. Second, and maybe related, its formulary management practices did not include an annual clinical evaluation of safety and efficacy of the drugs on its formulary. The court found, with the help of testimony from a defense expert, that these practices did not meet industry standards and could subject MMO to unusual defenses. Id. at *15. The Court held “that MMO is an inadequate class representative and on that basis denies MMO’s motion for class certification.” Id.

Not done there, the court also held that the plaintiff did not meet the predominance requirement of a class action, concluding instead that individual issues will predominate over common questions of law or fact. Id. In other words, there wasn’t enough sameness to dominate the individuality. For instance, MMO could not “show that each TPP actually received defendants’ alleged misrepresentations. Id. at *16. The court found that this was an individualized inquiry, varying by TPP:

Namely, defendants highlight evidence demonstrating that whether a TPP receives sales calls and clinical information from defendants depends on the number of beneficiaries the TPP insures; whether the TPP permits or prohibits meetings with drug manufacturers as a matter of policy; whether the TPP prefers to hear only business information, only clinical information, or both; and whether the TPP adopts formularies without modification from a [pharmacy benefit managers].

Id.

The court rejected MMO’s argument that it should infer that all TTPs received the misrepresentations because “defendants spent millions on promotional efforts aimed at TPPs . . . including standardized promotional materials”—a kind of fraud-in-the-air theory. Id. at *17. Finding ample reason to doubt that the promotional materials were standardized, the court reasoned that “one would need to know what particular representations a TPP received in order to assess whether that TPP was exposed to half-truths.” Id. That’s “TPP-by-TPP proof,” the very antithesis of class treatment. Id.

On reliance, the court held that individualized issues would also predominate over common issues, persuaded by defendants’ evidence that the formulary management process was complex, not standardized:

Defendants point to evidence tending to show that TPPs’ formulary and utilization management decisions are complex and individualized. Some TPPs do not meet with drug manufacturers at all and are thus unlikely to rely on information from them. Some TPPs use PBMs but customize the PBMs’ standardized formularies. Other TPPs, including MMO for much of the class period, adopt their PBMs’ formularies without modification but make their own utilization management decisions.

Id. at *18.

In short, the court found a lot of reasons to deny class certification. You can find even more in the court’s opinion, which we recommend for your reading list. It is a template for how to defend against these type of TPP class actions.

This post comes solely from the Cozen O’Connor side of this blog.

 

Last week, the Judge in the Testosterone Replacement Therapy (TRT) MDL threw out an over $140 million jury verdict. In re Testosterone Replacement Therapy Prods. Liab. Litig. Coordinated Pretrial Proceedings, 2018 U.S. Dist. LEXIS 111724 (N.D. Ill. July 5, 2018). It wasn’t the first time that the testosterone MDL court did something like that. Last December, it threw out a $150 million verdict. That’s almost $300 million in verdicts total. It’s got to take some strength to toss such hefty verdicts—testosterone or not.

In each instance, the court found the jury’s verdict to be so internally inconsistent that it required a new trial. In the verdict tossed last week, the jury found for the defendants on a failure to warn claim based in strict liability claim but found for the plaintiff on a failure to warn claim based in negligence. That sure does seem inconsistent.

Each claim turned on the same two disputed elements: (i) whether the TRT product, AndroGel, was unreasonably dangerous and (ii) whether its unreasonable dangerousness was a cause in fact and legal cause of the plaintiff’s injury (a heart attack). Id. at *419. In an attempt to save the verdict, plaintiff’s attorneys tried to reconcile these two findings. They argued that the strict liability claim had a different focus from the negligence claim. The strict liability claim focused on the AndroGel product itself and whether its deficient warnings caused plaintiff’s heart attack, while the negligence claim focused on defendants’ conduct and whether their negligence caused plaintiff’s heart attack. Id. at *420.

Um . . . . Okay. That does describe a different focus. But, either way, whether viewed as a product with deficient warnings or as defendants who negligently provided deficient warnings, the jury was ultimately answering the same question: did the AndroGel cause the heart attack? The causation questions were precisely the same:

[Plaintiff] has not articulated any theory, supported by evidence, of how [defendants’] breach of its duty of care could have been the cause in fact and legal cause of [Plaintiff’s] heart attack unless AndroGel itself was a cause in fact and legal cause of the heart attack. As [defendants] put the point in [their] reply, regardless of what the elements of each claim “focus on,” the claims share an essential causation question—whether AndroGel caused [plaintiff’s] heart attack.

Id. at *422. The court threw out the jury’s verdicts on both claims:

The verdicts on these claims are inconsistent under the instructions given to the jury. When this happens, the Court cannot accept one of the two inconsistent verdicts while discarding the other; both of them have to go.

Id. at *424-25.

But the jury also found for plaintiff on a misrepresentation claim, and that claim did not require a finding of “unreasonable dangerousness,” be it through deficient warnings or otherwise. Accordingly, the court found that this particular pro-plaintiff verdict was not necessarily irreconcilable with the jury’s finding against plaintiff on the strict liability claim. Id. at *425. Yet the court ordered a new trial on the misrepresentation claim too. It was not sufficiently distinct and separable from the other claims to protect against injustice resulting from two separate trials with separate verdicts. In particular, the jury received a single causation instruction for all claims:

[T]he Court does not believe that it can appropriately order a new trial limited to the negligence and strict liability claims while keeping the misrepresentation verdicts intact. A court may order a partial new trial only if “it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice.” In this case, one of the key disputed issues was causation, specifically whether AndroGel cased [plaintiff’s] heart attack. The jury was given a single causation instruction that covered all of the claims. Thus the issue of causation on the two claims that have to be retried due to the inconsistency of the jury’s verdicts is anything but “distinct and separable” from the issue of causation on the misrepresentation claims. For this reason, the Court concludes, it would be impossible to limit a new trial to the inconsistent claims “without injustice.” The appropriate remedy for the jury’s inconsistent verdicts on the strict liability and negligence claims is “[a] new trial on all claims.”

Id. at *426-27.

So out goes another hefty jury verdict in the testosterone MDL. The last time the MDL court did this, when it tossed out the $150 million verdict in December 2017, the jury at the second trial awarded $3.2 million. That’s not a small verdict, but it’s almost $147 million smaller than the first verdict. That’s a pretty significant, as they say, delta. So let’s see what happens in the new trial this time.

This post comes only from the Cozen O’Connor side of the blog.

 

Plaintiffs’ lawyers wanted to file a class action premised on the recovery of costs spent monitoring and replacing allegedly defective defibrillators manufactured by St. Jude Medical LLC. And they wanted to file it in Illinois. So they recruited a putative class representative, a union health benefits trust, and they filed their complaint, ASEA/AFSCME Local Health 52 Health Benefits Trust v. St. Jude Medical LLC, in Illinois federal court. But they then ran into a problem. St. Jude is not from Illinois. It is a Delaware LLC with Minnesota headquarters. In the post-Bauman personal jurisdiction world, St. Jude is considered to be at “home” only in those two states, not Illinois. So the Illinois court did not have general jurisdiction over St. Jude. Nor did it have specific jurisdiction. The health benefits trust plaintiff, ASEA, didn’t buy the St. Jude defibrillators in Illinois, nor did its beneficiaries have them implanted there. It didn’t matter that St. Jude marketed and sold defibrillators in Illinois. That fact doesn’t create the connection needed for specific jurisdiction. 2018 WL 3022670, at *4 (N.D. Ill. June 18, 2018). So the Illinois court could not exert personal jurisdiction over St. Jude.

But the plaintiffs’ lawyers thought they had a way around that. St. Jude had been recently acquired by Abbott Laboratories. And Abbott is at “home” in Illinois. It is incorporated and headquartered there. So the plaintiffs’ lawyers asked the court to look to St. Jude’s parent, not St. Jude itself, in determining personal jurisdiction. The problem with that approach, however, was that St. Jude is a limited liability company. The very name of that type of business entity—“limited liability company”—tells you how our legal system treats it. Holders of membership interests in a limited liability company are shielded from liability for the company’s debts and judgments. The only way around that general rule is to successfully assert an “alter ego” theory, generally known as piercing the corporate veil. If ASEA could do that, the court could then ignore St. Jude’s independent existence as a company and treat Abbott as the real defendant, thus presumably creating personal jurisdiction. And, while that approach might sound promising for the plaintiffs’ lawyers, the Illinois court very quickly reminded them of how hard—how very, very hard—it is to succeed on an “alter ego” claim.

Since St. Jude Medical LLC was formed in Delaware, Delaware law applied to the “alter ego” analysis. And Delaware law does not lightly lift the corporate veil. It requires an intensive inquiry into whether the company is in fact a sham that is rife with serious financial improprieties and management manipulation intended to defraud the people with which the company does business. It is only found in rare cases:

Under Delaware law, courts disregard the corporate form only in exceptional cases. Determining whether to do so requires an intensive inquiry which takes into consideration (1) whether the company was adequately capitalized for the undertaking; (2) whether the company was solvent; (3) whether corporate formalities were observed; (4) whether the controlling shareholder siphoned company funds; and (5) whether the company functioned as a façade for the controlling shareholder. In addition to these factors, Delaware’s courts have required an element of fraud or similar injustice in order to pierce the corporate veil.

Id. at *3 (citations omitted). And because an alter ego claim is generally based in fraud, courts often apply a heightened pleading standard.

So pleading an “alter ego” claim is extraordinarily difficult. ASEA did not come close. Rather than plead particulars of a sham financial structure and non-existent management, ASEA pointed to surface level actions and statements by St. Jude’s parent, Abbott, all of which are the types of actions ordinarily seen in the workaday world of a corporate holding structure.

For instance, plaintiff alleged that Abbott itself claimed responsibility for the recall of the defibrillators, issued updates on the recall using the Abbot name, communicated with the FDA using the Abbott name, took over the defibrillator manufacturing facility, advertised that “St. Jude Medical is now Abbott,” shared officers, managers and facilities with St. Jude, and even stated that St. Jude’s operations are controlled by Abbott. Id. These allegations are based on the faulty premise that Abbott’s “control” of St. Jude creates an alter ego claim. It does not. Abbott owns St. Jude. It is expected to control it. “Controlling shareholder” is presumed in the very Delaware test quoted above. And so exertion of control does not satisfy the alter ego inquiry. The real test is whether St. Jude was operated, or controlled, as a sham entity with inadequate capitalization and make-believe management for the purpose of defrauding others. And, as the court held, the plaintiff’s allegations addressed none of this:

These allegations do not call into question St. Jude’s capitalization, solvency, or recognition of corporate formalities. Cf. City of Greenville, Ill. v. Syngenta Crop Prot., Inc., 830 F. Supp. 2d 550, 563 (S.D. Ill. 2011) (piercing the corporate veil where evidence showed that the subsidiary company’s board unanimously rubber-stamped the parent company’s recommendations on a regular basis without discussion and where the subsidiaries employees were sometimes directly managed by employees of the parent company). Nor do they suggest that Abbott was siphoning or diverting funds from St. Jude. At most, the allegations in the complaint suggest that Abbott sometimes spoke on behalf of St. Jude or sometimes represented that it had succeeded St. Jude. See LaSalle Nat. Bank v. Vitro, Sociedad Anonima, 85 F. Supp. 2d 857, 865 (N.D. Ill. 2000) (Nordberg, J.) (“Personal jurisdiction is based on actual evidence of control … rather than on a corporation’s general descriptions. Promotional statements made on a public website do not precisely convey the operative corporate structure.”). Absent more, however, the allegations do not suggest that unfairness or injustice has resulted from the relationship between St. Jude and Abbott, as would be necessary to justify piercing the corporate veil under Delaware law. Doberstein v. G-P Indus., Inc., No. CV 9995-VCP, 2015 WL 6606484, at *4 (Del. Ch. 2015).

Id.

With the plaintiff unable to pierce the corporate (really, LLC) veil, the Illinois court was back to where it started, which is with no personal jurisdiction over St. Jude: “Accordingly, this Court does not have general jurisdiction over St. Jude because it is not “at home” in the state of Illinois. Id. It dismissed the action for lack of personal jurisdiction.

We expect this to be the ordinary outcome in attempts by plaintiffs’ lawyers to establish personal jurisdiction through an alter ego theory in drug and device cases. Not only is such a claim extraordinarily hard to plead and harder to prove, but drug and device cases usually involve large pharmaceutical and medical device companies with well-established, well-advised corporate structures. Under those circumstances, it will be rare that plaintiffs’ lawyers will be able to piece together the type of extraordinary facts necessary to successfully plead and prove an alter ego claim.

 

This post comes only from the Cozen O’Connor side of the blog.

The MDL court in the Testosterone Replacement Therapy (“TRT”) litigation recently entered summary judgment in favor of a non-US manufacturer that did not distribute in the US, along with its US subsidiary. The judgment ended efforts to hold those two defendants, Besins Healthcare, S.A. and Besins Healthcare Inc., liable under a series of product liability claims for injuries allegedly caused by the use of AndroGel, a TRT product. In re Testosterone Replacement Therapy Prods. Liab. Litig. Coordinated Pretrial Proceedings, 2018 WL 2416239 (N.D. Ill. May 29, 2018).

The court knocked down each of the plaintiffs’ claims in rather short order. Plaintiff’s strict liability and negligent design defect claims fell because plaintiffs had no evidence of a defect. Plaintiffs tried to rely on allegations in the complaint. That doesn’t cut it on summary judgment. Allegations are not evidence:

As the non-moving party, it is plaintiffs’ burden to identify evidence to show why defendants are not entitled to judgment as a matter of law. Because plaintiffs have provided nothing more than quotations from their complaint and from this Court’s order denying the Besins defendants’ motion to dismiss, they have not met their burden.

Id. at *5. A lack of evidence also ended plaintiffs’ manufacturing defect claim: “Plaintiffs present no evidence or argument that AndroGel suffers from a manufacturing defect. Thus the Court considers plaintiffs to have forfeited that negligence theory.” Id. The court entered judgment against plaintiffs’ defect claims.

More interesting was the Court’s rejection of Plaintiffs’ failure to test claim. Plaintiffs relied on an email from an R&D employee at a Besins subsidiary reacting to publications suggesting an association between AndroGel and cardiovascular risks. The employee wrote that “the community should be calling for further study” and that Besins should be “very careful . . . about getting into this discussion” because it might have an “ethical obligation” to conduct such studies as a company that profited from the manufacture of AndroGel. Id. at *2. It’s not surprising that plaintiffs focused on this email.

But they did little else. In fact, plaintiffs’ evidence went no further than the email, which on its own does not establish a failure to test claim. On the other hand, the Besins defendants, who were not distributors of AndroGel in the US, presented actual evidence undermining plaintiffs’ claim. In particular, they relied on the R&D employee’s deposition testimony in which he clarified that Besins did not have the right to conduct testing in the United States. Id. This went unchallenged, and the court found it dispositive:

Plaintiffs have provided nothing to support a contention that the Besins defendants have a duty to conduct safety studies in the United States. To the contrary, the undisputed evidence shows that the Besins defendants cannot do so, and plaintiffs have not attempted to reconcile that evidence with their position.

Id.

The court found other unfixable problems with plaintiffs’ failure to test claim. Plaintiffs presented no evidence that Besins actually failed to test. The R&D employee’s email certainly doesn’t prove that. Plaintiffs also provided no evidence of a proximate causation, making no evidentiary connection between the alleged failure to test and their injuries:

[P]laintiffs have provided no evidence that the Besins defendants’ alleged failure to test proximately caused plaintiffs’ injuries. Plaintiffs’ theory is that the Besins defendants’ failure to adequately test AndroGel caused AbbVie [the company to whom Besins licensed the exclusive right to market and distribute AndroGel in the US] to lack sufficient information about AndroGel’s risks. The alleged failure to test, plaintiffs say, thus “directly contributed to AbbVie’s failure to provide an adequate warning to healthcare providers in the United States.” Plaintiffs, however, do not cite any evidence to support this theory. Their conclusory argument is insufficient to withstand summary judgment.

Id.

The court also rejected plaintiffs’ failure to report adverse reports claim. Plaintiffs described this claim as a failure to report adverse events to other manufacturers, industry experts and the FDA. Having so constructed their claim, however, plaintiffs presented no evidence or argument to establish that the Besins defendants had an enforceable duty to report adverse events to other manufacturers or industry experts. Id. at *6. For their part, the Besins defendants presented evidence that they had no duty to report AndroGel adverse events to the FDA. That responsibility instead fell solely to AbbVie, the company to whom the Besins defendants licensed the exclusive right to market and distribute AndroGel in the US. Id. With no duty, plaintiffs had no claim. Setting that aside, plaintiffs nonetheless presented no evidence that the Besins defendants failed to report any adverse event or that such failure proximately caused their injuries. Id. For all these reasons, the court entered judgment against plaintiffs’ failure to report claim.

The upshot of this opinion appears to be that the non-distributor Besins defendants are our of the Hormone Replacement Therapy MDL.

On Wednesday, the Fifth Circuit was finally able speak to what’s been going on in a Dallas courtroom that has racked up over $1.7 billion—that’s billion—in jury verdicts over the last two years in the Pinnacle Hip Implant MDL. And the Fifth Circuit entered the room loudly. It ordered a new trial of the plaintiff’s very first victory, the one that produced a half-billion dollar verdict. The court did not hold back, making it perfectly clear that it vacated the judgment due to “the district court’s evidentiary errors and [plaintiffs’ attorney Mark] Lanier’s deception.” Slip Op. at 6.

The “evidentiary errors” have been a controversial part of these MDL trials since the time of our first post about them two years ago. Even then, we were struck by the “number and nature” of these evidentiary rulings, which in the aggregate suggested “an almost uninterrupted flow of unduly prejudicial and irrelevant information to the jury.”  The Fifth Circuit now agrees, highlighting two of them as the basis to order a new trial.

First, the Saddam Hussein evidence. Slip Op. at 43-46. That’s right. The court allowed evidence concerning Saddam Hussein into a hip implant trial. Its decision was based on a deferred prosecution agreement, one in which J&J took responsibility for the actions of affiliates who had bribed officials in the Iraqi government. These affiliates had nothing to do with the Pinnacle Hip Implant device. Regardless, after defendants elicited testimony on their own positive internal culture and marketing, the district court ruled that the defendants had thereby “opened the door” to Saddam Hussein, the deferred prosecution agreement and all sorts of other stuff. With light now green, the plaintiffs’ attorney thereafter featured Saddam Hussein and bribes and prosecution in his questioning of witnesses and closing argument. Mind you, this was a hip implant medical device trial.

The Fifth Circuit rejected the trial court’s “open door” ruling. It held that “the rules of evidence do not simply evaporate when one party opens the door on an issue.” Id. at 44. Prior bad acts cannot be used to convince a jury that defendants acted as wrongdoers in the case before it. Id. The Fifth Circuit held, however, that the plaintiffs’ attorney asked the jury to do just that. To illustrate this, the Fifth Circuit quoted the paragraph below from plaintiffs’ closing argument. Note that the italicized emphasis in the paragraph was placed there by the Fifth Circuit, as was the single word “Indeed” after that paragraph:

If you go back and look at the DPA, that’s the deferred prosecution agreement where the company paid money one time because of kickbacks to doctors in America, the other time because of the bribes to Saddam Hussein’s government, the bribes in Greece, Romania, Poland and other places where they were bribing people to put in . . . their products. The DPA has [J&J] admitting its responsibility in it. J&J is admitting that they’re responsible. They have already taken this issue out of your hands realistically. That alone is a winner. . . . [J&J] has admitted their responsibility for this. That ought to be enough.

Indeed.

Id. at 45. The Fifth Circuit wrote that this closing argument and the earlier questioning “tainted the result by inviting the jury to infer guilt based on no more than prior bad acts . . . . That alone provides grounds for a new trial.” Id.

The second evidentiary ruling rejected by the Fifth Circuit was the trial court’s decision to allow plaintiffs to use hearsay in a resignation letter from a DePuy employee alleging racism within the company. Slip Op. 46-48. Again, this was a hip implant trial. Calling it a “spectacle,” the Fifth Circuit ruled that reading this letter to the jury “refocused its attention on serious, and seriously distracting, claims of racial discrimination that defendants had no meaningful opportunity to rebut via cross-examination. This spectacle fortifies that a new trial is required.”

These evidentiary rulings alone were enough to upend the judgment. But there were more. As we laid out in our previous posts, the trial court made multiple other questionable evidentiary rulings that allowed questioning and argument on things like suicide, cancer, connections to the tobacco industry, transvaginal mesh suits, and so on. Having already overturned the judgment, the Fifth Circuit declined to address these other evidentiary rulings. But it did warn the trial court to “weigh carefully the application of Rule 403 and 404(b)” when considering these issues at future trials. Slip Op. at n. 71.

Next, the Fifth Circuit found additional grounds to overturn the judgment due to what it called “deception” by the plaintiffs’ attorney regarding plaintiffs’ experts, something we wrote about last year. Plaintiffs classified two of its experts as “non-retained,” meaning not paid. At trial, plaintiffs’ attorney contrasted this with what he called the “bought testimony” of the defendants’ expert. The problem is, however, that plaintiffs’ experts were “bought” too. Before trial, plaintiffs’ attorney donated $10,000 to St. Rita’s Catholic School, the favorite charity of one of the two experts. More blatantly, after trial, plaintiffs paid $65,000 in total to the two experts.

It would be difficult to overemphasize how hard the Fifth Circuit came down on this, labeling it “deception.” Slip Op. at 6. The court was clearly displeased. Its opinion (see pages 49-57) is littered with snide comments. Noting that Mr. Lanier mentioned to the jury that he had shared the “best apple pie in the world” with one of the two experts, the court wrote, “St. Rita’s and the $10,000 check went unmentioned.” Id. at 50. After quoting Mr. Lanier contrasting the supposedly “bought testimony” of the defendants’ experts with the supposed “real life” testimony of his two experts, the Fifth Circuit wrote: “As between ‘real life’ and ‘bought testimony,’ [the jury] chose the former by a margin of $502 million. But that choice was a false one, manufactured entirely by Lanier.” Id. at 52.

With the unmistakable intent to drive its point home, the Fifth Circuit clarified in just about every way possible that this type of maneuvering was improper:

This is the rare case in which counsel’s deceptions were sufficiently obvious, egregious, and impactful to penetrate the layers of deference that would ordinarily shield against reversal.

Lanier’s failure to disclose the donation, and his repeated insistence that Morrey Sr. had absolutely no pecuniary interest in testifying, were unequivocally deceptive.

Lawyers cannot engage with a favorable expert, pay him “for his time,” then invite him to testify as a purportedly “non-retained” neutral party. That is deception, plain and simple.

We find, by the “clear and convincing” evidence of common sense, that Lanier misled the jury in creating the impression that Morrey Jr. had neither pecuniary incentive nor motive in testifying. Neither our double deference nor counsel’s specious reasoning can alter that conclusion.

Calculated or not, falsehoods marred plaintiffs’ victory. The Verdict cannot stand.

Got it. This lambasting by the Fifth Circuit could change the game in the Pinnacle Hip Implant MDL. Proper boundaries may now be back in place, or at least some of them. There are more appeals to come, and they involve serious procedural and jurisdictional issues that were front and center in the two trials that followed this one. In fact, there may be more to come from this opinion, at least from us, as it also granted DePuy judgment on two plaintiffs’ failure to warn claims and J&J judgment on plaintiffs’ aiding and abetting claims—something for us to address another day.

One thing is already clear from this opinion, though. Two years of this MDL may have been wasted on defective jury trials. But, if a reset is needed, it must be done. The goal of an MDL is not to hammer defendants with every possible negative piece of evidence, relevant or not, so as to produce large verdicts. It is to establish a framework under which the parties can properly litigate and value the hundreds or thousands of cases within a complex mass tort. The Fifth Circuit’s opinion is an important step toward that proper construct.

In Looney v. Moore, 2018 WL 1547260 (11th Circuit Mar. 30, 2018), the Eleventh Circuit confirmed Alabama law’s rejection of an “increased risk of harm causation standard and established that lack of informed consent plaintiffs must have a physical injury.

Looney is a clinical trial case. Parents of several infants who were born prematurely claimed that the infants suffered injuries as a result of their participation in a clinical trial aimed at analyzing the effects of differing oxygen saturation levels on premature infants. Plaintiffs made negligence, negligence per se, product liability, breach of fiduciary duty and lack of informed consent claims, and they sued the doctors involved in the study, as well as the independent review board and the company that made the medical equipment for the study. Defendants won at the summary judgment stage, and the Eleventh Circuit affirmed.

The simplest issue was causation. The Eleventh Circuit applied Alabama’s strict requirement that a plaintiff making a negligence claim must show that the negligence more than likely caused plaintiff’s injury. An “increase risk of harm” is insufficient:

The Alabama Supreme Court has made clear that, “to present a jury question, the plaintiff in a medical-malpractice action must adduce some evidence indicating that the alleged negligence (the breach of the appropriate standard of care) probably caused the injury. A mere possibility is insufficient. . . . . An alleged “increased risk of harm” is not sufficient to survive summary judgment under Alabama law, which requires proof that the alleged negligence probably caused the injury.

Id. at *3.

Confirming this standard turned out to be the end of plaintiffs’ negligence claims. That’s because no expert, whether it be for plaintiffs or defendants, was willing to say that the defendants’ negligence during the clinical trial probably caused any of the infants’ injuries. At their depositions, defendants’ experts said that the infants’ premature births probably caused their injuries, not participation in the study. Id. Plaintiffs’ own expert could only manage to say that the clinical trial “increased the risk of harm” to the infants, not that it more likely than not injured them. Id. This testimony gave a jury no basis to find for plaintiffs, and the Eleventh Circuit affirmed defendants’ summary judgment victory. Id. at *4.

Plaintiffs’ informed consent claim was a bit trickier. Plaintiffs argued that they did not need a physical injury to make this claim, something that Alabama law had not directly addressed. Id. The Eleventh Circuit sought help on this, certifying a question to the Alabama Supreme Court. But the Alabama Supreme Court declined to answer. Id. This left the Eleventh Circuit in the position of having to predict how Alabama law would decide the issue. Id.

To do this, the Eleventh Circuit first considered the Alabama Medical Liability Act. It required an injury. The Eleventh Circuit also considered Alabama Supreme Court informed consent decisions. In each instance, the court laid out the elements of any informed consent claim, but they did not explicitly include injury. The Eleventh Circuit was not troubled by this because, in each case, the plaintiff not only suffered an injury, but a serious one. Id. at *5.

Left looking for any support for their theory of a claim without physical injury, plaintiffs pointed to battery claims, in particular medical battery claims, which in Alabama do not require physical injury. Id. at *7. The Eleventh Circuit distinguished these claims. Battery claims are not based in negligence, but instead on a lack of any consent at all. Id. On the other hand, plaintiffs in lack of informed consent claims actually give consent to the procedure. They just claim that their consent was ill informed. Id. at *8. In other words, their claims are based on the negligence of the medical providers. And that brings us back to the strict requirement under Alabama law that a plaintiff making a negligence claim must establish that the negligence probably caused an injury. With that, the Eleventh Circuit upheld summary judgment against plaintiffs’ informed consent claims. Id. at *9.

This post does not come from the Reed Smith side of the blog.

 

Favorable New Jersey appellate court decisions in product liability cases are almost always worthy of mention here. So we bring you Goodson v. C.R. Bard, 2018 WL 1370652 (N.J. App. Div. Mar. 19, 2018). To be truthful, we’re bringing it back to you. Bexis discussed the trial court’s decision to grant summary judgment to defendants last year.

As we discussed then, this is a case involving mesh used in hernia procedures. The particular mesh product involved in this case is not involved in the pelvic mesh MDL proceedings. And that may be reflected in the strength of the plaintiff’s expert reports, which is to say that they are not strong at all.  While the plaintiff used experts who have been involved in the pelvic mesh MDL, not one of them seemed to give the right opinions.

In particular, even though plaintiff brought a design defect claim, none of his experts gave an opinion that the design of this particular product was actually defective or that such a defect caused the plaintiff’s injuries. Id. at *4-5. Rather, his experts simply described various alleged risks of the product. This is not even close to sufficient to support a design defect claim. Id. Nor did any of the experts opine that there was a safer, feasible alternative design. Id. Similarly, even though plaintiff also brought a negligent failure to wan claim, none of the experts gave an opinion on the standard of care for issuing a warning or whether defendants met that standard. Id. at *5-6. In other words, plaintiff didn’t have a warnings expert to opine on whether the warning was adequate.

In short, plaintiff’s experts struck out looking.

To make matters worse, the treating doctor testified that he was aware of the potential risks of this mesh product and informed plaintiff of them. Id. at *6. There goes proximate causation under the learned intermediary doctrine.

Accordingly the New Jersey appellate division upheld the trial court’s grant of summary judgment to defendants. Unfortunately, it designated its opinion “not for publication.” That’s too bad. But rest assured: it happened. Westlaw already has it on-line. And the trial court’s decision, which Bexis’s post from last year lays out in considerable detail, has an excellent analysis of all the weaknesses in plaintiff’s case, an analysis that was essentially adopted by the Appellate Division. And, of course, we’ve written on it twice now. With all of that, we’re confident that you’ll find some way to make use of this appellate decision in your cases.

(Note that this post comes from the Cozen O’Connor side of the blog.)

Good morning. Do you have your coffee? If so, start sipping it. You will need it. Because this morning we’re going to discuss leads for implantable cardiac defibrillators (“ICD”), Riata Leads to be precise. Now, while this may not be the most thrilling subject, you have to admit that Riata Leads is a solid name. It sounds like something important, like rock-solid leads for selling real estate, the type of game-changing leads that Shelly “the Machine” Levene would plot to steal from his boss’s office. Like the Glengarry leads. But these are not the Glengarry leads. They truly are ICD leads, ones that detect a patient’s abnormal heartbeat and deliver an electric shock to restore a normal heartbeat. So take another sip of your coffee.

Plaintiff Richard Connelly alleges that in 2003 his doctors surgically connected Riata Leads to his heart but that, in 2010, the leads improperly shocked him 16 to 20 times while he slept, causing damage to his heart and requiring surgery to replace them. Connelly v. St. Jude Med., Inc., 2018 WL 732734, at *2 (N.D. Cal. Feb. 6, 2018). Plaintiff hired a lawyer and sued, claiming that St. Jude, the manufacturer, failed to file adverse event reports about the Riata Leads and that, if it had, plaintiff’s doctor would not have implanted them or, in the least, would have removed them after he did implant them. Id. at *1-2.

As you can probably tell already, this is another parallel violation claim. So take another sip. Plaintiffs file a lot of these claims. We write about them often. And they often fail, for many reasons. This one failed because plaintiff didn’t adequately allege causation. In particular, his complaint didn’t connect the defendant’s alleged failure to file adverse event reports about the Riata Leads to his doctor’s decision to implant them or leave them in.

In this respect, the allegations had a number of problems. They had a timing problem. The allegations did not plausibly suggest that the defendants failed to file adverse reports about the Riata Leads before they were implanted in plaintiff, which happened in 2003. Id. at 3. The allegations had regulatory problems. While the FDA issued a 483 Report covering the years 2002 to 2009 noting that the defendant failed to file adverse event reports on Riata Leads, plaintiff did not identify a single failure to file a report before the Riata Leads were implanted in him in 2003. Id. The allegations had defect identification problems. The FDA inspection that resulted in the 483 Report focused on malfunctions in the Riata Leads due to perforation, but the defect alleged by plaintiff had to do with improper abrasion. Id. OK, take one last sip of coffee. We’re almost there.

Finally, plaintiff claimed that defendant’s failed to file adverse event reports about Riata Leads after they were implanted in him, resulting in his doctor not removing them. This theory failed as a matter of California law, which does not allow such claims:

[T]o the extent Connelly’s claim is premised on a theory that St. Jude had a post-distribution (i.e., post-implantation) duty to warn, this fails as a matter of law. Under California law, a defendant may be held strictly liable for a failure to warn only if “the defendant did not adequately warn of a particular risk that was known or knowable…at the time of manufacture and distribution.” Anderson v. Owens-Corning Fiberglas Corp., 810 P.2d 549, 558 (Cal. 1991).

Id. at 4.

Having already dismissed plaintiff’s complaint once before, this time the Court dismissed it with prejudice.

Ok, all done. Now “Put . . . that . . . coffee . . . down! (I’m here from downtown. . . . I’m here from Mitch and Murray.)

The pushback by Plaintiffs’ lawyers against the Supreme Court’s BMS decision continues, and it continues to largely fail.

The lawsuit in Dyson v. Bayer Corp., 2018 WL 534375 (E.D. Mo. Jan. 24, 2018), began in state court in St. Louis, a favorite destination of plaintiffs’ lawyers. The complaint made product liability claims about Bayer’s implantable birth-control device, Essure, and named 95 individual plaintiffs. Only 3 of those individuals lived in Missouri. The other 92 lived in other states, including states that could destroy complete diversity and prevent removal of the case to federal court. But defendants removed the case to federal court anyway, arguing that Missouri courts could not exercise personal jurisdiction over the claims of those 92 plaintiffs, who were not only non-residents but who also did not receive their Essure implants in Missouri. Plaintiffs responded by filing a motion to remand the case to state court or, in the alternative, to conduct fact discovery on the existence of personal jurisdiction. Id. at *1-2. And, with that, the latest challenge to the breadth of the BMS decision was teed up.

The plaintiffs’ lawyers’ theory as to why Missouri courts could exercise personal jurisdiction over the claims of these 92 plaintiffs was based on an observation made by the Supreme Court in BMS: “BMS did not develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval for Plavix in [the forum state of California.]” Id. at 4 (quoting Bristol-Myers Squibb Co. v. Super. Ct. of Cal., 137 S. Ct. 1773, 1778 (2017). So the complaint in Dyson alleged, in some detail, that the defendants conducted clinical trials for the regulatory approval of Essure in Missouri and started their marketing campaign for Essure in Missouri. As the Dyson court put it, plaintiffs claimed that these allegations, in the least, made a prima facie case for personal jurisdiction:

Plaintiffs seize upon that [BMS] language and suggest the Supreme Court offered those factors as a blueprint for establishing personal jurisdiction. Plaintiffs thus believe they have solved their personal jurisdiction problems because they allege that the defendants worked on regulatory approval for Essure in Missouri and also worked on the Essure marketing campaign in Missouri. Plaintiffs argue that they have at least made a prima facie case for personal jurisdiction and that they should be able to conduct jurisdictional discovery to prove the plaintiffs’ claims’ connections to Missouri.

Id. at 4.

The Dyson court started its analysis by first addressing personal jurisdiction. This was a significant choice. If the court had instead addressed subject matter jurisdiction, it could have (blindly) declared a lack of complete diversity and remanded the case to state court. But it, properly, started with personal jurisdiction because, as the court put it, the personal jurisdiction inquiry was straight-forward. The deficiencies of the allegations under BMS were just too significant:

This Court agrees that, despite these new allegations made by plaintiffs, personal jurisdiction remains the more straightforward inquiry. To address subject matter jurisdiction at this juncture would involve deciding whether non-Missouri plaintiffs had been fraudulently joined or misjoined, which is a notoriously complex issue. As shown below, the personal jurisdiction inquiry is a much simpler matter. Further, because plaintiffs do not make a prima facie showing for personal jurisdiction, the motion for jurisdictional discovery (#24) will be denied.

Id. at *3 (citations omitted).

Having decided that personal jurisdiction was a threshold issue, the court addressed plaintiffs’ claim that defendants started their Essure marketing campaign in Missouri. The court waded through the details of plaintiffs’ marketing allegations and found that they did not establish a sufficient connection to claims of plaintiffs who did not live in Missouri, were not prescribed and did not purchase the Essure device in Missouri, were not injured in Missouri, and did not see or rely on marketing in Missouri:

With respect to plaintiffs’ arguments that personal jurisdiction may be supported by the alleged Missouri marketing campaign genesis, those arguments are contrary to BMS. In fact, the BMS plaintiffs themselves alleged that BMS marketed, advertised, and actively sought to promote Plavix in California specifically. Id. at 1779, 1783. Plaintiffs here go a step farther, saying defendants used Missouri as “ground zero” for its national campaign — that is, St. Louis was the first city to commercially offer the Essure procedure and was one of eight “test marketing” campaign sites. (Petition ¶ 165.) Plaintiffs also state that defendants cite to data from the Missouri clinical trials on Essure’s labels and in marketing materials distributed to plaintiffs and their physicians. (Id.) Plaintiffs add that defendants’ success with Essure in St. Louis allowed defendants to achieve profitability and launch a nationwide advertising campaign. (Id.) However, the non-Missouri plaintiffs do not allege they viewed Essure advertising in Missouri. That Missouri happened to be Essure’s first marketed area has no bearing on the non-Missouri plaintiffs’ claims where those plaintiffs did not see marketing in Missouri, were not prescribed Essure in Missouri, did not purchase Essure in Missouri, and were not injured by Essure in Missouri. Thus the allegations still do not suffice to provide the necessary “connection between the forum and the specific claims at issue.BMS, 137 S. Ct. at 1781.

Id. at *4.

The court next considered—and rejected—plaintiffs’ argument that the court had personal jurisdiction over the non-resident claims because defendants sponsored clinical trials in Missouri as part of their effort to secure regulatory approval of Essure. The court, once again, found this to be an inadequate link to establish personal jurisdiction:

As for plaintiffs’ allegations about the clinical trials having occurred in Missouri, plaintiffs argue that such activities play directly into BMS’s invitation to prove personal jurisdiction by showing the defendant “work[ed] on the regulatory approval of the product” in Missouri. Id. at 1778. But the Missouri clinical trials — the existence of which defendants readily admit — are simply too attenuated to serve as a basis for specific personal jurisdiction for defendants. Indeed, the trials would serve more properly as evidence of general personal jurisdiction. The non-Missouri plaintiffs do not allege they participated in a Missouri clinical study or that they reviewed and relied on Missouri clinical studies in deciding to use Essure. Plaintiffs also seem to suggest that specific jurisdiction exists because Essure could not have been approved without clinical trials, and some of those clinical trials occurred in Missouri. But again, this does not serve as an “adequate link” between Missouri and nonresidents’ claims that their individual device injured them in another state. See id. at 1781.

Id. at *5. With that, the court dismissed the claims of all 92 non-Missouri residents and retained jurisdiction over the claims of the remaining 3 plaintiffs.

While this was an excellent opinion, its importance may be greater than the ordinary opinion rejecting efforts to stretch personal jurisdiction under BMS. The District Court Judge was Stephen Limbaugh. He is a former Chief Justice of the Missouri Supreme Court and, as we understand it, well respected. This suggests that the current members of the Missouri Supreme Court will give his opinion a close read. Given how many product liability cases are filed in Missouri, that has to be a good thing.

When we described for you (here and here) the briefing on the appeal of the half-billion-dollar verdict in the Pinnacle Hip Implant MDL’s second bellwether trial, we left out maybe the most intriguing issue. This is one the likes of which we have not seen before: the case of the unpaid experts who were paid. Well, not really paid. They received a “thank you.” In the form of money. So, yeah, paid. This unpaid paid expert issue was serious enough to trigger a motion for a new trial from defendants under FRCP 60(b) (3). The denial of that motion is now part of the appeal.

Defendants’ opening appellate brief describes the issue in some detail. At trial, plaintiffs’ counsel repeatedly argued or elicited testimony in front of the jury that two of plaintiffs’ expert witnesses were not paid, contrasting them to defendants’ experts whom plaintiffs’ counsel described as giving “bought testimony.” If true, we see why plaintiffs’ counsel would stress this point to the jury. But . . . During depositions of those two experts for the next bellwether trial, defendants learned that they were in fact paid: one received $30,000; the other received $35,000 and a promise from plaintiffs’ counsel to donate $10,000 to the expert’s preferred charity. They sure seem like paid experts.

Plaintiffs try to clear this up in their opposition brief. In many respects, they only create confusion. They argue that, for instance, it was the defendants who paid one of these two experts—a full $10,000. But that expert was also a treater of two plaintiffs, and he appears to have charged defendants, as many treating doctors do, for appearing at two fact depositions about those plaintiffs. That is not an expert issue. After that detour, Plaintiffs’ lawyers concede that they did, in fact, pay these two experts the $65,000 and send the $10,000 to the charity. But they stress that they paid the experts after trial, that they agreed to pay the charity after the expert’s testimony, and that the experts did not ask for the payments. Instead, they claim that plaintiffs’ counsel decided after trial on their own—that’s sua sponte for us lawyers—to make the payments to the experts and the charity. They did this to show “appreciation” to the experts and to say “thank you.” Setting aside that this could raise other concerns—that is, paying an expert based on success—plaintiffs use this as a basis to argue they were well within bounds to tell the jury that the experts were not paid. . . . It’s starting to feel a little uncomfortable in here.

In their reply brief, defendants note, as they did in their opening brief, that one of the experts flat out admitted at his deposition that he always expected to be paid for his testimony at trial (and brushed off, because apparently they had to, the idea that the expert might have thought the defendants would pay him for testifying against them at trial). They also point out that the record shows that the promise to pay $10,000 to one of the expert’s preferred charity was made before trial

At oral argument, things got even more interesting—believe it or not. The court asked plaintiffs’ counsel to produce the $10,000 check to charity. Plaintiffs did so in a filing. Here it is, including the check and plaintiffs’ counsel’s explanatory letter. Take a close look at the check. It is dated December 4, 2015. That’s five weeks before the January 11, 2016 trial. Not only the promise, but the actual payment, came before trial. . . . It’s getting even more uncomfortable in here. Feel free to read the explanation in plaintiffs’ counsel’s letter. And here is the response from defendants.

So what can we make of all this. We really don’t know. But we do know one thing. No matter what you say about the Pinnacle Hip Implant MDL, it’s never boring. The Fifth Circuit will issue its opinion soon enough.