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The California Supreme Court heard oral argument in T.H. v. Novartis on Monday.  That is the case where the California Court of Appeal held that a prescription drug manufacturer could be held liable for injuries allegedly caused by a product that it did not make and did not sell.  This situation usually presents itself when plaintiffs sue an innovator drug manufacturer for injuries allegedly caused by generic products. T.H. v. Novartis has an added twist—the innovator manufacturer that the plaintiff sued had not made or sold the product for six years.  It sold the product line to another manufacturer, who made and sold the product that the plaintiff allegedly used.

How then can the innovator manufacturer owe a duty to this plaintiff, when it did not sell the product that allegedly harmed her and had not sold the product for anyone’s use for six years?  We set forth our views on this question here and here, where we listed the Court of Appeal’s opinion in T.H. v. Novartis the fifth worst decision of 2016.

The argument before the California Supreme Court lasted well more than the one hour allotted, and it featured questions from all seven justices. We’re not going to give you a blow-by-blow account.  Our stenographic skills are not up to that task, and it would take too long anyway.  We will start, however, the same way counsel for the defendant did:  The case presents not one, but two issues of duty.  For the plaintiff’s case to proceed, the California Supreme Court would have to recognize two unique legal duties:  (1) the duty of an innovator drug manufacturer to users of its competitors’ generic products, widely called “innovator liability”, and (2) the duty of a product’s former manufacturer to users of products made and sold by subsequent manufacturers, which we will call “perpetual liability.”

Perhaps the Court already knows what it wants to do with innovator liability, because nearly all the questioning was on perpetual liability, and the answers did not completely satisfy all the justices. To start, both sides attempted to seize the status quo—the defendant argued that no court anywhere has ever held a former manufacturer liable for a injuries allegedly caused by a subsequent manufacturer’s product, and the plaintiff argued that everyone owes a duty to everyone else to refrain from negligence.

The argument, however, dwelled on the limits of duty and how/where the Court should draw the line. Only one thing was clear:  The Court was troubled by the prospect of liability in perpetuity for a manufacturer that no longer sells a product.  The plaintiff tried to minimize the issue, arguing more than once that the prospect of perpetual liability was overblown and that perpetual liability cases would be rare.  Counsel even suggested once that the Court’s questions were “stacking a rare hypothetical upon a rare hypothetical.”  Despite these efforts, the Court directly confronted the issue, with a couple of justices noting that the situation would not necessarily be rare.

Now, whether the Court will recognize a new duty for former manufacturers and, if so, how the Court will limit such a duty is anyone’s guess. Of course, the best and obvious solution is to adopt the bright-line rule urged by the defense, that a former manufacturer owes no duty at all to users of a subsequent manufacturer’s products.  This is what every court to consider perpetual liability has decided, and it follows California Supreme Court precedent holding that a manufacturer owes no duty to warn regarding hazards in another manufacturer’s product, most recently in O’Neil v. Crane Co., 53 Cal. 4th 335, 360 (2012) (“An interpretation of [the law] that would require a manufacturer to warn about all potentially hazardous conditions surrounding the use of a product, even when those hazards arise entirely from the product of another manufacturer, reaches too far.”).  It is likewise faithful to decades of product liability law in California and elsewhere, which places the duty to warn on a product’s manufacturers and sellers.

The Court questioned counsel on other potential limits, for example by asking repeatedly how long a former manufacturer’s duty should persist. One justice noted that the lapse of time was the most difficult question.  In this case, six years passed between the defendant’s sale of the product line and the plaintiff’s use of the product manufactured by another company, so how long is too long?  Plaintiff had no answer to these concerns, and counsel finally acknowledged after nearly an hour of argument that there was no way to “scrub” perpetual liability from the case.

The Court also asked whether concepts of breach of duty and causation would adequately protect the defendant. In other words, if the Court created the duties, could the defendant move for summary judgment or defend itself at trial on the basis that it neither breached a duty nor caused any injury?  At least one justice was relatively open in supporting this idea.  Others preferred to focus on the threshold question presented—whether the defendant owed a duty in the first place.  In this regard, the expense of litigation and the ability (or inability) of a defendant to spread the cost when it no longer sells the product are particularly relevant considerations.

There were other suggested limits. The plaintiff argued that a former manufacturer could protect itself by updating its label before transferring a product line.  But as the defendant pointed out in response, that solution offers false assurance because plaintiffs would just claim the updated label was inadequate, too.  One plaintiff’s attorney suggested that the Court set a time limit for suing the former defendant, but another retracted that suggestion, noting that statutes of repose were the business of the legislature.

The plaintiff also suggested that a former manufacturer could protect itself by bargaining for indemnity, which led to questions about the whether the identity and reputability of the purchaser of the product line would make a difference. At least one justice thought that it might.  One plaintiff’s attorney argued that a former manufacturer’s duty should depend on how much a more robust warning would have affected the sale price of the product line.  We did not follow counsel’s reasoning, and we would be surprised if the Court did either.

In rebuttal, the defendant reiterated that the issue is duty, that it is the role of the Court to define duties and set limits, and that the plaintiff had offered no viable protection against perpetual liability. We agree.  These are not jury questions.  In the end, it will be a split decision, but we know how we would vote.  The law cannot justify creating an unprecedented duty of care for a company that did not sell the product that allegedly harmed the plaintiff and no longer sells the subject product at all.  The plaintiff’s remedy is against the manufacturer and seller of the product that she allegedly used and that allegedly resulting in an injury, just as it always has been under California product liability law.  We understand that this will not always give the plaintiff a complete remedy.  The manufacturer could be bankrupt or outside the jurisdiction of the court, and in some cases federal regulation of prescription drugs will preemption state-law claims.  But California has guidelines on when duties exist and when they do not.  We call them the Rowland factors, and they do not predict that a plaintiff will have the right to full recovery in every case.  So it should be here.  The opinion should be out in about 90 days.

The district court’s order dismissing claims in Ebrahimi v. Mentor Worldwide LLC, No. CV 16-7316, 2017 WL 4128976 (C.D. Cal. Sept. 15, 2017), is a good antidote to the Ninth Circuit’s wrongly decided opinion in Stengel v. Medtronic. Stengel is where the Ninth Circuit held that the plaintiff avoided express preemption by alleging that a pre-market approved medical device manufacturer failed to report adverse events to the FDA, thus violating FDCA regulations and a “parallel” state-law duty to warn.  We have criticized Stengel any number of times, but you can read this and this to get the gist. The most obviously questionable aspect of Stengel is its application of a California state-law duty to warn the FDA, which we are not convinced exists in the first place.

Another befuddling aspect of Stengel is causation:  How can a plaintiff plead and prove that an alleged failure to report events to the FDA actually affected his or her physician’s treating decisions or the treatment outcome?  The district court’s order in Ebrahimi v. Mentor dismissing claims against a breast implant manufacturer shows that most plaintiffs can’t do it.

Here is what happened. When the FDA approved the defendant’s silicone-gel breast implants through the pre-market approval process, it required six-post approval studies “to further assess the safety and effectiveness” of the implants.  This presumably was because of the ultimately unfounded concerns about silicone-gel breast implants that led to their absence from the U.S. market for a period of years.  The plaintiff in Ebrahimi was treated with the defendant’s silicone-gel implants and later experienced complications leading to the implants being removed.

Her lawsuit alleged failure to warn, strict liability manufacturing defect (presumably because California does not recognize strict liability for design defect), and negligence per se—all of which failed. On failure to warn, the district court distilled two theories from the complaint:  “a claim based on [the manufacturer’s] failure to report to the FDA ‘adverse events’ regarding certain dangers with the Implants’ use, and (2) a claim based on [the manufacturer’s] failure to issue sufficient warnings to consumers and doctors.” Id.

There are a number of issues here—express and implied preemption paramount among them—but the failure-to-warn claim failed at this juncture because of causation. The plaintiff opposed the manufacturer’s motion to dismiss by arguing that the manufacturer knew about “reported systemic ailments which can only be attributed to gel bleed . . . but failed to report that to the FDA.”  (emphasis supplied by court).  Those failure-to-report allegations were impossibly vague and failed to allege causation.  The following quote is kind of long, but it’s the core of the order:

The problem with Ebrahimi’s allegations concerning the flawed post-approval studies is that she has not sufficiently alleged facts to support her assertion that the unreported “systemic ailments” or negative health effects that patients experienced during the post-approval studies “can only be attributed to gel bleed” or some other actual “adverse event.” . . . . Ebrahimi fails to sufficiently allege what the “systemic ailments” are that the post-approval studies revealed and merely surmises, in conclusory fashion, that they “can only be attributed to gel bleed.”

Furthermore, Ebrahimi has not sufficiently alleged a causal nexus between her injuries and [the manufacturer’s] failure to report adverse events to the FDA.  She does not allege, for instance, how any “gel bleed” issue would have caused the FDA to require different labeling, especially given the FDA—and Ebrahimi herself for that matter—was aware of the risk of gel bleeding.  Ebrahimi states she suffered injuries “[a]s a direct and proximate results of [the manufacturer’s] foregoing acts and omissions.”  . . .  .  Yet, she fails to allege how any reporting by Mentor to the FDA would have caused her surgeon to stop using Implants or her to refrain from having the breast-implant surgery with the devices at issues, considering the potential health consequences of which she was already aware.

Id.  Let’s unpack that a little bit.  The plaintiff’s theory was the alleged failure to report events from post-approval studies caused her complications.  But in trying to get from point A to point B, the allegations fall apart.  It is awfully easy to allege “unreported systemic ailments,” but which ones?  What other actual “adverse events” did the defendant allegedly fail to report?  And how do any of them have anything to do with what the plaintiff allegedly experienced.  It is similarly easy to write on paper that such “ailments” can “only be attributed to gel bleed,” but how?  If there could be link, what else could cause the “ailments” and how can we exclude them?  We don’t know, and neither did the plaintiff, who “merely surmised” these facts, in conclusory fashion.

All that is before we even get directly to proximate causation. Sure, the plaintiff alleged injuries “as a direct and proximate result” of the defendant’s alleged conduct, as all plaintiffs do.  But when the FDA already knew about gel bleed, and the plaintiff’s doctor already knew about gel bleed, and the plaintiff herself already knew about gel bleed, how could the alleged failure to report adverse events (whatever those events were) possibly have made any difference.  Would the FDA have required a different warning?  Would the physician have reviewed the adverse reports?  If so, would anything have added to the physician’s knowledge, or to the plaintiff’s own knowledge?  Would it have changed anything?  Again we don’t know—and, again, neither did the plaintiff.

Recall what we said about Stengel at the outset.  That opinion’s Achilles heel is causation, owing to the Ninth Circuit’s result-oriented acrobatics to find a claim that avoided express preemption.  It purported to find one, but one that requires a causal chain that is extraordinarily attenuated.  We offer kudos to the district judge in Ebrahimi for recognizing the plaintiff’s burden to plead causation as part of her “parallel claim” and correctly finding that the plaintiff had not met it.  Of course, we would have preferred an order finding the failure-to-warn claims preempted, but this is not bad.

The district court also dismissed the strict liability manufacturing defect claim and the negligence per se claim.  The former was implied preempted under Buckman because “it hinges entirely on conduct [the plaintiff] claims violates the FDCA as well as the FDA’s Current Good Manufacturing Practices.” Id. In other words, she was suing because the alleged conduct violated the FDCA, which is the sine qua non of implied preemption.  The negligence per se claim fell because negligence per se is not a separate cause of action under California law. Id.

Alas, the district court granted leave to amend. But given that this plaintiff alleged a known and warned-of complication of a pre-market approved medical device, she has a tough row to hoe.

Hope springs eternal. At least that is what the optimists say, and while we would like to see the bright side of the Missouri Supreme Court’s split opinion on venue in Barron v. Abbott Laboratories, Inc., No. SC 96151, 2017 WL 4001487 (Mo. Sept. 12, 2017), we are having trouble this morning finding our rose-colored glasses.  The court’s ruling that a black box warning on the exact condition at issue is “irrelevant” does not help either.

Faithful readers will recognize Barron v. Abbott Laboratories from our list of worst opinions of 2016.  The Missouri Court of Appeals’ opinion in Barron affirming a $38 million verdict came in at #3 on that list.  What did that opinion do to warrant such distinction?  You might call it a twofer:  The court upheld an unfair application of Missouri’s unique and unexplainable venue rules, plus held that a black box warning that warned of the exact risk at issue was sufficiently inadequate to sustain a failure-to-warn verdict and punitive damages.  We discussed that opinion here.

The Missouri Supreme Court has now affirmed this result, and it is still unfair on multiple levels. Let’s start with venue.  The only claims at issue in this trial were those brought by a Minnesota plaintiff against an Illinois defendant under Minnesota law.  Of course, the Minnesota plaintiff found her way to the City of St. Louis by filing a complaint there with 24 plaintiffs from 13 different states, including four from Missouri. Barron, 2017 WL 4001487, at *1.  This is a tactic we often see and to which we object.  But the angle that seems to be unique under Missouri procedure is that venue is proper in the county where any plaintiff “was first injured.” Id. at *5 (concurring opinion).  That means that any plaintiff—including the Minnesotan who got her claims to trial—can piggyback his or her way into any Missouri county where any co-plaintiff “was first injured,” even though neither her claims nor the defendant have any identifiable relationship to that forum.

Even the Missouri Supreme Court in Barron could not defend this rule, but instead affirmed the plaintiff’s verdict on the basis that the trial court’s refusal to transfer venue caused the defendant no prejudice. Id. at *2.  Query how a verdict this size on these facts would not demonstrate prejudice.  Regardless, we find it interesting that a four-judge majority of the Missouri Supreme Court dodged the merits.

Which leads to a ray of hope. Three judges filed a concurring opinion stating that once the trial court determined that each Plaintiff’s claims should be tried separately, it was error for the court not to sever and transfer claims for which venue was no longer proper. Id. at *7.  In other words, venue is not a static inquiry.  When the trial court determined that the claims should be tried separately, it “necessarily decided there are no further gains in efficiency of expeditiousness to be had from the joinder.” Id. at *6.  At that point, “the trial court has discretion to deny a subsequent or renewed motion to sever only in the rarest of circumstances” and “an abuse of discretion in denying such a motion will be patently prejudicial.” Id. The concurring opinion further faulted the majority for applying a “no prejudice” standard because a defendant

will never obtain relief without showing the elusive, undefined, and likely unprovable prejudice that the principal opinion demands. I am unwilling to countenance such an immediate, improper, and easily avoided outcome.

Id. at *7. Sure, it’s a concurring opinion, but it calls out the unworkable situation that Barron has reinforced.  We will take this four-to-three decision as endorsing efforts for reform.

Missouri-based defendants should take particular interest. The United States Supreme Court’s BMS opinion clamping down on personal jurisdiction should reduce the number of out-of-state plaintiffs suing non-Missouri defendants in Missouri.  But the joinder problem remains where personal jurisdiction is not an issue.  As the concurring opinion noted, “Even though the use of a Rule 52.05(a) joinder to combine multiple in-state and out-of-state plaintiffs in a single action largely will be prevented in the future by Bristol-Myers Squibb Co. v. Superior Court, [137 S. Ct. 1773 (2017)], . . . the use of Rule 52.05(a) to join the claims of multiple Missouri plaintiffs in a single petition will (and should) still occur.” Barron, at *4.  Missouri’s joinder rules therefore discriminate against Missouri defendants, who will remain subject to Missouri’s joinder rules while out-of-state defendants will less often be around.  This is another reason why reform should finally occur.

Now, how about the warnings? When a boxed warning—the strongest warning permitted under the FDCA—warns of the complication about which the plaintiff is complaining, it should be adequate as a matter of law.  Period.  You can read more on this here.  In Bannon, the Supreme Court did not set forth what the black box warning said, so we will:  “[THE DRUG] CAN PRODUCE TERTOGENIC EFFECTS SUCH AS NEURAL TUBE DEFECTS (E.G., SPINA BIFIDA).  ACCORDINGLY, THE USE OF [THE DRUG] IN WOMEN OF CHILDBEARING POTENTIAL REQUIRES THAT THE BENEFITS OF ITS USE BE WEIGHED AGAINST THE RISK OF INJURY TO THE FETUS.”  The plaintiff in Barron alleges she was born with spina bifida, which is right there in the warning—in all caps, and boldface, and surrounded by box.  To make matters worse, the Missouri Supreme Court held that the black box warning was “not relevant” to punitive damage. Id. at *4.  Quibble if you will over whether a black box warning is adequate as a matter of law.  But where the basis for liability is an alleged failure to warn, there is no way to explain how a clear and prominent warning on the exact complication at issue can be “not relevant.”  We will leave it at that.

So is there room for hope? As we observed in connection with another Missouri case a few weeks ago, time will tell.  Whatever the future holds, we are betting that Barron v. Abbott Laboratories will be in the running for the worst opinions of 2017.  Time (and Bexis) will tell.

“I am from Missouri. You have got to show me.” That quote attributed to Congressman Willard Duncan Vandiver in 1899 is reputedly the source of Missouri’s unofficial nickname, the “Show Me” state.  Or maybe it isn’t.  Whatever the slogan’s origin, a federal judge in Missouri recently said “show me” when 83 plaintiffs from 30 different states claimed personal jurisdiction in Missouri over a New Jersey-based talcum powder manufacturer.  These litigation tourists predictably could not meet the challenge, resulting in their claims being dismissed and the federal court retaining diversity jurisdiction over those who remained.

The case is Jinright v. Johnson & Johnson, Inc., No. 4:17-cv-01849, 2017 WL 3731317 (E.D. Mo. Aug. 30, 2017).  Sure, this is not a drug or medical device case, but the plaintiffs’ business model is the same as what we often see in the drug and medical device space—dozens of out-of-state plaintiffs joining in a lawsuit with one or two resident plaintiffs and one or two plaintiffs who defeat diversity, all as a ploy to forum shop their cases into a state court that their attorneys perceive as friendly.  The Jinright plaintiffs followed the playbook to a tee:  Eighty-three plaintiffs in one civil action with two Missourians and at least one plaintiff each from California and New Jersey—the latter to defeat diversity of citizenship with the California and New Jersey defendants.

If this configuration looks familiar to you, it should. Almost identical facts were before the U.S. Supreme Court in BMS v. Superior Court, where the Supreme Court held that a plaintiff cannot establish specific personal jurisdiction over his or her claims by reference to transactions involving other parties. See Bristol Myers Squibb v. Superior Court, 137 S. Ct. 1773, 1781-84 (2017).  With those ground rules, the outcome in Missouri was correct.  The defendants removed the 83-plaintiff petition to federal court and moved to dismiss the non-Missouri plaintiffs, who had no basis for asserting personal jurisdiction over the defendants in Missouri.  The plaintiffs moved to remand, citing the non-diverse parties.

The defendants won, and there are two interesting aspects of the court’s order to highlight.

First, the district court decided personal jurisdiction first, before it determined subject matter jurisdiction. Jinright, 2017 WL 3731317, at *2.  The plaintiffs argued, with some support, that the district court should decide whether it had subject matter jurisdiction as a threshold matter.  But the district court took a more pragmatic approach after BMS, observing that “there are circumstances in which a court may first address personal jurisdiction, such as where personal jurisdiction is straightforward while subject matter jurisdiction is ‘difficult, novel, or complex.’” Id. (emphasis added).

This nugget is extremely useful in today’s climate, where the Supreme Court in BMS and before that in Bauman has made the rules governing personal jurisdiction as clear and straightforward as they have been in decades.  As the district judge in Jinright found, “The personal jurisdiction question is straightforward.  Remanding this case for lack of complete diversity only to have the case removed again later once the non-Missouri plaintiffs are dismissed would be a waste of judicial resources.” Jinright, at *2 (emphasis added).  Perhaps the district judge saw our post from about six weeks ago presciently titled “Post-BMS Personal Jurisdiction is Pretty Straightforward.”  Regardless, when faced with complaints like these, we have three options to invoke federal jurisdiction:  (1) Move to dismiss the plaintiffs who can’t establish personal jurisdiction, then remove; (2) remove and ask the district court to sever and remand the non-diverse claims, or (3) remove and simultaneously move to dismiss the non-diverse plaintiffs.  These options won’t always work, depending on the case and the applicable deadlines.  The Jinright order squarely recommends option 3.  The Supreme Court’s opinion in Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 588 (1999), similarly supports adjudicating personal jurisdiction before establishing subject matter jurisdiction where the former is “a straightforward . . . issue presenting no complex question of state law.”

Second, the district court rejected the plaintiffs’ argument that they needed discovery into personal jurisdiction. They claimed evidence that another defendant had talc-related dealings with a Missouri-based company, which “processed, bottled and labeled” product in Missouri. Id. at *4.  The district court, however, ruled that even if it considered these facts (which the plaintiffs did not allege in their petition), they did not establish specific personal jurisdiction over the talcum powder manufacturer because “it did not establish a connection between Plaintiffs’ injuries, the product which caused the harm in this matter, and Defendants’ contacts in Missouri.” Id. at *4.  This was similar to BMS, where the plaintiffs relied on the drug manufacturer defendant’s contacts with a California-based distributor.  It was not sufficient to establish specific personal jurisdiction in BMS, and it was not sufficient in Missouri either. Id. As such, no further discovery was needed or allowed because “[a]ll they have shown is a connection with a third party in Missouri.  This is not enough to create specific jurisdiction for nonresidents’ claims.” Id. at *5.

This last part is significant because these plaintiffs made a go at identifying talcum-related Missouri contacts, but the district court did not bite. We predicted that plaintiffs would try to stretch tenuous forum contacts into specific jurisdiction when confronted with motions to dismiss, but it does not always work.  It did not work here.  We also note that this is the second order that we know of rejecting “jurisdictional discovery” as futile.  There are likely others, but if two cases can be a trend, we like this trend.  It should lead to less talc-related litigation tourism in Missouri, but time will tell.

The result is that the claims of 79 plaintiffs with no articulable connection to Missouri were dismissed. The remaining claims are staying in federal court and will be transferred to multidistrict litigation in New Jersey.  Perhaps their dismissed cohorts will re-file there and join them, or maybe they will not re-file at all.  Either way, when this Missouri-based judge asked these litigation tourists if they knew their way to the door, they likely said “show me.”

This is our second post in three weeks on class actions, owing to the filing of two really interesting class action opinions within a couple of weeks of each other. We posted two weeks ago on the Eleventh Circuit’s rejection of a medical monitoring class action—a class action where the plaintiffs and putative class members have not experienced any injury, but still want the defendant to pay for their future medical care.

A recent order from the Eastern District of Pennsylvania rejecting another class action got us to thinking about class actions more generally. We used to see “personal injury” class actions, where the plaintiffs were claiming relief for an entire class of individuals claiming to be harmed by a product.  But a class action like that obviously cannot work because of the multiple individualized issues that need to be adjudicated.  Cases like Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997), pretty much put an end to them.  (You can see this for yourself in our state and federal class action denial cheat sheets, here and here.)  Then we saw the aforementioned “medical monitoring” class actions.  The plaintiffs’ hoped there that their affirmative allegations of no injury would avoid class-defeating individualized issues.  But that did not work either because proving an entitlement to “medical monitoring” invokes individualized factors too, such as whether any patient requires future medical care above and beyond what he or she otherwise would have required.  The Eighth Circuit’s opinion in In re Silzone Heart Valve Products Liability Litigation, 425 F.3d 1116 (8th Cir. 2005), is as good a place as any to start on why medical monitoring claims are not certifiable as class actions.

That leaves class actions like Center City Periodontists v. Dentsply International, Inc., No. 10-774, 2017 WL 3142119 (E.D. Pa. July 24, 2017).  You might call cases like this “economic loss” class actions, where a product’s user is claiming neither a particular injury nor a right to future benefits, but rather claims that the value of what he or she bought is impaired because of a product defect.  “Aha!”, say the plaintiffs.  We’ve done away with all those pesky individual issues, and it now boils down only to damages, which we can prove on a classwide basis with our experts.

Alas, it is not so easy. In Center City, the plaintiffs purported to represent a class of dentists and periodontists claiming that the “Cavitron ultrasonic scalers” that they purchased were defective because they were prone to biofilm growth and thus not worth what they paid for them.  The next time we go to the dentist, we will look around for a device labeled “scaler.”  We do not like the sound of it, and it reminds us of the time when we were law students in need of a cleaning, but with little cash to spare.  We went to the low-cost student clinic at our university’s dental school, which was conveniently located in the building next to the law school.  If you take one point away from this post, remember this—do not seek dental care at a student clinic.  It was like our own personal retelling of the Marathon Man, starring Dustin Hoffman in his post-The Graduate and pre-Kramer v. Kramer days.  (In Marathon Man, Hoffman plays a hapless soul who finds himself being tortured while bound to a stiff-back reclining chair by a . . . .  Well, you will have to see the film.  As an aside, people often remember Dustin Hoffman in this role, but fewer recall that the torturer was played by none other than Sir Laurence Olivier.  For our part, we prefer to remember Olivier as Henry V or as the warm-hearted doctor in A Bridge Too Far, which is a terrific movie but an even better book.  But we digress.)

The district court’s order denying class certification is interesting for two reasons. First, the court entertained full-blown Daubert challenges to the plaintiffs’ experts’ opinions.  The court excluded the opinions of the plaintiffs’ regulatory expert, not because his qualifications or opinions were lacking, but because his opinions did not “fit” the case.  In a case claiming economic loss and breach of warranties, the court did not see how opinions on the “regulatory regime” were helpful. Id. at **5-6.

More importantly, the court excluded the opinions of the plaintiffs’ accountant, who opined that the class could recover damages based on three remedies—reimbursement, retrofit, and replacement. Id. at *7.  The experts’ damages opinion was unreliable because he did not take into account the economic value that each class member derived from using his or her Cavitron scaler without incident.  The applicable laws (New Jersey and Pennsylvania) allow credits for “the value of the goods accepted.” Id.  Thus, according to the district court,

Hazel’s methodology fails to account for any revenue generated by class member from successfully using their allegedly non-conforming Cavitrons . . . . Failure to do so rendered his model unreliable and ill-fitting under the facts of this case.  Because individualized inquiries will be necessary to identify any value obtained by each class member from using the Cavitron as accepted, Hazel’s approach is also unhelpful for computing damages on a class-wide basis.

Id. The expert also could not link his model directly to the alleged breach of warranty, which is required under Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).  Rather, he conceded that he could not distinguish between damages attributable to the alleged breach and those attributable to “something else.” Id. at *8.

Second, after excluding the plaintiffs’ experts, the court ruled that the plaintiffs had not met their burden of proving the class certification requirements under Rule 23. The plaintiffs’ claims were not typical because, for among other reasons, some of the product’s users were aware of the risk of biofilm formation and had even taken precautions.  None of the plaintiffs had read the product’s directions for use, which included relevant information. Id. at **10.  These issues—which are directly reminiscent of issues we deal with every day in product liability claims—are unique to each product user and require individualized inquiries. Id. at **10-11.

The plaintiffs were not adequate class representatives because their claims were arguably time barred, placing them in a conflict with class members whose claims would be timely and arguable more valuable. Id. at *11.  Oddly, the plaintiffs did not prove numerosity, an element that is usually uncontested.  Maybe the plaintiffs mistakenly thought it would be uncontested here too, because they submitted no evidence beyond speculation as to how many Cavitron devices were actually purchased and used. Id. at **12-13.

Finally, the proposed class did not meet the requirements of Rule 23(b)(3): Common questions did not predominate because whether certain representations were made and whether anyone relied on them are inherently individualized issues—again directly reminiscent of arguments we have made vigorously in product liability cases.  Proving damages on a classwide basis was impossible too because, as prefaced above, each user could have derived different value from the product as accepted.

This class action bit the dust, and it is significant to us because it highlights issues with “economic loss” class actions that make them as untenable in the drug and medical device space as other kinds of class actions that are now history. With the current prevalence of inventory-dominated mass tort proceedings, we may never see a class action again.  But if we do, we will drill down, don our lead vests, and expect to prevail.

The Supreme Court’s opinion on personal jurisdiction in BMS v. Superior Court has already made a substantial impact, despite being on the books for a mere three weeks.  That’s probably because it’s the Supreme Court and also because personal jurisdiction is an issue in every lawsuit filed, whether in state or federal court.  Another reason could be that the California Supreme Court’s opinion reaching for personal jurisdiction in BMS was so clearly swimming against the Supreme Court’s recent current that its reversal was widely anticipated and thus gained notoriety even faster than usual.  That last part is speculation, but still, we have not heard so much about personal jurisdiction since poor Mr. Burnham traveled from New Jersey to California to visit his kids. See Burnham v. Superior Court, 495 U.S. 604 (1990).

So what will we see following BMS?  We saw last week that some plaintiffs will try to stretch even the most tenuous forum contacts into specific jurisdiction, and some courts may go along with that.  We expect that most will not.  Take for example a recent opinion from the New Jersey Appellate Division, Dutch Run-Mays Draft, LCC v. Wolf Block, LLP, __ A.3d __, 2017 WL 2854420 (N.J. App. Div. July 5, 2017).  In Dutch Run, a Florida real estate developer sued a dissolved Pennsylvania law firm in New Jersey state court, and it argued that the law firm’s compliance with New Jersey’s business registration statute created personal jurisdiction “by consent.”  The New Jersey courts rejected that position.  Sure, the plaintiff was able to identify New Jersey contacts—business registration, a New Jersey registered agent, two New Jersey offices, the residency of some partners on the law firm’s dissolution committee, and three lawsuits that the law firm filed in New Jersey’s courts.

The problem for the plaintiff was that its claims had nothing to do with these New Jersey contacts. As the court put it, “[T]he negligence forming plaintiff’s cause of action did not arise from defendant’s contacts with New Jersey.  Plaintiff cannot show any relationship between the underlying matter and the business or attorneys in New Jersey.” Id. at *5.  Thus, no specific personal jurisdiction.  This is a faithful application of BMS, which requires a causal link between the defendant’s forum contacts and the plaintiff’s alleged injury.

Equally as important, the court held that the law firm’s registration in New Jersey did not imply “consent” to general personal jurisdiction under Daimler AG v. Bauman:

Plaintiff suggests Daimler’s holding is narrowed by its facts, specifically that Daimler was not registered as a foreign entity and had no registered agent or offices in California.

This limited view ignores Daimler’s definitive due process analysis. . . .  We now join the many courts that have circumscribed the view of general jurisdiction post-Daimler. . . .  In light of Daimler, we reject the application of [Allied-Signal, Inc. v. Purex Indus., Inc. 242 N.J. Super. 362 (App. Div. 1990)] as allowing general jurisdiction solely based on the fiction of implied consent by a foreign corporation’s compliance with New Jersey’s business registration statute. . . .  Importantly, the exercise of general jurisdiction requires satisfaction of the “continuous and systematic contacts” to comply with due process. Mere registration to conduct some business is insufficient.

Dutch Run, at *7 (emphasis added, citations omitted).  The court also rejected the plaintiff’s request for “jurisdictional discovery” because “[w]e remain unconvinced that permitting further discovery would have altered our conclusion.” Id. at *8.

Speaking of discovery, we also commend to you the order rejecting “jurisdictional discovery” in In re Baltimore City Asbestos Litigation (Smith v. Automotive Prods. Co.), Memorandum Opinion & Order, No. 24X13000333 (Baltimore City Circuit Ct. June 7, 2017).  In Smith, a Pennsylvania plaintiff sued multiple Pennsylvania defendants in Pennsylvania.  But after some defendants won summary judgment, the plaintiff tried to re-file his lawsuit in Maryland, which has a longer statute of limitations.  Slip op. at 2.

The Maryland court initially reserved ruling on personal jurisdiction and allowed limited “jurisdictional discovery.” This made neither side happy, resulting in dueling motions for reconsideration:  The defendants asked again for dismissal, and the plaintiffs wanted broader discovery.

The defendants won. Citing BMS, the court ruled that it lacked specific personal jurisdiction over the defendants because

this suit is unrelated to any alleged contact the Defendants may have had with the State of Maryland. Further the Defendants in this suit have conducted virtually no business in the State of Maryland and, therefore, have not purposefully availed themselves of the privilege of conducting activities in the State.  Therefore, this Court lacks specific jurisdiction over the Defendants in this suit.

Slip op. at 5. The court similarly lacked general personal jurisdiction over the defendants because they were not “at home” in Maryland, where “the only relevant inquiry is whether the defendant is either incorporated or has its principle place of business in the forum state.”  Slip op. at 6 (citing Daimler AG v. Bauman).  Like the New Jersey court in Dutch Run, the Maryland court rejected “jurisdictional discovery” because “[i]t is clear that further discovery will not uncover facts demonstrating the existence of general jurisdiction over any of the moving Defendants.  All of the Defendants are incorporated outside of Maryland.  The Defendants’ principal places of business are all in Europe.”  Slip op. at 6.

We bring you these two cases not only because they are timely, but because they confront tactics that we expect to see post-BMS—assertions of jurisdiction “by consent” and requests for “jurisdictional discovery.”  Our view on jurisdiction by consent is clear:  We don’t think it holds up; and as the New Jersey court found, a majority of courts have ruled that business registration alone does not form consent to jurisdiction.

As for discovery, these courts were correct to reject discovery where the facts already showed that jurisdiction was lacking. To this, we can add only that courts contemplating “jurisdictional discovery” should be reticent, very reticent.  As is commonly true with phased discovery, defining the phases can be challenging, leading to substantial overlap between discovery on jurisdictional facts versus discovery on all other facts.  It is a slippery slope toward full-blown discovery, in a case where the plaintiff has not yet established the court’s jurisdiction.  Look at what the plaintiff did in Smith v. Automotive Products, discussed above—the court gave them jurisdictional discovery, and their response was to ask for more.  We are not surprised.  Of course, this all assumes that a court has the power to allow discovery against a defendant contesting jurisdiction in the first place.  We don’t know the answer to that question, but the yet-to-be established nature of the court’s prerogative is another reason to tread lightly.

Maybe we should not be surprised when courts within California reach to find personal jurisdiction over out-of-state corporations even when non-Californians sue. That is what BMS v. Superior Court was all about.  Right?  Well, it happened again last week in Dubose v. Bristol-Myers Squibb Co., No. 17-cv-00244, 2017 WL 2775034 (N.D. Cal. June 27, 2017), and it has us scratching our heads.

This is not an obscure issue. We know from Bauman that a company is subject to general personal jurisdiction only where it is “at home,” which means state of incorporation or principal place of business.  (You can view our post-Bauman personal jurisdiction cheat sheet here.)  And the Supreme Court famously held just two week ago in BMS that California’s courts cannot exercise specific personal jurisdiction over an out-of-state defendant unless there is “an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1773, 1781 (2017).  That means there must be a causal link between the defendant’s forum contacts and the alleged injury to the plaintiff.  Contacts with other people—even people taking the same drug—do not count.

That is what makes the order in Dubose so confounding.  In Dubose, a South Carolina plaintiff sued a New York pharmaceutical manufacturer in the Northern District of California alleging product liability claims arising from her use of a prescription drug in South Carolina.  This is Bauman and BMS all over again, right?  Well, the district court saw it differently because the plaintiff alleged that the defendant conducted clinical trials within California, which became “part of an unbroken chain of events leading to Plaintiff’s alleged injury.” Dubose, at *3.  The district court therefore found specific personal jurisdiction based on those clinical trials, and it distinguished BMS v. Superior Court on the basis that there were no California contacts alleged in that case sufficient to support jurisdiction.

Having found jurisdiction, the district court then promptly transferred the case to South Carolina, where it should have been filed in the first place. But even though the case ultimately came to the correct result—sending a litigation tourist packing—we question the court’s order finding jurisdiction for several reasons.  First, we cannot distinguish BMS as easily as the district court did.  The alleged California contacts in Dubose were clinical trials.  But what are clinical trials?  They are physicians prescribing drugs to patients.  Sure, the prescriptions are written under approved protocols and data is collected.  But a patient being treated in a clinical trial does not look all that different from a patient being treated outside a clinical trial.  The Supreme Court held in BMS that “the mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug] in California . . . does not allow the State to assert specific jurisdiction.”  137 S. Ct. at 1871.  The clinical trial participants referenced in Dubose were similarly “prescribed, obtained, and ingested” the drug within California.

Second, the district court in Dubose came to its conclusion because the clinical trials purportedly were in the “but for” causation chain leading to the alleged injury.  But were they?  Pharmaceutical companies typically run clinical trials at centers throughout the world.  Were the data from the California clinical trials really a “but for” cause of a patient ingesting a drug in South Carolina at some later point in time?  Put another way, if the California clinical trials never occurred, would the product really not have come to market?  We don’t know, but our point is that the causal chain leading from a specific, geographically defined subset of clinical trials to an alleged injury seems tenuous at best.

Third, the district court’s order seems to hold that any forum contact is sufficient to support specific personal jurisdiction, so long as it can be related to the plaintiff in any way.  But recall that specific personal jurisdiction is grounded in due process, which asks whether it is fundamentally fair to hold a defendant to answer in a forum where it is not at home.  At some point, the affiliation between the forum contact and the claim can be so attenuated that it can no longer be said that one “arose from” the other.  That is what we think is going on in Dubose.

If specific personal jurisdiction exists in every state where a multi-center clinical trial occurred, then any plaintiff who used the drug conceivably could sue the manufacturer in any of those states—no matter where the manufacturer is based and no matter where the plaintiff resides or used the drug. In the one example the district court cited, that would translate to specific personal jurisdiction in 44 states. Dubose, at *3 (citing M.M. ex rel. Meyers v. GlaxoSmithKline LLC, 61 N.E.3d 1026 (Ill. Ct. App. 2016)).  That is not “specific” personal jurisdiction.  That more resembles the concept of universal jurisdiction that the Supreme Court condemned in Bauman.

It could not be more unlike the disciplined contours of specific jurisdiction set forth in BMS.  The proliferation of jurisdiction to a multiplicity of states allowed the litigation tourism problem to arise in the first place.  It is also what led the Supreme Court to reel in personal jurisdiction.  Moreover, while the district court observed that “it is not clear what the alternative would be,” we would say the alternative is that Plaintiffs can sue a defendant where the defendant is at home or in states where they reside or where they ingested the product and experienced alleged injuries.  The Supreme Court made this clear in BMS too, where it rejected the plaintiffs’ “parade of horribles” and held that its “straightforward application of settled principles of personal jurisdiction” left plaintiffs ample alternatives, whether suing alone or in combination with others.

The case is in South Carolina now, so we doubt this order will undergo appellate review. That’s unfortunate.  Another thing is that the district court in Dubose relied most heavily on the M.M. ex rel. Meyers order to support its finding of jurisdiction.  But M.M. is currently in the U.S. Supreme Court on a petition for certiorari.  In light of BMS, we would not be surprised if the Supreme Court granted cert., vacated the order, and remanded for further proceedings.  That would leave Dubose as even more of an outlier.

 

We have a point of view. Our readers understand that we represent folks on the right side of the v., and our posts tend to read cases and legal trends with a pro-defense bent, although you can rest assured that we put a lot of thought into it.  From time to time, however, we see an opinion that is just plain wrong, and we have to call it out.  That is the case today with Mink v. Smith & Nephew, Inc., No. 16-11646, 2017 WL 2723913 (11th Cir. June 26, 2017).  The plaintiff sued the manufacturer of a metal-on-metal hip replacement device for negligence and strict product liability, among other claims, alleging that the manufacturer did not meet federal requirements in the manufacture of the device, that it improperly trained surgeons, and that it failed to report adverse events. Id. at **6-8.

The device is a Class III device approved through the FDA’s rigorous premarket approval process. That means express preemption applies, and because the plaintiff was suing to enforce federal requirements on the manufacturing of a device, implied preemption applies, too.  The district court so ruled and dismissed the plaintiff’s claims. Id. at *2.  But the Eleventh Circuit came to the opposite conclusion, and the opinion caught our eye for two reasons.  First, the Eleventh Circuit professes to know more about Florida law than the Florida courts.  What do we mean by that?  Well, the Medical Device Amendments state that federal law preempts all state law requirements “different from or in addition to” federal requirements.  Under the widely misunderstood “parallel claim” exception, plaintiffs can sometimes pursue state law claims that “parallel” federal claims, but this requires that state law actually recognize such a cause of action.

Here, the Eleventh Circuit allowed the plaintiff’s manufacturing defect claims to proceed as “parallel claims” because Florida recognizes a strict product liability claim based on a manufacturing defect and the plaintiff alleged that the defendant “violated the Florida common law duty to use due care in manufacturing a medical device.” Id. at *7.  This is okay as far as it goes, but what was the basis for the manufacturing defect and the alleged breach of duty?  The manufacturer did not comply with the FDA’s requirements. Id. at *8.  The plaintiff was suing because the manufacturer allegedly violated federal requirements.

That is federal preemption. Moreover, a Florida court recently held in the context of MDA express preemption that neither federal law nor Florida state law creates a private right of action to enforce federal medical device requirements. Id. at *5 (discussing Wolicki-Gables v. Doctors Same Day Surgery Ctr., Ltd., 216 So. 3d 665 (Fla. Dist. Ct. App. 2017)).  To make matters worse, the Florida Supreme Court held more than twenty years ago that penal and regulatory laws do not create a private right of action under Florida law absent a clear legislative intent to do so. See Murthy v. N. Sinha Corp., 644 So. 2d 983, 986 (Fla. 1994).  Congress has expressly said that the FDCA and the Medical Device Amendments do not create a private right of action, and the Florida legislature has never created such a right of action either.  The Eleventh Circuit apparently knows better.

The second reason this opinion caught our eye is the Eleventh’s Circuit’s apparent motivation—that unless it reversed the district court’s order dismissing the plaintiff’s claims, the plaintiff would not be allowed to proceed. Id. at *5.  We sometimes characterize opinions as “result oriented,” but rarely are circuit courts so blunt.  This court took umbrage with the idea that a plaintiff would not be able to pursue product liability claims against the manufacturer of a premarket approved device.  The Supreme Court thought differently in Riegel.

The court did hold that claims based on inadequate training were expressly preempted because no such claim exists under Florida law (i.e., there is no “parallel”), and the claim based on the failure to report adverse events was impliedly preempted because it was similar to a “fraud on the FDA” theory, per Buckman. The district court, however, came to correct result for the correct reasons when it dismissed the plaintiff’s claims.  The Eleventh Circuit should have affirmed it.

The Eastern District of Pennsylvania recently entered a fraudulent joinder order that is worth highlighting because it applies a fraudulent joinder standard that we think should apply more broadly. It has always puzzled us why courts are hesitant to find non-diverse or local defendants fraudulently joined.  You know what we mean.  A plaintiff from State X files state-law claims against a defendant from State Y in some place other than State Y.  That is a removable case, except that plaintiffs will frequently name a bogus defendant from either State X or the forum state to defeat the defendant’s right to remove.

That is fraudulent joinder, and it is a type of forum manipulation that we see all too often. Sure, we remove the cases anyway, and federal judges sometimes agree with us that the non-diverse or forum defendants are fraudulently joined, leading them to retain jurisdiction.  But more often than not, they don’t, depending on the facts and the applicable standards

The facts and the applicable standards. That is why we like the order in Bentley v. Merck & Co., No. 17-1122, 2017 WL 2311299 (E.D. Pa. May 26, 2017).  In Bentley, ten plaintiffs from Pennsylvania, Nevada, and Missouri sued a New Jersey pharmaceutical company in Pennsylvania state court. Id. at * 1.  That’s removable based on diversity of citizenship, right?  Well, to avoid federal court, the plaintiffs also sued a company employee who happened to reside in Pennsylvania.  The problem was that the plaintiffs had no claim against the local employee and had no intention of actually pursuing a claim against her.

That played into the fraudulent joinder standard in the Third Circuit, where fraudulent joinder exists if

“there is no reasonable basis or colorable ground supporting the claim against the joined defendant,” or no real intention in good faith to prosecute the action against the defendant or seek a joint judgment.

Bentley v. Merck & Co., 2017 WL 2311299 at *2 (citing Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990); In re Briscoe, 448 F.3d 201, 216 (3d Cir. 2006); Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985)).  Focus on the last part, the part that the court underlined—“no real intention in good faith to prosecute the action” against the non-diverse or forum defendant.  The first part is similar to standards that some other circuits apply, i.e., whether there is a reasonable basis for the claim.

But the “no real intention to prosecute” standard cuts right to the core—are the plaintiffs genuinely seeking redress from the non-diverse or forum defendant, or are they just manipulating the forum? It is a fair question to ask, and while courts in other circuits will consider such evidence, the Third Circuit’s standard makes it express and places it front and center.

What then happened in Bentley?  It turns out that the same plaintiffs’ attorney had sued the same defendants in federal court, too.  But in the federal case, called Juday, he voluntarily dismissed the Pennsylvania employee. Id. at *2.  That is to say, when the presence of the Pennsylvania employee made no difference to the forum, the plaintiffs did not care about her and let her go.  They kept her in in the cases only where her presence purportedly would defeat diversity, which lay bare exactly what their intentions were.  The district court viewed it this way:

We note that in Juday which was initially filed in the federal court, the presence of [the employee], a Pennsylvania citizen, would not defeat this court’s diversity jurisdiction since the plaintiffs were citizens of Indiana.  Thus, her dismissal had no effect on federal subject matter jurisdiction.  In contrast, if plaintiffs’ arguments against fraudulent joinder and against removal of cases with an in-state defendant are correct, her continued presence as a defendant in these ten cases would require remand.

. . . .

We find that the only reason plaintiffs have joined [the employee] as a defendant is to defeat this court’s subject matter jurisdiction and that they have no real intention in good faith to prosecute these actions against her to judgment. We reach this compelling finding in light of the stipulation of dismissal of [the employee] in Juday and the plaintiffs’ retention of [the employee] in the other similar cases where the same counsel represents all the plaintiffs.  Plaintiffs’ attorney conceded this inconsistency at oral argument and offered no explanation for it . . . .

Id. at *3.  The evidence in this case thus was particularly stark, and counsel candidly acknowledged that the plaintiffs had no intention of pursuing judgments against the individual defendant since they had a large corporate defendant already in the case.  On that record, the district court had only one justifiable path—denying the plaintiffs’ motion to remand.

We note that proving fraudulent joinder would not require evidence this strong. As in Bentley, plaintiffs tend to fraudulently join the same defendants over and over again, and they never make any genuine effort to proceed to judgment against them.  That history is evidence in the next case that the plaintiffs have “no real intention in good faith to prosecute the action.”  Voluntary dismissals and candid concessions of counsel would seal the deal, as they did in Bentley.  But less should be sufficient.  The order in Bentley is the right result for the right reason, and the standard applied is one that courts should apply more broadly.

We first mused over arbitration and drug/medical device claims exactly six years ago, when the United States Supreme Court issued its opinion in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).  In that widely studied opinion, the Supreme Court held that the Federal Arbitration Act preempted state laws limiting the enforceability of class action waivers.  Bexis wondered aloud whether drug and device companies could arbitrate their drug and device-related disputes, perhaps when involved in contractual relationships with third party payers?

And then we largely stopped talking about arbitration. For six years.  Until now.  Because it’s Supreme Court opinion season again, and the Supreme Court has again ruled that the FAA preempts state laws limiting arbitration.  And this time, the Court has done so in a wrongful death case and in a remarkably strong opinion, which got us to thinking again:  Is there a role for arbitration in drug and medical device product liability claims?  (And because Bexis originally posed this question in 2011, we have shamelessly stolen his thoughts and prose for parts of this post, with his permission).

In Kindred Nursing Centers Limited Partnership v. Clark, No. 16-32, 2017 WL 2039160 (U.S.S.C. May 15, 2017), the U.S. Supreme Court upheld application of a nursing home’s arbitration agreement to tort claims for alleged personal injuries suffered by patients under the home’s care.  Those holding the patients’ medical powers of attorney (an unfortunately common situation) “signed an arbitration agreement with [defendant] on behalf of [the] relative.” Id. at *3.  Later, they brought state-court tort actions for wrongful death. Id.  The defendant moved to enforce the arbitration agreement, but lost.  The state supreme court held both agreements invalid, invoking specificity rules involving powers of attorney and singling out arbitration agreements for special scrutiny.  As described by the Court:

The Kentucky Constitution, the court explained, protects the rights of access to the courts and trial by jury; indeed, the jury guarantee is the sole right the Constitution declares “sacred” and “inviolate”. . . . And that clear-statement rule − so said the court − complied with the FAA’s demands.  True enough that the [Federal Arbitration] Act precludes singling out arbitration agreements.  But that was no problem, the court asserted, because its rule would apply not just to those agreements, but also to some other contracts implicating “fundamental constitutional rights” . . . [such as] a contract “bind[ing] the principal to personal servitude.”

Kindred, at *4 (citations and quotation marks to opinion being reviewed omitted).

The Federal Arbitration Act “preempts any state rule discriminating on its face against arbitration,” including “any rule that covertly accomplished the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.” Id.  The Court then found the examples of non-arbitration “constitutional rights”− other than jury trial − pretextual.  “[T]he court hypothesized a slim set of both patently objectionable and utterly fanciful contracts that would be subject to its rule,” but only the jury trial was realistically implicated:

In ringing terms, the court affirmed the jury right’s unsurpassed standing in the State Constitution: The framers, the court explained, recognized “that right and that right alone as a divine God-given right” when they made it “the only thing” that must be “ ‘held sacred’ ” and “ ‘inviolate’”. . . .  And so it was that the court did exactly what Concepcion barred: adopt a legal rule hinging on the primary characteristic of an arbitration agreement − namely, a waiver of the right to go to court and receive a jury trial.  Such a rule is too tailor-made to arbitration agreements − subjecting them, by virtue of their defining trait, to uncommon barriers.

Id. at *5 (citations omitted).

Thus, even in personal injury cases, the FAA “requires a State to enforce all arbitration agreements (save on generally applicable grounds) once they have come into being.” Id. at *6.  “The Act’s key provision, once again, states that an arbitration agreement must ordinarily be treated as “valid, irrevocable, and enforceable.” Id. (citing 9 U.S.C. § 2).  “Adopting the [plaintiffs’] view would make it trivially easy for States to undermine the Act − indeed, to wholly defeat it.” Id.  Thus, the Court in Kindred “reach[ed] a conclusion that falls well within the confines of (and goes no further than) present well-established law.” Id. at *7 (quoting DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 471 (2015)).  States cannot “flout[ ] the FAA’s command to place those agreements on an equal footing with all other contracts.” Id.

It was already clear that the FAA enforces arbitration clauses in “standard form” contracts. Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 682 (1996).  The Act validates arbitration provisions in consumer contracts as well, including where the contract allows a company “to make unilateral amendments,” including to the arbitration provision. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 336 (2011).  DIRECTV pointed out that “parties to an arbitration contract [have] considerable latitude to choose what law governs,” so long as that law is “valid” under the FAA.  136 S. Ct. at 468, 470.

From our perspective, what Kindred adds to the analysis is the elimination of any argument that the FAA somehow exempts state-law personal injury actions – since that is precisely what was preempted by the FAA in that case.  We would even say more broadly that the opinion pumps the brakes on efforts to invalidate arbitration clauses on the basis of public policy.

So let’s circle back to our initial question: Is there a role for arbitration in drug and medical device product liability claims?  Forty years ago, when arbitration was seen as a commercial animal and a process where “businessmen” felt comfortable resolving their business disputes, we would have asked, why?

Today, we ask, why not? Things have changed, both in how we view arbitration on the one hand and product liability litigation on the other.  Of course, the elephant in the room is that in most personal injury lawsuits, the plaintiff and the alleged tortfeasor do not have a preexisting contractual relationship, which is how most parties in arbitration have agreed to arbitrate.  But assuming that could somehow be overcome, there are no clear legal barriers to adopting arbitration in drug and medical device product liability cases.

The FAA certainly does not exempt product liability claims. The relevant provision – the aforementioned 9 U.S.C. §2 – states:

A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

The sale of prescription medical products is certainly a “transaction” or “contract” – the other side routinely alleges warranty, consumer protection, and other contractually-based claims when suing our clients. Likewise such sales “involve commerce,” or else the FDA couldn’t exist.  There is no explicit exemption in the statute for product liability, torts, personal injury, or anything else of that nature.  So, we’d say the FAA by its terms covers sales of prescription medical products. Kindred establishes that tort claims for damages from goods and services “arise out of” the sales transaction for FAA purposes.

The FDA does not prohibit arbitration either. We checked FDA regulations and guidance documents to see if the FDA put any a priori (that means “right at the outset” in legal Latin) limits on arbitration clauses.  We found zilch in the FDA’s regulations, and to the extent arbitration is discussed at all in FDA Guidance Documents, those discussions did not pertain to prescription medical products – at least those used in humans.  Moreover, in 1998, President Clinton issued an executive order that “each Federal agency must take steps to:  1. Promote greater use of . . . arbitration. . . .”  Granted, that this order, by its terms applies only to disputes “involving the United States,” but it would be difficult for the FDA affirmatively to obstruct arbitration elsewhere while itself being under such a presidential directive.

And, because of Kindred, we know that state law cannot discriminate against arbitration clauses.  That was what Kindred was all about.

So it appears to us that the primary obstacles are practical, and assuming those could be worked out, we see many reasons why arbitration is worthy of consideration for product liability cases. To start with, there is no longer any stigma attached to arbitrating tort claims.  It has been well-established since the 1970s that medical malpractice claims can be arbitrated, and it has been clear since at least the 1990s that there is no public policy that would per se exclude personal injury and wrongful death claims from the scope of arbitration.  If there were any doubt on this point, the U.S. Supreme Court laid it to rest in Kindred, where seven justices of an eight-member court ruled that wrongful death claims can and should be arbitrated.

To those who say that arbitration is inadequate or is biased against claimants, we would say there are two sides to every story. Sure, the arbitration process can be (but is not always) less robust than litigation, especially in terms of discovery.  But before decrying that compromise, consider how productive discovery actually is when weighed against the cost—the majority of which is born by the defense.  Does discovery in its current form actually lead to results that are more fair than what parties would receive in arbitration?  We are not so sure.  And considering our view that discovery abuse is all too common, we would argue that a process that brings discovery under control and fully embraces proportionality would be eminently more fair.

As for bias, anyone who has been hit with a substantial arbitration award would disagree that arbitration presents substantial disadvantages to claimants. The structure of the arbitration process can address perceptions of bias as well.  We saw that in Concepcion, where the Supreme Court noted several procedural features that benefited consumers, including adoption of a one-page complaint, shifting of “nonfrivolous” costs to the defendants, designating a location convenient to the claimant, a flexible hearing process (in person, by telephone, or in writing) at the claimant’s option, among other features. Concepcion, 563 U.S. at 336-37.  Anyone who has been on the losing end of an arbitration award person would also disagree that arbitration removes the deterrent value of jury verdicts.  After all, the same statute that makes arbitration clauses enforceable also makes arbitration awards enforceable.

Finally, some defend product liability litigation for its “narrative value,” i.e., the value gained by presenting and resolving controversies in open court.  We see their point, but again consider how things have changed.  In our years of practice, we have come to understand that the American tort system is good at transferring wealth from one party to another, but is limited in delivering much more than that.  As a result, plaintiffs who sue to vindicate interests other than monetary interests tend to be disappointed.  Moreover, in today’s mass tort system, relatively few plaintiffs have any interest in litigation other than monetary gain.  Other than a few hand-picked “bellwether” plaintiffs, none will actually see the inside of a courtroom, and many will not meet their lawyers until the day before their depositions, if ever.  How does preserving this inventory-based system advance any helpful “narrative”?

In the end, we don’t know if arbitration on any appreciable scale could work, but it is worth considering. We do know that the current Supreme Court would be open to approving it.