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A myth that has regrettably gained some traction lately is that the FDA’s clearance of a medical device under the 510(k) substantial equivalence process is unrelated to safety and efficacy. One notably unfair manifestation of this myth is the entry of orders in limine in a number of recent medical device cases excluding evidence of the devices’ 510(k) regulatory pathway.  Most or all of these orders rely on the Supreme Court’s 1996 opinion in Medtronic, Inc. v. Lohr, where the Court held that federal law did not preempt certain medical device warnings claims involving 510(k) devices.  In so holding, the Court distinguished the pre-1990 510(k) clearance process from the more involved and “rigorous” premarket approval (“PMA”) process and observed that the old 510(k) process was “focused on equivalence, not safety.”  518 U.S. 470, 493 (1996).

The Supreme Court did not hold that 510(k) clearance has no bearing on safety and efficacy, but the language quoted above provides a foothold for those inclined to marginalize the FDA’s role.  Indeed, we believe the Supreme Court’s view of the 510(k) process was already outdated in 1996.  As we have explained multiple times (including here), the 510(k) clearance process is keyed directly to safety and efficacy, and the Supreme Court has been retreating from Medtronic v. Lohr almost since the day the opinion was filed.

A district judge in Los Angeles recently provided what we think is the correct perspective. The case is Otero v. Zeltiq Aesthetics, Inc., No. CV 17-3994, 2018 WL 3012942 (C.D. Cal. June 11, 2018), and it is not a preemption case, or even a product liability case.  Instead, patients sued the manufacturer of a non-invasive fat-reducing system under California’s permissive consumer fraud statutes, claiming that the company made partial statements that were misleading and failed to disclose material information about the product. Id. at **1-2.

What were the misleading partial statements and omitted facts? The plaintiffs alleged that the manufacturer stated (truthfully) that the product was “FDA-cleared” and “FDA-cleared as safe and effective.” Id. at *1.  And the manufacturer failed to explain the difference between “FDA clearance” on the one hand and “FDA approval” on the other.  That’s the omission.

We have unending sympathy for individuals who fight weight gain and for whom the condescending admonition to exercise more and eat less is not helpful. Be that as it may, these claims have no arguable merit, and the district court correctly dismissed them.  With regard to the alleged “partial” representation that the device was “FDA cleared,” the district court ruled that “Plaintiffs fail to explain how that true representation—on its own—could cause reasonable consumers to erroneously believe that the system received FDA approval.” Id. at *2.  The court continued:

Plaintiffs simply point out that under California law, true statements may mislead reasonable consumers if other relevant information is omitted. Although that is an accurate legal proposition, it does not establish that “FDA-Cleared” gives rise to viable [California statutory] claims, especially because the “mere possibility” that some consumers acting unreasonably will conflate FDA-clearance and FDA-approval is insufficient.

Id. So can a true statement ever support a claim?  Under some circumstances not presented here, it appears that one could, although that would be truly exceptional case.  Can a true statement support a claim where it is merely possible that a consumer will unreasonably misconstrue it?  This court ruled that it cannot.

There is more. The plaintiffs also argued that adding the words “safe and effective” to “FDA-cleared” was misleading because that claim can only be made in connection with FDA approval, citing Medtronic v. Lohr.  (See, we were going to get back to Medtronic v. Lohr eventually, and here we are).  In the part of the order that we like the most, the district court convincingly debunked the myth that “safe and effective” is unique to the PMA process:

It appears that this argument relies on Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), which allegedly establishes that “‘[t]he § 510(k) notification process is by no means comparable to the PMA process’ and in no way warrants that the device is safe and effective.”  [quoting Plaintiffs’ brief.]  Although Medtronic observed that obtaining Section 510(k) clearance is not as onerous as the “rigorous” PMA process, the Supreme Court did not find that the former has no bearing on a device’s safety and effectiveness. In fact, Medtronic acknowledged that “the FDA may well examine § 510(k) applications . . . with a concern for the safety and effectiveness of the device . . .”  The Supreme Court later clarified “the FDA simultaneously maintains the exhaustive MPA and the more limited § 510(k) process in order to ensure . . . that the medical devices are reasonably safe and effective.

Id. at *3 (first emphasis added, second in original).  In other words, the plaintiffs (and others before them) were relying on a snippet to misread Medtronic and overstate its holding.  The district court went on to state that the FDA’s regulations connect 510(k) clearance to safety and effectiveness, too:

Indeed, the FDA regulations provide that if the agency has found that a device is substantially equivalent to—but has “technological characteristics” that are different from—a predicate device, then that means the agency has concluded that “[t]he data submitted . . . contains information, including clinical data if deemed necessary by the Commissioner, that demonstrates that the device is as safe and as effective as a legally marketed device.”

Id. (emphasis in original).  Finally, the district court noted that compliance with general and special controls, which Class II medical devices must do, further provides “reasonable assurance of the safety and effectiveness of the device.” Id. There was no deceptive, no misleading statement.  Only true representations of a medical device’s regulatory pathway.  That is not the basis for a consumer fraud claim.

Nor is it consumer fraud when a manufacturer does not explain the difference between FDA clearance and FDA approval. The district court ruled that a manufacturer’s duty to consumers is limited to warranty obligations, absent an affirmative misrepresentation or a “safety issue.” Id. at *4.  We are not sure this is an accurate statement of a medical device manufacturer’s duty to consumers, especially considering the presence of prescribing physicians (i.e., the learned intermediaries) for many devices.  We also can’t imagine a situation where a medical device manufacturer would be under a legal obligation to explain FDA regulations to consumers.  But even taking the rule at face value, the plaintiffs alleged no safety risk. Id. at *5.  Maybe they were unsatisfied with the results (i.e., effectiveness) and wanted their money back.  Whatever their beef was, it was not about safety.

The plaintiffs walked away with their core claims dismissed without leave to amend. The district court gave them another chance to plead that they actually observed other statements that they claimed were misleading, based on counsel’s representations at argument that their clients might have seen them. Id. at **5-6.  We don’t know.  It seems to us that if those facts existed, the plaintiffs would already have pleaded them.  The takeaway for us is the reality that the 510(k) process does tie into safety and efficacy.  Don’t let anyone tell you otherwise.

We have made it no secret that we think the Ninth Circuit wrongly decided Stengel v. Medtronic.  That is the case where the Ninth Circuit reversed express preemption of claims involving a pre-market approved medical device by divining a “parallel” state-law duty to report adverse events to the FDA.  As we have said here and here (and other places), we are not convinced that such a duty even exists.  That is why we liked the district court’s order from last year dismissing the Complaint in Ebrahimi v. Mentor Worldwide LLC, mainly because the district court emphasized another befuddling aspect of Stengel:  How on Earth can a plaintiff plead and prove that a purported failure to report adverse events to the FDA caused him or her any injury?

The plaintiff in Ebrahimi could not allege causation last year, and despite multiple opportunities to amend, she still can’t, resulting in another order granting another motion to dismiss.  The order is Ebrahimi v. Mentor Worldwide LLC, No. 16-cv-7316 (C.D. Cal. May 25, 2018) (you can view the order here), and the pleading at issue was the Second Amended Complaint.  The plaintiff again alleged injuries resulting from treatment with silicone-gel breast implants, and as in the initial Complaint, she alleged two failure-to-warn theories:  (1) The defendant allegedly failed to report “adverse events” to the FDA, and (2) the defendant allegedly failed adequately to warn patients and doctors. Id. at 3.

But neither of those theories stated a parallel claim sufficient to avoid express preemption. The Medical Device Amendments expressly preempt any state-law requirement that is “different from or in addition to” any federal requirement related to safety or effectiveness. See 21 U.S.C. § 360k(a).  Under the much-misunderstood “parallel claim” exception, a plaintiff can sometimes plead a non-preempted state-law claim if the asserted state law duty “parallels” the federal requirement.  Theoretically, that claim would not be “different from or in addition to” federal requirements.

The alleged failure adequately to warn doctors and patient was clearly preempted. Imposing a state-law duty to warn that is different from what federal law requires runs headlong into the Medical Device Amendments’ express preemption provision.  That is Riegel v. Medtronic to a tee.

As for the alleged failure to report adverse events to the FDA, that was not an actionable “parallel claim.” As the district court observed, “To state a parallel claim under California law, Ebrahimi ‘will ultimately have to prove that if [the manufacturer] had properly reported the adverse event to the FDA as required under federal law, that information would have reached [her] doctors in time to prevent [her] injuries.’” Id. at 3 (quoting Stengel v. Medtronic, Inc., 704 F.3d 1224, 1234 (9th Cir. 2013)).

Of course, this gloss on a parallel claim assumes that a state-law claim for failure to report claim to the FDA actually exists, and we don’t think one does. But setting aside that fundamental disagreement, this district court has again correctly zeroed in on causation as essential to pleading a claim based on an alleged failure to report adverse events.  This plaintiff failed for two reasons.  First, the “adverse events” that she alleged were not “events” at all.  Plaintiff alleged “potential statistical issues” with six post-approval studies, but none of those “issues” was an “ailment or injury resulting from gel bleed.” Id. at 3-4.  Second, and we think more importantly, the plaintiff failed to allege a “causal nexus” between her injuries and the manufacturer’s alleged failure to report:

In particular, she does not allege any specific facts showing that had [the manufacturer] not “covered up” these purported adverse events, the FDA would have required [the manufacturer] to modify its labeling and marketing materials or otherwise warn patients and doctors that “significant gel bleed was a potential risk. . . .” Therefore, Ebrahimi’s failure-to-warn claim cannot escape express preemption because she has not shown that [the manufacturer’s] failure to report adverse events to the FDA resulted in her injury

Id. at 5. We have blogged on parallel claims on multiple occasions, but Ebrahimi is particularly strong on folding causation (or lack thereof) into defining which claims avoid express preemption and which do not.  This is more than TwIqbal.  This is a district court ruling that federal law preempts your claim unless you can allege specific facts showing that the violation of a “parallel” state-law duty actually caused you harm.  Other courts should do this, too.

This time around, the district court dismissed the failure-to-warn claims without leave to amend, which makes sense. The plaintiff filed a First Amended Complaint, and then a Second, and if she has not alleged a non-preempted claim by now, she never will.  The district court did grant leave to amend for the manufacturing defect claim, based on allegations that the implant suffered from “poor workmanship” and the like. Id. at 5-6.  So she gets another chance, but if all she is left with is a manufacturing defect claim in a medical device case, she does not have much.

Kudos to the attorneys at Tucker Ellis for achieving this result, and our thanks to Dustin Rawlin for sending the order our way.

The Nebraska Supreme Court issued a gem of a Daubert opinion in an Accutane case last week, Freeman v. Hoffman-La Roche, Inc., No. S-17-800, 2018 WL 2296772, at *2 (Neb. May 18, 2018).  We don’t write much about Nebraska, but the last time we waxed on about the beauty of the Platte River Valley, we actually received a few emails.  That was when we wrote last year about the Daubert order that the Nebraska Supreme Court has now affirmed, in an opinion that is as correct and straight-headed as the order it was reviewing.  Indeed, the current opinion might actually be the end of this case, which has been kicking around in the Nebraska state courts amazingly since the late 1990s.

Nebraska keeps a low profile. Growing up in California, we were told that Nebraska is in the Midwest.  But then we went to college in New England and learned that Nebraska is just plain “West,” unqualified by any prefix.  Sandwiched in between Colorado and Iowa, we suppose that either moniker could justifiably apply.  Nebraska has the country’s largest railyard, including a tall public viewing tower from which you feel as if you are looking down on a sprawling model train set.  We know because we have been there.  We had a few hours to kill in North Platte one day (don’t ask why) and we Googled “things to do in North Platte.”

There is a city in Nebraska named Kearney and a street in San Francisco named Kearny. They are spelled differently and pronounced differently (Nebraskans say Car-nee,” while Californians say “Ker-nee.”).  But they are named after the same guy.  Go figure.

Legalwise, Nebraska is the only state with a unicameral legislature—i.e., one chamber, with no separate house and senate.  The Nebraska state motto is “Equality Before The Law.”  We like that motto a lot, and we were even more impressed when we learned that it predates the Fourteenth Amendment by one year.  We begrudgingly admit that we prefer “Equality Before The Law” over our home state’s motto, “Eureka!”  The former echoes a bedrock principle of our post-Civil War legal tradition and is both declaratory and aspirational.  California’s motto celebrates sudden wealth.  Must have been sponsored by plaintiffs’ lawyers.

We like the Nebraska Supreme Court’s opinion in Freeman v. Hoffman-La Roche a lot, too.  The plaintiff was prescribed Accutane for chronic acne and allegedly experienced Crohn’s disease in her colon and rectum as a result.  2018 WL 2296772, at *2.  There is, however, no reliable scientific evidence showing a causal relationship between Accutane and this particular condition, so when it came time to produce the expert opinions necessary to prove her claims, the plaintiff could not come through.

She banked on a single expert, whom the trial court found to have applied an unreliable methodology and who “unabashedly cherry-picked supporting studies from an overwhelming contrary body of literature.” Id. The trial court’s 42-page order is among the more thorough orders on expert opinion that you will see, and you can review our take on it here.  It’s a strong order showing that the trial court understood who this expert was and what he was offering.

The Nebraska Supreme Court agreed, and it affirmed the exclusion of the expert’s opinions and the trial court’s order granting summary judgment. The Nebraska Supreme Court must have been as impressed with the trial court’s order as we were, because it affirmed the result in just a few pages.  Under Nebraska’s standard—known as the Daubert/Schafersman framework—the court must determine whether an expert’s methodology is reliable and whether the expert applied the methodology properly to the facts. Id. at *3.

This expert employed a “weight of the evidence” methodology, under which he purported to form an opinion based on a variety of disparate data—animal tests, case reports, epidemiological studies, etc. Id. at *4.  That methodology, according to the Nebraska Supreme Court, is generally accepted.  But the problem was and remains that the expert did not apply the methodology in a reliable fashion. Id. He recognized that there was no study determining that Accutane use was a risk factor for Crohn’s disease, but theorized that it would be a risk factor for a particular type of Crohn’s disease—Crohn’s disease of the colon.

Where did he get that? Well, essentially from nowhere.  He disregarded all but one of the epidemiological studies finding no significant relation between Accutane use and irritable bowel syndrome, which is a disease of the colon.  He also found studies reporting no association between Accutane use and Crohn’s disease a “waste of time” because they did not account for the “different manifestations” of Crohn’s disease.  He admitted, though, that the scientific community does not agree that “different manifestations” of Crohn’s disease make any real difference.  He also admitted that Crohn’s disease has a different clinical presentation and different causes than ulcerative colitis, but then he still relied on one study on ulcerative colitis to support his causation opinion. Id. at *4.  So Crohn’s disease is different, except when it isn’t.

Most tellingly, the expert rejected epidemiological studies on Crohn’s disease that showed no association because they did not focus narrowly on Crohn’s disease of the colon.  But then he relied on anecdotal case reports of Crohn’s disease in Accutane patients whether they reported disease of the colon or not.  So the location of the disease was critical when it helped him, but was immaterial when it did not.  As we said before, this is called talking out of both sides of your mouth, and it is neither good nor scientific.

Taking its cue from the trial court, the Nebraska Supreme Court thus concluded:

The objective of the trial court’s gatekeeping responsibility is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field. Clearly, cherrypicking studies from an overwhelming contrary body of literature without valid, supporting reasons for why the other studies were disregarded does not meet the standard of intellectual rigor required of expert witnesses.

Id. at *5.  Without admissible expert opinion, the plaintiff tried to fill the gap with “internal documents,” but that fell short, too.  To the extent the documents were in the record, they did not show a causal relationship.  Id.  Summary judgment affirmed.  This expert’s opinion was shallower than the Platte River itself—a mile wide at its mouth and six inches deep, as some Nebraskans like to say.  We got that saying, by the way, from Bexis.

A case from Alabama this week got us to thinking about two topics on which we write a lot — innovator liability and personal jurisdiction. We thought the most interesting part of Bexis’ recent post on innovator liability was its suggestion that innovators sued over the use of generic drugs should consider objecting to jurisdiction.  After all, it is one thing to say that an innovator manufacturer can be potentially liable for a generic manufacturer’s warnings under state tort law.  It is a fundamentally different question whether the innovator manufacturer can be subject to personal jurisdiction in that state under the U.S. Constitution.  The plaintiff’s use of the generic drug cannot alone support specific personal jurisdiction over the innovator for the simple reason that the innovator did not make or sell the drug.

How does any of this relate to the aforementioned case from Alabama? Well, what if an enterprising plaintiff argued that a prescription drug manufacturer is subject to personal jurisdiction in the forum state because the manufacturer submitted a New Drug Application for its product to the FDA.  Seems like a strained proposition, but that is what the plaintiff argued in Blackburn v. Shire U.S., Inc., No. 2:16-cv-963, 2018 U.S. Dist. LEXIS 78724 (N.D. Ala May 10, 2018).  Innovator liability was not at issue in Blackburn, but innovator manufacturers are all NDA holders.  Thus, if the Blackburn plaintiffs are correct and merely submitting an NDA can result in personal jurisdiction in distant forums, then innovators will not get very far with the jurisdictional challenges that Bexis has suggested.

Fortunately, the district court in Blackburn faithfully applied the law and properly rejected NDA-based personal jurisdiction.  The plaintiff took a prescription drug and sued five different companies with “Shire” in their names over allegedly inadequate warnings after developing a kidney injury. Id. at **1-2.  The district court dismissed three of the defendants for lack of personal jurisdiction, but the plaintiff later moved to reinstate one of them, the holder of the drug’s NDA. Id. at **3-4.  According to the plaintiff, the court could exercise specific jurisdiction because the defendant, “as the NDA holder” for the drug, “placed [the drug] into the stream of commerce to reach Alabama consumers, such as himself.” Id. at *16.

The issue was specific jurisdiction, and the district court started by quoting BMS:

In order for a state court to exercise specific jurisdiction, the suit must arise out of or relate to the defendant’s contacts with the forum.  In other words, there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.  For this reason, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.

Id. at *15 (quoting Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1773, 1780 (2017) (emphasis in original).  As a general rule, it is not sufficient that a defendant might have predicted that its goods would reach the state.  Rather, the defendant must have “targeted” the forum and “purposefully availed itself of the privilege of conducting activities within the forum.” Id. at **15-16 (citations omitted).

The plaintiff did not dispute that the defendant had not actually manufactured or sold the drug. Instead, the plaintiff contended that the defendant, as the NDA holder, should be deemed a “manufacturer” for jurisdictional purposes.  The district court had little difficulty rejecting these “semantics.” First, the plaintiff argued that the defendant established sufficient minimum contacts when it sought permission from the FDA to manufacture, market, and sell the drug in Alabama and other states.  But merely seeking permission from the FDA or submitting an NDA “does not rise to the level of targeting Alabama or invoking the benefits and protections of its laws (especially when none of these activities occurred within Alabama or were directed at Alabama).” Id. at *17

Second, the plaintiff argued that the defendant purposefully availed itself to Alabama by crafting a “defective label that it knew would be purchased by Alabama residents.”  But this is just a version of “the defendant might have predicted its product would be sold in the state,” which is not sufficient to establish personal jurisdiction. Id. at *17. Third, the plaintiff argued that the that the actions of the entities that actually sold the drug should be attributed to the defendant under some sort of alter ego theory, but the plaintiffs’ proposed amended complaint did not allege any facts supporting such a theory. Id. at *17-18.

There are other aspects to the order, but jurisdiction over the NDA holder is what caught our eye. Although we are not fond of saying that an argument “proves too much,” we think that statement applies here.  If merely submitting an NDA creates personal jurisdiction in Alabama, then it would arguably create personal jurisdiction in any state within the FDA’s regulatory reach, i.e., within the United States and its territories.  “NDA holder jurisdiction” would therefore be a form of universal jurisdiction that the Supreme Court condemned in Bauman.  It does not fly.  So for now, Bexis’ advice to innovators remains sound.  Innovators and NDA holders can and should consider challenging personal jurisdiction in cases where they did not make and did not sell the drug at issue.

The Eleventh Circuit has lately become a bit like Forest Gump’s box of chocolates—you never know what you’re going to get. The news today is positive.  The Eleventh Circuit recently issued a gem of an opinion on the learned intermediary doctrine under the law of Alabama, which also happens to be the home of the aforementioned Mr. Gump.

The Eleventh Circuit is not always so good. While the court got everything right in Tutwiler v. Sandoz, Inc., No. 17-13985, 2018 WL 1719024 (11th Cir. Apr. 9, 2018), readers of our 2017 Ten Worst post will recall that the Eleventh Circuit issued three of the ten worst drug and device opinions of 2017, making it 2017’s most noteworthy performer among the circuits.  Maybe we can read something into that.  Or maybe it was fate, like a feather floating in the wind.  After all, if Forest Gump taught us anything, it was that history is arbitrary and that sometimes bad things happen to good people.  The latter, of course, is a reference to Forest’s hard-luck childhood friend Jenny, played beautifully by a young Robin Wright in a performance that was both poignant and memorable.  (Much different, by the way, from Wright’s more recent portrayal of an Amazon warrior in 2017’s reboot of Wonder Woman, which awkwardly fell flat in what was otherwise a perfectly decent superhero film.  We have not yet binged the last season of House of Cards on Netflix, so we will withhold comment on Wright as the relentlessly power-hunger President Claire Underwood.  But we digress.)

So what flavor did the Eleventh Circuit recently give us on the learned intermediary doctrine? A good one, or two, or even three.  In Tutwiler, the plaintiff alleged that she suffered pulmonary issues as a result of taking generic amiodarone for non-life threatening atrial fibrillation.  2018 WL 1719024, at *1.  According to the plaintiff, she did not receive the patient Medication Guide that the manufacturer allegedly made available to distributors and thus did not know that her doctor prescribed the drug off label. Id.

The district court dismissed the plaintiffs’ failure-to-warn claims on two bases: (1) federal regulation of generic drug warnings impliedly preempted the state-law warnings claims and (2) the learned intermediary doctrine barred the plaintiff’s claims absent allegations that inadequate warnings to the physician proximately caused the alleged injury. Id..  The Eleventh Circuit affirmed under the learned intermediary doctrine.  This is slightly surprising, given that the Supreme Court’s opinion in PLIVA v. Mensing provides such a clear path to implied preemption in failure-to-warn claim involving generic drugs.

Regardless, the Eleventh Circuit’s opinion on Alabama’s learned intermediary doctrine is in equal parts concise and well reasoned. There are three takeaway points. First, the plaintiff alleged that her physician prescribed the drug off label.  But that did not make a difference to her failure-to-warn claims, nor should it have made a difference.  We have seen other plaintiffs try to establish or amplify failure-to-warn claims by highlighting that their physicians prescribed drugs off label.  It usually does not work, for the simple reason that a prescription drug manufacturer has a duty to warn about known and reasonably knowable risks, not uses.  Of course, some states’ laws might impose a duty to warn regarding dangers of a product’s foreseeable misuse.  Be that as it may, a bare allegation of off-label use does not an inadequate warning make.

Second, and most importantly in our view, the Eleventh Circuit rejected the argument that the learned intermediary doctrine did not apply because the drug manufacturer did not adequately warn the plaintiff’s physician—and all other physicians—of the drug’s dangers.  In other words, the physician lacked sufficient information to be considered a “learned” intermediary. Id. at *3.

We have seen this argument before too, and a small number of courts have regrettably fallen for it. It is nonsense.  The learned intermediary doctrine is not so named because drug and medical device manufacturers have a duty to create “learned intermediaries.”  The manufacturer’s duty is to warn about a product’s known and knowable risks, and the learned intermediary doctrine defines to whom that duty is owed—highly educated physicians who are already “learned.”  This in turn defines the two critical elements of a warnings claim in drug and medical device cases:  (1) whether the warnings are adequate and (2) whether any inadequacy in the warnings caused the alleged injury.  Those elements are defined by reference to a reasonable physician’s skill and knowledge (his or her “learnedness”) and the warnings’ impact on the prescribing physician’s conduct.

The Eleventh Circuit explained it this way:

[I]n Alabama, the manufacturer’s duty to warn is limited to an obligation to advise the prescribing physician of any potential dangers that may result from the use of its product. The adequacy of the manufacturer’s warning is “measured by its effect on the physician, [ ] to whom it owed a duty to warn, and not by its effect on the consumer.”

. . . . In such a situation [where the patient alleges inadequate warnings] the patient must show that:  “[T]he manufacturer failed to warn the physician of a risk not otherwise known to the physician and that the failure to warn was the actual and proximate cause of the patient’s injury.  In short, the patient must show that, but for the false representation made in the warning, the prescribing physician would not have prescribed the medication to his patient.”

Id. at **2-3 (citations and quotations omitted).  In Tutwiler, the plaintiffs alleged that the drug warnings were insufficient, but that alone does not erase the learned intermediary doctrine.  She also had to allege causation.  That is where she failed:

On appeal Ms. Tutwiler again argues that the learned intermediary doctrine does not apply because she alleged that [the manufacturer] did not adequately warn Dr. Plumb. This argument, however, does not address Alabama’s separate requirement that she also plead proximate causation—that Dr. Plumb would not have prescribed her amiodarone had he known of its dangers.

Id. at *3.  Because the plaintiffs did not allege that different or additional warnings would have changed her physician’s prescribing physician, she failed to allege causation, and the learned intermediary doctrine barred her claim. Id.

Which brings us to our third takeaway.  The plaintiff could not avoid the learned intermediary doctrine by alleging that she would have avoided the drug had she known of its dangers.  “Regardless of what Ms. Tutwiler would or would not have done with the information, Alabama law requires a showing of what Dr. Plumb would have done with it.” Id. (emphasis in original).  Plaintiffs routinely give self-serving testimony or execute affidavits attesting that they would not taken the drug “had they known.”  That won’t work, at least not in Alabama.

The opinion’s only drawback is that it is not published. Still, the Eleventh Circuit has set a tone that we hope will continue throughout 2018 and beyond.  Run Forest Run.

It took a while for courts to catch on that implied preemption in drug cases depends on whether the plaintiffs can present “newly acquired evidence” of a relevant risk, but the argument seems to be gaining some traction. The first case to recognize the “newly acquired evidence” argument was the First Circuit’s Marcus v. Forest Pharmaceuticals opinion in 2015, which we covered here.  Since then, we have covered the topic at some length in connection with orders coming out of the Eliquis MDL in New York, which you can revisit here, here, here, and here.  These posts report on a series of orders in which the district judge dismissed multiple cases because federal law impliedly preempted the plaintiffs’ claims.

A district judge has now issued a similar dismissal ruling in a prescription drug case in the Northern District of Alabama, McGee v. Boehringer Ingelheim Pharm., Inc., No. 4:15-cv-2082, 2018 WL 1399237 (N.D. Ala. Mar. 20, 2018).  Here is the gist of it.  We all understand that Wyeth v. Levine opened the anti-preemption door by recognizing that an innovator drug manufacturer could sometimes change its label without the FDA’s pre-approval through the Changed Being Effected (or “CBE”) process.  Because that allowed the manufacturer, under some circumstances, to change its label to accommodate state law without running afoul of federal law, implied preemption did not necessarily apply.  Then came PLIVA v. Mensing, which held that federal law impliedly preempted state-law failure-to-warn claims against generic drug manufactures because generic manufacturers cannot use the CBE process, and therefore cannot change their labels without pre-approval.  Because generic manufacturers cannot change their labeling to comply with state law without violating federal law, state law claims must give way.

In McGee, the district court joined others in recognizing that even an innovator manufacturer cannot use the CBE process unless there is “newly acquired evidence” of a causal association between a risk and the drug.  In that event, the innovators cannot change their drug labeling without the FDA’s pre-approval and implied preemption applies.  Id. at **3-4.  “So, if a plaintiff can allege the existence of newly-acquired information that supports a labeling change under the CBE regulation, and if the manufacturer subsequently fails to show by ‘clear evidence’ that the FDA would not have approved a change to the label, then a failure-to-warn claim will survive the manufacturer’s preemption defense.” Id. at *4.

In other words, before we even get to Wyeth v. Levine’s “clear evidence standard,” the plaintiff has to plead facts establishing that the manufacturer had newly acquired information and that the new information provides reasonable evidence of a causal association between the alleged risk and the drug.

The plaintiff in McGee failed.  He alleged that the product manufacturer failed to warn adequately regarding the risk of diabetic ketoacidosis, or “DKA.” McGee, 2018 WL 1399237, at *1.  But the complaint was ambiguous on what the manufacturer knew about that condition and when the manufacturer knew it. Id. It all came down to timing.  The plaintiff alleged that there were reports of DKA before the FDA approved the defendant’s drug, but reports that pre-date drug approval obviously are not “newly acquired” information.  In addition, any allegation that the manufacturer should have alerted the FDA about the DKA risk before approval is a fraud-on-the-FDA claim preempted under Buckman. Id. at *4.

The plaintiff also alleged that the FDA issued a warning with reference to adverse events after the plaintiff allegedly experienced DKA, but “common sense dictates that any information [the manufacturer] obtained after January 17, 2015, when Mr. McGee suffered DKA, is irrelevant to Mr. McGee’s claims because [the manufacturer] could not have used that information to change its label and prevent Mr. McGee’s injury.” Id.

In theory, the plaintiff could have stated a claim with reference to information newly acquired after approval but before he used the product.  “But Mr. McGee lumps together claims and facts from before, during, and after this brief time period” and “[w]ithout clarification, the court cannot tell when Mr. McGee alleges [the manufacturer] had what information.” Id.  Alas, the court granted leave to amend.  But the district court in the Eliquis cases gave the plaintiffs additional chances to plead too, and they were unable to come up with the facts.

The plaintiff in McGee may have similar difficulty.  We know from Eliquis that dumbing down the complaint and making the allegations more vague will not work, and the district court in McGee has already faulted this plaintiff for his imprecise pleadings in any event.  The court had particular distaste for allegations that were “nothing but a useless set of legal conclusions.” Id. at *5.  The court continued:

Worse, the complaint spews these legal conclusion with few supporting facts that would assist [the defendant] in understanding what the company did wrong. This type of “shotgun” pleading fails to plead a cognizable cause of action.  If Mr. McGee chooses to file an amended complaint, he must eliminate the unnecessary and unhelpful “shotgun” assertions and claims.

Id. (citations omitted). These are pretty strong words, but nothing beyond what any court should expect under Rule 8 and TwIqbal.  The takeaway is that the “newly acquired evidence” argument is well-grounded in the law and supported now by substantial precedent.  Moreover, plaintiffs will not always have the facts to get around it.

We have written a lot about personal jurisdiction and class actions, and we have particularly questioned how, after BMS, anyone could proceed with a nationwide class action applying state law in a forum where there is no general personal jurisdiction over the defendant.  We are not the only ones posing this question, but as has so often been the case, Bexis has led the way with two extraordinarily useful posts surveying the cases.  You can review these must-read posts here and here.  You can also get Bexis’ Washington Legal Foundation white paper on the topic here.

The issue is whether a court can exercise specific personal jurisdiction over claims asserted on behalf of out-of-state class members.  Take for example a putative nationwide class action in which a California class representative sues a New York defendant in California in connection with goods purchased in California.  Can this class representative purport to represent absent class members who reside and purchased goods outside California?  We think the answer clearly is no, since those non-Californians cannot establish specific personal jurisdiction over the New York defendant in California.

Most courts agree with us, and judging from our prior posts, the issue is often decided on a motion to dismiss. But is a motion to dismiss the only way to invoke BMS and its limitations on specific personal jurisdiction in a nationwide class action?  If you move fast, you can probably use BMS to oppose class certification, which is what happened last week in another Illinois case, Practice Management Support Services, Inc. v. Cirque du Soleil, Inc., No. 14 C 2032, 2018 WL 1255021 (N.D. Ill. Mar. 12, 2018).  In Practice Management, an Illinois company filed a nationwide class action in Illinois under the Telephone Consumer Protection Act (“TCPA”) against a Canadian company after received a fax advertising a circus performance in Illinois.

The case had been proceeding in federal court for several years, apparently including briefing on the plaintiffs’ motion for class certification, when the Supreme Court decided BMS.  The defendants therefore filed a supplemental brief asserting that BMS “prevents this Court from asserting personal jurisdiction over the Defendants with respect to the claims of putative class members located outside of Illinois” and that the case was therefore relevant to class certification. Id. at *15.

The district court agreed with the defendants, and its marquee holding is that BMS’s limitations on specific personal jurisdiction apply to class actions in federal court.  After citing other district judges who had so found, the district court made this broad ruling:

This Court agrees with these courts. Indeed, it [is] not clear how [Plaintiff] can distinguish the Supreme Court’s basic holding in Bristol-Myers simply because this is a class action.  The Supreme Court has emphasized that “Rule 23’s [class action] requirements must be interpreted in keeping with Article III constraints, and with the Rules Enabling Act, which instructs that the [federal court] rules of procedure ‘shall not abridge, enlarge, or modify any substantive right.’” Amchem Prods. v. Windsor, 521 U.S. 591, 592 (1997) . . .  The Supreme Court held in Bristol-Myers that the Fourteenth Amendment’s due process clause precludes nonresident plaintiffs injured outside the forum from aggregating their claims with an in-forum resident. Bristol-Myers, 137 S. Ct. at 1781.  Under the Rules Enabling Act, a defendant’s due process interest should be the same in the class context.

Id. at *16. This reasoning is essentially bulletproof, and the district court’s holding is bookended by another significant ruling—that the defendants did not waive their personal jurisdiction challenge. Id. at *17.  Remember, the defendants litigated this case in the Illinois federal court for years, and they did not raise personal jurisdiction in their answers.  But here, BMS was a game changer.  The district ruled that a personal jurisdiction challenge would have been futile before BMS and that the defendants “timely raise[d] their personal jurisdiction defense in a motion that timely followed the Supreme Court’s decision.” Id. Because other defendants sued before BMS are surely in a similar position, the district court’s no-waiver holding should not be overlooked.

If you stopped reading here, you would have the gist of Practice Management.  But the plaintiffs made other arguments, too.  They argued that the district court could exercise jurisdiction over a nationwide class under Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), where the Supreme Court held that courts could exercise personal jurisdiction over absent class member’s claims without violating the class members’ due process rights. Id. at *16.  But that is apples and oranges.  The issue in Practice Management was the defendants’ due process rights.  An absent class member has the right to notice and opt out before being bound to a class judgment.  A defendant whose objection to jurisdiction is overruled is being compelled to answer the out-of-staters’ claims and has no choice.  That’s a big due process difference.

The plaintiffs also argued that BMS left open the question of whether the Fifth Amendment’s due process clause imposed the same restrictions on the exercise of personal jurisdiction by a federal court.  We are aware of a handful of district judges who have bought this argument, and suffice it to say that we do not agree that due process under the Fifth Amendment is fundamentally different from due process under the Fourteenth Amendment when it comes to personal jurisdiction.  In Practice Management, it did not matter:  The TCPA does not authorize nationwide service of process and looks to state law for limitations on personal jurisdiction in any event. Id. at *16.  Thus, BMS applies.

The district court therefore followed BMS and ruled that it did not have jurisdiction over nonresidents’ claims:  “Because these nonresidents’ claims do not relate to defendants’ contacts with Illinois, exercising specific personal jurisdiction over defendants with respect to them would violate defendants’ due process rights.” Id. at *18.

The practical impact of this ruling is that this class action is now limited to Illinois only. In the portion of the order that we have not discussed, the district court granted class certification.  But instead of a class of fax recipients from anywhere, the district court redefined the class to include Illinois residents who received faxes in Illinois.  Maybe that is small consolation, but it is consolation nonetheless, and by raising their challenge when they did, the defendants created a published order on personal jurisdiction that will help us all.  We will be sure to thank them when the circus is over.

The district judge in the In re Zimmer Nexgen Knee Implant Products Liability Litigation MDL issued a summary judgment order in October 2016 that we called “the best Wisconsin law decision we have ever seen.”  What was the reason for our unusually unbridled enthusiasm?  The district judge debunked the idea that the learned intermediary rule does not apply in Wisconsin.  We have often heard that refrain, but we have always been skeptical.  The truth is that Wisconsin’s appellate courts have not addressed the issue, and the In re Zimmer Nexgen judge predicted that Wisconsin’s Supreme Court would adopt the learned intermediary rule if given the opportunity.

The Seventh Circuit has affirmed that order, so its opinion now inherits the mantle of “Best Wisconsin Law Decision We’ve Ever Seen.” That title is cemented not only by the adoption of the learned intermediary doctrine, but also the rejection of a heeding presumption, which is also very helpful.  We note that the three judges who issued this opinion have spent a combined 83 years on the Court of Appeals and that the author of the opinion spent five years on the Wisconsin Supreme Court.  Maybe the latter fact was considered when assigning the opinion; maybe it was not.  Regardless, it is a clear-minded and well-reasoned opinion that we commend to anyone who has grappled with warnings claims in Wisconsin.

Here is what happened. The plaintiff sued a knee implant manufacturer alleging design, manufacturing, and failure-to-warn claims after his prosthetic knee replacement loosened, which is a known complication of all joint replacement procedures. In re Zimmer Nexgen Knee Implant Prods. Liab. Litig., No. 16-3957, — F.3d –, 2018 WL 1193431, at *1 (7th Cir. Mar. 8, 2018).  Following summary judgment, the plaintiff raised only the warnings claims on appeal and argued that the manufacturer failed adequately to warn both the plaintiff and his surgeon.

Of course, an alleged failure to warn the plaintiff raises the application of the learned intermediary rule, which “holds that the manufacturer of a prescription drug or medical device fulfills its duty to warn of the product’s risk by informing the prescribing physician.” Id. at *2.  Because neither the Wisconsin Supreme Court nor the state’s intermediate appellate courts have addressed the rule, the Seventh Circuit undertook an Erie analysis. Id. at *3.

Although we would like to believe that the Seventh Circuit reviewed our frequently updated 50-state survey on the learned intermediary rule, it is more likely the court did its own research or relied on that provided by the manufacturer.  What it found was one Wisconsin trial court opinion applying the doctrine and noting its widespread acceptance. Id. at *3 (citing Staub v. Berg, No. 00-cv-0117, 2003 WL 26468454 (Wis. Cir. Ct. Jan. 6, 2003)).  The Court also found three federal district court opinions invoking the learned intermediary doctrine under Wisconsin law, and one case called Maynard v. Abbott Labs observing that “Wisconsin does not apply the learned intermediary doctrine.” Id. On this last point, the Seventh Circuit was particularly blunt:  “That statement is incorrect—the Wisconsin Supreme Court has never weighed in on the topic [and] Maynard itself is bereft of any analysis on the point.” Id.

The Seventh Circuit also relied on the learned intermediary doctrine’s “broad support in other jurisdictions,” including 48 states where the highest court or the intermediate appellate courts have adopted the doctrine in some form. Id. Finally, the rationale for the learned intermediary rule applies even more forcefully in cases involving surgical implants because “it is not reasonably conceivable that an individual could obtain and implant a device that requires a trained surgeon without the intervention of a physician.” Id. Amen.

The following holding and the reasoning upon which it is based are what make In re Zimmer Nexgen the Best Wisconsin Law Opinion We’ve Ever Seen:

In short, there is good reason to think that given the opportunity, the Wisconsin Supreme Court would join the vast majority of state supreme courts and adopt the learned-intermediary doctrine for use in defective-warning cases like this one involving a surgical implant. We predict the state high court would do so.  Accordingly, to the extent that [the plaintiff’s] defective-warnings claim is based on [the manufacturer’s] duty to warn him, it is foreclosed by the learned-intermediary doctrine.

Id. at *4.  For good measure, the Seventh Circuit held that the plaintiff’s direct warnings claim failed also because the plaintiff did not identify any danger about which that the manufacturer should have warned him and because he had no evidence of causation.  Even if the plaintiff would have heeded a different warning, “[he] didn’t select the NexGen Flex implant.”  His surgeon did.  Id.

The Seventh Circuit likewise rejected the plaintiffs’ argument that the manufacturer failed adequately to warn the surgeon.  The plaintiff cited the defense expert’s testimony that he would have used more cement to place the implant and argued that the manufacturer failed to warn about the amount of cement needed. Id. at *4.  But that was not sufficient because “no evidence supports [the plaintiff’s] contention that it was [the manufacturer’s] responsibility to instruct surgeons about the amount of cement they should use.” Id. at *5.  This surgeon relied exclusively on his education and training, not on any materials from the manufacturer, and the plaintiff offered no expert opinion that the warnings were inadequate in any event. Id.

Finally, the Seventh Circuit rejected the warnings claims on causation. The surgeon did not read the instructions for use and could not been affected by a different warning. Id. at **5-6.  The plaintiff urged the Seventh Circuit to apply a “heeding presumption,” i.e., a presumption in the absence of proof that the surgeon would have read and heeded a proper warning. Id. at *5.  But Wisconsin law squarely places the burden of proving causation on the plaintiff.  As the Seventh Circuit held,

Here again, the state appellate courts have not addressed this doctrine [the heeding presumption]. We seriously doubt that they would adopt it in this context.  [¶]  To the contrary, as we’ve already noted, the state court of appeals has recently held that “[a] plaintiff who has established both a duty and a failure to warn must also establish causation by showing that, if properly warned, he or she would have altered behavior and avoided injury.”

Id. (citing Kurer v. Parke, Davis & Co., 679 N.W.2d 867, 876 (Wis. Ct. App. 2004)).  In other words, since Wisconsin law already places the burden of proving causation on the plaintiff, the Seventh Circuit would not alter that law by creating a presumption.

The plaintiff’s last request was to certify questions to the Wisconsin Supreme Court, which the Seventh Circuit rejected because “[n]o genuine uncertainty exists here.” We could not agree more and would not be surprised to see this opinion on our Ten Best list at year end.

The Seventh Circuit taught us recently that the letter “A” is a powerful thing. Of course, we already knew that a well-placed A can convert the ordinary (“typical”) into the extraordinary (“atypical”), the melodic (“tonal”) into the dissonant (“atonal”), and the virtuous (“moral”) into the indifferent (“amoral”).  Adding a single A to a Scrabble board can result in a seriously high-value word, provided you can manage to place it on a triple word score appended to a word that already has high value letters, like H or Y, or if you are really lucky, X.

For today, A stands for “Abbreviated”—as in Abbreviated New Drug Application, or ANDA. It’s important because the Seventh Circuit held in Guilbeau v. Pfizer, Inc., No. 17-2056, 2018 WL 476343 (7th Cir. Jan. 19, 2018), that implied preemption of a failure-to-warn claim under Pliva v. Mensing depends not on a drug’s colloquial description as “generic” or “brand name,” but rather on the nature of the drug’s approval process.  If a drug is approved through an ANDA, federal regulation of drug labeling preempts state-law failure to warn claims—even if the drug is technically the “Reference Listed Drug.”

This ruling makes perfect sense, and here is how it works. In Guilbeau, the plaintiffs alleged that manufacturers of a testosterone replacement therapy product called Depo-T failed adequately to warn regarding cardiovascular events. Id. at *1.  Depo-T, however, had a slightly unusual regulatory history.  When a manufacturer applies for drug approval under an ANDA, it has to demonstrate that the drug has the same active ingredients, effects, and labeling as a predecessor drug that the FDA has already approved. Id. at *2.  The predecessor drug is called the Reference Listed Drug. Id.

The Reference Listed Drug is usually the innovator product, approved through the NDA process and often referred to as a “brand-name” drug. The ANDA drug is often called “generic.”  If, however, an original innovator drug has been discontinued, the FDA can designate the remaining market-leading drug to take its place as the Reference Listed Drug. Id. Something like that (but not exactly) happened to Depo-T.  Because of unique circumstances surrounding the timing of the drug’s approval, the FDA classified Depo-T as an ANDA-approved drug, but the product also was designated the Reference Listed Drug for its kind of testosterone injection. Id. at *4.

So which is it? “Generic” or “brand name”?  It turns out those terms are neither useful nor dispositive when applying implied preemption.  Or, as the Seventh Circuit observed, “These colloquial terms are not quite precise enough for our purposes in this case.” Id.  The relevant distinction is NDA-approved versus ANDA-approved.  That distinction determines whether a drug manufacturer can unilaterally update its labeling through the changes being effected (or “CBE”) process and thus potentially lose the protection of implied preemption recognized in Pliva v. Mensing.  The Seventh Circuit explained it this way:

[D]espite potentially confusing references to brand-name and generic drugs—recall that the relevant FDA terms are NDA-approved and ANDA-approved—Mensing itself unambiguously refers to the lines drawn in the drug approval process as determining access to the CBE regulation. Mensing concludes that while NDA holders may use the CBE regulation to add warnings, ANDA holders (like [the manufacturer] here) may not. . . .

Despite their occasional use of these terms, the Supreme Court, Congress, and the FDA all agree that the meaningful difference is found in approval process classifications, not shorthand terms like brand-name and generic.

Id. at *6. The key point for the Seventh Circuit was that the CBE regulation is unavailable for products approved through the ANDA process.  And that goes for every ANDA product, even if it is the Reference Listed Drug—like Depo-T.  Because ANDA product manufacturers cannot change their labels unilaterally, it is impossible to change a label in response to state tort law without violating the federal duty of “sameness” that applies to all ANDA products.  That is Pliva v. Mensing implied preemption. Id. at **4-5.

The Guilbeau plaintiffs tried to avoid preemption by arguing that, because Depo-T was itself the Reference Listed Drug, the manufacturer’s duty was to have labeling the same as its own labeling.  According to the plaintiffs, that means the manufacturer could change the label all it wanted to and it would still be the “same” as itself. Id. at *5.  We appreciate the metaphysical nature of this argument:  How can something ever be different from itself?  But the answer is pretty easy.  The duty of “sameness” means that ANDA holders must match the labeling for the Reference Listed Drug as approved by the FDA, “not whatever the RLD’s manufacturer currently thinks would be best.”  Id. at *7.  In other words, “The statutes, the regulations, and the Mensing opinion do not draw the distinction plaintiffs advocate:  a difference in abilities and responsibilities between RLD ANDA holders and other ANDA holders.” Id.

In the end, ANDA drugs that are also Reference Listed Drugs are subject to a “duty of sameness indistinguishable from that of all other ANDA drugs.” Id. at *8.  They all must show that their labeling is the same as the approved labeling. Id. Thus, because Depo-T’s manufacturer “may not unilaterally change the FDA-approved language on Depo-T’s label,” a lawsuit under state law that seeks damages for the manufacturer’s failure to do so is preempted by federal law. Id.

One more important note: The Seventh Circuit held that the plaintiffs were not entitled to conduct further discovery.  The district court decided this case on a motion to dismiss, and because “preemption is a legal question for determination by courts . . . , discovery of facts may not be as vital to this inquiry as it could be to others.” Id. at *10.  With recent opinions from the Third Circuit and Ninth Circuit treating preemption as a factual issue on which discovery might be appropriate (discussed here  and here), the Seventh Circuit’s holding on discovery is most welcome.  Preemption can and should be decided on the pleadings in many instances, including the circumstances presented here.  The district court in Guilbeau correctly did exactly that, and the Seventh Circuit gave the order an A grade.

Class actions hold our interest, even though we do not see them all that often anymore in the drug and medical device space. Maybe we are the rubbernecking motorists who can’t resist slowing down to gaze at someone else’s fender bender.  Maybe we are the children at the zoo who rush to the reptile house to gawk at creatures charitably described as unsightly.  Or maybe it’s because class actions are such odd ducks.  Our civil litigation system is conceived around concepts of due process.  Yet, a class action defendant can be compelled under threat of state authority to pay money to people who have never proved a claim or an injury, and an absent class member can be bound to the result of a proceeding in which he or she has never appeared.  What could possibly go wrong?

We expect many of you are like us, so we have gathered here a trio of significant class action opinions that caught our eye over the last few weeks. All hail from California.  All are important for unique reasons.  None involves drugs or medical devices, but the opinions are relevant generally to class settlements, expert opinion, and standing to appeal—topics that readily cross over.  So, without further delay, here we go.

Nationwide Class Settlements and Choice of Law: In re Hyundai and Kia Fuel Economy Litig., No. 15-56014, 2018 WL 505343 (9th. Cir. Jan. 23, 2018).  We will start with the opinion that has received the most attention and is probably the most important—the Ninth Circuit’s opinion reversing a nationwide class settlement because the district court did not consider the impact of varying state law. Id. at **12-13.  The procedural history for these multiple class actions resulting in a nationwide settlement is long and dizzying.  The important point is that the district court certified a settlement class that offered benefits to class members (automobile purchasers allegedly defrauded by representations regarding fuel mileage) and substantial fees to class counsel.

However, in certifying the class, the district court overly relied on a well-worn principle—that the inquiry on whether common issues of law predominate is relaxed with a settlement class.  Because the district court was certifying a class for settlement only, it ruled that a choice-of-law analysis was unnecessary. Id. at *11.

That was the district court’s mistake. As the Ninth Circuit explained:

Because the Rule 23(b)(3) predominance inquiry focuses on “questions that preexist any settlement,” namely, “the legal or factual questions that qualify each class member’s case as a genuine controversy,” a district court may not relax its “rigorous” predominance inquiry when it considers certification of a settlement class.  To be sure, when “[c]onfronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” But “other specifications of the Rule—those designed to protect absentees by blocking unwarranted or overbroad class definitions—demand undiluted, even heightened, attention in the settlement context.

Id. at *5 (emphasis added, citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)).  The district court’s error therefore was threefold.  First, it failed to conduct a choice-of-law analysis to determine the controlling substantive law. Id. at *12.  Second, the district court failed to acknowledge that laws in various states materially differed from California law.  Third, the district court did not consider whether material variations in state law defeated predominance under Rule 23(b)(3).

This is not to say that the district court lacks discretion on remand to certify another nationwide settlement class. We do know, however, that the district court will have to subject any newly proposed nationwide settlement to choice-of-law analysis and will have to decide whether state laws differ and whether any differences defeat the predominance of common legal issues.

Class Certification and Admissibility of Expert Opinions: Apple, Inc. v. Superior Court, No. D072287, 2018 WL 579858 (Cal. Ct. App. Jan. 29, 2018). Our second case held that a trial court can consider only admissible expert opinion evidence submitted in connection with a class certification motion and that California has only one standard for admissibility of expert opinion, Sargon Enterprises, Inc. v. University of So. Cal., 55 Cal. 4th 747 (2012).  In other words, Sargon applies at the class certification stage, a point about which we have often wondered, but for which we never had a clear answer.

Until now.  We wrote about Sargon here when it came out in 2012.  The opinion moved California away from its unique “Kelly/Leahy” test and toward a more Daubert-like standard.  In the new California Court of Appeal case, the trial court certified a class of consumers, but expressly refused to apply Sargon to the declarations of the plaintiffs’ experts. Id. at *1.  You will not be surprised to learn that the experts in question were damages experts who offered the opinions that damages could be calculated on a classwide basis.  Id. at **2-5.  Over multiple rounds of briefing, the defendant objected to the opinions and urged the trial court to apply Sargon.  The plaintiffs resisted.

In the end, the trial court ruled that “[t]he issues [the defendant] raises with respect to the materials Plaintiffs’ experts will rely upon in forming their opinions and whether Plaintiffs’ experts’ analyses rely on accepted methodologies and whether the analyses are correct are issues for trial.” Id. at *6.  The court therefore certified the class. Id.

In reversing, the California Court of Appeal issued a very straightforward holding:

[T]he court may consider only admissible expert opinion evidence at class certification.  The reasons for such a limitation are obvious.  A trial court cannot make an informed or reliable determination on the basis of inadmissible expert opinion evidence.  And certifying a proposed class based on inadmissible expert opinion evidence would merely lead to its exclusion at trial, imperiling continued certification of the class and wasting the time and resources of the parties and the court.

Id. at *8 (internal citations omitted). The Sargon case involved expert opinion presented at trial, but the Court of Appeal saw “no reason why Sargon should not apply equally in the context of class certification motions.” Id. at *9.

Moreover, although the plaintiffs argued that the result would have been the same even if the trial court had applied Sargon, the Court of Appeal disagreed.  The experts’ opinions were crucial to the trial court’s order, and there were significant individual issues for each consumer that the experts attempted to brush over. Id. at *11.  The Court of Appeal found that if the trial court had applied Sargon to these opinions, “there is a reasonable chance it would have excluded these declarations and found plaintiffs’ showing to be lacking.” Id. The Court of Appeal found similar deficiencies with the experts’ estimate of the size of the class, making it “difficult to see on the current record how plaintiffs’ formula could be found reliable.” Id. at *12.

Class Actions and Standing to Appeal: Hernandez v. Restoration Hardware, Inc., No. S233983, 2018 WL 577716 (Cal. Jan. 29, 2018). Our final class action opinion for today is Hernandez v. Restoration Hardware, where the issue was whether an unnamed class member has standing to appeal from a class action judgment under California procedure.  The California Supreme Court decided that an unnamed class member does not have standing to appeal without first intervening as a party in the trial court.  In Hernandez, the plaintiff sued a retailer for violating credit card laws, and after several years of litigation, the trial court certified a class and held a bench trial resulting in a substantial award.  An unnamed class member received notice of the class action, but she neither intervened as a party nor opted out.  Instead, her attorney filed a notice of appearance on her behalf. Id. at *1.

The controversy began when class counsel requested a 25 percent fee. Again the absent class member did not formally intervene, but instead appeared through counsel at the fairness hearing and argued mainly procedural points. Id. at *2.  The trial court nonetheless granted the fee request, and the unnamed class member appealed. Id. at *3.

In holding that the unnamed class member was not a “party aggrieved” and had no standing to appeal, a unanimous California Supreme Court followed Justice Traynor’s 75-year-old decision in Eggert v. Pacific Sales S&L Co., 20 Cal. 2d 199 (1942).  The Court’s main point was that absent class members have ample opportunity to become parties of record in class actions, either by filing a complaint in intervention or by filing an appealable motion to set aside and vacate a class judgment. Id. at *4.  This appellant did neither, making her neither a “party” nor “aggrieved.”  The Supreme Court also rejected the invitation to follow Rule 23 of the Federal Rules of Civil Procedure, which gives class members who informally object to settlement the right to appeal. Id. at *5.  The federal approach does not address California’s statutory requirement for appeal, and it cannot be reconciled with the controlling authority, Eggert.  As the California Supreme Court concluded,

Following Eggert and requiring intervention does not discourage unnamed class members from filing a meritorious appeal.  Rather, it continues a manageable process under a bright-line rule that promotes judicial economy by providing clear notice of a timely intent to challenge the class representative’s settlement action.  Formal intervention also enables the trial court to review the motion to intervene in a timely manner. . . .  By filing an appeal without first intervening in the action however, [the appellant] never became an “aggrieved party” of record to the action as our law requires.

Id. at *7. According to the California Supreme Court, this absent class member made the strategic decision to wait and see if she agreed with the result in the trial court, and that was not sufficient to perfect the right to appeal. Id. The Court also reasoned that the prevailing rule protects against wasteful and meritless objections, recognizes the fiduciary duties of class representatives and their counsel, and respects the doctrine of stare decisis. Id. at **7-8.

There you have it—all you need to know about three important decisions. Someday you might need them.