Photo of Steven Boranian

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.

We were not affected by the recent ransomware attack that disabled computers worldwide, including in multiple public hospitals in the UK. At least not yet.  For those who have never had the pleasure or who otherwise do not follow cybersecurity news closely, “ransomware” refers to an attack on a computer system that encrypts the user’s data—making it unavailable—and then informing the user where it can send payment in exchange for the encryption key.  It’s diabolical, and it preys upon users who have an immediate and urgent need for their data—such as healthcare providers in the process of providing life-saving and life-improving care.  The topic is of particular interest to us because healthcare data presents the classic data security conundrum:  Access to healthcare information improves patient care, yet the private nature of health information mandates tight control to prevent unauthorized access.

So it got us to thinking, what about the government? What are federal agencies doing to protect the enormous volumes of private information that they hold?  Regulators such as FDA, the FTC, and the Department of Homeland Security have stridently and justifiably insisted that our clients have policies in place regarding the protection of private information.  We would expect no less.  But is what’s good for the goose also good for the gander?

It just so happens that President Trump signed an executive order last week calling for federal agencies to get their cybersecurity houses in order. In its Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure, the administration set forth three cybersecurity priorities:  (1) Cybersecurity of Federal Networks, (2) Cybersecurity of Critical Infrastructure, and (3) “Cybersecurity for the Nation.”  We put the last one in quotes because it is so broad that it could mean anything.  You can link to the executive order here.  You can also take a look at what our colleagues at Reed Smith’s Technology Law Dispatch have to say about the executive order here.

The executive order directs federal agencies to take stock of their systems and prepare reports to be submitted ultimately to the Assistant to the President for Homeland Security and Counterterrorism, a position that has existed in some form since about a month after the attacks of September 11, 2001. Lots of reports.  By our count, the executive order calls for more a dozen categories of reports prepared by federal agencies on such topics as risk mitigation, budget concerns, the transition of computer systems, and authorities and capabilities that can be deployed against cyberattack.  It’s a lot, and on an extremely aggressive time schedule—the first of the reports are due in less than 60 days.

The section on Cybersecurity of Federal Networks starts with certain findings, including this one: “The executive branch has for too long accepted antiquated and difficult-to-defend IT.”  We know from the Jason Bourne movies and any number of television shows about super-secret government agencies that the federal government has multiple windowless rooms filled with slick computer systems that know all and can do all, and look really cool in the process.  We also know from our very brief sojourns into government service that reality does not match the movies.  Technology is certainly better now than it was when we last plied government halls, but we would describe the available technology then as piecemeal, even haphazard.  It’s like when the government renovated the Pentagon years ago and found multiple antennas on the roof that no one what they did or to whom they transmitted.  The technology had outlived the people who implemented it.

The Trump administration wants to fix that. The first and maybe the most important provision is that, effectively immediately, all government agencies will use the Framework for Improving Critical Infrastructure Cybersecurity developed by the National Institute of Standards and Technology.  The NIST Framework is a published framework for computer security that is highly regarded and widely referenced in private industry.  It dates back to 2014, and its hallmark is proactive risk management.  As we reported here, the FDA has recommended that medical device manufacturers adopt parts of the Framework in designing their own cybersecurity programs.

It therefore came as a surprise that the government has not already itself widely adopted the NIST Framework. Nor will all federal agencies be able to do so “immediately.”  The NIST published its draft Implementation Guidance for Federal Agencies just the other day, and the comment period remains open through June 30, 2017.

Timing aside, adoption of the NIST Framework is a welcome development. It addition, each agency head (including presumably the FDA head) has to prepare a risk management report within 90 days that sets forth the agency’s direction and its plan to implement the Framework.  Then within another 60 days, the President wants an overall plan.  Again, these are very aggressive time frames, and we will see if they permit any real analysis or viable plans of action.

The executive order also makes it’s the policy of the executive branch to build and maintain a “modern, secure, and more resilient executive branch IT structure.” Agency heads “shall show preference” to shared IT services, and a committee of officials will prepare a report, again within 90 days, on transitioning federal agencies to shared IT services.  This provision seeks to make the government technology bureaucracy reasoned and consistent.  Reality may get in the way.  We are not sure that every agency head will even be capable of surveying and describing his or her agency’s systems within 90 days, but it is nice that they now have to try.

The section on Cybersecurity of Critical Infrastructure pledges the government’s support for the cybersecurity risk management of the owners and operators of the nation’s critical infrastructure, and it calls for additional assessment, reporting, and plans. The deadlines given for these efforts are characteristically short—ranging from 90 to 240 days.  The seemingly all-encompassing section on “Cybersecurity for the Nation” is really about one thing:  Promoting an open, interoperable, reliable, and secure Internet for all.  The Internet is at the center of everyday business and living, and it will only get more pervasive.  We heard on this morning’s news that Google is developing “ambient” networking technology, under which the Internet will be all around us.  A device in your home will, for example, monitor your schedule and tell you when you take your meds, whether your flight is delayed, or whether you need to leave extra time to pick up your spouse at the train station.  The potential for inconvenient attacks, or worse, clearly exists.

The executive branch aims to secure the Internet from cyber threats through protection against adversaries, cooperation with international allies and other partners, and development of a domestic workforce trained and equipped to promote these ends. Of course, there will be more reports, and we will be interested to see what the various agency heads will have to say.

No one can be all that happy with how the Accutane mass tort proceeding has played out in New Jersey. We have no involvement in that proceeding, but we have monitored it from afar, and it has been extraordinarily contentious.  The rub is that the parties have very little to show for the effort.  The latest shoe dropped last week when the New Jersey Appellate Division vacated (again) a jury verdict in favor of an Accutane plaintiff.  The unpublished opinion in McCarrell v. Hoffmann-La Roche, Inc., No. A-4481-12T1, 2017 WL 1683187 (N.J. App. Div. May 2, 2017), is interesting, both in its treatment of expert opinion and evidence on causation under Alabama law.

But before we get to that, let’s review very briefly what has come before. When plaintiffs first started suing in earnest over Accutane, they alleged a variety of injuries, including psychiatric conditions, birth defects, kidney disorders, vision problems, and musculoskeletal problems.  There has been some litigation on these issues, but the proceedings in New Jersey and elsewhere have focused largely on gastrointestinal disease, including inflammatory bowel disease.  IBD can be every bit as bad as the name makes it sound, and we can see why patients who experience IBD can garner substantial sympathy.  But the warnings on gastrointestinal disorders are robust, and a federal court in Florida ruled in 2012 and 2013 that the Accutane warnings as to IBD were adequate as a matter of law.

But not in New Jersey, where several cases have proceeded to trial. We have not surveyed the New Jersey verdicts lately, but the last time we did, we counted about half a dozen verdicts—all of which were vacated, with others pending on appeal.  There certainly are others that we are not counting here, but the trend is unmistakable:  Multiple trials presided over by a New Jersey mass tort judge who was championed by some as a hard-working jurist and vilified by others for placing a thumb firmly on one side of the scale.  Substantial verdicts in favor of the plaintiffs.  All of them vacated.  In the mass tort context, vacated verdicts represent a massive waste of both sides’ time and money.

Which is what happened again last week in McCarrell.  The case was first tried to a jury in 2007, resulting in a verdict for the plaintiff.  But the Appellate Division vacated that award and remanded for a new trial because of erroneous evidentiary rulings. McCarrell, 2017 WL 1683187, at *1.  The parties therefore tried the case again in 2010, which resulted in a larger verdict for the plaintiff.  On appeal from the second verdict, the Appellate Division reversed again and held that the claims were time barred.  But the New Jersey Supreme Court disagreed and remanded the case back to the Appellate Division to address the remaining issues on appeal. Id. at **1-2

That remand resulted in last week’s opinion, and the Appellate Division reversed again.  First, the trial judge ordered that it would not allow duplicate expert testimony.  As a result, the defense had its expert gastroenterologist address certain studies, but was prohibited from having an epidemiologist corroborate that testimony. Id. at *2.  The rubber hit the road in closing argument when plaintiff’s counsel emphasized to the jury that the defense gastroenterologist’s opinion stood alone.  That was a problem, particularly once the Appellate Division ruled in 2013 that “trial courts should not prohibit overlapping expert testimony in complex matters on a ‘central issue of liability.’” Id. at *2 (citing McLean v. Liberty Health System, 430 N.J. Super. 156 (App. Div. 2013)).  Under that ruling, the trial judge’s decision to disallow overlapping expert testimony about scientific studies was error. Id. at *3.  And in light of counsel’s emphasis in closing on the defendants’ expert as a “lone outlier,” the error was prejudicial.

Second, the court held that the plaintiff had not met his burden of proving causation. This was a failure-to-warn case, but no one asked the prescribing physician whether her decision to prescribe Accutane would have been different if the drug had come with a stronger warning. Id. at *4.  Regular readers of the blog know this is warnings causation 101, and because the plaintiff bears the burden of proof under the applicable law (Alabama in this case), the absence of this essential evidence caused his warnings-based claims to fail as a matter of law. Id. We agree wholeheartedly with this ruling, although we are somewhat puzzled that the Appellate Division suggested going out and deposing the doctor again.  Sure, the doctor was deposed in 2007, but the burden of proving warning causation is not obscure now and was not obscure then.  It is not obvious to us that a second bite at the apple is warranted, nor do we know if the prescriber can even be re-deposed, after another decade has passed.

So what do we mean when we say that no one can be happy with this? The opinion gives parties on both sides more leeway in presenting expert testimony, and we have guidance on proving failure to warn under Alabama law.  But in the larger scheme, this case is apparently heading for a third trial, having first b een tried ten years ago.  Other verdicts from New Jersey have met the same fate.  Plaintiffs are left empty handed, and the defendants continue to bear the burden of vigorous litigation in New Jersey, whereas the federal MDL wrapped up in the defendants’ favor years ago.  In the end, McCarrell is a defense win, but the cost has been high.

 

Last September we expressed our curiosity over Wisconsin cheese curd and our distaste for an order from the Western District of Wisconsin rejecting implied preemption in an amiodarone case. As we explained then, the district court allowed a claim alleging that the defendants failed to provide medication guides for distribution with amiodarone prescriptions. The basis for the claim was the federal regulation requiring manufacturers of some prescription drugs to make medication guides available either by providing a sufficient number of guides to distributors and dispensers or by providing the means to produce guides in sufficient numbers. Marvin v. Zydus Pharmaceuticals (USA) Inc., 203 F. Supp. 3d 985, 986 (W.D. Wis. 2016) (citing 21 C.F.R. §§ 208.1, 208.24(b)).

A state law failure-to-warn claim based on a violation of federal prescription drug regulations? Sounds like implied preemption to us, but the district court in Wisconsin concluded that this very federal-sounding claim was actually based on an “independent” state duty to warn.  Go figure.

That cheesy conclusion spilled over last week into an amiodarone case in Illinois, which again alleged that the defendants failed to provide medication guides. And again the district court concluded that federal law did not impliedly preempt the plaintiffs’ state law tort claims based on a failure to warn.  The case is Hernandez v. Wyeth-Ayerst Laboratories, Inc., No. 15 C 11176, 2017 U.S. Dist. LEXIS 58743 (N.D. Ill. Apr. 18, 2017), and if anything, these plaintiffs were even more forward about co-opting federal regulations that the plaintiffs were in Marvin.

The Hernandez plaintiffs alleged two violations of the FDCA:  First, that the defendants violated the FDCA by promoting amiodarone off label as a first-line anti-arrhythmic medication; and second, that the defendants failed to provide medications guides. Id. at *3.  The generic drug manufacturer defendants justifiable argued that these claims were preempted under PLIVA v. Mensing and Buckman v. Plaintiffs’ Legal Committee, but the district court rejected both arguments.

The district court’s discussion of Mensing is a bit confused.  Applying the often-misunderstood “parallel claim” exception to express preemption, the court held that because the plaintiffs were alleging a violation of federal regulations, their claim was “parallel” to federal law and thus was not preempted. Id. at **8-10.  The problem with this is that Mensing did not apply express preemption.  It was an implied preemption case, and the district court had no business applying “parallel claim” analysis to implied preemption, where a “parallel claim” exception does not exist.  The district court even concluded that the plaintiffs’ claim was “not expressly preempted.” Id. at *9.  That is fine as far as it goes.  But we would be surprised if the generic defendants argued express preemption.  And even if they did, disposing of express preemption does not dispose of implied preemption.  They are different things.

What cases did the district court cite? One was the Seventh Circuit’s opinion in Bausch v. Stryker Corp., for which we have expressed our vigorous disagreement multiple times (including here and here), and another was a district court case called Garross v. Medtronic.  Both addressed express preemption as applied to pre-market approved medical devices.  Apples versus oranges.  Or if staying with our cheese theme, cheddar versus Limburger.

The district court’s treatment of Buckman fares no better.  According to the court, the “plaintiff alleges that [the generic manufacturer defendant] violated its duty to warn under Illinois law because it violated the FDCA’s requirement to provide distributors with medication guides.” Hernandez, at *9 (emphasis in original).  Did you catch that?  The plaintiff was suing because the defendant alleged violated the FDCA.  The court even put “because” in italics.  This is a recipe for implied preemption under Buckman, and it runs directly into section 337(a) of the FDCA, which gives the government exclusive power to enforce the Act.  We have often observed that plaintiffs seeking to avoid preemption have to weave their way through a “narrow gap” by alleging that are suing for a violation of the FDCA, but not because the defendant violated the FDCA.

These plaintiffs were not even close. The district court acknowledged they were suing because the defendants violated the FDCA, but it somehow found that Buckman did not apply.  Recall that Buckman held that claims were preempted where “federal enactments [were] a critical element” in the plaintiffs’ case. Buckman, 531 U.S. 341, 352 (2001).  That seems to describe the Hernandez plaintiffs’ case to a tee.  The district court also did not discuss, or even acknowledge, section 337(a), which prohibits private causes of action to enforce the FDCA.  The district court again cited Bausch, and it observed that the generic defendant did not cite an express preemption provision.  It did not otherwise explain how these plaintiffs could so overtly purport to enforce the FDCA through a state law failure-to-warn lawsuit.

The defendants also argued statute of limitations and that the plaintiffs did not sufficiently plead their claims, but the former argument failed, and latter resulted only in leave to amend. For our part, summer is approaching, and we still have not tried Wisconsin cheese curd.  Maybe we will soon have the good fortune of attending a Midwestern county fair, where we are told cheese curd runs in abundance.  Or maybe we’ll just go to Chicago and have a hot dog.

A funny thing happened on the way to a defense verdict last year—after the jury decided that the defendant’s product was not defective, the MDL judge told the jurors that perhaps they did not “fully understand” and instructed them to try again. So the jury went back into the jury room, and having been duly admonished by the court, the jury changed its mind and returned a verdict for the plaintiff.  We commented fully on the proceedings here, and while we will not repeat all the gory details, trust us, the proceedings were odd.

The Eleventh Circuit has now affirmed the plaintiff’s verdict, and the defendant has valid reasons to be unhappy. Not only did the Eleventh Circuit place its stamp of approval on the do-over verdict, it applied a hopelessly muddled view of comment k.

The case is Christiansen v. Wright Medical Technology, Inc., No. 16-12162, 2017 WL 1046088 (11th Cir. Mar. 20, 2017).  The plaintiff alleged that a defect in the defendant’s metal-on-metal hip replacement device caused him an injury, and he asserted product liability claims governed by Utah law. Id. at *1.  As luck would have it, the case was selected as a “bellwether” trial case in the Conserve Hip Implant MDL, and after a trial that lasted about a week, the jury returned a verdict finding that the product was not defectively designed. Id. The jury also found that the defendant had made negligent misrepresentations and awarded compensatory and punitive damages. Id.

Under Utah law, this is a defense verdict. The Utah Products Liability Statute covers all claims for injuries allegedly caused by defective products, and it requires proof of a product defect.  As a result, once the jury found that the product was not defective, nothing else mattered.  The defendant won.  The court, however, ruled that the verdict was “inconsistent” because the jury found no defect on the one hand, but also found negligent misrepresentation on the other. Id. That is why the court re-instructed the jury, resulting in the second verdict finding a product defect. Id.

The Eleventh Circuit affirmed this result, and its opinion relies on the assumption that the first verdict was “inconsistent.” Id. at **5-7.  But what inconsistency?  The jury made two core findings—no defect and negligent misrepresentation.  Maybe the evidence supported those findings and maybe it did not, but it is very possible for a defendant to make a misrepresentation and also sell a product that is free from design defects.  (There were no manufacturing or warning-based defect claims, in case you were wondering.)  The finding of no defect makes the misrepresentation finding meaningless under Utah law.  They are not “inconsistent.”  The former just deprives the latter of any legal consequence.

For whatever reason, the district judge saw an “inconsistency,” and the Eleventh Circuit deferred. The Eleventh Circuit tries to explain the proceedings in the district court, but in the end, it really did not explain why the initial verdict called for further deliberation.  It seems to have taken that for granted.

There is a second problem with the Eleventh Circuit’s opinion—it declined to apply Utah’s adoption of Comment k and gave a reason that simply does not hold up. Comment k to section 402A of the Restatement (Second) or Torts provides protection against strict liability claims involving “unavoidably unsafe products.”  Nearly all states have adopted some version of Comment k—some apply it on a case-by-case basis; some treat it as an affirmative defense; some apply Comment k as a matter of law in all cases involving prescription medical products, recognizing that all drugs and medical devices have both benefits and risks.

Utah has adopted Comment k, but has placed the burden on the defendant to prove certain elements to invoke Comment k as a defense. However, in cases involving prescription medical products, the Utah Supreme Court has “rejected the case-by-case approach and adopted Comment k as a categorical bar against strict liability.” Id. at **7-8 (quoting Grundberg v. Upjohn Co., 813 P.2d 89 (Utah 1991)).  Comment k therefore applies in Utah across the board, and the Defendant justifiably argued to the Eleventh Circuit that Comment k applied and that it should result in a judgment for the defense.

The Eleventh Circuit “predicted” Utah law differently. According to the Eleventh Circuit, the Utah Supreme Court applied Comment k to prescription drugs because they are FDA approved. Id. at *8.  It therefore held that the Utah Supreme Court would not apply comment k categorically to medical devices. Id. at **8-9.  It further held that, even if Comment k applied to “FDA-approved medical devices,” the defendant had not carried its burden of proving that the product was FDA approved. Id. at **8-9.

There is so much wrong with this holding. To start, with the Utah Supreme Court having decided that Comment k applies to prescription drugs, there is no basis on which to predict that Utah law would be different for prescription medical devices.  The rationale for applying Comment k is the same—no matter how you design a drug or medical device, there will always be risks. (See here for our research post on comment k, including a 50-state survey.)  In addition, the Eleventh Circuit’s fixation on FDA approval to distinguish prescription drugs from prescription medical devices ignores that the FDA regulates medical devices, too.  It also ignores that drugs are approved for marketing in different ways—some through full-blown new drug applications, some under pre-NDA rules, some through a showing of substantial equivalence, etc.  Comment K applies to all of them, and the Utah Supreme Court has never drawn a distinction.  There is no reason to believe it would draw a distinction between drugs and medical devices because of their respective regulatory pathways either.

Finally, the Eleventh Circuit held that Comment k would not help the defendant in any event because the defendant did not prove that the product was approved by the FDA. This is wrong.  Utah’s version of Comment k requires the defendant to prove certain elements, but FDA approval is not one of them.  Neither the Utah pattern jury instruction nor the instruction given by the district court called for the defendant to prove FDA approval.  Yet, the Eleventh Circuit based its opinion on this purported failure of proof.

We can’t help but consider the possibility that this plaintiff’s judgment had more staying power because it came out of an MDL “bellwether” trial. Maybe.  Maybe not.  It seems to us that if you assume that “bellwether” verdicts actually help the parties value other cases, a defense verdict is as useful as a plaintiff’s verdict.  Both have dollar amounts attached to them, and the number attached to the defense verdict is zero, plus the defendant’s costs.  That should have been the result in Christiansen.

“The facts and data considered by the witness . . . .” That is what expert witnesses must disclose to the other side after forming their opinions, although the rule was not always this way.  Before 2010, you had to disclose “the data or other information” considered by an expert.  But for many that was too broad, potentially encompassing attorney thoughts or impressions.  So the committee changed the rule, and we now have the “facts and data” standard.  As the committee explained, “The refocus on ‘facts or data’ is meant to limit disclosure to material of a factual nature by excluding theories or mental impressions of counsel.”  Rule 26(a)(2)(B)(ii) advisory committee note to 2010 amendment.  We wrote on the 2010 changes to Rule 26 here.

Your work product is therefore somewhat safer from disclosure than it once was, but if an expert considered “facts and data,” those facts and data must be disclosed. That is the lesson of In re Benicar (Olmesartan) Products Liability Litigation, No. 15-2606, 2017 WL 970263 (D.N.J. Mar. 13, 2017), where an MDL judge ordered the plaintiffs to produce medical records upon which their experts had relied.

The records at issue appear to have involved patients other than the plaintiffs, which we guess is why the production of medical records was the least bit controversial.  As it turned out, those other patients’ records became discoverable when two experts considered them in forming their opinions.  One, for example, reviewed the charts of certain patients and relied on them in reaching his ultimate conclusions. Id. at *3.  The other similarly confirmed that his review of a number of patient charts “contributed to his thinking.” Id.

Continue Reading All Things “Considered”: Plaintiffs’ Experts Ordered To Produce Patient Records

The Defendant/Petitioner has filed its merits brief in the U.S. Supreme Court in BMS v. Superior Court.  This is the case where the California Supreme Court expanded specific personal jurisdiction beyond recognition by basing specific jurisdiction on a pharmaceutical company’s forum contacts involving different products and people other than the plaintiffs.  We wrote about the opinion and its problems here, here, and here, and the opinion came in at number one on our 2016 worst ten list.

As expected, the Petitioner pharmaceutical company has put forth compelling arguments that the California Supreme Court’s version of specific jurisdiction runs against binding precedent and is an all-around bad idea. The Petitioner is also joined by a number of amici, most notably the United States of America.  (You can view all the briefs on the SCOTUSblog here.)  If we have been critical of the Solicitor General in the past, we will voice no concern this time around.  The SG hit the nail on the head, and the United States’ brief reinforces the Petitioner’s very strong arguments—and adds another, which we will get to in a minute.

First, the briefs. The general thrust of both briefs is that the California Supreme Court’s “sliding scale” approach to specific jurisdiction impossibly contradicts binding precedent.  A court simply court cannot base specific jurisdiction on a defendant’s forum contacts involving other individuals and other products, no matter how intense those contacts are.

For the Petitioner, it comes down mainly to one concept—proximate causation. That is to say, for a claim to “arise from or relate to” a defendant’s forum contacts, the defendant’s activities in the state must be a proximate cause of the plaintiff’s lawsuit.  Take, for example, this opening salvo:

The [California Supreme Court] concluded that Bristol-Myers could be haled into California on respondents’ claims merely because Bristol-Myers sold Plavix to other persons and developed other products in the State.

            That is not how specific jurisdiction works.  Since International Shoe Co. v. Washington, 326 U.S. 310 (1945), this Court has made clear time and again that “specific or case-linked” jurisdiction requires a causal connection between the defendant’s forum conduct and the litigation. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).  That bedrock requirement ensures that a common connection links the defendant, the forum, and the litigation; that States do not assert jurisdiction over matters occurring and directed entirely outside their borders; and that any litigation to which a defendant is subject is a direct and foreseeable consequence of its in-state activities.  Courts cannot dispense with this causation requirement because a defendant has wide-ranging contacts with a State.  Only general jurisdiction allows that, and then only where the defendant is at home.

Petitioner’s Br. at 2. This is (or at least should be) an uncontroversial description of specific jurisdiction, and the Petitioner draws from it that specific jurisdiction requires a “causal connection” between the defendant’s forum contacts and the plaintiff’s claims. Id. at 14.

Continue Reading Solicitor General Urges Supreme Court to Reverse California’s Ill-Conceived Version of “Specific Jurisdiction”

It is has been a rough few weeks for forum-shopping litigation tourists. We wrote the other day on the Missouri Supreme Court’s landmark opinion in State ex rel. Norfolk Southern Railway Co. v. Dolan, which held that Missouri’s courts do not have jurisdiction over out-of-state controversies involving out-of-state defendants.  It has long been the practice of many plaintiffs’ lawyers to group hundreds of claims together in Missouri state court because they prefer that venue and for the sake of their own convenience.  The Norfolk Southern Railway case should put an end to that.

Another bulwark against litigation tourism is the Class Action Fairness Act, which Congress enacted in 2005 to address abuses in aggregated litigation. Among other provisions, CAFA makes actions combining 100 or more plaintiffs removable to federal court as “mass actions.”  We have written a lot on mass actions, including multiple posts on removing mass actions to federal court even when plaintiffs’ counsel try to break their claims into multiple actions of less than 100 plaintiffs.  A not-too-old post on the topic is here, and you can link from there to numerous others.  The gist is that transparent gamesmanship should not prevent federal courts from retaining jurisdiction over hundreds of plaintiffs bringing coordinated claims, even when plaintiffs’ lawyers go through their usual machinations to avoid it.

That is what happened in Portnoff v. Janssen Pharmaceuticals, No. 16-5955, 2017 WL 708745 (E.D. Pa. Feb. 22, 2017), and the district court’s order denying the plaintiff’s motion to remand is really interesting.  First some background:  Six plaintiffs’ law firms filed a “Petition to Consolidate and for Mass Tort Designation” in the Philadelphia Court of Common Pleas requesting consolidation of 87 pending pharmaceutical cases.  They withdrew the petition about two weeks later and filed a second petition in its place. Id. at **2-3.

Continue Reading An Intelligent Treatment of “Mass Actions” in Pennsylvania

A case from Douglas County, Nebraska, caught our eye this week for a couple of reasons. It’s a great Daubert order in an Accutane case in Nebraska state court.  In addition to that, this blogger’s mother grew up on a farm in Douglas County, Nebraska.  It was a lovely 80-acre parcel terraced into a gentle slope leading down to the Platte River.  The Platte River is a shallow meandering river—a mile wide at the mouth and six inches deep, as some Nebraskans like to say—and it flows from west to east, eventually emptying into the Missouri River, and then on to the great Mississippi.  It forms the western boundary of Douglas County.

The Platte River is no use as a commercial waterway, but because of the gradual slope of the Platte River Valley, it has been a highway into the Rocky Mountains for hundreds of years. Traders established trails through the Valley, followed by wagon trains carrying settlors and ultimately surveyors for the Trans-Continental Railroad.  When the Trans-Continental Railroad was built, the government’s policy toward public lands was one of disposition.  The government therefore divided parcels along the railroad’s route into 160-acre tracts and gave every other parcel to the railroad companies, with the government keeping the rest for sale to other private landowners.  This checkerboard land ownership pattern persists to this day.  We have not done the research, but we would wager a bushel of corn that some grantee around the turn of the twentieth century split his 160-acre grant in half and sold it to our great grandfather—resulting in our lovely 80-acre farm in Douglas County.

The Douglas County judge who decided Freeman v. Hoffman La Roche, Inc., No. CI 10-9312802, 2017 WL 385440 (Dist. Ct. Neb. Jan. 23, 2017), may or may not live within view of the Platte River, but she produced an extraordinarily exacting Daubert order that came to the correct result—the exclusion of causation opinion because the expert had not applied a reliable methodology.  The plaintiff alleged that her Accutane use resulted in Crohn’s disease, which the defendants contested.

The battle came down to experts, and it is clear that this case is not the first rodeo for these experts or the lawyers. The plaintiff’s causation expert was Dr. David Sachar, who has been a plaintiffs’ expert for 15 years.  He offered the opinion that Accutane caused the plaintiff’s Crohn’s disease, but he did not follow any accepted scientific method.  Instead, he purported to rely on “lines of evidence” to draw his conclusions.

What are “lines of evidence”? Well, it’s not all that clear to us, but the expert identified nine categories of information:  (1) Animal studies; (2) class effect; (3) biological plausibility; (4) dose relationship; (5) clinical studies; (6) adverse event and challenge/de-challenge/re-challenge reports; (7) the defendants’ internal documents; (8) published medical literature; and (9) epidemiological studies. Id. at *8.  This list looks good on its face, but it does not disclose a scientific method, let alone application of a scientific method to draw a valid conclusion. Put another way, this expert was probably able to produce a nice long report—assuming that expert reports are required and/or permitted under Nebraska procedure.  But a long-winded report is not necessarily good science.

Continue Reading Nebraska Daubert Order Finds Expert a Mile Wide at the Mouth, But Only Six Inches Deep