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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.

When Congress enacted HIPAA and its Privacy Rule in the mid-1990s, it was a big deal. Healthcare providers surely protected patient privacy in the pre-HIPAA days, but the federal statute gave them a standard set of rules with which to comply and a uniform referent against which to gauge their privacy practices.  All told, HIPAA’s impact has been both pervasive and positive.  Moreover, one of its lasting virtues is that, because the statute created no private right of action, you can’t get sued under HIPAA.

At least not directly. A plaintiff cannot file a complaint outwardly claiming damages for a “HIPAA violation,” but that has not stopped some state courts from permitting negligence claims using HIPAA to define a standard of care.  The latest is Connecticut, whose Supreme Court recently created the new tort of “unauthorized disclosure of confidential information.”

The case is Byrne v. Avery Center for Obstetrics and Gynecology, P.C., 327 Conn. 540 (2018) (to be published in A.3d), and its outcome will give healthcare providers in Connecticut even greater pause when producing medical records in litigation.  In Byrne, the plaintiff/patient instructed the defendant healthcare provider not to release her medical records to her ex-boyfriend, who later filed a paternity action against the plaintiff. Id. at 542.  The defendant healthcare provider then received a third-party subpoena in the paternity action ordering a records custodian to appear and produce the patient’s medical records, which the provider did by mailing records directly to the court a few days later. Id.

This is where Connecticut’s new tort comes in. Alleging that her ex-boyfriend viewed her records in the court file and then harassed her, the patient sued her doctor for breach of contract and negligence in multiple forms. Id. at 543-44.  The trial court ruled initially that the negligence claims were preempted because the plaintiff was using HIPAA as the basis for her claims. Id. at 544-545.  The Connecticut Supreme Court, however, reversed that order in 2014 and held that HIPAA did not preempt the claims.  Given the purpose of HIPAA—i.e., to enact uniform rules—and the transparent nature of the plaintiff’s effort to enforce HIPAA through civil litigation that the statute does not permit, we would have criticized this ruling had we written on it when it came out in 2014.

But that is not today’s story. On remand, the trial court again ruled for the defendant and granted summary judgment on the basis that Connecticut law did not recognize a common law claim for breach of physician confidentiality. Id. at 548.  On appeal, the Connecticut Supreme Court filled that gap:

We conclude that recognizing a cause of action for the breach of the duty of confidentiality in the physician-patient relationship by the disclosure of medical information is not barred by [Connecticut statutes] or HIPAA and that public policy, as viewed in a majority of other jurisdictions that have addressed the issue, supports that recognition.

Id. at 550. So Connecticut patients not only can sue their doctors now for negligently disclosing their medical information, but can do so for responding to a subpoena in a pending legal action.

The core of the opinion examines both federal law and other states’ laws to conclude that the “majority” support the new cause of action. On federal law, the Court held that HIPAA supported a common law claim because Connecticut doctors follow HIPAA anyway and that a state-law tort would support HIPAA:

We further conclude that, to the extent it has become common practice for Connecticut health care providers to follow the procedures required under HIPAA in rendering services to their patients, HIPAA and its implementing regulations may be utilized to inform the standard of care applicable to such claims arising from allegations of negligence in the disclosure of patients’ medical records pursuant to a subpoena.

. . . [N]egligence claims in state courts support at least one of HIPAA’s goals by establishing another disincentive to wrongfully disclose a patient’s health care record.

Id. at *556-57.

As for other states’ laws, the Court surveyed state cases and found eight states that recognized comparable claims (although the one case cited from New York does not really say that) and four that did not. Id. at 557-68.  In following the states that have recognized the tort, the Court cited various sources for the duty, including state licensing statutes, evidentiary rules governing privileged communications, common law “principles of trust,” and the Hippocratic Oath. Id. at 564.

We have a few questions about this new tort. First, it is highly questionable to cite federal law as “supporting” a civil action with HIPAA defining the standard of care.  As even the Connecticut Supreme Court acknowledged, “It is by now well settled that the statutory structure of HIPAA . . . precludes implication of a private right of action.” Id. at 555.  Having recognized this principle on the one hand, the Court should not have invoked HIPAA to support its new private right of action on the other.

Second, it stands out that the Court spent about nine pages discussing the state authorities that support its position, but dismissed the four states that reject the tort in a single paragraph and a single sentence of analysis: “[Connecticut statutes] created a broad physician-patient privilege, and, therefore, the rationale of these jurisdictions that decline to recognize a common-law action for breach of duty of confidentiality is not persuasive in Connecticut.” Id. at 567.  More discussion of the contra authorities would have been helpful, especially considering that Connecticut is not unique in recognizing a physician-patient privilege.

Third, what are healthcare providers supposed to do? The ex-boyfriend served a subpoena, a court-issued document that millions of litigants rely on every day to obtain documents—including medical records.  The Connecticut Supreme Court’s first reaction is to denigrate subpoenas.  Connecticut law allows disclosure of medical records without patient consent only pursuant to “statute or regulation of any state agency or the rules of court.” Id. at 568.  According to the Court, a “subpoena without a court order” is none of those things. Id. That leaves us scratching our heads, because subpoenas in our home state and also in federal court are authorized by statute and/or court rules.  We would be surprised if the law of Connecticut were different.

The Court also placed great weight on the fact that the healthcare provider did not appear in person to produce the records and did not alert the patient/plaintiff or move to quash. Id. at 569-72.  But even though subpoenas routinely order record custodians to “appear” with records, they almost never do.  They make the records available for copying, or they mail them, which is what the healthcare provider did here.  This strikes us as creating a new cause of action on the back of a technicality.  As for the requirement that the provider alert the plaintiff or seek a judicial remedy, the Court cited federal regulations.  So now we are back to enforcing HIPAA.

We sometimes advocate for a high regulation, low litigation approach to product liability, and that approach particularly suits the protection of private information. Healthcare providers take patient privacy seriously, and when pulled involuntarily into litigation, the rules they need to follow ought to be clear.  Connecticut’s new tort does not advance that cause.

You don’t see class actions going to trial very often, but that is what happened in Patricia A. Murray Dental Corp. v. Dentsply International, Inc., and the defendant device manufacturer came away with a defense verdict that binds the class.  The California Court of Appeal’s opinion affirming that result is the topic of today’s post, and it is a nice bookend to a Pennsylvania case we wrote on just a few months ago, Center City Periodontists v. Dentsply International, Inc. Both are class actions alleging that Cavitron ultrasonic dental scalers are not worth what dentists paid for them.

Same devices. Similar allegations.  Somewhat different outcomes.  The Pennsylvania class action bit the dust when the court denied class certification, a result we lauded here.  The California plaintiffs met a similar fate on their first try, but the California Court of Appeal reversed the order denying class certification and remanded for further proceedings.  So the plaintiffs returned to the trial court and got their class certified.  They probably wish now that they had ended it there, or at least accepted whatever class settlement the defendant might have offered.

Why? Because they took their certified class action to trial and lost.

Here is what happened. The class representatives alleged that the Cavitron’s directions say it can be used in “[p]eriodontal debridement for all types of periodontal diseases,” but in fact they cannot because the devices accumulate biofilm in their waterlines and are incapable of delivering sterile water during surgical procedures.  According to the plaintiffs, this was a deceptive business practice under a California consumer statute and a breach of express warranty. Patricia A. Murray Dental Corp. v. Dentsply International, Inc., No. A141377, 2018 WL 345049, at *1 (Cal. Ct. App. Jan. 10, 2018).

Let’s focus on these allegations. Dentists have widely used Cavitron ultrasonic scalers for more than 40 years, and the statement that they can be used in “debridement for all types of periodontal diseases” is likely to deceive consumers only if dentists do not already know that biofilms can accumulate and that the systems cannot dispense sterile water.  That is one of the reasons why the certification of this class was questionable in the first place:  Surely each dentist’s knowledge regarding biofilms and his or her clinical judgment on when to use sterile versus nonsterile water is unique to each class member.

But plaintiffs also surely argued on class certification that all dentists are the same, so the trial court and Court of Appeal hoisted plaintiffs on their own petard. If dentists are all the same, they are the same in that they are all highly trained and already understand that biofilms and related water quality issues are dental facts of life.  For the Court of Appeal, the dentists’ knowledge base was a critical consideration.  That is to say, the Cavitron’s directions as presented “to the general public, could be viewed as representing that the Cavitron is suitable for surgical use. However, the fatal flaw in this reasoning is that the targeted consumers of this product are licensed dental professionals.Id. at *8.

As the Court further explained, the “knowledge base of the targeted consumer” is relevant in determining whether the allegedly deceptive conduct or advertising is “likely to deceive,” which is the standard under California’s statute. Id. On that score, the evidence was overwhelming that the Cavitron’s directions were not likely to deceive a significant portion of licensed dentists because they already knew about biofilms and water quality.  Biofilm contamination of dental unit waterlines was first documented in the 1960s, and as early as 1978 the American Dental Association was suggesting countermeasures. Id. at *3.  The ADA has issued publications on the topic, including a “Statement on Dental Unit Waterlines” in 1995 (and don’t you wish you had that scintillating article to read over a cup of coffee).  California dentists are required to take continuing education classes on infection control every two years.  The plaintiffs’ expert admitted that water quality was a “hot subject” starting in the mid-1990s.  The CDC released recommendations, and then updated them.  The Dental Board of California adopted minimum standards. Id. at **4-6.

You can read the opinion to get the details, but the gist is clear—dentists knew about this stuff and were not “likely to be deceived.” As the California Court of Appeal put it:

Plaintiffs already knew the facts they contend should have been disclosed. They know all dental waterlines contain biofilm and that Cavitrons do not deliver sterile water. [¶]  In sum, plaintiffs failed to carry their burden of proof.

Id. at *10 (emphasis added). This disposed of the deceptive practices claim and also breach of warranty because “[u]nlike the state of the evidence during class certification, the record on appeal establishes substantial evidence that plaintiffs were aware of the biofilm risk posed by Cavitron usage, but they purchased and used it anyway.” Id. (emphasis added).  That’s what it came down to:  The dentists knew, but purchased and used the devices anyway.  They got what they paid for, with their eyes wide open.

We posted our 2017 “Worst 10 decisions” list a day too soon, because the California Supreme Court issued its anticipated decision in TH v. Novartis, No. S233898, slip op. (Cal. Dec. 22, 2017) today, and if it is not the worst drug and device decision of 2017, it is awfully close.  With an emphasis on awful.

This case presents two issues of duty: (1) Does an innovator prescription drug manufacturer owe a duty to patients who used a competitor’s generic product; and (2) does that manufacturer also owe a duty to patients who used a competitor’s product years after the innovator sold the NDA and stopped selling the drug altogether?  The California Supreme Court decided “yes” on both counts, and in doing so it has broken away from decades of precedent placing responsibility for defective products on the companies that made and sold the products.

We will have more to say on this opinion, but our first read reveals that the Supreme Court fundamentally misframed the issue as whether the Court should create an “exception” to the duty to warn that all branded drug manufacturers owe. That is exactly backwards, and the Court framed “duty” in absurdly broad fashion (everyone owing a duty to everyone else not to be negligent in giving warnings) in order to posit an “exception” rather than what is really happening, that being a huge expansion of liability.  The law in every jurisdiction, including California, is that one manufacturer generally does not owe duties to those who use other manufacturers’ products.

So how did the California Supreme Court justify its departure from this general rule? Let’s take innovator liability first.  The Court held unanimously that an innovator drug manufacturer can be liable for its competitors’ generic products, with a particular fixation on a listed manufacturer’s exclusive right to “unilaterally” update a label.  For one thing, the Court considerably overstates a listed manufacturer’s ability to “unilaterally” change a label under the CBE regulations, which require “newly acquired information” among other things.  On the case-specific facts – off-label use – the opinion is simply wrong.  Only the FDA, and not a company “unilaterally,” can require a warning about an off-label use – it’s right there in the regulations.

The main problem, however, is the Court’s overreliance on foreseeability to define a new tort duty. Although the Court discusses other factors, its core rationale is that a listed manufacturer can foresee that a generic manufacturer will use substantially the same label.  Fine, but why does the law not require more than that to deviate from decades of product liability law?  And why are other factors not as relevant?  The Court, for example, quantifies the burden on brand-name manufacturers’ as “zero,” which is astonishing as it is potentially shifting 100% of liability onto 10% (if that) of the prescription drug market.  The Court also assumes that insurance against this new liability would be readily available.  If any reader knows of such a policy actually existing, please tell us.  When expanding duties so fundamentally, we are not sure how the Court can purport to draw these conclusions.

The opinion on predecessor liability—or as we would call it, “perpetual liability”—deviates from prevailing law by equal measure, if not more. By a vote of 4 to 3 (with the margin provided by an “assigned” judge filling an open seat), the Court held that an innovator owes duties to users of a competitor’s product, even after the innovator has sold the NDA and stopped selling the drug.  Again, the focus is on foreseeability, because a listed drug manufacturer purportedly can foresee that another manufacturer will make a generic product using a similar label in the future.  Is such a manufacturer supposed to “foresee” off-label promotion (alleged in the complaint but not mentioned in the opinion) as well?  We will definitely have more to say on this, but to start, what exactly can the innovator foresee and for how long?  Who will sell the product?  For how long, to whom, and for what purposes?  What scientific developments will come down the pike, and what will the new owner of the product do with the label, into which the innovator now has no input?  The result goes far beyond any other version of innovator liability ever adopted, in particular leaving in the dust the time limited, learned intermediary rule-respecting version adopted in the briefly extant Weeks v. Wyeth decision in Alabama.

We also take issue with the majority framing the issue as whether selling a product line “automatically terminates” liability for its negligence. The defense never proposed such a thing—a product manufacturer will continue to owe duties to users of its own products, even after it has left the market.  We again think the Court has it backward:  The issue is not whether liability “terminates”; the issue is whether the law should create a new form of liability in the first place.

We cannot help but think that the Court was motivated to create a remedy for plaintiffs who otherwise may not have one. Footnote 2 suggests that the decision is, at least in part, intended to lobby the FDA (and federal authorities generally) to trade generic preemption for elimination of this radical new innovator liability theory.  In this regard, the opinion treats innovators like insurers of competing products, potentially forever, and seeks to hold them hostage in a larger, more political game.  More to come.

We reported two weeks ago on an order favoring implied preemption in an innovator prescription drug case coming out of the Eliquis MDL in New York.  One week after that order, the Ninth Circuit filed an unpublished opinion reversing an order from the In re Incretin-Based Therapies MDL in the Southern District of California that similarly favored implied preemption.  With these recent events, it is tempting to construct an east-versus-west narrative around federal preemption, but the cases don’t really line up that way (see, e.g., the very eastern Fosamax opinion from the Third Circuit, discussed in detail here, here, and here).  Still, when we saw the recent preemption juxtaposition of California against New York, we could not help but think of the 1977 World Series, with Reggie Jackson hitting home runs by the handful to lead the Yankees over the Dodgers.  You have the Brooklyn Bridge versus the Golden Gate.  Broadway versus Hollywood.  Letterman versus Leno.  We are told that the Los Angeles Kings recently played the New York Rangers in the ice hockey Stanley Cup finals, but if that actually occurred, we overlooked it.

Of course, one thing that New York and California have in common is that they both cast their electoral votes in the 2016 presidential election for a candidate that did not win. At least New York has the consolation that both major-party candidates hailed from New York, a situation that has not occurred since Franklin Roosevelt defeated Manhattan attorney Thomas Dewey in 1944.  We do not believe there has ever been a New York versus California presidential election, but we have not looked it up.  Bexis points out that one of FDR’s general election opponents was Herbert Hoover, who relocated from Iowa to California, so we guess that counts.  California Governor Ronald Reagan and New York Senator Robert Kennedy both sought their parties’ nominations in 1968, but neither prevailed.  We can only imagine what kind of general election that would have been.

When it comes to federal preemption, we would not have cast our vote for the Ninth Circuit’s unpublished opinion in In re Incretin-Based Therapies Products Liability Litigation, No. 15-56997, 2017 WL 6030735 (9th Cir. Dec. 6, 2017).  The plaintiffs in In re Incretin claim that the defendants did not adequately warn about the risk of pancreatic cancer in connection with their prescription diabetes drugs.  The FDA, however, has said on multiple occasions that a causal association between the drugs and pancreatic cancer is indeterminate.  The district court therefore granted summary judgment on the basis that the defendants had presented “clear evidence” under Wyeth v. Levine that the FDA would not have approved a change to the drug labeling regarding that particular risk.  We reported on that order here and its California state-court counterpart here.

Well, the Ninth Circuit has undone the district court’s order, at least for now. Maybe the most important part of the opinion is what the Ninth Circuit did not do, which is rule on whether the defendants had or had not satisfied the “clear evidence” standard.  Instead, the Ninth Circuit reversed and remanded because the district court (1) improperly limited discovery and (2) did not consider certain “newly discovered evidence” when it granted summary judgment. In re Incretin, at *1.

Here is how it played out. On the discovery issue, the plaintiffs sought additional discovery into adverse event source documents and databases.  The district court, however, denied that request because adverse event reporting, including what was reported to the FDA and what was not, was irrelevant under Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001). See In re Incretin, at *1.  As our readers know, Buckman held that federal law impliedly preempts any claim for “fraud on the FDA.”

The Ninth Circuit saw it differently and held that the plaintiffs were not seeking discovery under a “fraud on the FDA” theory, but instead were pursuing a routine state-law failure-to-warn claim such as in Stengel.  That’s the case where the Ninth Circuit held that a plaintiff could plead a non-preempted “parallel claim” based on allegations that the defendant failed to report adverse events to the FDA, an opinion that came in second on our “Worst Ten” list for 2013.  According to the Ninth Circuit, the sought-after information was relevant to whether there was a causal connection between the products and pancreatic cancer, and preemption could not be determined “without knowing what information was available to the defendants.” Id. at *2.

The purported “newly discovered evidence” was an assessment completed by Canadian regulators and “evidence from animal studies and clinical trials” somehow involving pancreatic cancer. Id. at *3.  The Ninth Circuit held that the district court had improperly failed to consider this evidence, even after acknowledging that it remained “unclear whether the FDA considered this information, and if it did not, whether this data would have altered the FDA’s conclusion.” Id. (quoting district court’s order).  In the Ninth Circuit’s view, uncertainty on whether the “newly discovered evidence” would have been material to the FDA’s opinion on pancreatic cancer should have prevented summary judgment on the defendant’s implied preemption defense. Id.

So the case is headed back to the district court for litigation on the scope of discovery and presumably another motion for summary judgment. Because the Ninth Circuit left undisturbed the district court’s core ruling under the “clear evidence” standard, the result on remand could very well be the same.

Be that as it may, we find the Ninth Circuit’s opinion questionable. For one thing, the whole thing underplays Buckman and overplays Stengel.  Of course, any play on Stengel is an overplay because the opinion was wrongly decided.  A state-law duty to inform physicians of the known and knowable risks of prescription drugs does not equate to a state-law duty to report information to a federal government agency.  And without the latter duty, it is beyond us how a claim for failing to report adverse event information to the FDA does not exist solely by virtue of a federal enactment.  That is Buckman preemption, yet the Ninth Circuit has again invoked a supposed “duty to report” to allow not only a claim, but now discovery.

We also question the Ninth Circuit’s reasoning on the “newly discovered evidence” and the purported disputes of fact. The FDA’s position on incretin-based therapies and pancreatic cancer was undisputed—the causal connection was indeterminate.  The potential dispute apparently is over whether the FDA considered the plaintiffs’ information and whether it would have altered the FDA’s opinion.  But if that dispute exists, is it really material?  If defendant can present “clear evidence” that the FDA would not approve the plaintiffs’ proposed warning based on the FDA’s own statements and actions, are we now in the business of second-guessing the FDA’s judgment by sifting through what the FDA has considered and what it has not?  Are juries to engage in that review process based on the opinions of dueling regulatory experts?  That is the main problem with the Third Circuit’s opinion in Fosamax, which takes a legal issue (preemption) and the Supreme Court’s “clear evidence” standard and converts them into factual issues for juries to decide under a “clear and convincing evidence” standard never before enunciated in this context.

Most pointedly, there typically is no discovery directly into the FDA’s decision making process. As a result, when the Ninth Circuit suggests that the district court should have considered “whether the FDA considered this information” and whether it “would have altered” anything, the court is really asking by proxy whether the defendants made the information available to the FDA for consideration in the first place.  In other words, the Incretin plaintiffs were seeking to undermine the FDA’s stated position by questioning, at least in part, what the defendants did and did not submit to the FDA.  That comes full circle to Buckman, and the district court had a valid point when it ruled that a “reevaluation of scientific data or a judicial challenge to the accuracy of the FDA’s conclusions would disrupt the ‘delicate balance of statutory objectives’ the Buckman Court sought to preserve.” In re Incretin-Based Therapies Prods. Liab. Litig., 142 F. Supp. 3d 1108, 1130 (S.D. Cal. 2015) (quoting Buckman, 531 U.S. at 351), rev’d.

As we mentioned at the outset, the summary judgment order is reversed for now, but the result in the end could be the same. As fans of California, let’s hope that is the case.  As every sports fan has said at some point in his or her life, there is always next year.

The defendants in the Eliquis MDL have turned somewhat of a preemption hat trick. The latest order is In re Eliquis (Apixaban) Prods. Liab. Litig., No 17-md-2754 (S.D.N.Y. Nov. 29, 2017), where the district court dismissed twenty-four cases newly transferred into that MDL.  We will explain why in a moment, but first a little background.  The defendants scored their first goal in a case called Utts—which resulted in pair of orders (one before the MDL was formed and one after) ruling that federal law impliedly preempted the plaintiffs’ failure-to-warn and design defect claims.  These were important orders.  As we explained in detail here, the district court very clearly explicated the three Supreme Court opinions that mainly shape implied preemption in the prescription drug space—Wyeth v. Levine, Mensing, and Bartlett.

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 Mensing, which held that federal law impliedly preempted 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.  That leaves generic manufacturers between a federal rock and a state-law hard place, which equals preemption.

Finally, Bartlett.  There, the Supreme Court held that federal law impliedly preempted state-law design defect claims for similar reasons, i.e., a generic drug manufacturer cannot change a drug’s design without pre-approval either, thus again triggering implied preemption.  We have said multiple times in this space that Bartlett’s rationale is not limited to generic manufacturers because an innovator drug manufacturer also cannot change its product’s design without pre-approval.

That is where Utts came in.  Although dealing with an innovator drug, the district court applied Bartlett to dismiss the design defect claims.  In the part that we like the most, the court also applied Wyeth and Mensing to dismiss the warnings claims because the plaintiffs did not present any “newly acquired information.”  Because “newly acquired information” is required to invoke the CBE process, the defendants could not change the Eliquis label without federal pre-approval.  Under those circumstances, a state-law tort claim would conflict with federal law, thus preemption.  The district court granted the plaintiffs leave to amend, but they again failed to plead any “newly acquired information.”  Moreover, because the labeling already warned stridently about the risk at issue (bleeding) the warnings were adequate as a matter of law, too.  Case dismissed without leave, as we explained here.

The defendants scored their second goal when the district court applied Utts to other cases in the MDL.  The order that caught our eye was Fortner, which we covered here.  In Fortner, other plaintiffs attempted to plead state-law claims that were not preempted.  But try as they might, these plaintiffs also could not plead any “newly acquired information.”  The CBE process there was still unavailable; the defendants still could not alter the labeling without pre-approval; and federal law still preempted their claims.  And, by the way, the warnings were still adequate as a matter of state law.  (Careful readers have figured out by now that we have oversimplified these orders for brevity, but you get the idea.  You can read our prior posts here, here, and here to get the gory details.)

Which brings us to the defendants’ third goal scored—application of Utts to cases newly transferred into the Eliquis MDL.  To start, we admire the district court’s process.  The district court used Utts as a vehicle to decide preemption in the first instance, and once it set the rules, it ordered any plaintiff assigned or transferred to the MDL to show cause within 14 days why his or her case should not be dismissed.  Slip op. at 2.

These twenty-four plaintiffs, newly transferred from the District of Delaware, complied with the court’s order and made three arguments, none of them successful. They argued first that Utts did not apply because they omitted from their amended complaints some of the material that appeared in the Utts amended complaint.  Slip op. at 4.  In other words, their claims should survive because they were more vague and less complete in asserting their claims.

The plaintiffs in Fortner tried this tactic too—we’ll call it pleading by obfuscation.  But it did not work there, and it did not work here either:  “Even without reference to the documents on which the amended complaint in Utts relied, the complaints ‘simply do[ ] not provide sufficient factual content to support a plausible inference that there exists newly acquired information such that the defendants could unilaterally have changed the Eliquis label to include additional warnings.’”  Slip op. at 5 (quoting Fortner).

Plaintiffs also argued that the warnings were inadequate under their various states’ laws, but they did not explain why. Nor did they “even cite the statutes or case law that pertain to the adequacy of a label’s warnings for any jurisdiction.”  Slip op. at 5.  Thus, “[i]n the absence of citation to any authority, it is unnecessary to address the argument further.”  Slip op at 5.  Finally, the plaintiffs asked to be remanded to the District of Delaware.  That’s right.  If you can’t win, get out of Dodge.  But they again failed to “explain a basis” for granting that relief.

We mused in our last post on Eliquis that this MDL may not last long, and we seem to have been correct. Moreover, given the sound basis for the district court’s preemption rulings, we doubt the plaintiffs will do any better elsewhere.

We wrote a few months ago about what you will see from the plaintiffs’ side as they try to evade the Supreme Court’s opinion in BMS v. Superior Court.  That opinion has combined with Bauman to reset personal jurisdiction and restore fairness to a system that had gotten out of whack, particularly in the mass tort world in which we often dwell.  Plaintiffs have resisted this reset, even though there is no rational reason why they should.  A more disciplined approach to personal jurisdiction imposes absolutely no burden on plaintiffs, who remain free to sue where the defendants are “at home” or (if different) where the operative facts occurred with regard to those defendants.  The resistance comes from their attorneys, who would prefer to concentrate masses of case in fewer jurisdictions of their choosing so they can make more money with less effort.  We are not judging; they are merely exploiting the incentives built into our civil litigation system.

So what is in their personal jurisdiction playbook? We reported before that plaintiffs will try to stretch even the most tenuous forum contacts into specific personal jurisdiction.  Or they will assert that defendants “consented” to jurisdiction in a particular state through such routine activities as registering to do business.  If those do not work, the fallback position will always be to request “jurisdictional discovery,” even when the facts relevant to forum contacts are either undisputed or are already within the plaintiffs’ control.

Plaintiffs recently added to those tactics in a hernia mesh MDL in New Hampshire, In re Atrium Medical Corp. C-Qur Mesh Products Liability Litigation, No. 16-md-2753, 2017 WL 5514193 (D.N.H. Nov. 14, 2017), where the issue was whether the court had personal jurisdiction over a holding company based in Sweden.  The company did not make or sell the products in question, and it was undisputed that the company had no direct contacts with the United States.  Of course, the plaintiffs sued the device manufacturers too, and those companies did not contest jurisdiction in New Hampshire.  But wanting deeper pockets in which to reach, or simply to increase their nuisance value through harassment, the plaintiffs opposed the holding company’s motion to dismiss on multiple grounds.

First, the plaintiffs argued that the Swedish company waived its personal jurisdiction defense by participating in the MDL and complying with the court’s initial case management orders.  That argument was obviously frivolous.  The Swedish company asserted the lack of personal jurisdiction as an affirmative defense in its answer and simultaneously filed a motion to dismiss on that basis.  It is certainly possible for a defendant to waive its personal jurisdiction defense, but the Federal Rules allow a defendant to preserve a personal jurisdiction defense by way of answer (unlike some states).  The Swedish company did that, and it also moved to dismiss as soon as it answered.  That is not a waiver.  Id. at *2.

Second, the plaintiffs argued that the Swedish company was judicially estopped from contesting jurisdiction because the company participated in product liability cases in New Hampshire and California and had itself sued someone in Delaware state court.  This argument borders on frivolous as well.  Judicial estoppel prevents litigants from taking a contested legal position in one case to gain an advantage then taking the opposite position in another case to gain an advantage there, too.  A common example is a plaintiff who discharges his debts in bankruptcy by representing that he has no product liability claims, but then turns around and represents to another court that he actually has a claim by filing a complaint.  You can’t do that.  Another example, which we wrote about here, is when a plaintiff defeats preemption by arguing that a drug manufacturer’s label change was voluntary, but then turns around and argues later that the label change was not a subsequent remedial measure because it was actually mandatory.  That’s wrong, too.  Here, the Swedish company was neither talking out of both sides of its mouth nor trying to gain an unfair advantage.  There are many reasons why a defendant would voluntarily submit to a court’s jurisdiction in one case but not in another, especially when the rules have recently changed.  Moreover, if the plaintiffs were correct, a defendant who voluntarily submitted to personal jurisdiction in any state would be permanently estopped from asserting the defense anywhere and everywhere.  Ridiculous.  The court did not think much of the argument either. Id. at *3.

Third, the plaintiffs argued that the other defendants’ forum contacts could be attributed to the Swedish company because the Swedish company assumed responsibility for the other companies’ liabilities and because the companies were alter egos or agents of each other.  This version of “piercing the corporate veil” is very difficult for plaintiffs to satisfy, and while the plaintiffs gained some traction with this argument, they are hardly out of the woods yet.  The rules as applied in an MDL are a little different, and because we have never seen them set forth quite so clearly, we will repeat them here:

In multi-district litigation cases . . . the [specific personal jurisdiction] inquiry is often more complicated. In multi-district litigation based on diversity jurisdiction, ordinarily personal jurisdiction in the transferee court is based on the jurisdiction of the transferor court.  The transferee court then separately applies the state law pertaining to personal jurisdiction applicable in each of the transferor courts.  The transferee court, however, conducts “this analysis according to the law not of the transferor circuit,” but rather according to the law of the circuit in which it sits.

2017 WL 5514193, at *4 (citations omitted).  In other words, an MDL court applies the long-arm statute of the state in which the case was initially filed, but ultimately determines personal jurisdiction under the precedent of the circuit in which it sits.  There are also issues around personal jurisdiction over out-of-state defendants when MDL judges permit “direct filing” into multidistrict litigation, which we discussed at some length here.  This is one reason why the venue of an MDL, as selected by the J.P.M.L., matters.

The court also set forth the various procedural approaches to deciding a personal jurisdiction challenge: The court can determine whether the plaintiff has made a mere prima facie showing that personal jurisdiction exists, or it can conduct a full-blown evidentiary hearing and decide personal jurisdiction on a preponderance-of-the-evidence standard.  A third option falls in between these two ends of the spectrum.  Under the “intermediate standard,” also known as the “likelihood standard,” the court can weigh evidence and find “whether the plaintiff has shown a likelihood of the existence of each fact necessary to support personal jurisdiction.” Id. at **4-5.

The district court decided it would apply the “intermediate standard,” but would do so only after allowing additional discovery. That’s right—jurisdictional discovery.  We have expressed our opinion on jurisdictional discovery—we don’t think that it will make any difference except in the most exceptional cases and should not be allowed.  We also think that jurisdictional discovery is an area appropriate for cost-shifting under Rule 26(c)(1)(B).  This court, however, is allowing it.  But not the oppressively overreaching discovery that, of course, the plaintiffs proposed, which the court rejected as “broader than necessary to address the jurisdictional issues that have arisen.” Id. at *9.  Instead, the court directed the plaintiffs to serve discovery “focused on the issues,” which presumably includes the agency and alter ego theories that the plaintiffs advanced. Id. The discovery many or may not make any difference.  Only time will tell, but either way, the DDL Blog will be monitoring.