Regular blog readers may recall that, every year, we eagerly await a Monday and Tuesday right around February 14th.  This has nothing to do with Valentine’s Day (though we like a dozen roses and a box of chocolates as much as the next person.)  No, at this time every year (for the past eighteen or so) we cross our fingers that there is no blizzard, beg everyone in our work life to cover any emergencies, and head to New York for the Westminster Kennel Club Dog Show.  This year was the 141st annual show, and, as always, it was a mecca for all things dog.  As we ate breakfast in our hotel, we were visited by Mobius, a red Doberman so tall he had to lean down to attempt to taste our complimentary make-it-ourselves waffle.  To board the shuttle from the Hotel Pennsylvania (worthy of its own post) to Piers 92 and 94 for the daytime breed judging, we had to step over “Sky,” a 140-pound Greater Swiss Mountain Dog sprawled in the aisle of the bus, calmly oblivious to accidental bumps and kicks and happily kissing anyone who asked.  We live for this stuff, even if our chosen favorite almost never wins.

For the atmosphere is rarified. A few years ago, the show stopped being “champions only” and admitted “class dogs” – dogs still working their way through point-earning breed classes to achieve their championships – for the first time.  But, save for the infrequent upset, the group competition (the televised portion, in which the single winner of each breed competes against the winners from the other breeds in its “group” – sporting, herding, toy, etc.) is dominated by the very top-winning show dogs in the country.  Last year, we fell in love with a gorgeous German Shepherd Dog named Rumor.  She was a heavy favorite to win it all (“Best in Show”), but was upset by C.J. the German Shorthaired Pointer and settled for Reserve Best – second place.  And she retired, to raise beautiful puppies and live the life of a cherished house pet.

But, alas, said puppies did not get made on the first attempt. And, come January, Rumor’s owner/handler decided to give her one more shot at the big one.  So she “came back out,” showed at ten shows in January, and took one more run at the Garden.  And, this time, after upsetting the favorite, Preston the Puli, to take the Herding Group, she won it all.  It was very, very cool to witness.  And we already can’t wait ‘til next year.

And there was a blog-worthy lesson to be gleaned from it all (at least if you stretch a little): if you haven’t achieved everything you want, think about taking another shot.  And H.R. 985, a bill that passed the House Judiciary Committee this week, would pick up where CAFA left off (and then some) to correct still-rampant abuse of the system by class action and MDL plaintiff lawyers, to the detriment of our clients, the judicial system as a whole, and all too often, to the plaintiffs the lawyers ostensibly represent.

Under “Purposes,” the bill states: “The purposes of this act are to – (1) assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims; (2) diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system; and (3) restore the intent of the framers of the United States Constitution by ensuring Federal court consideration of interstate controversies of national importance consistent with diversity jurisdiction principles.”  Worthy goals all, if a trifle ambitious. The bill’s key points read like a set of nesting boxes – just when you think you’ve opened the last, there is another present inside.  Here are some highlights:

Class Actions

  • Injury allegations: this provision requires a court to deny certification unless “the party seeking to maintain such a class action affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative.” This is ascertainability something for which we’ve advocated, and also something that our side tried unsuccessfully to get fixed through the Federal Rules Committee. Thus, the judiciary had its chance to fix this. Nothing happened, so now Congress is poised to step in. About time.
  • Conflicts of interest: this provision requires class counsel to state, in the body of the complaint, “whether any proposed class representative or named plaintiff in the complaint is a relative of, is a present or former employee of, is a present or former client of (other than with respect to the class action) or has any contractual relationship with . . . class counsel” and shall “describe the circumstances under which each class representative or named plaintiff agreed to be included in the complaint and shall identify any other class action in which any proposed class representative or named plaintiff has a similar role.”
  • Attorneys’ fees: “[N]o attorneys’ fees may be . . . paid . . . until the distribution of any monetary recovery to class members has been completed,” and “[u]nless otherwise specified by Federal statute, . . . the portion of any attorneys’ fee award to class counsel . . . shall be limited to a reasonable percentage of any payments directly distributed to and received by class members [and in] no event shall the attorneys’ fee award exceed the total amount of money distributed to and received by all class members.” We particularly like this because it would effectively put an end to cy pres, against which we’ve railed for years. By limiting the denominator for fee awards to “payments directly distributed to and received by class members” it prevents cy pres sums from being used to inflate fee awards.

There are other provisions, requiring stringent accounting provisions for settlement funds forbidding certification of issue classes unless all relevant Rule 23 prerequisites are satisfied (another thing our side tried first to fix through a change to Rule 23), and most significantly providing for severance of misjoined plaintiffs for purposes of jurisdictional determinations. This legislative elimination of fraudulent misjoinder is a key point, since it addresses the multi-plaintiff complaints we love to hate.

We note that since the “effective date” of this act provides for its application to all “pending” civil actions, cases currently in state court can be removed (or removed again) under the provision negating misjoinder as a means of preventing diversity-based removal to federal court.

Finally, in an issue close to our hearts as we daily encounter plaintiffs unwittingly victimized by so-called “litigation funders,” the bill provides, “In any class action, class counsel shall promptly disclose in writing to the court and all other parties the identity of any person or entity, other than a class member or class counsel of record, who has a contingent right to receive compensation from any settlement, judgment, or other relief obtained in the action.” A sunshine law for third-party funding is something else for which we’ve advocated.

Multidistrict Litigation:

  • Proof of exposure and injury: We were thrilled to see a “Lone Pine”-esque provision build into the MDL portion of the bill. It provides, in pertinent part, “In any coordinated or consolidated pretrial proceedings . . . , counsel for a plaintiff asserting a claim seeking redress for personal injury [in the MDL] shall make a submission sufficient to demonstrate that there is evidentiary support (including but not limited to medical records) for the factual contentions in the plaintiff’s complaint regarding the alleged injury, the exposure to the risk that allegedly caused the injury, and the alleged cause of the injury . . . within 45 days after the civil action is transferred to or directly filed in the proceedings. That deadline shall not be extended. Within 30 days after the submission deadline, the judge . . . shall [determine] whether the submission is sufficient and shall dismiss the action without prejudice if the submission is found to be insufficient.” Thirty days later, in the continued absence of a satisfactory submission, the action is to be dismissed with prejudice. Not long ago, we advocated for amending the MDL statute to require early factual disclosure, with dismissal as the sanction for not disclosing enough to satisfy Rule 8. This is the functional equivalent.
  • Trial Prohibition (“waiving Lexecon”): MDL judges “may not conduct any trial in any civil action transferred to or directly filed in the proceedings unless all parties to the civil action consent to trail of the specific case sought to be tried.” This provision would remove the threat of MDL trials as a tool to force defendants to settle. It is something else for which we have advocated.
  • Ensuring Proper Recovery for Plaintiffs: MDL plaintiffs “shall receive not less than 80 percent of any monetary recovery obtained in that action by settlement, judgment or otherwise.”

While most of the press coverage seems to focus on class actions, to us the removal and MDL provisions are at least as important. The vast bulk of our professional life is spent in the mass tort space – mostly MDLs these days, with the occasional class action thrown in. We have become accustomed (but never inured) to plaintiffs without injuries herded by counsel who are their friends or bosses into mass actions in which they don’t belong. On the other end of the spectrum, we encounter severely injured plaintiffs who will recover next to nothing because lawyers and litigation funders own most or all of the plaintiffs’ stakes in the inevitable settlements. And, at every turn, we sit across the table from tanned and affluent plaintiff attorneys who are the only ones apparently immune to the vagaries of the system and who are the sole beneficiaries of its inequities. H.R. 985, as drafted, attempts to address many of these issues. We do have questions. Who defines “the same type and scope of injury,” for example? And we have doubts: can a bill possibly survive the powerful plaintiff attorney lobby when it attempts to resurrect the integrity of mass litigation by hitting those attorneys squarely in their pocketbooks? But we heartily and excitedly support this bill, and we know that some of its provisions are way, way better than none. We will keep you posted.

We can’t stand “cy pres” distributions of class action settlement funds to non-litigants.  We’ve blogged about this benighted doctrine many times.  We fought against cy pres at in the ALI, and we’ve been fighting against it through Lawyers for Civil Justice in the context of federal rules amendments.

Sure, cy pres can be useful in resolving this or that class action once our clients are unfortunate enough to have become embroiled.  But we firmly believe in the “build it and they will come” theory – that making class actions easier to settle make them easier to bring, because 99% of all class actions (at least those seeking $$$) are brought as strike suits to settle, rather than to litigate.  A cy pres award is a sure-fire indicator of litigation that should never have been brought – because even after settlement, without any opposition from the defendant(s), a cy pres request is an admission that the plaintiffs still can’t prove damages and causation with respect to the absent class members.  They can’t even win a walkover.  Outside the class action area, that would mean “case dismissed” (and maybe sanctions).  As a class action, it means “write a check.”

There is no basis for cy pres in substantive law (outside of a couple oddball statutes), and there’s nothing more “substantive” than taking money supposedly owed to absent class members and giving it to non-litigant charities. Since it’s substantive, there’s also no possible basis for it in Fed. R. Civ. P. 23, since court rules can’t change substantive law.  Cy pres a racket – designed primarily to inflate attorney fee awards − and while the charities might do good work, call us the Grinch, because we don’t think the litigation industry should be funding charities with other people’s money extorted through litigation threats.

Here’s the latest example of cy pres abuse occurring in the context of bogus litigation that should never have been brought, Koby v. ARS National Services, Inc., ___ F.3d ___, 2017 WL 359670 (9th Cir. Jan. 25, 2017).  This isn’t a drug/device case.  Thankfully, between the FDCA no private right of action rule (which, regrettably has a food loophole) and the rejection of personal injury class actions, we don’t encounter all that many of them anymore against drug/device clients.  Instead, Koby is a Fair Debt Collection Practices (“FDCP”) action, and as you might expect from the introduction, a bottom-feeding FDCP action at that.

Supposedly the defendant violated the FDCP at some point a decade or so ago when its employees left messages that did not fully identify themselves. This issue was later fixed, but the class action supposedly includes “some four million people nationwide.”  Koby, 2017 WL 359670, at *1.  Predictably, nobody in the class was actually harmed by what appears to have been a technical FDCP violation (quickly fixed), so only statutory damages were sought.  Theoretically that could have been a lot (4M x $1000), but because ARS was a small company, the 1% of net worth statutory cap limited recovery to $35,000. Id. at *1-2.

You do the math.

Continue Reading More Cy Pres Abuse in California Class Action Litigation

What follows is a guest post about a recent favorable decision in Canadian drug/device litigation.  Unlike in the USA, product liability class actions cases are often certified in Canada.  Thus, any pro-defense decision is good news indeed.  Robin Linley and Jessica Lam of Blake, Cassels & Graydon LLP in Toronto have been good enough to provide us what they call a “brief and selective summary” of Wise v. Abbott Laboratories Limited, No. CV-16-550747CP, 2016 ONSC 7275 slip op. (Ont. Super. Nov. 23, 2016), which in typical Canadian fashion, takes 85 pages to reach a result that our clients will like.  As always, our guest posters are 100% responsible for their content, and thus entitled to 100% of the credit or blame, as it may be, for what appears below.

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In a recent product liability class action decision, Wise v. Abbott Laboratories Limited, No. CV-16-550747CP, 2016 ONSC 7275 slip op. (Ont. Super. Nov. 23, 2016) (“Wise“), the Ontario Superior Court of Justice (“Court”) granted the defendants’ motion for summary judgment in advance of the certification motion, concluding that there was no genuine issue requiring a trial because there was insufficient evidence of general causation.  The decision highlights the potential for defendants to use summary judgment to resolve a class action before certification in appropriate cases.

The representative plaintiff brought a proposed class action against Abbott alleging that its testosterone replacement product, for the treatment of hypogonadism (testosterone deficiency) in men, caused serious cardiovascular (CV) events.  The plaintiff further alleged that the drug had no therapeutic benefit and that class members should be compensated for their economic losses incurred in purchasing the product. The plaintiffs also sought recovery from the defendant based on allegations of failure to warn and the novel claim of “waiver of tort”.

Abbott submitted that the plaintiff’s claims should be dismissed on the grounds that they could not prove general causation, which was a constituent element in all of the plaintiff’s product liability claims, and that ultimately, there was insufficient evidence of a “genuine issue requiring a trial”.

Continue Reading Guest Post – Ontario Court Decision Highlights Summary Judgment as a Potential Tool in Class Proceedings North of the Border

We are on a personal jurisdiction roll this week.  You might even say we’ve got Big Mo behind us.  That Mo, of course, refers to Momentum, though it also nicely captures the fact that yesterday’s defense-favorable personal jurisdiction case (Addelson) came out of Missouri.  Today’s case, Bauer v. Nortek Global HVAC LLC, 2016 WL 5724232 (M.D. Tenn. Sept. 30, 2016), is out of the Middle District of Tennessee.  The Bauer case does not involve drugs or medical devices. Rather, a bunch of consumers claimed they bought bum air conditioners.  But Bauer is a very interesting case because that ‘bunch’ of consumers styled themselves as a class or classes.  Thus, Bauer offers a useful application of Bauman personal jurisdiction principles to class actions.  The reasoning and prose are both sharp.

The Bauer class representatives came from Tennessee, Florida, Georgia, and Texas. (Why they didn’t add Alabama, Arkansas, Kentucky, Louisiana, Mississippi, and South Carolina to represent the entire SEC, we don’t know.  In any event, it is certainly understandable why clever plaintiff lawyers might want to cobble together classes of aggrieved air-conditioner buyers who live in hot places.) The claims included breaches of warranties and violations of the various states’ deceptive trade practices acts.  The defendants were not incorporated in Tennessee, nor did they have a principal place of business there.  One of the defendants had a distribution/manufacturing facility in Tennessee.  So what, you say?  You are exactly right, as it turns out.  The defendants filed a motion to dismiss all claims brought by the non-Tennessee plaintiffs for lack of personal jurisdiction.  The defendants won that motion.  They also moved to dismiss the Tennessee plaintiff’s claims based on the statute of limitations.  The defendants won that motion, too.  But for today’s purposes, we are focusing on the jurisdictional argument.

Continue Reading M.D. Tenn. Bids Adieu to Out-of-State Class Reps

We never heard the term “slack fill” before we started writing for this blog, but it seems to be getting a lot of attention lately. We enjoyed a podcast from NPR’s Planet Money the other day discussing slack fill in black pepper containers, and we blogged on the FDA’s regulation of slack fill a little more than a year ago.  We have to admit, the words are fun to say.  “Slack fill.”  They snap off your tongue with a certain percussive elegance.  Sort of like “Severus Snape.”  Or “Coco Crisp,” who is an actual person, a switch-hitting outfielder currently vying for a World Series crown with the Cleveland Indians.  (Coco Crisp, whose given name is Covelli Crisp, broke into the big leagues with the Indians in 2002, and he returned to Cleveland just a few months ago after spending six-and-a-half seasons leading off for our beloved Oakland Athletics.  His change from the white cleats to black is a big loss for Oakland and, if the Indians beat the Cubs, a bigger win for Coco.  But we digress.)

For those who missed our prior post on slack fill, the term refers to empty space, like the extra air in a bag of chips. The variant “nonfunctional slack fill” refers to pointless empty space.  It’s just there, serving no purpose, just like a recent slack fill class action that recently met its demise in the Eastern District of New York, Fermin v. Pfizer, Inc., No. 15-cv-2133, 2016 U.S. Dist. LEXIS 144851 (E.D.N.Y. Oct. 18, 2016).  In Fermin, the plaintiffs’ alleged that they were “tricked” into purchasing ibuprofen because the containers were too big. Id. at *1.  Never mind that the labels prominently and accurately stated exactly what was in the bottles, down to the number of pills.  These plaintiffs alleged that the “excessive empty space” in the packaging misled them into purchasing the product, and they purported to represent a class of purchasers under the consumer laws of multiple states. Id.

Continue Reading “Slack Fill” Class Action Is Empty Space

A class action claiming that a diet supplement was falsely advertised as being an aphrodisiac cries out for bad jokes and silly puns. Are we above all that?  Er… sure.  The supplement is called IntenseX.   (Get it?  Why don’t we ever see such clever marketing in law firm websites?) The case is called Sandoval  v. Pharmacare US, Inc., 2016 U.S. Dist. LEXIS 140717 (S.D. Cal. June 10, 2016).  The lead plaintiffs were from California and Florida.  Both alleged breaches of express and implied warranty, violations of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, and violation of the federal Magnuson-Moss Warranty Act.  The plaintiffs sought certification of a nationwide class of disappointed IntenseX users.  The plaintiffs also grumbled that they would accept California and Florida classes as alternatives.  The court denied class certification, so there was a happy ending.  The court did so after marching through the Rule 23 analysis in a logical, straightforward fashion, so the bits leading up to the climactic noncertification were also happiness-inducing, if not intense.

As usual, the plaintiffs could establish numerosity and (more controversially) ascertainability.  Just as usual, the plaintiffs could not establish that common issues predominated over individual ones.  The plaintiffs asserted that common to all claims for all class members was whether the representations about aphrodisiac effects were likely to deceive a “reasonable consumer.”  But an inference of reliance was not available in this case because there was no evidence that consumers had been exposed to a widespread, long-term marketing campaign.  (The court drew a contrast to advertising for tobacco, a product we wanted to use immediately after reading this case.)  What’s more, there was no evidence of any shared understanding among consumers as to the promised effects of IntenseX.  Even if there was a way to characterize the promise of IntenseX marketing in some general way, the court ruled that the plaintiffs “did not present sufficient evidence that IntenseX is incapable of producing the promised effects.”   What would such evidence look like?  Even if there were declarations by some disappointed users recounting their sad experiences with IntenseX (think of a bizarro-world version of Dear Penthouse Forum letters), would they truly establish a causal nexus?  Consider all the comorbidities that might account for why consumers couldn’t get any satisfaction.  Maybe they misplaced their Lionel Richie records, or showed up on date-night wearing socks with sandals.

Continue Reading S.D. Cal. Shows No Love for Aphrodisiac Class Certification

The Telephone Consumer Protection Act (“TCPA”) potentially touches just about every kind of business, including the business of selling prescription drugs. That is what the Northern District of California grappled with (correctly) in Jackson v. Safeway, Inc., No. 15-cv-04419, 2016 U.S. Dist. LEXIS 140763 (N.D. Cal. Oct. 11, 2016).  In Jackson, the plaintiff received a telephone reminder from her pharmacy that she was due for an annual flu shot, which prompted her to go in the next day to receive her shot. Id. at **5-6.  Of course, what do you do after you receive disease-preventing medical treatment?  You file a class action lawsuit dissing the pharmacy for bothering to call.  What is the old saying about no good deed?

For the uninitiated, the TCPA is the federal statute passed in the early 1990s that regulates “telemarketing.” We place that word in quotes for two separate reasons.  First, we use quotes to demarcate a term of art—the FCC uses the term “telemarketing” to define significant obligations under the Act.  Second, we use quotes to indicate irony (picture us making the familiar “air quotes” gesture as you read this post).  Although Congress passed the TCPA to cut down on intrusive “telemarketing” calls, many say that the FCC’s regulations do not target “telemarketers” narrowly enough.  That makes other businesses who are reaching out to their customers (like our pharmacy) potential targets for abusive litigation.  The stakes are high.  The statute imposes penalties of up to $1,500 per violation, and in a society where telephones increasingly serve as our windows to commerce and human relations, those penalties can multiple to large numbers quickly.

A particular target for critics of the regulations is a 2012 FCC order that could have, for example, strengthened an exception for calls made within existing business relationships. But the 2012 order instead abolished that exception, among other provisions.  A follow-up order issued in 2015 clarified matters, but that also fell short of expectations for many.  One example is the FCC’s definition of an “automated telephone dialing system,” which some say is now broad enough to include our iPhones.  We are not so sure, but the ambiguity in the rules is most unwelcome.  (You can read Reed Smith’s alert on the 2015 order here.)

We are writing about this here because the district court in Jackson invoked two TCPA exceptions that apply to healthcare:  (1) The “exigent healthcare treatment exception,” which creates a safe harbor for “exigent” calls that have a “healthcare treatment purpose” and “are not charged to the calling party”; and (2) the “telemarketing health care exception,” which permits automated calls that deliver “health care” messages from HIPAA covered entities and their business associates.

Continue Reading TCPA Health Care Exceptions Properly Applied In California

When we think of prescription medical devices, we usually think of the sorts of devices that are implanted during surgery and tend to end up in litigation—artificial joints, pacemakers, surgical meshes, and bone cements, to name a few.  Devices according to the FDCA also include “in vitro reagent[s] . . . intended for use in the diagnosis of disease or other conditions.”  There are a whole slew of diagnostic devices that are used to test blood, tissue, or other stuff from the body to provide useful health information.  Some of them get used directly by health care professionals, some can be purchased over-the-counter, and some need a prescription for the patient to use it at home.  We know that plaintiffs sue over just about every kind of device under a range of theories, but we do not recall seeing consumer fraud claims over prescription diagnostic devices.  That is what we have in Andren v. Alere, Inc., No. 16cv1255-GPC(NLS), 2016 U.S. Dist. LEXIS 124252 (S.D. Cal. Sept. 13, 2016), and we thought the issues were interesting enough to spend a little time sharing them with devoted readers.

Andren is a decision on a motion to dismiss a purported class action complaint brought by two plaintiffs, each of whom claimed to have suffered thrombotic events from inadequate anticoagulation as a consequence of inaccurate readings on a defendant’s test kit, which checks blood clotting times for people on anticoagulation therapy.  We have some guesses about why they did not just pursue product liability claims for personal injury and some of the hurdles that they would stumble over on the way to class certification.  None of that really mattered yet, because they tried to assert claims sounding in fraud and Fed. R. Civ. P. 9(b) requires heightened pleading for such claims.  Some background on the device is in order first.  Unlike the court, which had a discussion of what beyond the complaint it could consider—which we will omit here—we can say that the defendant recently elected to discontinue and withdraw the device that plaintiffs claim to have used, which followed the earlier recall of lots of the product made since 2008 because of issues with accuracy in certain patient populations or settings.  Plaintiffs’ allegations were not limited to the particular device they used and were predictably broad.  They alleged that the defendant and its predecessors received thousands of complaints of “malfunctions,” including some number that results with their devices differed significantly from what independent laboratories found on the same samples. Id. at **3-4.  They alleged that FDA issued warning letters about adverse event reporting and other issues after 2005 and 2006 inspections of defendant’s predecessor in 2005 and 2006—well before the device at issue was cleared or sold. Id. at **4-5.  In April 2014, the test strips portion of the test kit were recalled.  In December 2014, the monitor portion and other products in the line were recalled.  The recalls were because readings with the kits were sometimes significantly lower than they would have been if tested by laboratories. Id. at **5-6.

They way that these readings (of the International Normalized Ratio or “INR”) work is numbers that are lower than the expected range for someone on anticoagulation therapy (with the range depending on the underlying condition and other factors) should result in increased anticoagulation therapy.  Having too much anticoagulation therapy can put a patient at risk for undesired bleeding.  Each plaintiff claimed that their readings from the defendant’s test kits were incorrectly high, so they either failed to take a dose of anticoagulation on a certain day or reduced his regular dosage of anticoagulation over time—with each plaintiff apparently taking these actions without consulting health care providers. Id. at **7-9.  So, the alleged product issues here were the opposite of the reason for the recalls.  And then the plaintiffs claimed to have suffered a stroke (not specified as ischemic or hemorrhagic, but the former is about seven times more common and this one was apparently followed by transient ischemic attacks) or a transient ischemic attacks. Id. Based on the recounting of the medical allegations, then, the plaintiffs claimed the sort of injuries that were also the opposite of the risk implicit in the recall.

Continue Reading Consumer Fraud Allegations For A Prescription Medical Device Do Not Pass The Test

Is there a more misused statute than RICO?  Or one that more convincingly shows the weakness of the textualist position, which wads up any evidence of legislative intent and tosses it into the trash bin?  RICO was clearly intended to address organized crime, but its broad and vague language has been held to reach all sorts of commercial disputes and garden variety litigations where no hit-men, shake-down schemes, or cement shoes are in sight.  It’s easy to see why plaintiff lawyers love to lob RICO claims into their complaints – getting treble damages for labeling your opponent a racketeer is a good business model.  We’ve said all this before, of course.

The godfather of RICO was Notre Dame Law Professor G. Robert Blakey.  While in law school, Blakey authored a law review note about the inability of prosecutors to affix criminal liability to the attendees of the notorious Apalachin organized crime meeting in 1957.  Later, he worked on a bill that would take care of that problem.  President Nixon signed RICO into law in 1970 and, like a lot of what Nixon did, it created more problems than it solved.  Another law came into play – the law of unintended consequences.  The malleability of RICO didn’t merely suit plaintiff lawyers down to the ground; Blakey also seemed to enjoy the surprising scope and relevance of his baby.

When we were a young litigator we attended an all-day CLE conference in NYC on business litigation.  The moderator was a sharp litigator from the Mudge Rose firm named Jed Rakoff.  He is now one of the two or three smartest and scariest judges in the country.  The star speaker was Blakey, who held forth on how RICO was the cure for whatever ailed any wannabe plaintiff.  He probably never envisioned that RICO would result in his occupation of a Waldorf Astoria podium in front of 300 white-shoed lawyers.  But there he was.  The audience peppered Blakey with questions about the reach of RICO.  Would X fall within RICO’s grasp?  Yup.  Would Y?  Of course.  We went up to Blakey after the talk and poured into his ear a complex fact scenario we were defending.  Is that a RICO violation?  Sure.

Yikes.

Blakey must have been ecstatic about what happened in the District of Massachusetts Neurontin litigation, where allegations of off-label promotion and other marketing malfeasances supported RICO claims and, consequently, huge settlements.  RICO had been stretched up to (we would say past) its breaking point on issues such as causation, injury, and damages.  It was, in our judgment, one of this country’s enormous wrong turns in drug and device litigation.  D. Mass. prosecutors showed up at CLE conferences, crowing about their success and ominously hinting at more to come.  But their legal theories rang hollow and the showmanship looked cheesy.  Having prosecuted federal cases ourselves, we have a knee jerk reflex to assume the good faith and validity of USAO actions and policies.  Not so here.  It smelled like overreaching. We think history will vindicate our position.  It is not as if the history of Mass. litigation is a history of getting things right.  Ever heard of the Salem Witch trials?  Lizzy Borden?  Roberts v. Boston (which invented the separate but equal doctrine later embraced in Plessy v. Ferguson)? Sacco and Vanzetti?   A Civil Action? Reckis v. Johnson & Johnson (a Mass. Supreme Court decision that we listed as the single worst drug/device decision of 2015)? Anyway, maybe even the folks in Boston are starting to rethink the use of RICO to police the marketing of medicines.

Continue Reading D. Mass. (!) Refuses to Certify Celexa/Lexapro RICO Class Action

We can’t stand no-injury class actions – brought by plaintiffs who allege only that “I got exactly the product I paid for, and wasn’t hurt, but for X reason I paid ‘too much’ for it.” Such litigation is a waste of time and money, and is inevitably driven by class action lawyers looking for fees, not by any real injury, which is why they’re called ‘no injury” to start with.  We see them in our sandbox, mostly in connection with third-party payor actions, although some FCA cases also spout similar damage theories.  They’re usually based on some sort of technical violation of the FDCA.  But our clients are hardly the only defendants burdened by this kind of senseless litigation for litigation’s sake.

Statutory violations – otherwise not causing harm to anyone – are widely asserted as the basis for classwide relief in many areas of the law. Such violations were at issue in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), decided last month. Spokeo came to the Court on the question of whether certain alleged violations of the Fair Credit Reporting Act (“FCRA”) could suffice to create the Article III standing needed to proceed in federal court.  The Court gave the defense community some relief, at least rhetorical, from no-injury class actions – but ultimately remanded the action without making a definitive ruling on the claims before it.

In a nutshell, sufficient for our purposes here, FCRA imposes penalties for (among other things) false reporting of credit-related information. The defendant, Spokeo, operated an internet search engine that, for a fee, allowed anybody to conduct web searches on anybody else.  136 S. Ct. at 1546.  Given that the Internet (present company excepted) often seems to be a giant garbage can, the plaintiff claimed that some of the information about him was false.  Since the information on file was (or could be) used for determining credit, he brought a FCRA class action.  Id.   He sought statutory damages ($100-$1000 per “violation”), without any showing that he had ever actually been denied credit.  Id.  The district court dismissed for lack of standing, but the court of appeals (the Ninth) reversed.  Id.

Continue Reading Spokeo – Half a Loaf, Maybe More, from the Supreme Court