Normally, when we think of decisions relating to medical monitoring, the issue is whether a state will recognize medical monitoring for uninjured people as a separate claim or relief that can be sought under an existing theory of recovery.  Just last month, we noted that it looked like the issue had been largely resolved against allowing such claims or relief.  Sometimes, the issue is whether the plaintiff sufficiently pleads the elements of a medical monitoring claim in a jurisdiction that recognizes it.   Today’s case involves a different consideration of medical monitoring, looking at whether the requirements of Fed. R. Civ. 23 are met and a medical monitoring class can be certified.  There is quite a bit to Barraza v. C.R. Bard Inc., No. CV16-01374-PHX-DGC, 2017 WL 3976720 (D. Ariz. Sept. 11, 2017), and we are only going to focus we find most interesting.

Barraza comes from an IVC Filter MDL, which has been the source of some other decisions that drew our interest, and ultimately focused on the question of whether class certification was appropriate for eleven separate classes, each for the residents of a state that has recognized medical monitoring and had a resident proposed class representative.  Each class sought medical monitoring for people with one of seven of the defendant’s IVC filter devices in-place (after being implanted at any time) who had not brought a case alleging personal injury.  In other words, these were to be classes of uninjured plaintiffs with on-going use of the allegedly defective devices.  (Note that the proposed class definition does not expressly exclude all patients claiming current complications, but the court addresses the case as though it presents a “no injury” class, so we will too.)  Keep in mind that a common reason for rejecting medical monitoring has been that the tort system is predicating on an actual injury, giving rise to accrual of claims, damages that can be determined by somewhat predictable rules, a duty to mitigate, etc., and people who have not have an actual injury do not fit well within the existing tort system.  Someone with an actual injury, however, may be entitled to compensation for on-going medical care to minimize the progression or sequelae of the injury.  With that in mind, we turn to the evaluation of whether individual considerations or common issues predominate in trying to decide the elements of medical monitoring—as identified by the plaintiffs based on an amalgam of the law of the eleven states.

We will focus on the elements that mattered to the outcome.  While plaintiffs argued that negligent design and failure to warn could be decided on common evidence, the court disagreed.  The seven devices were designed and launched over a more than ten year period and exhibited different design features, manufacturing specifications, and testing.  Similarly, the labeling for the devices differed depending on the date and product, but seemed to address the risks that plaintiffs claim required monitoring.  “Trial of a single class representative’s claim would not suffice because the representative would have received a different filter with different warnings than many members of the class.”  Similarly, the application of affirmative defenses like assumption of the risk and contributory negligence would also turn on individual evidence about what the plaintiff and her doctor knew and did.  The court noted how some of the named plaintiffs—putative class representatives—had ignored recommendations for medical follow up and removal of the device they claim subjects them to an increased risk of harm requiring monitoring.  Thus, individual considerations in evaluating liability predominated and “the classes cannot be certified simply because Plaintiffs allegedly face a common risk and need medical monitoring.”

The related issues of whether the proposed monitoring was necessary and different from the treatment the plaintiffs would otherwise receive also turned on individual considerations.

Here, the amount of monitoring a class member would require in a normal course of her treatment and illness, without the monitoring sought in this case, is an individualized inquiry into the medical needs and ongoing course of treatment for each class member.

For instance, some named plaintiffs were already undergoing monitoring of their own doctor’s devising with different levels of compliance.

Even what law would apply to classes defined by the state of residency involved individual considerations as the state where each plaintiff’s implant surgery occurred, the state where the injury occurred, and the state where the defendant designed the products and drafted labeling could affect the law that would apply.

Put it all together and plaintiff did not come particularly close to satisfying the predominance requirement and class certification under Fed. R. Civ. P. 23(a).  (The plaintiffs also tried for certification of a 23(b)(2) class, but that was pretty much a non-starter as the relief sought—paying for monitoring—is not injunctive.)  Some of the result here is likely due to the plaintiffs’ insistence on broad classes and the selection of putative class representatives with warts, but Barraza also illustrates how class treatment of medical monitoring claims should be a long shot even when state law allows monitoring for uninjured people.

We’ve never liked the “cy pres” concept in the context of class actions. We opposed it (not terribly successfully) when the ALI was considering it.  We believe that taking money supposedly representing “damages” owed to class members and giving it to strangers is inherently substantive and thus not allowed by Fed. R. Civ. P. 23.  We also have yet to see any substantive source of court authority to do that.  To us, a cy pres settlement is an indicator of a lawsuit that should never have been brought, as it is an admission that even without any opposition the plaintiff is unable to prove damages or causation.  Cy pres is merely a dodge to make settlements look larger so that class counsel fees can likewise be inflated.

We have also noted the complete dearth of United States Supreme Court precedent supporting the use of cy pres in class actions, and further that the concurring opinion in the certiorari denial in Marek v. Lane, 134 S.Ct. 8 (2013), indicated interest on (at least) the part of Chief Justice Roberts in examining the validity of this doctrine.

We think that the split Ninth Circuit decision in In re Google Referrer Header Privacy Litigation, ___ F.3d ___, 2017 WL 3601250 (9th Cir. Aug. 22, 2017) (“GRHPL”), might just be the appropriate vehicle for seeking the Supreme Court review suggested in Marek.  Here’s why.

GRHPL had nothing to do with drugs or medical devices, but everything to do with cy pres abuse.  It was a privacy action that challenged the defendant’s storage and use of the search history of persons who had voluntarily used its free web searching algorithms.  Substantively this is, of course, complete garbage, since the quid pro quo of Google (and virtually every one of its chief competitors) making these search websites available for free is its ability to monetize the consumer preference data thereby created.

Would you rather pay to search the Internet?

We didn’t think so.

Enough on the merits. GRHPL was a privacy class action.  Those are never tried.  They are either dismissed or they settle.  This one settled, early, “before formal class certification.”  Id. at *3  The total settlement amount was $8.5 million – in return for a “release of the claims of the approximately 129 million people” who had used the defendant’s search capabilities over a period of almost eight years.  2017 WL 3601250, at *2.  The only other “benefit” for the class, if one could call it that, was the defendant “provide information on its website disclosing how users’ search terms are shared with third parties.”  Id.  As far as what the defendant actually did, the alleged violation that supposedly spawned the litigation, the GRHPL opinion mentioned no changes at all.  “Of the $8.5 million settlement fund, approximately $3.2 million was set aside for attorneys’ fees, administration costs, and incentive payments to the named plaintiffs.” Id. That’s right, class counsel and their hangers-on stood to receive 38% of a recovery that never came close to going to trial.  See id. at *3 (referring to settlement “at this early stage of litigation”).

That outcome was perfectly OK with the majority in GRHPL, which rejected the “view that the settlement should have been valued at a lower amount for the purposes of calculating attorneys’ fees simply because it was cy pres–only.”  Id. at *8.  This holding is, of course, in direct conflict with Judge Posner’s decision (discussed in our earlier post) that cy pres awards should be “excluded” altogether from counsel fee calculations because they “d[o] not benefit the class.” Pearson v. NBTY, Inc., 772 F.3d 778, 781, 784 (7th Cir. 2014).  Circuit conflicts such as this are the stuff of which Supreme Court review is made.

Having settled the litigation, what did the representative plaintiffs and class counsel do to provide recovery to the class itself?  Nothing.  Another thing that makes GRHPL an excellent candidate for Supreme Court review is the absence of other issues besides cy pres.  In this case 100% of the settlement went to “cy pres recipients” and 0% to the purported class:

The remaining $5.3 million or so was allocated to six cy pres recipients, each of which would receive anywhere from 15 to 21% of the money, provided that they agreed “to devote the funds to promote public awareness and education, and/or to support research, development, and initiatives, related to protecting privacy on the Internet.

Id.

The entire panoply of extreme cy pres abuse is present in GRHPL.  As we mentioned above, use of cy pres is an admission that even when the defendants cease to oppose the litigation, plaintiffs are unable to prove basic elements of any cause of action – causation and damages.  If this case were not a class action, it would have been dismissed.  Here, however, “the district court found . . . the settlement fund was non-distributable.” Id. at *3.  The Ninth Circuit however was perfectly willing to allow “cy pres-only settlement[s]”:

because the proof of individual claims would be burdensome or distribution of damages costly.  We have never imposed a categorical ban on a settlement that does not include direct payments to class members.

Id. (citation and quotation marks omitted).

We support such a “categorical ban.”  The inability of even unopposed plaintiffs to figure out who was injured and how much is a strong indicator that litigation is not the answer to the alleged problem.  In GRHPL, “each class member was entitled to a paltry 4 cents in recovery − a de minimis amount if ever there was one.” Id. at *4.  As to that situation, however, the United States Supreme Court has held:

[T]he venerable maxim de minimis non curat lex (“the law cares not for trifles”) is part of the established background of legal principles against which all enactments are adopted, and which all enactments (absent contrary indication) are deemed to accept.

Wisconsin Dept. of Revenue v. William Wrigley, Jr. Co., 505 U.S. 214, 231 (1992) (string citation to five earlier Supreme Court cases omitted).  The kinds of cases epitomized by GRHPL should be the province of government regulators, not private attorneys pocketing almost 40% of the settlement proceeds and giving the rest of it away to their friendly third parties.  We agree with the objectors, whose position was “if the settlement fund was non-distributable, then a class action cannot be the superior means of adjudicating this controversy.” Id. at *4.  The Ninth Circuit contrary position implicitly assumed, however, that litigation is always “superior” to non-litigation.  That is judicial triumphalism of the worst sort.  Lawyers and judges are not indispensable.  Disputes can be resolved in other ways.  There are some things that regulators are better at, and situations where would-be litigants can’t show causation or damages – what ordinary litigants must  prove – are one such example.

Then there were the cy pres recipients themselves – particularly the law schools, described as the “usual suspects” – given money for “promoting privacy protection on the Internet” and “educat[ing] the class about online privacy risks.” Id. at *5.  In other words, this all-cy pres settlement is a classic example of another form of litigation abuse, specifically the litigation industry using money supposedly belonging to “victims” (whose damages can’t be proven) to perpetuate itself.  Here, the cy pres awards would fund advocacy organizations (AARP and the World Privacy Forum), which turn around and file pro-plaintiff amicus briefs in other litigation (search for their names within the same paragraph as “amicus” and you’ll see we’re right).  They also fund specialty clinics at law schools to train still more lawyers and invent more expansive liability theories, all for the purpose of pursuing still more unprovable class actions.

Beyond that, all three of the law schools just happened to have pre-existing relationships with both class counsel and the defendant.  Specifically:

[Defendant] has in the past donated to at least some of the cy pres recipients, three of the cy pres recipients previously received [its] settlement funds, and three of the cy pres recipients are organizations housed at class counsel’s alma maters.

Id. at *5.  Such favoritism is precisely the kind of abuse that the ALI cautioned against when (over our objections) it chose to open the door to cy pres, despite the utter lack of recognized judicial power to give absent class members’ money to non-litigants.  “A cy pres remedy should not be ordered if the court or any party has any significant prior affiliation with the intended recipient that would raise substantial questions about whether the selection of the recipient was made on the merits.”  Principles of the Law of Aggregate Litigation §3.07, comment b (ALI 2010) (cited at 2017 WL 3601250, at *5).

Again, the majority in GRHPL sped right through the flashing yellow light.  Repeated receipt of cy pres money from the same defendant was excused because better education of lawyers (to bring more lawsuits) was viewed positively.  Id. at *6 (“Given that, over time, major players such as [defendant] may be involved in more than one cy pres settlement, it is not an abuse of discretion for a court to bless a strong nexus between the cy pres recipient and the interests of the class over a desire to diversify the pick via novel beneficiaries that are less relevant or less qualified”).  Giving away money that supposedly belongs to the class to the law schools counsel attended was also OK because, what the hey, everybody does it:

The claim that counsel’s receipt of a degree from one of these schools taints the settlement can’t be entertained with a straight face. Each of these schools graduates thousands of students each year. . . .  The court affirmatively analyzed the issue and was cognizant of the claim of a potential conflict.  All class counsel swore that they have no affiliations with the specific research centers.  Class counsel repeated that attestation at the final settlement approval hearing. . . .  The district court found “no indication that counsel’s allegiance to a particular alma mater factored into the selection process.”

Id. at *6.  And if you really believe that. . . .  Well, a number of courts (including the Ninth Circuit) have pointed out “[w]hat we know as men and women we must not forget as judges.” Larson v. Dumke, 900 F.2d 1363, 1369 (9th Cir. 1990); see also United States v. Blackburn, 461 F.3d 259, 264 (2d Cir. 2006); Henderson v. Frank, 155 F.3d 159, 164 (3d Cir. 1998); United States v. Jefferson, 925 F.2d 1242, 1253 n.13 (10th Cir. 1991). Not one, but all three, of the law school cy pres recipients just happened to be the alma maters of class counsel.  That strains credibility past the breaking point.

We’re not the only ones. In the words of the dissent in GRHPL:

Our precedent requires that district courts must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations. In our case, we have a cy pres-only settlement.  That alone raises a yellow flag.  Furthermore, we have a class settlement before formal class certification.  That raises another yellow flag.  Lastly, we have almost half of the settlement fund, several million dollars, being given to class counsel’s alma maters. To me, that raises a red flag.

2017 WL 3601250, at *10.

The only members of the class who received any payment at all were – you guessed it – the named class representative. The settlement paid “$15,000 in incentive awards to the three named plaintiffs.” Id. at *3.  The remaining 129 million or so class members received zilch.

We think this is a case that should go to the United States Supreme Court.  One problem with the Ninth Circuit is precedent.  “Objectors would also have us ignore our prior endorsement of cy pres awards.”  GRHPL, 2017 WL 3601250, at *4.  The Supreme Court doesn’t have that problem.  Justice Roberts is already looking for a case to consider whether cy pres should be allowed at all.  We don’t think it should, and further believe that courts have no substantive power to take money from litigants and hand it out to uninjured third party bystanders, charitable or otherwise.  GRHPL created a circuit split (unacknowledged), and if the Court takes a look at GRHPL, it will see the full spectrum of abuse that cy pres awards allow to occur.  Given that background, the chances are good that a majority of the justices be willing to inter cy pres once and for all.  Bad facts can sometimes make good law, and we hope GRHPL might be one of those instances.

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

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

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

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

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

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

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

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

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

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

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

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

We’ve seen it before.  The Southern District of Illinois will certify class actions with no real cause of action and no real damages.  While not as bad as the drive-through-class-certification state courts in southern Illinois, the nearby federal court will also perform doctrinal somersaults to benefit the local plaintiffs’ bar.  With both the lower state and federal courts in that otherwise lovely corner of the Midwest, an out of state corporate defendant must tough out absurd hijinks, then cross its corporate fingers and seek relief from the (usually) more rational appellate courts.  The Seventh Circuit, in particular, makes a full-time job out of spotting and reversing errors.

That not only happened in Eike  v. Allergan, Inc., 2017 WL 881834 (7th Cir. March 6, 2017), it happened courtesy of the pen of Judge Richard Posner.  In nine short paragraphs, with his typical absence of footnotes, Judge Posner exposes the purported class actions for the exercises in silliness they were.  So devastating is the reversal, so sharp is his prose, that Judge Posner’s miniature masterpiece must be viewed as a judicial thumb in the eye of the lower court.  The Seventh Circuit not only reversed the district court’s certification of the classes, it also ordered the case dismissed with prejudice for lack of standing.

Illinois calls itself the Land of Lincoln.  Lincoln said a lot of famous things.  One was, “Never stir up litigation.  A worse man can scarcely be found than one who does this.”  Imagine what Lincoln would have said if he had a look at a claim as batty as the one in Eike.  The plaintiffs sued pharmaceutical manufacturers of eye drops used for the treatment of glaucoma because the drops were bigger than they needed to be.  The theory is that the plaintiffs were paying more than they would have if the drops were smaller.  The plaintiffs alleged no conspiracy among the defendants.  This was not an antitrust case.   (Woe unto the plaintiffs if it were, and then they drew Judge Posner on the panel!) Nor did the plaintiffs allege any misrepresentations.  Rather, the plaintiffs simply sought, because they thought it would be less expensive, a smaller dose product that nobody made.

Continue Reading There’ll Always Be Posner: Reversal of Class Certification in the Blink of an Eye

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

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

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

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

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.

*********

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