Class Action

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We’ve already posted a couple of times about the Thorogood v. Sears, Roebuck & Co. case. Last week we put up a short post on the case. Before that, we contrasted Thorogood with some class certification opinions by Judge Posner that we disliked. The Thorogood case concerns washing machines, not drugs or devices, but the case gave Judge Posner the opportunity to say a load of things about class actions that we’ll likely be citing a lot over the next few years. The latest iteration is especially splendid, full of writing that is clean and well-starched.
Plaintiffs filed a purported class action on behalf of a half million purchasers scattered across 28 states plus the District of Columbia. The claim was that Sears falsely advertised that the drums in Kenmore washers were made entirely of stainless steel. Because part of the drum was actually not stainless steel, so the allegations went, clothes might acquire rust stains. Slip op. at 5. Moreover, calculation of actual damages would vary from consumer to consumer. Id. at 7. In short, individual, not common, issues predominated. That was the result of Appeal Number 1: no class.
After decertification, Sears made an offer of judgment for Thorogood’s suit in the amount of $20,000. That offer seems fairly generous, given that the maximum damage recovery under Tennessee law was $3,000. The $20,000 included a little something for attorney fees. But the district judge held that plaintiffs’ attorneys did not deserve any attorney fees and dismissed the case. Plaintiff’s attorneys appealed, claiming they had racked up $246,000 in attorney fees. The Seventh Circuit held that the claim for attorney fees was “beyond weak” because plaintiff had brought “a threadbare, idiosyncratic claim worth at most $3,000” and the effort to escalate it into a nationwide class had been “a flop.” Slip op. at 8-9. Sears shouldn’t have to subsidize such a flop and had merely offered to pay nuisance value. That was the result of Appeal Number 2: no attorney fees.Continue Reading There’ll Always Be Posner: Final Rinse

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We could fill this blog post with not-so-subtle references to Goofy, Mickey Mouse, or, for you old-timers, Oswald the Lucky Rabbit, but frankly, we’re still a little alarmed at what the Southern District of Florida did the other day in Nelson v. Mead Johnson Nutrition Co., __ F.R.D. __, 2010 WL 4282106 (S.D. Fla. Nov. 1, 2010).  The case involved a putative class action alleging that Mead Johnson violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) by misrepresenting that its baby formula, Enfamil, contained two ingredients that a competitor’s formula didn’t.  Id. at *1.  The plaintiff alleged that this misrepresentation ultimately led her and the class to buy Enfamil, and that the class suffered damage by paying more for Enfamil, or buying Enfamil instead of lower-priced brands.  Id.  To borrow the political meme of the moment, the class complained the price of Mead Johnson’s formula was “2 damn high.”
Now, defense-minded class action lawyers are probably chomping at the bit already. Sounds like there are a host of individual causation issues lurking here – for example, why each class member chose Enfamil vs. another formula, or whether class members “knew the truth” but bought Enfamil anyway.  If the plaintiffs’ causation theory is that the misrepresentation caused the class to choose a more expensive product rather than a cheaper product, that theory requires an individual inquiry into what each class member knew, what he or she saw/heard/read, and why he or she made a particular purchasing decision. And the “causation workaround” – the defendant’s misrepresentations inflated the price of the product, and thus the “fraud on the market” excuses any need to prove a causal nexus between the deception and the harm – has been rejected in the consumer fraud context in a number of cases across the country.
The Nelson court just blew off these concerns, in a decision that was, well, goofy (we couldn’t resist). The court started with the “reliance” strawman: FDUTPA does not require plaintiffs to prove individual reliance.  Id. at *6-7.  OK. But what about causation?  The statute requires plaintiffs to prove a loss “as a result of” the deception.  The Nelson court concluded that causation wasn’t a hurdle to certification either; “[t]he class members…need not submit individualized proof to establish causation.”  Id. at *7.  The court’s decision on this point relied heavily on a 2000 decision of an intermediate appellate Florida state court – Davis v. Powertel, 776 So.2d 971 (Fla. App. 2000) – that the court found “particularly persuasive.”  Id. at *2 n.2.  So what did Davis say that the Nelson court found so persuasive?  “Because proof of reliance is unnecessary, the plaintiffs’ inability to show reliance in every case cannot be used to justify a finding that individual issues will predominate over the class claims.”  Id. at *7 (quoting Davis, with our emphasis).Continue Reading Florida No Disney World For Consumer Fraud Class Action Defendants

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We’ll have more about it later, but anybody seeking to defend repetitive class action litigation should look at Judge Posner’s latest, Thorogood v. Sears Roebuck & Co., No. 10-2407, slip op. (7th Cir. Nov. 2, 2010), filed yesterday.  The plaintiff filed a meritless – ordered decertified by a prior Seventh Circuit opinion – consumer…

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We can’t say much, because Dechert’s involved in the litigation, but the Ninth Circuit has just affirmed (unpublished – but a win is a win is a win), the Rule 12 of the Amgen third-party payer action over alleged off-label promotion of Arasnep and Epogen.  The grounds:

(1) Failure to plead RICO and UCL (California’s…

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Not too long ago we offered considerable criticism of certain aspects – specifically the treatment of Pennsylvania consumer fraud claims – in Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, ___ F. Supp.2d ___, 2010 WL 3527601 (E.D. Pa. Sept. 7, 2010) (“SMW I”).  It turns out that the Rule 12 decision in SMW I was only prologue to the main event.  Several weeks later, the court outright denied class certification in the same litigation.  Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, 2010 WL 3855552, slip op. (E.D. Pa. Sept. 30, 2010) (“SMW II”).
You might expect that, as defense attorneys, we’d think a lot more highly of SMW II than we did of SMW I.
You’d be right.  We agree with Lord Palmerston:  We have no permanent friends, or permanent enemies, only permanent interests – those of our clients.  Thus, we have no quarrel with any particular judge, we’d much rather praise any judge.  Our critiques are limited to legal reasoning and outcomes. We have no problem with either in SMW II.
That being said, we’re not going to delve too deeply into large portions of SMW II. A lot of it’s antitrust-specific economic analysis, involving a comparison between what actually happened in the real world versus what supposedly might have happened in this shadowy “but for world” postulated by the plaintiffs’ economic expert.  Antitrust economics is rather outside of our sweet spot, so as to that we can only hope that our colleagues for whom this kind of thing is a hanging slider over the middle of the plate eventually explain it to us.
However, SMW II does involve class actions, consumer fraud claims, and allegations about drug marketing.  That means there are things in it that are relevant to what we do.  We’ve extracted five take home points from the opinion that we think are worthy of comment.

Delay Can Be A Friend As Well As An Enemy

One of the things that immediately struck us about SMW II is how long the class certification motion had been pending.  The opinion candidly admits that right up front.  2010 WL 3855552, at *2 (“Plaintiffs’ class certification motion has been long pending”).  How long is “long”?
How about more than four years?Continue Reading Wellbutrin – Only Permanent Interests

Whenever the New Jersey Supreme Court gets its hands on a class certification decision, you never know what to expect. Sometimes, it’s great news (no class action for Vioxx TPPs!). Some times, it’s downright scary. Take, for example, the recent Relacore decision, issued just in time to kick off Halloween season. In Lee v. Carter-Reed Co., LLC, __A.3d __, 2010 WL 3781595 (N.J. Sept. 30, 2010) (no page numbers available yet), the court lauded the class action as a mechanism to “balance the scales of power between the putative class members and a corporate entity” (uh-oh…), and found that class certification was appropriate for a putative class of New Jersey consumers who purchased Relacore, a dietary supplement pill.
The trial court had denied class certification, seizing on a number of “individualized factors” that would render the class action unmanageable. The Appellate Division affirmed the trial court, finding that individual issues predominated over common issues. The supreme court reversed, ruling that both lower courts “failed to accept as true the allegations asserted in plaintiff’s complaint or to view the pleadings in a light favorable to plaintiff, as required by our jurisprudence. Had those courts…accepted plaintiff’s representations that [the defendant’s] advertising of Relacore was no more than a passel of lies, then they should have concluded that the common issues of fact and law predominated over individual ones and that the case was not beyond the management skills of our capable Superior Court judges.” (We do have to tip our hat to the turn of phrase, ” a passel of lies.” Great name for an up-and-coming indie band, a hardboiled detective novel, or a mediocre thriller starring Russell Crowe, Clive Owen, or Leo DiCaprio chasing after the truth in some exotic locale. But we digress…)Continue Reading Darkness Falls Across The Land (Of New Jersey)

Last Friday, we promised you more on the Second Circuit’s reversal of Judge Weinstein’s Zyprexa class certification decision. Well, here’s more (and the Westlaw cite to boot).
First, the background: A bunch of third-party payors (“TPP”) sued Eli Lilly and Company, claiming that Lilly had misrepresented Zyprexa’s efficacy and side effects. UFCW Local 1776 and…

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More later, but we’ve just learned that the Second Circuit reversed the certification of a class in the Zyprexa litigation.  Here’s the opinion.
The grounds for reversal are:  (1) whether or not there are RICO cases that don’t require reliance, this one does.  Slip op. at 24.  (2) the plaintiff’s excess price theory is…

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A purported consumer fraud class action complaint that sought to join together off-label promotion allegations about no less than twelve different drugs was recently dismissed with prejudice for failure to state a claim.   Zafarana v Pfizer, Inc., ___ F. Supp.2d ___, 2010 WL 2854170 (E.D. Pa. July 19, 2010).  Talk about throwing in the kitchen sink.  Two individual plaintiffs brought suit under three different states’ consumer fraud statutes – Pennsylvania, New Jersey, and Wisconsin.
The court also threw out unjust enrichment claims.
The plaintiffs made three related types of claims:  (1) that off-label promotion caused them to take drugs (but not all 12) that were ineffective for the conditions they had, thus causing them personal injury from their underlying conditions; (2) that they suffered side effects from the drugs themselves, another personal injury claim; and (3) that the off-label promotion caused them to pay for treatments that were more expensive than would otherwise have been the case.  2010 WL 2854170, at *3.
Here’s what the court did:
New Jersey:  Plaintiffs’ first problem was that the New Jersey Products Liability Act Subsumes all personal injury claims relating to products – something we’ve discussed before.  Out go theories (1) and (2).   2010 WL 2854170, at *7.  Only the third could clear even this initial hurdle.  And that’s as far as it got.  As a consumer fraud claim, it failed for failure to plead causation or injury.  That’s because, for any class action involving a prescription drug even to pass a red face test for certification, it has to be pleaded at such a level of generality that it ignores the individualized prescription decisions of prescribing doctors, which is a no-no under the consumer fraud act.  Thus, the commonality that CFA claims would require for there to be any chance of class certification causes them to fail as CFA claims:

Plaintiffs, however, simply have not stated any facts that make it plausible that a less expensive alternative would have been prescribed.  Plaintiffs seem to ignore the role played by the prescribing physician in this case.  They have not stated, and likely cannot state, that they would have been prescribed other, less costly medications, but only that they could have been prescribed such medications.  It is also true, however, that they could have been prescribed a more expensive medication, or a combination of other medications that, while individually less expensive, were cumulatively more expensive.

2010 WL 2854170, at *7.  Obviously, plaintiffs’ counsel know how to plead valid claims – they’ve evidently made a choice that they’d rather have no claim at all than have a claim that couldn’t be brought as a class action.  Clients?  What clients?Continue Reading Kitchen Sink Complaint Dismissed

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Some of us have been accused of being mere fanboys of Judge Posner. Maybe that’s not so bad — better to admire the output of one of America’s foremost intellectuals (who else has written so thoughtfully on judging, antitrust, domestic intelligence, plagiarism, sex, bankruptcy, economics, etc?) than, say, a narcissistic athlete or an empty-headed entertainer. Anyway, we’re here to prove it just ain’t so. We’ve actually found a trend (okay – two cases) where Posner seems to have gone kind of soft on class actions.
In the past we’ve observed that reining in class actions has been one of the signal successes of recent mass tort defense. In the wake of Amchem Products Inc. v. Windsor, 521 U.S. 591 (1997) and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), one is hard-pressed to locate mass tort class certifications that have been affirmed. In fact, there are two that stand out, and both have Posner’s fingerprints on them.
Most recently, we have the window rot case, Pella Corp v. Saltzman, 606 F.3d 391 (2010) (per curiam). In that case, the Seventh Circuit affirmed certification of two classes: those who replaced their windows and those who have not. Plaintiffs alleged that Pella committed consumer fraud “by not publicly declaring the role of that the purported design defect plays in allowing rot.” For those plaintiffs who replaced their windows, the district court certified six statewide liability classes under Fed. R. Civ. P. 23(b)(3) on the theory that Pella violated state consumer fraud laws by failing to disclose the defect. For those who have not, the district court certified a class under Fed. R. Civ. P. 23(b)(2) to determine entitlement to declarations that all the windows had the defect, that Pella must notify consumers of the defect, and that Pella must pay for an inspection, followed by an individual claims adjudication process. The Seventh Circuit granted interlocutory review “in order to address the contention that consumer fraud claims are inappropriate for class treatment.” Sadly, the Seventh Circuit rejected that contention.Continue Reading Posner, Class Actions, and Pragmatism

Drug & Device Resources

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FDA-regulated products now account for an estimated one-fifth of overall economic activity in the U.S. They have also been the focus of a litigation explosion. This timely guide covers all aspects of litigation involving drugs, medical devices, vaccines and other FDA-regulated prescription products.
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