Class Action

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The other day we put up a piece about a Twombly/Iqbal law review symposium that promised “diverse interpretations.”  From an academic perspective, it was an impressive collection of articles that attacked Twombly/Iqbal from no fewer than 12 different directions.  But from our perspective, it turned out to be something of a disappointment, since the promised “diversity” never materialized.  Instead it was the usual academic Greek chorus of criticism, with the only “diversity” being differing avenues of criticism.
Having smacked that one down, we’re feeling like Mickey Mouse as the Sorcerer’s Apprentice in Fantasia – smash one broom and two more rise up in its place.  Since that post, we’ve been deluged with additional articles….
Well, not exactly deluged, but our readers have sent us a couple.
The first of these, Edward A. Hartnett, “Responding to Twombly & Iqbal: Where Do We Go from Here?” generously views Twombly/Iqbal “as equivalent to the traditional insistence that a factual inference be reasonable.”  Id. at 1.
We think there’s quite a bit more to Twombly/Iqbal than that.  As we’ve said elsewhere, our view is that Twombly/Iqbal have taken the “a short and plain statement of the claim showing that the pleader is entitled to relief” language of Fed. R. Civ. P. 8(a)(2), and given it a different gloss – one that emphasizes the “showing that the pleader is entitled” language more, and the “short and plain” language less, than was the case under the now-discarded Conley v. Gibson, 355 U.S. 41 (1957), formulation.  From an institutional standpoint we thus view Twombly/Iqbal and Conley as equivalents, with the Court having as much authority to adopt one interpretation as the other.  But make no mistake about it, the interpretation itself has changed, and we think it’s the right one given the litigation explosion that Conley at minimum facilitated.Continue Reading Once More Into The Breach

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As we said last week, because it’s a Dechert case, we can’t comment directly on Clark v. Pfizer, Inc., 2010 WL 163583, slip op. (Pa. Super. Jan. 19, 2010).  However, we were sufficiently inspired by what’s in the opinion that we thought this would be a good time to put in our two cents worth about one of the theories that the Clark plaintiffs pursued:  “fraud on the market.”
As defense lawyers, we want to do our part in killing off this pernicious import from federal securities law.  So we decided to take an in-depth look at all of the the precedent that rejects application of a “fraud on the market” reliance presumption to state-law claims.
Just to make sure that everyone’s with us, briefly “fraud on the market” is a doctrine that waters down fraud (and, plaintiffs would like to say, other liability theories based on claimed misinformation) by presuming reliance in certain limited circumstances. See Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (4 justice majority of 7-justice court).  It’s not a state law claim – the Supreme Court has never applied a “fraud on the market” presumption to state law even in securities cases.
The presumption arose because the Supreme Court bought a questionable proposition – that securities markets are “efficient” and “developed.” in other words, because there are so many participants in national stock markets, and those participants have such a voracious appetite for information, then anything about a particular stock is essentially instantaneously reflected in that stock’s price. Because of that (rather questionable) conclusion, any plaintiff in a securities fraud suit is “presumed” to rely on any material disinformation.
That’s the theory.  In practice, however, what “fraud on the market” is really all about is class actions – reliance is ordinarily considered an individualized issue that’s kryptonite to the supposed “superman” of class actions . Without “fraud on the market,” there probably wouldn’t be very many securities class actions. Conversely, if plaintiffs could import the “fraud on the market” presumption of reliance into non-securities contexts – such as consumer fraud/common-law fraud/warranty litigation against our drug/device clients – an invasion of class actions would follow like night follows day.Continue Reading No State-Law Market For “Fraud On The Market”

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The standing requirement. . . . Are you asleep yet?
Okay, few things induce yawning and cure insomnia as much as discussions about standing and jurisdiction, but in the world of no-injury lawsuits, we defense lawyers have to pay attention to such things. Standing (for the non-lawyers) is a requirement that courts impose on parties who want to sue. To have standing (at least in federal court), you need to have: (1) suffered an injury – which can be economic or not, but for our discussion today, let’s stick with an economic injury; (2) causally connected to the conduct complained of; and (3) redressable by the court.
As a practical matter, standing (generally — there are almost always exceptions to rules) means that you can’t sue a car dealer for selling a car for a false representation unless you actually bought the car. If you bought the car, you have an injury: money paid, causally connected to the false statement you complain of, and your claim is “redressable” – that is, a court can help you by ruling that you get your money refunded. But if you only thought of buying the car, or if you watched while someone else bought the car, even if you are angered by the car salesman, you have no standing to sue. (For purposes of this discussion, we’re ignoring the exception – we told you there were exceptions – that at times the law grants people standing to sue on behalf of the public.)
In federal courts, standing requirements come from the case or controversy requirement of the judicial power under Article 3 of the U.S. Constitution (“The judicial Power shall extend to all Cases, in Law and Equity, . . .–to Controversies”). Therefore, if you don’t have a real “case” or “controversy,” the courts have no authority (“jurisdiction”) to hear your gripe. States have their own versions of this constitutional grant of judicial authority; some are like the federal version, some aren’t (more exceptions) – so we’ll stick with the feds.
Now, just because you have standing does not mean you win your case, or get awarded damages. But it does get you past the first hurdle – the courthouse door – and thus into the game. And sometimes, especially class actions where the plaintiff’s goal is to pressure a defendant into settlement through the sheer size of the claim, getting into the game is the game.Continue Reading You say no injury, I say no standing

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It’s times like this that make us nostalgic for a multi-firm blog.

Yesterday, the Pennsylvania Superior Court issued a decision affirming the decertification of a putative non-personal-injury class of consumers who purchased Neurontin for alleged “off-label” uses. We can’t comment on the case because of Dechert’s involvement, but you can take a look at the…

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This just in:  The Eighth Circuit has affirmed the Baycol MDL judge’s authority to enjoin the plaintiffs, after losing a class certification motion in the MDL, from running to a (presumably) friendly state-court judge to get the same class certified.  Here’s a link to the opinion.
What happened is that one West Virginia law based consumer fraud (that is, economic losses only) class action was removed to federal court and became part of the Baycol MDL.  Class certification was denied.  In re Baycol Products Litigation, 218 F.R.D. 197, 202 (D. Minn. 2003) (omnibus complaint); In re Baycol Products Litigation (McCollins), No. 02-0199, slip op. (D. Minn. Aug. 25, 2008) (West Virginia specific order).
While all this was going on, a second, substantively identical class remained in West Virginia state court because there was no diversity of citizenship.  After none of the federal decisions, the West Virginia plaintiffs pressed for certification in the parallel state court suit.  Slip op. at 4-5.
The defendant sought to enjoin prosecution of the West Virginia do-over in state court, and the MDL judge granted the injunction.
As the Eighth Circuit observed, these kinds of forum-shopping shenanigans by plaintiffs looking for a do-over can’t happen any more, thanks to CAFA.  Slip op. at 3.Continue Reading Baycol Class Action End Run Stuffed

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The endless see-saw that is the battle to impose reason on California consumer fraud class actions, just took a “see” (or is that a “saw”) in the direction of the good guys. Last week, in a to-be-published opinion, the California Court of Appeal affirmed the denial of class certification for Vioxx-related consumer and third party…

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In our never-ending search for fascinating stuff to share with you, we’ve stumbled across two recent articles analyzing aggregate litigation.

The first is “Embedded Aggregation in Civil Litigation,” by Richard Nagareda (Vanderbilt). Nagareda thinks about situations where decisions made in individual cases affect groups of people, such as constitutional limits on punitive damage…

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We aren’t the first to note the latest class action denial in the prescription medical product liability field, In re Panacryl Sutures Products Liability Cases, No. 5:08-MD-1959-BO, slip op. (E.D.N.C. Nov. 13, 2009). 360 (subscription only) beat us to the punch the other day. But just because we aren’t first, doesn’t mean there’s nothing…

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The law reviews just keep on coming.

And one in a thousand articles keeps begging to be read.

We liked Nicholas Pace and William Rubenstein’s RAND Working Paper titled, “How Transparent are Class Action Outcomes?: Empirical Research on the Availability of Class Action Claims Data” (on SSRN here). Their thesis is not exactly a…

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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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