If you want to insult and annoy someone, consider suing them under the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. section 1964.  That law is charmingly known as RICO, in an allusion to the big bad in the great 1931 gangster film Little Caesar, played by Edward G. Robinson at his most snarly.  It’s one thing to accuse someone of fraud, but to accuse them of racketeering is a bit over the top.  But there is, unfortunately, ample precedent out there supporting the abuse of RICO, extending it to ordinary business disputes.  Plaintiffs dazzled by the prospects of treble damages have not been terribly shy  about filing RICO claims against companies that do their best to dot all the i’s and cross all the t’s – those companies simply committed the offense of being “organizations” in a society where plaintiff lawyers know no bounds of judgment or taste.   Promiscuous use of RICO is often counterproductive because, while the plaintiff lawyers are usually trolling for a settlement, good luck settling with someone who is justifiably outraged that you called them a racketeer.

 

 RICO is yet another instance of the American system of jurisprudence taking a wild wrong turn, so it’s nice to see a court rein it in.  It’s especially nice to see that the judge who did the reining in was once one of our favorite law professors in a far away place (okay – Chicago isn’t that far away) long ago.   Last week the Seventh Circuit issued its opinion in Sidney Hillman Health Center v. Abbott Laboratories, 2017 WL 4544834 (7th Cir. Oct. 12, 2017), a Third Party Payor (TPP) action coming out of the Depakote MDL in N.D. Illinois.   The action by the TPPs was, as is typical, completely parasitic, opportunistically seizing upon the existence or conclusion of other litigation.  The TPPs filed their RICO action after a 2012 guilty plea and settlement of a False Claim Act lawsuit.  Judge Easterbrook wrote the Seventh Circuit’s opinion.  It is pithy and compelling and might very well make it onto our top ten list at the end of the year. 

 

Two welfare-benefit plans that paid for some of Depakote’s off-label uses filed this suit seeking treble damages under civil RICO.  The plaintiffs alleged that the off-label uses of Depakote were harmful and/or not effective. The alleged injuries were that the TPPs paid for (1) off-label uses that would not have been paid but for the company’s alleged misrepresentations, and (2) additional medical harm caused by the drug.  The TPPs asked the district court to certify a class comprising all third-party payors of drug expenses. The district judge dismissed the complaint on the ground that the plaintiffs could not show proximate causation.  The district judge reasoned that the allegedly improper marketing was directed, not at the plaintiffs, but at physicians, and concluded that tracing loss through the steps between promotion and payment would be too complex.  We wrote about the district court’s ruling here. The Seventh Circuit affirmed the dismissal of the case, and did so without footnotes or reservations.    

 

The headline is that Sidney Hillman rejected the type of attenuated causal chain typically asserted by TPPs:  “improper representations made to physicians do not support a RICO claim by Payors, several levels removed in the causal sequence.”  Sidney Hillman, 2017 WL 4544834 at *4.  As the Seventh Circuit recognized, under RICO, the initially injured parties are not payors, but rather the patients, who “suffer if they take [a drug] even though it is useless to them and may be harmful.”   Id. at *2.  Because TPPs are not initially injured parties, determining their alleged injuries would be difficult.  First, some off-label uses of Depakote may be beneficial, so how does any alleged injury arise from such uses?  Second, some doctors would have prescribed the drug regardless of any off-label promotion.  Third, other doctors may not have changed their prescribing practices at all, or they might have changed them but done so in response to information that the company did not influence.  How can the ‘injury” caused by the off-label promotions be calculated?

 

The plaintiffs’ lawyers  suggested that they could gin up a “regression analysis” to “determine the volume of off-label prescriptions that would have occurred in the absence” of the promotional activity.  We have seen this sort of thing before.  Maybe you have, too.  Yes, there are travelling econometricians who can regress their way to any conclusion you might want.  Luckily, the Seventh Circuit did not accept this suggestion, because the data such an analysis would require simply did not exist.  The wished-for regression analysis also “would not address the question whether patients suffered medical losses or out-of-pocket costs via co-pays, or whether physicians lost business by prescribing an ineffective or harmful drug, or what to do about patients whose off-label use of Depakote made them healthier.”  Id. at *3.  Moreover, it would not be proper to assume that TPPs would not have paid for anything, as they likely would have paid for some drug other than Depakote, which might have been more costly.  Importantly, the “absence of data leaves a serious problem in showing plausible causation, which is required even at the complaint stage.”  Id.  Thank you, TwIqbal

 

The Seventh Circuit acknowledged that five other courts of appeals have considered the extent to which TPPs can recover under RICO for wrongs committed while marketing pharmaceuticals.  The Second Circuit, in Sergeants Benevolent Ass’n Health & Welfare Fund v. Sanofi-Aventis, 806 F.3d 71 (2d Cir. 2015), held that the causal chain in TPP cases was too long to satisfy SCOTUS requirements.  (Sergeants Benevolent Ass’n made our 2015 Top Ten list.) The Ninth and Eleventh Circuits agreed with the Second, “and deem this so straightforward that they have issued nonprecedential decisions.”  Sidney Hillman, 2017 WL 4544834 at *3.  Those are the good decisions.  Spoiler alert: the Seventh Circuit agrees with them.  On the not-so-good-side of the ledger, the Seventh Circuit observed that In re Avandia Marketing, Sales Practices & Product Liability Litigation, 804 F.3d 633 (3d Cir. 2015), the Third Circuit “held that recovery under RICO is possible when misrepresentations are made directly to Payors, leading them to add certain drugs to their formularies, which means that they pay more per prescription than they would otherwise.”  (Honestly, despite this terrible result in Avandia, and despite the Fosamax legal-butchery that we’ve analyzed to a fare-thee-well, our hometown Circuit is usually wise and wonderful.)  Finally, in the Neurontin litigation the First Circuit kind-of-sort-of had been in the same place as the Third Circuit, while implying disagreement “with the other four circuits about the possibility of Payors’ recovery for misrepresentations made to physicians.”  Id. at *4.  It’s not clear exactly what the First Circuit held in Neurontin,  but don’t fret about it too much, because “to the extent there is a conflict the Second Circuit has this right.”  Id

 

And, almost needless to say, we think the Seventh Circuit has this right.   

And, with a Circuit split teed up for SCOTUS, we’re willing to bet that the efforts by Second, Ninth, Eleventh, and now Seventh Circuits to cabin RICO somewhat will prevail.   

Bexis gave a talk the other day at the Washington Legal Foundation on personal jurisdiction after last term’s United States Supreme Court decisions in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), and BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017) (“BNSF”).  One of the highlighted areas of emerging jurisdictional issues was MDL practice – specifically the MDL practice of allowing plaintiffs anywhere in the country to “direct file” actions into the MDL after it has been established – thereby bypassing the provisions of the MDL statute, 28 U.S.C. §1407(a) that “transfers shall be made by the judicial panel on multidistrict litigation.”

We thought we’d examine that a bit today.

Essentially, we don’t think that there is any jurisdictional basis for direct filing – except the defendants’ waiver of any jurisdictional challenge.  Initially, the MDL statute itself does not confer such jurisdiction.  The statute nowhere mentions direct filing, and in only one instance is an MDL judge (also called the “transferee court”) clothed with extraordinary jurisdictional powers.  That has to do with depositions.  See 28 U.S.C. §1407(b) (MDL judge “may exercise the powers of a district judge in any district for the purpose of conducting pretrial depositions”).

Whether or not the legal maxim “expressio unius est exclusio alterius” (express mention of one item implies the exclusion of others of the same ilk) should apply here, we seriously doubt that Congress intended to hide any jurisdictional elephants in MDL statutory mouseholes.  Cf. Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 40-41 (1998) (refusing to imply MDL court jurisdiction to try transferred cases).  It “may or may not” be more efficient to allow direct filings, but the MDL statute does not so state, so “the proper venue for resolving that issue remains the floor of Congress.”  Id. at 40 (citations omitted).  We further note that the Judicial Panel on Multidistrict Litigation’s rule that has been interpreted as allowing direct filing, J.P.M.D.L.R 7.2(a), likewise does not mention jurisdiction – providing only that “[p]otential tag-along actions filed in the transferee district do not require Panel action.”

In BNSF (previously discussed here) the Supreme Court rejected an attempt to use a statute (the venue provision of the Federal Employees’ Liability Act) to create personal jurisdiction where it did not otherwise exist.  When Congress intends to expand jurisdiction (as opposed to venue) it “typical[ly]” does so by “authoriz[ing] service of process.”  137 S. Ct. at 1555 (list of examples omitted).  This statute did not expressly do so, and to the extent any prior precedent suggested otherwise, that precedent was obsolete:

[A]ll these cases . . . were decided before this Court’s transformative decision on personal jurisdiction in International Shoe Co. v. Washington, 326 U.S. 310 (1945).  See [Bauman], 134 S. Ct. [746], 761, n.18 (cautioning against reliance on cases “decided in the era dominated by” the “territorial thinking” of Pennoyer v. Neff, 95 U.S. 714 (1878)).

Id. at 1555-56 (citations modified).  We’ve already raised this cautionary note with respect to century-old precedent in jurisdiction by consent cases, but it applies more broadly.

Demise of their statutory arguments left the plaintiffs in BNSF with nothing but state law to rely on.  While the defendant “ha[d] over 2,000 miles of railroad track and more than 2,000 employees” in the state, that was insufficient to permit suit by non-resident plaintiffs under either general or specific jurisdictional principles:

[T]he business BNSF does in [the state] is sufficient to subject the railroad to specific personal jurisdiction in that State on claims related to the business it does in [the state].  But in-state business . . . does not suffice to permit the assertion of general jurisdiction over claims like [plaintiffs’] that are unrelated to any activity occurring in [the state].

Id. at 1559 (footnote omitted).

Turning to BMS, which was a mass tort worthy of a breaking news post, hundreds of plaintiffs filed in California to escape (among other things) an existing federal MDL.  Non-resident plaintiffs could not establish specific personal jurisdiction over a non-resident defendant, even though (like BNSF) resident plaintiffs could, and the non-residents might be able to sue a different defendant that was “at home” in that state.  “The primary focus of our personal jurisdiction inquiry is the defendant’s relationship to the forum State.”  137 S. Ct. at 1779.  Jurisdiction is “a consequence of the territorial limitations” on state power; therefore even a ‘convenient location for litigation’ may, as a consequence ‘of interstate federalism,’ be “divest[ed]. . . of its power to render a valid judgment.”  Id. at 1781 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980)).

Specific jurisdiction, as explained in BMS, requires “an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State.”  Id.  “[U]nconnected activities,” no matter how extensive, are irrelevant.  Id.  That “other,” in-state plaintiffs could bring suit was “an insufficient basis for jurisdiction,” as was the ability of the non-resident plaintiffs to sue other, in-state defendants.  Id. at 1781, 1783.  Jurisdictional requirements “must be met as to each defendant over whom a state court exercises jurisdiction.”  Id. at 1783 (citation and quotation marks omitted).  Where:

[t]he relevant plaintiffs are not [in-state] residents and do not claim to have suffered harm in that State[, and] all the conduct giving rise to the nonresidents’ claims occurred elsewhere[, i]t follows that the [state’s] courts cannot claim specific jurisdiction.

Id. at 1782 (citation omitted).  Mass tort plaintiffs have two choices after BMS:  they can all sue “in the States that have general jurisdiction” over a particular defendant, or “plaintiffs who are residents of a particular state . . . could probably sue together in their home States.”  Id. at 1873.

Returning to MDLs, as in BNSF, there is no “typical” jurisdictional provision anywhere in the MDL statute.  Unless a particular MDL happens to be located in a forum with “general jurisdiction” over a defendant, there is no constitutional basis for allowing plaintiffs anywhere in the country to file directly into the MDL and thereby bypass statutory procedures.  Further, since jurisdiction must exist “as to each defendant” individually, in MDLs with more than one major defendant (most MDLs), it is unlikely (albeit not impossible) for there to be any jurisdiction where all such defendants are “at home” so as to permit direct filing as a matter of constitutional Due Process.

Thus, the only jurisdictional basis for MDL direct filing is the acquiescence – and thus the waiver – of the defendant(s) being sued.  That is particularly dangerous in an MDL setting, as the recent decision in the Pinnacle Hip MDL litigation (discussed here) exemplifies.  See In re Depuy Orthopaedics, Inc., 870 F.3d 345 (5th Cir. 2017).  The defendants’ agreement to a direct filing order was – wrongly, a majority of the Court of Appeals held – interpreted as a waiver of jurisdictional objections.  Id. at 351-52.  As for the propriety of direct filing, there was no majority.  The lead opinion viewed direct filed cases as being “treated ‘as if they were transferred from a judicial district sitting in the state where the case originated.’”  Id. at 348 (quoting In re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Products Liability Litigation, 2011 WL 1375011, at *6 (S.D. Ill. April 12, 2011)).  The first concurrence declined to reach the issue.  Id. at 356-57.  The second, concurring and dissenting, opinion would find direct filing invalid:

But for the possibility of a “global waiver” of personal jurisdiction, the [MDL court] had no claim to personal jurisdiction over the cases:  none of the plaintiffs’ surgeries occurred in [the state]; the plaintiffs aren’t [in-state] residents; and neither general nor specific jurisdiction exists over the [defendants] for purposes of these disputes.  For that reason, the district court relied solely on the “global waiver”. . . .  Petitioners are being forced to trial over their objections to personal jurisdiction.

By comparison, a scholarly opinion . . . in an MDL case resulted in dismissal of a nonresident defendant against which there was a “direct filed” case by a nonresident plaintiff.  In re Heartland Payment Systems, Inc. Customer Data Security Breach Litigation, 2011 WL 1232352 (S.D. Tex. March 31, 2011).  The court first noted that the defendant’s agreement to transfer for purposes of pretrial proceedings was not inconsistent with and did not waive its personal jurisdiction challenge.  2011 WL 1232352 at *5–6.  Finding no waiver, the court then decided that it lacked personal jurisdiction over the non-consenting defendant based on [its] lack of minimum or relevant contacts with the [state in question]. 2011 WL 1232352 at *6–10.

Depuy Orthopaedics, 870 F.3d at 357.

This is a good place to start, so we examined the decisions cited by both sides.  Looking at Yasmin/Yaz, we were disappointed.  That decision doesn’t even discuss the jurisdictional ramifications of MDL direct filing.  Rather, as the first sentence of the opinion makes clear, “[t]his matter is before the Court for the purpose of resolving choice of law considerations.”  2011 WL 1375011, at *1.  The direct filing order at issue specified that direct filing would have no effect on choice of law.  Id. at *4 n.2, so the reference in Yasmin/Yaz to how direct filings were “treated” occurred in the context of deciding what “no effect” on choice of law meant:

As to the foreign direct filed cases, the choice of law decision is not as clear.  Foreign direct filed cases are filed in this Court pursuant to a direct filing order . . . [that] expressly provides that the parties’ direct filing agreement will not impact the choice of law that otherwise would apply to the direct filed actions.

In general, direct filing orders are beneficial to both parties because they streamline the litigation and help to eliminate the judicial inefficiency. . . .  However, direct filing orders also present difficult choice of law issues. . . .  The Court concludes that the better approach is to treat foreign direct filed cases as if they were transferred from a judicial district sitting in the state where the case originated.  For purposes of this analysis, the Court considers the originating state to be the state where the plaintiff purchased and was prescribed the subject drug.

Id. at *5-6 (citations omitted).  There is not one mention of personal jurisdiction in the entire Yasmin/Yaz opinion.

Turning instead to Heartland Payment, that case did involve a dispute over personal jurisdiction in a directly filed action.  See 2011 WL 1232352, at *4 (observing that “direct filings may present jurisdictional, venue, or related issues”).  The defendant moved to dismiss a direct filed action under Fed. R. Civ. P. 12(b)(2) on the ground that the state in which the MDL was situated had no personal jurisdiction over it.  Id. at *5.  March, 2011 was, of course, three years before Bauman was decided and even several months before the Supreme Court’s “at home” test debuted in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011).  But even under the more lax standards of that time, personal jurisdiction did not lie simply because an MDL against the defendant happened to exist in the state in question.

As in Depuy Orthopaedics, the MDL plaintiffs in Heartland Payment first attempted to use the defendant’s agreement to direct filing as a waiver of personal jurisdiction.  2011 WL 1232352, at *7.  Unlike Depuy Orthopaedics, the MDL court in Heartland Payment rejected that argument.  Id.  As for specific jurisdiction, neither the defendant’s use of an in-state processing center nor its agreements with national credit card networks sufficed.  “[M]erely contracting with a resident of the forum state is insufficient to subject the nonresident defendant to personal jurisdiction in that state.”  Id. at *8.  Plaintiff did not even try to argue that the fortuitous, after-the-fact creation of an MDL in the jurisdiction could be a “minimum contact” justifying jurisdiction.  Without a basis for jurisdiction, the directly filed case had to be either transferred or, if the parties could not agree, dismissed.  Id. at *12, 14.

On the basis of these two cases, we’d have to give the edge to the dissent on the jurisdictional issue, since Heartland Payment decided the question at issue – the jurisdictional impact of MDL direct filing – while Yasmin/Yaz did not.  But is there anything else out there, other than these two opinions, decided two weeks apart, in 2011?

We took a look, but most of what we found were either MDL orders creating negotiated direct filing regimes, or cases, like Yasmin/Yaz, that dealt with the impact of direct filing on substantive choice of law issues.  See, e.g., In re Incretin Mimetics Products Liability Litigation, 2013 WL 12171761 (S.D. Cal. Nov. 13, 2013) (an example of the former); Wahl v. General Electric Co., 786 F.3d 491, 498-99 (6th Cir. 2015) (an example of the latter).  Other than that, it appears that the two 2011 precedents are pretty much all there is.  The issue was raised in In re New England Compounding Pharmacy, Inc. Products Liability Litigation, 2015 WL 178130 (D. Mass. Jan. 13, 2015), but mooted by plaintiffs refiling in their home jurisdiction and getting a JPMDL “tag along” order before it could be decided.  Id. at *1 n.3.  The court in In re Vioxx Products Liability Litigation, 478 F. Supp.2d 897, 904 n. 2 (E.D. La. 2007), noted the possibility that “the MDL forum” might not be able to “exercise personal jurisdiction over the defendant” in discussing direct-filed complaints, but that was an aside in another choice of law decision.  A direct-filed case was dismissed for lack of subject matter jurisdiction in In re Pradaxa (Dabigatran Etexilate Products Liability Litigation, 2014 WL 7145470, at *3 (S.D. Ill. Dec. 15, 2014), where the plaintiffs were from a foreign country – but personal jurisdiction was not discussed.  Thus, it appears that Depuy Orthopaedics and Heartland Payment are the only cases actually addressing personal jurisdiction in the context of direct-filed MDL actions.

In the context of an ordinary (non-MDL) transfer, the Supreme Court has sought to “ensure that the ‘accident’ of federal diversity jurisdiction does not enable a party to utilize a transfer to achieve a result in federal court which could not have been achieved in the courts of the State where the action was filed.”  Van Dusen v. Barrack, 376 U.S. 612, 638 (1964).  We think that this principle logically extends to personal jurisdiction – and to direct filed actions.

In MDLs that rest – as product liability litigation does – on state law and diversity of citizenship, there is no jurisdictional basis for direct filing of MDL actions other than the defendant’s waiver of their rights to assert lack of personal jurisdiction.  The Supreme Court’s recent jurisdictional decisions, culminating (so far; there will be more) with BMS and BNSF, have put the other side’s mass tort business model in significant jeopardy.  Thus, we see plaintiffs making extreme and exorbitant waiver arguments based on MDL direct filing agreements, not only in Depuy Orthopaedics, but also in the earlier Heartland Payment case, which also involved an aggressive waiver claim.  Our best advice is “don’t do it anymore.”  There is no statutory basis for personal jurisdiction in a direct filed MDL case, and Lexecon indicates that the Supreme Court won’t be inclined to create one.  Except for the rare MDL located in a place where every defendant is “at home,” there is no constitutional basis for direct filing creating personal jurisdiction either.

Weighing all these considerations, and given how the jurisdictional law is evolving, it is not a good idea for a defendant to waive any personal jurisdiction defense at this time.  Thus, we believe that there is no constitutional basis for personal jurisdiction in direct-filed MDL cases, and defendants should not do plaintiffs any favors by voluntarily agreeing to such procedures.

In our continuing quest to share worthwhile educational opportunities with our loyal readers, we have a double shameless plug this weekend.

First, some of your favorite Drug and Device Law bloggers will be presenting at Reed Smith’s Philadelphia Life Sciences CLE Day on Thursday, November 2 at Reed Smith’s Philadelphia office. This is a free, full-day CLE program designed for in-house counsel at life sciences companies.

Eric Alexander will be part of a panel discussing “Digital Health: Issues and Considerations with Patient Engagement, Connected Devices, and Integrated Data” and Bexis and Rachel Weil will be speaking on “Going Long: Addressing the Biggest Opportunities and Threats in Prescription Medical Product Liability Litigation.”

In between, some of our Reed Smith colleagues will discuss:

  • The False Claims Act post-Escobar
  • State AG trends/activities concerning the life sciences industry
  • The insurance implications of aggressive civil litigation by state and local governments against pharmaceutical companies and distributors
  • The jurisdiction and venue refresh provided by Bristol-Myers and TC Heartland
  • Trends and recent angles of attack in product liability jury trials
  • Lessons learned in international arbitration battles

The good people at Reed Smith are also providing a networking breakfast and lunch, with a reception immediately following the CLE day.

This is a free, full-day program presumptively approved for 7.2 CLE credits in New Jersey and 6 CLE credits in Pennsylvania (application for Delaware credit is pending; for lawyers licensed in New York, the day is eligible for 7 credits under New York’s Approved Jurisdiction Policy).

Interested? You can register here. (Please note that space is limited.)

Our second learning opportunity carries no such space restrictions. Bexis will be co-presenting a free (can’t beat free) Washington Legal Foundation webinar on “Personal Jurisdiction and Venue Disputes: Succeeding in a Changed Legal Environment” on October 11 at 1:00-2:00 pm EST, with Phil Goldberg of Shook, Hardy & Bacon.  Here’s a description of the topic (WLF wrote this, not me):

Previously relegated to law-school classroom debate, personal jurisdiction and venue are now front-of-mind issues for civil litigators.  Our speakers will address how lower courts, and the plaintiffs’ bar, have responded to the U.S. Supreme Court’s recent restrictions on forum shopping. They will also identify the open questions and possible loopholes in the new jurisprudence, and discuss strategic responses on how to obtain and keep a “home court” advantage.

RSVP: to glammi@wlf.org.  More information on the webinar, and instructions on how to register, are here.

With Bexis having originally conceived the preemption argument that became Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), we are always on the lookout for ways in which plaintiffs attempt to circumvent Buckman’s result and thus  to pursue private litigation over fraud on the FDA.

Plaintiffs love to claim fraud on the FDA. It’s their all-purpose response to any FDA action that they don’t like.  For over fifteen years, now, Buckman has severely cramped their style.

One group of plaintiffs thought they had found their way around Buckman – relators bring cases under a federal statute, the False Claims Act, 31 U.S.C. §3729 (“FCA”).  Since the FCA is a federal statute, the preemption rationale by which the FDCA, and specifically 21 U.S.C. §337(a), prohibiting private enforcement, bars conflicting state-law theories would not apply.  These plaintiffs thought they had reached the promised land.

Not so fast.

Actually, all they’d come up with were a few bits of legal trumpery. The Oxford Dictionary offers four definitions for trumpery:

  • “Attractive articles of little value or use.”
  • “Practices or beliefs that are superficially or visually appealing but have little real value or worth.”
  • “Showy but worthless.”
  • “Delusive or shallow.”

When the word fits, use it. All the definitions (the first two are nouns; the last two adjectives) fit here.

We saw the end coming, in this post, discussing United States ex rel. D’Agostino v. EV3, Inc., 153 F. Supp.3d 519 (D. Mass. 2015), and it has now drawn nigh.  First, D’Agostino was affirmed. D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016).  We discussed that decision, with great glee, here.  Fraud on the FDA, unless the FDA actually found fraud, didn’t cut it under the FCA, because causation would be entirely speculative – plaintiffs would have to prove a counterfactual hypothesis, that the FDA would have done something other than what it in fact did:

If the representations did not actually cause the FDA to grant approval it otherwise would not have granted, [the government] would still have paid the claims.  In this respect, [relator’s] fraudulent inducement theory is like a kick shot in billiards where the cue ball “could have” but did not in fact bounce off the rail, much less hit the targeted ball.

Id. at 7.  Where the FDA didn’t act on an FCA plaintiff’s allegations, those claims are mere trumpery.  The materiality standard for FCA claims is tough – “[i]t is a ‘demanding’ standard.”  Id. (quoting Universal Health Services, Inc. v. United States, 136 S.Ct. 1989, 2003 (2016)).  If it’s not enough to impress the FDA directly under the FDCA, purported fraud on the FDA is certainly not enough to move the needle under the FCA.

D’Agostino was good, but a more recent case, United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29 (1st Cir. 2017), is even better.  The allegations in Nargol were practically indistinguishable from what the Bone Screw plaintiffs alleged two decades ago in Buckman itself.  The plaintiff, a pair of doctors who “claim to be experts in hip-replacement techniques and devices,” id. at 31, claimed that the manufacturer of a such a device “made a series of false statements to the FDA . . ., but for which the FDA would not have approved the [product] or would have withdrawn that approval.”  Id. at 32.  Sounds like a broken record to us:

Plaintiffs say petitioner made fraudulent representations to the Food and Drug Administration (FDA or Administration) in the course of obtaining approval to market the [product]. . . .  Had the representations not been made, the FDA would not have approved the devices, and plaintiffs would not have been injured.

Buckman, 531 U.S. at 343.  This plaintiff-side trumpery also reminds us of an advertising “slogan” from the Onion.  The only difference between Nargol and Buckman were the purported damages – while Buckman invoked fraud on the FDA to allege that every use of the device in question was automatically a tort, Nargol pushed the same theme to claim that every such use (on Medicare and certain other patients) was automatically a false claim.

Talk about allegations “of little use or value.”

Focusing on the claims, “whether direct or indirect, that rest on the allegation that [defendant] misrepresented the safety and effectiveness of the product’s design in order to secure or maintain FDA approval,” the panel “appl[ied and extend[ed]” D’Agostino to affirm dismissal.  Id. at 31, 34.  Unlike D’Agostino, which had involved a PMA medical device, Nargol involved a device that had been cleared for marketing as “substantially equivalent” under so-called “§510(k) clearance.” Id. at 34.  That difference didn’t matter, since the claims in both cases sought to attack the integrity of the process by which the FDA allowed the products in question to be marketed.

The claim in this case is not quite on all fours with the claim we confronted in D’Agostino because the FDA does not independently assess the safety and effectiveness of a [510(k)] medical device. . . .

Nevertheless, the process constitutes the government’s method of determining whether a device is safe and effective as claimed.  That determination is what makes the product marketable, and Relators offer no suggestion that government reimbursement rules require government health insurance programs to rely less on section 510(k) approval than they do other forms of FDA approval.

Id. (emphasis added) (citations to Lohr and Buckman omitted).  We would be remiss if we failed to note that, in this respect Nargol is congruent with what the FDA itself said earlier this year – that, yes, the 510(k) process does involve determinations of device safety and effectiveness.  Lohr is anachronistic on this point, and will eventually be reconsidered.

But we digress.  Back to fraud on the FDA, where Buckman, by comparison, isn’t out-of-date at all.

The FDA, as Buckman observed, wields plenty of tools to protect itself from being defrauded and to punish anyone so bold as to try.  531 U.S. at 349 (listing administrative powers).  Its lack of exercise of such powers in Nargol demonstrates the trumpery nature of the plaintiffs’ claims:

The FDA, in turn, possesses a full array of tools for “detecting, deterring, and punishing false statements made during . . . approval processes.”  Its decision not to employ these tools in the wake of Relators’ allegations so as to withdraw or even suspend its approval of the . . . device leaves Relators with a break in the causal chain between the alleged misstatements and the payment of any false claim.

865 F.3d at 34 (emphasis added) (Buckman citation omitted).  For this reason, the FDA’s decision not to act “also renders a claim of materiality implausible.”  Id.

Even in an ordinary situation not involving a misrepresentation of regulatory compliance made directly to the agency paying a claim, when “the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.”

Id. at 34-35 (quoting UHS, 136 S. Ct. at 2003).  Such evidence is not just “strong,” but “compelling” when “an agency armed with robust investigatory powers to protect public health and safety is told what Relators have to say, yet sees no reason to change its position.”  Id. at 35.

Thus, without an FDA finding that it was defrauded, fraud on the FDA allegations by FCA relators are both too speculative to plead causation plausibly and not material.  That’s not quite preemption but is satisfyingly close.  Fraud on the FDA allegations, without support from the FDA itself, amount to trumpery:

[T]here is no allegation that the FDA withdrew or even suspended product approval upon learning of the alleged misrepresentations.  To the contrary, the complaint alleges that Relators told the FDA about every aspect of the design of the . . . device that they felt was substandard, yet the FDA allowed the device to remain on the market. . . .  Such evidence does show that the FDA was paying attention.  But the lack of any further action also shows that the FDA viewed the information, including that furnished by Relators, differently than Relators do.

Id. at 35 (emphasis added).  Right.  The FDA considered these allegations to be fake news.

Plaintiffs had a fallback position – that even after the device was approved, its mere use could constitute a “false claim.”  To wit:  “In theory, a product may be sufficiently ‘safe’ and ‘effective’ to secure FDA approval for a given use, yet its use might nonetheless not be sufficiently ‘reasonable and necessary’ for patient care to warrant Medicare reimbursement.”  Id.  More trumpery, held Nargol.  The “complaint was devoid of particularized allegations,” the differences being claimed were within the “maximum failure rate provided under industry guidelines,” and ultimately “simply runs Relators back into” their fraud on the FDA claims.  Id. at 36.  Thus, no causation and no materiality:

We see no reason, though, why such a likely and customary repetition of the statements made to the FDA renders it more plausible that a materially false statement caused the payment of a claim that would not have been made otherwise.  The government, having heard what Relators had to say, was still paying claims . . . but because the government through the FDA affirmatively deemed the product safe and effective.

Id..  Yes, a 510(k) clearance means “the FDA affirmatively deemed the product safe and effective.”

Ultimately D’Agostino prevailed.  Plaintiffs “offer[ed] no rebuttal at all to D’Agostino’s observation that six jurors should not be able to overrule the FDA.”  Id.  Their arguments “offer[ed] no solution to the problems of proving that the FDA would have made a different approval decision in a situation where a fully informed FDA has not itself even hinted at doing anything.”  Id.

Between them, D’Agostino and Nargol should slam the door on plaintiffs’ attempt to assert fraud on the FDA under the guise of FCA claim (unless the FDA itself has reached the same conclusion).  See In re Plavix Marketing, Sales Practice & Products Liability Litigation (No. II), 2017 WL 2780744, at *21-23 (D.N.J. June 27, 2017) (rejecting similar FCA fraud on the FDA allegations against prescription drug).  Moreover, the emphasis in these cases on the speculative nature of attempting proof of what the FDA might have done if presented with a different set of facts also casts doubt on the Third Circuit’s terrible Fosamax decision, which, as we have pointed out, would saddle juries with the task of doing just that.

Your bloggers always do our best to alert our loyal readers to interesting, informative events. For those of you on the right side of the v and in the Greater Philadelphia area, the Drug & Device Defense Forum definitely makes the list.

This is a defense-only program for litigators and in-house counsel, and it counts the blog’s own Michelle Hart Yeary as one of its co-chairs, so you know it’s a quality program. Several of your bloggers have spoken at the event in the past, and Bexis will be doing so this year as part of a panel on “Emerging Issues in Drug and Device Litigation & Regulation.”

For more information, or to register, you can visit the event website.

Several of your Reed Smith bloggers are busily making travel plans to be in New York December 4-6th. Are we planning major holiday shopping sprees? Are we off to do some picturesque ice skating around a large tree? Did we finally score Hamilton tickets?

Even better: We’re heading to ACI’s Drug and Medical Device Litigation conference, one of those rare “can’t miss” industry events that consistently provides great content and great networking opportunities – including the chance to catch up with our loyal readers.

(Bexis will be in his usual front and center seat if you want to chat. Eric Alexander will be presenting on a panel on the opioid crisis, the latest developments in the litigation, and enforcement trends. Others in our blogging lineup plan to be running in and out of sessions as well.)

Since we hope to see you at ACI, we wanted to share two pieces of helpful news:

  • First, the early bird discount for ACI ends this Friday, making this week an excellent one in which to register if you haven’t already.
  • Second, the good people at ACI asked the blog to be a media sponsor this year – and are offering a special registration discount for the conference for the blog’s readers. Make sure to use the code D10-999-DD18 when you register. You’ll save 10 percent.

If you want to register, you can do so here. We’ll look forward to seeing you in New York!

Last week we were going through the regulatory record of a drug that is now the subject of mass tort litigation.  This effort is central to assembling, per the SCOTUS Wyeth v. Levine case, “clear evidence” that the FDA would not have approved whatever label change the plaintiffs are advocating.  Then we remembered something.  It was even worse than remembering that we left the stove on, or that we left the garage door open, or that we root for the Phillies. We remembered that our case would be governed by Third Circuit precedent, and that the Third Circuit had done its best in the Fosamax case to make it impossible to get summary judgment on preemption.

As we blogged back in March, the Third Circuit in Fosamax reversed summary judgment for the manufacturer and held that it is a question for the jury whether the manufacturer had proved with clear and convincing evidence that the FDA would have disapproved the exact warning suggested by the plaintiffs.  Throwing what was really a legal issue to the jury and wrapping said issue in a heightened evidentiary standard that neither the Supreme Court nor any other court of appeals has ever adopted was doubly wrong, wrecked the law on preemption, and presented the plaintiff bar with an undeserved gift that would ultimately decrease drug innovation and increase drug prices.  What was truly bizarre about the Fosamax decision was that the FDA had, in fact, rejected the warning.  That is about as “clear” a bit of evidence as one could imagine.  But that rejection was not good enough for the Third Circuit, which wondered whether the rejection might have turned on the particular wording of the warning.

The Fosamax decision is such an obvious, pernicious error that, in the words of Tony Soprano’s crew members when another gangster becomes much too troublesome, it “has got to go.”  (The Sopranos was set in North Jersey, which is, in fact, in the Third Circuit, so the analogy isn’t too overwrought.)

The petition for certiorari in the Fosamax abomination has been filed, and it is a beauty. You can read it here.  If it doesn’t catch the Supreme Court’s eye and alert it to lower court destruction of preemption precedent, it is hard to imagine what would. To begin with, the petition does a magnificent job of doing that thing we were all taught to do in law school: stating the issue in a way that seems to compel the right – and winning – answer.  Here is the question presented according to the petition:  “Is a state-law failure-to-warn claim preempted when the FDA rejected the drug manufacturer’s proposal to warn about the risk after being presented with the relevant scientific data; or must such a case go to a jury for conjecture as to why the FDA rejected the proposed warning?” Petition at i.  See what we mean? Asking a jury to conjecture about motives is plainly silly, especially in the face of an FDA rejection of a warning.

The Third Circuit’s decision turns on dithering over whether the FDA might have approved the warning if it had been phrased slightly differently. The petition places this speculative misadventure in the context of a larger trend of lower courts erecting substantive and procedural hurdles to the preemption defense because lots of judges simply don’t like preemption.  The Fosamax decision is especially crazy because it invites “a lay jury’s psychoanalysis of why the agency had blocked compliance with local law.”  Petition at 2.  There are two key aspects of the Fosamax preemption test. First, the panel took the “clear evidence” language from Levine and twisted it into a requirement that a defendant prove it is “highly probable” that the FDA would have rejected the label change.  That bit is hard enough. But the second step really builds in the impossibility of establishing impossibility preemption: because the issue of whether the FDA would have rejected a proposed change is “counterfactual,” the question must go to the jury unless there is a “smoking gun” rejection letter from the FDA that would leave the jury no choice but to find the state-law claim preempted. Petition at 12.

This sort of manifest error needs correction, and SCOTUS has demonstrated a proclivity for granting review to correct lower court decision that limited or circumvented (or, as the petition says on page 15, “defied”) preemption. See Mensing and Bartlett.  The petition also takes us on a tour of rotten preemption decisions, such as Reckis (Mass. 2015), Mason (7th Cir. 2010), In re Prempro (8th Cir. 2009), and Hutto (La. Ct. App. 2011).  We are unsurprised to see a decision from our own Commonwealth represented in this preemption Hall of Shame:  Gurley (Pa. Super. Ct. 2015). But the Fosamax error reaches a high-water mark because it makes it virtually impossible for a brand name drug manufacturer to establish preemption, as plaintiff lawyers and their paid experts “can always dream up some ‘hypothetical’ reason why the FDA might have rejected a proposed warning – and under the decision below, that suffices to reach a lay jury.  The jury would then be asked (case-by-case) to guess as to why the federal regulator blocked the manufacturer’s state-law compliance.” Petition at 14. The way in which the rule was concretely applied in Fosamax highlights its absurdity: “[E]ven though the FDA did reject Merck’s warning, the jury could conjecture about the FDA’s reasoning and thereby conclude that the agency would not have rejected the warning had Merck improved its draftsmanship.”  Petition at 25.

The Fosamax transformation of Levine’s “clear evidence” language into a heightened “clear and convincing evidence” standard abrogates the strong default rule in civil litigation that matters are to be proved by a preponderance of the evidence. Petition at 26.  Typically, courts await direction from the legislature before raising the evidentiary burden.  But the much-abused presumption against preemption, coupled with judicial hostility to preemption, apparently works doctrinal wonders  Moreover, the requirement that the clear and convincing evidence eliminate any possibility that the FDA might have arrived at a different decision from some theoretical change in circumstances or warning language is at odds with the teaching of Mensing and Bartlett that theoretical possibilities should not dislodge preemption. (Further, as we pointed out in an earlier post, the Fosamax determination that clear evidence preemption is a matter of fact for the jury is fully at odds with Third Circuit precedent that preemption is a question of law for the court.)

The petition concludes with an incisive discussion as to how the Fosamax erosion of preemption “threatens the pharmaceutical industry and the FDA’s regulatory role.” Petition at 31.  The manufacturer in the Fosamax case voluntarily disclosed risk information to the FDA, and the FDA rejected an enhanced warning.  To be found liable under such circumstances is ridiculously unjust, and places companies in a quandary. Meanwhile, the FDA’s rejection would be merrily second-guessed by juries around the country – a veritable nationwide festival of cynical counterfactualism.

The petition is so well reasoned, and the Third Circuit’s error is so egregious, that we harbor optimism that SCOTUS will take the case and, once again, clean up the law of preemption.  Two relatively minor references in the petition caught our eye.  First, we are told that it was Justice Alito who extended the time to file the petition for certiorari.  Petition at 3. Second, there is a quote from Justice Alito’s prescient dissent in Levine, where he warned against allowing “juries in all 50 states … to contradict the FDA’s expert determinations.”  Petition at 31, quoting Levine, 555 U.S. at 626. Justice Alito comes from the Third Circuit.  We are hoping he has a keen interest in ridding the law of an error created by his home Circuit.

It is also possible that the petition will induce SCOTUS to invite the FDA, now under a more pro-defense (and, we hope, pro-preemption) commissioner, for its views.

As our guest post predicted in last Monday, even Hurricane Harvey could not delay the Fifth Circuit long in deciding the Pinnacle Hip MDL mandamus petition.  Its decision, denying mandamus but mostly agreeing with the defendant’s substantive position, is available hereIn re Depuy Orthopaedics, Inc., ___ F.3d ___, 2017 WL 3768923 (5th Cir. Aug. 31, 2017).  The appellate court had two issues before it:  (1) whether defendants had waived jurisdictional objections under Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), as to all 9,300 MDL cases, as the MDL judge had held, and (2) whether, if there was no waiver, mandamus would lie “to prohibit the district court from proceeding to trial” in certain bellwether cases.  Depuy, 2017 WL 3768923, at *2.

The defendant won the waiver issue.  Although mandamus was ultimately denied as to the second (bellwether trial) issue, the panel majority (different majorities decided the two issues) issued a strong shot across the MDL judge’s bow by declaring that action to be in error.

To understand our evaluation, we begin with mandamus.

Mandamus is – and is intended to be – difficult to obtain, because it upsets and short-circuits the usual process of appellate review.  2017 WL 3768923, at *3.  To obtain mandamus, a petitioner such as the MDL defendant here, must establish three things:

  • The “right to relief” – that the judicial order at issue was erroneous – must be “clear and indisputable.”  There must be a “clear” abuse of discretion that “produce[s] patently erroneous results.”
  • Mandamus must be “appropriate under the circumstances,” being “particularly appropriate” for issues extending “beyond the immediate case.”
  • The mandamus petitioner must “have no other adequate means to obtain relief.”  If ordinary appellate review will suffice, mandamus is denied.

Depuy, 2017 WL 3768923, at *4-5.

As to waiver, the majority held that no valid basis existed for the MDL court’s decision that Lexecon/personal jurisdiction objections had been waived as to all 9,300 MDL cases.  Such waivers must be “clear and unambiguous,” id. at *4, and nothing the defendant did approached that standard.

The MDL court’s notion, echoed by plaintiffs, that petitioners are trying to limit their waivers retroactively, is not borne out by the facts.  We hold that petitioners limited their venue waivers to the first two bellwether trials and that the MDL court erred by declaring that they had globally and permanently waived their objections to venue and personal jurisdiction.  That was grave error:

Id. (footnotes omitted).  Since there was no “clear and unequivocal” waiver, “the MDL court clearly abused any discretion it might have had and, in doing so, reached a ‘patently erroneous’ result.”  Id. at *5.  Since this error at least potentially infected all 9,300 cases in the MDL, that prerequisite to mandamus was also met.  Id

Although two of the three judges on the Fifth Circuit panel found “grave error” in the grounds on which the pending (and, indeed, the past) consolidated bellwether trial was predicated, and also that mandamus would be “appropriate,” mandamus was nonetheless denied.  What happened?

One of those two panelists (Judge Jerry Smith, who wrote the opinion) switched on the third element – whether an appeal, after the 10-plaintiff consolidated trial was concluded, was an “adequate” remedy.  While the MDL statute, itself, is intended to “promote the just and efficient conduct of such [MDL] actions,” 28 U.S.C. §1407(a), that is not the mandamus standard.  As far as a right to mandamus is concerned, a doomed consolidated trial, no matter how wasteful of the parties’ time and resources, is still a trial, and at the end of the whole thing (“each of the previous three bellwether trials lasted several weeks,” 2017 WL 3768923, at *5), an appeal in the normal course can be had.  Mandamus, according to this majority, isn’t available to avoid waste of time and expense:

[F]or appeal to be an inadequate remedy, there must be some obstacle to relief beyond litigation costs that renders obtaining relief not just expensive but effectively unobtainable.  Nor is . . . the risk of substantial settlement pressure [] grounds for granting a mandamus petition;

Depuy, 2017 WL 3768923, at *6 (footnotes omitted).  Thus, the defendant “met [only] two of the three” elements required for mandamus.

On this final point, Judge Edith Jones dissented, finding that, apart from time and expense, the MDL court had “plainly act[ed] in excess of its jurisdiction, [so] mandamus may issue to prevent the usurpation of power.”  Id. at *9.  The grounds for her conclusion are interesting, and have implications for future MDL practice.  She believes that “direct filed” MDL cases by plaintiffs from outside the state in which the MDL is located (including all ten of the plaintiffs in the proposed bellwether trial) lack personal jurisdiction, and therefore “but for” the “global waiver” that the panel had just found erroneous, there was “no claim to personal jurisdiction over the cases.”  Id.  Because there was no jurisdiction (and therefore, also improper venue) over the cases proposed to be tried, more than just wasted time and expense was involved, and mandamus was appropriate.  Id.

We’ve alluded to this potential jurisdictional problem with direct filed cases before, and we suspect there will soon be a lot more law on this issue.  We also believe that, in light of this jurisdictional uncertainty, and the direction in which Supreme Court’s recent jurisdictional precedents point, MDL defendants should strongly consider preserving objections to the use of direct filing.

So what now?  We doubt we have ever seen such a strong shot across the bow fired by an appellate court.  A majority of the panel – and law of the case usually applies to appellate decisions – says that the basis for the objected-to consolidated bellwether trial (and also the one just finished) was not just error but “clear” and “grave” error.  This “majority requests the district court to vacate its ruling on waiver and to withdraw its order for a trial.”   2017 WL 3768923, at *1.  Judge Jones’ dissent describes the likely result if the MDL judge disregards this signal and plows forward anyway:

If the district court lacked jurisdiction over these direct-filing plaintiffs’ cases, as our panel majority concludes, they will receive a take-nothing judgment nearly a decade after their suits were filed and will have to start all over − if they have the stomach for it.  For the remaining thousands, the goal of the bellwether process will have been perverted by unreliable judgments, delayed by the appeals, and undermined when those judgments are reversed.  Allowing the court’s conduct of trials outside its jurisdiction to spawn such unpredictability and unfairness will harm petitioners or plaintiffs and most likely both.  Such an outcome belies the goals of efficiency, economy, fairness, and predictability for which the MDL system supposedly exists.

Depuy, 2017 WL 3768923, at *10 (concurring and dissenting opinion) (citing §1407).

One possibility is for the defendant to seek en banc appellate review, since both parts of the decision – the finding of clear error, and the denial of mandamus drew dissents from different members of the panel.  That has happened before in the MDL context, although a long time ago.  See In re Exterior Siding & Aluminum Coil Antitrust Litigation, 705 F.2d 980 (8th Cir. 1983) (en banc) (vacating mandamus concerning class certification).  However, the strictures of the difficult-to-meet mandamus standard must be considered.  Plaintiffs might also seek such review, although since relief was denied, it is questionable whether they would be “aggrieved” enough to have standing.

Another possibility would be to seek relief from the Panel on MDL Litigation, since there are strong grounds (enunciated by Judge Jones) for asserting that the Pinnacle Hip MDL is no longer being conducted in accordance with the goals and purposes of the MDL statute.  Finally, it is possible, that with an appellate finding of error staring him in the face, the MDL judge, on remand, may decide that a course correction is in order.

Whatever happens, we’ll be watching with interest.

We are beginning to feel like the Drug and Device Law theatre critic. Or perhaps we should say “theatre cheerleader,” as we rarely wax critical (at least about the stuff we include in our blog posts).  Last week, we saw the wonderful new musical Come From Away.   It is a true story, and it begins in the tiny town of Gander, Newfoundland on September 11, 2001.  On that infamous day, Gander opened its doors, and its collective heart, to many thousands of U.S.A.-bound airline passengers whose planes were forced to land when U.S. airspace was closed in the wake of the 9-11 attacks.  Despite the tragedy in the background – and in the foreground for some characters unable to confirm whether relatives were victims of the attacks – the play is an exquisitely energetic and joyful celebration of the openness of the human heart and the resilience of the human spirit.  On the last note of the last song, the cheering audience rose in unison in a manner we have rarely seen.

As in Come From Away, tragic facts are common in our line of work, but they can sometimes provide the framework for a silver lining. In the hands of a rigorous judge committed to correct application of the law despite the pull of sympathy, difficult facts can produce laudable precedent.   Such is not the case in today’s decision out of the Depakote litigation in the Southern District of Illinois.

In E.R.G. v. Abbott Laboratories, Inc., 2017 WL 3055520 (S.D. Ill. July 19, 2017), the plaintiff was a child who was conceived while his mother was taking Depakote and who was born with spina bifida and other birth defects.  At trial, the jury found for the plaintiff on his claim of negligent failure to warn and awarded fifteen million dollars in compensatory damages.  (The jury found that the evidence did not support an award of punitive damages.)  The defendant filed a post-verdict motion for judgment as a matter of law, arguing that: 1) the plaintiff did not produce evidence that the defendant failed to provide adequate warnings of the risk of spina bifida; 2) the plaintiff did not produce evidence that the defendant failed to provide adequate warnings of other birth defects; and 3) the plaintiff failed to prove warnings causation because no doctor testified that a stronger warning would have altered his prescribing decision.  In the alternative, the defendant moved for a new trial, citing evidentiary issues and improper comments during closing argument.

  1.  Motion for Judgment as a Matter of Law

                        Adequacy of Label Warnings

The defendant argued that the label warnings were adequate as a matter of law because the label contained a black-boxed warning of the (correct) 1-2% incidence of spina bifida when the drug was taken during pregnancy. This portion of the decision – like much of the rest – is confusing, but the judge seems to say that, notwithstanding the accurate spina bifida warning, it might have been the case that other portions of the label were inadequate and that the plaintiff’s mother might be saying that other proper warnings would have resulted in a decision to stop taking the drug when she was pregnant.  It’s not clear where the judge is getting any of this, because none of this hypothetical testimony is cited in the decision.  The judge also states that the plaintiff did not “concede” that the spina bifida warning was adequate.  Instead, according to the judge, the jury could adopt the plaintiff’s expert’s theory that the spina bifida labeling was not adequate because it did not state that the drug should be used by pregnant women “only as a last resort.”  In an opinion rife with wrong, we found this “last resort” argument to be the furthest from the mark.  We know of nothing in law or regulation that invites a judge to deem that only specific semantics would have rendered a warning adequate, when the label warned of the precise risk that befell the plaintiff and included an accurate statement of the incidence of that risk.

Finally, the judge held that the jury could reasonably infer that the label was “materially misleading” when it stated that all antiepileptic drugs carried a risk of birth defects, based on evidence that the defendant’s drug carried a higher risk of spina bifida than other drugs in the class. As such, the judge held, the jury could conclude that the defendant “watered down” the spina bifida risk when it lumped the drug in with others that carried a “much lower risk of spina bifida.” E.R.G., 2017 WL 3055520 at *3.  The judge concluded, “Ultimately, there was more than enough evidence presented in Plaintiff’s case in chief to support an argument that the label, including the spina bifida waning was inadequate.” Id. 

            Warnings Causation 

Because the plaintiff’s mother’s physicians testified that they were aware of Depakote’s teratogenic effects when they prescribed the drug, the defendant argued that the plaintiff had not established that any inadequacy of the drug’s warnings was a proximate cause of the plaintiff’s injuries. The plaintiff countered that the issue was not whether the defendant “failed to warn generally of ‘teratogenic effects’” but whether the defendant “provided full, accurate, and complete information about Depakote’s total teratogenic risks and instructions on the safe use of Depakote in women of childbearing age . . . .” Id. Forgive us, but we fail to see the distinction here.  One of the last two physicians to prescribe the drug before the plaintiff was conceived testified that he would have advised the plaintiff’s mother to stop taking the drug if he had been advised to use it as a “last resort” (the chosen language of the plaintiff’s expert and the judge), but he later testified that he would not have “taken away” the drug if the plaintiff’s mother had insisted on taking it.  The judge concluded, “. . . [A] reasonable jury could find that . . . a stronger warning would have caused [the last prescriber] (who was already on the fence about the efficacy of Depakote for [the plaintiff’s mother], to stop prescribing the drug.” Id. at *4.   We think this is a stretch, given the testimony.

The judge may have thought so, too, because she made a confusing attempt to justify her conclusion.   She postulated, “If the jury believed that [the doctor] would have discontinued [plaintiff’s mother’s] prescription in favor of a different [drug], then the jury could reasonably infer that she would still have been off of Depakote when she went to see [the other doctor] for her final visit” to the doctors’ clinic. Id. “Nothing in the testimony of [the second doctor] indicates that if [the plaintiff’s mother] had shown up for her appointment on [a different drug], he would have independently restarted the Depakote prescription.  [The second doctor] that, while he did make an independent assessment of [the plaintiff’s mother] at her last visit, he repeatedly asserted that he was ‘refilling’ her medication.” Id. (citation omitted).   Have trouble following that?  Can’t figure out what it has to do with warnings causation?  Neither can we.  Bottom line is that the prescribers knew that the drug could cause spina bifida and prescribed it anyway.  And, even if the imaginary “last resort” language had been included, the doctor would not have taken the drug away from the plaintiff’s mother if she wanted to keep taking it.  We fail to see how any of this adds up to warnings causation, except in the mind of a judge who didn’t want to grant the defendant’s motion.

  1.  Motion for New Trial 

Predictably, the judge also denied the defendant’s motion for a new trial. Some highlights of that decision:

Mother’s Testimony

In this case, unlike what we are used to seeing in the prescription drug context, the patient – the plaintiff’s mother – was apparently warned about birth defects while the plaintiff alleged that the prescribers weren’t. This led to an upside-down trial in which plaintiff didn’t call his mother in his case in chief while the prescribers testified live.   When the defendant learned that plaintiff’s mother was not being called, it filed a motion to compel her to sit for a de bene esse deposition.  The judge denied the motion, and this denial was one of the bases of the defendant’s motion for a new trial.  The judge held that her denial of the defendant’s motion was proper because the defendant had not adequately explained why the mother’s fact deposition (which was not videotaped) “did not accurately capture her testimony.” Id. (This in spite of the fact that, in our experience, plaintiffs routinely win motions like these.)

“Top 3” Opinion 

The defendant challenged the admission of one of the plaintiff’s expert’s opinions that Depakote was one of the “top three” teratogenic drugs in the PDR, arguing that the opinion was not the product of a reliable methodology. The court disagreed, holding, “While a different expert may come to a different conclusion or may even use a different methodology to determine what the three worst drugs are in terms of teratology, that is not the test for excluding an opinion under Daubert.” Id. at *6.

Improper Comments in Plaintiff’s Closing Argument 

The defendant argued that prejudicial comments in the plaintiff’s closing argument entitled it to a new trial.   These included the comment that the defendant was “guilty as hell” (the judge had to explain to the jury that this was not a criminal trial), as well as comments suggesting that compensatory damages should be based on the defendant’s alleged “bad behavior” (the judge halted this line of argument after the defendant objected that it was an argument for punitive damages, not compensatories) and that the jury, through its award “had a chance to make a decision about the kind of world [it] wanted to live in.” Id. at *7 (citation omitted).  The judge, predictably, held that none of the comments was “overly prejudicial.” Id.  

And so the verdict was allowed to stand. While we reiterate that we were not always able to follow the judge’s reasoning, our takeaway was that she started with her desired result and worked backwards.   As for us, our next foray onto the Great White Way occurs next week, when we accede to a request from the Drug and Device Law Rock Climber that we accompany her to the production of 1984 currently playing at the Hudson Theatre.  This production is notable for the proliferation of audience members fainting and vomiting during the torture scene, so we suspect that cheerfulness may not permeate our description.  And we will have to find a case that makes us queasy so we can easily tie it in.  Based on today’s decision, we suspect this will not be too difficult.  We’ll keep you posted.

There’s a problem with attorney advertising in the prescription medical product space – but it’s not the one you normally hear us defense-side litigators kvetching about. Quite apart from its litigation-generating effects, attorney advertising can have adverse public health consequences when all the anti-pharma hyperbole causes patients to cease taking targeted products in violation of their physicians’ orders.  That problem is worse with some products than with others.  Currently, plaintiff-side lawyers and their litigation funder enablers have decided to target virtually all modern anticoagulant drugs (e.g., Effient, Eliquis, Plavix, Pradaxa, Xarelto) because they can cause (surprise) severe bleeding.  That’s a big problem because abruptly stopping those medications can very easily be fatal.  Nor is it the only example.  Halting, say, an anti-diabetes medication can lead to serious complications, although one would hope not in such a dramatic fashion as a stroke.

Congress held hearings on patient injuries caused by attorney advertising last month. Here’s a link to the testimony of the witnesses.  Two doctors testified about the impact of sensationalistic lawyer advertising on their patients, including patients who had died after being induced to stop taking their medicine by all the bombast.  A law professor testified about a law review article that discussed the difficulties of bar associations regulating such advertising, when it is often carried out by non-lawyers whose physical locations (lawyers are regulated on a state-by-state basis) are unclear.  A lawyer also testified, who raised First Amendment objections essentially to any regulation of attorney advertising – even when limited to issues affecting the public health.

We want to address that last point.

To the attorney advertisers, we say “welcome to the club.”  Our medical device and pharmaceutical clients, when they engage in advertising – including direct-to-consumer advertising – are engaged in the same type of speech as our adversaries, at least from a First Amendment perspective.  It’s all commercial speech.  We’ve written lots of blogposts on commercial speech, most being variations on the theme that the FDA can’t ban truthful commercial speech.  We readily extend the same consideration to our opponents.  The government can’t ban truthful attorney advertising either.

That said, the First Amendment isn’t an obstacle to the kind of regulation that was considered at the recent hearing.  Disclaimers?  Those are child’s play, constitutionally.  Judicial opinions recommend them frequently, when they hold disclaimers to be an alternative to advertising bans of various types (not just involving drugs).  E.g., ECM BioFilms, Inc. v. FTC, 851 F.3d 599, 617 (6th Cir. 2017) (“the Commission was not required to adopt the least restrictive disclaimer”); Pearson v. Shalala, 164 F.3d 650, 659 (D.C. Cir. 1999) (“we suspect that a clarifying disclaimer could be added to the effect that ‘The evidence in support of this claim is inconclusive.’”); American Home Products Corp. v. FTC, 695 F.2d 681, 696-702 (3d Cir. 1982) (agency may order advertiser making unsubstantiated scientific claim to include a disclaimer to that effect).  Indeed, as to attorney advertising itself, the Supreme Court pointed out:

[Attorney’s] constitutionally protected interest in not providing any particular factual information in his advertising is minimal.  Thus, in virtually all our commercial speech decisions to date, we have emphasized that because disclosure requirements trench much more narrowly on an advertiser’s interests than do flat prohibitions on speech, warnings or disclaimers might be appropriately required in order to dissipate the possibility of consumer confusion or deception.

Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985) (citation and quotation marks omitted).  The proposal during the hearings that attorney advertisements, at least those concerning certain products, be required to state, with equal emphasis, that under no circumstances should anyone stop their treatment without first consulting their doctor, is 100% constitutional.

Indeed, if anything, that proposal is constitutionally conservative.  Attorney advertisers targeting prescription medical products are simply the flip side of prescription medical product manufacturers in this regard.  Anything the FDA can require our clients to do, it could, constitutionally at least – require attorney advertisers to do – if it had the regulatory authority.  Theoretically, Congress could confer on the FDA the power to regulate all advertising concerning FDA-regulated products, not just that originating with the entities that the FDA now regulates.  We don’t advocate doing this, because we think that the FDA has more important work to do than evaluate attorney advertising.  Nor are we wild about giving an FDA imprimatur to whatever attorney advertisements that could survive the agency’s standards.  But from a constitutional perspective the FDA could undertake such regulation.  Since commercial speech is commercial speech, the FDA (or some other regulatory body) could impose on lawyer advertising the same standards for balance and scientific support that our clients’ advertising, both DTC and otherwise, must already meet.  Moreover, an agency could make the attorney advertisers pay for the review process, just as our clients do, through user fees.

The bottom line is this:  Lawyer advertising holds no preferred position among types of commercial speech.  Indeed, there are no “types” of commercial speech – it’s all the same constitutionally.  So when attorneys on the other side advocate bans on truthful manufacturer speech, because supposedly even truthful off-label information is a threat to the public health, they should remember that the same thing can be said about truthful attorney advertising.

We’re quite willing to apply the same standards to both sides. Truthful commercial speech about prescription medical products (or anything else) cannot be banned, but that doesn’t prohibit the FDA (or some other entity) from exercising the power at least to review it first.  As far as disclaimers, look no further than 21 C.F.R. §101.93(c)(2).  Every lawyer advertisement about FDA-regulated products could quite constitutionally be required to state, “These statements have not been evaluated by the Food and Drug Administration.”